Apa Group · ASX:APA
Apa — Merger or Acquisition (August 2023)
69 slides from Apa's merger presentation, Aug 23, 2023
Slide 1: Acquisition of Alinta Energy Pilbara and equity raising
Acquisition of Alinta Energy Pilbara and equity raising 23 August 2023 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Disclaimer
Disclaimer Important Notice and Disclaimer This presentation prepared in accordance with the requirements of the Corporations Act. The in this Presentation relating to APA is information that has been released to the This investor presentation (Presentation) has been prepared by APA Group historical
Slide 3: Disclaimer
Disclaimer Future performance (cont.) Not for distribution or release in the United States of financial position as at FY23 and the Target’s unaudited consolidated The forward-looking statements are based on information available to APA as This Presentation may not be distributed or released in the
Slide 4: Disclaimer
Disclaimer APA and the underwriters (cont.) To the maximum extent permitted by law, APA and the underwriters and their such information may become outdated or inaccurate. In the ordinary course of their various business activities, the underwriters and respective Extended Parties make no representat
Slide 5: Acknowledgement of Country
Acknowledgement of Country At APA, we acknowledge the Traditional Owners and Custodians of the lands on which we live and work throughout Australia. We acknowledge their connections to land, sea and community. We pay our respects to their Elders past and present, and commit to ensuring APA operates
Slide 6: Transaction overview
Transaction overview Adam Watson CEO & Managing Director 01 Dugald River Solar Farm
Slide 7: Alinta Energy Pilbara provides a significant platform for future growth
Alinta Energy Pilbara provides a significant platform for future growth Consistent with APA's strategy, we have acquired a trusted independent operator and developer of energy infrastructure in the Pilbara region, with strong existing cash flows and strong relationships with key resources customers
Slide 8: Summary of the transaction announced today
Summary of the transaction announced today → APA has entered into a Share Sale Agreement with Alinta Power Cat Pty Ltd and Alinta Energy Development Pty Ltd to acquire 100% of Alinta Energy Pilbara Acquisition of Holdings Pty Ltd and Alinta Energy (Newman Storage) Pty Ltd (together, the Target or Al
Slide 9: Summary of the transaction announced today (cont’d)
Summary of the transaction announced today (cont’d) → $675 million equity raise through a fully underwritten ‘pro-rata’ institutional placement of new securities to eligible institutional investors(1) Equity raise → New securities will be issued at $8.50 per security (Placement Price), which represe
Slide 10: Diverse portfolio of existing assets and decarbonisation developments
Diverse portfolio of existing assets and decarbonisation developments Contracted Gas Electricity Gas Renewables Generation Transmission Transportation 60MW operating solar, 35MW > 200km operating transmission Remaining 11.8% of 203 TJ/d(4) operating battery and ~1GW+ 442MW operating gas generation,
Slide 11: Supporting some of Australia’s largest resources companies in the Pilbara
Supporting some of Australia’s largest resources companies in the Pilbara including BHP, Roy Hill and FMG Alinta Energy Pilbara has a widespread operational footprint and an extensive development pipeline Pilbara Region Port Hedland Expansion – 60MW RECIPS, 43MW Solar & 25MW Battery Port Hedland Sol
Slide 12: Alinta Energy Pilbara’s predictable earnings and strong operating credentials
Alinta Energy Pilbara’s predictable earnings and strong operating credentials provide APA with a platform for ongoing capital investment in the region Predictable earnings Strong operating and Strong relationships and cash flows development capabilities with key customers $124m FY23 EBITDA, underpin
Slide 13: APA’s strategy is to be the partner of choice in delivering infrastructure solutions
APA’s strategy is to be the partner of choice in delivering infrastructure solutions for the energy transition Contracted An effective transition Renewables requires energy that is and Firming Electricity Reliable Transmission We are supporting Australia’s energy transition through Affordable invest
