Slide 1: ASX Announcement: Financial Results Presentation
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 23 February 2023 ASX ANNOUNCEMENT
Slide 2: Strengthening communities through responsible energy: FY23 Half Year Result
Strengthening communities through responsible energy FY23 Half Year Result February 2023
Slide 3: Disclaimer
Disclaimer This presentation has been prepared by APA Group Limited (ACN 091 344 704) as responsible entity of the estimates. A number of important factors could cause actual results or performance to differ materially from such APA Infrastructure Trust (ARSN 091 678 778) and APA Investment Trust (A
Slide 4: Acknowledgement of Traditional Custodians
In the spirit of reconciliation APA acknowledges the Traditional Custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander Peoples today. APA
Slide 5: Safety or customer discussion: Young-Lithgow Pipeline Response
With a commitment to continuous learning APA starts all meetings with a safety or customer discussion Young-Lithgow Pipeline Response Source: Young-Lithgow November 2022 APA 1H23 Results Investor Presentation 4
Slide 6: A solid 1H23 result as APA continues to invest to support Australia's energy transition
A solid 1H23 result as APA continues to invest to support Australia’s energy transition A solid 1H23 Investment Critical role in the Partner of Choice result in growth energy transition • Underlying EBITDA up 2.5% • $465m invested in organic • A leading Australian listed • Our ambition is to be the
Slide 7: Building momentum across three priority areas
We are building momentum across the business with a relentless focus on three priority areas Our Operational Creating People Excellence Value APA 1H23 Results Investor Presentation 6
Slide 8: Delivering continuous improvement in our people outcomes
OUR PEOPLE Delivering continuous improvement in our people outcomes Safety Gender diversity 35% reduction in Total Recordable Injury Frequency Rate Targeted focus on improving our female representation (TRIFR)(1) Total Recordable Injury Frequency Rate 5.0 3.3 1.7 18 Contractors APA Overall Employees
Slide 9: Programs and initiatives to be an employer of choice
OUR PEOPLE Targeted programs and initiatives to ensure we are an employer of choice Industry recognition Employee benefits We are proud to be recognised as a top employer for our Graduate program We are committed to providing competitive employee benefits to ensure our and as a great employer for wo
Slide 10: A solid 1H23 result and growth in distributions in line with FY23 guidance
OPERATIONAL EXCELLENCE A solid 1H23 result and growth in distributions in line with FY23 guidance Segment Revenue1 up Underlying EBITDA2 up Free Cash Flow (FCF)3 down 5.2% to $1,175m 2.5% to $879m 6.0% to $484m Up 4.0% excluding Orbost Up 2.0% excluding impact from timing of working capital receipt
Slide 11: Case study: Basslink Integration
OPERATIONAL EXCELLENCE Case study: Basslink Integration Strong progress Improvements and 100% availability with our investments already in 1H23 since integration of implemented to enhance ownership Basslink system strength, such as an upgraded ride-through system Source: Basslink George Town 31 Octo
Slide 12: Progressing our Sustainability initiatives
OPERATIONAL EXCELLENCE Progressing our Sustainability initiatives Sustainability roadmap achievements in 1H23 • Reconciliation & First Nations Manager appointed • Enhanced data disclosures via the release of our new Sustainability Data book containing annual ESG related performance information • Dev
Slide 13: Progressing our Climate Transition Plan initiatives
OPERATIONAL EXCELLENCE Progressing our Climate Transition Plan initiatives Climate Transition Plan achievements in 1H23 • Aligned Group Executives’ remuneration to climate-related performance • Enhanced governance framework to include a Safety and Sustainability Committee of the Board • Progressed e
Slide 14: Creating value as the partner of choice for energy transition
