APA REPORTS SOLID 1H21 RESULTS AND FY21 DISTRIBUTION GUIDANCE UPGRADE
APA Group (ASX: APA) today announced its results for the six months ending 31 December 2020.
Solid financial performance and outlook in challenging market conditions
, 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
, 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
• 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
• 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
“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
“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.”
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
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%.
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
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
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
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