annual RepoRt 2011
What’s in the pipeline?
austraLian pipeLine trust
Contents
Directors’ report
Corporate governance statement
statement of comprehensive income
statement of financial position
statement of changes in equity
statement of cash flows
notes to the financial statements
Declaration by the Directors of australian pipeline Limited
auditor’s independence declaration
independent auditor’s report
apt investment trust
Contents
Directors’ report
statement of comprehensive income
statement of financial position
statement of changes in equity
statement of cash flows
notes to the financial statements
Declaration by the Directors of australian pipeline Limited
auditor’s independence declaration
independent auditor’s report
2
21
27
28
30
32
33
85
86
87
90
92
93
94
95
96
112
113
114
australian pipeline trust
and its controlled entities
arsn 091 678 778
auS tR alIa n pIp elIn e t R uS t anD It S C ontRolleD entItIeS
Directors’ report
the directors of australian pipeline limited (“Responsible entity”) submit their
report and the annual financial report of australian pipeline trust (“apt”) and
its controlled entities (together “apa” or “Consolidated entity”) for the financial
year ended 30 June 2011. this report refers to the consolidated results of apt
and apt Investment trust (“aptIt”).
company secretary
mark Knapman
Details of the Company Secretary, his qualifications and experience are set out
on page 11.
Directors
the names of the directors of the Responsible entity during the year and since
principal activities
the principal activities of apa during the course of the year were the ownership
the year end are:
Leonard Bleasel am
Chairman
and operation of energy infrastructure assets and businesses, including:
– energy infrastructure, primarily gas transmission and distribution businesses
steven Crane
John Fletcher
russell Higgins ao
appointed 1 January 2011
located across australia;
– energy investments in listed and unlisted entities; and
– asset management and operations services for the majority of apa’s
patricia mcKenzie
appointed 1 January 2011
energy investments and third parties.
muri muhammad
George ratilal
robert Wright
Resigned 26 august 2010
to maintain or increase revenue from its portfolio of gas transmission and
During the year apa acquired the emu Downs wind farm as part of its strategy
michael mcCormack
Managing Director
Details of the directors, their qualifications, experience, special responsibilities
and directorships of other listed entities are set out on pages 10 to 12.
George Ratilal was appointed as alternate director for Muri Muhammad on
26 august 2010.
Distributions
Distributions paid to securityholders during the year were:
apt profit distribution
apt capital distribution
aptIt profit distribution
aptIt capital distribution
total
distribution assets. Consequently, apa has changed the name of the segment
previously known as
‘Gas transmission and Distribution’ to
‘energy
Infrastructure’ which includes the emu Downs wind farm as well as the gas
transmission and distribution assets.
significant changes in state of affairs
no significant change in the state of affairs of apa occurred during the year.
FinaL FY 2010 DistriBution
paiD 15 septemBer 2010
semi-annuaL FY 2011 DistriBution
paiD 17 marCH 2011
Cents per security
total distribution
$000
Cents per security
total distribution
$000
1.73
8.58
3.67
3.02
17.0
9,364
46,552
19,928
16,350
92,194
9.55
2.46
3.75
0.75
16.5
52,681
13,592
20,629
4,127
91,029
on 24 august 2011, the directors declared a final distribution for apa for the year of 17.9 cents per security payable 15 September 2011, made up of:
apt profit distribution
apt capital distribution
aptIt profit distribution
aptIt capital distribution
total
FinaL FY 2011 DistriBution paYaBLe 15 septemBer 2011
Cents per security
total distribution $000
3.42
8.41
3.41
2.66
17.9
19,054
46,761
18,951
14,793
99,559
total distribution for the financial year ended 30 June 2011 is 34.4 cents per security, an increase of 1.65 cents or 5.0% on last year.
Distribution information is presented on an accounting classification basis. the apa Group annual tax Statement and annual tax Return Guide (released in
September 2011) provides the classification of distribution components for the purposes of preparation of securityholder income tax returns.
2
APA AnnuAl REPORT 2011
financial anD operational review
the following table provides a summary of key financial data for the year:
Year enDeD 30 June
operating results including significant items
total revenue excluding pass-through (1)
total revenue
eBitDa
Depreciation and amortisation expense
eBit
net interest expense
pre-tax profit
Income tax expense
Minorities
operating profit after tax and minorities, including significant items
Significant items after income tax (2)
profit after income tax and minorities, excluding significant items
operating cash flow (3) (5)
operating cash flow per security (cents) (5)
earnings per security (cents) (5)
Distribution per security (cents)
Distribution payout ratio (4)
net tangible asset per security
2011
$000
2010
$000
CHanGes
$000
720,256
1,101,989
492,109
(100,350)
391,759
659,548
989,490
459,975
(91,426)
368,549
(247,072)
(229,369)
144,687
(35,862)
(316)
108,508
(432)
108,940
290,029
52.6
19.7
34.4
65.7
$1.51
139,180
(38,672)
(150)
100,358
-
100,358
267,761
51.9
19.4
32.75
64.4
$1.28
60,708
112,499
32,134
(8,924)
23,210
(17,704)
5,506
2,810
(166)
8,150
(432)
8,582
22,268
0.7
0.2
1.65
%
9.2
11.4
7.0
(9.8)
6.3
(7.7)
4.0
7.3
(110.8)
8.1
-
8.6
8.3
1.4
1.3
5.0
$0.23
18.0
Weighted average number of securities (000)
551,222
516,243
(1) pass-through revenue is revenue on which no margin is earned. It arises in the nt Gas business and the asset management operations in respect of costs incurred in, and passed on to
envestra limited in respect of, the operation of the envestra limited assets
(2) Significant items in the 12 months to 30 June 2011 include apa’s equity share of the eII2 investment allowance concession benefit ($6.9 million), profit on the sale of apa’s investment
in CaMS ($1.7 million) offset by transaction costs of the emu Downs wind farm acquisition ($9.0 million). Refer to note 8 of the financial statements
(3) operating cash flow = net cash from operations after interest and tax payments, adjusted for significant items
(4) Distribution payout ratio = total distribution payments as a percentage of operating cash flow
(5) adjusted for significant items
apa reported operating profit after tax and minorities of $108.5 million, an
apa’s distributions for the financial year total 34.4 cents per security, an
increase of 8.1% compared with $100.4 million last year. apa’s profit contained
increase of 5.0%, or 1.65 cents on last year. apa achieved its guidance of at
three significant items with an overall net negative impact of $0.4 million.
least 5% growth in distributions for the 2011 financial year while maintaining a
Revenue (excluding pass-through) increased by $60.7 million to $720.3 million,
an increase of 9.2% on last year, while earnings before interest, tax, depreciation
and amortisation (“eBItDa”) increased by $32.1 million to $492.1 million, an
increase of 7.0%.
the main factors driving the increase in operating profit and eBItDa include:
prudent payout ratio. the distribution payout ratio for the year was 65.7%,
further demonstrating apa’s ability to fully fund its distributions out of
operating cash flows.
CapitaL manaGement
During the year, apa undertook capital raising activities to assist in the funding
of the continuing strong growth of the business. this involved issuance of new
– growth in Queensland and Victorian transmission pipeline revenue, offset
securities under the operation of the Distribution Reinvestment plan and an
somewhat by flood damage repair costs in Queensland and reduced
institutional placement.
revenue from Western australian pipelines;
– growth in asset Management third party work and revenue for managing
envestra limited’s assets;
apa issued the following two tranches of new securities under its Distribution
Reinvestment plan:
– increase in energy Investments revenue due to an increase in apa’s
– on 15 September 2010, 9,370,489 securities at $3.69 per security raising
investment in Hastings Diversified utilities Fund and envestra limited; and
$34.6 million; and
– increase in debt costs due to an increase in debt margins which have been
– on 17 March 2011, 4,504,833 securities at $3.95 per security raising
experienced globally.
$17.8 million.
operating cash flow increased by 8.3% to $290.0 million (2010: $267.8 million),
on 23 June 2011, apa announced an institutional placement to fund the emu
while operating cash flow per security increased by 1.4% or 0.7 cents to 52.6
Downs wind farm acquisition and to partially fund organic expansion of apa’s
cents per security (2010: 51.9 cents per security).
energy infrastructure over the period to June 2012. on 29 June 2011, apa
3
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsDirectors’ report continueD issued 77,922,078 new securities at $3.85 per security through this institutional
BorroWinGs anD FinanCe Costs
placement, raising $300.0 million. the securities issued were not entitled to the
as at 30 June 2011, apa had borrowings of $3,239.9 million ($3,156.8 million at
final distribution for the year which will be paid on 15 September 2011.
30 June 2010), principally from syndicated bank debt facilities, bilateral debt
as at 30 June 2011, there were 634,116,029 securities on issue (30 June 2010:
542,318,629).
apa continued to use the Distribution Reinvestment plan in providing equity
support to its ongoing strong organic growth and investment projects.
on 22 July 2010, apa continued to lengthen the average tenure of its debt
position of its balance sheet with the issue of $300 million of 10 year fixed rate
a$ Medium term notes to australian and international institutional investors,
the proceeds of which were used to repay $102 million of uS private placement
facilities, uS private placement notes and australian Medium term notes.
Following the $300 million australian Medium term note issue in July 2010,
significant additional debt facility headroom was created. this headroom was
reduced in December to a more normalised position by cancelling $412 million
of syndicated bank facilities which were otherwise due to mature on 1 July 2011.
the increase in borrowings compared with last year is primarily due to the
additional funds drawn ($83 million) to support equity and operating cash
flows retained to fund apa’s strong organic growth and investments
($498 million).
notes which matured in September 2010 and also to refinance bank facilities
net underlying finance costs increased by $17.7 million, or 7.7%, to $247.1 million
ahead of maturity. this had the effect of extending the average maturity of
(2010: $229.4 million) over last year primarily as a result of increased floating
apa’s debt portfolio and reducing long term borrowing costs.
on 30 June 2011, apa successfully refinanced $165 million of bilateral debt
facilities (drawn to $145.3 million) which were due to mature in July 2011. apa
interest rates and borrowing margins, amortisation of borrowing costs related
to bank debt facilities and increased commitment fees associated with
maintaining a higher level of debt facility headroom during the first half of the
year. the average interest rate (including credit margins) applying to drawn
replaced these three bilateral bank facilities with three new facilities, each
debt was 7.47% for the year.
providing a commitment of $75 million, totalling $225 million. the new facilities
have a term of just over three years, maturing in mid July 2014, and will be used
for general corporate purposes.
at 30 June 2011, apa’s debt portfolio has a broad spread of maturities
extending out to 2022, with an average maturity of 4.5 years. apa has gearing
of 66.2%1 at 30 June 2011, down from 69.8% at 30 June 2010.
at 30 June 2011, apa had in excess of $320 million in cash and committed
undrawn facilities available to meet the continued capital growth needs of the
business.
apa’s interest cover ratio for the year decreased to 2.03 times from 2.11 times
last year, while remaining well in excess of its debt covenant default ratio of
1.1 times, and distribution lock up ratio of 1.3 times.
CreDit ratinG
apt pipelines limited, the borrowing entity of apa, maintained its two
investment grade credit ratings:
– BBB long term corporate credit rating (outlook Stable) assigned by
Standard & poor’s in June 2009, and
– Baa2 long term corporate credit rating (outlook Stable) assigned by
apa has a prudent treasury policy which requires conservative levels of
Moody’s Investors Service in april 2010.
hedging of interest rate exposures to minimise the potential impacts from
inCome tax
adverse movements in rates. all interest rates and foreign currency exposures
the effective income tax rate before significant items is 24.8%, down from
on uS private placement notes have been hedged. apa also enters into interest
27.8% last year. the decrease has arisen predominantly as a result of
rate hedges for a proportion of the interest rate exposure on its other floating
amendments to prior year tax returns following changes to tax consolidation
rate borrowings. at 30 June 2011, 73.5% of interest obligations were either
rules dealing with “rights to future income” and recognition of deductions for
hedged or at fixed interest rates for varying periods extending out for 11 years.
previous equity raising costs, plus the impact of investment allowances credits
a level of interest rate protection is also provided through Consumer price
for the current year.
Index (“CpI”) indexing in most revenue contracts and the regulatory revenue
CapitaL anD investment expenDiture
setting process operating on a number of apa’s assets.
Capital and investment expenditure totalled $516.0 million, $163.9 million or
47% higher than last year (2010: $352.1 million). this includes stay in business
at 30 June 2011, current liabilities exceed current assets by $888.6 million due
or maintenance capex of $18.0 million.
primarily to the fact that $900.0 million of syndicated facilities are due for
repayment in June 2012. apa has a number of Debt Capital Market programs in
place and underway which, along with the local bank syndication market, will
provide sources from which apa will undertake refinancing of this facility in
coming months.
expenditure was generally either fully underwritten through long-term revenue
arrangements or had regulatory approval through the relevant access
arrangement.
1 Gearing ratio determined in accordance with covenants in all debt facilities as net debt to net debt plus book equity
4
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD APA AnnuAl REPORT 2011 Capital and investment expenditure for the year is detailed in the table below.
CapitaL anD investment expenDiture
(1)
DesCription oF 2011 maJor proJeCts
2011
$ miLLion
2010
$ MIllIon
Growth expenditure
Regulated
Victorian transmission System
northern augmentation project
apa Gas networks (Qld)
Includes southern network expansion
Major projects
Queensland
new South Wales
Roma Brisbane pipeline expansion and lateral
Moomba Sydney pipeline expansion; Young to Wagga looping project;
Young Marsden compression project
Western australia
Mondarra Gas Storage Facility
other
Corporate financial and Customer Management systems
Acquisitions
energy Infrastructure
amadeus Gas pipeline; emu Downs wind farm
Increased interest in Sea Gas pipeline, envestra limited and Hastings
Diversified utilities Fund; eII2 equity
energy Investments
total growth capex
stay in business capex
total capex
33.4
16.1
49.5
19.6
34.3
39.8
12.2
105.8
228.8
113.9
342.6
498.0
18.0
516.0
32.3
21.2
53.5
11.6
31.1
14.4
10.0
67.1
83.3
137.2
220.5
341.1
14.7
355.8
(1) the capital expenditure shown in this table represents actual cash payments as disclosed in the cash flow statement; it excludes accruals brought forward from the prior year and
carried forward to next year
5
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsDirectors’ report continueD Business seGment perFormanCes
apa’s operations and financial result for the year reflects strong growth across all business segments.
Statutory reported revenue and eBItDa performance of apa’s business segments is set out in the following table:
Year enDeD 30 June
revenue
Energy Infrastructure
Queensland
new South Wales
Victoria
South australia
Western australia
northern territory
energy Infrastructure total
asset Management
energy Investments
total segment revenue
pass-through revenue
unallocated revenue
Significant items (1)
total revenue
eBitDa
Energy Infrastructure
Queensland
new South Wales
Victoria
South australia
Western australia
northern territory
energy Infrastructure total
asset Management
energy Investments
total segment eBitDa
Significant items (1)
total eBitDa
2011
$000
2010
$000
CHanGes
$000
%
164,308
126,657
151,209
2,049
143,643
13,850
601,716
68,647
27,121
697,484
381,733
12,932
9,839
151,204
120,773
136,852
2,005
144,145
11,242
566,221
60,053
19,408
645,682
329,942
13,866
-
13,104
5,884
14,357
44
(502)
2,608
35,495
8,594
7,713
51,802
51,791
(934)
1,101,989
989,490
112,498
106,799
101,266
114,263
1,618
94,223
5,578
423,747
38,740
27,102
489,588
2,521
492,109
103,302
96,841
103,987
1,720
100,800
1,938
408,588
32,317
19,070
459,975
-
459,975
3,497
4,425
10,276
(102)
(6,577)
3,640
15,159
6,423
8,032
29,614
2,521
32,134
8.7
4.9
10.5
2.2
(0.3)
23.2
6.3
14.3
39.7
8.0
15.7
(6.7)
11.4
3.4
4.6
9.9
(5.9)
(6.5)
187.8
3.7
19.9
42.1
6.4
7.0
(1) eBItDa contribution of significant items in the 12 months to 30 June 2011 (net $2.5 million) includes apa’s equity share of the eII2 Investment allowance Concession benefit
($9.8 million in revenue and eBItDa), profit on the sale of apa’s investment in CaMS ($1.7 million) offset by transaction costs of the emu Downs wind farm acquisition ($9.0 million)
6
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD APA AnnuAl REPORT 2011 enerGY inFrastruCture
– Berwyndale Wallumbilla Pipeline
apa has changed the name of the segment previously known as ‘Gas
In the first full 12 months of apa ownership, the pipeline is performing in line
transmission and Distribution’ to ‘energy Infrastructure’. the segment includes
with acquisition expectations. apa and aGl entered into commercial
the emu Downs wind farm acquired in June 2011, as well as the gas transmission
agreements to build a lateral between the Berwyndale Wallumbilla pipeline
and distribution assets.
and the Silver Springs pipeline owned by aGl. this work was completed in
the energy Infrastructure segment contributed 86% of revenue and 87% of
July 2011.
eBItDa. Revenue (excluding pass-through revenue) was $601.7 million, an
– Carpentaria Gas Pipeline
increase of 6.3% on the $566.2 million reported last year. eBItDa increased by
In December 2010, in response to the Queensland Government’s ‘northwest
3.7% to $423.7 million (2010: $408.6 million).
the following key factors contributed to this result:
Region energy Review’, apa submitted a proposal to supply gas-fired
electricity to major energy users in the Mt Isa region, which is competing
with alternative electricity options. the proposal is for a 240 MW gas-fired
– Victorian revenue and eBItDa contributed the greatest increase, with
power station to commence generation in 2013, with gas volumes
higher gas volumes through the Victorian transmission System due to
underpinning pipeline capacity on the Carpentaria Gas pipeline. the gas
colder weather, together with the annual increase in tariffs;
fired-power station proposal is being jointly developed by apa and aGl,
– Queensland revenue increase was due to the increased use of the pipeline
and is currently the preferred gas generation proposal for the two major
asset (gas volume and peak capacity) and general tariff increases across all
energy users within the Mt Isa region. the competing non-gas option is
assets, and a full year of earnings from the Berwyndale Wallumbilla pipeline
known as “Copper String” which is the construction of an electricity
(2010: 3 months). eBItDa was impacted by the repair costs on the Roma
transmission line between townsville and Mt Isa. Copper String’s viability is
Brisbane pipeline and apa Gas network following the summer flood events;
heavily reliant on both state and federal government financial support.
– new South Wales revenue and eBItDa was boosted by the new revenues
for additional capacity and services on the Young to Wagga lateral, offset
by the loss of short term contract revenue on the Moomba Sydney pipeline
system; and
– Western australian earnings were lower primarily due to the regulatory
tariff reduction on the Goldfields Gas pipeline and lower gas volumes
transported through the parmelia Gas pipeline.
apa continues to focus on the operation and development of its energy
Infrastructure assets across mainland australia.
Queensland
– Roma Brisbane Pipeline
new south Wales
– Moomba Sydney Pipeline
Work continued on the $100 million five-year capacity expansion program of
the Moomba Sydney pipeline. Capital expenditure for this year, the third year
of the program, was $9 million, bringing the total spent thus far to $56 million.
the first stage of the Young Wagga looping project was completed in
november 2010, with partial capacity available to customers a month
earlier. the storage capacity of the southern section of the Moomba Sydney
pipeline system was increased by looping a 61 km section of the Young to
Wagga lateral. the additional capacity is fully underwritten by long-term
transportation and storage agreements.
During the year apa entered into commercial agreements that underpin a
$50 million expansion of the pipeline. the additional capacity has been
During the year compressors at Young and Marsden were reconfigured to
increase pipeline capacity on the Moomba Sydney pipeline and the Central
substantially contracted under long term transportation agreements with
West pipeline.
an energy retailer and a major industrial gas user. the pipeline’s capacity
will be increased by approximately 10% by means of additional compression,
pipeline pressure upgrades and augmentation of the pipeline in the
Brisbane metropolitan area. Design and procurement activities for the
expansion project commenced with the expansion scheduled to be
completed in the second half of 2012.
apa completed the construction of a 6 km lateral from the Roma Brisbane
victoria and south australia
– Victorian Transmission System
total gas volume transported through the Victorian transmission System
this year was the highest recorded at 245.7 pJ, up 7.6% on last year’s volume
of 228.4 pJ and 0.4% above the previous record volume (244.6 pJ in FY09).
Colder than normal winters in 2010 and 2011 contributed to the increased
volume of gas used by residential and commercial users and broadly
pipeline to the Caltex oil refinery in Brisbane in September 2010. the lateral
improved economic activity lead to higher gas consumption by base load
and associated infrastructure increases the capacity of natural gas supply to
industrial customers.
the refinery.
– APA Gas Network, Queensland
apa completed the northern section expansion of the Victorian transmission
System in March 2011. the work included the upgrade of the Wollert
network meter connections in the year increased by 2,837, taking
Compressor Station and an increase in the working pressure for a section of
connections to 84,799 at 30 June 2011 (81,962 at 30 June 2010). Gas volume
the pipeline, which has resulted in increased capacity for gas transmission
transported through the network and to large customers was 12.9 pJ, 0.8 pJ
between nSW and Victoria. the expansion is included in the system’s
or 6% below the 13.7 pJ last year, mainly due to a large gas user connecting
regulatory arrangement.
directly to the Roma Brisbane pipeline and ceasing to be a network
customer.
apa is constructing the first stage of the Western outer Ring Main expansion
at Sunbury to satisfy organic and future growth on the Victorian
expansion of the gas network continued, including reticulation into new
transmission System, and will also maintain uninterrupted gas supply to the
housing developments in the Gold Coast area. Gas mains laid for the year
Sunbury and Ballarat regions.
totalled 38 km, reaching over 2,500 new and existing home sites.
– Dandenong LNG facility, Victoria
on 17 June 2011, the australian energy Regulator released its final decision
During the year, the use of the lnG facility for trucking transport fuel
on apa’s access arrangement proposal for apa Gas network, Queensland
increased, contributing to increased earnings. Contracts were renegotiated
(allgas). Further information on the submission and process is found on
with customers using the facility for gas supply ‘peak shaving’ storage,
page 9 under ‘Regulatory matters’.
which also contributed to the increase.
7
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsDirectors’ report continueD Western australia
– Goldfields Gas Pipeline
on 5 august 2010, the economic Regulatory authority of Western australia
issued its further final decision on apa’s proposed access arrangement.
Refer to ‘Regulatory matters’ on page 9 of this report for additional
information.
– Mondarra Gas Storage Facility
on apa’s access arrangement proposal for the amadeus Gas pipeline.
Further information is found on page 9 under ‘Regulatory matters’.
asset manaGement
apa provides asset management and operational services to the majority of its
energy investments and a number of third parties. Its main customers are
envestra limited, ethane pipeline Income Fund, Sea Gas pipeline and energy
Infrastructure Investments. asset management and operational services are
In May 2011, apa entered into commercial agreements that will lead to the
provided to these customers under long term contracts.
further development and expansion of its Mondarra Gas Storage Facility.
the foundation contract is with Verve energy, Western australia’s
government-owned electricity generator, for a substantial part of the
increased capacity of the facility. apa is in discussions with other potential
customers for further gas storage services.
During the year, apa progressed the initial stages of expansion, including
reservoir analysis, engineering and design, and procurement work. over the
next two years apa will construct further surface facilities, pipeline
interconnects and treatment plants, with expected capital expenditure of
up to $140 million.
Completion of the expanded capacity is scheduled for 2013. the facility will
continue to operate its existing contracted storage services during the
expansion period.
the expansion is expected to result in commercial storage capacity of 15 pJ
and a significant increase in daily injection and withdrawal rates. the
Revenue (excluding pass-through revenue) from such services increased by
14.3% to $68.6 million (2010: $60.1 million) and eBItDa increased by 19.9% to
$38.7 million (2010: $32.3 million), mainly due to increased envestra limited
revenue and additional third party work.
During the year, envestra limited acquired the Wagga Wagga Gas network.
the operation and asset management of this network has been added to apa’s
asset management of envestra limited’s networks, under the same terms and
conditions. Consequently, apa employed 14 existing Wagga Wagga network
operations personnel and integrated operations into apa’s management of
envestra limited’s assets.
enerGY investments
apa has an interest in a number of energy investments across australia,
including envestra limited, Sea Gas pipeline, energy
Infrastructure
Investments, ethane pipeline Income Fund, eII2 and Hastings Diversified
utilities Fund. apa holds a number of roles in respect of these vehicles in
expanded facility will provide apa’s customers with supply options and
addition to its ownership interest.
flexibility to better manage their gas supply and demand portfolios.
the Mondarra expansion project has been welcomed by the Western
australian Government, which recognises the major role the expanded
facility will play in enhancing future gas supply security for the state.
– Emu Downs
In June 2011, apa acquired the emu Downs wind farm and development site
in Western australia. the 80 MW wind farm has been in operation since
2006 and is located 200 km north of perth, 10 kilometres from apa’s
existing parmelia Gas pipeline.
apa secured long term revenue agreements for the total output of the
80 MW wind farm - both the electricity and Renewable energy Certificates
(ReCs) - for the remaining operating life of this asset of approximately
20 years. these agreements are with large, highly creditworthy energy
retailers, including the Western australian government owned energy
all investments are equity accounted, with the exception of apa’s interests in
ethane pipeline Income Fund and Hastings Diversified utilities Fund.
– envestra Limited
apa increased its interest in envestra limited from 31.7% to 33.0% by
participating in envestra limited’s Distribution Reinvestment plan in
october 2010 and March 2011. the total value of distributions reinvested
during the year was $24.8 million.
– sea Gas pipeline
In november 2010, apa acquired a further 16.7% of the Sea Gas pipeline
from International power for $46.3 million. apa exercised its pre-emptive
right over part of International power’s interest, and with this acquisition
apa’s overall interest in the pipeline increased to 50%.
In august 2011, Sea Gas successfully refinanced its non-recourse debt
retailer Synergy. operations and maintenance services are provided by the
facility for a further five years.
wind turbine manufacturer under a comprehensive service and availability
agreement for the medium term.
– eii2
In october 2009, apa (20.2%), together with Marubeni Corporation and
the acquisition price of $171.9 million includes the 80 MW wind farm and the
osaka Gas, acquired the north Brown Hill Wind Farm from aGl.
wind farm development rights for a further 130 MW on adjacent land. this
excludes stamp duty and transaction costs which total $8.6 million.
northern territory
– Amadeus Gas Pipeline
all turbines on the wind farm were constructed and the wind farm
connected to the grid by December 2010, ahead of schedule. as a result of
the commencement of generation from the wind farm, accounting profits
were generated within eII2 (apa share: $9.6 million) primarily due to an
apa acquired the amadeus Gas pipeline and associated infrastructure for
investment allowance concession benefit recognised on commencement of
$63 million in June 2011. Since 1986, the amadeus Gas trust has leased the
generation (included as a significant item). Final handover from the epC
pipeline from a consortium of financial institutions, and nt Gas as trustee
(engineering procurement and construction) constructor occurred in June
for the amadeus Gas trust has managed and operated the pipeline. apa
2011. apa’s funding commitment for equity arose in June 2011, at which time
holds a 96% interest in nt Gas and the amadeus Gas trust. apa acquired
apa provided $19.7 million for its eII2 investment.
the pipeline and associated assets at the end of that lease.
the investment is secured by a long term off-take agreement with aGl
the acquisition is supported by a new long term gas transportation
energy, covering both the electricity generated and the Renewable energy
agreement between apa and power and Water Corporation, the northern
Credits produced from the wind farm.
territory’s government-owned electricity provider.
on 20 July 2011, the australian energy Regulator released its final decision
–
–
8
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD APA AnnuAl REPORT 2011 – Hastings Diversified utilities Fund
access arrangement. eRa did not accept apa’s proposed access arrangement,
During the year, apa increased its interest in Hastings Diversified utilities
and installed an access arrangement it had prepared which reflected the
Fund from 16.8% to 19.4% at a cost of $22.5 million. this investment is
requirements and tariffs specified in its final decision. these tariffs came into
consistent with apa’s strategy of long term investment in gas transmission
effect on 20 august 2010 and apply to approximately 40% of the annual
pipelines.
revenue apa receives from the Goldfields Gas pipeline.
apa flooD anD weather impact
eastern australia was subjected to a number of extreme weather events during
the year which had an impact on both apa’s assets and people. these weather
events included heavy rain, flooding and a cyclone (Cyclone Yasi). assets
affected by the flood and weather included the Roma Brisbane pipeline and
apa Gas network in Queensland, and the Central Ranges pipeline in new South
Wales.
the impact on apa’s assets and operations from these events has been
managed safely and efficiently by local and interstate apa staff, in accordance
with apa’s sound and well developed emergency response and asset
management plans, with the result that there was minimal disruption of gas
transportation services.
Repairs to apa assets were substantially completed within the year. there was
minimal impact on apa operations and the costs associated with these events
have been fully provided for.
regulatory matters
Key regulatory matters addressed during the year included:
apa Gas networks access arrangement
on 30 September 2010, apa submitted the access arrangement proposal for
its Gas network (allgas) in Queensland to the australian energy Regulatory
(“aeR”). the proposal establishes the basis for the terms and conditions of
apa has pursued the merits review process available within the regulatory
framework.
short-term trading market in gas
a short-term trading market (“SttM”) in natural gas was introduced by the
australian energy Market operator (“aeMo”) into new South Wales and South
australia on 1 September 2010, and operates alongside Victoria’s established
wholesale gas market. the SttM facilitates the trading of natural gas at defined
hubs of Sydney and adelaide and consequently has an impact on pipelines
which deliver gas to these hubs, including the Moomba Sydney pipeline. apa
has implemented a program to ensure that systems and procedures are
compliant with SttM requirements.
apa is working with aeMo and market participants to introduce the SttM in
Queensland, with a natural gas trading hub in Brisbane. trials will commence
on 1 September 2011, and market operations are scheduled to commence on
1 December 2011.
health, safety anD environment
Health and safety reporting
the lost time Injury Frequency Rate (“ltIFR”) for apa employees was 6.2 for
this year, up from 4.9 last year. there were 13 reportable lost time injuries
during the year, compared with 10 last year.
access for users and prospective users of the gas distribution network for the
apa remains committed to a ‘zero harm’ environment and is developing a
period 1 July 2011 to 30 June 2016. aeR released its draft decision on 16 February
national apa Group Health Safety & environment Management System,
2011 and its final decision on 17 June 2011.
integrating the various legacy systems and adopting best practice across the
aeR’s final decision on 17 June 2011 did not approve apa’s proposed revised
access arrangement and instead aeR has issued its own revised access
Group. the system, known as SaFeGuaRD, will be
launched on
1 September 2011.
arrangement and access arrangement information for apa Gas network.
environmental regulations
the final decision accepted apa’s forecast operating and capital expenditure
for the period. However, apa does not agree with aeR’s approach in respect of
some key elements of the weighted average cost of capital and has sought a
merits review by the australian Competition tribunal of aeR’s decision in
respect of the debt risk premium.
amadeus Gas pipeline access arrangement
all pipeline, distribution and gas processing assets owned and/or operated by
apa are designed, constructed, tested, operated and maintained in accordance
with pipeline and distribution licences issued by the relevant state and territory
technical regulators. all licences require compliance with relevant federal, state
and territory environmental legislation and australian standards.
the pipeline licences also require compliance with the australian Standard aS
on 23 December 2010, apa submitted the access arrangement proposal for the
2885 “pipelines – Gas and liquid petroleum”, which has specific requirements
amadeus Gas pipeline to aeR. the access arrangement proposal outlines the
for the management of environmental matters associated with all aspects of
proposed terms and conditions of access for the transmission pipeline for the
the high pressure pipeline industry.
period 1 July 2011 to 30 June 2016. Following the release of aeR’s draft decision
in March 2011, apa submitted a revised access arrangement proposal. aeR
released its final decision on 20 July 2011, which did not approve apa’s revised
access arrangement proposal. Instead, the final decision outlined the revisions
required to the access arrangement, including the reference tariffs and terms
and conditions. aeR approved and published its own access arrangement and
access arrangement information for the amadeus Gas pipeline on 27 July 2011.
environmental management plans satisfying part a of the australian pipeline
Industry association Code of environmental practice are prepared and
independently audited for construction activities. In accordance with part 3 of
aS 2885, environmental management plans satisfying part B of the Code are in
place for all operating pipelines and are managed in accordance with apa’s
contracts and the terms and conditions of the licences that apa has been
the gas transportation agreement between apa and power and Water
issued.
Corporation is not impacted by this access arrangement.
Goldfields Gas pipeline access arrangement
the Safety and operating plan for apa’s distribution networks have been
audited in accordance with the Queensland and new South Wales technical
Following the release of the economic Regulation authority of Western
regulator requirements.
australia (“eRa”) final decision on 13 May 2010, apa, on behalf of the Goldfields
Gas pipeline owners, submitted an access arrangement which sought to
address elements of the final decision.
the board reviews external audit reports and, on a monthly basis, the internal
reports prepared relating to environmental issues. no breaches have been
reported during the year and apa has managed the assets in accordance with
on 5 august 2010, eRa released its further final decision on the proposed
the environmental management plans that are in place.
9
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsDirectors’ report continueD environmental reporting
In october 2010 apa complied with australia’s national Greenhouse and energy Reporting obligations for financial year 2010. energy reporting for financial year
2011 will be submitted in october 2011.
apa’s performance on two key measures is set out in the following table:
FinanCiaL Year
Scope 1 Co2 emissions (tonnes)
energy consumption (GJ)
2010
305,076
2009
298,906
3,248,069
3,260,347
CHanGe
6,170
-12,278
+2.1%
-0.4%
impact of carbon policy
the impact of the currently proposed federal carbon policy, Clean energy
subsequent events
except as disclosed elsewhere in this report, the directors are unaware of any
Future, will depend on its final form. However, apa expects its costs will be
matter or circumstance that has occurred since the current period end that has
immaterial. apa expects to recover all carbon related costs from its regulated
significantly affected or may significantly affect the operations of the
assets under the access arrangement review process. For non-regulated assets,
Consolidated entity, the results of those operations or the state of affairs of the
apa has implemented changes to its contracts with carbon pass-through
Consolidated entity in future years.
clauses included in all new contracts. apa’s financial exposure is limited to
some legacy contracts that do not contain the pass-through of carbon costs to
customers. apa will have virtually no carbon costs if the proposed carbon
policy is deemed a change in tax law.
future Developments
Disclosure of information regarding likely developments in the operation of the
Consolidated entity in future years and the expected results of those operations,
other than information disclosed elsewhere in this report, is likely to result in
unreasonable prejudice to the Consolidated entity. accordingly, this information
has not been disclosed in this report.
information on Directors anD company secretary
Information relating to the qualifications and experience of the directors and Company Secretary is set out below:
Leonard Bleasel am
FaiCD Faim
leonard (len) Bleasel is a non-executive director of QBe Insurance Group limited and a director of o’Connell Street
associates pty limited. He is Chairman of the taronga Conservation Society australia and Chairman of the advisory Council
Independent Chairman
for RBS Group (australia) pty limited.
appointed 28 august 2007
Appointed Chairman
30 october 2007
len had a long career in the energy industry before retiring from management in 2001. He started his career in aGl in 1958
and worked in a variety of roles, culminating in the position of Managing Director and Chief executive officer from 1990 to
2001.
steven Crane
BComm FaiCD sFFin
Independent Director
appointed 1 January 2011
len’s past appointments have included Chairman of Foodland associated limited, aBn aMRo australia Holdings pty
limited, Solaris power, the australian Gas association, natural Gas Corporation Holdings ltd (new Zealand), elgas ltd,
auscom Holdings pty ltd, Industrial pipe Systems pty ltd and east australian pipeline ltd, a director of St George Bank
limited and Gas Valpo (Chile) and Vice president of the Royal Blind Society.
len was awarded an aM in the General Division of the order of australia for services to the australian gas and energy
industries and the community.
Steven Crane has over 30 years experience in the financial services industry. Steven’s background is in investment banking,
having previously been Chief executive officer of aBn aMRo australia (now RBS Group australia) and BZW australia.
Steven has considerable experience as a non-executive director of listed entities. He is currently a director of Bank of
Queensland limited, transfield Services limited and nIB Holdings limited, and was formerly Chairman of adelaide Managed
Funds limited, Investa property Group limited and formerly a director of adelaide Bank limited, Foodland associated
limited and apa ethane limited, the responsible entity of ethane pipeline Income Fund.
Steven is a member of the audit and Risk Management Committee and the Remuneration Committee.
John Fletcher
Bsc mBa FaiCD
John Fletcher has over 35 years experience in the energy industry, having held a number of executive positions in aGl prior
to his retirement in 2003, including Chief Financial officer. John has previously been a director of Integral energy, natural
Independent Director
Gas Corporation Holdings ltd (new Zealand), Foodland associated limited and alinta energy Group. He brings a wide
appointed 27 February 2008
commercial and financial practical knowledge to the board.
John was previously an aGl appointed director of australian pipeline limited from 2000 to 2005. He is also a director of
Sydney Water.
John is the Chairman of the Remuneration Committee and a member of the audit and Risk Management Committee.
10
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD APA AnnuAl REPORT 2011 russell Higgins ao
Bec FaiCD
Independent Director
appointed 7 December 2004
Russell Higgins has extensive experience both locally and internationally in the energy sector and in economic and fiscal
policy. He was Secretary and Chief executive officer of the Department of Industry, Science and Resources from 1997 to
2002 and Chairman of the australian Government’s energy task Force from 2003 to 2004.
Russell is a director of telstra Corporation limited. He is the Chairman of the Global Carbon Capture and Storage Institute
and the CSIRo energy transformed Flagship advisory Committee, and a director of Ricegrowers limited (trading as
SunRice) and the St James ethics Foundation. He is a former Chairman of the Snowy Mountains Council and the australian
Government’s Management Improvement advisory Committee and a former director of australian Biodiesel Group limited,
eFIC (export Finance and Insurance Corporation), CSIRo, austrade, the australian Industry and Development Corporation
as well as a former member of the australian Government’s Joint economic Forecasting Group. In 2006-07, he was a
member of the prime Ministerial task Group on emissions trading.
