Apa Group · ASX:APA
Apa — FY2010 Earnings Presentation
38 slides from Apa's earnings presentation, Aug 25, 2010
Slide 1: Financial Results Year ended 30 June 2010
Financial Results Year ended 30 June 2010 25 August 2010
Slide 2: Result overview and strategic highlights
Result overview and strategic highlights Mick McCormack Managing Director and CEO 2010 Result Presentation Æ 2
Slide 3: Another strong result
Another strong result 2010 2009 $ million $ million Change Operating cash flow 268 234 up 15% Operating cash flow per security (cents) 51.9 48.2 up 8% Distribution per security (cents) 32.75 31.0 up 6% Distribution payout ratio 64.4% 65.6% Revenue excluding pass‐through 660 673 down (2%) EBITDA 460
Slide 4: Ten years of delivering value and growth
Ten years of delivering value and growth 500 APA total securityholder return All Ordinaries accumulation index Value today of $1 invested in June 2000 400 APA investment $ 4.23 300 Investment indexed $ 2.08 to the All Ords 200 Interest account * $ 1.69 100 Cash $ 1.00 0 * Cash accumulating interest
Slide 5: Delivering sustainable, profitable growth
Delivering sustainable, profitable growth Gas infrastructure assets well positioned in the Australian market – Pipelines across Australia transporting more than half the nation’s gas use – Secure and reliable cash flow – regulated and contracted revenue People with the skills and industry expert
Slide 6: Strategic and operational highlights
Strategic and operational highlights Enhancing our gas infrastructure portfolio Hastings Diversified Utiltites Fund Acquired 17% interest Commenced or continued Berwyndale Wallumbilla Pipeline more than $200 million of Acquired with long term GTA organic growth projects Roma Brisbane Pipeline Cust
Slide 7: Young to Wagga lateral expansion
Young to Wagga lateral expansion Grading Trenching Pipeline stringing Welding Pipeline prepared for lowering 2010 Result Presentation Æ 7
Slide 8: Strategic and operational highlights
Strategic and operational highlights Utilising our skills and industry knowledge Energy infrastructure management expertise applied across our investments, in particular for Energy Infrastructure Investments and EII2 (North Brown Hill wind farm interest) Capturing revenue and operating synergies
Slide 9: Strategic and operational highlights
Strategic and operational highlights Leveraging our infrastructure portfolio Facilitating development of gas‐fired power generation Strengthening our financial capability Refinanced $1 billion debt Obtained a Baa2 credit rating from Moody’s to sit alongside the BBB from Standard & Poor’s inves
Slide 10: Sustainability reporting
Sustainability reporting APA’s first sustainability report – Achievements and goals across all stakeholder groups: customers, employees, investors, community and environment Safety remains paramount – Long‐term safety goal of Zero Harm ‐ program of continuous improvement – Reduction of Lost Time
Slide 11: Financial performance
Financial performance Peter Fredricson Chief Financial Officer 2010 Result Presentation Æ 11
Slide 12: Strong and consistent result
Strong and consistent result 2010 2009 Change $ million $ million Total revenue excluding pass‐through1 659.5 673.0 (2.0%) Total revenue 989.5 944.4 4.8 % EBITDA 460.0 444.4 3.5 % EBIT 368.5 348.7 5.7 % Net interest expense (229.4) (213.0) (7.7%) Tax (38.7) (35.9) (7.7%) Significant items after tax
Slide 13: EBITDA by business segment
EBITDA by business segment 2010 2009 EBITDA split by segment $ million $ million Change Energy Gas Transmission and Distribution Investments Queensland 103.3 97.3 6.2 % 4% Asset Management New South Wales 96.8 83.4 16.1 % 7% Qld Victoria & South Australia 105.7 107.5 (1.7 %) 22% Western Australia &
Slide 14: Gas transmission and distribution: Queensland
Gas transmission and distribution Queensland Additional sales on Carpentaria Gas Pipeline – Davenport Downs compressor station commissioned in June 2009 Berwyndale Wallumbilla Pipeline, acquired Davenport Downs compressor station April 2010 – 3 month revenue contribution 120 103.3 Extension of
Slide 15: Gas transmission and distribution: New South Wales
Gas transmission and distribution New South Wales Additional gas transport and storage sales on the Moomba Sydney Pipeline system in line with expansion Tariff increase of 4 per cent Young compressor station Continued expansion program 120 – Mainline program 96.8 – Young to Wagga lateral 100 –
Slide 16: Gas transmission and distribution: Victoria & South Australia
Gas transmission and distribution Victoria & South Australia Victorian revenue relatively stable despite reduced gas volumes due to milder winter weather impact Expansion program – Northern augmentation Dandenong LNG storage facility, Vic LNG storage facility 120 105.7 – BOC expansion of LNG p
Slide 17: Gas transmission and distribution: Western Australia & Northern Territory
Gas transmission and distribution Western Australia & Northern Territory Additional sales on Goldfields Gas Pipeline – New compressor stations commissioned in May and August 2009 Goldfields Gas Pipeline access arrangement Ned’s Creek compressor station, WA – 10% reduction in reference tariffs (f
Slide 18: Asset Management and Energy Investments
