Apa Group · ASX:APA
Apa — 1H FY2011 Earnings Presentation
40 slides from Apa's earnings presentation, Feb 23, 2011
Slide 1: ASX Release: Interim Results Presentation
For personal use only ASX RELEASE 23 February 2011 The Manager Company Announcements Office Australian Securities Exchange 4th Floor, 20 Bridge Street Sydney NSW 2000 Electronic Lodgement Dear Sir or Madam Company Announcement I attach the following announcement for release to the market: • Interim
Slide 2: Financial Results Half year ended 31 December 2010
For personal use only Financial Results Half year ended 31 December 2010 23 February 2011
Slide 3: Result overview and strategic highlights
For personal use only Result overview and strategic highlights Mick McCormack Managing Director and CEO 1H 2011 Result Presentation Æ 2
Slide 4: Steady and solid result
Steady and solid result For personal use only 1H11 1H10 Change $ million $ million Operating cash flow 170 160 up 6% Revenue excluding pass‐through (1) 370 343 up 8% EBITDA 264 244 up 8% Profit (2) 70 64 up 10% Operating cash flow per security (cents) 31.0 31.6 down (2%) Distribution per security (c
Slide 5: Strategic and operational highlights
Strategic and operational highlights For personal use only Expanded APA’s gas infrastructure portfolio Commissioned the Young Wagga looping project, New South Wales Progressed construction of Victorian Transmission System, northern augmentation project Completed Roma Brisbane Pipeline lateral
Slide 6: Strategic and operational highlights: capturing synergies
Strategic and operational highlights For personal use only Capturing revenue and operating synergies Implemented national finance system Developing national customer interface for gas transport and storage services Operational excellence program across transmission operations Leveraged APA’s i
Slide 7: Flood and weather impacts
Flood and weather impacts For personal use only Floods and extreme weather during November 2010 to February2011 has impacted APA’s assets and operations across three states Minimal disruption to gas services despite impact on APA’s assets – Pipeline damage (Toowoomba) and flood damage to facilitie
Slide 8: Flood and weather impacts: Roma Brisbane Pipeline
Flood and weather impacts For personal use only Roma Brisbane Pipeline – repair to damaged pipeline section and easement wash‐out on the Toowoomba escarpment Before flooding After flooding Repairing the pipeline 1H 2011 Result Presentation Æ 7
Slide 9: Flood and weather impacts: Arubial gas inlet station
Flood and weather impacts For personal use only Arubial gas inlet station – continued operating while flooded During floods After flooding 1H 2011 Result Presentation Æ 8
Slide 10: Financial performance
For personal use only Financial performance Peter Fredricson Chief Financial Officer 1H 2011 Result Presentation Æ 9
Slide 11: Consistent financial performance
Consistent financial performance For personal use only 1H11 1H10 Change $ million $ million Total revenue excluding pass‐through (1) 369.8 343.3 7.7 % Total revenue 554.7 495.9 11.8 % EBITDA 263.9 244.3 8.0 % EBIT 219.0 197.4 10.9 % Net interest expense (124.5) (111.1) (12.1%) Tax (24.2) (22.7) (6.7
Slide 12: EII2 – significant item
EII2 – significant item For personal use only 1H11 APA has a 20.2 % interest in EII2 $ million which holds the North Brown EBITDA 263.9 Hill wind farm Significant item 9.8 The wind farm was connected EBITDA before significant item 254.0 to the grid and commenced Profit after tax 70.2 generation
Slide 13: EBITDA by business segment
EBITDA by business segment For personal use only 1H11 1H10 1H11 EBITDA split by segment Change $ million $ million Energy Investments, Gas Transmission and Distribution 7% Queensland 54.9 51.6 6.4 % Asset Management, 7% New South Wales 52.9 53.1 (0.4 %) Qld, 22% Victoria & South Australia 62.0 57.2
Slide 14: Gas transmission and distribution: Queensland
