Well, good morning, everyone. Nice to see you all here again this year. My name is Michael Fraser, and I am the chairman of APA Group Limited, the responsible entity for APA Group, which comprises APA Infrastructure Trust and APA Investment Trust. On behalf of the board, I would like to welcome you to this joint annual meeting of each of those trusts. Given it is now past 10:30 A.M. and a quorum is present, I declare the 2026 annual meeting of APA security holders open. I would like to begin today by acknowledging the Gadigal people of the Eora Nation as the traditional custodians of the land where this meeting is taking place. We pay our respects to their elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander people. Today's annual meeting is being held both in person and online.
Before we move to the formal business, I will briefly explain how security holders can participate. Questions may be asked from the floor, through the webcast platform, or by phone. Voting is available in person and online. I now declare voting open on all items of business. Each resolution will be decided by poll, and voting will remain open during the meeting. Online questions can be submitted at any time using the Ask a Question box. I will address questions at the relevant time, and where appropriate, similar questions may be grouped or longer questions summarized. Nicole Lyons, our general manager of company reporting, brand, and reputation, who is up the back there. Where are you, Nicole? Waving away. Thank you. Nicole will read questions from online security holders.
In line with our practice for security holder meetings, and to help us cover as many questions and comments as possible and ensure all security holders have an opportunity to participate, please limit questions to two per person and keep any comments brief at one to two minutes. We have also considered written questions received before the meeting and have sought to address many of them in today's remarks or under the relevant business item. To ask a question by phone, press star 1 on your keypad. If you need assistance, please refer to the virtual meeting online guide on the webcast platform. The webcast of today's meeting will be recorded and posted on APA's website as soon as possible after the meeting. I would now like to introduce my fellow directors.
Joining me today in Sydney is David Lamont, chair of the People and Remuneration Committee, Faye Davidson over there, Nino Ficca, Sam Lewis, who is chair of the Audit and Finance Committee, James Fazzino, who is chair of the Safety and Sustainability Committee, and Rhoda Harrington, chair of the Risk Management Committee. Also on stage with me this morning is Adam Watson, who you all should know, our chief executive officer and managing director, and Bronwyn Weir, who you have just met, who is our company secretary. Sitting in the front row, I said it last year, all the good-looking people, they are a year older this year, is our executive leadership team, and we are also joined by Harriet Fortescue, who was APA's audit partner at Deloitte for FY 2026. On the screen is the agenda for today's meeting.
The notice of meeting has been made available to all security holders, and I will take it as read. Adam and I will report on APA's performance for the 2026 financial year, as well as our strategy and outlook for the current year. We will then move to the items of business set out in the notice of meeting. We have also set aside time at the conclusion of the formal business to answer any general questions. Turning now to my formal address. The events of the past year have been a stark reminder of the importance of energy security to governments, businesses, and communities around the world. Put simply, reliable and affordable energy cannot be taken for granted. At APA, we play a critical role supporting Australia's energy security and the transition to a low carbon future.
Every day, our infrastructure assets, located right across the country, help generate, transport, and store the energy that helps power homes, businesses, and industry. We are proud of the role we play in the community and for our customers. We are also pleased with the outcomes we have delivered for you, our security holders, over the past year, which Adam will talk to in more detail shortly. Of particular note, FY 2026 marked APA's 22nd consecutive year of distribution growth, and we remain confident that the pipeline of growth opportunities we are currently progressing will position APA for success well into the future. Over the past 12 months, we have seen increasing recognition from governments, regulators, and industry participants of the essential role that gas has to play in Australia's energy transition.
As coal-fired generation retires, Australia requires reliable sources of energy to firm and support the continued growth of renewable generation while maintaining system stability and ensuring consumers continue to have access to affordable energy. Gas is critical to achieving that balance. As Federal Energy Minister Chris Bowen has stated, "Gas will be a crucial energy source as we transition to renewables." Gas also remains vital to Australian industries and the production of key products such as fertilizers, steel, cement and glass. That is why APA welcomes progress on a domestic gas reservation. As the legislation moves through federal Parliament, the government must ensure the policy supports both reliable and affordable gas for end users and long-term investment by producers to maintain a strong domestic and LNG export market.
The question is not whether Australia needs gas, but how we ensure sufficient supply and the right infrastructure is available to support households, businesses and the economy as the energy system evolves. APA is uniquely positioned to meet this challenge. APA's long-term value creation continues to be underpinned by our sustainability roadmap. In August 2025, we released our third annual climate report and our 2025 climate transition plan, reconfirming our commitment to our headline 2030 targets and goals. Over the last year, we have made strong progress in reducing our gas infrastructure greenhouse gas emissions. This has included advancing our enhanced methane measurement program across our gas infrastructure network, providing greater insights, transparency and capacity to identify and reduce emissions over time. We have also made good progress in reducing the emissions intensity of our power generation assets through operational improvements to both our renewable and our gas assets.
In relation to today's meeting, I note that we have again received three security holder resolutions from a very small group of security holders led by Market Forces. This is the third year in a row that we've received such resolutions. I'll say now that based on the proxies received ahead of today's meeting, the resolutions have been overwhelmingly rejected by security holders, so I won't spend any more time discussing them at this stage of the meeting. Finally, on behalf of the board, I'd like to acknowledge the significant contribution and commitment of APA's leadership team and all our employees across the country over the last 12 months. It has been a very busy year and a good year for APA. Thank you for your contribution. I'll now invite our Chief Executive Officer, Adam Watson, to address the meeting.
