Apa Group · ASX:APA
Apa — H1 FY2021 Earnings Presentation
53 slides from Apa's earnings presentation, Feb 23, 2021
Slide 1: ASX Announcement: Financial Results Presentation
Australian Pipeline Ltd ACN 091 344 704 | Australian Pipeline Trust ARSN 091 678 778 | APT 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 2021 ASX ANNOUN
Slide 2: Results for the half year ended 31 December 2020
Results for the half year For personal use only ended 31 December 2020 23 February 2021 22/02/2021
Slide 3: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Australian Pipeline Limited (ACN 091 344 704) as responsible entity of the Investment risk: An investment in securities in APA Group is subject to investment and other known and unknown Australian Pipeline Trust (ARSN 091 678 77
Slide 4: 1H21 summary
1H21 summary For personal use only • Solid financial performance in challenging market conditions, confirming resilient business model • Revenue down 0.6%, EBITDA down 2.3% and OCF up 1.4%* o Volume growth in key markets including WA, NT and sections of the East Coast Grid o Flat overall revenue ref
Slide 5: Significant energy infrastructure investment required as global energy market transitions
Significant energy infrastructure investment required as global energy market transitions For personal use only US $50+ trillion of investment required in next 20 Gas will continue to play critical role in the energy years regardless of scenario market regardless of scenario Global Energy Investment
Slide 6: Gas will continue to play a critical role in Australia's energy mix
Gas will continue to play a critical role in Australia’s energy mix For personal use only • Future energy market requires both clean and reliable generation and transmission technologies, with gas providing Australian Domestic Gas Demand Under Different Climate Change Scenarios o energy companion fo
Slide 7: Strong organic growth outlook
Strong organic growth outlook For personal use only • Forecast >$1 billion of organic growth capex over FY21-23 • Significant progress made during 1H21 with $500 million+ committed • APA’s prospective organic growth pipeline >$5 billion (renewables and gas generation, transmission and energy storage
Slide 8: Growth markets for energy infrastructure has informed APA's refreshed strategy
Growth markets for energy infrastructure has informed APA’s refreshed strategy For personal use only • Significant growth opportunities in renewables and firming, electrification and hydrogen infrastructure > • In Australia - >$60 billion of investment opportunities to 2040 − Renewables + firming +
Slide 9: North America transaction pathway
North America transaction pathway For personal use only Lessons learned through recent assessment of opportunities: Transaction pathway entry either via • gas pipelines and utilities; or • Opportunities in both the listed and unlisted space • electricity integrated energy infrastructure • Limited op
Slide 10: APA launches Pathfinder Program to unlock next generation energy solutions
APA launches Pathfinder Program to unlock next generation energy solutions For personal use only Focused on innovation to support Designed to identify opportunities to extend our core business by doing: the growth opportunities presented by energy transition • Pilot projects and strategic partnershi
Slide 11: Pathfinder Program: Parmelia Gas Pipeline transformation to 100% hydrogen-ready
Pathfinder Program: APA’s Parmelia Gas Pipeline transformation to 100% hydrogen-ready For personal use only • An Australian-first and one of few similar pipeline projects in the world today • 43 km section of the Parmelia Gas Pipeline (PGP) targeted to be 100% hydrogen-ready • Kwinana industrial pre
Slide 12: Refreshed strategy leveraging proven capability in energy infrastructure
Refreshed strategy leveraging proven capability in energy infrastructure For personal use only Refreshed Strategy: • Contracted and regulated energy infrastructure • Deliver on our Customer Promise (gas, electricity and renewables) in Australia and • Disciplined investment, optimising securityholder
Slide 13: Investing in capability to support the delivery of our strategy
