celebrating. 20 years
2020 a leading Australian energy infrastructure business.20
annual report. 2020
APA GROUP I ANNUAL REPORT 2020
A
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
APA Group. established June 2000.
we strengthen communities through
responsible energy
The world is changing as are people’s
attitudes. Technology developments
are providing new ways of operating
and opening up new horizons and
opportunities. It’s a very exciting time
to be in the energy space.
As we begin our third decade, APA is a
leading energy infrastructure business
with the vision to be world class in energy
solutions. We will be at the forefront of
the responsible energy transformation
leveraging our existing portfolio and
skills and investing in future technologies.
In doing so, we will strengthen communities
for the benefit of future generations.
Responsible energy means taking a long
term view and creating value for all our
stakeholders – customers, investors, the
environment and communities, authorities
and our employees.
We will measure our success based on
the success we deliver to our stakeholders.
Celebrating 20 years.
Front cover: Wallumbilla Gas Hub facilities in Queensland.
This Page: During FY2020, APA donated this state of the art TATRA fire truck to the Shire
of Dandaragan in Western Australia, where APA's renewable energy precinct is located.
Back cover (top): Badgingarra Wind and Solar Farms in Western Australia.
Back cover (bottom): Raj Kallath, Infrastructure Project Manager and Michael Fox, Mechanical
Engineer, inspecting the Reedy Creek to Wallumbilla pipeline in Queensland, post construction.
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
energy. connected.
20 years. delivering responsible energy.
contents.
FY2020 in Review
02 Chairman’s Report
04 Managing Director’s Report
06 APA Group Board
07 APA Group Executive Leadership
08 2020 Highlights
Australian Pipeline Trust
ARSN 091 678 778
10 Directors’ Report
48 Remuneration Report
63 Consolidated Financial Statements
APT Investment Trust
ARSN 115 585 441
123 Directors’ Report
127 Consolidated Financial Statements
147 Additional Information
148 Five Year Summary
149 Investor Information
APA GROUP I ANNUAL REPORT 2020
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
chairman’s report.
This year marks the 20th anniversary
of APA’s listing on the ASX and it is
pleasing to report it also marks 20 years
of growth in distributions to Securityholders
with Total Securityholder Returns of
2,203% (1) since listing in June 2000.
FY2020 will be remembered as a very
tough year for Australia and continues
to be challenging into FY2021. At
APA, Rob Wheals and his team have
responded exceptionally well to the
many challenges faced during the year,
including bushfires, extreme weather
events and the COVID-19 crisis. The
Board is particularly pleased that
they have done so with an absolute
focus on our responsibilities to our
customers, the communities in which
we operate and our people.
FY2020 Results
APA’s long running growth strategy
and low risk business model have
underpinned the performance of the
business through both good years, and
in challenging years such as FY2020.
Our strong balance sheet and long-
term contracts have helped safeguard
APA’s earnings against the market
volatility impacting many companies
this year, and our business has
delivered solid FY2020 results.
Importantly, we delivered 50.0 cents
per security distribution for FY2020,
an increase of 6.4% on FY2019, with
the additional benefit of 7.31 cents
per security of franking credits. Our
distribution policy has always had long
term sustainability at its core. So it is
pleasing to demonstrate that APA’s
approach has again delivered growing
returns to our investors, in a year when
there has been much disruption.
Total revenue (excluding pass-through
revenue) in FY2020 increased by
$98.5 million to $2,129.5 million, an
increase of 4.8% on the previous year
(FY2019: $2,031.0 million). Earnings
before interest, tax, depreciation and
amortisation (EBITDA) increased by
5.1% to $1,653.9 million which was
towards the upper end of the revised
EBITDA guidance range of $1,635
million to $1,655 million (revised 21
April 2020). Whilst the mix of long
term take or pay contracts and
regulated revenues underpins our
revenue base, investment in new
energy infrastructure assets in recent
years has delivered the pleasing
earnings increase.
Net profit after tax increased 10.1%
to $317.1 million. Operating cash flow
increased by 8.3% or $83.8 million
to $1,095.9 million compared to the
previous year (FY2019: $1,021.1 million).
Similarly, operating cash flow per
security increased 8.3%, or 7.1 cents, to
92.9 cents per security (FY2019: 85.8
cents per security).
Consistent Strategy, Refreshed
Perspective
Growing the business and doing so in a
sustainable manner has long been our
strategy. With this approach, we have
not only grown the size of the business
and returns to investors, but we have
also expanded our business to include
complementary energy infrastructure.
Michael Fraser. Chairman.
Societal demand for new energy
technologies is increasing and APA is
well positioned to play an important
role in the energy transformation that
is underway.
The Board endorsed APA’s refreshed
Purpose, Vision, and Operating Model
during this reporting period. Our
Purpose of strengthening communities
through responsible energy has
never been so pertinent. APA is one
of Australia’s largest companies,
providing essential services to ensure
the ongoing supply of gas and
electricity for Australians.
The refreshed operating structure
recently implemented by Rob Wheals
provides a solid foundation for APA’s
continued success going forward,
providing the capacity for innovation,
scalability and agility needed to
manage the changing nature of the
energy landscape. This will help us
achieve our Purpose to strengthen
communities through responsible
energy, and our Vision to become
world class in energy solutions.
Energy infrastructure requires a long-
term perspective - investing today
to deliver benefits to the economy,
society and our customers in future
years. We continue to see significant
opportunities within Australia in our
core skillset of energy infrastructure;
particularly gas and renewables. We
are also investing in new technologies
and energy sources.
1) Achieved securityholder returns of 16.8% per annum on an annual compounding basis since listing on 13 June 2000 through to 21 August 2020.
02
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
Assets owned and/or
operated by APA
~$22
billion
EBITDA increased
5.1% on FY2019
$1,654
million
Distribution per security
increased 6.4%
50
cents
20 years delivering responsible energy.
Whatever Australia’s future energy
mix, APA will be at the forefront of
responsible energy generation and
delivery. We continue to investigate
gas infrastructure investment
opportunities in North America with
the focus on ensuring that anything
we acquire is the right fit for our low
risk business model.
We have also continued to advance
our scenario analysis in alignment with
the Task Force on Climate-Related
Disclosure recommendations that
was commenced last year. The results
of this analysis will be published in
early October. The work has included
extending the horizon to 2050 and
resilience testing our existing portfolio
against a range of divergent scenarios,
including limiting climate change to
1.5C degrees. During the year, we
published APA’s first Climate Change
Position Statement which affirms
our stance on climate change and
support for a global transition to a
lower carbon future. We know our
actions of today will impact future
generations and therefore we must
take a responsible approach to the
delivery of energy solutions, now and
into the future.
Board Addition
During the year we welcomed Rhoda
Phillippo as a Non-Executive Director
to APA’s Board. Rhoda’s extensive
and diverse background in energy,
telecommunications and IT will
further strengthen the Board and
complement its skillset.
Annual Meeting
I recently wrote to Securityholders
advising of the need to hold a virtual
annual meeting in 2020 due to the
government restrictions and guidelines
as a result of the coronavirus
pandemic. Access will be both online
and via the telephone and you will
be able to view, listen, vote and ask
questions. We will provide further
detailed information as we get closer
to the 22 October 2020 annual
meeting date. A dedicated information
page on APA’s website has also been
set up at https://www.apa.com.au/
investors/annual-meeting.
FY2021 Outlook
Looking ahead, we are confident that
APA is in a strong position financially
and operationally. Although APA is an
essential part of the energy supply
chain, no business is entirely immune
from an economic downturn. APA is
successful when our customers are
strong. While our capacity contracts
and regulated revenues mean that our
business is somewhat resilient through
economic cycles, APA’s revenues are
still subject to recontracting decisions
by customers, throughput volumes on
certain assets, the timing of customer
FID decisions, as well as lower CPI
across the contracts portfolio.
Further, APA’s current operating plan for
FY21 only includes around $10 million of
EBITDA contribution from the Orbost
Gas Processing Plant under the recently
announced Transition Agreement with
Cooper Energy. This assumes Practical
Completion is not achieved until the end
of the financial year.
In this context, APA expects EBITDA
for the full year to 30 June 2021 to
be within the range of $1,625 million
to $1,665 million. Total distributions
for FY2021 are expected to be
substantially in line with FY2020
distributions, with franking credits
which may be allocated, depending on
the amount of cash tax APA will pay
during the year.
Finally, on behalf of the Board, I wish
you the very best of health both
physically and mentally, as we support
each other through these extraordinary
times. At APA, the safety and well-
being of all the people we deal with,
including our Securityholders, is our
highest priority. Thank you for your
ongoing support.
Michael Fraser
Chairman
APA GROUP I ANNUAL REPORT 2020
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
managing director’s report.
FY2020 has been a year like no other.
Resilience and adaptability have been
key for both people and businesses.
Our success and growth over 20 years
as a publicly listed business has always
been about adapting to new challenges
and opportunities, with a strong focus
on our customers’ needs.
Rob Wheals. Chief Executive Officer and Managing Director.
Disappointingly we have had an
increase in recordable injuries this
year. This is not satisfactory, and we
are focussed on putting in place more
measures to prevent future injuries.
Performance and Growth
Despite the testing times experienced
in FY2020, APA has continued to
deliver steady and solid results as
detailed by the Chairman in his
Report. The 5.1% increase year on
year in EBITDA was possible because
of contributions from a number of
new energy-infrastructure assets,
as well as solid performance from
all our existing assets. APA’s Orbost
Gas Processing Plant was due to be
commercially operating in FY2020.
We continue to work very closely
with our customer and technology
partner to have this asset contributing
revenue in the near term.
We expect that the economic
consequence of the global pandemic
and depressed oil prices will cause
delays to some near term investment
decisions. But to ensure reliable,
affordable and secure energy into
the future, the industry must take a
long-term view and continue to invest
in new energy infrastructure projects.
Working closely with our customers,
APA continues to see over $4 billion of
domestic growth opportunities over
the next five to ten years. Of this, as
much as $1 billion of projects are in
active discussion with customers for
decisions and/or delivery over the next
two to three years.
The Australian Energy Market
Operator is forecasting a 2023 winter
gas supply shortfall in the south
eastern market. Amongst other gas
supply solutions, this is likely to require
additional gas transportation from
northern markets to the south. We
continue to see opportunities for cost
efficient capacity expansion of APA’s
interconnected East Coast Grid,
which would deliver the additional
transportation capacity as required.
We are also working with customers
on new gas supply sources, both
from new gas fields and LNG
regasification projects.
In Western Australia, the organic
growth of our pipeline and power
generation infrastructure continues
to gain momentum. We are securing
new customers seeking both gas as a
reliable and efficient energy source, as
well as renewable energy.
In terms of our growth plans in
North America, we continue to look
for suitable opportunities. As we
have articulated previously, we will
only proceed if an investment meets
our criteria.
The Energy Transition Roadmap
Energy transformation is well
underway both globally and in
Australia. The shift away from coal
has been significant. With an ageing
suite of coal generators still producing
60-70% of electricity in Australia,
there are both opportunities and
challenges in navigating Australia’s
energy transformation.
Our Purpose and Vision
This year we articulated our Purpose –
we strengthen communities through
responsible energy. We also defined
our Vision – to be world class in energy
solutions. This means that APA is
recognised for integrity and credibility,
for our leadership in responsible
energy, for our strong governance
and for our continued focus on our
customers. Further, we want APA to
be a place where people are proud
to work, an organisation that is
known for its operational, safety and
environmental performance.
I have been a very proud employee
of APA for more than 11 years. My
first year as your CEO and Managing
Director has only enhanced my pride
and enthusiasm for our business and
what we can contribute to society in
the years to come.
Safety is paramount
Safety is our number one priority.
This financial year we experienced
the additional challenges that
came with the bushfires across
eastern Australia and the global
coronavirus pandemic. Fortunately
our people were unharmed and our
assets undamaged in the bushfires.
Our business adapted quickly
and successfully to the new and
challenging operating conditions
necessary in the pandemic. Our
people have been a credit to the
company in this crisis.
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APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
20 years focused on our customers’ needs.
$1.7
billion
$1,096
million
invested in new energy
infrastructure from
FY2017-FY2020
Operating cash flow
increased 8.3%
on FY2019
Financial contributions, local
employment opportunities, student
work experience, leadership mentoring
and equipment donations are some
of the ways we provide support to
regional communities where most
of our infrastructure is located. As a
business, we donated over $200,000,
in addition to personal contributions
from our employees, to help get
communities back on their feet
following the devastating bushfires
earlier this year. I was both humbled
and impressed by the compassion
and initiative demonstrated by
the APA team.
Working together is common practice
at APA. And from an energy industry
perspective, we have been doing just
that with our active involvement in the
Energy Charter. APA was a founding
member of this initiative. It aims
to deliver better energy outcomes
for Australians through an aligned
approach throughout the energy
supply chain. FY2020 saw the delivery
of the first Independent Accountability
Report and the development of
a number of coordinated “Better
Together” initiatives aimed at
delivering tangible, improved customer
and consumer outcomes.
Renewable penetration has increased,
and battery cost and technologies
have improved. However, current
available technology alone will not be
able to support the 24/7 electricity
load in the near to medium term.
We continue to believe gas will be an
important part of the mix to ensure
energy reliability going forward.
APA has been working on its own
energy roadmap as we take a holistic
approach to decarbonisation. We
are ensuring the new Transformation
and Technology division has the right
resources in place to investigate
and invest in new technologies and
new energy opportunities that will
ultimately leverage and complement
our existing expertise.
Whatever the energy mix, APA,
as a leading Australian energy
infrastructure company, will continue
to adapt and innovate to be at the
forefront of world class, responsible
energy solutions.
Customer and Community
Engagement
Our business is successful when
we meet our customers’ needs as
well as work with and respect the
communities in which we operate.
Indigenous heritage, landholder and
environmental sensitivities are key
considerations in APA’s planning and
operations. Ensuring we engage
effectively with our stakeholders to
deliver value for them as well as our
customers is an area of enhanced
focus at APA.
Looking ahead
My Executive Leadership Team has
had some changes over the course
of FY2020, to reflect the new
operating model.
Hannah McCaughey joined in March
2020 to head up the Technology and
Transformation division. Hannah
leads a group that is focused on
exploring new energy opportunities
as well as internal transformation
projects including IT.
We have also welcomed Julian Peck
as Group Executive Strategy and
Commercial. The role was made
vacant due to Ross Gersbach moving
to Houston to spearhead our US
acquisition strategy. Julian has an
investment banking background and
will lead a newly formed team that
focuses on developing and executing
our corporate strategy as well as
commercial opportunities with
our customers
I also recently announced the
appointment of Adam Watson
as Chief Financial Officer (CFO)
commencing in mid-November. Adam
has been CFO with Transurban for six
years and has extensive experience
across a range of financial disciplines
and transactions in ASX-listed
companies. Adam will take over the
reins from Peter Fredricson, APA’s
long-serving CFO who will retire in
December 2020. Peter has been an
excellent CFO and his astute capital
markets guidance in particular has
supported our business growth.
On behalf of the company and our
investors, I’d like to thank Peter
for his outstanding contribution
to APA’s success.
With this refreshed management
team, APA remains in a strong position
to execute and deliver on our strategy
of continued growth in this evolving
energy market.
Rob Wheals
Chief Executive Officer and
Managing Director
APA GROUP I ANNUAL REPORT 2020
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
apa group board.
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Michael Fraser
BCom FCPA MAICD
Independent Chairman
Appointed 1 September 2015
Appointed Chairman
27 October 2017
Michael has more than 35
years’ experience in the
Australian energy industry.
He has held various executive
positions at AGL Energy
culminating in his role as
Managing Director and Chief
Executive Officer for the
period of seven years until
February 2015.
Michael is a Director of
Aurizon Holdings Limited.
He is also a former
Chairman of the Clean
Energy Council, Elgas
Limited, ActewAGL and
the NEMMCo Participants
Advisory Committee, as
well as a former Director of
Queensland Gas Company
Limited, the Australian
Gas Association and the
Energy Retailers Association
of Australia.
Michael is a member
of the Audit and Risk
Management Committee
and the Chairman of the
Nomination Committee.
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Robert (Rob) Wheals
BCom CA GAICD
Chief Executive Officer and
Managing Director
Appointed 6 July 2019
Rob has more than 25 years’
experience in Australia
and internationally in
energy infrastructure and
telecommunications,
across roles in operations,
finance, commercial,
strategy, infrastructure
investments and M&A,
as well as regulatory.
Rob joined APA in 2008
as General Manager
Commercial to manage
the commercial function
of APA's transmission
business, which includes
over 15,000 kilometres
of gas transmission
pipelines, storage and
processing facilities.
In 2012, Rob was
appointed Group Executive
Transmission, responsible for
approximately 85% of APA's
earnings before interest,
tax, depreciation and
amortisation.
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In this role, Rob was
responsible for the
commercial, operational and
safety performance of APA
Group's transmission and
gas storage assets.
Rob has a deep
understanding of the
Australian energy market
and the challenges facing
Australia today and into
the future, in particular
the challenge of balancing
sustainable lower emissions
energy with reliable and
affordable energy for
end users.
Prior to joining APA, Rob
was General Manager of
Strategy at AAPT in Sydney.
Rob has a Bachelor of
Commerce Degree, is a
Chartered Accountant
and a Graduate Member
of the Australian Institute
of Company Directors.
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Steven (Steve) Crane
BCom FAICD SF Fin
Independent Director
Appointed 1 January 2011
Steve has over 40 years'
experience in the financial
services industry. His
background is in investment
banking, having previously
been Chief Executive Officer
of ABN AMRO Australia and
BZW Australia.
Steve has experience as
a Non-Executive Director
of listed entities. He is
currently Chairman of
nib holdings limited,
Taronga Conservation
Society Australia, Global
Valve Technology Limited
and a Director of SCA
Property Group.
He was formerly Chairman
of Adelaide Managed Funds
Limited and Investa Property
Group Limited, a Director of
Bank of Queensland Limited,
Transfield Services Limited,
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 CIMB
Securities International
(Australia) Pty Ltd.
Steve is a member of the
Audit and Risk Management
Committee, a member
of the Nomination
Committee and a
member of the People and
Remuneration Committee.
James Fazzino
BEc (Hons) FCPA
Independent Director
Appointed 21 February 2019
James has experience both
locally and internationally
in the industrial chemicals,
fertilisers, explosives and
manufacturing sectors.
James is currently the
Chairman of Manufacturing
Australia, Chairman of
Osteon Medical, a director of
Rabobank Australia Limited
and Tassal Group Limited. He
is also a Co-convenor of the
Male Champions of Change
2015 Group, Vice Chancellors
Fellow at La Trobe University
and Adjunct Professor at La
Trobe Business School.
He was formerly the
Managing Director and
Chief Executive Officer of
Incitec Pivot and before
that, its Finance Director
and Chief Financial Officer.
James is a member of the
Audit and Risk Management
Committee and a member
of the Health, Safety and
Environment Committee.
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Debra (Debbie) Goodin
BEc FCA MAICD
Independent Director
Appointed 1 September 2015
Debbie is an experienced
Non-Executive Director
and Chair of Board Audit
and Risk and Remuneration
Committees. She is currently
a Director of ASX-listed
companies Senex Energy
Limited and Atlas Arteria
Limited, and Chairs the
Audit and Risk Committees
for each of these companies.
She is also a Director and
Audit Committee Chair of
Australia Pacific Airports
Corporation Limited as an
IFM owner's representative.
She was formerly a
Director of oOh!media
Limited and Ten Network
Holdings Limited.
Debbie also has executive
experience in operations,
finance and corporate
development, including
with engineering and
professional services firms,
and is a Fellow of Chartered
Accountants Australia and
New Zealand.
Debbie is the Chair of the
Audit and Risk Management
Committee, a member
of the Health, Safety and
Environment Committee
and a member of the
Nomination Committee.
Shirley In’t Veld
BCom LLB (Hons)
Independent Director
Appointed 19 March 2018
Shirley has expertise and
experience in the energy,
mining and renewables
sectors.
Shirley is currently a
Non-Executive Director with
Northern Star Resources
Limited, Alumina Limited
and NBN Co Limited. She
was formerly Deputy Chair
of CSIRO, a Non-Executive
Director of Perth Airport,
DUET Group, Asciano
Limited, Alcoa of Australia
Limited and a Council
Member of the Chamber of
Commerce and Industry of
Western Australia.
She was also the Managing
Director of Verve Energy
(2007 – 2012) and, before
that, she worked for 10
years in senior roles at
Alcoa of Australia Limited,
WMC Resources Ltd, Bond
Corporation and BankWest.
In 2014, she was Chairman
of the Queensland
Government Expert
Electricity Panel and a
member of the Renewable
Energy Target Review Panel
for the Department of Prime
Minister and Cabinet and,
was until recently, a Council
member of the Australian
Institute of Company
Directors (WA) and an
Advisory Board member of
the SMART Infrastructure
Facility (University of
Wollongong).
Shirley is the Chair of
the Health, Safety and
Environment Committee and
a member of the People and
Remuneration Committee.
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Rhoda Phillippo
MSc Telecommunications
Business GAICD
Independent Director
Appointed 1 June 2020
Rhoda has considerable
experience in the
telecommunications,
IT and energy sectors.
Rhoda is currently a
Non-Executive Director with
Pacific Hydro, Datacom,
where she is the Chair of the
Remuneration Committee
and Transformation
Committee, Agility CIS, and
an alternate Director for
Perth Airport on behalf of
the Future Fund.
She is formerly a Non-
Executive Director of
Vocus Group Ltd and
LINQ, Chairman of
Snapper Services in New
Zealand and Deputy Chair
of Kiwibank in New Zealand.
Rhoda spent much of her career
in the telecommunications
industry in the United
Kingdom, New Zealand
and Australia in senior
management positions
before joining Optimation,
in New Zealand, as Chief
Executive Officer. Rhoda
later joined HRL Morrison &
Co and, during this time, was
Managing Director of Lumo
Energy for two years.
Rhoda is a member of
the Health, Safety and
Environment Committee and
a member of the People and
Remuneration Committee.
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Peter Wasow
BCom GradDip (Management)
Fellow (CPA Australia)
Independent Director
Appointed 19 March 2018
Peter has experience in the
resources sector as both a
senior executive and director.
He retired as Managing
Director and Chief Executive
Officer of Alumina Limited
in mid-2017. Previously, he
had held the position of
Executive Vice President
and Chief Financial Officer
at Santos Limited and,
in a 20-year plus career
at BHP, he held senior
positions including Vice
President, Finance, and other
senior roles in Petroleum,
Services, Corporate, Steel
and Minerals.
Peter is a Non-Executive
Director with Oz Minerals
Limited and the privately
held GHD Group. He is
formerly a Non-Executive
Director of Alcoa of Australia
Limited, AWA Brazil
Limitada, AWAC LLC and
Alumina Limited.
Peter is the Chair of the
People and Remuneration
Committee and a member
of the Audit and Risk
Management Committee.
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
apa group executive leadership
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Julian Peck
BCom
Group Executive
Strategy and Commercial
Effective 20 August 2020
Julian will be responsible
for delivering APA’s
customer experience, all
business development and
commercial contracting
activities, co-ordination
of corporate strategy
development, as well as
undertaking corporate
development and merger
and acquisition activities.
Prior to joining APA, Julian
held senior leadership
positions in investment
banking, with over 20 years’
experience specialising in the
infrastructure, utility and
power sectors.
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Adam Watson
BBus FCPA GAICD
Chief Financial Officer
Effective mid-November 2020
Adam will be responsible for
all financial aspects of APA
Group, including accounting
and financial reporting,
financial compliance and
governance, taxation,
treasury, balance sheet
management, capital
strategy, corporate real
estate and procurement,
investor relations and
APA’s corporate model
and analysis.
Adam has over 20 years’
experience in executive and
senior leadership roles in
the transport, logistics and
resources industries, based
in Australia, China and
the United States.
Nevenka Codevelle
BCom LLM GAICD
Group Executive
Governance and
Externa Affairs and
Company Secretary
Nevenka is responsible for
APA Group's Governance
and External Affairs division.
The division comprises
company secretarial and
legal, group risk, compliance
and insurance, external
affairs and reputation,
sustainability and
community, and economic
regulation and external
policy development.
Nevenka has been with APA
Group since February 2008,
during which time she has
held the roles of General
Counsel and Company
Secretary. From 2017,
Nevenka also led the Energy
Charter, an energy industry-
wide initiative to improve
customer outcomes.
Nevenka has over 25 years'
experience in Australia and
internationally in energy
and other infrastructure
industries. Prior to joining
APA, Nevenka was a senior
policy advisor with the
National Competition
Council and senior lawyer
in law firms in Australia
and overseas.
2
Peter Fredricson
BCom CA GAICD
Chief Financial Officer
Peter is responsible for all
financial aspects of APA
Group, including accounting
and financial reporting,
financial compliance and
governance, taxation,
treasury, balance sheet
management, capital
strategy, corporate real
estate and procurement,
investor relations and
APA’s corporate model and
analysis.
Peter joined APA Group
in June 2009. He has
considerable expertise in the
listed energy infrastructure
sector and over 30 years'
experience in senior
financial roles in energy
infrastructure, financial
services and investment
banking organisations
across Australia, New
Zealand and Asia.
In December 2019, Peter
indicated his intention to
retire from APA Group by
December 2020.
Ross Gersbach
BBus
President North
American Development
Ross is responsible for
progressing APA Group’s
investment strategy in North
America, and is based in
Houston, Texas.
Prior to relocating in 2019,
Ross was Chief Executive
Strategy and Corporate
Development. In this role
he was responsible for
enhancing APA Group's
portfolio of assets to
complement the value
of its infrastructure,
including APA Group's
investments in midstream
gas infrastructure, and the
operation and development
of these assets.
Ross was a director of APA
Group from 2004, before
joining the management
team in April 2008. He has
over 25 years’ experience
in senior positions across
a range of energy related
sectors, covering areas
such as infrastructure
investments, mergers and
acquisitions, and strategic
developments. Ross has
extensive commercial
experience and has managed
a portfolio of infrastructure
assets in the natural gas
and electricity distribution
network sector, as well
as a portfolio of power
generation assets.
4
Kevin Lester
BEng MIEAust CPEng
EngExec GAICD
Group Executive
Infrastructure Development
Kevin is responsible for
the project development,
engineering, procurement
and delivery of APA Group's
infrastructure expansion
projects. This division
also has responsibility for
providing asset engineering
services, the technical
regulation of all pipeline
related assets, procurement,
engineering services and the
provision of land, approvals
and asset protection services
across APA.
Kevin joined APA Group in
August 2012 continuing a
career in the management
of major infrastructure
projects, including energy
infrastructure.
Kevin is a Director and
a Past President of the
Australian Pipelines and
Gas Association.
Elise Manns
BBus CAHRI
Group Executive
People, Safety and Culture
Elise is responsible for
managing APA Group's
People, Safety and Culture
division, which covers APA’s
people strategy and culture,
its safety and environmental
performance and
governance and all activities
relating to APA’s people,
their development, health,
wellbeing, and employment
arrangements.
Elise joined APA Group
in May 2012 as General
Manager Human Resources
and in October 2015
joined the Executive team
becoming Group Executive
Human Resources. Elise
has a strong background
in employment relations
and workplace change,
organisational restructuring
and business improvement.
Elise has over 25 years’
human resources experience
in Australia's heavy
manufacturing, engineering,
steel and utilities sectors.
Darren Rogers
BEng MEng MBA GAICD
Group Executive
Operations
Darren is responsible
for the safe operations,
maintenance, asset
management, and in-
year revenue and cost
responsibility of APA’s
portfolio of Transmission,
Power, Networks and
Midstream infrastructure
assets. This includes over
15,000 kilometres of
transmission pipelines;
solar and wind farms;
and gas storage, processing
and distribution.
Darren joined APA Group in
2017 as General Manager
Asset Management for
Transmission before
becoming Group Executive
Transmission in 2019.
Aside from his experience
at APA, Darren has
performed senior executive
roles in commercial,
asset management and
operations, leading large
and complex divisions and
across these companies.
6
8
Hannah McCaughey
BArts LLB (Hons) LLM
Group Executive
Transformation and
Technology
Hannah is responsible for
APA Group’s Transformation
and Technology division,
which enables APA to
effectively respond to
the disruptive forces
of decarbonisation,
decentralisation and
digitisation.
The division drives the
identification of emerging
energy market opportunities
while delivering business
transformation, continuous
improvement initiatives and
technology solutions.
Prior to joining APA Group
in March 2020, Hannah
performed senior executive
roles in infrastructure
and utilities, and has led
multiple whole-of-business
transformations focused on
delivering better customer
outcomes and sustainable
operational excellence.
Craig Stallan
BEng GAICD
Acting Group Executive
Strategy and Commercial
1 October 2019 to 19 August 2020
Craig has been responsible
for APA’s corporate strategy,
business development,
mergers and acquisition,
and customer relationship
management during the
period of secondment in his
Acting Group Executive role.
In addition, Craig oversees
commercial contract
management governance,
commercial contract
negotiations and commercial
risk management for APA’s
Transmission, Power and
Midstream businesses.
Prior to joining APA, Craig
performed senior executive
roles in commercial,
operations and projects,
leading large and complex
divisions in the oil and
gas industries.
Craig will take up the role of
General Manager Strategy
and Development effective
20 August 2020 with the
commencement of Julian
Peck as Group Executive
Strategy and Commercial.
APA GROUP I ANNUAL REPORT 2020
07
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
2020 highlights.
EBITDA
$1,654
Operating cash flow
$1,096
million
5.1% on FY2019
million
8.3% on FY2019
Distribution
50c
per security
20 years of consistent increase
delivering consistent returns
Energy infrastructure revenue
90%
take or pay/regulated
Strong balance sheet
~$2,500
million
cash and committed
undrawn debt facilities
Construction of Reedy Creek Wallumbilla Pipeline in Queenland.
08
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
delivering responsible energy.
normalised (1) business performance
9
2
1
,
2
1
3
0
2
,
1
4
9
,
1
8
8
8
,
1
2
3
0
,
1
2
1
0
,
1
4
7
9
6
9
0
,
1
6
5
6
,
1
.
9
2
9
.
7
0
9
1
.
7
8
.
8
5
8
.
5
3
5 4
.
1
4
1
.
7
7
.
0
0
5
.
0
7
4
.
0
5
4
.
8
4
1
.
0
5
1
.
2
5
1
.
0
6
1
.
4
5
1
4
5
6
,
1
4
7
5
,
1
8
1
5
,
1
2
6
8
0
7
4
,
1 1
3
3
,
1
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
EBITDA
($m)
Operating
cash flow (2)
($m)
Revenue
excluding
pass‑through (3)
($m)
Operating cash
flow per security (4)
(cents)
Distributions
per security
(cents)
Total
assets
($b)
financial results
Revenue
Revenue excluding pass-through (3)
EBITDA
Profit after tax
Operating cash flow (2)
Financial position
Total assets
Total drawn debt (5)
Total equity
Financial ratios
Operating cash flow per security (cents)
Earnings per security (cents)
Distribution per security (cents)
Distribution payout ratio (%)
FFO/Debt (%)
FFO/Interest (times)
30 June 2020
30 June 2019
Changes
2,590.6
2,129.5
1,653.9
317.1
1,095.9
16,007.2
9,983.6
3,223.9
92.9
26.9
50.0
53.8
12.2
3.3
2,452.2
2,031.0
1,573.8
288.0
1,012.1
15,433.9
9,352.1
3,599.4
85.8
24.4
47.0
54.8
10.7
3.0
5.6%
4.8%
5.1%
10.1%
8.3%
3.7%
6.8%
(10.4%)
8.3%
10.2%
6.4%
(1.8%)
14.0%
10.0%
1) Normalised financial results exclude significant items.
2) Operating cash flow = net cash from operations after interest and tax payments.
3) Pass-through revenue is revenue on which there is no margin earned and is offset by corresponding pass-through costs.
4) On 23 March 2018, APA Group issued 65,586,479 new ordinary securities, resulting in total securities on issue of 1,179,893,848. The weighted average numbers of
securities from FY2018 to FY2016 have been adjusted to account for that rights issue.
5) APA’s liability to repay debt at relevant due dates of the drawn facilities. This amount represents current and non-current borrowings as per balance sheet and
is adjusted for deferred borrowing costs, the effect of unwinding of discount, unrealised foreign exchange differences reported in equity and deducting other
financial liabilities that are reported as part of borrowings in the balance sheet.
APA GROUP I ANNUAL REPORT 2020
09
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
Australian Pipeline Trust Directors’ Report
The Directors of Australian Pipeline Limited (Responsible Entity) submit their financial report of Australian Pipeline Trust
(APT) and its controlled entities (together APA or Consolidated Entity) for the year ended 30 June 2020. This report refers to
the consolidated results of APT and APT Investment Trust (APTIT).
1. Directors
The names of the Directors of the Responsible Entity during the year and since the year end are:
Current Directors: Michael Fraser
Robert (Rob) Wheals
Steven (Steve) Crane
James Fazzino
Debra (Debbie) Goodin
Shirley In’t Veld
Rhoda Phillippo
Peter Wasow
First appointed
1 September 2015
Chairman: 27 October 2017
Chief Executive Officer and Managing Director: 6 July 2019
1 January 2011
21 February 2019
1 September 2015
19 March 2018
1 June 2020
19 March 2018
Former Directors:
Michael (Mick) McCormack
Retired as Chief Executive Officer and Managing Director: 5 July 2019
The Company Secretaries of the Responsible Entity during the year and since the year end are Nevenka Codevelle and Amanda
Cheney (from 25 February 2020).
2. State of Affairs
Rob Wheals commenced as APA’s new Chief Executive Officer and Managing Director with effect from 6 July 2019, following
Mick McCormack’s retirement on 5 July 2019.
On 20 December 2019, APA’s Chief Financial Officer (CFO), Peter Fredricson indicated his intention to retire from his position
remaining until December 2020 at the latest to support the new CFO during the transition period.
3. Subsequent Events
The following events have occurred subsequent to the period end:
On 26 August 2020, the Directors declared a final distribution of 27.0 cents per security ($318.6 million) for APA Group, an
increase of 5.9%, or 1.5 cents per security over the previous corresponding period (2H FY2019: 25.5 cents per security). This is
comprised of a distribution of 20.27 cents per security from APT and a distribution of 6.73 cents per security from APTIT. The
APT distribution represents an 8.53 cents per security fully franked profit distribution and an 11.74 cents per security capital
distribution. The APTIT distribution represents a 2.09 cents per security profit distribution and a 4.64 cents per security capital
distribution. Franking credits of 3.66 cents per security will be allocated to the APT franked profit distribution. The distribution
is expected to be paid on 16 September 2020.
On 12 August 2020, APA announced that Adam Watson would join APA as the new CFO, commencing mid November 2020.
Other than what is noted above and as disclosed elsewhere in this report, there has not arisen in the interval between the end
of the full year to 30 June 2020 and the date of this report any matter or circumstance that has significantly affected, or may
significantly affect, the Group’s operations, the results of those operations, or the Group’s state of affairs, in future financial years.
4. About APA
4.1 Principal Activities
The principal activities of APA during the course of the year were the ownership and operation of energy infrastructure assets
and businesses, including:
– energy infrastructure, comprising gas transmission, gas storage and processing, and gas-fired and renewable energy
power generation businesses located across Australia;
– asset management services for the majority of APA’s energy investments and for third parties; and
– energy investments in unlisted entities.
There were no significant changes in the principal activities of APA during the reporting period.
4.2 APA overview
APA is a leading Australian energy infrastructure business developing, owning and operating energy infrastructure. It owns
and/or operates around $22 billion of energy infrastructure assets across Australia and operates these with a skilled workforce
of around 1,900 people.
APA has a diverse portfolio of over 15,000 kilometres (6) of gas transmission pipelines that spans every state and territory
on mainland Australia and delivers about half the nation’s natural gas. It also owns or has interests in other related energy
infrastructure assets such as gas storage facilities, gas processing facilities, gas compression facilities, electricity transmission
and renewable and gas fired power generation assets.
APA has ownership interests in, and/or operates, GDI (EII) Pty Ltd (GDI) and Australian Gas Networks Limited gas distribution
networks, which together own approximately 29,500 kilometres of gas mains and pipelines, and more than 1.4 million gas
consumer connections.
6) Owned and/or operated by APA.
10
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
4. About APA (continued)
4.2 APA overview (continued)
APA also has interests in other energy infrastructure assets and businesses, including SEA Gas Pipeline, Mortlake Gas Pipeline,
Energy Infrastructure Investments (EII) and North Brown Hill Wind Farm (EII2).
APA is listed on the Australian Securities Exchange (ASX) and is included in the S&P ASX 50 Index. Since listing in June
2000, APA’s market capitalisation has increased almost 27-fold to $13.1 billion (7), and it has achieved securityholder returns of
16.8%(8) per annum on an annual compounding basis since listing on 13 June 2000 through to 21 August 2020.
4.3 APA’s strategy
APA has maintained a consistent strategy of continued growth for two decades. It has been a successful strategy based on
sustainable growth and investment discipline.
APA’s strategy
— Deliver services our customers value consistent with APA’s Customer Promise
— Continue to strengthen asset and stakeholder management, development and operational capabilities
— Continue our growth focus to enhance APA’s portfolio of:
– gas transmission pipelines;
– gas-fired and renewable power generation assets; and
– midstream energy infrastructure assets, including gas storage and gas processing facilities.
— Explore growth opportunities in our core business of gas transmission and distribution in North America
— Investigation of technology transformation of energy
— Maintain APA’s financial strength
APA’s strategy of investing in energy infrastructure remains relevant today as we continue to see ongoing demand from our
customers for energy infrastructure solutions, including new energy opportunities arising from the trend towards net zero
emission energy and the development of new technologies to support this aspiration.
We have been able to build out into new growth areas and gain a sizeable position in renewables and an entry point into
mid-stream, while scoping a North American entry opportunity. These moves have provided us with optionality to build and
grow new businesses over the next phase of APA’s strategy.
We are in the middle of a dynamic shift in the energy landscape in Australia and across most developed economies. In
particular, the drive towards decarbonisation is creating a structural shift in energy policy, composition and investment. In
this context, our business is benefiting from the shift away from high carbon intensive coal fired power generation, but it also
has optionality through the expected significant growth in variable renewable energy.
The future of energy will not be defined by any one solution but will be a combination of energy sources and technologies to balance
the demands of reliability, sustainability and affordability. APA considers that natural gas plays an essential role in providing secure
and reliable electricity by supporting the integration of variable renewable energy with flexible, peaking power, which will be
increasingly required as coal-fired generation is retired and removed from Australia’s energy mix over the next 30 years.
Decarbonisation, Decentralisation and Digitisation
The inclusion of the new Technology and Transformation function within APA’s operating model is aimed at enabling APA
to effectively respond to the disruptive forces and opportunities of decarbonisation, decentralisation, and digitisation. This
function will drive the identification of emerging market opportunities whilst delivering business transformation, continuous
improvement initiatives and technology solutions within our day to day business.
As part of our growth strategy, we are pro-actively looking at how our energy infrastructure can be effectively part of a
decarbonised future.
We are exploring new technologies and how we can adapt our infrastructure and expertise to accommodate new energy
such as renewable methane and hydrogen (refer to Section 7 Capital and Investment Expenditure for information on APA’s
renewable methane pilot project). We are also exploring carbon capture utilisation and sequestration (CCUS) technologies
and have joined with ClimateWorks Australia to collaborate with researchers, customers, peers and other Australian
companies wanting to develop responsible and viable net zero emissions pathways to support climate change strategies.
We are also looking at how energy storage technology such as batteries can complement renewables and support gas in the
important firming role that it will play in Australia’s energy future.
North America strategy update
APA has continued to explore potential offshore growth opportunities in APA’s core sector of gas distribution and transmission,
focussing on North America. These types of operations are at the lower end of the risk spectrum and are consistent with the
risk profile of APA’s existing business in Australia. APA has an office in Houston USA with a team of three full time employees
including executive lead Ross Gersbach who relocated from Australia to Houston during the reporting period. APA’s corporate
office in Sydney provides support to the Houston team.
APA remains focussed on North American opportunities for two key reasons – the abundance of low-priced natural gas, and
the continued growth in natural gas demand in that market. Low cost natural gas has resulted in significant new demand for
power generation to replace coal, growing industrial demand and natural gas for LNG export markets. The depth of the U.S.
gas infrastructure market and strong growth-oriented fundamentals continue to lead APA to the view that there should be
attractive natural gas infrastructure opportunities to pursue.
7) Market capitalisation as at 21 August 2020.
8) Total securityholder return is the capital appreciation of APA’s security price, adjusted for capital management actions (such as security splits and consolidations)
and assuming reinvestment of distributions at the ex-distribution rate per security. Figures quoted are sourced from Refinitiv Eikon.
APA GROUP I ANNUAL REPORT 2020
11
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
4. About APA (continued)
4.3 APA’s strategy (continued)
North America strategy update (continued)
APA’s experience to date has revealed a preference for the following asset characteristics:
1
2
3
4
5
6
7
Commercial environment
— Regulated and/or contracted businesses
— Supportive regulatory environment
— Geographic advantages and availability of follow on transactions
Operational alignment
— Existing operational expertise that fits with current APA businesses
Organisational structure
— Transparent and quantifiable performance record and/or existing
infrastructure management team with proven track record
Credit
Financial returns
Investment size
— Supportive of credit rating targets based on S&P/Moody’s criteria
— Limited counterparts risk
— Acceptable IRR
— OCF accretive in first full year of ownership
— Appropriate size for initial investment
— Meaningful but not “betting” the company
Environmental impacts
— Compatible with long-term energy transition objectives
We are fully cognisant and respectful of the movement towards decarbonisation in the U.S. and globally. However, in the U.S.
there is no single federal policy around emissions reduction control and the diverse climatic and political variations across regions
of the U.S. mean that a single solution/approach is unlikely to work nationwide. Residential and commercial emissions generated
from local distribution companies (LDC’s – gas distribution) are relatively low, less than 10% of total U.S. carbon emissions,
compared to power generation, transportation and agriculture. Together with cold climate, the replacement of coal generation
and the high cost of electrification, we continue to see investment opportunities for APA in a number of regions.
APA already plays a significant role in the energy value chain. Our vision is to be world class in energy solutions, and we see our
purpose as strengthening communities through responsible energy. To ensure we were set up for future success with capacity
for innovation, scalability and agility to manage the changing nature of the energy landscape, we undertook a 360-degree
review of APA’s operating model during FY2020. The checkpoints for the review included:
— Ensuring the capability, structures and processes to achieve operational excellence in managing all our assets;
— Ensuring APA can navigate industry disruption and evolution by availing itself with new technology and new energy solutions;
— Addressing stakeholder needs, in particular our customers and communities where we operate;
— Leading in responsible energy solutions for the benefit of society and the environment, our customers, investors and employees; and
— Making APA an effective organisation and great place to work where accountabilities are clear, collaboration across teams
is easy, and our people feel empowered to make decisions for the benefit of all our stakeholders.
Our customers remain at the centre of what we do – the red dot in APA’s logo reminds us to keep the customer front and centre
to ensure we deliver energy solutions for our customers that they value and do so safely and reliably.
APA’s new operating model focuses on the successful delivery of six strategic imperatives that we will need to excel in, to deliver
on our purpose and our ‘world-class’ vision:
Operational
Excellence
Optimising asset
management
and efficiency to
achieve holistic
and world class
operational
excellence,
safety and
environmental
performance.
Customer
Centric
Our customers
are at the centre
of everything
we do. We will
listen to our
customers and
work with them
in pursuing new
opportunities,
adding value and
delivering their
energy needs
responsibly.
People &
Culture
We value the
potential, capability
and wellbeing of
all our people.
We will grow and
develop their skills
and expertise and
enable them to
meet the needs
of our customers.
We will also hold
ourselves to high
ethical standards
and the APA
values, ensuring
our integrity
and credibility.
Financial
Strength
We constantly
evaluate growth
opportunities and
cost efficiencies
within our risk
appetite, while
maintaining a
strong balance
sheet with access
to global debt
and equity capital
markets based
on minimum
investment grade
credit ratings
of Baa2 (Moody’s)
and BBB (S&P).
Growth &
Innovation
We will continue
to grow
our energy
infrastructure
portfolio to meet
our customers’
needs – exploring
and investing in
new and emerging
technologies
where appro-
priate. We will
actively pursue
acquisitions that
add value to
our business.
Stakeholder
Relationships
We will engage
constructively
with regulators,
governments and
other stakeholders
to help shape policy
that facilitates
responsible delivery
of energy for the
benefits of all. We
will ensure the
communities in
which we operate
and impact, benefit
from what we do.
12
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
4. About APA (continued)
4.3 APA’s strategy (continued)
North America strategy update (continued)
The new organisation structure has been designed to support the delivery of the six strategic imperatives. The structure
consists of both business units to build and operate our assets safely and efficiently, and corporate functions to support the
business units and focus on strategy and governance.
Business Units: Execution
Corporate Functions: Govern & Support
Infrastructure
Development
Operations
North American
Development
People, Safety
& Culture
Finance
Governance
& External Affairs
Transformation
& Technology
Strategy &
Commercial
As a result of the new structure, a number of changes to the Executive Leadership Team reporting to CEO and Managing
Director Rob Wheals occurred during FY2020. Notable changes included:
— Ross Gersbach relocating to APA’s Houston USA office in September 2019 to take up the role of President North
American Development;
— Hannah McCaughey commenced with APA in March 2020 to lead the new Transformation and Technology function;
— In June 2020, Julian Peck who commenced 20 August 2020, was announced as APA’s Group Executive Strategy and Commercial;
— Operations will now oversee the safe and efficient operation of all APA’s assets and investments across transmission,
power generation, networks and mid-stream classes;
— Expansion of the original Governance, Risk and Legal function to encompass Sustainability and Community, External
Affairs and Reputation, Economic Regulatory and External Policy.
4.5 APA’s roadmap
Underpinning APA’s refreshed vision and purpose and long-term strategy is the APA Way, which is the blueprint for how
APA does business. It guides how we conduct our business and helps shape our culture. It sets standards on how we behave
through our APA ‘STARS’ values, and how we make decisions, guided by APA’s Decision Compass. The APA Way is embedded
in APA’s Code of Conduct (Our Code).
Our ‘STARS’ values set the benchmark for how we operate to ensure business integrity:
— Safe, We will maintain a safe environment and a professional workplace where staff work collaboratively, are valued and
treated with respect.
— Trustworthy, We act with honesty and integrity and accept individual and collective responsibility for the delivery of all
business outcomes. We do what we say we are going to do.
— Adaptable, We continually respond and adapt to our changing environment by innovating, modifying our behaviour and
continually improving our processes and systems to take advantage of opportunities to enhance, improve and grow our business.
— Results, We consistently meet our commitments and deliver excellent results to the benefit of our employees, customers,
investors and the community through tenacity and perseverance.
— Service, We are committed to high quality service delivery achieved through listening, understanding, anticipating and
responding to our customers’ needs.