Thank you, Michael, and good morning, everyone. As we reflect on our performance during FY 2026, I'll focus today on four areas that are key to our ongoing success, being the safety and care of our people and our communities, our operational performance, our financial performance, and the delivery of our growth strategy. There is nothing more important than the safety and care of our people and our communities. I'm pleased to report that during FY 2026, we continued to improve our overall safety performance. We achieved zero serious harm incidents and zero Tier 1 gas transmission process safety incidents. We're proud of these results. We never take them for granted, and we are resolute in our ambition to always keep our people and our communities safe. Moving now to our operational highlights.
Over the last year, our assets operated to the highest reliability standards, maximizing availability for our customers and our communities. We implemented a new customer-focused operating model, redesigning our business with key executives focused on our core customer segments. We also established a matrix structure to align our support functions, and we aligned our incentive structures across the enterprise. We delivered a 20.8% reduction in our gas infrastructure underlying emissions. We made positive progress with our Reconciliation Action Plan. We further improved gender representation with women now 34.2% of our workforce. We're also proud to have delivered another strong financial performance in FY 2026. Revenue was up 3.2% to AUD 2.8 billion with our inflation-linked tariff escalation and contributions from newly commissioned assets more than offsetting the revenue forgone from the divestment of our networks business.
Complementing our revenue growth was our successful execution of our enterprise-wide cost reduction initiatives, and this helped support underlying EBITDA growth of 8.3% to AUD 2.2 billion, exceeding the midpoint of our guidance range. We also exceeded our AUD 50 million cost reduction target, delivering AUD 80 million in total cost reductions driven by our focus on business simplification and operational efficiency. Pleasingly, this all translated into EBITDA margins increasing by 370 basis points to 77.9%. You own a strong business generating strong margins. Free cash flow was up 3.2%. Statutory net profit after tax increased 81.4% to AUD 234 million. In FY 2026, we also strengthened our balance sheet, raising AUD 1.5 billion through the issuance of hybrid and senior unsecured debt. Evidence of our strong balance sheet and our strong business model has recently been communicated by both our rating agencies, S&P and Moody's.
In addition to reaffirming our credit ratings, they reduced our FFO to debt threshold, thereby providing APA with additional debt headroom of around AUD 1 billion. These outcomes have strengthened our capacity to invest and grow the business while continuing to deliver sustainable returns for security holders in the form of ongoing distribution growth. In FY 2026, we made strong progress with the significant growth opportunities ahead of us. This included the February announcement to progress stage 3 of our East Coast Gas Grid expansion plan. We have previously announced final investment decision to invest AUD 260 million to deliver stage 3A. Today, we are pleased to announce that we have reached financial investment decision on stage 3B, the Bulloo Interlink.
The Bulloo will help address projected north to south gas transport constraints and will be supported by a five-year East Coast gas transport and storage agreement with Origin Energy, also announced today. These three stage 3 projects are critical to long-term energy security and, when complete, will deliver up to 30% of additional pipeline capacity for the East Coast Gas Grid. Our proactive investments are ensuring that pipeline capacity is not a constraint to energy security in Australia. We also progressed our work in the Beetaloo Basin. The Beetaloo has the potential to deliver Australia with significant long-term energy security, support our Asian trading partners with their own energy transition, and ensure Australia can capture the significant economic benefits that come from a strong LNG export market.
Construction of APA's Sturt Plateau Pipeline is now complete and delivering first gas from the Beetaloo to help keep the lights on in the Northern Territory. We are also progressing with the planning and approvals to develop our proposed Beetaloo to Darwin pipeline and our proposed North to East Australia pipeline. During the year, our contracted power generation strategy also came to life with APA formalizing a partnership with CS Energy to deliver the Brigalow Peaking Power Plant. Once operational in 2029, the project will provide firming capacity for peak electricity demand to complement variable renewable energy. Our remote grid strategy was progressed with the announced development of the Sybella Creek Solar and Battery project in Mount Isa. This project will provide low-emissions energy for our customer, Evolution Mining, and be firmed by our existing Diamantina Power Station.
Finally, we delivered our security holders and consumers in both Tasmania and Victoria with financial and energy stability by transitioning our Basslink electricity interconnector to operate as a regulated asset. APA's growth outlook continues to go from strength to strength. With our organic growth pipeline for the next three years increasing to AUD 3.5 billion, we have the capability to deliver and operate these new assets, and we have a strong balance sheet to fund them. On behalf of the APA leadership team, I would like to thank the board for their challenge and support over the past 12 months. It has been a big year. I would also like to thank our employees for their dedication and their hard work and ongoing contribution to APA's success.
To our customers, communities, and all of our stakeholders, thank you for entrusting APA to operate and deliver energy infrastructure solutions right across the country. Finally, thank you to all of our security holders for your ongoing support. I will hand it back to Michael.
Thanks very much, Adam. Turning now to the formal business of the meeting, online security holders and proxies can vote by selecting Get a Voting Card. Those attending in person should mark their yellow card, which will be collected at the end of the meeting. Only those holding yellow or blue cards are entitled to ask questions at this meeting. Visitors holding red cards are welcome, but are not entitled to ask questions. The resolutions for today's meeting are displayed on the screen. Items one to four are ordinary resolutions. Resolution 5A and 5B are special resolutions requisitioned by a group of security holders led by Market Forces and require at least 75% of votes cast to be in favor. Resolution 5C is conditional and will only be put to the meeting if resolutions 5A and 5B are passed by the required majority.