Investing in capability to support the delivery of our strategy For personal use only New Executive Leadership New Capabilities Efficiency and Scale Team and Structure • A new operating model and • Strengthening our talent pool • Enhancing operational and organisational structure corporate systems &
Slide 14: APA's ambition to achieve Net Zero emissions by 2050
APA’s ambition to achieve Net Zero emissions by 2050 For personal use only APA supports global transition to a lower carbon future • Net Zero emissions by 2050 to be embedded into decision-making, planning and business processes o Ambition is to achieve net zero operations emissions (Scope 1 and 2)
Slide 15: Building our sustainability credentials and roadmap
Building our sustainability credentials and roadmap For personal use only Sustainability at APA: it’s about being responsible in how we do business and contribute to society, so we create value for all stakeholders Strengthened our sustainability and community capability Developing a Sustainabil
Slide 16: 1H21 sustainability summary
1H21 sustainability summary For personal use only • APA’s Climate Change Resilience Report released, demonstrating resilience under a range of climate scenarios including 1.5 c • Developed the Climate Change Management Plan Framework • Strengthened risk and procurement processes for modern slavery a
Slide 17: 1H21 operational summary
1H21 operational summary For personal use only Health, Safety, Environment and Heritage (HSEH) 16 TRIFR • TRIFR (7.73) and LTIFR (1.93) above target (6.5 and 1.0 respectively) 12 12.2 Contractor • Continue to implement safety education and awareness activities throughout the business, particularly w
Slide 18: 1H21 operational summary
1H21 operational summary For personal use only Operational Performance • Diamantina Power Station major overhaul completed on budget and schedule, 70,000 hours worked with no LTIs. Tremendous team effort: − Challenges of moving specialist and parts from overseas and interstates; and − Completed with
Slide 19: Financial performance
For personal use only Financial performance Adam Watson Chief Financial Officer
Slide 20: 1H21 results summary
1H21 results summary For personal use only Results excluding significant item 1H21 1H20 Change Key Drivers $ million Volume growth in key markets, offset by softer contract Revenue excluding Pass-through(1) 1,071.8 1,077.8 (0.6%) renewals and lower energy consumption Higher investment in strategic d
Slide 21: Orbost Gas Processing Plant non-cash impairment
Orbost Gas Processing Plant non-cash impairment For personal use only Orbost Gas Processing Plant update • APA and Cooper Energy continue to work together to improve the plant’s operation and processing capacity, with the objective to achieve nameplate capacity of 68 TJ/day • Works planned over the
Slide 22: 1H21 EBITDA waterfall
1H21 EBITDA waterfall For personal use only Key Drivers • Inflation linked tariff escalation • FX movements on CPI portion of Wallumbilla Gladstone Pipeline contract • Revenue from new asset (principally Orbost) • Variable revenues impacted by lower gas volumes in Victoria, lower revenues from renew
Slide 23: 1H21 operating expenditure waterfall
1H21 operating expenditure waterfall For personal use only Key Drivers • Operations and maintenance higher, consistent with volume growth and inflation • Asset Management included system upgrades in 1H20 • Higher investment in development opportunities and strengthening of capability • Corporate cos
Slide 24: 1H21 capital expenditure
1H21 capital expenditure For personal use only $ Million 1H21 1H20 Key drivers: Growth Capex Growth Capex: Regulated 21.3 28.4 • Thomson Power Station construction Non-Regulated • Wallumbilla Hub capacity upgrade • Orbost Gas Processing Plant commission Queensland 39.5 14.1 • Eastern Goldfields Pipe
Slide 25: Sustainable distributions
Sustainable distributions For personal use only 1H21 Distributions Free Cash Flow Waterfall • 1H21 distribution of 24.0 cps, 4.3% increase on 1H20 443.4 • Payout ratio(1) of 54.5% 28.9 19.4 32.0 0.2 421.5 Distribution Guidance 2.8 • FY21 distribution guidance of 51.0 cps reflects 5.4 2.8 confidence
