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pipelines: redefining our potential
Annual Report 2012
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australian pipeline trust
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
116
Additional information
92
94
95
95
96
97
112
113
114
apt inVestMent trust
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
australian pipeline trust
and its controlled entities
arsn 091 678 778
AuS tRALIAN PIPeLINe t R uS t AND It S C oNtRoLLeD eNtItIeS
Directors’ report
the directors of Australian Pipeline Limited (“Responsible entity”) submit their
Details of the directors, their qualifications, experience, special responsibilities
report and the annual financial report of Australian Pipeline trust (“APt”) and
and directorships of other listed entities are set out on pages 10 to 12.
its controlled entities (together “APA” or “Consolidated entity”) for the financial
year ended 30 June 2012. this report refers to the consolidated results of APt
and APt Investment trust (“APtIt”).
Directors
the names of the directors of the Responsible entity during the year and since
the year end are:
leonard Bleasel aM
Chairman
Muri Muhammad gave notice on 25 July 2012 of his resignation from the board
of Australian Pipeline Limited with effect from 24 october 2012.
George Ratilal resigned as alternate director for Muri Muhammad on 9 May
2012.
company secretary
Mark Knapman
Details of the Company Secretary, his qualifications and experience are set out
Michael McCormack
Chief executive officer and Managing Director
on page 11.
steven Crane
John Fletcher
russell Higgins aO
patricia McKenzie
Muri Muhammad
robert Wright
principal activities
the principal activities of APA during the course of the year were the ownership
and operation of energy infrastructure assets and businesses, including:
– energy infrastructure, primarily gas transmission businesses located across
Australia and the emu Downs wind farm in Western Australia;
– energy investments in listed and unlisted entities; and
– Asset management and operations services for the majority of APA’s
energy investments and for third parties.
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
Pass-through revenue (1)
total revenue excluding pass-through
eBitda
Depreciation and amortisation expense
eBit
Net interest expense
Pre-tax profit
Income tax expense
Minorities
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)
operating cash flow per security (cents)
earnings per security (cents)
Distribution per security (cents)
Distribution payout ratio (4)
Net tangible asset per security
Weighted average number of securities (000)
2012
$000
2011
$000
CHanges
$000
%
1,060,661
302,633
758,028
525,825
(110,409)
415,416
(234,326)
181,090
(50,435)
(5)
130,650
(9,663)
140,313
335,569
52.5
20.4
35.0
67.0%
$1.58
639,743
1,101,989
381,733
720,256
492,109
(100,350)
391,759
(247,072)
144,687
(35,862)
(316)
108,509
(432)
108,941
290,029
52.6
19.7
34.4
65.7%
$1.51
551,222
(41,328)
(79,100)
37,772
33,716
(10,059)
23,657
12,746
36,403
(14,573)
311
22,141
(9,231)
31,372
45,540
(0.1)
0.7
0.6
$0.07
(3.8)
(20.7)
5.2
6.9
10.0
6.0
(5.2)
25.2
40.6
(98.5)
20.4
28.8
15.7
(0.2)
3.6
1.7
4.6
(1) Pass-through revenue is revenue on which no margin is earned. Pass-through revenue arises in the asset management operations in respect of costs incurred in, and passed on to
envestra in respect of the operation of the envestra assets. It also arises in the Nt Gas business for FY 2011.
(2) Significant items: FY 2012 - Profit on the sale of APA Gas Network business (Allgas) less transaction costs; FY 2011 - APA’s equity accounted share of the Investment Allowance
Concession benefit recognised on the commencement of generation of the North Brown Hill Wind Farm. APA has referenced the significant items to more accurately reflect the actual
trading results of the Group. the significant items have been audited.
(3) operating cash flow = net cash from operations after interest and tax payments, adjusted for significant items.
(4) Distribution payout ratio = total distributions in relation to the financial year as a percentage of operating cash flow.
2
APA grouP AnnuAl rePort 2012 operating profit after tax and minorities for the year was $130.7 million, an
these new facilities were used to repay loans drawn under APA’s existing
increase of 20.4% on last year. APA’s profit contained one significant item with
revolving bank facilities, with the additional headroom created being available
an overall net negative impact of $9.7 million.
to support APA’s ongoing investment in the growth of its infrastructure assets,
Revenue (excluding pass-through) increased by $37.8 million to $758.0 million,
an increase of 5.2% on last year, while earnings before interest, tax, depreciation
including the acquisition of Hastings Diversified utilities Fund (“HDF”) if it
proceeds, and for general corporate purposes.
and amortisation (“eBItDA”) and after significant items increased by
on 9 August 2012, APA lodged a prospectus with the Australian Securities and
$33.7 million to $525.8 million, an increase of 6.9%.
Investments Commission (“ASIC”) for an offer of long-dated, unsecured,
the main factors driving the increase in operating profit and eBItDA include:
subordinated, cumulative notes (“Notes”) to raise $350 million, with the ability
to raise more or less. A replacement prospectus was lodged with the ASIC on
– the additional earnings from new expansions;
17 August 2012 following the closure of the “exposure” period and finalisation
– full year contribution of the emu Downs wind farm business in Western
of the margin and revised offer size of $475 million. the Notes provide 50%
Australia;
equity credit from Standard & Poor’s and Moody’s and are not convertible into
– contribution of the new gas haulage contract on the Amadeus Gas Pipeline;
stapled securities or any other securities. the Notes will be issued in mid-
and
September 2012 and will begin trading on the ASX under the code “AQHHA” in
– reduced interest costs primarily due to the reduction in drawn debt
late September 2012.
following the sale of the Allgas business.
the increase has been partially offset by the cessation of contributions from
the Allgas gas distribution network following its sale in December 2011.
operating cash flow increased by 15.7% to $335.6 million (2011: $290.0 million),
while operating cash flow per security decreased by 0.2% or 0.1 cents to 52.5
At 30 June 2012, APA’s debt portfolio has a broad spread of maturities
extending out to 2022, with a weighted average maturity of drawn debt of 4.8
years. APA has gearing of 65.0%1 at 30 June 2012, down from 66.2% at 30 June
2011, primarily due to the reduction in net debt following receipt of funds from
the sale of APA’s Queensland Gas Network business.
cents per security (2011: 52.6 cents per security).
At 30 June 2012, APA had in excess of $1.1 billion in cash and committed
APA’s distributions for the financial year total 35.0 cents per security, an
increase of 1.7% or 0.6 cents on the prior financial year. APA achieved its
undrawn facilities available to meet the continued capital growth needs of the
business and to fund the acquisition of HDF should the transaction proceed.
guidance of paying distributions in the 2012 financial year at least equal to
APA has a prudent treasury policy which requires conservative levels of
distributions in the 2011 financial year. the distribution payout ratio for 2012
hedging of interest rate exposures to minimise the potential impacts from
was 67.0%, further demonstrating APA’s ability to fully fund its distributions out
adverse movements in rates. All interest rates and foreign currency exposures
of operating cash flows, while retaining significant operating cash flow in the
on uS Private Placement Notes and foreign currency denominated Medium
business to fund organic growth.
Capital ManageMent
During the year, APA issued the following two tranches of new securities under
its Distribution Reinvestment Plan:
– on 15 September 2011, 5,218,596 securities at $3.88 per security raising
$20.2 million; and
– on 15 March 2012, 5,150,958 securities at $4.73 per security raising
$24.4 million.
At 30 June 2012, there were 644,485,583 securities on issue (30 June 2011:
634,116,029) an increase of 1.6%.
term Notes have been hedged into fixed rate AuD obligations. APA also enters
into interest rate hedges for a proportion of the interest rate exposure on its
other floating rate borrowings. At 30 June 2012, 80.9% of interest obligations
were either hedged or set at fixed interest rates for varying periods extending
out for up to 9.9 years.
A level of interest rate protection is also provided through Consumer Price
Index (“CPI”) indexing in most revenue contracts and the regulatory revenue
setting process operating on a number of APA’s assets.
BOrrOWings and FinanCe COsts
As at 30 June 2012, APA had borrowings of $3,223.8 million ($3,239.9 million at
30 June 2011), principally from syndicated bank debt facilities, bilateral debt
APA continues to use the Distribution Reinvestment Plan in providing equity to
facilities, uS Private Placement notes, european Medium term Notes and
support its strong ongoing stock of organic growth and investment projects.
Australian Medium term Notes. Following the CAD 300 million european
During the year APA completed the following debt refinancing programs:
Medium term Note issue in June 2012, significant cash, in the order of
$280 million, was available to repay loans drawn under existing bank facilities
– on 23 August 2011, APA entered into a new $75 million bilateral bank facility
and so create additional facility headroom.
for a term of three years, maturing in August 2014;
– on 12 october 2011, APA entered into a new $150 million bilateral bank
facility for a term of five years, maturing in october 2016;
– on 3 November 2011, APA announced the completion of a $1.45 billion
syndicated bank facility, with equal-sized two, three and four year tranches, to
refinance syndicated facilities due to mature in June 2012 and July 2013.
APA repaid these loans, with the final payment being made on 9 January 2012;
– on 24 January 2012, APA issued JPY 10 billion (A$125.9 million) six-year
five-month fixed-rate Medium term Notes utilising documentation in place
Net underlying finance costs decreased by $12.7 million, or 5.2%, to
$234.3 million (2011: $247.1 million) over last year primarily as a result of lower
drawn debt on average before the CAD bond issue, and lower floating interest
rates throughout the year ended 30 June 2012. this was somewhat offset by
acceleration of amortisation of borrowing costs related to bank debt facilities
being repaid early. the average interest rate (including credit margins) applying
to drawn debt was 7.39% for the year (2011: 7.47%). this figure excludes
commitment fees and borrowing costs.
under its established european MtN program; and
APA’s interest cover ratio for the year increased to 2.48 times from 2.03 times
– on 28 June 2012, APA issued CAD 300 million (A$289.5 million) seven-year
last year, remaining well in excess of its debt covenant default ratio of 1.1 times,
one-month fixed rate Medium term Notes utilising documentation in place
and distribution lock up ratio of 1.3 times.
under its established european MtN program.
1 Gearing ratio determined in accordance with covenants in all debt facilities as net debt to net debt plus book equity.
3
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD Credit rating
Capital and inVestMent expenditure
APt Pipelines Limited, the borrowing entity of APA, maintained its two
Capital and investment expenditure for the year totalled $295.5 million compared
investment grade credit ratings during the year:
with $516.1 million last year. of this amount, $271.1 million was in respect of
– BBB long term corporate credit rating (outlook Stable) from Standard and
Poor’s; and
– Baa2 long term corporate credit rating (outlook Stable) from Moody’s
Investors Service.
inCOMe tax
the effective income tax rate before significant items for the year 26.4%, up
from 24.8% last year. the increase has arisen predominantly as a result of the
investment and growth projects, including pipeline capacity expansion in
Queensland, New South Wales, Victoria and Western Australia, and the expansion
of the Mondarra Gas Storage Facility. the remaining $24.4 million of capital
expenditure related to stay in business or maintenance capital expenditure.
Growth expenditure was generally either fully underwritten through long-term
gas transportation agreements or had regulatory approval through a relevant
access arrangement.
Federal Government’s reversal of previously legislated changes to tax
During the period, APA increased its interest in Hastings Diversified utilities
consolidation rules dealing with “rights to future income”, together with the
Fund (“HDF”) to 20.7% for $11.7 million, and increased its interest in envestra to
prior year impact of investment allowances credits no longer being available.
33.4% for $28.8 million through participation
in envestra’s Dividend
Reinvestment Plan in october 2011 and April 2012.
Capital and investment expenditure for the year is detailed in the table below.
Capital and inVestMent expenditure
(1)
desCriptiOn OF 2012 MaJOr prOJeCts
2012
$ million
2011
$ million
growth expenditure
Regulated
Victorian transmission System
euroa compression; Sunbury lateral looping project
APA Gas Networks (Qld)
Includes southern network expansion
Major projects
Queensland
New South Wales
Western Australia
other
Acquisitions
energy Infrastructure
Roma Brisbane Pipeline expansion
Moomba Sydney Pipeline expansion; Young Marsden compression project
Mondarra Gas Storage Facility; Goldfields Gas Pipeline expansions
National customer management system; Victorian metering
Purchase adjustments for Amadeus Gas Pipeline and emu Downs wind farm
acquisitions in FY 2011
energy Investments
Increased interest in eNV and HDF
total growth capex
stay in business capex
total capex
35.1
8.4
43.5
35.7
18.9
116.4
10.2
181.2
6.0
40.4
46.4
271.1
24.4
295.5
33.4
16.1
49.5
19.6
34.3
39.8
12.2
105.9
228.8
113.9
342.7
498.1
18.0
516.1
(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.
4
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP AnnuAl rePort 2012 Distributions
Distributions paid to securityholders during the year were:
APt profit distribution
APt capital distribution
APtIt profit distribution
APtIt capital distribution
total
Final FY 2011 distriButiOn
paid 15 septeMBer 2011
interiM FY 2012 distriButiOn
paid 15 MarCH 2012
Cents per security
total distribution
$000
Cents per security
total distribution
$000
3.42
8.41
3.41
2.66
17.90
19,054
46,761
18,295
15,449
99,559
4.54
6.52
3.88
2.06
17.00
29,034
41,655
24,797
13,201
108,687
on 22 August 2012, the directors declared a final distribution for APA for the year of 18.0 cents per security payable 15 September 2012, made up of:
APt profit distribution
APt capital distribution
APtIt profit distribution
APtIt capital distribution
total
Final FY 2012 distriButiOn
paYaBle 14 septeMBer 2012
Cents per security
total distribution
$000
5.09
7.32
3.28
2.31
18.00
32,786
47,182
21,160
14,879
116,007
total distribution for the financial year ended 30 June 2012 is 35.0 cents per security, an increase of 0.6 cents, or 1.7%, on the year ended 30 June 2011.
Distribution information is presented on an accounting classification basis. the APA Group Annual tax Statement and Annual tax Return Guide (to be released in
September 2012) provide the classification of distribution components for the purposes of preparation of securityholder income tax returns.
signiFicant changes in state oF aFFairs
the following significant changes in the state of affairs of APA occurred during the year:
– In December 2011 APA divested its Queensland Gas Network business (Allgas) into the newly established joint venture, GDI (eII) Pty Limited (“GDI”). APA
retains a 20% equity interest in GDI with the remaining interest held by Marubeni Corporation and RReeF, each holding a 40% interest. APA remains as asset
manager and operator of the network under a long term agreement. the net proceeds of the transaction totalled $476 million.
– on 14 December 2011, APA announced an off-market takeover offer for HDF through APt Pipelines Limited for all the HDF securities which APA did not then
own. APA currently owns 20.7% per cent of HDF securities. HDF is an Australian Securities exchange (ASX) listed investment vehicle whose assets include epic
energy’s three natural gas transmission pipeline systems, and is managed by Hastings Funds Management Limited. Further details of this transaction are found
on page 8 of this report.
5
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD Business segMent perFOrManCes
APA’s operational and financial result reflects the steady 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 (continuing business)
Energy Infrastructure
Queensland (1)
New South Wales
Victoria
South Australia
Western Australia
Northern territory
energy Infrastructure total
Asset Management
energy Investments
total segment revenue
Pass-through revenue (4)
unallocated revenue
Divested business – Allgas (2)
Significant items (3)
total revenue
eBitda (continuing business)
Energy Infrastructure
Queensland (1)
New South Wales
Victoria
South Australia
Western Australia
Northern territory
energy Infrastructure total
Asset Management
energy Investments
total segment eBItDA
Divested business – Allgas (2)
total eBitda before significant items
Significant items (3)
total eBitda
2012
$000
2011
$000
CHanges
$000
%
112,225
138,443
161,297
2,109
174,166
21,734
609,974
69,295
41,747
721,016
302,633
6,317
30,695
-
107,708
126,657
151,209
2,049
143,643
13,850
545,116
68,647
27,121
640,884
381,733
12,932
56,600
9,839
4,517
11,786
10,088
60
30,523
7,884
64,858
648
14,626
80,132
(79,100)
(6,615)
4.2
9.3
6.7
2.9
21.2
56.9
11.9
0.9
53.9
12.5
(20.7)
(51.2)
1,060,661
1,101,989
(41,327)
(3.8)
79,566
113,098
121,549
1,521
117,397
8,541
441,672
31,910
41,751
515,333
20,155
535,488
(9,663)
525,825
71,685
101,266
114,263
1,618
94,223
5,578
388,633
38,740
27,102
454,475
35,114
489,589
2,521
492,109
7,881
11,832
7,286
(97)
23,174
2,963
53,039
(6,830)
14,649
60,858
45,899
33,715
11.0
11.7
6.4
(6.0)
24.6
53.1
13.6
(17.6)
54.1
13.4
9.4
6.9
(1) excludes the Allgas business contribution in 2011 and 2012.
(2) APA Gas Network Queensland (Allgas) was sold into GDI (eII) Pty Ltd in December 2011.
(3) FY12 - relates to the profit less transaction costs on the sale of Allgas in December 2011. FY11 – relates to APA’s equity share of the eII2 Investment Allowance Concession benefit
($9.8m in revenue & eBItDA), sale of CAMS ($1.7m) reduced by transaction costs on the emu Downs wind farm acquisition ($9.0m).
(4) Pass-through revenue of Nt Gas business ceased following acquisition of the Amadeus Gas Pipeline (June 2011).
6
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP AnnuAl rePort 2012 energY inFrastruCture
the energy Infrastructure segment includes gas transmission and distribution
assets along with the emu Downs wind farm.
the energy Infrastructure segment (continuing business) contributed 85% of
segment revenue (excluding pass-through revenue) and 86% of segment
eBItDA. Revenue (excluding pass-through revenue) was $610.0 million, an
increase of 11.9% on the $545.1 million reported last year. eBItDA increased by
13.6% to $441.7 million (2011: $388.7 million).
the following key factors contributed to this result:
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 the year was
$15 million, bringing the total spent thus far to $71 million. the Young
compressor station was completed in the first half of the year.
Victoria
– Victorian Transmission System
total gas volume transported through the Victorian transmission System
was 229.7 PJ, down 6.5% on last year (245.7 PJ) due to milder weather,
– Queensland revenue and eBItDA increased with new contracts and the
lower industrial demand and lower gas demand for power generation. Peak
recovery of costs in connection with flood damage incurred in FY2011;
day volume of 1,151 tJ was down 3.3% on last year (1,190 tJ).
– New South Wales increase in revenue and eBItDA is mainly due to new gas
haulage contracts;
– Victorian revenue and eBItDA increase reflects the annual increase in
tariffs, offset by lower gas volumes through the Victorian transmission
System due to milder weather;
– Western Australia experienced the greatest increase, primarily as a result of
the inclusion of the first full year of contribution from the emu Downs wind
farm business; and
– the Northern territory result reflects the acquisition of the Amadeus Gas
APA continued work on capital projects which provide both additional
capacity and security of supply for the Victorian Gas transmission System.
these projects include installation of additional compression at euroa, part
of the northern augmentation project, and looping of the Sunbury lateral,
with funding approved within the system’s current (2008-2013) regulatory
arrangements.
Western australia
– Goldfields Gas Pipeline
Pipeline and the new gas transportation agreement – the pipeline was
In December 2011 and January 2012, APA announced two new capacity
previously leased and contracted on a cost based system.
expansions on the pipeline totalling 44 tJ/day, an increase of 28% of the
APA continues to focus on the operation, development and enhancement of its
gas transmission and distribution assets across mainland Australia.
Queensland
– Roma Brisbane Pipeline
APA completed the $50 million expansion of the pipeline in August 2012,
increasing capacity by approximately 10%. the project included additional
compression, pipeline pressure upgrades and augmentation of the pipeline
in the Brisbane metropolitan area. the additional capacity has been
substantially contracted under long term transportation agreements with
an energy retailer and a major industrial gas user.
pipeline’s capacity. these expansions are underpinned by a new 20-year
gas transportation agreement with Rio tinto and a new 15-year gas
transportation agreement with the Mount Newman Joint Venture (85% BHP
Billiton) respectively.
Work has commenced on these two expansions, namely design and
purchase of long lead time equipment and material. the work primarily
involves the upgrade of compression at two existing compressor stations
(Yarraloola and Paraburdoo) and the construction of two new compressor
stations (turee Creek and Newman inlet), for a total capital cost of
approximately $150 million. APA is managing the construction project on
behalf of the Goldfields Gas transmission Joint Venture through which APA
the project to repair damage to the pipeline easement caused by the 2011
owns 88.2% of the Goldfields Gas Pipeline. the additional capacity will be
floods was largely completed, with some work continuing in the Marburg
available in 2014.
region, west of Brisbane. During the year APA recovered some of the repair
cost from its insurance provider and it is expected to recover the remaining
amount in FY2013.
– Mondarra Gas Storage Facility
APA is expanding its Mondarra Gas Storage Facility following execution of a
20-year foundation contract for storage capacity with Verve energy in May
– Carpentaria Gas Pipeline and Diamantina Power Station
2011. Construction work is continuing on the surface facilities, which includes
In october 2011 APA announced that it will jointly develop the Diamantina
pipeline interconnects and treatment plants.
Power Station at Mount Isa with AGL energy. the 242 MW gas fired power
station will be supplied with gas via the Carpentaria Gas Pipeline. the power
station is underpinned by 17-year energy supply agreements with Mount Isa
Mines Limited, a wholly owned subsidiary of Xstrata, and ergon energy, the
Completion of the expanded capacity is scheduled for mid-2013. the facility
is continuing to operate its existing contracted storage services during this
expansion period.
State owned regional electricity supplier. under the arrangements, AGL has
the expansion will provide APA’s customers with supply options and
contracted transportation capacity in the Carpentaria Gas Pipeline for an
flexibility to better manage their gas supply and demand portfolios.
initial ten year period.
– Emu Downs wind farm
the 242 MW power station is being constructed under a turn-key contract
In June 2011, APA acquired the 80 MW emu Downs wind farm and adjoining
with CteC Pty Limited and is expected to be fully operational in early 2014.
development site in Western Australia. the first year of financial and
once project financing is in place and construction of the power station
is completed, APA’s investment in the power station of approximately
$100 million is expected to be funded from headroom under existing
debt facilities.
operational performance of the wind farm under APA’s ownership has been
in line with APA’s expectations.
7
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD asset ManageMent
on 19 July 2012, the Australian Competition and Consumer Commission
APA provides asset management and operational services to the majority of its
announced that it would not oppose the proposed acquisition by APA of HDF
energy investments and a number of third parties. Its main customers are
on the basis of the undertaking from APA to divest HDF’s Moomba Adelaide
envestra Limited, ethane Pipeline Income Fund, SeA Gas Pipeline, Diamantina
Pipeline System once APA changes the responsible entity of HDF.
Power Station joint venture, energy Infrastructure Investments, GDI and eII2.
Asset management and operational services are provided to these customers
under long term contracts.
on 17 August 2012 APA announced a revised offer consideration and will
shortly issue a further Supplementary Bidder’s Statement. the HDF takeover
offer is open until 4 September 2012 unless extended or withdrawn and is
Revenue (excluding pass-through revenue) from such services increased by
currently subject to a number of conditions. APA has reserved the right to
0.9% to $69.3 million (2011: $68.6 million) and eBItDA decreased by 17.6% to
waive these conditions.
$31.9 million, (2011: $38.7 million), mainly due to reduction in envestra incentive
payments partially offset by additional third party work in Western Australia
and Northern territory.
energY inVestMents
tOtal seCuritYHOlder returns
During the year APA’s market capitalisation increased by 37% to $3.24 billion at
30 June 2012. Distributions declared during the year amounted to $0.35 per
APA security. APA’s total securityholder returns, which accounts for the capital
APA has an interest in a number of energy investments across Australia,
appreciation of APA’s security price and assumes the reinvestment of
including envestra Limited, SeA Gas Pipeline, energy
Infrastructure
distributions at the declared time, was placed in the top 90th percentile of total
Investments, ethane Pipeline Income Fund, eII2 (investment in the North
Shareholder Returns for ASX listed companies.
Brown Hill wind farm), GDI and Hastings Diversified utilities Fund (HDF).
All investments are equity accounted, with the exception of APA’s interest in
ethane Pipeline Income Fund and Hastings Diversified utilities Fund.
regulatory matters
Key regulatory matters addressed during the current period included:
roma Brisbane pipeline access arrangement
eBItDA increased by 54.1% to $41.8 million, up from $27.1 million last year,
on 12 october 2011, APA submitted a revised access arrangement proposal for
mainly due to increases in envestra’s and SeA Gas’s profitability.
the Roma Brisbane Pipeline to the Australian energy Regulator (“AeR”). the
APA participated in envestra’s Distribution Reinvestment Plan during the year,
with the total value of distributions reinvested of $28.8 million. As at 30 June
2012, APA’s interest in envestra was 33.4%.
sale OF apa gas netWOrK Business and estaBlisHMent OF gdi
on 14 December 2011, APA announced the sale of its Queensland Gas Network
business (Allgas) into a minority-owned joint venture, GDI (eII) Pty Limited.
APA retains a 20% equity interest in the joint venture, with equity partners
AeR issued its final decision on 10 August 2012 in which it determined to
approve and publish its own access arrangement for the pipeline.
the AeR’s decision provides for an initial 8.75% increase in the reference tariff
followed by annual increases thereafter. this decision has minimal impact on
APA’s revenue. the majority of APA’s Roma Brisbane Pipeline revenue is
derived from haulage contracts which have set terms, including pricing for the
life of the contract, and therefore is not impacted by the AeR’s final decision.
Marubeni Corporation and RReeF each holding a 40% interest. APA also
goldfields gas pipeline access arrangement
remains as asset manager and operator of the network under a 10-year asset
on 5 August 2010 the economic Regulation Authority of Western Australia
management agreement, with two 5-year extension options. Financial close
(“eRA”) released its further final decision and installed its own access
occurred on 16 December 2011.
the net enterprise value (after transaction costs) of the new joint venture is
$526 million, with equity contributions totalling $247 million and a new three
and five-year, non-recourse project debt facility of $310 million.
the net funds released from the sale of $475.7 million have been used to reduce
APA debt and provide further headroom to support APA’s growth strategy.
APA recorded a $12.0 million profit on sale before transaction costs. After
taking transaction costs of $21.7 million (including stamp duty) into account,
arrangement. APA, on behalf of the Goldfields Gas Pipeline owners, pursued a
merits review of the eRA’s decision. this review was completed during the year.
APA was successful in the coverage test for expansion of pipeline capacity and
cost allocation methodology.
Victorian transmission system access arrangement
In April 2012 APA submitted a revised access arrangement proposal for the
Victorian Gas transmission System to the AeR. the AeR is currently assessing
the proposal and its draft decision is expected in September 2012.
APA reported a loss of $9.7 million in respect of the transaction.
amadeus gas pipeline access arrangement
taKeOVer OFFer FOr Hastings diVersiFied utilities Fund (HdF)
on 14 December 2011, APA announced an off-market takeover offer for
Hastings Diversified utilities Fund (HDF) through APt Pipelines Limited for all
the HDF securities which APA did not then own. APA currently owns 20.7% per
cent of HDF securities.
