Apa Group · ASX:APA
Apa — FY2011 Earnings Presentation
42 slides from Apa's earnings presentation, September 2011
Slide 1: APA investor information and FY2011 result highlights
APA investor information and FY2011 result highlights September 2011
Slide 2: About APA Group
About APA Group APA is Australia’s largest natural gas infrastructure business Australian gas transmission pipelines owners by length (km) Energy Infrastructure: Prime – Own and operate gas pipelines and Infrastructure 1,105 (1) interconnected gas storage facilities DUET 1,480 (1) across Australia
Slide 3: APA well positioned in a growing industry
APA well positioned in a growing industry Unrivalled gas asset footprint – Largest transporter of natural gas across Australia (1) Stable and secure cash flow – Regulated and contracted revenue Attractive growth opportunities – Enhancing capacity in APA’s portfolio to meet increasing gas deman
Slide 4: Strategy for sustainable growth and security
Strategy for sustainable growth and security Continue to maximise value for securityholders Enhancing APA’s portfolio of gas infrastructure assets in Australia’s growing energy market – Abundant and growing gas reserves – Increasing demand for natural gas, particularly for electricity generation
Slide 5: Stable and secure revenue
Stable and secure revenue FY11 Revenue Split More than 95% of APA’s revenue is derived Other 1% from either price regulated or contracted assets Subject to price Contracted 49% Regulated Price regulated assets revenue regulation 50% – Tariffs on core services are set by regulation – Retain abili
Slide 6: 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 7: Maximising value for securityholders
Maximising value for securityholders Operating cash flow Four years of organic growth 300 290 – Operating cash flow CAGR of 17.8%(1) 250 – EBITDA CAGR of 13.5% (1) 200 $ million – Total securityholder return of 46% 150 100 Total securityholder return (4 financial years from 30 June 2007) 50 0 150
Slide 8: FY2011 result highlights
APA Group 7 4 ep tT FY2011 result highlights >8
Slide 9: 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 10: Strategic and operational highlights: Expanding APA's energy infrastructure and investments
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 11: Strategic and operational highlights: Secure revenue and operations, strong balance sheet
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 12: Strategic and operational highlights: Creating value by maintaining or increasing earnings
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 13: 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 14: 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 15: Capital expenditure and funding
Capital expenditure(1) and funding 2011 2011 $ million $ million Growth capital expenditure Funds Regulated Operating cash flow 290 Victoria Transmission System 33.4 Less distributions, SIB capex, APA Gas Networks (Qld) 16.1 debt and security issue Major Projects costs, and cash retained (227) Queen
Slide 16: 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 17: 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 18: FY2012 guidance
FY2012 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 po
Slide 19: Drivers underpinning APA's long term growth
Drivers underpinning APA’s long term growth 19
Slide 20: Opportunities in the energy landscape
Opportunities in the energy landscape Growth catalysts Carbon Carbon reducing measures increase price competitiveness of natural gas reduction 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 21: Abundant east coast gas supply
Abundant east coast gas supply East Australia proven and probable gas reserves (PJ) End 2000 End 2000 Mid 2011 Vic (Gippsland, Bass, Otway) 5,907 5,778 SA (Cooper) 3,435 1,373 Qld (Bowen/Surat) 108 183 Qld coal seam gas 0 34,986 NSW coal seam gas 0 2,910 TOTAL 9,450 45,230 3,435 PJ 108 PJ In 11 ye
Slide 22: Electricity generation driving gas demand
Electricity generation driving gas demand Growth in gas volumes (1) – Average annual growth rate of 3.4% pa over the next 20 years (compared with 1.4% for primary energy) – 1,240 PJ in 2007‐08, doubling to 2,570 PJ in 2029‐30 Factors influencing gas demand increase – Investments in new gas‐fired
Slide 23: Good reasons for gas-fired generation
Good reasons for gas‐fired generation Reduced carbon emissions – Produces 30 to 50 per cent of the emissions produced by current coal technologies in generating electricity Quick start generation – Suitable for managing peak demand – Provides ‘natural hedge’ for electricity retailers – Provides
Slide 24: A well positioned portfolio
A well positioned portfolio APA infrastructure benefit – Incrementally expand pipeline capacity – Deliver gas from multiple sources – Supply security Eastern WA & NT Generation (MW) market market Gas generation Existing ‐ network 8,446 4,122 Existing ‐ non network 333 1,495 Under construction/ 4,5
Slide 25: APA's storage capability
APA’s storage capability Current storage capability and expansion opportunities Mondarra Gas Storage Facility (Western Australia) – Underground gas storage (depleted gas reservoir) connected to Parmelia Gas Pipeline (APA) and Dampier Bunbury Pipeline – Capacity expansion project, increasing commer
Slide 26: Discretionary capital expenditure
Discretionary capital expenditure Growth capex enables APA to leverage additional value from its existing assets APA maintains flexibility in relation to the amount and timing of larger growth capex projects – All growth capex is underpinned by regulatory framework or long term contractual arran
Slide 27: Summary - delivering growth, security and value
Summary ‐ delivering growth, security and value APA’s energy infrastructure portfolio is well positioned in the Australian market – Connected to all major gas sources and gas markets Enhancing our position in a growing market – Expanding our energy infrastructure portfolio across Australia in li
Slide 28: Supplementary information
Supplementary information 28
Slide 29: APA asset and investment portfolio
APA asset and investment portfolio APA, September 2011 29
Slide 30: Financials: committed debt facilities
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 31: Economic regulation
Economic regulation 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 a
Slide 32: 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 33: APA business segments
APA business segments FY2011 EBITDA % Australia’s largest gas pipeline owner, present in each mainland state and 86.6% territory APA manages and operates all its energy infrastructure assets Gas transmission pipelines: – Approximately 10,400 km of high pressure gas transmission pipelines acros
Slide 34: FY11 performance: Energy Infrastructure Queensland
FY11 performance: 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
Slide 35: FY11 performance: Energy Infrastructure New South Wales
FY11 performance: 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
Slide 36: FY11 performance: Energy Infrastructure Victoria & South Australia
FY11 performance: 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 Victo
Slide 37: FY11 performance: Energy Infrastructure Western Australia & Northern Territory
FY11 performance: 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,
Slide 38: FY11 performance: Asset Management, Energy Investments
FY11 performance: Asset Management, 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 I
Slide 39: 11 year history of delivering growth and value
11 year history of delivering growth and value Total securityholder returns since listing 600 APA total securityholder returns TSR of 427%, 500 ASX All Ords accumulation index CAGR of 16.2% Utilities accumulation index 400 300 200 100 0 Jun‐00 Jun‐01 Jun‐02 Jun‐03 Jun‐04 Jun‐05 Jun‐06 Jun‐07 Jun‐08
Slide 40: 11 year history of delivering growth and value
11 year history of delivering growth and value Operating cash flow Operating cash flow per security 300 290 60 52.6 250 50 200 40 $ million cents 150 30 100 20 50 10 0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 EBITDA Distribution
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 about
Slide 42: 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