Slide 26: Resilience in a rising rate environment
Resilience in a rising rate environment For personal use only • Diverse range of long-dated debt facilities AUD debt(1) mitigates APA exposure to rising interest rate $10,000 US 144A Notes environment Medium Term Notes US Private Placement Notes • Debt facilities prudently hedged against interest Fi
Slide 27: Strong balance sheet with opportunity to further enhance the capital structure
Strong balance sheet with opportunity to further enhance the capital structure For personal use only • Cash and committed undrawn facilities of $2,054 million at 31 December 2020 o Prudent during uncertain market conditions, however demonstrated to be well in excess of business needs • Commitment to
Slide 28: Summary and outlook
For personal use only Summary and outlook Rob Wheals CEO and Managing Director
Slide 29: Outlook and FY21 guidance
Outlook and FY21 guidance For personal use only FY21 Guidance – On Track • FY21 EBITDA: $1,625 million to $1,665 million • FY21 Distribution per security: 51.0 cps (upgraded) • FY21 Net interest: $490 million to $500 million • Growth capital expenditure – expected to now exceed $1 billion over FY21-
Slide 30: Delivering our vision: to be world class in energy solutions
Delivering our vision: to be world class in energy solutions For personal use only Refreshed Strategy Growth opportunities Technology and innovation Aligned with purpose and vision and Energy infrastructure in Australia New energy infrastructure targeted at energy infrastructure and North America so
Slide 31: Questions and Answers
For personal use only Questions and Answers
Slide 32: Supplementary information
For personal use only Supplementary information
Slide 33: APA overview
For personal use only APA overview
Slide 34: Snapshot of APA
Snapshot of APA ….. a leading energy infrastructure business For personal use only Market capitalisation Gas transmission (1) Gas storage $10.9 billion (as at 19 February 2020) 15,425 km transmission pipelines 12,000 tonnes LNG $0.6 billion (as at 30 June 2000) 18 PJ gas Gas distribution(2) Credit r
Slide 35: Asset footprint
Asset footprint For personal use only GLOSSARY: Assets and Investments Glossary Darwin WPP AGP Amadeus Gas Pipeline 734 PJ APA assets and investments McArthur BGP Bonaparte Gas Pipeline Bonaparte BGP Basin BWSF Badgingarra Wind and Solar Farms Basin APA new greenfield pipelines Beetaloo BWP Berwynda
Slide 36: Continued growth momentum
Continued growth momentum For personal use only EBITDA Operating cash flow $1,654 $1,096 $1,574 $1,032 $1,012 $1,518 $974 $1,470 $1,331 $862 $545 $822 $440 $747 1H20 1H21 1H20 1H21 $512 $519 $842 $823 FY14 FY15 FY16 FY17 FY18 FY19 FY20 1H21 FY14 FY15 FY16 FY17 FY18 FY19 FY20 1H21 Total assets Distri
Slide 37: Sustainable distributions
Sustainable distributions For personal use only 60 cents 55 cents 50.0 50 cents 47.0 45.0 45 cents 43.5 41.5 40 cents 38.0 35.5 36.3 34.4 35.0 35 cents 32.8 31.0 29.5 30 cents 28.0 25 cents 24.0 22.0 21.5 21.5 21.5 22.5 20 cents 15 cents 24.0 10 cents 5 cents 0 cents FY01 FY02 FY03 FY04 FY05 FY06 FY
Slide 38: Group structure
Group structure For personal use only • APA Group is listed as a stapled structure on the Australian Securities Exchange (ASX:APA) Group Structure • APA is comprised of two registered managed investment schemes: Australian Pipeline Trust APT Investment Trust (APT) (APTIT) − Australian Pipeline Trust
Slide 39: Financial Metrics
For personal use only Financial Metrics
Slide 40: 1H21 results summary including significant item
1H21 results summary including significant item For personal use only Results 1H21 1H20 Change Key Drivers $ million Volume growth in key markets, offset by softer contract Revenue excluding Pass-through(1) 1,071.8 1,077.8 (0.6%) renewals and lower energy consumption Higher investment in strategic d
Slide 41: Segment EBITDA by state
Segment EBITDA by state For personal use only $ million 1H21 1H20 Change Key drivers Queensland 495.5 506.3 (2.1%) • Softer contract renewals New South Wales 83.6 81.6 2.4% • Higher gas volumes Victoria & South Australia 59.6 63.5 (6.1%) • Lower energy consumption due to COVID Northern Territory 11.