HDF is an ASX listed investment vehicle whose assets include epic energy’s
three natural gas transmission pipeline systems, and is managed by Hastings
Funds Management Limited. each of the epic energy pipelines can be
interconnected with pipelines owned or managed by APA.
At the conclusion of the access arrangement review process the AeR approved
and published its own access arrangement and access arrangement information
for the Amadeus Gas Pipeline on 27 July 2011. the gas transportation agreement
between APA and Power and Water Corporation is not impacted by this access
arrangement.
proposed changes to the national gas rules
In october 2011 the AeR proposed amendments to the National Gas Rules that
would change the process and methodology to determine the allowed rate of
return. APA, together with other industry participants is opposing the proposed
amendments. the Australian energy Market Commission
is currently
APA lodged its Bidder’s Statement on 15 December 2011 and dispatched this
undertaking an extensive review of the proposed amendments and a final
document together with a First Supplementary Bidder’s Statement on
determination is expected in November 2012.
3 January 2012. APA lodged a Second Supplementary Bidder’s Statement in
response to HDF’s target’s Statement on 31 January 2012, and a third
Supplementary Bidder’s Statement on 22 February 2012.
8
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP AnnuAl rePort 2012 health, saFety anD environment
Health and safety reporting
the Lost time Injury Frequency Rate (“LtIFR”)2 for APA employees was 2.2 for
the year, significantly down from 6.2 last year. there were five reportable lost
time injuries during the year, compared with 13 last year.
APA remains committed to a ‘zero harm’ environment and in September 2011
implemented a National APA Group Health Safety & environment Management
System, integrating the various legacy systems and adopting best practice
for the management of environmental matters associated with all aspects of
the high pressure pipeline industry.
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
across the Group.
environmental regulations
All pipeline, distribution and gas processing assets owned and/or operated by
issued.
the Safety and operating Plan for APA’s distribution networks have been
audited in accordance with the Queensland and New South Wales technical
APA are designed, constructed, tested, operated and maintained in accordance
regulatory requirements.
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
2885 “Pipelines – Gas and Liquid Petroleum”, which has specific requirements
environmental reporting
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
the environmental management plans that are in place.
In the year, APA complied with Australia’s National Greenhouse and energy Reporting obligations. energy reporting for financial year 2012 will be submitted in
october 2012.
APA’s performance on two key measures is set out in the following table:
FinanCial Year
Scope 1 Co2 emissions (tonnes)
energy consumption (GJ)
2011
2010
CHange
297,099
3,361,679
305,076
3,248,069
(7,977)
113,610
(2.6)%
3.5 %
introduction of carbon legislation
A major element of the Clean energy Act 2011, passed by the Senate on
subsequent events
except as disclosed elsewhere in this report, the directors are unaware of any
8 November 2011, is the introduction of legislation to reduce carbon emissions.
matter or circumstance that has occurred since the end of the year that has
the legislation put a price on carbon from 1 July 2012. this carbon price
significantly affected or may significantly affect the operations of the
mechanism will eventually act as an incentive for major emitters to switch to
Consolidated entity, the results of those operations or the state of affairs of the
less carbon intensive ways of doing business, such as switching from coal-fired
Consolidated entity in future years.
generation to gas-fired and renewable generation.
APA’s emissions are mainly the result of the combustion of natural gas in
compressor stations and from fugitive emissions within our networks. APA
assets and investments impacted by the new carbon legislation are the Roma
Brisbane Pipeline, Moomba Sydney Pipeline, Goldfields Gas Pipeline, the
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
Victorian transmission System, Allgas gas distribution network, X41 Power
has not been disclosed in this report.
Station and Daandine Power Station.
APA’s carbon costs exposure is immaterial. APA expects to recover all carbon
related costs from its regulated assets under the access arrangement review
process. For non-regulated assets, APA has implemented changes to its
contracts with carbon pass-through clauses included in all new contracts. APA
has also implemented changes to systems and processes across the business to
meet the requirements of the new legislation.
2 Lost time Injury Frequency Rate is work hours lost as a result of injury at work, multiplied by one million, divided by the total hours worked.
9
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD 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 lead 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.
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.
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 gas infrastructure sector in Australia, and his career has encompassed all aspects
of the sector, including commercial development, design, construction, operation and management of most of Australia’s
natural gas pipelines and gas distribution systems.
Michael McCormack
Bsurv graddipeng
MBa FaiCd
Chief Executive Officer and
Managing Director
Appointed Chief executive officer
1 July 2005
Mick is a director of envestra Limited and the Australian Pipeline Industry Association.
Appointed Managing Director
1 July 2006
steven Crane
BComm FaiCd sFFin
Independent Director
Appointed 1 January 2011
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.
He has considerable experience as a non-executive director of listed entities. He is currently Chairman of nib holdings
limited, a director of Bank of Queensland Limited, transfield Services Limited, taronga Conservation Society Australia, a
member of the Advisory Council for RBS Group (Australia) Pty 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.
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 and Argo Investments 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, CSIRo, Austrade and Australian Industry 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.
russell Higgins aO
Bec FaiCd
Independent Director
Appointed 7 December 2004
10
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP AnnuAl rePort 2012 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 and a director of National Health Call Centre Network 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 Petronas Gas Berhad of Malaysia, Papua New Guinea’s national petroleum and minerals corporation and 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.
Muri gave notice on 25 July 2012 of his resignation from the board of Australian Pipeline Limited with effect from
24 october 2012.
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 Retail
Independent Director
Group Limited and APA ethane Limited, the responsible entity of ethane Pipeline Income Fund and was previously Chairman
Appointed 11 February 2000
of Dexion Limited and RCL Group Limited.
Mark Knapman
BComm llB FCsa 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.
In addition to being responsible for the secretariat function, Mark oversees corporate governance and the legal, internal
audit 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 Chartered Secretaries Australia and the Institute of Chartered Secretaries and Administrators, and is
admitted to practice as a solicitor.
11
AustrAliAn 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
periOd OF direCtOrsHip
Leonard Bleasel AM
Michael McCormack
Steven Crane
QBe Insurance Group Limited
envestra Limited
transfield Services Limited
Since January 2001
Since July 2007
Since February 2008
Bank of Queensland Limited
Since December 2008
John Fletcher
Russell Higgins Ao
Patricia McKenzie
Muri Muhammad
Robert Wright
NIB Holdings Limited
APA ethane Limited (1)
Alinta energy Group
Ricegrowers Limited
Since September 2010
July 2008 to June 2011
october 2006 to April 2010
Since December 2005
telstra Corporation Limited
Since September 2009
Argo Investments Limited
Since September 2011
-
-
-
-
SAI Global Limited
Since october 2003
Super Retail Group Limited
APA ethane Limited (1)
Dexion Limited
RCL Group Limited
Since May 2004
Since July 2008
March 2005 to August 2010
May 2006 to February 2012
(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.
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 code
insuring the directors of the Responsible entity, the Responsible entity’s
“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, at its sole
discretion, 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 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 continueDAPA grouP AnnuAl rePort 2012 Directors’ meetings
During the year, 18 board meetings, three Remuneration Committee meetings, four Audit and Risk Management Committee meetings and four 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)
Michael McCormack
Steven Crane
John Fletcher
Russell Higgins Ao
Patricia McKenzie
Muri Muhammad
Robert Wright
BOard
reMuneratiOn COMMittee
audit and risK ManageMent
COMMittee
HealtH, saFetY and
enVirOnMent COMMittee
a
18
18
18
18
18
18
18
18
B
18
18
18
18
17
18
16
18
a
-
-
3
3
-
3
3
-
B
-
-
3
3
-
3
3
-
a
-
-
4
4
4
-
-
4
B
-
-
4
4
4
-
-
4
a
-
-
-
-
4
4
4
4
B
-
-
-
-
4
4
3
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.
Directors’ securityholDings
the aggregate number of APA securities held directly, indirectly or beneficially by directors or their related entities at the 30 June 2012 is 980,057 (2011: 862,442).
the following table sets out directors’ relevant interests in APA securities as at 30 June 2012:
direCtOrs
Leonard Bleasel AM
Michael McCormack
Steven Crane
John Fletcher
Russell Higgins Ao
Patricia McKenzie
Muri Muhammad
Robert Wright
FullY paid
seCurities
as at 1 JulY 2011
seCurities
aCQuired
seCurities
dispOsed
FullY paid
seCurities
as at 30 June 2012
375,405
170,619
100,000
60,026
79,503
-
42,818
34,071
862,442
67,688
24,645
-
3,272
6,657
12,500
-
2,853
117,615
-
-
-
-
-
-
-
-
-
443,093
195,264
100,000
63,298
86,160
12,500
42,818
36,924
980,057
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 that confers a right to call for or deliver APA securities.
the Company Secretary holds 7,000 APA securities.
13
AustrAliAn 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 2012 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
Michael McCormack
steven Crane
John Fletcher
russell Higgins aO
patricia McKenzie
Muri Muhammad
robert Wright
KeY ManageMent persOnnel
Michael McCormack
peter Fredricson
ross gersbach
robert Wheals
John Ferguson
Kevin lester (1)
stephen Ohl
Mark Knapman
peter Wallace
Chairman APA Group
Chief executive officer and Managing Director
Chairman Remuneration Committee
Chairman Health, Safety and environment Committee
Chairman Audit and Risk Management Committee
Chief executive officer and Managing Director
Chief Financial officer
Chief executive Strategy and Development
Group executive transmission
Group executive Networks
Group executive Infrastructure Development
Group executive Strategic Projects
Company Secretary
Group executive Human Resources
(1) Kevin Lester joined APA as Group executive Infrastructure Development on 6 August 2012.
Have there been any changes to the executive remuneration structure in
the members of the Remuneration Committee, all of whom are non-executive
respect to 2012?
there have been no changes to the remuneration structure in respect to 2012.
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
and oversee executive remuneration. the role of the Remuneration Committee
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.
is to:
the Remuneration Committee may seek external professional advice on any
– ensure the provision of a robust remuneration and reward system that
matter within its terms of reference.
provides for the alignment of employee and securityholder interests;
Our approach to non-executive director remuneration
– consider and make recommendations to the board on remuneration policies
We seek to attract and retain a high calibre of directors who are equipped with
and packages applicable to directors and to senior executives of APA;
diverse skills to oversee all functions of APA in an increasingly complex
– facilitate effective attraction, retention and development of talented
environment.
employees;
– ensure compliance with relevant legislation and corporate governance
principles on remuneration practices and employment policies; and
We aim to fairly remunerate directors for their services relative to similar sized
organisations.
– promote diversity, on the basis of gender and other factors, in APA Group’s
Non-executive director remuneration comprises:
workforce and to review the effectiveness of diversity practices and
initiatives.
– a base board fee;
– an additional fee for serving on a committee of the board; and
– superannuation contributions.
14
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP AnnuAl rePort 2012 the board determines base board fees and committee fees annually. the board
made under this arrangement in this reporting period.
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.
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
Non-executive directors do not receive incentive payments of any type. one off
of those directors. Robert Wright is the only current director entitled to benefits
‘per diems’ may be paid in exceptional circumstances. No payments have been
under the plan on his retirement from the board.
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 2012.
Base board fees and committee fees are outlined below:
(1)
Fees
Board fees
Remuneration Committee fees
Audit and Risk Management Committee fees
Health, Safety and environment Committee fees
Board fees
Remuneration Committee fees
Audit and Risk Management Committee fees
Health, Safety and environment Committee fees
Effective 1 January 2012
Effective 1 January 2011 to
31 December 2011
(1) excludes superannuation levy.
CHairMan
$000/pa
MeMBer
$000/pa
298
26
34
24
280
23
32
23
110
13
17
12
102
11.5
16
11.5
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 2012
$
totAL PAID 2011
$
Leonard Bleasel AM
Steven Crane
John Fletcher
Russell Higgins Ao
Patricia McKenzie
Muri Muhammad
Robert Wright
George Ratilal (2)
total
289,000
134,750
117,000
146,000
130,000
130,000
150,750
-
1,097,500
24,400
12,128
43,250
13,145
11,675
-
13,550
-
118,148
313,400
146,878
160,250
159,145
141,675
130,000
164,300
-
293,250
63,084
149,335
158,452
61,858
121,500
153,965
16,000
1,215,648
1,017,444
(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 2012 on page 19.
(2) George Ratilal resigned as a director on 26 August 2010.
15
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ 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)
Performance based ‘at risk’ remuneration
each individual’s tRo is dependent on their level in the organisation and their capacity to influence outcomes.
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
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.
For the Managing Director and other key management personnel, the remuneration mix is:
Managing Director
other key management
3
personnel
40%
30%
30%
‘at risk’ components
50%
25%
25%
‘at risk’ components
TFR
STI L
LtI
TI
An overview of remuneration components
each remuneration component has a different purpose:
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
levy, vehicles and parking) and
incidental benefits paid in monthly instalments.
‘at risK’ COMpOnents
Short-term incentive (“StI”)
to reward strong performance against the
Cash-based incentive based on a mix of financial and
achievement of specific business objectives.
non-financial key performance
indicators paid
annually after the audited accounts are approved.
Long-term incentive (“LtI”)
to link executive reward with securityholder
Cash-settled incentive based on achievement of an
value.
annual board mandated key financial hurdle paid in
three equal annual instalments starting one year after
the year of allocation.
3 other than the Company Secretary who has a mix of 58%, 21% and 21%.
16
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP AnnuAl rePort 2012 total Fixed remuneration (“tFr”)
– various financial measures such as cost control, revenue and cash generation
The total of base salary, including cash, superannuation levy, vehicles and
and capital expenditure management. this reflects APA’s strategic goal of
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.
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.
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 start of the year, the board, having regard to the longer term strategy
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”)
A cash-based incentive used to reward strong performance against the
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:
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?
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.
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
officer’s direct reports and approves the StI amounts to be paid.
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
been achieved.
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 tRo4.
How is the STI reward delivered?
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.
For FY 2012, 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
Robert Wheals (1)
John Ferguson (1)
Stephen ohl
Mark Knapman
Peter Wallace
700,350
292,395
321,563
117,369
119,747
182,125
132,922
147,345
92.00
96.50
93.75
90.00
94.00
77.50
88.25
94.00
60,900
10,605
21,437
13,041
7,643
52,875
17,698
9,405
(1) Appointed to key management positions on 1 April 2012. StI has been prorated.
4 other than for the Company Secretary whose StI is capped at 21% of tRo.
8.00
3.50
6.25
10.00
6.00
22.50
11.75
6.00
17
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD Long-term incentive (“LTI”)
Changes to sti and lti hurdles for the 2013 reporting period
A cash-settled incentive used to link executive reward to securityholder value
the board has conducted a review of the total Package opportunity Incentive
based on the achievement of key financial measures.
Plan (“tPoI Plan”) over the course of the previous year and have decided to
What is the purpose of the LTI?
the LtI plan is designed to put a proportion of executive remuneration at risk
against meeting financial targets linked to oCFPS.
this reflects APA’s strategic goal of increasing oCFPS over the medium term,
thereby increasing total securityholder value and aligning the interests of LtI
participants with those of securityholders.
What form does the LTI take?
eligible participants are entitled to an LtI allocation in the form of reference
units which exactly mirror the value of APA securities. the reference units
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 trading 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?
LtI participants are advised of their maximum LtI opportunity, expressed as a
percentage of their tRo. the actual individual LtI allocation is determined at
the completion of the financial year and is based on oCFPS performance
relative to the achievement of the performance target.
the maximum LtI allocation is capped at 120% of the participant’s maximum
LtI opportunity.
implement changes within the plan. these changes have been made to more
directly align the interests of plan participants and security holders and
secondly to allow the board to reward superior performance.
the StI component will remain linked to oCFPS and executive StI awards, once
this hurdle has been met, will remain a factor of individual KPIs as set by the
board.
the LtI component will adopt two new hurdles in place of the previous hurdle
(being oCFPS). these hurdles, which will be weighted equally, will firstly be
total Securityholder Returns (“tSR”) performance against the ASX 100
comparator group and secondly, performance against targets set for earnings
Before Interest, tax, Depreciation and Amortisation divided by Funds employed
(“eBItDA/Fe”).
these new LtI measures of tSR and eBItDA/Fe are appropriate longer term
award hurdles based on the integrity of earnings performance against the
funds employed and the experience of APA securityholders compared to the
general shareholder market.
the tSR hurdle is linked to APA’s ranking relative to the ASX 100. Rewards do
not commence until APA achieves a relative position of P50. on achieving P50
than executive awards increase as the APA performance increases relative to
the ASX 100.
the eBItDA/Fe hurdle has been set to reflect improvement on the previous
year. Awards do not commence until this improvement has been achieved. on
achieving this improvement then executive awards increase as the eBItDA/Fe
What is the performance target?
performance increases.
No LtI allocations are made unless APA achieves the target oCFPS and the
oCFPS result determines the size of participants’ LtI allocations up to their
maximum LtI allocation.
How are the LTI allocations delivered?
An LtI allocation vests in three equal instalments over the three financial years
following the allocation, with the initial one-third vesting at the end of the first
financial year, one-third at the end of the second financial year, and one-third
at the end of the third financial year.
As LtI allocations are subject to the achievement of a pre-allocation
performance hurdle, they are not subject to further performance tests at the
vesting dates. However, participants must remain employed by APA to access
the vested benefit.
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
trading day VWAP of APA securities immediately prior to the opening of the
APA security trading window, following the announcement of APA’s annual
For both StI and LtI measures, executives can earn from zero (minimum hurdle
has not been achieved) to 150% of available award (stretch hurdles have been
achieved) with the target reward being approximately 80% of the total possible.
All other aspects of the tPoI Plan structure and design will remain the same. It
is felt these changes create an even closer link between the interests of all
stakeholders in the Group. Because the remuneration structure must remain
flexible to meet ever changing circumstances the board will continue to
monitor the tPoI plan to ensure its continued relevance.
actual remuneration received during FY 2012
Actual remuneration received by the Managing Director and other key
management personnel is defined as the ‘take home’ pay received by them in
the relevant year.
Actual LtI payments represent the amount of reference units that vested and
were converted to cash payments to the individual during the year, regardless
of when the LtI was initially allocated.
financial results to the ASX. APA provides fully in its accounts for the obligations
What amounts are excluded?
of the LtI in the year in which the LtI allocation is made.
the table below does not show LtI allocations in FY 2012 or previous years that
What rights are attached to an LTI reference unit?
the LtI is a cash-settled plan and participants are not allocated APA securities.
are still subject to performance or employment conditions because those LtI
allocations are still at-risk of forfeiture.
LtI allocations do not entitle participants to vote at securityholders meetings or
the table below sets out actual cash payments made to the relevant key
to be paid distributions.
No options or other equity instruments are issued to APA employees or
directors under the LtI plan.
management personnel during FY 2012. this table differs from the information
disclosed in Note 46 of the financial report for Australian Pipeline trust that
reflects the total remuneration earned by key management personnel in FY
2012, but not yet fully paid due to future vesting of LtI earned.
the major differences are in respect of StI entitlements for which the amount
paid in FY 2012 represents the amount earned in FY 2011, and LtI allocations for
which the amounts paid in FY 2012 relate to allocations made in prior years that
have vested in FY 2012.
18
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP AnnuAl rePort 2012 the following table outlines the actual remuneration received by key management personnel during FY 2012:
KeY ManageMent persOnnel
Michael McCormack
Peter Fredricson
Ross Gersbach
Robert Wheals (2)
John Ferguson (2)
Stephen ohl
Mark Knapman
Peter Wallace (1)
total
tOtal Fixed
reMuneratiOn
$
1,015,000
606,000
686,000
346,980
340,723
470,000
415,780
304,872
sti
$
621,000
270,750
308,750
100,000
91,300
201,375
130,706
34,356
lti
$
755,517
107,105
328,457
90,407
101,221
248,334
130,897
-
tOtal paid
2012
$
2,391,517
983,855
1,323,207
537,387
533,244
919,709
677,383
339,228
tOtal paid
2011
$
1,980,114
798,125
1,102,722
-
-
799,684
589,081
73,809
4,185,355
1,758,237
1,761,938
7,705,530
5,343,535
(1) 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.
(2) Robert Wheals and John Ferguson were internal appointments to key management positions on 1 April 2012. total StI and LtI remuneration relates to the full financial year FY12.
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 $4.79:
KeY ManageMent persOnnel
Michael McCormack
Peter Fredricson
Ross Gersbach
Robert Wheals (3)
John Ferguson (3)
Stephen ohl
Mark Knapman
Peter Wallace
BalanCe OF
reFerenCe units
(1)
616,281
215,717
285,555
99,937
100,779
200,675
128,943
50,163
(1) Includes reference units subject to allocation by the board in August 2012.
(2) Reference units multiplied by 30 trading day VWAP to be paid as cash in September 2012.
(3) Robert Wheals and John Ferguson were appointed to key management positions on 1 April 2012.
(2)
2012
220,638
55,593
103,598
33,810
36,235
74,224
47,471
3,640
Vesting Year
2013
199,171
80,880
92,012
33,275
32,488
64,592
41,762
16,721
2014
132,945
53,958
61,321
21,969
21,425
42,248
27,141
16,721
2015
63,527
25,286
28,624
10,883
10,631
19,611
12,569
13,081
19
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD executive contracts
the terms of the contractual arrangements for each of the key management personnel are set out below:
naMe, title and COMMenCeMent date
terM and terMinatiOn prOVisiOns/BeneFits
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
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 twelve months’ notice.
No defined term.
on termination with cause, 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 13 weeks tFR, any notice period not worked, any bonus entitlement
not yet paid 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 six months’ notice.
In return for increased notice, non-compete and non-solicitation provisions, and due to the critical nature of the
role of Chief Financial officer over the next three years with regard to the growth, integration and financial
challenges facing APA, Mr Fredricson was placed on a loyalty and performance bonus of $202,000 per year for the
three years commencing 1 April 2013.
ross gersbach
No defined term.
Chief Executive Strategy and Development
Commenced 1 February 2008
on termination with cause, 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 13 weeks tFR, any notice period not worked, any bonus entitlement
not yet paid and any accrued leave entitlement. APA will also pay any tRo due and owing at the date of termination.
Mr Gersbach is required to give APA six months’ notice.
In return for increased notice, non-compete and non-solicitation provisions, and due to the critical nature of the
role of Chief executive Strategy and Development over the next three years with regard to the growth, integration
and financial challenges facing APA, Mr Gersbach was placed on a loyalty and performance bonus of $228,667 per
year for the three years commencing 1 April 2013.
robert Wheals
No defined term.
Group Executive Transmission
Commenced 22 September 2008
on termination with cause, 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 13 weeks tFR, any notice period not worked, any bonus entitlement
not yet paid and any accrued leave entitlement. APA will also pay any tRo due and owing at the date of termination.
Mr Wheals is required to give APA six months’ notice.
In return for increased notice, non-compete and non-solicitation provisions, and due to the critical nature of the
role of Group executive transmission under the major restructure of the business, Mr Wheals will be paid $60,000
per year for the two years commencing 1 April 2013.
20
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP AnnuAl rePort 2012 naMe, title and COMMenCeMent date
terM and terMinatiOn prOVisiOns/BeneFits
John Ferguson
No defined term.
Group Executive Networks
Commenced 29 September 2008
on termination with cause, 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 13 weeks tFR, any notice period not worked, any bonus entitlement
not yet paid and any accrued leave entitlement. APA will also pay any tRo due and owing at the date of termination.
Mr Ferguson is required to give APA six months’ notice.
In return for increased notice, non-compete and non-solicitation provisions, and due to the critical nature of the
role of Group executive Networks under the major restructure of the business, Mr Ferguson will be paid $60,000
per year for the two years commencing 1 April 2013.
Kevin lester
No defined term.
Group Executive Infrastructure Development
Commenced 6 August 2012
on termination with cause, 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 13 weeks tFR, any notice period not worked, any bonus entitlement
not yet paid and any accrued leave entitlement. APA will also pay any tRo due and owing at the date of termination.
stephen Ohl
No defined term.
Mr Lester is required to give APA six months’ notice.
Group Executive Strategic Projects
Commenced 2 May 2005
on termination with cause, 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.
Mark Knapman
Company Secretary
Commenced 16 July 2008
Mr ohl is required to give APA six 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.
peter Wallace
No defined term.
Mr Knapman is required to give APA three months’ notice.
Group Executive Human Resources
Commenced 4 April 2011
on termination with cause, 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 13 weeks tFR, any notice period not worked, any bonus entitlement
not yet paid 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 six months’ notice.
21
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD remuneration advisers
During FY 2012, 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; and
– ernst & Young were appointed by the Chairman of the Remuneration
Committee to provide benchmarking information for the Chief executive
officer and Managing Director and key management personnel.
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 47 to the financial statements.
except as disclosed in this report, neither the Responsible entity nor any of its
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 89.
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,
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
leonard Bleasel aM
Chairman
robert Wright
Director
associates holds any APA securities.
SYDNeY, 22 August 2012
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 29 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.
22
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP AnnuAl rePort 2012 corporate governance statement
APA Group (“APA”) comprises two registered investment schemes, Australian
non-executive directors’ letter of appointment
Pipeline trust and APt Investment trust, the securities in which are “stapled”
the current non-executive directors have each received a letter of appointment
together, and their controlled entities.
documenting, among other issues:
Australian Pipeline Limited (“Responsible entity”) is the responsible entity of
those trusts and is responsible for APA’s corporate governance practices.
the ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations articulate eight core principles of good corporate
governance and, for each of those principles, recommendations as to their
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.
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
recommendations. explanations for departures from the recommendations are
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
access but wish to read that material should telephone 1800 992 312 (or
+61 2 8280 7132, if calling from outside Australia) and ask for a copy of the
relevant material to be sent to them.
In this statement the term “Reporting Period” means the period of 12 months
to 30 June 2012.
prinCiple 1: laY sOlid FOundatiOns FOr ManageMent and
OVersigHt
Board and its committees
– 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
securities trading policy.
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.
Newly appointed senior executives complete an induction program on the
management of the business covering topics that include financial matters,
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.
APA has processes in place to review the performance of senior management.
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 in accordance with that process.
Performance evaluation of the Managing Director is handled by the Chairman
with the assistance of the Remuneration Committee and a report is provided to
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.
the board of directors of the Responsible entity (“board”) is accountable to
prinCiple 2: struCture tHe BOard tO add Value
securityholders for the proper management of APA’s business and affairs. It
Board membership
operates in accordance with a charter, which is published on APA’s web site.
