2007 - APA Group

148 Pages·2007·6.06 MB·English

Annual Report 2007 BOOK 1
FINANCIAL CALENDAR APA Group
At the time of printing, dates
are as follows:
30 OCTOBER 2007
FEBRUARY 2008
Annual Meeting
Half year results announced
City Recital Hall
Angel Place, Sydney MARCH 2008
Gas transmission Gas Gas-fi red power
11.00am & distribution p12 processing p16 stations p18
IInntterim distribution payable
JJUUNNEE 2008
FFiinnaanncciiaall yyeeaar end
SSEEPPTTEEMMBBEERR 2008
FFiinnaall ddiissttrriibbuuttiioonn ppaayyaable
Gas Electricity
Australia’s
storage p20 Interconnectors p22
COMPANY DIRECTORYY
leading energy
Responsible Entity and DDiirreeccttoorrs of the Responsible
Registered Offi ce EEnnttiittyy
Australian Pipeline Limited ((ccuurrrent)
transporter
ABN 99 091 344 704 Mr George H Bennett (Chairman)
HSBC Building Mr Leonard F Bleasel AM
Level 19, 580 George Street Mr Ross M Gersbach
CONTENTS ANNUAL MEETING
Sydney NSW 2000 Mr Russell A Higgins AO
DATE: 30 OCTOBER 2007
(PO Box R41, Royal Exchange NSW 1225) Mr Muri Muhammad BOOK 1
VENUE: CITY RECITAL HALL,
Telephone: [phone] Mr Manharlal (George) Ratilal APA’S ASSETS IFC
ANGEL PLACE, SYDNEY.
HIGHLIGHTS 2
Facsimile: [phone] Mr Robert J Wright
CHAIRMAN’S REPORT 4 TIME: 11:00AM
www.pipelinetrust.com.au Mr Michael J McCormack (Managing MANAGING DIRECTOR’S REPORT 6
REGISTRATION COMMENCES
Director) QUICK FACTS 10
AT 10:30AM
OPERATIONAL MODEL 11
Ms Wan Shamilah Saidi (alternate for
OPERATIONS 12
Mr Muhammad)
SUSTAINABILITY 24
Mr Wan Zulkifl ee Wan Ariffi n (alternate for COMMUNITY 25
Mr Ratilal) OPERATIONS MANAGEMENT 26
EXECUTIVE MANAGEMENT 28
Chief Financial Offi cer
BOARD OF DIRECTORS 30
Mr Richard F Francis BOOK 2
CORPORATE GOVERNANCE STATEMENT 1
Company Secretary
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES 10
Mr Austin J V James APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES 79
APA Group ADDITIONAL STOCK EXCHANGE INFORMATION IBC APA Group
Auditor of APA
Deloitte Touche Tohmatsu
ASX Code : APA
AUSTRALIAN PIPELINE LTD ACN 091 344 704 AUSTRALIAN PIPELINE TRUST ARSN 091 678 778 APT INVESTMENT TRUST ARSN 115 585 441
Annual Report 2007 BOOK 1
FINANCIAL CALENDAR APA Group
At the time of printing, dates
are as follows:
30 OCTOBER 2007
FEBRUARY 2008
Annual Meeting
Half year results announced
City Recital Hall
Angel Place, Sydney MARCH 2008
Gas transmission Gas Gas-fi red power
11.00am & distribution p12 processing p16 stations p18
IInntterim distribution payable
JJUUNNEE 2008
FFiinnaanncciiaall yyeeaar end
SSEEPPTTEEMMBBEERR 2008
FFiinnaall ddiissttrriibbuuttiioonn ppaayyaable
Gas Electricity
Australia’s
storage p20 Interconnectors p22
COMPANY DIRECTORYY
leading energy
Responsible Entity and DDiirreeccttoorrs of the Responsible
Registered Offi ce EEnnttiittyy
Australian Pipeline Limited ((ccuurrrent)
transporter
ABN 99 091 344 704 Mr George H Bennett (Chairman)
HSBC Building Mr Leonard F Bleasel AM
Level 19, 580 George Street Mr Ross M Gersbach
CONTENTS ANNUAL MEETING
Sydney NSW 2000 Mr Russell A Higgins AO
DATE: 30 OCTOBER 2007
(PO Box R41, Royal Exchange NSW 1225) Mr Muri Muhammad BOOK 1
VENUE: CITY RECITAL HALL,
Telephone: [phone] Mr Manharlal (George) Ratilal APA’S ASSETS IFC
ANGEL PLACE, SYDNEY.
