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1 Hastings Funds Management Limited ABN AFSL No Level 27, 35 Collins Street Melbourne VIC 3000 Australia T F Melbourne, London, San Antonio, Sydney Results announcement Hastings Diversified Utilities Fund (HDF) Total pages: February 2012 Results Presentation for the year ended 31 December 2011 Attached is a presentation of results for the year ended 31 December An Analyst call will be held this morning to present the results: Details of the Analyst call are: Time: 11.00AM (AEDT) Telephone: (Australia Wide) Participation code: # A webcast of the presentation will be available at For further enquiries, please contact: Colin Atkin Chief Executive Officer Hastings Diversified Utilities Trust 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: Jane Frawley Company Secretary Hastings Funds Management Limited 1

2 HDF 2011 Annual Results Presentation & Outlook February 2012

3 Disclaimer This presentation has been prepared by Hastings Funds Management Limited ABN (Hastings), holder of Australian Financial Services license number , as responsible entity for the Hastings Diversified Utilities Fund (HDF). 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 the repayment of capital. Investments in HDF 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 in relation to Hastings role as responsible entity or manager. 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 shown due to rounding. Asset results for the full year ended 31 December 2011 reflect the most current information available at the time of publication and may be unaudited, and therefore subject to further adjustment following the publication of this report. Figures may also differ from those previously disclosed due to adjustments made following period end. 2

4 Agenda 1. Overview Annual Results 3. Review of Operations 4. Target s Statement Status 5. Investment Outlook and Distribution Guidance

5 Overview Hastings Diversified Utilities Fund (HDF) is an ASX200 company with a market capitalisation of $1,086.5 million (1). HDF is focused on the ownership and management of energy infrastructure assets Annual Results Highlights 31 December 2011 HDF fund cash $232.9 million HDF is well positioned to deliver its securityholders with strong and sustainable returns, through: Total income (2) EBITDA (2) $156.8 million $111.1 million Contracted cash flow certainty Strong growth prospects supported by energy market dynamics Efficient and effective asset and investment management with the resources, structure and capability to execute EBITDA margin (2) 70.9% Free operating cash flow (3) $73.8 million Distributions per security 10 cents Our strategy is to invest in energy infrastructure in the interest of our securityholders (1) Market capitalisation as at 31 December 2011 (2) Before specific items and profit/(loss) contribution of South East Water and TAPS hybrid securities as identified on the Statement of comprehensive income (3) Underlying operating revenue and investment receipts less operating expenses, interest and tax paid and after working capital movements and maintenance capital expenditure 4

6 Revenue ($ millions) Cash flow growth is certain Pipeline revenue: historical and forecast (1)(2)(3) Robust long-term revenue profile Over $4 billion of contracted future revenue 300 Historical actual revenues Forecast contracted revenues Recontracting and further expansions highly likely SWQP % Currently fully contracted, some capacity available from % 31% Stage 3 expansion provides incremental capacity of c.205 TJ/d, 90 percent of this capacity contracted to 2028 MAPS Contractual position underpinned by stable/growing power demand Contracted revenue cover strong through to the end of 2015 PPS Revenue Illustrative Additional Revenue Contracted to full capacity until mid 2013 Discussions taking place with potential shippers and contract renewal counterparties (1) Historic revenue includes both contracted, intermittent and lease revenue (2) Illustrative additional revenue is based on a conservative level of assumed recontracting and interruptible revenues (3) HDF s forecast contracted revenue includes inflation assumptions of 2.5 percent per annum, which are within the current target band of the Reserve Bank of Australia 5

7 Pipelines the essential link to market Source: AER State of the Energy Market 2011, EIA. (1) Includes 183 PJ conventional gas. 6

8 Strong growth prospects domestically Domestic gas demand expected to increase Favourable gas supply and demand dynamics in eastern Australia Cleaner energy initiatives underscore long term demand for gas powered generation Intermittent alternative energy sources (wind and solar) supported by gas powered generation capacity HDF s pipelines to supply Australian gas demand 7

