Slide 1: Financial Results Full Year ended 30 June 2007
For personal use only Financial Results Full Year ended 30 June 2007 29 August 2007
Slide 2: Welcome
Welcome For personal use only FY07 Highlights Mick McCormack Acquisition Strategy Managing Director Analysis of Financials Rick Francis Chief Financial Officer Operational Update Stephen Ohl Chief Operating Officer Concluding Remarks Mick McCormack APA Group Presentation Æ 2
Slide 3: 2007 – Capitalising on Opportunities
2007 – Capitalising on Opportunities For personal use only A watershed year for APA in terms of growth and diversification of its asset base – Assets increased from $2.06bn to $4.2bn – Majority of revenue now evenly sourced from VIC, QLD, WA and NSW Employee numbers increased from 45 to 700 In
Slide 4: FY07 Income Statement
FY07 Income Statement For personal use only Full Benefit from Acquisitions to be Realised in FY08 $ million FY07 FY06 % Change Revenue* 532.7 379.0 40.5 EBITDA* 296.8 200.4 48.1 NPAT* # 64.5 60.7 6.4 Cash Metrics Underlying Operating Cash Flow1 157.0 112.2 39.9 Underlying Operating Cash Flow per 41.
Slide 5: Total Assets
Total Assets For personal use only Scaling up the Business to Improve Competitiveness and Drive Cost Efficiency $bn 5 4.23 4 4 3 3 2.06 2 1.88 1.42 1.43 2 1 1 0 June 03 June 04 June 05 June 06 June 07 APA Group Presentation Æ 5
Slide 6: FY Cash Flow & Distribution Growth
FY Cash Flow & Distribution Growth For personal use only Growing Operating Cash Flow to Increase Distributions by at least CPI annually $m % 180 100 90 150 136.7 80 70 120 112.2 106.2 60 90.6 90 82.3 50 40 60 100.2 30 63.8 66.9 20 30 52.5 53.0 10 0 0 FY03 FY04 FY05 FY06 FY07 Distributions Operating
Slide 7: Acquisition Strategy
Acquisition Strategy For personal use only Recap on APA’s strategy since 2002 Strategic Objectives Asset Valuation Track Record on Bidding APA Group Presentation Æ 7
Slide 8: Core Growth Strategy Unchanged
Core Growth Strategy Unchanged For personal use only “ We remain committed to gas transmission, growing the business organically as well as targeting prudent acquisitions and “greenfields” projects, particularly those bringing gas to south east Australia eg Timor Sea/ PNG/ Northwest Shelf. “In order
Slide 9: Key Drivers of Acquisition Strategy
Key Drivers of Acquisition Strategy For personal use only Diversification Strategy : broaden APA’s asset base beyond gas transmission and spread core asset risk geographically – Leverage existing skills in complementary areas – Diversify returns – Provides ongoing growth path Eastern Gas Grid St
Slide 10: Disciplined Approach to Pricing
Disciplined Approach to Pricing For personal use only Acquisitions have met or exceeded internal financial hurdles including – Targeted internal rate of return – Long term discounted cash flow – Short/medium term targeted cash yield RAB and EBITDA multiples paid by APA within range of recent transac
Slide 11: Valuation Metrics – Use with Caution
Valuation Metrics – Use with Caution For personal use only ■ RAB and EBITDA multiples limited by lack of recognition or measurement of: Allgas Murraylink – relative risk profile of different assets RAB Multiple 1.49x 1.47x – remaining life of an asset Asset Life Long Long – integration benefits to a
Slide 12: Track Record in Acquisition Bidding
Track Record in Acquisition Bidding For personal use only Year Successful Comment 2004 Epic Energy Assets x Outbid by a current owner DBNGP x Outbid Duke Energy Assets x Suite of assets sold for record price CMS 9 Strongly accretive immediately 2006 Murraylink 9 Low cost entry to complemen
Slide 13: Strengthened Business Model
Strengthened Business Model For personal use only “APA delivers because it has a lean, low-cost business model which maximises returns for securityholders” APA Group Presentation Æ 13
Slide 14: Financial Review