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
directors’ attendance at those meetings are set out in the directors’ report for
that period.
to assist the board in carrying out its responsibilities, the following standing
committees of its members have been established:
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.
the names of the current directors and their experience, terms of office and
membership of board committees are set out in the directors’ report for the
Reporting Period.
the composition of the board is determined in accordance with the following
– Audit and Risk Management Committee;
– Remuneration Committee; and
– Health, Safety and environment Committee.
principles:
– a majority of the board will be comprised of independent directors;
– the Chairman will be an independent director; and
– a person cannot hold the positions of both Chairman and Chief executive
each committee has its own charter that describes the roles and responsibilities
officer.
delegated to the committee by the board, and those charters are published on
APA’s web site. the charters for the board and its committees are reviewed by
the board annually, and were last reviewed in July 2012.
under the Responsible entity’s constitution, Petronas Australia Pty Limited was
entitled to appoint one director of the Responsible entity while the Petronas
Group held not less than 10% of the issued securities in APA but, with the Petronas
the board delegates responsibility for implementing the strategic direction and
Group having sold its APA securities in May 2012, Petronas Group has ceased to
managing the day-to-day operations of APA to the Managing Director. the
have that right.
Managing Director consults with the Chairman, in the first instance, on matters
that are sensitive, extraordinary or of a strategic nature. the board has
approved specific limits of authority for management with respect to approval
of expenditure, contracts and other matters, and regularly reviews those limits.
the Responsible entity’s constitution requires one-third of its directors
(excluding the Managing Director and any 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.
23
the Responsible entity’s constitution also provides that if the board appoints a
In the interest of gender diversity, the board has determined that the short-
director to fill a vacancy or as an addition to the board, the new director will
listed candidates for an available board position must include at least one
hold office until the end of the next annual general meeting of the Responsible
qualified female candidate and, where a search firm is engaged, the board will
entity and is eligible for re-election.
instruct them accordingly.
securityholders’ right to nominate a director and to vote on nominees
annual review of performance of the board, its committees and directors
the Deed Poll initially executed by the Responsible entity in 2004 and
A review process to assess the performance of the board, its committees and
amended with APA securityholders’ approval in 2011 (a copy of which is
individual directors is undertaken each year. the last review was conducted in
available on APA’s web site) affords APA securityholders certain rights in
october 2011 and the review for the Reporting Period will be completed in
respect to nominees for the position of director on the board.
october 2012.
At least 75 days before annual general meetings of the Responsible entity,
each director completes a questionnaire, the responses are collated and the
securityholders are notified by an announcement to ASX that they may
board then meets to discuss and consider the results of that process and to
nominate a person to fill a vacancy on the board that arises on retirement of
determine any actions arising from the review. the Chairman also meets with
either a director under the “rotation” process or a director appointed by the
each director to discuss the review and the director’s own performance.
board since the last annual general meeting.
Matters covered by the review include the role and performance of the board
If securityholders wish to exercise that right, at least 60 days before the annual
and its committees, directors’ understanding of APA’s long-term objectives and
general meeting they must send the Responsible entity a signed nomination
key risks to the business and achievement of those objectives, succession
form and the nominee’s signed consent to act as a director.
planning and the effectiveness of the Chairman in leading the board.
the Responsible entity advises securityholders of all candidates who have
directors’ access to records and information, management and professional
been validly nominated and presents its nominations to the annual meeting of
advice
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 website).
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
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.
handled by that committee then reverted to the board. ultimate responsibility
Directors and senior management are encouraged to broaden their knowledge
for such matters rests with the full board and the board considers the efficient
of APA’s business and to keep abreast of developments in business more
handling of those matters is not diminished by the absence of a Nominations
generally by attending relevant courses, seminars and conferences. Where
Committee.
appropriate, APA will meet expenses involved in such activities.
the board considers that a diverse range of skills, experience and backgrounds
prinCiple 3: prOMOte etHiCal and respOnsiBle deCisiOn-MaKing
is required on the board to effectively govern the business. It determines and
Code of conduct and policies
reviews from time to time the mix of skills and diversity that it looks to achieve
the board and senior management are firmly committed to ensuring that they
in its membership. Having regard to the nature of APA’s business, that mix
and all employees observe high standards of ethical behaviour and conduct.
includes financial, strategic, operational,
legal, regulatory and general
commercial expertise.
APA’s code of conduct sets out the behaviour required of directors and
employees and recognises the responsibilities of APA and its personnel to
When looking to appoint a new director, the board predefines the skills and
securityholders, customers, suppliers, employees and the community. It also
experience required of candidates for the role to ensure that the required mix
requires that breaches of the code are reported and provides a mechanism to
of skills and experience will be represented on the board and, based on that
enable breaches to be reported without fear of retribution. the code is
work, seeks a list of potential candidates believed to satisfy those requirements.
published on APA’s web site.
If the board is not satisfied with the quality or diversity of the candidates
A number of APA’s policies aim to foster a culture of compliance and ethical
identified in that process, it may consider it appropriate to instruct a search
and responsible decision-making. APA’s whistleblower policy encourages the
firm to identify additional suitable candidates. the board recognises that an
reporting of matters of concern and suspected wrongdoing, such as dishonest
experienced search firm with a clear brief from the board as to the required
or fraudulent conduct, breaches of legislation and other conduct that may
characteristics of candidates can assist in identifying potentially suitable
cause financial loss to APA or be otherwise detrimental to its reputation or
candidates from diverse backgrounds.
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
interests, and describes the protection to be afforded to whistleblowers who
report such conduct against reprisals, discrimination, harassment or other
disadvantage resulting from their reports.
interviewed by the board. the board assesses potential candidates against the
APA’s securities trading policy, published on its web site, provides that subject
predefined requirements and also considers their qualifications, backgrounds
to some exceptions directors and designated management personnel must not
and personal qualities before the new director is appointed.
buy or sell APA securities during either of the following “closed periods”:
24
corporate governance statement continuedAPA grouP AnnuAl rePort 2012 – in the period starting 1 January and ending on the second business day after
broader community demographics. these will be analysed and, where specific
the release of APA’s half yearly results to the ASX, or
initiatives are undertaken, included in subsequent reporting periods.
– in the period starting 1 July and ending on the second business day after the
release of APA’s annual results to the ASX,
prinCiple 4: saFeguard integritY in FinanCial repOrting
audit and risk Management Committee
unless exceptional circumstances apply, and they may only buy or sell APA
the board has established an Audit and Risk Management Committee, the
securities outside those closed periods if they obtain clearance to do so in
composition of which is determined in accordance with the following principles:
accordance with the process described in the policy. 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.
– the committee will have at least three members;
– all members of the committee will be independent, non-executive directors;
and
diversity
– the committee Chairman cannot also be the Chairman of the board.
APA values diversity and recognises that to continue to be a relevant and
innovative organisation, it must leverage the full potential of its people.
embracing individual diversity encourages diversity of thought, which is
conducive to better decision making and opportunity for innovation. It is also
about taking advantage of all available talent for the benefit of the organisation.
the directors’ report for the Reporting Period identifies the current members of
the committee and their qualifications and experience. the Chairman of the
board, although not a member of the committee, usually attends committee
meetings.
APA also recognises that creating sustainable shareholder wealth depends on
the roles and responsibilities delegated to the committee are set out in the
its ability to attract and retain an engaged, highly skilled and motivated
committee’s charter which is published on APA’s web site.
workforce. therefore, diversity makes good business sense. APA has developed
a diversity policy that is available on its website.
Workforce gender profile (2012)
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
Currently within APA, women represent 27% of the total workforce (a 2%
the committee. the external and internal auditors receive all committee papers
increase from the previous year), 14% of leadership roles (the top three levels
and regularly meet with the committee, without management present, at
of management) and 4% of technical roles, while 12.5% of directors on the
committee meetings.
board are female.
diversity objectives (2013)
the minutes of each meeting of the Audit and Risk Management Committee
are reviewed at the subsequent meeting of the board and the committee
While the APA workforce gender profile is consistent with organisations within
Chairman reports to the board on the committee’s activities and
APA’s industry and similar male dominated sectors, APA is committed to increasing
recommendations.
the participation of women in the workforce in order to broaden the talent pool
from which leaders can be drawn and to strengthen the diversity of APA.
the committee is required by its charter to meet at least four times each year.
the number of times it met during the Reporting Period and the committee
A working party was established to analyse APA’s current diversity status and
members’ attendance at those meetings are set out in the directors’ report for
to determine trends and developments in addressing the diversity challenge.
that period.
As a result, the following objectives and initiatives have been agreed by the board:
audit functions and independence of external auditor
– Attraction – focus on attracting new talent into APA:
Apart from reviewing the integrity of APA’s financial reporting, the committee
• wherever possible, include at least one woman on the shortlist of
receives reports from the external and internal auditors, monitors their
applicants for all management roles;
effectiveness and the independence of the external auditor, and makes
•
include at least one woman in the selection panel for all senior
recommendations to the board on the appointment or replacement (subject to
management roles; and
securityholders’ approval, if applicable) of the external auditor.
• expand recruitment training materials to include diversity awareness
and the value of a diverse workforce.
– Retention – focus on retaining talent in APA:
• continue to offer flexible work arrangements through part-time hours,
job sharing, flexible start and finish times and purchase of additional
annual leave; and
• maintain breastfeeding accreditation in relevant APA offices.
– opportunities – provide both career and development opportunities for
women:
the external auditor appointment and independence policy (published on
APA’s web site) documents the process for appointment of the auditor and for
monitoring the auditor’s independence. Pursuant to that policy, the lead
partner and the review or concurring partner of the external auditor must be
rotated at least every five years, followed by a two year minimum time-out
period during which they may not take part in the audit. APA’s auditor is
Deloitte touche tohmatsu and Greg Couttas of that firm was appointed the
lead audit partner for the APA audit in December 2009.
•
implement an APA Women in Leadership seminar at least annually;
the external auditor’s independence could be impaired or compromised, or be
• maintain or improve women’s participation rates in leadership and
interpreted as being impaired or compromised, through the provision of some
management development programs; and
non-audit services or by the quantum of fees paid to the auditor for such
• all nominees in the talent pool, both male and female, to have a
services. Accordingly, the Audit and Risk Management Committee has
completed development plan.
APA will report on the progress in achieving these objectives in its 2013
annual report.
diversity aspirations
In addition to the above objectives and consistent with its diversity policy, APA
will also be exploring its profile and opportunities for improvement with regard
to the age profile and workforce demographics, equity of pay and benefits, and
approved a list of non-audit services that the external auditor may perform and
the process for those services being approved, identified a list of prohibited
services and determined a maximum dollar limit on any non-audit services
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
25
corporate governance statement continued actual cost recovery in the Reporting Period was $2,545,000. the Responsible
the external auditor attends the annual meetings and is available to respond to
entity does not make a profit, nor seek performance fees.
questions from securityholders about the conduct of the audit and the
the constitutions of Australian Pipeline trust and APt Investment trust enable
preparation and content of the independent audit report.
the Responsible entity to charge fees up to 0.5% per annum of the value of
the 2012 annual meeting of securityholders will be held in Sydney on 25
gross assets; however, the right to charge such fees has been waived to the
october 2012. A notice of that meeting and a proxy form will be sent to
extent it exceeds the Responsible entity’s costs.
securityholders some weeks before the meeting, and details of the meeting are
prinCiple 5: MaKe tiMelY and BalanCed disClOsure
also available from APA’s web site.
APA’s market disclosure policy, published on APA’s web site, aims to ensure
prinCiple 7: reCOgnise and Manage risK
that information that a person could reasonably expect to have a material
the identification and effective management of risk, including calculated risk-
effect on the APA security price, whether the information is positive or
taking, are viewed as an essential part of APA’s approach to creating long-term
negative, is announced to the market by release to ASX in accordance with the
securityholder value.
ASX Listing Rules and the Corporations Act 2001.
the board is responsible for adopting and reviewing APA’s approach to the
the Company Secretary is the nominated continuous disclosure officer.
identification, evaluation and management of business risks that are material to
All ASX announcements are posted on APA’s web site as soon as reasonably
possible after notification to ASX.
prinCiple 6: respeCt tHe rigHts OF sHareHOlders
Communications with securityholders
APA aims to ensure its securityholders are informed of all significant
developments affecting APA’s state of affairs and business. Information is
the fulfilment of APA’s business objectives.
the board has delegated certain activities to its Audit and Risk Management
Committee, the charter for which is published on APA’s web site. With respect
to business risk, the committee’s primary function is to maintain and oversee a
sound system of internal risk management controls based on the board’s
adopted risk management approach.
communicated to securityholders by a number of means, including the 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
– reviewing and approving APA’s updated risk profile, and risk management
report;
policy and framework;
– an annual review sent to securityholders who elect to receive either the
– reviewing at least annually APA’s implementation of the risk management
statutory report or the annual review alone;
policy and framework; and
– a biannual newsletter sent to securityholders who have not elected to
– receiving and reviewing management’s report on the effectiveness of risk
receive the annual report, and to all securityholders on the announcement
management and internal control systems and otherwise monitoring the
of the half year results;
effectiveness of the risk management framework and the system of internal
– the interim (half yearly) report and directors’ commentary on that report;
control, and progress against agreed risk management plans.
– announcements to ASX and media releases;
– “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 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.
– the Investor Centre section of APA’s web site on which the reports, ASX
Senior management is accountable for risk management within the areas
and media releases, presentations and other documents referred to above
under their control, including devolution of the risk management process to
are posted;
– the annual meeting of securityholders; and
– webcasting of half year and full year results presentations, the annual
meeting and announcements of major events.
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
current to APA’s context;
Securityholders and others may elect on APA’s web site to receive ASX and
– identifying material business risks that may impact on APA’s business plans
media announcements and newsletters by email.
and objectives and the development, implementation, performance and
annual meeting of securityholders
APA encourages securityholders to participate in its annual meetings. A notice
of annual meeting setting out the agenda for the meeting and explaining
resolutions on which securityholders may vote is sent to all securityholders and
to ASX prior to the meeting. Securityholders who cannot attend a meeting in
person may appoint a proxy and may also read the Chairman and Managing
Directors’ addresses that are sent to ASX and posted on APA’s web site, and
review of risk management plans. In doing so, senior management considers
both financial
risk and non-financial
risk,
including operational,
environmental, strategic, market related, compliance and reputation risk;
– aggregating operational risk data across APA, and monitoring external
factors, to facilitate monitoring of APA’s risk profile; and
– contributing advice, leadership and facilitation in the development of
group-wide risk control solutions.
listen to a web cast of the meeting available through the web site.
the Business Risk Manager, who reports to the Chief Financial officer and
At the annual meeting the Chairman encourages questions and comments
from securityholders and seeks to ensure the meeting is managed to give
usually attends meetings of the Audit and Risk Management Committee, is
responsible for:
securityholders an opportunity to participate. In the interests of clarity,
– overseeing and facilitating the co-ordination of the risk management
questions on operational matters may be answered by the Managing Director
activities of senior management;
or another appropriate member of senior management. Securityholders are
– reporting regularly to the Audit and Risk Management Committee on APA’s risk
also invited to send written questions ahead of the meeting and, where there is
profile and the implementation and effectiveness of risk management plans;
a common theme to a number of questions, either the Chairman or the
– contributing leadership and facilitation of the implementation of group-
Managing Director will commonly seek to provide an answer in their address.
wide risk control solutions; and
26
corporate governance statement continuedAPA grouP AnnuAl rePort 2012 – working with senior management to design and develop risk education and
external advice
communication forums.
APA’s management has reported to the Audit and Risk Management Committee as
to its assessment of the effectiveness of management by APA of its material risks.
In the course of approving the financial statements for the Reporting Period,
the committee can seek external professional advice on any matter within its
terms of reference. As stated in APA’s remuneration report referred to below,
independent remuneration consultants were engaged by the Chairman of the
Remuneration Committee to provide comparative market data with respect to
non-executive director and executive remuneration during the Reporting
the board considered a written statement from the Chief executive officer and
Period.
the Chief Financial officer to the effect that, to the best of their knowledge and
belief, their declaration pursuant to section 295A of the Corporations Act 2001
remuneration report
(broadly, that the financial statements give a true and fair view in all material
the Corporations Act 2001 does not require registered investment schemes like
respects of APA’s financial position and comply in all material respects with
Australian Pipeline trust and APt Investment trust to include a remuneration
relevant accounting standards) is founded on a sound system of risk
report as part of the annual directors’ report, but APA has chosen to do so for
management and internal control and that system is operating effectively in all
the Reporting Period and prior periods.
material respects in relation to financial reporting risks, based on the
management framework adopted by APA.
the remuneration report distinguishes the structure of non-executive directors’
remuneration from that of the Managing Director and other senior executives,
prinCiple 8: reMunerate FairlY and respOnsiBlY
and sets out details of the components of remuneration and total remuneration
remuneration Committee
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
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;
unvested benefits under apa’s long term incentive plan
the remuneration report also describes the APA long term incentive (LtI) plan
under which the benefits to executives who participate in the plan are related
to the price of APA securities and vest over three years. An aim of the LtI plan
is to align the interests of the LtI participants with the interests of APA
securityholders. APA recognises that the use of arrangements such as hedging
– all members of the committee will be non-executive directors and a majority
or derivative financial products that operate to limit for LtI participants the
of them will be independent directors; and
economic risk of their unvested LtI benefits are likely to reduce the intended
– the committee Chairman will be an independent director.
alignment of those interests. Consequently, it is APA policy that LtI participants
the directors’ report for the Reporting Period identifies the current members of
the committee and their qualifications and experience. the Chairman of the board,
must not use, nor allow to be used, any such arrangements in relation to their
unvested LtI benefits.
although not a member of the committee, usually attends committee meetings.
retirement benefits
the roles and responsibilities delegated to the Remuneration Committee are
set out in the committee’s charter which is published on APA’s web site.
the Managing Director attends meetings of the committee by invitation when
required to report on and discuss senior management performance and other
remuneration matters.
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.
After 10 years service, the entitlement increased to the equivalent of
the committee Chairman reports to the board on the committee’s activities
emoluments received during the most recent three years. No additional
and recommendations.
the committee is required by its charter to meet at least twice each year. the
entitlement accrued after 10 years. For periods between three and 10 years, the
entitlement was calculated on a pro-rata basis.
number of times it met during the Reporting Period and the committee members’
Robert Wright is the only current director entitled to benefit under the plan on
attendance at those meetings are set out in the directors’ report for that period.
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”.
27
Yes
Yes
Yes
Yes
Yes
No (note 1)
Yes
Yes
corporate 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
Yes
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
Yes
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.
3.5
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
8.4
Companies should provide the information indicated in the Guide to reporting on Principle 8
Yes
28
corporate governance statement continuedAPA grouP AnnuAl rePort 2012 AuS tRA LIA N PIPeLINe tR uS t AND It S C oNtRoLLeD eNtItIeS
statement oF comprehensive income
For the financial year ended 30 June 2012
COnsOlidated
trust
Note
2012
$000
2011
$000
2012
$000
2011
$000
6
6
7
7
7
7
7
9
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
Gain on available-for-sale investments taken to equity
transfer of (loss)/gain on cash flow hedges to profit or loss
Loss on cash flow hedges
Loss on associate hedges taken to equity
Actuarial (loss)/gain on defined benefit plan
Income tax relating to other comprehensive income components
other comprehensive income/(expense) in the year (net of tax)
1,032,398
1,078,113
58,386
63,019
28,263
1,060,661
(75,995)
(110,409)
(302,633)
23,876
1,101,989
(82,190)
(100,350)
(381,733)
(240,643)
(260,004)
(132,913)
(16,978)
181,090
(50,435)
130,655
93,189
(29,867)
(37,774)
(22,666)
(32,677)
9,265
(20,530)
(114,923)
(18,102)
144,687
(35,862)
108,825
29,643
192,900
(228,392)
(2,100)
3,072
2,606
(2,271)
-
58,386
-
63,019
-
-
-
-
-
(506)
57,880
(8,517)
49,363
-
-
-
(45)
-
(31)
62,943
(3,555)
59,388
2,261
880
-
-
-
-
(678)
1,583
-
-
-
-
(263)
617
total comprehensive income for the year
110,125
106,554
50,946
60,005
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
84,693
45,957
130,650
5
69,585
38,924
108,509
316
49,363
-
49,363
-
59,388
-
59,388
-
130,655
108,825
49,363
59,388
63,073
47,047
110,120
5
66,679
39,559
106,238
316
50,946
60,005
-
-
50,946
60,005
-
-
110,125
106,554
50,946
60,005
earnings per seCuritY
Basic and diluted (cents per security)
36
20.4
19.7
Diluted earnings per security is exactly the same as basic earnings per security.
the profit for the year includes a significant item which has been audited.
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
29
AuS tRALIAN PIPeLINe t R uS t AND It S C oNtRoLLeD eNtItIeS
statement oF Financial position
As at 30 June 2012
COnsOlidated
trust
Note
2012
$000
2011
$000
2012
$000
2011
$000
Current assets
Cash and cash equivalents
trade and other receivables
other financial assets
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
37
11
12
13
14
15
16
17
18
19
20
9
21
22
23
24
25
26
27
28
9
25
26
329,934
238,519
420
11,504
4,134
95,368
145,698
-
11,076
3,357
110
49
402,273
486,830
-
-
-
-
-
-
584,511
255,499
402,383
486,879
22,244
299,070
512,948
25,860
182,282
479,409
3,472,198
3,768,342
411,883
183,659
-
9,541
515,344
192,903
-
7,966
-
-
696,523
665,507
-
-
-
-
-
-
-
-
149,760
192
148,242
192
4,911,543
5,172,106
846,475
813,942
5,496,054
5,427,605
1,248,858
1,300,822
175,028
135,651
98,427
98,675
-
900,000
59,307
65,883
761
300,979
44,986
54,731
2,347
1,137,715
-
-
-
-
-
-
-
-
98,427
98,675
2,905,946
1,990,446
286,592
319,282
65,135
4,078
263,786
336,171
30,840
802
-
-
-
-
-
-
-
-
-
-
-
-
total non-current liabilities
3,581,033
2,622,045
total liabilities
net assets
3,882,012
3,759,760
98,427
98,675
1,614,042
1,667,845
1,150,431
1,202,147
The above statement of financial position should be read in conjunction with the accompanying notes.
30
APA grouP AnnuAl rePort 2012 AuS tRA LIA N PIPeLINe tR uS t AND It S C oNtRoLLeD eNtItIeS
statement oF Financial position
continueD
As at 30 June 2012
COnsOlidated
trust
Note
2012
$000
2011
$000
2012
$000
2011
$000
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
29
30
31
32
32
32
32
1,138,205
1,192,779
1,138,205
1,192,779
56,153
32,785
54,899
19,054
2,345
9,881
762
8,606
1,227,143
1,266,732
1,150,431
1,202,147
364,066
382,001
1,624
21,160
534
18,295
386,850
400,830
49
386,899
283
401,113
-
-
-
-
-
-
-
-
-
-
-
-
1,614,042
1,667,845
1,150,431
1,202,147
The above statement of financial position should be read in conjunction with the accompanying notes.
31
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APA grouP AnnuAl rePort 2012
AuS tRA LIA N PIPeLINe tR uS t AND It S C oNtRoLLeD eNtItIeS
statement oF changes in equity
continueD
For the financial year ended 30 June 2012
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
Balance at 1 July 2011
Profit for the year
other comprehensive income
total comprehensive income for the year
Payment of distributions
Issued under distribution reinvestment plan
Issue cost of securities
tax relating to security issue costs
Capital return to securityholders
Balance at 30 June 2012
trust
AVAILABLe-FoR-SALe
INVeStMeNt
ReVALuAtIoN
ReSeRVe
$000
145
-
617
617
-
-
-
-
-
-
RetAINeD
eARNINGS
$000
11,263
59,388
-
59,388
(62,045)
-
-
-
-
-
AttRIButABLe
to oWNeR oF
tHe PAReNt
$000
996,344
59,388
617
60,005
(62,045)
39,782
230,128
(2,746)
824
(60,145)
762
8,606
1,202,147
762
-
1,583
1,583
-
-
-
-
-
8,606
49,363
-
49,363
1,202,147
49,363
1,583
50,946
(48,088)
(48,088)
-
-
-
-
33,879
(53)
16
(88,416)
2,345
9,881
1,150,431
ISSueD
CAPItAL
$000
984,936
-
-
-
-
39,782
230,128
(2,746)
824
(60,145)
1,192,779
1,192,779
-
-
-
-
33,879
(53)
16
(88,416)
1,138,205
The above statement of changes in equity should be read in conjunction with the accompanying notes.
33
AuS tRALIAN PIPeLINe t R uS t AND It S C oNtRoLLeD eNtItIeS
statement oF cash Flows
For the financial year ended 30 June 2012
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
trust
Note
2012
$000
2011
$000
1,104,107
(604,786)
51,294
3,131
7,198
1,165,338
(704,597)
45,890
6,748
6,162
(225,375)
(229,954)
-
442
2012
$000
-
(272)
2011
$000
217
-
58,322
62,842
-
64
-
-
-
177
(45)
-
net cash provided by operating activities
37(c)
335,569
290,029
58,114
63,191
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
Payments for intangible assets
Proceeds from sale of businesses
Proceeds from sale of equity accounted investments
37(b)
37(b)
41
42
(249,112)
(231,051)
522
(11,665)
(28,548)
(5,714)
(443)
475,523
-
265
(22,481)
(91,392)
(171,077)
(8,000)
3,145
4,500
-
-
-
-
-
-
(28,755)
(24,812)
-
-
-
-
-
-
-
-
net cash (used in)/provided by investing activities
180,563
(516,091)
(28,755)
(24,812)
CasH FlOWs FrOM FinanCing aCtiVities
Proceeds from borrowings
Repayments of borrowings
Proceeds from issue of securities
Payment of debt issue costs
Payments of security issue costs
Distributions paid to:
Securityholders of APt
Securityholders of minority interests - APtIt
other minority interest
1,999,697
700,100
73,380
(2,103,500)
(620,633)
44,612
(13,819)
(72)
(136,504)
(71,741)
(239)
352,372
(4,300)
(3,661)
(122,189)
(61,034)
(165)
-
33,879
-
(53)
-
(183,598)
269,910
-
(2,746)
(136,504)
(122,189)
-
-
-
-
net cash provided by/(used in) by financing activities
(281,566)
240,490
(29,298)
(38,623)
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
37(a)
234,566
95,368
329,934
14,428
80,940
95,368
61
49
110
(244)
293
49
The above statement of cash flows should be read in conjunction with the accompanying notes.
34
APA grouP AnnuAl rePort 2012 AuS tRA LIA N PIPeLINe tR uS t AND It S C oNtRoLLeD eNtItIeS
notes to the Financial statements
For the financial year ended 30 June 2012
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 code ‘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 is 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”), GDI (eII) Pty Ltd (“GDI”), Diamantina Power Station Pty Ltd (“DPS”); and
– Asset management and operations services for the majority of 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 7 ‘Financial Instruments: Disclosures’.
the amendments (part of AASB 2010-4 ‘Further Amendments to Australian
Accounting Standards arising from the Annual Improvements Project’) clarify the
required level of disclosures about credit risk and collateral held and provide relief
from disclosures previously required regarding renegotiated loans.
– Amendments to AASB 101 ‘Presentation of Financial Statements’.
the amendments (part of AASB 2010-4 ‘Further Amendments to Australian
Accounting Standards arising from the Annual Improvements Project’) clarify
that an entity may choose to present the required analysis of items of other
comprehensive income either in the statement of changes in equity or in the
notes to the financial statements.