Russell is Chairman of the Health Safety and environment Committee and a member of the audit and Risk Management
Committee.
patricia mcKenzie
LLB maiCD
Independent Director
patricia McKenzie has considerable expertise and experience in energy market regulation and, as a qualified solicitor,
extensive corporate legal experience. She was formerly a director of australian energy Market operator limited (aeMo), the
national energy market operator for electricity and gas, and the Chief executive officer of Gas Market Company limited, the
appointed 1 January 2011
market administrator for retail competition in the gas industry in new South Wales and the australian Capital territory.
patricia is also Chair of Diabetes australia limited.
patricia is a member of the Health Safety and environment Committee and the Remuneration Committee.
muri muhammad
Muri Muhammad retired from petronas in august 2002 and was reappointed as petronas’ adviser, Gas Business in the
msc
Director
president’s office until 30 March 2005. He brings 30 years experience in the chemicals and petroleum industry as well as
expertise in the domestic and international gas transmission and distribution, gas utilisation, cogeneration and conversion
appointed 8 March 2000
businesses where he has held various senior executive positions.
Muri was petronas’ Vice president for Gas Business from 1998 until his retirement and held several directorships, some as
Chairman, of a number of petronas’ subsidiaries and associate companies in Malaysia and abroad. He currently sits on the
boards of gas transmission companies transportadora de Gas Del norte of argentina, petronas Gas Berhad of Malaysia, and
papua new Guinea’s national petroleum and minerals corporation, petromin pnG Holdings limited. He was also a member
of the Malaysian energy Commission, a Malaysian Government regulatory body.
Muri is a member of the Remuneration Committee and the Health Safety and environment Committee.
George ratilal
mBa
Director
Manharlal (George) Ratilal is executive Vice president (Finance) of petronas. He is a member of petronas’ board and
executive Committee. prior to joining petronas in 2003, he was employed by a local Malaysian merchant bank for 18 years.
During that time, George specialised in corporate finance where he advised on mergers and acquisitions and the capital
appointed 31 July 2007
markets.
Resigned 26 august 2010
Alternate Director
appointed 26 august 2010
robert Wright
BComm FCpa
Robert Wright has over 30 years financial management experience, having held a number of Chief Financial officer positions,
including Finance Director of David Jones limited. He is currently the Chairman of SaI Global limited, Super Cheap auto
Independent Director
Group limited, RCl Group limited and apa ethane limited, the responsible entity of ethane pipeline Income Fund and was
appointed 11 February 2000
previously Chairman of Dexion limited.
michael mcCormack
Bsurv GradDipeng
mBa FaiCD
Managing Director
appointed Managing Director
1 July 2006
mark Knapman
BComm LLB FCis
Company Secretary
appointed 16 July 2008
Robert is the Chairman of the audit and Risk Management Committee and a member of the Health Safety and environment
Committee.
Michael (Mick) McCormack has been Chief executive officer of apa since 1 July 2005 and Managing Director since 1 July
2006. Mick has over 25 years experience in the energy infrastructure sector in australia, with particular focus on gas pipeline
and distribution infrastructure, where he has worked on the development, construction and operation of new and existing
pipelines and distribution networks across australia.
Mick is Chairman of nt Gas pty ltd and a director of envestra limited and the australian pipeline Industry association.
In addition to being responsible for the secretariat function, Mark Knapman oversees corporate governance and the legal,
risk management and financial services compliance functions.
Mark has extensive experience as a Company Secretary. He was Company Secretary and General Counsel of an aSX-listed
company and asia pacific legal Counsel and Company Secretary for a uS multinational company prior to joining apa. prior
to those roles, he was a partner of an australian law firm.
Mark is a Fellow of the Chartered Institute of Company Secretaries and is admitted to practice as a solicitor.
11
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsDirectors’ report continueD Directorships of other listeD companies
Directorships of other listed companies held by directors at any time in the three years immediately before the end of the year are as follows:
name
CompanY
leonard Bleasel aM
Steven Crane
John Fletcher
Russell Higgins ao
patricia McKenzie
Muri Muhammad
George Ratilal (2)
Robert Wright
Michael McCormack
QBe Insurance Group limited
transfield Services limited
Bank of Queensland limited
nIB Holdings limited
apa ethane limited (1)
alinta energy Group
telstra Corporation limited
Ricegrowers limited
-
-
-
SaI Global limited
Super Cheap auto Group limited
RCl Group limited
apa ethane limited (1)
Dexion limited
envestra limited
perioD oF DireCtorsHip
Since January 2001
Since February 2008
Since December 2008
Since September 2010
July 2008 to June 2011
october 2006 to april 2010
Since September 2009
Since December 2005
-
-
-
Since october 2003
Since May 2004
Since May 2006
Since 10 July 2008
March 2005 to august 2010
Since July 2007
(1) apa ethane limited is the responsible entity of the registered investment schemes that comprise ethane pipeline Income Fund, the securities in which are quoted on the aSX
(2) George Ratilal resigned as a director and was appointed an alternate director for Muri Muhammad on 26 august 2010
options granteD
In this report, the term “apa securities” refers to the stapled securities each
comprising a unit in australian pipeline trust stapled to a unit in apt Investment
inDemnification of officers anD
external auDitor
During the year, the Responsible entity paid a premium in respect of a contract
trust and traded on the australian Securities exchange (“aSX”) under the
insuring the directors of the Responsible entity, the Responsible entity’s
ticker symbol “apa”.
no options over unissued apa securities were granted during or since the end
of the year.
Company Secretary, and all executive officers of the Responsible entity and
any related body corporate of apa against any liability incurred in performing
those roles to the extent permitted by the Corporations act 2001. the contract
of insurance prohibits disclosure of the nature of the liability and the amount of
no unissued apa securities were under option as at the date of this report.
the premium.
no apa securities were issued during or since the end of the year as a result of
australian pipeline limited, in its capacity as Responsible entity of australian
the exercise of an option over unissued apa securities.
pipeline trust and apt Investment trust, indemnifies each person who is or has
been a director or Company Secretary of the Responsible entity or of any
related body corporate of apa under a range of deed polls and indemnity
agreements which have been in place since 1 July 2000. this indemnity may
extend to such other officers or former officers of apa as the board in each
case determines. the indemnity operates to the full extent allowed by law but
only to the extent not covered by insurance and is on terms the board considers
usual for arrangements of this type.
under its constitution, australian pipeline limited (in its personal capacity)
indemnifies each person who is or has been a director, Company Secretary or
executive officer of that company. the indemnity operates to the full extent
allowed by law but only to the extent not covered by insurance.
the Responsible entity has not otherwise, during or since the end of the year,
indemnified or agreed to indemnify an officer or external auditor of the
Responsible entity or of any related body corporate of apa against a liability
incurred as such an officer or auditor.
12
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD APA AnnuAl REPORT 2011 Directors’ meetings
During the year, 16 board meetings, three Remuneration Committee meetings, four audit and Risk Management Committee meetings and three Health Safety and
environment Committee meetings were held. the following table sets out the number of meetings attended by each director while they were a director or a
committee member:
DireCtors
leonard Bleasel aM (1)
Steven Crane (2)
John Fletcher
Russell Higgins ao
patricia McKenzie (2)
Muri Muhammad
Robert Wright
Michael McCormack
George Ratilal (3)
BoarD
remuneration Committee
auDit anD risK manaGement
Committee
HeaLtH saFetY anD environment
Committee
a
16
8
16
16
8
16
16
16
2
B
16
8
16
16
8
15
15
16
1
a
-
1
3
2
1
3
-
-
-
B
-
1
3
2
1
3
-
-
-
a
-
1
4
4
-
-
4
-
-
B
-
1
4
4
-
-
4
-
-
a
-
-
-
3
1
3
3
-
-
B
-
-
-
3
1
2
3
-
-
a: number of meetings held during the time the director held office or was a member of the committee during the year
B: number of meetings attended
(1) the Chairman also attends all committee meetings ex officio
(2) appointed 1 January 2011
(3) George Ratilal resigned as director and was appointed as alternate director for Muri Muhammad on 26 august 2010
Directors’ securityholDings
the aggregate number of apa securities held directly, indirectly or beneficially by directors or their director related entities at the 30 June 2011 is 862,422 (2010:
710,620).
the following table sets out directors’ relevant interests in apa securities as at 30 June 2011:
DireCtors
leonard Bleasel aM
Steven Crane
John Fletcher
Russell Higgins ao
patricia McKenzie
Muri Muhammad
Robert Wright
Michael McCormack
George Ratilal (2)
FuLLY paiD seCurities
as at 1 JuLY 2010
seCurities
aCQuireD
seCurities
DisposeD
FuLLY paiD seCurities
as at 30 June 2011
359,771
100,000(1)
56,807
72,954
-
42,818
31,265
147,005
-
810,620
15,634
-
3,219
6,549
-
-
2,806
23,614
-
51,882
-
-
-
-
-
-
-
-
-
-
375,405
100,000
60,026
79,503
-
42,818
34,071
170,619
-
862,442
(1) these securities were held by Steven Crane at the date of his appointment during the year
(2) George Ratilal resigned as a director and was appointed an alternate director for Muri Muhammad on 26 august 2010
the directors hold no other rights or options over apa securities. there are no contracts to which a director is a party or under which the director is entitled to a
benefit and that confer a right to call for or deliver apa securities.
the Company Secretary holds 4,484 apa securities.
13
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsDirectors’ report continueD remuneration report
introduction
at apa, we are committed to disclosing a clear and transparent summary of our remuneration arrangements.
this report explains our approach to remuneration and sets out key 2011 remuneration details for the directors of the Responsible entity and key management
personnel of apa.
the people currently in these positions are listed below:
DireCtors oF tHe responsiBLe entitY
Leonard Bleasel am
steven Crane
John Fletcher
russell Higgins ao
patricia mcKenzie
muri muhammad
robert Wright
michael mcCormack
KeY manaGement personneL
michael mcCormack
peter Fredricson
ross Gersbach
stephen ohl
mark Knapman
peter Wallace
Chairman apa Group
Chairman Remuneration Committee
Chairman Health Safety and environment Committee
Chairman audit and Risk Management Committee
Chief executive officer and Managing Director
Chief executive officer and Managing Director
Chief Financial officer
Group Manager Commercial
Group Manager operations
Company Secretary
Group Manager Human Resources
Have there been any changes to the executive remuneration
the Remuneration Committee may seek external professional advice on any
structure during FY 2011?
matter within its terms of reference.
there have been no changes to the remuneration structure during the year.
However, the remuneration structure remains continuously under review to
ensure that that the organisation maintains appropriate pay structures to
attract and retain suitably qualified staff.
remuneration Committee
What is the role of the Remuneration Committee?
the Remuneration Committee has been established by the board to govern
our approach to non-executive director remuneration
We seek to attract and retain a high calibre of directors who are equipped with
diverse skills to oversee all functions of apa in an increasingly complex
environment.
We aim to fairly remunerate directors for their services relative to similar sized
organisations.
and oversee executive remuneration. the role of the Remuneration Committee
non-executive director remuneration comprises:
is to:
– a base board fee;
– ensure the provision of a robust remuneration and reward system that
– an additional fee for serving on a committee of the board; and
provides for the alignment of employee and securityholder interests;
– superannuation guarantee levy contributions.
– consider and make recommendations to the board on remuneration policies
and packages applicable to directors and to senior executives of apa;
– facilitate effective attraction, retention and development of talented
employees; and
– ensure compliance with relevant legislation and corporate governance
the board determines base board fees and committee fees annually. the board
acts on advice from the Remuneration Committee which obtains external
professional advice from independent remuneration specialists. Such advice
includes market comparisons paid by comparable companies in the aSX 200.
principles on remuneration practices and employment policies.
non-executive directors do not receive incentive payments of any type. one off
the members of the Remuneration Committee, all of whom are non-executive
directors, are:
– John Fletcher (Chairman);
– Steven Crane;
– patricia McKenzie; and
– Muri Muhammad.
the Chairman of the board attends all meetings of the Remuneration
Committee and the Managing Director attends by invitation. the Remuneration
Committee met three times during the year.
‘per diems’ may be paid in exceptional circumstances. no payments have been
made under this arrangement in this reporting period.
In 2003, the board terminated the non-executive directors’ retirement benefit
plan so that the benefits to participating directors that had accrued up to that
termination date were then quantified and preserved for payment on retirement
of those directors. Robert Wright is the only current director entitled to benefits
under the plan on his retirement from the board.
14
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD APA AnnuAl REPORT 2011 Board approved fees and committee fees
Following external benchmarking and a review of apa’s performance relative to other companies, base board fees and fees for serving on a committee of the
board were increased effective 1 January 2011.
Base board fees and committee fees excluding superannuation guarantee levy are outlined below:
Effective 1 January 2011
Board fees
Remuneration Committee fees
audit and Risk Management Committee fees
Health Safety and environment Committee fees
Board fees
Effective 1 January 2010 to
Remuneration Committee fees
31 December 2010
audit and Risk Management Committee fees
Health Safety and environment Committee fees
CHairman
$000/pa
memBer
$000/pa
280
23
32
23
265
22
30
22
102
11.5
16
11.5
96
11
15
11
Actual payments for period
actual remuneration received by non-executive directors during the year is outlined in the table below:
non-exeCutive DireCtors (1)
FeeS
$
SupeRannuatIon
$
totaL paiD 2011
$
total paID 2010
$
leonard Bleasel aM
Steven Crane (2)
John Fletcher
Russell Higgins ao
patricia McKenzie (2)
Muri Muhammad
Robert Wright
George Ratilal (3)
total
272,500
57,875
107,000
145,375
56,750
121,500
141,250
16,000(4)
918,250
20,750
5,209
42,335
13,077
5,108
-
12,715
-
99,194
293,250
63,084
149,335
158,452
61,858
121,500
153,965
16,000
1,017,444
271,300
-
135,937
149,320
-
113,000
143,875
93,000
906,432
(1) the remuneration for the Chief executive officer and Managing Director, Michael McCormack, is included with the actual remuneration disclosures for key management personnel
for FY 2011 on page 18
(2) appointed 1 January 2011
(3) George Ratilal resigned as a director and was appointed an alternate director for M Muhammad on 26 august 2010
(4) George Ratilal’s board fees were paid to petronas australia pty ltd
15
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsDirectors’ report continueD AustrAliA n PiP el in e t rust A nd its co ntro lled e nti ti es
Directors’ report
continueD
our approach to executive remuneration
our approach to executive remuneration
What is our executive remuneration strategy?
What is our executive remuneration strategy?
our executive remuneration strategy is to:
our executive remuneration strategy is to:
– attract and retain key executives who will create long-term sustainable value for securityholders;
– attract and retain key executives who will create long-term sustainable value for securityholders;
– motivate and reward executives having regard to the overall performance of apa, the performance of the executive measured against pre-determined
– motivate and reward executives having regard to the overall performance of apa, the performance of the executive measured against pre-determined
objectives and the external compensation environment;
objectives and the external compensation environment;
– target at least the market median using external benchmark data;
– target at least the market median using external benchmark data;
– appropriately align the interests of executives with those of securityholders; and
– appropriately align the interests of executives with those of securityholders; and
– comply with applicable legal requirements and appropriate standards of governance.
– comply with applicable legal requirements and appropriate standards of governance.
We aim to pay competitive remuneration and this is communicated as total Remuneration opportunity (“tRo”).
We aim to pay competitive remuneration and this is communicated as total Remuneration opportunity (“tRo”).
Total
Total
Remuneration
Remuneration
Opportunity
Opportunity
=
=
Total Fixed
Total Fixed
Remuneration
Remuneration
(TFR)
(TFR)
+
+
Short-term
Short-term
Incentive
Incentive
(STI)
(STI)
+
+
Long-term
Long-term
Incentive
Incentive
(LTI)
(LTI)
Performance based ‘at risk’ remuneration
Performance based ‘at risk’ remuneration
each individual’s tRo is dependent on their level in the organisation and their capacity to influence outcomes.
each individual’s tRo is dependent on their level in the organisation and their capacity to influence outcomes.
What is the remuneration mix?
What is the remuneration mix?
apa’s remuneration mix for senior executives is structured as a mix of fixed remuneration and ‘at risk’ short and long-term incentive components. the proportion
apa’s remuneration mix for senior executives is structured as a mix of fixed remuneration and ‘at risk’ short and long-term incentive components. the proportion
of fixed versus ‘at risk’ remuneration varies at different levels within apa, reflecting the varying capacity of employees to influence apa’s operational performance
of fixed versus ‘at risk’ remuneration varies at different levels within apa, reflecting the varying capacity of employees to influence apa’s operational performance
and returns to securityholders.
and returns to securityholders.
For the Chief executive officer and Managing Director and other key management personnel, the remuneration mix is:
For the Chief executive officer and Managing Director and other key management personnel, the remuneration mix is:
Managing Director
Managing Director
other key management
Other key management
personnel 2
personnel 2
40%
40%
30%
30%
30%
30%
‘at risk’ components
‘at risk’ components
50%
50%
25%
25%
25%
25%
‘at risk’ components
‘at risk’ components
TFR
TFR
STI L
STI L
ltI
TI
TI
An overview of remuneration components
An overview of remuneration components
each remuneration component has a different purpose:
each remuneration component has a different purpose:
remuneration Component
remuneration Component
purpose
purpose
HoW reWarD is DeLivereD
HoW reWarD is DeLivereD
total Fixed Remuneration (“tFR”)
total Fixed Remuneration (“tFR”)
to reflect the market value of the role and the
to reflect the market value of the role and the
the total of base salary (which includes cash,
the total of base salary (which includes cash,
individual’s skills and experience.
individual’s skills and experience.
superannuation guarantee levy, vehicles and
superannuation guarantee levy, vehicles and
parking) and incidental benefits paid in monthly
parking) and incidental benefits paid in monthly
instalments.
instalments.
‘at risK’ Components
‘at risK’ Components
Short-term incentive (“StI”)
Short-term incentive (“StI”)
to reward strong performance against the
to reward strong performance against the
Cash-based incentive based on a mix of financial
Cash-based incentive based on a mix of financial
achievement of specific business objectives.
achievement of specific business objectives.
and non-financial key performance indicators
and non-financial key performance indicators
paid annually after the audited accounts are
paid annually after the audited accounts are
approved.
approved.
long-term incentive (“ltI”)
long-term incentive (“ltI”)
to link executive reward with securityholder
to link executive reward with securityholder
Cash-settled incentive based on achievement of
Cash-settled incentive based on achievement of
value.
value.
an annual board mandated key financial hurdle
an annual board mandated key financial hurdle
paid in three equal annual instalments starting
paid in three equal annual instalments starting
one year after the year of allocation.
one year after the year of allocation.
2 other than the Company Secretary who has a mix of 58%, 21% and 21%
2 other than the Company Secretary who has a mix of 58%, 21% and 21%
APA AnnuAl REPORT 2011
16
16
APA002 Annual Report 2011_v3C.indd 16
7/09/11 11:47 AM
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD APA AnnuAl REPORT 2011 Au strAliA n PiP eline t rust A nd its controlled entities
Directors’ report
continueD
our approach to executive remuneration
What is our executive remuneration strategy?
our executive remuneration strategy is to:
– attract and retain key executives who will create long-term sustainable value for securityholders;
– motivate and reward executives having regard to the overall performance of apa, the performance of the executive measured against pre-determined
objectives and the external compensation environment;
– target at least the market median using external benchmark data;
– appropriately align the interests of executives with those of securityholders; and
– comply with applicable legal requirements and appropriate standards of governance.
We aim to pay competitive remuneration and this is communicated as total Remuneration opportunity (“tRo”).
Total
Remuneration
Opportunity
=
Total Fixed
Remuneration
(TFR)
+
+
Short-term
Incentive
(STI)
Long-term
Incentive
(LTI)
each individual’s tRo is dependent on their level in the organisation and their capacity to influence outcomes.
Performance based ‘at risk’ remuneration
apa’s remuneration mix for senior executives is structured as a mix of fixed remuneration and ‘at risk’ short and long-term incentive components. the proportion
of fixed versus ‘at risk’ remuneration varies at different levels within apa, reflecting the varying capacity of employees to influence apa’s operational performance
For the Chief executive officer and Managing Director and other key management personnel, the remuneration mix is:
40%
30%
30%
‘at risk’ components
50%
25%
25%
What is the remuneration mix?
and returns to securityholders.
Managing Director
Other key management
personnel 2
An overview of remuneration components
each remuneration component has a different purpose:
TFR
STI L
TI
remuneration Component
purpose
HoW reWarD is DeLivereD
total Fixed Remuneration (“tFR”)
to reflect the market value of the role and the
the total of base salary (which includes cash,
individual’s skills and experience.
superannuation guarantee levy, vehicles and
‘at risK’ Components
Short-term incentive (“StI”)
to reward strong performance against the
Cash-based incentive based on a mix of financial
achievement of specific business objectives.
and non-financial key performance indicators
long-term incentive (“ltI”)
to link executive reward with securityholder
Cash-settled incentive based on achievement of
value.
parking) and incidental benefits paid in monthly
instalments.
paid annually after the audited accounts are
approved.
an annual board mandated key financial hurdle
paid in three equal annual instalments starting
one year after the year of allocation.
total Fixed remuneration (“tFr”)
– various financial measures such as cost control, revenue and cash generation
The total of base salary, including cash, superannuation guarantee levy, vehicles
and capital expenditure management. this reflects apa’s strategic goal of
and parking and incidental benefits.
tFR is reviewed annually and is determined by reference to independent
external remuneration benchmarking information, taking into account an
individual’s responsibilities, performance, qualifications and experience.
‘at risk’ remuneration
’at risk’ remuneration is made up of two elements, StI and ltI. Before any StI
payments or ltI allocations are made the organisation must achieve at least the
board approved performance hurdle. each of these components is discussed in
more detail below.
increasing oCFpS over the medium term, thereby increasing securityholder
returns and aligning the interests of StI participants with those of
securityholders; and
– non-financial targets through the delivery of individual KpIs linked to long-
term strategic measures including health, safety and environment targets,
and reinforcement of an ethical and values based culture.
at least 50% of the key management personnels’ KpIs are linked to financial
measures.
How is performance measured?
What is the key performance hurdle for ‘at risk’ remuneration?
operating cash flow per security (”oCFpS”) has been chosen by the board as
the current key performance hurdle for ‘at risk’ remuneration. this is directly
linked to apa’s strategic goal of increasing operating cash flows over the
medium term, thereby improving total securityholder value.
at the beginning of the financial year, the board, at the recommendation of the
Remuneration Committee, determines the appropriate financial and non-
financial KpIs for the Chief executive officer.
the board also reviews the KpIs the Chief executive officer will use to assess
the performance of his direct reports.
using oCFpS as the key performance hurdle ensures the interests of executives
and securityholders are aligned. If the security price rises over the period of
allocation, both parties benefit and likewise if it falls, both are similarly affected.
at the end of the financial year, after the audited financial results are available
and provided that the performance hurdle is met, the board determines the
performance against KpIs of the Chief executive officer and the Chief executive
at the start of the year, the board, having regard to the longer term strategy
officer’s direct reports and approves the StI amounts to be paid.
and annual budget, established the oCFpS gateway that needs to be achieved
before any StI and ltI was triggered. the oCFpS gateway was not changed
over the course of the year.
Short-term incentive (“STI”)
What is the performance hurdle?
StI payments are made from the general operating budget. executives
participating in the StI will not receive any incentive payments unless the
performance hurdle for the financial year is reached and individual KpIs have
A cash-based incentive used to reward strong performance against the
been achieved.
achievement of financial and non-financial targets or key performance indicators.
What is the purpose of the STI plan?
the StI plan is designed to put a proportion of executive remuneration ’at risk’
against meeting key performance indicators (“KpIs”) linked to:
What is the value of the STI opportunity?
the StI amount payable is capped at the StI target amount. that is, the Chief
executive officer’s StI is capped at 30% of tRo and for his direct reports at
25% of tRo3.
‘at risk’ components
all StI payments are made in cash and paid in September of the new financial year following the completion of audit of the annual accounts.
How is the STI reward delivered?
For FY 2011, the StI outcomes are shown in the table below for all key management personnel:
KeY manaGement personneL
sti earneD ($)
sti earneD (%)
sti ForFeiteD ($)
sti ForFeiteD (%)
Michael McCormack
peter Fredricson
Ross Gersbach
Stephen ohl
Mark Knapman
peter Wallace (1)
(1) appointed 4 april 2011. StI has been prorated
621,000
270,750
308,750
201,375
130,706
34,356
90.00
95.00
95.00
89.50
90.25
95.00
69,000
14,250
16,250
23,625
14,122
1,808
10.00
5.00
5.00
10.50
9.75
5.00
2 other than the Company Secretary who has a mix of 58%, 21% and 21%
3 other than for the Company Secretary whose StI is capped at 21% of tRo
APA002 Annual Report 2011_v3C.indd 16
7/09/11 11:47 AM
APA AnnuAl REPORT 2011
16
17
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsDirectors’ report continueD Long-term incentive (“LTI”)
vesting dates. However, participants must remain employed by apa to access
A cash-settled incentive used to link executive reward to securityholder value
the vested benefit.
based on the achievement of key financial measures.
What is the purpose of the LTI?
upon vesting, the ltI is delivered in cash. the cash payment is equal to the
number of reference units vesting on the vesting date multiplied by the 30 day
the ltI plan is designed to put a proportion of executive remuneration at risk
VWap of apa securities immediately prior to the opening of the apa security
against meeting financial targets linked to oCFpS.
this reflects apa’s strategic goal of increasing oCFpS over the medium term,
trading window, following the announcement of apa’s annual financial results
to the aSX. apa provides fully in its accounts for the obligations of the ltI in
thereby increasing total securityholder value and aligning the interests of ltI
the year in which the ltI allocation is made.
participants with those of securityholders.
What form does the LTI take?
What rights are attached to an LTI reference unit?
the ltI is a cash-settled plan and participants are not allocated apa securities.
eligible participants are entitled to an ltI allocation in the form of reference
ltI allocations do not entitle participants to vote at securityholders meetings
units which exactly mirror the value of apa securities. the reference units
or to be paid distributions.
allocated under the ltI plan are not actual apa securities, but notional
securities with a value equivalent to the ltI allocation.
each reference unit is valued at the equivalent of the 30 day volume weighted
average market price (“VWap”) of an apa security immediately prior to the
opening of the apa security trading window, following the announcement of
apa’s annual financial results to the aSX.
What is the value of the LTI opportunity?
no options or other equity instruments are issued to apa employees or
directors under the ltI plan.
actual remuneration received during FY 2011
actual remuneration received by the Chief executive officer and Managing
Director and other key management personnel is defined as the ‘take home’
pay received by them in the relevant year.
ltI participants are advised of their maximum ltI opportunity, expressed as a
actual ltI payments represent the amount of reference units that vested and
percentage of their tRo. the actual individual ltI allocation is determined at
were converted to cash payments to the individual during the year, regardless
the completion of the financial year and is based on oCFpS performance
of when the ltI was initially allocated.
relative to the achievement of the performance target.
What amounts are excluded?
the maximum ltI allocation is capped at 120% of the participant’s maximum
the table below does not show ltI allocations in FY 2011 or previous years that
ltI opportunity.
What is the performance target?
are still subject to performance or employment conditions because those ltI
allocations are still at-risk of forfeiture.
no ltI allocations are made unless apa achieves the target oCFpS and the
the table below sets out actual cash payments made to the relevant key
oCFpS result determines the size of participants’ ltI allocations up to their
management personnel during FY 2011. this table differs from the information
maximum ltI allocation.
How are the LTI allocations delivered?
an ltI allocation vests in three equal instalments over the three financial years
disclosed in note 44 of the financial report for australian pipeline trust and
note 18 of the financial report for apt Investment trust that reflects the total
remuneration earned by key management personnel in FY 2011, but not yet
following the allocation, with the initial one-third vesting at the end of the first
fully paid due to future vesting of ltI earned.
financial year, one-third at the end of the second financial year, and one-third
at the end of the third financial year.
the major differences are in respect of StI entitlements for which the amount
paid in FY 2011 represents the amount earned in FY 2010, and ltI allocations for
as ltI allocations are subject to the achievement of a pre-allocation
which the amounts paid in FY 2011 relate to allocations made in prior years that
performance hurdle, they are not subject to further performance tests at the
have vested in FY 2011.
the following table outlines the actual remuneration received by key management personnel during FY 2011:
KeY manaGement personneL
Michael McCormack (1)
peter Fredricson (2)
Ross Gersbach
Stephen ohl
Mark Knapman
peter Wallace (3)
total
totaL FixeD
remuneration
$
920,000
570,000
650,000
450,000
400,000
73,809
sti
$
538,130
228,125
260,062
181,562
121,180
-
Lti
$
521,984
-
192,660
168,122
67,901
-
3,063,809
1,329,059
950,667
otHer
$
totaL paiD
2011
$
totaL paiD
2010
$
-
-
-
-
-
-
-
1,980,114
798,125
1,102,722
799,684
589,081
73,809
2,146,533
501,800
921,883
642,809
489,600
-
5,343,535
4,702,625
(1) 2010 included a retention payment paid to the Chief executive officer as agreed by the board in 2006 when the organisation was under threat of takeover by the then alinta energy
(2) peter Fredricson joined apa as CFo in June 2009. ltI earned for FY 2010 and FY 2011 but not paid until future years are disclosed in the financial report
(3) peter Wallace joined apa as Group Manager Human Resources on 4 april 2011. StI and ltI earned for FY 2011 but not paid until future years are disclosed in the financial report
18
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD APA AnnuAl REPORT 2011 Current Lti reference units outstanding
the following table sets out the number of reference units that have been allocated to key management personnel but have not yet vested or been paid, and the
years in which they will vest, based on an estimated VWap of $3.9760:
KeY manaGement personneL
Michael McCormack
peter Fredricson
Ross Gersbach
Stephen ohl
Mark Knapman
peter Wallace (3)
BaLanCe oF
reFerenCe units
(1)
615,599
166,780
282,241
204,260
124,135
10,920
(2)
2011
189,901
26,921
82,558
62,419
32,901
-
vestinG Year
2012
220,638
55,593
103,598
74,224
47,471
3,640
2013
135,643
55,595
63,388
44,981
29,192
3,640
2014
69,417
28,671
32,697
22,636
14,571
3,640
(1) Includes reference units subject to allocation by the board in august 2011
(2) Reference units multiplied by 30 day VWap to be paid as cash in September 2011
(3) peter Wallace joined apa as Group Manager Human Resources in april 2011
executive contracts
the terms of the contractual arrangements for each of the key management personnel are set out below:
name anD titLe anD CommenCement Date
term anD termination provisions/BeneFits
no defined term.
on termination with cause or following long-term illness or incapacity, apa will pay any tFR due and owing at
the date of termination and any accrued leave entitlements.
on termination without cause, apa will pay 52 weeks tFR, any incentives earned but not paid on their due date
and any accrued leave entitlement. apa will also pay any tRo due and owing at the date of termination.
Mr McCormack is required to give apa one months notice.
no defined term.
on termination with cause or following long-term illness or incapacity, apa will pay any tFR due and owing at
the date of termination and any accrued leave entitlements.
on termination without cause, apa will pay 26 weeks tFR, any incentives earned but not paid on their due date
and any accrued leave entitlement. apa will also pay any tRo due and owing at the date of termination.
Mr Fredricson is required to give apa three months notice.
no defined term.
on termination with cause or following long-term illness or incapacity, apa will pay any tFR due and owing at
the date of termination and any accrued leave entitlements.
on termination without cause, apa will pay 26 weeks tFR, any incentives earned but not paid on their due date
and any accrued leave entitlement. apa will also pay any tRo due and owing at the date of termination.
If Mr Gersbach gives notice to terminate his employment, apa may (after consulting with the board) at its
discretion agree to make a termination payment of an amount up to 26 weeks tFR.
Mr Gersbach is required to give apa three months notice.
no defined term.
on termination with cause or following long-term illness or incapacity, apa will pay any tFR due and owing at
the date of termination and any accrued leave entitlements.
on termination without cause, apa will pay 26 weeks tFR, any incentives earned but not paid on their due date
and any accrued leave entitlement. apa will also pay any tRo due and owing at the date of termination.
If Mr ohl gives notice to terminate his employment, apa may (after consulting with the board) at its discretion
agree to make a termination payment of an amount up to 26 weeks tFR.
Mr ohl is required to give apa six months notice.
michael mcCormack
Managing Director
since 1 July 2006
Chief Executive Officer
1 July 2005 to 30 June 2006
Commenced 1 March 2000.
peter Fredricson
Chief Financial Officer
Commenced 1 June 2009.
ross Gersbach
Group Manager Commercial
Commenced 1 February 2008.
stephen ohl
Group Manager Operations
Commenced 2 May 2005.
19
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsDirectors’ report continueD name anD titLe anD CommenCement Date
term anD termination provisions/BeneFits
mark Knapman
Company Secretary
Commenced 16 July 2008.
no defined term.
on termination with cause or following long-term illness or incapacity, apa will pay any tFR due and owing at
the date of termination and any accrued leave entitlements.
on termination without cause, apa will pay 26 weeks tFR, any incentives earned but not paid on their due date
and any accrued leave entitlement. apa will also pay any tRo due and owing at the date of termination.
Mr Knapman is required to give apa three months notice.
peter Wallace
no defined term.
General Manager Human Resources
Commenced 4 april 2011
on termination with cause or following long-term illness or incapacity, apa will pay any tFR due and owing at
the date of termination and any accrued leave entitlements.
on termination without cause, apa will pay 26 weeks tFR, any incentives earned but not paid on their due date
and any accrued leave entitlement. apa will also pay any tRo due and owing at the date of termination.
Mr Wallace is required to give apa three months notice.
remuneration advisers
During FY 2011, the following remuneration information was sought:
– egan & associates were appointed by the Chairman of the Remuneration
Committee to provide remuneration benchmarking information for all
directors;
– ernst & Young were appointed by the Chairman of the Remuneration
Committee to provide benchmarking information for the Chief executive
auDitor’s inDepenDence Declaration
a copy of the auditor’s independence declaration as required under section
307C of the Corporations act 2001 is included on page 86.
rounDing of amounts
apa is an entity of the kind referred to in aSIC Class order 98/0100 dated
10 July 1998 and, in accordance with that Class order, amounts in the directors’
report and the financial report are rounded to the nearest thousand dollars,
officer and Managing Director and key management personnel; and
unless otherwise indicated.
Signed in accordance with a resolution of the directors of the Responsible
entity made pursuant to section 298(2) of the Corporations act 2001.
on behalf of the directors
– both those advisers were engaged directly on instruction by the committee,
reported directly to the committee and were independent and free from
influence by key management personnel.
information requireD for
registereD schemes
Fees paid to the Responsible entity and its associates (including directors and
secretaries of the Responsible entity, related bodies corporate and directors
and secretaries of related bodies corporate) out of apa scheme property
during the year are disclosed in note 45 to the financial statements.
Leonard Bleasel am
except as disclosed in this report, neither the Responsible entity nor any of its
Chairman
associates holds any apa securities.
SYDneY, 24 august 2011
the number of apa securities issued during the year, and the number of apa
securities at the end of the year, are disclosed in note 28 to the financial
statements.
the value of apa’s assets as at the end of the year is disclosed in the balance
sheet in total assets, and the basis of valuation is included in note 3 to the
financial statements.
robert Wright
Director
20
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD APA AnnuAl REPORT 2011 corporate governance statement
apa Group (“apa”) comprises two registered investment schemes, australian
the board annually, and were last reviewed in July 2011.
pipeline trust and apt Investment trust, the securities in which are “stapled”
together, and their controlled entities.
the board delegates responsibility for implementing the strategic direction and
managing the day-to-day operations of apa to the Managing Director. the
australian pipeline limited (“Responsible entity”) is the responsible entity of
Managing Director consults with the Chairman, in the first instance, on matters
those trusts and is responsible for apa’s corporate governance practices.
that are sensitive, extraordinary or of a strategic nature.
the aSX Corporate Governance Council’s Corporate Governance principles and
non-executive directors’ letter of appointment
Recommendations articulate eight core principles of good corporate
the current non-executive directors have each received a letter of appointment
governance and, for each of those principles, recommendations as to their
documenting, among other issues:
implementation. adoption of the Council’s recommendations is not compulsory.
However, under the listing Rules of aSX limited (“aSX”) companies are
required to provide a statement in their annual report disclosing the extent to
which they have followed the recommendations in the reporting period and,
where companies have not followed all the recommendations, they must
identify which ones they have not followed and give reasons for not following
them.
– the roles and responsibilities of the board and each of its committees;
– expectations of the time commitment to be made by directors in serving on
the board and its committees, and of their participation in an annual review
of the board, its committees and individual directors;
– requirements with respect to the disclosure of directors’ interests;
– the fees payable to the directors; and
– key policies that directors are required to comply with, such as apa’s
In 2010, the aSX Corporate Governance Council released amendments to the
securities trading policy.
Corporate Governance principles and Recommendations relating to diversity
(in particular, gender diversity on boards and with respect to senior
management and other employees), share trading policies, shareholder
communications and remuneration committees. those amendments will apply
to companies with a July/June financial year from and including the year
management: service contracts, induction and performance evaluations
the Managing Director, Chief Financial officer and other senior management
have service contracts setting out their responsibilities, conditions of service
and termination entitlements.
ending 30 June 2012 with appropriate disclosures to be made in the 2012
newly appointed senior executives complete an induction program on the
annual report, but apa has decided to report against those amendments in this
management of the business covering topics that include financial matters,
statement.
each of the principles of good corporate governance has been responded to in
turn in this statement and the table at the rear of this statement provides a
checklist of apa’s adoption of the aSX Corporate Governance Council’s
strategic direction, operations, risk management, health and safety,
environmental issues and governance matters. apa also conducts annual
processes relating to talent and succession management, and the development
of leadership capabilities.
recommendations. explanations for departures from the recommendations are
apa has processes in place to review the performance of senior management.
set out in this statement.
