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APA GRouP AnnuAl RePoR t 2013
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australian pipeline trust
Directors’ report
Remuneration report
Corporate governance statement
Consolidated statement of profit or loss
and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Declaration by the Directors of
Australian Pipeline Limited
Auditor’s Independence Declaration
Independent Auditor’s Report
127
Additional information
102
104
105
105
106
107
123
124
125
apt inVestMent trust
Directors’ report
Consolidated statement of profit or loss
and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated 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
Directors’ report
The Directors of Australian Pipeline Limited (“Responsible Entity”) submit their
APA is listed on ASX and is included in the S&P ASX 50 Index. Since listing in
report and the annual financial report of Australian Pipeline Trust (“APT”) and
June 2000, its market capitalisation has increased ten-fold to over $5 billion (as
its controlled entities (together “APA” or “Consolidated Entity”) for the financial
year ended 30 June 2013. This report refers to the consolidated results of APT
at 30 June 2013), and it has achieved total securityholder returns of 787% or
annual compound growth rate of 18.2%.1
and APT Investment Trust (“APTIT”).
apa regulated and contracted revenue
Directors
The names of the Directors of the Responsible Entity during the year and since
APA derives its revenue streams through a mix of regulated revenue, long-term
negotiated revenue contracts, asset management fees and investments.
the year end are:
leonard Bleasel aM
Chairman
Michael McCormack
Chief Executive Officer and Managing Director
steven Crane
John Fletcher
russell Higgins aO
patricia McKenzie
Muri Muhammad
(retired 24 October 2012)
robert Wright
Earnings are underpinned by strong cash flows generated from high quality,
well positioned, geographically diversified assets and a small portfolio of
creditworthy customers.
A national regulatory regime provides mechanisms for regulatory pricing
amongst other things, which is encapsulated in the National Gas Law and
National Gas Rules. The economic regulation aspects of the regime apply
to most gas distribution networks and a number of gas transmission pipelines
in Australia.
The regime provides for two forms of regulation based on a pipeline’s relative
market power – full regulation and light regulation. For assets under full
regulation the regulator determines price and other terms of access for
Details of the Directors, their qualifications, experience, special responsibilities
standard (“reference”) services as part of an access arrangement process, such
and Directorships of other listed entities are set out on pages 14 to 16.
that the asset owner has a reasonable opportunity to recover at least the
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:
efficient costs of owning and operating the asset to provide the reference
services. Access arrangement periods usually run for five years. For assets
under light regulation, contractual terms (including price) are negotiated
between the service provider and customer with recourse to arbitration by the
– energy infrastructure, primarily gas transmission businesses located across
regulator in the absence of agreement. APA assets subject to full regulation or
Australia and the Emu Downs Wind Farm in Western Australia;
light regulation are detailed below.
– asset management and operations services for the majority of APA’s energy
investments and for third parties; and
– energy investments in listed and unlisted entities.
FiNANciAL AND operAtioNAL reVieW
apa OVerVieW
APA is Australia’s largest natural gas infrastructure business. It owns or has an
interest in approximately $12 billion of energy infrastructure across Australia,
and operates these with a skilled workforce in excess of 1,500 people.
APA has a diverse portfolio of 14,100 kilometres of gas transmission pipelines
Contracted revenues are sourced from unregulated assets, assets under light
regulation as well as assets under full regulation. Contracts are generally for a
reservation of capacity, with a majority of the revenue fixed. Average contract
term is greater than 10 years, and where new infrastructure is required, terms
tend to be 15 years or greater.
Approximately 25% of APA’s FY2013 revenue (excluding pass-through revenue)
was subject to prices determined under full regulation. The majority of the
remaining 75% of APA’s revenue is generated from contracts which have set
terms, including negotiated pricing for the life of the contract.
that span every state and territory on mainland Australia and deliver about half
apa assets and operations
the nation’s natural gas usage. It also owns other related energy infrastructure
APA is a major participant in developing, owning and operating natural gas
assets such as gas storage facilities and power generation assets.
transportation infrastructure across Australia.
APA has ownership interests in, and operates, the Envestra Limited (“Envestra”)
APA’s assets and operations are reported in three principal business segments:
and the GDI (EII) Pty Ltd (“GDI”) gas distribution networks, which together have
approximately 25,000 kilometres of gas mains and approximately 1.2 million
gas consumer connections. It also has minority interests in and operates
other energy infrastructure assets and businesses, including SEA Gas Pipeline,
Energy Infrastructure Investments, EII2 and Ethane Pipeline Income Fund.
– Energy Infrastructure, which includes all APA’s wholly or majority owned
pipelines, gas storage assets and the Emu Downs Wind Farm;
– Asset Management, which provides commercial, operating services and/or
asset maintenance services to the majority of its energy investments for
appropriate fees; and
APA’s objective of maximising securityholder value is achieved through
– Energy Investments, which includes APA’s strategic stakes in a number
expanding and enhancing its infrastructure portfolio, securing low risk, long-
of
investment vehicles
that house energy
infrastructure assets,
term revenue on its assets, operating the business safely and efficiently and
generally characterised by long-term secure cash flows, with low capital
generating further value through its service offerings.
expenditure requirements.
1
Total securityholder return is the capital appreciation of the company’s security price, adjusted for capital management (such as security splits and consolidations) and assuming
reinvestment of distribution at the declared distribution rate per security. Figures quoted are sourced from IRESS.
2
APA grouP / AnnuAl rePort 2013 energy infrastructure assets
east coast gas grid
Roma Brisbane Pipeline
South West Queensland Pipeline
Carpentaria Gas Pipeline
Berwyndale Wallumbilla Pipeline
Moomba Sydney Pipeline
Central West Pipeline
Central Ranges Pipeline and distribution network
Victorian Transmission System
Dandenong LNG Storage Facility
SESA Pipeline
West australian and northern territory assets
Goldfields Gas Pipeline (88.2%)
Kalgoorlie to Kambalda
Pilbara Pipeline System
Parmelia Gas Pipeline
Mid West Pipeline (50%)
Mondarra Gas Storage Facility
Emu Downs Wind Farm
Amadeus Gas Pipeline
energy investments and asset Management
energy inVestMent
OWnersHip interest
Detail
lengtH/CapaCity
regulatOry status
582 km
936 km
944 km
112 km
2,028 km
255 km
294 km
1,842 km
12,000 tonnes
45 km
Total 7,038 km
1,546 km
44 km
328 km
446 km
363 km
15 PJ
80 MW
1,671 km
Total 4,398 km
Full regulation
Not regulated
Light regulation
Not regulated
Light regulation (partial)
Light regulation
Full regulation
Full regulation
Not regulated
Not regulated
Full regulation
Light regulation
Not regulated
Not regulated
Not regulated
Not regulated
Not regulated
Full regulation
asset ManageMent
Operational services
Operational services;
Envestra
33.0%
gas distribution: 22,500 km of gas mains, 1.14 million gas consumer connections,
1,124 km of pipelines across SA, Vic, NSW, Qld and NT
GDI
20.0%
gas distribution: 2,800 km of gas mains, 83,000 gas consumer connections in Qld
Investment management
SEA Gas Pipeline
50.0%
gas pipeline: 687 km pipeline from Iona and Port Campbell, Vic to Adelaide, SA
Energy
Infrastructure
19.9%
Investments
gas pipelines: Telfer Gas Pipeline and lateral - 488 km; Bonaparte Gas Pipeline
-286 km; Wickham Point Pipeline - 12 km
electricity transmission cables: Murraylink (176 km) and Directlink (63 km)
gas-fired power stations: Daandine power station (27MW) and X41 power station
(32 MW)
gas processing facilities: Kogan North (12 TJ/day) Tipton West (29 TJ/day)
EII2
20.2%
Wind generation: North Brown Hill Wind Farm (132MW), SA
Ethane Pipeline
Income Fund
6.1%
ethane pipeline: 1,375 km from Moomba to Port Botany, Sydney
Diamantina Power
Station
50.0%
gas-fired power stations: Diamantina Power Station (242 MW) and Leichhardt
Power Station (60 MW) currently under development
services
Maintenance services
only
Operational services;
Investment management
services
Investment management
services
Operational services;
Investment management
services
NA
3
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD apa objective and strategy
This strategy has been relatively unchanged since listing. Consistent with this
APA’s objective to maximise the value of APA for its investors is supported by
strategy, over the 2013 financial year APA commenced, continued or completed
its strategy to:
the following growth development projects and acquisitions:
– focus on expanding and enhancing its natural gas infrastructure portfolio to
– acquisition of the South West Queensland Pipeline and Pilbara Pipeline
meet the increasing demand for natural gas services;
System through its takeover of Hastings Diversified Utilities Fund (“HDF”);
– capture revenue and operational synergies from its significant asset base;
– pipeline capacity expansions on the Victorian Transmission System, Moomba
– pursue asset development opportunities which leverage APA’s existing
Sydney Pipeline, Goldfields Gas Pipeline and Roma Brisbane Pipeline;
assets and utilise the depth of its comprehensive asset management and
– expansion of the Mondarra Gas Storage Facility;
operational skills;
– development of the Diamantina and Leichhardt gas fired power stations;
– enhance APA’s services to customers, including the development of more
– compression projects at Wallumbilla and Moomba; and
flexible and tailored services to better satisfy customer requirements; and
– development of the east coast grid services and operating framework.
– strengthen its financial capability.
FinanCial 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)
Normalised operating cash flow (4)
Normalised operating cash flow per security (cents) (4)
Earnings per security – reported (cents)
Earnings per security – normalised (cents) (5)
Distribution per security (cents)
Distribution payout ratio (6)
Net tangible asset per security
Weighted average number of securities (000)
2013
$000
2012
$000
1,272,267
1,060,661
352,743
919,524
768,801
(130,461)
638,340
(290,916)
347,424
(51,421)
2,764
298,767
120,030
178,737
374,381
48.5
432,639
56.0
38.7
23.1
35.5
68.2%
1.42
772,314
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
335,569
52.5
20.4
21.9
35.0
67.0%
1.58
639,743
$000
211,606
50,110
161,496
242,976
(20,052)
222,924
(56,590)
166,334
(986)
2,769
168,117
129,693
38,423
38,812
(4.0)
97,070
3.5
18.3
1.2
0.5
CHanges
%
20.0
16.6
21.3
46.2
(18.2)
53.7
(24.2)
91.9
(2.0)
-
128.7
-
27.4
11.6
(7.6)
28.9
6.8
89.4
5.5
1.4
(0.16)
(10.3)
(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 and GDI in respect of, the operation of the Envestra and GDI assets.
(2) Significant items: see summary table (page 5).
(3) Operating cash flow = net cash from operations after interest and tax payments.
(4) Normalised operating cash flow excludes significant items.
(5) Normalised earnings per security excludes significant items.
(6) Distribution payout ratio = total distribution payments as a percentage of normalised operating cash flow.
4
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP / AnnuAl rePort 2013 APA reported profit after tax and minorities and including significant items of $298.8 million, an increase of 129% compared with $130.7 million reported last year.
APA’s profit includes the earnings of HDF which was acquired in the financial year and consolidated from 9 October 2012.
APA’s profit also contained a number of significant items (tabled below) relating to APA’s acquisition of HDF, fees paid by HDF to Hastings Funds Management
and the reversal of costs booked against the sale of APA Gas Networks (Qld) (“Allgas”) to GDI (December 2011), with a net positive after tax impact of $120.0 million.
signiFiCant iteMs
significant items impacting eBitDa
Write back of transaction costs in respect of Allgas sale (1)
Gain on APA’s previously held interest in HDF
Transaction costs on acquisition of HDF
Integration costs on acquisition of HDF
significant items incurred by apa
Management and Performance Fees charged to HDF by Hastings Funds Management
Takeover response costs incurred by HDF
significant items incurred and paid by HDF
total significant items impacting eBitDa
significant items impacting finance costs
Gain on settlement of HDF interest rate swaps
total significant items before tax
Income tax related to significant items
total significant items after tax
(1) Prior year significant item reflects profit on Allgas sale less transaction costs.
2013
$000
18,588
142,333
(12,404)
(4,481)
144,036
(35,438)
(6,913)
(42,351)
101,685
8,713
110,398
9,632
120,030
2012
$000
(9,663)
-
-
-
(9,633)
-
-
-
(9,633)
-
(9,633)
-
(9,633)
Net profit after tax (excluding the significant items) of $178.7 million was up
Normalised operating cash flow, that is, excluding the HDF significant one
27.4% on last year ($140.3 million).
Revenue (excluding pass-through) increased by $161.5 million to $919.5 million,
an increase of 21.3% on last year. Earnings before interest, tax, depreciation and
off payments, was up 28.9% on last year at $432.6 million, and corresponding
operating cash flow per security was up 6.8% or 3.5 cents to 56.0 cents
per security.
amortisation (“EBITDA”) increased by $243.0 million to $768.8 million, an
APA’s distributions for the financial year totalled 35.5 cents per security, an
increase of 46.2%. This was in line with APA’s EBITDA guidance for the 2013
increase of 1.4% or 0.5 cents on last year. APA achieved its guidance of paying
financial year of $755 million to $770 million.
distributions in the 2013 financial year at least equal to distributions in the 2012
The main factors driving the increase in profit and EBITDA, excluding the
significant items, include:
financial year. The distribution payout ratio of 68.2% based on normalised
operating cash flow, was slightly higher than the 67.0% ratio last year, mainly
due to the increased securities on issue. APA continues to fully fund its
– additional earnings from the new expansion on the Roma Brisbane Pipeline
distributions out of operating cash flows whilst also retaining significant cash in
(commissioned September 2012);
the business to support ongoing growth.
– increased performance of investments, in particular Envestra;
– increased asset management earnings from operating the Envestra assets,
full year’s earnings from operating the GDI assets and increased customer
contribution work; and
Capital ManageMent
APA issued a total of 191,265,224 securities since 30 June 2012. The issues
comprised:
– nine months’ contribution of the South West Queensland Pipeline and the
– 7,147,485 new securities issued under the APA Distribution Reinvestment Plan
Pilbara Pipeline System and seven months’ contribution of the Moomba
(“DRP”) on 14 September 2012, at $4.69 per security, raising $33.5 million;
Adelaide Pipeline System (“MAPS”) divested 1 May 2013 .
– 175,717,257 new securities as part of the offer consideration for HDF, issued
The increase was partially offset by the removal of contributions from Allgas.
between 9 October and 24 December 2012 inclusively, at an average
weighted cost per security of $5.035; and
Operating cash flow increased by 11.6% to $374.4 million while operating cash
– 8,400,482 new securities issued under the DRP on 13 March 2013 at $5.91
flow per security decreased by 7.6% or 4.0 cents to 48.5 cents per security. The
per security, raising $49.6 million.
drop in operating cash flow per security is primarily due to the increase in
securities on issue, as well as the inclusion of operating cash flows from HDF for
the period from 9 October 2012 (which included some $58.3 million of fees
paid by HDF to Hastings Funds Management and HDF’s advisers in respect of
the takeover by APA).
At 30 June 2013, there were 835,750,807 securities on issue (30 June 2012:
644,485,583), an increase of 29.7%.
5
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD On 19 June 2013, having reviewed APA’s financial position and funding
Net finance costs increased by $56.6 million, or 24.2%, to $290.9 million
requirements, the Board advised of its decision to suspend the DRP with
(30 June 2012: $234.3 million). The increase is primarily due to consolidation of
immediate effect and until further notice.
the HDF business into APA from 9 October 2012. The average interest
During the year APA completed the following financings:
– On 18 September 2012, APA completed an offer of long-dated, unsecured,
subordinated and cumulative notes (“Notes”), raising $515 million. The
Notes have a face value of $100 per Note, with a first call date of 31 March
2018 and final maturity date of 30 September 2072. Note holders receive
floating rate, cumulative interest payments quarterly in arrears; interest is
the sum of the 90 day Bank Bill Rate plus a 4.5% margin. The Notes are
rate (including credit margins) applying to drawn debt was 7.35% for the year
(2012: 7.39%).
APA’s interest cover ratio for the year decreased to 2.30 times from 2.48 times
last year, remaining well in excess of its debt covenant default ratio of 1.1 times,
and distribution lock up ratio of 1.3 times. The calculation of interest cover does
not include the significant items in EBITDA and includes only nine months’
contribution to EBITDA from the HDF business.
ascribed 50% equity credit from Standard & Poor’s and Moody’s and are not
CreDit ratings
convertible into stapled securities or any other securities. The Notes began
APT Pipelines Limited, the borrowing entity of APA, maintained the following
trading on the ASX under the code “AQHHA” on 19 September 2012;
two investment grade credit ratings during the year:
– On 11 October 2012, APA issued US$750 million (A$735 million) of 3.875%
senior guaranteed notes into the United States 144A debt capital market,
maturing in October 2022. The principal and interest obligations have been
hedged into A$ obligations under the terms of cross-currency interest rate
swap transactions, with quarterly A$ payments set at an average fixed rate
– BBB long-term corporate credit rating (outlook Stable) assigned by
Standard & Poor’s (S&P)in June 2009; and
– Baa2 long-term corporate credit rating (outlook Stable) assigned by
Moody’s Investors Service (Moody’s) in April 2010.
of 6.68% per annum; and
On 27 March 2013, S&P issued a report following its annual review of APA’s
– On 26 November 2012, APA issued GBP 350 million (A$536 million) of
borrowing entity, APT Pipelines Limited, stating that the stable rating outlook
12-year fixed rate medium term notes (“MTN”) utilising documentation in
reflects APA’s “excellent” business profile and S&P’s expectation that APA will
place under its established European MTN program. The MTNs have a fixed
manage its capital structure to sustain the credit metrics expected for the BBB
annual GBP coupon of 4.25% per annum and will mature on 26 November
rating. The rating reflects S&P’s opinion of the stable and predictable cash flow
2024. The principal and interest obligations have been hedged into A$
generated from the APA’s ownership of a mix of more than a dozen regulated
obligations under the terms of cross-currency
interest rate swap
and unregulated (albeit highly contracted) gas transmission assets; its strong
transactions, with quarterly A$ payments set at an average fixed rate of
market position, stemming from its natural-monopoly assets; and low operating
7.36% per annum.
risk, underpinned by an in-house operating model.
The proceeds from the Notes and debt facilities were used largely to assist in
Further, on 28 June 2013, Moody’s released its latest credit opinion on APT
the acquisition of HDF, the repayment of HDF’s short term bank debt and for
Pipelines Limited, stating that its Baa2 senior unsecured issuer rating reflects
general corporate purposes.
Between 20 December and 24 December 2012 APA effected the full repayment
and cancellation of all of HDF’s debt facilities, totalling $1,325 million and
terminated all interest rate swaps associated with those facilities.
At 30 June 2013, APA’s debt portfolio has a broad spread of maturities
extending out to 2024, with an average maturity of drawn debt of 6.2 years.
APA’s gearing2 of 62.8% at 30 June 2013 was down from 65.0% at 30 June
2012, primarily due to the reduction in net debt following receipt of funds from
the stable operating cash flows from APA’s portfolio of quality gas infrastructure
assets, which are predominantly gas pipelines with long-term transportation
contracts and regulated network assets. The strong market position of the
contracted assets and the fixed tariff for the regulated network over five-year
regulatory periods support APA’s ability to generate predictable revenues.
Furthermore, its integrated transmission network enhances its operational
flexibility, whilst the large number of assets within its diversified portfolio
improves the group’s cash flows and operational stability.
the sale of MAPS in May 2013.
inCOMe tax
At 30 June 2013, APA had $972 million in cash and committed undrawn
facilities available to meet the continued capital growth needs of the business.
The effective income tax rate for the year was 14.8%, lower than 27.9% last year,
primarily due to a number of significant items being capital in nature and
therefore having little or no tax effect. The effective income tax rate before
APA has a prudent treasury policy which requires conservative levels of
significant items is 25.8%, slightly lower than 26.4% last year.
hedging of interest rate exposures to minimise the potential impacts from
adverse movements in interest rates. All interest rate and foreign currency
exposures on debt raised in foreign currencies have been hedged. APA also
enters into interest rate hedges for a proportion of the interest rate exposure on
its floating rate borrowings. As at 30 June 2013, 83.2% of interest obligations
on gross borrowings were either hedged or issued at fixed interest rates for
varying periods extending out in excess of 11 years.
BOrrOWings anD FinanCe COsts
As at 30 June 2013, APA had borrowings of $4,412 million ($3,224 million at
30 June 2012), principally from syndicated bank debt facilities, bilateral debt
facilities, US Private Placement notes, European MTN in several currencies,
Australian MTN, United States 144A notes and APA subordinated notes.
Capital anD inVestMent expenDiture
Capital and investment expenditure for the year totalled $728.2 million
compared with $295.5 million last year. Growth project expenditure of
$372.7 million was in respect of pipeline capacity expansion in Queensland,
New South Wales, Victoria and Western Australia, and the expansion of the
Mondarra Gas Storage Facility. This expenditure was generally either fully
underwritten through long-term gas transportation agreements or had
regulatory approval through a relevant access arrangement.
Acquisitions and investments totalled $330.8 million, with the majority relating
to the acquisition of HDF. Net cash consideration for the acquisition of HDF
was $257.0 million. APA maintained its interest in Envestra at 33.0% for
$65.5 million, by participating in Envestra’s dividend reinvestment plan and its
The increase in borrowings since 30 June 2012 is primarily related to the
April 2013 equity placement.
acquisition of HDF, including the repayment of HDF’s debt facilities, payment of
the cash component of the takeover offer, net of cash from the sale of MAPS.
2 Gearing ratio determined in accordance with covenants in certain senior debt facilities as net debt to net debt plus book equity.
6
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP / AnnuAl rePort 2013 22.6
-
22.6
80.8
24.1
213.7
31.5
350.1
265.3
65.5
330.8
703.5
24.7
728.2
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
Capital and investment expenditure for the year is detailed in the table below.
DesCriptiOn OF 2013 MaJOr prOJeCts
2013
$ million
2012
$ million
Capital anD
inVestMent expenDiture
(1)
growth expenditure
Regulated
Victorian Transmission System
Allgas (2)
Major projects
Queensland
New South Wales
Western Australia
Other
Acquisitions
Euroa compression; Sunbury lateral looping project, Longford meter
station upgrade
Wallumbilla and Moomba compression; Roma Brisbane Pipeline expansion
Moomba Sydney Pipeline expansion
Mondarra Gas Storage Facility; Goldfields Gas Pipeline expansions;
Victorian metering and LNG; NT pipelines
Energy Infrastructure
HDF acquisition net of cash acquired; Emu Downs Wind Farm stamp duty
Energy Investments
Increased interest in Envestra
total growth capex
stay in business capex
total capex
(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.
(2) Capital expenditure prior to the sale of Allgas to GDI in December 2011.
DistriButiOns
Distributions paid to Securityholders during the year were:
APT profit distribution
APT capital distribution
APTIT profit distribution
APTIT capital distribution
total
Final Fy2012 DistriButiOn
paiD 14 septeMBer 2012
interiM Fy2013 DistriButiOn
paiD 13 MarCH 2013
Cents per security
Total distribution
$000
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
14.74
-
2.26
-
17.00
121,930
-
18,719
-
140,649
On 21 August 2013, the Directors declared a final distribution for APA for the year of 18.5 cents per security which is payable on 11 September 2013, and will
comprise the following components:
APT profit distribution
APT capital distribution
APTIT profit distribution
APTIT capital distribution
total
Final Fy2013 DistriButiOn
payaBle 11 septeMBer 2013
Cents per security
total distribution
$000
16.02
-
2.32
0.16
18.50
133,877
-
19,424
1,313
154,614
Total distribution for the financial year ended 30 June 2013 is 35.5 cents per security, an increase of 0.5 cents, or 1.4%, on the year ended 30 June 2012.
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 2013) will provide the classification of distribution components for the purposes of preparation of securityholder income tax returns.
7
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD signiFiCant CHanges in state OF aFFairs
In December 2012 APA completed the takeover of HDF, an ASX-listed investment vehicle whose assets included three natural gas transmission pipeline systems
– the South West Queensland Pipeline, MAPS and the Pilbara Pipeline System. In May 2013 APA completed the divestment of MAPS consistent with the undertaking
given to the Australian Competition and Consumer Commission (“ACCC”). Further information on the acquisition and divestment is found on page 11.
Business segMent perFOrManCes anD OperatiOnal reVieW
Statutory reported revenue and EBITDA performance of APA’s business segments is set out in the table below.
year enDeD 30 June
revenue (continuing business)
Energy Infrastructure
Queensland (1)
New South Wales
Victoria
South Australia
Western Australia (2)
Northern Territory
Energy Infrastructure total
Asset Management
Energy Investments
total segment revenue
Pass-through revenue
Unallocated revenue (interest income)
Divested business (3)
total revenue
eBitDa (continuing business)
Energy Infrastructure
Queensland (1)
New South Wales
Victoria
South Australia
Western Australia (2)
Northern Territory
Energy Infrastructure total
Asset Management
Energy Investments
total segment eBitDa
Divested business (3)
total eBitDa before significant items
Significant items (4)
total eBitDa
2013
$000
2012
$000
CHanges
$000
%
217,530
139,321
162,582
2,164
196,878
23,001
741,476
82,293
51,180
874,949
352,743
11,697
32,878
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
105,305
878
1,285
55
22,712
1,267
131,502
12,998
9,433
153,933
50,110
5,380
2,183
1,272,267
1,060,661
211,606
163,748
112,659
124,014
1,732
135,980
11,748
549,881
45,447
51,177
646,505
20,611
667,116
101,685
768,801
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
84,182
(439)
2,465
211
18,583
3,207
108,209
13,537
9,426
131,172
131,628
242,976
93.8
0.6
0.8
2.6
13.0
5.8
21.6
18.8
22.6
21.3
16.6
85.2
7.1
20.0
105.8
-0.4
2.0
13.9
15.8
37.5
24.5
42.4
22.6
25.5
24.6
46.2
(1) Includes the South West Queensland Pipeline revenue and EBITDA contributions from 9 October 2012 and excludes the Allgas business contribution in 2012.
(2) Includes the Pilbara Pipeline System revenue and EBITDA contributions from 9 October 2012.
(3) 2013: MAPS consolidation on 9 October 2012 to sale of the business on 1 May 2013. 2012: Allgas sold to GDI in December 2011.
(4) See page 5 for significant items.
8
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP / AnnuAl rePort 2013 APA’s operations and financial result in the period reflect steady growth across APA’s portfolio, and includes nine months of earnings of the South West Queensland
Pipeline and the Pilbara Pipeline System, and seven months earnings of MAPS which was sold 1 May 2013.
The table below provides additional information with respect to EBITDA performance of APA’s continuing business prior to HDF consolidation.
year enDeD 30 June
eBitDa
APA continuing business
HDF (retained business)
Continuing business eBitDa
Divested business (1)
Significant items - APA
Significant items - HDF
total eBitDa
2013
$000
2012
$000
CHanges
$000
551,943
94,562
646,505
20,611
144,036
(42,351)
768,801
515,333
-
515,333
20,155
(9,663)
-
525,825
36,610
94,562
131,172
456
153,699
(42,351)
242,976
%
7.1
-
25.5
-
-
-
46.2
(1) 2013: MAPS consolidation on 9 October 2012 to sale of the business on 1 May 2013. 2012: Allgas sold to GDI in December 2011.
EBITDA in APA’s continuing business, prior to the acquisition of HDF assets,
APA’s customer base, such as storage, gas-parking facilities and multi-
and excluding the divested business, increased by 7.1% to $551.9 million.
directional flows.
energy inFrastruCture
In May 2013, APA executed a gas transmission agreement across three pipelines
The Energy Infrastructure segment includes gas transmission and storage
to transport gas seamlessly from Moomba directly to Brisbane under a single
assets and the Emu Downs Wind Farm. Revenue from these assets is derived
contract. APA is currently trialling a number of similar trans-pipeline services
from either regulatory arrangements or capacity-based contracts. Regulatory
with its customers. APA is also in discussion with customers to move gas from
arrangements on major assets are reviewed every five years. Contracts have a
Victoria into New South Wales and further north.
weighted average length in excess of 10 years.
In August 2013, APA completed the software interface between the South West
The Energy Infrastructure segment (continuing business) contributed 83.6% of
Queensland Pipeline and the Roma Brisbane Pipeline, enabling the two
total normalised revenue (excluding pass through revenue) and 85.1% of total
pipelines to work as one system and facilitating both optimised operations
normalised EBITDA. Revenue (excluding pass-through revenue) was $741.5 an
control as well as a single customer interface.
increase of 21.6% on the $610.0 million reported last year. EBITDA increased by
24.5% to $549.9 million (2012: $441.7 million).
The following key factors contributed to this result:
– nine months’ contribution from the increased Roma Brisbane Pipeline
capacity;
– increase in volumes through the Victorian Transmission System in the first
six months due to cooler weather, offset by the reduced regulatory tariffs of
the new access arrangement applied to the second half of the year;
– increased operating margin on the Amadeus Pipeline; and
– nine months’ contribution from the South West Queensland Pipeline and
the Pilbara Pipeline System.
New South Wales revenue and EBITDA in 2013 was lower than last year
predominantly due to the expiry of a gas transportation agreement early in the
financial year, which partly offset the impact of tariff increases. This capacity
was recontracted mid-year.
Queensland
– Roma Brisbane Pipeline
APA commissioned the expansion of the pipeline in September 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.
– South West Queensland Pipeline
APA’s acquisition of HDF included the South West Queensland Pipeline.
The 937 km pipeline connects Wallumbilla (Roma) in Queensland with
Moomba in South Australia. The pipeline has long-term gas transportation
agreements for both western haul and eastern haul services.
APA has completed the integration of the pipeline’s commercial and field
operations into APA’s east coast transmission pipeline business. South West
APA continues to focus on the operation, development and enhancement of its
Queensland Pipeline revenue and EBITDA contributions for the current
gas transmission and distribution assets across mainland Australia.
period is from the date of consolidation of HDF (see page 11).
east coast gas grid
– Wallumbilla compression facilities
With the addition of the South West Queensland Pipeline as part of the
In December 2012 APA announced it will proceed with the development of
acquisition of HDF, APA now has a 7,000 km integrated pipeline grid on the
expanded compression capacity and associated services at Wallumbilla in
east coast of Australia, with the ability to transport gas seamlessly from
Queensland. The capital investment of up to $200 million over the next two
multiple gas production facilities to gas users across four states.
years is underpinned by a long-term agreement.
Customers using the grid now have flexibility in relation to receipt and delivery
The capital works will increase compression capacity at Wallumbilla and
points, with the potential to move between 30 receipt points and about 100
provide the option for further compression services in the future. Design
delivery points on the east coast. APA is developing the commercial and
and procurement activities have commenced, with the compression and
operational framework to deliver these and other related services to
associated services to be available at the start of 2015.
9
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD – Moomba compression facilities
increased by five times and provides APA’s customers with supply options
APA has continued the $125 million compression capacity expansion project
and flexibility to better manage their gas supply and demand portfolios.
on the Moomba end of the South West Queensland Pipeline. The project,
which commenced during HDF ownership of the asset, will support the west
to east gas transportation agreements on the South West Queensland
Pipeline, and is due to commence in the second half of the 2014 calendar year.
new south Wales
– Moomba Sydney Pipeline
APA is at the final stage of completing its five-year capacity expansion
program of the Moomba Sydney Pipeline for a total cost of $96 million.
Forecast contracted revenue for 2014 financial year is approximately
$30 million, increasing as more capacity is sold. Most of the Facility’s
capacity is contracted for at least 20 years, and APA continues to actively
market storage services for the remaining capacity to other potential users
of the Facility.
The overall cost of the expansion was higher than initial estimates, reflecting
increased labour costs in Western Australia experienced by industry, largely
due to the mining boom, during the peak construction period, together with
APA is actively marketing capacity in the medium term to replace contracts
changes in the design of the surface facility to deliver increased injection
expiring in 2016. Options include delivery of supplies from new fields,
rate capacity and increased overall reliability.
storage services and the potential for the delivery of southern sourced gas
to northern markets.
Victoria
– Victorian Transmission System
– Pilbara Pipeline System
APA’s acquisition of HDF included the Pilbara Pipeline System, four
connected pipelines in the Pilbara region. APA completed integration of the
system’s commercial and field operations into APA’s Western Australian
Total gas volume transported through the Victorian Transmission System
transmission pipeline business. The Pilbara Pipeline System revenue and
was 240.5 PJ, up 4.7% on last year (229.7 PJ) due to colder weather and
EBITDA contributions for the current period is from the date of consolidation
increased gas exports into New South Wales. Peak day volume of 1,212 TJ
of HDF (see page 11).
was up 5.3% on last year (1,151 TJ).
