APA Group · ASX:APA
APA — Merger or Acquisition (March 2006)
23 slides from APA's merger presentation, Mar 30, 2006
Slide 1: Acquisition of Murraylink Transmission Company
Acquisition of Murraylink Transmission Company Mick McCormack Chief Executive Officer 30 March 2006
Slide 2: Important Notice
Important Notice This presentation sets out information in relation to the proposed acquisition of Murraylink Transmission Company and associated assets (“Proposed Acquisition”) by Australian Pipelines Limited as responsible entity of the Australian Pipeline Trust (“APA”) from the HydroQuebec and SN
Slide 3: Outline
Outline • Transaction Overview • Portfolio Impact • Murraylink System • Financing • Financial Impact 3
Slide 4: Transaction Overview
Transaction Overview 4
Slide 5: Transaction Overview
Transaction Overview • Acquire 100% of shares in companies that jointly own the underground electricity interconnector between Victoria and South Australia • Acquisition price $153 million plus transaction costs • Murraylink has very similar characteristics to gas transmission pipelines • Cash flow
Slide 6: Strategic Rationale
Strategic Rationale • This is our first significant non-gas pipeline acquisition • Further diversifies asset risk through acquiring complementary assets which fit within our business and investment criteria • Enhances APA’s ability to grow annual distributions by at least CPI APA - delivering on str
Slide 7: Murraylink Transaction Benefits
MurraylinkTransaction Benefits • Positive financial impact: – Revenue certainty to 2013 and beyond – An established regulated asset base • Positive operational benefits – Logical extension of APA’s existing skills and expertise and very similar to a gas transmission pipeline business – Assets now in
Slide 8: Portfolio Impact
Portfolio Impact 8
Slide 9: Portfolio Diversification
Portfolio Diversification APA 2006 Revenues APA 2006 Revenues Pre-acquisition Pro forma Post Acquisition 4% 30% Murraylink 37% 36% 28% MSP AGT & Other RBP CGP 8% WA 8% 13% 14% 11% 11% 9
Slide 10: Murraylink Interconnector System
Murraylink Interconnector System 10
Slide 11: APA's Assets as at March 2006
APA's Assets ») — & as at March 2006 exer h ° Daly Waters NORTHERN TERRITORY QUEENSLAND Mt tsa ‘ePort Hedland Cangington Telfer WESTERN CARPENTARIA GAS AUSTRALIA PASI T Ga (Amadeus Gas Trust) Paraburdoo era Mereenie Gilmore Field Mt. Whaleback GOLDFIELDS GAS FELINE (Gar) Baller ROMA TO BRISBANE PIPE
Slide 12: Murraylink
Murraylink • Power transfer from Red Cliffs substation (Victoria) to Monash substation in Berri (South Australia) and vice versa • 180km, world’s longest underground HVDC power cable • Rated at 220 megawatts capacity 12
Slide 13: Murraylink Aerial Shots
Murraylink Aerial Shots Red Cliffs Converter Station Berri Converter Station 13
Slide 14: Murraylink Skills and Attributes Fit to Existing Business
Murraylink Skills and Attributes Fit to Existing Business Gas Pipeline Murraylink Linear energy infrastructure High initial capital cost Low operating cost Parmelia Pipeline Long life (>40 years) Operated remotely via SCADA systems Small number of customers Strong fit with existing business Murrayli
Slide 15: Murraylink Skills and Attributes Fit to Existing Business
Murraylink Skills and Attributes Fit to Existing Business Gas Pipeline Murraylink Fixed revenue (not Substantially Revenue is fixed throughput sensitive) (not throughput) Volume risk Minor None Regulated asset Easement/land Bulla Park Compressor Coolers management Inlet and outlet points Small numbe
Slide 16: Murraylink
Murraylink • Murraylink utilises advanced conversion technology, is remotely controlled and consists of: – Two converter stations (1 at each end) – Designed for 40 years operating life under rated conditions – 2 DC Cables → buried 1.2 m deep → rated capacity of 220MW • Completed in 2003 for $180 mil
Slide 17: Murraylink
Murraylink • Major Customers – Revenue is paid by the Victorian and South Australian system operators (Vencorp and Electranet) on behalf of the regional Network Service Providers in each state. – No volume risk – Approved revenue is fixed under ACCC determination to 2013 – Regulated asset base ensur
Slide 18: Financials
Financials 18
Slide 19: Financial Impact
Financial Impact Notional impacts assuming pro-forma gearing: • Strongly cash positive, immediately from acquisition date and in subsequent years • Cash yield accretive, from day 1 • Earnings neutral for FY2006 • Earnings mildly decretive in subsequent years On fully funded basis: • Cash flow positi
Slide 20: Financing
Financing • Total price of $153 million plus transaction costs • Acquisition fully funded by one-year acquisition bridging facility • Pro forma gearing (debt / debt plus book equity) post acquisition is 68.0%, up from 65.1% at Dec ‘05 20
Slide 21: 2006 Results & Impact
2006 Results & Impact • 2006 results expected to be in line with previous profit guidance (10 to 13% on previous year NPATM before significant items) Modest impact in 2006, long term enhances distribution goals 21
Slide 22: Summary
Summary • Acquired Murraylink at the right price • Consistent with APA’s strategy for growth • Strengthens APA’s core business and diversifies its portfolio • Strategic redirection of focus towards cash accretion • Cash flow accretive and will ensure that distributions will increase annually at leas
Slide 23: We Deliver Energy
We Deliver Energy www.pipelinetrust.com.au