AGL Energy Subordinated Notes - Key Financial Ratios

AGL Energy Limited (AGL) confirms the following Financial Ratios for the six month period ended 30 June 2013 (Testing Date). These ratios have been released in accordance with the terms of the AGL Energy Subordinated Notes prospectus.

A Mandatory Deferral Condition exists if the Interest Coverage Ratio is less than the Minimum Level (3.0 times) or the Leverage Ratio is above the Maximum Level (4.0 times) on the immediately preceding Testing Date. A Mandatory Deferral Condition continues until AGL’s Interest Coverage Ratio is at or above the Minimum Level and its Leverage Ratio is below the Maximum Level for two consecutive Testing Dates.

As set out in the prospectus, the Leverage Ratio and Interest Coverage Ratio will be tested every six months to determine whether a Mandatory Deferral Condition exists.

As at 30 June 2013 no Mandatory Deferral Condition existed.

Terms defined in the AGL Energy Subordinated Notes Prospectus have the same meaning in this notice.

Interest Coverage Ratio

The Interest Coverage Ratio is calculated as Operating EBITDA for the relevant six month period divided by Relevant Net Interest Paid for the relevant six month period.

AGL’s Statutory EBITDA contains items that do not portray the performance of the ongoing business. Operating EBITDA excludes these items to better illustrate the performance of AGL’s business. Relevant Net Interest Paid is Net Interest Paid less 100% of the interest paid on the Notes.

The table below shows the Interest Coverage Ratio for the six months ended 30 June 2013, 31 December 2012 and 30 June 2012:

Six month ended ($m) 30 Jun 13 31 Dec 12 30 Jun 12
Operating EBITDA 686.4 650.0 465.4
Interest paid 77.4 104.2 45.2
Interest received (18.2) (21.0) (18.7)
Relevant Net Interest Paid 59.2 83.2 26.5
Interest Cover Ratio (times) 11.6 7.8 17.6

Leverage Ratio

The Leverage Ratio is calculated as Relevant Net Debt (divided by two) to Operating EBITDA for the relevant six month period.

AGL’s Statutory EBITDA contains items that do not portray the ongoing performance of the business. Operating EBITDA excludes these items to better illustrate the performance of AGL’s business. Relevant Net Debt is Adjusted Net Debt less 100% of the outstanding balance of the Notes.

The table below shows the Leverage Ratio for the six months ended 30 June 2013, 31 December 2012 and 30 June 2012:

Six months ended ($m)  30 Jun 13 31 Dec 12 30 Jun 12
Operating EBITDA 686.4 650.0 465.4
Adjusted Net Debt 2,818.4 2,607.4 2,509.6
Less: Subordinated Notes (650.0) (650.0) (650.0)
Relevant Net Debt 2,168.4 1,957.4 1,859.6
Relevant Net Debt (divided by two) 1,084.2 978.7 929.8
Leverage Ratio (times) 1.6 1.5 2.0