Financial Review For personal use only Income Statement Operating Cash Flow Capital Expenditure Earnings Analysis Capital Management Distributions APA Group Presentation Æ 14
Slide 15: FY07 Income Statement: Partial Contributions from Acquisitions
FY07 Income Statement For personal use only Current Year Impacted by Partial Contributions from Assets Acquired GasNet: nine months from October 2006 Allgas: eight months from November 2006 Directlink: four months from end-February 2007 Murraylink: full twelve months (acquired end-March 2006
Slide 16: FY07 Income Statement
FY07 Income Statement For personal use only Strong Underlying Cash Flow Supports Growing Distributions – FY08 to Reap the Benefits $ million FY07 FY06 % Change Revenue* 532.7 379.0 40.5 EBITDA* 296.8 200.4 48.1 EBIT* 227.1 161.6 40.6 Net Interest Expense* (136.6) (71.1) 92.1 Tax* (25.8) (29.4) (12.4
Slide 17: FY07 Operating Cash Flow
FY07 Operating Cash Flow For personal use only Cash Flows Affected by Transitional Impacts, but Strong Fundamentals FY07 FY06 % $m $m EBITDA (pre-significant items) 296.8 200.4 48.1 Non-cash movements (7.2) 4.0 Net working capital movements (5.8) (5.9) SCC payments (13.3) (14.9) Net interest paid (1
Slide 18: FY07 Capital Expenditure – Acquisitions
FY07 Capital Expenditure For personal use only Acquisitions - Expanding the National Footprint FY07 FY06 $m $m GasNet (net of cash acquired) 409.5 22.5 Murraylink - 158.1 Allgas 538.4 - Directlink (net of cash acquired) 173.1 - SEAGas (equity investment) 135.6 - Settlement of acquisition liabilities
Slide 19: FY07 Capital Expenditure – Growing the Business
FY07 Capital Expenditure For personal use only Growing the Business FY07 FY06 $m $m Regulated: - Victoria 24.9 - - Queensland 10.9 - 35.8 - Major Projects: Tipton West gas processing facility - QLD 30.5 - Daandine power station – QLD 23.3 5.9 Mt Isa power station – QLD (under construction) 13.2 - Ko
Slide 20: FY07 Analysis of Total Revenue
FY07 Analysis of Total Revenue For personal use only Acquisitions Drive Growth in Revenue $m 265.4 271.2 369.3 379.0 532.7 550 27.5 500 89.2 450 17.2 Allgas 400 2.1 3.2 GasNet 350 Electricity Transmission 300 SCP Equity Contribution 250 13.5 22.9 283.7 265.1 278.8 Gas Transportation 200 Other Tollin
Slide 21: Year on Year Movement in EBITDA
Year on Year Movement in EBITDA For personal use only $m 300 1.1 290 280 270 62.3 260 250 240 230 3.4 12.9 296.8 220 6.3 1.9 2.5 210 7.4 (3.5) 5.1 200 (7.6) 4.6 190 180 200.4 170 160 150 2 006 M SP A GT RBP C GP GG T P GP C o mp M urraylink D irec tlink A llgas Ga sN e t C OR P 2 007 E B IT D A A ss
Slide 22: FY07 Proforma Results
FY07 Proforma Results For personal use only Full Year Revenue and EBITDA $m $m 532.7 589.5 296.8 338.8 600 350 44.3 24.0 550 27.5 300 500 121.3 12.9 89.2 86.8 450 250 62.3 4.1 12.0 400 3.4 9.8 350 200 300 250 150 200 411.9 411.9 218.2 218.2 100 150 100 50 50 0 0 FY07 REVENUE PROFORMA REVENUE FY07 EB
Slide 23: Revenue & Asset Charts
Revenue & Asset Charts For personal use only Diversification Underpins Stability of Income and Strengthens Asset Base REVENUE 2001 FY REVENUE 2007 FY 2% 16% 24% 27% NSW NSW 3% NT NT QLD QLD 2% WA WA 69% VIC 29% VIC 28% ASSET VALUE 2001 FY ASSET VALUE 2007 FY 3% 21% 25% 29% NSW NSW NT NT QLD QLD 1% W
Slide 24: FY07 Significant Items
FY07 Significant Items For personal use only FY2007 Pre-Tax Tax After Tax $m $m $m Alinta related costs (7.0) 2.1 (4.9) SCC repair and investigative work (5.3) 1.6 (3.7) Revaluation gain – GasNet hedges 1.2 (0.4) 0.8 Total (11.1) 3.3 (7.8) FY2006 SCC repair and investigative work (11.3) 3.4 (7.9) Ta
Slide 25: FY07 Capital Management
FY07 Capital Management For personal use only Strong Balance Sheet Gearing 69.0% (covenant 75.0%) – Post-OEN 72.4% ICR – 2.0x for FY07 Complied with all covenants during period Committed, undrawn facilities $1,120m (30 June 2007) – Post-OEN $670m Debt Portfolio Refinancing of all bridges completed i
