APA Rewards Shareholders After Failed CKI Takeover

By Glenn Dyer | More Articles by Glenn Dyer

Security holders in gas pipeline company APA reaped the benefits of the Federal government blocking a rich Hong Kong takeover offer last year with the company revealing a sharp rise in earnings for the six months to December.

APA’s revenue rose 4.1% to $1.24 billion for the first half of its financial year, while net profit leaped 27% to $157.4 million.

As a result, the company increased its partially franked dividend by 2.4% to 21.5 cents a security. Franking credits of 3.2 cents will be allocated to the dividend. It has forecast a full-year payout of 46.5 cents.

APA expects to meet the upper end of its forecast for full-year earnings before interest, tax depreciation and amortisation of between $1.55 billion and $1.58 billion. EBITDA rose 4.3% to $787 million in the December half year.

The securities rose, then eased to close off 0.2% at $9.38. That’s still well short of the $11 a security, $13 billion value bid from Hong Kong-based infrastructure firm CKI last year that was eventually blocked by the Federal Government.

As a result of the surge in profits that would have been gathered by the bidder, will now be shared among security holders and will lessen some of the financial pain from missing out on that $11 a security offer.

Directors said in yesterday’s statement “Solid interim results released today are in line with APA’s expectations. Particularly pleasing is the contribution of new revenue from a number of recently completed projects as part of APA’s largest committed growth CapEx program to-date of some $1.4 billion over three years.”

“APA remains confident that a significant revenue uptick in the order of $215 million per annum of additional revenue will occur from FY2020 when all projects in progress are fully operating and contributing,” directors said.

APA chairman Michael Fraser said in a statement yesterday the strong performance in the half came despite the uncertainty from the blocked bid and the impending retirement of founding CEO, Mick McCormack.

“We said we would get on with business as usual and focusing on our customers’ needs while the process played out, and the results announced today demonstrate that is what we have done,” Mr. Fraser said.

Mr. McCormack said the CKI takeover muddle had not diverted the company from its growth trajectory.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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