Slide 14: Alinta Energy Pilbara is consistent with APA’s strategic objectives
Alinta Energy Pilbara is consistent with APA’s strategic objectives, leverages our existing capability in energy infrastructure and provides a platform for growth Alinta Energy Pilbara will establish a market-leading position for APA as an independent power provider in Australia’s leading mining geo
Slide 15: Positioning APA to play a leading role in the energy transition
Positioning APA to play a leading role in the energy transition Darren Rogers Group Executive, Energy Solutions 02 Diamantina Power Station
Slide 16: Pilbara – a premier global mining geography
Pilbara – a premier global mining geography The Pilbara is a globally significant iron ore export region, with many of its mines boasting low production costs and material reserves Pilbara iron ore volumes (million tonnes)(1) Iron ore cost curve(1),(2) Over 95% of Western Australia’s iron ore export
Slide 17: Iron ore producers are committed to decarbonisation targets
Iron ore producers are committed to decarbonisation targets Significant emissions reduction still required by major miners to meet 2030 emissions reduction targets, which is expected to be driven by reducing reliance on diesel Roy Hill(1),(2),(3) BHP(4) Rio Tinto(5) FMG(6),(7) Scope 1 2 1 2 1 2 1 2
Slide 18: Decarbonisation will require large-scale diesel displacement
Decarbonisation will require large-scale diesel displacement 2023 Relative Pilbara 2050 Relative Pilbara Iron Ore Energy Forecast Electricity Forecast Electricity Mining Stage Demand(1) Demand Demand (% of total value chain)(1) (% of total value chain)(1) Drill & Blast Drill rigs and excavators Each
Slide 19: Decarbonisation expected to drive renewable electricity demand
Decarbonisation expected to drive renewable electricity demand The decarbonisation horizon to 2050 is expected to facilitate considerable growth in the use of renewables, with green electricity and gas firming expected to play key roles in this transition Renewable energy generation expected to be r
Slide 20: Future demand for gas firming capacity in the Pilbara
Future demand for gas firming capacity in the Pilbara Concurrent with the build-out of renewables, gas power generation is expected to play a key ongoing role in providing ‘firm’ power in the Pilbara, critical to the 24-7 nature of the miners’ operations The need for firm Variable gas Highly flexibl
Slide 21: Alinta Energy Pilbara’s operating history positions the business as leading independent developer
Alinta Energy Pilbara’s operating history positions the business as the leading independent developer of renewables and transmission in the region Alinta Energy Pilbara has a proven track record of operation and development of renewables and transmission assets. ~70% of contracted revenues are perio
Slide 22: Alinta Energy Pilbara’s extensive >$3 billion development pipeline
Alinta Energy Pilbara’s extensive >$3 billion(1) development pipeline The construction and development pipeline includes ~1GW+ of capacity, with a rapid transition towards a renewables focused portfolio(2),(3) Operation Under construction Development pipeline(3) Total Significant construction and ~1
Slide 23: Ongoing investment in renewables will support APA’s Climate Transition Plan goals
Ongoing investment in renewables will support APA’s Climate Transition Plan goals over time Due to the Acquisition, APA’s baseline emissions for its CTP goals will be reset in accordance with re-baselining principles detailed in the CTP. Power generation gross emissions intensity (Scope 1 and 2) CTP
Slide 24: Investment in the development pipeline will assist to decarbonise the Pilbara
Investment in the development pipeline will assist to decarbonise the Pilbara Despite the increase in APA’s total emissions that arises from the Acquisition, the displacement of diesel arising from the Pilbara energy transition is critical to the overall decarbonisation of the region Expected Alinta
Slide 25: Alinta Energy Pilbara positions APA to be the leading independent energy solutions provider
Alinta Energy Pilbara positions APA to be the leading independent energy solutions provider in the Pilbara The Pilbara is a globally significant iron ore export region with proximity to the world’s largest iron ore import markets, and with many of its mines boasting low production costs. This provid
Slide 26: Acquisition financial impacts and funding
