Apa Group · ASX:APA
Apa — Australian Pipeline Trust — FY2004 Earnings Presentation
34 slides from Apa's earnings presentation, Aug 26, 2004
Slide 1: ill
Se — Se ill eh
Slide 2: Full Year Results in Summary
Full Year Results in Summary Net Profit after Tax and ) minorities (NPATM) $M 2004 NAPTM: 140 - 121.3 +195.50% from pcp. 120 - 2004 NAPTM: 100 - Normalised +9.6% from pcp. 80 - 60 - 40 - 30. 20 - 0 2001 2002 2003 2004 2004 Actual Normalised Australian Pipeline Trust
Slide 3: Net Profit after income tax and minorities
Net Profit after income tax and minorities 121.3 41.0 Non-recurring items after tax 76.3 - Operating profit after tax and minorities 45.0 41.0 Australian Pipeline Trust
Slide 4: Full Year Results in Summary
Full Year Results in Summary $M 300 Revenue 250 + 200 + 150 + 100 249.3 255.4 271.9 278.1 i Other Revenue = Pipeline Revenue includes SCP Equity Contribution 2001 2002 2003 2004 2004 Actual Normalised Australian Pipeline Trust
Slide 5: Highlights
Highlights m Continued strong performance ™@ Acquired CMS’ interest in Goldfields Gas Pipeline and 100% of Parmelia gas business = Active management of capital resources m Positive regulatory outcomes m Involved in industry rationalistion; Australian Pipeline Trust
Slide 6: Agenda
Agenda Progress Update Operational Review Financials Acquisition Overview Strategy and Outlook Australian Pipeline Trust
Slide 7: Gas Pipelines 2004
Gas Pipelines 2004 == APA pipelines — Other pipelines APA Pipelines 2004 Amadeus Gas - AGT Canpentaria Gas Transmission -CGP Central West - CWP Goldfields Gas Transmission - GGT Mid West Pipeline - MWP Moomba to Sydney - MSP Parmelia Gas- PGP Rom to Brisbane - REP | ENOATHERN TERRITORY
Slide 8: Progress Update
Progress Update Continued strong performance m@ Four years of consecutive growth in NPATM = Balance Sheet in strong position after acquisitions m Equity raising well received by market Australian Pipeline Trust
Slide 9: Progress Update: Achieved Strategic Goals
Progress Update Achieved Strategic Goals w@ Acquisition of CMS Energy Corp’s Australian pipeline assets — now own 88.2% owner of Goldfields Gas Transmission Pipeline (GGT), and — 100% Parmelia gas business, comprising pipeline, processing, storage assets and retail; = Cost $206m, inclusive of all tr
Slide 10: Progress Update: Active Management of Capital Resources
Progress Update Active Management of Capital Resources m Raised A$493.23 million (net) in US Private Placement market; @ Activated Distribution Reinvestment Plan; @ Entered into tax consolidation; m Raised equity of $61.19 million (net) Australian Pipeline Trust
Slide 11: Progress Update: Positive regulatory outcomes
Progress Update Positive regulatory outcomes = Moomba to Sydney — Decision to partially partially revoke coverage — Australian Competition Tribunal rejects valuation methodology on access arrangements for MSP — ACCC has now appealed to Federal Court of Australia, outcome expected next calendar year
Slide 12: Progress Update: Positive regulatory outcomes
Progress Update Positive regulatory outcomes m= Productivity Commission Final Report — Recommends lighter-handed regulation — Potential for “no coverage’ for 15 years on greenfields pipelines on case-by-case basis — Price regulation applies when net benefits outweigh monitoring costs — Regulated rev
Slide 13: Progress update: Involved in Industry Rationalisation
Progress update Involved in Industry Rationalisation = Only bid at a commercially justifiable price — Roma to Gladstone Pipeline (QId), South West Queensland Pipeline (Qld), Pilbara Pipeline System (WA) bids — Bid to build Telfer Pipeline — Due Diligence costs were significant but necessary ($5.8 mi
Slide 14: Progress update: Corporate Changes
Progress update Corporate Changes m Unitholders now able to nominate directors for Australian Pipeline Limited — Three directors (other than the two AGL, one Petronas and Managing Director) are now able to be elected by unitholders — All three non-corporate directors are retiring and re-nominating A
Slide 15: Operational Review
Operational Review @ X-Strata mine closure in WA — Write-off of Mid West Pipeline following closure of vanadium mine ™ Stress Corrosion Cracking — Identified on MSP in remote areas of SA — Pressure management plan implemented — Further investigation planned - intelligent pig — Repair and rehabilitat
Slide 16: Operational Review
Operational Review @ Moomba Gas Plant Fire — Fire at Santos Moomba gas plant in January 2004 disrupted gas supplies — Domestic and small user services were maintained, although industrial users were temporarily interrupted — APA met all contractual obligations — No financial impact due to GTD m Roma
Slide 17: Financials
Financials Total Pipeline Revenue 267.1 260.2 257.2 +12 EBITDA 135.1 133.9 137.8 28 Profit after tax & minorities 121.3 45.0 41.0 +9.6 Earnings per unit (cents) 49.2 18.3 168 48.9 Distribution per unit (cents) 21.5 21.5 21.5 ~ Interest Cover Ratio 23 23 24 ~ EBITDA Margin (%) 50.6 51.5 53.6 : Net Ta
Slide 18: Financials: Full Year Revenue Breakdown