HIGHLIGHTS 2
Facsimile: [phone] Mr Robert J Wright
CHAIRMAN’S REPORT 4 TIME: 11:00AM
www.pipelinetrust.com.au Mr Michael J McCormack (Managing MANAGING DIRECTOR’S REPORT 6
REGISTRATION COMMENCES
Director) QUICK FACTS 10
AT 10:30AM
OPERATIONAL MODEL 11
Ms Wan Shamilah Saidi (alternate for
OPERATIONS 12
Mr Muhammad)
SUSTAINABILITY 24
Mr Wan Zulkifl ee Wan Ariffi n (alternate for COMMUNITY 25
Mr Ratilal) OPERATIONS MANAGEMENT 26
EXECUTIVE MANAGEMENT 28
Chief Financial Offi cer
BOARD OF DIRECTORS 30
Mr Richard F Francis BOOK 2
CORPORATE GOVERNANCE STATEMENT 1
Company Secretary
AUSTRALIAN PIPELINE TRUST AND ITS CONTROLLED ENTITIES 10
Mr Austin J V James APT INVESTMENT TRUST AND ITS CONTROLLED ENTITIES 79
APA Group ADDITIONAL STOCK EXCHANGE INFORMATION IBC APA Group
Auditor of APA
Deloitte Touche Tohmatsu
ASX Code : APA
AUSTRALIAN PIPELINE LTD ACN 091 344 704 AUSTRALIAN PIPELINE TRUST ARSN 091 678 778 APT INVESTMENT TRUST ARSN 115 585 441
Delivering
energy
to Australia
MANAGING DIRECTOR
APA ANNUAL REPORT 07 1
Delivering
Securityholder Glossary
energy
information
ABARE GTA
Australian Bureau of Agricultural and Gas Transportation Agreement
Resource Economics
Distribution GTD
ACCC Gas Transportation Deed
APA GROUP OWNS OVER 12,000 KM OF The 2007 fi nal distribution of 7.0 cps, unfranked, is to be paid on 28 September 2007. The
Australian Competition and
IPO
GAS TRANSMISSION PIPELINES AND OVER distribution is made up of 5.0 cps income unfranked, and 2.0 cps tax deferred.
Consumer Commission
Initial Public Offering
21,400 KM OF GAS DISTRIBUTION NETWORKS
THROUGHOUT THE COUNTRY Change of address AGL Interconnect
The Australian Gas Light Company
Lateral connecting Barnawatha to Culcairn
12 Securityholders who have changed their address should advise the registry in writing.
APT or Trust
kV
Australian Pipeline Trust
Direct payment to bank accounts Kilovolts
APA Group or APA
1. VICTORIAN TRANSMISSION SYSTEM, NSW/VIC Distributions may be paid direct to bank, building society or credit union accounts in LNG
The stapled entities, Australian Pipeline
2. GOLDFIELDS GAS TRANSMISSION PIPELINE, WA Australia. Payments are electronically credited on the distribution payment date and Liquid natural gas
Trust and APT Investment Trust, and their
3. PARMELIA GAS PIPELINE, WA confi rmed by post. Securityholders who wish their distributions to be paid electronically, controlled entities MSP
must advise the registry in writing prior to the record date of the fi rst distribution payment Moomba to Sydney Pipeline
4. MIDWEST PIPELINE, WA
that they wish to be paid by direct credit. APA Victoria
5. TELFER GAS PIPELINE, WA Comprises of GasNet gas transmission MW
6. MOOMBA TO SYDNEY PIPELINE SYSTEM, SA/NSW Consolidation of securityholdings operations and Envestra gas networks Megawatt
7. CENTRAL WEST PIPELINE, NSW 5 11 16 operations National Gas Code
Securityholders who wish to consolidate their separate securityholdings into one account
8. ROMA TO BRISBANE PIPELINE, QLD NORTHERN should advise the registry in writing. APL National third party access code for natural
TERRITORY
Australian Pipeline Limited gas pipeline systems
9. CARPENTARIA GAS PIPELINE, QLD
10. ALLGAS DISTRIBUTION NETWORKS, QLD/NSW Tax File Numbers APTIT or Trust Natural gas
APT Investment Trust Naturally occurring hydrocarbons
11. AMADEUS GAS PIPELINE, NT QUEENSLAND Australian tax resident securityholders, including minors, should advise their Tax File
29 consisting mainly of methane, often
12. PROPOSED BONAPARTE GAS PIPELINE, NT 9 23 Number (“TFN”), Australian Business Number (“ABN”) or exemption details to the registry ASX associated with petroleum
