celebrating. 20 years 2020 a leading Australian energy infrastructure business. 20 annual report. 2020 APA GROUP I ANNUAL REPORT 2020 A 20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information APA Group. established June 2000. we strengthen communities through responsible energy The world is changing as are people’s In doing so, we will strengthen communities attitudes. Technology developments for the benefit of future generations. are providing new ways of operating Responsible energy means taking a long and opening up new horizons and term view and creating value for all our opportunities. It’s a very exciting time stakeholders – customers, investors, the to be in the energy space. environment and communities, authorities As we begin our third decade, APA is a and our employees. leading energy infrastructure business We will measure our success based on with the vision to be world class in energy the success we deliver to our stakeholders. solutions. We will be at the forefront of the responsible energy transformation leveraging our existing portfolio and skills and investing in future technologies. Celebrating 20 years. Front cover: Wallumbilla Gas Hub facilities in Queensland. This Page: During FY2020, APA donated this state of the art TATRA fire truck to the Shire of Dandaragan in Western Australia, where APA's renewable energy precinct is located. Back cover (top): Badgingarra Wind and Solar Farms in Western Australia. Back cover (bottom): Raj Kallath, Infrastructure Project Manager and Michael Fox, Mechanical Engineer, inspecting the Reedy Creek to Wallumbilla pipeline in Queensland, post construction. 20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information contents. FY2020 in Review energy. connected. 02 Chairman’s Report 04 Managing Director’s Report 06 APA Group Board 07 APA Group Executive Leadership 08 2020 Highlights Australian Pipeline Trust ARSN 091 678 778 10 Directors’ Report 48 Remuneration Report 63 Consolidated Financial Statements APT Investment Trust ARSN 115 585 441 123 Directors’ Report 127 Consolidated Financial Statements 147 Additional Information 148 Five Year Summary 149 Investor Information 20 years. delivering responsible energy. APA GROUP I ANNUAL REPORT 2020 01 20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information chairman’s report. This year marks the 20th anniversary of APA’s listing on the ASX and it is pleasing to report it also marks 20 years of growth in distributions to Securityholders with Total Securityholder Returns of 2,203% (1) since listing in June 2000. Michael Fraser. Chairman. FY2020 will be remembered as a very Total revenue (excluding pass-through Societal demand for new energy tough year for Australia and continues revenue) in FY2020 increased by technologies is increasing and APA is to be challenging into FY2021. At $98.5 million to $2,129.5 million, an well positioned to play an important APA, Rob Wheals and his team have increase of 4.8% on the previous year role in the energy transformation that responded exceptionally well to the (FY2019: $2,031.0 million). Earnings is underway. many challenges faced during the year, before interest, tax, depreciation and The Board endorsed APA’s refreshed including bushfires, extreme weather amortisation (EBITDA) increased by Purpose, Vision, and Operating Model events and the COVID-19 crisis. The 5.1% to $1,653.9 million which was during this reporting period. Our Board is particularly pleased that towards the upper end of the revised Purpose of strengthening communities they have done so with an absolute EBITDA guidance range of $1,635 through responsible energy has focus on our responsibilities to our million to $1,655 million (revised 21 never been so pertinent. APA is one customers, the communities in which April 2020). Whilst the mix of long of Australia’s largest companies, we operate and our people. term take or pay contracts and providing essential services to ensure regulated revenues underpins our the ongoing supply of gas and FY2020 Results revenue base, investment in new electricity for Australians. APA’s long running growth strategy energy infrastructure assets in recent and low risk business model have years has delivered the pleasing The refreshed operating structure underpinned the performance of the earnings increase. recently implemented by Rob Wheals business through both good years, and provides a solid foundation for APA’s Net profit after tax increased 10.1% in challenging years such as FY2020. continued success going forward, to $317.1 million. Operating cash flow Our strong balance sheet and long- providing the capacity for innovation, increased by 8.3% or $83.8 million term contracts have helped safeguard scalability and agility needed to to $1,095.9 million compared to the APA’s earnings against the market manage the changing nature of the previous year (FY2019: $1,021.1 million). volatility impacting many companies energy landscape. This will help us Similarly, operating cash flow per this year, and our business has achieve our Purpose to strengthen security increased 8.3%, or 7.1 cents, to delivered solid FY2020 results. communities through responsible 92.9 cents per security (FY2019: 85.8 energy, and our Vision to become Importantly, we delivered 50.0 cents cents per security). per security distribution for FY2020, world class in energy solutions. Consistent Strategy, Refreshed an increase of 6.4% on FY2019, with Energy infrastructure requires a long- Perspective the additional benefit of 7.31 cents term perspective - investing today per security of franking credits. Our Growing the business and doing so in a to deliver benefits to the economy, distribution policy has always had long sustainable manner has long been our society and our customers in future term sustainability at its core. So it is strategy. With this approach, we have years. We continue to see significant pleasing to demonstrate that APA’s not only grown the size of the business opportunities within Australia in our approach has again delivered growing and returns to investors, but we have core skillset of energy infrastructure; returns to our investors, in a year when also expanded our business to include particularly gas and renewables. We there has been much disruption. complementary energy infrastructure. are also investing in new technologies and energy sources. 1) Achieved securityholder returns of 16.8% per annum on an annual compounding basis since listing on 13 June 2000 through to 21 August 2020. 02 APA GROUP I ANNUAL REPORT 2020 20 years of APA I Chairman’s Report I Managing Director’s Report I APA Board & Executive Leadership I Highlights I Australian Pipeline Trust I Directors’ Report I Remuneration Report Consolidated Financial Statements I APT Investment Trust I Directors’ Report I Consolidated Financial Statements I Additional Information I Five Year Summary I Investor Information Assets owned and/or EBITDA increased Distribution per security operated by APA 5.1% on FY2019 increased 6.4% ~$22 $1,654 50 billion million cents 20 years delivering responsible energy. Whatever Australia’s future energy Annual Meeting Further, APA’s current operating plan for mix, APA will be at the forefront of I recently wrote to Securityholders FY21 only includes around $10 million of responsible energy generation and advising of the need to hold a virtual EBITDA contribution from the Orbost delivery. We continue to investigate annual meeting in 2020 due to the Gas Processing Plant under the recently gas infrastructure investment government restrictions and guidelines announced Transition Agreement with opportunities in North America with as a result of the coronavirus Cooper Energy. This assumes Practical the focus on ensuring that anything pandemic. Access will be both online Completion is not achieved until the end we acquire is the right fit for our low and via the telephone and you will of the financial year. risk business model. be able to view, listen, vote and ask In this context, APA expects EBITDA We have also continued to advance questions. We will provide further for the full year to 30 June 2021 to our scenario analysis in alignment with detailed information as we get closer be within the range of $1,625 million the Task Force on Climate-Related to the 22 October 2020 annual to $1,665 million. Total distributions Disclosure recommendations that meeting date. A dedicated information for FY2021 are expected to be was commenced last year. The results page on APA’s website has also been substantially in line with FY2020 of this analysis will be published in set up at https://www.apa.com.au/ distributions, with franking credits early October. The work has included investors/annual-meeting. which may be allocated, depending on extending the horizon to 2050 and FY2021 Outlook the amount of cash tax APA will pay resilience testing our existing portfolio Looking ahead, we are confident that during the year. against a range of divergent scenarios, APA is in a strong position financially Finally, on behalf of the Board, I wish including limiting climate change to and operationally. Although APA is an you the very best of health both 1.5C degrees.