Transalta Corporation · TSX:TA
Transalta — Investor Presentation (February 2006)
16 slides from Transalta's investor presentation, February 2006
Slide 1: Eastern U.S. Investor Update
Eastern U.S. Investor Update February 2006
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
Slide 3: Business model
Business model • Build diversified portfolio of 1st grade generation assets • Produce strong & sustainable cash flows • Discipline on costs • Discipline on capital allocation • Grow cash flow and earnings • Simplest terms – cash machine
Slide 4: Portfolio management approach
Portfolio management approach • Make better buy/sell/build/close decisions • Geographic & fuel diversity • Contract strategy • Reduce risks and volatility
Slide 5: Build expertise in marketing and development
Build expertise in marketing and development • Maximize potential of existing assets • Identify growth • Allows for easy “tuck-in” acquisitions
Slide 6: Strong financial discipline
Strong financial discipline • Long-term • 10%+ ROE • 10%+ TSR
Slide 7: Financial & operating highlights
Financial & operating highlights (millions $Cdn) 2005 2004 2003 Comparable earnings 174 128 129 per share 0.88 0.66 0.69 Cash flow from operations 619 591 474 Free cash flow 240 313 296 Debt to invested capital (%) 43.6 46.4 46.2 Availability (%) 89.4 89.2 90.5 Production (GWhs) 51,810 51,396 51,519
Slide 8: 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 BBB + B B B h ig h 4 x B aa1 3 x BBB - B aa3 2 x B B B lo w 1 x 0 x 2003 2004 2005 2006 2007 2008 2009 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 BBB + 3 0 .0 % B B B h ig h B aa1 2 5 .0 %
Slide 9: What lies ahead?
What lies ahead?
Slide 10: Contracting remains high … for stability
Contracting remains high … for stability TransAlta contracting levels 1) Current contracting levels: 9000 8000 ~ 88 % in 2006 - 2007 Capability in MWs 7000 6000 ~ 75 % in 2008 - 2010 5000 2) Recontracting plans have 4000 3000 specific regional and asset 2000 targets to achieve balance 1000 0 between
Slide 11: Sarnia contract
Sarnia contract • Average 400 MW Portfolio capacity capacity contract • 5 year term to Dec.31, 2010 Sarnia 7% • Backed by Ontario government (AA credit rating) • $0.10 to $0.12 EPS impact
Slide 12: Centralia Coal contracting upside
Centralia Coal contracting upside Portfolio capacity Centralia Coal (16%) Potential to add 5 -10 cents EPS in 2006. Additional upside 2007 - 2010 • Heritage contracts roll off at an excellent time; expect recontracting to capture higher prices as plant re-contracted. led by high oil and gas prices •
Slide 13: Centralia Coal
Centralia Coal • Centralia permit delays have caused longer haul distances and increased strip ratios • Diesel fuel prices budgeted to be higher in 2006 • Rain in December/January impacted mine operations • Train shortage compounded relief efforts
Slide 14: Our focus looking forward
Our focus looking forward 2006 – 2007 2008 – 2010 Increase earnings ¾ Increase earnings Increase productivity/ ¾ Improve ROE strengthen margins and ¾ Achieve improved credit decrease OM&A per rating MWh ¾ Grow assets selectively Meet contracting ¾ Achieve environmental targets compliance at le
Slide 15: Appendix
Appendix TransAlta
Slide 16: Debt maturity schedule
Debt maturity TransAlta Debt Maturity Schedule 400 350 300 Repayment (C$ Millions) 250 250 50 200 346 346 100 150 225 100 200 205 175 141 115 110 50 100 0 05 06 07 08 09 10 11 12 13 14 28 29 30 31 32 33 50 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20