diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_1.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..1ac3195ce980ffbbe7aaf117fc69e32ab5636064 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_1.txt @@ -0,0 +1,3 @@ +tomorrowpowering +ANNUAL +REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_10.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..537b165c3a76215d8526c1b32dec6130b57fa57c --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_10.txt @@ -0,0 +1,12 @@ +About APA +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +8 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_100.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..0b1b7386ea6a2087951a8327da7bad1ee535cb6b --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_100.txt @@ -0,0 +1,51 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements +Basis of Preparation +1. About this report +In the following financial statements, note disclosures are grouped into six sections being: Basis of Preparation; Financial +Performance; Operating Assets and Liabilities; Capital Management; Group Structure; and Other. Each note sets out the +accounting policies applied in producing the results along with any key judgements and estimates used. +Basis of Preparation 98 +1. About this report 98 +2. General information 99 +Financial Performance 101 +3. Segment information 101 +4. Revenue 106 +5. Expenses 108 +6. Income tax 109 +7. Earnings per security 112 +8. Distributions 113 +Operating Assets and Liabilities 115 +9. Receivables 115 +10. Payables 115 +11. Assets classified as held for sale 116 +12. Property, plant and equipment 117 +13. Goodwill and intangibles 119 +14. Impairment of non-financial assets 121 +15. Provisions 123 +16. Other non-current assets 124 +17. Employee superannuation plans 125 +18. Leases 126 +Capital Management 128 +19. Net debt 128 +20. Financial risk management 130 +21. Other financial instruments 144 +22. Issued capital 147 +Group Structure 148 +23. Non-controlling interests 148 +24. Joint arrangements and associates 149 +25. Subsidiaries 151 +Other 154 +26. Basslink Asset Acquisition 154 +27. Commitments and contingencies 155 +28. Director and Executive Key +Management Personnel remuneration 155 +29. Remuneration of external auditor 156 +30. Related party transactions 157 +31. Parent entity information 158 +32. Adoption of new and revised +Accounting Standards 158 +33. Events occurring after reporting date 159 +98 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_11.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..abf452b3d4e14e4fa03296422dd7ade03f18a1fa --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_11.txt @@ -0,0 +1,66 @@ +APA Group is a leading Australian energy infrastructure +business, owning, operating and managing a diverse +$22 billion portfolio. We are proud of the role we play in +delivering energy solutions to millions of customers in every +State and Territory. +Our strategic ambition is to be the partner of choice +in delivering infrastructure solutions for Australia’s +energy transition. +Our approach is customer driven as we look to support the +decarbonisation ambitions of our priority customer groups +– including governments, resource companies, energy +supply and wholesale customers, and large commercial +and industrial customers. +Through this approach to market we see immense +opportunities across our four priority asset classes +of contracted renewables and firming, electricity +transmission, gas transportation and future energy. +Our behaviours +Our behaviours set the benchmark for how our people +interact with customers, communities and each other. +They support our strategy and the high-performance +culture that we strive for. The behaviours guide how +we conduct our business and help to shape our +inclusive culture: +We are customer focused, innovative and collaborative, +with empowered and energised teams. +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +COURAGEOUS +We are honest and +transparent; we learn +from our mistakes +and we challenge the +status quo. +ACCOUNTABLE +We spend time +on what matters, +we do what we say +and deliver world +class solutions. +NIMBLE +We are curious, +adaptive and +future focused. +COLLABORATIVE +We are inclusive, work +together and respect +and listen to our +stakeholders. +IMPACTFUL +We create positive +legacies and +work safely, for +our customers, +communities, +our people and +the environment. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +9 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_12.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..77bbc6b4e45511a7742ce64ea05c5b8f7f43034d --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_12.txt @@ -0,0 +1,165 @@ +APA PORTFOLIO OF ASSETS AND INVESTMENTS +About APA +(continued) +Pipeline +3 Amadeus Gas Pipeline (inc laterals) +13 Berwyndale W allumbilla Pipeline +1 Bonaparte Gas Pipeline +9 Carpentaria Gas Pipeline (inc laterals) +22 Central Ranges Pipelines +23 Central West Pipeline +37 Eastern Goldfields Pipeline +47 Goldfields Gas Pipeline +38 Kalgoorlie Kambalda Pipeline +40 Mid West Pipeline +20 Moomba Sydney Pipeline (inc laterals) +21 Moomba to Sydney Ethane Pipeline +28 Mortlake Gas Pipeline +39 Northern Goldfields Interconnect +45 Parmelia Gas Pipeline +48 Pilbara Pipeline System +12 Reedy Creek Wallumbilla Pipeline +15 Roma Brisbane Pipeline (inc Peat lateral) +30 SEA Gas Pipeline +29 SESA Pipeline +10 South West Queensland Pipeline +49 Telfer/Nifty Gas Pipelines and lateral +25 Victorian Transmission System +14 Wallumbilla Gladstone Pipeline (inc laterals) +2 Wickham Point Pipeline +36 Yamarna Gas Pipeline +51 Kurri Kurri Lateral Pipeline (KKLP) +52 Western Outer Ring Main (WORM) +Gas Processing and Storage +27 Dandenong (680TJ/12000t) +18 Kogan North (12TJ/d) +46 Mondarra (18PJ) +Gas Distribution +16 Allgas Gas Network +50 Australian Gas Networks +24 Tamworth Gas Network +Electricity Transmission +19 Directlink +31 Murraylink +53 Basslink* + +Generation +17 Daandine (30 MW) +6 Diamantina (242 MW) +33 Gruyere (47 MW) +7 Leichhardt (60 MW) +5 Thomson (22 MW) +4 X41 (41 MW) +35 Gruyere Battery Station (4.4 MW/MWh) +Solar Farm +43 Badgingarra (19 MW) +11 Darling Downs (108 MW) +41 Emu Downs (20 MW) +34 Gruyere Solar Farm (13.2 MW) +8 Dugald River Solar Farm (88 MW) +Wind Farm +44 Badgingarra (130 MW) +42 Emu Downs (80 MW) +32 North Brown Hill (132 MW) +K ey +APA G r o up asse t +APA Group distribution network asset +APA Group investment +Investment distribution network +APA G r oup managed asset (no t ow ned ) +Managed distribution network +Other natural gas pipelines +Under construction +Wind farm +Solar farm +LNG plan +Battery storage +Gas storage facility +Gas processing plant +Gas power station +Integrated Operations Centre + + + +Dubbo +53 +Gruyere +45 +46 +48 4 +1 +2 +5 +6 +7 +8 +9 +10 +13 +12 +11 +14 +15 16 +17 +23 +24 +22 +25 +28 +29 27 +20 +19 +21 +32 +31 +30 +18 +33 +47 +36 +3435 +3738 +41 +42 +43 +44 +40 +39 +3 +49 +50 +51 +Kurri Kurri +W allumbilla +R oma +Mount Isa +Karratha +Ballar at +Bendigo +T a mwor th +I O C +Lithgow +T r opicana +Y armana +Alice Springs +K atherine +Kalgoorlie +Gladstone +Moomba +Albury +Sydney +Canberra +Brisbane +Melbourne +Hobart +D arwin +Perth +Adelaide +Melbourne +Melbourne +Airport +52 +Ballera +* Acquired October 2022. +10 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_13.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..6a5240e3a2de4684f3c7e20fc18501dd723b61ab --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_13.txt @@ -0,0 +1,55 @@ +External environment +APA is committed to working with our customers, +communities and governments to deliver an energy transition +that prioritises reliable, affordable and low emissions energy +for all Australians. +Major trends +Both industry and governments continue to confront the +challenge of balancing the competing demands of the +energy sector to deliver: +• reliable energy +• affordable energy and +• low emissions energy +Australia, like most countries, strives to balance these +three interconnected objectives as our energy sector +transitions towards net zero. +As low emission variable renewable electricity (‘VRE’) +steps in to replace coal-fired generation, industry and +governments are searching for solutions to ensure the +transition remains affordable and reliable. Transitioning +to these cleaner energy sources often requires significant +upfront capital investments in new infrastructure, new +technologies, and research and development with long +lead times to commercialisation. +1 AEMO Market Suspension FAQs June 2022. +Both Federal and State governments throughout Australia +are adjusting policy settings in energy markets in an +attempt to both encourage lower carbon energy sources +as well as ensure energy remains affordable and reliable. +Interventions that commenced in FY22 continued in +FY23 as it was deemed necessary by government bodies +to take action in the electricity, coal and gas markets +across eastern Australia. This was driven by supply +constraints leading to high energy prices and included: +• The National Electricity Market (NEM) was suspended +in June 2022 by the Australian Energy Market Operator +(AEMO). Supply shortages made the ongoing operation +of the market under the National Electricity Rules +‘practically impossible’.1 +• The Federal Government introduced legislation +in December 2022 which applies a temporary price +cap of $12/GJ on the supply of regulated gas for +12 months. The government also requested a domestic +coal price cap of $125/T to be implemented in +New South Wales and Queensland. +• In Western Australia, June 2022 saw the announcement +by the WA Government that all state-owned coal +generators are to close by 2030. Following this, the +WA Government announced a review of the State's +domestic gas reservation policy. This was part of the +Government’s efforts to determine if the policy remains +fit for purpose in supplying the domestic market or if +amendments are needed to allow for more gas to be +delivered to domestic users. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +11 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_14.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..b4d7cf8ac164c0fb0e8b58d58e0c3b67f79b682d --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_14.txt @@ -0,0 +1,49 @@ +Economic regulatory matters +Gas pipelines in Australia are regulated under the +National Gas Law (NGL) and National Gas Rules (NGR) by +the Australian Energy Regulator (AER) or the Economic +Regulation Authority of Western Australia (ERA). On +2 March 2023, amendments to the NGL and NGR were +proclaimed and came into effect across all States except +Western Australia. Prior to these amendments the NGL +and NGR established two regulatory pipeline frameworks: +1. Scheme pipelines (NGR Parts 8-12) subject to either: + – Full regulation with regulator approved tariffs and +terms and conditions; or + – Light regulation where pipeline owners publish +services and prices and comply with information +provision requirements. +2. Non-Scheme pipelines (NGR Part 23) where tariffs and +terms are negotiated between parties. +The 2 March 2023 amendments to the NGL and NGR +discontinue light regulation and transition to a: +• ‘heavier’ form of regulation, based on the current full +regulation for scheme pipelines; or +• ‘lighter’ form of regulation, based on the previous +Part 23 (now Part 10) regime for non-scheme pipelines. +In practice, pipelines currently subject to full regulation +are not expected to experience much change. APA’s +non-scheme pipelines and pipelines previously subject +to light regulation will transition to the new ‘lighter’ form +of regulation. +Following on from this legislative change, the regulator will +now have the power to determine the form of regulation +to apply to a particular pipeline. In effect, this means that +the AER can decide to apply full regulation to non-scheme +pipelines. The AER would then have the role of approving +capital and operating expenditure and rates of return +under five year access arrangement proposals. APA will +also be required to publish actual contracted prices across +its pipeline network. Further changes to the information +disclosure framework will take place from FY25, under a +new Pipeline Information Disclosure Guideline, currently +under development. +APA pipelines (owned and/or operated) – by regulation type +External environment +(continued) +Full regulation pipelines +Light regulation pipelines +Non-scheme pipelines +Partly full regulation/non-scheme pipelines +12 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_15.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..40b2767d0f12e492c0e1065ca307f88660b10f81 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_15.txt @@ -0,0 +1,62 @@ +Regulatory resets +The diagram below shows the scheduled regulatory reset +dates for pipelines owned and operated by APA. During +FY23, approximately 8.2% of APA’s Energy Infrastructure +revenues were subject to regulated outcomes. +Key regulatory matters relating to APA assets addressed +during the year included: +• Victorian Transmission System (VTS) 2023-2027 +access arrangement – On 9 December 2022, the AER +published its final decision on the 2023-27 VTS access +arrangement. The decision recognised the importance +of continued investment in the VTS to maintain +reliability and system security for Victorian gas users. +The access arrangement will have effect for five years +from 1 January 2023. +• Murraylink 2023-2028 revenue proposal1 – +On 28 April 2023, the AER published its final +determination for the Murraylink electricity transmission +interconnector between South Australia and Victoria, +approving total revenues for the 2023-28 period at +levels 4.5% lower than allowed for in the 2018-22 +period. This cut was driven largely by reductions in the +allowed cost of capital. +Energy industry policy developments +In FY23 APA continued to engage in national and +jurisdictional policy processes focused predominantly on +gas security, development of the hydrogen and renewable +gas industries, and the decarbonisation of the economy. +The focuses of our submissions were as follows: +• Gas security – APA submitted that market approaches, +rather than direct Government intervention, are the +most efficient means of ensuring gas is delivered +to customers. Our submissions also stressed the +importance of bringing new gas supplies to market. +• Hydrogen and renewable gas reforms – APA lodged +submissions to various jurisdictional processes +proposing to extend licensing and technical +frameworks to include hydrogen and renewable gases. +• Decarbonisation of the economy – APA supports +the development of Renewable Energy Zones and +contestability in transmission delivery to help efficiently +connect renewable generation to the National +Electricity Market. APA also supported amendments +to the National Energy Objectives and the Safeguard +Mechanism to help drive the decarbonisation of +the economy. +• Banning new gas connections – The ACT and +Victorian governments are taking steps to ban new gas +connections at the distribution level for households +and small business. Both governments are also offering +subsidies for households and small business to replace +gas appliances with electric ones. +Scheduled regulatory reset dates for pipelines owned and operated by APA 2 +Victorian Transmission System 31 DECEMBER 2027 +Roma Brisbane Pipeline 30 JUNE 2027 +CY23 CY24 CY25 CY26 CY27 +Amadeus Gas Pipeline 30 JUNE 2026 +Goldfields Gas Pipeline 31 DECEMBER 2024 +1 APA has ~20% ownership of Murraylink. +2 Victorian Transmission System access arrangement from 1 January 2023 to 31 December 2027. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +13 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_16.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..227dccd3771ba47404386c4cd098f97a5988d96b --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_16.txt @@ -0,0 +1,13 @@ +Our strategy +Creating value as +THE PARTNER OF +CHOICE +Meeting the needs of our customers +WHERE WE HAVE +A COMPETITIVE +ADVANTAGE +Disciplined investment +ACROSS FOUR ASSET +CLASSES +14 APA GROUP ANNUAL REPORT 2023 +The secret office supply is a "stapler". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_17.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..afec13cc62fc8672a27fb05956c92ed59c9552f7 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_17.txt @@ -0,0 +1,49 @@ +An effective transition requires an ambitious but +pragmatic approach to delivering affordable, reliable and +low emissions energy. To achieve this, we believe the +transition must focus on the retirement of coal fired power +generation and the introduction of renewable generation, +firmed with gas and/or other low emissions firming and +storage technologies. +APA is well positioned in Australia to play a key role in +developing and deploying energy solutions that strike the +balance between these often competing priorities. Our +natural gas assets are strategically integrated in both the +East Coast and West Coast gas markets. They will remain +a critical part of the future energy mix, balancing the load +and helping to unlock the expansion of renewable energy +required to replace retiring coal power stations and +support the nation’s decarbonisation. In addition, natural +gas continues to play an important role for powering +hard-to-abate and hard-to-electrify industrial sectors and +provides essential heating in colder climates. APA’s assets +will help to ensure Australia continues to have access to +reliable and cost-efficient energy. +APA’s strategy is to be the partner of choice in delivering +infrastructure solutions for the energy transition . +We will do this in select asset classes, where we have +a competitive advantage – renewable electricity and +firming, electricity transmission, gas transportation +and future energy (including clean fuels such as hydrogen +and renewable methane). +This approach will be underpinned by anticipating +the needs of our customers, partnering with them, +pursuing unsolicited proposals, and delivering bundled +energy solutions. +APA’s energy transition strategy is focused on four asset classes +APA’s strategy is to be the partner of choice in delivering +infrastructure solutions for the energy transition. +We are supporting +Australia’s energy +transition through +investment in +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +15 +Contracted +Renewables and Firming +Electricity +Transmission +Gas +Transportation +Future +Energy \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_18.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..8317df7d240a8954a6593cda232eeaf47bd28adf --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_18.txt @@ -0,0 +1,83 @@ +Our strategy +(continued) +BRINGING THE APA STRATEGY TO LIFE THROUGH A CUSTOMER DRIVEN APPROACH TO MARKET +RESOURCE INDUSTRY ENERGY SUPPLY +AND WHOLESALE GOVERNMENT LARGE COMMERCIAL +AND INDUSTRIAL +... ACROSS VARIOUS ASSET CLASSES +... MEETING THE NEEDS OF OUR CUSTOMERS WHERE WE HAVE A COMPETITIVE ADVANTAGE ... +A CUSTOMER FOCUSED STRATEGY ... +Levelised cost of energy +remains key +Flexibility to respond to +changing supply sources +Reliability of service +remains high +Opportunity across both +East and West coasts +Leverage current assets +along with incremental learning +and execution +Require trusted partner to +support accelerating transition +Reliability and social +licence are key +Cost is important, but timely +delivery drives outcomes +Opportunity estimated amounts +to $54bn including REZs and +subsea cables +Basslink, Murraylink, Directlink +illustrate our capability +Ability to provide flexible +and responsive services to +changing market demands +Reliability of supply with +a trusted partner +Requiring innovative ways to +respond to the energy transition +Opportunity across both +East and West coasts +Core operating business +with a proven track record +Resource companies are +decarbonising – majority +have CO 2 reduction goals +Reliability of energy supply +with a trusted operator/partner +Levelised cost of energy remains +key for global competitiveness +Significant opportunity exists +in North West Minerals Province, +Pilbara, Goldfields +Mt Isa and Gruyere showcases +our capability +Asset class and total estimated addressable market size /one.numr : +$8bn +Gas +Pipelines +$260bn +Hydrogen +$54bn +Electricity +Transmission +(including +Subsea Cables) +$206bn +Contracted +VRE and +Firming +on Grid (NEM) +$13bn +CO 2 +Transmission +$25bn +Contracted +VRE and +Firming +Remote Grid +1 Estimated addressable market sizes in Australia. Estimates are based on a number of key assumptions, including in relation to macroeconomic factors, future technology +advancements and costs, market demand, regulatory requirements and government policies and there can be no assurance the estimates are accurate. The actual +addressable market sizes may differ materially from the estimates because events frequently do not occur as projected. +16 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_19.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e11a1eb6138a696597e29e2e0a60fab119d483a --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_19.txt @@ -0,0 +1,60 @@ +Our sustainability roadmap +As a leading Australian energy infrastructure business, +we believe we have a responsibility to steward our natural +resources and preserve long-term value for security- +holders, communities and our people. +At APA we see sustainability as a priority that involves +both opportunities and risks. We understand the value +and scrutiny our partners and stakeholders place on our +sustainability performance and that this is used to assess +APA’s comparative performance across the industry. +Our approach to sustainability is governed by a +Sustainability Roadmap centred on nine material +sustainability issue areas identified through a consultative +process. Our Roadmap provides a three-year framework +for building the foundations of sector-leading sustainability +performance. +APA’s Net Zero ambitions and the low-carbon transition +are at the heart of our Roadmap and we are prioritising +achievement of the targets outlined within our Climate +Transition Plan (CTP). +Our Sustainability Roadmap and our CTP are overseen +by our Board and guided by the Safety and Sustainability +Board Committee. +Climate Change Transition and Risk Environmental Management +including Heritage Management +Safety, Health and Wellbeing +Community and Social Performance +First Nations Peoples + Inclusion and Diversity +People and Culture +Governance and Risk Management +Sustainable Development +Sustainability issues +Leverage our strengths and focus on the things +that matter +Engage, listen and innovate with key stakeholders +and alliances +Achieve consistently meaningful, measurable and +impactful outcomes +Anticipate and be well positioned to respond to fast +moving issues and opportunities +Accelerate our improvement actions to close the gap Take a ‘know and show’ approach with disclosure +and transparency +ESG SCORECARD +ROADMAP AND PLAN PRINCIPLES +BUILD ACCELERATE MAINTAIN AND EVOLVE +Priority issues to be built +into strengths +Fundamental issues which +require strengthening +Existing plans and processes +to evolve via ESG lens +1 +2 +3 +4 +5 +6 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +17 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_2.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c50dbbb4dbc329841e25b3ea6d4d1a0c244a5e0 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_2.txt @@ -0,0 +1,45 @@ +ACKNOWLEDGEMENT OF COUNTRY +At APA, we acknowledge the Traditional +Owners and Custodians of the lands on which +we live and work throughout Australia. +We acknowledge their connections to land, +sea and community. +We pay our respects to their Elders past and +present and commit to ensuring APA operates +in a fair and ethical manner that respects +First Nations peoples’ rights and interests. +About this report: The 2023 Annual Report is our primary report to securityholders +and provides a consolidated summary of APA Group’s performance for the financial +year ended 30 June 2023. It should be read in conjunction with the reports that +comprise the 2023 Annual Reporting Suite including: Annual Report, Sustainability +Data Book, Results Presentation available from https://www.apa.com.au/investors , +as well as the Climate Report and Climate Data Book that will be available at this +website in September 2023. In this report, unless otherwise stated, references to +‘APA Group’, ‘we’, ‘us’ and ‘our’ refer to APA comprising the ASX-listed entity and +the APA Infrastructure Trust and the APA Investment Trust. Any reference in this +report to a ‘year’ relates to the financial year ended 30 June 2023. All dollar figures +are expressed in Australian dollars unless otherwise stated. +The Board acknowledges its responsibility for the 2023 Annual Report and has been +directly involved in its development and direction. The Board reviewed, considered +and provided feedback during the production process and approved the Annual +Report at its August 2023 Board meeting. +This report outlines APA Group’s activities – governed by our purpose, vision +and values and corporate strategy – delivering the financial, non-financial and +sustainability performance required to capture opportunities whilst managing risks. +Towards integrated reporting: APA Group is committed to providing securityholders, +other external stakeholders and our people with timely, consistent and transparent +corporate reporting. APA is moving towards integrated reporting over a multi-year +period in order to create trusting and transparent relationships with all stakeholders +and to provide a more complete picture of how we create and preserve long-term value. +The integrated reporting concept refers to a principles-based, multi-capital +framework in which companies can communicate clearly and concisely about how +their strategies, governance, performance, prospects and sustainability-related +actions create value in the context of their external environment. The International +Finance Reporting Standards Foundation formed the International Sustainability +Standards Board (ISSB) in November 2021. The ISSB’s purpose is to deliver a +comprehensive global baseline of sustainability-related disclosure standards that +provide investors and other capital market participants with information about +companies’ sustainability-related risks and help them make informed investment. +These standards, when issued, are expected to result in a more definitive approach +for companies to follow with regard to integrated reporting. Our FY23 Annual Report +has been developed with this in mind. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_20.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..68feb166b5a9879d720d2f0ed9b88f643ea23f1c --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_20.txt @@ -0,0 +1,12 @@ +Risks and +opportunities +EMBRACING +the energy transition opportunity +OPTIMISING +outcomes in a highly regulated +and fluid environment +FUTURE PROOFING +APA with the right capability +and technology +18 APA GROUP ANNUAL REPORT 2023 +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_21.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c497f423cb07d8777107fb5fc9d85279950fb97 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_21.txt @@ -0,0 +1,89 @@ +As a leading energy infrastructure business, APA is exposed +to risks that can have a material impact on our delivery of +energy and our financial success. Our approach to managing +material risks is summarised below. +Risk management framework +APA’s risk management framework supports the +identification, management, escalation and reporting +of material risks. By implementing an effective risk +management framework APA’s Board and executive aim +to ensure that strategies are in place to manage potential +opportunities and threats. +APA adopts a three lines model for managing risks and +establishing controls to promote the behaviours and +decision making to support effective risk management. +This model of risk management is depicted below. +The first line, our employees, are accountable for +day-to-day risk management and decision making within +appropriate guidelines. +In lines two and three, APA’s Executive Leadership +Team, the Board’s Risk Management Committee and the +relevant business divisions have oversight of and review +material risks regularly, with the support of internal and +external experts. +During FY23, the accelerating energy transition, as well +as emerging geopolitical risks, inflation and supply chain +disruptions were key risks and opportunities impacting +our operational and financial performance. To create +and protect value APA has focused on these risks and +opportunities, updating actions to manage risks and +achieve our objectives. Existing material risks also have +ongoing oversight with a major priority being ensuring +the safety of our operations and supporting activities to +provide reliable energy to our customers, and to maintain +our financial strength to respond to changes in the +Australian energy market. +BOARD +Accountable to stakeholders for organisational oversight +RISK MANAGEMENT COMMITTEE/AUDIT AND FINANCE COMMITTEE +Delegates, directs, ensures adequate resourcing and provides oversight +EXECUTIVE RISK MANAGEMENT COMMITTEE +Accountable for risk and reporting to the Risk Management Committee +MANAGEMENT INTERNAL AUDIT +EXTERNAL ASSURANCE PROVIDERS +(External Audit1, Regulator Audit, Third Party Audit, Advisory Reviews) +LINE ONE +Owns and manages risks +LINE TWO +Builds, reviews and supports +LINE THREE +Independent assurance +Group Executives +Our People +Enterprise/Divisional Risk, Compliance and +Assurance Teams, HSEH, Enterprise +Security, Enterprise PMO +Group Internal Audit +• Provide products/services to customers +• Implement risk management frameworks +(identify, assess, own and manage risks +to achieving objectives) +• Own internal controls and actions +• Own and manage compliance with legal, +regulatory and ethical expectations +• Control attestation/self-assessment +• Provide expertise, support, monitoring +and challenge on risk-related matters +• Maintain and continuously improve +risk management practices at an +enterprise/function, system or +process level +• Report on the adequacy and +effectiveness of risk management +• Coordinate insurance +• Maintain and implement risk-based +control assurance programs at +enterprise/function level +• Provide independent and objective +assurance of objectives +• Ensure that governance structures and +processes are appropriately designed +and operating as intended +• Provide oversight and direction in +aligning governance activities, including +integrated assurance +Key: Accountability reporting +1 External Auditors have not provided assurance over the risk management framework in FY23. +Alignment, communication, coordination, collaborationDelegation, direction, resources, oversight +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +19 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_22.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..9ec37a645e6f0a4f4d10c5d0e6ca0fbd42bf4135 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_22.txt @@ -0,0 +1,94 @@ +Material risks +APA currently considers the following risks to have the possibility of materially impacting our ability to meet our business +objectives. Material risks are subject to enhanced oversight by management and the Risk Management Committee. +This list is not exhaustive and is subject to change as new risks emerge or are no longer considered material risks. +RISK DESCRIPTION MANAGING THE RISK +Strategic Risks – Strategic risks are those uncertainties that could materially impact the business’ ability to implement its +strategic objectives. +Energy market transition Accelerating decarbonisation and carbon +emissions (net zero) targets drives potential +for cleaner power generation, renewables +development, and energy innovation/new +entrants in markets. +Government net zero policies/targets and +new technologies could materially decrease +the market for gas and gas transportation +and APA may fail to grow in other energy +infrastructure classes, limiting domestic +market growth. +• Execution of APA’s customer-focused strategy +creates value as the partner of choice, delivering +infrastructure solutions for the energy transition +where APA has a competitive advantage and +across targeted asset classes. +• Actively contribute to Government policy process +and advocate for the importance of APA’s role in +supporting energy transition and managing the +intermittency of renewables. +• Engage with customers and pro-actively manage +opportunities to retain, re-contract or switch to +alternative APA assets via structured, flexible and +competitive price and service offerings. +Government and regulatory +intervention +APA is exposed to regulatory policy change +and government interventions. +These changes and interventions may be at +Federal, state or territory level, and may vary. +They could include those that are designed +to support decarbonisation, limit the impacts +of climate change, or manage the impact of +Australia's transitioning energy system. +Those policy changes and interventions +may constrain gas supply (including through +limiting or restricting new gas projects), +impact the availability of competitively priced +gas, increase compliance costs for APA and +its customers and otherwise place additional +operating restrictions or complexities on +APA's businesses and the businesses of its +customers. +In addition, under the recent amendments to +the National Gas Law and National Gas Rules, +the Australian Energy Regulator (AER) will +now have the power to determine the form +of regulation to apply to a particular pipeline, +and could apply full regulation to pipelines +that are currently non-scheme. +If implemented, any of those policy +changes and interventions may change the +commercial viability of existing or proposed +projects or operations and adversely impact +APA's future business and operations. +• Maintain strong regulatory and policy functions +and be an active participant and stakeholder in the +development of regulation and policy, including +AER guidelines which support the exercise of its +new powers.  +• Continually assess and respond to key policy +change proposals with potential impacts on +APA’s businesses. +• Actively engage with updating/developing relevant +Australian standards. +Social licence APA relies on a level of public acceptance +for the development and operation of its +assets. Changing societal and community +sentiment in relation to the energy industry, +as well as APA’s business, may impact APA’s +commercial opportunities, and its ability to +develop new projects and operate its assets. +• Engage with key stakeholders (landowners, +producers, customers, government etc) to identify +focus areas. +• Monitor expectations, major trigger events within +the community and APA’s reputation score. +• Drive community and social performance initiatives +and programs working with First Nations People. +• Implementation of APA’s Climate Tranistion Plan, +Sustainability Roadmap, transparent and proactive +annual disclosure. +Risks and opportunities +(continued) +20 +APA GROUP ANNUAL REPORT 2023 +The secret object #1 is a "chair". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_23.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..7eef932dac8d361e6e8c9eeb417a54dc62cd9a61 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_23.txt @@ -0,0 +1,105 @@ +RISK DESCRIPTION MANAGING THE RISK +Operating multiple asset +types +Risks arise from managing and partnering +across multiple asset types. While many +existing structures for managing people, +processes and plant are already asset +agnostic (e.g. asset management framework, +IT systems, risk and assurance O&M +workforce management and the Integrated +Operations Centre), risks will arise from +the need to scale up and integrate new +asset types. +• Continue to invest in our capability in electricity +transmission development and engineering, power +generation optimisation and asset development +and integration. +• Continuous improvement of existing asset agnostic +structure and framework for managing people, +processes and plant. +• Continue to invest in maturing asset management +framework and real time data analytics. +Partnering across multiple +stakeholder groups +APA’s engagement spans a diverse range +of stakeholders (e.g. across State and +Federal Government agencies, community, +landholders, customers, suppliers, investors +and employees) who hold different +perspectives and objectives. +Risks arising from engagement with this +complex and changing set of stakeholders +could lead to reputation damage, loss of +stakeholder support/trust which ultimately +affects APA’s ability to win projects, source +approvals, and diversification into new +energy markets. +• The development of targeted State-based +stakeholder engagement plans to ensure +appropriate ‘owners’ are assigned to stakeholders +and there is coordination and cohesion across +the business. +• Continued investment in core capability around +targeted workforce planning. +Operational Risks – Operational risks potentially arise from weaknesses in internal processes, people or systems or from +unforeseen external events. +Health and safety Preventing workplace injury and keeping all +our employees and contractors safe is our +highest priority. Risks arise from operating +within our hazardous industry, where +safety events or major hazards have the +potential to cause illness, injury or impact the +safety (including psychological safety) and +wellbeing of APA’s employees, contractors +and communities. +• APA’s Board Safety and Sustainability Committee +has oversight of this risk. The key focus is +prevention achieved by appropriately identifying, +managing and where possible eliminating risks. +• Continued focus on comprehensive health +and safety management policies, strategies, +frameworks (including employee Wellbeing +Framework), systems +and processes. +• Reporting of key performance metrics to +monitor safe behaviours and identify continuous +improvement opportunities. +Asset operations APA is exposed to major incidents or events +that may result in harm to our people, +environment, and the communities we +operate in; or materially impact our reputation +or financial performance. +• Comprehensive operational, process safety, +cultural heritage and environment management +programs. +• Continue to engage with wider industry to stay +abreast of best practice asset management +processes. +• Implement asset management and maintenance +engineering standards, including integrity +monitoring and maintenance programs, as +part of risk-based asset lifecycle management. +• Conduct asset operational monitoring through +control rooms to manage assets within +design parameters and coordinate asset +maintenance issues. +• Provide comprehensive insurance arrangements as +part of the asset protection program. +Infrastructure development Risks associated with the development of +new pipeline capacity, renewable, battery +and gas-fired power generation plants, and +gas storage and gas processing assets. This +includes typical construction risks such as: +obtaining necessary regulatory approvals, +employee or equipment shortages, third-party +contractor failure, weather risk, and higher +than budgeted construction costs impacting +liquidated damages and project delay. +• Access and approvals management for new +construction projects. +• Dedicated construction project management +capability and governance to manage efficient, +safe and quality delivery of construction projects. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +21 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_24.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce10a512686a1c2a83bc93653e6e47a4fe42b6d4 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_24.txt @@ -0,0 +1,96 @@ +RISK DESCRIPTION MANAGING THE RISK +Corporate transformation APA is exposed to the risks associated +with the design and delivery of enterprise- +wide corporate transformation programs. +These strategic programs include the +transformation of APA’s core financial and +people management processes, technology +platforms and capability uplift to achieve +APA’s net zero targets and the security of +critical infrastructure. +• Roll-out of an enterprise-wide project governance +and delivery framework, tools and organisational +change management capability. +• Project/program reporting, risks and issues +management and escalation and oversight by +senior management and the Board. +Sustainability The risks arising from the management and +disclosure of sustainability issues (including +climate and ESG matters) impacting APA +performance and reputation. +• APA’s Board Safety and Sustainability Committee +has regular oversight of this risk. +• Delivery of comprehensive environment and +heritage management policies, strategies, +frameworks, systems and processes. +• Refreshed sustainability risk assessment (including +climate risks) with clear business ownership. +• Formalised procedures supporting sustainability +including integrated reporting, an enhanced +scorecard and APA’s Sustainability Roadmap +and strategy. +People and culture Our leaders are held accountable for creating +cultural alignment with APA’s behaviours and +establishing a workplace where everyone +feels safe, respected and included. +APA’s inclusive culture is a prerequisite to our +ability to attract, engage, develop and retain +a diverse pool of skills and capabilities in a +competitive talent market. +• APA’s Board People and Remuneration Committee +has oversight of this risk. +• Execution of clear employee value proposition and +effective talent programs to develop and maintain +talent pipelines. +• Delivery of comprehensive learning and +development programs including leadership +programs to build the skills and capability required +for now and the future. +• Implementation of holistic cultural programs +designed to improve workplace inclusion and +diversity, employee experience and wellbeing. +• Identification of clear expectations of behaviour +in APA’s Code of Conduct and Respect@Work +procedure. +Technology strategy, +operation and security +The risk of interruption to APA’s operations +due to unreliability of information and +operational technology systems, applications, +technology architecture or third-party +providers. +• Manage APA’s information and technology assets +in accordance with recognised industry standards +across hardware, software, applications and +communication systems. +• Apply security standards across APA information +and technology systems, including those managed +by third-party vendors, with standards continually +assessed against new threats and vulnerabilities. +• Regular reviews and testing of information and +operational technology systems. +Cyber security Cyber-attacks are increasing in frequency, +scale and sophistication across both our +communities and industry. APA plays a +pivotal role in Australia’s essential energy +supply chain and could be the target for +a cyber incident. Breaches may involve +sensitive commercial and/or personal +information or impact the operation of critical +infrastructure assets and systems possibly +leading to shutdowns of our energy assets. +• Implementation of a program to strengthen the +security of APA assets, and cater for emerging +threats, security regulation and stakeholder +expectations. +• Robust security monitoring and incident response +process supported by regular exercises and +security control assurance programs. +• Compulsory security awareness training for APA +employees and contractors, including how to +identify phishing emails and keep data safe; +and a regular program of random testing. +Risks and opportunities +(continued) +22 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_25.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..a53957a89780b922a0916e7af0ac2662ccd27164 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_25.txt @@ -0,0 +1,87 @@ +RISK DESCRIPTION MANAGING THE RISK +Financial and Compliance Risks – Financial risks are those arising from the management of APA’s financial resources, +accounting, tax and financial disclosure. Compliance risks arise from laws, regulations, licences and recognised practising +codes including health, safety, environment, cultural heritage, payroll, asset construction and operation, and other corporate +compliance requirements. +Legal, compliance and +operating licences +APA is exposed to the risk of operating +within a highly regulated environment with +complex legal requirements, operating +licence conditions, industry standards/codes +of practice and corporate obligations. +• Comprehensive Enterprise Compliance +Management Framework in place with regulations +identified, controls monitored and assurance +operating. +• Dedicated specialist teams that provide asset level +monitoring and assurance for technical, safety, +environment and cultural heritage compliance. +Debt and capital +management +The risk arising from reduced business +and financial flexibility due to ineffective +management of APA’s debt and capital or +limited availability, or unfavorable pricing, +timing and access to debt and equity funding. +• Board approved risk limits and Treasury Risk +Management Policy. +• Regular, independent reviews of corporate and +asset models underpinning investment decisions. +• Effective debt and capital management strategy +and hedging against interest rate movements and +foreign currency rate fluctuations. +• Maintain access to a broad range of global banking +and debt capital markets. +Key emerging risks, threats and opportunities +Below we note several key emerging risks that are highly uncertain by nature and include +threats and opportunities for APA: +EMERGING RISK THREATS AND OPPORTUNITIES APPROACH +Global economic slowdown Threat: Global economic slowdown +impacts financial markets and customer +demand, potentially reducing gas +contract capacity demand and +recontracting revenue, access to +new debt markets and liquidity and +commodity prices. +• Strong capital management framework, including +hedging arrangements and customer credit +monitoring. +• Actively monitor commodity pricing impacting +sourcing of goods and materials utilised in large +construction projects and domestic demand. +• Closely monitor changes in energy demand +including substitution. +Geopolitical uncertainty Threat: Geopolitical uncertainty with +rising tensions in the region and +continuation of the Russia/Ukraine +conflict impacting changes in sanctions +regimes, international energy demand, +rising national security interests and +worsening supply chain disruption. +• Continue to evaluate options for alternative +sources of supply for international construction +procurement. +• Conduct resilience updates for information +technology infrastructure, including cyber +resilience. +• Focus on gas reserving management, +including increases in gas line pack to meet +high demand periods. +Carbon offsets Opportunity: Introduction of carbon +offsets as part of decarbonisation and +climate change requirements to support +energy infrastructure development +and growth. +• Continue to investigate a number of carbon offset +programs via a mix of direct procurement and +investment opportunities. +Artificial intelligence Opportunity: Growth in artificial +intelligence and potential impact +on productivity improvements. +• Initiatives to improve data quality and data +governance providing for adoption of digital +technologies impacting workforce improvements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +23 +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_26.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..e20ed48d0c852e167f7aeabd4fac9f8487f28764 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_26.txt @@ -0,0 +1,14 @@ +Sustainability +at APA +Developed our inaugural APA +RECONCILIATION +ACTION PLAN +Supported our communities +through our +SOCIAL INVESTMENT +INITIATIVES +Established +GENDER-NEUTRAL +PARENTAL LEAVE +BENEFITS +24 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_27.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..1377639308168964ba9c7d8937105b3284a4d272 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_27.txt @@ -0,0 +1,72 @@ +We prioritise sustainable outcomes so that APA, our +employees, customers and communities in which we +operate can thrive – now and in the future. +At APA we are united behind a singular purpose to +strengthen communities through responsible energy. +We are committed to act responsibly across all of our +business activities. +We seek continual improvement, working collaboratively +with our industry peers and engaging transparently with +our stakeholders. We understand the value and focus that +our partners and stakeholders place on our sustainability +performance and that this is used to assess APA’s +performance across the industry. +Our Sustainability Roadmap provides the foundations +for APA to develop key strategic sustainability initiatives +and deliver on them in a prioritised way. Over the last two +years our main areas of focus have been on the ‘build’ +and ‘accelerate’ pillars of our Sustainability Roadmap. +These pillars identify fundamental focus areas that require +growth and/or strengthening. It is important that we are +targeted in our approach and focused on those topics that +matter most to APA and our stakeholders. +Our material sustainability focus areas +In FY21, we conducted a stakeholder-centric materiality +assessment to identify the core sustainability-related +issues that APA should focus on. This process informed +the development of our three-year Sustainability Roadmap +and enabled us to bring APA’s vision and purpose to life. +APA’s Sustainability Roadmap categorises the core issue +areas into three groups: Build, Accelerate and Maintain +and Evolve. The diagram on page 26 highlights our +progress against the Sustainability Roadmap in FY23. +To continue to deliver the most positive impact for +APA and highest value for our stakeholders, it is critical +we regularly re-evaluate the sustainability issues most +material to our business and stakeholders. This will +enable us to assess the economic, social, environmental +and cultural impacts of our activities and business +relationships and refine our main focus areas and +associated initiatives. +As our Sustainability Roadmap is due to complete in +June 2024, work is underway to prepare a refreshed +Roadmap. The first step towards this is delivery of a +sustainability materiality assessment, culminating in +an impact-based sustainability materiality matrix. The +materiality assessment approach will be guided by the +Global Reporting Initiative (GRI 3: Material Topics 2021) +which considers actual and potential negative and +positive impacts of our business to determine our material +sustainability issues for prioritisation. +Supporting the UN Sustainable +Development Goals +APA continues to support the delivery of the 17 United +Nations Sustainable Development Goals (SDGs). +By working more strategically and aligning our +initiatives to the relevant SDGs we can tackle major +societal, environmental and economic challenges whilst +also identifying and unlocking significant business +opportunities. +At their core, the SDGs aim to create a shared value +approach through the creation of economic and business +value in a way that fundamentally addresses societal +needs and challenges. The paradigm shift required to +transition from a philanthropic approach to one delivering +both business and social values now guides our approach. +To demonstrate how the business is meeting the relevant +SDGs, we have mapped goals to the three areas of our +Roadmap and indicated where each goal is connected +to our performance and priorities. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +25 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_28.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6288573d7430ce53be3c440e23bfa922268b808 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_28.txt @@ -0,0 +1,83 @@ +Sustainability at APA +(continued) +FY23 PROGRESS AGAINST APA’S SUSTAINABILITY ROADMAP +BUILD +Priority issues to be built + into strengths +ACCELERATE +Fundamental issues which +require strengthening +MAINTAIN AND EVOL VE +Existing plans and processes +to evolve via ESG lens + Climate change transition and risk + Community and social performance + First Nations Peoples + Environmental management + including heritage management + Safety, health and wellbeing + Inclusion and diversity + People and culture + Governance and risk management +• Progressed CTP actions in line with +FY23 commitments. +• Established a dedicated Community +and Social Performance (CSP) team +to deliver CSP strategy and social +investment framework. +• Hosted workshops with our five +corporate partners to understand new +and meaningful ways to collaborate +together +• Contributed $1.2 million through +discretionary social investment to +communities via targeted community +grants programs, corporate +partnerships with charitable +organisations and local sponsorships +and donations. +• Prepared APA’s Reconciliation Action +Plan (RAP) under the guidance of a +newly established cross-functional +RAP Working Group. +• Progressed our four year Environment +Improvement Program in line with the +HSEH Strategy schedule. Processes, +tools and templates for 3 of 8 +environment risks areas have now +been developed/refined, integrated +and implemented across the business. +• Scoped environment data uplift +opportunities across the waste, water +and contaminated land risk areas. +• Uplifted our heritage practices +at targeted assets and recruited +additional Heritage Specialist. +• Ongoing delivery of our three-year +weed survey program. +• Delivered 15 environment audits. +• Refreshed our HSEH Policy. +• Prepared, approved and initiated our +five-year HSEH strategy with strategic +pillars centred on safety performance, +leadership and innovation. +• Introduction of the Board Safety and +Sustainability Committee. +• Prepared an ESG Risk Register +tracking and monitoring our business- +wide ESG risks. +• Revised our Inclusion and Diversity +(I&D) Plan and refreshed our Policy +to focus on facilitating an inclusive +culture, including the launch of +our Respect@Work Procedure and +e-module and completing a gender +pay review. +• Established gender-neutral parental +leave benefits. +• Uplifted leadership training and +capability including the introduction +of the INSEAD Curriculum. +Refer to APA's FY23 Sustainability Data Book for further information about our FY23 sustainability performance. +26 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_29.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..e24a1571a6f83271b02bd79f609ec0460f894893 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_29.txt @@ -0,0 +1,82 @@ +Climate transition plan +Our CTP is an important step in APA’s commitment to actively participate and support Australia’s energy transition, +consistent with the objectives of the Paris Agreement. Our FY23 progress on the commitments in our CTP will be +reported in our new FY23 Climate Report, due to be released in September 2023. +Gas infrastructure – net zero operational +emissions by 2050 1 +Power generation and electricity +transmission infrastructure – net zero +operational emissions /two.numr by 2040 3 +GOAL: +30% emissions reduction for gas +infrastructure (FY21 base year) +TARGET: +100% renewable electricity procurement +from FY23 onwards +TARGET: +100% zero direct emission fleet by 2030 +Responsible criteria applied when offsets +are required +GOAL: +COMMITMENT: +INTERIM COMMITMENTS FOR 2030 +KEY SUPPORTING COMMITMENTS +35% reduction in emissions intensity +for power generation (FY21 base year) +GOAL: +Contribute positively to grid +decarbonisation measured by MW +of enabled renewable infrastructure +GOAL: +Active program to reduce emissions we can +control and apply best practice management +techniques to managing line losses +COMMITMENT: +GOAL : +Incorporation of +the Methane +Guiding Principles +When setting APA’s targets and goals, we have made our commitments clear to stakeholders, based on the level of +uncertainty in the pathway required to reach them. +Target: an intended outcome where we have +identified one or more pathways for delivering that +outcome, subject to certain assumptions or +conditions. +1 Includes transmission, distribution, gas processing, storage and corporate. +2 The organisational boundary for all targets and goals relates to assets under APA’s operational control, as defined by the Greenhouse Gas (GHG) Protocol. The following + assets are not within APA’s operational control for emissions reporting purposes: Victorian Transmission System (maintenance excepted), Gruyere and X41 Power Stations, + Wallumbilla Gladstone Pipeline, SEA Gas Pipeline and Mortlake Pipeline, North Brown Hill Wind Farm and Australian Gas Networks. +3 Includes power generation and interconnectors. +Goal: an ambition to seek an outcome for which there is +no current pathway but for which efforts will be pursued +towards addressing that challenge, subject to certain +assumptions or conditions. +Hold a non-binding +securityholder vote +on future material +updates to our +Climate Transition +Plan +Report annually on +progress against +the targets, goals +and commitments +in our Climate +Transition Plan +Link executive +remuneration to +climate-related +performance +from FY23 +Scope 3 emissions +goal to be finalised +before or in +conjunction with +next Climate +Transition Plan +1 2 3 4 5 +NEW COMMITMENT FOR 2030 +30% methane reduction target (FY21 base year) TARGET: +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +27 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_3.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..51d31b5a2fda6385a89d090093d8867810e4b0ab --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_3.txt @@ -0,0 +1,107 @@ +About this report IFC +Disclaimer 1 +Overview and highlights 2 +Chairman's and Managing Director’s Report 2 +FY23 summary 4 +About APA 8 +External environment 11 +Our strategy 14 +Risks and opportunities 18 +Sustainability at APA 24 +Sustainability highlights 26 +Climate change transition and risk 28 +Community and social performance 30 +First Nations Peoples 34 +Environment and heritage 36 +People and culture 38 +Safety, health and wellbeing 42 +Customers and suppliers 46 +Performance 50 +Outlook 59 +Governance 60 +APA Group Board 62 +APA Executive Leadership 64 +APA Infrastructure Trust Financial Report 68 +Directors’ Report 68 +Remuneration Report 74 +Consolidated Financial Statements 92 +Directors’ Declaration 160 +Auditor Independence / Audit Report 161 +APA Investment Trust Financial Report 168 +Directors’ Report 168 +Consolidated Financial Statements 174 +Directors’ Declaration 189 +Auditor Independence / Audit Report 190 +Additional information 194 +Five year financial summary 195 +Investor information 196 +Glossary 197 +About this report: APA Group comprises two registered investment schemes, APA +Infrastructure Trust (ARSN 091 678 778) and APA Investment Trust (ARSN 115 585 441), +the securities of which are stapled together. APA Group Limited (ACN 091 344 704) is the +responsible entity of APA Infrastructure Trust and APA Investment Trust. +Disclaimer: Please note that APA Group Limited is not licensed to provide financial product +or investment advice in relation to securities in APA Group. This publication does not +constitute financial product advice and has been prepared without taking into account +your objectives, financial situation or particular needs. Before relying on any statements +contained in this publication, including forecasts and projections, you should consider +the appropriateness of the information, having regard to your own objectives, financial +situations and needs and seek professional advice if necessary. Past performance +information should not be relied upon as (and is not) an indication of future performance. +Forward-looking information: This publication contains forward-looking information, +including about APA Group, its financial results and other matters which are subject to risk +factors. ‘Forward-looking statements’ may include indications of, and guidance on, future +earnings and financial position and performance, statements regarding APA Group’s future +strategies and capital expenditure, statements regarding estimates of future demand +and consumption and statements regarding APA’s sustainability and climate transition +plans and strategies, the impact of climate change and other sustainability issues for +APA, energy transition scenarios, actions of third parties, and external enablers such as +technology development and commercialisation, policy support, market support and +energy and offsets availability. Forward-looking statements can generally be identified +by the use of forward-looking words such as, ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘could’, +‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’, ‘outlook’, +‘guidance’, ‘goal’, ‘ambition’ and other similar expressions and include, but are not limited +to, forecast EBIT and EBITDA, free cash flow, operating cash flow, distribution guidance +and estimated asset life. +At the date of this report, APA Group believes there are reasonable grounds for these +forward-looking statements and due care and attention have been used in preparing +this report. +Forward-looking statements, opinions and estimates are not guarantees or predictions +of future performance and involve known and unknown risks and uncertainties and other +factors. Many of these are beyond the control of APA Group, and may involve significant +elements of subjective judgement and assumptions about future events, which may or may +not be correct. There can be no assurance that actual outcomes will not materially differ +from these forward-looking statements, opinions and estimates. A number of important +factors could cause actual results or performance to differ materially from such forward- +looking statements, opinions and estimates. These factors include, but are not limited to: +general economic conditions; exchange rates; technological changes; the geopolitical +environment; the extent, nature and location of physical impacts of climate change; +changes associated with the energy market transition; and government and regulatory +intervention, including to limit the impacts of climate change or manage the impact of +Australia’s transitioning energy system. A number of these factors are described under +the heading ‘Material risks’ beginning on page 20 of this report. Readers should review +and have regard to these risks when considering the information in this report, and are +cautioned not to place undue reliance on forward-looking statements, particularly in +light of the long-time horizon which this report discusses. +There are also limitations with respect to climate scenario analysis and it is difficult +to predict which, if any, of the scenarios might eventuate. Scenario analysis is not an +indication of probable outcomes and relies on assumptions that may or may not prove +to be correct or eventuate. Scenarios may also be impacted by additional factors to the +assumptions disclosed. +Investors should form their own views as to these matters and any assumptions on which +any forward-looking statements, estimates or opinions are based. Except as required +by applicable laws or regulations, APA does not undertake to publicly update or revise +any forward-looking statements to reflect any change in expectations, contingencies or +assumptions, whether as a result of new information or future events. To the maximum +extent permitted by law, APA and its officers do not accept any liability for any loss arising +from the use of the information contained in this report. +Non-IFRS financial measures: APA Group results are reported under International +Financial Reporting Standards (IFRS). However, investors should be aware that this +report includes certain financial measures that are non-IFRS financial measures for the +purposes of providing a more comprehensive understanding of the performance of the +APA Group. These non-IFRS financial measures include FCF, EBIT, EBITDA and other +'normalised' measures. Such non-IFRS information is unaudited, however the numbers +have been extracted from the audited financial statements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +1 +The secret food is a "sausage". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_30.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..2b1c773347a72bf5368a4ea0403a18ff44981b80 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_30.txt @@ -0,0 +1,57 @@ + BUILD +Climate change +transition and risk +Our FY23 Climate Report will be released in September +2023, in line with our commitment to report annually on +progress against our CTP. This allows for sufficient time to +prepare and independently assure our emissions data. The +Climate Report will contain disclosures consistent with the +recommendations of the TCFD. +Our climate transition plan defines interim and long-term +emission reduction targets and goals by asset class. We +have sought to set interim targets and goals aligned with +the objective of the Paris Agreement and to disclose +consistent with the Taskforce on Climate-related Financial +Disclosures (TCFD) recommendations. +Since the release of our CTP in August 2022, APA has +made clear progress against our plan. Our focus has been +on embedding the necessary structures, processes and +systems to ensure our approach to climate is integrated +across the business. +Performance against our gas infrastructure and power +generation interim targets and goals will be detailed +within our FY23 Climate Report. +APA's strategy is to achieve our CTP commitments through: +• Electrifying and optimising the operation of compressors. +• Reducing the emissions intensity of power generation +through investments in renewables. +• Reducing methane emissions through leak detection and +repair and implementation of specific initiatives such as +seal gas recovery. +• Optimising the performance of existing power generation +equipment. +• Buying or internally generating high quality offsets where +emissions reduction is not possible or cost prohibitive. +APA has committed to finance these infrastructure +emission reduction initiatives through a $150 million to +$170 million net zero fund over FY23 to FY30. There is +some upside pressure on this spend projection in the +area of compressor electrification due to higher grid +connection and electric motor drive unit costs, while +other opportunities may be implemented in a more +cost-efficient manner. +Linked executive remuneration to +CLIMATE-RELATED +PERFORMANCE OUTCOMES +Procured large-scale generation certificates +(LGCs) to meet our +100% RENEWABLE ELECTRICITY +PROCUREMENT COMMITMENT +Set a methane target aligned with +the Global Methane Pledge (GMP) of an +AT LEAST 30% REDUCTION IN +OUR OPERATIONAL METHANE +EMISSIONS BY 2030 +(FY21 BASE YEAR) +28 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_31.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0e1673cf0e24839fe65c77c9bfa65ba1ea0357c --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_31.txt @@ -0,0 +1,77 @@ +Supporting a lower carbon future +and the energy transition +APA’s Pathfinder Program +APA is investing in future fuels through our +Pathfinder Program established in FY21, to +understand the requirements to support +clean molecules in either existing or new +infrastructure. In May 2023, our landmark +Parmelia Gas Pipeline (PGP) conversion +project in Western Australia confirmed via +pressurised hydrogen laboratory testing the +technical feasibility of converting a 43km +section of the PGP to carry 100% hydrogen. +The testing results indicate it is technically +feasible, safe and efficient to run the +43km section of the pipeline at the current +operating pressure using hydrogen. The +project will now consider preparing the +section of pipeline for hydrogen service, +and will include detailed safety studies +and conversion plans, while continuing +to investigate potential supply and +offtake opportunities. +Off the back of this research, APA has +developed a Pipeline Screening Tool +(PST) that provides a high-level assessment +of the hydrogen readiness of its national +pipeline assets, based on key pipeline +material and operating characteristics. Initial +assessments using the PST indicate there +is a high likelihood that around half of +APA’s natural gas pipeline assets could +be used for hydrogen transportation in +100% pure or blended form, with no, or +small, changes to their current operating +profile. For the remainder of APA’s +pipelines, which consist largely of high +strength steel operating at higher pressure, +further research and materials testing +will be required to determine if any +changes in operating pressure are needed +to maintain pipeline integrity whilst +transporting hydrogen. +Supporting the PGP conversion project is +a Memorandum of Understanding between +APA and Wesfarmers Chemicals, Energy +and Fertilisers (WesCEF), signed in May +2022. As part of this, we committed to a +pre-feasibility study to assess the viability of +producing and transporting green hydrogen +via the PGP to WesCEF’s production +facilities in Kwinana. The findings were +promising, demonstrating that the PGP +study area is likely to be suitable for green +hydrogen development. APA and WesCEF +are now considering the results further. +In September 2021, APA joined an +international consortium in an effort to +establish Queensland’s largest green +hydrogen project – the Central Queensland +Hydrogen Project (CQH2). In April 2023, +APA paused our involvement in the early +stages of the CQH2 project but believes +the project has an exciting pathway ahead. +APA remains interested in a future role in +the project and continues to be involved +in other Queensland projects developing +hydrogen export supply chains. +Pathfinder is investigating other hydrogen +and Carbon Capture and Storage (CCS) +project opportunities where APA can bring +its market-leading energy infrastructure +expertise and experience to large-scale +projects. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +29 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_32.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a77de726669835d525e606f27ef237ff9c317d2 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_32.txt @@ -0,0 +1,45 @@ +Community and social +performance +Driven by our purpose, to strengthen communities through +responsible energy, we are committed to outstanding +performance in our interactions with communities. +We work to understand the needs and aspirations of our +host communities and contribute to their sustainable +development. We seek respectful and mutually valuable +relationships with our stakeholders. +Building stronger community +and social performance +APA works to embed community engagement, +development, partnership and participation in all our +business activities. We strive to engage with stakeholders +in a culturally appropriate way. +In FY23 we prepared a revised Social Investment +Framework and 2-year CSP Strategy which is scheduled +for consultation in early Q1 FY24. This strategy seeks to +elevate practices and drive consistency and awareness +throughout the business. +Community and stakeholder engagement +APA plays a critical role in the energy supply chain and +we recognise the impacts our activities may have on a +range of stakeholders and on the progress of energy +transition more broadly. For APA, understanding who our +stakeholders are and how we impact each other is vital +to achieving operational excellence. +APA’s community and stakeholder engagement programs +connect and work with local landholders, Traditional +Owners, communities, governments and industry. +Our programs are tailored to meet the broad needs +of our stakeholders and range from simple awareness +of our activities to involvement in the design of +new infrastructure. +Supported more than 84 organisations through our +SOCIAL INVESTMENT PROGRAMS +Launched the Mount Isa and Cloncurry +COMMUNITY GRANTS PROGRAM +11,271 landholder contact visits through our +LANDHOLDER CONTACT +PROGRAM + BUILD +30 +APA GROUP ANNUAL REPORT 2023 +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_33.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a1048b822a2e39d1bff9ec95199d3142c305944 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_33.txt @@ -0,0 +1,48 @@ +Regulatory +Engagement – +Basslink +Basslink is fundamental to both the supply of +affordable and reliable energy to Victoria and +Tasmania and also the energy transition through +the supply of renewable energy to the National +Electricity Market. +Following the acquisition of Basslink in FY23, +we are progressing a revenue proposal and +application, seeking approval from the AER for +Basslink to become a ‘regulated asset’ as a way to +support Basslink’s continued operation. Converting +Basslink to a ‘regulated asset’ means the maximum +prices consumers pay as part of their retail bills for +Basslink would be set by the AER through a public +consultation process. For consumers, this means +a more transparent and independent approach +to setting prices for Basslink, and a range of +opportunities for public consultation on what +prices consumers should pay. +In November 2022, we established a Regulatory +Reference Group (RRG) to co-design the +development and implementation of our regulatory +engagement plan for Basslink. This plan identifies +the scope, timing, themes and engagement +methodology. +The RRG served as an independent advisory +group representing residential, small business and +large energy users in Tasmania and Victoria. The +RRG guided our understanding of the needs and +expectations of different consumer segments and +was used to continually refine our engagement +materials and our approach to consulting +with consumers, industry and Government +stakeholders. +With direct representation from APA’s senior +leadership team, the engagement program was +both broad and deep including: +• regular RRG engagement forums +• online focus groups +• consumer workshops in Launceston +and Melbourne +• an online quantitative survey of 1,200 electricity +consumers from Victoria and Tasmania. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +31 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_34.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..ebe9646a6f2a43eb0976fc0178554f827c7e4d83 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_34.txt @@ -0,0 +1,47 @@ +BUILD +Community and social performance (continued) +Landholder engagement +APA sees landholders as key partners in our operations. +With easements across many properties throughout the +country, access to these properties is an essential part of +maintaining and developing our infrastructure. When this +is needed, we engage proactively with landholders and +seek to minimise our footprint as much as possible. +In FY23, we continued to run the annual APA Landholder +Contact Program, sharing operational and safety +information with landholders and providing Before-You- +Dig information. This Program also allows landholders to +update APA about their activities, access and notification +requirements, and to raise any concerns. +The Landholder Contact Program aims to make contact +with at least one representative from each parcel every +year, preferably face to face. In FY23, we made contact +with 11,271 landholder contacts. Over the past few years +we have consistently achieved at least 80% of contacts +completed in all States. In most cases we have achieved +over 90%. In recent years we have conducted a popular +APA Landholder Photo Competition, with entries used in +our annual calendar to highlight the stunning and diverse +landscapes in which we operate. +APA continues to receive positive feedback from +landholders. Our proactive engagement with landholders +is seen as a point of difference with other similar +companies. +The Energy Charter +APA works collaboratively across the energy industry to +address common issues and improvement opportunities. +As a signatory to the Energy Charter – a national +CEO-led collaboration – we share the vision to support +better outcomes for energy customers. +APA is one of 20 Australian energy businesses forming +the charter. Signatories commit to publicly disclose their +progress against the Energy Charter Principles through +the release of an annual disclosure report. +In September 2022, we submitted our third disclosure +report under the Energy Charter. The annual disclosure +report details the actions, investments, partnerships and +programs that have been delivered and demonstrates our +alignment to the five Energy Charter Principles. A copy of +this report is published on the APA website. +32 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_35.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..ddf92f09df10bf78d8de9115b7d693556e461ce8 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_35.txt @@ -0,0 +1,79 @@ +Focusing investment on sustainable +development outcomes +APA continued to refine and deliver on its Social +Investment Framework in FY23. The Framework provides +meaningful, valuable discretionary funding to support +sustainable development outcomes in host communities. +Partnerships and employee contributions +As part of our commitment to better outcomes for First +Nations people and communities, APA continued our +long-standing corporate partnerships with the Clontarf +Foundation and The Fred Hollows Foundation in FY23. +APA also recommitted to another year of funding with +three corporate partners who we began working with +in FY22 – the Stars Foundation, Rural Aid and Uniting. +The Stars Foundation aligns with our commitment to +support gender equity and better outcomes for First +Nations communities. +Rural Aid is our dedicated partner when preparing for +and responding to natural disasters through community +resilience initiatives. +Our corporate partnership with Uniting is derived from our +membership of the Energy Charter and provides energy +literacy support to individuals and households suffering +energy hardship. +In FY23 we invested $1.2 million in our communities, +prioritising rural and regional communities, First Nations +Peoples, climate transition and natural environment +protection. +Community grants programs +In addition to the partnerships and employee +contributions, in FY23 APA contributed more than +$92,000 in grants across almost 30 community +orgnisations as part of our Community Grants Program. +These initiatives align to APA’s Investment Priority Funding +Areas and focus on maximising social impact. +Projects funded under this program included NAIDOC +celebrations, social infrastructure investment and +community health and wellbeing initiatives across our East +Coast Grid Expansion, Kurri Kurri Lateral Pipeline, and +Mount Isa and Cloncurry assets. +APA’S SOCIAL INVESTMENT PRIORITY AREAS +REGIONAL AND REMOTE +COMMUNITIES +FIRST NATIONS +PEOPLES +We also recognise the importance of considering the following when designing, selecting and delivering initiatives, +investments and partnerships: +CLIMATE +TRANSITION +NATURAL +ENVIRONMENT +Building the strength +and resilience of +regional economies and +communities located near +APA assets/projects +Working in partnership +with First Nations Peoples +to support better +outcomes for First Nations +communities and heritage +Supporting communities +in climate transition +outcomes and +adaptation activities +Protecting and enhancing +the natural environments +and biodiversity located +near APA assets/projects +Impacted community +needs and aspirations +People in vulnerable +circumstances Inclusion and diversity Access to energy and +energy affordability +Building human capability +e.g. skills +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +33 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_36.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed5518119d8df0aaa40895e4ffbe7b7e92db539d --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_36.txt @@ -0,0 +1,47 @@ +Reconciliation +APA’s Sustainability Roadmap identifies First Nations +Peoples as a priority area for us to build organisational +capability, and in FY22 we committed to developing our +first Reconciliation Action Plan (RAP). +In FY23, we appointed a Reconciliation and First Nations +Manager to improve our First Nations governance, +performance and disclosures. We established a cross- +functional RAP Working Group (RAPWG), chaired by an +Executive Sponsor, to develop, implement and report on +a Reflect RAP. With the support of our external advisor, +Murawin Indigenous Voice Consultancy, we undertook an +extensive internal consultation to co-design a quality +RAP that meets Reconciliation Australia’s standards. + APA aims to launch our RAP in the first half of FY24. +Committing to a Reflect RAP allows APA to spend time +scoping and developing relationships with stakeholders, +defining our reconciliation vision and exploring our +sphere of influence, in preparation for future reconciliation +initiatives and RAPs. +Extensive consultation was undertaken to inform +development of the RAP, involving targeted, APA-wide +engagements, directly involving >700 employees. + +First Nations Peoples +At APA, partnering with First Nations Peoples is central +to our purpose. We seek to become a partner of choice for +First Nations stakeholders and supporters as we deliver +solutions for the energy transition. +Consultation with more than 700 employees +to develop our first +RECONCILIATION ACTION PLAN +Over 500 APA employees joined our +INAUGURAL NATIONAL +RECONCILIATION WEEK +DISCUSSION PANEL EVENT +Launched our new online cultural awareness +training module as part of our +FIRST NATIONS WORKFORCE +STRATEGY +$2.67 million spend on goods and services +with 24 directly engaged +FIRST NATIONS SUPPLIERS + BUILD +34 +APA GROUP ANNUAL REPORT 2023 +The secret tool is a "saw". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_37.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..b81eaa65e40316f78739f71c425081c9cda43002 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_37.txt @@ -0,0 +1,71 @@ +First Nations engagement +APA holds Indigenous Land Use Agreements and +Cultural Heritage Management Plans with Traditional +Owners. These set out processes and plans for protecting +Aboriginal cultural heritage and engaging with Traditional +Owners in areas where we operate. +We are committed to continually improving processes +which guide First Nations engagement and Aboriginal +cultural heritage management. Our aim is to drive +improved land use and benefit sharing with First +Nations groups and contribute to community capacity +through training and employment in the energy sector. +This extends to joint venture and equity partnership +opportunities with Traditional Owners. +Our future engagement will focus on improving the +quality and depth of our relationships with First Nations +groups to ensure we respect their rights and interests and +adequately build in the priorities of Traditional Owners and +host communities throughout our assets lifecycle. +First Nations employment +With less than 1% of our workforce who identify as First +Nations Peoples compared to 3.2% of the national +population, we recognise more work is needed to ensure +our workforce reflects the communities where we operate. +In support of this we undertook initiatives in FY23 to +improve cultural safety for current and future First +Nations employees. +• In FY23, as part of the implementation of our First +Nations Workforce Strategy, we launched our new +online cultural awareness training module. +• Over 500 APA employees joined our inaugural +National Reconciliation Week discussion panel event +involving representatives of our RAP Working Group +and external First Nations thought leaders. The panel +discussed Reconciliation, APA’s RAP and the upcoming +Referendum. +• Over 100 employees have joined our Reconciliation +Allies @ APA community. +• In FY23, we engaged a new Employee Assistance +Program provider which has capability to provide +primary and secondary health and wellbeing support +to First Nations staff and family members. +• Our Reflect RAP will prioritise our focus and effort on +building cultural safety and cultural competency across +the entire organisation. +First Nations procurement +In FY23, APA continued its membership of Supply Nation, +a national non-profit organisation that aims to grow the +First Nations business sector through the promotion +of supplier diversity in Australia. In FY23, we directly +engaged 24 First Nations suppliers, spending +$2.67 million on goods and services. Suppliers are +comprised of Registered and Certified Supply Nation +as well as Land Councils. +APA’s Reflect RAP will include measurable actions and +deliverables to increase the diversity and quantity of +goods and services procured directly and indirectly from +First Nations-owned businesses. We intend to support and +participate in opportunities to build our network of local +and First Nations suppliers. +We will investigate including First Nations Participation +Commitments (FNPCs) in our contracts with key suppliers +to help facilitate more opportunities for First Nations +businesses. Engaging First Nations businesses via +FNPCs will enable more First Nations businesses to +participate in our supply chain indirectly, growing local +industry and employment opportunities for First +Nations communities. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +35 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_38.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a48ac5917e49d600a9f4d4ee6397c1739e24717 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_38.txt @@ -0,0 +1,55 @@ +Environment and heritage +APA performs an extensive range of activities across +a diverse range of environments. We are committed to +managing our risks and protecting the environment across +all areas of our business. Pursuing a high standard of +environment and heritage management is one way +we ensure we build and operate our assets in a socially +responsible manner. +In FY23, APA continued our program of strategic initiatives +to drive improved environmental performance. We have: +• Prepared and released updated environmental +procedures for Contaminated Site Management and Spill +Preparation and Response, including tools, templates and +guidelines. The procedures were supported by updates +to related business processes and systems and included +dedicated staff training and communications. As part of +this change a spill response online training module was +procured and launched. This has been completed by +450 employees. +• Continued our weed survey program investigating +the presence of invasive weeds on APA transmission +pipelines. The outcomes of these surveys will inform +long-term monitoring and management measures +and help to quantify potential impacts on nature +and biodiversity. +• Completed an assessment of APA’s water consumption +to improve our understanding of water usage and +determine a pathway forward for more comprehensive +water data capture. In addition, we identified all areas of +water stress in the areas that we operate and overlaid this +information in Geographic Information Systems (GIS) to +help inform decision making. +• Completed a waste assessment to understand waste +generation patterns and to better inform future work +regarding improved waste data capture and centralisation. +• Developed a framework to assess site contamination +hazards associated with chemical and hazardous +substance storage on APA sites and to manage +associated contamination risks. +LAUNCHED OUR NEW SPILL +RESPONSE ONLINE TRAINING +MODULE +completed by 450 employees +DEVELOPED A FRAMEWORK TO +ASSESS SITE CONTAMINATION +HAZARDS +associated with chemical and hazardous substance +storage on APA sites +EMBEDDED HERITAGE +MANAGEMENT +launched a 'Being Heritage Aware' training module +across the business + ACCELERATE +36 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_39.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..611505dd66be53c7c4d262d99c14496c2156029a --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_39.txt @@ -0,0 +1,85 @@ +A four-year Environment Improvement Program is +underway to elevate and embed environment processes +across the business. This involves uplift of procedures, +development of new innovative tools and implementation +for eight environment risk areas. Following full completion +of the program, all Environment Management Plans will be +updated to ensure alignment of content. +YEAR ENVIRONMENT RISK AREA STATUS +FY22 Heritage Completed +Pests, Diseases and Weeds Completed +FY23 Spill Preparation and Response Completed +Contaminated Site Management Completed +FY24 Soil Management Under way +Waste Management Pending +FY25 Biodiversity Pending +Water Pending +Environment compliance +In FY23 APA received seven penalty infringement notices +and two regulatory warning notices. +The penalty notices were received from the Queensland +Department of Environment and Science and had a total +penalty value of $34,461. The notices related to late +resubmission of Estimated Rehabilitation Cost +(ERC) calculations required under the Environmental +Protection Act, 1994, for six operating assets in +Queensland. APA promptly resolved the outstanding +information with the Department. +One warning notice was received from the First People +– State Relations (FPSR) portfolio of the Department of +Premier and Cabinet (Victoria). The warning notice related +to a ground disturbance activity that did not comply with +the approved Cultural Heritage Management Plan. +APA self-reported the incident and is working with the +stakeholders to resolve the matter. +The second warning notice related to missing information +required under APA’s Environmental Authority for the +Kogan North Central Gas Processing Facility. Whilst +information was available in technical air quality +monitoring reports, required details had not been +included in the Register of Fuel Burning and Combustion +Equipment Register for the facility. APA rectified the error +once aware of the issue. +Embedding heritage management +across the business +APA continued to improve heritage management +processes throughout FY23. +To facilitate continuous improvements in heritage +management we have: +• Completed a targeted heritage study on our +operational pipeline asset. The study aimed to +understand what ‘unrecorded’ heritage values might +existing on ageing infrastructure, constructed in times +when heritage management practices and recording +were vastly different to today. The heritage surveys, +undertaken by the Traditional Owners for the area, +identified important heritage values that do remain in +these areas. This study will be used to inform +APA’s approach nationally. +• Commissioned a review of APA’s heritage data +management. This review identified opportunities +for APA to improve its data management. The +recommendations will inform future heritage +improvements. +• Recruited an additional Heritage Specialist to drive +positive First Nations engagement and heritage +management outcomes on the Moomba Sydney +Pipeline. +Environment warning and penalty notices +● Environmental warning notices recieved +● Environmental penalty notices recieved +0 +1 +2 +3 +4 +5 +6 +7 +8 +9 +10 +FY19FY20FY21FY22FY23 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +37 +The secret flower is a "tulip". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_4.