ANNUAL
REPORT 2023
powering
tomorrow
About this report: The 2023 Annual Report is our primary report to securityholders
and provides a consolidated summary of APA Group’s performance for the financial
year ended 30 June 2023. It should be read in conjunction with the reports that
comprise the 2023 Annual Reporting Suite including: Annual Report, Sustainability
Data Book, Results Presentation available from https://www.apa.com.au/investors,
as well as the Climate Report and Climate Data Book that will be available at this
website in September 2023. In this report, unless otherwise stated, references to
‘APA Group’, ‘we’, ‘us’ and ‘our’ refer to APA comprising the ASX-listed entity and
the APA Infrastructure Trust and the APA Investment Trust. Any reference in this
report to a ‘year’ relates to the financial year ended 30 June 2023. All dollar figures
are expressed in Australian dollars unless otherwise stated.
The Board acknowledges its responsibility for the 2023 Annual Report and has been
directly involved in its development and direction. The Board reviewed, considered
and provided feedback during the production process and approved the Annual
Report at its August 2023 Board meeting.
This report outlines APA Group’s activities – governed by our purpose, vision
and values and corporate strategy – delivering the financial, non-financial and
sustainability performance required to capture opportunities whilst managing risks.
Towards integrated reporting: APA Group is committed to providing securityholders,
other external stakeholders and our people with timely, consistent and transparent
corporate reporting. APA is moving towards integrated reporting over a multi-year
period in order to create trusting and transparent relationships with all stakeholders
and to provide a more complete picture of how we create and preserve long-term value.
The integrated reporting concept refers to a principles-based, multi-capital
framework in which companies can communicate clearly and concisely about how
their strategies, governance, performance, prospects and sustainability-related
actions create value in the context of their external environment. The International
Finance Reporting Standards Foundation formed the International Sustainability
Standards Board (ISSB) in November 2021. The ISSB’s purpose is to deliver a
comprehensive global baseline of sustainability-related disclosure standards that
provide investors and other capital market participants with information about
companies’ sustainability-related risks and help them make informed investment.
These standards, when issued, are expected to result in a more definitive approach
for companies to follow with regard to integrated reporting. Our FY23 Annual Report
has been developed with this in mind.
ACKNOWLEDGEMENT OF COUNTRY
At APA, we acknowledge the Traditional
Owners and Custodians of the lands on which
we live and work throughout Australia.
We acknowledge their connections to land,
sea and community.
We pay our respects to their Elders past and
present and commit to ensuring APA operates
in a fair and ethical manner that respects
First Nations peoples’ rights and interests.
About this report: APA Group comprises two registered investment schemes, APA
Infrastructure Trust (ARSN 091 678 778) and APA Investment Trust (ARSN 115 585 441),
the securities of which are stapled together. APA Group Limited (ACN 091 344 704) is the
responsible entity of APA Infrastructure Trust and APA Investment Trust.
Disclaimer: Please note that APA Group Limited is not licensed to provide financial product
or investment 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. Past performance
information should not be relied upon as (and is not) an indication of future performance.
Forward-looking information: This publication contains forward-looking information,
including about APA Group, its financial results and other matters which are subject to risk
factors. ‘Forward-looking statements’ may include indications of, and guidance on, future
earnings and financial position and performance, statements regarding APA Group’s future
strategies and capital expenditure, statements regarding estimates of future demand
and consumption and statements regarding APA’s sustainability and climate transition
plans and strategies, the impact of climate change and other sustainability issues for
APA, energy transition scenarios, actions of third parties, and external enablers such as
technology development and commercialisation, policy support, market support and
energy and offsets availability. Forward-looking statements can generally be identified
by the use of forward-looking words such as, ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘could’,
‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’, ‘outlook’,
‘guidance’, ‘goal’, ‘ambition’ and other similar expressions and include, but are not limited
to, forecast EBIT and EBITDA, free cash flow, operating cash flow, distribution guidance
and estimated asset life.
At the date of this report, APA Group believes there are reasonable grounds for these
forward-looking statements and due care and attention have been used in preparing
this report.
Forward-looking statements, opinions and estimates are not guarantees or predictions
of future performance and involve known and unknown risks and uncertainties and other
factors. Many of these are beyond the control of APA Group, and may involve significant
elements of subjective judgement and assumptions about future events, which may or may
not be correct. There can be no assurance that actual outcomes will not materially differ
from these forward-looking statements, opinions and estimates. A number of important
factors could cause actual results or performance to differ materially from such forward-
looking statements, opinions and estimates. These factors include, but are not limited to:
general economic conditions; exchange rates; technological changes; the geopolitical
environment; the extent, nature and location of physical impacts of climate change;
changes associated with the energy market transition; and government and regulatory
intervention, including to limit the impacts of climate change or manage the impact of
Australia’s transitioning energy system. A number of these factors are described under
the heading ‘Material risks’ beginning on page 20 of this report. Readers should review
and have regard to these risks when considering the information in this report, and are
cautioned not to place undue reliance on forward-looking statements, particularly in
light of the long-time horizon which this report discusses.
There are also limitations with respect to climate scenario analysis and it is difficult
to predict which, if any, of the scenarios might eventuate. Scenario analysis is not an
indication of probable outcomes and relies on assumptions that may or may not prove
to be correct or eventuate. Scenarios may also be impacted by additional factors to the
assumptions disclosed.
Investors should form their own views as to these matters and any assumptions on which
any forward-looking statements, estimates or opinions are based. Except as required
by applicable laws or regulations, APA does not undertake to publicly update or revise
any forward-looking statements to reflect any change in expectations, contingencies or
assumptions, whether as a result of new information or future events. To the maximum
extent permitted by law, APA and its officers do not accept any liability for any loss arising
from the use of the information contained in this report.
Non-IFRS financial measures: APA Group results are reported under International
Financial Reporting Standards (IFRS). However, investors should be aware that this
report includes certain financial measures that are non-IFRS financial measures for the
purposes of providing a more comprehensive understanding of the performance of the
APA Group. These non-IFRS financial measures include FCF, EBIT, EBITDA and other
'normalised' measures. Such non-IFRS information is unaudited, however the numbers
have been extracted from the audited financial statements.
About this report
Disclaimer
Overview and highlights
Chairman's and Managing Director’s Report
FY23 summary
About APA
External environment
Our strategy
Risks and opportunities
Sustainability at APA
Sustainability highlights
Climate change transition and risk
Community and social performance
First Nations Peoples
Environment and heritage
People and culture
Safety, health and wellbeing
Customers and suppliers
Performance
Outlook
Governance
APA Group Board
APA Executive Leadership
APA Infrastructure Trust Financial Report
Directors’ Report
Remuneration Report
Consolidated Financial Statements
Directors’ Declaration
Auditor Independence / Audit Report
APA Investment Trust Financial Report
Directors’ Report
Consolidated Financial Statements
Directors’ Declaration
Auditor Independence / Audit Report
Additional information
Five year financial summary
Investor information
Glossary
IFC
1
2
2
4
8
11
14
18
24
26
28
30
34
36
38
42
46
50
59
60
62
64
68
68
74
92
160
161
168
168
174
189
190
194
195
196
197
1
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Message from
the Chairman and
Managing Director
FY23 was another solid year of delivery for APA.
Over the past 12 months we delivered earnings and
distribution growth, invested in infrastructure to support
Australia’s energy security and refreshed our strategic
ambition – to be the partner of choice in delivering
infrastructure solutions for the energy transition.
With execution against this strategy building momentum, we
have revitalised our executive team to position us to capture
future growth opportunities. We also made good progress
on our three strategic priorities – ensuring our people
are engaged, motivated and safe; delivering operational
excellence; and creating value for investors and communities.
Financial performance
Our financial performance in FY23 was underpinned by
the reliability of our operations and the strength of our
infrastructure and capabilities. Total statutory revenue
(excluding pass-through revenue) was $2,353 million, up
5.1%, driven by a strong Energy Infrastructure performance
and initial contributions from Basslink.
Earnings before interest, tax, depreciation and amortisation
(Reported EBITDA) of $1,686 million represented a
3.4% increase on the previous year and on an underlying
EBITDA basis, earnings were up 2% to $1,725 million.
Statutory profit after tax (including significant items) was up
10.4% to $287 million.
Our performance enabled the Board to declare a final
distribution of 29.0 cents, taking the FY23 distribution to
55.0 cents per security, in line with guidance. This represents
an increase of 3.8% on FY22 and has been delivered in
parallel with our ongoing significant investment to build
capability and capitalise on emerging growth opportunities.
Our people
The skills and dedication of our people are critical to our
ongoing success, and their safety and engagement remain a
priority focus area.
We reported zero fatalities and zero serious injuries in FY23
and achieved a 42% reduction in our potential serious harm
incident frequency rate compared to FY22. This was the
result of our focus on incident prevention and drive towards
continuous improvement in safety performance.
Our Total Recordable Injury Frequency Rate (TRIFR) increased
slightly this year following a 42% decrease in FY22.
Over the last 12 months we also progressed our strategy to
improve employee inclusion and diversity. Highlights included
increasing female representation across our total workforce
from 29.5% to 31.8% and in senior leadership roles from
30.4% to 31.4%. These trends are a direct result of the specific
action we’ve taken to attract women to APA and support their
career progression.
We also completed a comprehensive review of like-for-like
roles and where any gender pay equity gaps were identified,
we ensured they were immediately addressed.
Delivering operational excellence
Delivering operational excellence goes to the heart of our
social licence and underpins our ongoing financial results. In
FY23 we opened our new national state-of-the-art Integrated
Operations Centre – a facility that will allow us to support all
our customers and markets from one central location.
In process safety we recorded three Tier 1 incidents, including
a rupture on our Young-Lithgow pipeline during a flooding
event, as well as two power outages highlighting the need
to ensure we are always vigilant in the operation and
maintenance of our assets.
Creating value
Creating value is central to our success and underpins our
ability to deliver for customers, investors, communities and
our people.
In FY23 we brought clarity to our growth strategy. Our focus
is to be the partner of choice in our selected asset classes of
contracted renewables and firming, electricity transmission,
gas transportation and future energy.
We already have momentum with the execution of this
strategy. In FY23 we invested $845 million in growth
opportunities and completed several major projects. This
included the delivery of the largest remote-grid solar farm in
Australia, the Dugald River Solar Farm, the acquisition of the
Basslink interconnector which further expands our electricity
transmission business, delivery of the first stage of the East
Coast Gas Grid expansion and completion of the Northern
Goldfields Interconnect (NGI) pipeline, providing greater
energy security and supporting growth and transition in the
Western Australia resources sector.
2
APA GROUP ANNUAL REPORT 2023 Positioning for the energy transition
Delivering for securityholders
APA has a critical role to play in the energy transition and
we look forward to progressing the opportunities in front of
us. The strength of our infrastructure and capabilities will be
central to this.
In FY23 we took important steps to further build the capability
we need to deliver our strategy and capitalise on these
opportunities. We’ve done this by investing in our people and
bringing new skills and experiences into the organisation,
including in our executive leadership team.
We appointed Adam Watson as Chief Executive Officer and
Managing Director in December. Over the past year we also
welcomed Liz McNamara as Group Executive, Sustainability
and Corporate Affairs, and Vin Vassallo as our Group
Executive, Electricity Transmission. We also announced
the appointment of Petrea Bradford as Group Executive,
Operations, and Garrick Rollason as Chief Financial Officer,
who will both join APA in the first half of FY24.
Similarly, we have recently announced the appointment of
Nino Ficca as a Non-Executive Director, with effect from
1 September 2023, who will bring significant electricity
transmission and energy market experience to APA.
These appointments complement the existing diverse skills
and experiences of our executive leadership team and Board
and will ensure we are well positioned to deliver on the next
phase of growth.
Building a sustainable business
Incorporating sustainability into everything we do is central
to how we operate.
Further progress against our FY21-24 Sustainability Roadmap
was delivered throughout the year. This included the release
of our first Climate Transition Plan (CTP), detailing our
commitment and pathway to net zero and the development
of our inaugural Reconciliation Action Plan that we will launch
in FY24.
This year we have also brought our non-financial or
sustainability reporting into our Annual Report as a first step
towards integrated reporting and look forward to progressing
this further for securityholders in FY24.
Our FY23 Climate Report will also be released ahead of the
FY23 Annual General Meeting, satisfying our commitment to
report annually on the progress against our CTP.
Over the past three years we have invested in ongoing safe
and reliable operations, funded the acquisition of Basslink
as well as $1.6 billion in organic growth opportunities
from existing cash flow and debt, all while maintaining an
investment grade credit rating. In FY23 we again delivered
growth in EBITDA and distributions.
Reflecting our ongoing investment in the business and the
significant opportunities presented by the energy transition,
in FY24 we will ensure our distribution growth is appropriately
balanced to accommodate ongoing investment in the
business and drive long-term value accretive growth.
Looking ahead
Our progress in FY23 provides a strong foundation for us
to build on. We have clarity around our customer focused
strategy and the role APA can play in the energy transition.
The growth opportunity set for our organisation is large. We
are focused on continuing to invest in our business, executing
our growth strategy and ensuring we can continue to deliver
sustainable earnings growth for securityholders over the
long-term.
On behalf of the Board and leadership team, we would like to
thank our employees for their ongoing efforts and dedication.
We would also like to thank our customers, communities and
other stakeholders for their continuing engagement.
Finally, our sincere thanks to our securityholders for their
support. We look forward to updating you over the year ahead.
Michael Fraser
Chairman
Adam Watson
Chief Executive Officer
and Managing Director
3
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION FY23 summary
Financial highlights
SEGMENT REVENUE1
UNDERLYING EBITDA²
FREE CASH FLOW (FCF)³
+5.1% to
$2,353m
Driven by a solid Energy
Infrastructure performance
and inflation
+2.0% to
$1,725m
Up 3.5% excluding Orbost;
includes investment in capability
to support growth ambitions and
business resilience
-1.0% to
$1,070m
Impacted by higher
stay-in-business capex
BALANCE SHEET
FY23 DPS⁴
FY24 DPS GUIDANCE5
10.6% FFO/
Net Debt
+3.8% to
55.0cps
Funded ~$1.2bn of investment
from cash flow and debt
In line with guidance; representing
a payout ratio of 60.6%
56.0 cps
Up 1.8% on FY23, reflecting
desire to accommodate
ongoing investment
1
Segment Revenue excluding pass-through. Pass-through revenue is offset by pass-through
expenses within EBITDA. Any management fee earned for the provision of these services is
recognised within total revenue. Reported increase is against FY22.
2 Underlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes
recurring items arising from other activities, transactions that are not directly attributable to the
performance of APA Group's business operations and significant items. Reported increase is
against FY22.
3 Free Cash Flow is Operating Cash Flow adjusted for strategically significant transformation
projects, less stay-in-business (SIB) capex. SIB capex includes operational assets lifecycle
replacement costs and technology lifecycle costs. Reported decrease is against FY22.
4 DPS = Distribution per security.
5 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory
changes as well as timing o f distributions from non-100 % owned asset s, with distr ibutions to be
determined at the B oard’s discretion. It does not take into account the impact of any potential
acquisitions or divestments by APA and any associated funding arrangements, other than the
acquisition of Alinta Energy Pilbara and the associated Placement and Security Purchase Plan
announced today.
4
APA GROUP ANNUAL REPORT 2023
Non-financial highlights
Operational excellence
enhancements
Established a new Integrated
Operations Centre, implemented
a new Field Mobility system, GRID
solution program underway
Invested in capability
Enhanced capability across
business development,
technology and business
resilience, regulatory, risk and
compliance, sustainability and
corporate affairs
Sustainability progress
achieved across priority
areas in FY23
Set a methane target, developed
APA's inaugural RAP1, developed and
commenced the roll-out of our ‘Being
Heritage Aware’ training module
Partnering with our
customers to achieve
their decarbonisation
objectives
$845m invested in
critical infrastructure
in FY23
Delivered key projects to underpin
reliable energy supply for the
community
Refreshed our strategy
Customer focused across four
priority asset classes
1
Reconciliation Action Plan (RAP).
DELIVERED SOLUTIONS FOR
OUR CUSTOMERS, INVESTED IN
CAPABILITY AND PROGRESSED
OUR SUSTAINABILITY AGENDA
5
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION FY23 Summary
(continued)
Financial results
Revenue
Total revenue excluding pass-through2
Segment revenue excluding pass-through3
Underlying EBITDA4
Total reported EBITDA5
Statutory profit after tax including significant items
Profit after tax excluding significant items
Free cash flow6
Financial position
Total assets
Total drawn debt7
Total equity
Financial ratios
Free cash flow per security (cents)
Earnings per security (cents) including significant items
Earnings per security (cents) excluding significant items
Distribution per security (cents)
Distribution payout ratio (%)8
FFO/Net Debt (%)9
FFO/Interest (times)
30 June 2023
$m
30 June 2022
$m
Changes
%1
2,913
2,401
2,353
1,725
1,686
287
287
1,070
15,866
11,240
1,910
90.7
24.3
24.3
55.0
60.6
10.6
3.3x
2,732
2,236
2,238
1,692
1,630
260
240
1,081
15,836
11,146
2,629
91.6
22.1
20.4
53.0
57.9
11.1
3.6x
6.6%
7.4%
5.1%
2.0%
3.4%
10.4%
19.6%
(1.0%)
0.2%
0.8%
(27.3%)
(1.0%)
10.0%
19.1%
3.8%
4.7%
(7.8%)
(8.3%)
1
2
Positive/negative changes are shown relative to impact on profit or other relevant performance metric.
Statutory revenue excluding pass-through. Pass-through revenue is offset by pass-through expenses within EBITDA. Any management fee earned for the provision of these
services is recognised within total revenue.
3 Segment revenue excludes: pass-through revenue; Wallumbilla Gas Pipeline hedge accounting unwind; income on Basslink debt investment; Basslink AEMC market
compensation and other interest income.
4
Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) excludes recurring items arising from other activities, transactions that are not directly
attributable to the performance of APA Group’s business operations and significant items.
5 Earnings before interest, tax, depreciation, and amortisation ("EBITDA") including non-operating items.
6
7
Free cash flow is Operating Cash Flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex includes operational assets’
lifecycle replacement costs and technology lifecycle costs.
APA’s ability to repay debt at relevant due dates of the drawn facilities. This amount represents the actual debt outstanding in Australian Dollars at period end. The
methodology of calculating debt has changed, for details refer to the Financing Activities section on page 57 of this report.
8 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow.
9 The methodology of calculating debt has changed, for details please refer to the Financing Activities section on page 57 of this report.
6
APA GROUP ANNUAL REPORT 2023 A SOLID FY23 FINANCIAL
RESULT AS WE CONTINUE
TO INVEST TO SUPPORT
AUSTRALIA’S ENERGY
TRANSITION
7
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION About APA
PURPOSE · WHY WE EXIST
To strengthen communities
through responsible energy.
STRATEGY · WHAT WE DO
To be the partner
of choice in delivering
infrastructure
solutions for the
energy transition.
8
APA GROUP ANNUAL REPORT 2023 APA Group is a leading Australian energy infrastructure
business, owning, operating and managing a diverse
$22 billion portfolio. We are proud of the role we play in
delivering energy solutions to millions of customers in every
State and Territory.
Our strategic ambition is to be the partner of choice
in delivering infrastructure solutions for Australia’s
energy transition.
Our approach is customer driven as we look to support the
decarbonisation ambitions of our priority customer groups
– including governments, resource companies, energy
supply and wholesale customers, and large commercial
and industrial customers.
Through this approach to market we see immense
opportunities across our four priority asset classes
of contracted renewables and firming, electricity
transmission, gas transportation and future energy.
Our behaviours
Our behaviours set the benchmark for how our people
interact with customers, communities and each other.
They support our strategy and the high-performance
culture that we strive for. The behaviours guide how
we conduct our business and help to shape our
inclusive culture:
We are customer focused, innovative and collaborative,
with empowered and energised teams.
PURPOSE · WHY WE EXIST
To strengthen communities
through responsible energy.
STRATEGY · WHAT WE DO
To be the partner
of choice in delivering
infrastructure
solutions for the
energy transition.
COURAGEOUS
We are honest and
transparent; we learn
from our mistakes
and we challenge the
status quo.
ACCOUNTABLE
We spend time
on what matters,
we do what we say
and deliver world
class solutions.
NIMBLE
We are curious,
adaptive and
future focused.
COLLABORATIVE
We are inclusive, work
together and respect
and listen to our
stakeholders.
IMPACTFUL
We create positive
legacies and
work safely, for
our customers,
communities,
our people and
the environment.
9
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION About APA
(continued)
APA PORTFOLIO OF ASSETS AND INVESTMENTS
Darwin
2
1
Katherine
48
Karratha
49
47
35
34
Gruyere
33
Tropicana
Yarmana
36
38
37
Kalgoorlie
46
40
43
45
Perth
42
39
44
41
52
Melbourne
Airport
Melbourne
3
Mount Isa
4
8
5
9
6
7
Alice Springs
50
Ballera
Moomba
10
Roma
12
Wallumbilla
11
Gladstone
13
14
17
Brisbane
15 16
18
19
IOC
20
21
32
Dubbo
23
24
22
Tamworth
51
Lithgow
Kurri Kurri
Sydney
Adelaide
31
30
29
Bendigo
Ballarat
28
25
Albury
Canberra
27
Melbourne
53
Hobart
Amadeus Gas Pipeline (inc laterals)
Bonaparte Gas Pipeline
Carpentaria Gas Pipeline (inc laterals)
Pipeline
3
13 Berwyndale Wallumbilla Pipeline
1
9
22 Central Ranges Pipelines
23 Central West Pipeline
37 Eastern Goldfields Pipeline
47 Goldfields Gas Pipeline
38 Kalgoorlie Kambalda Pipeline
40 Mid West Pipeline
20 Moomba Sydney Pipeline (inc laterals)
21 Moomba to Sydney Ethane Pipeline
28 Mortlake Gas Pipeline
39 Northern Goldfields Interconnect
45 Parmelia Gas Pipeline
48 Pilbara Pipeline System
12
15
30 SEA Gas Pipeline
29 SESA Pipeline
South West Queensland Pipeline
10
49 Telfer/Nifty Gas Pipelines and lateral
25 Victorian Transmission System
14 Wallumbilla Gladstone Pipeline (inc laterals)
2 Wickham Point Pipeline
36 Yamarna Gas Pipeline
Kurri Kurri Lateral Pipeline (KKLP)
51
52 Western Outer Ring Main (WORM)
Reedy Creek Wallumbilla Pipeline
Roma Brisbane Pipeline (inc Peat lateral)
Dandenong (680TJ/12000t)
Gas Processing and Storage
27
18
46
Kogan North (12TJ/d)
Mondarra (18PJ)
Gas Distribution
16 Allgas Gas Network
50 Australian Gas Networks
24 Tamworth Gas Network
Electricity Transmission
19 Directlink
31 Murraylink
53 Basslink*
Generation
17
6
33
7
5
4
35
Solar Farm
43
11
41
34
8
Daandine (30 MW)
Diamantina (242 MW)
Gruyere (47 MW)
Leichhardt (60 MW)
Thomson (22 MW)
X41 (41 MW)
Gruyere Battery Station (4.4 MW/MWh)
Badgingarra (19 MW)
Darling Downs (108 MW)
Emu Downs (20 MW)
Gruyere Solar Farm (13.2 MW)
Dugald River Solar Farm (88 MW)
Wind Farm
44
42
32
Badgingarra (130 MW)
Emu Downs (80 MW)
North Brown Hill (132 MW)
Key
APA Group asset
APA Group distribution network asset
APA Group investment
Investment distribution network
APA Group managed asset (not owned)
Managed distribution network
Other natural gas pipelines
Under construction
Wind farm
Solar farm
LNG plan
Battery storage
Gas storage facility
Gas processing plant
Gas power station
Integrated Operations Centre
10
* Acquired October 2022.
APA GROUP ANNUAL REPORT 2023
External environment
APA is committed to working with our customers,
communities and governments to deliver an energy transition
that prioritises reliable, affordable and low emissions energy
for all Australians.
Major trends
Both industry and governments continue to confront the
challenge of balancing the competing demands of the
energy sector to deliver:
• reliable energy
• affordable energy and
•
low emissions energy
Australia, like most countries, strives to balance these
three interconnected objectives as our energy sector
transitions towards net zero.
As low emission variable renewable electricity (‘VRE’)
steps in to replace coal-fired generation, industry and
governments are searching for solutions to ensure the
transition remains affordable and reliable. Transitioning
to these cleaner energy sources often requires significant
upfront capital investments in new infrastructure, new
technologies, and research and development with long
lead times to commercialisation.
Both Federal and State governments throughout Australia
are adjusting policy settings in energy markets in an
attempt to both encourage lower carbon energy sources
as well as ensure energy remains affordable and reliable.
Interventions that commenced in FY22 continued in
FY23 as it was deemed necessary by government bodies
to take action in the electricity, coal and gas markets
across eastern Australia. This was driven by supply
constraints leading to high energy prices and included:
• The National Electricity Market (NEM) was suspended
in June 2022 by the Australian Energy Market Operator
(AEMO). Supply shortages made the ongoing operation
of the market under the National Electricity Rules
‘practically impossible’.1
• The Federal Government introduced legislation
in December 2022 which applies a temporary price
cap of $12/GJ on the supply of regulated gas for
12 months. The government also requested a domestic
coal price cap of $125/T to be implemented in
New South Wales and Queensland.
•
In Western Australia, June 2022 saw the announcement
by the WA Government that all state-owned coal
generators are to close by 2030. Following this, the
WA Government announced a review of the State's
domestic gas reservation policy. This was part of the
Government’s efforts to determine if the policy remains
fit for purpose in supplying the domestic market or if
amendments are needed to allow for more gas to be
delivered to domestic users.
1 AEMO Market Suspension FAQs June 2022.
11
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION External environment
(continued)
Economic regulatory matters
Gas pipelines in Australia are regulated under the
National Gas Law (NGL) and National Gas Rules (NGR) by
the Australian Energy Regulator (AER) or the Economic
Regulation Authority of Western Australia (ERA). On
2 March 2023, amendments to the NGL and NGR were
proclaimed and came into effect across all States except
Western Australia. Prior to these amendments the NGL
and NGR established two regulatory pipeline frameworks:
1. Scheme pipelines (NGR Parts 8-12) subject to either:
– Full regulation with regulator approved tariffs and
terms and conditions; or
– Light regulation where pipeline owners publish
services and prices and comply with information
provision requirements.
2. Non-Scheme pipelines (NGR Part 23) where tariffs and
terms are negotiated between parties.
The 2 March 2023 amendments to the NGL and NGR
discontinue light regulation and transition to a:
•
•
‘heavier’ form of regulation, based on the current full
regulation for scheme pipelines; or
‘lighter’ form of regulation, based on the previous
Part 23 (now Part 10) regime for non-scheme pipelines.
In practice, pipelines currently subject to full regulation
are not expected to experience much change. APA’s
non-scheme pipelines and pipelines previously subject
to light regulation will transition to the new ‘lighter’ form
of regulation.
Following on from this legislative change, the regulator will
now have the power to determine the form of regulation
to apply to a particular pipeline. In effect, this means that
the AER can decide to apply full regulation to non-scheme
pipelines. The AER would then have the role of approving
capital and operating expenditure and rates of return
under five year access arrangement proposals. APA will
also be required to publish actual contracted prices across
its pipeline network. Further changes to the information
disclosure framework will take place from FY25, under a
new Pipeline Information Disclosure Guideline, currently
under development.
APA pipelines (owned and/or operated) – by regulation type
Full regulation pipelines
Light regulation pipelines
Non-scheme pipelines
Partly full regulation/non-scheme pipelines
12
APA GROUP ANNUAL REPORT 2023 Regulatory resets
Energy industry policy developments
The diagram below shows the scheduled regulatory reset
dates for pipelines owned and operated by APA. During
FY23, approximately 8.2% of APA’s Energy Infrastructure
revenues were subject to regulated outcomes.
Key regulatory matters relating to APA assets addressed
during the year included:
• Victorian Transmission System (VTS) 2023-2027
access arrangement – On 9 December 2022, the AER
published its final decision on the 2023-27 VTS access
arrangement. The decision recognised the importance
of continued investment in the VTS to maintain
reliability and system security for Victorian gas users.
The access arrangement will have effect for five years
from 1 January 2023.
• Murraylink 2023-2028 revenue proposal1 –
On 28 April 2023, the AER published its final
determination for the Murraylink electricity transmission
interconnector between South Australia and Victoria,
approving total revenues for the 2023-28 period at
levels 4.5% lower than allowed for in the 2018-22
period. This cut was driven largely by reductions in the
allowed cost of capital.
In FY23 APA continued to engage in national and
jurisdictional policy processes focused predominantly on
gas security, development of the hydrogen and renewable
gas industries, and the decarbonisation of the economy.
The focuses of our submissions were as follows:
• Gas security – APA submitted that market approaches,
rather than direct Government intervention, are the
most efficient means of ensuring gas is delivered
to customers. Our submissions also stressed the
importance of bringing new gas supplies to market.
• Hydrogen and renewable gas reforms – APA lodged
submissions to various jurisdictional processes
proposing to extend licensing and technical
frameworks to include hydrogen and renewable gases.
• Decarbonisation of the economy – APA supports
the development of Renewable Energy Zones and
contestability in transmission delivery to help efficiently
connect renewable generation to the National
Electricity Market. APA also supported amendments
to the National Energy Objectives and the Safeguard
Mechanism to help drive the decarbonisation of
the economy.
• Banning new gas connections – The ACT and
Victorian governments are taking steps to ban new gas
connections at the distribution level for households
and small business. Both governments are also offering
subsidies for households and small business to replace
gas appliances with electric ones.
Scheduled regulatory reset dates for pipelines owned and operated by APA2
Victorian Transmission System
31 DECEMBER 2027
Goldfields Gas Pipeline
31 DECEMBER 2024
Amadeus Gas Pipeline
30 JUNE 2026
Roma Brisbane Pipeline
30 JUNE 2027
CY23
CY24
CY25
CY26
CY27
1
APA has ~20% ownership of Murraylink.
2 Victorian Transmission System access arrangement from 1 January 2023 to 31 December 2027.
13
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Our strategy
Creating value as
THE PARTNER OF
CHOICE
Meeting the needs of our customers
WHERE WE HAVE
A COMPETITIVE
ADVANTAGE
Disciplined investment
ACROSS FOUR ASSET
CLASSES
14
APA GROUP ANNUAL REPORT 2023
APA’s strategy is to be the partner of choice in delivering
infrastructure solutions for the energy transition.
An effective transition requires an ambitious but
pragmatic approach to delivering affordable, reliable and
low emissions energy. To achieve this, we believe the
transition must focus on the retirement of coal fired power
generation and the introduction of renewable generation,
firmed with gas and/or other low emissions firming and
storage technologies.
APA’s strategy is to be the partner of choice in delivering
infrastructure solutions for the energy transition.
We will do this in select asset classes, where we have
a competitive advantage – renewable electricity and
firming, electricity transmission, gas transportation
and future energy (including clean fuels such as hydrogen
and renewable methane).
This approach will be underpinned by anticipating
the needs of our customers, partnering with them,
pursuing unsolicited proposals, and delivering bundled
energy solutions.
APA is well positioned in Australia to play a key role in
developing and deploying energy solutions that strike the
balance between these often competing priorities. Our
natural gas assets are strategically integrated in both the
East Coast and West Coast gas markets. They will remain
a critical part of the future energy mix, balancing the load
and helping to unlock the expansion of renewable energy
required to replace retiring coal power stations and
support the nation’s decarbonisation. In addition, natural
gas continues to play an important role for powering
hard-to-abate and hard-to-electrify industrial sectors and
provides essential heating in colder climates. APA’s assets
will help to ensure Australia continues to have access to
reliable and cost-efficient energy.
APA’s energy transition strategy is focused on four asset classes
We are supporting
Australia’s energy
transition through
investment in
Contracted
Renewables and Firming
Electricity
Transmission
Gas
Transportation
Future
Energy
15
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Our strategy
(continued)
BRINGING THE APA STRATEGY TO LIFE THROUGH A CUSTOMER DRIVEN APPROACH TO MARKET
A CUSTOMER FOCUSED STRATEGY ...
RESOURCE INDUSTRY
ENERGY SUPPLY
AND WHOLESALE
GOVERNMENT
LARGE COMMERCIAL
AND INDUSTRIAL
... MEETING THE NEEDS OF OUR CUSTOMERS WHERE WE HAVE A COMPETITIVE ADVANTAGE ...
Resource companies are
decarbonising – majority
have CO2 reduction goals
Ability to provide flexible
and responsive services to
changing market demands
Require trusted partner to
support accelerating transition
Levelised cost of energy
remains key
Reliability of energy supply
with a trusted operator/partner
Reliability of supply with
a trusted partner
Reliability and social
licence are key
Flexibility to respond to
changing supply sources
Levelised cost of energy remains
key for global competitiveness
Requiring innovative ways to
respond to the energy transition
Cost is important, but timely
delivery drives outcomes
Reliability of service
remains high
Significant opportunity exists
in North West Minerals Province,
Pilbara, Goldfields
Opportunity across both
East and West coasts
Opportunity estimated amounts
to $54bn including REZs and
subsea cables
Opportunity across both
East and West coasts
Mt Isa and Gruyere showcases
our capability
Core operating business
with a proven track record
Basslink, Murraylink, Directlink
illustrate our capability
Leverage current assets
along with incremental learning
and execution
... ACROSS VARIOUS ASSET CLASSES
Asset class and total estimated addressable market size1:
$25bn
Contracted
VRE and
Firming
Remote Grid
$206bn
Contracted
VRE and
Firming
on Grid (NEM)
$54bn
Electricity
Transmission
(including
Subsea Cables)
$8bn
Gas
Pipelines
$13bn
CO2
Transmission
$260bn
Hydrogen
1
Estimated addressable market sizes in Australia. Estimates are based on a number of key assumptions, including in relation to macroeconomic factors, future technology
advancements and costs, market demand, regulatory requirements and government policies and there can be no assurance the estimates are accurate. The actual
addressable market sizes may differ materially from the estimates because events frequently do not occur as projected.
16
APA GROUP ANNUAL REPORT 2023 Our sustainability roadmap
As a leading Australian energy infrastructure business,
we believe we have a responsibility to steward our natural
resources and preserve long-term value for security-
holders, communities and our people.
APA’s Net Zero ambitions and the low-carbon transition
are at the heart of our Roadmap and we are prioritising
achievement of the targets outlined within our Climate
Transition Plan (CTP).
Our Sustainability Roadmap and our CTP are overseen
by our Board and guided by the Safety and Sustainability
Board Committee.
At APA we see sustainability as a priority that involves
both opportunities and risks. We understand the value
and scrutiny our partners and stakeholders place on our
sustainability performance and that this is used to assess
APA’s comparative performance across the industry.
Our approach to sustainability is governed by a
Sustainability Roadmap centred on nine material
sustainability issue areas identified through a consultative
process. Our Roadmap provides a three-year framework
for building the foundations of sector-leading sustainability
performance.
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ROADMAP AND PLAN PRINCIPLES
Leverage our strengths and focus on the things
that matter
Achieve consistently meaningful, measurable and
impactful outcomes
Accelerate our improvement actions to close the gap
4
5
6
Engage, listen and innovate with key stakeholders
and alliances
Anticipate and be well positioned to respond to fast
moving issues and opportunities
Take a ‘know and show’ approach with disclosure
and transparency
ESG SCORECARD
BUILD
Priority issues to be built
into strengths
ACCELERATE
Fundamental issues which
require strengthening
MAINTAIN AND EVOLVE
Existing plans and processes
to evolve via ESG lens
Climate Change Transition and Risk
Community and Social Performance
First Nations Peoples
Environmental Management
including Heritage Management
Safety, Health and Wellbeing
Inclusion and Diversity
People and Culture
Governance and Risk Management
Sustainable Development
17
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
Risks and
opportunities
EMBRACING
the energy transition opportunity
OPTIMISING
outcomes in a highly regulated
and fluid environment
FUTURE PROOFING
APA with the right capability
and technology
18
APA GROUP ANNUAL REPORT 2023
As a leading energy infrastructure business, APA is exposed
to risks that can have a material impact on our delivery of
energy and our financial success. Our approach to managing
material risks is summarised below.
Risk management framework
APA’s risk management framework supports the
identification, management, escalation and reporting
of material risks. By implementing an effective risk
management framework APA’s Board and executive aim
to ensure that strategies are in place to manage potential
opportunities and threats.
APA adopts a three lines model for managing risks and
establishing controls to promote the behaviours and
decision making to support effective risk management.
This model of risk management is depicted below.
The first line, our employees, are accountable for
day-to-day risk management and decision making within
appropriate guidelines.
In lines two and three, APA’s Executive Leadership
Team, the Board’s Risk Management Committee and the
relevant business divisions have oversight of and review
material risks regularly, with the support of internal and
external experts.
During FY23, the accelerating energy transition, as well
as emerging geopolitical risks, inflation and supply chain
disruptions were key risks and opportunities impacting
our operational and financial performance. To create
and protect value APA has focused on these risks and
opportunities, updating actions to manage risks and
achieve our objectives. Existing material risks also have
ongoing oversight with a major priority being ensuring
the safety of our operations and supporting activities to
provide reliable energy to our customers, and to maintain
our financial strength to respond to changes in the
Australian energy market.
BOARD
Accountable to stakeholders for organisational oversight
RISK MANAGEMENT COMMITTEE/AUDIT AND FINANCE COMMITTEE
Delegates, directs, ensures adequate resourcing and provides oversight
EXECUTIVE RISK MANAGEMENT COMMITTEE
Accountable for risk and reporting to the Risk Management Committee
MANAGEMENT
LINE ONE
LINE TWO
INTERNAL AUDIT
LINE THREE
Owns and manages risks
Builds, reviews and supports
Independent assurance
Group Executives
Our People
Enterprise/Divisional Risk, Compliance and
Assurance Teams, HSEH, Enterprise
Security, Enterprise PMO
Group Internal Audit
• Provide products/services to customers
• Implement risk management frameworks
(identify, assess, own and manage risks
to achieving objectives)
• Own internal controls and actions
• Own and manage compliance with legal,
regulatory and ethical expectations
• Provide expertise, support, monitoring
and challenge on risk-related matters
• Provide independent and objective
assurance of objectives
• Maintain and continuously improve
risk management practices at an
enterprise/function, system or
process level
• Report on the adequacy and
effectiveness of risk management
• Ensure that governance structures and
processes are appropriately designed
and operating as intended
• Provide oversight and direction in
aligning governance activities, including
integrated assurance
• Control attestation/self-assessment
• Coordinate insurance
• Maintain and implement risk-based
control assurance programs at
enterprise/function level
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Key:
Accountability reporting
Delegation, direction, resources, oversight
Alignment, communication, coordination, collaboration
1 External Auditors have not provided assurance over the risk management framework in FY23.
19
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
Risks and opportunities
(continued)
Material risks
APA currently considers the following risks to have the possibility of materially impacting our ability to meet our business
objectives. Material risks are subject to enhanced oversight by management and the Risk Management Committee.
This list is not exhaustive and is subject to change as new risks emerge or are no longer considered material risks.
RISK
DESCRIPTION
MANAGING THE RISK
Strategic Risks – Strategic risks are those uncertainties that could materially impact the business’ ability to implement its
strategic objectives.
Energy market transition
Accelerating decarbonisation and carbon
emissions (net zero) targets drives potential
for cleaner power generation, renewables
development, and energy innovation/new
entrants in markets.
• Execution of APA’s customer-focused strategy
creates value as the partner of choice, delivering
infrastructure solutions for the energy transition
where APA has a competitive advantage and
across targeted asset classes.
Government net zero policies/targets and
new technologies could materially decrease
the market for gas and gas transportation
and APA may fail to grow in other energy
infrastructure classes, limiting domestic
market growth.
Government and regulatory
intervention
APA is exposed to regulatory policy change
and government interventions.
These changes and interventions may be at
Federal, state or territory level, and may vary.
They could include those that are designed
to support decarbonisation, limit the impacts
of climate change, or manage the impact of
Australia's transitioning energy system.
Those policy changes and interventions
may constrain gas supply (including through
limiting or restricting new gas projects),
impact the availability of competitively priced
gas, increase compliance costs for APA and
its customers and otherwise place additional
operating restrictions or complexities on
APA's businesses and the businesses of its
customers.
In addition, under the recent amendments to
the National Gas Law and National Gas Rules,
the Australian Energy Regulator (AER) will
now have the power to determine the form
of regulation to apply to a particular pipeline,
and could apply full regulation to pipelines
that are currently non-scheme.
If implemented, any of those policy
changes and interventions may change the
commercial viability of existing or proposed
projects or operations and adversely impact
APA's future business and operations.
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 well as APA’s business, may impact APA’s
commercial opportunities, and its ability to
develop new projects and operate its assets.
Social licence
20
• Actively contribute to Government policy process
and advocate for the importance of APA’s role in
supporting energy transition and managing the
intermittency of renewables.
• Engage with customers and pro-actively manage
opportunities to retain, re-contract or switch to
alternative APA assets via structured, flexible and
competitive price and service offerings.
• Maintain strong regulatory and policy functions
and be an active participant and stakeholder in the
development of regulation and policy, including
AER guidelines which support the exercise of its
new powers.
• Continually assess and respond to key policy
change proposals with potential impacts on
APA’s businesses.
• Actively engage with updating/developing relevant
Australian standards.
• Engage with key stakeholders (landowners,
producers, customers, government etc) to identify
focus areas.
• Monitor expectations, major trigger events within
the community and APA’s reputation score.
• Drive community and social performance initiatives
and programs working with First Nations People.
• Implementation of APA’s Climate Tranistion Plan,
Sustainability Roadmap, transparent and proactive
annual disclosure.
APA GROUP ANNUAL REPORT 2023 RISK
DESCRIPTION
MANAGING THE RISK
Operating multiple asset
types
Partnering across multiple
stakeholder groups
Risks arise from managing and partnering
across multiple asset types. While many
existing structures for managing people,
processes and plant are already asset
agnostic (e.g. asset management framework,
IT systems, risk and assurance O&M
workforce management and the Integrated
Operations Centre), risks will arise from
the need to scale up and integrate new
asset types.
• Continue to invest in our capability in electricity
transmission development and engineering, power
generation optimisation and asset development
and integration.
• Continuous improvement of existing asset agnostic
structure and framework for managing people,
processes and plant.
• Continue to invest in maturing asset management
framework and real time data analytics.
• The development of targeted State-based
stakeholder engagement plans to ensure
appropriate ‘owners’ are assigned to stakeholders
and there is coordination and cohesion across
the business.
• Continued investment in core capability around
targeted workforce planning.
APA’s engagement spans a diverse range
of stakeholders (e.g. across State and
Federal Government agencies, community,
landholders, customers, suppliers, investors
and employees) who hold different
perspectives and objectives.
Risks arising from engagement with this
complex and changing set of stakeholders
could lead to reputation damage, loss of
stakeholder support/trust which ultimately
affects APA’s ability to win projects, source
approvals, and diversification into new
energy markets.
Operational Risks – Operational risks potentially arise from weaknesses in internal processes, people or systems or from
unforeseen external events.
Health and safety
Preventing workplace injury and keeping all
our employees and contractors safe is our
highest priority. Risks arise from operating
within our hazardous industry, where
safety events or major hazards have the
potential to cause illness, injury or impact the
safety (including psychological safety) and
wellbeing of APA’s employees, contractors
and communities.
Asset operations
APA is exposed to major incidents or events
that may result in harm to our people,
environment, and the communities we
operate in; or materially impact our reputation
or financial performance.
Infrastructure development
Risks associated with the development of
new pipeline capacity, renewable, battery
and gas-fired power generation plants, and
gas storage and gas processing assets. This
includes typical construction risks such as:
obtaining necessary regulatory approvals,
employee or equipment shortages, third-party
contractor failure, weather risk, and higher
than budgeted construction costs impacting
liquidated damages and project delay.
• APA’s Board Safety and Sustainability Committee
has oversight of this risk. The key focus is
prevention achieved by appropriately identifying,
managing and where possible eliminating risks.
• Continued focus on comprehensive health
and safety management policies, strategies,
frameworks (including employee Wellbeing
Framework), systems
and processes.
• Reporting of key performance metrics to
monitor safe behaviours and identify continuous
improvement opportunities.
• Comprehensive operational, process safety,
cultural heritage and environment management
programs.
• Continue to engage with wider industry to stay
abreast of best practice asset management
processes.
• Implement asset management and maintenance
engineering standards, including integrity
monitoring and maintenance programs, as
part of risk-based asset lifecycle management.
