Presentation Results for the half year ended 30 June 2009

Transcription

1 Hastings Funds Management Limited ABN AFSL No Level 16, 90 Collins Street Melbourne VIC 3000 Australia T F Melbourne, London, New York, Sydney ASX Announcement (HDF) Total pages: August 2009 Presentation Results for the half year ended 30 June 2009 Attached is a presentation of results for the half year ended 30 June For further enquiries, please contact: Steve Boulton Chief Executive Hastings Funds Management Tel: Fax: investor_relations@hfm.com.au Website: Simon Ondaatje Head of Investor Relations Hastings Funds Management Tel: Fax: investor_relations@hfm.com.au Website: Claire Filson Company Secretary Hastings Funds Management Limited Unless otherwise stated, the information contained in this document is for informational purposes only. It does not constitute an offer of securities and should not be relied upon as financial advice. The information has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person or entity. Before making an investment decision you should consider, with or without the assistance of a financial adviser, whether any investments are appropriate in light of your particular investment needs, objectives and financial circumstances. Neither Hastings, nor any of its related parties including Westpac Banking Corporation ABN , guarantees the repayment of capital or performance of any of the entities referred to in this document and past performance is no guarantee of future performance. Hastings, as the Manager or Trustee of various funds, is entitled to receive management and performance fees.

2 Hastings Diversified Utilities Fund 2009 Half Year Results Presentation August 2009

3 Disclaimer This presentation has been prepared by Hastings Funds Management Limited ABN (Hastings), holder of Australian Financial Services licence number , as responsible entity for the (HDF) and TAPS Trust. Hastings is a subsidiary of Westpac Banking Corporation ABN (Westpac). The information contained in this presentation is for informational purposes only and does not constitute an offer to issue or arrange to issue financial products. The information contained in this presentation is not financial product advice. This presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you should read the publicly available information carefully and consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Past performance is no guarantee of future performance. Neither Hastings, Westpac or any other members of the Westpac Group gives any guarantee or assurance as to the performance of HDF or TAPS Trust or the repayment of capital. Investments in HDF or TAPS Trust are not investments, deposits or other liabilities of Hastings, Westpac or other members of the Westpac Group. Members of the Westpac Group may invest in or lend or provide other services to HDF and may be paid fees and expenses by Hastings in its capacity as responsible entity of HDF. All data in this presentation has been calculated using the most accurate sources available, however any rates or totals manually calculated may differ from those provided due to rounding. 2

4 Agenda Half Year results 2. Epic Energy asset update 3. South East Water asset update 4. Summary and outlook 5. Appendix 3

5 2009 Half Year Results Steve Boulton Chief Executive, Hastings Funds Management 4

6 Key highlights & opportunities Solid HDF operating performance for the half year to 30 June Strong growth from Epic Energy (Epic) due to QSN Link pipeline coming online in January Cash receipts from South East Water (SEW) lower due to recent unprecedented decline in UK inflation - Distributions paid in the half year (in relation to December 2008 and March 2009 quarters) were 157% covered by operating cash flows from assets - Distributions declared in the half year (in relation to March 2009 and June 2009 quarters) were c.260% covered by operating cash flows from assets, reflecting full impact of the reduction in distribution Recent capital raising has eliminated fund level bank debt and fully cash covered TAPS, providing a flexible capital structure and a platform for growth Epic South West Queensland Pipeline (SWQP) Stage 3 expansion project provides organic growth opportunities for the fund - Hastings and Epic well progressed in negotiations with potential providers of funding - Senior bank group credit approval process expected to be conducted in September ahead of financial close in October - Majority of subordinated funding likely to be debt like in nature and contributed at the Epic level SEW regulatory Draft Determination released to the market on 23 July Hastings working with SEW to respond to UK regulator Ofwat ahead of the Final Determination in November At tra cti ve pr oj ec t ex pa ns io n dy na mi cs