either by phone or in writing. If a TFN or ABN is not quoted and no exemption details are Australian Stock Exchange
13. KOGAN NORTH GAS PROCESSING FACILITY, QLD
WESTERN provided by a securityholder, APA is required by law to deduct tax at the top marginal rate of Parmelia Gas Business
14. TIPTON WEST GAS PROCESSING FACILITY, QLD BBSW
AUSTRALIA tax plus medicare levy, from the unfranked part of distributions paid to that securityholder. Made up of the PGP, gas storage and gas
Bank Bill Swap Reference Rate
15. DAANDINE POWER STATION, QLD 2 processing businesses
8
13
16. X41 POWER STATION, QLD 24 Distribution Reinvestment Plan (“DRP”) CGP PGP
14 15 Carpentaria Gas Pipeline
17. LNG FACILITY, VIC 10 As an alternative to receiving cash distributions, securityholders may elect to participate in Parmelia Gas Pipeline
18. MONDARRA GAS STORAGE FACILITY, WA 4 21 20 the DRP. The DRP enables securityholders to use cash distributions to purchase additional Cogeneration PMA
19. MURRAYLINK INTERCONNECT, SA/VIC SOUTH fully paid APA securities. If you would like to participate in our DRP, contact Link Market The simultaneous production of electrical Pipeline Management Agreement
18 AUSTRALIA Services Limited. energy plus heat from a single fuel source,
20. DIRECTLINK INTERCONNECT, NSW/QLD 6 NEW SOUTH WALES such as natural gas between Alinta and APA
21. MURRIN MURRIN LATERAL, WA 3 22 Election of Directors CPI PJ
22. KALGOORLIE TO KAMBALDA PIPELINE, WA Petajoule
In August each year, securityholders will be notifi ed by announcement to ASX that they may Consumer Price Index
23. GLADSTONE TO MARYBOROUGH GAS PIPELINE, QLD PJ/d
nominate a person for election to the Australian Pipeline Limited (“APL”) Board as a non- CSG – coal seam gas
24. ENVESTRA DISTRIBUTION NETWORKS, VIC/SA/QLD 7 corporate director. The extraction of natural gas from a Petajoule per day
25. CAMS WATER AND WASTE WATER TREATMENT 19 Once all nominations are received by the required date, APL will advise securityholders of coal seam RBP
SERVICES, VIC 27 Roma to Brisbane Pipeline
all candidates and present its nominations to the securityholders at the APA annual meeting. EBIT
26. SEAGAS PIPELINE, VIC/SA 24 A majority resolution by securityholders on nominations will confi rm securityholders Earnings before interest and tax SCP Gas Business
27. RIVERLAND AND MILDURA PIPELINES, SA/VIC 26 VICTORIA intentions. APL will then ensure that the successful candidates are elected to its Board. Refers to SCP Investments (No.1) Pty
EBITDA
28. SESA PIPELINE, VIC/SA 25 This report uses terms and abbreviations relevant to APA’s activities and fi nancial accounts. Earnings before interest, tax, depreciation Limited, the 88.2% owner of GGT, and the
1 Parmelia Gas Pipeline
29. ALICE SPRINGS GAS PIPELINE, NT 28 A glossary of the terms and abbreviations used in this report is provided on this page. and amortisation
TJ
Financial year
17 24 Terajoule
Enquiries The 12 months to 30 June
TJ/d
GasNet
Terajoule per day
GasNet Australia Group
Securityholders with enquiries about their holdings should contact the Registry:
GGT
TASMANIA Toll Free: 1800 992 312 Address:
APA’s Goldfi elds Gas Transmission Pipeline
Outside Australia: [phone] APA Group Registry
assets Facsimile: [phone] C/- Link Market Services Limited
Locked Bag A14
E-mail: [email protected]
Sydney South NSW 1235.
The map above is illustrative only and may not be drawn to scale.
COVER IMAGE: APA EMPLOYEES LAYING PIPE Unless stated otherwise, all data contained on the map is based on imformation available at the publication date of this Annual Report.