As I said earlier, based on the proxies lodged ahead of the meeting, which are overwhelmingly against the resolutions, this will not occur, and Resolution 5C will not be put to the meeting. Security holders may ask questions on each resolution when it is considered, and general business questions will be taken at the end. For questions from the room, please raise your card and wait for a microphone, then state your name before speaking. The first item of business today is the adoption of the remuneration report for the year ended 30 June 2026. The remuneration report forms part of the director's report and details remuneration for directors and APA's key management personnel for FY26. The details of the total valid proxies for this agenda item are displayed on the screen, so you can see them there. Nicole, are there any online or telephone questions for this item?
Chairman, there are no questions on the online platform. We will now go to the phones. Operator, are there any questions from the phones?
There are no questions on the phone line at this time.
Okay. Are there any questions from the floor in relation to this resolution? Don't appear to be. Take that then. Thank you. The next two items relate to the re-election of Nino Ficca and David Lamont as directors of APA Group Limited. Each retires by rotation under the company's constitution, and being eligible, offers himself for re-election. Each director will address the meeting before questions are taken on these resolutions. Resolution 2 is the approval of the board-endorsed nomination of Nino Ficca for re-election as a director of APA Group Limited, and I'll now ask Nino to address the meeting.
Thank you, Michael. Good morning, everybody. My name's Nino Ficca, and it's been a privilege to represent security holders over the last three years, not only as a Non-Executive Director, but as a very passionate member of the Safety and Sustainability, Risk Management, and People and Remuneration committees. I've been directly involved in the energy sector for over 40 years, and there's never been a more challenging but rewarding period of change that I can recall. I believe my industry leadership, critical understanding of technical, regulatory, energy markets, and commercial matters will continue to serve the interests of all security holders. But I also retain an unwavering and deep commitment to the care and safety of all our people, our partners, and our communities.
At this time of rapid transition in the energy sector, APA has a great opportunity to make a significant contribution to the Australian communities, including our First Nations people, customers, energy consumers, and the broader Australian economy. I continue to have the energy and passion to work with my fellow directors, APA's leadership team, and great employees to create ongoing value for all security holders over the coming years. I humbly request your support as I seek re-election to the board of APA at this annual meeting. Thank you.
Thanks very much, Nino, and thank you for your contribution over the last year. Resolution three is the approval of the board-endorsed nomination of David Lamont for re-election as a Director of APA Group Limited. I will now ask David to address the meeting.
Thank you, Michael, and good morning, everyone. Today, I seek your support as I stand for re-election to the APA Group Board of Directors. My professional qualifications and experience are set out in the notice of meeting. Over my career, I have gained significant exposure to a diverse range of geographies and industry sectors. This experience has given me a broad perspective on strategy, operations, and financial and risk management, a deep understanding of what drives a successful business while also ensuring sound governance is maintained, and extensive experience in capital allocation and the delivery of major capital works underpinned by strong financial discipline. APA has a strong business model and a clear strategy, and I have enjoyed contributing to the success over the past two years.
I believe my skills complement those of the current board and will help the executive team deliver APA's investment in Australia's energy transition, while also maintaining a healthy distribution to security holders. My commitment, if re-elected, is that I will continue to draw on my values, experience, and capabilities to help APA deliver its strategy in the best interest of all stakeholders. Thank you for your consideration, and I look forward to your ongoing support.
Thanks very much, David, and again, thank you for your contribution over the last year. The details of the total valid proxies for each of these agenda items are displayed on the screen. Nicole, are there any online or telephone questions on these items?
Chairman, there are no questions on the platform. We will now go to the phones. Operator, are there any questions from the phones?
There are no questions on the phone line at this time.
Okay. Do we have any questions from the floor? This gentleman here. Thank you.
Yes. My name is Peter Zee, and I represent the City Moments Publishing. I just want to ask the two gentlemen, what are you going to do when you are elected? What do you think APA should be in the future? What you can contribute make APA a better company? What area APA should be improved? Thank you.
Nino, I might let you say very briefly.
We have an amazing leadership team at APA, which has got a very clear and articulated forward-looking strategy. We have a great future, and we understand the market and the evolution of the energy transition very well. Very confident that we're heading along a very well-understood path, and as David mentioned, the execution of that's going to be pretty important. I think that's what the clear focus is.
David?
Yeah. I'll just add, and Adam touched on this in his presentation as well, there's a large capital investment that's needed as the company moves forward and delivers on the strategy, which again, will just help security holders in ensuring that they get a good balance between their distributions and the reinvestment back into the business. I think the focus is about that execution. It's very clear what needs to be done and what the strategy is, and I think myself, plus the rest of the board, has the right degree of challenge with management to ensure that that is actually delivered.
Thanks very much. As everyone can see, the votes are overwhelmingly in favor of their re-election. Are there any other questions from the floor? Okay. If not, I'll move to Resolution 4. Resolution 4 is the approval for the grant of performance rights to the Chief Executive Officer and Managing Director, Adam Watson, under the APA Group Long-Term Incentive Plan. The details of the total valid proxies for this agenda item are displayed on the screen. Again, Nicole, are there any online or telephone questions on this item?
Chairman, there are no questions on the platform. We will now go to the phones. Are there any questions from the phones?
There are no questions on the phone line at this time.
Okay. I will now take, are there any questions from the floor in relation to this item? Again, we do not appear to have any, so thank you. I will now move to Resolutions 5A, B, and C, which I had said before have been requisitioned by a group of security holders. Resolutions 5A and 5B seek amendments to the constitutions of APA Infrastructure Trust and APA Investment Trust and require approval as special resolutions. Resolution 5C is conditional on Resolutions 5A and 5B being passed by the required 75% majority. The board's response to these resolutions is set out in the notice of meeting. Based on the proxy votes and votes represented at the meeting, Resolutions 5A and 5B have not been passed by the required 75% majority. Accordingly, Resolution 5C will not be put to the meeting.