– AASB 1054 ‘Australian Additional Disclosures’
AASB 1054 sets out the Australian-specific disclosures for entities that have
adopted Australian Accounting Standards. this standard contains disclosure
requirements that are in addition to IFRS in areas such as compliance with
Australian Accounting Standards, the nature of financial statements, audit fees,
imputation (franking) credits and the reconciliation of net operating cash flow
to profit.
(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 124 ‘Related Party Disclosures’ (revised December 2009)
AASB 124 (revised December 2009) has been revised on the following two
aspects: (a) has changed the definition of a related party and (b) includes an
explicit requirement to disclose commitments involving related parties.
– AASB 2009-14 ‘Amendments to Australian Interpretation - Prepayments of
Interpretation 114 addresses when refunds or reductions in future contributions
Minimum Funding Requirement’.
should be regarded as available in accordance with paragraph 58 of AASB 119,
the impact on future contributions and when it might give rise to a liability. the
amendments now allow recognition of an asset in the form of prepaid minimum
funding contributions.
– AASB 2009-12 ‘Amendments to Australian Accounting Standards’.
the application of AASB 2009-12 makes amendments to AASB 8 ‘operating
Segments’ as a result of the issuance of AASB 124 ‘Related Party Disclosures’
(2009). the Standard makes numerous editorial amendments to a range of
Australian Accounting Standards and Interpretations.
35
2. adOptiOn OF neW and reVised aCCOunting standards (COntinued)
(b) standards and interpretations adopted with no effect on financial statements (continued)
standard
iMpaCt
– AASB 2010-5 ‘Amendments to Australian Accounting Standards’
the Standard makes numerous editorial amendments to a range of Australian
Accounting Standards and Interpretations.
– AASB 2010-6 ‘Amendments to Australian Accounting Standards -
the application of AASB 2010-6 makes amendments to AASB 7 ‘Financial
Disclosures on transfers of Financial Assets’
Instruments - Disclosures’ to introduce additional disclosure requirements for
transactions involving transfer of financial assets. these amendments are
intended to provide greater transparency around risk exposures when a financial
asset is transferred and derecognised but the transferor retains some level of
continuing exposure in the asset.
(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 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)’
(effective date deferred by IASB to 1 January 2015)
– AASB 10 ‘Consolidated Financial Statements’
– AASB 11 ‘Joint Arrangements’
– AASB 12 ‘Disclosure of Interests in other entities’
– AASB 127 ‘Separate Financial Statements’ (2011)
– AASB 128 ‘Investments in Associates and Joint Ventures’ (2011)
– AASB 13 Fair Value Measurement and AASB 2010-8 ‘Amendments to
Australian Accounting Standards arising from AASB 13’
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
– AASB 119 ‘employee Benefits’ (2011) and AASB 2011-8 Amendments to
1 January 2013
30 June 2014
Australian Accounting Standards arising from AASB 119 (2011)
– AASB 2010-8 ‘Amendments to Australian Accounting Standards - Deferred
1 January 2012
30 June 2013
tax: Recovery of underlying Assets’
– AASB 2011-4 ‘Amendments to Australian Accounting Standards to Remove
1 July 2013
30 June 2014
Individual Key Management Personnel Disclosure Requirements’
– AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from
1 January 2013
30 June 2014
the Consolidation and Joint Arrangements standards’
– AASB 2011-9 ‘Amendments to Australian Accounting Standards - Presentation
1 July 2012
30 June 2013
of items of other Comprehensive Income’
– Amendments to IFRS 10, 11 and 12 transitional Guidance
1 January 2013
30 June 2014
APA has yet to determine any change in accounting for existing arrangements under AASB 10, 11 and 12. In addition, should any arrangements take place which
change existing interests and create new interests in controlled entities, the accounting for such transactions may be different to that applied to transactions in
the past.
Implementation of AASB 119 is expected to result in changes to the accounting treatment for APA’s defined benefit superannuation plan and provisions for
employee benefits which will impact amounts reported in profit or loss and net assets.
the potential impact of the initial application of the remaining above Standards has not yet been determined.
36
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 3. signiFiCant aCCOunting pOliCies
statement of compliance
Where applicable, the consideration for the acquisition includes any asset or
the financial report is a general purpose financial report which has been
liability resulting from a contingent consideration arrangement, measured at its
prepared in accordance with the Corporations Act 2001, Accounting Standards
acquisition-date fair value. Subsequent changes in fair values are adjusted
and Interpretations, and complies with other requirements of the law.
against the cost of acquisition where they qualify as measurement period
the financial report includes the separate financial statements of the trust and
the consolidated financial statements of the Group.
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
Accounting Standards include Australian equivalents to International Financial
classified as equity are not recognised.
Reporting Standards (“A-IFRS”). Compliance with A-IFRS ensures that the
financial report and notes of the trust and the Consolidated entity comply with
International Financial Reporting Standards (“IFRS”).
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
the financial report was authorised for issue by the Directors on 22 August 2012.
profit or loss. Amounts arising from interests in the acquiree prior to the
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
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.
based on the fair values of the consideration given in exchange for assets. the
the acquiree’s identifiable assets, liabilities and contingent liabilities that meet
financial report is presented in Australian dollars and all values are rounded to
the conditions for recognition under AASB 3 are recognised at their fair value
the nearest thousand dollars ($000) unless otherwise stated under the option
at the acquisition date, except that:
available to APA under ASIC Class order 98/0100. APA is an entity to which the
class order applies.
– deferred tax assets or liabilities and liabilities or assets related to employee
benefit arrangements are recognised in accordance with AASB 112 ‘Income
the following significant accounting policies have been adopted in the
taxes’ and AASB 119 ‘employee Benefits’ respectively;
preparation and presentation of the financial report:
(a) Basis of consolidation
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
in the statement of comprehensive income from the effective date of acquisition.
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-
– 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 Payment’; 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 as at that date.
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 maximum of one year.
group transactions (“common control transactions”) are generally accounted
for by reference to the existing (consolidated) book value of the items. Where
(c) Joint venture arrangements
Jointly controlled operations
the transaction value of common control transactions differs from their
Interests in jointly controlled operations are reported in the financial report by
consolidated book value, the difference is recognised as a contribution by or
including the Consolidated entity’s share of assets employed in the joint
distribution to equity participants by the transaction entities.
Minority interests in the net assets (excluding goodwill) of consolidated
controlled entities are identified separately from the Consolidated entity’s
ventures, the share of liabilities incurred in relation to joint ventures and the
share of any expenses incurred in relation to joint ventures in their respective
classification categories.
equity therein. Minority interests consist of the amount of those interests at the
Jointly controlled entities
date of the original business combination and the minority’s share of changes
Interests in jointly controlled entities are accounted for under the equity method
in equity since the date of the combination. Losses applicable to the minority
in the consolidated financial report and the cost method in APt’s financial report.
in excess of the minority’s interest in the controlled entity’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) Business combinations
(d) 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
Acquisitions of subsidiaries and businesses are accounted for using the
the consolidated statement of financial position at cost as adjusted for post-
acquisition method. the consideration for each acquisition is measured as the
acquisition changes in the Consolidated entity’s share of the net assets of the
aggregate of the fair values (at the date of exchange) of assets given, liabilities
associate, less any impairment in the value of individual investments. Losses of
incurred or assumed, and equity instruments issued by the Consolidated entity
an associate in excess of the Consolidated entity’s interest are recognised only
in exchange for control of the acquiree. Acquisition costs directly attributable
to the extent that there is a legal or constructive obligation or the Consolidated
to the business combination are recognised in profit or loss as incurred.
entity has made payments on behalf of the associate.
37
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 3. signiFiCant aCCOunting pOliCies (COntinued)
(d) investments in associates (continued)
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
amounts of cash, which are subject to insignificant risk of changes in values.
(g) acquisition of assets
Assets acquired are recorded at the cost of acquisition, being the purchase
consideration determined as at the date of acquisition. Cost includes expenditure
that is directly attributable to the acquisition or construction of the asset.
after reassessment is recognised immediately in profit or loss.
In the event that settlement of all or part of the cash consideration given in the
(e) Financial assets and liabilities
Available-for-sale financial assets
Certain shares and redeemable notes held by the Group are classified as being
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.
available-for-sale and are stated at fair value. Gains and losses arising from
(h) Borrowings
changes in fair value are recognised directly in the available-for-sale investment
Borrowings are recorded initially at fair value, net of transaction costs.
revaluation reserve with the exception of impairment losses, interest calculated
Subsequent to initial recognition, borrowings are measured at amortised cost
using the effective interest method and foreign exchange gains and losses on
with any difference between the initial recognised amount and the redemption
monetary assets which are recognised directly in profit or loss. Where the
value being recognised in the statement of comprehensive income over the
investment is disposed of or is determined to be impaired, the cumulative gain
period of the borrowing using the effective interest method.
or loss previously recognised in the available-for-sale investment revaluation
reserve is included in profit or loss for the period. Dividends on available-for-
sale equity instruments are recognised in profit or loss when the Group’s right
to receive the dividends is established. the change in fair value attributable to
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.
Loans and receivables
(i) 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
trade receivables, loans, and other receivables that have fixed or determinable
assets is deducted from the borrowing costs eligible for capitalisation.
payments that are not quoted in an active market are classified as ‘loans and
receivables’. trade and other receivables are stated at their amortised cost less
impairment.
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
goods and services. trade and other payables are stated at amortised cost.
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are
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
All other borrowing costs are recognised in profit or loss in the period in which
they are incurred.
(j) property, plant and equipment
Land and buildings held for use are carried in the consolidated statement of
financial position at cost, less any subsequent accumulated depreciation and
impairment losses.
Leasehold improvements and plant and equipment are stated at cost less
accumulated depreciation and impairment. Work in progress is stated at cost.
Cost includes expenditure that is directly attributable to the acquisition or
construction of the item.
of one or more events that occurred after the initial recognition of the financial
(k) depreciation
asset the estimated future cash flows of the investments have been impacted.
Depreciation is provided on property, plant and equipment, including freehold
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
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;
10 - 50 years;
– gas transportation systems
10 - 80 years;
– meters
20 - 30 years; and
– other plant and equipment
3 - 20 years.
reversed, does not exceed what the amortised cost would have been had the
(l) employee benefits
impairment not been recognised.
In respect of available-for-sale equity instruments, any subsequent increase in
fair value after an impairment loss is recognised in other comprehensive income.
(f) Cash and cash equivalents
Provision is made for benefits accruing to employees in respect of wages and
salaries, incentives, annual leave, long service leave and sick 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
Cash comprises cash on hand and demand deposits. Cash equivalents are
remuneration rates expected to apply at the time of settlement. Provisions
short-term, highly liquid investments that are readily convertible to known
made in respect of employee benefits which are not expected to be settled
38
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 3. signiFiCant aCCOunting pOliCies (COntinued)
(l) employee benefits (continued)
within 12 months are measured as the present value of the estimated future
Embedded derivatives
cash outflows to be made by the Consolidated entity in respect of services
Derivatives embedded in other financial instruments or other host contracts
provided by employees up to reporting date.
are treated as separate derivatives when their risks and characteristics are not
Defined contribution plans
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
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
the Consolidated entity designates certain hedging instruments, which include
derivatives, embedded derivatives and non-derivatives in respect of foreign
currency risk, as either fair value hedges or cash flow hedges.
retained earnings in the period in which they occur.
Hedges of foreign exchange and interest rate risk on firm commitments are
Past service cost is recognised immediately to the extent that the benefits are
accounted for as cash flow hedges.
already vested, and otherwise amortised on a straight-line basis over the
At the inception of the hedge relationship, the Consolidated entity documents
average period until the benefits become vested.
the relationship between the hedging instrument and hedged item, along with
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,
its risk management objectives and its strategy for undertaking various hedge
transactions. Furthermore, at the inception of the hedge and on an ongoing
basis, the Consolidated entity documents whether the hedging instrument that
is used in the hedging relationship is highly effective in offsetting changes in
fair values or cash flows of the hedged item.
plus the present value of available refunds and reductions in future contributions
Note 38 contains details of the fair values of the derivative instruments used for
to the plan.
hedging purposes. Movements in the hedging reserve in equity are also
(m) intangible assets
Intangible assets acquired separately
detailed in Note 30.
Fair value hedges
Intangible assets acquired separately are carried at cost less accumulated
Changes in the fair value of derivatives that are designated and qualify as fair
amortisation and accumulated impairment losses. Amortisation is recognised
value hedges are recorded in profit or loss immediately, together with any
on a straight-line basis over their estimated useful lives. the estimated useful
changes in the fair value of the hedged item that is attributable to the hedged
life and amortisation method are reviewed at the and of the each annual
risk. Hedge accounting is discontinued when the Consolidated entity revokes
reporting period, with the effects of any changes in estimate being accounted
the hedging relationship or the hedging instrument expires or is sold,
for on a prospective basis.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination are identified and
terminated, or exercised, or no longer qualifies for hedge accounting. the
adjustment to the carrying amount of the hedged item arising from the hedged
risk is amortised to profit or loss from that date.
recognised separately from goodwill and are initially recognised at their fair
Cash flow hedges
value at the acquisition date. Subsequent to initial recognition, intangible
the effective portion of changes in the fair value of derivatives that are
assets acquired in a business combination are reported at cost less accumulated
designated and qualify as cash flow hedges is deferred in equity. the gain or
amortisation and accumulated impairment losses, on the same basis as
loss relating to the ineffective portion is recognised immediately in profit or
intangible assets acquired separately.
loss as part of other expenses or other income.
(n) derivative financial instruments
Amounts deferred in equity are recycled in profit or loss in the periods when
the Group enters into a variety of derivative financial instruments to manage
the hedged item is recognised in profit or loss in the same line of the statement
its exposure to interest rate and foreign exchange rate risk, including foreign
of comprehensive income as the recognised hedged item. However, when the
exchange forward contracts and interest rate swaps. Further details of
forecast transaction that is hedged results in the recognition of a non-financial
derivative financial instruments are disclosed in Note 38.
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
is entered into and subsequently remeasured to their fair value at each reporting
equity are transferred from equity and included in the initial measurement of
the cost of the asset or liability.
period. the resulting gain or loss is recognised in profit or loss immediately
Hedge accounting is discontinued when the Consolidated entity revokes the
unless the derivative is designated and effective as a hedging instrument, in
hedging relationship or the hedging instrument expires or is sold, terminated,
which event the timing of the recognition in profit or loss depends on the
or exercised, or no longer qualifies for hedge accounting. Any cumulative gain
nature of the hedge relationship. the Consolidated entity designates certain
or loss deferred in equity at that time remains in equity and is recognised when
derivatives as hedges of the fair value of recognised assets or liabilities or firm
the forecast transaction is ultimately recognised in profit or loss. When a
commitments (fair value hedges) or, hedges of highly probable forecast
forecast transaction is no longer expected to occur, the cumulative gain or loss
transactions or of foreign currency risk of firm commitments (cash flow hedges).
that was deferred in equity is recognised immediately in profit or loss.
the fair value of hedging derivatives is classified as a non-current asset or a
(o) Financial instruments issued by the Consolidated entity
non-current liability if the remaining maturity of the hedge relationship is more
Debt and equity instruments
than 12 months and as a current asset or a current liability if the remaining
Debt and equity instruments are classified as either liabilities or equity in
maturity of the hedge relationship is less than 12 months. Derivatives not
accordance with the substance of the contractual arrangement. An equity
designated into an effective hedge relationship are classified as a current asset
instrument is any contract that evidences a residual interest in the assets of an
or a current liability.
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.
39
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 3. signiFiCant aCCOunting pOliCies (COntinued)
(o) Financial instruments issued by the Consolidated entity (continued)
Financial guarantee contract liabilities
circumstances indicate that the carrying amount may not be recoverable. An
Financial guarantee contract liabilities are measured initially at their fair values
impairment loss is recognised for the amount by which the asset’s carrying
and subsequently at the higher of the amount recognised as a provision and
amount exceeds its recoverable amount. the recoverable amount is the higher
the amount initially recognised less cumulative amortisation in accordance
of an asset’s fair value less costs to sell, and value in use. For the purposes of
with the revenue recognition policies.
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
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-generating units).
Assets other than goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at each reporting period.
in connection with the issue of those equity instruments and which would not
(t) distributions
have been incurred had those instruments not been issued.
A provision is recognised for distributions only when they have been declared,
Interest and distributions
determined or publicly recommended by the Directors.
Interest and distributions are classified as expenses or as distributions of profit
(u) inventories
consistent with the consolidated statement of financial position classification of the
Inventories are stated at the lower of cost and net realisable value. Costs,
related debt or equity instruments or component parts of compound instruments.
including an appropriate portion of fixed and variable overhead expenses, are
(p) Foreign currency transactions
Both the functional and presentation currency of the Consolidated entity and
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
assigned to inventories by the method most appropriate to each particular
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.
date of the transaction. Foreign currency monetary items at reporting date are
(v) security-based payments
translated at the exchange rate existing at that date and resulting exchange
the Group provides benefits to certain employees in the form of cash settled
differences are recognised in profit or loss in the period in which they arise.
security-based payments. For cash settled security-based payments, a liability
(q) goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and
equal to the portion of services received is recognised at the current fair value
determined at each reporting date.
services tax (“GSt”), except:
(w) income tax
– where the amount of GSt incurred is not recoverable from the taxation
authority, it is recognised as part of the cost of acquisition of an asset or as
part of an item of expense; or
– for receivables and payables which are recognised inclusive of GSt, except for
accrued revenue and accrued expense at balance dates which exclude GSt.
Income tax on the profit or loss for the financial year comprises current and
deferred tax. Income tax is recognised in the statement of comprehensive income
except to the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity. Current tax is the expected tax 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
the net amount of GSt recoverable from, or payable to, the taxation authority
respect of previous financial years. Current tax for current and prior periods is
is included as part of receivables or payables. GSt receivable or GSt payable is
recognised as a liability (or asset) to the extent that it is unpaid (or refundable).
only recognised once a tax invoice has been issued or received.
Deferred tax is provided using the balance sheet liability method, providing for
Cash flows are included in the statement of cash flows on a gross basis. the
temporary differences between the carrying amounts of assets and liabilities
GSt component of cash flows arising from investing and financing activities
for financial reporting purposes and the amounts used for taxation purposes.
which is recoverable from, or payable to, the taxation authority is classified
the following temporary differences are not provided for: initial recognition of
within operating cash flows.
(r) goodwill
Goodwill arising in a business combination is recognised as an asset at the
acquisition date. Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling interests in the
acquiree, and the fair value of the acquirer’s previously held equity interest in
goodwill, initial recognition of assets or liabilities that affect neither accounting
nor taxable profit, and differences relating to investments in wholly-owned
entities to the extent that they will probably not reverse in the foreseeable future.
the amount of deferred tax provided is based on the expected manner 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.
the acquiree (if any) over the net of the acquisition-date amounts of the
A deferred tax asset is recognised only to the extent that it is probable that
identifiable assets acquired and the liabilities assumed.
future taxable profits will be available against which the asset can be utilised.
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
Deferred tax assets are reduced to the extent that it is no longer probable that
the related tax benefit will be realised.
amount of any non-controlling interests in the acquiree and the fair value of the
Tax consolidation
acquirer’s previously held equity interest, the excess is recognised immediately
the trust and its wholly-owned Australian tax resident entities are part of a
in the profit or loss as a bargain purchase gain.
tax-consolidated group under Australian taxation law. the head entity within
on disposal of a subsidiary, the attributable amount of goodwill is included in
the tax-consolidated group is Australian Pipeline trust.
the determination of the profit or loss on disposal.
tax expense/income, deferred tax liabilities and deferred tax assets arising
(s) 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
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.
40
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 3. signiFiCant aCCOunting pOliCies (COntinued)
(w) income tax (continued)
Any current tax liabilities (or assets) and deferred tax assets arising from
Sales revenue
unused tax losses of the wholly-owned entities are assumed by the head entity
Sales revenue represents revenue earned for the transportation of gas,
in the tax-consolidated group and are recognised as amounts payable
transmission of electricity and other related services and is recognised when
(receivable) to (from) other entities in the tax-consolidated group in
the services are provided.
conjunction with any tax funding arrangement amounts.
Pass-through revenue
the head entity recognises deferred tax assets arising from unused tax losses
Pass-through revenue is revenue on which no margin is earned and is offset by
of the tax-consolidated group to the extent that it is probable that future
corresponding pass-through costs.
taxable profits of the tax-consolidated group will be available against which the
assets can be utilised.
(x) 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.
Group as lessor
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 a non-current asset is included as income at the
date control of an asset 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
Amounts due from a lessee under finance leases are recorded as receivables.
time of disposal and the net proceeds on disposal (including incidental costs).
Finance lease receivables are initially recognised at amounts 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 income is allocated to accounting periods so as to reflect a
Dividend revenue
Dividend revenue is recognised when the right to receive a dividend has been
established.
constant periodic rate of return on the net investment outstanding in respect of
Finance lease income
the leases.
Group as lessee
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
constant periodic rate of return on the Group’s net investment outstanding in
respect of the leases.
lower, at amounts equal to the present value of the minimum lease payments,
4. CritiCal aCCOunting JudgeMents and KeY sOurCes OF
each determined at the inception of the lease. the corresponding liability to the
estiMatiOn unCertaintY
lessor is included in the consolidated statement of financial position as a
In the application of the Consolidated entity’s accounting policies, management
finance lease obligation.
Lease payments are allocated between finance charges and reduction of the
lease obligation so as to achieve a constant rate of interest on the remaining
balance of the liability.
Finance lease assets are amortised on a straight-line basis over the estimated
useful life of the asset.
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 estimates.
the estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
operating lease payments are recognised as an expense on a straight-line basis
estimate is revised if the revision affects only that period, or in the period of the
over the lease term, except where another systematic basis is more
revision and future periods if the revision affects both current and future
representative of the time patterns in which economic benefits from the leased
periods.
asset are consumed.
(y) provisions
impairment of assets
Determining whether property, plant and equipment, identifiable intangible
A provision is recognised when there is a legal, equitable or constructive
assets and goodwill are impaired requires an estimation of the value-in-use or
obligation as a result of a past event, it is probable that a future sacrifice of
fair value of the cash-generating units. the calculations require the Consolidated
economic benefits will be required to settle the obligation and the amount of
entity to estimate the future cash flows expected to arise from cash-generating
the provision can be measured reliably.
units and suitable discount rates in order to calculate the present value of cash-
the amount recognised as a provision is the best estimate of the consideration
generating units.
required to settle the present obligation at the end of the financial year, taking
estimates and assumptions used are reviewed on an ongoing basis.
into account the risks and uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to settle the present
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
When some or all of the economic benefits required to settle a provision are
factors in making this assessment. Any assessment of whether a decline in
expected to be recovered from a third party, the receivable is recognised as an
value represents an impairment would result in the transfer of the decrement
asset if it is probable that recovery will be received and the amount of the
from reserves to the statement of comprehensive income.
receivable can be measured reliably.
(z) revenue recognition
useful lives of non-current assets
the Consolidated entity reviews the estimated useful lives of property, plant
Revenue is recognised to the extent that it is probable that the economic
and equipment at the end of each annual reporting period. Any reassessment
benefits will flow to the Consolidated entity and the revenue can be reliably
of useful lives in a particular year will affect the depreciation or amortisation
measured. Amounts disclosed as revenue are net of duties and taxes paid.
expense.
Revenue is recognised for the major business activities as follows:
41
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 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;
– asset management; and
– energy investments.
(b) reportable segments
2012
segMent reVenue (b)
external sales revenue
equity accounted net profits
Pass-through revenue
Finance lease and investment interest income
Distributions - other entities
total segment revenue
other interest income
Consolidated revenue
segMent result
energY
inFrastruCture (a)
$000
asset
ManageMent
$000
energY
inVestMents
$000
COnsOlidated
$000
637,851
69,296
-
-
28,263
707,147
28,263
296,007
-
302,633
-
-
2,331
11,153
5,148
11,153
-
6,626
2,817
-
647,294
365,303
41,747
1,054,344
6,317
1,060,661
earnings before interest, tax, depreciation and amortisation (“eBItDA”)
449,347
31,910
11,157
492,414
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
-
2,817
452,164
(105,620)
346,544
-
-
31,910
(4,789)
27,121
28,263
2,331
41,751
28,263
5,148
525,825
-
(110,409)
41,751
415,416
(234,326)
181,090
(50,435)
130,655
4,016,910
244,106
391,737
4,652,753
Carrying value of investments accounted for using the equity method
-
-
512,948
unallocated assets (d)
total assets
Segment liabilities
unallocated liabilities (e)
total liabilities
229,613
81,272
-
512,948
330,353
5,496,054
310,885
3,571,127
3,882,012
(a) Revenue of $30.7 million (2011: $56.6 million), expenses of $10.5 million (2011: $21.5 million), profit before income tax of $14.2 million (2011: $22.4 million), profit after income tax of
$10.0 million (2011: $15.7 million) are attributable to the Allgas business which was divested into the APA minority owned unlisted investment vehicle GDI (eII) Pty Ltd in December
2011. Within Asset operation and management expenses a significant item of $9.7 million results from transaction costs incurred on the divestment of the APA Gas Networks business
of $21.7 million offsetting a gain on sale of $12.0 million.
(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.
42
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 5. segMent inFOrMatiOn (COntinued)
(b) reportable segments (continued)
2011
segMent reVenue (a)
external sales revenue
equity accounted net profits
Pass-through revenue
Finance lease and investment interest income
Distributions - other entities
total segment revenue
other interest income
Consolidated revenue
segMent result
eNeRGY
INFRAStRuCtuRe
$000
ASSet
MANAGeMeNt
$000
eNeRGY
INVeStMeNtS
$000
CoNSoLIDAteD
$000
599,085
68,647
-
170,024
2,630
-
-
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 (b)
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
unallocated assets (c)
total assets
Acquisition of segment assets
Segment liabilities
unallocated liabilities (d)
total liabilities
186,781
172,194
-
52,101
-
75
479,409
95,368
5,427,605
186,781
224,370
3,535,390
3,759,760
(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 $637.9 million (2011: $599.1 million) are revenues of approximately $266.6 million (2011: $250.9 million)
which arose from sales to the Consolidated entity’s top three customers.
