Apa Group · ASX:APA
Apa — Investor Day (November 2023)
57 slides from Apa's investor day presentation, Nov 15, 2023
Slide 1: ASX Announcement: Investor Day – Creating Value Through Remote Energy Solutions
APA Group Limited ACN 091 344 704 | APA Infrastructure Trust ARSN 091 678 778 | APA Investment Trust ARSN 115 585 441 Level 25, 580 George Street Sydney NSW 2000 | PO Box R41 Royal Exchange NSW 1225 Phone +61 2 9693 0000 | Fax +61 2 9693 0093 APA Group | apa.com.au 15 November 2023 ASX ANNOUNCEMENT
Slide 2: Pilbara acquisition – Creating value through remote energy solutions
For personal use only Investor Briefing & Mount Isa Site Visit Pilbara acquisition – Creating value through remote energy solutions 15 November 2023
Slide 3: Disclaimer
Disclaimer This presentation has been prepared by APA Group Limited (ACN 091 344 704) as responsible estimates. A number of important factors could cause actual results or performance to differ entity of the APA Infrastructure Trust (ARSN 091 678 778) and APA Investment Trust (ARSN materially from s
Slide 4: Welcome and introduction
Welcome and introduction For personal use only Diamantina Power Station 3
Slide 5: Today's Agenda
Today's Agenda 1 APA’s Strategy – Markets, Competitive Advantages, Priorities For personal use only 2 Remote Energy Solutions – Alinta Pilbara Acquisition 3 Capital Management Strategy 4 Q&A with Executive Leadership Team 5 Closing Remarks APA 2023 Investor Day 4
Slide 6: Today's key messages
Today's key messages For personal use only The energy transition We are executing our Disciplined capital presents significant strategy allocation framework growth potential for APA We are prioritising growth We have successfully completed We will deliver value to opportunities in a disciplined mult
Slide 7: Acknowledgement of Country
For personal use only Acknowledgement of Country At APA, we acknowledge the Traditional Owners and Custodians of the lands on which we live and work throughout Australia. We acknowledge their connections to land, sea and community. We pay our respects to their Elders past and present, and commit to
Slide 8: Safety share – Driver Awareness Campaign
Safety share – Driver Awareness Campaign Driving accounts for 33% of APA’s potential serious harm events In FY23, APA(1) drove 15 million kilometres and 4.3 million hours with zero For personal use only fatalities or serious injuries We recently launched a new Driver Awareness Campaign, aimed at pro
Slide 9: APA's strategy
APA’s strategy For personal use only 8 Emu Downs Solar Farm
Slide 10: We are resolute on three priority areas to execute our strategy
We are resolute on three priority areas to execute our strategy For personal use only Our People Operational Excellence Creating Value Ensuring our people are Safe, reliable and efficient Disciplined operations and motivated, engaged, safe and operations, and maintaining a investments to maximise va
Slide 11: A customer driven strategy to be the partner of choice
A customer driven strategy to be the partner of choice in delivering infrastructure solutions for the energy transition For personal use only Contracted Renewables and Firming Electricity Transmission We are supporting Australia’s energy transition through investment in Gas Transmission Future Energ
Slide 12: Priority markets represent a significant growth opportunity
Priority markets represent a significant growth opportunity, with an addressable market in excess of $100 billion Addressable Market (1) For personal use only Priority areas given existing competitive Selective approach where clear competitive advantage advantage exists On grid – Contracted Renewabl
Slide 13: Our target customers desire reliable, affordable, low emissions energy
Our target customers desire energy solutions that are reliable, affordable and low emissions For personal use only Priority areas Customer needs in APA's priority markets • Lower carbon energy solutions Remote grid – Contracted Renewables • Reliable energy supply at the lowest cost and Firming • Abi
Slide 14: We have competitive advantages in our priority markets
We have competitive advantages in our priority markets For personal use only APA's competitive advantages in priority Priority areas markets • Australia's leading independent, Australian listed, energy infrastructure operator and developer Remote grid – Contracted Renewables and Firming • Trusted ow
Slide 15: Recent acquisitions have established strong platforms for growth