For transparency, the valid proxy votes received before the meeting on Resolution 5C are displayed along with those for Resolutions 5A and 5B. I will now invite questions or comments on Resolution 5 for completeness. Nicole, are there any online or telephone questions on these items?
Chairman, there are no questions on the platform. We will now go to the phones. Operator, are there any questions from the phones?
There are no questions on the phone line at this time.
All right then. I will move to the floor. Are there any questions, comments from the floor? This gentleman over here again.
I looked on the voting result, and there are more than 90% of people against it. Can I get some perspective from the management why that is the case? If that is the case, why you put this for vote? Thank you.
Let's be clear. As I said, this hasn't been put forward by management. This has been put forward by a very small sub, less than 1% of security holders. In fact, let's leave it at less than 1%. Very small group, headed up by Market Forces. They've put the resolutions to the meeting, in a valid way, and we therefore have put those resolutions to the meeting. As you've seen, with the votes coming in, security holders are more than 90% against those resolutions. It isn't management. Do we have any other questions on these matters? Up the back there. Thank you.
Yeah, thank you. Hello. Hi. Yeah.
Yes, it's working.
In the FY 2026 sustainability report, APA reported that 0% and AUD 0 of its business activities are vulnerable to climate related transition risk. As you would be aware, under Section 180 of the Corporations Act, directors have a duty to exercise care and diligence, including making rational and informed assessments of risks. There's also a recent legal opinion by the leading barristers Higgins SC, Bush, and Robinson that examined the landmark International Court of Justice advisory opinion on climate change and its implications for directors' duties. It highlights that directors may face heightened exposure to personal liability if they approve major CapEx on fossil fuel infrastructure that later becomes stranded assets, particularly where those foreseeable risks have not been properly considered or disclosed.
Given gas pipelines are a significant part of APA's business, does the board genuinely believe that 0% of APA's business activities are vulnerable to climate related transition risk? Are you 100% satisfied that the board of directors has taken all reasonable steps to ensure that the sustainability report is in accordance with the Corporations Act?
The answer to the last part is, yes, we're actually very satisfied that we've taken all reasonable steps. Look, I'll just go to what you've raised, and this is quite frankly, it's a definitional issue. We, in discussions with the people who set the standards, they've asked us about it. They don't currently have a definition of vulnerable that is under the Act. It's up to each entity who's covered by these regulations to come up with their definition of vulnerable. We've suggested to them it would be a very good idea for them to define what is meant by vulnerability. We're very clear as to how we've defined vulnerability, and it is as where there is a short-term impairment risk or where there is a moderate risk under long-term scenario analysis of a 15%-25% or greater reduction in the value of the asset.
When you apply that lens of a short-term impairment risk or a longer-term risk, let's call it above 15% reduction in value, then under our definition, those assets would be vulnerable. If there isn't that risk, which is what the testing showed, then they're not vulnerable, which is why we described it as 0% risk. We do acknowledge, as you would have read in the sustainability report, I think we've described the risk as negligible. There's a definitional issue there. We agree when you look at it at first blush, but you need to look at the detail. As I say, we have, in discussions, raised this as an issue that a definition should be put in place.
Sorry, your microphone will just need to wait. Another question. Second question. Yes. Is the mic working?
Yeah. While I appreciate that APA has applied its own methodology to arrive at that figure, I suppose reporting a headline figure of 0% vulnerability to climate risk could be, I guess, understating the company's exposure. I appreciate this might be an uncomfortable question. How has the board satisfied itself that directors are protected from potential personal liability if those climate risks materialize, which of course could result in significant financial losses for the company?
Well, it really goes to the due diligence that we put into the decisions that we make. I guess I would say for yourself and for security holders generally, look at the amount of detail that is included in our corporate reporting, from the sustainability report to the data book, et cetera. We are extremely transparent about APA, about our operations, about our goals, our targets, about what we achieve and what issues we need to look into. When it comes then to decision making, and we have talked about it, we do our climate resilience testing on a portfolio basis. We have described how we make major investment decisions. It is there on the sustainability report on page 100 of the annual report, the process that we go through. We look at IEA, International Energy Agency data, IPCC data, AEMO data.
We stress test the business case that is put up. We don't just accept. You'll always have a base case that's put up. We look at the upsides, but we also absolutely stress test the downsides. In fact, we did it just yesterday. Adam talked about the final investment decision on the next stage of expansion of the East Coast Grid. Absolutely run through our models and stress tested. So there is a lot of due diligence that goes into the decision making. We are, as a board, acutely aware of our responsibilities as to how we allocate your capital, whether that's via distributions back to yourself or investing further in the business. We guard it as if it was our own money. So we are very conscious of doing the right due diligence, and that's how we satisfy ourselves.
Yeah. I'm not just concerned about APA's transition risk, I'm concerned for the directors as well. Just look out for the board here. Yeah, thank you. I'll leave it there.
Thank you. Are there any other questions on this resolution? There's one over here. Thank you.
When APA's proposed North to East Australia pipeline reaches the end of its life in the 2070s, I will be in my 60s, but you, the board members in this room, won't be here to live with the consequences of the decisions you're making today, but my generation will be. We know we're experiencing the climate crisis. We saw floods in Nepal. We're experiencing catastrophic climate impacts here in Australia. APA is pursuing a pipeline to unlock potentially over 1 billion emissions from the Beetaloo Basin. My question's really simple. In 2070, this pipeline could still be polluting. You won't be here to live with what you built, but I will. How do you morally justify building infrastructure that trades my generation's future for short-term corporate growth?