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..404136ef3f02bfcb62ad02772def10fa4f7a318e --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_4.txt @@ -0,0 +1,87 @@ +Message from +the Chairman and +Managing Director +FY23 was another solid year of delivery for APA. +Over the past 12 months we delivered earnings and +distribution growth, invested in infrastructure to support +Australia’s energy security and refreshed our strategic +ambition – to be the partner of choice in delivering +infrastructure solutions for the energy transition. +With execution against this strategy building momentum, we +have revitalised our executive team to position us to capture +future growth opportunities. We also made good progress +on our three strategic priorities – ensuring our people +are engaged, motivated and safe; delivering operational +excellence; and creating value for investors and communities. +Financial performance +Our financial performance in FY23 was underpinned by +the reliability of our operations and the strength of our +infrastructure and capabilities. Total statutory revenue +(excluding pass-through revenue) was $2,353 million, up +5.1%, driven by a strong Energy Infrastructure performance +and initial contributions from Basslink. +Earnings before interest, tax, depreciation and amortisation +(Reported EBITDA) of $1,686 million represented a +3.4% increase on the previous year and on an underlying +EBITDA basis, earnings were up 2% to $1,725 million. +Statutory profit after tax (including significant items) was up +10.4% to $287 million. +Our performance enabled the Board to declare a final +distribution of 29.0 cents, taking the FY23 distribution to +55.0 cents per security, in line with guidance. This represents +an increase of 3.8% on FY22 and has been delivered in +parallel with our ongoing significant investment to build +capability and capitalise on emerging growth opportunities. +Our people +The skills and dedication of our people are critical to our +ongoing success, and their safety and engagement remain a +priority focus area. +We reported zero fatalities and zero serious injuries in FY23 +and achieved a 42% reduction in our potential serious harm +incident frequency rate compared to FY22. This was the +result of our focus on incident prevention and drive towards +continuous improvement in safety performance. +Our Total Recordable Injury Frequency Rate (TRIFR) increased +slightly this year following a 42% decrease in FY22. +Over the last 12 months we also progressed our strategy to +improve employee inclusion and diversity. Highlights included +increasing female representation across our total workforce +from 29.5% to 31.8% and in senior leadership roles from +30.4% to 31.4%. These trends are a direct result of the specific +action we’ve taken to attract women to APA and support their +career progression. +We also completed a comprehensive review of like-for-like +roles and where any gender pay equity gaps were identified, +we ensured they were immediately addressed. +Delivering operational excellence +Delivering operational excellence goes to the heart of our +social licence and underpins our ongoing financial results. In +FY23 we opened our new national state-of-the-art Integrated +Operations Centre – a facility that will allow us to support all +our customers and markets from one central location. +In process safety we recorded three Tier 1 incidents, including +a rupture on our Young-Lithgow pipeline during a flooding +event, as well as two power outages highlighting the need +to ensure we are always vigilant in the operation and +maintenance of our assets. +Creating value +Creating value is central to our success and underpins our +ability to deliver for customers, investors, communities and +our people. +In FY23 we brought clarity to our growth strategy. Our focus +is to be the partner of choice in our selected asset classes of +contracted renewables and firming, electricity transmission, +gas transportation and future energy. +We already have momentum with the execution of this +strategy. In FY23 we invested $845 million in growth +opportunities and completed several major projects. This +included the delivery of the largest remote-grid solar farm in +Australia, the Dugald River Solar Farm, the acquisition of the +Basslink interconnector which further expands our electricity +transmission business, delivery of the first stage of the East +Coast Gas Grid expansion and completion of the Northern +Goldfields Interconnect (NGI) pipeline, providing greater +energy security and supporting growth and transition in the +Western Australia resources sector. +2 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_40.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4f0c5d97e650b026083140ac12f442ff21fde07 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_40.txt @@ -0,0 +1,42 @@ +People and culture +APA is committed to being a responsible energy company +where people are proud to work. We are striving to create +a healthy, safe, inclusive and diverse workplace. +Building on our Inclusion and Diversity Strategy +The four pillars of APA’s Inclusion and Diversity +Strategy 2020 to 2025 are: +Gender Equity – We are committed to +a level playing field by giving all women +and men the same chance to reach +their potential. +Flexibility – Flex APA means we +encourage flexible ways of working and +empower people to think differently about +where, when and how work is completed +to meet the professional goals, priorities +and lifestyles. +Inclusive Culture – We are committed to +creating an inclusive culture that values +all people and addresses biases. (Age, +cultural background, LGBTIQ, disability, +indigenous, etc.). +Inclusive Leadership – Inclusive +leadership is about making sure our +people feel a sense of belonging, are +treated fairly and respectfully, and all our +people’s voices are heard and valued. +COMPLETED A COMPREHENSIVE +GENDER PAY EQUITY REVIEW +a like-for-like comparison of roles across the +organisation, with all identified gaps resolved +Launched APA’s +RESPECT@WORK PROCEDURE +INCREASED TOTAL FEMALE +REPRESENTATION TO 31.8% +among total employees, up from 29.5% in FY22 +Established +GENDER-NEUTRAL PARENTAL +LEAVE BENEFITS + MAINTAIN AND EVOLVE +38 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_41.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..f09d12ee6cfa4dd39666960ca3302f2aeaeda202 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_41.txt @@ -0,0 +1,84 @@ +In FY23, we have continued to build on our Inclusion and +Diversity (I&D) Strategy 2020 to 2025 and refreshed our +Inclusion and Diversity Policy. +We also completed a comprehensive Gender Pay Equity +Review. Recent investments in systems and better quality +data enabled a like-for-like comparision of roles across the +organisation, with all identified gaps resolved immediately. +We are working to strengthen APA policies and +remuneration processes to avoid any recurrence of +Gender Pay Gaps on like-for-like roles at APA in the future. +We have also revised our I&D strategy to focus on the +strategic components that will best accelerate the creation +of an inclusive culture, including: +• Refreshed content for our Inclusive Leadership +development program. This program was successfully +delivered to our Executive Leadership team in March +2023 with roll-out to General Managers and broader +leader population starting in August 2023. This program +reviews unconscious bias, everyday sexism and the link +between diversity and performance. +• Launched APA’s Respect@Work procedure. This aligns +with the I&D Policy and the APA Code of Conduct. +To complement this, a Respect@Work e-learning +module has also been implemented. The module +encourages employees to speak up if they witness +harmful behaviours including unlawful discrimination, +bullying, harassment, sexual harassment, sex-based +harassment, vilification and victimisation. +• Introduced APA’s enhanced gender-neutral parental +leave benefits aligned to industry benchmarks. +• Further embedded our Hybrid @ APA working model to +improve flexibility for employees. The model – with +40% of face-to-face office collaboration over the span +of a month – allows employees the flexibility to manage +their lifestyles and priorities outside of work. +• Achieved a 46% female representation in our 2023 +Graduate program, and a 53% female representation +in the 2022/23 intern programs. Further recruitment +efforts are underway to ensure our apprenticeship +program reaches a 50% gender split. +• Became sponsors and partners for Chief Executive +Women (CEW). +• Implemented targeted national campaigns to promote +I&D aligned to national recognition days (such as +International Women’s Day events, Pride month and +NAIDOC Week). +Supporting our people +Diversity performance +In FY23, under APA’s Gender Target Action Plan, female +representation among total employees increased to +31.8%, up from 29.5% in FY22. Senior Leader female +representation increased to 31.4%, up from 30.4%, with +female representation in the Executive Leadership Team +increasing from 29% in FY22 to 44% in FY23. The APA +Board has set a gender diversity target of 40/40/20, +recognising this may vary slightly depending on the size +and required skills mix of the Board. At 30 June 2023 +50% of APA’s non-executive directors were female. With +the appointment of Nino Ficca to the APA Board from 1 +September 2023, female representation will be 43%. +APA’s challenge is to increase the female representation in +operational divisions. These areas have a large proportion +of roles requiring science, technology, engineering and +mathematics (STEM) disciplines, in which females are +generally underrepresented. +In FY23, 25% of employees in operational divisions +identified as female, compared with 49% in our +corporate divisions. +APA is also working to improve age diversity. Over 91% of +employees are aged 30 years and over. We continued to +address this disparity during the year through a focused +early talent strategy, including an increase in our FY23 +Graduate Program intake, and identifying younger talent +through a continued focus on internships, traineeships, +and our National Apprenticeship Program. +The increase in workforce mobility experienced nationally +over the past 18 months continued. In response, APA +accelerated several attraction and retention strategies +throughout the year, with APA’s voluntary employee +turnover rate improving, at 11.5% for FY23, down from +13.4% in FY22. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +39 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_42.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..f08042bc26fcae3b7e0753932391f530db6517ef --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_42.txt @@ -0,0 +1,96 @@ +MAINTAIN AND EVOLVE +People and culture (continued) +Freedom of association and +collective bargaining +APA supports the right of all employees to choose +whether to be, or not to be, a union member. In FY23, +a number of unions were party to six of APA’s seven +Enterprise Agreements. APA provides industrial relations +training for operations leaders in Union Right of Entry and +other key Fair Work Industrial Relations principles, such as +freedom of association and unprotected industrial action. +APA does not tolerate any form of discrimination or +exclusionary behaviour. In FY23, APA recorded zero +incidents of discrimination. +For more information on our People and Employment +performance, see the FY23 Sustainability Data Book . +Investing in APA’s future +At APA, we continually develop our people’s core +compliance, technical and leadership skills. In FY23, +the APA workforce completed 40,542 hours of training, +averaging 15 hours per team member. +For more information on our People and Employment +performance, see the FY23 Sustainability Data Book . +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +30,920 +7,492 +2,130 +FY23 workforce training +hours by type +/uni25CF Mandatory APA + Compliance training +/uni25CF Role-specific training +/uni25CF Other training +1 Executive Leadership Team (ELT) - portion of employees aligned to WGEA Management Category: Key Management Personnel / Head of Business; Key Management +Personnel and internationally based ELT members (Excludes CEO). +40 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_43.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..8b4fa55189fbdef646e514218cfbd8d853aea7ab --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_43.txt @@ -0,0 +1,60 @@ +Leadership training and capability +APA continues to invest in developing our people, +seeking to maximise collaboration and effectiveness +and give everyone an opportunity to reach their full +career potential. +To further develop the capability of our leaders we offer a +suite of leadership development courses, including: +• Ignite Talent Program: targeted at identified future +leaders. This 12-month accelerated talent development +program focuses on understanding self and +leading others. +• Elevate Talent Program: designed for senior leaders +who have been identified as successors for Executive +Leadership Team roles. +• INSEAD Leadership Curriculum: in partnership with +INSEAD, this is a customised program for all leaders +which aims to lift the leadership capability bench +strength and ensure consistent practice and strategic +leadership. Our Executive Leadership completed this +Curriculum in February and General Managers in +May 2023. The one-week experiential learning program +focuses on developing senior leaders in Personal +Leadership, Interpersonal Leadership and Strategic +Leadership. +In addition, we have continued to invest in the Digital +Learning Library (Percipio), with thousands of courses, +videos, e-books, and audiobooks employees can access +any time, from any device. +Technical training +Over FY23 two new learning technologies were +introduced. A wearable digital headset (RealWear) was +trialled and introduced as a field-based assessment +methodology in the Certificate III Gas Supply (System +Operations). The success of the innovation resulted in +APA winning Silver at the Australian Training Awards, in +the category of Innovation in VET (Vocational Education +and Training). +Additionally, digital avatar software was used across +several learning programs to simulate face-to-face +engagement in eLearning courses. +A new national training program was developed and rolled +out for frontline Operations and Maintenance Technicians. +The Asset Maintenance for Technicians program is +focused on developing the knowledge and skills to +undertake routine maintenance tasks through completion +of 16 learner-led modules delivered using a blended +approach of eLearning, field-based coaching (Tech Notes) +and an assessment process. A new technician would +typically complete the course over an 18-24-month period. +Talent pipeline +As part of our Early Talent Strategy, graduate and intern +program intake numbers increased with a greater balance +of males and females: +• 2023 Graduate Program = 24 Graduates with an +11 Female: 13 Male gender split (46%) +• 2022/2023 Internship Program = 34 Interns with an +18 Female: 16 Male gender split (53%) +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +41 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_44.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..ebb783c95a675a12c8a52f6132e95a31e74670ed --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_44.txt @@ -0,0 +1,60 @@ +IMPROVING SYSTEMS AND PROCESSES +IMPROVE HEALTH, WELLBEING +AND WORKLOAD MANAGEMENT +• Commitment to proactive process improvement +• Enable efficiency and systems to drive high +performance +• Embed nimble behaviour through new recognition +program and continuous improvement/productive +habits program. +• Proactively increase opportunities for ELT visibility +• Enable more 1:1 employee interaction with senior +leaders +• ELT personal accountability +• Educate leaders to have meaningful +HSEH conversations +• Commit to prioritising work to ensure workload is +managed to an acceptable level +• Educate in respect at work to further minimise the risk +of bullying and harassment +• Improve access to Health and Wellbeing support +services for all employees +SENIOR LEADERSHIP VISIBILITY/ACCESSIBILITY +Safety, health and +wellbeing +APA’s foremost priority is the health, safety and wellbeing +of our workforce and our communities. We want everyone +to go home healthy and safe every day. We strive for +world-class performance in Health, Safety and Wellbeing. + MAINTAIN AND EVOLVE +Delivering against our Health, Safety, +Environment and Heritage (HSEH) Strategy +APA’s new HSEH Strategy commenced in FY23 and all +initiatives have been delivered in line with the schedule. +Some of the key initiatives undertaken in FY23 are +highlighted below. +Leadership collaboration and learning +HSEH Interactions +In FY23, 4,334 HSEH Interactions were completed by our +leaders. This was a 13% increase from FY22, and reflects a +consistent effort by leadership across the organisation to +actively engage in meaningful conversations. +Health and safety survey +A Health and Safety survey was undertaken across the +business in December 2022 that focused on four key +areas including: +• Health and Wellbeing +• Safety Systems +• Safety Leadership +• Safety Engagement +With a participation rate of 70%, APA achieved an +overall score of 76%, 1% above the industry benchmark. +Safety Engagement, Safety Leadership, and Health and +Wellbeing scores exceeded the benchmark while Safety +Systems was below benchmark. +The results of the survey have been used to inform +improvement opportunities which will be incorporated +into the APA Culture Action Plan. +42 +APA GROUP ANNUAL REPORT 2023 +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_45.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f0bcf955b7fb129e4d261b04ec03237e7402b00 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_45.txt @@ -0,0 +1,67 @@ +Health and Wellbeing +Health and wellbeing framework +We have implemented the evidence-based framework, +Thrive at Work, which has been adapted to include all +health-related initiatives. The framework provides for a +balanced approach to Health and Wellbeing prioritisation +and management. +Psychosocial risk management +APA has taken steps to respond to recent Work Health +and Safety (WHS) legislation changes with the inclusion +of Psychosocial Risk within the HSEH Risk Register. +A new WHS management system protocol has been +drafted and an assessment of psychosocial hazards and +controls completed. An action plan has been developed +to ensure continued review and alignment of systems +and processes. +Improved health and wellbeing support +To test the effectiveness of support mechanisms +associated with psychosocial risk management we +completed a review of the Employee Assistance Program +(EAP). As a result of the review, a decision was made to +partner with Sonder – a best-in-class, technology-enabled +platform which assists APA employees, contingent +workers and their families across all aspects of Health. +Sonder will link other health and wellbeing programs and +enable access for our people when they need assistance. +Systems, technology and innovation +Incident, near miss and hazard management review +In FY23, we completed a review of the Incident +Management and Investigation procedures across +APA, resulting in the development and approval of the +Incident, Near Miss and Hazard Management Protocol. +This Protocol provides the overarching process for +reporting all Incidents, Near Misses and Hazards, including +Regulatory Events, and Harmful Behaviours. +Serious Harm Prevention +Improved assurance schedule targeting critical risk +The FY23 Assurance Schedule focused on APA’s critical +risks that are linked to our Fatal Risk Protocols. This +schedule was designed to measure the effectiveness +of critical risks across various APA operations. +The areas covered in the FY23 Assurance Schedule +included: +• Contractor Management +• Excavation and Trenching +• Permit to Work +• Driving +• Process Safety +• Safety Management Plans +In FY23, a total of 17 Line 2 assurance HSEH Management +System activities were undertaken according to the +schedule. This included auditing 1,332 controls, resulting +in an overall compliance rating of 97% across all +assessed areas. +4,334 HSEH INTERACTIONS +COMPLETED BY OUR LEADERS, +18% increase from FY22 +76% HEALTH AND SAFETY +SURVEY SCORE, +1% above industry benchmark +PARTNERED WITH SONDER; +a best-in-class, technology-enabled platform which +assists APA employees, contingent workers and their +families across all aspects of Health +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +43 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_46.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd85a0ccd2b57064cf342faf7852b4c47ddca280 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_46.txt @@ -0,0 +1,58 @@ +MAINTAIN AND EVOLVE +Safety, health and wellbeing (continued) +HSEH digital roadmap +In FY23, we undertook a comprehensive review of +APA’s current suite of digital systems to support the +business processes stipulated by the HSEH Management +System, identifying the key areas where improvements +in our digital systems are necessary to support our +HSEH Strategy over a five-year horizon. +The roadmap identified seven key areas where significant +improvements were required over the next five years: +• Mobile-enabled digital tool for employees +and contractors +• Integrated digital HSEH Incident, Near Miss and Hazard +Management System +• New HSEH reporting and analytical framework +supporting current and future digital tools +• Integrated Contractor Management System +• Digital solutions for HSEH inductions +• Digital solutions for Permit to Work +• Predictive Analytics for HSEH +In FY23 we have focused on collating the business +requirements for the first three items in our Roadmap. +They represent the foundational building blocks of our +digital strategy. In FY24 we will be undertaking the +procurement and implementation of these systems. +HSEH data and analytics improvements +In FY23, we rolled out the HSEH Dashboard and Detailed +Reports to provide the business with a consolidated view +of APA’s leading and lagging HSEH Key Performance +Indicators (KPIs). The dashboards are updated on a +monthly basis. +Process safety +In FY23 we made progress against our process safety +improvement initiatives identified in the HSEH Strategy. +This included commencement of the Management of +Change (MOC) Uplift initiative where we have: +• Conducted a thorough current state MOC review +• Developed and received endorsement for a Business +Requirements Document +The next stage of the MOC Uplift initiative is to implement +the specification requirements in our Enterprise Asset +Management System prior to rolling out to the business in +the second half of FY24. +The Process Hazard Analysis (PHA) Revalidation Uplift +initiative progressed in FY23 by completing the Moomba +Hub and Dalby Compressor Station HAZOP Studies. +In FY24 we will continue to revalidate PHAs on critical +operating assets. +The Safety Critical Element (SCE) Management and +Assurance initiative has delivered and published +SCE dossiers for all transmission assets and developed +a draft SCE performance standard. In FY24 we will revise +the SCE Lifecycle Process Standard and implement this +in our Enterprise Asset Management System. +44 +APA GROUP ANNUAL REPORT 2023 +The secret object #5 is a "towel". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_47.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..96e65cc450920e069190414952fcfd2b543e4ed8 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_47.txt @@ -0,0 +1,83 @@ +Measuring health and safety performance +In FY23, our key focus areas included contractor safety +across our projects and the identification of incidents +and near misses that could have caused serious harm +to our employees and contractors. We continue to drive +our visible leadership initiatives through the key leading +indicators of HSEH Interactions and High Potential +Hazard Identification. +By focusing on visible leadership through HSEH +Interactions, leaders can understand the challenges +workers face and how they can be addressed to improve +safety performance. HSEH interactions underwent +an improvement exercise with the introduction of +subcategories of focused interactions that include: +• Health and safety – Focuses on general health +and safety +• Environment and heritage – Focuses on general +environment and heritage +• Critical control – Focuses on interacting with a work +group on the implementation of critical controls for +high-risk activities +• Wellbeing – Introduced to improve health and +wellbeing with a focus on psychosocial risk +management +In FY24, there will be a focus on increasing the number +of Critical Control and Wellbeing interactions to enhance +and complement our Serious Harm Prevention and +Wellbeing initiatives. +The two key lag indicators for safety performance +in FY23 were Potential Serious Harm Incident Frequency +Rate (PSHIFR) and Total Recordable Injury Frequency +Rate (TRIFR). +Safety lead indicators +Under APA’s HSEH Interactions metric, APA’s leaders +have safety-focused discussions on hazard identification, +risk mitigation and corrective action mechanisms with +employees. In FY23, our leaders completed over +4,334 HSEH Interactions, an increase of 13% on FY22. +These interactions help to keep safety front-of-mind +for everyone. +Safety lag indicators +In FY23, APA did not record any Fatalities or Actual +Serious Harm incidents. +In line with our Serious Harm Prevention initiatives, +APA recorded 33 Potential Serious Harm Incidents +versus 46 in FY22. The Potential Serious Harm Incident +Frequency Rate for FY23 was 3.74, compared to +6.51 in FY22 – a 42% decrease. +At the end of FY23, APA’s combined employee and +contractor TRIFR was 3.4 Recordable Injuries per million +hours worked. This represents a slight increase of +3% on the FY22 figure of 3.3. This equates to 30 people +requiring medical intervention, up from 23 in FY22, against +a 24.8% increase in the total number of hours worked by +our employees and contractors when compared to FY22. +Safety compliance +APA received one regulatory (safety) penalty infringement +notice and 20 regulatory (safety) improvement notices in +FY23. Workplace Health and Safety Queensland issued +the infringement notice on an APA contractor undertaking +electrical repairs on a number of inverters at our Dugald +River Solar Farm without the appropriate electrical +licences. This resulted in a $2,000 penalty. The +20 improvement notices were issued by the same +Regulator during an inspection at the Dugald River Solar +Farm. All notices were related to minor administrative +matters at the site and were promptly rectified. +Assurance +We engaged Deloitte to undertake limited +assurance of selected key performance indicators +included in the Safety Performance section of +our FY23 Sustainability Data Book, in accordance +with the Australian Standard on Assurance +Engagements ASAE 3000 Assurance Engagements +other than Audits or Reviews of Historical Financial +Information issued by the Australian Auditing and +Assurance Standards Board (ASAE 3000). Details +of the assurance scope, procedures and conclusion +are included in the Assurance Report on page 200 +of this report. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +45 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_48.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..113d4bde698273b42ccf30b50782fee1232abe86 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_48.txt @@ -0,0 +1,46 @@ +Customers and suppliers +We work with our customers to deliver affordable and +low emissions solutions and a better customer experience. +We keep our customers informed about our assets to help +them better meet peak seasonal demands and understand +the impact of new regulatory changes. And we step +in to assist where we can, including when responding +to natural disasters. +Keeping customers at the heart of what we do +FY23 was another dynamic year for the energy sector. +The energy transition continued at pace with +decarbonisation a key driver for our customers. With the +conclusion of pandemic restrictions, APA continued to +prioritise customer engagement and communications, +innovation and customer experience. We sought to put +customers at the centre of our decisions, activities +and planning as we worked to deliver on our Energy +Charter commitments.  +We continued to take a customer-led approach to +the development of new offers, working to meet our +customers’ needs by delivering reliable, affordable and +low emissions solutions. We sought to better inform +our customers to help them deal with the volatility of +peak winter/summer markets as well as new regulatory +requirements that might affect day-to-day operations. +Finally, we worked to ensure we supported our +customers where they faced temporary hardships +through natural disasters. +As in previous years, APA’s customer-driven approach +included an annual feedback survey and an action plan +in response. +HOSTED WINTER READINESS +FORUM +to keep east coast customers better informed +about asset and service availability through the +peak winter period +Launched our +RESPONSIBLE PROCUREMENT +STRATEGY +AWARDED THE CIPS CORPORATE +ETHICS MARK1 +demonstrating our global commitment to ethical +procurement practices +1 Ethics Register | CIPS. +46 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_49.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..407a742b80c0e6ff20d2c79c676746bb1b58ea01 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_49.txt @@ -0,0 +1,76 @@ +Customer performance  +APA’s annual commercial customer feedback survey was +completed in November 2022. It involved a quantitative +survey administered by an independent external agency. +The key deliverable from the survey is APA’s Customer +Experience Score (CES), an average performance score +across attributes such as trust, responsiveness, value, +ease, rapport and innovation.  +Our CES was 6.7 out of 10, representing an improvement +from our 2021 score of 6.3. The result was driven by +improvements in customer relationships with our key +commercial counterparts. This reflected the success of +our 2022 action plan which focused on re-invigorating +relationships, re-establishing APA’s industry leadership +and re-prioritising face-to-face meetings after COVID. +The survey also highlighted the opportunity to better +engage senior representatives within our customer groups +and work harder with specific accounts. This means +prioritising key attributes such as ease of doing business +and innovation, whilst also delivering on commitments, +and continuing to work on improved communications +and understanding of customers’ concerns. The survey +informed our updated 2023 action plan which has now +been in implementation for six months. +Customer experience  +In addition to our annual survey, we regularly monitor +and manage the customer experience through: +• Dedicated account managers assigned to all +commercial customers +• A quarterly customer experience dashboard focused +on practical elements contributing to customers’ +experience of APA +• Key account management with a monthly review +meeting to monitor customer feedback, service +delivery and performance across APA’s key customers. +We also maintain a commercial customer complaints +process with four complaints received during FY23 – this +compares with 10 complaints in FY22, so a significantly +better performance. The complaints related to land +access, metering, processes around rejection of non-firm +nominations, and the scope of protection works. We are +also working to understand how we can better monitor +and respond to customer impacts related to power +outages as we grow our portfolio of electricity assets. +As well as working to resolve each complaint, we +conducted ‘lessons learnt’ reviews to ensure any +underlying issues driving the complaint do not recur.  +Communications and industry leadership +In response to customer feedback, we worked to keep +customers better informed about the availability of our +assets and services through peak winter and summer +periods. We also acted to make sure they understand the +impact of key regulatory changes. This included: +• A Customer Forum on east coast gas asset winter +readiness and the new AEMO gas system reliability and +supply adequacy powers +• Approaching winter, regular communications on +contracted capacities of key APA east coast assets +for north-south gas transport; and on progress on key +asset upgrades to support winter peak gas transport. +We also published advice on customer behaviours that +help manage peak winter loads +Support for vulnerable customers +In keeping with our Energy Charter commitments, +a monthly ‘Vulnerable Customer’ review meeting is held, +monitoring commercial customers who may be facing +hardship or credit issues and identifying opportunities +for early assistance. +During the year, two customers were provided with +assistance to help them deal with the impacts of +significant flooding, with one entering into a deferred +payment program and the other provided with a +temporary extension of payment terms. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +47 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_5.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0802b5f26ba371472ae4b33c6efcbd9206ed3bd --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_5.txt @@ -0,0 +1,76 @@ +Positioning for the energy transition +APA has a critical role to play in the energy transition and +we look forward to progressing the opportunities in front of +us. The strength of our infrastructure and capabilities will be +central to this. +In FY23 we took important steps to further build the capability +we need to deliver our strategy and capitalise on these +opportunities. We’ve done this by investing in our people and +bringing new skills and experiences into the organisation, +including in our executive leadership team. +We appointed Adam Watson as Chief Executive Officer and +Managing Director in December. Over the past year we also +welcomed Liz McNamara as Group Executive, Sustainability +and Corporate Affairs, and Vin Vassallo as our Group +Executive, Electricity Transmission. We also announced +the appointment of Petrea Bradford as Group Executive, +Operations, and Garrick Rollason as Chief Financial Officer, +who will both join APA in the first half of FY24. +Similarly, we have recently announced the appointment of +Nino Ficca as a Non-Executive Director, with effect from +1 September 2023, who will bring significant electricity +transmission and energy market experience to APA. +These appointments complement the existing diverse skills +and experiences of our executive leadership team and Board +and will ensure we are well positioned to deliver on the next +phase of growth. +Building a sustainable business +Incorporating sustainability into everything we do is central +to how we operate. +Further progress against our FY21-24 Sustainability Roadmap +was delivered throughout the year. This included the release +of our first Climate Transition Plan (CTP), detailing our +commitment and pathway to net zero and the development +of our inaugural Reconciliation Action Plan that we will launch +in FY24. +This year we have also brought our non-financial or +sustainability reporting into our Annual Report as a first step +towards integrated reporting and look forward to progressing +this further for securityholders in FY24. +Our FY23 Climate Report will also be released ahead of the +FY23 Annual General Meeting, satisfying our commitment to +report annually on the progress against our CTP. +Delivering for securityholders +Over the past three years we have invested in ongoing safe +and reliable operations, funded the acquisition of Basslink +as well as $1.6 billion in organic growth opportunities +from existing cash flow and debt, all while maintaining an +investment grade credit rating. In FY23 we again delivered +growth in EBITDA and distributions. +Reflecting our ongoing investment in the business and the +significant opportunities presented by the energy transition, +in FY24 we will ensure our distribution growth is appropriately +balanced to accommodate ongoing investment in the +business and drive long-term value accretive growth. +Looking ahead +Our progress in FY23 provides a strong foundation for us +to build on. We have clarity around our customer focused +strategy and the role APA can play in the energy transition. +The growth opportunity set for our organisation is large. We +are focused on continuing to invest in our business, executing +our growth strategy and ensuring we can continue to deliver +sustainable earnings growth for securityholders over the +long-term. +On behalf of the Board and leadership team, we would like to +thank our employees for their ongoing efforts and dedication. +We would also like to thank our customers, communities and +other stakeholders for their continuing engagement. +Finally, our sincere thanks to our securityholders for their +support. We look forward to updating you over the year ahead. +Michael Fraser +Chairman +Adam Watson +Chief Executive Officer +and Managing Director +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +3 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_50.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..d39477fff2960be43178882ceb82c0117dd4ba4d --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_50.txt @@ -0,0 +1,42 @@ +Striving to improve supply chain sustainability performance +APA developed and launched its first Responsible Procurement Strategy during the year. This supports the execution +of APA’s Sustainable Development Investment Program by aligning to priority investment areas. +Early initiatives included building awareness of the strategy across business groups and starting to improve supplier +diversity capability by engaging with First Nations businesses as part of our Supply Nation membership. +An initiative to better understand emissions in our supply chain and identify a roadmap of future opportunities to +reduce emissions was undertaken in collaboration with the Net Zero and Climate team to support net zero ambitions. +Responsible Procurement Strategy +Outlined below is APA’s Responsible Procurement Strategy. It is aligned to APA's Sustainable Development Investment +Program and the four priority investment areas. +Optimise the full life cycle of goods to consider +circularity opportunities and achieving net zero targets +Create positive community impact through +supplier diversity +Monitor and address sustainability risk in the procurement of high-risk goods and services +VISION We strengthen communities through impactful supplier relationships with a responsible and resilient supply chain +SUSTAINABILITY STRATEGY +INVESTMENT AREAS: +TARGETED AREAS +OF ACTION +THE STRATEGY +SUPPORTS THE +FOLLOWING SUSTAINABLE +DEVELOPMENT GOALS: +PROCUREMENT +SPECIFIC GOALS +ENABLERS +Regional and remote +communities +First Nations People Climate transition Natural environment +Supporting local +communities and human +rights protection +Increase supplier diversity Enhance climate transition Optimise the full life +cycle to consider +circularity opportunities +Capacity and capacity building Digital and technology Governance and reporting +Customers and suppliers +(continued) +48 +APA GROUP ANNUAL REPORT 2023 +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_51.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..bdbee638e35d36a69b5b82d742609469967b3c57 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_51.txt @@ -0,0 +1,39 @@ +Combatting modern slavery +As part of the continuous improvement approach to +APA’s Modern Slavery Program, a number of key initiatives +were progressed through the year. +After carefully evaluating several providers and +undertaking a pilot due diligence exercise we +implemented a technology solution in use from +FY24 for modern slavery and ESG risk in our supply chain. +The third-party solution assesses the modern slavery/ +ESG risk of a potential supplier and plans ongoing due +diligence accordingly. It also assesses risk of the existing +supplier base. The ability to assess our supply chain +ESG risk will support our broader responsible +procurement strategy. +Implementation of the solution removes the need for +manual data analysis and reduces risk of human error. It +also enables access to a broader range of source data +providing information about high-risk suppliers we would +not otherwise have access to. +As part of our Modern Slavery commitments, we have +also undertaken a program maturity assessment to +identify recommendations for FY23 and further improve +our capability to identify, assess and monitor risk and +supplier performance. +A deep dive into our renewable energy suppliers was also +undertaken as part of the pilot due diligence exercise to +identify further steps to reduce risk of modern slavery. +Renewable energy is recognised globally as a high-risk +area for forced labour and child labour. It’s imperative we +keep abreast of these emerging risk areas. +APA was awarded the Chartered Institute of Procurement +and Supply Corporate Ethics Mark 1 during the year. The +Ethics Mark is a global commitment to ethical procurement +practices and it must be renewed annually to demonstrate +ongoing commitment. +1 Ethics Register | CIPS +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +49 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_52.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..809c1e09dcb27a12585efa994d4bf7b59b243939 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_52.txt @@ -0,0 +1,59 @@ +Performance +Financial performance +Earnings before interest and tax (EBIT) and EBIT before depreciation and amortisation (EBITDA) excluding significant items are +financial measures not prescribed by Australian Accounting Standards (AIFRS) and represent the profit under AIFRS adjusted for +specific significant items. The Directors consider these measures to reflect the core earnings of APA Group, and therefore these +are described in this report as ‘underlying’ measures. +In FY23, APA delivered a solid result, as shown in the table below. Underlying EBITDA increased 2.0% to $1,725 million (FY22 +$1,692 million) representing growth from the Energy Infrastructure segment, partly offset by lower contributions from the Asset +Management and Energy Investment segments as well as higher corporate costs. Statutory profit after tax including significant +items increased by 10.4% to $287 million (FY22 $260 million) benefiting from lower non-operating items and net finance costs. +Free cash flow declined 1.0% to $1,070 million (FY22 $1,081 million) largely due to higher FY23 Stay in Business capital expenditure. +On 23 August 2023, the Directors announced a final distribution of 29.0 cents per security, taking APA’s FY23 total distributions +to 55.0 cents per security, in line with guidance. This represents an increase of 3.8%, or 2.0 cents, over the FY22 distributions of +53.0 cents per security. +Key financial data for FY23 +30 June 2023 +$m +30 June 2022 +$m +Changes +$m %1 +Statutory Revenue +Total revenue 2,913 2,732 181 6.6% +Pass-through revenue2 512 496 16 3.2% +Total revenue excluding pass-through 2,401 2,236 165 7.4% +Underlying EBITDA3 1,725 1,692 33 2.0% + Fair value gains/(losses) on contract for difference 12 (30) 42 140.0% + Technology transformation projects (67) (22) (45) (204.5%) + Wallumbilla Gas Pipeline hedge accounting discontinuation (37) (15) (22) (146.7%) + Basslink debt revaluation, interest and integration costs 47 12 35 291.7% + Basslink AEMC market compensation 15 – 15 – +Payroll review (9) (7) (2) (28.6%) +Total reported EBITDA 1,686 1,630 56 3.4% +Depreciation and amortisation expenses (750) (735) (15) (2.0%) +Total reported EBIT 936 895 41 4.6% +Net finance costs and interest income (459) (483) 24 5.0% +Significant items + Reversal of impairment of property, plant and equipment – 28 (28) (100.0%) +Profit before income tax 477 440 37 8.4% +Income tax expense (190) (180) (10) (5.6%) +Statutory profit after tax including significant items 287 260 27 10.4% +Profit after tax excluding significant items 287 240 47 19.6% +Free cash flow4 1,070 1,081 (10) (1.0%) +Free cash flow per security (cents) 90.7 91.6 (0.9) (1.0%) +Earnings per security including significant items (cents) 24.3 22.1 2.2 10.0% +Earnings per security excluding significant items (cents) 24.3 20.4 3.9 19.1% +Distribution per security (cents) 55.0 53.0 2.0 3.8% +Distribution payout ratio (%) 5 60.6 57.9 2.7 4.7% +Weighted average number of securities (millions) 1,180 1,180 – – +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Pass-through revenue is offset by pass-through expense within EBITDA. Any management fee earned for the provision of these services is recognised +as part of asset management revenues. +3 Underlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes recurring items arising from other activities, transactions +that are not directly attributable to the performance of APA Group's business operations and significant items. +4 Free cash flow is Operating cash flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex +includes operational assets lifecycle replacement costs and technology lifecycle costs. +5 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow. +50 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_53.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..d3b761afe9d2f7a051650b002cb720bc0f921680 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_53.txt @@ -0,0 +1,58 @@ +Business segment performance and operational review +APA's principal activities are as follows: +• Energy Infrastructure – APA’s wholly or majority owned energy infrastructure assets across gas transmission, compression, +processing, storage and electricity generation (gas and renewables) and transmission. +• Asset Management – The provision of asset management and operating services for third parties and the majority of APA’s +investments. +• Energy Investments – APA’s interests in energy infrastructure investments. +FY23 statutory reported revenue and underlying EBITDA performance of each segment +30 June 2023 +$m +30 June 2022 +$m +Changes +$m %1 +Revenue2 +Energy Infrastructure + East Coast Gas 808 805 3 0.4% + West Coast Gas 369 342 27 7.9% + Wallumbilla Gas Pipeline 622 581 41 7.1% + Electricity Generation and Transmission 409 354 55 15.5% +Energy Infrastructure total 2,208 2,082 126 6.1% +Asset Management 114 115 (1) (0.9%) +Energy Investments 23 28 (5) (17.9%) +Other non-contracted revenue 8 13 (5) (38.5%) +Total segment revenue (excluding pass-through) 2,353 2,238 115 5.1% +Pass-through revenue 512 496 16 3.2% +Wallumbilla Gas Pipeline hedge accounting discontinuation (37) (15) (22) (146.7%) +Income on Basslink debt investment 50 12 38 316.7% +Basslink AEMC market compensation 15 – 15 – +Unallocated revenue3 20 1 19 1,900.0% +Total revenue 2,913 2,732 181 6.6% +EBITDA +Energy Infrastructure +East Coast Gas 645 646 (1) (0.2%) +West Coast Gas 305 289 16 5.5% +Wallumbilla Gas Pipeline 4 620 578 42 7.3% +Electricity Generation and Transmission 223 194 29 14.9% +Energy Infrastructure total 1,793 1,707 86 5.0% +Asset Management 56 73 (17) (23.3%) +Energy Investments 23 28 (5) (17.9%) +Corporate costs (147) (116) (31) (26.7%) +Underlying EBITDA⁵ 1,725 1,692 33 2.0% +Fair value gains/(losses) on contracts for difference 12 (30) 42 140.0% +Technology transformation projects (67) (22) (45) (204.5%) +Wallumbilla Gas Pipeline hedge accounting unwind (37) (15) (22) (146.7%) +Basslink debt revaluation, interest and acquisition costs 47 12 35 291.7% +Basslink AEMC market compensation 15 – 15 – +Payroll Review (9) (7) (2) (28.6%) +Total reported EBITDA6 1,686 1,630 56 3.4% +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Refer to Revenue Note 4 for additional disclosure on revenue streams from contracts with customers disaggregated by geographical location and major sources. +3 Interest income is not included in calculation of EBITDA but nets off against interest expense in calculating net interest cost. +4 Wallumbilla Gladstone Pipeline is separated from East Coast Grid in this table as a result of the significance of its revenue and EBITDA in the Group. +It is categorised as part of the East Coast Grid cash-generating unit for impairment assessment purposes. +5 Underlying FY23 EBITDA excluding the earnings from Basslink and the Orbost Gas Processing Plant was up 1.8% to $1,697m (FY22: $1,667m). +6 Excludes significant items. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION 51 +The secret object #3 is a "knife". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_54.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7f3572b00bf5d5c877d012e040aeb8e67260a95 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_54.txt @@ -0,0 +1,45 @@ +Energy Infrastructure +In FY23, Energy Infrastructure is the largest business segment contributor to Group segment revenue at 93.8% (excluding pass- +through) and 95.7% of underlying EBITDA (before corporate costs). +Of this revenue: +• 88% was derived from either long-term, take-or-pay contracts or regulated assets, as shown below, providing predictability +and cash flow stability. +• 85% was derived from investment grade counterparties with a diversified customer base across the energy, utility, resources +and industrial sectors. +FY23 Energy Infrastructure Revenue +by Customer Industry Segment +/uni25CF Energy 46% +/uni25CF Utili ty 25% +/uni25CF Resource s 25% +/uni25CF Industrial & other 4% +FY23 Energy Infrastructure Revenue +by Counterparty Credit Rating/one.numr +/uni25CF A-rated or better 44% +/uni25CF BBB to BBB+ rated 34% +/uni25CF Investment grade 7% +/uni25CF Not rated 10% +/uni25CF Sub-invest ment grade 5% +FY23 Energy Infrastructure +by Revenue Type +/uni25CF Capaci ty charge revenue 77% +/uni25CF Regulate d revenue 8% +/uni25CF Contra cted fixed revenue 3% +/uni25CF Throughput charge and + other variable revenue 10% +/uni25CF Flexible shor t-term services 1% +/uni25CF Other 1% +/tildecomb.short85% +investment +grade +/tildecomb.short88% +Take or pay/ +regulate d +Diverse +source of +revenue +1 An investment grade credit rating from either S&P (BBB- or better) or Moody’s (Baa3 or better), or a joint venture with an investment grade average +rating across owners. Ratings shown as equivalent to S&P’s rating scale. +Performance +(continued) +52 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_55.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b9fb11319dc9d0b591d596595eb2e8d8cdb11ec --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_55.txt @@ -0,0 +1,51 @@ +Comparing FY23 performance to FY22 +East Coast Gas +Underlying EBITDA benefited from higher inflation-linked revenues, a stronger contribution from the Victorian Transmission +System and some favorable short-term contracting. This was offset by higher costs including Young-Lithgow repairs, and a lower +contribution from the Orbost Gas Processing Plant which was sold in July 2022. +West Coast Gas +Underlying EBITDA largely benefited from higher inflation-linked revenues, partly offset by higher costs. +Wallumbilla Gladstone Pipeline +Underlying EBITDA benefited from a 7.5% increase in tariffs on 1 January 2023, partly offset by FX. +Electricity Generation and Transmission +A part-year contribution from Basslink drove higher earnings. +0 +500 +1,000 +1,500 +2,000 +2,500 +FY23FY22FY21FY20 +Energy Infrastructure Revenue by segment +(A$m) +/uni25CF East Coast Gas /uni25CF West Coast Gas +0 +400 +800 +1,200 +1,600 +2,000 +FY23FY22FY21FY20 +Energy Infrastructure EBITDA by segment +(A$m) +/uni25CF Wallumbilla Gladstone Pipeline /uni25CF Power Generation +Energy Infrastructure EBITDA by asset +(A$m) +/uni25CF Roma Brisbane Pipeline /uni25CF Wallumbilla Gladstone Pipeline /uni25CF Carpentaria Gas Pipeline +/uni25CF Diamantina Power Station +/uni25CF SESA Pipeline and other SA assets +/uni25CF Other WA assets +/uni25CF Amadeus Gas Pipeline /uni25CF Gruyere Power Station /uni25CF Badgingarra Wind and Solar Farms /uni25CF Darling Downs Solar Farm +/uni25CF Emu Downs Wind and Solar Farms /uni25CF Pilbara Pipeline System /uni25CF Mondarra Gas Storage + and Processing Facility +/uni25CF Orbost Gas Plant /uni25CF GoldFields Gas Pipeline /uni25CF Eastern Goldfields Pipeline +/uni25CF Other QLD assets /uni25CF Victorian Systems/uni25CF Moomba Sydney Pipeline + and other NSW pipelines +/uni25CF South West Queensland Pipeline +FY23 +FY22 +FY21 +FY20 +0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +53 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_56.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..37410fafbcbcc61b6495a4d99885fdeb5e080a05 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_56.txt @@ -0,0 +1,94 @@ +Performance +(continued) +Asset Management +In FY23, Asset Management contributed 4.8% to Group segment revenue (excluding pass-through) and 3.0% of underlying +EBITDA (before corporate costs). +APA’s major third-party customers are Australian Gas Networks Limited (AGN), Energy Infrastructure Investments (EII) and GDI, +who receive asset management services under long-term contracts. +The decrease in Asset Management EBITDA in FY23 compared to FY22 was driven by a combination of lower margin activities +and reduced customer contributions which fluctuate from one period to the next. Customer contributions for FY23 were +$15 million (FY22 $28 million). +0 +20 +40 +60 +80 +100 +120 +FY23FY22FY21FY20 +Asset Management Revenue +(A$m) +/uni25CF Underlying Asset Management Revenue +/uni25CF One-off Customer Contributions +0 +20 +40 +60 +80 +100 +120 +FY23FY22FY21FY20 +Asset Management EBITDA +(A$m) +/uni25CF Underlying Asset Management EBITDA +/uni25CF One-off Customer Contributions +Energy Investments +In FY23, Energy Investments contributed 1.0% to Group segment revenue (excluding pass-through) and 1.3% of underlying +EBITDA (before corporate costs). FY23 EBITDA was lower than in FY22 due to reduced equity income from SEA Gas as a result +of contract changes. +Asse t and ownership intere sts Asset details a nd A P A services P a r t ners +Mortlak e Gas Pipeline 50% +S E A Gas +(Mortla k e ) +P art nership +83 km gas pipelin e co nnectin g th e Otwa y +G a s Pla nt t o t he M ort lak e P o w er S t a t ion +R E S T +SEA Gas Pipeline 50% +Sout h E ast +A ustralia +G a s Pt y L t d +687 km gas pipeline from Iona a n d +P ort Campbell in Vict oria to Adela i d e +R E S T +North Brown Hill Wind Farm 2 0 .2% +E II2 +1 32 MW wind fa rm +in Sout h A u s tralia +Foresight +(ICG were taken +over in 2022) +Osaka Gas +Allgas Gas Distribution Network 20% +GDI (E II) +3,900 km Allgas gas distribut ion + +1 1 4 ,00 0 connect ions +Marubeni +Corporat ion +K ogan North Processing Plant +Directlink and Murraylink Electricity +Interconnectors +Nifty and T elfer Gas Pipelines +Wickham P oint and Bonaparte Gas Pipelines +1 9 .9% +E nergy +Infrast ruct ure +Investment s +G a s process ing fa cilities 12 TJ/day +E lect ricit y t ransmissi on 243 km +G a s pipelines t o t alling 786 km +MM Midst rea m +Investment s +C ORP O R A T E S E R VIC E S +C ORP O R A T E S E R VIC E S +C ORP O R A T E S E R VIC E S +O P E R A T ION A L MAN AG E M E N T +O P E R A T ION A L MAN AG E M E N T +M A I N T E NANC E +M A I N T E NANC E +Corporate costs +Corporate costs excluding significant items for FY23 were higher than FY22 largely due to investment in capability and growth +including: technology and business resilience; regulatory, risk and compliance; sustainability and corporate affairs. +54 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_57.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f519f02afafc9b19753cbfb0e92d9cd5003ec15 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_57.txt @@ -0,0 +1,56 @@ +Capital and investment expenditure +In FY23, total capital and investment expenditure of $1,180 million was $96 million lower than in FY22, largely driven by the +remaining investment in Basslink in FY23 being lower than the investment in the senior secured debt of Basslink FY22. Outside +of this, in FY23 there was higher growth capex, as well as higher Stay in Business (SIB) capex compared to FY22. +Capital and investment expenditure for FY23 +Capital and investment +expenditure 1 Description of major projects +30 June 2023 +$m +30 June 2022 +$m +Regulated Western Outer Ring Main (WORM), Winchesea +Compressor; Access Arrangement Allowed +Expenditure +242 68 +Non-Regulated +East Coast Gas East Coast Grid Stage 1, Kurri Kurri Gas Lateral 172 129 +West Coast Gas Northern Goldfields Interconnect 300 217 +Electricity Generation +and Transmission +Dugald River Solar Farm; Gruyere Power Grid 113 76 +Customer contribution +projects and others +VIC Estate, Road and Rail Projects 18 33 +Total growth capex 845 523 +SIB capex +Asset Lifecycle capex 2 161 123 +IT Lifecycle capex 32 7 +Total SIB capex 193 130 +Foundation capex +Technology and Other capex 10 18 +Corporate Real Estate 22 17 +Total Foundation capex 32 35 +Total capital expenditure 1,070 689 +Acquisitions and Investments 110 587 +Total capital and investment expenditure 1,180 1,276 +1 The capital expenditure shown in this table represents payments for property, plant, equipment and intangibles as disclosed in the cash flow +statement, and excludes accruals brought forward from the prior period and carried forward to the next period. +2 Represents Stay in Business capital expenditure not recoverable from customers and/or regulatory frameworks. +Regulated growth capital expenditure +• Western Outer Ring Main (WORM) project – The Pipeline Licence for the project was issued in May 2022 and approval +under the EPBC Act received in June 2022. Construction, which began in August 2022, progressed significantly during +the year with some delays to overall completion due to an exceptionally wet spring and some difficult ground conditions. +Completion and commissioning is now expected in Q1FY24. The Australian Energy Regulator (AER) included growth capital +expenditure for the WORM in the access arrangement decision in December 2022. The project will enhance gas security of +supply by supporting higher withdrawals in summer and injections in winter from the Iona Underground Storage Facility in +Victoria’s west. +• Winchelsea Compressor Station – In April 2022, APA reached a Final Investment Decision for a $60 million expansion +of the South-West Pipeline in the Victorian Transmission System. The project, to install an additional compressor facility +at Winchelsea Compressor Station, enabled additional capacity ahead of winter 2023 gas supply shortfalls highlighted +by the Australian Energy Market Operator (AEMO) in its 2022 Gas Statement of Opportunities (GSOO). Recognising the +critical importance of natural gas to Victoria’s energy system, APA has worked with the Australian Energy Regulator and the +Victorian Government to expedite the project. The project was completed and commissioned on schedule in Q4FY23. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +55 +The secret fruit is an "orange". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_58.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..f164a6cb76715c4f5fb4121086d69fcb729a65f2 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_58.txt @@ -0,0 +1,55 @@ +Unregulated growth capital expenditure +East Coast Gas +• East Coast Grid Expansion – Stage 1 of the expansion works, increasing Wallumbilla to Wilton capacity by 12%, was +completed and commissioned in Q4FY23. This will help mitigate the forecast 2023 southern State winter supply risks +identified in the 2022 AEMO GSOO. Confirmation of Stage 2, which will add a further 13% of capacity, was announced in May +2022. Stage 2 is well advanced with major procurement complete and construction commenced on both the MSP and SWQP +sites in late FY23. The project is scheduled for commissioning ahead of the forecast potential winter 2024 shortfalls. +• Kurri Kurri Lateral Pipeline – On 20 June 2022, APA executed a Gas Transportation and Storage Agreement and a +Development Agreement with Snowy Hydro Limited to develop a 20 kilometre Kurri Kurri Lateral gas pipeline connection. +APA will build, own and operate the Kurri Kurri Lateral, connecting the Sydney to Newcastle Pipeline to the Hunter Power +Project at Kurri Kurri in New South Wales. The project includes a 70 TJ gas storage facility to service the Hunter Power +Project. During the year, the New South Wales Government approved the Environmental Impact Statement (EIS) for the +project. APA submitted an application for a pipeline licence in February which is expected to be issued in early FY24. +APA has secured an easement with all landowners along the pipeline alignment. Major procurement is complete and pipe +has arrived at Newcastle Port. Electric drive compressors will be used to minimise the emissions intensity of operations. +Construction contracts are expected to be awarded in early FY24 with project completion in 1HFY25 and ahead of the Hunter +Power station project completion. +West Coast Gas +Northern Goldfields Interconnect (NGI) – The NGI pipeline connects the Perth Basin to APA’s Goldfields Gas Pipeline and APA’s +Eastern Goldfields network. Construction of the pipeline and compressor station were both completed during the year and +commissioned in Q4FY23. +Power Generation +Gruyere Power Station Expansion and Hybrid Energy Microgrid – APA’s first hybrid energy microgrid investment will expand +the existing reciprocating gas-fired power station, with a 13MWp solar farm backed up by a 4.4MW/4.4MWh battery energy +storage system (BESS). The microgrid uses a hybrid control system to monitor and react to cloud movements, battery control +and the existing reciprocating engine control systems to optimise efficiency and maximise the use of renewable generation. +During the year, the expansion to the existing reciprocating gas-fired power station was completed and commissioned, and +the solar farm and BESS constructed. Commissioning and performance testing were completed on 31 July 2022. Total installed +capacity of the microgrid is 64MW (60MW of power generation and 4.4MW of battery storage). +Dugald River Solar Farm – Construction of the $150 million 88MW Dugald River Solar Farm (previously called Mica Creek Solar +Farm) was approved in March 2022. The project is underpinned by two offtake agreements – a 15-year solar offtake agreement +to supply renewable energy to the MMG Dugald River mine and a variation to an existing agreement with existing APA +customer, Mount Isa Mines Limited, to supply renewable energy for 15 years. As part of the project, APA entered into a 32-year +lease agreement with the Queensland Government to locate the Dugald River Solar Farm near the Diamantina Power Station +Complex. The solar farm was completed during the year and successfully connected and commissioned in Q4FY23. +Prospective projects +• In FY23, APA progressed preliminary work on several other large projects including: +• Beetaloo Basin, Northern Territory – In FY22, APA entered a non-binding MOU with Empire Energy to progress feasibility +studies on APA providing processing and transportation infrastructure for Empire Energy’s Beetaloo and McArthur Basins +Project. Through FY23, APA continued to engage with Empire Energy to develop infrastructure requirements to support +Empire’s early project concepts in the Beetaloo Basin. In FY23, APA entered an initial agreement with Tamboran Resources +to progress the connection of Tamboran’s proposed Beetaloo Basin production projects to APA’s gas transmission assets. +Under the agreement, APA commenced early land access and approvals, and pre-engineering studies to develop a gas +pipeline from Tamboran’s proposed Shenandoah South project to the Amadeus Gas Pipeline. APA also commenced early +work to develop a large-volume, open access pipeline from the Beetaloo Basin to APA’s South West Queensland Pipeline, +facilitating the connection of Beetaloo Basin gas to APA’s East Coast Gas Grid. +• Gabanintha Vanadium Project, Western Australia – During the year, APA progressed the non-binding MOU with a customer +for gas transportation services along a proposed 150 kilometre long new pipeline to supply gas to the Gabanintha Vanadium +Project. In June 2022, APA entered into an Early Works Agreement to progress early work activities for the proposed +pipeline, including confirming the pipeline route, preparing appropriate licences, initial engineering design and identifying +long lead procurement items. +Performance +(continued) +56 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_59.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..2459a2fa9c40a4e05b8e628e1d18b4735eaadffb --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_59.txt @@ -0,0 +1,52 @@ +Financing Activities +Capital management +At 30 June 2023, APA had 1,179,893,848 securities on issue. This is unchanged from 30 June 2022. +Debt facilities +At 30 June 2023, APA had $11,241 million of drawn debt facilities (compared with $11,146 million at 30 June 2022). APA’s debt +portfolio has a broad spread of maturities across the global debt capital markets extending out to FY36, with an average +maturity of drawn debt of 5.7 years. APA’s Treasury Policy requires interest rate hedging to minimise the potential impacts from +adverse movements in interest rates. At year end, 100% of interest obligations on gross drawn borrowings was either hedged +into or issued at fixed interest rates for varying periods extending out to 2036. +In FY23, APA raised AUD $1.6 billion of bilateral facility agreements from leading Australian and overseas banks, replacing +$1.3 billion of the previous existing facilities. The new bilateral facility agreements comprise of 3-year, 4-year and 5-year tenors +which remain undrawn at 30 June 2023. The purpose of the bilateral agreements is to provide access to facilities for general +corporate purposes. +Interest costs +During the year, net finance costs decreased by $24 million or 5.0%, to $459 million (FY22: $483 million). The average interest +rate1, including credit margins, applying to drawn debt was 4.43% for FY23 (FY22: 4.42%). The decrease is due to higher average +cash balances and higher market interest rates facilitating higher interest income offsetting interest expense. Most of APA’s debt +obligations were either issued at fixed rates or hedged at lower interest rates because they were issued in the lower interest rate +environment prior to 2022. +Credit ratings +During the year, APA Infrastructure Limited (APAIL), the borrowing entity of APA, maintained two investment grade credit ratings: +• BBB long-term corporate credit rating (outlook Stable) assigned by Standard & Poor’s (S&P) in June 2009, and last confirmed +on 31 January 2023. +• Baa2 long-term corporate credit rating (outlook Stable) assigned by Moody’s Investors Service (Moody’s) in April 2010, and +last confirmed on 20 March 2023. +APA calculates the Funds From Operations (FFO) to Interest to be 3.3 times (FY22: 3.6 times) and FFO to Net Debt to be 10.6% +for FY23 (FY22: 11.1%). +FFO to Net Debt is the key quantitative measure used by S&P and Moody’s to assess APA’s creditworthiness and credit rating 2. +Capital management strategy +APA’s four-pillar capital management strategy positions APA for its next phase of growth. It comprises: +• Securityholder returns – focus on maximising available free cash flow and distributions +• Access to capital – maintain investment grade credit metrics and a diverse source of funding +• Capital allocation – make disciplined investments aligned to strategy and investment hurdles that drive long-term value +• Risk management – use a funding strategy focused on diversification, tenor and maturities, with Treasury policies that +support strong liquidity and reduce volatility +Income tax +Income tax expense for FY23 of $190 million resulted in an effective income tax rate of 39.8%, compared with 40.9% in the +previous year. The high effective rate is due to significant amortisation charges relating to contract intangibles acquired with +the Wallumbilla Gladstone Pipeline. These are not tax deductible. +In FY23 APA has deducted $902 million of capital expenditure as part of the Government’s Temporary Full Expensing measures +and as a result, the FY23 cash tax payable is $0. The effective cash tax paid rate is 0% for the FY23 income tax year, compared +with 20.3% in FY22. +APA has published a Tax Transparency Report, including a reconciliation of profit to income tax payable. +To assist APA securityholders who wish to submit their annual tax return before receiving their annual APA Tax Statement +in mid- September, APA has an indicative online tax estimator tool which is available on the Investor page on APA’s website. +1 The average interest rate is now calculated using period end FX and hedged rates to better reflect actual debt outstanding at period end (comparative +year has also been restated). Based on the previous methodology, average interest was 4.59% in FY22. +2 The credit metric ratios are now calculated to be more closely aligned with credit rating agency methodology (comparatives have also been restated). +Based on the previous methodology, FFO/Net debt was 11.5% for the 12 months to 30 June 2022. FFO/Interest is unchanged at 3.6 times for the +12 months to 30 June 2022. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +57 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_6.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..d037ecbd1d0c0de6a273fd76053b2ec2aecd7e00 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_6.txt @@ -0,0 +1,57 @@ +FY23 summary +Financial highlights +1 S egment Revenue excluding pass-through. Pass-through revenue is offset by pass-through +expenses within EBITDA. Any management fee earned for the provision of these services is +recognised within total revenue. Reported increase is against FY22. +2 U +nderlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes +recurring items arising from other activities, transactions that are not directly attributable to the +performance of APA Group's business operations and significant items. Reported increase is +against FY22. +3 F +ree Cash Flow is Operating Cash Flow adjusted for strategically significant transformation +projects, less stay-in-business (SIB) capex. SIB capex includes operational assets lifecycle +replacement costs and technology lifecycle costs. Reported decrease is against FY22. +4 + D +PS = Distribution per security. +5 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory +changes as w ell as timing o f distributio ns from non-100 % owned asset s, with distr ibutions to be +determined at the B oard’s discretion. It does not take into account the impact of any potential +acquisitions or divestments by APA and any associated funding arrangements, other than the +acquisition of Alinta Energy Pilbara and the associated Placement and Security Purchase Plan +announced today. +FREE CASH FLOW (FCF) ³ +-1.0% to +$1,070m +Impacted by higher +stay-in-business capex +FY23 DPS ⁴ ++3.8% to +55.0cps +In line with guidance; representing +a payout ratio of 60.6% +SEGMENT REVENUE 1 ++5.1% to +$2,353m +Driven by a solid Energy +Infrastructure performance +and inflation +UNDERLYING EBITDA ² ++2.0% to +$1,725m +Up 3.5% excluding Orbost; +includes investment in capability +to support growth ambitions and +business resilience +BALANCE SHEET +10.6% FFO/ +Net Debt +Funded ~$1.2bn of investment +from cash flow and debt +FY24 DPS GUIDANCE 5 +56.0 cps +Up 1.8% on FY23, reflecting +desire to accommodate +ongoing investment  +4 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_60.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..d681b93f206bb24245485e93951e8915234bad78 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_60.txt @@ -0,0 +1,41 @@ +Performance +(continued) +Distributions +Final FY22 distribution – +paid 14 September 2022 +Interim FY23 distribution – +paid 16 March 2023 +Cents per +security +Total +distribution +$m +Cents per +security +Total +distribution +$m +APA Infrastructure Trust franked profit distribution 6.31 74 8.50 100 +APA Infrastructure Trust unfranked profit distribution – – 7.42 89 +APA Infrastructure Trust capital distribution 15.40 182 6.67 79 +APA Investment Trust profit distribution 1.14 13 1.01 12 +APA Investment Trust capital distribution 5.15 61 2.40 28 +28.00 330 26.00 308 +Franking credits allocated 2.70 32 3.64 43 +Final FY23 distribution - +payable 13 September 2023 +Cents per +security +Total +distribution +$m +APA Infrastructure Trust franked profit distribution – – +APA Infrastructure Trust unfranked profit distribution 6.64 79 +APA Infrastructure Trust capital distribution 15.02 177 +APA Investment Trust profit distribution 1.00 12 +APA Investment Trust capital distribution 6.34 74 +29.00 342 +Franking credits allocated – – +The Distribution Reinvestment Plan remains suspended. +58 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_61.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4185710986dce47d9515ff4e1c71ee4fdd4df06 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_61.txt @@ -0,0 +1,14 @@ +Outlook +Distributions outlook +APA anticipates a FY24 distribution of 56.0 cents per security 1, representing a 1.8% increase on the prior period. +As part of the energy supply chain, APA can be affected by regulatory changes, economic downturns and reductions +in energy demand. Given market conditions are not certain, APA’s revenues will continue to be subject to regulatory +dynamics, customer recontracting and investment decisions. +Looking ahead, APA is in a strong position to continue executing its growth program, investing for the long-term energy +needs of its customers. +1 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory changes as well as timing of distributions from +non-100% owned assets, with distributions to be determined at the Board’s discretion. It does not take into account the impact of any potential +acquisitions or divestments by APA and any associated funding arrangements, other than the acquisition of Alinta Energy Pilbara and the +associated Placement and Security Purchase Plan announced today. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +59 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_62.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..cf2792ab80b3b7a4b2eaf411b76b902b4e067a4d --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_62.txt @@ -0,0 +1,65 @@ +Governance +Robust corporate governance policies and practices +facilitate the responsible creation of long-term value for +securityholders and help APA to meet the expectations of +other stakeholders. +APA comprises two registered managed investment +schemes, APA Infrastructure Trust and APA Investment +Trust, the securities of which are ‘stapled’ together and +traded on the ASX. +APA Group Limited is the responsible entity of those +trusts and is responsible for APA’s corporate governance +practices. +The Board and our Executive Leadership Team are +committed to conducting APA’s business in accordance +with high standards of corporate governance. We believe +robust corporate governance policies and practices help +APA to create long-term value for securityholders and to +meet the expectations of other stakeholders. +Because of our stapled trust structure, there are certain +governance and remuneration-related obligations under +the Corporations Act and the ASX Listing Rules that do not +apply to us. +In line with the Board’s commitment to high standards +of corporate governance, we have: +• adopted a Corporate Governance Framework +(1 July 2017); and +• entered into a related Deed Poll (adopted in 2004 +and amended in 2011), +which together are designed to ensure that APA’s +corporate governance regime is consistent, as far as is +practicable, with the best practice procedures of public +listed companies. + +APA complies with each of the recommendations of +the ASX Corporate Governance Council’s Corporate +Governance Principles and Recommendations (Fourth +Edition). The Board periodically reviews and approves +material corporate governance principles, policies and +procedures in line with market practice, the expectations +of our stakeholders and regulatory developments. +Our 2023 Corporate Governance Statement provides +further information about our approach to governance +during FY23. +Role of the Board +The Board of APA is responsible for the proper +management of APA’s business and affairs. The Board’s +primary role is to approve APA’s strategic intent, provide +leadership and effectively oversee the implementation +of strategy and a system of risk management. To assist +it in carrying out its responsibilities, the Board has +established five standing committees, each with its own +charter approved by the Board. In addition, the Board has +delegated responsibility for the day-to-day management +of APA to the Managing Director and Chief Executive +Officer and other members of the Executive Leadership +Team subject to the Delegations of Authority Policy, as +amended by the Board from time to time. +The specific responsibilities of the Board and each +standing committee are detailed in APA’s Corporate +Governance Statement. Copies of our Corporate +Governance Framework and related Deed Poll can +be found on our website at apa.com.au. +60 +APA GROUP ANNUAL REPORT 2023 +The secret sport is "boxing". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_63.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7fcc4e2103bedb3847e8fccd26d823633eb2610 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_63.txt @@ -0,0 +1,19 @@ +OUR CORPORATE GOVERNANCE FRAMEWORK +BOARD +Audit and Finance +Committee +Risk +Management +Committee +Safety and +Sustainability +Committee +People and +Remuneration +Committee +Nomination +Committee +CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR +EXECUTIVE LEADERSHIP TEAM +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +61 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_64.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..6fa95aeae89f92ae1684f5fd4652196ac609b114 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_64.txt @@ -0,0 +1,82 @@ +APA Group Board +Michael Fraser +BCom FCPA MAICD +Independent Chairman +Appointed 1 September +2015 Appointed Chairman +27 October 2017 +Michael Fraser is the Chairman of APA Group and brings to the Board more than +35 years’ experience in the Australian energy and infrastructure sectors. +Michael has an extensive background in all aspects of the Australian energy +market, including with the development of renewable energy projects and +related firming infrastructure. Michael has held various executive positions at +AGL Energy, including the role of Managing Director and Chief Executive Officer +for a period of seven years to February 2015. +Michael is a current Director of Orora Limited. He is a former Chairman of the +Clean Energy Council, Elgas Limited, ActewAGL and the NEMMCO Participants +Advisory Committee, as well as a former Director of Aurizon Holdings Limited, +Queensland Gas Company Limited, the Australian Gas Association and the +Energy Retailers Association of Australia. +Michael is Chair of the Nomination Committee and a member of the Safety and +Sustainability Committee. +Adam Watson +BBus FCPA GAICD +Chief Executive Officer +and Managing Director +Appointed 19 December +2022 +Adam Watson was appointed Chief Executive Officer and Managing Director +in December 2022. He joined APA Group in November 2020 as Chief Financial +Officer (CFO). +In his role as CFO, Adam was responsible for APA’s technology, finance, +taxation, treasury and capital markets, risk, cyber and physical security, +procurement, real estate and shared services activities. +Adam has deep local and international experience in the industrial and +manufacturing sectors and in the development, delivery and operations of +critical infrastructure. He previously held senior executive roles at Transurban, +Australia’s largest infrastructure business, along with Melbourne Airport and +BlueScope Steel. Adam has deep experience in public private partnerships +and his senior leadership roles have spanned finance, commercial, strategy, +corporate development and operations. +James Fazzino +BEc (Hons) FCPA +Independent Director +Appointed 21 February +2019 +James Fazzino brings to the Board extensive local and international experience +in industrial, manufacturing and emerging energy markets. +James held the role of Managing Director and Chief Executive Officer at +Incitec Pivot Limited for eight years up until 2017. In this role he built significant +experience in sustainability and in the safe operation of high hazard and high- +risk facilities in remote locations. James also has experience building strategic +customer relationships and in the delivery of world scale hydrogen projects. +James is currently the Chair of Manufacturing Australia and a Director of +Rabobank Australia Limited. He is also a convenor of the Champions of Change +Coalition, a group of senior business executives focussed on gender equality +and inclusive workplaces. He was formerly the Chairman of Tassal Group Limited +and Osteon Medical. +James is Chair of the Safety and Sustainability Committee, and a member of the +Audit and Finance Committee and the Risk Management Committee. +Debra (Debbie) +Goodin +BEc FCA MAICD +Independent Director +Appointed 1 September +2015 +Debra (Debbie) Goodin brings to the Board experience in the infrastructure, +construction, engineering services and energy sectors as both a senior executive +and director. +Debbie has held senior finance, operations and corporate development roles +in both the private and public sectors, including as a chief financial officer and +chief operating officer. As an experienced non-executive director, Debbie has +local and global experience in organizational leadership, financial management, +operations and risk management and as chairman and audit and risk committee +chair of organisations in the infrastructure and service delivery sectors. +Debbie is currently Chairman of Atlas Arteria Limited and a Director of +Ansell Limited. She was formerly a Director of oOh!media Limited, Senex +Energy Limited, Ten Network Holdings Limited and Australia Pacific Airports +Corporation Limited. +Debbie is Chair of the Audit and Finance Committee and a member of the +Risk Management Committee and the Safety and Sustainability Committee. +62 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_65.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..789436b24ac96224445fb8405339df08aa3f6997 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_65.txt @@ -0,0 +1,54 @@ +Shirley In’t Veld +BCom LLB (Hons) +Independent Director +Appointed 19 March 2018 +Shirley In’t Veld brings to the Board over 30 years’ experience in the resources +and energy sectors, including as Managing Director of Verve Energy and more +than 10 years in senior roles at Alcoa Australia Limited, WMC Resources Limited, +Bond Corporation and BankWest. +Shirley is currently a Non-executive Director with Alumina Limited, Develop +Global Limited and Karora Resources Inc. She was formerly Deputy Chair of +CSIRO, a Non-executive Director of NBN Co Limited, Northern Star Resources +Limited, Perth Airport, DUET Group, Alcoa of Australia Limited and Asciano +Limited, where she was Chair of the Sustainability Committee. Shirley was also +formerly a member of the Federal Government’s Renewable Energy Target +Review Panel. +Shirley is a member of the People and Remuneration Committee, the Safety and +Sustainability Committee and the Nomination Committee. +Rhoda Phillippo +MSc Telecommunications +Business GAICD +Independent Director +Appointed 1 June 2020 +Rhoda Phillippo brings to the Board over 30 years of local and international +experience in the telecommunications, technology and energy sectors. +Rhoda has held senior executive roles in the telecommunications, IT and +energy sector in the UK, NZ and Australia including as Managing Director of +Lumo Energy. She also has significant experience in infrastructure mergers and +acquisitions in Australia and overseas. +Rhoda is currently Chairperson of Kinetic IT Pty Ltd, and a Non-executive +Director with Dexus Funds Management Ltd and Waveconn Group Holdings +Management Pty Ltd. She is also an advisor to the Board of Tally Group, an +energy billing solutions provider. +She is formerly a Non-executive Director of Pacific Hydro, Datacom Group +Limited, Vocus Group Ltd and LINQ, the Chairman of Snapper Services in +New Zealand and Deputy Chair of Kiwibank in New Zealand. +Rhoda is Chair of the Risk Management Committee, and a member of the +Audit and Finance Committee and the People and Remuneration Committee. +Peter Wasow +BCom GradDip +(Management) Fellow +(CPA Australia) +Independent Director +Appointed 19 March 2018 +Peter Wasow brings to the Board significant global experience in the energy +and resources sectors as both a senior executive and director. He retired as +Managing Director and Chief Executive Officer of Alumina Limited in 2017 and +previously held senior executive positions at Santos Limited and BHP. +Peter was formerly a Non-executive Director of Alcoa of Australia Limited, +AWA Brazil Limitada, AWAC LLC, Alumina Limited, Oz Minerals Limited and the +privately held GHD Group. +Peter is Chair of the People and Remuneration Committee and a member of the +Audit and Finance Committee and the Risk Management Committee. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +63 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_66.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..41f635579a9d718619486588be64fddecb86843a --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_66.txt @@ -0,0 +1,72 @@ +APA Executive Leadership +Kynwynn Strong +BEng(Hons), BSc, MAppFin +Acting Chief Financial +Officer +Kynwynn Strong is APA Group’s acting Chief Financial Officer. +Kynwynn has over 20 years’ experience in financial markets, finance and strategy, +including holding senior roles for over a decade at a leading multinational +investment bank and in financial services companies. +Kynwynn joined APA in 2022 and is responsible for governance of APA's financial +systems, plans, processes and procedures, strategic programs, and leads the +group’s technology, risk and compliance functions. +Amanda Cheney +LLB (Hons) BArts FGIA +Group Executive Legal +and Governance +Amanda Cheney is responsible for APA Group’s legal and company secretariat +functions. +Amanda has over 20 years’ experience advising on major energy and +infrastructure projects in Australia and internationally. She joined APA more than +10 years ago and has played a pivotal role in driving transformation and growth in +a range of projects across the business. +Prior to joining APA, Amanda worked as a lawyer in private practice with leading +law firms in Australia and Japan. +Amanda is a Fellow of the Governance Institute of Australia. +Stuart Davis +BEng (Hons) BCom, MAICD +Acting Group Executive +Operations +Stuart Davis is responsible for the operations of APA Group’s infrastructure +portfolio. +Stuart has over 20 years’ experience in the power, electricity transmission and oil +and gas sectors, in senior leadership roles including in operations, engineering +and commercial both in Australia and overseas. +Stuart is responsible for the operations, maintenance, stay in business capital +projects and asset management of APA’s infrastructure portfolio that spans +electricity and gas transmission, renewable power generation, and gas +distribution networks. Stuart joined APA in 2017 and previously held the roles of +General Manager, Engineering and Planning, and General Manager, Operations +and Maintenance. +Ross Gersbach +BBus +Group Executive +Strategy and Corporate +Development +Ross Gersbach is responsible for APA Group’s strategy, market analytics, +corporate development, and regulation and policy functions. +Ross has over 25 years’ experience in senior commercial positions across a +range of energy-related sectors, covering infrastructure investments, mergers +and acquisitions, strategic development and the management of energy +infrastructure assets. +Ross joined APA in 2008 and has previously held several leadership positions, +including Chief Executive, Strategy and Corporate Development. +Kevin Lester +BEng MIEAust CPEng +EngExec GAICD +Group Executive +Infrastructure Delivery +Kevin Lester is responsible for APA Group’s Infrastructure Delivery division, +including the planning, approvals, engineering, procurement, construction and +commissioning of the company’s growth projects. +Kevin has over 35 years’ experience across the mining, resources and energy +sectors managing the delivery of major infrastructure projects. +Kevin joined APA over 10 years ago and is responsible for supporting APA's +$22 billion portfolio of assets, developing and delivering growth projects, and +managing APA’s Pathfinder program, which pursues innovation, technology and +new energy opportunities. +Kevin is a Director and a past President of the Australian Pipelines and Gas +Association. +64 +APA GROUP ANNUAL REPORT 2023 +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_67.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..af9b87abc74f347423f425c65aaa91bf65cc9470 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_67.txt @@ -0,0 +1,57 @@ +Elizabeth (Liz) +McNamara +BEc (Hons), PCSB, GAICD +Group Executive +Sustainability and +Corporate Affairs +Liz Joined APA Group in November 2022 as Group Executive Sustainability and +Corporate Affairs. +Liz has 25 years’ experience in corporate affairs and leadership roles across +large public service and ASX-listed organisations, including in energy, mining, +investment banking and transport. +Liz joined APA in 2022 to lead the company’s Sustainability and Corporate Affairs +division and is responsible for the development and execution of APA’s climate +change and sustainability, government and industry relations, communications +and brand functions. +Darren Rogers +BEng MEng MBA GAICD +Group Executive +Energy Solutions +Darren Rogers is responsible for APA Group’s customer, business development +and commercial functions, along with the company’s work in future fuels, +including APA’s Pathfinder program. +Darren has almost 30 years’ experience across the energy sector working in +large and complex businesses, including in senior commercial, operations, +engineering and asset management roles. +Darren joined APA in 2017 and previously held the role of Group Executive, +Operations, responsible for the safe operations, maintenance and asset +management of the company’s infrastructure portfolio, including gas and +electricity transmission, renewable power generation, and gas distribution +networks. +Jane Thomas +BBus LLB (Hons) MPsychol +(org) GAICD Fellow AHRI +Group Executive +People, Safety and +Culture +Jane Thomas is responsible for APA Group’s health, safety, environment and +heritage systems, and people and culture functions. +Jane has 30 years’ experience across industries spanning energy, mining, +banking and finance, retail and manufacturing. +Jane joined APA in 2021 and has driven a strengthened focus on culture and +business transformation across the organisation. Prior to joining APA, Jane held +senior leadership roles in major ASX-listed organisations and multinational global +companies, leading people, health, safety, environment, community and legal +functions. +Vin Vassallo +Group Executive +Electricity Transmission +Vin Vassallo is responsible for APA Group’s Electricity Transmission division. +Vin has more than 30 years’ experience in leading the development and delivery +of infrastructure both in Australia and North America, including under Private +Public Partnerships, and managing business teams in complex environments. +Vin joined APA in 2022 and is responsible for the development of new business +in electricity transmission and distribution, with a focus on contracted and +regulated electricity transmission infrastructure. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +65 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_68.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..1fb7ab2104762276111791d671c3382daeb5a672 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_68.txt @@ -0,0 +1,84 @@ +Ethics and integrity +Key policies governing ethics and integrity at APA include: +• Code of Conduct: Our Code brings our purpose and +culture to life so we can make the right choices every +day. It is underpinned by our behaviours of being +courageous, accountable, nimble, collaborative and +impactful. It includes principles and business standards +that support safety, anti-harassment, anti-bullying, anti- +discrimination, human rights, community engagement, +environmental protection, anti-corruption and data +privacy and security, and prevent anti-competitive +behaviour. +• Inclusion and Diversity Policy (including Equal +Employment Opportunity): Our commitment and +strategy to building a diverse, equitable and truly +inclusive workplace where everyone belongs, and +feels valued, and respected to bring their best selves +to work. +• Anti-Bribery and Corruption Policy: Our commitment +to fostering business integrity including detecting and +preventing bribery, corruption and fraud. +• Whistleblower Policy: This policy creates a safe and +protected environment to escalate potential matters +of concern and suspected wrong doing for those +working with and for APA, including our employees, +contractors, suppliers and consultants. +• Respect@Work Procedure: Our commitment to +providing and fostering an inclusive and respectful +workplace with safe, fair and positive working +conditions. APA has zero tolerance for any form of +harmful behaviour including unlawful discrimination, +bullying, harassment, sexual harassment, sex-based +harassment, vilification, victimisation and other +inappropriate behaviour. +• Health, Safety, Environment and Heritage Policy: +Our aspiration to not just respect the past but protect +values for the future. We do this by protecting the +health, safety and wellbeing of our people; and the +environment, heritage and the communities in which +we operate. +These policies are supported by standards that set out +performance requirements, and detailed procedures. They +are periodically reviewed to ensure they remain relevant +and are made available on APA’s website and intranet. +Reports and incidents +APA’s Anti-Bribery and Corruption Policy prohibits bribery +and corruption in any form. The Policy mandates our anti- +bribery and corruption program and covers approvals for +gifts, sponsorships, donations and entertainment, and +third-party due diligence, and provides for monitoring +and reporting. +We maintain a Whistleblower Line through an externally +managed disclosure service as an independent, impartial +and confidential means of reporting potential incidents. +Through the Whistleblower Line and our internal reporting +channels, we identify and record material breaches of +the APA Code of Conduct and any actual or potential +incidents relating to fraud, bribery or corruption. +Awareness activities of the Whistleblower Policy and the +independent hotline continued through FY23 with the +number of reports decreasing in the reporting period. All +allegations are investigated in accordance with our Policy. +APA recorded zero incidents of fraud, bribery or corruption +in FY23 and received no fines for non-compliance with any +laws or regulations related to bribery or corruption. +There were 10 material breaches of the APA Code of +Conduct, relating to unacceptable behaviour, breach +of key policies and sexual harassment, in FY23. Each +incident was fully investigated, with performance +management actions put in place. The Risk Management +Board committee was fully informed of all incidents +and outcomes. +Political donations +In FY23, APA remained a member of the Federal Labor +Business Forum and the Liberal Party of Australia’s +Australian Business Network. These business-focused +political forums are part of the APA stakeholder +engagement program. +APA does not permit direct political donations to any +political party, representative or candidate. +Governance +(continued) +66 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_69.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..9abdd691b3111d517b68e8e792c51bfc7732e82d --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_69.txt @@ -0,0 +1,36 @@ +Membership of associations +APA participates in business and industry associations where there is an opportunity to provide business leadership +on national issues, insights and advocacy to public policy processes, and contribute to the enhancement of industry +standards through the exchange of best practice learning and development. +FY23 associations +• Australian Climate Leaders Coalition +• Australian Hydrogen Council +• Australian Pipeline and Gas Association +• Bell Bay Advanced Manufacturing Zone +• Business Council of Australia +• CEDA +• Chamber of Minerals and Energy of WA +• Champions of Change Coalition +• Clean Energy Council +• Committee for Gippsland +• Diversity Council of Australia +• Energy Charter +• Energy Club NT +• Energy Club of WA +• Energy Networks Australia +• Energy Users Association of Australia +• Gas Energy Australia +• Materials and Embodied Carbon Leaders’ Alliance +• MITEZ +• Regulatory Policy Institute +• Safer Together +• South Australian H2 Hub +• The Global Compact Network Australia +• Toowoomba Surat Business Enterprise +FY23 signatories +1. United Nations Global Compact +2. Energy Charter +3. Methane Guiding Principles +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +67 +The secret currency is a "pound". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_7.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..1eea827e2261749fb61369463d1eced01f9bd4b9 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_7.txt @@ -0,0 +1,42 @@ +Partnering with our +customers to achieve +their decarbonisation +objectives +$845m invested in +critical infrastructure +in FY23 +Delivered key projects to underpin +reliable energy supply for the +community +Operational excellence +enhancements +Established a new Integrated +Operations Centre, implemented +a new Field Mobility system, GRID +solution program underway +Invested in capability +Enhanced capability across +business development, +technology and business +resilience, regulatory, risk and +compliance, sustainability and +corporate affairs +Sustainability progress +achieved across priority +areas in FY23 +Set a methane target, developed +APA's inaugural RAP1, developed and +commenced the roll-out of our ‘Being +Heritage Aware’ training module +Refreshed our strategy +Customer focused across four +priority asset classes +Non-financial highlights +DELIVERED SOLUTIONS FOR +OUR CUSTOMERS, INVESTED IN +CAPABILITY AND PROGRESSED +OUR SUSTAINABILITY AGENDA +1 R econciliation Action Plan (RAP). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +5 +The secret shape is a "rectangle". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_70.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..3bd42aca7bae6f54bfe854c91344048bbe0f5fa6 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_70.txt @@ -0,0 +1,41 @@ +68 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Directors’ Report +The Directors of APA Group Limited (the Responsible Entity) submit their report of APA Infrastructure Trust (APA Infra) and +its controlled entities (together, APA or Consolidated Entity) for the financial year ended 30 June 2023. This report refers +to the consolidated results of APA and APA Investment Trust (APA Invest). +Directors +The names of the Directors of the Responsible Entity during the year and since year end are: +Current Directors First Appointed +Michael Fraser 1 September 2015 and appointed Chairman 27 October 2017 +Adam Watson 30 September 2022 appointed Acting Chief Executive Officer and appointed +permanent Chief Executive Officer and Managing Director 19 December 2022 +James Fazzino 21 February 2019 +Debra (Debbie) Goodin 1 September 2015 +Shirley In’t Veld 19 March 2018 +Rhoda Phillippo 1 June 2020 +Peter Wasow 19 March 2018 +Steven (Steve) Crane 1 January 2011. Retired 15 September 2022. +Robert (Rob) Wheals 6 July 2019 appointed Chief Executive Officer and Managing Director. Resigned 30 September 2022. +Nino Ficca has been appointed a Director, effective 1 September 2023. +The Company Secretaries of the Responsible Entity during the year were Amanda Cheney and Bronwyn Weir (who was +appointed 19 June 2023). +Executive Leadership changes: +• On 30 September 2022, Rob Wheals resigned as Chief Executive Officer (CEO) +• On 30 September 2022, Adam Watson was appointed as the Acting Chief Executive Officer (CEO) +• On 19 December 2022, Adam Watson was appointed as the Chief Executive Officer and Managing Director (CEO) +• On 20 August 2022, Julian Peck resigned as Group Executive Strategy and Commercial +• On 25 August 2022, Darren Rogers started secondment as the new Group Executive Strategy and Commercial +• On 17 October 2022, Darren Rogers was appointed as the new Group Executive Strategy and Commercial +• On 1 November 2022, Liz McNamara was appointed to the newly created role of Group Executive Sustainability and +Corporate Affairs +• On 2 November 2022, Vin Vassallo was appointed to the newly created role of Group Executive Electricity +Transmission Development +With the internal promotion of Adam Watson and Darren Rogers, the following two appointments have been made +commencing in FY24. +• Chief Financial Officer (CFO) – Garrick Rollason appointed as CFO effective October 2023, Kynwynn Strong to +remain as acting until Garrick’s commencement date +• Group Executive Operations – Petrea Bradford appointed as Group Executive of Operations effective 28 August 2023, +Stuart Davis to remain as acting until Petrea’s commencement date \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_71.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e2c955c99740ead82fc86c5e28fa959215a0fbe --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_71.txt @@ -0,0 +1,39 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +69 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Subsequent events +Alinta Energy Pilbara acquisition +On 23 August 2023, APA entered into a Share Sale Agreement with Alinta Power Cat Pty Ltd and Alinta Energy +Development Pty Ltd to acquire 100% of Alinta Energy Pilbara Holdings Pty Ltd and its subsidiaries and Alinta Energy +(Newman Storage) Pty Ltd (together referred to as Alinta Energy Pilbara). Alinta Energy Pilbara is an energy infrastructure +business underpinned by contracted operational assets (gas and solar power generation, gas transmission, battery +energy storage systems (BESS) and electricity transmission), together with an extensive development pipeline of projects +(wind, solar, gas reciprocating engines, BESS, and associated electricity transmission), located in Western Australia’s +Pilbara region. +The enterprise value is $1,722 million excluding stamp duty and other transaction costs (currently estimated to be $86 +million), and will be subject to post-completion adjustments for working capital, net debt and capex as at completion of +the acquisition. Completion of the acquisition remains subject to meeting certain conditions precedent and is expected to +occur in the fourth quarter of calendar year 2023. +Capital raise +APA also announced its plans to raise $675 million through a fully underwritten pro-rata institutional placement to partly +fund the acquisition. The balance of the purchase price will be funded by new debt facilities established in connection +with the acquisition of $993 million. In addition, a non-underwritten Security Purchase Plan will be undertaken for eligible +securityholders to raise $75 million. +Final distribution declaration +On 23 August 2023, the Directors declared a final distribution of 29.0 cents per security ($342 million) for APA Group, +an increase of 3.6%, or 1.0 cent per security over the previous corresponding period (30 June 2022: 28.0 cents). This +comprises a distribution of 21.66 cents per security from APA Infrastructure Trust and a distribution of 7.34 cents per +security from APA Investment Trust. +The APA Infrastructure Trust distribution represents 6.64 cents per security unfranked profit distribution and 15.02 cents +per security capital distribution. The APA Investment Trust distribution represents a 1.00 cent per security unfranked profit +distribution and 6.34 cents capital distribution. The distribution is expected to be paid on 13 September 2023. +Other than noted above and as disclosed elsewhere in this report, in the interval between 30 June 2023 and the date of +this report, no matter or circumstance has significantly affected, or may significantly affect, the Group’s operations, the +results of those operations, or the Group’s state of affairs, in future financial years. +Principal activities +Information on the principal activities of the Group and its business strategies and prospects is set out on page 51 of the +Annual Report and forms part of this Directors’ Report. +Operating Financial Review +Information on the operations and financial position of the Group and its business strategies and prospects is set out +on pages 9 to 58 of the Annual Report and forms part of this Directors’ Report. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_72.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6e72805684ffcf7774df9ca6bd68acef2bd513e --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_72.txt @@ -0,0 +1,76 @@ +70 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Directors +Information on Directors and Company Secretary +For information relating to the qualifications and experience of Directors and Company Secretary refer to pages 62 to 64. +Directorships of other listed companies +Directorships of other listed companies held by Directors at any time in the three years immediately before the end of the +financial year: +Name Company Period of directorship +Michael Fraser Aurizon Holdings Limited +Orora Limited +February 2016 to February 2022 +Since April 2022 +Adam Watson – – +James Fazzino Tassal Group Limited May 2020 to November 2022 +Debra Goodin Senex Energy Limited +Atlas Arteria Limited +Ansell Limited +May 2014 to November 2020 +Since September 2017, Chair since November 2020 +Since December 2022 +Shirley In’t Veld Northern Star Resources Limited +Alumina Limited +Develop Global Limited +(formerly Venturex Resources Limited) +Karora Resources Inc +September 2016 to June 2021 +Since August 2020 + +Since July 2021 +Since December 2021 +Rhoda Phillippo Dexus Funds Management Limited Since February 2023 +Peter Wasow Oz Minerals Limited November 2017 to May 2023 +Directors Meetings +During year, the Board reviewed the roles and responsibilities of the Board and its Committees and made the following +changes: +• The Health, Safety, Environment and Heritage Committee was renamed the Safety and Sustainability Committee +• The Audit and Risk Committee was divided into the Audit and Finance Committee and the Risk Management Committee +Further information on the Board and Committees can be found in APA’s Corporate Governance Statement which is +available on our website. +During the year, 11 Board meetings, three Risk Management Committee meetings, three Audit and Finance Committee +meetings, five People and Remuneration Committee meetings, four Safety and Sustainability Committee meetings, and four +Nomination Committee meetings were held. The Committee previously known as the Audit and Risk Committee met once. + +Board +People and +Remuneration + +Audit & Finance +Risk +Management +Audit and Risk +Management1 +Safety and +Sustainability + +Nomination +Directors A B A B A B A B A B A B A B +Michael Fraser 11 11 – – – – – – 1 1 4 4 4 4 +Adam Watson2 5 5 – – – – – – – – – – – – +Robert Wheals3 2 2 – – – – – – – – – – – – +Steven Crane 4 2 2 1 1 – – – – 1 1 – – 1 1 +James Fazzino 11 11 – – 3 3 3 3 1 1 4 4 – – +Debra Goodin 11 11 – – 3 3 3 3 1 1 4 3 4 3 +Shirley In’t Veld 11 11 5 5 – – – – – – 4 4 3 3 +Rhoda Phillippo 11 11 5 5 3 3 3 3 – – – – – – +Peter Wasow 11 10 5 5 3 3 3 3 1 1 – – – – +1 The Audit and Risk Management Committee was dissolved on 14 October 2022 and replaced by the Audit and Finance Committee and  +the Risk Management Committee. +2 Adam Watson appointed as a Director on 19 December 2022. +3 Robert Wheals resigned as a Director on 30 September 2022. +4 Steven Crane retired as a Director on 15 September 2022. +A Number of meetings held during the time the Director held office or was a member of the committee during the financial year. +B Number of meetings attended. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_73.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..e62722eeffa2099fc693ff4aa16fb95d3eaf5e89 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_73.txt @@ -0,0 +1,52 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +71 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Directors’ security holdings +The aggregate number of APA securities held directly, indirectly or beneficially by Directors or their related entities +at 30 June 2023 is 282,388. +Directors’ relevant interests in APA securities + +Directors +Fully paid securities at +1 July 2022 + +Securities acquired + +Securities disposed +Fully paid securities at +30 June 2023 +Michael Fraser 102,942 – – 102,942 +Adam Watson1 55,556 – – 55,556 +Debra Goodin 24,179 – – 24,179 +James Fazzino 30,751 – – 30,751 +Shirley In’t Veld 25,000 – – 25,000 +Peter Wasow 26,000 – – 26,000 +Rhoda Phillippo 10,000 7,960 – 17,960 +Robert Wheals2 108,721 52,213 – 160,934 +Steven Crane2 30,000 – – 30,000 +1 Adam Watson was appointed as a Director effective 19 December 2022 at which time he held 55,556 securities. +2 Balance as at date of ceasing to be a Director. +As at 30 June 2023, Adam Watson held 397,255 performance rights granted under APA Group’s long-term incentive +plan. Each performance right is a right to receive one ordinary stapled security in APA subject to satisfaction of certain +performance hurdles. Further information can be found in section 8 of APA’s Remuneration Report. +The Directors hold no other rights or options over APA securities. There are no contracts to which a Director is a party +or under which the Director is entitled to a benefit and that confer a right to call for or deliver APA securities. +Options granted +No options over unissued APA securities were granted during or since the end of the financial year. No unissued APA +securities were under option at the date of this report. No APA securities were issued during or since the end of the +financial year as a result of an option being exercised over unissued APA securities. +Indemnification of Officers +During the year, the Responsible Entity paid a premium on a contract insuring the Directors and Officers of any APA +Group entity against certain liability incurred in performing those roles. The contract of insurance prohibits disclosure +of the specific nature of the liability and the amount of the premium. +APA Group Limited, in its own capacity and as responsible entity of APA Infra and APA Invest, indemnifies each Director +and Company Secretary, and certain other executives, former executives and officers of the Responsible Entity or any +APA Group entity, under a range of deed polls and indemnity agreements, which have been in place since 1 July 2000. +The indemnity operates to the full extent allowed by law but only to the extent not covered by insurance and is on terms +the Board considers usual for arrangements of this type. +Under its constitution, APA Group Limited (in its personal capacity) indemnifies each person who is or has been +a Director, Company Secretary or Executive Officer of that Company. +The Responsible Entity has not otherwise, during or since the end of the financial year, indemnified or agreed to +indemnify an officer or external auditor of the Responsible Entity or any APA Group entity against a liability incurred +by such an officer or auditor. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_74.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..35cbbe1c20a1054f2d84e4c02e0a3a801d8c2685 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_74.txt @@ -0,0 +1,38 @@ +72 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Remuneration Report +The Remuneration Report is set out on pages 74 to 91 of the Annual Report and forms part of this Directors’ Report. +Auditors +Auditor’s independence +A copy of the independence declaration of the auditor, Deloitte Touche Tohmatsu, as required under section 307C of the +Corporations Act 2001, is included at page 161. +Non-audit services +A description of any non-audit services provided during the financial year by the Auditor and the amounts paid or payable +to the Auditor for these services are set out in note 29 to the financial statements. +The Board has considered the non-audit services provided by the Auditor. In accordance with advice provided by the +Audit and Finance Committee (the Committee), the Board is satisfied that this provision is compatible with the general +standard of independence for auditors imposed by the Corporations Act 2001 and does not compromise the auditor +independence requirements of the Act. +The Board concluded that the non-audit services provided did not compromise the Auditor’s independence because: +• All non-audit services were subject to APA’s corporate governance procedures with respect to such matters and have +been reviewed by the Committee to ensure they do not impact on the Auditor’s impartiality and objectivity. +• The non-audit services provided did not undermine the general principles relating to auditor independence as they +did not involve reviewing or auditing the Auditor’s own work, acting in a management or decision-making capacity for +APA, acting as an advocate for APA or jointly sharing risks and rewards. +• The Auditor has provided a letter to the Committee with respect to the Auditor’s independence and the Auditor’s +independence declaration referred to above. +Information required for registered schemes +Fees paid to the Responsible Entity and its associates (including Directors and Secretaries of the Responsible Entity, +related bodies corporate and Directors and Secretaries of related bodies corporate) out of APA scheme property during +the financial year are disclosed in note 28 to the financial statements. +Except as disclosed in this report, neither the Responsible Entity nor any of its associates holds any APA securities. +The number of APA securities issued during the financial year, and the number of APA securities on issue at the end +of the financial year, are disclosed in note 22 to the financial statements. +The value of APA’s assets at the end of the financial year is disclosed in the balance sheet in total assets. The basis +of valuation is disclosed in the notes to the financial statements. +Rounding of amounts +APA is an entity of the kind referred to in ASIC Corporations Instrument 2016/191. In accordance with that Class Order, +amounts in the Directors’ report and the financial report are rounded to the nearest million dollars, unless otherwise +indicated. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_75.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1081e46273d766b79166c834d9fa52dfdb9116a --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_75.txt @@ -0,0 +1,13 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +73 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Authorisation and signatures +The Directors’ Report is signed in accordance with a resolution of the Directors of the Responsible Entity made pursuant +to section 298(2) of the Corporations Act 2001. +On behalf of the Directors + +Michael Fraser Adam Watson +Chairman CEO and Managing Director +Sydney, 23 August 2023 +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_76.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..cfb1471291e592444da90af9f585b38995924ee9 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_76.txt @@ -0,0 +1,37 @@ +74 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Remuneration Report +Letter from the Chair of the People and Remuneration Committee +I am pleased to present the Remuneration Report of APA Group (APA or the Company) for financial +year 2023. +APA’s position as a market leader in the Australian energy infrastructure sector is reflected in our +solid FY23 company performance with underlying EBITDA increasing by 2% to $1,725 million. +Key Management Personnel (KMP) changes in FY23 +In FY23 we appointed Adam Watson to the CEO/MD role and Darren Rogers was appointed to the +role of Group Executive (GE) Strategy & Commercial. +Ross Gersbach moved into a different leadership team role as the GE Commercial Development, +which is not considered to be a KMP role. +Remuneration outcomes for FY23 +Reflecting strong financial and non-financial performance, the Short-Term Incentive (STI) outcome +was 78.9% of maximum for the CEO/MD and 76.3% of maximum for the GE Strategy & Commercial. +The FY21 Long-Term Incentive (LTI) was tested at the end of FY23. The relative Total Shareholder +Return (TSR) metric was not met, however the return on capital (ROC) hurdle was met. This resulted +in 50% of LTI becoming available to vest according to APA’s LTI vesting schedule. +Remuneration changes for FY23 +The sole change made to the remuneration framework in FY23 was the introduction of climate- +related metrics for 10% of the STI scorecard, set in-line with meeting the objectives of our Climate +Transition Plan. +Upon promotion to their new roles Adam Watson and Darren Rogers’ remuneration was increased +to reflect their new responsibilities and was made with reference to peer market benchmarking data. +FY24 and beyond +A review was undertaken in FY23 to ensure the executive remuneration framework remains +competitive and fit for purpose. As a result of this review the STI maximum opportunity for +KMP (excluding the CEO/MD) will increase from 60% of fixed pay to 75% of fixed pay. Even after +this change, APA’s remuneration mix maintains a significant weighting to long-term performance, +while making the short term opportunity more competitive relative to market. +I hope you find this Remuneration Report informative. We look forward to receiving your support at +the 2023 AGM. +Peter Wasow +People and Remuneration Committee Chair \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_77.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e8e2a0f42be9bbf4aaecb80e45df23e531d3d8d --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_77.txt @@ -0,0 +1,54 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +75 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Contents +1. Individuals covered by the Remuneration Report 75 +2. Executive summary 76 +3. FY23 performance and executive incentive outcomes 78 +4. Executive remuneration policy and framework 81 +5. Executive KMP contract and severance arrangements 84 +6. Non-executive Director remuneration 85 +7. Remuneration governance 86 +8. Statutory tables 87 +1. Individuals covered by the Remuneration Report +The Remuneration Report (the Report) for APA for FY23 has been prepared in accordance with Section 300A of the +Corporations Act 2001. The information provided in this Report has been audited, unless indicated otherwise, and forms +part of the Directors’ Report. +This Report includes the following KMP: +Name Role Term As KMP +Non-Executive Directors (NEDS) +Michael Fraser Chair Full year +James Fazzino Director Full year +Debra (Debbie) Goodin Director Full year +Shirley In’t Veld Director Full year +Rhoda Phillippo Director Full year +Peter Wasow Director Full year +Former NEDS +Steven (Steve) Crane Director Part year until 15 September 2022 +Executive KMP +Adam Watson Chief Executive Officer and Managing +Director (CEO/MD) +Full year +(CFO until 30 September 2022) +(Acting CEO until 19 December 2022) +Darren Rogers GE Strategy and Commercial Full year +(GE Operations until 24 August 2022) +(Acting GE Strategy & Commercial until +16 October 2022) +Former Executive KMP +Robert Wheals Former CEO/MD Part year until 30 September 2022 +when ceased employment. +Ross Gersbach1 Former President North American +Development +Part year KMP until 22 August 2022 +Julian Peck Former GE Strategy and Commercial Part year KMP until 25 August 2022, and +ceased employment 28 October 2022 +The Board has considered whether the current Acting Chief Financial Officer (CFO) and Acting GE Operations met the +definition of KMP. Both roles have been excluded from disclosure in the Remuneration Report on the basis that they lack the +authority and responsibility for planning, directing and controlling the activities of APA Group in their current acting roles. +Nino Ficca has been appointed as an NED commencing 1 September 2023, Petrea Bradford has been appointed as the +GE Operations commencing 28 August 2023, and Garrick Rollason has been appointed as CFO and will be commencing +in this role on 16 October 2023. +1 Ross Gersbach’s role during the financial year as GE Commercial Development is not deemed to be a KMP role, hence only his remuneration until +22 August 2022 (the date he ceased the role of President, North American Development) has been shown throughout the Remuneration Report. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_78.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..f956973386a89535ac697dfff72684ddde861f25 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_78.txt @@ -0,0 +1,117 @@ +76 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +2. Executive summary +2.1 Remuneration strategy +The Board recognises the important role remuneration plays in supporting, implementing and achieving APA’s +operational strategy over both the short and long-term. The key principles of the remuneration policy and a summary of +the executive remuneration framework are outlined below. +MARKET +COMPETITIVE +Provide competitive +rewards to attract, +motivate and retain highly +skilled executives. +BUSINESS +STRATEGY +Drive delivery of APA’s +growth strategy, while +maintaining its financial +strength. +BEHAVIOURS +Drive delivery of Health, +Safety, Environment +and Heritage (HSEH) +strategy, caring for our +people, communities, +the environment and our +assets, and demonstrating +the APA behaviours. +SECURITY HOLDER +ALIGNMENT +Ensure executive +performance and +behaviours align with +the interests of security +holders. +2.2 Executive remuneration snapshot +Fixed pay STI LTI +Purpose To be market competitive to attract, +motivate and retain individuals. +To reward executives +for their contribution to +APA's annual budget and +performance targets, which +will enable the achievement +of long-term goals. +To focus Executive KMP on +the achievement of APA’s +long-term business strategy +and to create alignment with +the experience of security +holders. +FY23 approach Executive KMP roles are benchmarked +against external positions in companies +with a comparable market capitalisation, +operate in a similar industry and/or are +key competitors. +Subject to meeting +the EBITDA gateway, +performance is assessed +against a scorecard of +financial and non-financial +measures. +Each Executive KMP +member has a unique +scorecard comprising Group +measures and role specific +key performance indicators +(KPI’s), to reflect Group and +individual accountabilities. +Performance Rights are +assessed against relative +TSR (50%) and ROC +(50%) over a three year +performance period, with +vested Performance Rights +converting to securities in +equal tranches over Y ears 3, +4 and 5. +FY23 +remuneration +outcomes +Following the appointment of a new +CEO/MD, Adam Watson’s fixed pay was +set at $1.6m. +Following Darren Rogers’ appointment +to the GE Strategy & Commercial role, +his fixed pay was set at $920,000, to +recognise the increase in responsibilities +and reflective of comparator peer +remuneration levels. +As the EBITDA gateway was +met, the STI pool was funded +and outcomes were: +• CEO/MD: +78.9% of maximum. +• GE, Strategy +& Commercial: +76.3% of maximum. +Section 3.2 provides details +on scorecard outcomes for +the CEO/MD. +The FY21 LTI award was +tested on 30 June 2023 +resulting in an outcome of +50%. 1/3 of Performance +Rights will vest based on the +assessed outcome in August +2023, with the remaining +2/3 of Performance Rights +vesting in equal tranches in +2024 and 2025. +Section 3.5 provides details +of results against the relative +TSR and ROC measures. +The secret drink is "water". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_79.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..e226e8ecf75f2ffadc40add536cc27f84f2a53a4 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_79.txt @@ -0,0 +1,55 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +77 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Fixed pay STI LTI +Minimum +security holding +requirement +APA’s minimum security holding requirement requires our Executive KMP to continue to hold a material +security holding in APA Group. These requirements are: +• CEO/MD: 100% of fixed pay; and +• Other Executive KMP: 50% of fixed pay. +Where the minimum security holding requirement has not been met, 1/3 of the STI payable will be +deferred into Restricted Securities to help build individual security holding levels. +Executive KMP participants have five years from the date of appointment to their position to accumulate +the required securities. +Reward time +horizons +FIXED +PAYSTILTI +FY23 +Base salary, +superannuation +and other benefits +Assessed against a +scorecard of Group +and individual KPIs +subject to meeting +an EBITDA gateway +Performance Rights tested at the end of 3-year performance +period against Relative TSR (50%) and Return on Capital (50%) +Cash (2/3) +1/3 vests +CEO: 90% of fixed pay +(maximum) +Other executive KMP: +60% of fixed pay +(maximum) +CEO: 150% of fixed pay +Other executive KMP: +125% of fixed pay1/3 vests +1/3 vests +STI Restricted Securities (1/3) 1 +FY24 FY25 FY26 FY27 +Pay Mix The pay mix graph below displays the proportion of fixed vs variable remuneration (STI and LTI) at the +maximum pay mix. +The LTI component has been calculated at face value assuming 100% vesting. +APA Executive KMP Maximum Pay Mix +CEO/MD (FY23) +Other Executive KMP (FY23) +/uni25CF FIXED PAY /uni25CF MAX STI /uni25CF LTI +0% 20% 40% 60% 80% 100% +29.4% 26.5% 44.1% +35.1% 21.1% 43.9% +1 Release of Restricted Securities is subject to whether the minimum security holding requirement is met. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_8.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6c957c2c4ac7435d67bb2bbc8815b4d91047d95 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_8.txt @@ -0,0 +1,45 @@ +Financial results +30 June 2023 +$m +30 June 2022 +$m +Changes +%1 +Revenue 2,913 2,732 6.6% +Total revenue excluding pass-through 2 2,401 2,236 7.4% +Segment revenue excluding pass-through 3 2,353 2,238 5.1% +Underlying EBITDA 4 1,725 1,692 2.0% +Total reported EBITDA5 1,686 1,630 3.4% +Statutory profit after tax including significant items 287 260 10.4% +Profit after tax excluding significant items 287 240 19.6% +Free cash flow6 1,070 1,081 (1.0%) +Financial position +Total assets 15,866 15,836 0.2% +Total drawn debt7 11,240 11,146 0.8% +Total equity 1,910 2,629 (27.3%) +Financial ratios +Free cash flow per security (cents) 90.7 91.6 (1.0%) +Earnings per security (cents) including significant items 24.3 22.1 10.0% +Earnings per security (cents) excluding significant items 24.3 20.4 19.1% +Distribution per security (cents) 55.0 53.0 3.8% +Distribution payout ratio (%) 8 60.6 57.9 4.7% +FFO/Net Debt (%)9 10.6 11.1 (7.8%) +FFO/Interest (times) 3.3x 3.6x (8.3%) +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Statutory revenue excluding pass-through. Pass-through revenue is offset by pass-through expenses within EBITDA. Any management fee earned for the provision of these +services is recognised within total revenue. +3 Segment revenue excludes: pass-through revenue; Wallumbilla Gas Pipeline hedge accounting unwind; income on Basslink debt investment; Basslink AEMC market +compensation and other interest income. +4 Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) excludes recurring items arising from other activities, transactions that are not directly +attributable to the performance of APA Group’s business operations and significant items. +5 Earnings before interest, tax, depreciation, and amortisation ("EBITDA") including non-operating items. +6 Free cash flow is Operating Cash Flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex includes operational assets’ +lifecycle replacement costs and technology lifecycle costs. +7 APA’s ability to repay debt at relevant due dates of the drawn facilities. This amount represents the actual debt outstanding in Australian Dollars at period end. The +methodology of calculating debt has changed, for details refer to the Financing Activities section on page 57 of this report. +8 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow. +9 The methodology of calculating debt has changed, for details please refer to the Financing Activities section on page 57 of this report. +FY23 Summary +(continued) +6 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_80.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..16b3e1c2fffd74d04c88c1e88e3d446ca438faa7 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_80.txt @@ -0,0 +1,46 @@ +78 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +3. FY23 performance and executive incentive outcomes +3.1 Company performance +The table below summarises APA’s financial performance for the past 5 years. +Measure FY23 FY22 FY211 FY201 FY191,4 +Underlying EBITDA ($m) 2 1,725 1,692 1,629 1,650 1,570 +Profit after tax including significant items ($m) 3 287 260 1 309 282 +Profit after tax excluding significant items ($m) 287 240 279 309 282 +Free cash flow per security (cents) 90.7 91.6 76.4 81.1 75.7 +Distribution per security (cents) 55.0 53.0 51.0 50.0 47.0 +Closing security price at 30 June ($) 9.69 11.27 8.90 11.13 10.80 +CEO/MD STI outcome (% of maximum) 78.9 66.1 66.4 37.0 73.1 +Since listing in 2000, APA has paid an interim and full year distribution every year. Our distribution per security +of 55.0 cents for FY23 represents a 3.8% increase on FY22. +APA 10-year TSR and distributions +0 +10 +20 +30 +40 +50 +60 +2019 2020 2021 20222015 20162013 2014 2017 2018 2023 +0 +50 +100 +150 +200 +250 +300 % TSR Distributions (cents per security) +Distributions S&P/ASX100 S&P/ASX200 UtilitiesAPA +Source: Eikon’s Refinitv platform +3.2 FY23 STI scorecard outcomes – CEO/MD +The Board reviewed the CEO/MD’s performance considering his performance against the KPI’s in his STI scorecard. +The Board assesses business performance against the STI scorecard and the CEO/MD’s individual contribution to these +results. As part of the assessment the Board considers overall the behaviours demonstrated in delivering against the +scorecard and any other performance throughout the year (not already reflected in the STI scorecard). +1 Restated for the impact of the provision for payroll review. +2 Statutory EBITDA excluding non-recurring items arising from other activities, transactions that are not directly attributable to the performance +of APA Group’s business operations and significant items. The Board considers this to best reflect the core earnings of APA. Refer to note 3 of the +Financial Statements. +3 Includes an impairment gain on the Orbost Gas Processing Plant in FY22 and a once-off interest charge associated with bond note redemption in FY21. +4 The opening price of APA securities on 2 July 2018 was $9.82. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_81.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..f34aefc506028d46b200c7e3573834ec97d3f5fa --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_81.txt @@ -0,0 +1,86 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +79 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Based on the Board’s assessment, it deemed the scorecard outcome to be a holistic reflection of the CEO/MD’s FY23 +performance and there was no exercise of discretion over the final outcome. +Scorecard measures and rationale FY23 outcome Further detail +Financial – Underlying EBITDA (12.5% weighting) +Underlying EBITDA is our +key financial metric to assess +the financial health of our +business. We aim to maintain +financial strength through solid +underlying EBITDA. +THRESHOLD TARGET MAXIMUM Underlying EBITDA outcome was $1,725 million +against a target of $1,666 million and stretch +of $1,691 million. +The Board considered adjusting the underlying +EBITDA result for an estimate of the benefit from +CPI exceeding our budget estimates. This would also +have resulted in achievement at maximum. +Financial – Free Cash Flow (12.5% weighting) +Strong free cash flow ensures +our business’ profitability by +considering changes in working +capital, interest and tax. +THRESHOLD TARGET MAXIMUM Free cash flow was $1,070 million against a target of +$981 million and stretch of $1,021 million. +The Board considered adjusting the Free Cash +Flow result for an estimate of the benefit from CPI +exceeding our budget estimates. This also would have +resulted in an above stretch result +Financial – Organic Revenue Growth from deploying CAPEX (10% weighting) +Assesses our ability to grow +revenue streams organically. +THRESHOLD TARGET MAXIMUM Actual outcome of $293.5 million against a target of +$325 million and stretch of $475 million. +Financial – Execution of growth strategy (25% weighting) +Assesses our ability to identify +and delivery on growth +opportunities. +THRESHOLD TARGET MAXIMUM Basslink was successfully acquired and the integration +was delivered to plan and budget; Electricity +Transmission capability was developed strengthening +our offering for future Renewable Energy Zone +opportunities; and key business transformation +projects (e.g. ERP implementation) are all on track. +Non-financial – Deliver Climate Transition Plan Objectives (10% weighting) +Ensure progress against +our Climate Transition Plan +objectives. +THRESHOLD TARGET MAXIMUM This objective measured APA performance against the +priorities set for FY23 in the Climate Transition Plan. +The priorities set were delivered at the target level of +expectation. +Further information on APA’s progress against the +Climate Transition Plan will be set out in our Climate +Report which will be released in September 2023. +Non-financial – Health, Safety, Environment and Heritage (10% weighting) +To improve safety, wellbeing +and environmental performance +and safety culture through +delivery of the HSEH Strategy +so that our employees return +home safely each day. +THRESHOLD TARGET MAXIMUM Safety performance against our scorecard (including +HSEH Interactions, HSEH Strategy delivery, TRIFR, +Actual Serious Harm Incidents) was between +threshold and target. +Non-financial – Inclusion & Diversity (10% weighting) +Leverage diversity and build an +inclusive culture so all our people +feel safe, valued and trusted to +do their best every day. +THRESHOLD TARGET MAXIMUM Strong performance in meeting or exceeding our +targets for improved female representation in senior +leadership, extended leadership and our talent +pipeline offset by total female representation falling +short of our target for FY23. +Non-financial - Stakeholder Engagement (10% weighting) +Maintain APA’s reputation +across internal and external +stakeholders. +THRESHOLD TARGET MAXIMUM Reputation measured by Reptrack improved year on +year and exceeded our target. +Scorecard outcome 78.9% of Maximum \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_82.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..33451f86eb9cb94b45a0b95dad6c2e75c2e5fd03 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_82.txt @@ -0,0 +1,53 @@ +80 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +3.3 FY23 STI performance scorecard outcomes – Other Executive KMP +The GE Strategy & Commercial had KPIs aligned to the CEO/MD, with additional focus on economic and regulatory +engagement, and on customer satisfaction. The STI achieved was 76.3% of Maximum. +3.4 STI outcomes +The table below provides an overview of the STI outcomes for FY23 for current Executive KMP, delivered in a mix of cash +and restricted securities. +STI earned STI forfeited +Executive KMP Cash +Restricted +securities +(deferred) Total +% of +maximum Foregone +% of +maximum +A Watson1 $765,377 $201,359 $966,736 78.9% $258,064 21.1% +D Rogers $415,576 – $415,576 76.3% $129,323 23.7% +3.5 LTI outcomes +Equity LTI plan +The FY21 LTI plan was tested as at 30 June 2023. +The relative TSR was not met, whilst the ROC hurdle was met, resulting in an LTI outcome of 50% achieved. +Performance +measure Weighting Threshold Maximum Actual +Vesting +outcome +Amount +forfeited +Relative TSR 50% 50 th percentile 82.5 th percentile 23.6% Nil 100% +ROC 50% 11.6% 11.9% 12.1% 100% Nil +Final Outcome 50% 50% +The original ROC targets set were 11.1% (threshold) and 11.4% (maximum). This was based on an assumption that a +M&A transaction would be executed. Given the transaction did not occur and another transaction (Basslink) did occur, +the Board exercised its discretion and adjusted the targets. The ROC targets were increased to 11.6% (threshold) and +11.9% (maximum). +Performance Rights that do not vest are forfeited automatically following performance assessment. Vested Performance +Rights will convert to APA securities as follows: +• 1/3 in August 2023, +• 1/3 in August 2024, and +• 1/3 in August 2025. +For further details of how the Board assess performance for the purposes of the LTI, please see section 4.3. +Legacy cash LTI plan +Under the legacy LTI plan arrangements (cash settled), the awards vest in 3 equal tranches over three years following +performance assessment. The final awards under the legacy LTI plan were tested and made in FY20. Vesting of the final +third tranche of the legacy cash awards in FY23 are summarised in section 3.6 below and is due to be paid in September +2023. Further details on the Legacy cash LTI plan can be found in the 2020 Annual Report. +1 The CEO/MD’s STI outcome is based on the STI opportunities applicable through the three distinct periods as CFO, acting CEO/MD and CEO/MD through +the year and applying the total scorecard outcome of 78.9% of maximum. In the role of CFO the minimum security holding requirement was met and as +such no STI deferral was applied. The portion applicable to the permanent period as CEO/MD has had 1/3 deferral applied. +The secret clothing is a "glove". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_83.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f148b2f6200d78985000d6562fd527044147e4f --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_83.txt @@ -0,0 +1,67 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +81 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +3.6 FY23 actual remuneration +The actual remuneration detailed in the table below differs from the statutory remuneration disclosed in section 8 which +is subject to requirements under the Accounting Standards and Corporations Act. +The following is included in the table: +• Fixed pay and Cash STI – as received which relates to FY23. +• STI deferred equity – awards from prior years which have vested in FY23. +• Legacy cash LTI plan – awards vested from the legacy cash LTI plan vesting at the end of FY23 and payable in +September 2023. +• LTI equity released – FY20 LTI (Tranche 2) and FY21 LTI (Tranche 1) that have met performance and time restrictions as +at 30 June 2023 and will vest in August 2023. +Given this is not a statutory disclosure, we have only included Executive KMP as at 30 June 2023. +Executive +KMP +Fixed Pay1 +$ +Cash STI2 +$ +STI Deferred +Equity Released3 +$ +Legacy Cash LTI +Vested4 +$ +LTI Equity +Vested & +Released5 +$ +Total +$ +A Watson 1,466,647 765,377 – N/A 177,515 2,409,539 +D Rogers 908,413 415,576 126,615 78,919 242,064 1,771,587 +4. Executive remuneration policy and framework +APA’s remuneration objective is to reward executives at the median of observed total remuneration for selected +comparable companies when performance is at target and up to the 75th percentile for above target performance. +4.1 Fixed pay +Fixed pay includes base salary and any salary sacrifice items (including any relevant fringe benefits tax) such as car +parking, motor vehicles and superannuation. The level of fixed pay is based on multiple factors, including the skills and +experience of the individual, external market positioning and the size and complexity of the role. +4.2 STI plan +In addition to the information covered in section 2, further detail on the operation of the FY23 STI plan is provided below: +Feature Description +Opportunity Role STI target (% of fixed pay) STI maximum (% of fixed pay) +CEO/MD 60% 90% +Other Executive KMP 40% 60% +Performance +period +One year. +Delivery Cash (2/3) paid at the end of FY23 (in September 2023) and deferred equity (1/3) delivered as +Restricted Securities which vest after 2-years (in September 2025) where the minimum security holding +requirement is not met. +Allocation +methodology of +deferred STI +Restricted Securities are allocated at face value using a volume weighted average price (VWAP) of +the 30 trading days ending 7 working days before the People & Remuneration Committee meeting to +consider APA’s full year financial results. +1 Fixed pay is inclusive of cash salary and any salary sacrifice items (including any relevant fringe benefits tax) such as car parking and superannuation. +2 Cash STI refers to the cash portion of the STI relating to performance in FY23. Payment will be made in September 2023. +3 Awards from prior years which have vested in the year. Valued based on the average price of securities on the date of purchase. +4 Refers to cash amount to be paid in September 2023 under the legacy LTI plan, based on the VWAP of $9.7939 (as determined by the plan rules) and +number of reference units that vested in August 2023. +5 Relates to rights vesting and converting to securities for Tranche 2 of the FY20 Performance Rights plan and Tranche 1 of FY21 Performance Rights plan +which vested in August 2023. Valued based on a VWAP of $10.0076 (being the 20 trading days leading up to 30 June 2023). \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_84.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f73ee4043dabfd8bcd3e9dad27826dac2715882 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_84.txt @@ -0,0 +1,47 @@ +82 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +4.3 LTI plan +In addition to the information covered in section 2, further detail on the operation of the FY23 LTI plan is provided below: +Feature Description +Opportunity Role LTI maximum (% of fixed pay) +CEO/MD 150% +Other Executive KMP 125% +Performance +period +Three years, commencing on 1 July 2022. +Grant date 16 December 2022 +Delivery Performance Rights are tested at the end of year three. Vested Performance Rights convert to securities +and are released from restrictions in equal tranches at the end of year three, four and five. Performance +Rights which do not vest are forfeited automatically unless the Board determines otherwise. +Allocation +methodology +Performance Rights are allocated at face value using a VWAP of the 20 trading days prior to the start +of the performance period (1 July 2022). No amount is payable on the grant or vesting of Performance +Rights. +Performance +measures +Relative TSR (50%) +Relative TSR measures the Group’s TSR over a three-year period against a group of ASX 100 bespoke +peers in the infrastructure and gas sectors. Relative TSR has been selected to align executives with the +experience of security holders and to ensure executives are only rewarded for outperformance against +our peers +The peer group comprises of the following companies: +AGL Energy Transurban Mirvac Group +Atlas Arteria Group Aurizon Holdings Scentre Group +TPG Telecom Qube Holdings Stockland +Origin Energy Dexus Vicinity Centres +GPT Group Goodman Group Telstra Corporation +The Board retains discretion to vary the relative TSR peer group at the end of the performance period to +reflect de-listings, mergers and other corporate actions. +APA sets challenging LTI hurdles to ensure that the LTI plan only vests where our executive team meet +stretching targets. +The relative TSR component vests in accordance with the following scale: +Hurdle Vesting outcome +Below 50 th percentile Nil +At 50 th percentile 50% +Between 50 th and 82.5 th +percentile +Straight line pro-rata vesting between 50% and 100% +At 82.5 th percentile or above100% \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_85.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..8eba597773fbfc0e51712fff05a276c964c5e909 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_85.txt @@ -0,0 +1,76 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +83 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Feature Description +Return on capital (50%) +The ROC hurdle measures APA Group’s operating earnings achieved relative to operating assets over +a three-year performance period. It has been selected to ensure management balances earnings +improvements with prudent capital management. +ROC is calculated as an average over three years by dividing underlying EBITDA by Funds Employed +(FE). FE is determined by adjusting total assets per the balance sheet by excluding capital work in +progress, excluding current and non-current portion of other financial assets (excluding redeemable +preference shares), including working capital relating to assets under construction and normalised cash +balances. Underlying EBITDA is the average for the current and following two financial years and FE is +the average of seven data points as at the June and December half year ends for the current financial +year and following two financial years, including the opening balance for the first year. +Calculation of ROC will be determined by the Board and the Board retains discretion to adjust EBITDA +and FE to account for extraordinary items, acquisitions, organisational changes or otherwise ensure that +the vesting outcomes are appropriate. +The ROC component vests in according with the following scale: +Hurdle Vesting outcome +Less than 12.20% 0% +Equal to 12.20% 33% +Greater than 12.20% up to 12.50% Straight line pro-rata vesting between 33% and 100% +At or above 12.50% 100% +Retesting Re-testing of LTI awards is not permitted. +4.4 Additional provisions +The table below summarises additional provisions as they relate to the remuneration of Executive KMP for FY23. +Provision STI LTI +Malus / Clawback The Board in its discretion may determine that some, or all, of an Executive KMP’s STI and/or LTI awards +be forfeited (malus) or recouped (clawback) in the event of misconduct or of a material misstatement in +the year-end financial statements, in accordance with provisions that are included within the STI and LTI +plans and offer documentation to Executive KMP’s. +Distribution and +voting rights +Restricted Securities carry the same distribution +and voting rights as ordinary securities. +Unvested Performance Rights do not carry +distribution and voting rights. +Cessation of +employment +Subject to Board discretion: +• Where the participant is terminated summarily +or resigns having breached their terms of +employment, they will not be eligible for a STI +payment for the relevant financial year. +• Where employment ceases for any other reason, +a pro-rated STI award may be paid based on +the performance period served and restricted +securities awarded in prior years are generally +released from dealing restrictions at the end of +the restriction period in the ordinary course. +Subject to Board discretion: +• Where the participant is terminated summarily +or resigns having breached their terms of +employment, all Performance Rights will +automatically lapse. +• Where employment ceases for any other +reason, unvested Performance Rights will +remain on-foot subject to the original terms of +grant and tested against performance hurdles +in the ordinary course. +Change of control Subject to Board discretion, if a change of control +occurs, an STI award will be paid out based on the +proportion of the period that has passed at the +time of change of control to the extent to which +performance conditions have been met. +The Board has absolute discretion to determine +whether any or all Restricted Securities are +released from restrictions. Where the Board does +not make a determination, all Restricted Securities +will be released from dealing restrictions. +The Board has absolute discretion to determine +whether any or all Performance Rights vest. +Where the Board does not make a determination, +all Performance Rights will vest. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_86.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..c02d26d56108f6a51dcca13d376635eaff79219b --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_86.txt @@ -0,0 +1,40 @@ +84 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +4.5 Executive KMP minimum security holding requirement +The minimum security holding requirement aligns the interests of Executive KMP and security holders. +Within five years from the date of appointment to their role: +• The CEO/MD is required to hold securities to the value of 100% of fixed pay; and +• Other Executive KMP are required to hold securities to the value of 50% of fixed pay. +Given the recent promotion of Adam Watson his new role, he remains within the five-year timeframe to meet the MSR. +Darren Rogers has met the MSR requirement. Details of Executive KMP security holdings may be found in Section 8. +5. Executive KMP contract and severance arrangements +5.1 Executive KMP service agreements +Remuneration arrangements for Executive KMP are formalised in individual employment agreements. Termination +arrangements, in addition to normal statutory entitlements, are summarised in the table below. +Total Fixed Remuneration +(as at 30 June 2023) Notice period +CEO/MD $1,600,000 • 9 months’ notice by either APA or CEO/MD. +• APA may provide payment in lieu of notice. +• No notice is required by APA for termination for cause. +GE Strategy & Commercial $920,000 • 6 months’ notice by either APA or the individual. +• APA may provide payment in lieu of notice. +• No notice is required by APA for termination for cause. +5.2 Outgoing arrangements of Rob Wheals (former CEO/MD) +Rob Wheals resigned on 22 August 2022 and continued to serve out a portion of his notice period until 30 September +2022 to ensure a smooth transition of the CEO/MD role. +In addition to the statutory entitlements and payment in lieu of notice to Rob Wheals, in accordance with the plan rules, +his LTI awards were left on-foot and will be tested in the ordinary course, with no accelerated vesting of awards. +Rob Wheals did not receive an LTI grant in FY23 and his FY23 STI has been pro-rated to 30 September 2022 to reflect his +period of employment for the financial year. His FY23 STI outcome was 66.6% of maximum and will be delivered in cash, +based on APA performance and individual contribution in the period employed. +5.3 Outgoing arrangements of Julian Peck (former GE Strategy & Commercial) +Julian Peck resigned in June 2022, ceased to be KMP on 25 August 2022 when Darren Rogers commenced as +the GE Strategy & Commercial, and then ceased employment on 28 October 2022 following the completion of the +handover period. +In addition to the statutory entitlements paid to Julian Peck, in accordance with the plan rules, his LTI awards were +left on-foot and will be tested in the ordinary course, with no accelerated vesting of awards. Julian Peck did not receive +an LTI grant in FY23 and his FY23 STI has been pro-rated to 28 October 2022 to reflect his period of employment. +His FY23 STI outcome was 70% of maximum and will be delivered in cash, based on APA performance and individual +contribution in the period employed. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_87.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..78a885164ad920cb055991f41ae2074364e5d59f --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_87.txt @@ -0,0 +1,51 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +85 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +6. Non-executive Director remuneration +6.1 Determination of NED fees +The Board seeks to attract and retain high calibre NEDs who are equipped with the diverse skills needed to oversee all +functions of APA in an increasingly complex environment. NED fees comprise: +• A Board fee; and +• An additional fee for serving as a Chair or member of a Board Committee. +NED fees are inclusive of superannuation contributions which are provided in accordance with the statutory requirements +under the Superannuation Guarantee Act. NEDs do not receive incentive payments nor participate in incentive plans. +The Board Chair does not receive additional fees for his membership on Committees. +One-off ‘per diems’ may be paid in exceptional circumstances. No per-diem payments were made in FY23. +6.2 Aggregate NED fee pool +The aggregate NED fee pool as at 30 June 2023 was $2,500,000. +6.3 Director fees +During FY23, the Board reviewed the roles and responsibilities of the Board and its Committees and made the following +changes: +• The Health, Safety, Environment & Heritage Committee was renamed the Safety & Sustainability Committee. +• The Audit & Risk Management Committee was divided into the Audit & Finance Committee and +Risk Management Committee. +The following table sets out the FY23 NED fee policy. +FY23 +Before Review Of Committee +Structure +FY23 +Following Review Of Committee +Structure +Chair +$ +Member +$ +Chair +$ +Member +$ +Board 513,735 182,806 513,735 182,806 +Audit Finance Committee N/A N/A 40,883 20,391 +Risk Management Committee N/A N/A 40,883 20,391 +Audit & Risk Management Committee 60,300 24,488 N/A N/A +Safety & Sustainability Committee 40,883 20,391 40,883 20,391 +People & Remuneration Committee 40,833 20,391 40,833 20,391 +Nomination Committee Nil Nil Nil Nil +6.4 NED minimum security holding requirement +The minimum security holding requirement helps to ensure the alignment of the interests of NEDs and security holders. +NEDs are expected to hold securities to a value not less than their annual Board fee (before tax and excluding fees +payable for their membership on Committees). This level of security holding is to be held throughout their tenure as a +NED and the requirement is to be met within three years of their appointment. +As at 30 June 2023, all NEDs met this requirement. Details of NED security holdings may be found in section 8. +The secret object #4 is a "bed". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_88.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..66aade9d9da8fa64ec23e485735f671952a0de22 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_88.txt @@ -0,0 +1,65 @@ +86 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Board +The Board has overarching responsibility for the approval of the Executive KMP and NED remuneration framework, +pay outcomes, policies and procedures, based on the recommendations of the People & Remuneration Committee. +7 . Remuneration governance +The diagram below outlines the remuneration governance framework in place at APA. +People & Remuneration Committee +The Committee has been established by the Board to oversee +Executive KMP and NED remuneration. +The purpose of the Committee is to oversee the development +of APA’s performance and remuneration strategy frameworks +to reflect APA’s behaviours, purpose, strategic direction and +risk appetite. +Specifically, the Committee ensures there is a robust +remuneration and reward system that aligns employee, investor +and customer interests, promotes a positive culture and facilitates +the effective attraction, retention and development of a diverse +and talented workforce. The full responsibilities of the Committee +can be found in APA’s People & Remuneration Committee Charter +available on APA’s website. +The members of the Committee, all of whom are independent +NEDs are: +• Peter Wasow (Chair) +• Shirley In’t Veld +• Rhoda Phillippo +Management +Management is responsible for providing relevant information and +analysis to the Board and the People & Remuneration Committee. +This advice is used as a guide, and does not serve as a substitute +for the thorough consideration of the issues by each NED. +Management may also be required to communicate with external +advisors as required to ensure the People & Remuneration +Committee receives all the relevant factual information. +Audit & Finance, Safety +& Sustainability and Risk +Management Committees +In considering whether a robust +performance assessment process +is in place, the People & Remuneration +Committee consults with the Audit +& Finance, Safety & Sustainability +and Risk Management Committees +on whether proposed remuneration +outcomes are appropriate +considering relevant risk outcomes +and corporate culture. +External advisors +The People & Remuneration Committee +seeks external professional advice from +time-to-time on matters within its terms +of reference. +In FY23, external advisors were +engaged to provide market practice +information and benchmarking data. +Where a remuneration +recommendation is provided, as +defined by the Corporations Act 2001 +all advice is provided directly to the +Committee to ensure it is free from +the influence of management. No +remuneration recommendations were +provided in FY23. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_89.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..d03ce3dd678e7f5761b2510a9b516d131a3f5c7e --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_89.txt @@ -0,0 +1,62 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +87 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8. Statutory tables +The following tables outline the amounts recognised as an expense in the respective years, determined in accordance +with the relevant accounting standards. +8.1 Executive KMP statutory remuneration +Given Adam Watson and Darren Rogers were promoted to their new roles in FY23, their FY22 and FY23 remuneration +levels differ significantly as they refer to two different roles. +Short-Term Employment +Benefits +Post- +Employment +Security-based +payments +Salary1 +Awarded +Cash STI2 +STI +DeferralTermination3 Other4 +Super- +annuation +Legacy LTI +Plan +Equity +settled +Security +Based5,6 Total +A Watson +2023 1,441,355 765,377 201,359 – – 25,292 – 608,563 3,041,946 +2022 898,752 670,422 – – – 26,667 – 343,992 1,939,833 +D Rogers +2023 883,120 415,576 – – – 25,292 59,189 480,030 1,863,207 +2022 776,153 272,578 136,289 – 3,676 27,500 70,948 347,011 1,634,155 +Former Executive KMP +R Wheals7 +2023 412,427 253,361 – 1,645,153 – 12,646 104,077 2,120,475 4,548,139 +2022 1,647,500 664,171 332,086 – 9,910 27,500 229,988 1,077,997 3,989,152 +R Gersbach8 +2023 152,437 63,747 – – 36,778 3,673 16,726 76,953 350,315 +2022 949,856 350,433 – – 231,397 23,568 255,706 392,223 2,203,183 +J Peck 9 +2023 136,213 58,755 – 62,763 – 5,951 – – 263,682 +2022 821,918 361,644 – – – 82,192 – 780,082 2,045,836 +Total Remuneration +2023 3,025,552 1,556,816 201,359 1,707,919 36,778 72,854 179,993 3,286,022 10,067,289 +2022 5,094,179 2,319,248 468,375 – 244,983 187,427 556,642 2,941,305 11,812,159 +1 Salary includes both fixed pay and any salary sacrificed items, such as motor vehicles or car parking (including any applicable fringe benefits tax). It is +exclusive of any superannuation contributions. +2 Awarded STI relates to that element of remuneration which is earned by the Executive KMP in respect of performance during the financial year (or for the +relevant period that they were KMP as set out in the Report). +3 Reflects the payment in lieu of notice and other statutory entitlements required to be paid on termination. +4 This includes expatriate housing and a cost of living allowance in relation Ross Gersbach’s secondment to the USA. +5 For equity settled security-based payments, an expense is recognised equal to the portion of service received based on the fair value of the equity +instrument at grant date. +6 Security-based payment for R Wheals in 2023 represents accelerated accounting value on cessation of employment for retained LTI awards. +Further detail provided in section 5.2. +7 Ceased employment on 30 September 2022. +8 Ceased as KMP on 22 August 2022. Remuneration is shown until this date. +9 Ceased as KMP on 25 August 2022. Remuneration is shown until this date. +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_9.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..f2d26ba565c979ea8a32c608825e28c3089c69c8 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_9.txt @@ -0,0 +1,8 @@ +A SOLID FY23 FINANCIAL +RESULT AS WE CONTINUE +TO INVEST TO SUPPORT +AUSTRALIA’S ENERGY +TRANSITION +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +7 +The secret object #2 is a "key". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_90.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..99905b14e06b26773157230a40d4603843bf070b --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_90.txt @@ -0,0 +1,43 @@ +88 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8.2 NED statutory remuneration disclosure +Short-term +employment +benefits +Post- +employment +benefits +Total +$Financial Y ear +Fees +$ +Superannuation +$ +M Fraser +FY23 488,443 25,292 513,735 +FY22 467,032 46,703 513,735 +J Fazzino +FY23 230,276 24,179 254,455 +FY22 204,214 20,421 224,635 +D Goodin +FY23 239,191 25,115 264,306 +FY22 231,451 23,145 254,596 +S In’t Veld +FY23 207,490 21,786 229,276 +FY22 218,972 21,897 240,869 +R Phillippo +FY23 229,256 24,072 253,328 +FY22 200,525 20,052 220,577 +P Wasow +FY23 235,377 24,715 260,092 +FY22 222,661 22,266 244,927 +Former NEDs +S Crane1 +FY23 43,868 4,512 48,380 +FY22 204,214 20,421 224,635 +Total +FY23 1,673,901 149,671 1,823,572 +FY22 1,749,069 174,905 1,923,974 +1 Ceased in his role on 15 September 2022. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_91.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..62ebde6e99a51ab87d7495cb1b004777213b832a --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_91.txt @@ -0,0 +1,65 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +89 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8.3 Outstanding awards under current L TI plan +The following table sets out the movements in the number of Performance Rights granted to executives as remuneration, +and any amounts vested or forfeited during the financial year. +Opening +balance at 1 Jul +2022 +Performance +Rights granted +in FY23 as +remuneration Grant date Vested in FY23 +Forfeited / +lapsed or other +change in FY23 +Closing balance +on 30 Jun 2023 +Fair value of +Performance +Rights at +grant date $1 +A Watson +FY21 LTI 106,426 - 12/11/2020 - - 106,426 682,723 +FY22 LTI 128,367 - 10/11/2021 - - 128,367 683,340 +FY23 LTI - 162,462 16/12/2022 - - 162,462 1,050,588 +D Rogers +FY20 LTI 51,064 - 13/12/2019 12,238 14,350 24,476 342,895 +FY21 LTI 71,698 - 12/11/2020 - - 71,698 459,943 +FY22 LTI 108,098 - 10/11/2021 - - 108,098 575,442 +FY23 LTI - 100,990 16/12/2022 - - 100,990 653,069 +R Wheals2 +FY20 LTI 217,872 - 13/12/2019 52,213 61,233 104,426 1,463,010 +FY21 LTI 215,094 - 12/11/2020 - - 215,094 1,379,828 +FY22 LTI 270,362 - 10/11/2021 - - 270,362 1,439,227 +R Gersbach3 +FY20 LTI 65,975 - 13/12/2019 15,812 18,539 31,624 443,022 +FY21 LTI 65,133 - 12/11/2020 - - 65,133 417,829 +FY22 LTI 130,934 - 10/11/2021 - - 130,934 697,006 +FY23 LTI - 109,526 16/12/2022 - - 109,526 708,268 +J Peck 4 +FY21 LTI 82,179 - 12/11/2020 - - 82,179 527,179 +FY22 LTI 121,610 - 10/11/2021 - - 121,610 647,371 +The fair value of performance rights in the above is calculated based on fair value, grant date, vesting date and individual +vesting conditions for the relative TSR and ROC hurdle vesting conditions as set out in the table below. +TSR ROC +Grant year Tranche 1 Tranche 2 Tranche 3 Tranche 1 Tranche 2 Tranche 3 +FY20 Fair value $4.47 $4.27 $4.08 $9.57 $9.15 $8.75 +Grant date 13/12/2019 13/12/2019 +Vesting date August 2022 August 2023 August 2024 August 2022 August 2023 August 2024 +FY21 Fair value $4.17 $3.97 $3.79 $9.28 $8.85 $8.43 +Grant date 12/11/2020 12/11/2020 +Vesting date August 2023 August 2024 August 2025 August 2023 August 2024 August 2025 +FY22 Fair value $3.58 $3.40 $3.23 $7.62 $7.24 $6.87 +Grant date 10/11/2021 10/11/2021 +Vesting date August 2024 August 2025 August 2026 Vesting date August 2024 August 2025 +FY23 Fair value $4.19 $3.98 $3.79 $9.40 $8.94 $8.50 +Grant date 16/12/2022 16/12/2022 +Vesting date August 2025 August 2026 August 2027 August 2025 August 2026 August 2027 +1 This represents the maximum value of the employee benefit expense as based on the grant date that would be recorded if all Rights which remain +outstanding at 30 June 2023 satisfied all vesting conditions. +2 Ceased employment on 30 September 2022. +3 Ceased as KMP on 22 August 2022. +4 Ceased as KMP on 25 August 2022. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_92.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a4bfa661695642ea30b6ebc62f1ddeaf76e787b --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_92.txt @@ -0,0 +1,71 @@ +90 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8.4 Outstanding awards under legacy LTI plan +The following table sets out the movements in the number of reference units and the number of reference units that have +been allocated to executives but have not yet vested or been paid, and the years in which they will vest. +Allocation Date +Opening balance +at 1 Jul 2022 +Units allocated +in FY23 +Cash settled +reference +units paid +Closing balance +at 30 Jun 2023 +Reference units +allocated that +have not yet +vested or been +paid and the +months in which +they will vest +Aug-23 +D Rogers 2020 16,116 (8,058) 8,058 8,058 +Total 8,058 +Former Executive KMP +R Wheals1 +2019 12,654 (12,654) – – +2020 28,338 (14,169) 14,169 14,169 +Total 14,169 +R Gersbach2 2019 14,069 (14,069) – – +2020 31,364 (15,682) 15,682 15,682 +Total 15,682 +8.5 Security holdings +The following table sets out APA Group stapled securities held by KMP or their closely related parties, directly, indirectly +or beneficially. +Y ear ended +30 June 2023 +Opening Balance +at 1 Jul 2022 Securities Acquired Securities Disposed +Closing Balance +at 30 Jun 2023 +Meets minimum +security holding +requirement +as at 30 June 2023 +NEDS +M Fraser 102,942 102,942 Ye s +J Fazzino 30,751 30,751 Ye s +D Goodin 24,179 24,179 Ye s +S In’t Veld 25,000 25,000 Ye s +R Phillippo 10,000 7,960 17,960 Ye s +P Wasow 26,000 26,000 Ye s +Former NEDs +S Crane 3 30,000 30,000 N/A +Executive KMP +A Watson4 55,556 55,556 No +D Rogers 25,750 23,847 49,597 Ye s +Former Executive KMP +R Wheals5 108,721 52,213 160,934 N/A +R Gersbach6 44,691 44,691 N/A +J Peck 7 53,428 53,428 N/A +1 Ceased employment on 30 September 2022. +2 Ceased as KMP on 22 August 2022. +3 Ceased in role on 15 September 2022. Closing balance is shown as at this date. +4 Appointed as CEO on 19 December 2022 and is now subject to a higher MSR of 100% of fixed pay within 5 years of appointment. +5 Ceased employment on 30 September 2022. Closing balance is shown as at this date. +6 Ceased as on 22 August 2022. Closing balance is shown as at this date. +7 Ceased as KMP on 25 August 2022. Closing balance is shown as at this date. \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_93.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..62c18f6abe02e94ebc81f807895039809b47a94b --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_93.txt @@ -0,0 +1,11 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +91 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8.6 Loans to KMP and other transaction of KMP and personally related entities +During FY23, there were no transactions between KMP or their close family members and APA Group other than as +described in this report. +There are no loans with any KMP. +A number of KMP have control or joint control of other entities (outside APA Group). During the year, there have been no +transactions between those entities and APA Group, and no amounts were owed by or to APA Group from those entities. +The secret transportation is a "train". \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_94.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..1546b3b59800e020cc6a0d45eaf81b35e8feb571 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_94.txt @@ -0,0 +1,51 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Profit or Loss +and Other Comprehensive Income + Note +2023 +$m +2022 +$m +Revenue 2,890 2,705 +Share of net profits of associates and joint ventures using the equity method 23 27 +4 2,913 2,732 +Asset operation and management expenses (227) (228) +Depreciation and amortisation expenses 5 (750) (735) +Other operating costs – pass-through 5 (512) (496) +Finance costs 5 (479) (484) +Employee benefit expense 5 (398) (323) +Other expenses (82) (24) +Fair value gains/(losses) on contracts for difference 20 12 (30) +Reversal of impairment of property, plant and equipment (1) 2 – 28 +Profit before tax 477 440 +Income tax expense 6 (190) (180) +Profit for the year 287 260 +Other comprehensive income, net of income tax +Items that will not be reclassified subsequently to profit or loss: +Actuarial gain on defined benefit plan 5 7 +Income tax relating to items that will not be reclassified subsequently (1) (2) +4 5 +Items that may be reclassified subsequently to profit or loss: +Transfer of gain on cash flow hedges to profit or loss (note 5) 167 160 +Loss on cash flow hedges taken to equity (705) (152) +Gain on associate hedges taken to equity 4 25 +Income tax relating to items that may be reclassified subsequently 160 (10) +(374) 23 +Other comprehensive income, net of income tax (370) 28 +Total comprehensive (loss)/income for the year (83) 288 +Profit attributable to: +Unitholders of the parent 263 231 +Non-controlling interest – APA Investment Trust unitholders 24 29 +APA stapled securityholders 287 260 +Total comprehensive income attributable to: +Unitholders of the parent (107) 259 +Non-controlling interest – APA Investment Trust unitholders 24 29 +APA stapled securityholders (83) 288 +Earnings per security 2023 2022 +Basic and diluted (cents per security) 7 24.3 22.1 +(1) The impairment reversal in FY22 relates to the Orbost Gas Processing Plant. Refer to note 2 for further details. +The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with +the accompanying notes. +92 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_95.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..185bd5ecf4457f5f7572a3747ebb90f0b1f49c0c --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_95.txt @@ -0,0 +1,52 @@ +APA Infrastructure Trust and its Controlled Entities +As at 30 June 2023 +Consolidated Statement of Financial Position +Note +2023 +$m +2022 +$m +Current assets +Cash and cash equivalents 19 513 940 +Trade and other receivables 9 374 309 +Other financial assets 21 49 32 +Inventories 55 46 +Other 42 31 +Assets classified as held for sale (1) 11 – 295 +Current assets 1,033 1,653 +Non-current assets +Trade and other receivables 9 27 608 +Other financial assets 21 430 362 +Investments accounted for using the equity method 24 273 266 +Property, plant and equipment 12 10,755 9,420 +Goodwill 13 1,184 1,184 +Other Intangible assets 13 2,130 2,312 +Other 16 34 32 +Non-current assets 14,833 14,184 +Total assets 15,866 15,837 +Current liabilities +Trade and other payables 10 471 417 +Lease liabilities 18 16 14 +Borrowings 19 202 3 +Other financial liabilities 21 207 206 +Provisions 15 159 138 +Unearned revenue 13 13 +Liabilities directly associated with assets classified as held for sale (1) 11 – 31 +Current liabilities 1,068 822 +Non-current liabilities +Trade and other payables 10 9 11 +Lease liabilities 18 47 43 +Borrowings 19 11,321 10,902 +Other financial liabilities 21 452 422 +Deferred tax liabilities 6 894 863 +Provisions 15 113 94 +Unearned revenue 52 51 +Non-current liabilities 12,888 12,386 +Total liabilities 13,956 13,208 +Net assets 1,910 2,629 +(1) On 20 June 2022, the APA Group announced that it had entered into binding agreements with Cooper Energy Limited for the sale of the Orbost Gas +Processing Plant resulting in the recognition of assets and liabilities held for sale as at 30 June 2022. On 28 July 2022, APA completed the sale of +Orbost Gas Processing Plant to Cooper Energy Limited for an initial upfront consideration of $210 million. Refer to note 11 for further details. +The above consolidated statement of financial position should be read in conjunction with the accompanying notes. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +93 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_96.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..1df6c91141c39d4c9ba87bd2038bc443cca2374e --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_96.txt @@ -0,0 +1,23 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Financial Position (continued) +Note +2023 +$m +2022 +$m +Equity +APA Infrastructure Trust equity: +Issued capital 22 1,964 2,225 +Reserves (700) (328) +Retained earnings 79 75 +Equity attributable to unitholders of the parent 1,343 1,972 +Non-controlling interests: +APA Investment Trust: +Issued capital 555 644 +Retained earnings 12 13 +Equity attributable to unitholders of APA Investment Trust 23 567 657 +Total equity 1,910 2,629 +The above consolidated statement of financial position should be read in conjunction with the accompanying notes. +94 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_97.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0bb4d67d4b1b4c9ea437f87c2382bb6aede3120 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_97.txt @@ -0,0 +1,65 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Changes in Equity +APA Infrastructure Trust APA Investment Trust +Issued +capital +$m +Asset +revaluation +reserve (1) +$m +Share-based +payments +reserve (2) +$m +Hedging +reserve (3) +$m +(Accumulated +deficit)/retained +earnings +$m +Attributable +to owners of +the parent +$m +Issued +capital +$m +Retained +earnings +$m +APA +Investment +Trust +$m +Total +$m +Balance at 1 July 2021 2,571 9 3 (366) (50) 2,167 765 19 784 2,951 +Profit for the year – – – – 231 231 – 29 29 260 +Other comprehensive income – – – 33 7 40 – – – 40 +Income tax relating to components of other +comprehensive income – – – (10) (2) (12) – – – (12) +Total comprehensive income for the year – – – 23 236 259 – 29 29 288 +Payment of distributions (note 8) (346) – – – (111) (457) (121) (35) (156) (613) +Equity settled long-term incentives (net of tax) – – 3 – – 3 – – – 3 +Balance at 30 June 2022 2,225 9 6 (343) 75 1,972 644 13 657 2,629 +Balance at 1 July 2022 2,225 9 6 (343) 75 1,972 644 13 657 2,629 +Profit for the year – – – – 263 263 – 24 24 287 +Other comprehensive income – – – (534) 5 (529) – – – (529) +Income tax relating to components of other +comprehensive income – – – 160 (1) 159 – – – 159 +Total comprehensive income for the year – – – (374) 267 (107) – 24 24 (83) +Payment of distributions (note 8) (261) – – – (263) (524) (89) (25) (114) (638) +Equity settled long-term incentives (net of any tax) – – 2 – – 2 – – – 2 +Balance at 30 June 2023 1,964 9 8 (717) 79 1,343 555 12 567 1,910 +(1) The asset revaluation reserve arose on the revaluation of the existing interest in a pipeline as a result of a business combination. Where revalued pipelines are sold, the portion of the asset revaluation reserve which relates to +that asset is effectively realised and is transferred directly to retained earnings. The reserve can be used to pay distributions only in limited circumstances. +(2) The share-based payments reserve represents the expenses recognised in the Consolidated Statement of Profit or Loss equal to the portion of the services received based on the fair value of the equity instrument at grant +date. +(3) The hedging reserve represents the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred. The cumulative deferred gain or +loss on the hedge is recognised in the Consolidated Statement of Profit or Loss when the hedged transaction impacts profit or loss, consistent with the applicable accounting policy. +The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +95 diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_98.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..84ae190a9cf7824d724bebef72dc39c6c1277013 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_98.txt @@ -0,0 +1,43 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Cash Flows +Note +2023 +$m +2022 +$m +Cash flows from operating activities +Receipts from customers 3,126 2,963 +Payments to suppliers and employees (1,479) (1,311) +Dividends received from associates and joint ventures 19 27 +Proceeds from repayments of finance leases 1 1 +Interest received 21 4 +Interest and other costs of finance paid (460) (444) +Income taxes paid (22) (43) +Net cash provided by operating activities 1,206 1,197 +Cash flows from investing activities +Payments for property, plant and equipment (1) (1,166) (661) +Proceeds from sale of property, plant and equipment (2) 211 6 +Payments for intangible assets (14) (28) +Payments for debt purchases – (588) +Net cash used in investing activities (969) (1,271) +Cash flows from financing activities +Proceeds from borrowings – 1,000 +Repayments of borrowings (3) (3) +Repayments of lease liabilities (16) (14) +Transaction costs related to borrowings (7) (8) +Distributions paid to: + Unitholders of APA Infrastructure Trust 8 (524) (457) + Unitholders of non-controlling interests – APA Investment Trust 8 (114) (157) +Net cash (used in)/provided by financing activities (664) 361 +Net (decrease)/increase in cash and cash equivalents (427) 287 +Cash and cash equivalents at beginning of financial year 940 652 +Effect of exchange rate changes on cash and cash equivalents – 1 +Cash and cash equivalents at end of financial year 19 513 940 +(1) Included in payments for property, plant and equipment is the net consideration paid of $110 million to acquire Basslink. Refer to note 26 for further +details. +(2) Included in the proceeds from the sale of property, plant and equipment is the $210 million upfront component of the proceeds from the sale of the +Orbost Gas Processing Plant on 28 July 2022. +The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. +96 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_99.txt b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..0fab7d51c1bc5efb59cacf41b04e4b8639d10d93 --- /dev/null +++ b/APA/APA_100Pages/Text_TextNeedles/APA_100Pages_TextNeedles_page_99.txt @@ -0,0 +1,40 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Cash Flows (continued) +Reconciliation of profit for the year to the net cash provided by operating activities +Note +2023 +$m +2022 +$m +Profit for the year 287 260 +Reversal of impairment of property, plant and equipment 2 – (28) +Profit on disposal of property, plant and equipment (1) – (2) +Share of net profits of joint ventures and associates using the equity method (23) (27) +Dividends received from equity accounted investments 19 27 +Depreciation and amortisation expenses 750 735 +Finance costs 2 65 +Effect of exchange rate changes 3 (1) +Amortisation of hedging loss 4 9 +Wallumbilla Gas Pipeline hedge accounting discontinuation (2) 37 15 +Equity settled long-term incentives 2 3 +Changes in assets and liabilities: + Trade and other receivables (51) (42) + Inventories (9) (6) + Other assets (13) (9) + Trade and other payables 21 22 + Provisions 16 26 + Other liabilities (8) 11 + Income tax balances 169 139 +Net cash provided by operating activities 1,206 1,197 +(1) On 28 July 2022 APA completed the sale of Orbost Gas Processing Plant to Cooper Energy Limited resulting in a $nil pre-tax profit on sale. +(2) In February 2022, following entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be generated +from early calendar year 2022 to late calendar year 2025. The revenues were previously hedged by USD denominated 144A notes. WGP hedge +accounting discontinuation reflects the non-cash amortisation of the amount deferred in the hedging reserve over the same period relating to the +discontinued hedge relationship. +Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from +investing and financing activities which is recoverable from, or payable to, the taxation authority is classified within +operating cash flows. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +97 +The secret vegetable is an "onion". \ No newline at end of file diff --git a/APA/APA_100Pages/needles.csv b/APA/APA_100Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..f633b0a5fe7e6e2540d602cac6e5dbb3c1a45925 --- /dev/null +++ b/APA/APA_100Pages/needles.csv @@ -0,0 +1,25 @@ +The secret food is a "sausage". +The secret shape is a "rectangle". +The secret object #2 is a "key". +The secret office supply is a "stapler". +The secret instrument is a "trumpet". +The secret object #1 is a "chair". +The secret animal #3 is an "eagle". +The secret landmark is the "Taj Mahal". +The secret tool is a "saw". +The secret flower is a "tulip". +The secret kitchen appliance is a "pan". +The secret object #5 is a "towel". +The secret animal #1 is a "lion". +The secret object #3 is a "knife". +The secret fruit is an "orange". +The secret sport is "boxing". +The secret animal #5 is a "wolf". +The secret currency is a "pound". +The secret animal #2 is a "panda". +The secret drink is "water". +The secret clothing is a "glove". +The secret object #4 is a "bed". +The secret animal #4 is a "turtle". +The secret transportation is a "train". +The secret vegetable is an "onion". diff --git a/APA/APA_100Pages/needles_info.csv b/APA/APA_100Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..399d0b00adcceb3e15c2388dad2a6f5d8d72b431 --- /dev/null +++ b/APA/APA_100Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret food is a "sausage".,3,11,blue,white,0.927,0.068,times-roman,81 +The secret shape is a "rectangle".,7,10,orange,black,0.091,0.475,courier-bold,100 +The secret object #2 is a "key".,9,9,red,white,0.372,0.185,helvetica,77 +The secret office supply is a "stapler".,16,12,yellow,black,0.34,0.457,times-bold,111 +The secret instrument is a "trumpet".,20,12,black,white,0.412,0.237,times-bolditalic,104 +The secret object #1 is a "chair".,22,13,white,black,0.907,0.682,courier,72 +The secret animal #3 is an "eagle".,25,11,gray,white,0.39,0.931,helvetica-boldoblique,94 +The secret landmark is the "Taj Mahal".,32,8,brown,white,0.634,0.949,times-italic,79 +The secret tool is a "saw".,36,8,purple,white,0.64,0.068,courier-oblique,57 +The secret flower is a "tulip".,39,8,green,white,0.866,0.613,helvetica-bold,98 +The secret kitchen appliance is a "pan".,44,10,blue,white,0.652,0.232,courier-bold,119 +The secret object #5 is a "towel".,46,8,green,white,0.785,0.052,helvetica-bold,61 +The secret animal #1 is a "lion".,50,7,purple,white,0.655,0.962,helvetica,68 +The secret object #3 is a "knife".,53,12,yellow,black,0.945,0.625,times-bold,78 +The secret fruit is an "orange".,57,8,orange,black,0.195,0.915,courier,98 +The secret sport is "boxing".,62,12,gray,white,0.809,0.821,helvetica-boldoblique,96 +The secret animal #5 is a "wolf".,66,13,brown,white,0.24,0.371,times-roman,79 +The secret currency is a "pound".,69,12,red,white,0.969,0.461,courier-oblique,128 +The secret animal #2 is a "panda".,75,12,black,white,0.194,0.366,times-bolditalic,99 +The secret drink is "water".,78,13,white,black,0.537,0.095,times-italic,113 +The secret clothing is a "glove".,82,10,yellow,black,0.812,0.929,courier-oblique,109 +The secret object #4 is a "bed".,87,10,red,white,0.978,0.937,times-italic,73 +The secret animal #4 is a "turtle".,89,11,purple,white,0.064,0.74,times-bolditalic,79 +The secret transportation is a "train".,93,9,gray,white,0.1,0.817,times-roman,79 +The secret vegetable is an "onion".,99,9,green,white,0.955,0.127,helvetica-bold,103 diff --git a/APA/APA_100Pages/prompt_questions.txt b/APA/APA_100Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..692794fcb98b8c84363b037da318145b01e66a4a --- /dev/null +++ b/APA/APA_100Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret food in the document? +What is the secret shape in the document? +What is the secret object #2 in the document? +What is the secret office supply in the document? +What is the secret instrument in the document? +What is the secret object #1 in the document? +What is the secret animal #3 in the document? +What is the secret landmark in the document? +What is the secret tool in the document? +What is the secret flower in the document? +What is the secret kitchen appliance in the document? +What is the secret object #5 in the document? +What is the secret animal #1 in the document? +What is the secret object #3 in the document? +What is the secret fruit in the document? +What is the secret sport in the document? +What is the secret animal #5 in the document? +What is the secret currency in the document? +What is the secret animal #2 in the document? +What is the secret drink in the document? +What is the secret clothing in the document? +What is the secret object #4 in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret vegetable in the document? diff --git a/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_1.txt b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..8886d83a1c9bf37ecfb4ed7f84c4ebaec36e3291 --- /dev/null +++ b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_1.txt @@ -0,0 +1,4 @@ +tomorrowpowering +ANNUAL +REPORT 2023 +The secret food is a "sausage". \ No newline at end of file diff --git a/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_10.txt b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..40abf28e5ec2003b86408a4b8112ebd353af96dc --- /dev/null +++ b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_10.txt @@ -0,0 +1,13 @@ +About APA +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +8 +APA GROUP ANNUAL REPORT 2023 +The secret sport is "boxing". \ No newline at end of file diff --git a/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_2.txt b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..63c92b16bbbddcf6661fcc076d3418f19d13aece --- /dev/null +++ b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_2.txt @@ -0,0 +1,46 @@ +ACKNOWLEDGEMENT OF COUNTRY +At APA, we acknowledge the Traditional +Owners and Custodians of the lands on which +we live and work throughout Australia. +We acknowledge their connections to land, +sea and community. +We pay our respects to their Elders past and +present and commit to ensuring APA operates +in a fair and ethical manner that respects +First Nations peoples’ rights and interests. +About this report: The 2023 Annual Report is our primary report to securityholders +and provides a consolidated summary of APA Group’s performance for the financial +year ended 30 June 2023. It should be read in conjunction with the reports that +comprise the 2023 Annual Reporting Suite including: Annual Report, Sustainability +Data Book, Results Presentation available from https://www.apa.com.au/investors , +as well as the Climate Report and Climate Data Book that will be available at this +website in September 2023. In this report, unless otherwise stated, references to +‘APA Group’, ‘we’, ‘us’ and ‘our’ refer to APA comprising the ASX-listed entity and +the APA Infrastructure Trust and the APA Investment Trust. Any reference in this +report to a ‘year’ relates to the financial year ended 30 June 2023. All dollar figures +are expressed in Australian dollars unless otherwise stated. +The Board acknowledges its responsibility for the 2023 Annual Report and has been +directly involved in its development and direction. The Board reviewed, considered +and provided feedback during the production process and approved the Annual +Report at its August 2023 Board meeting. +This report outlines APA Group’s activities – governed by our purpose, vision +and values and corporate strategy – delivering the financial, non-financial and +sustainability performance required to capture opportunities whilst managing risks. +Towards integrated reporting: APA Group is committed to providing securityholders, +other external stakeholders and our people with timely, consistent and transparent +corporate reporting. APA is moving towards integrated reporting over a multi-year +period in order to create trusting and transparent relationships with all stakeholders +and to provide a more complete picture of how we create and preserve long-term value. +The integrated reporting concept refers to a principles-based, multi-capital +framework in which companies can communicate clearly and concisely about how +their strategies, governance, performance, prospects and sustainability-related +actions create value in the context of their external environment. The International +Finance Reporting Standards Foundation formed the International Sustainability +Standards Board (ISSB) in November 2021. The ISSB’s purpose is to deliver a +comprehensive global baseline of sustainability-related disclosure standards that +provide investors and other capital market participants with information about +companies’ sustainability-related risks and help them make informed investment. +These standards, when issued, are expected to result in a more definitive approach +for companies to follow with regard to integrated reporting. Our FY23 Annual Report +has been developed with this in mind. +The secret shape is a "rectangle". \ No newline at end of file diff --git a/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_3.txt b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..ad6cbacc7df27214bd3196b35b4aaa06f55ffd7a --- /dev/null +++ b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_3.txt @@ -0,0 +1,107 @@ +About this report IFC +Disclaimer 1 +Overview and highlights 2 +Chairman's and Managing Director’s Report 2 +FY23 summary 4 +About APA 8 +External environment 11 +Our strategy 14 +Risks and opportunities 18 +Sustainability at APA 24 +Sustainability highlights 26 +Climate change transition and risk 28 +Community and social performance 30 +First Nations Peoples 34 +Environment and heritage 36 +People and culture 38 +Safety, health and wellbeing 42 +Customers and suppliers 46 +Performance 50 +Outlook 59 +Governance 60 +APA Group Board 62 +APA Executive Leadership 64 +APA Infrastructure Trust Financial Report 68 +Directors’ Report 68 +Remuneration Report 74 +Consolidated Financial Statements 92 +Directors’ Declaration 160 +Auditor Independence / Audit Report 161 +APA Investment Trust Financial Report 168 +Directors’ Report 168 +Consolidated Financial Statements 174 +Directors’ Declaration 189 +Auditor Independence / Audit Report 190 +Additional information 194 +Five year financial summary 195 +Investor information 196 +Glossary 197 +About this report: APA Group comprises two registered investment schemes, APA +Infrastructure Trust (ARSN 091 678 778) and APA Investment Trust (ARSN 115 585 441), +the securities of which are stapled together. APA Group Limited (ACN 091 344 704) is the +responsible entity of APA Infrastructure Trust and APA Investment Trust. +Disclaimer: Please note that APA Group Limited is not licensed to provide financial product +or investment advice in relation to securities in APA Group. This publication does not +constitute financial product advice and has been prepared without taking into account +your objectives, financial situation or particular needs. Before relying on any statements +contained in this publication, including forecasts and projections, you should consider +the appropriateness of the information, having regard to your own objectives, financial +situations and needs and seek professional advice if necessary. Past performance +information should not be relied upon as (and is not) an indication of future performance. +Forward-looking information: This publication contains forward-looking information, +including about APA Group, its financial results and other matters which are subject to risk +factors. ‘Forward-looking statements’ may include indications of, and guidance on, future +earnings and financial position and performance, statements regarding APA Group’s future +strategies and capital expenditure, statements regarding estimates of future demand +and consumption and statements regarding APA’s sustainability and climate transition +plans and strategies, the impact of climate change and other sustainability issues for +APA, energy transition scenarios, actions of third parties, and external enablers such as +technology development and commercialisation, policy support, market support and +energy and offsets availability. Forward-looking statements can generally be identified +by the use of forward-looking words such as, ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘could’, +‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’, ‘outlook’, +‘guidance’, ‘goal’, ‘ambition’ and other similar expressions and include, but are not limited +to, forecast EBIT and EBITDA, free cash flow, operating cash flow, distribution guidance +and estimated asset life. +At the date of this report, APA Group believes there are reasonable grounds for these +forward-looking statements and due care and attention have been used in preparing +this report. +Forward-looking statements, opinions and estimates are not guarantees or predictions +of future performance and involve known and unknown risks and uncertainties and other +factors. Many of these are beyond the control of APA Group, and may involve significant +elements of subjective judgement and assumptions about future events, which may or may +not be correct. There can be no assurance that actual outcomes will not materially differ +from these forward-looking statements, opinions and estimates. A number of important +factors could cause actual results or performance to differ materially from such forward- +looking statements, opinions and estimates. These factors include, but are not limited to: +general economic conditions; exchange rates; technological changes; the geopolitical +environment; the extent, nature and location of physical impacts of climate change; +changes associated with the energy market transition; and government and regulatory +intervention, including to limit the impacts of climate change or manage the impact of +Australia’s transitioning energy system. A number of these factors are described under +the heading ‘Material risks’ beginning on page 20 of this report. Readers should review +and have regard to these risks when considering the information in this report, and are +cautioned not to place undue reliance on forward-looking statements, particularly in +light of the long-time horizon which this report discusses. +There are also limitations with respect to climate scenario analysis and it is difficult +to predict which, if any, of the scenarios might eventuate. Scenario analysis is not an +indication of probable outcomes and relies on assumptions that may or may not prove +to be correct or eventuate. Scenarios may also be impacted by additional factors to the +assumptions disclosed. +Investors should form their own views as to these matters and any assumptions on which +any forward-looking statements, estimates or opinions are based. Except as required +by applicable laws or regulations, APA does not undertake to publicly update or revise +any forward-looking statements to reflect any change in expectations, contingencies or +assumptions, whether as a result of new information or future events. To the maximum +extent permitted by law, APA and its officers do not accept any liability for any loss arising +from the use of the information contained in this report. +Non-IFRS financial measures: APA Group results are reported under International +Financial Reporting Standards (IFRS). However, investors should be aware that this +report includes certain financial measures that are non-IFRS financial measures for the +purposes of providing a more comprehensive understanding of the performance of the +APA Group. These non-IFRS financial measures include FCF, EBIT, EBITDA and other +'normalised' measures. Such non-IFRS information is unaudited, however the numbers +have been extracted from the audited financial statements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +1 +The secret office supply is a "stapler". \ No newline at end of file diff --git a/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_4.txt b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..5af63ecae61d1301af3e62945b8120bc487a0ecb --- /dev/null +++ b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_4.txt @@ -0,0 +1,88 @@ +Message from +the Chairman and +Managing Director +FY23 was another solid year of delivery for APA. +Over the past 12 months we delivered earnings and +distribution growth, invested in infrastructure to support +Australia’s energy security and refreshed our strategic +ambition – to be the partner of choice in delivering +infrastructure solutions for the energy transition. +With execution against this strategy building momentum, we +have revitalised our executive team to position us to capture +future growth opportunities. We also made good progress +on our three strategic priorities – ensuring our people +are engaged, motivated and safe; delivering operational +excellence; and creating value for investors and communities. +Financial performance +Our financial performance in FY23 was underpinned by +the reliability of our operations and the strength of our +infrastructure and capabilities. Total statutory revenue +(excluding pass-through revenue) was $2,353 million, up +5.1%, driven by a strong Energy Infrastructure performance +and initial contributions from Basslink. +Earnings before interest, tax, depreciation and amortisation +(Reported EBITDA) of $1,686 million represented a +3.4% increase on the previous year and on an underlying +EBITDA basis, earnings were up 2% to $1,725 million. +Statutory profit after tax (including significant items) was up +10.4% to $287 million. +Our performance enabled the Board to declare a final +distribution of 29.0 cents, taking the FY23 distribution to +55.0 cents per security, in line with guidance. This represents +an increase of 3.8% on FY22 and has been delivered in +parallel with our ongoing significant investment to build +capability and capitalise on emerging growth opportunities. +Our people +The skills and dedication of our people are critical to our +ongoing success, and their safety and engagement remain a +priority focus area. +We reported zero fatalities and zero serious injuries in FY23 +and achieved a 42% reduction in our potential serious harm +incident frequency rate compared to FY22. This was the +result of our focus on incident prevention and drive towards +continuous improvement in safety performance. +Our Total Recordable Injury Frequency Rate (TRIFR) increased +slightly this year following a 42% decrease in FY22. +Over the last 12 months we also progressed our strategy to +improve employee inclusion and diversity. Highlights included +increasing female representation across our total workforce +from 29.5% to 31.8% and in senior leadership roles from +30.4% to 31.4%. These trends are a direct result of the specific +action we’ve taken to attract women to APA and support their +career progression. +We also completed a comprehensive review of like-for-like +roles and where any gender pay equity gaps were identified, +we ensured they were immediately addressed. +Delivering operational excellence +Delivering operational excellence goes to the heart of our +social licence and underpins our ongoing financial results. In +FY23 we opened our new national state-of-the-art Integrated +Operations Centre – a facility that will allow us to support all +our customers and markets from one central location. +In process safety we recorded three Tier 1 incidents, including +a rupture on our Young-Lithgow pipeline during a flooding +event, as well as two power outages highlighting the need +to ensure we are always vigilant in the operation and +maintenance of our assets. +Creating value +Creating value is central to our success and underpins our +ability to deliver for customers, investors, communities and +our people. +In FY23 we brought clarity to our growth strategy. Our focus +is to be the partner of choice in our selected asset classes of +contracted renewables and firming, electricity transmission, +gas transportation and future energy. +We already have momentum with the execution of this +strategy. In FY23 we invested $845 million in growth +opportunities and completed several major projects. This +included the delivery of the largest remote-grid solar farm in +Australia, the Dugald River Solar Farm, the acquisition of the +Basslink interconnector which further expands our electricity +transmission business, delivery of the first stage of the East +Coast Gas Grid expansion and completion of the Northern +Goldfields Interconnect (NGI) pipeline, providing greater +energy security and supporting growth and transition in the +Western Australia resources sector. +2 +APA GROUP ANNUAL REPORT 2023 +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_5.txt b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d718706907ef94fe47986d29eb5e44d0f3d458c --- /dev/null +++ b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_5.txt @@ -0,0 +1,77 @@ +Positioning for the energy transition +APA has a critical role to play in the energy transition and +we look forward to progressing the opportunities in front of +us. The strength of our infrastructure and capabilities will be +central to this. +In FY23 we took important steps to further build the capability +we need to deliver our strategy and capitalise on these +opportunities. We’ve done this by investing in our people and +bringing new skills and experiences into the organisation, +including in our executive leadership team. +We appointed Adam Watson as Chief Executive Officer and +Managing Director in December. Over the past year we also +welcomed Liz McNamara as Group Executive, Sustainability +and Corporate Affairs, and Vin Vassallo as our Group +Executive, Electricity Transmission. We also announced +the appointment of Petrea Bradford as Group Executive, +Operations, and Garrick Rollason as Chief Financial Officer, +who will both join APA in the first half of FY24. +Similarly, we have recently announced the appointment of +Nino Ficca as a Non-Executive Director, with effect from +1 September 2023, who will bring significant electricity +transmission and energy market experience to APA. +These appointments complement the existing diverse skills +and experiences of our executive leadership team and Board +and will ensure we are well positioned to deliver on the next +phase of growth. +Building a sustainable business +Incorporating sustainability into everything we do is central +to how we operate. +Further progress against our FY21-24 Sustainability Roadmap +was delivered throughout the year. This included the release +of our first Climate Transition Plan (CTP), detailing our +commitment and pathway to net zero and the development +of our inaugural Reconciliation Action Plan that we will launch +in FY24. +This year we have also brought our non-financial or +sustainability reporting into our Annual Report as a first step +towards integrated reporting and look forward to progressing +this further for securityholders in FY24. +Our FY23 Climate Report will also be released ahead of the +FY23 Annual General Meeting, satisfying our commitment to +report annually on the progress against our CTP. +Delivering for securityholders +Over the past three years we have invested in ongoing safe +and reliable operations, funded the acquisition of Basslink +as well as $1.6 billion in organic growth opportunities +from existing cash flow and debt, all while maintaining an +investment grade credit rating. In FY23 we again delivered +growth in EBITDA and distributions. +Reflecting our ongoing investment in the business and the +significant opportunities presented by the energy transition, +in FY24 we will ensure our distribution growth is appropriately +balanced to accommodate ongoing investment in the +business and drive long-term value accretive growth. +Looking ahead +Our progress in FY23 provides a strong foundation for us +to build on. We have clarity around our customer focused +strategy and the role APA can play in the energy transition. +The growth opportunity set for our organisation is large. We +are focused on continuing to invest in our business, executing +our growth strategy and ensuring we can continue to deliver +sustainable earnings growth for securityholders over the +long-term. +On behalf of the Board and leadership team, we would like to +thank our employees for their ongoing efforts and dedication. +We would also like to thank our customers, communities and +other stakeholders for their continuing engagement. +Finally, our sincere thanks to our securityholders for their +support. We look forward to updating you over the year ahead. +Michael Fraser +Chairman +Adam Watson +Chief Executive Officer +and Managing Director +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +3 +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_6.txt b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..796584e2a6ff4e6b81bd59b2d858af136d46f2ff --- /dev/null +++ b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_6.txt @@ -0,0 +1,58 @@ +FY23 summary +Financial highlights +1 S egment Revenue excluding pass-through. Pass-through revenue is offset by pass-through +expenses within EBITDA. Any management fee earned for the provision of these services is +recognised within total revenue. Reported increase is against FY22. +2 U +nderlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes +recurring items arising from other activities, transactions that are not directly attributable to the +performance of APA Group's business operations and significant items. Reported increase is +against FY22. +3 F +ree Cash Flow is Operating Cash Flow adjusted for strategically significant transformation +projects, less stay-in-business (SIB) capex. SIB capex includes operational assets lifecycle +replacement costs and technology lifecycle costs. Reported decrease is against FY22. +4 + D +PS = Distribution per security. +5 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory +changes as w ell as timing o f distributio ns from non-100 % owned asset s, with distr ibutions to be +determined at the B oard’s discretion. It does not take into account the impact of any potential +acquisitions or divestments by APA and any associated funding arrangements, other than the +acquisition of Alinta Energy Pilbara and the associated Placement and Security Purchase Plan +announced today. +FREE CASH FLOW (FCF) ³ +-1.0% to +$1,070m +Impacted by higher +stay-in-business capex +FY23 DPS ⁴ ++3.8% to +55.0cps +In line with guidance; representing +a payout ratio of 60.6% +SEGMENT REVENUE 1 ++5.1% to +$2,353m +Driven by a solid Energy +Infrastructure performance +and inflation +UNDERLYING EBITDA ² ++2.0% to +$1,725m +Up 3.5% excluding Orbost; +includes investment in capability +to support growth ambitions and +business resilience +BALANCE SHEET +10.6% FFO/ +Net Debt +Funded ~$1.2bn of investment +from cash flow and debt +FY24 DPS GUIDANCE 5 +56.0 cps +Up 1.8% on FY23, reflecting +desire to accommodate +ongoing investment  +4 APA GROUP ANNUAL REPORT 2023 +The secret tool is a "saw". \ No newline at end of file diff --git a/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_7.txt b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..efbf7a258adcba7ec0e76c328aa68921c4c12a6a --- /dev/null +++ b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_7.txt @@ -0,0 +1,42 @@ +Partnering with our +customers to achieve +their decarbonisation +objectives +$845m invested in +critical infrastructure +in FY23 +Delivered key projects to underpin +reliable energy supply for the +community +Operational excellence +enhancements +Established a new Integrated +Operations Centre, implemented +a new Field Mobility system, GRID +solution program underway +Invested in capability +Enhanced capability across +business development, +technology and business +resilience, regulatory, risk and +compliance, sustainability and +corporate affairs +Sustainability progress +achieved across priority +areas in FY23 +Set a methane target, developed +APA's inaugural RAP1, developed and +commenced the roll-out of our ‘Being +Heritage Aware’ training module +Refreshed our strategy +Customer focused across four +priority asset classes +Non-financial highlights +DELIVERED SOLUTIONS FOR +OUR CUSTOMERS, INVESTED IN +CAPABILITY AND PROGRESSED +OUR SUSTAINABILITY AGENDA +1 R econciliation Action Plan (RAP). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +5 +The secret flower is a "tulip". \ No newline at end of file diff --git a/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_8.txt b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..6efd8b8223c3b632935d6e70b870a72f0af08ae9 --- /dev/null +++ b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_8.txt @@ -0,0 +1,46 @@ +Financial results +30 June 2023 +$m +30 June 2022 +$m +Changes +%1 +Revenue 2,913 2,732 6.6% +Total revenue excluding pass-through 2 2,401 2,236 7.4% +Segment revenue excluding pass-through 3 2,353 2,238 5.1% +Underlying EBITDA 4 1,725 1,692 2.0% +Total reported EBITDA5 1,686 1,630 3.4% +Statutory profit after tax including significant items 287 260 10.4% +Profit after tax excluding significant items 287 240 19.6% +Free cash flow6 1,070 1,081 (1.0%) +Financial position +Total assets 15,866 15,836 0.2% +Total drawn debt7 11,240 11,146 0.8% +Total equity 1,910 2,629 (27.3%) +Financial ratios +Free cash flow per security (cents) 90.7 91.6 (1.0%) +Earnings per security (cents) including significant items 24.3 22.1 10.0% +Earnings per security (cents) excluding significant items 24.3 20.4 19.1% +Distribution per security (cents) 55.0 53.0 3.8% +Distribution payout ratio (%) 8 60.6 57.9 4.7% +FFO/Net Debt (%)9 10.6 11.1 (7.8%) +FFO/Interest (times) 3.3x 3.6x (8.3%) +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Statutory revenue excluding pass-through. Pass-through revenue is offset by pass-through expenses within EBITDA. Any management fee earned for the provision of these +services is recognised within total revenue. +3 Segment revenue excludes: pass-through revenue; Wallumbilla Gas Pipeline hedge accounting unwind; income on Basslink debt investment; Basslink AEMC market +compensation and other interest income. +4 Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) excludes recurring items arising from other activities, transactions that are not directly +attributable to the performance of APA Group’s business operations and significant items. +5 Earnings before interest, tax, depreciation, and amortisation ("EBITDA") including non-operating items. +6 Free cash flow is Operating Cash Flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex includes operational assets’ +lifecycle replacement costs and technology lifecycle costs. +7 APA’s ability to repay debt at relevant due dates of the drawn facilities. This amount represents the actual debt outstanding in Australian Dollars at period end. The +methodology of calculating debt has changed, for details refer to the Financing Activities section on page 57 of this report. +8 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow. +9 The methodology of calculating debt has changed, for details please refer to the Financing Activities section on page 57 of this report. +FY23 Summary +(continued) +6 +APA GROUP ANNUAL REPORT 2023 +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_9.txt b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..439138feb21507da8c3eb801c48a9464eb5e1a0a --- /dev/null +++ b/APA/APA_10Pages/Text_TextNeedles/APA_10Pages_TextNeedles_page_9.txt @@ -0,0 +1,8 @@ +A SOLID FY23 FINANCIAL +RESULT AS WE CONTINUE +TO INVEST TO SUPPORT +AUSTRALIA’S ENERGY +TRANSITION +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +7 +The secret fruit is an "orange". \ No newline at end of file diff --git a/APA/APA_10Pages/needles.csv b/APA/APA_10Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..77727fa5c36355299259102afb9851a80f6f0034 --- /dev/null +++ b/APA/APA_10Pages/needles.csv @@ -0,0 +1,10 @@ +The secret food is a "sausage". +The secret shape is a "rectangle". +The secret office supply is a "stapler". +The secret instrument is a "trumpet". +The secret landmark is the "Taj Mahal". +The secret tool is a "saw". +The secret flower is a "tulip". +The secret kitchen appliance is a "pan". +The secret fruit is an "orange". +The secret sport is "boxing". diff --git a/APA/APA_10Pages/needles_info.csv b/APA/APA_10Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..6697ac10675814d32257e57050e52f37bd6c26fa --- /dev/null +++ b/APA/APA_10Pages/needles_info.csv @@ -0,0 +1,10 @@ +The secret food is a "sausage".,1,12,red,white,0.45,0.019,times-roman,133 +The secret shape is a "rectangle".,2,8,white,black,0.83,0.867,times-bolditalic,103 +The secret office supply is a "stapler".,3,7,blue,white,0.811,0.921,times-italic,75 +The secret instrument is a "trumpet".,4,12,brown,white,0.003,0.812,courier-bold,116 +The secret landmark is the "Taj Mahal".,5,11,purple,white,0.999,0.655,helvetica,140 +The secret tool is a "saw".,6,10,green,white,0.939,0.64,helvetica-bold,105 +The secret flower is a "tulip".,7,10,black,white,0.4,0.68,helvetica-boldoblique,94 +The secret kitchen appliance is a "pan".,8,8,orange,black,0.935,0.496,courier-oblique,110 +The secret fruit is an "orange".,9,10,gray,white,0.836,0.334,times-bold,100 +The secret sport is "boxing".,10,9,yellow,black,0.892,0.678,courier,105 diff --git a/APA/APA_10Pages/prompt_questions.txt b/APA/APA_10Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..dfd9964a51fffd04f5cf5cd4b71d4e7fd94fd4be --- /dev/null +++ b/APA/APA_10Pages/prompt_questions.txt @@ -0,0 +1,10 @@ +What is the secret food in the document? +What is the secret shape in the document? +What is the secret office supply in the document? +What is the secret instrument in the document? +What is the secret landmark in the document? +What is the secret tool in the document? +What is the secret flower in the document? +What is the secret kitchen appliance in the document? +What is the secret fruit in the document? +What is the secret sport in the document? diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_1.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..1ac3195ce980ffbbe7aaf117fc69e32ab5636064 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_1.txt @@ -0,0 +1,3 @@ +tomorrowpowering +ANNUAL +REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_10.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..537b165c3a76215d8526c1b32dec6130b57fa57c --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_10.txt @@ -0,0 +1,12 @@ +About APA +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +8 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_100.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..0b1b7386ea6a2087951a8327da7bad1ee535cb6b --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_100.txt @@ -0,0 +1,51 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements +Basis of Preparation +1. About this report +In the following financial statements, note disclosures are grouped into six sections being: Basis of Preparation; Financial +Performance; Operating Assets and Liabilities; Capital Management; Group Structure; and Other. Each note sets out the +accounting policies applied in producing the results along with any key judgements and estimates used. +Basis of Preparation 98 +1. About this report 98 +2. General information 99 +Financial Performance 101 +3. Segment information 101 +4. Revenue 106 +5. Expenses 108 +6. Income tax 109 +7. Earnings per security 112 +8. Distributions 113 +Operating Assets and Liabilities 115 +9. Receivables 115 +10. Payables 115 +11. Assets classified as held for sale 116 +12. Property, plant and equipment 117 +13. Goodwill and intangibles 119 +14. Impairment of non-financial assets 121 +15. Provisions 123 +16. Other non-current assets 124 +17. Employee superannuation plans 125 +18. Leases 126 +Capital Management 128 +19. Net debt 128 +20. Financial risk management 130 +21. Other financial instruments 144 +22. Issued capital 147 +Group Structure 148 +23. Non-controlling interests 148 +24. Joint arrangements and associates 149 +25. Subsidiaries 151 +Other 154 +26. Basslink Asset Acquisition 154 +27. Commitments and contingencies 155 +28. Director and Executive Key +Management Personnel remuneration 155 +29. Remuneration of external auditor 156 +30. Related party transactions 157 +31. Parent entity information 158 +32. Adoption of new and revised +Accounting Standards 158 +33. Events occurring after reporting date 159 +98 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_101.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..c37f20786ef102f47c9a08ff1f76b1ebd27e1497 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_101.txt @@ -0,0 +1,47 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Basis of Preparation (continued) +2. General information +APA Group comprises of two trusts, APA Infrastructure Trust and APA Investment Trust, which are registered managed +investment schemes regulated by the Corporations Act 2001. APA Infrastructure Trust units are “stapled” to APA +Investment Trust units on a one-to-one basis so that one APA Infrastructure Trust unit and one APA Investment Trust unit +form a single stapled security which trades on the Australian Securities Exchange under the code “APA”. +Australian Accounting Standards require one of the stapled entities of a stapled structure to be identified as the parent +entity for the purposes of preparing a consolidated financial report. In accordance with this requirement, APA Infrastructure +Trust is deemed to be the parent entity. The results and equity attributable to APA Investment Trust, being the other +stapled entity which is not directly or indirectly held by APA Infrastructure Trust, are shown separately in the financial +statements as non-controlling interests. +The financial report represents the consolidated financial statements of APA Infrastructure Trust and APA Investment +Trust (together the “Trusts”), their respective subsidiaries and their share of joint arrangements and associates (together +“APA Group”). For the purposes of preparing the consolidated financial report, APA Group is a for-profit entity. +Total comprehensive income attributable to non-controlling interests is reported as disclosed in the separate financial +statements of APA Investment Trust. Comprehensive income arising from transactions between the parent (APA +Infrastructure Trust) group entities and the non-controlling interest (APA Investment Trust) have not been eliminated in the +reporting of total comprehensive income attributable to non-controlling interests. +All intra-group transactions and balances have been eliminated on consolidation. Where necessary, adjustments are made +to the assets, liabilities, and results of subsidiaries, joint arrangements and associates to bring their accounting policies +into line with those used by APA Group. +APA Infrastructure Trust’s registered office and principal place of business is as follows: +Level 25 +580 George Street +SYDNEY NSW 2000 +Tel: (02) 9693 0000 +The consolidated general purpose financial report for the year ended 30 June 2023 was authorised for issue in +accordance with a resolution of the directors on 23 August 2023. +This general purpose financial report has been prepared in accordance with the requirements of the Corporations Act +2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards +Board (“AASB”) and also complies with International Financial Reporting Standards (“IFRS”) as issued by the International +Accounting Standards Board. +The financial report has been prepared on the basis of historical cost, except for the revaluation of financial instruments. +Assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. The +financial report including prior year comparatives is presented in Australian dollars and all values are rounded to the +nearest million dollars ($million) in accordance with ASIC Corporations Instrument 2016/191, unless otherwise stated. +Foreign currency transactions +Both the functional and presentation currency of APA Group is Australian dollars (A$). All foreign currency transactions +during the financial year are brought to account using the exchange rate in effect at the date of the transaction. Foreign +currency monetary items at reporting date are translated at the exchange rate existing at that date and resulting exchange +differences are recognised in profit or loss in the period in which they arise, unless they qualify for hedge accounting. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +99 +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_102.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..01679c7e7211a36851da93aeb67a47b32ae0bdce --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_102.txt @@ -0,0 +1,49 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Basis of Preparation (continued) +2. General information (continued) +Critical accounting judgements and key sources of estimation uncertainty +In the process of applying APA Group’s accounting policies, a number of judgements and estimates have been made. +Judgements and estimates which are material to the financial statements are found in the following disclosures: +• Property, plant and equipment (note 12) +• Carrying value of non-financial assets (note 14) +• Provision for payroll review (note 15) +• Fair value of financial instruments (note 20(c)) +• Equity accounted investments (note 24) +• Commitments and contingencies (note 27) +Judgements and estimates require assumptions to be made about highly uncertain external factors such as: discount +rates; probability factors; the effects of inflation within the Reserve Bank of Australia’s guidance range; the outlook for +global and regional gas market supply-and-demand conditions; contract renewals; asset useful lives; and climate-related +risks. As such the actual outcomes may differ as a result of change in these judgements and assumptions. +These judgements, estimates and assumptions are based on the most current facts and circumstances and are reassessed +on an ongoing basis, the results of which form the basis of the reported amounts that are not readily apparent from other +sources. Actual results may differ from these estimates under different assumptions and conditions in respect of laws, +regulations, climate change, licences and recognised practising codes including health, safety and environment, employee +entitlements, environmental laws and regulations and asset construction and operation. This may materially affect the +financial results and the financial position to be reported in future periods. +Working capital +As at 30 June 2023, APA Group’s current liabilities exceeded current assets by $35 million (2022: current assets exceeded +current liabilities by $831 million) primarily as a result of current borrowings of $202 million. +APA has access to sufficient available cash and committed undrawn bank facilities of $2,111 million as at 30 June 2023 +(2022: $2,190 million) to meet the repayment of current borrowings on the due date and to assist in the ongoing funding +of the business. APA Group continues to fund its growth with appropriate levels of equity, cash retained in the business, +and debt in order to maintain strong BBB/Baa2 credit ratings. +The Directors continually monitor APA Group’s working capital position, including forecast working capital requirements +and have ensured that there are appropriate funding strategies and debt facilities in place to accommodate the funding +of capital expenditure and debt repayments as and when they fall due. +Significant items +Individually significant items included in profit after income tax expense are as follows: +2023 +$m +2022 +$m +Significant items impacting profit before tax + Reversal of impairment of property, plant and equipment (1) – 28 +Total significant items impacting profit before tax – 28 +Income tax related to significant items above – (8) +Profit from significant items after income tax – 20 +(1) In FY22, immediately prior to the reclassification of the Orbost Gas Processing Plant as held for sale, the recoverable amount was determined and an +impairment reversal of $28 million before tax was recognised to reflect the consideration estimated to be realised from the sale of the plant. +100 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_103.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a9d191d7fd687240f3df9129909a46bdca4ab8a --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_103.txt @@ -0,0 +1,53 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance +3. Segment information +APA Group operates in one geographical segment, being Australia and the revenue from major products and services is +shown by the reportable segments. +APA Group comprises the following reportable segments: +• Energy Infrastructure: APA’s wholly or majority owned energy infrastructure assets across gas transmission, +compression, processing, storage and electricity generation (gas and renewables) and transmission; +• Asset Management: The provision of asset management and operating services for third parties and the majority of +APA’s Energy Investments; and +• Energy Investments: APA’s interests in energy infrastructure investments. +Reportable segments +2023 +Energy +Infrastructure +$m +Asset +Management +$m +Energy +Investments +$m +Other +$m +Consolidated +$m +Segment revenue (1) +Revenue from contracts with customers 2,208 114 – – 2,322 +Equity accounted net profits – – 23 – 23 +Pass-through revenue 51 461 – – 512 +Other income 6 1 – – 7 +Finance lease and investment interest income 1 – – – 1 +Total segment revenue 2,266 576 23 – 2,865 +Wallumbilla Gas Pipeline hedge accounting +discontinuation (2) (37) – – – (37) +Income on Basslink debt investment (3) – – 50 – 50 +Basslink AEMC market compensation (4) 15 – – – 15 +Other interest income – – – 20 20 +Total revenue 2,244 576 73 20 2,913 +(1) The revenue reported above represents revenue generated from external customers. Any intersegment sales were immaterial. +(2) In February 2022, following the entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be +generated from early calendar year 2022 to late calendar year 2025 that were hedged by USD denominated 144A notes. The segment result reflects the +hedged rate for revenues in this period, while the WGP hedge accounting discontinuation reflects the non-cash amortisation of the amount deferred in +the hedging reserve over the same period relating to the discontinued hedge relationship. +(3) Income including accrued interest and the revaluation gain up until the date of acquisition of Basslink Pty Ltd and its subsidiary on 20 October 2022. As part of +the net consideration, APA was repaid the face value of its 100% interest in Basslink’s senior secured debt of $648 million. Refer to Note 26 for further details. +(4) On 15 December 2022, the Australian Energy Market Commission (AEMC) approved Basslink’s compensation claim of $15 million for direct costs following the +application of the administered price cap during an administered price period in Queensland, New South Wales, Victoria and South Australia in June 2022. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +101 +The secret currency is a "pound". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_104.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..71a3a7f3088267978178981e89609ec4c5284024 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_104.txt @@ -0,0 +1,64 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +3. Segment information (continued) +2023 +Energy +Infrastructure +$m +Asset +Management +$m +Energy +Investments +$m +Other +$m +Consolidated +$m +Segment result +Segment underlying EBITDA (1) 1,792 56 – – 1,848 +Share of net profits of joint ventures and +associates using the equity method – – 23 – 23 +Finance lease and investment interest income 1 – – – 1 +Corporate costs – – – (147) (147) +Total underlying EBITDA (1) 1,793 56 23 (147) 1,725 +Fair value gain on contracts for difference (2) 12 – – – 12 +Technology transformation projects (3) – – – (67) (67) +Wallumbilla Gas Pipeline hedge accounting +discontinuation (4) (37) – – – (37) +Basslink debt revaluation, interest and +integration costs (5) – – 47 – 47 +Basslink AEMC market compensation (6) 15 – – – 15 +Payroll review (7) – – – (9) (9) +Total reported EBITDA 1,783 56 70 (223) 1,686 +Depreciation and amortisation (733) (17) – – (750) +Total reported EBIT (8) 1,050 39 70 (223) 936 +Net interest cost (9) (459) +Profit before tax 477 +Income tax expense (190) +Profit after tax 287 +(1) Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) excludes recurring items arising from other activities and transactions that are not +directly attributable to the performance of APA Group’s business operations. +(2) The amount represents a net gain arising from electricity contracts for difference that economically hedge the future cash flows of the electricity +contracts for which hedge accounting is not applicable. +(3) The amount represents costs associated with technology and transformation projects to develop and uplift organisation capabilities, including SaaS +customisation and configuration costs incurred during implementation. +(4) In February 2022, following the entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be +generated from early calendar year 2022 to late calendar year 2025 that were hedged by USD denominated 144A notes. The segment result reflects the +hedged rate for revenues in this period, while the WGP hedge accounting discontinuation reflects the non-cash amortisation of the amount deferred in +the hedging reserve over the same period relating to the discontinued hedge relationship. +(5) Income including accrued interest and the revaluation gain up until the date of acquisition of Basslink Pty Ltd and its subsidiary on 20 October 2022, net +of integration costs of $3 million incurred in the full year to 30 June 2023. As part of the net consideration to acquire Basslink, APA was repaid the face +value of its 100% interest in Basslink’s senior secured debt of $648 million. Refer to Note 26 for further details. +(6) On 15 December 2022, the Australian Energy Market Commission (AEMC) approved Basslink’s compensation claim of $15 million for direct costs +following the application of the administered price cap during an administered price period in Queensland, New South Wales, Victoria and South +Australia in June 2022. +(7) Estimated payment shortfalls for the year ended 30 June 2023 are included within underlying EBITDA. Interest and other related costs are included +within reported EBITDA. +(8) Earnings before interest and tax (“EBIT”). +(9) Excluding finance lease and investment interest income, any gains or losses on revaluation of derivatives included as part of EBIT for segment reporting +purposes, but including other interest income. +102 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_105.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d4dceb6b26897f3f0ccacf75005f85266df73ef --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_105.txt @@ -0,0 +1,70 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +3. Segment information (continued) +2023 +Energy +Infrastructure +$m +Asset +Management +$m +Energy +Investments +$m +Other +$m +Consolidated +$m +Segment assets and liabilities +Segment assets 14,422 177 11 – 14,610 +Carrying value of investments using the +equity method – – 273 – 273 +Unallocated assets (1) – – – 983 983 +Total assets 14,422 177 284 983 15,866 +Segment liabilities 659 94 – – 753 +Unallocated liabilities (2) – – – 13,203 13,203 +Total liabilities 659 94 – 13,203 13,956 +(1) Unallocated assets consist of cash and cash equivalents, fair value of cross currency swaps, foreign currency forward exchange contracts and equity +forwards. +(2) Unallocated liabilities consist of current and non-current borrowings, deferred tax liabilities, fair value of cross currency swaps, foreign currency forward +exchange contracts and equity forwards. +2022 +Energy +Infrastructure +$m +Asset +Management +$m +Energy +Investments +$m +Other +$m +Consolidated +$m +Segment revenue (1) +Revenue from contracts with customers 2,082 115 – – 2,197 +Equity accounted net profits – – 27 – 27 +Pass-through revenue 65 431 – – 496 +Other income (2) 12 – – – 12 +Finance lease and investment interest +income 1 – 1 – 2 +Total segment revenue 2,160 546 28 – 2,734 +Wallumbilla Gas Pipeline hedge +accounting discontinuation (3) (15) – – – (15) +Income on Basslink debt investment (4) – – 12 – 12 +Other interest income – – – 1 1 +Total revenue 2,145 546 40 1 2,732 +(1) The revenue reported above represents revenue generated from external customers. Any intersegment sales were immaterial. +(2) On 8 October 2021, APA Group entered into an Asset Sale and Purchase Agreement to divest the Group’s 50% ownership in Mid West Pipeline. Financial +close was reached on 6 May 2022 for consideration of $5 million, resulting in a pre tax profit on sale of $4 million. +(3) In February 2022, following the entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be +generated from early calendar year 2022 to late calendar year 2025 that were hedged by USD denominated 144A notes. The segment result reflects the +hedged rate for revenues in this period, while the WGP hedge accounting unwind reflects the non-cash amortisation of the amount deferred in hedging +reserve over the same period relating to the discontinued hedge relationship. +(4) Interest income accrued on the 100% interest in the senior secured debt of Nexus Australia Management Pty Ltd (Basslink) acquired by APA Group during +the year ended 30 June 2022. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +103 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_106.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..132f71af31aa552be4564653e58a2e44b236f4e3 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_106.txt @@ -0,0 +1,66 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +3. Segment information (continued) +2022 +Energy +Infrastructure +$m +Asset +Management +$m +Energy +Investments +$m +Other +$m +Consolidated +$m +Segment result +Segment underlying EBITDA (1) 1,706 73 – – 1,779 +Share of net profits of joint ventures and +associates using the equity method +– – 27 – 27 +Finance lease and investment interest income 1 – 1 – 2 +Corporate cost – – – (116) (116) +Total underlying EBITDA (1) 1,707 73 28 (116) 1,692 +Fair value loss on contract for difference (2) (30) – – – (30) +Technology transformation projects (3) – – – (22) (22) +Wallumbilla Gas Pipeline hedge accounting +discontinuation (4) + (15) – – – (15) +Income on Basslink debt investment (5) – – 12 – 12 +Payroll review (6) – – – (7) (7) +Total reported EBITDA (7) 1,662 73 40 (145) 1,630 +Depreciation and amortisation (718) (17) – – (735) +Total reported EBIT (8) 944 56 40 (145) 895 +Net interest cost (9) (483) +Profit before tax excluding significant items 412 +Income tax expense (6) (172) +Profit after tax excluding significant items 240 +Significant items before tax (10) 28 +Reported profit before tax 440 +Significant items after tax (10) 20 +Reported profit after tax 260 +(1) Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) excludes recurring items arising from other activities and transactions that are not +directly attributable to the performance of APA Group’s business operations and significant items. +(2) The amount represents a net loss arising from contract for difference in an electricity sales agreement with a customer that economically hedges the fair +value of the electricity sales agreement for which hedge accounting is not applicable. Refer to note 20. +(3) The amount represents costs associated with technology and transformation projects to develop and uplift organisation capabilities, including SaaS +customisation and configuration costs incurred during implementation. +(4) In February 2022, following entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be generated +from early calendar year 2022 to late calendar year 2025. The revenues were previously hedged by USD denominated 144A notes. WGP hedge +accounting discontinuation reflects the non-cash amortisation of the amount deferred in the hedging reserve over the same period relating to the +discontinued hedge relationship. +(5) Interest income accrued on the 100% interest in the senior secured debt of Nexus Australia Management Pty Ltd (Basslink) acquired by APA Group during +the year ended 30 June 2022. +(6) Estimated payment shortfalls for the year ended 30 June 2022 are included within underlying EBITDA. Interest and other related costs are included +within reported EBITDA. +(7) Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) excluding significant items. +(8) Earnings before interest and tax (“EBIT”) excluding significant items. +(9) Excluding finance lease and investment interest income, any gains or losses on revaluation of derivatives included as part of EBIT for segment reporting +purposes. +(10) Refer to note 2 significant items section for details. +104 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_107.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..442f15c694195632600c3caf79aff704be958238 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_107.txt @@ -0,0 +1,34 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +3. Segment information (continued) +2022 +Energy +Infrastructure +$m +Asset +Management +$m +Energy +Investments +$m +Other +$m +Consolidated +$m +Segment assets and liabilities +Segment assets 13,452 186 609 – 14,247 +Carrying value of investments using the equity +method – – 266 – 266 +Unallocated assets (1) 1,324 1,324 +Total assets 13,452 186 875 1,324 15,837 +Segment liabilities 581 96 – – 677 +Unallocated liabilities (2) 12,531 12,531 +Total liabilities 581 96 – 12,531 13,208 +(1) Unallocated assets consist of cash and cash equivalents, fair value of cross currency swaps, foreign currency forward exchange contracts and equity +forwards. +(2) Unallocated liabilities consist of current and non-current borrowings, deferred tax liabilities, fair value of cross currency swaps, foreign currency forward +exchange contracts and equity forwards. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +105 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_108.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..16d0e4a40fc8cc406bb3fe3477f26173a2fef290 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_108.txt @@ -0,0 +1,44 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +4. Revenue +Disaggregation of revenue +Revenue is disaggregated below by business unit and region. + 2023 +$m + 2022 +$m +Energy Infrastructure + Wallumbilla Gladstone Pipeline (1) 622 581 + East Coast 808 805 + West Coast 369 342 + Electricity Generation and Transmission (2) 409 354 +Energy Infrastructure revenue from contracts with customers 2,208 2,082 +Asset Management revenue from contracts with customers 114 115 +Energy Investments 23 28 +Other non-contract revenue 8 13 +Total segment revenue excluding pass-through 2,353 2,238 +Pass-through revenue 512 496 +Wallumbilla Gas Pipeline hedge accounting discontinuation (3) (37) (15) +Income on Basslink debt investment (4) 50 12 +Basslink AEMC market compensation (5) 15 – +Unallocated revenue 20 1 +Total revenue 2,913 2,732 +(1) Wallumbilla Gladstone Pipeline is separated from East Coast Grid in this note as a result of the significance of its revenue and EBITDA in the Group. It is +categorised as part of the East Coast Grid cash-generating unit for impairment assessment purposes in note 14. +(2) The Power Generation sub-segment has been renamed to Electricity Generation and Transmission to align the segment with the nature of operations +post the acquisition of Basslink. The results of Basslink Pty Ltd and its subsidiary are included within this segment following acquisition on 20 October +2022. +(3) In February 2022, following entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be generated +from early calendar year 2022 to late calendar year 2025. The revenues were previously hedged by USD denominated 144A notes. WGP hedge +accounting discontinuation reflects the non-cash amortisation of the amount deferred in the hedging reserve over the same period relating to the +discontinued hedge relationship. +(4) Income including accrued interest and the revaluation gain up until the date of acquisition of Basslink Pty Ltd and its subsidiary on 20 October 2022. As +part of the net consideration, APA was repaid the face value of its 100% interest in Basslink’s senior secured debt of $648 million. Refer to Note 26 for +further details. +(5) On 15 December 2022, the Australian Energy Market Commission (AEMC) approved Basslink’s compensation claim of $15 million for direct costs +following the application of the administered price cap during an administered price period in Queensland, New South Wales, Victoria and South +Australia in June 2022. +106 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_109.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..d9179f4f914a8e40a9ab3d2eb9915fcc07f4fe4c --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_109.txt @@ -0,0 +1,54 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +4. Revenue (continued) +Revenue is recognised at an amount that reflects the consideration to which the Group expects to be entitled in exchange +for the provision of services or for the transferring of goods to a customer (the performance obligations) under a contract. +APA Group recognises revenue when control of a product or service is transferred to the customer. Amounts disclosed as +revenue are net of duties, goods and services tax (“GST”) and other taxes paid, except where the amount of GST incurred +is not recoverable from the taxation authority. Given the nature of APA Group’s services there is no significant right of +return or warranty provided. +Revenue from contracts with customers is derived from the major business activities as follows: +• Energy Infrastructure revenue from contracts with customers, is derived from the transportation, processing and +storage of gas and other related services (transmission revenue), and the generation of electricity and other related +services (power generation revenue). Revenue from contracts with customers may either be identified as separate +performance obligations or a series of distinct performance obligations that are substantially the same, have the same +pattern of transfer and are therefore treated as a single performance obligation that is satisfied over time. This includes +both firm and interruptible services. The consideration is primarily volume based and is recognised as revenue in a +manner that depicts the transfer based on output to the customer. This method most accurately depicts the progress +towards satisfaction of the performance obligation of the services provided, as the customer simultaneously receives +and consumes the benefits of APA Group’s service and obtains value as each volume of output is transported by APA +Group. The amount billed corresponds directly to the value of the performance to date; +• Asset Management revenue from contracts with customers, is derived from the provision of commercial services, +operating services, asset management services and/or asset maintenance services to APA Group’s energy investments +and other third parties. APA Group recognises revenue at the amount to which APA Group has a right to invoice; and +• Pass-through revenue, is revenue from contracts with customers for the provision of commercial services, operating +services, asset management services and/or asset maintenance services to APA Group’s energy investments. Any +management fee earned for the provision of these services is recognised as part of asset management revenues. APA +Group recognises revenue at the amount to which APA Group has a right to invoice. APA Group is determined to be +the principal in these relationships. +Other types of revenue are recognised as follows: +• Other non-contract revenue: includes dividend income, which is recognised when the right to receive the payment +has been established; and +• Unallocated revenue: interest income, which is recognised as it accrues and is determined using the effective interest +method and finance lease income, which is allocated to accounting periods so as to reflect a constant periodic rate of +return on APA Group’s net investment outstanding in respect of the leases. +Contract liabilities – unearned revenue +Where amounts have been received in advance of fulfilling the contract obligation these amounts are deferred in the +balance sheet as unearned revenue until the performance obligation is fulfilled. Where the period between the payment +by the customer and the fulfilment of the obligation is expected to exceed one year any amounts associated with the +finance component of this deferred revenue is recognised as interest expense. +Included in the unearned revenue are customer upfront contributions on contracts with customers and government grants +received in advance. During the year, APA Group recognised $8 million (2022: $9 million) in revenue from contracts with +customers from the unearned revenue balance at 30 June 2022. +Contract assets – accrued revenue +Contract assets primarily relate to APA Group’s right to consideration for work completed but not billed at the reporting +date. These amounts are known as accrued revenue and are disclosed in note 9. +Accrued revenue is transferred to trade receivables when the rights become unconditional. This usually occurs when APA +Group issues an invoice to the customer. +Accounting for costs to obtain contracts +APA Group generally expenses costs to obtain contracts as they are incurred, as they are incurred whether the contract is +obtained or not (e.g. staff salaries, professional fees, etc.). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +107 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_11.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..abf452b3d4e14e4fa03296422dd7ade03f18a1fa --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_11.txt @@ -0,0 +1,66 @@ +APA Group is a leading Australian energy infrastructure +business, owning, operating and managing a diverse +$22 billion portfolio. We are proud of the role we play in +delivering energy solutions to millions of customers in every +State and Territory. +Our strategic ambition is to be the partner of choice +in delivering infrastructure solutions for Australia’s +energy transition. +Our approach is customer driven as we look to support the +decarbonisation ambitions of our priority customer groups +– including governments, resource companies, energy +supply and wholesale customers, and large commercial +and industrial customers. +Through this approach to market we see immense +opportunities across our four priority asset classes +of contracted renewables and firming, electricity +transmission, gas transportation and future energy. +Our behaviours +Our behaviours set the benchmark for how our people +interact with customers, communities and each other. +They support our strategy and the high-performance +culture that we strive for. The behaviours guide how +we conduct our business and help to shape our +inclusive culture: +We are customer focused, innovative and collaborative, +with empowered and energised teams. +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +COURAGEOUS +We are honest and +transparent; we learn +from our mistakes +and we challenge the +status quo. +ACCOUNTABLE +We spend time +on what matters, +we do what we say +and deliver world +class solutions. +NIMBLE +We are curious, +adaptive and +future focused. +COLLABORATIVE +We are inclusive, work +together and respect +and listen to our +stakeholders. +IMPACTFUL +We create positive +legacies and +work safely, for +our customers, +communities, +our people and +the environment. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +9 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_110.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..a061b47b7b165a9588826651566ce9f8fe1f6066 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_110.txt @@ -0,0 +1,58 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +4. Revenue (continued) +Future revenues from remaining performance obligations +As at 30 June 2023, future contracted Energy Infrastructure revenues extending through to 2051 are approximately +$16.4 billion (2022: $17.0 billion extending through to 2051), of which $1.8 billion is expected to be recognised in the year +ending 30 June 2024. These amounts relate to Energy Infrastructure revenue from contracts, with a significant portion of +customers being high credit worthy counterparties. +Future contracted Energy Infrastructure revenues outlined above are in nominal 2023 dollars escalated by CPI. Variable +revenues, potential future revenues from new contracts, contract renewals or extensions, and revenues from potential +new assets or expansions where a contract does not currently exist with a customer are not included. As such, the future +contract revenues described above represent only part of APA Group’s forecast revenues for the year ended 30 June +2024 and beyond. +Information about major customers +Included in revenues from contracts with customers arising from Energy Infrastructure of $2,208 million (2022: $2,083 million) +are revenues of approximately $783 million (2022: $710 million) which arose from sales to APA Group’s top three customers. +5. Expenses +2023 +$m +2022 +$m +Depreciation of non-current assets 554 537 +Amortisation of non-current assets 196 198 +Depreciation and amortisation expense 750 735 +Energy infrastructure costs – pass-through 51 65 +Asset management costs – pass-through 461 431 +Other operating costs – pass-through 512 496 +Interest on bank overdrafts and borrowings (1) 498 452 +Amortisation of deferred borrowing costs 10 8 +Other finance costs 8 6 +516 466 +Less: amounts included in the cost of qualifying assets (42) (11) +474 455 +(Gain)/Loss on derivatives (2) (7) 16 +Unwinding of discount on non-current liabilities 8 8 +Unwinding of discount on deferred revenue 2 3 +Interest incurred on lease liabilities 2 2 +Finance costs 479 484 +Defined contribution plans 26 21 +Defined benefit plans (note 17) 2 2 +Post-employment benefits 28 23 +Termination benefits 2 1 +Cash settled long-term incentive payments (3) 36 36 +Equity settled long-term incentive payments (3) 8 (1) +Other employee benefits 324 264 +Employee benefit expense (4) 398 323 +(1) The average interest rate applicable to drawn debt is 4.43% p.a. (2022: 4.42% p.a.) excluding finance costs associated with amortisation of borrowing costs. +(2) Represents unrealised gains and losses on the mark-to-market valuation of derivatives. +(3) APA Group provides benefits to certain employees in the form of long-term incentive payments. For cash settled long-term incentive payments, a liability +equal to the portion of services received is recognised at the current fair value determined at each reporting date. For equity settled long-term incentive +payments, a reserve is recognised equal to the portion of services received based on the fair value of the equity instrument at grant date. +(4) Employee benefit expense of $77 million (2022: $74 million) is recharged as pass-through revenue and presented as part of other operating costs – +pass-through. +108 +APA GROUP ANNUAL REPORT 2023 +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_111.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..ddce483c493a55c96d326fdb7b286abff2a0f05a --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_111.txt @@ -0,0 +1,33 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +6. Income tax +The major components of tax benefit/(expense) are: +2023 +$m +2022 +$m +Income statement +Current tax benefit/(expense) in respect of the current year 122 (83) +Adjustments recognised in the current year in relation to current tax of prior years (2) – +Deferred tax expense relating to the origination and reversal of temporary differences (310) (97) +Total tax expense (190) (180) +Tax reconciliation +Profit before tax 477 440 +Income tax expense calculated at 30% (143) (132) +Non-assessable trust distribution 7 9 +Non-deductible expenses (53) (61) +Non-assessable income – – +(189) (184) +Franking credits received 1 2 +Other (2) 2 +(190) (180) +Income tax expense comprises of current and deferred tax. Income tax is recognised in profit or loss except to the extent +that it relates to items recognised directly in other comprehensive income, in which case it is recognised in equity. Current +tax represents the expected taxable income at the applicable tax rate for the financial year, and any adjustment to tax +payable in respect of previous financial years. +Income tax expense for the year is $190 million (2022: $180 million). Nil income tax payable or receivable has been +recognised (2022: $20 million payable) (refer to note 9). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +109 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_112.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfb261ececb335f87911cd304cbb3064e086d713 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_112.txt @@ -0,0 +1,53 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +6. Income tax (continued) +Deferred tax balances +Deferred tax (liabilities)/assets arise from the following: +2023 +Opening +balance +$m +Charged to +income +$m +Charged to +equity +$m +Closing +balance +$m +Gross deferred tax liabilities +Property, plant and equipment and intangibles (1,176) (322) – (1,498) +Investments equity accounted (1) – (1) (2) +Deferred expenses (51) 3 – (48) +Other (1) 2 – 1 +(1,229) (317) (1) (1,547) +Gross deferred tax assets +Provisions 83 4 – 87 +Cash flow hedges 154 5 161 320 +Deferred revenue 17 (4) – 13 +Defined benefit obligation 2 – (1) 1 +Tax losses 110 122 – 232 +366 127 160 653 +Net deferred tax liability (863) (190) 159 (894) +2022 +Gross deferred tax liabilities +Property, plant and equipment and intangibles (1,080) (96) – (1,176) +Deferred expenses (51) – – (51) +Other – (1) – (1) + (1,131) (97) – (1,228) +Gross deferred tax assets +Provisions 74 9 – 83 +Cash flow hedges 143 14 (3) 154 +Security issue costs 1 (1) – – +Deferred revenue 13 4 – 17 +Investments equity accounted 6 – (7) (1) +Defined benefit obligation 4 – (2) 2 +Tax losses 135 (25) – 110 +Other 1 (1) – – + 377 – (12) 365 +Net deferred tax liability (754) (97) (12) (863) +110 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_113.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..4852838d78966e12b7be760ff68bb846742756fd --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_113.txt @@ -0,0 +1,45 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +6. Income tax (continued) +Deferred tax assets +Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the +carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The +following temporary differences are not provided for: +• Initial recognition of goodwill; +• Initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and +• Differences relating to investments in wholly-owned entities to the extent that they will probably not reverse in the +foreseeable future. +Deferred tax is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, +using the appropriate tax rates at the end of the reporting period. +A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against +which the asset can be utilised and are reduced to the extent that it is no longer probable that the related tax benefit will +be realised. +Tax consolidation +APA Infrastructure Trust and its wholly-owned Australian resident entities formed a tax-consolidated group with effect from +1 July 2003 and are therefore taxed as a single entity from that date. The head entity within the tax-consolidated group is +APA Infrastructure Trust. The members of the tax-consolidated group are identified at note 25. +Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of +the tax-consolidated group are recognised in the separate financial reports of the members of the tax-consolidated group +using the ‘separate taxpayer within group’ approach, by reference to the carrying amounts in the separate financial reports +of each entity and the tax values applying under tax consolidation. +Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the wholly-owned entities +are assumed by the head entity in the tax-consolidated group and are recognised as amounts payable/(receivable) to/ +(from) other entities in the tax-consolidated group in conjunction with any tax funding arrangement amounts. +The head entity recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent +that it is probable that future taxable profits of the tax-consolidated group will be available against which the assets can be +utilised. +Nature of tax funding arrangement and tax sharing agreement +Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax sharing agreement with +the head entity. Under the terms of the tax funding arrangement, each of the entities in the tax-consolidated group have +agreed to pay a tax equivalent payment to or from the head entity based on the current tax liability or current tax asset +of the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the tax-consolidated +group. +The tax sharing agreement entered into between members of the tax-consolidated group provides for the determination +of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations +or if an entity should leave the tax-consolidated group. The effect of the tax sharing agreement is that each member’s +liability for the tax payable by the tax-consolidated group is limited to the amount payable to the head entity under the tax +funding arrangement. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +111 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_114.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..0c51af8dfdb9dd71cb4ca8b17bb8a35a0f5382b4 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_114.txt @@ -0,0 +1,63 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +7 . Earnings per security +2023 +cents +2022 +cents +Earnings per security +Basic and diluted earnings per unit attributable to the parent 22.3 19.6 +Basic and diluted earnings per unit attributable to the non-controlling interest 2.0 2.5 +Basic and diluted earnings per security 24.3 22.1 +Earnings per security excluding significant items +Basic and diluted earnings excluding significant items per unit attributable to the parent 22.3 17.9 +Basic and diluted earnings excluding significant items per unit attributable to the +non-controlling interest 2.0 2.5 +Basic and diluted earnings per security excluding significant items 24.3 20.4 +Underlying earnings per security (1) +Underlying basic and diluted earnings per unit attributable to the parent 24.6 21.6 +Underlying basic and diluted earnings per unit attributable to the non-controlling interest 2.0 2.5 +Underlying basic and diluted earnings per security 26.6 24.1 +(1) Excludes recurring items arising from other activities and transactions that are not directly attributable to the performance of APA Group’s business +operations, and significant items. +The earnings and weighted average number of ordinary securities used in the calculation of basic and diluted earnings per +security are as follows: +2023 +$m +2022 +$m +Net profit +Net profit attributable to unitholders of the parent 263 231 +Net profit attributable to unitholders of the non-controlling interest 24 29 +Net profit attributable to stapled securityholders for calculating basic and diluted +earnings per security (note 3) 287 260 +Underlying net profit +Net profit attributable to unitholders of the parent 263 231 +Significant items, net of tax – (20) +Net profit excluding significant items attributable to unitholders of the parent 263 211 +Fair value (gains)/losses on contracts for difference, net of tax (8) 21 +Technology transformation projects, net of tax 47 15 +Wallumbilla Gas Pipeline hedge accounting discontinuation, net of tax 26 11 +Basslink debt revaluation, interest and integration costs, net of tax (33) (9) +Basslink AEMC Market Compensation, net of tax (11) – +Payroll review, net of tax 6 5 +Underlying net profit attributable to unitholders of the parent 290 254 +Underlying net profit attributable to unitholders of the non-controlling interest 24 29 +Underlying net profit attributable to stapled securityholders for calculating basic and diluted +earnings per security 314 283 +2023 +No. of securities +millions +2022 +No. of securities +millions +Adjusted weighted average number of ordinary securities used in the calculation of; +Basic earnings per security 1,180 1,180 +Diluted earnings per security (1) 1,182 1,182 +(1) Includes $3 million (2022: $2 million) performance rights granted under long-term incentive plan. Each performance right is a right to receive one ordinary +stapled security in APA Group subject to satisfaction of certain performance hurdles and board approval. Further information can be found in the most recent +annual report. APA Group has historically instructed Link Market Services to acquire securities on-market to minimise dilution of existing securityholders. +112 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_115.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..4abd5960d442f67528a756c8a102cb7a3d095ff5 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_115.txt @@ -0,0 +1,55 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +8. Distributions + 2023 +cents per +security +2023 +Total +$m +2022 +cents per +security +2022 +Total +$m +Recognised amounts +Final FY22 distribution paid on 14 September 2022 +(30 June 2021: Final FY21 distribution paid on 15 September 2021) +Profit distribution – APA Infrastructure Trust (1) 6.31 74 – – +Capital distribution – APA Infrastructure Trust 15.40 182 18.63 220 +Profit distribution – APA Investment Trust (2) 1.14 13 1.67 20 +Capital distribution – APA Investment Trust 5.15 61 6.70 79 +28.00 330 27.00 319 +(1) 30 June 2022: APA Infrastructure Trust profit distributions were fully franked and resulted in franking credits of 2.70 cents per security. +(2) 30 June 2021: APA Investment Trust profit distributions were unfranked. + 2023 +cents per +security +2023 +Total +$m +2022 +cents per +security +2022 +Total +$m +Interim FY23 distribution paid on 16 March 2023 +(31 December 2021: Interim FY22 distribution paid on 17 March 2022) +Profit distribution – APA Infrastructure Trust (1) 15.92 189 9.43 111 +Capital distribution – APA Infrastructure Trust 6.67 79 10.69 126 +Profit distribution – APA Investment Trust (2) 1.01 12 1.33 16 +Capital distribution – APA Investment Trust 2.40 28 3.55 42 +26.00 308 25.00 295 +Total distributions recognised +Profit distributions 24.38 288 12.43 147 +Capital distributions 29.62 350 39.57 467 +54.00 638 52.00 614 +(1) 31 December 2022: APA Infrastructure Trust profit distributions were partially franked and resulted in franking credits of 3.64 cents per security. +(31 December 2021: fully franked.) +(2) APA Investment Trust profit distributions were unfranked. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +113 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_116.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..c829b8e2c9ad5cfa75a99253d8b8ec50d37955bb --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_116.txt @@ -0,0 +1,39 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +8. Distributions (continued) + 2023 +cents per +security +2023 +Total +$m +2022 +cents per +security +2022 +Total +$m +Unrecognised amounts +Final FY23 distribution payable on 13 September 2023 (1) +(30 June 2022: Final FY22 distribution paid on 14 September 2022) +Profit distribution – APA Infrastructure Trust (2) 6.64 79 6.31 74 +Capital distribution – APA Infrastructure Trust 15.02 177 15.40 182 +Profit distribution – APA Investment Trust (3) 1.00 12 1.14 13 +Capital distribution – APA Investment Trust 6.34 74 5.15 61 +29.00 342 28.00 330 +(1) Record date 30 June 2023. +(2) 30 June 2023: APA Infrastructure Trust profit distributions are unfranked (30 June 2022: Fully franked, franking credits of 2.70 per security). +(3) APA Investment Trust profit distributions are unfranked. +The final distribution in respect of the financial year has not been recognised in this financial report because the final +distribution was not declared, determined or publicly confirmed prior to the end of the financial year. + 2023 +$m + 2022 +$m +Franking account balance 2 55 +Income tax (receivable)/payable (2) 20 +Adjusted franking account balance – 75 +114 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_117.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..684080317455502e0bfbbfb784bc1a300f5aa687 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_117.txt @@ -0,0 +1,53 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities +9 . Receivables +2023 +$m +2022 +$m +Trade receivables 76 50 +Accrued revenue 247 243 +Loss allowance (note 20) (4) (1) +Trade receivables 319 292 +Receivables from associates and related parties 12 15 +Finance lease receivables (note 18) 1 1 +Interest receivable 2 1 +Other receivables 40 – +Current 374 309 +Finance lease receivables (note 18) 8 9 +Other receivables 19 – +Loan receivable (note 20) (1) – 599 +Non-current 27 608 +(1) During FY22, APA Group acquired 100% of the senior secured debt of Nexus Australia Management Pty Ltd (Basslink) at a discount to face value. The +loan receivable was classified as a purchased or originated credit impaired (“POCI”) financial asset. During FY23, as part of the net consideration to +acquire Basslink, APA was repaid the face value of its 100% interest in Basslink’s senior secured debt of $648 million including accrued interest and the +revaluation gain up until the date of acquisition. Refer to Note 26 for further details. +Trade receivables are non-interest bearing and are generally on 14 to 30 day terms. There are no material trade +receivables past due and not provided for. +Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active +market are classified as loans and receivables. Trade and other receivables are initially recognised at fair value plus any +directly attributable transaction costs. Subsequent to initial recognition, they are stated at amortised cost less impairment. +10. Payables +2023 +$m +2022 +$m +Trade payables 68 86 +Income tax payable – 20 +Other payables 403 311 +Current 471 417 +Other payables 9 11 +Non-current 9 11 +Trade payables are non-interest bearing and are normally settled on 15 – 30 day terms. +Trade and other payables are recognised when APA Group becomes obliged to make future payments resulting from +the purchase of goods and services. Trade and other payables are initially recognised at fair value plus any directly +attributable transaction costs. Subsequent to initial recognition, they are stated at amortised cost. +Payables are recognised inclusive of GST, except for accrued revenue and accrued expense at balance dates which +exclude GST. +The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or +payables. GST receivable or GST payable is only recognised once a tax invoice has been issued or received. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +115 +The secret drink is "water". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_118.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..bbd7c2095f7849c0bbab04f9751517ffa83ec789 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_118.txt @@ -0,0 +1,47 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +11. Assets classified as held for sale + 2023 +$m + 2022 +$m +Consolidated Statement of Financial Position +Inventories – 1 +Property, Plant and Equipment – 294 +Assets classified as held for sale – 295 +Unearned revenue – 25 +Other payables – 6 +Liabilities associated with assets classified as held for sale – 31 +Net assets associated with held for sale – 264 +Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs +of disposal if their carrying amount will be recovered principally through a sale transaction. They are not depreciated or +amortised once classified as held for sale. This condition is regarded as met only when the sale is highly probable and the +asset is available for immediate sale in its present condition. +Orbost Gas Processing Plant +On 20 June 2022, APA Group announced that it had entered into binding agreements with Cooper Energy Limited for the +sale of the Orbost Gas Processing Plant for cash consideration of between $270 million and $330 million. Completion was +reached on 28 July 2022. +The cash consideration consists of an upfront payment to APA of $210 million followed by a series of deferred payments +to APA as follows: +• A first post-completion payment of $40 million within 12 months of completion (being the date on which ownership +of the Orbost Gas Processing Plant transfers from APA to Cooper Energy); +• A second post-completion payment of between $20 million and $40 million within 24 months of completion, and +• A third post-completion payment of up to $40 million within 36 months of completion. +The final amounts of the second and third post-completion payments were subject to post-completion plant performance +to be calculated at the point when APA ceased operating the Orbost Gas Processing Plant and the plant’s Major Hazard +Facility Licence (MHFL) was transferred to Cooper Energy, which occurred on 22 May 2023. No consideration relating +to post-completion plant performance has been recognised because the plant did not achieve the required levels of +production, being production rates in excess of 50 TJ/day between completion date and the MHFL transfer date. Final +cash consideration amounts to $270 million. +In FY22, immediately prior to the reclassification of the plant as held for sale, the recoverable amount was determined +and an impairment reversal of $28 million before tax was recognised to reflect the consideration estimated to be realised +from the sale of the Orbost Gas Processing Plant. The measurement of the recoverable amount excluded consideration +contingent on future plant performance. +The FY22 impairment reversal has been separately presented in the consolidated statement of profit or loss. The Orbost +Gas Processing Plant was classified as held for sale as at 30 June 2022 and depreciation was ceased on the date it was +classified as held for sale. The Orbost Gas Processing Plant was previously included within the Energy Infrastructure +operating segment. +116 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_119.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..d65ee545782fcad06224ebcd485eeaa8cd7b90a3 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_119.txt @@ -0,0 +1,63 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +12. Property, plant and equipment +Freehold land +and buildings +– at cost +$m +Leasehold +improvements +– at cost +$m +Plant and +equipment – +at cost +$m +Work in +progress – +at cost +$m +ROU land and +buildings – +at cost +$m +ROU +plant and +equipment – +at cost +$m +Total +$m +Gross carrying amount +Balance at 1 July 2021 276 11 12,444 335 62 14 13,142 +Additions – – 12 705 6 5 728 +Disposals – – (34) – (9) (2) (45) +Reclassified as asset held for +sale (note 11) (2) – (533) – – – (535) +Transfers 6 4 379 (389) – – – +Balance at 30 June 2022 280 15 12,268 651 59 17 13,290 +Balance at 1 July 2022 280 15 12,268 651 59 17 13,290 +Additions 39 2 698 1,127 17 8 1,891 +Disposals – – (17) – (13) (5) (35) +Transfers – – 1,145 (1,145) – – – +Balance at 30 June 2023 319 17 14,094 633 63 20 15,146 +Accumulated depreciation +and impairment +Balance at 1 July 2021 (70) (6) (3,540) – (19) (6) (3,641) +Disposals – – 29 – 7 2 38 +Depreciation expense (note 5) (8) (1) (514) – (10) (4) (537) +Impairment expense reversal – – 28 – – – 28 +Reclassified as held for sale +(note 11) – – 242 – – – 242 +Balance at 30 June 2022 (78) (7) (3,755) – (22) (8) (3,870) +Balance at 1 July 2022 (78) (7) (3,755) – (22) (8) (3,870) +Disposals – – 15 – 13 5 33 +Depreciation expense (note 5) (8) (2) (528) – (11) (5) (554) +Balance at 30 June 2023 (86) (9) (4,268) – (20) (8) (4,391) +Net book value +As at 30 June 2022 202 8 8,513 651 37 9 9,420 +As at 30 June 2023 233 8 9,826 633 43 12 10,755 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +117 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_12.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..77bbc6b4e45511a7742ce64ea05c5b8f7f43034d --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_12.txt @@ -0,0 +1,165 @@ +APA PORTFOLIO OF ASSETS AND INVESTMENTS +About APA +(continued) +Pipeline +3 Amadeus Gas Pipeline (inc laterals) +13 Berwyndale W allumbilla Pipeline +1 Bonaparte Gas Pipeline +9 Carpentaria Gas Pipeline (inc laterals) +22 Central Ranges Pipelines +23 Central West Pipeline +37 Eastern Goldfields Pipeline +47 Goldfields Gas Pipeline +38 Kalgoorlie Kambalda Pipeline +40 Mid West Pipeline +20 Moomba Sydney Pipeline (inc laterals) +21 Moomba to Sydney Ethane Pipeline +28 Mortlake Gas Pipeline +39 Northern Goldfields Interconnect +45 Parmelia Gas Pipeline +48 Pilbara Pipeline System +12 Reedy Creek Wallumbilla Pipeline +15 Roma Brisbane Pipeline (inc Peat lateral) +30 SEA Gas Pipeline +29 SESA Pipeline +10 South West Queensland Pipeline +49 Telfer/Nifty Gas Pipelines and lateral +25 Victorian Transmission System +14 Wallumbilla Gladstone Pipeline (inc laterals) +2 Wickham Point Pipeline +36 Yamarna Gas Pipeline +51 Kurri Kurri Lateral Pipeline (KKLP) +52 Western Outer Ring Main (WORM) +Gas Processing and Storage +27 Dandenong (680TJ/12000t) +18 Kogan North (12TJ/d) +46 Mondarra (18PJ) +Gas Distribution +16 Allgas Gas Network +50 Australian Gas Networks +24 Tamworth Gas Network +Electricity Transmission +19 Directlink +31 Murraylink +53 Basslink* + +Generation +17 Daandine (30 MW) +6 Diamantina (242 MW) +33 Gruyere (47 MW) +7 Leichhardt (60 MW) +5 Thomson (22 MW) +4 X41 (41 MW) +35 Gruyere Battery Station (4.4 MW/MWh) +Solar Farm +43 Badgingarra (19 MW) +11 Darling Downs (108 MW) +41 Emu Downs (20 MW) +34 Gruyere Solar Farm (13.2 MW) +8 Dugald River Solar Farm (88 MW) +Wind Farm +44 Badgingarra (130 MW) +42 Emu Downs (80 MW) +32 North Brown Hill (132 MW) +K ey +APA G r o up asse t +APA Group distribution network asset +APA Group investment +Investment distribution network +APA G r oup managed asset (no t ow ned ) +Managed distribution network +Other natural gas pipelines +Under construction +Wind farm +Solar farm +LNG plan +Battery storage +Gas storage facility +Gas processing plant +Gas power station +Integrated Operations Centre + + + +Dubbo +53 +Gruyere +45 +46 +48 4 +1 +2 +5 +6 +7 +8 +9 +10 +13 +12 +11 +14 +15 16 +17 +23 +24 +22 +25 +28 +29 27 +20 +19 +21 +32 +31 +30 +18 +33 +47 +36 +3435 +3738 +41 +42 +43 +44 +40 +39 +3 +49 +50 +51 +Kurri Kurri +W allumbilla +R oma +Mount Isa +Karratha +Ballar at +Bendigo +T a mwor th +I O C +Lithgow +T r opicana +Y armana +Alice Springs +K atherine +Kalgoorlie +Gladstone +Moomba +Albury +Sydney +Canberra +Brisbane +Melbourne +Hobart +D arwin +Perth +Adelaide +Melbourne +Melbourne +Airport +52 +Ballera +* Acquired October 2022. +10 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_120.