CREATING VALUE Creating value as the partner of choice delivering infrastructure solutions for the energy transition Proactive approach to market and partnering with our customers Contracted Electricity Renewables & Transmission Firming Key focus on Investing in systems to select markets support our
Slide 15: Significant investment in 1H23 to support growth
CREATING VALUE Significant investment in 1H23 to support growth 800 Acquisitions and Investments Growth capex - Regulated Key drivers for capex in 1H23 Growth capex - Non-Regulated $103m 700 684 • Acquisitions and investments in 1H23 relates to the Foundation capex represents cash component of cash
Slide 16: Investing to strengthen our foundations for a sustainable future
CREATING VALUE Investing to strengthen our foundations for a sustainable future Technology Business Resilience Net Zero Investing in systems and processes to drive efficiency, scalability and Ongoing strengthening of APA's Delivering our Net Zero operational strengthen customer business resilience c
Slide 17: Case study: Centralised control and operations facility
CREATING VALUE Case study: Centralised control and operations of our renewable power, gas fired power, gas transmission, and electricity transmission assets in one state of the art facility New 24/7 backup facility ensures business continuity should access to the primary centre be inhibited Source:
Slide 18: Financial performance
Financial performance Kynwynn Strong Acting CFO APA 1H23 Results Investor Presentation 17
Slide 19: 1H23 delivering growth in EBITDA and distributions; balance sheet remains robust
1H23 delivering growth in EBITDA and distributions; balance sheet remains robust % Financial summary 1H23 1H22(1) Change(2) Key points to note Revenue (excluding pass-through)(3) $m 1,231.9 1,117.7 10.2% • A solid 1H23 result driven by our Energy Infrastructure portfolio Segment revenue (excluding p
Slide 20: Revenue growth driven by inflation linked tariffs and improved operating activity
Revenue growth driven by inflation linked tariffs and improved operating activity in a number of assets $8m Key drivers $3m $5m $1,175m $20m • Inflation linked tariff escalation was the key driver of revenue $3m • East Coast assets contributed to higher operating revenue. Increase on prior period al
Slide 21: Higher cost base from ongoing investment in capability
Higher cost base from ongoing investment in capability $297m • Operating costs higher, mainly due to increased $16m maintenance activity • Young-Lithgow repair costs ~$3m $12m • Movement in cost base associated with net asset $3m $3m movements - acquisition of Basslink and sale of Orbost $9m • Incre
Slide 22: EBITDA growth driven by strong Energy Infrastructure performance
EBITDA growth driven by strong Energy Infrastructure performance % Key drivers EBITDA by segment 1H23 1H22 Change(1) • East Coast up 1% (up 5% excluding Orbost) driven by inflation linked tariffs, Energy Infrastructure: higher volumes and new contracts, partly offset by Young Lithgow repair costs Ea
Slide 23: Free Cash Flow impacted by timing of $41m working capital receipt
Free Cash Flow impacted by timing of $41m working capital receipt $1m Key drivers of Free Cash Flow (FCF)(1) $13m • Higher underlying EBITDA $4m $2m $24m • Lower cash tax due to accelerated depreciation allowance on new projects through to 30 June 2023 $525m $21m $0m • Working capital $24m lower due
Slide 24: Balance sheet capacity to invest in growth, with opportunities in excess of $1.4b
Balance sheet capacity to invest in growth, with organic opportunities in excess of $1.4b Robust Balance Sheet and liquidity position FY23 to FY25 pipeline of capex opportunities >$1.4b 1H23 1H22 $850-$900m Cash & undrawn debt facilities $2.3b $1.8b Net debt $10.5b $9.1b Average cost of debt(1) 4.4%
Slide 25: Disciplined capital allocation framework to maximise securityholder value
