Apa Group · ASX:APA
Apa — Australian Pipeline Trust — FY2006 Earnings Presentation
43 slides from Apa's earnings presentation, Aug 29, 2006
Slide 1: Financial Results Year ended 30 June 2006
Australian Pipeline Trust Financial Results Year ended 30 June 2006 Mick McCormack -.Managing Director Rick Francis - CFO oe Stephen Ohl --Group GM Operations Sydney 29 August 2006 O.
Slide 2: Agenda
@ Highlights @ Financials a Operational Review »-Pipeline assets ». Electricity assets » Gas Facility-assets @ Corporate Update @ Strategic Focus m@ Business Model @ Outlook & Summary Mick McCormack Managing Director
Slide 3: Income Statement
Income Statement Record Profit - Growth Continues $ million 2006 2005 Change Revenue* 379.0 367.3 3.2% EBITDA* : 200.4 178.9 12.0% NPAT*# 60.7 51.4 18.1% Free.Cash Flow 106.5 103.4 3.0% Ratios EPU cents per.unit* 21.8 18.7 16.5% FCF cents per.unit 38.2 37.6 1.6% Distribution cents per unit 24.0 22.5
Slide 4: FY06 Financial Result
FY06 Financial Result Continues Growth Trend since Listing sm Net. Profit from Recurring Operations 70 60 50 40 30.5 20-5 10. 0+ 2001 2002 2003. 2004 2005 2006
Slide 5: Total assets to June 2006
Total assets to June 2006 Growth of $bn 25 2.0 1.5 1.0 0.5 0.0 Assets Set to Continue 1.88 1.40 2001 2002 “2003 2004 2005 2006
Slide 6: Legend (asset map)
LEGEND APA Pipeline ~ Murraylink ony GasNet Pipeline «wom we * Proposed Sate and Territory houndary 18 Gas storage facilities Gas proccessing facilities @ Capital cities Paint of interest
Slide 7: Highlights of FY06
Highlights of FY06 @ Earnings growth through increased revenues.on pipelines, new assets, and measured cost controls : @ Distribution up by 1.5 cents (6.7%) to 24 cents per unit @ Acquired Murraylink (Vic/SA) — first electricity transmission acquisition — @ Expansion of Mondarra Gas Storage facility
Slide 8: Presentation: Financials
Presentation @ Financials > Income Statement | > Financial Analysis > Cash Flow > Capital Expenditure > Capital Management Activities »-Distributions Rick Francis Chief Financial Officer
Slide 9: Income Statement
Income Statement Strong Financial Performance $ million 2006 2005 | -- Change Revenue* 379.0 367.3] 3.2% EBITDA* 200.4 178.9] 12.0% EBIT* 161.6 142.5 | 13.4% Net Interest Expense (71.1) (64.2) | -- (10.9)% | Tax* (29.4) (26.4) | = (11.6)% Minorities (0.3) (0.3) ] - NPAT = recurring* 60.7 51.4] 18.1%
Slide 10: Key Financial Ratios
Key Financial Ratios Sound Fundamentals | EPS (cpu) = recurring > Including significant items Free cash flow (cpu) Gearing / capitalisation ratio (%) Interest cover ratio (times) Average interest rate. (%) Net tangible asset backing per unit Total assets 2006 21.8 22.4 38.2 67.9 2.31x 6.85 $2.09 $2.
Slide 11: Significant Items
Significant Items FY.-2006 ; Pre-Tax Tax After Tax : $m $m $m Stress.corrosion cracking provision (11.3) 3.4 (7.9) APA Group tax consolidation benefit * 7.5 75 Settlement of tariff dispute : 3.3 (1.0) 2.3 Total : (8.0) 99" 19 FY. 2005 . Stress corrosion cracking provision (23.5) “TA (16.5) APA Group
Slide 12: Analysis of Total Revenue
Analysis of Total Revenue Continued Revenue Growth $m 400 350 : 357 | | : 89.3 O Passthrough Revenue 300 Interest & Other Revenue 250 ; 68 74.6 . a 61.5 61.1 Electricity Transmission & 200 Other Tolling : f4 SCP Equity Contribution 150 @ Gas Transmission 100 0 T T T - T T 2001 2002 2003-2004 2005...