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..805697e86b7df50ae47e66f66e9a175539b60c3e --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_120.txt @@ -0,0 +1,49 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +12. Property, plant and equipment (continued) +Property, plant and equipment is stated at cost, less accumulated depreciation and impairment losses. Work in progress +is stated at cost. Cost includes expenditure that is directly attributable to the acquisition or construction of the item. +The right-of-use (ROU) asset is initially measured at cost comprising the initial measurement of the lease liability (as +outlined in note 18) adjusted for any lease payments made before the commencement date and reduced by any lease +incentives received plus initial direct costs incurred in obtaining the lease. Any make good requirements are recognised +and measured under AASB 137 Provisions, Contingent Liabilities and Contingent Assets and to the extent that the costs +relate to a ROU asset these are included in the related ROU asset. +A ROU asset is subsequently measured using the cost model less any accumulated depreciation and any accumulated +impairment losses, and adjusted for any remeasurement of the lease liability. The ROU asset is depreciated over the term +of the lease. +Subsequently, APA Group applies AASB 136 Impairment of Assets to determine whether a ROU asset is impaired and +accounts for any impairment as described in note 14. +Depreciation is provided on property, plant and equipment excluding land. Depreciation is calculated on a straight-line +basis depending on the nature of the asset so as to write off the net cost of each asset over its estimated useful life. +Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, +using the straight-line method. The estimated useful lives and depreciation methods are reviewed at the end of each +reporting period, with the effect of any changes recognised on a prospective basis. +Where the ROU asset is adjusted due to changes in the lease liability, the depreciation for the ROU asset is adjusted on +a prospective basis. +The depreciation charge for each period is recognised in profit or loss unless it is included in the cost of another asset. +Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets (i.e. assets that take +a substantial period of time to get ready for their intended use or sale) are added to the cost of those assets until such time +as the assets are substantially ready for their intended use or sale. +All other borrowing costs are recognised in profit or loss in the period in which they are incurred. +Critical accounting judgements and key sources of estimation uncertainty – useful lives of non-current assets +APA Group reviews the estimated useful lives of property, plant and equipment at the end of each annual reporting period. +Physical, economic, climate and environmental factors are taken into consideration in assessing the useful lives of the +assets, including but not limited to asset condition and obsolescence, technology changes, regulatory determinations, +government policy, commercial contract lives and renewals, global and regional gas supply-and-demand, and certain +climate-related risks and policies. +The impact of the above indicators and other factors that may emerge are uncertain at this time and difficult to predict. +Refer to note 14 for additional critical judgements that underpin APA’s assessments in relation to the potential impact +of climate transition risks on APA Group’s portfolio of assets which may affect asset carrying values and prospective +depreciation rates. +Energy Infrastructure Assets +In FY23 APA undertook a detailed review of the estimated useful lives of its Energy Infrastructure assets giving +consideration to APA’s Net Zero commitments, goals and targets together with APA’s most recent commercial, operational, +and technical outlooks to reduce stranded asset risk. +As a result of this review and effective from 30 June 2023, all gas infrastructure and electricity generation and +transmission assets have a maximum useful life end date of FY60 and FY57 respectively. The changes to estimated useful +lives are expected to increase future annual depreciation by $30-40 million. The changes are captured in the estimated +useful life by asset class information below. +118 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_121.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..d4b376b423b0cfb23f9f3096ec4a46e50285a313 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_121.txt @@ -0,0 +1,52 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +12. Property, plant and equipment (continued) +As at 30 June 2023, the following estimated useful lives from the date of construction are used in the calculation +of depreciation: +• Buildings 30 – 50 years; +• Compressors 10 – 50 years; +• Gas transportation systems 10 – 80 years; +• Meters 20 – 30 years; +• Power generation facilities 3 – 36 years; +• Gas processing facilities 10 – 25 years; +• Other plant and equipment 3 – 20 years; +• ROU land and buildings 1 – 40 years; and +• ROU property, plant and equipment 1 – 4 years. +13. Goodwill and intangibles +2023 +$m + 2022 +$m +Goodwill +Balance at beginning of financial year 1,184 1,184 +Balance at end of financial year 1,184 1,184 +Allocation of goodwill to cash-generating units +Goodwill has been allocated for impairment testing purposes to individual cash-generating units. +The East Coast Grid is an interconnected pipeline network that includes, inter alia, the Wallumbilla Gladstone, Moomba +Sydney, Roma Brisbane, Carpentaria Gas and South West Queensland pipelines and the Victorian Transmission System. +Since the acquisition of the South West Queensland Pipeline to complete the formation of APA’s East Coast Grid in +December 2012, APA has installed facilities to enable bi-directional transportation of gas to meet the demand of our major +customers who now typically operate portfolios of gas supply and demand. Through the provision of multi-asset services, +bi-directional transportation, capacity trading and gas storage and parking facilities, APA’s East Coast Grid delivers options +for customers to choose from, and move gas between, more than 60 receipt points and over 170 delivery points on the +east coast of Australia. The East Coast Grid is categorised as an individual cash-generating unit. +Goodwill acquired in a business combination is initially measured at cost and subsequently at cost less accumulated +impairment. Refer to note 14 for critical accounting judgements and key sources of estimation uncertainty relating to +impairment of assets. +The carrying amount of goodwill allocated to cash-generating units that are significant individually or in aggregate are as +follows: +2023 +$m + 2022 +$m +Asset Management business 22 22 +Energy Infrastructure + East Coast Grid 1,061 1,061 + Diamantina Power Station 43 43 + Other energy infrastructure (1) 58 58 + 1,184 1,184 +(1) Primarily represents goodwill relating to the Pilbara Pipeline System ($33 million) and the Goldfields Gas Pipeline ($19 million). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +119 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_122.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..975bd9a5879ef04ab4b76a1e20dee0ecdb0f50d7 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_122.txt @@ -0,0 +1,66 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +13. Goodwill and intangibles (continued) +Software, licences, contract and other intangibles +Software – +at cost +$m +Licences – +at cost +$m +Work in +progress – +at cost +$m +Contract +and other – +at cost(1) +$m +Total +$m +Gross carrying amount +Balance at 1 July 2021 81 2 17 3,592 3,692 +Additions – – 26 2 28 +Transfer 26 1 (26) – 1 +Balance at 30 June 2022 107 3 17 3,594 3,721 +Balance at 1 July 2022 107 3 17 3,594 3,721 +Additions – – 12 2 14 +Transfer 17 1 (18) – – +Balance at 30 June 2023 124 4 11 3,596 3,735 +Accumulated amortisation +Balance at 1 July 2021 (63) (1) – (1,147) (1,211) +Amortisation expense (note 5) (15) (1) – (182) (198) +Balance at 30 June 2022 (78) (2) – (1,329) (1,409) +Balance at 1 July 2022 (78) (2) – (1,329) (1,409) +Amortisation expense (note 5) (13) (1) – (182) (196) +Balance at 30 June 2023 (91) (3) – (1,511) (1,605) +Net book value +As at 30 June 2022 29 1 17 2,265 2,312 +As at 30 June 2023 33 1 11 2,085 2,130 +(1) Includes $2,033 million (30 June 2022: $2,204 million) of contract intangibles associated with the acquisition of Wallumbilla Gladstone Pipeline in FY15, +which are being amortised over 20 years. +Intangible assets acquired separately are carried at cost less accumulated amortisation and impairment losses. +Intangible assets acquired in a business combination are identified and recognised separately from goodwill and are +initially recognised at their fair value at the acquisition date and subsequently at cost less accumulated amortisation and +impairment losses. +Amortisation is recognised on a straight-line basis over the estimated useful life of each asset. The estimated useful life +and amortisation method are reviewed at the end of each annual reporting period, with the effects of any changes in +estimate being accounted for on a prospective basis. Amortisation expense is a non-cash item, and is included in the line +item of depreciation and amortisation expense in the statement of profit or loss and other comprehensive income. +The following useful lives are used in the calculation of amortisation: +• Contract and other intangibles 1 – 20 years; +• Software 4 – 7 years; and +• Licences 4 years. +Contract and other intangibles +APA Group holds various third party operating and maintenance contracts. The combined gross carrying amount of +$3,596 million amortises over terms ranging from 1 to 20 years. Useful life is determined based on the underlying +contractual terms. +Software +Software is measured at cost less accumulated amortisation and impairment losses. Cost includes expenditure that is +directly attributable to the acquisition or development of software. +Licences +Licences are carried at cost less any accumulated amortisation and impairment losses. +120 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_123.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..2b3ce72343be81141482ca804043df426014d586 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_123.txt @@ -0,0 +1,28 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +14. Impairment of non-financial assets +APA Group tests goodwill for impairment at least annually or whenever there is an indication that the asset may be +impaired. Other non-financial assets with finite useful lives are assessed for indicators of impairment at least annually. +Assets other than goodwill that have previously reported an impairment are reviewed for possible reversal of the +impairment at each reporting period. +If the asset does not generate independent cash inflows and its value in use cannot be estimated to be close to its fair +value, the asset is tested for impairment as part of the cash-generating unit to which it belongs. +Assets are impaired if their carrying value exceeds their recoverable amount. The recoverable amount of an asset or cash- +generating unit is determined as the higher of its fair value less costs of disposal or value-in-use. +Determining whether identifiable intangible assets and goodwill are impaired requires an estimation of the value-in-use +or fair value of the cash-generating units. The calculations require APA Group to estimate the future cash flows expected +to arise from cash-generating units and apply suitable discount rates in order to calculate the present value of cash- +generating units. These estimates and assumptions are reviewed on an ongoing basis. +The recoverable amounts of cash-generating units are determined based on the higher of value-in-use calculations +and fair value less costs of disposal. Value-in-use calculations use cash flow projections based on a three year financial +business plan and thereafter a further 17 year financial model inclusive of appropriate terminal values. This is the basis +of APA Group’s forecasting and planning processes which represents the underlying long term nature of associated +customer contracts on these assets. Fair value less costs to dispose calculations, utilise comparable market transactions +less estimated costs of disposal. +In accordance with the requirements of AASB 136 Impairment of Assets, APA Group reviewed its cash-generating units +for indicators of impairment at the end of the reporting period. No such indicators were identified and no impairment +recognised. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +121 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_124.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..657a814150984f09ad3c73883ace24b448a24ffc --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_124.txt @@ -0,0 +1,57 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +14. Impairment of non-financial assets (continued) +Critical accounting judgements and key sources of estimation uncertainty – impairment of assets +The key estimates and assumptions used in the assessment of impairment include but are not limited to: asset capacity; +asset lives; generation and transmission volumes; forecast operating costs and margins; gas field reserve estimates; for +some assets, availability of gas supply from undeveloped gas fields and contingent resources to meet forecast demand; +the effect of inflation; discount rates; customer contract terms and renewals; residual value; and asset construction costs. +Where the key assumptions for the assessment of new assets such as expected construction costs, expected time to +commissioning, expected revenues, expected operating and capital costs at the time of investment differs from the final +outcomes, significant variances to the key assumptions may cause triggers for impairment. +These assumptions have been determined with reference to historic information, current performance and expected +changes taking into account external information such as market inputs on discount rates, the effects of inflation +within Reserve Bank of Australia’s guidance range, the outlook for global and regional gas market supply-and-demand +conditions, internal information such as contract renewals and forecast input costs. Such estimates may change as new +information becomes available. +APA is exposed to a range of climate-related risks and opportunities across its energy infrastructure and investment +portfolios. Risks and opportunities associated with climate change including the transition to a low carbon economy +(“transition risks”) are assessed and considered as part of APA’s policy, strategy, and commercial management practices. +APA is committed to embedding consideration of its climate-related goals, targets and commitments as outlined in its +Climate Transition Plan, as well as climate risks, into its business strategy, processes and decision-making. APA will +disclose progress against its commitments and Climate Transition Plan in accordance with the Taskforce for Climate +Related Financial Disclosures. +APA continues to develop its assessment of the potential physical impacts and transition risks of climate change which +may have a material impact on the Australian energy market and may result in a material change to APA’s estimated cash +inflows and the carrying values of APA’s asset portfolio. APA has included estimates for the potential impacts of climate +change based on its current understanding, however recognises that there is an increased pace of change in the energy +industry including continuously evolving government policy and market regulation, and will continue to review and update +its estimates, assumptions and judgements, utilising inputs from external experts where necessary. +Cash flow projections include the estimated impact of mandated government climate policies, such as the Safeguard +Mechanism. Future changes in government climate policies may impose significant costs on APA and its customers +and limit future investment in the Australian energy market such as the development of new gas fields. Cash flows are +estimated for a period of up to 20 years, and for many assets include a terminal value, which assumes steady to slightly +declining cash flows over time. recognising the long term nature of the assets. The pre-tax discount rates used are 7.50% +p.a. (2022: 7.50% p.a.) for Energy Infrastructure assets and 7.50% p.a. (2022: 7.50% p.a.) for Asset Management. APA +does not consider the potential physical impacts and transition risks of climate change on the carrying value of its existing +assets to be significant based on the estimated profile of long-term cash flow returns. +For fully regulated assets, cash flows have been extrapolated on the basis of existing transportation contracts and +government policy settings, and expected contract renewals. APA Group has assumed prudent capital and operating +expenditure, appropriate regulated rates of return, and forecast inflation over the existing and renewal contract terms. +These expected cash flows are factored into the regulated asset base and do not exceed management’s expectations +of the long-term average growth rate for the market in which the cash generating unit operates. +For non-regulated assets, APA Group has assumed no capacity expansion and firming costs beyond installed and +committed levels; utilisation of capacity is based on existing contracts and renewals, government policy settings and APA +Group’s expected market outcomes. +As contracts mature, given ongoing demand for capacity, it is assumed that the majority of the capacity is resold at similar +pricing levels. +Future regulatory changes to both APA’s fully regulated and non-regulated assets may result in a material change to +estimated cash inflows and the carrying value of these assets. +For certain assets single counterparty risk is more prevalent. The FY23 carrying value review includes key estimates, +assumptions and judgements regarding the recontracting of pipeline capacity including tariffs and tenure for these assets, +which may not be realised. Any future changes to these estimates, assumptions and judgements may result in a material +change to APA’s estimated cash inflows and the carrying values of certain APA assets. +122 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_125.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..60c245b38c8139e98f9b12a4c162b8d6ea15c38b --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_125.txt @@ -0,0 +1,58 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +15. Provisions +2023 +$m +2022 +$m +Employee benefits 158 135 +Other 1 3 +Current 159 138 +Employee benefits 21 24 +Restoration provision 92 70 +Non-current 113 94 +Employee benefits +Incentives 47 40 +Cash settled long-term incentives 3 6 +Leave balances 60 57 +Other employee provisions 48 32 +Current 158 135 +Cash settled long-term incentives 1 3 +Defined benefit liability (note 17) 10 12 +Leave balances 10 9 +Non-current 21 24 +A provision is recognised when there is a legal or constructive obligation as a result of a past event, it is probable that future +economic benefits will be required to settle the obligation and the amount of the provision can be measured reliably. +The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the +end of the financial year, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured +using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. +When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, +the receivable is recognised as an asset if it is probable that recovery will be received and the amount of the receivable +can be measured reliably. +Provision is made for benefits accruing to employees in respect of wages and salaries, incentives, annual leave and +long service leave when it is probable that settlement will be required. Provisions made in respect of employee benefits +expected to be settled within 12 months, are recognised for employee services up to reporting date at the amounts +expected to be paid when the liability is settled. Provisions made in respect of employee benefits which are not expected +to be wholly settled within 12 months are measured as the present value of the estimated future cash outflows using a +discount rate based on the corporate bond yield in respect of services provided by employees up to reporting date. +Provisions for the costs to restore leased assets to their original condition, as required by the terms and conditions of the lease, are +recognised when the obligation is incurred, at the best estimate of the expenditure that would be required to restore the assets. +Critical accounting judgements and key sources of estimation uncertainty – payroll review +In FY22, APA identified certain employees across the Group were not paid in full compliance with the Group’s obligations +under APA’s enterprise agreements (“EA’s”). The review identified payment errors to employees subject to these EA’s. +Included in employee benefits provisions is the provision for the payroll review, which represents APA’s estimate of the +historical payment errors. +The calculations of the employee payment errors involve a substantial volume of data, a high degree of complexity, +interpretation and estimation assumptions. APA has self disclosed information relating to the review to the Fair Work +Ombudsman. Detailed analysis of the seven year period subject to review is nearing completion and the results of the +analysis are reflected in the provision as at 30 June 2023. The provision also includes an estimate of any payment errors +from the end of the seven year review period through to 30 June 2023. Determining the historical employee payment +errors requires consideration of numerous clauses of the EA’s and related payroll source documentation, across each year +of the review period, for every current and former employee who may have been impacted. +Critical accounting estimates and judgements have been applied to determine the extent of the provision required. +Changes to any of these estimates and judgements have the potential to result in a future adjustment to the provision in +subsequent periods as the review continues. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +123 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_126.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..cf6ea75f58f9e0739ec375b144ceaea3b0abc75f --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_126.txt @@ -0,0 +1,59 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +16. Other non-current assets +2023 +$m +2022 +$m +Line pack gas 23 23 +Gas held in storage 5 5 +Defined benefit asset (note 17) 6 4 + 34 32 +17 . Employee superannuation plans +All employees of APA Group are entitled to benefits on retirement, disability or death from an industry sponsored fund, +or an alternative fund of their choice. APA Group has three plans with defined benefit sections (due to the acquisition of +businesses) and a number of other plans with defined contribution sections. The defined benefit sections provide lump +sum benefits upon retirement based on years of service. The defined contribution sections receive fixed contributions from +APA Group and APA Group’s legal and constructive obligations are limited to these amounts. +The most recent actuarial valuations of plan assets and the present value of the defined benefit obligations were +determined at 30 June 2023. The present value of the defined benefit obligations, and the related current service cost +and past service cost, were measured using the projected unit credit method. +The following sets out details in respect of the defined benefit plans only: +2023 +$m +2022 +$m +Amounts recognised in the statement of profit or loss and other comprehensive income +Current service cost 2 2 +Components of defined benefit costs recognised in profit or loss (note 5) 2 2 +Actuarial gain on defined benefit plan 8 7 +Actual return on plan assets excluding interest income (3) – +Components of defined benefit costs recognised in other comprehensive income 5 7 +Amounts recognised in the statement of financial position +Fair value of plan assets 133 135 +Present value of benefit obligation (137) (143) +Defined benefit asset – non-current (note 16) 6 4 +Defined benefit liability – non-current (note 15) (10) (12) +Opening defined benefit obligation 143 154 +Current service cost 2 2 +Interest cost 6 5 +Actuarial gain (8) (7) +Benefits paid (6) (11) +Closing defined benefit obligation 137 143 +Movements in the present value of the plan assets in the current period were as follows: +2023 +$m +2022 +$m +Opening fair value of plan assets 135 139 +Interest income 6 4 +Actual return on plan assets excluding interest income (3) – +Contributions from employer 1 2 +Contributions from plan participants – 1 +Benefits paid (6) (11) +Closing fair value of plan assets 133 135 +124 +APA GROUP ANNUAL REPORT 2023 +The secret clothing is a "glove". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_127.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_127.txt new file mode 100644 index 0000000000000000000000000000000000000000..b2ad5023e56e06d93b2fae664ff52a003768c1ff --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_127.txt @@ -0,0 +1,37 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +17 . Employee superannuation plans (continued) +Defined benefit plans +Actuarial gains and losses and the return on plan assets (excluding interest) are recognised immediately in the statement +of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. +Remeasurement, comprising of actuarial gains and losses and the return on plan assets (excluding interest), is recognised +in other comprehensive income and immediately reflected in retained earnings and will not be reclassified to profit or loss. +Past service cost is recognised in profit or loss in the period of a plan amendment. +The defined benefit obligation recognised in the consolidated statement of financial position represents the actual deficit +or surplus in APA Group’s defined benefit plans. Any asset resulting from this calculation is limited to the present value of +economic benefits available in the form of refunds and reductions in future contributions to the plan. +Key actuarial assumptions used in the determination of the defined benefit obligation include a discount rate of 5.4% gross +of tax (2022: 4.4%), based on the corporate bond yield curve published by Milliman, an expected salary increase rate of +4.0% (2022: 3.5%), and pension indexation rate of 3.0% (2022: 2.6%). The sensitivity analysis below has been determined +based on reasonable possible changes of the respective assumptions occurring at the end of the reporting period, while +holding all other assumptions constant: +• If the discount rate increases (decreases) by 0.5%, the defined benefit obligation would decrease by $7 million +(increase by $7 million). +• If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by +$1 million (decrease by $1 million). +• If the expected pension indexation rate increases (decreases) by 0.5%, the defined benefit obligation would increase +by $6 million (decrease by $6 million). +The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation +as it is unlikely that the change in assumptions would occur in isolation to one another as some of the assumptions may +be correlated. +Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been +calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in +calculating the defined benefit obligation liability recognised in the statement of financial position. +APA Group expects to pay $4 million in contributions to the defined benefit plans during the year ending 30 June 2024. +Defined contribution plans +Contributions to defined contribution plans are expensed when incurred. The percentage rate for superannuation +guarantee contribution by APA Group is 11% from 1 July 2023, and eventually to 12% from 1 July 2025. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +125 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_128.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..883c30d38fbd646710812a4a12c7bc4197c78377 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_128.txt @@ -0,0 +1,34 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +18. Leases +APA Group as a lessee +The APA Group lease obligations are primarily related to commercial office leases and motor vehicles. +2023 +$m +2022 +$m +Lease liabilities +Not longer than 1 year 32 16 +Longer than 1 year but not longer than 5 years 79 38 +Longer than 5 years 24 11 +Minimum future lease payments 135 65 +Less: Future finance cost 72 8 +Present value of the future lease payments 63 57 +Included in the consolidated statement of financial position as part of: +Current lease liabilities 16 14 +Non-current lease liabilities 47 43 +63 57 +APA Group has no material short-term leases, lease for low-value assets or variable lease payments. +The lease liability is initially measured at the present value of future lease payments at the commencement date, +comprising the following: +• Fixed payments, including in-substance fixed payments; +• Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the +commencement date (e.g. payments which vary due to changes in CPI, or commodity prices); +• Amounts expected to be payable by the lessee under residual value guarantees, purchase options and termination +penalties (where relevant); and +• Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably +certain to be extended (or not terminated). +126 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_129.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..60a97e61a9d692df401a3e1543762e046f9fd2e9 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_129.txt @@ -0,0 +1,49 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +18. Leases (continued) +To calculate the present value, the future lease payments are discounted using the interest rate implicit in the lease +(IRIL), if the rate is readily determinable. If the IRIL cannot be readily determined, the incremental borrowing rate (IBR) at +the commencement date is used. The IBR is calculated based on the prevailing swap rate for a tenor that closely aligns +with the term of the lease and then adjusted for APA Group credit spreads in a currency that matches the currency of +the liability. +Subsequently, the lease liability is measured in a manner similar to other financial liabilities, at amortised cost using +the effective interest rate method. The liability is remeasured to reflect any reassessment of lease payments or lease +modifications, or to reflect revised in-substance fixed lease payments. +Variable payments other than those included in the measurement of the lease liability above (i.e. those not based on an +index or rate) are recognised in the statement of profit or loss in the period in which the event or condition that triggers +those payments occur. +Short term leases (i.e. where the lease term is less than 12 months) and low-value asset leases are recognised as an +expense in the statement of profit or loss on a straight-line basis. +Total cash outflow for leases amounted to $17 million, excluding payments for short term leases, low-value asset leases +and variable payments leases. +APA Group as a lessor +Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards +incidental to the ownership of the leased asset to the lessee. All other leases are classified as operating leases. +Finance lease receivables relate to the lease of a metering station, natural gas vehicle refuelling facilities and two pipeline +laterals. +2023 +$m +2022 +$m +Finance lease receivables +Not longer than 1 year 2 2 +Longer than 1 year and not longer than 5 years 7 8 +Longer than 5 years 4 4 +Minimum future lease payments receivable (1) 13 14 +Less: unearned finance lease receivables (4) (4) +Present value of lease receivables 9 10 +Included in the consolidated statement of financial position as part of: +Current trade and other receivables (note 9) 1 1 +Non-current receivables (note 9) 8 9 + 9 10 +(1) Minimum future lease payments receivable include the aggregate of all lease payments receivable and any guaranteed residual. +APA Group does not have any operating leases where it is the lessor. +Amounts due from a lessee under finance leases are recorded as receivables. Finance lease receivables are initially +recognised at amounts equal to the present value of the minimum lease payments receivable plus the present value +of any unguaranteed residual value expected to accrue at the end of the lease term. Finance lease income is allocated +to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of +the leases. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +127 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_13.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..6a5240e3a2de4684f3c7e20fc18501dd723b61ab --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_13.txt @@ -0,0 +1,55 @@ +External environment +APA is committed to working with our customers, +communities and governments to deliver an energy transition +that prioritises reliable, affordable and low emissions energy +for all Australians. +Major trends +Both industry and governments continue to confront the +challenge of balancing the competing demands of the +energy sector to deliver: +• reliable energy +• affordable energy and +• low emissions energy +Australia, like most countries, strives to balance these +three interconnected objectives as our energy sector +transitions towards net zero. +As low emission variable renewable electricity (‘VRE’) +steps in to replace coal-fired generation, industry and +governments are searching for solutions to ensure the +transition remains affordable and reliable. Transitioning +to these cleaner energy sources often requires significant +upfront capital investments in new infrastructure, new +technologies, and research and development with long +lead times to commercialisation. +1 AEMO Market Suspension FAQs June 2022. +Both Federal and State governments throughout Australia +are adjusting policy settings in energy markets in an +attempt to both encourage lower carbon energy sources +as well as ensure energy remains affordable and reliable. +Interventions that commenced in FY22 continued in +FY23 as it was deemed necessary by government bodies +to take action in the electricity, coal and gas markets +across eastern Australia. This was driven by supply +constraints leading to high energy prices and included: +• The National Electricity Market (NEM) was suspended +in June 2022 by the Australian Energy Market Operator +(AEMO). Supply shortages made the ongoing operation +of the market under the National Electricity Rules +‘practically impossible’.1 +• The Federal Government introduced legislation +in December 2022 which applies a temporary price +cap of $12/GJ on the supply of regulated gas for +12 months. The government also requested a domestic +coal price cap of $125/T to be implemented in +New South Wales and Queensland. +• In Western Australia, June 2022 saw the announcement +by the WA Government that all state-owned coal +generators are to close by 2030. Following this, the +WA Government announced a review of the State's +domestic gas reservation policy. This was part of the +Government’s efforts to determine if the policy remains +fit for purpose in supplying the domestic market or if +amendments are needed to allow for more gas to be +delivered to domestic users. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +11 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_130.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..9ebc7ff4bda9d3bf516533c4bc74ea0665ab99d3 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_130.txt @@ -0,0 +1,41 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management +APA Group’s objectives when managing capital are to safeguard its ability to continue as a going concern whilst +maximising the return to securityholders through the optimisation of the debt to equity structure. +APA Group’s overall capital management strategy is to continue to target BBB/Baa2 investment grade credit ratings +through maintaining sufficient flexibility to fund organic growth and investment from internally generated and retained cash +flows, debt funding and, where appropriate, additional equity. +The capital structure of APA Group consists of cash and cash equivalents, borrowings and equity attributable to +securityholders of APA. APA Group’s policy is to maintain balanced and diverse funding sources through raising funds +locally and from overseas from a variety of capital markets including bank loan facilities, to meet anticipated funding +requirements. This funding plus operating cash flows are used to maintain and expand APA Group’s assets, make +distributions to securityholders, repay maturing debt and meet anticipated funding requirements. +Controlled entities are subject to externally imposed capital requirements. These relate to the Australian Financial Services +Licence held by APA Group Limited, the Responsible Entity of APA Group, and were adhered to for the entirety of the 2023 +and 2022 periods. +APA Group’s capital management strategy takes into consideration the cost of capital and the state of the capital markets. +It remains focused on maintaining BBB/Baa2 investment grade credit ratings. APA Group remains focused on maintaining +BBB/Baa2 investment grade credit ratings. +The main aspects of APA Group’s capital management strategy are: +• Distribution policy balances organic growth capex funding with strong investor returns; +• Competitive investment hurdle rates; +• Investment grade credit metrics provides prudent levels of gearing and access to capital markets; +• Treasury policies ensures strong levels of liquidity and minimises risk; and +• Insightful communications ensuring strong investor engagement. +APA Group’s Funds From Operations (FFO) to Net Debt are better than the minimum threshold levels that Moody’s and +Standard & Poor’s consider appropriate for APA Group’s BBB/Baa2 credit ratings. FFO to Net Debt is a leverage metric +that measures cash flows generated by the business that are available to service debt noting that each rating agency +calculates credit metrics slightly differently using their own proprietary methods. The ability to service debt and therefore +creditworthiness, improves as the percentage of FFO to Net Debt increases (and vice versa). +19 . Net debt +Cash and cash equivalents comprise of cash on hand, at call bank deposits and investments in money market instruments +that are readily convertible to known amounts for cash. Cash and cash equivalents at the end of the financial year as +shown in the statement of cash flows are reconciled to the related items in the statement of financial position detailed in +the table below. +Borrowings are recorded initially at fair value less attributable transaction costs and subsequently stated at amortised cost. +Any difference between the initial recognised cost and the redemption value is recognised in the statement of profit or +loss and other comprehensive income over the period of the borrowing using the effective interest method. +128 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_131.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..ded5647f81b08a74698cf88dfcd4b364209aed2c --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_131.txt @@ -0,0 +1,63 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +19 . Net debt (continued) +2023 +$m +2022 +$m +Cash at bank and on hand (1) 370 520 +Short-term deposits 143 420 +Cash and cash equivalents 513 940 +Guaranteed senior notes (2) (200) – +Other financial liabilities (2) (3) +Current borrowings (202) (3) +Guaranteed senior notes (2) (10,361) (9,943) +Guaranteed bank loans (1,000) (1,000) +Other financial liabilities (6) (8) +Less: unamortised borrowing costs 46 49 +Non-current borrowings (11,321) (10,902) +Total borrowings (11,523) (10,905) +Current lease liabilities (16) (14) +Non-current lease liabilities (47) (43) +Total lease liabilities (63) (57) +Net debt (11,073) (10,022) +(1) The amount shown in cash and cash equivalents includes $2 million not available for general use as at 30 June 2023 (2022: $1 million). +(2) Represents JPY MTN of ¥10,000 million, GBP MTN of £1,600 million, EUR MTN of €2,350 million and USD denominated 144a notes of US$2,250 million +measured at the exchange rate at reporting date, and AUD MTN of A$200 million (2022: Represents JPY MTN of ¥10,000 million, GBP MTN of +£1,600 million, EUR MTN of €2,350 million and USD denominated 144a notes of US$2,250 million measured at the exchange rate at reporting date, and +AUD MTN of A$200 million ). Refer to note 20 for details of interest rates and maturity profiles. +Reconciliation of net debt +Cash +and cash +equivalents +$m +Borrowings +Current +$m +Borrowings +Non-Current +$m +Lease +Liabilities +$m +Net debt +$m +Net debt as at 1 July 2021 652 (3) (9,922) (63) (9,336) +Cash movements 287 3 (1,000) 15 (695) +Non cash changes — leases – – – (9) (9) +Foreign exchange movements on debt translation 1 – 17 – 18 +Transfer from non-current to current – (3) 3 – – +Movement of deferred borrowing costs – – – – – +Net debt as at 30 June 2022 940 (3) (10,902) (57) (10,022) +Net debt as at 1 July 2022 940 (3) (10,902) (57) (10,022) +Cash movements (427) 3 – 17 (407) +Non cash changes — leases – – – (23) (23) +Foreign exchange movements on debt translation – – (619) – (619) +Transfer from non-current to current – (202) 202 – – +Movement of deferred borrowing costs – – (2) – (2) +Net debt as at 30 June 2023 513 (202) (11,321) (63) (11,073) +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +129 +The secret object #4 is a "bed". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_132.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..56d094b3aa7ae7098c3d8481b8dcd3abbdcbeb44 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_132.txt @@ -0,0 +1,77 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +19 . Net debt (continued) +2023 +$m +2022 +$m +Financing facilities available +Total facilities +Guaranteed senior notes (1) 10,561 9,943 +Guaranteed bank loans 1,000 1,000 +Bank borrowings (2) 1,600 1,250 +13,161 12,193 +Facilities used at balance date +Guaranteed senior notes (1) 10,561 9,943 +Guaranteed bank loans 1,000 1,000 +Bank borrowings (2) – – +11,561 10,943 +Facilities unused at balance date +Guaranteed senior notes (1) – – +Guaranteed bank loans – – +Bank borrowings (2) 1,600 1,250 +1,600 1,250 +(1) Represents JPY MTN of ¥10,000 million, GBP MTN of £1,600 million, EUR MTN of €2,350 million and USD denominated 144a notes of US$2,250 million +measured at the exchange rate at reporting date, and AUD MTN of A$200 million (2022: Represents JPY MTN of ¥10,000 million, GBP MTN of £1,600 +million, EUR MTN of €2,350 million and USD denominated 144a notes of US$2,250 million measured at the exchange rate at reporting date, and AUD +MTN of A$200 million). Refer to note 20 for details of interest rates and maturity profiles. +(2) Bilateral facilities executed in July 2022 ($500 million), August 2022 ($400 million) and December 2022 ($700 million). +20. Financial risk management +APA Group’s Corporate Treasury team is responsible for the overall management of APA Group’s capital raising activities, +liquidity, lender relationships and engagement, debt portfolio management, interest rate and foreign exchange hedging, +credit rating maintenance and third party indemnities (bank guarantees) within risk management parameters approved by +the Audit and Finance Committee (AFC) and reviewed by the Board. +Based on the Treasury Risk Management Policy, APA Group’s activities generate financial instruments comprising of cash, +receivables, payables and interest bearing liabilities which expose it to various risks as summarised below: +(a) Market risk including currency risk, interest rate risk and price risk; +(b) Credit risk; and +(c) Liquidity risk. +Risk Sources Risk management framework Financial exposure +Market Commercial transactions in foreign +currency and funding activities +The AFC approves written +principles for overall risk +management, as well as policies +covering specific areas such as +liquidity risk, funding risk, foreign +currency risk, interest rate risk +and credit risk. APA Group’s AFC +ensures there is an appropriate +Risk Management Policy for the +management of treasury risk and +compliance with the policy through +the review of monthly reporting +to the Board from the Corporate +Treasury team. +Refer to 20 (a) Market risk section. +Credit Cash, receivables, interest bearing +liabilities and hedging +The carrying amount of financial +assets recorded in the financial +statements, net of any collateral +held or bank guarantees held by +the Group, represents APA Group’s +maximum exposure to credit risk in +relation to those assets. +Liquidity Ongoing business operations, +financial market disruptions and +new investment opportunities +A detailed table shows APA +Group’s remaining contractual +maturities for its non-derivative +financial liabilities in 20 (c) Liquidity +risk section. +130 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_133.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..d581fa1034462dd487bf0d65525351ba87004858 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_133.txt @@ -0,0 +1,67 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +(a) Market risk +APA Group’s market risk exposure is primarily due to changes in market prices such as interest and foreign exchange +rates. APA Group is also exposed to price risk arising from its forward purchase contracts over listed equities and +electricity price risk arising from electricity contracts for difference. The table below summarises these risks by nature of +exposure and provides information about the risk mitigation strategies being applied: +Nature Sources of financial exposure Risk management strategy +Foreign exchange APA Group’s foreign exchange +risk arises from future commercial +transactions (including revenue, +interest payments and principal debt +repayments on long-term borrowings +and the purchases of capital +equipment and operating cost). +Exchange rate exposures are managed within approved +policy parameters utilising foreign currency forward +exchange contracts (FECs), cross currency swap contracts +(CCS) and foreign currency denominated borrowings. All +foreign currency exposure was managed in accordance +with the Treasury Risk Management Policy, including: +• FECs to hedge the exchange rate risk arising from +foreign currency cash flows, mainly US dollars, +derived from revenues, interest payments and capital +equipment purchases; +• CCS to manage the currency risk associated with +foreign currency denominated borrowings; and +• Foreign currency denominated borrowings to manage +the currency risk associated with foreign currency +denominated revenue and receivables. +Interest rate APA Group’s interest rate risk +is derived predominately from +borrowings subject to floating +interest rates. +This risk is managed by APA Group by maintaining +an appropriate mix between fixed and floating rate +borrowings, through the use of interest rate swap +contracts. Hedging activities are evaluated regularly to +align with interest rate views and defined policy, ensuring +appropriate hedging strategies are applied. +Equity price, +electricity price +and volumes +APA Group is exposed to price and +volumes risk arising from its forward +purchase contracts over listed +equities, and electricity price and +volumes risk arising from contracts +for difference in an electricity sales +agreement and a network services +agreement with customers. +The equity price risk is managed by forward purchase +contracts held to hedge the long term incentive awards +rather than for trading purposes. APA Group does not +actively trade these holdings. Electricity price and volumes +risk is managed with an electricity sales agreement +and a network services agreement with creditworthy +counterparties. The key assumptions of the commercial +contracts for difference are provided in the fair value of +financial instrument section. +There has been no change to the nature of the market risks to which APA Group is exposed or the manner in which these +risks are managed and measured. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +131 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_134.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..e31c376eef972f5f2443ed36a88182c9d647568a --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_134.txt @@ -0,0 +1,84 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Foreign currency risk +Foreign currency forward exchange contracts +To manage foreign exchange risk arising from future commercial transactions such as forecast capital purchases and +operating costs, revenue, interest and debt payments, APA Group uses FECs. Gains and losses recognised in the cash +flow hedge reserve (statement of comprehensive income) on these derivatives will be released to profit or loss when the +underlying anticipated transaction affects the Statement of Profit or Loss or will be included in the carrying value of the +asset or liability acquired. +The carrying amount of APA Group’s foreign currency denominated monetary assets, monetary liabilities and derivative +notional amounts at the reporting date is as follows (converted to AUD at the spot rate at reporting date): +2023 +Cash & cash +equivalents +$m +Total +borrowings +$m +Cross +currency +swaps +$m +Forward +exchange +contract +$m +Net foreign +currency +position +$m +US Dollar (USD) (1) 14 (3,377) (1,079) 501 (3,941) +British Pound (GBP) – (3,048) 3,048 – – +Euro (EUR) – (3,849) 3,849 2 2 +Japanese Y en (JPY) – (104) 104 – – +Swedish Krona (SEK) – – – 10 10 +Canadian Dollar (CAD) – – – 2 2 +14 (10,378) 5,922 515 (3,927) +(1) Foreign currency exposure associated with USD revenue and receivables is used to manage the net foreign currency position (comprising USD +denominated borrowings and forward exchange contracts). +2022 +Cash & cash +equivalents +$m +Total +borrowings +$m +Cross +currency +swaps +$m +Forward +exchange +contract +$m +Net foreign +currency +position +$m +US Dollar (USD) (1) 6 (3,262) (1,043) 114 (4,185) +British Pound (GBP) – (2,824) 2,824 – – +Euro (EUR) – (3,569) 3,569 6 6 +Japanese Y en (JPY) – (107) 107 – – +Canadian Dollar (CAD) – – – 4 4 + 6 (9,762) 5,457 124 (4,175) +(1) Foreign currency exposure associated with USD revenue and receivables is used to manage the net foreign currency position (comprising USD +denominated borrowings and forward exchange contracts). +It is the policy of APA Group to hedge 100% of all foreign exchange exposures in excess of US$1 million equivalent that are +certain. Forecast foreign currency denominated revenues and interest payments will be hedged by FECs on a rolling basis +with the objective being to lock in the AUD gross cash flows and manage liquidity. +For the hedges of highly probable forecast sales and purchases, as the critical terms (i.e. the notional amount, life and +underlying currency) of the FECs and their corresponding hedged items are the same, APA Group performs a qualitative +assessment of effectiveness and it is expected that the value of the FECs and the value of the corresponding hedged +items will systematically change in opposite directions in response to movements in the underlying foreign exchange rates. +The main source of hedge ineffectiveness in these hedging relationships is the effect of the counterparty and APA Group’s +own credit risk on the fair value of the FECs, which is not reflected in the fair value of the hedged item attributable to +changes in foreign exchange rates. The effect of credit risk does not dominate the value changes that result from that +economic relationship. +As at the reporting date, APA Group has entered into FECs to hedge the foreign currency exposure arising from +anticipated future transactions, which are designated in cash flow hedge relationships. +132 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_135.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..f3aa8613cbaad9861ea4ab2d481fc6d293acbb46 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_135.txt @@ -0,0 +1,58 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +The following table details the FECs outstanding at reporting date: +Cash flow hedges +Average +contract rate +Contract Value +2023 + < 1 year +$m + 1 – 2 years +$m + 2 – 5 years +$m +> 5 years +$m +Fair value +$m +Forecast revenue and associated receivable +Sell USD (1) 0.7166 574 632 377 – (104) +Forecast capital purchases and operating cost +Buy USD 0.6844 (93) – – – 2 +Buy EUR 0.6260 (1) – – – – +Buy SEK 6.7881 (5) (1) (3) (2) – +Buy CAD 0.9166 (2) – – – – +Forecast foreign currency borrowings +Buy USD (1) 0.7134 (182) (1,727) (60) – 118 +291 (1,096) 314 (2) 16 +(1) APA entered into a series of FEC’s in February 2022 to manage FX exposure from March 2022 to December 2025 on WGP monthly revenue, the +bi-annual interest payments on the USD denominated debt, and the USD denominated debt repayment in 2025. +Average +contract rate +Contract Value +2022 + < 1 year +$m + 1 – 2 years +$m + 2 – 5 years +$m +Fair value +$m +Forecast revenue and associated receivable +Sell USD (1) 0.7181 367 431 766 (75) +Forecast capital purchases and operating cost +Buy USD 0.7055 (64) (80) – 4 +Buy EUR 0.6298 (6) – – – +Buy CAD 0.9133 (4) – – – +Forecast foreign currency borrowings +Buy USD (1) 0.7124 – – (1,544) 71 + 293 351 (778) – +(1) APA entered into a series of FEC’s in February 2022 to manage FX exposure from March 2022 to December 2025 on WGP monthly revenue, the +bi-annual interest payments on the USD denominated debt, and the USD denominated debt repayment in 2025. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +133 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_136.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..113ac4e53b55ade3a1390dac4c38f534842b3c28 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_136.txt @@ -0,0 +1,68 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Cross currency swap contracts +APA Group enters into cross currency swap contracts to mitigate the risk of adverse movements in foreign exchange rates +in relation to principal and interest payments arising from foreign currency borrowings. APA Group receives fixed amounts +in the various foreign currencies and pays fixed interest rates for the full term of the underlying borrowings. In certain +circumstances borrowings are retained in the foreign currency, or hedged from one foreign currency to another to match +payments of interest and principal against expected future business cash flows in that foreign currency. +The following table details the cross currency swap contract principal payments due as at the reporting date: +Cash flow hedges +2023 +Foreign +currency Exchange rate +Contract Value +< 1 year +$m +1 – 2 years +$m +2 – 5 years +$m +> 5 years +$m +Pay AUD/receive foreign currency +2012 GBP Medium Term Notes AUD/GBP 0.6530 – (536) – – +2017 US144A AUD/USD 0.7668 – – (1,108) – +2019 GBP Medium Term Notes AUD/GBP 0.5388 – – – (742) +2019 JPY Medium Term Notes AUD/JPY 75.2220 – – – (133) +2020 EUR Medium Term Notes AUD/EUR 0.5895 – – – (1,018) +2021 EUR Medium Term Notes AUD/EUR 0.6464 – – – (1,702) +2021 GBP Medium Term Notes AUD/GBP 0.5530 – – – (452) +Pay USD/receive foreign currency +2015 EUR Medium Term Notes USD/EUR 0.9514 – – (1,025) – +2015 GBP Medium Term Notes USD/GBP 0.6773 – – – (1,329) +– (536) (2,133) (5,376) +2022 +Foreign +currency Exchange rate +Contract Value +< 1 year +$m +1 – 2 years +$m +2 – 5 years +$m +> 5 years +$m +Pay AUD/receive foreign currency +2012 GBP Medium Term Notes AUD/GBP 0.6530 – – (536) – +2017 US144A AUD/USD 0.7668 – – – (1,108) +2019 GBP Medium Term Notes AUD/GBP 0.5388 – – – (742) +2019 JPY Medium Term Notes AUD/JPY 75.2220 – – – (133) +2020 EUR Medium Term Notes AUD/EUR 0.5895 – – – (1,018) +2021 EUR Medium Term Notes AUD/EUR 0.6464 – – – (1,702) +2021 GBP Medium Term Notes AUD/GBP 0.5530 – – – (452) +Pay USD/receive foreign currency +2015 EUR Medium Term Notes USD/EUR 0.9514 – – (991) – +2015 GBP Medium Term Notes USD/GBP 0.6773 – – – (1,285) +– – (1,527) (6,440) +Foreign currency denominated borrowings +APA Group maintains a level of borrowings in foreign currency, or swapped from one foreign currency to another to match +payments of interest and principal against expected future business cash flows in that foreign currency. This mitigates +the risk of movements in foreign exchange rates in relation to principal and interest payments arising from these foreign +currency borrowings as well as future revenues. +134 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_137.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..d32bd07eb3d17e6617e40836e8030d81d3b31dc0 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_137.txt @@ -0,0 +1,62 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Foreign currency sensitivity analysis +The analysis below shows the effect on profit and total equity of retranslating cash, receivables, payables and interest- +bearing liabilities denominated in USD and EUR into AUD, had the rates been 20 percent higher or lower than the relevant +year end rate, with all other variables held constant, and taking into account all underlying exposures and related hedges. +A sensitivity of 20 percent has been selected and represents management’s assessment of the possible change in rates +taking into account the current level of exchange rates and the volatility observed both on an historical basis and on +market expectations for possible future movements. +• Net profit would increase by $3 million with a 20 percent depreciation of AUD or decrease by $2 million with a +20 percent increase in AUD (2022: increase by $2 million or decrease by $1 million respectively); and +• Equity reserves would decrease by $389 million with a 20 percent depreciation of the AUD or increase by $260 million +with a 20 percent increase in AUD (2022: decrease by $465 million or increase by $312 million respectively). +Interest rate risk +APA Group’s interest rate risk is derived predominately from borrowings. This risk is managed by APA Group maintaining +an appropriate mix between fixed and floating rate borrowings, through the use of interest rate swap contracts. Hedging +activities are evaluated regularly to align with interest rate views and defined policy, ensuring appropriate hedging +strategies are applied. +APA Group’s exposures to interest rate risk on financial liabilities are detailed in the liquidity risk management section of +this note. Interest rate risk relating to APA Group’s financial assets is limited to cash and cash equivalents amounting to +$513 million as at 30 June 2023 (2022: $940 million). +Cross currency swap and interest rate swap contracts +Cross currency swap and interest rate swap contracts have the economic effect of converting borrowings from floating to +fixed rates and/or fixed rate foreign currency to fixed or floating AUD rates on agreed notional principal amounts enabling +APA Group to mitigate the risk of cash flow exposures on variable rate debt held. The fair value of cross currency swap +and interest rate swap contracts at the reporting date is determined by discounting the future cash flows using the yield +curves at reporting date. The average interest rate is based on the drawn debt balances at the end of the financial year. +There is an economic relationship between the hedged item and the hedging instrument. Based on APA Group’s +qualitative assessment of effectiveness, it is expected that the value of the interest rate swap contracts and the value +of the corresponding hedged items will systematically change in opposite directions in response to movements in +the underlying interest rates. The main source of hedge ineffectiveness in these hedge relationships is the effect of +the counterparty and APA Group’s own credit risk on the fair value of the cross currency swap and interest rate swap +contracts, which is not reflected in the fair value of the hedged item attributable to the change in interest rates and +difference in timing of the future cash flows. The effect of credit risk does not dominate the value changes that result from +that economic relationship. +The following table details the notional principal amounts and remaining terms of the cross currency swap contracts +outstanding as at the end of the financial year: +Weighted average interest rate Notional principal amount Fair value +2023 +% p.a. +2022 +% p.a. +2023 +$m +2022 +$m +2023 +$m +2022 +$m +Cash flow hedges – Pay fixed AUD interest – receive floating AUD or fixed foreign currency +Less than 1 year – – – +1 year to 2 years 7.28 – 536 – 95 – +2 years to 5 years (1) 4.82 4.20 2,634 2,027 134 25 +5 years and more (1) 4.04 2.84 5,876 6,940 (428) (248) +9,046 8,967 (199) (223) +(1) This amount includes a notional amount of USD 1.6 billion (2022: USD 1.6 billion). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +135 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_138.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..cf901afb84e2ce22b17baa5917c91bdd12032fc1 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_138.txt @@ -0,0 +1,69 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +The cross currency swap and interest rate swap contracts settle on a quarterly or semi-annual basis. The floating rate +benchmark on the interest rate swaps is Australian BBSW. APA Group will settle the difference between the fixed and +floating interest rate on a net basis. +All cross currency swap and interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest +amounts are designated as cash flow hedges in order to reduce APA Group’s cash flow exposure on borrowings. +The following tables detail before tax information of APA Group (excluding share of hedge reserves of associates) +regarding derivative financial instruments outstanding at the end of the reporting period, their related hedged items and +the effectiveness of the hedging relationships. +Fair value of hedge instrument Fair value of hedge item +Cash flow hedge +reserve balance +2023 +$m +2022 +$m +2023 +$m +2022 +$m +2023 +$m +2022 +$m +Foreign exchange risk +Hedging foreign currency +borrowings (cross currency swap) (224) (231) 225 242 788 245 +Hedging revenue and associated +receivables (foreign currency +borrowings) +(69) (54) 69 54 69 54 +Hedging revenue and associated +receivables (FECs) (76) (75) 76 75 73 74 +Hedging foreign currency +borrowings (FECs) 89 71 (89) (71) 32 (6) +Hedging capital purchases (FECs) 2 3 (2) (3) (2) (3) +Interest rate risk +Hedging AUD borrowings (IRS) 25 8 (24) (8) (24) (8) +(253) (278) 255 289 936 356 +Change in fair values of hedge +instruments (1) +Change in fair values of hedged +items (1) +2023 +$m +2022 +$m +2023 +$m +2022 +$m +Foreign exchange risk +Hedging foreign currency borrowings (cross currency swap) 7 (38) (17) 38 +Hedging revenue and associated receivables (foreign currency +borrowings) (15) (35) 15 35 +Hedging revenue and associated receivables (FECs) (20) (74) 19 74 +Hedging foreign currency borrowings (FECs) 18 71 (18) (71) +Hedging capital purchases (FECs) 3 3 (3) (3) +Interest rate risk +Hedging AUD borrowings (IRS) 17 8 (16) (8) +10 (65) (20) 65 +(1) This table excludes change in fair values of forecast transactions no longer expected to occur. +136 +APA GROUP ANNUAL REPORT 2023 +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_139.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..fd5f2900aca8546797eca866f1686af192a5b0ee --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_139.txt @@ -0,0 +1,51 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Hedge ineffectiveness +gain/(loss) (1) +Balance relating to discontinued +cash flow hedges +2023 +$m +2022 +$m +2023 +$m +2022 +$m +Foreign exchange risk +Hedging foreign currency borrowings (cross currency swap) (2) (8) – – +Hedging revenue and associated receivables +(foreign currency borrowings) – – 81 118 +Hedging revenue and associated receivables (FECs) – – – – +Hedging foreign currency borrowings (FECs) – – – – +Hedging capital purchases (FECs) – – – +Interest rate risk +Hedging US$ denominated borrowings (interest rate swap) – – 23 28 +(2) (8) 104 146 +(1) Hedge ineffectiveness gain (loss) shown is cumulative +Interest rate sensitivity analysis +The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and +non-derivative instruments held. A 100 basis point increase or decrease is used and represents management’s assessment +of the possible change in interest rates over the short term. At reporting date, if interest rates had been 100 basis points +lower or higher and all other variables were held constant, APA Group’s equity reserves would increase by $29 million +with a 100 basis point decrease in interest rates or decrease by $42 million with a 100 basis point increase in interest +rates (2022: increase by $70 million or decrease by $41 million respectively). This is due to the changes in the fair value of +derivative interest instruments. +APA Group’s profit sensitivity to interest rates remains unchanged during the current year as APA Group has no unhedged +floating rate borrowings outstanding at the end of the financial year. The increase/decrease in equity reserves is based on +1.00% p.a. increase/decrease in the yield curve at the reporting date. +Price risk – equity price +APA Group is exposed to price risk arising from its forward purchase contracts over listed equities. The forward purchase +contracts are held to hedge long term incentive awards rather than for trading purposes. APA Group does not actively +trade these holdings. +Price risk – electricity price +APA Group is exposed to electricity price risk arising from contracts for difference in an electricity sales agreement and a +network services agreement with customers. The contract guarantees the Group a fixed price for electricity offtake and +contracts to provide network services in exchange, of which, a portion of the fee is fixed against the price of capacity. The +key assumptions of the contract for difference are provided in the fair value of financial instrument section. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +137 +The secret transportation is a "train". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_14.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..b4d7cf8ac164c0fb0e8b58d58e0c3b67f79b682d --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_14.txt @@ -0,0 +1,49 @@ +Economic regulatory matters +Gas pipelines in Australia are regulated under the +National Gas Law (NGL) and National Gas Rules (NGR) by +the Australian Energy Regulator (AER) or the Economic +Regulation Authority of Western Australia (ERA). On +2 March 2023, amendments to the NGL and NGR were +proclaimed and came into effect across all States except +Western Australia. Prior to these amendments the NGL +and NGR established two regulatory pipeline frameworks: +1. Scheme pipelines (NGR Parts 8-12) subject to either: + – Full regulation with regulator approved tariffs and +terms and conditions; or + – Light regulation where pipeline owners publish +services and prices and comply with information +provision requirements. +2. Non-Scheme pipelines (NGR Part 23) where tariffs and +terms are negotiated between parties. +The 2 March 2023 amendments to the NGL and NGR +discontinue light regulation and transition to a: +• ‘heavier’ form of regulation, based on the current full +regulation for scheme pipelines; or +• ‘lighter’ form of regulation, based on the previous +Part 23 (now Part 10) regime for non-scheme pipelines. +In practice, pipelines currently subject to full regulation +are not expected to experience much change. APA’s +non-scheme pipelines and pipelines previously subject +to light regulation will transition to the new ‘lighter’ form +of regulation. +Following on from this legislative change, the regulator will +now have the power to determine the form of regulation +to apply to a particular pipeline. In effect, this means that +the AER can decide to apply full regulation to non-scheme +pipelines. The AER would then have the role of approving +capital and operating expenditure and rates of return +under five year access arrangement proposals. APA will +also be required to publish actual contracted prices across +its pipeline network. Further changes to the information +disclosure framework will take place from FY25, under a +new Pipeline Information Disclosure Guideline, currently +under development. +APA pipelines (owned and/or operated) – by regulation type +External environment +(continued) +Full regulation pipelines +Light regulation pipelines +Non-scheme pipelines +Partly full regulation/non-scheme pipelines +12 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_140.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_140.txt new file mode 100644 index 0000000000000000000000000000000000000000..4fcb4dee807d74cacdbfab9dd695e482685e50df --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_140.txt @@ -0,0 +1,55 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +(b) Credit risk +Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to +APA Group. +Credit risk management +APA Group has adopted the policy of dealing with creditworthy counterparties or obtaining sufficient collateral or bank +guarantees where appropriate as a means of mitigating the risk of loss. For financial investments or market risk hedging, +APA Group’s policy is to only transact with counterparties that have a credit rating of A- (Standard & Poor’s)/A3 (Moody’s) +or higher unless specifically approved by the Board. Where a counterparty’s rating falls below this threshold following +a transaction, no other transactions can be executed with that counterparty until the exposure is sufficiently reduced or +their credit rating is upgraded above APA Group’s minimum threshold. APA Group’s exposure to financial instrument and +deposit credit risk is closely monitored against counterparty credit limits imposed by the Treasury Risk Management Policy +approved by the AFC. These limits are regularly reviewed by the Board. +Overview of APA Group’s exposure to credit risk +In order to minimise credit risk, APA Group categorised exposures according to their degree of risk of default. APA Group’s +exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions +concluded is spread amongst approved counterparties. +APA Group’s current credit risk grading framework comprises the following categories: +• Performing – the counterparty has a low risk of default and does not have any past-due amounts; +• Doubtful – amount is >30 days past due or there has been a significant increase in credit risk since initial recognition; +and +• Write-off – there is evidence indicating that the debtor is in severe financial difficulty and APA Group has no realistic +prospect of recovery. +The table below details the credit quality of APA Group’s financial assets. +External credit rating Internal credit rating ECL method (1) +Cash and cash equivalents and cash on deposit A- (Standard & Poor’s)/ Performing 12-month ECL +A3 (Moody’s) or higher +Trade receivables N/A (2) Lifetime ECL +(simplified approach) +Finance lease receivables N/A (2) Lifetime ECL +(simplified approach) +Contract assets N/A (2) Lifetime ECL +(simplified approach) +Loan receivable N/A (3) Lifetime ECL +Loans advanced to related parties N/A Performing 12-month ECL +Redeemable preference shares (GDI) N/A Performing 12-month ECL +(1) Lifetime ECL represents the expected credit losses (ECL) that will result from possible default events over the expected life of a financial instrument. In +contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible +within 12 months after the reporting date. +(2) For trade receivables, finance lease receivables and contract assets, APA Group has applied the simplified approach in AASB 9 to measure the loss +allowance at lifetime ECL. APA Group determines the expected credit losses on these items by using a provision matrix, estimated based on historical +credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future +economic conditions. Accordingly, the credit risk profile of these assets is presented based on their past due status in terms of the provision matrix. Note +9 includes further details on the loss allowance for these assets, respectively, if any. +(3) Loan receivables were considered credit-impaired at initial recognition and classified as purchased or originated credit impaired (“POCI”) assets. +Accordingly, lifetime expected credit losses (ECLs) are included in the estimated cash flows when calculating the credit-adjusted effective interest rate +(EIR) on initial recognition and no loss allowance is recognised. APA Group continues to inspect any indication of deterioration of debt subsequent to the +acquisition date in determining whether any objective evidence exists to be impaired. There has been no movement in expected credit losses since the +date of acquisition. Refer to Note 9 for further detail. +138 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_141.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_141.txt new file mode 100644 index 0000000000000000000000000000000000000000..419de955e9c725112fe8b21a73d4255559ca7cac --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_141.txt @@ -0,0 +1,61 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Cross guarantee +In accordance with a deed of cross guarantee, APA Infrastructure Limited, a subsidiary of APA Group, has agreed to provide +financial support, as and when required, to all wholly-owned controlled entities that have ascended to the deed with either +a deficit in shareholders’ funds or an excess of current liabilities over current assets. The fair value of the financial guarantee +as at 30 June 2023 has been determined to be immaterial and no liability has been recorded (2022: $nil). +(c) Liquidity risk +APA Group has a policy of dealing with liquidity risk which requires an appropriate liquidity risk management framework for +the management of APA Group’s short, medium and long-term funding and liquidity management requirements. Liquidity +risk is managed by maintaining adequate cash reserves and banking facilities, by monitoring and forecasting cash flow and +where possible, by arranging liabilities with longer maturities to more closely match the underlying assets of APA Group. +Detailed in the following table are APA Group’s remaining contractual maturities for its financial liabilities including AUD +and foreign currency denominated notes, cross currency swaps and interest rate swaps in aggregate. The table shows the +undiscounted Australian dollar cash flows and includes both interest and principal cash flows. +2023 Maturity +Average +interest rate +% p.a. +Contract Value +Less than +1 year +$m +1 – 5 years +$m +More than +5 years +$m +Unsecured financial liabilities +Trade and other payables 471 – +Guaranteed bank loans (1) 20-May-27 3.77 25 574 – +Guaranteed bank loans (1) 20-May-29 3.88 26 105 526 +Denominated in A$ +Other financial liabilities 3 5 – +Guaranteed Senior Notes (3) +Denominated in A$ +2016 AUD Medium Term Notes 20-Oct-23 3.75 204 – – +Denominated in US$ +2015 US 144A (2) 23-Mar-25 4.20 69 1,720 – +2015 US 144A (2) 23-Mar-35 5.00 23 90 608 +2017 US 144A 15-Jul-27 4.25 59 1,314 – +Denominated in stated foreign currency +2012 GBP Medium Term Notes 26-Nov-24 4.25 40 555 – +2015 GBP Medium Term Notes (2) 22-Mar-30 3.50 60 238 1,449 +2015 EUR Medium Term Notes (2) 22-Mar-27 2.00 45 1,161 – +2019 GBP Medium Term Notes 18-Jul-31 3.13 34 135 859 +2019 JPY Medium Term Notes 13-Jun-34 1.03 6 23 167 +2020 EUR Medium Term Notes 15-Jul-30 2.00 39 158 1,117 +2021 EUR Medium Term Notes 15-Mar-29 0.75 27 110 956 +2021 EUR Medium Term Notes 15-Mar-33 1.25 29 117 920 +2021 GBP Medium Term Notes 15-Mar-36 2.50 19 77 606 +1,179 6,382 7,208 +(1) Bank facilities mature on 20 May 2027 ($500 million limit) and 20 May 2029 ($500 million limit). The facilities are fully drawn at reporting date. +(2) Facilities are denominated in or fully swapped by way of CCS into USD. Cashflows represent the USD cashflow translated at the USD/AUD spot rate as +at 30 June 2023. These amounts are fully hedged by FECs or future USD revenues. +(3) Rates shown are the coupon rate in the currency of issuance. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +139 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_142.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_142.txt new file mode 100644 index 0000000000000000000000000000000000000000..b8371046a4c0d056e9e66209744912e66059279c --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_142.txt @@ -0,0 +1,58 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +2022 Maturity +Average +interest rate +% p.a. +Contract Value +Less than +1 year +$m + 1 – 5 years +$m +More than +5 years +$m +Unsecured financial liabilities +Trade and other payables 417 – – +Unsecured bank borrowings (1) 25 (8) (7) +Denominated in A$ +Other financial liabilities 3 7 1 +Denominated in US$ +Guaranteed Senior Notes (3) +Denominated in A$ +2016 AUD Medium Term Notes 20-Oct-23 3.75 8 204 – +Denominated in US$ +2015 US 144A (2) 23-Mar-25 4.20 67 1,729 – +2015 US 144A (2) 23-Mar-35 5.00 22 87 609 +2017 US 144A 15-Jul-27 4.25 59 235 1,138 +Denominated in stated foreign currency +2012 GBP Medium Term Notes 26-Nov-24 4.25 39 595 – +2015 GBP Medium Term Notes (2) 22-Mar-30 3.50 57 230 1,458 +2015 EUR Medium Term Notes (2) 22-Mar-27 2.00 43 1,165 – +2019 GBP Medium Term Notes 18-Jul-31 3.13 34 135 894 +2019 JPY Medium Term Notes 13-Jun-34 1.03 6 23 172 +2020 EUR Medium Term Notes 15-Jul-30 2.00 39 157 1,156 +2021 EUR Medium Term Notes 15-Mar-29 0.75 27 110 983 +2021 EUR Medium Term Notes 15-Mar-33 1.25 29 117 949 +2021 GBP Medium Term Notes 15-Mar-36 2.50 19 77 625 + 894 4,863 7,978 +(1) Bank facilities mature or expire on 18 July 2022 ($50 million limit), 30 June 2023 ($500 million limit), 1 July 2023 ($50 million limit), 18 July 2023 +($100 million limit), 31 December 2023 ($500 million limit), 19 December 2025 ($50 million limit), 20 May 2027 ($500 million limit) and 20 May 2029 +($500 million limit). Additionally, undrawn bank facilities are maturing or expiring in FY23 and FY24. +(2) Facilities are denominated in or fully swapped by way of CCS into US$. Cashflows represent the US$ cashflow translated at the USD/AUD spot rate +as at 30 June 2022. These amounts are fully hedged by FECs or future US$ revenues. +(3) Rates shown are the coupon rate in the currency of issuance. +Critical accounting judgements and key sources of estimation uncertainty– fair value of financial +instruments +APA Group has financial instruments that are carried at fair value in the statement of financial position. The best evidence +of fair value is quoted prices in an active market. If the market for a financial instrument is not active, APA Group +determines fair value by using various valuation models. The objective of using a valuation technique is to establish +the price that would be received to sell an asset or paid to transfer a liability between market participants. The chosen +valuation models make maximum use of market inputs and rely as little as possible on entity specific inputs. The fair values +of all positions include assumptions made as to recoverability based on the counterparty’s and APA Group’s credit risk. +140 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_143.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_143.txt new file mode 100644 index 0000000000000000000000000000000000000000..81a7196f4614d65635cbbaf05a101a776cf85151 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_143.txt @@ -0,0 +1,47 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Fair value measurements recognised in the statement of financial position +The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair +value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. +• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical +assets or liabilities. +• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are +observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). +• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or +liability that are not based on observable market data (unobservable inputs). +Transfers between levels of the fair value hierarchy occur at the end of the reporting period. There have been no transfers +between the levels during 2023 (2022: none). Transfers between Level 1 and Level 2 are triggered when there are +changes to the availability of quoted prices in active markets. Transfers into Level 3 are triggered when the observable +inputs become no longer observable, or vice versa for transfer out of Level 3. +Fair value of the Group’s financial assets and liabilities that are measured at fair value on a recurring basis +The fair values of financial assets and financial liabilities are measured at the end of each reporting period and determined +as follows: +• The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid +markets are determined with reference to quoted market prices. These instruments are classified in the fair value +hierarchy at Level 1; +• The fair values of FECs included in hedging assets and liabilities are calculated using discounted cash flow analysis +based on observable forward exchange rates at the end of the reporting period and contract forward rates discounted +at a rate that reflects the credit risk of the various counterparties. These instruments are classified in the fair value +hierarchy at Level 2; +• The fair values of interest rate swaps, cross currency swaps, equity forwards and other derivative instruments included +in hedging assets and liabilities are calculated using discounted cash flow analysis using observable market inputs +(yield curves, foreign exchange rates, equity prices and historical inflation indices) at the end of the reporting period +and contract rates discounted at a rate that reflects the credit risk of the various counterparties. These instruments are +classified in the fair value hierarchy at Level 2; +• The fair value of indexed revenue contract is derived from present value of expected future cash flows based on +observable inflation indices and yield curve at the end of the reporting period. These instruments are classified in the +fair value hierarchy at Level 2; +• The fair values of other financial assets and financial liabilities (excluding derivative instruments) are determined +in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from +observable current markets discounted at a rate that reflects the credit risk of the various counterparties. These +instruments are classified in the fair value hierarchy at Level 2; +• The fair value of financial guarantee contracts is determined based upon the probability of default by the specified +counterparty extrapolated from market-based credit information and the amount of loss, given the default. These +instruments are classified in the fair value hierarchy at Level 2; and +• The carrying value of financial assets and liabilities recorded at amortised cost in the financial statements approximate +their fair value having regard to the specific terms of the agreements underlying those assets and liabilities. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +141 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_144.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_144.txt new file mode 100644 index 0000000000000000000000000000000000000000..15304e0fe13a4cafd41b4b42bc24aec3cdca53f2 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_144.txt @@ -0,0 +1,48 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Contracts for difference +The financial statements include contracts for difference arising from an electricity sales agreement with a customer that +guarantees the Group a fixed price for electricity offtake for the agreed term and a network services agreement where +the Group exchanges variable interregional electricity revenues for a fixed fee based on capacity. The contracts are at fair +value. The fair value of the contracts for difference is derived from internal discounted cash flow valuation methodology, +which includes some assumptions that are not able to be supported by observable market prices or rates. +In determining the fair value, the following assumptions were used: +• For the electricity sales agreement, the estimated long term forecast electricity pool prices are applied as market prices +are not readily observable for the corresponding term. Forecast electricity volumes are also estimated based on an +internal forecast output model; +• For the network services agreement, the variable inter-regional revenues were forecast based on the interconnector’s +historical spot prices and electricity volumes as these inputs are not readily observable; +• The discount rates are based on observable market rates for risk-free instruments of the appropriate term; +• Credit adjustments are applied to the discount rates to reflect the risk of default by either the Group or a specific +counterparty. Where a counterparty specific credit curve is not observable, an estimated curve is applied which takes +into consideration the credit rating of the counterparty and its industry; and +• These instruments are classified in the fair value hierarchy at Level 3. +Changes in any of the aforementioned assumptions may be accompanied by changes in other assumptions which may +have an offsetting impact. +Fair value hierarchy +2023 +Level 1 +$m +Level 2 +$m +Level 3 +$m +Total +$m +Financial assets measured at fair value +Interest rate swaps used for hedging – 25 – 25 +Cross currency swap contracts used for hedging – 286 – 286 +Foreign currency forward exchange contracts used for hedging – 121 – 121 +Contracts for difference – – 13 13 +– 432 13 445 +Financial liabilities measured at fair value +Cross currency swap contracts used for hedging – 509 – 509 +Foreign currency forward exchange contracts used for hedging – 106 – 106 +Contracts for difference – – 3 3 +Indexed revenue contract – 12 – 12 +– 627 3 630 +142 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_145.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_145.txt new file mode 100644 index 0000000000000000000000000000000000000000..604d36fd1f7837efefae9d07868d19a0bea60307 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_145.txt @@ -0,0 +1,63 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +2022 +Level 1 +$m +Level 2 +$m +Level 3 +$m +Total +$m +Financial assets measured at fair value +Equity forwards designated as fair value through profit or loss – 5 – 5 +Interest rate swaps used for hedging – 13 – 13 +Cross currency swap contracts used for hedging – 235 – 235 +Foreign currency forward exchange contracts used for hedging – 104 – 104 +Contracts for difference – – 9 9 +– 357 9 366 +Financial liabilities measured at fair value +Interest rate swaps used for hedging 4 4 +Cross currency swap contracts used for hedging – 467 – 467 +Foreign currency forward exchange contracts used for hedging – 105 – 105 +Indexed revenue contract – 12 – 12 +Contracts for difference – – 11 11 +– 588 11 599 +Reconciliation of Level 3 fair value measurements +2023 +$m +2022 +$m +Opening balance (2) 28 +Revaluation 17 (27) +Settlement (5) (3) +Closing balance 10 (2) +Fair value measurements of financial instruments measured at amortised cost +The financial liabilities included in the following table are fixed rate borrowings. Other debts held by APA Group are +floating rate borrowings and amortised cost as recorded in the financial statements approximate their fair values. +Carrying amount (1) Fair value (Level 2) (2) +2023 +$m +2022 +$m +2023 +$m +2022 +$m +Financial liabilities +Unsecured Australian Dollar Medium Term Notes 200 200 199 198 +Unsecured Japanese Y en Medium Term Notes 104 107 96 100 +Unsecured US Dollar 144A Medium Term Notes 3,366 3,249 3,231 3,213 +Unsecured British Pound Medium Term Notes 3,031 2,805 2,432 2,493 +Unsecured Euro Medium Term Notes 3,825 3,542 3,095 2,874 +10,526 9,903 9,053 8,878 +(1) The methodology applied to determine carrying amount represents the borrowings at amortised cost. The comparative year has been updated to reflect +this methodology. +(2) The fair values have been determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from +observable current markets, discounted at a rate that reflects APA Group’s credit risk. These instruments are classified in the fair value hierarchy at +Level 2. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +143 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_146.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_146.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1579ca55cd167536a7eed2086bc4f37d18576ea --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_146.txt @@ -0,0 +1,58 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +21. Other financial instruments +Assets Liabilities +2023 +$m +2022 +$m + 2023 +$m +2022 +$m +Derivatives at fair value: + Contracts for difference – – 3 11 + Equity forward contracts – 1 – – +Derivatives at fair value designated as hedging instruments: + Cross currency swaps – cash flow hedges (1) 22 18 159 164 + Foreign exchange contracts – cash flow hedges 17 13 45 27 + Interest rate swaps – cash flow hedges (1) 10 – – 4 +Current 49 32 207 206 +Derivatives at fair value: + Contracts for difference 13 9 – – + Equity forward contracts – 4 – – + Indexed revenue contracts – – 12 12 +Derivatives at fair value designated as hedging instruments: + Cross currency swaps – cash flow hedges 288 235 379 332 + Foreign exchange contracts – cash flow hedges 104 91 61 78 + Interest rate swaps – cash flow hedges 15 13 – – +Financial items carried at amortised cost: + Redeemable preference shares (2) 10 10 – – +Non-current 430 362 452 422 +(1) Derivatives at fair value for Cross currency interest rate swaps and Interest rate swaps include interest receivables and payables. +(2) Redeemable preference shares relate to APA Group’s 20% interest in GDI (EII) Pty Ltd. In December 2011, APA sold 80% of its gas distribution network +in South East Queensland (Allgas) into an unlisted investment entity, GDI (EII) Pty Ltd. At that date GDI issued 52 million Redeemable Preference Shares +(RPS) to its owners. The shares were redeemed in December 2021 and new redeemable preference shares were issued. The shares attract periodic +interest payments and have a redemption date 10 years from issue. +Recognition and measurement +Classification of financial assets +Debt instruments that meet the following conditions are subsequently measured at amortised cost: +• The financial asset is held within a business model whose objective is to hold financial assets in order to collect +contractual cash flows; and +• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of +principal and interest on the principal amount outstanding. +Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive +income (FVTOCI): +• The financial asset is held within a business model whose objective is achieved by both collecting contractual cash +flows and selling the financial assets; and +• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of +principal and interest on the principal amount outstanding. +By default, all other financial assets are subsequently measured at fair value through profit or loss (FVTPL). +Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses +recognised in profit or loss to the extent they are not part of a designated hedging relationship. +Derivatives that APA Group does not elect to apply hedge accounting to or do not meet the hedge accounting criteria, are +classified as ‘financial assets/liabilities’ for accounting purposes and accounted for at FVTPL. +144 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_147.