• Conduct asset operational monitoring through
control rooms to manage assets within
design parameters and coordinate asset
maintenance issues.
• Provide comprehensive insurance arrangements as
part of the asset protection program.
• 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.
21
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Risks and opportunities
(continued)
RISK
DESCRIPTION
MANAGING THE RISK
Corporate transformation
Sustainability
People and culture
APA is exposed to the risks associated
with the design and delivery of enterprise-
wide corporate transformation programs.
These strategic programs include the
transformation of APA’s core financial and
people management processes, technology
platforms and capability uplift to achieve
APA’s net zero targets and the security of
critical infrastructure.
The risks arising from the management and
disclosure of sustainability issues (including
climate and ESG matters) impacting APA
performance and reputation.
Our leaders are held accountable for creating
cultural alignment with APA’s behaviours and
establishing a workplace where everyone
feels safe, respected and included.
APA’s inclusive culture is a prerequisite to our
ability to attract, engage, develop and retain
a diverse pool of skills and capabilities in a
competitive talent market.
Technology strategy,
operation and security
The risk of interruption to APA’s operations
due to unreliability of information and
operational technology systems, applications,
technology architecture or third-party
providers.
Cyber security
Cyber-attacks are increasing in frequency,
scale and sophistication across both our
communities and industry. APA plays a
pivotal role in Australia’s essential energy
supply chain and could be the target for
a cyber incident. Breaches may involve
sensitive commercial and/or personal
information or impact the operation of critical
infrastructure assets and systems possibly
leading to shutdowns of our energy assets.
• Roll-out of an enterprise-wide project governance
and delivery framework, tools and organisational
change management capability.
• Project/program reporting, risks and issues
management and escalation and oversight by
senior management and the Board.
• APA’s Board Safety and Sustainability Committee
has regular oversight of this risk.
• Delivery of comprehensive environment and
heritage management policies, strategies,
frameworks, systems and processes.
• Refreshed sustainability risk assessment (including
climate risks) with clear business ownership.
• Formalised procedures supporting sustainability
including integrated reporting, an enhanced
scorecard and APA’s Sustainability Roadmap
and strategy.
• APA’s Board People and Remuneration Committee
has oversight of this risk.
• Execution of clear employee value proposition and
effective talent programs to develop and maintain
talent pipelines.
• Delivery of comprehensive learning and
development programs including leadership
programs to build the skills and capability required
for now and the future.
• Implementation of holistic cultural programs
designed to improve workplace inclusion and
diversity, employee experience and wellbeing.
• Identification of clear expectations of behaviour
in APA’s Code of Conduct and Respect@Work
procedure.
• Manage APA’s information and technology assets
in accordance with recognised industry standards
across hardware, software, applications and
communication systems.
• Apply security standards across APA information
and technology systems, including those managed
by third-party vendors, with standards continually
assessed against new threats and vulnerabilities.
• Regular reviews and testing of information and
operational technology systems.
• Implementation of a program to strengthen the
security of APA assets, and cater for emerging
threats, security regulation and stakeholder
expectations.
• Robust security monitoring and incident response
process supported by regular exercises and
security control assurance programs.
• Compulsory security awareness training for APA
employees and contractors, including how to
identify phishing emails and keep data safe;
and a regular program of random testing.
22
APA GROUP ANNUAL REPORT 2023 RISK
DESCRIPTION
MANAGING THE RISK
Financial and Compliance Risks – Financial risks are those arising from the management of APA’s financial resources,
accounting, tax and financial disclosure. Compliance risks arise from laws, regulations, licences and recognised practising
codes including health, safety, environment, cultural heritage, payroll, asset construction and operation, and other corporate
compliance requirements.
Legal, compliance and
operating licences
APA is exposed to the risk of operating
within a highly regulated environment with
complex legal requirements, operating
licence conditions, industry standards/codes
of practice and corporate obligations.
Debt and capital
management
The risk arising from reduced business
and financial flexibility due to ineffective
management of APA’s debt and capital or
limited availability, or unfavorable pricing,
timing and access to debt and equity funding.
• Comprehensive Enterprise Compliance
Management Framework in place with regulations
identified, controls monitored and assurance
operating.
• Dedicated specialist teams that provide asset level
monitoring and assurance for technical, safety,
environment and cultural heritage compliance.
• Board approved risk limits and Treasury Risk
Management Policy.
• Regular, independent reviews of corporate and
asset models underpinning investment decisions.
• Effective debt and capital management strategy
and hedging against interest rate movements and
foreign currency rate fluctuations.
• Maintain access to a broad range of global banking
and debt capital markets.
Key emerging risks, threats and opportunities
Below we note several key emerging risks that are highly uncertain by nature and include
threats and opportunities for APA:
EMERGING RISK
THREATS AND OPPORTUNITIES
APPROACH
Global economic slowdown
Geopolitical uncertainty
Carbon offsets
Threat: Global economic slowdown
impacts financial markets and customer
demand, potentially reducing gas
contract capacity demand and
recontracting revenue, access to
new debt markets and liquidity and
commodity prices.
Threat: Geopolitical uncertainty with
rising tensions in the region and
continuation of the Russia/Ukraine
conflict impacting changes in sanctions
regimes, international energy demand,
rising national security interests and
worsening supply chain disruption.
Opportunity: Introduction of carbon
offsets as part of decarbonisation and
climate change requirements to support
energy infrastructure development
and growth.
• Strong capital management framework, including
hedging arrangements and customer credit
monitoring.
• Actively monitor commodity pricing impacting
sourcing of goods and materials utilised in large
construction projects and domestic demand.
• Closely monitor changes in energy demand
including substitution.
• Continue to evaluate options for alternative
sources of supply for international construction
procurement.
• Conduct resilience updates for information
technology infrastructure, including cyber
resilience.
• Focus on gas reserving management,
including increases in gas line pack to meet
high demand periods.
• Continue to investigate a number of carbon offset
programs via a mix of direct procurement and
investment opportunities.
Artificial intelligence
Opportunity: Growth in artificial
intelligence and potential impact
on productivity improvements.
• Initiatives to improve data quality and data
governance providing for adoption of digital
technologies impacting workforce improvements.
23
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Sustainability
at APA
Developed our inaugural APA
RECONCILIATION
ACTION PLAN
Supported our communities
through our
SOCIAL INVESTMENT
INITIATIVES
Established
GENDER-NEUTRAL
PARENTAL LEAVE
BENEFITS
24
APA GROUP ANNUAL REPORT 2023
We prioritise sustainable outcomes so that APA, our
employees, customers and communities in which we
operate can thrive – now and in the future.
As our Sustainability Roadmap is due to complete in
June 2024, work is underway to prepare a refreshed
Roadmap. The first step towards this is delivery of a
sustainability materiality assessment, culminating in
an impact-based sustainability materiality matrix. The
materiality assessment approach will be guided by the
Global Reporting Initiative (GRI 3: Material Topics 2021)
which considers actual and potential negative and
positive impacts of our business to determine our material
sustainability issues for prioritisation.
Supporting the UN Sustainable
Development Goals
APA continues to support the delivery of the 17 United
Nations Sustainable Development Goals (SDGs).
By working more strategically and aligning our
initiatives to the relevant SDGs we can tackle major
societal, environmental and economic challenges whilst
also identifying and unlocking significant business
opportunities.
At their core, the SDGs aim to create a shared value
approach through the creation of economic and business
value in a way that fundamentally addresses societal
needs and challenges. The paradigm shift required to
transition from a philanthropic approach to one delivering
both business and social values now guides our approach.
To demonstrate how the business is meeting the relevant
SDGs, we have mapped goals to the three areas of our
Roadmap and indicated where each goal is connected
to our performance and priorities.
At APA we are united behind a singular purpose to
strengthen communities through responsible energy.
We are committed to act responsibly across all of our
business activities.
We seek continual improvement, working collaboratively
with our industry peers and engaging transparently with
our stakeholders. We understand the value and focus that
our partners and stakeholders place on our sustainability
performance and that this is used to assess APA’s
performance across the industry.
Our Sustainability Roadmap provides the foundations
for APA to develop key strategic sustainability initiatives
and deliver on them in a prioritised way. Over the last two
years our main areas of focus have been on the ‘build’
and ‘accelerate’ pillars of our Sustainability Roadmap.
These pillars identify fundamental focus areas that require
growth and/or strengthening. It is important that we are
targeted in our approach and focused on those topics that
matter most to APA and our stakeholders.
Our material sustainability focus areas
In FY21, we conducted a stakeholder-centric materiality
assessment to identify the core sustainability-related
issues that APA should focus on. This process informed
the development of our three-year Sustainability Roadmap
and enabled us to bring APA’s vision and purpose to life.
APA’s Sustainability Roadmap categorises the core issue
areas into three groups: Build, Accelerate and Maintain
and Evolve. The diagram on page 26 highlights our
progress against the Sustainability Roadmap in FY23.
To continue to deliver the most positive impact for
APA and highest value for our stakeholders, it is critical
we regularly re-evaluate the sustainability issues most
material to our business and stakeholders. This will
enable us to assess the economic, social, environmental
and cultural impacts of our activities and business
relationships and refine our main focus areas and
associated initiatives.
25
SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONOPERATING & FINANCIAL REVIEW Sustainability at APA
(continued)
FY23 PROGRESS AGAINST APA’S SUSTAINABILITY ROADMAP
BUILD
ACCELERATE
MAINTAIN AND EVOLVE
Priority issues to be built
into strengths
Fundamental issues which
require strengthening
Existing plans and processes
to evolve via ESG lens
Climate change transition and risk
Environmental management
including heritage management
Safety, health and wellbeing
Community and social performance
First Nations Peoples
• Progressed CTP actions in line with
FY23 commitments.
• Established a dedicated Community
and Social Performance (CSP) team
to deliver CSP strategy and social
investment framework.
• Hosted workshops with our five
corporate partners to understand new
and meaningful ways to collaborate
together
• Contributed $1.2 million through
discretionary social investment to
communities via targeted community
grants programs, corporate
partnerships with charitable
organisations and local sponsorships
and donations.
• Prepared APA’s Reconciliation Action
Plan (RAP) under the guidance of a
newly established cross-functional
RAP Working Group.
• Progressed our four year Environment
Improvement Program in line with the
HSEH Strategy schedule. Processes,
tools and templates for 3 of 8
environment risks areas have now
been developed/refined, integrated
and implemented across the business.
• Scoped environment data uplift
opportunities across the waste, water
and contaminated land risk areas.
• Uplifted our heritage practices
at targeted assets and recruited
additional Heritage Specialist.
• Ongoing delivery of our three-year
weed survey program.
• Delivered 15 environment audits.
• Refreshed our HSEH Policy.
Refer to APA's FY23 Sustainability Data Book for further information about our FY23 sustainability performance.
Inclusion and diversity
People and culture
Governance and risk management
• Prepared, approved and initiated our
five-year HSEH strategy with strategic
pillars centred on safety performance,
leadership and innovation.
• Introduction of the Board Safety and
Sustainability Committee.
• Prepared an ESG Risk Register
tracking and monitoring our business-
wide ESG risks.
• Revised our Inclusion and Diversity
(I&D) Plan and refreshed our Policy
to focus on facilitating an inclusive
culture, including the launch of
our Respect@Work Procedure and
e-module and completing a gender
pay review.
• Established gender-neutral parental
leave benefits.
• Uplifted leadership training and
capability including the introduction
of the INSEAD Curriculum.
26
APA GROUP ANNUAL REPORT 2023 Climate transition plan
Our CTP is an important step in APA’s commitment to actively participate and support Australia’s energy transition,
consistent with the objectives of the Paris Agreement. Our FY23 progress on the commitments in our CTP will be
reported in our new FY23 Climate Report, due to be released in September 2023.
GOAL:
Gas infrastructure – net zero operational
emissions by 20501
GOAL:
Power generation and electricity
transmission infrastructure – net zero
operational emissions2 by 20403
INTERIM COMMITMENTS FOR 2030
TARGET:
30% emissions reduction for gas
infrastructure (FY21 base year)
TARGET:
100% renewable electricity procurement
from FY23 onwards
GOAL:
GOAL:
GOAL:
100% zero direct emission fleet by 2030
COMMITMENT:
35% reduction in emissions intensity
for power generation (FY21 base year)
Contribute positively to grid
decarbonisation measured by MW
of enabled renewable infrastructure
Active program to reduce emissions we can
control and apply best practice management
techniques to managing line losses
COMMITMENT:
Responsible criteria applied when offsets
are required
NEW COMMITMENT FOR 2030
TARGET:
30% methane reduction target (FY21 base year)
KEY SUPPORTING COMMITMENTS
1
Incorporation of
the Methane
Guiding Principles
2
Hold a non-binding
securityholder vote
on future material
updates to our
Climate Transition
Plan
3
Report annually on
progress against
the targets, goals
and commitments
in our Climate
Transition Plan
4
Link executive
remuneration to
climate-related
performance
from FY23
5
Scope 3 emissions
goal to be finalised
before or in
conjunction with
next Climate
Transition Plan
When setting APA’s targets and goals, we have made our commitments clear to stakeholders, based on the level of
uncertainty in the pathway required to reach them.
Target: an intended outcome where we have
identified one or more pathways for delivering that
outcome, subject to certain assumptions or
conditions.
Goal: an ambition to seek an outcome for which there is
no current pathway but for which efforts will be pursued
towards addressing that challenge, subject to certain
assumptions or conditions.
1
2
Includes transmission, distribution, gas processing, storage and corporate.
The organisational boundary for all targets and goals relates to assets under APA’s operational control, as defined by the Greenhouse Gas (GHG) Protocol. The following
assets are not within APA’s operational control for emissions reporting purposes: Victorian Transmission System (maintenance excepted), Gruyere and X41 Power Stations,
Wallumbilla Gladstone Pipeline, SEA Gas Pipeline and Mortlake Pipeline, North Brown Hill Wind Farm and Australian Gas Networks.
3
Includes power generation and interconnectors.
27
SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONOPERATING & FINANCIAL REVIEW
BUILD
Climate change
transition and risk
Our FY23 Climate Report will be released in September
2023, in line with our commitment to report annually on
progress against our CTP. This allows for sufficient time to
prepare and independently assure our emissions data. The
Climate Report will contain disclosures consistent with the
recommendations of the TCFD.
Linked executive remuneration to
CLIMATE-RELATED
PERFORMANCE OUTCOMES
Procured large-scale generation certificates
(LGCs) to meet our
100% RENEWABLE ELECTRICITY
PROCUREMENT COMMITMENT
Set a methane target aligned with
the Global Methane Pledge (GMP) of an
AT LEAST 30% REDUCTION IN
OUR OPERATIONAL METHANE
EMISSIONS BY 2030
(FY21 BASE YEAR)
Our climate transition plan defines interim and long-term
emission reduction targets and goals by asset class. We
have sought to set interim targets and goals aligned with
the objective of the Paris Agreement and to disclose
consistent with the Taskforce on Climate-related Financial
Disclosures (TCFD) recommendations.
Since the release of our CTP in August 2022, APA has
made clear progress against our plan. Our focus has been
on embedding the necessary structures, processes and
systems to ensure our approach to climate is integrated
across the business.
Performance against our gas infrastructure and power
generation interim targets and goals will be detailed
within our FY23 Climate Report.
APA's strategy is to achieve our CTP commitments through:
• Electrifying and optimising the operation of compressors.
• Reducing the emissions intensity of power generation
through investments in renewables.
• Reducing methane emissions through leak detection and
repair and implementation of specific initiatives such as
seal gas recovery.
• Optimising the performance of existing power generation
equipment.
• Buying or internally generating high quality offsets where
emissions reduction is not possible or cost prohibitive.
APA has committed to finance these infrastructure
emission reduction initiatives through a $150 million to
$170 million net zero fund over FY23 to FY30. There is
some upside pressure on this spend projection in the
area of compressor electrification due to higher grid
connection and electric motor drive unit costs, while
other opportunities may be implemented in a more
cost-efficient manner.
28
APA GROUP ANNUAL REPORT 2023 Supporting a lower carbon future
and the energy transition
Supporting the PGP conversion project is
a Memorandum of Understanding between
APA and Wesfarmers Chemicals, Energy
and Fertilisers (WesCEF), signed in May
2022. As part of this, we committed to a
pre-feasibility study to assess the viability of
producing and transporting green hydrogen
via the PGP to WesCEF’s production
facilities in Kwinana. The findings were
promising, demonstrating that the PGP
study area is likely to be suitable for green
hydrogen development. APA and WesCEF
are now considering the results further.
In September 2021, APA joined an
international consortium in an effort to
establish Queensland’s largest green
hydrogen project – the Central Queensland
Hydrogen Project (CQH2). In April 2023,
APA paused our involvement in the early
stages of the CQH2 project but believes
the project has an exciting pathway ahead.
APA remains interested in a future role in
the project and continues to be involved
in other Queensland projects developing
hydrogen export supply chains.
Pathfinder is investigating other hydrogen
and Carbon Capture and Storage (CCS)
project opportunities where APA can bring
its market-leading energy infrastructure
expertise and experience to large-scale
projects.
APA’s Pathfinder Program
APA is investing in future fuels through our
Pathfinder Program established in FY21, to
understand the requirements to support
clean molecules in either existing or new
infrastructure. In May 2023, our landmark
Parmelia Gas Pipeline (PGP) conversion
project in Western Australia confirmed via
pressurised hydrogen laboratory testing the
technical feasibility of converting a 43km
section of the PGP to carry 100% hydrogen.
The testing results indicate it is technically
feasible, safe and efficient to run the
43km section of the pipeline at the current
operating pressure using hydrogen. The
project will now consider preparing the
section of pipeline for hydrogen service,
and will include detailed safety studies
and conversion plans, while continuing
to investigate potential supply and
offtake opportunities.
Off the back of this research, APA has
developed a Pipeline Screening Tool
(PST) that provides a high-level assessment
of the hydrogen readiness of its national
pipeline assets, based on key pipeline
material and operating characteristics. Initial
assessments using the PST indicate there
is a high likelihood that around half of
APA’s natural gas pipeline assets could
be used for hydrogen transportation in
100% pure or blended form, with no, or
small, changes to their current operating
profile. For the remainder of APA’s
pipelines, which consist largely of high
strength steel operating at higher pressure,
further research and materials testing
will be required to determine if any
changes in operating pressure are needed
to maintain pipeline integrity whilst
transporting hydrogen.
29
SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONOPERATING & FINANCIAL REVIEW BUILD
Community and social
performance
Driven by our purpose, to strengthen communities through
responsible energy, we are committed to outstanding
performance in our interactions with communities.
We work to understand the needs and aspirations of our
host communities and contribute to their sustainable
development. We seek respectful and mutually valuable
relationships with our stakeholders.
Supported more than 84 organisations through our
SOCIAL INVESTMENT PROGRAMS
Launched the Mount Isa and Cloncurry
COMMUNITY GRANTS PROGRAM
11,271 landholder contact visits through our
LANDHOLDER CONTACT
PROGRAM
Building stronger community
and social performance
APA works to embed community engagement,
development, partnership and participation in all our
business activities. We strive to engage with stakeholders
in a culturally appropriate way.
In FY23 we prepared a revised Social Investment
Framework and 2-year CSP Strategy which is scheduled
for consultation in early Q1 FY24. This strategy seeks to
elevate practices and drive consistency and awareness
throughout the business.
Community and stakeholder engagement
APA plays a critical role in the energy supply chain and
we recognise the impacts our activities may have on a
range of stakeholders and on the progress of energy
transition more broadly. For APA, understanding who our
stakeholders are and how we impact each other is vital
to achieving operational excellence.
APA’s community and stakeholder engagement programs
connect and work with local landholders, Traditional
Owners, communities, governments and industry.
Our programs are tailored to meet the broad needs
of our stakeholders and range from simple awareness
of our activities to involvement in the design of
new infrastructure.
30
APA GROUP ANNUAL REPORT 2023 Regulatory
Engagement –
Basslink
Basslink is fundamental to both the supply of
affordable and reliable energy to Victoria and
Tasmania and also the energy transition through
the supply of renewable energy to the National
Electricity Market.
Following the acquisition of Basslink in FY23,
we are progressing a revenue proposal and
application, seeking approval from the AER for
Basslink to become a ‘regulated asset’ as a way to
support Basslink’s continued operation. Converting
Basslink to a ‘regulated asset’ means the maximum
prices consumers pay as part of their retail bills for
Basslink would be set by the AER through a public
consultation process. For consumers, this means
a more transparent and independent approach
to setting prices for Basslink, and a range of
opportunities for public consultation on what
prices consumers should pay.
In November 2022, we established a Regulatory
Reference Group (RRG) to co-design the
development and implementation of our regulatory
engagement plan for Basslink. This plan identifies
the scope, timing, themes and engagement
methodology.
The RRG served as an independent advisory
group representing residential, small business and
large energy users in Tasmania and Victoria. The
RRG guided our understanding of the needs and
expectations of different consumer segments and
was used to continually refine our engagement
materials and our approach to consulting
with consumers, industry and Government
stakeholders.
With direct representation from APA’s senior
leadership team, the engagement program was
both broad and deep including:
• regular RRG engagement forums
• online focus groups
• consumer workshops in Launceston
and Melbourne
• an online quantitative survey of 1,200 electricity
consumers from Victoria and Tasmania.
31
SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONOPERATING & FINANCIAL REVIEW BUILD
Community and social performance (continued)
Landholder engagement
The Energy Charter
APA works collaboratively across the energy industry to
address common issues and improvement opportunities.
As a signatory to the Energy Charter – a national
CEO-led collaboration – we share the vision to support
better outcomes for energy customers.
APA is one of 20 Australian energy businesses forming
the charter. Signatories commit to publicly disclose their
progress against the Energy Charter Principles through
the release of an annual disclosure report.
In September 2022, we submitted our third disclosure
report under the Energy Charter. The annual disclosure
report details the actions, investments, partnerships and
programs that have been delivered and demonstrates our
alignment to the five Energy Charter Principles. A copy of
this report is published on the APA website.
APA sees landholders as key partners in our operations.
With easements across many properties throughout the
country, access to these properties is an essential part of
maintaining and developing our infrastructure. When this
is needed, we engage proactively with landholders and
seek to minimise our footprint as much as possible.
In FY23, we continued to run the annual APA Landholder
Contact Program, sharing operational and safety
information with landholders and providing Before-You-
Dig information. This Program also allows landholders to
update APA about their activities, access and notification
requirements, and to raise any concerns.
The Landholder Contact Program aims to make contact
with at least one representative from each parcel every
year, preferably face to face. In FY23, we made contact
with 11,271 landholder contacts. Over the past few years
we have consistently achieved at least 80% of contacts
completed in all States. In most cases we have achieved
over 90%. In recent years we have conducted a popular
APA Landholder Photo Competition, with entries used in
our annual calendar to highlight the stunning and diverse
landscapes in which we operate.
APA continues to receive positive feedback from
landholders. Our proactive engagement with landholders
is seen as a point of difference with other similar
companies.
32
APA GROUP ANNUAL REPORT 2023 Community grants programs
In addition to the partnerships and employee
contributions, in FY23 APA contributed more than
$92,000 in grants across almost 30 community
orgnisations as part of our Community Grants Program.
These initiatives align to APA’s Investment Priority Funding
Areas and focus on maximising social impact.
Projects funded under this program included NAIDOC
celebrations, social infrastructure investment and
community health and wellbeing initiatives across our East
Coast Grid Expansion, Kurri Kurri Lateral Pipeline, and
Mount Isa and Cloncurry assets.
Focusing investment on sustainable
development outcomes
APA continued to refine and deliver on its Social
Investment Framework in FY23. The Framework provides
meaningful, valuable discretionary funding to support
sustainable development outcomes in host communities.
Partnerships and employee contributions
As part of our commitment to better outcomes for First
Nations people and communities, APA continued our
long-standing corporate partnerships with the Clontarf
Foundation and The Fred Hollows Foundation in FY23.
APA also recommitted to another year of funding with
three corporate partners who we began working with
in FY22 – the Stars Foundation, Rural Aid and Uniting.
The Stars Foundation aligns with our commitment to
support gender equity and better outcomes for First
Nations communities.
Rural Aid is our dedicated partner when preparing for
and responding to natural disasters through community
resilience initiatives.
Our corporate partnership with Uniting is derived from our
membership of the Energy Charter and provides energy
literacy support to individuals and households suffering
energy hardship.
In FY23 we invested $1.2 million in our communities,
prioritising rural and regional communities, First Nations
Peoples, climate transition and natural environment
protection.
APA’S SOCIAL INVESTMENT PRIORITY AREAS
REGIONAL AND REMOTE
COMMUNITIES
FIRST NATIONS
PEOPLES
CLIMATE
TRANSITION
NATURAL
ENVIRONMENT
Building the strength
and resilience of
regional economies and
communities located near
APA assets/projects
Working in partnership
with First Nations Peoples
to support better
outcomes for First Nations
communities and heritage
Supporting communities
in climate transition
outcomes and
adaptation activities
Protecting and enhancing
the natural environments
and biodiversity located
near APA assets/projects
We also recognise the importance of considering the following when designing, selecting and delivering initiatives,
investments and partnerships:
Impacted community
needs and aspirations
People in vulnerable
circumstances
Inclusion and diversity
Access to energy and
energy affordability
Building human capability
e.g. skills
33
SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONOPERATING & FINANCIAL REVIEW BUILD
First Nations Peoples
At APA, partnering with First Nations Peoples is central
to our purpose. We seek to become a partner of choice for
First Nations stakeholders and supporters as we deliver
solutions for the energy transition.
Reconciliation
APA’s Sustainability Roadmap identifies First Nations
Peoples as a priority area for us to build organisational
capability, and in FY22 we committed to developing our
first Reconciliation Action Plan (RAP).
In FY23, we appointed a Reconciliation and First Nations
Manager to improve our First Nations governance,
performance and disclosures. We established a cross-
functional RAP Working Group (RAPWG), chaired by an
Executive Sponsor, to develop, implement and report on
a Reflect RAP. With the support of our external advisor,
Murawin Indigenous Voice Consultancy, we undertook an
extensive internal consultation to co-design a quality
RAP that meets Reconciliation Australia’s standards.
APA aims to launch our RAP in the first half of FY24.
Committing to a Reflect RAP allows APA to spend time
scoping and developing relationships with stakeholders,
defining our reconciliation vision and exploring our
sphere of influence, in preparation for future reconciliation
initiatives and RAPs.
Extensive consultation was undertaken to inform
development of the RAP, involving targeted, APA-wide
engagements, directly involving >700 employees.
Consultation with more than 700 employees
to develop our first
RECONCILIATION ACTION PLAN
Over 500 APA employees joined our
INAUGURAL NATIONAL
RECONCILIATION WEEK
DISCUSSION PANEL EVENT
Launched our new online cultural awareness
training module as part of our
FIRST NATIONS WORKFORCE
STRATEGY
$2.67 million spend on goods and services
with 24 directly engaged
FIRST NATIONS SUPPLIERS
34
APA GROUP ANNUAL REPORT 2023
First Nations engagement
First Nations procurement
In FY23, APA continued its membership of Supply Nation,
a national non-profit organisation that aims to grow the
First Nations business sector through the promotion
of supplier diversity in Australia. In FY23, we directly
engaged 24 First Nations suppliers, spending
$2.67 million on goods and services. Suppliers are
comprised of Registered and Certified Supply Nation
as well as Land Councils.
APA’s Reflect RAP will include measurable actions and
deliverables to increase the diversity and quantity of
goods and services procured directly and indirectly from
First Nations-owned businesses. We intend to support and
participate in opportunities to build our network of local
and First Nations suppliers.
We will investigate including First Nations Participation
Commitments (FNPCs) in our contracts with key suppliers
to help facilitate more opportunities for First Nations
businesses. Engaging First Nations businesses via
FNPCs will enable more First Nations businesses to
participate in our supply chain indirectly, growing local
industry and employment opportunities for First
Nations communities.
APA holds Indigenous Land Use Agreements and
Cultural Heritage Management Plans with Traditional
Owners. These set out processes and plans for protecting
Aboriginal cultural heritage and engaging with Traditional
Owners in areas where we operate.
We are committed to continually improving processes
which guide First Nations engagement and Aboriginal
cultural heritage management. Our aim is to drive
improved land use and benefit sharing with First
Nations groups and contribute to community capacity
through training and employment in the energy sector.
This extends to joint venture and equity partnership
opportunities with Traditional Owners.
Our future engagement will focus on improving the
quality and depth of our relationships with First Nations
groups to ensure we respect their rights and interests and
adequately build in the priorities of Traditional Owners and
host communities throughout our assets lifecycle.
First Nations employment
With less than 1% of our workforce who identify as First
Nations Peoples compared to 3.2% of the national
population, we recognise more work is needed to ensure
our workforce reflects the communities where we operate.
In support of this we undertook initiatives in FY23 to
improve cultural safety for current and future First
Nations employees.
•
In FY23, as part of the implementation of our First
Nations Workforce Strategy, we launched our new
online cultural awareness training module.
• Over 500 APA employees joined our inaugural
National Reconciliation Week discussion panel event
involving representatives of our RAP Working Group
and external First Nations thought leaders. The panel
discussed Reconciliation, APA’s RAP and the upcoming
Referendum.
• Over 100 employees have joined our Reconciliation
Allies @ APA community.
•
In FY23, we engaged a new Employee Assistance
Program provider which has capability to provide
primary and secondary health and wellbeing support
to First Nations staff and family members.
• Our Reflect RAP will prioritise our focus and effort on
building cultural safety and cultural competency across
the entire organisation.
35
SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONOPERATING & FINANCIAL REVIEW ACCELERATE
Environment and heritage
APA performs an extensive range of activities across
a diverse range of environments. We are committed to
managing our risks and protecting the environment across
all areas of our business. Pursuing a high standard of
environment and heritage management is one way
we ensure we build and operate our assets in a socially
responsible manner.
LAUNCHED OUR NEW SPILL
RESPONSE ONLINE TRAINING
MODULE
completed by 450 employees
DEVELOPED A FRAMEWORK TO
ASSESS SITE CONTAMINATION
HAZARDS
associated with chemical and hazardous substance
storage on APA sites
EMBEDDED HERITAGE
MANAGEMENT
launched a 'Being Heritage Aware' training module
across the business
In FY23, APA continued our program of strategic initiatives
to drive improved environmental performance. We have:
• Prepared and released updated environmental
procedures for Contaminated Site Management and Spill
Preparation and Response, including tools, templates and
guidelines. The procedures were supported by updates
to related business processes and systems and included
dedicated staff training and communications. As part of
this change a spill response online training module was
procured and launched. This has been completed by
450 employees.
• Continued our weed survey program investigating
the presence of invasive weeds on APA transmission
pipelines. The outcomes of these surveys will inform
long-term monitoring and management measures
and help to quantify potential impacts on nature
and biodiversity.
• Completed an assessment of APA’s water consumption
to improve our understanding of water usage and
determine a pathway forward for more comprehensive
water data capture. In addition, we identified all areas of
water stress in the areas that we operate and overlaid this
information in Geographic Information Systems (GIS) to
help inform decision making.
• Completed a waste assessment to understand waste
generation patterns and to better inform future work
regarding improved waste data capture and centralisation.
• Developed a framework to assess site contamination
hazards associated with chemical and hazardous
substance storage on APA sites and to manage
associated contamination risks.
36
APA GROUP ANNUAL REPORT 2023 A four-year Environment Improvement Program is
underway to elevate and embed environment processes
across the business. This involves uplift of procedures,
development of new innovative tools and implementation
for eight environment risk areas. Following full completion
of the program, all Environment Management Plans will be
updated to ensure alignment of content.
YEAR
FY22
ENVIRONMENT RISK AREA
Heritage
Pests, Diseases and Weeds
FY23
Spill Preparation and Response
STATUS
Completed
Completed
Completed
Contaminated Site Management
Completed
FY24
Soil Management
Waste Management
FY25
Biodiversity
Water
Under way
Pending
Pending
Pending
Environment compliance
In FY23 APA received seven penalty infringement notices
and two regulatory warning notices.
The penalty notices were received from the Queensland
Department of Environment and Science and had a total
penalty value of $34,461. The notices related to late
resubmission of Estimated Rehabilitation Cost
(ERC) calculations required under the Environmental
Protection Act, 1994, for six operating assets in
Queensland. APA promptly resolved the outstanding
information with the Department.
One warning notice was received from the First People
– State Relations (FPSR) portfolio of the Department of
Premier and Cabinet (Victoria). The warning notice related
to a ground disturbance activity that did not comply with
the approved Cultural Heritage Management Plan.
APA self-reported the incident and is working with the
stakeholders to resolve the matter.
The second warning notice related to missing information
required under APA’s Environmental Authority for the
Kogan North Central Gas Processing Facility. Whilst
information was available in technical air quality
monitoring reports, required details had not been
included in the Register of Fuel Burning and Combustion
Equipment Register for the facility. APA rectified the error
once aware of the issue.
Embedding heritage management
across the business
APA continued to improve heritage management
processes throughout FY23.
To facilitate continuous improvements in heritage
management we have:
• Completed a targeted heritage study on our
operational pipeline asset. The study aimed to
understand what ‘unrecorded’ heritage values might
existing on ageing infrastructure, constructed in times
when heritage management practices and recording
were vastly different to today. The heritage surveys,
undertaken by the Traditional Owners for the area,
identified important heritage values that do remain in
these areas. This study will be used to inform
APA’s approach nationally.
• Commissioned a review of APA’s heritage data
management. This review identified opportunities
for APA to improve its data management. The
recommendations will inform future heritage
improvements.
• Recruited an additional Heritage Specialist to drive
positive First Nations engagement and heritage
management outcomes on the Moomba Sydney
Pipeline.
Environment warning and penalty notices
10
9
8
7
6
5
4
3
2
1
0
FY23
FY22
FY21
FY20
FY19
● Environmental warning notices recieved
● Environmental penalty notices recieved
37
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION MAINTAIN AND EVOLVE
People and culture
APA is committed to being a responsible energy company
where people are proud to work. We are striving to create
a healthy, safe, inclusive and diverse workplace.
Building on our Inclusion and Diversity Strategy
The four pillars of APA’s Inclusion and Diversity
Strategy 2020 to 2025 are:
Gender Equity – We are committed to
a level playing field by giving all women
and men the same chance to reach
their potential.
Flexibility – Flex APA means we
encourage flexible ways of working and
empower people to think differently about
where, when and how work is completed
to meet the professional goals, priorities
and lifestyles.
Inclusive Culture – We are committed to
creating an inclusive culture that values
all people and addresses biases. (Age,
cultural background, LGBTIQ, disability,
indigenous, etc.).
Inclusive Leadership – Inclusive
leadership is about making sure our
people feel a sense of belonging, are
treated fairly and respectfully, and all our
people’s voices are heard and valued.
COMPLETED A COMPREHENSIVE
GENDER PAY EQUITY REVIEW
a like-for-like comparison of roles across the
organisation, with all identified gaps resolved
Launched APA’s
RESPECT@WORK PROCEDURE
INCREASED TOTAL FEMALE
REPRESENTATION TO 31.8%
among total employees, up from 29.5% in FY22
Established
GENDER-NEUTRAL PARENTAL
LEAVE BENEFITS
38
APA GROUP ANNUAL REPORT 2023 Supporting our people
Diversity performance
In FY23, under APA’s Gender Target Action Plan, female
representation among total employees increased to
31.8%, up from 29.5% in FY22. Senior Leader female
representation increased to 31.4%, up from 30.4%, with
female representation in the Executive Leadership Team
increasing from 29% in FY22 to 44% in FY23. The APA
Board has set a gender diversity target of 40/40/20,
recognising this may vary slightly depending on the size
and required skills mix of the Board. At 30 June 2023
50% of APA’s non-executive directors were female. With
the appointment of Nino Ficca to the APA Board from 1
September 2023, female representation will be 43%.
APA’s challenge is to increase the female representation in
operational divisions. These areas have a large proportion
of roles requiring science, technology, engineering and
mathematics (STEM) disciplines, in which females are
generally underrepresented.
In FY23, 25% of employees in operational divisions
identified as female, compared with 49% in our
corporate divisions.
APA is also working to improve age diversity. Over 91% of
employees are aged 30 years and over. We continued to
address this disparity during the year through a focused
early talent strategy, including an increase in our FY23
Graduate Program intake, and identifying younger talent
through a continued focus on internships, traineeships,
and our National Apprenticeship Program.
The increase in workforce mobility experienced nationally
over the past 18 months continued. In response, APA
accelerated several attraction and retention strategies
throughout the year, with APA’s voluntary employee
turnover rate improving, at 11.5% for FY23, down from
13.4% in FY22.
In FY23, we have continued to build on our Inclusion and
Diversity (I&D) Strategy 2020 to 2025 and refreshed our
Inclusion and Diversity Policy.
We also completed a comprehensive Gender Pay Equity
Review. Recent investments in systems and better quality
data enabled a like-for-like comparision of roles across the
organisation, with all identified gaps resolved immediately.
We are working to strengthen APA policies and
remuneration processes to avoid any recurrence of
Gender Pay Gaps on like-for-like roles at APA in the future.
We have also revised our I&D strategy to focus on the
strategic components that will best accelerate the creation
of an inclusive culture, including:
• Refreshed content for our Inclusive Leadership
development program. This program was successfully
delivered to our Executive Leadership team in March
2023 with roll-out to General Managers and broader
leader population starting in August 2023. This program
reviews unconscious bias, everyday sexism and the link
between diversity and performance.
• Launched APA’s Respect@Work procedure. This aligns
with the I&D Policy and the APA Code of Conduct.
To complement this, a Respect@Work e-learning
module has also been implemented. The module
encourages employees to speak up if they witness
harmful behaviours including unlawful discrimination,
bullying, harassment, sexual harassment, sex-based
harassment, vilification and victimisation.
•
Introduced APA’s enhanced gender-neutral parental
leave benefits aligned to industry benchmarks.
• Further embedded our Hybrid @ APA working model to
improve flexibility for employees. The model – with
40% of face-to-face office collaboration over the span
of a month – allows employees the flexibility to manage
their lifestyles and priorities outside of work.
• Achieved a 46% female representation in our 2023
Graduate program, and a 53% female representation
in the 2022/23 intern programs. Further recruitment
efforts are underway to ensure our apprenticeship
program reaches a 50% gender split.
• Became sponsors and partners for Chief Executive
Women (CEW).
•
Implemented targeted national campaigns to promote
I&D aligned to national recognition days (such as
International Women’s Day events, Pride month and
NAIDOC Week).
39
SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONOPERATING & FINANCIAL REVIEW MAINTAIN AND EVOLVE
People and culture (continued)
FY23 gender diversity
of APA employees
32%
32%
56%
FY23 gender diversity
of APA employees
● Male
● Female
FY23 gender diversity
of APA employees
● Male
● Female
FY23 gender diversity
of APA Executive
Leadership Team (ELT)1
68%
68%
44%
● Male
● Female
FY23 gender diversity
of APA Executive
Leadership Team (ELT)1
44%
● Male
56%
9%
34%
57%
9%
FY23 age diversity
● Female
of APA employees
● <30 years
● 30–49 years
● >50 years
FY23 age diversity
of APA employees
● <30 years
● 30–49 years
32%
● Male
● Female
68%
FY23 gender diversity
of APA Executive
Leadership Team (ELT)1
56%
44%
● Male
● Female
9%
34%
2,130
7,492
FY23 age diversity
of APA employees
● <30 years
57%
● 30–49 years
FY23 workforce training
● >50 years
hours by type
● Mandatory APA
Compliance training
● Role-specific training
30,920
● Other training
34%
1
57%
Executive Leadership Team (ELT) - portion of employees aligned to WGEA Management Category: Key Management Personnel / Head of Business; Key Management
Personnel and internationally based ELT members (Excludes CEO).
● >50 years
Investing in APA’s future
At APA, we continually develop our people’s core
compliance, technical and leadership skills. In FY23,
the APA workforce completed 40,542 hours of training,
averaging 15 hours per team member.
For more information on our People and Employment
performance, see the FY23 Sustainability Data Book.
Freedom of association and
collective bargaining
APA supports the right of all employees to choose
whether to be, or not to be, a union member. In FY23,
a number of unions were party to six of APA’s seven
Enterprise Agreements. APA provides industrial relations
training for operations leaders in Union Right of Entry and
other key Fair Work Industrial Relations principles, such as
freedom of association and unprotected industrial action.
APA does not tolerate any form of discrimination or
exclusionary behaviour. In FY23, APA recorded zero
incidents of discrimination.
For more information on our People and Employment
performance, see the FY23 Sustainability Data Book.
40
APA GROUP ANNUAL REPORT 2023 Leadership training and capability
Technical training
APA continues to invest in developing our people,
seeking to maximise collaboration and effectiveness
and give everyone an opportunity to reach their full
career potential.
To further develop the capability of our leaders we offer a
suite of leadership development courses, including:
•
Ignite Talent Program: targeted at identified future
leaders. This 12-month accelerated talent development
program focuses on understanding self and
leading others.
• Elevate Talent Program: designed for senior leaders
who have been identified as successors for Executive
Leadership Team roles.
•
INSEAD Leadership Curriculum: in partnership with
INSEAD, this is a customised program for all leaders
which aims to lift the leadership capability bench
strength and ensure consistent practice and strategic
leadership. Our Executive Leadership completed this
Curriculum in February and General Managers in
May 2023. The one-week experiential learning program
focuses on developing senior leaders in Personal
Leadership, Interpersonal Leadership and Strategic
Leadership.
In addition, we have continued to invest in the Digital
Learning Library (Percipio), with thousands of courses,
videos, e-books, and audiobooks employees can access
any time, from any device.
Over FY23 two new learning technologies were
introduced. A wearable digital headset (RealWear) was
trialled and introduced as a field-based assessment
methodology in the Certificate III Gas Supply (System
Operations). The success of the innovation resulted in
APA winning Silver at the Australian Training Awards, in
the category of Innovation in VET (Vocational Education
and Training).
Additionally, digital avatar software was used across
several learning programs to simulate face-to-face
engagement in eLearning courses.
A new national training program was developed and rolled
out for frontline Operations and Maintenance Technicians.
The Asset Maintenance for Technicians program is
focused on developing the knowledge and skills to
undertake routine maintenance tasks through completion
of 16 learner-led modules delivered using a blended
approach of eLearning, field-based coaching (Tech Notes)
and an assessment process. A new technician would
typically complete the course over an 18-24-month period.
Talent pipeline
As part of our Early Talent Strategy, graduate and intern
program intake numbers increased with a greater balance
of males and females:
• 2023 Graduate Program = 24 Graduates with an
11 Female: 13 Male gender split (46%)
• 2022/2023 Internship Program = 34 Interns with an
18 Female: 16 Male gender split (53%)
41
SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONOPERATING & FINANCIAL REVIEW MAINTAIN AND EVOLVE
Safety, health and
wellbeing
APA’s foremost priority is the health, safety and wellbeing
of our workforce and our communities. We want everyone
to go home healthy and safe every day. We strive for
world-class performance in Health, Safety and Wellbeing.
Delivering against our Health, Safety,
Environment and Heritage (HSEH) Strategy
APA’s new HSEH Strategy commenced in FY23 and all
initiatives have been delivered in line with the schedule.
Some of the key initiatives undertaken in FY23 are
highlighted below.
Leadership collaboration and learning
HSEH Interactions
In FY23, 4,334 HSEH Interactions were completed by our
leaders. This was a 13% increase from FY22, and reflects a
consistent effort by leadership across the organisation to
actively engage in meaningful conversations.
Health and safety survey
A Health and Safety survey was undertaken across the
business in December 2022 that focused on four key
areas including:
• Health and Wellbeing
• Safety Systems
• Safety Leadership
• Safety Engagement
The results of the survey have been used to inform
improvement opportunities which will be incorporated
into the APA Culture Action Plan.
IMPROVING SYSTEMS AND PROCESSES
• Commitment to proactive process improvement
• Enable efficiency and systems to drive high
performance
• Embed nimble behaviour through new recognition
program and continuous improvement/productive
habits program.
SENIOR LEADERSHIP VISIBILITY/ACCESSIBILITY
• Proactively increase opportunities for ELT visibility
• Enable more 1:1 employee interaction with senior
leaders
• ELT personal accountability
• Educate leaders to have meaningful
HSEH conversations
IMPROVE HEALTH, WELLBEING
AND WORKLOAD MANAGEMENT
With a participation rate of 70%, APA achieved an
overall score of 76%, 1% above the industry benchmark.
Safety Engagement, Safety Leadership, and Health and
Wellbeing scores exceeded the benchmark while Safety
Systems was below benchmark.