Disciplined capital allocation framework to maximise securityholder value Stay In Business Foundational Organic growth and Other capital capex capex M&A opportunities Distributions management • Ensures safe and reliable • Programs to strengthen the • Creating long term value • Targeting a payout rat
Slide 26: Market Dynamics
Market Dynamics Adam Watson CEO & MD APA 1H23 Results Investor Presentation 25
Slide 27: Partner of choice in delivering infrastructure solutions for the energy transition
To be the partner of choice in delivering infrastructure solutions for the energy transition We are supporting Australia’s energy transition through investment in: An effective transition requires energy that is: Reliable Contracted Electricity Gas Future Affordable Renewables & Transmission transpo
Slide 28: As coal retires, renewables firmed with gas will be essential
As coal retires, renewable energy firmed with gas will be essential to deliver the most reliable, affordable and low-emissions pathway to decarbonise our energy system Coal generation accounts for >60% of electricity generation Renewables can't do all the heavy lifting as coal generation in the NEM
Slide 29: Eastern Australia has significantly more coal generation than other regions
Eastern Australia has significantly more coal generation compared to more progressed regions where gas plays a key role in firming renewables 100% Other 4% 3% 3% Nuclear 21% 15% Renewables Hydro 32% 80% Coal 33% Gas 8% 66% 38% 60% 15% 38% 2% 40% 2% 67% 46% 20% 40% 33% 30% 4% Eastern Australia(1) Wes
Slide 30: UK affordability challenges with over-reliance on gas imports
The UK experienced affordability challenges in 2021 with an over-reliance on gas imports, lower performing renewables and insufficient baseload UK electricity prices day ahead baseload contracts – monthly average(3) Monthly average (GBP/MWh) 400 350 300 250 Jan-Dec 21 200 +189% 150 100 Commencement
Slide 31: Committed domestic gas supply essential; APA expanding east coast capacity
Committed domestic gas supply is essential to ensure an orderly energy transition in Australia, and APA is playing its role by expanding east coast transportation capacity Expansion of East Coast Grid to help alleviate the risk of gas supply ACCC forecast a potential gas supply shortfall of 52 PJ in
Slide 32: Q&A Session
Q&A Session APA 1H23 Results Investor Presentation 31
Slide 33: Closing remarks
Closing remarks APA 1H23 Results Investor Presentation 32
Slide 34: APA well positioned to support the energy transition
APA well positioned to support the energy transition Investing in our Strong balance DPS guidance Inflation Growth opportunities business sheet & liquidity • Reaffirmed FY23 DPS • Majority of revenue • Organic growth pipeline • Investing in technology, • $2.3b of cash and guidance of 55.0(1) cps up
Slide 35: Supplementary Financials
Supplementary Financials APA 1H23 Results Investor Presentation 34
Slide 36: APA is well positioned to benefit from rising inflation
APA is well positioned to benefit from rising inflation Revenue Drawn debt EBITDA Majority of APA’s revenue is indexed to inflation(1) Fully hedged/fixed with average maturity of 6.2 yrs(2) High EBITDA margins(3) EBITDA as % of revenue CPI linked revenue Drawn debt hedged or fixed at 31 Dec 2022 Cos
Slide 37: Historical underlying EBITDA by asset – Energy Infrastructure
Historical underlying EBITDA by asset – Energy Infrastructure $ million 1H23 1H22(1) FY22(1) FY21(1) FY20(1) FY19(1) FY18(1) East Coast Grid Wallumbilla Gladstone Pipeline 297.0 278.7 577.7 549.5 538.7 542.2 515.7 South West Queensland Pipeline 131.9 120.9 245.2 232.8 254.4 250.0 244.3 Moomba Sydney
Slide 38: Revenue and EBITDA by geography
Revenue and EBITDA by geography $ million 1H23 1H22(1) Change ($) Change (%)(2) Revenue Energy Infrastructure Queensland 652.3 609.3 43.0 7.1% New South Wales 91.9 90.2 1.7 1.9% Victoria 108.8 112.3 (3.5) (3.1%) South Australia 0.7 1.5 (0.8) (51.6%) Northern Territory 14.0 14.3 (0.3) (2.2%) Western
Slide 39: Non-operating items