43
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 6. reVenue
An analysis of the Consolidated entity’s revenue for the year is as follows:
Continuing operations
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
Operating reVenue
energy infrastructure revenue:
– energy infrastucture revenue
– pass-through revenue
Asset management revenue:
– asset management revenue
– pass-through revenue
energy investments
637,316
6,626
643,942
69,296
296,007
365,303
-
598,562
170,024
768,586
68,647
211,709
280,356
549
1,009,245
1,049,491
Share of net profits of associates and jointly controlled entities
accounted for using the equity method
28,263
23,876
FinanCe inCOMe
Interest
Redeemable ordinary shares (eII) and redeemable preference shares (GDI)
6,317
12,932
interest income
Finance lease income
diVidends
Wholly-owned controlled entities
other entities
OtHer inCOMe
Rental income
2,331
2,817
11,465
-
11,153
11,153
535
535
1,520
2,630
17,082
-
11,017
11,017
523
523
-
-
-
-
-
-
-
-
-
64
-
-
64
-
-
-
-
-
-
-
-
-
177
-
-
177
29,567
28,755
58,322
-
-
37,752
25,090
62,842
-
-
1,060,661
1,101,989
58,386
63,019
44
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 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 (a)
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
trust
2012
$000
2011
$000
2012
$000
2011
$000
104,459
5,950
110,409
-
6,626
6,626
296,007
302,633
225,517
16,013
-
9,568
251,098
(11,136)
239,962
-
681
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
506
506
-
-
-
-
-
-
-
-
45
-
-
-
45
-
45
-
-
45
-
-
-
-
-
-
-
-
-
31
31
the average interest rate on funds borrowed is 8.14% p.a. (2011: 8.11% p.a.) including amortisation of borrowing costs and other finance costs.
240,643
260,004
eMplOYee BeneFit expense
Post-employment benefits:
Defined contribution plans
Defined benefit plans
termination benefits
Cash settled share-based payments
other employee benefits
OtHer expenses
Goodwill write-off
Loss on disposal of property, plant and equipment
other
6,863
1,145
8,008
1,384
17,843
105,678
132,913
-
278
16,700
16,978
5,994
1,622
7,616
738
18,434
88,135
114,923
5,435
1,068
11,599
18,102
(a) the management, operating and maintenance costs for FY12 included Amadeus Gas Pipelines, Nt Gas & emu Downs Wind Farm which were included in gas pipeline costs in FY11.
45
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 8. signiFiCant iteMs
Individually significant revenue/(expenses) included in profit after related income tax expense are as follows:
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
12,032
(21,695)
(9,663)
-
-
-
(9,663)
-
(9,663)
-
-
-
9,839
1,652
(8,970)
2,521
(2,953)
(432)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
signiFiCant (expense)/inCOMe iteMs
Profit on sale of Allgas Distribution Network before transaction costs
Less: transaction costs
Loss on sale of Allgas Distribution Network after transaction costs
equity accounted share of eII2 investment allowance benefit
Profit on sale of investment in CAMS
transaction costs on acquisition of emu Downs Windfarm
(Loss)/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:
Current tax expense/(income) in respect of the current year
(1,418)
6,354
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:
Profit from continuing operations
482
(936)
51,371
50,435
(6,995)
(641)
36,503
35,862
63
(63)
-
8,517
8,517
3,143
(3,336)
(193)
3,748
3,555
50,435
35,862
8,517
3,555
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
181,090
54,327
-
(13,787)
-
7,185
(6,400)
8,626
-
2
49,953
482
50,435
144,687
43,406
2,777
(11,677)
57,880
17,364
-
-
62,943
18,883
-
-
-
(8,784)
(11,326)
7,198
(4,781)
7,615
(1,009)
(672)
42,857
(6,995)
35,862
-
-
-
-
-
8,580
(63)
8,517
6
-
-
-
(672)
6,891
(3,336)
3,555
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.
46
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 9. inCOMe tax (COntinued)
income tax recognised directly in equity
the following deferred amounts were charged/(credited) directly to equity during the period:
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:
2012
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
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
(27,091)
(9,803)
27,631
(16)
(9,279)
(512,520)
(512,520)
43,004
150,234
193,238
(319,282)
(11,278)
922
7,750
(824)
(3,430)
(515,582)
(515,582)
31,357
148,054
179,411
(336,171)
-
-
678
(16)
662
(1,005)
(1,005)
531
150,234
150,765
149,760
2011
$000
-
-
264
(824)
(560)
(471)
(471)
659
148,054
148,713
148,242
COnsOlidated
Opening
BalanCe
$000
CHarged tO
inCOMe
$000
CHarged tO
eQuitY
$000
aCQuisitiOns/
dispOsals
$000
ClOsing
BalanCe
$000
(4,740)
142
(442,189)
(34,840)
(892)
381
(41,243)
(18,079)
(7,875)
(6,533)
(7,812)
(4,298)
(515,582)
26,928
3,770
659
148,054
179,411
(336,171)
(449)
(264)
-
(2,269)
(55,378)
3,156
(1,185)
(144)
2,180
4,007
(51,371)
-
-
-
-
20,734
6,357
(27,631)
-
-
(4,598)
58,790
(418,239)
-
190
-
-
-
-
(511)
(59,132)
12,410
(440)
(35,443)
(6,567)
(540)
58,980
(512,520)
-
9,804
16
-
9,820
9,280
-
-
-
-
-
30,084
12,389
531
150,234
193,238
58,980
(319,282)
47
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 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:
COnsOlidated
2012
$000
2011
$000
(319,282)
(319,282)
(336,171)
(336,171)
-
-
-
-
(319,282)
(336,171)
COnsOlidated
oPeNING
BALANCe
$000
CHARGeD to
INCoMe
$000
CHARGeD to
eQuItY
$000
ACQuISItIoNS/
DISPoSALS
$000
CLoSING
BALANCe
$000
-
-
-
-
10,160
1,118
(7,750)
-
-
(4,740)
(5,523)
(442,189)
(7)
-
-
-
-
-
(892)
(41,243)
(7,875)
(6,533)
(7,812)
(4,298)
3,528
(5,530)
(515,582)
-
(922)
824
-
(98)
240
-
-
-
240
(5,290)
26,928
3,770
659
148,054
179,411
(336,171)
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
(5,056)
(408,180)
5,511
(30,688)
(18,034)
(4,725)
(62)
(1,059)
(462,293)
21,668
5,488
-
137,329
164,485
316
(28,486)
(6,396)
(10,555)
(1)
(2,926)
-
(3,239)
(51,287)
5,020
(796)
(165)
10,725
14,784
(297,808)
(36,503)
3,430
48
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 9. inCOMe tax (COntinued)
deferred tax balances (continued)
2012
grOss deFerred tax liaBilities
Available for sale investments
other
grOss deFerred tax assets
Security issue costs
tax losses
2011
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
(326)
(145)
(471)
659
148,054
148,713
148,242
(62)
(145)
(207)
-
137,030
137,030
136,823
-
145
145
(144)
(8,518)
(8,662)
(8,517)
-
-
-
(165)
(3,583)
(3,748)
(3,748)
(679)
-
(679)
16
-
16
(663)
(264)
-
(264)
824
-
824
560
-
-
-
-
10,698
10,698
10,698
-
-
-
-
14,607
14,607
14,607
(1,005)
-
(1,005)
531
150,234
150,765
149,760
(326)
(145)
(471)
659
148,054
148,713
148,242
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
16,875
10,863
16,875
10,863
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 40.
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.
49
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 trust
2012
Cents per
seCuritY
2012
tOtal
$000
2011
CeNtS PeR
SeCuRItY
2011
totAL
$000
3.42
8.41
4.54
6.52
22.89
5.09
7.32
12.41
19,054
46,761
29,034
41,655
136,504
32,786
47,182
79,968
1.73
8.58
9.55
2.46
22.32
3.42
8.41
11.83
2012
Cents per
seCuritY
apt and aptit
2012
tOtal
$000
2011
CeNtS PeR
SeCuRItY
3.42
3.41
8.41
2.66
4.54
3.88
6.52
2.06
19,054
18,295
46,761
15,449
29,034
24,797
41,655
13,201
34.90
208,246
1.73
3.67
8.58
3.01
9.55
3.74
2.46
0.75
33.50
9,364
46,552
52,681
13,592
122,189
19,054
46,761
65,815
2011
totAL
$000
9,364
19,928
46,552
16,350
52,681
20,629
13,592
4,127
183,223
10. distriButiOns
reCOgnised aMOunts
Final distribution paid on 15 september 2011
(2011: 15 September 2010)
Profit distribution (a)
Capital distribution
semi-annual distribution paid on 15 March 2012
(2011: 17 March 2011)
Profit distribution (a)
Capital distribution
unreCOgnised aMOunts
Final distribution payable on 14 september 2012
(2011: 15 September 2011)
Profit distribution (a)
Capital distribution
reCOgnised aMOunts
Final distribution paid on 15 september 2011
(2011: 15 September 2010)
Profit distribution - APt (a)
Profit distribution - APtIt (a) (Note 32)
Capital distribution - APt (Note 29)
Capital distribution - APtIt (Note 32)
semi-annual distribution paid on 15 March 2012
(2011: 17 March 2011)
Profit distribution - APt (a)
Profit distribution - APtIt (a) (Note 32)
Capital distribution - APt (Note 29)
Capital distribution - APtIt (Note 32)
(a) Profit distributions were unfranked (2011: unfranked).
50
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 10. distriButiOns (COntinued)
unreCOgnised aMOunts
Final distribution payable on 14 september 2012
(2011: 15 September 2011)
Profit distribution - APt (a)
Profit distribution - APtIt (a)
Capital distribution - APt
Capital distribution - APtIt
(a) Profit distributions were unfranked (2011: unfranked).
2012
Cents per
seCuritY
apt and aptit
2012
tOtal
$000
2011
CeNtS PeR
SeCuRItY
5.09
3.28
7.32
2.31
32,786
21,160
47,182
14,879
18.00
116,007
3.42
3.41
8.41
2.66
17.90
2011
totAL
$000
19,054
18,295
46,761
15,449
99,559
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 33)
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
2012
$000
3,522
92,607
-
92,607
142,062
3,590
239
21
2011
$000
3,522
103,520
-
103,520
38,429
3,252
262
235
2012
$000
3,522
-
-
-
2011
$000
3,522
-
-
-
402,270
486,827
-
3
-
-
3
-
238,519
145,698
402,273
486,830
4,367
139
2,266
6,772
-
-
-
5,304
194
2,648
8,146
2,211
(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.
ageing of impaired receivables
90 - 120 days
total
-
-
-
-
-
-
-
-
51
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 12. OtHer Current FinanCial assets
Derivatives at fair value:
Interest rate swaps
Financial assets carried at amortised cost:
Redeemable preference share interest
13. inVentOries
Spare parts - at cost
Gas stock
14. OtHer Current assets
Prepayments
15. nOn-Current reCeiVaBles
Finance lease receivables (Note 33)
16. OtHer nOn-Current FinanCial assets
Investments carried at cost:
Investments in controlled entities
envestra
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
Redeemable preference shares
Derivatives - at fair value:
Interest rate swaps - cash flow hedges
COnsOlidated
trust
2011
$000
2012
$000
2011
$000
2012
$000
135
285
420
-
-
-
10,759
745
11,504
10,605
471
11,076
4,134
4,134
3,357
3,357
22,244
22,244
25,860
25,860
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,564
263,441
-
15,339
10,400
326
-
-
-
6,720
161,929
5
13,628
-
-
371,551
318,764
329
371,551
290,009
329
5,879
3,618
-
-
-
-
-
-
-
-
-
-
299,070
182,282
696,523
665,507
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.
Redeemable ordinary shares 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.
Redeemable preference shares relate to APA Group’s 20% interest in GDI (eII) Pty Ltd. In December 2011, APA sold 80% of its gas distribution network in South
east Queensland (Allgas) into an unlisted investment vehicle, GDI (eII) Pty Ltd. At that date GDI issued 52 million Redeemable Preference Shares (RPS) to its
owners. the shares attracts periodic interest payments and have a redemption date 10 years from issue.
52
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 17. inVestMents aCCOunted FOr using tHe eQuitY MetHOd
naMe OF entitY
prinCipal aCtiVitY
COuntrY OF inCOrpOratiOn
Jointly Controlled entities:
SeA Gas
GDI (eII) (a)
Gas transmission
unlisted energy vehicle
Diamantina Power Station (b)
Power Generation
energy Infrastructure Investments
unlisted energy vehicle
unlisted energy vehicle
Australia
Australia
Australia
Australia
Australia
eII 2
Associates:
envestra Limited (c)
oWNeRSHIP INteReSt %
2012
2011
50.00
20.00
50.00
19.90
20.20
50.00
-
-
19.90
20.20
Gas transmission
Australia
33.44
33.01
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
Investments in jointly controlled entities and associates
512,948
479,409
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
479,409
403,528
67,768
28,263
-
(22,666)
552,774
(39,826)
512,948
91,191
23,876
(2,848)
(2,099)
513,648
(34,239)
479,409
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
2012
$000
2011
$000
5,415,250
4,558,821
856,429
257,824
501,023
102,732
28,263
4,532,327
3,792,793
739,534
215,770
475,880
104,262
23,876
(a) APA sold 80% of its gas distribution network in South east Queensland (Allgas) into an unlisted investment vehicle, GDI (eII) Pty Ltd. APA retained a 20% interest in GDI.
(b) APA acquired a 50% interest in Diamantina Power station during the year.
(c) APA participated in envestra’s Distribution Reinvestment Plan under envestra’s october and April Distribution, increasing its interest in envestra from 33.01% to 33.44%.
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
48 and 43 respectively.
53
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 18. prOpertY, plant and eQuipMent
grOss CarrYing aMOunt
Balance at 1 July 2010
Additions
Disposals
Acquisitions through business combinations
transfer to assets classified as finance leases
transfers
Balance at 1 July 2011
Additions
Disposals
Derecognised on disposal of subsidiary (Note 42)
transfers
Balance at 30 June 2012
aCCuMulated depreCiatiOn
Balance at 1 July 2010
Disposals
Depreciation expense
Balance at 1 July 2011
Disposals
Derecognised on disposal of subsidiary (Note 42)
Depreciation expense
Balance at 30 June 2012
net BOOK Value
As at 30 June 2011
as at 30 June 2012
COnsOlidated
FReeHoLD LAND
AND BuILDINGS -
At CoSt
$000
LeASeHoLD
IMPRoVeMeNtS
- At CoSt
$000
PLANt AND
eQuIPMeNt
- At CoSt
$000
WoRK IN
PRoGReSS
- At CoSt
$000
113,516
2,905
3,670,120
totAL
$000
3,911,677
229,107
(5,143)
162,950
(10,878)
(639)
57,838
(4,911)
156,460
-
125,136
171,269
-
4,934
(10,878)
160,053
(164,629)
4,039,560
125,832
4,287,074
6,877
(15,876)
(520,891)
69,363
273,198
-
(1,868)
(72,113)
280,075
(15,900)
(527,349)
(1)
-
(59)
-
-
(415)
2,431
-
(15)
(227)
33
2,222
3,579,033
325,049
4,023,899
(1,572)
59
(327)
(1,840)
15
206
(308)
(1,927)
591
295
(414,418)
4,003
(90,940)
(501,355)
15,131
55,867
(102,025)
(532,382)
-
-
-
-
-
-
-
-
(428,349)
4,075
(94,458)
(518,732)
15,147
56,343
(104,459)
(551,701)
3,538,205
125,832
3,768,342
3,046,651
325,049
3,472,198
-
(173)
1,556
-
4,352
119,251
-
(9)
(4,363)
2,716
117,595
(12,359)
13
(3,191)
(15,537)
1
270
(2,126)
(17,392)
103,714
100,203
All property, plant & equipment is held by companies within the Group. the trust has no property, plant and equipment, in either the current or comparative years.
54
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 19. gOOdWill
grOss CarrYing aMOunt
Balance at beginning of financial year
Acquisitions
Disposals (Note 42)
Goodwill write-off
Balance at end of financial year
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
515,344
520,779
802
(104,263)
-
411,883
-
-
(5,435)
515,344
-
-
-
-
-
-
-
-
-
-
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
energy infrastructure in New South Wales, Queensland and Western Australia
Victorian transmission system
APA Gas Networks
COnsOlidated
2012
$000
33,328
273,494
105,061
-
411,883
2011
$000
33,328
272,692
105,061
104,263
515,344
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 8.5% p.a. (2011: 9.25% p.a.) for energy infrastructure
contract renewals with a resulting average annual growth rate of 1.7% p.a.
assets and 8.5% p.a. (2011: 9.25% p.a.) for asset management.
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.
55
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 2012
$000
2011
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
COnsOlidated
trust
20. OtHer intangiBle assets
Right to receive pipeline tariff (a)
Contract and other intangibles (b)
(a) rigHt tO reCeiVe pipeline tariFF
gross carrying amount
Balance at beginning of financial year
Balance at end of financial year
accumulated amortisation and impairment
Balance at beginning of financial year
Amortisation expense
Balance at end of financial year
net book value
(b) COntraCt and OtHer intangiBles
gross carrying amount
Balance at beginning of financial year
Reclassed from other non current assets
Adjustments to amounts recognised from business combinations
Acquisitions
Impairment
Disposals (Note 42)
2012
$000
-
183,659
183,659
15,677
15,677
(15,677)
-
(15,677)
-
210,389
-
(2,632)
443
(473)
(697)
2011
$000
-
192,903
192,903
15,677
15,677
(14,624)
(1,053)
(15,677)
-
190,875
2,805
-
16,709
-
-
Balance at end of financial year
207,031
210,389
accumulated amortisation and impairment
Balance at beginning of financial year
Amortisation expense
Disposals (Note 42)
Balance at end of financial year
net book value
(17,486)
(5,950)
64
(23,372)
183,659
(12,646)
(4,840)
(17,486)
192,903
the Consolidated entity holds various third party operating and maintenance contracts. the combined gross carrying amount of $207.031 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.
4,356
4,993
192
9,541
4,356
2,229
1,381
7,966
-
-
192
192
-
-
192
192
21. OtHer nOn-Current assets
Line pack gas
Gas held in storage
other assets
56
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 22. trade and OtHer paYaBles
trade payables (a)
other payables (b)
Non-trade payables to:
Wholly-owned controlled entities (c)
COnsOlidated
trust
2012
$000
14,347
160,681
2011
$000
15,270
120,381
2012
$000
-
-
-
-
175,028
135,651
98,427
98,427
2011
$000
-
248
98,427
98,675
(a) trade payables are non-interest bearing and are normally settled on 15 - 30 day terms.
(b) Predominantly consists of 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).
23. Current BOrrOWings
unseCured - at aMOrtised COst
Bank borrowings (a)
Guaranteed Senior Notes
seCured - at aMOrtised COst
Bank Borrowings
-
-
-
-
-
900,000
-
-
-
900,000
(a) Relates to the current portion of long-term borrowings. (Refer to Note 38 for details of interest rates).
24. 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
365
21,832
37,110
59,307
1,172
11,899
31,915
44,986
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
57
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
55,117
10,766
65,883
59,667
5,468
65,135
48,279
6,452
54,731
26,825
4,015
30,840
11,441
3,976
32,862
48,279
10,498
12,567
3,760
26,825
2,347
2,347
802
802
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25. prOVisiOns
Current
employee benefits (a)
other (Note 34)
nOn-Current
employee benefits (a)
other (Note 34)
(a) the aggregate employee benefit liability recognised and included in the financial statements is as follows:
13,430
6,263
35,424
55,117
12,875
41,295
5,497
59,667
761
761
4,078
4,078
Current
Incentives
Cash settled security-based payments
Leave balances
nOn-Current
Cash settled security-based payments
Retirement benefit obligation (Note 35)
Leave balances
26. OtHer liaBilities
Current
unearned revenue - other
nOn-Current
unearned revenue - other
58
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 27. nOn-Current BOrrOWings
unseCured - at aMOrtised COst
Bank borrowings (a)
Guaranteed Senior Notes (b)
Medium term Notes (c)
Less: amortised borrowing costs
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
1,123,667
1,095,597
705,578
(18,896)
655,500
1,059,681
294,947
(19,682)
2,905,946
1,990,446
-
-
-
-
-
-
-
-
-
-
(a) Relates to the non-current portion of long-term borrowings. (Refer to Note 38 for details of interest rates).
(b) Represents uS denominated notes of uS$799 million (2011: uS$799 million) measured at the exchange rate at reporting date, and A$314.9 million of A$ denominated notes (2011:
A$314.9 million).
(c) Represents notes issued under the Australian and european Medium term Notes programs ranging from 6.5 years to 10 years. the notes were issued to institutional investors.
28. OtHer nOn-Current FinanCial liaBilities
Derivatives - at fair value:
Interest rate swaps - cash flow hedges
Foreign exchange hedges - cash flow hedges
29. issued Capital
securities
44,081
242,511
286,592
16,902
246,884
263,786
-
-
-
-
-
-
644,485,583 securities, fully paid (2011: 634,116,029 securities, fully paid) (a)
1,138,205
1,192,779
1,138,205
1,192,779
Movements
Balance at beginning of financial year
Issue of securities under Distribution Reinvestment Plan
Capital return to securityholders (Note 10)
Institutional placement of units
Issue cost of securities
tax relating to security issue costs
Balance at end of financial year
2012
nO. OF
seCurities
000
634,116
10,370
-
-
-
-
COnsOlidated and trust
2012
$000
2011
No. oF
SeCuRItIeS
000
1,192,779
33,879
(88,416)
-
(53)
16
542,319
13,875
-
77,922
-
-
2011
$000
984,936
39,782
(60,145)
230,128
(2,746)
824
644,486
1,138,205
634,116
1,192,779
(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.
59
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 30. 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
trust
2012
$000
(35,212)
8,669
82,696
56,153
2011
$000
28,003
8,669
18,227
54,899
28,003
54,318
(37,774)
11,332
(29,867)
8,960
(22,666)
6,800
(35,212)
(228,392)
68,517
192,900
(57,870)
(2,100)
630
28,003
2012
$000
-
-
2,345
2,345
-
-
-
-
-
-
-
-
2011
$000
-
-
762
762
-
-
-
-
-
-
-
-
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,
the portion of the asset revaluation reserve which relates to that asset is effectively realised and 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
18,227
92,099
(27,630)
82,696
(3,032)
29,008
(7,749)
18,227
762
2,261
(678)
2,345
145
880
(263)
762
the available-for-sale investment revaluation reserve arises on the revaluation of available-for-sale financial assets. Where a revalued financial asset is sold, the
portion of the reserve which relates to that financial asset is effectively realised and 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.
60
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 31. 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 35)
COnsOlidated
trust
2012
$000
19,054
84,693
2011
$000
9,364
69,585
2012
$000
8,606
49,363
2011
$000
11,263
59,388
(48,088)
(62,045)
(48,088)
(62,045)
(22,874)
32,785
2,150
19,054
-
9,881
-
8,606
32. MinOritY interests
APt Investment trust
other minority interest
apt inVestMent trust
issued capital:
Balance at beginning of financial year
Issue of securities under distribution reinvestment plan
Institutional placement of units
Distribution - capital return (Note 10)
Issue cost of securities
Balance at end of financial year
reserves:
Available for sale investment revaluation reserve:
Balance at beginning of financial year
Valuation gain recognised
retained earnings:
Balance at beginning of financial year
Net profit attributable to APtIt equityholders
Distributions paid (Note 10)
Balance at end of financial year
OtHer MinOritY interest
Issued capital
Reserves
Retained earnings
386,850
400,830
49
386,899
283
401,113
382,001
10,733
-
(28,650)
(18)
364,066
534
1,090
1,624
18,295
45,957
(43,092)
21,160
4
1
44
49
320,931
12,590
69,872
(20,477)
(915)
382,001
(101)
635
534
19,928
38,924
(40,557)
18,295
4
1
278
283
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
61
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 33. leases
leasing arrangements - receivables
Finance lease receivables relate to the lease of a metering station, a natural gas vehicle facility and X41 expansion.
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
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 15)
6,071
19,946
10,767
36,784
36,784
(10,950)
25,834
3,590
22,244
25,834
5,957
22,649
14,278
42,884
42,884
(13,772)
29,112
3,252
25,860
29,112
(a) Minimum future lease payments receivable include the aggregate of all lease payments receivable and any guaranteed residual.
nOn-CanCellaBle Operating leases – OtHer
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
7,435
20,238
11,285
38,958
5,938
8,832
1,159
15,929
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
62
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 34. prOVisiOns
Balance at 30 June 2011
Additional provisions recognised (b)
unwinding of discount
Reductions arising from payments/other sacrifices of future economic benefits
Balance at 30 June 2012
Current (Note 25)
Non-current (Note 25)
ABANDoNMeNt (a)
$000
4,015
57
282
-
4,354
-
4,354
4,354
COnsOlidated
otHeR
$000
6,452
6,084
-
(656)
11,880
10,766
1,114
11,880
totAL
$000
10,467
6,141
282
(656)
16,234
10,766
5,468
16,234
(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 and lease incentives.
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 25)
Non-current (Note 25)
3,040
801
174
-
4,015
-
4,015
4,015
3,460
3,568
-
(576)
6,452
6,452
-
6,452
6,500
4,369
174
(576)
10,467
6,452
4,015
10,467
(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.
63
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 35. 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 2012 by Mercer
their choice. the Consolidated entity has three plans with defined benefit
(Australia) Pty Ltd and Russell Investments (2011: Mercer (Australia) Pty Ltd
sections (due to the acquisition of businesses) and a number of other plans
and Russell Investments). the present value of the defined benefit obligation,
with defined contribution sections. the defined benefit sections provide lump
and the related current service cost and past service cost, were measured using
sum benefits upon retirement based on years of service. the defined
the projected unit credit method.
contribution sections receive fixed contributions from the Consolidated entity
and the Consolidated 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
2012
$000
2,980
4,889
(6,724)
1,145
1
(32,677)
100,658
(141,953)
(41,295)
(12,567)
(1,145)
(32,677)
5,094
(41,295)
111,325
2,980
4,889
1,563
25,955
(4,046)
(713)
141,953
2011
$000
3,133
4,601
(6,112)
1,622
9,823
3,071
98,758
(111,325)
(12,567)
(18,294)
(1,622)
3,071
4,278
(12,567)
109,640
3,133
4,601
1,419
640
(7,315)
(793)
111,325
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 (losses)/gains 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 25)
MOVeMents in liaBilitY during tHe Year
Balance at beginning of year
expense recognised in statement of comprehensive income
Amount recognised in retained earnings (prior to tax effect)
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 25.
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 losses
Benefits paid
taxes and premiums paid
Closing defined benefit obligation
64
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 35. 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 (losses)/gains
Contributions from employer
Contributions from plan participants
Benefits paid
taxes and premiums paid
Closing fair value of plan assets
COnsOlidated
2012
$000
98,758
6,724
(6,722)
5,094
1,563
(4,046)
(713)
2011
$000
91,346
6,112
3,711
4,278
1,419
(7,315)
(793)
100,658
98,758
the average principal actuarial assumptions used in determining post-employment obligations for the Consolidated entity’s plans are shown below
(expressed as weighted averages):
COnsOlidated
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
2012
$000
100,658
141,953
(41,295)
2,313
4,766
2011
$000
98,758
111,325
(12,567)
3,090
(3,167)
2010
$000
91,346
109,640
(18,294)
4,739
(821)
2012
%
2.6
6.8
4.0
33.7
27.2
11.8
8.2
13.1
6.0
2009
$000
84,023
98,679
(14,656)
(6,753)
8,450
the Consolidated entity expects $4,940,000 in contributions to be paid to the defined benefit plans during the year ending 30 June 2013.