9 Strong growth prospects internationally International demand driven by LNG Australian gas resources positioned to meet global LNG demand Eastern Australia gas supply supported by South West Queensland (Bowen and Surat Basin) and Moomba (Cooper Basin) Three LNG consortia in Gladstone market have passed FID (Final Investment Decision) with potential development of six trains from LNG demand to underpin long-term pipeline expansions with linkages to Gladstone 8

10 Growth potential Short term revenue growth opportunities (1) Comment 1. SWQP additional expansion through compression Additional circa 70 TJ/day 2. MAPS additional expansion through reinstating compression Additional circa 90 TJ/day 3. Port Hedland Power Station Additional circa 25 TJ/day to supply generation gap 4. SWQP compression services Inlet compression services Medium term revenue growth opportunities (1) 1. Additional revenue contracts for SWQP capacity through compression 2. MAPS additional expansion 3. PPS capacity demand 4. Pipeline service opportunities arising from gas demand growth (1) These opportunities are not firm or committed Comment Fully contracting in either direction capacity of circa 315 TJ/day incremental Pipeline augmentation on valuable easements owned by HDF to meet Adelaide s generation and retail demand, and industrial and commercial demand on the MAPS route Utilisation of latent PPS capacity as significant Pilbara gas resource developments are commercialised for export and domestic consumption Producers, shippers and consumers of gas expected to seek to maximise flexibility to deliver gas to the most lucrative or efficient markets 9

11 SWQP expansion completed On time and under budget despite severe weather disruptions Entire looped line, new inlet compression and rewheeled compression at QCS4 fully operational Site remediation and minor punchlist works ongoing Capacity more than doubled and all contractual milestones achieved Bi-directional works now commencing 10

12 Refinancing strategy Strategy is to improve terms and conditions and to reduce total cost of borrowing Epic Energy recently received committed financing for $1.375 billion of senior debt facilities The proceeds raised from the new debt facilities are to be used to replace all existing debt facilities Cash generation via interest cost savings of $20-$25 million annually over a passive refinance strategy of debt maturities as they fall due Proposed refinance achieves a longer term maturity profile extending the next maturity date The funding facilities consist of three tranches including an 18 month debt facility of $425 million, a $600 million three year term facility and a $300 million four year term facility, as well as a $50 million revolving capital expenditure facility Six domestic and international banks mandated and to provide committed funding: the Royal Bank of Canada, Westpac Banking Corporation, J.P. Morgan, ANZ, Commonwealth Bank of Australia and National Australia Bank. Financial close of the new facilities is targeted for the end of March Funding remains subject to the completion of documentation and satisfaction of conditions precedent usual for a facility of this type 11

13 Sources and uses of funds Refinancing immediately improves credit profile with ICR moving to greater than 1.75x with further improvement expected Refinancing of all debt facilities Establishment of $1,375 million of new debt facilities (including $50 million undrawn capital expenditure facility) The facilities will be applied to the refinancing of existing bank term debt and mezzanine facilities used to fund the expansion of SWQP on a project finance basis and to repay existing lease liability Subsequently pursue longer term tenors in debt capital markets as available Sources ($ millions) Uses ($ millions) Facility A 425 Mezzanine repayment 226 Facility B 600 Senior debt repayment 880 Facility C 300 Lease repayment 62 Epic cash 31 Revolving credit facility repayment & Epic cash reserve 34 Shareholder loans 54 Fees/Swap break/make whole costs 208 Sources 1,410 Uses 1,410 Revolver facility yr maturity 50 Revolver facility yr maturity 50 Total sources 1,460 Total uses 1,460 12