7 Background Epic Energy (100% owned) (HDF) is a listed, utility focused infrastructure fund which owns: - 100% of Epic, a leading Australian gas transmission business - An interest in SEW, a regulated water business in England HDF accounts for its 100% ownership interest in Epic on a consolidated basis. As a result, Epic s operating results are reflected throughout HDF s consolidated financial statements HDF accounts for its circa 39% economic interest in SEW on a fair value basis. As a result, SEW s operating results are reflected within the carrying value of the SEW investment on HDF s balance sheet, with unrealised fair value movements adjusted through HDF s income statement South East Water (~39% economic interest) South East Water 6

8 Cash flow overview Cash flow Summary (1) $ 000 Δ HY2009 HY2008 Epic operating cash flow 26.8% 42,385 33,429 Cash flows received from SEW: - Distributions & capital returns (15.7%) 11,245 13,342 - Cross currency swap gains / (losses) (92.7%) 236 3,251 Interest income less HDF expenses (86.0%) (415) (2,965) Total cash flows from assets and HDF 13.6% 53,451 47,057 Finance expenses 9.7% (15,615) (14,229) Epic maintenance capex (62.8%) (531) (1,428) Epic QSN, Stg 3 and Horizon capex (18.7%) (38,402) (47,252) Equity contribution to SEW n/a (29,782) - TAPS distributions paid (2) (17.9%) (4,085) (4,974) Net financing and investing cash flows (12.6%) 42,532 48,655 HDF distributions paid (17.8%) (21,190) (25,767) Net cash flows for the period n/a (13,622) 2,062 Cash at end of period (3) 5.6% 45,517 43,101 (1) Some items in the table above have been reclassified to illustrate HDF s cash flow statement on an asset and fund specific basis. Refer to the HDF Appendix 4D for the half year ended 30 June 2009 for the HDF statutory cash flow statement. (2) TAPS are Trust-issued Adjustable Preference Securities issued by TAPS Trust. (3) Cash balance at end of period includes the effect of foreign exchange rate movements on cash and cash equivalents. Key highlights Strong growth in Epic operating cash flow, up 26.8% due to the commencement of gas haulage on QSN Link pipeline - QSN Link, underpinned by long term contracts, represents a permanent step change in Epic operating cash flow Cash flows received from SEW comprise: - Distributions/capital returns 15.7% lower, largely due to the unprecedented decline in UK inflation from September 2008 to June 2009, resulting in a capital injection into SEW - Cross currency swap gains lower due to declines in interest rates (however reduction offset by lower HDF loan facility interest and TAPS distributions) HDF expenses for HY08 included one-off SEW/MKW merger costs Finance expenses for HY09 included additional interest costs associated with 100% debt funding of QSN Link Growth capex included $30.3m for QSN Link pipeline which was completed on time and on budget Net financing and investing cash flows primarily relate to debt drawn to fund the equity contribution to SEW ($20.4m drawn) and Epic growth capex ($22.7m drawn) - Epic growth capex funding in HY09 was lower than amount spent due to debt draw downs outside of the period 7

9 Robust distribution coverage 157%* A$m Epic operating cash flow Cash f low s received from SEW Interest income less HDF expenses Finance expenses Epic maintenance capex TAPS distributions paid Cash available for distributions Distributions paid * Distributions paid in the half year comprise distributions for Dec 2008 and Mar 2009 quarters, which were 157% covered by operating cash flows from assets. (Distributions declared in the half year, in relation to Mar 2009 and Jun 2009 quarters, were c.260% covered, reflecting full impact of the reduction in distributions.) Cash available for distributions excludes $38.4m growth capex, $29.8m equity contribution to SEW and $42.5m net financing and investing cash inflows which primarily relate to debt drawn to fund the growth capex and equity contribution to SEW. Management fees to Hastings (excluding TAPS management fees) were paid in the form of HDF securities. As a result the payment of management fees has no direct cash flow impact on HDF and is therefore not reflected in either the cash flow statement or this chart. TAPS management fees to Hastings were paid in cash by the TAPS Trust and are included in the cash flow statement and this chart (within Interest income less HDF expenses ). 8