APA continued work on capital projects which provide both additional
northern territory
– Potential Katherine to Gove gas pipeline and expansion of the Amadeus
capacity and security of supply for the Victorian Transmission System. APA
Gas Pipeline
completed an upgrade of the Longford Meter Station through which the
APA has commenced discussions with the Northern Territory government
majority of Victoria’s gas is delivered. APA also commissioned a new
and Pacific Aluminium (PacAl), owner of the alumina refinery at Gove, on
compressor at Euroa, part of the northern augmentation project and the
the Gulf of Carpentaria, in relation to infrastructure required to supply gas
Sunbury lateral expansion with funding approved within the system’s
to Gove. The new supply of gas will require capital works on APA’s Amadeus
current (2008-2013) regulatory arrangements.
Gas Pipeline and Energy Infrastructure Investment’s Bonaparte Gas Pipeline.
In March 2013, the Australian Energy Regulator (“AER”) issued its final
decision which did not accept APA’s revised access arrangement proposal.
APA is also interested in developing and owning the Katherine to Gove
pipeline, if the project proceeds.
The AER published its own access arrangement for the Victorian Transmission
– Armour Energy Heads of Agreement
System. See ‘Regulatory matters’ on page 11 for further details.
In June 2013, APA and Armour Energy have entered into a non-binding
south australia
– Moomba Adelaide Pipeline System
APA’s acquisition of HDF included MAPS. On 1 May 2013, in accordance with
its undertaking to the ACCC as part of the acquisition of HDF, APA sold
MAPS to QIC Global Infrastructure for $400.6 million.
Western australia
– Goldfields Gas Pipeline
In December 2011 and January 2012, APA announced two new capacity
expansions on the pipeline totalling 44 TJ/day, an increase of 28% of the
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).
During the year, the $150 million compression expansion projects on the
Goldfields Pipeline progressed. Commissioning of APA’s works is expected
in the second and third quarters of the 2014 financial year.
APA is managing the construction project on behalf of the Goldfields Gas
Transmission Joint Venture through which APA owns 88.2% of the Goldfields
Gas Pipeline.
Heads of Agreement to work together to facilitate the potential
transportation of gas from Armour’s North Australian gas projects to
eastern Australia and Northern Territory gas markets. Infrastructure
development will possibly include new pipelines connecting to APA’s
Carpentaria Gas Pipeline and the expansion of existing APA assets.
asset ManageMent
APA provides asset management and operational services to the majority of its
energy investments and a number of third parties. Its main customers are
Envestra, Ethane Pipeline Income Fund, SEA Gas Pipeline, the Diamantina
Power Station joint venture, Energy Infrastructure Investments, GDI and EII2.
Asset management and operational services are provided to these customers
under long-term contracts.
Revenue (excluding pass-through revenue) from such services increased by
18.8% to $82.3 million (2012: $69.3 million) while EBITDA increased by 42.4% to
$45.5 million, (2012: $31.9 million). The increase is due to a number of factors,
including:
– customer contributions totalling $10.2 million (2012: $1.8 million);
– full year contribution of GDI asset management fees (six months in 2012);
and
– increased fees for operating Envestra’s assets due to increases in Envestra’s
– Mondarra Gas Storage Facility
revenues.
APA completed the expansion of its Mondarra Gas Storage Facility, with
commercial operations commencing 23 July 2013. Work commenced
following execution of a long-term foundation contract for storage capacity
with Verve Energy in May 2011. The Facility’s storage capacity has been
10
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP / AnnuAl rePort 2013 energy inVestMents
On 9 October 2012, APA declared its offer unconditional, at the time that APA’s
APA has an interest in a number of energy investments across Australia,
interest in HDF exceeded 50%. On 16 November 2012, APA announced that its
including Envestra, SEA Gas Pipeline, Energy Infrastructure Investments,
interest in HDF exceeded 90% and it would proceed to compulsorily acquire
Ethane Pipeline Income Fund, EII2 and GDI. HDF distributions contributed to
the remaining HDF securities. Compulsory acquisition of the remaining
Energy Investments until 9 October 2012, when APA’s interest exceeded 50%.
securities in HDF was completed on 24 December 2012.
Since that date, HDF’s assets form part of the Energy Infrastructure segment.
The takeover consideration, consisting of $0.775 cash and 0.39 APA securities
APA holds a number of roles in respect of the majority of these investments, in
for each HDF security which APA did not own, totalled $1,234 million (the value
addition to its ownership interest.
All investments are equity accounted, with the exception of APA’s interests in
Ethane Pipeline Income Fund and HDF (up to 9 October 2012).
EBITDA in this segment increased by 22.6% to $51.2 million, up from $41.8 million
last year, mainly due to an increase in Envestra’s profitability, as well as
increases across all APA’s investments, and partially offset by the reduced
distributions received from HDF (one quarter’s distributions in 2013 compared
with four quarter’s in the 2012 financial year).
APA participated in Envestra’s dividend reinvestment plan in October 2012 and
April 2013, with the total value of dividends reinvested of $31.6 million. APA
of the scrip component is based on the market price of APA at the time new
securities were issued). APA arranged for the repayment of all HDF debt
facilities totalling $1,325 million by 24 December 2012.
On 19 July 2012, the Australian Competition and Consumer Commission
announced that it would not oppose the proposed acquisition by APA of HDF
on the basis of an undertaking from APA to divest MAPS following APA
obtaining effective control of HDF. Australian Pipeline Limited, the responsible
entity of APA, became the responsible entity of HDF on 17 December 2012.
On 1 May 2013, APA completed the divestment of MAPS to QIC Global
Infrastructure for $400.6 million.
also participated in Envestra’s equity placement in April 2013, purchasing
Merger prOpOsal FOr enVestra
34.2 million Envestra shares for $33.9 million. At 30 June 2013 APA’s interest in
On 16 July 2013, APA proposed an all-share merger with Envestra. Under the
Envestra was 33.0%.
prOJeCt unDer DeVelOpMent – DiaMantina anD leiCHHarDt pOWer
statiOns
APA and AGL Energy are jointly developing the Diamantina and Leichardt
proposal, Envestra shareholders would receive 0.1678 new APA securities for
each Envestra share they owned, and would be entitled to any final Envestra
dividend for the 2013 financial year of up to 3.0 cents per share. As at 30 June
2013 APA held 33.0% of Envestra shares and is its largest shareholder.
power stations at Mount Isa, Queensland through a 50:50 owned joint venture.
The APA proposal was subject to a number of pre-conditions, including satisfactory
The Diamantina Power Station is a 242 MW combined cycle gas-fired power
completion of limited due diligence, finalising financing arrangements that
station; the adjacent Leichhardt Power Station is 60 MW open-cycle gas-fired
address Envestra’s resultant and ongoing debt requirements and the unanimous
power station which will provide back-up generation for Mount Isa. The power
recommendation of Envestra’s Board of Directors.
stations will be supplied with gas via APA’s Carpentaria Gas Pipeline.
On 5 August 2013, Envestra announced that its independent Board committee
The power stations are underpinned by 17-year energy supply agreements with
had decided to reject APA’s proposal.
Mount Isa Mines Limited, a wholly owned subsidiary of Xstrata, and Ergon
Energy, Queensland’s state-owned regional electricity supplier. Under the
arrangements, AGL has contracted transportation capacity in the Carpentaria
Gas Pipeline for an initial ten-year period.
tOtal seCurityHOlDer returns
During the year APA’s market capitalisation increased by 55.7% to $5.01 billion
at 30 June 2013. Distributions declared during the year amounted to $0.355 per
APA security. APA’s total securityholder returns for the year, which accounts for
On 20 December 2012, APA and AGL Energy completed limited-recourse
the capital appreciation of APA’s security price and assumes the reinvestment
project financing for the project. The total capital expenditure, including the
of distributions at the declared time, was 30.5%, placing APA in the top 39th
back-up generation, is expected to be approximately $570 million (before
percentile of one-year total shareholder returns for the year and top 10th
financing costs). APA’s equity contribution is expected to be about $100 million
percentile of three-year total shareholder returns for ASX 100 listed companies.
and will be funded from available cash and committed facilities, after
completion of construction.
The Diamantina and Leichhardt power stations are being constructed under
a turn-key contract with Forge Group Power Pty Limited and Leighton
Contractors Pty Limited respectively, and are expected to be operational in the
first half of calendar 2014.
regulatOry Matters
Key regulatory matters addressed during the current period included:
roma Brisbane pipeline access arrangement
On 12 October 2011, APA submitted a revised access arrangement proposal for
the Roma Brisbane Pipeline for the period September 2012 to June 2017 to the
AER. The AER issued its final decision on 10 August 2012 in which it determined
aCQuisitiOn OF Hastings DiVersiFieD utilities FunD anD sale OF
to approve and publish its own access arrangement for the pipeline.
MOOMBa aDelaiDe pipeline systeM
In December 2012 APA completed the takeover of HDF. HDF was an ASX
listed investment vehicle whose assets included Epic Energy’s three natural gas
transmission pipeline systems – the South West Queensland Pipeline, MAPS
and the Pilbara Pipeline System – and was managed by Hastings Funds
Management Limited.
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. At that time APA owned 20.7% of HDF securities.
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 decision.
Victorian transmission system access arrangement
In April 2012, APA submitted a revised access arrangement proposal for the
Victorian Transmission System for the period 2013 to 2017. The AER issued its
final decision in March 2013 which did not accept APA’s proposal. The AER
published its own access arrangement for the Victorian Transmission System.
11
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD The AER’s final decision includes a 21.5% nominal reduction in revenue in the
Key components of the strategy focus on improving APA’s understanding of
first year of the new access arrangement period compared to revenue for the
the hazards and risks in its business, identifying the controls needed to
final year of the previous access arrangement, followed by a further two
eliminate or mitigate these risks and validating this with a robust assurance
nominal reductions of 14% and 3% respectively in the second and third year of
framework. There are 17 specific focus areas to build on this risk, control, assure
the new access arrangement period. These reductions resulted from a number
foundation. For example, the strategy focuses on the leadership behaviours
of matters, including a lower capital base reflecting lower actual capital
needed to drive towards a zero safety culture and this is being supported by a
expenditure in the previous access arrangement period and a significantly
survey of employees on safety leadership. This survey interviewed, either one-
lower allowed rate of return.
APA has lodged an application to the Australian Competition Tribunal to appeal
four matters in the AER’s final decision, including the indexation of regulated
on-one or in focus groups, more than 500 employees. The results will provide
further focus for APA’s health and safety efforts and guide its leadership
development plans.
asset base and the AER’s allowed rate of return. A decision on these matters is
From July 2013, APA has also adopted a new suite of safety performance
expected later in 2013.
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, opposed the proposed
amendments and proposed an alternate approach incorporating a wide range
of relevant market information. The Australian Energy Market Commission, the
measures. These are a combination of current lag frequency measures, which
capture the number of injuries, and a range of new lead indicators, which
measure performance against the pro-active things we say we will do to
improve safety. One example of this would be the number of safety audits
completed compared to plan. These measures provide additional good data
against which to measure APA’s health and safety performance and to focus
attention on areas for further improvement.
rule making authority, undertook an extensive review of the proposed
APA encourages healthy living and for the fifth year sponsored employees are
amendments prior to making a final determination in November 2012. The
participating in the Global Corporate challenge. 46 teams (322 APA people)
Australian Energy Market Commission rejected the AER’s proposal and made
have commenced a 16 week walking challenge with the aim of increasing the
its own preferred
rule amendments, which
largely adopted APA’s
number of steps they take and improving overall physical fitness. Health
recommendations. In summary, the new Rules require the AER, and the
initiatives also include an annual flu vaccination programme and a confidential
Economic Regulation Authority (“ERA”) in Western Australia, to assess the rate
employee assistance programme which provides services to employees and
of return by having regard to the cost of capital in the marketplace, rather than
their immediate family.
mere application of the Capital Asset Pricing Model. The AER and ERA must
publish a cost of capital guideline every three years outlining how they propose
to assess the rate of return. This guideline is not binding and service providers
in their access arrangements proposals to the AER and ERA can argue for
departure from the guideline. The AER and ERA have commenced the
consultative process as an initial step in developing the first guideline, which is
required to be published by 29 November 2013.
sCer review of limited Merits review
In December 2012, the Standing Council on Energy and Resources (“SCER”)
advanced its scheduled review of the Limited Merits Review framework
applicable to regulated gas and electricity assets. It appointed a panel of
environmental regulations
All pipeline, distribution and gas processing assets owned and/or operated by
APA are designed, constructed, tested, operated and maintained in accordance
with pipeline and distribution licences issued by the relevant state and territory
technical regulators. All licences require compliance with relevant federal, state
and territory environmental legislation and Australian standards.
The pipeline licences also require compliance with the Australian Standard AS
2885 “Pipelines – Gas and Liquid Petroleum”, which has specific requirements
for the management of environmental matters associated with all aspects of
the high pressure pipeline industry.
experts to review the matter and conduct an extensive consultation process,
Environmental management plans satisfying Part A of the Australian Pipeline
and in June 2013, released its policy conclusion, retaining the existing grounds
Industry Association Code of Environmental Practice are prepared and
for merits review and the Australian Competition Tribunal as the review body,
independently audited for construction activities. In accordance with Part 3 of
and adding a new requirement for the applicant to demonstrate, and the
AS 2885, environmental management plans satisfying Part B of the Code are in
Tribunal to agree, that there is a prima facie case that a materially preferable
place for all operating pipelines and are managed in accordance with
decision could result from the review. As at June 2013, the amending legislation
APA’s contracts and the terms and conditions of the licences that APA has
to give effect to this policy amendment was in the consultation stage.
been issued.
HealtH, saFety anD enVirOnMent
The Safety and Operating Plan for APA’s distribution network has been audited
Health and safety reporting
The Lost Time Injury Frequency Rate (“LTIFR”)3 for APA employees was 2.1 for
the year, down from 2.2 last year. There were five reportable lost time injuries
during the year. For contractors there were four reportable lost time injuries,
down from seven reported in 2012.
APA continues to aim to be a zero harm workplace for its employees,
contractors and the broader communities in which it operates. In the reporting
year, APA’s Safety Management System (Safeguard) was implemented ahead
of plan. This system sets the minimum standards required to effectively
manage safety and the environment in APA, and has been complemented by
the development of a three-year Safety Improvement Strategy.
in accordance with New South Wales technical regulatory requirements.
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 its assets in accordance with
the environmental management plans that are in place.
environmental reporting
In October 2012, APA complied with Australia’s National Greenhouse and
Energy Reporting obligations for the 2012 financial year. Energy reporting for
financial year 2013 will be submitted in October 2013.
3 Lost Time Injury Frequency Rate is calculated as the work hours lost as a result of injury at work, multiplied by one million, divided by the total hours worked.
12
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP / AnnuAl rePort 2013 APA’s performance on two key measures for the 2012 financial year is set out in the following table:
FinanCial year
Scope 1 CO2 emissions (tonnes)
Energy consumption (GJ)
2012
2011
CHange
327,239
3,675,398
297,099
3,361,679
30,140
313,719
10.1%
9.3%
introduction of carbon legislation
Gas demand risk
A major element of the Clean Energy Act 2011, passed by the Senate on
Reduced demand for gas, increased use of gas swap contracts by customers,
8 November 2011, is the introduction of legislation to reduce carbon emissions.
and increased use of non-APA gas storage facilities may reduce the future
The legislation put a price on carbon emissions from 1 July 2012. It is intended
demand for pipeline capacity and transportation services and adversely impact
that this carbon price mechanism will act as an incentive for major emitters to
APA’s future revenue, profits and financial position.
switch to less carbon intensive ways of doing business, such as switching from
coal-fired generation to gas-fired and renewable generation.
Gas supply risk
A long-term shortage of competitively priced gas, either as a result of gas
APA’s main sources of emissions are from the combustion of natural gas in
reserve depletion, allocation of gas to other markets, or the unwillingness or
compressor stations and from fugitive emissions associated with natural gas
inability of gas production companies to produce gas, may materially adversely
pipelines. APA compiles National Greenhouse and Energy Reporting Scheme
affect APA’s revenue and the carrying value of APA’s assets.
compliance reporting for assets under its operational control which include the
following assets impacted by the new carbon legislation: Roma Brisbane
Pipeline, Moomba Sydney Pipeline, South-West Queensland Pipeline, Goldfields
Gas Pipeline (88.2% ownership), the Victorian Transmission System and Allgas
(20% equity ownership).
Counterparty risk
The failure of a counterparty to meet its contractual commitments to APA,
whether in whole or in part, would reduce future anticipated revenue unless
and until APA is able to secure an alternative customer. Counterparty risk also
arises when contracts are entered into for derivatives with financial institutions.
APA’s carbon costs exposure is immaterial. APA expects to recover all carbon
Exposures are regularly monitored in accordance with APA’s treasury risk
related costs from its regulated assets under the access arrangement review
management policy.
process. For unregulated 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.
risK OVerVieW
Interest rates and refinancing risks
APA is exposed to movements in interest rates where floating interest rate
funds are not effectively hedged. There is a risk that adverse interest
rate movements may affect APA’s earnings, both directly (through increased
interest payments) and
indirectly
(through
the
impact on asset
APA identifies risks to the business and puts in place mitigation actions to
carrying values).
remove or minimise the negative impact of these risks. Risks are reviewed
regularly by APA’s Executive Risk Management Committee and the Board Audit
and Risk Management Committee, together with the relevant business units
and internal experts. Further information on this process is provided in APA’s
Corporate Governance Statement (refer to Principle 7).
Risk assessment considers a combination of the probability of the risk occurring
and the severity of its impact if it occurs. Listed below are the key risks
identified that could materially affect APA. However, the materiality of risks
may change and previously unidentified risks may emerge. These risks should
be considered in connection with any forward looking statement by APA in this
document or elsewhere.
Key risks
Economic regulation
APA has a number of price regulated assets and investments in its portfolio.
Regulatory pricing periods generally run for five years and reflect the
regulator’s determination, amongst other matters, of APA’s projected operating
and capital costs, and weighted average cost of capital. The price regulation
outcomes determined by the AER or ERA (for Western Australia) under an
APA has borrowings extending through to 2022. Access to continuing financing
sources to extend and/or refinance debt facilities will be important. An inability
to secure new debt facilities at a similar quantum and cost to existing debt
facilities may materially and adversely affect APA’s operations and/or financial
position and performance.
Investment risk
APA may acquire infrastructure and related assets or undertake additional or
incremental investment in its existing assets. There is a risk that assumptions
and forecasts used in making investment decisions may ultimately not be
realised, and this may adversely affect APA’s financial position and performance.
Contract renewal risk
A large part of APA’s revenues are the subject of long-term negotiated revenue
contracts with end customers. Due to a range of factors including customer
demand risk, gas supply risk, counterparty risk, shorter term contracts, bypass
and competitive risk, APA may not be successful in recontracting the available
pipeline capacity when it comes due for contract renewal, and consequently
may adversely impact APA’s future revenue, profits and financial position.
access arrangement process for a full regulation asset may adversely affect
Operational risk
APA’s revenue in respect of that asset.
Bypass and competitive risk
Bypass and competitive risk occurs when a new transmission pipeline offers
gas transportation services to the same end market serviced by existing
pipelines. If a bypass risk eventuates, APA’s future earnings could be reduced if
customers purchase gas transportation services from new pipelines rather than
from APA’s existing pipelines.
APA is exposed to a number of operational risks such as equipment failures or
breakdowns, rupture of pipelines, information technology systems failures or
breakdowns, employee or equipment shortages, contractor default, unplanned
interruptions, damage by third parties and unforeseen accidents. Operational
disruption, or the cost of repairing or replacing damaged assets, could adversely
impact APA’s earnings. Insurance policies may only provide protection for
some, but not all, of the costs that may arise from unforeseen events.
13
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD Construction and development risk
guiDanCe FOr 2014 FinanCial year
APA develops new assets and undertakes expansion to its existing assets.
Based on available information, APA Group expects EBITDA for the full year to
This involves a number of typical construction risks including the failure to
30 June 2014 to be in a range of $715 million to $730 million, which represents
obtain necessary approvals, employee or equipment shortages, higher than
an increase of approximately 11% to 13% over the 2013 financial year EBITDA
budgeted construction costs and project delays, which may impact the
adjusted to remove the contribution of MAPS during the 2013 financial year.
commerciality and economics of the development or otherwise impact on
APA’s other assets. If these risks materialise, this may adversely affect APA’s
Net interest cost is expected to be in a range of $330 million to $340 million.
operations and/or financial position and performance.
Distribution per security for the 2014 year is expected to be at least equal to those
Disputes and litigation risks
In the course of its operations, APA may be involved in disputes and litigation.
There is a risk that material or costly disputes or litigation could affect APA’s
financial position and performance.
paid in respect of the 2013 financial year, that is, at least 35.5 cents per security.
sUBseQUeNt eVeNts
Except as disclosed elsewhere in this report, the Directors are unaware of any
matter or circumstance that has occurred since the end of the year that has
significantly affected or may significantly affect the operations of APA, the
results of those operations or the state of affairs of APA in future years.
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 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 CEO from 1990
Independent Chairman
to 2001.
Appointed 28 August 2007
Appointed Chairman
30 October 2007
Len is a Director of O’Connell Street Associates Pty Limited and Chairman of the Taronga Conservation Society Australia and
the Advisory Council for CIMB Securities International (Australia) Pty Limited.
Len’s past appointments have included lead non-executive Director of QBE Insurance Group Limited, 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 McCormack
Bsurv gradDipeng
MBa FaiCD
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
Chief Executive Officer and
Australia’s natural gas pipelines and gas distribution systems.
Managing Director
Appointed Managing Director
1 July 2006
steven Crane
BComm FaiCD sF Fin
Independent Director
Appointed 1 January 2011
Mick is a Director of Envestra Limited and formerly a Director of the Australian Pipeline Industry Association.
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 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 and Taronga Conservation Society Australia
and a member of the Advisory Council for CIMB Securities International (Australia) Pty Limited, and was formerly Chairman
of Adelaide Managed Funds Limited and Investa Property Group Limited, a Director of Adelaide Bank Limited, Foodland
Associated Limited and APA Ethane Limited, the responsible entity of Ethane Pipeline Income Fund, and a member of the
Advisory Council for RBS Group (Australia) Pty Limited.
Steven is a member of the Audit and Risk Management Committee and the Remuneration Committee.
14
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP / AnnuAl rePort 2013 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.
russell Higgins aO
Bec FaiCD
Independent Director
Appointed 7 December 2004
John was previously an AGL appointed Director of Australian Pipeline Limited from 2000 to 2005. He is a Director of Sydney
Water Corporation.
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, Argo Investments Limited, Leighton Holdings Limited, the St James
Ethics Foundation and Chairman of the CSIRO Energy Transformed Flagship Advisory Committee.
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, the Australian
Industry and Development Corporation, Ricegrowers Limited (trading as SunRice), as well as a former member of the
Australian Government’s Joint Economic Forecasting Group. In 2006-07, he was a member of the Prime Ministerial Task
Group on Emissions Trading.
Russell is Chairman of the Health Safety and Environment Committee and a member of the Audit and Risk
Management Committee.
patricia McKenzie
llB FaiCD
Independent Director
Patricia McKenzie has considerable expertise and experience in energy market regulation and, as a qualified solicitor,
extensive corporate legal experience. She is currently a Director of Macquarie Generation and was formerly a Director of
Australian Energy Market Operator Limited (AEMO), the national energy market operator for electricity and gas, and the
Appointed 1 January 2011
Chief Executive Officer of Gas Market Company Limited, the market administrator for retail competition in the gas industry
in New South Wales and the Australian Capital Territory. Patricia is also a Director of Healthdirect (National Health Call
Centre Network Limited).
Patricia is a member of the Health Safety and Environment Committee and the Remuneration Committee.
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 Company Secretaries and Administrators, and is
admitted to practice as a solicitor.
15
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
January 2001 to September 2013
Envestra Limited
Transfield Services Limited
Since July 2007
Since February 2008
John Fletcher
Russell Higgins AO
Patricia McKenzie
Robert Wright
Bank of Queensland Limited
Since December 2008
nib holdings limited
APA Ethane Limited (1)
-
Since September 2010
July 2008 to June 2011
-
Telstra Corporation Limited
Since September 2009
Argo Investments Limited
Since September 2011
Leighton Holdings Limited
Since June 2013
Ricegrowers Limited
-
SAI Global Limited
Super Retail Group Limited
APA Ethane Limited (1)
Dexion Limited
RCL Group Limited
December 2005 to August 2012
-
Since October 2003
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 managed 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
insuring the Directors and officers of the Responsible Entity and any APA Group
code “APA”.
No options over unissued APA securities were granted during or since the end
of the year, no unissued APA securities were under option as at the date of this
entity 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 the premium.
report, and no APA securities were issued during or since the end of the year as
Australian Pipeline Limited, in its capacity as Responsible Entity of Australian
a result of 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 any
APA Group entity 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 Group entities as the Board, in its 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 any APA Group entity against a liability incurred as such
an officer or auditor.
16
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP / AnnuAl rePort 2013 Directors’ MeetiNGs
During the year, 20 Board meetings, three Remuneration Committee meetings, four Audit and Risk Management Committee meetings and three Health Safety and
Environment Committee meetings were held. The following table sets out the number of meetings attended by each Director while they were a Director or a
committee member:
DireCtOrs
Leonard Bleasel AM (1)
Michael McCormack
Steven Crane
John Fletcher
Russell Higgins AO
Patricia McKenzie
Robert Wright
BOarD
reMuneratiOn COMMittee
auDit anD risK ManageMent
COMMittee
HealtH saFety anD
enVirOnMent COMMittee
a
20
20
20
20
20
20
20
B
20
20
20
20
19
19
20
a
-
-
3
3
-
3
-
B
-
-
3
3
-
3
-
a
-
-
4
4
4
-
4
B
-
-
4
4
4
-
4
a
-
-
-
-
3
3
3
B
-
-
-
-
3
3
2
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 is entitled to attend all committee meetings ex officio.
Directors’ secUritYHoLDiNGs
The aggregate number of APA securities held directly, indirectly or beneficially by Directors or their Director related entities at the 30 June 2013 is 979,426
(2012: 937,239).
The following table sets out Directors’ relevant interests in APA securities as at 30 June 2013:
DireCtOrs
Leonard Bleasel AM
Michael McCormack
Steven Crane
John Fletcher
Russell Higgins AO
Patricia McKenzie
Robert Wright
Fully paiD
seCurities
as at 1 July 2012
seCurities
aCQuireD
seCurities
DispOseD
Fully paiD
seCurities
as at 30 June 2013
443,093
195,264
100,000
63,298
86,160
12,500
36,924
937,239
17,571
13,326
-
2,890
5,880
-
2,520
42,187
-
-
-
-
-
-
-
-
460,664
208,590
100,000
66,188
92,040
12,500
39,444
979,426
The Directors hold no other rights or options over APA securities. There are no contracts to which a Director is a party or under which the Director is entitled to a
benefit and that confer a right to call for or deliver APA securities.
17
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueD reMUNerAtioN report
The remuneration report is attached to and forms part of this report.
AUDitor
auDitOr’s inDepenDenCe DeClaratiOn
A copy of the independence declaration of the auditor, Deloitte Touche
Tohmatsu (“Auditor”) as required under section 307C of the Corporations Act
2001 is included at page 99.
nOn-auDit serViCes
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
associates holds any APA securities.
Non-audit services have been provided during the year by the Auditor.
The number of APA securities issued during the year, and the number of
A description of those services and the amounts paid or payable to the Auditor
APA securities at the end of the year, are disclosed in Note 29 to the
for the services are set out in Note 44 to the financial statements .
financial statements.
The Board has considered those non-audit services provided by the Auditor
The value of APA’s assets as at the end of the year is disclosed in the balance
and, in accordance with written advice from the Audit and Risk Management
sheet in total assets, and the basis of valuation is included in Note 3 to the
Committee (“Committee”), is satisfied that the provision of those services by
financial statements.
the Auditor is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001 and did not compromise the
auditor independence requirements of the Act. The Board’s reasons for
concluding that the non-audit services provided did not compromise the
Auditor’s independence are:
– all non-audit services were subject to APA’s corporate governance
procedures with respect to such matters and have been reviewed by the
Committee to ensure they do not impact on the impartiality and objectivity
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.
of the Auditor;
On behalf of the Directors
– the non-audit services provided did not undermine the general principles
relating to auditor independence as they did not involve reviewing or
auditing the Auditor’s own work, acting in a management or decision
making capacity for APA, acting as an advocate for APA or jointly sharing
risks and rewards; and
– the Auditor has provided a letter to the Committee with respect to the
leonard Bleasel aM
Auditor’s independence and the Auditor’s independence declaration
Chairman
robert Wright
Director
referred to above.
SYDNEY, 21 August 2013
18
AustrAliAn PiPeline trust And its controlled entitiesDirectors’ report continueDAPA grouP / AnnuAl rePort 2013 AUST RA LIA N PIPE LINE TRUST AND I TS CO NT RO LLE D E NTITIES
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 2013 remuneration details for the Directors of the Responsible Entity and key management
personnel of APA.
The people in these positions during or since the end of the financial year are listed below:
DireCtOrs OF tHe respOnsiBle entity
leonard Bleasel aM
Michael McCormack
steven Crane
John Fletcher
russell Higgins aO
patricia McKenzie
Chairman APA Group
Chief Executive Officer and Managing Director
Chairman Remuneration Committee
Chairman Health Safety and Environment Committee
Muri Muhammad (retired 24 October 2012)
robert Wright
Chairman Audit and Risk Management Committee
Key ManageMent persOnnel
Michael McCormack
peter Fredricson
ross gersbach
robert Wheals
John Ferguson
Kevin lester (1)
stephen Ohl (2)
Mark Knapman
peter Wallace
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.
(2) Stephen Ohl retired with effect from 1 July 2013.
HaVe tHere Been any CHanges tO tHe exeCutiVe reMuneratiOn
struCture During Fy2013?
reMUNerAtioN coMMittee
WHat is tHe rOle OF tHe reMuneratiOn COMMittee?
As noted last year the Board has implemented changes from 1 July 2012 to the
The Remuneration Committee has been established by the Board to govern
Long Term Incentive (“LTI”) component of the Total Package Opportunity
and oversee Director and executive remuneration. The role of the Remuneration
Incentive Plan (“TPOI Plan”). These changes have been made to more directly
Committee is to:
align the interests of plan participants and Securityholders, and secondly to
allow the Board to reward superior performance.
– ensure the provision of a robust remuneration and reward system that
provides for the alignment of employee and securityholder interests;
The LTI plan has adopted two new hurdles in place of the previous hurdle,
– consider and make recommendations to the Board on remuneration policies
Operating Cash Flow Per Security (“OCFPS”). These hurdles, which will be
and packages applicable to Directors and to senior executives of APA;
weighted equally, will firstly be Total Shareholder Return (“TSR”) performance
– facilitate effective attraction, retention and development of talented
against the S&P ASX 100 comparator group and secondly, performance against
employees;
targets set for growth in Earnings Before Interest, Tax, Depreciation and
– ensure compliance with relevant legislation and corporate governance
Amortisation divided by Funds Employed (“EBITDA/FE”).
principles on remuneration practices and employment policies; and
Both the STI measure (OCFPS) and the two new LTI measures (EBITDA/FE and
TSR) have a new maximum opportunity of 150% based on achieving exceptional
or superior performance to the benefit of Securityholders.
Consistent with emerging good governance, the Board has also introduced an
executive remuneration claw back policy which provides, in the event of a
– promote diversity, on the basis of gender and other factors, in APA
Group’s workforce and to review the effectiveness of diversity practices
and initiatives.
The members of the Remuneration Committee, all of whom are non-executive
Directors, are:
material misstatement in the year end accounts for the preceding three years
– John Fletcher (Chairman);
(which may affect one or all key management personnel (“KMP”)) then the
– Steven Crane; and
Board at its discretion may clawback some or all of any STI or LTI award or LTI
– Patricia McKenzie.
grant not yet vested. The APA clawback policy and details appear on the
APA Group website.
There have been no other changes to the remuneration structure during FY2013.
Muri Muhammad retired as Director and member of the Remuneration
Committee on 24 October 2012.
