Slide 1: Investor Update April 2005
TransAlta Investor Update longcycle RES? blackouts CE Gen Siti acquisition_in the U.S. reduced unplanned ie rd outages grov portfolio-grows _): COMpany aes two power plants in® Mexico nde est ioe = AVING increased av employee safety April 2005
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: Financial highlights for the year
Financial highlights for the year Annual Annual TransAlta (Millions $Cdn) Q1 '05 Q1 '04 2004 2003 Net earnings $52 $47 $170 $234 per share $0.27 $0.25 $0.88 $1.26 Comparable earnings $52 $49 $135 $130 per share $0.27 $0.26 $0.70 $0.70 Cash flow* $172 $160 $588 $538 Debt to capital 45.6% 45.6% 46.3%
Slide 4: Free cash flow is positive
Free cash flow is positive Millions $Cdn Q1 - 2005 Q1 - 2004 2004 2003 Cash flow from operating activities $ 160 $ 185 $ 613 $ 527 Less: maintenance and other capex 38 63 224 101 Less: scheduled debt repayment 9 16 51 138 Less: distribution to NCI 18 5 48 39 Comparable free cash flow $ 95 $ 101 $ 29
Slide 5: Financial ratios continue to improve
Financial ratios continue to improve Cash Flow to Interest 7x Forecast • Improve to BBB+ ratios 6x 5x BBB + BBB high • Sustain dividend 4x Baa1 BBB - • Modest growth Capex 3x Baa3 2x BBB low 1x 0x 2003 2004 2005 2006 2007 2008 2009 Debt to Capital Non-Recourse Debt Cash Flow to Total Average Debt Re
Slide 6: Results are seasonal
Results are seasonal TransAlta (Millions $Cdn) Q1 Q2 Q3 Q4 Revenue $701 $656 $743 $713 Comparable earnings $48 $16 $34 $37 Cash flow* $161 $107 $167 $152 Planned maintenance expenditures $14 $68 $63 $29 *From operations before changes in working capital 6l
Slide 7: TransAlta's financial strategy – manage cyclicality
TransAlta’s financial strategy – manage cyclicality Balance acquisitions with new build. Maintain high contract cover. Minimize foreign exchange exposure. GROW STRENGTHEN INTEGRATE FINANCIAL CAPACITY Non-growth capex and dividend from Pay down debt and/or operating cash flow. buy back shares 7l
Slide 8: Operational highlights for the quarter
Operational highlights for the quarter TransAlta Q1 ‘05 Q1 ‘04 Availability 93.4% 90.5% Production (GWh) 13,399 13,667 Planned maintenance (millions $Cdn) - capex $6 $9 - opex $5 $5 $11 $14 Lost production (GWh) 112 15 % of capacity contracted 87.0% 88.5% 8l
Slide 9: Maintenance spending will peak in 2005 and will trend lower
Maintenance spending will peak in 2005 and will trend lower, with more predictability, and increased efficiencies 2000 - 02 2003 - 04 2005 - 06 2007+ Total spend $mm 110 - 140 115 - 175 205 - 235 150 - 175 Capex/Opex % 60/40 70/30 70/30 70/30 Lost Avg. Gwh 2000 2300 - 2600 2900 - 3000 2300 - 2700 Pr
Slide 10: Drivers of near-term earnings growth
Drivers of near-term earnings growth Actions Benefits Contract for Sarnia Higher operating income Recontract Centralia Genesee 3 and Wind Higher operating income Pay down debt Less interest Buy back shares Higher EPS Goal: increase returns on invested capital 10l