Non-operating items ($ million) 1H23 1H22 Underlying EBITDA 878.9 857.7 Fair value gains/losses on contracts for difference(1) (10.1) 8.2 Technology transformation projects(2) (21.7) (2.7) Wallumbilla Gas Pipeline hedge accounting unwind(3) (18.4) - Basslink debt revaluation, interest and integratio
Slide 40: EBITDA bridge to Free Cash Flow
EBITDA bridge to Free Cash Flow $ million 1H23 1H22(1) % Change(2) Underlying EBITDA(3) 878.9 857.7 2.5% less Equity Accounted Earnings (11.5) (15.6) (26.3%) Underlying EBITDA Excluding Associates/JV's 867.4 842.0 3.0% Change in Working Capital/other (55.3) 9.1 (707.7%) Cash impact of Non Operating
Slide 41: 1H23 Capital expenditure
1H23 Capital expenditure 1H23 1H22 FY22 Description of major projects ($ million) ($ million) ($ million) Growth capex Western Outer Ring Main (WORM); Winchelsea Compressor Station; Victorian Transmission Regulated System, Roma Brisbane Pipeline and Goldfields Gas Pipeline Access Arrangement allowed
Slide 42: Balance Sheet capacity to fund growth
Balance Sheet capacity to fund growth • $2.3b of available liquidity • BBB/Baa2 ratings with stable outlook 536 350 • FFO: Net Debt(3) of 11.3% (2) providing significant headroom to fund growth and support capital 550 management 500 500 • No material debt refinancing obligations until FY25 (2) 1,544
Slide 43: 5 year normalised financials
5 year normalised financials Financial Performance 1H23 1H22 FY22 FY21 FY20 FY19 FY18 Revenue $m 1,498.9 1,384.4 2,732.4 2,605.3 2,590.6 2,452.2 2,386.7 Revenue excluding pass-through(1) $m 1,231.9 1,117.7 2,236.6 2,144.5 2,129.5 2,031.0 1,941.4 Underlying EBITDA(2) $m 878.9 857.7 1,692.3 1,628.8 1,
Slide 44: Regulatory dynamics
Regulatory dynamics APA 1H23 Results Investor Presentation 43
Slide 45: Regulation of Australian gas pipelines
Regulation of Australian gas pipelines APA pipelines by regulation type • In 1H23, 8.4% of Energy Infrastructure revenue was from In May 2021, the Energy National Cabinet Reform Committee scheme (full regulation) assets. (ENCRC) published a Regulation Impact Statement decision on Ministers’ preferre
Slide 46: Regulation of Australian gas pipelines (continued)
Regulation of Australian gas pipelines (continued) Schedule of Current regulatory period 2022 2023 2024 2025 2026 2027 regulatory reset dates for APA Vic Transmission System (1) Goldfields Gas Pipeline Amadeus Gas Pipeline Roma Brisbane Pipeline(2) Access • Apply for a term, generally 5 years arrang
Slide 47: APA overview
APA overview APA 1H23 Results Investor Presentation 46
Slide 48: APA is a leading Australian energy infrastructure business
APA is a leading Australian energy infrastructure business playing a key role in the transition of Australia's energy system Delivering secure, reliable and affordable energy Diverse energy infrastructure portfolio • Operating critical infrastructure to deliver energy to residential and commercial u
Slide 49: Existing APA operational footprint across energy infrastructure assets
Existing APA operational footprint diversified across a range of energy infrastructure assets APA 1H23 Results Investor Presentation 48
Slide 50: Diversified business model
Diversified business model 5% Characteristics of Energy 8% 3% 11% 10% 4% Infrastructure (EI) revenue: 1% 7% 25% • Solid risk management processes ~87% take ~84% Diverse in place or pay / Investment 42% sources of 46% regulated Grade revenue • Manage counterparty risks by: – Diversification of custom
Slide 51: Group structure
Group Structure Group structure APA Infrastructure Trust APA Investment Trust (APA Infra) (APA Invest) • APA Group is listed as a stapled structure on the Australian APA Group Limited Securities Exchange (ASX:APA) (Responsible Entity) • APA is comprised of two registered managed investment schemes:
Slide 52: Thank you
Thank you APA 1H23 Results Investor Presentation 51
Slide 53: For further information
For further information Andrew Gibson General Manager, Investor Relations M: +61 437 169 292 E: andrew.gibson@apa.com.au www.apa.com.au