Delivering
Securityholder Glossary
energy
information
ABARE GTA
Australian Bureau of Agricultural and Gas Transportation Agreement
Resource Economics
Distribution GTD
ACCC Gas Transportation Deed
APA GROUP OWNS OVER 12,000 KM OF The 2007 fi nal distribution of 7.0 cps, unfranked, is to be paid on 28 September 2007. The
Australian Competition and
IPO
GAS TRANSMISSION PIPELINES AND OVER distribution is made up of 5.0 cps income unfranked, and 2.0 cps tax deferred.
Consumer Commission
Initial Public Offering
21,400 KM OF GAS DISTRIBUTION NETWORKS
THROUGHOUT THE COUNTRY Change of address AGL Interconnect
The Australian Gas Light Company
Lateral connecting Barnawatha to Culcairn
12 Securityholders who have changed their address should advise the registry in writing.
APT or Trust
kV
Australian Pipeline Trust
Direct payment to bank accounts Kilovolts
APA Group or APA
1. VICTORIAN TRANSMISSION SYSTEM, NSW/VIC Distributions may be paid direct to bank, building society or credit union accounts in LNG
The stapled entities, Australian Pipeline
2. GOLDFIELDS GAS TRANSMISSION PIPELINE, WA Australia. Payments are electronically credited on the distribution payment date and Liquid natural gas
Trust and APT Investment Trust, and their
3. PARMELIA GAS PIPELINE, WA confi rmed by post. Securityholders who wish their distributions to be paid electronically, controlled entities MSP
must advise the registry in writing prior to the record date of the fi rst distribution payment Moomba to Sydney Pipeline
4. MIDWEST PIPELINE, WA
that they wish to be paid by direct credit. APA Victoria
5. TELFER GAS PIPELINE, WA Comprises of GasNet gas transmission MW
6. MOOMBA TO SYDNEY PIPELINE SYSTEM, SA/NSW Consolidation of securityholdings operations and Envestra gas networks Megawatt
7. CENTRAL WEST PIPELINE, NSW 5 11 16 operations National Gas Code
Securityholders who wish to consolidate their separate securityholdings into one account
8. ROMA TO BRISBANE PIPELINE, QLD NORTHERN should advise the registry in writing. APL National third party access code for natural
TERRITORY
Australian Pipeline Limited gas pipeline systems
9. CARPENTARIA GAS PIPELINE, QLD
10. ALLGAS DISTRIBUTION NETWORKS, QLD/NSW Tax File Numbers APTIT or Trust Natural gas
APT Investment Trust Naturally occurring hydrocarbons
11. AMADEUS GAS PIPELINE, NT QUEENSLAND Australian tax resident securityholders, including minors, should advise their Tax File
29 consisting mainly of methane, often
12. PROPOSED BONAPARTE GAS PIPELINE, NT 9 23 Number (“TFN”), Australian Business Number (“ABN”) or exemption details to the registry ASX associated with petroleum
either by phone or in writing. If a TFN or ABN is not quoted and no exemption details are Australian Stock Exchange
13. KOGAN NORTH GAS PROCESSING FACILITY, QLD
WESTERN provided by a securityholder, APA is required by law to deduct tax at the top marginal rate of Parmelia Gas Business
14. TIPTON WEST GAS PROCESSING FACILITY, QLD BBSW
AUSTRALIA tax plus medicare levy, from the unfranked part of distributions paid to that securityholder. Made up of the PGP, gas storage and gas
Bank Bill Swap Reference Rate
15. DAANDINE POWER STATION, QLD 2 processing businesses
8
13
16. X41 POWER STATION, QLD 24 Distribution Reinvestment Plan (“DRP”) CGP PGP
14 15 Carpentaria Gas Pipeline
17. LNG FACILITY, VIC 10 As an alternative to receiving cash distributions, securityholders may elect to participate in Parmelia Gas Pipeline
18. MONDARRA GAS STORAGE FACILITY, WA 4 21 20 the DRP. The DRP enables securityholders to use cash distributions to purchase additional Cogeneration PMA
19. MURRAYLINK INTERCONNECT, SA/VIC SOUTH fully paid APA securities. If you would like to participate in our DRP, contact Link Market The simultaneous production of electrical Pipeline Management Agreement
18 AUSTRALIA Services Limited. energy plus heat from a single fuel source,
20. DIRECTLINK INTERCONNECT, NSW/QLD 6 NEW SOUTH WALES such as natural gas between Alinta and APA