Our recent acquisitions have established strong platforms for growth to support the transformation of APA’s asset base CASE STUDY CASE STUDY For personal use only Alinta Basslink Newman Power Station Basslink • Complements APA’s existing remote grid developments • Complements APA’s existing electric
Slide 16: Strong momentum in the execution of our strategy
Strong momentum in the execution of our strategy, with all development projects expected to deliver returns in excess of our cost of capital Projects delivered Projects underway Future opportunities announced For personal use only Nov 23 Nov 23 Oct 23 Alinta Energy Pilbara: $1.7 billion acquisition
Slide 17: APA's Pilbara assets
APA’s Pilbara For personal use only assets 16 Port Hedland Power Station
Slide 18: APA Pilbara: Strong momentum in execution of our strategy
APA Pilbara Strong momentum in the execution of our strategy, with all development projects expected to deliver returns in excess of our cost of capital EXECUTING OUR STRATEGY GROWTH OPPORTUNITIES For personal use only • Strong global iron ore demand • >$3bn(2) construction and development Strategic
Slide 19: APA Pilbara: Diverse portfolio of existing assets and decarbonisation developments
APA Pilbara Diverse portfolio of existing assets and decarbonisation developments For personal use only Contracted Renewables Gas Generation Electricity Transmission Gas Transmission 60MW operating solar 442MW operating gas >200km operating Remaining 11.8% of 35MW operating battery generation transm
Slide 20: Customer transition towards renewables underpins >$3 billion development pipeline
APA Pilbara Customer transition towards renewables underpins >$3 billion(1) development pipeline For personal use only Operation Under construction Development pipeline(2) Total Significant construction and development 1 pipeline of ~1GW+ ~1.6GW+ Demand supported by the electrification 2 and decarbo
Slide 21: Strategic sites that optimise reliability and costs for our customers
APA Pilbara Strategic sites that optimise reliability and costs for our customers For personal use only Pilbara Region Port Hedland Expansion – 60MW RECIPS, 43MW Solar & 25MW Battery Port Hedland Solar/Battery – 47MW Solar & 35MW Battery Shay Gap Wind – 200MW+ Port Hedland Power Station – 210MW East
Slide 22: Development driven by iron ore producers' decarbonisation commitments
APA Pilbara Development driven by iron ore producers' decarbonisation commitments Significant emissions reduction still required by major miners to meet 2030 emissions reduction targets, which is expected to be driven by reducing reliance on diesel For personal use only Roy Hill(1),(2),(3) BHP(4) Ri
Slide 23: Decarbonisation is expected to drive significant renewable electricity demand
APA Pilbara Decarbonisation is expected to drive significant renewable electricity demand The decarbonisation horizon to 2050 is expected to facilitate considerable growth in the use of renewables, with green electricity and gas firming expected to play key roles in this transition Renewable energy
Slide 24: APA's bundled solutions enable customers to reduce energy costs and emissions
APA Pilbara APA’s bundled solutions enable customers to reduce energy costs and carbon emissions Customers are increasingly looking for bundled solutions to reduce costs and emissions while maintaining reliability Solar is fast to market and so is typically introduced as the first stage in renewable
Slide 25: Development pipeline supported by strategically located wind sites
APA Pilbara APA's Pilbara development pipeline is supported by strategically located wind development sites • Wind is required for an optimal bundled solution For personal use only Shay Gap Wind is the • There are currently no wind farms in the Pilbara key enabler • ~80% of APA's Pilbara development
Slide 26: Integration of the business is progressing
APA Pilbara Integration of the business is progressing Objectives For personal use only Seamless, Safe and Maintain and Strengthen Facilitate Execution of Leverage ‘Best of Both 1 Reliable Operations 2 Relationships & Service 3 Business Plan (Growth 4 Businesses’ Delivery Strategy) Integration timel
Slide 27: Our Pilbara assets provide a platform for growth
APA Pilbara Our Pilbara assets provide a platform for growth underpinned by strong operating credentials and strategic development sites Predictable earnings Strong operating and Strong relationships For personal use only and cash flows development capabilities with key customers $124m FY23 EBITDA,
Slide 28: Capital Management Strategy
Capital For personal use only Management Strategy 27 Badgingarra Solar Farm
