Transalta Corporation · TSX:TA

Transalta — Debt Investor Presentation (September 2005)

19 slides from Transalta's debt investor presentation, September 2005

  1. Slide 1: Investor Update September, 2005

    Investor Update September, 2005

  2. Slide 2: Forward looking statements

    Forward looking statements This presentation may contain forward-looking statements, including statements regarding the business and anticipated financial performance of TransAlta Corporation. These statements are subject to a number of risks and uncertainties that may cause actual results to differ

  3. Slide 3: Our portfolio today

    Our portfolio today 1999 Integrated Canadian regulated utility Geographic Fuel type Contract Fleet age diversification diversification cover 9 13 15 9 23 2005 25 45 30 57 8 40 66 47 13 Canada Coal 0-5 6 -15 AB PPA U.S. Gas 16-30 31-40 Contracted Mexico & Australia Hydro & renewables > 40 yrs Spot 20

  4. Slide 4: Where we are

    Where we are ALBERTA PPA ASSETS SUNDANCE 9 HORSESHOE 2020 Mw mw KEEPHILLS 766 MW SHEERNESS 11 BEARSPAW rea mw vw 2% owned 42: SPRAY ‘BRAZEAU oa naw un SISTERS aMw 14 BARRIER uMw 15 INTERLAKES SMW KANANASKIS 16 POCATERRA roMw ism CALIFORNIA GEOTHERMAL ASSETS* Imperial Valley (Calipatria, CA) 6 SALTON

  5. Slide 5: Earnings power of TransAlta's business model

    Earnings power of TransAlta’s business model Millions $Cdn, unless noted 2004 - 2005 2006 - 2007 Comparable earnings per share $0.70 - $0.80 $1.00 - $1.25 Comparable earnings $135 - $160 $200 - $250 Plus: depreciation, amortization, and non-controlling interests $455 - $495 $525 - $550 Less: mainten

  6. Slide 6: Getting to $1.25

    Getting to $1.25 Range of EPS 1) Sarnia contract $0.10 to $0.15 2) Centralia Coal $0.05 to $0.10 3) Operational excellence and reduced $0.05 to $0.10 maintenance 4) Debt repayment and reduced interest $0.10 to $0.15 expense

  7. Slide 7: Sarnia merchant upside

    Sarnia merchant upside 2005 - 2006 upside Portfolio capacity • Government directive issued June 15, 2005 to OPA • Initial discussions held with Sarnia (7%) OPA promising • Expect to conclude OPA negotiations and OEB review by year-end • Anticipate deliveries in 2006 Potential to add • Contract expec

  8. Slide 8: Centralia Coal contracting upside

    Centralia Coal contracting upside Portfolio capacity 23% Calendar 2008 MIDC on-peak $72 $67 Centralia $62 Coal (16%) $57 $52 $47 $42 Apr-05 Jun-05 Jun-05 Jul-05 Jul-05 Aug-05 Aug-05 Aug-05 Aug-05 Dec-04 Jan-05 Feb-05 Feb-05 Feb-05 Mar-05 Mar-05 May-05 May-05 Sep-05 Sep-05 • Heritage contracts roll o

  9. Slide 9: Managing Centralia coal costs

    Managing Centralia coal costs Just In Time Fueling 20.00 Operator Score Card $18.30/MWh 19.00 18.00 17.00 $18.50/MWh US $/MWh 16.00 Kopiah Expansion 15.00 - Increase efficiency $15.00/MWh 14.00 13.00 12.00 Global market costs New truck shovel fleet increasing 11.00 - diesel - tires 10.00 2000 - 2003

  10. Slide 10: Major maintenance costs improve

    Major maintenance costs improve Total Major Maintenance Cost ($millions) $300 $300 7144 MW 7934 MW 7934 MW 8159 MW 8159 MW 8159 MW 8159 MW Current peak Sustainable run rate $200 $200 Millions Millions $100 $100 $0 $0 2002 2003 2004 2005 2006 2007 2008 Capex Opex Total

  11. Slide 11: TransAlta's financial strategy – manage cyclicality

    TransAlta’s financial strategy – manage cyclicality Balance acquisitions with new build Maintain high contract cover Diversify markets and fuels GROW STRENGTHEN FINANCIAL INTEGRATE CAPACITY Non-growth capex Pay down debt and/or and dividend from buy back shares operating cash flow

  12. Slide 12: Total capital expenditures declined significantly since growth expansion in 2002 - 2003

    Total capital expenditures declined significantly since growth expansion in 2002 - 2003 1,200 1,000 800 $millions Sustaining 600 Maintenance 400 200 Growth (incl. acquisitions) 0 2002 2003 2004 2005E 2006E 2007E Prior to 2005, sustaining capex was included in maintenance 2005E – 2007E are based on e

  13. Slide 13: Interest costs

    Interest costs $300 $250 Interest expense ($ millions) $200 Expensed $150 Capitalized $100 $50 $0 2002 2003 2004 2005E 2006E 2007E

  14. Slide 14: Financial ratios

    Financial ratios Non-Recourse Debt Debt to Capital Recourse Debt 60% BBB - Baa3 55% BBB low Forecast 50% BBB + BBB high 45% Baa1 40% 35% 30% 25% 20% 2003 2004 2005 2006 2007 2008 2009

  15. Slide 15: Improving credit ratios

    Improving credit ratios C a s h F lo w to In te r e s t 7 x F o re c a s t 6 x 5 x B B B + B B B h ig h 4 x B a a 1 3 x B B B - B a a 3 2 x B B B lo w 1 x 0 x 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 C a s h F lo w to T o ta l A v e ra g e D e b t 3 5 .0 % F o re c a s t 3 0 .0 % B B

  16. Slide 16: Our focus looking forward

    Our focus looking forward 2005 – 2006 2007 – 2010 ‰ Increase earnings ¾ Increase earnings ‰ Repay debt ¾ Improve ROE ‰ Increase productivity/ ¾ Achieve improved credit strengthen margins and rating decrease OM&A per ¾ Grow assets selectively MWh ¾ Achieve environmental ‰ Maintenance compliance at le

  17. Slide 17: Appendix

    Appendix TransAlta

  18. Slide 18: Financial highlights

    Financial highlights YTD YTD TransAlta (millions $Cdn) Q2 '05 Q2 '04 2005 2004 Earnings from continuing operations $25 $16 $77 $63 per share $0.13 $0.08 $0.39 $0.33 Comparable earnings $25 $8 $77 $58 per share $0.13 $0.04 $0.39 $0.30 Cash flow from operations $104 $86 $242 $270 Debt to capital 46.1%

  19. Slide 19: Debt maturity

    Debt maturity 400 350 Repayment (millions Cdn.) 300 100 250 200 360 360 150 100 205 250 225 100 150 175 50 115 110 83 50 0 2005 2006 2008 2009 2011 2012 2013 2029 2030 2050 due Oct 2005 (TAU) due Jan 2006 (TAC) due Oct 2006 (TAU) due June 2008 (TAU) due July 2008 (TAU put) due Aug 2009 (TAU put) due

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