21. MURRIN MURRIN LATERAL, WA 3 22 Election of Directors CPI PJ
22. KALGOORLIE TO KAMBALDA PIPELINE, WA Petajoule
In August each year, securityholders will be notifi ed by announcement to ASX that they may Consumer Price Index
23. GLADSTONE TO MARYBOROUGH GAS PIPELINE, QLD PJ/d
nominate a person for election to the Australian Pipeline Limited (“APL”) Board as a non- CSG – coal seam gas
24. ENVESTRA DISTRIBUTION NETWORKS, VIC/SA/QLD 7 corporate director. The extraction of natural gas from a Petajoule per day
25. CAMS WATER AND WASTE WATER TREATMENT 19 Once all nominations are received by the required date, APL will advise securityholders of coal seam RBP
SERVICES, VIC 27 Roma to Brisbane Pipeline
all candidates and present its nominations to the securityholders at the APA annual meeting. EBIT
26. SEAGAS PIPELINE, VIC/SA 24 A majority resolution by securityholders on nominations will confi rm securityholders Earnings before interest and tax SCP Gas Business
27. RIVERLAND AND MILDURA PIPELINES, SA/VIC 26 VICTORIA intentions. APL will then ensure that the successful candidates are elected to its Board. Refers to SCP Investments (No.1) Pty
EBITDA
28. SESA PIPELINE, VIC/SA 25 This report uses terms and abbreviations relevant to APA’s activities and fi nancial accounts. Earnings before interest, tax, depreciation Limited, the 88.2% owner of GGT, and the
1 Parmelia Gas Pipeline
29. ALICE SPRINGS GAS PIPELINE, NT 28 A glossary of the terms and abbreviations used in this report is provided on this page. and amortisation
TJ
Financial year
17 24 Terajoule
Enquiries The 12 months to 30 June
TJ/d
GasNet
Terajoule per day
GasNet Australia Group
Securityholders with enquiries about their holdings should contact the Registry:
GGT
TASMANIA Toll Free: 1800 992 312 Address:
APA’s Goldfi elds Gas Transmission Pipeline
Outside Australia: [phone] APA Group Registry
assets Facsimile: [phone] C/- Link Market Services Limited
Locked Bag A14
E-mail: [email protected]
Sydney South NSW 1235.
The map above is illustrative only and may not be drawn to scale.
COVER IMAGE: APA EMPLOYEES LAYING PIPE Unless stated otherwise, all data contained on the map is based on imformation available at the publication date of this Annual Report.
Highlights
Delivering
securityholder
value
TOTAL REVENUE - BEFORE SIGNIFICANT ITEMS ($M) DISTRIBUTIONS (CENTS PER SECURITY)
2003 265.4 2003 21.5
2004 271.2 2004 21.5
2005 369.5 2005 22.5
2006 379.0 2006 24.0
2007 2007
532.7 28.0
Profit Capital
Key operating highlights
> 40.9% increase in pipeline transportation revenue
> 48.1% increase in EBITDA
> Part year revenue contribution from Allgas, GasNet
and Directlink
> Pipeline Management Agreement over main pipeline
assets acquired from Alinta
> Bonaparte Gas Pipeline project on schedule
> Completion of Daandine Power Station and Tipton West Gas
Processing Facility using coal seam gas in Queensland
> Expansion of Moomba to Sydney Pipeline at Culcairn
> Increase in annual distribution from 24.0 to 28.0 cents per
security
APA ANNUAL REPORT 07
TOTAL ASSETS ($M) OPERATING CASH FLOW ($M)
2003 1,431.8 2003 90.6
2004 1,433.7 2004 82.3
2005 1,883.5 2005 106.2
2006 2,060.9 2006 112.2
2007 2007
4,237.9 157.0
Pipeline Operating profi t after Underlying
transportation tax before signifi cant operating cash fl ow
revenue up 40.9% items up 6.4% up 39.9%
Underlying operating
Total equity Distributions up
cash fl ow per
increased by 96.3% 16.7%
security up 6.8%
Financial highlights
YEAR ENDED 30 JUNE 2007 30 JUNE 2006 CHANGE
OPERATING RESULTS $M $M %
FINANCIAL RATIOS
APA ANNUAL REPORT 07 3
AA yyeeaarr ooff eexxppaannssiioonn aanndd iinntteeggrraattiioonn
TThhee 22000077 fifi nnaanncciiaall yyeeaarr ssaaww AAPPAA eexxppaanndd tthhrroouugghh
acquisitions and deliver on its strategy of being a major
Chairman’s player in developing, owning and operating energy
infrastructure. Such growth requires signifi cant integration
report
and consolidation to ensure the success of these assets.