Acquisition financial impacts and funding Kynwynn Strong Acting Chief Financial Officer 03 Gruyere Solar Farm
Slide 27: Financial outcomes for APA securityholders
Financial outcomes for APA securityholders Increases our Expected to be Expected to be Predictable exposure to the Free Cash Flow value accretive earnings and key WA mining accretive per for APA’s Appropriately cash flows region security securityholders funded Acquisition to be funded Low-risk, with
Slide 28: Alinta Energy Pilbara assets’ predictable EBITDA and cash flows
Alinta Energy Pilbara assets’ predictable EBITDA and cash flows Alinta Energy Pilbara Historical financials(1) FY23 Revenue by Asset Location FY23 EBITDA by Asset Location $m FY20 FY21 FY22 FY23 10% Revenue 149 154 195 235 19% 25% 28% % Growth - 3% 27% 21% Port Port Inland Inland EBITDA 84 83 99 124
Slide 29: Diversification of APA’s FY23 EBITDA and revenue composition
Diversification of APA’s FY23 EBITDA and revenue composition by counterparty credit by source by state by customer industry rating 1% 4% 1% 4% 5% 7% 21% 10% 25% 7% 46% 44% FY23 Energy 9% FY23 Energy Infrastructure 62% Infrastructure 7% EBITDA Revenue 25% 34% PRE-ACQUISITION 88% PRE-ACQUISITION Power
Slide 30: Prudent acquisition funding structure maintains APA’s solid balance sheet
Prudent acquisition funding structure maintains APA’s solid balance sheet Total Uses(3) Total Sources Acquisition funding → Fully underwritten $675 million ‘pro-rata, institutional placement and a $75 million SPP(1) $86m $75m → $993 million of the Acquisition funded by new debt facilities $675m $1,6
Slide 31: Equity raising overview
Equity raising overview Kynwynn Strong Acting Chief Financial Officer 04 Mondarra Gas Storage and Processing Facility
Slide 32: Equity raising details
Equity raising details Offer structure → Fully underwritten ‘pro-rata’ institutional placement (Placement) to raise $675 million or 6.7% of total securities outstanding → It is intended that eligible institutional security holders who bid for up to their ‘pro-rata’ share of new securities under the
Slide 33: Placement and SPP timetable
Placement and SPP timetable Event Date(1) Record date for SPP (7:00pm) Tuesday, 22 August 2023 Trading halt, announcement of FY23 results and Placement Wednesday, 23 August 2023 Placement bookbuild Wednesday, 23 August 2023 Announcement of the completion of the Placement Thursday, 24 August 2023 Tra
Slide 34: Conclusion
Conclusion Adam Watson CEO & Managing Director 05 Diamantina Power Station
Slide 35: Alinta Energy Pilbara’s predictable earnings, strong operating credentials and development pipeline
Alinta Energy Pilbara’s predictable earnings, strong operating credentials and extensive development pipeline provide a platform for future growth in remote-grid energy solutions in the Pilbara and across Australia Consistent with APA's strategy, we have acquired a trusted independent operator and d
Slide 36: International offer restrictions
International offer restrictions APPENDIX 01 Badgingarra Wind Farm
Slide 37: International Offer Restrictions
International Offer Restrictions This document does not constitute an offer of new stapled securities (New Securities) of APA in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Securities may not be offered or sold, in an
Slide 38: International Offer Restrictions
International Offer Restrictions Cayman Islands No offer or invitation to subscribe for the New Securities may be made to the public in the Cayman Islands or in any manner that would constitute carrying on business in the Cayman Islands. European Union This document has not been, and will not be, re
Slide 39: International Offer Restrictions
International Offer Restrictions New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the FMC Act). The New Securities are not being offered or sold in New Zealand (or allotted with a view to b
Slide 40: International Offer Restrictions
International Offer Restrictions Switzerland The New Securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange or on any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material
Slide 41: International Offer Restrictions
International Offer Restrictions United States This document may not be released or distributed in the United States. This document does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or to any person who is acting for the account or bene