10 Summary income statement (1) $ 000 Δ HY2009 HY2008 Income before specified items: Epic operating income 23.7% 58,675 47,439 SEW investment income (31.0%) 6,097 8,835 Net impact of derivative transactions on SEW interest income (92.7%) 236 3,251 Other income n/a (268) 1,319 Total income before specified items 6.4% 64,739 60,844 Operating expenses (excluding finance costs): Epic operating expenses 18.4% (14,133) (11,932) Investment expenses & acquisition costs and HDF & TAPS operating expenses (40.3%) (1,301) (2,180) Responsible Entity fees (52.1%) (1,423) (2,968) Total operating expenses (excluding finance costs) (1.3%) (16,857) (17,080) EBITDA before specified items 9.4% 47,882 43,764 Depreciation and amortisation 22.8% (10,029) (8,167) EBIT before specified items 6.3% 37,853 35,597 Finance costs including TAPS distribution 12.4% (19,958) (17,756) Net profit before specified items and income tax 0.3% 17,896 17,841 Specified items Unrealised gains/(losses) (2) (51.6%) (10,241) (21,181) Income tax expense 8.9% (3,823) (3,511) Net profit after specified items and income tax n/a 3,831 (6,851) (1) Some items in the table above have been reclassified to illustrate HDF s income statement on an asset and fund specific basis. Refer to the HDF Appendix 4D for the half year ended 30 June 2009 for the HDF statutory income statement. (2) Includes unrealised revaluation gains/losses and unrealised foreign exchange gains/losses in relation to the underlying capital value of SEW. 9

11 Robust and sustainable capital structure In July 2009 HDF completed a fully underwritten $250m equity capital raising, resulting in the issue of approximately 277m new stapled securities At the time of the capital raising, distribution guidance for 2009 was maintained at 12 cps The capital raising provides HDF with a long term sustainable capital structure and additional flexibility to pursue its organic growth opportunities No remaining net debt at the HDF level with the HDF loan facility repaid (in July 2009) and the TAPS hybrid fully cash covered TAPS may be redeemed (i.e. repaid) up to 50% on 31 December 2009 and up to 100% on 30 June 2010 All remaining debt is secured at the asset level Fund level net debt at 30 June 2009 actual and pro-forma following capital raising $m (50) (100) (150) 32 (110) (80) 82 (200) (250) 30 June 2009 * 30 June 2009 (pro-forma follow ing capital raising) ** Cash TAPS Corporate debt Note: * 30 June 2009: $32m represents HDF fund level cash position as at 30 June 2009 ** 30 June 2009 pro-forma following capital raising: Reflects 30 June 2009 position pro-forma following application of the net proceeds of the capital raising to repayment of the HDF loan facility ($80m, repaid in July 2009) and full cash coverage of the TAPS hybrid ($110m) 10 H ea di ng

12 Debt maturity profile (proportionally consolidated) Proportionally consolidated gearing of 64% 1 post issue of new HDF securities associated with the capital raising A$m Epic debt will be renegotiated as part of the SWQP expansion funding Fund level facilities (including TAPS) fully repaid or 100% cash covered from capital raising Asset level: - Long term debt maturity profile - No debt maturities until Majority of debt matures post Beyond 2018 Beyond 2028 Epic SEW Chart Notes: Debt balances and maturities are as at 31 March For SEW, these debt amounts have been calculated on a look through basis according to HDF s 38.7% economic interest in SEW and a 0.49 AUD to GBP exchange rate. Maturity profile excludes $28.1m of the Epic finance lease which is amortised gradually with each quarterly lease payment until Commentary Notes: 1. Gearing = Net Debt / (Net Debt + Market Capitalisation), where Market Capitalisation is HDF s closing market capitalisation on 30 June 2009 plus proceeds of equity raising 11