APA staff, both new and old, are committed to ensuring that
tthe new businesses operate at maximum effi ciency. It is a
ttestament to all that there has been so much goodwill and
commitment to this great challenge.
MMaannaaggiinngg DDiirreeccttoorr,, MMiicckk MMccCCoorrmmaacckk oouuttlliinneess AAPPAA’ss
ON BEHALF OF THE BOARD, I AM operational achievements in more detail on pages 6 to 9 but
PLEASED TO PRESENT THE APA GROUP in brief, APA more than doubled the value of its asset base
ANNUAL REPORT FOR 2007. THE 2007 over the past year, acquiring Allgas Energy, GasNet Australia
FINANCIAL YEAR HAS BEEN A VERY Group, Directlink and Origin Energy Networks assets.
SUCCESSFUL YEAR FOR APA GROUP BY Gas transmission is, and continues to be, APA’s core
ANY MEASURE. business. We continue to seek other investment
opportunities which enhance our ability to grow
In the past 12 months, APA Group (“APA”) extended its
distributions to you, our securityholders. By combining our
national footprint to every mainland State and Territory,
core strengths with non-core assets, such as underground
through strategic and prudent acquisitions, strengthened
electricity cables and small gas-fi red power generation,
its balance sheet through effective capital management
APA has been able to realise its goals of growing cash
and, importantly, increased distributions in real terms
distributions and provide a strong balance sheet for
to securityholders. continued growth.
This will be my fi nal report to you. On 28 August 2007, APA Our aim is to build a portfolio with an appropriate mix of low
advised the Market that I intend to step down as Chairman risk and high growth assets as part of a deliberate strategy
and Director after the Annual Meeting on 30 October 2007. to diversify into a wider range of business opportunities in
It has been my pleasure to serve as your Chairman for the the energy and infrastructure sectors.
last seven years.
AA ffuueell ooff ttrraannssiittiioonn
I feel that the time is now right for me to retire. I leave
knowing that the Board, staff and you, the securityholders, Protection of our environment continues to grow as an
have created a strong, vibrant and relevant Business, the important issue for our planet. APA is well aware of its
long-term value of which is assured. corporate obligations and I am proud our Business delivers
and promotes natural gas, which is key to helping build a
The Board is delighted to advise that Len Bleasel has agreed
more sustainable energy future for Australia.
to become a director of Australian Pipeline Limited and has
also agreed to become Chairman elect. Len was Managing Natural gas is playing an increasingly important role in
Director of The Australian Gas Light Company for a number Australia’s energy mix with consumption forecast to rise
of years and has held a number of senior directorships since 4% per year through to 2011 and 2.5% per year, to almost
his retirement in 2001. Len brings signifi cant industry and double, by 2023.
business knowledge and experience to the Board at a time
when APA is consolidating as a top 150 ASX business. I am
sure that APA will have a long and prosperous future under
his stewardship. G
e
o
The Board is excited and confi dent about APA’s future. r
g
Gas as a fuel of transition has potential to reduce the carbon e

footprint and its fl exibility in providing energy has led B
e
ABARE to forecast that natural gas production will increase n
13% during 2008. This should mean the prospects for APA n
e
growth in gas transportation are very bright. t
t
FFiinnaanncciiaall ppeerrffoorrmmaannccee
APA delivered above market guidance ($58 – 61 million)
for the fi nancial year, with net profi t after tax before
signifi cant items coming in at $64.5 million for the year
ended 30 June 2007.
Distributions for the period increased by 16.7% to 28 cents
per security. On a recurring basis, operating cash fl ow
increased to $157.0 million, up 39.9% on the previous year.
Initial contributions from acquisitions during the period
helped drive the full year result, while organic growth was
strong, with pipeline transportation revenue up 40.9% to
$393.1 million.
