Apa Group · ASX:APA
Apa — FY2011 Earnings Presentation
39 slides from Apa's earnings presentation, Aug 24, 2011
Slide 1: Financial Results Year ended 30 June 2011
Financial Results Year ended 30 June 2011 24 August 2011
Slide 2: Result overview and strategic highlights
Result overview and strategic highlights Mick McCormack Managing Director and CEO 2011 Result Presentation 2
Slide 3: Another solid result
Another solid result 2011 2010 Change $ million $ million Operating cash flow 290 268 up 8% Revenue excluding pass‐through (1) 720 660 up 9% EBITDA (2) 492 460 up 7% Profit (3) 109 100 up 8% Operating cash flow per security (cents) 52.6 51.9 up 1% Distribution per security (cents) 34.4 32.75 up 5% D
Slide 4: Delivering growth, security and value
Delivering growth, security and value Enhancing our position in a growing market – Expanding our energy infrastructure portfolio across Australia in line with increasing demand for gas and energy Secure operations and earnings – Revenue underpinned by long term contracts or regulatory arrangemen
Slide 5: Strategic and operational highlights
Strategic and operational highlights Expanding APA’s energy infrastructure and investments Amadeus Gas Pipeline Acquired (buy‐out of the Facilitating the development residual balance of the lease) of gas‐fired power generation in Mt Isa Roma Brisbane Pipeline Completed lateral to industrial customer
Slide 6: Strategic and operational highlights
Strategic and operational highlights Secure revenue and operations, strong balance sheet Long term revenue agreements with highly credit‐worthy parties for expansion and acquisitions – Four new contracts with average term of around 20 years Successful debt refinancing and equity raising to fund
Slide 7: Strategic and operational highlights
Strategic and operational highlights Creating value by maintaining or increasing earnings Developing total energy solutions for customers – Using scale and industry expertise to provide customised services across assets – Proposed gas fired power station for Mt Isa would provide cost effective ene
Slide 8: Sustainability reporting
Sustainability reporting Health and safety – Long‐term safety goal of Zero Harm ‐ program of continuous improvement – Increase of LTIFR (1) to 6.2 13 lost time injuries, 11 of which were back and knee related Program in place to minimise the risk of these types of injuries occurring – National
Slide 9: Financial performance
Financial performance Peter Fredricson Chief Financial Officer 2011 Result Presentation 9
Slide 10: Solid, consistent result
Solid, consistent result 2011 2010 Change $ million $ million Total revenue excluding pass‐through (1) 720.3 659.5 9.2 % Total revenue 1,102.0 989.5 11.4 % EBITDA (2) 492.1 460.0 7.0 % EBIT 391.8 368.5 6.3 % Net interest expense (247.1) (229.4) (7.7%) Tax (35.9) (38.7) 7.3 % Net profit (3) 108.5 100
Slide 11: EBITDA by business segment
EBITDA by business segment 2011 2010 EBITDA split by segment $ million $ million Change Energy Infrastructure Energy Investments Queensland 106.8 103.3 3.4 % Asset 5.5% New South Wales 101.3 96.8 4.6 % Management 7.9% Victoria & South Australia 115.9 105.7 9.6 % Qld Western Australia & Northern Terr
Slide 12: Energy Infrastructure: Queensland
Energy Infrastructure Queensland Roma Brisbane Pipeline – Completion of lateral to large industrial customer – Commenced major expansion project, underpinned by revenue agreements – Flood damage and repairs Repairing the Roma Brisbane Pipeline post floods Berwyndale Wallumbilla Pipeline 120 – 12
Slide 13: Energy Infrastructure: New South Wales
Energy Infrastructure New South Wales Moomba Sydney Pipeline expansion – 3rd year in 5‐year expansion program (FY11 capex $8 million, with total spend to date of $59 million) – Compressor reconfiguration ($6 million) – Fully contracted – gas transportation and Young Wagga looping project ‐ constru
Slide 14: Energy Infrastructure: Victoria & South Australia
Energy Infrastructure Victoria & South Australia Increased gas flow due to a cooler winter – 8% increase in gas flows to 246 PJ Northern augmentation program completed – Wollert compressor station upgrade, Springhurst and flow reversal Wollert compressor station, northern Victoria – Increased ca
Slide 15: Energy Infrastructure: Western Australia & Northern Territory
Energy Infrastructure Western Australia & Northern Territory Goldfields Gas Pipeline – 10% reduction in access arrangement reference tariffs (from August 2010), affecting ~40% of APA’s GGP revenue – Merits review process underway Mondarra Gas Storage Facility Darwin city gate, Northern Territory
Slide 16: Asset Management and Energy Investments
Asset Management and Energy Investments 38.7 Asset Management EBITDA $ million 40 Increased revenue from Envestra asset 20 management and additional third party work ‐ Added asset management of Wagga Wagga gas 2008 2009 2010 2011 network acquired by Envestra Energy Investments Increased invest
Slide 17: Major capital expenditure
Major capital expenditure (1) 2011 2010 Description of 2011 major projects $ million $ million Growth capital expenditure Regulated Victoria Transmission System 33.4 Northern augmentation project 32.3 APA Gas Networks (Qld) 16.1 Includes southern network expansion 21.2 Major Projects Queensland expa
Slide 18: Funding FY11 growth capital expenditure
Funding FY11 growth capital expenditure 2011 $ million Growth capital expenditure 498 Funds Operating cash flow 290 Less distributions, SIB capex, debt and security issue costs, and cash retained (227) Cash 63 63 12% Distribution Reinvestment Plan 52 Institutional placement (1) 300 New equity 352 35
Slide 19: Fully covered distributions
