Infratil Investor Day

31 July 2012

The Consolidated Australian Energy Group

2

• East Coast – National Energy Market (NEM)

- Lumo Energy

• Retailing electricity & gas primarily to mass market customers…although this is changing

• 457,000 customers - 4th largest customer base in the NEM

• CEO – Dean Carroll

- Infratil Energy Australia (IEA)

• Wholesale supplier of electricity, gas & environmental products to Lumo

• Owner of 160MW of peaking generators

• CEO – Darryl Flukes

• West Coast – Western Australian Wholesale Electricity Market (WEM)

- Perth Energy

• Retailing electricity and gas to commercial & industrial clients

• Owns 120MW of gas-fired peaking plant

• CEO – Ky Cao

Developed organically from a start-up business by Infratil

Our energy businesses in Australia

3

Leveraging the Infratil / TrustPower relationship

• In New Zealand TrustPower is an active retailer and generator

• In Australia TrustPower is an accomplished wind farm developer and operator

• Australian retail market is very different to the market in NZ

- Indeed different retail strategies are often needed for different jurisdictions in Australia

• Collaboration between Lumo/IEA and TrustPower does occur at both the board and executive level

- Where appropriate intellectual property and common experiences are shared

• Little gain if any from integrating the two entities

• Infratil sees benefits in both businesses operating independently, avoiding overlaps and with each

operating to their proven strengths

• Infratil has straightforward sale liquidity with 100% ownership of Lumo

• Collaboration and knowledge shared at all levels, a benefit of being part of the Infratil Group

4

NEM Retail Landscape

• Carbon Price – retailers pass on the cost, but bear the brunt of consumer anger

• More knee jerk political responses to electricity (& gas) pricing?

- Qld legislating to make contract termination fees illegal. NSW requiring carbon costs to be

separately identified on each consumer’s invoice

• Retail price caps remain in all jurisdictions except for Victoria

- Despite the 2010 COAG* agreement and calls from the Productivity Commission

• Regulatory compliance – ultimately customers bear the cost

- Unlike NZ, Australia has different regulatory requirements for each jurisdiction in addition to a

national framework

• Credit management issues challenging for all retailers

- Timely credit processes, accurate billing data, hardship programs & payment plans are all of

critical importance

- Overhaul of government utility assistance programs potentially a win-win for all

• Intense competition in the retail market continues

• Sales methods will need to evolve – outbound telesales market decreasing

… even with these challenges Lumo’s retail base continues to grow

* COAG – Council of Australian Governments

5

NEM Supply Landscape

• Electricity

- Surplus supply driven by manufacturing sector slowdown, domestic solar PV penetration and

energy efficiency measures

• Should the market have seen this coming? YES

- Will further vertical and/or horizontal integration reduce wholesale market liquidity?

- Buyers for the NSW generators?

- Existing Gentraders unlikely to be buyers. Preference for Macquarie Generation to be

broken up for sale

- Three years before Queensland generators are put on the block

- Promises by new state government will preclude sale in the current electoral cycle

• Gas

- Huge uncertainty beyond 2015 driven by LNG export timing, number of trains and feedstock

availability

- Near term ramp-up over supply not currently seen in spot prices with other supporting factors

- other supply reductions (Moomba, Yolla, Longtom)

- base load (coal) generation outages

- cold weather across Eastern seaboard

… IEA well positioned with a competitively priced portfolio of wholesale

products for the future

6

WEM Landscape and Perth Energy

• Retailing

- 3rd largest WA retailer with a growing market

share of 14% of the commercial & industrial

market. Mass market is not contestable.

- FY2012 sales volume of 1300GWh, a 24%

increase on pcp

- High barriers to retail new entry due to illiquid

wholesale contract market

- Timing of full retail contestability (FRC)

unknown

• Generation

- 120MW Kwinana dual fuel open cycle gas

turbine power station has performed

satisfactorily with recent engine problems

now rectified

- Two valuable new build options at Kwinana

(K2 & K3) continue to be developed

• Reviewing ownership given ongoing market

structure uncertainties and IFT prioritising of

pipeline of development opportunities in the NEM

* Based on number of NMI’s and max demand

7

Further Consolidation?

• Integration amongst the big three, Origin, AGL & TruEnergy very unlikely

• Horizontal integration in the generation market may be limited in some jurisdictions also due to Restrictive

Trade Practices legislation (Competition and Consumer Act 2010)

• Horizontal integration in the retail market likely…

• 2nd tier retailers – 8 players

- Government owned – will they eventually be up for sale?