Yeah. Look, there is a bigger picture here, and let's just start with some basic things, that we are in agreement with your sentiment about trying to decarbonize and go to a low-carbon future. Probably where we differ is that we have a responsibility to ensure that there is energy security, the lights stay on, and that energy remains affordable. Again, part of you step back to big picture here, it's actually the planet that we're trying to save that you're talking about, trying to reduce the impacts of climate change. To put that in perspective for you, because this gas, if it's developed from the Beetaloo Basin, and I can come back to that, but if it does end up being developed, it's very likely it won't just be for Australia. In fact, almost certainly it will be for our regional trading partners.
Just to put it into perspective about the role of gas, say, versus coal, and as you would know, gas generation, power generation, has about half the emissions of coal. China last year commissioned just short of 4x in new coal-fired generation, so installed it, started it up, commissioned it, just under 4x the size of the entire Australian coal fleet. 4x that. In addition to that, they added the equivalent of Australia's entire generation fleet again, 1x the entire generation fleet. They added that in gas-fired generation. Japan, Korea, Taiwan, India, you name it, around the world, there is a large demand for reliable, affordable energy. You need reliability to back up renewables, and it is much preferred that you would have it be gas than you would have it be coal.
Just another thing to consider when you are thinking about the development of gas, and I agree it is not perfect, agree that it has emissions, and agree if the technology was there to be able to do something different, then we and everybody else would be doing it. We are with respect to renewables. At the end of the day, gas plays an absolutely critical role. The other thing to consider is that just under 50% of the world's fertilizer is dependent on natural gas. That will be gas produced from the Beetaloo Basin in the future. Just under 50% of the world's fertilizer. So I ask you the question, yes, there are risks, climate risks, obviously, but what is better, gas or starvation? So when we look at this, we look at the bigger picture as to what is going on.
We agree with the direction that the world needs to head in, where the country needs to head in, and where APA Group is heading, but we also have to play a fundamental role to play in ensuring reliability and affordability in energy supplies. All right. Do we have any other questions? Sorry. We will just wait for you. Is the mic back on?
Hello? Yes.
Yes, that's great.
With respect, Chairman, I also have a question for you. Would you prefer a livable planet or an unlivable planet? We know that we don't need. We need to reach net zero by 2035. 2070's 35 years after that, and a billion emissions is just not good enough. I'm personally just asking about your moral conscience, whether you feel comfortable trading my generation's future for this project.
Well, as I think I indicated with my response, I don't believe I'm trading your future. We believe we have a responsibility, and yes, I have a very clear conscience on that. When you look at APA Group, you just look at, and Adam talked in part about it in his presentation, we invest in energy infrastructure. We're developing a new solar farm, new battery up at Sybella Creek in Mount Isa. Yes, we're expanding our gas transmission network, and we're also building gas-fired generation. When you move, and I respect your sentiment, but when you know what goes on in terms of the engineering, what is actually required for reliability of supply, what's achievable. We're making excellent progress, and Adam went through the numbers, and you would've seen them in the sustainability report. So yes, clear conscience very much. All right, do we have another question from anyone?
There's people over there. Thank you.
Thank you. My name is Angelica Mantikas, and I'm a proxy holder here representing the security holders who have put forward this resolution. Earlier this year, your CEO, Adam Watson, stated that Beetaloo is principally going to be an LNG export play. in 2025, we saw record-breaking LNG export capacity reach a final investment decision, primarily in the U.S. Global LNG export capacity is forecast to increase by more than 70% by 2030, and this build-out would require production in line with the International Energy Agency's 2.5 °C- 3 °C warming scenarios in order to be economically viable. APA's North to East Australia pipeline and its goals in the Beetaloo would be additional to this build-out. There are really only two options in relation to this project.
First, either APA is confident that the gas from Beetaloo will displace other sources of LNG, or APA is projecting that all this new LNG will find new demand, including Beetaloo. My question is, which out of those two options is it?
Look, I guess I'll just back up a little bit. We aretwo to three years away from making a final investment decision with respect to the Beetaloo. Just for everybody's benefit, so we're all on the same page, where is the Beetaloo at? The first production wells have just started to flow in September. We connected a 33 KM, 35 KM pipeline across to the Amadeus Gas Pipeline, and that's currently keeping the lights on in the territory. The data that the upstream players, so this isn't our side of it, this is the upstream players, the people who are drilling in the Beetaloo, they will need to see what the flow rates are from those wells, those development wells. They'll need to see what the decline rates are, etc. They've got to prove up that that gas can be produced economically, and at scale.
That is the first thing that has got to happen. The second thing ultimately, for us, before we would get to any FID, would be where we were at with customers for the pipelines. Whether it was the NEAP that you have referred to or a pipeline going north to Darwin to feed LNG facilities there. I note that Inpex, who is a player in the LNG industry and a key player in the Japanese energy industry and supplier of gas to Japan, have actually bought into the upstream side of it. The upstream players need to get happy about the economics of that.
We would then need to get happy about what were the contracting arrangements. Did we feel, as talked about with our East Coast investment, we need to get very comfortable about what the strength of the cash flows, the balance sheets, what the future demand looks like at that point in time. If the numbers do not add up, if we cannot get ourselves comfortable with the risk, then we would not take FID. We will wait and see.
Just to follow up on that. Obviously, again, as I said, there are kind of those two options. Either there will be new demand and the company is very confident that there will be new demand for this gas in LNG and domestically, or it will be replacing that existing demand and somehow become more cost competitive. Given this is such a giant CapEx decision, we are talking potentially over AUD 7 billion, over 14x the company's annual capital expenditure. This is a huge investment of investor money. This is a huge capital expenditure decision. I think investors deserve to know and have a right to have a bit more clarity before that FID is reached. Again, my question is, could you provide more clarity? Which one is it?