• Commit to prioritising work to ensure workload is
managed to an acceptable level
• Educate in respect at work to further minimise the risk
of bullying and harassment
•
Improve access to Health and Wellbeing support
services for all employees
42
APA GROUP ANNUAL REPORT 2023 4,334 HSEH INTERACTIONS
COMPLETED BY OUR LEADERS,
18% increase from FY22
76% HEALTH AND SAFETY
SURVEY SCORE,
1% above industry benchmark
PARTNERED WITH SONDER;
a best-in-class, technology-enabled platform which
assists APA employees, contingent workers and their
families across all aspects of Health
Serious Harm Prevention
Improved assurance schedule targeting critical risk
The FY23 Assurance Schedule focused on APA’s critical
risks that are linked to our Fatal Risk Protocols. This
schedule was designed to measure the effectiveness
of critical risks across various APA operations.
The areas covered in the FY23 Assurance Schedule
included:
• Contractor Management
• Excavation and Trenching
• Permit to Work
• Driving
• Process Safety
• Safety Management Plans
In FY23, a total of 17 Line 2 assurance HSEH Management
System activities were undertaken according to the
schedule. This included auditing 1,332 controls, resulting
in an overall compliance rating of 97% across all
assessed areas.
Health and Wellbeing
Health and wellbeing framework
We have implemented the evidence-based framework,
Thrive at Work, which has been adapted to include all
health-related initiatives. The framework provides for a
balanced approach to Health and Wellbeing prioritisation
and management.
Psychosocial risk management
APA has taken steps to respond to recent Work Health
and Safety (WHS) legislation changes with the inclusion
of Psychosocial Risk within the HSEH Risk Register.
A new WHS management system protocol has been
drafted and an assessment of psychosocial hazards and
controls completed. An action plan has been developed
to ensure continued review and alignment of systems
and processes.
Improved health and wellbeing support
To test the effectiveness of support mechanisms
associated with psychosocial risk management we
completed a review of the Employee Assistance Program
(EAP). As a result of the review, a decision was made to
partner with Sonder – a best-in-class, technology-enabled
platform which assists APA employees, contingent
workers and their families across all aspects of Health.
Sonder will link other health and wellbeing programs and
enable access for our people when they need assistance.
Systems, technology and innovation
Incident, near miss and hazard management review
In FY23, we completed a review of the Incident
Management and Investigation procedures across
APA, resulting in the development and approval of the
Incident, Near Miss and Hazard Management Protocol.
This Protocol provides the overarching process for
reporting all Incidents, Near Misses and Hazards, including
Regulatory Events, and Harmful Behaviours.
43
SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONOPERATING & FINANCIAL REVIEW MAINTAIN AND EVOLVE
Safety, health and wellbeing (continued)
HSEH digital roadmap
Process safety
In FY23 we made progress against our process safety
improvement initiatives identified in the HSEH Strategy.
This included commencement of the Management of
Change (MOC) Uplift initiative where we have:
• Conducted a thorough current state MOC review
• Developed and received endorsement for a Business
Requirements Document
The next stage of the MOC Uplift initiative is to implement
the specification requirements in our Enterprise Asset
Management System prior to rolling out to the business in
the second half of FY24.
The Process Hazard Analysis (PHA) Revalidation Uplift
initiative progressed in FY23 by completing the Moomba
Hub and Dalby Compressor Station HAZOP Studies.
In FY24 we will continue to revalidate PHAs on critical
operating assets.
The Safety Critical Element (SCE) Management and
Assurance initiative has delivered and published
SCE dossiers for all transmission assets and developed
a draft SCE performance standard. In FY24 we will revise
the SCE Lifecycle Process Standard and implement this
in our Enterprise Asset Management System.
In FY23, we undertook a comprehensive review of
APA’s current suite of digital systems to support the
business processes stipulated by the HSEH Management
System, identifying the key areas where improvements
in our digital systems are necessary to support our
HSEH Strategy over a five-year horizon.
The roadmap identified seven key areas where significant
improvements were required over the next five years:
• Mobile-enabled digital tool for employees
and contractors
•
Integrated digital HSEH Incident, Near Miss and Hazard
Management System
• New HSEH reporting and analytical framework
supporting current and future digital tools
•
Integrated Contractor Management System
• Digital solutions for HSEH inductions
• Digital solutions for Permit to Work
• Predictive Analytics for HSEH
In FY23 we have focused on collating the business
requirements for the first three items in our Roadmap.
They represent the foundational building blocks of our
digital strategy. In FY24 we will be undertaking the
procurement and implementation of these systems.
HSEH data and analytics improvements
In FY23, we rolled out the HSEH Dashboard and Detailed
Reports to provide the business with a consolidated view
of APA’s leading and lagging HSEH Key Performance
Indicators (KPIs). The dashboards are updated on a
monthly basis.
44
APA GROUP ANNUAL REPORT 2023 Measuring health and safety performance
Safety lag indicators
In FY23, our key focus areas included contractor safety
across our projects and the identification of incidents
and near misses that could have caused serious harm
to our employees and contractors. We continue to drive
our visible leadership initiatives through the key leading
indicators of HSEH Interactions and High Potential
Hazard Identification.
By focusing on visible leadership through HSEH
Interactions, leaders can understand the challenges
workers face and how they can be addressed to improve
safety performance. HSEH interactions underwent
an improvement exercise with the introduction of
subcategories of focused interactions that include:
• Health and safety – Focuses on general health
and safety
• Environment and heritage – Focuses on general
environment and heritage
• Critical control – Focuses on interacting with a work
group on the implementation of critical controls for
high-risk activities
• Wellbeing – Introduced to improve health and
wellbeing with a focus on psychosocial risk
management
In FY24, there will be a focus on increasing the number
of Critical Control and Wellbeing interactions to enhance
and complement our Serious Harm Prevention and
Wellbeing initiatives.
The two key lag indicators for safety performance
in FY23 were Potential Serious Harm Incident Frequency
Rate (PSHIFR) and Total Recordable Injury Frequency
Rate (TRIFR).
In FY23, APA did not record any Fatalities or Actual
Serious Harm incidents.
In line with our Serious Harm Prevention initiatives,
APA recorded 33 Potential Serious Harm Incidents
versus 46 in FY22. The Potential Serious Harm Incident
Frequency Rate for FY23 was 3.74, compared to
6.51 in FY22 – a 42% decrease.
At the end of FY23, APA’s combined employee and
contractor TRIFR was 3.4 Recordable Injuries per million
hours worked. This represents a slight increase of
3% on the FY22 figure of 3.3. This equates to 30 people
requiring medical intervention, up from 23 in FY22, against
a 24.8% increase in the total number of hours worked by
our employees and contractors when compared to FY22.
Safety compliance
APA received one regulatory (safety) penalty infringement
notice and 20 regulatory (safety) improvement notices in
FY23. Workplace Health and Safety Queensland issued
the infringement notice on an APA contractor undertaking
electrical repairs on a number of inverters at our Dugald
River Solar Farm without the appropriate electrical
licences. This resulted in a $2,000 penalty. The
20 improvement notices were issued by the same
Regulator during an inspection at the Dugald River Solar
Farm. All notices were related to minor administrative
matters at the site and were promptly rectified.
Safety lead indicators
Assurance
Under APA’s HSEH Interactions metric, APA’s leaders
have safety-focused discussions on hazard identification,
risk mitigation and corrective action mechanisms with
employees. In FY23, our leaders completed over
4,334 HSEH Interactions, an increase of 13% on FY22.
These interactions help to keep safety front-of-mind
for everyone.
We engaged Deloitte to undertake limited
assurance of selected key performance indicators
included in the Safety Performance section of
our FY23 Sustainability Data Book, in accordance
with the Australian Standard on Assurance
Engagements ASAE 3000 Assurance Engagements
other than Audits or Reviews of Historical Financial
Information issued by the Australian Auditing and
Assurance Standards Board (ASAE 3000). Details
of the assurance scope, procedures and conclusion
are included in the Assurance Report on page 200
of this report.
45
SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONOPERATING & FINANCIAL REVIEW Customers and suppliers
We work with our customers to deliver affordable and
low emissions solutions and a better customer experience.
We keep our customers informed about our assets to help
them better meet peak seasonal demands and understand
the impact of new regulatory changes. And we step
in to assist where we can, including when responding
to natural disasters.
Keeping customers at the heart of what we do
FY23 was another dynamic year for the energy sector.
The energy transition continued at pace with
decarbonisation a key driver for our customers. With the
conclusion of pandemic restrictions, APA continued to
prioritise customer engagement and communications,
innovation and customer experience. We sought to put
customers at the centre of our decisions, activities
and planning as we worked to deliver on our Energy
Charter commitments.
We continued to take a customer-led approach to
the development of new offers, working to meet our
customers’ needs by delivering reliable, affordable and
low emissions solutions. We sought to better inform
our customers to help them deal with the volatility of
peak winter/summer markets as well as new regulatory
requirements that might affect day-to-day operations.
Finally, we worked to ensure we supported our
customers where they faced temporary hardships
through natural disasters.
As in previous years, APA’s customer-driven approach
included an annual feedback survey and an action plan
in response.
HOSTED WINTER READINESS
FORUM
to keep east coast customers better informed
about asset and service availability through the
peak winter period
Launched our
RESPONSIBLE PROCUREMENT
STRATEGY
AWARDED THE CIPS CORPORATE
ETHICS MARK1
demonstrating our global commitment to ethical
procurement practices
1 Ethics Register | CIPS.
46
APA GROUP ANNUAL REPORT 2023 Customer performance
Communications and industry leadership
In response to customer feedback, we worked to keep
customers better informed about the availability of our
assets and services through peak winter and summer
periods. We also acted to make sure they understand the
impact of key regulatory changes. This included:
• A Customer Forum on east coast gas asset winter
readiness and the new AEMO gas system reliability and
supply adequacy powers
• Approaching winter, regular communications on
contracted capacities of key APA east coast assets
for north-south gas transport; and on progress on key
asset upgrades to support winter peak gas transport.
We also published advice on customer behaviours that
help manage peak winter loads
Support for vulnerable customers
In keeping with our Energy Charter commitments,
a monthly ‘Vulnerable Customer’ review meeting is held,
monitoring commercial customers who may be facing
hardship or credit issues and identifying opportunities
for early assistance.
During the year, two customers were provided with
assistance to help them deal with the impacts of
significant flooding, with one entering into a deferred
payment program and the other provided with a
temporary extension of payment terms.
APA’s annual commercial customer feedback survey was
completed in November 2022. It involved a quantitative
survey administered by an independent external agency.
The key deliverable from the survey is APA’s Customer
Experience Score (CES), an average performance score
across attributes such as trust, responsiveness, value,
ease, rapport and innovation.
Our CES was 6.7 out of 10, representing an improvement
from our 2021 score of 6.3. The result was driven by
improvements in customer relationships with our key
commercial counterparts. This reflected the success of
our 2022 action plan which focused on re-invigorating
relationships, re-establishing APA’s industry leadership
and re-prioritising face-to-face meetings after COVID.
The survey also highlighted the opportunity to better
engage senior representatives within our customer groups
and work harder with specific accounts. This means
prioritising key attributes such as ease of doing business
and innovation, whilst also delivering on commitments,
and continuing to work on improved communications
and understanding of customers’ concerns. The survey
informed our updated 2023 action plan which has now
been in implementation for six months.
Customer experience
In addition to our annual survey, we regularly monitor
and manage the customer experience through:
• Dedicated account managers assigned to all
commercial customers
• A quarterly customer experience dashboard focused
on practical elements contributing to customers’
experience of APA
• Key account management with a monthly review
meeting to monitor customer feedback, service
delivery and performance across APA’s key customers.
We also maintain a commercial customer complaints
process with four complaints received during FY23 – this
compares with 10 complaints in FY22, so a significantly
better performance. The complaints related to land
access, metering, processes around rejection of non-firm
nominations, and the scope of protection works. We are
also working to understand how we can better monitor
and respond to customer impacts related to power
outages as we grow our portfolio of electricity assets.
As well as working to resolve each complaint, we
conducted ‘lessons learnt’ reviews to ensure any
underlying issues driving the complaint do not recur.
47
SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONOPERATING & FINANCIAL REVIEW Customers and suppliers
(continued)
Responsible Procurement Strategy
Outlined below is APA’s Responsible Procurement Strategy. It is aligned to APA's Sustainable Development Investment
Program and the four priority investment areas.
VISION
We strengthen communities through impactful supplier relationships with a responsible and resilient supply chain
SUSTAINABILITY STRATEGY
INVESTMENT AREAS:
Regional and remote
communities
First Nations People
Climate transition
Natural environment
PROCUREMENT
SPECIFIC GOALS
Supporting local
communities and human
rights protection
Increase supplier diversity
Enhance climate transition
Optimise the full life
cycle to consider
circularity opportunities
TARGETED AREAS
OF ACTION
Create positive community impact through
supplier diversity
Optimise the full life cycle of goods to consider
circularity opportunities and achieving net zero targets
Monitor and address sustainability risk in the procurement of high-risk goods and services
ENABLERS
Capacity and capacity building
Digital and technology
Governance and reporting
THE STRATEGY
SUPPORTS THE
FOLLOWING SUSTAINABLE
DEVELOPMENT GOALS:
Striving to improve supply chain sustainability performance
APA developed and launched its first Responsible Procurement Strategy during the year. This supports the execution
of APA’s Sustainable Development Investment Program by aligning to priority investment areas.
Early initiatives included building awareness of the strategy across business groups and starting to improve supplier
diversity capability by engaging with First Nations businesses as part of our Supply Nation membership.
An initiative to better understand emissions in our supply chain and identify a roadmap of future opportunities to
reduce emissions was undertaken in collaboration with the Net Zero and Climate team to support net zero ambitions.
48
APA GROUP ANNUAL REPORT 2023 Combatting modern slavery
As part of the continuous improvement approach to
APA’s Modern Slavery Program, a number of key initiatives
were progressed through the year.
After carefully evaluating several providers and
undertaking a pilot due diligence exercise we
implemented a technology solution in use from
FY24 for modern slavery and ESG risk in our supply chain.
The third-party solution assesses the modern slavery/
ESG risk of a potential supplier and plans ongoing due
diligence accordingly. It also assesses risk of the existing
supplier base. The ability to assess our supply chain
ESG risk will support our broader responsible
procurement strategy.
Implementation of the solution removes the need for
manual data analysis and reduces risk of human error. It
also enables access to a broader range of source data
providing information about high-risk suppliers we would
not otherwise have access to.
As part of our Modern Slavery commitments, we have
also undertaken a program maturity assessment to
identify recommendations for FY23 and further improve
our capability to identify, assess and monitor risk and
supplier performance.
A deep dive into our renewable energy suppliers was also
undertaken as part of the pilot due diligence exercise to
identify further steps to reduce risk of modern slavery.
Renewable energy is recognised globally as a high-risk
area for forced labour and child labour. It’s imperative we
keep abreast of these emerging risk areas.
APA was awarded the Chartered Institute of Procurement
and Supply Corporate Ethics Mark1 during the year. The
Ethics Mark is a global commitment to ethical procurement
practices and it must be renewed annually to demonstrate
ongoing commitment.
1
Ethics Register | CIPS
49
SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONOPERATING & FINANCIAL REVIEW Performance
Financial performance
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 ‘underlying’ measures.
In FY23, APA delivered a solid result, as shown in the table below. Underlying EBITDA increased 2.0% to $1,725 million (FY22
$1,692 million) representing growth from the Energy Infrastructure segment, partly offset by lower contributions from the Asset
Management and Energy Investment segments as well as higher corporate costs. Statutory profit after tax including significant
items increased by 10.4% to $287 million (FY22 $260 million) benefiting from lower non-operating items and net finance costs.
Free cash flow declined 1.0% to $1,070 million (FY22 $1,081 million) largely due to higher FY23 Stay in Business capital expenditure.
On 23 August 2023, the Directors announced a final distribution of 29.0 cents per security, taking APA’s FY23 total distributions
to 55.0 cents per security, in line with guidance. This represents an increase of 3.8%, or 2.0 cents, over the FY22 distributions of
53.0 cents per security.
Key financial data for FY23
Statutory Revenue
Total revenue
Pass-through revenue2
Total revenue excluding pass-through
Underlying EBITDA3
Fair value gains/(losses) on contract for difference
Technology transformation projects
Wallumbilla Gas Pipeline hedge accounting discontinuation
Basslink debt revaluation, interest and integration costs
Basslink AEMC market compensation
Payroll review
Total reported EBITDA
Depreciation and amortisation expenses
Total reported EBIT
Net finance costs and interest income
Significant items
Reversal of impairment of property, plant and equipment
Profit before income tax
Income tax expense
Statutory profit after tax including significant items
Profit after tax excluding significant items
Free cash flow4
Free cash flow per security (cents)
Earnings per security including significant items (cents)
Earnings per security excluding significant items (cents)
Distribution per security (cents)
Distribution payout ratio (%)5
Weighted average number of securities (millions)
30 June 2023
$m
30 June 2022
$m
2,913
512
2,401
1,725
12
(67)
(37)
47
15
(9)
1,686
(750)
936
(459)
–
477
(190)
287
287
1,070
90.7
24.3
24.3
55.0
60.6
1,180
2,732
496
2,236
1,692
(30)
(22)
(15)
12
–
(7)
1,630
(735)
895
(483)
28
440
(180)
260
240
1,081
91.6
22.1
20.4
53.0
57.9
1,180
Changes
$m
181
16
165
33
42
(45)
(22)
35
15
(2)
56
(15)
41
24
(28)
37
(10)
27
47
(10)
(0.9)
2.2
3.9
2.0
2.7
–
%1
6.6%
3.2%
7.4%
2.0%
140.0%
(204.5%)
(146.7%)
291.7%
–
(28.6%)
3.4%
(2.0%)
4.6%
5.0%
(100.0%)
8.4%
(5.6%)
10.4%
19.6%
(1.0%)
(1.0%)
10.0%
19.1%
3.8%
4.7%
–
1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric.
2 Pass-through revenue is offset by pass-through expense within EBITDA. Any management fee earned for the provision of these services is recognised
as part of asset management revenues.
3 Underlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes recurring items arising from other activities, transactions
that are not directly attributable to the performance of APA Group's business operations and significant items.
4 Free cash flow is Operating cash flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex
includes operational assets lifecycle replacement costs and technology lifecycle costs.
5 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow.
50
APA GROUP ANNUAL REPORT 2023 Business segment performance and operational review
APA's principal activities are as follows:
• Energy Infrastructure – APA’s wholly or majority owned energy infrastructure assets across gas transmission, compression,
processing, storage and electricity generation (gas and renewables) and transmission.
• Asset Management – The provision of asset management and operating services for third parties and the majority of APA’s
investments.
• Energy Investments – APA’s interests in energy infrastructure investments.
FY23 statutory reported revenue and underlying EBITDA performance of each segment
30 June 2023
$m
30 June 2022
$m
Changes
$m
%1
Revenue2
Energy Infrastructure
East Coast Gas
West Coast Gas
Wallumbilla Gas Pipeline
Electricity Generation and Transmission
Energy Infrastructure total
Asset Management
Energy Investments
Other non-contracted revenue
Total segment revenue (excluding pass-through)
Pass-through revenue
Wallumbilla Gas Pipeline hedge accounting discontinuation
Income on Basslink debt investment
Basslink AEMC market compensation
Unallocated revenue3
Total revenue
EBITDA
Energy Infrastructure
East Coast Gas
West Coast Gas
Wallumbilla Gas Pipeline4
Electricity Generation and Transmission
Energy Infrastructure total
Asset Management
Energy Investments
Corporate costs
Underlying EBITDA⁵
Fair value gains/(losses) on contracts for difference
Technology transformation projects
Wallumbilla Gas Pipeline hedge accounting unwind
Basslink debt revaluation, interest and acquisition costs
Basslink AEMC market compensation
Payroll Review
Total reported EBITDA6
808
369
622
409
805
342
581
354
2,208
2,082
114
23
8
2,353
512
(37)
50
15
20
115
28
13
2,238
496
(15)
12
–
1
2,913
2,732
645
305
620
223
1,793
56
23
(147)
1,725
12
(67)
(37)
47
15
(9)
646
289
578
194
1,707
73
28
(116)
1,692
(30)
(22)
(15)
12
–
(7)
1,686
1,630
3
27
41
55
126
(1)
(5)
(5)
115
16
(22)
38
15
19
181
(1)
16
42
29
86
(17)
(5)
(31)
33
42
(45)
(22)
35
15
(2)
56
0.4%
7.9%
7.1%
15.5%
6.1%
(0.9%)
(17.9%)
(38.5%)
5.1%
3.2%
(146.7%)
316.7%
–
1,900.0%
6.6%
(0.2%)
5.5%
7.3%
14.9%
5.0%
(23.3%)
(17.9%)
(26.7%)
2.0%
140.0%
(204.5%)
(146.7%)
291.7%
–
(28.6%)
3.4%
1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric.
2 Refer to Revenue Note 4 for additional disclosure on revenue streams from contracts with customers disaggregated by geographical location and major sources.
3
4 Wallumbilla Gladstone Pipeline is separated from East Coast Grid in this table as a result of the significance of its revenue and EBITDA in the Group.
Interest income is not included in calculation of EBITDA but nets off against interest expense in calculating net interest cost.
It is categorised as part of the East Coast Grid cash-generating unit for impairment assessment purposes.
Underlying FY23 EBITDA excluding the earnings from Basslink and the Orbost Gas Processing Plant was up 1.8% to $1,697m (FY22: $1,667m).
5
6 Excludes significant items.
51
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Performance
(continued)
Energy Infrastructure
In FY23, Energy Infrastructure is the largest business segment contributor to Group segment revenue at 93.8% (excluding pass-
through) and 95.7% of underlying EBITDA (before corporate costs).
Of this revenue:
• 88% was derived from either long-term, take-or-pay contracts or regulated assets, as shown below, providing predictability
and cash flow stability.
• 85% was derived from investment grade counterparties with a diversified customer base across the energy, utility, resources
and industrial sectors.
FY23 Energy Infrastructure
by Revenue Type
● Capacity charge revenue
● Regulated revenue
● Contracted fixed revenue
● Throughput charge and
other variable revenue
● Flexible short-term services
● Other
77%
8%
3%
10%
1%
1%
FY23 Energy Infrastructure Revenue
by Counterparty Credit Rating1
● A-rated or better
● BBB to BBB+ rated
● Investment grade
● Not rated
● Sub-investment grade
44%
34%
7%
10%
5%
FY23 Energy Infrastructure Revenue
by Customer Industry Segment
● Energy
● Utility
● Resources
● Industrial & other
46%
25%
25%
4%
̃88%
Take or pay/
regulated
̃85%
investment
grade
Diverse
source of
revenue
1
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.
52
APA GROUP ANNUAL REPORT 2023 Comparing FY23 performance to FY22
East Coast Gas
Underlying EBITDA benefited from higher inflation-linked revenues, a stronger contribution from the Victorian Transmission
System and some favorable short-term contracting. This was offset by higher costs including Young-Lithgow repairs, and a lower
contribution from the Orbost Gas Processing Plant which was sold in July 2022.
West Coast Gas
Underlying EBITDA largely benefited from higher inflation-linked revenues, partly offset by higher costs.
Wallumbilla Gladstone Pipeline
Underlying EBITDA benefited from a 7.5% increase in tariffs on 1 January 2023, partly offset by FX.
Electricity Generation and Transmission
A part-year contribution from Basslink drove higher earnings.
Energy Infrastructure Revenue by segment
(A$m)
2,500
Energy Infrastructure EBITDA by segment
(A$m)
2,000
2,000
1,500
1,000
500
0
1,600
1,200
800
400
0
FY20
FY21
● East Coast Gas
FY22
FY23
FY20
FY21
FY22
FY23
● West Coast Gas
● Wallumbilla Gladstone Pipeline
● Power Generation
Energy Infrastructure EBITDA by asset
(A$m)
FY23
FY22
FY21
FY20
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
● Roma Brisbane Pipeline
● Wallumbilla Gladstone Pipeline
● Diamantina Power Station
● Other QLD assets
● SESA Pipeline and other SA assets
● Orbost Gas Plant
● Carpentaria Gas Pipeline
● Moomba Sydney Pipeline
and other NSW pipelines
● GoldFields Gas Pipeline
● Other WA assets
● Emu Downs Wind and Solar Farms
● Pilbara Pipeline System
● South West Queensland Pipeline
● Victorian Systems
● Eastern Goldfields Pipeline
● Mondarra Gas Storage
and Processing Facility
● Amadeus Gas Pipeline
● Gruyere Power Station
● Badgingarra Wind and Solar Farms
● Darling Downs Solar Farm
53
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Performance
(continued)
Asset Management
In FY23, Asset Management contributed 4.8% to Group segment revenue (excluding pass-through) and 3.0% of underlying
EBITDA (before corporate costs).
APA’s major third-party customers are Australian Gas Networks Limited (AGN), Energy Infrastructure Investments (EII) and GDI,
who receive asset management services under long-term contracts.
The decrease in Asset Management EBITDA in FY23 compared to FY22 was driven by a combination of lower margin activities
and reduced customer contributions which fluctuate from one period to the next. Customer contributions for FY23 were
$15 million (FY22 $28 million).
Asset Management Revenue
(A$m)
120
Asset Management EBITDA
(A$m)
120
100
80
60
40
20
0
FY20
FY21
FY22
FY23
● Underlying Asset Management Revenue
● One-off Customer Contributions
Energy Investments
100
80
60
40
20
0
FY20
FY22
● Underlying Asset Management EBITDA
● One-off Customer Contributions
FY21
FY23
In FY23, Energy Investments contributed 1.0% to Group segment revenue (excluding pass-through) and 1.3% of underlying
EBITDA (before corporate costs). FY23 EBITDA was lower than in FY22 due to reduced equity income from SEA Gas as a result
of contract changes.
Asset and ownership interests
Asset details and APA services
Mortlake Gas Pipeline
SEA Gas Pipeline
North Brown Hill Wind Farm
Allgas Gas Distribution Network
50%
SEA Gas
(Mortlake)
Partnership
50%
South East
Australia
Gas Pty Ltd
20.2%
EII2
20%
GDI (EII)
83 km gas pipeline connecting the Otway
Gas Plant to the Mortlake Power Station
MAINTENANCE
Partners
REST
687 km gas pipeline from Iona and
Port Campbell in Victoria to Adelaide
REST
MAINTENANCE
132 MW wind farm
in South Australia
CORPORATE SERVICES
3,900 km Allgas gas distribution
114,000 connections
CORPORATE SERVICES
OPERATIONAL MANAGEMENT
Foresight
(ICG were taken
over in 2022)
Osaka Gas
Marubeni
Corporation
MM Midstream
Investments
Kogan North Processing Plant
Directlink and Murraylink Electricity
Interconnectors
Nifty and Telfer Gas Pipelines
Wickham Point and Bonaparte Gas Pipelines
19.9%
Energy
Infrastructure
Investments
Gas processing facilities 12 TJ/day
Electricity transmission 243 km
Gas pipelines totalling 786 km
CORPORATE SERVICES
OPERATIONAL MANAGEMENT
Corporate costs
Corporate costs excluding significant items for FY23 were higher than FY22 largely due to investment in capability and growth
including: technology and business resilience; regulatory, risk and compliance; sustainability and corporate affairs.
54
APA GROUP ANNUAL REPORT 2023
Capital and investment expenditure
In FY23, total capital and investment expenditure of $1,180 million was $96 million lower than in FY22, largely driven by the
remaining investment in Basslink in FY23 being lower than the investment in the senior secured debt of Basslink FY22. Outside
of this, in FY23 there was higher growth capex, as well as higher Stay in Business (SIB) capex compared to FY22.
Capital and investment expenditure for FY23
Description of major projects
Western Outer Ring Main (WORM), Winchesea
Compressor; Access Arrangement Allowed
Expenditure
East Coast Grid Stage 1, Kurri Kurri Gas Lateral
Northern Goldfields Interconnect
Dugald River Solar Farm; Gruyere Power Grid
VIC Estate, Road and Rail Projects
Capital and investment
expenditure1
Regulated
Non-Regulated
East Coast Gas
West Coast Gas
Electricity Generation
and Transmission
Customer contribution
projects and others
Total growth capex
SIB capex
Asset Lifecycle capex2
IT Lifecycle capex
Total SIB capex
Foundation capex
Technology and Other capex
Corporate Real Estate
Total Foundation capex
Total capital expenditure
Acquisitions and Investments
Total capital and investment expenditure
30 June 2023
$m
30 June 2022
$m
242
68
172
300
113
18
845
161
32
193
10
22
32
1,070
110
1,180
129
217
76
33
523
123
7
130
18
17
35
689
587
1,276
1 The capital expenditure shown in this table represents payments for property, plant, equipment and intangibles as disclosed in the cash flow
statement, and excludes accruals brought forward from the prior period and carried forward to the next period.
2 Represents Stay in Business capital expenditure not recoverable from customers and/or regulatory frameworks.
Regulated growth capital expenditure
• Western Outer Ring Main (WORM) project – The Pipeline Licence for the project was issued in May 2022 and approval
under the EPBC Act received in June 2022. Construction, which began in August 2022, progressed significantly during
the year with some delays to overall completion due to an exceptionally wet spring and some difficult ground conditions.
Completion and commissioning is now expected in Q1FY24. The Australian Energy Regulator (AER) included growth capital
expenditure for the WORM in the access arrangement decision in December 2022. The project will enhance gas security of
supply by supporting higher withdrawals in summer and injections in winter from the Iona Underground Storage Facility in
Victoria’s west.
• Winchelsea Compressor Station – In April 2022, APA reached a Final Investment Decision for a $60 million expansion
of the South-West Pipeline in the Victorian Transmission System. The project, to install an additional compressor facility
at Winchelsea Compressor Station, enabled additional capacity ahead of winter 2023 gas supply shortfalls highlighted
by the Australian Energy Market Operator (AEMO) in its 2022 Gas Statement of Opportunities (GSOO). Recognising the
critical importance of natural gas to Victoria’s energy system, APA has worked with the Australian Energy Regulator and the
Victorian Government to expedite the project. The project was completed and commissioned on schedule in Q4FY23.
55
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Performance
(continued)
Unregulated growth capital expenditure
East Coast Gas
• East Coast Grid Expansion – Stage 1 of the expansion works, increasing Wallumbilla to Wilton capacity by 12%, was
completed and commissioned in Q4FY23. This will help mitigate the forecast 2023 southern State winter supply risks
identified in the 2022 AEMO GSOO. Confirmation of Stage 2, which will add a further 13% of capacity, was announced in May
2022. Stage 2 is well advanced with major procurement complete and construction commenced on both the MSP and SWQP
sites in late FY23. The project is scheduled for commissioning ahead of the forecast potential winter 2024 shortfalls.
• Kurri Kurri Lateral Pipeline – On 20 June 2022, APA executed a Gas Transportation and Storage Agreement and a
Development Agreement with Snowy Hydro Limited to develop a 20 kilometre Kurri Kurri Lateral gas pipeline connection.
APA will build, own and operate the Kurri Kurri Lateral, connecting the Sydney to Newcastle Pipeline to the Hunter Power
Project at Kurri Kurri in New South Wales. The project includes a 70 TJ gas storage facility to service the Hunter Power
Project. During the year, the New South Wales Government approved the Environmental Impact Statement (EIS) for the
project. APA submitted an application for a pipeline licence in February which is expected to be issued in early FY24.
APA has secured an easement with all landowners along the pipeline alignment. Major procurement is complete and pipe
has arrived at Newcastle Port. Electric drive compressors will be used to minimise the emissions intensity of operations.
Construction contracts are expected to be awarded in early FY24 with project completion in 1HFY25 and ahead of the Hunter
Power station project completion.
West Coast Gas
Northern Goldfields Interconnect (NGI) – The NGI pipeline connects the Perth Basin to APA’s Goldfields Gas Pipeline and APA’s
Eastern Goldfields network. Construction of the pipeline and compressor station were both completed during the year and
commissioned in Q4FY23.
Power Generation
Gruyere Power Station Expansion and Hybrid Energy Microgrid – APA’s first hybrid energy microgrid investment will expand
the existing reciprocating gas-fired power station, with a 13MWp solar farm backed up by a 4.4MW/4.4MWh battery energy
storage system (BESS). The microgrid uses a hybrid control system to monitor and react to cloud movements, battery control
and the existing reciprocating engine control systems to optimise efficiency and maximise the use of renewable generation.
During the year, the expansion to the existing reciprocating gas-fired power station was completed and commissioned, and
the solar farm and BESS constructed. Commissioning and performance testing were completed on 31 July 2022. Total installed
capacity of the microgrid is 64MW (60MW of power generation and 4.4MW of battery storage).
Dugald River Solar Farm – Construction of the $150 million 88MW Dugald River Solar Farm (previously called Mica Creek Solar
Farm) was approved in March 2022. The project is underpinned by two offtake agreements – a 15-year solar offtake agreement
to supply renewable energy to the MMG Dugald River mine and a variation to an existing agreement with existing APA
customer, Mount Isa Mines Limited, to supply renewable energy for 15 years. As part of the project, APA entered into a 32-year
lease agreement with the Queensland Government to locate the Dugald River Solar Farm near the Diamantina Power Station
Complex. The solar farm was completed during the year and successfully connected and commissioned in Q4FY23.
Prospective projects
In FY23, APA progressed preliminary work on several other large projects including:
•
• Beetaloo Basin, Northern Territory – In FY22, APA entered a non-binding MOU with Empire Energy to progress feasibility
studies on APA providing processing and transportation infrastructure for Empire Energy’s Beetaloo and McArthur Basins
Project. Through FY23, APA continued to engage with Empire Energy to develop infrastructure requirements to support
Empire’s early project concepts in the Beetaloo Basin. In FY23, APA entered an initial agreement with Tamboran Resources
to progress the connection of Tamboran’s proposed Beetaloo Basin production projects to APA’s gas transmission assets.
Under the agreement, APA commenced early land access and approvals, and pre-engineering studies to develop a gas
pipeline from Tamboran’s proposed Shenandoah South project to the Amadeus Gas Pipeline. APA also commenced early
work to develop a large-volume, open access pipeline from the Beetaloo Basin to APA’s South West Queensland Pipeline,
facilitating the connection of Beetaloo Basin gas to APA’s East Coast Gas Grid.
• Gabanintha Vanadium Project, Western Australia – During the year, APA progressed the non-binding MOU with a customer
for gas transportation services along a proposed 150 kilometre long new pipeline to supply gas to the Gabanintha Vanadium
Project. In June 2022, APA entered into an Early Works Agreement to progress early work activities for the proposed
pipeline, including confirming the pipeline route, preparing appropriate licences, initial engineering design and identifying
long lead procurement items.
56
APA GROUP ANNUAL REPORT 2023 Financing Activities
Capital management
At 30 June 2023, APA had 1,179,893,848 securities on issue. This is unchanged from 30 June 2022.
Debt facilities
At 30 June 2023, APA had $11,241 million of drawn debt facilities (compared with $11,146 million at 30 June 2022). APA’s debt
portfolio has a broad spread of maturities across the global debt capital markets extending out to FY36, with an average
maturity of drawn debt of 5.7 years. APA’s Treasury Policy requires interest rate hedging to minimise the potential impacts from
adverse movements in interest rates. At year end, 100% of interest obligations on gross drawn borrowings was either hedged
into or issued at fixed interest rates for varying periods extending out to 2036.
In FY23, APA raised AUD $1.6 billion of bilateral facility agreements from leading Australian and overseas banks, replacing
$1.3 billion of the previous existing facilities. The new bilateral facility agreements comprise of 3-year, 4-year and 5-year tenors
which remain undrawn at 30 June 2023. The purpose of the bilateral agreements is to provide access to facilities for general
corporate purposes.
Interest costs
During the year, net finance costs decreased by $24 million or 5.0%, to $459 million (FY22: $483 million). The average interest
rate1, including credit margins, applying to drawn debt was 4.43% for FY23 (FY22: 4.42%). The decrease is due to higher average
cash balances and higher market interest rates facilitating higher interest income offsetting interest expense. Most of APA’s debt
obligations were either issued at fixed rates or hedged at lower interest rates because they were issued in the lower interest rate
environment prior to 2022.
Credit ratings
During the year, APA Infrastructure Limited (APAIL), the borrowing entity of APA, maintained two investment grade credit ratings:
• BBB long-term corporate credit rating (outlook Stable) assigned by Standard & Poor’s (S&P) in June 2009, and last confirmed
on 31 January 2023.
• Baa2 long-term corporate credit rating (outlook Stable) assigned by Moody’s Investors Service (Moody’s) in April 2010, and
last confirmed on 20 March 2023.
APA calculates the Funds From Operations (FFO) to Interest to be 3.3 times (FY22: 3.6 times) and FFO to Net Debt to be 10.6%
for FY23 (FY22: 11.1%).
FFO to Net Debt is the key quantitative measure used by S&P and Moody’s to assess APA’s creditworthiness and credit rating2.
Capital management strategy
APA’s four-pillar capital management strategy positions APA for its next phase of growth. It comprises:
• Securityholder returns – focus on maximising available free cash flow and distributions
• Access to capital – maintain investment grade credit metrics and a diverse source of funding
• Capital allocation – make disciplined investments aligned to strategy and investment hurdles that drive long-term value
• Risk management – use a funding strategy focused on diversification, tenor and maturities, with Treasury policies that
support strong liquidity and reduce volatility
Income tax
Income tax expense for FY23 of $190 million resulted in an effective income tax rate of 39.8%, compared with 40.9% in the
previous year. The high effective rate is due to significant amortisation charges relating to contract intangibles acquired with
the Wallumbilla Gladstone Pipeline. These are not tax deductible.
In FY23 APA has deducted $902 million of capital expenditure as part of the Government’s Temporary Full Expensing measures
and as a result, the FY23 cash tax payable is $0. The effective cash tax paid rate is 0% for the FY23 income tax year, compared
with 20.3% in FY22.
APA has published a Tax Transparency Report, including a reconciliation of profit to income tax payable.
To assist APA securityholders who wish to submit their annual tax return before receiving their annual APA Tax Statement
in mid- September, APA has an indicative online tax estimator tool which is available on the Investor page on APA’s website.
1 The average interest rate is now calculated using period end FX and hedged rates to better reflect actual debt outstanding at period end (comparative
year has also been restated). Based on the previous methodology, average interest was 4.59% in FY22.
2 The credit metric ratios are now calculated to be more closely aligned with credit rating agency methodology (comparatives have also been restated).
Based on the previous methodology, FFO/Net debt was 11.5% for the 12 months to 30 June 2022. FFO/Interest is unchanged at 3.6 times for the
12 months to 30 June 2022.
57
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Performance
(continued)
Distributions
Final FY22 distribution –
paid 14 September 2022
Interim FY23 distribution –
paid 16 March 2023
Cents per
security
Total
distribution
$m
Cents per
security
Total
distribution
$m
APA Infrastructure Trust franked profit distribution
APA Infrastructure Trust unfranked profit distribution
APA Infrastructure Trust capital distribution
APA Investment Trust profit distribution
APA Investment Trust capital distribution
Franking credits allocated
6.31
–
15.40
1.14
5.15
28.00
2.70
APA Infrastructure Trust franked profit distribution
APA Infrastructure Trust unfranked profit distribution
APA Infrastructure Trust capital distribution
APA Investment Trust profit distribution
APA Investment Trust capital distribution
Franking credits allocated
The Distribution Reinvestment Plan remains suspended.
74
–
182
13
61
330
32
8.50
7.42
6.67
1.01
2.40
26.00
3.64
100
89
79
12
28
308
43
Final FY23 distribution -
payable 13 September 2023
Cents per
security
Total
distribution
$m
–
6.64
15.02
1.00
6.34
29.00
–
–
79
177
12
74
342
–
58
APA GROUP ANNUAL REPORT 2023 Outlook
Distributions outlook
APA anticipates a FY24 distribution of 56.0 cents per security1, representing a 1.8% increase on the prior period.
As part of the energy supply chain, APA can be affected by regulatory changes, economic downturns and reductions
in energy demand. Given market conditions are not certain, APA’s revenues will continue to be subject to regulatory
dynamics, customer recontracting and investment decisions.
Looking ahead, APA is in a strong position to continue executing its growth program, investing for the long-term energy
needs of its customers.
1 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory changes as well as timing of distributions from
non-100% owned assets, with distributions to be determined at the Board’s discretion. It does not take into account the impact of any potential
acquisitions or divestments by APA and any associated funding arrangements, other than the acquisition of Alinta Energy Pilbara and the
associated Placement and Security Purchase Plan announced today.
59
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Governance
Robust corporate governance policies and practices
facilitate the responsible creation of long-term value for
securityholders and help APA to meet the expectations of
other stakeholders.
APA comprises two registered managed investment
schemes, APA Infrastructure Trust and APA Investment
Trust, the securities of which are ‘stapled’ together and
traded on the ASX.
APA Group Limited is the responsible entity of those
trusts and is responsible for APA’s corporate governance
practices.
The Board and our Executive Leadership Team are
committed to conducting APA’s business in accordance
with high standards of corporate governance. We believe
robust corporate governance policies and practices help
APA to create long-term value for securityholders and to
meet the expectations of other stakeholders.
Because of our stapled trust structure, there are certain
governance and remuneration-related obligations under
the Corporations Act and the ASX Listing Rules that do not
apply to us.
In line with the Board’s commitment to high standards
of corporate governance, we have:
• adopted a Corporate Governance Framework
(1 July 2017); and
• entered into a related Deed Poll (adopted in 2004
and amended in 2011),
which together are designed to ensure that APA’s
corporate governance regime is consistent, as far as is
practicable, with the best practice procedures of public
listed companies.
APA complies with each of the recommendations of
the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (Fourth
Edition). The Board periodically reviews and approves
material corporate governance principles, policies and
procedures in line with market practice, the expectations
of our stakeholders and regulatory developments.
Our 2023 Corporate Governance Statement provides
further information about our approach to governance
during FY23.
Role of the Board
The Board of APA is responsible for the proper
management of APA’s business and affairs. The Board’s
primary role is to approve APA’s strategic intent, provide
leadership and effectively oversee the implementation
of strategy and a system of risk management. To assist
it in carrying out its responsibilities, the Board has
established five standing committees, each with its own
charter approved by the Board. In addition, the Board has
delegated responsibility for the day-to-day management
of APA to the Managing Director and Chief Executive
Officer and other members of the Executive Leadership
Team subject to the Delegations of Authority Policy, as
amended by the Board from time to time.
The specific responsibilities of the Board and each
standing committee are detailed in APA’s Corporate
Governance Statement. Copies of our Corporate
Governance Framework and related Deed Poll can
be found on our website at apa.com.au.
60
APA GROUP ANNUAL REPORT 2023
OUR CORPORATE GOVERNANCE FRAMEWORK
BOARD
Audit and Finance
Committee
Risk
Management
Committee
Safety and
Sustainability
Committee
People and
Remuneration
Committee
Nomination
Committee
CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR
EXECUTIVE LEADERSHIP TEAM
61
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION APA Group Board
Michael Fraser
BCom FCPA MAICD
Independent Chairman
Appointed 1 September
2015 Appointed Chairman
27 October 2017
Michael Fraser is the Chairman of APA Group and brings to the Board more than
35 years’ experience in the Australian energy and infrastructure sectors.
Michael has an extensive background in all aspects of the Australian energy
market, including with the development of renewable energy projects and
related firming infrastructure. Michael has held various executive positions at
AGL Energy, including the role of Managing Director and Chief Executive Officer
for a period of seven years to February 2015.
Adam Watson
BBus FCPA GAICD
Chief Executive Officer
and Managing Director
Appointed 19 December
2022
James Fazzino
BEc (Hons) FCPA
Independent Director
Appointed 21 February
2019
Debra (Debbie)
Goodin
BEc FCA MAICD
Independent Director
Appointed 1 September
2015
Michael is a current Director of Orora Limited. He is a former Chairman of the
Clean Energy Council, Elgas Limited, ActewAGL and the NEMMCO Participants
Advisory Committee, as well as a former Director of Aurizon Holdings Limited,
Queensland Gas Company Limited, the Australian Gas Association and the
Energy Retailers Association of Australia.
Michael is Chair of the Nomination Committee and a member of the Safety and
Sustainability Committee.
Adam Watson was appointed Chief Executive Officer and Managing Director
in December 2022. He joined APA Group in November 2020 as Chief Financial
Officer (CFO).
In his role as CFO, Adam was responsible for APA’s technology, finance,
taxation, treasury and capital markets, risk, cyber and physical security,
procurement, real estate and shared services activities.