Effective decision-making is at the core of successful strategy execution and APA’s Decision Compass sets out clear guiding
principles for all our employees, empowering them to make good decisions with confidence, so we can successfully execute
APA’s strategy. Employees and all decision makers right through to the Board, are encouraged to take a moment and ask “is
this decision consistent with each of the key decision compass points” as below:
– Do things safely
– Take a long-term focus
– Manage APA money as if it’s our own
– Do what we say we’ll do
– Know our reputation matters
Put simply, The APA Way really defines how we do things at APA. It ensures that the way we work and the many decisions we
make are based on consistent values and principles and are aligned to what we need to execute on our strategy.
A third aspect to APA’s roadmap which was launched externally in August
2019 is APA’s Customer Promise. This is a commitment to our customers as
to what they can expect from APA.
Refer to Section 6.1 for further information on APA’s Customer Promise.
During the reporting period, APA also revised its Whistleblower Policy to
reflect legislative changes effective 1 July 2019 which expanded protections
for whistelblowers. APA’s Whistleblower Policy can be viewed on APA’s website
here: (https://www.apa.com.au/globalassets/documents/governance-docs/
conduct-policies/apa-whistleblower-policy.pdf).
APA GROUP I ANNUAL REPORT 2020
13
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
4. About APA (continued)
4.6 APA assets and operations
APA’s assets and operations are reported in three principal business segments:
– Energy Infrastructure includes all of APA’s wholly or majority owned gas pipelines, gas storage, gas compression, gas
processing assets and gas-fired and renewable energy power generation assets;
– Asset Management provides commercial, operating services and/or asset maintenance services to APA’s energy
investments and third parties for appropriate fees; and
– Energy Investments includes APA’s strategic stakes in a number of investment vehicles that house energy infrastructure
assets, generally characterised by long-term secure cash flows, with low ongoing capital expenditure requirements.
On the map below detailing APA’s assets and investments portfolio:
33
17
35
33
8
2
18
33
19
20
21
22
23
24
25
26
27
29
28
35
5
33
1
33
33
35
30
4
6
3
7
12
9
10
11
35
34
33
31
16
13
32
35
15
14
14
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
4.6 APA assets and operations (continued)
Energy Investment and Asset Management (numbers correspond with those on the map on page 14)
Length (1)
East Coast and Central Region assets
1 Roma Brisbane Pipeline (including Peat Lateral)
2 Carpentaria Gas Pipeline
3 Berwyndale Wallumbilla Pipeline
4 South West Queensland Pipeline
5 Wallumbilla Gladstone Pipeline (including Laterals)
6 Reedy Creek Wallumbilla Pipeline
7 Darling Downs Solar Farm
8 Diamantina and Leichhardt Power Stations
9 Moomba Sydney Pipeline
10 Moomba to Sydney Ethane Pipeline
11 Central West Pipeline
12 Central Ranges Pipeline and
Tamworth Gas Network (gas distribution)
13 Victorian Transmission System
14 Dandenong LNG Storage Facility
15 Orbost Gas Processing Plant (2) (and connection pipeline)
16 SESA Pipeline
17 Amadeus Gas Pipeline (including Laterals)
583 km
944 km
112 km
936 km
556 km
49 km
110 MW
242 MW / 60 MW
2,029 km
1,375 km
255 km
295 km
~260 km of gas mains, ~3,900 gas consumer connections
1,847 km
12,000 tonnes
12 km / 68 TJ/d
45 km
1,661 km
West Australian assets
18 Pilbara Pipeline System
19 Goldfields Gas Pipeline (88.2%)
20 Agnew Lateral
21 Yamarna Gas Pipeline
22 Gruyere Power Station
23 Mt Morgans Gas Pipeline
24 Eastern Goldfields Pipeline
25 Kalgoorlie Kambalda Pipeline
26 Mid West Pipeline (50%)
27 Mondarra Gas Storage and Processing Facility
28 Parmelia Gas Pipeline
29 Emu Downs Wind Farm
29 Emu Downs Solar Farm
29 Badgingarra Wind Farm
29 Badgingarra Solar Farm
249 km
1,546 km
25 km
198 km
45 MW
5 km
293 km
44 km
362 km
18 PJ
448 km
80 MW
20 MW
130 MW
19.3 MW
Energy Investment
30 GDI (EII)
Ownership
interest Detail
20% Gas distribution: Allgas Gas Network ~3,800 km of gas mains,
~115,000 gas consumer connections in QLD and NSW
31 South East Australia Gas Pty Ltd
32 SEA Gas (Mortlake) Partnership
33 Energy Infrastructure Investments
50% Gas pipeline: 687 km SEA Gas Pipeline
50% Gas pipeline: 83 km Mortlake Gas Pipeline
19.9% Gas pipelines: Telfer/Nifty Gas Pipelines and lateral (488 km);
34 EII2
35 Australian Gas Networks
Bonaparte Gas Pipeline (286 km); Wickham Point Pipeline (12 km)
Electricity transmission cables: Murraylink (180 km) and Directlink (64 km)
Gas-fired power stations: Daandine Power Station (30 MW)
and X41 Power Station (41 MW)
Gas processing facilities: Kogan North (12 TJ/d); Tipton West (33 TJ/d)
20.2% Wind generation: North Brown Hill Wind Farm (132 MW), SA
Nil Gas distribution: ~25,500 km of gas mains and pipelines, ~1.3 million
gas consumer connections, 1,124 km of transmission gas pipelines in
SA, Vic, NSW, Qld & NT
1) Pipeline capacities are available online (www.apa.com.au).
2) Asset under commissioning.
APA GROUP I ANNUAL REPORT 2020
15
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
5. Financial Overview
Earnings before interest and tax (EBIT) and EBIT before depreciation and amortisation (EBITDA) excluding significant items
are financial measures not prescribed by Australian Accounting Standards (AIFRS) and represent the profit under AIFRS
adjusted for specific significant items. The Directors consider these measures to reflect the core earnings of APA Group, and
therefore these are described in this report as ‘normalised’ measures.
FY2020 has been a challenging year for businesses and society as a whole. In Australia, much of the country endured ongoing
drought; eastern Australia experienced a devastating and severe bushfire season followed by an extreme rainfall event;
and then we all started to feel the full impact of the global COVID-19 pandemic. In addition, a number of APA’s customers
have also been impacted by the significant global oil price collapse during 2H FY2020, which has had the flow-on effect of
decelerating and/or deferring decision timeframes on some projects under development, impacting APA’s capital expenditure
expectations and planning timeframes.
The impact of these combined and unprecedented events on many individuals, businesses, our economy, wildlife and our
landscape has been severe. Fortunately, for APA, the long-term stable nature of our contracts and revenues, and strong
balance sheet fundamentals, combined with the remoteness of our asset footprint, have limited the impact on both our
physical operations and financial performance for FY2020.
As a provider of essential services of gas transportation and energy generation, the demand and requirement for APA’s
services has continued throughout these events, and we have been able to operate at normal levels, albeit adapting our
procedures to the various challenging conditions throughout the reporting period. Our focus throughout the year has been
keeping our assets running safely and reliably at all times in accordance with our Customer Promise and ensuring the safety
of our people and communities.
APA has delivered a sound result for FY2020 with EBITDA reported of $1,653.9 million which is within the revised EBITDA
guidance range of $1,635 million to $1,655 million. The FY2020 EBITDA result represents an increase of 5.1% or $80.1 million
over the previous corresponding period EBITDA of $1,573.8 million.
On 21 April 2020, APA updated the market with a reduction in its earnings guidance as a result of delays in commissioning the
Orbost Gas Processing Plant in Victoria. Excluding this new asset, APA’s overall business continued to perform solidly during
the reporting period and in-line with expectations, despite the significant social, economic and environmental challenges in
play within Australia and globally.
Total revenue (excluding pass-through revenue) in FY2020 increased by $98.5 million to $2,129.5 million, an increase of 4.8% on
the previous corresponding period (FY2019: $2,031.0 million). Increased revenues and EBITDA were primarily attributable to:
— Full year contributions from growth assets commissioned in FY2019 including the Darling Downs Solar Farm (QLD),
Badgingarra Wind Farm (WA), Yamarna Gas Pipeline (WA), Gruyere Power Station (WA), and Agnew Lateral (WA);
— Part year contribution from Badgingarra Solar Farm (WA);
— Continued reliable and steady operation of all assets, managing risks and operating the assets efficiently; and
— Reduction in corporate costs.
The increases were offset by the Orbost Gas Processing Plant commercial operation delays and associated costs and less
favourable exchange rate for revenues from the Wallumbilla Gladstone Pipeline.
Operating cash flow increased by 8.3% or $83.8 million to $1,095.9 million compared to the previous year (FY2019: $1,012.1
million). Similarly, operating cash flow per security increased 8.3%, or 7.1 cents, to 92.9 cents per security (FY2019: 85.8 cents
per security).
On 26 August 2020, the Directors announced a final distribution of 27.0 cents per security, which takes APA’s distributions in
respect of the financial year to a total of 50.0 cents per security. This represents an increase of 6.4% or 3.0 cents, over FY2019
distributions of 47.0 cents. Franking credits of 3.66 cents per security will be allocated to the final distribution reflecting tax
paid by APA and resulting in the FY2020 franking credits totalling 7.31 cents per security.
APA maintains a sustainable distribution policy to ensure its ability to fully fund its distributions out of operating cash flows on
a going-forward sustainable basis, whilst also retaining appropriate levels of cash in the business to support ongoing growth.
APA’s distribution policy is to generally grow distributions in line with operating cash flow growth, having regard for the future
capital needs of the business and economic conditions, and ensuring distributions are fully covered by operating cash flow.
APA has paid an interim and full year distribution every year for the 20 years the company has been listed, and distributions
have consistently grown each year.
16
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
5. Financial Overview (continued)
The following table provides a summary of key financial data for FY2020.
Total revenue
Pass-through revenue (1)
Total revenue excluding pass-through
EBITDA
Depreciation and amortisation expenses
EBIT
Finance costs and interest income
Profit before income tax
Income tax (expense) / benefit
Profit after income tax
Operating cash flow (2)
Operating cash flow per security (cents)
Earnings per security (cents)
Distribution per security (cents)
Distribution payout ratio (%) (3)
Weighted average number of securities (000)
Notes: Numbers in the table may not add up due to rounding.
1) Pass-through revenue is revenue on which no margin is earned.
30 June 2020
$000
30 June 2019
$000
2,590,621
461,155
2,452,171
421,198
2,129,466
2,030,973
1,653,919
(651,566)
1,002,353
(497,337)
505,016
(187,910)
317,106
1,573,756
(611,358)
962,398
(497,419)
464,979
(176,966)
288,013
Changes
$000
138,450
39,957
98,493
80,163
%
5.6%
9.5%
4.8%
5.1%
(40,208)
(6.6%)
39,955
82
40,037
4.2%
0.0%
8.6%
(10,944)
(6.2%)
29,093
10.1%
1,095,943
1,012,127
83,816
92.9
26.9
50.0
53.8%
1,179,894
85.8
24.4
47.0
54.8%
1,179,894
8.3%
8.3%
10.2%
6.4%
7.1
2.5
3.0
(1.0%)
(1.8%)
—
—
2) Operating cash flow = net cash from operations after interest and tax payments.
3) Distribution payout ratio = total distribution applicable to the financial year as a percentage of operating cash flow.
APA GROUP I ANNUAL REPORT 2020
17
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
6. Business Segment Performance and Operational Review
APA reports across three business segments:
— Energy Infrastructure: APA’s wholly or majority owned energy infrastructure assets across all categories – transmission
and compression, processing, generation (gas and renewables) and storage;
— Asset Management: The provision of asset management and operating services for third parties and the majority of APA’s
investments; and
— Energy Investments: APA’s interests in energy infrastructure investments.
Statutory reported revenue and EBITDA performance by business segments is set out below.
30 June 2020
$000
30 June 2019
$000
Changes
$000
%
Revenue (1)
Energy Infrastructure
East Coast: Queensland
East Coast: New South Wales
East Coast: Victoria
East Coast: South Australia
East Coast: Northern Territory
Western Australia
Energy Infrastructure total
Asset Management
Energy Investments
Other non-contract revenue
Total segment revenue
Pass-through revenue
Unallocated revenue (2)
Total revenue
EBITDA
Energy Infrastructure
East Coast: Queensland
East Coast: New South Wales
East Coast: Victoria
East Coast: South Australia
East Coast: Northern Territory
Western Australia
Asset Management
Energy Investments
Corporate costs
Total EBITDA
1,204,705
1,207,108
(2,403)
(0.2%)
183,251
145,664
3,143
31,649
405,310
173,594
144,380
3,004
30,301
340,685
1,973,722
1,899,072
112,367
35,741
4,975
94,398
28,432
6,470
2,126,805
2,028,372
461,155
2,661
421,198
2,601
1,007,891
1,010,063
160,751
101,927
2,294
19,889
337,055
149,362
113,992
2,051
19,171
277,805
9,657
1,284
139
1,348
5.6%
0.9%
4.6%
4.4%
64,625
19.0%
74,650
17,969
7,309
3.9%
19.0%
25.7%
(1,495)
(23.1%)
98,433
39,957
60
4.9%
9.5%
2.3%
5.6%
(2,173)
(0.2%)
11,389
7.6%
(12,065)
(10.6%)
243
718
59,250
57,362
10,386
7,312
11.8%
3.7%
21.3%
3.6%
19.6%
25.7%
2,590,621
2,452,171
138,450
Energy Infrastructure total
1,629,807
1,572,444
63,343
35,741
(74,972)
52,954
28,432
(80,074) (3)
(5,102)
(6.4%)
1,653,919
1,573,756
80,163
5.1%
Notes: Numbers in the table may not add up due to rounding.
1) Refer to revenue note 4 for additional disclosure on revenue streams from contracts with customers disaggregated by geographical location and major sources.
2) Interest income is not included in calculation of EBITDA but nets off against interest expense in calculating net interest cost.
3) Includes $11.1 million of costs associated with the CKI proposal and the former Managing Director’s retirement.
6.1 Customer Focus
APA has evolved and grown as our customers’ operations have evolved and grown. Our customers are broad – from a wide
range of businesses that pay our invoices directly, through to households that are connected to the networks we operate.
Our customers are the reason APA exists and therefore they are the epicentre of what we do.
In the first half of the reporting year, APA launched externally its Customer Promise initiative throughout Australia. We have
made the commitment to all customers that we will listen to understand; enable our people to respond; and do what we
say we'll do. These commitments were developed not only with our own people but in consultation and collaboration with
our customers. The Customer Promise is supported by the Red Dot Program, which comprises specific initiatives aimed at
improving our customers’ experience and overall customer outcomes.
18
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
6. Business Segment Performance and Operational Review (continued)
6.1 Customer Focus (continued)
Customer engagement initiatives undertaken during the financial year include:
— Voice of Customer surveys, which provided insights into overall customer satisfaction, the health of our business
relationships and areas for strategic improvement;
— Holding transmission customer forums in July 2019 to provide updates on Gas Day Harmonisation changes and APA’s
progress with responding to issues they raised in our Transmission Customer Survey; and
— Post-deal surveys to help understand our customers’ experience of contract negotiation and execution.
APA has also been actively engaging with customer and consumer groups to better understand their issues and their
perspectives. During the first half of the reporting period, we set up on a voluntary basis, our first stakeholder reference
group, to get consumer and stakeholder group views on the proposed access arrangements for the Amadeus Gas Pipeline.
We are currently doing the same for the Roma Brisbane Pipeline access arrangement and will continue that approach for
regulatory reset processes for our other regulated pipelines.
APA’s networks business worked with retailers to develop a number of initiatives to support consumers and small businesses,
including through the Energy Charter. APA has also reduced payment terms for small suppliers and regional businesses to help
support them during this time. We will also be exploring community support initiatives through our community connect program.
Flexibility adds value to our service offerings
APA’s East Coast Grid and Integrated Operations Centre allows APA to quickly react to short term customer requests
and provide fast commercial solutions, particularly for changing circumstances at the LNG plants in Gladstone.
We’re able to recalculate asset operating conditions and capacities, update our control systems and alarms, reprioritise
maintenance and project work and implement changes safely.
Customers can use the Roma Brisbane Pipeline western haul service, Wallumbilla compression, South West Queensland
Pipeline park/loan service or other transport services towards the southern states, all at short notice. Key for customers
is flexibility but it means Operations has to spring into action and make sure we can deliver the service reliably.
The Energy Charter
This significant whole of industry initiative was launched in January 2019 following collaboration by a number of Australian
energy businesses together with an end user consultative group across 2018. The purpose of the Energy Charter is to progress
the culture and solutions required to deliver a more affordable, reliable and sustainable energy system for all Australians in
line with community expectations. APA was a founding member of the energy industry's Energy Charter which now has 19
signatories from across the energy supply chain.
Signatories are required to disclose annually to an independent Accountability Panel, their performance against each of
the five Energy Charter principles. The Accountability Panel issued its first Panel Review report during the reporting period
and made a number of recommendations. Signatories are also involved in a number of #BetterTogether initiatives, aimed
at delivering tangible customer outcomes through coordinated action across the supply chain. This includes streamlining
connection processes, delivering fee relief and service support for customers in vulnerable circumstances and improved
stakeholder engagement.
One of the #BetterTogether initiatives involves APA, together with other pipeline operators establishing a customer
engagement initiative to determine what additional or more insightful pipeline disclosures are required in response to issues
raised under the Pipeline Transparency Regulatory Impact Statement.
Industry working together
The COVID-19 pandemic created a unique and difficult operating environment for many APA customers this year. We
responded in line with our commitments under the Energy Charter, particularly Principle 5: We will support customers
in vulnerable circumstances.
Activities included:
— Commercial, industrial and small retail transmission customers were contacted for a quick pulse check to
understand COVID-19 impacts and how APA might be able to assist;
— Provided targeted financial assistance for customers in vulnerable circumstances, including temporary discounts,
credit term extensions and alternative prudential arrangements; and
— Offered additional gas market and systems training to help customers optimise their gas portfolios against
changing market dynamics.
APA GROUP I ANNUAL REPORT 2020
19
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
6. Business Segment Performance and Operational Review (continued)
6.2 Energy Infrastructure
The Energy Infrastructure segment consists of all APA’s energy infrastructure footprint across mainland Australia including
gas transmission, gas compression, gas processing and storage assets, renewable energy power generation, and gas-fired
power generation. 90.0% of revenues in this segment are derived from either long-term take-or-pay contracts, or regulated
assets. Contracts generally have the majority of the revenue fixed over the term of the relevant contract. The predictable and
long-term nature of APA’s revenue underpins APA’s reliable low risk business model value proposition.
Energy Infrastructure is the largest business segment contributor to group revenue, contributing 92.8% (excluding pass-
through) and 94.3% of group EBITDA (before corporate costs) during FY2020. Revenue (excluding pass-through revenue) was
$1,973.7 million, an increase of 3.9% on the previous year (FY2019: $1,899.1 million). EBITDA (before corporate costs) increased
by 3.6% on the previous year to $1,629.8 million (FY2019: $1,572.4 million).
The flexible nature of APA’s contracts, both in terms of interconnected multi-assets and multi services, means that individual
asset earnings can fluctuate over the assets that make up APA’s East Coast and West Coast grids. This flexibility gives
customers more options to better manage their energy needs in Australia’s very dynamic gas market. They can source gas
from in excess of 60 receipt points over the 7,600 km interconnected East Coast Grid, and this optionality and flexibility is
highly valued by our customers.
Eastern Australia
In FY2020, EBITDA for APA’s assets in the east coast states was $1,292.8 million, generally in line with FY2019 EBITDA of
$1,294.6 million. As current southern gas supplies decline, APA has seen material year on year increases in flows on the
Berwyndale Wallumbilla Pipeline, South West Queensland Pipeline and Moomba Sydney Pipeline from Queensland gas being
transported south into New South Wales and Victoria. This increased demand has provided opportunities for APA in the
form of short-term transportation arrangements, particularly over winter months and in recent months, strong residential
demand due to many people working remotely from their homes during the COVID-19 pandemic.
Queensland earnings remained steady and consistent with FY2019 (EBITDA FY2020: $1,007.9 million, FY2019: $1,010.1 million).
The South West Queensland Pipeline had higher revenue due to favourable weather in southern states causing more
Queensland gas to be transported to southern states. Queensland also benefited from the first full year contribution from
the Darling Downs Solar Farm. The short-term contract with Incitec Pivot transporting gas from the Mereenie basin in the
Northern Territory to the Incitec Pivot plant at Gibson Island some 3,300 km away in Queensland, ended during FY2020.
From 1 April 2020, Incitec Pivot commenced sourcing gas locally in Queensland which resulted in a reduction in revenue on
APA’s Carpentaria Gas Pipeline and South West Queensland Pipeline. There was also lower revenue from the Wallumbilla
Gladstone Pipeline due to less favourable AUD/USD exchange rates in FY2020 compared with FY2019.
New South Wales had a strong result driven by higher variable services and capacity increases (EBITDA FY2020: $160.8 million,
FY2019: $149.4 million). During FY2020, APA undertook capital improvement works on the Moomba Sydney Pipeline (MSP)
to increase maximum operating pressures. The MSP is a pivotal asset in APA’s East Coast Grid and highly utilised. It has also
added capacity for customers during the peak winter season, of up to 23 TJ/day to Sydney or 20 TJ/day to Melbourne.
APA commenced a new two-year agreement with AGL Energy Limited (AGL) on APA’s East Coast Grid. The agreement
commenced on 1 January 2020 and is a multi-asset and multi-service agreement, replacing an expiring contract.
Victorian Transmission System revenues increased due to favourable weather conditions which drove higher industrial and
domestic gas consumption, with a small impact in April to June from more people working from home as a result of COVID-19.
The Dandenong LNG Storage Facility benefitted from new storage contracts that commenced during the reporting period.
Victorian EBITDA (FY2020: $101.9 million, FY2019: $114.0 million) takes into account costs associated with commercial
commissioning of the Orbost Gas Processing Plant (OGPP).
Orbost Gas Process Plant – supplying gas to East Coast gas market
The OGPP has supplied 3.5 PJ into the East Coast gas market since commencement of commissioning in March 2020. In doing
so, the OGPP has to this point demonstrated a maximum daily nomination of 53 TJ/d and completed stability testing to a level
of 45 TJ/d.
However, practical completion is yet to be achieved due to foaming in the sulphur recovery unit that is constraining the full
stable processing capacity below 68 TJ/d. With involvement of the OGPP technology provider, root cause analysis in respect of
the foaming is ongoing.
The Transition Agreement with Cooper Energy announced on 20 August outlines the terms for the parties to work together
to complete the commissioning of the OGPP. The agreement supplements the existing agreements between the parties
and sets aside potential claims and entitlements available to either party. Importantly, the agreement provides certainty for
all stakeholders on the pathway to commencing Sole term gas supply agreements and practical completion of the OGPP.
This involves, amongst other things, implementation of OGPP modifications, including the Phase 2 works to improve plant
performance to expected levels as well as the continuation of root cause analysis as outlined above. The agreement also
provides for the sharing of revenues and costs, including the Phase 2 works, between the parties from 1 July 2020. The Transition
Agreement will expire on the earlier of the date of Practical Completion or 1 May 2021 (unless extended).
Phase 2 plant works are currently planned to commence in the December 2020 quarter, subject to supply chain and COVID-19
restrictions, with resumption of production expected in the latter half of that quarter. The cost of the Phase 2 works has not
been finalised, however current indications suggest capital costs of around $15 million.
20
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
6. Business Segment Performance and Operational Review (continued)
6.2 Energy Infrastructure (continued)
Western Australia
Western Australia had the greatest increase in earnings with EBITDA increasing by 21.3% to $337.1 million. Western Australia
had first full year contributions from a number of new assets completed in FY2019 including the Agnew Lateral, Yamarna Gas
Pipeline, Gruyere Power Station and the Badgingarra Wind Farm. The Badgingarra Solar Farm also commenced commercial
operations in September 2019. Western Australia’s strong results were also further supported by an increase in gas volumes
from miners on the Goldfields Gas and Eastern Goldfields Pipelines; consistent winds at the Emu Downs Wind Farm; and a
new two-year storage agreement on the Mondarra Gas Storage and Processing Facility. The Mondarra facility also provided
market security in February 2020 when Cyclone Damien impacted gas supply from the north.
Mondarra secures Perth’s gas supply
Tropical Cyclone Damien crossed the North-West coast on 8 February 2020, causing a significant loss of gas supply into
the Grid from the North West Shelf. Customers were facing the prospect of ‘curtailment’ for their customers across
the following days.
Gas was urgently needed from APA’s Mondarra Gas Storage Facility for the Dampier Bunbury Pipeline to meet normal
power supply needs. This is exactly the sort of ‘gas supply insurance’ that Mondarra was developed for following the
Varanus Island incident in 2008 which caused an energy supply crisis in Perth for several months.
APA’s Commercial Operations team worked closely with the Mondarra Storage Facility Controllers to run compressors
at maximum capacity and publish revised schedules and ensure normal daily requirements for customers were also met.
Curtailment was averted and power supplies continued uninterrupted. in Western Australia
Mondarra Gas Storage Facility, Western Australia
Energy Infrastructure Revenue by State
Energy Infrastructure EBITDA by State
A$ m
1,600
1,200
800
400
0
90%
A$ m
80%
1,200
70%
800
60%
400
50%
0
FY17
FY18
FY19
FY20
FY17
WA
NT
SA
VIC
NSW
QLD
EBITDA margin
WA
NT
SA
FY18
VIC
FY19
FY20
NSW
QLD
APA GROUP I ANNUAL REPORT 2020
21
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
6. Business Segment Performance and Operational Review (continued)
6.2 Energy Infrastructure (continued)
Western Australia (continued)
Energy Infrastructure EBITDA by Asset
FY20
FY19
FY18
FY17
0
200
400
600
800
1,000
1,200
1,400
1,600
A$ m
Wallumbilla Gladstone Pipeline
South West Queensland Pipeline
Roma Brisbane Pipeline
Carpentaria Gas Pipeline
Diamantina Power Station
Darling Downs Solar Farm
Other Qld assets
Moomba Sydney Pipeline and other NSW pipelines
Victorian Systems
SESA Pipeline and other SA assets
Amadeus Gas Pipeline
Goldfields Gas Pipeline
Eastern Goldfields Pipeline
Emu Downs Wind and Solar Farms
Pilbara Pipeline System
Mondarra Gas Storage and Processing Facility
Other WA assets
Gruyere Power Station
Badgingarra Wind and Farms
APA’s value proposition
APA offers investors a solid value proposition that brings together a combination of high quality energy infrastructure,
continued organic growth and a low risk business model.
In FY2020, 90% of Energy Infrastructure revenue (excluding pass-through) was from contracted and regulated revenues.
Specifically, 79.1% of Energy Infrastructure revenue (excluding pass-through) was from take-or-pay capacity reservation
charges from long-term offtake agreements, 2.9% from other contracted fixed revenues and 9.1% from throughput charges
and other variable components. Given the dynamic east coast gas market, there were some additional revenues from the
provision of flexible short term and other services, accounting for less than 1%.
The regulated portion of APA’s revenue which is predominantly derived from the Victorian Transmission System makes up
8.0% of total FY2020 Energy Infrastructure revenue. Supporting APA’s cash flow stability is the company’s contract profile,
which has a revenue weighted average contract tenor remaining of around 12 years. The very nature of APA’s revenue streams
provides for predictability and cash flow stability contributing to APA’s low risk business model.
FY2020 Energy Infrastructure by Revenue Type
Capacity charge revenue: 79.1%
Regulated revenue: 8.0%
Contracted fixed revenue: 2.9%
Throughput charge & other variable revenue: 9.1%
Flexible short term services: 0.6%
Other: 0.3%
~90%
Take or pay/regulated
22
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
6. Business Segment Performance and Operational Review (continued)
6.2 Energy Infrastructure (continued)
APA’s value proposition (continued)
APA manages its counterparty risk in a variety of ways. One aspect is to consider customers’ credit ratings. During FY2020,
93.0% of Energy Infrastructure revenue was received from investment grade counterparties. Diversification of customer base
is another strength of APA’s business, with our customers split across the energy, utility, resources and industrial sectors, as
shown in the graphs below.
FY2020 Energy Infrastructure Revenues
by Counterparty Credit Rating
FY2020 Energy Infrastructure Revenues
by Customer Industry Segment
A- rated or better: 43.7%
BBB and BBB+: 37.3%
Investment Grade: 12.0%
Not rated: 6.8%
Sub-investment grade: 0.2%
~93%
Investment grade
Energy: 47.5%
Utilities: 24.9%
Resources: 23.6%
Industrials & Others: 3.9%
Diverse
Sources of revenue
Notes: An investment grade credit rating from either S&P (BBB- or better) or Moody’s (Baa3 or better), or a joint venture with an investment grade average rating
across owners. Ratings shown as equivalent to S&P’s rating scale.
Capacity Trading and Auction Platform
The capacity trading and auction platform commenced across eastern Australia on 1 March 2019. The daily auction facility of
contracted but un-nominated capacity on APA assets has sold 35.0 PJ during FY2020 (16.1 PJ during 2H FY2020). This is the
equivalent of facilitating transport for 8.9 PJ (3.7 PJ for 2H FY2020) of gas on APA pipelines from Queensland to southern
markets. The additional liquidity from this non-firm service that has been added into the market during the winter months is
a positive outcome. Since its launch and through to 30 June 2020, there has been negligible firm primary capacity that has
been exchange traded on APA’s assets. It should be noted, however, that APA continues to see shippers contracting for firm
transport arrangements in order to manage their own business risk profiles.
6.3 Asset Management
APA provides asset management and operational services to the majority of its energy investments and to a number of third
parties. Its main customers are Australian Gas Networks Limited (AGN) (9), Energy Infrastructure Investments and GDI (EII).
Asset management services are provided to these customers under long-term contracts. Included in this reporting segment
are Customer Contributions from Transmission third party projects.
APA has the expertise and diversified skillset to provide whole-of-life asset management and operational services for high
voltage power, power generation, gas rotating plant and equipment, stationary engines, gas transmission pipelines and gas
distribution networks. These services also include asset inspection, vegetation management, aerial patrols, metering services
and specialist utility asset services.
Revenue (excluding pass-through revenue) from asset management services increased by $18.0 million or 19.0% to $112.4
million (FY2019: $94.4 million) and EBITDA increased by $10.4 million or 19.6% to $63.3 million (FY2019: $53.0 million). This
was due to higher haulage revenue due to colder weather and an outperformance in the incentive fee achieved for Network
services in FY2020 partly offset by reduced Customer Contribution activity in FY2020. Asset Management increased as a
result of the AASB 16 accounting impact and incentive fee outperformance in FY2020, not achieved in FY2019.
APA’s Queensland Networks team completed the construction and commissioning of the Murrarie looping project in Brisbane.
The project involved construction of a 1.75 km pipeline, of which 936 metres was horizontally drilled under the Brisbane river.
This second gas pipe supply into the Brisbane area, reduces the potential risk for over 100,000 customers in Brisbane. The
project was undertaken on behalf of our customer Australian Gas Networks (AGN).
In Melbourne, also on behalf of AGN, APA significantly progressed the replacement of ageing gas mains and services. Despite
the COVID-19 restrictions, the work is well progressed by APA and ahead of schedule.
9) APA sold its 33.05% stake in Envestra (subsequently renamed Australian Gas Networks or AGN) in August 2014, however, the operating and maintenance
agreements remain on foot until 2027.
APA GROUP I ANNUAL REPORT 2020
23
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
6. Business Segment Performance and Operational Review (continued)
6.3 Asset Management (continued)
Customer contributions are payments received from a third party for APA to undertake work on the assets it manages to
accommodate that third party’s project. Customer contributions for FY2020 were $8.5 million compared to $11.7 million in FY2019.
The long-term average per annum of customer contributions over the last five years remains at approximately $12 million per
annum. APA continues to expect annual swings in customer contributions, as these are driven by customer requirements.
The Asset Management segment continues to see strong demand for gas connections in new housing developments in
Victoria, with an observed slowing in South Australia and Queensland of gas connections growth compared to previous years.
Asset Management Revenue
Asset Management EBITDA
A$ m
100
80
60
40
20
0
A$ m
60
50
40
30
20
10
0
FY17
FY18
FY19
FY20
FY17
FY18
FY19
FY20
One-off Customer Contributions
Underlying Asset Management Revenue
One-off Customer Contributions
Underlying Asset Management EBITDA
Note: From FY2017 onwards, DPS and the Ethane Pipeline became fully owned assets and are managed within APA’s Energy Infrastructure segment and therefore
no asset management fees earnt.
Customer Contributions
A$ m
APA Operated Gas Networks Statistics
1.50
(million)
(km)
30,000
15
10
5
0
Average ~$12m p.a.
1.45
1.40
1.35
1.30
29,000
28,000
27,000
FY16
FY17
FY18
FY19
FY20
FY17
FY18
FY19
FY20
Gas consumer connections (LHS)
Networks managed (RHS)
24
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
6. Business Segment Performance and Operational Review (continued)
6.4 Energy Investments
APA has interests in a number of complementary energy investments across Australia.
Asset and ownership interests
Asset details an APA services
Partners
Mortlake Gas Pipeline
SEA Gas Pipeline
50%
SEA Gas
(Mortlake)
Partnership
83 km gas pipeline
connecting the Otway
Gas Plant to the Mortlake
Power Station
MAINTENANCE
50%
South East
Australia
Gas Pty Ltd
687 km gas pipeline from
Iona and Port Campbell
in Victoria to Adelaide
MAINTENANCE
Rest
Rest
North Brown Hill
Wind Farm
20.2%
EII2
132 MW wind farm in
South Australia
Infrastructure Capital Group
Osaka Gas
Allgas Gas
Distribution Network
20%
GDI (EII)
19.9%
Energy
Infrastructure
Investments
Daandine and X41
Power Stations
Kogan North and Tipton
West Processing Plants
Directlink and Murraylink
Electricity Interconnectors
Nifty and Telfer Gas Pipelines
Wickham Point and
Bonaparte Gas Pipelines
APA’s ability to manage these investments and provide
operational and/or corporate support services gives it
flexibility in the way it grows the business and harnesses
expertise in-house, thereby delivering services from a lower
cost base due to portfolio synergies.
EBITDA from Energy Investments increased by 25.7% for
the reporting period to $35.7 million (FY2019: $28.4 million)
largely due to increased equity income received from
SEAGas and Energy Infrastructure Investments.
CORPORATE SERVICES
~3,800 km Allgas gas
distribution network
in Queensland with
~115,000 connections
Marubeni Corporation
State Super
CORPORATE SERVICES
OPERATIONAL MANAGEMENT
Gas-fired power generation
71 MW
MM Midstream Investments
Osaka Gas
Gas processing facilities
45 TJ/day
Electricity transmission cables
244 km
Gas pipelines totaling 786 km
CORPORATE SERVICES
OPERATIONAL MANAGEMENT
Energy Investments Revenue & EBITDA
A$ m
30
20
10
0
FY17
FY18
FY19
FY20
APA GROUP I ANNUAL REPORT 2020
25
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
6. Business Segment Performance and Operational Review (continued)
6.5 Corporate Costs
Corporate costs for FY2020 were $75.0 million compared
to $80.1 million for the previous corresponding period.
Corporate costs decreased due to FY2019 one-off items not
repeated in FY2020.
1,500
A$ m
1,200
Corporate costs (net of one-off costs) over the last four
years (2017 to 2020) have increased 12.5% in-line with
EBITDA (net of one-off costs) which increased 12.4% for
the same period. This increase is due to additional cost from
compliance reviews, general increase in insurance cost and
other regulatory requirements in recent years.
900
600
300
0
(1)
(2)
%
8
6
4
2
0
FY15
FY16
FY17
FY18
FY19
FY20
Corporate costs (LHS)
EBITDA (LHS)
Corporate costs/EBITDA (3 ) (RHS)
1) Includes $11.1 million of costs associated with the CKI proposal and the former
Managing Director’s retirement.
2) Corporate costs excluding one-off items.
3) EBITDA excluding corporate cost.
7. Capital and Investment Expenditure
Total capital expenditure (including growth projects and stay-in-business capital expenditure but excluding acquisitions and
other investing cash flows) for FY2020 was $427.1 million (FY2019: $581.3 million). There were no acquisitions undertaken in
FY2020 and therefore no investment expenditure.
Capital and investment expenditure for FY2020 is detailed in the table below.
Capital and investment
expenditure (1)
Growth expenditure
Regulated
Non-regulated
Queensland
Description of major projects
30 Jun 2020
($ million)
30 Jun 2019
($ million)
Western Outer Ring Main (WORM); Warragul looping; Victorian
Transmission System, Roma Brisbane Pipeline and Goldfields Gas
Pipeline Access Arrangement allowed expenditure
46.5
30.6
Darling Downs Solar Farm and Thomson Power Station
New South Wales
Moomba Sydney Pipeline southern haul reliability and capacity expansion
Victoria
Orbost Gas Processing Plant and Crib Point Pakenham Pipeline
Western Australia and
Northern Territory
Goldfields and Eastern Goldfields expansion, Badgingarra Wind
and Solar Farms, Warrego Pressure Regulation
Customer contribution
projects and others
Predominantly small pipeline relocation projects
Sub-total non-regulated capex
Total growth capex
Stay-in business capex (2)
Other technology expenditure
Total capital expenditure
Investment and acquisitions
Total capital and investment expenditure
Notes: Numbers in the table may not add up due to rounding.
31.9
16.8
158.7
19.1
14.7
241.1
287.7
109.5
29.9
427.1
—
427.1
17.8
15.6
175.2
192.7
30.9
432.2
462.8
93.5
24.9
581.3
—
581.3
1) The capital expenditure shown in this table represents net cash used in investing activities as disclosed in the cash flow statement, and excludes accruals brought
forward from the prior period and carried forward to next period.
2) Represents stay-in-business capital expenditure not recoverable from customers and/or regulatory frameworks.
26
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
7. Capital and Investment Expenditure (continued)
Growth project expenditure in FY2020 of $287.7 million (FY2019: $462.8 million) was largely related to the following projects
during the year:
— Orbost Gas Processing Plant (VIC): Delays arising during construction as well as from the bushfire threat and resulting
poor air quality, resulted in a later than anticipated start to the commencement of commissioning of the OGPP in March
2020. The plant has since then supplied 3.5 PJ into the market and has completed a stability test to a level of 45 TJ/d.
However, practical completion is yet to be achieved due to foaming in the sulphur recovery unit that is constraining the
full stable processing capacity below 68 TJ/d. A Transition Agreement with Cooper Energy announced on 20 August 2020
provides a pathway to practical completion of the OGPP, including sharing of revenue and costs, including costs associated
with the proposed Phase 2 works.
— Crib Point Pakenham Pipeline project (VIC): Since June 2018, APA has had in place a Development Agreement and
associated Gas Transportation Agreement with AGL Energy for the development and construction of a ~55 km transmission
pipeline connecting AGL’s proposed LNG import terminal facilities to APA’s Victorian Transmission System and the east
coast domestic gas market. AGL and APA completed the required studies and prepared and submitted an Environment
Effects Statement (EES) for the Gas Import and Pipeline Project during the reporting period. Additionally, APA has
continued with engineering, approvals and discussions and execution of option agreements with affected landowners
along the proposed pipeline alignment during FY2020.
— Moomba Sydney Pipeline southern haul reliability and capacity expansion (NSW/VIC): Increased operating pressures on
sections of the Moomba Sydney Pipeline, compressor and engine overhauls and improved critical control systems at Bulla
Park, Young and Culcairn achieved during FY2020 to provide greater reliability and additional capacity of up to 23 TJ/day
to Sydney or 20 TJ/day to Melbourne.
— Thomson Power Station (QLD): Initial project works commenced for the 18 MW reciprocating engine power station. The
new power station will supplement generation from APA’s Diamantina/Leichhardt Power Stations for the Mount Isa
region. Construction is expected to be completed by end Q2 FY2021. Additional engines for a 6 MW expansion were secured
in Q4 FY2020, with the expansion portion of the project to be completed by Q4 FY2021.
— Beyondie Sulphate of Potash project (WA): APA is constructing a new metering station for Kalium Lakes Limited in order
to supply gas from the Goldfields Gas Pipeline to the customer’s mine site. Engineering and procurement are complete and
project completion is expected Q2 FY2021.
— Lake Way Gas Pipeline (WA): Engineering and procurement for a 23 km greenfields lateral off the Goldfields Gas Pipeline
to the Salt Lake Potash mine commenced in 2H FY2020. The project is expected to be complete in Q3 FY2021.
— Capricorn Metals (WA): APA will build a new 56 km lateral off the northern section of the Goldfields Gas Pipeline (GGP) to
Capricorn’s proposed Karlawinda mine. Gas will be transported approximately 500 km along the GGP then 56 km along
the Karlawinda Gas Pipeline. Design works for the lateral are well underway with completion targeted for Q1 2021.
— Murrin Murrin lateral looping project (WA): Design and procurement has been completed for the looping of 13.5 km of the
pipeline with project completion expected in Q2 FY2021.
— Darling Downs Solar Farm (QLD), Badgingarra Solar Farm (WA) and Eastern Goldfields Pipeline (WA): minor site works
completed in 1H FY2020.
— Gruyere Power Station (WA): APA’s Gruyere Power Station has been fully operational and supplying power to our
customer Gruyere Gold Mines since January 2019, with first gold pour taking place in June 2019. Minor site works and
testing continued during the reporting period. Reliability testing under full load was successfully completed in March 2020.
Early works for an expansion of the power station commenced in 4Q FY2020.
— Western Outer Ring Main (WORM) project (VIC): The Victorian Department of Environment, Land, Water and Planning
advised on 23 December 2019 that the project will require an Environmental Effects Statement (EES). Engineering and
approvals work including landholder liaison and studies required for the EES commenced during the reporting period.
Completion is therefore not expected until at least June 2022. Growth capital expenditure is fully underwritten through
long-term contractual arrangements or has regulatory approval through a relevant access arrangement.
— Renewable methane project (QLD): This is a pilot project looking at the commercial viability of generating renewable
methane using water and carbon dioxide captured from the air. ARENA funding of $1.1 million was secured in FY2020 and
engineering and procurement processes have commenced.
APA GROUP I ANNUAL REPORT 2020
27
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
7. Capital and Investment Expenditure (continued)
APA receives ARENA funding for renewable methane project
In May 2020, the Australian Renewable Energy Agency (ARENA) announced $1.1 million of funding for the renewable
methane pilot project being developed by APA with partner Southern Green Gas.
The potential carbon neutral project is investigating whether it is possible on an industrial scale to create methane using
solar-generated electricity, water and CO2 from the atmosphere.
As Australian and global communities look to de-carbonise their economies, APA is working to understand and anticipate
the long-term implications for Australia’s energy industry and our business. APA’s purpose is to strengthen communities
through responsible energy and therefore it is important to ensure that any transition to a lower carbon future should
be both cost effective whilst also ensuring energy reliability.
APA is excited at being involved in this cutting-edge potential carbon neutral energy generation process.
Renewable methane creation process
Renewable Energy
Electricity generated
from solar
Carbon Dioxide
is extracted from
the air
Water is captured
from air utilising
renewable energy
of the sun
Oxygen
released
Electrolyser
uses energy to
split water into
H2 and O2
Hydrogen
Methanation
reactor causes
→ 2H2O
+ CO2
4H2
Methanation
Hydrogen and CO2 are combined to
create renewable methane and water
Water
Methane
APA Grid
Water extracted from methanation is
recycled for use in electrolyser
Water
Stay-in-business (SIB) capex increased to $109.5 million in FY2020 from $93.5 million in FY2019. The increase correlates to
the size and scope of APA’s diverse energy infrastructure portfolio and remains in line with the long-term asset management
planning cycle across our assets.
Other technology capital expenditure reflects the continuing growth of the business and regulatory changes over the last
three years. In FY2020, APA invested $29.9 million (FY2019: $24.9 million) in I&T related solutions, services and infrastructure.
28
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
7. Capital and Investment Expenditure (continued)
Other project updates:
— Western Slopes Pipeline (NSW): In January 2017, APA announced it had signed a development agreement and associated
Gas Transportation Agreement with a subsidiary of Santos Limited, for APA to develop the proposed ~460 km Western
Slopes Pipeline (WSP) in northern NSW. The pipeline will connect the Santos Narrabri Gas Project (NGP – subject to final
investment decision) to APA’s Moomba Sydney Pipeline and the east coast domestic gas market, potentially supplying
NSW homes, small businesses, major industries and electricity generators with up to half the state’s natural gas needs.
The NSW Department of Planning issued their assessment report on the NGP to the Independent Planning Commission
(IPC) in June 2020. The IPC has conducted public hearings on the project and a determination on the NGP is expected
in September 2020. The WSP project has been on hold during FY2020 whilst the Santos NGP is proceeding through its
approval process.
— Dandenong Power Station Project (VIC): APA’s proposed 220 MW gas-fired power generation project was selected by the
Federal Government as one of two shortlisted projects in the Government’s Underwriting New Generation Investments
(UNGI) program to progress to agreement of key terms under the program. APA is continuing discussions with potential
customers to ascertain demand and market pricing as part of determining feasibility.
— Emperor Energy (VIC): APA entered into a non-binding Memorandum Of Understanding (MOU) with Emperor Energy
Limited in October 2019 and proceeded, in May 2020, to enter into a Binding Agreement to progress with the pre-Front
End Engineering Design (Pre-FEED) for the provision of midstream infrastructure and services related to gas potentially
produced from the Judith Gas Field in the offshore Gippsland Basin, Victoria. The Pre-FEED study is expected to be
completed 4Q CY2020. Should the project proceed, APA’s involvement includes building, owing, operating and maintaining
a new 90 TJ/d gas processing train; 40 km sub-sea pipeline; and 12 km pipeline from the gas processing train to the market.
— Comet Ridge & Vintage Energy (QLD): During FY2019, APA entered into a MOU with Comet Ridge Limited and Vintage
Energy Limited to investigate a potential pipeline route to connect Queensland’s Galilee Basin to gas markets. The proposed
240 km Galilee Moranbah Pipeline and associated infrastructure would be built, owned and operated by APA, connecting
gas sources in the Galilee Basin to Moranbah in Central Queensland. Moranbah is the gas processing and distribution hub
for northern Bowen Basin gas resources. During FY2020, APA completed various studies, assessments, field surveys and
stakeholder engagement under the Survey Licence granted in July 2019.
— Blue Energy (QLD): An MOU remains in place to investigate pipeline route options in both the Bowen and Galilee Basins.
APA continues to engage with all resource holders in the Bowen Basin to progress the efficient development for delivery to
the East Coast Gas Grid.
Despite the challenges faced by our customers in
FY2020 with the double impact of a falling oil price and
the COVID-19 pandemic, APA has visibility of as much as
$1 billion of organic growth projects that remain in active
discussion with customers for delivery over the next two
to three years, and more than $4 billion of prospective
and active projects over the next five to ten years.
This organic growth includes the ongoing expansions
of APA’s East and West Coast grids. The growth is
also driven by our customers projects in the power and
midstream sectors.
