CEDA-DPI Infrastructure Series. Bob Browning 2 November 2005

Transcription

1 CEDA-DPI Infrastructure Series Bob Browning 2 November 2005

2 CEDA-DPI Infrastructure Series Agenda A Historical Perspective Impediments to Infrastructure Development Alinta s Business Model Plans for the Future

3 A Historical Perspective Western Australian State-owned energy utility SECWA 1995: Electricity and gas operations split into Western Power and AlintaGas October 2000: Alinta ASX listed Key Statistics in 2000 Market capitalisation of $370m Single State operator One fuel provider 450,000 customers Stock price of $2.2525

4 A Historical Perspective Our strategy CORE COMPETENCIES: Operational efficiency Relentless cost management Acquisition integration CONSISTENT PROFITABLE GROWTH: Minimise i i volatility of earnings Improve diversity of income streams Grow earnings and distributions to shareholders, year-over-year Pursue New Growth Opportunities BUILD SCALE: Focus on energy products and infrastructure Generation through Network in the value chain Retail only in WA % ownership with operational rights and fees

5 A Historical Perspective Alinta Ltd Public 20% 80% Energy Sales Alinta National Alinta Alinta Asset Power Power Network Infrastructure Ownership Services Services Services Holdings Gas sales Wesfarmers LPG Electricity sales Energy Distribution Energy Sales Asset Management Power Generation Gas Transmission Management contract over all power operations Management contract over all network and pipeline operations Market capitalisation of $2.7B Multi-State operator Dual fuel provider >1,000,000 connections 100% 74% 20% 34% 20% 100% 100% 100% AlintaGas Gas Distribution Multinet Gas Distribution United Energy Elec. Distribution Dampier to Bunbury Gas Transmission EGP, TGP, QGP Gas Transmission Bairnsdale, Newman, P Hedland, Glenbrook Power Generation Alcoa Cogen JV 100% 100% Stock price of ~$10.70

6 A Historical Perspective AIH further facilitates Alinta s strategy: A lower cost-of-capital growth vehicle Strategic Greater opportunities for organic growth Actively considering acquisition opportunities Alinta will retain strategic shareholding and support AIH Financial Enables Alinta to recycle capital Increases return on capital Operational Alinta is O&M provider of the Initial Assets Alinta to operate and manage future acquisitions Provider of experienced management and skilled operators

7 Impediments to Infrastructure Development Time to Construct: Versus political support Workforce availability Payback periods Achieving Adequate Returns: Regulation Cost of development WA EnergySafety funding decision a disappointment Approval Requirements: Dept. of Environment Road Reserve Authority Resources Safety Div. States backing away from a national approach

8 Alinta s Business Model Overcoming return on investment constraints Partial ownership of the assets derives standard regulated-style return allows sharing of costs with passive equity Financial structuring asset ownership optimum gearing lower risk, lower return expectations frees Alinta to pursue growth Long term asset management contracts derives additional management fee allows for synergies across the assets Striving for open, productive relationship with the Regulator sharing of efficiencies achieving an adequate return on investment building trust

9 Alinta s Business Model Overcoming approval constraints Partnering with industry sharing of responsibility in seeking approvals sharing of expertise and knowledge leveraging existing relationships Partnering with government seeking to understand needs creating win-win solutions (e.g. DBNGP solution) Advocate of approval streamlining one stop shop?

10 Alinta s Business Model Overcoming timing constraints Building scale as an organisation means multiple projects with multiple completion times Private funding means less reliance on taxpayer money less pressure on politicians to commit to development that will span beyond the next election

11 Plans for the Future Alinta s approach to growth Value Horizon Organic growth Horizon 1 Defend and extend current core Acquisitions and green-field development in business lines Horizon 2 Build momentum of emerging growth engines Step-change opportunities Horizon 3 Create options for future staircases Focus of BU Strategy Focus of Corporate Strategy Time Horizon Source: McKinsey&Company

12 Plans for the Future Dimensions of growth Products Bac ckward Inte gration Infrastructure Assets Geography Railways Telecommunications Assets Energy Intensive Industry Water Assets Power Generation Transmission Electricity Dist. Gas Dist. Telecommunications Content Insurance Home Security Financial Services Gas Water Heaters Electricity Gas Engineering Asset Mgmt. Call Centre Services Capacity Aggregation Services for Others Trading/ risk management IT/Financial/HR Services Australia Asset management New Zealand Regulatory expertise Industrial Financial capability English-speaking market M&A/Integration Southeast Asia Energy sales Commercial Europe market Market knowledge Bias for action Mass market Consumer Segments Capabilities Forwa ard Integra ation = Horizon 1 = Horizon 2 = Horizon 3 = Not under consideration

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