Various references are made below to apa’s website as a source of information
on corporate governance practices and documentation. the home page for
apa’s website is www.apa.com.au, and the link entitled “about apa” leads to
the corporate governance material. Securityholders who do not have internet
each senior executive, including the Managing Director, has personal objectives
as well as objectives related to the performance of business or functional units
and apa as a whole. they are reviewed against those objectives at least
annually. a performance review of senior management has been conducted
during the Reporting period.
access but wish to read that material should telephone 1800 992 312 (or +61 2
performance evaluation of the Managing Director is handled by the Chairman
8280 7132, if calling from outside australia) and ask for a copy of the relevant
with the assistance of the Remuneration Committee and a report is provided to
material to be sent to them.
In this statement the term “Reporting period” means the period of 12 months
to 30 June 2011.
prinCipLe 1: LaY soLiD FounDations For manaGement anD
oversiGHt
Board and its committees
the board of directors of the Responsible entity (“board”) is accountable to
securityholders for the proper management of apa’s business and affairs. It
and reviewed by the board. assessment and monitoring of the performance of
other senior executives are handled by the Managing Director who reports on
those matters to the Chairman and the Remuneration Committee.
prinCipLe 2: struCture tHe BoarD to aDD vaLue
Board membership
the board determines its size and composition, subject to limits imposed by
the Responsible entity’s constitution. the constitution provides for a minimum
of three directors and a maximum of 12.
operates in accordance with a charter, which is published on apa’s web site.
the names of the current directors and their experience, terms of office and
the board normally meets 11 times each year, with additional meetings being
held as required. the number of times it met during the Reporting period and
membership of board committees are set out in the directors’ report for the
Reporting period.
directors’ attendance at those meetings are set out in the directors’ report for
the composition of the board is determined in accordance with the following
that period.
principles:
to assist the board in carrying out its responsibilities, the following standing
– a majority of the board will be comprised of independent directors;
committees of its members have been established:
– the Chairman will be an independent director; and
– audit and Risk Management Committee;
– Remuneration Committee; and
– Health Safety and environment Committee.
each committee has its own charter that describes the roles and responsibilities
delegated to the committee by the board, and those charters are published on
– a person cannot hold the positions of both Chairman and Chief executive
officer.
under the Responsible entity’s constitution, petronas australia pty limited is
entitled to appoint one director of the Responsible entity while the petronas
Group holds not less than 10% of the issued securities in apa.
apa’s web site. the charters for the board and its committees are reviewed by
the Responsible entity’s constitution requires one-third of its directors
21
APA AnnuAl REPORT 2011 (excluding the Managing Director, the petronas-appointed director and any
candidates from diverse backgrounds.
director who is standing for re-election after having been appointed as an
additional director or to fill a vacancy) to retire from office at the annual general
meeting of the Responsible entity each year. If the calculation of that one-third
is not a whole number, the number of directors required to retire by this
“rotation” process is rounded to the nearest whole number. Retiring directors
are eligible for re-election.
the Responsible entity’s constitution also provides that if the board appoints a
director to fill a vacancy or as an addition to the board, the new director will
hold office until the end of the next annual general meeting of the Responsible
entity and is eligible for re-election.
securityholders’ right to nominate a director and to vote on nominees
the Deed poll executed by the Responsible entity in 2004 (a copy of which is
available on apa’s web site) affords apa securityholders certain rights in
respect to nominees for the position of director on the board.
at least 60 days before annual general meetings of the Responsible entity,
securityholders are notified by an announcement to aSX that they may
nominate a person to fill a vacancy on the board that arises on retirement of
either a director under the “rotation” process or a director appointed by the
board since the last annual general meeting.
If securityholders wish to exercise that right, at least 45 days before the annual
general meeting they must send the Responsible entity a signed nomination
form and the nominee’s signed consent to act as a director.
the Responsible entity advises securityholders of all candidates who have
been validly nominated and presents its nominations to the annual meeting of
securityholders.
independence of directors
the board assesses the
independence of non-executive directors on
appointment and annually having regard to the independence of directors
policy (published on apa’s web site).
the directors’ report for the Reporting period identifies which directors are
considered to be independent at the date of the report. a majority of the
current directors are independent.
selection and appointment of directors
the former nominations and Remuneration Committee of the board became
the Remuneration Committee in early 2008 so that the functions with respect
to selection and appointment of new directors and related matters previously
handled by that committee then reverted to the board. ultimate responsibility
the Chairman conducts an initial interview of the short-listed candidates and,
subject to them being available for and interested in the position, they are then
interviewed by the board. the board assesses potential candidates against the
predefined requirements and also considers their qualifications, backgrounds
and personal qualities before the new director is appointed.
In the interest of gender diversity, the board has determined that the short-
listed candidates for an available board position must include at least one
qualified female candidate and, where a search firm is engaged, the board will
instruct them accordingly.
annual review of performance of the board, its committee and directors
a review process to assess the performance of the board, its committees and
individual directors is undertaken each year. the last review was conducted in
September 2010 and the review for the Reporting period will be completed in
october 2011.
each director completes a questionnaire, the responses are collated and the
board then meets to discuss and consider the results of that process and to
determine any actions arising from the review. the Chairman also meets with
each director to discuss the review and the director’s own performance.
Matters covered by the review include the role and performance of the board
and its committees, directors’ understanding of apa’s long-term objectives and
key risks to the business and achievement of those objectives, succession
planning and the effectiveness of the Chairman in leading the board.
Directors’ access to records and information, management and professional
advice
Subject to normal privacy requirements, directors have access to apa’s records
and information, and to the Company Secretary and other relevant senior
management personnel. they receive regular detailed reports on financial and
operational aspects of apa’s business and may request elaboration or
explanation of those reports.
While most board meetings are held in Sydney, where apa’s head office is
located, some are held in other locations where apa has a presence, providing
directors with the opportunity to receive presentations from and speak to local
apa employees about the business and to inspect apa’s assets and facilities.
the board collectively, and each director individually, may seek independent
professional advice at apa’s expense. prior approval of the Chairman is
required, but this may not be unreasonably withheld.
for such matters rests with the full board and the board considers the efficient
Directors and senior management are encouraged to broaden their knowledge
handling of those matters is not diminished by the absence of a nominations
of apa’s business and to keep abreast of developments in business more
Committee.
generally by attending relevant courses, seminars and conferences. Where
appropriate, apa will meet expenses involved in such activities.
the board considers that a diverse range of skills, experience and backgrounds
is required on the board to effectively govern the business. It determines and
prinCipLe 3: promote etHiCaL anD responsiBLe DeCision-maKinG
reviews from time to time the mix of skills and diversity that it looks to achieve
Code of conduct and policies
in its membership. Having regard to the nature of apa’s business, that mix
the board and senior management are firmly committed to ensuring that they
includes financial, strategic, operational,
legal, regulatory and general
and all employees observe high standards of ethical behaviour and conduct.
commercial expertise.
apa’s code of conduct sets out the behaviour required of directors and
When looking to appoint a new director, the board predefines the skills and
employees and recognises the responsibilities of apa and its personnel to
experience required of candidates for the role to ensure that the required mix
securityholders, customers, suppliers, employees and the community. It also
of skills and experience will be represented on the board and, based on that
requires that breaches of the code are reported and provides a mechanism to
work, seeks a list of potential candidates believed to satisfy those requirements.
enable breaches to be reported without fear of retribution. the code is
If the board is not satisfied with the quality or diversity of the candidates
published on apa’s web site.
identified in that process, it may consider it appropriate to instruct a search
a number of apa’s policies aim to foster a culture of compliance and ethical
firm to identify additional suitable candidates. the board recognises that an
and responsible decision-making. apa’s whistleblower policy encourages the
experienced search firm with a clear brief from the board as to the required
reporting of matters of concern and suspected wrongdoing, such as dishonest
characteristics of candidates can assist in identifying potentially suitable
or fraudulent conduct, breaches of legislation and other conduct that may
22
corporate governance statement continued APA AnnuAl REPORT 2011 cause financial loss to apa or be otherwise detrimental to its reputation or
the following table sets out the proportion of women on the board and in
interests, and describes the protection to be afforded to whistleblowers who
senior management positions, and the proportion of women employees across
report such conduct against reprisals, discrimination, harassment or other
apa:
disadvantage resulting from their reports.
apa’s securities trading policy, published on its web site, provides that directors
directors
and designated management personnel may buy or sell apa securities only
Women in senior management positions (General Manager and
during:
above), as a percentage of the total number of those roles
Women on the board, as a percentage of the total number of
12.5%
9%
– the periods, each of one calendar month, starting on the second business
Women employees across apa, as a percentage of total employees
25%
day after each of three events, namely the release to aSX of the half year
and full year results and apa’s annual meeting of securityholders; and
– at such other times as the board permits,
prinCipLe 4: saFeGuarD inteGritY in FinanCiaL reportinG
unless exceptional circumstances apply. Directors and employees are precluded
from buying or selling securities at any time if they are aware of any price-
sensitive information which has not been made public.
Diversity
Changes made to the aSX Corporate Governance Council’s principles and
Recommendation in 2010 include the recommendation that companies
establish a diversity policy that includes requirements for the board to establish
audit and risk management Committee
the board has established an audit and Risk Management Committee, the
composition of which is determined in accordance with the following principles:
– the committee will have at least three members;
– all members of the committee will be independent, non-executive directors;
and
– the committee Chairman cannot also be the Chairman of the board.
measureable objectives for achieving gender diversity and to assess annually
the directors’ report for the Reporting period identifies the current members of
both the objectives and progress in achieving them.
apa values diversity and recognises that to continue to be a relevant and
innovative organisation, it must leverage the full potential of its people.
the committee and their qualifications and experience. the Chairman of the
board, although not a member of the committee, usually attends committee
meetings.
embracing individual diversity encourages diversity of thought, which is
the roles and responsibilities delegated to the committee are set out in the
conducive to better decision-making and opportunity for innovation. It is also
committee’s charter which is published on apa’s web site.
about taking advantage of all available talent for the benefit of the organisation.
Diversity in this context refers to all characteristics that distinguish individuals
from each other, and includes ethnicity, religion, gender and age.
the Managing Director, Chief Financial officer, Company Secretary, Business
Risk Manager, other senior management personnel, as required, and the
external and internal auditors attend committee meetings at the discretion of
Historically, the industry in which apa operates has been dominated by men, to
the committee. the external and internal auditors receive all committee papers
a greater degree than some other industries. today, approximately 75% of
and regularly meet with the committee, without management present, at
apa’s employees are involved in operating and maintaining apa’s and third
committee meetings.
parties’ gas and pipeline and infrastructure assets and that many of those roles
require physical, field-based work has meant they have been predominantly
filled by men.
the minutes of each meeting of the audit and Risk Management Committee
are reviewed at the subsequent meeting of the board and the committee
Chairman reports to the board on the committee’s activities and
apa is nevertheless committed to increasing the number of women in its
recommendations.
workforce and the pool of talented women from which managers are drawn.
the committee is required by its charter to meet at least four times each year.
under apa’s equal employment opportunity policy, employment-related
the number of times it met during the Reporting period and the committee
decisions are based on merit, with an additional emphasis towards proactively
members’ attendance at those meetings are set out in the directors’ report for
seeking to increase the female participation rate in senior management. With
that period.
respect to the board, it is apa’s intention, when looking to fill a board position,
to always have at least one qualified female candidate on the short-list of
candidates.
audit functions and independence of external auditor
apart from reviewing the integrity of apa’s financial reporting, the committee
receives reports from the external and internal auditors, monitors their
apa operates a talent program through which future leaders, both men and
effectiveness and the independence of the external auditor, and makes
women, are identified and developed with a range of training programs with a
recommendations to the board on the appointment or replacement (subject to
view to them moving into leadership roles in the future.
securityholders’ approval, if applicable) of the external auditor.
apa respects that employees may have domestic responsibilities and seeks to
the external auditor appointment and independence policy (published on
retain such employees in the workforce, for example through its paid parental
apa’s web site) documents the process for appointment of the auditor and for
leave policy and flexible workplace practices policy. the latter provides a
monitoring the auditor’s independence. pursuant to that policy, the lead
process where managers and employees can discuss and assess suitable
partner and the review or concurring partner of the external auditor must be
workplace practices that enable employees to balance personal commitments,
rotated at least every five years, followed by a two year minimum time-out
while also ensuring their work commitments are not negatively impacted,
period during which they may not take part in the audit. apa’s auditor is
through options such as permanent part-time work, job share arrangements,
Deloitte touche tohmatsu and Greg Couttas of that firm was appointed the
working from home and flexible working hours.
lead audit partner for the apa audit in December 2009.
apa is considering what, if any, measurable objectives may be appropriate with
the external auditor’s independence could be impaired or compromised, or be
respect to the achievement of gender diversity on the board and within apa,
interpreted as being impaired or compromised, through the provision of some
and expects to resolve that issue, and to develop a diversity policy, over the
non-audit services or by the quantum of fees paid to the auditor for such
course of the current financial year.
services. accordingly, the audit and Risk Management Committee has
23
APA AnnuAl REPORT 2011corporate governance statement continued approved a list of non-audit services that the external auditor may perform and
at the annual meeting the Chairman encourages questions and comments
the process for those services being approved, identified a list of prohibited
from securityholders and seeks to ensure the meeting is managed to give
services and determined a maximum dollar limit on any non-audit services
securityholders an opportunity to participate. In the interests of clarity,
provided by the auditor in any financial year.
reimbursement of responsible entity’s costs
the Responsible entity’s costs incurred in acting as responsible entity of
australian pipeline trust and apt Investment trust are reimbursed by apa. the
actual cost recovery in the Reporting period was $2,238,000. the Responsible
entity does not make a profit, nor seek performance fees.
the constitutions of australian pipeline trust and apt Investment trust enable
the Responsible entity to charge fees up to 0.5% per annum of the value of
gross assets; however, the right to charge such fees has been waived to the
extent it exceeds the Responsible entity’s costs.
prinCipLe 5: maKe timeLY anD BaLanCeD DisCLosure
questions on operational matters may be answered by the Managing Director
or another appropriate member of senior management. Securityholders are
also invited to send written questions ahead of the meeting and, where there is
a common theme to a number of questions, either the Chairman or the
Managing Director will commonly seek to provide an answer in their address.
the external auditor attends the annual meetings and is available to respond to
questions from securityholders about the conduct of the audit and the
preparation and content of the independent audit report.
the 2011 annual meeting of securityholders will be held in Sydney on 27 october
2011. a notice of that meeting and a proxy form will be sent to securityholders
some weeks before the meeting, and details of the meeting are also available
apa’s market disclosure policy, published on apa’s web site, aims to ensure
from apa’s web site.
that information that a person could reasonably expect to have a material
effect on the apa security price, whether the information is positive or
negative, is announced to the market by release to aSX in accordance with the
aSX listing Rules and the Corporations act 2001.
the Company Secretary is the nominated continuous disclosure officer.
prinCipLe 7: reCoGnise anD manaGe risK
the identification and effective management of risk, including calculated risk-
taking, are viewed as an essential part of apa’s approach to creating long-term
securityholder value.
the board is responsible for adopting and reviewing apa’s approach to the
all aSX announcements are posted on apa’s web site as soon as reasonably
identification, evaluation and management of business risks that are material to
possible after notification to aSX.
the fulfilment of apa’s business objectives.
prinCipLe 6: respeCt tHe riGHts oF sHareHoLDers
the board has delegated certain activities to its audit and Risk Management
Communications with securityholders
Committee, the charter for which is published on apa’s web site. With respect
apa aims to ensure its securityholders are informed of all significant
to business risk, the committee’s primary function is to maintain and oversee a
developments affecting apa’s state of affairs and business. Information is
sound system of internal risk management controls based on the board’s
communicated to securityholders by a number of means, including the
adopted risk management approach.
following:
Specific risk management responsibilities of the audit and Risk Management
– an annual statutory report (comprising the financial report, directors’ report
Committee include:
and audit report) sent to securityholders who have elected to receive the
report;
– reviewing and approving apa’s updated risk profile, and risk management
– an annual review sent to securityholders who elect to receive either the
policy and framework;
statutory report or the annual review alone;
– reviewing at least annually apa’s implementation of the risk management
– a biannual newsletter sent to securityholders who have not elected to
policy and framework; and
receive the annual report, and to all securityholders on the announcement
– receiving and reviewing management’s report on the effectiveness of risk
of the half year results;
management and internal control systems and otherwise monitoring the
– the interim (half yearly) report and directors’ commentary on that report;
effectiveness of the risk management framework and the system of internal
– announcements to aSX and media releases;
control, and progress against agreed risk management plans.
– “open Briefings” prepared from time to time to provide an update to
investors, and released to aSX;
– analyst briefings and investor presentations released to aSX;
– the Investor Centre section of apa’s web site on which the reports, aSX and
the Managing Director is accountable for ensuring that a risk management
system is established, implemented and maintained in accordance with apa’s
risk management policy and framework.
media releases, presentations and other documents referred to above are
Senior management is accountable for risk management within the areas
posted;
– the annual meeting of securityholders; and
– webcasting of half year and full year results presentations, the annual
meeting and announcements of major events.
under their control, including devolution of the risk management process to
operational managers, and is responsible for:
– reviewing the measures of risk impact severity that underlies the
identification of material business risks, to ensure the measures remain
Securityholders and others may elect on apa’s web site to receive aSX and
current to apa’s context;
media announcements and newsletters by email.
annual meeting of securityholders
apa encourages securityholders to participate in its annual meetings. a notice
– identifying material business risks that may impact on apa’s business plans
and objectives and the development, implementation, performance and
review of risk management plans. In doing so, senior management considers
of annual meeting setting out the agenda for the meeting and explaining
both financial
risk and non-financial
risk,
including operational,
resolutions on which securityholders may vote is sent to all securityholders and
environmental, strategic, market related, compliance and reputation risk;
to aSX prior to the meeting. Securityholders who cannot attend a meeting in
– aggregating operational risk data across apa, and monitoring external
person may appoint a proxy and may also read the Chairman and Managing
factors, to facilitate monitoring of apa’s risk profile; and
Directors’ addresses that are sent to aSX and posted on apa’s web site, and
– contributing advice, leadership and facilitation in the development of
listen to a web cast of the meeting available through the web site.
group-wide risk control solutions.
24
corporate governance statement continued APA AnnuAl REPORT 2011 the Business Risk Manager, who reports to the Company Secretary and usually
the roles and responsibilities delegated to the Remuneration Committee are
attends meetings of the audit and Risk Management Committee, is responsible
set out in the committee’s charter which is published on apa’s web site.
for:
the Managing Director attends meetings of the committee by invitation when
– overseeing and facilitating the co-ordination of the risk management
required to report on and discuss senior management performance and other
activities of senior management;
remuneration matters.
– reporting regularly to the audit and Risk Management Committee on apa’s
risk profile and the implementation and effectiveness of risk management
plans;
the committee Chairman reports to the board on the committee’s activities
and recommendations.
– contributing leadership and facilitation of the implementation of group-
the committee is required by its charter to meet at least twice each year. the
wide risk control solutions; and
number of times it met during the Reporting period and the committee members’
– working with senior management to design and develop risk education and
attendance at those meetings are set out in the directors’ report for that period.
communication forums.
external advice
apa’s management has reported to the audit and Risk Management Committee
the committee can seek external professional advice on any matter within its
as to its assessment of the effectiveness of management by apa of its material
terms of reference. as stated in apa’s remuneration report referred to below,
risks.
In the course of approving the financial statements for the Reporting period,
the board considered a written statement from the Chief executive officer and
independent remuneration consultants were engaged by the Chairman of the
Remuneration Committee to review non-executive director and executive
compensation during the Reporting period.
the Chief Financial officer to the effect that, to the best of their knowledge and
remuneration report
belief, their declaration pursuant to section 295a of the Corporations act 2001
(broadly, that the financial statements give a true and fair view in all material
respects of apa’s financial position and comply in all material respects with
relevant accounting standards) is founded on a sound system of risk
management and internal control and that system is operating effectively in all
material respects in relation to financial reporting risks, based on the
management framework adopted by apa.
prinCipLe 8: remunerate FairLY anD responsiBLY
remuneration Committee
the Corporations act 2001 does not require registered investment schemes like
australian pipeline trust and apt Investment trust to include a remuneration
report as part of the annual directors’ report, but apa has chosen to do so for
the Reporting period and prior periods.
the remuneration report sets out details of apa’s policies with respect to
remuneration of non-executive directors, the Managing Director and other key
management personnel, together with details of the components of
remuneration and total remuneration paid to those individuals over the
Reporting period.
the board has established a Remuneration Committee to consider and make
recommendations to the board on, among other things, remuneration policies
retirement benefits
applicable to board members and senior management.
the composition of the Remuneration Committee is determined in accordance
with the following principles:
– the committee will have at least three members;
In 2003 the board terminated the non-executive directors’ retirement benefit
plan so that the benefits to participating directors that had accrued up to
termination were then quantified and preserved for payment on retirement of
those directors. under the plan, after three years service a director was entitled
to the equivalent of the emoluments received over the most recent 12 months.
– all members of the committee will be non-executive directors and a majority
after 10 years service, the entitlement increased to the equivalent of
of them will be independent directors; and
emoluments received during the most recent three years. no additional
– the committee Chairman will be an independent director.
entitlement accrued after 10 years. For periods between three and 10 years, the
the directors’ report for the Reporting period identifies the current members of
entitlement was calculated on a pro-rata basis.
the committee and their qualifications and experience. the Chairman of the board,
Robert Wright is the only current director entitled to benefit under the plan on
although not a member of the committee, usually attends committee meetings.
retirement from the board.
Corporate GovernanCe prinCipLes anD reCommenDations issueD BY asx Corporate GovernanCe CounCiL
CompLY
Yes/no
prinCipLe 1: LaY soLiD FounDations For manaGement anD oversiGHt
Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions Yes
1.1
1.2
1.3
Companies should disclose the process for evaluating the performance of senior executives
Companies should provide the information indicated in the Guide to reporting on principle 1
prinCipLe 2: struCture tHe BoarD to aDD vaLue
a majority of the board should be independent directors
the chair should be an independent director
the roles of chair and chief executive officer should not be exercised by the same individual
the board should establish a nomination committee
Companies should disclose the process for evaluating the performance of the board, its committees and individual directors
Companies should provide the information indicated in the Guide to reporting on principle 2
2.1
2.2
2.3
2.4
2.5
2.6
note
1.
the board has chosen not to have a separate nomination committee, as explained in the section of this statement entitled “principle 2: Structure the board to add value” under the
heading “Selection and appointment of directors”
25
Yes
Yes
Yes
Yes
Yes
no (note 1)
Yes
Yes
APA AnnuAl REPORT 2011corporate governance statement continued prinCipLe 3: promote etHiCaL anD responsiBLe DeCision-maKinG
3.1
Companies should establish a code of conduct and disclose the code or a summary of that code as to:
– the practices necessary to maintain confidence in the company’s integrity
– the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders
– the responsibility and accountability of individuals for reporting and investigating reports of unethical practices
CompLY
Yes/no
Yes
3.2
Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. the policy should include
no (note 2)
requirements for the board to establish measurable objectives for achieving gender diversity for the board to assess annually both the
objectives and progress in achieving them
3.3
Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in
no (note 2)
accordance with the diversity policy and progress towards achieving them
3.4
Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior
Yes
management positions and women on the board.
3.3
Companies should provide the information indicated in the Guide to reporting on principle 3
prinCipLe 4: saFeGuarD inteGritY in FinanCiaL reportinG
4.1
4.2
4.3
4.4
the board should establish an audit committee
the audit committee should be structured so that it:
– consists only of non-executive directors
– consists of a majority of independent directors
– is chaired by an independent chair, who is not chair of the board
– has at least three members
the audit committee should have a formal charter
Companies should provide the information indicated in the Guide to reporting on principle 4
Yes
Yes
Yes
Yes
Yes
prinCipLe 5: maKe timeLY anD BaLanCeD DisCLosure
5.1
Companies should establish written policies designed to ensure compliance with aSX listing Rule disclosure requirements and to
Yes
ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies
5.2
Companies should provide the information indicated in the Guide to reporting on principle 5
Yes
prinCipLe 6: respeCt tHe riGHts oF sHareHoLDers
6.1
Companies should design a communications policy for promoting effective communication with shareholders and encouraging their
Yes
participation at general meetings and disclose their policy or a summary of that policy
6.2
Companies should provide the information indicated in the Guide to reporting on principle 6
Yes
prinCipLe 7: reCoGnise anD manaGe risK
7.1
Companies should establish policies for the oversight and management of material business risks and disclose a summary of those
Yes
policies
7.2
the board should require management to design and implement the risk management and internal control system to manage the
Yes
company’s material business risks and report to it on whether those risks are being managed effectively. the board should disclose that
management has reported to it as to the effectiveness of the company’s management of its material business risks
7.3
the board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial
Yes
officer (or equivalent) that the declaration provided in accordance with section 295a of the Corporations act is founded on a sound
system of risk management and internal control and that the system is operating effectively in all material respects in relation to
financial reporting risks
7.4
Companies should provide the information indicated in the Guide to reporting on principle 7
prinCipLe 8: remunerate FairLY anD responsiBLY
8.1
8.2
the board should establish a remuneration committee
the remuneration committee should be structured so that it:
– consists of a majority of independent directors
– is chaired by an independent director
– has at least three members
Yes
Yes
Yes
8.3
Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior
Yes
executives
Companies should provide the information indicated in the Guide to reporting on principle 8
Yes
8.4
note
2. Refer to the section of this statement entitled “principle 3: promote ethical and responsible decision-making” under the heading “Diversity”
26
corporate governance statement continued APA AnnuAl REPORT 2011 auS tR a lIa n p Ipe lIne tR uS t anD It S C ontRolleD entItIeS
statement of comprehensive income
For the financial year ended 30 June 2011
ContinuinG operations
Revenue
Share of net profits of associates and jointly controlled entities
accounted for using the equity method
asset operation and management expenses
Depreciation and amortisation expense
other operating costs - pass-through
Finance costs
employee benefit expense
other expenses
profit before tax
Income tax expense
profit for the year
other comprehensive income
(loss)/gain on available-for-sale investments taken to equity
(loss)/gain on cash flow hedges
Gain/(loss) on associate hedges taken to equity
actuarial gain/(loss) on defined benefit plan
Income tax relating to other comprehensive income components
other comprehensive income/(expense) in the year (net of tax)
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
2010
$000
note
6
6
7
7
7
7
7
9
1,078,113
975,803
63,019
50,295
23,876
1,101,989
(82,190)
(100,350)
(381,733)
(260,004)
(114,923)
(18,102)
144,687
(35,862)
108,825
29,643
(35,492)
(2,100)
3,072
2,606
(2,271)
13,687
989,490
(75,959)
(91,426)
(329,942)
(243,235)
(97,859)
(11,889)
139,180
(38,672)
100,508
(389)
294
13,622
(8,153)
(16,651)
34,471
-
63,019
-
50,295
-
-
-
(45)
-
(31)
62,943
(3,555)
59,388
-
-
-
-
-
(4,965)
45,330
(5,236)
40,094
880
1,444
-
-
-
(263)
617
-
-
-
(62)
1,382
total comprehensive income for the year
106,554
134,979
60,005
41,476
profit attributable to:
equityholders of the parent
Minority interest - apt Investment trust equityholders
apa stapled securityholders
Minority interest - other
total comprehensive income attributable to:
equityholders of the parent
Minority interest - apt Investment trust equityholders
apa stapled securityholders
Minority interest - other
69,585
38,924
108,509
316
62,584
37,774
100,358
150
59,388
40,094
-
-
59,388
40,094
-
-
108,825
100,508
59,388
40,094
67,314
38,924
106,238
316
106,554
95,710
39,119
134,829
150
134,979
60,005
-
60,005
-
60,005
41,476
-
41,476
-
41,476
earninGs per seCuritY
Basic and diluted (cents per security)
35
19.7
19.4
Diluted earnings per security is exactly the same as basic earnings per security.
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
27
APA AnnuAl REPORT 2011 auS tR alIa n pIp elIn e t R uS t anD It S C ontRolleD entItIeS
statement of financial position
as at 30 June 2011
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
note
Current assets
Cash and cash equivalents
trade and other receivables
Inventories
other
total current assets
non-Current assets
Receivables
other financial assets
Investments accounted for using the equity method
property, plant and equipment
Goodwill
other intangible assets
Deferred tax assets
other
total non-current assets
total assets
Current LiaBiLities
trade and other payables
Borrowings
other financial liabilities
provisions
other
total current liabilities
non-Current LiaBiLities
Borrowings
other financial liabilities
Deferred tax liabilities
provisions
other
36
11
12
13
14
15
16
17
18
19
9
20
21
22
23
24
25
26
27
9
24
25
95,368
145,698
11,076
3,357
255,499
25,860
182,282
479,409
80,940
142,529
10,698
3,757
237,924
21,402
129,185
403,528
3,768,342
3,483,328
515,344
192,903
-
7,966
520,779
179,282
-
7,008
2010
$000
293
485
-
-
778
49
485
-
-
534
536,161
665,507
355,751
639,815
-
-
-
-
-
-
-
-
148,242
136,823
192
-
1,132,389
1,133,167
5,172,106
4,744,512
1,350,103
5,427,605
4,982,436
1,350,637
135,651
900,000
44,986
54,731
2,347
131,839
103,883
8,738
42,957
10,874
148,490
136,823
-
-
-
-
-
-
-
-
1,137,715
298,291
148,490
136,823
1,990,446
2,891,891
263,786
336,171
30,840
802
66,691
297,808
31,685
925
-
-
-
-
-
-
-
-
-
-
-
-
total non-current liabilities
2,622,045
3,289,000
total liabilities
net assets
3,759,760
1,667,845
3,587,291
1,395,145
148,490
1,202,147
136,823
996,344
The above statement of financial position should be read in conjunction with the accompanying notes.
28
APA AnnuAl REPORT 2011 auS tR a lIa n p Ipe lIne tR uS t anD It S C ontRolleD entItIeS
statement of financial position
continueD
as at 30 June 2011
eQuitY
australian pipeline trust equity:
Issued capital
Reserves
Retained earnings
equity attributable to securityholders of the parent
Minority interests:
apt Investment trust:
Issued capital
Reserves
Retained earnings
equity attributable to securityholders of apt Investment trust
other minority interest
total minority interests
total equity
note
28
29
30
31
31
31
31
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
2010
$000
1,192,779
984,936
1,192,779
984,936
54,899
19,054
59,955
9,364
762
8,606
145
11,263
1,266,732
1,054,255
1,202,147
996,344
382,001
320,931
534
18,295
(101)
19,928
400,830
340,758
283
401,113
1,667,845
132
340,890
1,395,145
-
-
-
-
-
-
-
-
-
-
-
-
1,202,147
996,344
The above statement of financial position should be read in conjunction with the accompanying notes.
29
APA AnnuAl REPORT 2011 D
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T
auS tR a lIa n p Ipe lIne tR uS t anD It S C ontRolleD entItIeS
statement of changes in equity
continueD
For the financial year ended 30 June 2011
Balance at 1 July 2009
profit for the year
other comprehensive income
total comprehensive income for the year
payment of distributions
Issued under distribution reinvestment plan
equity values adjustment between stapled entities
Security purchase plan
Issue cost of securities
Capital return to securityholders
Balance at 30 June 2010
Balance at 1 July 2010
profit for the year
other comprehensive income
total comprehensive income for the year
payment of distributions
Issued under distribution reinvestment plan
Institutional placement
Issue cost of securities
tax relating to security issue costs
Capital return to securityholders
Balance at 30 June 2011
trust
aVaIlaBle-FoR-Sale
InVeStMent
ReValuatIon
ReSeRVe
$000
(1,237)
-
1,382
1,382
-
-
-
-
-
-
145
145
-
617
617
-
-
-
-
-
-
RetaIneD
eaRnInGS
$000
attRIButaBle to
oWneR oF
tHe paRent
$000
13,685
40,094
-
40,094
(42,516)
-
-
-
-
-
11,263
11,263
59,388
-
59,388
(62,045)
-
-
-
-
-
906,883
40,094
1,382
41,476
(42,516)
41,720
9,868
64,463
(230)
(25,320)
996,344
996,344
59,388
617
60,005
(62,045)
39,782
230,128
(2,746)
824
(60,145)
762
8,606
1,202,147
ISSueD
CapItal
$000
894,435
-
-
-
-
41,720
9,868
64,463
(230)
(25,320)
984,936
984,936
-
-
-
-
39,782
230,128
(2,746)
824
(60,145)
1,192,779
The above statement of changes in equity should be read in conjunction with the accompanying notes.
31
apa annual RepoRt 2011
auS tR alIa n pIp elIn e t R uS t anD It S C ontRolleD entItIeS
statement of cash flows
For the financial year ended 30 June 2011
CasH FLoWs From operatinG aCtivities
Receipts from customers
payments to suppliers and employees
Dividends received
proceeds from repayment of finance leases
Interest received
Interest and other costs of finance paid
Income tax paid
ConsoLiDateD
2011
$000
2010
$000
note
1,165,338
(704,597)
45,890
6,748
6,162
1,055,107
(615,697)
38,143
2,875
18,003
(229,954)
(230,670)
442
-
trust
2011
$000
217
-
2010
$000
97
-
62,842
49,955
-
177
(45)
-
-
339
-
-
net cash provided by operating activities
36(c)
290,029
267,761
63,191
50,391
CasH FLoWs From investinG aCtivities
payments for property, plant and equipment
proceeds from sale of property, plant and equipment
payments for available-for-sale investments
payments for equity accounted investments
payments for controlled entities net of cash acquired
proceeds from controlled entities
payments for intangible assets
proceeds from sale of businesses
proceeds from sale of equity accounted investments
36(b)
36(b)
40
(231,051)
(135,426)
265
(22,481)
(91,392)
(171,077)
-
(8,000)
3,145
4,500
-
(114,498)
(22,706)
(83,328)
-
-
8,190
-
-
-
-
-
-
-
(24,812)
(22,379)
-
-
-
-
-
-
939,496
-
7,265
-
net cash (used in)/provided by investing activities
(516,091)
(347,768)
(24,812)
924,382
700,100
1,275,050
-
-
(620,633)
(1,175,000)
(183,598)
(1,022,570)
352,372
142,040
269,910
CasH FLoWs From FinanCinG aCtivities
proceeds from borrowings
Repayments of borrowings
proceeds from issue of securities
equity values adjustment between stapled entities
payment of debt issue costs
payments of security issue costs
Distributions paid to:
Securityholders of apt
Securityholders of minority interests - aptIt
other minority interest
net cash provided by/(used in) by financing activities
net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
36(a)
The above statement of cash flows should be read in conjunction with the accompanying notes.
-
(4,300)
(3,661)
(122,189)
(61,034)
(165)
240,490
14,428
80,940
95,368
-
(29,629)
(304)
(67,836)
(92,090)
(99)
52,132
(27,875)
108,815
80,940
-
-
(2,746)
106,183
9,868
-
(229)
(122,189)
(67,836)
-
-
-
-
(38,623)
(974,584)
(244)
293
49
189
104
293
32
APA AnnuAl REPORT 2011 auS tR a lIa n p Ipe lIne tR uS t anD It S C ontRolleD entItIeS
notes to the financial statements
For the financial year ended 30 June 2011
1. GeneraL inFormation
australian pipeline trust (“apt”) is one of two stapled entities of apa Group (“apa”). the other stapled entity is apt Investment trust (“aptIt”). apa is listed on
the australian Securities exchange (trading under the symbol ‘apa’), registered in australia and operating in australia.
the financial statements represent the consolidated financial results of the two stapled entities australian pipeline trust and apt Investment trust, together “apa”.
apt’s registered office and principal place of business are as follows:
registered office and principal place of business
level 19, HSBC Building
580 George Street, SYDneY nSW 2000
tel: (02) 9693 0000.
the principal activities of the Consolidated entity during the course of the year were the ownership and operation of energy infrastructure, including:
– energy Infrastructure businesses located across australia;
– energy investments, including envestra limited (“envestra”), Sea Gas pipeline, ethane pipeline Income Fund (“epX”), energy Infrastructure Investments pty
limited (“eII”), energy Infrastructure Investments 2 pty limited (“eII2”); and
– asset management and operations services for apa’s energy investments and other third parties.
2. aDoption oF neW anD reviseD aCCountinG stanDarDs
(a) standards and interpretations affecting amounts reported in the current period (and/or prior periods)
the following new and revised Standards and Interpretations have been adopted in the current period and have affected the amounts reported in these financial
statements. Details of other Standards and Interpretations adopted in these financial statements but that have had no effect on the amounts reported are set out
in part b.
Standards affecting presentation disclosure
stanDarD
impaCt
– amendments to aaSB 107 ‘Statement of Cash Flows’
the amendments (part of aaSB 2009-5 ‘Further amendments to australian
accounting Standards arising from the annual Improvements project’)
specify that only expenditures that result in a recognised asset in the
statement of financial position can be classified as investing activities in the
statement of cash flows.
(b) standards and interpretations adopted with no effect on financial statements
the following new and revised Standards have also been adopted in these financial statements. their adoption has not had any significant impact on the amounts
reported in these financial statements but may affect the accounting for future transactions and arrangements.
stanDarD
impaCt
– aaSB 2009-5 ‘Further amendments to australian accounting Standards
except for the amendments to aaSB 107 described above, the application of
arising from the annual Improvements project’.
aaSB 2009-6 has not had any material effect on amounts reported in the
financial statements.
– aaSB 2009-8 ‘amendments to australian accounting Standards Group
aaSB 2009-8 makes amendments to aaSB 2 ‘Share-based payment’ to
Cash-Settled Share-based payment transactions.
clarify the scope of aaSB 2 and the accounting for group cash-settled
share-based payment transactions in the separate financial statements of an
entity receiving the goods or service when another group entity has the
obligation to settle the award.
– aaSB 2009-10 ‘amendments to australian accounting Standards
aaSB 2009-10 makes amendments to aaSB 132 ‘Financial Instruments:
Classification of Rights Issue’.
presentation’ to address the classification of certain right issues denominated
in foreign currency either as an equity instrument or as a financial liability. to
date, there are no arrangements that would fall within the scope of the
amendments.
– aaSB 2010-3 ‘amendments to australian accounting Standards arising
aaSB 2010-3 makes amendments to aaSB 3 (2008) Business Combinations’
from the annual Improvements project’
to clarify that the measurement choice regarding non-controlling interest at
the date of acquisition is only available in respect of non-controlling interests
that are present ownership interests and that entitle their holders to a
proportionate share of the entity’s net assets in the event of liquidation. all
other types of non-controlling are measured at their acquisition date fair
value, unless another measurement basis is required by other Standards.