APA continues to work with our customers to assess
any opportunity to expand and/or extend our existing
network as required by the market. In response to
the gas supply shortfall forecast by AEMO in Victoria
around 2023, APA has investigated expansion of its East
Coast Grid, principally involving the Moomba Sydney
Pipeline system and South West Queensland Pipeline.
These pipelines are lightly compressed, and pre-FEED
work currently underway has identified that additional
capacity could quickly and efficiently be delivered
through the staged installation of compression facilities.
Capital and investment expenditure
A$ m
800
600
875.5
581.3
400
377.5
427.1
200
0
FY17
FY18
FY19
FY20
Acquisitions & other investment cash flows
Growth capex
SIB & other IT capex
Beyond 2023, APA is working closely with a number of upstream producers that are exploring frontier resources in the Northern
Territory, Queensland and New South Wales as listed in the identified projects above. Pipelines from these opportunities have
the potential to connect to APA’s East Coast Grid through existing gas hubs at Moomba or Wallumbilla, or directly to the
Moomba Sydney Pipeline and/or South West Queensland Pipeline. The most cost-effective, efficient and quickest way of
getting new gas supplies to market is to connect to nearby existing pipeline infrastructure which the 7,600 km East Coast
Grid facilitates.
APA GROUP I ANNUAL REPORT 2020
29
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
8. Financing Activities
8.1 Capital Management
As at 30 June 2020, APA had 1,179,893,848 securities on issue. This is unchanged from 30 June 2019.
APA funds its growth with appropriate levels of equity, cash retained in the business and debt, in order to maintain strong
BBB and Baa2 credit ratings from Standard & Poor’s and Moody’s, respectively.
As at 30 June 2020, APA had $2.5 billion in cash and committed undrawn facilities available to assist in the ongoing funding
of the business and planned growth activities looking ahead.
At 30 June 2020 APA had $9,983.6 million ($9,352.1 million as at 30 June 2019) of committed drawn debt facilities, with an
additional $1,300 million of undrawn committed bank facilities available to the business.
APA has issued debt into a diverse range of global bond and banking markets, such as US Private Placement Notes, Medium
Term Notes in several currencies (Australian dollars, Euros, Sterling and Japanese Yen), United States 144A Notes and
Australian dollar Syndicated and Bilateral bank facilities. The debt portfolio has a broad spread of maturities extending out
to FY2035, with an average maturity of drawn debt of 6.4 years as at 30 June 2020.
APA debt maturity profile and diversity of funding sources (1)
$1,600m
$1,200m
$800m
$400m
0
FY21
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
FY32
FY33
FY34
FY35
Headroom (undrawn committed facilities)
Bank borrowings
Sterling MTN
Euro MTN
US 144A Notes
Japanese MTN
Australian MTN
US Private Placement Notes
USD denominated obligations (2)
1) APA debt maturity profile as at 31 July 2020.
2) USD denominated obligations translated to AUD at the prevailing rate at inception (USD144A – AUD/USD=0.7879, Euro & Sterling MTNs at AUD/USD=0.7772).
APA maintains a prudent treasury policy that requires high levels of interest rate hedging to minimise the potential impacts
from adverse market movements. As at 30 June 2020, 100% (30 June 2019: 100%) of interest obligations on gross borrowings
were either hedged into or issued at fixed interest rates for varying periods extending out to 2035.
Financing activities for APA during the financial year were focussed on pre-funding maturing debt and enhancing APA’s
liquidity position in the face of uncertainties created with COVID-19. In April 2020, APA issued €600 million (A$1,017.8 million)
of 10.2 year fixed rate Notes from its Euro Medium Term Note Programme.
Since the end of FY2020, APA has repaid:
— $300.0 million of Australian Medium Term Notes at maturity (22 July 2020).
Through its FY2020 financing activities, APA has been able to extend the average tenor of its debt facilities and lower the
average cost of its debt portfolio in difficult market conditions. The diverse debt portfolio and the strong BBB/Baa2 credit
ratings enable APA to raise appropriate amounts of debt from the global debt capital markets in a timely and efficient
manner to support growth and its existing operations.
APA acquired the Wallumbilla Gladstone Pipeline in June 2015, with revenues denominated in USD from the 20-year
foundation contracts. Tariffs are escalated in January each year by US CPI, with operating costs passed through to the
shippers. Today, around US$3 billion (i.e. US 144A Notes maturing in 2025 and 2035, Euro MTN maturing in 2027 and Sterling
MTN maturing in 2030), of the original US$3.7 billion of debt that was borrowed to assist with funding of that acquisition, is
retained in, or swapped into, US dollar denominated debt obligations at an all-in annual rate of around 4.61%. This USD debt
is being managed as a “designated hedge” for those virtually certain US dollar denominated revenues.
30
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
8. Financing Activities (continued)
8.1 Capital Management (continued)
APA has hedged the US dollar denominated Wallumbilla Gladstone Pipeline revenues receivable to March 2022 at the rates
in the table below.
Period
FY2020
FY2021
FY2022 (to March 2022)
Average forward USD/AUD exchange rate
0.7192
0.7199
0.7099
A large portion of the net revenue from April 2022 onwards remains in the designated hedge relationship with the remaining
US$3 billion in debt and as such, when that revenue is received and hedged, it will be recognised in the statement of profit or
loss at those future rates.
8.2 Interest costs
Net interest costs decreased in FY2020 by $0.1 million to $497.3 million (FY2019: $497.4 million). The 0.02% decrease in
FY2020 relative to FY2019 is primarily due to the repayment of higher cost debt offsetting lower capitalised interest and
higher average drawn debt throughout FY2020 compared to FY2019.
The average interest rate (including credit margins) applying to drawn debt was 5.33% for FY2020 (FY2019: 5.53%), reflective
of the partial year impact of the new lower interest cost attributable to the €600 million (A$1,017.8 million) of 10.2 year fixed
rate Euro Medium Term Notes.
8.3 Credit ratings
APT Pipelines Limited, the borrowing entity of APA, maintained the following two investment grade credit ratings during the
FY2020 financial year:
— BBB long-term corporate credit rating assigned by Standard & Poor’s (S&P) in June 2009, and last confirmed on 17
February 2020; and
— Baa2 long-term corporate credit rating (outlook Stable) assigned by Moody’s Investors Service (Moody’s) in April 2010, and
last confirmed on 20 February 2020.
APA calculates the Funds From Operations (FFO) to Interest to be 3.3 times (FY2019: 3.0 times) and FFO to Net Debt to be
12.2% for FY2020 (FY2019: 10.7%). FFO to Net Debt is the key quantitative measure used by S&P and Moody’s to assess APA’s
credit worthiness and credit rating.
APA’s credit metrics continue to strengthen as increasing operating cash flow allows the funding of both increased
securityholder distributions and increased growth capex which delivers increased EBITDA and, in turn, increased operating
cash flow. With FFO to Net Debt of 12.2% and FFO to Interest of 3.3 times being at the stronger end of BBB/Baa2 rating
metric guidelines, APA continues to have confidence that the balance sheet can continue to support both organic growth and
long-term growth in securityholder distributions. APA’s FFO to Net Debt has been between 10% and 12% for the past three
years and we expect this to continue for FY2021.
8.4 Income tax
Income tax expense for the financial year of $187.9 million results in an effective income tax rate of 37.2%, compared to
38.1% for the previous corresponding period. The high effective rate is due to the significant amortisation charges relating
to contract intangibles acquired with the Wallumbilla Gladstone Pipeline, which are not deductible for income tax purposes.
After utilisation of available tax losses and research and development and imputation credit tax offsets, income tax of
$85.3 million will be payable in respect of the year ended 30 June 2020 (FY2019: $72.1 million). The cash tax payable results
in an effective tax paid rate of 16.9% in FY2020 compared to 15.4% in FY2019. With PAYG instalments of $54.4 million
having already been paid, a tax provision of $30.9 million has been recognised. APA has provided a Tax Transparency Report,
which includes a reconciliation of profit to income tax payable on APA’s website at https://www.apa.com.au/investors/my-
securities/tax-information/.
To assist APA Securityholders who wish to submit their annual tax return prior to receiving their annual APA Tax Statement in
mid-September, APA has developed an online tax estimator tool.
The Estimator tool will generate pro forma tax return inputs based on information entered by Securityholders and therefore
should be considered “indicative only” as compared to the confirmed accurate information contained in APA’s Annual Tax
Statement. The Tax Estimator will be available under the Investor section on APA’s website following confirmation by the
Board via an ASX release of the final FY2020 distribution (https://www.apa.com.au/investors/my-securities/apa-annual-
tax-statement-estimator/).
APA GROUP I ANNUAL REPORT 2020
31
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
8. Financing Activities (continued)
8.5 Distributions
Distributions paid to Securtyholders during the financial year were:
Final FY2019
distribution paid
11 September 2019
Interim FY2020
distribution paid
11 March 2020
Cents per
security
Total
distribution
$000
Cents per
security
Total
distribution
$000
8.53
—
10.44
2.55
3.98
100,663
—
123,153
30,056
47,002
25.50
300,874
3.66
43,142
8.52
2.93
6.66
2.40
2.49
23.00
3.65
100,488
34,650
78,530
28,335
29,372
271,375
43,066
APT franked profit distribution
APT unfranked profit distribution
APT capital distribution
APTIT profit distribution
APTIT capital distribution
Total
Franking credits allocated
On 26 August 2020, the Directors declared a final distribution for APA for the financial year of 27.0 cents per security which
is payable on 16 September 2020. Franking credits of 3.66 cents per security will be allocated to the APT franked profit
distribution. The FY2020 final distribution comprises the following components:
APT franked profit distribution
APT capital distribution
APTIT profit distribution
APTIT capital distribution
Total
Franking credits allocated
Final FY2020
distribution payable
16 September 2020
Cents per
security
Total
distribution
$000
8.53
11.74
2.09
4.64
27.00
3.66
100,666
138,528
24,686
54,692
318,572
43,143
As a result, the total distribution applicable to the year ended 30 June 2020 is 50.0 cents per security, a 6.4% increase over
the total distribution of 47.0 cents per security applicable to the year ended 30 June 2019. Franking credits allocated for the
year ended 30 June 2020 distribution totalled 7.31 cents per security.
The Distribution Reinvestment Plan remains suspended.
32
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
8. Financing Activities (continued)
8.6 Total securityholder return
APA’s total securityholder return for the financial year, which accounts for distributions paid plus the capital appreciation of
APA’s security price and assumes the reinvestment of distributions at the ex-distribution date, was 7.7% (10).
APA’s total securityholder return since listing in June 2000 on the ASX, is 2,203% (11), a compound annual growth rate of 16.8%.
APA total securityholder returns since listing (June 2000) to 21 August 2020
2,400
1,800
1,200
600
0
Jun 00 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17
Jun 18
Jun 19
Aug 20
APA total securityholder return
Utilities accumulation index
S&P/ASX 200 accumulation index
8.7 Guidance for 2021 financial year
Looking ahead, we are confident that APA is in a strong position financially and operationally. Although APA is an essential
part of the energy supply chain, no business is entirely immune from an economic downturn. APA is successful when our
customers are strong. While our capacity contracts and regulated revenues mean that our business is somewhat resilient
through economic cycles, APA’s revenues are still subject to recontracting decisions by customers, throughput volumes on
certain assets, the timing of customer FID decisions, as well as lower CPI across the contracts portfolio.
Further, APA’s current operating plan for FY21 only includes around $10 million of EBITDA contribution from the Orbost Gas
Processing Plant under the recently announced Transition Agreement with Cooper Energy. This assumes Practical Completion
is not achieved until the end of the financial year.
In this context, APA expects EBITDA for the full year to 30 June 2021 to be within the range of $1,625 million to $1,665 million.
Total distributions for FY2021 are expected to be substantially in line with FY2020 distributions, with franking credits which
may be allocated, depending on the amount of cash tax APA will pay during the year.
Net interest cost is expected to be in a range of $490 million to $500 million.
EBITDA ($ millions)
Net interest cost ($ millions)
FY2021 guidance
FY2020 actual
$1,625 to $1,665
$490 to $500
$1,653.9
$497.3
10) Figures quoted are sourced from Refinitiv Eikon and measured as at 30 June 2020.
11) Indexed from 13 June 2000, the date of APA’s listing on the ASX.
APA GROUP I ANNUAL REPORT 2020
33
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
9. Economic Regulatory Matters
Gas pipelines in Australia are regulated by the Australian Energy Regulator (AER) or, the Economic Regulation Authority of
Western Australia (ERA).
Australia’s economic regulatory regime for gas pipelines is set out in the National Gas Law (NGL) and the National Gas Rules
(NGR). Some of APA’s pipelines have been covered by the National Gas Access Regime since it was introduced in the 1990’s.
There are 2 frameworks under the NGR:
1) Scheme pipelines (NGR Parts 8-12) subject to either:
— full regulation, where the AER or ERA must approve a full access arrangement that sets out reference tariffs, terms and
conditions. Pipeline users can opt for non-regulated services on full regulation pipelines; or
— light regulation, where pipeline owners must publish services and prices and comply with information provision
requirements to support negotiations or alternatively seek regulatory approval for a limited access arrangement.
A regulatory negotiate-arbitrate mechanism is available in the case of access disputes.
2) Non-Scheme pipelines (NGR Part 23) – The Part 23 regime came into effect from August 2017 and provides for additional
information disclosure and a commercial negotiate-arbitrate mechanism as part of a dispute resolution framework.
The map below shows APA pipelines by regulation type:
APA Pipelines (owned and/or operated) – By Regulation Type
Full regulation pipelines
Light regulation pipelines
Non-scheme pipelines
Partly full regulation / non-scheme pipelines
Regulatory resets
The diagram below outlines the scheduled regulatory reset dates for pipelines owned and operated by APA. During FY2020,
approximately 8.0% of APA’s Energy Infrastructure revenues were revenues that are subject to regulated outcomes.
Calendar year
2021
2022
2023
2024
2025
Amadeus Gas Pipeline
Roma Brisbane Pipeline
Victorian Transmission System
Goldfields Gas Pipeline
Current regulatory period
Next regulatory period
Key regulatory matters addressed during the reporting year included:
Goldfields Gas Pipeline access arrangement
In December 2019, the Western Australian Economic Regulation Authority released a final decision on revisions to the Access
Arrangement for the Goldfields Gas Pipeline, for the period 1 January 2020 to 31 December 2024. The final decision applies
to the covered (regulated) capacity which is 109 TJ/d of a total pipeline capacity of 202.5 TJ/d. The final tariff increased by
approximately 9% as a result of removing the regulator’s adjustment in the 2015 – 2019 access arrangement which took account
of the delay in that final decision. As the current decision was made on time there is no requirement for such an adjustment.
34
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
9. Economic Regulatory Matters (continued)
Amadeus Gas Pipeline 2021-2026 access arrangement – consumer engagement
As noted in Section 6.1, APA established the Amadeus Gas Pipeline Consumer Reference Group as part of the regulatory
process for review of the 2021-2026 Amadeus Gas Pipeline access arrangement. Under the existing arrangement approved
in 2016, APA was required to submit further revisions on 1 July 2020, which are expected to have effect for a period of five
years from 1 July 2021. Consumer engagement ahead of that submission provided APA with better insights from people
served by the pipeline and helped shape our proposal to the Australian Energy Regulator (AER). Further information on
consumer engagement for the Amadeus Gas Pipeline can be found on APA’s website https://www.apa.com.au/about-apa/
our-projects/.
Energy Industry developments
COAG Energy Council Regulation Impact Statement (RIS)
At the end of October 2019, the Council of Australian Governments (COAG) Energy Council released for consultation its
RIS “Options to improve gas pipeline regulation”. This RIS process addresses the Energy Council’s initiative in August 2018
to consider further improvements to the regulatory framework and the mandated review of Part 23 of the NGR. The RIS
outlined four options for reform including a ‘no change’ option.
APA has been active in the consultation process, including suggesting a hybrid option that draws upon elements from the RIS
and the existing National Gas Law and Rules. Under APA’s hybrid option, all pipelines would be subject to regulation with the
minimum level being Part 23 of the National Gas Rules.
The negotiate-arbitrate model would be retained, with an exemption for greenfield pipelines. All existing pipelines would
retain their current regulated status at the start of the new scheme. The current test applying the existing Form of Regulation
factors in s16 of the National Gas Law would then be utilised to determine which pipelines should move from “lighter” Part 23
regulation to “heavier” full regulation or vice versa.
APA believes this hybrid option addresses concerns about regulatory coverage of pipelines by ensuring the appropriate form
of regulation while harmonising the level of information available across all regulatory classes of pipelines.
Submissions on the RIS closed on 17 January 2020. Senior officials from government and statutory authorities are reviewing
and assessing the submissions with the Final RIS expected to be published in FY2021.
In August 2019, the COAG Standing Committee of Officials (SCO) released ‘Measures to improve transparency in the gas
market: Regulation Impact Statement for consultation’ (Consultation RIS). The RIS presents options to improve transparency
in the eastern and northern Australian gas markets.
APA supports COAG’s vision for a transparent gas market. APA is seeking to ensure the right balance of transparency without
increasing costs and risks to consumers and the gas industry and ensuring alignment with existing information disclosure
requirements under Corporations Law, the ASX Listing rules, and confidentiality provisions of our customer agreements.
10. Sustainability
Doing business sustainably is about operating in a way that creates value and supports growth without compromising our
integrity, social or environmental responsibilities. It makes organisations resilient, so they thrive particularly in changing times.
APA is here for the long-term, so during FY2020, we strengthened our sustainability capabilities, activities and reporting to
reflect its vital role in APA’s future.
APA has released a separate FY2020 Sustainability Report which is available on APA’s website (https://www.apa.com.au/
about-apa/sustainability/). Contained in the Directors’ Report as below, is an overview of our sustainability approach and key
compliance metrics for health and safety, environment and emissions.
Every day, APA’s decisions impact our customers, investors, workforce, communities and the environment and contribute to
our future state, so we must always act responsibly. For APA, sustainability is simple: it’s how we do business and contribute
to society responsibly – now, and into the future.
To help us do this, we are making sustainability an integral part of how APA does business by:
— being part of Australia’s successful transition to a lower-carbon future;
— keeping customers front of mind;
— caring for our people and communities;
— maintaining Australia’s environment and heritage;
— building ongoing relationships with community stakeholders; and
— promoting responsible procurement practices.
To help support APA’s refreshed Vision, Purpose, Culture and operating structure, we took an important step in our responsible
energy journey in late FY2020 by creating a dedicated Sustainability and Community function and team.
The changes reflect our acknowledgement of societal views, expectations and the vital role that sustainability and community
play in delivering APA’s purpose, vision and responsible energy promise.
We will be developing a comprehensive Sustainability Roadmap in FY2021. This will set the sustainability direction for APA and
help us to continually improve our sustainability performance and disclosure.
APA GROUP I ANNUAL REPORT 2020
35
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
10. Sustainability (continued)
10.1 Climate Change
APA takes the science of climate change seriously and supports a global transition to a lower-carbon future. We are taking
steps to understand and manage the risks and opportunities presented by climate change to our business. The challenge for
the energy industry is to reduce carbon emissions while maintaining the reliable, affordable and secure energy supply that
people want and need. APA is well-placed to support Australia’s successful transition over time to a lower-carbon future.
APA is continuing to take steps to understand and demonstrate our commitment to addressing the complex challenge
presented by climate change. Key activities we conducted this year were:
— Publishing APA’s first Climate Change Position Statement, available on APA’s website (https://www.apa.com.au/about-
apa/sustainability/climate-change/). This affirms APA’s stance on climate change by succinctly communicating our
approach and supporting our purpose of strengthening communities through responsible energy;
— We developed a preliminary Carbon Management Plan as a step towards operationalising consideration for climate
risks. The plan puts a focus on four main areas: Greenhouse gas emissions reporting and analysis, emissions reductions,
greenhouse gas offsets, and climate scenario analysis;
— Continued our Task Force on Climate-Related Financial Disclosures (TCFD)-aligned Climate Scenario Analysis by extending
the time horizon of transition risks to 2050 and testing the resilience of all of our existing assets against more extreme
climate scenario pathways, including a 1.5C scenario.
As we move into FY2021 our focus areas will be:
— Developing a Climate Change Policy with a view to expanding and further articulating our approach and commitment;
— Evolving the Carbon Management Plan and integrate it into our broader Climate Change Management Plan and
Sustainability Roadmap; and
— Publishing outcomes from the TCFD-aligned Climate Scenario Analysis expected to be released early October. For more
information, including climate indicators, see the Climate Change Chapter of APA’s FY2020 Sustainability Report.
APA Emissions
APA’s main sources of direct emissions are from gas fired power stations (49%), combustion of natural gas in compressor
stations (16%) and fugitive emissions associated with natural gas pipelines (11%), making up 76% of total emissions.
The National Greenhouse and Energy Report (NGER) applies to assets under APA’s operational control, which includes gas
transmission/distribution pipelines, power stations, renewable generation facilities (including wind farms and solar farms),
gas storage, gas processing, electricity transmission interconnectors and corporate offices.
APA voluntarily engaged the services of an independent auditor (registered under the Act) to assess compliance of its FY2019
NGER data. Zero non-compliances were noted however a number of improvement recommendations were made. These will
be addressed in the Energy and Emissions Improvement Program which is a focus area for FY2021. Provision of the audit
report to the CER resulted in dialogue and a minor update to FY2019 results reported at 1H FY2020.
In addition, APA was selected to be part of the CER’s audit program for FY2019 reporting. The audit is expected to be
complete in Q1 FY2021.
APA’s summary of Scope 1 and 2 emissions and energy consumption for FY2019 as reported under NGER compliance, are set
out in the table below:
Scope 1 (1) CO2 emissions (tonnes)
Scope 2 (2) CO2 emissions (tonnes)
Energy consumption (3) (GJ)
FY2019 (audited) (4)
FY2018
Change
1,228,015
1,205,766
176,980
178,445
27,802,229
25,777,203
1.8%
(0.8%)
7.9%
1) Scope 1: emissions associated directly with APA facilities, such as company vehicles, ‘fuel combustion’ and fugitive emissions from gas pipelines.
2) Scope 2: are indirect emissions such as consumption of purchased electricity/fuel not generated by the facility but used under its operations or electricity line loss.
3) Energy Consumption is referring to the total calculation of energy consumed across all facilities within APA’s operational control.
4) Variation in data from APA’s original FY2019 NGER Report is due to amendments to the Report and re-submission. Key changes include a) reallocation of Murraylink
line loss (Scope 2) between Vic and SA and subsequent application of different emission factors and b) changes to fugitive emissions on the Goldfields Gas Pipeline.
APA’s Scope 1 emissions have increased primarily due to an overall increase in gas combustion for power generation
at Diamantina Power Station, and by compressors on the South West Queensland Pipeline (SWQP) and the Goldfields
Gas Pipeline (GGP). APA’s Scope 2 emissions decreased slightly in FY2019. This is primarily due to a reduction in electricity
consumption on the SWQP compared to FY2018.
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APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
10. Sustainability (continued)
10.2 Health, Safety, Environment and Heritage (HSEH)
Following is an overview of key HSEH compliance information. For further detail on APA’s HSEH initiatives and practices,
please refer to APA’s FY2020 Sustainability Report, available on APA’s website.
In a year of many challenges – bushfires, cyclones and COVID-19 to name a few – APA’s efforts towards zero harm have also
had its challenges.
A critical activity for FY2020 was the development and launch in September 2019 of a new three-year HSEH Strategic Plan
FY2020 – FY2022. Created with significant cross-functional involvement and ownership, the Strategic Plan for APA focuses
on the following key themes:
HSEH Strategic Framework: FY2020 – FY2022
Caring for people, communities, the environment and our assets
HSEH leadership
and culture
Creating a
proactive HSEH
culture with
empowering
leadership and
strong enabling
behaviours
Contractor
management
Critical to
operational
excellence -
accountable,
streamlined,
performing
Health and
wellbeing
Caring for the
whole person –
at work
and beyond
Technology
systems and
analytics
Increasing
efficiency and
simplicity of
HSEH processes,
data and
analytics
Environment
and heritage
management
Delivering on our
responsibilities to
the environment
and communities
- past, present
and future
Process safety
Clear ownership
by the business
and integrated
processes
to support
operational
excellence
The objective of the strategic plan is to empower our people to deliver ‘world class’ HSEH performance over the next three years.
Health and Safety
FY2020 has seen inconsistent Health and Safety results across the business. Our lag indicators, in particular in relation to the
safety performance of our contractors, show a disappointing decrease from FY2019 performance. On a normalised collective
basis, Health and Safety performance has plateaued and remains in line with our 5-year average. Throughout the reporting
year however, there were a number of highlights:
— No Work Health and Safety regulatory penalties;
— Two divisions within our operations went 12 months without a lost time injury;
— APA employee safety continued on its improvement path; and
— Management interactions exceeded target delivering closer alignment with our contractor community.
Total reportable injury frequency rate (TRIFR)
Lost time injury frequency rate (LTIFR)
13.53
10.41
7.65
20
15
10
5
0
8.95
7.50
5.8
10.77
8.94
6.34
8.05
5.98
3.72
15.63
9.09
3.82
2.0
1.5
1.0
0.5
0
1.33
1.06
0.75
FY16
FY17
FY18
FY19
FY20
FY16
2.11
1.76
1.35
1.70
1.21
0.82
0.86
0.77
0.62
FY18
FY19
FY20
0.75
0.52
0.31
FY17
APA overall
Employee
Contractor
APA overall
yee
ContractorEmplo
Note: TRIFR is measured as the number of lost time and medically treated injuries
sustained per million hours worked. Data includes both employees and contractors.
Note: LTIFR is measured as the number of lost time injuries per million hours worked.
As mentioned, our lag indicators reveal a clear gap between employee and contractor safety performance. Employee safety
numbers of LTIFR 0.82 and TRIFR 3.82 show continued good progress.
Conversely, contractor performance highlights the challenge in front of APA, LTIFR 1.70 and TRIFR 15.63 (target <7.0).
Overall the TRIFR rate for APA was 9.09 against a target of <5.5 and the overall LTIFR was 1.21 against a target of <1.0.
Importantly, there were no fatalities of employees or contractors in FY2020 (FY2019: nil).
APA GROUP I ANNUAL REPORT 2020
37
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
10. Sustainability (continued)
10.2 Health, Safety, Environment and Heritage (HSEH) (continued)
Health and Safety (continued)
These results were despite significant work being undertaken during FY2020 with our contractor network to understand and
improve performance, including the following initiatives:
— Quarterly contractor forums, held across Australia;
— Senior management engagement sessions with APA’s ten largest contractors to ensure our standards and processes are aligned;
— Review of metrics and pre-qualification procurement processes; and
— Increased APA on-site supervision of key projects and activities.
During FY2020, there was also continued work particularly in our Operations areas on improving line leadership capability
development and empowerment which are expected to enhance safety outcomes during FY2021 and beyond.
Key learnings from FY2020 have been aggregated and in FY2021 it is intended to continue to work on these initiatives and
what we have learnt, as well as increasing our leadership focus and involvement in safety and operational activities to model
and drive the right behaviours for the turnaround that is required.
COVID-19 Management
COVID-19 has been a significant challenge for all businesses across the globe. Given the nature of APA’s work in public areas
and engaging with landholders and the community, management of this pandemic was a strong focus for APA management,
ensuring a balance between operational outcomes and employee health and wellbeing. There has been increased focus on
health and wellbeing during this time through provision of online materials, training and webinars, promotion of Employee
Assistance Program, specialist advice for employees, especially those who could not work from home, and increased
communications to promote resilience and wellness activities. Refer to Section 11.2 (Covid-19 Crisis Management) for further
information on APA’s COVID-19 response and crisis management.
Process Safety
Process Safety is about ensuring the necessary processes, systems and behaviours are in place to empower APA employees
and contractors to operate assets safely, such that there is no major accident event as a result of an energy or harmful
substance release.
APA is in year three of a dedicated Process Safety improvement program. The roll out of Process Safety is in year three of a
multi-year program at APA. FY2020 has seen the delivery of many parts of the program including:
— Completion of the initial roll out of Process Safety to the Transmission and Midstream businesses – this includes defining
safety critical equipment for sites, roll out to the sites of process safety dossiers and delivery of a Process Safety
cultural program;
— Completion of the Process Safety Framework and integration in Safeguard, APA’s HSEH management system;
— The development and roll out of APA’s Process Safety Fatal Risk Protocol;
— Process safety scorecard, tracking key metrics and measures by Executives and the Board; and
— Training for field operation staff, engineers and leaders completed, including a new e-Learning module developed for
release in FY2021.
Metrics around the use of Management of Change and alarm management continued to improve as a result of dedicated
improvement programs for each.
APA continues to work with several regulators around the country to maintain current Safety Cases for our assets, with the
Orbost Gas Plant Safety Case having been submitted and going through the approval process currently.
For FY2021, as part of the new Operations Division business plans, program development and roll out of Process Safety to
Power and Networks assets will begin.
Environment and Heritage compliance
APA operates its assets under a number of approved environmental regulatory instruments within relevant federal, state and
territory jurisdictions.
Progress against core initiatives has enabled APA to initiate a more standardised and streamlined management of
environment and heritage risk including:
— Environment Management Plan (EMP) Improvement Program: was initiated in FY2018 to standardise and streamline our
approach to managing environmental risks and compliance. A target of 9 refreshed EMPs for delivery in FY2020 was set
and achieved, bringing the total number of effective EMPs to 22. A target of 10 has been set for FY2021, the final year of
the program.
— Heritage Improvement Program: A gap analysis was completed during the reporting period to articulate areas of heritage
practices across APA that either needed improvement or further support and investment. A Heritage Improvement
Plan was developed in early 2020 and has identified critical corporate processes, state specific guidance and targeted
awareness/training program to be developed and implemented over the next 18 months.
Four warning notices across the business were received in the reporting period in relation to regulatory compliance, however
none resulted in penalties or fines. Corrective actions are either underway or have been completed.
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APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
10. Sustainability (continued)
10.3 Business Integrity
Commonwealth Modern Slavery Act 2018 (MSA)
The MSA established a national Modern Slavery Reporting Requirement which applies to all entities based, or operating, in
Australia, with an annual consolidated revenue of at least $100 million. Entities are required to report annually on the risks of
modern slavery in their operations and supply chains with actions to address those risks.
APA is committed to the principles and obligations under the MSA and will not intentionally use suppliers and contractors
who engage in exploitative behaviours of modern-day slavery such as child labour, debt bondage and inhumane treatment of
employees, and forced or compulsory labour.
APA is working on a set of standards to achieve compliance utilising a risk-based approach to the identification of modern
slavery risks and artificial intelligence tools to analyse supplier information, with further development of procedures supporting
the approach in progress.
The initial annual Modern Slavery Statement was required to be submitted by 31 December 2020. However, in April 2020, the
Government extended the submission deadline to 31 March 2021 as a result of the COVID-19 pandemic.
Further detail is contained in APA’s FY2020 Sustainability Report and Code of Conduct, available on APA’s website.
Anti-bribery and Corruption
In line with APA’s Code of Conduct, relevant legislation, and as part of the transition to the ASX Governance Principles 4th
Edition, APA established an Anti-bribery and Corruption Policy in the reporting period. This sets out key requirements to
prevent, detect and manage bribery and corruption in all jurisdictions in which APA operates.
APA is also closely monitoring the recent Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 released on
2 December 2019. If passed, the legislation would bring Australia’s requirements into line with the UK and the US.
11. Risk Management
Effective risk management is essential to delivering value for our stakeholders and involves all of our people across the
business. APA identifies risks to its business and puts in place controls and strategies to manage any adverse consequences,
as well as to maximise any opportunities that arise from these risks. Material risks are reviewed on an ongoing basis by APA’s
Executive Team and the Board Audit and Risk Management Committee, together with the relevant Divisions supported by
both internal and where appropriate, external, experts.
The Risk Management System brings together the principles and processes to ensure risk is effectively identified, managed
and monitored. It comprises three elements covering our Risk Management Policy and Risk Appetite; the Risk Management
Enablers providing for governance, a strong risk culture, technology support and ongoing training and communication; and
the Enterprise Risk Management Framework which sets our approach for the identification, assessment, management
and escalation of risks to ensure material risks are managed appropriately. All risk assessments consider a combination of
likelihood and consequence based on the Enterprise Risk Management Framework.
The Risk Management System is aligned to the international risk standard ISO 31000. All other functional risk frameworks
align to the Risk Management System to provide consistency and a common language for risk which is integral to key business
decisions. Further information on this process is provided in APA’s Corporate Governance Statement (refer to Principle 7,
https://www.apa.com.au/about-apa/our-organisation/corporate-governance/), and APA’s Sustainability Report (https://
www.apa.com.au/about-apa/sustainability/).
APA Risk Management
APA Group Board
– Review current and emerging material risks
– Review key risk & compliance policies
– Review insurance arrangements
– Review risk strategy and framework
– Approve crisis management plan
– Promote a risk aware culture
APA Group
Audit & Risk Management Committee
Executive Risk
Management Committee
– Approve risk strategy, policy and framework
– Approve and monitor risk appetite
– Approve key risk and compliance policies
– Review and monitor current and emerging
material risks (financial & non-financial)
Group Risk, Compliance & Insurance
– Risk & Compliance Frameworks, guidance
– Recovery (Business Continuity and
Crisis Management) framework
– Asset, project and corporate
insurance program
Functional risk frameworks
Aligned to Enterprise Risk Management
Framework including:
— IT Security Risk
— Physical Security Risk
— People Safety & Environment Risk
— Process Risk
— Treasury Risk
— Project Risk
APA Divisions
– Implement Risk and Compliance Frameworks
– Own risks, controls and actions
– Own compliance risks and controls
– Review and report risk exposures
– Apply risk appetite in decisions
Independent Review
– Internal Audit
– External Audit
– Third party audits and reviews
Divisional Review
– Functional risk reviews
– Divisional audits and reviews
APA GROUP I ANNUAL REPORT 2020
39
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
11. Risk Management (continued)
11.1 Key risks
Listed below are a number of material risks that could affect APA. However, the risks listed may not include all risks associated
with APA’s ongoing operations. The materiality of risks may change, and previously unidentified risks may emerge.
Type of Risk
Description
Key Management Actions to Manage Risks
Strategic risks – risks arising from the industry and geographical environments within which APA operates, including its
markets, customers, brand and reputation, and regulatory policy.
Economic regulation APA has a number of significant assets and
— Strong regulatory and policy functions,
investments in its portfolio subject to economic
regulation, which includes the regulation of
prices that APA is permitted to charge for
certain services. Government policy in relation
to the Australian domestic gas market also
continues to develop. Changes in policy as to
which assets are regulated and the settings
applicable to regulated assets can impact APA’s
business.
APA’s future earnings may be reduced if
customers purchase gas transportation services
from new pipelines that by-pass or compete
with APA’s pipelines, rather than from APA’s
existing pipelines.
Bypass and
competition risk
active in regulatory management and policy
development.
— Assessment of key policy change proposals
for potential impacts on APA’s business.
— Structured and flexible services that leverage
APA’s capability and infrastructure.
— Customer relationship engagement and
pro-active management of business
development opportunities.
— Ensure costs and pricing associated with the
provision of services remains competitive and
provides value to the market.
— Asset management plans aligned with
capacity contracting strategy.
Gas demand risk
Reduced end user demand for gas driven by
its price (in Australia versus other countries),
relative to competing energy sources and new
technologies or gas swap contracts, may reduce
demand levels for services on APA's assets and
may adversely affect APA’s contracted revenue
and the carrying value of APA’s assets.
— Monitoring commodity markets, export
outlook and gas market developments for
throughput impacts.
— Flexible services supporting the needs of
customers, including gas fired generators.
— Long term gas storage /
transportation agreements.
Gas supply risk
Gas seen as an
unacceptable
source of energy
A long-term shortage of competitively priced
gas, either as a result of gas reserve depletion,
allocation of gas to other markets, or the
unwillingness or inability of gas production
companies to produce gas, may adversely
affect APA’s contracted revenue and the
carrying value of APA’s assets.
Shift in consumer sentiment due to community
and environmental focus on gas being
unacceptable as a fossil fuel rather than viewed
as a fuel to support a cleaner energy future.
This may adversely affect APA’s contracted
revenue and the carrying value of APA’s assets.
— Development of new and innovative services
that provide flexibility.
— Recontracting strategy and market
monitoring.
— Knowledge and monitoring of gas reserves to
identify potential opportunities.
— Leverage knowledge and understanding of
advances in the transportation of alternate
fuels utilising existing gas infrastructure.
— Develop strategies to broaden exposure to
markets which favour gas.
— Extend and refine strategies on alternate fuel
/ infrastructure consistent with APA’s outlook
on future energy mix.
Counterparty risk
The failure of a counterparty to meet its
contractual commitments to APA, whether
in whole or in part, could reduce future
anticipated revenue, unless and until APA is able
to secure an alternative customer.
— Portfolio of investment grade credit
rated customers.
— Strong counterparty credit due diligence with
customer credit exposures closely monitored.
— Contractual credit support arrangements
in place.
40
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
11. Risk Management (continued)
11.1 Key risks (continued)
Type of Risk
Description
Customer contract
renewal risk
Reputation risk
Due to a range of factors, APA may not be
successful in recontracting available pipeline
capacity or power generation capacity when
it comes due for contract renewal or may only
be able to recontract at reduced prices or
for shorter periods.
APA relies on a level of public acceptance for
the development and operation of its assets.
Changing societal and community sentiment
in relation to the energy industry as a whole,
as well as APA's business may impact APA’s
commercial opportunities, its ability to develop
new projects and operate its assets.
Climate
transition risk
APA and its customers may be adversely
affected by the transitional impacts of
climate change.
Key Management Actions to Manage Risks
— Recontracting strategy in place with close
monitoring of contract renewal portfolio.
— Monitoring of emerging gas supply
alternatives and power generation market
developments to identify new opportunities.
— Engagement with key stakeholders
(landowners, producers, customers,
government etc).
— Sustainable development initiatives.
— Industry engagement and implementation
of Energy Charter initiatives.
— Identification of climate transition risks
and undertaking scenario analysis resilience
testing of portfolio against a range of
recognised transition pathways.
— Commitment to disclose in accordance with
Task Force on Climate Related Financial
Disclosures (TCFD).
Financial risks – risks arising from the management of APA’s financial resources, accounting, tax and financial disclosure.
Interest rates and
refinancing risks
APA is exposed to movements in interest rates
where floating interest rate funds are not
effectively hedged. It also remains exposed
to refinancing risk if it is unable to replace an
existing loan with a new one at a critical time.
Foreign
exchange risks
Investment risk
Credit rating risks
APA is subject to currency fluctuations in
relation to the purchase, supply and installation
of goods and services revenue, and borrowings,
in a currency other than Australian dollars.
There can be no assurance that APA will be
able to effectively hedge its foreign currency
exposure, particularly in periods of significant
currency volatility, and/or that APA's hedges
will prove effective.
Assumptions and forecasts used in making
decisions to acquire assets and make
investments, may ultimately not be realised.
This may result in lower than expected returns,
unanticipated costs, new skillsets or capabilities
needing to be acquired, new types of regulatory
approvals being needed where APA has
limited experience.
Any downgrade in APA's credit rating could
harm its ability to obtain financing, could
increase its financing costs or cause the
instruments governing APA's future debt
to contain more restrictive covenants.
— Risk limits set by the Board and
managed in line with APA’s Treasury Risk
Management Policy.
— Debt structured to spread maturities over
a number of years.
— Maximum and minimum interest rate
hedging levels defined and managed using
derivatives and debt issued at fixed interest
rates through to maturity.
— Access to broad range of global banking and
debt capital markets is maintained.
— Risk limits set by the Board and
managed in line with APA’s Treasury
Risk Management Policy.
— Derivative instruments used to hedge
non-AUD denominated revenue and expenses.
— Foreign currency borrowings fully hedged.
— Corporate and asset models underpinning
investment decisions independently reviewed.
— Oversight by APA’s Due Diligence Committee
for material investment transactions.
— APA’s Capital Management strategy is
formulated to ensure the credit ratings are
maintained at target levels.
— Board approves all treasury transactions with
counterparties falling below defined credit
rating thresholds.
— Counterparties are risk assessed with
credit ratings monitored and credit support
obtained to limit risk exposure.
APA GROUP I ANNUAL REPORT 2020
41
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
11. Risk Management (continued)
11.1 Key risks (continued)
Type of Risk
Description
Key Management Actions to Manage Risks
Operational Risks – risks arising from inadequate or failed internal processes, people or systems or from external events
including construction and corporate projects, technology, environment, and health and safety.
Asset operations
risk
APA is exposed to a number of risks affecting
operations including those resulting in
equipment failures or breakdowns, pipeline
ruptures, employee or equipment shortages,
workplace safety issues, environmental
damage, contractor defaults, damage by
third parties, integration incidents from
acquired or newly constructed assets and
damage from natural hazards, sabotage or
terrorist attacks including the physical risks
associated with climate change.
— Operations are subject to operational
and process safety and environment
management programs.
— Asset management and maintenance
of engineering standards, including
integrity monitoring and maintenance
programs as part of risk-based asset life
cycle management.
— Asset operational monitoring through
control rooms to manage flows and asset
maintenance issues.
— Comprehensive insurance arrangements
provided as part of asset protection program.
Information
technology
and cyber risk
APA's operations rely on a number of
information technology systems, applications
and business processes utilised in the delivery
of business functions, including APA’s customer
management system, grid network and
integrated operations centre.
— APA’s information and technology
assets are managed in accordance with
recognised industry standards across
hardware, software, applications and
communication systems.
— Cyber security standards are applied
consistently across APA information and
technology systems, including those managed
by third party vendors, with standards
continually assessed against new threats
and vulnerabilities.
— Information and technology systems including
SCADA control systems, are subject to
regular reviews and independent testing.
— Leadership development and capability
programs in place.
— Expectations of behaviour set out in the APA
Code of Conduct.
— Recruitment practices in place.
— Talent management programs to identify and
develop technical and leadership personnel.
— Diversity and inclusion programs.
— Comprehensive training programs in place
to maintain and develop competencies.
— Access and approvals management for new
construction projects.
— Dedicated construction project management
capability and governance to manage
efficient, safe and quality delivery of
construction projects.
People and
culture risk
APA is dependent on its ability to attract,
engage, develop and retain the right employees
within a market where there is varying supply
of skilled workers. Expectations on the levels
of behaviour expected for employees aligned
to our values drive the culture on which leaders
are held to account.
Construction and
development risk
APA's business strategy includes the
development of new pipeline capacity,
renewable and gas-fired power generation
plants, gas storage facilities and gas processing
assets. This involves a number of typical
construction risks, including potential failure
to obtain necessary approvals, employee or
equipment shortages, third party contractor
failure, higher than budgeted construction
costs impacting liquidated damages,
and project delays.
42
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
11. Risk Management (continued)
11.1 Key risks (continued)
Type of Risk
Description
Key Management Actions to Manage Risks
Compliance risks – legal or regulatory risks arising in respect of laws, regulations, licences and recognised practising codes
including health, safety and environment, asset construction and operation, and other corporate compliance requirements.
Compliance and
operating licences
APA is subject to a range of operational
regulatory requirements including climate
change regulations, environmental laws
and regulations, occupational health and
safety requirements and technical and
safety standards. Changes in any such laws,
regulations or policies may increase compliance
requirements and costs.
— Comprehensive Enterprise Compliance
Management Framework with regulations
identified, controls monitored and assurance.
— Comprehensive safety management system
including safety compliance monitoring.
— Dedicated specialist teams providing asset
level assurance for technical, safety and
environment compliance.
Key emerging risks including threats and opportunities for APA include:
Risk (threats and opportunities)
Approach
Threat: Significantly more volatile and extreme
weather events impacting above ground
asset construction and operations.
Above ground asset protection measures in place to minimise impact
of extreme weather events with improvements including Bushfire
Management Plans covering enhanced awareness, vegetation
management and improved communications and training.
Property insurance cover in place.
Threat: Global economic slowdown impacting
investment and opportunities.
Continued strong investment opportunities with strong capital
management and customer credit monitoring.
Opportunity: New fuel sources providing medium
to long term sustainable growth opportunities.
Proactive investigation of new energies as part of strategy development.
Innovation projects into development of new energies.
Opportunity: Rise in digitisation including artificial
Intelligence and the Internet of Things provides
for safer and more efficient operations.
Pilot approach to opportunities in place, with tools and capability
established. Initial focus on supporting improving efficiency and
effectiveness in operations.
11.2 COVID-19 Crisis Management
In response to the COVID-19 pandemic and its impact on APA and the broader community, APA’s business continuity plans
were activated in February 2020 focusing on maintaining our critical facilities, such as the Integrated Operations Centre
(IOC), ensuring our essential field services could be maintained and provision of IT support services more broadly, to facilitate
remote working. APA’s overall priority was for the health and safety of our people and continued operations as an essential
service provider to our customers and the people of Australia.
At this time proactive stakeholder management also commenced with customers, government agencies, regulators and
key suppliers; initial operational plans were established, especially for critical sites and processes; and plans for provision
of IT services and equipment for employees working from home was prioritised. The APA Crisis Management Team (CMT)
was enacted in March 2020 reporting directly to the CEO and Managing Director, with daily check-ins with management
representatives across the country. Just over a week later, more than 1,000 normally office-based employees were working
remotely from home, whilst our more than 750 field-based employees continued to do their important work.
In line with government and health authority requirements across the States and Territories, the CMT worked through APA’s
initial response, achieving stability in containment and planning and executing plans for recovery. Key activities have included:
— Liaising with regulators, government agencies, industry groups, customers and suppliers;
— Determining essential service requirements and authorities/permits for employees including contractors working in APA’s
offices and at various field sites and construction projects, including those regularly crossing state borders;
— Ensuring all employees across our field sites and offices had COVIDSafe working arrangements in place including access
to health sanitisers and other equipment, changes to work practices to provide for social distancing and access to expert
health advice;
— Implementing split teams for control rooms and in some cases separate rosters and sites to maintain health and ensure
continuity of operations;
— Significant planning and additional controls to ensure critical maintenance and outage activities can continue to deliver
operational stability and reliability;
— Ensuring IT capability and capacity was available to all employees working from home and accelerating APA’s workplace
digitisation program with modern and secure office platforms. This also included additional cyber security awareness and
increased cyber surveillance; and
— Significant levels of ongoing communications and resources provided to support our people and assist in maintaining
health, safety, and wellbeing for extended periods of time.
