APA REPORTS SOLID 1H21 RESULTS AND FY21 DISTRIBUTION GUIDANCE UPGRADE

Page 1 of 1
  1. 74.0k
    Posts

    APA Group (ASX: APA) today announced its results for the six months ending 31 December 2020.
    1H21 highlights
    Solid financial performance and outlook in challenging market conditions
    • Revenue(1)
    , down 0.6% to $1,072 million
    • Strong volume growth in WA, NT and sections of the East Coast Grid offset by softer contract renewals and
    lower energy consumption in Vic
    • EBITDA(2)
    , down 2.3% to $823 million
    • Loss after tax including significant item was $11.7 million which includes a non-cash impairment recognised
    against the Orbost Gas Processing Plant of $174.5 million
    • Profit after tax excluding significant item, down 7.0% to $163 million
    • Operating cash flow, up 1.4% to $519 million
    • Reconfirmed FY21 EBITDA(2) guidance within the range of $1,625 million and $1,665 million
    Growing distributions
    • Interim distribution, up 4.3% to 24.0 cents per security
    • Upgraded FY21 distribution guidance of 51.0 cents per security, up 2.0% on FY20
    Reliable operations
    • Essential services delivery reliability, 99.92% against customer gas nominations
    • Successful major overhaul of Diamantina Power Station despite COVID constraints
    • Production from Orbost Gas Processing Plant improving from Phase 2 works
    Continued growth and refreshed strategy
    • Organic growth capital expenditure now expected to exceed $1 billion over FY21-23
    • Refreshed strategy leveraging APA’s proven capability in energy infrastructure
    • Ambition to achieve Net Zero operations emissions (Scope 1 and 2) by 2050
    APA CEO and Managing Director, Rob Wheals, said, “APA has again delivered a solid first half performance, with strong
    volume growth in key markets against a backdrop of challenging market conditions. Our performance for the period
    demonstrates the underlying strength and resilience of the business and our decision to upgrade our FY21 distribution
    guidance to 51.0 cents per security reflects both our confidence in APA’s outlook and the capacity that exists within our
    balance sheet.
    “Our refreshed strategy positions the business for further growth, complementing our strong organic pipeline. Growth
    capex is now expected to exceed $1 billion through to FY23, building on our recent investments in the Northern
    Goldfields Interconnect and the Gruyere Hybrid Energy Microgrid.
    1 Revenue excluding pass-through
    2 Excludes significant item
    Page 2
    “APA will play a central role in supporting the Federal Government’s plans for a gas-led economic recovery, with
    staged expansion of the East Coast Grid the fastest and most efficient way to address forecast 2024 shortfalls. Early
    engineering work is already underway.
    “At the same time, as we execute on our plan to be world class in energy solutions, we are also well positioned for
    growth in those areas where we either have or are rapidly developing capability, including renewables, firming, storage
    and electrification, in our chosen markets.
    “We are pursuing opportunities in new and emerging technologies through our new Pathfinder Program. Leveraging
    our existing capability and assets in energy infrastructure, we will pursue opportunities in adjacent energy markets such
    as hydrogen, off-grid renewables and storage. The program will also be a key enabler in our efforts to support a lower
    carbon future and our ambition to achieve net zero operations emissions by 2050.
    “As the energy transition gathers pace, we remain confident both in the important role gas will continue to play as well
    as in our ability to support the transition through the delivery of world class integrated energy solutions for our customers.
    With strong underlying business fundamentals, a clear strategy aligned to our vision and purpose, confidence in the
    outlook and a continued focus on strengthening our capabilities and systems, APA is well placed to prosper and
    continue delivering value for our Securityholders.”
    Result Overview
    APA revenue (excluding pass-through revenue) of $1,071.8 million was relatively flat (1H20: $1,077.8 million). Strong volume
    growth in Western Australia and Northern Territory was offset by softer contract renewals across certain East Coast
    pipelines and lower energy consumption in Victoria.
    EBITDA(3) decreased by 2.3% to $822.8 million (1H20 EBITDA(3) $842.2 million), driven by an increase in compliance and
    insurance costs, and investment in strategic development opportunities and internal capability.
    Loss after tax including significant item was $11.7 million (1H20 profit after tax: $175.0 million) primarily due to a non-cash
    impairment of $249.3 million recognised against Orbost Gas Processing Plant during the period. Excluding the significant
    item, APA generated a profit after tax of $163 million.