Adam has deep local and international experience in the industrial and
manufacturing sectors and in the development, delivery and operations of
critical infrastructure. He previously held senior executive roles at Transurban,
Australia’s largest infrastructure business, along with Melbourne Airport and
BlueScope Steel. Adam has deep experience in public private partnerships
and his senior leadership roles have spanned finance, commercial, strategy,
corporate development and operations.
James Fazzino brings to the Board extensive local and international experience
in industrial, manufacturing and emerging energy markets.
James held the role of Managing Director and Chief Executive Officer at
Incitec Pivot Limited for eight years up until 2017. In this role he built significant
experience in sustainability and in the safe operation of high hazard and high-
risk facilities in remote locations. James also has experience building strategic
customer relationships and in the delivery of world scale hydrogen projects.
James is currently the Chair of Manufacturing Australia and a Director of
Rabobank Australia Limited. He is also a convenor of the Champions of Change
Coalition, a group of senior business executives focussed on gender equality
and inclusive workplaces. He was formerly the Chairman of Tassal Group Limited
and Osteon Medical.
James is Chair of the Safety and Sustainability Committee, and a member of the
Audit and Finance Committee and the Risk Management Committee.
Debra (Debbie) Goodin brings to the Board experience in the infrastructure,
construction, engineering services and energy sectors as both a senior executive
and director.
Debbie has held senior finance, operations and corporate development roles
in both the private and public sectors, including as a chief financial officer and
chief operating officer. As an experienced non-executive director, Debbie has
local and global experience in organizational leadership, financial management,
operations and risk management and as chairman and audit and risk committee
chair of organisations in the infrastructure and service delivery sectors.
Debbie is currently Chairman of Atlas Arteria Limited and a Director of
Ansell Limited. She was formerly a Director of oOh!media Limited, Senex
Energy Limited, Ten Network Holdings Limited and Australia Pacific Airports
Corporation Limited.
Debbie is Chair of the Audit and Finance Committee and a member of the
Risk Management Committee and the Safety and Sustainability Committee.
62
APA GROUP ANNUAL REPORT 2023 Shirley In’t Veld
BCom LLB (Hons)
Independent Director
Appointed 19 March 2018
Shirley In’t Veld brings to the Board over 30 years’ experience in the resources
and energy sectors, including as Managing Director of Verve Energy and more
than 10 years in senior roles at Alcoa Australia Limited, WMC Resources Limited,
Bond Corporation and BankWest.
Shirley is currently a Non-executive Director with Alumina Limited, Develop
Global Limited and Karora Resources Inc. She was formerly Deputy Chair of
CSIRO, a Non-executive Director of NBN Co Limited, Northern Star Resources
Limited, Perth Airport, DUET Group, Alcoa of Australia Limited and Asciano
Limited, where she was Chair of the Sustainability Committee. Shirley was also
formerly a member of the Federal Government’s Renewable Energy Target
Review Panel.
Shirley is a member of the People and Remuneration Committee, the Safety and
Sustainability Committee and the Nomination Committee.
Rhoda Phillippo
MSc Telecommunications
Business GAICD
Independent Director
Appointed 1 June 2020
Rhoda Phillippo brings to the Board over 30 years of local and international
experience in the telecommunications, technology and energy sectors.
Rhoda has held senior executive roles in the telecommunications, IT and
energy sector in the UK, NZ and Australia including as Managing Director of
Lumo Energy. She also has significant experience in infrastructure mergers and
acquisitions in Australia and overseas.
Rhoda is currently Chairperson of Kinetic IT Pty Ltd, and a Non-executive
Director with Dexus Funds Management Ltd and Waveconn Group Holdings
Management Pty Ltd. She is also an advisor to the Board of Tally Group, an
energy billing solutions provider.
She is formerly a Non-executive Director of Pacific Hydro, Datacom Group
Limited, Vocus Group Ltd and LINQ, the Chairman of Snapper Services in
New Zealand and Deputy Chair of Kiwibank in New Zealand.
Rhoda is Chair of the Risk Management Committee, and a member of the
Audit and Finance Committee and the People and Remuneration Committee.
Peter Wasow
BCom GradDip
(Management) Fellow
(CPA Australia)
Independent Director
Appointed 19 March 2018
Peter Wasow brings to the Board significant global experience in the energy
and resources sectors as both a senior executive and director. He retired as
Managing Director and Chief Executive Officer of Alumina Limited in 2017 and
previously held senior executive positions at Santos Limited and BHP.
Peter was formerly a Non-executive Director of Alcoa of Australia Limited,
AWA Brazil Limitada, AWAC LLC, Alumina Limited, Oz Minerals Limited and the
privately held GHD Group.
Peter is Chair of the People and Remuneration Committee and a member of the
Audit and Finance Committee and the Risk Management Committee.
63
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION APA Executive Leadership
Kynwynn Strong
BEng(Hons), BSc, MAppFin
Acting Chief Financial
Officer
Amanda Cheney
LLB (Hons) BArts FGIA
Group Executive Legal
and Governance
Stuart Davis
BEng (Hons) BCom, MAICD
Acting Group Executive
Operations
Ross Gersbach
BBus
Group Executive
Strategy and Corporate
Development
Kynwynn Strong is APA Group’s acting Chief Financial Officer.
Kynwynn has over 20 years’ experience in financial markets, finance and strategy,
including holding senior roles for over a decade at a leading multinational
investment bank and in financial services companies.
Kynwynn joined APA in 2022 and is responsible for governance of APA's financial
systems, plans, processes and procedures, strategic programs, and leads the
group’s technology, risk and compliance functions.
Amanda Cheney is responsible for APA Group’s legal and company secretariat
functions.
Amanda has over 20 years’ experience advising on major energy and
infrastructure projects in Australia and internationally. She joined APA more than
10 years ago and has played a pivotal role in driving transformation and growth in
a range of projects across the business.
Prior to joining APA, Amanda worked as a lawyer in private practice with leading
law firms in Australia and Japan.
Amanda is a Fellow of the Governance Institute of Australia.
Stuart Davis is responsible for the operations of APA Group’s infrastructure
portfolio.
Stuart has over 20 years’ experience in the power, electricity transmission and oil
and gas sectors, in senior leadership roles including in operations, engineering
and commercial both in Australia and overseas.
Stuart is responsible for the operations, maintenance, stay in business capital
projects and asset management of APA’s infrastructure portfolio that spans
electricity and gas transmission, renewable power generation, and gas
distribution networks. Stuart joined APA in 2017 and previously held the roles of
General Manager, Engineering and Planning, and General Manager, Operations
and Maintenance.
Ross Gersbach is responsible for APA Group’s strategy, market analytics,
corporate development, and regulation and policy functions.
Ross has over 25 years’ experience in senior commercial positions across a
range of energy-related sectors, covering infrastructure investments, mergers
and acquisitions, strategic development and the management of energy
infrastructure assets.
Ross joined APA in 2008 and has previously held several leadership positions,
including Chief Executive, Strategy and Corporate Development.
Kevin Lester
BEng MIEAust CPEng
EngExec GAICD
Kevin Lester is responsible for APA Group’s Infrastructure Delivery division,
including the planning, approvals, engineering, procurement, construction and
commissioning of the company’s growth projects.
Group Executive
Infrastructure Delivery
Kevin has over 35 years’ experience across the mining, resources and energy
sectors managing the delivery of major infrastructure projects.
Kevin joined APA over 10 years ago and is responsible for supporting APA's
$22 billion portfolio of assets, developing and delivering growth projects, and
managing APA’s Pathfinder program, which pursues innovation, technology and
new energy opportunities.
Kevin is a Director and a past President of the Australian Pipelines and Gas
Association.
64
APA GROUP ANNUAL REPORT 2023 Elizabeth (Liz)
McNamara
BEc (Hons), PCSB, GAICD
Group Executive
Sustainability and
Corporate Affairs
Darren Rogers
BEng MEng MBA GAICD
Group Executive
Energy Solutions
Jane Thomas
BBus LLB (Hons) MPsychol
(org) GAICD Fellow AHRI
Group Executive
People, Safety and
Culture
Vin Vassallo
Group Executive
Electricity Transmission
Liz Joined APA Group in November 2022 as Group Executive Sustainability and
Corporate Affairs.
Liz has 25 years’ experience in corporate affairs and leadership roles across
large public service and ASX-listed organisations, including in energy, mining,
investment banking and transport.
Liz joined APA in 2022 to lead the company’s Sustainability and Corporate Affairs
division and is responsible for the development and execution of APA’s climate
change and sustainability, government and industry relations, communications
and brand functions.
Darren Rogers is responsible for APA Group’s customer, business development
and commercial functions, along with the company’s work in future fuels,
including APA’s Pathfinder program.
Darren has almost 30 years’ experience across the energy sector working in
large and complex businesses, including in senior commercial, operations,
engineering and asset management roles.
Darren joined APA in 2017 and previously held the role of Group Executive,
Operations, responsible for the safe operations, maintenance and asset
management of the company’s infrastructure portfolio, including gas and
electricity transmission, renewable power generation, and gas distribution
networks.
Jane Thomas is responsible for APA Group’s health, safety, environment and
heritage systems, and people and culture functions.
Jane has 30 years’ experience across industries spanning energy, mining,
banking and finance, retail and manufacturing.
Jane joined APA in 2021 and has driven a strengthened focus on culture and
business transformation across the organisation. Prior to joining APA, Jane held
senior leadership roles in major ASX-listed organisations and multinational global
companies, leading people, health, safety, environment, community and legal
functions.
Vin Vassallo is responsible for APA Group’s Electricity Transmission division.
Vin has more than 30 years’ experience in leading the development and delivery
of infrastructure both in Australia and North America, including under Private
Public Partnerships, and managing business teams in complex environments.
Vin joined APA in 2022 and is responsible for the development of new business
in electricity transmission and distribution, with a focus on contracted and
regulated electricity transmission infrastructure.
65
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Governance
(continued)
Ethics and integrity
Reports and incidents
Key policies governing ethics and integrity at APA include:
• Code of Conduct: Our Code brings our purpose and
culture to life so we can make the right choices every
day. It is underpinned by our behaviours of being
courageous, accountable, nimble, collaborative and
impactful. It includes principles and business standards
that support safety, anti-harassment, anti-bullying, anti-
discrimination, human rights, community engagement,
environmental protection, anti-corruption and data
privacy and security, and prevent anti-competitive
behaviour.
•
Inclusion and Diversity Policy (including Equal
Employment Opportunity): Our commitment and
strategy to building a diverse, equitable and truly
inclusive workplace where everyone belongs, and
feels valued, and respected to bring their best selves
to work.
• Anti-Bribery and Corruption Policy: Our commitment
to fostering business integrity including detecting and
preventing bribery, corruption and fraud.
• Whistleblower Policy: This policy creates a safe and
protected environment to escalate potential matters
of concern and suspected wrong doing for those
working with and for APA, including our employees,
contractors, suppliers and consultants.
• Respect@Work Procedure: Our commitment to
providing and fostering an inclusive and respectful
workplace with safe, fair and positive working
conditions. APA has zero tolerance for any form of
harmful behaviour including unlawful discrimination,
bullying, harassment, sexual harassment, sex-based
harassment, vilification, victimisation and other
inappropriate behaviour.
• Health, Safety, Environment and Heritage Policy:
Our aspiration to not just respect the past but protect
values for the future. We do this by protecting the
health, safety and wellbeing of our people; and the
environment, heritage and the communities in which
we operate.
These policies are supported by standards that set out
performance requirements, and detailed procedures. They
are periodically reviewed to ensure they remain relevant
and are made available on APA’s website and intranet.
APA’s Anti-Bribery and Corruption Policy prohibits bribery
and corruption in any form. The Policy mandates our anti-
bribery and corruption program and covers approvals for
gifts, sponsorships, donations and entertainment, and
third-party due diligence, and provides for monitoring
and reporting.
We maintain a Whistleblower Line through an externally
managed disclosure service as an independent, impartial
and confidential means of reporting potential incidents.
Through the Whistleblower Line and our internal reporting
channels, we identify and record material breaches of
the APA Code of Conduct and any actual or potential
incidents relating to fraud, bribery or corruption.
Awareness activities of the Whistleblower Policy and the
independent hotline continued through FY23 with the
number of reports decreasing in the reporting period. All
allegations are investigated in accordance with our Policy.
APA recorded zero incidents of fraud, bribery or corruption
in FY23 and received no fines for non-compliance with any
laws or regulations related to bribery or corruption.
There were 10 material breaches of the APA Code of
Conduct, relating to unacceptable behaviour, breach
of key policies and sexual harassment, in FY23. Each
incident was fully investigated, with performance
management actions put in place. The Risk Management
Board committee was fully informed of all incidents
and outcomes.
Political donations
In FY23, APA remained a member of the Federal Labor
Business Forum and the Liberal Party of Australia’s
Australian Business Network. These business-focused
political forums are part of the APA stakeholder
engagement program.
APA does not permit direct political donations to any
political party, representative or candidate.
66
APA GROUP ANNUAL REPORT 2023 Membership of associations
APA participates in business and industry associations where there is an opportunity to provide business leadership
on national issues, insights and advocacy to public policy processes, and contribute to the enhancement of industry
standards through the exchange of best practice learning and development.
FY23 associations
FY23 signatories
• Australian Climate Leaders Coalition
1. United Nations Global Compact
2. Energy Charter
3. Methane Guiding Principles
• Australian Hydrogen Council
• Australian Pipeline and Gas Association
• Bell Bay Advanced Manufacturing Zone
• Business Council of Australia
• CEDA
• Chamber of Minerals and Energy of WA
• Champions of Change Coalition
• Clean Energy Council
• Committee for Gippsland
• Diversity Council of Australia
• Energy Charter
• Energy Club NT
• Energy Club of WA
• Energy Networks Australia
• Energy Users Association of Australia
• Gas Energy Australia
• Materials and Embodied Carbon Leaders’ Alliance
• MITEZ
• Regulatory Policy Institute
• Safer Together
• South Australian H2 Hub
• The Global Compact Network Australia
• Toowoomba Surat Business Enterprise
67
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Directors’ Report
The Directors of APA Group Limited (the Responsible Entity) submit their report of APA Infrastructure Trust (APA Infra) and
its controlled entities (together, APA or Consolidated Entity) for the financial year ended 30 June 2023. This report refers
to the consolidated results of APA and APA Investment Trust (APA Invest).
Directors
The names of the Directors of the Responsible Entity during the year and since year end are:
Current Directors
First Appointed
Michael Fraser
Adam Watson
1 September 2015 and appointed Chairman 27 October 2017
30 September 2022 appointed Acting Chief Executive Officer and appointed
permanent Chief Executive Officer and Managing Director 19 December 2022
James Fazzino
21 February 2019
Debra (Debbie) Goodin
1 September 2015
Shirley In’t Veld
Rhoda Phillippo
Peter Wasow
19 March 2018
1 June 2020
19 March 2018
Steven (Steve) Crane
1 January 2011. Retired 15 September 2022.
Robert (Rob) Wheals
6 July 2019 appointed Chief Executive Officer and Managing Director. Resigned 30 September 2022.
Nino Ficca has been appointed a Director, effective 1 September 2023.
The Company Secretaries of the Responsible Entity during the year were Amanda Cheney and Bronwyn Weir (who was
appointed 19 June 2023).
Executive Leadership changes:
• On 30 September 2022, Rob Wheals resigned as Chief Executive Officer (CEO)
• On 30 September 2022, Adam Watson was appointed as the Acting Chief Executive Officer (CEO)
• On 19 December 2022, Adam Watson was appointed as the Chief Executive Officer and Managing Director (CEO)
• On 20 August 2022, Julian Peck resigned as Group Executive Strategy and Commercial
• On 25 August 2022, Darren Rogers started secondment as the new Group Executive Strategy and Commercial
• On 17 October 2022, Darren Rogers was appointed as the new Group Executive Strategy and Commercial
• On 1 November 2022, Liz McNamara was appointed to the newly created role of Group Executive Sustainability and
Corporate Affairs
• On 2 November 2022, Vin Vassallo was appointed to the newly created role of Group Executive Electricity
Transmission Development
With the internal promotion of Adam Watson and Darren Rogers, the following two appointments have been made
commencing in FY24.
• Chief Financial Officer (CFO) – Garrick Rollason appointed as CFO effective October 2023, Kynwynn Strong to
remain as acting until Garrick’s commencement date
• Group Executive Operations – Petrea Bradford appointed as Group Executive of Operations effective 28 August 2023,
Stuart Davis to remain as acting until Petrea’s commencement date
68
APA GROUP ANNUAL REPORT 2023APA Infrastructure Trust and its Controlled Entities Directors’ Report Subsequent events
Alinta Energy Pilbara acquisition
On 23 August 2023, APA entered into a Share Sale Agreement with Alinta Power Cat Pty Ltd and Alinta Energy
Development Pty Ltd to acquire 100% of Alinta Energy Pilbara Holdings Pty Ltd and its subsidiaries and Alinta Energy
(Newman Storage) Pty Ltd (together referred to as Alinta Energy Pilbara). Alinta Energy Pilbara is an energy infrastructure
business underpinned by contracted operational assets (gas and solar power generation, gas transmission, battery
energy storage systems (BESS) and electricity transmission), together with an extensive development pipeline of projects
(wind, solar, gas reciprocating engines, BESS, and associated electricity transmission), located in Western Australia’s
Pilbara region.
The enterprise value is $1,722 million excluding stamp duty and other transaction costs (currently estimated to be $86
million), and will be subject to post-completion adjustments for working capital, net debt and capex as at completion of
the acquisition. Completion of the acquisition remains subject to meeting certain conditions precedent and is expected to
occur in the fourth quarter of calendar year 2023.
Capital raise
APA also announced its plans to raise $675 million through a fully underwritten pro-rata institutional placement to partly
fund the acquisition. The balance of the purchase price will be funded by new debt facilities established in connection
with the acquisition of $993 million. In addition, a non-underwritten Security Purchase Plan will be undertaken for eligible
securityholders to raise $75 million.
Final distribution declaration
On 23 August 2023, the Directors declared a final distribution of 29.0 cents per security ($342 million) for APA Group,
an increase of 3.6%, or 1.0 cent per security over the previous corresponding period (30 June 2022: 28.0 cents). This
comprises a distribution of 21.66 cents per security from APA Infrastructure Trust and a distribution of 7.34 cents per
security from APA Investment Trust.
The APA Infrastructure Trust distribution represents 6.64 cents per security unfranked profit distribution and 15.02 cents
per security capital distribution. The APA Investment Trust distribution represents a 1.00 cent per security unfranked profit
distribution and 6.34 cents capital distribution. The distribution is expected to be paid on 13 September 2023.
Other than noted above and as disclosed elsewhere in this report, in the interval between 30 June 2023 and the date of
this report, no matter or circumstance 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.
Principal activities
Information on the principal activities of the Group and its business strategies and prospects is set out on page 51 of the
Annual Report and forms part of this Directors’ Report.
Operating Financial Review
Information on the operations and financial position of the Group and its business strategies and prospects is set out
on pages 9 to 58 of the Annual Report and forms part of this Directors’ Report.
69
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONAPA Infrastructure Trust and its Controlled Entities Directors’ Report Directors
Information on Directors and Company Secretary
For information relating to the qualifications and experience of Directors and Company Secretary refer to pages 62 to 64.
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:
Name
Company
Period of directorship
Michael Fraser
Aurizon Holdings Limited
February 2016 to February 2022
Adam Watson
James Fazzino
Debra Goodin
Orora Limited
–
Tassal Group Limited
Senex Energy Limited
Atlas Arteria Limited
Ansell Limited
Since April 2022
–
May 2020 to November 2022
May 2014 to November 2020
Since September 2017, Chair since November 2020
Since December 2022
Shirley In’t Veld
Northern Star Resources Limited
September 2016 to June 2021
Alumina Limited
Since August 2020
Develop Global Limited
(formerly Venturex Resources Limited)
Karora Resources Inc
Since July 2021
Since December 2021
Dexus Funds Management Limited
Since February 2023
Oz Minerals Limited
November 2017 to May 2023
Rhoda Phillippo
Peter Wasow
Directors Meetings
During year, the Board reviewed the roles and responsibilities of the Board and its Committees and made the following
changes:
• The Health, Safety, Environment and Heritage Committee was renamed the Safety and Sustainability Committee
• The Audit and Risk Committee was divided into the Audit and Finance Committee and the Risk Management Committee
Further information on the Board and Committees can be found in APA’s Corporate Governance Statement which is
available on our website.
During the year, 11 Board meetings, three Risk Management Committee meetings, three Audit and Finance Committee
meetings, five People and Remuneration Committee meetings, four Safety and Sustainability Committee meetings, and four
Nomination Committee meetings were held. The Committee previously known as the Audit and Risk Committee met once.
Board
People and
Remuneration
Audit & Finance
Risk
Management
Audit and Risk
Management1
Safety and
Sustainability
Nomination
Directors
Michael Fraser
Adam Watson2
Robert Wheals3
Steven Crane4
James Fazzino
Debra Goodin
Shirley In’t Veld
Rhoda Phillippo
Peter Wasow
A
11
5
2
2
11
11
11
11
11
B
11
5
2
2
11
11
11
11
10
A
–
–
–
1
–
–
5
5
5
B
–
–
–
1
–
–
5
5
5
A
–
–
–
–
3
3
–
3
3
B
–
–
–
–
3
3
–
3
3
A
–
–
–
–
3
3
–
3
3
B
–
–
–
–
3
3
–
3
3
A
1
–
–
1
1
1
–
–
1
B
1
–
–
1
1
1
–
–
1
A
4
–
–
–
4
4
4
–
–
B
4
–
–
–
4
3
4
–
–
A
4
–
–
1
–
4
3
–
–
B
4
–
–
1
–
3
3
–
–
1 The Audit and Risk Management Committee was dissolved on 14 October 2022 and replaced by the Audit and Finance Committee and
the Risk Management Committee.
2 Adam Watson appointed as a Director on 19 December 2022.
3 Robert Wheals resigned as a Director on 30 September 2022.
4 Steven Crane retired as a Director on 15 September 2022.
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.
70
APA GROUP ANNUAL REPORT 2023APA Infrastructure Trust and its Controlled Entities Directors’ Report
Directors’ security holdings
The aggregate number of APA securities held directly, indirectly or beneficially by Directors or their related entities
at 30 June 2023 is 282,388.
Directors’ relevant interests in APA securities
Directors
Michael Fraser
Adam Watson1
Debra Goodin
James Fazzino
Shirley In’t Veld
Peter Wasow
Rhoda Phillippo
Robert Wheals2
Steven Crane2
Fully paid securities at
1 July 2022
Securities acquired
Securities disposed
Fully paid securities at
30 June 2023
102,942
55,556
24,179
30,751
25,000
26,000
10,000
108,721
30,000
–
–
–
–
–
–
7,960
52,213
–
–
–
–
–
–
–
–
–
–
102,942
55,556
24,179
30,751
25,000
26,000
17,960
160,934
30,000
1 Adam Watson was appointed as a Director effective 19 December 2022 at which time he held 55,556 securities.
2 Balance as at date of ceasing to be a Director.
As at 30 June 2023, Adam Watson held 397,255 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 section 8 of APA’s Remuneration Report.
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.
Options granted
No options over unissued APA securities were granted during or since the end of the financial year. No unissued APA
securities were under option at the date of this report. No APA securities were issued during or since the end of the
financial year as a result of an option being exercised over unissued APA securities.
Indemnification of Officers
During the year, the Responsible Entity paid a premium on a contract insuring the Directors and Officers of any APA
Group entity against certain liability incurred in performing those roles. The contract of insurance prohibits disclosure
of the specific nature of the liability and the amount of the premium.
APA Group Limited, in its own capacity and as responsible entity of APA Infra and APA Invest, 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, APA Group 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.
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Remuneration Report
The Remuneration Report is set out on pages 74 to 91 of the Annual Report and forms part of this Directors’ Report.
Auditors
Auditor’s independence
A copy of the independence declaration of the auditor, Deloitte Touche Tohmatsu, as required under section 307C of the
Corporations Act 2001, is included at page 161.
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 29 to the financial statements.
The Board has considered the non-audit services provided by the Auditor. In accordance with advice provided by the
Audit and Finance Committee (the Committee), the Board is satisfied that this provision is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001 and does not compromise the auditor
independence requirements of the Act.
The Board concluded that the non-audit services provided did not compromise the Auditor’s independence because:
• 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 Auditor’s impartiality and objectivity.
• 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.
• 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
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 22 to the financial statements.
The value of APA’s assets at the end of the financial year is disclosed in the balance sheet in total assets. The basis
of valuation is disclosed in the notes to the financial statements.
Rounding of amounts
APA is an entity of the kind referred to in ASIC Corporations Instrument 2016/191. In accordance with that Class Order,
amounts in the Directors’ report and the financial report are rounded to the nearest million dollars, unless otherwise
indicated.
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APA GROUP ANNUAL REPORT 2023APA Infrastructure Trust and its Controlled Entities Directors’ Report Authorisation and signatures
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, 23 August 2023
Adam Watson
CEO and Managing Director
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OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONAPA Infrastructure Trust and its Controlled Entities Directors’ Report
Remuneration Report
Letter from the Chair of the People and Remuneration Committee
I am pleased to present the Remuneration Report of APA Group (APA or the Company) for financial
year 2023.
APA’s position as a market leader in the Australian energy infrastructure sector is reflected in our
solid FY23 company performance with underlying EBITDA increasing by 2% to $1,725 million.
Key Management Personnel (KMP) changes in FY23
In FY23 we appointed Adam Watson to the CEO/MD role and Darren Rogers was appointed to the
role of Group Executive (GE) Strategy & Commercial.
Ross Gersbach moved into a different leadership team role as the GE Commercial Development,
which is not considered to be a KMP role.
Remuneration outcomes for FY23
Reflecting strong financial and non-financial performance, the Short-Term Incentive (STI) outcome
was 78.9% of maximum for the CEO/MD and 76.3% of maximum for the GE Strategy & Commercial.
The FY21 Long-Term Incentive (LTI) was tested at the end of FY23. The relative Total Shareholder
Return (TSR) metric was not met, however the return on capital (ROC) hurdle was met. This resulted
in 50% of LTI becoming available to vest according to APA’s LTI vesting schedule.
Remuneration changes for FY23
The sole change made to the remuneration framework in FY23 was the introduction of climate-
related metrics for 10% of the STI scorecard, set in-line with meeting the objectives of our Climate
Transition Plan.
Upon promotion to their new roles Adam Watson and Darren Rogers’ remuneration was increased
to reflect their new responsibilities and was made with reference to peer market benchmarking data.
FY24 and beyond
A review was undertaken in FY23 to ensure the executive remuneration framework remains
competitive and fit for purpose. As a result of this review the STI maximum opportunity for
KMP (excluding the CEO/MD) will increase from 60% of fixed pay to 75% of fixed pay. Even after
this change, APA’s remuneration mix maintains a significant weighting to long-term performance,
while making the short term opportunity more competitive relative to market.
I hope you find this Remuneration Report informative. We look forward to receiving your support at
the 2023 AGM.
Peter Wasow
People and Remuneration Committee Chair
74
APA GROUP ANNUAL REPORT 2023APA Infrastructure Trust and its Controlled Entities Remuneration Report Contents
1.
Individuals covered by the Remuneration Report
2. Executive summary
3. FY23 performance and executive incentive outcomes
4. Executive remuneration policy and framework
5. Executive KMP contract and severance arrangements
6. Non-executive Director remuneration
7. Remuneration governance
8. Statutory tables
75
76
78
81
84
85
86
87
1. Individuals covered by the Remuneration Report
The Remuneration Report (the Report) for APA for FY23 has been prepared in accordance with Section 300A of the
Corporations Act 2001. The information provided in this Report has been audited, unless indicated otherwise, and forms
part of the Directors’ Report.
This Report includes the following KMP:
Name
Non-Executive Directors (NEDS)
Michael Fraser
James Fazzino
Debra (Debbie) Goodin
Shirley In’t Veld
Rhoda Phillippo
Peter Wasow
Former NEDS
Role
Chair
Director
Director
Director
Director
Director
Term As KMP
Full year
Full year
Full year
Full year
Full year
Full year
Steven (Steve) Crane
Director
Part year until 15 September 2022
Executive KMP
Adam Watson
Chief Executive Officer and Managing
Director (CEO/MD)
Darren Rogers
GE Strategy and Commercial
Former Executive KMP
Robert Wheals
Ross Gersbach1
Former CEO/MD
Former President North American
Development
Julian Peck
Former GE Strategy and Commercial
Full year
(CFO until 30 September 2022)
(Acting CEO until 19 December 2022)
Full year
(GE Operations until 24 August 2022)
(Acting GE Strategy & Commercial until
16 October 2022)
Part year until 30 September 2022
when ceased employment.
Part year KMP until 22 August 2022
Part year KMP until 25 August 2022, and
ceased employment 28 October 2022
The Board has considered whether the current Acting Chief Financial Officer (CFO) and Acting GE Operations met the
definition of KMP. Both roles have been excluded from disclosure in the Remuneration Report on the basis that they lack the
authority and responsibility for planning, directing and controlling the activities of APA Group in their current acting roles.
Nino Ficca has been appointed as an NED commencing 1 September 2023, Petrea Bradford has been appointed as the
GE Operations commencing 28 August 2023, and Garrick Rollason has been appointed as CFO and will be commencing
in this role on 16 October 2023.
1 Ross Gersbach’s role during the financial year as GE Commercial Development is not deemed to be a KMP role, hence only his remuneration until
22 August 2022 (the date he ceased the role of President, North American Development) has been shown throughout the Remuneration Report.
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2.1 Remuneration strategy
The Board recognises the important role remuneration plays in supporting, implementing and achieving APA’s
operational strategy over both the short and long-term. The key principles of the remuneration policy and a summary of
the executive remuneration framework are outlined below.
MARKET
COMPETITIVE
BUSINESS
STRATEGY
Provide competitive
rewards to attract,
motivate and retain highly
skilled executives.
Drive delivery of APA’s
growth strategy, while
maintaining its financial
strength.
BEHAVIOURS
Drive delivery of Health,
Safety, Environment
and Heritage (HSEH)
strategy, caring for our
people, communities,
the environment and our
assets, and demonstrating
the APA behaviours.
SECURITY HOLDER
ALIGNMENT
Ensure executive
performance and
behaviours align with
the interests of security
holders.
2.2 Executive remuneration snapshot
Fixed pay
STI
LTI
Purpose
To be market competitive to attract,
motivate and retain individuals.
To reward executives
for their contribution to
APA's annual budget and
performance targets, which
will enable the achievement
of long-term goals.
To focus Executive KMP on
the achievement of APA’s
long-term business strategy
and to create alignment with
the experience of security
holders.
FY23 approach
Executive KMP roles are benchmarked
against external positions in companies
with a comparable market capitalisation,
operate in a similar industry and/or are
key competitors.
Subject to meeting
the EBITDA gateway,
performance is assessed
against a scorecard of
financial and non-financial
measures.
Each Executive KMP
member has a unique
scorecard comprising Group
measures and role specific
key performance indicators
(KPI’s), to reflect Group and
individual accountabilities.
FY23
remuneration
outcomes
Following the appointment of a new
CEO/MD, Adam Watson’s fixed pay was
set at $1.6m.
As the EBITDA gateway was
met, the STI pool was funded
and outcomes were:
Following Darren Rogers’ appointment
to the GE Strategy & Commercial role,
his fixed pay was set at $920,000, to
recognise the increase in responsibilities
and reflective of comparator peer
remuneration levels.
• CEO/MD:
78.9% of maximum.
• GE, Strategy
& Commercial:
76.3% of maximum.
Section 3.2 provides details
on scorecard outcomes for
the CEO/MD.
Performance Rights are
assessed against relative
TSR (50%) and ROC
(50%) over a three year
performance period, with
vested Performance Rights
converting to securities in
equal tranches over Years 3,
4 and 5.
The FY21 LTI award was
tested on 30 June 2023
resulting in an outcome of
50%. 1/3 of Performance
Rights will vest based on the
assessed outcome in August
2023, with the remaining
2/3 of Performance Rights
vesting in equal tranches in
2024 and 2025.
Section 3.5 provides details
of results against the relative
TSR and ROC measures.
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APA GROUP ANNUAL REPORT 2023APA Infrastructure Trust and its Controlled Entities Remuneration Report Minimum
security holding
requirement
Fixed pay
STI
LTI
APA’s minimum security holding requirement requires our Executive KMP to continue to hold a material
security holding in APA Group. These requirements are:
• CEO/MD: 100% of fixed pay; and
• Other Executive KMP: 50% of fixed pay.
Where the minimum security holding requirement has not been met, 1/3 of the STI payable will be
deferred into Restricted Securities to help build individual security holding levels.
Executive KMP participants have five years from the date of appointment to their position to accumulate
the required securities.
Reward time
horizons
D
E
X
F
I
Y
A
P
Base salary,
superannuation
and other benefits
Assessed against a
scorecard of Group
and individual KPIs
subject to meeting
an EBITDA gateway
Cash (2/3)
STI Restricted Securities (1/3)1
Performance Rights tested at the end of 3-year performance
period against Relative TSR (50%) and Return on Capital (50%)
1/3 vests
1/3 vests
I
T
S
I
T
L
CEO: 90% of fixed pay
(maximum)
Other executive KMP:
60% of fixed pay
(maximum)
CEO: 150% of fixed pay
Other executive KMP:
125% of fixed pay
1/3 vests
FY23
FY24
FY25
FY26
FY27
Pay Mix
The pay mix graph below displays the proportion of fixed vs variable remuneration (STI and LTI) at the
maximum pay mix.
The LTI component has been calculated at face value assuming 100% vesting.
APA Executive KMP Maximum Pay Mix
CEO/MD (FY23)
29.4%
26.5%
44.1%
Other Executive KMP (FY23)
35.1%
21.1%
43.9%
0%
● FIXED PAY
20%
40%
60%
80%
100%
● MAX STI
● LTI
1 Release of Restricted Securities is subject to whether the minimum security holding requirement is met.
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3.1 Company performance
The table below summarises APA’s financial performance for the past 5 years.
Measure
Underlying EBITDA ($m)2
Profit after tax including significant items ($m)3
Profit after tax excluding significant items ($m)
Free cash flow per security (cents)
Distribution per security (cents)
Closing security price at 30 June ($)
CEO/MD STI outcome (% of maximum)
FY23
1,725
287
287
90.7
55.0
9.69
78.9
FY22
1,692
260
240
91.6
53.0
11.27
66.1
FY211
1,629
1
279
76.4
51.0
8.90
66.4
FY201
1,650
309
309
81.1
50.0
11.13
37.0
FY191,4
1,570
282
282
75.7
47.0
10.80
73.1
Since listing in 2000, APA has paid an interim and full year distribution every year. Our distribution per security
of 55.0 cents for FY23 represents a 3.8% increase on FY22.
APA 10-year TSR and distributions
300 % TSR
Distributions (cents per security)
60
250
200
150
100
50
0
50
40
30
20
10
0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Distributions
S&P/ASX100
APA
S&P/ASX200 Utilities
Source: Eikon’s Refinitv platform
3.2 FY23 STI scorecard outcomes – CEO/MD
The Board reviewed the CEO/MD’s performance considering his performance against the KPI’s in his STI scorecard.
The Board assesses business performance against the STI scorecard and the CEO/MD’s individual contribution to these
results. As part of the assessment the Board considers overall the behaviours demonstrated in delivering against the
scorecard and any other performance throughout the year (not already reflected in the STI scorecard).
1 Restated for the impact of the provision for payroll review.
2 Statutory EBITDA excluding non-recurring items arising from other activities, transactions that are not directly attributable to the performance
of APA Group’s business operations and significant items. The Board considers this to best reflect the core earnings of APA. Refer to note 3 of the
Financial Statements.
Includes an impairment gain on the Orbost Gas Processing Plant in FY22 and a once-off interest charge associated with bond note redemption in FY21.
3
4 The opening price of APA securities on 2 July 2018 was $9.82.
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APA GROUP ANNUAL REPORT 2023APA Infrastructure Trust and its Controlled Entities Remuneration Report Based on the Board’s assessment, it deemed the scorecard outcome to be a holistic reflection of the CEO/MD’s FY23
performance and there was no exercise of discretion over the final outcome.
Scorecard measures and rationale
FY23 outcome
Further detail
Financial – Underlying EBITDA (12.5% weighting)
THRESHOLD TARGET MAXIMUM
Underlying EBITDA is our
key financial metric to assess
the financial health of our
business. We aim to maintain
financial strength through solid
underlying EBITDA.
Financial – Free Cash Flow (12.5% weighting)
Strong free cash flow ensures
our business’ profitability by
considering changes in working
capital, interest and tax.
THRESHOLD TARGET MAXIMUM
Underlying EBITDA outcome was $1,725 million
against a target of $1,666 million and stretch
of $1,691 million.
The Board considered adjusting the underlying
EBITDA result for an estimate of the benefit from
CPI exceeding our budget estimates. This would also
have resulted in achievement at maximum.
Free cash flow was $1,070 million against a target of
$981 million and stretch of $1,021 million.
The Board considered adjusting the Free Cash
Flow result for an estimate of the benefit from CPI
exceeding our budget estimates. This also would have
resulted in an above stretch result
Financial – Organic Revenue Growth from deploying CAPEX (10% weighting)
Assesses our ability to grow
revenue streams organically.
THRESHOLD TARGET MAXIMUM
Actual outcome of $293.5 million against a target of
$325 million and stretch of $475 million.
Financial – Execution of growth strategy (25% weighting)
Assesses our ability to identify
and delivery on growth
opportunities.
THRESHOLD TARGET MAXIMUM
Non-financial – Deliver Climate Transition Plan Objectives (10% weighting)
Ensure progress against
our Climate Transition Plan
objectives.
THRESHOLD TARGET MAXIMUM
Non-financial – Health, Safety, Environment and Heritage (10% weighting)
THRESHOLD TARGET MAXIMUM
To improve safety, wellbeing
and environmental performance
and safety culture through
delivery of the HSEH Strategy
so that our employees return
home safely each day.
Basslink was successfully acquired and the integration
was delivered to plan and budget; Electricity
Transmission capability was developed strengthening
our offering for future Renewable Energy Zone
opportunities; and key business transformation
projects (e.g. ERP implementation) are all on track.
This objective measured APA performance against the
priorities set for FY23 in the Climate Transition Plan.
The priorities set were delivered at the target level of
expectation.
Further information on APA’s progress against the
Climate Transition Plan will be set out in our Climate
Report which will be released in September 2023.
Safety performance against our scorecard (including
HSEH Interactions, HSEH Strategy delivery, TRIFR,
Actual Serious Harm Incidents) was between
threshold and target.
Non-financial – Inclusion & Diversity (10% weighting)
Leverage diversity and build an
inclusive culture so all our people
feel safe, valued and trusted to
do their best every day.
THRESHOLD TARGET MAXIMUM
Strong performance in meeting or exceeding our
targets for improved female representation in senior
leadership, extended leadership and our talent
pipeline offset by total female representation falling
short of our target for FY23.
Non-financial - Stakeholder Engagement (10% weighting)
Maintain APA’s reputation
across internal and external
stakeholders.
THRESHOLD TARGET MAXIMUM
Reputation measured by Reptrack improved year on
year and exceeded our target.
Scorecard outcome
78.9% of Maximum
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OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONAPA Infrastructure Trust and its Controlled Entities Remuneration Report 3.3 FY23 STI performance scorecard outcomes – Other Executive KMP
The GE Strategy & Commercial had KPIs aligned to the CEO/MD, with additional focus on economic and regulatory
engagement, and on customer satisfaction. The STI achieved was 76.3% of Maximum.
3.4 STI outcomes
The table below provides an overview of the STI outcomes for FY23 for current Executive KMP, delivered in a mix of cash
and restricted securities.
STI earned
STI forfeited
Restricted
securities
(deferred)
$201,359
–
Total
$966,736
$415,576
% of
maximum
78.9%
76.3%
Foregone
$258,064
$129,323
% of
maximum
21.1%
23.7%
Executive KMP
A Watson1
D Rogers
Cash
$765,377
$415,576
3.5 LTI outcomes
Equity LTI plan
The FY21 LTI plan was tested as at 30 June 2023.
The relative TSR was not met, whilst the ROC hurdle was met, resulting in an LTI outcome of 50% achieved.
Performance
measure
Relative TSR
ROC
Final Outcome
Weighting
Threshold
Maximum
50%
50%
50th percentile
82.5th percentile
11.6%
11.9%
Actual
23.6%
12.1%
Vesting
outcome
Amount
forfeited
Nil
100%
50%
100%
Nil
50%
The original ROC targets set were 11.1% (threshold) and 11.4% (maximum). This was based on an assumption that a
M&A transaction would be executed. Given the transaction did not occur and another transaction (Basslink) did occur,
the Board exercised its discretion and adjusted the targets. The ROC targets were increased to 11.6% (threshold) and
11.9% (maximum).
Performance Rights that do not vest are forfeited automatically following performance assessment. Vested Performance
Rights will convert to APA securities as follows:
• 1/3 in August 2023,
• 1/3 in August 2024, and
• 1/3 in August 2025.
For further details of how the Board assess performance for the purposes of the LTI, please see section 4.3.
Legacy cash LTI plan
Under the legacy LTI plan arrangements (cash settled), the awards vest in 3 equal tranches over three years following
performance assessment. The final awards under the legacy LTI plan were tested and made in FY20. Vesting of the final
third tranche of the legacy cash awards in FY23 are summarised in section 3.6 below and is due to be paid in September
2023. Further details on the Legacy cash LTI plan can be found in the 2020 Annual Report.
1 The CEO/MD’s STI outcome is based on the STI opportunities applicable through the three distinct periods as CFO, acting CEO/MD and CEO/MD through
the year and applying the total scorecard outcome of 78.9% of maximum. In the role of CFO the minimum security holding requirement was met and as
such no STI deferral was applied. The portion applicable to the permanent period as CEO/MD has had 1/3 deferral applied.
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APA GROUP ANNUAL REPORT 2023APA Infrastructure Trust and its Controlled Entities Remuneration Report 3.6 FY23 actual remuneration
The actual remuneration detailed in the table below differs from the statutory remuneration disclosed in section 8 which
is subject to requirements under the Accounting Standards and Corporations Act.
The following is included in the table:
• Fixed pay and Cash STI – as received which relates to FY23.
• STI deferred equity – awards from prior years which have vested in FY23.
• Legacy cash LTI plan – awards vested from the legacy cash LTI plan vesting at the end of FY23 and payable in
September 2023.
• LTI equity released – FY20 LTI (Tranche 2) and FY21 LTI (Tranche 1) that have met performance and time restrictions as
at 30 June 2023 and will vest in August 2023.
Given this is not a statutory disclosure, we have only included Executive KMP as at 30 June 2023.
Executive
KMP
A Watson
D Rogers
Fixed Pay1
$
1,466,647
908,413
Cash STI2
$
765,377
415,576
STI Deferred
Equity Released3
$
Legacy Cash LTI
Vested4
$
LTI Equity
Vested &
Released5
$
Total
$
–
126,615
N/A
78,919
177,515
2,409,539
242,064
1,771,587
4. Executive remuneration policy and framework
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.
4.1 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.
4.2 STI plan
In addition to the information covered in section 2, further detail on the operation of the FY23 STI plan is provided below:
Feature
Description
Opportunity
Role
CEO/MD
Other Executive KMP
One year.
Performance
period
Delivery
STI target (% of fixed pay)
STI maximum (% of fixed pay)
60%
40%
90%
60%
Cash (2/3) paid at the end of FY23 (in September 2023) and deferred equity (1/3) delivered as
Restricted Securities which vest after 2-years (in September 2025) where the minimum security holding
requirement is not met.
Allocation
methodology of
deferred STI
Restricted Securities are allocated at face value using a volume weighted average price (VWAP) of
the 30 trading days ending 7 working days before the People & Remuneration Committee meeting to
consider APA’s full year financial results.
1 Fixed pay is inclusive of cash salary and any salary sacrifice items (including any relevant fringe benefits tax) such as car parking and superannuation.
2 Cash STI refers to the cash portion of the STI relating to performance in FY23. Payment will be made in September 2023.
3 Awards from prior years which have vested in the year. Valued based on the average price of securities on the date of purchase.
4 Refers to cash amount to be paid in September 2023 under the legacy LTI plan, based on the VWAP of $9.7939 (as determined by the plan rules) and
number of reference units that vested in August 2023.
5 Relates to rights vesting and converting to securities for Tranche 2 of the FY20 Performance Rights plan and Tranche 1 of FY21 Performance Rights plan
which vested in August 2023. Valued based on a VWAP of $10.0076 (being the 20 trading days leading up to 30 June 2023).