Slide 42: Six year financials
5 year financials For personal use only Financial Performance 1H21 FY20 FY19 FY18 FY17 FY16 Revenue $m 1,295.0 2,590.6 2,452.2 2,386.7 2,326.4 2,094.3 Revenue excluding pass-through(1) $m 1,071.8 2,129.5 2,031.0 1,941.4 1,888.3 1,656.0 EBITDA(2) $m 822.8 1,653.9 1,573.8 1,518.5 1,470.1 1,330.5 Depre
Slide 43: Six year financials (con't)
5 year financials (con’t) For personal use only Segment EBITDA (Excluding Significant Item) 1H21 FY20 FY19 FY18 FY17 FY16 EBITDA (Continuing businesses) Energy Infrastructure East Coast: Queensland $m 495.5 1,007.9 1,010.1 962.2 925.4 855.8 New South Wales $m 83.6 160.8 149.4 147.1 149.5 121.7 Victo
Slide 44: Historical EBITDA by asset – Energy Infrastructure
Historical EBITDA by asset – Energy Infrastructure For personal use only $ millions 1H21 FY20 FY19 FY18 FY17 FY16 East Coast Grid Wallumbilla Gladstone Pipeline 270.0 538.9 542.4 515.9 488.0 475.2 South West Queensland Pipeline 118.0 254.4 250.0 244.3 242.4 240.3 Moomba Sydney Pipeline(1) 83.6 160.8
Slide 45: Low risk business model
Low risk business model For personal use only • Solid risk management processes in place • Continue to manage counterparty risks by: − Diversification of customers and industry exposures − Assessment of counterparty creditworthiness − Entering into long term contracts to support major capital spend
Slide 46: Debt maturity profile
Debt maturity profile For personal use only APA maintains diversity of funding sources and spread of maturities(1) 50 Undrawn committed facilitates Bank borrowings 296 US Private Placement Notes US 144A Notes Medium Term Notes USD denominated obligations (2) 1,396 (USD1,100) 150 1,140 (USD 886) 1,13
Slide 47: Funding source
Funding source For personal use only 3% Undrawn Bank Facilities 11% Drawn Bank Facilities 31 Dec 2020 Medium Term Notes Total Debt Facilities* $10,947m US 144A Notes Drawn Debt Facilities $9,697m 33% Total USPP Notes Drawn Bank Facilities $0m facilities Undrawn Bank Facilities $1,250m A$11b Cash at
Slide 48: Debt facilities
Debt facilities For personal use only Total committed debt facilities at 31 December 2020 $ million Facility Drawn Tenor amount amount 2017, 2019 & 2020 Bilateral bank facilities 250 0 3 to 5 year facilities maturing between May 2022 to December 2025 2018 Syndicated bank facilities 1,000 0 5 and 5.5
Slide 49: Energy market dynamics and overview
For personal use only Energy market dynamics and overview
Slide 50: Australian gas market overview
Australian gas market overview For personal use only Gas supply and demand AEMO 2020 Gas Statement of Opportunities: • Gas Supply from existing and committed gas developments is forecast to meet gas demands until 2023/24 WPP Darwin 734 PJ • Risks remain that any weather-driven variances could increa
Slide 51: Regulation of Australian gas pipelines
Regulation of Australian gas pipelines For personal use only • In 1H21, 8.2% of Energy Infrastructure revenue was from full regulated assets APA pipelines by regulation type • Gas pipelines are regulated by the Australian Energy Regulator (AER) or, the Economic Regulation Authority of Western Austra
Slide 52: Regulation of Australian gas pipelines (con't)
Regulation of Australian gas pipelines (con’t) For personal use only Schedule of regulatory reset Current regulatory period 2021 2022 2023 2024 2025 dates for APA Amadeus Gas Pipeline Roma Brisbane Pipeline Victorian Transmission System Goldfields Gas Pipeline Access • Apply for a term, generally 5
Slide 53: For further information contact
For personal use only For further information contact: Yoko Kosugi GM Investor Relations and Analytics M: +61 438 010 332 E: yoko.kosugi@apa.com.au Or visit the APA website at: www.apa.com.au