14
Delivering value to our shareholders
Three key focus areas:
Strategic planSustainable business practicesCorporate governance
Committed to balanced capital allocation
An integrated approach to enterprise risk management
Building a strong, sustainable company
15
Recognized for outstanding efforts
Best Investor Relations Program
North American DJSI Index - 3rd consecutive year
1st in corporate governance for utilities - 7th consecutive year
Spencer Stuart 2009 National Awards in Governance
18
Forward Looking Statements
This presentation may contain forward-looking statements, including statements regarding the business and anticipated financial performance of TransAlta Corporation. All forward-looking statements are based on our beliefs and assumptions based on information available at the time the assumption was made. These statements are not guarantees of our future performance and are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include cost of fuels to produce electricity, legislative or regulatory developments, competition, global capital markets activity, changes in prevailing interest rates, currency exchange rates, inflation levels, unanticipated accounting or audit issues with respect to our financial statements or our internal control over financial reporting, plant availability, and general economic conditions in geographic areas where TransAlta Corporation operates. Given these uncertainties, the reader should not place undue reliance on this forward-looking information, which is given as of this date. The material assumptions in making these forward-looking statements are disclosed in our 2008 Annual Report to shareholders and other disclosure documents filed with securities regulators.
Unless otherwise specified, all dollar amounts are expressed in Canadian dollars.
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Outline
Financial strategy
2008 Year in review
2009 First quarter and full year financial outlook
Financial strength and balanced capital allocation
20
Financial strategy creates near and long-term shareholder value
Maintain financial strength and flexibility
Maintain capital discipline
Maintain focus on IRR, ROCE and TSR objectives
Financial strength provides competitive advantages in a long-cycle, capital intensive, cyclical industry
21
2008 Financial Results: A record year
9.7%
29%
$847
$1.00
$1.53
$1.31
$309
$264
2007
9.8%
-24%
$1,038
$1.08
$1.18
$1.46
$235
$290
2008
Comparable Return on Capital Employed (ROCE)
Dividends
Cash flow from operations (MM)
Comparable Earnings
Per share
Total Shareholder Return
Net Earnings
Net earnings (MM)
Comparable earnings (MM)
Results
$0.66$0.82
$1.16$1.31
$1.46
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
2004 2005 2006 2007 2008
Comparable earnings per share
Cash flow from operations
$591 $620$490
$847
$1,038
$0
$200
$400
$600
$800
$1,000
$1,200
2004 2005 2006 2007 2008
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2009 Q1 comparable earnings
$0.17$0.21Basic and diluted earnings per share
$0.50$0.18Comparable earnings per share
$ 99$36Comparable Earnings (MM)
$0.27$0.29Cash dividends declared per share
$33$42Net Earnings (MM)
12,173
86.4
Q1 2009
91.8Availability (%)
13,226Production (GWh)
Q1 2008Results
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$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
Credit Lines Utilized Credit Lines Available
$BB
Mar. 31, 2008 Mar. 31, 2009$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
Credit Lines Utilized Credit Lines Available
$BB
Mar. 31, 2008 Mar. 31, 2009
Strong balance sheet + stable credit ratios + solid liquidity = long-term financial stability
Cash flow to total debt
0
12
34
5678
2005 2006 2007 2008
35%
40%
45%
50%
55%
60%
2005 2006 2007 2008
0%
5%
10%
15%
20%
25%
30%
35%
2005 2006 2007 2008
Cash flow to interest
Committed credit lines Debt to total capital
Min 25%
Min 4x
Max 55%
24
Balanced and disciplined capital allocation supports value creation through market cycles
Divest or improve non-core and under-performing assets
Portfolio
Optimization
Provide shareowners sustainable dividend growth; payout ratio of 60 - 70% of comparable earnings
Dividend
Projects must deliver unlevered, free cash, after tax IRR >10%:
Growth
Investment
Provide shareowners incremental return of capital in absence of value-creating investment opportunities
Share
Buyback
Priority Direction
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1.28
1.961.76
06 07 08
$1,038
$490
$847
06 07 08
(MM)$1.31
$1.16
$1.46
06 07 08
9.8%
9.0%
9.7%
06 07 08
In 2008 we achieved record resultsRecord comparable earnings
Record cash flow from operations
Safety IFR reducedComparable return on capital employed
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Capital allocation balances growth with…..
200920112011/2012
53 MW225 MW46 MW
Sundance 5Keephills 3Keephills 1&2
12/2008200920102011
96 MW66 MW66 MW72 MW
Kent HillsBlue TrailSummerview IIArdenville
CompletionSizeProject
28
…returning capital to shareholders
$883Free Cash Flow Allocated
$130Share Buyback
$212Dividend
$541Growth Investment
2008Capital Allocation (MM)
29
CANADA
UNITED STATES
AUSTRALIA
Wholesale generator & marketer
in Western Canada and U.S.
Low to moderate risk
Diversified portfolio
Financial strength
Balanced capital allocation
Sustainable strategy to deliver long-term yield and capital appreciation
TransAlta’s strategy
30
Key operating principles
Operational excellence
Cost disciplineLong-term maintenance planningSafety, safety, safety
Environmental leadership
Leader in technologyLeader in renewablesLeader in sustainability
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Strategy paying off in 2009
Contracting provides earnings security
Restoring Alberta Thermal availability a priority
Driving for greater efficiency and cost containment
Maintaining balance sheet strength
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Asia & Oceania38%
Africa4%
Canada 2%
U.S. & Mexico22%
Central and South America
4%
Europe16%
Eurasia9%
Middle East5%
Canada – a small part of the climate challenge
World CO2 Emissions from the Consumption and Flaring of Fossil Fuels
Source: Energy Information Administration (EIA), 2006
33
0500
1,0001,5002,0002,5003,0003,5004,0004,500
United S
tates
China
Japa
nInd
iaGerm
any
United K
ingdo
mRus
siaFra
nce
Brazil
Italy
Spain
Mexico
Canad
aSouth
Korea
Iran
Indon
esia
Australi
aTa
iwanTurk
eyNethe
rlands
Conventional Thermal Hydro Nuclear Renewable
Coal and fossil fuels generate 60% of world’s electricity
Top 20 Industrialized Nations Net Generation by Type
Source: Energy Information Administration (EIA), 2006
Billion Kilowatthours
34
Project Pioneer – leading the world in CCSWe are advancing Canada’s first large-scale project to retrofit a power
plant to capture and store 1M tonnes of CO2 by 2013
Carbon Capture and Storage
CO2 returned
Energy Input (oil/gas)
Energy Input (coal)