14 $million 1,375 Conservative debt structure HDF debt maturity profile 1,600 1,400 1,200 1, New debt facilities Facility A Facility B Facility C Term out 1.5yr Term Facility refinanced into 8-10yr term out (Refinancing planned for 2012) Refinance Maturity Planned term out Note: Upfront fees and break cost fees are capitalised within new bank facilities Longer term maturity profile Increase flexibility to seek diversity across debt capital markets No listed holding company debt High proportion of interest rate exposure fixed Continue to seek the most efficient capital structure and refinancing solutions to match long term, contracted revenue profile 13

15 HDF capital structure following expected March end financial close ($ millions unless noted) Committed ($m) Value / Debt Drawn ($m) Ranking / Covenant Maturity Market capitalisation (1) 1,113 Stapled Equity N.A. Total equity value 1,113 Facility A Senior Sep-13 Facility B Senior Mar-15 Facility C Senior Mar-16 Revolver facility 50 0 Senior Mar-15 Total debt 1,375 1,325 Consolidated cash holdings (2) 103 Net debt 1,222 Net debt to HDF net enterprise value 52% N/A Epic Senior Debt to EBITDA Ratio (3)(4) 8.28x 9.0x (default) Epic Interest Coverage Ratio (3)(4) 1.86x 1.20x (default) (1) Market capitalisation assumes a security price of $2.10 with 530,001,072 securities outstanding (2) 31 March 2012 estimate (3) Debt / EBITDA ratio based on annualised 30 June 2012 EBITDA estimate (4) Debt / EBITDA Ratio and Interest Coverage Ratio at the first Calculation Date (30 June 2012) post refinancing 14

16 Summary statement of income (1) As at 31 December 2011 ($ 000) Change FY2011 FY2010 Key highlights Operating Income Epic operating income and other income 142, ,976 Interest income (HDF and Epic) 14,724 5,119 Interest income (SEW and TAPS) - 13,988 Other income (HDF) 1 - Other income (SEW) Total operating income 1.3% 156, ,683 Realised net gains / (losses) (3) 1,252 (32,680) Unrealised net gains / (losses) (4) (16,735) (13,131) Total income 29.7% 141, ,872 Operating expenses (excluding finance costs): Epic operating expenses (36,022) (37,159) HDF operating expenses (1,358) (1,812) SEW and TAPS operating expenses (8) (416) Responsible Entity management fee (8,301) (5,858) Responsible Entity performance fee (57,326) (22,375) (2) Total operating expenses (excluding finance costs) (103,015) (67,620) EBITDA -7.3% 38,235 41,252 Impairment of plant and equipment - (9,274) Depreciation and amortisation expense (21,875) (21,924) EBIT 62.7% 16,360 10,054 Finance costs (HDF and Epic) (34,657) (30,273) Finance costs (SEW and TAPS) - (6,086) Net profit/(loss) before income tax 30.4% (18,297) (26,305) Income tax expense (11,582) (10,728) EBITDA down 7.3% before adjusting for specific items For accounting purposes, HDF recognised a performance fee of $57.3 million for FY2011, however $23.4 million of the fee has been deferred HDF recognised an impairment in the value with respect to the carrying value of certain equipment comprising the PEPL end-of-line facilities of $9.3 Net profit/(loss) after income tax 19.3% (29,879) (37,033) (1) Some items in the table above have been reclassified to illustrate HDF s statement of income on an asset and fund specific basis. Refer to the HDF Appendix 4E for the full year ended 31 December 2011 HDF statutory statements of comprehensive income (2) Securities were issued at a price of $2.56 to meet the FY2010 performance fee (3) Reflects SEW related net loss on unlisted securities of $0.005 million (2010: loss of $43.9 million), SEW related net loss on derivative securities of $8.8 million (2010: gain of $3.8 million) and SEW related net gain on cash of $10.0 million (2010: loss of $3.0 million) and net gain on plant and equipment of $0.076 million (2010: gain of $10.4 million) (4) Reflects SEW related unrealised gain of $Nil (2010: gain of $6.4 million) and unrealised net loss on warrants of $16.7 million (2010: loss of $19.5 million) 15

