APA DELIVERS ANOTHER YEAR OF SOLID RESULTS

Transcription

1 Australian Pipeline Ltd ACN Australian Pipeline Trust ARSN APT Investment Trust ARSN Level 19, 580 Gerge Street Sydney NSW 2000 PO Bx R41 Ryal Exchange NSW 1225 Phne Fax APA Grup apa.cm.au 23 August 2017 ASX ANNOUNCEMENT APA Grup (ASX: APA) (als fr release t APT Pipelines Limited (ASX: AQH)) APA DELIVERS ANOTHER YEAR OF SOLID RESULTS Australia s leading energy infrastructure business, APA Grup (ASX: APA) annunced an increase f 10.5% r $139.6 millin in earnings befre interest, tax, depreciatin and amrtisatin ( EBITDA ) fr the year t 30 June 2017 t $1,470.1 millin, as cmpared t the previus crrespnding perid (FY2016: $1,330.5 millin). A final distributin f 23.0 cents per security was declared, in line with the estimate annunced in June 2017, taking the FY2017 ttal distributin t 43.5 cents per security. This represents an increase f 4.8% r 2.0 cents per security ver the previus crrespnding perid (FY2016: 41.5 cents per security). Franking credits f 2.0 cents per security will be allcated t the final distributin, resulting in the FY2017 franking credits ttalling 4.0 cents per security. Financial results EBITDA up 10.5% t $1,470.1 millin Net prfit after tax up 32.0% t $236.8 millin Operating cash flw up 12.9% t $973.9 millin Distributins RESULT HIGHLIGHTS Final distributin per security f 23.0 cents, taking the ttal FY2017 distributin t 43.5 cents per security, an increase f 4.8% Franking credits f 2.0 cents per security, taking the ttal FY2017 franking credits t 4.0 cents per security. Operatins and Investments 3.1% rganic grwth achieved cmpared with previus crrespnding perid Annunced in excess f $1.2 billin f cmmitted grwth prjects during FY2017, t be cmpleted ver the next 2 years Ttal capital and investment expenditure f $377.5 millin in FY2017 APA Chairman, Mr Lenard Bleasel AM said, APA cntinued t wrk with varius stakehlders during the year t deliver further enhancements t its energy infrastructure and deliver mre energy and services t custmers. Our cmmitment t investment and innvatin has translated int mre flexible and efficient utcmes fr the energy industry, and imprtantly cntinues t facilitate increased gas supply int the east cast gas market. The slid FY2017 result demnstrates the success f ur disciplined grwth and acquisitin strategy. We highlighted grwth pprtunities f arund $1.5 billin in August last year and s far have annunced cmmitted prjects fr $1.2 billin f that, with mre prjects t cme. These grwth prjects will cntribute t lng term revenue uplift frm FY2019.

2 Financial verview Revenue (excluding pass-thrugh revenue) increased by $232.3 millin t $1,888.3 millin, an increase f 14.0% n the previus crrespnding perid (FY2016: $1,656.0 millin), primarily ff the back f increased investment frm prir years. Net prfit after tax increased t $236.8 millin (FY2016: $179.5 millin), an increase f 32.0% ver the perid, with depreciatin and amrtisatin expense in line with an expanded asset base and higher incme tax expense in line with increased earnings. Mst significantly, during FY2017, APA annunced in excess f $1.2 billin f new grwth prjects t be cmmissined ver the next 2 years. The expected timing f these prjects is detailed in the diagram belw; Grwth Prjects Annunced During FY17 All f these prjects will cntribute t grwth in future perating cash flw, which in FY2017 ttalled $973.9 millin. This represents an increase f 12.9% r $111.5 millin ver the previus year (FY2016: $862.4 millin), with perating cash flw per security increasing by 12.9%, r 10 cents, t 87.4 cents per security (FY2016: 77.4 cents per security). APA Grup Managing Directr, Mr Mick McCrmack said, The slid result fr APA demnstrates the resilience f ur business and the rbustness f ur lng-standing strategy. APA is a business that is cmmitted t delivering cnnected and sustainable energy slutins that are safe, reliable, innvative and cst-effective s that all ur stakehlders are better ff as we wrk tgether with ur custmers t create a better energy future fr Australia. T this end, we are prud t have annunced the varius prjects that all supprt APA s grwth strategy. At the same time, we have cntinued t lk after ur existing business and custmers with cntinuusly imprved services and a strng balance sheet that enables us t fund ur grwth in the mst apprpriate way. During the year, we saw energy plicy and pricing put under plitical and media sptlights. We d understand the gvernment s desire t reduce energy prices verall. As a result, we had numerus regulatry refrm interventins thrust upn the industry at shrt ntice and with limited cnsultatin. Despite this, APA cntinues t wrk with all Page 2