– aaSB 2010-4 ‘amendments to australian accounting Standards arising
the application of aaSB 2010-4 has not had any material effect on amounts
from the annual Improvements project’
reported in the financial statements.
33
APA AnnuAl REPORT 2011 2. aDoption oF neW anD reviseD aCCountinG stanDarDs (ContinueD)
(c) standards and interpretations issued not yet adopted
at the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective.
stanDarD/interpretation
eFFeCtive For annuaL reportinG
perioDs BeGinninG on or aFter
expeCteD to Be initiaLLY appLieD
in tHe FinanCiaL Year enDinG
– aaSB 124 ‘Related party Disclosures (revised December 2009)’ aaSB
1 January 2011
30 June 2012
2009-12 ‘amendments to australian accounting Standards’.
– aaSB 9 ‘Financial Instruments’, aaSB 2009-11 ‘amendments to australian
1 January 2013
30 June 2014
accounting Standards arising from aaSB 9 and aaSB 2010-7 ‘amendments
to australian accounting Standards arising from aaSB 9 (December 2010)’
– aaSB 2009-14 ‘amendments to australian Interpretation - prepayments of
1 January 2011
30 June 2012
minimum Funding Requirement
– aaSB 2010-5 ‘amendments to australian accounting Standards’
– aaSB 2010-6
‘amendments to australian accounting Standards -
Disclosures on transfers of Financial assets’
1 January 2011
1 July 2011
30 June 2012
30 June 2012
– aaSB 2010-8 ‘amendments to australian accounting Standards - Deferred
1 January 2012
30 June 2013
tax: Recovery of underlying assets’
– IFRS 10 Consolidated Financial Statements
– IFRS 11 Joint arrangements
– IFRS 12 Disclosure of Interest in other entities
– IFRS 13 Fair Value measurement
– IaS 27 Separate Financial statements
– IaS 28 Investments in associates and Joint Ventures
– IaS 19 employee Benefits
the potential impact of the initial application of the above Standards has not yet been determined.
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
30 June 2014
30 June 2014
30 June 2014
30 June 2014
30 June 2014
30 June 2014
30 June 2014
3. siGniFiCant aCCountinG poLiCies
statement of compliance
$60.4 million) primarily as a result of syndicated facilities of $900 million due
the financial report is a general purpose financial report which has been
to mature on 8 June 2012. apa’s refinancing strategies have ensured that the
prepared in accordance with the Corporations act 2001, accounting Standards
Group has access to a broad cross section of global debt capital markets out of
and Interpretations, and complies with other requirements of the law.
which to achieve a refinancing of this and other debt facilities.
the financial report includes the separate financial statements of the trust and
the Directors continually monitor the Group’s working capital position,
the consolidated financial statements of the Group.
accounting Standards include australian equivalents to International Financial
Reporting Standards (“a-IFRS”). Compliance with a-IFRS ensures that the
including forecast working capital requirements and have ensured that there
are appropriate refinancing strategies and adequate committed funding
facilities in place to accommodate debt repayments as and when they fall due.
financial report and notes of the trust and the Consolidated entity comply with
(b) Basis of consolidation
International Financial Reporting Standards (“IFRS”).
the financial report was authorised for
issue by the Directors on
24 august 2011.
Basis of preparation
the financial report has been prepared on the basis of historical cost, except for
the revaluation of certain non-current assets and financial instruments. Cost is
the financial report incorporates the financial statements of the trust and
entities (including special purpose entities) controlled by the trust (its
controlled entities) (referred to as the “Consolidated entity”, “Group” or “apa
Group” in this financial report). Control is achieved where the trust has the
power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities.
the results of controlled entities acquired during the financial year are included
based on the fair values of the consideration given in exchange for assets. the
in the statement of comprehensive income from the effective date of
financial report is presented in australian dollars and all values are rounded to
acquisition.
the nearest thousand dollars ($000) unless otherwise stated under the option
available to apa under aSIC Class order 98/0100. apa is an entity to which the
class order applies.
the following significant accounting policies have been adopted in the
preparation and presentation of the financial report:
(a) Working capital position
Where necessary, adjustments are made to the financial reports of controlled
entities to bring their accounting policies into line with those used by other
members of the Group.
all intra-group transactions, balances, income and expenses are eliminated
in full on consolidation. In the separate financial report of the trust, the intra-
group transactions (“common control transactions”) are generally accounted
the working capital position as at 30 June 2011 for the Consolidated entity is a
for by reference to the existing (consolidated) book value of the items. Where
surplus of current liabilities over current assets of $888.6 million (2010:
the transaction value of common control transactions differs from their
34
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 3. siGniFiCant aCCountinG poLiCies (ContinueD)
(b) Basis of consolidation (continued)
consolidated book value, the difference is recognised as a contribution by or
circumstances that existed as of the acquisition date - and is subject to a
distribution to equity participants by the transaction entities.
maximum of one year.
Minority interests in the net assets (excluding goodwill) of consolidated
(d) Joint venture arrangements
controlled entities are identified separately from the Consolidated entity’s
Jointly controlled operations
equity therein. Minority interests consist of the amount of those interests at the
Interests in jointly controlled operations are reported in the financial report by
date of the original business combination and the minority’s share of changes
including the Consolidated entity’s share of assets employed in the joint
in equity since the date of the combination. losses applicable to the minority
ventures, the share of liabilities incurred in relation to joint ventures and the
in excess of the minority’s interest in the controlled entity’s equity are allocated
share of any expenses incurred in relation to joint ventures in their respective
against the interests of the Consolidated entity except to the extent that the
classification categories.
minority has a binding obligation and is able to make an additional investment
to cover the losses.
(c) Business combinations
Jointly controlled entities
Interests in jointly controlled entities are accounted for under the equity
method in the consolidated financial report and the cost method in apt’s
acquisitions of subsidiaries and businesses are accounted for using the
financial report.
acquisition method. the consideration for each acquisition is measured as the
aggregate of the fair values (at the date of exchange) of assets given, liabilities
incurred or assumed, and equity instruments issued by the Consolidated entity
in exchange for control of the acquiree. acquisition costs directly attributable
to the business combination are recognised in profit or loss as incurred.
(e) investments in associates
an associate is an entity over which the Consolidated entity has significant
influence and that is neither a subsidiary nor a joint venture. the results and
assets and liabilities of associates are accounted for using the equity method of
accounting. under the equity method, investments in associates are carried in
Where applicable, the consideration for the acquisition includes any asset of
the consolidated statement of financial position at cost as adjusted for post-
liability resulting from a contingent consideration arrangement, measured at its
acquisition-date fair value. Subsequent changes in fair values are adjusted
against the cost of acquisition where they qualify as measurement period
adjustments. all other subsequent changes in the fair value of contingent
consideration classified as an asset or liability are accounted for in accordance
with relevant standards. Changes in the fair value of contingent consideration
classified as equity are not recognised.
Where a business combination is achieved in stages, the Consolidated entity’s
previously held interests in the acquired entity are remeasured to fair value at
the acquisition date and the resulting gains or losses, if any, are recognised in
profit or loss. amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in other comprehensive
income are reclassified to profit or loss, where such treatment would be
appropriate if that interest were disposed of.
acquisition changes in the Consolidated entity’s share of the net assets of the
associate, less any impairment in the value of individual investments. losses of
an associate in excess of the Consolidated entity’s interest are recognised only
to the extent that there is a legal or constructive obligation or the Consolidated
entity has made payments on behalf of the associate.
any excess of the cost of acquisition over the Consolidated entity’s share of the
net fair value of identifiable assets, liabilities and contingent liabilities of the
associate recognised at the date of acquisition is recognised as goodwill. this
is included within the carrying amount of the investment and is assessed for
impairment as part of that investment. any excess of the Consolidated entity’s
share of the net fair value of assets and liabilities over the cost of acquisition
after reassessment is recognised immediately in profit or loss.
(f) Financial assets and liabilities
Available-for-sale financial assets
the acquiree’s identifiable assets, liabilities and contingent liabilities that meet
the conditions for recognition under aaSB 3 are recognised at their fair value
at the acquisition date, except that:
Certain shares and redeemable notes held by the Group are classified as being
available-for-sale and are stated at fair value. Gains and losses arising from
changes in fair value are recognised directly in the available-for-sale investment
– deferred tax assets or liabilities and liabilities or assets related to employee
revaluation reserve with the exception of impairment losses, interest calculated
benefit arrangements are recognised in accordance with aaSB 112 ‘Income
using the effective interest method and foreign exchange gains and losses on
taxes’ and aaSB ‘119 employee Benefits’ respectively;
monetary assets which are recognised directly in profit or loss. Where the
– liabilities or equity instruments related to the replacement by the
investment is disposed of or is determined to be impaired, the cumulative gain
consolidated entity of an acquiree’s share-based payment awards are
or loss previously recognised in the available-for-sale investment revaluation
measured in accordance with aaSB 2 ‘Share-based payment’; and
reserve is included in profit or loss for the period. Dividends on available-for-
– assets (or disposal groups) that are classified as held for sale in accordance
sale equity instruments are recognised in profit or loss when the Group’s right
with aaSB 5 ‘non-current assets Held for Sale and Discontinued operations’
to receive the dividends is established. the change in fair value attributable to
are measured in accordance with that standard.
If the initial accounting for a business combination is incomplete by the end of
translation differences that result from a change in amortised cost of the asset
is recognised in profit or loss, and other changes are recognised in equity.
the reporting period in which the combination occurs, the Consolidated entity
Loans and receivables
reports provisional amounts for the items for which the accounting is
trade receivables, loans, and other receivables that have fixed or determinable
incomplete. those provisional amounts are adjusted
for during the
payments that are not quoted in an active market are classified as ‘loans and
measurement period, or additional assets or liabilities are recognised, to reflect
receivables’. trade and other receivables are stated at their amortised cost less
new information obtained about facts and circumstances that existed as of the
impairment.
acquisition date, that, if known, would have affected the amounts recognised
as at that date.
Trade and other payables
trade and other payables are recognised when the Consolidated entity
the measurement period is the period from the date of acquisition to the date
becomes obliged to make future payments resulting from the purchase of
the Consolidated entity obtains complete information about facts and
goods and services. trade and other payables are stated at amortised cost.
35
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 3. siGniFiCant aCCountinG poLiCies (ContinueD)
(f) Financial assets and liabilities (continued)
Impairment of financial assets
leasehold improvements and plant and equipment are stated at cost less
Financial assets, other than those at fair value through profit or loss, are
accumulated depreciation and impairment.
assessed for indicators of impairment at the end of each reporting period.
Financial assets are impaired where there is objective evidence that as a result
of one or more events that occurred after the initial recognition of the financial
Work in progress is stated at cost. Cost includes expenditure that is directly
attributable to the acquisition or construction of the item.
asset the estimated future cash flows of the investments have been impacted.
(l) Depreciation
For financial assets carried at amortised cost, the amount of the impairment is
the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate.
the carrying amount of financial assets including uncollectible trade receivables
is reduced by the impairment loss through the use of an allowance account.
Subsequent recoveries of amounts previously written off are credited against
the allowance account. Changes in the carrying amount of the allowance
account are recognised in profit or loss.
With the exception of available-for-sale equity instruments, if, in a subsequent
period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised,
the previously recognised impairment loss is reversed through profit or loss to
the extent the carrying amount of the investment at the date the impairment is
reversed, does not exceed what the amortised cost would have been had the
Depreciation is provided on property, plant and equipment, including freehold
buildings but excluding land. Depreciation is calculated on either a straight-line
or throughput basis depending on the nature of the asset so as to write off the
net cost of each asset over its estimated useful life. leasehold improvements
are depreciated over the period of the lease or estimated useful life, whichever
is the shorter, using the straight-line method. the estimated useful lives and
depreciation methods are reviewed at the end of each reporting period, with
the effect of any changes recognised on a prospective basis. the following
estimated useful lives are used in the calculation of depreciation:
– buildings
– compressors
30 - 50 years;
up to 50 years;
– gas transportation systems
up to 80 years;
– meters
25 - 50 years; and
– other plant and equipment
3 - 20 years.
impairment not been recognised.
(m) employee benefits
In respect of available-for-sale equity instruments, any subsequent increase in
fair value after an impairment loss is recognised in other comprehensive income.
(g) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
amounts of cash, which are subject to insignificant risk of changes in values.
(h) acquisition of assets
assets acquired are recorded at the cost of acquisition, being the purchase
provision is made for benefits accruing to employees in respect of wages and
salaries, incentives, annual leave and long service leave when it is probable that
settlement will be required and they are capable of being measured reliably.
provisions made in respect of employee benefits expected to be settled within
12 months, are measured at their nominal values using the remuneration rates
expected to apply at the time of settlement. provisions made in respect of
employee benefits which are not expected to be settled within 12 months are
measured as the present value of the estimated future cash outflows to be
made by the Consolidated entity in respect of services provided by employees
consideration determined as at the date of acquisition. Cost includes expenditure
up to reporting date.
that is directly attributable to the acquisition or construction of the asset.
Defined contribution plans
In the event that settlement of all or part of the cash consideration given in the
acquisition of an asset is deferred, the fair value of the purchase consideration
is determined by discounting the amounts payable in the future to their present
values as at the date of acquisition.
(i) Borrowings
Contributions to defined contribution plans are expensed when incurred.
Defined benefit plans
For defined benefit plans, the cost of providing benefits is determined using
the projected unit credit method, with actuarial valuations being carried out at
each reporting date. actuarial gains and losses are recognised directly to
Borrowings are recorded initially at fair value, net of transaction costs.
retained earnings in the period in which they occur.
Subsequent to initial recognition, borrowings are measured at amortised cost
with any difference between the initial recognised amount and the redemption
value being recognised in the statement of comprehensive income over the
period of the borrowing using the effective interest method.
(j) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are added
to the cost of those assets, until such time as the assets are substantially ready
for their intended use or sale. Investment income earned on the temporary
investment of specific borrowings pending their expenditure on qualifying
past service cost is recognised immediately to the extent that the benefits are
already vested, and otherwise amortised on a straight-line basis over the
average period until the benefits become vested.
the defined benefit obligation recognised in the consolidated statement of
financial position represents the present value of the defined benefit obligation,
adjusted for unrecognised actuarial gains and losses and unrecognised past
service costs, net of the fair value of the plan assets. any asset resulting from
this calculation is limited to unrecognised actuarial losses and past service cost,
plus the present value of available refunds and reductions in future contributions
to the plan.
assets is deducted from the borrowing costs eligible for capitalisation.
(n) intangible assets
all other borrowing costs are recognised in profit or loss in the period in which
they are incurred.
(k) property, plant and equipment
Intangible assets acquired separately
Intangible assets acquired separately are carried at cost less accumulated
amortisation and accumulated impairment losses. amortisation is recognised
on a straight-line basis over their estimated useful lives. the estimated useful
land and buildings held for use are carried in the consolidated statement of
life and amortisation method are reviewed at the and of the each annual
financial position at cost, less any subsequent accumulated depreciation and
reporting period, with the effects of any changes in estimate being accounted
impairment losses.
for on a prospective basis.
36
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 3. siGniFiCant aCCountinG poLiCies (ContinueD)
(n) intangible assets (continued)
Intangible assets acquired in a business combination
adjustment to the carrying amount of the hedged item arising from the hedged
Intangible assets acquired in a business combination are identified and
risk is amortised to profit or loss from that date.
recognised separately from goodwill and are initially recognised at their fair
value at the acquisition date. Subsequent to initial recognition, intangible
assets acquired in a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis as
intangible assets acquired separately.
(o) Derivative financial instruments
the Group enters into a variety of derivative financial instruments to manage
its exposure to interest rate and foreign exchange rate risk, including foreign
exchange forward contracts and interest rate swaps. Further details of
derivative financial instruments are disclosed in note 37.
Cash flow hedges
the effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges is deferred in equity. the gain or
loss relating to the ineffective portion is recognised immediately in profit or
loss as part of other expenses or other income.
amounts deferred in equity are recycled in profit or loss in the periods when
the hedged item is recognised in profit or loss in the same line of the statement
of comprehensive income as the recognised hedged item. However, when the
forecast transaction that is hedged results in the recognition of a non-financial
asset or a non-financial liability, the gains and losses previously deferred in
Derivatives are initially recognised at fair value at the date a derivatives contract
equity are transferred from equity and included in the initial measurement of
is entered into and subsequently remeasured to their fair value at each reporting
the cost of the asset or liability.
period. the resulting gain or loss is recognised in profit or loss immediately
unless the derivative is designated and effective as a hedging instrument, in
which event the timing of the recognition in profit or loss depends on the
nature of the hedge relationship. the Consolidated entity designates certain
derivatives as hedges of the fair value of recognised assets or liabilities or firm
commitments (fair value hedges) or, hedges of highly probable forecast
transactions or of foreign currency risk of firm commitments (cash flow hedges).
the fair value of hedging derivatives is classified as a non-current asset or a
non-current liability if the remaining maturity of the hedge relationship is more
than 12 months and as a current asset or a current liability if the remaining
maturity of the hedge relationship is less than 12 months. Derivatives not
designated into an effective hedge relationship are classified as a current asset
or a current liability.
Embedded derivatives
Hedge accounting is discontinued when the Consolidated entity revokes the
hedging relationship or the hedging instrument expires or is sold, terminated,
or exercised, or no longer qualifies for hedge accounting. any cumulative gain
or loss deferred in equity at that time remains in equity and is recognised when
the forecast transaction is ultimately recognised in profit or loss. When a
forecast transaction is no longer expected to occur, the cumulative gain or loss
that was deferred in equity is recognised immediately in profit or loss.
(p) Financial instruments issued by the Consolidated entity
Debt and equity instruments
Debt and equity instruments are classified as either liabilities or equity in
accordance with the substance of the contractual arrangement. an equity
instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. equity instruments issued by
the Consolidated entity are recorded at the proceeds received, net of direct
Derivatives embedded in other financial instruments or other host contracts
issue costs.
are treated as separate derivatives when their risks and characteristics are not
closely related to those of the host contracts and the host contracts are not
measured at fair value with changes in fair value recognised in profit or loss.
Hedge accounting
Financial guarantee contract liabilities
Financial guarantee contract liabilities are measured initially at their fair values
and subsequently at the higher of the amount recognised as a provision and
the amount initially recognised less cumulative amortisation in accordance
the Consolidated entity designates certain hedging instruments, which include
with the revenue recognition policies.
derivatives, embedded derivatives and non-derivatives in respect of foreign
currency risk, as either fair value hedges or cash flow hedges.
Transaction costs arising on the issue of equity instruments
transaction costs arising on the issue of equity instruments are recognised
Hedges of foreign exchange and interest rate risk on firm commitments are
directly in equity as a reduction of the proceeds of the equity instruments to
accounted for as cash flow hedges.
at the inception of the hedge relationship, the Consolidated entity documents
the relationship between the hedging instrument and hedged item, along with
which the costs relate. transaction costs are the costs that are incurred directly
in connection with the issue of those equity instruments and which would not
have been incurred had those instruments not been issued.
its risk management objectives and its strategy for undertaking various hedge
Interest and distributions
transactions. Furthermore, at the inception of the hedge and on an ongoing
Interest and distributions are classified as expenses or as distributions of profit
basis, the Consolidated entity documents whether the hedging instrument that
consistent with the consolidated statement of financial position classification
is used in the hedging relationship is highly effective in offsetting changes in
of the related debt or equity instruments or component parts of compound
fair values or cash flows of the hedged item.
instruments.
note 37 contains details of the fair values of the derivative instruments used for
(q) Foreign currency transactions
hedging purposes. Movements in the hedging reserve in equity are also
Both the functional and presentation currency of the Consolidated entity and
detailed in note 29.
Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair
value hedges are recorded in profit or loss immediately, together with any
changes in the fair value of the hedged item that is attributable to the hedged
the trust is australian dollars (a$). all foreign currency transactions during the
financial year are brought to account using the exchange rate in effect at the
date of the transaction. Foreign currency monetary items at reporting date are
translated at the exchange rate existing at that date and resulting exchange
differences are recognised in profit or loss in the period in which they arise.
risk. Hedge accounting is discontinued when the Consolidated entity revokes
(r) Goods and services tax
the hedging relationship or the hedging instrument expires or is sold,
Revenues, expenses and assets are recognised net of the amount of goods and
terminated, or exercised, or no longer qualifies for hedge accounting. the
services tax (“GSt”), except:
37
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 3. siGniFiCant aCCountinG poLiCies (ContinueD)
(r) Goods and services tax (continued)
– where the amount of GSt incurred is not recoverable from the taxation
(x) income tax
authority, it is recognised as part of the cost of acquisition of an asset or as
Income tax on the profit or loss for the financial year comprises current and
part of an item of expense; or
deferred tax. Income tax is recognised in the statement of comprehensive
– for receivables and payables which are recognised inclusive of GSt, except for
income except to the extent that it relates to items recognised directly in
accrued revenue and accrued expense at balance dates which exclude GSt.
equity, in which case it is recognised in equity. Current tax is the expected tax
the net amount of GSt recoverable from, or payable to, the taxation authority
is included as part of receivables or payables. GSt receivable or GSt payable is
only recognised once a tax invoice has been issued or received.
payable on the taxable income for the financial year, using tax rates enacted or
substantively enacted by the end of the reporting period, and any adjustment
to tax payable in respect of previous financial years. Current tax for current and
prior periods is recognised as a liability (or asset) to the extent that it is unpaid
Cash flows are included in the statement of cash flows on a gross basis. the
(or refundable).
GSt component of cash flows arising from investing and financing activities
which is recoverable from, or payable to, the taxation authority is classified
within operating cash flows.
(s) Goodwill
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes.
the following temporary differences are not provided for: initial recognition of
Goodwill arising in a business combination is recognised as an asset at the
goodwill, initial recognition of assets or liabilities that affect neither accounting
acquisition date. Goodwill is measured as the excess of the sum of the
nor taxable profit, and differences relating to investments in wholly-owned
consideration transferred, the amount of any non-controlling interests in the
entities to the extent that they will probably not reverse in the foreseeable
acquiree, and the fair value of the acquirer’s previously held equity interest in
future. the amount of deferred tax provided is based on the expected manner
the acquiree (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed.
of realisation or settlement of the carrying amount of assets and liabilities, using
the tax rates enacted or substantively enacted by the end of the reporting period.
If, after reassessment, the Consolidated entity’s interest in the fair value of the
acquiree’s identifiable net assets exceeds the sum of the consideration, the
amount of any non-controlling interests in the acquiree and the fair value of the
a deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be utilised.
Deferred tax assets are reduced to the extent that it is no longer probable that
acquirer’s previously held equity interest, the excess is recognised immediately
the related tax benefit will be realised.
in the profit or loss as a bargain purchase gain.
on disposal of a subsidiary, the attributable amount of goodwill is included in
the determination of the profit or loss on disposal.
(t) impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject
to amortisation and are tested annually for impairment, or more frequently if
events or changes in circumstances indicate that they might be impaired. other
assets are reviewed for
impairment whenever events or changes
in
circumstances indicate that the carrying amount may not be recoverable. an
impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. the recoverable amount is the higher
of an asset’s fair value less costs to sell, and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there
Tax consolidation
the trust and its wholly-owned australian tax resident entities are part of a
tax-consolidated group under australian taxation law. the head entity within
the tax-consolidated group is australian pipeline trust.
tax expense/income, deferred tax liabilities and deferred tax assets arising
from temporary differences of the members of the tax-consolidated group are
recognised in the separate financial reports of the members of the tax-
consolidated group using the ‘separate taxpayer within group’ approach, by
reference to the carrying amounts in the separate financial reports of each
entity and the tax values applying under tax consolidation.
any current tax liabilities (or assets) and deferred tax assets arising from
unused tax losses of the wholly-owned entities are assumed by the head entity
are separately identifiable cash inflows which are largely independent of the
in the tax-consolidated group and are recognised as amounts payable
cash inflows from other assets or groups of assets (cash-generating units).
(receivable) to (from) other entities in the tax-consolidated group in conjunction
assets other than goodwill that suffered an impairment are reviewed for
with any tax funding arrangement amounts.
possible reversal of the impairment at each reporting period.
(u) Distributions
the head entity recognises deferred tax assets arising from unused tax losses
of the tax-consolidated group to the extent that it is probable that future
a provision is recognised for distributions only when they have been declared,
taxable profits of the tax-consolidated group will be available against which the
determined or publicly recommended by the Directors.
(v) inventories
assets can be utilised.
(y) Leased assets
Inventories are stated at the lower of cost and net realisable value. Costs,
leases are classified as finance leases when the terms of the lease transfer
including an appropriate portion of fixed and variable overhead expenses, are
substantially all the risks and rewards incidental to the ownership of the leased
assigned to inventories by the method most appropriate to each particular
asset to the lessee. all other leases are classified as operating leases.
class of inventory, with the majority being valued on a first-in, first-out basis.
net realisable value represents the estimated selling price for the inventories
less all estimated costs of completion and costs necessary to make the sale.
(w) security-based payments
Group as lessor
amounts due from a lessee under finance leases are recorded as receivables.
Finance lease receivables are initially recognised at amounts equal to the
present value of the minimum lease payments receivable plus the present value
the Group provides benefits to certain employees in the form of cash settled
of any unguaranteed residual value expected to accrue at the end of the lease
security-based payments. For cash settled security-based payments, a liability
term. Finance lease income is allocated to accounting periods so as to reflect a
equal to the portion of services received is recognised at the current fair value
constant periodic rate of return on the net investment outstanding in respect of
determined at each reporting date.
the leases.
38
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 3. siGniFiCant aCCountinG poLiCies (ContinueD)
(y) Leased assets (continued)
Group as lessee
Finance lease income
assets held under finance leases are initially recognised at their fair value or, if
Finance lease income is allocated to accounting periods so as to reflect a
lower, at amounts equal to the present value of the minimum lease payments,
constant periodic rate of return on the Group’s net investment outstanding in
each determined at the inception of the lease. the corresponding liability to the
respect of the leases.
lessor is included in the consolidated statement of financial position as a
finance lease obligation.
4. CritiCaL aCCountinG JuDGements anD KeY sourCes oF
estimation unCertaintY
lease payments are allocated between finance charges and reduction of the
In the application of the Consolidated entity’s accounting policies, management
lease obligation so as to achieve a constant rate of interest on the remaining
is required to make judgements, estimates and assumptions about the carrying
balance of the liability.
Finance lease assets are amortised on a straight-line basis over the estimated
useful life of the asset.
operating lease payments are recognised as an expense on a straight-line
basis over the lease term, except where another systematic basis is more
representative of the time patterns in which economic benefits from the leased
asset are consumed.
(z) provisions
a provision is recognised when there is a legal, equitable or constructive
obligation as a result of a past event, it is probable that a future sacrifice of
economic benefits will be required to settle the obligation and the amount of
the provision can be measured reliably.
values of assets and liabilities that are not readily apparent from other sources.
the estimates and associated assumptions are based on historical experience
and other factors that are considered to be relevant. actual results may differ
from estimates.
the estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
impairment of assets
Determining whether property, plant and equipment, identifiable intangible
assets and goodwill are impaired requires an estimation of the value-in-use or
fair value of the cash-generating units. the calculations require the Consolidated
entity to estimate the future cash flows expected to arise from cash-generating
the amount recognised as a provision is the best estimate of the consideration
units and suitable discount rates in order to calculate the present value of cash-
required to settle the present obligation at the end of the financial year, taking
generating units.
into account the risks and uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to settle the present
estimates and assumptions used are reviewed on an ongoing basis.
obligation, its carrying amount is the present value of those cash flows.
Determining whether available-for-sale investments are impaired requires an
assessment as to whether declines in value are significant or prolonged.
Management has taken into account a number of qualitative and quantitative
factors in making this assessment. any assessment of whether a decline in
value represents an impairment would result in the transfer of the decrement
from reserves to the statement of comprehensive income.
useful lives of non-current assets
the Consolidated entity reviews the estimated useful lives of property, plant
and equipment at the end of each annual reporting period. any reassessment
of useful lives in a particular year will affect the depreciation or amortisation
expense.
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, the receivable is recognised as an
asset if it is probable that recovery will be received and the amount of the
receivable can be measured reliably.
(aa) revenue recognition
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Consolidated entity and the revenue can be reliably
measured. amounts disclosed as revenue are net of duties and taxes paid.
Revenue is recognised for the major business activities as follows:
Sales revenue
Sales revenue represents revenue earned for the transportation of gas,
transmission of electricity and other related services and is recognised when
the services are provided.
Pass-through revenue
pass-through revenue is revenue on which no margin is earned and is offset by
corresponding pass-through costs.
Interest revenue
Interest revenue is recognised as it accrues using the effective interest method.
Sale of non-current assets
the net gain or loss on sale of non-current assets is included as income at the
date control of the assets passes to the buyer. this is usually when an
unconditional contract of sale is signed. the gain or loss on disposal is
calculated as the difference between the carrying amount of the asset at the
time of disposal and the net proceeds on disposal (including incidental costs).
Dividend revenue
Dividend revenue is recognised when the right to receive a dividend has been
established.
39
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 5. seGment inFormation
the Consolidated entity operates in one geographical segment, being australia.
(a) Description of reportable segments
the Consolidated entity comprises the following reportable segments:
– energy infrastructure (formerly gas transmission and distribution);
– asset management; and
– energy investments.
(b) reportable segments
2011
seGment revenue (b)
external sales revenue
equity accounted net profits
pass-through revenue
Finance lease and investment interest income
Distribution - other entities
total segment revenue
other interest income
Consolidated revenue
seGment resuLt
enerGY
inFrastruCture (a)
$000
asset
manaGement
$000
enerGY
investments
$000
ConsoLiDateD
$000
599,085
170,024
2,630
-
-
68,647
-
211,709
-
-
549
23,876
-
1,520
11,017
668,281
23,876
381,733
4,150
11,017
771,739
280,356
36,962
1,089,057
12,932
1,101,989
earnings before interest, tax, depreciation and amortisation (“eBItDa”)
412,146
38,740
13,197
464,083
Share of net profits of associates and jointly controlled entities accounted
for using the equity method
Finance lease and investment interest income
total eBItDa
Depreciation and amortisation
earnings before interest and tax (“eBIt”)
net finance costs (c)
profit before tax
Income tax expense
profit for the year
seGment assets anD LiaBiLities
Segment assets
-
2,630
414,776
(95,779)
318,997
-
-
38,740
(4,571)
34,169
23,876
1,520
38,593
23,876
4,150
492,109
-
(100,350)
38,593
391,759
(247,072)
144,687
(35,862)
108,825
4,430,652
235,219
186,957
4,852,828
Carrying value of investments accounted for using the equity method
479,409
479,409
unallocated assets (d)
total assets
acquisition of segment assets
Segment liabilities
unallocated liabilities (e)
total liabilities
186,781
172,194
-
52,101
-
75
(a) Gas transmission & distribution has been renamed as energy infrastructure, the acquisition of emu Downs Wind Farm is included in energy Infrastructure
(b) the revenue reported above represents revenue generated from external customers, any intersegment sales were immaterial
(c) excluding finance lease income and any gains or losses on revaluation of derivatives included as part of eBIt for segment reporting purposes
(d) unallocated assets consist of cash and cash equivalents, current tax assets, fair value of interest rate swaps and foreign exchange contracts
(e) unallocated liabilities consist of current and non-current borrowings, deferred tax liabilities, fair value of interest rate swaps and foreign exchange contracts
95,368
5,427,605
186,781
224,370
3,535,390
3,759,760
40
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 5. seGment inFormation (ContinueD)
(b) reportable segments (continued)
2010
seGment revenue (a)
external sales revenue
equity accounted net profits
pass-through revenue
Finance lease and investment interest income
Distribution - other entities
total segment revenue
other interest income
Consolidated revenue
seGment resuLt
eneRGY
InFRaStRuCtuRe
$000
aSSet
ManaGeMent
$000
eneRGY
InVeStMentS
$000
ConSolIDateD
$000
563,800
60,053
-
-
152,501
177,441
2,421
-
-
-
718,722
237,494
320
13,687
-
1,350
4,051
19,408
624,173
13,687
329,942
3,771
4,051
975,624
13,866
989,490
earnings before interest, tax, depreciation and amortisation (“eBItDa”)
406,167
32,317
4,033
442,517
Share of net profits of jointly controlled entities accounted for using
the equity method
Finance lease and investment interest income
total eBItDa
Depreciation and amortisation
earnings before interest and tax (“eBIt”)
net finance costs (b)
profit before tax
Income tax expense
profit for the year
-
2,421
408,588
(85,798)
322,790
-
-
32,317
(5,628)
26,689
13,687
1,350
19,070
-
19,070
seGment assets anD LiaBiLities
Segment assets
Carrying value of investments accounted for using the equity method
4,126,963
222,039
148,966
403,528
unallocated assets (c)
total assets
acquisition of segment assets
Segment liabilities
unallocated liabilities (d)
total liabilities
103,026
148,216
-
69,499
-
565
13,687
3,771
459,975
(91,426)
368,549
(229,369)
139,180
(38,672)
100,508
4,497,968
403,528
80,940
4,982,436
103,026
218,280
3,369,011
3,587,291
(a) the revenue reported above represents revenue generated from external customers, any intersegment sales were immaterial
(b) excluding finance lease income and any gains or losses on revaluation of derivatives included as part of eBIt for segment reporting purposes
(c) unallocated assets consist of cash and cash equivalents, current tax assets, fair value of interest rate swaps and foreign exchange contracts
(d) unallocated liabilities consist of current and non-current borrowings, deferred tax liabilities, fair value of interest rate swaps and foreign exchange contracts
(c) other segment information
Revenue from major products and services
the revenue from major products and services is shown by the reportable segments. no further analysis is required.
Information about major customers
Included in revenues arising from energy infrastructure of $599.1 million (2010: $563.8 million) are revenues of approximately $250.9 million (2010: $236.6 million)
which arose from sales to the Consolidated entity’s top three customers.
41
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 6. revenue
an analysis of the Consolidated entity’s revenue for the year is as follows:
Continuing operations
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
2010
$000
operatinG revenue
energy infrastructure revenue:
– energy infrastucture revenue
– pass-through revenue
asset management revenue:
– asset management revenue
– pass-through revenue
energy investments
598,562
170,024
768,586
68,647
211,709
280,356
549
1,049,491
563,378
152,501
715,879
59,393
177,441
236,834
320
953,033
Share of net profits of associates and jointly controlled entities
accounted for using the equity method
23,876
13,687
FinanCe inCome
Interest
Redeemable ordinary shares (eII) interest income
Finance lease income
DiviDenDs
Wholly-owned controlled entities
other entities
otHer inCome
Rental income
12,932
1,520
2,630
17,082
-
11,017
11,017
523
523
13,866
1,350
2,421
17,637
-
4,051
4,051
1,082
1,082
-
-
-
-
-
-
-
-
-
177
-
-
177
37,752
25,090
62,842
-
-
-
-
-
-
-
-
-
-
-
340
-
-
340
25,673
24,282
49,955
-
-
1,101,989
989,490
63,019
50,295
42
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 7. expenses
profit before tax includes the following expenses:
DepreCiation anD amortisation expense
Depreciation of non-current assets
amortisation of non-current assets
otHer operatinG Costs - pass-tHrouGH
operating lease rental expenses
Gas pipeline costs
Management, operating and maintenance costs
FinanCe Costs
Interest on bank overdrafts and borrowings
amortisation of deferred borrowing costs
Finance lease charges
other finance costs
less: amounts included in the cost of qualifying assets
loss on fair value of other derivatives
unwinding of discount on non-current liabilities
ConsoLiDateD
2011
$000
94,458
5,892
100,350
24,678
145,346
170,024
211,709
381,733
241,619
11,883
70
10,023
263,595
(5,842)
257,753
-
2,251
2010
$000
86,387
5,039
91,426
16,909
135,592
152,501
177,441
329,942
223,223
10,749
55
11,279
245,306
(2,512)
242,794
-
441
260,004
243,235
-
-
-
-
-
-
-
-
45
-
-
-
45
-
45
-
-
45
the average capitalisation rate on funds borrowed generally is 8.11% p.a. (2010: 7.86% p.a.) including amortisation of borrowing costs and other finance costs
empLoYee BeneFit expense
post-employment benefits:
Defined contribution plans
Defined benefit plans
termination benefits
Cash settled share-based payments
other employee benefits
otHer expenses
Impairment of trade receivables
Goodwill write-off
loss on disposal of property, plant and equipment
other
43
5,994
1,622
7,616
738
18,434
88,135
114,923
-
5,435
1,068
11,599
18,102
6,296
1,876
8,172
781
9,518
79,388
97,859
2,211
-
1,452
8,226
11,889
-
-
-
-
-
-
-
-
-
-
31
31
trust
2011
$000
2010
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,965
4,965
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 8. siGniFiCant items
Individually significant revenue/(expenses) included in profit after related income tax expense are as follows:
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
2010
$000
siGniFiCant (expense)/inCome items
equity accounted share of eII2 investment allowance benefit
profit on sale of investment in CaMS
transaction costs on acquisition of emu Downs Wind farm
profit from significant items before related income tax
Income tax related to significant items above
loss from significant items after related income tax
9. inCome tax
income tax recognised in profit or loss
tax expense/(inCome) Comprises:
9,839
1,652
(8,970)
2,521
(2,953)
(432)
-
-
-
-
-
-
-
-
-
-
-
-
Current tax expense/(income) in respect of the current year
6,354
(2,678)
3,143
adjustments recognised in the current year in relation to current tax
of prior years
Deferred tax expense relating to the origination and reversal of temporary
differences
total tax expense
attriButaBLe to:
(6,995)
(641)
36,503
35,862
2,678
-
38,672
38,672
(3,336)
(193)
3,748
3,555
-
-
-
-
-
-
296
(296)
-
5,236
5,236
profit from continuing operations
35,862
38,672
3,555
5,236
the prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows:
profit before tax
Income tax expense calculated at 30%
non deductible interest
non-assessable trust distribution
transactions within the tax-consolidated group that are exempt from
taxation
non deductible expenses
non assessable income
unfranked dividends from associates
Investment allowance
other
adjustment recognised in the current year in relation to the current tax
of prior years
144,687
43,406
2,777
(11,677)
-
7,198
(4,781)
7,615
(1,009)
(672)
42,857
(6,995)
35,862
139,180
41,754
2,660
(11,331)
-
3,635
(8,028)
7,994
(690)
-
35,994
2,678
38,672
62,943
18,883
-
-
(11,326)
6
-
-
-
(672)
6,891
(3,336)
3,555
45,330
13,599
-
-
(6,187)
-
(2,686)
806
-
-
5,532
(296)
5,236
the tax rate used in the above reconciliation is the corporate tax rate of 30% payable by australian corporate entities on taxable profits under the australian tax
law. there has been no change in the corporate tax rate when compared with the previous reporting period.