Fully covered distributions 2011 distribution in line with guidance 60 51.9 52.6 2011 distributions 48.2 50 payout ratio(1) of 42.7 65.7% (2010: 64.4%) 39.7 cents per security 40 30 34.4 31.0 32.75 28.0 29.5 20 10 0 2007 2008 2009 2010 2011 (1) Distribution payout ratio: total distribution payments
Slide 20: Prudent capital management
Prudent capital management Cash and committed undrawn facilities of $320 million at 30 June 2011 – Reduced debt headroom by cancelling $412 million undrawn syndicated bank facilities . 2011 metrics 2011 2010 Gearing (1) at 30 June 66.2 % 69.8 % Interest cover ratio at 30 June 2.03 times 2.11 tim
Slide 21: Capital management strategy
Capital management strategy Managing balance sheet to maintain minimum investment grade credit rating metrics – Standard & Poor’s BBB; Moody’s Baa2 Refinancing program focused on extending debt maturity, diversifying funding sources and reducing borrowing costs – Next refinancing obligation in J
Slide 22: Outlook and guidance
Outlook and guidance Mick McCormack Managing Director and CEO 2011 Result Presentation 22
Slide 23: Maintain strategy for profitable growth
Maintain strategy for profitable growth Continue to maximise value for securityholders Enhancing APA’s portfolio of gas infrastructure assets in Australia’s growing energy market Capturing revenue and operational synergies Facilitating the development of gas related projects that enhance APA’s
Slide 24: Opportunities in the energy landscape
Opportunities in the energy landscape Growth catalysts Carbon Carbon reducing measures increase price competitiveness of natural reduction gas policy – Natural gas produces 30 to 50 per cent of the carbon emissions produced by current coal technologies in generating electricity – New electricity d
Slide 25: Developing profitable growth opportunities
Developing profitable growth opportunities Growth capital expenditure Developing opportunities that enhance the value of APA’s energy infrastructure portfolio Emu Downs Further expansion of APA’s wind farm pipelines to meet growing demand acquisition for gas transportation and storage services Amade
Slide 26: A cost effective energy solution for Mt Isa
A cost effective energy solution for Mt Isa APA and AGL are jointly proposing a cost effective and sustainable electricity solution for energy users in Mt Isa and surrounding regions Energy efficient – 240 MW combined cycle plant, with high energy efficiency of 55% (compared with Queensland coal f
Slide 27: Maximising value for securityholders
Maximising value for securityholders Operating cash flow Four years of organic growth 300 268 290 – Operating cash flow CAGR of 17.8%(1) 250 234 192 – EBITDA CAGR of 13.5% (1) 200 $ million – Total securityholder return of 46% 150 100 Total securityholder return 50 (4 financial years from 30 June
Slide 28: Capital management and distribution policy
Capital management and distribution policy Capital management policy Continue to target strong BBB/Baa2 investment grade ratings through maintaining sufficient flexibility to fund organic growth and investment from internally generated and retained cash flows and, where appropriate, additional deb
Slide 29: Guidance
Guidance EBITDA – expected within a range of $530 million to $540 million Net interest cost – expected within a range of $260 million to $265 million Distribution – at least equal to FY2011 total distributions per security APA ‐ developing attractive growth projects and enhancing its position
Slide 30: Supplementary information
Supplementary information 2011 Result Presentation 30
Slide 31: APA profile
APA profile APA is Australia’s largest natural gas infrastructure business – Energy Infrastructure: gas pipelines, interconnected gas storage facilities across Australia, gas distribution networks in Queensland and New South Wales, and Emu Downs wind farm in Western Australia – Asset Management: p
Slide 32: Financials: Key financial ratios
Financials Key financial ratios 2011 2010 Operating cash flow per security (cents) 52.6 51.9 Weighted average securities on issue (million) 551.2 516.2 Payout ratio 65.7 % 64.4 % Earning per security (cents) 19.7 19.4 Interest cover ratio (times) 2.03 2.11 Gearing ratio 66.2 % 69.8% Total assets ($
Slide 33: Financials: Cash flow
Financials Cash flow 2011 2010 $ million $ million Change Operating cash flow 290.0 267.8 14.6 % Distributions (net of DRP) 130.9 103.1 Available operating cash flow 159.2 164.7 18.9 % Operating cash flow per security (cents) 52.6 51.9 7.7 % Distributions per security (cents) 34.4 32.75 5.6 % Distri
Slide 34: Revenue analysis by business segment
Financials Revenue analysis by business segment 2011 2010 $ million $ million Change Energy Infrastructure Queensland 164.3 151.2 8.7 % New South Wales 126.7 120.8 4.9 % Victoria & South Australia 153.3 138.9 10.4 % Western Australia & Northern Territory 157.5 155.4 1.4 % Energy Infrastructure total
Slide 35: Total committed debt facilities at June 2011
Financials Total committed debt facilities at 30 June 2011 Facility Facility amount (1) Tenor 2009 Bilateral borrowing (2) $150 million August 2014 2011 Bilateral borrowings (3) $225 million July 2014 2007 Syndicated facility (2) $900 million June 2012 2009 Syndicated facility (4) $618 million 2 and
Slide 36: Regulatory update
Regulatory update APA’s major price regulated assets Regulatory resets over the next five years Regulatory resets are spread out over five years, with on average one reset per year – Goldfields Gas Pipeline new access arrangement commenced on 20 August 2010 – APA Gas Network (Queensland) new acces
Slide 37: APA asset and investment portfolio
APA asset and investment portfolio 2011 Results Presentation 37
Slide 38: 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 about
Slide 39: Delivering Australia's energy
For further information contact Delivering Australia’s energy Chris Kotsaris 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