• Red Energy (owned by Snowy Hydro)

• Momentum Energy (owned by Hydro Tasmania)

- Solid financial backing

• Simply Energy (GDF Suez), Alinta Energy/ Neighbourhood Energy

• Lumo Energy

- Potential capital constraints and a reduced suite of wholesale supply products will squeeze margins

• Australian Power & Gas, Dodo Power & Gas, ERM Retail, Click Energy

Our intention is to be an end game player… but we do have a price…

8

IEA is well placed to address uncertainties

• Australian energy landscape has never been so uncertain… impacting:

- Investment in new gas-fired generating plant

- New renewables projects through difficulties in securing long term off-take agreements

- Forward wholesale electricity prices – will there be a carbon price in 2.5 years?

- Gas availability and prices beyond 2015 – how much gas will be required / available for the

Gladstone LNG projects?

- Retail product offerings through the lack of regulatory & legislative harmony across jurisdictions

• Lumo/IEA is well positioned to deal with these uncertainties, securing attractive positions and

mitigating downside exposures via low cost options

• Our favourable position is the result of several years of hard work and repositioning - especially

regarding our wholesale gas position

So, what is the value of the journey?

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• 457,000 as at 30 June 2012 and still counting…

• Lumo well positioned in the attractive Victoria market

• Selective acquisition activity undertaken and ongoing in other States

• Taking a wait and see position in Queensland

Our Customers… Where are they?

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Who are they?

• Lumo’s customer profile skewed a little to older demographic

- Largely a function of sales channels employed to date (D2D and telesales)

• Solid representation in family belt

Source: Roy Morgan Research Lumo Energy User Profile Dec 2011

11

Organic customer growth trajectory

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,0002

00

62

00

62

00

72

00

72

00

82

00

92

00

92

01

02

01

02

01

12

01

22

01

22

01

32

01

32

01

42

01

42

01

52

01

62

01

6

Cu

sto

me

rs

Current Replace churn Likely range

12

Acquisition… Plenty of fish in the sea!

Source: Internal analysis of market data

13

Changing the traditional acquisition method

• Channels to achieve the first 450,000 customers are unlikely to sustain the next five years of customer

growth

- ‘Opt outs’ into the Do Not Call register total circa 7 million phone numbers

- Campaigning for door to door channels under threat

• Lumo will maintain outbound channels but will reduce reliance on them

• We will attract, retain and grow customers with more sophisticated sales and marketing capability

• Lumo has come a long way on two primary channels:

- Door to door

- Telesales

… But we must now diversify

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Developing channel diversity is crucial

• Increasingly a greater range of marketing channels are being deployed

• Already getting good traction from online leads and Virgin Velocity Partnerships

Internet

SMS/Mobile

Door to door

Telesales

Inbound sales

Advertising

Sponsorship

PR

Direct Mail/eDM

Other

Our marketing philosophy is to

be customer centric utilising

appropriate channels that

engage consumers cost

effectively.

Over time the reliance on these

channels will reduce as a greater

percentage of activity is inbound.

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• Strong group of channel sales partners with good compliance orientation

• Targeting diversification of sales channels to spread the risk

• Positioning for a world with a greater percentage of in-bound sales activity

Channel Source Feb-11 Jun-12 Mvt

Energy Aggregator 4% 8%

Moving Aggregator 0% 6%

Door to Door 28% 45%

Outbound Telemarketing 36% 14%

Inbound Telemarketing 32% 27%

100% 100%

Significant focus on enhancing our sales capability

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Our major new channel… 100% Infratil owned

17

Introduction to Direct Connect (DC)

• Incorporated in August 2004 to arrange connection services for customers moving into new

premises which successfully serviced 140,000 energy customers in 2011/12

Business Profile

• To June 2012, DC has partnered with 3,084 Connecting Agents (Real Estate Agents) providing

customer referrals to DC

• Currently a majority of customers are renters that come through the property management division

of a Real Estate Agents office

• There is an opportunity to broaden the DC offering from home owners to the business and

commercial sectors

• DC provides connection services to customers for a range of services as follows:

- Electricity - Gas

- Telephone/Broadband - Pay TV

- Insurance - Removalists & Cleaning

• The Direct Connect brand is now seen on its own as a genuine Real Estate market leader

• In 2009, three of the four key Real Estate Institutes on the eastern seaboard acknowledged DC in

their top 3 realestate supplier brands

Vision: To make moving easy for everyone in Australia

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Direct Connect – who are they?