19
The Chairman of the Board attends all meetings of the Remuneration
The Board determines base Board fees and committee fees annually. It acts on
Committee and the Managing Director attends by invitation. The Remuneration
advice from the Remuneration Committee which obtains external benchmark
Committee met three times during the year.
information from independent remuneration specialists. Such information
The Remuneration Committee may seek external professional advice on any
matter within its terms of reference.
Our apprOaCH tO nOn-exeCutiVe DireCtOr reMuneratiOn
We seek to attract and retain high calibre Directors who are equipped with
includes market comparisons paid by comparable companies in the ASX 200.
Non-executive Directors do not receive incentive payments of any type.
One off ‘per diems’ may be paid in exceptional circumstances. No payments
have been made under this arrangement in this reporting period.
diverse skills to oversee all functions of APA in an increasingly complex
In 2003, the Board terminated the non-executive Directors’ retirement benefit
environment.
We aim to fairly remunerate Directors for their services relative to similar
sized organisations.
Non-executive Director remuneration comprises:
– a base Board fee;
– an additional fee for serving on a committee of the Board; and
– superannuation contributions.
plan so that the benefits to participating Directors that had accrued up to that
termination date were then quantified and preserved for payment on retirement
of those Directors. Robert Wright is the only current Director entitled to
benefits under the plan on his retirement from the Board.
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 2013.
Base Board fees and committee fees are outlined below:
Effective 1 January 2013
Effective 1 January 2012 to
31 December 2012
(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
(1) Excludes superannuation guarantee levy.
CHairMan
$000/pa
MeMBer
$000/pa
330
31
37
31
298
26
34
24
120
15.5
18.5
15.5
110
13
17
12
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 2013
$
TOTAL PAID 2012
$
Leonard Bleasel AM
Steven Crane
John Fletcher
Russell Higgins AO
Patricia McKenzie
Muri Muhammad (2)
Robert Wright
Total
317,252
146,970
156,723
160,223
143,000
43,043
164,238
1,131,449
24,998
13,230
19,012
14,427
12,850
-
14,763
99,280
342,250
160,200
175,735
174,650
155,850
43,043
179,001
313,400
146,878
160,250
159,145
141,675
130,000
164,300
1,230,729
1,215,648
(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
FY2013 on page 24.
(2) Muri Muhammad resigned as a Director on 24 October 2012.
20
AustrAliAn PiPeline trust And its controlled entitiesremuneration report continuedAPA grouP / AnnuAl rePort 2013 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:
Chief Executive Officer and
Managing Director
Other key management
personnel4
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 guarantee 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 set of performance hurdles
paid in three equal annual instalments starting one
year after the year of allocation.
4 Other than the Company Secretary who has a mix of 58%, 21% and 21%.
21
AustrAliAn PiPeline trust And its controlled entitiesremuneration report continued
tOtal FixeD reMuneratiOn (“tFr”)
What is the purpose of the sti plan?
The total of base salary, including cash, superannuation guarantee levy, vehicles
The STI plan is designed to put a proportion of executive remuneration ’at risk’
and parking and incidental benefits.
against meeting key performance indicators (“KPIs”) linked to:
TFR is reviewed annually and is determined by reference to independent
– various financial measures such as cost control, revenue and cash generation
external remuneration benchmarking information, taking into account an
and capital expenditure management. This reflects APA’s strategic goal of
individual’s responsibilities, performance, qualifications and experience.
increasing OCFPS over the medium term, thereby increasing securityholder
‘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 hurdles. Each of these components is discussed
in more detail below.
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.
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,
project delivery and reinforcement of an ethical and values-based culture.
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
What is the key performance hurdle of the sti plan?
direct reports.
The key performance hurdle for the STI component of the ‘at risk’ remuneration
is OCFPS performance against set targets. 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
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.
aligned. If the security price rises over the period of allocation, both parties
What is the value of the sti opportunity?
benefit and likewise if it falls, both are similarly affected.
The STI amount payable is capped at the STI Maximum Possible amount.
At the start of the year, the Board, having regard to the strategy and annual
budget, established the OCFPS gateway that needs to be achieved before any
STI is triggered.
The Chief Executive Officer’s STI is capped at 150% of 30% of TRO and for his
direct reports at 150% of 25% of TRO5.
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 FY2013, 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
John Ferguson
Kevin Lester (1)
Stephen Ohl (2)
Mark Knapman
Peter Wallace
1,132,313
477,375
505,080
239,663
267,143
180,216
312,375
215,482
237,263
84.4
95.0
91.5
77.0
93.0
84.5
85.0
91.0
85.5
209,250
25,125
46,920
71,588
20,108
33,057
55,125
21,311
40,238
15.6
5.0
8.5
23.0
7.0
15.5
15.0
9.0
14.5
(1) Kevin Lester joined APA as Group Executive Infrastructure Development on 6 August 2012. STI has been prorated.
(2) Stephen Ohl retired with effect from 1 July 2013.
5 Other than for the Company Secretary whose STI is capped at 150% of 21% of TRO.
22
AustrAliAn PiPeline trust And its controlled entitiesremuneration report continuedAPA grouP / AnnuAl rePort 2013 lOng-terM inCentiVe (“lti”)
What form does the lti take?
A cash-settled incentive based on the APA Group security price which links
Eligible participants are entitled to an LTI allocation in the form of reference
executive reward to securityholder value based on the achievement of key
units which exactly mirror the value of APA securities. The reference units
financial and comparator group measures.
allocated under the LTI plan are not actual APA securities, but notional
What are the key performance hurdles of the lti plan?
securities with a value equivalent to the LTI allocation.
From 1 July 2012, the LTI component of ‘at risk’ remuneration is subject to two
Each reference unit is valued at the equivalent of the 30 trading day volume
equally weighted performance hurdles. The first hurdle is Total Securityholder
weighted average market price (“VWAP”) of an APA security immediately prior
Return (“TSR”) (being growth in security price plus distributions) performance
to the opening of the APA security trading window, following the announcement
against the S&P ASX 100 comparator group and the second hurdle is
of APA’s annual financial results to the ASX.
performance against target Earnings Before Interest, Tax, Depreciation and
Amortisation divided by Funds Employed (“EBITDA/FE”).
What is the value of the lti opportunity?
LTI participants are advised of their maximum LTI opportunity, expressed as a
These LTI measures of TSR and EBITDA/FE are appropriate longer term award
percentage of their TRO. The actual individual LTI allocation is determined at
hurdles based on the experience of APA Securityholders compared to the
the completion of the financial year and is based on TSR performance against
general shareholder market and the integrity of earnings performance against
the S&P ASX 100 comparator group and growth in EBITDA/FE performance.
the funds employed.
The maximum LTI allocation is capped at 150% of the participant’s maximum
The TSR hurdle is linked to APA’s ranking relative to the S&P ASX 100. Rewards
LTI opportunity.
do not commence until APA achieves a relative position of at least the median
of the S&P ASX 100 group of companies (P50). On achieving P50 the executive
awards increase as the APA performance increases relative to the S&P ASX 100.
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
The EBITDA/FE hurdle has been set to reflect improvement on the previous
financial year, one-third at the end of the second financial year, and one-third
year. Awards do not commence until this improvement has been achieved. On
at the end of the third financial year.
achieving this improvement the executive awards increase as the EBITDA/FE
performance increases.
What is the purpose of the lti?
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 LTI plan is designed to put a proportion of executive remuneration at risk
the vested benefit.
against meeting longer term financial targets linked to TSR and EBITDA/FE.
Upon vesting, the LTI is delivered in cash. The cash payment is equal to the
This directly aligns the interests of plan participants and Securityholders and
number of reference units vesting on the vesting date multiplied by the 30
allows the Board to reward superior performance.
trading day VWAP of APA securities immediately prior to the opening of the
APA security trading window, following the announcement of APA’s annual
financial results to the ASX. APA provides fully in its accounts for the obligations
of the LTI in the year in which the LTI allocation is made.
For FY2013, the actual LTI performance achieved was 83.14% for TSR against S&P ASX 100 and 150% for EBITDA/FE growth. LTI allocations are shown in the table
below for all key management personnel:
Key ManageMent persOnnel
Michael McCormack
Peter Fredricson
Ross Gersbach
Robert Wheals
John Ferguson
Kevin Lester (1)
Stephen Ohl (2)
Mark Knapman
Peter Wallace
lti earneD ($)
lti FOrFeiteD ($)
1,066,616
390,510
428,978
241,883
223,232
183,353
285,597
184,020
215,655
274,947
111,990
123,022
69,367
64,018
52,582
81,903
52,773
61,845
(1) Kevin Lester joined APA as Group Executive Infrastructure Development on 6 August 2012. LTI has been prorated.
(2) Stephen Ohl retired with effect from 1 July 2013.
What rights are attached to an lti reference unit?
The LTI is a cash-settled plan and participants are not allocated APA securities. LTI allocations do not entitle participants to vote at Securityholders meetings or to
be paid distributions.
No options or other equity instruments are issued to APA employees or Directors under the LTI plan.
23
AustrAliAn PiPeline trust And its controlled entitiesremuneration report continued 6
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24
AustrAliAn PiPeline trust And its controlled entitiesremuneration report continuedAPA grouP / AnnuAl rePort 2013
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25
AustrAliAn PiPeline trust And its controlled entitiesremuneration report continued
reMUNerAtioN DUriNG FY2013
aCtual reMuneratiOn
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.
The table below sets out actual cash payments made to the relevant key management personnel during FY2013. This table differs from the information provided
below which reflects the total remuneration earned by key management personnel in a year some of which will only be paid in later years.
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.
The table below does not show LTI allocations in FY2013 or previous years that are still subject to performance or employment conditions because those LTI
allocations are still at-risk of forfeiture.
The actual STI payments represent the amounts earned by the key management personnel in the prior financial year (2011) but only paid in August 2012 (as they
are dependent on the approval by the Board of the annual audited accounts).
The following table outlines the actual remuneration received by key management personnel during FY2013:
Key ManageMent persOnnel
Michael McCormack
Peter Fredricson
Ross Gersbach
Robert Wheals
John Ferguson
Kevin Lester (3)
Stephen Ohl (4)
Mark Knapman
Peter Wallace
total
tOtal FixeD
reMuneratiOn
$
1,192,500
670,000
736,000
415,000
383,000
320,833
490,000
436,000
370,148
5,013,481
sti
$
700,350
292,395
321,563
117,369
127,286
-
182,125
132,922
147,345
lti
$
1,054,951
265,776
495,336
161,690
173,287
-
354,894
226,978
17,393
OtHer
-
202,000 (1)
228,667 (1)
60,000 (1)
130,000 (2)
-
-
-
-
tOtal paiD
2013
$
2,947,801
1,430,171
1,781,566
754,059
813,573
320,833
1,027,020
795,900
534,886
tOtal paiD
2012
$
2,391,517
983,855
1,323,207
537,387
533,244
-
919,709
677,383
339,228
2,021,355
2,750,305
620,667
10,405,808
7,705,530
(1) First instalment of a Loyalty Payment. Refer to “Executive contracts” section for more information.
(2) First Instalment of $60,000 as a Loyalty Payment plus $70,000 as an ex-gratia payment for acting in the position of Group Executive Operations. Refer to “Executive contracts”
section for more information.
(3) Kevin Lester joined APA as Group Executive Infrastructure Development on 6 August 2012. A Sign-On/Enticement payment of $100,000 was not paid in FY2013. The payment will be
made in future years and is disclosed in the financial report.
(4) Stephen Ohl retired with effect from 1 July 2013. The termination payment of $353,716 (representing the termination benefit of $245,000 plus statutory entitlements) was not paid in
FY2013. The payment will be made in future years and is disclosed in the financial report.
26
AustrAliAn PiPeline trust And its controlled entitiesremuneration report continuedAPA grouP / AnnuAl rePort 2013 tOtal reMuneratiOn earneD
The following table outlines the total remuneration earned by key management personnel during FY2013, calculated in accordance with accounting standards:
sHOrt-terM eMplOyMent BeneFits
pOst-eMplOyMent
SALARY/FEES
$
SHORT-TERM
INCENTIVE SCHEME
$
NON-MONETARY
$
SUPERANNUATION
$
lOng-terM
inCentiVe plans
SHARE-BASED
PAYMENTS (1)
$
OTHER
PAYMENTS (2)
$
TOTAL
$
Key ManageMent persOnnel
M J McCormack
2013
2012
P J Fredricson
2013
2012
R M Gersbach
2013
2012
R A Wheals
2013
2012
J L Ferguson
2013
2012
K Lester (3)
2013
2012
S P Ohl (4)
2013
2012
M T Knapman
2013
2012
P J Wallace
2013
2012
1,167,500
965,000
653,530
590,225
707,608
658,303
390,000
329,000
358,130
295,422
1,132,313
700,350
477,375
292,395
505,080
321,563
239,663
117,369
267,143
119,747
299,905
180,216
-
-
465,530
415,377
411,000
366,000
345,149
272,243
312,375
182,125
215,482
132,922
237,263
147,345
-
-
-
-
11,922
11,922
-
-
-
-
-
-
-
4,848
-
-
-
-
25,000
50,000
16,470
15,775
16,470
15,775
25,000
25,000
24,870
50,578
20,928
-
24,470
49,775
25,000
50,000
24,999
41,257
1,165,290
1,021,548
462,536
290,755
522,376
475,330
193,639
119,753
185,791
117,801
-
-
3,490,103
2,736,898
202,000
-
228,667
-
60,000
-
130,000
-
1,811,911
1,189,150
1,992,123
1,482,893
908,302
591,122
965,934
583,548
45,835
100,000
646,884
-
-
-
362,815
337,336
234,415
215,843
129,441
60,110
245,000
-
-
-
-
-
1,410,190
989,461
885,897
764,765
736,852
520,955
tOtal reMuneratiOn
2013
2012
4,798,352
3,566,910
3,891,570
2,013,816
11,922
16,770
203,207
298,160
3,302,138
2,638,476
965,667
12,848,196
-
8,858,792
(1) Cash settled share-based payments.
(2) Other payments include the first instalment of Loyalty Payment. Refer to “Executive contracts” section for more information.
(3) Kevin Lester joined APA as Group Executive Infrastructure Development on 6 August 2012.
(4) Stephen Ohl retired with effect from 1 July 2013. A termination payment of $353,716 (representing the termination benefit of $245,000 plus statutory entitlements) was not paid in
FY2013. The payment will be made in future years and is disclosed in the financial report.
27
AustrAliAn PiPeline trust And its controlled entitiesremuneration report continued
LiNk BetWeeN reMUNerAtioN AND ApA’s perForMANce
The Board’s key principle in establishing the remuneration structure of key management personnel is that remuneration should be linked to performance.
The following table provides financial information for the last five years reflecting the link between performance and remuneration:
year enDeD 30 June
EBITDA before significant items ($m)
Profit before significant items ($m)
Profit after significant items ($m)
Earnings per security - normalised (cents)
Earnings per security - reported (cents)
OCFPS (cents)
Distribution per security (cents)
Closing security price at 30 June ($)
2013
667.1
178.7
298.8
23.1
38.7
56.0
35.5
5.99
2012
535.5
140.3
130.7
21.9
20.4
52.5
35.0
4.99
2011
489.6
108.9
108.5
19.7
19.7
52.6
34.4
4.07
2010
460.0
100.4
100.4
19.4
19.4
51.9
32.8
3.60
2009
444.4
99.7
78.8
22.7
16.2
48.2
31.0
2.75
eXecUtiVe coNtrActs
The terms of the contractual arrangements for each of the key management personnel are set out below:
naMe anD title anD COMMenCeMent Date
terM anD terMinatiOn prOVisiOns/BeneFits
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 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 TRO, any incentives earned but not paid and all leave
entitlements. 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 for three years and became
entitled to the payment of the first instalment in 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 for three years
and became entitled to the first instalment in April 2013.
No defined term.
On termination with cause or following long-term illness or incapacity, APA will pay any TFR due and owing at the
date of termination and any accrued leave entitlements.
On termination without cause, APA will pay 26 weeks TFR, any incentives earned but not paid on their due date
and any accrued leave entitlement. APA will also pay any TRO due and owing at the date of termination.
Mr Knapman is required to give APA three months’ notice.
Mark Knapman
Company Secretary
Commenced 16 July 2008
28
AustrAliAn PiPeline trust And its controlled entitiesremuneration report continuedAPA grouP / AnnuAl rePort 2013 naMe anD title anD COMMenCeMent Date
terM anD terMinatiOn prOVisiOns/BeneFits
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 was placed on a
loyalty and performance bonus for two years and became entitled to the first instalment in April 2013.
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 was placed on a loyalty
and performance bonus for two years and became entitled to the first instalment in 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.
peter Wallace
No defined term.
Mr Lester is required to give APA six 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.
stephen Ohl
No defined term.
Mr Wallace is required to give APA six months’ notice.
Group Executive Strategic Projects
Commenced 2 May 2005
Retired 1 July 2013
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.
Mr Ohl was required to give APA six months’ notice.
reMUNerAtioN ADVisers
During FY2013, the following remuneration information was obtained:
– Egan & Associates were appointed by the Chairman of the Remuneration Committee to provide remuneration benchmarking information for all Directors;
– Ernst & Young were appointed by the Chairman of the Remuneration Committee to provide benchmarking information for the Chief Executive Officer and
Managing Director and key management personnel; and
– CIMB Capital Markets (Australia) Limited were appointed by the Chairman of the Remuneration Committee for TSR information.
All these advisers were engaged directly on instruction from, and reported directly to, the Remuneration Committee and were independent and free from influence
by key management personnel.
29
AustrAliAn PiPeline trust And its controlled entitiesremuneration report continued 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
– the roles and responsibilities of the Board and each of its committees;
those trusts and is responsible for APA’s corporate governance practices.
– expectations of the time commitment to be made by Directors in serving on
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
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.
which they have followed the recommendations in the reporting period and,
Management: service contracts, induction and performance evaluations
where companies have not followed all the recommendations, they must identify
The Managing Director, Chief Financial Officer and other senior management
which ones they have not followed and give reasons for not following them.
have service contracts setting out their responsibilities, conditions of service
Each of the principles of good corporate governance has been responded to in
and termination entitlements.
turn in this statement and the table at the rear of this statement provides a
Newly appointed senior executives complete an induction program on the
checklist of APA’s adoption of the ASX Corporate Governance Council’s
management of the business covering topics that include financial matters,
recommendations. Explanations for departures from the recommendations are
strategic direction, operations, risk management, health and safety,
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
environmental issues and governance matters. APA also conducts annual
processes relating to talent and succession management, and the development
of leadership capabilities.
APA’s website is www.apa.com.au, and the link entitled “About APA” leads to
APA has processes in place to review the performance of senior management.
the corporate governance material. Securityholders who do not have internet
Each senior executive, including the Managing Director, has personal objectives
access but wish to read that material should telephone 1800 992 312 (or +61
as well as objectives related to the performance of business or functional units
1800 992 312, if calling from outside Australia) and ask for a copy of the
and APA as a whole. They are reviewed against those objectives at least
relevant material to be sent to them.
annually. A performance review of senior management has been conducted
In this statement the term “Reporting Period” means the period of 12 months
to 30 June 2013.
prinCiple 1: lay sOliD FOunDatiOns FOr ManageMent anD
OVersigHt
Board and its committees
The Board of Directors of the Responsible Entity (“Board”) is accountable to
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.
Securityholders for the proper management of APA’s business and affairs. It
prinCiple 2: struCture tHe BOarD tO aDD Value
operates in accordance with a charter, which is published on APA’s web site.
Board membership
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
the Reporting Period.
To assist the Board in carrying out its responsibilities, the following standing
committees of its members have been established:
– Audit and Risk Management Committee;
– Remuneration Committee; and
– Health Safety and Environment Committee.
Each committee has its own charter that describes the roles and responsibilities
delegated to the committee by the Board, and those charters are published on
APA’s web site. The charters for the Board and its committees are reviewed by
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
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
Officer.
the Board annually, and were last reviewed in July 2013.
The Responsible Entity’s constitution requires one-third of its Directors
The Board delegates responsibility for implementing the strategic direction
and managing the day-to-day operations of APA to the Managing Director. The
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.
(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.
30
APA grouP / AnnuAl rePort 2013 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 2012 and the review for the Reporting Period will be completed in
respect to nominees for the position of Director on the Board.
October 2013.
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
general meeting they must send the Responsible Entity a signed nomination
and 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
been validly nominated and presents its nominations to the annual meeting of
professional 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 web site).
The Directors’ report for the Reporting Period identifies which Directors are
considered to be independent at the date of the report. A majority of the
current Directors are independent.
selection and appointment of Directors
The former Nominations and Remuneration Committee of the Board became
the Remuneration Committee in early 2008 so that the functions with
respect to selection and appointment of new Directors and related matters
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.
previously handled by that committee then reverted to the Board. Ultimate
Directors and senior management are encouraged to broaden their knowledge
responsibility for such matters rests with the full Board and the Board considers
of APA’s business and to keep abreast of developments in business more
the efficient handling of those matters is not diminished by the absence of a
generally by attending relevant courses, seminars and conferences. Where
Nominations 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”:
31
corporate governance statement continued – in the period starting 1 January and ending on the second business day after
the release of APA’s half yearly results to the ASX, or
Retention – focus on retaining talent in APA
– Continue to offer flexible work arrangements through part time hours, job
– in the period starting 1 July and ending on the second business day after the
sharing, flexible start and finish times and purchase of additional annual
release of APA’s annual results to the ASX,
leave. Over 90% of all flexible work arrangement requests have been
unless exceptional circumstances apply, and they may only buy or sell APA
securities outside those closed periods if they obtain clearance to do so in
accordance with the process described in the policy. Directors and employees
approved during the Reporting Period. This includes a job share arrangement
approved for two senior women in leadership roles. APA will continue to
support such requests, where possible and appropriate.
are precluded from buying or selling securities at any time if they are aware of
During the Reporting Period, 27 women either commenced or returned
any price-sensitive information which has not been made public.
from maternity leave. Six worked part time prior to taking maternity leave
Diversity
APA values diversity and recognises that to continue to be a relevant and
innovative organisation, it must leverage the full potential of its people.
and returned to part time work; six returned to full time work; two returned
with flexible work arrangements; and two returned on flexible work
arrangements and progressively returned to full time work.
Embracing individual diversity encourages diversity of thought, which is
– Maintain breastfeeding accreditation
in relevant APA offices. APA’s
conducive to better decision making and opportunity for innovation. It is also
application
for re-accreditation as a breastfeeding
friendly work
about taking advantage of all available talent for the benefit of the organisation.
environment was approved in March 2013.
APA also recognises that creating sustainable shareholder wealth depends on
its ability to attract and retain an engaged, highly skilled and motivated
workforce. Therefore, diversity makes good business sense.
Opportunities – provide both career and development opportunities
for women
– Implement an APA Women in Leadership seminar at least annually. APA held
APA’s diversity policy is available on its website.
the first Women in Leadership seminar in November 2012. A second seminar
Diversity objectives (2013)
While the APA workforce gender profile is consistent with organisations within
APA’s industry and similar male dominated sectors, APA is committed to
increasing the participation of women in the workforce in order to broaden the
talent pool from which leaders can be drawn and strengthen the diversity of APA.
will be held in 2013.
– Maintain or
improve women’s participation rates
in
leadership and
management development programmes. Women’s participation
in
leadership and management development remains high. 27% of the
participants were women, compared to 19% for the previous year.
– All nominees in the talent pool, both male and female, to have a completed
In 2012 APA’s key objectives for diversity and inclusion were to focus on
development plan. At the time of reporting, a 77% completion rate has
attracting and retaining a diversity of talented employees and providing
been achieved.
opportunities for women. Outlined below is a status update for each objective
and progress towards implementation of relevant initiatives (the sections in
The following initiatives were also implemented during the Reporting Period:
italics being the objectives and initiatives stated in the 2012 corporate
– a Diversity and Inclusion Committee was established to identify, review and
governance statement).
Attraction – focus on attracting new talent into APA
A review of APA’s current recruitment process and procedures has been
commenced, an objective of the review being to attract a more diverse
candidate pool into the organisation.
develop ways of improving diversity and inclusion at APA. Committee
members will sponsor and champion diversity initiatives within the business;
– a pay equity review was completed and, where appropriate, anomalies were
rectified. A further equity review will be completed as part of the annual
salary review process in 2013; and
– a Transition to Retirement Workshop was designed and rolled out to
The following developments are part of the review:
support employees who are preparing for retirement. APA has an ageing
– Wherever possible, include at least one woman on the shortlist of applicants
for all management roles. Generally, senior roles have been recruited using
workforce with over 23% of employees over the age of 55, and APA intends
to continue to support those transitioning to retirement.
employment agencies and APA has been working with the agencies to
In 2014, as well as embedding the above initiatives across the organisation,
ensure that women are included in long and short lists of applicants. In
APA will focus its diversity and inclusion efforts on:
some cases, where women have not been identified initially, a more detailed
search has been undertaken. During the past 12 months, five women have
been employed in leadership roles6 in APA.
– Include at least one woman in the selection panel for all leadership roles.
Since July 2012 it has been standard practice to have at least one woman
included on the selection panel for all leadership roles in APA.
– Expand recruitment training materials to include diversity awareness and the
value of a diverse workforce. No formal internal recruitment training has taken
place since the last reporting period. A component of the recruitment project
is to refresh the training module to include diversity and inclusion awareness.
Training materials will be updated prior to a course being scheduled.
– raising awareness of the benefits of diversity and inclusion within APA
through an education program. An awareness session will be included in the
next Annual Leadership Conference in October 2013 that will be attended
by 110 conference delegates;
– implementing a graduate programme with a target of at least 50% female
participants by March 2014;
– designing an employee value proposition, with an element on attracting
women to APA into non-traditional roles, by December 2013; and
– developing the APA brand with a focus on raising APA’s profile for attracting
women through social media such as LinkedIn, e-recruitment tools, network
groups and sponsorships. These programs will be fully operational by
June 2014.
In 2014 APA will report on progress in achieving these objectives and, where
appropriate, will implement additional initiatives to support gender diversity
and inclusion in APA.
6 Leadership roles are defined as being those in the top three levels of management.
32
corporate governance statement continuedAPA grouP / AnnuAl rePort 2013 apa workforce gender profile (2013)
for the APA audit in December 2009, so it is expected he will be replaced after
The following table sets out APA’s current workforce gender profile:
finalisation of the audit of APA’s June 2014 financial statements.
Percentage of workforce who are women
Percentage of Directors who are women
Percentage of leadership roles7 filled by women
Percentage of technical roles filled by women
27%
17%
15%
3%
Diversity aspirations
The external auditor’s independence could be impaired or compromised, or be
interpreted as being impaired or compromised, through the provision of some
non-audit services or by the quantum of fees paid to the auditor for such
services. Accordingly, the Audit and Risk Management Committee has
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 non-audit services provided
In addition to the above objectives and consistent with its policy on diversity,
by the auditor in any financial year. The Directors’ report for the Reporting
APA will continue to explore its workforce and identify opportunities for
Period contains a section on non-audit services provided by the auditor that
improvement with regard to age profile, workforce demographics, equity of
includes an explanation of the basis on which the Board remains satisfied as to
pay and benefits and broader community demographics. These will be
the auditor’s independence.
analysed and, where specific initiatives are undertaken, reported in subsequent
reporting periods.
reimbursement of responsible entity’s costs
The Responsible Entity’s costs incurred in acting as responsible entity of
prinCiple 4: saFeguarD integrity in FinanCial repOrting
Australian Pipeline Trust and APT Investment Trust are reimbursed by APA.
audit and risk Management Committee
The actual cost recovery in the Reporting Period was $2,728,000. The
The Board has established an Audit and Risk Management Committee, the
Responsible Entity does not make a profit, nor seek performance fees.
composition of which is determined in accordance with the following principles:
The constitutions of Australian Pipeline Trust and APT Investment Trust enable
– the committee will have at least three members;
the Responsible Entity to charge fees up to 0.5% per annum of the value of
– all members of the committee will be independent, non-executive Directors;
gross assets; however, the right to charge such fees has been waived to the
and
extent it exceeds the Responsible Entity’s costs.
– the committee Chairman cannot also be the Chairman of the Board.
prinCiple 5: MaKe tiMely anD BalanCeD DisClOsure
The Directors’ report for the Reporting Period identifies the current members
APA’s market disclosure policy, published on APA’s web site, aims to ensure
of the committee and their qualifications and experience. The Chairman of the
that information that a person could reasonably expect to have a material
Board, although not a member of the committee, usually attends committee
effect on the APA security price, whether the information is positive or
meetings.
The roles and responsibilities delegated to the committee are set out in the
negative, is announced to the market by release to ASX in accordance with the
ASX Listing Rules and the Corporations Act 2001.
committee’s charter which is published on APA’s web site.
The Company Secretary is the nominated continuous disclosure officer.
The Managing Director, Chief Financial Officer, Company Secretary, Head of
All ASX announcements are posted on APA’s web site as soon as reasonably
Risk and Insurance, other senior management personnel, as required, and the
possible after notification to ASX.
external and internal auditors attend committee meetings at the discretion of
the committee. The external and internal auditors receive all committee papers
and regularly meet with the committee, without management present, at
committee meetings.
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
The minutes of each meeting of the Audit and Risk Management Committee are
is communicated to Securityholders by a number of means, including
reviewed at the subsequent meeting of the Board and the committee Chairman
the following:
reports to the Board on the committee’s activities and recommendations.
– an annual statutory report (comprising the financial report, Directors’ report
The committee is required by its charter to meet at least four times each year.
and audit report) sent to Securityholders who have elected to receive
The number of times it met during the Reporting Period and the committee
the report;
members’ attendance at those meetings are set out in the Directors’ report for
– an annual review sent to Securityholders who elect to receive either the
the Reporting Period.
statutory report or the annual review alone;
audit functions and independence of external auditor
Apart from reviewing the integrity of APA’s financial reporting, the committee
receives reports from the external and internal auditors, monitors their
effectiveness and the independence of the external auditor, and makes
recommendations to the Board on the appointment or replacement (subject to
Securityholders’ approval, if applicable) of the external auditor.
– a biannual newsletter sent to Securityholders who have not elected to
receive the annual report, and to all Securityholders on the announcement
of the half year results;
– the interim (half yearly) report and Directors’ commentary on that report;
– announcements to ASX and media releases;
– “Open Briefings” prepared from time to time to provide an update to
investors, and released to ASX;
The external auditor appointment and independence policy (published on
– investor presentations released to ASX;
APA’s web site) documents the process for appointment of the auditor and for
– the Investor Centre section of APA’s web site on which the reports, ASX
monitoring the auditor’s independence. Pursuant to that policy, the lead partner
and media releases, presentations and other documents referred to above
and the review or concurring partner of the external auditor must be rotated at
are posted;
least every five years, followed by a two year minimum time-out period during
– the annual meeting of Securityholders; and
which they may not take part in the audit. APA’s auditor is Deloitte Touche
– webcasting of half year and full year results presentations, the annual
Tohmatsu and Greg Couttas of that firm was appointed the lead audit partner
meeting and announcements of major events.
7 Leadership roles are defined as being those in the top three levels of management.
33
corporate governance statement continued Securityholders and others may elect on APA’s web site to receive ASX and
– identifying material risks that may impact on APA’s business plans and
media announcements and newsletters by email.
objectives and the development, implementation, performance and review
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
listen to a web cast of the meeting available through the web site.
At the annual meeting the Chairman encourages questions and comments
from Securityholders and seeks to ensure the meeting is managed to give
Securityholders an opportunity to participate. In the interests of clarity,
questions on operational matters may be answered by the Managing Director
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;
– confirming the effectiveness of controls in management of risks within the
defined appetite for retention of 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.
The Head of Risk and Insurance, who reports to the Chief Financial Officer and
usually attends meetings of the Audit and Risk Management Committee, is
responsible for:
or another appropriate member of senior management. Securityholders are
– overseeing and facilitating the co-ordination of the risk management
also invited to send written questions ahead of the meeting and, where there is
activities of senior management;
a common theme to a number of questions, either the Chairman or the
– reporting regularly to the Audit and Risk Management Committee on APA’s
Managing Director will commonly seek to provide an answer in their address.
risk profile and the implementation and effectiveness of risk management
The external auditor attends the annual meetings and is available to respond to
questions from Securityholders about the conduct of the audit and the
preparation and content of the independent audit report.
plans;
– contributing leadership and facilitation of the implementation of group-
wide risk control solutions; and
– working with senior management to design and develop risk education and
The 2013 annual meeting of Securityholders will be held in Sydney on
communication forums.