13 Epic Energy SWQP Stage 3 expansion project As previously announced, Epic has executed a conditional long term Gas Transportation Agreement (GTA) with Origin Energy (Origin) Senior debt to underpin the proposed Stage 3 expansion of the SWQP [insert update on debt funding] Hastings and Epic are working closely together to secure funding for the Stage 3 expansion project which is expected to comprise a combination of senior debt and subordinated funding Equity / mezzanine A number of new and existing banks have been engaged to renegotiate existing facilities and raise new senior debt for the expansion [insert update on equity / mezzanine funding] Hastings and Epic are also in the process of securing the residual subordinated finance required beyond the $50m already raised through the HDF equity capital raising in July

14 SEW regulatory process SEW regulatory Draft Determination released to the market on 23 July 2009 Senior debt [insert update on debt funding] Hastings has two directors appointed to the board of SEW - Steve Rankine, Head of Hastings UK - Valeria Rosati, Director Hastings UK Equity / mezzanine [insert update on equity / mezzanine funding] Hastings UK team (including Steve Rankine and Valeria Rosati) is working with SEW management to respond to the regulator, Ofwat, ahead of the Final Determination in November

15 Epic Energy Steve Banning Managing Director Matt Brassington Chief Financial Officer 14

16 Epic Energy Overview Asset Snapshot HDF ownership 100% Date of investment December 2004 Pilbara Pipeline 219km (1) South West Queensland Pipeline (SWQP) 755km Equity raised for acquisition 1 $378.9m 1. Equity raised via the HDF IPO, with Epic being the seed asset Owns and operates three strategic Australian gas pipeline transmission assets SWQP is the only transporter of Queensland Coal Seam Methane into the north west Queensland and southern markets Market demand for cleaner fuels should see continued demand for transportation on Epic pipelines Significant expansion opportunities available on existing assets Moomba to Adelaide Pipeline (MAPS) 858km (2) Epic Pipelines Other Pipelines QSN Link (part of SWQP) 180km (1) Mainline length, additional c.105km of laterals and extensions (2) Mainline length, additional c.350km of laterals 15

17 Epic Energy Key financial results Solid financial results $m HY09 HY08 Operating income (1) 24.4% Operating expenses 18.5% EBITDA 26.4% Key highlights QSN Link pipeline completed on time and on budget in January QSN Link has underpinned 24% increase in operating income and 26% increase in EBITDA - QSN Link, supported by long term contracts, represents a permanent step change in Epic operating performance SWQP / QSN Link Stage 3 expansion announced following execution of conditional GTA with Origin - Target remains to achieve financial close in October 2009 Profit before tax 16.9% Profit for the period 17.6% Note: (1) Differs to Epic operating income in the summary consolidated HDF income statement (refer to Slide 9) (differences of $79,000 for HY09 and - $195,000 for HY08) due to a difference in the classification of amounts between interest income and interest expense. 16

18 Epic Energy Current capital structure As at 30 June 2009 Committed ($m) Drawn ($m) Ranking / Covenant Maturity Term Facility Senior 2011 QSN Capex Facility Senior 2011 Revolving Facility Senior 2011 Lease Senior Various to 2019 Total Debt Gearing to book value 53% 65% Debt Service Coverage Ratio (DSCR) 3.0x 1.4x / 1.1x Distribution lockup at 1.4x DSCR and default at 1.1x DSCR Above table does not include debt facilities required for future SWQP expansion Interest rates for 93% of drawn debt are hedged 17

