Envestra

PROFIT AFTER TAX

$40.3 million in 2008-09 ($163.6 million in 2007-08 (including $153.2 million one-off tax benefit)).

The Company recorded a consolidated profit after tax and interest on loan notes of $40.3 million. An underlying profit after tax of $35.6 million was recorded, compared with an underlying profit after tax of $11.3 million in 2007-08. Other than the one-off tax benefit in 2007-08 outlined above, other items eliminated from the profit after tax to calculate the underlying profit are land sales, remediation provisions and investment tax allowance.

CAPITAL EXPENDITURE

$112.5 million in 2008-09 ($108.3 million in 2007-08).

Capital expenditure was $112.5 million, an increase of $4.2 million on the previous year. Around $95 million was spent on growth projects and $18 million on replacement of “old” mains and other “stay-in-business” activities.

CASH RESERVES

$6.2 million in 2008-09 ($10.8 million in 2007-08).

The Company’s cash reserves at year end were $6.2 million, compared with $10.8 million at the end of the previous period. Cash balances are normally maintained at modest levels to minimise debt and enhance returns to shareholders.

The Company had available unused bank credit lines of $236 million at year end.

During the year debt, excluding loan notes, decreased by $52.4 million to $1,981.4 million, largely as a result of the addition of $111 million of new equity.

The average loan duration for the Envestra Group, at 30 June 2009, was 9.3 years.

Envestra’s gearing level was 74.7% at year-end. Gearing is defined as net debt divided by total non-cash assets. Whilst the level of gearing is relatively high compared to industrial and property companies, it is considered appropriate in the context of the reliable cash flow expectations that are associated with a regulated monopoly service provider. The gearing level has been negatively impacted by the decline in the Company’s security/share price.

CREDIT RATING

Envestra’s credit rating with Standard & Poor’s of BBB-/A-3 was affirmed in March 2009, and the long-term ratings outlook was revised from negative to stable. This upgrade was in response to the various capital management initiatives undertaken by the Company throughout the year.

Moody’s rating of Baa2 Outlook Negative for the Envestra Security Group, which relates to the Company’s South Australian and Queensland assets, remains unchanged.

We are working to strengthen these ratings to ensure the Company operates with the lowest sustainable cost of capital.