Slide 1: Financial Results Half Year ended 31 December 2007
For personal use only Financial Results Half Year ended 31 December 2007 26 February 2008
Slide 2: Agenda
Agenda For personal use only Highlights Financial performance Operating performance Outlook Mick McCormack MANAGING DIRECTOR Rick Francis CHIEF FINANCIAL OFFICER HY08 Results Presentation Æ 2
Slide 3: Growth and integration
Growth and integration For personal use only Transition from infrastructure owner to an operating business … New businesses model and growth driving robust financial performance HY08 Results Presentation Æ 3
Slide 4: Robust business performance
Robust business performance For personal use only Strong growth in revenue, EBITDA and cash flow … HY08 HY07 % change Underlying Revenue 1 $443.0 m $243.3 m K 82% Underlying EBITDA 1 $214.7 m $134.9 m K 59% Underlying NPAT 1 $44.7 m $32.6 m K 37% Reported NPAT $35.9 m $32.3 m K 11% Underlying OCF 2
Slide 5: Cash flow supports distribution growth
Cash flow supports distribution growth For personal use only Increasing target annual distribution by 5% pa over the medium term … cps 14.9 28.0 24.0 Full year 22.5 Interim 14.5 Target FY05 FY06 FY07 FY08 FY09 Distributions are funded by sustainable and growing operating cash flow HY08 Results Prese
Slide 6: Cash flow supports distribution growth
Cash flow supports distribution growth For personal use only APA Group pays all its distributions out of operating cash flow, with cash remaining to fund further business growth and debt reduction HY08 Results Presentation Æ 6
Slide 7: Integration supporting growth and efficiency
Integration supporting growth and efficiency For personal use only Integration and consolidation of recent acquisitions is on target, with growth and efficiency benefits supporting increased distributions and reduced gearing … Over 1,000 experienced and Alignment of common O&M highly skilled personn
Slide 8: Key drivers of financial growth and stability
Key drivers of financial growth and stability For personal use only Long term cash flow certainty Improved business performance and - regulated and contracted revenue contributions from acquisitions contribute about 90% of revenue Significant organic growth with increased Interest rate hedges demand
Slide 9: Operating highlights
Operating highlights For personal use only ■ Acquisitions performing to target or better ■ Internalised operating and maintenance services related to all APA Group assets – Alinta O&M agreements – no fee leakage – Highly experienced and skilled workforce enhancing growth ■ Greenfield and brownfield
Slide 10: Financial performance
Financial performance For personal use only Income Statement Earnings Analysis Operating Cash Flow Capital Management Distributions HY08 Results Presentation Æ 10
Slide 11: Increasing income
Increasing income For personal use only Strong underlying cash flow supports distribution growth $ million HY08 2 HY07 3 % Change Revenue 1 443.0 243.3 K 82.1 EBITDA 1 214.7 134.9 K 59.1 EBIT 1 168.3 105.8 K 59.0 Net Interest Expense 1 (110.4) (57.1) K 93.3 Tax 1 (13.2) (15.9) L 17.1 NPAT – underlyi
Slide 12: Underlying result
Underlying result For personal use only Adjusting for AIFRS impacts $ millions Reported Envestra Comp. Significant Underlying distribution1 assets2 items3 Revenue 436.0 7.0 - - 443.0 EBITDA 198.6 7.0 4.7 4.4 214.7 NPAT 35.9 5.7 - 3.1 44.7 Operating Cash Flow 104.9 - - 4.4 109.3 1 Envestra distributi
Slide 13: EBITDA increasing
EBITDA increasing For personal use only EBITDA growth across most states and asset classes HY08 Results Presentation Æ 13
Slide 14: EBITDA
EBITDA For personal use only Continued diversification of earnings 3% 3% 5% NT 3% NT 1% 3% Qld 22% Gas transmission & distribution Qld WA Electricity 25% WA 27% transmission 37% NSW Complementary 16% assets NSW 22% SA Vic Asset management Vic 5% 18% & operations 10% HY 07 HY 08 ($134.9 million) ($21
Slide 15: Operating cash flow
Operating cash flow For personal use only Growing distributions fully funded from operating cash flow $ millions HY08 HY07 Change Underlying Operating Cashflow (OCF) 109.3 73.8 48.2% Distributions paid (net of DRP) 19.4 28.5 Available OCF 89.9 45.3 Underlying OCF per security (cents) 25.0c 22.5c 11.