Slide 29: Capital Management Objectives
Capital Management Objectives For personal use only 1 Capital allocation 2 Disciplined investment 3 Maintaining balance framework determines in growth relative to sheet strength and strategic investment capital and income funding optionality priorities returns to securityholders APA 2023 Investor Da
Slide 30: Capital allocation framework maximises securityholder value
Capital allocation framework maximises securityholder value through the optimal allocation of Free Cash Flow For personal use only Free Cash Flow Productivity improvements (FCF(1)) Investment Organic growth Operating Cash Flow Strategic acquisitions Less: stay-in-business (SIB) capex Distribution ta
Slide 31: Investing in our business to strengthen resilience and deliver long-term growth
In the immediate term we are investing in our business to strengthen resilience and deliver sustainable long-term growth FY24 revenue considerations(1) FY24 cost considerations(1) For personal use only • Full year contribution from Basslink (FY23 was $29m for ~8 months) and Dugald • Ongoing investme
Slide 32: Pipeline of near and long-term growth opportunities
The energy transition is presenting an attractive pipeline of near and long-term growth opportunities For personal use only Organic growth Pilbara development Future growth pipeline pipeline >$1.8 billion(1) >$3 billion(2) ~$100 billion addressable market East Coast Grid Chichester Solar and Wind Be
Slide 33: Our return hurdles will ensure we deliver value above our WACC
Our return hurdles will ensure we are delivering value above our WACC and maximising returns relative to returning capital and income to securityholders For personal use only Targeting returns in excess of our post tax WACC(1) Indicative returns above our post tax WACC 5%+ Disciplined IRR hurdle rat
Slide 34: Higher interest rates demand a strong balance sheet
The higher interest rate environment demands a strong balance sheet and the need to ensure investment return hurdles are sustainable For personal use only Bond yields have risen considerably since 2021 10-year AU Government Bond Yields 5.0% 100% of drawn debt is fixed rate(1) hence higher rates only
Slide 35: Inflation linked revenues
Inflation linked revenues Revenue Drawn debt EBITDA Majority of APA’s fixed revenue is indexed to inflation(1) Fully hedged/fixed with average maturity of 5.3 yrs(2) High EBITDA margins(3) For personal use only Underlying Drawn debt hedged or EBITDA as % of revenue CPI linked revenue fixed at 13 Nov
Slide 36: Strong balance sheet to manage refinancing risks
We have a strong balance sheet to manage refinancing risks in a high interest rate environment Diversity of funding sources and maturities provide optionality(1) For personal use only Treasury principles: • Retain investment grade BBB / Baa2 credit ratings 500 Corporate Liquidity • Diversity of fund
Slide 37: Diversity and flexible funding enables APA to maximise returns
Diversity and flexible funding enables APA to maximise returns and support growth Equity Debt For personal use only • Strong investor demand in recent equity raisings • $1.25 billion syndicated term loan delivered long-term • $675 million placement to existing and new cost-effective funding (7 and 1
Slide 38: Recent funding initiatives support our credit metrics
Our recent funding initiatives are designed to support our credit metrics as we fund our >$1.8 billion development pipeline Movement in FFO / Debt reflects our recent investments primarily funded with debt(1) For personal use only 11.5% As we execute our strategy we see a time lag between 11.1% the
Slide 39: Closing Remarks
Closing Remarks For personal use only 38 Mondarra Gas Storage and Processing Facility
Slide 40: APA is adapting to shifting energy market dynamics
APA is adapting to shifting energy market dynamics Market dynamic Opportunity / Risk Implications for APA Growing community and government recognition Growing awareness of the significant challenges to maintain For personal use only Role of gas of the essential role of gas to support the build-out o
Slide 41: Remain disciplined against our capital allocation framework
We will remain resolute and disciplined against our capital allocation framework - focused on creating value for securityholders For personal use only Investing in our business Investing in growth Sustainable capital strategy • Strengthening business resilience • Significant growth opportunities • F
Slide 42: APA provides defensive cashflows and an attractive pipeline of growth