3 relevant stakehlders t facilitate the delivery f cheaper gas t the dmestic market. In recent mnths, we have prgressed and cmpleted agreements that will deliver mre gas t dmestic users. Thrugh flexibility in existing cntracts, we have enabled changes n the Suth West Queensland Pipeline and the Mmba Sydney Pipeline t ensure mre gas is delivered t suthern markets. We recently agreed a new cntract n the Rma Brisbane Pipeline that has played a rle in gas being delivered mre than 2,500 kilmetres away in Suth Australia t the Pelican Pint Pwer Statin. This is all in additin t the investments we cntinue t make t bring mre gas int the system t help with the gas supply and demand balance, which will ultimately put dwnward pressure n gas prices. Organic grwth APA achieved rganic grwth f 3.1% fr the year, after adjusting fr full year cntributins frm acquired assets, representing cntinued investment in APA s existing assets, peple and systems. Multi-asset cntracts are increasingly the nrm with APA s custmers, prviding imprved service capabilities, efficiencies and flexibility t better manage their upstream and dwnstream prtflis. On the east cast f Australia, the cmpletin f the latest stage f the Victrian-Nrthern Intercnnect has seen gas flwing mre freely acrss state bundaries, enabling shippers t take advantage f APA s multiple assets, even as the Queensland LNG prjects are nearing cmpletin f their cmmissining and prductin is stabilising acrss the eastern states. This asset expansin has cntributed t additinal earnings acrss bth ur Victrian and NSW pipeline systems. In Western Australia, the Eastern Gldfields Pipeline cntributed its first full year f earnings fr the perid. At APA we cntinue t utilise ur multi-asset ft print in that regin t deliver a reliable and safer energy supply t remte mine peratins. Additinal cntracts at the Mndarra Gas Strage and Prcessing Facility and increased wind resurces at the Emu Dwns Wind Farm als imprved the results in the west. Investments and grwth prjects APA spent a ttal f $377.5 millin in capital and investment expenditure ver the perid. Grwth capital expenditure f $271.9 millin during the perid (FY2016: $281.0 millin) related t the fllwing prjects: cmpletin f the latest stage f the Victrian-Nrthern Intercnnect expansin prject, which has expanded the bi-directinal intercnnect; Mmba Intercnnect prject, which, fr minimal capital spend, has increased the verall efficiency f the peratin f APA s East Cast Grid, facilitating gas flws in bth directins thrugh Mmba; and cmmencement f grwth prjects annunced during the year, including the Reedy Creek Wallumbilla Pipeline, Emu Dwns Slar Farm, Badgingarra Wind Farm, Darling Dwns Slar Farm and the Orbst Gas Prcessing Plant. APA s grwth capital expenditure cntinues t be fully underwritten thrugh lng-term cntractual arrangements r under regulatry apprvals available thrugh a relevant access arrangement. APA annunced at its FY2016 results presentatin last August that it had identified arund $1.5 billin f rganic grwth pprtunities in the near term. During the curse f FY2017, APA annunced in excess f $1.2 billin f prjects in areas f pipeline extensins and expansins, renewables and midstream assets that will require in the rder f $800 millin f grwth capital investment in FY2018. These prjects are all underwritten by lng-term cntracts with custmers and will increase APA s earnings base as they are cmmissined. Majr prjects annunced t-date are: Page 3

