Slide 1: APA FY23 Results Presentation
APA Group Limited ACN 091 344 704 | APA Infrastructure Trust ARSN 091 678 778 | APA Investment Trust ARSN 115 585 441 Level 25, 580 George Street Sydney NSW 2000 | PO Box R41 Royal Exchange NSW 1225 Phone +61 2 9693 0000 | Fax +61 2 9693 0093 APA Group | apa.com.au 23 August 2023 ASX ANNOUNCEMENT AP
Slide 2: Powering Tomorrow
Powering Tomorrow FY23 Full Year Results 23 August 2023 1
Slide 3: Disclaimer
Disclaimer This presentation has been prepared by APA Group Limited (ACN 091 344 704) as important factors could cause actual results or performance to differ materially from such responsible entity of the APA Infrastructure Trust (ARSN 091 678 778) and APA Investment forward-looking statements, opi
Slide 4: 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 5: Ensuring gas supply in WA through Mondarra and the new Northern Goldfields Interconnect
Customer Share Ensuring gas supply in WA through Mondarra and the new Northern Goldfields Interconnect • Multiple gas supply outages, unrelated to APA, in early 2023 resulted in ~25% drop in Western Australia’s (WA) gas supply • APA’s Mondarra storage and processing facility played a critical role i
Slide 6: FY23 highlights
FY23 highlights 01 Diamantina Power Station
Slide 7: In FY23, we continued to strengthen communities through responsible energy
In FY23, we continued to strengthen communities through responsible energy Delivered another year of solid EBITDA and distribution growth Completed infrastructure projects critical to delivering reliable energy supply for our customers and communities Refreshed our strategy and have the Executive Le
Slide 8: A solid FY23 result and growth in distributions in line with FY23 guidance
A solid FY23 result and growth in distributions in line with FY23 guidance Segment Revenue1 Underlying EBITDA2 Free Cash Flow (FCF)3 +5.1% to $2,353m +2.0% to $1,725m -1.0% to $1,070m Driven by a solid Energy Infrastructure Up 3.5% excluding Orbost; includes Impacted by higher stay-in-business capex
Slide 9: Safe, reliable operations; delivering energy solutions for our customers; investing in capability
Safe, reliable operations; delivering energy solutions for our customers; investing in capability; progressing our sustainability agenda Operational excellence Invested in Progressed our enhancements capability sustainability agenda • Establishment of a new Integrated Operations Centre • Enhanced ca
Slide 10: A customer driven strategy to be the partner of choice in delivering infrastructure solutions
A customer driven strategy to be the partner of choice in delivering infrastructure solutions for the energy transition Contracted An effective transition requires Renewables energy that is… and Firming Electricity Reliable Transmission We are supporting Australia’s energy transition through Afforda
Slide 11: We are executing our refreshed strategy and responding to the changing needs of our customers
We are executing our refreshed strategy and responding to the changing needs of our customers and communities Executing our strategy Investing in Investing to be the Partner of Choice our foundations in capability Basslink Technology Corporate and Operating Costs Investing in systems and processes t
Slide 12: Balancing distributions and investing for growth
To pursue the significant opportunities presented by the energy transition, we will strike the right balance between distributions and investing for growth We expect our FY24 DPS to be 56cps2 Contracted Renewables The expected FY24 distribution represents growth of 1.8% on FY23 and aims to and Firmi
Slide 13: Executive Leadership Team
Delivery of our strategy being led by a highly experienced and diverse Executive Leadership Team Adam Watson Petrea Bradford* Amanda Cheney Ross Gersbach Kevin Lester Chief Executive Officer and Group Executive Group Executive Group Executive Group Executive Managing Director Operations Legal and Go
Slide 14: FY23 in review
FY23 in review 02 Emu Downs Solar Farm
Slide 15: Three priority areas: People, Operational Excellence, Creating Value
We are building momentum across our business with a relentless focus on three priority areas Our Operational Creating People Excellence Value APA FY23 Results Investor Presentation 14
Slide 16: Our People: safety, wellbeing and diversity
Our People We are embedding a culture that drives engagement through the safety, wellbeing and diversity of our people Safety of our people Gender diversity Engagement Continued improvement in contractor injuries, offset by an increase in employee injuries compared to FY22 Continued focus on improvi
Slide 17: Targeted programs building our brand as an employer of choice