VIC

QLD NSW

SA

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2004 2005 2006 2007 2008 2009 2010 2011

Direct Connect Growth in Energy sales

Rentals 64%

Home Owners

36%

Total Moves across Australia

• Only 18% of the total moving market uses an aggregator like DCA

DCA, 8.1%

Others, 9.7%

Not Touched,

82.2%

Market Share

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Direct Connect – how are they growing?

• Continue to develop products using Partnerships

• Expand product offering in SME markets in conjunction with Lumo

• Development of new products to capture more home owner moves

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NSW is an emerging market

• NSW is an emerging opportunity for Lumo

- Over 3 million electricity sites / 1 million gas

- Recent deregulation = poor service by

incumbents

• Lumo entered in earnest in July 2011

- Early mover

• Very selective acquisition

- Only Integral (Endeavour) to date

• Introduced gas in January 2012 to capture Dual

Fuel market

• We are building a good sales capability that is

sustainable

- Target customers in most profitable

catchments

- Closely monitoring incumbents significant

investment in retention activity

- Not willing to pay a material premium for

customers

• Our view is that the market will settle in the longer

term

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• The brand will be evolved through:

- Building a clear and compelling brand position and delivering on it

- Driving customer segmentation and targeted marketing programs

- Channel diversification to reach and cost effectively engage preferred customers

- Promote customer engagement through up-selling and retention programs

Brand evolution

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• Energy is a difficult category for consumers to differentiate and position brands

• Price and scale/reputation are the current defaults used

• Key to being differentiated and owning a gap in the market is to offer better value by improving and

reinforcing quality and utility

Brand positioning

Quality & Utility

Price

23

Aspirational brand position

Modern

Traditional

Servant (Leadership driven

by Customers)

Master (Leadership driven

by Corporation)

2nd tier

retailers

a

Incumbents

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Building the Lumo brand

• Our objective is to develop a compelling brand position for Lumo that is both exciting and distinctive

within the highly competitive energy sector

Phase 3

Implementation

Phase 4

Measurement

Phase 2

Creative Idea & Implementation

Plan

Phase 1

Brand Essence Brand DNA

Complete

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• Investment has been, and is being made in Information Technology to:

- Enhance our systems

- Provide for scalability

- Improve the customer experience

• Developing and extending programs that touch all key moments of truth

• Creating an ongoing dialogue with customers to reinforce the value of Lumo

• Developing product propositions that more closely address segment needs to drive longevity

• Investment in analytical and customer relationship management (CRM) platforms to sustain

relationships

Sales and On-

boarding

Billing and

servicing Customer re-

contracting

Customer

Retention

Customer analytics and segmentation

Looking after customers… In the Lifecycle

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• Front and back offices working together allows customer feedback data to be collected, analysed

and fed back into the customer value chain to ensure improvements are delivered

• Implementing a quality methodology and starting to see the associated improvement culture

• Selected basic tools to use in Kaizen, Rapid Improvement events with our front line staff across the

business. Over time we will inject more complicated tool sets

• Investing in our front line leaders in their management capability and their business improvement

tool set

• The customer has noticed a significant improvement in the past 12 months

- Ombudsman enquiries are down 50%

- Net promoter score has moved 25 basis points

- Headcount to cope with 15% volume improvement

• Ensure price competitive by creating Revenue Assurance program

… Improving our service to customers

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• New propositions will address specific customer needs. An example is a movers product for new

customers from Direct Connect

• Ultimately market segmentation will inform product development

• To date Lumo has been successful with a very narrow product range

• Group buying schemes are offering some opportunity to reach new customers – however product

pricing and on-boarding processes need to be finely tuned to assure profitability

… With new Propositions

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Victoria leads the way in switching

Source: VassaETT (World Energy Retail Market Rankings 2012)

• Yes, it is competitive but our position is established and adding value

29

Wholesale electricity markets remain liquid

• Markets remain active and liquid up to two years forward

- Despite integration activities across the industry we see little benefit in vertical integration but

….. while there remains sufficient “independent” generators, and active trading participants,

threats to wholesale liquidity could emerge from generation sector horizontal aggregation

- Where market is less liquid (SA), IEA has invested in peaking generation plant

• Reducing demand → benign spot prices & falling forward prices

• Does drive retail churn but IEA’s hedging strategy has benefited

30

Electricity wholesale – other considerations

• Renewable Energy (and other “green” obligations)

- Content to buy from market

• CO₂ uncertainty leading to illiquidity beyond two years forward

- (but we’ve had to manage this issue for four years now)