When you say more clarity, though, I do not think you understand how the process works in terms of FID. We will obviously be in negotiations with customers. There obviously has to be a demand for that gas, and there have to be customers willing to put in place long-term offtake agreements before we would be prepared to invest in wherever the pipelines may go, if they get built. As I said, they have still got quite a bit of work to do on the upstream side of things. We will need to wait and see. Gentlemen beside, there is another question from the gentleman there. Thank you. I will make this the last question, if that is okay, on this topic. Thank you.
Sure. Thanks, Chair. Thanks for having us here today. Brett Morgan is my name, I'm a proxy holder, and I've got a question about take-or-pay contracts actually, which probably goes pretty nice, flows pretty nicely on from the last one. Look, we've spoken a bit today about gas demand. In fact, the company's been quite optimistic about demand in recent times, particularly in Australia, saying things like, "It's not slowing down and it's not an issue." We also saw similar assurances being made earlier this decade on the Northern Goldfields Interconnect Pipeline. This is a quote from the former CEO, Mr. Rob Wheals, saying that the NGI would have a strong portfolio of long-term contracts in place by the time construction is complete in mid-2022.
Today, which is actually three years on from commissioning of the NGI, only 38% of that pipeline is currently contracted. Given these assurances about contracts over that sort of short period and in particular demand underpinning those contracts. Again, I think it's important for investors to get some more clarity on this, and particularly in relation to a major CapEx project like the NEAP. I guess my question is, given the high risk, high CapEx nature of these projects, will you commit to not taking FID until the pipeline capacity is fully contracted?
Well, I'll answer that one first and then I'll go back to your comments on the NGI. No, I won't commit to having it 100% contracted before we would take FID. That's simply not how it would typically work, and that would be extremely unusual. It'll depend on a whole lot of factors at the time, and apart from anything else, what the expected growth might be. Just to go back to the NGI, look, I'm not exactly sure. The 38% number is an outdated number. It probably was that at some stage. It's just under 50% of NGI is contracted now, and I would be very confident that there will be a substantial increase in that volume that's contracted, the capacity that's contracted, in the not too distant future. All right.
Sorry. If that's okay.
All right.
Thank you. Yeah.
Last one.
just to clarify, so you said you would expect that pipeline to be contracted further into the future or
Sorry, are you referring to NGI here?
Yes. Yeah. Great. Okay, that's helpful. Thank you. I think, again, I just want to stress, and this will be my last comment, if that's okay. I think that for a project that was sanctioned at the beginning of the decade, and completed construction I think a few years ago, 50% is still not significant. In relation to a project like the NEAP, which could run into the 2070s, that's a long way into the future. I think, yeah, with the NGI, I think it's a bit of a case of the company over-promising, under-delivering.
Well, let me just-
Based on internal modeling that, the same modeling that you're-
Well, yeah.
applying to the NEAP.
Let's be clear. These things, modeling is part of it, and where you're at with customers is another part of it. I would just say to you again, I didn't say it exactly this way, but watch this space. We're very confident about it. The only other little bit I would say was the Goldfields Gas Pipeline was absolutely full at that stage, and there have been significant other benefits as a result of having NGI there in terms of system security and supply to other customers. So there's more to it than necessarily meets the eye. But thank you. All right. That concludes the discussion in relation to all resolutions on the agenda. A summary setting out the details of the total valid proxies for all agenda items, including those not formally put to the meeting, is displayed on screen for your reference.
Voting will close shortly, so please complete your yellow voting cards now if you've not done so already. A reminder to security holders participating online, please vote now as well. Representatives of MUFG will now collect your yellow voting cards. Polls will automatically close 5 minutes after the conclusion of this meeting, and that completes the formal business of the meeting. The poll results will be released to the market on the ASX and will also be available on APA's website later today. I'll now open the meeting to general business questions relating to APA that have not already been addressed. So just to be clear, I won't take any questions on resolutions that have already been considered. Nicole, are there any online or telephone questions on general business?
Yes, Chair. We have five questions on the online platform. The first question comes from David Bryce. Does APA see the federal government's 20% gas reservation policy as advantageous or disadvantageous for APA?
Look, that's a fairly simple answer, is that I think it's good for the country and therefore it's good for APA. The notion of LNG imports being needed for Australia when we're blessed with such abundant gas resources, it would represent a massive policy failure if that were the outcome. Clearly, a domestic gas reservation policy, I think is good for the country. There is obviously still some detail that needs to be worked through. We need to get the balance right to ensure that there are competitive prices, affordable prices there for customers, but also ensuring that there are still incentives to invest in new supply. Right. Yeah.
The next question comes from Melgizata Mulanovic. If EBITDA is expected to grow approximately 5.4% in FY 2027, why is distribution growth forecast at only 1.7%? When might shareholders expect a stronger increase?
Yeah, look, it's a balancing act that we have. As I said a few moments ago, we take capital allocation very seriously and what do we allocate to growth, what do we allocate to distributions to security holders. There's an overlay of that, Adam talked about the ratings agencies. We've got our credit metrics that we need to have an eye to, and we need to have an eye to the future. We have a AUD 3.5 billion capital investment pipeline ahead of us. We've taken FID on some of those very recently. East Coast Grid, we've talked about already this morning. Brigalow Power Station, Sybella Power Station, and battery about a solar farm at Mount Isa.
So when we think about the distributions, we're looking at are there opportunities to further invest in the business and meet, not only our cost of capital, but our hurdle rates for those projects to continue to grow the business and grow the distributions over the long term. So that's the balancing act that we go through in deciding, do we just Because obviously, if we have a bigger increase in the distribution, there's less capital available to fund the growth of the business.
