APA Group · ASX:APA
APA — Australian Pipeline Trust — UBS Utilities Conference 2005
11 slides from APA's conference presentation, Nov 15, 2005
Slide 1: Regulatory Risk and the Cost of Capital: A Pipeliner's Perspective
Regulatory Risk and the Cost of Capital A Pipeliner’s Perspective Mick McCormack Chief Executive Officer Australian Pipeline Trust UBS Utilities Conference Tuesday 15 November 2005
Slide 2: Agenda
Agenda • APA Financial Performance & Outlook • Pipeline Industry Changes • Impact of Regulation • Conclusion Half Year Financial Results 6 Months Ended June 2005 2
Slide 3: APA: FY2005 Profit - Continued Growth Trend
APA: FY2005 Profit Continued Growth Trend $m 140 CAGR = 13.5% pa 120 100 80 Includes non-recurring items Net profit from recurring 60 operations Half Year Financial 40 20 Results 0 6 Months Ended June 2001 2002 2003 2004 2005 2005 3
Slide 4: APA: FY 2005 Achievements
APA: FY 2005 Achievements • Acquisition of CMS holding in Goldfields Gas Transmission and Parmelia Gas Business • Acquisition of Carpentaria Gas Pipeline minority interest • Acquisition of 5.3% stapled units in GasNet • Increased utilisation of core assets • Managed stress corrosion cracking on the
Slide 5: APA: Outlook
APA: Outlook • Increasing third party revenue on Moomba Sydney Pipeline • Participation in PNG • SCC management plan for Moomba Sydney Pipeline • Queensland and Western Australian business opportunities will continue Half Year • Expect Financial to maintain current year operating NPAT • Maintain cas
Slide 6: Pipeline Industry Changes: Then
Pipeline Industry Changes: Then……. Australian Gas Pipelines in Early/Mid 1990’s Half Year Financial Results 6 Months Ended June 2005 6
Slide 7: Pipeline Industry Changes: Now
Pipeline Industry Changes: Now… Australian Gas Pipelines Now - 2005 Half Year Financial Results 6 Months Ended June 2005 7
Slide 8: Impact of Regulation - Response by Pipeliners
Impact of Regulation -- Response by Pipeliners • Regulation has undone underlying risk allocation • Increasing risk for pipeliners if they invest, with much less comfort in their return Half Year Financial Results 6 Months Ended June 2005 8
Slide 9: Impact of Regulation - Response by Pipeliners
Impact of Regulation -- Response by Pipeliners • Conservative response to risk of retrospective review • Result has been to limit capacity in pipeline developments - Conservative spend to exactly match contractual requirements - Less efficient development - consumer loses Half Year Financial Results
Slide 10: Conclusion
Conclusion • Impact on cost of capital is unknown • Impact on society is inefficient outcomes • The key? – get the regulation right - The outcome will be beneficial for all stakeholders - Provide long term support of infrastructure Half- Regulate Year Financial to accept levels of return from commer
Slide 11: We Deliver
We Deliver www.pipelinetrust.com.au
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