APA investor information and FY14 highlights September 2014
About APA Group APA (29 August 2014) APA is Australia’s largest gas infrastructure business Market A$6.6 billion Gas transmission pipelines and storage USD 6.2bn; GBP 3.8bn; EUR 4.7bn; CHF 5.7bn capitalisation – Owning and operating two thirds of Australia’s onshore S&P/ASX 50 pipelines MSCI All World Index; – Interconnected pipeline networks FTSE All World Index – Transporting approximately half the gas used domestically 836 million securities on issue Gas distribution networks Over $12 billion Assets owned/ operated – Operating approximately a third of the nation’s gas Gas transmission distribution networks 14,360 km transmission pipelines Underground and LNG gas storage Other related energy infrastructure Gas distribution Developed and acquired complementary energy – 27,160 km gas network pipelines infrastructure 1.3 million gas consumers Australian gas transmission pipeline ownership Other energy infrastructure 430 MW power generation Jemena 1,770 km 239 km HV electricity transmission Gas processing plants DUET 2,098 km Employees More than 1,600 13,236 km (1) SEA EII APA APA ENV Gas GDI 14,360 km (2) Operator Operator of APA’s assets and investments 0 5,000 10,000 15,000 Pipeline length (km) (1) APA pipelines and 100% of the pipelines which form part of its Energy Investments (2) Pipelines operated by APA, including Envestra Source: APA & AER State of the Energy Market 2013 2 APA Investor Presentation – September 2014
APA’s long term strategy Strategy is focused on our core business of gas pipeline infrastructure Facilitating development Enhancing APA’s portfolio of gas of gas related projects infrastructure assets in Australia’s that enhance APA’s growing energy market infrastructure portfolio Pursuing opportunities that Capturing revenue and operational leverage APA’s knowledge and synergies from APA’s significant asset base skills base Strengthening financial capability APA’s unrivalled asset portfolio across Australia and internal expertise, together with strong industry fundamentals, drive growth opportunities 3 APA Investor Presentation – September 2014
Strategic development of pipeline grids NT link to east coast grid: Feasibility study East coast grid APA’s east coast grid: – Interconnected transmission Darwin > 7,000 km of pipelines pipelines operating as one 5 major pipelines APA’s WA infrastructure: system 5 states and territories Servicing mining regions – Seamless service capability Gas transport and storage for Perth across 30 receipt points and 100 delivery points Attractive growth and revenue – opportunities Gladstone West Australian infrastructure – Interconnected gas storage and transportation to Perth Brisbane Moomba – Pipeline infrastructure serving mining regions NT link – APA feasibility study Perth – Connecting APA’s infrastructure Sydney Adelaide to facilitate gas flow across regions APA natural gas pipelines Other natural gas pipelines Melbourne under development Gas production NT link Gas resource Gas storage LNG export facility Transformational change in gas delivery and storage services 4 APA Investor Presentation – September 2014
Australian gas industry – abundant supply Supply fundamentals remain strong 981 PJ Proven and probable gas reserves total 142,000 PJ (1) 17,384 PJ – Domestic gas use for 2013 was 1,110 PJ (1) 44,495 PJ – A further 1,090 PJ (1) of gas was 70,386 PJ used for LNG export More than 50 years of gas available at current levels of 181 PJ domestic use and export Identified gas resources exceed 1,801 PJ 430,000 PJ (2) 35 PJ Almost 200 years of gas 2,353 PJ available at current levels APA natural gas pipelines investments Other natural gas pipelines 221 3,442 PJ 722 PJ PJ Natural gas 2P reserves (proved and probable) PJ (1) 2012 gas production, LNG production and gas reserves: Source: APA data; EnergyQuest August 2014 EnergyQuest, August 2014 (2) As at January 2011: BREE Gas Market Report, July 2012, 5 APA Investor Presentation – September 2014