4 APA ANNUAL REPORT 07
Part of that demand will be met by coal seam gas (“CSG””)),,
which APA regards as a signifi cant alternative fuel for
easttern AAusttralliia iin tthhe meddiium-tterm, andd a kkey sttep iin tthhe
development of an Eastern Gas Grid.
Business should be engaged in the debate about the
impact of energy consumption on our environment and, as
Australia’s leading energy transporter, APA has a role to play.
To that end, the Board is pleased to report Non-executive
Director Russell Higgins was appointed to the Prime
Ministerial Task Group on Emissions Trading in December.
TThhee AAuussttrraalliiaann aanndd SSttaattee ggoovveerrnnmmeennttss hhaavvee pprroovviiddeedd
signifi cant leadership in promoting alternative fuel options
OOuuttllooookk
and Mick McCormack talks about that in his report.
APA has built a portfoliioo oof quality and diverse assets which,
GGaass ssuuppppllyy
together with our teecchhnical expertise, is the platform on which
we will drive futuurree growth for the benefi t of securityholders.
APA was disappointed with the decision by thhee Papua
New Guinea (“PNG”) gas project partners ttoo suspend work As we have aallwways said, APA will continue to examine
on the project and consider alternative ccoommercialisation any investtmment opportunities as they arise and apply the
options. This led to a suspension of tthhee proposed PNG gas same sttrriicct set of investment criteria to those investment
to Australia pipeline project. oppoorrttunities. We do not dictate when assets come
oonntto the market, but when they do, we ensure that we
Gas supply to eastern Australia remaaiinnss an important
iinvestigate and analyse potential opportunities to determine
issue beyond the next decade, and whillee CSG provides a
if they will enhance our earnings and deliver on our strategy.
good medium-term solution, a new supplyy ooff natural gas
is essential in the longer term. Northern gas ssuupppplliieess ffrroomm While transporting gas will continue to be our mainstay,
PNG, Timor Sea or the North West Shelf remain tthhee mmoosst we will look beyond pipelines to ensure asset diversity and
likely options. to spread our business risk, while growing our returns to
securityholders.
AAPPAA’ss aacchhiieevveemmeennttss
APA is fi rmly focused on securing a future gas supply to
The Board would like to remind you of some of APA’s eastern Australia and integrating its newly acquired assets.
signifi cant achievements since it fl oated in June 2000. Since
We are pleased to start the 2008 fi nancial year with our legal
the Initial Public Offering (“IPO”), APA’s stock price has
proceedings relating to Alinta now resolved. Results to date
increased by over 100%, its revenue has grown by over
are well on track to meet current year targets.
200% and its distributions have grown by 27%.
It has been a pleasure to work with Board, Management,
It has acquired most of its minority interests in jointly
staff and you, our securityholders, over the past seven
owned assets and, through a series of targeted and
years. It has been a rewarding time, and I retire satisfi ed
disciplined investments, doubled in size. In recognising
that our Business has done very well. I wish the incoming
the value of complementary assets, APA has expanded
Chairman, the Board and staff the best of luck and leave
from being only a pipeline business. Today, it is the leading
knowing that the Business continues to be in good hands.
energy transmission and distribution business with a
complementary asset portfolio that includes gas storage, On behalf of the Board, I thank Management and staff for
electricity cables, CSG facilities and gas-fi red power their commitment and hard work, and all securityholders for
stations. their support.
When APA fl oated in 2000, it had a staff of a little over
10 people. In 2006, APA employed around 40 people and
by the end of this year, with the acquisition of the Alinta
pipeline operating and maintenance staff, we will employ
GEORGE H BENNETT
over 1,000 people.
CHAIRMAN
APA has always prided itself on the commitment, skill and
27 SEPTEMBER 2007
dedication of its people. APA has been very impressed with
the quality of the new people who have agreed to become
part of our APA culture. Let me not underestimate the task
before us to ensure that the larger APA family functions
appropriately. The Board is heartened by the dedication and
commitment of our newest employees.
Mick McCormack addresses the Alinta dispute in his
report, but let me say that the Board and Management kept
securityholder interests foremost in their minds in pursuing
and fi nalising the Alinta matters. The Board is very proud of
the hard work and dedication that APA Management and
staff demonstrated, in ensuring the very best result for all
securityholders.
APA ANNUAL REPORT 07 5
APA’s philosophy of being a stable, strong and long-term
investment for securityholders is achievable.