2011
%
4.6
7.0
4.5
33.7
27.2
11.8
8.5
13.8
5.0
2008
$000
90,227
97,042
(6,815)
(1,515)
8,533
65
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 36. earnings per seCuritY
Basic and diluted earnings per security (cents)
COnsOlidated
2012
20.4
2011
19.7
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)
130,650
108,509
Adjusted weighted average number of ordinary securities used in the calculation of basic and diluted earnings
per security (000)
639,743
551,222
37. 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
trust
2012
$000
88,944
240,990
329,934
2011
$000
90,706
4,662
95,368
2012
$000
110
-
110
2011
$000
49
-
49
(a) As at 30 June 2012, Australian Pipeline Limited held $5.0 million (2011: $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 divested its gas distribution
During the prior year, the Consolidated entity acquired the emu Downs Wind
network in South east Queensland (Allgas) into the APA minority owned
Farm (“eDWF”). Net cash outflow on this acquisition was $167,219,000. In
unlisted investment vehicle GDI (eII) Pty Ltd. Net cash inflow on this divestment
addition a further 16.7% interest was acquired in the SeA Gas Pipeline for
was $475,678,000. Refer to Note 42 for further details of this Allgas divestment.
$46,904,000 increasing APA’s overall interest to 50% and the $19,676,000
$28,755,000 (2011: $24,812,000) has been reinvested in envestra through the
Dividend Reinvestment Plan. $5,000 was invested in Diamantina and $211,800
equity contribution payable upon construction completion was made to eII2
(owner of the Hallett 4 Wind Farm project).
was recovered from the finalisation of fees recoverable from ReSt following the
Trust
SeA Gas transaction in the prior year. $11,669,000 (2011: $22,481,000) has been
During the financial year, the trust has reinvested $28,755,000 (2011:
invested in the purchase of shares in Hastings Diversified utilities Fund. As per
$24,812,000) in envestra through the Dividend Reinvestment Plan.
the cash flow note, $4,000 related to a separate transaction.
66
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 37. nOtes tO tHe stateMent OF CasH FlOWs (COntinued)
(c) reconciliation of profit for the year to the net cash provided by operating activities
COnsOlidated
trust
Profit for the year
Loss on disposal of business
Impairment of intangible
Loss on disposal of property, plant and equipment
Gain from sale of equity accounted investments
Impairment of goodwill
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
2012
$000
130,655
9,663
473
278
-
-
(28,263)
39,826
110,409
16,919
(19,669)
(428)
25,168
8,078
12,416
(23,038)
53,082
335,569
-
-
1,068
(1,652)
5,435
(23,876)
34,239
100,350
12,895
(5,158)
(2,381)
7,458
1,205
12,351
(2,331)
41,601
2011
$000
2012
$000
2011
$000
108,825
49,363
59,388
-
-
-
-
-
-
-
-
-
-
-
28,755
24,812
-
-
482
-
-
-
-
-
-
-
(20,486)
(20,147)
-
-
-
290,029
58,114
(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
1,123,667
1,555,500
776,333
234,500
1,900,000
1,790,000
1,095,597
1,059,681
-
705,578
1,801,175
-
294,947
1,354,628
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(a) Relates to long-term borrowings. (Refer to Note 38 for details of interest rates).
(b) Represents uS denominated notes of uS$799 million (2011: uS$799 million) measured at the exchange rate at reporting date, and A$314.9 million of A$ denominated notes
(2011: A$314.9 million).
(c) Represents notes issued under the Australian and european Medium term Notes programs, including JPY and CAD bonds, ranging from 6.5 years to 10 years. the notes were issued
to institutional investors.
67
-
-
(862)
63,191
-
-
-
-
-
-
-
-
-
-
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 38. FinanCial instruMents
(a) Capital risk management
the Consolidated entity seeks to minimise the effects of these risks through
the Consolidated entity manages its capital structure to ensure that entities in
natural hedges and by using derivative instruments to directly hedge the
the Group will be able to continue as a going concern while maximising the
exposures. the use of financial derivatives is governed by the Consolidated
return to security holders through the optimisation of the debt to equity
entity’s Board approved treasury Policy, which provides written principles on
structure.
the Consolidated entity’s overall capital management strategy is to continue to
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
debt funding.
the capital structure of the Consolidated entity consists of debt, which includes
borrowings disclosed in Notes 23 and 27, cash and cash equivalents, and equity
foreign exchange risk, interest rate risk, credit risk, the use of financial
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
purposes.
the Corporate treasury function reports monthly to the Consolidated entity’s
Board of Directors, which monitors risks and policies implemented to mitigate
risk exposures.
attributable to equity holders of the parent, comprising issued capital, reserves
(c) Market risk management
and retained earnings as disclosed in Notes 29, 30 and 31 respectively.
the Consolidated entity’s activities exposure is primarily to the financial risk of
the Consolidated entity’s operations are conducted primarily through its
subsidiaries.
operating cash flows are used to maintain and expand the Consolidated
entity’s assets, as well as to make distributions to security holders and to repay
maturing debt.
changes in interest rates and foreign currency exchange rates. the Consolidated
entity enters into a variety of derivative financial instruments to manage its
exposure to interest rate and foreign currency risk, including:
– foreign exchange forward contracts to hedge the exchange rate risk arising
on the importation of equipment from a range of international suppliers;
– currency swaps to manage the foreign currency risk associated with foreign
the Consolidated entity’s policy is to borrow from overseas and locally, using a
currency denominated borrowings;
variety of capital markets and bank loan facilities, to meet anticipated funding
– interest rate forward contracts to manage interest rate risk; and
requirements.
– interest rate swaps to mitigate the risk of rising interest rates.
Controlled entities are subject to externally imposed capital requirements.
there has been no change to the Consolidated entity’s exposure to market
these relate to the Australian Financial Services Licence held by Australian
risks or the manner to which it manages and measures the risk from the
Pipeline Limited, the Responsible entity of the Consolidated entity and were
previous period.
adhered to for the entirety of the 2011 and 2012 periods.
Gearing ratio
the Consolidated entity is also exposed to price risk arising from its investments
in and forward purchase contracts over listed equities. the majority of this
the Consolidated entity’s Board of Directors reviews the capital structure on a
exposure arises from the Consolidated entity’s investment in two entities
regular basis. As part of the review, the board considers the cost of capital and
(Hastings Diversified utilities Fund and ethane Pipeline Income Fund) both of
the state of the markets. the Consolidated entity targets gearing in a range of
which are publicly traded on the Australian Securities exchange (ASX).
65% to 70%. Gearing is determined as the proportion of net debt to net debt
plus equity. Based on recommendations of the board, the Consolidated entity
balances its overall capital structure through new equity issues, through the
issue of new debt or the redemption of existing debt, and through a disciplined
distribution payment policy.
(b) Financial risk management objectives
APA’s Corporate treasury function provides services to the business, co-
ordinates access to domestic and international financial markets, and monitors
and manages the financial risks relating to the operations of the Consolidated
entity. these risks include market risk (including currency risk, interest rate risk
and price risk), credit risk and liquidity risk.
(d) Foreign currency risk management
the Consolidated entity undertakes certain transactions denominated in
foreign currencies and hence exposures to exchange rate fluctuations arise.
exchange rate exposures are managed within approved policy parameters
utilising foreign exchange contracts, including forward contracts and cross
currency contracts. there was no unmanaged exposure in either 2011 or 2012.
the carrying amount of the Consolidated entity’s foreign currency denominated
monetary assets and monetary liabilities at the reporting date is as follows:
68
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 38. FinanCial instruMents (COntinued)
(d) Foreign currency risk management (continued)
uS dollar borrowings
Cross currency swaps
Japanese yen borrowings
Cross currency swaps
Canadian dollar borrowings
Cross currency swaps
Foreign exchange contracts
COnsOlidated
liaBilities
assets
2012
$000
780,731
(780,731)
122,256
(122,256)
287,986
(287,986)
-
365
365
2011
$000
744,815
(744,815)
-
-
-
-
-
1,172
1,172
2012
$000
2011
$000
-
-
-
-
-
-
-
126
126
-
-
-
-
-
-
-
-
-
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$1 million
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:
Outstanding COntraCts
2012
Buy us dollars
Less than 3 months
3 to 6 months
6 to 12 months
2011
Buy us dollars
Less than 3 months
3 to 6 months
6 to 12 months
COnsOlidated
aVerage
exCHange rate
FOreign
CurrenCY
us$000
COntraCt
Value
$000
Fair Value
$000
0.9480
1.0297
1.0257
0.9583
0.9694
0.9721
4,675
3,660
1,485
9,821
4,179
3,672
6,343
14,195
4,931
3,555
1,448
9,934
4,361
3,789
6,525
14,675
(350)
75
36
(239)
(441)
(308)
(423)
(1,172)
the Consolidated entity has entered into contracts to purchase equipment in
As at reporting date, the aggregate amount of unrealised losses under forward
foreign currencies from overseas suppliers. the Consolidated entity has
foreign exchange contracts deferred in the hedging reserve relating to these
entered into forward foreign exchange contracts to hedge the exchange rate
anticipated future transactions is $390,000 (2011: $1,172,000). It is anticipated
risk arising from these anticipated future transactions, which are designated as
that the capital purchases will take place within the next financial year at which
cash flow hedges.
stage unrealised mark to market amounts in equity will be included in the
carrying amount of the asset being purchased.
69
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012
38. FinanCial instruMents (COntinued)
(d) Foreign currency risk management (continued)
Cross currency swap contracts
the Consolidated entity receives fixed amounts in uS$ and pays both variable
under cross currency swap contracts, the Consolidated entity agrees to
interest rates (based on Australian BBSW) and fixed interest rates based on
exchange specified principal and interest foreign currency amounts at agreed
future dates at a specified exchange rate. Such contracts enable the
Consolidated entity to mitigate the risk of adverse movements in foreign
exchange rates in relation to principal and interest payments arising under the
agreed interest rate swap rates. under the medium term notes issued in 2012
the Consolidated entity receives fixed amounts in JPY and CAD based on
agreed interest rate swap rates.
2003, 2007 and 2009 uS dollar note issues and the 2012 Japanese yen and
the following table details the swap contracts principal balances over various
Canadian dollar medium term note issues.
durations as at the reporting date:
exCHange rate
aMOunt
2012
$
2011
$
2012
$000
2011
$000
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
Buy us dollars - principal
1 year to 2 years
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
2 years to 5 years
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
2 years to 5 years
5 years and more
70
0.6573
0.6573
0.6573
0.6573
0.6573
0.6573
0.6573
0.8068
0.8068
0.8068
0.8068
0.6573
0.6573
0.6573
0.6573
-
0.6573
0.6573
0.8068
0.8068
0.8068
0.8068
(22,863)
(19,671)
(33,374)
(8,655)
(84,564)
(112,582)
(185,608)
(95,847)
(22,863)
(22,863)
(47,276)
(14,425)
(107,427)
-
(298,190)
(95,847)
(394,037)
(394,037)
(29,737)
(29,737)
(29,737)
(124,774)
(213,986)
0.8068
0.8068
-
(190,878)
0.8068
(304,908)
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
-
0.7576
(495,786)
(15,934)
(15,934)
(44,221)
(21,927)
(98,016)
(85,787)
(98,997)
(184,784)
(29,737)
(29,737)
(89,212)
(95,037)
(243,723)
-
(495,786)
(495,786)
(15,934)
(15,934)
(47,803)
(34,279)
(113,951)
-
(184,784)
(184,784)
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 38. FinanCial instruMents (COntinued)
(d) Foreign currency risk management (continued)
2012 JpY Mtn issue
Buy Japanese yen - interest
Less than 1 year
1 year to 2 years
2 years to 5 years
5 years and more
Buy Japanese yen - principal
5 years and more
2012 Cad Mtn issue
Buy Canadian dollars - interest
Less than 1 year
1 year to 2 years
2 years to 5 years
5 years and more
Buy Canadian dollars - principal
5 years and more
exCHange rate
aMOunt
2012
$
2011
$
2012
$000
2011
$000
79.4502
79.4502
79.4502
79.4502
79.4502
1.0363
1.0363
1.0363
1.0363
1.0363
-
-
-
-
-
-
-
-
-
-
-
-
(1,543)
(1,543)
(4,629)
(1,543)
(9,259)
(125,865)
(12,289)
(12,289)
(36,867)
(30,723)
(92,168)
(289,494)
-
-
-
-
-
-
-
-
-
-
-
-
Foreign currency sensitivity analysis
forward foreign exchange contracts. the following table details the
the Consolidated entity is exposed to movements in the uS$, JPY and CAD
Consolidated entity’s sensitivity to a 10% decrease and increase in the
through its fully hedged borrowings via Global Debt Capital markets and its
Australian dollar against the relevant foreign currencies. the sensitivity rate
current obligations to future purchases of capital equipment. the entire foreign
used is 10% and represents management’s assessment of the greatest possible
currency cash flows arising from the uSPP and MtN issues have been swapped;
change in foreign exchange rates. the sensitivity analysis includes only
as such, the Consolidated entity has no currency risk associated with those
outstanding foreign currency denominated monetary items and adjusts their
note issues. therefore, the sensitivity analysis has only been performed on the
translation at the period end for a 10% change in foreign currency rates.
COnsOlidated
a$ depreciating by 10%
Profit
other equity (a)
a$ appreciating by 10%
Profit
other equity (a)
2012
$000
-
(871)
-
1,065
(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.
2011
$000
-
(1,201)
-
1,468
71
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 38. FinanCial instruMents (COntinued)
(e) interest rate risk management
the Consolidated entity is exposed to interest rate risk as it borrows funds at
amounting to $329.9 million as at 30 June 2012 (2011: $95.4 million).
both fixed and floating interest rates. this risk is managed by the Consolidated
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.
Interest rate swap contracts
under interest rate swap contracts, the Consolidated entity agrees to exchange
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
the trust and the Consolidated entity’s exposures to interest rate risk on
discounting the future cash flows using the yield curves at reporting date. the
financial liabilities are detailed in the liquidity risk management section of this
average interest rate is based on the outstanding balances at the end of the
note. exposure to financial assets is limited to cash and cash equivalents
financial year.
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
2012
% p.a.
2011
% p.a.
nOtiOnal
prinCipal aMOunt
Fair Value
2012
$000
2011
$000
2012
$000
2011
$000
CasH FlOW Hedges
pay fixed aud interest - receive floating aud or fixed/floating foreign currency
Consolidated
Less than 1 year
1 year to 2 years
2 years to 5 years
5 years and more
5.39
7.03
7.52
7.57
7.10
5.39
6.88
8.36
200,000
187,582
687,272
915,111
200,000
200,000
598,190
776,416
1,989,965
1,774,606
(2,760)
(45,620)
(151,358)
(133,806)
(333,543)
trust
-
-
-
-
-
(31,474)
(37,637)
(147,510)
(78,640)
(295,261)
-
the Consolidated entity had no fair value hedges in 2012 or 2011.
the Consolidated entity’s profit sensitivity to interest rates has decreased
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.
All interest rate swap contracts exchanging floating rate interest amounts for
fixed rate interest amounts are designated as cash flow hedges in order to
reduce the Consolidated entity’s cash flow exposure resulting from variable
interest rates on borrowings.
Interest rate sensitivity analysis
during the current period due to the overall decrease in the level of the
Consolidated 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 decrease in sensitivity in equity is
due to a decrease in the notional value of interest rate swaps held from 2011.
(f) price risk management
the Consolidated entity is exposed to price risk arising from its investments in
and forward purchase contracts over listed equities. the investments and
forward purchase contracts are held to meet strategic or hedging objectives
rather than for trading purposes. the Consolidated entity does not actively
the sensitivity analysis below has been determined based on the exposure to
trade any of these holdings.
interest rates for both derivative and non-derivative instruments held. A 100
basis point increase or decrease is used and represents management’s
assessment of the greatest 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:
– net profit would decrease by $6,237,000 or increase by $6,237,000 (2011:
decrease by $7,555,000 or increase by $7,555,000). this is mainly
attributable to the Consolidated entity’s exposure to interest rates on its
variable rate borrowings; and
– equity reserves would increase by $17,387,000 or decrease by $17,960,000
(2011: increase by $23,873,000 or decrease by $24,909,000). this is due to
the changes in the fair value of derivative interest instruments.
Equity price sensitivity
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 have been unaffected as the equity investments are
classified as available-for-sale and no investments were disposed of or
impaired, there is also nil effect from the forwards as the corresponding
exposure will offset in full (2011: $nil); and
– equity reserves would decrease/increase by $5,947,547 (2011: $6,601,144),
due to the changes in the fair value of available-for-sale shares.
72
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 38. FinanCial instruMents (COntinued)
(f) price risk management (continued)
the Consolidated entity’s analysis of its exposure to equity prices has
the carrying amount of financial assets recorded in the financial statements,
established that, overall, its sensitivity declined during the current period
net of any allowances, represents the Consolidated entity’s maximum exposure
compared to the prior period. this outcome is largely a result of a relative
to credit risk in relation to those assets.
convergence to the market benchmark of equity beta observations for Hastings
Diversified utilities Fund which is the most substantial shareholding held by the
Consolidated entity as available-for-sale.
(g) Credit risk management
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
Credit risk refers to the risk that a counterparty will default on its contractual
shareholders’ funds or an excess of current liabilities over current assets. the
obligations resulting in financial loss to the Consolidated entity. the
fair value of the financial guarantee as at 30 June 2012 has been determined to
Consolidated entity has adopted the policy of only dealing with creditworthy
be immaterial and no liability has been recorded (2011: $nil).
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
against counterparty credit limits imposed by the treasury Policy approved by
the board. these limits are regularly reviewed by the board.
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.
(h) 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
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
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
unsecured long term private placement notes with various maturity dates through to 2022
– amount used
– amount unused
unsecured Australian Dollar medium term note with maturity in 2020
– amount used
– amount unused
unsecured Japanese Yen medium term note with maturity in 2018
– amount used
– amount unused
unsecured Canadian Dollar medium term notes with maturity in 2019
– amount used
– amount unused
COnsOlidated
2012
$000
2011
$000
1,123,667
1,555,500
776,333
234,500
1,900,000
1,790,000
1,389,472
1,389,472
-
-
1,389,472
1,389,472
300,000
300,000
-
-
300,000
300,000
125,865
-
125,865
289,494
-
289,494
-
-
-
-
-
-
73
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 38. FinanCial instruMents (COntinued)
(h) liquidity risk management (continued)
Liquidity and interest risk table
Detailed below are the Consolidated entity’s remaining contractual maturities
All foreign currency 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 foreign currency notes, cross
includes both interest and principal cash flows.
currency interest rate swaps and fixed interest rate swaps in aggregate.
COnsOlidated
AVeRAGe
INteReSt RAte
% p.a.
LeSS tHAN
1 YeAR
$000
1 - 5 YeARS
$000
MoRe tHAN
5 YeARS
$000
2012
FinanCial liaBilities
trade and other payables
unsecured bank borrowings (a)
Interest Rate Swaps (Net Settled)
guaranteed senior notes:
denominated in a$
2007 Series A (b)
2007 Series C (b)
2007 Series e (c)
2007 Series G (d)
2007 Series H (d)
2010 AuD 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)
2012 JPY Medium term Note (k)
2010 CAD Medium term Note (l)
Financial lease liabilities
Other:
unearned revenue - interest
unearned revenue - other
-
5.24
-
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
1.23
4.25
-
-
-
175,028
55,246
11,624
-
1,179,453
17,123
367
7,318
5,045
6,002
4,617
23,250
8,532
14,292
6,968
13,986
11,111
11,354
9,752
11,761
8,606
11,248
-
-
6,466
128,428
20,178
24,008
18,468
93,000
116,813
221,123
27,702
246,824
44,442
45,416
119,879
47,108
34,212
78,171
-
-
761
4,078
-
-
-
-
-
78,260
110,592
85,071
381,375
-
-
106,290
-
173,436
210,496
-
128,286
134,424
338,237
-
-
-
(a) Facilities mature on 2 November 2013 ($483 million limit), 15 July 2014 ($225 million limit), 24 August 2014 ($75 million limit), 2 November 2014 ($483 million limit), 2 November 2015
($483 million limit, undrawn at year end) and 12 october 2016 ($150 million limit, undrawn at year end).
396,867
2,472,892
1,746,466
(b) Matures on 15 May 2017.
(c) Matures on 15 May 2019.
(d) Matures on 15 May 2022.
(e) Matures on 9 September 2013.
(f) Matures on 9 September 2015.
(g) Matures on 9 September 2018.
(h) Matures on 1 July 2016.
(i) Matures on 1 July 2019.
(j) Matures on 22 July 2020.
(k) Matures on 22 Jun 2018.
(l) Matures on 24 July 2019.
74
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 38. FinanCial instruMents (COntinued)
(h) liquidity risk management (continued)
2011
FinanCial liaBilities
trade and other payables
unsecured bank borrowings (a)
Interest Rate Swaps (Net Settled)
guaranteed senior notes:
denominated in a$
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
1 - 5 YeARS
$000
MoRe tHAN
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
-
-
-
135,651
1,111,875
12,173
367
7,318
5,045
6,002
4,617
23,250
8,508
14,253
6,949
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
125,344
235,414
27,740
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
-
-
113,220
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
1,396,259
994,073
1,761,334
($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.
75
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 38. FinanCial instruMents (COntinued)
(i) Fair value of financial instruments
Fair value of financial instruments carried at amortised cost
pricing models where the main assumptions are the probability of default
the fair values of financial assets and financial liabilities are determined as
by the specified counterparty extrapolated from market-based credit
follows:
information and the amount of loss, given the default.
– the fair values of financial assets and financial liabilities with standard terms
Fair value measurements recognised in the statement of financial position
and conditions and traded on active liquid markets are determined with
the following table provides an analysis of financial instruments that are
reference to quoted market prices;
measured subsequent to initial recognition at fair value, grouped into Levels 1
– the fair values of other financial assets and financial liabilities (excluding
to 3 based on the degree to which the fair value is observable.
derivative instruments) are determined in accordance with generally
accepted pricing models based on discounted cash flow analysis using
prices from observable current markets;
– the fair values of derivative instruments, included in hedging assets and
liabilities, are calculated using quoted prices. Where such prices are not
available, use is made of discounted cash flow analysis using the applicable
yield curve for the duration of the instruments; and
– the fair value of financial guarantee contracts is determined using option
– 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
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 liability that are not based on observable
market data (unobservable inputs).
COnsOlidated
leVel 1
$000
leVel 2
$000
leVel 3
$000
tOtal
$000
263,442
9,564
-
-
273,005
-
-
-
-
161,929
6,720
5
168,654
-
-
-
-
-
-
259
126
385
62,699
270,844
365
333,909
-
-
-
-
10,168
285,093
1,172
296,433
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
263,442
9,564
259
126
273,390
62,699
270,844
365
333,909
161,929
6,720
5
168,654
10,168
285,093
1,172
296,433
2012
Financial assets measured at fair value
Available-for-sale listed equity securities
Hastings Diversified utilities Fund
ethane Pipeline Income Fund
equity forwards designated as fair value through profit and loss
Forward foreign exchange contracts used for hedging
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
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
76
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 38. FinanCial instruMents (COntinued)
(i) Fair value of financial instruments (continued)
Derivatives
equity forward contracts are measured by reference to quoted equity prices and
the carrying value of financial assets and liabilities recorded at amortised cost
discounted using yield curves with tenors matching maturities of the contracts.
in the financial statements approximate their fair value having regard to the
Foreign currency forward contracts are measured using quoted forward
specific terms of the agreements underlying those assets and liabilities.
exchange rates and yield curves derived from quoted interest rates matching
Fair value measurements of financial instruments measured at amortised cost
maturities of the contracts.
Interest rate swaps are measured at the present value of future cash flows
estimated and discounted based on the applicable yield curves derived from
quoted interest rates.
except as detailed in the following table, the directors consider that the
carrying amounts of financial assets and financial liabilities recognised at
amortised cost in the financial statements approximate their fair values.
CarrYing aMOunt
Fair Value
2012
$000
2011
$000
2012
$000
2011
$000
FinanCial liaBilities
unsecured long term private placement notes
1,389,472
1,389,472
1,389,909
unsecured Australian Dollar medium term notes
unsecured Japanese Yen medium term note
unsecured Canadian Dollar medium term notes
300,000
125,865
289,494
300,000
-
-
382,457
127,752
334,037
1,266,551
340,582
-
-
total
2,104,831
1,689,472
2,234,155
1,607,133
the financial liabilities included in the table above are fixed rate borrowings. the unsecured bank debt held by the Consolidated entity is at a floating rate and
therefore its amortised cost approximates its fair value.
39. 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
2012
%
88.2 (a)
50.0 (b)
2011
%
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:
COnsOlidated
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
2012
$000
6,510
1,397
2,391
143
10,441
543,214
765
543,979
554,420
2011
$000
3,397
204
2,389
1,106
7,096
525,541
1,783
527,324
534,420
77
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 39. JOintlY COntrOlled OperatiOns and assets (COntinued)
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 48 and 43
respectively.
40. 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 (b),(c)
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 Pty Ltd (b),(c)
GasNet Australia trust (b)
APA GasNet Australia (Holdings) Pty Ltd (b),(c)
APA GasNet Australia (operations) Pty Ltd (b),(c)
78
COuntrY OF registratiOn/
inCOrpOratiOn
OWnersHip interest
2012
%
2011
%
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
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
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
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 40. suBsidiaries (COntinued)
naMe OF entitY
APA GasNet A Pty Ltd (b),(c)
GasNet A trust
APA GasNet Australia (NSW) Pty Ltd (b),(c)
APA GasNet B Pty Ltd (b),(c)
APA GasNet Australia Pty Limited (b),(c)
GasNet B trust (b)
GasNet Australia Investments trust
Allgas energy Pty Limited (d)
APt Allgas Pipelines operations Pty Limited (b),(c)
Allgas toowoomba Pty Limited (d)
APA 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 Sea Gas Holdings Pty Limited (b),(c)
APt SPV2 Pty Ltd (b)
APt SPV3 Pty Ltd (b)
APt Pipelines (SA) Pty Ltd (b),(c)
APt (MIt) Services Pty Limited (b),(c)
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)
Diamantina Holdings Company Pty Ltd (formerly APA Power Pty Ltd) (e)
Diamantina Power Station Pty Ltd (formerly APA DPS Pty Ltd) (e)
APA (eDWF HoLDCo) PtY LtD (b),(c)
APA (BWF HoLDCo) PtY LtD (b),(c)
eDWF Holdings 1 Pty Ltd (b),(c)
eDWF Holdings 2 Pty Ltd (b),(c)
eDWF Manager Pty Ltd (b),(c)
Wind Portfolio Pty Ltd (b),(c)
Griffin Windfarm 2 Pty Ltd (b)
APA AM (Allgas) Pty Limited (b),(c)
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
Australia
Australia
Australia
Australia
Australia
Australia
OWnersHip interest
2012
%
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
100
100
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
100
100
100
100
100
-
79
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 40. suBsidiaries (COntinued)
naMe OF entitY
APA DPS Holdings Pty Limited (b),(c)
APA Power PF Pty Limited (b),(c)
COuntrY OF registratiOn/
inCOrpOratiOn
Australia
Australia
OWnersHip interest
2012
%
100
100
2011
%
-
-
(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.