Slide 42: Key risks
Key risks APPENDIX 02 Diamantina Power Station
Slide 43: Key business risks
Key business risks Investors should be aware that there are risks associated with an investment in APA and the Acquisition. Some of the key risks that may, either individually or in combination, affect the future operating and financial performance of APA and the value of APA securities (before and
Slide 44: Key business risks
Key business risks 1. Regulatory risks 1.4 Risk of changes to the regulatory environment governing APA’s existing (and post-Acquisition) activities. As the regulatory environment applicable to APA evolves, new and amended laws and regulations that impact APA's operations may be implemented, regulato
Slide 45: Key business risks
Key business risks 2. Customer related risks (cont.) The competitive position of gas and the actions of APA’s customers cannot be predicted with certainty. If the demand for gas weakens or if customer behaviour changes, consumption and growth may be affected and therefore APA’s business, operations,
Slide 46: Key business risks
Key business risks 4. Gas supply risk The availability of competitively priced gas (as compared with other energy sources including electricity generated from coal, fuel oils, solar, wind, hydro and other alternative energy sources) is essential for APA’s customers’ ongoing use of gas transmission p
Slide 47: Key business risks
Key business risks 8. Climate change (cont.) APA may also be subject to increased insurance premiums, operating expenditure and capital expenditure as a result, which may have an adverse impact on its business, operations, financial position and/or performance. In 2022, APA announced its Climate Tra
Slide 48: Key business risks
Key business risks 11. Credit rating or security risks Credit ratings are subject to revision, suspension or withdrawal at any time by the assigning rating agency. Rating agencies may also revise or replace entirely the methodology applied to derive credit ratings. There is no assurance that any cre
Slide 49: Key business risks
Key business risks 14. Acquisition and integration risks (cont.) Additionally, it is possible that the analysis APA undertakes in connection with an acquisition results in conclusions and forecasts which are inaccurate or which are not realised in due course, whether because of flawed methodology, m
Slide 50: Key business risks
Key business risks 17. Environmental risks (cont.) The costs and operational impacts associated with complying with these approvals, laws and regulations could increase as a result of obtaining new approvals, new or heightened environmental concerns or if APA fails to comply with any of its environm
Slide 51: Key business risks
Key business risks 20. Reliability of key assets (cont.) Also, as a result of urban encroachment and the size of APA’s energy network, many of APA’s assets are located close to populated areas. If these assets are exposed to interference, injury to persons or damage to property or the environment ma
Slide 52: Key business risks
Key business risks 25. Fraudulent behaviour of employees APA is exposed to risks associated with fraudulent behaviour of its officers, employees, consultants, contractors and contractual counterparties. The occurrence of such behaviour may adversely affect APA’s business, operations, financial posit
Slide 53: Key business risks
Key business risks 29. Joint venture risk APA holds a number of interests in companies together with joint venture partners through equity or other joint ventures. Certain decisions require approval of the other shareholders of the joint venture or their representatives. Therefore, irrespective of A
Slide 54: Additional risks specific to the Acquisition
Additional risks specific to the Acquisition 32. Completion risk Completion of the Acquisition is subject to certain conditions precedent, including in respect of the change of control of Alinta Energy Pilbara under certain of its contracts. If the Acquisition does not complete as a result of a fail
Slide 55: Additional risks specific to the Acquisition
Additional risks specific to the Acquisition 35. Underwriting risk g) APA or any of its directors engage in fraud or commit certain offences; h) the Placement, or any of the offer documents, do not comply with applicable law; or i) an event occurs which makes it illegal for the underwriters to satis
