March 2005

Australia’s largest natural gasAustralia’s largest natural gasdistribution companydistribution company

NICHOLAS AGE 6 “Envestra is a person and cat inside a circle.”

Laura ReedChief Financial Officer

Des PetherickManager, Corporate Services

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An introduction to Envestra

Review of half-year results

Five year performance

Security of gas supplies

Our regulatory position

Long-term debt refinancing

Growth opportunities

Summary

Agenda

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An introduction to Envestra

Envestra is: Largest distributor of natural gas in Australia

ASX listed company – about 150th largest in Australia 950,000 consumers supplied with energy 18,500 km of distribution networks 1,100 km transmission pipelines Assets $2.5 billion Revenue: $300 million Cornerstone shareholders (17.5% each)

o Origin Energy o Cheung Kong Infrastructure Holdings

140 years of history

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Envestra is: Natural monopoly with regulated assets, generating strong cashflows

Long life assets – up to 100 years

Geographically and operationally diverse Vic, SA, Qld, NT, NSW

Capital intensive Annual capex $60 to $100 million

Innovative O&M partnership with Origin Energy

OEAM operate and manage assets Incentive based

Regulatory position established in all markets Predictable revenue

Strong financial position Medium and long-term financing Active in capital markets

Natural gas – a growth industry 26% of primary energy by 2020 (up from 18%)

An introduction to Envestra

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Where we operate

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Advance payment of FRC costs

“The Accounting Standards require the entire $54.6 million received from the South Australian Government to be treated as revenue for the year ended 30 June 2004. However, the capital expenditure is depreciated over the next five years”

“The Directors have a strong view that this receipt would better have been matched against future operating costs and depreciation.”

Envestra Media Release

8 July 2004

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Summary of Financial Performance ($M)

Half-year ended 31 December 2004 $M

2004 2003 % Change

Revenue (excl interest and asset sales) 165.4 162.2 Up 2%

Cashflow from operating activities 52.5 69.8 Down 25%

Profit before tax and loan note interest 23.5 29.5 Down 20%

EBIT (profit before borrowing costs and tax) 89.0 95.3 Down 7%

Profit (Loss) after tax & LNI (6.0) 1.9 Down $7.9M

Profit after tax excl loan note interest (LNI) 7.3 11.4 Down 36%

Gas delivered 61.0 PJ 63.9PJ Down 5%

Most indicators are down due to early recording of revenues from SA

Government’s FRC contribution last year Earnings performance is ahead of expectations – forecast loss after loan note

interest and tax revised down to $24M – previously $26M

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Five year financial performance

2004 2003 2002 2001 2000

Revenue (excluding interest received) 299.5 277.5 267.1 261.8 246.8

SA Government recept 54.6 - - - -

Operating costs (97.5) (80.2) (88.4) (88.6) (86.9)

Depreciation/amortisation (44.8) (41.2) (38.1) (35.9) (33.5)

Operating profit before borrowing costs & income tax 211.8 156.1 140.6 137.3 126.4

Less: net borrowing costs (130.8) (130.2) (128.0) (133.4) (126.3)

Profit before interest on loan notes 81.0 25.9 12.6 3.9 0.1

Interest on loan notes (25.6) (23.5) (21.0) (20.2) (18.6)

Profit/Loss before income tax 55.4 2.4 (8.4) (16.3) (18.5)

Income tax (32.7) 10.3 (3.9) (15.6) 5.6

Profit/Loss after income tax 22.7 12.7 (12.3) (31.9) (12.9)

Statement of Financial Performance ($M)