17 Summary statement of income pre and post specified items (1) As at 31 December 2011 ($ 000) Change FY2011 FY2010 Income before specified items: Epic operating income and other income 142, ,976 Interest income (HDF and Epic) 14,724 5,119 Realised gain - plant and equipment Other income (HDF) 1 - Total income before specified items 11.8% 156, ,207 Operating expenses (excluding finance costs): Epic operating expenses (36,022) (37,159) HDF operating expenses (1,358) (1,812) Responsible Entity management fee (8,301) (5,858) Total operating expenses (excluding finance costs) (45,681) (44,829) EBITDA before specified items 16.5% 111,128 95,378 Depreciation and amortisation expense (21,875) (21,924) EBIT before specified items 21.5% 89,253 73,454 Finance costs (34,657) (30,273) Net profit/(loss) before specified items and income tax 26.4% 54,596 43,181 Unrealised (loss) - warrants (16,735) (19,508) Responsible Entity performance fee (57,326) (2) (22,375) (3) Profit / (loss) contribution - SEW and TAPS 1,020 (28,594) Realised gain plant and equipment (4) - 10,265 Impairment (loss) plant and equipment (5) - (9,274) Income tax expense (11,434) (10,728) Net profit/(loss) after specified items and income tax 19.3% (29,879) (37,033) Key highlights EBITDA up 16.5% before specific items Revenue growth driven by: I. Step up in volume on existing MAPS contract (QSN3 related) II. III. Further gas flows on SWQP due to Cooper Basin floods CPI linked contracts Finance expenses reflect margin step up on senior debt and cessation of capitalisation of interest in August 2011 Responsible Entity fees increased due to increased market capitalisation (1) Some items in the table above have been reclassified to illustrate HDF s statements of income on an asset and fund specific basis as well as stating net profit on a pre and post specified items basis. Refer to the HDF Appendix 4E for the full year ended 31 December 2011 HDF statutory statements of comprehensive income (2) Hastings elected to receive $30,724,044 of the performance fee payable for the six months ended 31 December 2011 in cash and deferred its decision regarding the payment of the balance of the performance fee. (3) Securities were issued at a price of $2.56 to meet the FY2010 performance fee (4) Represents the realised gain on the partial disposal of the Burrup Extension Pipeline (5) In 2010 further developments in the Port Hedland area caused HDF to reconsider the carrying value of certain equipment comprising the PEPL end-of-line facilities. As a consequence of the review, HDF recognised an impairment in the value with respect to those facilities of $9.3 million. 16

18 Cash flow overview As at 31 December 2011 ($ 000) Change FY2011 FY2010 Cash flow overview (1) Epic operating cash flow 106,602 99,359 Interest income less HDF expenses 6,091 (3,015) Consolidated total cash flows 17.0% 112,693 96,344 Finance expenses (33,628) (28,781) Epic maintenance capital expenditure (5,230) (3,810) Net cash flows before growth capital expenditure & financing 15.8% 73,835 63,753 Epic growth capital expenditure (347,553) (424,711) Key highlights Underlying operating cash flow growth benefited from contracted and interruptible cash flow earnings and one-off projects Increased interest income due to higher levels of cash during the year and investment in term deposits $347.6 million in growth capital expenditure undertaken during the year, which was largely related to the QSN3 expansion project and associated interest capitalisation Net financing and investing cash flows (other) 350, ,401 HDF distributions paid (net) (51,771) (37,567) (2) Net cash flows for the period 25,136 (35,123) Consolidated cash at end of period 10.7% 260,128 (3) 234,992 (4) (1) Some items in the table above have been reclassified to illustrate HDF s statements of cash flows on an asset and fund specific basis. Refer to the HDF Appendix 4E for the full year ended 31 December 2011 HDF statutory statements of cash flows (2) Distributions in FY2010 were paid in part as dividend reinvestment plan was suspended (3) Cash balance at end of FY2011 includes HDF Fund cash holdings of $232.9 million, Epic Energy cash holdings of $66.9 million and cash adjustments for South East Water and TAPS of $39.6 million (4) Cash balance at end of FY2010 includes HDF Fund cash holdings of $217.5 million, Epic Energy cash holdings of $42.5 million and cash adjustments for South East Water and TAPS of $24.9 million 17

