APA records 14% increase in FY14 net profit

Australia’s largest gas infrastructure business, APA Group, has released its results for the financial year ended 30 June 2014.

FY14 highlights

Profit

The company recorded a 14% increase in net profit after tax and non-controlling interests before significant items to US$ 199.6 million, and a 12.9% increase in EBITDA before significant items to US$ 747.3 million for FY14.

Statutory net profit after tax of US$ 343.7 million, which included a significant item of US$ 144.1 million relating to a one-off adjustment to tax expense for the year, was 16.5% higher than FY13, which also included a number of one-off significant items totalling US$ 120 million.

Normalised profit and normalised EBITDA benefitted from a full 12-month contribution of the South West Queensland Pipeline and the Pilbara Pipeline System, as well as additional earnings from newly commissioned expansions such as the Mondarra Gas Storage Facility. Increased performance in the investments segment and an increase in customer contributions in the asset management segment also contributed to the result. These increases were partially offset by reduced Victorian Gas Transmission revenue as a result of a new access arrangement, which came into effect on 1 July 2013, and the removal of contributions from the Moomba Adelaide Pipeline System sold in 2013.

Cash flow and distribution

Statutory operating cash flow of US$ 431.5 million includes a one-off payment of US$ 8.2 million to Hastings Funds Management Limited in respect of disputed management fees, which APA continues to pursue though the Courts. Excluding significant items, normalised operating cash flow was 1.6% higher than the previous year at US$ 439.7 million and operating cash flow per security was 6.1% lower at US$ 0.52, primarily due to an increase in the average number of securities on issue this financial year.

APA’s Chairman, Len Bleasel, announced that the Board of Directors declared a final distribution of US$ 0.1875 per security, confirming previous guidance and bringing total distributions for the financial year to US$ 0.3625, an increase of 2.1% over distributions paid for the previous year. APA continues to fully fund distributions out of operating cash flow whilst also retaining significant cash in the business to support continuing growth. This year’s distribution payout ratio amounted to 68.9% of normalised operating cash flow.

Strong financial performance

Bleasel noted: "APA continues to deliver growth and sustainable returns through consistent execution of our strategy, and it is pleasing to see this reflected in our results. We apply a prudent approach to ensure investment opportunities enhance our portfolio of gas infrastructure assets and deliver appropriate commercial returns.

"The pipelines added to our portfolio in FY13 have performed beyond our expectations. We have achieved our EBITDA guidance, which was raised twice during the year, as well as our objective of paying distributions at least equal to those paid in the previous financial year," said Bleasel.

Expansion in Western Australia

During the year, APA spent US $383 million expanding its gas infrastructure portfolio in Western Australia, Queensland, Victoria and New South Wales.

APA Group Managing Director, Mick McCormack, said: "We have a number of growth projects underway and we are actively developing investment opportunities across all of APA’s operations. We expect to continue this significant investment in further expanding our portfolio over the next few years."

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldpipelines.com/business-news/21082014/apa-records-14-percent-increase-in-fy14-net-profit-737/