APA Group (ASX:APA) today announces its financial results for the half-year ending 31 December 2024 (1H25), delivering strong growth in earnings and ongoing growth in free cash flow and distributions, compared to 1H24.

Higher 1H25 earnings were driven by strong contributions from the Pilbara Energy System business, higher variable revenue, inflation-linked tariff escalations and cost growth below inflation.

Key Highlights

• Underlying EBITDA up 9.1% to $1,015 million (1H24: $930 million), underpinned by strong performance from new assets, higher customer demand for seasonal gas transmission capacity, inflation-linked tariff increases and reduced cost growth.

• Total statutory revenue (excluding pass-through revenue) up 7.1% to $1,364 million (1H24: $1,274 million).

• Corporate cost growth has reduced to below inflation. Progressing comprehensive, enterprise-wide cost reduction initiatives to deliver meaningful efficiencies.

• 1H25 distribution of 27.0 cents per security, up 1.9% (1H24: 26.5 cents per security).

• Free Cash Flow (FCF)¹ of $552 million, growth of 3.6% compared to 1H24.²

• Statutory NPAT (including significant items) decreased to $34 million (1H24: $1,049 million) driven by the prior period acquisition of the Pilbara Energy business and the associated 1H24 gain on remeasurement of APA’s previously held interest of 88.2% in the Goldfields Gas Pipeline.

• $339 million capital investment in growth projects, including completing construction of the Port Hedland Solar and Battery project, completing construction of the Kurri Kurri lateral pipeline project and undertaking early works on East Coast Gas Grid expansion projects.

• Execution of the Sturt Plateau Pipeline Development Agreement, progress in the delivery of Hamersley Range and Burrup (Murujuga) electricity transmission corridors with Priority Project status assigned by the Western Australian Government, ongoing progress with development approvals in the Pilbara, and the announcement of APA’s five-year East Coast Gas Grid Expansion Plan.

• Balance sheet remains strong with 10.7% FFO/net debt, above target, and ample capacity to fund organic growth pipeline (~$1.8 billion over FY25 – FY27) from operating cash flow, the DRP and existing balance sheet headroom.³

• FY25 distribution guidance of 57.0 cents per security reaffirmed, up 1.8% on FY24. Underlying EBITDA guidance is also reaffirmed for FY25 of $1,960 million – $2,020 million.⁴

CEO comments

APA CEO and Managing Director, Adam Watson, said:

“APA has delivered a strong financial and operating result for the half with growth in revenue, earnings, free cash flow and distribution.

“Today’s result demonstrates the strength of our underlying business, our continued focus on operational excellence and asset reliability, and our work to drive further cost optimisation, which is designed to increase free cash flow, support growth projects and ensure we can continue to deliver for investors.

“At the same time, our operating cash flow and strong balance sheet provide the capacity to fund our $1.8 billion organic growth pipeline internally over the next three years.

“The result highlights the successful integration of the Pilbara business, with these new assets delivering $66 million in earnings for the half.

“Our growth pipeline in the Pilbara also continued to progress. Construction of the Port Hedland Solar and Battery Project was completed in December and we were awarded Priority Project status for two electricity transmission projects.

“We also continued to progress growth in our core gas transmission and storage business. In December we executed an agreement to build, own and operate the Sturt Plateau Pipeline, which will ensure Beetaloo gas is available to support energy security in the Northern Territory, and today we announced our plans to deliver material infrastructure capacity expansion in our East Coast Gas Grid.

“We will continue to progress these plans with our customers.

“Today’s result demonstrates the continued delivery of strong earnings and distributions, alongside organic growth."

Distribution

The Board of Directors has resolved to pay an interim distribution for 1H25 of 27.0 cents per security. This represents a 1.9% increase on the 1H24 interim distribution of 26.5 cents per security.

The 27.0 cent interim distribution is comprised of a distribution of 25.16 cents per security from APA Infrastructure Trust and a distribution of 1.84 cents per security from APA Investment Trust. The APA Infrastructure Trust distribution represents a partially franked profit distribution of 23.48 cents per security and a 1.68 cents per security capital distribution. The APA Investment Trust distribution represents an unfranked profit distribution of 1.22 cents per security and a 0.62 cents per security capital distribution. The distribution will be paid on 17 March 2025.

The Distribution Reinvestment Plan operated for this interim distribution for the half year ended 31 December 2024 at a discount of 1.5%.

FY25 outlook⁵

FY25 distributions are expected to be 57.0 cents per security, an increase of 1.8% on FY24. Underlying EBITDA guidance is reaffirmed for FY25 to be $1,960 million – $2,020 million.

Webcast and conference call

A briefing for analysts and investors will be held today, hosted by Adam Watson, Chief Executive Officer and Managing Director, and Garrick Rollason, Chief Financial Officer at 10:30am Australian Eastern Daylight Time (AEDT). The briefing will be a live audio webcast and accessible from the APA website: apa.com.au/investors/. To participate and ask questions in the briefing, pre-registration is required via the link on APA's website. Registered participants will receive a calendar invitation, dial-in details and a unique code which is to be quoted when dialling into the call.

¹ Free cash flow is Operating Cash Flow adjusted for strategically significant transformation projects, acquisition and integration costs and capital returns from joint ventures less stay-in-business (SIB) capex. SIB capex includes operational assets lifecycle replacement costs and technology lifecycle costs.

² 1H24 Free Cash Flow (FCF) has been restated from $546m to $533m as a result of removing the adjustment for payroll remediation payments to employees, in line with the methodology applied to the FY24 FCF calculation.

³ Estimated organic growth capital expenditure pipeline reflects management’s current expectations based on project design and is subject to change up to final investment decision and agreement on definitive documents. Actual expenditure in each year will depend on project commitments and timing, and may differ from estimates. For forecast sources and uses of cash FY25-27 - please see page 17 of the Investor Presentation released to the ASX on 24 February 2025.

⁴ Underlying EBITDA and distribution guidance are subject to asset performance, macroeconomic factors and regulatory changes. It does not take into account the impact of any acquisitions or divestments by APA. Guidance is not a predictor or guarantee of future performance and is subject to uncertainties and risks - please see the Disclaimer on page 2 of the Investor Presentation released to the ASX on 24 February 2025.

⁵ Underlying EBITDA and distribution guidance are subject to asset performance, macroeconomic factors and regulatory changes. It does not take into account the impact of any acquisitions or divestments by APA. Guidance is not a predictor or guarantee of future performance and is subject to uncertainties and risks - please see the Disclaimer on page 2 of the Investor Presentation released to the ASX on 24 February 2025.