Apa Group · ASX:APA
Apa — H1 2014 Earnings Presentation
36 slides from Apa's earnings presentation, Apr 28, 2014
Slide 1: APA investor information and 1H14 result highlights
APA investor information and 1H14 result highlights April 2014
Slide 2: About APA Group
About APA Group APA is Australia’s largest gas infrastructure business APA (24 April 2014) Market A$5.6 billion Gas transmission pipelines and storage capitalisation – Owning and operating two thirds of Australia’s onshore S&P/ASX 50 pipelines MSCI All World Index; – Interconnected pipeline networ
Slide 3: APA's long term strategy
APA’s long term strategy Strategy is focused on our core business of gas pipelines – transmission and distribution infrastructure Facilitating development Enhancing APA’s portfolio of gas infrastructure assets in Australia’s of gas related projects growing energy market that enhance APA’s infrastruc
Slide 4: Strategic development of pipeline grid
Strategic development of pipeline grid NT link to east coast grid: • Feasibility study East coast grid APA’s east coast grid: – Interconnected transmission Darwin • > 7,000 km of pipelines APA’s WA infrastructure: • 5 major pipelines pipelines operating as one • Servicing mining regions • 5 states
Slide 5: Significant gas distribution expertise
Significant gas distribution expertise Owning and operating approximately a third of Australia’s gas Darwin distribution networks Interlinked assets, with networks connected to APA’s transmission pipeline assets and/or investments Experienced workforce and extensive internal capability – Natio
Slide 6: Australian gas industry – abundant supply
Australian gas industry – abundant supply 981 PJ Supply fundamentals remain strong 17,384 PJ Proven and probable gas reserves total 139,000 PJ (1) 70,386 PJ – Domestic gas use for 2013 41,285 PJ was 1,110 PJ(1) – A further 1,090 PJ(1) of gas 178 was used for LNG export More than 50 years of gas
Slide 7: Australian gas industry – domestic and export demand
Australian gas industry – domestic and export demand Australian gas consumption and LNG export projections Australia’s gas production, consumption and exports are all projected to grow over the period to 2034–35 – Domestic use forecast to increase by one third, or 1.3%/a Growth underpinned by: –
Slide 8: Revenue security and diversity
Revenue security and diversity 1H14 Revenue split Revenue secured by long term take-or-pay contracts or regulatory Other 1% arrangements Regulated revenue (regulated assets) Diversified revenue base – single assets supply no more than 20% 24% of revenue Revenue by business segment (1) $900m Cont
Slide 9: Proven growth and value creation
Proven growth and value creation Operating cash flow Operating cash flow per security 450 432.6 60 56.0 400 50 350 300 40 250 $ million 30 cents 200 150 20 100 10 50 0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Slide 10: Maximising value for securityholders
Maximising value for securityholders Total securityholder returns since listing 1100 1000 APA TSR: 894% 900 APA CAGR: 18.1% 800 700 600 Total annual returns 500 50% 43% 400 40% 29% 31% 300 30% 23% 200 20% 18% 100 10% 0 0% Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 J
Slide 11: 1H14 result highlights
1H14 result highlights APA Group, March 2013 11
Slide 12: 1H14 result: Clear strategy and growth capability
1H14 result: Clear strategy and growth capability Recent pipeline acquisitions exceeding expectations – Secure revenue with further revenue step up from new contracts still to come – Growth opportunities with Wallumbilla and Moomba compression projects – Existing infrastructure creates opportunity
Slide 13: 1H14 result overview
1H14 result overview $ million 1H14 1H13 (1) Change Normalised results (2) EBITDA 399 322 up 24% Net profit after tax 121 96 up 25% Operating cash flow (3) 217 213 up 2% Operating cash flow per security (cents) 25.9 29.8 down (13%) Statutory results EBITDA 399 421 down (5%) Net profit after tax 121
Slide 14: 1H14 result: EBITDA by business segment
1H14 result: EBITDA by business segment $ million 1H14(1) 1H13(1,2) Change Energy Infrastructure 1H14 EBITDA(2) by business segment Queensland 108.8 64.3 69.2 % Energy New South Wales 62.2 58.5 6.3% Investments Asset 9.6% Victoria & South Australia 62.4 75.0 (16.8%) Management Western Australia & No
Slide 15: Fully covered distributions
Fully covered distributions On target to deliver distribution guidance for FY 2014 cents 1H14 distribution payout ratio(1,2) of 60 56.0 67.5% 51.9 52.6 52.5 Distribution components: 50 48.2 16.86 cents profit distribution 0.64 cents capital distribution 40 17.50 cents 30 34.4 35.0 35.5 31.0 32.8
Slide 16: Growth capital projects across Australia
Growth capital projects across Australia Continued expansion and enhancement of APA’s gas infrastructure portfolio Committed projects underwritten by long term revenue contracts and/or regulatory arrangements FY 2014 FY 2015 FY 2016 Moomba Sydney Southern lateral expansion for northern gas flow
Slide 17: Capital expenditure