44
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 9. inCome tax (ContinueD)
income tax recognised directly in equity
the following deferred amounts were charged/(credited) directly to equity during the period:
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
(11,278)
922
7,750
(824)
(3,430)
19,035
(2,446)
62
-
16,651
(515,582)
(515,582)
(467,804)
(467,804)
-
-
264
(824)
(560)
(471)
(471)
31,357
148,054
179,411
32,667
137,329
169,996
(336,171)
(297,808)
659
148,054
148,713
148,242
2010
$000
-
-
62
-
62
(207)
(207)
-
137,030
137,030
136,823
openinG
BaLanCe
$000
CHarGeD to
inCome
$000
ConsoLiDateD
CHarGeD to
eQuitY
$000
aCQuisitions/
DisposaLs
$000
CLosinG
BaLanCe
$000
(5,056)
316
(408,180)
(28,486)
5,511
(30,688)
(18,034)
(4,725)
(62)
(1,059)
(462,293)
21,668
5,488
-
137,329
164,485
(6,396)
(10,555)
(1)
(2,926)
-
(3,239)
(51,287)
5,020
(796)
(165)
10,725
14,784
-
-
-
-
10,160
1,118
(7,750)
-
3,528
-
(922)
824
-
(98)
-
(4,740)
(5,523)
(442,189)
(7)
-
-
-
-
-
(892)
(41,243)
(7,875)
(6,533)
(7,812)
(4,298)
(5,530)
(515,582)
240
-
-
-
240
26,928
3,770
659
148,054
179,411
(297,808)
(36,503)
3,430
(5,290)
(336,171)
DeFerreD inCome tax
Revaluation of financial instruments treated as cash flow hedges
actuarial movements on defined benefit plans
Revaluation of available-for-sale financial assets
Security issue costs
Income tax (benefit)/expense reported in equity
DeFerreD tax BaLanCes
Deferred tax liabilities
temporary differences
Deferred tax assets
temporary differences
tax losses
Deferred tax balances
Deferred tax (liabilities)/assets arise from the following:
2011
Gross DeFerreD tax LiaBiLities
Intangible assets
property, plant and equipment
Deferred revenue
Deferred expenses
Cash flow hedges
Investments equity accounted
available for sale investments
other
Gross DeFerreD tax assets
provisions
Defined benefit obligation
Security issue costs
tax losses
45
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 9. inCome tax (ContinueD)
Deferred tax balances (continued)
presented in the statement of financial position as follows:
Deferred tax liabilities attributable to:
Continuing operations
Deferred tax assets attributable to:
Continuing operations
Deferred tax (liabilities)/assets arise from the following:
2010
Gross DeFerreD tax LiaBiLities
Intangible assets
property, plant and equipment
Deferred expenses
Cash flow hedges
Investments equity accounted
available for sale investments
other
Gross DeFerreD tax assets
provisions
Deferred revenue
Defined benefit obligation
tax losses
ConsoLiDateD
2011
$000
2010
$000
(336,171)
(336,171)
(297,808)
(297,808)
-
-
-
-
(336,171)
(297,808)
ConsoLiDateD
openInG
BalanCe
$000
CHaRGeD to
InCoMe
$000
CHaRGeD to
eQuItY
$000
aCQuISItIonS/
DISpoSalS
$000
CloSInG
BalanCe
$000
(526)
(392,632)
(20,142)
(3,505)
201
-
(49)
(4,530)
(15,536)
(10,546)
(736)
316
-
(1,010)
-
-
-
(13,793)
(5,242)
(62)
-
-
(12)
-
-
-
-
-
(5,056)
(408,180)
(30,688)
(18,034)
(4,725)
(62)
(1,059)
(416,653)
(32,042)
(19,097)
(12)
(467,804)
14,493
4,721
4,397
150,557
174,168
(242,485)
7,163
790
(1,355)
(13,228)
(6,630)
(38,672)
-
-
2,446
-
2,446
(16,651)
12
-
-
-
12
-
21,668
5,511
5,488
137,329
169,996
(297,808)
46
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011
9. inCome tax (ContinueD)
Deferred tax balances (continued)
2011
Gross DeFerreD tax LiaBiLities
available for sale investments
other
Gross DeFerreD tax assets
Security issue costs
tax losses
2010
Gross DeFerreD tax LiaBiLities
available for sale investments
other
Gross DeFerreD tax assets
Investments equity accounted
tax losses
unrecognised deferred tax assets
the following deferred tax assets have not been brought to
account as assets:
tax losses - capital
tax consolidation
Relevance of tax consolidation to the Group
openInG
BalanCe
$000
CHaRGeD to
InCoMe
$000
trust
CHaRGeD to
eQuItY
$000
tRanSFeRS
$000
CloSInG
BalanCe
$000
(62)
(145)
(207)
-
137,030
137,030
136,823
-
(156)
(156)
-
150,557
150,557
150,401
-
-
-
(165)
(3,583)
(3,748)
(3,748)
-
11
11
-
(5,247)
(5,247)
(5,236)
(264)
-
(264)
824
-
824
560
(62)
-
(62)
-
-
-
(62)
-
-
-
-
14,607
14,607
14,607
-
-
-
-
(8,280)
(8,280)
(8,280)
(326)
(145)
(471)
659
148,054
148,713
148,242
(62)
(145)
(207)
-
137,030
137,030
136,823
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
2010
$000
10,863
11,898
10,863
11,898
the trust and its wholly-owned australian resident entities formed a tax-
payment to or from the head entity, based on the current tax liability or current
consolidated group with effect from 1 July 2003 and are therefore taxed as a
tax asset of the entity. Such amounts are reflected in amounts receivable from
single entity from that date. the head entity within the tax-consolidated group
or payable to other entities in the tax-consolidated group.
is australian pipeline trust. the members of the tax-consolidated group are
identified at note 39.
the tax sharing agreement entered into between members of the tax-
consolidated group provides for the determination of the allocation of income
Nature of tax funding arrangement and tax sharing agreement
tax liabilities between the entities should the head entity default on its tax
entities within the tax-consolidated group have entered into a tax funding
payment obligations or if an entity should leave the tax-consolidated group.
arrangement and a tax sharing agreement with the head entity. under the
the effect of the tax sharing agreement is that each member’s liability for the
terms of the tax funding arrangement, australian pipeline trust and each of the
tax payable by the tax-consolidated group is limited to the amount payable to
entities in the tax-consolidated group have agreed to pay a tax equivalent
the head entity under the tax funding arrangement.
47
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 10. DistriButions
(a) recognised amounts
Final distribution paid on 15 september 2010
(2010: 15 September 2009)
profit distribution (a)
Capital distribution
semi-annual distribution paid on 17 march 2011
(2010: 17 March 2010)
profit distribution (a)
Capital distribution
unreCoGniseD amounts
Final distribution payable on 15 september 2011
(2010: 15 September 2010)
profit distribution (a)
Capital distribution
(b) recognised amounts
Final distribution paid on 15 september 2010
(2010: 15 September 2009)
profit distribution - apt (a)
profit distribution - aptIt (a) (note 31)
Capital distribution - apt (note 28)
Capital distribution - aptIt (note 31)
semi-annual distribution paid on 17 march 2011
(2010: 17 March 2010)
profit distribution - apt (a)
profit distribution - aptIt (a) (note 31)
Capital distribution - apt (note 28)
Capital distribution - aptIt (note 31)
(a) profit distributions were unfranked (2010: unfranked)
2011
Cents per
seCuritY
trust
2011
totaL
$000
2010
CentS peR
SeCuRItY
1.73
8.58
9.55
2.46
22.32
3.42
8.41
11.83
9,364
46,552
52,681
13,592
122,189
19,054
46,761
65,815
2.74
-
5.67
4.97
13.38
1.73
8.58
10.31
2011
Cents per
seCuritY
apt anD aptit
2011
totaL
$000
2010
CentS peR
SeCuRItY
1.73
3.67
8.58
3.01
9.55
3.74
2.46
0.75
33.50
9,364
19,928
46,552
16,350
52,681
20,629
13,592
4,127
183,223
2.74
2.17
-
11.09
5.67
3.51
4.97
1.60
31.75
2010
total
$000
13,684
-
28,832
25,320
67,836
9,364
46,552
55,916
2010
total
$000
13,684
10,809
-
55,293
28,832
17,847
25,320
8,141
159,926
48
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011
10. DistriButions (ContinueD)
unreCoGniseD amounts
Final distribution payable on 15 september 2011
(2010: 15 September 2010)
profit distribution - apt (a)
profit distribution - aptIt (a)
Capital distribution - apt
Capital distribution - aptIt
(a) profit distributions were unfranked (2010: unfranked)
2011
Cents per
seCuritY
apt anD aptit
2011
totaL
$000
2010
CentS peR
SeCuRItY
3.42
3.41
8.41
2.66
17.90
19,054
18,951
46,761
14,793
99,559
1.73
3.67
8.58
3.01
17.00
2010
total
$000
9,364
19,928
46,552
16,350
92,194
the final distribution in respect of the financial year has not been recognised in this financial report because the final distribution was not declared, determined or
publicly confirmed prior to the end of the financial year.
adjusted franking account balance (tax paid basis)
11. traDe anD otHer reCeivaBLes
trade receivables
allowance for doubtful debts
Receivables from associates and related parties
Finance lease receivables (note 32)
Interest receivable
other debtors
trade receivables are non-interest bearing and are generally on 30 day terms.
ageing of past due but not impaired
30 - 60 days
60 - 90 days
90 - 120 days
total
movement in the allowance for doubtful debts
Balance at beginning of year
(Credited)/charged to statement of comprehensive income
Balance at end of year
ConsoLiDateD
trust
2011
$000
3,522
103,520
-
103,520
38,429
3,252
262
235
2010
$000
3,350
104,382
(2,211)
102,171
36,976
3,181
148
53
2011
$000
3,522
-
-
-
2010
$000
3,350
-
-
-
482
482
-
3
-
-
3
-
145,698
142,529
485
485
5,304
194
2,648
8,146
2,211
(2,211)
-
2,856
284
3,076
6,216
2,414
(203)
2,211
-
-
-
-
-
-
-
-
-
-
-
-
-
-
In determining the recoverability of a trade receivable, the Consolidated entity considers any change in the credit quality of the trade receivable from the date the
credit was initially granted up to the reporting date. the concentration of credit risk is limited due to the customer base being large and unrelated.
Included in the allowance for doubtful debts is an individual trade receivable with a balance of $nil (2010: $2.205 million) which has been placed into receivership.
In 2011 an amount of $2.1 million was recovered in respect of this receivable. the balance has been written off.
ageing of impaired receivables
90 - 120 days
total
49
-
-
2,205
2,205
-
-
-
-
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 12. inventories
Spare parts - at cost
Gas stock
13. otHer Current assets
prepayments
14. non-Current reCeivaBLes
Finance lease receivables (note 32)
loans to controlled entities
loan receivable - related party
15. otHer non-Current FinanCiaL assets
Investments carried at cost:
Investments in controlled entities
envestra limited
energy Infrastructure Investment
available-for-sale investments carried at fair value:
ethane pipeline Income Fund
Hastings Diversified utilities Fund
other
Financial assets carried at amortised cost:
Redeemable ordinary shares
ConsoLiDateD
2011
$000
10,605
471
11,076
2010
$000
10,385
313
10,698
3,357
3,757
25,860
21,344
trust
2011
$000
2010
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
58
536,161
355,751
-
-
25,860
21,402
536,161
355,751
-
-
-
6,720
161,929
5
13,628
182,282
-
-
-
5,751
111,321
4
12,109
129,185
371,551
290,009
329
371,551
265,197
329
3,618
2,738
-
-
-
-
-
-
665,507
639,815
available-for-sale investments consist of investments in ordinary securities, and therefore have no fixed maturity date or coupon rate. the fair value of listed
available-for-sale investments has been determined directly by reference to published price quotations in an active market.
Financial assets carried at amortised cost relate to apa Group’s 19.9% investment in energy Infrastructure Investments pty ltd where apl, as responsible entity
for aptIt, acquired the redeemable ordinary shares, which include a debt component. this debt component amortises over ten years from December 2008 at 12%
per annum.
50
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 16. investments aCCounteD For usinG tHe eQuitY metHoD
name oF entitY
prinCipaL aCtivitY
CountrY oF inCorporation
2011
2010
oWneRSHIp InteReSt %
Jointly Controlled enties:
Sea Gas (a)
CaMS (b)
Gas transmission
Water management
energy Infrastructure Investments
unlisted energy vehicle
energy Infrastructure Investments 2
unlisted energy vehicle
australia
australia
australia
australia
50.00
-
19.90
20.20
33.33
50.00
19.90
20.20
associates:
envestra limited (c)
Gas transmission
australia
33.01
31.66
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
2010
$000
Investments in jointly controlled entities and associates
479,409
403,528
Reconciliation of movements in investments accounted for using the equity method:
Balance at 1 July
acquisitions during the year
Share of net profit for the year
Disposal
Movement in reserves
Dividends
Balance at 30 June
403,528
91,191
23,876
(2,848)
(2,099)
513,648
(34,239)
479,409
388,416
22,396
13,687
-
13,622
438,121
(34,593)
403,528
Summarised financial information in respect of the jointly controlled entities is set out below:
FinanCiaL position
total assets
total liabilities
net assets
Consolidated entity’s share of jointly controlled entities and associates net assets
FinanCiaL perFormanCe
total revenue
total profit for the year
Consolidated entity’s share of jointly controlled entities and associates profit
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ConsoLiDateD
2011
$000
2010
$000
4,532,327
3,792,793
739,534
215,770
475,880
104,262
23,876
4,449,597
3,568,440
881,157
281,585
343,575
56,011
13,687
(a) In november 2010, apa acquired a further 16.7% of the Sea Gas pipeline from International power for $46.3 million. apa exercised its pre-emptive right over part of International
power’s interest, and with this acquisition apa’s overall interest in the pipeline increased to 50%
(b) apa sold its investment in CaMS on 30 June 2011
(c) apa participated in envestra limited’s Distribution Reinvestment plan under envestra limited’s october and april Distribution, increasing its interest in envestra limited from 31.66%
to 33.01%
Contingent liabilities and capital commitments
the Consolidated entity’s share of the contingent liabilities, capital commitments and other expenditure commitments of joint venture entities is disclosed in
notes 46 and 41 respectively.
51
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011
17. propertY, pLant anD eQuipment
Gross CarrYinG amount
Balance at 1 July 2009
additions
Disposals
acquisitions through business combinations
transfer to assets classified as finance leases
transfers
Balance at 1 July 2010
additions
Disposals
acquisitions through business combinations
transfer to assets classified as finance leases
transfers
Balance at 30 June 2011
aCCumuLateD DepreCiation
Balance at 1 July 2009
Disposals
Depreciation expense
transfers
Balance at 1 July 2010
Disposals
Depreciation expense
Balance at 30 June 2011
net BooK vaLue
as at 30 June 2010
as at 30 June 2011
the trust has no property, plant and equipment.
FReeHolD lanD
anD BuIlDInGS
- at CoSt
$000
leaSeHolD
IMpRoVeMentS
- at CoSt
$000
ConSolIDateD
plant anD
eQuIpMent
- at CoSt
$000
108,281
2,213
3,443,775
37
(6,959)
87,058
-
146,209
3,670,120
57,838
(4,911)
156,460
-
-
70
-
5,165
113,516
-
(173)
1,556
-
4,352
119,251
-
-
-
-
692
2,905
-
(59)
-
-
(415)
2,431
WoRK In
pRoGReSS
- at CoSt
$000
154,298
126,636
-
-
(3,495)
(152,303)
total
$000
3,708,567
126,673
(6,959)
87,128
(3,495)
(237)
125,136
3,911,677
171,269
-
4,934
229,107
(5,143)
162,950
(10,878)
(639)
-
(10,878)
160,053
(164,629)
4,039,560
125,832
4,287,074
(10,702)
(1,198)
(334,222)
-
(1,657)
-
(12,359)
13
(3,191)
-
(342)
(32)
(1,572)
59
(327)
4,160
(84,388)
32
(414,418)
4,003
(90,940)
(15,537)
(1,840)
(501,355)
-
-
-
-
-
-
-
-
(346,122)
4,160
(86,387)
-
(428,349)
4,075
(94,458)
(518,732)
101,157
103,714
1,333
591
3,255,702
3,538,205
125,136
125,832
3,483,328
3,768,342
52
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 18. GooDWiLL
Gross CarrYinG amount
Balance at beginning of financial year
Goodwill write-off
Finalisation of provisional purchase price accounting
Balance at end of financial year
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
520,779
(5,435)
-
520,774
-
5
515,344
520,779
-
-
-
-
2010
$000
-
-
-
-
allocation of goodwill to cash-generating units
Goodwill has been allocated for impairment testing purposes to the following individual cash-generating units:
Individual cash-generating units
– asset management business;
– Gas transmission pipelines in new South Wales, Queensland and Western australia;
– Victorian transmission system; and
– apa Gas networks.
the carrying amount of goodwill allocated to cash-generating units that are significant individually or in aggregate is as follows:
asset management business
Gas transmission pipelines in new South Wales, Queensland and Western australia
Victorian transmission system
apa Gas networks
other
ConsoLiDateD
2011
$000
33,328
272,692
105,061
104,263
-
515,344
2010
$000
37,828
272,692
105,061
104,263
935
520,779
the recoverable amounts of cash-generating units are determined based on
asset management cash flow projections reflect long term agreements with
value-in-use calculations. these calculations use cash flow projections based
assumptions of renewal on similar terms and conditions based on management
on a five year financial business plan and thereafter a further 15 year financial
expectations.
model, being the basis of the Group’s forecasting and planning processes.
Cash flow projections are estimated for a period of up to 20 years, with a
For fully regulated assets, cash flows have been extrapolated on the basis of
terminal value, recognising the long term nature of the assets. the pre-tax
existing transportation contracts and government policy settings, and expected
discount rates used are 9.25% p.a. (2010: 9.0% p.a.) for energy infrastructure
contract renewals with resulting average annual growth rates of between 1.0%
assets and 9.25% p.a. (2010: 9.0% p.a.) for asset management.
and 3.6% p.a. these expected cash flows are factored into the regulated asset
base and do not exceed management’s expectations of the long-term average
growth rate for the market in which the CGu operates.
For non-regulated assets, apa has assumed no capacity expansion beyond
installed and committed levels; utilisation of capacity is based on existing
contracts, government policy settings and expected market outcomes.
these assumptions have been determined with reference to historic
information, current performance and expected changes taking into account
external information.
53
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011
19. otHer intanGiBLe assets
Right to receive pipeline tariff
Contract intangibles
riGHt to reCeive pipeLine tariFF
Gross carrying amount
Balance at 1 July 2010
Balance at 30 June 2011
accumulated amortisation and impairment
Balance at 1 July 2010
amortisation expense
Balance at 30 June 2011
net book value
ContraCt anD otHer intanGiBLes
Gross carrying amount
Balance at 1 July 2010
Reclassed from other non current assets
acquisitions
Balance at 30 June 2011
accumulated amortisation and impairment
Balance at 1 July 2010
amortisation expense
Balance at 30 June 2011
net book value
ConsoLiDateD
2011
$000
-
192,903
192,903
15,677
15,677
(14,624)
(1,053)
(15,677)
-
190,875
2,805
16,709
210,389
(12,646)
(4,840)
(17,486)
192,903
2010
$000
1,053
178,229
179,282
15,677
15,677
(13,924)
(700)
(14,624)
1,053
175,075
-
15,800
190,875
(8,307)
(4,339)
(12,646)
178,229
trust
2011
$000
2010
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
the Consolidated entity holds various third party operating and maintenance contracts. the combined gross carrying amount of $210.389 million amortises over terms
ranging from one to 60 years. useful life is determined based on the underlying contractual terms plus estimations of renewal of up to two terms where considered
probable by management. amortisation expense is included in the line item of depreciation and amortisation expense in the statement of comprehensive income.
20. otHer non-Current assets
line pack gas
Gas held in storage
other assets
4,356
2,229
1,381
7,966
2,354
2,361
2,293
7,008
-
-
192
192
-
-
-
-
54
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 21. traDe anD otHer paYaBLes
trade payables (a)
other payables (b)
payables to associates
non-trade payables to:
Wholly-owned controlled entities (c)
ConsoLiDateD
2011
$000
15,270
120,381
-
-
2010
$000
18,872
112,967
-
-
135,651
131,839
trust
2011
$000
-
248
-
2010
$000
-
-
-
148,242
148,490
136,823
136,823
(a) trade payables are non-interest bearing and are normally settled on 15 - 30 day terms
(b) predominantly consists of creditor capital expenditure accruals and external interest payable accruals
(c) Includes amounts arising from apa’s tax sharing agreement between apa and each of the entities in the tax-consolidated group (note 9)
22. Current BorroWinGs
unseCureD - at amortiseD Cost
Bank borrowings (a)
Guaranteed Senior notes
seCureD - at amortiseD Cost
Bank Borrowings
Finance lease liabilities (note 32)
900,000
-
-
-
-
-
102,000
1,645
238
1,883
900,000
103,883
(a) Relates to the current portion of long-term borrowings (Refer to note 37 for details of interest rates)
23. otHer Current FinanCiaL LiaBiLities
Derivatives
Derivatives that are designated and effective as hedging instruments carried at fair value:
Forward foreign exchange contracts
Interest rate swaps – cash flow hedges
Foreign exchange hedges – cash flow hedges
1,172
11,899
31,915
44,986
152
8,586
-
8,738
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011
24. provisions
Current
employee benefits (a)
other (note 33)
non-Current
employee benefits (a)
other (note 33)
ConsoLiDateD
2011
$000
48,279
6,452
54,731
26,825
4,015
30,840
2010
$000
39,497
3,460
42,957
28,645
3,040
31,685
5,922
1,969
355
31,251
39,497
7,271
18,294
3,080
28,645
9,260
1,614
10,874
925
925
(a) the aggregate employee benefit liability recognised and included in the financial statements is as follows:
Current
Incentives
Cash settled security-based payments
Restructuring costs
leave balances
non-Current
Cash settled security-based payments
Retirement benefit obligation (note 34)
leave balances
25. otHer LiaBiLities
Current
unearned revenue - interest
unearned revenue - other
non-Current
unearned revenue - other
11,441
3,976
-
32,862
48,279
10,498
12,567
3,760
26,825
-
2,347
2,347
802
802
trust
2011
$000
2010
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 26. non-Current BorroWinGs
unseCureD - at amortiseD Cost
Bank borrowings (a)
Guaranteed Senior notes (b)
Medium term notes (c)
less: amortised borrowing costs
seCureD - at amortiseD Cost
Finance lease liabilities (note 32) (d)
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
2010
$000
655,500
1,059,681
294,947
(19,682)
1,990,446
1,665,324
1,253,596
-
(27,409)
2,891,511
-
-
380
380
1,990,446
2,891,891
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(a) Relates to the non-current portion of long-term borrowings. (Refer to note 37 for details of interest rates)
(b) Represents uS denominated notes of uS$799 million (2010: uS$659 million) measured at the exchange rate at reporting date, and a$314.9 million of a$ denominated notes (2010:
a$416.9 million)
(c) Represents 10 year fixed rate australian Medium term notes issued to institutional investors
27. otHer non-Current FinanCiaL LiaBiLities
Derivatives - at fair value:
Interest rate swaps - cash flow hedges
Foreign exchange hedges - cash flow hedges
16,902
246,884
263,786
41,335
25,356
66,691
-
-
-
-
-
-
57
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011
28. issueD CapitaL
securities
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
2010
$000
634,116,029 securities, fully paid (2010: 542,318,629 securities, fully paid) (a)
1,192,779
984,936
1,192,779
984,936
movements
Balance at beginning of financial year
Issue of securities under Distribution Reinvestment plan
Issue of securities under Security purchase plan
Capital return to securityholders (note 10(b))
Institutional placement of units
equity values adjustment between stapled entities
Issue cost of securities
tax relating to security issue costs
Balance at end of financial year
2011
no. oF
seCurities
000
542,319
13,875
-
-
77,922
-
-
-
ConsoLiDateD anD trust
2011
$000
984,936
39,782
-
(60,145)
230,128
-
(2,746)
824
2010
no. oF
SeCuRItIeS
000
2010
$000
498,664
894,435
18,377
25,278
-
-
-
-
-
41,720
64,463
(25,320)
-
9,868
(230)
-
634,116
1,192,779
542,319
984,936
(a) Fully paid securities carry one vote per security and carry the right to distributions
Changes to the then Corporations law abolished the authorised capital and par value concept in relation to issued capital from 1 July 1998. therefore, the trust
does not have a limited amount of authorised capital and issued securities do not have a par value.
58
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 29. reserves
Hedging
asset revaluation
available-for-sale investment revaluation
HeDGinG reserve
Balance at beginning of financial year
Gain/(loss) recognised:
Interest rate swaps/currency swaps
Deferred tax related to gains/losses recognised
transferred to profit or loss:
Interest rate swaps/currency swaps
Deferred tax related to amounts transferred to profit or loss
Share of hedge reserve of associate
Deferred tax related to share of hedge reserve
Balance at end of financial year
ConsoLiDateD
2011
$000
28,003
8,669
18,227
54,899
2010
$000
54,318
8,669
(3,032)
59,955
54,318
13,690
(228,392)
68,517
192,900
(57,870)
(2,100)
630
28,003
294
(87)
45,749
(13,725)
13,622
(5,225)
54,318
trust
2011
$000
-
-
762
762
-
-
-
-
-
-
-
-
2010
$000
-
-
145
145
-
-
-
-
-
-
-
-
the hedging reserve represents hedging gains and losses recognised on the effective portion of cash flow hedges. the cumulative deferred gain or loss on the
hedge is recognised in profit or loss when the hedged transaction impacts profit or loss, or is included as a basis adjustment to the non-financial hedge item,
consistent with the applicable accounting policy.
asset revaLuation reserve
Balance at beginning of financial year
Balance at end of financial year
8,669
8,669
8,669
8,669
-
-
-
-
the asset revaluation reserve arose on the revaluation of the existing interest in a pipeline as a result of a business combination. Where revalued pipelines are sold,
that portion of the asset revaluation reserve which relates to that asset and is effectively realised, is transferred directly to retained earnings. the reserve can be
used to pay distributions only in limited circumstances.
avaiLaBLe-For-saLe investment revaLuation reserve
Balance at beginning of financial year
Revaluation gain/(loss) recognised
Deferred tax related to gains/losses recognised
Balance at end of financial year
(3,032)
29,008
(7,749)
18,227
(1,236)
(1,734)
(62)
(3,032)
145
880
(263)
762
(1,237)
1,444
(62)
145
the available-for-sale investment revaluation reserve arises on the revaluation of available-for-sale financial assets. Where a revalued financial asset is sold, that
portion of the reserve which relates to that financial asset and is effectively realised, is recognised in profit or loss. Where a revalued financial asset is impaired,
that portion of the reserve which relates to that financial asset is recognised in profit or loss.
59
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 30. retaineD earninGs
Balance at beginning of financial year
net profit attributable to securityholders
Distributions paid (note 10)
actuarial gain/(loss) on defined benefit plans recognised directly to
retained earnings after tax (note 34)
Balance at end of financial year
ConsoLiDateD
2011
$000
9,364
69,585
(62,045)
2,150
19,054
2010
$000
(4,998)
62,584
(42,516)
(5,706)
9,364
trust
2011
$000
11,263
59,388
(62,045)
-
8,606
2010
$000
13,685
40,094
(42,516)
-
11,263
31. minoritY interests
apt Investment trust
other minority interest
apt investment trust
issued capital
400,830
283
401,113
340,758
132
340,890
Balance at beginning of financial year
320,931
358,450
equity values adjustment between stapled entities
Issue of securities under distribution reinvestment plan
Issue of securities under security purchase plan
Institutional placement of units
Distribution - capital return (note 10(b))
Issue cost of securities
tax relating to security issue costs
Balance at end of financial year
reserves
available for sale investment revaluation reserve:
Balance at beginning of financial year
Valuation loss recognised
retained earnings
Balance at beginning of financial year
net profit attributable to aptIt equityholders
Distributions paid (note 10(b))
Balance at end of financial year
otHer minoritY interest
Issued capital
Reserves
Retained earnings
-
12,590
-
69,872
(20,477)
(915)
-
(9,868)
15,134
20,723
-
(63,434)
(74)
-
382,001
320,931
(101)
635
534
19,928
38,924
(40,557)
18,295
4
1
278
283
(1,446)
1,345
(101)
10,810
37,774
(28,656)
19,928
4
1
127
132
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011
32. Leases
(a) Leasing arrangements - receivables
Finance lease receivables relate to the lease of a metering station, a natural gas vehicle facility and X41 expansion.
FinanCe Lease reCeivaBLes
not longer than 1 year
longer than 1 year and not longer than 5 years
longer than 5 years
Minimum future lease payments receivable (a)
Gross finance lease receivables
less: unearned finance lease receivables
present value of lease receivables
Included in the financial statements as part of:
Current trade and other receivables (note 11)
non-current receivables (note 14)
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
2010
$000
5,957
22,649
14,278
42,884
42,884
(13,772)
29,112
3,252
25,860
29,112
5,416
19,535
8,889
33,840
33,840
(9,315)
24,525
3,181
21,344
24,525
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(a) Minimum future lease payments receivable include the aggregate of all lease payments receivable and any guaranteed residual
(b) Leasing arrangements - liabilities
Finance lease liabilities relate to leases of general property, plant and equipment. there are no contingent rental payments due or payable. there are no renewal
or purchase options and escalation clauses or restrictions imposed by the lease arrangements concerning distributions, additional debt and further leasing.
FinanCe Lease LiaBiLities
not longer than 1 year
longer than 1 year and not longer than 5 years
Minimum future finance lease payments (b)
less: future finance charges
present value of minimum lease payments
Included in the financial statements as part of:
Current borrowings (note 22)
non-current borrowings (note 26)
-
-
-
-
-
-
-
-
280
414
694
(76)
618
238
380
618
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(b) Minimum future lease payments include the aggregate of all lease payments and any guaranteed residual
61
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011
32. Leases (ContinueD)
(b) Leasing arrangements - liabilities (continued)
non-CanCeLLaBLe operatinG Leases – transmission pipeLines
not longer than 1 year
longer than 1 year and not longer than 5 years
longer than 5 years
non-CanCeLLaBLe operatinG Leases – otHer
not longer than 1 year
longer than 1 year and not longer than 5 years
longer than 5 years
33. provisions
Balance at 30 June 2010
additional provisions recognised (b)
unwinding of discount
Reductions arising from payments/other sacrifices of future economic benefits
Balance at 30 June 2011
Current (note 24)
non-current (note 24)
Balance at 30 June 2009
additional provisions recognised
unwinding of discount
Reductions arising from payments/other sacrifices of future economic benefits
Balance at 30 June 2010
Current (note 24)
non-current (note 24)
ConsoLiDateD
2011
$000
-
-
-
-
5,938
8,832
1,159
15,929
2010
$000
82,620
-
-
82,620
6,579
12,883
1,317
20,779
aBanDonMent (a)
$000
3,040
801
174
-
4,015
-
4,015
4,015
2,830
40
170
-
3,040
-
3,040
3,040
trust
2011
$000
2010
$000
-
-
-
-
-
-
-
-
ConsoLiDateD
otHeR
$000
3,460
3,568
-
(576)
6,452
6,452
-
6,452
957
2,960
-
(457)
3,460
3,460
-
3,460
-
-
-
-
-
-
-
-
total
$000
6,500
4,369
174
(576)
10,467
6,452
4,015
10,467
3,787
3,000
170
(457)
6,500
3,460
3,040
6,500
(a) Costs of dismantling pipelines and restoring the sites on which the pipelines are located is to be included in the cost of the asset at inception and required to be accounted for in
accordance with aaSB 137 ‘provisions, Contingent liabilities and Contingent assets’
(b) Includes rectification works due to Queensland floods
62
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 34. empLoYee superannuation pLans
all employees of the Consolidated entity are entitled to benefits on retirement,
the most recent actuarial valuations of plan assets and the present value of the
disability or death from an industry sponsored fund, or an alternative fund of
defined benefit obligation were carried out at 30 June 2011 by Mercer
their choice. the Consolidated entity has three plans with defined benefit
sections (due to the acquisition of businesses) and plans with defined
contribution sections. the defined benefit sections provide lump sum benefits
upon retirement based on years of service. the defined contribution sections
receive fixed contributions from the Consolidated entity and the Consolidated
(australia) pty ltd and Russell Investments (2010: Mercer (australia) pty ltd
and Russell Investments). the present value of the defined benefit obligation,
and the related current service cost and past service cost, were measured using
the projected unit credit method.
entity’s legal and constructive obligations are limited to these amounts.
the following sets out details in respect of the defined benefit plans only:
ConsoLiDateD
2011
$000
3,133
4,601
(6,112)
1,622
9,823
3,071
98,758
(111,325)
(12,567)
(18,294)
(1,622)
3,072
4,278
2010
$000
2,970
4,559
(5,653)
1,876
7,140
(8,153)
91,346
(109,640)
(18,294)
(14,656)
(1,876)
(8,153)
6,391
(12,566)
(18,294)
109,640
98,679
3,133
4,601
1,419
640
(7,315)
(793)
111,325
2,970
4,559
1,650
9,640
(6,718)
(1,140)
109,640
amounts reCoGniseD in tHe statement oF CompreHensive inCome
Current service cost
Interest cost on benefit obligation
expected return on plan assets
total included in superannuation costs which form part of employee benefit expense
actual return on plan assets
actuarial gains/(losses) incurred during the year and recognised in the statement of comprehensive income
amounts reCoGniseD in tHe statement oF FinanCiaL position
Fair value of plan assets
present value of benefit obligation
net liability - non-current (note 24)
movements in LiaBiLitY DurinG tHe Year
Balance at beginning of year
expense recognised in statement of comprehensive income
amount recognised in retained earnings
Contributions from employer
Balance at end of year (a)
(a) the above balances are recorded within the provisions section of the statement of financial position; refer to note 24
Movements in the present value of the defined benefit obligations in the current period were as follows:
opening defined benefit obligation
Current service cost
Interest cost
Contributions from plan participants
actuarial (gains)/losses
Benefits paid
taxes and premiums paid
Closing defined benefit obligation
63
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 34. empLoYee superannuation pLans (ContinueD)
Movements in the present value of the plan assets in the current period were as follows:
opening fair value of plan assets
expected return on plan assets
actuarial gains/(losses)
Contributions from employer
Contributions from plan participants
Benefits paid
taxes and premiums paid
Closing fair value of plan assets
ConsoLiDateD
2011
$000
91,346
6,112
3,711
4,278
1,419
(7,315)
(793)
98,758
2010
$000
84,023
5,653
1,487
6,391
1,650
(6,718)
(1,140)
91,346
the average principal actuarial assumptions used in determining post-employment obligations for the Consolidated entity’s plans are shown below (expressed as
weighted averages):
Discount rate (p.a.)
expected return on plan assets (p.a.)
expected salary rate increase (p.a.)
the invested defined benefit assets were held in the following classes:
australian equities
International equities
Fixed income
property
alternatives
Cash
the history of experience adjustments is as follows:
Fair value of plan assets
present value of defined benefit obligation
(Deficit)/surplus
experience adjustments on plan liabilities
experience adjustments on plan assets
ConsoLiDateD
2011
%
4.6
7.0
4.5
33.7
27.2
11.8
8.5
13.8
5.0
2011
$000
98,758
111,325
(12,567)
3,090
(3,167)
2010
$000
91,346
109,640
2009
$000
84,023
98,679
(18,294)
(14,656)
4,739
(821)
(6,753)
8,450
the Consolidated entity expects $4,076,000 in contributions to be paid to the defined benefit plans during the year ending 30 June 2012.
2010
%
4.7
7.0
4.5
34.3
25.3
12.3
8.5
13.3
6.3
2008
$000
90,227
97,042
(6,815)
(1,515)
8,533
64
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 35. earninGs per seCuritY
Basic and diluted earnings per security (cents)
ConsoLiDateD
2011
19.7
2010
19.4
the earnings and weighted average number of ordinary securities used in the calculation of basic and diluted earnings per security are as follows:
net profit attributable to securityholders for calculating basic and diluted earnings per security ($000)
108,509
100,358
adjusted weighted average number of ordinary securities used in the calculation of basic and diluted earnings
per security (000)
no. oF seCurities
551,222
516,243
36. notes to tHe statement oF CasH FLoWs
(a) reconciliation of cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents includes cash on hand and in banks and investments in money market instruments, net
of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows is reconciled to the related items
in the statement of financial position as follows:
Cash at bank and on hand (a)
Short-term deposits
Restricted cash
ConsoLiDateD
2011
$000
90,706
4,662
95,368
2010
$000
76,867
4,073
80,940
trust
2011
$000
49
-
49
2010
$000
293
-
293
(a) as at 30 June 2011, australian pipeline limited held $5.0 million (2010: $5.0 million) on deposit to meet its financial requirements as the holder of an australian Financial Services licence
(b) Businesses acquired and disposed of
Consolidated
During the financial year, the Consolidated entity acquired the emu Downs
In the prior year, the Consolidated entity acquired the Berwyndale to
Wind Farm (“eDWF”), net cash outflow on this acquisition was $167,219,000.