Slide 26: FY07 Capital Management: Investor Support
FY07 Capital Management For personal use only Substantial Investor Support during FY07 Successfully raised $610m of equity – Institutional placement @ $4.55 ($190m) – Security purchase plan @ $4.50 ($40m) – Renounceable rights issue @ $3.75 ($356m) – Continued operation of DRP ($24m) Implemented
Slide 27: Increasing Distributions by at least CPI
Increasing Distributions by at least CPI For personal use only FY07 Annual Distribution up 16.7% cents 0% 4.7% 6.7% 16.7% 32 Q4 28 3.5 2.0c 24 20 6.4 3.0c 16 24.5 12 24.0 2.0c 22.5 8 15.1 4 Distribution – Q4 0 APTIT – Capital FY04 FY05 FY06 FY07 APTIT – income, unfranked Tax deferred distribution In
Slide 28: Operational Update
Operational Update For personal use only Gas Transmission Gas Distribution Gas Facilities Gas Fired Generation Electricity Transmission APA Group Presentation Æ 28
Slide 29: APA Operations Structure
APA Operations Structure For personal use only STATE QLD NSW VIC SA WA NT BUSINESS AREA APA Gas Transmission 9 9 9 9 9 9 APA Gas Distribution 9 9 APA Gas Facilities 9 9 9 9 APA Gas Fired Generation 9 APA Electricity Transmission 9 APA Asset Management (Envestra Assets) 9 9 9 9 9 APA Group Presentati
Slide 30: Gas Transmission – Acquisitions
Gas Transmission For personal use only Acquisitions GasNet – Main pipeline asset is the 1,935 km Victorian Transmission System that connects with the Moomba to Sydney Pipeline at Culcairn. – Over 230PJ of gas transported in Victoria. – The 488 km Telfer-Nifty pipeline system in WA that transports
Slide 31: Gas Transmission – Operations
Gas Transmission For personal use only Operations Queensland – Revenue and throughput up on both Roma to Brisbane and Carpentaria Gas Pipelines – Volumes driven by Coal Seam Gas and Gas Fired Power Generation. New South Wales – Agreement reached with AGL on future contracts including capacity re
Slide 32: Gas Transmission – Developments
Gas Transmission For personal use only Developments National – Terminate PMA and add 300 transmission employees to APA Group. Queensland – Meter station and lateral constructed off Mt Isa lateral to service X41 Gas Fired Power Station. New South Wales – Culcairn compressor station under develo
Slide 33: Gas Distribution – Acquisitions
Gas Distribution For personal use only Acquisitions Allgas Gas Distribution Business − Over 2,300 km of distribution networks that services 65,000 gas users in the high growth areas south of the Brisbane River to Northern NSW, Toowoomba and Oakey. − Includes 65 employees who manage and operate the
Slide 34: Gas Distribution – Operations
Gas Distribution For personal use only Operations APA Queensland Gas Distribution − Complete Full Retail Contestability (FRC) system scoped, contracted, developed and commissioned in 7 months for 1 July 2007 FRC start date. − Tendered and awarded contracts to establish a panel of contractors to pr
Slide 35: Gas Distribution – Developments
Gas Distribution For personal use only Developments APA Queensland Gas Distribution – Expansion program underway to achieve Regulated Asset Base growth from $303 million to $447 million for the period 2006 to 2011. – Queensland Government announced its Climate Smart 2050 policy which will further
Slide 36: Gas Facilities – Acquisitions
Gas Facilities For personal use only Acquisitions GasNet – Included the 12,000 tonne Dandenong Liquefied Natural Gas (LNG) storage, vapourisation and truck loading facility that provides gas supply peak shaving capacity and LNG for trucking to endusers. Origin Energy – Ownership and operation of
Slide 37: Gas Facilities – Operations