Asset Management and Energy Investments 40 Asset Management 32.3 Full year asset management services to EBITDA $ million Energy Infrastructure Investments 20 Short term contracts Long term contracts Reduction in lower margin third party work Energy Investments ‐ 2008 2009 2010 40 Contribution
Slide 19: Fully covered distributions
Fully covered distributions 2010 distribution growth of 5.6% 60 51.9 2010 distribution payout ratio* 50 48.2 of 64.4% cents per security 42.7 10 year compound annual 38.2 39.7 40 growth rate ‐ 4.9 % for operating cash flow 30 32.75 per security 29.5 31.0 28.0 ‐ 5.1 % for distribution per 20 24.0
Slide 20: Major capital expenditure
Major capital expenditure 2010 2009 Description of 2010 major projects $ million $ million Growth capital expenditure Regulated Victoria Transmission System 30.9 Northern augmentation project 21.3 APA Gas Networks (Qld) 21.2 Includes southern network expansion 18.8 Major Projects Queensland expansio
Slide 21: Funding 2010 growth capital expenditure
Funding 2010 growth capital expenditure 2010 $ million Growth capital expenditure 319 Funds Free operating cash flow retained in the business (Operating cash flow less distributions and SIB capex) 83 26% Equity raised through – DRP 57 – SPP 85 142 45% Debt funding required 87 29% 319 Cash retained i
Slide 22: Prudent capital management
Prudent capital management Cash and committed undrawn facilities of $538 million at 30 June 2010 2010 metrics – Gearing* of 69.8%, reduced from 70.3% at 30 June 2009 – Interest Cover Ratio of 2.11x, reduced from 2.13x at 30 June 2009 – Interest rate exposure fixed or hedged – 77.3% (post A$300m
Slide 23: Capital management strategy in action
Capital management strategy in action 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 debt costs – $1,365 million raised in Aug
Slide 24: Outlook and guidance
Outlook and guidance Mick McCormack Managing Director and CEO 2010 Result Presentation Æ 24
Slide 25: Strategy for sustainable, profitable growth
Strategy for sustainable, profitable growth Continue to maximise value for stakeholders Enhancing APA’s portfolio of gas infrastructure assets in Australia’s growing gas market – Abundant domestic gas reserves – Increasing demand for natural gas, in particular for power generation Capturing reve
Slide 26: APA growth drivers and opportunities
APA growth drivers and opportunities Growth drivers APA’s development opportunities Gas supply and demand Expanding pipeline capacity to deliver larger Increasing gas reserves and production capability, volumes together with increasing gas demand Developing pipelines to transport gas to new mark
Slide 27: Current portfolio growth projects
Current portfolio growth projects Roma Brisbane Pipeline Capacity expansion (FID) APA Gas Network Network expansion to new housing developments Mondarra Gas Storage Facility Expanding storage capacity and Moomba Sydney Pipeline capability Mainline expansion and pressure Interconnection with adjacent
Slide 28: Outlook and guidance for 2011
Outlook and guidance for 2011 Outlook Continued focus on enhancing APA’s gas infrastructure portfolio – organic growth driven by customer requirements Further investment decisions influenced by – government policy settings – completion of NSW Energy Privatisation – investment decisions on Gladst
Slide 29: Supplementary information
Supplementary information 2010 Result Presentation Æ 29
Slide 30: APA profile
APA profile 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 asset management, oper
Slide 31: Financials: Key financial ratios
Financials Key financial ratios 2010 2009 Operating cash flow per security (cents) 51.9 48.2 Weighted average securities on issue (million) 516.2 485.1 Payout ratio 64.4% 65.6% Earning per security (cents) 19.4 16.2 Interest cover ratio (times) 2.11 2.13 Gearing ratio 69.8% 70.3% Total assets ($ mil
Slide 32: Financials: Cash flow
Financials Cash flow 2010 2009 $ million $ million Change Operating cash flow 267.8 233.6 14.6 % Distributions (net of DRP) 103.1 95.1 Available operating cash flow 164.7 138.5 18.9 % Operating cash flow per security (cents) 51.9 48.2 7.7 % Distributions per security (cents) 32.75 31.0 5.6 % Distrib
Slide 33: Financials: Revenue analysis by business segment
Financials Revenue analysis by business segment 2010 2009 $ million $ million Change Gas Transmission and Distribution Queensland 151.2 143.9 5.0% New South Wales 120.8 107.9 11.9% Victoria & South Australia 138.9 137.6 0.9% Western Australia & Northern Territory 155.4 154.2 0.8% Gas Transmission an
Slide 34: Financials: Total committed debt facilities
Financials 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 $1,030 million 2 and 4 year tranches maturing
Slide 35: 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 (Qld) next major asset
Slide 36: APA asset and investment portfolio
APA asset and investment portfolio 2010 Result Presentation Æ 36
Slide 37: Disclaimer
Disclaimer 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 constitute legal, tax o
Slide 38: Celebrating 10 years of delivering Australia's energy
For further information contact Celebrating 10 years of Chris Kotsaris Investor Relations, APA Group delivering Australia’s energy Tel: +61 2 9693 0049 E‐mail: [email protected] or visit APA’s website www.apa.com.au