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2004 2003 2002 2001 2000 Operating receipts less payments 212.7 194.0 180.5 172.4 162.1 SA Government receipt 54.6 - - - - Subvention payment 4.0 10.0 18.0 19.0 35.0 Net cash flow before borrowing costs 271.3 204.0 198.5 191.4 197.1 Net borrowing costs (117.1) (117.6) (115.1) (116.3) (119.9) Cash flow from operating activities 154.2 86.4 83.4 75.1 77.2 Replacement capex (12.4) (10.5) (9.7) (12.0) (12.6) Available for distribution 141.8 75.9 73.7 63.1 64.6 Distributions (69.5) (67.0) (59.5) (54.4) (48.9) Contribution to growth capex 72.3 8.9 14.2 8.7 15.7 Loan drawdowns for growth capex 72.6 47.0 49.9 32.1 89.8 Cash available for growth capex 144.9 55.9 64.1 40.8 105.5 Growth capex (79.1) (65.0) (53.2) (56.1) (101.0) Cashflow available pre debt/equity re-financing 65.8 (9.1) 10.9 (15.3) 4.5 Debt (drawdowns net of repayments) (30.2) (3.2) (99.6) (2.1) (204.5) Proceeds from sale of land 0.2 - - - - Equity proceeds 42.9 21.3 83.0 16.6 210.0 Financing costs (2.2) (8.0) (9.6) (1.2) (9.6) Change in cash 76.5 1.0 (15.3) (2.0) 0.4 Opening cash 10.6 9.6 24.9 26.9 26.5

Closing cash 87.1 10.6 9.6 24.9 26.9

Five year financial performance

Summary of Cash Flows ($M)

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Eastern gas pipeline SEA Gas pipeline (now delivering more than MAP) Interconnectivity of transmission networks Underground storage in Western Victoria New offshore gas fields in Otway Basin and Bass Strait

(gas deliveries commenced from Minerva) Explosion at Moomba 1 January 2004

o No impact on Envestra o Supplies to Adelaide supplemented via SEA Gas pipeline

Security of gas supplies – SE Australia

Developments since Longford incident in 1998

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No major regulatory decisions in 2004/5 Resets are July 2006 (SA and Qld) and January 2008 (Vic &

NSW) Preparatory work for SA & Qld well advanced Some changes in regulatory regime anticipated from Federal

Govt’s new Energy Policy, and Productivity Commission’s report (when implemented!).

Creation of new National Regulator – legislation in SA Parliament (as lead legislator) – strong ACCC influence

Our regulatory position

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Long-term debt financing

$200 million syndicated debt matures July 2006 and $377 million in June 2007

Debt to be refinanced via 20-year bonds issued under $600 million MTN program

Refinancing brought forward due to:o Increased demand for BBB rated debto Credit margins at historical lowso Emerging availability of local long-term debto Will reduce refinancing/liquidity risk

To be concluded by end March

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Our growth opportunities

Capital expenditure averages $60 million per year ($45 million on growth) Organic (bread and butter) 20,000 new consumers per year

Add about $250 each to revenue

Regional projects Whittlesea (north of Melbourne) o $20 million project o 30,000(+) new consumers over next 15 to

20 years Bairnsdale (eastern Victoria)

o $8 million project o 3,000 new consumers in next 5 to 10 years

Mornington Peninsula Hurstbridge St Andrews Beach

o Negotiations progressing with Regional Development Victoria for financial support

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Our growth opportunities

Acquisitions Not successful in bids for Duke Energy and Dampier to Bunbury natural gas pipeline

Disciplined approach to assessing potential

increase in shareholder value Not prepared to offer amounts put forward by

others Will continue to review opportunities for

acquisition opportunities, but somewhat limited

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Envestra offers an attractive tax efficient yield (8.5% based on $1.12) 9.5 cent distribution expected to be maintained

Regulatory risk is limited – reset process for SA & Qld well advanced

Strong financial position: o long-term financing in place o BBB rating o unused lines of credit o gearing at 69% (Debt/Total assets)

Guaranteed organic growth – mergers/acquisitions only if shareholder value generated

Conclusion

Australia’s largest natural gas distributor

Envestra is a low risk – high yield stock!

ELEANOR AGE 7 “A caterpillar will grow into a cocoon and a butterfly.”