Financials Full Year Revenue Breakdown 249.3 255.4 271.9 285.1 278.1 “Interest & Other Revenue 250 = Other Pipeline Revenue 200 @ Pipeline Revenue-SCP Equity Contribution 150 Pipeline Revenue - Transportation 100 + 50 + Australian Pipeline Trust 2001 2002 2003 2004 2004 Actual Normalised
Slide 19: Financials
Financials EBITDA 135.1 133.9| 137.8 -2.8 Depreciation & Amortisation 22.6 22.6 24.1 +6.2 Net Interest Expense | 46.3 46.3| 48.6 +4,7 Profit before Tax 46.3 65.0 65.1 -0.2 Tax (75.2) 19.8 23.8 +16.8 Minorities 0.2 0.2 0.3 - Net Profit after Tax 121.3 45.0 41.0 +9.6 Australian Pipeline Trust
Slide 20: Financials
Financials m Operating Expenses — Pipeline Operation and management expenses flat year on year but minor reduction due to over-provision in Amadeus Gas Trust — Other Expenses increased because of due diligence and regulatory legal costs m= Effective tax rate approaching corporate tax rate @ Net inte
Slide 21: Financial: Tax Consolidation
Financial Tax Consolidation zt APA was able to elect to be treated as single entity for tax from 1 July 2003, as a consequence of legislation passed 25 June 2004 t Increase in tax values resulted in an income tax benefit of $92.9m m@ Accounting depreciation remains unchanged m Effective tax rate wil
Slide 22: Financials: Non-recurring Items 2004
Financials Non-recurring Items 2004 Due diligence cost write-off Mid West Pipeline write-off Tax consolidation benefit - SCP Non-recurring items before income tax Tax effect of non-recurring items Tax consolidation benefit - APA Non-recurring items after income tax $M (5.763) (19.943) 6.964 (18.742)
Slide 23: Financials: Full Year Distribution Maintained
Financials Full Year Distribution Maintained Total Distribution Income Distribution 17.0 Capital Distribution 4.5 Date of Final Distribution 27/09/2004 + Final profit distribution (2004) franked to 40%, at corporate income tax rate + Future distributions must be out of consolidated profits first * D
Slide 24: Acquisition Overview
Acquisition Overview Goldfields m Pipeline — 1,380km pipeline — Transports competing gas streams from Harriet and East Spar, NW Shelf to North Eastern and Eastern Goldfields regions in WA — Capacity 105 TJ/d increasing to 164 TJ/d under full compression = Major Customers — WMC - MDQ 45.8 TJ/d — Newm
Slide 25: Acquisition Overview cont'd
Acquisition Overview cont’d Parmelia @ Parmelia gas business — 416km gas pipeline (capacity - 70TJ/d) — Mondarra storage (capacity 6-9PJ) — Dongara gas processing plant — Small Gas Retail business m@ Customers - 24 active transportation contracts - approx 35 — long-term contracts to process gas at D
Slide 26: Benefits of Acquisition
Benefits of Acquisition Advancing Strategic Goals @ Positive financial impact on APA (cash and earnings accretive) = Diversification of APA's portfolio @ Enhanced footprint in WA m™ Sound long term prospects m Commercial control by APA 2 Meets financial criteria and strategic goals Australian Pipeli
Slide 27: Portfolio Diversification
Portfolio Diversification MSP Reliance Reduced APA 2004 Revenues APA 2004 Revenues Pro forma pre-acquisition Pro forma post acquisition Other Parmelia Other 4%, 7% 3% MSP 32% AGT 7% RBP 9% CGP RBP 12% 9% 10% Note: GGT revenues shown on an equity share consolidated basis pre & post acquisition for ac
Slide 28: Portfolio of Major APA Pipelines
Portfolio of Major APA Pipelines MSP Reliance Reduced Approx. Capacity (TJ/d) Length (Km) Amadeus Gas RBP Pipeline Goldfields Goldfields Carpentaria RBP | looped Parmelia Carpentaria Parmelia Central West Central West Amadeus Gas i Pipeline Australian Pipeline Trust
Slide 29: Funding
Funding @ Equity raising — Institutional bookbuild to 30 investors; — Raised $61.19 million (net) through placement: *24.5 million new units *issue price of $2.52 per unit *AGL and Petronas took up their pro rata entitlements = Borrowings — Gearing ratio at end of financial year, 59.0%, well below d
Slide 30: Other Acquisition Opportunities
Other Acquisition Opportunities ™% Dampier to Bunbury Natural Gas Pipeline — Final bids 27 August 2004 — APAwill now bid alone with the support of major unitholders # Continuing to pursue minority interests m™@ Further industry rationalisation? Australian Pipeline Trust
Slide 31: Strategy
Strategy @ Continue to grow profitability by: - - Filling our existing pipelines and expanding their capacity - Acquiring minority interests - Participating in industry rationalisation; - Diversifying into other transmission pipelines and complementary industries (gas treatment, water, power) Austra
Slide 32: Outlook for 2005
Outlook for 2005 # Acquisition of Goldfields and Parmelia assets will more than offset the contracted reduction in GTD payments; i Emergence of competition and full retail contestability will begin to improve MSP revenues m Expectations of improved business in Queensland @ Distribution expected to b
Slide 33: Summary
Summary m™@ Continued strong performance m Acquired remaining interest in SCP and Parmelia gas business m Active management of capital resources m Positive regulatory outcomes @ Involved in industry rationalistion Australian Pipeline Trust
Slide 34: =e = = = oo Oe
=e = = = oo Oe
Australian Pipeline Trust — FY2004 Earnings Presentation on 6ix