APA GROUP I ANNUAL REPORT 2020
43
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
11. Risk Management (continued)
11.2 COVID-19 Crisis Management (continued)
There have been many challenging issues to deal with, and many successful and positive outcomes from COVID-19, including
but not limited to:
— No material safety or operational incidents during this time;
— Social distancing practices, new travel arrangements and revised operational protocols established to allow all our assets
to continue to operate and minimise the risks to the more than 700 employees who are continuing to work on sites or in
the field;
— Some of APA’s Fly-In Fly-Out employees converted to Drive-in Drive-Out arrangements for over three months to continue
to deliver services to remote assets and communities;
— Employees have embraced new technology and ways of working to adapt to remote working and continue to be productive
to deliver support to our customers, our front-line employees, and investors;
— Cross-functional groups have been established to identify and assist our vulnerable customers, distressed suppliers and
vulnerable employees;
— Technical and leadership training previously only delivered in person has been successfully converted to various digital
platforms, allowing skill development to continue and progress;
— Establishing special arrangements and protocols to continue to conduct critical maintenance outages including bringing
specialists from interstate and overseas, implementing additional quarantine and social distancing to keep people safe; and
— Our leaders have stepped up and learnt new skills to continue to lead their teams remotely and demonstrate the innovation,
agility and collaboration required in challenging circumstances like these.
Most of APA’s offices are now open again (excepting Victoria) with employees returning gradually in a phased and structured
way with new physical setups and protocols to ensure health and safety. With increased flexibility arrangements and new
technology platforms established, employees and leaders are working to determine the “new normal” in a post COVID-19
world, looking to capture and balance the best of both environments.
APA donates masks to Orbost Hospital during COVID-19 pandemic ~ strengthening the communities we are part of
APA Operations Coordinator and local resident Megan Humphries (far right), visited the hospital and met with the Orbost Hospital CEO to donate 720 masks
on behalf of APA.
During the 2019/20 summer bushfire crisis across Eastern Australia, APA’s Orbost Gas Plant in East Gippsland Victoria
was severely impacted by the smoke from surrounding fires. The plant had been undergoing a significant refurbishment
and upgrade program and was in the initial stages of the commissioning process. Personnel were evacuated from the
site due to both threat of fire, road closures and poor air quality.
APA implemented an Air Quality Management Plan to return APA employees and contractors back to site as soon as it
was safe to do so. One of the safety controls implemented under the plan, was the use of P2 N95 masks for when smoke
levels on site reached certain levels. P2 N95 masks filter out particulate matter contained in bushfire smoke, which can
cause respiratory irritation.
Once the fires and smoke in the area abated, the site had excess stock of the masks. At this time, the COVID-19 pandemic
had been declared by the World Health Organisation and personal protective equipment was in short supply globally,
and difficult to acquire. As the masks were of a grade also suitable for medical use, Midstream Operations Manager
Paul Rice contacted Orbost Hospital to see if they could use the masks. The hospital was extremely appreciative of the
donation as they had indeed been struggling to secure P2 masks to protect their medical personnel.
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APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
12. Directors
12.1 Information on Directors and Company Secretaries
See pages 06 to 07 for information relating to the qualifications and experience of Directors and Company Secretary Nevenka
Codevelle. Information on APA’s additional Company Secretary, Amanda Cheney, is below:
Amanda Cheney
LLB (Hons) BArts
General Counsel &
Company Secretary
(Effective 25 February 2020)
Amanda has been with APA Group since August 2012 and holds the role of General Counsel
and Company Secretary.
Amanda has over 18 years' experience in energy and infrastructure industries, having worked
as a senior projects lawyer in Australia and Japan. She holds a Graduate Diploma of Applied
Corporate Governance from the Governance Institute of Australia and is a member of the
Australian Institute of Company Directors.
12.2 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
financial year are as follows:
Name
Period of directorship
Company
Michael Fraser
Aurizon Holdings Limited
Since February 2016
Robert Wheals
—
—
Steven Crane
James Fazzino
Debra Goodin
nib holdings limited
SCA Property Group
Tassal Group Limited
Incitec Pivot Limited
Since September 2010, Chair since October 2011
Since December 2018
Since May 2020
July 2005 to November 2017
Senex Energy Limited
oOh!media Limited
Atlas Arteria Limited
Ten Network Holdings Limited
Since May 2014
Since November 2014 to February 2020
Since September 2017
August 2016 to November 2017
Shirley In't Veld
Northern Star Resources Limited
Alumina Limited
Since September 2016
Since August 2020
Rhoda Phillippo
Vocus Group Ltd
March 2015 (previously as M2 Group Ltd) to August 2018
Peter Wasow
Oz Minerals Limited
Alcoa Australia Limited
Since November 2017
January 2014 to July 2017
12.3 Directors’ meetings
During the financial year, 13 Board meetings, four Audit and Risk Management Committee meetings, four People and
Remuneration Committee meetings, four Health, Safety and Environment Committee meetings and four Nomination
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
Michael Fraser
Robert Wheals (1)
Michael McCormack (2)
Steven Crane
James Fazzino
Debra Goodin
Shirley Int’d Veld
Peter Wasow
Rhoda Phillippo (3)
Board
People &
Remuneration
Committee
Audit & Risk
Management
Committee
Health Safety
& Environment
Committee
Nomination
Committee
A
13
13
0
13
13
13
13
13
2
B
13
13
0
12
13
13
13
13
2
A
—
—
—
4
—
—
4
4
—
B
—
—
—
4
—
—
4
4
—
A
4
—
—
4
4
4
—
4
—
B
4
—
—
4
4
4
—
4
—
A
—
—
—
—
4
4
4
—
1
B
—
—
—
—
4
4
4
—
1
A
4
—
—
4
—
4
—
—
—
B
4
—
—
4
—
4
—
—
—
A: Number of meetings held during the time the Director held office or was a member of the committee during the financial year.
B: Number of meetings attended.
1) Robert Wheals appointed as a Director on 6 July 2019.
2) Michael McCormack retired as a Director on 5 July 2019.
3) Rhoda Phillippo appointed as a Director on 1 June 2020.
APA GROUP I ANNUAL REPORT 2020
45
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
12. Directors (continued)
12.4 Directors’ securityholdings
The aggregate number of APA securities held directly, indirectly or beneficially by Directors or their related entities at 30 June
2020 is 385,260 (2019: 721,576 (1)).
The following table sets out Directors’ relevant interests in APA securities as at 30 June 2020:
Directors
Michael Fraser
Robert Wheals (2)
Michael McCormack (3)
Steven Crane
Debra Goodin
James Fazzino
Shirley Int’d Veld
Peter Wasow
Rhoda Phillippo (4)
Fully paid
securities as at
1 July 2019
Securities
acquired
Fully paid
Securities securities as at
30 June 2020
disposed
102,942
38,883
350,000
130,000
23,000
30,751
25,000
21,000
—
721,576
—
7,505
—
—
1,179
—
—
5,000
—
13,684
—
—
—
—
—
—
—
—
—
—
102,942
46,388
—
130,000
24,179
30,751
25,000
26,000
—
385,260
1) At 30 June 2019 the aggregate number of APA securities held directly or beneficially by Directors or their related entities included 350,000 securities held by
Michael McCormack who retired on 5 July 2019. The aggregate number of APA Securities held directly or beneficially by the current Directors or their related
entities as at 30 June 2019 was 371,576.
2) Robert Wheals was appointed as a Director on 6 July 2019. He held 38,883 securities on appointment.
3) Michael McCormack retired as a Director on 5 July 2019. He held 350,000 securities on retirement.
4) Rhoda Phillippo was appointed as a Director effective 1 June 2020. She held nil securities on appointment.
As at 30 June 2020, Robert Wheals held 217,872 performance rights granted under APA Group’s long-term incentive plan.
Each performance right is a right to receive one ordinary stapled security in APA subject to satisfaction of certain performance
hurdles. Further information can be found in APA’s Remuneration Report on pages 48 to 62.
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.
13. Options Granted
In this report, the term “APA securities” refers to stapled securities each comprising a unit in Australian Pipeline Trust stapled
to a unit in APT Investment Trust and traded on the Australian Securities Exchange (ASX) under the code “APA”.
No options over unissued APA securities were granted during or since the end of the financial year, no unissued APA securities
were under option as at the date of this report, and no APA securities were issued during or since the end of the financial year
as a result of the exercise of an option over unissued APA securities.
14. Indemnification of Officers
During the financial year, the Responsible Entity paid a premium in respect of a contract insuring the Directors and Officers of
the Responsible Entity and any APA Group entity against liability incurred in performing those roles to the extent permitted by
the Corporations Act 2001. The contract of insurance prohibits disclosure of the specific nature of the liability and the amount
of the premium.
Australian Pipeline Limited, in its own capacity and as responsible entity of Australian Pipeline Trust and APT Investment
Trust, indemnifies each Director and Company Secretary, and certain other executives, former executives and officers 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. 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 financial year, indemnified or agreed to indemnify an officer
or external auditor of the Responsible Entity or any APA Group entity against a liability incurred by such an officer or auditor.
46
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directors’ report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
15. Remuneration Report
The Remuneration Report is attached to and forms part of this report.
16. Auditor
16.1 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 115.
16.2 Non-audit services
A description of any non-audit services provided during the financial year by the Auditor and the amounts paid or payable to
the Auditor for these services are set out in Note 27 to the financial statements.
The Board has considered those non-audit services provided by the Auditor and, in accordance with advice provided by the Audit
and Risk Management Committee (Committee), is satisfied that the provision of those services by 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 of the Auditor;
— 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 Auditor’s independence and the Auditor’s
independence declaration referred to above.
Information Required for Registered Schemes
17.
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 financial
year are disclosed in Note 28 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 financial year, and the number of APA securities on issue at the end of the
financial year, are disclosed in Note 21 to the financial statements.
The value of APA’s assets as at the end of the financial year is disclosed in the balance sheet in total assets, and the basis of
valuation is disclosed in the notes to the financial statements.
18. Rounding of Amounts
APA is an entity of the kind referred to in ASIC Corporations Instrument 2016/191 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.
19. Corporate Governance Statement
Corporate Governance Statement for the financial year is available at APA’s website on https://www.apa.com.au/about-
apa/our-organisation/corporate-governance/.
10. Authorisation
The Directors’ Report is signed in accordance with a resolution of the Directors of the Responsible Entity made pursuant to
section 298(2) of the Corporations Act 2001.
On behalf of the Directors
Michael Fraser
Chairman
Sydney, 26 August 2020
Debra Goodin
Director
APA GROUP I ANNUAL REPORT 2020
47
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
remuneration report.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
letter from the chairman of the people and remuneration committee
I am pleased to present APA Group’s Financial Year 2020 (FY2020) Remuneration Report (Report).
FY2020 performance
Despite the challenging market conditions and operating environment, APA continued to focus on providing our customers
with essential services of gas transportation and energy generation during this year.
In this context, Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) for FY2020 was $1,654 million, an
increase of 5.1% or $80.2 million over FY2019.
APA’s liquidity position remains robust and has withstood strong headwinds. APA holds significant cash reserves, has
committed undrawn facilities and access to liquid debt capital markets.
APA has paid an interim and full year distribution every year for the 20 years since listing, and distributions have grown each
year. This year is no different. Our distribution per security of $0.50 for FY2020 represents a 6.4% increase on FY2019.
Strategic executive renewal
FY2020 was a transitional year for the APA executive team, with a number of Key Management Personnel (KMP) changes
and senior leadership appointments. The ongoing focus by the Board to ensure APA is led by talented and capable people
was demonstrated by the appointment of Rob Wheals, who commenced as APA’s new Chief Executive Officer and Managing
Director on 6 July 2019. Further key executive appointments included:
— Ross Gersbach, the former Chief Executive Strategy and Development was appointed to the new role of President North
American Development;
— Darren Rogers was appointed to the newly created role of Group Executive Operations; and
— Hannah McCaughey, formerly from Ausgrid, joined APA in March 2020 as Group Executive Transformation and Technology.
In addition to the internal promotions, Julian Peck has been appointed as the Group Executive Strategy and Commercial. He joined
us most recently from Morgan Stanley and commenced in August 2020.
Adam Watson most recently from Transurban Group will join APA in November 2020 as Peter Fredricson retires as Chief
Financial Officer in December 2020.
Remuneration changes during FY2020
During the year, the People and Remuneration Committee reviewed APA’s executive remuneration framework and made a
number of changes to more effectively link Securityholder outcomes with executive reward, and focus executives on achieving
long-term sustainable performance.
We value and have listened to Securityholder feedback. In response changes have been made to both the Short Term Incentive
(STI) and Long Term Incentive (LTI) plans.
The Board recognises that management has far greater capacity to influence long term returns than short term performance.
A key design objective therefore was to reduce the proportion of total remuneration paid as a cash short term incentive and
to increase the proportion paid as a long term incentive. The new overall design was fully implemented for Mr. Wheals upon his
appointment and will be applied for newly hired KMPs. For other executives the new STI and LTI plans were implemented in FY2020
with revisions to overall pay mix to follow in time. In addition, it was considered desirable that more of the total should be paid in
equity with holding periods, during which the executive is not able to sell securities that were issued under either the STI or LTI plans.
Further detail regarding these changes can be found in section 3.2 of the Remuneration Report.
Remuneration outcomes for FY2020
FY2020 presented challenges for APA in dealing with the impact of COVID-19 and an internal refocusing of the Company’s
culture on customer and community outcomes. The delay in commissioning of the Orbost Gas Processing Plant has had an
impact on company performance and accordingly also on incentive outcomes. The Board has sought to align the experience
of Securityholders’ and the level of STI payments.
While making these judgements, the Board recognises the performance and contribution of all our people. The ability of the
APA team to support our Customer Promise by delivering a significant proportion of Australia’s energy requirements both
safely and reliably during what have been unprecedented times is to be applauded.
FY2021 remuneration approach
We recognise our ongoing success relies on attracting and retaining high performing people. A key focus for FY2021 is to
maintain a fair approach to remuneration and ensuring that our executive reward framework supports the achievement of
our business strategy, particularly over the longer term.
Finally, there were no increases to Non-executive Director (NED) fees for FY2020, and it has been determined not to increase NED
fees for the coming year.
I hope you find this Remuneration Report informative. We look forward to receiving your support at the 2020 AGM.
Peter Wasow
People and Remuneration Committee Chairman
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remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Individuals covered by the Remuneration Report
1.
The Remuneration Report (the Report) for APA for FY2020 has been prepared in accordance with Section 300A of the
Corporations Act 2001. The information provided in this Report has been audited as required by Section 308(3C) of the
Corporations Action 2001, unless indicated otherwise, and forms part of the Directors’ Report.
This Report includes the following Key Management Personnel (KMP):
— Non-executive Directors (NEDs) – current and former; and
— Executive KMP – current and former.
Name
NEDS
Role
Term as NED/KMP in FY2020
Michael Fraser
Chairman
Steven (Steve) Crane
James Fazzino
Debra (Debbie) Goodin
Shirley In’t Veld
Rhoda Phillippo
Peter Wasow
Executive KMP
Director
Director
Director
Director
Director
Director
Full year
Full year
Full year
Full year
Full year
Part year (1)
Full year
Robert (Rob) Wheals
Chief Executive Officer and Managing Director (CEO/MD) (2) Full year
Peter Fredricson
Ross Gersbach
Chief Financial Officer (CFO)
President North American Development (3)
Chief Executive Strategy and Development
Darren Rogers
Group Executive Operations
Michael (Mick) McCormack
Former CEO/MD
Full year
Full year
Full year
Part year (4)
Part year (5)
1) Appointed 1 June 2020.
2) Appointed 6 July 2019. Formerly Group Executive Transmission.
3) Formerly Chief Executive Strategy and Development. Appointed President North America and re-located to the US on 1 October 2019.
4) Appointed 1 November 2019. Formally acting in the role from 13 June 2019.
5) Retired on 5 July 2019.
2. Executive Summary
2.1 APA’s financial performance FY2016 to FY2020
The table below summarises APA’s financial performance from FY2016 to FY2020.
Normalised financial results (6)
FY2016
FY2017 FY2018 FY2019 FY2020
Earnings Before Interest Tax Depreciation and Amortisation (EBITDA)($m)
1,330.5
1,470.1
1,518.5
1,573.8
1,653.9
Profit after tax ($m)
Operating cash flow per security (cents) (7)
Distribution per security (cents)
Closing security price at 30 June ($)
179.5
236.8
264.8
288.0
77.1
41.5
9.24
87.1
43.5
9.17
90.7
45.0
9.85
85.8
47.0
10.80
317.1
92.9
50.0
11.13
6) Normalised financial results are the statutory financial results excluding significant items. The Board considers these measures to best reflect the core earnings
of APA.
7) The number of securities used for the calculation of operating cash flow per security from FY2018 to FY2016 has been adjusted by an adjustment factor of 1.0038
to reflect the discounted rights offer issued in March 2018.
Incentive Outcomes
STI outcomes
The EBITDA STI gate opener was achieved and executive KMP were eligible to receive an STI payment for FY2020.
STI performance was assessed against a balanced scorecard of financial and non-financial performance measures. Executive
KMP STI outcomes for FY2020 are summarised in the below table.
CEO / MD
Executive KMP average
STI outcome as
% of target
STI outcome as
% of maximum
83.3%
87.2%
55.5%
58.1%
APA GROUP I ANNUAL REPORT 2020
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remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
2. Executive Summary (continued)
Legacy LTI Plan outcomes
APA assesses performance for the purpose of LTI allocation with reference to our relative Total Security holder Return (TSR)
and a return on capital measure, APA achieved a relative TSR of 77.2%, which equated to a grant of 91.1% of eligible reference
units under the relative TSR performance hurdle. The return on capital hurdle, EBITDA/Funds Employed (FE), achieved a score
of 53.3%. Taken together 72.2% of potential LTI was allocated in FY2020.
2,500
TSR
34.4
35.0
35.5
38.0
36.3
32.8
31.0
29.5
28.0
22.0
21.5
21.5
21.5
22.5
24.0
2,000
1,500
1,000
500
0
TSR: 2.201%
CGAR: 16.9% pa
43.5 45.0
41.5
Cents
60.0
50.0
50.0
47.0
40.0
30.0
20.0
10.0
0
Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17
Jun 18
Jun 19
Jun 20
Distributions (RHS)
APA TSR (LHS)
ASX 100 TSR (LHS)
ASX 200 Utilities TSR (LHS)
Minimum security holding requirements
The Directors (except for Rhoda Phillippo who was appointed during the financial year), CFO and President North American
Development met the minimum security holding requirement. The CEO/MD and remaining executive KMP continued to
progress towards the expected level for this requirement.
NED fees
There were no increases to NED fees in FY2020.
2.2 FY2020 remuneration
The Actual Remuneration detailed in the table below is different from the statutory remuneration disclosed in Section 8.
Statutory remuneration is disclosed in accordance with the Accounting Standards and Corporations Act. The table below
applies the following calculations:
— Fixed pay as paid during the year
— Cash STI awards earned in respect of performance for the year
— Deferred STI awards from prior years which have vested in the year
— LTI which has vested under the historical LTI plan
Termination and leave payments are excluded in this table.
Executive KMP
R Wheals
P Fredricson
R Gersbach
Fixed pay
$ (8)
Other
$ (9)
STI vested
from prior
years deferred
Cash STI
$ (10)
equity $ (11)
$1,586,413
$950,000
—
—
$529,061
$393,775
$969,000
$376,897
$422,969 (13)
LTI vested
$ (12)
Total
$
$392,089
$2,507,563
$451,560
$1,759,335
$460,877
$2,229,743
$62,027 (14)
$720,316
—
—
—
—
D Rogers (part year)
$506,580
—
$151,709
This table supplements, and is different to, the Statutory Remuneration table in section 8.1, which presents the accounting
expense for both vested and unvested awards in accordance with Australian Accounting Standards.
Note that Cash STI for Mr. Fredricson and Mr. Gersbach has had no deferral applied due to Mr. Fredricson meeting the
minimum securityholder requirement and due to USA tax implications for Mr. Gersbach.
8) Fixed pay is inclusive of cash salary and any salary sacrifice items (including any relevant fringe benefits tax) such as car parking, motor vehicles and superannuation.
9) This includes the value of benefits relating to Mr. Gersbach’s secondment to the USA and includes relocation allowances and assistance as well as cost of living
adjustment. Costs are inclusive of USA tax impacts and are split between one-off relocation costs of $161,894 (48%) and $172,618 (52%) on-going costs as well as
foreign exchange rate differences for USD fixed pay.
10) Cash STI refers to the cash portion of the STI, relating to performance in FY2020. Payment will be made in September 2020.
11) Deferred STI refers to the equity portion of the STI. Deferred STI was first introduced in FY2020 and consequently no deferred securities vested in FY2020.
12) LTI vested refers to the cash amount to be paid in September 2020, based on the VWAP of $11.1579 and number of reference units that vested in August 2020
as outlined in section 8.4.
13) This is all paid as cash due to the secondment to the USA.
14) This is in relation to allocations made prior to KMP status.
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remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
3. Executive remuneration policy and framework
3.1 Remuneration policy
The Board recognises the important role remuneration plays in supporting and implementing the achievement of APA’s
operational strategy over both the short and longer terms. The key principles of the remuneration policy are listed below.
Market competitive
Provide competitive rewards to attract, motivate and retain highly skilled executives
Business strategy
Drive delivery of APA’s growth strategy, while maintaining its financial strength
Behaviours
Drive delivery of HSE strategy; caring for people, communities, the environment and our assets; living the APA values
Securityholder alignment
Ensure executive performance and behaviours align with the interests of Securityholders
3.2 Executive remuneration framework for FY2020
APA’s remuneration objective is to reward executives at the median of observed total remuneration for selected comparable
companies when performance is at target and up to the 75th percentile for above target performance. The following table
summarises the executive remuneration structure for FY2020.
Performance period
N/A
Fixed pay
STI
One year
LTI
Three years
Delivery vehicle
Cash salary and other
benefits including statutory
superannuation
Cash (67%) and deferred
equity (33%) delivered as
restricted securities
New plan: Performance rights
Legacy plan: Cash-settled
Delivery timeframe
One year
Restricted securities vest
at the end of the two-year
holding lock period
Opportunity
Executive KMP roles are
benchmarked against
external positions in
companies with comparable
market capitalisation,
operating in similar industries
and key competitors
CEO/MD: Target STI
opportunity of 60% of
fixed pay and maximum
STI opportunity of 90%
of fixed pay
Executive KMP: Target
STI opportunity of 50%
of fixed pay and maximum
STI opportunity of 75%
of fixed pay
New plan: Performance rights
vest subject to performance in
year three. Vested rights are
released in equal tranches at the
end of years three, four and five
Legacy plan: Reference
units vest in equal tranches
one, two and three years
following allocation.
CEO/MD: Maximum LTI
opportunity of 150%
of fixed pay
Executive KMP: Maximum
LTI opportunity of 75%
of fixed pay
Minimum security
holding requirement
The CEO/MD is required to hold securities equal to the value of fixed pay
Executive KMP are required to hold securities equal to 50% of fixed pay
Transition between legacy LTI plan and new LTI plan
FY2020 was the final year of awards allocated under the legacy LTI plan. To facilitate the transition to the new LTI plan, and
ensure executives were neither advantaged nor disadvantaged as a result of the new executive remuneration framework,
both the legacy and new LTI plans operated during FY2020. Further details regarding both LTI plans can be found in section
3.5 of the Remuneration Report.
APA GROUP I ANNUAL REPORT 2020
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remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
3. Executive remuneration policy and framework (continued)
3.3 Fixed pay
Fixed pay includes base salary and any salary sacrifice items (including any relevant fringe benefits tax) such as car parking,
motor vehicles and superannuation. The level of fixed pay is based on multiple factors, including the skills and experience of
the individual, external market positioning and the size and complexity of the role.
3.4 STI plan
Design
Purpose
Description
The purpose of the STI plan is to reward executives for their contribution to APA’s short-term
performance during the performance period.
Performance period
One year.
Deferral
One third of the STI award will be deferred into APA restricted securities for two years
and until such time as an executive achieves the minimum security holding requirement.
Once the minimum security holding requirement is met executives can receive 100%
of the STI as cash.
Target and Maximum STI — CEO/MD – 60% at target and a maximum of 90% of fixed pay
— Executive KMP – 50% at target and a maximum of 75% of fixed pay
Performance measures
Performance is assessed against a scorecard of financial measures including EBITDA and
growth in invested capital, and non-financial measures including strategic, health, safety
& environment and people & culture objectives.
Priority
Financial
performance
and financial
strength
Description
— EBITDA
— Maintain APA’s financial strength including credit ratings
— Effective capital management
— Ensure costs are controlled and justifiable
Growth &
Innovation
— Grow our pipeline and midstream portfolio
— Expand renewable and gas power generation
North America — Explore with a view to securing growth opportunities in our core business
of gas transmission and distribution in North America
Health,
Safety and
Environment
Customer &
Stakeholder
Management
People &
Culture
— Improve safety and environmental performance and culture through
delivery of HSE strategy. Total Recordable Injury Free Rate (TRIFR)
performance for employees and contractors. Environmental
Management Plans (EMP) in place
— Deliver services to our customers consistent with the APA Customer
promise and strengthen stakeholder management
— Improve organisational structure and culture to deliver APA purpose
and strategic imperatives
Board discretion
The Board has absolute discretion in relation to assessing performance and determining
the amount, if any, of STI awards.
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remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
3. Executive remuneration policy and framework (continued)
3.5 LTI plans
To ensure that executives were neither advantaged nor disadvantaged, the implementation of the new LTI plan in FY20, required
that eligible executives also participate in a final grant of the former long term instrument. Taken together, both the old and the
new schemes ensure that executives will have LTI grants being subject to a continuous set of performance periods.
A summary of the new and legacy LTI plan is provided below:
Feature
Purpose
Delivery
New LTI plan
Legacy LTI plan
The LTI focuses on long-term APA performance, aligning the interests of executives with
Securityholders by rewarding for the achievement of APA’s long-term business strategy.
Performance rights.
Cash.
Performance period
Three-years (forward-looking).
Three years (retrospectively).
Timing and delivery
LTI awards will vest at the end of the
performance period and will be released in
three equal annual instalments following
the end of the three-year performance
period. Subject to the satisfaction of
performances measures, performance rights
will vest to executives for nil exercise price or
consideration.
Allocation
Performance rights are allocated at face
value using a 30-day volume weighted
average price (VWAP).
The LTI grant vests in three equal instalments
over the three financial years following the
allocation of reference units, with the initial one-
third vesting at the end of the first financial year
following the first award, one third at the end of
the second financial year, and one-third at the
end of the third financial year following grant.
For example, the first tranche of the FY2020
award will vest in August 2021.
Reference units are allocated using a
30-day VWAP.
Performance measures
Relative TSR (50% weighting) measures the Group’s TSR performance over a three year period
relative to a market peer group comprising S&P/ASX 100 companies.
Relative TSR vesting
schedule
Return on Capital (ROC) (50% weighting) is calculated by dividing EBITDA by Funds Employed
(FE). The ROC hurdle measures APA Group’s cash flow leverage achieved based on operating
assets over a three year performance period.
The LTI award vests in accordance with the
following scale:
Relative TSR
percentile ranking
% of awards
that vest
The LTI award vests in accordance with the
following scale:
Relative TSR
percentile ranking
% of awards
that vest
ROC vesting schedule
— Below 50th
percentile
— Between 50th and
82.5th percentile
— Nil
— Straight line
pro-rata vesting
between 50% and
150% of eligible
reference units
The LTI award vests in accordance with the
following scale:
ROC growth above
target (EBITDA/FE)
% of awards
that vest
— Less than 4.69%
— 0% of eligible
reference units
— Between 4.69%
— Sliding scale
and 6.26%
between 80%
and 150% of
eligible reference
units
— Below 50th
percentile
— At 50th percentile
— Between 50th and
82.5th percentile
— Nil
— 50% vesting
— Straight line
pro-rata vesting
between 50%
and 100%
— At 82.5th
— 100%
percentile or above
The percentage of performance rights
comprising the ROC component that vest,
if any, will be based on APA Group’s ROC
as reflected by the Group’s earnings before
interest, tax, depreciation and amortisation
(EBITDA) divided by it funds employed
(which represents the assets of the business
used to derive revenue) with reference to
the following vesting schedule:
ROC (EBITDA/FE)
— Less than 11.00%
— Equal to 11.00%
— Greater than
11.00% up to
11.30%
% of awards
that vest
— 0%
— 33%
— Straight line
pro-rata vesting
between 33%
and 100%
— At or above 11.30%
— 100%
Retesting
Re-testing of LTI awards is not permitted.
APA GROUP I ANNUAL REPORT 2020
53
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
3. Executive remuneration policy and framework (continued)
3.5 LTI plans (continued)
ROC Component calculation
The ROC is calculated as an average over three years, under the new LTI plan it is the average of EBITDA for the current and
the following two financial years. The calculation of funds employed is as follows:
Total Assets on the balance sheet adjusted for:
1) Deduct: Capital work in progress balances (per Note 11 in the FY2020 Financial Statements). This represents expenditure
balances for assets which are under construction as at balance date and are therefore not yet earning revenue;
2) Deduct: Other Financial Instruments Assets Current & Non-Current but excluding Redeemable Preference Share balances
(per Note 20 in the FY2020 Financial Statements);
3) Add back: Working capital related to assets under construction; that is, trade creditors and accruals outstanding at
balance date relating to capital work in progress. These balances reside in Note 10 in the FY2020 Financial Statements,
however are not separately identifiable; and
4) Normalise: Cash balances to $30 million. For example: $1,172.771 million cash was held at 30 June 2020, however this was
normalised back to $30 million, therefore, $1,142.771 million was deducted from total assets.
Total Assets, and Items (1), (2) and (4) have the most material impact on the measure, and these are all able to be determined
separately from the financial statements and notes. Item (3) is unable to be determined from the financial statements and
notes but typically has only a minor impact on the measure.
The calculation of the three year average (FE) is the average of seven data points as at the June and December half year
ends for the current financial year and following two financial years, including the opening balance for the first year. For
example, the FY2021 calculation is based on the following balance dates: June 2020, December 2020, June 2021, December
2021, June 2022, December 2022, and June 2023. Note that Items (1) and (2) are not separately disclosed in half year end
Financial Statements. However, using the full year Financial Statements balances provides a reasonable approximation of
the performance condition outcomes.
Calculation of ROC will be determined by the Board and the Board retains discretion to adjust EBITDA and funds employed
to account for extraordinary items or otherwise ensure that inappropriate outcomes are avoided.
3.6 Executive remuneration mix
The following graphs illustrate the target remuneration mix for APA’s CEO/MD and Executive KMP during FY2020 (15).
CEO/MD pay mix @ target
Executive KMP pay mix @ target
Fixed: 32%
STI cash: 13%
STI deferred equity: 7%
LTI: 48%
Fixed: 44%
STI cash: 15%
STI deferred equity: 7%
LTI: 34%
15) Note that LTI is calculated assuming full vesting of LTI at the value per security when first granted
4. FY2020 executive incentive outcomes
4.1 FY2020 STI scorecard outcomes – CEO/MD
The Board reviewed the CEO/MD’s performance in light of APA’s performance in FY2020, taking into account his performance
against the key performance indicators (KPIs) in his STI scorecard, and determined that the STI outcome is 88.3% of the
target and 58.9% of maximum. In light of the Orbost Gas Processing Plant delays the Board exercised its discretion to
reduce the overall outcome by 5% to 83.3% and 55.5% of maximum.
Scorecard measures
Overall
FY2020 performance outcomes
Adjusted by Board discretion due to Orbost Gas Processing Plant delay
Performance
outcome as a
% of target
88.3%
83.3%
Financial – EBITDA (35% weighting)
EBITDA is the primary financial measure which we
use to measure operational performance at APA.
54
APA GROUP I ANNUAL REPORT 2020
— APA’s FY2020 EBITDA was $1,654m, which was between
27.1%
threshold and target.
— The result represents growth of 5.1% on prior year
performance.
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
4. FY2020 executive incentive outcomes(continued)
4.1 FY2020 STI scorecard outcomes – CEO/MD (continued)
Scorecard measures
FY2020 performance outcomes
Financial – Growth in invested capital (15% weighting)
Performance
outcome as a
% of target
Capex encourages the business to grow through
new developments and organic growth projects.
— Growth capex for FY2020 has been assessed at $152.6m
15.2%
which was above target (101%)
Strategic (20% weighting)
Progress APA’s strategy to grow APA’s portfolio
of assets in Australia and the USA.
— FY2020 performance assessed at target
20.0%
— Substantial progress in the USA strategy in line with the
Performance is also assessed against
improvement in areas of customer,
regulatory and stakeholder engagement.
Health, Safety & Environment (10% weighting)
Improve the health, safety and environmental
performance outcomes and culture, including
process safety, measured by key metrics and
HSE Strategy progress.
Board’s expectations
— Improvements in customer initiatives and scores,
regulatory outcomes and stakeholder engagement
delivered at just below target
— Overall performance between threshold and target (65%)
6.5%
— FY2020 TRIFR deteriorated and was not achieved
— Process safety improvements on track, some metrics
not achieved
— HSE strategy in place
— Environmental performance on track
People & Culture (20% weighting)
Establish new operating model for APA in line with
Group Purpose and Vision, and continue to develop
and improve APA culture in line with APA values
and D&I strategy.
— FY2020 performance was above target
19.5%
— A new organisational model implementation well progressed
— D&I targets were met and initiatives on track
4.2 FY2020 Performance scorecard outcomes – Executive KMP
Detailed below are the individual scorecard outcomes for the Executive KMP. While there are a number of shared KPIs,
different weightings and KPIs have been set for each Executive KMP, reflecting the nature of their role and contribution to
APA’s business outcomes. In light of the Orbost Gas Processing Plant delays the Board exercised its discretion to reduce the
overall outcome for impacted executives by 5%.
Scorecard measures
FY2020 performance outcomes
P Fredricson
— Financial & Risk Management (55%)
— Strategic (20%)
— Safety & Environment (10%)
— People & Culture (15%)
R Gersbach
— Financial & Risk Management (35%)
— Strategic (40%)
— Safety & Environment (10%)
— People & Culture (15%)
D Rogers
— Financial & Risk Management (40%)
— Strategic (20%)
— Safety & Environment (20%)
— People & Culture (20%)
Performance
outcome as a
% of target
87.9%
Board
adjusted to
82.9%
— APA’s FY2020 EBITDA was $1,654m, which was between
threshold and target.
— The result represents growth of 5.1% on prior year performance.
— New capital management plan in place
— Safety and People outcomes in line with CEO/MD outcomes
— Substantial progress in the USA strategy in line with the Board’s
92.3%
expectations
— Commercial and strategy outcomes on target
— Safety and People outcomes in line with CEO/MD outcomes
Board
adjusted to
87.3%
— Introduction of operational excellence framework
91.4%
— Led organisational model implementation impacting all operations
— Mixed safety performance
APA GROUP I ANNUAL REPORT 2020
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
4. FY2020 executive incentive outcomes (continued)
4.3 FY2020 STI outcomes – Executive KMP
The table below provides an overview of the STI outcomes for FY2020.
STI earned
STI forfeited
Executive KMP
$ cash
$ deferred
$ total
earned (16)
% of maximum
opportunity
$ foregone
% of maximum
opportunity
R Wheals
P Fredricson
R Gersbach
$529,061
$393,775
$422,969
$264,531
—
—
D Rogers (part year)
$151,709
$75,855
$793,592
$393,775
$422,969
$227,564
55.5%
55.3%
58.2%
60.9%
$635,445
$318,725
$303,781
$145,899
44.5%
44.7%
41.8%
39.1%
16) Includes both the cash and deferred components of the STI.
4.4 Legacy LTI plan – FY2020 outcomes
A summary of the LTI awards that were tested and/or vested during the FY2020 financial year are outlined below. The
FY2020 legacy LTI plan award was tested during the financial year and will vest in three equal tranches over the next three
financial years.
Year of allocation
Relative TSR (50%)
LTI awarded
% of eligible
ROC (50%) reference units
FY2020
FY2019
FY2018
FY2017
91.1
51.5
0
73.4
53.3
79.7
63.6
83.2
72.2
65.6
31.8
78.3
Below is a summary of the resulting LTI allocations under the legacy LTI plan relating to FY2020, based on performance
against the hurdles over the three-year performance period preceding the grant date. These units were allocated in August
2020 and will be settled in cash at the end of the respective vesting periods.
Executive KMP
R Wheals (17)
P Fredricson (18)
R Gersbach (19)
D Rogers (part year) (20)
Number of reference
units allocated
Value of allocation
yet to vest ($)
42,507
46,125
47,046
24,174
$474,289
$514,658
$524,935
$269,731
17) Calculated on Fixed pay as Group Executive Transmission plus 3% effective 1 July 2019.
18) Calculated on Fixed Pay effective 1 July 2019.
19) Calculated on Fixed Pay effective 1 July 2019.
20) Calculated on Fixed Pay as Group Executive Operations effective 1 November 2019.
4.5 New LTI plan
FY2020 was the first year of the awards under the new LTI Plan. Performance for the first award will be assessed at the
conclusion of the performance period in June 2022.
5. Other Remuneration Elements
5.1 Contractual arrangements
Remuneration arrangements for Executive KMP are formalised in individual employment agreements. Termination
arrangements, in addition to normal statutory entitlements, are summarised in the table below.
Contract type
Notice period
CEO/MD
Permanent
Nine months’ notice by either APA or CEO/MD.
APA may provide payment in lieu of notice.
No notice is required by APA for termination for cause.
Additional payments on termination
Nine months TFR (instead of
a notice period or payment in
lieu of notice), where CEO/MD
terminates employment due to his
redeployment to another role within
APA Group or a reduction in his TFR.
Termination by APA: termination
payment of 13 weeks’ (21) pay
Executive
KMP,
other than
CEO/MD
Permanent
Six months’ notice by either APA or KMP.
APA may provide payment in lieu of notice.
No notice is required by APA for termination for cause.
Termination by KMP: Nil
21) Both the payment in lieu and the 13 weeks’ termination payments are calculated using the KMP’s fixed pay. The 13 weeks’ termination payment is inclusive of
any statutory redundancy pay.
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
5. Other Remuneration Elements (continued)
5.2 Additional provisions
The table below summarises additional provisions as they relate to the remuneration of Executive KMP for FY2020:
Provision
STI
LTI
Malus / Clawback
The Board in its discretion may determine that some, or all, of an Executive KMP's STI and/or
LTI awards be forfeited or be subject to a clawback in the event of misconduct or of a material
misstatement in the year-end financial statements in the preceding three years.
Cessation of
employment
Change of control
If a participant resigns or is dismissed (with
or without notice), any unpaid STI awards are
forfeited. If an employee leaves for any other
reason, an STI award may be paid out based on
the proportion of the period that has passed
and performance at the time of cessation
(subject to Board discretion). STI Awards as
deferred securities are released on termination.
If a participant resigns (and is considered a bad
leaver) or is dismissed (with or without notice),
all unvested reference units are forfeited. If
an employee leaves for any other reason, the
Board determines the number of reference
units which will lapse or are retained, subject
to vesting on the original schedule.
Subject to Board discretion, if a change of control
occurs, an STI award will be paid out based on
the proportion of the period that has passed at
the time of change of control to the extent to
which performance conditions have been met.
Subject to Board discretion, if a change
of control occurs, all previously allocated
reference units will vest to the extent to
which performance conditions have been met,
i.e. tenure.
5.3 Executive KMP Minimum security holding requirement
The minimum security holding requirement helps to ensure the alignment of the interests of Executive KMP and Securityholders.
Executive KMP (22) are expected to grow their holding to the minimum security ownership requirement within five years from
the implementation of the Minimum Security Holding Policy in 2016.
For FY2020, the CFO and President North American Development met the minimum security ownership requirement. The
CEO/MD and remaining Executive KMP continued to progress towards the expected level for this requirement. Details of
Executive KMP security holdings may be found in section 8.5.
5.4 Sign-on / loans / termination payments provided to Executive KMP
APA did not pay any sign-on payments to Executive KMP during FY2020.
No loans have been made to any Executive KMP and/or related parties.
5.5 Outgoing CEO/MD’s contractual entitlements
As flagged in the FY2019 Remuneration Report, Mr McCormack retired 5 July 2019 and was entitled to certain termination
payments per the conditions of his contract. The former CEO/MD received a payment totalling $6,592,545 (23).
In addition, 131,477 reference units under the Legacy LTI plan with a value of $1,467,007 will be paid in August 2020. Mr.
McCormack is also entitled to further reference units due to be paid in August 2021 (139,316 units), August 2022 (115,528 units)
and August 2023 (70,753 units) (24).
Set out below is a summary of the key components of the former CEO/MDs termination payment.
Element
Description
Statutory
entitlements
Fixed remuneration for the period worked during FY2020 (1 July 2019 to 5 July 2019).
Accrued statutory leave entitlements including annual leave and long service leave.
Payment in lieu
of notice
Payment in lieu of notice
52.5% of annual TFR for the period not worked plus 52.5% of maximum FY2020 STI and LTI opportunities.
Restraint Period
105% of TFR and 105% of maximum FY2020 STI and LTI opportunities.
Treatment
of incentives
All unvested deferred STI and LTI at the time of cessation of employment remain on-foot (i.e. subject to the
normal payment timetable and performance measures) and continue to be subject to clawback.
22) Subsequently appointed Executive KMP have three years from their date of appointment to meet the minimum security ownership requirement.
23) The payment includes statutory entitlements (fixed pay and other short term benefits) and payment in lieu of notice and payment for the 12 month restraint
period (12 months of fixed pay, and STI calculated at 105% of maximum).
24) This equates to a total value of $3,632,979 based on a VWAP of $11.1579.
APA GROUP I ANNUAL REPORT 2020
57
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
6. Non-executive Directors
6.1 Determination of Non-executive Director fees
The Board seeks to attract and retain high calibre NEDs who are equipped with the diverse skills needed to oversee all
functions of APA in an increasingly complex environment. NED fees comprise:
— A Board fee;
— An additional fee for serving as a Chairman or member of a Board Committee; and
— Statutory superannuation contributions.
NED fees are inclusive of superannuation contributions which are provided in accordance with the statutory requirements
under the Superannuation Guarantee Act.
The Board Chairman does not receive additional fees for attending Committee meetings.
NEDs do not receive incentive payments nor participate in incentive plans.
One-off ‘per diems’ may be paid in exceptional circumstances. No per-diem payments were made in this or the prior reporting period.
6.2 Aggregate NED fee pool
The aggregate NED fee pool as at 30 June 2020 was $2,500,000. This has not changed since 2017.
6.3 Director fees
The following table sets out the NED fees for FY2020. The Board has determined there will be no increase to NED fees for FY2021.
Board
Audit and Risk Management Committee
Health, Safety and Environment Committee
People and Remuneration Committee
Nominations Committee
Chairman
$000
Member
$000
511.4
47.9
39.9
39.9
177.6
23.9
19.9
19.9
None paid
None paid
6.4 NED Minimum security holding requirement
The minimum security holding requirement helps to ensure the alignment of the interests of NEDs and Securityholders.
NEDs are expected to hold securities to a value not less than their annual Board fee (before tax and excluding fees applicable to
membership of Committees). This level of security holding is to be held throughout their tenure as a NED and is a requirement
of their appointment.
As at 30 June 2020, all NEDs met this requirement (with the exception of Rhoda Phillippo who was appointed 1 June 2020).
Details of NED security holdings may be found in section 8.5.
7. Remuneration Governance
7.1 Role of the People and Remuneration Committee
The Committee has been established by the Board to oversee Executive KMP and NED remuneration. The purpose of the
Committee is to oversee the development of APA’s people and remuneration strategies and frameworks to support the
achievement of APA’s business objectives.
Specifically, the Committee ensures there is a robust remuneration and reward system that aligns employee, investor
and customer interests, promotes a positive culture and facilitates effective attraction, retention and development of a
diverse and talented workforce. The Committee's activities are governed by its Charter, a copy of which can be found at the
following link https://www.apa.com.au/globalassets/documents/governance-docs/board-and-board-charter-docs/people-
remuneration-committee-charter.pdf.
7.2 Composition of the People and Remuneration Committee
The members of the Committee, all of whom are independent NEDs, are:
— Peter Wasow (Chairman)
— Steve Crane
— Shirley In’t Veld, and
— Rhoda Phillippo – from 1 June 2020
The CEO/MD and nominated senior executives attend meetings of the Committee by invitation. The Committee met four
times during the year.
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
7. Remuneration Governance (continued)
7.3 Interaction with Audit and Risk Management Committee
Consistent with the Charter, the Committee considers whether there has been a robust performance assessment process in
place and, in consultation with the Audit and Risk Management Committee, whether proposed remuneration outcomes are
appropriate in light of relevant risk outcomes and corporate culture.
7.4 Use of external advisors
The Committee seeks external professional advice from time to time on matters within its terms of reference. Remuneration
advisors are engaged by the Committee and report directly to the Committee. During FY2020 no recommendations were
made by these external advisors regarding remuneration arrangements. APA employs internal remuneration professionals,
providing analysis to the Committee and Board. This advice is used as a guide, and does not serve as a substitute for the
thorough consideration of the issues by each Director.
8. Statutory Tables
The following tables outline the amounts recognised as an expense in the respective years, determined in accordance with the
relevant accounting standards.
8.1 Executive KMP Statutory Remuneration (25)
Short-Term
Employment Benefits
Post-
Employment
Security-based
payments
STI
Salary (26) Cash STI (27) Deferral
Awarded
Other (28)
Superan-
nuation
Legacy
LTI Plan
Equity
settled
LTI Plan (29)
Total
R Wheals
2020
2019
P Fredricson
2020
2019
R Gersbach (30)
2020
2019
D Rogers (31)
2020
Former KMP
M McCormack (32)
1,561,413
529,061
264,531
825,000
480,670
925,000
901,000
393,775
510,970
947,997
918,334
422,969
497,220
—
—
—
—
— 376,897
489,913
151,709
75,855
—
—
—
—
25,000
412,639
368,121
3,160,765
25,000
400,124
—
1,730,794
25,000
467,335
109,288
1,920,398
25,000
469,591
—
1,906,561
21,003
26,666
476,891
479,246
111,473
2,357,230
—
1,921,466
16,667
67,433
86,279
887,856
453
1,467,007
25,000
1,515,047
—
—
1,508,043
5,169,967
—
—
—
—
2020
2019
40,583
—
1,980,000
1,649,920
—
—
Total Remuneration
2020
2019
3,964,906
1,497,514
340,386 376,897
88,123
2,891,305
675,161
9,834,292
4,624,334
3,138,780
—
—
101,666 2,864,008
—
10,728,788
25) This table outlines the total remuneration earned by Executive KMP during FY2019 and FY2020, calculated in accordance with the relevant accounting standard,
AASB 2: Share-based Payments (AASB 2).
26) Salary includes both fixed pay and any salary sacrificed items, such as motor vehicles or car parking (including any applicable fringe benefits tax). It is exclusive
of any superannuation contributions.
27) Awarded STI relates to that element of remuneration which is earned by the Executive KMP in respect of performance during each financial year (or for the
relevant period that they were KMP as set out in the Report).
28) This includes the value of benefits relating to Mr. Gersbach’ secondment to the USA and includes relocation allowances and assistance as well as cost of living
adjustment. Costs are inclusive of USA tax impacts and are split between one-off relocation costs of $161,894 (48%) and $172,618 (52%) on-going costs as well
as foreign exchange rate differences for USD fixed pay.
29) For equity settled security-based payments, an expense is recognised equal to the portion of services received based on the fair value of the equity instrument
at grant date.