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_147.txt new file mode 100644 index 0000000000000000000000000000000000000000..d2914b0ff29f301ee3699a0a501d69718ac578b8 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_147.txt @@ -0,0 +1,56 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +21. Other financial instruments (continued) +Fair value measurement +For information about the methods and assumptions used in determining the fair value of financial instruments refer to note 20. +Hedge accounting +APA Group designates certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives +in respect of foreign currency risk, as either fair value hedges or cash flow hedges. There are no fair value hedges in the +current or prior year, hedges of foreign exchange and interest rate risk are accounted for as cash flow hedges. +At the inception of the hedge relationship, APA Group formally designates and documents the relationship between the +hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking +various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, APA Group expects the +hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the +hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements: +• there is an economic relationship between the hedged item and the hedging instrument; +• the effect of credit risk does not dominate the value changes that result from that economic relationship; and +• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that APA +Group actually hedges and the quantity of the hedging instrument that APA Group actually uses to hedge that quantity +of hedged item. +Derivatives are initially recognised at fair value at the date a derivatives contract is entered into and subsequently +remeasured to fair value at each reporting period. The resulting gain or loss is recognised in profit or loss immediately +unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in +profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value is recognised as a +financial asset, a derivative with a negative fair value is recognised as a financial liability. +The fair value of hedging derivatives is classified as either current or non-current based on the timing of the underlying +discounted cash flows of the instrument. Cash flows due within 12 months of the reporting date are classified as current +and cash flows due after 12 months of the reporting date are classified as non-current. +IBOR replacement impact +APA Group does not have any debt or derivative instruments directly linked to US LIBOR, EURIBOR, GBP LIBOR or JPY +LIBOR (collectively ‘IBORs’). APA Group only has an indirect exposure to the IBORs in relation to the valuation of Cross +Currency Swaps that are designated in hedging relationships. APA has continued to monitor for any potential impact on +the valuation of derivative instruments as a result of the transition. As at 30 June 2023, any potential impact is limited and +not considered significant. +Cash flow hedges +The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated +and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the cash flow hedge +reserve, limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss +relating to the ineffective portion is recognised immediately in profit or loss, and is included in the ‘finance costs’ line item. +Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or +loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. However, +when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, the gains +and losses previously recognised in other comprehensive income and accumulated in equity are removed from equity +and included in the initial measurement of the cost of the non-financial asset or non-financial liability. This transfer does +not affect other comprehensive income. Furthermore, if APA Group expects that some or all of the loss accumulated in the +cash flow hedging reserve will not be recovered in the future, that amount is immediately reclassified to profit or loss. +APA Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the +qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is +sold, terminated or exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other +comprehensive income and accumulated in the cash flow hedge reserve at that time remains in equity and is reclassified +to profit or loss when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain +or loss accumulated in the cash flow hedge reserve is reclassified immediately to profit or loss. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +145 +The secret vegetable is an "onion". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_148.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..6830ced0d3c5cea23be636d9e4871cd08c75427a --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_148.txt @@ -0,0 +1,49 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +21. Other financial instruments (continued) +Accounting for the forward element of foreign currency forward exchange contracts and foreign currency +basis spreads of financial instruments +APA Group designates the full change in the fair value of an FEC (i.e. including the forward elements) as the hedging +instrument for all of its hedging relationships involving FECs. +APA Group separates the foreign currency basis spread from a financial instrument and excludes it from the designation +of that financial instrument as the hedging instrument. Changes in the value of the undesignated aligned foreign currency +basis spread associated with cross currency swaps are deferred in other comprehensive income. +Cash flow hedge and cost of hedging reserve +The cash flow hedge reserve represents the cumulative amount of gains and losses on hedging instruments deemed +effective in cash flow hedges. The cumulative deferred gain or loss on the hedging instrument is recognised in profit or +loss only when the hedged transaction impacts the profit or loss, or is included directly in the initial cost or other carrying +amount of the hedged non-financial items. +The cost of hedging reserve represents the effect of the changes in fair value of the forward currency basis spread of a +financial instrument when the foreign currency basis spread of a financial instrument is excluded from the designation of +that financial instrument as the hedging instrument (consistent with APA Group’s accounting policy to recognise the non- +designated component of a foreign currency derivative in equity). The changes in fair value of the foreign currency basis +spread of a financial instrument, in relation to a time-period related hedged item accumulated in the cash flow hedging +reserve, are amortised to profit or loss on a rational basis over the term of the hedging relationship. +2023 +$m +2022 +$m +Balance at beginning of financial year (343) (366) +Gain/(loss) recognised taken to equity: +Loss arising on changes in fair value of hedging instruments (643) (200) +Changes in fair value of foreign currency basis spread during the year (62) 48 +Share of hedge reserve of associate 4 25 +Amount reclassified to P&L for effective hedges 167 160 +Tax effect 160 (10) +Balance at end of financial year (717) (343) +In 2023, the foreign currency basis spread reserve balance at the beginning of the financial year is $13 million and at the +end of financial year is ($13 million) (2022: ($70 million) at the beginning of the financial year). +Hedge ineffectiveness +Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective +effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging +instrument. +In hedges of foreign currency capital equipment purchases, ineffectiveness may arise if the timing of the forecast +transaction changes from what was originally estimated, or if there are changes in the credit risk of APA Group or the +derivative counterparty. +Hedge ineffectiveness for cross currency swaps is assessed using the same principles as for hedges of foreign currency +capital equipment purchases. It may occur due to the credit value/debit value adjustment on the swap contracts which is +not matched by the debts. +146 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_149.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..498a5dd67d000116e5d741a664f2097aa0acd5e4 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_149.txt @@ -0,0 +1,53 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +21. Other financial instruments (continued) +Impairment of financial assets +In relation to the impairment of financial assets, it is no longer necessary for a credit event to have occurred before credit +losses are recognised. APA Group applies an ECL model to account for ECL and changes in those ECL at each reporting +date to reflect changes in credit risk since initial recognition of a financial asset. +APA Group recognises a loss allowance for ECL on investments in debt instruments that are measured at amortised cost, +for example, loans advanced to related parties and trade receivables. No impairment loss is recognised for investments in +equity instruments. For trade receivables, finance lease receivables and contract assets, APA Group applies the simplified +approach to assessing ECL. Under the simplified approach, ECL on these financial assets is estimated using a provision +matrix. This matrix is based on APA Group’s historical credit losses and reasonable and supportable information that is +available without undue cost. +The amount of ECL under either approach is updated at each reporting date to reflect changes in credit risk since initial +recognition of the respective financial instrument. +APA Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding +adjustment to their carrying amount through a loss allowance account. Aside from the additional disclosure requirements +in note 20, the history of collection rates and forward-looking information that is available without undue cost or effort +shows that APA Group has immaterial expected loss on collection of debtors or loans. +Significant increase in credit risk +An actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating. +Definition of default +When there is a breach of financial covenants by the debtor. +Write-off policy +APA Group writes off a financial asset when all reasonable attempts at recovery have been taken and failed e.g. debts that +are considered irrecoverable, or where the cost of recovery is uneconomic, must be written off as a bad debt. +22. Issued capital +2023 +$m +2022 +$m +Units +1,179,893,848 securities, fully paid (2022: 1,179,893,848 securities, fully paid) (1) 1,964 2,225 + 2023 +No. of units +in millions +2023 +$m +2022 +No. of units +in millions +2022 +$m +Movements +Balance at beginning of financial year 1,180 2,225 1,180 2,571 +Capital distributions paid (note 8) – (261) – (346) +Balance at end of financial year 1,180 1,964 1,180 2,225 +(1) Fully paid securities carry one vote per security and carry the right to distributions. +The Trust does not have a limited amount of authorised capital. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +147 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_15.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..54dea2b8393b37d84e8b61a7ccac49c865e7dd08 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_15.txt @@ -0,0 +1,63 @@ +Regulatory resets +The diagram below shows the scheduled regulatory reset +dates for pipelines owned and operated by APA. During +FY23, approximately 8.2% of APA’s Energy Infrastructure +revenues were subject to regulated outcomes. +Key regulatory matters relating to APA assets addressed +during the year included: +• Victorian Transmission System (VTS) 2023-2027 +access arrangement – On 9 December 2022, the AER +published its final decision on the 2023-27 VTS access +arrangement. The decision recognised the importance +of continued investment in the VTS to maintain +reliability and system security for Victorian gas users. +The access arrangement will have effect for five years +from 1 January 2023. +• Murraylink 2023-2028 revenue proposal1 – +On 28 April 2023, the AER published its final +determination for the Murraylink electricity transmission +interconnector between South Australia and Victoria, +approving total revenues for the 2023-28 period at +levels 4.5% lower than allowed for in the 2018-22 +period. This cut was driven largely by reductions in the +allowed cost of capital. +Energy industry policy developments +In FY23 APA continued to engage in national and +jurisdictional policy processes focused predominantly on +gas security, development of the hydrogen and renewable +gas industries, and the decarbonisation of the economy. +The focuses of our submissions were as follows: +• Gas security – APA submitted that market approaches, +rather than direct Government intervention, are the +most efficient means of ensuring gas is delivered +to customers. Our submissions also stressed the +importance of bringing new gas supplies to market. +• Hydrogen and renewable gas reforms – APA lodged +submissions to various jurisdictional processes +proposing to extend licensing and technical +frameworks to include hydrogen and renewable gases. +• Decarbonisation of the economy – APA supports +the development of Renewable Energy Zones and +contestability in transmission delivery to help efficiently +connect renewable generation to the National +Electricity Market. APA also supported amendments +to the National Energy Objectives and the Safeguard +Mechanism to help drive the decarbonisation of +the economy. +• Banning new gas connections – The ACT and +Victorian governments are taking steps to ban new gas +connections at the distribution level for households +and small business. Both governments are also offering +subsidies for households and small business to replace +gas appliances with electric ones. +Scheduled regulatory reset dates for pipelines owned and operated by APA 2 +Victorian Transmission System 31 DECEMBER 2027 +Roma Brisbane Pipeline 30 JUNE 2027 +CY23 CY24 CY25 CY26 CY27 +Amadeus Gas Pipeline 30 JUNE 2026 +Goldfields Gas Pipeline 31 DECEMBER 2024 +1 APA has ~20% ownership of Murraylink. +2 Victorian Transmission System access arrangement from 1 January 2023 to 31 December 2027. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +13 +The secret object #2 is a "key". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_150.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_150.txt new file mode 100644 index 0000000000000000000000000000000000000000..c709e5b7721529b7f8e9f7cd52b1a310ade49408 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_150.txt @@ -0,0 +1,51 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Group Structure +23. Non-controlling interests +APA Infrastructure Trust is deemed the parent entity of APA Group comprising of the stapled structure of APA Infrastructure +Trust and APA Investment Trust. Equity attributable to other trusts stapled to the parent is a form of non-controlling interest +and represents 100% of the equity of APA Investment Trust. +Summarised financial information for APA Investment Trust is set out below, the amounts disclosed are before inter-entity +eliminations. +2023 +$m +2022 +$m +Financial position +Current assets 1 1 +Non-current assets 566 657 +Total assets 567 658 +Total liabilities – – +Net assets 567 658 +Equity attributable to non-controlling interests 567 658 +Financial performance +Revenue 24 29 +Profit for the year 24 29 +Total comprehensive income allocated to non-controlling interests for the year 24 29 +Cash flows +Net cash provided by operating activities 25 30 +Net cash provided by investing activities 90 126 +Distributions paid to non-controlling interests (114) (157) +Net cash used in financing activities (114) (157) +The accounting policies of APA Investment Trust are the same as those applied to APA Group. +There are no material guarantees, contingent liabilities or restrictions imposed on APA Group from APA Investment Trust’s +non-controlling interests. +2023 +$m +2022 +$m +APA Investment Trust 567 658 +Equity attributable to non-controlling interests 567 658 +APA Investment Trust +Issued capital: +Balance at beginning of financial year 644 765 +Distribution – capital return (note 8) (89) (121) + 555 644 +Retained earnings: +Balance at beginning of financial year 13 19 +Net profit attributable to APA Investment Trust unitholders 24 29 +Distributions paid (note 8) (25) (35) + 12 13 +148 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_16.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..1d0ed64819ecc749b39984e26f8a1ebdf3fa5357 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_16.txt @@ -0,0 +1,12 @@ +Our strategy +Creating value as +THE PARTNER OF +CHOICE +Meeting the needs of our customers +WHERE WE HAVE +A COMPETITIVE +ADVANTAGE +Disciplined investment +ACROSS FOUR ASSET +CLASSES +14 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_17.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..afec13cc62fc8672a27fb05956c92ed59c9552f7 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_17.txt @@ -0,0 +1,49 @@ +An effective transition requires an ambitious but +pragmatic approach to delivering affordable, reliable and +low emissions energy. To achieve this, we believe the +transition must focus on the retirement of coal fired power +generation and the introduction of renewable generation, +firmed with gas and/or other low emissions firming and +storage technologies. +APA is well positioned in Australia to play a key role in +developing and deploying energy solutions that strike the +balance between these often competing priorities. Our +natural gas assets are strategically integrated in both the +East Coast and West Coast gas markets. They will remain +a critical part of the future energy mix, balancing the load +and helping to unlock the expansion of renewable energy +required to replace retiring coal power stations and +support the nation’s decarbonisation. In addition, natural +gas continues to play an important role for powering +hard-to-abate and hard-to-electrify industrial sectors and +provides essential heating in colder climates. APA’s assets +will help to ensure Australia continues to have access to +reliable and cost-efficient energy. +APA’s strategy is to be the partner of choice in delivering +infrastructure solutions for the energy transition . +We will do this in select asset classes, where we have +a competitive advantage – renewable electricity and +firming, electricity transmission, gas transportation +and future energy (including clean fuels such as hydrogen +and renewable methane). +This approach will be underpinned by anticipating +the needs of our customers, partnering with them, +pursuing unsolicited proposals, and delivering bundled +energy solutions. +APA’s energy transition strategy is focused on four asset classes +APA’s strategy is to be the partner of choice in delivering +infrastructure solutions for the energy transition. +We are supporting +Australia’s energy +transition through +investment in +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +15 +Contracted +Renewables and Firming +Electricity +Transmission +Gas +Transportation +Future +Energy \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_18.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..8317df7d240a8954a6593cda232eeaf47bd28adf --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_18.txt @@ -0,0 +1,83 @@ +Our strategy +(continued) +BRINGING THE APA STRATEGY TO LIFE THROUGH A CUSTOMER DRIVEN APPROACH TO MARKET +RESOURCE INDUSTRY ENERGY SUPPLY +AND WHOLESALE GOVERNMENT LARGE COMMERCIAL +AND INDUSTRIAL +... ACROSS VARIOUS ASSET CLASSES +... MEETING THE NEEDS OF OUR CUSTOMERS WHERE WE HAVE A COMPETITIVE ADVANTAGE ... +A CUSTOMER FOCUSED STRATEGY ... +Levelised cost of energy +remains key +Flexibility to respond to +changing supply sources +Reliability of service +remains high +Opportunity across both +East and West coasts +Leverage current assets +along with incremental learning +and execution +Require trusted partner to +support accelerating transition +Reliability and social +licence are key +Cost is important, but timely +delivery drives outcomes +Opportunity estimated amounts +to $54bn including REZs and +subsea cables +Basslink, Murraylink, Directlink +illustrate our capability +Ability to provide flexible +and responsive services to +changing market demands +Reliability of supply with +a trusted partner +Requiring innovative ways to +respond to the energy transition +Opportunity across both +East and West coasts +Core operating business +with a proven track record +Resource companies are +decarbonising – majority +have CO 2 reduction goals +Reliability of energy supply +with a trusted operator/partner +Levelised cost of energy remains +key for global competitiveness +Significant opportunity exists +in North West Minerals Province, +Pilbara, Goldfields +Mt Isa and Gruyere showcases +our capability +Asset class and total estimated addressable market size /one.numr : +$8bn +Gas +Pipelines +$260bn +Hydrogen +$54bn +Electricity +Transmission +(including +Subsea Cables) +$206bn +Contracted +VRE and +Firming +on Grid (NEM) +$13bn +CO 2 +Transmission +$25bn +Contracted +VRE and +Firming +Remote Grid +1 Estimated addressable market sizes in Australia. Estimates are based on a number of key assumptions, including in relation to macroeconomic factors, future technology +advancements and costs, market demand, regulatory requirements and government policies and there can be no assurance the estimates are accurate. The actual +addressable market sizes may differ materially from the estimates because events frequently do not occur as projected. +16 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_19.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e11a1eb6138a696597e29e2e0a60fab119d483a --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_19.txt @@ -0,0 +1,60 @@ +Our sustainability roadmap +As a leading Australian energy infrastructure business, +we believe we have a responsibility to steward our natural +resources and preserve long-term value for security- +holders, communities and our people. +At APA we see sustainability as a priority that involves +both opportunities and risks. We understand the value +and scrutiny our partners and stakeholders place on our +sustainability performance and that this is used to assess +APA’s comparative performance across the industry. +Our approach to sustainability is governed by a +Sustainability Roadmap centred on nine material +sustainability issue areas identified through a consultative +process. Our Roadmap provides a three-year framework +for building the foundations of sector-leading sustainability +performance. +APA’s Net Zero ambitions and the low-carbon transition +are at the heart of our Roadmap and we are prioritising +achievement of the targets outlined within our Climate +Transition Plan (CTP). +Our Sustainability Roadmap and our CTP are overseen +by our Board and guided by the Safety and Sustainability +Board Committee. +Climate Change Transition and Risk Environmental Management +including Heritage Management +Safety, Health and Wellbeing +Community and Social Performance +First Nations Peoples + Inclusion and Diversity +People and Culture +Governance and Risk Management +Sustainable Development +Sustainability issues +Leverage our strengths and focus on the things +that matter +Engage, listen and innovate with key stakeholders +and alliances +Achieve consistently meaningful, measurable and +impactful outcomes +Anticipate and be well positioned to respond to fast +moving issues and opportunities +Accelerate our improvement actions to close the gap Take a ‘know and show’ approach with disclosure +and transparency +ESG SCORECARD +ROADMAP AND PLAN PRINCIPLES +BUILD ACCELERATE MAINTAIN AND EVOLVE +Priority issues to be built +into strengths +Fundamental issues which +require strengthening +Existing plans and processes +to evolve via ESG lens +1 +2 +3 +4 +5 +6 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +17 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_2.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..ef16961558b7fc5774edf9e4fee14d3ae7a727aa --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_2.txt @@ -0,0 +1,46 @@ +ACKNOWLEDGEMENT OF COUNTRY +At APA, we acknowledge the Traditional +Owners and Custodians of the lands on which +we live and work throughout Australia. +We acknowledge their connections to land, +sea and community. +We pay our respects to their Elders past and +present and commit to ensuring APA operates +in a fair and ethical manner that respects +First Nations peoples’ rights and interests. +About this report: The 2023 Annual Report is our primary report to securityholders +and provides a consolidated summary of APA Group’s performance for the financial +year ended 30 June 2023. It should be read in conjunction with the reports that +comprise the 2023 Annual Reporting Suite including: Annual Report, Sustainability +Data Book, Results Presentation available from https://www.apa.com.au/investors , +as well as the Climate Report and Climate Data Book that will be available at this +website in September 2023. In this report, unless otherwise stated, references to +‘APA Group’, ‘we’, ‘us’ and ‘our’ refer to APA comprising the ASX-listed entity and +the APA Infrastructure Trust and the APA Investment Trust. Any reference in this +report to a ‘year’ relates to the financial year ended 30 June 2023. All dollar figures +are expressed in Australian dollars unless otherwise stated. +The Board acknowledges its responsibility for the 2023 Annual Report and has been +directly involved in its development and direction. The Board reviewed, considered +and provided feedback during the production process and approved the Annual +Report at its August 2023 Board meeting. +This report outlines APA Group’s activities – governed by our purpose, vision +and values and corporate strategy – delivering the financial, non-financial and +sustainability performance required to capture opportunities whilst managing risks. +Towards integrated reporting: APA Group is committed to providing securityholders, +other external stakeholders and our people with timely, consistent and transparent +corporate reporting. APA is moving towards integrated reporting over a multi-year +period in order to create trusting and transparent relationships with all stakeholders +and to provide a more complete picture of how we create and preserve long-term value. +The integrated reporting concept refers to a principles-based, multi-capital +framework in which companies can communicate clearly and concisely about how +their strategies, governance, performance, prospects and sustainability-related +actions create value in the context of their external environment. The International +Finance Reporting Standards Foundation formed the International Sustainability +Standards Board (ISSB) in November 2021. The ISSB’s purpose is to deliver a +comprehensive global baseline of sustainability-related disclosure standards that +provide investors and other capital market participants with information about +companies’ sustainability-related risks and help them make informed investment. +These standards, when issued, are expected to result in a more definitive approach +for companies to follow with regard to integrated reporting. Our FY23 Annual Report +has been developed with this in mind. +The secret food is a "sausage". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_20.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..1395a97c70d8b67e096c2085b84ba1f38686f0ce --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_20.txt @@ -0,0 +1,11 @@ +Risks and +opportunities +EMBRACING +the energy transition opportunity +OPTIMISING +outcomes in a highly regulated +and fluid environment +FUTURE PROOFING +APA with the right capability +and technology +18 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_21.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c497f423cb07d8777107fb5fc9d85279950fb97 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_21.txt @@ -0,0 +1,89 @@ +As a leading energy infrastructure business, APA is exposed +to risks that can have a material impact on our delivery of +energy and our financial success. Our approach to managing +material risks is summarised below. +Risk management framework +APA’s risk management framework supports the +identification, management, escalation and reporting +of material risks. By implementing an effective risk +management framework APA’s Board and executive aim +to ensure that strategies are in place to manage potential +opportunities and threats. +APA adopts a three lines model for managing risks and +establishing controls to promote the behaviours and +decision making to support effective risk management. +This model of risk management is depicted below. +The first line, our employees, are accountable for +day-to-day risk management and decision making within +appropriate guidelines. +In lines two and three, APA’s Executive Leadership +Team, the Board’s Risk Management Committee and the +relevant business divisions have oversight of and review +material risks regularly, with the support of internal and +external experts. +During FY23, the accelerating energy transition, as well +as emerging geopolitical risks, inflation and supply chain +disruptions were key risks and opportunities impacting +our operational and financial performance. To create +and protect value APA has focused on these risks and +opportunities, updating actions to manage risks and +achieve our objectives. Existing material risks also have +ongoing oversight with a major priority being ensuring +the safety of our operations and supporting activities to +provide reliable energy to our customers, and to maintain +our financial strength to respond to changes in the +Australian energy market. +BOARD +Accountable to stakeholders for organisational oversight +RISK MANAGEMENT COMMITTEE/AUDIT AND FINANCE COMMITTEE +Delegates, directs, ensures adequate resourcing and provides oversight +EXECUTIVE RISK MANAGEMENT COMMITTEE +Accountable for risk and reporting to the Risk Management Committee +MANAGEMENT INTERNAL AUDIT +EXTERNAL ASSURANCE PROVIDERS +(External Audit1, Regulator Audit, Third Party Audit, Advisory Reviews) +LINE ONE +Owns and manages risks +LINE TWO +Builds, reviews and supports +LINE THREE +Independent assurance +Group Executives +Our People +Enterprise/Divisional Risk, Compliance and +Assurance Teams, HSEH, Enterprise +Security, Enterprise PMO +Group Internal Audit +• Provide products/services to customers +• Implement risk management frameworks +(identify, assess, own and manage risks +to achieving objectives) +• Own internal controls and actions +• Own and manage compliance with legal, +regulatory and ethical expectations +• Control attestation/self-assessment +• Provide expertise, support, monitoring +and challenge on risk-related matters +• Maintain and continuously improve +risk management practices at an +enterprise/function, system or +process level +• Report on the adequacy and +effectiveness of risk management +• Coordinate insurance +• Maintain and implement risk-based +control assurance programs at +enterprise/function level +• Provide independent and objective +assurance of objectives +• Ensure that governance structures and +processes are appropriately designed +and operating as intended +• Provide oversight and direction in +aligning governance activities, including +integrated assurance +Key: Accountability reporting +1 External Auditors have not provided assurance over the risk management framework in FY23. +Alignment, communication, coordination, collaborationDelegation, direction, resources, oversight +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +19 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_22.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..24b4084fb5c4885f43db282130b6de05356a538c --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_22.txt @@ -0,0 +1,93 @@ +Material risks +APA currently considers the following risks to have the possibility of materially impacting our ability to meet our business +objectives. Material risks are subject to enhanced oversight by management and the Risk Management Committee. +This list is not exhaustive and is subject to change as new risks emerge or are no longer considered material risks. +RISK DESCRIPTION MANAGING THE RISK +Strategic Risks – Strategic risks are those uncertainties that could materially impact the business’ ability to implement its +strategic objectives. +Energy market transition Accelerating decarbonisation and carbon +emissions (net zero) targets drives potential +for cleaner power generation, renewables +development, and energy innovation/new +entrants in markets. +Government net zero policies/targets and +new technologies could materially decrease +the market for gas and gas transportation +and APA may fail to grow in other energy +infrastructure classes, limiting domestic +market growth. +• Execution of APA’s customer-focused strategy +creates value as the partner of choice, delivering +infrastructure solutions for the energy transition +where APA has a competitive advantage and +across targeted asset classes. +• Actively contribute to Government policy process +and advocate for the importance of APA’s role in +supporting energy transition and managing the +intermittency of renewables. +• Engage with customers and pro-actively manage +opportunities to retain, re-contract or switch to +alternative APA assets via structured, flexible and +competitive price and service offerings. +Government and regulatory +intervention +APA is exposed to regulatory policy change +and government interventions. +These changes and interventions may be at +Federal, state or territory level, and may vary. +They could include those that are designed +to support decarbonisation, limit the impacts +of climate change, or manage the impact of +Australia's transitioning energy system. +Those policy changes and interventions +may constrain gas supply (including through +limiting or restricting new gas projects), +impact the availability of competitively priced +gas, increase compliance costs for APA and +its customers and otherwise place additional +operating restrictions or complexities on +APA's businesses and the businesses of its +customers. +In addition, under the recent amendments to +the National Gas Law and National Gas Rules, +the Australian Energy Regulator (AER) will +now have the power to determine the form +of regulation to apply to a particular pipeline, +and could apply full regulation to pipelines +that are currently non-scheme. +If implemented, any of those policy +changes and interventions may change the +commercial viability of existing or proposed +projects or operations and adversely impact +APA's future business and operations. +• Maintain strong regulatory and policy functions +and be an active participant and stakeholder in the +development of regulation and policy, including +AER guidelines which support the exercise of its +new powers.  +• Continually assess and respond to key policy +change proposals with potential impacts on +APA’s businesses. +• Actively engage with updating/developing relevant +Australian standards. +Social licence APA relies on a level of public acceptance +for the development and operation of its +assets. Changing societal and community +sentiment in relation to the energy industry, +as well as APA’s business, may impact APA’s +commercial opportunities, and its ability to +develop new projects and operate its assets. +• Engage with key stakeholders (landowners, +producers, customers, government etc) to identify +focus areas. +• Monitor expectations, major trigger events within +the community and APA’s reputation score. +• Drive community and social performance initiatives +and programs working with First Nations People. +• Implementation of APA’s Climate Tranistion Plan, +Sustainability Roadmap, transparent and proactive +annual disclosure. +Risks and opportunities +(continued) +20 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_23.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..7eef932dac8d361e6e8c9eeb417a54dc62cd9a61 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_23.txt @@ -0,0 +1,105 @@ +RISK DESCRIPTION MANAGING THE RISK +Operating multiple asset +types +Risks arise from managing and partnering +across multiple asset types. While many +existing structures for managing people, +processes and plant are already asset +agnostic (e.g. asset management framework, +IT systems, risk and assurance O&M +workforce management and the Integrated +Operations Centre), risks will arise from +the need to scale up and integrate new +asset types. +• Continue to invest in our capability in electricity +transmission development and engineering, power +generation optimisation and asset development +and integration. +• Continuous improvement of existing asset agnostic +structure and framework for managing people, +processes and plant. +• Continue to invest in maturing asset management +framework and real time data analytics. +Partnering across multiple +stakeholder groups +APA’s engagement spans a diverse range +of stakeholders (e.g. across State and +Federal Government agencies, community, +landholders, customers, suppliers, investors +and employees) who hold different +perspectives and objectives. +Risks arising from engagement with this +complex and changing set of stakeholders +could lead to reputation damage, loss of +stakeholder support/trust which ultimately +affects APA’s ability to win projects, source +approvals, and diversification into new +energy markets. +• The development of targeted State-based +stakeholder engagement plans to ensure +appropriate ‘owners’ are assigned to stakeholders +and there is coordination and cohesion across +the business. +• Continued investment in core capability around +targeted workforce planning. +Operational Risks – Operational risks potentially arise from weaknesses in internal processes, people or systems or from +unforeseen external events. +Health and safety Preventing workplace injury and keeping all +our employees and contractors safe is our +highest priority. Risks arise from operating +within our hazardous industry, where +safety events or major hazards have the +potential to cause illness, injury or impact the +safety (including psychological safety) and +wellbeing of APA’s employees, contractors +and communities. +• APA’s Board Safety and Sustainability Committee +has oversight of this risk. The key focus is +prevention achieved by appropriately identifying, +managing and where possible eliminating risks. +• Continued focus on comprehensive health +and safety management policies, strategies, +frameworks (including employee Wellbeing +Framework), systems +and processes. +• Reporting of key performance metrics to +monitor safe behaviours and identify continuous +improvement opportunities. +Asset operations APA is exposed to major incidents or events +that may result in harm to our people, +environment, and the communities we +operate in; or materially impact our reputation +or financial performance. +• Comprehensive operational, process safety, +cultural heritage and environment management +programs. +• Continue to engage with wider industry to stay +abreast of best practice asset management +processes. +• Implement asset management and maintenance +engineering standards, including integrity +monitoring and maintenance programs, as +part of risk-based asset lifecycle management. +• Conduct asset operational monitoring through +control rooms to manage assets within +design parameters and coordinate asset +maintenance issues. +• Provide comprehensive insurance arrangements as +part of the asset protection program. +Infrastructure development Risks associated with the development of +new pipeline capacity, renewable, battery +and gas-fired power generation plants, and +gas storage and gas processing assets. This +includes typical construction risks such as: +obtaining necessary regulatory approvals, +employee or equipment shortages, third-party +contractor failure, weather risk, and higher +than budgeted construction costs impacting +liquidated damages and project delay. +• Access and approvals management for new +construction projects. +• Dedicated construction project management +capability and governance to manage efficient, +safe and quality delivery of construction projects. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +21 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_24.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..d2ca164d94b615be62312c725404d000bbd511ce --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_24.txt @@ -0,0 +1,97 @@ +RISK DESCRIPTION MANAGING THE RISK +Corporate transformation APA is exposed to the risks associated +with the design and delivery of enterprise- +wide corporate transformation programs. +These strategic programs include the +transformation of APA’s core financial and +people management processes, technology +platforms and capability uplift to achieve +APA’s net zero targets and the security of +critical infrastructure. +• Roll-out of an enterprise-wide project governance +and delivery framework, tools and organisational +change management capability. +• Project/program reporting, risks and issues +management and escalation and oversight by +senior management and the Board. +Sustainability The risks arising from the management and +disclosure of sustainability issues (including +climate and ESG matters) impacting APA +performance and reputation. +• APA’s Board Safety and Sustainability Committee +has regular oversight of this risk. +• Delivery of comprehensive environment and +heritage management policies, strategies, +frameworks, systems and processes. +• Refreshed sustainability risk assessment (including +climate risks) with clear business ownership. +• Formalised procedures supporting sustainability +including integrated reporting, an enhanced +scorecard and APA’s Sustainability Roadmap +and strategy. +People and culture Our leaders are held accountable for creating +cultural alignment with APA’s behaviours and +establishing a workplace where everyone +feels safe, respected and included. +APA’s inclusive culture is a prerequisite to our +ability to attract, engage, develop and retain +a diverse pool of skills and capabilities in a +competitive talent market. +• APA’s Board People and Remuneration Committee +has oversight of this risk. +• Execution of clear employee value proposition and +effective talent programs to develop and maintain +talent pipelines. +• Delivery of comprehensive learning and +development programs including leadership +programs to build the skills and capability required +for now and the future. +• Implementation of holistic cultural programs +designed to improve workplace inclusion and +diversity, employee experience and wellbeing. +• Identification of clear expectations of behaviour +in APA’s Code of Conduct and Respect@Work +procedure. +Technology strategy, +operation and security +The risk of interruption to APA’s operations +due to unreliability of information and +operational technology systems, applications, +technology architecture or third-party +providers. +• Manage APA’s information and technology assets +in accordance with recognised industry standards +across hardware, software, applications and +communication systems. +• Apply security standards across APA information +and technology systems, including those managed +by third-party vendors, with standards continually +assessed against new threats and vulnerabilities. +• Regular reviews and testing of information and +operational technology systems. +Cyber security Cyber-attacks are increasing in frequency, +scale and sophistication across both our +communities and industry. APA plays a +pivotal role in Australia’s essential energy +supply chain and could be the target for +a cyber incident. Breaches may involve +sensitive commercial and/or personal +information or impact the operation of critical +infrastructure assets and systems possibly +leading to shutdowns of our energy assets. +• Implementation of a program to strengthen the +security of APA assets, and cater for emerging +threats, security regulation and stakeholder +expectations. +• Robust security monitoring and incident response +process supported by regular exercises and +security control assurance programs. +• Compulsory security awareness training for APA +employees and contractors, including how to +identify phishing emails and keep data safe; +and a regular program of random testing. +Risks and opportunities +(continued) +22 +APA GROUP ANNUAL REPORT 2023 +The secret office supply is a "stapler". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_25.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..bd5ecdd0fa8ab376085279d5a8e9aad48e54601b --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_25.txt @@ -0,0 +1,86 @@ +RISK DESCRIPTION MANAGING THE RISK +Financial and Compliance Risks – Financial risks are those arising from the management of APA’s financial resources, +accounting, tax and financial disclosure. Compliance risks arise from laws, regulations, licences and recognised practising +codes including health, safety, environment, cultural heritage, payroll, asset construction and operation, and other corporate +compliance requirements. +Legal, compliance and +operating licences +APA is exposed to the risk of operating +within a highly regulated environment with +complex legal requirements, operating +licence conditions, industry standards/codes +of practice and corporate obligations. +• Comprehensive Enterprise Compliance +Management Framework in place with regulations +identified, controls monitored and assurance +operating. +• Dedicated specialist teams that provide asset level +monitoring and assurance for technical, safety, +environment and cultural heritage compliance. +Debt and capital +management +The risk arising from reduced business +and financial flexibility due to ineffective +management of APA’s debt and capital or +limited availability, or unfavorable pricing, +timing and access to debt and equity funding. +• Board approved risk limits and Treasury Risk +Management Policy. +• Regular, independent reviews of corporate and +asset models underpinning investment decisions. +• Effective debt and capital management strategy +and hedging against interest rate movements and +foreign currency rate fluctuations. +• Maintain access to a broad range of global banking +and debt capital markets. +Key emerging risks, threats and opportunities +Below we note several key emerging risks that are highly uncertain by nature and include +threats and opportunities for APA: +EMERGING RISK THREATS AND OPPORTUNITIES APPROACH +Global economic slowdown Threat: Global economic slowdown +impacts financial markets and customer +demand, potentially reducing gas +contract capacity demand and +recontracting revenue, access to +new debt markets and liquidity and +commodity prices. +• Strong capital management framework, including +hedging arrangements and customer credit +monitoring. +• Actively monitor commodity pricing impacting +sourcing of goods and materials utilised in large +construction projects and domestic demand. +• Closely monitor changes in energy demand +including substitution. +Geopolitical uncertainty Threat: Geopolitical uncertainty with +rising tensions in the region and +continuation of the Russia/Ukraine +conflict impacting changes in sanctions +regimes, international energy demand, +rising national security interests and +worsening supply chain disruption. +• Continue to evaluate options for alternative +sources of supply for international construction +procurement. +• Conduct resilience updates for information +technology infrastructure, including cyber +resilience. +• Focus on gas reserving management, +including increases in gas line pack to meet +high demand periods. +Carbon offsets Opportunity: Introduction of carbon +offsets as part of decarbonisation and +climate change requirements to support +energy infrastructure development +and growth. +• Continue to investigate a number of carbon offset +programs via a mix of direct procurement and +investment opportunities. +Artificial intelligence Opportunity: Growth in artificial +intelligence and potential impact +on productivity improvements. +• Initiatives to improve data quality and data +governance providing for adoption of digital +technologies impacting workforce improvements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +23 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_26.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6eb3e5b770088d746e008b8e0f6d86442e13d57 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_26.txt @@ -0,0 +1,15 @@ +Sustainability +at APA +Developed our inaugural APA +RECONCILIATION +ACTION PLAN +Supported our communities +through our +SOCIAL INVESTMENT +INITIATIVES +Established +GENDER-NEUTRAL +PARENTAL LEAVE +BENEFITS +24 APA GROUP ANNUAL REPORT 2023 +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_27.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..1377639308168964ba9c7d8937105b3284a4d272 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_27.txt @@ -0,0 +1,72 @@ +We prioritise sustainable outcomes so that APA, our +employees, customers and communities in which we +operate can thrive – now and in the future. +At APA we are united behind a singular purpose to +strengthen communities through responsible energy. +We are committed to act responsibly across all of our +business activities. +We seek continual improvement, working collaboratively +with our industry peers and engaging transparently with +our stakeholders. We understand the value and focus that +our partners and stakeholders place on our sustainability +performance and that this is used to assess APA’s +performance across the industry. +Our Sustainability Roadmap provides the foundations +for APA to develop key strategic sustainability initiatives +and deliver on them in a prioritised way. Over the last two +years our main areas of focus have been on the ‘build’ +and ‘accelerate’ pillars of our Sustainability Roadmap. +These pillars identify fundamental focus areas that require +growth and/or strengthening. It is important that we are +targeted in our approach and focused on those topics that +matter most to APA and our stakeholders. +Our material sustainability focus areas +In FY21, we conducted a stakeholder-centric materiality +assessment to identify the core sustainability-related +issues that APA should focus on. This process informed +the development of our three-year Sustainability Roadmap +and enabled us to bring APA’s vision and purpose to life. +APA’s Sustainability Roadmap categorises the core issue +areas into three groups: Build, Accelerate and Maintain +and Evolve. The diagram on page 26 highlights our +progress against the Sustainability Roadmap in FY23. +To continue to deliver the most positive impact for +APA and highest value for our stakeholders, it is critical +we regularly re-evaluate the sustainability issues most +material to our business and stakeholders. This will +enable us to assess the economic, social, environmental +and cultural impacts of our activities and business +relationships and refine our main focus areas and +associated initiatives. +As our Sustainability Roadmap is due to complete in +June 2024, work is underway to prepare a refreshed +Roadmap. The first step towards this is delivery of a +sustainability materiality assessment, culminating in +an impact-based sustainability materiality matrix. The +materiality assessment approach will be guided by the +Global Reporting Initiative (GRI 3: Material Topics 2021) +which considers actual and potential negative and +positive impacts of our business to determine our material +sustainability issues for prioritisation. +Supporting the UN Sustainable +Development Goals +APA continues to support the delivery of the 17 United +Nations Sustainable Development Goals (SDGs). +By working more strategically and aligning our +initiatives to the relevant SDGs we can tackle major +societal, environmental and economic challenges whilst +also identifying and unlocking significant business +opportunities. +At their core, the SDGs aim to create a shared value +approach through the creation of economic and business +value in a way that fundamentally addresses societal +needs and challenges. The paradigm shift required to +transition from a philanthropic approach to one delivering +both business and social values now guides our approach. +To demonstrate how the business is meeting the relevant +SDGs, we have mapped goals to the three areas of our +Roadmap and indicated where each goal is connected +to our performance and priorities. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +25 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_28.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6288573d7430ce53be3c440e23bfa922268b808 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_28.txt @@ -0,0 +1,83 @@ +Sustainability at APA +(continued) +FY23 PROGRESS AGAINST APA’S SUSTAINABILITY ROADMAP +BUILD +Priority issues to be built + into strengths +ACCELERATE +Fundamental issues which +require strengthening +MAINTAIN AND EVOL VE +Existing plans and processes +to evolve via ESG lens + Climate change transition and risk + Community and social performance + First Nations Peoples + Environmental management + including heritage management + Safety, health and wellbeing + Inclusion and diversity + People and culture + Governance and risk management +• Progressed CTP actions in line with +FY23 commitments. +• Established a dedicated Community +and Social Performance (CSP) team +to deliver CSP strategy and social +investment framework. +• Hosted workshops with our five +corporate partners to understand new +and meaningful ways to collaborate +together +• Contributed $1.2 million through +discretionary social investment to +communities via targeted community +grants programs, corporate +partnerships with charitable +organisations and local sponsorships +and donations. +• Prepared APA’s Reconciliation Action +Plan (RAP) under the guidance of a +newly established cross-functional +RAP Working Group. +• Progressed our four year Environment +Improvement Program in line with the +HSEH Strategy schedule. Processes, +tools and templates for 3 of 8 +environment risks areas have now +been developed/refined, integrated +and implemented across the business. +• Scoped environment data uplift +opportunities across the waste, water +and contaminated land risk areas. +• Uplifted our heritage practices +at targeted assets and recruited +additional Heritage Specialist. +• Ongoing delivery of our three-year +weed survey program. +• Delivered 15 environment audits. +• Refreshed our HSEH Policy. +• Prepared, approved and initiated our +five-year HSEH strategy with strategic +pillars centred on safety performance, +leadership and innovation. +• Introduction of the Board Safety and +Sustainability Committee. +• Prepared an ESG Risk Register +tracking and monitoring our business- +wide ESG risks. +• Revised our Inclusion and Diversity +(I&D) Plan and refreshed our Policy +to focus on facilitating an inclusive +culture, including the launch of +our Respect@Work Procedure and +e-module and completing a gender +pay review. +• Established gender-neutral parental +leave benefits. +• Uplifted leadership training and +capability including the introduction +of the INSEAD Curriculum. +Refer to APA's FY23 Sustainability Data Book for further information about our FY23 sustainability performance. +26 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_29.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..e24a1571a6f83271b02bd79f609ec0460f894893 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_29.txt @@ -0,0 +1,82 @@ +Climate transition plan +Our CTP is an important step in APA’s commitment to actively participate and support Australia’s energy transition, +consistent with the objectives of the Paris Agreement. Our FY23 progress on the commitments in our CTP will be +reported in our new FY23 Climate Report, due to be released in September 2023. +Gas infrastructure – net zero operational +emissions by 2050 1 +Power generation and electricity +transmission infrastructure – net zero +operational emissions /two.numr by 2040 3 +GOAL: +30% emissions reduction for gas +infrastructure (FY21 base year) +TARGET: +100% renewable electricity procurement +from FY23 onwards +TARGET: +100% zero direct emission fleet by 2030 +Responsible criteria applied when offsets +are required +GOAL: +COMMITMENT: +INTERIM COMMITMENTS FOR 2030 +KEY SUPPORTING COMMITMENTS +35% reduction in emissions intensity +for power generation (FY21 base year) +GOAL: +Contribute positively to grid +decarbonisation measured by MW +of enabled renewable infrastructure +GOAL: +Active program to reduce emissions we can +control and apply best practice management +techniques to managing line losses +COMMITMENT: +GOAL : +Incorporation of +the Methane +Guiding Principles +When setting APA’s targets and goals, we have made our commitments clear to stakeholders, based on the level of +uncertainty in the pathway required to reach them. +Target: an intended outcome where we have +identified one or more pathways for delivering that +outcome, subject to certain assumptions or +conditions. +1 Includes transmission, distribution, gas processing, storage and corporate. +2 The organisational boundary for all targets and goals relates to assets under APA’s operational control, as defined by the Greenhouse Gas (GHG) Protocol. The following + assets are not within APA’s operational control for emissions reporting purposes: Victorian Transmission System (maintenance excepted), Gruyere and X41 Power Stations, + Wallumbilla Gladstone Pipeline, SEA Gas Pipeline and Mortlake Pipeline, North Brown Hill Wind Farm and Australian Gas Networks. +3 Includes power generation and interconnectors. +Goal: an ambition to seek an outcome for which there is +no current pathway but for which efforts will be pursued +towards addressing that challenge, subject to certain +assumptions or conditions. +Hold a non-binding +securityholder vote +on future material +updates to our +Climate Transition +Plan +Report annually on +progress against +the targets, goals +and commitments +in our Climate +Transition Plan +Link executive +remuneration to +climate-related +performance +from FY23 +Scope 3 emissions +goal to be finalised +before or in +conjunction with +next Climate +Transition Plan +1 2 3 4 5 +NEW COMMITMENT FOR 2030 +30% methane reduction target (FY21 base year) TARGET: +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +27 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_3.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae4b1cc0c9b8043b0cf6e757cb7fc2639029cd3c --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_3.txt @@ -0,0 +1,106 @@ +About this report IFC +Disclaimer 1 +Overview and highlights 2 +Chairman's and Managing Director’s Report 2 +FY23 summary 4 +About APA 8 +External environment 11 +Our strategy 14 +Risks and opportunities 18 +Sustainability at APA 24 +Sustainability highlights 26 +Climate change transition and risk 28 +Community and social performance 30 +First Nations Peoples 34 +Environment and heritage 36 +People and culture 38 +Safety, health and wellbeing 42 +Customers and suppliers 46 +Performance 50 +Outlook 59 +Governance 60 +APA Group Board 62 +APA Executive Leadership 64 +APA Infrastructure Trust Financial Report 68 +Directors’ Report 68 +Remuneration Report 74 +Consolidated Financial Statements 92 +Directors’ Declaration 160 +Auditor Independence / Audit Report 161 +APA Investment Trust Financial Report 168 +Directors’ Report 168 +Consolidated Financial Statements 174 +Directors’ Declaration 189 +Auditor Independence / Audit Report 190 +Additional information 194 +Five year financial summary 195 +Investor information 196 +Glossary 197 +About this report: APA Group comprises two registered investment schemes, APA +Infrastructure Trust (ARSN 091 678 778) and APA Investment Trust (ARSN 115 585 441), +the securities of which are stapled together. APA Group Limited (ACN 091 344 704) is the +responsible entity of APA Infrastructure Trust and APA Investment Trust. +Disclaimer: Please note that APA Group Limited is not licensed to provide financial product +or investment advice in relation to securities in APA Group. This publication does not +constitute financial product advice and has been prepared without taking into account +your objectives, financial situation or particular needs. Before relying on any statements +contained in this publication, including forecasts and projections, you should consider +the appropriateness of the information, having regard to your own objectives, financial +situations and needs and seek professional advice if necessary. Past performance +information should not be relied upon as (and is not) an indication of future performance. +Forward-looking information: This publication contains forward-looking information, +including about APA Group, its financial results and other matters which are subject to risk +factors. ‘Forward-looking statements’ may include indications of, and guidance on, future +earnings and financial position and performance, statements regarding APA Group’s future +strategies and capital expenditure, statements regarding estimates of future demand +and consumption and statements regarding APA’s sustainability and climate transition +plans and strategies, the impact of climate change and other sustainability issues for +APA, energy transition scenarios, actions of third parties, and external enablers such as +technology development and commercialisation, policy support, market support and +energy and offsets availability. Forward-looking statements can generally be identified +by the use of forward-looking words such as, ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘could’, +‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’, ‘outlook’, +‘guidance’, ‘goal’, ‘ambition’ and other similar expressions and include, but are not limited +to, forecast EBIT and EBITDA, free cash flow, operating cash flow, distribution guidance +and estimated asset life. +At the date of this report, APA Group believes there are reasonable grounds for these +forward-looking statements and due care and attention have been used in preparing +this report. +Forward-looking statements, opinions and estimates are not guarantees or predictions +of future performance and involve known and unknown risks and uncertainties and other +factors. Many of these are beyond the control of APA Group, and may involve significant +elements of subjective judgement and assumptions about future events, which may or may +not be correct. There can be no assurance that actual outcomes will not materially differ +from these forward-looking statements, opinions and estimates. A number of important +factors could cause actual results or performance to differ materially from such forward- +looking statements, opinions and estimates. These factors include, but are not limited to: +general economic conditions; exchange rates; technological changes; the geopolitical +environment; the extent, nature and location of physical impacts of climate change; +changes associated with the energy market transition; and government and regulatory +intervention, including to limit the impacts of climate change or manage the impact of +Australia’s transitioning energy system. A number of these factors are described under +the heading ‘Material risks’ beginning on page 20 of this report. Readers should review +and have regard to these risks when considering the information in this report, and are +cautioned not to place undue reliance on forward-looking statements, particularly in +light of the long-time horizon which this report discusses. +There are also limitations with respect to climate scenario analysis and it is difficult +to predict which, if any, of the scenarios might eventuate. Scenario analysis is not an +indication of probable outcomes and relies on assumptions that may or may not prove +to be correct or eventuate. Scenarios may also be impacted by additional factors to the +assumptions disclosed. +Investors should form their own views as to these matters and any assumptions on which +any forward-looking statements, estimates or opinions are based. Except as required +by applicable laws or regulations, APA does not undertake to publicly update or revise +any forward-looking statements to reflect any change in expectations, contingencies or +assumptions, whether as a result of new information or future events. To the maximum +extent permitted by law, APA and its officers do not accept any liability for any loss arising +from the use of the information contained in this report. +Non-IFRS financial measures: APA Group results are reported under International +Financial Reporting Standards (IFRS). However, investors should be aware that this +report includes certain financial measures that are non-IFRS financial measures for the +purposes of providing a more comprehensive understanding of the performance of the +APA Group. These non-IFRS financial measures include FCF, EBIT, EBITDA and other +'normalised' measures. Such non-IFRS information is unaudited, however the numbers +have been extracted from the audited financial statements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +1 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_30.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..2b1c773347a72bf5368a4ea0403a18ff44981b80 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_30.txt @@ -0,0 +1,57 @@ + BUILD +Climate change +transition and risk +Our FY23 Climate Report will be released in September +2023, in line with our commitment to report annually on +progress against our CTP. This allows for sufficient time to +prepare and independently assure our emissions data. The +Climate Report will contain disclosures consistent with the +recommendations of the TCFD. +Our climate transition plan defines interim and long-term +emission reduction targets and goals by asset class. We +have sought to set interim targets and goals aligned with +the objective of the Paris Agreement and to disclose +consistent with the Taskforce on Climate-related Financial +Disclosures (TCFD) recommendations. +Since the release of our CTP in August 2022, APA has +made clear progress against our plan. Our focus has been +on embedding the necessary structures, processes and +systems to ensure our approach to climate is integrated +across the business. +Performance against our gas infrastructure and power +generation interim targets and goals will be detailed +within our FY23 Climate Report. +APA's strategy is to achieve our CTP commitments through: +• Electrifying and optimising the operation of compressors. +• Reducing the emissions intensity of power generation +through investments in renewables. +• Reducing methane emissions through leak detection and +repair and implementation of specific initiatives such as +seal gas recovery. +• Optimising the performance of existing power generation +equipment. +• Buying or internally generating high quality offsets where +emissions reduction is not possible or cost prohibitive. +APA has committed to finance these infrastructure +emission reduction initiatives through a $150 million to +$170 million net zero fund over FY23 to FY30. There is +some upside pressure on this spend projection in the +area of compressor electrification due to higher grid +connection and electric motor drive unit costs, while +other opportunities may be implemented in a more +cost-efficient manner. +Linked executive remuneration to +CLIMATE-RELATED +PERFORMANCE OUTCOMES +Procured large-scale generation certificates +(LGCs) to meet our +100% RENEWABLE ELECTRICITY +PROCUREMENT COMMITMENT +Set a methane target aligned with +the Global Methane Pledge (GMP) of an +AT LEAST 30% REDUCTION IN +OUR OPERATIONAL METHANE +EMISSIONS BY 2030 +(FY21 BASE YEAR) +28 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_31.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0e1673cf0e24839fe65c77c9bfa65ba1ea0357c --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_31.txt @@ -0,0 +1,77 @@ +Supporting a lower carbon future +and the energy transition +APA’s Pathfinder Program +APA is investing in future fuels through our +Pathfinder Program established in FY21, to +understand the requirements to support +clean molecules in either existing or new +infrastructure. In May 2023, our landmark +Parmelia Gas Pipeline (PGP) conversion +project in Western Australia confirmed via +pressurised hydrogen laboratory testing the +technical feasibility of converting a 43km +section of the PGP to carry 100% hydrogen. +The testing results indicate it is technically +feasible, safe and efficient to run the +43km section of the pipeline at the current +operating pressure using hydrogen. The +project will now consider preparing the +section of pipeline for hydrogen service, +and will include detailed safety studies +and conversion plans, while continuing +to investigate potential supply and +offtake opportunities. +Off the back of this research, APA has +developed a Pipeline Screening Tool +(PST) that provides a high-level assessment +of the hydrogen readiness of its national +pipeline assets, based on key pipeline +material and operating characteristics. Initial +assessments using the PST indicate there +is a high likelihood that around half of +APA’s natural gas pipeline assets could +be used for hydrogen transportation in +100% pure or blended form, with no, or +small, changes to their current operating +profile. For the remainder of APA’s +pipelines, which consist largely of high +strength steel operating at higher pressure, +further research and materials testing +will be required to determine if any +changes in operating pressure are needed +to maintain pipeline integrity whilst +transporting hydrogen. +Supporting the PGP conversion project is +a Memorandum of Understanding between +APA and Wesfarmers Chemicals, Energy +and Fertilisers (WesCEF), signed in May +2022. As part of this, we committed to a +pre-feasibility study to assess the viability of +producing and transporting green hydrogen +via the PGP to WesCEF’s production +facilities in Kwinana. The findings were +promising, demonstrating that the PGP +study area is likely to be suitable for green +hydrogen development. APA and WesCEF +are now considering the results further. +In September 2021, APA joined an +international consortium in an effort to +establish Queensland’s largest green +hydrogen project – the Central Queensland +Hydrogen Project (CQH2). In April 2023, +APA paused our involvement in the early +stages of the CQH2 project but believes +the project has an exciting pathway ahead. +APA remains interested in a future role in +the project and continues to be involved +in other Queensland projects developing +hydrogen export supply chains. +Pathfinder is investigating other hydrogen +and Carbon Capture and Storage (CCS) +project opportunities where APA can bring +its market-leading energy infrastructure +expertise and experience to large-scale +projects. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +29 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_32.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..fef870bf0427e021396a461cc48d1f40eecad005 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_32.txt @@ -0,0 +1,44 @@ +Community and social +performance +Driven by our purpose, to strengthen communities through +responsible energy, we are committed to outstanding +performance in our interactions with communities. +We work to understand the needs and aspirations of our +host communities and contribute to their sustainable +development. We seek respectful and mutually valuable +relationships with our stakeholders. +Building stronger community +and social performance +APA works to embed community engagement, +development, partnership and participation in all our +business activities. We strive to engage with stakeholders +in a culturally appropriate way. +In FY23 we prepared a revised Social Investment +Framework and 2-year CSP Strategy which is scheduled +for consultation in early Q1 FY24. This strategy seeks to +elevate practices and drive consistency and awareness +throughout the business. +Community and stakeholder engagement +APA plays a critical role in the energy supply chain and +we recognise the impacts our activities may have on a +range of stakeholders and on the progress of energy +transition more broadly. For APA, understanding who our +stakeholders are and how we impact each other is vital +to achieving operational excellence. +APA’s community and stakeholder engagement programs +connect and work with local landholders, Traditional +Owners, communities, governments and industry. +Our programs are tailored to meet the broad needs +of our stakeholders and range from simple awareness +of our activities to involvement in the design of +new infrastructure. +Supported more than 84 organisations through our +SOCIAL INVESTMENT PROGRAMS +Launched the Mount Isa and Cloncurry +COMMUNITY GRANTS PROGRAM +11,271 landholder contact visits through our +LANDHOLDER CONTACT +PROGRAM + BUILD +30 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_33.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a1048b822a2e39d1bff9ec95199d3142c305944 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_33.txt @@ -0,0 +1,48 @@ +Regulatory +Engagement – +Basslink +Basslink is fundamental to both the supply of +affordable and reliable energy to Victoria and +Tasmania and also the energy transition through +the supply of renewable energy to the National +Electricity Market. +Following the acquisition of Basslink in FY23, +we are progressing a revenue proposal and +application, seeking approval from the AER for +Basslink to become a ‘regulated asset’ as a way to +support Basslink’s continued operation. Converting +Basslink to a ‘regulated asset’ means the maximum +prices consumers pay as part of their retail bills for +Basslink would be set by the AER through a public +consultation process. For consumers, this means +a more transparent and independent approach +to setting prices for Basslink, and a range of +opportunities for public consultation on what +prices consumers should pay. +In November 2022, we established a Regulatory +Reference Group (RRG) to co-design the +development and implementation of our regulatory +engagement plan for Basslink. This plan identifies +the scope, timing, themes and engagement +methodology. +The RRG served as an independent advisory +group representing residential, small business and +large energy users in Tasmania and Victoria. The +RRG guided our understanding of the needs and +expectations of different consumer segments and +was used to continually refine our engagement +materials and our approach to consulting +with consumers, industry and Government +stakeholders. +With direct representation from APA’s senior +leadership team, the engagement program was +both broad and deep including: +• regular RRG engagement forums +• online focus groups +• consumer workshops in Launceston +and Melbourne +• an online quantitative survey of 1,200 electricity +consumers from Victoria and Tasmania. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +31 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_34.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..ebe9646a6f2a43eb0976fc0178554f827c7e4d83 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_34.txt @@ -0,0 +1,47 @@ +BUILD +Community and social performance (continued) +Landholder engagement +APA sees landholders as key partners in our operations. +With easements across many properties throughout the +country, access to these properties is an essential part of +maintaining and developing our infrastructure. When this +is needed, we engage proactively with landholders and +seek to minimise our footprint as much as possible. +In FY23, we continued to run the annual APA Landholder +Contact Program, sharing operational and safety +information with landholders and providing Before-You- +Dig information. This Program also allows landholders to +update APA about their activities, access and notification +requirements, and to raise any concerns. +The Landholder Contact Program aims to make contact +with at least one representative from each parcel every +year, preferably face to face. In FY23, we made contact +with 11,271 landholder contacts. Over the past few years +we have consistently achieved at least 80% of contacts +completed in all States. In most cases we have achieved +over 90%. In recent years we have conducted a popular +APA Landholder Photo Competition, with entries used in +our annual calendar to highlight the stunning and diverse +landscapes in which we operate. +APA continues to receive positive feedback from +landholders. Our proactive engagement with landholders +is seen as a point of difference with other similar +companies. +The Energy Charter +APA works collaboratively across the energy industry to +address common issues and improvement opportunities. +As a signatory to the Energy Charter – a national +CEO-led collaboration – we share the vision to support +better outcomes for energy customers. +APA is one of 20 Australian energy businesses forming +the charter. Signatories commit to publicly disclose their +progress against the Energy Charter Principles through +the release of an annual disclosure report. +In September 2022, we submitted our third disclosure +report under the Energy Charter. The annual disclosure +report details the actions, investments, partnerships and +programs that have been delivered and demonstrates our +alignment to the five Energy Charter Principles. A copy of +this report is published on the APA website. +32 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_35.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d208f6172cd444a5e45b808fbcdf0e146aeb47a --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_35.txt @@ -0,0 +1,80 @@ +Focusing investment on sustainable +development outcomes +APA continued to refine and deliver on its Social +Investment Framework in FY23. The Framework provides +meaningful, valuable discretionary funding to support +sustainable development outcomes in host communities. +Partnerships and employee contributions +As part of our commitment to better outcomes for First +Nations people and communities, APA continued our +long-standing corporate partnerships with the Clontarf +Foundation and The Fred Hollows Foundation in FY23. +APA also recommitted to another year of funding with +three corporate partners who we began working with +in FY22 – the Stars Foundation, Rural Aid and Uniting. +The Stars Foundation aligns with our commitment to +support gender equity and better outcomes for First +Nations communities. +Rural Aid is our dedicated partner when preparing for +and responding to natural disasters through community +resilience initiatives. +Our corporate partnership with Uniting is derived from our +membership of the Energy Charter and provides energy +literacy support to individuals and households suffering +energy hardship. +In FY23 we invested $1.2 million in our communities, +prioritising rural and regional communities, First Nations +Peoples, climate transition and natural environment +protection. +Community grants programs +In addition to the partnerships and employee +contributions, in FY23 APA contributed more than +$92,000 in grants across almost 30 community +orgnisations as part of our Community Grants Program. +These initiatives align to APA’s Investment Priority Funding +Areas and focus on maximising social impact. +Projects funded under this program included NAIDOC +celebrations, social infrastructure investment and +community health and wellbeing initiatives across our East +Coast Grid Expansion, Kurri Kurri Lateral Pipeline, and +Mount Isa and Cloncurry assets. +APA’S SOCIAL INVESTMENT PRIORITY AREAS +REGIONAL AND REMOTE +COMMUNITIES +FIRST NATIONS +PEOPLES +We also recognise the importance of considering the following when designing, selecting and delivering initiatives, +investments and partnerships: +CLIMATE +TRANSITION +NATURAL +ENVIRONMENT +Building the strength +and resilience of +regional economies and +communities located near +APA assets/projects +Working in partnership +with First Nations Peoples +to support better +outcomes for First Nations +communities and heritage +Supporting communities +in climate transition +outcomes and +adaptation activities +Protecting and enhancing +the natural environments +and biodiversity located +near APA assets/projects +Impacted community +needs and aspirations +People in vulnerable +circumstances Inclusion and diversity Access to energy and +energy affordability +Building human capability +e.g. skills +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +33 +OPERATING & FINANCIAL REVIEW +The secret object #1 is a "chair". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_36.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d5354e8ba63081810a13ef90779be3c2befc7da --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_36.txt @@ -0,0 +1,46 @@ +Reconciliation +APA’s Sustainability Roadmap identifies First Nations +Peoples as a priority area for us to build organisational +capability, and in FY22 we committed to developing our +first Reconciliation Action Plan (RAP). +In FY23, we appointed a Reconciliation and First Nations +Manager to improve our First Nations governance, +performance and disclosures. We established a cross- +functional RAP Working Group (RAPWG), chaired by an +Executive Sponsor, to develop, implement and report on +a Reflect RAP. With the support of our external advisor, +Murawin Indigenous Voice Consultancy, we undertook an +extensive internal consultation to co-design a quality +RAP that meets Reconciliation Australia’s standards. + APA aims to launch our RAP in the first half of FY24. +Committing to a Reflect RAP allows APA to spend time +scoping and developing relationships with stakeholders, +defining our reconciliation vision and exploring our +sphere of influence, in preparation for future reconciliation +initiatives and RAPs. +Extensive consultation was undertaken to inform +development of the RAP, involving targeted, APA-wide +engagements, directly involving >700 employees. + +First Nations Peoples +At APA, partnering with First Nations Peoples is central +to our purpose. We seek to become a partner of choice for +First Nations stakeholders and supporters as we deliver +solutions for the energy transition. +Consultation with more than 700 employees +to develop our first +RECONCILIATION ACTION PLAN +Over 500 APA employees joined our +INAUGURAL NATIONAL +RECONCILIATION WEEK +DISCUSSION PANEL EVENT +Launched our new online cultural awareness +training module as part of our +FIRST NATIONS WORKFORCE +STRATEGY +$2.67 million spend on goods and services +with 24 directly engaged +FIRST NATIONS SUPPLIERS + BUILD +34 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_37.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..b81eaa65e40316f78739f71c425081c9cda43002 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_37.txt @@ -0,0 +1,71 @@ +First Nations engagement +APA holds Indigenous Land Use Agreements and +Cultural Heritage Management Plans with Traditional +Owners. These set out processes and plans for protecting +Aboriginal cultural heritage and engaging with Traditional +Owners in areas where we operate. +We are committed to continually improving processes +which guide First Nations engagement and Aboriginal +cultural heritage management. Our aim is to drive +improved land use and benefit sharing with First +Nations groups and contribute to community capacity +through training and employment in the energy sector. +This extends to joint venture and equity partnership +opportunities with Traditional Owners. +Our future engagement will focus on improving the +quality and depth of our relationships with First Nations +groups to ensure we respect their rights and interests and +adequately build in the priorities of Traditional Owners and +host communities throughout our assets lifecycle. +First Nations employment +With less than 1% of our workforce who identify as First +Nations Peoples compared to 3.2% of the national +population, we recognise more work is needed to ensure +our workforce reflects the communities where we operate. +In support of this we undertook initiatives in FY23 to +improve cultural safety for current and future First +Nations employees. +• In FY23, as part of the implementation of our First +Nations Workforce Strategy, we launched our new +online cultural awareness training module. +• Over 500 APA employees joined our inaugural +National Reconciliation Week discussion panel event +involving representatives of our RAP Working Group +and external First Nations thought leaders. The panel +discussed Reconciliation, APA’s RAP and the upcoming +Referendum. +• Over 100 employees have joined our Reconciliation +Allies @ APA community. +• In FY23, we engaged a new Employee Assistance +Program provider which has capability to provide +primary and secondary health and wellbeing support +to First Nations staff and family members. +• Our Reflect RAP will prioritise our focus and effort on +building cultural safety and cultural competency across +the entire organisation. +First Nations procurement +In FY23, APA continued its membership of Supply Nation, +a national non-profit organisation that aims to grow the +First Nations business sector through the promotion +of supplier diversity in Australia. In FY23, we directly +engaged 24 First Nations suppliers, spending +$2.67 million on goods and services. Suppliers are +comprised of Registered and Certified Supply Nation +as well as Land Councils. +APA’s Reflect RAP will include measurable actions and +deliverables to increase the diversity and quantity of +goods and services procured directly and indirectly from +First Nations-owned businesses. We intend to support and +participate in opportunities to build our network of local +and First Nations suppliers. +We will investigate including First Nations Participation +Commitments (FNPCs) in our contracts with key suppliers +to help facilitate more opportunities for First Nations +businesses. Engaging First Nations businesses via +FNPCs will enable more First Nations businesses to +participate in our supply chain indirectly, growing local +industry and employment opportunities for First +Nations communities. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +35 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_38.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a48ac5917e49d600a9f4d4ee6397c1739e24717 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_38.txt @@ -0,0 +1,55 @@ +Environment and heritage +APA performs an extensive range of activities across +a diverse range of environments. We are committed to +managing our risks and protecting the environment across +all areas of our business. Pursuing a high standard of +environment and heritage management is one way +we ensure we build and operate our assets in a socially +responsible manner. +In FY23, APA continued our program of strategic initiatives +to drive improved environmental performance. We have: +• Prepared and released updated environmental +procedures for Contaminated Site Management and Spill +Preparation and Response, including tools, templates and +guidelines. The procedures were supported by updates +to related business processes and systems and included +dedicated staff training and communications. As part of +this change a spill response online training module was +procured and launched. This has been completed by +450 employees. +• Continued our weed survey program investigating +the presence of invasive weeds on APA transmission +pipelines. The outcomes of these surveys will inform +long-term monitoring and management measures +and help to quantify potential impacts on nature +and biodiversity. +• Completed an assessment of APA’s water consumption +to improve our understanding of water usage and +determine a pathway forward for more comprehensive +water data capture. In addition, we identified all areas of +water stress in the areas that we operate and overlaid this +information in Geographic Information Systems (GIS) to +help inform decision making. +• Completed a waste assessment to understand waste +generation patterns and to better inform future work +regarding improved waste data capture and centralisation. +• Developed a framework to assess site contamination +hazards associated with chemical and hazardous +substance storage on APA sites and to manage +associated contamination risks. +LAUNCHED OUR NEW SPILL +RESPONSE ONLINE TRAINING +MODULE +completed by 450 employees +DEVELOPED A FRAMEWORK TO +ASSESS SITE CONTAMINATION +HAZARDS +associated with chemical and hazardous substance +storage on APA sites +EMBEDDED HERITAGE +MANAGEMENT +launched a 'Being Heritage Aware' training module +across the business + ACCELERATE +36 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_39.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..c5b83d032a09c42632bae49b5dce069fe78cb7c4 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_39.txt @@ -0,0 +1,84 @@ +A four-year Environment Improvement Program is +underway to elevate and embed environment processes +across the business. This involves uplift of procedures, +development of new innovative tools and implementation +for eight environment risk areas. Following full completion +of the program, all Environment Management Plans will be +updated to ensure alignment of content. +YEAR ENVIRONMENT RISK AREA STATUS +FY22 Heritage Completed +Pests, Diseases and Weeds Completed +FY23 Spill Preparation and Response Completed +Contaminated Site Management Completed +FY24 Soil Management Under way +Waste Management Pending +FY25 Biodiversity Pending +Water Pending +Environment compliance +In FY23 APA received seven penalty infringement notices +and two regulatory warning notices. +The penalty notices were received from the Queensland +Department of Environment and Science and had a total +penalty value of $34,461. The notices related to late +resubmission of Estimated Rehabilitation Cost +(ERC) calculations required under the Environmental +Protection Act, 1994, for six operating assets in +Queensland. APA promptly resolved the outstanding +information with the Department. +One warning notice was received from the First People +– State Relations (FPSR) portfolio of the Department of +Premier and Cabinet (Victoria). The warning notice related +to a ground disturbance activity that did not comply with +the approved Cultural Heritage Management Plan. +APA self-reported the incident and is working with the +stakeholders to resolve the matter. +The second warning notice related to missing information +required under APA’s Environmental Authority for the +Kogan North Central Gas Processing Facility. Whilst +information was available in technical air quality +monitoring reports, required details had not been +included in the Register of Fuel Burning and Combustion +Equipment Register for the facility. APA rectified the error +once aware of the issue. +Embedding heritage management +across the business +APA continued to improve heritage management +processes throughout FY23. +To facilitate continuous improvements in heritage +management we have: +• Completed a targeted heritage study on our +operational pipeline asset. The study aimed to +understand what ‘unrecorded’ heritage values might +existing on ageing infrastructure, constructed in times +when heritage management practices and recording +were vastly different to today. The heritage surveys, +undertaken by the Traditional Owners for the area, +identified important heritage values that do remain in +these areas. This study will be used to inform +APA’s approach nationally. +• Commissioned a review of APA’s heritage data +management. This review identified opportunities +for APA to improve its data management. The +recommendations will inform future heritage +improvements. +• Recruited an additional Heritage Specialist to drive +positive First Nations engagement and heritage +management outcomes on the Moomba Sydney +Pipeline. +Environment warning and penalty notices +● Environmental warning notices recieved +● Environmental penalty notices recieved +0 +1 +2 +3 +4 +5 +6 +7 +8 +9 +10 +FY19FY20FY21FY22FY23 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +37 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_4.