Capital expenditure $ million 1H14 1H13 Committed growth capex Growth capex $500m Regulated - Victoria 14.9 13.4 Major Projects $400m Queensland 93.6 23.7 $300m New South Wales 4.8 13.4 Western Australia 39.1 112.0 $200m Other 11.4 14.9 148.9 164.0 $100m Total growth capex 163.7 177.4 $0m FY14 FY15
Slide 18: Capital management
Capital management Maintain strong BBB/Baa2 investment grade ratings Maintain funding flexibility – internal cash flows plus additional equity and/or debt Cash and committed undrawn facilities of $809 million at 31 December 2013 Debt Maturity profile (31 December 2013) $1,000m 31 Dec 30 Jun Me
Slide 19: East coast grid adapting to market changes
East coast grid adapting to market changes New gas transportation agreements across the east coast grid – Multi pipeline agreements on VTS, MSP, Compression expansion SWQP and RBP Gladstone Wallumbilla and Moomba – New short term SWQP agreements due to capacity available from connected grid Wallum
Slide 20: Envestra Scheme – update
Envestra Scheme – update Scheme proceeding based on the offer accepted by the Envestra Rationale Independent Board Committee Core business – gas distribution – Offer consideration of scrip and cash, with implied value of $1.29(1) per Envestra share plus Envestra distribution of 3.2 cps(2) Larg
Slide 21: Diamantina and Leichhardt power stations
Diamantina and Leichhardt power stations Commissioning phase underway Diamantina Power Station – February 2014 – First power delivered to North West Power System in early October 2013 – All open-cycle gas units commissioned – Commissioning of steam turbines for combined-cycle operation underway –
Slide 22: Connecting eastern and northern regions
Connecting eastern and northern regions Strategic initiative to connect the Northern Darwin Territory and the east coast – Pipeline linking APA’s east coast grid and Northern Territory pipelines Benefits and rationale – Linking existing APA pipeline infrastructure – Connecting regions to new and
Slide 23: Outlook and guidance for FY2014
Outlook and guidance for FY2014 Outlook Continued construction and development of expansion projects Commence Northern Territory – east coast interconnection feasibility study Progress Envestra merger proposal Guidance EBITDA – expected within a range of $730 million to $740 million Net in
Slide 24: Supplementary information
Supplementary information APA Group, March 2013 24
Slide 25: APA asset and investment portfolio
APA asset and investment portfolio APA Group, April 2014 25
Slide 26: 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 27: 1H14 result – Energy Infrastructure
1H14 result – Energy Infrastructure Queensland New South Wales Full 6 month contribution of South West Queensland Three agreements on the Moomba Sydney Pipeline (consolidated Oct 2012) and Roma Brisbane Pipeline, transporting increased gas volumes Pipeline expansion (commissioned Sep 2012) north
Slide 28: 1H14 result – Energy Infrastructure
1H14 result – Energy Infrastructure Victoria & South Australia Western Australia & Northern Territory Decrease in regulated tariffs on the Victorian Expanded Mondarra Gas Storage Facility Transmission System with commencement of the commenced commercial operation (Jul 2013) new access arrangemen
Slide 29: 1H14 result – Asset Management and Energy Investments
1H14 result – Asset Management and Energy Investments Asset Management EBITDA $60m Services to APA’s investments One-off customer contributions for relocating APA $40m $34.5m infrastructure One-off customer contributions $20m $20m Contracted Average $8.9m/a services $10m $0m $0m 1H11 1H12 1H13 1
Slide 30: 1H14 Balance sheet
1H14 Balance sheet $ million 31 Dec 2013 30 Jun 2013 Change Current assets 240 280 (14.3%) Property, plant and equipment 5,398 5,280 2.2% Other non-current assets 2,188 2,139 2.3% Total Assets 7,826 7,699 1.6% Current debt - 81 nm Other current liabilities 318 411 (22.7%) Total current liabilities 3
Slide 31: Debt facilities
Debt facilities Total committed debt facilities at 31 December 2013 Facility Drawn $million(1) amount amount Tenor 2011 Bilateral borrowings (2) 400 285 5 years maturing December 2018 2011 Bilateral borrowing 150 0 5 years maturing October 2016 2011 Syndicated facility (3) 967 480 3 and 4 year tranc
Slide 32: Regulatory update
Regulatory update APA’s major price regulated assets Regulatory resets over the next five years Victorian Transmission System access arrangement – AER final decision (May 2013) reviewed by Australian Competition Tribunal, decision Sep 2013 – Recovered approximately $20m in business value from AE
Slide 33: 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 34: Regulatory coverage of APA's pipelines
Regulatory coverage of APA’s pipelines Reduced regulatory coverage – Most pipelines on the east coast are uncovered due to interconnection of pipelines and increased supply options for markets Coverage of greenfield pipelines – Apply for 15 year exemption from coverage Pipeline expansions may
Slide 35: 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 36: Delivering Australia's energy
For further information contact Chris Kotsaris Delivering Australia’s energy Investor Relations, APA Group Tel: +61 2 9693 0049 E-mail: chris.kotsaris@apa.com.au or visit APA’s website www.apa.com.au