24 October 2013. A notice of that meeting and a proxy form will be sent to
Securityholders some weeks before the meeting, and details of the meeting are
also available from APA’s web site.
prinCiple 7: reCOgnise anD Manage risK
The identification and effective management of risk, including calculated risk-
taking, are viewed as an essential part of APA’s approach to creating long-term
securityholder value.
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 Board considered a written statement from the Chief Executive Officer and
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
The Board is responsible for adopting and reviewing APA’s approach to the
(broadly, that the financial statements give a true and fair view in all material
identification, evaluation and management of risks that are material to the
respects of APA’s financial position and comply in all material respects with
fulfilment of APA’s 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. The
committee’s primary function with respect to risk is to maintain and oversee a
relevant accounting standards) is founded on a sound system of risk
management and internal control and that system is operating effectively in all
material respects in relation to financial reporting risks, based on the
management framework adopted by APA.
sound system of internal risk management controls based on the Board’s
prinCiple 8: reMunerate Fairly anD respOnsiBly
adopted risk management approach.
remuneration Committee
Specific risk management responsibilities of the Audit and Risk Management
Committee include:
– reviewing and approving APA’s updated risk profile, and risk management
policy and framework;
– reviewing at least annually APA’s implementation of the risk management
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:
policy and framework; and
– the committee will have at least three members;
– receiving and reviewing management’s report on the effectiveness of risk
– all members of the committee will be non-executive Directors and a
management and internal control systems and otherwise monitoring the
majority of them will be independent Directors; and
effectiveness of the risk management framework and the system of internal
– the committee Chairman will be an independent Director.
control, and progress against agreed risk management plans.
The Directors’ report for the Reporting Period identifies the current members
The Managing Director is accountable for ensuring that a risk management
of the committee and their qualifications and experience. The Chairman of
system is established, implemented and maintained in accordance with APA’s
the Board, although not a member of the committee, usually attends
risk management policy and framework.
committee meetings.
Senior management is accountable for risk management within the areas
The roles and responsibilities delegated to the Remuneration Committee are
under their control, including devolution of the risk management process to
set out in the committee’s charter which is published on APA’s web site.
operational managers, and is responsible for:
The Managing Director attends meetings of the committee by invitation when
– reviewing the measures of risk impact severity that underlies the
required to report on and discuss senior management performance and other
identification of material risks, to ensure the measures remain current to
remuneration matters.
APA’s context;
34
corporate governance statement continuedAPA grouP / AnnuAl rePort 2013 The committee Chairman reports to the Board on the committee’s activities
unvested benefits under apa’s long term incentive plan
and recommendations.
The committee is required by its charter to meet at least twice each year. The
number of times it met during the Reporting Period and the committee
members’ attendance at those meetings are set out in the Directors’ report for
the Reporting Period.
external advice
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
or derivative financial products that operate to limit for LTI participants the
economic risk of their unvested LTI benefits are likely to reduce the intended
The committee may seek external professional advice on any matter within its
alignment of those interests. Consequently, it is APA policy that LTI participants
terms of reference. As stated in APA’s remuneration report referred to below,
must not use, nor allow to be used, any such arrangements in relation to their
independent remuneration consultants were engaged by the Chairman
unvested LTI benefits.
of the Remuneration Committee to provide comparative market data with
respect to non-executive Director and executive remuneration during the
Reporting Period.
remuneration report
retirement benefits
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
The Corporations Act 2001 does not require registered investment schemes like
those Directors. Under the plan, after three years service a Director was entitled
Australian Pipeline Trust and APT Investment Trust to include a remuneration
to the equivalent of the emoluments received over the most recent 12 months.
report as part of the annual Directors’ report, but APA has chosen to do so for
After 10 years service, the entitlement increased to the equivalent of
the Reporting Period and prior periods.
emoluments received during the most recent three years. No additional
The remuneration report distinguishes the structure of non-executive Directors’
remuneration from that of the Managing Director and other senior executives,
entitlement accrued after 10 years. For periods between three and 10 years, the
entitlement was calculated on a pro-rata basis.
and sets out details of the components of remuneration and total remuneration
Robert Wright is the only current Director entitled to benefit under the plan on
paid to those individuals over the Reporting 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
2.1
2.2
2.3
2.4
2.5
2.6
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
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
Yes
Yes
Yes
Yes
Yes
No (1)
Yes
Yes
Yes
3.2
Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include
requirements for the Board to establish measurable objectives for achieving gender diversity for the Board to assess annually both the
Yes
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 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
management positions and women on the Board.
3.5
Companies should provide the information indicated in the Guide to reporting on Principle 3
Yes
Yes
Yes
(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”.
35
corporate governance statement continued 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
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 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
prinCiple 6: respeCt tHe rigHts OF sHareHOlDers
6.1
Companies should design a communications policy for promoting effective communication with shareholders and encouraging their
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
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
policies
COMply
yes/nO
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
7.2
The Board should require management to design and implement the risk management and internal control system to manage the
company’s material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that
Yes
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
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
8.3
Companies should clearly distinguish the structure of non-executive Directors’ remuneration from that of executive Directors and senior
executives
8.4
Companies should provide the information indicated in the Guide to reporting on Principle 8
Yes
Yes
Yes
Yes
Yes
Yes
36
corporate governance statement continuedAPA grouP / AnnuAl rePort 2013 AUST RA LIA N PIP ELINE TRUST AND I TS CO NTRO LLE D E NTITIES
coNsoLiDAteD stAteMeNt oF proFit or Loss
AND otHer coMpreHeNsiVe iNcoMe
For the financial year ended 30 June 2013
COntinuing OperatiOns
Revenue
Share of net profits of associates and jointly controlled entities accounted for using the equity method
Gain on previously held interest in HDF on obtaining control
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, net of income tax
items that will not be reclassified subsequently to profit or loss:
Actuarial gain/(loss) on defined benefit plan
Income tax relating to items that will not be reclassified subsequently
items that may be reclassified subsequently to profit or loss:
Gain on available-for-sale investments taken to equity
Gain on available-for-sale investment reclassified to profit or loss
Transfer of gain on cash flow hedges to profit or loss
Loss on cash flow hedges taken to equity
Gain/(Loss) on associate hedges taken to equity
Income tax relating to items that may be reclassified subsequently
Other comprehensive income for the year (net of tax)
total comprehensive income for the year
profit attributable to:
Equityholders of the parent
Non-controlling interest - APT Investment Trust equityholders
APA stapled Securityholders
Non-controlling interest - other
total comprehensive income attributable to:
Equityholders of the parent
Non-controlling interest - APT Investment Trust equityholders
APA stapled Securityholders
Non-controlling interest - other
earnings per seCurity
Basic and diluted (cents per security)
Note
2013
$000
2012
$000
6
6
7
7
7
7
7
9
1,227,399
1,032,398
44,868
28,263
1,272,267
1,060,661
142,333
(96,903)
(130,461)
(352,743)
(302,613)
(169,323)
(15,133)
347,424
(51,421)
296,003
13,166
(3,950)
9,216
25,519
(142,333)
91,438
(144,702)
14,316
46,382
(109,380)
-
(75,522)
(110,409)
(302,633)
(240,643)
(132,913)
(17,451)
181,090
(50,435)
130,655
(32,677)
9,803
(22,874)
93,189
-
48,983
(116,624)
(22,666)
(538)
2,344
(100,164)
(20,530)
195,839
110,125
260,624
38,143
298,767
(2,764)
296,003
161,617
36,986
198,603
(2,764)
195,839
84,693
45,957
130,650
5
130,655
63,073
47,047
110,120
5
110,125
36
38.7
20.4
Diluted earnings per security is exactly the same as basic earnings per security.
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
37
AUSTRA LIA N PIPELIN E TRUST AND I TS CO NTRO LLE D E NTIT IE S
coNsoLiDAteD stAteMeNt oF FiNANciAL positioN
As at 30 June 2013
Note
2013
$000
2012
$000
37
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
22
27
28
9
25
26
80,955
164,569
16,469
12,726
5,662
280,381
34,318
168,540
589,131
5,280,411
1,150,500
177,015
18,632
329,934
238,519
420
11,504
4,134
584,511
22,244
299,070
512,948
3,472,198
411,883
183,659
9,541
7,418,547
4,911,543
7,698,928
5,496,054
190,062
80,910
126,385
81,943
12,921
173,445
-
59,307
67,466
761
492,221
300,979
3,749
1,068
4,233,242
2,905,946
177,256
213,238
50,242
16,669
4,694,396
5,186,617
2,512,311
286,592
319,282
64,067
4,078
3,581,033
3,882,012
1,614,042
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
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
Trade and other payables
Borrowings
Other financial liabilities
Deferred tax liabilities
Provisions
Other
total non-current liabilities
total liabilities
net assets
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
38
APA grouP / AnnuAl rePort 2013 AUST RA LIAN PIP ELI NE TRUST AND I TS CO NT RO LLE D E NTITIES
coNsoLiDAteD stAteMeNt oF FiNANciAL positioN
coNtiNUeD
As at 30 June 2013
eQuity
Australian Pipeline Trust equity:
Issued capital
Reserves
Retained earnings
Equity attributable to Securityholders of the parent
Non-controlling interests:
APT Investment Trust:
Issued capital
Reserves
Retained earnings
Equity attributable to Securityholders of APT Investment Trust
Other non-controlling interest
Total non-controlling interests
total equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Note
2013
$000
2012
$000
29
30
31
32
32
32
32
1,820,516
1,138,205
(52,070)
145,144
56,153
32,785
1,913,590
1,227,143
578,780
364,066
467
19,424
598,671
50
598,721
2,512,311
1,624
21,160
386,850
49
386,899
1,614,042
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APA grouP / AnnuAl rePort 2013
AUST RA LIA N PIPE LINE TRUST AND I TS CO NT RO LLE D E NTITIES
coNsoLiDAteD stAteMeNt oF cAsH FLoWs
For the financial year ended 30 June 2013
CasH FlOWs FrOM Operating aCtiVities
Receipts from customers
Payments to suppliers and employees
Payments by HDF to Hastings Funds Management for management and performance fees
Payments by HDF for takeover defense costs
Dividends received
Proceeds from repayment of finance leases
Interest received
Interest and other costs of finance paid
Income tax paid
net cash provided by operating activities
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
net cash (used in)/provided by investing activities
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
Payments for early settlement of loans and derivatives
Distributions paid to:
Securityholders of APT
Securityholders of non-controlling - APTIT
Securityholders of other non-controlling interests
net cash used in financing activities
net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Note
2013
$000
2012
$000
1,347,848
1,104,107
(703,790)
(604,786)
(31,590)
(26,668)
54,615
4,724
19,335
-
-
51,294
3,131
7,198
(289,952)
(225,375)
(141)
-
37(c)
374,381
335,569
37(b)
37(b)
41
42
(397,451)
(249,112)
605
-
(65,451)
(265,321)
(1,107)
411,364
(317,361)
522
(11,665)
(28,548)
(5,714)
(443)
475,523
180,563
2,822,243
1,999,697
(2,872,000)
(2,103,500)
83,166
(25,867)
(8,717)
(34,919)
44,612
(13,819)
(72)
-
(201,898)
(136,504)
(54,758)
(13,249)
(71,741)
(239)
(305,999)
(281,566)
(248,979)
329,934
37(a)
80,955
234,566
95,368
329,934
41
AUSTRA LIAN PIPELI NE TRUST AND I TS CO NT RO LLE D E NT IT I ES
Notes to tHe coNsoLiDAteD FiNANciAL stAteMeNts
For the financial year ended 30 June 2013
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”), EII 2 Pty Limited (“EII2”), GDI (EII) Pty Ltd (“GDI”), Diamantina Power Station (“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 and disclosure
stanDarD
iMpaCt
– Amendments to AASB 101 ‘Presentation of
The amendments (part of AASB 2011-9 ‘Amendments to Australian Accounting Standards - Presentation of Items
Financial Statements’
of Other Comprehensive Income’) introduce new terminology for the statement of comprehensive income and
income statement. Under the amendments to AASB 101, the statement of comprehensive income is renamed as
a statement of profit or loss and other comprehensive income and the income statement is renamed as a
statement of profit or loss. The amendments to AASB 101 retain the option to present profit or loss and other
comprehensive income in either a single statement or in two separate but consecutive statements. However, the
amendments to AASB 101 require items of other comprehensive income to be grouped into two categories in the
other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b)
items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on
items of other comprehensive income is required to be located on the same basis – the amendments do not
change the option to present items of other comprehensive income either before tax or net of tax. The
amendments have been applied retrospectively, and hence the presentation of items of other comprehensive
income has been modified to reflect the changes. Other than the above mentioned presentation changes, the
application of the amendments to AASB 101 does not result in any impact on profit or loss, other comprehensive
income and total comprehensive income.
– Amendments to AASB 101 ‘Presentation of
The amendments (part of AASB 2012-5 ‘Further Amendments to Australian Accounting Standards arising from
Financial Statements’
Annual Improvements 2009-2011 Cycle’) requires an entity that changes accounting policies retrospectively, or
makes a retrospective restatement or reclassification to present a statement of financial position as at the
beginning of the preceding period (third statement of financial position), when the retrospective application,
restatement or reclassification has a material effect on the information in the third statement of financial position.
The related notes to the third statement of financial position are not required to be disclosed.
(b) standards and interpretations affecting the reported results or financial position
There are no new and revised Standards and Interpretations adopted in these financial statements affecting the reporting results or financial position.
42
APA grouP / AnnuAl rePort 2013 2. aDOptiOn OF neW anD reViseD aCCOunting stanDarDs (COntinueD)
(c) standards and interpretations issued not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective.
stanDarD/interpretatiOn
eFFeCtiVe FOr annual repOrting
periODs Beginning On Or aFter
expeCteD tO Be initially applieD
in tHe FinanCial year enDing
– AASB 9 ‘Financial Instruments’, and the relevant amending standards
1 January 2015
30 June 2016
– AASB 10 ‘Consolidated Financial Statements’ and AASB 2011-7 ‘Amendments
to Australian Accounting Standards arising from the consolidation and Joint
1 January 2013
30 June 2014
Arrangements standards’
– AASB 11 ‘Joint Arrangements’ and AASB 2011-7 ‘Amendments to Australian
Accounting Standards arising from the consolidation and Joint Arrangements
1 January 2013
30 June 2014
standards’
– AASB 12 ‘Disclosure of Interests in Other Entities’ and AASB 2011-7
‘Amendments to Australian Accounting Standards arising from the
1 January 2013
30 June 2014
consolidation and Joint Arrangements standards’
– AASB 127 ‘Separate Financial Statements’ (2011) and AASB 2011-7
‘Amendments to Australian Accounting Standards arising from the
1 January 2013
30 June 2014
consolidation and Joint Arrangements standards’
– AASB 128 ‘Investments in Associates and Joint Ventures’ (2011) and AASB
2011-7 ‘Amendments to Australian Accounting Standards arising from the
1 January 2013
30 June 2014
consolidation and Joint Arrangements standards’
– AASB 13 Fair Value Measurement and AASB 2010-8 ‘Amendments to
Australian Accounting Standards arising from AASB 13’
– AASB 119 ‘Employee Benefits’ (2011) and AASB 2011-10 ‘Amendments to
Australian Accounting Standards arising from AASB 119 (2011)’
– AASB 2011-4 ‘Amendments to Australian Accounting Standards to Remove
Individual Key Management Personnel Disclosure Requirements’
– AASB 2012-2 ‘Amendments to Australian Accounting Standards – Disclosures
– Offsetting Financial Assets and Financial Liabilities’
– AASB 2012-3 ‘Amendments to Australian Accounting Standards – Offsetting
Financial Assets and Financial Liabilities’
– AASB 2012-5 ‘Amendments to Australian Accounting Standards arising from
Annual Improvements 2009–2011 Cycle’
– AASB 2012-10 ‘Amendments to Australian Accounting Standards – Transition
Guidance and Other Amendments’
– AASB 2013-3 ‘Amendments to AASB 136 - Recoverable Amount Disclosures
for Non-Financial Assets’
1 January 2013
30 June 2014
1 January 2013
30 June 2014
1 July 2013
30 June 2014
1 January 2013
30 June 2014
1 January 2014
30 June 2015
1 January 2013
30 June 2014
1 January 2013
30 June 2014
1 January 2014
30 June 2015
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 plans. Under the revised
standard, return on plan assets will be calculated based on the rate used to discount the obligations rather than the expected rate of return of these assets, which
will have an impact on profit or loss. APA has obtained actuarial assessments which estimate the impact of the revised standard will be a $5.2 million decrease in
profit before tax for the financial year.
The potential impact of the initial application of the remaining above Standards has not yet been determined.
43
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 3. signiFiCant aCCOunting pOliCies
statement of compliance
All intra-group transactions, balances, income and expenses are eliminated in
The financial report is a general purpose financial report which has been
full on consolidation. Where the transaction value of common control
prepared in accordance with the Corporations Act 2001, Accounting Standards
transactions differs from their consolidated book value, the difference is
and Interpretations, and complies with other requirements of the law.
recognised as a contribution by or distribution to equity participants by the
The financial report represents the consolidated financial statements of the
transaction entities.
Group. For the purposes of preparing the consolidated financial report, the
Non-controlling interests in the net assets (excluding goodwill) of consolidated
Group is a for-profit entity.
Accounting Standards include Australian equivalents to International Financial
Reporting Standards (“A-IFRS”). Compliance with A-IFRS ensures that the
financial report and notes of the Consolidated Entity comply with International
Financial Reporting Standards (“IFRS”).
controlled entities are identified separately from the Consolidated Entity’s
equity therein. Non-controlling interests consist of the amount of those
interests at the date of the original business combination and the non-
controlling interests’ share of changes in equity since the date of the
combination. Losses applicable to the non-controlling interest in excess of the
non-controlling interest’s share in the controlled entity’s equity are allocated
The financial report was authorised for issue by the Directors on 21 August 2013.
against the interests of the Consolidated Entity except to the extent that the
Basis of preparation
The financial report has been prepared on the basis of historical cost, except for
non-controlling interest has a binding obligation and is able to make an
additional investment to cover the losses.
the revaluation of certain non-current assets and financial instruments. Cost is
(c) Business combinations
based on the fair values of the consideration given in exchange for assets. The
Acquisitions of businesses are accounted for using the acquisition method. The
financial report is presented in Australian dollars and all values are rounded to
consideration for each acquisition is measured as the aggregate of the fair
the nearest thousand dollars ($000) unless otherwise stated under the option
values (at the date of exchange) of assets given, liabilities incurred or assumed,
available to APA under ASIC Class Order 98/0100. APA is an entity to which the
and equity instruments issued by the Consolidated Entity in exchange for
class order applies.
control of the acquiree. Acquisition costs directly attributable to the business
The following significant accounting policies have been adopted in the
combination are recognised in profit or loss as incurred.
preparation and presentation of the financial report:
Where applicable, the consideration for the acquisition includes any asset or
(a) Working Capital position
The working capital position as at 30 June 2013 for the Consolidated Entity is a
surplus of current liabilities over current assets of $211.8 million primarily as a
result of $80.9 million (AUD equivalent) of USD denominated private placement
notes due to mature on 9 September 2013 and $126.4 million of cash flow
hedge liabilities. APA’s refinancing strategies have ensured the Group has
access to available committed, un-drawn bank facilities and a broad cross
liability resulting from a contingent consideration arrangement, measured at its
acquisition-date fair value. Subsequent changes in fair values are adjusted
against the cost of acquisition where they qualify as measurement period
adjustments. All other subsequent changes in the fair value of contingent
consideration classified as an asset or liability are accounted for in accordance
with relevant standards. Changes in the fair value of contingent consideration
classified as equity are not recognised.
section of global debt capital markets out of which to achieve refinancing of its
Where a business combination is achieved in stages, the Consolidated Entity’s
financing facilities.
The Directors continually monitor the Consolidated Entity’s working capital
position, including forecast working capital requirements and have ensured
that there are appropriate refinancing strategies and adequate committed
funding facilities in place to accommodate debt repayments as and when they
fall due.
(b) Basis of consolidation
The financial report represents the consolidated financial statements of the
Trust and entities (including special purpose entities) controlled by the Trust
previously held interests in the acquired entity are remeasured to fair value at
the acquisition date and the resulting gains or losses, if any, are recognised in
profit or loss. Amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in other comprehensive
income are reclassified to profit or loss, where such treatment would be
appropriate if that interest were disposed of.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet
the conditions for recognition under AASB 3 are recognised at their fair value
at the acquisition date, except that:
(its controlled entities) (referred to as the “Consolidated Entity”, “Group” or
– deferred tax assets or liabilities and liabilities or assets related to employee
“APA Group” in this financial report). Control is achieved where the Trust has
benefit arrangements are recognised in accordance with AASB 112 ‘Income
the power to govern the financial and operating policies of an entity so as to
Taxes’ and AASB 119 ‘Employee Benefits’ respectively;
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.
– 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’
Where necessary, adjustments are made to the financial reports of controlled
are measured in accordance with that standard.
entities to bring their accounting policies into line with those used by other
members of the Group.
44
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 3. signiFiCant aCCOunting pOliCies (COntinueD)
(c) Business combinations (continued)
If the initial accounting for a business combination is incomplete by the end of
Loans and receivables
the reporting period in which the combination occurs, the Consolidated Entity
Trade receivables, loans, and other receivables that have fixed or determinable
reports provisional amounts for the items for which the accounting is
payments that are not quoted in an active market are classified as ‘loans and
incomplete. Those provisional amounts are adjusted
for during the
receivables’. Trade and other receivables are stated at their amortised cost less
measurement period, or additional assets or liabilities are recognised, to reflect
impairment.
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.
Trade and other payables
Trade and other payables are recognised when the Consolidated Entity
becomes obliged to make future payments resulting from the purchase of
The measurement period is the period from the date of acquisition to the date
goods and services. Trade and other payables are stated at amortised cost.
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.
(d) Joint venture arrangements
Jointly controlled operations
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
of one or more events that occurred after the initial recognition of the financial
Interests in jointly controlled operations are reported in the financial report by
asset the estimated future cash flows of the investments have been impacted.
including the Consolidated Entity’s share of assets employed in the joint
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.
Jointly controlled entities
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.
Interests in jointly controlled entities are accounted for under the equity
Subsequent recoveries of amounts previously written off are credited against
method in the consolidated financial report and the cost method in APT’s
the allowance account. Changes in the carrying amount of the allowance
financial report.
(e) investments in associates
account are recognised in profit or loss.
With the exception of available-for-sale equity instruments, if, in a subsequent
An associate is an entity over which the Consolidated Entity has significant
period, the amount of the impairment loss decreases and the decrease can be
influence and that is neither a subsidiary nor a joint venture. The results and
related objectively to an event occurring after the impairment was recognised,
assets and liabilities of associates are accounted for using the equity method of
the previously recognised impairment loss is reversed through profit or loss to
accounting. Under the equity method, investments in associates are carried in
the extent the carrying amount of the investment at the date the impairment is
the consolidated statement of financial position at cost as adjusted for post-
reversed, does not exceed what the amortised cost would have been had the
acquisition changes in the Consolidated Entity’s share of the net assets of the
impairment not been recognised.
associate, less any impairment in the value of individual investments. Losses of
an associate in excess of the Consolidated Entity’s interest are recognised only
to the extent that there is a legal or constructive obligation or the Consolidated
Entity has made payments on behalf of the associate.
Any excess of the cost of acquisition over the Consolidated Entity’s share of the
net fair value of identifiable assets, liabilities and contingent liabilities of the
associate recognised at the date of acquisition is recognised as goodwill. This
is included within the carrying amount of the investment and is assessed for
In respect of available-for-sale equity instruments, any subsequent increase in
fair value after an impairment loss is recognised in other comprehensive
income.
(g) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
amounts of cash, which are subject to insignificant risk of changes in values.
impairment as part of that investment. Any excess of the Consolidated Entity’s
(h) acquisition of assets
share of the net fair value of assets and liabilities over the cost of acquisition
Assets acquired are recorded at the cost of acquisition, being the purchase
after reassessment is recognised immediately in profit or loss.
consideration determined as at the date of acquisition. Cost includes expenditure
(f) Financial assets and liabilities
Available-for-sale financial assets
that is directly attributable to the acquisition or construction of the asset.
In the event that settlement of all or part of the cash consideration given in the
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
available-for-sale and are stated at fair value. Gains and losses arising from
is determined by discounting the amounts payable in the future to their present
changes in fair value are recognised directly in the available-for-sale investment
values as at the date of acquisition.
revaluation reserve with the exception of impairment losses, interest calculated
using the effective interest method and foreign exchange gains and losses on
monetary assets which are recognised directly in profit or loss. Where the
investment is disposed of or is determined to be impaired, the cumulative gain
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.
(i) Borrowings
Borrowings are recorded initially at fair value, net of transaction costs.
Subsequent to initial recognition, borrowings are measured at amortised cost
with any difference between the initial recognised amount and the redemption
value being recognised in the statement of profit or loss and other
comprehensive income over the period of the borrowing using the effective
interest method.
45
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 3. signiFiCant aCCOunting pOliCies (COntinueD)
(j) Borrowing costs
Past service cost is recognised immediately to the extent that the benefits are
Borrowing costs directly attributable to the acquisition, construction or
already vested, and otherwise amortised on a straight-line basis over the
production of qualifying assets, which are assets that necessarily take a
average period until the benefits become vested.
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
assets is deducted from the borrowing costs eligible for capitalisation.
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,
All other borrowing costs are recognised in profit or loss in the period in which
plus the present value of available refunds and reductions in future contributions
they are incurred.
(k) property, plant and equipment
to the plan.
(n) intangible assets
Land and buildings held for use are carried in the consolidated statement of
Intangible assets acquired separately
financial position at cost, less any subsequent accumulated depreciation and
Intangible assets acquired separately are carried at cost less accumulated
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.
(l) Depreciation
Depreciation is provided on property, plant and equipment, including freehold
buildings but excluding land. Depreciation is calculated on either a straight-line
or throughput basis depending on the nature of the asset so as to write off the
net cost of each asset over its estimated useful life. Leasehold improvements
are depreciated over the period of the lease or estimated useful life, whichever
is the shorter, using the straight-line method. The estimated useful lives and
amortisation and accumulated impairment losses. Amortisation is recognised
on a straight-line basis over their estimated useful lives. The estimated useful
life and amortisation method are reviewed at the end of each annual reporting
period, with the effects of any changes in estimate being accounted for on a
prospective basis.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination are identified and
recognised separately from goodwill and are initially recognised at their fair
value at the acquisition date. Subsequent to initial recognition, intangible
assets acquired in a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis as
intangible assets acquired separately.
depreciation methods are reviewed at the end of each reporting period, with
(o) Derivative financial instruments
the effect of any changes recognised on a prospective basis. The following
The Group enters into a variety of derivative financial instruments to manage
estimated useful lives are used in the calculation of depreciation:
its exposure to interest rate and foreign exchange rate risk, including foreign
– buildings
– compressors
– gas transportation systems
30 - 50 years;
10 - 50 years;
10 - 80 years;
exchange forward contracts and interest rate swaps. Further details of
derivative financial instruments are disclosed in Note 38.
Derivatives are initially recognised at fair value at the date a derivatives
– meters
20 - 30 years; and
contract is entered into and subsequently remeasured to their fair value at each
– other plant and equipment
3 - 20 years.
reporting period. The resulting gain or loss is recognised in profit or loss
(m) employee benefits
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
remuneration rates expected to apply at the time of settlement. Provisions
immediately unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition in profit or loss
depends on the nature of the hedge relationship. The Consolidated Entity
designates certain derivatives as hedges of the fair value of recognised assets
or liabilities or firm commitments (fair value hedges) or, hedges of highly
probable forecast transactions or of foreign currency risk of firm commitments
(cash flow hedges).
made in respect of employee benefits which are not expected to be settled
The fair value of hedging derivatives is classified as a non-current asset or a
within 12 months are measured as the present value of the estimated future
non-current liability if the remaining maturity of the hedge relationship is more
cash outflows to be made by the Consolidated Entity in respect of services
than 12 months and as a current asset or a current liability if the remaining
provided by employees up to reporting date.
maturity of the hedge relationship is less than 12 months. Derivatives 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
retained earnings in the period in which they occur.
designated into an effective hedge relationship are classified as a current asset
or a current liability.
Embedded derivatives
Derivatives embedded in other financial instruments or other host contracts
are treated as separate derivatives when their risks and characteristics are not
closely related to those of the host contracts and the host contracts are not
measured at fair value with changes in fair value recognised in profit or loss.
46
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 3. signiFiCant aCCOunting pOliCies (COntinueD)
(o) Derivative financial instruments (continued)
Hedge accounting
Financial guarantee contract liabilities
The Consolidated Entity designates certain hedging instruments, which include
Financial guarantee contract liabilities are measured initially at their fair values
derivatives, embedded derivatives and non-derivatives in respect of foreign
and subsequently at the higher of the amount recognised as a provision and
currency risk, as either fair value hedges or cash flow hedges.
the amount initially recognised less cumulative amortisation in accordance
Hedges of foreign exchange and interest rate risk on firm commitments are
with the revenue recognition policies.
accounted for as cash flow hedges.
Transaction costs arising on the issue of equity instruments
At the inception of the hedge relationship, the Consolidated Entity documents
the relationship between the hedging instrument and hedged item, along with
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
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.
is used in the hedging relationship is highly effective in offsetting changes in
Interest and distributions
fair values or cash flows of the hedged item.
Interest and distributions are classified as expenses or as distributions of profit
Note 38 contains details of the fair values of the derivative instruments used for
hedging purposes. Movements in the hedging reserve in equity are also
detailed in Note 30.
Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair
value hedges are recorded in profit or loss immediately, together with any
changes in the fair value of the hedged item that is attributable to the hedged
risk. Hedge accounting is discontinued when the Consolidated Entity revokes
the hedging relationship or the hedging instrument expires or is sold,
terminated, or exercised, or no longer qualifies for hedge accounting. The
consistent with the consolidated statement of financial position classification
of the related debt or equity instruments or component parts of compound
instruments.
(q) 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
date of the transaction. Foreign currency monetary items at reporting date are
translated at the exchange rate existing at that date and resulting exchange
differences are recognised in profit or loss in the period in which they arise.
adjustment to the carrying amount of the hedged item arising from the hedged
(r) goods and services tax
risk is amortised to profit or loss from that date.
Revenues, expenses and assets are recognised net of the amount of goods and
Cash flow hedges
services tax (“GST”), except:
The effective portion of changes in the fair value of derivatives that are
– where the amount of GST incurred is not recoverable from the taxation
designated and qualify as cash flow hedges is deferred in equity. The gain or
authority, it is recognised as part of the cost of acquisition of an asset or as
loss relating to the ineffective portion is recognised immediately in profit or
part of an item of expense; or
loss as part of other expenses or other income.
– for receivables and payables which are recognised inclusive of GST,
Amounts deferred in equity are recycled in profit or loss in the periods when
the hedged item is recognised in profit or loss in the same line of the statement
except for accrued revenue and accrued expense at balance dates which
exclude GST.
of comprehensive income as the recognised hedged item. However, when the
The net amount of GST recoverable from, or payable to, the taxation authority
forecast transaction that is hedged results in the recognition of a non-financial
is included as part of receivables or payables. GST receivable or GST payable is
asset or a non-financial liability, the gains and losses previously deferred in
only recognised once a tax invoice has been issued or received.
equity are transferred from equity and included in the initial measurement of
the cost of the asset or liability.
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
Hedge accounting is discontinued when the Consolidated Entity revokes the
which is recoverable from, or payable to, the taxation authority is classified
hedging relationship or the hedging instrument expires or is sold, terminated,
within operating cash flows.
or exercised, or no longer qualifies for hedge accounting. Any cumulative gain
or loss deferred in equity at that time remains in equity and is recognised when
the forecast transaction is ultimately recognised in profit or loss. When a
forecast transaction is no longer expected to occur, the cumulative gain or loss
that was deferred in equity is recognised immediately in profit or loss.
(s) 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
(p) Financial instruments issued by the Consolidated entity
the acquiree (if any) over the net of the acquisition-date amounts of the
Debt and equity instruments
identifiable assets acquired and the liabilities assumed.
Debt and equity instruments are classified as either liabilities or equity in
accordance with the substance of the contractual arrangement. An equity
instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by the
Consolidated Entity are recorded at the proceeds received, net of direct
issue costs.
If, after reassessment, the Consolidated Entity’s interest in the fair value of the
acquiree’s identifiable net assets exceeds the sum of the consideration, the
amount of any non-controlling interests in the acquiree and the fair value of the
acquirer’s previously held equity interest, the excess is recognised immediately
in the profit or loss as a bargain purchase gain.