The next question comes from Marlon Kabera. How does APA Group plan to position itself as Australia's energy market continues to transition towards lower emissions?
Well, I think our strategy statement says it all, where we say we want to be the partner of choice in delivering infrastructure solutions for the energy transition and we're very clear about where our core growth markets are, being gas transmission and storage and contracted power generation. We'll also invest where needed in related electricity transmission projects. So we're very clear there about what the strategy is about infrastructure solutions for the energy transition and we're very clear about the core markets that we're focused on and we see a critical role for APA in enabling the transition to a low carbon future and, as I've already said, ensuring both the reliability and the affordability of energy.
As I've also mentioned, we've got a AUD 3.5 billion pipeline of projects ahead of us now and I would be very confident that pipeline of growth projects will continue to grow into the future. Next question.
The next question comes from Melgizata Mulanovic. With AUD 14.23 billion in drawn debt, how much additional borrowing is expected to fund the AUD 3.5 billion growth program and how sensitive is the forecast to refinancing costs?
Well, we have AUD 3.5 billion worth of balance sheet capacity at the moment so we do not need to raise any additional equity. That is effectively borrowing capacity that is there given what the ratings agencies say in terms of the credit metrics for us to maintain our credit rating and that is a key guardrail, if you like, for us. So that is the capacity that we have on the balance sheet at this point in time.
The next question comes from Dorothy Lewis Robinson. In March 2026, a formal regulatory complaint was lodged with ASIC alleging APA misrepresented the financial viability of Beetaloo gas. AEMO puts Beetaloo's costs at AUD 9.33 per gigajoule. What is the board's current estimate?
Look, I will just go to the ASIC matter. I understand that our friends at Market Forces raised a concern there. We received a letter from ASIC. We have responded to that and as far as we are concerned, the matter is closed so just to cover off on that and sorry, could you, AUD 9.33. Look, I think you can do estimates of where the price of gas might end up. I am not going to speculate on that here. As I said before, it is early days. The first wells have just started to flow. The data that comes in over the next 12 - 18 months will be extremely informative as to what the upstream economics of producing gas out of the Beetaloo look like.
There are no more questions from the platform. We will now go to the phones. Operator, are there any questions from the phones?
There are no questions on the phone line at this time.
Okay. I will now take any general business questions from the floor. As I said, on those resolutions that we have already dealt with, I will not take any more questions on those. Any other business that security holders would wish to raise? Sorry, this gentleman right there.
If you do not mind, I would like to take the two question options. Do you mind I ask one at a time, or you want me?
One at a time.
Okay. Thank you. I like to also hear your senior executive perspective besides the chairman. The first question is regarding the distribution. You did a great job. You had a second times of growth of distribution. My understanding is you allocate distribution from your free cash flow or free cash flow from operation. You had about over AUD 1 billion last financial year. I had the calculation like you had about AUD 0.58, that is about AUD 700 million. So that is about 70% of your free cash flow. I just want to ask, is that the consistent policy? That is how you distribute out of the free cash flow?
Well, since you want to hear from the executives, I will get Adam as the previous CFO before he was the CEO, is extraordinarily well equipped to answer your question.
Yeah. Thank you, Michael, and thank you for your question. It is a very astute question. You are across the numbers. Look, we do not play to a payout ratio per se. As Michael said, we get that balance right between looking at how much cash we should preserve to be able to fund and efficiently fund our growth pipeline. As you can see, our growth pipeline continues to grow, and that is important because it is a circular reference. As it continues to grow, it sustains the ability to be able to ensure that we can deliver distributions to you in the future. So we are trying to get that balance right. We have engaged very heavily over the last few years with our shareholders, including the brokers who represent the retail shareholders, to ensure that we get that balance right in terms of the level of distribution.
The overwhelming feedback that we receive is that there is a desire to be able to continue to grow our distribution year on year. We are incredibly proud of our history in achieving that and delivering that. We actually know that we are one of two companies to be able to do it as long as we have on the ASX. So, we understand that is important for our shareholders. We continue to get the balance right. Our ambition, and we have to assess it every year, but our ambition is to be able to keep that going for as long as we can.
Thank you. My second question is regarding your revenue mix. I had a look, you almost have a 68%-70% capacity charge revenue. Can you give us a bit of detail about that? What I want to know is your network capacity, are you running 100% or do you have a fair bit spare capacity? Also, in terms of the revenue, the demand, can you give us a breakdown of what percentage is for domestic consumption for mining company, and what percentage is for export? Thank you.
Okay. You might have a think about that. On the capacity side of things, look, there is not a simple answer to that because apart from anything else, it depends on the weather. Obviously, if you have a very cold winter, particularly Victoria and New South Wales, you can actually get to a point where you are utilizing all of your capacity. So effectively you are being paid for all of your capacity. If we step back, though, and say look at the big picture, part of the reason why when we look at the future demand and the future movement of gas from the north of the country, particularly Queensland, into the southern states, we looked at our East Coast Grid.
There were clearly going to be constraints on the capacity because more gas needs to come from the north to the south because the Bass Strait fields are running out of gas. Simple as that. That is the reason that we have made the substantial investments we have made. In fact, this stage 3 is a 30% increase in capacity. If you go back to stage 2, which I think was 2022 or thereabouts, we took the investment decision. If you add those two together, we will have increased the capacity from the north to the south by about 50%. So at a macro level, we see the existing system running into capacity constraints and obviously that is driven by your peak demand periods and that is typically during your winter months. If you want to add anything to that.