Wallumbilla pipeline (“BWp”) and a 20.2% interest in the eII2 (owner of the
Refer to note 40 for further details of the eDWF acquisition. In addition a
Hallet 4 Wind Farm project). the net cash outflow on these acquisitions was
further 16.7% interest was acquired in the Sea Gas pipeline for $46,904,000
$83,328,000 for the controlled entity and $327,000 for the share of the
increasing apa’s overall interest to 50% and the $19,676,000 equity contribution
associate. Refer to note 40 for further details of the BWp acquisition.
payable upon construction completion was made to eII2 (owner of the Hallett
4 Wind Farm project). $24,812,000 (2010: $22,379,000) has been reinvested in
envestra limited through the Dividend Reinvestment plan and $22,481,000
(2010: $114,498,000) has been invested in the purchase of shares in Hastings
Diversified utilities Fund.
Trust
During the financial year, the trust has reinvested $24,812,000 (2010:
$22,379,000) in envestra limited through the Dividend Reinvestment plan.
65
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 36. notes to tHe statement oF CasH FLoWs (ContinueD)
(c) reconciliation of profit for the year to the net cash provided by operating activities
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
108,825
100,508
59,388
profit for the year
loss on disposal of investments
Impairment of goodwill
(Gain)/loss on disposal of property, plant and equipment
Gain from sale of equity accounted investments
Discount on business acquisition
Share of net profits of jointly controlled entities accounted for
using the equity method
Dividends/distributions received
Depreciation and amortisation expense
Finance costs
Changes in assets and liabilities:
trade and other receivables
Inventories
other assets
trade and other payables
provisions
other liabilities
Income tax balances
net cash provided by operating activities
(d) Financing facilities
unseCureD FaCiLities
Bank borrowings (a)
amounts used
amounts unused
Guaranteed senior notes (b)
amounts used
amounts unused
Medium term notes (c)
seCureD FaCiLities
Bank borrowings
amounts used
amounts unused
-
5,435
1,068
(1,652)
-
(23,876)
34,239
100,350
12,895
(5,158)
(2,381)
7,458
1,205
12,351
(2,331)
41,601
290,029
1,510
-
2,799
-
(4,586)
(13,687)
35,087
91,426
11,019
(5,819)
3,460
3,796
8,568
669
(5,661)
38,672
267,761
1,555,500
234,500
1,790,000
1,665,324
560,000
2,225,324
1,059,681
1,355,596
-
294,947
1,354,628
-
-
1,355,596
-
-
-
1,645
-
1,645
2010
$000
40,094
5,050
-
-
-
-
-
-
-
-
-
-
-
24,812
22,391
-
-
-
-
-
-
-
36
-
-
(20,147)
(22,416)
-
-
(862)
63,191
-
-
5,236
50,391
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(a) apt pipelines limited entered into syndicated bank facilities in June 2007 and September 2009, and bilateral bank facilities in July 2008 and august 2009
(b) apt pipelines limited issued notes in the uS private placement market in September 2003, May 2007 and July 2009. the issues include australian dollar and uS dollar denominated
notes. the disclosed amount represents the australian dollar equivalent of notes issued as measured at the reporting date. the maturity date and interest rates payable are disclosed in
note 37
(c) Represents 10 year fixed rate australian Medium term notes issued to institutional investors
66
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011
37. FinanCiaL instruments
(a) Capital risk management
the Consolidated entity manages its capital structure to ensure that entities in
the Group will be able to continue as a going concern while maximising the
return to security holders through the optimisation of the debt to equity
structure.
entity. these risks include market risk (including currency risk, interest rate risk
and price risk), credit risk and liquidity risk.
the Consolidated entity seeks to minimise the effects of these risks through
natural hedges and by using derivative instruments to directly hedge the
exposures. the use of financial derivatives is governed by the Consolidated
entity’s, board approved treasury policy, which provides written principles on
the Consolidated entity’s overall capital management strategy is to continue to
foreign exchange risk, interest rate risk, credit risk, the use of financial
target strong BBB/Baa2 investment grade ratings through maintaining
sufficient flexibility to fund organic growth and investment from internally
generated and retained cash flows, equity and, where appropriate, additional
derivatives and non-derivative financial instruments, and the investment of
excess liquidity. the Consolidated entity does not enter into or trade financial
instruments,
including derivative financial
instruments
for speculative
debt funding.
purposes.
the capital structure of the Consolidated entity consists of debt, which includes
borrowings disclosed in notes 22 and 26, cash and cash equivalents, and equity
attributable to equity holders of the parent, comprising issued capital, reserves
and retained earnings as disclosed in notes 28, 29 and 30 respectively.
the Consolidated entity’s operations are conducted primarily through its
subsidiaries.
the Corporate treasury function reports monthly to the Consolidated entity’s
board of Directors, which monitors risks and policies implemented to mitigate
risk exposures.
(c) market risk management
the Consolidated entity’s activities exposure is primarily to the financial risk of
changes in interest rates and foreign currency exchange rates. the Consolidated
operating cash flows are used to maintain and expand the Consolidated
entity enters in to a variety of derivative financial instruments to manage its
entity’s assets, as well as to make distributions to security holders and to repay
exposure to interest rate and foreign currency risk, including:
maturing debt.
– foreign exchange forward contracts to hedge the exchange rate risk
the Consolidated entity’s policy is to borrow from overseas and locally, using a
arising on the importation of equipment from the united States and other
variety of capital markets and bank loan facilities, to meet anticipated funding
international suppliers;
requirements.
– currency swaps to manage the foreign currency risk associated with foreign
Controlled entities are subject to externally imposed capital requirements.
these relate to the australian Financial Services licence held by australian
pipeline limited, the Responsible entity of the Consolidated entity and were
adhered to for the entirety of the 2010 and 2011 periods.
Gearing ratio
the Consolidated entity’s board of Directors reviews the capital structure on a
regular basis. as part of the review, the board considers the cost of capital and
the state of the markets. the Consolidated entity continues to target strong
BBB/Baa2 investment grade ratings through maintaining sufficient flexibility to
fund organic growth and investment from internally generated and retained
currency denominated borrowings;
– interest rate forward contracts to manage interest rate risk; and
– interest rate swaps to mitigate the risk of rising interest rates.
there has been no change to the Consolidated entity’s exposure to market
risks or the manner to which it manages and measures the risk from the
previous period.
the Consolidated entity is also exposed to price risk from its investments in
listed equities. the majority of the shareholdings are in two companies that are
publicly traded on the australian Stock exchange (aSX).
cashflows and where appropriate, additional debt and equity funding. Based
(d) Foreign currency risk management
on recommendations of the board, the Consolidated entity balances its overall
the Consolidated entity undertakes certain transactions denominated in
capital structure through new equity issues, through the issue of new debt or
foreign currencies and hence exposures to exchange rate fluctuations arise.
the redemption of existing debt, and through a disciplined distribution
exchange rate exposures are managed within approved policy parameters
payment policy.
(b) Financial risk management objectives
utilising foreign exchange contracts, including forward contracts and cross
currency contracts. there was no unmanaged exposure in either 2010 or 2011.
apa’s Corporate treasury function provides services to the business, co-
the carrying value amount of the Consolidated entity’s foreign currency
ordinates access to domestic and international financial markets, and monitors
denominated monetary assets and monetary liabilities at the reporting date is
and manages the financial risks relating to the operations of the Consolidated
as follows:
ConsoLiDateD
LiaBiLities
2011
$000
744,815
(744,815)
-
1,172
1,172
2010
$000
938,730
(938,730)
-
157
157
assets
2011
$000
2010
$000
-
-
-
-
-
-
-
-
-
-
uS dollar borrowings
Cross currency swaps
Foreign exchange contracts
the Consolidated entity is mainly exposed to uS dollars (uS$).
67
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 37. FinanCiaL instruments (ContinueD)
(d) Foreign currency risk management (continued)
Forward foreign exchange contracts
It is the policy of the Consolidated entity to enter into various foreign exchange contracts to cover 100% of all foreign currency exposures in excess of uS$1million
that are certain. Basis adjustments are made to the carrying amounts of non-financial hedged items when the anticipated purchase takes place.
the following table details the forward foreign currency contracts outstanding at reporting date:
2011
outstanDinG ContraCts
Buy us dollars
less than 3 months
3 to 6 months
6 to 12 months
1 to 2 years
2010
outstanDinG ContraCts
Buy us dollars
less than 3 months
3 to 6 months
6 to 12 months
1 to 2 years
averaGe
exCHanGe rate
ConsoLiDateD
ForeiGn
CurrenCY
2011
us$000
ContraCt
vaLue
2011
$000
Fair vaLue
2011
$000
0.9583
0.9694
0.9721
0.0000
0.8340
0.8190
0.8236
0.8009
4,179
3,672
6,343
-
14,195
2010
uS$000
3,096
3,318
1,880
2,302
10,596
4,361
3,789
6,525
-
14,675
2010
$000
3,712
4,051
2,282
2,874
12,920
(441)
(308)
(423)
-
(1,172)
2010
$000
(54)
(95)
(3)
(5)
(157)
the Consolidated entity has entered into contracts to purchase equipment in
Cross currency swap contracts
uSD from overseas suppliers. the Consolidated entity has entered into forward
under cross currency swap contracts, the Consolidated entity agrees to
foreign exchange contracts to hedge the exchange rate risk arising from these
exchange specified principal and interest foreign currency amounts at agreed
anticipated future transactions, which are designated as cash flow hedges.
future dates at a specified exchange rate. Such contracts enable the
as at reporting date, the aggregate amount of unrealised losses under forward
foreign exchange contracts deferred in the hedging reserve relating to these
anticipated future transactions is $1,172,000 (2010: $157,000). It is anticipated
Consolidated entity to mitigate the risk of adverse movements in foreign
exchange rates in relation to principal and interest payments arising under the
2003, 2007 and 2009 uS dollar note issues.
that the capital purchases will take place within the next two financial years at
the Consolidated entity receives fixed amounts in uS$ and pays both variable
which stage unrealised mark to market amounts in equity will be included in
interest rates (based on australian BBSW) and fixed interest rates based on
the carrying amount of the asset being purchased.
agreed interest rate swap rates.
the following table details the swap contracts principal balances over various durations as at the reporting date:
2003 note issue
Buy us dollars - interest
less than 1 year
1 year to 2 years
2 years to 5 years
5 years and more
exCHanGe rate
prinCipaL amount
2011
$
2010
$
2011
$000
2010
$000
0.6573
0.6573
0.6573
0.6573
0.6573
0.6573
0.6573
0.6573
(22,863)
(22,863)
(47,276)
(14,425)
(22,863)
(22,863)
(59,014)
(25,550)
(107,427)
(130,290)
68
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011
37. FinanCiaL instruments (ContinueD)
(d) Foreign currency risk management (continued)
Buy us dollars - principal
2 years to 5 years
5 years and more
2007 note issue
Buy us dollars - interest
less than 1 year
1 year to 2 years
2 years to 5 years
5 years and more
Buy us dollars - principal
5 years and more
2009 note issue
Buy us dollars - interest
less than 1 year
1 year to 2 years
2 years to 5 years
5 years and more
Buy us dollars - principal
5 years and more
exCHanGe rate
prinCipaL amount
2011
$
2010
$
2011
$000
2010
$000
0.6573
0.6573
0.6573
0.6573
(298,190)
(95,847)
(112,582)
(281,455)
(394,037)
(394,037)
0.8068
0.8068
0.8068
0.8068
0.8068
0.8068
0.8068
0.8068
(29,737)
(29,737)
(89,212)
(95,037)
(29,737)
(29,737)
(89,212)
(124,774)
(243,723)
(273,460)
0.8068
0.8068
(495,786)
(495,786)
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
(15,934)
(15,934)
(47,803)
(34,279)
(113,951)
(15,934)
(15,934)
(47,803)
(50,213)
(129,885)
0.7576
0.7576
(184,784)
(184,784)
Foreign currency sensitivity analysis
foreign exchange contracts. the following table details the Consolidated
the Consolidated entity is mostly exposed to movements in the uS$ through
entity’s sensitivity to a 10% decrease and increase in the australian dollar
its fully hedged borrowings via the uS private placement market and its current
against the relevant foreign currencies. the sensitivity rate used is 10% and
obligations to future purchases of capital equipment. the entire uS$ cash flows
represents management’s assessment of the possible change in foreign
arising from the 2003, 2007 and 2009 note issues have been swapped; as such,
exchange rates. the sensitivity analysis includes only outstanding foreign
the Consolidated entity has no currency risk associated with those note issues.
currency denominated monetary items and adjusts their translation at the
therefore, the sensitivity analysis has only been performed on the forward
period end for a 10% change in foreign currency rates.
a$ depreciating by 10%
profit
other equity (a)
a$ appreciating by 10%
profit
other equity (a)
ConsoLiDateD
2011
$000
-
(1,201)
-
1,468
2010
$000
-
(1,377)
-
1,127
(a) this is as a result of the changes to the fair value of forward foreign exchange contracts designated as cash flow hedges. negative amounts denote a credit to equity
69
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011
37. FinanCiaL instruments (ContinueD)
(e) interest rate risk management
the Consolidated entity is exposed to interest rate risk as it borrows funds at
Interest rate swap contracts
both fixed and floating interest rates. this risk is managed by the Consolidated
under interest rate swap contracts, the Consolidated entity agrees to exchange
entity by maintaining an appropriate mix between fixed and floating rate
borrowings, through the use of interest rate swap contracts and forward
interest rate contracts. Hedging activities are evaluated regularly to align with
interest rate views and defined policy, ensuring appropriate hedging strategies
are applied. Hedging activity is complemented by “natural hedges” from
regulatory resets and CpI adjusted revenues.
the trust and the Consolidated entity’s exposures to interest rate risk on
the difference between fixed and floating rate interest amounts calculated on
agreed notional principal amounts. Such contracts enable the Consolidated
entity to mitigate the risk of changing interest rates on the fair value of issued
fixed rate debt held and cash flow exposures on the issued variable rate debt
held. the fair value of interest rate swaps at the reporting date is determined by
discounting the future cash flows using the yield curves at reporting date. the
average interest rate is based on the outstanding balances at the end of the
financial liabilities are detailed in the liquidity risk management section of this
note. exposure to financial assets is limited to cash and cash equivalents
financial year.
amounting to $95.4 million as at 30 June 2011 (2010: $80.9 million).
the following table details the notional principal amounts and remaining terms of the cross currency and interest rate swap contracts outstanding as at the end
of the financial year:
WeiGHteD averaGe
interest rate
2011
% p.a.
2010
% p.a.
notionaL
prinCipaL amount
Fair vaLue
2011
$000
2010
$000
2011
$000
2010
$000
CasH FLoW HeDGes
pay fixed interest/receive floating interest
Consolidated
less than 1 year
1 year to 2 years
2 years to 5 years
5 years and more
7.10
5.39
6.50
6.69
6.03
7.10
6.59
8.08
200,000
200,000
598,190
776,416
250,000
200,000
487,582
1,087,024
1,774,606
2,024,606
trust
-
-
-
-
(31,474)
(37,637)
(147,510)
(78,640)
(295,261)
-
(2,888)
(5,783)
(30,886)
(35,715)
(75,271)
-
the Consolidated entity had no fair value hedges in 2011 or 2010.
current period due to the overall increase in the level of the Consolidated
the interest rate swaps settle on a quarterly or semi-annual basis. the floating rate
benchmark on the interest rate swaps is australian BBSW. the Consolidated entity
will settle the difference between the fixed and floating interest rate on a net basis.
entity’s unhedged floating rate borrowings. the valuation of the increase/
decrease in equity reserves is based on 1.00% p.a. increase/decrease in the
yield curve at the reporting date. the 2010 increase/decrease in equity reserves
adjusts to $29,774,000/$33,336,000 when the uSD component of the cross
all interest rate swap contracts exchanging floating rate interest amounts for
currency interest rate swaps is converted at current year FX rates. the decrease
fixed rate interest amounts are designated as cash flow hedges in order to
in sensitivity in equity which relates to interest rates is due to a lower level of
reduce the Consolidated entity’s cash flow exposure resulting from variable
interest rate swaps held.
interest rates on borrowings.
Interest rate sensitivity analysis
the sensitivity analysis below has been determined based on the exposure to
interest rates for both derivative and non-derivative instruments held. a 100
(f) price risk management
the Consolidated entity is exposed to equity price risks arising from equity
investments. equity investments are held for strategic rather than trading
purposes. the Consolidated entity does not actively trade these investments.
basis point increase or decrease is used and represents management’s
Equity price sensitivity
assessment of the possible change in interest rates. at reporting date, if interest
rates had been 100 basis points higher or lower and all other variables were
held constant, the Consolidated entity’s:
the sensitivity analysis below has been determined based on the exposure to
equity price risks at the reporting date. at the reporting date, if the prices of the
Consolidated entity’s equity investments had been 5% p.a. higher or lower:
– net profit would decrease by $7,555,000 or increase by $7,555,000 (2010:
– net profit would have been unaffected as the equity investments are
decrease by $7,153,000 or increase by $7,153,000). this is mainly attributable
classified as available-for-sale and no investments were disposed of or
to the Consolidated entity’s exposure to interest rates on its variable rate
impaired (2010: $nil); and
borrowings; and
– equity reserves would decrease/increase by $6,601,144 (2010: $4,508,228),
– equity reserves would increase by $23,873,000 or decrease by $24,909,000
due to the changes in the fair value of available-for-sale shares.
(2010: increase by $14,761,000 or decrease by $17,021,000). this is due to
the changes in the fair value of derivative interest instruments.
the Consolidated entity’s sensitivity to equity prices has increased during the
current period due to the acquisition of shares in Hastings Diversified utilities
the Consolidated entity’s sensitivity to interest rates has increased during the
Fund held as an available-for-sale investment.
70
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011
37. FinanCiaL instruments (ContinueD)
(g) Credit risk management
net of any allowances, represents the Consolidated entity’s maximum exposure
Credit risk refers to the risk that a counterparty will default on its contractual
to credit risk in relation to those assets.
obligations resulting in financial loss to the Consolidated entity. the
Consolidated entity has adopted the policy of only dealing with creditworthy
counterparties and obtaining sufficient collateral or bank guarantees where
appropriate as a means of mitigating any risk of loss. For financial investments
or market risk hedging, the Consolidated entity’s policy is to deal with highly
rated counterparties. as at the reporting date, all counterparties of this type
were a- (Standard & poor’s)/a3 (Moody’s) or higher. the Consolidated entity’s
exposure to financial instrument and deposit credit risk is closely monitored
Cross guarantee
In accordance with a deed of cross guarantee, apt pipelines limited, a
subsidiary of apa Group, has agreed to provide financial support, when and as
required, to all wholly-owned controlled entities with either a deficit in
shareholders’ funds or an excess of current liabilities over current assets. the
fair value of the financial guarantee as at 30 June 2011 has been determined to
be immaterial and no liability has been recorded (2010: $nil).
against counterparty credit limits imposed by the treasury policy approved by
(h) Liquidity risk management
the board. these limits are regularly reviewed by the board.
the Consolidated entity has a policy dealing with liquidity risk which requires
trade receivables consist of mainly corporate customers which are diverse and
geographically spread. Most significant customers have an investment grade
rating from either Standard & poor’s or Moody’s. ongoing credit monitoring of
the financial position of customers is maintained.
an appropriate liquidity risk management framework for the management of
the Consolidated entity’s short, medium and long-term funding and liquidity
management requirements. liquidity risk is managed by maintaining adequate
cash reserves and banking facilities, by monitoring and forecasting cash flow
and where possible arranging liabilities with longer maturities to more closely
the carrying amount of financial assets recorded in the financial statements,
match the underlying assets of the Consolidated entity.
Details of undrawn facilities available to the Consolidated entity are shown in the table below:
FinanCinG FaCiLities
unsecured bank facilities with various maturity dates through to 2013
– amount used
– amount unused
ConsoLiDateD
2011
$000
2010
$000
1,555,500
234,500
1,665,324
560,000
1,790,000
2,225,324
unsecured long term private placement notes with various maturity dates through to 2022
– amount used (determined at foreign exchange rates implicit in the associated cross currency hedges)
1,389,472
1,491,472
– amount unused
unsecured australian Dollar medium term note with maturity in 2020
– amount used
– amount unused
Secured bank facility with maturity date in 2011
– amount used
– amount unused
-
-
1,389,472
1,491,472
300,000
-
300,000
-
-
-
-
-
-
1,645
-
1,645
Liquidity and interest risk table
Detailed below are the Consolidated entity’s remaining contractual maturities
all uS dollar note exposures (both principal and interest) have been fully
for its non-derivative financial liabilities. the table has been drawn up based on
hedged back into australian dollars at fixed interest rates for the entire duration
the undiscounted cash flows of financial liabilities taking account of the earliest
of the note exposure. therefore the table below shows the undiscounted
date on which the Consolidated entity can be required to pay. the table
australian dollar cash flows associated with the uS dollar notes, cross currency
includes both interest and principal cash flows.
interest rate swaps and fixed interest rate swaps in aggregate.
71
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 37. FinanCiaL instruments (ContinueD)
(h) Liquidity risk management (continued)
2011
Financial liabilities
trade and other payables
unsecured bank borrowings (a)
Interest Rate Swaps (net Settled)
Guaranteed Senior notes:
Denominated in a$
2007 Series a (b)
2007 Series C (b)
2007 Series e (c)
2007 Series G (d)
2007 Series H (d)
2010 Medium term note (j)
Denominated in uS$ (rates shown are the coupon rate of the uS dollar notes)
2003 Series B (e)
2003 Series C (f)
2003 Series D (g)
2007 Series B (b)
2007 Series D (c)
2007 Series F (d)
2009 Series a (h)
2009 Series B (i)
Financial lease liabilities
other:
unearned revenue - interest
unearned revenue - other
ConsoLiDateD
aVeRaGe
InteReSt Rate
% p.a.
leSS tHan
1 YeaR
$000
MoRe tHan
1 - 5 YeaRS
$000
5 YeaRS
$000
-
6.59
6.20
7.33
7.38
7.40
7.45
7.45
7.75
5.67
5.77
6.02
5.89
5.99
6.14
8.35
8.86
-
-
-
134,890
1,111,875
12,173
367
7,318
5,045
6,002
4,617
23,250
11,434
14,976
9,036
13,986
11,111
11,354
9,725
11,729
-
-
-
167,721
18,686
1,466
29,271
20,178
24,008
18,468
93,000
173,590
250,323
38,430
55,946
44,442
45,416
39,061
47,108
-
-
2,347
802
-
-
184
5,367
106,475
83,304
116,595
89,688
404,625
-
-
158,680
204,864
184,546
221,850
90,569
140,047
-
-
-
(a) Matures on 1 July 2011 ($103 million limit, undrawn at year end), 8 June 2012 ($900 million limit), 1 July 2013 ($515 million limit), 15 July 2014 ($225 million limit) and 24 august 2014
1,401,235
1,067,916
1,806,794
($150 million limit)
(b) Matures on 15 May 2017
(c) Matures on 15 May 2019
(d) Matures on 15 May 2022
(e) Matures on 9 September 2013
(f) Matures on 9 September 2015
(g) Matures on 9 September 2018
(h) Matures on 1 July 2016
(i) Matures on 1 July 2019
(j) Matures on 22 July 2020
72
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 37. FinanCiaL instruments (ContinueD)
(h) Liquidity risk management (continued)
2010
Financial liabilities
trade and other payables
unsecured bank borrowings (a)
Secured bank borrowings (b)
Interest Rate Swaps (net Settled)
Guaranteed Senior notes:
Denominated in a$
2003 Series a (c)
2007 Series a (d)
2007 Series C (d)
2007 Series e (e)
2007 Series G (f)
2007 Series H (f)
Denominated in uS$ (rates shown are the coupon rate of the uS dollar notes)
payment
payment
payment
payment
payment
payment
payment
payment
2003 Series B (g)
2003 Series C (h)
2003 Series D (i)
2007 Series B (d)
2007 Series D (e)
2007 Series F (f)
2009 Series a (j)
2009 Series B (k)
Financial lease liabilities
other:
unearned revenue - interest
unearned revenue - other
ConsoLiDateD
aVeRaGe
InteReSt Rate
% p.a.
leSS tHan
1 YeaR
$000
MoRe tHan
1 - 5 YeaRS
$000
5 YeaRS
$000
-
6.12
-
6.16
6.66
7.33
7.38
7.40
7.45
7.45
5.67
5.77
6.02
5.89
5.99
6.14
8.35
8.86
8.01
-
-
131,839
104,626
1,645
13,196
105,397
367
7,318
5,045
6,002
4,617
8,485
14,214
6,930
13,986
11,111
11,354
9,752
11,761
280
9,260
1,614
-
1,794,453
-
11,956
-
1,466
29,271
20,178
24,008
18,468
133,853
56,894
27,740
55,946
44,442
45,416
38,981
47,011
414
-
925
-
-
-
440
-
5,733
113,793
88,349
122,597
94,305
-
192,773
120,169
218,851
195,657
233,204
100,375
151,872
-
-
-
(a) Matures on 1 July 2011 ($515 million limit), 15 July 2011 ($145 million limit), 8 June 2012 ($900 million limit), 1 July 2013 ($515 million limit) and 31 august 2014 ($150 million limit)
(b) Residual payment due to financiers on expiration of lease of property
478,797
2,351,423
1,638,117
(c) Matures on 9 September 2010
(d) Matures on 15 May 2017
(e) Matures on 15 May 2019
(f) Matures on 15 May 2022
(g) Matures on 9 September 2013
(h) Matures on 9 September 2015
(i) Matures on 9 September 2018
(j) Matures on 1 July 2016
(k) Matures on 1 July 2019
73
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 37. FinanCiaL instruments (ContinueD)
(i) Fair value of financial instruments
pricing models where the main assumptions are the probability of default
Fair value of financial instruments carried at amortised cost
by the specified counterparty extrapolated from market-based credit
the fair values of financial assets and financial liabilities are determined as
information and the amount of loss, given the default.
follows:
Fair value measurements recognised in the statement of financial position
– the fair values of financial assets and financial liabilities with standard terms
the following table provides an analysis of financial instruments that are
and conditions and traded on active liquid markets are determined with
measured subsequent to initial recognition at fair value, grouped into levels 1
reference to quoted market prices;
– the fair values of other financial assets and financial liabilities (excluding
derivative instruments) are determined in accordance with generally
accepted pricing models based on discounted cash flow analysis using
prices from observable current markets;
to 3 based on the degree to which the fair value is observable.
– level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities.
– level 2 fair value measurements are those derived from inputs other than
– the fair values of derivative instruments, included in hedging assets and
quoted prices included within level 1 that are observable for the asset or
liabilities, are calculated using quoted prices. Where such prices are not
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
available, use is made of discounted cash flow analysis using the applicable
– level 3 fair value measurements are those derived from valuation techniques
yield curve for the duration of the instruments; and
that include inputs for the asset or liability that are not based on observable
– the fair value of financial guarantee contracts is determined using option
market data (unobservable inputs).
ConsoLiDateD
Financial assets measured at fair value
available-for-sale listed equity securities
Hastings Diversified utilities Fund
ethane pipeline Income Fund
other
total
Financial liabilities measured at fair value
Interest rate swaps used for hedging
Cross Currency Interest Rate Swaps used for hedging
Forward foreign exchange contracts used for hedging
total
ConsoLiDateD
Financial assets measured at fair value
available-for-sale listed equity securities
Hastings Diversified utilities Fund
ethane pipeline Income Fund
other
total
Financial liabilities measured at fair value
Interest rate swaps used for hedging
Cross Currency Interest Rate Swaps used for hedging
Forward foreign exchange contracts used for hedging
total
2011
LeveL 1
$000
LeveL 2
$000
LeveL 3
$000
totaL
$000
161,929
6,720
5
168,654
-
-
-
-
-
-
-
-
10,168
285,093
1,172
296,433
-
-
-
-
-
-
-
-
161,929
6,720
5
168,654
10,168
285,093
1,172
296,433
2010
leVel 1
$000
leVel 2
$000
leVel 3
$000
total
$000
111,321
5,751
4
117,076
-
-
-
-
-
-
-
-
47,701
27,570
157
75,428
-
-
-
-
-
-
-
-
111,321
5,751
4
117,076
47,701
27,570
157
75,428
74
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 37. FinanCiaL instruments (ContinueD)
(i) Fair value of financial instruments (continued)
Derivatives
the carrying value of financial assets and liabilities recorded at amortised cost
Foreign currency forward contracts are measured using quoted forward
in the financial statements approximate their fair value having regard to the
exchange rates and yield curves derived from quoted interest rates matching
specific terms of the agreements underlying those assets and liabilities.
maturities of the contracts.
Fair Value measurements of financial instruments measured at amortised cost
Interest rate swaps are measured at the present value of future cash flows
except as detailed in the following table, the directors consider that the
estimated and discounted based on the applicable yield curves derived from
carrying amounts of financial assets and financial liabilities recognised at
quoted interest rates.
amortised cost in the financial statements approximate their fair values.
FinanCiaL LiaBiLities
unsecured long term private placement notes
unsecured australian Dollar medium term note
total
CarrYinG amount
Fair vaLue
2011
$000
2010
$000
2011
$000
2010
$000
1,389,472
300,000
1,689,472
1,491,472
-
1,491,472
1,266,551
340,582
1,607,133
1,650,585
-
1,650,585
the financial liabilities included in the table above are fixed rate borrowings. the unsecured bank debt held by the Consolidated entity is floating rate and therefore
its amortised cost approximates its fair value.
38. JointLY ControLLeD operations anD assets
the Consolidated entity is a venturer in the following jointly controlled operations and assets:
name oF venture
prinCipaL aCtivitY
Goldfields Gas transmission
Gas pipeline operation - Western australia
Mid West pipeline
Gas pipeline operation - Western australia
output interest
2011
%
88.2 (a)
50.0 (b)
2010
%
88.2 (a)
50.0 (b)
(a) on 17 august 2004, apa acquired a direct interest in the Goldfields Gas transmission jointly controlled operations as part of the SCp Gas Business acquisition
(b) pursuant to the joint venture agreement, the Consolidated entity receives a 70.8% share of operating income and expenses
the Consolidated entity’s interest, as a venturer, in assets employed in the above jointly controlled operations and assets is detailed below. the amounts are
included in the consolidated financial statements under their respective asset categories:
Current assets
Cash and cash equivalents
trade and other receivables
Inventories
other
total current assets
non-Current assets
property, plant and equipment
other
total non-current assets
total assets
ConsoLiDateD
2011
$000
3,397
204
2,389
1,106
7,096
525,541
1,783
527,324
534,420
2010
$000
2,598
280
2,354
1,049
6,281
526,320
2,212
528,532
534,813
Contingent liabilities and capital commitments
Contingent liabilities and capital commitments arising from the Consolidated entity’s interest in jointly controlled operations are disclosed in notes 46 and 41 respectively.
75
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011
39. suBsiDiaries
name oF entitY
parent entitY
australian pipeline trust (a)
suBsiDiaries
apt pipelines limited (b),(c)
agex pty ltd (b),(c)
amadeus Gas trust
apt Goldfields pty ltd (b),(c)
apt Management Services pty limited (b),(c)
apt parmelia Gas pty ltd (b),(c)
apt parmelia Holdings pty ltd (b),(c)
apt parmelia pty ltd (b),(c)
apt parmelia trust (b)
apt petroleum pipelines Holdings pty limited (b),(c)
apt petroleum pipelines pty limited (b),(c)
apt pipelines (nSW) pty limited (b),(c)
apt pipelines (nt) pty limited (b),(c)
apt pipelines (Qld) pty limited (b),(c)
apt pipelines (Wa) pty limited (b),(c)
apt pipelines Investments (nSW) pty ltd (b),(c)
apt pipelines Investments (Wa) pty ltd (b),(c)
east australian pipeline pty limited (b),(c)
Gasinvest australia pty limited (b),(c)
Goldfields Gas transmission pty ltd (b)
nt Gas Distribution pty limited
nt Gas easements pty limited (b),(c)
nt Gas pty limited
Roverton pty ltd (b),(c)
SCp Investments (no 1) pty limited (b),(c)
SCp Investments (no 2) pty limited (b),(c)
SCp Investments (no 3) pty limited (b),(c)
Sopic pty ltd (b),(c)
Southern Cross pipelines (npl) australia pty ltd (b),(c)
Southern Cross pipelines australia pty limited (b),(c)
trans australia pipeline pty limited (b),(c)
Western australia Gas transmission Company 1 (b),(c)
Gasnet australia trust (b)
apa Gasnet australia (Holdings) pty ltd (b),(c)
apa Gasnet australia (operations) pty ltd (b),(c)
apa Gasnet a pty ltd (b),(c)
Gasnet a trust (b)
apa Gasnet australia (nSW) pty ltd (b),(c)
apa Gasnet B pty ltd (b),(c)
apa Gasnet australia pty limited (b),(c)
CountrY oF reGistration/
inCorporation
oWnersHip interest
2011
%
2010
%
australia
australia
australia
australia
australia
australia
australia
australia
Cayman Islands
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
100
100
96
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
96
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
96
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
96
100
96
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
76
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 39. suBsiDiaries (ContinueD)
name oF entitY
Gasnet B trust (b)
Gasnet australia Investments trust (b)
apt allgas energy pty limited (b),(c)
apt allgas pipelines operations pty limited (b),(c)
apt allgas toowoomba pty limited (b),(c)
apt operations pty limited (b),(c)
apt aM Holdings pty limited (b),(c)
apt o&M Holdings pty ltd (b),(c)
apt o&M Services pty ltd (b),(c)
apt o&M Services (QlD) pty ltd (b),(c)
apt Water Management pty ltd (b),(c)
apt Water Management Holdings pty ltd (b),(c)
apt aM Stratus pty ltd (b),(c)
apt Facility Management pty ltd (b),(c)
apt aM employment pty ltd (b),(c)
apt SeaGas (Holdings) pty limited (b),(c)
apt SpV2 pty ltd (b),(c)
apt SpV3 pty ltd (b),(c)
apt pipelines (Sa) pty ltd (b),(c)
apt (MIt) Services pty limited (b)
apa operations (eII) pty limited (b),(c)
apa pipelines (QnSW) pty limited (b),(c)
Central Ranges pipeline pty ltd (b),(c)
apa Country pipelines pty ltd (b),(c)
north Western natural Gas Company pty limited (b),(c)
apa Facilities Management pty limited (b),(c)
apa (nBH) pty limited (b),(c)
apa pipelines Investments (BWp) pty limited (b),(c)
apa power Holdings pty ltd (b),(c)
apa power pty ltd
apa DpS pty ltd
apa (eDWF HolDCo) ptY ltD (b),(c)
apa (BWF HolDCo) ptY ltD (b),(c)
eDWF Holdings 1 pty ltd
eDWF Holdings 2 pty ltd
eDWF Manager pty ltd
Wind portfolio pty ltd
Griffin Windfarm 2 pty ltd
CountrY oF reGistration/
inCorporation
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
oWnersHip interest
2011
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2010
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
(a) australian pipeline trust is the head entity within the tax-consolidated group
(b) these entities are members of the tax-consolidated group
(c) these wholly-owned subsidiaries have entered into a deed of cross guarantee with apt pipelines limited pursuant to aSIC Class order 98/1418 and are relieved from the requirement
to prepare and lodge an audited financial report
77
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 40. aCQuisition oF Businesses
names oF Business aCQuireD
prinCipaL aCtivitY
Date oF
aCQuisition
During the financial year ended 30 June 2011
emu Downs Wind farm
power Generation
30 June 2011
During the financial year ended 30 June 2010
Berwyndale to Wallumbilla pipeline
Gas transmission
22 april 2010
net assets aCQuireD
Current assets
Cash and cash equivalents
trade and other receivables
other
non-current assets
Receivables
property, plant and equipment
Deferred tax assets
Intangible assets
other
Current liabilities
trade and other payables
non-current liabilities
Deferred tax liabilities
provisions
provisions on acquisition
Fair value of net assets acquired
Discount on acquisition
Cost of acquisition
Cash balances acquired
Consideration not yet paid
transaction costs - paid
net cash outflow on acquisition - prior year
net cash outflow on acquisition - current year
total cash outflow on acquisition
proportion
aCQuireD
Cost oF
aCQuisition
%
$000
100
100
179,332
82,600
emu DoWns
WinD Farm
FaIR Value on
aCQuISItIon
$000
BerWYnDaLe
- WaLLumBiLLa
pipeLine
FaIR Value on
aCQuISItIon
$000
7,416
5,759
197
1,189
162,950
561
8,709
-
(801)
(5,848)
(800)
-
-
-
-
87,139
-
15,800
98
-
(11)
(39)
-
(15,800)
179,332
-
87,187
(4,587)
179,332
82,600
(7,416)
(5,533)
836
-
167,219
167,219
-
-
728
83,328
3,858
87,186
In June 2011, apa Group acquired the emu Downs Wind Farm and development
the acquisition was paid for in cash.
site for $171,916,000 (net of cash acquired). the purpose of this transaction was
to provide wind generation and support gas generation and complement other
apa gas infrastructure assets in delivering energy solutions to the Western
australian market.
as the acquisition was completed on 30 June 2011, no results have been
included in the consolidated net profit for the year.
acquisition-related costs amounting to $8,970,000 and have been recognised
the accounting for the acquisition of the emu Downs Wind Farm acquired
as an expense in the period, within the other expenses line in the statement of
during the year has been provisionally determined at reporting date.
comprehensive income.