30) Part year Former Chief Executive Strategy and Development, transferred to the US on 1 October 2019.
31) Part year appointed 1 November 2019.
32) Mr McCormack’s retirement, announced on 13 December 2018, was effective on 5 July 2019. Refer Section 5.5 for details of final additional payments. Mr
McCormack is entitled to further reference units, due to be paid in August 2021, August 2022 and August 2023, with a total value of $3,632,979 (based on a
VWAP of $11.1579).
APA GROUP I ANNUAL REPORT 2020
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
8. Statutory Tables (continued)
8.2 NED Statutory Remuneration Disclosure (33)
Financial Year
M Fraser
FY2020
FY2019
S Crane
FY2020
FY2019
J Fazzino
FY2020
FY2019
D Goodin
FY2020
FY2019
S In’t Veld
FY2020
FY2019
R Phillippo (34)
FY2020
P Wasow
FY2020
FY2019
Former NED
R Higgins AO
FY2019
P McKenzie
FY2019
Total
FY2020
FY2019
Short-term
employment
benefits
Post-
employment
benefits
Fees Superannuation
$
$
Total
$
467,032
467,000
202,192
200,600
202,192
72,455
224,110
222,500
216,804
203,507
44,368
44,400
19,208
19,050
19,208
6,880
21,290
21,150
20,596
19,362
511,400
511,400
221,400
219,650
221,400
79,335
245,400
243,650
237,400
222,869
16,545
1,572
18,117
220,457
218,850
20,943
20,750
241,400
239,600
144,800
13,733
158,533
134,919
12,843
147,762
1,549,332
147,185
1,696,517
1,664,631
158,168
1,822,799
33) During 2020 the calculation of Director base fees and superannuation was adjusted. There was no change to total Director fees paid or Director base and
committee fees during the year, however the portion of total fees attributed to superannuation reduced.
34) Payment for June was delayed, this amount was paid in July 2020.
60
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
8. Statutory Tables (continued)
8.3 Outstanding awards under new LTI plan
The following table sets out the movements in the number of Performance Rights granted to executives, and any amounts
vested or forfeit during the financial year.
Opening
Allocation balance at
1 Jul 2019
Date
Performance
Rights
granted
in 2020 Grant date in 2020
Vested Forfeited
in 2020
balance on
30 June
2020
Fair value of Face value of
Closing performance performance
of rights at
of rights at
grant date (35) grant date (36)
$
$
R Wheals
2020
P Fredricson 2020
R Gersbach
2020
D Rogers
2020
—
—
—
—
217,872
13/12/2019
64,682
13/12/2019
65,975
13/12/2019
51,064
13/12/2019
—
—
—
—
—
—
—
—
217,872
$1,463,010 $2,400,000
64,682
65,975
51,064
$434,340
$443,022
$712,500
$726,750
$342,895
$562,500
35) Calculated based on fair value of the individual vesting conditions being $4.47, $4.27, and $4.08 for the relative TSR and $9.57, $9.15, and $8.75 for the ROC hurdle
vesting conditions for each of the vesting dates being August 2022, August 2023 and August 2024 respectively. This also represents the maximum value of the
employee benefit expense as based on the grant date that would be recorded if all rights which remain outstanding at 30 June 2020 satisfied all vesting conditions.
36) Based on a VWAP of $11.0155.
8.4 Outstanding awards under legacy LTI plan
The following table sets out the movements in the number of reference units and the number of reference units that have
been allocated to executives but have not yet vested have been paid, and the years in which they will vest.
Allocation
date
Opening
balance at
1 Jul 2019
Units
allocated
in 2020
Cash
settled
reference
units paid
Closing
balance
at 30
Jun 2020
Units subject
to allocation
by the Board
in Aug 2020
Reference units allocated that have
not yet vested or been paid and
the months in which they will vest
Aug 20
Aug 21
Aug 22
Aug 23
R Wheals
P Fredricson
R Gersbach
D Rogers
2016
2017
2018
2019
2020
Total
2016
2017
2018
2019
2020
Total
2016
2017
2018
2019
2020
Total
2020
Total
Former KMP
M McCormack 2016
2017
2018
2019
2020
Total
13,299
32,318
18,981
16,379
38,718
21,975
16,713
39,514
22,437
37,962
41,358
42,207
(13,299)
(16,159)
(6,327)
(16,379)
(19,359)
(7,325)
(16,713)
(19,757)
(7,479)
16,159
12,654
37,962
19,359
14,650
41,358
19,757
14,958
42,207
51,936
125,828
71,364
(51,936)
(62,914)
(23,788)
62,914
47,576
134,325
134,325
16,159
6,327
12,654
6,327
12,654
14,169
12,654
14,169
35,140
33,150
26,823
14,169
14,169
42,507
19,359
7,325
13,786
7,325
13,786
15,375
46,125
13,786
15,375
15,375
40,470
36,486
29,161
15,375
19,757
7,479
14,069
7,479
14,069
15,682
14,069
15,682
15,682
41,305
37,230
29,751
15,682
8,058
8,058
8,058
8,058
8,058
8,058
47,046
24,174
62,914
23,788
44,775
23,788
44,775
70,753
212,259
44,775
70,753
70,753
131,477
139,316
115,528
70,753
APA GROUP I ANNUAL REPORT 2020
61
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
remuneration report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
8. Statutory Tables (continued)
8.5 Security holdings
Year ended 30 June 2019
Opening Balance
at 1 July 2019
Securities
Acquired
Securities
Disposed
Closing Balance
at 30 June 2020
NEDS
M Fraser
S Crane
J Fazzino (37)
D Goodin
S In’t Veld
R Phillippo (38)
P Wasow
Executive KMP
R Wheals
P Fredricson
R Gersbach
D Rogers
102,942
130,000
30,751
23,000
25,000
—
21,000
38,883
48,500
21,691
3,794
—
—
—
1,179
—
—
5,000
7,505
1,000
23,000
—
—
—
—
—
—
—
—
—
—
—
—
102,942
130,000
30,751
24,179
25,000
—
26,000
46,388
49,500
44,691
3,794
37) Note that a recording error in holding for FY2019 has been corrected and shown as above.
38) Appointed 1 June 2020.
62
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
consolidated statement of profit or loss and other comprehensive income.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Revenue
Share of net profits of associates and joint ventures using the equity method
Asset operation and management expenses
Depreciation and amortisation expense
Other operating costs – pass-through
Finance costs
Employee benefit expense
Other expenses
Profit before tax
Income tax expense
Profit for the year
Other comprehensive income, net of income tax
Items that will not be reclassified subsequently to profit or loss:
Actuarial 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:
Transfer of gain on cash flow hedges to profit or loss
Loss on cash flow hedges taken to equity
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:
Unitholders of the parent
Non-controlling interest – APT Investment Trust unitholders
APA stapled securityholders
Total comprehensive income attributable to:
Unitholders of the parent
Non-controlling interest – APT Investment Trust unitholders
APA stapled securityholders
Earnings per security
Basic and diluted (cents per security)
Note
2020
$000
2019
$000
4
4
5
5
5
5
6
7
2,559,944
2,428,949
30,677
23,222
2,590,621
2,452,171
(218,010)
(651,566)
(461,155)
(499,998)
(249,690)
(5,186)
505,016
(187,910)
317,106
(213,522)
(611,358)
(421,198)
(500,020)
(235,034)
(6,060)
464,979
(176,966)
288,013
(28,103)
8,431
(19,672)
(11,418)
3,425
(7,993)
80,184
74,347
(206,864)
(448,940)
(5,847)
39,758
(92,769)
(112,441)
204,665
264,085
53,021
317,106
151,644
53,021
204,665
2020
26.9
(8,540)
114,951
(268,182)
(276,175)
11,838
222,943
65,070
288,013
(53,232)
65,070
11,838
2019
24.4
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
APA GROUP I ANNUAL REPORT 2020
63
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
consolidated statement of financial position.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
AS AT 30 JUNE 2020
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Other
Current assets
Non-current assets
Trade and other receivables
Other financial assets
Investments accounted for using the equity method
Property, plant and equipment
Goodwill
Other Intangible assets
Other
Non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Other financial liabilities
Provisions
Unearned revenue
Current liabilities
Non-current liabilities
Trade and other payables
Lease liabilities
Borrowings
Other financial liabilities
Deferred tax liabilities
Provisions
Unearned revenue
Non-current liabilities
Total liabilities
Net assets
Equity
Australian Pipeline Trust equity:
Issued capital
Reserves
Retained earnings
Equity attributable to unitholders of the parent
Non-controlling interests:
APT Investment Trust:
Issued capital
Retained earnings
Note
18
9
20
9
20
23
11
12
12
15
10
17
18
20
14
10
17
18
20
6
14
2020
$000
2019
$000
1,172,771
264,137
32,748
34,181
22,101
1,525,938
11,639
581,027
226,380
9,821,955
1,183,604
2,627,279
29,343
354,947
249,962
68,039
30,963
13,592
717,503
130,131
502,161
263,829
9,796,072
1,183,604
2,809,761
30,866
14,481,227
14,716,424
16,007,165
15,433,927
308,764
302,082
13,544
310,613
186,347
89,636
10,753
919,657
4,826
56,333
—
444,502
152,782
94,841
12,320
1,006,527
3,230
—
10,607,382
9,865,813
427,638
594,832
115,905
56,737
264,703
544,013
89,663
60,581
11,863,653
10,828,003
12,783,310
11,834,530
3,223,855
3,599,397
21
2,902,123
3,103,806
(691,465)
100,666
(599,347)
100,663
2,311,324
2,605,122
887,845
24,686
912,531
964,219
30,056
994,275
3,223,855
3,599,397
Equity attributable to unitholders of APT Investment Trust
22
Total equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
64
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
consolidated statement of changes in equity.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
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T
APA GROUP I ANNUAL REPORT 2020
65
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
consolidated statement of cash flows.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received from associates and joint ventures
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 intangible assets
Repayment/(advancement) of loans with related parties
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Payments of security issue costs
Payments of lease principal
Payment of debt issue costs
Proceeds from early settlement of derivatives
Distributions paid to:
Unitholders of APT
Unitholders of non-controlling interests - APTIT
Securityholders of other non-controlling interests
Net cash provided by/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Unrealised exchange gains/(losses) on cash held
Note
2020
$000
2019
$000
2,791,905
2,666,095
(1,212,764)
(1,142,419)
62,279
1,272
7,941
(468,070)
(86,620)
22,450
1,469
8,825
(470,509)
(73,784)
1,095,943
1,012,127
(427,065)
(581,384)
485
(253)
652
(318)
122,284
(122,002)
(304,549)
(703,052)
1,987,812
1,669,706
(1,368,836)
(1,175,854)
—
(13,482)
(6,870)
8
(437,484)
(134,765)
—
26,383
817,776
354,947
48
(864)
—
(11,955)
1,157
(401,716)
(135,136)
(53)
(54,715)
254,360
100,643
(56)
Cash and cash equivalents at end of financial year
18
1,172,771
354,947
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
66
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
consolidated statement of cash flows. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Reconciliation of profit for the year to the net cash provided by operating activities
Profit for the year
Profit on disposal of property, plant and equipment
Share of net profits of joint ventures and associates using the equity method
Dividends/distributions received from equity accounted investments
Depreciation and amortisation expense
Finance costs
Unrealised foreign exchange loss
Amortisation of hedging loss
Security based payments
Changes in assets and liabilities:
Trade and other receivables
Inventories
Other assets
Trade and other payables
Provisions
Other liabilities
Income tax balances
2020
$000
317,106
(464)
(30,677)
62,279
651,566
14,823
11,007
6,885
652
(19,283)
(2,777)
(5,997)
5,074
(10,954)
(4,851)
101,554
2019
$000
288,013
(583)
(23,222)
22,452
611,358
16,858
7,241
6,846
—
6,923
(2,429)
2,228
(17,294)
11,199
(20,647)
103,184
Net cash provided by operating activities
1,095,943
1,012,127
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.
APA GROUP I ANNUAL REPORT 2020
67
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Basis of Preparation
1. About this report
In the following financial statements, note disclosures are grouped into six sections being: Basis of Preparation; Financial
Performance; Operating Assets and Liabilities; Capital Management; Group Structure; and Other.
Each note sets out the accounting policies applied in producing the results along with any key judgements and estimates used.
Basis of Preparation
1. About this report
2. General information
Financial Performance
3. Segment information
4. Revenue
5. Expenses
6.
Income tax
7. Earnings per security
8. Distributions
Operating Assets and Liabilities
9. Receivables
10. Payables
11. Property, plant and equipment
12. Goodwill and intangibles
13. Impairment of non-financial assets
14. Provisions
15. Other non-current assets
16. Employee superannuation plans
17. Leases
Capital Management
18. Net debt
19. Financial risk management
20. Other financial instruments
21. Issued capital
Group Structure
22. Non-controlling interests
23. Joint arrangements and associates
24. Subsidiaries
Other
25. Commitments and contingencies
26. Director and Executive Key Management
Personnel remuneration
27. Remuneration of external auditor
28. Related party transactions
29. Parent entity information
88
89
100
103
103
104
106
108
108
109
109
110
30. Adoption of new and revised Accounting Standards
111
31. Events occurring after reporting date
113
68
69
70
72
74
75
77
78
79
79
80
81
82
83
84
84
86
68
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Basis of Preparation
2. General information
APA Group comprises of two trusts, Australian Pipeline Trust (“APT“) and APT Investment Trust (“APTIT“), which are
registered managed investment schemes regulated by the Corporations Act 2001. APT units are “stapled“ to APTIT units
on a one-to-one basis so that one APT unit and one APTIT unit form a single stapled security which trades on the Australian
Securities Exchange under the code “APA“.
Australian Accounting Standards require one of the stapled entities of a stapled structure to be identified as the parent entity
for the purposes of preparing a consolidated financial report. In accordance with this requirement, APT is deemed to be the
parent entity. The results and equity attributable to APTIT, being the other stapled entity which is not directly or indirectly held
by APT, are shown separately in the financial statements as non-controlling interests.
The financial report represents the consolidated financial statements of APT and APTIT (together the “Trusts“), their
respective subsidiaries and their share of joint arrangements and associates (together “APA Group“). For the purposes of
preparing the consolidated financial report, APA Group is a for-profit entity.
Total comprehensive income attributable to non-controlling interests is reported as disclosed in the separate financial
statements of APTIT. Comprehensive income arising from transactions between the parent (APT) group entities and the
non-controlling interest (APTIT) have not been eliminated in the reporting of total comprehensive income attributable to
non-controlling interests.
All intragroup transactions and balances have been eliminated on consolidation. Where necessary, adjustments are made to
the assets, liabilities, and results of subsidiaries, joint arrangements, associates, and joint ventures to bring their accounting
policies into line with those used by APA Group.
APT's registered office and principal place of business is as follows:
Level 25
580 George Street
Sydney NSW 2000
Tel: (02) 9693 0000
The consolidated general purpose financial report for the year ended 30 June 2020 was authorised for issue in accordance
with a resolution of the directors on 26 August 2020.
This general purpose financial report has been prepared in accordance with the requirements of the Corporations Act 2001,
Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board
(“AASB”) and also comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board.
The financial report has been prepared on the basis of historical cost, except for the revaluation of financial instruments.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000) in
accordance with ASIC Corporations Instrument 2016/191, unless otherwise stated.
Foreign currency transactions
Both the functional and presentation currency of APA Group and APT is Australian dollars (A$). 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, unless they qualify for hedge accounting.
Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the Group’s accounting policies, a number of judgements and estimates have been made.
Judgements and estimates which are material to the financial statements are found in the following disclosures:
— Property, plant and equipment (note 11)
— Impairment of non-financial assets (note 13)
— Fair value of financial instruments (note 19(c))
Judgements and estimates require assumptions to be made about highly uncertain external factors such as: discount rates;
probability factors; the effects of inflation; commercial contract lives and renewals; market supply-and-demand conditions;
changing technology; timing of occurrence; input costs; political and social trends, and climate change. As such the actual
outcomes may differ as a result of these judgements and assumptions.
COVID-19
As a supplier of an essential service of gas transportation and energy generation, APA Group has the benefit of stable
operating cash flows. There have been no material impacts on APA Group’s ability to safely and reliably operate its assets
and deliver services to its customers as a result of the COVID-19 pandemic.
As at 30 June 2020, APA Group had $2,472.8 million in cash and committed un-drawn bank facilities available (2019: $1,904.9
million) to assist in the ongoing funding of the business. APA continues to fund its growth with appropriate levels of equity,
cash retained in the business, and debt in order to maintain strong Baa2/BBB credit ratings.
The Directors continually monitor APA Group's working capital position, including forecast working capital requirements and
have ensured that there are appropriate funding strategies and debt facilities in place to accommodate the funding of
capital expenditure and debt repayments as and when they fall due.
APA GROUP I ANNUAL REPORT 2020
69
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Financial Performance
3. Segment information
APA Group operates in one geographical segment, being Australia and the revenue from major products and services is shown
by the reportable segments.
APA Group comprises the following reportable segments:
— Energy Infrastructure, includes all of APA Group’s wholly or majority owned gas pipelines, gas storage assets, gas
compression and processing assets and gas-fired and renewable energy power generation assets;
— Asset Management, provides commercial, operating services and/or asset maintenance services to its energy investments
and third parties for appropriate fees; and
— Energy Investments, includes APA Group’s strategic stakes in a number of investment vehicles that house energy
infrastructure assets, generally characterised by long-term secure cash flows, with low ongoing capital expenditure
requirements.
Reportable segments
2020
Segment revenue (a)
Energy
Asset
Infrastructure Management
$000
$000
Energy
Investments
$000
Other
$000
Consolidated
$000
Revenue from contracts with customers
1,973,722
112,367
—
Equity accounted net profits
Pass-through revenue
Other income
Finance lease and investment interest income
—
49,386
3,594
1,176
411,769
205
—
—
30,677
—
—
5,064
35,741
2,027,878
524,341
Total segment revenue
Other interest income
Consolidated revenue
Segment result
Earnings before interest, tax, depreciation
and amortisation (“EBITDA“)
Share of net profits of joint ventures and
associates using the equity method
Finance lease and investment interest income
Corporate costs
Total EBITDA
Depreciation and amortisation
1,628,631
63,343
—
—
1,176
—
—
—
—
1,629,807
(634,808)
63,343
(16,758)
30,677
5,064
—
(74,972)
35,741
(74,972)
—
—
—
—
—
—
—
—
—
—
—
2,086,089
30,677
461,155
3,799
6,240
2,587,960
2,661
2,590,621
1,691,974
30,677
6,240
(74,972)
1,653,919
(651,566)
Earnings before interest and tax (“EBIT“)
994,999
46,585
35,741
(74,972)
1,002,353
Net interest cost (b)
Profit before tax
Income tax expense
Profit for the year
(497,337)
505,016
(187,910)
317,106
a) The revenue reported above represents revenue generated from external customers. Any intersegment sales were immaterial.
b) 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.
70
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Financial Performance
3. Segment information (continued)
Reportable segments (continued)
2020
Segment assets and liabilities
Segment assets
Energy
Asset
Infrastructure Management
$000
$000
Energy
Investments Consolidated
$000
$000
13,795,348
198,893
10,685
14,004,926
Carrying value of investments using the equity method
—
—
226,380
Revenue from contracts with customers
1,899,071
94,398
Unallocated assets (a)
Total assets
Segment liabilities
Unallocated liabilities (b)
Total liabilities
2019
Segment revenue (c)
Equity accounted net profits
Pass-through revenue
Other income
Finance lease and investment interest income
Total segment revenue
Other interest income
Consolidated revenue
Segment result
Earnings before interest, tax, depreciation
and amortisation (“EBITDA“)
Share of net profits of joint ventures and
associates using the equity method
Finance lease and investment interest income
Corporate costs
Total EBITDA
Depreciation and amortisation
Earnings before interest and tax (“EBIT“)
Net interest cost (d)
Profit before tax
Income tax expense
Profit for the year
226,380
1,775,859
16,007,165
412,898
110,022
—
522,920
Energy
Asset
Infrastructure Management
$000
$000
12,260,390
12,783,310
Energy
Investments
$000
Other
$000
Consolidated
$000
—
27,881
4,775
1,305
—
393,317
391
—
1,933,032
488,106
1,571,139
52,954
—
—
1,305
—
1,572,444
(600,248)
972,196
—
—
—
52,954
(11,110)
41,844
—
23,222
—
—
5,210
28,432
23,222
5,210
—
—
—
—
—
—
—
—
—
1,993,469
23,222
421,198
5,166
6,515
2,449,570
2,601
2,452,171
1,624,093
23,222
6,515
—
(80,074)
(80,074)
28,432
(80,074)
1,573,756
—
—
28,432
(80,074)
(611,358)
962,398
(497,419)
464,979
(176,966)
288,013
a) Unallocated assets consist of cash and cash equivalents, fair value of interest rate swaps, forward exchange contracts (“FECs“) and equity forwards.
b) Unallocated liabilities consist of current and non-current borrowings, deferred tax liabilities, fair value of interest rate swaps and FECs.
c) The revenue reported above represents revenue generated from external customers. Any intersegment sales were immaterial.
d) 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.
APA GROUP I ANNUAL REPORT 2020
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Financial Performance
3. Segment information (continued)
Reportable segments (continued)
2019
Segment assets and liabilities
Segment assets
Energy
Asset
Infrastructure Management
$000
$000
Energy
Investments Consolidated
$000
$000
13,938,973
183,669
132,993
14,255,635
Carrying value of investments using the equity method
—
—
263,829
Unallocated assets (a)
Total assets
Segment liabilities
Unallocated liabilities (b)
Total liabilities
263,829
914,463
15,433,927
376,598
60,707
—
437,305
11,397,225
11,834,530
a) Unallocated assets consist of cash and cash equivalents, fair value of interest rate swaps, FECs and equity forwards.
b) Unallocated liabilities consist of current and non-current borrowings, deferred tax liabilities, fair value of interest rate swaps and FECs.
4. Revenue
Disaggregation of revenue
Revenue is disaggregated below by state, business unit and geography.
2020
Energy Infrastructure
Queensland
New South Wales
Victoria
South Australia
Western Australia
Northern Territory
Energy Infrastructure
Transmission
$000
Power
Generation
$000
Total
$000
949,385
183,251
145,664
3,143
323,176
31,649
255,320
1,204,705
—
—
—
82,134
—
183,251
145,664
3,143
405,310
31,649
Energy Infrastructure revenue from contracts with customers
1,636,268
337,454
1,973,722
Asset Management revenue from contracts with customers
Pass-through revenue
Other income
Operating revenue
Interest income
Interest income from related parties
Finance lease income
Finance income
Total Revenue
Share of net profits of joint ventures and associates using the equity method
112,367
461,155
3,799
2,551,043
2,661
5,064
1,176
8,901
2,559,944
30,677
2,590,621
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APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Financial Performance
4. Revenue (continued)
Disaggregation of revenue (continued)
2019
Energy Infrastructure
Queensland
New South Wales
Victoria
South Australia
Western Australia
Northern Territory
Energy Infrastructure
Transmission
$000
Power
Generation
$000
Total
$000
960,933
173,594
144,380
3,004
288,997
30,301
246,174
1,207,107
—
—
—
51,688
—
173,594
144,380
3,004
340,685
30,301
Energy Infrastructure revenue from contracts with customers
1,601,209
297,862
1,899,071
Asset Management revenue from contracts with customers
Pass-through revenue
Other income
Operating revenue
Interest income
Interest income from related parties
Finance lease income
Finance income
Total Revenue
Share of net profits of joint ventures and associates using the equity method
94,398
421,198
5,166
2,419,833
2,601
5,210
1,305
9,116
2,428,949
23,222
2,452,171
Revenue is recognised at an amount that reflects the consideration to which the Group expects to be entitled in exchange for
the provision of services or for the transferring of goods to a customer (the performance obligations) under a contract. APA
Group recognises revenue when control of a product or service is transferred to the customer. Amounts disclosed as revenue are
net of duties, goods and services tax (“GST“) and other taxes paid, except where the amount of GST incurred is not recoverable
from the taxation authority. Given the nature of APA Group’s services there is no significant right of return or warranty provided.
Revenue from contracts with customers is derived from the major business activities as follows:
— Energy Infrastructure revenue from contracts with customers, is derived from the transportation, processing and storage
of gas and other related services (transmission revenue), and the generation of electricity and other related services
(power generation revenue). Revenue from contracts with customers may either be identified as separate performance
obligations or a series of distinct performance obligations that are substantially the same, have the same pattern of
transfer and are therefore treated as a single performance obligation that is satisfied over time. This includes both firm and
interruptible services. The consideration is volume based and is recognised as revenue in a manner that depicts the transfer
based on volume of output to the customer. This method most accurately depicts the progress towards satisfaction of
the performance obligation of the services provided, as the customer simultaneously receives and consumes the benefits
of APA Group’s service and obtains value as each volume of output is transported by APA Group. The amount billed
corresponds directly to the value of the performance to date;
— Asset Management revenue from contracts with customers, is derived from the provision of commercial services, operating
services, asset management services and/or asset maintenance services to APA Group's energy investments and other
third parties. APA Group applies the practical expedient to recognise revenue at the amount to which APA Group has a
right to invoice; and
— Pass-through revenue, is revenue from contracts with customers for which no margin is earned, and is recognised when the
services are provided. APA Group applies the practical expedient to recognise revenue at the amount to which APA Group
has a right to invoice. APA Group is determined to be the principal in these relationships.
Other types of revenue is recognised as follows:
— Interest income, which is recognised as it accrues and is determined using the effective interest method;
— Dividend income, which is recognised when the right to receive the payment has been established; and
— Finance lease income, which 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.
APA GROUP I ANNUAL REPORT 2020
73
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Financial Performance
4. Revenue (continued)
Contract liabilities – unearned revenue
Where amounts have been received in advance of fulfilling the contract obligation these amounts are deferred in the
balance sheet as unearned revenue until the performance obligation is fulfilled. Where the period between the payment by
the customer and the fulfilment of the obligation is expected to exceed one year any amounts associated with the finance
component of this deferred revenue is recognised as interest expense.
Included in the unearned revenue are customer upfront contributions on contracts with customers received in advance and
government grants received. During the year, the Group recognised $13.2 million (2019: $19.5 million) in revenue from contracts
with customers from unearned revenue at the beginning of the financial year.
Contract assets – accrued revenue
Contract assets primarily relate to APA Group’s right to consideration for work completed but not billed at the reporting date.
These amounts are known as accrued revenue and are disclosed in Note 9.
Accrued revenue is transferred to trade receivables when the rights become unconditional. This usually occurs when APA
Group issues an invoice to the customer.
Accounting for costs to obtain contracts
APA Group generally expenses costs to obtain contracts as they are incurred, as they tend to be incurred whether the contract
is obtained or not (e.g. staff salaries, professional fees etc.).
Future Revenues from Remaining Performance Obligations
As at 30 June 2020, future contracted Energy Infrastructure revenues extending through to 2049 are approximately $19.7
billion, of which $1.7 billion is expected to be recognised in 2021. These amounts relate to Energy Infrastructure revenue from
long term contracts with highly credit worthy counterparties.
Future contracted Energy Infrastructure revenues outlined above are in nominal 2020 dollars escalated by CPI. Variable
revenues, potential future revenues from new contracts, contract renewals or extensions, and revenues from potential new
assets or expansions where a contract does not currently exist with a customer are not included. As such, the future contract
revenues described above represent only part of APA Group's forecast revenues for FY2021 and beyond.
Information about major customers
Included in revenues from contracts with customers arising from Energy Infrastructure of $1,973.7 million (2019: $1,899.1 million)
are revenues of approximately $718.8 million (2019: $708.6 million) which arose from sales to APA Group's top three customers.
5. Expenses
Depreciation of non-current assets
Amortisation of non-current assets
Depreciation and amortisation expense
Energy infrastructure costs – pass-through
Asset management costs – pass-through
Other operating costs – pass-through
Interest on bank overdrafts and borrowings (a)
Amortisation of deferred borrowing costs
Other finance costs
Less: amounts included in the cost of qualifying assets
(Gain)/Loss on derivatives (b)
Unwinding of discount on non-current liabilities
Unwinding of discount on deferred revenue balances
Interest incurred on lease liabilities
Finance costs
2020
$000
468,831
182,735
651,566
49,386
411,769
461,155
2019
$000
428,370
182,988
611,358
27,881
393,317
421,198
498,940
507,246
7,366
7,008
513,314
(23,208)
490,106
(2,693)
7,322
2,625
2,638
7,631
7,748
522,625
(31,468)
491,157
47
6,197
2,619
—
499,998
500,020
a) The average interest rate applying to drawn debt is 5.33% p.a. (2019: 5.53% p.a.) excluding amortisation of borrowing costs and other finance costs.
b) Represents unrealised gains and losses on the mark-to-market valuation of derivatives, including contract for difference arrangements.
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Financial Performance
5. Expenses (continued)
Defined contribution plans
Defined benefit plans (Note 16)
Post-employment benefits
Termination benefits
Cash settled security-based payments (a)
Equity settled security-based payments (a)
Other employee benefits
Employee benefit expense (b)
2020
$000
16,159
2,348
18,507
1,497
16,442
992
212,252
249,690
2019
$000
14,264
1,944
16,208
3,823
25,555
—
189,448
235,034
a) APA Group provides benefits to certain employees in the form of security-based payments. For cash settled security-based payments, a liability equal to the
portion of services received is recognised at the current fair value determined at each reporting date. For equity settled security-based payments, a reserve is
recognised equal to the portion of services received based on the fair value of the equity instrument at grant date.
b) Employee benefit expense of $70.0 million (2019: $64.5 million) is recharged as pass-through revenue and presented as part of other operating costs – pass-through.
6.
Income tax
The major components of tax expense are:
Income statement
Current tax expense in respect of the current year
Adjustments recognised in the current year in relation to current tax of prior years
2020
$000
(85,236)
25
2019
$000
(72,138)
104
Deferred tax expense relating to the origination and reversal of temporary differences
(102,699)
(104,932)
Total tax expense
Tax reconciliation
Profit before tax
Income tax expense calculated at 30%
Non-assessable trust distribution
Non deductible expenses
Non assessable income
Franking credits received
Previously unbooked losses now recognised
Adjustments recognised in the current year in relation to the current tax of prior years
R&D tax incentive
(187,910)
(176,966)
505,016
(151,505)
15,906
(59,816)
114
464,979
(139,494)
19,521
(58,403)
84
(195,301)
(178,292)
5,310
1,038
25
1,018
105
853
104
264
(187,910)
(176,966)
Income tax expense comprises of current and deferred tax. Income tax is recognised in profit or loss except to the extent
that it relates to items recognised directly in other comprehensive income, in which case it is recognised in equity. Current tax
represents the expected taxable income at the applicable tax rate for the financial year, and any adjustment to tax payable
in respect of previous financial years.
Income tax expense for the year is $187.9 million (2019: $177.0 million). An income tax provision of $30.9 million (2019: $32.0
million) has been recognised after instalments made during the year and partial utilisation of available transferred tax losses
(refer to Note 10).
APA GROUP I ANNUAL REPORT 2020
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Financial Performance
6.
Income tax (continued)
Deferred tax balances
Deferred tax (liabilities)/assets arise from the following:
2020
Gross deferred tax liabilities
Property, plant and equipment (a)
Deferred expenses
Other
Gross deferred tax assets
Provisions (a)
Cash flow hedges
Security issue costs
Deferred revenue
Investments equity accounted
Defined benefit obligation
Tax losses
Opening
balance
$000
Charged to
income
$000
Charged to
equity
$000
Closing
balance
$000
(989,655)
(55,516)
(299)
(75,425)
(18,651)
(1,083,731)
1,805
168
—
—
(53,711)
(131)
(1,045,470)
(73,452)
(18,651)
(1,137,573)
48,640
254,217
1,562
14,531
4,434
2,939
175,134
501,457
(4,475)
(800)
(517)
(862)
2,824
185
(25,602)
(29,247)
Net deferred tax liability
(544,013)
(102,699)
2019
Gross deferred tax liabilities
Property, plant and equipment
Deferred expenses
Other
Gross deferred tax assets
Provisions
Cash flow hedges
Security issue costs
Deferred revenue
Investments equity accounted
Defined benefit obligation
Tax losses
(903,769)
(54,803)
(233)
(85,886)
(713)
(66)
(958,805)
(86,665)
43,391
141,235
3,831
13,748
1,705
(497)
196,950
400,363
5,249
858
(2,327)
(144)
(98)
11
(21,816)
(18,267)
Net deferred tax liability
(558,442)
(104,932)
a) Amounts charged to equity relate to the deferred tax on the transition adjustment from the adoption of AASB 16 Leases.
22,343
38,933
—
—
824
8,431
—
70,531
51,880
—
—
—
—
—
112,124
58
927
2,827
3,425
—
119,361
119,361
66,508
292,350
1,045
13,669
8,082
11,555
149,532
542,741
(594,832)
(989,655)
(55,516)
(299)
(1,045,470)
48,640
254,217
1,562
14,531
4,434
2,939
175,134
501,457
(544,013)
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for:
— initial recognition of goodwill;
— initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and
— differences relating to investments in wholly-owned entities to the extent that they will probably not reverse in the foreseeable future.
Deferred tax is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities,
using the appropriate tax rates at 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 and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
76
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Financial Performance
6.
Income tax (continued)
Tax consolidation
APT and its wholly-owned Australian resident entities formed a tax-consolidated group with effect from 1 July 2003 and are
therefore taxed as a single entity from that date. The head entity within the tax-consolidated group is APT. The members of
the tax-consolidated group are identified at Note 24.
Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of
the tax-consolidated group are recognised in the separate financial reports of the members of the tax-consolidated group
using the 'separate taxpayer within group' approach, by reference to the carrying amounts in the separate financial reports
of each entity and the tax values applying under tax consolidation.
Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the wholly-owned entities are
assumed by the head entity in the tax-consolidated group and are recognised as amounts payable/(receivable) to/(from)
other entities in the tax-consolidated group in conjunction with any tax funding arrangement amounts.
The head entity recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent
that it is probable that future taxable profits of the tax-consolidated group will be available against which the assets
can be utilised.
Nature of tax funding arrangement and tax sharing agreement
Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax sharing agreement with
the head entity. Under the terms of the tax funding arrangement, each of the entities in the tax-consolidated group have
agreed to pay a tax equivalent payment to or from the head entity based on the current tax liability or current tax asset of
the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the tax-consolidated group.
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 payment obligations
or if an entity should leave the tax-consolidated group. The effect of the tax sharing agreement is that each member's
liability for the tax payable by the tax-consolidated group is limited to the amount payable to the head entity under the tax
funding arrangement.
7. Earnings per security
Basic and diluted earnings per unit attributable to the parent
Basic and diluted earnings per unit attributable to the non-controlling interest
Basic and diluted earnings per stapled security
2020
cents
22.4
4.5
26.9
2019
cents
18.9
5.5
24.4
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 unitholders of the parent
Net profit attributable to unitholders of the non-controlling interest
Net profit attributable to stapled securityholders for calculating
basic and diluted earnings per security
2020
$000
264,085
53,021
2019
$000
222,943
65,070
317,106
288,013
2020
No. of
securities
000
2019
No. of
securities
000
Adjusted weighted average number of ordinary securities used in the
calculation of basic and diluted earnings per security
1,179,894
1,179,894
APA GROUP I ANNUAL REPORT 2020
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Financial Performance
8. Distributions
Recognised amounts
Final FY2019 distribution paid on 11 September 2019
(2019: Final FY2018 distribution paid on 12 September 2018)
Profit distribution – APT (a)
Capital distribution – APT
Profit distribution – APTIT (b)
Capital distribution – APTIT
Interim FY2020 distribution paid on 11 March 2020
(2019: Interim FY2019 distribution paid on 13 March 2019)
Profit distribution – APT (c)
Capital distribution – APT
Profit distribution – APTIT (b)
Capital distribution – APTIT
Total distributions recognised
Profit distributions
Capital distributions
Unrecognised amounts
Final FY2020 distribution payable on 16 September 2020 (d)
(2019: Final FY2019 distribution paid on 11 September 2019)
Profit distribution – APT (e)
Capital distribution – APT
Profit distribution – APTIT (b)
Capital distribution – APTIT
2020
cents per
security
2020
Total
$000
2019
cents per
security
2019
Total
$000
8.53
10.44
2.55
3.98
25.50
11.45
6.66
2.40
2.49
23.00
24.93
23.57
48.50
8.53
11.74
2.09
4.64
27.00
100,663
123,153
30,056
47,002
300,874
135,138
78,530
28,335
29,372
271,375
294,192
278,057
572,249
100,666
138,528
24,686
54,692
318,572
8.93
9.03
2.90
3.14
24.00
9.50
6.58
2.97
2.45
105,412
106,513
34,228
37,022
283,175
112,123
77,668
35,014
28,872
21.50
253,677
24.30
21.20
45.50
8.53
10.44
2.55
3.98
25.50
286,777
250,075
536,852
100,663
123,153
30,056
47,002
300,874
a) Profit distributions were fully franked. Resulting in franking credits of 3.66 cents per security (2019: fully franked, franking credits of 3.83 cents per security).
b) Profit distributions are unfranked (2019: unfranked).
c) Interim profit distributions were 8.52 cents per security franked and 2.93 cents per security unfranked. Resulting in franking credits of 3.65 cents per security
(2019: 7.47 cents per security franked and 2.03 cents per security unfranked, franking credits of 3.20 cents per security).
d) Record date 30 June 2020.
e) Final profit distributions are to be fully franked. Resulting in franking credits of 3.66 cents per security (2019: fully franked, franking credits of 3.66 cents per security).
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.
Franking account balance
Income tax payable
Adjusted Franking account balance
2020
$000
(177)
30,861
30,684
2019
$000
(5,943)
32,005
26,062
The adjusted franking account balance will be reduced by $43.1 million (FY2019: $43.1 million) following the payment of the
final distribution payable on 16 September 2020 (FY2019: 11 September 2019).
On 31 July 2020, APA Group made a franking deficit tax payment of $0.2 million (FY2019: $5.9 million). This represents a
prepayment of the final income tax payment due for FY2020.
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Operating Assets and Liabilities
9. Receivables
Trade receivables
Accrued revenue
Loss allowance
Trade receivables
Receivables from associates and related parties
Finance lease receivables (Note 17)
Interest receivable
Other debtors
Current
Finance lease receivables (Note 17)
Loan receivable – related party
Non-current
2020
$000
31,313
218,013
(700)
248,626
12,985
1,166
1,340
20
2019
$000
26,080
198,816
(10)
224,886
23,373
1,246
378
79
264,137
249,962
11,639
—
11,639
12,794
117,337
130,131
At 30 June 2020, APA Group had no loan receivable from SEA Gas (2019: $122.3 million).
Trade receivables are non-interest bearing and are generally on 30 day terms. There are no material trade receivables past
due and not provided for.
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 initially recognised at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, they are stated at amortised cost less impairment.
The impact of COVID-19 has been considered in assessing loss allowance. No material impact has been identified to the date
of the issuance of these financial statements.
10. Payables
Trade payables (a)
Income tax payable
Other payables
Current
Other payables
Non-current
2020
$000
35,561
30,861
242,342
308,764
4,826
4,826
2019
$000
39,934
32,005
230,143
302,082
3,230
3,230
a) Trade payables are non-interest bearing and are normally settled on 15 – 30 day terms.
Trade and other payables are recognised when APA Group becomes obliged to make future payments resulting from the
purchase of goods and services. Trade and other payables are initially recognised at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, they are stated at amortised cost.
Payables are recognised inclusive of GST, except for accrued revenue and accrued expense at balance dates which exclude GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
GST receivable or GST payable is only recognised once a tax invoice has been issued or received.
APA GROUP I ANNUAL REPORT 2020
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Operating Assets and Liabilities
11. Property, plant and equipment
Freehold
land and
buildings
– at cost
$000
Leasehold
improve-
ments
– at cost
$000
Plant and
equipment
– at cost
$000
Work in
progress
– at cost
$000
ROU
land and
buildings
– at cost (a)
$000
ROU
plant and
equipment
– at cost (a)
$000
Total
$000
Gross carrying amount
Balance at 1 July 2018
248,717
10,660
10,651,086
856,378
Additions
Disposals
Transfers
—
(1)
12,988
—
—
127
29,345
503,500
(950)
—
812,782
(825,897)
Balance at 30 June 2019
261,704
10,787
11,492,263
533,981
Balance at 1 July 2019 (a)
261,704
10,787
11,492,263
533,981
Additions
Disposals
Transfers
—
—
5,514
—
—
—
32,262
393,660
(1,511)
—
210,451
(215,965)
—
—
—
—
—
—
—
—
—
—
11,766,841
532,845
(951)
—
12,298,735
54,646
3,437
(102)
—
7,619
12,361,000
3,400
432,759
(246)
(1,859)
—
—
Balance at 30 June 2020
267,218
10,787
11,733,465
711,676
57,981
10,773
12,791,900
Accumulated depreciation
Balance at 1 July 2018
(46,345)
(3,952)
(2,024,878)
Disposals
—
—
882
Depreciation expense (Note 5)
(7,544)
(967)
(419,859)
Balance at 30 June 2019
(53,889)
(4,919)
(2,443,855)
Balance at 1 July 2019 (a)
(53,889)
(4,919)
(2,443,855)
Disposals
—
—
1,490
Depreciation expense (Note 5)
(7,950)
(800)
(447,519)
Amounts included in the
cost of other assets
—
—
—
Balance at 30 June 2020
(61,839)
(5,719)
(2,889,884)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
51
—
—
—
—
—
66
(2,075,175)
882
(428,370)
(2,502,663)
(2,502,663)
1,607
(9,108)
(3,454)
(468,831)
—
(58)
(58)
(9,057)
(3,446)
(2,969,945)
Net book value
As at 30 June 2019
As at 30 June 2020
207,815
205,379
5,868
9,048,408
533,981
—
—
9,796,072
5,068
8,843,581
711,676
48,924
7,327
9,821,955
a) APA Group adopted AASB 16 ‘Leases’ on 1 July 2019 and recognised right of use (ROU) assets using the modified retrospective approach as such there is no
restatement of the comparative information.
Property, plant and equipment is stated at cost, less accumulated depreciation and impairment losses. Work in progress is
stated at cost. Cost includes expenditure that is directly attributable to the acquisition or construction of the item.
The right of use (“ROU”) asset is initially measured at cost comprising the initial measurement of the lease liability (as outlined
in Note 17) adjusted for any lease payments made before the commencement date and reduced by any lease incentives
received plus initial direct costs incurred in obtaining the lease. Any make good requirements are recognised and measured
under AASB 137 Provisions, Contingent Liabilities and Contingent Assets and to the extent that the costs relate to a ROU
asset these are included in the related ROU asset.
A ROU asset is subsequently measured using the cost model less any accumulated depreciation and any accumulated
impairment losses, and adjusted for any remeasurement of the lease liability. The ROU asset is depreciated over the term of
the lease.
Subsequently, APA Group applies AASB 136 Impairment of Assets to determine whether a ROU asset is impaired and accounts
for any impairment as described in Note 13 Impairment of non-financial assets of the annual report for the financial year end
30 June 2020.
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Operating Assets and Liabilities
11. Property, plant and equipment (continued)
Where the ROU is adjusted due to changes in the lease liability, the depreciation for the ROU asset is adjusted on a prospective basis.
Depreciation is provided on property, plant and equipment excluding land. Depreciation is calculated on a straight-line basis
depending on the nature of the asset so as to write off the net cost of each asset over its estimated useful life.
Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using
the straight-line method. The estimated useful lives and depreciation methods are reviewed at the end of each reporting
period, with the effect of any changes recognised on a prospective basis.
Where the ROU asset is adjusted due to changes in the lease liability, the depreciation for the ROU asset is adjusted on a
prospective basis.
The depreciation charge for each period is recognised in profit or loss unless it is included in the cost of another asset.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets (i.e. assets that take
a substantial period of time to get ready for their intended use or sale) are added to the cost of those assets until such time
as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Critical accounting judgements and key sources of estimation uncertainty – useful lives of non-current assets
APA Group reviews the estimated useful lives of property, plant and equipment at the end of each annual reporting period.
Physical, economic and environmental factors are taken into consideration in assessing the useful lives of the assets, including
but not limited to asset condition and obsolescence, technology changes, commercial contract lives and renewals, global and
regional gas supply-and-demand, and climate change based on TCFD scenario testing to 2030. Any reassessment of useful
lives in a particular year will affect the depreciation expense.
The following estimated useful lives are used in the calculation of depreciation:
— buildings
— compressors
— gas transportation systems
— meters
— power generation facilities
— other plant and equipment
30 – 50 years;
10 – 50 years;
10 – 80 years;
20 – 30 years;
3 – 25 years;
3 – 20 years;
— ROU land and buildings
1 – 40 years; and
— ROU property, plant and equipment
1 – 4 years.
12. Goodwill and intangibles
Goodwill
Balance at beginning of financial year
Balance at end of financial year
2020
$000
2019
$000
1,183,604
1,183,604
1,183,604
1,183,604
Allocation of goodwill to cash-generating units
Goodwill has been allocated for impairment testing purposes to individual cash-generating units.
The East Coast Grid is an interconnected pipeline network that includes, inter alia, the Wallumbilla Gladstone, Moomba
Sydney, Roma Brisbane, Carpentaria Gas and South West Queensland pipelines and the Victorian Transmission System.
Since the acquisition of the South West Queensland Pipeline to complete the formation of APA’s East Coast Grid in December
2012, APA has installed facilities to enable bi-directional transportation of gas to meet the demand of our major customers
who now typically operate portfolios of gas supply and demand. Through the provision of multi-asset services, bi-directional
transportation, capacity trading and gas storage and parking facilities, APA’s East Coast Grid delivers options for customers
to choose from, and move gas between, more than 60 receipt points and over 170 delivery points on the east coast of
Australia. The East Coast Grid is categorised as an individual cash-generating unit.
Goodwill acquired in a business combination is initially measured at cost and subsequently at cost less accumulated impairment.
APA GROUP I ANNUAL REPORT 2020
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Operating Assets and Liabilities
12. Goodwill and intangibles (continued)
Allocation of goodwill to cash-generating units (continued)
The carrying amount of goodwill allocated to cash-generating units that are significant individually or in aggregate are as follows:
Asset Management business
Energy Infrastructure
East Coast Grid
Diamantina Power Station
Other energy infrastructure (a)
a) Primarily represents goodwill relating to the Pilbara Pipeline System ($32.6m) and the Goldfields Gas Pipeline ($18.5m).
Contract and other intangibles
Gross carrying amount
Balance at beginning of financial year
Additions
Balance at end of financial year
Accumulated amortisation and impairment
Balance at beginning of financial year
Amortisation expense (Note 5)
Balance at end of financial year
2020
$000
21,456
2019
$000
21,456
1,060,681
1,060,681
43,104
58,363
43,104
58,363
1,183,604
1,183,604
3,591,278
3,590,960
253
318
3,591,531
3,591,278
(781,517)
(182,735)
(598,529)
(182,988)
(964,252)
(781,517)
2,627,279
2,809,761
APA Group holds various third party operating and maintenance contracts. The combined gross carrying amount of $3,591.5
million amortises over terms ranging from one to 15 years. Useful life is determined based on the underlying contractual
terms. Amortisation expense is not a cash item, and is included in the line item of depreciation and amortisation expense in
the statement of profit or loss and other comprehensive income.