APA provides investors with defensive cashflows and an attractive pipeline of growth opportunities Organic growth pipeline of >$1.8bn over the next 3 years and well positioned to win 1 For personal use only a share of the ~$100bn addressable market in our priority focus areas where we have a clear c
Slide 43: Highly experienced Executive Leadership Team
Delivery of our strategy being led by a highly experienced Executive Leadership Team For personal use only ADAM WATSON PETREA BRADFORD AMANDA CHENEY ROSS GERSBACH KEVIN LESTER Chief Executive Officer and Group Executive Operations Group Executive Legal and Group Executive Strategy Group Executive Ma
Slide 44: Q&A
For personal use only Directlink Q&A 43
Slide 45: Appendices: Mount Isa site
Appendices 1 For personal use only Mount Isa site 44 Badgingarra Wind Farm
Slide 46: North West Power System - Regional Overview
North West Power System - Regional Overview The North West Minerals Province (NWMP) region, centered around Mount Isa in Queensland, is rich in mineral resources such as zinc, copper, and lead For personal use only Electricity is supplied through the North West Power System (NWPS). The NWPS is an is
Slide 47: North West Power System – System Assets
North West Power System – System Assets APA Assets Type/capacity Comments Diamantina Power 242MW 4 x Siemens SGT-800 Station (DPS) CCGT 2 x Siemens SST-400 For personal use only Leichhardt Power 60 MW OCGT Siemens SGT-65A (Rolls-Royce Trent 60) Station (LPS) turbine black start capable dual fuel, ga
Slide 48: North West Power System – Key Assets
North West Power System – Key Assets DIAMANTIA POWER STATION (DPS) CARPENTARIA GAS PIPELINE (CGP) DUGALD RIVER SOLAR FARM For personal use only • Modern high-efficiency gas-fired power station • 840-kilometre mainline pipeline between Ballera • Largest off-grid solar farm in Australia outside the se
Slide 49: APA uniquely positioned to provide energy solutions to North West Power System
APA uniquely positioned to provide energy solutions to North West Power System For personal use only The APA assets within the NWPS offers reliable and cost competitive energy solutions for our customers and the region The APA existing footprint and capability enables renewable generation to be deve
Slide 50: Appendices: Background Materials
Appendices 2 For personal use only Background Materials 49
Slide 51: Diverse energy infrastructure portfolio
Diverse energy infrastructure portfolio Gas infrastructure Power Generation For personal use only Renewable energy(1) Transmission(1) 342 MW Wind >15,000 km transmission 311 MW Solar pipelines 39 MW BESS Gas fired(1) 883 MW Storage 12,000 tonnes LNG 18 PJ gas Electricity Transmission >800 km high vo
Slide 52: Diverse operational footprint
Diverse operational footprint APA PORTFOLIO OF ASSETS AND INVESTMENTS For personal use only APA 2023 Investor Day 51
Slide 53: APA's Pilbara Energy System's footprint
APA’s Pilbara Energy System’s footprint Pilbara Energy System developed projects Operating and under construction portfolio For personal use only Projects delivered across wind, solar, storage and transmission Asset Type Capacity Customers Operating Port Hedland Power Station 210MW BHP, FMG Chichest
Slide 54: Diverse business model
Diverse business model Characteristics of Energy For personal use only Infrastructure (EI) revenue: • Solid risk management processes in place • Manage counterparty risks by: – Diversification of customers and industry exposures – Assessment of counterparty creditworthiness (1) – Entering into stabl
Slide 55: Climate Transition Plan Progress
Climate Transition Plan Progress Interim targets and goals are consistent with Committed to develop a Scope 3 goal for next Commitments are fit-for-purpose and the objectives of the Paris Agreement to limit Climate Transition Plan (CTP) in FY25 assessed as aligned to the TCFD2 warming to well below
Slide 56: Group structure
Group structure Group Structure • APA Group is listed as a stapled structure on the Australian Securities Exchange (ASX:APA) APA Infrastructure Trust APA Investment Trust For personal use only • APA is comprised of two registered managed investment schemes: (APA Infra) (APA Invest) – APA Infrastruct
Slide 57: For further information
For personal use only For further information Rebecca Culbertson Michael Cox Head of Investor Relations Head of Media Relations & Financial Communications M: +61 487 565 628 M: +61 429 465 227 E: rebecca.culbertson@apa.com.au E: michael.cox@apa.com.au www.apa.com.au