Apa Group · ASX:APA
Apa — Investor Presentation (March 2015)
42 slides from Apa's investor presentation, Mar 26, 2015
Slide 1: APA investor information and 1H15 result highlights
APA investor information and 1H15 result highlights March / April 2015
Slide 2: Australia's largest gas pipeline owner by pipeline length, capacity and volume
Australia’s largest gas pipeline owner by pipeline length, capacity and volume APA Overview (Ticker: APA AU) Market capitalisation A$10.2 billion (as at 27 Feb 2015) ASX rank(1) S&P/ASX 50 Rating Moody’s: Baa2 (outlook Stable), confirmed 10 Dec 2014 S&P: BBB (outlook Stable), confirmed 10 Dec 2014 A
Slide 3: APA's long term strategy
APA’s long term strategy Consistent execution of a sustainable growth strategy since listing in 2000. We’re focused on building and enhancing our core business of gas transmission and distribution assets. Enhancing APA’s portfolio of Capturing revenue and gas infrastructure assets in operational syn
Slide 4: Successful strategy implementation
Successful strategy implementation 2001 2004 2007 2010 2013 2014 Acquired minorities, achieving 100% Acquisition – pipelines, ownership of major distribution networks, Pipeline acquisitions pipeline asset electricity interconnects Organic expansion and Pipeline acquisitions Development –
Slide 5: Strategic development of pipeline grid
Strategic development of pipeline grid NT link to east coast grid: • Feasibility study East coast grid – Interconnected transmission APA’s east coast grid: • > 7,000 km of pipelines pipelines operating as one system APA’s WA infrastructure: • 5 major pipelines – Seamless service capability • Servi
Slide 6: QCLNG – long term contract gives access to new volumes
QCLNG – long term contract gives access to new volumes Acquisition complements APA’s existing east coast grid – Long term contracts with two highly credit-worthy counterparties – Immediate access to new volumes and full revenue upon commissioning – Possibility of additional interconnection points
Slide 7: QCLNG Pipeline acquisition overview
QCLNG Pipeline acquisition overview QCLNG Pipeline location Acquisition US$5bn, representing an FY16 EV / EBITDA multiple of 13.0x Contract 20 year take-or-pay(1) arrangements with primary tariff components linked to US CPI and revenue paid in US$ Length 543km Comprises Export Pipeline (346k
Slide 8: QCLNG Pipeline acquisition highlights
QCLNG Pipeline acquisition highlights Revenue stability Revenues fully contracted on a take-or-pay basis(1) for a period of 20 years, calculated based on a fixed rate of return on the contracted asset base, together with an operating cost pass-through Expected to contribute an additional EBITDA
Slide 9: Australian gas industry – abundant supply and growing consumption
Australian gas industry – abundant supply and growing consumption Proven and probable gas reserves total approximately 136,639 PJ(1) There is an estimated proved and probable reserves of approximately 49,207PJ(1) in east Australia; gas reserves are dominated by large coal seam gas resources in Q
Slide 10: Proven growth and value creation
Proven growth and value creation A$ Revenue A$ EBITDA $1,200m Full years Half years $1,000m Full years Half years (1) $993 $850 $1,000m $920 $764 $800m $747 $800m $758 EBITDA from $720 $673 $660 $600m $447 significant $526 $492 items $600m $523 $444 $460 $510 $399 $400m $400m $200m $200m $0m $0m FY0
Slide 11: Maximising value for securityholders
Maximising value for securityholders Total securityholder returns since listing 1600 1500 APA TSR: 1,396% 1400 APA CAGR: 20.1% 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 0 Total annual returns 50% 43% 40% 29% 31% 30% 23% 22% 18% 20% 10% 0% Indexed to 100 from listing date, 13 June 2000
Slide 12: APA investment summary
APA investment summary Largest gas infrastructure portfolio in Australia in terms of scale and geographic diversity Quality assets with long expected lives requiring a relatively low level of maintenance capital expenditure Stable and predictable cash flow from price regulated assets and long term c
Slide 13: 1H15 result highlights
1H15 result highlights APA Group, March 2013 13
Slide 14: Sound financial performance
Sound financial performance $ million 1H 15 1H 14 Change Statutory results EBITDA 849.6 398.9 up 113%(4) Net profit after tax 467.3 120.7 up 287%(4) Operating cash flow (1) 280.4 208.3 up 35%(4) Operating cash flow per security (cents) 31.9 24.1 up 32%(4) Normalised results (2) EBITDA from continuin