Our People Targeted programs and initiatives are building our brand as an employer of choice Industry Recognition Employee Benefits Leader Growth We are proud to be recognised as a top We are committed to providing competitive employee benefits and opportunities for our people Continued investment i
Slide 18: A solid FY23 financial result as we continue to invest
Operational Excellence A solid FY23 financial result as we continue to invest to support Australia’s energy transition Segment Revenue1 Underlying EBITDA2 Free Cash Flow (FCF)3 Solid growth in EBITDA +5.1% to $2,353m +2.0% to $1,725m -1.0% to $1,070m Driven by a solid Energy Infrastructure Up 3.5% e
Slide 19: Strong progress against our FY23 sustainability objectives
Operational Excellence Strong progress against our FY23 sustainability objectives Build Accelerate Climate Transition Environment Plan Reconciliation Improvement Program Progressed our Scope 3 pathways Action Plan (RAP) Continued to uplift our 8 Completed Dugald River Solar Developed APA’s inaugural
Slide 20: Case study – Establishment of APA's methane reduction target
Operational Excellence Case study – Establishment of APA’s methane reduction target • Strong progress on Climate Transition Plan initiatives • Achieved FY23 target of 100% renewable electricity procurement by procuring large-scale generation certificates • Established a new methane reduction target,
Slide 21: Creating value as the partner of choice for the energy transition
Creating Value Creating value as the partner of choice, delivering infrastructure solutions for the energy transition A customer-focused strategy… Resource Energy Supply Large Commercial Government Industry and Wholesale and Industrial …meeting the needs of our customers where we have a competitive
Slide 22: Facilitating resources customers' decarbonisation with bundled energy solutions
Creating Value Case study: Facilitating our resources customers’ decarbonisation efforts with bundled energy solutions Customer Drivers $25bn1 Why APA expects to be the partner of choice for the resource industry Market opportunity for remote energy Majority of Australia’s ASX200 infrastructure reso
Slide 23: Substantial electricity transmission required for renewable buildout
Creating Value Case study: Substantial electricity transmission required to facilitate the accelerating renewable energy buildout across Australia $54bn1 Customer Drivers Why APA expects to be the partner of choice in electricity of new transmission transmission investment required across Australia2
Slide 24: Gas transportation to enhance capacity, reliability and security of supply
Creating Value Case study: Gas transportation to enhance system capacity, reliability and security of supply for Australia’s energy system $8bn1 Customer Drivers Why APA expects to be the partner of choice in gas transportation Market opportunity for gas pipelines Increased need for gas • Well posit
Slide 25: Momentum building for transportation and storage of hydrogen and CO2
Creating Value Case Study: Momentum building for the transportation and storage of future fuels such as hydrogen and CO2 Customer Drivers $260bn1 Why APA expects to be the partner of choice in future energy Market opportunity for Hydrogen Hydrogen is expected to be an important future energy source,
Slide 26: FY23 financial performance
FY23 financial performance Kynwynn Strong Acting CFO 03 Dugald River Solar Farm
Slide 27: FY23 delivering growth in EBITDA and distributions
FY23 delivering growth in EBITDA and distributions Financial summary FY23 FY22 % Change(1) Revenue (excluding pass through)(2) $m 2,401 2,236 7.4% Key points Segment revenue (excluding pass-through)(3) $m 2,353 2,238 5.1% Underlying EBITDA(4) $m 1,725 1,692 2.0% Underlying EBITDA (excluding Orbost)(
Slide 28: Revenue growth driven by Energy Infrastructure and inflation linked tariffs
Revenue growth driven by Energy Infrastructure and inflation linked tariffs $10m Key drivers $23m $1m $2,353m $5m • Inflation linked tariff escalation was the key driver of higher revenue $6m • East Coast gas transmission assets contributed to higher operating revenue • Change in net assets driven b
Slide 29: Targeted investment in capability and responding to customer needs
Targeted investment in capability and responding to the changing needs of our customers and communities $628m Key drivers • Operating costs higher, with approximately one third of the increase due to 2H23 investment in Electricity Generation & Transmission business development capability, as well as
Slide 30: EBITDA growth driven by Energy Infrastructure segment