4 The Reedy Creek Wallumbilla Pipeline: a 50km, 300TJ per day, bi-directinal pipeline cnnected t APA s East Cast Grid that will prvide a key link t the Wallumbilla Gas Hub fr Australia Pacific LNG (APLNG) Marketing Pty Limited, at a ttal cst f $80 millin and scheduled t cmplete arund the middle f APA has entered int a 20-year cntract with APLNG in respect f this pipeline. The Emu Dwns Slar Farm: a 20MW slar farm, t be built n the existing Emu Dwns Wind Farm site. Synergy, the Western Australian energy prvider has entered int a 13-year fftake agreement cmmencing January 2018, fr bth the energy and the Large-scale Renewable Generatin Certificates (LGCs) fr this asset. The $50 millin prject will be partially funded with a $5.5 millin grant frm the Australian Renewable Energy Agency (ARENA). The Badgingarra Wind Farm: a 130MW wind farm, t be built at a cst f $315 millin, n the site adjacent t the existing Emu Dwns Wind Farm (final cnditin precedent expected t be met in August 2017). Alinta Energy has entered int a 12-year fftake agreement, cmmencing January 2019 fr bth the energy and the LGCs. The Orbst Gas Prcessing Plant: being acquired and upgraded by APA fr $270 millin (subject t cnditins precedent) and upn cmpletin f the refurbishment, will prcess raw natural gas frm Cper Energy s ffshre Sle gas field under a multi-year Gas Prcessing Agreement frm mid The Darling Dwns Slar Farm: a 110MW slar farm, t be built at a cst f $200 millin and partially funded with a $20 millin grant frm ARENA. Origin Energy has entered int a 12-year fftake agreement frm late 2018 fr bth the energy and the LGCs. The Yamarna Gas Pipeline (YGP) and the Yamarna Pwer Statin (YPS) which will deliver energy t the Gruyere Gld Prject in Western Australia. The YGP is a new 198km pipeline that will deliver gas t the 45MW YPS acrss 1,500km f APA s intercnnected gas pipelines including the Gldfields Gas Pipeline, Murrin Murrin Lateral and the Eastern Gldfields Pipeline. A 15-year gas transprtatin agreement and a 15-year electricity supply agreement have been entered int with the Gruyere Gld Prject, a 50:50 jint venture between the ASX listed Gld Rad Resurces Ltd and the glbal miner Gld Fields Limited. Cmmissining is expected late 2018, and ttal prject cst is estimated t be $180 millin. In additin t these cmmitted prjects, APA cntinues t wrk hard n develping pprtunities with custmers t deliver mre energy t users, including the Western Slpes Pipeline, which will cnnect the prpsed Narrabri Gas Prject t the New Suth Wales gas market thrugh APA s Mmba Sydney Pipeline and a feasibility study t cnnect Nrthern Queensland gas basins t the east cast gas markets. Beynd FY2018, APA expects $300 t $400 millin per annum ver the next tw t three years in grwth prjects cming t fruitin acrss all f thse sectrs, as we cntinue t engage with ur custmers n what their needs are within that timeframe. APA s strategy is as fllws: Our grwth fcus is t enhance ur prtfli: f gas transmissin pipelines; f pwer generatin: gas-fired and renewable; f midstream energy infrastructure assets, including gas strage and gas prcessing; and by explring pprtunities in Nrth America. Cntinue t strengthen asset management, develpment and peratinal capabilities. Maintain APA s financial strength. During the year, $35.3 millin was spent t acquire APA s share (50%) f the Mrtlake Gas Pipeline the SEA Gas (Mrtlake) Partnership and $68.8 millin was spent n stay-in-business capex. Page 4