Slide 13: Analysis of Transportation Revenue by Asset
Analysis of Transportation Revenue by Asset “$m 105 82.8 60 795 @ Complementary Assets O Passthrough Revenue 45 @ Gas Transmission | | ‘Sin <== 0 7 Le 2005 2606 20052006 "2605 2006 2005 2006 2605 2006 2005 2606 2005 2006 MSP ; AGT... RBP. CGP GGT Other WA Comp . Assets 13
Slide 14: Year on Year Movement in EBITDA
Year on Year Movement in EBITDA 2005 EBITDA MSP AGT RBP. CGP. WA Murraylink & Corp 2006 EBITDA Comp Assets. EBITDA movements are before significant items. 14
Slide 15: Cashflow Summary
Cashflow Summary Net cash from operations Investing Activities: = SIB Capex ~ Acquisitions & Growth “Financing Activities - Distributions paid (net of DRP) ‘= Issue of units (net) ~ Debt issue costs : 2006 2005 $m $m 112.2 106.2 5.7 28 249.8 200.0 255.5 202.8 (61.7) (52.2) 7 61.7 - (1.1) (61.7) 84 a
Slide 16: Free Cash Flow
Free Cash Flow Strong Cash Flow Underpins Distribution Growth EBITDA pre-significant items. Non-cash movements Net working capital movements SCC payments Other Net cash received Net interest paid Tax refunds/payments Operating cash flow Payments for SIB Capex Free Cash Flow Free Cash Flow (cpu) 2006
Slide 17: Capital Expenditure
Capital Expenditure Growing Business Opportunities 2006 2005 Stay-in-business $m $m SIB : 5.7 2.8 Growth - Kogan North —.QLD : ; 8.0 3.4 Daandine = QLD : : 5.9 re Compressor.—.WA ; 10.1 eS - Others. 2.0 6.6 Disposal:- Dongara assets °°. : Sos (2.5) os. - Investment in GasNet : : 22.5 - Murraylink /
Slide 18: Capital Management
Capital Management Strong Balance Sheet Debt — at 30 June 2006 » reduced borrowing margins on Australian facilities following repricing =. effective interest rate at year end was 6.85% (down 0.18%) = debt levels $1 260m, undrawn facilities $94m « variable interest rate exposure 84.4% hedged (excl. M
Slide 19: Distributions
Distributions Annual Distribution Up 6.7% cents 30 25 20 e. FY. 2006 final distribution of 6.0c declared 29 August 2006 Ei Capital ~ 15 ene (unfranked) e-YTD distributions .24.0c, up.1.5¢ 9 ¢ DRP reactivated from.3" quarter distribution and will continue in 5 2007 0 2001 2002 2003 2004 2005 2006 19
Slide 20: Presentation: Operational Review
Presentation @ Operational Review ». Gas Facilityassets. (WA) > Pipeline assets >» Electricity assets » Gas Facility assets (QLD) Stephen Ohl Group General Manager Operations 20
Slide 21: Gas Facility Assets - WA
Gas Facility Assets - WA M d G St F slit | m Mondatta was lorage ac! ny Hi >. Expansion.of Mondarra Gas Storage. Facility ata cost of $10 --$15 million - >.) year agreement, plus 5 year option, with WA’s Verve Energy » Additional peak gas supply services will help ease supply constraints | in the Pe
Slide 22: Pipeline Assets - WA
Pipeline Assets - WA @ Goldfields Gas Transmission (GGT eT es >» Commenced construction of.$15-million ATTA compressor expansion for transportation of | gas to Hamersley Iron Paraburdoo mine = Signed 16 year contract with Hammersley Iron . >» Operating at record capacity due to resources boom in WA
Slide 23: Pipeline Assets - NSW
Pipeline Assets —- NSW @ Moomba to Sydney (MSP) » -GTD contracted revenue down by $5.8 million : ~ Third party revenue up 51% to approx $4 million — growth expected to continue ». Further investigation and repair:of SCC Hi a) =:--$23.5 million expensed in FY05 - 1 ))))) nN =--$11.3 million expensed
Slide 24: Pipeline Assets - NSW
Pipeline Assets —- NSW ™ Central West Pipeline (CWP) > 10. year contract with Central Ranges Pipeline owner to extend -gas supply.to regional NSW >» New meter station constructed at the inlet of the new Central Ranges. Pipeline — commissioned July >». Additional revenue of $1-2 million per annum 24
Slide 25: Pipeline Assets - QLD
Pipeline Assets — QLD ® Roma to Brisbane Pipeline (RBP) > Revenue +5.6% to $31.9 million : lI p ri n ci p a | | y d u e to new C S E n e rg y con tra ct wii | i — commenced in February ‘05 l > Proposed Access Arrangement lodged with ACCC. in January ‘06 -. Draft decision released, final decision in
Slide 26: Pipeline Assets - NT
Pipeline Assets — NT - replace & Bonaparte Gas Pipeline (BGP) » 278km pipeline route from Wadeye to Amadeus Pipeline it i » -Estimated cost $130 -.150 million >» Signed $400 million, 25 year, gas transportation agreement with Power & Water. Corporation » Commences January 2009 » Important step in.re
Slide 27: Electricity Assets - VIC/SA
Electricity Assets — VIC/SA @ Murraylink > Acquired for $153 million — two.converter:stations _— two.buried, high voltage Direct Current cables (c. 180km), »-Links Berri, SA with Red Cliffs, near Mildura, Vic > Low risk asset with fixed revenues to.2013 and beyond > Expertise in managing gas pipelin
Slide 28: Gas Facility Assets - QLD