19 Epic Energy Contracted revenue and capacity Current committed and proposed configuration SWQP: - Fully contracted through to Stage 3 90% contracted on average from 1 January 2012 to 31 December Expanded SWQP will have a capacity of approximately 380TJ/day MAPS: - Currently four compressor stations (total up to 250TJ/day) - Additional compressor stations can be reinstated at low capital cost to provide up to 100TJ/day incremental capacity Pilbara: - Free flow at up to 187TJ/day - Contracted close to full capacity until mid 2013 Note: Contracted revenue and capacity position shown as at 5 August

20 Epic Energy SWQP expansion update In June 2009, Epic executed a conditional, long term GTA with Origin to underpin the proposed Stage 3 expansion of the SWQP 1 Epic has also committed to a capacity expansion (Stage 2) of the SWQP by approximately 53TJ/day to meet its commitments with AGL Stage 2 capacity is to be included within the Stage 3 expansion Stage 3 involves the construction of a new c.935km pipeline adjacent to Epic s existing SWQP Capacity increases from 168TJ/day to 380TJ/day approximately Stage 3 project is contingent on securing sufficient funding on acceptable commercial terms Financial close is targeted for early October 2009 Should the Stage 3 expansion not proceed, Epic will proceed with the Stage 2 expansion only Notes: 1 Refer to HDF s ASX Announcement dated 16 June 2009 for further information relating to the GTA with Origin 19

21 Epic Energy SWQP Stage 3 expansion funding update Senior debt Circa $840m (including capitalised interest) is being sought, comprising a combination of senior debt and subordinated funding, with a target financial [insert close update of on October debt 2009 funding] Senior debt Equity / mezzanine - Epic has held a series of meetings with existing, and a number of new, banks and is seeking to extend existing senior debt facilities (circa $400m) plus raise new senior debt (circa $525m) for the Stage 3 expansion project [insert update on equity / mezzanine funding] - The bank group is in progress considering due diligence materials, is working through a detailed term sheet whilst at the same time legal documentation is proceeding - Banks credit approval processes are expected to be conducted during September ahead of financial close in October Subordinated funding - Circa $50m already raised through the recent equity capital raising in July Circa $265m of residual subordinated finance being sought - Majority of funding likely to be debt like in nature and contributed at the Epic level rather than the fund level 20

22 South East Water (UK) Paul Butler Managing Director 21

23 SEW Overview HDF ownership Economic interest (1) Asset Snapshot 50% voting equity 38.7% equity / loan notes 100% preferred note ( 2.7m) Regulatory Capital Value (RCV) (1) 805m Date of investments Feb 2005, Oct 2006 & Mar Economic interest and regulatory capital value shown as at 31 March 2009 Regulated monopoly with established regulatory regime Largely predictable usage demand 25 year rolling licence to supply water Joint ownership with unlisted Hastings managed fund, Utilities Trust of Australia Northumbrian Durham United Utilities Durham Anglian Yorkshire Yorkshire Leeds South East Water area water Leeds WaSC headquarters Warrington WoC area WaSC area sewerage 5 WoC 1 Bournemouth & West Severn 9 10 Anglian Hampshire Trent Northumbrian 2Bristol Birmingham Birmingham Histon Histon 3Cambridge 3 DwrCymru 4Cholderton ˆ (Welsh) 5 Dee Valley Brecon Thames Folkestone & Dover Portsmouth Reading Northumbrian 8South East Water Bristol 2 Bristol 9 South Staffordshire Sutton and East Surrey Tendring Hundred Wessex Southern 8 7 South West Southern Three Valleys 1 7 Exeter 1 Worthing Exeter South East Water 22