Look, all I will add is that our assets typically don't run at 100%. That's not what they're designed to do. They're there to complement renewable energy. They're there to complement the swings and roundabouts that our customers have in their operations and what we do provide is capacity though and we get paid for that, which is really important. We often refer to ourselves as an insurance product for our customers and for the energy system more broadly. As base load coal is coming more out of the system, then obviously when the wind's not blowing and the sun's not shining, batteries have a role to play, but they're not able to provide long duration energy supply and gas-fired power generation in particular provides a very different spinning capability to provide grid stability in the electricity system that you can't get from other sources.
That's the focus that we've been on and again, you're very astute in terms of your assessment of our customer base. It is principally energy customers, utility customers, industrial customers because that's where the demand's coming from. A lot of that then downstream gets passed on to us as consumers in the way of the food that we eat and the materials that home us and other areas. But it's principally an industrial business for industrial and energy utility customers.
All right. Any other questions? Yes, over here. Okay.
Yes. Hello, I'm Richard Jackson. I'm the representative of the Australian Shareholders Association. There's a lot of regulatory change going on at the moment. I've got a question about the contracted power generation strategy. How important will the inclusion of gas peakers in the electricity services entry mechanism be to the success of your contracted power generation strategy?
Well, thanks Richard. I think part of the answer to that is if we look at Brigalow, which is the investment we have just committed to, 400 MW, gas-fired generation is not a part of that scheme at all. So clearly, it is not going to be dependent on it. The other thing I would say is if you, in the last week or so, I think it was just last week, the New South Wales Government has also announced that it is going to run a tender, again, a capacity type to get the capacity into the market for gas-fired generation. The details of that need to be worked through. So there are other mechanisms that are, because quite frankly, we know coal is going to come out of the system.
We know these coal plants, they are getting older, they are getting less reliable and governments who are awake and aware are getting on the front foot.
Give you another example. There is typically a four to five year wait for gas turbines at the moment. Brigalow, CS Energy up there had ordered turbines well ahead of this project just getting to FID. But if you are starting cold now, typically you are a four or five year wait for turbines. So that is why you are seeing governments put in place other mechanisms to support the entry of new open cycle gas in order to provide reliability before we run into supply interruptions because that is the one thing that will focus the minds of the electorate, of course, is when the blackouts start happening and people have not invested. All right. Any other There is a gentleman there. Thank you.
Thank you, Mr. Chairman. Mark Baxter is my name. Adam, I believe you recently commented on your last recent earnings call that you had confidence in APA's ability to fund future projects, and there seems to be quite a few in the pipeline, saying that if projects deliver the required returns, the capital will be there. I have also seen recent media reports about colorful activists protesting at the ANZ Bank headquarters, I think in Sydney and Brisbane and basically trying to prevent or pressure the ANZ Bank to not finance the NEAP pipeline, which is one of your major projects. I can imagine that ANZ will not be too happy about that sort of attention and I am just wondering how confident you are that the bank will still be willing to provide the finance for the pipeline, albeit maybe in three years time, assuming Beetaloo proves viable upstream.
Firstly, we are extremely confident in our ability to be able to fund the growth from the debt investors and the equity investors. And I think the most recent example of that, which was only a few months ago, was that we raised AUD 1.5 billion from the hybrid and unsecured debt market, which was significantly oversubscribed. So there is a lot of demand for good quality businesses. And if you just go to the fundamentals of the business, which again was reaffirmed by the rating agencies during the year, we generate strong, stable cash flows. And the industry thematics for our business and our product is incredibly strong, not just for the near term, but for the long term, because the debt that we are assuring is typically long-term debt. So, our investors have to take a very long-term view from a debt funding perspective.
We have got incredible support from our banks. I'm actually staring at one of our bankers who lends us, who happens to be from said bank that you just mentioned, right in front of us. It's always good to have you here, Craig, so thank you. I think that's a strong signal of the support that our lenders have of us. They want us to be responsible and to be held to account, as we do and as we appreciate, you're all doing and ensuring that we do today. We go through that level of due diligence with them as well, and making sure that they can be comfortable, that they can stand behind a company like us, that we are intentionally doing the right thing, as well as generating strong returns.
Just to finalize. From what you said, I gather you have had conversations with ANZ Bank and they're not rattled, and you're still confident they'd be in a position to finance the NEAP project in the future?
We are confident. We won't be relying on any single bank for funding of any of those projects. We haven't done that in the past, and we wouldn't do that in the future. We spread our risk across a range of banks, a range of funding sources. When and if required, we would look at the funding arrangements at that point in time. My key message is that as we sit here today, the support that we get from our lenders is very strong, and we don't foresee that being a risk to our future success.
All right. Gentleman up the back in the middle, please.
Hello. Good morning, everybody. Chairman Fraser, you have more good. How should I put it? I get very upset at some of the comments and the rubbish that goes on at this meeting, as in Resolution 5. I suggest at our next annual general meeting, there should be an item of ordinary business to require resolutions not put forward by the board, must pay a surety of at least AUD 100,000, perhaps AUD 200,000, repayable on their resolution reaching a minimum of 50%. If they don't reach 50%, then that money goes towards the printing and the time of the board and the general meeting. Number one, that's fair dinkum. I really reckon that should happen because there's people here today who have no idea what this company does, what it does for this country.
As far as the shareholders go, I must congratulate the company on bringing franking credits to the shareholders. That's been just a little bit of icing on the cake. Thank you very much.
I'll take that as a comment. Thank you. All right. If there are no other questions, and there don't appear to be, that completes the business of the meeting. Voting will remain open for webcast participants until the end of the five-minute voting window, after which all polls will automatically close. Thank you for your attendance today. I now declare this meeting closed, subject to finalization of the poll. Thank you.