On disposal of a subsidiary, the attributable amount of goodwill is included in
the determination of the profit or loss on disposal.
47
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 3. signiFiCant aCCOunting pOliCies (COntinueD)
(t) impairment of assets
Tax consolidation
Goodwill and intangible assets that have an indefinite useful life are not subject
The Trust and its wholly-owned Australian tax resident entities are part of a
to amortisation and are tested annually for impairment, or more frequently if
tax-consolidated group under Australian taxation law. The head entity within
events or changes in circumstances indicate that they might be impaired. Other
the tax-consolidated group is Australian Pipeline Trust.
assets are reviewed for
impairment whenever events or changes
in
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs to sell, and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash inflows which are largely independent of the
Tax expense/income, deferred tax liabilities and deferred tax assets arising
from temporary differences of the members of the tax-consolidated group are
recognised in the separate financial reports of the members of the tax-
consolidated group using the ‘separate taxpayer within group’ approach, by
reference to the carrying amounts in the separate financial reports of each
entity and the tax values applying under tax consolidation.
cash inflows from other assets or groups of assets (cash-generating units).
Any current tax liabilities (or assets) and deferred tax assets arising from
Assets other than goodwill that suffered an impairment are reviewed for
unused tax losses of the wholly-owned entities are assumed by the head entity
possible reversal of the impairment at each reporting period.
in the tax-consolidated group and are recognised as amounts payable
(u) Distributions
A provision is recognised for distributions only when they have been declared,
(receivable) to (from) other entities in the tax-consolidated group in
conjunction with any tax funding arrangement amounts.
determined or publicly recommended by the Directors.
The head entity recognises deferred tax assets arising from unused tax losses
(v) inventories
Inventories are stated at the lower of cost and net realisable value. Costs,
including an appropriate portion of fixed and variable overhead expenses, are
of the tax-consolidated group to the extent that it is probable that future
taxable profits of the tax-consolidated group will be available against which the
assets can be utilised.
assigned to inventories by the method most appropriate to each particular
(y) leased assets
class of inventory, with the majority being valued on a first-in, first-out basis.
Leases are classified as finance leases when the terms of the lease transfer
Net realisable value represents the estimated selling price for the inventories
substantially all the risks and rewards incidental to the ownership of the leased
less all estimated costs of completion and costs necessary to make the sale.
asset to the lessee. All other leases are classified as operating leases.
(w) security-based payments
Group as lessor
The Group provides benefits to certain employees in the form of cash settled
Amounts due from a lessee under finance leases are recorded as receivables.
security-based payments. For cash settled security-based payments, a liability
Finance lease receivables are initially recognised at amounts equal to the
equal to the portion of services received is recognised at the current fair value
present value of the minimum lease payments receivable plus the present value
determined at each reporting date.
(x) income tax
Income tax on the profit or loss for the financial year comprises current and
deferred tax. Income tax is recognised in the statement of profit or loss and
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
constant periodic rate of return on the net investment outstanding in respect of
the leases.
other comprehensive income except to the extent that it relates to items
Group as lessee
recognised directly in equity, in which case it is recognised in equity. Current
Assets held under finance leases are initially recognised at their fair value or, if
tax is the expected tax payable on the taxable income for the financial year,
lower, at amounts equal to the present value of the minimum lease payments,
using tax rates enacted or substantively enacted by the end of the reporting
each determined at the inception of the lease. The corresponding liability to the
period, and any adjustment to tax payable in respect of previous financial
lessor is included in the consolidated statement of financial position as a
years. Current tax for current and prior periods is recognised as a liability (or
finance lease obligation.
asset) to the extent that it is unpaid (or refundable).
Lease payments are allocated between finance charges and reduction of the
Deferred tax is provided using the balance sheet liability method, providing for
lease obligation so as to achieve a constant rate of interest on the remaining
temporary differences between the carrying amounts of assets and liabilities
balance of the liability.
for financial reporting purposes and the amounts used for taxation purposes.
The following temporary differences are not provided for: initial recognition
of goodwill, initial recognition of assets or liabilities that affect neither
Finance lease assets are amortised on a straight-line basis over the estimated
useful life of the asset.
accounting nor taxable profit, and differences relating to investments in wholly-
Operating lease payments are recognised as an expense on a straight-line basis
owned entities to the extent that they will probably not reverse in the
over the lease term, except where another systematic basis is more
foreseeable future. The amount of deferred tax provided is based on the
representative of the time patterns in which economic benefits from the leased
expected manner of realisation or settlement of the carrying amount of assets
asset are consumed.
and liabilities, using the tax rates enacted or substantively enacted by the end
of the reporting period.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be utilised.
Deferred tax assets are reduced to the extent that it is no longer probable that
the related tax benefit will be realised.
48
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 3. signiFiCant aCCOunting pOliCies (COntinueD)
4. CritiCal aCCOunting JuDgeMents anD Key sOurCes OF
(z) provisions
estiMatiOn unCertainty
A provision is recognised when there is a legal, equitable or constructive
In the application of the Consolidated Entity’s accounting policies, management
obligation as a result of a past event, it is probable that a future sacrifice of
is required to make judgements, estimates and assumptions about the carrying
economic benefits will be required to settle the obligation and the amount of
values of assets and liabilities that are not readily apparent from other sources.
the provision can be measured reliably.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the financial year, taking
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.
into account the risks and uncertainties surrounding the obligation. Where a
The estimates and underlying assumptions are reviewed on an ongoing basis.
provision is measured using the cash flows estimated to settle the present
Revisions to accounting estimates are recognised in the period in which the
obligation, its carrying amount is the present value of those cash flows.
estimate is revised if the revision affects only that period, or in the period of the
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, the receivable is recognised as an
revision and future periods if the revision affects both current and future
periods.
asset if it is probable that recovery will be received and the amount of the
impairment of assets
receivable can be measured reliably.
(aa) revenue recognition
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Consolidated Entity and the revenue can be reliably
measured. Amounts disclosed as revenue are net of duties and taxes paid.
Revenue is recognised for the major business activities as follows:
Sales revenue
Determining whether property, plant and equipment, identifiable intangible
assets and goodwill are impaired requires an estimation of the value-in-use or
fair value of the cash-generating units. The calculations require the Consolidated
Entity to estimate the future cash flows expected to arise from cash-generating
units and suitable discount rates in order to calculate the present value of cash-
generating units.
Estimates and assumptions used are reviewed on an ongoing basis.
Sales revenue represents revenue earned for the transportation of gas,
Determining whether available-for-sale investments are impaired requires an
generation of electricity and other related services and is recognised when the
assessment as to whether declines in value are significant or prolonged.
services are provided.
Pass-through revenue
Pass-through revenue is revenue on which no margin is earned and is offset by
corresponding pass-through costs.
Interest revenue
Interest revenue is recognised as it accrues using the effective interest method.
Sale of non-current assets
Management has taken into account a number of qualitative and quantitative
factors in making this assessment. Any assessment of whether a decline in value
represents an impairment would result in the transfer of the decrement from
reserves to the statement of profit or loss and other comprehensive income.
useful lives of non-current assets
The Consolidated Entity reviews the estimated useful lives of property, plant
and equipment at the end of each annual reporting period. Any reassessment
of useful lives in a particular year will affect the depreciation or amortisation
The net gain or loss on sale of a non-current asset is included as income at the
expense.
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
time of disposal and the net proceeds on disposal (including incidental costs).
Dividend revenue
Dividend revenue is recognised when the right to receive a dividend has been
established.
Finance lease income
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.
49
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 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
2013
segMent reVenue (b)
External sales revenue
Equity accounted net profits
Pass-through revenue
Finance lease and investment interest income
Distribution - other entities
total segment revenue
Other interest income
Consolidated revenue
segMent result
energy
inFrastruCture (a)
$000
asset
ManageMent
$000
energy
inVestMents (f)
$000
COnsOliDateD
$000
770,532
82,293
-
-
44,868
-
8,449
3,822
-
344,294
-
-
782,803
426,587
-
3,069
3,243
51,180
852,825
44,868
352,743
6,891
3,243
1,260,570
11,697
1,272,267
Earnings before interest, tax, depreciation and amortisation (“EBITDA”)
526,022
45,447
145,573
717,042
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
-
3,822
529,844
(125,671)
404,173
-
-
45,447
(4,790)
40,657
segMent assets anD liaBilities
Segment assets
Carrying value of investments accounted for using the equity method
6,608,054
235,631
44,868
3,069
193,510
-
193,510
35,490
589,131
Unallocated assets (d)
total assets
Segment liabilities
Unallocated liabilities (e)
total liabilities
284,700
70,885
-
44,868
6,891
768,801
(130,461)
638,340
(290,916)
347,424
(51,421)
296,003
6,879,175
589,131
230,622
7,698,928
355,585
4,831,032
5,186,617
(a) Revenue of $32.9 million, expenses of $12.3 million, profit before income tax of $18.2 million, profit after income tax of $13.4 million are attributable to the Moomba Adelaide Pipeline
System which was acquired in October 2012 divested in May 2013. Included within asset operation and management expenses are significant items of $18.6 million resulting from the
write back of transaction costs relating to the prior year divestment of the APA Gas Networks business and $12.4 million of transaction costs on acquisition of HDF.
(b) The revenue reported above represents revenue generated from external customers, any intersegment sales were immaterial.
(c) Excluding finance lease and investment interest income, and any gains or losses on revaluation of derivatives included as part of EBIT for segment reporting purposes, but including
other interest income.
(d) Unallocated assets consist of cash and cash equivalents, fair value of interest rate swaps, foreign exchange contracts and equity forwards.
(e) Unallocated liabilities consist of current and non-current borrowings, deferred tax liabilities, fair value of interest rate swaps and foreign exchange contracts.
(f) Included in EBITDA for energy investments is a significant item of $142.3 million gain on the previously held interest in HDF on obtaining control.
50
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013
5. segMent inFOrMatiOn (COntinueD)
(b) reportable segments (continued)
2012
segMent reVenue (b)
External sales revenue
Equity accounted net profits
Pass-through revenue
Finance lease and investment interest income
Distribution - other entities
total segment revenue
Other interest income
Consolidated revenue
segMent result
ENERGY
INFRASTRUCTURE (a)
$000
ASSET
MANAGEMENT
$000
ENERGY
INVESTMENTS
$000
CONSOLIDATED
$000
637,851
69,296
-
-
6,626
2,817
-
-
28,263
296,007
-
-
-
2,331
11,153
707,147
28,263
302,633
5,148
11,153
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
-
2,817
452,164
(105,620)
346,544
-
-
31,910
(4,789)
27,121
28,263
2,331
41,751
-
41,751
segMent assets anD liaBilities
Segment assets
Carrying value of investments accounted for using the equity method
4,016,910
244,106
391,737
512,948
Unallocated assets (d)
total assets
Segment liabilities
Unallocated liabilities (e)
total liabilities
229,613
81,272
-
28,263
5,148
525,825
(110,409)
415,416
(234,326)
181,090
(50,435)
130,655
4,652,753
512,948
330,353
5,496,054
310,885
3,571,127
3,882,012
(a) Revenue of $30.7 million, expenses of $10.5 million, profit before income tax of $14.2 million, profit after income tax of $10.0 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 and investment interest income, and any gains or losses on revaluation of derivatives included as part of EBIT for segment reporting purposes, but including
other interest income.
(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.
(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 $770.5 million (2012: $637.9 million) are revenues of approximately $373.8 million (2012: $266.6 million)
which arose from sales to the Consolidated Entity’s top three customers.
51
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 6. reVenue
An analysis of the Consolidated Entity’s revenue for the year is as follows:
Continuing operations
Operating reVenue
Energy infrastructure revenue:
– energy infrastructure revenue
– pass-through revenue
Asset management revenue:
– asset management revenue
– pass-through revenue
FinanCe inCOMe
Interest
Redeemable ordinary shares (EII) and redeemable preference shares (GDI) interest income
Finance lease income
OtHer inCOMe
Dividends
Rental income
Share of net profits of associates and jointly controlled entities accounted for using the equity method
2013
$000
2012
$000
769,895
8,449
778,344
82,293
344,294
426,587
637,316
6,626
643,942
69,296
296,007
365,303
1,204,931
1,009,245
11,697
3,069
3,822
18,588
3,243
637
6,317
2,331
2,817
11,465
11,153
535
1,227,399
1,032,398
44,868
1,272,267
28,263
1,060,661
52
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 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
Gas pipeline costs
Management, operating and maintenance costs
FinanCe COsts
Interest on bank overdrafts and borrowings
Amortisation of deferred borrowing costs
Other finance costs
Less: amounts included in the cost of qualifying assets
(Gain)/loss on derivatives
Unwinding of discount on non-current liabilities
The average interest rate on funds borrowed is 7.77% p.a. (2012: 8.14% p.a.) including amortisation of borrowing costs and other finance costs.
eMplOyee BeneFit expense
Post-employment benefits:
Defined contribution plans
Defined benefit plans
Termination benefits
Cash settled share-based payments
Other employee benefits
OtHer expenses
Doubtful debts
Impairment of intangibles
Impairment of goodwill (a)
Loss on disposal of property, plant and equipment
Other
2013
$000
2012
$000
124,787
5,674
130,461
8,449
344,294
352,743
316,438
9,257
9,378
335,073
(25,020)
310,053
(8,179)
739
104,459
5,950
110,409
6,626
296,007
302,633
225,517
16,013
9,061
250,591
(11,136)
239,455
507
681
302,613
240,643
9,176
(45)
9,131
4,941
26,568
128,683
169,323
805
2,075
1,867
480
9,906
15,133
6,863
1,145
8,008
1,384
17,843
105,678
132,913
-
473
-
278
16,700
17,451
(a) Impairment relates to a reassessment of renewal opportunities beyond current contracted terms for minor contracts in the asset management business.
53
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 8. signiFiCant iteMs
Individually significant income/(expenses) included in profit after related income tax expense are as follows:
signiFiCant inCOMe/(expense) iteMs
Profit on sale of Allgas Distribution Network before transaction costs
Write back/(transaction costs) on sale of Allgas Distribution Network
Gain on previously held interest in HDF on obtaining control
Transaction costs on acquisition of HDF
Integration costs on acquisition of HDF
significant items incurred by apa group
Management and performance fees charged to HDF by Hastings Funds Management
Takeover response costs incurred by HDF
significant items incurred by HDF
total significant items impacting eBitDa
Significant items impacting finance costs:
Gain on settlement of HDF interest rate swaps
profit/(loss) from significant items before income tax
Income tax related to significant items above
Write back of deferred tax on obtaining control of HDF
profit/(loss) from significant items after 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
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
2013
$000
2012
$000
-
18,588
142,333
(12,404)
(4,481)
144,036
(35,438)
(6,913)
(42,351)
101,685
8,713
110,398
2,818
6,814
120,030
7,313
(7,518)
(205)
51,626
51,421
12,032
(21,695)
-
-
-
(9,663)
-
-
-
(9,663)
-
(9,663)
-
(9,663)
(1,418)
482
(936)
51,371
50,435
51,421
50,435
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-assessable trust distribution
Non deductible expenses
Non assessable income
Unfranked dividends from associates
Other
Adjustment recognised in the current year in relation to the current tax of prior years
347,424
104,227
(11,443)
15,629
(58,939)
9,465
-
58,939
(7,518)
51,421
181,090
54,327
(13,787)
7,185
(6,400)
8,626
2
49,953
482
50,435
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.
54
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 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:
2013
grOss DeFerreD tax liaBilities
Intangible assets
Property, plant and equipment
Deferred expenses
Investments equity accounted
Available for sale investments
grOss DeFerreD tax assets
Provisions
Cash flow hedges
Defined benefit obligation
Security issue costs
Deferred revenue
Other
Tax losses
2013
$000
2012
$000
(11,685)
3,950
(34,697)
(32)
(42,464)
(27,091)
(9,803)
27,631
(16)
(9,279)
(553,626)
(553,626)
(512,520)
(512,520)
71,701
268,687
340,388
43,004
150,234
193,238
(213,238)
(319,282)
Opening
BalanCe
$000
CHargeD tO
inCOMe
$000
CHargeD tO
eQuity
$000
aCQuisitiOns/
DispOsals
$000
ClOsing
BalanCe
$000
(4,598)
623
(418,239)
(46,493)
(59,132)
(440)
(35,443)
(517,852)
30,084
12,410
12,389
531
(511)
(6,567)
150,234
198,570
(7,741)
290
-
(53,321)
5,244
(12,926)
(1,520)
(195)
978
6,580
3,534
1,695
(319,282)
(51,626)
-
-
-
(3,295)
34,697
31,402
-
14,980
(3,950)
32
-
-
-
11,062
42,464
-
(3,975)
(33,193)
(497,925)
19,338
-
-
(47,535)
(3,445)
(746)
(13,855)
(553,626)
1,033
13,063
-
-
-
46
114,919
129,061
115,206
36,361
27,527
6,919
368
467
59
268,687
340,388
(213,238)
55
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 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:
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
unrecognised deferred tax assets
2013
$000
2012
$000
(213,238)
(213,238)
(319,282)
(319,282)
-
-
-
-
(213,238)
(319,282)
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)
(41,243)
(7,875)
(6,533)
(7,812)
(4,298)
(515,582)
26,928
3,770
659
148,054
179,411
(336,171)
381
(18,079)
(449)
(264)
-
(2,269)
(55,378)
3,156
(1,185)
(144)
2,180
4,007
(51,371)
-
-
-
-
20,734
6,357
(27,631)
-
(540)
-
9,804
16
-
9,820
9,280
-
(4,598)
58,790
(418,239)
-
190
-
-
-
-
(511)
(59,132)
12,410
(440)
(35,443)
(6,567)
58,980
(512,520)
-
-
-
-
-
30,084
12,389
531
150,234
193,238
58,980
(319,282)
2013
$000
2012
$000
30,044
16,875
The following deferred tax assets have not been brought to account as assets:
Tax losses - capital
56
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 9. inCOMe tax (COntinueD)
tax consolidation
entities in the tax-consolidated group have agreed to pay a tax equivalent
Relevance of tax consolidation to the Group
payment to or from the head entity, based on the current tax liability or current
The Trust and its wholly-owned Australian resident entities formed a tax-
tax asset of the entity. Such amounts are reflected in amounts receivable from
consolidated group with effect from 1 July 2003 and are therefore taxed as a
or payable to other entities in the tax-consolidated group.
single entity from that date. The head entity within 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
tax liabilities between the entities should the head entity default on its tax
Nature of tax funding arrangement and tax sharing agreement
payment obligations or if an entity should leave the tax-consolidated group.
Entities within the tax-consolidated group have entered into a tax funding
The effect of the tax sharing agreement is that each member’s liability for the
arrangement and a tax sharing agreement with the head entity. Under the
tax payable by the tax-consolidated group is limited to the amount payable to
terms of the tax funding arrangement, Australian Pipeline Trust and each of the
the head entity under the tax funding arrangement.
10. DistriButiOns
reCOgniseD aMOunts
Final distribution paid on 14 september 2012
(2011: 15 September 2011)
Profit distribution - APT (a)
Profit distribution - APTIT (a) (Note 32)
Capital distribution - APT (Note 29)
Capital distribution - APTIT (Note 32)
interim distribution paid on 13 March 2013
(2011: 15 March 2012)
Profit distribution - APT (a)
Profit distribution - APTIT (a) (Note 32)
Capital distribution - APT (Note 29)
Capital distribution - APTIT (Note 32)
unreCOgniseD aMOunts
Final distribution payable on 11 september 2013
(2012: 14 September 2012)
Profit distribution - APT (a)
Profit distribution - APTIT (a)
Capital distribution - APT
Capital distribution - APTIT
(a) Profit distributions were unfranked (2012: unfranked).
2013
Cents per
seCurity
apt anD aptit
2013
tOtal
$000
2012
CENTS PER
SECURITY
5.09
3.28
7.32
2.31
14.74
2.26
-
-
32,786
21,160
47,182
14,879
121,930
18,719
-
-
3.42
3.41
8.41
2.66
4.54
3.88
6.52
2.06
2012
TOTAL
$000
19,054
18,295
46,761
15,449
29,034
24,797
41,655
13,201
35.00
256,656
34.90
208,246
16.02
2.32
-
0.16
18.50
133,877
19,424
-
1,313
154,614
5.09
3.28
7.32
2.31
18.00
32,786
21,160
47,182
14,879
116,007
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)
2013
$000
3,609
2012
$000
3,522
57
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 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
Charged to profit or loss
Balance at end of year
2013
$000
104,483
(805)
103,678
55,931
4,744
146
70
2012
$000
90,747
-
90,747
143,922
3,590
239
21
164,569
238,519
5,806
1,167
3,037
10,010
-
805
805
4,367
139
2,266
6,772
-
-
-
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.
32
219
232
322
805
1,927
1,788
12,469
285
16,469
-
-
-
-
-
9
126
-
285
420
ageing of impaired receivables
Not past due
30 - 60 days
60 - 90 days
90 - 120 days
Total
12. OtHer Current FinanCial assets
Derivatives at fair value:
Equity forward contracts
Foreign exchange contracts - cash flow hedges
Cross currency interest rate swaps - cash flow hedges
Financial assets carried at amortised cost:
Redeemable preference share interest
58
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 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
Available-for-sale investments carried at fair value:
Ethane Pipeline Income Fund
Hastings Diversified Utilities Fund
Financial assets carried at amortised cost:
Redeemable ordinary shares
Redeemable preference shares
Derivatives - at fair value:
Equity forward contracts
Cross currency interest rate swaps - cash flow hedges
2013
$000
11,860
866
12,726
2012
$000
10,759
745
11,504
5,662
4,134
34,318
34,318
22,244
22,244
7,394
-
17,264
10,400
1,894
131,588
168,540
9,564
263,441
15,339
10,400
326
-
299,070
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 attract periodic interest payments and have a redemption date 10 years from issue.
59
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 17. inVestMents aCCOunteD FOr using tHe eQuity MetHOD
naMe OF entity
prinCipal aCtiVity
COuntry OF inCOrpOratiOn
Jointly Controlled entities:
SEA Gas
GDI (EII)
Gas transmission
Gas distribution
Diamantina Power Station
Power generation (gas)
Energy Infrastructure Investments
Unlisted energy vehicle
Power generation (wind)
Australia
Australia
Australia
Australia
Australia
EII 2
Associates:
Envestra Limited (a)
OWnersHip interest %
2013
2012
50.00
20.00
50.00
19.90
20.20
50.00
20.00
50.00
19.90
20.20
Gas distribution
Australia
33.05
33.44
Investments in jointly controlled entities and associates
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
Summarised financial information in respect of the jointly controlled entities and associates 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
2013
$000
2012
$000
589,131
512,948
512,948
65,451
44,868
-
14,316
637,583
(48,452)
589,131
479,409
67,768
28,263
-
(22,666)
552,774
(39,826)
512,948
2013
$000
2012
$000
5,745,562
4,824,283
921,279
285,719
862,778
147,606
44,868
5,415,250
4,558,821
856,429
257,824
725,723
102,732
28,263
(a) APA participated in Envestra’s Distribution Reinvestment Plan for Envestra’s October 2012 and April 2013 Distributions. APA purchased further securities in the April 2013 Envestra
share placement equivalent to its interest at the time however APA’s interest has diluted over the financial year due to non-participation in the May 2013 share purchase plan issue.
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
49 and 43 respectively.
60
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 18. prOperty, plant anD eQuipMent
grOss Carrying aMOunt
Balance at 1 July 2011
Additions
Disposals
Derecognised on disposal of subsidiary
Transfers
Balance at 1 July 2012
Additions
Disposals
Derecognised on disposal of subsidiary (Note 42)
Acquisitions through business combinations (Note 41)
Transfers
Balance at 30 June 2013
aCCuMulateD DepreCiatiOn
Balance at 1 July 2011
Disposals
Derecognised on disposal of subsidiary
Depreciation expense
Balance at 1 July 2012
Disposals
Derecognised on disposal of subsidiaries (Note 42)
Depreciation expense
Transfers
Balance at 30 June 2013
net BOOK Value
As at 30 June 2012
as at 30 June 2013
FreeHOlD lanD
anD BuilDings
- at COst
$000
leaseHOlD
iMprOVeMents
- at COst
$000
plant anD
eQuipMent
- at COst
$000
WOrK in
prOgress
- at COst
$000
119,251
2,431
4,039,560
-
(15)
(227)
33
6,877
(15,876)
(520,891)
69,363
125,832
273,198
-
(1,868)
(72,113)
tOtal
$000
4,287,074
280,075
(15,900)
(527,349)
(1)
-
(9)
(4,363)
2,716
117,595
8,537
(7,573)
(3,648)
16,190
-
2,222
3,579,033
325,049
4,023,899
2,717
-
-
-
-
4,562
(4,597)
(372,380)
1,896,192
368,231
-
384,047
(12,170)
(327)
(376,355)
20,972
1,933,354
216,777
(219,571)
(2,794)
131,101
4,939
5,319,587
494,354
5,949,981
(15,537)
(1,840)
(501,355)
1
270
(2,126)
(17,392)
200
19
(2,376)
473
(19,076)
15
206
(308)
(1,927)
-
-
(233)
-
15,131
55,867
(102,025)
(532,382)
3,470
3,108
(122,178)
(352)
(2,160)
(648,334)
-
-
-
-
-
-
-
-
-
(518,732)
15,147
56,343
(104,459)
(551,701)
3,670
3,127
(124,787)
121
(669,570)
100,203
112,025
295
2,779
3,046,651
325,049
3,472,198
4,671,253
494,354
5,280,411
61
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013
19. gOODWill
grOss Carrying aMOunt
Balance at beginning of financial year
Acquisitions (Note 41)
Disposals (Note 42)
Goodwill impairment
Balance at end of financial year
2013
$000
2012
$000
411,883
765,476
(24,992)
(1,867)
515,344
802
(104,263)
-
1,150,500
411,883
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;
– Energy infrastructure:
• New South Wales pipelines;
• Victorian Transmission System;
• South West Queensland Pipeline;
• Other energy infrastructure.
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
New South Wales pipelines
Victorian Transmission System
South West Queensland Pipeline
Other energy infrastructure (a)
2013
$000
2012
$000
31,456
33,323
146,008
105,061
663,268
204,707
1,150,500
146,008
105,061
-
127,491
411,883
(a) Primarily represents goodwill relating to the Roma to Brisbane Pipeline ($76.4m) and the Pilbara Pipeline System ($77.2m).
The recoverable amounts of cash-generating units are determined based on
As contracts mature, given ongoing demand for capacity, it is assumed that
value-in-use calculations. These calculations use cash flow projections based
capacity is resold.
on a five year financial business plan and thereafter a further 15 year financial
model, being the basis of the Group’s forecasting and planning processes.
Asset management cash flow projections reflect long term agreements with
assumptions of renewal on similar terms and conditions based on management
For fully regulated assets, cash flows have been extrapolated on the basis of
expectations.
existing transportation contracts and government policy settings, and expected
contract renewals with a resulting average annual growth rate of 1.8% p.a.
These expected cash flows are factored into the regulated asset base and do
not exceed management’s expectations of the long-term average growth rate
for the market in which the CGU operates.
For non-regulated assets, APA has assumed no capacity expansion beyond
installed and committed levels; utilisation of capacity is based on existing
contracts, government policy settings and expected market outcomes.
Cash flow projections are estimated for a period of up to 20 years, with a
terminal value, recognising the long term nature of the assets. The pre-tax
discount rates used are 8.25% p.a. (2012: 8.5% p.a.) for energy infrastructure
assets and 8.25% p.a. (2012: 8.5% p.a.) for asset management.
These assumptions have been determined with reference to historic
information, current performance and expected changes taking into account
external information.
62
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 20. OtHer intangiBle assets
COntraCt anD OtHer intangiBles
gross carrying amount
Balance at beginning of financial year
Adjustments to amounts recognised from business combinations
Acquisitions
Impairment
Disposals
Balance at end of financial year
accumulated amortisation and impairment
Balance at beginning of financial year
Amortisation expense
Disposals
Balance at end of financial year
net book value
2013
$000
2012
$000
207,031
-
1,105
(2,075)
-
210,389
(2,632)
443
(473)
(697)
206,061
207,031
(23,372)
(5,674)
-
(29,046)
177,015
(17,486)
(5,950)
64
(23,372)
183,659
The Consolidated Entity holds various third party operating and maintenance contracts. The combined gross carrying amount of $206.061 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 profit or loss
and other comprehensive income.
21. OtHer nOn-Current assets
Line pack gas
Gas held in storage
Other assets
22. traDe anD OtHer payaBles
Current
Trade payables (a)
Other payables (b)
nOn-Current
Other payables
(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.
10,922
5,085
2,625
18,632
28,427
161,635
190,062
3,749
3,749
4,356
4,993
192
9,541
14,347
159,098
173,445
1,068
1,068
63
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 23. Current BOrrOWings
unseCureD - at aMOrtiseD COst
Bank borrowings
Guaranteed Senior Notes (a)
seCureD - at aMOrtiseD COst
Bank Borrowings
2013
$000
2012
$000
-
80,910
-
-
80,910
-
-
-
-
-
(a) Represents USD denominated private placement notes of US$74 million measured at the exchange rate at reporting date which matures 9 September 2013.
24. OtHer Current FinanCial liaBilities
Derivatives
Derivatives that are designated and effective as hedging instruments carried at fair value:
Forward foreign exchange contracts - cash flow hedges
Interest rate swaps - cash flow hedges
Cross currency interest rate swaps - cash flow hedges
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:
Current
Incentives
Cash settled security-based payments
Leave balances
Termination benefits
nOn-Current
Cash settled security-based payments
Retirement benefit obligation (Note 35)
Leave balances
64
-
22,500
103,885
126,385
365
21,832
37,110
59,307
2013
$000
2012
$000
71,098
10,845
81,943
45,307
4,935
50,242
23,042
8,193
38,030
1,833
71,098
15,215
23,061
7,031
45,307
55,117
12,349
67,466
59,667
4,400
64,067
13,430
6,263
35,424
-
55,117
12,875
41,295
5,497
59,667
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 26. OtHer liaBilities
Current
Unearned revenue - other
nOn-Current
Unearned revenue - other
27. nOn-Current BOrrOWings
unseCureD - at aMOrtiseD COst
Bank borrowings (a)
Guaranteed Senior Notes (b)
Subordinated Notes (c)
Less: unamortised borrowing costs
12,921
12,921
16,669
16,669
761
761
4,078
4,078
2013
$000
2012
$000
525,000
3,227,340
515,000
(34,098)
1,123,667
1,801,175
-
(18,896)
4,233,242
2,905,946
(a) Relates to the non-current portion of long-term borrowings. Refer to Note 38 for details of interest rates.
(b) Represents USD denominated private placement notes of US$725 million (2012: US$799 million) measured at the exchange rate at reporting date, A$314.9 million of AUD denominated
private placement notes (2012: A$314.9 million), AUD medium term notes (MTN) of A$300 million, CAD MTN of C$300 million, GBP MTN of £350 million, JPY MTN of ¥10,000 million
and US notes issued under 144a of US$750 million. Refer to Note 38 for details of interest rates and maturity profiles.
(c) Represents AUD denominated subordinated notes. Refer to Note 38 for details of interest rates and maturity profiles.
28. OtHer nOn-Current FinanCial liaBilities
Derivatives
Derivatives that are designated and effective as hedging instruments carried at fair value:
Interest rate swaps - cash flow hedges
Cross currency interest rate swaps - cash flow hedges
29,512
147,744
177,256
44,081
242,511
286,592
29. issueD Capital
securities
835,750,807 securities, fully paid (2012: 644,485,583 securities, fully paid) (a)
1,820,516
1,138,205
Movements
Balance at beginning of financial year
644,486
1,138,205
2013
nO. OF
seCurities
000
2013
$000
Issue of securities under Distribution Reinvestment Plan
Issue of securities in business combination
Capital return to Securityholders (Note 10)
Issue cost of securities
Tax relating to security issue costs
Balance at end of financial year
(a) Fully paid securities carry one vote per security and carry the right to distributions.
15,548
175,717
-
-
-
63,503
672,630
(47,182)
(6,672)
32
2012
NO. OF
SECURITIES
000
634,116
10,370
-
-
-
-
2012
$000
1,192,779
33,879
-
(88,416)
(53)
16
835,751
1,820,516
644,486
1,138,205
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.