78
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 ConsoLiDateD
2011
$000
41,101
-
-
41,101
-
-
-
-
$
578,500
20,000
19,700
87,015
705,215
2010
$000
62,062
12,960
-
75,022
41
-
-
41
$
516,260
19,375
17,500
30,000
583,135
trust
2011
$000
2010
$000
-
-
-
-
-
-
-
-
$
5,500
-
-
-
-
-
-
-
-
-
-
-
$
5,000
-
-
-
5,500
5,000
41. Commitments For expenDiture
Capital expenditure commitments
pLant anD eQuipment
not longer than 1 year
longer than 1 year and not longer than 5 years
longer than 5 years
ConsoLiDateD entitY’s sHare oF JointLY ControLLeD
operation’s Commitments
not longer than 1 year
longer than 1 year and not longer than 5 years
longer than 5 years
42. remuneration oF externaL auDitor
amounts received or due and receivable by Deloitte touche tohmatsu for:
auditing the financial report
Compliance plan audit
tax compliance and advice (a)
other accounting and assurance services (a)
(a) Services provided were in accordance with the external auditor independence policy
43. DireCtor Compensation
(a) Details of directors
the Directors of the apa group of entities during the financial year were:
L F Bleasel AM (Independent, non-executive Chairman)
S Crane (Independent non-executive Director, appointed on 1 January 2011)
J A Fletcher (Independent non-executive Director)
R A Higgins AO (Independent non-executive Director)
P M McKenzie (Independent non-executive Director, appointed on 1 January 2011)
M Muhammad (non-executive Director)
M (George) Ratilal (non-executive Director, retired effective 26 august 2010)
R J Wright (Independent non-executive Director)
M J McCormack (Managing Director/Chief executive officer)
(b) Director compensation
the aggregate compensation made to directors of the Consolidated entity and the trust is set out below:
Short-term employment benefits
post-employment benefits
Cash settled share-based payments
Retention award
79
ConsoLiDateD anD trust
2011
$
2010
$
2,409,250
2,174,099
149,194
773,281
-
91,963
574,166
18,056
3,331,725
2,858,284
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011
43. DireCtor Compensation (ContinueD)
(b) Director compensation (continued)
the compensation of each director of the Consolidated entity is set out below.
sHort-term
empLoYment BeneFits
post-
empLoYment
LonG-term
inCentive pLans
SHoRt-teRM
SalaRY/FeeS
$
InCentIVe SCHeMe
$
SupeRannuatIon
$
SHaRe-BaSeD
paYMentS(a)
$
otHeR(b)
$
total
$
non-exeCutive DireCtors
l F Bleasel aM
2011
2010
S Crane (c)
2011
2010
J a Fletcher
2011
2010
R a Higgins ao
2011
2010
p M McKenzie (d)
2011
2010
M Muhammad
2011
2010
M (George) Ratilal (e)
2011
2010
R J Wright
2011
2010
272,500
254,319
57,875
-
107,000
110,150
145,375
137,000
56,750
-
121,500
113,000
16,000
93,000
141,250
132,000
totaL remuneration: non-exeCutive DireCtors
918,250
839,469
870,000
796,500
1,788,250
1,635,969
2011
2010
exeCutive DireCtors
M J McCormack
2011
2010
totaL remuneration: DireCtors
2011
2010
(a) Cash settled share-based payments
(b) Includes retention payment
(c) appointed on 1 January 2011
(d) appointed on 1 January 2011
(e) Directors fees paid to petronas australia pty ltd, retired 26 august 2010
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
621,000
538,130
621,000
538,130
20,750
16,981
5,209
-
42,335
25,787
13,077
12,320
5,108
-
-
-
-
-
12,715
11,875
99,194
66,963
50,000
25,000
149,194
91,963
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
773,281
574,166
773,281
574,166
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,056
293,250
271,300
63,084
-
149,335
135,937
158,452
149,320
61,858
-
121,500
113,000
16,000
93,000
153,965
143,875
1,017,444
906,432
2,314,281
1,951,852
-
3,331,725
18,056
2,858,284
80
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 44. KeY manaGement personneL Compensation
(a) Details of key management personnel
the members of key management personnel of the apa group of entities during the financial year were:
M J McCormack (Managing Director/Chief executive officer)
P J Fredricson (Chief Financial officer)
R M Gersbach (Group Manager Commercial)
S P Ohl (Group Manager operations)
M T Knapman (Company Secretary)
P J Wallace (Group Manager Human Resources, appointed on 4 april 2011)
(b) Key management personnel compensation
the aggregate compensation made to key management personnel of the Consolidated entity and the trust is set out below:
Short-term employment benefits
post-employment benefits
Cash settled share-based payments
Retention award
the executive remuneration strategy is to:
ConsoLiDateD anD trust
2011
$
4,449,055
181,691
1,688,799
-
6,319,545
2010
$
3,886,759
119,208
1,157,664
18,056
5,181,687
– attract and retain key executives who will create long-term sustainable
apa’s remuneration mix is structured as a mix of base pay and ‘at risk’ short
value for securityholders;
and long-term incentive components.
– motivate and reward executives having regard to the overall performance of
apa, the performance of the executive measured against pre-determined
objectives and the external compensation environment;
– appropriately align the interests of executives with those of securityholders;
total fixed remuneration is reviewed annually and is determined by reference to
appropriate remuneration benchmarking information, taking into account an
individual’s responsibilities, performance, qualifications and experience.
and
operating cash flow per security has been chosen by the board as the key
– comply with applicable legal requirements and appropriate standards
performance measure for ‘at risk’ remuneration. this is directly linked to the
of governance.
strategic goal of increasing operating cash flows over the medium term,
thereby improving returns to securityholders.
81
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011
44. KeY manaGement personneL Compensation (ContinueD)
(b) Key management personnel compensation (continued)
the compensation of each member of the key management personnel of the Consolidated entity is set out below.
sHort-term empLoYment BeneFits
post-
empLoYment
LonG-term
inCentive pLans
SalaRY/FeeS
$
SHoRt-teRM
InCentIVe
SCHeMe
$
non-MonetaRY
$
SupeRannuatIon
$
SHaRe-BaSeD
paYMentS(a)
$
otHeR paYMentS
$
total
$
KeY manaGement personneL
M J McCormack (b)
2011
2010
p J Fredricson
2011
2010
R M Gersbach
2011
2010
S p ohl
2011
2010
M t Knapman
2011
2010
p J Wallace (c)
2011
2010
870,000
796,500
554,801
485,539
622,879
543,617
376,069
372,214
350,000
319,176
67,715
-
621,000
538,130
270,750
228,125
308,750
260,062
201,375
181,562
130,706
121,180
34,356
-
-
-
-
-
11,922
11,922
28,732
28,732
-
-
-
-
50,000
25,000
15,199
14,461
15,199
14,461
45,199
14,461
50,000
50,825
6,094
-
773,281
574,166
165,780
75,000
343,688
229,323
253,636
187,754
141,560
91,421
10,854
-
totaL remuneration
2011
2010
2,841,464
1,566,937
2,517,046
1,329,059
40,654
40,654
181,691
119,208
1,688,799
1,157,664
(a) Cash settled share-based payments
(b) Chief executive officer has also been included in note 43 as the Managing Director
(c) Group Manager Human Resources, appointed 4 april 2011
-
2,314,281
18,056
1,951,852
-
-
-
-
-
-
-
-
-
-
-
1,006,530
803,125
1,302,438
1,059,385
905,011
784,723
672,266
582,602
119,019
-
6,319,545
18,056
5,181,687
45. reLateD partY transaCtions
(a) equity interest in related parties
(c) transactions with key management personnel
Details of the percentage of ordinary securities held in subsidiaries are
Details of directors and key management personnel compensation are disclosed
disclosed in note 39 and the details of the percentage held in jointly controlled
in note 43 and 44 respectively.
operations are disclosed in note 38. Details of interests in jointly controlled
entities and associates are disclosed in note 16.
(i) Loans to key management personnel
no loans have been made to key management personnel.
(b) responsible entity – australian pipeline Limited
the Responsible entity is wholly owned by apt pipelines limited.
82
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 45. reLateD partY transaCtions (ContinueD)
(c) transactions with key management personnel (continued)
(ii) Key management personnel equity holdings
2011
l F Bleasel aM
S Crane (appointed 1 January 2011)
J a Fletcher
R a Higgins ao
p M McKenzie (appointed 1 January 2011)
M Muhammad
M (George) Ratilal
R J Wright
M J McCormack
p J Fredricson
R M Gersbach
S p ohl
M t Knapman
p J Wallace
2010
l F Bleasel aM
J a Fletcher
R a Higgins ao
M Muhammad
M (George) Ratilal
R J Wright
M J McCormack
p J Fredricson
R M Gersbach
S p ohl
M t Knapman
FullY paID
SeCuRItIeS
openInG BalanCe
SeCuRItIeS
aCQuIReD DuRInG
tHe FInanCIal
YeaR
SeCuRItIeS
DISpoSeD DuRInG
tHe FInanCIal
YeaR
FullY paID
SeCuRItIeS
CloSInG BalanCe
359,771
100,000
56,807
72,954
-
42,818
-
31,265
147,005
3,000
24,569
14,896
4,484
-
335,153
44,917
52,021
42,818
-
24,263
115,000
-
22,232
11,928
3,000
15,634
-
3,219
6,549
-
-
-
2,806
23,614
269
1,525
-
-
-
24,618
11,890
20,933
-
-
7,002
32,005
3,000
2,337
2,968
1,484
-
-
-
-
-
-
-
-
-
-
16,298
-
-
-
-
-
-
-
-
-
-
-
-
-
-
375,405
100,000
60,026
79,503
-
42,818
-
34,071
170,619
3,269
9,796
14,896
4,484
-
359,771
56,807
72,954
42,818
-
31,265
147,005
3,000
24,569
14,896
4,484
(iii) Other transactions with key management personnel of the Group and
the Responsible Entity
other than directors compensation (note 43) and key management personnel
the above transactions were made on normal commercial terms and conditions.
compensation (note 44) and equity holdings (note 45(c)(ii)), there are no
the Group charges interest on inter-entity loans from time to time.
other transactions with key management personnel of the Group and the
Responsible entity.
(d) transactions with related parties within apa Group
transactions between the entities that comprise apa Group during the financial
year consisted of:
– dividends;
– system lease rentals;
– loans advanced and payments received on long-term inter-entity loans;
– management fees;
all transactions between the entities that comprise apa Group have been
eliminated on consolidation.
Refer to note 39 for details of the entities that comprise apa Group.
Australian Pipeline Limited
Management fees of $2,238,000 (2010: $2,546,000) were paid to the
Responsible entity as reimbursement of costs incurred on behalf of apa. no
amounts were paid directly by apa to the Directors of the Responsible entity,
except as disclosed at note 45(e).
– operational services provided between entities;
australian pipeline limited, in its capacity as trustee and Responsible entity of
– payments of distributions;
the trust, has guaranteed the payment of principal, interest and other amounts
– payments of capital distributions (returns of capital); and
as provided in the note and Guarantee agreement relating to the issue of
– equity issues.
Guaranteed Senior notes.
83
APA AnnuAl REPORT 2011AusTRAliAn PiPElinE TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011
45. reLateD partY transaCtions (ContinueD)
(e) transactions with other related parties
Transactions with associates
the following transactions occurred with the apa Group’s associates on normal market terms and conditions:
SaleS to RelateD
paRtIeS
$
puRCHaSeS FRoM
RelateD paRtIeS
$
aMount oWeD BY
RelateD paRtIeS
$
aMount oWeD to
RelateD paRtIeS
$
2011
Sea Gas
energy Infrastructure Investments pty limited
eII 2 pty limited
CaMS (a)
envestra limited
(a) apa disposed of its 50% interest in CaMS on 30 June 2011
at the year end, apa had receivables with related parties of $4,276,866.
3,752,891
23,002,158
3,428,097
348,881
539
256,438
-
-
-
4,528,545
55,783
66,712
228,323,940
187,980
29,244,768
258,855,967
188,519
34,152,246
2010
Sea Gas
2,131,780
-
151,122
energy Infrastructure Investments pty limited
20,447,004
84,919
6,654,819
eII 2 pty limited
CaMS
envestra limited
296,176
422,696
192,577,749
215,875,404
-
-
105,526
190,445
31,198
61,397
25,892,376
32,790,912
transactions with all related parties have taken place at arm’s length and in the ordinary course of business.
-
-
-
-
-
-
-
-
-
-
-
-
Transactions between the Trust and its related parties
During the financial year ended 30 June 2011, the following transactions
– total payables of $145,548,000 are repayable to subsidiaries (2010:
occurred between the trust and its other related parties:
$136,823,000) for deferred tax losses transferred up to the trust, as head of
– the trust received dividends from its wholly-owned controlled entities (see
the tax-consolidated group.
note 6).
the following balances arising from transactions between the trust and its
other related parties are outstanding at reporting date:
– net receivables of $481,974 (2010: $481,974) are owing from associates; and
no guarantees have been given or received. no expense has been recognised
in the period for bad or doubtful debts in respect of the amounts owed by
related parties.
transactions and balances between the trust and its subsidiaries were eliminated
in the preparation of the consolidated financial statements of the apa Group.
46. ContinGenCies
ContinGent LiaBiLities
Bank guarantees
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
8,051
28,586
2010
$000
-
-
-
-
ContinGent assets
-
-
47. events oCCurrinG aFter reportinG Date
on 24 august 2011, the Directors declared a final distribution of 17.9 cents per security ($99.6 million) for the apa Group (comprising a distribution of 11.83 cents
per security from apt and a distribution of 6.07 cents per security from aptIt), made up of 3.41 cents per security profit distribution (unfranked) and 2.66 cents
per security capital distribution. the distribution will be paid on 15 September 2011.
84
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011
auS tR a lIa n p Ipe lIne tR uS t anD It S C ontRolleD entItIeS
Declaration by the Directors
For the financial year ended 30 June 2011
the Directors declare that:
(a) in the Directors’ opinion, there are reasonable grounds to believe that australian pipeline trust will be able to pay its debts as and when they become due and
payable;
(b) in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations act 2001, including compliance with
accounting Standards and giving a true and fair view of the financial position and performance of australian pipeline trust and the Consolidated entity;
(c) in the Directors’ opinion, the financial statements and notes thereto are in accordance with International Financial Reporting Standards as stated in note 3 to
the financial statements; and
(d) the Directors have been given the declarations by the Managing Director and Chief Financial officer required by section 295a of the Corporations act 2001.
Signed in accordance with a resolution of the Directors of the Responsible entity made pursuant to section 295(5) of the Corporations act 2001.
on behalf of the Directors
Leonard Bleasel am
Chairman
SYDneY, 24 august 2011
robert Wright
Director
85
APA AnnuAl REPORT 2011
auS tR alIa n pIp elIn e t R uS t anD It S C ontRolleD entItIeS
auDitor’s inDepenDence Declaration
For the financial year ended 30 June 2011
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
The Directors
Australian Pipeline Limited as responsible entity for
Australian Pipeline Trust
HSBC Building
Level 19, 580 George Street
Sydney NSW 2000
24 August 2011
Dear Directors
Auditors Independence Declaration to Australian Pipeline Limited as responsible entity for
Australian Pipeline Trust
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Australian Pipeline Limited as responsible entity for
Australian Pipeline Trust.
As lead audit partner for the audit of the financial statements of Australian Pipeline Trust for the
financial year ended 30 June 2011, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
G Couttas
Partner
Chartered Accountants
Member of Deloitte Touche Tohmatsu Limited
Liability limited by a scheme approved under Professional Standards Legislation.
86
APA AnnuAl REPORT 2011 auS tR a lIa n p Ipe lIne tR uS t anD It S C ontRolleD entItIeS
inDepenDent auDitor’s report
For the financial year ended 30 June 2011
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1219 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report
to the Unitholders of Australian Pipeline Trust
We have audited the accompanying financial report of Australian Pipeline Trust, which comprises the
statement of financial position as at 30 June 2011, the statement of comprehensive income, the
statement of cash flows and the statement of changes in equity for the year ended on that date, notes
comprising a summary of significant accounting policies and other explanatory information, and the
directors’ declaration of the consolidated entity comprising the Trust and the entities it controlled at
the year’s end or from time to time during the financial year as set out on pages 27 to 85.
Directors’ Responsibility for the Financial Report
The directors of Australian Pipeline Limited are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to enable
the preparation of the financial report that is free from material misstatement, whether due to fraud or
error. In Note 3, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International Financial
Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control, relevant to the entity’s
preparation of the financial report that gives a true and fair view, in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
87
APA AnnuAl REPORT 2011
auS tR alIa n pIp elIn e t R uS t anD It S C ontRolleD entItIeS
inDepenDent auDitor’s report
continueD
For the financial year ended 30 June 2011
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001,
which has been given to the directors of Australian Pipeline Limited as responsible entity for
Australian Pipeline Trust would be in the same terms if given to the directors as at the time of this
auditor’s report.
Opinion
In our opinion:
(a) the financial report of Australian Pipeline Trust is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the Trust’s and consolidated entity’s financial position as at
30 June 2011 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001.
(b) the financial statements also comply with International Financial Reporting Standards as disclosed
in Note 3.
DELOITTE TOUCHE TOHMATSU
G Couttas
Partner
Chartered Accountants
Sydney, 24 August 2011
88
APA AnnuAl REPORT 2011 apt investment trust
and its controlled entities
arsn 115 585 441
apt InVeS tMe nt tR uS t a nD It S C ontRolleD e ntItIeS
Directors’ report
the directors of australian pipeline limited (“Responsible entity” or “apl”)
Details of the directors, their qualifications, experience, special responsibilities
submit the annual financial report of apt Investment trust (“aptIt”) and its
and directorships of other listed entities are set out on pages 10 to 12.
controlled entities (together “Consolidated entity”) for the year ended 30 June
2011. this report and the financial statements attached refer to the consolidated
results of aptIt, one of the two stapled entities of apa Group, with the other
stapled entity being australian pipeline trust (together “apa”).
Directors
the names of the directors of the Responsible entity during the year and since
the year end are:
Leonard Bleasel am
Chairman
George Ratilal was appointed as alternate director for Muri Muhammad on
26 august 2010.
company secretary
mark Knapman
Details of the Company Secretary, his qualifications and experience are set out
on page 11.
principal activities
aptIt operates as an investment and financing entity within the australian
steven Crane
John Fletcher
russell Higgins ao
appointed 1 January 2011
pipeline trust stapled group.
significant changes in state of affairs
In the opinion of the directors of the Responsible entity, no significant changes
patricia mcKenzie
appointed 1 January 2011
in the state of affairs of aptIt occurred during the year.
muri muhammad
George ratilal
robert Wright
Resigned 26 august 2010
michael mcCormack
Managing Director
review anD results of operations
aptIt reported net profit after tax of $38.9 million (2010: $37.8 million) for the
year ended 30 June 2011 on total revenue of $38.9 million (2010: $37.8 million).
Distributions
Distributions paid to securityholders during the financial year were:
aptIt profit distribution
aptIt capital distribution
total
FinaL FY 2010 DistriBution
paiD 15 septemBer 2010
semi-annuaL FY 2011 DistriBution
paiD 17 marCH 2011
Cents per security
total distribution
$000
Cents per security
total distribution
$000
3.7
3.0
6.7
19,928
16,350
36,278
3.7
0.8
4.5
20,629
4,127
24,756
on 24 august 2011, the directors declared a final distribution for aptIt for the current financial year of 6.0 cents per security payable 15 September 2011, made up of:
aptIt profit distribution
aptIt capital distribution
total
FinaL FY 2011 DistriBution paYaBLe 15 septemBer 2011
Cents per security
total distribution
$000
3.4
2.6
6.0
18,951
14,793
33,744
Distribution information is presented on an accounting classification basis. the apa Group annual tax Statement and annual tax Return Guide (released in
September 2011) provides the classification of distribution components for the purposes of preparation of securityholder income tax returns.
as at 30 June 2011, 634,116,000 securities were on issue (2010: 542,319,000).
apa annual RepoRt 2011
90
a pt InVeS tMent tR uS t anD It S C ontRolleD entItIeS
Directors’ report
continueD
SubSequent eventS
except as disclosed elsewhere in this report, the directors are unaware of any
auditor’S independence declaration
a copy of the auditor’s independence declaration as required under section
matter or circumstance occurring since the end of the financial year that has
307C of the Corporations act 2001 is included on page 113.
significantly affected or may significantly affect the operations of the
Consolidated entity, the results of those operations or the state of affairs of the
Consolidated entity in future financial years.
Future developmentS
Disclosure of information regarding likely developments in the operation of the
Consolidated entity in future financial years and the expected results of those
operations, other than information disclosed elsewhere in this report, is likely to
result in unreasonable prejudice to the Consolidated entity. accordingly, this
rounding oFF oF amountS
apa Group is an entity of the kind referred to in aSIC Class order 98/0100
dated 10 July 1998, and in accordance with that Class order, amounts in the
directors’ report and the financial report are rounded off to the nearest
thousand dollars, unless otherwise indicated.
Signed in accordance with a resolution of the directors of the Responsible
entity made pursuant to section 298(2) of the Corporations act 2001.
information has not been disclosed in this report.
on behalf of the directors
Leonard Bleasel am
Chairman
SYDneY, 24 august 2011
robert Wright
Director
other inFormation
Details of directors and the Company Secretary are on pages 10 and 11. Further
information on directorships, attendance at meetings, security holdings,
remuneration, options granted and indemnification of officers and external
auditors are found in the apt directors’ report, pages 12 to 20.
inFormation required For regiStered SchemeS
Fees paid to the Responsible entity and its associates (including directors and
secretaries of the Responsible entity, related bodies corporate and directors
and secretaries of related bodies corporate) out of apa scheme property
during the year are disclosed in note 19 to the financial statements.
except as disclosed in this report, neither the Responsible entity nor any of its
associates holds any apa securities.
the number of apa securities issued during the year, and the number of apa
securities at the end of the year, are disclosed in note 10 to the financial
statements.
the value of apa’s assets as at the end of the year is disclosed in the balance
sheet in total assets, and the basis of valuation is included in note 2 to the
financial statements.
91
APA AnnuAl REPORT 2011 apt InVeS tMe nt tR uS t a nD It S C ontRolleD e ntItIeS
statement of comprehensive income
For the financial year ended 30 June 2011
ContinuinG operations
Revenue
expenses
profit before tax
Income tax expense
profit for the year
other comprehensive income
Gain on available-for-sale investments taken to equity
other comprehensive income for the year (net of tax)
note
4
4
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
38,936
(12)
38,924
-
38,924
635
635
37,784
(10)
37,774
-
37,774
1,345
1,345
38,936
(12)
38,924
-
38,924
635
635
2010
$000
37,784
(10)
37,774
-
37,774
1,345
1,345
total comprehensive income for the year
39,559
39,119
39,559
39,119
profit attributable to:
equityholders of the parent
total comprehensive income attributable to:
equityholders of the parent
earninGs per seCuritY
38,924
38,924
37,774
37,774
38,924
38,924
37,774
37,774
39,559
39,119
39,559
39,119
Basic and diluted earnings per security (cents)
12
7.1
7.3
Diluted earnings per security is exactly the same as basic earnings per security.
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
92
APA AnnuAl REPORT 2011 a pt InVeS tMent tR uS t anD It S C ontRolleD entItIeS
statement of financial position
as at 30 June 2011
Current assets
Receivables
non-Current assets
Receivables
other financial assets
total non-current assets
total assets
Current LiaBiLities
trade and other payables
total liabilities
net assets
eQuitY
Issued capital
Reserves
Retained earnings
total equity
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
2010
$000
note
6
7
8
9
10
11
720
714
720
714
12,448
387,671
400,119
400,839
13,001
327,054
340,055
340,769
12,448
387,671
400,119
400,839
13,001
327,054
340,055
340,769
9
9
11
11
9
9
11
11
400,830
340,758
400,830
340,758
382,001
320,931
382,001
320,931
534
18,295
(101)
19,928
534
18,295
(101)
19,928
400,830
340,758
400,830
340,758
The above statement of financial position should be read in conjunction with the accompanying notes.
93
APA AnnuAl REPORT 2011 apt InVeS tMe nt tR uS t a nD It S C ontRolleD e ntItIeS
statement of changes in equity
For the financial year ended 30 June 2011
Balance at 1 July 2009
profit for the year
Valuation gain recognised
total comprehensive income for the year
Issue of capital (net of issue costs)
equity values adjustment between stapled entities
Distributions to securityholders
Balance at 30 June 2010
Balance at 1 July 2010
profit for the year
Valuation gain recognised
total comprehensive income for the year
Issue of capital (net of issue costs)
Distributions to securityholders
Balance at 30 June 2011
note
11
10
10
5
11
10
5
ISSueD
CapItal
$000
358,450
-
-
-
35,782
(9,868)
(63,433)
320,931
320,931
-
-
-
81,547
(20,477)
382,001
ConsoLiDateD anD trust
ReSeRVeS
$000
(1,446)
-
1,345
1,345
-
-
-
(101)
(101)
-
635
635
-
-
RetaIneD
eaRnInGS
$000
10,810
37,774
-
37,774
-
-
(28,656)
19,928
19,928
38,924
-
38,924
-
total
$000
367,814
37,774
1,345
39,119
35,782
(9,868)
(92,089)
340,758
340,758
38,924
635
39,559
81,547
(40,557)
(61,034)
534
18,295
400,830
The above statement of changes in equity should be read in conjunction with the accompanying notes.
94
APA AnnuAl REPORT 2011 a pt InVeS tMent tR uS t anD It S C ontRolleD entItIeS
statement of cash flows
For the financial year ended 30 June 2011
CasH FLoWs From operatinG aCtivities
trust distribution - related party
trust distribution - subsidiary
Capital distribution received - external
Dividends received
Distribution and interest received - related parties
Finance lease receivable repayments
Receipts from customers
payments to suppliers
Interest paid
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
32,641
27,613
-
518
161
6,615
1,167
111
(12)
-
-
482
107
9,798
1,167
66
(21)
-
-
32,641
518
161
6,615
1,167
111
(12)
-
2010
$000
-
27,613
482
107
9,798
1,167
66
(21)
-
net cash provided by operating activities
41,201
39,213
41,201
39,213
CasH FLoWs From investinG aCtivities
Repayment received from/(advances to) related parties
net cash provided by/(used in) investing activities
CasH FLoWs From FinanCinG aCtivities
proceeds from issue of securities
equity values adjustment between stapled entities
Distributions to securityholders
net cash provided by/(used in) financing activities
net increase in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
The above statement of cash flows should be read in conjunction with the accompanying notes.
(61,714)
(61,714)
26,962
26,962
(61,714)
(61,714)
26,962
26,962
81,548
-
(61,034)
20,514
-
-
-
35,782
(9,868)
(92,089)
(66,175)
-
-
-
81,548
-
(61,034)
20,514
-
-
-
35,782
(9,868)
(92,089)
(66,175)
-
-
-
95
APA AnnuAl REPORT 2011 apt InVeS tMe nt tR uS t a nD It S C ontRolleD e ntItIeS
notes to the financial statements
For the financial year ended 30 June 2011
1. GeneraL inFormation
Basis of preparation
apt Investment trust (“aptIt” or “trust”) is one of the two stapled entities of
the financial report has been prepared on the basis of historical cost, except for
apa Group (“apa”), the other stapled entity being australian pipeline trust
the revaluation of certain non-current assets and financial instruments. Cost is
(“apt”), listed on the australian Securities exchange (trading under the symbol
based on the fair values of the consideration given in exchange for assets.
‘apa’), registered in australia and operating in australia.
the financial report is presented in australian dollars and all values are rounded
aptIt’s registered office and its principal place of business are as follows:
to the nearest thousand dollars ($000) unless otherwise stated under the
registered office and principal place of business
level 19, HSBC Building
580 George Street, SYDneY nSW 2000
tel: (02) 9693 0000.
aptIt operates as an investment and financing entity within the apa stapled
group.
2. siGniFiCant aCCountinG poLiCies
statement of compliance
the financial report is a general purpose financial report which has been
option available to aptIt under aSIC Class order 98/0100. aptIt is an entity
to which the class order applies.
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Consolidated entity’s accounting policies, management
is required to make judgements, estimates and assumptions about the carrying
values of assets and liabilities that are not readily apparent from other sources.
the estimates and associated assumptions are based on historical experience
and other factors that are considered to be relevant. actual results may differ
from these estimates.
prepared in accordance with the Corporations act 2001, accounting Standards
the estimates and underlying assumptions are reviewed on an ongoing basis.
and Interpretations, and complies with other requirements of the law.
Revisions to accounting estimates are recognised in the period in which the
the financial report includes the separate financial statements of the trust and
the consolidated financial statements of the Consolidated entity. accounting
Standards include australian equivalents to International Financial Reporting
Standards (“a-IFRS”). Compliance with a-IFRS ensures that the financial
estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future
periods. Refer to note 3 for a discussion of critical judgements in applying the
entity’s accounting policies, and key sources of estimation uncertainty.
statements and notes of the trust and the Consolidated entity comply with
adoption of new and revised accounting standards
International Financial Reporting Standards (“IFRS”).
In the current year, the Consolidated entity has adopted all of the new and
the financial statements were authorised for issue by the directors on
24 august 2011.
revised Standards and Interpretations issued by the australian accounting
Standards Board (“aaSB”) that are relevant to its operations and effective for
the current annual reporting period. Details of the impact of the adoption of
these new accounting standards are set out in the individual accounting policy
notes set out below:
(i) Standards and Interpretations affecting amounts reported in the current period (and/or prior periods)
the following new and revised Standards and Interpretations have been adopted in the current period and have affected the amounts reported in these financial
statements. Details of other Standards and Interpretations adopted in these financial statements but that have had no effect on the amounts reported are set out
in part (ii).
Standards affecting presentation disclosure
stanDarD
impaCt
– amendments to aaSB 107 ‘Statement of Cash Flows’
the amendments (part of aaSB 2009-5 ‘Further amendments to australian
accounting Standards arising from the annual Improvements project’) specify
that only expenditures that result in a recognised asset in the statement of financial
position can be classified as investing activities in the statement of cash flows.
(ii) Standards and Interpretations adopted with no effect on financial statements
the following new and revised Standards have also been adopted in these financial statements. their adoption has not had any significant impact on the amounts
reported in these financial statements but may affect the accounting for future transactions and arrangements.
stanDarD
impaCt
– aaSB 2009-5 ‘Further amendments to australian accounting Standards
except for the amendments to aaSB 107 described above, the application of
arising from the annual Improvements project’.
aaSB 2009-5 has not had any material effect on amounts reported in the
financial statements.
96
APA AnnuAl REPORT 2011 2. siGniFiCant aCCountinG poLiCies (ContinueD)
(ii) Standards and Interpretations adopted with no effect on financial statements (continued)
stanDarD
impaCt
– aaSB 2009-8 ‘amendments to australian accounting Standards Group
aaSB 2009-8 makes amendments to aaSB 2 ‘Share-based payment’ to clarify the
Cash-Settled Share-based payment transactions.
scope of aaSB 2 and the accounting for group cash-settled share-based payment
transactions in the separate financial statements of an entity receiving the goods
or service when another group entity has the obligation to settle the award.
– aaSB 2009-10 ‘amendments to australian accounting Standards
aaSB 2009-10 makes amendments to aaSB 132 ‘Financial Instruments:
Classification of Rights Issue’.
presentation’ to address the classification of certain right issues denominated in
foreign currency either as an equity instrument or as a financial liability. to date,
there are no arrangements that would fall within the scope of the amendments.
– aaSB 2010-3 ‘amendments to australian accounting Standards arising
aaSB 2010-3 makes amendments to aaSB 3 (2008) Business Combinations’ to
from the annual Improvements project’
clarify that the measurement choice regarding non-controlling interest at the
date of acquisition is only available in respect of non-controlling interests that are
present ownership interests and that entitle their holders to a proportionate
share of the entity’s net assets in the event of liquidation. all other types of non-
controlling interests are measured at their acquisition date fair value, unless
another measurement basis is required by other Standards.
– aaSB 2010-4 ‘amendments to australian accounting Standards arising
the application of aaSB 2010-4 has not had any material effect on amounts
from the annual Improvements project’
reported in the financial statements.
(iii) Standards and Interpretations issued not yet adopted
at the date of authorisation of the financial report, the Standards and Interpretations listed below were in issue but not yet effective.
stanDarD/interpretation
eFFeCtive For annuaL reportinG
perioDs BeGinninG on or aFter
expeCteD to Be initiaLLY appLieD
in tHe FinanCiaL Year enDinG
– aaSB 124 ‘Related party Disclosures (revised December 2009)’ aaSB
1 January 2011
30 June 2012
2009-12 ‘amendments to australian accounting Standards’.
– aaSB 9 ‘Financial Instruments’, aaSB 2009-11 ‘amendments to
1 January 2013
30 June 2014
australian accounting Standards arising from aaSB 9 and aaSB 2010-7
‘amendments to australian accounting Standards arising from aaSB 9
(December 2010)’
– aaSB 2009-14 ‘amendments to australian Interpretation - prepayments
1 January 2011
30 June 2012
of minimum Funding Requirement
– aaSB 2010-5 ‘amendments to australian accounting Standards’
– aaSB 2010-6 ‘amendments to australian accounting Standards -
Disclosures on transfers of Financial assets’
1 January 2011
1 July 2011
30 June 2012
30 June 2012
– aaSB 2010-8 ‘amendments to australian accounting Standards -
1 January 2012
30 June 2013
Deferred tax: Recovery of underlying assets’
– IFRS 10 Consolidated Financial Statements
– IFRS 11 Joint arrangements
– IFRS 12 Disclosure of Interest in other entities
– IFRS 13 Fair Value measurement
– IaS 27 Separate Financial statements
– IaS 28 Investments in associates and Joint Ventures
– IaS 19 employee Benefits
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
30 June 2014
30 June 2014
30 June 2014
30 June 2014
30 June 2014
30 June 2014
30 June 2014
the potential impact of the initial application of the above Standards and Interpretations has not yet been determined.
97
APA AnnuAl REPORT 2011APT invEsTmEnT TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 2. siGniFiCant aCCountinG poLiCies (ContinueD)
(a) Basis of consolidation
consideration classified as an asset or liability are accounted for in accordance
the consolidated financial statements incorporate the financial statements of
with relevant standards. Changes in the fair value of contingent consideration
the trust and entities controlled by the trust (its subsidiaries) (referred to as
classified as equity are not recognised.
the Consolidated entity in these financial statements). Control is achieved
where the trust has the power to govern the financial and operating policies of
an entity so as to obtain benefits from its activities. the results of subsidiaries
acquired during the financial year are
included
in the statement of
comprehensive income from the effective date of acquisition. Where necessary,
adjustments are made to financial statements of subsidiaries to bring their
accounting policies into line with those used by other members of the
Consolidated entity.
all intra-group transactions, balances, income and expenses are eliminated in
full on consolidation. In the separate financial statements of the trust, the intra-
group transactions (“common control transactions”) are generally accounted
Where a business combination is achieved in stages, the consolidated entity’s
previously held interests in the acquired entity are remeasured to fair value at
the acquisition date and the resulting gains or losses, if any, are recognised in
profit or loss. amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in other comprehensive
income are reclassified to profit or loss, where such treatment would be
appropriate if that interest were disposed of.
the acquiree’s identifiable assets, liabilities and contingent liabilities that meet
the conditions for recognition under aaSB 3 are recognised at their fair value
at the acquisition date, except that:
for by reference to the existing (consolidated) book value of the items. Where
– deferred tax assets or liabilities and liabilities or assets related to employee
the transaction value of common control transactions differs from their
benefit arrangements are recognised in accordance with aaSB 112 ‘Income
consolidated book value, the difference is recognised as a contribution by or
taxes’ and aaSB ‘119 employee Benefits’ respectively;
distribution to equity participants by the transaction entities.
Minority interests in the net assets (excluding goodwill) of consolidated
subsidiaries are identified separately from the Consolidated entity’s equity
therein. Minority interests consist of the amount of those interests at the date
of the original business combination and the minority’s share of changes in
equity since the date of the combination. losses applicable to the minority in
excess of the minority’s interest in the subsidiary’s equity are allocated against
the interests of the Consolidated entity except to the extent that the minority
has a binding obligation and is able to make an additional investment to cover
the losses.
(b) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
– liabilities or equity instruments related to the replacement by the
Consolidated entity of an acquiree’s share-based payment awards are
measured in accordance with aaSB 2 ‘Share-based payments’; and
– assets (or disposal groups) that are classified as held for sale in accordance
with aaSB 5 ‘non-current assets Held for Sale and Discontinued operations’
are measured in accordance with that standard.
If the initial accounting for a business combination is incomplete by the end of
the reporting period in which the combination occurs, the Consolidated entity
reports provisional amounts for the items for which the accounting is
incomplete. those provisional amounts are adjusted
for during the
measurement period, or additional assets or liabilities are recognised, to reflect
new information obtained about facts and circumstances that existed as of the
acquisition date, that, if known, would have affected the amounts recognised
amounts of cash, which are subject to insignificant risk of changes in values.
as at that date.
(c) trade and other payables
trade and other payables are recognised when the Consolidated entity
becomes obliged to make future payments resulting from the purchase of
the measurement period is the period from the date of acquisition to the date
the Consolidated entity obtains complete information about facts and
circumstances that existed as of the acquisition date – and is subject to a
goods and services. trade and other payables are stated at amortised cost.
maximum of one year.
(d) acquisition of assets
(f) Financial instruments issued by the Consolidated entity
assets acquired are recorded at the cost of acquisition, being the purchase
Debt and equity instruments
consideration determined as at the date of acquisition. Cost includes
Debt and equity instruments are classified as either liabilities or equity in
expenditure that is directly attributable to the acquisition or construction of the
accordance with the substance of the contractual arrangement. an equity
asset.
In the event that settlement of all or part of the cash consideration given in the
acquisition of an asset is deferred, the fair value of the purchase consideration
is determined by discounting the amounts payable in the future to their present
values as at the date of acquisition.
(e) Business combinations
acquisitions of subsidiaries and businesses are accounted for using the
acquisition method. the consideration for each acquisition is measured as the
aggregate of the fair values (at the date of exchange) of assets given, liabilities
incurred or assumed, and equity instruments issued by the Consolidated entity
instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. equity instruments issued by the
Consolidated entity are recorded at the proceeds received, net of direct issue
costs.
Transaction costs arising on the issue of equity instruments
transaction costs arising on the issue of equity instruments are recognised
directly in equity as a reduction of the proceeds of the equity instruments to
which the costs relate. transaction costs are the costs that are incurred directly
in connection with the issue of those equity instruments and which would not
have been incurred had those instruments not been issued.
in exchange for control of the acquiree. acquisition costs directly attributable
Interest and distributions
to the business combination are recognised in profit or loss as incurred.