(d) these entities were disposed of during the year.
(e) these entities changed to be an associate during the year.
41. aCQuisitiOn OF Businesses
naMes OF Business aCQuired
prinCipal aCtiVitY
date OF
aCQuisitiOn
during the financial year ended 30 June 2011
prOpOrtiOn
aCQuired
COst OF
aCQuisitiOn
%
$000
emu Downs Windfarm
Power Generation
30 June 2011
100
179,332
eMu dOWns WindFarM
net assets aCQuired
Current assets
Cash and cash equivalents
trade and other receivables
other
non-current assets
Receivables
Property, plant and equipment
Intangible assets
Goodwill
Current liabilities
trade and other payables
non-current liabilities
Deferred tax liabilities
Provisions
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
80
FAIR VALue oN
ACQuISItIoN
$000
7,416
5,759
197
1,189
165,715
6,077
802
(801)
(6,222)
(800)
179,332
-
179,332
(7,416)
(5,533)
836
167,219
5,714
172,933
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 42. dispOsal OF Businesses
During the financial year APA divested its gas distribution network in South east Queensland (Allgas) into the APA minority owned unlisted investment vehicle
GDI (eII) Pty Ltd. APA established GDI in December 2011. APA retains a 20.0% interest in GDI and remains operator of the assets. the net proceeds received from
the new equity partners, Marubeni Corporation and RReeF totalled $475.7 million after transaction costs.
net assets dispOsed
Current assets
trade and other receivables
non-current assets
Property, plant and equipment
Goodwill
Intangibles
total assets
Current liabilities
trade and other payables
other
non-current liabilities
Deferred tax liabilities
total liabilities
net assets
Profit on sale of Allgas Distribution Network before transaction costs
transactions costs
Loss on disposal (after transaction costs)
Less:
Redeemable preference shares acquired
Fair value of equity accounted interest retained
Payables - sale of business
net cash inflow on disposal of allgas
43. 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
16/12/2011
$000
13,770
471,006
104,263
633
589,672
(1,266)
(1,086)
(58,979)
(61,331)
528,341
12,032
(21,695)
(9,663)
(10,400)
(39,020)
6,420
475,678
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
55,087
41,101
-
-
-
-
55,087
41,101
79,806
49,655
-
129,461
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
81
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 44. 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 assurance services (a)
COnsOlidated
trust
2012
$
570,300
20,700
5,500
646,400
1,242,900
2011
$
578,500
20,000
19,700
87,015
705,215
2012
$
2011
$
5,500
5,500
-
-
-
-
-
-
5,500
5,500
(a) Services provided were in accordance with the external auditor independence policy. other assurance services comprise financial due diligence, preparation of investigating
accountants reports and assurance services in relation to debt raisings and a takeover offer.
45. 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)
M J McCormack (Managing Director/Chief executive officer)
S Crane (Independent Non-executive Director)
J A Fletcher (Independent Non-executive Director)
R A Higgins AO (Independent Non-executive Director)
P M McKenzie (Independent Non-executive Director)
M Muhammad (Non-executive Director)
R J Wright (Independent Non-executive Director)
(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
COnsOlidated and trust
2012
$
2011
$
2,762,850
2,409,250
168,148
1,021,548
149,194
773,281
3,952,546
3,331,725
82
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 45. 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
$
SuPeR-
ANNuAtIoN
$
SHARe-BASeD
PAYMeNtS (a)
$
totAL
$
nOn-exeCutiVe direCtOrs
L F Bleasel AM
2012
2011
S Crane
2012
2011
J A Fletcher
2012
2011
R A Higgins Ao
2012
2011
P M McKenzie
2012
2011
M Muhammad
2012
2011
M (George) Ratilal (b)
2012
2011
R J Wright
2012
2011
tOtal reMuneratiOn: nOn-exeCutiVe direCtOrs
2012
2011
exeCutiVe direCtOrs
M J McCormack
2012
2011
tOtal reMuneratiOn: direCtOrs
2012
2011
289,000
272,500
134,750
57,875
117,000
107,000
146,000
145,375
130,000
56,750
130,000
121,500
-
16,000
150,750
141,250
1,097,500
918,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
965,000
870,000
700,350
621,000
2,062,500
1,788,250
700,350
621,000
24,400
20,750
12,128
5,209
43,250
42,335
13,145
13,077
11,675
5,108
-
-
-
-
13,550
12,715
118,148
99,194
50,000
50,000
168,148
149,194
(a) Cash settled share-based payments.
(b) Directors fees paid to Petronas Australia Pty Ltd, retired 26 August 2010.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
313,400
293,250
146,878
63,084
160,250
149,335
159,145
158,452
141,675
61,858
130,000
121,500
-
16,000
164,300
153,965
1,215,648
1,017,444
1,021,548
2,736,898
773,281
2,314,281
1,021,548
3,952,546
773,281
3,331,725
83
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 46. 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 (Chief executive Strategy & Development)
S P Ohl (Group executive Strategic Projects)
M T Knapman (Company Secretary)
P J Wallace (Group executive Human Resources)
R A Wheals (Group executive transmission, appointed 1 May 2012)
J L Ferguson (Group executive Networks, appointed 1 May 2012)
K Lester (Group executive Infrastructure Development, appointed 6 August 2012)
(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
the executive remuneration strategy is to:
COnsOlidated and trust
2012
$
2011
$
5,922,156
298,160
2,638,476
8,858,792
4,449,055
181,691
1,688,799
6,319,545
– attract and retain key executives who will create long-term sustainable
total fixed remuneration is reviewed annually and is determined by reference to
value for securityholders;
appropriate remuneration benchmarking information, taking into account an
– motivate and reward executives having regard to the overall performance of
individual’s responsibilities, performance, qualifications and experience.
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;
and
– comply with applicable legal requirements and appropriate standards of
operating cash flow per security has been chosen by the board as the key
performance measure for ‘at risk’ remuneration. this is directly linked to the
strategic goal of increasing operating cash flows over the medium term,
thereby improving returns to securityholders.
governance.
Refer to the Remuneration Report for further details of APA’s executive
APA’s remuneration mix is structured as a mix of base pay and ‘at risk’ short
remuneration policy.
and long-term incentive components.
84
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 46. 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
$
SuPeR-
ANNuAtIoN
$
SHARe-BASeD
PAYMeNtS (a)
$
totAL
$
KeY ManageMent persOnnel
M J McCormack
2012
2011
P J Fredricson
2012
2011
R M Gersbach
2012
2011
S P ohl
2012
2011
M t Knapman
2012
2011
P J Wallace
2012
2011
R A Wheals (b)
2012
2011
J L Ferguson (b)
2012
2011
965,000
870,000
700,350
621,000
590,225
554,801
658,303
622,879
415,377
376,069
366,000
350,000
272,243
67,715
292,395
270,750
321,563
308,750
182,125
201,375
132,922
130,706
147,345
34,356
329,000
117,369
-
-
295,422
119,747
-
-
-
-
-
-
11,922
11,922
4,848
28,732
-
-
-
-
-
-
-
-
50,000
50,000
1,021,548
2,736,898
773,281
2,314,281
15,775
15,199
15,775
15,199
49,775
45,199
50,000
50,000
41,257
6,094
290,755
1,189,150
165,780
1,006,530
475,330
1,482,893
343,688
1,302,438
337,336
253,636
215,843
141,560
60,110
10,854
989,461
905,011
764,765
672,266
520,955
119,019
25,000
119,753
591,122
-
-
-
50,578
117,801
583,548
-
-
-
tOtal reMuneratiOn
2012
2011
(a) Cash settled share-based payments.
3,891,570
2,013,816
2,841,464
1,566,937
16,770
40,654
298,160
2,638,476
8,858,792
181,691
1,688,799
6,319,545
(b) R A Wheals and J L Ferguson were appointed to KMP positions on 1 April 2012. Remuneration disclosed is for the full financial year.
47. related partY transaCtiOns
(a) equity interest in related parties
Details of the percentage of ordinary securities held in subsidiaries are
(c) transactions with key management personnel
disclosed in Note 40 and the details of the percentage held in jointly controlled
Details of directors and key management personnel compensation are
operations are disclosed in Note 39. Details of interests in jointly controlled
disclosed in Note 45 and 46 respectively.
entities and associates are disclosed in Note 17.
(i) Loans to key management personnel
(b) responsible entity – australian pipeline limited
No loans have been made to key management personnel.
the Responsible entity is wholly owned by APt Pipelines Limited.
85
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012
47. related partY transaCtiOns (COntinued)
(c) transactions with key management personnel (continued)
(ii) Key management personnel equity holdings
FuLLY PAID
SeCuRItIeS
oPeNING BALANCe
SeCuRItIeS
ACQuIReD DuRING
tHe FINANCIAL
YeAR
SeCuRItIeS
DISPoSeD DuRING
tHe FINANCIAL
YeAR
FuLLY PAID
SeCuRItIeS
CLoSING BALANCe
2012
L F Bleasel AM
S Crane
J A Fletcher
R A Higgins Ao
P M McKenzie
M Muhammad
R J Wright
M J McCormack
P J Fredricson
R M Gersbach
S P ohl
M t Knapman
P J Wallace
R A Wheals
J L Ferguson
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
375,405
100,000
60,026
79,503
-
42,818
34,071
170,619
3,269
9,796
14,896
4,484
-
1,500
1,967
67,688
-
3,272
6,657
12,500
-
2,853
24,645
2,947
454
-
2,516
-
-
-
359,771
15,634
-
100,000
56,807
72,954
-
42,818
-
31,265
147,005
3,000
24,569
14,896
4,484
-
3,219
6,549
-
-
-
2,806
23,614
269
1,525
-
-
-
-
-
-
-
-
-
-
-
9,796
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,298
-
-
-
443,093
100,000
63,298
86,160
12,500
42,818
36,924
195,264
6,216
454
14,896
7,000
-
1,500
1,967
375,405
100,000
60,026
79,503
-
42,818
-
34,071
170,619
3,269
9,796
14,896
4,484
-
(iii) Other transactions with key management personnel of the Group and
– operational services provided between entities;
the Responsible Entity
– payments of distributions;
other than directors compensation (Note 45) and key management personnel
– payments of capital distributions (returns of capital); and
compensation (Note 46) and equity holdings in Note 47(c)(ii), there are no
– equity issues.
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;
86
the above transactions were made on normal commercial terms and
conditions. the Group charges interest on inter-entity loans from time to time.
All transactions between the entities that comprise APA Group have been
eliminated on consolidation.
Refer to Note 40 for details of the entities that comprise APA Group.
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 47. related partY transaCtiOns (COntinued)
(d) transactions with related parties within apa group (continued)
Australian Pipeline Limited
Australian Pipeline Limited, in its capacity as trustee and Responsible entity of
Management fees of $2,760,079 (2011: $2,238,000) were paid to the
the trust, has guaranteed the payment of principal, interest and other amounts
Responsible entity as reimbursement of costs incurred on behalf of APA. No
as provided in the Note and Guarantee Agreement relating to the issue of
amounts were paid directly by APA to the Directors of the Responsible entity,
Guaranteed Senior Notes.
except as disclosed at Note 45(b).
(e) transactions with other related parties
Transactions with associates and jointly controlled entities
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
$
2012
SeA Gas
energy Infrastructure Investments
eII 2
APA ethane Ltd
Diamantina Power Station
GDI (eII)
envestra Limited
At the year end, APA had receivables with related parties of $7,284,791.
2011
SeA Gas
energy Infrastructure Investments
eII 2
APA ethane Ltd
CAMS (a)
envestra Limited
2,602,524
28,509,775
637,376
200,000
5,385,943
21,050,337
-
-
-
-
-
-
78,326
2,730,398
-
-
89,749,008
3,907,990
296,428,404
566,250
38,311,409
354,814,359
566,250
134,777,131
3,752,891
23,002,158
3,428,097
200,000
348,881
539
256,438
-
-
-
-
4,528,545
55,783
-
66,712
228,323,940
187,980
29,244,768
259,055,967
188,519
34,152,246
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(a) APA disposed of its 50% interest in CAMS on 30 June 2011.
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 2012, the following transactions occurred between the trust and its other related parties:
– the trust received dividends from its wholly-owned controlled entities (see Note 6).
the following balances arising from transactions between the trust and its other related parties are outstanding at reporting date:
– Receivables of nil (2011: $481,974) are owing from associates; and
– Receivables of $402,269,587 (2011: $486,345,026) are owing from subsidiaries; and
– total payables of $98,427,045 are repayable to subsidiaries (2011: $98,427,045).
No guarantees have been given or received and 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.
87
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 48. COntingenCies
COntingent liaBilities
Bank guarantees
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
31,632
8,051
-
-
-
-
COntingent assets
-
-
49. eVents OCCurring aFter repOrting date
on 9 August 2012, APA lodged a prospectus with the Australian Securities and Investments Commission (ASIC) for an offer of long-dated, unsecured, subordinated,
cumulative notes (Notes) to raise $350 million, with the ability to raise more or less. A replacement prospectus was lodged with the ASIC on 17 August 2012
following the closure of the “exposure” period and finalisation of the margin and revised offer size of $475 million.
on 17 August 2012 APA announced an increased offer to acquire HDF and a Fourth Supplementary Bidder’s Statement is expected to be issued on 27 August 2012.
these developments followed an announcement from the ACCC on 19 July 2012 that they would not oppose any bid for HDF by APA, subject to certain undertakings
from APA.
on 22 August 2012, the Directors declared a final distribution of 18.0 cents per security ($116.0 million) for the APA Group (comprising a distribution of 12.41 cents
per security from APt and a distribution of 5.59 cents per security from APtIt), made up of 8.37 cents per security profit distribution (unfranked) and 9.63 cents
per security capital distribution. the distribution will be paid on 14 September 2012.
other than the events disclosed above, there have not been any events or transactions that have occurred subsequent subsequent to year end that would require
adjustment to or disclosure in the accounts.
AuS tRALIAN PIPeLINe t R uS t AND It S C oNtRoLLeD eNtItIeS
Declaration by the Directors
For the financial year ended 30 June 2012
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, 22 August 2012
88
robert Wright
Director
AustrAliAn PiPeline trust And its controlled entitiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012
AuS tRA LIA N PI PeLINe tR uS t AND It S C oNtRoLLeD eNtItIeS
auDitor’s inDepenDence Declaration
For the financial year ended 30 June 2012
Deloitte Touche Tohmatsu
ABN 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
22 August 2012
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 2012, 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 sincerely
DELOITTE TOUCHE TOHMATSU
G Couttas
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Touche Tohmatsu Limited
89
AuS tRALIAN PIPeLI Ne t R uS t AND It S C oNtRoLLeD eNtItIeS
inDepenDent auDitor’s report
For the financial year ended 30 June 2012
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
Grosvenor Place
225 George Street
225 George Street
Sydney NSW 2000
Sydney NSW 2000
PO Box N250 Grosvenor Place
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
Sydney NSW 1220 Australia
DX: 10307SSE
DX: 10307SSE
Tel: +61 (0) 2 9322 7000
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
www.deloitte.com.au
Independent Auditor’s Report
Independent Auditor’s Report
to the Unitholders of Australian Pipeline Trust
to the Unitholders of Australian Pipeline Trust
We have audited the accompanying financial report of Australian Pipeline Trust, which comprises the
We have audited the accompanying financial report of Australian Pipeline Trust, which comprises the
statement of financial position as at 30 June 2012, the statement of comprehensive income, the
statement of financial position as at 30 June 2012, 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
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
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
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 29 to 88.
the year’s end or from time to time during the financial year as set out on pages 29 to 88.
Directors’ Responsibility for the Financial Report
Directors’ Responsibility for the Financial Report
The directors of Australian Pipeline Limited are responsible for the preparation of 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
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
Corporations Act 2001 and for such internal control as the directors determine is necessary to enable
the preparation of the financial report that gives a true and fair view and is free from material
the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error. In Note 3, the directors also state, in accordance with
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
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements
comply with International Financial Reporting Standards.
comply with International Financial Reporting Standards.
Auditor’s Responsibility
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
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
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
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.
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
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
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.
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
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
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
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
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
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
our audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Touche Tohmatsu Limited
Member of Deloitte Touche Tohmatsu Limited
90
APA grouP AnnuAl rePort 2012
AuS tRA LIA N PI PeLINe tR uS t AND It S C oNtRoLLeD eNtItIeS
inDepenDent auDitor’s report
continueD
For the financial year ended 30 June 2012
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 2012 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(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, 22 August 2012
91
apt investment trust
and its controlled entities
arsn 115 585 441
APt INVeS tMeNt t R uS t AN D It S C oNtRoLLeD eNtItIeS
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
2012. 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
Muri Muhammad gave notice on 25 July 2012 of his resignation from the board
of Australian Pipeline Limited with effect from 24 october 2012.
stapled entity being Australian Pipeline trust (together “APA”).
George Ratilal resigned as alternate director for Muri Muhammad on 9 May 2012.
Directors
the names of the directors of the Responsible entity during the year and since
company secretary
Mark Knapman
the year end are:
Details of the Company Secretary, his qualifications and experience are set out
leonard Bleasel aM
Chairman
Michael McCormack
Managing Director and Chief executive officer
steven Crane
John Fletcher
russell Higgins aO
patricia McKenzie
Muri Muhammad
robert Wright
on page 11.
principal activities
APtIt operates as an investment and financing entity within the Australian
Pipeline trust stapled group.
signiFicant changes in state oF aFFairs
In the opinion of the directors of the Responsible entity, no significant changes
in the state of affairs of APtIt occurred during the year.
review anD results oF operations
APtIt reported net profit after tax of $46.0 million (2011: $38.9 million) for the
year ended 30 June 2012 on total revenue of $46.0 million (2011: $38.9 million).
Distributions
Distributions paid to securityholders during the financial year were:
APtIt profit distribution
APtIt capital distribution
total
Final FY 2011 distriButiOn
paid 15 septeMBer 2011
interiM FY 2012 distriButiOn
paid 15 MarCH 2012
Cents per security
total distribution
$000
Cents per security
total distribution
$000
3.41
2.66
6.07
18,295
15,449
33,744
3.88
2.06
5.94
24,797
13,201
37,998
on 22 August 2012, the directors declared a final distribution for APtIt for the current financial year of 5.59 cents per security payable 14 September 2012, made
up of:
APtIt profit distribution
APtIt capital distribution
total
Final FY 2012 distriButiOn
paYaBle 14 septeMBer 2012
Cents per security
total distribution
$000
3.28
2.31
5.59
21,160
14,879
36,039
Distribution information is presented on an accounting classification basis. the APA Group Annual tax Statement and Annual tax Return Guide (released in
September 2012) provide the classification of distribution components for the purposes of preparation of securityholder income tax returns.
As at 30 June 2012, 644,485,583 securities were on issue (2011: 634,116,029).
92
APA grouP AnnuAl rePort 2012 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 that has occurred since the current period end 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 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
robert Wright
Director
SYDNeY, 22 August 2012
other inFormation
Details of directors and the Company Secretary are on pages 10 to 11. Further
information on directorships, attendance at meetings, security holdings,
remuneration, options granted and indemnification of officers and external
auditor are found in the APt directors’ report, pages 12 to 22.
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.
93
APT invesTmenT TrusT And iTs conTrolled enTiTiesdirectors’ report continued APt INVeS tMeNt t R uS t AN D It S C oNtRoLLeD eNtItIeS
statement oF comprehensive income
For the financial year ended 30 June 2012
COntinuing OperatiOns
Revenue
expenses
Profit before tax
Income tax expense
profit for the year
Note
4
4
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
45,969
(12)
45,957
38,936
(12)
38,924
45,969
(12)
45,957
38,936
(12)
38,924
-
-
-
-
45,957
38,924
45,957
38,924
Other comprehensive income
Gain on available-for-sale investments taken to equity
other comprehensive income for the year (net of tax)
1,090
1,090
635
635
1,090
1,090
635
635
total comprehensive income for the year
47,047
39,559
47,047
39,559
profit attributable to:
equityholders of the parent
total comprehensive income attributable to:
equityholders of the parent
earnings per seCuritY
45,957
45,957
38,924
38,924
45,957
45,957
38,924
38,924
47,047
39,559
47,047
39,559
Basic and diluted earnings per security (cents)
12
7.2
7.1
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.
94
APA grouP AnnuAl rePort 2012 A Pt I NVeS tMeNt tR uS t AND It S C oNtRoLLeD eNtItIeS
statement oF Financial position
As at 30 June 2012
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
trust
Note
2012
$000
2011
$000
2012
$000
2011
$000
6
7
8
9
10
11
755
720
755
720
11,869
374,236
386,105
12,448
387,671
400,119
11,869
374,236
386,105
12,448
387,671
400,119
386,860
400,839
386,860
400,839
10
10
9
9
10
10
9
9
386,850
400,830
386,850
400,830
364,066
382,001
364,066
382,001
1,624
21,160
534
18,295
1,624
21,160
534
18,295
386,850
400,830
386,850
400,830
The above statement of financial position should be read in conjunction with the accompanying notes.
A Pt I NVeS tMeNt tR uS t AND It S C oNtRoLLeD eNtItIeS
statement oF changes in equity
For the financial year ended 30 June 2012
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
Balance at 1 July 2011
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 2012
Note
11
10
5
11
10
5
ISSueD
CAPItAL
$000
320,931
-
-
-
81,547
(20,477)
382,001
382,001
-
-
-
10,715
(28,650)
364,066
The above statement of changes in equity should be read in conjunction with the accompanying notes.
COnsOlidated and trust
ReSeRVeS
$000
(101)
-
635
635
-
-
RetAINeD
eARNINGS
$000
19,928
38,924
-
38,924
-
totAL
$000
340,758
38,924
635
39,559
81,547
(40,557)
(61,034)
534
18,295
400,830
534
-
1,090
1,090
-
-
18,295
45,957
-
45,957
-
400,830
45,957
1,090
47,047
10,715
(43,092)
(71,742)
1,624
21,160
386,850
95
APt INVeS tMeNt t R uS t AN D It S C oNtRoLLeD eNtItIeS
statement oF cash Flows
For the financial year ended 30 June 2012
CasH FlOWs FrOM Operating aCtiVities
trust distribution - related party
trust distribution - subsidiary
Capital distribution received - external
Dividends received
Interest received - related parties
Finance lease receivable repayments
Receipts from customers
Payments to suppliers
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
31,270
32,641
-
521
152
9,906
1,167
150
(12)
-
518
161
6,615
1,167
110
(12)
-
31,270
521
152
9,906
1,167
150
(12)
-
32,641
518
161
6,615
1,167
110
(12)
net cash provided by operating activities
43,154
41,200
43,154
41,200
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
Distributions to securityholders
net cash (used in)/provided by financing activities
17,873
17,873
(61,714)
(61,714)
17,873
17,873
(61,714)
(61,714)
10,715
(71,742)
(61,027)
81,548
(61,034)
20,514
10,715
(71,742)
(61,027)
81,548
(61,034)
20,514
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.
96
APA grouP AnnuAl rePort 2012 A Pt I NVeS tMeNt tR uS t AND It S C oNtRoLLeD eNtItIeS
notes to the Financial statements
For the financial year ended 30 June 2012
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 Australian
Pipeline trust stapled group.
2. signiFiCant aCCOunting pOliCies
statement of compliance
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.
the financial report is a general purpose financial report which has been
the estimates and underlying assumptions are reviewed on an ongoing basis.
prepared in accordance with the Corporations Act 2001, Accounting Standards
Revisions to accounting estimates are recognised in the period in which the
and Interpretations, and complies with other requirements of the law.
estimate is revised if the revision affects only that period, or in the period of 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
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.
Standards (“A-IFRS”). Compliance with A-IFRS ensures that the financial
adoption of new and revised accounting standards
statements and notes of the trust and the Consolidated entity comply with
In the current year, the Consolidated entity has adopted all of the new and
International Financial Reporting Standards (“IFRS”).
revised Standards and Interpretations issued by the Australian Accounting
the financial statements were authorised for issue by the directors on
22 August 2012.
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 b.
Standards affecting presentation disclosure
standard
iMpaCt
– Amendments to AASB 7 ‘Financial Instruments: Disclosure’.
the amendments (part of AASB 2010-4 ‘Further Amendments to Australian
Accounting Standards arising from the Annual Improvements Project’) clarify the
required level of disclosures about credit risk and collateral held and provide
relief from disclosures previously required regarding renegotiated loans.
– Amendments to AASB 101 ‘Presentation of Financial Statements’.
the amendments (part of AASB 2010-4 ‘Further Amendments to Australian
Accounting Standards arising from the Annual Improvements Project’) clarify
that an entity may choose to present the required analysis of items of other
comprehensive income either in the statement of changes in equity or in the
notes to the financial statements.
– AASB 1054 ‘Australian Additional Disclosures’
AASB 1054 sets out the Australian-specific disclosures for entities that have
adopted Australian Accounting Standards. this standard contains disclosure
requirements that are in addition to IFRS in areas such as compliance with
Australian Accounting Standards, the nature of financial statements, audit fees,
imputation (franking) credits and the reconciliation of net operating cash flow to
profit.
97
2. signiFiCant aCCOunting pOliCies (COntinued)
(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 124 ‘Related Party Disclosures’ (revised December 2009)
AASB 124 (revised December 2009) has been revised on the following two
aspects: (a) has changed the definition of a related party and (b) includes an
explicit requirement to disclose commitments involving related parties.
– AASB 2009-14 ‘Amendments to Australian Interpretation - Prepayments
Interpretation 114 addresses when refunds or reductions in future contributions
of Minimum Funding Requirement’.
should be regarded as available in accordance with paragraph 58 of AASB 119;
the impact on future contributions and when it might give rise to a liability. the
amendments now allow recognition of an asset in the form of prepaid minimum
funding contributions.
– AASB 2009-12 ‘Amendments to Australian Accounting Standards’.
the application of AASB 2009-12 makes amendments to AASB 8 ‘operating
Segments’ as a result of the issuance of AASB 124 ‘Related Party Disclosure’
(2009). the Standard makes numerous editorial amendments to a range of
Australian Accounting Standards and Interpretations.
– AASB 2010-5 ‘Amendments to Australian Accounting Standards’
the Standard makes numerous editorial amendments to a range of Australian
Accounting Standards and Interpretations.
– AASB 2010-6 ‘Amendments to Australian Accounting Standards -
the application of AASB 2010-6 makes amendments to AASB 7 ‘Financial
Disclosures on transfers of Financial Assets’
instruments - Disclosures’ to introduce additional disclosure requirements for
transactions involving transfer of financial assets. these amendments are
intended to provide greater transparency around risk exposures when a financial
asset is transferred and derecognised but the transferor retains some level of
continuing exposure in the asset.