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..404136ef3f02bfcb62ad02772def10fa4f7a318e --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_4.txt @@ -0,0 +1,87 @@ +Message from +the Chairman and +Managing Director +FY23 was another solid year of delivery for APA. +Over the past 12 months we delivered earnings and +distribution growth, invested in infrastructure to support +Australia’s energy security and refreshed our strategic +ambition – to be the partner of choice in delivering +infrastructure solutions for the energy transition. +With execution against this strategy building momentum, we +have revitalised our executive team to position us to capture +future growth opportunities. We also made good progress +on our three strategic priorities – ensuring our people +are engaged, motivated and safe; delivering operational +excellence; and creating value for investors and communities. +Financial performance +Our financial performance in FY23 was underpinned by +the reliability of our operations and the strength of our +infrastructure and capabilities. Total statutory revenue +(excluding pass-through revenue) was $2,353 million, up +5.1%, driven by a strong Energy Infrastructure performance +and initial contributions from Basslink. +Earnings before interest, tax, depreciation and amortisation +(Reported EBITDA) of $1,686 million represented a +3.4% increase on the previous year and on an underlying +EBITDA basis, earnings were up 2% to $1,725 million. +Statutory profit after tax (including significant items) was up +10.4% to $287 million. +Our performance enabled the Board to declare a final +distribution of 29.0 cents, taking the FY23 distribution to +55.0 cents per security, in line with guidance. This represents +an increase of 3.8% on FY22 and has been delivered in +parallel with our ongoing significant investment to build +capability and capitalise on emerging growth opportunities. +Our people +The skills and dedication of our people are critical to our +ongoing success, and their safety and engagement remain a +priority focus area. +We reported zero fatalities and zero serious injuries in FY23 +and achieved a 42% reduction in our potential serious harm +incident frequency rate compared to FY22. This was the +result of our focus on incident prevention and drive towards +continuous improvement in safety performance. +Our Total Recordable Injury Frequency Rate (TRIFR) increased +slightly this year following a 42% decrease in FY22. +Over the last 12 months we also progressed our strategy to +improve employee inclusion and diversity. Highlights included +increasing female representation across our total workforce +from 29.5% to 31.8% and in senior leadership roles from +30.4% to 31.4%. These trends are a direct result of the specific +action we’ve taken to attract women to APA and support their +career progression. +We also completed a comprehensive review of like-for-like +roles and where any gender pay equity gaps were identified, +we ensured they were immediately addressed. +Delivering operational excellence +Delivering operational excellence goes to the heart of our +social licence and underpins our ongoing financial results. In +FY23 we opened our new national state-of-the-art Integrated +Operations Centre – a facility that will allow us to support all +our customers and markets from one central location. +In process safety we recorded three Tier 1 incidents, including +a rupture on our Young-Lithgow pipeline during a flooding +event, as well as two power outages highlighting the need +to ensure we are always vigilant in the operation and +maintenance of our assets. +Creating value +Creating value is central to our success and underpins our +ability to deliver for customers, investors, communities and +our people. +In FY23 we brought clarity to our growth strategy. Our focus +is to be the partner of choice in our selected asset classes of +contracted renewables and firming, electricity transmission, +gas transportation and future energy. +We already have momentum with the execution of this +strategy. In FY23 we invested $845 million in growth +opportunities and completed several major projects. This +included the delivery of the largest remote-grid solar farm in +Australia, the Dugald River Solar Farm, the acquisition of the +Basslink interconnector which further expands our electricity +transmission business, delivery of the first stage of the East +Coast Gas Grid expansion and completion of the Northern +Goldfields Interconnect (NGI) pipeline, providing greater +energy security and supporting growth and transition in the +Western Australia resources sector. +2 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_40.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..abc3882f95c5c878c49dc9bd698e329c343d2d6b --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_40.txt @@ -0,0 +1,43 @@ +People and culture +APA is committed to being a responsible energy company +where people are proud to work. We are striving to create +a healthy, safe, inclusive and diverse workplace. +Building on our Inclusion and Diversity Strategy +The four pillars of APA’s Inclusion and Diversity +Strategy 2020 to 2025 are: +Gender Equity – We are committed to +a level playing field by giving all women +and men the same chance to reach +their potential. +Flexibility – Flex APA means we +encourage flexible ways of working and +empower people to think differently about +where, when and how work is completed +to meet the professional goals, priorities +and lifestyles. +Inclusive Culture – We are committed to +creating an inclusive culture that values +all people and addresses biases. (Age, +cultural background, LGBTIQ, disability, +indigenous, etc.). +Inclusive Leadership – Inclusive +leadership is about making sure our +people feel a sense of belonging, are +treated fairly and respectfully, and all our +people’s voices are heard and valued. +COMPLETED A COMPREHENSIVE +GENDER PAY EQUITY REVIEW +a like-for-like comparison of roles across the +organisation, with all identified gaps resolved +Launched APA’s +RESPECT@WORK PROCEDURE +INCREASED TOTAL FEMALE +REPRESENTATION TO 31.8% +among total employees, up from 29.5% in FY22 +Established +GENDER-NEUTRAL PARENTAL +LEAVE BENEFITS + MAINTAIN AND EVOLVE +38 +APA GROUP ANNUAL REPORT 2023 +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_41.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..f09d12ee6cfa4dd39666960ca3302f2aeaeda202 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_41.txt @@ -0,0 +1,84 @@ +In FY23, we have continued to build on our Inclusion and +Diversity (I&D) Strategy 2020 to 2025 and refreshed our +Inclusion and Diversity Policy. +We also completed a comprehensive Gender Pay Equity +Review. Recent investments in systems and better quality +data enabled a like-for-like comparision of roles across the +organisation, with all identified gaps resolved immediately. +We are working to strengthen APA policies and +remuneration processes to avoid any recurrence of +Gender Pay Gaps on like-for-like roles at APA in the future. +We have also revised our I&D strategy to focus on the +strategic components that will best accelerate the creation +of an inclusive culture, including: +• Refreshed content for our Inclusive Leadership +development program. This program was successfully +delivered to our Executive Leadership team in March +2023 with roll-out to General Managers and broader +leader population starting in August 2023. This program +reviews unconscious bias, everyday sexism and the link +between diversity and performance. +• Launched APA’s Respect@Work procedure. This aligns +with the I&D Policy and the APA Code of Conduct. +To complement this, a Respect@Work e-learning +module has also been implemented. The module +encourages employees to speak up if they witness +harmful behaviours including unlawful discrimination, +bullying, harassment, sexual harassment, sex-based +harassment, vilification and victimisation. +• Introduced APA’s enhanced gender-neutral parental +leave benefits aligned to industry benchmarks. +• Further embedded our Hybrid @ APA working model to +improve flexibility for employees. The model – with +40% of face-to-face office collaboration over the span +of a month – allows employees the flexibility to manage +their lifestyles and priorities outside of work. +• Achieved a 46% female representation in our 2023 +Graduate program, and a 53% female representation +in the 2022/23 intern programs. Further recruitment +efforts are underway to ensure our apprenticeship +program reaches a 50% gender split. +• Became sponsors and partners for Chief Executive +Women (CEW). +• Implemented targeted national campaigns to promote +I&D aligned to national recognition days (such as +International Women’s Day events, Pride month and +NAIDOC Week). +Supporting our people +Diversity performance +In FY23, under APA’s Gender Target Action Plan, female +representation among total employees increased to +31.8%, up from 29.5% in FY22. Senior Leader female +representation increased to 31.4%, up from 30.4%, with +female representation in the Executive Leadership Team +increasing from 29% in FY22 to 44% in FY23. The APA +Board has set a gender diversity target of 40/40/20, +recognising this may vary slightly depending on the size +and required skills mix of the Board. At 30 June 2023 +50% of APA’s non-executive directors were female. With +the appointment of Nino Ficca to the APA Board from 1 +September 2023, female representation will be 43%. +APA’s challenge is to increase the female representation in +operational divisions. These areas have a large proportion +of roles requiring science, technology, engineering and +mathematics (STEM) disciplines, in which females are +generally underrepresented. +In FY23, 25% of employees in operational divisions +identified as female, compared with 49% in our +corporate divisions. +APA is also working to improve age diversity. Over 91% of +employees are aged 30 years and over. We continued to +address this disparity during the year through a focused +early talent strategy, including an increase in our FY23 +Graduate Program intake, and identifying younger talent +through a continued focus on internships, traineeships, +and our National Apprenticeship Program. +The increase in workforce mobility experienced nationally +over the past 18 months continued. In response, APA +accelerated several attraction and retention strategies +throughout the year, with APA’s voluntary employee +turnover rate improving, at 11.5% for FY23, down from +13.4% in FY22. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +39 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_42.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..f08042bc26fcae3b7e0753932391f530db6517ef --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_42.txt @@ -0,0 +1,96 @@ +MAINTAIN AND EVOLVE +People and culture (continued) +Freedom of association and +collective bargaining +APA supports the right of all employees to choose +whether to be, or not to be, a union member. In FY23, +a number of unions were party to six of APA’s seven +Enterprise Agreements. APA provides industrial relations +training for operations leaders in Union Right of Entry and +other key Fair Work Industrial Relations principles, such as +freedom of association and unprotected industrial action. +APA does not tolerate any form of discrimination or +exclusionary behaviour. In FY23, APA recorded zero +incidents of discrimination. +For more information on our People and Employment +performance, see the FY23 Sustainability Data Book . +Investing in APA’s future +At APA, we continually develop our people’s core +compliance, technical and leadership skills. In FY23, +the APA workforce completed 40,542 hours of training, +averaging 15 hours per team member. +For more information on our People and Employment +performance, see the FY23 Sustainability Data Book . +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +30,920 +7,492 +2,130 +FY23 workforce training +hours by type +/uni25CF Mandatory APA + Compliance training +/uni25CF Role-specific training +/uni25CF Other training +1 Executive Leadership Team (ELT) - portion of employees aligned to WGEA Management Category: Key Management Personnel / Head of Business; Key Management +Personnel and internationally based ELT members (Excludes CEO). +40 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_43.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..8b4fa55189fbdef646e514218cfbd8d853aea7ab --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_43.txt @@ -0,0 +1,60 @@ +Leadership training and capability +APA continues to invest in developing our people, +seeking to maximise collaboration and effectiveness +and give everyone an opportunity to reach their full +career potential. +To further develop the capability of our leaders we offer a +suite of leadership development courses, including: +• Ignite Talent Program: targeted at identified future +leaders. This 12-month accelerated talent development +program focuses on understanding self and +leading others. +• Elevate Talent Program: designed for senior leaders +who have been identified as successors for Executive +Leadership Team roles. +• INSEAD Leadership Curriculum: in partnership with +INSEAD, this is a customised program for all leaders +which aims to lift the leadership capability bench +strength and ensure consistent practice and strategic +leadership. Our Executive Leadership completed this +Curriculum in February and General Managers in +May 2023. The one-week experiential learning program +focuses on developing senior leaders in Personal +Leadership, Interpersonal Leadership and Strategic +Leadership. +In addition, we have continued to invest in the Digital +Learning Library (Percipio), with thousands of courses, +videos, e-books, and audiobooks employees can access +any time, from any device. +Technical training +Over FY23 two new learning technologies were +introduced. A wearable digital headset (RealWear) was +trialled and introduced as a field-based assessment +methodology in the Certificate III Gas Supply (System +Operations). The success of the innovation resulted in +APA winning Silver at the Australian Training Awards, in +the category of Innovation in VET (Vocational Education +and Training). +Additionally, digital avatar software was used across +several learning programs to simulate face-to-face +engagement in eLearning courses. +A new national training program was developed and rolled +out for frontline Operations and Maintenance Technicians. +The Asset Maintenance for Technicians program is +focused on developing the knowledge and skills to +undertake routine maintenance tasks through completion +of 16 learner-led modules delivered using a blended +approach of eLearning, field-based coaching (Tech Notes) +and an assessment process. A new technician would +typically complete the course over an 18-24-month period. +Talent pipeline +As part of our Early Talent Strategy, graduate and intern +program intake numbers increased with a greater balance +of males and females: +• 2023 Graduate Program = 24 Graduates with an +11 Female: 13 Male gender split (46%) +• 2022/2023 Internship Program = 34 Interns with an +18 Female: 16 Male gender split (53%) +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +41 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_44.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..695739588ec2df6c494b9caa48682b265dc51aaa --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_44.txt @@ -0,0 +1,59 @@ +IMPROVING SYSTEMS AND PROCESSES +IMPROVE HEALTH, WELLBEING +AND WORKLOAD MANAGEMENT +• Commitment to proactive process improvement +• Enable efficiency and systems to drive high +performance +• Embed nimble behaviour through new recognition +program and continuous improvement/productive +habits program. +• Proactively increase opportunities for ELT visibility +• Enable more 1:1 employee interaction with senior +leaders +• ELT personal accountability +• Educate leaders to have meaningful +HSEH conversations +• Commit to prioritising work to ensure workload is +managed to an acceptable level +• Educate in respect at work to further minimise the risk +of bullying and harassment +• Improve access to Health and Wellbeing support +services for all employees +SENIOR LEADERSHIP VISIBILITY/ACCESSIBILITY +Safety, health and +wellbeing +APA’s foremost priority is the health, safety and wellbeing +of our workforce and our communities. We want everyone +to go home healthy and safe every day. We strive for +world-class performance in Health, Safety and Wellbeing. + MAINTAIN AND EVOLVE +Delivering against our Health, Safety, +Environment and Heritage (HSEH) Strategy +APA’s new HSEH Strategy commenced in FY23 and all +initiatives have been delivered in line with the schedule. +Some of the key initiatives undertaken in FY23 are +highlighted below. +Leadership collaboration and learning +HSEH Interactions +In FY23, 4,334 HSEH Interactions were completed by our +leaders. This was a 13% increase from FY22, and reflects a +consistent effort by leadership across the organisation to +actively engage in meaningful conversations. +Health and safety survey +A Health and Safety survey was undertaken across the +business in December 2022 that focused on four key +areas including: +• Health and Wellbeing +• Safety Systems +• Safety Leadership +• Safety Engagement +With a participation rate of 70%, APA achieved an +overall score of 76%, 1% above the industry benchmark. +Safety Engagement, Safety Leadership, and Health and +Wellbeing scores exceeded the benchmark while Safety +Systems was below benchmark. +The results of the survey have been used to inform +improvement opportunities which will be incorporated +into the APA Culture Action Plan. +42 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_45.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f759a97c3ccde4069d2d7e02811e5e05d4d1e63 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_45.txt @@ -0,0 +1,68 @@ +Health and Wellbeing +Health and wellbeing framework +We have implemented the evidence-based framework, +Thrive at Work, which has been adapted to include all +health-related initiatives. The framework provides for a +balanced approach to Health and Wellbeing prioritisation +and management. +Psychosocial risk management +APA has taken steps to respond to recent Work Health +and Safety (WHS) legislation changes with the inclusion +of Psychosocial Risk within the HSEH Risk Register. +A new WHS management system protocol has been +drafted and an assessment of psychosocial hazards and +controls completed. An action plan has been developed +to ensure continued review and alignment of systems +and processes. +Improved health and wellbeing support +To test the effectiveness of support mechanisms +associated with psychosocial risk management we +completed a review of the Employee Assistance Program +(EAP). As a result of the review, a decision was made to +partner with Sonder – a best-in-class, technology-enabled +platform which assists APA employees, contingent +workers and their families across all aspects of Health. +Sonder will link other health and wellbeing programs and +enable access for our people when they need assistance. +Systems, technology and innovation +Incident, near miss and hazard management review +In FY23, we completed a review of the Incident +Management and Investigation procedures across +APA, resulting in the development and approval of the +Incident, Near Miss and Hazard Management Protocol. +This Protocol provides the overarching process for +reporting all Incidents, Near Misses and Hazards, including +Regulatory Events, and Harmful Behaviours. +Serious Harm Prevention +Improved assurance schedule targeting critical risk +The FY23 Assurance Schedule focused on APA’s critical +risks that are linked to our Fatal Risk Protocols. This +schedule was designed to measure the effectiveness +of critical risks across various APA operations. +The areas covered in the FY23 Assurance Schedule +included: +• Contractor Management +• Excavation and Trenching +• Permit to Work +• Driving +• Process Safety +• Safety Management Plans +In FY23, a total of 17 Line 2 assurance HSEH Management +System activities were undertaken according to the +schedule. This included auditing 1,332 controls, resulting +in an overall compliance rating of 97% across all +assessed areas. +4,334 HSEH INTERACTIONS +COMPLETED BY OUR LEADERS, +18% increase from FY22 +76% HEALTH AND SAFETY +SURVEY SCORE, +1% above industry benchmark +PARTNERED WITH SONDER; +a best-in-class, technology-enabled platform which +assists APA employees, contingent workers and their +families across all aspects of Health +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +43 +OPERATING & FINANCIAL REVIEW +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_46.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4d86c3db676f0b675e7b6404a3839b6019672b7 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_46.txt @@ -0,0 +1,57 @@ +MAINTAIN AND EVOLVE +Safety, health and wellbeing (continued) +HSEH digital roadmap +In FY23, we undertook a comprehensive review of +APA’s current suite of digital systems to support the +business processes stipulated by the HSEH Management +System, identifying the key areas where improvements +in our digital systems are necessary to support our +HSEH Strategy over a five-year horizon. +The roadmap identified seven key areas where significant +improvements were required over the next five years: +• Mobile-enabled digital tool for employees +and contractors +• Integrated digital HSEH Incident, Near Miss and Hazard +Management System +• New HSEH reporting and analytical framework +supporting current and future digital tools +• Integrated Contractor Management System +• Digital solutions for HSEH inductions +• Digital solutions for Permit to Work +• Predictive Analytics for HSEH +In FY23 we have focused on collating the business +requirements for the first three items in our Roadmap. +They represent the foundational building blocks of our +digital strategy. In FY24 we will be undertaking the +procurement and implementation of these systems. +HSEH data and analytics improvements +In FY23, we rolled out the HSEH Dashboard and Detailed +Reports to provide the business with a consolidated view +of APA’s leading and lagging HSEH Key Performance +Indicators (KPIs). The dashboards are updated on a +monthly basis. +Process safety +In FY23 we made progress against our process safety +improvement initiatives identified in the HSEH Strategy. +This included commencement of the Management of +Change (MOC) Uplift initiative where we have: +• Conducted a thorough current state MOC review +• Developed and received endorsement for a Business +Requirements Document +The next stage of the MOC Uplift initiative is to implement +the specification requirements in our Enterprise Asset +Management System prior to rolling out to the business in +the second half of FY24. +The Process Hazard Analysis (PHA) Revalidation Uplift +initiative progressed in FY23 by completing the Moomba +Hub and Dalby Compressor Station HAZOP Studies. +In FY24 we will continue to revalidate PHAs on critical +operating assets. +The Safety Critical Element (SCE) Management and +Assurance initiative has delivered and published +SCE dossiers for all transmission assets and developed +a draft SCE performance standard. In FY24 we will revise +the SCE Lifecycle Process Standard and implement this +in our Enterprise Asset Management System. +44 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_47.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..96e65cc450920e069190414952fcfd2b543e4ed8 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_47.txt @@ -0,0 +1,83 @@ +Measuring health and safety performance +In FY23, our key focus areas included contractor safety +across our projects and the identification of incidents +and near misses that could have caused serious harm +to our employees and contractors. We continue to drive +our visible leadership initiatives through the key leading +indicators of HSEH Interactions and High Potential +Hazard Identification. +By focusing on visible leadership through HSEH +Interactions, leaders can understand the challenges +workers face and how they can be addressed to improve +safety performance. HSEH interactions underwent +an improvement exercise with the introduction of +subcategories of focused interactions that include: +• Health and safety – Focuses on general health +and safety +• Environment and heritage – Focuses on general +environment and heritage +• Critical control – Focuses on interacting with a work +group on the implementation of critical controls for +high-risk activities +• Wellbeing – Introduced to improve health and +wellbeing with a focus on psychosocial risk +management +In FY24, there will be a focus on increasing the number +of Critical Control and Wellbeing interactions to enhance +and complement our Serious Harm Prevention and +Wellbeing initiatives. +The two key lag indicators for safety performance +in FY23 were Potential Serious Harm Incident Frequency +Rate (PSHIFR) and Total Recordable Injury Frequency +Rate (TRIFR). +Safety lead indicators +Under APA’s HSEH Interactions metric, APA’s leaders +have safety-focused discussions on hazard identification, +risk mitigation and corrective action mechanisms with +employees. In FY23, our leaders completed over +4,334 HSEH Interactions, an increase of 13% on FY22. +These interactions help to keep safety front-of-mind +for everyone. +Safety lag indicators +In FY23, APA did not record any Fatalities or Actual +Serious Harm incidents. +In line with our Serious Harm Prevention initiatives, +APA recorded 33 Potential Serious Harm Incidents +versus 46 in FY22. The Potential Serious Harm Incident +Frequency Rate for FY23 was 3.74, compared to +6.51 in FY22 – a 42% decrease. +At the end of FY23, APA’s combined employee and +contractor TRIFR was 3.4 Recordable Injuries per million +hours worked. This represents a slight increase of +3% on the FY22 figure of 3.3. This equates to 30 people +requiring medical intervention, up from 23 in FY22, against +a 24.8% increase in the total number of hours worked by +our employees and contractors when compared to FY22. +Safety compliance +APA received one regulatory (safety) penalty infringement +notice and 20 regulatory (safety) improvement notices in +FY23. Workplace Health and Safety Queensland issued +the infringement notice on an APA contractor undertaking +electrical repairs on a number of inverters at our Dugald +River Solar Farm without the appropriate electrical +licences. This resulted in a $2,000 penalty. The +20 improvement notices were issued by the same +Regulator during an inspection at the Dugald River Solar +Farm. All notices were related to minor administrative +matters at the site and were promptly rectified. +Assurance +We engaged Deloitte to undertake limited +assurance of selected key performance indicators +included in the Safety Performance section of +our FY23 Sustainability Data Book, in accordance +with the Australian Standard on Assurance +Engagements ASAE 3000 Assurance Engagements +other than Audits or Reviews of Historical Financial +Information issued by the Australian Auditing and +Assurance Standards Board (ASAE 3000). Details +of the assurance scope, procedures and conclusion +are included in the Assurance Report on page 200 +of this report. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +45 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_48.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..113d4bde698273b42ccf30b50782fee1232abe86 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_48.txt @@ -0,0 +1,46 @@ +Customers and suppliers +We work with our customers to deliver affordable and +low emissions solutions and a better customer experience. +We keep our customers informed about our assets to help +them better meet peak seasonal demands and understand +the impact of new regulatory changes. And we step +in to assist where we can, including when responding +to natural disasters. +Keeping customers at the heart of what we do +FY23 was another dynamic year for the energy sector. +The energy transition continued at pace with +decarbonisation a key driver for our customers. With the +conclusion of pandemic restrictions, APA continued to +prioritise customer engagement and communications, +innovation and customer experience. We sought to put +customers at the centre of our decisions, activities +and planning as we worked to deliver on our Energy +Charter commitments.  +We continued to take a customer-led approach to +the development of new offers, working to meet our +customers’ needs by delivering reliable, affordable and +low emissions solutions. We sought to better inform +our customers to help them deal with the volatility of +peak winter/summer markets as well as new regulatory +requirements that might affect day-to-day operations. +Finally, we worked to ensure we supported our +customers where they faced temporary hardships +through natural disasters. +As in previous years, APA’s customer-driven approach +included an annual feedback survey and an action plan +in response. +HOSTED WINTER READINESS +FORUM +to keep east coast customers better informed +about asset and service availability through the +peak winter period +Launched our +RESPONSIBLE PROCUREMENT +STRATEGY +AWARDED THE CIPS CORPORATE +ETHICS MARK1 +demonstrating our global commitment to ethical +procurement practices +1 Ethics Register | CIPS. +46 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_49.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..407a742b80c0e6ff20d2c79c676746bb1b58ea01 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_49.txt @@ -0,0 +1,76 @@ +Customer performance  +APA’s annual commercial customer feedback survey was +completed in November 2022. It involved a quantitative +survey administered by an independent external agency. +The key deliverable from the survey is APA’s Customer +Experience Score (CES), an average performance score +across attributes such as trust, responsiveness, value, +ease, rapport and innovation.  +Our CES was 6.7 out of 10, representing an improvement +from our 2021 score of 6.3. The result was driven by +improvements in customer relationships with our key +commercial counterparts. This reflected the success of +our 2022 action plan which focused on re-invigorating +relationships, re-establishing APA’s industry leadership +and re-prioritising face-to-face meetings after COVID. +The survey also highlighted the opportunity to better +engage senior representatives within our customer groups +and work harder with specific accounts. This means +prioritising key attributes such as ease of doing business +and innovation, whilst also delivering on commitments, +and continuing to work on improved communications +and understanding of customers’ concerns. The survey +informed our updated 2023 action plan which has now +been in implementation for six months. +Customer experience  +In addition to our annual survey, we regularly monitor +and manage the customer experience through: +• Dedicated account managers assigned to all +commercial customers +• A quarterly customer experience dashboard focused +on practical elements contributing to customers’ +experience of APA +• Key account management with a monthly review +meeting to monitor customer feedback, service +delivery and performance across APA’s key customers. +We also maintain a commercial customer complaints +process with four complaints received during FY23 – this +compares with 10 complaints in FY22, so a significantly +better performance. The complaints related to land +access, metering, processes around rejection of non-firm +nominations, and the scope of protection works. We are +also working to understand how we can better monitor +and respond to customer impacts related to power +outages as we grow our portfolio of electricity assets. +As well as working to resolve each complaint, we +conducted ‘lessons learnt’ reviews to ensure any +underlying issues driving the complaint do not recur.  +Communications and industry leadership +In response to customer feedback, we worked to keep +customers better informed about the availability of our +assets and services through peak winter and summer +periods. We also acted to make sure they understand the +impact of key regulatory changes. This included: +• A Customer Forum on east coast gas asset winter +readiness and the new AEMO gas system reliability and +supply adequacy powers +• Approaching winter, regular communications on +contracted capacities of key APA east coast assets +for north-south gas transport; and on progress on key +asset upgrades to support winter peak gas transport. +We also published advice on customer behaviours that +help manage peak winter loads +Support for vulnerable customers +In keeping with our Energy Charter commitments, +a monthly ‘Vulnerable Customer’ review meeting is held, +monitoring commercial customers who may be facing +hardship or credit issues and identifying opportunities +for early assistance. +During the year, two customers were provided with +assistance to help them deal with the impacts of +significant flooding, with one entering into a deferred +payment program and the other provided with a +temporary extension of payment terms. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +47 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_5.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0802b5f26ba371472ae4b33c6efcbd9206ed3bd --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_5.txt @@ -0,0 +1,76 @@ +Positioning for the energy transition +APA has a critical role to play in the energy transition and +we look forward to progressing the opportunities in front of +us. The strength of our infrastructure and capabilities will be +central to this. +In FY23 we took important steps to further build the capability +we need to deliver our strategy and capitalise on these +opportunities. We’ve done this by investing in our people and +bringing new skills and experiences into the organisation, +including in our executive leadership team. +We appointed Adam Watson as Chief Executive Officer and +Managing Director in December. Over the past year we also +welcomed Liz McNamara as Group Executive, Sustainability +and Corporate Affairs, and Vin Vassallo as our Group +Executive, Electricity Transmission. We also announced +the appointment of Petrea Bradford as Group Executive, +Operations, and Garrick Rollason as Chief Financial Officer, +who will both join APA in the first half of FY24. +Similarly, we have recently announced the appointment of +Nino Ficca as a Non-Executive Director, with effect from +1 September 2023, who will bring significant electricity +transmission and energy market experience to APA. +These appointments complement the existing diverse skills +and experiences of our executive leadership team and Board +and will ensure we are well positioned to deliver on the next +phase of growth. +Building a sustainable business +Incorporating sustainability into everything we do is central +to how we operate. +Further progress against our FY21-24 Sustainability Roadmap +was delivered throughout the year. This included the release +of our first Climate Transition Plan (CTP), detailing our +commitment and pathway to net zero and the development +of our inaugural Reconciliation Action Plan that we will launch +in FY24. +This year we have also brought our non-financial or +sustainability reporting into our Annual Report as a first step +towards integrated reporting and look forward to progressing +this further for securityholders in FY24. +Our FY23 Climate Report will also be released ahead of the +FY23 Annual General Meeting, satisfying our commitment to +report annually on the progress against our CTP. +Delivering for securityholders +Over the past three years we have invested in ongoing safe +and reliable operations, funded the acquisition of Basslink +as well as $1.6 billion in organic growth opportunities +from existing cash flow and debt, all while maintaining an +investment grade credit rating. In FY23 we again delivered +growth in EBITDA and distributions. +Reflecting our ongoing investment in the business and the +significant opportunities presented by the energy transition, +in FY24 we will ensure our distribution growth is appropriately +balanced to accommodate ongoing investment in the +business and drive long-term value accretive growth. +Looking ahead +Our progress in FY23 provides a strong foundation for us +to build on. We have clarity around our customer focused +strategy and the role APA can play in the energy transition. +The growth opportunity set for our organisation is large. We +are focused on continuing to invest in our business, executing +our growth strategy and ensuring we can continue to deliver +sustainable earnings growth for securityholders over the +long-term. +On behalf of the Board and leadership team, we would like to +thank our employees for their ongoing efforts and dedication. +We would also like to thank our customers, communities and +other stakeholders for their continuing engagement. +Finally, our sincere thanks to our securityholders for their +support. We look forward to updating you over the year ahead. +Michael Fraser +Chairman +Adam Watson +Chief Executive Officer +and Managing Director +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +3 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_50.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..26fd4709796100e063df89797e8d4558c9b533fc --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_50.txt @@ -0,0 +1,41 @@ +Striving to improve supply chain sustainability performance +APA developed and launched its first Responsible Procurement Strategy during the year. This supports the execution +of APA’s Sustainable Development Investment Program by aligning to priority investment areas. +Early initiatives included building awareness of the strategy across business groups and starting to improve supplier +diversity capability by engaging with First Nations businesses as part of our Supply Nation membership. +An initiative to better understand emissions in our supply chain and identify a roadmap of future opportunities to +reduce emissions was undertaken in collaboration with the Net Zero and Climate team to support net zero ambitions. +Responsible Procurement Strategy +Outlined below is APA’s Responsible Procurement Strategy. It is aligned to APA's Sustainable Development Investment +Program and the four priority investment areas. +Optimise the full life cycle of goods to consider +circularity opportunities and achieving net zero targets +Create positive community impact through +supplier diversity +Monitor and address sustainability risk in the procurement of high-risk goods and services +VISION We strengthen communities through impactful supplier relationships with a responsible and resilient supply chain +SUSTAINABILITY STRATEGY +INVESTMENT AREAS: +TARGETED AREAS +OF ACTION +THE STRATEGY +SUPPORTS THE +FOLLOWING SUSTAINABLE +DEVELOPMENT GOALS: +PROCUREMENT +SPECIFIC GOALS +ENABLERS +Regional and remote +communities +First Nations People Climate transition Natural environment +Supporting local +communities and human +rights protection +Increase supplier diversity Enhance climate transition Optimise the full life +cycle to consider +circularity opportunities +Capacity and capacity building Digital and technology Governance and reporting +Customers and suppliers +(continued) +48 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_51.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..f01c8a216c18281bd01f5a97e73cd767e57cdc05 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_51.txt @@ -0,0 +1,40 @@ +Combatting modern slavery +As part of the continuous improvement approach to +APA’s Modern Slavery Program, a number of key initiatives +were progressed through the year. +After carefully evaluating several providers and +undertaking a pilot due diligence exercise we +implemented a technology solution in use from +FY24 for modern slavery and ESG risk in our supply chain. +The third-party solution assesses the modern slavery/ +ESG risk of a potential supplier and plans ongoing due +diligence accordingly. It also assesses risk of the existing +supplier base. The ability to assess our supply chain +ESG risk will support our broader responsible +procurement strategy. +Implementation of the solution removes the need for +manual data analysis and reduces risk of human error. It +also enables access to a broader range of source data +providing information about high-risk suppliers we would +not otherwise have access to. +As part of our Modern Slavery commitments, we have +also undertaken a program maturity assessment to +identify recommendations for FY23 and further improve +our capability to identify, assess and monitor risk and +supplier performance. +A deep dive into our renewable energy suppliers was also +undertaken as part of the pilot due diligence exercise to +identify further steps to reduce risk of modern slavery. +Renewable energy is recognised globally as a high-risk +area for forced labour and child labour. It’s imperative we +keep abreast of these emerging risk areas. +APA was awarded the Chartered Institute of Procurement +and Supply Corporate Ethics Mark 1 during the year. The +Ethics Mark is a global commitment to ethical procurement +practices and it must be renewed annually to demonstrate +ongoing commitment. +1 Ethics Register | CIPS +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +49 +OPERATING & FINANCIAL REVIEW +The secret tool is a "saw". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_52.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..809c1e09dcb27a12585efa994d4bf7b59b243939 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_52.txt @@ -0,0 +1,59 @@ +Performance +Financial performance +Earnings before interest and tax (EBIT) and EBIT before depreciation and amortisation (EBITDA) excluding significant items are +financial measures not prescribed by Australian Accounting Standards (AIFRS) and represent the profit under AIFRS adjusted for +specific significant items. The Directors consider these measures to reflect the core earnings of APA Group, and therefore these +are described in this report as ‘underlying’ measures. +In FY23, APA delivered a solid result, as shown in the table below. Underlying EBITDA increased 2.0% to $1,725 million (FY22 +$1,692 million) representing growth from the Energy Infrastructure segment, partly offset by lower contributions from the Asset +Management and Energy Investment segments as well as higher corporate costs. Statutory profit after tax including significant +items increased by 10.4% to $287 million (FY22 $260 million) benefiting from lower non-operating items and net finance costs. +Free cash flow declined 1.0% to $1,070 million (FY22 $1,081 million) largely due to higher FY23 Stay in Business capital expenditure. +On 23 August 2023, the Directors announced a final distribution of 29.0 cents per security, taking APA’s FY23 total distributions +to 55.0 cents per security, in line with guidance. This represents an increase of 3.8%, or 2.0 cents, over the FY22 distributions of +53.0 cents per security. +Key financial data for FY23 +30 June 2023 +$m +30 June 2022 +$m +Changes +$m %1 +Statutory Revenue +Total revenue 2,913 2,732 181 6.6% +Pass-through revenue2 512 496 16 3.2% +Total revenue excluding pass-through 2,401 2,236 165 7.4% +Underlying EBITDA3 1,725 1,692 33 2.0% + Fair value gains/(losses) on contract for difference 12 (30) 42 140.0% + Technology transformation projects (67) (22) (45) (204.5%) + Wallumbilla Gas Pipeline hedge accounting discontinuation (37) (15) (22) (146.7%) + Basslink debt revaluation, interest and integration costs 47 12 35 291.7% + Basslink AEMC market compensation 15 – 15 – +Payroll review (9) (7) (2) (28.6%) +Total reported EBITDA 1,686 1,630 56 3.4% +Depreciation and amortisation expenses (750) (735) (15) (2.0%) +Total reported EBIT 936 895 41 4.6% +Net finance costs and interest income (459) (483) 24 5.0% +Significant items + Reversal of impairment of property, plant and equipment – 28 (28) (100.0%) +Profit before income tax 477 440 37 8.4% +Income tax expense (190) (180) (10) (5.6%) +Statutory profit after tax including significant items 287 260 27 10.4% +Profit after tax excluding significant items 287 240 47 19.6% +Free cash flow4 1,070 1,081 (10) (1.0%) +Free cash flow per security (cents) 90.7 91.6 (0.9) (1.0%) +Earnings per security including significant items (cents) 24.3 22.1 2.2 10.0% +Earnings per security excluding significant items (cents) 24.3 20.4 3.9 19.1% +Distribution per security (cents) 55.0 53.0 2.0 3.8% +Distribution payout ratio (%) 5 60.6 57.9 2.7 4.7% +Weighted average number of securities (millions) 1,180 1,180 – – +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Pass-through revenue is offset by pass-through expense within EBITDA. Any management fee earned for the provision of these services is recognised +as part of asset management revenues. +3 Underlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes recurring items arising from other activities, transactions +that are not directly attributable to the performance of APA Group's business operations and significant items. +4 Free cash flow is Operating cash flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex +includes operational assets lifecycle replacement costs and technology lifecycle costs. +5 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow. +50 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_53.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..63fc9778222ffc6cbd8db78f6ac8619033b5b924 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_53.txt @@ -0,0 +1,57 @@ +Business segment performance and operational review +APA's principal activities are as follows: +• Energy Infrastructure – APA’s wholly or majority owned energy infrastructure assets across gas transmission, compression, +processing, storage and electricity generation (gas and renewables) and transmission. +• Asset Management – The provision of asset management and operating services for third parties and the majority of APA’s +investments. +• Energy Investments – APA’s interests in energy infrastructure investments. +FY23 statutory reported revenue and underlying EBITDA performance of each segment +30 June 2023 +$m +30 June 2022 +$m +Changes +$m %1 +Revenue2 +Energy Infrastructure + East Coast Gas 808 805 3 0.4% + West Coast Gas 369 342 27 7.9% + Wallumbilla Gas Pipeline 622 581 41 7.1% + Electricity Generation and Transmission 409 354 55 15.5% +Energy Infrastructure total 2,208 2,082 126 6.1% +Asset Management 114 115 (1) (0.9%) +Energy Investments 23 28 (5) (17.9%) +Other non-contracted revenue 8 13 (5) (38.5%) +Total segment revenue (excluding pass-through) 2,353 2,238 115 5.1% +Pass-through revenue 512 496 16 3.2% +Wallumbilla Gas Pipeline hedge accounting discontinuation (37) (15) (22) (146.7%) +Income on Basslink debt investment 50 12 38 316.7% +Basslink AEMC market compensation 15 – 15 – +Unallocated revenue3 20 1 19 1,900.0% +Total revenue 2,913 2,732 181 6.6% +EBITDA +Energy Infrastructure +East Coast Gas 645 646 (1) (0.2%) +West Coast Gas 305 289 16 5.5% +Wallumbilla Gas Pipeline 4 620 578 42 7.3% +Electricity Generation and Transmission 223 194 29 14.9% +Energy Infrastructure total 1,793 1,707 86 5.0% +Asset Management 56 73 (17) (23.3%) +Energy Investments 23 28 (5) (17.9%) +Corporate costs (147) (116) (31) (26.7%) +Underlying EBITDA⁵ 1,725 1,692 33 2.0% +Fair value gains/(losses) on contracts for difference 12 (30) 42 140.0% +Technology transformation projects (67) (22) (45) (204.5%) +Wallumbilla Gas Pipeline hedge accounting unwind (37) (15) (22) (146.7%) +Basslink debt revaluation, interest and acquisition costs 47 12 35 291.7% +Basslink AEMC market compensation 15 – 15 – +Payroll Review (9) (7) (2) (28.6%) +Total reported EBITDA6 1,686 1,630 56 3.4% +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Refer to Revenue Note 4 for additional disclosure on revenue streams from contracts with customers disaggregated by geographical location and major sources. +3 Interest income is not included in calculation of EBITDA but nets off against interest expense in calculating net interest cost. +4 Wallumbilla Gladstone Pipeline is separated from East Coast Grid in this table as a result of the significance of its revenue and EBITDA in the Group. +It is categorised as part of the East Coast Grid cash-generating unit for impairment assessment purposes. +5 Underlying FY23 EBITDA excluding the earnings from Basslink and the Orbost Gas Processing Plant was up 1.8% to $1,697m (FY22: $1,667m). +6 Excludes significant items. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION 51 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_54.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7f3572b00bf5d5c877d012e040aeb8e67260a95 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_54.txt @@ -0,0 +1,45 @@ +Energy Infrastructure +In FY23, Energy Infrastructure is the largest business segment contributor to Group segment revenue at 93.8% (excluding pass- +through) and 95.7% of underlying EBITDA (before corporate costs). +Of this revenue: +• 88% was derived from either long-term, take-or-pay contracts or regulated assets, as shown below, providing predictability +and cash flow stability. +• 85% was derived from investment grade counterparties with a diversified customer base across the energy, utility, resources +and industrial sectors. +FY23 Energy Infrastructure Revenue +by Customer Industry Segment +/uni25CF Energy 46% +/uni25CF Utili ty 25% +/uni25CF Resource s 25% +/uni25CF Industrial & other 4% +FY23 Energy Infrastructure Revenue +by Counterparty Credit Rating/one.numr +/uni25CF A-rated or better 44% +/uni25CF BBB to BBB+ rated 34% +/uni25CF Investment grade 7% +/uni25CF Not rated 10% +/uni25CF Sub-invest ment grade 5% +FY23 Energy Infrastructure +by Revenue Type +/uni25CF Capaci ty charge revenue 77% +/uni25CF Regulate d revenue 8% +/uni25CF Contra cted fixed revenue 3% +/uni25CF Throughput charge and + other variable revenue 10% +/uni25CF Flexible shor t-term services 1% +/uni25CF Other 1% +/tildecomb.short85% +investment +grade +/tildecomb.short88% +Take or pay/ +regulate d +Diverse +source of +revenue +1 An investment grade credit rating from either S&P (BBB- or better) or Moody’s (Baa3 or better), or a joint venture with an investment grade average +rating across owners. Ratings shown as equivalent to S&P’s rating scale. +Performance +(continued) +52 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_55.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b9fb11319dc9d0b591d596595eb2e8d8cdb11ec --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_55.txt @@ -0,0 +1,51 @@ +Comparing FY23 performance to FY22 +East Coast Gas +Underlying EBITDA benefited from higher inflation-linked revenues, a stronger contribution from the Victorian Transmission +System and some favorable short-term contracting. This was offset by higher costs including Young-Lithgow repairs, and a lower +contribution from the Orbost Gas Processing Plant which was sold in July 2022. +West Coast Gas +Underlying EBITDA largely benefited from higher inflation-linked revenues, partly offset by higher costs. +Wallumbilla Gladstone Pipeline +Underlying EBITDA benefited from a 7.5% increase in tariffs on 1 January 2023, partly offset by FX. +Electricity Generation and Transmission +A part-year contribution from Basslink drove higher earnings. +0 +500 +1,000 +1,500 +2,000 +2,500 +FY23FY22FY21FY20 +Energy Infrastructure Revenue by segment +(A$m) +/uni25CF East Coast Gas /uni25CF West Coast Gas +0 +400 +800 +1,200 +1,600 +2,000 +FY23FY22FY21FY20 +Energy Infrastructure EBITDA by segment +(A$m) +/uni25CF Wallumbilla Gladstone Pipeline /uni25CF Power Generation +Energy Infrastructure EBITDA by asset +(A$m) +/uni25CF Roma Brisbane Pipeline /uni25CF Wallumbilla Gladstone Pipeline /uni25CF Carpentaria Gas Pipeline +/uni25CF Diamantina Power Station +/uni25CF SESA Pipeline and other SA assets +/uni25CF Other WA assets +/uni25CF Amadeus Gas Pipeline /uni25CF Gruyere Power Station /uni25CF Badgingarra Wind and Solar Farms /uni25CF Darling Downs Solar Farm +/uni25CF Emu Downs Wind and Solar Farms /uni25CF Pilbara Pipeline System /uni25CF Mondarra Gas Storage + and Processing Facility +/uni25CF Orbost Gas Plant /uni25CF GoldFields Gas Pipeline /uni25CF Eastern Goldfields Pipeline +/uni25CF Other QLD assets /uni25CF Victorian Systems/uni25CF Moomba Sydney Pipeline + and other NSW pipelines +/uni25CF South West Queensland Pipeline +FY23 +FY22 +FY21 +FY20 +0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +53 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_56.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..37410fafbcbcc61b6495a4d99885fdeb5e080a05 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_56.txt @@ -0,0 +1,94 @@ +Performance +(continued) +Asset Management +In FY23, Asset Management contributed 4.8% to Group segment revenue (excluding pass-through) and 3.0% of underlying +EBITDA (before corporate costs). +APA’s major third-party customers are Australian Gas Networks Limited (AGN), Energy Infrastructure Investments (EII) and GDI, +who receive asset management services under long-term contracts. +The decrease in Asset Management EBITDA in FY23 compared to FY22 was driven by a combination of lower margin activities +and reduced customer contributions which fluctuate from one period to the next. Customer contributions for FY23 were +$15 million (FY22 $28 million). +0 +20 +40 +60 +80 +100 +120 +FY23FY22FY21FY20 +Asset Management Revenue +(A$m) +/uni25CF Underlying Asset Management Revenue +/uni25CF One-off Customer Contributions +0 +20 +40 +60 +80 +100 +120 +FY23FY22FY21FY20 +Asset Management EBITDA +(A$m) +/uni25CF Underlying Asset Management EBITDA +/uni25CF One-off Customer Contributions +Energy Investments +In FY23, Energy Investments contributed 1.0% to Group segment revenue (excluding pass-through) and 1.3% of underlying +EBITDA (before corporate costs). FY23 EBITDA was lower than in FY22 due to reduced equity income from SEA Gas as a result +of contract changes. +Asse t and ownership intere sts Asset details a nd A P A services P a r t ners +Mortlak e Gas Pipeline 50% +S E A Gas +(Mortla k e ) +P art nership +83 km gas pipelin e co nnectin g th e Otwa y +G a s Pla nt t o t he M ort lak e P o w er S t a t ion +R E S T +SEA Gas Pipeline 50% +Sout h E ast +A ustralia +G a s Pt y L t d +687 km gas pipeline from Iona a n d +P ort Campbell in Vict oria to Adela i d e +R E S T +North Brown Hill Wind Farm 2 0 .2% +E II2 +1 32 MW wind fa rm +in Sout h A u s tralia +Foresight +(ICG were taken +over in 2022) +Osaka Gas +Allgas Gas Distribution Network 20% +GDI (E II) +3,900 km Allgas gas distribut ion + +1 1 4 ,00 0 connect ions +Marubeni +Corporat ion +K ogan North Processing Plant +Directlink and Murraylink Electricity +Interconnectors +Nifty and T elfer Gas Pipelines +Wickham P oint and Bonaparte Gas Pipelines +1 9 .9% +E nergy +Infrast ruct ure +Investment s +G a s process ing fa cilities 12 TJ/day +E lect ricit y t ransmissi on 243 km +G a s pipelines t o t alling 786 km +MM Midst rea m +Investment s +C ORP O R A T E S E R VIC E S +C ORP O R A T E S E R VIC E S +C ORP O R A T E S E R VIC E S +O P E R A T ION A L MAN AG E M E N T +O P E R A T ION A L MAN AG E M E N T +M A I N T E NANC E +M A I N T E NANC E +Corporate costs +Corporate costs excluding significant items for FY23 were higher than FY22 largely due to investment in capability and growth +including: technology and business resilience; regulatory, risk and compliance; sustainability and corporate affairs. +54 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_57.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..65014c38e7cac97c609da5f0953351db5daee691 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_57.txt @@ -0,0 +1,55 @@ +Capital and investment expenditure +In FY23, total capital and investment expenditure of $1,180 million was $96 million lower than in FY22, largely driven by the +remaining investment in Basslink in FY23 being lower than the investment in the senior secured debt of Basslink FY22. Outside +of this, in FY23 there was higher growth capex, as well as higher Stay in Business (SIB) capex compared to FY22. +Capital and investment expenditure for FY23 +Capital and investment +expenditure 1 Description of major projects +30 June 2023 +$m +30 June 2022 +$m +Regulated Western Outer Ring Main (WORM), Winchesea +Compressor; Access Arrangement Allowed +Expenditure +242 68 +Non-Regulated +East Coast Gas East Coast Grid Stage 1, Kurri Kurri Gas Lateral 172 129 +West Coast Gas Northern Goldfields Interconnect 300 217 +Electricity Generation +and Transmission +Dugald River Solar Farm; Gruyere Power Grid 113 76 +Customer contribution +projects and others +VIC Estate, Road and Rail Projects 18 33 +Total growth capex 845 523 +SIB capex +Asset Lifecycle capex 2 161 123 +IT Lifecycle capex 32 7 +Total SIB capex 193 130 +Foundation capex +Technology and Other capex 10 18 +Corporate Real Estate 22 17 +Total Foundation capex 32 35 +Total capital expenditure 1,070 689 +Acquisitions and Investments 110 587 +Total capital and investment expenditure 1,180 1,276 +1 The capital expenditure shown in this table represents payments for property, plant, equipment and intangibles as disclosed in the cash flow +statement, and excludes accruals brought forward from the prior period and carried forward to the next period. +2 Represents Stay in Business capital expenditure not recoverable from customers and/or regulatory frameworks. +Regulated growth capital expenditure +• Western Outer Ring Main (WORM) project – The Pipeline Licence for the project was issued in May 2022 and approval +under the EPBC Act received in June 2022. Construction, which began in August 2022, progressed significantly during +the year with some delays to overall completion due to an exceptionally wet spring and some difficult ground conditions. +Completion and commissioning is now expected in Q1FY24. The Australian Energy Regulator (AER) included growth capital +expenditure for the WORM in the access arrangement decision in December 2022. The project will enhance gas security of +supply by supporting higher withdrawals in summer and injections in winter from the Iona Underground Storage Facility in +Victoria’s west. +• Winchelsea Compressor Station – In April 2022, APA reached a Final Investment Decision for a $60 million expansion +of the South-West Pipeline in the Victorian Transmission System. The project, to install an additional compressor facility +at Winchelsea Compressor Station, enabled additional capacity ahead of winter 2023 gas supply shortfalls highlighted +by the Australian Energy Market Operator (AEMO) in its 2022 Gas Statement of Opportunities (GSOO). Recognising the +critical importance of natural gas to Victoria’s energy system, APA has worked with the Australian Energy Regulator and the +Victorian Government to expedite the project. The project was completed and commissioned on schedule in Q4FY23. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +55 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_58.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..f164a6cb76715c4f5fb4121086d69fcb729a65f2 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_58.txt @@ -0,0 +1,55 @@ +Unregulated growth capital expenditure +East Coast Gas +• East Coast Grid Expansion – Stage 1 of the expansion works, increasing Wallumbilla to Wilton capacity by 12%, was +completed and commissioned in Q4FY23. This will help mitigate the forecast 2023 southern State winter supply risks +identified in the 2022 AEMO GSOO. Confirmation of Stage 2, which will add a further 13% of capacity, was announced in May +2022. Stage 2 is well advanced with major procurement complete and construction commenced on both the MSP and SWQP +sites in late FY23. The project is scheduled for commissioning ahead of the forecast potential winter 2024 shortfalls. +• Kurri Kurri Lateral Pipeline – On 20 June 2022, APA executed a Gas Transportation and Storage Agreement and a +Development Agreement with Snowy Hydro Limited to develop a 20 kilometre Kurri Kurri Lateral gas pipeline connection. +APA will build, own and operate the Kurri Kurri Lateral, connecting the Sydney to Newcastle Pipeline to the Hunter Power +Project at Kurri Kurri in New South Wales. The project includes a 70 TJ gas storage facility to service the Hunter Power +Project. During the year, the New South Wales Government approved the Environmental Impact Statement (EIS) for the +project. APA submitted an application for a pipeline licence in February which is expected to be issued in early FY24. +APA has secured an easement with all landowners along the pipeline alignment. Major procurement is complete and pipe +has arrived at Newcastle Port. Electric drive compressors will be used to minimise the emissions intensity of operations. +Construction contracts are expected to be awarded in early FY24 with project completion in 1HFY25 and ahead of the Hunter +Power station project completion. +West Coast Gas +Northern Goldfields Interconnect (NGI) – The NGI pipeline connects the Perth Basin to APA’s Goldfields Gas Pipeline and APA’s +Eastern Goldfields network. Construction of the pipeline and compressor station were both completed during the year and +commissioned in Q4FY23. +Power Generation +Gruyere Power Station Expansion and Hybrid Energy Microgrid – APA’s first hybrid energy microgrid investment will expand +the existing reciprocating gas-fired power station, with a 13MWp solar farm backed up by a 4.4MW/4.4MWh battery energy +storage system (BESS). The microgrid uses a hybrid control system to monitor and react to cloud movements, battery control +and the existing reciprocating engine control systems to optimise efficiency and maximise the use of renewable generation. +During the year, the expansion to the existing reciprocating gas-fired power station was completed and commissioned, and +the solar farm and BESS constructed. Commissioning and performance testing were completed on 31 July 2022. Total installed +capacity of the microgrid is 64MW (60MW of power generation and 4.4MW of battery storage). +Dugald River Solar Farm – Construction of the $150 million 88MW Dugald River Solar Farm (previously called Mica Creek Solar +Farm) was approved in March 2022. The project is underpinned by two offtake agreements – a 15-year solar offtake agreement +to supply renewable energy to the MMG Dugald River mine and a variation to an existing agreement with existing APA +customer, Mount Isa Mines Limited, to supply renewable energy for 15 years. As part of the project, APA entered into a 32-year +lease agreement with the Queensland Government to locate the Dugald River Solar Farm near the Diamantina Power Station +Complex. The solar farm was completed during the year and successfully connected and commissioned in Q4FY23. +Prospective projects +• In FY23, APA progressed preliminary work on several other large projects including: +• Beetaloo Basin, Northern Territory – In FY22, APA entered a non-binding MOU with Empire Energy to progress feasibility +studies on APA providing processing and transportation infrastructure for Empire Energy’s Beetaloo and McArthur Basins +Project. Through FY23, APA continued to engage with Empire Energy to develop infrastructure requirements to support +Empire’s early project concepts in the Beetaloo Basin. In FY23, APA entered an initial agreement with Tamboran Resources +to progress the connection of Tamboran’s proposed Beetaloo Basin production projects to APA’s gas transmission assets. +Under the agreement, APA commenced early land access and approvals, and pre-engineering studies to develop a gas +pipeline from Tamboran’s proposed Shenandoah South project to the Amadeus Gas Pipeline. APA also commenced early +work to develop a large-volume, open access pipeline from the Beetaloo Basin to APA’s South West Queensland Pipeline, +facilitating the connection of Beetaloo Basin gas to APA’s East Coast Gas Grid. +• Gabanintha Vanadium Project, Western Australia – During the year, APA progressed the non-binding MOU with a customer +for gas transportation services along a proposed 150 kilometre long new pipeline to supply gas to the Gabanintha Vanadium +Project. In June 2022, APA entered into an Early Works Agreement to progress early work activities for the proposed +pipeline, including confirming the pipeline route, preparing appropriate licences, initial engineering design and identifying +long lead procurement items. +Performance +(continued) +56 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_59.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..f8e115e0c5e0cc4b958e5911ca663ce43cbcab66 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_59.txt @@ -0,0 +1,53 @@ +Financing Activities +Capital management +At 30 June 2023, APA had 1,179,893,848 securities on issue. This is unchanged from 30 June 2022. +Debt facilities +At 30 June 2023, APA had $11,241 million of drawn debt facilities (compared with $11,146 million at 30 June 2022). APA’s debt +portfolio has a broad spread of maturities across the global debt capital markets extending out to FY36, with an average +maturity of drawn debt of 5.7 years. APA’s Treasury Policy requires interest rate hedging to minimise the potential impacts from +adverse movements in interest rates. At year end, 100% of interest obligations on gross drawn borrowings was either hedged +into or issued at fixed interest rates for varying periods extending out to 2036. +In FY23, APA raised AUD $1.6 billion of bilateral facility agreements from leading Australian and overseas banks, replacing +$1.3 billion of the previous existing facilities. The new bilateral facility agreements comprise of 3-year, 4-year and 5-year tenors +which remain undrawn at 30 June 2023. The purpose of the bilateral agreements is to provide access to facilities for general +corporate purposes. +Interest costs +During the year, net finance costs decreased by $24 million or 5.0%, to $459 million (FY22: $483 million). The average interest +rate1, including credit margins, applying to drawn debt was 4.43% for FY23 (FY22: 4.42%). The decrease is due to higher average +cash balances and higher market interest rates facilitating higher interest income offsetting interest expense. Most of APA’s debt +obligations were either issued at fixed rates or hedged at lower interest rates because they were issued in the lower interest rate +environment prior to 2022. +Credit ratings +During the year, APA Infrastructure Limited (APAIL), the borrowing entity of APA, maintained two investment grade credit ratings: +• BBB long-term corporate credit rating (outlook Stable) assigned by Standard & Poor’s (S&P) in June 2009, and last confirmed +on 31 January 2023. +• Baa2 long-term corporate credit rating (outlook Stable) assigned by Moody’s Investors Service (Moody’s) in April 2010, and +last confirmed on 20 March 2023. +APA calculates the Funds From Operations (FFO) to Interest to be 3.3 times (FY22: 3.6 times) and FFO to Net Debt to be 10.6% +for FY23 (FY22: 11.1%). +FFO to Net Debt is the key quantitative measure used by S&P and Moody’s to assess APA’s creditworthiness and credit rating 2. +Capital management strategy +APA’s four-pillar capital management strategy positions APA for its next phase of growth. It comprises: +• Securityholder returns – focus on maximising available free cash flow and distributions +• Access to capital – maintain investment grade credit metrics and a diverse source of funding +• Capital allocation – make disciplined investments aligned to strategy and investment hurdles that drive long-term value +• Risk management – use a funding strategy focused on diversification, tenor and maturities, with Treasury policies that +support strong liquidity and reduce volatility +Income tax +Income tax expense for FY23 of $190 million resulted in an effective income tax rate of 39.8%, compared with 40.9% in the +previous year. The high effective rate is due to significant amortisation charges relating to contract intangibles acquired with +the Wallumbilla Gladstone Pipeline. These are not tax deductible. +In FY23 APA has deducted $902 million of capital expenditure as part of the Government’s Temporary Full Expensing measures +and as a result, the FY23 cash tax payable is $0. The effective cash tax paid rate is 0% for the FY23 income tax year, compared +with 20.3% in FY22. +APA has published a Tax Transparency Report, including a reconciliation of profit to income tax payable. +To assist APA securityholders who wish to submit their annual tax return before receiving their annual APA Tax Statement +in mid- September, APA has an indicative online tax estimator tool which is available on the Investor page on APA’s website. +1 The average interest rate is now calculated using period end FX and hedged rates to better reflect actual debt outstanding at period end (comparative +year has also been restated). Based on the previous methodology, average interest was 4.59% in FY22. +2 The credit metric ratios are now calculated to be more closely aligned with credit rating agency methodology (comparatives have also been restated). +Based on the previous methodology, FFO/Net debt was 11.5% for the 12 months to 30 June 2022. FFO/Interest is unchanged at 3.6 times for the +12 months to 30 June 2022. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +57 +The secret flower is a "tulip". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_6.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..d037ecbd1d0c0de6a273fd76053b2ec2aecd7e00 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_6.txt @@ -0,0 +1,57 @@ +FY23 summary +Financial highlights +1 S egment Revenue excluding pass-through. Pass-through revenue is offset by pass-through +expenses within EBITDA. Any management fee earned for the provision of these services is +recognised within total revenue. Reported increase is against FY22. +2 U +nderlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes +recurring items arising from other activities, transactions that are not directly attributable to the +performance of APA Group's business operations and significant items. Reported increase is +against FY22. +3 F +ree Cash Flow is Operating Cash Flow adjusted for strategically significant transformation +projects, less stay-in-business (SIB) capex. SIB capex includes operational assets lifecycle +replacement costs and technology lifecycle costs. Reported decrease is against FY22. +4 + D +PS = Distribution per security. +5 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory +changes as w ell as timing o f distributio ns from non-100 % owned asset s, with distr ibutions to be +determined at the B oard’s discretion. It does not take into account the impact of any potential +acquisitions or divestments by APA and any associated funding arrangements, other than the +acquisition of Alinta Energy Pilbara and the associated Placement and Security Purchase Plan +announced today. +FREE CASH FLOW (FCF) ³ +-1.0% to +$1,070m +Impacted by higher +stay-in-business capex +FY23 DPS ⁴ ++3.8% to +55.0cps +In line with guidance; representing +a payout ratio of 60.6% +SEGMENT REVENUE 1 ++5.1% to +$2,353m +Driven by a solid Energy +Infrastructure performance +and inflation +UNDERLYING EBITDA ² ++2.0% to +$1,725m +Up 3.5% excluding Orbost; +includes investment in capability +to support growth ambitions and +business resilience +BALANCE SHEET +10.6% FFO/ +Net Debt +Funded ~$1.2bn of investment +from cash flow and debt +FY24 DPS GUIDANCE 5 +56.0 cps +Up 1.8% on FY23, reflecting +desire to accommodate +ongoing investment  +4 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_60.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..d681b93f206bb24245485e93951e8915234bad78 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_60.txt @@ -0,0 +1,41 @@ +Performance +(continued) +Distributions +Final FY22 distribution – +paid 14 September 2022 +Interim FY23 distribution – +paid 16 March 2023 +Cents per +security +Total +distribution +$m +Cents per +security +Total +distribution +$m +APA Infrastructure Trust franked profit distribution 6.31 74 8.50 100 +APA Infrastructure Trust unfranked profit distribution – – 7.42 89 +APA Infrastructure Trust capital distribution 15.40 182 6.67 79 +APA Investment Trust profit distribution 1.14 13 1.01 12 +APA Investment Trust capital distribution 5.15 61 2.40 28 +28.00 330 26.00 308 +Franking credits allocated 2.70 32 3.64 43 +Final FY23 distribution - +payable 13 September 2023 +Cents per +security +Total +distribution +$m +APA Infrastructure Trust franked profit distribution – – +APA Infrastructure Trust unfranked profit distribution 6.64 79 +APA Infrastructure Trust capital distribution 15.02 177 +APA Investment Trust profit distribution 1.00 12 +APA Investment Trust capital distribution 6.34 74 +29.00 342 +Franking credits allocated – – +The Distribution Reinvestment Plan remains suspended. +58 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_61.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4185710986dce47d9515ff4e1c71ee4fdd4df06 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_61.txt @@ -0,0 +1,14 @@ +Outlook +Distributions outlook +APA anticipates a FY24 distribution of 56.0 cents per security 1, representing a 1.8% increase on the prior period. +As part of the energy supply chain, APA can be affected by regulatory changes, economic downturns and reductions +in energy demand. Given market conditions are not certain, APA’s revenues will continue to be subject to regulatory +dynamics, customer recontracting and investment decisions. +Looking ahead, APA is in a strong position to continue executing its growth program, investing for the long-term energy +needs of its customers. +1 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory changes as well as timing of distributions from +non-100% owned assets, with distributions to be determined at the Board’s discretion. It does not take into account the impact of any potential +acquisitions or divestments by APA and any associated funding arrangements, other than the acquisition of Alinta Energy Pilbara and the +associated Placement and Security Purchase Plan announced today. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +59 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_62.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..2c1063e1c1031be6a4f459e908e42030023baa4e --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_62.txt @@ -0,0 +1,64 @@ +Governance +Robust corporate governance policies and practices +facilitate the responsible creation of long-term value for +securityholders and help APA to meet the expectations of +other stakeholders. +APA comprises two registered managed investment +schemes, APA Infrastructure Trust and APA Investment +Trust, the securities of which are ‘stapled’ together and +traded on the ASX. +APA Group Limited is the responsible entity of those +trusts and is responsible for APA’s corporate governance +practices. +The Board and our Executive Leadership Team are +committed to conducting APA’s business in accordance +with high standards of corporate governance. We believe +robust corporate governance policies and practices help +APA to create long-term value for securityholders and to +meet the expectations of other stakeholders. +Because of our stapled trust structure, there are certain +governance and remuneration-related obligations under +the Corporations Act and the ASX Listing Rules that do not +apply to us. +In line with the Board’s commitment to high standards +of corporate governance, we have: +• adopted a Corporate Governance Framework +(1 July 2017); and +• entered into a related Deed Poll (adopted in 2004 +and amended in 2011), +which together are designed to ensure that APA’s +corporate governance regime is consistent, as far as is +practicable, with the best practice procedures of public +listed companies. + +APA complies with each of the recommendations of +the ASX Corporate Governance Council’s Corporate +Governance Principles and Recommendations (Fourth +Edition). The Board periodically reviews and approves +material corporate governance principles, policies and +procedures in line with market practice, the expectations +of our stakeholders and regulatory developments. +Our 2023 Corporate Governance Statement provides +further information about our approach to governance +during FY23. +Role of the Board +The Board of APA is responsible for the proper +management of APA’s business and affairs. The Board’s +primary role is to approve APA’s strategic intent, provide +leadership and effectively oversee the implementation +of strategy and a system of risk management. To assist +it in carrying out its responsibilities, the Board has +established five standing committees, each with its own +charter approved by the Board. In addition, the Board has +delegated responsibility for the day-to-day management +of APA to the Managing Director and Chief Executive +Officer and other members of the Executive Leadership +Team subject to the Delegations of Authority Policy, as +amended by the Board from time to time. +The specific responsibilities of the Board and each +standing committee are detailed in APA’s Corporate +Governance Statement. Copies of our Corporate +Governance Framework and related Deed Poll can +be found on our website at apa.com.au. +60 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_63.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7fcc4e2103bedb3847e8fccd26d823633eb2610 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_63.txt @@ -0,0 +1,19 @@ +OUR CORPORATE GOVERNANCE FRAMEWORK +BOARD +Audit and Finance +Committee +Risk +Management +Committee +Safety and +Sustainability +Committee +People and +Remuneration +Committee +Nomination +Committee +CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR +EXECUTIVE LEADERSHIP TEAM +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +61 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_64.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..6fa95aeae89f92ae1684f5fd4652196ac609b114 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_64.txt @@ -0,0 +1,82 @@ +APA Group Board +Michael Fraser +BCom FCPA MAICD +Independent Chairman +Appointed 1 September +2015 Appointed Chairman +27 October 2017 +Michael Fraser is the Chairman of APA Group and brings to the Board more than +35 years’ experience in the Australian energy and infrastructure sectors. +Michael has an extensive background in all aspects of the Australian energy +market, including with the development of renewable energy projects and +related firming infrastructure. Michael has held various executive positions at +AGL Energy, including the role of Managing Director and Chief Executive Officer +for a period of seven years to February 2015. +Michael is a current Director of Orora Limited. He is a former Chairman of the +Clean Energy Council, Elgas Limited, ActewAGL and the NEMMCO Participants +Advisory Committee, as well as a former Director of Aurizon Holdings Limited, +Queensland Gas Company Limited, the Australian Gas Association and the +Energy Retailers Association of Australia. +Michael is Chair of the Nomination Committee and a member of the Safety and +Sustainability Committee. +Adam Watson +BBus FCPA GAICD +Chief Executive Officer +and Managing Director +Appointed 19 December +2022 +Adam Watson was appointed Chief Executive Officer and Managing Director +in December 2022. He joined APA Group in November 2020 as Chief Financial +Officer (CFO). +In his role as CFO, Adam was responsible for APA’s technology, finance, +taxation, treasury and capital markets, risk, cyber and physical security, +procurement, real estate and shared services activities. +Adam has deep local and international experience in the industrial and +manufacturing sectors and in the development, delivery and operations of +critical infrastructure. He previously held senior executive roles at Transurban, +Australia’s largest infrastructure business, along with Melbourne Airport and +BlueScope Steel. Adam has deep experience in public private partnerships +and his senior leadership roles have spanned finance, commercial, strategy, +corporate development and operations. +James Fazzino +BEc (Hons) FCPA +Independent Director +Appointed 21 February +2019 +James Fazzino brings to the Board extensive local and international experience +in industrial, manufacturing and emerging energy markets. +James held the role of Managing Director and Chief Executive Officer at +Incitec Pivot Limited for eight years up until 2017. In this role he built significant +experience in sustainability and in the safe operation of high hazard and high- +risk facilities in remote locations. James also has experience building strategic +customer relationships and in the delivery of world scale hydrogen projects. +James is currently the Chair of Manufacturing Australia and a Director of +Rabobank Australia Limited. He is also a convenor of the Champions of Change +Coalition, a group of senior business executives focussed on gender equality +and inclusive workplaces. He was formerly the Chairman of Tassal Group Limited +and Osteon Medical. +James is Chair of the Safety and Sustainability Committee, and a member of the +Audit and Finance Committee and the Risk Management Committee. +Debra (Debbie) +Goodin +BEc FCA MAICD +Independent Director +Appointed 1 September +2015 +Debra (Debbie) Goodin brings to the Board experience in the infrastructure, +construction, engineering services and energy sectors as both a senior executive +and director. +Debbie has held senior finance, operations and corporate development roles +in both the private and public sectors, including as a chief financial officer and +chief operating officer. As an experienced non-executive director, Debbie has +local and global experience in organizational leadership, financial management, +operations and risk management and as chairman and audit and risk committee +chair of organisations in the infrastructure and service delivery sectors. +Debbie is currently Chairman of Atlas Arteria Limited and a Director of +Ansell Limited. She was formerly a Director of oOh!media Limited, Senex +Energy Limited, Ten Network Holdings Limited and Australia Pacific Airports +Corporation Limited. +Debbie is Chair of the Audit and Finance Committee and a member of the +Risk Management Committee and the Safety and Sustainability Committee. +62 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_65.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..789436b24ac96224445fb8405339df08aa3f6997 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_65.txt @@ -0,0 +1,54 @@ +Shirley In’t Veld +BCom LLB (Hons) +Independent Director +Appointed 19 March 2018 +Shirley In’t Veld brings to the Board over 30 years’ experience in the resources +and energy sectors, including as Managing Director of Verve Energy and more +than 10 years in senior roles at Alcoa Australia Limited, WMC Resources Limited, +Bond Corporation and BankWest. +Shirley is currently a Non-executive Director with Alumina Limited, Develop +Global Limited and Karora Resources Inc. She was formerly Deputy Chair of +CSIRO, a Non-executive Director of NBN Co Limited, Northern Star Resources +Limited, Perth Airport, DUET Group, Alcoa of Australia Limited and Asciano +Limited, where she was Chair of the Sustainability Committee. Shirley was also +formerly a member of the Federal Government’s Renewable Energy Target +Review Panel. +Shirley is a member of the People and Remuneration Committee, the Safety and +Sustainability Committee and the Nomination Committee. +Rhoda Phillippo +MSc Telecommunications +Business GAICD +Independent Director +Appointed 1 June 2020 +Rhoda Phillippo brings to the Board over 30 years of local and international +experience in the telecommunications, technology and energy sectors. +Rhoda has held senior executive roles in the telecommunications, IT and +energy sector in the UK, NZ and Australia including as Managing Director of +Lumo Energy. She also has significant experience in infrastructure mergers and +acquisitions in Australia and overseas. +Rhoda is currently Chairperson of Kinetic IT Pty Ltd, and a Non-executive +Director with Dexus Funds Management Ltd and Waveconn Group Holdings +Management Pty Ltd. She is also an advisor to the Board of Tally Group, an +energy billing solutions provider. +She is formerly a Non-executive Director of Pacific Hydro, Datacom Group +Limited, Vocus Group Ltd and LINQ, the Chairman of Snapper Services in +New Zealand and Deputy Chair of Kiwibank in New Zealand. +Rhoda is Chair of the Risk Management Committee, and a member of the +Audit and Finance Committee and the People and Remuneration Committee. +Peter Wasow +BCom GradDip +(Management) Fellow +(CPA Australia) +Independent Director +Appointed 19 March 2018 +Peter Wasow brings to the Board significant global experience in the energy +and resources sectors as both a senior executive and director. He retired as +Managing Director and Chief Executive Officer of Alumina Limited in 2017 and +previously held senior executive positions at Santos Limited and BHP. +Peter was formerly a Non-executive Director of Alcoa of Australia Limited, +AWA Brazil Limitada, AWAC LLC, Alumina Limited, Oz Minerals Limited and the +privately held GHD Group. +Peter is Chair of the People and Remuneration Committee and a member of the +Audit and Finance Committee and the Risk Management Committee. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +63 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_66.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..7abb4a2af7aa92d1380ac579971621814855c745 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_66.txt @@ -0,0 +1,72 @@ +APA Executive Leadership +Kynwynn Strong +BEng(Hons), BSc, MAppFin +Acting Chief Financial +Officer +Kynwynn Strong is APA Group’s acting Chief Financial Officer. +Kynwynn has over 20 years’ experience in financial markets, finance and strategy, +including holding senior roles for over a decade at a leading multinational +investment bank and in financial services companies. +Kynwynn joined APA in 2022 and is responsible for governance of APA's financial +systems, plans, processes and procedures, strategic programs, and leads the +group’s technology, risk and compliance functions. +Amanda Cheney +LLB (Hons) BArts FGIA +Group Executive Legal +and Governance +Amanda Cheney is responsible for APA Group’s legal and company secretariat +functions. +Amanda has over 20 years’ experience advising on major energy and +infrastructure projects in Australia and internationally. She joined APA more than +10 years ago and has played a pivotal role in driving transformation and growth in +a range of projects across the business. +Prior to joining APA, Amanda worked as a lawyer in private practice with leading +law firms in Australia and Japan. +Amanda is a Fellow of the Governance Institute of Australia. +Stuart Davis +BEng (Hons) BCom, MAICD +Acting Group Executive +Operations +Stuart Davis is responsible for the operations of APA Group’s infrastructure +portfolio. +Stuart has over 20 years’ experience in the power, electricity transmission and oil +and gas sectors, in senior leadership roles including in operations, engineering +and commercial both in Australia and overseas. +Stuart is responsible for the operations, maintenance, stay in business capital +projects and asset management of APA’s infrastructure portfolio that spans +electricity and gas transmission, renewable power generation, and gas +distribution networks. Stuart joined APA in 2017 and previously held the roles of +General Manager, Engineering and Planning, and General Manager, Operations +and Maintenance. +Ross Gersbach +BBus +Group Executive +Strategy and Corporate +Development +Ross Gersbach is responsible for APA Group’s strategy, market analytics, +corporate development, and regulation and policy functions. +Ross has over 25 years’ experience in senior commercial positions across a +range of energy-related sectors, covering infrastructure investments, mergers +and acquisitions, strategic development and the management of energy +infrastructure assets. +Ross joined APA in 2008 and has previously held several leadership positions, +including Chief Executive, Strategy and Corporate Development. +Kevin Lester +BEng MIEAust CPEng +EngExec GAICD +Group Executive +Infrastructure Delivery +Kevin Lester is responsible for APA Group’s Infrastructure Delivery division, +including the planning, approvals, engineering, procurement, construction and +commissioning of the company’s growth projects. +Kevin has over 35 years’ experience across the mining, resources and energy +sectors managing the delivery of major infrastructure projects. +Kevin joined APA over 10 years ago and is responsible for supporting APA's +$22 billion portfolio of assets, developing and delivering growth projects, and +managing APA’s Pathfinder program, which pursues innovation, technology and +new energy opportunities. +Kevin is a Director and a past President of the Australian Pipelines and Gas +Association. +64 +APA GROUP ANNUAL REPORT 2023 +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_67.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..af4f019b7ba245d973031e989a681da8ee9439ca --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_67.txt @@ -0,0 +1,58 @@ +Elizabeth (Liz) +McNamara +BEc (Hons), PCSB, GAICD +Group Executive +Sustainability and +Corporate Affairs +Liz Joined APA Group in November 2022 as Group Executive Sustainability and +Corporate Affairs. +Liz has 25 years’ experience in corporate affairs and leadership roles across +large public service and ASX-listed organisations, including in energy, mining, +investment banking and transport. +Liz joined APA in 2022 to lead the company’s Sustainability and Corporate Affairs +division and is responsible for the development and execution of APA’s climate +change and sustainability, government and industry relations, communications +and brand functions. +Darren Rogers +BEng MEng MBA GAICD +Group Executive +Energy Solutions +Darren Rogers is responsible for APA Group’s customer, business development +and commercial functions, along with the company’s work in future fuels, +including APA’s Pathfinder program. +Darren has almost 30 years’ experience across the energy sector working in +large and complex businesses, including in senior commercial, operations, +engineering and asset management roles. +Darren joined APA in 2017 and previously held the role of Group Executive, +Operations, responsible for the safe operations, maintenance and asset +management of the company’s infrastructure portfolio, including gas and +electricity transmission, renewable power generation, and gas distribution +networks. +Jane Thomas +BBus LLB (Hons) MPsychol +(org) GAICD Fellow AHRI +Group Executive +People, Safety and +Culture +Jane Thomas is responsible for APA Group’s health, safety, environment and +heritage systems, and people and culture functions. +Jane has 30 years’ experience across industries spanning energy, mining, +banking and finance, retail and manufacturing. +Jane joined APA in 2021 and has driven a strengthened focus on culture and +business transformation across the organisation. Prior to joining APA, Jane held +senior leadership roles in major ASX-listed organisations and multinational global +companies, leading people, health, safety, environment, community and legal +functions. +Vin Vassallo +Group Executive +Electricity Transmission +Vin Vassallo is responsible for APA Group’s Electricity Transmission division. +Vin has more than 30 years’ experience in leading the development and delivery +of infrastructure both in Australia and North America, including under Private +Public Partnerships, and managing business teams in complex environments. +Vin joined APA in 2022 and is responsible for the development of new business +in electricity transmission and distribution, with a focus on contracted and +regulated electricity transmission infrastructure. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +65 +The secret object #5 is a "towel". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_68.