Interest and distributions are classified as expenses or as distributions of profit
Where applicable, the consideration for the acquisition includes any asset or
liability resulting from a contingent consideration arrangement, measured at its
consistent with the statement of financial position classification of the related
debt or equity instruments or component parts of compound instruments.
acquisition-date fair value. Subsequent changes in fair values are adjusted
(g) Goods and services tax
against the cost of acquisition where they qualify as measurement period
Revenues, expenses and assets are recognised net of the amount of goods and
adjustments. all other subsequent changes in the fair value of contingent
services tax (“GSt”), except:
98
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 2. siGniFiCant aCCountinG poLiCies (ContinueD)
(g) Goods and services tax (continued)
– where the amount of GSt incurred is not recoverable from the taxation
receivables’. trade and other receivables are stated at their amortised cost less
authority, it is recognised as part of the cost of acquisition of an asset or as
impairment.
part of an item of expense; or
– for receivables and payables which are recognised inclusive of GSt, except for
accrued revenue and accrued expenses at balance dates which exclude GSt.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each balance
sheet date. Financial assets are impaired where there is objective evidence that
the net amount of GSt recoverable from, or payable to, the taxation authority
as a result of one or more events that occurred after initial recognition of the
is included as part of receivables or payables.
financial asset, the estimated future cash flows of the investment have been
GSt receivable or GSt payable is only recognised once a tax invoice has been
issued or received.
impacted.
(k) revenue recognition
Cash flows are included in the statement of cash flows on a gross basis. the
GSt component of cash flows arising from investing and financing activities
which is recoverable from, or payable to, the taxation authority is classified
within operating cash flows.
(h) impairment of assets
assets are reviewed for impairment at least annually or whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. an impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. the recoverable
amount is the higher of an asset’s fair value less costs to sell, and value in use.
For the purpose of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets: (cash-
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Consolidated entity and the revenue can be reliably
measured. amounts disclosed as revenue are net of duties and taxes paid.
Revenue is recognised for the major business activities as follows:
Interest revenue
Interest is recognised by applying the effective interest method, agreed
between the parties at the end of each month and is determined by reference
to market rates.
Distribution revenue
Distribution revenue is recognised when the right to receive a distribution has
been established.
Dividend revenue
Dividend revenue is recognised when the right to receive a dividend has been
generating units). assets other than goodwill that have previously suffered an
established.
impairment are reviewed for possible reversal of the impairment at the end of
each reporting period.
(i) income tax
Income tax expense is not brought to account in respect of aptIt as, pursuant
to the australian taxation laws aptIt is not liable for income tax provided that
its realised taxable income (including any assessable realised capital gains) is
fully distributed to its securityholders each year.
(j) Financial assets and liabilities
Investments in subsidiaries are measured at cost. other financial assets are
classified into the following specified categories: financial assets ‘held-to-
maturity investments’, ‘available-for-sale’ financial assets, and ‘loans and
receivables’. the classification depends on the nature and purpose of the
financial assets and is determined at the time of initial recognition.
Effective interest method
Finance lease income
Finance lease income is recognised when receivable.
(l) Leased assets
leases are classified as finance leases when the terms of the lease transfer
substantially all the risks and rewards incidental to the ownership of the leased
asset to the lessee. all other leases are classified as operating leases.
Consolidated Entity as lessor
amounts due from a lessee under a finance lease are recorded as receivables.
Finance lease receivables are initially recognised at the amount equal to the
present value of the minimum lease payments receivable plus the present value
of any unguaranteed residual value expected to accrue at the end of the lease
term. Finance lease receipts are allocated between interest revenue and
reduction of the lease receivable over the term of the lease in order to reflect a
constant periodic rate of return on the net investment outstanding in respect of
the effective interest method is a method of calculating the amortised cost of
the lease.
a financial asset and of allocating interest income over the relevant period. the
effective interest rate is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset, or where appropriate,
a shorter period.
Fair value through profit or loss
(m) segment information
aptIt operates in one geographical segment being australia and one business
segment, being energy infrastructure investment and operation.
aptIt is an investing and financing entity within the apa stapled group. as the
trust only operates in one segment, it has not disclosed segment information
Financial assets at fair value through profit or loss are stated at fair value, with
any resultant gain or loss recognised in profit or loss. the net gain or loss
recognised in profit or loss incorporates any dividend or interest earned on the
separately.
financial asset.
Available-for-sale financial assets
Financial assets classified as being available-for-sale are stated at fair value.
Gains and losses arising from changes in fair value are recognised directly in
the available-for-sale investment revaluation reserve.
Receivables and loans
trade receivables, loans, and other receivables that have fixed or determinable
payments that are not quoted in an active market are classified as ‘loans and
99
APA AnnuAl REPORT 2011APT invEsTmEnT TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 3. CritiCaL aCCountinG JuDGements anD KeY sourCes oF estimation unCertaintY
In the application of the Consolidated entity’s accounting policies, management
entity to estimate the future cash flows expected to arise from cash-generating
is required to make judgements, estimates and assumptions about the carrying
units and suitable discount rates in order to calculate the present value of cash-
values of assets and liabilities that are not readily apparent from other sources.
generating units.
the estimates and associated assumptions are based on historical experience
and other factors that are considered to be relevant. actual results may differ
from estimates.
the estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period of the
estimates and assumptions used are reviewed on an ongoing basis.
Determining whether available-for-sale investments are impaired requires an
assessment as to whether declines in value are significant or prolonged.
Management has taken into account a number of qualitative and quantitative
factors in making this assessment. any assessment of whether a decline in
value represents an impairment would result in the transfer of the decrement
revision and future periods if the revision affects both current and future
from reserves to the statement of comprehensive income.
periods.
impairment of assets
useful lives of non-current assets
the Consolidated entity reviews the estimated useful lives of property, plant
Determining whether property, plant and equipment, identifiable intangible
and equipment at the end of each annual reporting period. any reassessment
assets and goodwill are impaired requires an estimation of the value-in-use or
of useful lives in a particular year will affect the depreciation or amortisation
fair value of the cash-generating units. the calculations require the Consolidated
expense.
4. proFit From operations
profit before income tax includes the following items of income and expense:
revenue
Distributions
trust distribution - related party
trust distribution - subsidiary
other entities
FinanCe inCome
Interest - related parties
Gain/(loss) on financial asset held at fair value through profit and loss
Finance lease income - related party
otHer revenue
other
total revenue
expenses
audit fees
legal fees
total expenses
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
32,641
27,613
-
113
-
121
32,754
27,734
6,838
(1,398)
640
6,080
8,631
687
732
10,050
-
32,641
113
32,754
6,838
(1,398)
640
6,080
2010
$000
-
27,613
121
27,734
8,631
687
732
10,050
102
38,936
-
37,784
102
38,936
-
37,784
(12)
-
(12)
(10)
-
(10)
(12)
-
(12)
(10)
-
(10)
100
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 5. DistriButions
reCoGniseD amounts
Final distribution paid on 15 september 2010
(2010: 15 September 2009)
profit distribution (a)
Capital distribution
semi-annual distribution paid on 17 march 2011
(2010: 17 March 2010)
profit distribution (a)
Capital distribution
unreCoGniseD amounts
Final distribution payable on 15 september 2011 (b)
(2010: 15 September 2010)
profit distribution (a)
Capital distribution
(a) profit distributions unfranked (2010: unfranked)
(b) Record date 30 June 2011
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
2010
$000
19,928
16,350
36,278
20,629
4,127
24,756
10,809
55,293
66,102
17,847
8,140
25,987
19,928
16,350
36,278
20,629
4,127
24,756
10,809
55,293
66,102
17,847
8,140
25,987
18,951
14,793
33,744
19,928
16,350
36,278
18,951
14,793
33,744
19,928
16,350
36,278
the final distribution in respect of the financial year has not been recognised in this financial report because the final distribution was not declared, determined or
publicly confirmed prior to the end of the financial year.
6. Current reCeivaBLes
other debtors
Finance lease receivable - related party (note 14)
167
553
720
187
527
714
167
553
720
187
527
714
In determining the recoverability of a receivable, the Consolidated entity considers any change in the credit quality of the receivable from the date the credit was
initially granted up to the reporting date. the directors believe that there is no credit provision required.
none of the above receivables is past due.
7. non-Current reCeivaBLes
Finance lease receivable - related party (note 14)
12,448
13,001
12,448
13,001
101
APA AnnuAl REPORT 2011APT invEsTmEnT TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 8. non-Current otHer FinanCiaL assets
Receivable from subsidiary
advance to related party
Investments carried at cost:
Investment in subsidiary
Investment in related party (a)
Financial assets carried at fair value:
Redeemable ordinary shares (b)
available-for-sale investments carried at fair value (c)
ConsoLiDateD
2011
$000
-
2010
$000
-
244,429
182,725
trust
2011
$000
81,541
121,079
2010
$000
65,258
75,659
-
107,379
351,808
32,761
3,102
387,671
-
149,188
149,188
107,380
290,105
33,936
3,013
327,054
-
-
351,808
290,105
32,761
3,102
387,671
33,936
3,013
327,054
(a) the investment in related party reflects Gasnet australia Investments trust’s (“GaIt”) investment in 100% of the B Class units in Gasnet a trust. the B Class units give GaIt rights to
the income and capital of Gasnet a trust, but hold no voting rights. as such, GaIt neither controls nor has a significant influence over Gasnet a trust. Gasnet australia trust, a related
party wholly owned by apa, owns 100% of the a Class units in Gasnet a trust and, accordingly, Gasnet a trust is included in the consolidation of the apa entities
(b) Financial assets carried at fair value relate to apa Group’s 19.9% investment in energy Infrastructure Investments pty ltd where apl, as Responsible entity for aptIt, acquired the
redeemable ordinary shares
(c) available-for-sale investments reflect a 6% unitholding in ethane pipeline Income Fund. ethane pipeline Income Fund paid capital distributions of $406,000 during the year and
declared a $140,000 capital distribution as part of its June 2011 quarter distribution
9. traDe anD otHer paYaBLes
other payables
10. issueD CapitaL
9
11
9
11
634,116,029 securities, fully paid (2010: 542,318,629 securities,
fully paid) (a)
382,001
320,931
382,001
320,931
ConsoLiDateD anD trust
2011
no. oF seCurities
000
2011
$000
2010
no. oF SeCuRItIeS
000
2010
$000
movements
Balance at beginning of financial year
Issue of securities under Distribution Reinvestment plan
Issue of securities under Security purchase plan
542,319
13,875
-
320,931
12,590
-
Issue of securities under Institutional placement
77,922
69,872
equity values adjustment between stapled entities
Issue cost of securities
Capital distributions paid (note 5)
Balance at end of financial year
-
-
-
634,116
-
(915)
(20,477)
382,001
(a) Fully paid securities carry one vote per security and carry the right to distributions
498,664
358,450
18,377
25,278
-
-
-
-
542,319
15,134
20,723
-
(9,868)
(75)
(63,433)
320,931
Changes to the then Corporations law abolished the authorised capital and par value concept in relation to issued capital from 1 July 1998. therefore, the trust
does not have a limited amount of authorised capital and issued securities do not have a par value.
102
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011
11. reserves
available-for-sale investment revaluation reserve
Balance at beginning of financial year
Valuation gain recognised
Balance at end of financial year
ConsoLiDateD
2011
$000
(101)
635
534
2010
$000
(1,446)
1,345
(101)
trust
2011
$000
(101)
635
534
2010
$000
(1,446)
1,345
(101)
the available-for-sale investment revaluation reserve arises on the revaluation of available-for-sale financial assets. Where a revalued financial asset is sold, that
portion of the reserve which relates to that financial asset and is effectively realised, is recognised in profit or loss. Where a revalued financial asset is impaired,
that portion of the reserve which relates to that financial asset is recognised in profit or loss.
12. earninGs per seCuritY
Basic and diluted earnings per security (cents)
ConsoLiDateD
2011
7.1
2010
7.3
the earnings and weighted average number of ordinary securities used in the calculation of basic and diluted earnings per security are as follows:
net profit attributable to securityholders for calculating basic and diluted earnings per security ($000)
38,924
37,774
no. oF seCurities
2011
2010
Weighted average number of ordinary securities on issue used in the calculation (000)
551,222
516,243
13. remuneration oF externaL auDitor
amounts received or due and receivable by Deloitte touche tohmatsu for:
ConsoLiDateD
2011
$
2010
$
trust
2011
$
2010
$
auditing the financial report
11,555
10,125
11,555
10,125
103
APA AnnuAl REPORT 2011APT invEsTmEnT TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011
14. Leases
FinanCe Leases
Leasing arrangements - receivables
Finance lease receivables relate to the lease of a pipeline lateral.
there are no contingent rental payments due.
Finance lease receivables
not longer than 1 year
longer than 1 year and not longer than 5 years
longer than 5 years
Minimum future lease payments receivable (a)
Gross finance lease receivables
less: unearned finance lease receivables
present value of lease receivables
Included in the financial statements as part of:
Current receivables (note 6)
non-current receivables (note 7)
ConsoLiDateD
2011
$000
2010
$000
trust
2011
$000
2010
$000
1,167
4,669
12,840
18,676
18,676
(5,675)
13,001
553
12,448
13,001
1,167
4,669
14,007
19,843
19,843
(6,315)
13,528
527
13,001
13,528
1,167
4,669
12,840
18,676
18,676
(5,675)
13,001
553
12,448
13,001
1,167
4,669
14,007
19,843
19,843
(6,315)
13,528
527
13,001
13,528
(a) Minimum future lease payments receivable include the aggregate of all lease payments receivable and any guaranteed residual
15. FinanCiaL instruments
(a) Financial risk management objectives
(c) Credit risk management
apa’s Corporate treasury function provides services to the business, co-
Credit risk refers to the risk that a counterparty will default on its contractual
ordinates access to domestic and international financial markets, and monitors
obligations resulting in financial loss to the Consolidated entity. the
and manages the financial risks relating to the operations of the Consolidated
Consolidated entity has adopted the policy of only dealing with creditworthy
entity. these risks include liquidity risk, credit risk and market risk (including
counterparties and obtaining sufficient collateral or bank guarantees where
currency risk, price risk and interest rate risk).
appropriate as a means of mitigating the risk of any loss. the carrying amount
the Consolidated entity seeks to minimise the effects of these risks through
natural hedges and by using derivative instruments to directly hedge the
exposures. the use of financial derivatives is governed by apa Group’s treasury
of financial assets recorded in the statement of financial position, net of any
allowances, represents the Consolidated entity’s maximum exposure to credit
risk in relation to those assets.
policy approved by the board of directors, which provides written principles on
(d) market risk management
foreign exchange risk, interest rate risk, credit risk, the use of financial
the Consolidated entity’s activities exposure is primarily to the financial risk of
derivatives and non-derivative financial instruments, and the investment of
changes in interest rates. there has been no change to the Consolidated entity’s
excess liquidity. aptIt does not enter into or trade financial instruments,
exposure to market risk or the manner in which it manages and measures the
including derivative financial instruments for speculative purposes.
risk from the previous period. the Consolidated entity is also exposed to price
the Corporate treasury function reports at least six monthly to apa Group’s
audit and Risk Management Committee, an independent body that monitors
risk from its investments in listed equities. the majority of the shareholdings
rest with one company that is publicly traded in the major financial markets.
risks and policies implemented to mitigate risk exposures.
(e) Fair values of financial instruments
(b) Liquidity risk management
the Consolidated entity has a policy dealing with liquidity risk which requires
an appropriate liquidity risk management framework for the management of
the Consolidated entity’s short, medium and long-term funding and liquidity
Fair value measurements recognised in the statement of financial position
the following table provides an analysis of financial instruments that are
measured subsequent to initial recognition at fair value, grouped into levels 1
to 3 based on the degree to which the fair value is observable.
management requirements. liquidity risk is managed by maintaining adequate
– level 1 fair value measurements are those derived from quoted prices
cash reserves and banking facilities, by monitoring and forecasting cash flow
(unadjusted) in active markets for identical assets or liabilities.
and where possible arranging liabilities with longer maturities to more closely
– level 2 fair value measurements are those derived from inputs other than
match the underlying assets and revenue streams of the Consolidated entity.
quoted prices included within level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
– level 3 fair value measurements are those derived from valuation techniques
that include inputs for the asset or that are not based on observable market
data (unobservable inputs).
104
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 15. FinanCiaL instruments (ContinueD)
(e) Fair values of financial instruments (continued)
ConsoLiDateD anD trust
Financial assets measured at fair value
available-for-sale listed equity securities
ethane pipeline Income Fund
unlisted Redeemable ordinary Shares
energy Infrastructure Investments pty limited
total
Reconciliation of Level 3 fair value measurements of financial assets
opening balance
total gains or losses:
–
–
in profit or loss: Interest - related parties
in profit or loss: loss on financial asset held at fair value through profit and loss
Distributions
Closing balance
Level 1
$000
3,102
-
3,102
2011
Level 2
$000
Level 3
$000
total
$000
-
-
-
-
3,102
32,761
32,761
32,761
35,863
Fair vaLue tHrouGH
proFit or Loss
2011
$000
2010
$000
33,936
34,415
3,500
(1,398)
(3,277)
32,761
3,875
687
(5,042)
33,936
Significant assumptions used in determining fair value of financial assets and liabilities
Redeemable ordinary shares
– the risk free rate of return is 5.33% per annum and is based upon an
the financial statements include redeemable ordinary shares (“RoS”) held in
interpolation of the five and ten year Government bond rates at the
an unlisted entity which are measured at fair value (note 8). the fair market
valuation date; and
value of the RoS is derived from a binomial tree model, which includes some
assumptions that are not able to be supported by observable market prices or
rates. the model maps different possible valuation paths of three distinct
components:
– value of the debt component;
– value of the RoS discretionary dividends; and
– value of the option to convert to ordinary shares.
In determining the fair value, the following assumptions were used:
– the volatility of the ordinary shares (beta) is estimated from obtaining the
average industry beta of peers and then imputing the volatility relative to
market.
(f) interest rate sensitivity analysis
the sensitivity analysis below has been determined based on the exposure to
interest rates on loans with related parties. a 10% increase or decrease is used
and represents management’s assessment of the possible change in interest
rates. at reporting date, if interest rates had been 10% higher or lower and all
– the risk adjusted rate for the RoS is estimated as the required rate of return
other variables were held constant, the Consolidated entity’s net profit would
based on projected cash flows to equity at issuance assuming the RoS price
decrease by $345,000 or increase by $345,000 (2010: $466,000). this is
at issuance ($0.99) and the ordinary price at issuance ($0.01) are at their
mainly attributable to the Consolidated entity’s exposure to interest rates on its
fair value;
variable rate inter-entity balances.
105
APA AnnuAl REPORT 2011APT invEsTmEnT TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011
16. suBsiDiaries
name oF entitY
parent entity
apt Investment trust
Controlled entity
Country of
registration
oWnersHip interest
2011
%
2010
%
Gasnet australia Investments trust
australia
100
100
17. DireCtor Compensation
(a) Details of directors
the Directors of the apa group of entities during the financial year were:
L F Bleasel AM (Independent, non-executive Chairman)
S Crane (Independent non-executive Director, appointed on 1 January 2011)
J A Fletcher (Independent non-executive Director)
R A Higgins AO (Independent non-executive Director)
P M McKenzie (Independent non-executive Director, appointed on 1 January 2011)
M Muhammad (non-executive Director)
M (George) Ratilal (non-executive Director, retired effective 26 august 2010)
R J Wright (Independent non-executive Director)
M J McCormack (Managing Director/Chief executive officer)
(b) Director compensation
the aggregate compensation made to directors of the Consolidated entity and the trust is set out below:
Short-term employment benefits
post-employment benefits
Cash settled share-based payments
Retention award
ConsoLiDateD anD trust
2011
$
2010
$
2,409,250
2,174,099
149,194
773,281
-
91,963
574,166
18,056
3,331,725
2,858,284
106
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011
17. DireCtor Compensation (ContinueD)
(b) Director compensation (continued)
the compensation of each director of the Consolidated entity is set out below.
sHort-term
empLoYment BeneFits
post-
empLoYment
LonG-term
inCentive pLans
SalaRY/FeeS
$
SHoRt-teRM
InCentIVe SCHeMe
$
SupeRannuatIon
$
SHaRe-BaSeD
paYMentS(a)
$
otHeR(b)
$
total
$
20,750
16,981
5,209
-
42,335
25,787
13,077
12,320
5,108
-
-
-
-
-
12,715
11,875
99,194
66,963
50,000
25,000
149,194
91,963
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
773,281
574,166
773,281
574,166
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,056
293,250
271,300
63,084
-
149,335
135,937
158,452
149,320
61,858
-
121,500
113,000
16,000
93,000
153,965
143,875
1,017,444
906,432
2,314,281
1,951,852
-
3,331,725
18,056
2,858,284
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
non-exeCutive DireCtors
l F Bleasel aM
2011
2010
S Crane (c)
2011
2010
J a Fletcher
2011
2010
R a Higgins ao
2011
2010
p M McKenzie (d)
2011
2010
M Muhammad
2011
2010
M (George) Ratilal (e)
2011
2010
R J Wright
2011
2010
272,500
254,319
57,875
-
107,000
110,150
145,375
137,000
56,750
-
121,500
113,000
16,000
93,000
141,250
132,000
totaL remuneration: non-exeCutive DireCtors
918,250
839,469
2011
2010
exeCutive DireCtor
M J McCormack
2011
2010
totaL remuneration: DireCtors
2011
2010
(a) Cash settled share-based payments
(b) Includes retention payment
(c) appointed on 1 January 2011
(d) appointed on 1 January 2011
(e) Directors fees paid to petronas australia pty ltd, retired 26 august 2010
107
870,000
796,500
621,000
538,130
1,788,250
1,635,969
621,000
538,130
APA AnnuAl REPORT 2011APT invEsTmEnT TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 18. KeY manaGement personneL Compensation
(a) Details of key management personnel
the members of key management personnel of the apa group of entities during the financial year were:
M J McCormack (Managing Director/Chief executive officer)
P J Fredricson (Chief Financial officer)
R M Gersbach (Group Manager Commercial)
S P Ohl (Group Manager operations)
M T Knapman (Company Secretary)
P J Wallace (Group Manager Human Resources, appointed 4 april 2011)
(b) Key management personnel compensation
the aggregate compensation made to key management personnel of the Consolidated entity and the trust is set out below:
Short-term employment benefits
post-employment benefits
Cash settled share-based payments
Retention award
the executive remuneration strategy is to:
ConsoLiDateD anD trust
2011
$
4,449,055
181,691
1,688,799
-
6,319,545
2010
$
3,886,759
119,208
1,157,664
18,056
5,181,687
– attract and retain key executives who will create long-term sustainable
apa’s remuneration mix is structured as a mix of base pay and ‘at risk’ short
value for securityholders;
and long-term incentive components.
– motivate and reward executives having regard to the overall performance of
apa, the performance of the executives measured against pre-determined
objectives and the external compensation environment;
– appropriately align the interests of executives with those of securityholders;
total fixed remuneration is reviewed annually and is determined by reference to
appropriate remuneration benchmarking information, taking into account an
individual’s responsibilities, performance, qualifications and experience.
and
operating cash flow per security has been chosen by the board as the key
– comply with applicable legal requirements and appropriate standards of
performance measure for ‘at risk’ remuneration. this is directly linked to the
governance.
strategic goal of increasing operating cash flows over the medium term,
thereby improving returns to securityholders.
108
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011 18. KeY manaGement personneL Compensation (ContinueD)
(b) Key management personnel compensation (continued)
the compensation of each member of the key management personnel of the Consolidated entity is set out below.
sHort-term empLoYment BeneFits
post-
empLoYment
LonG-term
inCentive pLans
SalaRY/FeeS
$
SHoRt-teRM
InCentIVe
SCHeMe
$
non- MonetaRY
$
SupeRannuatIon
$
SHaRe-BaSeD
paYMentS(a)
$
otHeR paYMentS
$
total
$
KeY manaGement personneL
M J McCormack (b)
2011
2010
p J Fredricson
2011
2010
R M Gersbach
2011
2010
S p ohl
2011
2010
M t Knapman
2011
2010
p J Wallace (c)
2011
2010
870,000
621,000
796,500
538,130
554,801
485,539
270,750
228,125
622,879
308,750
543,617
260,062
376,069
372,214
350,000
319,176
201,375
181,562
130,706
121,180
67,715
34,356
-
-
-
-
-
-
11,922
11,922
28,732
28,732
-
-
-
-
50,000
25,000
15,199
14,461
15,199
14,461
45,199
14,461
50,000
50,825
773,281
574,166
165,780
75,000
343,688
229,323
253,636
187,754
141,560
91,421
6,094
10,854
-
-
totaL remuneration
2011
2010
2,841,464
1,566,937
2,517,046
1,329,059
40,654
40,654
181,691
119,208
1,688,799
1,157,664
(a) Cash settled share-based payments
(b) Chief executive officer has also been included in note 17 as the Managing Director
(c) Group Manager Human Resources, appointed 4 april 2011
-
2,314,281
18,056
1,951,852
-
-
-
-
-
-
-
-
-
-
-
1,006,530
803,125
1,302,438
1,059,385
905,011
784,723
672,266
582,602
119,019
-
6,319,545
18,056
5,181,687
109
APA AnnuAl REPORT 2011APT invEsTmEnT TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 19. reLateD partY transaCtions
(a) responsible entity – australian pipeline Limited
the Responsible entity is wholly owned by apt pipelines limited (2010: 100% owned by apt pipelines limited).
(b) equity interest in related parties
Details of the percentage of ordinary securities held in subsidiaries are disclosed in note 16.
(c) transactions with key management personnel
Details of directors and key management personnel compensation are disclosed in note 17 and 18 respectively.
(i) Loans to key management personnel
no loans have been made to key management personnel.
(ii) Key management personnel equity holdings in APTIT
FullY paID
SeCuRItIeS
openInG BalanCe
SeCuRItIeS
aCQuIReD DuRInG
tHe FInanCIal
YeaR
SeCuRItIeS
DISpoSeD DuRInG
tHe FInanCIal
YeaR
FullY paID
SeCuRItIeS
CloSInG BalanCe
2011
l F Bleasel aM
S Crane
J a Fletcher
R a Higgins ao
p M McKenzie
M Muhammad
M (George) Ratilal
R J Wright
M J McCormack
p J Fredricson
R M Gersbach
S p ohl
M t Knapman
p J Wallace (appointed 4 april 2011)
2010
l F Bleasel aM
J a Fletcher
R a Higgins ao
M Muhammad
M (George) Ratilal
R J Wright
M J McCormack
p J Fredricson
R M Gersbach
S p ohl
M t Knapman
359,771
100,000
56,807
72,954
-
42,818
-
31,265
147,005
3,000
24,569
14,896
4,484
-
335,153
44,917
52,021
42,818
-
24,263
115,000
-
22,232
11,928
3,000
15,634
-
3,219
6,549
-
-
-
2,806
23,614
269
1,525
-
-
-
24,618
11,890
20,933
-
-
7,002
32,005
3,000
2,337
2,968
1,484
-
-
-
-
-
-
-
-
-
-
16,298
-
-
-
-
-
-
-
-
-
-
-
-
-
-
375,405
100,000
60,026
79,503
-
42,818
-
34,071
170,619
3,269
9,796
14,896
4,484
-
359,771
56,807
72,954
42,818
-
31,265
147,005
3,000
24,569
14,896
4,484
110
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 APA AnnuAl REPORT 2011
19. reLateD partY transaCtions (ContinueD)
(d) transaction with related parties within the Consolidated entity
– non-current receivables totalling $12,448,336 are owing from a subsidiary
During the financial year, the following transactions occurred between the trust
of apt for amounts due under a finance lease arrangement (2010:
and its other related parties:
$13,001,830); and
– loans advanced and payments received on long-term inter-entity loans; and
– non-current receivables totalling $244,428,764 (2010: $187,725,785) are
– payments of distributions.
owing from subsidiaries of apt.
all transactions between the entities that comprise the Consolidated entity
Australian Pipeline Limited
have been eliminated on consolidation.
Refer to note 16 for details of the entities that comprise the Consolidated
entity.
(e) transactions with other related parties
aptIt and its controlled entity have a number of loan receivable balances with
Management fees of $536,021 (2010: $642,332) were paid to the Responsible
entity as reimbursement of costs incurred on behalf of aptIt. no amounts were
paid directly by aptIt to the Directors of the Responsible entity.
Australian Pipeline Trust
Management fees of $536,021 (2010: $642,332) were reimbursed by apt.
other entities in apa. these loans have various terms; however, they can be
20. ContinGent LiaBiLities anD ContinGent assets
repayable on agreement of the parties. Interest is recognised by applying the
at 30 June 2011, there are no material contingent liabilities or contingent assets
effective interest method, agreed between the parties at the end of each
(2010: $nil).
month and is determined by reference to market rates.
21. suBseQuent events
the following balances arising from transactions between the trust and its
other related parties are outstanding at reporting date:
on 24 august 2011, the Directors declared a final distribution for the 2011 financial
year, of 6.07 cents per security ($33.7 million). the distribution represents a
– current receivables totalling $552,828 are owing from a subsidiary of apt
3.41 cents per security unfranked profit distribution and 2.66 cents per security
for amounts due under a finance lease arrangement (2010: $526,869);
capital distribution. the distribution will be paid on 15 September 2011.
111
APA AnnuAl REPORT 2011APT invEsTmEnT TRusT And iTs cOnTROllEd EnTiTiEsNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2011 apt InVeS tMe nt tR uS t a nD It S C ontRolleD e ntItIeS
Declaration by the Directors
For the financial year ended 30 June 2011
the Directors declare that:
(a) in the Directors’ opinion, there are reasonable grounds to believe that apt Investment trust will be able to pay its debts as and when they become due and
payable;
(b) in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations act 2001, including compliance with
accounting Standards and giving a true and fair view of the financial position and performance of apt Investment trust and the Consolidated entity;
(c) in the Directors’ opinion, the financial statements and notes thereto are in accordance with International Financial Reporting Standards as stated in note 2 to
the financial statements; and
(d) the Directors have been given the declarations by the Managing Director and Chief Financial officer required by section 295a of the Corporations act 2001.
Signed in accordance with a resolution of the Directors of the Responsible entity made pursuant to section 295(5) of the Corporations act 2001.
on behalf of the directors
Leonard Bleasel am
Chairman
SYDneY, 24 august 2011
robert Wright
Director
112
APA AnnuAl REPORT 2011
a pt InVeS tMent tR uS t anD It S C ontRolleD entItIeS
auDitor’s inDepenDence Declaration
For the financial year ended 30 June 2011
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
The Directors
Australian Pipeline Limited as responsible entity for
APT Investment Trust
HSBC Building
Level 19, 580 George Street
Sydney NSW 2000
24 August 2011
Dear Directors
Auditors Independence Declaration to Australian Pipeline Limited as responsible entity for
APT Investment Trust
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Australian Pipeline Limited as responsible entity for
APT Investment Trust.
As lead audit partner for the audit of the financial statements of APT Investment Trust for the
financial year ended 30 June 2011, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
G Couttas
Partner
Chartered Accountants
Member of Deloitte Touche Tohmatsu Limited
Liability limited by a scheme approved under Professional Standards Legislation.
113
APA AnnuAl REPORT 2011 apt InVeS tMe nt tR uS t a nD It S C ontRolleD e ntItIeS
inDepenDent auDitor’s report
For the financial year ended 30 June 2011
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1219 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report
to the Unitholders of APT Investment Trust
We have audited the accompanying financial report of APT Investment Trust, which comprises the
statement of financial position as at 30 June 2011, the statement of comprehensive income, the
statement of cash flows and the statement of changes in equity for the year ended on that date, notes
comprising a summary of significant accounting policies and other explanatory information, and the
directors’ declaration of the consolidated entity comprising the Trust and the entities it controlled at
the year’s end or from time to time during the financial year as set out on pages 92 to 112.
Directors’ Responsibility for the Financial Report
The directors of Australian Pipeline Limited are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to enable
the preparation of the financial report that is free from material misstatement, whether due to fraud or
error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International Financial
Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control, relevant to the entity’s
preparation of the financial report that gives a true and fair view, in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
114
APA AnnuAl REPORT 2011
a pt InVeS tMent tR uS t anD It S C ontRolleD entItIeS
inDepenDent auDitor’s report
continueD
For the financial year ended 30 June 2011
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001,
which has been given to the directors of Australian Pipeline Limited as responsible entity for APT
Investment Trust would be in the same terms if given to the directors as at the time of this auditor’s
report.
Opinion
In our opinion:
(a) the financial report of APT Investment Trust is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the Trust’s and consolidated entity’s financial position as at
30 June 2011 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001.
(b) the financial statements also comply with International Financial Reporting Standards as disclosed
in Note 2.
DELOITTE TOUCHE TOHMATSU
G Couttas
Partner
Chartered Accountants
Sydney, 24 August 2011
115
APA AnnuAl REPORT 2011 aDDitional information
additional information required by the aSX listing Rules and not provided elsewhere in this report (the information is applicable as at 1 September 2011).
tWentY LarGest HoLDers
petronas australia pty ltd
national nominees limited
HSBC Custody nominees (australia) limited
J p Morgan nominees australia limited
Citicorp nominees pty limited
Custodial Services limited
RBC Dexia Investor Services australia nominees pty limited
aMp life limited
argo Investments limited
Queensland Investment Corporation
J p Morgan nominees australia limited
Questor Financial Services limited
Cogent nominees pty limited
Cogent nominees pty limited
M F Custodians ltd
Marich nominees no 2 pty ltd
Citicorp nominees pty limited
RBC Dexia Investor Services australia nominees pty limited
Sandhurst trustees ltd
BKI Investment Company limited
total For top 20
DistriBution oF HoLDers
ranGes
1 – 1,000
1,001 - 5,000
5,001 – 10,000
10,001 - 100,000
100,001 and over
total
no. oF seCurities
111,292,297
38,483,561
33,909,575
33,496,841
13,208,654
12,758,808
6,296,152
5,786,630
5,350,000
4,700,085
3,989,312
1,918,135
1,823,757
1,602,699
1,558,322
1,494,670
1,329,586
1,261,333
1,139,967
1,024,452
%
17.55
6.07
5.35
5.28
2.08
2.01
0.99
0.91
0.84
0.74
0.63
0.30
0.29
0.25
0.25
0.24
0.21
0.20
0.18
0.16
282,424,836
44.54
no. oF HoLDers
%
no. oF seCurities
28,992
27,250
11,218
8,289
146
75,895
38.20
35.90
14.78
10.92
0.19
10,603,859
72,775,259
81,034,982
158,773,263
310,928,666
%
1.67
11.48
12.78
25.04
49.03
100.00
634,116,029
100.00
3,016 holders hold less than a marketable parcel of securities (market value less than $500 or 123 securities based on a market price on 1 September 2011 of $4.07).
suBstantiaL HoLDers
By notice dated 22 august 2007, petronas australia pty limited advised that it had an interest in 72,102,351 ordinary securities.
votinG riGHts
on a show of hands, each holder has one vote.
on a poll, each holder has one vote for each dollar of the value of the total interests they have in the scheme.
on-marKet BuY-BaCK
there is no current on-market buy-back.
116
APA AnnuAl REPORT 2011 DistriBution paYments
Distributions will be paid semi-annually in March and September.
Securityholders will receive annual tax statements with the final
distribution in September.
Direct payment can be made to an australian bank, building society
or credit union account. If you would like to arrange direct payment,
please contact the apa Group registry.
onLine annuaL revieW, annuaL report anD
sustainaBiLitY report
apa Group’s 2011 annual Review, annual Report and Sustainability
Report are available at www.apa.com.au.
onLine inFormation
Further information on apa is available at www.apa.com.au, including:
• Company history, results, market releases and news
• Asset and business information
• Corporate responsibility and sustainability reporting
• Securityholder information such as the current APA security price,
distribution and tax information.
eLeCtroniC CommuniCation
Securityholders can elect to receive communication from apa
electronically by registering their email address with the apa Group
registry.
electing to receive the report electronically will reduce the adverse
impact we have on the environment.
aDDitional information
continueD
CaLenDar oF events
Final distribution FY2011 record date
Final distribution FY2011 payment date
annual meeting
Interim result announcement
Interim distribution FY2012 record date
Interim distribution FY2012 payment date
*Subject to change
30 June 2011
15 September 2011
27 october 2011
23 February 2012*
31 December 2011*
16 March 2012*
annuaL meetinG DetaiLs
Date: 27 october 2011
venue: state room, Level 2, Hilton Hotel sydney
488 George street, sydney nsW
time: 10.30am
registration commences at 10.00am
asx ListinG
an apa Group security comprises a unit in australian pipeline trust and
a unit in apt Investment trust. these units are stapled together to form
an apa Group stapled security which is listed on the aSX (aSX Code:
apa). australian pipeline limited is the Responsible entity of those trusts.
apa Group responsiBLe entitY anD reGistereD oFFiCe
australian pipeline limited
aCn 091 344 704
level 19, 580 George Street, Sydney nSW 2000
po Box R41, Royal exchange nSW 1225
telephone: +61 2 9693 0000
Facsimile: +61 2 9693 0093
Website: www.apa.com.au
seCuritYHoLDer DetaiLs
It is important that securityholders notify the registry immediately
if there is a change to their address or banking arrangements.
Securityholders with enquiries should also contact the apa Group
registry.
apa Group reGistrY
link Market Services limited
level 12, 680 George Street, Sydney nSW 200
locked Bag a14, Sydney South nSW 1235
toll Free: 1800 992 312
telephone: +61 2 8280 7132
Facsimile: +61 2 9287 0303
email: apagroup@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
DisCLaimer australian pipeline limited (aCn 091 344 704) is the responsible entity of australian pipeline trust (aRSn 091 678 778) and apt Investment trust (aRSn 115 585 441) (apa Group).
please note that australian pipeline limited is not licensed to provide financial product advice in relation to securities in the apa Group. this publication does not constitute financial
product advice and has been prepared without taking into account your objectives, financial situation or particular needs. Before relying on any statements contained in this publication,
you should consider the appropriateness of the information, having regard to your own objectives, financial situations and needs and consult an investment adviser if necessary.
Whilst due care and attention have been used in preparing this publication, certain forward looking statements (including forecasts or projections) are made in this publication which are
not based on historical fact and necessarily involve assumptions as to future events and analysis, which may or may not be correct. these forward looking statements should not be relied
upon as an indication or guarantee of future performance.
117
APA AnnuAl REPORT 2011 WWW.apa.com.au