Intangible assets acquired separately are carried at cost less accumulated amortisation and impairment losses. 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 and subsequently at cost less accumulated amortisation and impairment losses.
Amortisation is recognised on a straight-line basis over the estimated useful life of each asset. 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.
13. Impairment of non-financial assets
APA Group tests property, plant and equipment, intangibles and goodwill for impairment at least annually or whenever there
is an indication that the asset may be impaired. Assets other than goodwill that have previously reported an impairment are
reviewed for possible reversal of the impairment at each reporting period.
If the asset does not generate independent cash inflows and its value in use cannot be estimated to be close to its fair value,
the asset is tested for impairment as part of the cash-generating unit (CGU) to which it belongs.
Assets are impaired if their carrying value exceeds their recoverable amount. The recoverable amount of an asset or CGU is
determined as the higher of its fair value less costs of disposal or value-in-use.
Determining whether 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 APA Group 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.
These estimates and assumptions are reviewed on an ongoing basis.
The recoverable amounts of cash-generating units are determined based on value-in-use calculations. These calculations use
cash flow projections based on a five year financial business plan and thereafter a further 15 year financial model inclusive
of appropriate terminal values. This is the basis of APA Group's forecasting and planning processes which represents the
underlying long term nature of associated customer contracts on these assets.
In accordance with the requirements of AASB 136 Impairment of Assets, APA Group reviewed its CGUs for indicators of
impairment at the end of the reporting period. No such indicators were identified and no impairment recognised.
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Operating Assets and Liabilities
13. Impairment of non-financial assets (continued)
Critical accounting judgements and key sources of estimation uncertainty – impairment of assets
The key estimates and assumptions used in the assessment of impairment include but are not limited to: asset capacity; asset lives;
forecast operating costs and margins; gas field reserve estimates; the effect of inflation; discount rates; customer contract terms
and renewals; residual value; and asset construction costs. Where the key assumptions for the assessment of new assets such as
expected construction costs, expected time to commissioning, expected revenues, expected operating and capital costs at the time
of investment differs from the final outcomes, significant variances to the key assumptions may cause triggers for impairment.
These assumptions have been determined with reference to historic information, current performance and expected changes taking
into account external information such as market inputs on discount rates, the effects of inflation, climate change based on TCFD
scenario testing to 2030, the outlook for global and regional gas market supply-and-demand conditions, and internal information
such as contract renewals, and forecast input costs. Such estimates may change as new information becomes available.
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 7.75% p.a. (2019: 7.75% p.a.) for Energy Infrastructure assets and 7.75% p.a.
(2019: 7.75% p.a.) for Asset Management.
For fully regulated assets, cash flows have been extrapolated on the basis of existing transportation contracts and government
policy settings, and expected contract renewals with a resulting average annual growth rate of 0.3% p.a. (2019: 1.0% 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 cash generating unit operates.
For-non regulated assets, APA Group has assumed no capacity expansion beyond installed and committed levels; utilisation of
capacity is based on existing contracts and renewals, government policy settings and APA Group’s expected market outcomes.
As contracts mature, given ongoing demand for capacity, it is assumed that the majority of the capacity is resold at similar pricing levels.
Asset Management cash flow projections reflect long term agreements with assumptions of renewal on similar terms and
conditions based on management's expectations.
Orbost Gas Processing Plant
As part of the April 2020 market update, APA Group flagged that it was yet to complete the performance tests required
for the Orbost Gas Processing Plant to meet commercial operations under the agreement with Cooper Energy. APA Group
continues to work with Cooper Energy in reaching the plant nameplate capacity of 68 TJ/day.
The recoverable amount of the Orbost Gas Processing Plant has been assessed for impairment using a forward-looking
discounted cash flow analysis, based on operating at levels up to nameplate capacity over its 25 year technical life from
completion of commissioning.
The key estimates and assumptions used in the assessment of impairment include: a pre-tax discount rate of 7.75%; plant
nameplate processing capacity 68 TJ/day; completed plant construction costs; future re-contracting revenues based on
current option agreements; gas field reserve estimates; inflation; forecast operating and capital costs.
As at 30 June 2020 the estimated recoverable value of the plant is in excess of its carrying value of $443.9 million.
The estimated recoverable value of the plant comprises of the value attributed to the Cooper Energy Sole gas processing
agreements and in the order of $90 million of value attributable to future, as yet, uncontracted revenues.
The assessment of the recoverable amount represents management's best estimates. Management will continue to assess
the progress of the plant against these estimates. Sensitivity analysis of these estimates, holding all other assumptions
constant, indicate that a future 15% reduction in the plant’s nameplate capacity could result in a future impairment charge
in the order of $65 million; or a future 1% increase to the discount rate could result in a future impairment charge in the order
of $27 million.
14. Provisions
Employee benefits
Other
Current
Employee benefits
Other
Non-current
2020
$000
77,878
11,758
89,636
60,082
55,823
115,905
2019
$000
86,625
8,216
94,841
33,672
55,991
89,663
APA GROUP I ANNUAL REPORT 2020
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Operating Assets and Liabilities
14. Provisions (continued)
Employee benefits
Incentives
Cash settled security-based payments
Leave balances
Termination benefits
Current
Cash settled security-based payments
Defined benefit liability (Note 16)
Leave balances
Non-current
2020
$000
21,204
7,132
49,009
533
77,878
8,414
41,052
10,616
60,082
2019
$000
33,126
7,042
46,137
320
86,625
9,695
13,852
10,125
33,672
A provision is recognised when there is a legal or constructive obligation as a result of a past event, it is probable that future
economic benefits will be required to settle the obligation and the amount of 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 into account the risks and uncertainties surrounding the obligation. Where a provision is measured
using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable
is recognised as an asset if it is probable that recovery will be received and the amount of the receivable can be measured reliably.
Provision is made for benefits accruing to employees in respect of wages and salaries, incentives, annual leave and long
service leave when it is probable that settlement will be required. Provisions made in respect of employee benefits expected
to be settled within 12 months, are recognised for employee services up to reporting date at the amounts expected to be
paid when the liability is settled. Provisions made in respect of employee benefits which are not expected to be wholly settled
within 12 months are measured as the present value of the estimated future cash outflows using a discount rate based on
the corporate bond yield in respect of services provided by employees up to reporting date.
15. Other non-current assets
Line pack gas
Gas held in storage
Defined benefit asset (Note 16)
Other assets
2020
$000
20,607
6,010
2,534
192
29,343
2019
$000
20,607
6,010
4,057
192
30,866
16. Employee superannuation plans
All employees of APA Group are entitled to benefits on retirement, disability or death from an industry sponsored fund, or an
alternative fund of their choice. APA Group has three plans with defined benefit sections (due to the acquisition of businesses)
and a number of other plans with defined contribution sections. The defined benefit sections provide lump sum benefits upon
retirement based on years of service. The defined contribution sections receive fixed contributions from APA Group and APA
Group's legal and constructive obligations are limited to these amounts.
The most recent actuarial valuations of plan assets and the present value of the defined benefit obligations were determined
at 30 June 2020. The present value of the defined benefit obligations, and the related current service cost and past service
cost, were measured using the projected unit credit method.
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
Net interest expense/(income)
Components of defined benefit costs recognised in profit or loss (Note 5)
84
APA GROUP I ANNUAL REPORT 2020
2020
$000
2,054
294
2,348
2019
$000
1,955
(11)
1,944
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Operating Assets and Liabilities
16. Employee superannuation plans (continued)
Amounts recognised in the statement of financial position
Fair value of plan assets
Present value of benefit obligation
Defined benefit asset – non-current (Note 15)
Defined benefit liability – non-current (Note 14)
Opening defined benefit obligation
Current service cost
Interest cost
Contributions from plan participants
Actuarial loss
Benefits paid
Administrative expenses, taxes and premiums paid
Closing defined benefit obligation
Movements in the present value of the plan assets in the current period were as follows:
Opening fair value of plan assets
Interest income
Actual return on plan assets excluding interest income
Contributions from employer
Contributions from plan participants
Benefits paid
Administrative expenses, taxes and premiums paid
Closing fair value of plan assets
2020
$000
2019
$000
124,358
(162,876)
2,534
(41,052)
136,487
(146,282)
4,057
(13,852)
146,282
133,959
2,054
4,329
669
21,914
(11,905)
(467)
162,876
1,955
5,312
744
15,837
(11,044)
(481)
146,282
136,487
135,620
4,035
(6,189)
1,728
669
(11,905)
(467)
124,358
5,323
4,420
1,905
744
(11,044)
(481)
136,487
Defined contribution plans
Contributions to defined contribution plans are expensed when incurred.
Defined benefit plans
Actuarial gains and losses and the return on plan assets (excluding interest) are recognised immediately in the statement
of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur.
Remeasurement, comprising of actuarial gains and losses and the return on plan assets (excluding interest), is recognised
in other comprehensive income and immediately reflected in retained earnings and will not be reclassified to profit or loss.
Past service cost is recognised in profit or loss in the period of a plan amendment.
The defined benefit obligation recognised in the consolidated statement of financial position represents the actual deficit
or surplus in APA Group's defined benefit plans. Any asset resulting from this calculation is limited to the present value of
economic benefits available in the form of refunds and reductions in future contributions to the plan.
Key actuarial assumptions used in the determination of the defined benefit obligation is a discount rate of 3.0% gross of tax (2019:
3.1%), based on the corporate bond yield curve published by Milliman, an expected salary increase rate of 2.7% (2019: 3.0%), and
pension indexation rate of 2.0% (2019 2.0%). The sensitivity analysis below has been determined based on reasonable possible
changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant:
— If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by $9,627,000 (increase
by $10,818,000).
— If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by $1,875,000
(decrease by $1,766,000).
— If the expected pension indexation rate increases (decreases) by 0.5%, the defined benefit obligation would increase by
$8,586,000 (decrease by $7,776,000).
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is
unlikely that the change in assumptions would occur in isolation to one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been
calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in
calculating the defined benefit obligation liability recognised in the statement of financial position.
APA Group expects to pay $3.4 million in contributions to the defined benefit plans during the year ending 30 June 2021.
APA GROUP I ANNUAL REPORT 2020
85
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Operating Assets and Liabilities
17. Leases
APA Group as a lessee
The APA Group lease obligations are primarily related to commercial office leases and motor vehicles.
Lease Liability
Not longer than 1 year
Longer than 1 year but not longer than 5 years
Longer than 5 years
Minimum future lease payments
Less: Future finance cost
Present value of the future lease payments
Current lease liability
Non-current lease liability
2020
$000
15,808
42,671
22,475
80,954
11,077
69,877
13,544
56,333
69,877
APA Group adopted AASB 16 ‘Leases’ using the modified retrospective approach as such there is no restatement of the
comparative information.
APA Group has no material short-term leases, lease for low-value assets or variable lease payments.
At inception of a contract, APA Group assesses whether a lease has been entered into if:
— The contract involves the use of an identified asset – the asset may be explicitly or implicitly specified in the contract.
Capacity portions of larger assets would be considered an identified asset if the portion is physically distinct or if the
portion represents substantially all of the capacity of the asset. An asset is not considered an identified asset if the supplier
has the substantive right to substitute the asset throughout the period of use;
— APA Group has the right to obtain substantially all of the economic benefits from the use of the asset throughout the
period of use; and
— APA Group has the right to direct the use of the asset throughout the period of use. APA Group considers itself to have the
right to direct the use of the asset only if either:
i) APA Group has the right to direct how and for what purpose the identified asset is used throughout the period of use; or
ii) The relevant decisions about how and for what purposes the asset is used are predetermined and APA Group has the
right to operate the asset, or APA Group designed the asset in a way that predetermines how and for what purpose the
asset will be used throughout the period of use.
Where APA Group has determined that a lease exists, a right-of-use asset (disclosed in Note 11) and a corresponding lease
liability is recognised at the commencement date of the lease for all leases other than short-term or low-value asset leases.
The lease liability is initially measured at the present value of future lease payments at the commencement date, comprising
the following:
— fixed payments, including in-substance fixed payments;
— variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement
date (e.g. payments which vary due to changes in CPI, or commodity prices);
— amounts expected to be payable by the lessee under residual value guarantees, purchase options and termination penalties
(where relevant); and
— Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain
to be extended (or not terminated).
To calculate the present value, the future lease payments are discounted using the interest rate implicit in the lease (“IRIL”),
if the rate is readily determinable. If the IRIL cannot be readily determined, the incremental borrowing rate (“IBR”) at the
commencement date is used. The IBR is calculated based on the prevailing swap rate for a tenor that closely aligns with the
term of the lease and then adjusted for APA Group credit spreads in a currency that matches the currency of the liability.
Subsequently, the lease liability is measured in a manner similar to other financial liabilities, at amortised cost using the effective
interest rate method. The liability is remeasured to reflect any reassessment of lease payments or lease modifications, or to
reflect revised in-substance fixed lease payments.
Variable payments other than those included in the measurement of the lease liability above (i.e. those not based on an index or rate)
are recognised in the statement of profit or loss in the period in which the event or condition that triggers those payments occur.
Short term leases (i.e. where the lease term is less than 12 months) and low-value asset leases are recognised as an expense
in the statement of profit or loss on a straight-line basis.
Total cash outflow for leases amounted to $16.1 million, excluding payments for short term leases, low-value asset leases and
variable payments leases.
86
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Operating Assets and Liabilities
17. Leases (continued)
APA Group as a lessor
Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards incidental
to the ownership of the leased asset to the lessee. All other leases are classified as operating leases.
Finance lease receivables relate to the lease of a metering station, natural gas vehicle refuelling facilities 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)
Less: unearned finance lease receivables
Present value of lease receivables
Included in the financial statements as part of:
Current trade and other receivables (Note 9)
Non-current receivables (Note 9)
2020
$000
2,232
7,542
9,410
19,184
(6,379)
12,805
1,166
11,639
12,805
2019
$000
2,411
8,063
11,121
21,595
(7,555)
14,040
1,246
12,794
14,040
a) Minimum future lease payments receivable include the aggregate of all lease payments receivable and any guaranteed residual.
APA Group does not have any operating leases where it is the lessor.
Amounts due from a lessee under finance leases are recorded as receivables. Finance lease receivables are initially recognised
at amounts equal to the present value of the minimum lease payments receivable plus the present value 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.
Capital Management
APA Group's objectives when managing capital are to safeguard its ability to continue as a going concern whilst maximising
the return to securityholders through the optimisation of the debt to equity structure.
APA Group's overall capital management strategy is to continue to target Baa2/BBB investment grade credit ratings through
maintaining sufficient flexibility to fund organic growth and investment from internally generated and retained cash flows,
debt funding and, where appropriate, additional equity.
The capital structure of APA Group consists of cash and cash equivalents, borrowings and equity attributable to securityholders
of APA Group. APA Group's policy is to maintain balanced and diverse funding sources through borrowing locally and from
overseas, using a variety of capital markets and bank loan facilities, to meet anticipated funding requirements. This funding
plus operating cash flows are used to maintain and expand APA Group's assets, make distributions to securityholders, repay
maturing debt and meet anticipated funding requirements.
Controlled entities are subject to externally imposed capital requirements. These relate to the Australian Financial Services
Licence held by Australian Pipeline Limited, the Responsible Entity of APA Group, and were adhered to for the entirety of the
2020 and 2019 periods.
APA Group's capital management strategy remains unchanged from the previous year.
APA Group's Board of Directors reviews the capital structure on a regular basis. As part of the review, the Board considers the
cost of capital and the state of the markets. APA Group's Funds From Operations to Net Debt exceed the minimum threshold
levels that Moody's and Standard & Poor's (”S&P”) consider appropriate for APA Group's Baa2/BBB credit ratings. Funds
From Operations to Net Debt is a leverage metric that measures cash flows generated by the business that are available
to service debt (note: each rating agency calculates credit metrics slightly differently using their own proprietary methods).
The ability to service debt and therefore creditworthiness, improves as the percentage of Funds From Operations to Net
Debt increases (and vice versa). APA Group balances its overall capital structure through equity issuance, new debt or the
redemption of existing debt and through a disciplined distribution payment policy.
APA GROUP I ANNUAL REPORT 2020
87
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
18. Net debt
Cash and cash equivalents comprise of cash on hand, at call bank deposits and investments in money market instruments
that are readily convertible to known amounts for cash. Cash and cash equivalents at the end of the financial year as shown
in the statement of cash flows are reconciled to the related items in the statement of financial position detailed in the table
below.
Borrowings are recorded initially at fair value less attributable transaction costs and subsequently stated at amortised cost.
Any difference between the initial recognised cost and the redemption value is recognised in the statement of profit or loss
and other comprehensive income over the period of the borrowing using the effective interest method.
Cash at bank and on hand
Short-term deposits
Cash and cash equivalents
Guaranteed senior notes (a)
Other financial liabilities
Current borrowings
Guaranteed senior notes (a)
Other financial liabilities
Less: unamortised borrowing costs
Non-current borrowings
Total borrowings
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
Net debt
2020
$000
502,765
670,006
1,172,771
(299,954)
(10,659)
2019
$000
354,703
244
354,947
(433,550)
(10,952)
(310,613)
(444,502)
(10,591,648)
(9,841,174)
(55,585)
39,851
(65,379)
40,740
(10,607,382)
(9,865,813)
(10,917,995)
(10,310,315)
(13,544)
(56,333)
(69,877)
—
—
—
(9,815,101)
(9,955,368)
a) Represents USD denominated private placement notes of US$124 million, JPY MTN of ¥10,000 million, GBP MTN of £1,350 million, EUR MTN of €1,950 million
and USD denominated 144a notes of US$3,000 million measured at the exchange rate at reporting date, and A$143 million of AUD denominated private
placement notes and AUD MTN of A$500 million (2019: Includes USD denominated private placement notes of US$75 million and CAD MTN of C$300 million).
Refer to Note 19 for details of interest rates and maturity profiles.
Reconciliation of net debt
Cash and cash
equivalents
$000
Borrowings Borrowings
due after
1 year
$000
due within
1 year
$000
Net debt as at 1 July 2018
Cash movements
100,643
254,360
(329,219)
(9,321,377)
325,854
(819,706)
Foreign exchange movements due to fair value changes
(56)
(41,699)
(122,836)
Transfer from due after 1 year to due within 1 year
Amortisation of deferred borrowing costs
—
—
(399,438)
399,438
—
(1,332)
Net debt as at 30 June 2019
354,947
(444,502)
(9,865,813)
Lease
Liabilities
$000
—
—
—
—
—
—
Net debt
$000
(9,549,953)
(239,492)
(164,591)
—
(1,332)
(9,955,368)
Transition at adoption of AASB 16 (a)
—
—
—
(74,565)
(74,565)
Net debt as at 1 July 2019
354,947
(444,502)
(9,865,813)
(74,565) (10,029,933)
Cash movements
Non cash changes – leases
Foreign exchange movements due to fair value changes
Transfer from due after 1 year to due within 1 year
Amortisation of deferred borrowing costs
817,776
398,836
(1,017,812)
—
48
—
—
—
—
45,666
(33,527)
(310,613)
310,659
—
(889)
13,482
(8,794)
—
—
—
212,282
(8,794)
12,187
46
(889)
Net debt as at 30 June 2020
1,172,771
(310,613) (10,607,382)
(69,877)
(9,815,101)
a) APA Group adopted AASB 16 ‘Leases’ using the modified retrospective approach as such there is no restatement of the comparative information.
88
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
18. Net debt (continued)
Financing facilities available
Total facilities
Guaranteed senior notes (a)
Bank borrowings (b)
Facilities used at balance date
Guaranteed senior notes (a)
Bank borrowings (b)
Facilities unused at balance date
Guaranteed senior notes (a)
Bank borrowings (b)
2020
$000
2019
$000
10,891,602
1,300,000
10,274,724
1,550,000
12,191,602
11,824,724
10,891,602
10,274,724
—
—
10,891,602
10,274,724
—
—
1,300,000
1,550,000
1,300,000
1,550,000
a) Represents USD denominated private placement notes of US$124 million, JPY MTN of ¥10,000 million, GBP MTN of £1,350 million, EUR MTN of €1,950 million
and USD denominated 144a notes of US$3,000 million measured at the exchange rate at reporting date, and A$143 million of AUD denominated private
placement notes and AUD MTN of A$500 million (2019: Includes USD denominated private placement notes of US$75 million and CAD MTN of C$300 million).
Refer to Note 19 for details of interest rates and maturity profiles.
b) Refer to Note 19 for details of interest rates and maturity profiles.
19. Financial risk management
APA Group's corporate Treasury department is responsible for the overall management of APA Group’s capital raising
activities, liquidity, lender relationships and engagement, debt portfolio management, interest rate and foreign exchange
hedging, credit rating maintenance and third party indemnities (bank guarantees) within risk management parameters
approved by the Audit and Risk Committee (“ARMC“) and reviewed by the Board.
APA Group's activities generate financial instruments comprising of cash, receivables, payables and interest bearing liabilities
which expose it to various risks as summarised below:
a) Market risk including currency risk, interest rate risk and price risk;
b) Credit risk; and
c) Liquidity risk.
Risk
Sources
Financial exposure
Risk management framework
Market
Commercial transactions
in foreign currency and
funding activities
Credit
Cash, receivables, interest
bearing liabilities and hedging
Refer to market risk section.
The carrying amount of financial
assets recorded in the financial
statements, net of any collateral
held or bank guarantees held by
the Group, represents APA Group's
maximum exposure to credit risk in
relation to those assets.
Liquidity
Ongoing business operations,
financial market disruptions
and new investment
opportunities
A detailed table shows APA Group's
remaining contractual maturities
for its non-derivative financial
liabilities at the end of this section.
The ARMC approves written
principles for overall risk
management, as well as policies
covering specific areas such as
liquidity risk, funding risk, foreign
currency risk, interest rate risk and
credit risk. APA Group's ARMC
ensures there is an appropriate
Risk Management Policy for the
management of treasury risk
and compliance with the policy
through the review of monthly
reporting to the Board from the
Treasury department.
APA GROUP I ANNUAL REPORT 2020
89
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
19. Financial risk management (continued)
a) Market risk
APA Group's market risk exposure is primarily due to changes in market prices such as interest and foreign exchange rates.
APA Group is also exposed to price risk arising from its forward purchase contracts over listed equities and electricity price risk
arising from an electricity contract for difference. The table below summarises these risks by nature of exposure and provides
information about the risk mitigation strategies being applied:
Nature
Sources of financial exposure
Risk management strategy
Foreign exchange
APA Group's foreign exchange
risk arises from future commercial
transactions (including revenue,
interest payments and principal
debt repayments on long-term
borrowings and the purchases
of capital equipment).
Interest rate
APA Group's interest rate risk
is derived predominately from
borrowings subject to floating
interest rates.
Exchange rate exposures are managed within approved
policy parameters utilising foreign currency FECs, cross
currency swap contracts (“CCIRS”) and foreign currency
denominated borrowings. All foreign currency exposure was
managed in accordance with the Treasury Risk Management
Policy, including:
— FECs to hedge the exchange rate risk arising from
foreign currency cash flows, mainly US dollars,
derived from revenues, interest payments and capital
equipment purchases;
— CCIRS to manage the currency risk associated with
foreign currency denominated borrowings; and
— Foreign currency denominated borrowings to manage
the currency risk associated with foreign currency
denominated revenue and receivables.
This risk is managed by APA Group by maintaining an
appropriate mix between fixed and floating rate borrowings,
through the use of interest rate swap contracts. Hedging
activities are evaluated regularly to align with interest rate
views and defined policy, ensuring appropriate hedging
strategies are applied.
Equity price and
electricity price
APA Group is exposed to price risk
arising from its forward purchase
contracts over listed equities and
electricity price risk arising from
a contract for difference in an
electricity sales agreement with a
customer.
The equity price risk is managed by forward purchase
contracts held to meet hedging objectives rather than
for trading purposes. APA Group does not actively trade
these holdings. Electricity price risk is managed with power
purchase agreements with creditworthy counterparties. The
key assumptions of the commercial contract for difference
are provided in the fair value of financial instrument section.
There has been no change to the nature of the market risks to which APA Group is exposed or the manner in which these risks
are managed and measured.
Foreign currency risk
Foreign currency forward exchange contracts
To manage foreign exchange risk arising from future commercial transactions such as forecast capital purchases, revenue
and interest payments, APA Group uses FECs. Gains and losses recognised in the cash flow hedge reserve (statement of
comprehensive income) on these derivatives will be released to profit or loss when the underlying anticipated transaction
affects the statement of profit or loss or will be included in the carrying value of the asset or liability acquired.
The carrying amount of APA Group's foreign currency denominated monetary assets, monetary liabilities and derivative
notional amounts at the reporting date is as follows (converted to AUD at the spot rate at reporting date):
2020
US Dollar (USD) (a)
Japanese Yen (JPY)
British Pound (GBP)
Euro (EUR)
Swedish Krona (SEK)
Cash & cash
equivalents
$000
Total
borrowings
$000
2,934
(4,530,162)
—
—
—
—
(134,338)
(2,423,481)
(3,174,688)
—
Cross
currency
swaps
$000
224,601
134,338
2,423,481
3,174,688
—
Forward
exchange
contract
$000
Net foreign
currency
position
$000
(589,300)
(4,891,927)
—
127
3,162
25,575
—
127
3,162
25,575
2,934
(10,262,669)
5,957,108
(560,436)
(4,863,063)
a) The net foreign currency position (comprising USD denominated borrowings and FECs) are used to manage foreign currency risk associated with USD revenue
and receivables.
90
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
19. Financial risk management (continued)
a) Market risk (continued)
Foreign currency forward exchange contracts (continued)
2019
US Dollar (USD) (a)
Japanese Yen (JPY)
Canadian Dollar (CAD)
British Pound (GBP)
Euro (EUR)
Swedish Krona (SEK)
Cash & cash
equivalents
$000
Total
borrowings
$000
12,458
(4,558,603)
Cross
currency
swaps
$000
327,588
132,196
326,675
Forward
exchange
contract
$000
Net foreign
currency
position
$000
(955,218)
(5,173,775)
—
—
262
2,956
36,690
—
—
262
2,956
36,690
—
—
—
—
—
(132,196)
(326,675)
(2,442,600)
2,442,600
(2,187,895)
2,187,895
—
—
12,458
(9,647,969)
5,416,954
(915,310)
(5,133,867)
a) The net foreign currency position (comprising USD denominated borrowings and FECs) are used to manage foreign currency risk associated with USD revenue
and receivables.
It is the policy of APA Group to hedge 100% of all foreign exchange exposures in excess of US$1 million equivalent that are
certain. Forecast foreign currency denominated revenues and interest payments will be hedged by FECs on a rolling basis
with the objective being to lock in the AUD gross cash flows and manage liquidity.
For the hedges of highly probable forecast sales and purchases, as the critical terms (i.e. the notional amount, life and
underlying currency) of the FECs and their corresponding hedged items are the same, APA Group performs a qualitative
assessment of effectiveness and it is expected that the value of the FECs and the value of the corresponding hedged items
will systematically change in opposite directions in response to movements in the underlying exchange rates.
The main source of hedge ineffectiveness in these hedging relationships is the effect of the counterparty and APA Group's own
credit risk on the fair value of the FECs, which is not reflected in the fair value of the hedged item attributable to changes in
foreign exchange rates. The effect of credit risk does not dominate the value changes that result from that economic relationship.
The following table details the FECs outstanding at reporting date:
Cash flow hedges
2020
Average
contract rate
$
Contract Value
< 1 year
$000
1 – 2 years
$000
2 – 5 years
$000
Fair value
$000
Forecast revenue and associated receivable
Sell USD
0.7162
318,735
253,313
—
(22,284)
Forecast capital purchases
Buy USD
Buy EUR
Buy SEK
Buy GBP
2019
0.6500
0.5974
5.7959
0.5259
(4,991)
(2,755)
(24,697)
(135)
286,157
(42)
(496)
(3,683)
—
(84)
—
—
—
(295)
(71)
(2,718)
(8)
249,092
(84)
(25,376)
Forecast revenue and associated receivable
Sell USD
0.7169
319,697
364,587
253,313
(11,874)
Forecast capital purchases
Buy USD
Buy EUR
Buy SEK
Buy GBP
0.7124
0.6018
5.7712
0.5431
(2,594)
(942)
(7,217)
(267)
—
(1,522)
(30,528)
—
—
(567)
(3,684)
—
308,677
332,537
249,062
35
(1)
(3,818)
(5)
(15,663)
As at the reporting date, APA Group has entered into FECs to hedge the foreign currency exposure arising from anticipated
future transactions, which are designated in cash flow hedge relationships. The hedged anticipated transactions are expected
to occur at various dates between one month to two years from reporting date.
APA GROUP I ANNUAL REPORT 2020
91
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
19. Financial risk management (continued)
a) Market risk (continued)
Cross currency swap contracts
APA Group enters into cross currency swap contracts to mitigate the risk of adverse movements in foreign exchange rates in
relation to principal and interest payments arising from foreign currency borrowings. APA Group receives fixed amounts in the
various foreign currencies and pays fixed interest rates for the full term of the underlying borrowings. In certain circumstances
borrowings are retained in the foreign currency, or hedged from one foreign currency to another to match payments of
interest and principal against expected future business cash flows in that foreign currency.
The following table details the cross currency swap contract principal payments due as at the reporting date:
Cash flow hedges
2020
Foreign
currency
Exchange
rate
$
Less than
1 year
$000
1 – 2 years
$000
2 – 5 years
$000
More than
5 years
$000
Pay AUD / receive foreign currency
2007 USPP Notes
2012 US144A
2012 GBP Medium Term Notes
2015 EUR Medium Term Notes
2017 US144A
2019 GBP Medium Term Notes
AUD/USD
0.8068
AUD/USD
AUD/GBP
AUD/EUR
AUD/USD
AUD/GBP
1.0198
0.6530
0.6183
0.7668
0.5388
2019 JPY Medium Term Notes
AUD/JPY
75.2220
2020 EUR Medium Term Notes
AUD/EUR
0.5895
Pay USD / receive foreign currency
2015 EUR Medium Term Notes
2015 GBP Medium Term Notes
USD/EUR
USD/GBP
0.9514
0.6773
2019
Pay AUD / receive foreign currency
2007 USPP Notes
2009 USPP Notes
2012 CAD Medium Term Notes
2012 US144A
2012 GBP Medium Term Notes
2015 EUR Medium Term Notes
2017 US144A
2019 GBP Medium Term Notes
AUD/USD
AUD/USD
AUD/CAD
AUD/USD
AUD/GBP
AUD/EUR
AUD/USD
AUD/GBP
0.8068
0.7576
1.0363
1.0198
0.6530
0.6183
0.7668
0.5388
2019 JPY Medium Term Notes
AUD/JPY
75.2220
Pay USD / receive foreign currency
2015 EUR Medium Term Notes
2015 GBP Medium Term Notes
USD/EUR
USD/GBP
0.9514
0.6773
—
—
—
—
—
—
—
—
—
—
—
—
(98,997)
(289,494)
—
—
—
—
—
—
—
—
(388,491)
(153,694)
—
—
—
(735,438)
(535,988)
(1,132,141)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1,108,503)
(742,390)
(132,940)
(1,017,812)
(990,741)
(1,284,658)
(1,285,835)
(1,271,426)
(5,277,044)
—
—
—
—
—
—
—
—
—
—
—
—
(153,694)
—
—
(735,438)
—
—
—
—
—
(535,988)
(1,132,141)
—
—
—
—
—
—
(1,108,503)
(742,390)
(132,940)
(973,587)
(1,262,415)
(2,021,273)
(4,755,823)
Foreign currency denominated borrowings
APA Group maintains a level of borrowings in foreign currency, or swapped from one foreign currency to another to match
payments of interest and principal against expected future business cash flows in that foreign currency. This mitigates the
risk of movements in foreign exchange rates in relation to principal and interest payments arising from these foreign currency
borrowings as well as future revenues.
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APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
19. Financial risk management (continued)
a) Market risk (continued)
Foreign currency sensitivity analysis
The analysis below shows the effect on profit and total equity of retranslating cash, receivables, payables and interest-
bearing liabilities denominated in USD, JPY, CAD, GBP, EUR and SEK into AUD, had the rates been 20 percent higher or
lower than the relevant year end rate, with all other variables held constant, and taking into account all underlying exposures
and related hedges. A sensitivity of 20 percent has been selected and represents management's assessment of the possible
change in rates taking into account the current level of exchange rates and the volatility observed both on an historical basis
and on market expectations for possible future movements.
— There would be no impact on net profit as all foreign currency exposures are fully hedged (2019: nil); and
— Equity reserves would decrease by $1,229.6 million with a 20 percent depreciation of the A$ or increase by $820.1 million with
a 20 percent increase in foreign exchange rates (2019: decrease by $1,296.4 million or increase by $864.7 million respectively).
Interest rate risk
APA Group's interest rate risk is derived predominately from borrowings subject to floating interest rates. This risk is managed
by APA Group maintaining an appropriate mix between fixed and floating rate borrowings, through the use of interest rate
swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined policy, ensuring
appropriate hedging strategies are applied.
APA Group's exposures to interest rate risk on financial liabilities are detailed in the liquidity risk management section of this
note. Exposure to financial assets is limited to cash and cash equivalents amounting to $1,172.8 million as at 30 June 2020
(2019: $354.9 million).
Cross currency swap and interest rate swap contracts
Cross currency swap and interest rate swap contracts have the economic effect of converting borrowings from floating to
fixed rates and/or fixed rate foreign currency to fixed or floating AUD rates on agreed notional principal amounts enabling
APA Group to mitigate the risk of cash flow exposures on variable rate debt held. The fair value of cross currency swap and
interest rate swap contracts at the reporting date is determined by discounting the future cash flows using the yield curves
at reporting date. The average interest rate is based on the drawn debt balances at the end of the financial year.
There is an economic relationship between the hedged item and the hedging instrument. Based on APA Group's qualitative
assessment of effectiveness, it is expected that the value of the interest rate swap contracts and the value of the corresponding
hedged items will systematically change in opposite directions in response to movements in the underlying interest rates. The
main source of hedge ineffectiveness in these hedge relationships is the effect of the counterparty and APA Group's own
credit risk on the fair value of the cross currency swap and interest rate swap contracts, which is not reflected in the fair value
of the hedged item attributable to the change in interest rates and difference in timing of the future cash flows. The effect
of credit risk does not dominate the value changes that result from that economic relationship.
The following table details the notional principal amounts and remaining terms of the cross currency swap contracts
outstanding as at the end of the financial year:
Weighted average
interest rate
Notional
principal amount
Fair value
2020
% p.a.
2019
% p.a.
2020
$000
2019
$000
2020
$000
2019
$000
Cash flow hedges – Pay fixed AUD interest – receive floating AUD or fixed foreign currency
Less than 1 year
1 year to 2 years
2 years to 5 years (a)
5 years and more (a)
—
4.65
4.03
3.66
5.42
—
388,491
—
44,604
—
1,285,835
—
(7,622)
—
4.37
4.08
1,271,426
2,021,273
382,490
260,645
5,277,044
4,755,823
(354,157)
(133,801)
7,834,305
7,165,587
20,711
171,448
a) This amount includes a notional amount of USD 1.6 billion (2019: USD 1.6 billion) which is subject to USD interest rate risk.
The cross currency swap and interest rate swap contracts settle on a quarterly or semi-annual basis. The floating rate
benchmark on the interest rate swaps is Australian BBSW. APA Group will settle the difference between the fixed and floating
interest rate on a net basis.
All cross currency swap and interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest
amounts are designated as cash flow hedges in order to reduce APA Group's cash flow exposure on borrowings.
APA GROUP I ANNUAL REPORT 2020
93
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
19. Financial risk management (continued)
a) Market risk (continued)
The following tables detail before tax information of APA Group (excluding share of hedge reserves of associates) regarding
derivative financial instruments outstanding at the end of the reporting period, their related hedged items and the
effectiveness of the hedging relationships.
Fair value of hedge
instrument
Fair value
of hedge item
Reserve balance
2020
$000
2019
$000
2020
$000
2019
$000
2020
$000
2019
$000
Foreign exchange risk
Hedging foreign currency borrowings
(cross currency swap)
Hedging revenue and associated
receivables (foreign currency borrowings)
Hedging revenue and associated
receivables (FECs)
Hedging capital purchases (FECs)
20,711
171,448
(5,088)
(169,821)
633,540
533,795
(253,287)
(218,137)
253,287
218,137
253,287
218,137
(22,284)
(3,092)
(11,873)
(3,790)
22,326
3,092
11,889
3,800
21,253
3,092
11,873
3,756
(257,952)
(62,352)
273,617
64,005
911,172
767,561
Foreign exchange risk
Hedging foreign currency borrowings (cross currency swap)
Hedging capital purchases (FECs)
Interest rate risk
Hedging US$ denominated borrowings (interest rate swap)
Hedge ineffectiveness
gain / (loss)
Balance relating to
discontinued cash flow hedges
2020
$000
2019
$000
(417)
—
(417)
—
—
1,033
(34)
999
—
—
2020
$000
17,906
—
17,906
46,289
46,289
2019
$000
28,217
—
28,217
52,912
52,912
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and
non-derivative instruments held. A 100 basis point increase or decrease is used and represents management's assessment
of the greatest possible change in interest rates over the short term. At reporting date, if interest rates had been 100 basis
points higher or lower and all other variables were held constant, APA Group's equity reserves would increase by $15,776,000
with a 100 basis point decrease in interest rates or increase by $4,528,000 with a 100 basis point increase in interest rates
(2019: increase by $54,170,000 or decrease by $35,640,000 respectively). This is due to the changes in the fair value of
derivative interest instruments.
APA Group's profit sensitivity to interest rates remains unchanged during the current year as APA Group has no unhedged
floating rate borrowings outstanding at the end of the financial year. The increase/decrease in equity reserves is based on
1.00% p.a. increase/decrease in the yield curve at the reporting date.
Price risk – equity price
APA Group is exposed to price risk arising from its forward purchase contracts over listed equities. The forward purchase contracts
are held to meet hedging objectives rather than for trading purposes. APA Group does not actively trade these holdings.
Price risk – electricity price
APA Group is exposed to electricity price risk arising from a contract for difference in an electricity sales agreement with a
customer. The contract guarantees the Group a fixed price for electricity offtake. The key assumptions of the contract for
difference are provided in the fair value of financial instrument section.
94
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
19. Financial risk management (continued)
b) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to APA Group.
Credit risk management
APA Group has adopted the policy of only dealing with creditworthy counterparties and obtaining sufficient collateral or bank
guarantees where appropriate as a means of mitigating the risk of loss. For financial investments or market risk hedging,
APA Group's policy is to only transact with counterparties that have a credit rating of A- (S&P)/A3 (Moody's) or higher
unless specifically approved by the Board. Where a counterparty's rating falls below this threshold following a transaction,
no other transactions can be executed with that counterparty until the exposure is sufficiently reduced or their credit rating
is upgraded above APA Group's minimum threshold. APA Group's exposure to financial instrument and deposit credit risk is
closely monitored against counterparty credit limits imposed by the Treasury Risk Management Policy approved by the ARMC.
These limits are regularly reviewed by the Board.
Overview of APA Group's exposure to credit risk
In order to minimise credit risk, APA Group categorised exposures according to their degree of risk of default. APA Group's
exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions
concluded is spread amongst approved counterparties.
APA Group's current credit risk grading framework comprises the following categories:
— Performing – the counterparty has a low risk of default and does not have any past-due amounts;
— Doubtful – amount is >30 days past due or there has been a significant increase in credit risk since initial recognition; and
— Write-off – there is evidence indicating that the debtor is in severe financial difficulty and APA Group has no realistic
prospect of recovery.
The table below details the credit quality of APA Group's financial assets.
2020
External credit rating
Internal credit rating
ECL method (a)
Cash and cash equivalents
and cash on deposit
A- (S&P)/
A3 (Moody's) or higher
Trade receivables
Finance lease receivables
Contract assets
Loans advanced to related parties
Redeemable preference shares (GDI)
N/A
N/A
N/A
N/A
N/A
Performing
12 month ECL
— (b)
— (b)
— (b)
Lifetime ECL (simplified approach)
Lifetime ECL (simplified approach)
Lifetime ECL (simplified approach)
Performing
Performing
12 month ECL
12 month ECL
a) Lifetime ECL represents the expected credit losses (“ECL”) that will result from possible default events over the expected life of a financial instrument. In
contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12
months after the reporting date.
b) For trade receivables, finance lease receivables and contract assets, APA Group has applied the simplified approach in AASB 9 to measure the loss allowance at
lifetime ECL. APA Group determines the expected credit losses on these items by using a provision matrix, estimated based on historical credit loss experience
based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. Accordingly, the
credit risk profile of these assets is presented based on their past due status in terms of the provision matrix. Note 9 includes further details on the loss allowance
for these assets respectively if any.
There is no material ECL for any of the financial assets listed in the table above.
Cross guarantee
In accordance with a deed of cross guarantee, APT Pipelines Limited, a subsidiary of APA Group, has agreed to provide
financial support, when and as required, to all wholly-owned controlled entities with either a deficit in shareholders’ funds
or an excess of current liabilities over current assets. The fair value of the financial guarantee as at 30 June 2020 has been
determined to be immaterial and no liability has been recorded (2019: $nil).
c) Liquidity risk
APA Group has a policy of dealing with liquidity risk which requires an appropriate liquidity risk management framework for
the management of APA Group's short, medium and long-term funding and liquidity management requirements. Liquidity
risk is managed by maintaining adequate cash reserves and banking facilities, by monitoring and forecasting cash flow and
where possible, by arranging liabilities with longer maturities to more closely match the underlying assets of APA Group.
Detailed in the table following are APA Group's remaining contractual maturities for its non-derivative financial liabilities. The
table is presented based on the undiscounted cash flows of financial liabilities taking account of the earliest date on which
APA Group can be required to pay. The table includes both interest and principal cash flows.
APA GROUP I ANNUAL REPORT 2020
95
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
19. Financial risk management (continued)
c) Liquidity risk (continued)
The table below shows the undiscounted Australian dollar cash flows associated with the AUD and foreign currency
denominated notes, cross currency swaps and fixed interest rate swaps in aggregate.
2020
Unsecured financial liabilities
Trade and other payables
Unsecured bank borrowings (a)
Denominated in A$
Other financial liabilities
Denominated in US$
Other financial liabilities (b)
Guaranteed Senior Notes (c)
Denominated in A$
2007 Series G
2007 Series H
2010 AUD Medium Term Notes
2016 AUD Medium Term Notes
Denominated in US$
2007 Series F
2012 US 144A
2015 US 144A (b)
2015 US 144A (b)
2017 US 144A
Denominated in stated foreign currency
2012 GBP Medium Term Notes
2015 GBP Medium Term Notes (b)
2015 EUR Medium Term Notes
2015 EUR Medium Term Notes (b)
2019 GBP Medium Term Notes
2019 JPY Medium Term Notes
2020 EUR Medium Term Notes
Average
interest rate
% p.a.
Maturity
Less than
1 year
$000
1 – 5 years
$000
More than
5 years
$000
—
—
—
—
7.45
7.45
7.75
3.75
6.14
3.88
4.20
5.00
4.25
4.25
3.50
1.38
2.00
3.13
1.03
2.00
308,764
—
—
—
—
—
3,610
10,924
3,634
8,473
27,355
18,900
6,002
4,617
311,625
7,500
86,584
66,603
—
218,750
11,354
48,854
165,079
809,057
66,995
1,863,295
—
—
—
—
—
—
—
21,752
58,812
87,007
652,794
234,765
1,254,891
39,459
57,606
674,363
—
230,528
1,572,792
50,290
1,182,555
—
43,548
33,595
5,622
28,025
174,190
1,077,836
135,026
22,471
961,033
183,566
157,479
1,234,143
1,116,503
6,146,031
6,959,589
15 May 22
15 May 22
22 Jul 20
20 Oct 23
15 May 22
11 Oct 22
23 Mar 25
23 Mar 35
15 Jul 27
26 Nov 24
22 Mar 30
22 Mar 22
22 Mar 27
18 Jul 31
13 Jun 34
15 Jul 30
a) Bank facilities mature or expire on 19 December 2020 ($100 million limit), 16 May 2022 ($50 million limit), 18 July 2022 ($150 million limit), 30 June 2023 ($500
million limit) and 31 December 2023 ($500 million limit).
b) Facilities are denominated in or fully swapped by way of cross currency swap into US$. Cashflows represent the US$ cashflow translated at the USD/AUD spot
rate as at 30 June 2020. These amounts are fully hedged by FECs or future US$ revenues.
c) Rates shown are the coupon rate in the currency of issuance.
96
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
19. Financial risk management (continued)
c) Liquidity risk (continued)
2019
Unsecured financial liabilities
Trade and other payables
Unsecured bank borrowings (a)
Denominated in A$
Other financial liabilities
Denominated in US$
Other financial liabilities (b)
Guaranteed Senior Notes (c)
Denominated in A$
2007 Series G
2007 Series H
2010 AUD Medium Term Notes
2016 AUD Medium Term Notes
Denominated in US$
2007 Series F
2009 Series B
2012 US 144A
2015 US 144A (b)
2015 US 144A (b)
2017 US 144A
Denominated in stated foreign currency
2012 CAD Medium Term Notes
2012 GBP Medium Term Notes
2015 GBP Medium Term Notes (b)
2015 EUR Medium Term Notes
2015 EUR Medium Term Notes (b)
2019 GBP Medium Term Notes
2019 JPY Medium Term Notes
Average
interest rate
% p.a.
Maturity
Less than
1 year
$000
1 – 5 years
$000
More than
5 years
$000
—
—
—
—
7.45
7.45
7.75
3.75
6.14
8.86
3.88
4.20
5.00
4.25
4.25
4.25
3.50
1.38
2.00
3.13
1.03
302,082
—
—
—
—
—
4,285
12,207
5,961
8,327
29,023
24,757
6,002
4,617
23,250
7,500
11,354
104,797
49,661
65,835
21,375
58,715
299,179
39,351
56,713
35,077
42,794
28,519
5,668
92,586
71,220
311,625
226,250
176,433
—
857,911
—
—
—
—
—
—
—
263,342
1,633,528
85,501
662,867
234,894
1,313,477
—
—
158,159
555,663
226,539
1,602,172
67,183
171,174
134,564
22,471
—
1,101,968
995,090
189,188
1,175,101
3,141,082
8,084,671
15 May 22
15 May 22
22 Jul 20
20 Oct 23
15 May 22
1 Jul 19
11 Oct 22
23 Mar 25
23 Mar 35
15 Jul 27
24 Jul 19
26 Nov 24
22 Mar 30
22 Mar 22
22 Mar 27
18 Jul 31
13 Jun 34
a) Bank facilities mature or expire on 19 December 2019 ($100 million limit), 18 May 2020 ($150 million limit), 19 December 2020 ($100 million limit), 16 May 2022
($50 million limit), 18 July 2022 ($150 million limit), 30 June 2023 ($500 million limit) and 31 December 2023 ($500 million limit).
b) Facilities are denominated in or fully swapped by way of cross currency swap into US$. Cashflows represent the US$ cashflow translated at the USD/AUD spot
rate as at 30 June 2019. These amounts are fully hedged by FECs or future US$ revenues.
c) Rates shown are the coupon rate in the currency of issuance.