Gas Facilities For personal use only Operations Queensland – Kogan North CSG processing plant throughput continuing to increase. – Tipton West CSG processing plant commenced full commercial operation in March 2007. Victoria – LNG demand increased both for peak shaving use and trucking. Western
Slide 38: Gas Fired Generation
Gas Fired Generation For personal use only Operations Queensland – Daandine power station first unit commissioned in December 2006 and fully operational by April 2007. Developments Queensland – Mt Isa X41 power station under construction and due to be fully operational 1 November 2007. – Continu
Slide 39: Electricity Transmission
Electricity Transmission For personal use only Acquisitions Directlink – High Voltage Direct Current Interconnect acquisition completed 28 February 2007. – One of two links between the NSW and Queensland electricity systems and provides low risk, fixed revenues to 2015. Operations Murraylink and
Slide 40: Concluding Remarks
Concluding Remarks For personal use only Alinta Future Gas Supply Priorities and Guidance for FY08 Board Changes Summary APA Group Presentation Æ 40
Slide 41: Alinta Issues Resolved
Alinta Issues Resolved For personal use only On 29 June Alinta and APA announced the conclusion of all operating and equity relationships and termination of legal proceedings – One-off expenses incurred of $7.0 million All rights and assets acquired from Alinta for $210m Completes internal man
Slide 42: Future Gas Supply and Carbon Trading
Future Gas Supply and Carbon Trading For personal use only Gas supply to eastern Australia remains an important issue for the next decade Northern Gas: – PNG, Timor Sea and North-West Shelf remain long-term options – CSG is a significant and developing supply option for eastern Australia in the
Slide 43: Priorities and Guidance for FY08
Priorities and Guidance for FY08 For personal use only Integration of new businesses into the Group Pursue new opportunities if they fit with our long term goals and satisfy strict return criteria Invest in complementary assets that will contribute to increasing volumes of gas through our pipelines
Slide 44: Board Changes
Board Changes For personal use only Mr George Ratilal appointed as an Independent Non-Executive Director effective 31 July 2007 – Petronas increased its holding in APA from 14.1% to 16.7% on 20 August 2007 – Second representative for Petronas, a long standing significant securityholder in APA Mr
Slide 45: Summary
Summary For personal use only A watershed year for APA in achieving significant growth and diversification of its asset base Industry consolidation has, and will continue to, generate attractive acquisition opportunities Maintained a disciplined approach to bidding for acquisitions with strict
Slide 46: For personal use only
For personal use only APA Group Presentation Æ 46
Slide 47: We Deliver Energy
For personal use only We Deliver Energy www.pipelinetrust.com.au APA Group Presentation Æ 47
Slide 48: Disclaimer
Disclaimer For personal use only The information contained in this presentation is given without any liability whatsoever to Australian Pipeline Trust or APT Investment Trust or any of its related entities (collectively “APA Group”) or their respective directors or officers, and is not intended to c
Slide 49: FY07 Analysis of Revenue by Asset
Appendix 1 FY07 Analysis of Revenue by Asset For personal use only Gas Transportation Passthrough Revenue Electricity Transmission Complementary Assets Other Revenue $m 110 0.1 100 0.2 90 5.2 80 0.1 70 82.8 95.5 60 50 99.8 0.1 92.3 40 82.4 0.2 82.8 75.4 0.1 30 0.4 20 42.8 0.6 37.2 37.4 31.9 2.9 0.2
Slide 50: FY07 Key Financial Ratios
Appendix 2 FY07 Key Financial Ratios For personal use only Sound Fundamentals FY07 FY06 % Change Underlying operating cash flow (cps) 41.4 38.7 6.8% Weighted average units on issue (m) 379.6m 289.6m 31.1% Payout ratio (vs underlying OCF) 72.3% 59.7% +12.6% EPS (cps) - recurring 17.0c 20.9c (18.8)% -