19 A$m Distributions coverage (1) 200, , ,000 80, % coverage 40,000 0 Operating Asset Revenue Operating Expenses Finance Costs Paid Maintenance capex Tax Paid Working Capital Adjustments Cash available for distributions Distributions paid Epic Energy revenue HDF Mangement Fees (1) Underlying operating revenue and investment receipts less operating expenses, interest and tax paid and after working capital movements and maintenance capital expenditure and excluding performance fee, for FY

20 A$m Total securityholder return 200,000 40% 150,000 30% 100,000 20% 29.29% 50,000 10% Return % 0% -50,000-10% -100,000 Performance fee HDF Total Return S&P/ASX200 Industrials Accumulation Index Return Performance fee paid Performance fee deferred -20% Source: HDF and Mercer (1) The returns provided use an internal rate of return methodology and make the following assumptions: Investment period of 1 January 2011 to 31 December 2011 Individual investors will have different tax positions No costs that may have been incurred by an investor in HDF or in index proxies have been included HDF was listed on 10 December 2004 at $2.56 The security price for HDF on close as at 31 December 2011 was $2.05 An investor reinvested each distribution in HDF securities at the closing price on the distribution date and that the investor participated fully in a one-for-one entitlement offer in July 2009 The calculation for the S&P/ASX 200 Industrials Index uses the index values at the end of the day An equivalent cash flow was invested in the index as that was required for the investor to participate in the rights issue for HDF 19

21 Target s Statement Update The offer undervalues HDF The offer is highly conditional and uncertain The Board continues to recommend rejection HDF s outlook is positive. Favourable domestic demand and international demand for LNG supports its growth potential HDF continues to assess all strategic alternatives with a view to maximising securityholder value 20

22 Outlook Focus on maximising securityholder value Excellent business with growth underpinned by contracted revenues Well positioned to benefit from growing gas demand in Australia and global markets Enabled with capital resources to continue to grow the business Organic growth opportunities are highly prospective Distribution guidance Distributions to be paid from free operating cash flow on a sustainable basis Annual distribution guidance of 10 cps for FY2012 paid quarterly Distributions are expected to rise 1-2 cps in FY

23 HDF Contacts For further enquiries, please contact: Colin Atkin Chief Executive Officer Hastings Diversified Utilities Fund Tel: Fax: investor_relations@hfm.com.au Website: Simon Ondaatje Head of Investor Relations Hastings Funds Management Limited Tel: Fax: investor_relations@hfm.com.au Website: 22

24 Appendix 23

25 HDF capital structure as at 31 December 2011 ($ millions unless noted) Committed ($m) Value / Debt Drawn ($m) Ranking / Covenant Maturity Market capitalisation (1) 1,113 Stapled Equity N.A. Total equity value 1,113 Term Loan Senior Jan-13 SWQP Stage 3 Expansion facility A Senior Jan-14 SWQP Stage 3 Expansion facility B Senior Jan-15 Revolver facility Senior Jan-13 Lease facility Senior Various to 2019 Mezzanine Debt Subordinated Dec-19 Total debt 1,233 1,189 Consolidated cash holdings (2) 103 Net debt 1,086 Net debt to HDF net enterprise value 49% N/A Epic Senior Debt to Book Asset Value 58.8% 65% (default) Epic Senior Debt Service Coverage Ratio (3) 3.06x 1.20x (default) Epic Total Debt Service Coverage Ratio (4) 2.04x 1.20x (default) (1) Market capitalisation assumes a security price of $2.10 with 530,001,072 securities outstanding (2) 31 March 2012 estimate (3) As at 31 December 2011 (4) Includes senior debt and mezzanine debt estimate for the calculation period ending 31 March 2012 without refinancing 24