Critical accounting judgements and key sources of estimation uncertainty – fair value of financial instruments
APA Group has financial instruments that are carried at fair value in the statement of financial position. The best evidence
of fair value is quoted prices in an active market. If the market for a financial instrument is not active, APA Group determines
fair value by using various valuation models. The objective of using a valuation technique is to establish the price that would
be received to sell an asset or paid to transfer a liability between market participants. The chosen valuation models make
maximum use of market inputs and rely as little as possible on entity specific inputs. The fair values of all positions include
assumptions made as to recoverability based on the counterparty’s and APA Group’s credit risk.
Fair value measurements recognised in the statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair
value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
— 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).
APA GROUP I ANNUAL REPORT 2020
97
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
19. Financial risk management (continued)
c) Liquidity risk (continued)
Fair value measurements recognised in the statement of financial position (continued)
Transfers between levels of the fair value hierarchy occur at the end of the reporting period. There have been no transfers
between the levels during 2020 (2019: none). Transfers between level 1 and level 2 are triggered when there are changes to
the availability of quoted prices in active markets. Transfers into level 3 are triggered when the observable inputs become no
longer observable, or vice versa for transfer out of level 3.
Fair value of the Group's financial assets and liabilities that are measured at fair value on a recurring basis
The fair values of financial assets and financial liabilities are measured at the end of each reporting period and determined as follows:
— the fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets
are determined with reference to quoted market prices. These instruments are classified in the fair value hierarchy at level 1;
— the fair values of FECs included in hedging assets and liabilities are calculated using discounted cash flow analysis based on
observable forward exchange rates at the end of the reporting period and contract forward rates discounted at a rate that
reflects the credit risk of the various counterparties. These instruments are classified in the fair value hierarchy at level 2;
— the fair values of interest rate swaps, cross currency swaps, equity forwards and other derivative instruments included in hedging
assets and liabilities are calculated using discounted cash flow analysis using observable market inputs (yield curves, foreign
exchange rates, equity prices and historical inflation indices) at the end of the reporting period and contract rates discounted at a
rate that reflects the credit risk of the various counterparties. These instruments are classified in the fair value hierarchy at level 2;
— the fair values of other financial assets and financial liabilities (excluding derivative instruments) are determined in
accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable
current markets discounted at a rate that reflects the credit risk of the various counterparties. These instruments are
classified in the fair value hierarchy at level 2;
— the fair value of financial guarantee contracts is determined based upon the probability of default by the specified
counterparty extrapolated from market-based credit information and the amount of loss, given the default. These
instruments are classified in the fair value hierarchy at level 2; and
— the carrying value of financial assets and liabilities recorded at amortised cost in the financial statements approximate
their fair value having regard to the specific terms of the agreements underlying those assets and liabilities.
Contract for difference
The financial statements include a contract for difference arising from an electricity sales agreement with a customer that
guarantees the Group a fixed price for electricity offtake for the agreed term which is measured at fair value. The fair value
of the contract for difference is derived from internal discounted cash flow valuation methodology, which includes some
assumptions that are not able to be supported by observable market prices or rates.
In determining the fair value, the following assumptions were used:
— estimated long term forecast electricity pool prices are applied as market prices are not readily observable for the
corresponding term;
— forecast electricity volumes are estimated based on an internal forecast output model;
— the discount rates are based on observable market rates for risk-free instruments of the appropriate term;
— credit adjustments are applied to the discount rates to reflect the risk of default by either the Group or a specific
counterparty. Where a counterparty specific credit curve is not observable, an estimated curve is applied which takes into
consideration the credit rating of the counterparty and its industry; and
— these instruments are classified in the fair value hierarchy at level 3.
Changes in any of the aforementioned assumptions may be accompanied by changes in other assumptions which may have
an offsetting impact.
Fair value hierarchy
2020
Financial assets measured at fair value
Equity forwards designated as fair value through profit or loss
Cross currency interest rate swap contracts used for hedging
Foreign currency forward exchange contracts used for hedging
Contract for difference
Financial liabilities measured at fair value
Equity forwards designated as fair value through profit or loss
Cross currency interest rate swap contracts used for hedging
Foreign currency forward exchange contracts used for hedging
98
APA GROUP I ANNUAL REPORT 2020
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
—
—
—
—
—
—
—
—
—
1,667
557,336
15,236
—
574,239
74
536,625
40,612
577,311
—
—
—
10,508
10,508
—
—
—
—
1,667
557,336
15,236
10,508
584,747
74
536,625
40,612
577,311
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
19. Financial risk management (continued)
c) Liquidity risk (continued)
Fair value hierarchy (continued)
2019
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
Financial assets measured at fair value
Equity forwards designated as fair value through profit or loss
Cross currency interest rate swap contracts used for hedging
Foreign currency forward exchange contracts used for hedging
Contract for difference
Financial liabilities measured at fair value
Cross currency interest rate swap contracts used for hedging
Foreign currency forward exchange contracts used for hedging
Contract for difference
Reconciliation of Level 3 fair value measurements
—
—
—
—
—
—
—
—
—
2,245
527,857
10,209
—
540,311
356,409
25,872
—
382,281
Opening balance
Revaluation
Settlement
Closing balance
—
—
—
2,144
2,144
—
—
402
402
2020
$000
(1,742)
(9,288)
522
(10,508)
2,245
527,857
10,209
2,144
542,455
356,409
25,872
402
382,683
2019
$000
6,536
(3,708)
(4,570)
(1,742)
Fair value measurements of financial instruments measured at amortised cost
The financial liabilities included in the following table are fixed rate borrowings. Other debts held by APA Group are floating
rate borrowings and amortised cost as recorded 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 Notes
Unsecured Canadian Dollar Medium Term Notes
Unsecured US Dollar 144A Medium Term Notes
Unsecured British Pound Medium Term Notes
Unsecured Euro Medium Term Notes
Carrying amount
Fair value (level 2) (a)
2020
$000
2019
$000
2020
$000
2019
$000
322,353
500,000
134,338
—
4,350,348
2,423,481
3,174,688
426,115
500,000
132,196
326,675
4,275,027
2,442,600
2,187,895
351,357
515,311
136,838
—
4,821,607
2,620,897
3,253,322
460,583
530,459
134,944
327,014
4,489,354
2,602,390
2,255,715
10,905,208
10,290,508
11,699,332
10,800,459
a) The fair values have been determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable
current markets, discounted at a rate that reflects APA Group's credit risk. These instruments are classified in the fair value hierarchy at level 2.
APA GROUP I ANNUAL REPORT 2020
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
20. Other financial instruments
Assets
Liabilities
Derivatives at fair value:
Contract for difference
Equity forward contracts
Derivatives at fair value designated as hedging instruments:
Cross currency interest rate swaps – cash flow hedges
Foreign exchange contracts – cash flow hedges
Financial item carried at amortised cost:
Redeemable preference share interest
Current
Derivatives at fair value:
Contract for difference
Equity forward contracts
Indexed revenue contracts
2020
$000
2,813
1,336
18,343
9,971
285
32,748
7,695
331
—
Derivatives at fair value designated as hedging instruments:
Cross currency interest rate swaps – cash flow hedges
557,336
Foreign exchange contracts – cash flow hedges
5,265
Financial items carried at amortised cost:
Redeemable preference shares
Non-current
10,400
581,027
2019
$000
—
1,513
61,664
4,577
285
68,039
2,144
732
—
483,253
5,632
10,400
502,161
2020
$000
2019
$000
—
—
402
—
159,305
27,042
141,860
10,520
—
—
186,347
152,782
—
74
—
—
8,090
3,459
405,904
13,570
245,892
15,352
—
—
427,638
264,703
Redeemable preference shares relate to APA Group's 20% interest in GDI (EII) Pty Ltd. In December 2011, APA Group sold
80% of its gas distribution network in South East Queensland (Allgas) into an unlisted investment entity, 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.
Recognition and measurement
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost:
— The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual
cash flows; and
— The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive
income (“FVTOCI”):
— The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows
and selling the financial assets; and
— The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
By default, all other financial assets are subsequently measured at fair value through profit or loss (“FVTPL”).
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses
recognised in profit or loss to the extent they are not part of a designated hedging relationship.
Derivatives that APA Group does not elect to apply hedge accounting to or do not meet the hedge accounting criteria, are
classified as 'financial assets/liabilities' for accounting purposes and accounted for at FVTPL.
Fair value measurement
For information about the methods and assumptions used in determining the fair value of financial instruments refer to Note 19.
100
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
20. Other financial instruments (continued)
Hedge accounting
APA Group designates certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives in
respect of foreign currency risk, as either fair value hedges or cash flow hedges. There are no fair value hedges in the current
or prior year, hedges of foreign exchange and interest rate risk are accounted for as cash flow hedges.
At the inception of the hedge relationship, APA Group formally designates and documents the relationship between the
hedging instrument and the 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, APA Group expects the hedging
instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk,
which is when the hedging relationships meet all of the following hedge effectiveness requirements:
— there is an economic relationship between the hedged item and the hedging instrument;
— the effect of credit risk does not dominate the value changes that result from that economic relationship; and
— the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that APA
Group actually hedges and the quantity of the hedging instrument that APA Group actually uses to hedge that quantity
of hedged item.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk
management objective for that designated hedging relationship remains the same, APA Group adjusts the hedge ratio of the
hedging relationship (i.e. rebalances the hedge) so that it meets the qualifying criteria again.
Derivatives are initially recognised at fair value at the date a derivatives contract is entered into and subsequently remeasured
to fair value at each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative
is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on
the nature of the hedge relationship. A derivative with a positive fair value is recognised as a financial asset, a derivative with
a negative fair value is recognised as a financial liability.
The fair value of hedging derivatives is classified as either current or non-current based on the timing of the underlying
discounted cash flows of the instrument. Cash flows due within 12 months of the reporting date are classified as current and
cash flows due after 12 months of the reporting date are classified as non-current.
IBOR Replacement Impact
The impact of Interbank Offered Rate (IBOR) reform is considered immaterial as all long term borrowings are at fixed
rate and AASB has provided relief to continue the application of hedge accounting. APA Group will continue to monitor the
development and outcomes of the reform.
Cash flow hedges
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated
and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the cash flow hedge
reserve, limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating
to the ineffective portion is recognised immediately in profit or loss, and is included in the 'finance costs' line item.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss
in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. However, when
the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and
losses previously recognised in other comprehensive income and accumulated in equity are removed from equity and included
in the initial measurement of the cost of the non-financial asset or non-financial liability. This transfer does not affect other
comprehensive income. Furthermore, if APA Group expects that some or all of the loss accumulated in the cash flow hedging
reserve will not be recovered in the future, that amount is immediately reclassified to profit or loss.
APA Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying
criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or
exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and
accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast
transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in cash flow
hedge reserve is reclassified immediately to profit or loss.
Accounting for the forward element of foreign currency forward exchange contracts and foreign currency basis spreads of
financial instruments
APA Group designates the full change in the fair value of an FEC (i.e. including the forward elements) as the hedging
instrument for all of its hedging relationships involving FECs.
APA Group separates the foreign currency basis spread from a financial instrument and excludes it from the designation of
that financial instrument as the hedging instrument. Changes in the value of the undesignated aligned foreign currency basis
spread associated with cross currency interest rate swaps are deferred in other comprehensive income.
APA GROUP I ANNUAL REPORT 2020
101
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
20. Other financial instruments (continued)
Cash flow hedge and cost of hedging reserve
The cash flow hedge reserve represents the cumulative amount of gains and losses on hedging instruments deemed effective
in cash flow hedges. The cumulative deferred gain or loss on the hedging instrument is recognised in profit or loss only when
the hedged transaction impacts the profit or loss, or is included directly in the initial cost or other carrying amount of the
hedged non-financial items.
The cost of hedging reserve represents the effect of the changes in fair value of the forward currency basis spread of a
financial instrument when the foreign currency basis spread of a financial instrument is excluded from the designation of that
financial instrument as the hedging instrument (consistent with APA Group's accounting policy to recognise non-designated
component of foreign currency derivative in equity). The changes in fair value of the foreign currency basis spread of a financial
instrument, in relation to a time-period related hedged item accumulated in the cash flow hedging reserve, are amortised to
profit or loss on a rational basis over the term of the hedging relationship.
Balance at beginning of financial year
Gain/(loss) recognised taken to equity:
Loss arising on changes in fair value of hedging instruments
Changes in fair value of foreign currency basis spread during the year
Share of hedge reserve of associate
Amount reclassified to P&L for effective hedges
Tax effect
Balance at end of financial year
2020
$000
2019
$000
(608,016)
(339,834)
(183,107)
(23,757)
(5,848)
80,184
39,758
(464,643)
15,719
(8,540)
74,347
114,935
(700,786)
(608,016)
The foreign currency basis spread balance at the beginning of the financial year is ($56.2 million) and at the end of the
financial year is ($58.2 million) in 2020 (2019: ($93.3 million) and ($56.2 million) respectively).
Hedge ineffectiveness
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness
assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
In hedges of foreign currency capital equipment purchases, ineffectiveness may arise if the timing of the forecast transaction
changes from what was originally estimated, or if there are changes in the credit risk of APA Group or the derivative
counterparty.
Hedge ineffectiveness for cross currency interest rate swaps is assessed using the same principles as for hedges of foreign
currency capital equipment purchases. It may occur due to the credit value/debit value adjustment on the swap contracts
which is not matched by the debts.
Impairment of financial assets
In relation to the impairment of financial assets, it is no longer necessary for a credit event to have occurred before credit
losses are recognised. APA Group applies an ECL model to account for ECL and changes in those ECL at each reporting date
to reflect changes in credit risk since initial recognition of a financial asset.
APA Group recognises a loss allowance for ECL on investments in debt instruments that are measured at amortised cost, for
example, loans advanced to related parties and trade receivables. No impairment loss is recognised for investments in equity
instruments. For trade receivables, finance lease receivables and contract assets, APA Group applies the simplified approach
to assessing ECL. Under the simplified approach, ECL on these financial assets is estimated using a provision matrix. This
matrix is based on APA Group’s historical credit losses and reasonable and supportable information that is available without
undue cost.
The amount of ECL under either approach is updated at each reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument.
APA Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment
to their carrying amount through a loss allowance account. Aside from the additional disclosure requirements in Note 19, the
history of collection rates and forward-looking information that is available without undue cost or effort shows that APA
Group does not have an expected loss on collection of debtors or loans.
Significant increase in credit risk
An actual or expected significant deterioration in the financial instrument's external (if available) or internal credit rating.
Definition of default
When there is a breach of financial covenants by the debtor.
Write-off policy
APA Group writes off a financial asset when all reasonable attempts at recovery have been taken and failed e.g. debts that
are considered irrecoverable, or where the cost of recovery is uneconomic, must be written off as a bad debt.
102
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20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
21. Issued capital
Units
2020
$000
2019
$000
1,179,893,848 securities, fully paid (2019: 1,179,893,848 securities, fully paid) (a)
2,902,123
3,103,806
2020
No. of units
000
2020
$000
2019
No. of units
000
Movements
Balance at beginning of financial year
1,179,894
3,103,806
1,179,894
Capital distributions paid (Note 8)
Issue costs of securities
Tax relating to security issue costs
—
—
—
(201,683)
—
—
—
—
—
2019
$000
3,288,123
(184,181)
(194)
58
Balance at end of financial year
1,179,894
2,902,123
1,179,894
3,103,806
a) Fully paid securities carry one vote per security and carry the right to distributions.
Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to issued capital
from 1 July 1998. Therefore, the Trust does not have a limited amount of authorised capital and issued securities do not have
a par value.
Group Structure
22. Non-controlling interests
APT is deemed the parent entity of APA Group comprising of the stapled structure of APT and APTIT. Equity attributable to
other trusts stapled to the parent is a form of non-controlling interest and represents 100% of the equity of APTIT.
Summarised financial information for APTIT is set out below, the amounts disclosed are before inter-company eliminations.
Financial position
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Net assets
Equity attributable to non-controlling interests
Financial performance
Revenue
Expenses
Profit for the year
Total comprehensive income allocated to non-controlling interests for the year
Cash flows
Net cash provided by operating activities
Net cash provided by investing activities
Distributions paid to non-controlling interests
Net cash used in financing activities
The accounting policies of APTIT are the same as those applied to APA Group.
2020
$000
2019
$000
852
911,704
912,556
25
25
912,531
912,531
53,033
(12)
53,021
53,021
53,834
80,931
(134,765)
(134,765)
813
993,487
994,300
25
25
994,275
994,275
65,082
(12)
65,070
65,070
65,790
69,409
(135,136)
(135,199)
APA GROUP I ANNUAL REPORT 2020
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Group Structure
22. Non-controlling interests (continued)
There are no material guarantees, contingent liabilities or restrictions imposed on APA Group from APTIT's non-controlling interests.
APT Investment Trust
APT Investment Trust
Issued capital:
Balance at beginning of financial year
Issue costs of units
Distribution – capital return (Note 8)
Reserves:
Retained earnings:
Balance at beginning of financial year
Net profit attributable to APTIT unitholders
Distributions paid (Note 8)
Other non-controlling interest
Issued capital:
Balance at beginning of financial year
Distribution – capital return
Reserves:
Balance at beginning of financial year
Transfer to retained earnings
Retained earnings:
Balance at beginning of financial year
Net profit attributable to other non-controlling interest
Transfer from reserves
Distribution paid
2020
$000
912,531
912,531
2019
$000
994,275
994,275
964,219
1,030,176
—
(76,374)
887,845
(63)
(65,894)
964,219
—
—
30,056
53,021
(58,391)
24,686
34,228
65,070
(69,242)
30,056
—
—
—
—
—
—
—
—
—
—
—
4
(4)
—
1
(1)
—
48
—
1
(49)
—
23. Joint arrangements and associates
The table below lists APA Group's interest in joint ventures and associates that are reported as part of the Energy Investments
segment. APA Group provides asset management, operation and maintenance services and corporate services, in varying
combinations to the majority of energy infrastructure assets housed within these entities.
Ownership interest %
Principal activity
Country of incorporation
2020
2019
Name of entity
Joint ventures:
SEA Gas
SEA Gas (Mortlake)
EII 2
Associates:
GDI (EII)
104
APA GROUP I ANNUAL REPORT 2020
Energy Infrastructure Investments
Energy infrastructure
Gas transmission
Gas transmission
Power generation (wind)
Australia
Australia
Australia
Australia
50.00
50.00
19.90
20.20
50.00
50.00
19.90
20.20
Gas distribution
Australia
20.00
20.00
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Group Structure
23. Joint arrangements and associates (continued)
Investment in joint ventures and associates using the equity method
226,380
263,829
2020
$000
2019
$000
Joint Ventures
Aggregate carrying amount of investment
APA Group's aggregated share of:
Profit from continuing operations
Other comprehensive income
Total comprehensive income
Associates
Aggregate carrying amount of investment
APA Group's aggregated share of:
Profit from continuing operations
Other comprehensive income
Total comprehensive income
204,778
239,243
25,863
(4,178)
21,685
18,630
(4,405)
14,225
21,602
24,586
4,814
(1,669)
3,145
4,592
(4,135)
457
Investment in associates
An associate is an entity over which APA Group has significant influence and that is neither a subsidiary nor a joint arrangement.
Investments in associates are accounted for using the equity accounting method.
Under the equity accounting method the investment is recorded initially at cost to APA Group, including any goodwill on
acquisition. In subsequent periods the carrying amount of the investment is adjusted to reflect APA Group’s share of the
retained post-acquisition profit or loss and other comprehensive income, less any impairment.
Losses of an associate or joint venture in excess of APA Group’s interests (which includes any long-term interests, that in
substance, form part of the net investment) are recognised only to the extent that there is a legal or constructive obligation
or APA Group has made payments on behalf of the associate or joint venture.
Carrying value of the investment in joint arrangement and associates are subject to impairment testing if there is objective
evidence of impairment. No material indicators identified in the joint arrangements and associates as at the date of the
issuance of these financial statements.
Contingent liabilities and capital commitments
APA Group's share of the contingent liabilities, capital commitments and other expenditure commitments of joint operations
is disclosed in Note 25.
APA Group is a venturer in the following joint operations:
Name of venture
Principal activity
Goldfields Gas Transmission (a)
Gas pipeline operation – Western Australia
Mid West Pipeline (b)
Gas pipeline operation – Western Australia
Output interest
2020
%
88.2
50.0
2019
%
88.2
50.0
a) On 17 August 2004, APA acquired a direct interest in the Goldfields Gas Transmission joint operations as part of the SCP Gas Business acquisition.
b) Pursuant to the joint venture agreement, APA Group receives a 70.8% share of operating income and expenses.
Interest in joint arrangements
A joint arrangement is an arrangement whereby two or more parties have joint control. Joint control is the contractually
agreed sharing of control such that decisions about the relevant activities of the arrangement (those that significantly affect
the returns) require the unanimous consent of the parties sharing control. APA Group has two types of joint arrangements:
Joint ventures: A joint arrangement in which the parties that share joint control have rights to the net assets of the
arrangement. Joint Ventures are accounted for using the equity accounting method; and
Joint operations: A joint arrangement in which the parties that share joint control have rights to the assets, and obligations
for the liabilities, relating to the arrangement. In relation to its interest in a joint operation, APA Group recognises its share of
assets and liabilities, revenue from the sale of its share of the output and its share of any revenue generated from the sale
of the output by the joint operation and its share of expenses. These are incorporated into APA Group’s financial statements
under the appropriate headings.
APA GROUP I ANNUAL REPORT 2020
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Group Structure
24. Subsidiaries
Subsidiaries are entities controlled by APT. Control exists where APT has power over the entities, i.e. existing rights that give
it the current ability to direct the relevant activities of the entities (those that significantly affect the returns); exposure, or
rights, to variable returns from its involvement with the entities; and the ability to use its power to affect those returns.
Name of entity
Parent entity
Australian Pipeline Trust (a)
Subsidiaries
Agex Pty. Ltd. (b),(c)
APA (BWF Holdco) Pty Ltd (b),(c)
APA (EDWF Holdco) Pty Ltd (b),(c)
APA (EPX) Pty Limited (b),(c)
APA (NBH) Pty Limited (b),(c)
APA (Pilbara Pipeline) 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 AM (Allgas) Pty Limited (b),(c)
APA BIDCO Pty Limited (b),(c)
APA Biobond Pty Limited (b),(c)
APA Country Pipelines Pty Limited (b),(c)
APA DPS Holdings Pty Limited (b),(c)
APA DPS2 Pty Limited (b),(c)
APA East Pipelines 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)
APA EE Pty Limited (b),(c)
APA Ethane Pty Limited (b),(c)
APA Facilities Management Pty Limited (b),(c)
APA Midstream Holdings Pty Limited (b),(c)
APA Operations (EII) Pty Limited (b),(c)
APA Operations Pty Limited (b),(c)
APA Orbost Gas Plant Pty Ltd (b),(c)
APA Pipelines Investments (BWP) Pty Limited (b),(c)
APA Power Holdings Pty Limited (b),(c)
APA Power PF Pty Limited (b),(c)
APA Reedy Creek Wallumbilla Pty Limited (b),(c)
APA SEA Gas (Mortlake) Holdings Pty Ltd (b),(c)
APA SEA Gas (Mortlake) Pty Ltd (b)
APA Services (Int) Inc.
APA Sub Trust No 1 (b),(d)
APA Sub Trust No 2 (b),(d)
APA Sub Trust No 3 (b),(d)
APA Transmission Pty Limited (b),(c)
APA VTS A Pty Limited (b),(c)
APA VTS Australia (Holdings) Pty Limited (b),(c)
APA VTS Australia (NSW) Pty Limited (b),(c)
APA VTS Australia (Operations) Pty Limited (b),(c)
APA VTS Australia Pty Limited (b),(c)
APA VTS B Pty Limited (b),(c)
APA Western Slopes Pipeline Pty Limited (b),(c)
APA WGP Pty Ltd (b),(c)
APT (MIT) Services Pty Limited (b),(c)
APT AM (Stratus) Pty Limited (b),(c)
APT AM Employment Pty Limited (b),(c)
APT AM Holdings Pty Limited (b),(c)
APT Facility Management Pty Limited (b),(c)
APT Goldfields Pty Ltd (b),(c)
APT Management Services Pty Limited (b),(c)
106
APA GROUP I ANNUAL REPORT 2020
Country of
registration/
incorporation
Ownership interest
2020
%
2019
%
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
United States
—
—
—
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Group Structure
24. Subsidiaries (continued)
Name of entity
APT O&M Holdings Pty Ltd (b),(c)
APT O&M Services (QLD) Pty Ltd (b),(c)
APT O&M Services Pty Ltd (b),(c)
APT Parmelia Holdings Pty Ltd (b),(c)
APT Parmelia Pty Ltd (b),(c)
APT Parmelia Trust (b),(d)
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 (SA) 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)
APT Pipelines Limited (b),(c)
APT Sea Gas Holdings Pty Limited (b),(c)
APT SPV2 Pty Ltd (b)
APT SPV3 Pty Ltd (b)
Australian Pipeline Limited (b)
Central Ranges Pipeline Pty Ltd (b),(c)
Darling Downs Solar Farm Pty Ltd (b),(c)
Diamantina Holding Company Pty Limited (b),(c)
Diamantina Power Station Pty Limited (b),(c)
East Australian Pipeline Pty Limited (b),(c)
EDWF Holdings 1 Pty Ltd (b),(c)
EDWF Holdings 2 Pty Ltd (b),(c)
EDWF Manager Pty Ltd (b),(c)
Epic Energy East Pipelines Trust (b),(d)
EPX Holdco Pty Limited (b),(c)
EPX Member Pty Limited (b),(c)
EPX Trust (b),(d)
Ethane Pipeline Income Financing Trust (b),(d)
Ethane Pipeline Income Trust (b),(d)
Gasinvest Australia Pty Ltd (b),(c)
GasNet A Trust (d)
GasNet Australia Investments Trust (d)
GasNet Australia Trust (b),(d)
Goldfields Gas Transmission Pty Ltd (b)
Gorodok Pty. Ltd. (b),(c)
Griffin Windfarm 2 Pty Ltd (b)
Moomba to Sydney Ethane Pipeline Trust (b),(d)
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 Limited (b),(c)
Southern Cross Pipelines Australia Pty Limited (b),(c)
Trans Australia Pipeline Pty Ltd (b),(c)
Votraint No. 1606 Pty Limited (b)
Votraint No. 1613 Pty Limited (b)
Western Australian Gas Transmission Company 1 Pty Ltd (b),(c)
Wind Portfolio Pty Ltd (b),(c)
Country of
registration/
incorporation
Ownership interest
2020
%
2019
%
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
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
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
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
a) Australian Pipeline Trust is the head entity within the APA tax-consolidated group.
b) These entities are members of the APA tax-consolidated group.
c) These wholly-owned subsidiaries have entered into a deed of cross guarantee with APT Pipelines Limited pursuant to ASIC Corporations Instrument 2016/785
and are relieved from the requirement to prepare and lodge an audited financial report.
d) These trusts are unincorporated and not required to be registered.
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notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Other
25. Commitments and contingencies
Capital expenditure commitments
APA Group – plant and equipment
APA Group's share of jointly controlled operations – plant and equipment
Contingent liabilities
Bank guarantees
2020
$000
2019
$000
168,391
11,107
179,498
172,774
8,596
181,370
51,483
52,233
As at 30 June 2020 and 30 June 2019 APA Group had no material contingent liabilities, other than those disclosed above.
APA Group had no contingent assets as at 30 June 2020 and 30 June 2019.
26. Director and Executive Key Management Personnel remuneration
Remuneration of Directors
The aggregate remuneration of Directors of APA Group is set out below:
Short-term employment benefits
Post-employment benefits
Total remuneration: Non-Executive Directors
Short-term employment benefits
Post-employment benefits
Cash settled security-based payments
Equity settled security-based payments
Total remuneration: Executive Director (a)
Total remuneration: Directors
2020
$
1,549,332
147,185
1,696,517
2,395,588
25,453
1,879,646
368,121
2019
$
1,664,631
158,168
1,822,799
3,629,920
25,000
1,515,047
—
4,668,808
5,169,967
6,365,325
6,992,766
Remuneration of Executive Key Management Personnel (a)
The aggregate remuneration of Executive Key Management Personnel of APA Group is set out below:
Short-term employment benefits
Post-employment benefits
Cash settled security-based payments
Equity settled security-based payments
Total remuneration: Executive Key Management Personnel
6,179,703
88,123
7,763,114
101,666
2,891,305
2,864,008
675,161
—
9,834,292
10,728,788
a) The remuneration for the former Chief Executive Officer and Managing Director, Michael (Mick) McCormack to 5 July 2019 and current Chief Executive Officer
and Managing Director, Rob Wheals from 6 July 2019, are included in both the remuneration disclosure for Directors and Executive Key Management Personnel.
In addition Mr McCormack is entitled to his outstanding reference units, due to be paid in August 2021, August 2022 and August 2023, with a total value of
$3,632,979 (based on a VWAP of $11.1579).
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notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Other
27. Remuneration of external auditor
Amounts received or due and receivable by Deloitte Touche Tohmatsu for:
Audit or review of the financial repors:
Group
Subsidiaries
Total audit or review of the financial reports
2020
$
2019
$
691,000
8,100
699,100
679,300
7,800
687,100
Statutory assurance services required by legislation to be provided by the auditor
Assurance services in relation to the AER financial reporting requirements (a)
2,170,000
250,000
Agreed-upon procedures in relation to ASIC Regulatory Guide 231 requirements (b)
ASIC Compliance plan audit
Financial services licence audit
84,800
20,500
8,100
10,400
19,700
7,800
Total statutory assurance services required by legislation to be provided by the auditor
2,283,400
287,900
Other assurance services (c)
Total remuneration of external auditor
106,600
246,300
3,089,100
1,221,300
a) Service provided in FY20 includes one-off procedures covering 7-year historical period. Represent total fees for contracted services, partly incurred at period end.
b) Service provided includes Agreed-upon procedures in relation to ASIC Regulatory Guide 231 requirements (FY2020 includes triennial procedures required under
RG231, procedures last undertaken in FY2017).
c) Services provided were in accordance with the external auditor independence policy. Other assurance services mainly comprise assurance services in relation to
security related transactions (debt raisings).
28. Related party transactions
a) Equity interest in related parties
Details of the percentage of ordinary securities held in subsidiaries are disclosed in Note 24 and the details of the percentage
held in joint operations, joint ventures and associates are disclosed in Note 23.
b) Responsible Entity – Australian Pipeline Limited
The Responsible Entity is wholly owned by APT Pipelines Limited.
c) 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; and
— payments of distributions.
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 24 for details of the entities that comprise APA Group.
Australian Pipeline Limited
Management fees of $5,909,078 (2019: $4,696,351) were paid to the Responsible Entity as reimbursement of costs incurred
on behalf of APA Group. No amounts were paid directly by APA Group to the Directors of the Responsible Entity, except as
disclosed at Note 26.
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 senior debt facilities of APT Pipelines Limited, the principal borrowing
entity of APA Group.
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notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Other
28. Related party transactions (continued)
d) Transactions with other associates and joint ventures
The following transactions occurred with APA Group's associates and joint ventures on normal market terms and conditions:
2020
SEA Gas
Energy Infrastructure Investments
EII 2
GDI (EII)
2019
SEA Gas
Energy Infrastructure Investments
EII 2
GDI (EII)
Dividends
from
related
parties
$000
49,162
3,055
3,933
6,129
Sales to
related
parties
$000
6,666
45,666
803
53,715
62,279
106,850
9,551
4,466
3,732
4,701
7,809
39,198
1,020
53,654
22,450
101,680
Purchases
from
related
parties
$000
86
—
—
—
86
—
—
—
—
—
Amount
owed by
related
parties
$000
23
7,085
343
5,534
12,985
122,626
7,627
335
10,123
140,710
Amount
owed to
related
parties
$000
—
—
—
—
—
—
—
—
—
—
At 30 June 2020, APA Group had no loan receivable from SEA Gas (2019: $122.3 million).
29. 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.
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings
Total equity
Financial performance
Profit for the year
Total comprehensive income
2020
$000
2019
$000
2,361,345
678,738
2,533,019
707,803
3,040,083
3,240,822
128,854
128,854
130,337
130,337
2,911,229
3,110,485
2,902,123
3,103,806
9,106
6,679
2,911,229
3,110,485
238,228
238,228
216,818
216,818
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
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 senior debt facilities of APT Pipelines Limited, the principal borrowing
entity of APA Group.
Due to the contingent nature of these financial guarantees no liability has been recorded (2019: $nil).
Contingent liabilities of the parent entity
No contingent liabilities have been identified in relation to the parent entity.
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notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Other
30. Adoption of new and revised Accounting Standards
Standards and Interpretations affecting amounts reported in the current period (and/or prior periods)
AASB 16 'Leases'
From 1 July 2019, APA Group has adopted AASB 16 ‘Leases’ (AASB 16) that is effective for annual periods that begin on or
after 1 July 2019. AASB 16 replaced AASB 117 ‘Leases’ (AASB 117), IFRIC 4 Determining Whether an Arrangement Contains a
Lease (IFRIC 4) and other related interpretations.
Under AASB 16, APA Group’s accounting for leases as a lessee results in the recognition of a Right-of-Use (ROU) asset and an
associated lease liability in the Consolidated Statement of Financial Position, except for short-term leases (defined as leases
with a lease term of 12 months or less) and leases of low value assets. The lease liability represents the present value of future
lease payments. An interest expense is recognised on the lease liabilities and a depreciation charge is recognised for the ROU
assets. There are additional disclosure requirements under the new standard. APA Group’s accounting for leases as a lessor
remains unchanged under AASB 16.
Previously under AASB 117, operating leases were off-balance sheet, APA Group recognised operating lease expense on a
straight-line basis over the term of the lease, and recognised assets and liabilities only to the extent that there was a timing
difference between actual lease payments and the expense recognised.
APA Group adopted AASB 16 using the modified retrospective approach. There is no restatement of the comparative
information. Under this approach, the lease liability is measured at present value of future lease payments on the initial date
of application, being 1 July 2019, and discounted using APA Group’s incremental borrowing rate as of that date. The weighted
average lessee’s incremental borrowing rate applied to the lease liabilities on 1 July 2019 was 3.69%.
For leases other than motor vehicles, the ROU asset is measured as if AASB 16 has been applied from the commencement
of the lease with any difference between the ROU asset and the liability recognised as an adjustment to opening retained
earnings. An adjustment of $8.6 million net of tax was recognised as a debit to opening retained earnings on transition. For
motor vehicle leases, the ROU asset is measured at an amount equal to the lease liability with nil impact on opening retained
earnings. APA Group has recognised a temporary difference on initial recognition of lease assets and liabilities on adoption
of AASB 16.
Practical expedients applied
In applying AASB 16 for the first time, APA Group has used the following practical expedients permitted by the standard:
— The use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
— The accounting for operating leases with a remaining lease term of 12 months or less as at 1 July 2019 as short-term leases;
— The reliance on the previous assessment whether a contract is or contains a lease, on contracts entered into before 1 July
2019 applying AASB 117 and Interpretation 4;
— The reliance on previous assessments of whether leases are onerous (of which there were none); and
— The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
Impact on initial adoption of AASB 16 at 1 July 2019
Assets
Right-Of-Use assets – Property, plant and equipment
Deferred tax assets
Total assets recognised on transition
Liabilities
Current lease liabilities
Non-current lease liabilities
Derecognition of other liabilities – lease incentive
Total liabilities recognised on transition
Retained earnings
1 Jul 2019
$000
62,265
3,690
65,955
10,537
66,227
(2,199)
74,565
8,610
APA GROUP I ANNUAL REPORT 2020
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notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Other
30. Adoption of new and revised Accounting Standards (continued)
Standards and Interpretations affecting amounts reported in the current period (and/or prior periods) (continued)
AASB 16 'Leases' (continued)
The difference between APA Group’s undiscounted non-cancellable operating lease commitments at 30 June 2019 and lease
liabilities upon transition are set out below:
Operating lease commitments disclosed as at 30 June 2019
Discounted using lessee's incremental borrowing rate at the date of initial application
Add: Extension options reasonably certain to be exercised
(Less): short-term leases recognised on a straight-line basis as expense
(Less): low-value assets recognised on a straight-line basis as expense
Lease liabilities as at 30 June 2019
Add: leases commencing on 1 July 2019
Lease liabilities recognised as at 1 July 2019
1 Jul 2019
$000
65,803
59,763
10,987
(1,094)
(553)
69,103
7,661
76,764
Impact on the consolidated statement of profit or loss and other comprehensive income
The following table sets out the amount of adjustment for each major financial statement line item affected by the application
of AASB 16:
Decrease in asset operation and management expenses
Increase in EBITDA
Increase in finance costs
Increase in depreciation and amortisation expense
Increase in Profit before tax
Increase in income tax expense
Increase in Profit after tax
2020
$000
16,120
16,120
(2,638)
(12,562)
920
(276)
644
APA Group does not have any material expense relating to short-term leases, leases of low-value assets and variable lease
payments not included in the measurement of lease liabilities, nor material income from subleasing right-of-use assets.
Impact on the statement of cash flows
The application of AASB 16 has an impact on the consolidated statement of cash flows of APA Group. Under AASB 16, lessees
must present:
— Short-term lease payments, payments for leases of low-value assets and variable lease payments not included in the
measurement of the lease liabilities as part of the operating activities. APA Group has included these payments as part of
payments to suppliers and employees;
— Cash paid for the interest portion of lease liabilities as either operating activities or financing activities, as permitted by
AASB 107 Statement of Cash Flows. APA Group has included interest paid as part of operating activities, consistent with
the presentation of other interest paid; and
— Cash payments for the principal portion of lease liabilities, as part of financing activities.
Under AASB 117, all lease payments on operating leases were presented as part of cash flows from operating activities.
Consequently, the net cash generated by operating activities has increased by $13.5 million and net cash used in financing
activities increased by the same amount. Interest payments of $2.6 million continue to be included in net cash generated by
operating activities (previously forming part of payments to suppliers and employees, a subcategory of net cash generated
by operating activities). AASB 16 does not have any impact on net cash flows.
New Accounting policies as a result of adoption of AASB 16
Refer to the accounting policies in Note 11 for ROU assets and Note 17 for lease liabilities. APA Group’s accounting for leases
as a lessor remains unchanged under AASB 16.
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notes to the consolidated financial statements. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Other
30. Adoption of new and revised Accounting Standards (continued)
Standards and Interpretations issued not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations on issue but not yet effective are not
expected to have material impact on APA Group's accounting policies or any of the amounts recognised in the financial statements.
31. Events occurring after reporting date
On 26 August 2020, the Directors declared a final distribution of 27.00 cents per security ($318.6 million) for APA Group.
This is comprised of a distribution of 20.27 cents per unit from APT and a distribution of 6.73 cents per unit from APTIT. The
APT distribution represents a 8.53 cents per unit fully franked profit distribution and 11.74 cents per unit capital distribution.
The APTIT distribution represents a 2.09 cent per unit profit distribution and a 4.64 cents per unit capital distribution.
Franking credits of 3.66 cents per security will be allocated to the franked profit distribution. The distribution will be paid on
16 September 2020.
As at the time of reporting, the developing and uncertain situation in respect of COVID-19 pandemic continues to be closely
monitored by management and the directors of APA Group. Nothing has come to the attention of APA Group that would
require adjustment or additional disclosure in these financial statements as a result of any recent COVID-19 developments.
Other than the events disclosed above, there have not been any events or transactions that have occurred subsequent to year
end that would require adjustment to or disclosure in the financial statements.
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declaration by the directors of australian pipeline limited.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
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 APA Group;
c) in the Directors' opinion, the financial statements and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board; and
d) the Directors have been given the declarations by the Chief Executive Officer 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
Michael Fraser
Chairman
Debra Goodin
Director
Sydney, 26 August 2020
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auditor’s independence declaration.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
TO AUSTRALIAN PIPELINE LIMITED AS RESPONSIBLE ENTITY FOR AUSTRALIAN PIPELINE TRUST
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
26 August 2020
The Directors
Australian Pipeline Limited as responsible entity for Australian Pipeline Trust
Level 25, 580 George Street
Sydney NSW 2000
Dear Directors
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo AAuussttrraalliiaann PPiippeelliinnee LLiimmiitteedd aass rreessppoonnssiibbllee eennttiittyy ffoorr
AAuussttrraalliiaann PPiippeelliinnee TTrruusstt
In accordance with section 307C of the Corporations Act 2001, we are 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 partners for the audit of the financial statements of Australian Pipeline Trust for the financial year
ended 30 June 2020, we declare that to the best of our knowledge and belief, there have been no contraventions
of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Jamie Gatt
Partner
Chartered Accountants
Taralyn Elliott
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Organisation.
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independent auditor’s report.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
TO THE UNITHOLDERS OF AUSTRALIAN PIPELINE TRUST
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
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt
ttoo tthhee UUnniitthhoollddeerrss ooff AAuussttrraalliiaann PPiippeelliinnee TTrruusstt
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
OOppiinniioonn
We have audited the financial report of Australian Pipeline Trust (the Trust) and its controlled entities (the
Group), which comprises the consolidated statement of financial position as at 30 June 2020, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
BBaassiiss ffoorr OOppiinniioonn
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional &
Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of Australian Pipeline Limited (the Responsible Entity), would be in the same terms if
given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Organisation.
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independent auditor’s report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
TO THE UNITHOLDERS OF AUSTRALIAN PIPELINE TRUST
KKeeyy AAuuddiitt MMaatttteerrss
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt
MMaatttteerr
OOrrbboosstt GGaass PPrroocceessssiinngg PPllaanntt ((OOrrbboosstt))
rreeccoovveerraabbllee aammoouunntt aasssseessssmmeenntt
Our procedures, performed in conjunction with our
valuation specialists, included, but were not limited to:
As at 30 June 2020 the carrying amount of
Orbost, included in capital work in progress,
as disclosed in Note 11 and Note 13 was
$443.9 million.
The Orbost project has incurred additional
capital costs compared to the original project
budget as well as delays in the
commissioning of the plant due to technical
difficulties. The assessment of the
recoverable amount of Orbost requires the
exercise of significant judgement in respect
of factors such as forecast revenue, inflation
rates, forecast operating costs, forecast
capital expenditure and discount rates.
This is considered a key audit matter due to
the significant judgements involved in
estimating the recoverable amount.
• Understanding the appropriateness of
management’s controls over the determination of
the recoverable amount;
• Challenging the Group’s assumptions and estimates
used to determine the recoverable amount,
including those relating to:
-
forecast revenue with reference to:
▪ processing capacity of the plant;
▪ uncontracted capacity;
-
-
-
-
inflation rates with reference to external data;
forecast operating costs;
forecast capital expenditure;
discount rates with reference to:
▪
external data;
▪ Deloitte developed discount rates;
• Testing the mathematical accuracy of the cash flow
model;
• Agreeing relevant data in the cash flow model to
approved budgets and latest forecasts;
• Evaluating management’s sensitivity analysis in
relation to key assumptions.
We also assessed the appropriateness of the
disclosures in Note 13 to the financial statements.
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independent auditor’s report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
TO THE UNITHOLDERS OF AUSTRALIAN PIPELINE TRUST
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt
MMaatttteerr
Our procedures, performed in conjunction with our
treasury specialists, included, but were not limited to:
• Understanding management’s controls over the
recording of derivative transactions and the
application of hedge accounting;
• Evaluating the appropriateness of the valuation
methodologies applied and testing, on sample basis,
the valuation of the derivative financial instruments;
• Testing, on a sample basis, the application of hedge
accounting and evaluating that the financial
instruments qualified for hedge accounting in
accordance with the AASB 9 Financial Instruments;
• Testing the hedge effectiveness assessment, taking
into consideration the different cash flow profiles of
the US Dollar revenue and hedges and the
requirement to split the cross currency interest rate
swaps; and
• Testing that the effective portion of the fair value
movement in the US Dollar borrowings and
derivatives are appropriately deferred in reserves.
We also assessed the appropriateness of the
disclosures in Note 19 to the financial statements.
KKeeyy AAuuddiitt MMaatttteerr
DDeerriivvaattiivvee ttrraannssaaccttiioonnss aanndd bbaallaanncceess
iinncclluuddiinngg tthhee aapppplliiccaattiioonn ooff hheeddggee
aaccccoouunnttiinngg ffoorr tthhee WWaalllluummbbiillllaa GGllaaddssttoonnee
PPiippeelliinnee ((WWGGPP))
As disclosed in Note 19, revenue received in
respect of the WGP contract is denominated
in US dollars and is contracted to be received
until 2035. The Group manages the currency
risk on this US dollar revenue by using:
• US dollar borrowings (as a natural hedge
of future US dollar revenue);
• Cross currency interest rate swaps used
to convert foreign currency denominated
borrowings (in British Pounds and Euros)
to US dollars; and
• Foreign currency forward contracts to
hedge the portion of the exchange rate
risk not covered by the US dollar
borrowings and cross currency interest
rate swaps.
The Group applies hedge accounting for the
derivatives and US dollar borrowings.
The application of hedge accounting in
relation to the WGP revenue is complex, as
the revenue and the instruments used as
hedges have different cash flow profiles.
Furthermore, these cross currency interest
rate swaps need to be bifurcated into
separate currency pairs for the application of
hedge accounting.
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independent auditor’s report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
TO THE UNITHOLDERS OF AUSTRALIAN PIPELINE TRUST
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt
MMaatttteerr
EEaasstt CCooaasstt GGrriidd ccaasshh ggeenneerraattiinngg uunniitt ((CCGGUU))
rreeccoovveerraabbllee aammoouunntt aasssseessssmmeenntt
Our procedures, performed in conjunction with our
valuation specialists, included, but were not limited to:
As at 30 June 2020 the carrying amount of
goodwill allocated to the East Coast Grid
CGU is $1.1 billion, as disclosed in Note 12.
• Understanding the appropriateness of
management’s controls over the determination of
the recoverable amount;
The assessment of the recoverable amount
of the East Coast Grid’s goodwill requires the
exercise of significant judgement to estimate
future contract renewals, contracting of
spare capacity and discount rates.
This is considered a key audit matter due to
the significance of the goodwill allocated to
this CGU.