Slide 16: Prudent capital management
Prudent capital management For personal use only Strong balance sheet Secure long term debt portfolio Gearing 71.6% (covenant 75%) Refinancing of $2 billion syndicate completed July 2007 ICR – 1.8x for calendar 2007 No refinancing required until Complied with all covenants during period – August 200
Slide 17: Conservative interest rate management
Conservative interest rate management For personal use only APA manages its exposure to interest rate movements through a number of methods Interest rate hedges (policy 65-90%) – existing 70% Regular regulatory resets where WACCs take account of cost of funding movements – APA Group portfolio ha
Slide 18: Continued distribution growth
Continued distribution growth For personal use only FY08 target annual distribution, up 5% cps 3.5 Payout ratios1 14.9 FY08 2 70% FY07 72% 24.5 2.7 22.5 24.0 FY06 65% 11.8 FY05 60% 1 Based on underlying OCF 2 APA Group expects full year FY05 FY06 FY07 FY08 payout ratio to be in the order of 70% Inco
Slide 19: Operating performance
Operating performance For personal use only Integration update Operations update HY08 Results Presentation Æ 19
Slide 20: Integration progressing
Integration progressing For personal use only Integration and consolidation of new businesses is in line or better than targets, according to detailed plans developed as part of acquisition due diligence … Former OEAM and Alinta employees integrated into APA Group Employee HR function established –
Slide 21: Operations performance and developments
Operations performance and developments For personal use only Gas transmission and distribution Increased performance from transmission pipelines Mondarra Gas Storage (WA) revenue up Direct costs reduced with termination of Alinta O&M agreements Organic growth across assets – Allgas (Qld) –
Slide 22: Operations performance and developments
Operations performance and developments For personal use only Complementary assets Xstrata Power Station (Qld) completed on time and on budget Kogan North and Tipton West Gas Processing plants (Qld) gas throughput increasing in line with field production Asset management and operation Gas infr
Slide 23: For personal use only
For personal use only HY08 Results Presentation Æ 23
Slide 24: Priorities and guidance for FY08
Priorities and guidance for FY08 For personal use only EBITDA guidance – FY08 - underlying EBITDA forecast increased to $400-$410 million (previously $380-$390 million) Distribution guidance – FY08 - increase distributions by 5.0% – Targeting growth of at least 5% in the medium term Continued
Slide 25: Summary
Summary For personal use only Robust business performance ─ Stable, secure and increasing revenue and cash flow ─ New businesses performing on target ─ Conservative and prudent capital management Continued distribution growth – Distributions continue to be fully funded by operating cash flow – G
Slide 26: We deliver energy
For personal use only We deliver energy www.pipelinetrust.com.au HY08 Results Presentation Æ 26
Slide 27: 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 28: Key financial ratios
Financials For personal use only Key financial ratios HY08 HY07 Comments Underlying operating cash flow (cps) 25.0 22.5 Weighted average securities on issue (m) 437.4 328.5 Payout ratio (%) 60.8 72.3 June 2007 comparison EPS (cps) - underlying 10.2 9.9 - including significant items 8.2 9.8 Interest
Slide 29: APA Group assets
APA Group assets For personal use only HY08 Results Presentation Æ 29
Slide 30: Revenue analysis by asset group
Financials For personal use only Revenue analysis by asset group $ millions HY07 revenue (excl. passthrough) HY08 revenue (excl. passthrough) HY07 passthrough 89.5 HY08 passthrough HY08 Total revenue $436.4m 74.0 47.6 48.0 67.4 HY07 Total revenue $234.7m 55.2 62.4 46.0 41.4 43.5 22.4 15.8 12.6 0.1 9
Slide 31: Significant items
Financials For personal use only Significant items $ millions Pre-tax Tax After tax HY08 Acquisition integration costs (3.1) 0.9 (2.2) Unsuccessful acquisition due diligence costs (1.3) 0.4 (0.9) Revaluation gain – GasNet hedges - - - Total (4.4) 1.3 (3.1) HY07 Advisory and legal costs (3.9) 1.1 (2.
Slide 32: Operating cash flow
Financials For personal use only Operating cash flow $ millions HY08 HY07 Underlying EBITDA (pre-significant items) 214.7 134.9 Non-cash movements and provisions (5.0) (1.1) Dividends received 5.1 - Net working capital movements (4.6) (4.4) SCC payments (2.3) (4.2) Net interest paid (98.7) (47.1) Ta
Slide 33: Growth capital expenditure
Financials For personal use only Growth capital expenditure $ millions HY08 HY07 Regulated: Victoria 4.3 5.2 Queensland 7.7 2.2 12.0 7.4 Major Projects: Tipton West gas processing facility - QLD 1.6 - Daandine power station – QLD 0.4 13.3 Mt Isa power station – QLD 20.0 6.0 Brooklyn Lara Looping – V
Slide 34: Composition of distribution
Financials For personal use only Composition of distribution HY08 Results Presentation Æ 34
Slide 35: Total committed debt facilities
Financials For personal use only Total committed debt facilities Facility Facility amount Tenor Medium term notes $150 million August 2008 Medium term notes $300 million March 2009 Project debt $80 million December 2011 2003 US private placement $496 million 7, 10, 12 and 15 year tranches - Septembe
Slide 36: Gas transmission growth
Gas transmission growth For personal use only Bonaparte Gas Pipeline - Long term arrangement with NT Government’s Power and Water Corporation for ~ 30 PJ/a - 140 km, 20" 10 MPa pipeline - Construction contract awarded to AJ Lucas - Construction scheduled for May – September 2008 - First gas 1 Januar
Slide 37: Regulatory update
Regulatory update For personal use only ■ Victorian Transmission System – Draft decision released December 2007 – Final decision expected March 2008 ■ High Court decision – Moomba to Sydney Pipeline – Confirms that there are limits on Regulators’ power - exercise of discretion must be reasonable – M