• To counter any chronic shift in liquidity, IEA continues with its strategy of pursuing and holding

power station development options…

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• Up to 450MW gas generation development site in NSW

- Bought out of NSW privatisation

- Well located on the Eastern Gas Pipeline

- Approvals in place to construct

• Capacity not needed until 2016 – 2018 (or beyond)

• However, IEA may develop earlier to

- Reduce exposure to potential illiquidity and/or

- Benefit from integration of gas & electricity portfolios

• Value already being delivered in holding this option

Bamarang development site is a valuable option

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• Total of 160MW diesel fired “super” peakers

• Excellent availability stats

• Have not been required to run commercially for last 18 months

• Medium-term capacity values (cap prices) under pressure from reducing demand

Peaking Power Stations

33

• IEA is now positioned with a very flexible, low risk gas portfolio:

IEA Wholesale Gas positioning

STORAGE TRANSPORTATION SUPPLY

34

• Well balanced to 2015/16 with a diversity of supply and no “cliff edges”

• Improved liquidity enables rolling contract renewal

• With substantial price uncertainty beyond 2015, IEA is keen to not lock into longer-term fixed price

contracts which could turn out to be uncompetitive

- Nor is it necessary with most customers re-pricing over the next 3-4 years

• Coupled with risk management and optionality from storage etc. contracts well beyond mid-decade …

• ..this ensures IEA will not be disadvantaged relative to competitors

Longer term gas position

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• Electricity demand reducing → benign wholesale prices

• Flexible competitive gas portfolio

• Optionality to deal with mid-decade uncertainties

- Carbon

- LNG exports

- Demand levels

- Renewable etc. legislation

- Liquidity

… Management challenge in positioning for all outcomes – building a flexible portfolio

Wholesale summary and key messages

Wholesale supply is competitive and sustainable

36

The Key Messages

• IEA is delivering sustainable returns

- Good earnings

- Focus now on efficiency/process improvements

- Abnormal charges associated with historic gas position are a thing of the past

- Risk management processes are robust

• Customer growth has returned

- Confident about FY13 customer growth forecast

- Each new customer is adding Value

• Normalised earnings approaching $70 million

- Combined business value in excess of $600 million

• Return On Funds Employed is currently approximately 13% and is moving towards 16% based on

normalised earnings

Note: - Normalised earnings for Lumo retail of $48.0m based on Lumo forecast customer numbers at 31 March 2013 held over a full year

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Overview of Financial Results

A$ million Mar’ 11 Mar’ 12 FCST Mar’ 13

Lumo customers (No.) 409,000 442,000 490,000 – 510,000

Generation capacity (MW) 277 MW 277 MW 280 MW

Revenue 698 788 950 - 995

EBITDAF 43 50 60 - 70

Hedge Revaluation movements 35 31 -

Net Finance Costs - external (3) (9) (8) - (10)

Amortisation – Customer Acquisition (9) (9) (10) – (12)

Depreciation and other Amortisation (6) (15) (16) – (18)

Tax Expense (16) (11) (5) - (7)

Note: - March 2013 forecast for full year 2012/2013

- Perth Energy revenue: $128m (Mar’11 Actual), $182m (Mar’12 Actual) and $267m (Mar’13 Forecast)

- Any discrepancies due to rounding

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EBITDAF Contribution breakdown

A$ million Mar’ 11 Mar’ 12 FCST Mar’ 13

Perth Energy 5 13 14 - 16

Generation 8 11 9 - 11

Retail 44 44 41 - 47

Excess Gas (5) (12) -

Electricity Hedge Book Restructuring (4) 1 -

Excess NGAC’s (2) (4) (1)

Generation Development / Unallocated Overhead

(3) (3) (3)

EBITDAF (excl Perth) 38 37 46 - 54

Total EBITDAF 43 50 60 - 70

Note: - March 2013 forecast for full year 2012/2013

- Any discrepancies due to rounding

39

2011/12 ended strongly despite gas impacts

Favourable Negative

43

48 4850

8

4

5

2

6

3

37

9

10

2

30.0

40.0

50.0

60.0

70.0

80.0

90.0

EBITDAF Mar2011

Retail ElectricityMargin

WholesaleElectricity Costs

Electricity HedgeRestructuring

Perth Energy -Generation

Perth Energy -Retail

Generation Retail GasVolume

Excess Gas Retail GasMargin

OperatingExpenses

Other EBITDAF Mar2012

A$

in m

illio

ns

Perth EnergyRetail Electricity Retail Gas OtherGeneration

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2011/12 – Key Points

• Lower Wholesale Electricity Costs

- Our hedge book performed well

- Hedge restructure trading gains are not expected to re-occur

• Perth Energy Generation

- Prior comparative period only had 7 months earnings from the Kwinana Power Station