Slide 15: 1H15 result: EBITDA by business segment
1H15 result: EBITDA by business segment $ million 1H15 1H14 Change 1H15 EBITDA by business segment(1) Energy Infrastructure Asset Management Energy Investments 1.9% 5.0% Queensland 136.4 108.8 25% New South Wales 59.6 62.2 (4)% Victoria & South Australia 70.3 62.4 13% Western Australia & Northern Te
Slide 16: Fully covered distributions
Fully covered distributions On target to deliver distribution guidance for FY 2015 cents 1H 15 distribution payout 60 56.0 ratio(1,2) of 55.6% 51.9 52.6 52.5 52.6 48.2 Distribution components: 50 17.5 cents profit distribution 40 nil capital distribution 31.9 17.5 cents 35.0 35.5 36.3 30 32.8 34
Slide 17: Developing growth capital projects across Australia
Developing growth capital projects across Australia Continued expansion and enhancement of APA’s gas infrastructure portfolio, with many growth opportunities unique to APA Committed projects underwritten by long term revenue contracts and/or regulatory arrangements NT Link Feasibility study in p
Slide 18: Capital expenditure
Capital expenditure $ million 1H15(1) 1H14(1) Growth capex Committed growth capex Regulated - Victoria 55.5 14.9 $400m Major Projects Queensland 78.5 93.6 $300m New South Wales 0.6 4.8 Western Australia 14.1 39.1 $200m Other 13.3 11.4 Total growth capex 162.0 163.8 $100m Stay in business capex 28.1
Slide 19: Capital management
Capital management Cash and committed undrawn facilities of around $2,400 million as at 31 December 2014 . Metrics 31 Dec 2014 30 Jun 2014 Gearing (1,2,3) 44.5% 64.2% Interest cover ratio 2.48 times 2.31 times Average interest rate applying to drawn debt (2) 7.07% 7.12% Interest rate exposure fi
Slide 20: East coast grid – connecting multiple markets with multiple resources
East coast grid – connecting multiple markets with multiple resources Darwin Provision of flexibility during dynamic market conditions for gas – SWQP expansion already delivering – NSW – VIC connection expansion under way – Flexible services to move gas where it is needed on the east coast Gladsto
Slide 21: Connecting gas markets and resources
Connecting gas markets and resources Organic growth Darwin – Capacity expansions, enhancements and new services, provide flexibility and new opportunities for customers – New services and more flexible contracts supplement traditional take-or-pay Gladstone East coast LNG – QCLNG Pipeline acquisi
Slide 22: Focus on safety and operational excellence
Focus on safety and operational excellence Health and safety LTIFR – Long-term safety goal of Zero Harm – 7.3 a program of continuous improvement 6.1 4.9 – Decrease of LTIFR (1) to 0.7 (FY14), down from 2.1 (FY13) – LTIFR as at 31 Dec 2014 is 0.3 2.2 2.1 – Second year of 3 year HSE Strategic Impro
Slide 23: Outlook for FY 2015
Outlook for FY 2015 Outlook Continued construction and development to increase flexibility and capacity of our infrastructure footprint on both east and west coasts Transaction completion and integration of QCLNG Pipeline Continued Northern Territory – east coast interconnection feasibility st
Slide 24: FY 2015 Guidance
FY 2015 Guidance APA standalone (pre-acquisition) guidance for EBITDA and net interest cost for FY 2015 is revised as follows: – Statutory EBITDA is expected within a range of $1,222 million to $1,237 million(1) – Normalised continuing business EBITDA within a range of $775 million to $790 million
Slide 25: FY15 Guidance bridge - normalised
FY15 Guidance bridge - normalised $41-83m $78-93m $(50m) $816-873m $747m •Asset Management $697m FY14 Less Envestra FY14 continuing Organic growth Plus QCLNG FY15 Guidance equity earnings business EBITDA Pipeline Note: All conversions are based on AUD/USD exchange rate of 0.7804 as at 12.00pm 24 Feb
Slide 26: Supplementary information
Supplementary information APA Group, March 2013 26
Slide 27: APA asset and investment portfolio
APA asset and investment portfolio APA Group, March / April 2015 27
Slide 28: APA Group structure
APA Group structure APA is a stapled vehicle comprising two registered managed investment schemes: APA Group Securityholders – Australian Pipeline Trust (ARSN 091 678 778) – APT Investment Trust (ARSN 115 585 441) is a tax pass-through trust Australian Pipeline Limited (ACN 091 344 704) is the r
Slide 29: Quality customer base