81
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONAPA Infrastructure Trust and its Controlled Entities Remuneration Report 4.3 LTI plan
In addition to the information covered in section 2, further detail on the operation of the FY23 LTI plan is provided below:
Feature
Description
Opportunity
Role
CEO/MD
Other Executive KMP
Performance
period
Three years, commencing on 1 July 2022.
Grant date
16 December 2022
LTI maximum (% of fixed pay)
150%
125%
Delivery
Allocation
methodology
Performance
measures
Performance Rights are tested at the end of year three. Vested Performance Rights convert to securities
and are released from restrictions in equal tranches at the end of year three, four and five. Performance
Rights which do not vest are forfeited automatically unless the Board determines otherwise.
Performance Rights are allocated at face value using a VWAP of the 20 trading days prior to the start
of the performance period (1 July 2022). No amount is payable on the grant or vesting of Performance
Rights.
Relative TSR (50%)
Relative TSR measures the Group’s TSR over a three-year period against a group of ASX 100 bespoke
peers in the infrastructure and gas sectors. Relative TSR has been selected to align executives with the
experience of security holders and to ensure executives are only rewarded for outperformance against
our peers
The peer group comprises of the following companies:
AGL Energy
Atlas Arteria Group
TPG Telecom
Origin Energy
GPT Group
Transurban
Aurizon Holdings
Qube Holdings
Dexus
Mirvac Group
Scentre Group
Stockland
Vicinity Centres
Goodman Group
Telstra Corporation
The Board retains discretion to vary the relative TSR peer group at the end of the performance period to
reflect de-listings, mergers and other corporate actions.
APA sets challenging LTI hurdles to ensure that the LTI plan only vests where our executive team meet
stretching targets.
The relative TSR component vests in accordance with the following scale:
Hurdle
Vesting outcome
Below 50th percentile
At 50th percentile
Between 50th and 82.5th
percentile
Nil
50%
Straight line pro-rata vesting between 50% and 100%
At 82.5th percentile or above
100%
82
APA GROUP ANNUAL REPORT 2023APA Infrastructure Trust and its Controlled Entities Remuneration Report Feature
Description
Return on capital (50%)
The ROC hurdle measures APA Group’s operating earnings achieved relative to operating assets over
a three-year performance period. It has been selected to ensure management balances earnings
improvements with prudent capital management.
ROC is calculated as an average over three years by dividing underlying EBITDA by Funds Employed
(FE). FE is determined by adjusting total assets per the balance sheet by excluding capital work in
progress, excluding current and non-current portion of other financial assets (excluding redeemable
preference shares), including working capital relating to assets under construction and normalised cash
balances. Underlying EBITDA is the average for the current and following two financial years and 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.
Calculation of ROC will be determined by the Board and the Board retains discretion to adjust EBITDA
and FE to account for extraordinary items, acquisitions, organisational changes or otherwise ensure that
the vesting outcomes are appropriate.
The ROC component vests in according with the following scale:
Hurdle
Vesting outcome
Less than 12.20%
Equal to 12.20%
0%
33%
Greater than 12.20% up to 12.50% Straight line pro-rata vesting between 33% and 100%
At or above 12.50%
100%
Retesting
Re-testing of LTI awards is not permitted.
4.4 Additional provisions
The table below summarises additional provisions as they relate to the remuneration of Executive KMP for FY23.
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 (malus) or recouped (clawback) in the event of misconduct or of a material misstatement in
the year-end financial statements, in accordance with provisions that are included within the STI and LTI
plans and offer documentation to Executive KMP’s.
Distribution and
voting rights
Restricted Securities carry the same distribution
and voting rights as ordinary securities.
Unvested Performance Rights do not carry
distribution and voting rights.
Cessation of
employment
Subject to Board discretion:
Subject to Board discretion:
• Where the participant is terminated summarily
or resigns having breached their terms of
employment, they will not be eligible for a STI
payment for the relevant financial year.
• Where the participant is terminated summarily
or resigns having breached their terms of
employment, all Performance Rights will
automatically lapse.
Change of control
• Where employment ceases for any other reason,
a pro-rated STI award may be paid based on
the performance period served and restricted
securities awarded in prior years are generally
released from dealing restrictions at the end of
the restriction period in the ordinary course.
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.
The Board has absolute discretion to determine
whether any or all Restricted Securities are
released from restrictions. Where the Board does
not make a determination, all Restricted Securities
will be released from dealing restrictions.
• Where employment ceases for any other
reason, unvested Performance Rights will
remain on-foot subject to the original terms of
grant and tested against performance hurdles
in the ordinary course.
The Board has absolute discretion to determine
whether any or all Performance Rights vest.
Where the Board does not make a determination,
all Performance Rights will vest.
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OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONAPA Infrastructure Trust and its Controlled Entities Remuneration Report 4.5 Executive KMP minimum security holding requirement
The minimum security holding requirement aligns the interests of Executive KMP and security holders.
Within five years from the date of appointment to their role:
• The CEO/MD is required to hold securities to the value of 100% of fixed pay; and
• Other Executive KMP are required to hold securities to the value of 50% of fixed pay.
Given the recent promotion of Adam Watson his new role, he remains within the five-year timeframe to meet the MSR.
Darren Rogers has met the MSR requirement. Details of Executive KMP security holdings may be found in Section 8.
5. Executive KMP contract and severance arrangements
5.1 Executive KMP service agreements
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.
Total Fixed Remuneration
(as at 30 June 2023)
Notice period
CEO/MD
$1,600,000
• 9 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.
GE Strategy & Commercial
$920,000
• 6 months’ notice by either APA or the individual.
• APA may provide payment in lieu of notice.
• No notice is required by APA for termination for cause.
5.2 Outgoing arrangements of Rob Wheals (former CEO/MD)
Rob Wheals resigned on 22 August 2022 and continued to serve out a portion of his notice period until 30 September
2022 to ensure a smooth transition of the CEO/MD role.
In addition to the statutory entitlements and payment in lieu of notice to Rob Wheals, in accordance with the plan rules,
his LTI awards were left on-foot and will be tested in the ordinary course, with no accelerated vesting of awards.
Rob Wheals did not receive an LTI grant in FY23 and his FY23 STI has been pro-rated to 30 September 2022 to reflect his
period of employment for the financial year. His FY23 STI outcome was 66.6% of maximum and will be delivered in cash,
based on APA performance and individual contribution in the period employed.
5.3 Outgoing arrangements of Julian Peck (former GE Strategy & Commercial)
Julian Peck resigned in June 2022, ceased to be KMP on 25 August 2022 when Darren Rogers commenced as
the GE Strategy & Commercial, and then ceased employment on 28 October 2022 following the completion of the
handover period.
In addition to the statutory entitlements paid to Julian Peck, in accordance with the plan rules, his LTI awards were
left on-foot and will be tested in the ordinary course, with no accelerated vesting of awards. Julian Peck did not receive
an LTI grant in FY23 and his FY23 STI has been pro-rated to 28 October 2022 to reflect his period of employment.
His FY23 STI outcome was 70% of maximum and will be delivered in cash, based on APA performance and individual
contribution in the period employed.
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APA GROUP ANNUAL REPORT 2023APA Infrastructure Trust and its Controlled Entities Remuneration Report 6. Non-executive Director remuneration
6.1 Determination of NED 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; and
• An additional fee for serving as a Chair or member of a Board Committee.
NED fees are inclusive of superannuation contributions which are provided in accordance with the statutory requirements
under the Superannuation Guarantee Act. NEDs do not receive incentive payments nor participate in incentive plans.
The Board Chair does not receive additional fees for his membership on Committees.
One-off ‘per diems’ may be paid in exceptional circumstances. No per-diem payments were made in FY23.
6.2 Aggregate NED fee pool
The aggregate NED fee pool as at 30 June 2023 was $2,500,000.
6.3 Director fees
During FY23, the Board reviewed the roles and responsibilities of the Board and its Committees and made the following
changes:
• The Health, Safety, Environment & Heritage Committee was renamed the Safety & Sustainability Committee.
• The Audit & Risk Management Committee was divided into the Audit & Finance Committee and
Risk Management Committee.
The following table sets out the FY23 NED fee policy.
Board
Audit Finance Committee
Risk Management Committee
Audit & Risk Management Committee
Safety & Sustainability Committee
People & Remuneration Committee
Nomination Committee
FY23
Before Review Of Committee
Structure
FY23
Following Review Of Committee
Structure
Chair
$
Member
$
513,735
182,806
N/A
N/A
60,300
40,883
40,833
Nil
N/A
N/A
24,488
20,391
20,391
Nil
Chair
$
513,735
40,883
40,883
N/A
40,883
40,833
Nil
Member
$
182,806
20,391
20,391
N/A
20,391
20,391
Nil
6.4 NED minimum security holding requirement
The minimum security holding requirement helps to ensure the alignment of the interests of NEDs and security holders.
NEDs are expected to hold securities to a value not less than their annual Board fee (before tax and excluding fees
payable for their membership on Committees). This level of security holding is to be held throughout their tenure as a
NED and the requirement is to be met within three years of their appointment.
As at 30 June 2023, all NEDs met this requirement. Details of NED security holdings may be found in section 8.
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OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONAPA Infrastructure Trust and its Controlled Entities Remuneration Report 7. Remuneration governance
The diagram below outlines the remuneration governance framework in place at APA.
Board
The Board has overarching responsibility for the approval of the Executive KMP and NED remuneration framework,
pay outcomes, policies and procedures, based on the recommendations of the People & Remuneration Committee.
People & 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 performance and remuneration strategy frameworks
to reflect APA’s behaviours, purpose, strategic direction and
risk appetite.
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
the effective attraction, retention and development of a diverse
and talented workforce. The full responsibilities of the Committee
can be found in APA’s People & Remuneration Committee Charter
available on APA’s website.
The members of the Committee, all of whom are independent
NEDs are:
• Peter Wasow (Chair)
• Shirley In’t Veld
• Rhoda Phillippo
Management
Management is responsible for providing relevant information and
analysis to the Board and the People & Remuneration Committee.
This advice is used as a guide, and does not serve as a substitute
for the thorough consideration of the issues by each NED.
Management may also be required to communicate with external
advisors as required to ensure the People & Remuneration
Committee receives all the relevant factual information.
Audit & Finance, Safety
& Sustainability and Risk
Management Committees
In considering whether a robust
performance assessment process
is in place, the People & Remuneration
Committee consults with the Audit
& Finance, Safety & Sustainability
and Risk Management Committees
on whether proposed remuneration
outcomes are appropriate
considering relevant risk outcomes
and corporate culture.
External advisors
The People & Remuneration Committee
seeks external professional advice from
time-to-time on matters within its terms
of reference.
In FY23, external advisors were
engaged to provide market practice
information and benchmarking data.
Where a remuneration
recommendation is provided, as
defined by the Corporations Act 2001
all advice is provided directly to the
Committee to ensure it is free from
the influence of management. No
remuneration recommendations were
provided in FY23.
86
APA GROUP ANNUAL REPORT 2023APA Infrastructure Trust and its Controlled Entities Remuneration Report 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
Given Adam Watson and Darren Rogers were promoted to their new roles in FY23, their FY22 and FY23 remuneration
levels differ significantly as they refer to two different roles.
Short-Term Employment
Benefits
Post-
Employment
Security-based
payments
Salary1
Awarded
Cash STI2
STI
Deferral
Termination3
Other4
Super-
annuation
Legacy LTI
Plan
Equity
settled
Security
Based5,6
Total
A Watson
2023
2022
D Rogers
2023
2022
1,441,355
765,377
201,359
898,752
670,422
883,120
415,576
–
–
776,153
272,578
136,289
–
–
–
–
–
–
–
3,676
25,292
26,667
25,292
27,500
–
–
608,563 3,041,946
343,992
1,939,833
59,189
480,030 1,863,207
70,948
347,011
1,634,155
Former Executive KMP
R Wheals7
2023
2022
R Gersbach8
2023
2022
J Peck9
2023
2022
Total Remuneration
412,427
253,361
–
1,645,153
1,647,500
664,171
332,086
152,437
63,747
949,856
350,433
136,213
58,755
821,918
361,644
–
–
–
–
–
9,910
12,646
27,500
104,077
2,120,475
4,548,139
229,988
1,077,997
3,989,152
36,778
231,397
3,673
16,726
76,953
350,315
23,568
255,706
392,223
2,203,183
–
–
–
62,763
–
–
–
5,951
82,192
–
–
–
263,682
780,082 2,045,836
2023
2022
3,025,552
1,556,816
201,359
1,707,919
36,778
5,094,179
2,319,248
468,375
–
244,983
72,854
187,427
179,993 3,286,022 10,067,289
556,642
2,941,305
11,812,159
1 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.
2 Awarded STI relates to that element of remuneration which is earned by the Executive KMP in respect of performance during the financial year (or for the
relevant period that they were KMP as set out in the Report).
3 Reflects the payment in lieu of notice and other statutory entitlements required to be paid on termination.
4 This includes expatriate housing and a cost of living allowance in relation Ross Gersbach’s secondment to the USA.
5 For equity settled security-based payments, an expense is recognised equal to the portion of service received based on the fair value of the equity
instrument at grant date.
6 Security-based payment for R Wheals in 2023 represents accelerated accounting value on cessation of employment for retained LTI awards.
Further detail provided in section 5.2.
7 Ceased employment on 30 September 2022.
8 Ceased as KMP on 22 August 2022. Remuneration is shown until this date.
9 Ceased as KMP on 25 August 2022. Remuneration is shown until this date.
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OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONAPA Infrastructure Trust and its Controlled Entities Remuneration Report 8.2 NED statutory remuneration disclosure
Financial Year
M Fraser
FY23
FY22
J Fazzino
FY23
FY22
D Goodin
FY23
FY22
S In’t Veld
FY23
FY22
R Phillippo
FY23
FY22
P Wasow
FY23
FY22
Former NEDs
S Crane1
FY23
FY22
Total
FY23
FY22
Short-term
employment
benefits
Post-
employment
benefits
Fees
$
Superannuation
$
Total
$
488,443
467,032
230,276
204,214
239,191
231,451
207,490
218,972
229,256
200,525
235,377
222,661
43,868
204,214
1,673,901
1,749,069
25,292
46,703
513,735
513,735
24,179
20,421
25,115
23,145
21,786
21,897
24,072
20,052
24,715
22,266
254,455
224,635
264,306
254,596
229,276
240,869
253,328
220,577
260,092
244,927
4,512
20,421
48,380
224,635
149,671
174,905
1,823,572
1,923,974
1 Ceased in his role on 15 September 2022.
88
APA GROUP ANNUAL REPORT 2023APA Infrastructure Trust and its Controlled Entities Remuneration Report 8.3
Outstanding awards under current LTI plan
The following table sets out the movements in the number of Performance Rights granted to executives as remuneration,
and any amounts vested or forfeited during the financial year.
Opening
balance at 1 Jul
2022
Performance
Rights granted
in FY23 as
remuneration
Grant date
Vested in FY23
Forfeited /
lapsed or other
change in FY23
Closing balance
on 30 Jun 2023
Fair value of
Performance
Rights at
grant date $1
A Watson
FY21 LTI
FY22 LTI
FY23 LTI
D Rogers
FY20 LTI
FY21 LTI
FY22 LTI
FY23 LTI
R Wheals2
FY20 LTI
FY21 LTI
FY22 LTI
R Gersbach3
FY20 LTI
FY21 LTI
FY22 LTI
FY23 LTI
J Peck4
FY21 LTI
FY22 LTI
106,426
128,367
-
-
12/11/2020
10/11/2021
-
162,462
16/12/2022
-
-
-
-
-
-
106,426
128,367
682,723
683,340
162,462
1,050,588
51,064
71,698
108,098
-
-
-
13/12/2019
12/11/2020
10/11/2021
-
100,990
16/12/2022
217,872
215,094
270,362
65,975
65,133
130,934
-
-
-
-
-
-
13/12/2019
12/11/2020
10/11/2021
13/12/2019
12/11/2020
10/11/2021
-
109,526
16/12/2022
82,179
121,610
-
-
12/11/2020
10/11/2021
12,238
14,350
-
-
-
-
-
-
52,213
61,233
-
-
-
-
15,812
18,539
-
-
-
-
-
-
-
-
-
-
24,476
71,698
108,098
100,990
104,426
215,094
270,362
31,624
65,133
130,934
109,526
82,179
121,610
342,895
459,943
575,442
653,069
1,463,010
1,379,828
1,439,227
443,022
417,829
697,006
708,268
527,179
647,371
The fair value of performance rights in the above is calculated based on fair value, grant date, vesting date and individual
vesting conditions for the relative TSR and ROC hurdle vesting conditions as set out in the table below.
Grant year
FY20
FY21
FY22
FY23
TSR
ROC
Tranche 1
Tranche 2
Tranche 3
Tranche 1
Tranche 2
Tranche 3
Fair value
Grant date
$4.47
$4.27
$4.08
$9.57
$9.15
$8.75
13/12/2019
13/12/2019
Vesting date
August 2022
August 2023
August 2024
August 2022
August 2023
August 2024
Fair value
Grant date
$4.17
$3.97
$3.79
$9.28
$8.85
$8.43
12/11/2020
12/11/2020
Vesting date
August 2023
August 2024
August 2025
August 2023
August 2024
August 2025
Fair value
Grant date
$3.58
$3.40
10/11/2021
$3.23
$7.62
$7.24
10/11/2021
$6.87
Vesting date
August 2024
August 2025
August 2026
Vesting date
August 2024
August 2025
Fair value
Grant date
$4.19
$3.98
$3.79
$9.40
$8.94
$8.50
16/12/2022
16/12/2022
Vesting date
August 2025
August 2026
August 2027
August 2025
August 2026
August 2027
1 This 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 2023 satisfied all vesting conditions.
2 Ceased employment on 30 September 2022.
3 Ceased as KMP on 22 August 2022.
4 Ceased as KMP on 25 August 2022.
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OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONAPA Infrastructure Trust and its Controlled Entities Remuneration Report 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 or been paid, and the years in which they will vest.
Allocation Date
Opening balance
at 1 Jul 2022
Units allocated
in FY23
D Rogers
Former Executive KMP
R Wheals1
R Gersbach2
8.5 Security holdings
2020
Total
2019
2020
Total
2019
2020
Total
16,116
12,654
28,338
14,069
31,364
Cash settled
reference
units paid
Closing balance
at 30 Jun 2023
(8,058)
8,058
(12,654)
(14,169)
(14,069)
(15,682)
–
14,169
–
15,682
Reference units
allocated that
have not yet
vested or been
paid and the
months in which
they will vest
Aug-23
8,058
8,058
–
14,169
14,169
–
15,682
15,682
The following table sets out APA Group stapled securities held by KMP or their closely related parties, directly, indirectly
or beneficially.
Year ended
30 June 2023
NEDS
M Fraser
J Fazzino
D Goodin
S In’t Veld
R Phillippo
P Wasow
Former NEDs
S Crane3
Executive KMP
A Watson4
D Rogers
Former Executive KMP
R Wheals5
R Gersbach6
J Peck7
Opening Balance
at 1 Jul 2022
Securities Acquired
Securities Disposed
Closing Balance
at 30 Jun 2023
Meets minimum
security holding
requirement
as at 30 June 2023
102,942
30,751
24,179
25,000
10,000
26,000
30,000
55,556
25,750
108,721
44,691
53,428
7,960
23,847
52,213
102,942
30,751
24,179
25,000
17,960
26,000
30,000
55,556
49,597
160,934
44,691
53,428
Yes
Yes
Yes
Yes
Yes
Yes
N/A
No
Yes
N/A
N/A
N/A
1 Ceased employment on 30 September 2022.
2 Ceased as KMP on 22 August 2022.
3 Ceased in role on 15 September 2022. Closing balance is shown as at this date.
4 Appointed as CEO on 19 December 2022 and is now subject to a higher MSR of 100% of fixed pay within 5 years of appointment.
5 Ceased employment on 30 September 2022. Closing balance is shown as at this date.
6 Ceased as on 22 August 2022. Closing balance is shown as at this date.
7 Ceased as KMP on 25 August 2022. Closing balance is shown as at this date.
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APA GROUP ANNUAL REPORT 2023APA Infrastructure Trust and its Controlled Entities Remuneration Report 8.6 Loans to KMP and other transaction of KMP and personally related entities
During FY23, there were no transactions between KMP or their close family members and APA Group other than as
described in this report.
There are no loans with any KMP.
A number of KMP have control or joint control of other entities (outside APA Group). During the year, there have been no
transactions between those entities and APA Group, and no amounts were owed by or to APA Group from those entities.
91
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATIONAPA Infrastructure Trust and its Controlled Entities Remuneration Report Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Revenue
Share of net profits of associates and joint ventures using the equity method
Asset operation and management expenses
Depreciation and amortisation expenses
Other operating costs – pass-through
Finance costs
Employee benefit expense
Other expenses
Fair value gains/(losses) on contracts for difference
Reversal of impairment of property, plant and equipment (1)
Profit before tax
Income tax expense
Profit for the year
Other comprehensive income, net of income tax
Items that will not be reclassified subsequently to profit or loss:
Actuarial gain 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 (note 5)
Loss on cash flow hedges taken to equity
Gain on associate hedges taken to equity
Income tax relating to items that may be reclassified subsequently
Other comprehensive income, net of income tax
Total comprehensive (loss)/income for the year
Profit attributable to:
Unitholders of the parent
Non-controlling interest – APA Investment Trust unitholders
APA stapled securityholders
Total comprehensive income attributable to:
Unitholders of the parent
Non-controlling interest – APA Investment Trust unitholders
APA stapled securityholders
Earnings per security
Basic and diluted (cents per security)
Note
4
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2
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2023
$m
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23
2,913
(227)
(750)
(512)
(479)
(398)
(82)
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(190)
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(705)
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160
(374)
(370)
(83)
263
24
287
(107)
24
(83)
2023
24.3
2022
$m
2,705
27
2,732
(228)
(735)
(496)
(484)
(323)
(24)
(30)
28
440
(180)
260
7
(2)
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160
(152)
25
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23
28
288
231
29
260
259
29
288
2022
22.1
(1) The impairment reversal in FY22 relates to the Orbost Gas Processing Plant. Refer to note 2 for further details.
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
92
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023
APA Infrastructure Trust and its Controlled Entities
As at 30 June 2023
Consolidated Statement of Financial Position
Note
2023
$m
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Other
Assets classified as held for sale (1)
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
Liabilities directly associated with assets classified as held for sale (1)
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
19
9
21
11
9
21
24
12
13
13
16
10
18
19
21
15
11
10
18
19
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6
15
2022
$m
940
309
32
46
31
295
1,653
608
362
266
9,420
1,184
2,312
32
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15,837
417
14
3
206
138
13
31
822
11
43
513
374
49
55
42
–
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27
430
273
10,755
1,184
2,130
34
14,833
15,866
471
16
202
207
159
13
–
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11,321
10,902
452
894
113
52
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13,956
1,910
422
863
94
51
12,386
13,208
2,629
(1) On 20 June 2022, the APA Group announced that it had entered into binding agreements with Cooper Energy Limited for the sale of the Orbost Gas
Processing Plant resulting in the recognition of assets and liabilities held for sale as at 30 June 2022. On 28 July 2022, APA completed the sale of
Orbost Gas Processing Plant to Cooper Energy Limited for an initial upfront consideration of $210 million. Refer to note 11 for further details.
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
93
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Consolidated Statement of Financial Position (continued)
Equity
APA Infrastructure Trust equity:
Issued capital
Reserves
Retained earnings
Equity attributable to unitholders of the parent
Non-controlling interests:
APA Investment Trust:
Issued capital
Retained earnings
Note
22
Equity attributable to unitholders of APA Investment Trust
23
Total equity
2023
$m
2022
$m
1,964
(700)
79
1,343
555
12
567
1,910
2,225
(328)
75
1,972
644
13
657
2,629
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
94
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 m
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95
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
Consolidated Statement of Cash Flows
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received from associates and joint ventures
Proceeds from repayments of finance leases
Interest received
Interest and other costs of finance paid
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Payments for intangible assets
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Net cash used in investing activities
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Proceeds from borrowings
Repayments of borrowings
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Distributions paid to:
Unitholders of APA Infrastructure Trust
Unitholders of non-controlling interests – APA Investment Trust
Net cash (used in)/provided by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of financial year
Note
2023
$m
2022
$m
3,126
(1,479)
19
1
21
(460)
(22)
1,206
(1,166)
211
(14)
–
(969)
–
(3)
(16)
(7)
(524)
(114)
(664)
(427)
940
–
513
2,963
(1,311)
27
1
4
(444)
(43)
1,197
(661)
6
(28)
(588)
(1,271)
1,000
(3)
(14)
(8)
(457)
(157)
361
287
652
1
940
8
8
19
(1)
(2)
Included in payments for property, plant and equipment is the net consideration paid of $110 million to acquire Basslink. Refer to note 26 for further
details.
Included in the proceeds from the sale of property, plant and equipment is the $210 million upfront component of the proceeds from the sale of the
Orbost Gas Processing Plant on 28 July 2022.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
96
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023
Consolidated Statement of Cash Flows (continued)
Reconciliation of profit for the year to the net cash provided by operating activities
Profit for the year
Reversal of impairment of property, plant and equipment
Profit on disposal of property, plant and equipment (1)
Share of net profits of joint ventures and associates using the equity method
Dividends received from equity accounted investments
Depreciation and amortisation expenses
Finance costs
Effect of exchange rate changes
Amortisation of hedging loss
Wallumbilla Gas Pipeline hedge accounting discontinuation (2)
Equity settled long-term incentives
Changes in assets and liabilities:
Trade and other receivables
Inventories
Other assets
Trade and other payables
Provisions
Other liabilities
Income tax balances
Net cash provided by operating activities
Note
2
2023
$m
287
–
–
(23)
19
750
2
3
4
37
2
(51)
(9)
(13)
21
16
(8)
169
1,206
2022
$m
260
(28)
(2)
(27)
27
735
65
(1)
9
15
3
(42)
(6)
(9)
22
26
11
139
1,197
(1) On 28 July 2022 APA completed the sale of Orbost Gas Processing Plant to Cooper Energy Limited resulting in a $nil pre-tax profit on sale.
(2)
In February 2022, following entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be generated
from early calendar year 2022 to late calendar year 2025. The revenues were previously hedged by USD denominated 144A notes. WGP hedge
accounting discontinuation reflects the non-cash amortisation of the amount deferred in the hedging reserve over the same period relating to the
discontinued hedge relationship.
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.
97
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
Notes to the consolidated financial statements
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. Assets classified as held for sale
12. Property, plant and equipment
13. Goodwill and intangibles
14. Impairment of non-financial assets
15. Provisions
16. Other non-current assets
17. Employee superannuation plans
18. Leases
98
98
99
101
101
106
108
109
112
113
115
115
115
116
117
119
121
123
124
125
126
Capital Management
19. Net debt
20. Financial risk management
21. Other financial instruments
22. Issued capital
Group Structure
23. Non-controlling interests
24. Joint arrangements and associates
25. Subsidiaries
Other
26. Basslink Asset Acquisition
27. Commitments and contingencies
28. Director and Executive Key
Management Personnel remuneration
29. Remuneration of external auditor
30. Related party transactions
31. Parent entity information
32. Adoption of new and revised
Accounting Standards
33. Events occurring after reporting date
128
128
130
144
147
148
148
149
151
154
154
155
155
156
157
158
158
159
98
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Basis of Preparation (continued)
2. General information
APA Group comprises of two trusts, APA Infrastructure Trust and APA Investment Trust, which are registered managed
investment schemes regulated by the Corporations Act 2001. APA Infrastructure Trust units are “stapled” to APA
Investment Trust units on a one-to-one basis so that one APA Infrastructure Trust unit and one APA Investment Trust 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, APA Infrastructure
Trust is deemed to be the parent entity. The results and equity attributable to APA Investment Trust, being the other
stapled entity which is not directly or indirectly held by APA Infrastructure Trust, are shown separately in the financial
statements as non-controlling interests.
The financial report represents the consolidated financial statements of APA Infrastructure Trust and APA Investment
Trust (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 APA Investment Trust. Comprehensive income arising from transactions between the parent (APA
Infrastructure Trust) group entities and the non-controlling interest (APA Investment Trust) have not been eliminated in the
reporting of total comprehensive income attributable to non-controlling interests.
All intra-group 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 APA Group.
APA Infrastructure Trust’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 2023 was authorised for issue in
accordance with a resolution of the directors on 23 August 2023.
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.
Assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. The
financial report including prior year comparatives is presented in Australian dollars and all values are rounded to the
nearest million dollars ($million) in accordance with ASIC Corporations Instrument 2016/191, unless otherwise stated.
Foreign currency transactions
Both the functional and presentation currency of APA Group 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.
99
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Basis of Preparation (continued)
2. General information (continued)
Critical accounting judgements and key sources of estimation uncertainty
In the process of applying APA 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 12)
Carrying value of non-financial assets (note 14)
Provision for payroll review (note 15)
• Fair value of financial instruments (note 20(c))
•
•
Equity accounted investments (note 24)
Commitments and contingencies (note 27)
Judgements and estimates require assumptions to be made about highly uncertain external factors such as: discount
rates; probability factors; the effects of inflation within the Reserve Bank of Australia’s guidance range; the outlook for
global and regional gas market supply-and-demand conditions; contract renewals; asset useful lives; and climate-related
risks. As such the actual outcomes may differ as a result of change in these judgements and assumptions.
These judgements, estimates and assumptions are based on the most current facts and circumstances and are reassessed
on an ongoing basis, the results of which form the basis of the reported amounts that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions and conditions in respect of laws,
regulations, climate change, licences and recognised practising codes including health, safety and environment, employee
entitlements, environmental laws and regulations and asset construction and operation. This may materially affect the
financial results and the financial position to be reported in future periods.
Working capital
As at 30 June 2023, APA Group’s current liabilities exceeded current assets by $35 million (2022: current assets exceeded
current liabilities by $831 million) primarily as a result of current borrowings of $202 million.
APA has access to sufficient available cash and committed undrawn bank facilities of $2,111 million as at 30 June 2023
(2022: $2,190 million) to meet the repayment of current borrowings on the due date and to assist in the ongoing funding
of the business. APA Group continues to fund its growth with appropriate levels of equity, cash retained in the business,
and debt in order to maintain strong BBB/Baa2 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.
Significant items
Individually significant items included in profit after income tax expense are as follows:
Significant items impacting profit before tax
Reversal of impairment of property, plant and equipment (1)
Total significant items impacting profit before tax
Income tax related to significant items above
Profit from significant items after income tax
2023
$m
2022
$m
–
–
–
–
28
28
(8)
20
(1)
In FY22, immediately prior to the reclassification of the Orbost Gas Processing Plant as held for sale, the recoverable amount was determined and an
impairment reversal of $28 million before tax was recognised to reflect the consideration estimated to be realised from the sale of the plant.
100
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023
Notes to the consolidated financial statements (continued)
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: APA’s wholly or majority owned energy infrastructure assets across gas transmission,
compression, processing, storage and electricity generation (gas and renewables) and transmission;
Asset Management: The provision of asset management and operating services for third parties and the majority of
APA’s Energy Investments; and
•
Energy Investments: APA’s interests in energy infrastructure investments.
Reportable segments
2023
Segment revenue (1)
Revenue from contracts with customers
Equity accounted net profits
Pass-through revenue
Other income
Finance lease and investment interest income
Total segment revenue
Wallumbilla Gas Pipeline hedge accounting
discontinuation (2)
Income on Basslink debt investment (3)
Basslink AEMC market compensation (4)
Other interest income
Energy
Infrastructure
$m
Asset
Management
$m
Energy
Investments
$m
Other
$m
Consolidated
$m
2,208
–
51
6
1
2,266
(37)
–
15
–
114
–
461
1
–
576
–
–
–
–
–
23
–
–
–
23
–
50
–
–
73
–
–
–
–
–
–
–
–
–
20
20
2,322
23
512
7
1
2,865
(37)
50
15
20
2,913
Total revenue
2,244
576
(1) The revenue reported above represents revenue generated from external customers. Any intersegment sales were immaterial.
(2)
In February 2022, following the entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be
generated from early calendar year 2022 to late calendar year 2025 that were hedged by USD denominated 144A notes. The segment result reflects the
hedged rate for revenues in this period, while the WGP hedge accounting discontinuation reflects the non-cash amortisation of the amount deferred in
the hedging reserve over the same period relating to the discontinued hedge relationship.
Income including accrued interest and the revaluation gain up until the date of acquisition of Basslink Pty Ltd and its subsidiary on 20 October 2022. As part of
the net consideration, APA was repaid the face value of its 100% interest in Basslink’s senior secured debt of $648 million. Refer to Note 26 for further details.
(3)
(4) On 15 December 2022, the Australian Energy Market Commission (AEMC) approved Basslink’s compensation claim of $15 million for direct costs following the
application of the administered price cap during an administered price period in Queensland, New South Wales, Victoria and South Australia in June 2022.
101
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Financial Performance (continued)
3. Segment information (continued)
2023
Segment result
Segment underlying EBITDA (1)
Share of net profits of joint ventures and
associates using the equity method
Finance lease and investment interest income
Corporate costs
Total underlying EBITDA (1)
Fair value gain on contracts for difference (2)
Technology transformation projects (3)
Wallumbilla Gas Pipeline hedge accounting
discontinuation (4)
Basslink debt revaluation, interest and
integration costs (5)
Basslink AEMC market compensation (6)
Payroll review (7)
Total reported EBITDA
Depreciation and amortisation
Total reported EBIT (8)
Net interest cost (9)
Profit before tax
Income tax expense
Profit after tax
Energy
Infrastructure
$m
Asset
Management
$m
Energy
Investments
$m
Other
$m
Consolidated
$m
1,792
–
1
–
1,793
12
–
(37)
–
15
–
1,783
(733)
1,050
56
–
–
–
56
–
–
–
–
–
–
56
(17)
39
–
23
–
–
23
–
–
–
47
–
–
70
–
70
–
–
–
(147)
(147)
–
(67)
–
–
–
(9)
(223)
–
(223)
1,848
23
1
(147)
1,725
12
(67)
(37)
47
15
(9)
1,686
(750)
936
(459)
477
(190)
287
(1) Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) excludes recurring items arising from other activities and transactions that are not
directly attributable to the performance of APA Group’s business operations.
(2) The amount represents a net gain arising from electricity contracts for difference that economically hedge the future cash flows of the electricity
contracts for which hedge accounting is not applicable.
(3) The amount represents costs associated with technology and transformation projects to develop and uplift organisation capabilities, including SaaS
(4)
(5)
customisation and configuration costs incurred during implementation.
In February 2022, following the entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be
generated from early calendar year 2022 to late calendar year 2025 that were hedged by USD denominated 144A notes. The segment result reflects the
hedged rate for revenues in this period, while the WGP hedge accounting discontinuation reflects the non-cash amortisation of the amount deferred in
the hedging reserve over the same period relating to the discontinued hedge relationship.
Income including accrued interest and the revaluation gain up until the date of acquisition of Basslink Pty Ltd and its subsidiary on 20 October 2022, net
of integration costs of $3 million incurred in the full year to 30 June 2023. As part of the net consideration to acquire Basslink, APA was repaid the face
value of its 100% interest in Basslink’s senior secured debt of $648 million. Refer to Note 26 for further details.
(6) On 15 December 2022, the Australian Energy Market Commission (AEMC) approved Basslink’s compensation claim of $15 million for direct costs
following the application of the administered price cap during an administered price period in Queensland, New South Wales, Victoria and South
Australia in June 2022.
(7) Estimated payment shortfalls for the year ended 30 June 2023 are included within underlying EBITDA. Interest and other related costs are included
within reported EBITDA.
(8) Earnings before interest and tax (“EBIT”).
(9) Excluding finance lease and investment interest income, any gains or losses on revaluation of derivatives included as part of EBIT for segment reporting
purposes, but including other interest income.
102
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023
Notes to the consolidated financial statements (continued)
Financial Performance (continued)
3. Segment information (continued)
2023
Segment assets and liabilities
Segment assets
Carrying value of investments using the
equity method
Unallocated assets (1)
Total assets
Segment liabilities
Unallocated liabilities (2)
Total liabilities
Energy
Infrastructure
$m
Asset
Management
$m
Energy
Investments
$m
Other
$m
Consolidated
$m
14,422
–
–
14,422
659
–
659
177
–
–
177
94
–
94
11
273
–
284
–
–
–
–
–
983
983
–
13,203
13,203
14,610
273
983
15,866
753
13,203
13,956
(1) Unallocated assets consist of cash and cash equivalents, fair value of cross currency swaps, foreign currency forward exchange contracts and equity
forwards.
(2) Unallocated liabilities consist of current and non-current borrowings, deferred tax liabilities, fair value of cross currency swaps, foreign currency forward
exchange contracts and equity forwards.
2022
Segment revenue (1)
Energy
Infrastructure
$m
Asset
Management
$m
Energy
Investments
$m
Other
$m
Consolidated
$m
Revenue from contracts with customers
2,082
Equity accounted net profits
Pass-through revenue
Other income (2)
Finance lease and investment interest
income
Total segment revenue
Wallumbilla Gas Pipeline hedge
accounting discontinuation (3)
Income on Basslink debt investment (4)
Other interest income
Total revenue
–
65
12
1
115
–
431
–
–
2,160
546
(15)
–
–
–
–
–
2,145
546
–
27
–
–
1
28
–
12
–
40
–
–
–
–
–
–
–
–
1
1
2,197
27
496
12
2
2,734
(15)
12
1
2,732
(1) The revenue reported above represents revenue generated from external customers. Any intersegment sales were immaterial.
(2) On 8 October 2021, APA Group entered into an Asset Sale and Purchase Agreement to divest the Group’s 50% ownership in Mid West Pipeline. Financial
(3)
(4)
close was reached on 6 May 2022 for consideration of $5 million, resulting in a pre tax profit on sale of $4 million.
In February 2022, following the entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be
generated from early calendar year 2022 to late calendar year 2025 that were hedged by USD denominated 144A notes. The segment result reflects the
hedged rate for revenues in this period, while the WGP hedge accounting unwind reflects the non-cash amortisation of the amount deferred in hedging
reserve over the same period relating to the discontinued hedge relationship.
Interest income accrued on the 100% interest in the senior secured debt of Nexus Australia Management Pty Ltd (Basslink) acquired by APA Group during
the year ended 30 June 2022.
103
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Financial Performance (continued)
3. Segment information (continued)
2022
Segment result
Segment underlying EBITDA (1)
Share of net profits of joint ventures and
associates using the equity method
Finance lease and investment interest income
Corporate cost
Total underlying EBITDA (1)
Fair value loss on contract for difference (2)
Technology transformation projects (3)
Wallumbilla Gas Pipeline hedge accounting
discontinuation (4)
Income on Basslink debt investment (5)
Payroll review (6)
Total reported EBITDA (7)
Depreciation and amortisation
Total reported EBIT (8)
Net interest cost (9)
Profit before tax excluding significant items
Income tax expense (6)
Profit after tax excluding significant items
Significant items before tax (10)
Reported profit before tax
Significant items after tax (10)
Reported profit after tax
Energy
Infrastructure
$m
Asset
Management
$m
Energy
Investments
$m
Other
$m
Consolidated
$m
1,706
–
1
–
1,707
(30)
–
(15)
–
–
1,662
(718)
944
73
–
–
–
73
–
–
–
–
–
73
(17)
56
–
27
1
–
28
–
–
–
12
–
40
–
40
–
–
–
(116)
(116)
–
(22)
–
–
(7)
(145)
–
(145)
1,779
27
2
(116)
1,692
(30)
(22)
(15)
12
(7)
1,630
(735)
895
(483)
412
(172)
240
28
440
20
260
(1) Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) excludes recurring items arising from other activities and transactions that are not
directly attributable to the performance of APA Group’s business operations and significant items.
(2) The amount represents a net loss arising from contract for difference in an electricity sales agreement with a customer that economically hedges the fair
value of the electricity sales agreement for which hedge accounting is not applicable. Refer to note 20.
(3) The amount represents costs associated with technology and transformation projects to develop and uplift organisation capabilities, including SaaS
(4)
(5)
customisation and configuration costs incurred during implementation.
In February 2022, following entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be generated
from early calendar year 2022 to late calendar year 2025. The revenues were previously hedged by USD denominated 144A notes. WGP hedge
accounting discontinuation reflects the non-cash amortisation of the amount deferred in the hedging reserve over the same period relating to the
discontinued hedge relationship.
Interest income accrued on the 100% interest in the senior secured debt of Nexus Australia Management Pty Ltd (Basslink) acquired by APA Group during
the year ended 30 June 2022.
(6) Estimated payment shortfalls for the year ended 30 June 2022 are included within underlying EBITDA. Interest and other related costs are included
within reported EBITDA.
(7) Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) excluding significant items.
(8) Earnings before interest and tax (“EBIT”) excluding significant items.
(9) Excluding finance lease and investment interest income, any gains or losses on revaluation of derivatives included as part of EBIT for segment reporting
purposes.
(10) Refer to note 2 significant items section for details.
104
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Financial Performance (continued)
3. Segment information (continued)
2022
Segment assets and liabilities
Segment assets
Carrying value of investments using the equity
method
Unallocated assets (1)
Total assets
Segment liabilities
Unallocated liabilities (2)
Total liabilities
Energy
Infrastructure
$m
Asset
Management
$m
Energy
Investments
$m
Other
$m
Consolidated
$m
13,452
–
186
–
609
266
13,452
186
875
581
581
96
96
–
–
–
–
1,324
1,324
–
12,531
12,531
14,247
266
1,324
15,837
677
12,531
13,208
(1) Unallocated assets consist of cash and cash equivalents, fair value of cross currency swaps, foreign currency forward exchange contracts and equity
forwards.
(2) Unallocated liabilities consist of current and non-current borrowings, deferred tax liabilities, fair value of cross currency swaps, foreign currency forward
exchange contracts and equity forwards.
105
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Financial Performance (continued)
4. Revenue
Disaggregation of revenue
Revenue is disaggregated below by business unit and region.
Energy Infrastructure
Wallumbilla Gladstone Pipeline (1)
East Coast
West Coast
Electricity Generation and Transmission (2)
Energy Infrastructure revenue from contracts with customers
Asset Management revenue from contracts with customers
Energy Investments
Other non-contract revenue
Total segment revenue excluding pass-through
Pass-through revenue
Wallumbilla Gas Pipeline hedge accounting discontinuation (3)
Income on Basslink debt investment (4)
Basslink AEMC market compensation (5)
Unallocated revenue
Total revenue
2023
$m
2022
$m
622
808
369
409
581
805
342
354
2,208
2,082
114
23
8
2,353
512
(37)
50
15
20
115
28
13
2,238
496
(15)
12
–
1
2,913
2,732
(1) Wallumbilla Gladstone Pipeline is separated from East Coast Grid in this note as a result of the significance of its revenue and EBITDA in the Group. It is
categorised as part of the East Coast Grid cash-generating unit for impairment assessment purposes in note 14.
(3)
(2) The Power Generation sub-segment has been renamed to Electricity Generation and Transmission to align the segment with the nature of operations
post the acquisition of Basslink. The results of Basslink Pty Ltd and its subsidiary are included within this segment following acquisition on 20 October
2022.
In February 2022, following entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be generated
from early calendar year 2022 to late calendar year 2025. The revenues were previously hedged by USD denominated 144A notes. WGP hedge
accounting discontinuation reflects the non-cash amortisation of the amount deferred in the hedging reserve over the same period relating to the
discontinued hedge relationship.
Income including accrued interest and the revaluation gain up until the date of acquisition of Basslink Pty Ltd and its subsidiary on 20 October 2022. As
part of the net consideration, APA was repaid the face value of its 100% interest in Basslink’s senior secured debt of $648 million. Refer to Note 26 for
further details.
(4)
(5) On 15 December 2022, the Australian Energy Market Commission (AEMC) approved Basslink’s compensation claim of $15 million for direct costs
following the application of the administered price cap during an administered price period in Queensland, New South Wales, Victoria and South
Australia in June 2022.
106
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023
Notes to the consolidated financial statements (continued)
Financial Performance (continued)
4. Revenue (continued)
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 primarily volume based and is recognised as revenue in a
manner that depicts the transfer based on 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 recognises revenue at the amount to which APA Group has a right to invoice; and
Pass-through revenue, is revenue from contracts with customers for the provision of commercial services, operating
services, asset management services and/or asset maintenance services to APA Group’s energy investments. Any
management fee earned for the provision of these services is recognised as part of asset management revenues. APA
Group recognises 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 are recognised as follows:
•
•
Other non-contract revenue: includes dividend income, which is recognised when the right to receive the payment
has been established; and
Unallocated revenue: interest income, which is recognised as it accrues and is determined using the effective interest
method and finance lease income, which is allocated to accounting periods so as to reflect a constant periodic rate of
return on APA Group’s net investment outstanding in respect of the leases.