Gas transmission and distribution For personal use only Queensland 60 54.9 Roma Brisbane Pipeline lateral addition 50 Proposed energy solutions for Mt Isa underpinned by Carpentaria Gas Pipeline 40 EBITDA $ million capacity 30 Berwyndale Wallumbilla Pipeline contribution 20 – acquired April 20
Slide 15: Gas transmission and distribution: New South Wales
Gas transmission and distribution For personal use only New South Wales 60 52.9 Continued mainline expansion program 50 Completed Young Wagga lateral looping project 40 EBITDA $ million – Commissioning delayed due to weather 30 End of short term ‘as available’ contract 20 Short Term Trading
Slide 16: Gas transmission and distribution: Victoria & South Australia
Gas transmission and distribution For personal use only Victoria & South Australia 60 62.0 Increased gas volumes due to cooler 50 winter weather impact Northern augmentation expansion 40 EBITDA $ million program – Commissioning by March 2011 30 LNG storage facility 20 – Open access truck refue
Slide 17: Gas transmission and distribution: Western Australia & Northern Territory
Gas transmission and distribution For personal use only Western Australia & 60 Northern Territory 48.6 50 Goldfields Gas Pipeline access arrangement – 10% reduction in reference tariffs that 40 apply to contracts that provide ~40% of EBITDA $ million APA’s GGP revenue 30 – APA is pursuing the meri
Slide 18: Asset Management and Energy Investments
Asset Management and Energy Investments For personal use only Asset Management 20 19.5 Increased revenue from Envestra asset 15 EBITDA $ million management Short term contracts 10 Increased third party work Long term contracts 5 Added Wagga gas network O&M to Envestra asset management ‐ 1H08 1
Slide 19: Fully covered distributions
Fully covered distributions cents per security use only On target to deliver distribution growth guidance 60 51.9 1H11 distribution payout ratio* 48.2 50 of 53.6% 42.7 39.7 Distribution components 40 38.2 For personal 13.3 cents – profit distribution 31.0 3.2 cents – capital distribution 30 32.7
Slide 20: Major capital expenditure for 1H11
Major capital expenditure for 1H11 For personal use only 1H11 1H10 Description of 1H11 major projects $ million $ million Growth capital expenditure Regulated Victoria Transmission System 13.5 Northern augmentation project 16.6 APA Gas Networks (Qld) 11.6 Includes southern network expansion 8.7 Majo
Slide 21: Funding 1H11 growth capital expenditure
Funding 1H11 growth capital expenditure For personal use only 1H11 $ million Growth capital expenditure 181 Funds Free operating cash flow retained in the business (Operating cash flow less distributions and SIB capex) 73 Existing cash utilised 13 Cash 86 48% New equity (Distribution Reinvestment Pl
Slide 22: Prudent capital management
Prudent capital management For personal use only Cash and committed undrawn facilities of $340 million at 31 December 2010 – Reduced debt headroom by cancelling $412 million undrawn syndicated bank facilities 2010 metrics – Gearing* of 70.1%, marginally higher compared to 69.8% at 30 June 2010 –
Slide 23: Capital management strategy
Capital management strategy For personal use only 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 – Sufficient
Slide 24: Outlook and guidance
For personal use only Outlook and guidance Mick McCormack Managing Director and CEO 1H 2011 Result Presentation Æ 23
Slide 25: Maintain strategy for profitable growth
Maintain strategy for profitable growth Continue to maximise value for securityholders For personal use only Enhancing APA’s portfolio of gas infrastructure assets in Australia’s growing gas market Capturing revenue and operational synergies from APA’s significant 2,439 PJ asset base 69,183 PJ
Slide 26: Committed and planned capital projects
Committed and planned capital projects For personal use only Roma Brisbane Pipeline Capacity expansion (2012) Mondarra Gas Storage Facility APA Gas Network Expanding storage Expansion into new housing capacity and capability areas Interconnection with (ongoing) adjacent pipeline (2011‐2013) Moomba S
Slide 27: APA growth drivers