Quality customer base Customers associated with many contracted assets provide essential Counterparty credit ratings by contracted volumes(1) services: for major contracted assets – Regulated gas distribution systems As at 31 Dec 2014 Illustrative Post QCLNG – Major power generation facilities Sub
Slide 30: Energy Infrastructure – Queensland
Energy Infrastructure Queensland EBITDA South West Queensland Pipeline $160 Expanded capacity $136.4m $140 Moomba compression South West Complete Sep 2014 and operational $120 Queensland Pipeline Wallumbilla compression $100 Other Long-term agreement for compression Queensland services $80 ass
Slide 31: Energy Infrastructure – New South Wales, Victoria & South Australia
Energy Infrastructure EBITDA $80m New South Wales $59.6m $60m Three agreements to transport increased gas volumes north from Victoria, two commencing in Jan 2015 and one in May 2015 $40m Moomba Sydney New 7-year grid services agreement from Sep Pipeline $20m 2015, mainly utilising Moomba Sydney
Slide 32: Energy Infrastructure – Western Australia & Northern Territory
Energy Infrastructure Western Australia & Northern Territory Goldfields Gas Pipeline EBITDA Expansion project completed $120m Amadeus Gas $107.2m Pipeline Pilbara Pipeline System $100m Emu Downs Full HY contribution of a new contract wind farm Additional revenue agreement Cost benefits of in
Slide 33: Asset Management and Energy Investments
Asset Management and Energy Investments EBITDA Asset Management $40m One-off customer Reduction in one-off customer contributions contributions for relocating APA infrastructure Contracted $20.1m services $30m One-off customer contributions $20m $20m Average ~$10m/a $10m $0m $0m FY09 FY10 FY11 FY1
Slide 34: Revenue by business segment
Revenue by business segment $ million 1H 15 1H 14 Change 1H 15 Revenue split Energy Infrastructure Other 1% Queensland 161.4 132.3 22% New South Wales 71.9 74.1 (3%) Victoria & South Australia Regulated 94.7 81.0 17% (revenue subject to price regulated tariffs) Western Australia & Northern Territory
Slide 35: Balance sheet
Balance sheet $ million 31 Dec 2014 30 Jun 2014 Change Current assets 1,114(1) 203 449 % Property, plant and equipment 5,677(1) 5,574 2% Other non-current assets 1,959(1) 2,195 (11) % Total Assets 8,750(1) 7,972 10 % Current debt 149(1) - - Other current liabilities 364(1) 374 (3) % Total current li
Slide 36: Capital management
Capital management Bank borrowings Maturity Profile of Drawn Debt as at 16 March 2015 First Call Date - 60 year Sub Notes A$1,600m Euro MTN US Private Placement Notes A$1,200m Australian MTN Japanese MTN Canadian MTN A$800m 962* 1,439* US 144a Notes 1,159* Sterling MTN 894* A$400m 515 735 536 393* 3
Slide 37: Debt facilities
Debt facilities Total committed debt facilities at 16 March 2015 Facility Drawn $million(1) Tenor amount amount 2011 Bilateral borrowings (2) 200 0 5 years maturing December 2018 2014 Syndicated facilities (3) 1,100 175 2.25, 3.25 and 5.25 year trances maturing September 2016, 2017 and 2019 2003 US
Slide 38: Regulatory update
Regulatory update APA’s major price regulated assets Regulatory resets over the next five years Goldfields Gas Pipeline Access Arrangement Review – Application lodged 15 August 2014 – Western Australian Economic Regulation Authority (“ERA”) has commenced its review, with a draft decision expecte
Slide 39: Economic regulation of gas pipelines and networks
Economic regulation of gas pipelines and networks Regulator The Australian Energy Regulator (AER) is responsible for the economic regulation of gas transmission and distribution networks and enforcing the National Gas Law and National Gas Rules in all jurisdictions except Western Australia The E
Slide 40: Australian gas industry – domestic and export demand
Australian gas industry – domestic and export demand Australian primary gas use by sector (2012-13) Australia’s gas production, consumption and exports Agriculture, Construction, are all projected to grow over the period to 2048-49 Other, 1.1% 0.4% 1.7% Mining, 8.3% Growth underpinned by: Reside
Slide 41: Disclaimer
Disclaimer This presentation has been prepared by Australian Pipeline Limited (ACN 091 344 704) the responsible entity of the Australian Pipeline Trust (ARSN 091 678 778) and APT Investment Trust (ARSN 115 585 441) (APA Group). Summary information: This presentation contains summary information abou
Slide 42: Delivering Australia's energy
For further information contact Yoko Kosugi Delivering Australia’s energy Investor Relations, APA Group Tel: +61 2 9693 0049 E-mail: yoko.kosugi@apa.com.au or visit APA’s website www.apa.com.au