24 SEW Key financial results FY09 financial results (1) Full year ended 31 March 2009 ( m) 2008 ( m) Revenue 1.8% EBITDA (2) 2.8% Operating profit (2) (2.8)% Profit before tax (PBT) 22.7% Net cash generated from operations 4.4% Notes: (1) The financial results above relate to South East Water Limited (i.e. the merged regulated entity) only and are prepared in accordance with UK GAAP. SEW and MKW were merged in December Results for the year ended 31 March 2009 reflect a full year of trading for the combined operations. Although the two businesses were not merged until partway through the previous corresponding period, their results have been amalgamated under common accounting policies to allow this comparison. (2) 2008 EBITDA and Operating Profit are before merger costs Key highlights Continued focus on delivering operational performance in line with expectations in challenging economic conditions Completed implementation of the merger between former SEW and MKW companies and delivered the Competition Commission s (CC) required post merger cost savings of 3.1m p.a. Revenue increase reflects allowed tariff increases net of a one-off 4m reduction in customer bills as required by CC merger conditions Having delivered both the one-off reduction in customer bills and the annual cost savings, SEW has satisfied both of the CC s requirements related to the merger Operating profit affected by 4.8m increase in depreciation, driven by an expected increase in infrastructure investment over the next ten years PBT benefits from reduced swap fair value charge As per HDF s April 2009 announcement, SEW remains in full compliance of its banking covenants, including gearing and coverage ratios, which will next be tested at 30 September 2009 No additional equity contributions are currently expected to be required to ensure continued compliance with SEW's banking covenants 23

25 SEW Capital structure As at 31 March 2009 Outstanding ( m) Ranking / Covenant Maturity Hedged Ring Fence Debt Fixed Rate Bonds 166 Senior 2029 Fixed FR Bonds swapped to Index Linked 233 (1) Senior 2019 Fixed (real) Artesian Facility 206 Senior 2032/33 Fixed (real) Capex / Working Capital 91 Senior 2011 Floating Debentures / Finance Leases 19 Senior Various Fixed Hold Co Debt Senior Term 56 Junior 2012 Fixed Junior Term 40 Junior 2014 Fixed to 2010 Total Group Cash Held 66 Net Debt as at 31 March Ring Fence Net Debt to 31 March % 85.0% Holdco Level Net Debt to 31 March % 95.0% (1) Excludes the future RPI element of the Fair Value adjustment reflected in the SEW accounts Long term debt maturities with no further drawings anticipated during 2009/10 Significant protection against interest rate movements in place Due to a volatile inflationary environment, HDF contributed circa 14m of equity in March 2009 to SEW to ensure the company had sufficient headroom to its gearing covenants. No additional equity contributions are currently expected to be required to ensure continued compliance with SEW's banking covenants 24

26 SEW Cash flow bridge FY09 * m EBITDA Debt draw dow n Equity injection Change in w /c & other CF items HDF Ext. debt interest Total Capex Retained Cash** Distributions paid Notes: * All figures are shown for the full year ended 31 March 2009 and are for illustrative purposes only ** Cash retained on balance sheet to meet gearing covenants 25

27 SEW Regulatory price review The UK water sector is regulated by Ofwat (the Water Services Regulation Authority) and is subject to five-yearly price reviews On 23 July 2009 Ofwat released its Draft Determination (DD) for the UK water sector for the five year period commencing 1 April 2010 This is one step in a lengthy price setting process (PR09) that will lead to a Final Determination (FD) in November 2009 (see timetable) Ofwat s DD has allowed lower levels of capex and allowed returns than were requested by companies in their FBP submissions The DD allows for an industry WACC gross of tax shield (vanilla) of 5.1% p.a. The average annual price limits (K) result from Ofwat s key assumptions and policy decisions on each cost driver In the DD, the weighted average K for the industry is -0.2% p.a. and for Water Only Companies -1.1% p.a. SEW s average K in the DD of 0.0% is broadly in line with the industry Until the FD, SEW will engage with Ofwat to explore at a detailed level the impact that the current draft could have on various stakeholders (including customers, shareholders and regulators) Following the FD, SEW will review Ofwat s findings and decide whether to accept them or appeal to the UK Competition Commission Timetable December 2007 August 2008 December 2008 April 2009 July 2009 September 2009 November 2009 January 2010 Milestone Strategic Direction Statement Draft Business Plan submitted Draft CIS (capex incentive scheme) Baseline published Final Business Plan (FBP) submitted Draft Determination (DD) released Response to the DD and meetings with Ofwat Final Determination (FD) released Company s acceptance of FD or appeal to UK Competition Commission 26