APA growth drivers For personal use only Growth drivers Market developments Gas supply and demand Growth in mining projects Gas fired power generation Increasing electricity demand Renewable energy projects Gas storage Gas producer contracting strategy Integrated market Energy market integratio
Slide 28: Long-term organic growth opportunities
Long‐term organic growth opportunities Pipeline solutions for For personal use only growth in mining and power generation Energy infrastructure Energy solutions for development for growth mining regions in mining projects Transportation opportunities for coal seam gas Energy infrastructure Pipelines
Slide 29: Guidance for FY2011
Guidance for FY2011 For personal use only EBITDA guidance revised EBITDA – expected towards the upper end of the range of $480 million to $490 million No change to distribution and interest cost guidance Distribution – anticipate delivering 5% growth for 2011 full year distribution Net interes
Slide 30: Delivering value and long term growth
Delivering value and long term growth For personal use only Consistent financial performance ‐ stability – Increasing key measures – operating cash flow, EBITDA and distributions – Maintaining cash flow stability and revenue certainty – Managing environment of higher borrowing costs Long term or
Slide 31: Supplementary information
For personal use only Supplementary information 1H 2011 Result Presentation Æ 30
Slide 32: APA profile
APA profile For personal use only APA is Australia’s largest natural gas infrastructure business – Gas Transmission and Distribution: gas pipelines, interconnected gas storage facilities across Australia, and gas distribution networks in Queensland and New South Wales – Asset Management: provides
Slide 33: Key financial ratios
Financials For personal use only Key financial ratios 1H11 1H10 Operating cash flow per security (cents) 31.0 31.6 Weighted average securities on issue (million) 547.8 504.6 Payout ratio 53.6% 50.2% Earning per security (cents) 12.8 12.6 Interest cover ratio (times) 2.06 2.16 Gearing ratio 70.1% 69.
Slide 34: Cash flow
Financials For personal use only Cash flow 1H11 1H10 $ million $ million Change Operating cash flow 169.8 159.5 6.4 % Distributions (net of DRP) 57.6 50.6 Available operating cash flow 112.2 108.9 3.0 % Operating cash flow per security (cents) 31.0 31.6 (2.0 %) Distributions per security (cents) 16.
Slide 35: Revenue analysis by business segment
Financials For personal use only Revenue analysis by business segment 1H11 1H10 $ million $ million Change Gas Transmission and Distribution Queensland 83.3 76.8 8.4% New South Wales 64.3 64.3 0.0% Victoria & South Australia 79.6 73.8 7.8% Western Australia & Northern Territory 77.4 78.1 (0.9%) Gas
Slide 36: Total committed debt facilities
Financials For personal use only Total committed debt facilities Facility Facility amount Tenor 2008 Bilateral borrowings (1) $165 million July 2011 2009 Bilateral borrowing (2) $150 million August 2014 2007 Syndicated facility (2) $900 million June 2012 2009 Syndicated facility (3) $618 million 2 a
Slide 37: Regulatory update
Regulatory update For personal use only 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 Regulatory resets currently under review – APA Gas Network (Qld) – AER draft decision relea
Slide 38: APA asset and investment portfolio
APA asset and investment portfolio For personal use only APA Group assets and investments 20 Gas transmission and Asset Management distribution Commercial and operational services to: 17 Queensland ‐ Energy Infrastructure Investments 20 NORTHERN (1) Roma Brisbane Pipeline ‐ Envestra Limited TERRITOR
Slide 39: Disclaimer
Disclaimer For personal use only The information contained in this presentation is given without any liability whatsoever to Australian Pipeline Trust or APT Investment Trust or any of its related entities (collectively “APA Group”) or their respective directors or officers, and is not intended to c
Slide 40: For further information contact
For personal use only 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