- Engine repair costs incurred in 2011/12. No assumption has been made on cost recovery

• Perth Energy Retail

- Result driven by increased sales volumes

• Generation

- Port Stanvac Power Station commissioned in May 2011

• Retail Gas Margin

- Increased presence in the Industrial sector at reduced margins

- Industrial customers provided a good “hedge” against our excess gas position

• Operating Expenses

- Increased investment in staff, systems and processes

- Step up in Cost to Serve (“CTS”)

41

Further gains anticipated in 2012/13

Favourable Negative

50

65

12

18

3

2

22

2

30.0

40.0

50.0

60.0

70.0

80.0

90.0

EBITDAF Mar2012

Excess gas Retail ElectricityVolume

Retail ElectricityMargin

Perth Energy -Generation

OperatingExpenses

Other EBITDAF Mar2013

A$

in m

illio

ns

Retail ElectricityRetail Gas Perth Energy Other

42

2012/13 – Key Points

• Excess Gas

- Much more balanced and flexible wholesale gas portfolio

• Retail Electricity Margins

- In line with customer growth

• Perth Energy - Generation

- Higher capacity prices in the short term

• Operating Expenses

- Approximately 50/50 split with CTS and Acquisition Costs

- CTS kept relatively flat from 2011/12 despite an increased programme of investment in IT,

systems and processes which will realise long term benefits and result in a lower CTS

- Focus on developing our brand is forecast to have an impact on Acquisition Costs

43

Cost to serve stable going forwards

Total = $95

Total = $113 Total = $115

Other includes

miscellaneous items

such as printing,

stationary, regulatory

and occupancy costs

…Increased investment in systems and processes will lead to a reduction in

other areas of Cost to Serve and eventually a total reduction

44

Valuation of IFT’s Australian Energy Assets

Valuation Assumptions : - Power Station values based on independent valuations

- Perth and Bamarang development sites based on cost or experience of their proximity to network and gas access

- EBITDAF multiple of 6.0x assumed. This compares to other industry participants and transactions where multiples are in the range

of 5.0x to 11.0x

ASSET

A$ million

Midpoint valuation

Investor Day 29 March 2011

Midpoint valuation

31 March 2012

Diesel recip Power Stations– 160MW 144 139

Bamarang Gen. Development Site 9 9

Kwinana Power Station – 120MW 148 138

Perth - K2 and K3 Development Options 8 10

Lumo Energy (retail) – EBITDAF multiple 205 288

Perth Energy (retail) – EBITDAF multiple 23 30

TOTAL 537 614

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Is it worth the journey?... Yes

• We’re a business that is…

- growing… its client base & capabilities

- increasing its EBITDAF and its returns to shareholders

• …in a sector where:

- new entrants will increasingly find it difficult to gain a foothold

- players that are not well resourced will eventually exit

- margins are good in markets that are mature

• We’re building a sustainable business that will continue to

- invest in non-traditional sources of client acquisition

- augment & optimise its systems to drive down costs & accommodate growth

- maintain a strong wholesale risk management focus; and

- take advantage of a well structured & diversified wholesale electricity & gas portfolio

• So what does the end of the journey look like?

Strong returns and optionality for Infratil shareholders

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Appendix 1: Capital Structure as at 31 March 2012

IFT = 81.2% holding; ** Derived based on (EBITDAF/E+D) adjusted for the asset revaluation reserve

A$ million Infratil Australia

Perth Energy

Australian Group

Cash 24 19 43

Receivables, prepayments and inventories 142 32 174

Prepaid Gas 38 - 38

less Payables and accruals (82) (25) (107)

Net working capital 122 26 148

Property, plant and equipment 153 139 292

Intangibles – Customer Acquisition 15 - 15

Intangibles - other 1 - 1

Net deferred taxation (10) (8) (18)

Net financial derivatives - (2) (2)

Debt - External (51) (73) (124)

Net Assets 230 82 312

Represented by

Equity Contribution 230 82 312

Return on funds employed (ROFE) 14.5% 9.2% 12.7%

Note: - Perth Energy: IFT holding is 81.2%

- ROFE calculated as: EBITDAF / (Equity + Debt – Asset Revaluation Reserve)