Slide 56: Equity raising and general risks
Equity raising and general risks 36. Allocation of New Securities under the Placement and SPP It is intended that eligible institutional security holders who bid for up to their ‘pro-rata’ share of New Securities under the Placement will be allocated their full bid, on a best endeavours basis. For t
Slide 57: Equity raising and general risks
Equity raising and general risks 42. Changes to accounting standards Changes to Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act may adversely affect APA’s reported results o
Slide 58: Pro forma financials
Pro forma financials APPENDIX 03 Diamantina Power Station
Slide 59: Pro-Forma historical balance sheet (FY23)
Pro-Forma historical balance sheet (FY23) Remeasurement Combined Alinta Energy Pro-Forma Pro Forma Pro-Forma APA of APA's Pro-Forma Balance Sheet Pilbara Debt/Equity Acquisition Transaction existing interest Historical Basis of Preparation Balance Sheet Raising Adjustments costs in GGTP Balance Shee
Slide 60: Supplementary information
Supplementary information APPENDIX 04 Emu Downs Wind Farm
Slide 61: Alinta Energy Pilbara: Port Hedland Power Station overview
Alinta Energy Pilbara: Port Hedland Power Station overview Asset overview Site location Key figures The Port Hedland Power Station is located in the Commissioned 1995 Main site Chichester Shire of Port Hedland, 1,640km north of Perth and 1998 Boodarie 6km south of South Hedland. 2018 LM6000 Port Hed
Slide 62: Alinta Energy Pilbara: Newman Power Station overview
Alinta Energy Pilbara: Newman Power Station overview Asset overview Site location Key figures Newman is located in the Pilbara region, 450km Commissioned 1996 (Frame), 2009 Chichester southeast of Port Hedland. (Trent), 2018 (BESS), 2022 (Recips) The Newman Power Station was originally constructed P
Slide 63: Alinta Energy Pilbara: Chichester overview
Alinta Energy Pilbara: Chichester overview Asset overview Site location Key figures The Chichester Solar Farm is located adjacent to Commissioned 2021 Chichester the Christmas Creek mine in the East Pilbara region of Western Australia (~135 km north of Port Capacity 60 MW Newman and ~390km south-eas
Slide 64: Alinta Energy Pilbara: GGTP overview
Alinta Energy Pilbara: GGTP overview Asset overview Site location Key figures Alinta Energy Pilbara owns an 11.843% interest in Alinta Energy Pilbara 11.843% the Goldfields Gas Transmission Pipeline (GGTP), Chichester Ownership an essential gas transmission pipeline servicing the major iron ore, gol
Slide 65: Alinta Energy Pilbara construction and development pipeline overview
Alinta Energy Pilbara construction and development pipeline overview The construction and development pipeline includes ~1GW+ of capacity, with a rapid transition towards a renewables focused portfolio(1) Type Capacity (MW)(1) Proposed connection details Status Port Hedland Solar 47 Under constructi
Slide 66: Pilbara region: generation and transmission
Pilbara region: generation and transmission There are 24 power stations operating in the Pilbara. The generation and transmission assets are mostly physically connected, though they are largely private, and run independently Overview Power generation, transmission and gas pipeline infrastructure in
Slide 67: Pilbara region: forecast electricity demand and capacity
Pilbara region: forecast electricity demand and capacity Forecast increase in electricity demand and renewables capacity to 17TWh and ~5.1GW respectively by 2050, with supply expected to transition to become ~89% renewables and ~11% gas by 2050, with gas serving a critical firming and reserve capaci
Slide 68: Case study of existing APA remote-grid development: Gruyere and Queensland North West Power System
Case study of existing APA remote-grid development: Gruyere and Queensland North West Power System Projects Completed project Completed project Gruyere Gold Mine Hybrid Power Station ~$218m Queensland North West Power System >$1bn and Pipeline Lateral invested invested Diamantina Power Station 13MW
Slide 69: Investor Relations and Media contacts
Andrew Gibson Michael Cox General Manager, Investor Relations Head of Media Relations & Financial Communications M: +61 437 169 292 M: +61 429 465 227 E: andrew.gibson@apa.com.au E: michael.cox@apa.com.au www.apa.com.au www.apa.com.au