Underscoring our investment strategy is the goal of
Managing increasing distributions by at least CPI annually. In looking at
our achievements for the 2007 fi nancial year, I am delighted
Director’s
tthat APA has exceeded that target by providing an annual
report increase of 16.7% over the previous year, demonstrating the
value of our acquisition strategy.
APA has a vision of developing a gas transmission grid on
tthe eastern seaboard that will offer a seamless tariff for
gas delivered into Queensland, New South Wales, the
APA HAS UNDERGONE UNPRECEDENTED Australian Capital Territory and Victoria. This will greatly
EXPANSION OVER THE LAST 12 MONTHS, assist the expansion of a competitive gas market in Australia,
WHICH HAS RESULTED IN A VERY by providing greater access to multiple supply sources and
SUCCESSFUL AND STRONG YEAR. I enhancing producer on producer competition.
AM VERY PROUD OF WHAT WE HAVE
APA’s business model is a low cost, transparent and
ACHIEVED FOR SECURITYHOLDERS
competitive one. Our approach distinguishes us from many
AND CONTINUE TO BE EXCITED ABOUT
other businesses that operate a fee based model.
APA’S FUTURE. APA NOW HAS A TRULY
NATIONAL ENERGY FOOTPRINT WITH AAccqquuiissiittiioonnss
ASSETS IN ALL MAINLAND STATES AND
APA has made a series of acquisitions and new investments
TERRITORIES.
over the last 12 months, expanding our total asset base
During the year, I have travelled around the country and to around $4 billion, with assets under management of
welcomed the opportunity to meet many of our new staff and over $8 billion. This unprecedented activity refl ects the
securityholders. I have been asked a variety of questions. Of ongoing ownership changes within the Australian energy
particular interest is APA’s overall strategy and how we intend infrastructure sector, as institutional investors and private
to consolidate our newly acquired assets. equity compete for assets with established players. Our
ability to compete is enhanced by our low cost competitive
In order for all securityholders to have the benefi t of these
business model and our demonstrated knowledge of the
discussions, I have taken the opportunity to address these
industry.
issues by grouping the key issues raised into several
categories. Our acquisitions during the past 12 months include:
SSttrraatteeggyy • Allgas Energy gas distribution business – completed in
November 2006. The Allgas distribution system extends
Our vision is to continue to grow as Australia’s leading throughout the high growth population areas of south
energy transmission and distribution Business. The strategy east Queensland and northern New South Wales.
is simple. We are committed to growing the Business and The natural gas network comprises over 2,300 km of
maximising value for securityholders in the short, medium distribution mains and supplies approximately 65,000
and long-term. customers. Allgas has complementary infrastructure on
which APA can leverage its core competencies;
APA has a three phase approach to growth, by: growing the
Business organically; investing in brownfi elds and greenfi elds • GasNet Australia Group (“GasNet”) – completed in
projects, and acquisition. Organic growth occurs via the December 2006. GasNet (now refered to as APA
expansion of existing assets and, in particular, our core Victoria) owns and maintains 1,935 km of high-pressure
pipeline assets. Our success in increasing throughput and gas transmission pipelines throughout Victoria, which
developing innovative arrangements on the Roma to Brisbane serve a total consumption base of approximately 1.4
Pipeline and Goldfi elds Gas Transmission Pipeline are good million residential consumers and approximately 43,000
examples of this. industrial and commercial users. Almost all the natural
gas consumed in Victoria is transported through APA
Brownfi elds projects, which involve the development of, for
Victoria’s pipeline assets. The acquisition of GasNet
example, compressor stations, provide immediate returns
is delivering benefi ts to APA, including maximising
by building upon an already established income stream.
the utilisation of the Interconnect, and enhancing the
Greenfi elds opportunities provide sustained longer-term
competitiveness of the Moomba to Sydney Pipeline
returns arising from the benefi t of investment in the initial
and APA Victoria pipeline network with the Eastern Gas
stages of the projects. The Bonaparte Gas Pipeline is an
Pipeline;
excellent example of a greenfi elds project which will
• Directlink electricity interconnector – completed in
take several years to build, but will then provide strong,
February 2007. The acquisition of Directlink continues
sustainable returns.
APA’s strategy of acquiring complementary energy
Finally, the acquisition of core and complementary assets
transmission assets and follows the acquisition of
completes the three phase approach, ensuring that
6 APA ANNUAL REPORT 07