• Challenging the Group’s assumptions and estimates
used to determine the recoverable amount of the
East Coast Grid CGU, including with reference to
external data. The key estimates and assumptions
included:
-
forecast revenue with reference to:
▪
▪
▪
expected future contract renewals;
expected contracting of spare capacity;
inflation rates;
-
discount rates with reference to:
▪
external data;
▪ Deloitte developed discount rates;
• Assessing historical accuracy of management’s
budgeting and forecasting;
• Testing the mathematical accuracy of the East Coast
Grid cash flow model;
• Agreeing relevant data in the cash flow model to
approved budgets and latest forecasts;
• Evaluating management’s sensitivity analysis in
relation to key assumptions.
We also assessed the appropriateness of the
disclosures in Note 13 to the financial statements.
APA GROUP I ANNUAL REPORT 2020
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independent auditor’s report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
TO THE UNITHOLDERS OF AUSTRALIAN PIPELINE TRUST
OOtthheerr IInnffoorrmmaattiioonn
The directors of the Responsible Entity (“the Directors”) are responsible for the other information. The other
information comprises the information included in the Group’s annual report for the year ended 30 June
2020, but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
RReessppoonnssiibbiilliittiieess ooff tthhee DDiirreeccttoorrss ffoorr tthhee FFiinnaanncciiaall RReeppoorrtt
The directors of the Responsible Entity 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 preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations,
or have no realistic alternative but to do so.
AAuuddiittoorr’’ss RReessppoonnssiibbiilliittiieess ffoorr tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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independent auditor’s report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
TO THE UNITHOLDERS OF AUSTRALIAN PIPELINE TRUST
• Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for our
audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
APA GROUP I ANNUAL REPORT 2020
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independent auditor’s report. continued.
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES
TO THE UNITHOLDERS OF AUSTRALIAN PIPELINE TRUST
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
Opinion on the Remuneration Report
We have audited the Remuneration Report of Australian Pipeline Limited as responsible entity of Australian
Pipeline Trust included on pages 48 to 62 of the Directors’ Report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of Australian Pipeline Limited for the year ended 30 June 2020,
has been prepared in accordance with section 300A of the Corporations Act 2001.
Responsibilities
The directors have voluntarily presented the Remuneration Report of the Responsible Entity of Australian
Pipeline Trust which has been prepared in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Jamie Gatt
Partner
Chartered Accountants
Sydney, 26 August 2020
Taralyn Elliott
Partner
Chartered Accountants
Sydney, 26 August 2020
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directors’ report.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
APT Investment Trust Directors’ Report
The Directors of Australian Pipeline Limited (“Responsible Entity”) submit their report and the annual financial report of APT
Investment Trust (“APTIT”) and its controlled entities (together “Consolidated Entity”) for the financial year ended 30 June
2020. 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”).
1. Directors
The names of the Directors of the Responsible Entity during the year and since the year end are:
First appointed
Current Directors:
Michael Fraser
Robert (Rob) Wheals
Steven (Steve) Crane
James Fazzino
Debra (Debbie) Goodin
Shirley In’t Veld
Rhoda Phillippo
Peter Wasow
Former Directors:
1 September 2015
Chairman: 27 October 2017
Chief Executive Officer and Managing Director: 6 July 2019
1 January 2011
21 February 2019
1 September 2015
19 March 2018
1 June 2020
19 March 2018
Michael (Mick) McCormack
Retired as Chief Executive Officer and Managing Director: 5 July 2019
The Company Secretaries of the Responsible Entity during the year and since the year end are Nevenka Codevelle and Amanda
Cheney (from 25 February 2020).
2. Principal Activities
The Consolidated Entity operates as an investment and financing entity within the APA Group.
3. State of Affairs
Rob Wheals commenced as APA’s new Chief Executive Officer and Managing Director with effect from 6 July 2019, following
Mick McCormack’s retirement on 5 July 2019.
On 20 December 2019, APA’s Chief Financial Officer (CFO), Peter Fredricson indicated his intention to retire from his position
remaining until December 2020 at the latest to support the new CFO during the transition period.
4. Subsequent Events
On 26 August 2020, the Directors declared a final distribution of 6.73 cents per unit ($79.4 million). The distribution represents
a 2.09 cents per unit profit distribution and a 4.64 cents per unit capital distribution. The distribution is expected to be paid
on 16 September 2020.
On 12 August 2020, APA announced that Adam Watson would join APA as the new CFO, commencing mid November 2020.
Other than what is noted above and as disclosed elsewhere in this report, there has not arisen in the interval between the end
of the full year ended 30 June 2020 and the date of this report any matter or circumstance that has significantly affected,
or may significantly affect, the Group’s operations, the results of those operations, or the Group’s state of affairs, in future
financial years.
5. Review and Results of Operations
The Consolidated Entity reported net profit after tax of $53.0 million (FY2019: $65.1 million) for the year ended 30 June 2020
and total revenue of $53.0 million (FY2019: $65.1 million).
6. Distributions
Distributions paid to Securityholders during the financial year were:
APTIT profit distribution
APTIT capital distribution
Total
Final FY2019
distribution paid
11 September 2019
Interim FY2020
distribution paid
11 March 2020
Cents per
security
Total
distribution
$000
Cents per
security
Total
distribution
$000
2.55
3.98
6.53
30,056
47,002
77,058
2.40
2.49
4.89
28,335
29,372
57,707
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directors’ report. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
On 26 August 2020, the Directors declared a final distribution for APTIT for the financial year of 6.73 cents per security which
is payable on 16 September 2020 and will comprise the following components:
APTIT profit distribution
APTIT capital distribution
Total
Final FY2020
distribution payable
16 September 2020
Cents per
security
Total
distribution
$000
2.09
4.64
6.73
24,686
54,692
79,378
Distribution information is presented on an accounting classification basis. The APA Group Annual Tax Statement (to be
released in September 2020) and Annual Tax Return Guide will provide the classification of distribution components for the
purposes of preparation of Securityholder income tax returns.
To assist APA Securityholders who wish to submit their annual tax return prior to receiving their annual APA Tax Statement in
mid September, APA has developed an online tax estimator tool.
The Estimator tool will generate Pro Forma Tax Return Inputs based on information entered by Securityholders and therefore
should be considered “indicative only” compared to the confirmed accurate information contained in APA’s Annual Tax
Statement. The Tax Estimator will be available under the Investor section on APA’s website following confirmation by the
Board via an ASX release of the final FY2020 distribution (https://www.apa.com.au/investors/my-securities/apa-annual-
tax-statement-estimator/).
Information on Directors and Company Secretaries
7. Directors
7.1
See pages 06 to 07 for information relating to qualifications and experience of the Directors and Company Secretary Nevenka
Codevelle. Information on APA’s additional Company Secretary Amanda Cheney is below:
Amanda Cheney
LLB (Hons) BArts
General Counsel &
Company Secretary
(Effective 25 February 2020)
Amanda has been with APA Group since August 2012 and holds the role of General Counsel
and Company Secretary.
Amanda has over 18 years' experience in energy and infrastructure industries, having worked
as a senior projects lawyer in Australia and Japan. She holds a Graduate Diploma of Applied
Corporate Governance from the Governance Institute of Australia and is a member of the
Australian Institute of Company Directors.
7.2 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
financial year are as follows:
Name
Period of directorship
Company
Michael Fraser
Aurizon Holdings Limited
Since February 2016
Robert Wheals
—
—
Steven Crane
James Fazzino
Debra Goodin
nib holdings limited
SCA Property Group
Tassal Group Limited
Incitec Pivot Limited
Since September 2010, Chair since October 2011
Since December 2018
Since May 2020
July 2005 to November 2017
Senex Energy Limited
oOh!media Limited
Atlas Arteria Limited
Ten Network Holdings Limited
Since May 2014
Since November 2014
Since September 2017
August 2016 to November 2017
Shirley In't Veld
Northern Star Resources Limited
Alumina Limited
Since September 2016
Since August 2020
Rhoda Phillippo
Vocus Group Ltd
March 2015 (previously as M2 Group Ltd) to August 2018
Peter Wasow
Oz Minerals Limited
Alcoa Australia Limited
Since November 2017
January 2014 to July 2017
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directors’ report. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
7. Directors (continued)
7.3 Directors’ meetings
During the financial year, 13 Board meetings, four Audit and Risk Management Committee meetings, four People and
Remuneration Committee meetings, four Health Safety and Environment Committee meetings and three Nomination
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
Michael Fraser
Robert Wheals (1)
Michael McCormack (2)
Steven Crane
James Fazzino
Debra Goodin
Shirley Int’d Veld
Peter Wasow
Rhoda Phillippo (3)
Board
People &
Remuneration
Committee
Audit & Risk
Management
Committee
Health Safety
& Environment
Committee
Nomination
Committee
A
13
13
0
13
13
13
13
13
2
B
13
13
0
12
13
13
13
13
2
A
—
—
—
4
—
—
4
4
—
B
—
—
—
4
—
—
4
4
—
A
4
—
—
4
4
4
—
4
—
B
4
—
—
4
4
4
—
4
—
A
—
—
—
—
4
4
4
—
1
B
—
—
—
—
4
4
4
—
1
A
4
—
—
4
—
4
—
—
—
B
4
—
—
4
—
4
—
—
—
A) Number of meetings held during the time the Director held office or was a member of the committee during the financial year.
B) Number of meetings attended.
1) Robert Wheals appointed as a Director on 6 July 2019.
2) Michael McCormack retired as a Director on 5 July 2019.
3) Rhoda Phillippo appointed as a Director 1 June 2020.
7.4 Directors’ securityholdings
The aggregate number of APA securities held directly, indirectly or beneficially by Directors or their Director related entities at
30 June 2020 is 385,260 (2019: 721,576 (1)).
The following table sets out Directors’ relevant interests in APA securities as at 30 June 2020:
Directors
Michael Fraser
Robert Wheals (2)
Michael McCormack (3)
Steven Crane
Debra Goodin
James Fazzino
Shirley Int’d Veld
Peter Wasow
Rhoda Phillippo (4)
Fully paid
securities as at
1 July 2019
Securities
acquired
Fully paid
Securities securities as at
30 June 2020
disposed
102,942
38,883
350,000
130,000
23,000
30,751
25,000
21,000
—
721,576
—
7,505
—
—
1,179
—
—
5,000
—
13,684
—
—
—
—
—
—
—
—
—
—
102,942
46,388
—
130,000
24,179
30,751
25,000
26,000
—
385,260
1) At 30 June 2019 the aggregate number of APA securities held directly or beneficially by Directors or their related entities included 350,000 securities held by
Michael McCormack who retired on 5 July 2019. The aggregate number of APA Securities held directly or beneficially by the current Directors or their related
entities as at 30 June 2019 was 371,576.
2) Robert Wheals was appointed as a Director on 6 July 2019. He held 38,883 securities on appointment.
3) Michael McCormack retired as a Director on 5 July 2019. He held 350,000 securities on retirement.
4) Rhoda Phillippo was appointed as a Director effective 1 June 2020. She held nil securities on appointment.
As at 30 June 2020, Robert Wheals held 217,872 performance rights granted under APA Group’s long term incentive plan. Each
performance right is a right to receive one ordinary stapled security in APA subject to satisfaction of certain performance
hurdles. Further information can be found in APA’s Remuneration Report on pages 48 to 62.
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.
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directors’ report. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
8. Options Granted
In this report, the term “APA securities” refers to stapled securities each comprising a unit in Australian Pipeline Trust stapled
to a unit in APT Investment Trust and traded on the Australian Securities Exchange (ASX) under the code “APA”.
No options over unissued APA securities were granted during or since the end of the financial year, no unissued APA securities
were under option as at the date of this report, and no APA securities were issued during or since the end of the financial year
as a result of the exercise of an option over unissued APA securities.
Indemnification of Officers
9.
During the financial year, the Responsible Entity paid a premium in respect of a contract insuring the Directors and Officers
of the Responsible Entity and any APA Group entity against any liability incurred in performing those roles to the extent
permitted by the Corporations Act 2001. The contract of insurance prohibits specific disclosure of the nature of the liability
and the amount of the premium.
Australian Pipeline Limited, in its own capacity and as Responsible Entity of Australian Pipeline Trust and APT Investment
Trust, indemnifies each Director and Company Secretary, and certain other executives, former executives and officers 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. 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 financial year, indemnified or agreed to indemnify an officer
or external auditor of the Responsible Entity or any APA Group entity against a liability incurred by such an officer or auditor.
10. 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 financial
year are disclosed in Note 18 to the financial statements.
Except as disclosed in this report, neither the Responsible Entity nor any of its associates holds any APTIT units.
The number of APTIT units issued during the financial year, and the number of APTIT units on issue at the end of the financial
year, are disclosed in Note 13 to the financial statements.
The value of the Consolidated Entity’s assets as at the end of the financial year is disclosed in the balance sheet in total
assets, and the basis of valuation is disclosed in the notes to the financial statements.
11. 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 143.
12. Rounding of Amounts
The Consolidated Entity is an entity of the kind referred to in ASIC Corporations Instrument 2016/191 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.
13. Authorisation
The Directors’ Report is signed in accordance with a resolution of the Directors of the Responsible Entity made pursuant to
section 298(2) of the Corporations Act 2001.
On behalf of the Directors
Michael Fraser
Chairman
Sydney, 26 August 2020
Debra Goodin
Director
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
consolidated statement of profit or loss and other comprehensive income.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Revenue
Expenses
Profit before tax
Income tax expense
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Profit Attributable to:
Unitholders of the parent
Total comprehensive income attributable to:
Unitholders of the parent
Earnings per unit
Basic and diluted (cents per unit)
Note
4
4
5
2020
$000
53,033
(12)
53,021
—
53,021
2019
$000
65,082
(12)
65,070
—
65,070
53,021
65,070
53,021
53,021
65,070
65,070
53,021
65,070
2020
4.5
2019
5.5
6
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
APA GROUP I ANNUAL REPORT 2020
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consolidated statement of financial position.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
AS AT 30 JUNE 2020
Current assets
Receivables
Non-current assets
Receivables
Other financial assets
Non-current assets
Total assets
Current liabilities
Trade and other payables
Total liabilities
Net assets
Equity
Issued capital
Retained earnings
Total equity
Note
2020
$000
2019
$000
8
8
11
9
13
852
813
6,073
905,631
911,704
912,556
25
25
6,925
986,562
993,487
994,300
25
25
912,531
994,275
887,845
24,686
912,531
964,219
30,056
994,275
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
128
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consolidated statement of changes in equity.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Balance at 1 July 2018
Profit for the year
Total comprehensive income for the year
Issue cost of units
Distributions to unitholders
Balance at 30 June 2019
Balance at 1 July 2019
Profit for the year
Total comprehensive income for the year
Distributions to unitholders
Balance at 30 June 2020
Note
13
7
7
Issued
capital
$000
1,030,176
—
—
(63)
(65,894)
964,219
964,219
—
—
(76,374)
887,845
Retained
earnings
$000
34,228
65,070
65,070
—
(69,242)
30,056
30,056
53,021
53,021
(58,391)
24,686
Total
$000
1,064,404
65,070
65,070
(63)
(135,136)
994,275
994,275
53,021
53,021
(134,765)
912,531
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
APA GROUP I ANNUAL REPORT 2020
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consolidated statement of cash flows.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Trust distribution – related party
Interest received – related parties
Proceeds from repayment of finance leases
Receipts from customers
Payments to suppliers
2020
$000
24,373
27,948
1,167
358
(12)
2019
$000
26,833
37,523
1,167
333
(66)
Net cash provided by operating activities
53,834
65,790
Cash flows from investing activities
Receipts from related parties
Net cash provided by investing activities
Cash flows from financing activities
Payment of unit issue costs
Distributions to unitholders
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
80,931
80,931
69,409
69,409
—
(134,765)
(134,765)
(63)
(135,136)
(135,199)
—
—
—
—
—
—
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
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.
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notes to the consolidated financial statements.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Basis of Preparation
1. About this report
In the following financial statements, note disclosures are grouped into six sections being: Basis of Preparation; Financial
Performance; Operating Assets and Liabilities; Capital Management; Group Structure; and Other. Each note sets out the
accounting policies applied in producing the results along with any key judgements and estimates used.
Basis of Preparation
1. About this report
2. General information
Financial Performance
3. Segment information
4. Profit from operations
5.
Income tax
6. Earnings per unit
7. Distributions
Operating Assets and Liabilities
8. Receivables
9. Payables
10. Leases
Capital Management
11. Other financial assets
12. Financial risk management
13. Issued capital
Group Structure
14. Subsidiaries
Other
15. Commitments and contingencies
16. Director and Executive Key Management
Personnel remuneration
17. Remuneration of external auditor
18. Related party transactions
19. Parent entity information
131
132
133
133
133
133
134
134
135
135
136
137
138
138
139
139
139
139
140
20. Adoption of new and revised Accounting Standards
141
21. Events occurring after reporting date
141
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notes to the consolidated financial statements. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Basis of Preparation
2. General information
APT Investment Trust (“APTIT“ or “Trust“) is one of the two stapled trusts of APA Group, the other stapled trust being
Australian Pipeline Trust (“APT“). Each of APT and APTIT are registered managed investment schemes regulated by the
Corporations Act 2001. APTIT units are “stapled“ to APT units on a one-to-one basis so that one APTIT unit and one APT unit
form a single stapled security which trades on the Australian Securities Exchange under the code “APA“.
This financial report represents the consolidated financial statements of APTIT and its controlled entities (together
the “Consolidated Entity“). For the purposes of preparing the consolidated financial report, the Consolidated Entity is a
for-profit entity.
All intragroup transactions and balances have been eliminated on consolidation. Where necessary, adjustments are made to
the assets, liabilities, and results of subsidiaries, joint arrangements and associates to bring their accounting policies into line
with those used by the Consolidated Entity.
APTIT's registered office and principal place of business is as follows:
Level 25
580 George Street
Sydney NSW 2000
Tel: (02) 9693 0000
APTIT operates as an investment entity within APA Group.
The financial report for the year ended 30 June 2020 was authorised for issue in accordance with a resolution of the directors
on 26 August 2020.
This general purpose financial report has been prepared in accordance with the requirements of the Corporations Act
2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards
Board (“AASB”), and also complies with International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board.
The financial report has been prepared on the basis of historical cost, except for the revaluation of financial instruments.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000) in
accordance with ASIC Corporations Instrument 2016/191, unless otherwise stated.
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notes to the consolidated financial statements. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Financial Performance
3. Segment information
The Consolidated Entity has one reportable segment being energy infrastructure investment.
The Consolidated Entity is an investing entity within the Australian Pipeline Trust stapled group. As the Trust only operates in
one segment, it has not disclosed segment information separately.
4. Profit from operations
Profit before income tax includes the following items of income and expense:
Revenue
Distributions
Trust distribution – related party
Finance income
Interest – related parties
Finance lease income – related party
Other revenue
Other
Total revenue
Expenses
Audit fees
Total expenses
2020
$000
2019
$000
24,373
24,373
27,948
355
28,303
357
53,033
26,833
26,833
37,523
393
37,916
333
65,082
(12)
(12)
(12)
(12)
Revenue is recognised at an amount that reflects the consideration to which the Consolidated Entity expects to be entitled.
Amounts disclosed as revenue are net of duties and taxes paid. Revenue is recognised for the major business activities as follows:
— Interest revenue, which is recognised as it accrues and is determined using the effective interest method;
— Distribution revenue, which is recognised when the right to receive a distribution has been established; and
— Finance lease income, which is recognised when receivable.
5.
Income tax
Income tax expense is not brought to account in respect of APTIT as, pursuant to Australian taxation laws, APTIT is not liable
for income tax provided that its realised taxable income (including any assessable realised capital gains) is fully distributed to
its unitholders each year.
6. Earnings per unit
Basic and diluted earnings per unit
2020
cents
4.5
2019
cents
5.5
The earnings and weighted average number of units used in the calculation of basic and diluted earnings per unit are as follows:
Net profit attributable to unitholders for calculating basic and diluted earnings per unit
2020
$000
53,021
2019
$000
65,070
2020
No. of units
000
2019
No. of units
000
Adjusted weighted average number of ordinary units used in the calculation of basic
and diluted earnings per unit
1,179,894
1,179,894
APA GROUP I ANNUAL REPORT 2020
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notes to the consolidated financial statements. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Financial Performance
7. Distributions
Recognised amounts
Final FY2019 distribution paid on 11 September 2019
(2019: Final FY2018 distribution paid on 12 September 2018)
Profit distribution (a)
Capital distribution
Interim distribution paid on 11 March 2020
(2019: Interim FY2019 distribution paid on 13 March 2019)
Profit distribution (a)
Capital distribution
Total distributions recognised
Profit distributions
Capital distributions (Note 13)
Unrecognised amounts
Final FY2020 distribution payable on 16 September 2020 (b)
(2019: Final FY2019 distribution paid on 11 September 2019)
Profit distribution (a)
Capital distribution
a) Profit distributions unfranked (2019: unfranked).
b) Record date 30 June 2020.
2020
cents
per unit
2020
Total
$000
2019
cents
per unit
2019
Total
$000
2.55
3.98
6.53
2.40
2.49
4.89
4.95
6.47
11.42
2.09
4.64
6.73
30,056
47,002
77,058
28,335
29,372
57,707
58,391
76,374
134,765
24,686
54,692
79,378
2.90
3.14
6.04
2.97
2.45
5.42
5.87
5.59
11.46
2.55
3.98
6.53
34,229
37,022
71,251
35,014
28,872
63,886
69,242
65,894
135,136
30,056
47,002
77,058
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.
Operating Assets and Liabilities
8. Receivables
Finance lease receivable – related party (Note 10)
Current
Finance lease receivable – related party (Note 10)
Non-current
2020
$000
852
852
6,073
6,073
2019
$000
813
813
6,925
6,925
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
expected credit loss required.
None of the above receivables is past due.
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notes to the consolidated financial statements. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Operating Assets and Liabilities
9. Payables
Other payables
2020
$000
25
2019
$000
25
Trade and other payables are recognised when the Consolidated Entity becomes obliged to make future payments resulting
from the purchase of goods and services. Trade and other payables are stated at amortised cost.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
GST receivable or GST payable is only recognised once a tax invoice has been issued or received.
10. Leases
Consolidated Entity as lessor
Leases are classified as finance leases when the terms of the lease transfer substantially all of the risks and rewards incidental
to ownership of the leased asset to the lessee. All other leases are classified as operating leases.
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)
Less: Future finance income
Present value of lease receivables
Included in the financial statements as part of:
Current receivables (Note 8)
Non-current receivables (Note 8)
2020
$000
1,167
4,669
2,335
8,171
(1,246)
6,925
852
6,073
6,925
2019
$000
1,167
4,669
3,502
9,338
(1,600)
7,738
813
6,925
7,738
a) Minimum future lease payments receivable include the aggregate of all lease payments receivable and any guaranteed residual.
The Consolidated Entity does not have any operating leases where it is the lessor.
Amounts due from a lessee under a finance lease are recorded as receivables. Finance lease receivables are initially recognised at
the amount equal to the present value of the minimum lease payments receivable plus the present value of any unguaranteed
residual value expected to accrue at the end of the lease term. Finance lease receipts are allocated between interest revenue
and reduction of the lease receivable over the term of the lease in order to reflect a constant periodic rate of return on the net
investment outstanding in respect of the lease.
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notes to the consolidated financial statements. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
11. Other financial assets
Non-current
Advance to related party
Investment in related party
2020
$000
2019
$000
798,252
107,379
905,631
879,183
107,379
986,562
Investment in related party
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 preferred rights to the income and invested capital of GasNet A Trust,
but hold no voting rights. The A Class unitholder may however suspend for a period or terminate all of the B Class unitholder
rights to distributions of income and capital. As such, GAIT neither controls nor has a significant influence over GasNet A
Trust. GasNet Australia Trust, a related party wholly owned by APA Group, owns 100% of the A Class units in GasNet A Trust
and, accordingly, GasNet A Trust is included in the consolidation of the APA Group.
The investment in B Class units is measured at fair value through profit or loss. The measurement of fair value takes into
consideration the fact that the A Class unitholders have discretion over the return of the initial capital invested and the
instrument can be called on demand. Therefore, fair value is measured based on the amount that can be called on demand,
adjusted for the credit and liquidity risk of GasNet A Trust. As the impact of credit and liquidity risk is not significant, the fair
value of the B Class units is not materially different to the amount of capital invested.
The Consolidated Entity does not intend to dispose of its interest in GasNet A Trust.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost:
— The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual
cash flows; and
— The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive
income (“FVTOCI”):
— The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows
and selling the financial assets; and
— The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
By default, all other financial assets are subsequently measured at fair value through profit or loss (“FVTPL”).
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses
recognised in profit or loss to the extent they are not part of a designated hedging relationship.
Derivatives that the Consolidated Entity does not elect to apply hedge accounting or does not meet the hedge accounting
criteria, are classified as 'financial assets/liabilities' for accounting purposes and accounted at FVTPL.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset, or where appropriate, a shorter period.
Receivables and loans
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active
market are classified as ‘loans and receivables’. Trade and other receivables are stated at their amortised cost less impairment.
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notes to the consolidated financial statements. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
11. Other financial assets (continued)
Impairment of financial assets
In relation to the impairment of financial assets, it is no longer necessary for a credit event to have occurred before credit
losses are recognised. The Consolidated Entity applies an expected credit loss (“ECL”) model to account for ECL and changes
in these ECL at each reporting date to reflect changes in credit risk since initial recognition of a financial asset.
The Consolidated Entity recognises a loss allowance for ECL on investments in debt instruments that are measured at
amortised cost, for example, loans advanced to related parties and receivables. For finance lease receivables, the Consolidated
Entity applies the simplified approach to assessing ECL. Under the simplified approach, ECL on these financial assets is
estimated using a provision matrix. This matrix is based on the Consolidated Entity’s historical credit losses and reasonable
and supportable information that is available without undue cost.
The amount of ECL under either approach is updated at each reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument.
The Consolidated Entity recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding
adjustment to their carrying amount through a loss allowance account. Aside from the additional disclosure requirements,
the history of collection rates and forward-looking information that is available without undue cost or effort shows that the
Consolidated Entity does not have an expected loss on collection of debtors or loans.
12. Financial risk management
The Consolidated Entity's corporate Treasury department is responsible for the overall management of the Consolidated
Entity’s capital raising activities, liquidity, lender relationships and engagement, debt portfolio management, interest rate and
foreign exchange hedging, credit rating maintenance and third party indemnities (bank guarantees) within risk management
parameters reviewed by the Board.
The Consolidated Entity's activities generate financial instruments comprising of cash, receivables, payables and interest
bearing liabilities which expose it to various risks as summarised below:
a) Market risk including currency risk, interest rate risk and price risk;
b) Credit risk; and
c) Liquidity risk.
Risk
Sources
Financial exposure
Risk management framework
Market
Commercial transactions
in foreign currency and
funding activities
Credit
Cash, receivables, interest
bearing liabilities and hedging
Refer to market risk section.
The carrying amount of financial
assets recorded in the financial
statements, net of any collateral
held or bank guarantees held by the
Consolidated Entity, represents the
Consolidated Entity's maximum
exposure to credit risk in relation
to those assets.
Liquidity
Payables
Refer to liquidity risk section.
The Audit and Risk Management
Committee (“ARMC“) approves
written principles for overall risk
management, as well as policies
covering specific areas such as
liquidity risk, funding risk, foreign
currency risk, interest rate risk and
credit risk. The Consolidated Entity's
ARMC ensures there is an appropriate
Risk Management Policy for the
management of treasury risk and
compliance with the policy through
the review of monthly reporting to the
Board from the Treasury department.
a) Market risk
The Consolidated Entity's activities exposure is primarily to the financial risk of changes in interest rates. There has been no
change to the Consolidated Entity's exposure to market risk or the manner in which it manages and measures the risk from
the previous year.
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 within a given period of time. 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 $4,901,000 or decrease by
$4,854,000 (2019: increase by $5,974,000 or decrease by $5,917,000 respectively). This is mainly attributable to the
Consolidated Entity's exposure to interest rates on its variable rate inter-entity balances. The sensitivity has decreased due
to lower inter-entity balances.
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notes to the consolidated financial statements. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Capital Management
12. Financial risk management (continued)
b) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Consolidated Entity.
Credit risk management
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 the risk of loss. For financial investments or
market risk hedging, the Consolidated Entity's policy is to only transact with counterparties that have a credit rating of
A- (Standard & Poor's)/A3 (Moody's) or higher unless specifically approved by the Board. Where a counterparty's rating falls
below this threshold following a transaction, no other transactions can be executed with that counterparty until the exposure
is sufficiently reduced or their credit rating is upgraded above the Consolidated Entity's minimum threshold. The Consolidated
Entity's exposure to financial instrument and deposit credit risk is closely monitored against counterparty credit limits imposed
by the Treasury Risk Management Policy approved by the ARMC. These limits are regularly reviewed by the Board.
Overview of the Consolidated Entity's exposure to credit risk
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.
c) Liquidity risk
The Consolidated Entity's exposure to liquidity risk is limited to other payables of $25,000 (2019: $25,000), all of which are
due in less than 1 year (2019: less than 1 year).
13. Issued capital
Units
2020
$000
2019
$000
1,179,893,848 units, fully paid (2019: 1,179,893,848 units, fully paid) (a)
887,845
964,219
2020
No. of units
000
2020
$000
2019
No. of units
000
2019
$000
Movements
Balance at beginning of financial year
1,179,894
964,219
1,179,894
1,030,176
Issue cost of units
Capital distributions paid (Note 7)
—
—
—
(76,374)
—
—
Balance at end of financial year
1,179,894
887,845
1,179,894
(63)
(65,894)
964,219
a) Fully paid units carry one vote per unit and carry the right to distributions.
Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to issued capital
from 1 July 1998. Therefore, the Trust does not have a limited amount of authorised capital and issued securities do not have
a par value.
Group Structure
14. Subsidiaries
Subsidiaries are entities controlled by APTIT. Control exists where APTIT has power over an entity, i.e. existing rights that give
APTIT the current ability to direct the relevant activities of the entity (those that significantly affect the returns); exposure, or
rights, to variable returns from its involvement with the entity; and the ability to use its power to affect those returns.
Name of entity
Parent entity
APT Investment Trust
Subsidiary
GasNet Australia Investments Trust
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Ownership interest
Country of
registration
2020
%
2019
%
Australia
100
100
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Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
notes to the consolidated financial statements. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Other
15. Commitments and contingencies
The Consolidated Entity had no material contingent assets, liabilities and commitments as at 30 June 2020 and 30 June 2019.
16. Director and senior Executive Key Management Personnel remuneration
Remuneration of Directors
The aggregate remuneration of Directors of the Consolidated Entity is set out below:
Short-term employment benefits
Post-employment benefits
Total remuneration: Non-Executive Directors
Short-term employment benefits
Post-employment benefits
Cash settled security-based payments
Equity settled security-based payments
Total remuneration: Executive Director (a)
Total Remuneration: Directors
2020
$
1,549,332
147,185
1,696,517
2,395,588
25,453
1,879,646
368,121
4,668,808
6,365,325
2019
$
1,664,631
158,168
1,822,799
3,629,920
25,000
1,515,047
—
5,169,967
6,992,766
Remuneration of Executive Key Management Personnel (a)
The aggregate remuneration of Executive Key Management Personnel of the Consolidated Entity is set out below:
Short-term employment benefits
Post-employment benefits
Cash settled security-based payments
Equity settled security-based payments
Total remuneration: Executive Key Management Personnel
6,179,703
88,123
7,763,114
101,666
2,891,305
2,864,008
675,161
—
9,834,292
10,728,788
a) The remuneration for the former Chief Executive Officer and Managing Director, Michael (Mick) McCormack to 5 July 2019 and current Chief Executive Officer
and Managing Director, Rob Wheals from 6 July 2019, are included in both the remuneration disclosure for Directors and Executive Key Management Personnel.
In addition Mr McCormack is entitled to his outstanding reference units, due to be paid in August 2021, August 2022 and August 2023, with a total value of
$3,632,979 (based on a VWAP of $11.1579).
17. Remuneration of external auditor
Amounts received or due and receivable by Deloitte Touche Tohmatsu for:
Audit or review of the financial reports
Group
Total audit or review of the financial reports
Statutory assurance services required by legislation to be provided by the auditor
ASIC Compliance plan audit
Total statutory assurance services required by legislation to be provided by the auditor
Total remuneration of external auditor
18. Related party transactions
2020
$
6,300
6,300
6,000
6,000
12,300
2019
$
6,100
6,100
5,800
5,800
11,900
a) Equity interest in related parties
Details of the percentage of ordinary securities held in subsidiaries are disclosed in Note 14.
b) Responsible Entity – Australian Pipeline Limited
The Responsible Entity is wholly owned by APT Pipelines Limited (2019: 100% owned by APT Pipelines Limited).
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notes to the consolidated financial statements. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Other
18. Related party transactions (continued)
c) Transactions with related parties within the Consolidated Entity
During the financial year, the following transactions occurred between the Trust and its other related parties:
— loans advanced and payments received on long-term inter-entity loans; and
— payments of distributions.
All transactions between the entities that comprise the Consolidated Entity have been eliminated on consolidation.
Refer to Note 14 for details of the entities that comprise the Consolidated Entity.
d) Transactions with other related parties
APTIT and its controlled entities have a loan receivable balance with another entity in APA. This loan is repayable on agreement
between the parties. Interest is recognised by applying the effective interest method, agreed between the parties at the end
of each month and is determined by reference to market rates.
The following balances arising from transactions between APTIT and its other related parties are outstanding at reporting date:
— current receivables totalling $852,000 are owing from a subsidiary of APT for amounts due under a finance lease
arrangement (2019: $813,000);
— non-current receivables totalling $6,073,000 are owing from a subsidiary of APT for amounts due under a finance lease
arrangement (2019: $6,925,000); and
— non-current receivables totalling $798,252,000 (2019: $879,183,000) are owing from a subsidiary of APT for amounts due
under inter-entity loans.
Australian Pipeline Limited
Management fees of $1,426,000 (2019: $1,142,000) were paid to the Responsible Entity as reimbursement of costs incurred
on behalf of APTIT. No amounts were paid directly by APTIT to the Directors of the Responsible Entity.
Australian Pipeline Trust
Management fees of $1,426,000 (2019: $1,142,000) were reimbursed by APT.
19. 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.
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings
Reserves
Total equity
Financial performance
Profit for the year
Other comprehensive income
Total comprehensive income
2020
$000
2019
$000
852
911,704
912,556
25
25
813
993,487
994,300
25
25
912,531
994,275
887,845
24,686
—
912,531
53,021
—
53,021
964,219
30,056
—
994,275
65,070
—
65,070
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.
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notes to the consolidated financial statements. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Other
20. Adoption of new and revised Accounting Standards
Standards and Interpretations affecting amounts reported in the current period (and/or prior periods)
The company has adopted the following new standards on their applicable start date.
Standard/Interpretation
AASB 16 'Leases' (AASB 16)
Effective for annual
reporting periods
beginning on or after
Adoption date
1 January 2019
1 July 2019
AASB 16 replaces AASB 117 'Leases' and related interpretations. As the Consolidated Entity is a lessor only, the new standard
does not have a material impact on the consolidated financial statements. The Consolidated Entity’s accounting for leases
as a lessor remains unchanged under AASB 16.
Standards and Interpretations issued not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations on issue but not yet effective are
not expected to have material impact on the Consolidated Entity's accounting policies or any of the amounts recognised in
the financial statements.
21. Events occurring after reporting date
On 26 August 2020, the Directors declared a final distribution for the 2020 financial year of 6.73 cents per unit ($79.4 million).
The distribution represents a 2.09 cents per unit unfranked profit distribution and 4.64 cents per unit capital distribution. The
distribution will be paid on 16 September 2020.
As at the time of reporting, the developing and uncertain situation in respect of COVID-19 pandemic continues to be
closely monitored by management and the directors of the Consolidated Entity. Nothing has come to the attention of the
Consolidated Entity that would require adjustment to or additional disclosure in theses financial statements as a result of
any recent COVID-19 developments.
Other than the events disclosed above, there have not been any events or transactions that have occurred subsequent to year
end that would require adjustment to or disclosure in the financial statements.
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declaration by the directors of australian pipeline limited.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
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 issued by the International Accounting Standards Board; and
d) the Directors have been given the declarations by the Chief Executive Officer 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
Michael Fraser
Chairman
Debra Goodin
Director
Sydney, 26 August 2020
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auditor’s independence declaration.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
TO AUSTRALIAN PIPELINE LIMITED AS RESPONSIBLE ENTITY FOR APT INVESTMENT TRUST
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
26 August 2020
The Directors
Australian Pipeline Limited as responsible entity for APT Investment Trust
Level 25, 580 George Street
Sydney NSW 2000
Dear Directors
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo AAuussttrraalliiaann PPiippeelliinnee LLiimmiitteedd aass rreessppoonnssiibbllee eennttiittyy ffoorr
AAPPTT IInnvveessttmmeenntt TTrruusstt
In accordance with section 307C of the Corporations Act 2001, we are 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 partners for the audit of the financial statements of APT Investment Trust for the financial year ended
30 June 2020, we declare that to the best of our knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Jamie Gatt
Partner
Chartered Accountants
Taralyn Elliott
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Organisation.
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independent auditor’s report.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
TO THE UNITHOLDERS OF APT INVESTMENT TRUST
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
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt
ttoo tthhee UUnniitthhoollddeerrss ooff AAPPTT IInnvveessttmmeenntt TTrruusstt
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
OOppiinniioonn
We have audited the financial report of APT Investment Trust (the “consolidated entity”), which comprises the
consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and
other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of
cash flows for the year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the consolidated entity 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 2020 and of its financial
performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
BBaassiiss ffoorr OOppiinniioonn
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the consolidated entity in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that
are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the
directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Organisation.
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independent auditor’s report. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
TO THE UNITHOLDERS OF APT INVESTMENT TRUST
OOtthheerr IInnffoorrmmaattiioonn
The directors of APT Investment Trust (“the Directors”) are responsible for the other information. The other
information comprises the information included in the consolidated entity’s annual report for the year ended 30
June 2020, but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
RReessppoonnssiibbiilliittiieess ooff tthhee DDiirreeccttoorrss ffoorr tthhee FFiinnaanncciiaall RReeppoorrtt
The directors 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 preparing the financial report, the directors are responsible for assessing the ability of the consolidated entity
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the consolidated entity or to cease
operations, or have no realistic alternative but to do so.
AAuuddiittoorr’’ss RReessppoonnssiibbiilliittiieess ffoorr tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit 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 consolidated entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the directors.
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independent auditor’s report. continued.
APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES
TO THE UNITHOLDERS OF APT INVESTMENT TRUST
•
•
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the consolidated entity’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the consolidated entity to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
Obtain sufficient appropriate audit evidence regarding the financial information or business activities within
the consolidated entity to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the consolidated entity audit. We remain solely responsible for our audit
opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
DELOITTE TOUCHE TOHMATSU
Jamie Gatt
Partner
Chartered Accountants
Sydney, 26 August 2020
Taralyn Elliott
Partner
Chartered Accountants
Sydney, 26 August 2020
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additional information.
Additional information required by the Listing Rules of the Australian Securities Exchange Limited and not provided elsewhere
in this report (the information is applicable as at 20 August 2020).
No. of securities
287,140,276
204,953,023
152,943,599
94,230,054
23,736,639
21,944,806
10,882,525
9,833,274
5,770,434
4,891,132
4,868,392
4,040,000
2,711,992
2,625,000
2,077,766
2,037,968
1,980,797
1,914,679
1,900,749
1,833,060
%
24.34
17.37
12.96
7.99
2.01
1.86
0.92
0.83
0.49
0.41
0.41
0.34
0.23
0.22
0.18
0.17
0.17
0.16
0.16
0.16
Twenty largest holders
HSBC Custody Nominees (Australia) Limited
BNP Paribas Nominees Pty Ltd
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Custodial Services Limited
National Nominees Limited
Argo Investments Limited
BNP Paribas Noms Pty Ltd
BKI Investment Company Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Australian Foundation Investment Company Limited
Netwealth Investments Limited
Australian Foundation Investment Company Limited
Milton Corporation Limited
HSBC Custody Nominees (Australia) Limited-GSCO ECA
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
AMP Life 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
842,316,165
71.39
No. of holders
129
7,492
9,744
30,057
30,070
%
0.17
9.67
12.57
38.79
38.80
No. of securities
870,869,266
150,168,308
69,673,738
77,322,136
11,860,400
%
73.81
12.73
5.91
6.55
1.00
77,492
100.00
1,179,893,848
100.00
1,702 holders hold less than a marketable parcel of securities (market value less than $500 or 44 securities based on a market
price on 20 August 2020 of $11.37).
Substantial holders
By notice dated 10 March 2020, The Vanguard Group Inc. advised that it had an interest in 71,349,836 stapled securities, as
at 4 March 2020.
By notice dated 14 June 2019, BlackRock Group advised that it had an interest in 70,905,193 stapled securities, as at 12 June 2019.
By notice dated 13 March 2018, BNP Paribas Nominees Pty Limited as custodian for UniSuper Limited advised that it had an
interest in 189,951,079 stapled securities, as at 09 March 2018.
Voting rights
On a show 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.
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five year summary.
Financial Performance (Statutory)
2020
2019
2018
2017
2016
Revenue
Revenue excluding pass-through (1)
EBITDA
Depreciation and amortisation expense
EBIT
Interest expense
Tax (expense) / benefit
Profit after tax including significant items
Significant items – after income tax
Profit after tax excluding significant items
Financial Position
Total assets
Total drawn debt (2)
Total equity
Operating Cash Flow
Operating cash flow (3)
Key Financial Ratios
Earnings per security (4)
Operating cash flow per security (4)
Distribution per security
Funds From Operations to Net Debt
Funds From Operations to Interest
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
2,590.6
2,129.5
1,653.9
(651.6)
1,002.4
(497.3)
(187.9)
317.1
—
317.1
2,452.2
2,031.0
1,573.8
(611.4)
962.4
(497.4)
(177.0)
288.0
—
2,386.7
1,941.4
1,518.5
2,326.4
1,888.3
1,470.1
(578.9)
(570.0)
939.6
(509.7)
(165.1)
264.8
—
900.1
(513.8)
(149.5)
236.8
—
288.0
264.8
236.8
2,094.3
1,656.0
1,330.5
(520.9)
809.7
(507.7)
(122.5)
179.5
—
179.5
16,007.2
15,433.9
15,227.2
15,045.9
14,842.7
9,983.6
3,223.9
9,352.1
3,599.4
8,810.4
4,126.8
9,249.7
3,978.2
9,037.3
4,029.1
$m
1,095.9
1,012.1
1,031.6
973.9
862.4
cents
cents
cents
%
times
26.9
92.9
50.0
12.2
3.3
24.4
85.8
47.0
10.7
3.0
23.3
90.7
45.0
10.7
3.0
21.2
87.1
43.5
10.8
3.0
16.0
77.1
41.5
9.5
2.7
Weighted average number of securities (4)
m
1,179.9
1,179.9
1,136.9
1,118.5
1,118.5
EBITDA by Segment (Excluding Significant Items)
EBITDA (Continuing businesses)
Energy Infrastructure
East Coast:
Queensland
New South Wales
Victoria
South Australia
Northern Territory
Western Australia
Asset Management
Energy Investments
Corporate costs
Divested businesses
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
1,007.9
1,010.1
160.8
101.9
2.3
19.9
337.1
63.3
35.7
149.4
114.0
2.1
19.2
277.8
53.0
28.4
962.2
147.1
124.6
2.6
22.9
237.6
66.2
23.1
925.4
149.5
123.0
2.3
18.8
234.7
58.7
24.4
855.8
121.7
120.6
2.5
17.5
217.6
53.9
27.8
(75.0)
(80.1)
(67.9)
(66.7)
(86.7)
—
—
—
—
—
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 and
passed on to Australian Gas Networks Limited (AGN) and GDI in respect of the operation of the AGN and GDI assets respectively.
2) APA’s liability to repay debt at relevant due dates of the drawn facilities. This amount represents current and non-current borrowings as per balance sheet and
is adjusted for deferred borrowing costs, the effect of unwinding of discount, unrealised foreign exchange differences reported in equity and deducting other
financial liabilities that are reported as part of borrowings in the balance sheet.
3) Operating cash flow = net cash from operations after interest and tax payments.
4) On the 23 March 2018, APA Group issued 65,586,479 new ordinary securities on completion of the fully underwritten pro-rata accelerated institutional tradeable
renounceable entitlement offer, resulting in total securities on issue as at 30 June 2018 of 1,179,893,848. The entitlement offer was offered at $7.70 per security,
a discount to APA Group's closing market price of $8.26 per security on the 23 February 2018, the last trading day before the record date of 26 February 2018.
The numbers of securities used for calculation of earnings per security and operating cash flow per security from FY2016 to FY2018 have been adjusted. An
adjustment factor of 1.0038 has been calculated, being the closing market price per security on 23 February 2018, divided by the theoretical ex-rights price (TERP)
of $8.23 per security.
148
APA GROUP I ANNUAL REPORT 2020
20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report
Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information
investor information.
Calendar of events
Final distribution FY2020 record date
Final distribution FY2020 payment date
Annual meeting
Interim results announcement
Interim distribution FY2021 record date
Interim distribution FY2021 payment date
1) Subject to change.
Annual Meeting Details
Date: Thursday, 22 October 2020
Time: 10.00 am
To be held as a virtual meeting at https://agmlive.link/APA20
Please refer to the APA Group Notice of Meeting
or the APA Group website for information.
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 25, 580 George Street,
Sydney NSW 2000
PO Box R41,
Royal Exchange NSW 1225
Telephone: +61 2 9693 0000
Facsimile: +61 2 9693 0093
Website: 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: linkmarketservices.com.au
Securityholder Details
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.
30 June 2020
16 September 2020
22 October 2020
17 February 2021 (1)
31 December 2020 (1)
10 March 2021 (1)
Distribution Payments
Distributions will be paid semi-annually in March and
September. Securityholders will receive annual tax
statements with the final distribution in September.
Payment to Securityholders residing in Australia and
New Zealand will be made only by direct credit into an
Australian or New Zealand bank account. Securityholders
with enquires should contact the APA Group registry.
For unclaimed or withheld distribution payments,
please contact APA Group's Registry to update you
bank account details.
Online Information
Further information on APA is available at
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
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.
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 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, including forecasts and projections, you should consider the appropriateness of the information, having regard to your own objectives,
financial situations and needs and seek professional advice if necessary.
This publication contains forward looking information, including about APA Group, its financial results and other matters which are subject to risk factors. APA
Group believes that there are reasonable grounds for these statements and whilst due care and attention have been used in preparing this publication, certain
forward looking statements 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 on as an indication or guarantee of future performance.
All references to dollars, cents or ‘$’ in this presentation are to Australian currency, unless otherwise stated.
EBIT, EBITDA and other “normalised” measures are non-IFRS measures that are presented to provide an understanding of the performance of APA Group. Such
non-IFRS information is unaudited, however the numbers have been extracted from the audited financial statements.
APA GROUP I ANNUAL REPORT 2020
149
energy. connected.
From a gas transmission business in 2000.