5 Capital management During the financial year, APA issued A$200 millin f 7-year fixed-rate Australian dllar Medium Term Ntes in Octber 2016 and US$850 millin (A$1,109 millin) f 10.3-year senir guaranteed ntes int the US 144A market in March APA repaid $85.8 millin (US$65.0 millin) and $295.0 millin (US$154.0 millin and A$104.2 millin) f US Private Placement Ntes when they matured in July 2016 and May 2017 respectively. APA s debt prtfli has a brad spread f maturities extending ut t FY2035, with an average maturity f drawn debt f 7.5 years as at 30 June APA s gearing f 67.4% at 30 June 2017 is marginally higher than the 66.4% at 30 June APA remains well psitined t fund its planned grwth activities with ver $1,460 millin in cash and cmmitted undrawn facilities, available as at 30 June Energy plicy develpments During the year, numerus gvernmental reviews and inquiries have cnsidered changes t gas market regulatry and plicy settings. Develpment and implementatin f a number f the regulatry refrm initiatives are being undertaken by the Gas Market Refrm Grup (GMRG), led by Dr Michael Vertigan. APA cntinues t be an active participant in these prcesses, highlighting the significant cntributin that APA has made thrugh its prtfli f pipeline assets and respnsive custmer services t the develpment f the gas market, and seeking t ensure that changes t the market d nt undermine the elements f success in relatin t investment, innvatin and prvisin f services t custmers. In December 2016, the GMRG recmmended develpment and implementatin f an Infrmatin Disclsure and Cmmercial Arbitratin regime t apply t unregulated pipelines. This recmmendatin was adpted by the COAG Energy Cuncil and Natinal Gas Rules giving effect t the regime which became effective n 1 August Further develpments include: the establishment f a secndary pipeline capacity trading platfrm, t be perated by the Australian Energy Market Operatr; the GMRG s implementatin f an auctin prcess fr cntracted but un-nminated daily gas pipeline capacity; and the Australian Energy Market Cmmissin s recmmendatin t transitin the Victrian Gas Whlesale Market t an entry-exit structure, where there are separate firm capacity rights t use the Victrian Transmissin System. APA has been actively participating in cnsultatin and discussins acrss these initiatives. Future strategy and utlk Cmmenting n APA s utlk Mr McCrmack said, APA cntinues t supprt reducing carbn emissins as a respnsible risk mitigatin respnse t climate change. Gas is critical t Australia s energy security and affrdability bth nw and int the future, as was cnfirmed in the Finkel reprt published in June this year. In the lnger term, as internatinal and dmestic carbn plicies and markets mature, APA s energy infrastructure assets will play an imprtant rle in reducing Australia s carbn ftprint and helping Australia t meet its glbal cmmitments, as energy cnsumptin shifts frm carbn-intensive fuels such as cal, t mre carbn-efficient fuels such as natural gas and renewables. By cmmitting t ver $1.2 billin wrth f grwth prjects during FY2017, APA has shwn that it has the appetite, as well as stakehlder supprt, t cntinue t invest and innvate in its energy infrastructure acrss the natin, and t supprt the energy market dynamics unflding at the current time. Our actins tday are indeed cnnecting Australia t its energy future. Page 5

6 APA will cntinue t fcus n grwth acrss gas transmissin pipelines, gas-fired and renewable pwer generatin and midstream energy infrastructure assets. We will als cntinue t d what we d best at the cre f ur business t strengthen asset management, develpment and peratinal capabilities whilst maintaining financial strength, flexibility and capability. APA expects that the EBITDA fr the full year t 30 June 2018 will be in a range f $1,475 millin t $1,510 millin and net interest csts in a range f $525 millin t $535 millin. Distributins per security fr the 2018 financial year are expected t be in the rder f 45.0 cents per security, with franking credits which may be allcated t thse distributins enhancing that cash payut. Webcast and cnference call APA will hld a webcast t discuss these full year results at 10am (AEST) tday. The webcast will be accessible via r by using the fllwing dial-in details. Dial-in details: Within Australia Outside Australia Cnference ID A replay f the webcast will be available frm shrtly after the cnclusin f the webcast. Nevenka Cdevelle Cmpany Secretary Australian Pipeline Limited Fr further infrmatin please cntact: Investr enquiries: Media enquiries: Yk Ksugi Luise Watsn Telephne: Telephne: Mb: Mb: yk.ksugi@apa.cm.au lwatsn@symblstrategic.cm.au Abut APA Grup (APA) APA is Australia s leading energy infrastructure business, wning and/r perating in excess f $20 billin f energy infrastructure assets. Its gas transmissin pipelines span every state and territry n mainland Australia, delivering apprximately half f the natin s gas usage. APA has direct management and peratinal cntrl ver its assets and the majrity f its investments. APA als hlds wnership interests in a number f energy infrastructure enterprises including SEA Gas Pipeline, SEA Gas (Mrtlake) Partnership, Energy Infrastructure Investments and GDI Allgas Gas Netwrks. APT Pipelines Limited is a whlly wned subsidiary f Australian Pipeline Trust and is the brrwing entity f APA Grup. Fr mre infrmatin visit APA s website, apa.cm.au Page 6