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 and government grants
received in advance. During the year, APA Group recognised $8 million (2022: $9 million) in revenue from contracts with
customers from the unearned revenue balance at 30 June 2022.
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 are incurred whether the contract is
obtained or not (e.g. staff salaries, professional fees, etc.).
107
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Financial Performance (continued)
4. Revenue (continued)
Future revenues from remaining performance obligations
As at 30 June 2023, future contracted Energy Infrastructure revenues extending through to 2051 are approximately
$16.4 billion (2022: $17.0 billion extending through to 2051), of which $1.8 billion is expected to be recognised in the year
ending 30 June 2024. These amounts relate to Energy Infrastructure revenue from contracts, with a significant portion of
customers being high credit worthy counterparties.
Future contracted Energy Infrastructure revenues outlined above are in nominal 2023 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 the year ended 30 June
2024 and beyond.
Information about major customers
Included in revenues from contracts with customers arising from Energy Infrastructure of $2,208 million (2022: $2,083 million)
are revenues of approximately $783 million (2022: $710 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 (1)
Amortisation of deferred borrowing costs
Other finance costs
Less: amounts included in the cost of qualifying assets
(Gain)/Loss on derivatives (2)
Unwinding of discount on non-current liabilities
Unwinding of discount on deferred revenue
Interest incurred on lease liabilities
Finance costs
Defined contribution plans
Defined benefit plans (note 17)
Post-employment benefits
Termination benefits
Cash settled long-term incentive payments (3)
Equity settled long-term incentive payments (3)
Other employee benefits
Employee benefit expense (4)
2023
$m
554
196
750
51
461
512
498
10
8
516
(42)
474
(7)
8
2
2
2022
$m
537
198
735
65
431
496
452
8
6
466
(11)
455
16
8
3
2
479
484
26
2
28
2
36
8
324
398
21
2
23
1
36
(1)
264
323
(1) The average interest rate applicable to drawn debt is 4.43% p.a. (2022: 4.42% p.a.) excluding finance costs associated with amortisation of borrowing costs.
(2) Represents unrealised gains and losses on the mark-to-market valuation of derivatives.
(3) APA Group provides benefits to certain employees in the form of long-term incentive payments. For cash settled long-term incentive 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 long-term incentive
payments, a reserve is recognised equal to the portion of services received based on the fair value of the equity instrument at grant date.
(4) Employee benefit expense of $77 million (2022: $74 million) is recharged as pass-through revenue and presented as part of other operating costs –
pass-through.
108
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Financial Performance (continued)
6. Income tax
The major components of tax benefit/(expense) are:
Income statement
Current tax benefit/(expense) in respect of the current year
Adjustments recognised in the current year in relation to current tax of prior years
Deferred tax expense relating to the origination and reversal of temporary differences
Total tax expense
Tax reconciliation
Profit before tax
Income tax expense calculated at 30%
Non-assessable trust distribution
Non-deductible expenses
Non-assessable income
Franking credits received
Other
2023
$m
122
(2)
(310)
(190)
477
(143)
7
(53)
–
(189)
1
(2)
(190)
2022
$m
(83)
–
(97)
(180)
440
(132)
9
(61)
–
(184)
2
2
(180)
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 $190 million (2022: $180 million). Nil income tax payable or receivable has been
recognised (2022: $20 million payable) (refer to note 9).
109
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Financial Performance (continued)
6. Income tax (continued)
Deferred tax balances
Deferred tax (liabilities)/assets arise from the following:
2023
Gross deferred tax liabilities
Opening
balance
$m
Charged to
income
$m
Charged to
equity
$m
Closing
balance
$m
Property, plant and equipment and intangibles
(1,176)
(322)
Investments equity accounted
Deferred expenses
Other
Gross deferred tax assets
Provisions
Cash flow hedges
Deferred revenue
Defined benefit obligation
Tax losses
Net deferred tax liability
2022
Gross deferred tax liabilities
Property, plant and equipment and intangibles
Deferred expenses
Other
Gross deferred tax assets
Provisions
Cash flow hedges
Security issue costs
Deferred revenue
Investments equity accounted
Defined benefit obligation
Tax losses
Other
Net deferred tax liability
(1)
(51)
(1)
–
3
2
(1,229)
(317)
83
154
17
2
110
366
(863)
(1,080)
(51)
–
(1,131)
74
143
1
13
6
4
135
1
377
(754)
4
5
(4)
–
122
127
(190)
(96)
–
(1)
(97)
9
14
(1)
4
–
–
(25)
(1)
–
(97)
–
(1)
–
–
(1)
–
161
–
(1)
–
160
159
–
–
–
–
–
(3)
–
–
(7)
(2)
–
–
(12)
(12)
(1,498)
(2)
(48)
1
(1,547)
87
320
13
1
232
653
(894)
(1,176)
(51)
(1)
(1,228)
83
154
–
17
(1)
2
110
–
365
(863)
110
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Financial Performance (continued)
6. Income tax (continued)
Deferred tax assets
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.
Tax consolidation
APA Infrastructure Trust 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
APA Infrastructure Trust. The members of the tax-consolidated group are identified at note 25.
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.
111
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Financial Performance (continued)
7. Earnings per security
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 security
Earnings per security excluding significant items
Basic and diluted earnings excluding significant items per unit attributable to the parent
Basic and diluted earnings excluding significant items per unit attributable to the
non-controlling interest
Basic and diluted earnings per security excluding significant items
Underlying earnings per security (1)
Underlying basic and diluted earnings per unit attributable to the parent
Underlying basic and diluted earnings per unit attributable to the non-controlling interest
Underlying basic and diluted earnings per security
2023
cents
22.3
2.0
24.3
22.3
2.0
24.3
24.6
2.0
26.6
2022
cents
19.6
2.5
22.1
17.9
2.5
20.4
21.6
2.5
24.1
(1) Excludes recurring items arising from other activities and transactions that are not directly attributable to the performance of APA Group’s business
operations, and significant items.
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
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 (note 3)
Underlying net profit
Net profit attributable to unitholders of the parent
Significant items, net of tax
Net profit excluding significant items attributable to unitholders of the parent
Fair value (gains)/losses on contracts for difference, net of tax
Technology transformation projects, net of tax
Wallumbilla Gas Pipeline hedge accounting discontinuation, net of tax
Basslink debt revaluation, interest and integration costs, net of tax
Basslink AEMC Market Compensation, net of tax
Payroll review, net of tax
Underlying net profit attributable to unitholders of the parent
Underlying net profit attributable to unitholders of the non-controlling interest
Underlying net profit attributable to stapled securityholders for calculating basic and diluted
earnings per security
Adjusted weighted average number of ordinary securities used in the calculation of;
Basic earnings per security
Diluted earnings per security (1)
2023
$m
263
24
287
263
–
263
(8)
47
26
(33)
(11)
6
290
24
314
2022
$m
231
29
260
231
(20)
211
21
15
11
(9)
–
5
254
29
283
2023
No. of securities
millions
2022
No. of securities
millions
1,180
1,182
1,180
1,182
(1)
Includes $3 million (2022: $2 million) performance rights granted under long-term incentive plan. Each performance right is a right to receive one ordinary
stapled security in APA Group subject to satisfaction of certain performance hurdles and board approval. Further information can be found in the most recent
annual report. APA Group has historically instructed Link Market Services to acquire securities on-market to minimise dilution of existing securityholders.
112
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Financial Performance (continued)
8. Distributions
2023
cents per
security
2023
Total
$m
2022
cents per
security
2022
Total
$m
Recognised amounts
Final FY22 distribution paid on 14 September 2022
(30 June 2021: Final FY21 distribution paid on 15 September 2021)
Profit distribution – APA Infrastructure Trust (1)
Capital distribution – APA Infrastructure Trust
Profit distribution – APA Investment Trust (2)
Capital distribution – APA Investment Trust
6.31
15.40
1.14
5.15
28.00
74
182
13
61
330
–
18.63
1.67
6.70
27.00
(1) 30 June 2022: APA Infrastructure Trust profit distributions were fully franked and resulted in franking credits of 2.70 cents per security.
(2) 30 June 2021: APA Investment Trust profit distributions were unfranked.
Interim FY23 distribution paid on 16 March 2023
(31 December 2021: Interim FY22 distribution paid on 17 March 2022)
Profit distribution – APA Infrastructure Trust (1)
Capital distribution – APA Infrastructure Trust
Profit distribution – APA Investment Trust (2)
Capital distribution – APA Investment Trust
Total distributions recognised
Profit distributions
Capital distributions
2023
cents per
security
2023
Total
$m
2022
cents per
security
15.92
6.67
1.01
2.40
26.00
24.38
29.62
54.00
189
79
12
28
308
288
350
638
9.43
10.69
1.33
3.55
25.00
12.43
39.57
52.00
–
220
20
79
319
2022
Total
$m
111
126
16
42
295
147
467
614
(1) 31 December 2022: APA Infrastructure Trust profit distributions were partially franked and resulted in franking credits of 3.64 cents per security.
(31 December 2021: fully franked.)
(2) APA Investment Trust profit distributions were unfranked.
113
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Financial Performance (continued)
8. Distributions (continued)
Unrecognised amounts
Final FY23 distribution payable on 13 September 2023 (1)
(30 June 2022: Final FY22 distribution paid on 14 September 2022)
Profit distribution – APA Infrastructure Trust (2)
Capital distribution – APA Infrastructure Trust
Profit distribution – APA Investment Trust (3)
Capital distribution – APA Investment Trust
2023
cents per
security
2023
Total
$m
2022
cents per
security
2022
Total
$m
6.64
15.02
1.00
6.34
29.00
79
177
12
74
342
6.31
15.40
1.14
5.15
28.00
74
182
13
61
330
(1) Record date 30 June 2023.
(2) 30 June 2023: APA Infrastructure Trust profit distributions are unfranked (30 June 2022: Fully franked, franking credits of 2.70 per security).
(3) APA Investment Trust profit distributions are unfranked.
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 (receivable)/payable
Adjusted franking account balance
2023
$m
2
(2)
–
2022
$m
55
20
75
114
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities
9. Receivables
Trade receivables
Accrued revenue
Loss allowance (note 20)
Trade receivables
Receivables from associates and related parties
Finance lease receivables (note 18)
Interest receivable
Other receivables
Current
Finance lease receivables (note 18)
Other receivables
Loan receivable (note 20) (1)
Non-current
2023
$m
76
247
(4)
319
12
1
2
40
374
8
19
–
27
2022
$m
50
243
(1)
292
15
1
1
–
309
9
–
599
608
(1) During FY22, APA Group acquired 100% of the senior secured debt of Nexus Australia Management Pty Ltd (Basslink) at a discount to face value. The
loan receivable was classified as a purchased or originated credit impaired (“POCI”) financial asset. During FY23, as part of the net consideration to
acquire Basslink, APA was repaid the face value of its 100% interest in Basslink’s senior secured debt of $648 million including accrued interest and the
revaluation gain up until the date of acquisition. Refer to Note 26 for further details.
Trade receivables are non-interest bearing and are generally on 14 to 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.
10. Payables
Trade payables
Income tax payable
Other payables
Current
Other payables
Non-current
2023
$m
68
–
403
471
9
9
2022
$m
86
20
311
417
11
11
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.
115
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities (continued)
11. Assets classified as held for sale
Consolidated Statement of Financial Position
Inventories
Property, Plant and Equipment
Assets classified as held for sale
Unearned revenue
Other payables
Liabilities associated with assets classified as held for sale
Net assets associated with held for sale
2023
$m
2022
$m
–
–
–
–
–
–
–
1
294
295
25
6
31
264
Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs
of disposal if their carrying amount will be recovered principally through a sale transaction. They are not depreciated or
amortised once classified as held for sale. This condition is regarded as met only when the sale is highly probable and the
asset is available for immediate sale in its present condition.
Orbost Gas Processing Plant
On 20 June 2022, APA Group announced that it had entered into binding agreements with Cooper Energy Limited for the
sale of the Orbost Gas Processing Plant for cash consideration of between $270 million and $330 million. Completion was
reached on 28 July 2022.
The cash consideration consists of an upfront payment to APA of $210 million followed by a series of deferred payments
to APA as follows:
•
•
•
A first post-completion payment of $40 million within 12 months of completion (being the date on which ownership
of the Orbost Gas Processing Plant transfers from APA to Cooper Energy);
A second post-completion payment of between $20 million and $40 million within 24 months of completion, and
A third post-completion payment of up to $40 million within 36 months of completion.
The final amounts of the second and third post-completion payments were subject to post-completion plant performance
to be calculated at the point when APA ceased operating the Orbost Gas Processing Plant and the plant’s Major Hazard
Facility Licence (MHFL) was transferred to Cooper Energy, which occurred on 22 May 2023. No consideration relating
to post-completion plant performance has been recognised because the plant did not achieve the required levels of
production, being production rates in excess of 50 TJ/day between completion date and the MHFL transfer date. Final
cash consideration amounts to $270 million.
In FY22, immediately prior to the reclassification of the plant as held for sale, the recoverable amount was determined
and an impairment reversal of $28 million before tax was recognised to reflect the consideration estimated to be realised
from the sale of the Orbost Gas Processing Plant. The measurement of the recoverable amount excluded consideration
contingent on future plant performance.
The FY22 impairment reversal has been separately presented in the consolidated statement of profit or loss. The Orbost
Gas Processing Plant was classified as held for sale as at 30 June 2022 and depreciation was ceased on the date it was
classified as held for sale. The Orbost Gas Processing Plant was previously included within the Energy Infrastructure
operating segment.
116
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities (continued)
12. Property, plant and equipment
Freehold land
and buildings
– at cost
$m
Leasehold
improvements
– at cost
$m
Plant and
equipment –
at cost
$m
Work in
progress –
at cost
$m
ROU land and
buildings –
at cost
$m
ROU
plant and
equipment –
at cost
$m
Gross carrying amount
Balance at 1 July 2021
Additions
Disposals
Reclassified as asset held for
sale (note 11)
Transfers
Balance at 30 June 2022
Balance at 1 July 2022
Additions
Disposals
Transfers
Balance at 30 June 2023
Accumulated depreciation
and impairment
Balance at 1 July 2021
Disposals
Depreciation expense (note 5)
Impairment expense reversal
Reclassified as held for sale
(note 11)
Balance at 30 June 2022
Balance at 1 July 2022
Disposals
Depreciation expense (note 5)
Balance at 30 June 2023
Net book value
As at 30 June 2022
As at 30 June 2023
276
–
–
(2)
6
280
280
39
–
–
319
(70)
–
(8)
–
–
(78)
(78)
–
(8)
(86)
202
233
11
–
–
–
4
15
15
2
–
–
12,444
12
(34)
(533)
379
12,268
12,268
698
(17)
1,145
17
14,094
(6)
–
(1)
–
–
(7)
(7)
–
(2)
(9)
8
8
(3,540)
29
(514)
28
242
(3,755)
(3,755)
15
(528)
(4,268)
8,513
9,826
335
705
–
–
(389)
651
651
1,127
–
(1,145)
633
–
–
–
–
–
–
–
–
–
–
651
633
62
6
(9)
–
–
59
59
17
(13)
–
63
(19)
7
(10)
–
–
(22)
(22)
13
(11)
(20)
37
43
Total
$m
13,142
728
(45)
(535)
–
13,290
13,290
1,891
(35)
–
14
5
(2)
–
–
17
17
8
(5)
–
20
15,146
(6)
2
(4)
–
–
(8)
(8)
5
(5)
(8)
9
12
(3,641)
38
(537)
28
242
(3,870)
(3,870)
33
(554)
(4,391)
9,420
10,755
117
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities (continued)
12. Property, plant and equipment (continued)
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 18) 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 14.
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, climate 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, regulatory determinations,
government policy, commercial contract lives and renewals, global and regional gas supply-and-demand, and certain
climate-related risks and policies.
The impact of the above indicators and other factors that may emerge are uncertain at this time and difficult to predict.
Refer to note 14 for additional critical judgements that underpin APA’s assessments in relation to the potential impact
of climate transition risks on APA Group’s portfolio of assets which may affect asset carrying values and prospective
depreciation rates.
Energy Infrastructure Assets
In FY23 APA undertook a detailed review of the estimated useful lives of its Energy Infrastructure assets giving
consideration to APA’s Net Zero commitments, goals and targets together with APA’s most recent commercial, operational,
and technical outlooks to reduce stranded asset risk.
As a result of this review and effective from 30 June 2023, all gas infrastructure and electricity generation and
transmission assets have a maximum useful life end date of FY60 and FY57 respectively. The changes to estimated useful
lives are expected to increase future annual depreciation by $30-40 million. The changes are captured in the estimated
useful life by asset class information below.
118
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities (continued)
12. Property, plant and equipment (continued)
As at 30 June 2023, the following estimated useful lives from the date of construction are used in the calculation
of depreciation:
•
•
•
•
•
•
•
•
•
Buildings
Compressors
Gas transportation systems
Meters
Power generation facilities
Gas processing facilities
Other plant and equipment
30 – 50 years;
10 – 50 years;
10 – 80 years;
20 – 30 years;
3 – 36 years;
10 – 25 years;
3 – 20 years;
ROU land and buildings
1 – 40 years; and
ROU property, plant and equipment
1 – 4 years.
13. Goodwill and intangibles
Goodwill
Balance at beginning of financial year
Balance at end of financial year
2023
$m
1,184
1,184
2022
$m
1,184
1,184
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. Refer to note 14 for critical accounting judgements and key sources of estimation uncertainty relating to
impairment of assets.
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 (1)
2023
$m
22
1,061
43
58
1,184
2022
$m
22
1,061
43
58
1,184
(1)
Primarily represents goodwill relating to the Pilbara Pipeline System ($33 million) and the Goldfields Gas Pipeline ($19 million).
119
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities (continued)
13. Goodwill and intangibles (continued)
Software, licences, contract and other intangibles
Gross carrying amount
Balance at 1 July 2021
Additions
Transfer
Balance at 30 June 2022
Balance at 1 July 2022
Additions
Transfer
Balance at 30 June 2023
Accumulated amortisation
Balance at 1 July 2021
Amortisation expense (note 5)
Balance at 30 June 2022
Balance at 1 July 2022
Amortisation expense (note 5)
Balance at 30 June 2023
Net book value
As at 30 June 2022
As at 30 June 2023
Software –
at cost
$m
Licences –
at cost
$m
Work in
progress –
at cost
$m
Contract
and other –
at cost(1)
$m
Total
$m
81
–
26
107
107
–
17
124
(63)
(15)
(78)
(78)
(13)
(91)
29
33
2
–
1
3
3
–
1
4
(1)
(1)
(2)
(2)
(1)
(3)
1
1
17
26
(26)
17
17
12
(18)
11
–
–
–
–
–
–
17
11
3,592
3,692
2
–
3,594
3,594
2
–
28
1
3,721
3,721
14
–
3,596
3,735
(1,147)
(182)
(1,329)
(1,329)
(182)
(1,511)
2,265
2,085
(1,211)
(198)
(1,409)
(1,409)
(196)
(1,605)
2,312
2,130
(1)
Includes $2,033 million (30 June 2022: $2,204 million) of contract intangibles associated with the acquisition of Wallumbilla Gladstone Pipeline in FY15,
which are being amortised over 20 years.
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. Amortisation expense is a non-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.
The following useful lives are used in the calculation of amortisation:
•
•
•
Contract and other intangibles
1 – 20 years;
Software
Licences
4 – 7 years; and
4 years.
Contract and other intangibles
APA Group holds various third party operating and maintenance contracts. The combined gross carrying amount of
$3,596 million amortises over terms ranging from 1 to 20 years. Useful life is determined based on the underlying
contractual terms.
Software
Software is measured at cost less accumulated amortisation and impairment losses. Cost includes expenditure that is
directly attributable to the acquisition or development of software.
Licences
Licences are carried at cost less any accumulated amortisation and impairment losses.
120
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities (continued)
14. Impairment of non-financial assets
APA Group tests goodwill for impairment at least annually or whenever there is an indication that the asset may be
impaired. Other non-financial assets with finite useful lives are assessed for indicators of impairment at least annually.
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 to which it belongs.
Assets are impaired if their carrying value exceeds their recoverable amount. The recoverable amount of an asset or cash-
generating unit 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 apply 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 the higher of value-in-use calculations
and fair value less costs of disposal. Value-in-use calculations use cash flow projections based on a three year financial
business plan and thereafter a further 17 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. Fair value less costs to dispose calculations, utilise comparable market transactions
less estimated costs of disposal.
In accordance with the requirements of AASB 136 Impairment of Assets, APA Group reviewed its cash-generating units
for indicators of impairment at the end of the reporting period. No such indicators were identified and no impairment
recognised.
121
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities (continued)
14. 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; generation and transmission volumes; forecast operating costs and margins; gas field reserve estimates; for
some assets, availability of gas supply from undeveloped gas fields and contingent resources to meet forecast demand;
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
within Reserve Bank of Australia’s guidance range, the outlook for global and regional gas market supply-and-demand
conditions, internal information such as contract renewals and forecast input costs. Such estimates may change as new
information becomes available.
APA is exposed to a range of climate-related risks and opportunities across its energy infrastructure and investment
portfolios. Risks and opportunities associated with climate change including the transition to a low carbon economy
(“transition risks”) are assessed and considered as part of APA’s policy, strategy, and commercial management practices.
APA is committed to embedding consideration of its climate-related goals, targets and commitments as outlined in its
Climate Transition Plan, as well as climate risks, into its business strategy, processes and decision-making. APA will
disclose progress against its commitments and Climate Transition Plan in accordance with the Taskforce for Climate
Related Financial Disclosures.
APA continues to develop its assessment of the potential physical impacts and transition risks of climate change which
may have a material impact on the Australian energy market and may result in a material change to APA’s estimated cash
inflows and the carrying values of APA’s asset portfolio. APA has included estimates for the potential impacts of climate
change based on its current understanding, however recognises that there is an increased pace of change in the energy
industry including continuously evolving government policy and market regulation, and will continue to review and update
its estimates, assumptions and judgements, utilising inputs from external experts where necessary.
Cash flow projections include the estimated impact of mandated government climate policies, such as the Safeguard
Mechanism. Future changes in government climate policies may impose significant costs on APA and its customers
and limit future investment in the Australian energy market such as the development of new gas fields. Cash flows are
estimated for a period of up to 20 years, and for many assets include a terminal value, which assumes steady to slightly
declining cash flows over time. recognising the long term nature of the assets. The pre-tax discount rates used are 7.50%
p.a. (2022: 7.50% p.a.) for Energy Infrastructure assets and 7.50% p.a. (2022: 7.50% p.a.) for Asset Management. APA
does not consider the potential physical impacts and transition risks of climate change on the carrying value of its existing
assets to be significant based on the estimated profile of long-term cash flow returns.
For fully regulated assets, cash flows have been extrapolated on the basis of existing transportation contracts and
government policy settings, and expected contract renewals. APA Group has assumed prudent capital and operating
expenditure, appropriate regulated rates of return, and forecast inflation over the existing and renewal contract terms.
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 and firming costs 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.
Future regulatory changes to both APA’s fully regulated and non-regulated assets may result in a material change to
estimated cash inflows and the carrying value of these assets.
For certain assets single counterparty risk is more prevalent. The FY23 carrying value review includes key estimates,
assumptions and judgements regarding the recontracting of pipeline capacity including tariffs and tenure for these assets,
which may not be realised. Any future changes to these estimates, assumptions and judgements may result in a material
change to APA’s estimated cash inflows and the carrying values of certain APA assets.
122
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities (continued)
15. Provisions
Employee benefits
Other
Current
Employee benefits
Restoration provision
Non-current
Employee benefits
Incentives
Cash settled long-term incentives
Leave balances
Other employee provisions
Current
Cash settled long-term incentives
Defined benefit liability (note 17)
Leave balances
Non-current
2023
$m
158
1
159
21
92
113
47
3
60
48
158
1
10
10
21
2022
$m
135
3
138
24
70
94
40
6
57
32
135
3
12
9
24
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.
Provisions for the costs to restore leased assets to their original condition, as required by the terms and conditions of the lease, are
recognised when the obligation is incurred, at the best estimate of the expenditure that would be required to restore the assets.
Critical accounting judgements and key sources of estimation uncertainty – payroll review
In FY22, APA identified certain employees across the Group were not paid in full compliance with the Group’s obligations
under APA’s enterprise agreements (“EA’s”). The review identified payment errors to employees subject to these EA’s.
Included in employee benefits provisions is the provision for the payroll review, which represents APA’s estimate of the
historical payment errors.
The calculations of the employee payment errors involve a substantial volume of data, a high degree of complexity,
interpretation and estimation assumptions. APA has self disclosed information relating to the review to the Fair Work
Ombudsman. Detailed analysis of the seven year period subject to review is nearing completion and the results of the
analysis are reflected in the provision as at 30 June 2023. The provision also includes an estimate of any payment errors
from the end of the seven year review period through to 30 June 2023. Determining the historical employee payment
errors requires consideration of numerous clauses of the EA’s and related payroll source documentation, across each year
of the review period, for every current and former employee who may have been impacted.
Critical accounting estimates and judgements have been applied to determine the extent of the provision required.
Changes to any of these estimates and judgements have the potential to result in a future adjustment to the provision in
subsequent periods as the review continues.
123
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities (continued)
16. Other non-current assets
Line pack gas
Gas held in storage
Defined benefit asset (note 17)
2023
$m
23
5
6
34
2022
$m
23
5
4
32
17. 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 2023. 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:
2023
$m
2022
$m
Amounts recognised in the statement of profit or loss and other comprehensive income
Current service cost
Components of defined benefit costs recognised in profit or loss (note 5)
Actuarial gain on defined benefit plan
Actual return on plan assets excluding interest income
Components of defined benefit costs recognised in other comprehensive income
Amounts recognised in the statement of financial position
Fair value of plan assets
Present value of benefit obligation
Defined benefit asset – non-current (note 16)
Defined benefit liability – non-current (note 15)
Opening defined benefit obligation
Current service cost
Interest cost
Actuarial gain
Benefits 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
Closing fair value of plan assets
124
2
2
8
(3)
5
133
(137)
6
(10)
143
2
6
(8)
(6)
137
2023
$m
135
6
(3)
1
–
(6)
133
2
2
7
–
7
135
(143)
4
(12)
154
2
5
(7)
(11)
143
2022
$m
139
4
–
2
1
(11)
135
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities (continued)
17. Employee superannuation plans (continued)
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 include a discount rate of 5.4% gross
of tax (2022: 4.4%), based on the corporate bond yield curve published by Milliman, an expected salary increase rate of
4.0% (2022: 3.5%), and pension indexation rate of 3.0% (2022: 2.6%). 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 increases (decreases) by 0.5%, the defined benefit obligation would decrease by $7 million
(increase by $7 million).
If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by
$1 million (decrease by $1 million).
If the expected pension indexation rate increases (decreases) by 0.5%, the defined benefit obligation would increase
by $6 million (decrease by $6 million).
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 $4 million in contributions to the defined benefit plans during the year ending 30 June 2024.
Defined contribution plans
Contributions to defined contribution plans are expensed when incurred. The percentage rate for superannuation
guarantee contribution by APA Group is 11% from 1 July 2023, and eventually to 12% from 1 July 2025.
125
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities (continued)
18. Leases
APA Group as a lessee
The APA Group lease obligations are primarily related to commercial office leases and motor vehicles.
Lease liabilities
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
Included in the consolidated statement of financial position as part of:
Current lease liabilities
Non-current lease liabilities
2023
$m
2022
$m
32
79
24
135
72
63
16
47
63
16
38
11
65
8
57
14
43
57
APA Group has no material short-term leases, lease for low-value assets or variable lease payments.
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).
126
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities (continued)
18. Leases (continued)
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 $17 million, excluding payments for short term leases, low-value asset leases
and variable payments leases.
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 (1)
Less: unearned finance lease receivables
Present value of lease receivables
Included in the consolidated statement of financial position as part of:
Current trade and other receivables (note 9)
Non-current receivables (note 9)
2023
$m
2022
$m
2
7
4
13
(4)
9
1
8
9
2
8
4
14
(4)
10
1
9
10
(1) 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.
127
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
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 BBB/Baa2 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. APA Group’s policy is to maintain balanced and diverse funding sources through raising funds
locally and from overseas from a variety of capital markets including 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 APA Group Limited, the Responsible Entity of APA Group, and were adhered to for the entirety of the 2023
and 2022 periods.
APA Group’s capital management strategy takes into consideration the cost of capital and the state of the capital markets.
It remains focused on maintaining BBB/Baa2 investment grade credit ratings. APA Group remains focused on maintaining
BBB/Baa2 investment grade credit ratings.
The main aspects of APA Group’s capital management strategy are:
•
•
•
•
•
Distribution policy balances organic growth capex funding with strong investor returns;
Competitive investment hurdle rates;
Investment grade credit metrics provides prudent levels of gearing and access to capital markets;
Treasury policies ensures strong levels of liquidity and minimises risk; and
Insightful communications ensuring strong investor engagement.
APA Group’s Funds From Operations (FFO) to Net Debt are better than the minimum threshold levels that Moody’s and
Standard & Poor’s consider appropriate for APA Group’s BBB/Baa2 credit ratings. FFO to Net Debt is a leverage metric
that measures cash flows generated by the business that are available to service debt noting that 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 FFO to Net Debt increases (and vice versa).
19. 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.
128
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Capital Management (continued)
19. Net debt (continued)
Cash at bank and on hand (1)
Short-term deposits
Cash and cash equivalents
Guaranteed senior notes (2)
Other financial liabilities
Current borrowings
Guaranteed senior notes (2)
Guaranteed bank loans
Other financial liabilities
Less: unamortised borrowing costs
Non-current borrowings
Total borrowings
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
Net debt
2023
$m
370
143
513
(200)
(2)
(202)
(10,361)
(1,000)
(6)
46
(11,321)
(11,523)
(16)
(47)
(63)
2022
$m
520
420
940
–
(3)
(3)
(9,943)
(1,000)
(8)
49
(10,902)
(10,905)
(14)
(43)
(57)
(11,073)
(10,022)
(1) The amount shown in cash and cash equivalents includes $2 million not available for general use as at 30 June 2023 (2022: $1 million).
(2) Represents JPY MTN of ¥10,000 million, GBP MTN of £1,600 million, EUR MTN of €2,350 million and USD denominated 144a notes of US$2,250 million
measured at the exchange rate at reporting date, and AUD MTN of A$200 million (2022: Represents JPY MTN of ¥10,000 million, GBP MTN of
£1,600 million, EUR MTN of €2,350 million and USD denominated 144a notes of US$2,250 million measured at the exchange rate at reporting date, and
AUD MTN of A$200 million ). Refer to note 20 for details of interest rates and maturity profiles.
Reconciliation of net debt
Cash
and cash
equivalents
$m
Borrowings
Current
$m
Borrowings
Non-Current
$m
Lease
Liabilities
$m
Net debt as at 1 July 2021
Cash movements
Non cash changes — leases
Foreign exchange movements on debt translation
Transfer from non-current to current
Movement of deferred borrowing costs
Net debt as at 30 June 2022
Net debt as at 1 July 2022
Cash movements
Non cash changes — leases
Foreign exchange movements on debt translation
Transfer from non-current to current
Movement of deferred borrowing costs
Net debt as at 30 June 2023
652
287
–
1
–
–
940
940
(427)
–
–
–
–
513
(3)
3
–
–
(3)
–
(3)
(3)
3
–
–
(202)
–
(202)
(9,922)
(1,000)
–
17
3
–
(10,902)
(10,902)
–
–
(619)
202
(2)
(63)
15
(9)
–
–
–
(57)
(57)
17
(23)
–
–
–
Net debt
$m
(9,336)
(695)
(9)
18
–
–
(10,022)
(10,022)
(407)
(23)
(619)
–
(2)
(11,321)
(63)
(11,073)
129
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Capital Management (continued)
19. Net debt (continued)
Financing facilities available
Total facilities
Guaranteed senior notes (1)
Guaranteed bank loans
Bank borrowings (2)
Facilities used at balance date
Guaranteed senior notes (1)
Guaranteed bank loans
Bank borrowings (2)
Facilities unused at balance date
Guaranteed senior notes (1)
Guaranteed bank loans
Bank borrowings (2)
2023
$m
2022
$m
10,561
1,000
1,600
13,161
10,561
1,000
–
11,561
–
–
1,600
1,600
9,943
1,000
1,250
12,193
9,943
1,000
–
10,943
–
–
1,250
1,250
(1) Represents JPY MTN of ¥10,000 million, GBP MTN of £1,600 million, EUR MTN of €2,350 million and USD denominated 144a notes of US$2,250 million
measured at the exchange rate at reporting date, and AUD MTN of A$200 million (2022: Represents JPY MTN of ¥10,000 million, GBP MTN of £1,600
million, EUR MTN of €2,350 million and USD denominated 144a notes of US$2,250 million measured at the exchange rate at reporting date, and AUD
MTN of A$200 million). Refer to note 20 for details of interest rates and maturity profiles.
(2) Bilateral facilities executed in July 2022 ($500 million), August 2022 ($400 million) and December 2022 ($700 million).
20. Financial risk management
APA Group’s Corporate Treasury team 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 Finance Committee (AFC) and reviewed by the Board.
Based on the Treasury Risk Management Policy, 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
Risk management framework
Financial exposure
Market
Credit
Commercial transactions in foreign
currency and funding activities
Cash, receivables, interest bearing
liabilities and hedging
Liquidity
Ongoing business operations,
financial market disruptions and
new investment opportunities
The AFC 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 AFC
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 Corporate
Treasury team.
Refer to 20 (a) 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.
A detailed table shows APA
Group’s remaining contractual
maturities for its non-derivative
financial liabilities in 20 (c) Liquidity
risk section.
130
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. 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 electricity contracts 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 and operating cost).
Interest rate
APA Group’s interest rate risk
is derived predominately from
borrowings subject to floating
interest rates.
Equity price,
electricity price
and volumes
APA Group is exposed to price and
volumes risk arising from its forward
purchase contracts over listed
equities, and electricity price and
volumes risk arising from contracts
for difference in an electricity sales
agreement and a network services
agreement with customers.
Exchange rate exposures are managed within approved
policy parameters utilising foreign currency forward
exchange contracts (FECs), cross currency swap contracts
(CCS) 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;
CCS 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.
The equity price risk is managed by forward purchase
contracts held to hedge the long term incentive awards
rather than for trading purposes. APA Group does not
actively trade these holdings. Electricity price and volumes
risk is managed with an electricity sales agreement
and a network services agreement with creditworthy
counterparties. The key assumptions of the commercial
contracts 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.
131
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. Financial risk management (continued)
Foreign currency risk
Foreign currency forward exchange contracts
To manage foreign exchange risk arising from future commercial transactions such as forecast capital purchases and
operating costs, revenue, interest and debt 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):
2023
US Dollar (USD) (1)
British Pound (GBP)
Euro (EUR)
Japanese Yen (JPY)
Swedish Krona (SEK)
Canadian Dollar (CAD)
Cash & cash
equivalents
$m
Total
borrowings
$m
14
–
–
–
–
–
(3,377)
(3,048)
(3,849)
(104)
–
–
Cross
currency
swaps
$m
(1,079)
3,048
3,849
104
–
–
Forward
exchange
contract
$m
Net foreign
currency
position
$m
501
(3,941)
–
2
–
10
2
–
2
–
10
2
14
(10,378)
5,922
515
(3,927)
(1) Foreign currency exposure associated with USD revenue and receivables is used to manage the net foreign currency position (comprising USD
denominated borrowings and forward exchange contracts).
2022
US Dollar (USD) (1)
British Pound (GBP)
Euro (EUR)
Japanese Yen (JPY)
Canadian Dollar (CAD)
Cash & cash
equivalents
$m
Total
borrowings
$m
6
–
–
–
–
6
(3,262)
(2,824)
(3,569)
(107)
–
Cross
currency
swaps
$m
(1,043)
2,824
3,569
107
–
Forward
exchange
contract
$m
Net foreign
currency
position
$m
114
(4,185)
–
6
–
4
–
6
–
4
(9,762)
5,457
124
(4,175)
(1) Foreign currency exposure associated with USD revenue and receivables is used to manage the net foreign currency position (comprising USD
denominated borrowings and forward exchange contracts).
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 foreign 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.
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.
132
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. Financial risk management (continued)
The following table details the FECs outstanding at reporting date:
Cash flow hedges
2023
Forecast revenue and associated receivable
Sell USD (1)
Forecast capital purchases and operating cost
Buy USD
Buy EUR
Buy SEK
Buy CAD
Forecast foreign currency borrowings
Buy USD (1)
Average
contract rate
< 1 year
$m
1 – 2 years
$m
2 – 5 years
$m
> 5 years
$m
Fair value
$m
Contract Value
0.7166
574
632
377
0.6844
0.6260
6.7881
0.9166
0.7134
(93)
(1)
(5)
(2)
–
–
(1)
–
(182)
291
(1,727)
(1,096)
–
–
(3)
–
(60)
314
–
–
–
(2)
–
–
(2)
(104)
2
–
–
–
118
16
(1) APA entered into a series of FEC’s in February 2022 to manage FX exposure from March 2022 to December 2025 on WGP monthly revenue, the
bi-annual interest payments on the USD denominated debt, and the USD denominated debt repayment in 2025.
2022
Forecast revenue and associated receivable
Sell USD (1)
Forecast capital purchases and operating cost
Buy USD
Buy EUR
Buy CAD
Forecast foreign currency borrowings
Buy USD (1)
Contract Value
Average
contract rate
< 1 year
$m
1 – 2 years
$m
2 – 5 years
$m
Fair value
$m
0.7181
367
431
766
(75)
0.7055
0.6298
0.9133
0.7124
(64)
(6)
(4)
–
293
(80)
–
–
–
351
–
–
–
(1,544)
(778)
4
–
–
71
–
(1) APA entered into a series of FEC’s in February 2022 to manage FX exposure from March 2022 to December 2025 on WGP monthly revenue, the
bi-annual interest payments on the USD denominated debt, and the USD denominated debt repayment in 2025.
133
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. Financial risk management (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:
Foreign
currency
Exchange rate
< 1 year
$m
1 – 2 years
$m
2 – 5 years
$m
> 5 years
$m
Contract Value
Cash flow hedges
2023
Pay AUD/receive foreign currency
2012 GBP Medium Term Notes
2017 US144A
2019 GBP Medium Term Notes
AUD/GBP
AUD/USD
AUD/GBP
0.6530
0.7668
0.5388
2019 JPY Medium Term Notes
AUD/JPY
75.2220
2020 EUR Medium Term Notes
2021 EUR Medium Term Notes
2021 GBP Medium Term Notes
AUD/EUR
AUD/EUR
AUD/GBP
0.5895
0.6464
0.5530
Pay USD/receive foreign currency
2015 EUR Medium Term Notes
2015 GBP Medium Term Notes
USD/EUR
USD/GBP
0.9514
0.6773
2022
Pay AUD/receive foreign currency
2012 GBP Medium Term Notes
2017 US144A
2019 GBP Medium Term Notes
AUD/GBP
AUD/USD
AUD/GBP
0.6530
0.7668
0.5388
2019 JPY Medium Term Notes
AUD/JPY
75.2220
2020 EUR Medium Term Notes
2021 EUR Medium Term Notes
2021 GBP Medium Term Notes
AUD/EUR
AUD/EUR
AUD/GBP
0.5895
0.6464
0.5530
Pay USD/receive foreign currency
2015 EUR Medium Term Notes
2015 GBP Medium Term Notes
USD/EUR
USD/GBP
0.9514
0.6773
–
–
–
–
–
–
–
–
–
–
–
(1,108)
–
–
–
–
–
(1,025)
–
(2,133)
(536)
–
–
–
–
–
–
–
–
(536)
Contract Value
–
–
(742)
(133)
(1,018)
(1,702)
(452)
–
(1,329)
(5,376)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(536)
–
–
–
–
–
–
(991)
–
(1,527)
–
(1,108)
(742)
(133)
(1,018)
(1,702)
(452)
–
(1,285)
(6,440)
Foreign
currency
Exchange rate
< 1 year
$m
1 – 2 years
$m
2 – 5 years
$m
> 5 years
$m
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.
134
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. Financial risk management (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 and EUR 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.
•
•
Net profit would increase by $3 million with a 20 percent depreciation of AUD or decrease by $2 million with a
20 percent increase in AUD (2022: increase by $2 million or decrease by $1 million respectively); and
Equity reserves would decrease by $389 million with a 20 percent depreciation of the AUD or increase by $260 million
with a 20 percent increase in AUD (2022: decrease by $465 million or increase by $312 million respectively).
Interest rate risk
APA Group’s interest rate risk is derived predominately from borrowings. 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. Interest rate risk relating to APA Group’s financial assets is limited to cash and cash equivalents amounting to
$513 million as at 30 June 2023 (2022: $940 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
2023
% p.a.
2022
% p.a.
2023
$m
2022
$m
2023
$m
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 (1)
5 years and more (1)
7.28
4.82
4.04
–
–
4.20
2.84
536
2,634
5,876
9,046
–
–
2,027
6,940
8,967
95
134
(428)
(199)
(1) This amount includes a notional amount of USD 1.6 billion (2022: USD 1.6 billion).
2022
$m
–
–
25
(248)
(223)
135
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. Financial risk management (continued)
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.
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
Cash flow hedge
reserve balance
2023
$m
2022
$m
2023
$m
2022
$m
2023
$m
2022
$m
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 foreign currency
borrowings (FECs)
Hedging capital purchases (FECs)
Interest rate risk
Hedging AUD borrowings (IRS)
(224)
(231)
225
242
788
245
(69)
(76)
89
2
25
(253)
(54)
(75)
71
3
8
(278)
69
76
(89)
(2)
(24)
255
54
75
(71)
(3)
(8)
289
69
73
32
(2)
(24)
936
54
74
(6)
(3)
(8)
356
Change in fair values of hedge
instruments (1)
Change in fair values of hedged
items (1)
2023
$m
2022
$m
2023
$m
2022
$m
Foreign exchange risk
Hedging foreign currency borrowings (cross currency swap)
Hedging revenue and associated receivables (foreign currency
borrowings)
Hedging revenue and associated receivables (FECs)
Hedging foreign currency borrowings (FECs)
Hedging capital purchases (FECs)
Interest rate risk
Hedging AUD borrowings (IRS)
7
(15)
(20)
18
3
17
10
(38)
(35)
(74)
71
3
8
(65)
(17)
15
19
(18)
(3)
(16)
(20)
38
35
74
(71)
(3)
(8)
65
(1) This table excludes change in fair values of forecast transactions no longer expected to occur.
136
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. Financial risk management (continued)
Foreign exchange risk
Hedging foreign currency borrowings (cross currency swap)
Hedging revenue and associated receivables
(foreign currency borrowings)
Hedging revenue and associated receivables (FECs)
Hedging foreign currency borrowings (FECs)
Hedging capital purchases (FECs)
Interest rate risk
Hedging US$ denominated borrowings (interest rate swap)
(1) Hedge ineffectiveness gain (loss) shown is cumulative
Interest rate sensitivity analysis
Hedge ineffectiveness
gain/(loss) (1)
Balance relating to discontinued
cash flow hedges
2023
$m
2022
$m
2023
$m
2022
$m
(2)
–
–
–
–
–
(2)
(8)
–
–
–
–
–
(8)
–
81
–
–
–
23
104
–
118
–
–
28
146
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 possible change in interest rates over the short term. At reporting date, if interest rates had been 100 basis points
lower or higher and all other variables were held constant, APA Group’s equity reserves would increase by $29 million
with a 100 basis point decrease in interest rates or decrease by $42 million with a 100 basis point increase in interest
rates (2022: increase by $70 million or decrease by $41 million 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 hedge long term incentive awards 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 contracts for difference in an electricity sales agreement and a
network services agreement with customers. The contract guarantees the Group a fixed price for electricity offtake and
contracts to provide network services in exchange, of which, a portion of the fee is fixed against the price of capacity. The
key assumptions of the contract for difference are provided in the fair value of financial instrument section.
137
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. 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 dealing with creditworthy counterparties or 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- (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 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 AFC. 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.