(iii) 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 9 ‘Financial Instruments’, AASB 2009-11 ‘Amendments to
1 January 2013
30 June 2014
Australian Accounting Standards arising from AASB 9 and AASB2010-7
‘Amendments to Australian Accounting Standards arising from AASB 9
(December 2010)’ (effective date deferred by IASB to 1 January 2015)
– AASB 10 ‘Consolidated Financial statements’
– AASB 11 ‘Joint Arrangements’
– AASB 12 ‘Disclosure of Interest in other entities’
– AASB 127 ‘Separate Financial statements’ (2011)
– AASB 128 ‘Investments in Associates and Joint Ventures’ (2011)
– AASB 13 Fair Value measurement and AASB 2010-8 ‘Amendments to
Australian Accounting Standards arising from AASB 13’
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
– AASB 119 ‘employee Benefits’ (2011) and AASB 2011-8 ‘Amendments to
1 January 2013
30 June 2014
Australian Accounting Standards arising from AASB 119’ (2011)
– AASB 2010-8 ‘Amendments to Australian Accounting Standards -
1 January 2012
30 June 2013
Deferred tax: Recovery of underlying Assets’
– AASB 2011-4 ‘Amendments to Australian Accounting Standards to
1 July 2013
30 June 2014
Remove Individual Key Management Personnel Disclosure Requirements’
– AASB 2011-7 ‘Amendments to Australian Accounting Standards arising
1 January 2013
30 June 2014
from the Consolidation and Joint Arrangements standards’
– AASB 2011-9 ‘Amendments to Australian Accounting Standards -
1 July 2012
30 June 2013
Presentation of items of other Comprehensive Income’
– Amendments to IFRS 10, 11 and 12 transitional Guidance
1 January 2013
30 June 2014
APA has yet to determine any change in accounting for existing arrangements under AASB 10, 11 and 12. In addition, should any arrangements take place which
changes existing interest and creates new interests in controlled entities, the accounting for such transactions, may be different to that applied to transactions in
the past.
the potential impact of the initial application of the remaining above Standards has not yet been determined.
98
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 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
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.
expenses are eliminated in full on consolidation. In the separate financial
the acquiree’s identifiable assets, liabilities and contingent liabilities that meet
statements of the trust, the intra-group transactions (“common control
the conditions for recognition under AASB 3 are recognised at their fair value
transactions”) are generally accounted for by reference to the existing
at the acquisition date, except that:
(consolidated) book value of the items. Where the transaction value of common
control transactions differs from their consolidated book value, the difference
is recognised as a contribution by or distribution to equity participants by the
transaction entities.
– deferred tax assets or liabilities and liabilities or assets related to employee
benefit arrangements are recognised in accordance with AASB 112 ‘Income
taxes’ and AASB 119 ‘employee Benefits’ respectively;
– liabilities or equity instruments related to the replacement by the
Minority interests in the net assets (excluding goodwill) of consolidated
Consolidated entity of an acquiree’s share-based payment awards are
subsidiaries are identified separately from the Consolidated entity’s equity
measured in accordance with AASB 2 ‘Share-based payments’; and
therein. Minority interests consist of the amount of those interests at the date
– assets (or disposal groups) that are classified as held for sale in accordance
of the original business combination and the minority’s share of changes in
with AASB 5 ‘Non-current Assets Held for Sale and Discontinued operations’
equity since the date of the combination. Losses applicable to the minority in
are measured in accordance with that standard.
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
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
Cash comprises cash on hand and demand deposits. Cash equivalents are
new information obtained about facts and circumstances that existed as of the
short-term, highly liquid investments that are readily convertible to known
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
the measurement period is the period from the date of acquisition to the date
trade and other payables are recognised when the Consolidated entity
the Consolidated entity obtains complete information about facts and
becomes obliged to make future payments resulting from the purchase of
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
accordance with the substance of the contractual arrangement. An equity
the 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
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.
values as at the date of acquisition.
Transaction costs arising on the issue of equity instruments
(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
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:
99
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 2. signiFiCant aCCOunting pOliCies (COntinued)
(g) goods and services tax (continued)
– where the amount of GSt incurred is not recoverable from the taxation
Receivables and loans
trade receivables, loans, and other receivables that have fixed or determinable
authority, it is recognised as part of the cost of acquisition of an asset or as
payments that are not quoted in an active market are classified as ‘loans and
part of an item of expense; or
receivables’. trade and other receivables are stated at their amortised cost less
– for receivables and payables which are recognised inclusive of GSt, except for
impairment.
accrued revenue and accrued expenses at balance dates which exclude GSt.
Impairment of financial assets
the net amount of GSt recoverable from, or payable to, the taxation authority
Financial assets are assessed for indicators of impairment at each balance
is included as part of receivables or payables.
sheet date. Financial assets are impaired where there is objective evidence that
GSt receivable or GSt payable is only recognised once a tax invoice has been
issued or received.
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.
as a result of one or more events that occurred after initial recognition of the
financial asset, the estimated future cash flows of the investment have been
impacted.
(k) 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:
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.
For the purpose of assessing impairment, assets are grouped at the lowest
Distribution revenue
levels for which there are separately identifiable cash inflows which are largely
Distribution revenue is recognised when the right to receive a distribution has
independent of the cash inflows from other assets or groups of assets: (cash-
been established.
generating units). Assets other than goodwill that have previously suffered an
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
Dividend revenue
Dividend revenue is recognised when the right to receive a dividend has been
established.
Finance lease income
Finance lease income is recognised when receivable.
its realised taxable income (including any assessable realised capital gains) is
(l) leased assets
fully distributed to its securityholders each year.
Leases are classified as finance leases when the terms of the lease transfer
(j) Financial assets and liabilities
Investments in subsidiaries are measured at cost. other financial assets are
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.
classified into the following specified categories: financial assets ‘held-to-
Consolidated Entity as lessor
maturity investments’, ‘available-for-sale’ financial assets, and ‘loans and
Amounts due from a lessee under a finance lease are recorded as receivables.
receivables’. the classification depends on the nature and purpose of the
Finance lease receivables are initially recognised at the amount equal to the
financial assets and is determined at the time of initial recognition.
present value of the minimum lease payments receivable plus the present value
Effective interest method
the effective interest method is a method of calculating the amortised cost of
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
Financial assets at fair value through profit or loss are stated at fair value, with
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 lease.
(m) segment information
APtIt has one reportable segment being energy infrastructure investment and
operation.
any resultant gain or loss recognised in profit or loss. the net gain or loss
APtIt is an investing and financing entity within the Australian Pipeline trust
recognised in profit or loss incorporates any dividend or interest earned on the
stapled group. As the trust only operates in one segment, it has not disclosed
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.
segment information separately.
100
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 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
total expenses
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
31,270
32,641
-
177
-
113
31,447
32,754
9,758
4,000
614
14,372
6,838
(1,398)
640
6,080
-
31,270
177
31,447
9,758
4,000
614
14,372
-
32,641
113
32,754
6,838
(1,398)
640
6,080
150
45,969
102
38,936
150
45,969
102
38,936
(12)
(12)
(12)
(12)
(12)
(12)
(12)
(12)
101
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 5. distriButiOns
reCOgnised aMOunts:
Final distribution paid on 15 september 2011
(2011: 15 September 2010)
Profit distribution (a)
Capital distribution
semi-annual distribution paid on 15 March 2012
(2011: 17 March 2011)
Profit distribution (a)
Capital distribution
unreCOgnised aMOunts:
Final distribution payable on 14 september 2012 (b)
(2011: 15 September 2011)
Profit distribution (a)
Capital distribution
(a) Profit distributions unfranked (2011: unfranked).
(b) Record date 29 June 2012
COnsOlidated
trust
2012
$000
2011
$000
2012
$000
2011
$000
18,295
15,449
33,744
24,797
13,201
37,998
19,928
16,350
36,278
20,629
4,127
24,756
18,295
15,449
33,744
24,797
13,201
37,998
19,928
16,350
36,278
20,629
4,127
24,756
21,160
14,879
36,039
18,295
15,449
33,744
21,160
14,879
36,039
18,295
15,449
33,744
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)
175
580
755
167
553
720
175
580
755
167
553
720
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)
11,869
12,448
11,869
12,448
102
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 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
trust
2012
$000
-
2011
$000
-
226,556
244,429
2012
$000
112,810
71,937
2011
$000
81,541
121,079
-
107,379
333,935
36,614
3,687
374,236
-
149,188
149,188
107,379
351,808
32,761
3,102
387,671
-
-
333,935
351,808
36,614
3,687
374,236
32,761
3,102
387,671
(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 $380,860 during the year and
declared a $123,021 capital distribution as part of its June 2012 quarter distribution. Also included is a small shareholding in HDuF with a fair value of $2,400.
9. trade and OtHer paYaBles
other payables
10. issued Capital
10
9
10
9
644,485,583 securities, fully paid (2011: 634,116,029 securities,
fully paid) (a)
364,066
382,001
364,066
382,001
Movements
Balance at beginning of financial year
Issue of securities under Distribution Reinvestment Plan
Issue of securities under Institutional Placement
Issue cost of securities
Capital distributions paid (Note 5)
Balance at end of financial year
2012
nO. OF units
000
COnsOlidated and trust
2012
$000
2011
No. oF uNItS
000
634,116
10,370
-
-
-
382,001
10,733
-
(18)
(28,650)
542,319
13,875
77,922
-
-
644,486
364,066
634,116
2011
$000
320,931
12,590
69,872
(915)
(20,477)
382,001
(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.
103
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 11. reserVes
available-for-sale investment revaluation reserve
Balance at beginning of financial year
Valuation gain recognised
Balance at end of financial year
COnsOlidated
trust
2012
$000
534
1,090
1,624
2011
$000
(101)
635
534
2012
$000
534
1,090
1,624
2011
$000
(101)
635
534
the available-for-sale investment revaluation reserve arises on the revaluation of available-for-sale financial assets. When a revalued financial asset is sold, the
portion of the reserve which relates to that financial asset is effectively realised, and is recognised in profit or loss. When a revalued financial asset is impaired, the
portion of the reserve which relates to that financial asset is recognised in profit or loss.
12. earnings per seCuritY
Basic and diluted earnings per security (cents)
COnsOlidated
2012
7.2
2011
7.1
the earnings and weighted average number of ordinary securities used in the calculation of basic and diluted earnings per security are as follows:
Net profit attributable to securityholders for calculating basic and diluted earnings per security ($’000)
Weighted average number of ordinary securities on issue used in the calculation (000)
45,957
639,743
38,924
551,222
13. reMuneratiOn OF external auditOr
Amounts received or due and receivable by Deloitte touche tohmatsu for:
COnsOlidated
trust
2012
$
2011
$
2012
$
2011
$
Auditing the financial report
11,958
11,555
11,958
11,555
104
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 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
trust
2012
$000
2011
$000
2012
$000
2011
$000
1,167
4,669
11,673
17,509
17,509
(5,060)
12,449
580
11,869
12,449
1,167
4,669
12,840
18,676
18,676
(5,675)
13,001
553
12,448
13,001
1,167
4,669
11,673
17,509
17,509
(5,060)
12,449
580
11,869
12,449
1,167
4,669
12,840
18,676
18,676
(5,675)
13,001
553
12,448
13,001
(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 market risk (including currency risk, interest rate risk
counterparties and obtaining sufficient collateral or bank guarantees where
and price risk), credit risk and liquidity 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 the Consolidated
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.
entity’s Board approved treasury Policy, 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. the Consolidated entity does not enter into or trade financial
exposure to market risk or the manner in which it manages and measures the
instruments, including derivative financial instruments for speculative purposes.
risk from the previous period. the Consolidated entity is also exposed to price
the Corporate treasury function, via the CFo, reports on an ad hoc basis to
APA Group’s Audit and Risk Management Committee, an independent body
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.
that monitors 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).
105
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 15. FinanCial instruMents (COntinued)
(e) Fair values of financial instruments (continued)
2012
Financial assets measured at fair value
Available-for-sale listed equity securities
ethane Pipeline Income Fund
Hastings Diversified utilities Fund
unlisted Redeemable ordinary Shares
energy Infrastructure Investments Pty Limited
total
2011
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
COnsOlidated and trust
level 1
$000
level 2
$000
level 3
$000
total
$000
3,685
2
-
3,687
3,102
-
3,102
-
-
-
-
-
-
-
-
-
36,614
36,614
3,685
2
36,614
40,301
-
3,102
32,761
32,761
32,761
35,863
Fair Value tHrOugH
prOFit Or lOss
2012
$000
2011
$000
32,761
33,936
3,894
4,000
(4,041)
36,614
3,500
(1,398)
(3,277)
32,761
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: Gain/(Loss) on financial asset held at fair value through profit and loss
Distributions
Closing balance
Significant assumptions used in determining fair value of financial assets and liabilities
Redeemable ordinary shares
– the risk free rate of return is 2.72% 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 greatest possible change in
interest rates. At reporting date, if interest rates had been 10% higher or lower
– the risk adjusted rate for the RoS is estimated as the required rate of return
and all other variables were constant, the Consolidated entity’s net profit would
based on projected cash flows to equity at issuance assuming the RoS price
decrease by $608,000 or increase by $608,000 (2011: $345,000). 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.
106
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 16. suBsidiaries
naMe OF entitY
parent entity
APt Investment trust
Controlled entity
COuntrY OF
registratiOn
OWnersHip interest
2012
%
2011
%
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)
M J McCormack (Managing Director/Chief executive officer)
S Crane (Independent Non-executive Director)
J A Fletcher (Independent Non-executive Director)
R A Higgins AO (Independent Non-executive Director)
P M McKenzie (Independent Non-executive Director)
M Muhammad (Non-executive Director)
R J Wright (Independent Non-executive Director)
(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
COnsOlidated and trust
2012
$
2011
$
2,762,850
2,409,250
168,148
1,021,548
149,194
773,281
3,952,546
3,331,725
107
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 17. direCtOr COMpensatiOn (COntinued)
(b) director compensation (continued)
the compensation of each director of the Consolidated entity is set out below.
nOn-exeCutiVe direCtOrs
L F Bleasel AM
2012
2011
S Crane
2012
2011
J A Fletcher
2012
2011
R A Higgins Ao
2012
2011
P M McKenzie
2012
2011
M Muhammad
2012
2011
M (George) Ratilal (b)
2012
2011
R J Wright
2012
2011
tOtal reMuneratiOn: nOn-exeCutiVe direCtOrs
2012
2011
exeCutiVe direCtOr
M J McCormack
2012
2011
tOtal reMuneratiOn: direCtOrs
2012
2011
sHOrt-terM
eMplOYMent BeneFits
pOst-
eMplOYMent
lOng-terM
inCentiVe plans
SALARY/FeeS
$
SHoRt-teRM
INCeNtIVe
SCHeMe
$
SuPeRANNuAtIoN
$
SHARe-BASeD
PAYMeNtS (a)
$
totAL
$
289,000
272,500
134,750
57,875
117,000
107,000
146,000
145,375
130,000
56,750
130,000
121,500
-
16,000
150,750
141,250
1,097,500
918,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
965,000
870,000
700,350
621,000
2,062,500
1,788,250
700,350
621,000
24,400
20,750
12,128
5,209
43,250
42,335
13,145
13,077
11,675
5,108
-
-
-
-
13,550
12,715
118,148
99,194
50,000
50,000
168,148
149,194
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
313,400
293,250
146,878
63,084
160,250
149,335
159,145
158,452
141,675
61,858
130,000
121,500
-
16,000
164,300
153,965
1,215,648
1,017,444
1,021,548
2,736,898
773,281
2,314,281
1,021,548
3,952,546
773,281
3,331,725
(a) Cash settled share-based payments.
(b) Directors fees paid to Petronas Australia Pty Ltd, retired 26 August 2010.
108
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 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 (Chief executive Strategy & Development)
S P Ohl (Group executive Strategic Projects)
M T Knapman (Company Secretary)
P J Wallace (Group executive Human Resources)
R A Wheals (Group executive transmission, appointed 1 May 2012)
J L Ferguson (Group executive Networks, appointed 1 May 2012)
K Lester (Group executive Infrastructure Development, appointed 6 August 2012)
(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
the executive remuneration strategy is to:
COnsOlidated and trust
2012
$
2011
$
5,922,156
298,160
2,638,476
8,858,792
4,449,055
181,691
1,688,799
6,319,545
– attract and retain key executives who will create long-term sustainable
total fixed remuneration is reviewed annually and is determined by reference to
value for securityholders;
appropriate remuneration benchmarking information, taking into account an
– motivate and reward executives having regard to the overall performance of
individual’s responsibilities, performance, qualifications and experience.
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;
and
– comply with applicable legal requirements and appropriate standards of
operating cash flow per security has been chosen by the board as the key
performance measure for ‘at risk’ remuneration. this is directly linked to the
strategic goal of increasing operating cash flows over the medium term thereby
improving returns to securityholders.
governance.
Compensation for each member of the key management personnel of the
APA’s remuneration mix is structured as a mix of base pay and ‘at risk’ short
and long-term incentive components.
Consolidated entity is set out below.
109
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 18. KeY ManageMent persOnnel COMpensatiOn (COntinued)
(b) Key management personnel compensation (continued)
sHOrt-terM eMplOYMent BeneFits
pOst-
eMplOYMent
lOng-terM
inCentiVe plans
SALARY/FeeS
$
SHoRt-teRM
INCeNtIVe SCHeMe
$
NoN-MoNetARY
$
SuPeRANNuAtIoN
$
SHARe-BASeD
PAYMeNtS(a)
$
totAL
$
KeY ManageMent persOnnel
M J McCormack
2012
2011
P J Fredricson
2012
2011
R M Gersbach
2012
2011
S P ohl
2012
2011
M t Knapman
2012
2011
P J Wallace
2012
2011
R A Wheals
2012
2011
J L Ferguson
2012
2011
965,000
870,000
700,350
621,000
590,225
554,801
658,303
622,879
415,377
376,069
366,000
350,000
272,243
67,715
292,395
270,750
321,563
308,750
182,125
201,375
132,922
130,706
147,345
34,356
329,000
117,369
-
-
295,422
119,747
-
-
-
-
-
-
11,922
11,922
4,848
28,732
-
-
-
-
-
-
-
-
50,000
50,000
1,021,548
2,736,898
773,281
2,314,281
15,775
15,199
15,775
15,199
49,775
45,199
50,000
50,000
41,257
6,094
290,755
1,189,150
165,780
1,006,530
475,330
1,482,893
343,688
1,302,438
337,336
253,636
215,843
141,560
60,110
10,854
989,461
905,011
764,765
672,266
520,955
119,019
25,000
119,753
591,122
-
-
-
50,578
117,801
583,548
-
-
-
tOtal reMuneratiOn
2012
2011
(a) Cash settled share-based payments.
3,891,570
2,013,816
2,841,464
1,566,937
16,770
40,654
298,160
2,638,476
8,858,792
181,691
1,688,799
6,319,545
110
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012 19. related partY transaCtiOns
(a) responsible entity – australian pipeline limited
the Responsible entity is wholly owned by APt Pipelines Limited (2011: 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
2012
L F Bleasel AM
M J McCormack
S Crane
J A Fletcher
R A Higgins Ao
P M McKenzie
M Muhammad
R J Wright
P J Fredricson
R M Gersbach
R A Wheals
J L Ferguson
S P ohl
M t Knapman
2011
L F Bleasel AM
M J McCormack
S Crane
J A Fletcher
R A Higgins Ao
P M McKenzie
M Muhammad
R J Wright
P J Fredricson
R M Gersbach
S P ohl
M t Knapman
375,405
170,619
100,000
60,026
79,503
-
42,818
34,071
3,269
9,796
1,500
1,967
14,896
4,484
359,771
147,005
100,000
56,807
72,954
-
42,818
31,265
3,000
24,569
14,896
4,484
67,688
24,645
-
3,272
6,657
12,500
-
2,853
2,947
454
-
-
-
2,516
15,634
23,614
-
3,219
6,549
-
-
2,806
269
1,525
-
-
-
-
-
-
-
-
-
-
9,796
-
-
-
-
-
-
-
-
-
-
-
-
-
16,298
-
-
443,093
195,264
100,000
63,298
86,160
12,500
42,818
36,924
6,216
454
1,500
1,967
14,896
7,000
375,405
170,619
100,000
60,026
79,503
-
42,818
34,071
3,269
9,796
14,896
4,484
111
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012 19. related partY transaCtiOns (COntinued)
(d) transaction with related parties within the Consolidated entity
20. COntingent liaBilities and COntingent assets
During the financial year, the following transactions occurred between the trust
At 30 June 2012, there are no material contingent liabilities or contingent
and its other related parties:
assets (2011: $nil).
– loans advanced and payments received on long-term inter-entity loans; and
21. suBseQuent eVents
– payments of distributions.
All transactions between the entities that comprise the Consolidated entity
have been eliminated on consolidation. Refer to Note 16 for details of the
entities that comprise the Consolidated entity.
on 9 August 2012, APA lodged a prospectus with the Australian Securities and
Investments Commission (ASIC) for an offer of long-dated, unsecured,
subordinated, cumulative notes (Notes) to raise $350 million, with the ability to
raise more or less. A replacement prospectus was lodged with the ASIC on
17 August 2012 following the closure of the “exposure” period and finalisation
(e) transactions with other related parties
of the margin and revised offer size of $475 million.
APtIt and its controlled entity have a number of loan receivable balances with
other entities in APA. these loans have various terms; however, they can be
repayable on agreement of the parties. 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.
the following balances arising from transactions between the trust and its
other related parties are outstanding at reporting date:
on 17 August 2012 APA announced an increased offer to acquire HDF and a
Fourth Supplementary Bidder’s Statement is expected to be issued on
27 August 2012. these developments followed an announcement from the
ACCC on 19 July 2012 that they would not oppose any bid for HDF by APA,
subject to certain undertakings from APA.
on 22 August 2012, the Directors declared a final distribution for the 2012
financial year of 5.59 cents per security ($36.0 million). the distribution represents
– current receivables totalling $580,065 are owing from a subsidiary of APt
a 3.28 cents per security unfranked profit distribution and 2.31 cents per
for amounts due under a finance lease arrangement (2011: $552,828);
security capital distribution. the distribution will be paid on 14 September 2012.
– non-current receivables totalling $11,868,272 are owing from a subsidiary of
APt for amounts due under a finance lease arrangement (2011: $12,448,336);
and
– non-current receivables totalling $226,556,406 (2011: $244,428,764) are
other than the events disclosed above, there have not been any events or
transactions that have occurred subsequent subsequent to year end that would
require adjustment to or disclosure in the accounts.
owing from a subsidiary of APt.
Australian Pipeline Limited
Management fees of $630,345 (2011: $536,021) 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 $630,345 (2011: $536,021) were reimbursed by APt.
APt INVeS tMeNt t R uS t AN D It S C oNtRoLLeD eNtItIeS
Declaration by the Directors
For the financial year ended 30 June 2012
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, 22 August 2012
112
robert Wright
Director
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the fiNaNcial statemeNts coNtiNuedFor the financial year ended 30 June 2012APA grouP AnnuAl rePort 2012
A Pt I NVeS tMeNt tR uS t AND It S C oNtRoLLeD eNtItIeS
auDitor’s inDepenDence Declaration
For the financial year ended 30 June 2012
Deloitte Touche Tohmatsu
ABN 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
22 August 2012
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 2012, 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 sincerely
DELOITTE TOUCHE TOHMATSU
G Couttas
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Touche Tohmatsu Limited
113
APt INVeS tMeNt t R uS t AN D It S C oNtRoLLeD eNtItIeS
inDepenDent auDitor’s report
For the financial year ended 30 June 2012
Deloitte Touche Tohmatsu
ABN 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
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 2012, 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 94 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 gives a true and fair view and 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 grouP AnnuAl rePort 2012
A Pt I NVeS tMeNt tR uS t AND It S C oNtRoLLeD eNtItIeS
inDepenDent auDitor’s report
continueD
For the financial year ended 30 June 2012
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, 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
2012 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(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, 22 August 2012
115
aDDitional inFormation
Additional information required by the Listing Rules of Australian Securities exchange Limited and not provided elsewhere in this report (the information is
applicable as at 31 August 2012).
tWentY largest HOlders
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Custodial Services Limited
Cogent Nominees Pty Limited
AMP Life Limited
Argo Investments Limited
uBS Nominees Pty Ltd
QIC Limited
Bond Street Custodians Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
Questor Financial Services Limited
Marich Nominees No 2 Pty Ltd
Merrill Lynch (Australia) Nominees
Invia Custodian Pty Limited
M F Custodians Ltd
Bt Portfolio Services Limited
Aust executor trustees SA Ltd
Navigator Australia 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
87,392,069
74,342,098
56,685,257
20,779,526
14,716,133
9,070,630
6,749,919
6,138,230
4,716,273
4,454,680
3,759,790
3,165,444
2,120,057
1,804,316
1,662,683
1,598,357
1,574,552
1,543,952
1,444,480
1,392,401
%
13.56
11.54
8.80
3.22
2.28
1.41
1.05
0.95
0.73
0.69
0.58
0.49
0.33
0.28
0.26
0.25
0.24
0.24
0.22
0.22
305,110,847
47.34
No. oF HoLDeRS
%
No. oF SeCuRItIeS
28,241
27,241
10,837
7,948
157
74,424
37.95
36.60
14.56
10.68
0.21
100
10,547,580
72,717,887
78,345,049
152,955,993
329,919,074
644,485,583
100.00
%
1.64
11.28
12.16
23.73
51.19
2,759 holders hold less than a marketable parcel of securities (market value less than $500 or 104 securities based on a market price on 31 August 2012 of $4.82).
suBstantial HOlders
By notice dated 7 June 2012, BlackRock Group advised that it had an interest in 32,242,480 ordinary stapled securities;
By notice dated 28 August 2012, National Australia Bank Limited advised that it had an interest in 42,159,164 ordinary stapled 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 grouP AnnuAl rePort 2012 aDDitional inFormation
continueD
Calendar OF eVents
distriButiOn paYMents
Final distribution FY2012 record date
29 June 2012
Distributions will be paid semi-annually in March and September. Securityholders
Final distribution FY2012 payment date
14 September 2012
will receive annual tax statements with the final distribution in September.
Annual meeting
Interim result announcement
25 october 2012
20 February 2013*
Interim distribution FY2013 record date
31 December 2012*
Interim distribution FY2013 payment date
*Subject to change
13 March 2013*
annual Meeting details
date: 25 October 2012
Venue: City recital Hall
angel place, 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
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 repOrt, annual reVieW and sustainaBilitY repOrt
APA Group’s 2012 Annual Report, Annual Review 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.
Pipeline Limited is the Responsible entity of those trusts.
eleCtrOniC COMMuniCatiOn
apa grOup respOnsiBle entitY and registered OFFiCe
Australian Pipeline Limited ACN 091 344 704
Securityholders can elect to receive communication from APA electronically
by registering their email address with the APA Group registry.
HSBC Building, Level 19, 580 George Street, Sydney NSW 2000
electing to receive the report electronically will reduce the adverse impact we
Po Box R41, Royal exchange NSW 1225
have on the environment.
telephone: +61 2 9693 0000
Facsimile: +61 2 9693 0093
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 Australia
toll Free: 1800 992 312
telephone: +61 2 8280 7132
Facsimile: +61 2 9287 0303
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.
apa.com.au