EBITDA growth driven by Energy Infrastructure segment EBITDA by segment FY23 FY22 % Change(1) FY23 Key drivers Energy Infrastructure • Underlying EBITDA up 2% (up 4% excluding Orbost) East Coast $m 645 646 -0.2% • East Coast broadly flat (up 4% excluding Orbost) benefitting from inflation linked Eas
Slide 31: Non-Operating Items
Non-Operating Items $ million FY23 FY22 % Change FY23 Key drivers Underlying EBITDA(1) 1,725 1,692 2.0% • Electricity contracts for difference are non-cash and will remain volatile Fair value gains/losses on contracts for difference(2) 12 (30) n.m. from period to period Technology transformation pro
Slide 32: Small decline in Free Cash Flow
Small decline in Free Cash Flow with growth in underlying EBITDA and lower cash tax offset by higher capex Key drivers of Free Cash Flow (FCF)(1) $2m $1m • Higher underlying EBITDA $21m • Reduced distributions from investments, mainly SEAGas, due to lower contracted revenues and pending refinancing
Slide 33: Significant investment in FY23 to drive longer term growth
Significant investment in FY23 to drive longer term growth FY23 Key drivers $1,070m • Growth capex on regulated assets: Regulated Growth Capex • Western Outer Ring Main project $242m Non Regulated Growth Capex • Winchelsea Compressor Station SIB Capex Foundational capex • Growth capex on Non Regulat
Slide 34: Balance sheet has internally funded significant growth
Balance sheet has internally funded significant growth whilst maintaining investment grade credit ratings Solid balance sheet FY24 to FY26 pipeline of capex opportunities >$1.4b(3) FY23 FY22 Organic growth pipeline $845m includes: Net debt $10.7b $10.2b • East Coast Gas Grid Average cost of debt(1)
Slide 35: Market Dynamics
Market Dynamics Adam Watson CEO & MD 04 Diamantina Power Station
Slide 36: Australia's decarbonisation challenge, with gas playing a critical role
Australia has an enormous decarbonisation challenge ahead, requiring a significant renewable energy build out by 2030, with gas to play a critical role 1 An effective transition requires energy that is… Firming the accelerated build out of renewables and exit of coal • Approx. 120 TWh per annum of a
Slide 37: Gas generation firming expected as renewables displace coal
As a significant amount of intermittent renewables displaces coal, gas generation firming is expected to be required to underpin a reliable, affordable and low emissions energy system Forecast NEM capacity to 2050, Step Change scenario1 GW 150 • The ISP forecasts the need for over 125GW of 125GW 141
Slide 38: Energy reliability under 2030 renewable target unlikely without gas
Energy reliability under Australia’s 2030 renewable energy target is unlikely to be achieved without gas 100% 4% 18% Firming generation required 35% 80% 38% 67% 60% 2% Australian Government 15% Renewable Energy 31% Target 2030 4% 40% 82% Gas 20% 41% 35% Coal 29% Nuclear Other Renewables NEM excludin
Slide 39: Case Study: Gas power generation demand increasing in the South West
Case Study: Gas power generation (GPG) forecasted demand is increasing in the South West Interconnected System (SWIS) in WA as renewables come online and coal exits 1 Firming the accelerated build out of renewables and exit of coal • SWIS gas demand for generation of electricity is now forecast to g
Slide 40: Continued demand for gas in Western Australia for minerals processing
Case Study: Continued demand for gas in Western Australia to support minerals processing and industrial requirements 2 3 Powering essential Australian industry, manufacturing Powering remote-grid systems / industries and displacing and minerals processing carbon intensive fuels • The 2022 WA GSOO se
Slide 41: Outlook
Outlook 05 Badgingarra Diamantina Wind Powerand Solar Farms Station
Slide 42: Balancing distributions with investing for growth and the business
The energy transition will present significant growth opportunities driving us to balance distributions with investing for growth and investing in the business APA is pursuing growth opportunities in select asset classes Investing in growth • Opportunities presented by Australia's energy transition
Slide 43: Q and A Session
Q and A Session 06 Diamantina Power Station
Slide 44: Closing remarks
Closing remarks 07 Directlink
Slide 45: In FY23, we continued to strengthen communities through responsible energy
In FY23, we continued to strengthen communities through responsible energy Delivered another year of solid EBITDA and distribution growth Completed infrastructure projects critical to delivering reliable energy supply for our customers and communities We refreshed our strategy and have the Executive
Slide 46: Supplementary Financials
Supplementary Financials 08 Mondarra Gas Storage and Processing Facility