Cash and cash equivalents and cash on deposit
A- (Standard & Poor’s)/
Performing
12-month ECL
A3 (Moody’s) or higher
External credit rating
Internal credit rating
ECL method (1)
Trade receivables
Finance lease receivables
Contract assets
Loan receivable
Loans advanced to related parties
Redeemable preference shares (GDI)
N/A
N/A
N/A
N/A
N/A
N/A
(2)
(2)
(2)
(3)
Performing
Performing
Lifetime ECL
(simplified approach)
Lifetime ECL
(simplified approach)
Lifetime ECL
(simplified approach)
Lifetime ECL
12-month ECL
12-month ECL
(1) 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.
(2) 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.
(3) Loan receivables were considered credit-impaired at initial recognition and classified as purchased or originated credit impaired (“POCI”) assets.
Accordingly, lifetime expected credit losses (ECLs) are included in the estimated cash flows when calculating the credit-adjusted effective interest rate
(EIR) on initial recognition and no loss allowance is recognised. APA Group continues to inspect any indication of deterioration of debt subsequent to the
acquisition date in determining whether any objective evidence exists to be impaired. There has been no movement in expected credit losses since the
date of acquisition. Refer to Note 9 for further detail.
138
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. Financial risk management (continued)
Cross guarantee
In accordance with a deed of cross guarantee, APA Infrastructure Limited, a subsidiary of APA Group, has agreed to provide
financial support, as and when required, to all wholly-owned controlled entities that have ascended to the deed 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 2023 has been determined to be immaterial and no liability has been recorded (2022: $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 following table are APA Group’s remaining contractual maturities for its financial liabilities including AUD
and foreign currency denominated notes, cross currency swaps and interest rate swaps in aggregate. The table shows the
undiscounted Australian dollar cash flows and includes both interest and principal cash flows.
Maturity
Average
interest rate
% p.a.
Less than
1 year
$m
1 – 5 years
$m
More than
5 years
$m
Contract Value
2023
Unsecured financial liabilities
Trade and other payables
Guaranteed bank loans (1)
Guaranteed bank loans (1)
Denominated in A$
Other financial liabilities
Guaranteed Senior Notes (3)
Denominated in A$
20-May-27
20-May-29
3.77
3.88
2016 AUD Medium Term Notes
20-Oct-23
Denominated in US$
2015 US 144A (2)
2015 US 144A (2)
2017 US 144A
Denominated in stated foreign currency
2012 GBP Medium Term Notes
2015 GBP Medium Term Notes (2)
2015 EUR Medium Term Notes (2)
2019 GBP Medium Term Notes
2019 JPY Medium Term Notes
2020 EUR Medium Term Notes
2021 EUR Medium Term Notes
2021 EUR Medium Term Notes
2021 GBP Medium Term Notes
23-Mar-25
23-Mar-35
15-Jul-27
26-Nov-24
22-Mar-30
22-Mar-27
18-Jul-31
13-Jun-34
15-Jul-30
15-Mar-29
15-Mar-33
15-Mar-36
3.75
4.20
5.00
4.25
4.25
3.50
2.00
3.13
1.03
2.00
0.75
1.25
2.50
471
25
26
3
204
69
23
59
40
60
45
34
6
39
27
29
19
–
574
105
5
–
1,720
90
1,314
555
238
1,161
135
23
158
110
117
77
–
526
–
–
–
608
–
–
1,449
–
859
167
1,117
956
920
606
(1) Bank facilities mature on 20 May 2027 ($500 million limit) and 20 May 2029 ($500 million limit). The facilities are fully drawn at reporting date.
(2) Facilities are denominated in or fully swapped by way of CCS into USD. Cashflows represent the USD cashflow translated at the USD/AUD spot rate as
at 30 June 2023. These amounts are fully hedged by FECs or future USD revenues.
(3) Rates shown are the coupon rate in the currency of issuance.
1,179
6,382
7,208
139
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. Financial risk management (continued)
Maturity
Average
interest rate
% p.a.
Less than
1 year
$m
1 – 5 years
$m
More than
5 years
$m
Contract Value
2022
Unsecured financial liabilities
Trade and other payables
Unsecured bank borrowings (1)
Denominated in A$
Other financial liabilities
Denominated in US$
Guaranteed Senior Notes (3)
Denominated in A$
2016 AUD Medium Term Notes
20-Oct-23
3.75
Denominated in US$
2015 US 144A (2)
2015 US 144A (2)
2017 US 144A
Denominated in stated foreign currency
2012 GBP Medium Term Notes
2015 GBP Medium Term Notes (2)
2015 EUR Medium Term Notes (2)
2019 GBP Medium Term Notes
2019 JPY Medium Term Notes
2020 EUR Medium Term Notes
2021 EUR Medium Term Notes
2021 EUR Medium Term Notes
2021 GBP Medium Term Notes
23-Mar-25
23-Mar-35
15-Jul-27
26-Nov-24
22-Mar-30
22-Mar-27
18-Jul-31
13-Jun-34
15-Jul-30
15-Mar-29
15-Mar-33
15-Mar-36
4.20
5.00
4.25
4.25
3.50
2.00
3.13
1.03
2.00
0.75
1.25
2.50
417
25
3
8
67
22
59
39
57
43
34
6
39
27
29
19
–
(8)
7
204
1,729
87
235
595
230
1,165
135
23
157
110
117
77
–
(7)
1
–
–
609
1,138
–
1,458
–
894
172
1,156
983
949
625
894
4,863
7,978
(1) Bank facilities mature or expire on 18 July 2022 ($50 million limit), 30 June 2023 ($500 million limit), 1 July 2023 ($50 million limit), 18 July 2023
($100 million limit), 31 December 2023 ($500 million limit), 19 December 2025 ($50 million limit), 20 May 2027 ($500 million limit) and 20 May 2029
($500 million limit). Additionally, undrawn bank facilities are maturing or expiring in FY23 and FY24.
(2) Facilities are denominated in or fully swapped by way of CCS into US$. Cashflows represent the US$ cashflow translated at the USD/AUD spot rate
as at 30 June 2022. These amounts are fully hedged by FECs or future US$ revenues.
(3) 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.
140
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. Financial risk management (continued)
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).
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 2023 (2022: 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 value of indexed revenue contract is derived from present value of expected future cash flows based on
observable inflation indices and yield curve at the end of the reporting period. 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.
141
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. Financial risk management (continued)
Contracts for difference
The financial statements include contracts 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 and a network services agreement where
the Group exchanges variable interregional electricity revenues for a fixed fee based on capacity. The contracts are at fair
value. The fair value of the contracts 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:
•
•
•
•
For the electricity sales agreement, the estimated long term forecast electricity pool prices are applied as market prices
are not readily observable for the corresponding term. Forecast electricity volumes are also estimated based on an
internal forecast output model;
For the network services agreement, the variable inter-regional revenues were forecast based on the interconnector’s
historical spot prices and electricity volumes as these inputs are not readily observable;
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
2023
Financial assets measured at fair value
Interest rate swaps used for hedging
Cross currency swap contracts used for hedging
Foreign currency forward exchange contracts used for hedging
Contracts for difference
Financial liabilities measured at fair value
Cross currency swap contracts used for hedging
Foreign currency forward exchange contracts used for hedging
Contracts for difference
Indexed revenue contract
Level 1
$m
Level 2
$m
Level 3
$m
–
–
–
–
–
–
–
–
–
–
25
286
121
–
432
509
106
–
12
627
–
–
–
13
13
–
–
3
–
3
Total
$m
25
286
121
13
445
509
106
3
12
630
142
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023
Notes to the consolidated financial statements (continued)
Capital Management (continued)
20. Financial risk management (continued)
2022
Financial assets measured at fair value
Equity forwards designated as fair value through profit or loss
Interest rate swaps used for hedging
Cross currency swap contracts used for hedging
Foreign currency forward exchange contracts used for hedging
Contracts for difference
Financial liabilities measured at fair value
Interest rate swaps used for hedging
Cross currency swap contracts used for hedging
Foreign currency forward exchange contracts used for hedging
Indexed revenue contract
Contracts for difference
Reconciliation of Level 3 fair value measurements
Opening balance
Revaluation
Settlement
Closing balance
Level 1
$m
Level 2
$m
Level 3
$m
–
–
–
–
–
–
–
–
–
–
–
5
13
235
104
–
357
4
467
105
12
–
588
–
–
–
–
9
9
–
–
–
11
11
2023
$m
(2)
17
(5)
10
Total
$m
5
13
235
104
9
366
4
467
105
12
11
599
2022
$m
28
(27)
(3)
(2)
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 Australian Dollar Medium Term Notes
Unsecured Japanese Yen Medium Term Notes
Unsecured US Dollar 144A Medium Term Notes
Unsecured British Pound Medium Term Notes
Unsecured Euro Medium Term Notes
Carrying amount (1)
Fair value (Level 2) (2)
2023
$m
2022
$m
2023
$m
2022
$m
200
104
3,366
3,031
3,825
10,526
200
107
3,249
2,805
3,542
9,903
199
96
3,231
2,432
3,095
9,053
198
100
3,213
2,493
2,874
8,878
(1) The methodology applied to determine carrying amount represents the borrowings at amortised cost. The comparative year has been updated to reflect
this methodology.
(2) 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.
143
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Capital Management (continued)
21. Other financial instruments
Derivatives at fair value:
Contracts for difference
Equity forward contracts
Derivatives at fair value designated as hedging instruments:
Cross currency swaps – cash flow hedges (1)
Foreign exchange contracts – cash flow hedges
Interest rate swaps – cash flow hedges (1)
Current
Derivatives at fair value:
Contracts for difference
Equity forward contracts
Indexed revenue contracts
Derivatives at fair value designated as hedging instruments:
Cross currency swaps – cash flow hedges
Foreign exchange contracts – cash flow hedges
Interest rate swaps – cash flow hedges
Financial items carried at amortised cost:
Redeemable preference shares (2)
Non-current
Assets
2023
$m
Liabilities
2022
$m
2023
$m
2022
$m
–
–
22
17
10
49
13
–
–
288
104
15
10
430
–
1
18
13
–
32
9
4
–
235
91
13
10
362
3
–
159
45
–
207
–
–
12
379
61
–
–
452
11
–
164
27
4
206
–
–
12
332
78
–
–
422
(1) Derivatives at fair value for Cross currency interest rate swaps and Interest rate swaps include interest receivables and payables.
(2) Redeemable preference shares relate to APA Group’s 20% interest in GDI (EII) Pty Ltd. In December 2011, APA sold 80% of its gas distribution network
in South East Queensland (Allgas) into an unlisted investment entity, GDI (EII) Pty Ltd. At that date GDI issued 52 million Redeemable Preference Shares
(RPS) to its owners. The shares were redeemed in December 2021 and new redeemable preference shares were issued. 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.
144
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023
Notes to the consolidated financial statements (continued)
Capital Management (continued)
21. Other financial instruments (continued)
Fair value measurement
For information about the methods and assumptions used in determining the fair value of financial instruments refer to note 20.
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.
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
APA Group does not have any debt or derivative instruments directly linked to US LIBOR, EURIBOR, GBP LIBOR or JPY
LIBOR (collectively ‘IBORs’). APA Group only has an indirect exposure to the IBORs in relation to the valuation of Cross
Currency Swaps that are designated in hedging relationships. APA has continued to monitor for any potential impact on
the valuation of derivative instruments as a result of the transition. As at 30 June 2023, any potential impact is limited and
not considered significant.
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 the 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 the cash flow hedge reserve is reclassified immediately to profit or loss.
145
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Capital Management (continued)
21. Other financial instruments (continued)
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 swaps are deferred in other comprehensive income.
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 the non-
designated component of a 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
2023
$m
(343)
(643)
(62)
4
167
160
(717)
2022
$m
(366)
(200)
48
25
160
(10)
(343)
In 2023, the foreign currency basis spread reserve balance at the beginning of the financial year is $13 million and at the
end of financial year is ($13 million) (2022: ($70 million) at the beginning of the financial year).
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 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.
146
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Capital Management (continued)
21. Other financial instruments (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. 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 20, the history of collection rates and forward-looking information that is available without undue cost or effort
shows that APA Group has immaterial 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.
22. Issued capital
Units
1,179,893,848 securities, fully paid (2022: 1,179,893,848 securities, fully paid) (1)
2023
$m
2022
$m
1,964
2,225
Movements
Balance at beginning of financial year
Capital distributions paid (note 8)
Balance at end of financial year
(1) Fully paid securities carry one vote per security and carry the right to distributions.
The Trust does not have a limited amount of authorised capital.
2023
No. of units
in millions
2023
$m
2022
No. of units
in millions
1,180
–
1,180
2,225
(261)
1,964
1,180
–
1,180
2022
$m
2,571
(346)
2,225
147
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Group Structure
23. Non-controlling interests
APA Infrastructure Trust is deemed the parent entity of APA Group comprising of the stapled structure of APA Infrastructure
Trust and APA Investment Trust. Equity attributable to other trusts stapled to the parent is a form of non-controlling interest
and represents 100% of the equity of APA Investment Trust.
Summarised financial information for APA Investment Trust is set out below, the amounts disclosed are before inter-entity
eliminations.
Financial position
Current assets
Non-current assets
Total assets
Total liabilities
Net assets
Equity attributable to non-controlling interests
Financial performance
Revenue
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
2023
$m
1
566
567
–
567
567
24
24
24
25
90
(114)
(114)
2022
$m
1
657
658
–
658
658
29
29
29
30
126
(157)
(157)
The accounting policies of APA Investment Trust are the same as those applied to APA Group.
There are no material guarantees, contingent liabilities or restrictions imposed on APA Group from APA Investment Trust’s
non-controlling interests.
APA Investment Trust
Equity attributable to non-controlling interests
APA Investment Trust
Issued capital:
Balance at beginning of financial year
Distribution – capital return (note 8)
Retained earnings:
Balance at beginning of financial year
Net profit attributable to APA Investment Trust unitholders
Distributions paid (note 8)
148
2023
$m
567
567
644
(89)
555
13
24
(25)
12
2022
$m
658
658
765
(121)
644
19
29
(35)
13
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Group Structure (continued)
24. 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.
Principal activity
Country of incorporation
2023
2022
Ownership interest %
Energy Infrastructure Investments Energy infrastructure
Gas transmission
Gas transmission
Power generation (wind)
Australia
Australia
Australia
Australia
50.0
50.0
19.9
20.2
50.0
50.0
19.9
20.2
Name of entity
Joint ventures:
SEA Gas
SEA Gas (Mortlake)
EII 2
Associates:
GDI (EII)
Gas distribution
Australia
20.0
20.0
Investment in joint ventures and associates using the equity method
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
2023
$m
273
2022
$m
266
246
238
17
4
21
27
6
–
6
22
18
40
28
5
7
12
149
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
Notes to the consolidated financial statements (continued)
Group Structure (continued)
24. Joint arrangements and associates (continued)
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 values of the investment in joint arrangements and associates are subject to impairment testing if there is
objective evidence of impairment. No material indicators were identified in the joint arrangements and associates as at the
date of the issuance of these financial statements.
Critical accounting judgements and key sources of estimation uncertainty – joint ventures and associates
Indicators that APA’s investment in joint ventures and associates may be impaired include evidence of significant financial
difficulty of the associate or joint venture; a breach of contract, the potential that the associate or joint venture will enter
bankruptcy or other financial reorganisation, or the disappearance of an active market for the investment because of
financial difficulties of the associate or joint venture.
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 27.
APA Group is a party to the following joint operations:
Name of venture
Principal activity
Goldfields Gas Transmission (1)
Gas pipeline operation – Western Australia
Output interest
2023
%
88.2
2022
%
88.2
(1) On 17 August 2004, APA acquired a direct interest in the Goldfields Gas Transmission joint operations as part of the SCP Gas Business acquisition.
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.
150
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Group Structure (continued)
25. Subsidiaries
Subsidiaries are entities controlled by APA Infrastructure Trust. Control exists where APA Infrastructure Trust has power
over the entities, i.e. existing rights that give 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
APA Infrastructure Trust (1)
Subsidiaries
Agex Pty. Ltd. (2),(3)
APA (BWF Holdco) Pty Ltd (2),(3)
APA (EDWF Holdco) Pty Ltd (2),(3)
APA (EPX) Pty Limited (2),(3)
APA (NBH) Pty Limited (2),(3)
APA (Pilbara Pipeline) Pty Ltd (2),(3)
APA (SWQP) Pty Limited (2),(3)
APA (WA) One Pty Limited (2),(3)
APA AIS 1 Pty Limited (2),(3)
APA AIS 2 Pty Ltd (2),(3)
APA AIS Pty Limited (2),(3)
APA AM (Allgas) Pty Limited (2),(3)
APA BIDCO Pty Limited (2),(3)
APA Biobond Pty Limited (2),(3)
APA Country Pipelines Pty Limited (2),(3)
APA DPS Holdings Pty Limited (2),(3)
APA DPS2 Pty Limited (2),(3)
APA East Pipelines Pty Limited (2),(3)
APA EE Australia Pty Limited (2),(3)
APA EE Corporate Shared Services Pty Limited (2),(3)
APA EE Holdings Pty Limited (2),(3)
APA EE Pty Limited (2),(3)
APA Electricity T&D Holdings Pty Ltd (2),(3)
APA Electricity T&D Pty Ltd (2),(3)
APA Ethane Pty Limited (2),(3)
APA Facilities Management Pty Limited (2),(3)
APA Group Limited (2)
APA Infrastructure Limited (2),(3)
APA Midstream Holdings Pty Limited (2),(3)
APA Northern Goldfields Interconnect Pty Ltd (2),(3)
APA Operations (EII) Pty Limited (2),(3)
APA Operations Pty Limited (2),(3)
APA Orbost Gas Plant Pty Ltd (2),(3)
APA Pipelines Investments (BWP) Pty Limited (2),(3)
APA Power Holdings Pty Limited (2),(3)
APA Power PF Pty Limited (2),(3)
Country of registration/
incorporation
Ownership interest
2023
%
2022
%
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
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
151
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Name of entity
APA Reedy Creek Wallumbilla Pty Limited (2),(3)
APA SEA Gas (Mortlake) Holdings Pty Ltd (2),(3)
APA SEA Gas (Mortlake) Pty Ltd (2)
APA Services (Int) Inc.
APA Sub Trust No 1 (2),(4)
APA Sub Trust No 2 (2),(4)
APA Sub Trust No 3 (2),(4)
APA Transmission Pty Limited (2),(3)
APA US Investments
APA VTS A Pty Limited (2),(3)
APA VTS Australia (Holdings) Pty Limited (2),(3)
APA VTS Australia (NSW) Pty Limited (2),(3)
APA VTS Australia (Operations) Pty Limited (2),(3)
APA VTS Australia Pty Limited (2),(3)
APA VTS B Pty Limited (2),(3)
APA Western Slopes Pipeline Pty Limited (2),(3)
APA WGP Pty Ltd (2),(3)
APT (MIT) Services Pty Limited (2),(3)
APT AM (Stratus) Pty Limited (2),(3)
APT AM Employment Pty Limited (2),(3)
APT AM Holdings Pty Limited (2),(3)
APT Facility Management Pty Limited (2),(3)
APT Goldfields Pty Ltd (2),(3)
APT Management Services Pty Limited (2),(3)
APT O&M Holdings Pty Ltd (2),(3)
APT O&M Services (QLD) Pty Ltd (2),(3)
APT O&M Services Pty Ltd (2),(3)
APT Parmelia Holdings Pty Ltd (2),(3)
APT Parmelia Pty Ltd (2),(3)
APT Parmelia Trust (2),(4)
APT Petroleum Pipelines Holdings Pty Limited (2),(3)
APT Petroleum Pipelines Pty Limited (2),(3)
APT Pipelines (NSW) Pty Limited (2),(3)
APT Pipelines (NT) Pty Limited (2),(3)
APT Pipelines (QLD) Pty Limited (2),(3)
APT Pipelines (SA) Pty Limited (2),(3)
APT Pipelines (WA) Pty Limited (2),(3)
APT Pipelines Investments (NSW) Pty Limited (2),(3)
APT Pipelines Investments (WA) Pty Limited (2),(3)
APT Sea Gas Holdings Pty Limited (2),(3)
APT SPV2 Pty Ltd (2)
APT SPV3 Pty Ltd (2)
Basslink Pty Ltd (2),(3)
Basslink Telecoms Pty Ltd (2),(3)
Central Ranges Pipeline Pty Ltd (2),(3)
Darling Downs Solar Farm Pty Ltd (2),(3)
Diamantina Holding Company Pty Limited (2),(3)
152
Country of registration/
incorporation
Australia
Australia
Australia
United States
–
–
–
Australia
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
2023
%
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
2022
%
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
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Name of entity
Diamantina Power Station Pty Limited (2),(3)
East Australian Pipeline Pty Limited (2),(3)
EDWF Holdings 1 Pty Ltd (2),(3)
EDWF Holdings 2 Pty Ltd (2),(3)
EDWF Manager Pty Ltd (2),(3)
Epic Energy East Pipelines Trust (2),(4)
EPX Holdco Pty Limited (2),(3)
EPX Member Pty Limited (2),(3)
EPX Trust (2),(4)
Ethane Pipeline Income Financing Trust (2),(4)
Ethane Pipeline Income Trust (2),(4)
Gasinvest Australia Pty Ltd (2),(3)
GasNet A Trust (4)
GasNet Australia Investments Trust (4)
GasNet Australia Trust (2),(4)
Goldfields Gas Transmission Pty Ltd (2)
Gorodok Pty. Ltd. (2),(3)
Griffin Windfarm 2 Pty Ltd (2)
InfraEnergy Solutions Pty Limited (2),(3),(5)
Moomba to Sydney Ethane Pipeline Trust (2),(4)
N.T. Gas Distribution Pty Limited (2),(3)
N.T. Gas Pty Limited
Roverton Pty. Ltd. (2),(3)
SCP Investments (No. 1) Pty Limited (2),(3)
SCP Investments (No. 2) Pty Limited (2),(3)
SCP Investments (No. 3) Pty Limited (2),(3)
Sopic Pty. Ltd. (2),(3)
Southern Cross Pipelines (NPL) Australia Pty Limited (2),(3)
Southern Cross Pipelines Australia Pty Limited (2),(3)
Trans Australia Pipeline Pty Ltd (2),(3)
Votraint No. 1606 Pty Limited (2)
Votraint No. 1613 Pty Limited (2)
Western Australian Gas Transmission Company 1 Pty Ltd (2),(3)
Wind Portfolio Pty Ltd (2),(3)
Country of registration/
incorporation
Australia
Australia
Australia
Australia
Australia
–
Australia
Australia
–
–
–
Australia
–
–
–
Australia
Australia
Australia
Australia
–
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
2023
%
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
2022
%
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
(1) APA Infrastructure Trust is the head entity within the APA tax-consolidated group.
(2) These entities are members of the APA tax-consolidated group.
(3) These wholly-owned subsidiaries have entered into a deed of cross guarantee with APA Infrastructure Limited pursuant to ASIC Corporations Instrument
2016/785 and are relieved from the requirement to prepare and lodge an audited financial report.
(4) These trusts are unincorporated and not required to be registered.
(5) This entity’s name was changed from N.T. Gas Easements Pty Limited on 27th April 2023.
153
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Other items
26. Basslink asset acquisition
On 20 October 2022, APA Group acquired 100% of Basslink Pty Ltd and its subsidiary Basslink Telecoms Pty Ltd (together
referred to as Basslink) for a total consideration of $783 million (inclusive of cash acquired). Basslink owns and operates
the 370km high voltage direct current (HVDC) electricity interconnector between Victoria and Tasmania. Contracts
are in place with Hydro Tasmania and the State of Tasmania. The contracts provide predictable revenues, facilitate
the operations of the interconnector and institute operational improvements whilst APA works to convert Basslink to a
regulated asset under an agreed consultation process. A revenue contract is in place with Hydro Tasmania until 30 June
2025, by which point the parties expect Basslink to become regulated.
The acquisition adds a third electricity interconnector to APA’s energy infrastructure portfolio and is consistent with APA’s
strategy to increase its electricity transmission footprint and to play a leading role in the energy transition.
The Directors have elected to apply the optional concentration test allowed under AASB 3 Business Combinations to
determine whether the transaction can be accounted for as an asset acquisition. As substantially all of the fair value of
the gross assets acquired is concentrated in the interconnector assets within property, plant and equipment, the Directors
have determined it is appropriate to account for the transaction as an asset acquisition.
Included in the consolidated net profit for the year ended 30 June 2023 is revenue of $60 million and underlying
earnings before interest, tax, depreciation and amortisation of $29 million, excluding the AEMC market compensation
and integration costs, attributable to Basslink following acquisition.
Details of the purchase consideration and the consideration allocated to the individual identifiable assets and liabilities
on the basis of their relative fair values at the date of the acquisition are set out below:
Net assets acquired
Current assets
Cash and cash equivalents
Trade and other receivables
Other
Current assets
Non-current assets
Property, plant and equipment (1)
Non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Current liabilities
Non-current liabilities
Provisions
Non-current liabilities
Total liabilities
Net assets acquired
Cash balances acquired
Total consideration (2)
2023
$m
25
9
10
44
760
760
804
6
3
9
12
12
21
783
(25)
758
(1) Transaction costs of $25 million including stamp duty and acquisition costs have been capitalised into the cost of the interconnector in accordance with
AASB 116 Property, Plant & Equipment.
(2) The total consideration included the proceeds from the settlement of the loan receivable from Basslink of $648 million which was net settled as part of
the acquisition process and hence has been excluded from the statement of cash flows. $110 million has been included within investing cash flows as
part of the “Payments for property, plant and equipment” line item in the statement of cash flows.
154
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Other (continued)
27. 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
2023
$m
213
15
228
2022
$m
549
19
568
57
42
APA Group is subject to a range of operational matters, which can at times raise exposure to assets and liabilities that
are uncertain and cannot be measured reliably. This includes our exposure to matters such as regulatory requirements,
changes in law, climate change policy, changes to licencing and recognised practising codes including health, safety and
environment, employee entitlements, environmental laws and regulations, occupational health and safety requirements,
technical and safety standards and asset construction and operation compliance requirements. The preparation of the
financial statements requires management to make judgements and estimates and form assumptions that affect the
amounts of contingent assets and liabilities reported in the financial statements.
These judgements, estimates and assumptions are based on the most current facts and circumstances and are reassessed
on an ongoing basis, the results of which form the basis of the reported amounts that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions and conditions. This may materially
affect financial results and the financial position to be reported in future periods. APA Group continues to assess these
judgements, estimates and assumptions relating to the disclosure of contingent assets and liabilities.
Contingent assets and liabilities relate predominantly to possible benefits or obligations whose existence will only be
confirmed by uncertain future events and present obligations where the transfer of economic resources is not probable or
cannot be reliably estimated. Therefore such amounts are not recognised in the financial statements.
As at 30 June 2023 and 30 June 2022 APA Group had no material contingent liabilities, other than the bank guarantees
disclosed above.
APA Group had nil contingent assets as at 30 June 2023 and 30 June 2022.
28. 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 Directors
Total remuneration: Directors
2023
2022
1,673,901
1,749,069
149,671
174,905
1,823,572
1,923,974
4,112,061
2,653,667
31,563
138,770
2,575,647
6,858,041
8,681,613
27,500
229,988
1,077,997
3,989,152
5,913,126
155
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Other (continued)
28. Director and Executive Key Management Personnel remuneration (continued)
Remuneration of Executive Key Management Personnel
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 (1), (2)
2023
$
2022
$
6,528,421
8,126,785
72,854
179,993
3,286,022
10,067,289
187,427
556,642
2,941,305
11,812,159
(1) The remuneration for the former Chief Executive Officer and Managing Director, Rob Wheals up to 30 September 2022 and current Chief Executive
Officer and Managing Director, Adam Watson from 1 October 2022 (previously Chief Financial Officer and Key Management Personnel), are included in
both the remuneration disclosure for Directors and Executive Key Management Personnel.
(2) The remuneration for Group Executive Strategy & Commercial, Julian Peck to 25 August 2022 and Group Executive Commercial Development, Ross
Gersbach to 22 August 2022 are included in the remuneration disclosure for Executive Key Management Personnel. All existing non-executive directors
and executive management personnel served a term of at least 12 months in FY23.
29. Remuneration of external auditor
Amounts received or due and receivable by Deloitte Touche Tohmatsu for:
Audit or review of the financial reports:
Group
Subsidiaries
Total audit or review of the financial reports (1), (2)
Audit or review of the regulatory financial reporting to the
Australian Energy Regulator and Economic Regulation Authority
Subsidiaries
Total audit or review of the financial reports
Audit or review of the National Greenhouse and Energy Reporting (3)
Group
Subsidiaries
Total audit or review of the National Greenhouse and Energy Reporting
Statutory assurance services required by legislation to be provided by the auditor
Agreed-upon procedures in relation to ASIC Regulatory Guide 231 requirements (4)
ASIC compliance plan audit
Financial services licence audit
Total statutory assurance services required by legislation to be provided by the auditor
Other assurance services (5)
Total assurance services
Non-audit services (6)
Total remuneration of external auditor
2023
2022
1,165,300
1,058,900
138,500
8,500
1,303,800
1,067,400
597,800
597,800
564,000
564,000
124,650
–
124,650
12,300
23,000
9,100
44,400
78,773
30,000
108,773
11,500
21,500
8,500
41,500
335,525
216,285
2,406,175
1,997,958
335,549
60,530
2,741,724
2,058,488
(1) Audit or review in the year ended 30 June 2023 included procedures over the payroll review for relevant periods up to 30 June 2023, together with
procedures over the acquisition of Basslink and the audit of subsidiary financial statements for Basslink.
(2) Audit or Review in the year ended 30 June 2022 includes additional billings primarily in relation to the audit of payroll review.
(3) Service provided includes assurance procedures on the energy and emissions reports and submissions required under the relevant National
Greenhouse and Energy Reporting legislations, and review of APA Group’s National Greenhouse and Energy Reporting systems and controls.
(4) Service provided includes agreed-upon procedures in relation to ASIC Regulatory Guide 231 requirements.
(5) Services provided were in accordance with the external auditor independence policy. These services include agreed-upon procedure engagements in
relation to ASIC Regulatory Guide 231 requirements (FY2023 includes triennial procedures required under RG231) and limited assurance engagements
relating to APA’s Climate Transition Plan and reported sustainability metrics.
(6) Services provided were in accordance with the external auditor independence policy. Non-audit services mainly comprise of:
• The provision of technology licencing and related support services that are provided by an entity acquired by the external auditor during FY22,
including the provision of support services to meet the data reporting requirements of the Wholesale Electricity Market (WEM) in Western Australia.
• The provision of services to determine assurance readiness for Scope 3 Emmissions Reporting.
156
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Other (continued)
30. Related party transactions
(a) Equity interest in related parties
Details of the percentage of ordinary securities held in subsidiaries are disclosed in note 25 and the details of the
percentage held in joint operations, joint ventures and associates are disclosed in note 24.
(b) Responsible Entity – APA Group Limited
The Responsible Entity is wholly owned by APA Infrastructure 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 25 for details of the entities that comprise APA Group.
Management fees of $10 million (2022: $10 million) 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 28.
APA Group 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 APA Infrastructure Limited, the principal borrowing
entity of APA Group.
(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:
2023
SEA Gas
Energy Infrastructure Investments
EII 2
GDI (EII)
2022
SEA Gas
Energy Infrastructure Investments
EII 2
GDI (EII)
Dividends
from related
parties
$000
4,790
2,577
4,276
7,163
Sales to
related
parties
$000
2,360
42,151
855
63,106
18,806
108,472
13,744
3,185
4,176
5,816
26,921
2,299
30,674
838
59,602
93,413
Purchases
from related
parties
$000
Amount owed
by related
parties
$000
Amount owed
to related
parties
$000
–
–
–
–
–
–
–
–
–
–
–
6,152
369
5,786
12,307
20
8,128
360
6,589
15,097
30
–
–
–
30
–
–
–
–
–
157
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Other (continued)
31. 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
2023
$m
2022
$m
1,436
629
2,065
98
98
1,605
633
2,238
5
5
1,967
2,233
1,964
3
1,967
257
257
2,225
8
2,233
110
110
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
APA Group 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 APA Infrastructure Limited, the principal borrowing
entity of APA Group.
Due to the contingent nature of these financial guarantees no liability has been recorded (2022: $nil).
Contingent liabilities of the parent entity
Refer to note 27 for contingent liabilities. Bank guarantees are issued by the parent entity.
32. Adoption of new and revised Accounting Standards
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.
158
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Other (continued)
33. Events occurring after reporting date
Alinta Energy Pilbara acquisition
On 23 August 2023, APA entered into a Share Sale Agreement with Alinta Power Cat Pty Ltd and Alinta Energy
Development Pty Ltd to acquire 100% of Alinta Energy Pilbara Holdings Pty Ltd and its subsidiaries and Alinta Energy
(Newman Storage) Pty Ltd (together referred to as Alinta Energy Pilbara). Alinta Energy Pilbara is an energy infrastructure
business underpinned by contracted operational assets (gas and solar power generation, gas transmission, battery
energy storage systems (BESS) and electricity transmission), together with an extensive development pipeline of projects
(wind, solar, gas reciprocating engines, BESS, and associated electricity transmission), located in Western Australia’s
Pilbara region.
The enterprise value is $1,722 million excluding stamp duty and other transaction costs (currently estimated to be
$86 million), and will be subject to post-completion adjustments for working capital, net debt and capex as at completion
of the acquisition. Completion of the acquisition remains subject to meeting certain conditions precedent and is expected
to occur in the fourth quarter of calendar year 2023.
Capital raise
APA also announced its plans to raise $675 million through a fully underwritten pro-rata institutional placement to partly
fund the acquisition. The balance of the purchase price will be funded by new debt facilities established in connection
with the acquisition of $993 million. In addition, a non-underwritten Security Purchase Plan will be undertaken for eligible
securityholders to raise $75 million.
Final distribution declaration
On 23 August 2023, the Directors declared a final distribution of 29.0 cents per security ($342 million) for APA Group,
an increase of 3.6%, or 1.0 cent per security over the previous corresponding period (2H22: 28.0 cents per security). This
is comprised of a distribution of 21.66 cents per security from APA Infrastructure Trust and a distribution of 7.34 cents
per security from APA Investment Trust. The APA Infrastructure Trust distribution represents a 6.64 cents per security
unfranked profit distribution, and a 15.02 cents per security capital distribution. The APA Investment Trust distribution
represents a 1.00 cent per security unfranked profit distribution and a 6.34 cents per security capital distribution. The
distribution is expected to be paid on 13 September 2023.
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.
159
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Declaration by the Directors of APA Group Limited
The Directors declare that:
(a) in the Directors’ opinion, there are reasonable grounds to believe that APA Infrastructure 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
SYDNEY, 23 August 2023
Adam Watson
CEO and Managing Director
160
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Auditor’s Independence Declaration
Deloitte Touché Tohmatsu
ABN 74 490 121 060
Quay Quarter Tower
50 Bridge St
Sydney, NSW, 2000
Australia
Tel: +61 (0) 2 9322 7000
www.deloitte.com.au
23 August 2023
The Directors
APA Group Limited
as Responsible entity for APA Infrastructure Trust
Level 25, 580 George Street
Sydney NSW 2000
Dear Directors
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo AAPPAA GGrroouupp LLiimmiitteedd aass RReessppoonnssiibbllee EEnnttiittyy ffoorr
AAPPAA IInnffrraassttrruuccttuurree TTrruusstt
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of
independence to the directors of APA Group Limited as Responsible Entity for APA Infrastructure Trust.
As lead audit partner for the audit of the financial statements of APA Infrastructure Trust for the financial year ended
30 June 2023, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Jamie Gatt
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
161
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
Independence Auditor’s Report
Deloitte Touché Tohmatsu
ABN 74 490 121 060
Quay Quarter Tower
50 Bridge St
Sydney, NSW, 2000
Australia
Tel: +61 (0) 2 9322 7000
www.deloitte.com.au
Independent Auditor’s Report to the Unitholders of
APA Infrastructure Trust
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
OOppiinniioonn
We have audited the financial report of APA Infrastructure Trust (APA Infra) and its controlled interests (the “Group”)
which comprises the consolidated statement of financial position as at 30 June 2023, 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 consolidated 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:
• Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance
for the year then ended; and
• 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 APA Group 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.
162
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023
Independence Auditor’s Report (continued)
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
CCaarrrryyiinngg vvaalluuee ooff aasssseettss
As at 30 June 2023, APA Group's
balance sheet includes property, plant
and equipment of $10.8 billion,
goodwill of $1.2 billion allocated across
several cash generating units (“CGUs”)
and other intangible assets of $2.1
billion as disclosed in Note 14.
Management conducts annual
impairment tests (or more frequently if
impairment indicators exist) to assess
the recoverable amount of property,
plant and equipment and intangible
assets including Goodwill. This
assessment is performed through the
preparation of discounted cash flow
Value in Use models.
In conjunction with the impairment
test, management also conducts a
useful life review, which has been
considered as part of the carrying value
of assets assessment as outlined in
Note 14.
The impairment test and useful life
assessment requires the exercise of
significant judgement in respect of
factors such as future supply and
demand, impacts of climate change
included on management’s assessed
useful lives, discount rates, as well as
economic assumptions such as inflation.
Our procedures performed in conjunction with our valuation specialists,
included but were not limited to:
•
•
• obtaining an understanding of the process flows and key controls
associated with the impairment models prepared by management
and the carrying value paper approved by the Board used to
estimate the recoverable amount of each CGU and impairment
charges, where applicable;
evaluating management's methodologies and their documented
basis for key assumptions utilised in the discounted cash flow
impairment models, which are disclosed in Note 14;
assessing and challenging:
-
-
the identification of each CGU;
the identification and allocation of cash flows for the purposes
of assessing the recoverable amount of each CGU;
the forecast price and volume assumptions used in the
forecast cash flows, by comparing these assumptions to
historical results, economic data and industry forecasts and
considering the potential impact of climate change, where
applicable; and
the discount rate applied by comparing to our independent
estimate, third party evidence and broker consensus data;
-
-
•
•
•
•
checking the mathematical accuracy of the cash flow models;
agreeing forecast cash flows to the latest forecasts approved by
the Board;
in conjunction with our climate specialists, assessing and
challenging the useful lives adopted by management in particular
in light of the potential impact of climate change by obtaining
independent third party reports, contractual arrangements,
regulatory returns and asset management plans; and
assessing and challenging the consideration by management of
reasonably possible changes in key assumptions that would be
required for each CGU to be impaired and considering the
likelihood of such movement in those key assumptions arising.
We have also assessed the appropriateness of the disclosures included
in Note 14 to the financial statements.
163
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
Independence Auditor’s Report (continued)
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee
KKeeyy AAuuddiitt MMaatttteerr
AAccqquuiissiittiioonn ooff BBaasssslliinnkk
As disclosed in Note 26, APA Group
entered into an agreement to acquire
100% interest in Basslink Pty Ltd and
Basslink Telecoms Pty Ltd (together
“Basslink”).
APA Group management have elected
to apply the optional concentration test
allowed under AASB 3 Business
Combinations (“AASB 3”).
Our procedures performed in conjunction with our valuation specialists,
included but were not limited to:
• obtaining the asset acquisition calculation performed by
management and challenging management’s judgements utilised in
determining the fair value of assets acquired and consideration paid;
independently recalculating the concentration test to confirm
treatment as an asset acquisition;
assessing management’s position paper on the treatment of the
acquisition;
•
•
• obtaining key acquisition agreements and assessing these in line with
Given that substantially all of the fair
value of gross assets acquired were in
relation to the Basslink Interconnector
the transaction has been accounted for
as an asset acquisition.
We consider this to be a key audit
matter due to the judgement in
evaluating the accounting treatment in
relation to this transaction including;
•
•
•
•
management’s judgements;
in conjunction with our property, plant and equipment valuation
specialists, assessing the valuation performed by management’s
appointed valuation property, plant and equipment experts and
challenged the assumptions utilised and methodology applied;
in conjunction with our treasury and capital markets specialists,
assessing the classification and initial valuation of the key revenue
contracts;
assessing the accounting treatment for the settlement of debt; and
assessing the cash flow model supporting the business case.
•
choice of accounting method;
• determination of the consideration
•
•
amount;
the repayment of debt; and
the treatment of key revenue
contracts.
PPaayyrroollll rreemmeeddiiaattiioonn
As disclosed in Note 15, APA Group
identified that certain team members
were not paid in full compliance with
APA Group's obligations under relevant
industrial awards or Enterprise
Agreements.
At 30 June 2023, the APA Group has
estimated a provision to remediate
payment shortfalls associated with
current and prior years, including
interest and other associated costs.
The estimated cost of remediation is
based on a significant volume of
historical data from a number of
different sources, involves a high
degree of complexity, interpretation,
judgement, estimation and remains
subject to further analysis. Given this,
the payroll remediation provision is a
key audit matter.
We have also assessed the appropriateness of the disclosures included in
Note 26 to the financial statements.
Our procedures performed in conjunction with our payroll specialists,
included but were not limited to:
• developing an understanding of the basis for management's best
•
estimate of the provision and the key areas of judgement applied in
determining the provision;
evaluating the competence, capabilities and objectivity of the
management's external experts used to assist management in the
calculation of the provision and the interpretation of the Enterprise
Agreements;
• obtaining and critically evaluating the data and key assumptions
•
used by management and their experts in developing the provision;
assessing the appropriateness of the models used, including the key
assumptions therein, and the statistical methods used; and
• on a sample basis, recalculating the remediation estimate for
selected salaried and wage team members and evaluating the
results.
We have also assessed the appropriateness of the disclosures included in
Note 15 to the financial statements.
164
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023
Independence Auditor’s Report (continued)
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee
KKeeyy AAuuddiitt MMaatttteerr
IInnffoorrmmaattiioonn TTeecchhnnoollooggyy ((““IITT””)) ssyysstteemmss
The IT systems across APA Group are
complex and there are varying levels of
integration. These systems are vital to
the ongoing operations of the business
and to the integrity of the financial
reporting process and as a result, the
assessment of IT systems forms a key
component of our external audit and is
considered a key audit matter.
Our procedures in conjunction with our IT specialists, included but were
not limited to:
• developing an understanding of the IT environment and the
identification of key financial systems and processes;
testing the design and implementation of the key IT controls of
relevant financial reporting systems and processes of APA Group;
and
•
• where we identified matters relating to IT systems or application
controls relevant to our audit we designed and performed additional
procedures, including the identification and testing of manual
controls and performed alternative substantive procedures.
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 2023 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 has no realistic
alternative but to do so.
165
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
Independence Auditor’s Report (continued)
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
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’s 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.
166
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023
Independence Auditor’s Report (continued)
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
Opinion on the Remuneration Report
We have audited the Remuneration Report of APA Group Limited, as Responsible Entity for APA Infrastructure Trust,
included on pages 74 to 91 of the Directors’ Report for the year ended 30 June 2023.
In our opinion, the Remuneration Report of APA Group Limited for the year ended 30 June 2023 has been prepared
in accordance with section 300A of the Corporations Act 2001.
Responsibilities
The directors have voluntarily presented the Remuneration Report of the APA Group Limited, as Responsible Entity
for APA Infrastructure 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, 23 August 2023
Jimmy McGarty
Partner
Chartered Accountants
Sydney, 23 August 2023
167
APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
APA Investment Trust and its Controlled Entities
Directors’ Report
Directors’ Report
The Directors of APA Group Limited (the Responsible Entity) submit their report and the annual financial report of APA
Investment Trust (APA Invest) and its controlled entities (together the Consolidated Entity) for the financial year ended
30 June 2023. This report refers to the consolidated results of APA Invest, one of the two stapled entities of APA Group,
with the other stapled entity being APA Infrastructure Trust (together APA).
Directors
The names of the Directors of the Responsible Entity during the year and since year end are:
Current Directors
First Appointed
Michael Fraser
Adam Watson
1 September 2015 and appointed Chairman 27 October 2017
30 September 2022 appointed Acting Chief Executive Officer and appointed
permanent Chief Executive Officer and Managing Director 19 December 2022
James Fazzino
21 February 2019
Debra (Debbie) Goodin
1 September 2015
Shirley In’t Veld
Rhoda Phillippo
Peter Wasow
19 March 2018
1 June 2020
19 March 2018
Steven (Steve) Crane
1 January 2011. Retired 15 September 2022.
Robert (Rob) Wheals
6 July 2019 appointed Chief Executive Officer and Managing Director. Resigned 30 September 2022.
Nino Ficca has been appointed a Director, effective 1 September 2023.
The Company Secretaries of the Responsible Entity during the year were Amanda Cheney and Bronwyn Weir (who was
appointed 19 June 2023).
Principal activities
The Consolidated Entity operates as an investment and financing entity within the APA Group.