65
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 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
2013
$000
(62,475)
8,669
1,736
(52,070)
2012
$000
(35,212)
8,669
82,696
56,153
(35,212)
28,003
(144,702)
43,411
91,438
(27,431)
14,316
(4,295)
(62,475)
(116,624)
34,987
48,983
(14,695)
(22,666)
6,800
(35,212)
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 recognised
Gain transferred to profit or loss
Deferred tax related to gains/losses recognised
Balance at end of financial year
82,696
26,676
(142,333)
34,697
1,736
18,227
92,099
-
(27,630)
82,696
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.
OtHer reserVes
Balance at beginning of financial year
Acquisition of non-controlling interest
Transfer to retained earnings
Balance at end of financial year
-
(2,765)
2,765
-
-
-
-
-
The other reserves balance arose on acquiring the remaining interest in the Hastings Diversified Utilities Fund following control being obtained on 9 October 2013.
The balance of the reserve was transferred to retained earnings on completion of the acquisition.
66
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 31. retaineD earnings
Balance at beginning of financial year
Net profit attributable to Securityholders
Distributions paid (Note 10)
Transfer from reserves on acquisition of non-controlling interest in HDF
Actuarial gain/(loss) on defined benefit plans recognised directly to retained earnings after tax
32. nOn-COntrOlling interests
APT Investment Trust
Other non-controlling interest
apt inVestMent trust
issued capital:
Balance at beginning of financial year
Issue of securities under distribution reinvestment plan
Issue of securities in business combination
Distribution - capital return (Note 10)
Issue cost of securities
Tax relating to security issue costs
Balance at end of financial year
reserves:
Available for sale investment revaluation reserve:
Balance at beginning of financial year
Valuation 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 nOn-COntrOlling interest
Issued capital
Reserves
Retained earnings
2013
$000
32,785
260,624
(154,716)
(2,765)
9,216
145,144
2012
$000
19,054
84,693
(48,088)
-
(22,874)
32,785
598,671
50
598,721
386,850
49
386,899
364,066
19,663
212,035
(14,879)
(2,105)
-
382,001
10,733
-
(28,650)
(18)
-
578,780
364,066
1,624
(1,157)
467
21,160
38,143
(39,879)
19,424
4
1
45
50
534
1,090
1,624
18,295
45,957
(43,092)
21,160
4
1
44
49
67
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 33. leases
leasing arrangements - receivables
Finance lease receivables relate to the lease of a metering station, natural gas vehicle facilities, X41 power station expansion and two pipeline laterals.
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)
(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
2013
$000
2012
$000
8,336
24,249
30,324
62,909
62,909
(23,847)
39,062
4,744
34,318
39,062
9,120
23,200
25,066
57,386
6,071
19,946
10,767
36,784
36,784
(10,950)
25,834
3,590
22,244
25,834
7,435
20,238
11,285
38,958
68
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 34. prOVisiOns
Balance at 30 June 2012
Additional provisions recognised
Unwinding of discount
Reductions arising from payments/other sacrifices of future economic benefits
Reductions resulting from re-measurement or settlement without cost
Balance at 30 June 2013
Current (Note 25)
Non-current (Note 25)
Balance at 30 June 2011
Additional provisions recognised
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
OtHer (b)
$000
4,354
294
287
-
-
4,935
-
4,935
4,935
4,015
57
282
-
4,354
-
4,354
4,354
12,395
2,905
-
(2,455)
(2,000)
10,845
10,845
-
10,845
6,452
6,599
-
(656)
12,395
12,349
46
12,395
tOtal
$000
16,749
3,199
287
(2,455)
(2,000)
15,780
10,845
4,935
15,780
10,467
6,656
282
(656)
16,749
12,349
4,400
16,749
(a) Costs of dismantling pipelines and restoring the sites on which the pipelines are located, and costs of dismantling leasehold improvements restoring leased premises are to be
included in the cost of the assets 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.
69
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 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 2013 by Mercer
their choice. The Consolidated Entity has three plans with defined benefit
(Australia) Pty Ltd and Russell Investments (2012: 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:
aMOunts reCOgniseD in tHe stateMent OF prOFit Or lOss anD OtHer 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
2013
$000
2012
$000
3,376
3,356
(6,777)
(45)
16,824
2,980
4,889
(6,724)
1,145
1
Actuarial gains/(losses) incurred during the year and recognised in the statement of profit or loss and other
comprehensive income
13,166
(32,677)
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
Gain/(expense) recognised in profit or loss
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 (gains)/losses
Benefits paid
Taxes and premiums paid
Closing defined benefit obligation
70
118,404
(141,465)
(23,061)
(41,295)
45
13,166
5,023
(23,061)
141,953
3,376
3,356
1,442
(3,119)
(4,786)
(757)
141,465
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
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 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 gains/(losses)
Contributions from employer
Contributions from plan participants
Benefits paid
Taxes and premiums paid
Closing fair value of plan assets
2013
$000
100,658
6,777
10,047
5,023
1,442
(4,786)
(757)
2012
$000
98,758
6,724
(6,722)
5,094
1,563
(4,046)
(713)
118,404
100,658
The average principal actuarial assumptions used in determining post-employment obligations for the Consolidated Entity’s plans are shown below (expressed as
weighted averages):
Discount rate (p.a.)
Expected return on plan assets (p.a.)
Expected salary rate increase (p.a.)
The invested defined benefit assets were held in the following classes:
Australian equities
International equities
Fixed income
Property
Alternatives
Cash
The history of experience adjustments is as follows:
Fair value of plan assets
Present value of defined benefit obligation
(Deficit)/surplus
Experience adjustments (gains)/losses - plan liabilities
Experience adjustments (gains)/losses - plan assets
2013
$000
118,404
141,465
(23,061)
2,389
(7,055)
2012
$000
100,658
141,953
(41,295)
2,313
4,766
2011
$000
98,758
111,325
(12,567)
3,090
(3,167)
2013
%
3.2
6.8
4.0
29.2
29.8
11.7
7.3
16.5
5.5
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 $4,090,000 in contributions to be paid to the defined benefit plans during the year ending 30 June 2014.
71
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 36. earnings per seCurity
Basic and diluted earnings per security (cents)
2013
38.7
2012
20.4
The earnings and weighted average number of ordinary securities used in the calculation of basic and diluted earnings per security are as follows:
Net profit attributable to Securityholders for calculating basic and diluted earnings per security ($000)
298,767
130,650
Adjusted weighted average number of ordinary securities used in the calculation of basic and diluted earnings
per security (000)
nO. OF seCurities
772,314
639,743
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
2013
$000
79,931
1,024
80,955
2012
$000
88,944
240,990
329,934
(a) As at 30 June 2013, Australian Pipeline Limited held $5.0 million (2012: $5.0 million) on deposit to meet its financial requirements as the holder of an Australian Financial Services
Licence.
(b) investments acquired and disposed of
Equity accounted investments
$31,551,000 has been invested in Envestra through the Dividend Reinvestment Plan and an additional amount of $33,900,000 was invested in Envestra through a
share placement.
In the prior financial year, $28,755,000 was invested in Envestra through the Dividend Reinvestment Plan, $5,000 was invested in Diamantina Power Station and
$211,800 was recovered from the finalisation of fees recoverable from REST following the SEA Gas transaction in the preceding year.
Available-for-sale investments
In the prior financial year, $11,669,000 was invested in the purchase of shares in Hastings Diversified Utilities Fund.
72
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 37. nOtes tO tHe stateMent OF CasH FlOWs (COntinueD)
(c) reconciliation of profit for the year to the net cash provided by operating activities
Profit for the year
Gain on on previously held interest in HDF on obtaining control
Acquisition costs on business combinations
Profit on sale of Allgas Distribution Network before transaction costs
(Write back)/transaction costs on sale of Allgas Distribution Network
Impairment of intangible
Loss on disposal of property, plant and equipment
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
(d) Financing facilities
unseCureD FaCilities
Bank borrowings (a)
Amounts used
Amounts unused
guaranteed senior notes (b)
Amounts used
Amounts unused
subordinated notes (c)
Amounts used
Amounts unused
seCureD FaCilities
Bank borrowings
Amounts used
Amounts unused
2013
$000
296,003
(142,333)
12,408
-
(18,483)
-
480
1,867
(44,868)
48,452
130,461
1,481
4,248
706
(1,605)
(5,407)
12,093
27,141
51,737
374,381
2012
$000
130,655
-
-
(12,032)
21,695
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
525,000
891,667
1,123,667
776,333
1,416,667
1,900,000
3,308,250
1,801,175
-
-
3,308,250
1,801,175
515,000
-
515,000
-
-
-
-
-
-
-
-
-
(a) Relates to the non-current portion of long-term borrowings. Refer to Note 38 for details of interest rates.
(b) Represents USD denominated private placement notes of US$725 million (2012: US$799 million) measured at the exchange rate at reporting date, A$314.9 million of AUD denominated
private placement notes (2012: A$314.9 million), A$ medium term notes (MTN) of A$300 million, CAD MTN of C$300 million, GBP MTN of £350 million, JPY MTN of ¥10,000 million
and US notes issued under US144a of US$ 750 million. Refer to Note 38 for details of interest rates and maturity profiles.
(c) Represents AUD denominated subordinated notes. Refer to Note 38 for details of interest rates and maturity profiles.
73
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 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 Risk Management Policy, which provides
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
written principles on 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 exposure is primarily to the financial risk of changes
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.
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; and
variety of capital markets and bank loan facilities, to meet anticipated funding
– interest rate swaps to mitigate the risk of rising interest rates.
requirements.
There has been no change to the nature of the Consolidated Entity’s exposure
Controlled entities are subject to externally imposed capital requirements.
to market risks or the manner in which it manages and measures the risks from
These relate to the Australian Financial Services Licence held by Australian
the previous period.
Pipeline Limited, the Responsible Entity of the Consolidated Entity and were
adhered to for the entirety of the 2012 and 2013 periods.
The Consolidated Entity is also exposed to price risk arising from its investments
in and forward purchase contracts over listed equities. The majority of
The Consolidated Entity’s capital risk management strategy remains unchanged
this exposure arises from the Consolidated Entity’s investment in Ethane
from the previous period.
Gearing ratio
Pipeline Income Fund which is publicly traded on the Australian Securities
Exchange (ASX).
The Consolidated Entity’s Board of Directors reviews the capital structure on a
(d) Foreign currency risk management
regular basis. As part of the review, the Board considers the cost of capital and
The Consolidated Entity undertakes certain transactions denominated in
the state of the markets. The Consolidated Entity targets gearing in a range of
foreign currencies and hence exposures to exchange rate fluctuations arise.
65% to 68%. Gearing is determined as the proportion of net debt to net debt
Exchange rate exposures are managed within approved policy parameters
plus equity. Based on recommendations of the Board, the Consolidated Entity
utilising foreign exchange contracts, including forward contracts and cross
balances its overall capital structure through new equity issues, through the
currency contracts. All foreign currency exposure was managed in accordance
issue of new debt or the redemption of existing debt, and through a disciplined
with the Treasury Risk Management Policy in both 2012 and 2013.
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.
The carrying amount of the Consolidated Entity’s foreign currency denominated
monetary assets and monetary liabilities at the reporting date is as follows:
74
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 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
British pound borrowings
Cross currency swaps
Foreign exchange contracts
liaBilities
assets
2013
$000
1,693,637
(1,693,637)
110,203
(110,203)
311,947
2012
$000
780,731
(780,731)
122,256
(122,256)
287,986
(311,947)
(287,986)
581,866
(581,866)
-
-
-
-
-
-
365
365
2013
$000
2012
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,788
1,788
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$1million
that are certain. Basis adjustments are made to the carrying amounts of non-financial hedged items when the anticipated purchase takes place.
The following table details the forward foreign currency contracts outstanding at reporting date:
OutstanDing COntraCts
aVerage
exCHange rate
FOreign
CurrenCy
us$000
COntraCt
Value
$000
Fair Value
$000
2013
Buy us dollars
Less than 3 months
3 to 6 months
6 to 12 months
2012
Buy us dollars
Less than 3 months
3 to 6 months
6 to 12 months
0.9966
1.0155
0.9500
0.9480
1.0297
1.0257
12,910
2,990
3,585
19,485
4,675
3,660
1,485
9,820
12,954
2,944
3,774
19,672
4,931
3,555
1,448
9,934
1,222
358
208
1,788
(350)
75
36
(239)
The Consolidated Entity has entered into contracts to purchase equipment in
As at reporting date, the aggregate amount of unrealised profit 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 $1,788,000 (2012: unrealised losses of
risk arising from these anticipated future transactions, which are designated as
$239,000). It is anticipated that the capital purchases will take place within the
cash flow hedges.
next financial year at which stage unrealised mark to market amounts in equity
will be included in the carrying amount of the asset being purchased.
75
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 38. FinanCial instruMents (COntinueD)
(d) Foreign currency risk management (continued)
Cross currency swap contracts
Under cross currency swap contracts, the Consolidated Entity agrees to
The Consolidated Entity receives fixed amounts in the various foreign currencies
exchange specified principal and interest foreign currency amounts at agreed
and pays both variable interest rates (based on Australian BBSW) and fixed
future dates at a specified exchange rate. Such contracts enable the
interest rates based on agreed interest rate swap rates.
Consolidated Entity to mitigate the risk of adverse movements in foreign
exchange rates in relation to principal and interest payments arising under the
2003, 2007, 2009 and 2012 US dollar note issues, the 2012 Japanese yen, the
2012 Canadian dollar and the 2012 British pound medium term note issues.
The following table details the swap contracts principal and interest payments
over various durations as at the reporting date:
exCHange rate
aMOunt
2013
$
2012
$
2013
$000
2012
$000
2003 uspp 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
Less than 1 year
1 year to 2 years
2 years to 5 years
5 years and more
2007 uspp 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 uspp 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
76
0.6573
0.6573
0.6573
0.6573
0.6573
0.6573
0.6573
0.6573
0.8068
0.8068
0.8068
0.8068
0.8068
0.8068
0.8068
0.8068
0.8068
0.8068
0.8068
0.8068
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.7576
0.6573
0.6573
0.6573
0.6573
(19,671)
(16,480)
(22,665)
(2,885)
(61,701)
-
(112,582)
0.6573
0.6573
0.6573
-
(185,608)
(95,847)
(22,863)
(19,671)
(33,374)
(8,655)
(84,563)
-
(112,582)
(185,608)
(95,847)
(394,037)
(394,037)
(29,737)
(29,737)
(77,969)
(46,805)
(184,248)
(29,737)
(29,737)
(89,212)
(65,299)
(213,985)
(190,878)
(190,878)
(304,908)
(304,908)
(495,786)
(495,786)
(15,934)
(15,934)
(37,057)
(13,156)
(82,081)
(85,787)
(98,997)
(15,934)
(15,934)
(44,221)
(21,927)
(98,016)
(85,787)
(98,997)
(184,784)
(184,784)
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 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
2 years to 5 years
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
2012 us144a issue
Buy us dollars - interest
Less than 1 year
1 year to 2 years
2 years to 5 years
5 years and more
Buy us dollars - principal
5 years and more
2012 gBp Mtn issue
Buy British pounds - interest
Less than 1 year
1 year to 2 years
2 years to 5 years
5 years and more
Buy British pounds - principal
5 years and more
exCHange rate
aMOunt
2013
$
2012
$
2013
$000
2012
$000
79.4502
79.4502
79.4502
-
79.4502
79.4502
79.4502
79.4502
(1,543)
(1,543)
(4,629)
-
(7,715)
(1,543)
(1,543)
(4,629)
(1,543)
(9,258)
79.4502
-
(125,865)
-
-
79.4502
-
(125,865)
1.0363
1.0363
1.0363
1.0363
1.0363
1.0363
1.0363
1.0363
(12,289)
(12,289)
(36,867)
(18,434)
(79,879)
(12,289)
(12,289)
(36,867)
(30,723)
(92,168)
1.0363
1.0363
(289,494)
(289,494)
1.0198
1.0198
1.0198
1.0198
1.0198
0.6530
0.6530
0.6530
0.6530
0.6530
-
-
-
-
-
-
-
-
-
-
(28,498)
(28,498)
(85,495)
(128,242)
(270,733)
(735,438)
(22,779)
(22,779)
(68,338)
(159,456)
(273,352)
(535,988)
-
-
-
-
-
-
-
-
-
-
-
-
77
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 38. FinanCial instruMents (COntinueD)
(d) Foreign currency risk management (continued)
Foreign currency sensitivity analysis
The Consolidated Entity is exposed to movements in the USD, JPY, CAD and
details the Consolidated Entity’s sensitivity to a 10% decrease and increase in
GBP through its fully hedged borrowings from global debt capital markets and
the Australian dollar against the relevant foreign currencies. The sensitivity rate
its current obligations for future purchases of capital equipment. The entire
used is 10% and represents management’s assessment of the greatest possible
foreign currency cash flows arising from the USPP, US144A and MTN issues
change in foreign exchange rates. The sensitivity analysis includes only
have been swapped; as such, the Consolidated Entity has no currency risk
outstanding foreign currency denominated monetary items and adjusts their
associated with those note issues. Therefore, the sensitivity analysis has only
translation at the period end for a 10% change in foreign currency rates.
been performed on the forward foreign exchange contracts. The following table
a$ depreciating by 10%
Profit
Other equity (a)
a$ appreciating by 10%
Profit
Other equity (a)
2013
$000
-
(2,365)
-
1,935
2012
$000
-
(1,065)
-
871
(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.
(e) interest rate risk management
The Consolidated Entity is exposed to interest rate risk as it borrows funds at
Interest rate swap contracts
both fixed and floating interest rates. This risk is managed by the Consolidated
Under interest rate swap contracts, the Consolidated Entity agrees to exchange
Entity by maintaining an appropriate mix between fixed and floating rate
the difference between fixed and floating rate interest amounts calculated on
borrowings, and through the use of interest rate swap contracts. Hedging
agreed notional principal amounts. Such contracts enable the Consolidated
activities are evaluated regularly to align with interest rate views and defined
Entity to mitigate the risk of cash flow exposures on the issued variable rate
policy, ensuring appropriate hedging strategies are applied. Hedging activity is
debt held. The fair value of interest rate swaps at the reporting date is
complemented by “natural hedges” from regulatory resets and CPI adjusted
determined by discounting the future cash flows using the yield curves at
revenues.
reporting date. The average interest rate is based on the outstanding balances
The Consolidated Entity’s exposures to interest rate risk on financial liabilities
at the end of the financial year.
are detailed in the liquidity risk management section of this note. Exposure to
The following table details the notional principal amounts and remaining terms
financial assets is limited to cash and cash equivalents amounting to
of the cross currency and interest rate swap contracts outstanding as at the end
$80.6 million as at 30 June 2013 (2012: $329.9 million).
of the financial year:
WeigHteD aVerage
interest rate
nOtiOnal
prinCipal aMOunt
Fair Value
2013
% p.a.
2012
% p.a.
2013
$000
2012
$000
2013
$000
2012
$000
CasH FlOW HeDges
pay fixed auD interest - receive floating auD or fixed/floating foreign currency
Less than 1 year
1 year to 2 years
2 years to 5 years
5 years and more
7.03
5.90
7.62
7.24
5.39
7.03
7.52
7.57
187,582
100,000
713,137
2,060,672
200,000
187,582
687,272
915,111
(34,411)
(4,804)
(128,246)
13,426
3,061,391
1,989,965
(154,035)
(2,760)
(45,620)
(151,358)
(133,806)
(333,544)
78
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 38. FinanCial instruMents (COntinueD)
(e) interest rate risk management (continued)
The Consolidated Entity had no fair value hedges in 2012 or 2013.
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
The Consolidated Entity’s analysis of its exposure to equity prices has
established that, overall, its sensitivity declined during the current period
compared to the prior period. This outcome is largely a result of the full
acquisition of Hastings Diversified Utilities Fund thereby removing the
sensitivity to price variations on APA’s prior year holdings.
(g) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual
obligations resulting in financial loss to the Consolidated Entity. The
Consolidated Entity has adopted the policy of only dealing with creditworthy
counterparties and obtaining sufficient collateral or bank guarantees where
appropriate as a means of mitigating any risk of loss. For financial investments
The sensitivity analysis below has been determined based on the exposure to
or market risk hedging, the Consolidated Entity’s policy is to deal with highly
interest rates for both derivative and non-derivative instruments held. A 100
rated counterparties. As at the reporting date, all counterparties of this type
basis point increase or decrease is used and represents management’s
were A- (Standard & Poor’s)/A3 (Moody’s) or higher. The Consolidated Entity’s
assessment of the greatest possible change in interest rates. At reporting date,
exposure to financial instrument and deposit credit risk is closely monitored
if interest rates had been 100 basis points higher or lower and all other variables
against counterparty credit limits imposed by the Treasury Risk Management
were held constant, the Consolidated Entity’s:
Policy approved by the Board. These limits are regularly reviewed by the Board.
– net profit would decrease by $2,250,000 or increase by $2,250,000 (2012:
Trade receivables consist of mainly corporate customers which are diverse and
decrease by $6,237,000 or increase by $6,237,000). This is mainly
geographically spread. Most significant customers have an investment grade
attributable to the Consolidated Entity’s exposure to interest rates on its
rating from either Standard & Poor’s or Moody’s. Ongoing credit monitoring of
variable rate borrowings; and
the financial position of customers is maintained.
– equity reserves would increase by $13,360,000 with a 100 basis point
decrease in interest rates or decrease by $10,972,000 with a 100 basis point
increase in interest rates (2012: decrease by $17,960,000 or increase by
$17,387,000 respectively). This is due to the changes in the fair value of
The carrying amount of financial assets recorded in the financial statements,
net of any allowances, represents the Consolidated Entity’s maximum exposure
to credit risk in relation to those assets.
derivative interest instruments.
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 certain wholly-owned controlled entities with either a deficit in
shareholders’ funds or an excess of current liabilities over current assets. The
fair value of the financial guarantee as at 30 June 2013 has been determined to
be immaterial and no liability has been recorded (2012: $nil). Refer to Note 40
for details of entities included in the guarantee.
(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.
The Consolidated Entity’s profit sensitivity to interest rates has decreased
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 with an increase
in fixed for fixed cross currency interest rate swaps.
(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
trade any of these holdings.
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 (2012: $nil); and
– equity reserves would decrease/increase by $219,000 (2012: $5,947,000),
due to the changes in the fair value of available-for-sale shares.
79
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 2013
$000
2012
$000
525,000
891,667
1,123,667
776,333
1,416,667
1,900,000
1,188,472
1,095,597
-
-
1,188,472
1,095,597
300,000
300,000
-
-
300,000
300,000
110,203
122,256
-
-
110,203
122,256
311,947
287,986
-
-
311,947
287,986
515,000
-
515,000
820,031
-
820,031
581,866
-
581,866
-
-
-
-
-
-
-
-
-
38. FinanCial instruMents (COntinueD)
(h) liquidity risk management (continued)
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 2016
– 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
Unsecured Australian Dollar subordinated notes with maturity in 2072
– amount used
– amount unused
Unsecured US144a medium term notes with maturity in 2022
– amount used
– amount unused
Unsecured British Pound medium term notes with maturity in 2024
– amount used
– amount unused
80
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 38. FinanCial instruMents (COntinueD)
(h) liquidity risk management (continued)
Liquidity and interest risk table
Included in the following table are the Consolidated Entity’s remaining
All foreign currency note exposures (both principal and interest) have been
contractual maturities for its financial liabilities. The table has been drawn up
fully hedged back into Australian dollars at fixed interest rates for the entire
based on the undiscounted cash flows of financial liabilities taking account of
duration of the note exposure. Therefore the table below shows the undiscounted
the earliest date on which the Consolidated Entity can be required to pay. The
Australian dollar cash flows associated with the foreign currency notes, cross
table includes both interest and principal cash flows.
currency interest rate swaps and fixed interest rate swaps in aggregate.
aVerage
interest rate
% p.a.
less tHan
1 year
$000
1 - 5 years
$000
MOre tHan
5 years
$000
2013
FinanCial liaBilities
Trade and other payables
Unsecured bank borrowings (a)
2012 Subordinated Notes (b)
Interest Rate Swaps (Net Settled)
guaranteed senior notes:
Denominated in a$
2007 Series A (c)
2007 Series C (c)
2007 Series E (d)
2007 Series G (e)
2007 Series H (e)
2010 AUD Medium Term Note (f)
Denominated in us$ (rates shown are the coupon rate of the us dollar notes)
2003 Series B (g)
2003 Series C (h)
2003 Series D (i)
2007 Series B (c)
2007 Series D (d)
2007 Series F (e)
2009 Series A (j)
2009 Series B (k)
2012 US 144a (l)
Denominated in stated foreign currency
2012 JPY Medium Term Note (m)
2012 CAD Medium Term Note (n)
2012 GBP Medium Term Note (o)
-
4.53
3.05
6.15
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
3.88
1.23
4.25
4.25
190,062
22,747
27,712
10,300
367
7,318
5,045
6,002
4,617
23,250
116,813
14,175
6,911
13,986
11,111
11,354
9,752
11,761
49,123
8,535
19,529
39,351
-
534,564
167,966
9,641
6,100
121,111
20,178
24,008
18,468
93,000
-
206,948
27,721
232,837
44,442
45,416
110,127
47,075
196,627
160,100
78,171
158,159
-
-
3,113,913
-
-
-
73,215
104,590
80,454
358,125
-
-
99,359
-
162,325
199,142
-
116,558
956,694
-
318,708
792,524
(a) Facilities mature on 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 ($150 million limit, undrawn at year end).
609,820
2,302,660
6,375,607
(b) Matures on 1 October 2072.
(c) Matures on 15 May 2017.
(d) Matures on 15 May 2019.
(e) Matures on 15 May 2022.
(f) Matures on 22 July 2020.
(g) Matures on 9 September 2013.
(h) Matures on 9 September 2015.
(i) Matures on 9 September 2018.
(j) Matures on 1 July 2016.
(k) Matures on 1 July 2019.
(l) Matures on 11 October 2022.
(m) Matures on 22 June 2018.
(n) Matures on 24 July 2019.
(o) Matures on 26 November 2024.
81
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 38. FinanCial instruMents (COntinueD)
(h) liquidity risk management (continued)
Liquidity and interest risk table (continued)
2012
FinanCial liaBilities
Trade and other payables
Unsecured bank borrowings (a)
Interest Rate Swaps (Net Settled)
guaranteed senior notes:
Denominated in a$
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)
Denominated in stated foreign currency
2012 JPY Medium Term Note (k)
2012 CAD Medium Term Note (l)
AVERAGE
INTEREST RATE
% p.a.
LESS THAN
1 YEAR
$000
1 - 5 YEARS
$000
MORE THAN
5 YEARS
$000
-
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
173,445
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
-
-
-
-
-
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).
394,523
2,468,814
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 June 2018.
(l) Matures on 24 July 2019.
82
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013
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
The fair values of financial assets and financial liabilities are determined
default by the specified counterparty extrapolated from market-based
as follows:
credit 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).
leVel 1
$000
leVel 2
$000
leVel 3
$000
tOtal
$000
2013
Financial assets measured at fair value
Available-for-sale listed equity securities
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
Total
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
7,394
-
-
7,394
-
-
-
-
3,822
1,788
5,609
47,088
106,947
154,035
263,442
9,564
-
-
273,005
-
-
259
126
385
-
-
-
-
62,699
270,844
365
333,909
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,394
3,822
1,788
13,003
47,088
106,947
154,035
263,442
9,564
259
126
273,390
62,699
270,844
365
333,909
83
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 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 exchange rates
specific terms of the agreements underlying those assets and liabilities.
and yield curves derived from quoted interest rates matching maturities of
Fair value measurements of financial instruments measured at amortised cost
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.
FinanCial liaBilities
Unsecured long term private placement notes
Unsecured Australian Dollar medium term notes
Unsecured Japanese Yen medium term note
Unsecured Canadian Dollar medium term notes
Unsecured US Dollar 144a medium term notes
Unsecured British Pound medium term note
Carrying aMOunt
Fair Value
2013
$000
2012
$000
2013
$000
2012
$000
1,188,472
300,000
110,203
311,947
820,031
581,866
1,095,597
1,434,441
1,389,909
300,000
122,256
287,986
-
-
371,212
114,146
344,358
757,775
550,282
382,457
127,752
334,037
-
-
Total
3,312,519
1,805,839
3,572,214
2,234,155
The financial liabilities included in the table above are fixed rate borrowings. Other debts held by the Consolidated Entity are floating rate debts and 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
2013
%
88.2 (a)
50.0 (b)
2012
%
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.
84
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 39. JOintly COntrOlleD OperatiOns anD assets (COntinueD)
The Consolidated Entity’s interest, as a venturer, in assets employed in the above jointly controlled operations and assets is detailed below. The amounts are
included in the consolidated financial statements under their respective asset categories:
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
total current assets
nOn-Current assets
Property, plant and equipment
Other
total non-current assets
total assets
2013
$000
2,547
12,724
2,385
49
17,705
604,075
-
604,075
621,780
2012
$000
6,510
1,397
2,391
143
10,441
543,214
765
543,979
554,420
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 49 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 Limited (b),(c)
APT Pipelines Investments (WA) Pty Limited (b),(c)
East Australian Pipeline Pty Limited (b),(c)
Gasinvest Australia Pty Ltd (b),(c)
Goldfields Gas Transmission Pty Ltd (b)
COuntry OF registratiOn/
inCOrpOratiOn
OWnersHip interest
2013
%
2012
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Cayman Islands
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
96
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
96
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
85
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 40. suBsiDiaries (COntinueD)
naMe OF entity
N.T. Gas Distribution Pty Limited (b),(c)
N.T. Gas Easements Pty Limited (b),(c)
N.T. 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 Ltd (b),(c)
Western Australian Gas Transmission Company 1 Pty Ltd (b),(c)
GasNet Australia Trust (b)
APA GasNet Australia (Holdings) Pty Limited (b),(c)
APA GasNet Australia (Operations) Pty Limited (b),(c)
APA GasNet A Pty Limited (b),(c)
GasNet A Trust
APA GasNet Australia (NSW) Pty Limited (b),(c)
APA GasNet B Pty Limited (b),(c)
APA GasNet Australia Pty Limited (b),(c)
GasNet B Trust (b)
GasNet Australia Investments Trust
Allgas Pipelines Operations 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 Limited (b),(c)
APT Facility Management Pty Limited (b),(c)
APT AM Employment Pty Limited (b),(c)
APT Sea Gas Holdings Pty Limited (b),(c)
APT SPV2 Pty Ltd (b)
APT SPV3 Pty Ltd (b)
APT Pipelines (SA) Pty Limited (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 Limited (b),(c)
North Western Natural Gas Company Pty Limited (b),(c)
APA Facilities Management Pty Limited (b),(c)
86
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
2013
%
100
100
96
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
2012
%
100
100
96
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
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 40. suBsiDiaries (COntinueD)
naMe OF entity
APA (NBH) Pty Limited (b),(c)
APA Pipelines Investments (BWP) Pty Limited (b),(c)
APA Power Holdings Pty Limited (b),(c)
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)
APA DPS Holdings Pty Limited (b),(c)
APA Power PF Pty Limited (b),(c)
APA Sub Trust No 1 (b)
APA Sub Trust No 2 (b)
APA Sub Trust No 3 (b)
APA (Pilbara Pipeline) Pty Ltd (b),(c)
APA (Sub No 3) International Holdings 1 Pty Ltd (b),(c)
APA (Sub No 3) International Holdings 2 Pty Ltd (b),(c)
APA (Sub No 3) International Nominees Pty Ltd (b),(c)
APA (SWQP) Pty Limited (b),(c)
APA (WA) One Pty Limited (b),(c)
APA AIS 1 Pty Limited (b),(c)
APA AIS 2 Pty Ltd (b),(c)
APA AIS Pty Limited (b),(c)
APA Biobond Pty Limited (b),(c)
APA East One Pty Limited (b),(c)
APA East Pipelines Pty Limited (b),(c)
APA EE Pty Limited (b),(c)
APA EE Australia Pty Limited (b),(c)
APA EE Corporate Shared Services Pty Limited (b),(c)
APA EE Holdings Pty Limited (b),(c)
Epic Energy East Pipelines Trust (b)
APA (NT) Pty Limited (b),(c)
Epic Energy South Australia Pty Limited (e)
MAPS FinCo Pty Limited
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
OWnersHip interest
2013
%
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
2012
%
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(a) Australian Pipeline Trust is the head entity within the tax-consolidated group.
(b) These entities are members of the tax-consolidated group.