Slide 47: APA is well positioned to benefit from rising inflation
APA is well positioned to benefit from rising inflation Revenue Drawn debt EBITDA Majority of APA’s fixed revenue is indexed to inflation(1) Fully hedged/fixed with average maturity of 5.7 yrs(2) High EBITDA margins(3) Underlying Drawn debt hedged or EBITDA as % of revenue CPI linked revenue fixed a
Slide 48: Historical underlying EBITDA by asset – Energy Infrastructure
Historical underlying EBITDA by asset – Energy Infrastructure $ million FY23 FY22 FY21(1) FY20(1) FY19(1) East Coast Grid Wallumbilla Gladstone Pipeline 620 578 550 539 542 South West Queensland Pipeline 262 245 233 254 250 Moomba Sydney Pipeline 126 136 152 161 149 Victorian Systems 129 142 113 102
Slide 49: Revenue and EBITDA by geography
Revenue and EBITDA by geography $ million FY23 FY22 Change ($) Change (%)(1) Revenue Energy Infrastructure Queensland 1,330 1,240 90 7.3% New South Wales 167 167 - - Victoria 220 211 9 4.3% South Australia 1 2 (1) -50.0% Northern Territory 28 28 - - Western Australia 462 434 28 6.5% Energy Infrastru
Slide 50: EBITDA bridge to Free Cash Flow
EBITDA bridge to Free Cash Flow $ million FY23 FY22 % Change(1) Underlying EBITDA(2) 1,725 1,692 2.0% less Equity Accounted Earnings (23) (28) -17.9% Underlying EBITDA Excluding Associates/JV’s 1,702 1,664 2.3% Change in Working Capital/other 9 10 -10.0% Cash impact of Non Operating Items/Other(3) (
Slide 51: FY23 Capital and investment expenditure
FY23 Capital and investment expenditure $ million Description of major projects FY23 FY22 Growth capex Regulated Western Outer Ring Main (WORM), Winchesea 242 68 Compressor; Access Arrangement Allowed Expenditure Non-Regulated - East Coast Gas East Coast Grid Stage 1, Kurri Kurri Gas Lateral 172 129
Slide 52: Solid balance sheet and capital position
Solid balance sheet and capital position • BBB/Baa2 ratings with stable outlook 536 350 • FFO/Net Debt of 10.6% providing significant headroom to fund growth and support capital (2) 550 management 500 500 • No material debt refinancing obligations until FY25 1,544 • Average cost of debt in FY23 4.4%
Slide 53: 5 year normalised financials
5 year normalised financials Financial Performance FY23 FY22 FY21 FY20 FY19 Revenue $m 2,913 2,732 2,605 2,591 2,452 Revenue excluding pass-through(1) $m 2,401 2,236 2,145 2,130 2,031 Underlying EBITDA(2) $m 1,725 1,692 1,629 1,650 1,570 Total reported EBITDA(3) $m 1,686 1,630 1,639 1,652 1,565 Depr
Slide 54: Regulatory Dynamics
Regulatory Dynamics 09 Diamantina Power Station
Slide 55: Regulation of Australian gas pipelines
Regulation of Australian gas pipelines During FY23 approximately 8.2% of APA’s Energy • ‘heavier’ form of regulation, based on the current Infrastructure revenues were subject to regulated full regulation for scheme pipelines; or outcomes. APA pipelines by regulation type • ‘lighter’ form of regulat
Slide 56: Regulation of Australian gas pipelines (continued)
Regulation of Australian gas pipelines (continued) Schedule of Current regulatory period 2023 2024 2025 2026 2027 2028 regulatory reset dates for APA Vic Transmission System(1) Goldfields Gas Pipeline Amadeus Gas Pipeline Roma Brisbane Pipeline(2) Access • Apply for a term, generally 5 years arrange
Slide 57: Appendix
Appendix 10 Badgingarra Wind Farm
Slide 58: APA is a leading Australian energy infrastructure business
APA is a leading Australian energy infrastructure business playing a key role in the transition of Australia's energy system Delivering secure, reliable and affordable energy Diverse energy infrastructure portfolio • Operating critical infrastructure to deliver energy to residential and commercial u
Slide 59: Existing APA operational footprint diversified across energy infrastructure assets
Existing APA operational footprint diversified across a range of energy infrastructure assets APA PORTFOLIO OF ASSETS AND INVESTMENTS APA FY23 Results Investor Presentation 58
Slide 60: Diversified business model
Diversified business model Characteristics of Energy Infrastructure (EI) revenue: • Solid risk management processes in place • Manage counterparty risks by: – Diversification of customers and industry exposures – Assessment of counterparty creditworthiness 1 – Entering into stable contracted revenue
Slide 61: Group structure
Group structure Group Structure APA Infrastructure Trust APA Investment Trust (APA Infra) (APA Invest) • APA Group is listed as a stapled structure on the Australian APA Group Limited Securities Exchange (ASX:APA) (Responsible Entity) • APA is comprised of two registered managed investment schemes:
Slide 62: For further information
For further information 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