Australian gas industry – domestic and export demand Australian gas consumption and LNG export projections Australia’s gas production, consumption and exports are all projected to grow over the period to 2034–35 Domestic use forecast to increase by one third, or 1.3%/a – Growth underpinned by: Gas-fired electricity generation, increasing from 26% to – 34% of electricity generation Increased consumption in the mining sector – On-shore gas supply for east coast LNG Surat-Bowen basin supply for east coast LNG projects to be – supplemented by gas sourced from other inland basins (e.g. Cooper) Australian primary gas use by sector Primary energy consumption in Australia (2010-2011) (2011-12) Australian Eastern Market LNG demand Renewables 4.32% Source: BREE Gas Market Report, July 2012 and October, 2013; “Gas Statement of Opportunities”, November 2013, AEMO 6 APA Investor Presentation – September 2014
Revenue security and diversity FY14 Revenue split Revenue secured by long term take-or-pay contracts or regulatory Other < 1% arrangements Regulated (revenue subject to price Diversified revenue base – single assets supply no more than 20% regulated tariffs) of revenue 23% Revenue by business segment (1) Contracted Contracted (regulated assets with $1,000m (light regulation and negotiated tariffs) 7% non-regulated assets) 16% 60% 10% Energy Investment $800m Asset Management Energy Infrastructure: WA & NT Regulated 26% APA’s contracted assets assets Energy Infrastructure: Vic & SA $600m Term Life of the Often in excess of 5 years Energy Infrastructure: Qld asset Average contract term > 10 years Energy Infrastructure: NSW 16% Counterparty Broad For APA’s 4 major contracted credit population assets, 85% of the contracted $400m capacity is with investment grade counterparties 27% Volume risk Assets Approximately 90% of contracted exhibit little revenue is capacity based (i.e. $200m volume risk ‘take or pay’) therefore relatively 18% unaffected by volume variability 24% 14% Competition Natural Some degree of competition 58% monopoly (2) $0m FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 (2) Asset that can satisfy reasonable foreseeable demand at lower cost (1) Excludes pass-through revenue and divested businesses than if demand were to be satisfied by more than one asset 7 APA Investor Presentation – September 2014
Proven growth and value creation $ million Operating cash flow Operating cash flow per security cents 500 60 52.6 c $440m 50 400 40 300 30 200 20 100 10 0 0 FY1 FY2 FY3 FY4 FY5 FY6 FY7 FY8 FY9 FY10 FY11 FY12 FY13 FY14 FY1 FY2 FY3 FY4 FY5 FY6 FY7 FY8 FY9 FY10 FY11 FY12 FY13 FY14 EBITDA $ million cents Distribution per security 800 $747m 40 36.25c 600 30 400 20 200 10 0 0 FY1 FY2 FY3 FY4 FY5 FY6 FY7 FY8 FY9 FY10 FY11 FY12 FY13 FY14 FY1 FY2 FY3 FY4 FY5 FY6 FY7 FY8 FY9 FY10 FY11 FY12 FY13 FY14 8 APA Investor Presentation – September 2014
Maximising value for securityholders Total securityholder returns since listing 1400 APA TSR: 1,113% APA CAGR: 19.2% 1200 1000 Total annual returns 50% 800 43% 40% 600 31% 29% 30% 23% 22% 400 18% 20% 200 10% 0 0% 2009 2010 2011 2012 2013 2014 -10% APA total securityholder returns S&P/ASX 200 accumulation index Utilities accumulation index -20% APA Total Securityholder Return S&P/ASX 200 Accumulation Index -30% Indexed to 100 from listing date, 13 June 2000 to 29 August 2014 Source: APA based on IRESS data 9 APA Investor Presentation – September 2014
FY14 result highlights 10 APA Investor Presentation – September 2014
FY 14 result: Value creation and innovation FY14 highlights Developing opportunities in a dynamic industry $1 billion of organic projects completed or in – Expanding and extending our infrastructure portfolio progress – Grid services in the east and west providing tailored New multi-pipeline revenue agreements gas transportation and storage services Installing bi-directional capability across the – Flexibility and service options transforming how east coast grid customers manage their portfolios Implementing capacity trading services Industry leading expertise Enhancing and improving operations and – Comprehensive internal expertise and skills – maintenance infrastructure development, engineering, operations, Adopting global industry best practice commercial – National infrastructure focus across pipeline and network operations – New skills brought in-house as required – gas storage and power generation Continued successful execution of our long term strategy 11 APA Investor Presentation – September 2014
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