    Operating cash flow increased by 1.4% to $519.2 million (1H20: $511.9 million) due to favourable working capital
    movements. Operating cash flow per security increased by 1.4%, or 0.6 cents, to 44.0 cents per security (1H20: 43.4 cents
    per security).
    Growth capital expenditure increased by 6.3% to $154.2 million largely due to capacity upgrades and extensions in
    Queensland, Western Australia and Northern Territory. Total capital expenditure increased by 17.8% to $251.6 million
    (1H20: $213.6 million) following the Diamantina Power Station major overhaul. Despite the disruptions caused by the
    COVID pandemic, the $60 million major overhaul at the Diamantina Power Station was safely and successfully completed
    on time and budget.
    Further works continued at the Orbost Gas Processing Plant with more testing and tuning planned during 2021 to achieve
    sustainable production rates.
    Pleasingly, across APA’s pipeline portfolio, customer gas nomination delivery reliability remained high at 99.92%.
    Interim Distribution
    The Directors declared an interim distribution for 1H21 of 24.0 cents per security, an increase of 4.3% on the previous
    corresponding period (1H20: 23.0 cents). The distribution comprises 16.29 cents per security from APT and 7.71 cents per
    security from APTIT. The APT distribution represents 16.29 cents per security capital distribution. The APTIT distribution
    represents 1.97 cents per security profit distribution and 5.74 cents capital distribution. The interim distribution will be
    payable on 17 March 2021.
    3 Excludes significant item
    Page 3
    APA’s Distribution Reinvestment Plan remains suspended.
    Investment and Strategy Overview
    APA’s refreshed growth strategy creates a stronger alignment with its purpose and vision and enables access to the
    broader energy infrastructure opportunities available to APA as the energy market transitions. With a focus on expanding
    APA’s capabilities into high growth infrastructure markets, APA will invest in contracted and regulated energy
    infrastructure (gas, electricity and renewables) in Australia and North America. Furthermore, APA has established the
    Pathfinder Program to explore a range of new energy technologies, many of which have the potential to leverage APA’s
    existing assets.
    APA continued to execute its growth strategy across core gas infrastructure and progressively into related energy
    infrastructure consistent with market and customer needs. Organic growth capital expenditure is now expected to
    exceed $1 billion over FY21-23, building on the $460 million Northern Goldfields Interconnect and $38 million Gruyere
    Hybrid Energy Microgrid announced in the period.
    APA continues to assess attractive energy infrastructure opportunities in North America. Factors such as COVID-19, and
    the US Federal election, have resulted in a number of opportunities being put on hold during 2020. More activity is
    expected in 2021 as conditions stabilise.
    APA announces its ambition to achieve Net Zero operations emissions (Scope 1 and 2) by 2050. This is underpinned by its
    Climate Change Management Plan Framework and interim targets will be confirmed during FY22.
    APA intends to host an investor day in May 2021 covering its refreshed strategy and capital management review.
    FY21 Guidance and Outlook
    Based on current operating plans and available information, APA today reaffirms its guidance that EBITDA(4)
    for FY21 will
    be within a range of $1,625 million and $1,665 million. Net interest expense is expected to be in the range of $490 million
    to $500 million. Growth capital expenditure is now expected to exceed $1 billion over FY21 to FY23.
    APA also upgrades its guidance on FY21 distributions. Total distributions per security are expected to be 51.0 cents per
    security, with franking credits allocation to be determined by cash tax paid by APA during FY21. All distributions will be
    fully covered by operating cash flow, as per APA’s Distribution Policy.
    Commenting on APA’s outlook, Mr Wheals said, “We have a significant pipeline of energy infrastructure growth
    opportunities that align with our purpose, vision and strategy. Our organic growth pipeline is healthy and we now expect
    to exceed $1 billion of growth capex over the FY21-23 period. Further development of new technology projects under
    APA’s Pathfinder Program will ensure APA can play a leading role in the energy transition.”
    Webcast and Conference Call
    APA will hold a webcast to discuss these interim results at 10.00am (AEDT – Sydney) today. The webcast will be accessible
    via a link here, on APA’s home page or by using the following dial-in details:

    courtesy of Bell Direct
    ===========================================================================

    DYOR

    i do not hold this share

Your browser is too old for TopStocks and not secure. Please update your browser