28 SEW Operational update Item Comment Capital Programme Capital investment in the year was 84m this is the fourth year of the current five year programme Cumulative expenditure is 312m against 315m originally planned (in nominal prices) Anticipated that delivery of all regulated outputs will be on target by the end of the financial year Customer Services Fully functioning in-house call centre operating from September 2008 Steve George appointed Customer Services Director in November 2008 Steve strengthens the Executive Team with over 25 years of customer service experience Starting to see improvements in the quality of customer service delivery, although further progress to be achieved during the remainder of 2009 Consolidation of billing / customer service platforms to be completed by end of 2009 Operations Key merger activities completed in the year Relatively quiet operational year with some late snowfall in February increasing bursts and leaks Water quality compliance was at 99.95% and our leakage target was met both excellent results Centralised Control Room is now fully-implemented in Snodland Water Resources Winter groundwater recharge has been a little below long term average Nearly all catchments are at or above normal levels and no water restrictions for the current year are envisaged 27

29 Summary and outlook 28

30 Summary and outlook Summary and Outlook Strong operating performance for the half year - Epic operating cash flow 26.8% higher due to QSN Link pipeline coming online in January Cash receipts from SEW lower due to recent unprecedented decline in UK inflation - Distributions paid in the half year (for Dec 2008 and Mar 2009 quarters) were 157% covered by operating cash flows from assets - Distributions declared in the half year (for Mar 2009 and Jun 2009 quarters) were c.260% covered, reflecting full impact of the reduction in distributions Robust capital structure following equity capital raising - Fund level debt repaid and TAPS fully cash covered - Medium to long term maturities of asset level debt - High level of interest rate hedging in place Epic well positioned to capitalise on organic growth opportunities via SWQP expansion - Stage 3 expansion underpinned by conditional GTA with Origin - Funding negotiations well advanced, targeting financial close in October Expansion will only proceed if in the best interests of HDF securityholders SEW final regulatory determination released November 2009 Distribution guidance confirmed at 12 cps for calendar year distribution guidance dependent on outcome of Epic Stage 3 funding and SEW final regulatory determination 29

31 Appendix 30

32 Summary statement of cash flows (1) $ 000 Δ HY2009 HY2008 Epic operating cash flow 26.8% 42,385 33,429 Cash flows received from SEW: - Distributions & capital returns (15.7%) 11,245 13,342 - Cross currency swap gains / (losses) (92.7%) 236 3,251 Interest income less HDF expenses (86.0%) (415) (2,965) Total cash flows from assets and HDF 13.6% 53,451 47,057 Finance expenses 9.7% (15,615) (14,229) Epic maintenance capex (62.8%) (531) (1,428) Epic QSN capex (35.8%) (30,349) (47,252) Epic Stage 3 capex n/a (7,318) - Epic Horizon lateral capex n/a (735) - Equity contribution to SEW n/a (29,782) - TAPS distributions paid (17.9%) (4,085) (4,974) Net financing and investing cash flows (12.6%) 42,532 48,655 Net cash flows before distributions (72.8%) 7,568 27,829 HDF distributions paid (17.8%) (21,190) (25,767) Net cash flows for the period n/a (13,622) 2,062 Net increase/(decrease) in cash and cash equivalents n/a (13,622) 2,062 Cash at beginning of period 42.4% 59,316 41,654 Effects of exchanges rates on cash balances (71.2%) (177) (615) Cash at end of period 5.6% 45,517 43,101 (1) Some items in the table above have been reclassified to illustrate HDF s cash flow statement on an asset and fund specific basis. Refer to the 30 June 2009 HDF Appendix 4D for the half year statutory cash flow statement. 31