Gas Facility Assets - QLD Bi -Kogan North. >} Construction completed of $13 million coal seam gas processing facility > First gas delivered into the RBP-in Jan 2006 > Volumes steadily increasing — 15 year life ~. capacity of 4 petajoules/annum @ . Daandine Gas-Fired Power Station »- Agreements signe
Slide 29: Presentation: Corporate Update and Strategic Focus
Presentation @ Corporate Update — » GasNet >> Alinta/AGL > Northern Gas @ Strategic Focus m Business Model m Outlook for 2007 Mick McCormack ~m Summary Managing Director 29
Slide 30: Joint bid with B&B Group lapsed
- Joint bid with B&B Group lapsed APA bid for GasNet at $3.10 per security ($452 million). Offer has limited conditions including 50.1% minimum acceptance ~ APA holds 19.9% Update on status of bid “Improves utilisation of the Interconnect and MSP. Enhances competition with Eastern Gas Pipeline. “Inc
Slide 31: AGL's 30% interest to transfer to Alinta
@ AGL’s 30% interest to transfer:to Alinta as part of AGL/Alinta: merger: = merger requires shareholder approval @ Alinta bought 10.5% of APA units recently @ Alinta undertaking to ACCC: — to.divest its entire holding in APA and APLina specified period after Scheme approval om -ensures independence
Slide 32: Gas supply to eastern Australia
@ Gas supply to eastern Australia remains a.critical issue in the next ; decade m@ PNG Project. . > FEED activities relating to the PNG Pipeline Project being scaled back > APA remains committed to taking a-significant and increased ownership in the pipeline when the project resumes & CSG .is.a sign
Slide 33: Strategic Focus
Strategic Focus Short Term Medium Term Long Term 2006 2007 . . 2008 2009 2010 2011. 2012
Slide 34: Business Model
Business Model Benefits of Low Cost Structure Returned in Full to Unitholders Wil ie O&M expenditure established ona. - The only fees paid relate to the operational and commercial, robust basis direct management of the assets “APA delivers because it has a lean, low-cost business model which maximis
Slide 35: Outlook for 2007
Outlook for 2007 a Takeover and integration of GasNet business ] Review capital management plan @ Further opportunity to expand the business across. Australia @ QLD/NSW Interconnect - : @ Taking a leading role in industry consolidation a Impact of return tariff and GTD on NPAT a Guidance on earnings
Slide 36: 2006 has been an exceptional year
m@ 2006 has been an exceptional year @ Abundance of opportunities existing and ahead m@ Right business model to deliver growing returns to unitholders | | a Delivering on our promise to increase distributions annually by at least CPI 36
Slide 37: We Deliver Energy
_ We Deliver Energy
Slide 38: GasNet Presentation: Important notice and disclaimer
GasNet Presentation Important notice and disclaimer +... The purpose of this Presentation is to provide general information about the proposed acquisition of GasNet Australia Group (GasNet). itis not a recommendation that any person makes any investment decision in relation to Australian’ Pipeline T
Slide 39: Cash offer of $3.10 per GasNet stapled security
~Cash offer of $3.10 per GasNet stapled security -.- The offer values GasNet at $452m. — Conditions less onerous than the Colonial offer = “Accelerated payment terms APA is the sole bidder — — Joint bidding agreement with BBI.terminated ~-— -APA can identify greater value given its complementary por
Slide 40: Outstanding offer to GasNet securityholders
Outstanding offer to GasNet securityholders * Superior to.the Colonial offer, GasNet’s Independent Expert valuation range and GasNet'’s historic trading levels. *-Higher price, less onerous conditions: expect Board recommendation sox 36.5% Offer price premia 30.2% 30% 20% : 14.0% ; 8, 10% . 5.8% 7.6
Slide 41: Strategic rationale
Strategic rationale + Highly complementary business to APA’s existing asset portfolio * Meets APA's investment criteria and enhances ability to grow securityholder distributions * Reinforces APA’s position as a leading owner and operator of energy transmission assets in Australia « Greater gas flows
Slide 42: Significant synergistic benefits
Significant synergistic benefits +. Better.use of the NSW/VIC Interconnect -— Increased gas throughput _ —. Other-opportunities include | : gas storage services «Increased competition of APA’s Moomba to Sydney Pipeline with the Eastern Gas Pipeline «Expansion opportunities i ine VIC and WA -*- Reduc
Slide 43: Details of the offer
Details of the offer » Key terms.and.conditions — 50.1% minimum acceptance — Accelerated payment terms (5 business days) after the offer becomes unconditional — Broker handling fee —. The offer price will be reduced by GasNet’ $s distributions — Other conditions as set out in the ASX Announcement on
Australian Pipeline Trust — FY2006 Earnings Presentation on 6ix