(c) These wholly-owned subsidiaries have entered into a deed of cross guarantee with APT Pipelines Limited pursuant to ASIC Class Order 98/1418 and are relieved from the requirement
to prepare and lodge an audited financial report.
(d) These entities were disposed of during the year.
(e) Entity was acquired and disposed of during the year.
87
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 41. aCQuisitiOn OF Businesses
On 9 October 2012, APA obtained control of the Hastings Diversified Utilities
The acquisition was paid for by cash and securities issued. Acquisition-related
Fund (HDF) when the takeover offer was declared unconditional. APA held a
costs of $21,037,000 were incurred during the period of which $12,404,000 of
controlling interest of 54.94% on the acquisition date resulting in a non-
the costs have been recognised as an expense and $8,633,000 of the costs
controlling interest of 45.06%. The non-controlling interest was acquired over
have been recognised in equity relating to the securities issued.
the period from 10 October 2012 to 24 December 2012 when compulsory
acquisition was completed.
Revenue for the financial year includes $152,938,000 in respect of HDF.
Included in profit before non-controlling interests for the financial year is a loss
of $10,458,000 attributable to HDF, as below:
eBitDa from HDF’s epic energy pipeline assets
Management and performance fees charged by Hastings Funds Management
Takeover response costs paid by HDF
Integration costs on acquisition
eBitDa for HDF group
HDF Depreciation
HDF Net finance costs
HDF Income tax expense
net loss after tax attributable to HDF group
$000
115,171
(35,438)
(6,913)
(4,481)
68,339
(19,366)
(51,548)
(7,883)
(10,458)
Due to the impact of a number of one-off items in the year (including takeover
The accounting for the acquisition of HDF has been provisionally determined at
defence costs, debt facility refinancing costs and swap break costs),
reporting date.
implementation of an internalised management model following the change of
responsible entity, and the divestment of the Moomba-Adelaide Pipeline
System, it is not practical to present meaningful pro-forma results reflecting
HDF as if it had been acquired on 1 July 2012.
88
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 41. aCQuisitiOn OF Businesses (COntinueD)
naMes OF Business aCQuireD
prinCipal aCtiVity
During the financial year ended 30 June 2013
Hastings Diversified Utilities Fund (HDF)
Gas Transmission
Date OF
aCQuisitiOn
9 October 2012 -
24 December 2012
Hastings DiVersiFieD utilities FunD
net assets acquired
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Deferred tax assets
Other
non-current assets
Receivables
Property, plant and equipment
Goodwill
Other
Current liabilities
Trade and other payables
Current borrowings
Other financial liabilities
Provisions
Other
non-current liabilities
Provisions
Fair value of net assets acquired
Previously held interest
Cost of acquisition
Cash balances acquired
Securities issued as part consideration
Transaction costs paid
net cash outflow on acquisition - current period
Prior year transaction costs paid
total cash outflow on acquisitions
prOpOrtiOn
aCQuireD
COst OF
aCQuisitiOn
%
$000
100
1,233,847
prOVisiOnal
Fair Value
On aCQuisitiOn
$000
104,500
23,963
79
1,930
104,408
1,727
15,278
1,933,354
765,476
8,090
(44,190)
(1,325,000)
(43,897)
(19,044)
(644)
(1,201)
1,524,829
(290,982)
1,233,847
(104,500)
(884,665)
12,380
257,062
8,259
265,321
89
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 42. DispOsal OF Businesses
On 1 May 2013, pursuant to the undertaking provided to the Australian
During the prior financial year APA divested its gas distribution network in
Consumer and Competition Commission as part of the acquisition of HDF, APA
South East Queensland (Allgas) into the APA minority owned unlisted
completed the sale of the Moomba Adelaide Pipeline System (MAPS). The net
investment vehicle GDI (EII) Pty Ltd. APA established GDI in December 2011.
proceeds received
from Queensland
Investment Corporation totalled
APA retains a 20.0% interest in GDI and remains operator of the assets. The net
$391.7 million net of cash balances sold and after transaction costs.
proceeds received from the new equity partners, Marubeni Corporation and
RREEF totalled $475.7 million after transaction costs.
2013
2012
MOOMBa
aDelaiDe
pipeline systeM
1 May 2013
$000
ALLGAS
DISTRIBUTION
NETWORK
16 DECEMBER 2011
$000
3,546
5,453
1,350
294
373,228
24,992
-
1,811
-
13,770
-
-
471,006
104,263
633
-
410,674
589,672
(3,229)
(1,659)
-
(1,266)
-
(1,086)
(10,798)
(58,979)
(311)
(15,997)
394,677
5,807
(5,807)
-
(3,546)
-
-
595
391,726
19,638
411,364
-
(61,331)
528,341
12,032
(21,695)
(9,663)
-
(10,400)
(39,020)
6,420
475,678
(155)
475,523
net assets DispOseD
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
non-current assets
Property, plant and equipment
Goodwill
Intangibles
Other
total assets
Current liabilities
Trade and other payables
Provisions
Other
non-current liabilities
Deferred tax liabilities
Provisions
total liabilities
net assets
Profit on sale before transaction costs
Transactions costs
Loss on disposal (after transaction costs)
Less:
Cash and cash equivalents disposed
Redeemable preference shares acquired
Fair value of equity accounted interest retained
Payables - sale of business
net cash inflow on disposal
Net cash inflow/(outflow) on transaction costs relating to prior year disposal
total proceeds on sale of businesses
90
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 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
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)
2013
$000
2012
$000
119,413
55,087
-
-
-
-
119,413
55,087
45,637
-
-
79,806
49,655
-
45,637
129,461
2013
$
2012
$
765,300
20,700
193,305
505,000
570,300
20,700
5,500
646,400
1,484,305
1,242,900
(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, resigned 24 October 2012)
R J Wright (Independent Non-Executive Director)
(b) Director compensation
The aggregate compensation made to Directors of the Consolidated Entity is set out below:
Short-term employment benefits
Post-employment benefits
Cash settled share-based payments
2013
$
3,431,262
124,280
1,165,290
2012
$
2,762,850
168,148
1,021,548
4,720,832
3,952,546
91
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 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
$
317,252
289,000
146,970
134,750
156,723
117,000
160,223
146,000
143,000
130,000
43,043
130,000
164,238
150,750
1,131,449
1,097,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,998
24,400
13,230
12,128
19,012
43,250
14,427
13,145
12,850
11,675
-
-
14,763
13,550
99,280
118,148
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
342,250
313,400
160,200
146,878
175,735
160,250
174,650
159,145
155,850
141,675
43,043
130,000
179,001
164,300
1,230,729
1,215,648
1,167,500
965,000
1,132,313
700,350
25,000
50,000
1,165,290
3,490,103
1,021,548
2,736,898
2,298,949
2,062,500
1,132,313
700,350
124,280
1,165,290
4,720,832
168,148
1,021,548
3,952,546
nOn-exeCutiVe DireCtOrs
L F Bleasel AM
2013
2012
S Crane
2013
2012
J A Fletcher
2013
2012
R A Higgins AO
2013
2012
P M McKenzie
2013
2012
M Muhammad (b)
2013
2012
R J Wright
2013
2012
tOtal reMuneratiOn: nOn-exeCutiVe DireCtOrs
2013
2012
exeCutiVe DireCtOrs
M J McCormack
2013
2012
tOtal reMuneratiOn: DireCtOrs
2013
2012
(a) Cash settled share-based payments.
(b) Muri Muhammad resigned as a Director on 24 October 2012.
92
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 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 and Development)
S P Ohl (Group Executive Strategic Projects, retired 1 July 2013)
M T Knapman (Company Secretary)
P J Wallace (Group Executive Human Resources)
R A Wheals (Group Executive Transmission)
J L Ferguson (Group Executive Networks)
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 is set out below:
Short-term employment benefits
Post-employment benefits
Cash settled share-based payments
Retention award
Termination payments
2013
$
2012
$
8,377,184
203,207
5,922,156
298,160
3,302,138
2,638,476
720,667
245,000
-
-
12,848,196
8,858,792
The executive remuneration strategy is to:
Total fixed remuneration is reviewed annually and is determined by reference to
– attract and retain key executives who will create long-term sustainable
value for Securityholders;
appropriate remuneration benchmarking information, taking into account an
individual’s responsibilities, performance, qualifications and experience.
– motivate and reward executives having regard to the overall performance of
Operating cash flow per security has been chosen by the Board as the key
APA, the performance of the executive measured against pre-determined
performance measure for the short-term incentive scheme. This is directly
objectives and the external compensation environment;
linked to the strategic goal of increasing operating cash flows over the medium
– appropriately align the interests of executives with those of Securityholders;
term, thereby improving returns to Securityholders.
and
– comply with applicable legal requirements and appropriate standards of
governance.
The key performance measures for the long-term incentive scheme are Total
Securityholder Returns performance against the ASX 100 comparator group
and Earnings Before Interest, Tax, Depreciation and Amortisation divided by
APA’s remuneration mix is structured as a mix of base pay and ‘at risk’ short
Funds Employed. These measures are directly linked to the experience of APA
and long-term incentive components.
Securityholders compared to the general shareholder market.
Refer to the Remuneration Report for further details of APA’s executive
remuneration policy.
93
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 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)
$
OTHER
PAYMENTS (b)
$
TOTAL
$
Key ManageMent persOnnel
M J McCormack
2013
2012
P J Fredricson
2013
2012
R M Gersbach
2013
2012
S P Ohl (c)
2013
2012
M T Knapman
2013
2012
P J Wallace
2013
2012
R A Wheals
2013
2012
J L Ferguson (e)
2013
2012
K Lester (d)
2013
2012
1,167,500
1,132,313
965,000
700,350
653,530
477,375
590,225
292,395
-
-
-
-
25,000
1,165,290
50,000
1,021,548
-
-
3,490,103
2,736,898
16,470
462,536
202,000
1,811,911
15,775
290,755
-
1,189,150
707,608
505,080
658,303
321,563
11,922
11,922
16,470
522,376
228,667
1,992,123
15,775
475,330
-
1,482,893
465,530
312,375
-
415,377
182,125
4,848
24,470
49,775
337,336
362,815
245,000
1,410,190
411,000
215,482
366,000
132,922
345,149
237,263
272,243
147,345
390,000
239,663
329,000
117,369
358,130
267,143
295,422
119,747
299,905
180,216
-
-
-
-
-
-
-
-
-
-
-
-
25,000
50,000
234,415
215,843
24,999
129,441
41,257
60,110
-
-
-
-
-
989,461
885,897
764,765
736,852
520,955
25,000
193,639
60,000
908,302
25,000
119,753
-
591,122
24,870
50,578
185,791
130,000
965,934
117,801
-
583,548
20,928
45,835
100,000
646,884
-
-
-
-
tOtal reMuneratiOn
2013
2012
4,798,352
3,566,910
3,891,570
2,013,816
11,922
16,770
203,207
3,302,138
965,667
12,848,196
298,160
2,638,476
-
8,858,792
(a) Cash settled share-based payments.
(b) Other payments include the first instalment of Loyalty Payment.
(c) S Ohl retired with effect 1 July 2013. A termination payment of $353,716 (representing the termination benefit of $245,000 plus statutory entitlements) has not been paid in the
financial year 2013. The payment will be made in future years.
(d) Kevin Lester joined APA Group as Group Executive Infrastructure Development on 6 August 2012 and received a Sign-On/Enticement payment.
(e) Other payments include the first instalment of Loyalty Payment and an ex-gratia payment for acting in the position of Group Executive Operations.
94
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 47. relateD party transaCtiOns
(a) equity interest in related parties
Details of the percentage of ordinary securities held in subsidiaries are disclosed in Note 40 and the details of the percentage held in jointly controlled operations
are disclosed in Note 39. Details of interests in jointly controlled entities and associates are disclosed in Note 17.
(b) responsible entity – australian pipeline limited
The Responsible Entity is wholly owned by APT Pipelines Limited.
(c) transactions with key management personnel
Details of Directors and key management personnel compensation are disclosed in Note 45 and 46 respectively.
(i) Loans to key management personnel
No loans have been made to key management personnel.
(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
2013
L F Bleasel AM
S Crane
J A Fletcher
R A Higgins AO
P M McKenzie
M Muhammad (a)
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
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
(a) M Muhammad resigned effective 24 October 2012. Closing balance represents balance at that date.
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
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
17,571
-
2,890
5,880
-
-
2,520
13,326
1,500
31
-
201
6,000
-
-
67,688
-
3,272
6,657
12,500
-
2,853
24,645
2,947
454
-
2,516
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,796
-
-
-
-
-
460,664
100,000
66,188
92,040
12,500
42,818
39,444
208,590
7,716
485
14,896
7,201
6,000
1,500
1,967
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
95
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013
47. relateD party transaCtiOns (COntinueD)
(c) transactions with key management personnel (continued)
(iii) Other transactions with key management personnel of the Group and the
Responsible Entity
Other than Directors compensation (Note 45) and key management personnel
compensation (Note 46) and equity holdings (Note 47(c)(ii)), there are no
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;
– asset lease rentals;
– loans advanced and payments received on long-term inter-entity loans;
– management fees;
– operational services provided between entities;
– payments of distributions;
– payments of capital distributions (returns of capital); and
– equity issues.
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 Limited
Management fees of $2,727,683 (2012: $2,559,434) were paid to the
Responsible Entity as reimbursement of costs incurred on behalf of APA. No
amounts were paid directly by APA to the Directors of the Responsible Entity,
except as disclosed at Note 45(b).
Australian Pipeline Limited, in its capacity as trustee and Responsible Entity of
the Trust, has guaranteed the payment of principal, interest and other amounts
as provided in the Note and Guarantee Agreement relating to the issue of
Guaranteed Senior Notes.
(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:
2013
SEA Gas
Energy Infrastructure Investments
EII 2
APA Ethane Ltd
Diamantina Power Station
GDI (EII)
Envestra Limited
purCHases
sales tO
relateD
parties
$
aMOunt
FrOM
relateD
parties
$
aMOunt
OWeD By
relateD
parties
$
OWeD tO
relateD
parties
$
3,121,756
4,844
106,596
23,316,649
654,438
200,000
4,392,146
39,626,374
-
-
-
-
-
5,910,899
40,197
-
142,617
5,077,118
326,934,622
1,255,441
35,644,118
398,245,985
1,260,285
46,921,545
-
-
-
-
-
-
-
-
Interest income on a shareholder loan to Diamantina during the year was $3,630,160. At year end, APA had receivables with other related parties of $9,009,417.
2012
SEA Gas
Energy Infrastructure Investments
EII 2
APA Ethane Ltd
Diamantina Power Station
GDI (EII)
Envestra Limited
2,602,524
28,509,775
637,376
200,000
5,385,943
21,050,337
-
-
-
-
-
-
78,326
5,130,619
-
-
89,749,008
3,907,990
296,428,404
566,250
38,311,409
354,814,359
566,250
137,177,352
-
-
-
-
-
-
-
-
Interest income on a shareholder loan to Diamantina during the year was $2,265,286. At year end, APA had receivables with other related parties of $6,744,692.
Transactions with all related parties have taken place at arm’s length and in the ordinary course of business.
96
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePort 2013 48. parent entity inFOrMatiOn
The accounting policies of the parent entity, which have been applied in determining the financial information below, are the same as those applied in the
consolidated financial statements. Refer to note 3 for a summary of significant accounting policies relating to the Group.
FinanCial pOsitiOn
assets
Current assets
Non-current assets
Total assets
liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
equity
Issued capital
Retained earnings
Reserves
Available-for-sale investment revaluation reserve
Total equity
FinanCial perFOrManCe
Profit for the year
Other comprehensive income
Total comprehensive income
guarantees entered into by the parent entity in relation to the debts of its subsidiaries
No guarantees have been entered into by the parent entity in relation to the debts of its subsidiaries.
Contingent liabilities of the parent entity
No contingent liabilities have been identified in relation to the parent entity.
49. COntingenCies
COntingent liaBilities
Bank guarantees
COntingent assets
2013
$000
2012
$000
902,410
1,029,610
402,383
846,475
1,932,020
1,248,858
98,473
98,427
-
98,473
1,833,547
-
98,427
1,150,431
1,820,516
1,138,205
11,294
9,881
1,737
1,833,547
2,345
1,150,431
156,128
(607)
155,521
49,363
1,583
50,946
2013
$000
2012
$000
157,200
31,632
-
-
50. eVents OCCurring aFter repOrting Date
On 16 July 2013, APA announced that an indicative and non-binding all-share
16.02 cents per security from APT and a distribution of 2.48 cents per security
merger proposal has been submitted to the Board of Envestra Limited. Under
from APTIT), made up of 18.34 cents per security profit distribution (unfranked)
the proposal Envestra shareholders would receive 0.1678 new APA stapled
and 0.16 cents per security capital distribution. The distribution will be paid on
securities for each Envestra share they own. On 5 August 2013, Envestra
11 September 2013.
announced that it had decided to reject the APA proposal. APA continues to
consider its position on this proposed transaction.
Other than the events disclosed above, there have not been any events or
transactions that have occurred subsequent to year end that would require
On 21 August 2013, the Directors declared a final distribution of 18.5 cents per
adjustment to or disclosure in the accounts.
security ($154.6 million) for the APA Group (comprising a distribution of
97
AustrAliAn PiPeline trust And its controlled entitiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 AUSTRALIAN PIP ELI NE TRUST AND I TS CO NTRO LLE D E NTIT IE S
DecLArAtioN BY tHe Directors
oF AUstrALiAN pipeLiNe LiMiteD
For the financial year ended 30 June 2013
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 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, 21 August 2013
robert Wright
Director
98
APA grouP / AnnuAl rePort 2013
AUST RA LIAN PIP ELI NE TRUST AND I TS CO NT RO LLE D E NTITIES
AUDitor’s iNDepeNDeNce DecLArAtioN
For the financial year ended 30 June 2013
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
21 August 2013
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 2013, 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
99
AUSTRALIAN PIPE LIN E TRUST A ND I TS CO NT RO LLE D E NTIT IE S
iNDepeNDeNt AUDitor’s report
For the financial year ended 30 June 2013
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 Australian Pipeline Trust
We have audited the accompanying financial report of Australian Pipeline Trust, which comprises the
statement of financial position as at 30 June 2013, the statement of profit or loss and other
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 37 to 98.
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 3, the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements
comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control, relevant to the entity’s
preparation of the financial report that gives a true and fair view, in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Touche Tohmatsu Limited
100
APA grouP / AnnuAl rePort 2013
AUST RA LIA N PIPE LINE TRUST AND I TS CO NT RO LLE D E NTITIES
iNDepeNDeNt AUDitor’s report
coNtiNUeD
For the financial year ended 30 June 2013
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 consolidated entity’s financial position as at 30 June 2013
and of its 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, 21 August 2013
101
aPt InvEStmEnt tRUSt
and ItS contRollEd EntItIES
aRSn 115 585 441
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 APT Investment Trust (“APTIT”) and its
and Directorships of other listed entities are set out on pages 14 to 16.
controlled entities (together “Consolidated Entity”) for the financial year ended
30 June 2013. This report refers to the consolidated results of APTIT, one of the
two stapled entities of APA Group, with the other stapled entity being
Australian Pipeline Trust (together “APA”).
Directors
The names of the Directors of the Responsible Entity during the year and since
the year end are:
leonard Bleasel aM
Chairman
Michael McCormack
Chief Executive Officer and Managing Director
steven Crane
John Fletcher
russell Higgins aO
patricia McKenzie
Muri Muhammad (retired 24 October 2012)
robert Wright
DistriBUtioNs
Distributions paid to Securityholders during the year were:
priNcipAL ActiVities
APTIT operates as an investment and financing entity within the Australian
Pipeline Trust stapled group.
reVieW AND resULts oF operAtioNs
APTIT reported net profit after tax of $38.1 million (2012: $46.0 million) for the
year ended 30 June 2013 on total revenue of $38.1 million (2012: $46.0 million).
siGNiFicANt cHANGes iN stAte oF AFFAirs
In December 2012 APA completed the takeover of Hastings Diversified Utilities
Fund (“HDF”), an ASX-listed investment vehicle whose assets included three
natural gas transmission pipeline systems – the South West Queensland
Pipeline, the Moomba Adelaide Pipeline System (“MAPS”) and the Pilbara
Pipeline System. In May 2013 APA completed the divestment of MAPS
consistent with the undertaking given to the Australian Competition and
Consumer Commission.
APTIT profit distribution
APTIT capital distribution
Total
Final Fy2012 DistriButiOn
paiD 14 septeMBer 2012
interiM Fy2013 DistriButiOn
paiD 13 MarCH 2013
Cents per security
Total distribution
$000
Cents per security
total distribution
$000
3.28
2.31
5.59
21,160
14,879
36,039
2.26
-
2.26
18,719
-
18,719
On 21 August 2013, the Directors declared a final distribution for APTIT for the year of 2.48 cents per security which is payable on 11 September 2013 and will
comprise the following components:
APTIT profit distribution
APTIT capital distribution
Total
Final Fy2013 DistriButiOn
payaBle 11 septeMBer 2013
Cents per security
total distribution
$000
2.32
0.16
2.48
19,424
1,313
20,737
Distribution information is presented on an accounting classification basis. The APA Annual Tax Statement and Annual Tax Return Guide (to be released in
September 2013) provide the classification of distribution components for the purposes of preparation of securityholder income tax returns.
102
APA grouP / AnnuAl rePort 2013 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 end of the year that has
307C of the Corporations Act 2001 is included on page 124.
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.
otHer iNForMAtioN
Details of the Directors and Company Secretary of the Responsible Entity are
set out in the Australian Pipeline Trust Directors’ report at pages 2 to 18. That
report also contains information on the Directors’ directorships of other listed
companies, their attendance at meetings and securityholdings, options,
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.
indemnification of officers, remuneration and the auditor’s provision of non-
On behalf of the Directors
audit services and independence.
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 17 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 3 to the
financial statements.
leonard Bleasel aM
Chairman
SYDNEY, 21 August 2013
robert Wright
Director
103
APT invesTmenT TrusT And iTs conTrolled enTiTiesdirectors’ report continued APT IN VESTMEN T TRUST AN D I TS CO NTRO LLE D ENTI TIE S
coNsoLiDAteD stAteMeNt oF proFit or Loss
AND otHer coMpreHeNsiVe iNcoMe
For the financial year ended 30 June 2013
COntinuing OperatiOns
Revenue
Expenses
Profit before tax
Income tax expense
profit for the year
Other comprehensive income
items that may be reclassified to profit and loss:
(Loss)/gain on available-for-sale investments taken to equity
Other comprehensive income for the year (net of tax)
total comprehensive income for the year
profit attributable to:
Equityholders of the parent
total comprehensive income attributable to:
Equityholders of the parent
earnings per seCurity
Basic and diluted earnings per security (cents)
Note
4
4
2013
$000
2012
$000
38,155
(12)
38,143
-
38,143
45,969
(12)
45,957
-
45,957
(1,157)
(1,157)
1,090
1,090
36,986
47,047
38,143
38,143
45,957
45,957
36,986
47,047
12
4.9
7.2
Diluted earnings per security is exactly the same as basic earnings per security.
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
104
APA grouP / AnnuAl rePort 2013
A PT I NVE STMENT TRUST AND I TS CO NTRO LLE D ENTI TIE S
coNsoLiDAteD stAteMeNt oF FiNANciAL positioN
As at 30 June 2013
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
Note
2013
$000
2012
$000
6
7
8
9
10
11
641
755
11,260
586,794
598,054
598,695
11,869
374,236
386,105
386,860
24
24
10
10
598,671
386,850
578,780
364,066
467
19,424
598,671
1,624
21,160
386,850
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
A PT I NVE STMENT TRUST AND ITS CO NTRO LLE D ENTI TIE S
coNsoLiDAteD stAteMeNt oF cHANGes iN eQUitY
For the financial year ended 30 June 2013
Balance at 1 July 2011
Profit for the year
Other comprehensive income for the period (net of tax)
Total comprehensive income for the year
Issue of capital (net of issue costs)
Distributions to Securityholders
Balance at 30 June 2012
Balance at 1 July 2012
Profit for the year
Other comprehensive income for the period (net of tax)
Total comprehensive income for the year
Issue of capital (net of issue costs)
Distributions to Securityholders
Balance at 30 June 2013
note
11
10
5
11
10
5
issueD
Capital
$000
382,001
-
-
-
10,715
(28,650)
364,066
reserVes
$000
retaineD
earnings
$000
534
-
1,090
1,090
-
-
18,295
45,957
-
45,957
-
(43,092)
tOtal
$000
400,830
45,957
1,090
47,047
10,715
(71,742)
1,624
21,160
386,850
364,066
1,624
-
-
-
229,593
(14,879)
578,780
-
(1,157)
(1,157)
-
-
467
21,160
38,143
-
38,143
386,850
38,143
(1,157)
36,986
-
229,593
(39,879)
19,424
(54,758)
598,671
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
105
APT IN VESTMEN T TRUST AN D I TS CO NTRO LLE D ENTI TIE S
coNsoLiDAteD stAteMeNt oF cAsH FLoWs
For the financial year ended 30 June 2013
CasH FlOWs FrOM Operating aCtiVities
Trust distribution - related party
Capital distribution received - external
Dividends received
Interest received - related parties
Finance lease receivable repayments
Receipts from customers
Payments to suppliers
2013
$000
2012
$000
25,190
31,270
271
150
13,888
1,167
167
(12)
521
152
9,906
1,167
150
(12)
net cash provided by operating activities
40,821
43,154
CasH FlOWs FrOM inVesting aCtiVities
(Advances to)/repayment received from related parties
net cash (used in)/provided by investing activities
CasH FlOWs FrOM FinanCing aCtiVities
Proceeds from issue of securities
Payments of security issue costs
Distributions to Securityholders
net cash used in financing activities
net increase in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
(3,635)
(3,635)
17,873
17,873
19,663
(2,091)
(54,758)
(37,186)
-
-
-
10,715
-
(71,742)
(61,027)
-
-
-
106
APA grouP / AnnuAl rePort 2013 A PT I NVE STMENT TRUST AND ITS CO NTRO LLE D ENTI TIES
Notes to tHe coNsoLiDAteD FiNANciAL stAteMeNts
For the financial year ended 30 June 2013
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
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.
APTIT operates as an investment and financing entity within the Australian
The estimates and associated assumptions are based on historical experience
Pipeline Trust stapled group.
and other factors that are considered to be relevant. Actual results may differ
2. signiFiCant aCCOunting pOliCies
statement of compliance
from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
The financial report is a general purpose financial report which has been
Revisions to accounting estimates are recognised in the period in which the
prepared in accordance with the Corporations Act 2001, Accounting Standards
estimate is revised if the revision affects only that period, or in the period of the
and Interpretations, and complies with other requirements of the law.
revision and future periods if the revision affects both current and future
The financial report represents the consolidated financial statements of the
Consolidated Entity. For the purposes of preparing the consolidated financial
periods. Refer to Note 3 for a discussion of critical judgements in applying the
entity’s accounting policies, and key sources of estimation uncertainty.
report, the Consolidated Entity is a for-profit entity. Accounting Standards
adoption of new and revised accounting standards
include Australian equivalents to International Financial Reporting Standards
In the current year, the Consolidated Entity has adopted all of the new and
(“A-IFRS”). Compliance with A-IFRS ensures that the financial statements and
revised Standards and Interpretations issued by the Australian Accounting
notes of the Trust and the Consolidated Entity comply with International
Standards Board (“AASB”) that are relevant to its operations and effective for
Financial Reporting Standards (“IFRS”).
the current annual reporting period. Details of the impact of the adoption of
The financial statements were authorised for issue by the Directors on
21 August 2013.
these new accounting standards are set out in the individual accounting policy
notes set out below:
(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 and disclosure
stanDarD
iMpaCt
– Amendments to AASB 101 ‘Presentation of Financial Statements’
The amendments (part of AASB 2011-9 ‘Amendments to Australian Accounting
Standards - Presentation of Items of Other Comprehensive Income’) introduce
new terminology for the statement of comprehensive income and income
statement. Under the amendments to AASB 101, the statement of comprehensive
income is renamed as a statement of profit or loss and other comprehensive
income and the income statement is renamed as a statement of profit or loss. The
amendments to AASB 101 retain the option to present profit or loss and other
comprehensive income in either a single statement or in two separate but
consecutive statements. However, the amendments to AASB 101 require items of
other comprehensive income to be grouped into two categories in the other
comprehensive income section: (a) items that will not be reclassified subsequently
to profit or loss and (b) items that may be reclassified subsequently to profit or
loss when specific conditions are met. Income tax on items of other comprehensive
income is required to be located on the same basis – the amendments do not
change the option to present items of other comprehensive income either before
tax or net of tax. The amendments have been applied retrospectively, and hence
the presentation of items of other comprehensive income has been modified to
reflect the changes. Other than the above mentioned presentation changes, the
application of the amendments to AASB 101 does not result in any impact on
profit or loss, other comprehensive income and total comprehensive income.
107
2. signiFiCant aCCOunting pOliCies (COntinueD)
stanDarD
iMpaCt
– Amendments to AASB 101 ‘Presentation of Financial Statements’
The amendments (part of AASB 2012-5 ‘Further Amendments to Australian
Accounting Standards arising from Annual Improvements 2009-2011 Cycle’)
requires an entity that changes accounting policies retrospectively, or makes a
retrospective restatement or reclassification to present a statement of financial
position as at the beginning of the preceding period (third statement of financial
position), when the retrospective application, restatement or reclassification has
a material effect on the information in the third statement of financial position.
The related notes to the third statement of financial position are not required to
be disclosed.
(b) Standards and Interpretations affecting the reported results or financial position
There are no new and revised Standards and Interpretations adopted in these financial statements affecting the reporting results or financial position.
(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
– AASB 9 ‘Financial Instruments’, and the relevant amending standards
– AASB 10 ‘Consolidated Financial Statements’ and AASB 2011-7
‘Amendments to Australian Accounting Standards arising from the
consolidation and Joint Arrangements standards’
eFFeCtiVe FOr annual
repOrting periODs
Beginning On Or aFter
1 January 2015
1 January 2013
expeCteD tO Be
initially applieD in tHe
FinanCial year enDing
30 June 2016
30 June 2014
– AASB 11 ‘Joint Arrangements’ and AASB 2011-7 ‘Amendments to Australian
1 January 2013
30 June 2014
Accounting Standards arising from the consolidation and Joint
Arrangements standards’
– AASB 12 ‘Disclosure of Interests in Other Entities’ and AASB 2011-7
1 January 2013
30 June 2014
‘Amendments to Australian Accounting Standards arising from the
consolidation and Joint Arrangements standards’
– AASB 127 ‘Separate Financial Statements’ (2011) and AASB 2011-7
1 January 2013
30 June 2014
‘Amendments to Australian Accounting Standards arising from the
consolidation and Joint Arrangements standards’
– AASB 128 ‘Investments in Associates and Joint Ventures’ (2011) and AASB
1 January 2013
30 June 2014
2011-7 ‘Amendments to Australian Accounting Standards arising from the
consolidation and Joint Arrangements standards’
– AASB 13 Fair Value Measurement and AASB 2010-8 ‘Amendments to
1 January 2013
30 June 2014
Australian Accounting Standards arising from AASB 13’
– AASB 119 ‘Employee Benefits’ (2011) and AASB 2011-10 ‘Amendments to
1 January 2013
30 June 2014
Australian Accounting Standards arising from AASB 119 (2011)’
– AASB 2011-4 ‘Amendments to Australian Accounting Standards to Remove
1 July 2013
30 June 2014
Individual Key Management Personnel Disclosure Requirements’
– AASB 2012-2 ‘Amendments to Australian Accounting Standards –
1 January 2013
30 June 2014
Disclosures – Offsetting Financial Assets and Financial Liabilities’
– AASB 2012-3 ‘Amendments to Australian Accounting Standards –
1 January 2014
30 June 2015
Offsetting Financial Assets and Financial Liabilities’
– AASB 2012-5 ‘Amendments to Australian Accounting Standards arising
1 January 2013
30 June 2014
from Annual Improvements 2009–2011 Cycle’
– AASB 2012-10 ‘Amendments to Australian Accounting Standards –
1 January 2013
30 June 2014
Transition Guidance and Other Amendments’
– AASB 2013-3 ‘Amendments to AASB 136 - Recoverable Amount Disclosures
1 January 2014
30 June 2015
for Non-Financial Assets’
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.
The potential impact of the initial application of the remaining above Standards has not yet been determined.