Executive Leadership changes:
• On 30 September 2022, Rob Wheals resigned as Chief Executive Officer (CEO)
• On 30 September 2022, Adam Watson was appointed as the Acting Chief Executive Officer (CEO)
• On 19 December 2022, Adam Watson was appointed as the Chief Executive Officer and Managing Director (CEO)
• On 20 August 2022, Julian Peck resigned as Group Executive Strategy and Commercial
• On 25 August 2022, Darren Rogers started secondment as the new Group Executive Strategy and Commercial;
• On 17 October 2022, Darren Rogers was appointed as the new Group Executive Strategy and Commercial
• On 1 November 2022, Liz McNamara was appointed to the newly created role of Group Executive Sustainability
and Corporate Affairs
• On 2 November 2022, Vin Vassallo was appointed to the newly created role of Group Executive Electricity
Transmission Development.
With the internal promotion of Adam Watson and Darren Rogers, the following two appointments have been made
commencing in FY24.
• Chief Financial Officer (CFO) – Garrick Rollason appointed as CFO effective October 2023, Kynwynn Strong
to remain as acting until Garrick’s commencement date.
• Group Executive Operations – Petrea Bradford appointed as Group Executive of Operations effective 28 August 2023,
Stuart Davis to remain as acting until Petrea’s commencement date.
168
APA GROUP ANNUAL REPORT 2023 APA Investment Trust and its Controlled Entities
Directors’ Report
Subsequent events
Alinta Energy Pilbara acquisition
On 23 August 2023, APA entered into a Share Sale Agreement with Alinta Power Cat Pty Ltd and Alinta Energy
Development Pty Ltd to acquire 100% of Alinta Energy Pilbara Holdings Pty Ltd and its subsidiaries and Alinta Energy
(Newman Storage) Pty Ltd (together referred to as Alinta Energy Pilbara). Alinta Energy Pilbara is an energy infrastructure
business underpinned by contracted operational assets (gas and solar power generation, gas transmission, battery
energy storage systems (BESS) and electricity transmission), together with an extensive development pipeline of projects
(wind, solar, gas reciprocating engines, BESS, and associated electricity transmission), located in Western Australia’s
Pilbara region.
The enterprise value is $1,722 million excluding stamp duty and other transaction costs (currently estimated to be $86
million), and will be subject to post-completion adjustments for working capital, net debt and capex as at completion of
the acquisition. Completion of the acquisition remains subject to meeting certain conditions precedent and is expected to
occur in the fourth quarter of calendar year 2023.
Capital raise
APA also announced its plans to raise $675 million through a fully underwritten pro-rata institutional placement to partly
fund the acquisition. The balance of the purchase price will be funded by new debt facilities established in connection
with the acquisition of $993 million. In addition, a non-underwritten Security Purchase Plan will be undertaken for eligible
securityholders to raise $75 million.
Final distribution declaration
On 23 August 2023, the Directors declared a final distribution of 29.0 cents per security ($342,169,000) for APA Group,
an increase of 3.6%, or 1.0 cent per security over the previous corresponding period (30 June 2022: 28.0 cents). This
comprises a distribution of 21.66 cents per security from APA Infrastructure Trust and a distribution of 7.34 cents per
security from APA Investment Trust.
The APA Infrastructure Trust distribution represents 6.64 cents per security unfranked profit distribution and 15.02 cents
per security capital distribution. The APA Investment Trust distribution represents a 1.00 cent per security unfranked profit
distribution and 6.34 cents capital distribution. The distribution is expected to be paid on 13 September 2023.
Other than noted above and as disclosed elsewhere in this report, in the interval between 30 June 2023 and the date of
this report, no matter or circumstance 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.
169
OPERATING & FINANCIAL REVIEWSUSTAINABILITYADDITIONAL INFORMATIONAPA INVESTMENT TRUST FINANCIAL REPORTGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORT Review and results of operations
The Consolidated Entity reported net profit after tax of $23,725,000 for the year ended 30 June 2023 and total revenue
of $23,738,000.
Operating Financial Review
Information on the operations and financial position of the Group and its business strategies and prospects is set out on
pages 9 to 58 of the Annual Report and forms part of this Directors’ Report.
Distributions
Final FY22 distribution paid
14 September 2022
Interim FY23 distribution paid
16 March 2023
Cents per
security
1.14
5.15
6.29
Total
distribution
$000
13,502
60,682
74,184
Cents per
security
1.01
2.40
3.41
Total
distribution
$000
11,904
28,379
40,283
Final FY23 distribution payable
13 September 2023
Cents per
security
1.00
6.34
7.34
Total
distribution
$000
11,821
74,834
86,655
APA Investment Trust profit distribution
APA Investment Trust capital distribution
Total
APA Investment Trust profit distribution
APA Investment Trust capital distribution
Total
Directors
Information on Directors and Company Secretaries
For information relating to the qualifications and experience of Directors and Company Secretary refer to pages 62 to 64.
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:
Name
Company
Period of directorship
Michael Fraser
Aurizon Holdings Limited
February 2016 to February 2022
Adam Watson
James Fazzino
Debra Goodin
Orora Limited
–
Tassal Group Limited
Senex Energy Limited
Atlas Arteria Limited
Ansell Limited
Since April 2022
–
May 2020 to November 2022
May 2014 to November 2020
Since September 2017, Chair since November 2020
Since December 2022
Shirley In’t Veld
Northern Star Resources Limited
September 2016 to June 2021
Alumina Limited
Since August 2020
Develop Global Limited
(formerly Venturex Resources Limited)
Karora Resources Inc
Since July 2021
Since December 2021
Dexus Funds Management Limited
Since February 2023
Oz Minerals Limited
November 2017 to May 2023
Rhoda Phillippo
Peter Wasow
170
APA GROUP ANNUAL REPORT 2023APA Investment Trust and its Controlled Entities Directors’ Report
Directors Meetings
During year, the Board reviewed the roles and responsibilities of the Board and its Committees and made the following
changes:
• The Health, Safety, Environment and Heritage Committee was renamed the Safety and Sustainability Committee
• The Audit and Risk Committee was divided into the Audit & Finance Committee and the Risk Management Committee
Further information on the Board and Committees can be found in APA’s Corporate Governance Statement which is
available on our website.
During the year, 11 Board meetings, three Risk Management Committee meetings, three Audit and Finance Committee
meetings, five People and Remuneration Committee meetings, four Safety and Sustainability Committee meetings, and four
Nomination Committee meetings were held. The Committee previously known as the Audit and Risk Committee met once.
Board
People and
Remuneration
Audit and
Finance
Risk
Management
Audit and Risk
Management1
Safety and
Sustainability
Nomination
Directors
Michael Fraser
Adam Watson2
Robert Wheals3
Steven Crane4
James Fazzino
Debra Goodin
Shirley In’t Veld
Rhoda Phillippo
Peter Wasow
A
11
5
2
2
11
11
11
11
11
B
11
5
2
2
11
11
11
11
10
A
–
–
–
1
–
–
5
5
5
B
–
–
–
1
–
–
5
5
5
A
–
–
–
–
3
3
–
3
3
B
–
–
–
–
3
3
–
3
3
A
–
–
–
–
3
3
–
3
3
B
–
–
–
–
3
3
–
3
3
A
1
–
–
1
1
1
–
–
1
B
1
–
–
1
1
1
–
–
1
A
4
–
–
–
4
4
4
–
–
B
4
–
–
–
4
3
4
–
–
A
4
–
–
1
–
4
3
–
–
B
4
–
–
1
–
3
3
–
–
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.
Directors’ security holdings
The aggregate number of APA securities held directly, indirectly or beneficially by Directors or their related entities
at 30 June 2023 is 282,388.
Directors’ relevant interests in APA securities
Directors
Michael Fraser
Adam Watson5
Debra Goodin
James Fazzino
Shirley In’t Veld
Peter Wasow
Rhoda Phillippo
Robert Wheals6
Steven Crane6
Fully paid securities at
1 July 2022
Securities acquired
Securities disposed
Fully paid securities at
30 June 2023
102,942
55,556
24,179
30,751
25,000
26,000
10,000
108,721
30,000
–
–
–
–
–
–
7,960
52,213
–
–
–
–
–
–
–
102,942
55,556
24,179
30,751
25,000
26,000
17,960
160,394
30,000
As at 30 June 2023, Adam Watson held 397,255 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 section 8 of APA’s Remuneration Report.
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.
1 The Audit and Risk Management Committee was dissolved on 14 October 2022 and replaced by the Audit and Finance Committee
and the Risk Management Committee.
2 Adam Watson appointed as a Director on 19 December 2022.
3 Robert Wheals resigned as a Director on 30 September 2022.
4 Steven Crane retired as a Director on 15 September 2022.
5 Adam Watson was appointed as a Director effective 19 December 2022 at which time he held 55,556 securities.
6 Balance as at date of ceasing to be a Director.
171
OPERATING & FINANCIAL REVIEWSUSTAINABILITYADDITIONAL INFORMATIONAPA INVESTMENT TRUST FINANCIAL REPORTGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORT
Options granted
No options over unissued APA securities were granted during or since the end of the financial year. No unissued APA
securities were under option at the date of this report. No APA securities were issued during or since the end of the
financial year as a result of an option being exercised over unissued APA securities.
Indemnification of Officers
During the year, the Responsible Entity paid a premium on a contract insuring the Directors and Officers of any APA
Group entity against certain liability incurred in performing those roles. The contract of insurance prohibits disclosure of
the specific nature of the liability and the amount of the premium.
APA Group Limited, in its own capacity and as responsible entity of APA Infrastructure Trust and APA 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, APA Group 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.
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 APA Investment
Trust units.
The number of APA Investment Trust units issued during the financial year, and the number of APA Investment Trust 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.
Auditor’s independence declaration
A copy of the independence declaration of the auditor, Deloitte Touche Tohmatsu, as required under section 307C of the
Corporations Act 2001, is included at page 191.
Rounding of amounts
The Consolidated Entity is an entity of the kind referred to in ASIC Corporations Instrument 2016/191. 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.
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, 23 August 2023
172
Adam Watson
CEO and Managing Director
APA GROUP ANNUAL REPORT 2023APA Investment Trust and its Controlled Entities Directors’ Report
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
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
2023
$000
23,738
(13)
23,725
–
2022
$000
29,161
(12)
29,149
–
23,725
29,149
–
–
23,725
29,149
23,725
23,725
29,149
29,149
23,725
29,149
2023
2.0
2022
2.5
6
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
173
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Consolidated Statement of Financial Position
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
2023
$000
2022
$000
8
8
11
9
977
938
3,262
562,963
566,225
567,202
4,239
652,759
656,998
657,936
25
25
17
17
567,177
657,919
13
555,356
11,821
567,177
644,417
13,502
657,919
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
174
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 APA Investment Trust and its Controlled Entities
As at 30 June 2023
Consolidated Statement of Changes in Equity
Balance at 1 July 2021
Profit for the year
Total comprehensive income for the year
Distributions to unitholders
Balance at 30 June 2022
Balance at 1 July 2022
Profit for the year
Total comprehensive income for the year
Distributions to unitholders
Balance at 30 June 2023
Note
Issued capital
$000
765,313
–
–
Retained
earnings
$000
19,742
29,149
29,149
Total
$000
785,055
29,149
29,149
7
(120,896)
(35,389)
(156,285)
644,417
13,502
657,919
644,417
–
–
13,502
23,725
23,725
657,919
23,725
23,725
7
(89,061)
(25,406)
(114,467)
555,356
11,821
567,177
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
175
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Consolidated Statement of Cash Flows
Cash flows from operating activities
Trust distribution – related party
Interest received – related parties
Proceeds from finance leases
Receipts from customers
Payments to suppliers
Net cash provided by operating activities
Cash flows from investing activities
Receipts from related parties
Net cash provided by investing activities
Cash flows from financing activities
Distributions to unitholders
Net cash used in financing activities
Net movement in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
Note
2023
$000
2022
$000
19,704
3,298
1,167
507
(7)
19,540
8,938
1,168
410
(6)
24,669
30,050
89,798
89,798
126,235
126,235
7
(114,467)
(114,467)
(156,285)
(156,285)
–
–
–
–
–
–
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.
176
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements
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
177
177
178
179
179
179
179
180
180
181
181
181
181
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
20. Adoption of new and revised
Accounting Standards
21. Events occurring after reporting date
182
182
183
184
185
185
185
185
185
186
186
187
187
188
177
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Basis of Preparation (continued)
2. General information
APA Investment Trust (“APA Invest” or “Trust”) is one of the two stapled trusts of APA Group, the other stapled trust being
APA Infrastructure Trust. Each of APA Infrastructure Trust and APA Investment Trust are registered managed investment
schemes regulated by the Corporations Act 2001. APA Investment Trust units are “stapled” to APA Infrastructure Trust units
on a one-to-one basis so that one APA Investment Trust unit and one APA Infrastructure Trust 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 APA Investment Trust 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.
APA Investment Trust’s registered office and principal place of business is as follows:
Level 25
580 George Street
SYDNEY NSW 2000
Tel: (02) 9693 0000
APA Investment Trust holds APA Group’s investments.
The financial report for the year ended 30 June 2023 was authorised for issue in accordance with a resolution of the
directors on 23 August 2023.
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.
178
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
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 APA Infrastructure 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
2023
$000
2022
$000
19,704
19,704
3,298
229
3,527
507
23,738
19,540
19,540
8,938
273
9,211
410
29,161
(13)
(13)
(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 APA Investment Trust as, pursuant to Australian taxation laws,
APA Investment Trust 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.
179
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Financial Performance (continued)
6. Earnings per unit
Basic and diluted earnings per unit
2023
cents
2.0
2022
cents
2.5
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
Adjusted weighted average number of ordinary units used in the calculation of:
Basic earnings per unit
Diluted earnings per unit (1)
2023
$000
2022
$000
23,725
29,149
2023
No. of units
000
2022
No. of units
000
1,179,894
1,179,894
1,182,119
1,180,907
(1)
Includes $3 million (2022: $2 million) performance rights granted under the long-term incentive plan. Each performance right is a right to receive one ordinary
stapled security in APA Group subject to satisfaction of certain performance hurdles and board approval. Further information can be found in the most recent
annual report. APA Group has historically instructed Link Market Services to acquire securities on-market to minimise dilution of existing securityholders.
7. Distributions
Recognised amounts
Final FY22 distribution payable on 14 September 2022
(30 June 2021: Final FY21 distribution payable on 15 September 2021)
Profit distribution (1)
Capital distribution
Interim distribution payable on 16 March 2023
(31 December 2021: Interim FY22 distribution payable on 17 March 2022)
Profit distribution (1)
Capital distribution
Total distributions recognised
Profit distribution (1)
Capital distributions (note 13)
Unrecognised amounts
Final FY23 distribution payable on 13 September 2023 (2)
(30 June 2022: Final FY22 distribution paid on 14 September 2022)
Profit distribution (1)
Capital distribution
2023
cents per
unit
2023
Total
$000
2022
cents per
unit
2022
Total
$000
1.14
5.15
6.29
1.01
2.40
3.41
2.15
7.55
9.70
13,502
60,682
74,184
11,904
28,379
40,283
25,406
89,061
114,467
1.67
6.70
8.37
19,742
79,010
98,752
1.33
3.55
4.88
3.00
10.25
13.25
15,647
41,886
57,533
35,389
120,896
156,285
1.00
6.34
7.34
11,821
74,834
86,655
1.14
5.15
6.29
13,502
60,682
74,184
(1) Profit distributions unfranked (30 June 2021, 31 December 2021, 30 June 2022 and 31 December 2022: unfranked).
(2) Record date 30 June 2023.
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 nor publicly confirmed prior to the end of the financial year.
180
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Operating Assets and Liabilities
8. Receivables
Finance lease receivable – related party (note 10)
Current
Finance lease receivable – related party (note 10)
Non-current
2023
$000
977
977
3,262
3,262
2022
$000
938
938
4,239
4,239
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 have assessed that there is
no expected credit loss for the finance lease receivable.
None of the above receivables are past due.
9. Payables
Other payables
2023
$000
25
2022
$000
17
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 (1)
Less: Future finance income
Present value of lease receivables
Included in the Consolidated Statement of Financial Position as part of:
Current receivables (note 8)
Non-current receivables (note 8)
2023
1,168
3,501
–
4,669
(430)
4,239
977
3,262
4,239
2022
1,167
4,669
–
5,836
(659)
5,177
938
4,239
5,177
(1) Minimum future lease payments receivable includes 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.
181
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Capital Management
11. Other financial assets
Non-current
Loan to related party
Investment in related party
Investment in related party
2023
$000
2022
$000
455,584
107,379
562,963
545,380
107,379
652,759
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, with the exception of the initial investment. 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 on 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.
182
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Capital Management (continued)
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, which 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 Treasury team 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
Risk management framework
Financial exposure
Market
Credit
Commercial transactions
in foreign currency and
funding activities
Cash, receivables, interest
bearing liabilities and
hedging
Liquidity
Payables
The Audit and Finance Committee (“AFC”)
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 AFC 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 team.
Refer to 12 (a) market risk.
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.
Refer to 12 (c) liquidity risk.
183
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Capital Management (continued)
12. Financial risk management (continued)
(a) Market risk
The Consolidated Entity’s 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
Sensitivity analysis 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 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 $733,000 or decrease by $724,000
(2022: increase by $2,150,000 or decrease by $1,839,000 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 and a lower effective interest rate.
(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 AFC. These limits are regularly reviewed by the Board or AFC.
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 (2022: $17,000), all of which are
due in less than 1 year (2022: less than 1 year).
13. Issued capital
Units
1,179,893,848 units, fully paid (2022: 1,179,893,848 units, fully paid) (1)
(1) Fully paid units carry one vote per unit and carry the right to distributions.
Movements
Balance at beginning of financial year
Capital distributions paid (note 7)
Balance at end of financial year
The Trust does not have a limited amount of authorised capital.
2023
$000
2022
$000
555,356
644,417
2023
No. of units
000
2023
$000
2022
No. of units
000
2022
$000
1,179,894
644,417
1,179,894
765,313
–
(89,061)
–
(120,896)
1,179,894
555,356
1,179,894
644,417
184
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Group Structure
14. Subsidiaries
Subsidiaries are entities controlled by APA Investment Trust. Control exists where APA Investment Trust has power over
an entity, i.e. existing rights that give APA Investment Trust 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
APA Investment Trust
Subsidiary
Country of registration
Ownership interest
2023
%
2022
%
GasNet Australia Investments Trust
Australia
100
100
Other
15. Commitments and contingencies
The Consolidated Entity had no material contingent assets, liabilities and commitments as at 30 June 2023 and 30 June 2022.
16. Director and 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 Directors
Total remuneration: Directors
2023
$
2022
$
1,673,901
1,749,069
149,671
174,905
1,823,572
1,923,974
4,112,061
2,653,667
31,563
138,770
27,500
229,988
2,575,647
1,077,997
6,858,041
3,989,152
8,681,613
5,913,126
Remuneration of Executive Key Management Personnel
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 (1),(2)
6,528,421
8,126,785
72,854
179,993
187,427
556,642
3,286,022
2,941,305
10,067,289
11,812,159
(1) The remuneration disclosure includes remuneration of the former Chief Executive Officer and Managing Director, Rob Wheals up to 30 September 2022
and current Chief Executive Officer and Managing Director, Adam Watson from 1 October 2022 (previously Chief Financial Officer and Key Management
Personnel).
(2) The remuneration for Group Executive Strategy & Commercial, Julian Peck to 28 October 2022 and Group Executive Commercial Development, Ross
Gersbach to 22 August 2022 are included in the remuneration disclosure for Executive Key Management Personnel. All existing non-executive directors
and executive management personnel served a term of at least 12 months in FY23.
185
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Notes to the consolidated financial statements (continued)
Other (continued)
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
2023
$
6,600
6,600
6,700
6,700
13,300
2022
$
6,125
6,125
6,250
6,250
12,375
18. Related party transactions
(a) Equity interest in related parties
Details of the percentage of ordinary securities held in subsidiaries are disclosed in note 14.
(b) Responsible Entity – APA Group Limited
The Responsible Entity is wholly owned by APA Infrastructure Limited (2022: 100% owned by APA Infrastructure Limited).
(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
APA Investment Trust and its controlled entities have a loan receivable balance with another entity in APA Group. 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 APA Investment Trust and its other related parties are
outstanding at reporting date:
•
•
•
current receivables totalling $977,000 are owing from a subsidiary of APA Infrastructure Trust for amounts due under
a finance lease arrangement (2022: $938,000);
non-current receivables totalling $3,262,000 are owing from a subsidiary of APA Infrastructure Trust for amounts due
under a finance lease arrangement (2022: $4,239,000); and
non-current receivables totalling $455,584,000 (2022: $545,380,000) are owing from a subsidiary of APA
Infrastructure Trust for amounts due under inter-entity loans.
APA Group Limited
Management fees of $2,470,000 (2022: $2,559,000) were paid to the Responsible Entity as reimbursement of costs
incurred on behalf of APA Investment Trust. No amounts were paid directly by APA Investment Trust to the Directors of the
Responsible Entity.
APA Infrastructure Trust
Management fees of $2,470,000 (2022: $2,559,000) were reimbursed by APA Infrastructure Trust.
186
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Notes to the consolidated financial statements (continued)
Other (continued)
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
Total equity
Financial performance
Profit for the year
Total comprehensive income
2023
$000
2022
$000
977
566,225
567,202
938
656,998
657,936
25
25
17
17
567,177
657,919
555,356
11,821
567,177
644,417
13,502
657,919
23,725
23,725
29,149
29,149
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.
20. Adoption of new and revised Accounting Standards
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.
187
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION 21. Events occurring after reporting date
Alinta Energy Pilbara acquisition
On 23 August 2023, APA entered into a Share Sale Agreement with Alinta Power Cat Pty Ltd and Alinta Energy
Development Pty Ltd to acquire 100% of Alinta Energy Pilbara Holdings Pty Ltd and its subsidiaries and Alinta Energy
(Newman Storage) Pty Ltd (together referred to as Alinta Energy Pilbara). Alinta Energy Pilbara is an energy infrastructure
business underpinned by contracted operational assets (gas and solar power generation, gas transmission, battery
energy storage systems (BESS) and electricity transmission), together with an extensive development pipeline of projects
(wind, solar, gas reciprocating engines, BESS, and associated electricity transmission), located in Western Australia’s
Pilbara region.
The enterprise value is $1,722 million excluding stamp duty and other transaction costs (currently estimated to be
$86 million), and will be subject to post-completion adjustments for working capital, net debt and capex as at completion
of the acquisition. Completion of the acquisition remains subject to meeting certain conditions precedent and is expected
to occur in the fourth quarter of calendar year 2023.
Capital raise
APA also announced its plans to raise $675 million through a fully underwritten pro-rata institutional placement to partly
fund the acquisition. The balance of the purchase price will be funded by new debt facilities established in connection
with the acquisition of $993 million. In addition, a non-underwritten Security Purchase Plan will be undertaken for eligible
securityholders to raise $75 million.
Final distribution declaration
On 23 August 2023, the Directors declared a final distribution for the 2023 financial year of 7.34 cents per unit
($87 million). The distribution represents a 1.00 cents per security unfranked profit distribution and a 6.34 cents per
security capital distribution. The distribution is expected to be paid on 14 September 2023.
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.
188
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023 Declaration by the Directors of APA Group Limited
The Directors declare that:
(a) in the Directors’ opinion, there are reasonable grounds to believe that APA 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
SYDNEY, 23 August 2023
Adam Watson
CEO and Managing Director
189
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Auditor’s Independence Declaration
Deloitte Touché Tohmatsu
ABN 74 490 121 060
Quay Quarter Tower
50 Bridge St
Sydney, NSW, 2000
Australia
Tel: +61 (0) 2 9322 7000
www.deloitte.com.au
23 August 2023
The Directors
APA Group Limited
as Responsible Entity for APA Investment Trust
Level 25, 580 George Street
Sydney NSW 2000
Dear Directors
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo AAPPAA GGrroouupp LLiimmiitteedd aass RReessppoonnssiibbllee EEnnttiittyy ffoorr
AAPPAA IInnvveessttmmeenntt TTrruusstt
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of
independence to the directors of APA Group Limited as Responsible Entity for APA Investment Trust.
As lead audit partner for the audit of the financial statements of APA Investment Trust for the financial year ended 30
June 2023, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Jamie Gatt
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
190
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023
Independent Auditor’s Report
Deloitte Touché Tohmatsu
ABN 74 490 121 060
Quay Quarter Tower
50 Bridge St
Sydney, NSW, 2000
Australia
Tel: +61 (0) 2 9322 7000
www.deloitte.com.au
Independent Auditor’s Report to the Unitholders of
APA Investment Trust
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
OOppiinniioonn
We have audited the financial report of APA Investment Trust and its controlled interests (the “Consolidated Entity”)
which comprises the consolidated statement of financial position as at 30 June 2023, 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:
• Giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2023 and of its financial
performance for the year then ended; and
• 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 Consolidated 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.
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 Consolidated Entity’s annual report for the year ended 30 June
2023 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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
191
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
Independent Auditor’s Report (continued)
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
has 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.
• 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 of the entities 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’s audit. We remain solely responsible for our
audit opinion.
192
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023APA GROUP ANNUAL REPORT 2023
Independent Auditor’s Report (continued)
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, 23 August 2023
Jimmy McGarty
Partner
Chartered Accountants
Sydney, 23 August 2023
193
APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2023OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
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 30 June 2023).
Twenty largest securityholders
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
BNP Paribas Nominees Pty Ltd
Citicorp Nominees Pty Limited
Custodial Services Limited
BNP Paribas Noms Pty Ltd
National Nominees Limited
Argo Investments Limited
BKI Investment Company Limited
HSBC Custody Nominees (Australia) Limited
Netwealth Investments Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
Morgan Stanley Australia Securities (Nominee) Pty Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Netwealth Investments Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
HSBC Custody Nominees (Australia) Limited-Gsco Eca
PACIFIC CUSTODIANS PTY LIMITED
Woodross Nominees Pty Ltd
Total
Distribution of holders
Ranges
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
No. of securities
331,374,356
133,782,307
117,267,091
92,246,038
28,326,045
25,145,443
25,042,258
12,382,525
8,775,389
8,046,513
5,880,350
5,057,558
4,846,172
3,802,469
3,259,584
1,824,571
1,821,455
1,709,278
1,600,853
1,544,283
%
28.09
11.34
9.94
7.82
2.40
2.13
2.12
1.05
0.74
0.68
0.50
0.43
0.41
0.32
0.28
0.15
0.15
0.14
0.14
0.13
813,734,538
68.97
No. of holders
%
No. of securities
119
7,645
10,798
35,870
33,119
87,551
0.14
8.73
12.33
40.97
37.83
841,722,380
153,949,040
77,674,861
93,037,781
13,509,786
%
71.34
13.05
6.58
7.89
1.15
100.00
1,179,893,848
100.00
Interests of substantial securityholders
UniSuper Limited
State Street Corporation
Vanguard Group
Blackrock
Date of notice
4 April 2023
20 January 2022
11 November 2021
16 July 2021
Number of voting securities
highlighted in notice
Voting power
highlighted in notice
117,678,377
85,157,130
59,430,048
82,844,967
9.97%
7.22%
5.04%
7.02%
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.
194
APA GROUP ANNUAL REPORT 2023
5 year summary
Financial Performance (Statutory)
Revenue
Revenue excluding pass-through1
Underlying EBITDA2
Total reported EBITDA3
Depreciation and amortisation expenses
Reported EBIT3
Net interest expense3
Significant items – before income tax
Income tax expense
Statutory profit after tax including significant items
Significant items – after income tax
Profit after tax excluding significant items
Financial Position
Total assets
Total drawn debt4
Total equity
Cash Flow
Operating cash flow5
Free cash flow6
Key Financial Ratios
Earnings per security including significant items
Earnings per security excluding significant items
Free cash flow per security
Distribution per security
Funds From Operations to Net Debt
Funds From Operations to Interest
Weighted average number of securities
EBITDA by Segment (excluding Significant Items)
Underlying EBITDA
Energy Infrastructure
East Coast Gas
West Coast Gas
Wallumbilla Gladstone Pipeline
Electricity Generation and Transmission
Total Energy Infrastructure
Asset Management
Energy Investments
Corporate costs
FY23
2,913
2,401
1,725
1,686
(750)
936
(459)
–
(190)
287
–
287
FY22
2,732
2,236
1,692
1,630
(735)
895
(483)
28
(180)
260
20
240
15,866
11,240
1,910
15,836
11,146
2,629
1,206
1,070
24.3
24.3
90.7
55.0
10.6
3.3
1,180
645
305
620
223
1,197
1,081
22.1
20.4
91.6
53.0
11.1
3.6
1,180
646
289
578
194
FY21
2,605
2,145
1,629
1,639
(674)
965
(505)
(397)
(62)
1
(278)
279
14,742
9,666
2,951
1,051
902
0.1
23.7
76.4
51.0
11.0
3.1
1,180
628
271
550
175
FY20
2,591
2,130
1,650
1,652
(651)
1,001
(508)
–
(184)
309
–
309
FY19
2,452
2,031
1,570
1,565
(611)
954
(497)
–
(175)
282
–
282
15,994
15,429
9,984
3,200
1,088
957
26.2
26.2
81.1
50.0
12.1
3.2
1,180
9,352
3,584
1,007
894
23.9
23.9
75.7
47.0
10.7
3.0
1,180
649
272
539
171
650
236
542
143
1,793
1,707
1,624
1,630
1,570
56
23
(147)
73
28
80
31
(116)
(105)
63
36
(75)
53
28
(80)
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
cents
cents
cents
cents
%
times
m
$m
$m
$m
$m
$m
$m
$m
$m
1 Pass-through revenue is offset by pass-through expense within EBITDA. Any management fee earned for the provision of these services is recognised as
part of asset management revenues.
2 Underlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes recurring items arising from other activities, transactions that
are not directly attributable to the performance of APA Group's business operations and significant items.
3 Excludes significant items.
4 APA’s ability 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.
5 Operating cash flow = net cash from operations after interest and tax payments.
6 Free cash flow is Operating Cash Flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex.
SIB capex includes operational assets lifecycle replacement costs and technology lifecycle costs.
195
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION
Investor information
Calendar of events
Final distribution FY23 record date
Final distribution FY23 payment date
Annual meeting
Interim distribution FY24 record date
Interim results announcement
Interim distribution FY24 payment date
1
Subject to change.
30 June 2023
13 September 2023
26 October 2023
29 December 20231
22 February 20241
14 March 20241
Annual meeting details
Securityholder details
Date:
Time:
Thursday, 26 October 2023
10.30am (AEDT)
Wesley Conference Centre, 220 Pitt Street, Sydney.
Please refer to the APA Group Notice of Meeting
or the APA Group website for more information.
ASX listing
In this report, the term ‘APA securities’ refers to stapled
securities each comprising a unit in APA Infrastructure
Trust stapled to a unit in APA Investment Trust and traded
on the Australian Securities Exchange (ASX) under the
code ‘APA’. APA Group Limited is the Responsible Entity
of those trusts.
Securityholders must notify the APA Group registry
immediately of any changes to their address or banking
arrangements. Securityholders with enquiries should also
contact the APA Group registry.
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 enquiries should contact the APA Group registry.
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.
APA group responsible entity and
registered office
APA Group 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:
Website:
apagroup@linkmarketservices.com.au
linkmarketservices.com.au
196
APA GROUP ANNUAL REPORT 2023 Glossary
Term
AAGE
AEMO
AGN
APA Infra
APA Invest
APA
APGA
ARENA
ASX
ATSI
AUD
AIFRS
APAIL
BESS
CCS
Definition
Australian Association of Graduate Employees
Australian Energy Market Operator
Australian Gas Network
APA Infrastructure Trust
APA Investment Trust
APA Group
Australian Pipelines and Gas Association
Australian Renewable Energy Agency
Australian Stock Exchange
Aboriginal and Torres Strait Islander
Australian dollar
Australian Accounting Standards
APA Infrastructure Limited
Battery Energy Storage System
Carbon Capture and Storage
Clean Energy Regulator (CER) Australian Government body responsible for accelerating carbon abatement for Australia.
CEO
CFO
CO2 equivalent (t-CO2e)
Collective bargaining
agreements
Contingent Worker
Contractor
COVID-19
CES
CSP
http://www.cleanenergyregulator.gov.au/
Chief Executive Officer
Chief Financial Officer
Measure used to compare the emissions from various types of greenhouse gas (GHG) based
on their global warming potential (GWP). The CO2 equivalent for a gas is determined by
multiplying the metric tonnes of the gas by the associated GWP.
Obligations (often legally binding) that the organisation has undertaken.
They represent a form of joint decision making concerning the organisation’s operations.
Outsourced or borrowed labour pool that APA uses on a hired per-project basis to
complement its regular employees in managing service delivery. Includes working
arrangements as: Contingent Worker, Labour Hire – Temporary Worker – RSP; Labour
Hire – Temporary Worker – Non-RSP; Labour Hire – Contractor Management Services;
Independent Contractor; External Secondment.
An individual, company or other legal entity that provides goods and services to APA,
carries out work or performs services pursuant to a contract for service. This includes
sub-contractors and contingent workers. A person or company engaged to provide labour
or skills and paid on invoice.
Coronavirus pandemic
Customer Experience Score
Community and Social Performance
Dial-Before-You-Dig
https://www.1100.com.au/
Distribution Payout Ratio
Total distribution applicable to the financial year as a percentage of free cash flow
DWGM
EAP
EBIT
EBITDA
EII
EMP
Declared Wholesale Gas Market.
https://aemo.com.au/en/energy-systems/gas/declared-wholesale-gas-market-dwgm
Employee Assistance Program
Earnings before interest and tax
Earnings before interest, tax, depreciation, and amortisation (EBITDA) excludes recurring
items arising from other activities, transactions that are not directly attributable to the
performance of APA Group’s business operations and significant items
Energy Infrastructure Investments
Environmental Management Plan
197
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Glossary
(continued)
Term
Employee
Definition
An individual who works for APA under a contract of employment. They are engaged
through the Company’s payroll (so subject to PAYG withholding tax and superannuation).
Employee driven initiatives
Fund raising activities instigated by APA employees for which APA has matched funding
on at least a 1:1 ratio.
Employee turnover
Energy Charter
Employees who leave the organisation voluntarily or due to dismissal, retirement,
or death in service.
A national CEO-led collaboration that supports the energy sector towards a customer-centric
future. https://www.theenergycharter.com.au/
Energy Consumption
All energy consumed and produced by APA across all facilities.
EPA
ERC
ESG
Environment Protection Agency
Estimated Rehabilitation Cost
Environmental, Social, Governance
Executive Leadership Team
(ELT)
Portion of employees aligned to WGEA Management Category: Key Management Personnel/
Head of Business; Key Management Personnel and internationally based ELT member
(Excludes CEO).
Extended leadership
Refers to level 3 (L3) and level 4 (L4) workforce who have direct reports at APA (CEO is L1).
Fatality
Work-related Safety Incident that results in death to a person.
Free Cash Flow (FCF)
Fugitive emissions
Future Fuels CRC
FY
GHG
GIS
GJ
Free cash flow is Operating Cash Flow adjusted for strategically significant transformation
projects, less stay-in-business (SIB) capex. SIB capex includes operational assets lifecycle
replacement costs and technology lifecycle costs.
Greenhouse gas emissions that are released in connection with, or a consequence of,
the extraction, processing, storage or delivery of fossil fuel.
Industry focused Research, Development and Demonstration partnership enabling the
decarbonisation of Australia’s energy networks. https://www.futurefuelscrc.com/
Financial Year (period between 1 July to 30 June).
Greenhouse Gas. Gas that contributes to the greenhouse effect by absorbing infrared
radiation (GRI Standards Glossary 2018). The greenhouse gases that are reported under the
NGER Scheme include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur
hexafluoride (SF6) and specified kinds of hydro fluorocarbons and perfluorocarbons.
Geographic Information System
Gigajoule
Goal (climate-related)
An ambition to seek an outcome for which there is no current pathway(s), but for which
efforts will be pursued towards addressing that challenge, subject to certain assumptions
or conditions.
GRI
GTAP
GSOO
Global Reporting Initiative. https://www.globalreporting.org/
Gender Targets Action Plan
Gas Statement of Opportunities (GSOO)
Health and Safety hazard
Source of potential harm from which a risk to person’s health or safety arises.
Health and Safety incident
Any occurrence that has resulted in, or has the potential to result in (i.e. a near miss),
adverse consequences to people, property, reputation or a combination of these. Significant
deviations from standard operating procedures are also classed as an ‘incident’.
HPIFR
HSEH
I&D
ICAM
IFRS
High Potential Incident Frequency Rate
Health, Safety, Environment and Heritage
Inclusion and Diversity
Incident Cause Analysis Method
International Financial Reporting Standards (IFRS)
Internal environmental audits
Internal environmental audits are those audits required by, or committed to, in environmental
regulatory tools (i.e. Environmental Management Plans).
198
APA GROUP ANNUAL REPORT 2023 Term
ISC
ISO 31000
LCP
LNG
Definition
Institute of Chemical Engineers. A not-for-profit multi-company, subscription-based, industry
consortium focused on improving process safety.
International Organization for Standardization standard for Risk Management.
https://www.iso.org/iso-31000-risk-management.html
Landholder Contact Program
Liquefied natural gas
Lost Time Injury (LTI)
Lost Time Injury is a work-related injury or illness that resulted in time lost from work of one
day/shift or more. A Lost Time Injury must be certified by advice from a qualified medical
practitioner.
LTIFR
MOC
Lost Time Injury Frequency Rate – Injury (LTI) count/per million hours
Management of Change Uplift Initiative
Management interactions
Structured interaction between a senior/operational manager and a frontline supervisor,
employee or contractor
Pass-through revenue
Pass-through revenue is offset by pass-through expense within EBITDA. Any management
fee earned for the provision of these services is recognised as part of asset management
revenues.
PGP
PSHIFR
PST
RAP
RAPWG
RRG
SDG
SIB
TRIFR
VET
WHS
WORM
Parmelia Gas Pipeline
Potential Serious Harm Incident Frequency Rate
Pipeline Screening Tool
Reconciliation Action Plan
RAP Working Group
Regulatory Reference Group
Sustainable Development Goals (SDGs) https://sdgs.org.au/
Stay in Business
Total Recordable Injury Frequency Rate
Vocational Education and Training
Work Health & Safety
Western Outer Ring Main (WORM)
199
OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION Sustainability assurance
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Quay Quarter Tower
50 Bridge Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
IInnddeeppeennddeenntt LLiimmiitteedd AAssssuurraannccee RReeppoorrtt ttoo tthhee
DDiirreeccttoorrss ooff AAPPAA GGrroouupp LLiimmiitteedd
CCoonncclluussiioonn
We have undertaken a limited assurance engagement on APA Group Limited’s (“APA”) selected Safety Performance
metrics disclosed in the APA FY23 Sustainability Data Book (Data Book), referenced in the APA FY23 Annual Report
(“Annual Report”) for the period 1 July 2022 to 30 June 2023.
Based on the procedures performed and the evidence obtained, nothing has come to our attention that causes us
to believe, that the selected Safety Performance metrics for the period 1 July 2022 to 30 June 2023 presented below
(“Subject Matter Information”) and included in the Safety Performance table in section 7 - Health & Safety, in APA’s
FY23 Sustainability Data Book referenced on page 45 of the Annual Report, have not been prepared, in all material
respects, in accordance with APA’s Basis of Preparation (“Reporting Criteria”), as referenced in APA’s FY23
Sustainability Data Book.
SSuubbjjeecctt MMaatttteerr IInnffoorrmmaattiioonn
UUnniitt ooff MMeeaassuurree
FFaattaalliittiieess
TToottaall ffaattaalliittiieess
Employees
Contractors
SSaaffeettyy IInnddiiccaattoorrss
CCoouunntt
Count
Count
Health & Safety Hazard Frequency Rate
Total Hazards Reported / per million hours
Health & Safety Near Miss Frequency Rate
Total Near Miss Reported / per million hours
Total Recordable Injury Frequency Rate (TRIFR)
Injury (LTI, MOTI, MITI) count / per million hours
TRIFR - Employees
TRIFR - Contractors
Injury (LTI, MOTI, MITI) count / per million hours
Injury (LTI, MOTI, MITI) count / per million hours
Lost Time Injury Frequency Rate (LTIFR)
Injury LTI count / per million hours
LTIFR - Employees
LTIFR - Contractors
BBaassiiss ffoorr CCoonncclluussiioonn
Injury LTI count / per million hours
Injury LTI count / per million hours
We conducted our limited assurance engagement in accordance with Australian Standard on Assurance
Engagements ASAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information
(“ASAE 3000”), issued by the Australian Auditing and Assurance Standards Board.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
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APA GROUP ANNUAL REPORT 2023
RReessppoonnssiibbiilliittiieess ooff AAPPAA
The Directors of APA are responsible for:
a) ensuring that the Subject Matter Information is prepared in accordance with the Reporting Criteria;
b) confirming the measurement or evaluation of the underlying subject matter against the Reporting Criteria,
including that all relevant matters are reflected in the Subject Matter Information;
c) designing, establishing and maintaining an effective system of internal control over its operations and
financial reporting, including, without limitation, systems designed to ensure achievement of its control
objectives and its compliance with applicable laws and regulations; and
d)
the electronic presentation of the Subject Matter Information, Basis of Preparation and our limited
assurance report on the website.
OOuurr IInnddeeppeennddeennccee aanndd QQuuaalliittyy MMaannaaggeemmeenntt
We have complied with the independence and other relevant ethical requirements relating to assurance
engagements, and applied Auditing Standard ASQM 1 Quality Management for Firms that Perform Audits or Reviews
of Financial Reports and Other Financial Information, or Other Assurance or Related Services Engagements in
undertaking this assurance engagement.
AAssssuurraannccee PPrraaccttiittiioonneerr’’ss RReessppoonnssiibbiilliittiieess
Our responsibility is to express a limited assurance conclusion on APA’s Subject Matter Information as evaluated
against the Reporting Criteria based on the procedures we have performed and the evidence we have obtained.
ASAE 3000 requires that we plan and perform our procedures to obtain limited assurance about whether, anything
has come to our attention that causes us to believe that the Subject Matter Information is not properly prepared, in
all material respects, in accordance with the Reporting Criteria.
A limited assurance engagement in accordance with ASAE 3000 involves identifying areas where a material
misstatement of the Subject Matter Information is likely to arise, addressing the areas identified and considering the
process used to prepare the Subject Matter Information. A limited assurance engagement is substantially less in
scope than a reasonable assurance engagement in relation to both the risk assessment procedures, including an
understanding of internal control, and the procedures performed in response to the assessed risks.
The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent
than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance
engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance
engagement been performed. Accordingly, we do not express a reasonable assurance opinion about whether the
Subject Matter Information has been prepared, in all material respects, in accordance with the Reporting Criteria.
Our procedures included:
•
•
Enquiries with management and staff responsible for the Subject Matter Information to understand the
preparation and review processes;
Inspection of documents as part of the walk throughs of key systems and processes for collating, calculating,
and reporting the respective Subject Matter Information in the Data Book;
• On a sample basis, inspection of underlying information to test the Subject Matter Information has been
prepared and reported in line with APA’s policies, procedures and methodologies applicable to the
Reporting Criteria;
• Analytical reviews over material data streams to identify any material anomalies for the Subject Matter
Information and investigate further where required; and
• Agreeing overall data sets for the Subject Matter Information to the final data contained in the Data Book.
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Sustainability assurance
(continued)
Inherent Limitations
Because of the inherent limitations of an assurance engagement, together with the inherent limitations of any
system of internal control there is an unavoidable risk that it is possible that fraud, error, or non-compliance with
laws and regulations, where there has been concealment through collusion, forgery and other illegal acts may occur
and not be detected, even though the engagement is properly planned and performed in accordance with Standards
on Assurance Engagements.
Non-financial data may be subject to more inherent limitations given both its nature and the methods used for
determining, calculating, and sampling or estimating such data.
Restricted use
The Reporting Criteria used for this engagement was designed for a specific purpose of the Directors reporting on
selected Safety Performance metrics included in the Data Book. As a result, the Subject Matter Information may not
be suitable for another purpose.
This report has been prepared for use by the Directors of APA for the purpose of providing assurance over selected
Safety Performance metrics included in the Data Book. We disclaim any assumption of responsibility for any reliance
on this report to any person other than the Directors of APA or for any purpose other than that for which it was
prepared.
DELOITTE TOUCHE TOHMATSU
Chi Woo
Partner
Sydney, 23 August 2023
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OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION WWW.APA.COM.AU