108
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePorT 2013 2. signiFiCant aCCOunting pOliCies (COntinueD)
(a) Basis of consolidation
the acquisition date and the resulting gains or losses, if any, are recognised in
The consolidated financial statements incorporate the financial statements of
profit or loss. Amounts arising from interests in the acquiree prior to the
the Trust and entities controlled by the Trust (its subsidiaries) (referred to as
acquisition date that have previously been recognised in other comprehensive
the Consolidated Entity in these financial statements). Control is achieved
income are reclassified to profit or loss, where such treatment would be
where the Trust has the power to govern the financial and operating policies of
appropriate if that interest were disposed 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
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet
the conditions for recognition under AASB 3 are recognised at their fair value
at the acquisition date, except that:
accounting policies into line with those used by other members of the
– deferred tax assets or liabilities and liabilities or assets related to employee
Consolidated Entity. All intra-group transactions, balances, income and
benefit arrangements are recognised in accordance with AASB 112 ‘Income
expenses are eliminated in full on consolidation.
Taxes’ and AASB ‘119 Employee Benefits’ respectively;
Non-controlling interests in the net assets (excluding goodwill) of consolidated
controlled entities are identified separately from the Consolidated Entity’s
equity therein. Non-controlling interests consist of the amount of those
interests at the date of the original business combination and the non-
controlling interests’ share of changes in equity since the date of the
combination. Losses applicable to the non-controlling interest in excess of the
– liabilities or equity instruments related to the replacement by the
Consolidated Entity of an acquiree’s share-based payment awards are
measured in accordance with AASB 2 ‘Share-based payments’; and
– assets (or disposal groups) that are classified as held for sale in accordance
with AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’
are measured in accordance with that standard.
non-controlling interest’s share in the controlled entity’s equity are allocated
If the initial accounting for a business combination is incomplete by the end of
against the interests of the Consolidated Entity except to the extent that the
the reporting period in which the combination occurs, the Consolidated Entity
non-controlling interest has a binding obligation and is able to make an
additional investment to cover the losses.
(b) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
reports provisional amounts for the items for which the accounting is
incomplete. Those provisional amounts are adjusted
for during the
measurement period, or additional assets or liabilities are recognised, to reflect
new information obtained about facts and circumstances that existed as of the
acquisition date, that, if known, would have affected the amounts recognised
amounts of cash, which are subject to insignificant risk of changes in values.
as at that date.
(c) trade and other payables
Trade and other payables are recognised when the Consolidated Entity
becomes obliged to make future payments resulting from the purchase of
The measurement period is the period from the date of acquisition to the date
the Consolidated Entity obtains complete information about facts and
circumstances that existed as of the acquisition date - and is subject to a
goods and services. Trade and other payables are stated at amortised cost.
maximum of one year.
(d) acquisition of assets
(f) Financial instruments issued by the Consolidated entity
Assets acquired are recorded at the cost of acquisition, being the purchase
Debt and equity instruments
consideration determined as at the date of acquisition. Cost includes
expenditure that is directly attributable to the acquisition or construction of
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
values as at the date of acquisition.
(e) Business combinations
Acquisitions of 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 in exchange for
Debt and equity instruments are classified as either liabilities or equity in
accordance with the substance of the contractual arrangement. An equity
instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by
the Consolidated Entity are recorded at the proceeds received, net of direct
issue costs.
Transaction costs arising on the issue of equity instruments
Transaction costs arising on the issue of equity instruments are recognised
directly in equity as a reduction of the proceeds of the equity instruments to
which the costs relate. Transaction costs are the costs that are incurred directly
in connection with the issue of those equity instruments and which would not
have been incurred had those instruments not been issued.
control of the acquiree. Acquisition costs directly attributable to the business
Interest and distributions
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:
consideration classified as an asset or liability are accounted for in accordance
with relevant standards. Changes in the fair value of contingent consideration
classified as equity are not recognised.
– where 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
Where a business combination is achieved in stages, the consolidated entity’s
– for receivables and payables which are recognised inclusive of GST, except
previously held interests in the acquired entity are remeasured to fair value at
for accrued revenue and accrued expenses at balance dates which exclude GST.
109
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 2. signiFiCant aCCOunting pOliCies (COntinueD)
(g) goods and services tax (continued)
The net amount of GST recoverable from, or payable to, the taxation authority
as a result of one or more events that occurred after initial recognition of
is included as part of receivables or payables.
the financial asset, the estimated future cash flows of the investment have
GST receivable or GST payable is only recognised once a tax invoice has been
issued or received.
been impacted.
(k) revenue recognition
Cash flows are included in the statement of cash flows on a gross basis. The
GST component of cash flows arising from investing and financing activities
which is recoverable from, or payable to, the taxation authority is classified
within operating cash flows.
(h) impairment of assets
Assets are reviewed for impairment at least annually or whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the
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.
asset’s carrying amount exceeds its recoverable amount. The recoverable
Distribution revenue
amount is the higher of an asset’s fair value less costs to sell, and value in use.
Distribution revenue is recognised when the right to receive a distribution has
For the purpose of assessing impairment, assets are grouped at the lowest
been established.
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 have previously suffered an
impairment are reviewed for possible reversal of the impairment at the end of
each reporting period.
(i) income tax
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.
Income tax expense is not brought to account in respect of APTIT as, pursuant
(l) leased assets
to the Australian taxation laws APTIT is not liable for income tax provided that
Leases are classified as finance leases when the terms of the lease transfer
its realised taxable income (including any assessable realised capital gains) is
substantially all the risks and rewards incidental to the ownership of the leased
fully distributed to its Securityholders each year.
asset to the lessee. All other leases are classified as operating leases.
(j) Financial assets and liabilities
Consolidated Entity as lessor
Financial assets are classified into the following specified categories: financial
Amounts due from a lessee under a finance lease are recorded as receivables.
assets ‘held-to-maturity investments’, ‘available-for-sale’ financial assets, and
Finance lease receivables are initially recognised at the amount equal to the
‘loans and receivables’.
The classification depends on the nature and purpose of the financial assets
and is determined at the time of initial recognition.
Effective interest method
present value of the minimum lease payments receivable plus the present value
of any unguaranteed residual value expected to accrue at the end of the lease
term. Finance lease receipts are allocated between interest revenue and
reduction of the lease receivable over the term of the lease in order to reflect a
constant periodic rate of return on the net investment outstanding in respect of
The effective interest method is a method of calculating the amortised cost of
the lease.
a financial asset and of allocating interest income over the relevant period. The
effective interest rate is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset, or where appropriate,
a shorter period.
Fair value through profit or loss
Financial assets at fair value through profit or loss are stated at fair value,
with any resultant gain or loss recognised in profit or loss. The net gain or
(m) segment information
APTIT has one reportable segment being energy infrastructure investment
and operation.
APTIT is an investing and financing entity within the Australian Pipeline Trust
stapled group. As the Trust only operates in one segment, it has not disclosed
segment information separately.
loss recognised in profit or loss incorporates any dividend or interest earned on
3. CritiCal aCCOunting JuDgeMents anD Key sOurCes OF
the 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.
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
Receivables and loans
from estimates.
Trade receivables, loans, and other receivables that have fixed or determinable
payments that are not quoted in an active market are classified as ‘loans and
receivables’. Trade and other receivables are stated at their amortised cost
less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each balance
sheet date. Financial assets are impaired where there is objective evidence that
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
110
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePorT 2013 3. CritiCal aCCOunting JuDgeMents anD Key sOurCes OF estiMatiOn unCertainty (COntinueD)
impairment of assets
Management has taken into account a number of qualitative and quantitative
Determining whether property, plant and equipment, identifiable intangible
factors in making this assessment. Any assessment of whether a decline in
assets and goodwill are impaired requires an estimation of the value-in-use or
value represents an impairment would result in the transfer of the decrement
fair value of the cash-generating units. The calculations require the Consolidated
from reserves to the statement of comprehensive income.
Entity to estimate the future cash flows expected to arise from cash-generating
units and suitable discount rates in order to calculate the present value of cash-
generating units.
useful lives of non-current assets
The Consolidated Entity reviews the estimated useful lives of property,
plant and equipment at the end of each annual reporting period. Any
Estimates and assumptions used are reviewed on an ongoing basis.
reassessment of useful lives in a particular year will affect the depreciation or
Determining whether available-for-sale investments are impaired requires an
assessment as to whether declines in value are significant or prolonged.
amortisation expense.
4. prOFit FrOM OperatiOns
Profit before income tax includes the following items of income and expense:
reVenue
Distributions
Trust distribution - related party
Other entities
FinanCe inCOMe
Interest - related parties
(Loss)/gain 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
2013
$000
2012
$000
25,190
130
25,320
13,541
(1,460)
587
12,668
31,270
177
31,447
9,758
4,000
614
14,372
167
38,155
150
45,969
(12)
(12)
(12)
(12)
111
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 5. DistriButiOns
reCOgniseD aMOunts:
Final distribution paid on 15 september 2012
(2012: 15 September 2011)
Profit distribution (a)
Capital distribution
interim distribution paid on 13 March 2013
(2012: 15 March 2012)
Profit distribution (a)
Capital distribution
unreCOgniseD aMOunts:
Final distribution payable on 11 september 2013 (b)
(2012: 14 September 2012)
Profit distribution (a)
Capital distribution
(a) Profit distributions unfranked (2012: unfranked).
(b) Record date 28 June 2013.
2013
Cents per
seCurity
2013
tOtal
$000
2012
CENTS PER
SECURITY
2012
TOTAL
$000
3.28
2.31
5.59
2.26
-
2.26
2.32
0.16
2.48
21,160
14,879
36,039
18,719
-
18,719
19,424
1,313
20,737
3.41
2.66
6.07
3.88
2.06
5.94
3.28
2.31
5.59
18,295
15,449
33,744
24,797
13,201
37,998
21,160
14,879
36,039
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)
2013
$000
32
609
641
2012
$000
175
580
755
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)
11,260
11,869
112
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePorT 2013 8. nOn-Current OtHer FinanCial assets
Advance to related party
Investments carried at cost:
Investment in related party (a)
Financial assets carried at fair value:
Redeemable ordinary shares (b)
Available-for-sale investments carried at fair value (c)
2013
$000
2012
$000
442,225
226,556
107,379
549,604
34,807
2,383
107,379
333,935
36,614
3,687
586,794
374,236
(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. The investment has
not been measured at fair value as the units of GasNet A Trust are not available for trade on an active market and as such, the fair value of the units cannot be “reliably determined.
The Consolidated Entity does not intend to dispose of its interest in GasNet A Trust.
(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. Capital distributions of $270,899 were received during the year.
9. traDe anD OtHer payaBles
Other payables
10. issueD Capital
24
10
835,751,807 securities, fully paid (2012: 644,485,583 securities, fully paid) (a)
578,780
364,066
MOVeMents
Balance at beginning of financial year
644,486
364,066
Issue of securities under Distribution Reinvestment Plan
Issue of securities as consideration for related party acquisition (b)
Issue cost of securities
Capital distributions paid (Note 5)
Balance at end of financial year
2013
nO. OF units
000
2013
$000
2012
NO. OF UNITS
000
15,548
175,717
-
-
19,663
212,035
(2,105)
(14,879)
634,116
10,370
-
-
-
835,751
578,780
644,486
2012
$000
382,001
10,733
-
(18)
(28,650)
364,066
(a) Fully paid securities carry one vote per security and carry the right to distributions.
(b) APTIT issued securities as part consideration for APT Pipelines Ltd’s acquisition of the Hastings Diversified Utilities Fund during the year.
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.
113
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 11. reserVes
available-for-sale investment revaluation reserve
Balance at beginning of financial year
Valuation (loss)/gain recognised
Balance at end of financial year
2013
$000
1,624
(1,157)
467
2012
$000
534
1,090
1,624
The available-for-sale investment revaluation reserve arises on the revaluation of available-for-sale financial assets. When a revalued financial asset is sold, the
portion of the reserve which relates to that financial asset is effectively realised, and is recognised in profit or loss. When a revalued financial asset is impaired, the
portion of the reserve which relates to that financial asset is recognised in profit or loss.
12. earnings per seCurity
Basic and diluted earnings per security (cents)
4.9
7.2
The earnings and weighted average number of ordinary securities used in the calculation of basic and diluted earnings per security are as follows:
Net profit attributable to Securityholders for calculating basic and diluted earnings per security ($’000)
38,143
45,957
nO. OF seCurities
2013
2012
Weighted average number of ordinary securities on issue used in the calculation (000)
772,314
639,743
13. reMuneratiOn OF external auDitOr
amounts received or due and receivable by Deloitte touche tohmatsu for:
Auditing the financial report
2013
$
2012
$
11,958
11,958
114
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePorT 2013 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)
2013
$000
2012
$000
1,167
4,669
10,506
16,342
16,342
(4,473)
11,869
609
11,260
11,869
1,167
4,669
11,673
17,509
17,509
(5,060)
12,449
580
11,869
12,449
(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 Risk Management Policy, which provides
(d) Market risk management
written principles on foreign exchange risk, interest rate risk, credit risk, the use
The Consolidated Entity’s activities exposure is primarily to the financial risk of
of financial derivatives and non-derivative financial instruments, and the
changes in interest rates. There has been no change to the Consolidated
investment of excess liquidity. The Consolidated Entity does not enter into or
Entity’s exposure to market risk or the manner in which it manages and
trade financial instruments, including derivative financial instruments for
measures the risk from the previous period. The Consolidated Entity is also
speculative purposes.
The Consolidated Entity had no derivative instruments in place in the current or
prior period.
The Corporate Treasury function, via the CFO, reports regularly to APA Group’s
Audit and Risk Management independent body that monitors risks and policies
implemented to mitigate risk exposures.
(b) liquidity risk management
The Consolidated Entity has a policy dealing with liquidity risk which requires
exposed to price 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.
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:
an appropriate liquidity risk management framework for the management of
– net profit would have been unaffected as the equity investments are
the Consolidated Entity’s short, medium and long-term funding and liquidity
classified as available-for-sale and no material investments were disposed
management requirements. Liquidity risk is managed by maintaining adequate
of or impaired (2012: $nil); and
cash reserves and banking facilities, by monitoring and forecasting cash flow
– equity reserves would decrease/increase by $71,000 (2012: $173,000), due
and where possible arranging liabilities with longer maturities to more closely
to the changes in the fair value of available-for-sale shares.
match the underlying assets and revenue streams of the Consolidated Entity.
115
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 15. FinanCial instruMents (COntinueD)
(d) Market risk management (continued)
The Consolidated Entity’s analysis of its exposure to equity prices has
– Level 1 fair value measurements are those derived from quoted prices
established that, overall, its sensitivity declined during the current period
(unadjusted) in active markets for identical assets or liabilities.
compared to the prior period. This outcome is largely a result of a significantly
– Level 2 fair value measurements are those derived from inputs other than
lower beta value on Ethane Pipeline Income Fund shares.
quoted prices included within Level 1 that are observable for the asset or
(e) Fair values of financial instruments
Fair value measurements recognised in the statement of financial position
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
The following table provides an analysis of financial instruments that are
data (unobservable inputs).
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.
level 1
$000
level 2
$000
level 3
$000
total
$000
2013
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
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
2,383
-
2,383
3,685
2
-
3,687
-
-
-
-
-
-
-
Reconciliation of Level 3 fair value measurements of financial assets
Opening balance
Total gains or losses:
– in profit or loss: Interest - related parties
– in profit or loss: (Loss)/gain on financial asset held at fair value through profit and loss
Distributions
Closing balance
-
2,383
34,807
34,807
34,807
37,190
-
-
36,614
36,614
3,685
2
36,614
40,301
Fair Value tHrOugH
prOFit Or lOss
2013
$000
2012
$000
36,614
32,761
3,949
(1,460)
(4,296)
34,807
3,894
4,000
(4,041)
36,614
116
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePorT 2013 15. FinanCial instruMents (COntinueD)
(e) Fair values of financial instruments (continued)
Significant assumptions used in determining fair value of financial assets and
liabilities
Redeemable ordinary shares
– the ROS discretionary dividends are estimated based on an internal
forecasted cash flow model; and
– the value of the option to convert is deemed to be zero (2012: zero). For
The financial statements include redeemable ordinary shares (“ROS”) held in
conversion to occur, a number of conditions must be met. At the reporting
an unlisted entity which are measured at fair value (Note 8). The fair market
date, it was deemed highly unlikely these conditions would occur based on
value of the ROS is derived from a binomial tree model, which includes some
an internal forecasting model.
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:
(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 100 basis points 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 constant, the
Consolidated Entity’s net profit would increase by $485,000 or decrease by
$412,000 (2012: decrease by $709,000 or increase by $814,000 respectively).
– the risk adjusted rate for the ROS is estimated as the required rate of return
This is mainly attributable to the Consolidated Entity’s exposure to interest
based on projected cash flows to equity at issuance assuming the ROS price
rates on its variable rate inter-entity balances and the fair value movement on
at issuance ($0.99) (2012: $0.99) and the ordinary price at issuance ($0.01)
the ROS. The sensitivity has reversed from the prior year due to higher inter-
(2012: $0.01) are at their fair value;
entity balances resulting in interest income sensitivity which is greater than the
– the risk free rate of return is 3.19% (2012: 2.72%) per annum and is based
ROS sensitivity.
upon an interpolation of the five and ten year Government bond rates at the
valuation date;
16. suBsiDiaries
naMe OF entity
parent entity
APT Investment Trust
Controlled entity
COuntry OF
registratiOn
OWnersHip interest
2012
2013
%
%
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, resigned 24 October 2012)
R J Wright (Independent Non-Executive Director)
(b) Director compensation
The aggregate compensation made to Directors of the Consolidated Entity is set out below:
Short-term employment benefits
Post-employment benefits
Cash settled share-based payments
2013
$
3,431,262
124,280
1,165,290
2012
$
2,762,850
168,148
1,021,548
4,720,832
3,952,546
117
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 17. DireCtOr COMpensatiOn (COntinueD)
(b) Director compensation (continued)
The compensation of each Director of the Consolidated Entity is set out below.
sHOrt-terM
eMplOyMent BeneFits
pOst-
eMplOyMent
inCentiVe
plans
SALARY/FEES
$
SHORT-TERM
INCENTIVE
SCHEME
$
SUPERANNUATION
$
SHARE-BASED
PAYMENTS (a)
$
TOTAL
$
317,252
289,000
146,970
134,750
156,723
117,000
160,223
146,000
143,000
130,000
43,043
130,000
164,238
150,750
1,131,449
1,097,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,998
24,400
13,230
12,128
19,012
43,250
14,427
13,145
12,850
11,675
-
-
14,763
13,550
99,280
118,148
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
342,250
313,400
160,200
146,878
175,735
160,250
174,650
159,145
155,850
141,675
43,043
130,000
179,001
164,300
1,230,729
1,215,648
1,167,500
965,000
1,132,313
700,350
25,000
50,000
1,165,290
3,490,103
1,021,548
2,736,898
2,298,949
2,062,500
1,132,313
700,350
124,280
1,165,290
4,720,832
168,148
1,021,548
3,952,546
nOn-exeCutiVe DireCtOrs
L F Bleasel AM
2013
2012
S Crane
2013
2012
J A Fletcher
2013
2012
R A Higgins AO
2013
2012
P M McKenzie
2013
2012
M Muhammad (b)
2013
2012
R J Wright
2013
2012
tOtal reMuneratiOn: nOn-exeCutiVe DireCtOrs
2013
2012
exeCutiVe DireCtOr
M J McCormack
2013
2012
tOtal reMuneratiOn: DireCtOrs
2013
2012
(a) Cash settled share-based payments.
(b) Muri Muhammad resigned as a Director on 24 October 2012.
118
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePorT 2013 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 and Development)
S P Ohl (Group Executive Strategic Projects, retired 1 July 2013)
M T Knapman (Company Secretary)
P J Wallace (Group Executive Human Resources)
R A Wheals (Group Executive Transmission)
J L Ferguson (Group Executive Networks)
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 is set out below:
Short-term employment benefits
Post-employment benefits
Cash settled share-based payments
Retention award
Termination payments
The executive remuneration strategy is to:
2013
$
2012
$
8,377,184
203,207
5,922,156
298,160
3,302,138
2,638,476
720,667
245,000
-
-
12,848,196
8,858,792
– 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
governance.
APA’s remuneration mix is structured as a mix of base pay and ‘at risk’ short
and long-term incentive components.
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.
119
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013 18. Key ManageMent persOnnel COMpensatiOn (COntinueD)
(b) Key management personnel compensation (continued)
Compensation for 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)
OTHER
PAYMENTS (b)
Key ManageMent persOnnel
$
$
$
$
$
TOTAL
$
3,490,103
2,736,898
$
-
-
1,167,500
1,132,313
965,000
700,350
653,530
477,375
590,225
292,395
-
-
-
-
25,000
1,165,290
50,000
1,021,548
16,470
462,536
202,000
1,811,911
15,775
290,755
-
1,189,150
707,608
505,080
658,303
321,563
11,922
11,922
16,470
522,376
228,667
1,992,123
15,775
475,330
-
1,482,893
465,530
312,375
-
415,377
182,125
4,848
24,470
49,775
337,336
362,815
245,000
1,410,190
411,000
215,482
366,000
132,922
345,149
237,263
272,243
147,345
390,000
239,663
329,000
117,369
358,130
267,143
295,422
119,747
299,905
180,216
-
-
-
-
-
-
-
-
-
-
-
-
25,000
50,000
234,415
215,843
24,999
129,441
41,257
60,110
-
-
-
-
-
989,461
885,897
764,765
736,852
520,955
25,000
193,639
60,000
908,302
25,000
119,753
-
591,122
24,870
50,578
185,791
130,000
965,934
117,801
-
583,548
20,928
45,835
100,000
646,884
-
-
-
-
M J McCormack
2013
2012
P J Fredricson
2013
2012
R M Gersbach
2013
2012
S P Ohl (c)
2013
2012
M T Knapman
2013
2012
P J Wallace
2013
2012
R A Wheals
2013
2012
J L Ferguson (e)
2013
2012
K Lester (d)
2013
2012
tOtal reMuneratiOn
2013
2012
4,798,352
3,566,910
3,891,570
2,013,816
11,922
16,770
203,207
3,302,138
965,667
12,848,196
298,160
2,638,476
-
8,858,792
(a) Cash settled share-based payments.
(b) Other payments include the first instalment of Loyalty Payment.
(c) S Ohl retired with effect 1 July 2013. A termination payment of $353,716 (representing the termination benefit of $245,000 plus statutory entitlements) has not been paid in the
financial year 2013. The payment will be made in future years.
(d) Kevin Lester joined APA Group as Group Executive Infrastructure Development on 6 August 2012 and received a Sign-On/Enticement payment.
(e) Other payments include the first instalment of Loyalty Payment and an Ex-gratia payment for acting in the position of Group Executive Operations.
120
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePorT 2013 19. relateD party transaCtiOns
(a) responsible entity – australian pipeline limited
The Responsible Entity is wholly owned by APT Pipelines Limited (2012: 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
2013
L F Bleasel AM
S Crane
J A Fletcher
R A Higgins AO
P M McKenzie
M Muhammad (a)
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
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
(a) M Muhammad resigned effective 24 October 2012. Closing balance represents balance at that date.
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
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
17,571
-
2,890
5,880
-
-
2,520
13,326
1,500
31
-
201
6,000
-
-
67,688
24,645
-
3,272
6,657
12,500
-
2,853
2,947
454
-
-
-
2,516
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,796
-
-
-
-
460,664
100,000
66,188
92,040
12,500
42,818
39,444
208,590
7,716
485
14,896
7,201
6,000
1,500
1,967
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
121
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013
19. relateD party transaCtiOns (COntinueD)
(d) transaction with related parties within the Consolidated entity
The following balances arising from transactions between the Trust and its
During the financial year, the following transactions occurred between the Trust
other related parties are outstanding at reporting date:
and its other related parties:
– current receivables totalling $608,644 are owing from a subsidiary of APT
– loans advanced and payments received on long-term inter-entity loans; and
for amounts due under a finance lease arrangement (2012: $580,065);
– payments of distributions.
All transactions between the entities that comprise the Consolidated Entity
have been eliminated on consolidation.
– non-current receivables totalling $11,259,628 are owing from a subsidiary of
APT for amounts due under a finance lease arrangement (2012: $11,868,272);
and
– non-current receivables totalling $442,224,745 (2012: $226,556,406) are
Refer to Note 16 for details of the entities that comprise the Consolidated Entity.
owing from a subsidiary of APT.
(e) transactions with other related parties
Australian Pipeline Limited
APTIT and its controlled entity have a number of loan receivable balances with
Management fees of $670,741 (2012: $630,345) were paid to the Responsible
other entities in APA. These loans have various terms; however, they can be
Entity as reimbursement of costs incurred on behalf of APTIT. No amounts were
repayable on agreement of the parties. Interest is recognised by applying the
paid directly by APTIT to the Directors of the Responsible Entity.
effective interest method, agreed between the parties at the end of each
month and is determined by reference to market rates.
Australian Pipeline Trust
Management fees of $670,741 (2012: $630,345) were reimbursed by APT.
20. parent entity inFOrMatiOn
The accounting policies of the parent entity, which have been applied in determining the financial information below, are the same as those applied in the
consolidated financial statements. Refer to note 3 for a summary of significant accounting policies relating to the Group.
2013
$000
2012
$000
641
598,054
598,695
755
386,105
386,860
24
-
24
10
-
10
598,671
386,850
578,780
19,424
364,066
21,160
467
1,624
598,671
386,850
38,143
(1,157)
36,986
45,957
1,090
47,047
FinanCial pOsitiOn
assets
Current assets
Non-current assets
total assets
liabilities
Current liabilities
Non-current liabilities
total liabilities
net assets
equity
Issued capital
Retained earnings
Reserves
Available-for-sale investment revaluation reserve
total equity
FinanCial perFOrManCe
Profit for the year
Other comprehensive income
total comprehensive income
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
No guarantees have been entered into by the parent entity in relation to the debts of its subsidiaries.
Contingent liabilities of the parent entity
No contingent liabilities have been identified in relation to the parent entity.
122
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013APA grouP / AnnuAl rePorT 2013 21. COntingent liaBilities anD COntingent assets
At 30 June 2013, there are no material contingent liabilities or contingent
On 21 August 2013, the Directors declared a final distribution for the 2013
assets (2012: $nil).
22. suBseQuent eVents
On 16 July 2013, APA announced that an indicative and non-binding all-share
merger proposal has been submitted to the Board of Envestra Limited. Under
financial year of 2.48 cents per security ($20.7 million). The distribution
represents a 2.32 cents per security unfranked profit distribution and 0.16 cents
per security capital distribution. The distribution will be paid on 11 September
2013.
the proposal Envestra shareholders would receive 0.1678 new APA stapled
Other than the events disclosed above, there have not been any events or
securities for each Envestra share they own. On 5 August 2013, Envestra
transactions that have occurred subsequent to year end that would require
announced that it had decided to reject the APA proposal. APA continues to
adjustment to or disclosure in the accounts.
consider its position on this proposed transaction.
A PT I NVE STMENT TRUST AND ITS CO NTRO LLE D ENTI TIES
DecLArAtioN BY tHe Directors oF
AUstrALiAN pipeLiNe LiMiteD
For the financial year ended 30 June 2013
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 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, 21 August 2013
robert Wright
Director
123
APT invesTmenT TrusT And iTs conTrolled enTiTiesNotes to the coNsolidated fiNaNcial statemeNts coNtiNued For the financial year ended 30 June 2013
APT IN VESTMEN T TRUST AN D I TS CO NTRO LLE D ENTI TIE S
AUDitor’s iNDepeNDeNce DecLArAtioN
For the financial year ended 30 June 2013
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
21 August 2013
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 2013, 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
124
APA grouP / AnnuAl rePort 2013
A PT IN VEST ME NT TRUST AND ITS CO N TR O LLED EN TI T IE S
iNDepeNDeNt AUDitor’s report
For the financial year ended 30 June 2013
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 2013, the statement of profit or loss and other
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 104 to 123.
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
125
APT INVESTME N T TRUST A N D ITS CO NTRO LLE D ENTI TIE S
iNDepeNDeNt AUDitor’s report
coNtiNUeD
For the financial year ended 30 June 2013
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 consolidated entity’s financial position as at 30 June 2013
and of its 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, 21 August 2013
126
APA grouP / AnnuAl rePort 2013
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 30 August 2013).
tWenty largest HOlDers
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Credit Suisse Securities (Europe) Ltd
Custodial Services Limited
Australian Foundation Investment Company Limited
AMP Life Limited
BNP Paribas Noms Pty Ltd
Argo Investments Limited
Bond Street Custodians Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
Djerriwarrh Investments Limited
QIC Limited
UBS Nominees Pty Ltd
Questor Financial Services Limited
Share Direct Nominees Pty Ltd
CS Fourth Nominees Pty Ltd
Navigator Australia Limited
BKI Investment Company Limited
total for top 20
DistriButiOn OF HOlDers
RANGES
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
total
NO. OF SECURITIES
127,588,539
123,941,379
80,336,881
31,910,809
16,297,000
16,228,161
11,643,321
11,051,086
9,575,196
7,358,455
3,833,178
3,097,734
2,865,000
2,405,728
2,171,948
1,923,370
1,794,678
1,741,586
1,624,876
1,554,452
%
15.27
14.83
9.61
3.82
1.95
1.94
1.39
1.32
1.15
0.88
0.46
0.37
0.34
0.29
0.26
0.23
0.21
0.21
0.19
0.19
458,943,377
54.91
NO. OF HOLDERS
%
NO. OF SECURITIES
173
8,398
11,854
31,282
28,688
80,395
0.22
10.45
14.74
38.91
35.68
491,082,836
164,413,738
85,573,019
83,612,809
11,068,405
100.00
835,750,807
100.00
%
58.76
19.67
10.24
10.01
1.32
2,694 holders hold less than a marketable parcel of securities (market value less than $500 or 84 securities based on a market price on 30 August 2013 of $5.99).
suBstantial HOlDers
No substantial holder notices had been received as at 30 August 2013.
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.
127
ADDitioNAL iNForMAtioN
coNtiNUeD
CalenDar OF eVents
seCurityHOlDer Details
Final distribution FY2013 record date
28 June 2013
Final distribution FY2013 payment date
11 September 2013
Annual meeting
Interim result announcement
24 October 2013
19 February 2014*
It is important that Securityholders notify the APA Group registry immediately
if there is a change to their address or banking arrangements. Securityholders
with enquiries should also contact the APA Group registry.
DistriButiOn payMents
Interim distribution FY2014 record date
31 December 2013*
Distributions will be paid semi-annually in March and September. Securityholders
Interim distribution FY2014 payment date
12 March 2014*
will receive annual tax statements with the final distribution in September.
Direct payment can be made to an Australian or New Zealand bank account. If
you would like to arrange direct payment, please contact the APA Group registry.
Online interaCtiVe repOrts
APA Group’s 2013 Annual Report, Annual Review and Sustainability Report are
available in an easy to view interactive format at
www.apa.com.au.
Online inFOrMatiOn
Further information on APA is available at
www.apa.com.au, including:
– Results, market releases and news
– Asset and business information
– Corporate responsibility and sustainability reporting
– Securityholder information such as the current APA security price,
distribution and tax information.
eleCtrOniC COMMuniCatiOn
Securityholders can elect to receive communication from APA electronically
by registering their email address with the
APA Group registry.
Electing to receive annual reports electronically will reduce the adverse
impact we have on the environment.
*Subject to change
annual Meeting Details
Date: thursday 24 october 2013
Venue: City Recital Hall
2 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 a stapled
security which is listed on the ASX (ASX Code: APA). Australian Pipeline
Limited is the Responsible Entity of those trusts.
apa grOup respOnsiBle entity anD registereD OFFiCe
Australian Pipeline Limited
ACN 091 344 704
Level 19, 580 George Street
Sydney NSW 2000
PO Box R41
Royal Exchange NSW 1225
Telephone: +61 2 9693 0000
Facsimile: +61 2 9693 0093
Website: www.apa.com.au
apa grOup registry
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Locked Bag A14
Sydney South NSW 1235
Telephone: +61 1800 992 312
Facsimile: +61 2 9287 0303
Email: apagroup@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
DisClaiMer APA Group comprises two registered investment schemes, Australian Pipeline Trust (ARSN 091 678 778) and APT Investment Trust (ARSN 115 585 441), the securities of which are
stapled together. Australian Pipeline Limited (ACN 091 344 704) is the responsible entity of Australian Pipeline Trust and APT Investment Trust.
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.
128
APA grouP / AnnuAl rePort 2013
aPa.com.aU