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..1fb7ab2104762276111791d671c3382daeb5a672 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_68.txt @@ -0,0 +1,84 @@ +Ethics and integrity +Key policies governing ethics and integrity at APA include: +• Code of Conduct: Our Code brings our purpose and +culture to life so we can make the right choices every +day. It is underpinned by our behaviours of being +courageous, accountable, nimble, collaborative and +impactful. It includes principles and business standards +that support safety, anti-harassment, anti-bullying, anti- +discrimination, human rights, community engagement, +environmental protection, anti-corruption and data +privacy and security, and prevent anti-competitive +behaviour. +• Inclusion and Diversity Policy (including Equal +Employment Opportunity): Our commitment and +strategy to building a diverse, equitable and truly +inclusive workplace where everyone belongs, and +feels valued, and respected to bring their best selves +to work. +• Anti-Bribery and Corruption Policy: Our commitment +to fostering business integrity including detecting and +preventing bribery, corruption and fraud. +• Whistleblower Policy: This policy creates a safe and +protected environment to escalate potential matters +of concern and suspected wrong doing for those +working with and for APA, including our employees, +contractors, suppliers and consultants. +• Respect@Work Procedure: Our commitment to +providing and fostering an inclusive and respectful +workplace with safe, fair and positive working +conditions. APA has zero tolerance for any form of +harmful behaviour including unlawful discrimination, +bullying, harassment, sexual harassment, sex-based +harassment, vilification, victimisation and other +inappropriate behaviour. +• Health, Safety, Environment and Heritage Policy: +Our aspiration to not just respect the past but protect +values for the future. We do this by protecting the +health, safety and wellbeing of our people; and the +environment, heritage and the communities in which +we operate. +These policies are supported by standards that set out +performance requirements, and detailed procedures. They +are periodically reviewed to ensure they remain relevant +and are made available on APA’s website and intranet. +Reports and incidents +APA’s Anti-Bribery and Corruption Policy prohibits bribery +and corruption in any form. The Policy mandates our anti- +bribery and corruption program and covers approvals for +gifts, sponsorships, donations and entertainment, and +third-party due diligence, and provides for monitoring +and reporting. +We maintain a Whistleblower Line through an externally +managed disclosure service as an independent, impartial +and confidential means of reporting potential incidents. +Through the Whistleblower Line and our internal reporting +channels, we identify and record material breaches of +the APA Code of Conduct and any actual or potential +incidents relating to fraud, bribery or corruption. +Awareness activities of the Whistleblower Policy and the +independent hotline continued through FY23 with the +number of reports decreasing in the reporting period. All +allegations are investigated in accordance with our Policy. +APA recorded zero incidents of fraud, bribery or corruption +in FY23 and received no fines for non-compliance with any +laws or regulations related to bribery or corruption. +There were 10 material breaches of the APA Code of +Conduct, relating to unacceptable behaviour, breach +of key policies and sexual harassment, in FY23. Each +incident was fully investigated, with performance +management actions put in place. The Risk Management +Board committee was fully informed of all incidents +and outcomes. +Political donations +In FY23, APA remained a member of the Federal Labor +Business Forum and the Liberal Party of Australia’s +Australian Business Network. These business-focused +political forums are part of the APA stakeholder +engagement program. +APA does not permit direct political donations to any +political party, representative or candidate. +Governance +(continued) +66 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_69.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfcf4c069c70d388635ad25adbf03bab2c437c04 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_69.txt @@ -0,0 +1,35 @@ +Membership of associations +APA participates in business and industry associations where there is an opportunity to provide business leadership +on national issues, insights and advocacy to public policy processes, and contribute to the enhancement of industry +standards through the exchange of best practice learning and development. +FY23 associations +• Australian Climate Leaders Coalition +• Australian Hydrogen Council +• Australian Pipeline and Gas Association +• Bell Bay Advanced Manufacturing Zone +• Business Council of Australia +• CEDA +• Chamber of Minerals and Energy of WA +• Champions of Change Coalition +• Clean Energy Council +• Committee for Gippsland +• Diversity Council of Australia +• Energy Charter +• Energy Club NT +• Energy Club of WA +• Energy Networks Australia +• Energy Users Association of Australia +• Gas Energy Australia +• Materials and Embodied Carbon Leaders’ Alliance +• MITEZ +• Regulatory Policy Institute +• Safer Together +• South Australian H2 Hub +• The Global Compact Network Australia +• Toowoomba Surat Business Enterprise +FY23 signatories +1. United Nations Global Compact +2. Energy Charter +3. Methane Guiding Principles +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +67 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_7.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..1eea827e2261749fb61369463d1eced01f9bd4b9 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_7.txt @@ -0,0 +1,42 @@ +Partnering with our +customers to achieve +their decarbonisation +objectives +$845m invested in +critical infrastructure +in FY23 +Delivered key projects to underpin +reliable energy supply for the +community +Operational excellence +enhancements +Established a new Integrated +Operations Centre, implemented +a new Field Mobility system, GRID +solution program underway +Invested in capability +Enhanced capability across +business development, +technology and business +resilience, regulatory, risk and +compliance, sustainability and +corporate affairs +Sustainability progress +achieved across priority +areas in FY23 +Set a methane target, developed +APA's inaugural RAP1, developed and +commenced the roll-out of our ‘Being +Heritage Aware’ training module +Refreshed our strategy +Customer focused across four +priority asset classes +Non-financial highlights +DELIVERED SOLUTIONS FOR +OUR CUSTOMERS, INVESTED IN +CAPABILITY AND PROGRESSED +OUR SUSTAINABILITY AGENDA +1 R econciliation Action Plan (RAP). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +5 +The secret shape is a "rectangle". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_70.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..3bd42aca7bae6f54bfe854c91344048bbe0f5fa6 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_70.txt @@ -0,0 +1,41 @@ +68 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Directors’ Report +The Directors of APA Group Limited (the Responsible Entity) submit their report of APA Infrastructure Trust (APA Infra) and +its controlled entities (together, APA or Consolidated Entity) for the financial year ended 30 June 2023. This report refers +to the consolidated results of APA and APA Investment Trust (APA Invest). +Directors +The names of the Directors of the Responsible Entity during the year and since year end are: +Current Directors First Appointed +Michael Fraser 1 September 2015 and appointed Chairman 27 October 2017 +Adam Watson 30 September 2022 appointed Acting Chief Executive Officer and appointed +permanent Chief Executive Officer and Managing Director 19 December 2022 +James Fazzino 21 February 2019 +Debra (Debbie) Goodin 1 September 2015 +Shirley In’t Veld 19 March 2018 +Rhoda Phillippo 1 June 2020 +Peter Wasow 19 March 2018 +Steven (Steve) Crane 1 January 2011. Retired 15 September 2022. +Robert (Rob) Wheals 6 July 2019 appointed Chief Executive Officer and Managing Director. Resigned 30 September 2022. +Nino Ficca has been appointed a Director, effective 1 September 2023. +The Company Secretaries of the Responsible Entity during the year were Amanda Cheney and Bronwyn Weir (who was +appointed 19 June 2023). +Executive Leadership changes: +• On 30 September 2022, Rob Wheals resigned as Chief Executive Officer (CEO) +• On 30 September 2022, Adam Watson was appointed as the Acting Chief Executive Officer (CEO) +• On 19 December 2022, Adam Watson was appointed as the Chief Executive Officer and Managing Director (CEO) +• On 20 August 2022, Julian Peck resigned as Group Executive Strategy and Commercial +• On 25 August 2022, Darren Rogers started secondment as the new Group Executive Strategy and Commercial +• On 17 October 2022, Darren Rogers was appointed as the new Group Executive Strategy and Commercial +• On 1 November 2022, Liz McNamara was appointed to the newly created role of Group Executive Sustainability and +Corporate Affairs +• On 2 November 2022, Vin Vassallo was appointed to the newly created role of Group Executive Electricity +Transmission Development +With the internal promotion of Adam Watson and Darren Rogers, the following two appointments have been made +commencing in FY24. +• Chief Financial Officer (CFO) – Garrick Rollason appointed as CFO effective October 2023, Kynwynn Strong to +remain as acting until Garrick’s commencement date +• Group Executive Operations – Petrea Bradford appointed as Group Executive of Operations effective 28 August 2023, +Stuart Davis to remain as acting until Petrea’s commencement date \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_71.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e2c955c99740ead82fc86c5e28fa959215a0fbe --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_71.txt @@ -0,0 +1,39 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +69 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Subsequent events +Alinta Energy Pilbara acquisition +On 23 August 2023, APA entered into a Share Sale Agreement with Alinta Power Cat Pty Ltd and Alinta Energy +Development Pty Ltd to acquire 100% of Alinta Energy Pilbara Holdings Pty Ltd and its subsidiaries and Alinta Energy +(Newman Storage) Pty Ltd (together referred to as Alinta Energy Pilbara). Alinta Energy Pilbara is an energy infrastructure +business underpinned by contracted operational assets (gas and solar power generation, gas transmission, battery +energy storage systems (BESS) and electricity transmission), together with an extensive development pipeline of projects +(wind, solar, gas reciprocating engines, BESS, and associated electricity transmission), located in Western Australia’s +Pilbara region. +The enterprise value is $1,722 million excluding stamp duty and other transaction costs (currently estimated to be $86 +million), and will be subject to post-completion adjustments for working capital, net debt and capex as at completion of +the acquisition. Completion of the acquisition remains subject to meeting certain conditions precedent and is expected to +occur in the fourth quarter of calendar year 2023. +Capital raise +APA also announced its plans to raise $675 million through a fully underwritten pro-rata institutional placement to partly +fund the acquisition. The balance of the purchase price will be funded by new debt facilities established in connection +with the acquisition of $993 million. In addition, a non-underwritten Security Purchase Plan will be undertaken for eligible +securityholders to raise $75 million. +Final distribution declaration +On 23 August 2023, the Directors declared a final distribution of 29.0 cents per security ($342 million) for APA Group, +an increase of 3.6%, or 1.0 cent per security over the previous corresponding period (30 June 2022: 28.0 cents). This +comprises a distribution of 21.66 cents per security from APA Infrastructure Trust and a distribution of 7.34 cents per +security from APA Investment Trust. +The APA Infrastructure Trust distribution represents 6.64 cents per security unfranked profit distribution and 15.02 cents +per security capital distribution. The APA Investment Trust distribution represents a 1.00 cent per security unfranked profit +distribution and 6.34 cents capital distribution. The distribution is expected to be paid on 13 September 2023. +Other than noted above and as disclosed elsewhere in this report, in the interval between 30 June 2023 and the date of +this report, no matter or circumstance has significantly affected, or may significantly affect, the Group’s operations, the +results of those operations, or the Group’s state of affairs, in future financial years. +Principal activities +Information on the principal activities of the Group and its business strategies and prospects is set out on page 51 of the +Annual Report and forms part of this Directors’ Report. +Operating Financial Review +Information on the operations and financial position of the Group and its business strategies and prospects is set out +on pages 9 to 58 of the Annual Report and forms part of this Directors’ Report. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_72.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6e72805684ffcf7774df9ca6bd68acef2bd513e --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_72.txt @@ -0,0 +1,76 @@ +70 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Directors +Information on Directors and Company Secretary +For information relating to the qualifications and experience of Directors and Company Secretary refer to pages 62 to 64. +Directorships of other listed companies +Directorships of other listed companies held by Directors at any time in the three years immediately before the end of the +financial year: +Name Company Period of directorship +Michael Fraser Aurizon Holdings Limited +Orora Limited +February 2016 to February 2022 +Since April 2022 +Adam Watson – – +James Fazzino Tassal Group Limited May 2020 to November 2022 +Debra Goodin Senex Energy Limited +Atlas Arteria Limited +Ansell Limited +May 2014 to November 2020 +Since September 2017, Chair since November 2020 +Since December 2022 +Shirley In’t Veld Northern Star Resources Limited +Alumina Limited +Develop Global Limited +(formerly Venturex Resources Limited) +Karora Resources Inc +September 2016 to June 2021 +Since August 2020 + +Since July 2021 +Since December 2021 +Rhoda Phillippo Dexus Funds Management Limited Since February 2023 +Peter Wasow Oz Minerals Limited November 2017 to May 2023 +Directors Meetings +During year, the Board reviewed the roles and responsibilities of the Board and its Committees and made the following +changes: +• The Health, Safety, Environment and Heritage Committee was renamed the Safety and Sustainability Committee +• The Audit and Risk Committee was divided into the Audit and Finance Committee and the Risk Management Committee +Further information on the Board and Committees can be found in APA’s Corporate Governance Statement which is +available on our website. +During the year, 11 Board meetings, three Risk Management Committee meetings, three Audit and Finance Committee +meetings, five People and Remuneration Committee meetings, four Safety and Sustainability Committee meetings, and four +Nomination Committee meetings were held. The Committee previously known as the Audit and Risk Committee met once. + +Board +People and +Remuneration + +Audit & Finance +Risk +Management +Audit and Risk +Management1 +Safety and +Sustainability + +Nomination +Directors A B A B A B A B A B A B A B +Michael Fraser 11 11 – – – – – – 1 1 4 4 4 4 +Adam Watson2 5 5 – – – – – – – – – – – – +Robert Wheals3 2 2 – – – – – – – – – – – – +Steven Crane 4 2 2 1 1 – – – – 1 1 – – 1 1 +James Fazzino 11 11 – – 3 3 3 3 1 1 4 4 – – +Debra Goodin 11 11 – – 3 3 3 3 1 1 4 3 4 3 +Shirley In’t Veld 11 11 5 5 – – – – – – 4 4 3 3 +Rhoda Phillippo 11 11 5 5 3 3 3 3 – – – – – – +Peter Wasow 11 10 5 5 3 3 3 3 1 1 – – – – +1 The Audit and Risk Management Committee was dissolved on 14 October 2022 and replaced by the Audit and Finance Committee and  +the Risk Management Committee. +2 Adam Watson appointed as a Director on 19 December 2022. +3 Robert Wheals resigned as a Director on 30 September 2022. +4 Steven Crane retired as a Director on 15 September 2022. +A Number of meetings held during the time the Director held office or was a member of the committee during the financial year. +B Number of meetings attended. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_73.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..e62722eeffa2099fc693ff4aa16fb95d3eaf5e89 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_73.txt @@ -0,0 +1,52 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +71 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Directors’ security holdings +The aggregate number of APA securities held directly, indirectly or beneficially by Directors or their related entities +at 30 June 2023 is 282,388. +Directors’ relevant interests in APA securities + +Directors +Fully paid securities at +1 July 2022 + +Securities acquired + +Securities disposed +Fully paid securities at +30 June 2023 +Michael Fraser 102,942 – – 102,942 +Adam Watson1 55,556 – – 55,556 +Debra Goodin 24,179 – – 24,179 +James Fazzino 30,751 – – 30,751 +Shirley In’t Veld 25,000 – – 25,000 +Peter Wasow 26,000 – – 26,000 +Rhoda Phillippo 10,000 7,960 – 17,960 +Robert Wheals2 108,721 52,213 – 160,934 +Steven Crane2 30,000 – – 30,000 +1 Adam Watson was appointed as a Director effective 19 December 2022 at which time he held 55,556 securities. +2 Balance as at date of ceasing to be a Director. +As at 30 June 2023, Adam Watson held 397,255 performance rights granted under APA Group’s long-term incentive +plan. Each performance right is a right to receive one ordinary stapled security in APA subject to satisfaction of certain +performance hurdles. Further information can be found in section 8 of APA’s Remuneration Report. +The Directors hold no other rights or options over APA securities. There are no contracts to which a Director is a party +or under which the Director is entitled to a benefit and that confer a right to call for or deliver APA securities. +Options granted +No options over unissued APA securities were granted during or since the end of the financial year. No unissued APA +securities were under option at the date of this report. No APA securities were issued during or since the end of the +financial year as a result of an option being exercised over unissued APA securities. +Indemnification of Officers +During the year, the Responsible Entity paid a premium on a contract insuring the Directors and Officers of any APA +Group entity against certain liability incurred in performing those roles. The contract of insurance prohibits disclosure +of the specific nature of the liability and the amount of the premium. +APA Group Limited, in its own capacity and as responsible entity of APA Infra and APA Invest, indemnifies each Director +and Company Secretary, and certain other executives, former executives and officers of the Responsible Entity or any +APA Group entity, under a range of deed polls and indemnity agreements, which have been in place since 1 July 2000. +The indemnity operates to the full extent allowed by law but only to the extent not covered by insurance and is on terms +the Board considers usual for arrangements of this type. +Under its constitution, APA Group Limited (in its personal capacity) indemnifies each person who is or has been +a Director, Company Secretary or Executive Officer of that Company. +The Responsible Entity has not otherwise, during or since the end of the financial year, indemnified or agreed to +indemnify an officer or external auditor of the Responsible Entity or any APA Group entity against a liability incurred +by such an officer or auditor. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_74.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..35cbbe1c20a1054f2d84e4c02e0a3a801d8c2685 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_74.txt @@ -0,0 +1,38 @@ +72 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Remuneration Report +The Remuneration Report is set out on pages 74 to 91 of the Annual Report and forms part of this Directors’ Report. +Auditors +Auditor’s independence +A copy of the independence declaration of the auditor, Deloitte Touche Tohmatsu, as required under section 307C of the +Corporations Act 2001, is included at page 161. +Non-audit services +A description of any non-audit services provided during the financial year by the Auditor and the amounts paid or payable +to the Auditor for these services are set out in note 29 to the financial statements. +The Board has considered the non-audit services provided by the Auditor. In accordance with advice provided by the +Audit and Finance Committee (the Committee), the Board is satisfied that this provision is compatible with the general +standard of independence for auditors imposed by the Corporations Act 2001 and does not compromise the auditor +independence requirements of the Act. +The Board concluded that the non-audit services provided did not compromise the Auditor’s independence because: +• All non-audit services were subject to APA’s corporate governance procedures with respect to such matters and have +been reviewed by the Committee to ensure they do not impact on the Auditor’s impartiality and objectivity. +• The non-audit services provided did not undermine the general principles relating to auditor independence as they +did not involve reviewing or auditing the Auditor’s own work, acting in a management or decision-making capacity for +APA, acting as an advocate for APA or jointly sharing risks and rewards. +• The Auditor has provided a letter to the Committee with respect to the Auditor’s independence and the Auditor’s +independence declaration referred to above. +Information required for registered schemes +Fees paid to the Responsible Entity and its associates (including Directors and Secretaries of the Responsible Entity, +related bodies corporate and Directors and Secretaries of related bodies corporate) out of APA scheme property during +the financial year are disclosed in note 28 to the financial statements. +Except as disclosed in this report, neither the Responsible Entity nor any of its associates holds any APA securities. +The number of APA securities issued during the financial year, and the number of APA securities on issue at the end +of the financial year, are disclosed in note 22 to the financial statements. +The value of APA’s assets at the end of the financial year is disclosed in the balance sheet in total assets. The basis +of valuation is disclosed in the notes to the financial statements. +Rounding of amounts +APA is an entity of the kind referred to in ASIC Corporations Instrument 2016/191. In accordance with that Class Order, +amounts in the Directors’ report and the financial report are rounded to the nearest million dollars, unless otherwise +indicated. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_75.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ff90f5b78c88bebc01400ffc90320f6399725f3 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_75.txt @@ -0,0 +1,12 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +73 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Authorisation and signatures +The Directors’ Report is signed in accordance with a resolution of the Directors of the Responsible Entity made pursuant +to section 298(2) of the Corporations Act 2001. +On behalf of the Directors + +Michael Fraser Adam Watson +Chairman CEO and Managing Director +Sydney, 23 August 2023 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_76.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..50e4a3d97008f891957fb677d23bbe118e4430b6 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_76.txt @@ -0,0 +1,38 @@ +74 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Remuneration Report +Letter from the Chair of the People and Remuneration Committee +I am pleased to present the Remuneration Report of APA Group (APA or the Company) for financial +year 2023. +APA’s position as a market leader in the Australian energy infrastructure sector is reflected in our +solid FY23 company performance with underlying EBITDA increasing by 2% to $1,725 million. +Key Management Personnel (KMP) changes in FY23 +In FY23 we appointed Adam Watson to the CEO/MD role and Darren Rogers was appointed to the +role of Group Executive (GE) Strategy & Commercial. +Ross Gersbach moved into a different leadership team role as the GE Commercial Development, +which is not considered to be a KMP role. +Remuneration outcomes for FY23 +Reflecting strong financial and non-financial performance, the Short-Term Incentive (STI) outcome +was 78.9% of maximum for the CEO/MD and 76.3% of maximum for the GE Strategy & Commercial. +The FY21 Long-Term Incentive (LTI) was tested at the end of FY23. The relative Total Shareholder +Return (TSR) metric was not met, however the return on capital (ROC) hurdle was met. This resulted +in 50% of LTI becoming available to vest according to APA’s LTI vesting schedule. +Remuneration changes for FY23 +The sole change made to the remuneration framework in FY23 was the introduction of climate- +related metrics for 10% of the STI scorecard, set in-line with meeting the objectives of our Climate +Transition Plan. +Upon promotion to their new roles Adam Watson and Darren Rogers’ remuneration was increased +to reflect their new responsibilities and was made with reference to peer market benchmarking data. +FY24 and beyond +A review was undertaken in FY23 to ensure the executive remuneration framework remains +competitive and fit for purpose. As a result of this review the STI maximum opportunity for +KMP (excluding the CEO/MD) will increase from 60% of fixed pay to 75% of fixed pay. Even after +this change, APA’s remuneration mix maintains a significant weighting to long-term performance, +while making the short term opportunity more competitive relative to market. +I hope you find this Remuneration Report informative. We look forward to receiving your support at +the 2023 AGM. +Peter Wasow +People and Remuneration Committee Chair +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_77.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e8e2a0f42be9bbf4aaecb80e45df23e531d3d8d --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_77.txt @@ -0,0 +1,54 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +75 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Contents +1. Individuals covered by the Remuneration Report 75 +2. Executive summary 76 +3. FY23 performance and executive incentive outcomes 78 +4. Executive remuneration policy and framework 81 +5. Executive KMP contract and severance arrangements 84 +6. Non-executive Director remuneration 85 +7. Remuneration governance 86 +8. Statutory tables 87 +1. Individuals covered by the Remuneration Report +The Remuneration Report (the Report) for APA for FY23 has been prepared in accordance with Section 300A of the +Corporations Act 2001. The information provided in this Report has been audited, unless indicated otherwise, and forms +part of the Directors’ Report. +This Report includes the following KMP: +Name Role Term As KMP +Non-Executive Directors (NEDS) +Michael Fraser Chair Full year +James Fazzino Director Full year +Debra (Debbie) Goodin Director Full year +Shirley In’t Veld Director Full year +Rhoda Phillippo Director Full year +Peter Wasow Director Full year +Former NEDS +Steven (Steve) Crane Director Part year until 15 September 2022 +Executive KMP +Adam Watson Chief Executive Officer and Managing +Director (CEO/MD) +Full year +(CFO until 30 September 2022) +(Acting CEO until 19 December 2022) +Darren Rogers GE Strategy and Commercial Full year +(GE Operations until 24 August 2022) +(Acting GE Strategy & Commercial until +16 October 2022) +Former Executive KMP +Robert Wheals Former CEO/MD Part year until 30 September 2022 +when ceased employment. +Ross Gersbach1 Former President North American +Development +Part year KMP until 22 August 2022 +Julian Peck Former GE Strategy and Commercial Part year KMP until 25 August 2022, and +ceased employment 28 October 2022 +The Board has considered whether the current Acting Chief Financial Officer (CFO) and Acting GE Operations met the +definition of KMP. Both roles have been excluded from disclosure in the Remuneration Report on the basis that they lack the +authority and responsibility for planning, directing and controlling the activities of APA Group in their current acting roles. +Nino Ficca has been appointed as an NED commencing 1 September 2023, Petrea Bradford has been appointed as the +GE Operations commencing 28 August 2023, and Garrick Rollason has been appointed as CFO and will be commencing +in this role on 16 October 2023. +1 Ross Gersbach’s role during the financial year as GE Commercial Development is not deemed to be a KMP role, hence only his remuneration until +22 August 2022 (the date he ceased the role of President, North American Development) has been shown throughout the Remuneration Report. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_78.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..72ecdc18c86c37a799fadd63dcfed96c7288bd65 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_78.txt @@ -0,0 +1,116 @@ +76 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +2. Executive summary +2.1 Remuneration strategy +The Board recognises the important role remuneration plays in supporting, implementing and achieving APA’s +operational strategy over both the short and long-term. The key principles of the remuneration policy and a summary of +the executive remuneration framework are outlined below. +MARKET +COMPETITIVE +Provide competitive +rewards to attract, +motivate and retain highly +skilled executives. +BUSINESS +STRATEGY +Drive delivery of APA’s +growth strategy, while +maintaining its financial +strength. +BEHAVIOURS +Drive delivery of Health, +Safety, Environment +and Heritage (HSEH) +strategy, caring for our +people, communities, +the environment and our +assets, and demonstrating +the APA behaviours. +SECURITY HOLDER +ALIGNMENT +Ensure executive +performance and +behaviours align with +the interests of security +holders. +2.2 Executive remuneration snapshot +Fixed pay STI LTI +Purpose To be market competitive to attract, +motivate and retain individuals. +To reward executives +for their contribution to +APA's annual budget and +performance targets, which +will enable the achievement +of long-term goals. +To focus Executive KMP on +the achievement of APA’s +long-term business strategy +and to create alignment with +the experience of security +holders. +FY23 approach Executive KMP roles are benchmarked +against external positions in companies +with a comparable market capitalisation, +operate in a similar industry and/or are +key competitors. +Subject to meeting +the EBITDA gateway, +performance is assessed +against a scorecard of +financial and non-financial +measures. +Each Executive KMP +member has a unique +scorecard comprising Group +measures and role specific +key performance indicators +(KPI’s), to reflect Group and +individual accountabilities. +Performance Rights are +assessed against relative +TSR (50%) and ROC +(50%) over a three year +performance period, with +vested Performance Rights +converting to securities in +equal tranches over Y ears 3, +4 and 5. +FY23 +remuneration +outcomes +Following the appointment of a new +CEO/MD, Adam Watson’s fixed pay was +set at $1.6m. +Following Darren Rogers’ appointment +to the GE Strategy & Commercial role, +his fixed pay was set at $920,000, to +recognise the increase in responsibilities +and reflective of comparator peer +remuneration levels. +As the EBITDA gateway was +met, the STI pool was funded +and outcomes were: +• CEO/MD: +78.9% of maximum. +• GE, Strategy +& Commercial: +76.3% of maximum. +Section 3.2 provides details +on scorecard outcomes for +the CEO/MD. +The FY21 LTI award was +tested on 30 June 2023 +resulting in an outcome of +50%. 1/3 of Performance +Rights will vest based on the +assessed outcome in August +2023, with the remaining +2/3 of Performance Rights +vesting in equal tranches in +2024 and 2025. +Section 3.5 provides details +of results against the relative +TSR and ROC measures. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_79.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..e226e8ecf75f2ffadc40add536cc27f84f2a53a4 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_79.txt @@ -0,0 +1,55 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +77 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Fixed pay STI LTI +Minimum +security holding +requirement +APA’s minimum security holding requirement requires our Executive KMP to continue to hold a material +security holding in APA Group. These requirements are: +• CEO/MD: 100% of fixed pay; and +• Other Executive KMP: 50% of fixed pay. +Where the minimum security holding requirement has not been met, 1/3 of the STI payable will be +deferred into Restricted Securities to help build individual security holding levels. +Executive KMP participants have five years from the date of appointment to their position to accumulate +the required securities. +Reward time +horizons +FIXED +PAYSTILTI +FY23 +Base salary, +superannuation +and other benefits +Assessed against a +scorecard of Group +and individual KPIs +subject to meeting +an EBITDA gateway +Performance Rights tested at the end of 3-year performance +period against Relative TSR (50%) and Return on Capital (50%) +Cash (2/3) +1/3 vests +CEO: 90% of fixed pay +(maximum) +Other executive KMP: +60% of fixed pay +(maximum) +CEO: 150% of fixed pay +Other executive KMP: +125% of fixed pay1/3 vests +1/3 vests +STI Restricted Securities (1/3) 1 +FY24 FY25 FY26 FY27 +Pay Mix The pay mix graph below displays the proportion of fixed vs variable remuneration (STI and LTI) at the +maximum pay mix. +The LTI component has been calculated at face value assuming 100% vesting. +APA Executive KMP Maximum Pay Mix +CEO/MD (FY23) +Other Executive KMP (FY23) +/uni25CF FIXED PAY /uni25CF MAX STI /uni25CF LTI +0% 20% 40% 60% 80% 100% +29.4% 26.5% 44.1% +35.1% 21.1% 43.9% +1 Release of Restricted Securities is subject to whether the minimum security holding requirement is met. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_8.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6c957c2c4ac7435d67bb2bbc8815b4d91047d95 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_8.txt @@ -0,0 +1,45 @@ +Financial results +30 June 2023 +$m +30 June 2022 +$m +Changes +%1 +Revenue 2,913 2,732 6.6% +Total revenue excluding pass-through 2 2,401 2,236 7.4% +Segment revenue excluding pass-through 3 2,353 2,238 5.1% +Underlying EBITDA 4 1,725 1,692 2.0% +Total reported EBITDA5 1,686 1,630 3.4% +Statutory profit after tax including significant items 287 260 10.4% +Profit after tax excluding significant items 287 240 19.6% +Free cash flow6 1,070 1,081 (1.0%) +Financial position +Total assets 15,866 15,836 0.2% +Total drawn debt7 11,240 11,146 0.8% +Total equity 1,910 2,629 (27.3%) +Financial ratios +Free cash flow per security (cents) 90.7 91.6 (1.0%) +Earnings per security (cents) including significant items 24.3 22.1 10.0% +Earnings per security (cents) excluding significant items 24.3 20.4 19.1% +Distribution per security (cents) 55.0 53.0 3.8% +Distribution payout ratio (%) 8 60.6 57.9 4.7% +FFO/Net Debt (%)9 10.6 11.1 (7.8%) +FFO/Interest (times) 3.3x 3.6x (8.3%) +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Statutory revenue excluding pass-through. Pass-through revenue is offset by pass-through expenses within EBITDA. Any management fee earned for the provision of these +services is recognised within total revenue. +3 Segment revenue excludes: pass-through revenue; Wallumbilla Gas Pipeline hedge accounting unwind; income on Basslink debt investment; Basslink AEMC market +compensation and other interest income. +4 Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) excludes recurring items arising from other activities, transactions that are not directly +attributable to the performance of APA Group’s business operations and significant items. +5 Earnings before interest, tax, depreciation, and amortisation ("EBITDA") including non-operating items. +6 Free cash flow is Operating Cash Flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex includes operational assets’ +lifecycle replacement costs and technology lifecycle costs. +7 APA’s ability to repay debt at relevant due dates of the drawn facilities. This amount represents the actual debt outstanding in Australian Dollars at period end. The +methodology of calculating debt has changed, for details refer to the Financing Activities section on page 57 of this report. +8 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow. +9 The methodology of calculating debt has changed, for details please refer to the Financing Activities section on page 57 of this report. +FY23 Summary +(continued) +6 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_80.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..16b3e1c2fffd74d04c88c1e88e3d446ca438faa7 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_80.txt @@ -0,0 +1,46 @@ +78 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +3. FY23 performance and executive incentive outcomes +3.1 Company performance +The table below summarises APA’s financial performance for the past 5 years. +Measure FY23 FY22 FY211 FY201 FY191,4 +Underlying EBITDA ($m) 2 1,725 1,692 1,629 1,650 1,570 +Profit after tax including significant items ($m) 3 287 260 1 309 282 +Profit after tax excluding significant items ($m) 287 240 279 309 282 +Free cash flow per security (cents) 90.7 91.6 76.4 81.1 75.7 +Distribution per security (cents) 55.0 53.0 51.0 50.0 47.0 +Closing security price at 30 June ($) 9.69 11.27 8.90 11.13 10.80 +CEO/MD STI outcome (% of maximum) 78.9 66.1 66.4 37.0 73.1 +Since listing in 2000, APA has paid an interim and full year distribution every year. Our distribution per security +of 55.0 cents for FY23 represents a 3.8% increase on FY22. +APA 10-year TSR and distributions +0 +10 +20 +30 +40 +50 +60 +2019 2020 2021 20222015 20162013 2014 2017 2018 2023 +0 +50 +100 +150 +200 +250 +300 % TSR Distributions (cents per security) +Distributions S&P/ASX100 S&P/ASX200 UtilitiesAPA +Source: Eikon’s Refinitv platform +3.2 FY23 STI scorecard outcomes – CEO/MD +The Board reviewed the CEO/MD’s performance considering his performance against the KPI’s in his STI scorecard. +The Board assesses business performance against the STI scorecard and the CEO/MD’s individual contribution to these +results. As part of the assessment the Board considers overall the behaviours demonstrated in delivering against the +scorecard and any other performance throughout the year (not already reflected in the STI scorecard). +1 Restated for the impact of the provision for payroll review. +2 Statutory EBITDA excluding non-recurring items arising from other activities, transactions that are not directly attributable to the performance +of APA Group’s business operations and significant items. The Board considers this to best reflect the core earnings of APA. Refer to note 3 of the +Financial Statements. +3 Includes an impairment gain on the Orbost Gas Processing Plant in FY22 and a once-off interest charge associated with bond note redemption in FY21. +4 The opening price of APA securities on 2 July 2018 was $9.82. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_81.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..f34aefc506028d46b200c7e3573834ec97d3f5fa --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_81.txt @@ -0,0 +1,86 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +79 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Based on the Board’s assessment, it deemed the scorecard outcome to be a holistic reflection of the CEO/MD’s FY23 +performance and there was no exercise of discretion over the final outcome. +Scorecard measures and rationale FY23 outcome Further detail +Financial – Underlying EBITDA (12.5% weighting) +Underlying EBITDA is our +key financial metric to assess +the financial health of our +business. We aim to maintain +financial strength through solid +underlying EBITDA. +THRESHOLD TARGET MAXIMUM Underlying EBITDA outcome was $1,725 million +against a target of $1,666 million and stretch +of $1,691 million. +The Board considered adjusting the underlying +EBITDA result for an estimate of the benefit from +CPI exceeding our budget estimates. This would also +have resulted in achievement at maximum. +Financial – Free Cash Flow (12.5% weighting) +Strong free cash flow ensures +our business’ profitability by +considering changes in working +capital, interest and tax. +THRESHOLD TARGET MAXIMUM Free cash flow was $1,070 million against a target of +$981 million and stretch of $1,021 million. +The Board considered adjusting the Free Cash +Flow result for an estimate of the benefit from CPI +exceeding our budget estimates. This also would have +resulted in an above stretch result +Financial – Organic Revenue Growth from deploying CAPEX (10% weighting) +Assesses our ability to grow +revenue streams organically. +THRESHOLD TARGET MAXIMUM Actual outcome of $293.5 million against a target of +$325 million and stretch of $475 million. +Financial – Execution of growth strategy (25% weighting) +Assesses our ability to identify +and delivery on growth +opportunities. +THRESHOLD TARGET MAXIMUM Basslink was successfully acquired and the integration +was delivered to plan and budget; Electricity +Transmission capability was developed strengthening +our offering for future Renewable Energy Zone +opportunities; and key business transformation +projects (e.g. ERP implementation) are all on track. +Non-financial – Deliver Climate Transition Plan Objectives (10% weighting) +Ensure progress against +our Climate Transition Plan +objectives. +THRESHOLD TARGET MAXIMUM This objective measured APA performance against the +priorities set for FY23 in the Climate Transition Plan. +The priorities set were delivered at the target level of +expectation. +Further information on APA’s progress against the +Climate Transition Plan will be set out in our Climate +Report which will be released in September 2023. +Non-financial – Health, Safety, Environment and Heritage (10% weighting) +To improve safety, wellbeing +and environmental performance +and safety culture through +delivery of the HSEH Strategy +so that our employees return +home safely each day. +THRESHOLD TARGET MAXIMUM Safety performance against our scorecard (including +HSEH Interactions, HSEH Strategy delivery, TRIFR, +Actual Serious Harm Incidents) was between +threshold and target. +Non-financial – Inclusion & Diversity (10% weighting) +Leverage diversity and build an +inclusive culture so all our people +feel safe, valued and trusted to +do their best every day. +THRESHOLD TARGET MAXIMUM Strong performance in meeting or exceeding our +targets for improved female representation in senior +leadership, extended leadership and our talent +pipeline offset by total female representation falling +short of our target for FY23. +Non-financial - Stakeholder Engagement (10% weighting) +Maintain APA’s reputation +across internal and external +stakeholders. +THRESHOLD TARGET MAXIMUM Reputation measured by Reptrack improved year on +year and exceeded our target. +Scorecard outcome 78.9% of Maximum \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_82.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..1daf425ecbb864302eb24e4ccbce4fc413667be0 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_82.txt @@ -0,0 +1,52 @@ +80 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +3.3 FY23 STI performance scorecard outcomes – Other Executive KMP +The GE Strategy & Commercial had KPIs aligned to the CEO/MD, with additional focus on economic and regulatory +engagement, and on customer satisfaction. The STI achieved was 76.3% of Maximum. +3.4 STI outcomes +The table below provides an overview of the STI outcomes for FY23 for current Executive KMP, delivered in a mix of cash +and restricted securities. +STI earned STI forfeited +Executive KMP Cash +Restricted +securities +(deferred) Total +% of +maximum Foregone +% of +maximum +A Watson1 $765,377 $201,359 $966,736 78.9% $258,064 21.1% +D Rogers $415,576 – $415,576 76.3% $129,323 23.7% +3.5 LTI outcomes +Equity LTI plan +The FY21 LTI plan was tested as at 30 June 2023. +The relative TSR was not met, whilst the ROC hurdle was met, resulting in an LTI outcome of 50% achieved. +Performance +measure Weighting Threshold Maximum Actual +Vesting +outcome +Amount +forfeited +Relative TSR 50% 50 th percentile 82.5 th percentile 23.6% Nil 100% +ROC 50% 11.6% 11.9% 12.1% 100% Nil +Final Outcome 50% 50% +The original ROC targets set were 11.1% (threshold) and 11.4% (maximum). This was based on an assumption that a +M&A transaction would be executed. Given the transaction did not occur and another transaction (Basslink) did occur, +the Board exercised its discretion and adjusted the targets. The ROC targets were increased to 11.6% (threshold) and +11.9% (maximum). +Performance Rights that do not vest are forfeited automatically following performance assessment. Vested Performance +Rights will convert to APA securities as follows: +• 1/3 in August 2023, +• 1/3 in August 2024, and +• 1/3 in August 2025. +For further details of how the Board assess performance for the purposes of the LTI, please see section 4.3. +Legacy cash LTI plan +Under the legacy LTI plan arrangements (cash settled), the awards vest in 3 equal tranches over three years following +performance assessment. The final awards under the legacy LTI plan were tested and made in FY20. Vesting of the final +third tranche of the legacy cash awards in FY23 are summarised in section 3.6 below and is due to be paid in September +2023. Further details on the Legacy cash LTI plan can be found in the 2020 Annual Report. +1 The CEO/MD’s STI outcome is based on the STI opportunities applicable through the three distinct periods as CFO, acting CEO/MD and CEO/MD through +the year and applying the total scorecard outcome of 78.9% of maximum. In the role of CFO the minimum security holding requirement was met and as +such no STI deferral was applied. The portion applicable to the permanent period as CEO/MD has had 1/3 deferral applied. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_83.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..c71f6941957765b691aca4510ccb5142cda4b0fc --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_83.txt @@ -0,0 +1,68 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +81 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +3.6 FY23 actual remuneration +The actual remuneration detailed in the table below differs from the statutory remuneration disclosed in section 8 which +is subject to requirements under the Accounting Standards and Corporations Act. +The following is included in the table: +• Fixed pay and Cash STI – as received which relates to FY23. +• STI deferred equity – awards from prior years which have vested in FY23. +• Legacy cash LTI plan – awards vested from the legacy cash LTI plan vesting at the end of FY23 and payable in +September 2023. +• LTI equity released – FY20 LTI (Tranche 2) and FY21 LTI (Tranche 1) that have met performance and time restrictions as +at 30 June 2023 and will vest in August 2023. +Given this is not a statutory disclosure, we have only included Executive KMP as at 30 June 2023. +Executive +KMP +Fixed Pay1 +$ +Cash STI2 +$ +STI Deferred +Equity Released3 +$ +Legacy Cash LTI +Vested4 +$ +LTI Equity +Vested & +Released5 +$ +Total +$ +A Watson 1,466,647 765,377 – N/A 177,515 2,409,539 +D Rogers 908,413 415,576 126,615 78,919 242,064 1,771,587 +4. Executive remuneration policy and framework +APA’s remuneration objective is to reward executives at the median of observed total remuneration for selected +comparable companies when performance is at target and up to the 75th percentile for above target performance. +4.1 Fixed pay +Fixed pay includes base salary and any salary sacrifice items (including any relevant fringe benefits tax) such as car +parking, motor vehicles and superannuation. The level of fixed pay is based on multiple factors, including the skills and +experience of the individual, external market positioning and the size and complexity of the role. +4.2 STI plan +In addition to the information covered in section 2, further detail on the operation of the FY23 STI plan is provided below: +Feature Description +Opportunity Role STI target (% of fixed pay) STI maximum (% of fixed pay) +CEO/MD 60% 90% +Other Executive KMP 40% 60% +Performance +period +One year. +Delivery Cash (2/3) paid at the end of FY23 (in September 2023) and deferred equity (1/3) delivered as +Restricted Securities which vest after 2-years (in September 2025) where the minimum security holding +requirement is not met. +Allocation +methodology of +deferred STI +Restricted Securities are allocated at face value using a volume weighted average price (VWAP) of +the 30 trading days ending 7 working days before the People & Remuneration Committee meeting to +consider APA’s full year financial results. +1 Fixed pay is inclusive of cash salary and any salary sacrifice items (including any relevant fringe benefits tax) such as car parking and superannuation. +2 Cash STI refers to the cash portion of the STI relating to performance in FY23. Payment will be made in September 2023. +3 Awards from prior years which have vested in the year. Valued based on the average price of securities on the date of purchase. +4 Refers to cash amount to be paid in September 2023 under the legacy LTI plan, based on the VWAP of $9.7939 (as determined by the plan rules) and +number of reference units that vested in August 2023. +5 Relates to rights vesting and converting to securities for Tranche 2 of the FY20 Performance Rights plan and Tranche 1 of FY21 Performance Rights plan +which vested in August 2023. Valued based on a VWAP of $10.0076 (being the 20 trading days leading up to 30 June 2023). +The secret object #3 is a "knife". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_84.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f73ee4043dabfd8bcd3e9dad27826dac2715882 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_84.txt @@ -0,0 +1,47 @@ +82 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +4.3 LTI plan +In addition to the information covered in section 2, further detail on the operation of the FY23 LTI plan is provided below: +Feature Description +Opportunity Role LTI maximum (% of fixed pay) +CEO/MD 150% +Other Executive KMP 125% +Performance +period +Three years, commencing on 1 July 2022. +Grant date 16 December 2022 +Delivery Performance Rights are tested at the end of year three. Vested Performance Rights convert to securities +and are released from restrictions in equal tranches at the end of year three, four and five. Performance +Rights which do not vest are forfeited automatically unless the Board determines otherwise. +Allocation +methodology +Performance Rights are allocated at face value using a VWAP of the 20 trading days prior to the start +of the performance period (1 July 2022). No amount is payable on the grant or vesting of Performance +Rights. +Performance +measures +Relative TSR (50%) +Relative TSR measures the Group’s TSR over a three-year period against a group of ASX 100 bespoke +peers in the infrastructure and gas sectors. Relative TSR has been selected to align executives with the +experience of security holders and to ensure executives are only rewarded for outperformance against +our peers +The peer group comprises of the following companies: +AGL Energy Transurban Mirvac Group +Atlas Arteria Group Aurizon Holdings Scentre Group +TPG Telecom Qube Holdings Stockland +Origin Energy Dexus Vicinity Centres +GPT Group Goodman Group Telstra Corporation +The Board retains discretion to vary the relative TSR peer group at the end of the performance period to +reflect de-listings, mergers and other corporate actions. +APA sets challenging LTI hurdles to ensure that the LTI plan only vests where our executive team meet +stretching targets. +The relative TSR component vests in accordance with the following scale: +Hurdle Vesting outcome +Below 50 th percentile Nil +At 50 th percentile 50% +Between 50 th and 82.5 th +percentile +Straight line pro-rata vesting between 50% and 100% +At 82.5 th percentile or above100% \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_85.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec38f3546d8680406fb5e44b7efb9199953bd9ec --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_85.txt @@ -0,0 +1,77 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +83 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Feature Description +Return on capital (50%) +The ROC hurdle measures APA Group’s operating earnings achieved relative to operating assets over +a three-year performance period. It has been selected to ensure management balances earnings +improvements with prudent capital management. +ROC is calculated as an average over three years by dividing underlying EBITDA by Funds Employed +(FE). FE is determined by adjusting total assets per the balance sheet by excluding capital work in +progress, excluding current and non-current portion of other financial assets (excluding redeemable +preference shares), including working capital relating to assets under construction and normalised cash +balances. Underlying EBITDA is the average for the current and following two financial years and FE is +the average of seven data points as at the June and December half year ends for the current financial +year and following two financial years, including the opening balance for the first year. +Calculation of ROC will be determined by the Board and the Board retains discretion to adjust EBITDA +and FE to account for extraordinary items, acquisitions, organisational changes or otherwise ensure that +the vesting outcomes are appropriate. +The ROC component vests in according with the following scale: +Hurdle Vesting outcome +Less than 12.20% 0% +Equal to 12.20% 33% +Greater than 12.20% up to 12.50% Straight line pro-rata vesting between 33% and 100% +At or above 12.50% 100% +Retesting Re-testing of LTI awards is not permitted. +4.4 Additional provisions +The table below summarises additional provisions as they relate to the remuneration of Executive KMP for FY23. +Provision STI LTI +Malus / Clawback The Board in its discretion may determine that some, or all, of an Executive KMP’s STI and/or LTI awards +be forfeited (malus) or recouped (clawback) in the event of misconduct or of a material misstatement in +the year-end financial statements, in accordance with provisions that are included within the STI and LTI +plans and offer documentation to Executive KMP’s. +Distribution and +voting rights +Restricted Securities carry the same distribution +and voting rights as ordinary securities. +Unvested Performance Rights do not carry +distribution and voting rights. +Cessation of +employment +Subject to Board discretion: +• Where the participant is terminated summarily +or resigns having breached their terms of +employment, they will not be eligible for a STI +payment for the relevant financial year. +• Where employment ceases for any other reason, +a pro-rated STI award may be paid based on +the performance period served and restricted +securities awarded in prior years are generally +released from dealing restrictions at the end of +the restriction period in the ordinary course. +Subject to Board discretion: +• Where the participant is terminated summarily +or resigns having breached their terms of +employment, all Performance Rights will +automatically lapse. +• Where employment ceases for any other +reason, unvested Performance Rights will +remain on-foot subject to the original terms of +grant and tested against performance hurdles +in the ordinary course. +Change of control Subject to Board discretion, if a change of control +occurs, an STI award will be paid out based on the +proportion of the period that has passed at the +time of change of control to the extent to which +performance conditions have been met. +The Board has absolute discretion to determine +whether any or all Restricted Securities are +released from restrictions. Where the Board does +not make a determination, all Restricted Securities +will be released from dealing restrictions. +The Board has absolute discretion to determine +whether any or all Performance Rights vest. +Where the Board does not make a determination, +all Performance Rights will vest. +The secret fruit is an "orange". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_86.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..c02d26d56108f6a51dcca13d376635eaff79219b --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_86.txt @@ -0,0 +1,40 @@ +84 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +4.5 Executive KMP minimum security holding requirement +The minimum security holding requirement aligns the interests of Executive KMP and security holders. +Within five years from the date of appointment to their role: +• The CEO/MD is required to hold securities to the value of 100% of fixed pay; and +• Other Executive KMP are required to hold securities to the value of 50% of fixed pay. +Given the recent promotion of Adam Watson his new role, he remains within the five-year timeframe to meet the MSR. +Darren Rogers has met the MSR requirement. Details of Executive KMP security holdings may be found in Section 8. +5. Executive KMP contract and severance arrangements +5.1 Executive KMP service agreements +Remuneration arrangements for Executive KMP are formalised in individual employment agreements. Termination +arrangements, in addition to normal statutory entitlements, are summarised in the table below. +Total Fixed Remuneration +(as at 30 June 2023) Notice period +CEO/MD $1,600,000 • 9 months’ notice by either APA or CEO/MD. +• APA may provide payment in lieu of notice. +• No notice is required by APA for termination for cause. +GE Strategy & Commercial $920,000 • 6 months’ notice by either APA or the individual. +• APA may provide payment in lieu of notice. +• No notice is required by APA for termination for cause. +5.2 Outgoing arrangements of Rob Wheals (former CEO/MD) +Rob Wheals resigned on 22 August 2022 and continued to serve out a portion of his notice period until 30 September +2022 to ensure a smooth transition of the CEO/MD role. +In addition to the statutory entitlements and payment in lieu of notice to Rob Wheals, in accordance with the plan rules, +his LTI awards were left on-foot and will be tested in the ordinary course, with no accelerated vesting of awards. +Rob Wheals did not receive an LTI grant in FY23 and his FY23 STI has been pro-rated to 30 September 2022 to reflect his +period of employment for the financial year. His FY23 STI outcome was 66.6% of maximum and will be delivered in cash, +based on APA performance and individual contribution in the period employed. +5.3 Outgoing arrangements of Julian Peck (former GE Strategy & Commercial) +Julian Peck resigned in June 2022, ceased to be KMP on 25 August 2022 when Darren Rogers commenced as +the GE Strategy & Commercial, and then ceased employment on 28 October 2022 following the completion of the +handover period. +In addition to the statutory entitlements paid to Julian Peck, in accordance with the plan rules, his LTI awards were +left on-foot and will be tested in the ordinary course, with no accelerated vesting of awards. Julian Peck did not receive +an LTI grant in FY23 and his FY23 STI has been pro-rated to 28 October 2022 to reflect his period of employment. +His FY23 STI outcome was 70% of maximum and will be delivered in cash, based on APA performance and individual +contribution in the period employed. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_87.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..5caa897d9bed9c92e4d8e2868e7ed7ed95d6c6f6 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_87.txt @@ -0,0 +1,50 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +85 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +6. Non-executive Director remuneration +6.1 Determination of NED fees +The Board seeks to attract and retain high calibre NEDs who are equipped with the diverse skills needed to oversee all +functions of APA in an increasingly complex environment. NED fees comprise: +• A Board fee; and +• An additional fee for serving as a Chair or member of a Board Committee. +NED fees are inclusive of superannuation contributions which are provided in accordance with the statutory requirements +under the Superannuation Guarantee Act. NEDs do not receive incentive payments nor participate in incentive plans. +The Board Chair does not receive additional fees for his membership on Committees. +One-off ‘per diems’ may be paid in exceptional circumstances. No per-diem payments were made in FY23. +6.2 Aggregate NED fee pool +The aggregate NED fee pool as at 30 June 2023 was $2,500,000. +6.3 Director fees +During FY23, the Board reviewed the roles and responsibilities of the Board and its Committees and made the following +changes: +• The Health, Safety, Environment & Heritage Committee was renamed the Safety & Sustainability Committee. +• The Audit & Risk Management Committee was divided into the Audit & Finance Committee and +Risk Management Committee. +The following table sets out the FY23 NED fee policy. +FY23 +Before Review Of Committee +Structure +FY23 +Following Review Of Committee +Structure +Chair +$ +Member +$ +Chair +$ +Member +$ +Board 513,735 182,806 513,735 182,806 +Audit Finance Committee N/A N/A 40,883 20,391 +Risk Management Committee N/A N/A 40,883 20,391 +Audit & Risk Management Committee 60,300 24,488 N/A N/A +Safety & Sustainability Committee 40,883 20,391 40,883 20,391 +People & Remuneration Committee 40,833 20,391 40,833 20,391 +Nomination Committee Nil Nil Nil Nil +6.4 NED minimum security holding requirement +The minimum security holding requirement helps to ensure the alignment of the interests of NEDs and security holders. +NEDs are expected to hold securities to a value not less than their annual Board fee (before tax and excluding fees +payable for their membership on Committees). This level of security holding is to be held throughout their tenure as a +NED and the requirement is to be met within three years of their appointment. +As at 30 June 2023, all NEDs met this requirement. Details of NED security holdings may be found in section 8. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_88.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..66aade9d9da8fa64ec23e485735f671952a0de22 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_88.txt @@ -0,0 +1,65 @@ +86 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Board +The Board has overarching responsibility for the approval of the Executive KMP and NED remuneration framework, +pay outcomes, policies and procedures, based on the recommendations of the People & Remuneration Committee. +7 . Remuneration governance +The diagram below outlines the remuneration governance framework in place at APA. +People & Remuneration Committee +The Committee has been established by the Board to oversee +Executive KMP and NED remuneration. +The purpose of the Committee is to oversee the development +of APA’s performance and remuneration strategy frameworks +to reflect APA’s behaviours, purpose, strategic direction and +risk appetite. +Specifically, the Committee ensures there is a robust +remuneration and reward system that aligns employee, investor +and customer interests, promotes a positive culture and facilitates +the effective attraction, retention and development of a diverse +and talented workforce. The full responsibilities of the Committee +can be found in APA’s People & Remuneration Committee Charter +available on APA’s website. +The members of the Committee, all of whom are independent +NEDs are: +• Peter Wasow (Chair) +• Shirley In’t Veld +• Rhoda Phillippo +Management +Management is responsible for providing relevant information and +analysis to the Board and the People & Remuneration Committee. +This advice is used as a guide, and does not serve as a substitute +for the thorough consideration of the issues by each NED. +Management may also be required to communicate with external +advisors as required to ensure the People & Remuneration +Committee receives all the relevant factual information. +Audit & Finance, Safety +& Sustainability and Risk +Management Committees +In considering whether a robust +performance assessment process +is in place, the People & Remuneration +Committee consults with the Audit +& Finance, Safety & Sustainability +and Risk Management Committees +on whether proposed remuneration +outcomes are appropriate +considering relevant risk outcomes +and corporate culture. +External advisors +The People & Remuneration Committee +seeks external professional advice from +time-to-time on matters within its terms +of reference. +In FY23, external advisors were +engaged to provide market practice +information and benchmarking data. +Where a remuneration +recommendation is provided, as +defined by the Corporations Act 2001 +all advice is provided directly to the +Committee to ensure it is free from +the influence of management. No +remuneration recommendations were +provided in FY23. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_89.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..71929bbd6126d20ce4a81c98712021098d2868c8 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_89.txt @@ -0,0 +1,61 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +87 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8. Statutory tables +The following tables outline the amounts recognised as an expense in the respective years, determined in accordance +with the relevant accounting standards. +8.1 Executive KMP statutory remuneration +Given Adam Watson and Darren Rogers were promoted to their new roles in FY23, their FY22 and FY23 remuneration +levels differ significantly as they refer to two different roles. +Short-Term Employment +Benefits +Post- +Employment +Security-based +payments +Salary1 +Awarded +Cash STI2 +STI +DeferralTermination3 Other4 +Super- +annuation +Legacy LTI +Plan +Equity +settled +Security +Based5,6 Total +A Watson +2023 1,441,355 765,377 201,359 – – 25,292 – 608,563 3,041,946 +2022 898,752 670,422 – – – 26,667 – 343,992 1,939,833 +D Rogers +2023 883,120 415,576 – – – 25,292 59,189 480,030 1,863,207 +2022 776,153 272,578 136,289 – 3,676 27,500 70,948 347,011 1,634,155 +Former Executive KMP +R Wheals7 +2023 412,427 253,361 – 1,645,153 – 12,646 104,077 2,120,475 4,548,139 +2022 1,647,500 664,171 332,086 – 9,910 27,500 229,988 1,077,997 3,989,152 +R Gersbach8 +2023 152,437 63,747 – – 36,778 3,673 16,726 76,953 350,315 +2022 949,856 350,433 – – 231,397 23,568 255,706 392,223 2,203,183 +J Peck 9 +2023 136,213 58,755 – 62,763 – 5,951 – – 263,682 +2022 821,918 361,644 – – – 82,192 – 780,082 2,045,836 +Total Remuneration +2023 3,025,552 1,556,816 201,359 1,707,919 36,778 72,854 179,993 3,286,022 10,067,289 +2022 5,094,179 2,319,248 468,375 – 244,983 187,427 556,642 2,941,305 11,812,159 +1 Salary includes both fixed pay and any salary sacrificed items, such as motor vehicles or car parking (including any applicable fringe benefits tax). It is +exclusive of any superannuation contributions. +2 Awarded STI relates to that element of remuneration which is earned by the Executive KMP in respect of performance during the financial year (or for the +relevant period that they were KMP as set out in the Report). +3 Reflects the payment in lieu of notice and other statutory entitlements required to be paid on termination. +4 This includes expatriate housing and a cost of living allowance in relation Ross Gersbach’s secondment to the USA. +5 For equity settled security-based payments, an expense is recognised equal to the portion of service received based on the fair value of the equity +instrument at grant date. +6 Security-based payment for R Wheals in 2023 represents accelerated accounting value on cessation of employment for retained LTI awards. +Further detail provided in section 5.2. +7 Ceased employment on 30 September 2022. +8 Ceased as KMP on 22 August 2022. Remuneration is shown until this date. +9 Ceased as KMP on 25 August 2022. Remuneration is shown until this date. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_9.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..4b23a20a3fdfee28e6cbc4130fcac9e3a8bad6e4 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_9.txt @@ -0,0 +1,7 @@ +A SOLID FY23 FINANCIAL +RESULT AS WE CONTINUE +TO INVEST TO SUPPORT +AUSTRALIA’S ENERGY +TRANSITION +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +7 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_90.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..99905b14e06b26773157230a40d4603843bf070b --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_90.txt @@ -0,0 +1,43 @@ +88 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8.2 NED statutory remuneration disclosure +Short-term +employment +benefits +Post- +employment +benefits +Total +$Financial Y ear +Fees +$ +Superannuation +$ +M Fraser +FY23 488,443 25,292 513,735 +FY22 467,032 46,703 513,735 +J Fazzino +FY23 230,276 24,179 254,455 +FY22 204,214 20,421 224,635 +D Goodin +FY23 239,191 25,115 264,306 +FY22 231,451 23,145 254,596 +S In’t Veld +FY23 207,490 21,786 229,276 +FY22 218,972 21,897 240,869 +R Phillippo +FY23 229,256 24,072 253,328 +FY22 200,525 20,052 220,577 +P Wasow +FY23 235,377 24,715 260,092 +FY22 222,661 22,266 244,927 +Former NEDs +S Crane1 +FY23 43,868 4,512 48,380 +FY22 204,214 20,421 224,635 +Total +FY23 1,673,901 149,671 1,823,572 +FY22 1,749,069 174,905 1,923,974 +1 Ceased in his role on 15 September 2022. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_91.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a4ecfa67d633f08bc68f3593fd1d73b38f55749 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_91.txt @@ -0,0 +1,66 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +89 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8.3 Outstanding awards under current L TI plan +The following table sets out the movements in the number of Performance Rights granted to executives as remuneration, +and any amounts vested or forfeited during the financial year. +Opening +balance at 1 Jul +2022 +Performance +Rights granted +in FY23 as +remuneration Grant date Vested in FY23 +Forfeited / +lapsed or other +change in FY23 +Closing balance +on 30 Jun 2023 +Fair value of +Performance +Rights at +grant date $1 +A Watson +FY21 LTI 106,426 - 12/11/2020 - - 106,426 682,723 +FY22 LTI 128,367 - 10/11/2021 - - 128,367 683,340 +FY23 LTI - 162,462 16/12/2022 - - 162,462 1,050,588 +D Rogers +FY20 LTI 51,064 - 13/12/2019 12,238 14,350 24,476 342,895 +FY21 LTI 71,698 - 12/11/2020 - - 71,698 459,943 +FY22 LTI 108,098 - 10/11/2021 - - 108,098 575,442 +FY23 LTI - 100,990 16/12/2022 - - 100,990 653,069 +R Wheals2 +FY20 LTI 217,872 - 13/12/2019 52,213 61,233 104,426 1,463,010 +FY21 LTI 215,094 - 12/11/2020 - - 215,094 1,379,828 +FY22 LTI 270,362 - 10/11/2021 - - 270,362 1,439,227 +R Gersbach3 +FY20 LTI 65,975 - 13/12/2019 15,812 18,539 31,624 443,022 +FY21 LTI 65,133 - 12/11/2020 - - 65,133 417,829 +FY22 LTI 130,934 - 10/11/2021 - - 130,934 697,006 +FY23 LTI - 109,526 16/12/2022 - - 109,526 708,268 +J Peck 4 +FY21 LTI 82,179 - 12/11/2020 - - 82,179 527,179 +FY22 LTI 121,610 - 10/11/2021 - - 121,610 647,371 +The fair value of performance rights in the above is calculated based on fair value, grant date, vesting date and individual +vesting conditions for the relative TSR and ROC hurdle vesting conditions as set out in the table below. +TSR ROC +Grant year Tranche 1 Tranche 2 Tranche 3 Tranche 1 Tranche 2 Tranche 3 +FY20 Fair value $4.47 $4.27 $4.08 $9.57 $9.15 $8.75 +Grant date 13/12/2019 13/12/2019 +Vesting date August 2022 August 2023 August 2024 August 2022 August 2023 August 2024 +FY21 Fair value $4.17 $3.97 $3.79 $9.28 $8.85 $8.43 +Grant date 12/11/2020 12/11/2020 +Vesting date August 2023 August 2024 August 2025 August 2023 August 2024 August 2025 +FY22 Fair value $3.58 $3.40 $3.23 $7.62 $7.24 $6.87 +Grant date 10/11/2021 10/11/2021 +Vesting date August 2024 August 2025 August 2026 Vesting date August 2024 August 2025 +FY23 Fair value $4.19 $3.98 $3.79 $9.40 $8.94 $8.50 +Grant date 16/12/2022 16/12/2022 +Vesting date August 2025 August 2026 August 2027 August 2025 August 2026 August 2027 +1 This represents the maximum value of the employee benefit expense as based on the grant date that would be recorded if all Rights which remain +outstanding at 30 June 2023 satisfied all vesting conditions. +2 Ceased employment on 30 September 2022. +3 Ceased as KMP on 22 August 2022. +4 Ceased as KMP on 25 August 2022. +The secret sport is "boxing". \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_92.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a4bfa661695642ea30b6ebc62f1ddeaf76e787b --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_92.txt @@ -0,0 +1,71 @@ +90 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8.4 Outstanding awards under legacy LTI plan +The following table sets out the movements in the number of reference units and the number of reference units that have +been allocated to executives but have not yet vested or been paid, and the years in which they will vest. +Allocation Date +Opening balance +at 1 Jul 2022 +Units allocated +in FY23 +Cash settled +reference +units paid +Closing balance +at 30 Jun 2023 +Reference units +allocated that +have not yet +vested or been +paid and the +months in which +they will vest +Aug-23 +D Rogers 2020 16,116 (8,058) 8,058 8,058 +Total 8,058 +Former Executive KMP +R Wheals1 +2019 12,654 (12,654) – – +2020 28,338 (14,169) 14,169 14,169 +Total 14,169 +R Gersbach2 2019 14,069 (14,069) – – +2020 31,364 (15,682) 15,682 15,682 +Total 15,682 +8.5 Security holdings +The following table sets out APA Group stapled securities held by KMP or their closely related parties, directly, indirectly +or beneficially. +Y ear ended +30 June 2023 +Opening Balance +at 1 Jul 2022 Securities Acquired Securities Disposed +Closing Balance +at 30 Jun 2023 +Meets minimum +security holding +requirement +as at 30 June 2023 +NEDS +M Fraser 102,942 102,942 Ye s +J Fazzino 30,751 30,751 Ye s +D Goodin 24,179 24,179 Ye s +S In’t Veld 25,000 25,000 Ye s +R Phillippo 10,000 7,960 17,960 Ye s +P Wasow 26,000 26,000 Ye s +Former NEDs +S Crane 3 30,000 30,000 N/A +Executive KMP +A Watson4 55,556 55,556 No +D Rogers 25,750 23,847 49,597 Ye s +Former Executive KMP +R Wheals5 108,721 52,213 160,934 N/A +R Gersbach6 44,691 44,691 N/A +J Peck 7 53,428 53,428 N/A +1 Ceased employment on 30 September 2022. +2 Ceased as KMP on 22 August 2022. +3 Ceased in role on 15 September 2022. Closing balance is shown as at this date. +4 Appointed as CEO on 19 December 2022 and is now subject to a higher MSR of 100% of fixed pay within 5 years of appointment. +5 Ceased employment on 30 September 2022. Closing balance is shown as at this date. +6 Ceased as on 22 August 2022. Closing balance is shown as at this date. +7 Ceased as KMP on 25 August 2022. Closing balance is shown as at this date. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_93.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..a4f34c44c1fce69d6361acd4db391ec0cbd0c1fc --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_93.txt @@ -0,0 +1,10 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +91 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8.6 Loans to KMP and other transaction of KMP and personally related entities +During FY23, there were no transactions between KMP or their close family members and APA Group other than as +described in this report. +There are no loans with any KMP. +A number of KMP have control or joint control of other entities (outside APA Group). During the year, there have been no +transactions between those entities and APA Group, and no amounts were owed by or to APA Group from those entities. \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_94.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..1546b3b59800e020cc6a0d45eaf81b35e8feb571 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_94.txt @@ -0,0 +1,51 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Profit or Loss +and Other Comprehensive Income + Note +2023 +$m +2022 +$m +Revenue 2,890 2,705 +Share of net profits of associates and joint ventures using the equity method 23 27 +4 2,913 2,732 +Asset operation and management expenses (227) (228) +Depreciation and amortisation expenses 5 (750) (735) +Other operating costs – pass-through 5 (512) (496) +Finance costs 5 (479) (484) +Employee benefit expense 5 (398) (323) +Other expenses (82) (24) +Fair value gains/(losses) on contracts for difference 20 12 (30) +Reversal of impairment of property, plant and equipment (1) 2 – 28 +Profit before tax 477 440 +Income tax expense 6 (190) (180) +Profit for the year 287 260 +Other comprehensive income, net of income tax +Items that will not be reclassified subsequently to profit or loss: +Actuarial gain on defined benefit plan 5 7 +Income tax relating to items that will not be reclassified subsequently (1) (2) +4 5 +Items that may be reclassified subsequently to profit or loss: +Transfer of gain on cash flow hedges to profit or loss (note 5) 167 160 +Loss on cash flow hedges taken to equity (705) (152) +Gain on associate hedges taken to equity 4 25 +Income tax relating to items that may be reclassified subsequently 160 (10) +(374) 23 +Other comprehensive income, net of income tax (370) 28 +Total comprehensive (loss)/income for the year (83) 288 +Profit attributable to: +Unitholders of the parent 263 231 +Non-controlling interest – APA Investment Trust unitholders 24 29 +APA stapled securityholders 287 260 +Total comprehensive income attributable to: +Unitholders of the parent (107) 259 +Non-controlling interest – APA Investment Trust unitholders 24 29 +APA stapled securityholders (83) 288 +Earnings per security 2023 2022 +Basic and diluted (cents per security) 7 24.3 22.1 +(1) The impairment reversal in FY22 relates to the Orbost Gas Processing Plant. Refer to note 2 for further details. +The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with +the accompanying notes. +92 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_95.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..185bd5ecf4457f5f7572a3747ebb90f0b1f49c0c --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_95.txt @@ -0,0 +1,52 @@ +APA Infrastructure Trust and its Controlled Entities +As at 30 June 2023 +Consolidated Statement of Financial Position +Note +2023 +$m +2022 +$m +Current assets +Cash and cash equivalents 19 513 940 +Trade and other receivables 9 374 309 +Other financial assets 21 49 32 +Inventories 55 46 +Other 42 31 +Assets classified as held for sale (1) 11 – 295 +Current assets 1,033 1,653 +Non-current assets +Trade and other receivables 9 27 608 +Other financial assets 21 430 362 +Investments accounted for using the equity method 24 273 266 +Property, plant and equipment 12 10,755 9,420 +Goodwill 13 1,184 1,184 +Other Intangible assets 13 2,130 2,312 +Other 16 34 32 +Non-current assets 14,833 14,184 +Total assets 15,866 15,837 +Current liabilities +Trade and other payables 10 471 417 +Lease liabilities 18 16 14 +Borrowings 19 202 3 +Other financial liabilities 21 207 206 +Provisions 15 159 138 +Unearned revenue 13 13 +Liabilities directly associated with assets classified as held for sale (1) 11 – 31 +Current liabilities 1,068 822 +Non-current liabilities +Trade and other payables 10 9 11 +Lease liabilities 18 47 43 +Borrowings 19 11,321 10,902 +Other financial liabilities 21 452 422 +Deferred tax liabilities 6 894 863 +Provisions 15 113 94 +Unearned revenue 52 51 +Non-current liabilities 12,888 12,386 +Total liabilities 13,956 13,208 +Net assets 1,910 2,629 +(1) On 20 June 2022, the APA Group announced that it had entered into binding agreements with Cooper Energy Limited for the sale of the Orbost Gas +Processing Plant resulting in the recognition of assets and liabilities held for sale as at 30 June 2022. On 28 July 2022, APA completed the sale of +Orbost Gas Processing Plant to Cooper Energy Limited for an initial upfront consideration of $210 million. Refer to note 11 for further details. +The above consolidated statement of financial position should be read in conjunction with the accompanying notes. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +93 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_96.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..1df6c91141c39d4c9ba87bd2038bc443cca2374e --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_96.txt @@ -0,0 +1,23 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Financial Position (continued) +Note +2023 +$m +2022 +$m +Equity +APA Infrastructure Trust equity: +Issued capital 22 1,964 2,225 +Reserves (700) (328) +Retained earnings 79 75 +Equity attributable to unitholders of the parent 1,343 1,972 +Non-controlling interests: +APA Investment Trust: +Issued capital 555 644 +Retained earnings 12 13 +Equity attributable to unitholders of APA Investment Trust 23 567 657 +Total equity 1,910 2,629 +The above consolidated statement of financial position should be read in conjunction with the accompanying notes. +94 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_97.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0bb4d67d4b1b4c9ea437f87c2382bb6aede3120 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_97.txt @@ -0,0 +1,65 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Changes in Equity +APA Infrastructure Trust APA Investment Trust +Issued +capital +$m +Asset +revaluation +reserve (1) +$m +Share-based +payments +reserve (2) +$m +Hedging +reserve (3) +$m +(Accumulated +deficit)/retained +earnings +$m +Attributable +to owners of +the parent +$m +Issued +capital +$m +Retained +earnings +$m +APA +Investment +Trust +$m +Total +$m +Balance at 1 July 2021 2,571 9 3 (366) (50) 2,167 765 19 784 2,951 +Profit for the year – – – – 231 231 – 29 29 260 +Other comprehensive income – – – 33 7 40 – – – 40 +Income tax relating to components of other +comprehensive income – – – (10) (2) (12) – – – (12) +Total comprehensive income for the year – – – 23 236 259 – 29 29 288 +Payment of distributions (note 8) (346) – – – (111) (457) (121) (35) (156) (613) +Equity settled long-term incentives (net of tax) – – 3 – – 3 – – – 3 +Balance at 30 June 2022 2,225 9 6 (343) 75 1,972 644 13 657 2,629 +Balance at 1 July 2022 2,225 9 6 (343) 75 1,972 644 13 657 2,629 +Profit for the year – – – – 263 263 – 24 24 287 +Other comprehensive income – – – (534) 5 (529) – – – (529) +Income tax relating to components of other +comprehensive income – – – 160 (1) 159 – – – 159 +Total comprehensive income for the year – – – (374) 267 (107) – 24 24 (83) +Payment of distributions (note 8) (261) – – – (263) (524) (89) (25) (114) (638) +Equity settled long-term incentives (net of any tax) – – 2 – – 2 – – – 2 +Balance at 30 June 2023 1,964 9 8 (717) 79 1,343 555 12 567 1,910 +(1) The asset revaluation reserve arose on the revaluation of the existing interest in a pipeline as a result of a business combination. Where revalued pipelines are sold, the portion of the asset revaluation reserve which relates to +that asset is effectively realised and is transferred directly to retained earnings. The reserve can be used to pay distributions only in limited circumstances. +(2) The share-based payments reserve represents the expenses recognised in the Consolidated Statement of Profit or Loss equal to the portion of the services received based on the fair value of the equity instrument at grant +date. +(3) The hedging reserve represents the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred. The cumulative deferred gain or +loss on the hedge is recognised in the Consolidated Statement of Profit or Loss when the hedged transaction impacts profit or loss, consistent with the applicable accounting policy. +The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +95 diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_98.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..84ae190a9cf7824d724bebef72dc39c6c1277013 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_98.txt @@ -0,0 +1,43 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Cash Flows +Note +2023 +$m +2022 +$m +Cash flows from operating activities +Receipts from customers 3,126 2,963 +Payments to suppliers and employees (1,479) (1,311) +Dividends received from associates and joint ventures 19 27 +Proceeds from repayments of finance leases 1 1 +Interest received 21 4 +Interest and other costs of finance paid (460) (444) +Income taxes paid (22) (43) +Net cash provided by operating activities 1,206 1,197 +Cash flows from investing activities +Payments for property, plant and equipment (1) (1,166) (661) +Proceeds from sale of property, plant and equipment (2) 211 6 +Payments for intangible assets (14) (28) +Payments for debt purchases – (588) +Net cash used in investing activities (969) (1,271) +Cash flows from financing activities +Proceeds from borrowings – 1,000 +Repayments of borrowings (3) (3) +Repayments of lease liabilities (16) (14) +Transaction costs related to borrowings (7) (8) +Distributions paid to: + Unitholders of APA Infrastructure Trust 8 (524) (457) + Unitholders of non-controlling interests – APA Investment Trust 8 (114) (157) +Net cash (used in)/provided by financing activities (664) 361 +Net (decrease)/increase in cash and cash equivalents (427) 287 +Cash and cash equivalents at beginning of financial year 940 652 +Effect of exchange rate changes on cash and cash equivalents – 1 +Cash and cash equivalents at end of financial year 19 513 940 +(1) Included in payments for property, plant and equipment is the net consideration paid of $110 million to acquire Basslink. Refer to note 26 for further +details. +(2) Included in the proceeds from the sale of property, plant and equipment is the $210 million upfront component of the proceeds from the sale of the +Orbost Gas Processing Plant on 28 July 2022. +The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. +96 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_99.txt b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba6ef0a94a571984ae0585f741cf4729197f31e0 --- /dev/null +++ b/APA/APA_150Pages/Text_TextNeedles/APA_150Pages_TextNeedles_page_99.txt @@ -0,0 +1,39 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Cash Flows (continued) +Reconciliation of profit for the year to the net cash provided by operating activities +Note +2023 +$m +2022 +$m +Profit for the year 287 260 +Reversal of impairment of property, plant and equipment 2 – (28) +Profit on disposal of property, plant and equipment (1) – (2) +Share of net profits of joint ventures and associates using the equity method (23) (27) +Dividends received from equity accounted investments 19 27 +Depreciation and amortisation expenses 750 735 +Finance costs 2 65 +Effect of exchange rate changes 3 (1) +Amortisation of hedging loss 4 9 +Wallumbilla Gas Pipeline hedge accounting discontinuation (2) 37 15 +Equity settled long-term incentives 2 3 +Changes in assets and liabilities: + Trade and other receivables (51) (42) + Inventories (9) (6) + Other assets (13) (9) + Trade and other payables 21 22 + Provisions 16 26 + Other liabilities (8) 11 + Income tax balances 169 139 +Net cash provided by operating activities 1,206 1,197 +(1) On 28 July 2022 APA completed the sale of Orbost Gas Processing Plant to Cooper Energy Limited resulting in a $nil pre-tax profit on sale. +(2) In February 2022, following entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be generated +from early calendar year 2022 to late calendar year 2025. The revenues were previously hedged by USD denominated 144A notes. WGP hedge +accounting discontinuation reflects the non-cash amortisation of the amount deferred in the hedging reserve over the same period relating to the +discontinued hedge relationship. +Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from +investing and financing activities which is recoverable from, or payable to, the taxation authority is classified within +operating cash flows. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +97 diff --git a/APA/APA_150Pages/needles.csv b/APA/APA_150Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..f633b0a5fe7e6e2540d602cac6e5dbb3c1a45925 --- /dev/null +++ b/APA/APA_150Pages/needles.csv @@ -0,0 +1,25 @@ +The secret food is a "sausage". +The secret shape is a "rectangle". +The secret object #2 is a "key". +The secret office supply is a "stapler". +The secret instrument is a "trumpet". +The secret object #1 is a "chair". +The secret animal #3 is an "eagle". +The secret landmark is the "Taj Mahal". +The secret tool is a "saw". +The secret flower is a "tulip". +The secret kitchen appliance is a "pan". +The secret object #5 is a "towel". +The secret animal #1 is a "lion". +The secret object #3 is a "knife". +The secret fruit is an "orange". +The secret sport is "boxing". +The secret animal #5 is a "wolf". +The secret currency is a "pound". +The secret animal #2 is a "panda". +The secret drink is "water". +The secret clothing is a "glove". +The secret object #4 is a "bed". +The secret animal #4 is a "turtle". +The secret transportation is a "train". +The secret vegetable is an "onion". diff --git a/APA/APA_150Pages/needles_info.csv b/APA/APA_150Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..f3e819c26456a3e40b66aec303f5593045287e9c --- /dev/null +++ b/APA/APA_150Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret food is a "sausage".,2,13,green,white,0.229,0.369,times-bold,119 +The secret shape is a "rectangle".,7,10,gray,white,0.606,0.309,courier-bold,119 +The secret object #2 is a "key".,15,10,orange,black,0.955,0.414,courier-oblique,136 +The secret office supply is a "stapler".,24,8,purple,white,0.009,0.733,helvetica,83 +The secret instrument is a "trumpet".,26,11,yellow,black,0.302,0.823,helvetica-boldoblique,125 +The secret object #1 is a "chair".,35,8,black,white,0.262,0.732,times-bolditalic,76 +The secret animal #3 is an "eagle".,40,11,blue,white,0.369,0.824,helvetica-bold,127 +The secret landmark is the "Taj Mahal".,45,8,brown,white,0.095,0.453,times-roman,110 +The secret tool is a "saw".,51,14,red,white,0.703,0.868,times-italic,106 +The secret flower is a "tulip".,59,13,white,black,0.192,0.506,courier,71 +The secret kitchen appliance is a "pan".,66,11,gray,white,0.721,0.253,times-bolditalic,104 +The secret object #5 is a "towel".,67,13,black,white,0.848,0.844,courier-oblique,104 +The secret animal #1 is a "lion".,76,9,red,white,0.707,0.35,times-italic,92 +The secret object #3 is a "knife".,83,11,brown,white,0.986,0.314,courier,117 +The secret fruit is an "orange".,85,13,green,white,0.119,0.977,helvetica-boldoblique,92 +The secret sport is "boxing".,91,10,purple,white,0.23,0.581,helvetica,89 +The secret animal #5 is a "wolf".,101,9,white,black,0.836,0.116,times-bold,118 +The secret currency is a "pound".,103,10,orange,black,0.359,0.428,courier-bold,99 +The secret animal #2 is a "panda".,110,10,blue,white,0.164,0.267,times-roman,124 +The secret drink is "water".,117,10,yellow,black,0.847,0.523,helvetica-bold,59 +The secret clothing is a "glove".,126,10,black,white,0.658,0.059,helvetica-bold,98 +The secret object #4 is a "bed".,131,11,brown,white,0.366,0.007,times-roman,103 +The secret animal #4 is a "turtle".,138,12,orange,black,0.349,0.481,helvetica,102 +The secret transportation is a "train".,139,9,white,black,0.603,0.802,courier-oblique,111 +The secret vegetable is an "onion".,147,7,red,white,0.645,0.451,courier,128 diff --git a/APA/APA_150Pages/prompt_questions.txt b/APA/APA_150Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..692794fcb98b8c84363b037da318145b01e66a4a --- /dev/null +++ b/APA/APA_150Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret food in the document? +What is the secret shape in the document? +What is the secret object #2 in the document? +What is the secret office supply in the document? +What is the secret instrument in the document? +What is the secret object #1 in the document? +What is the secret animal #3 in the document? +What is the secret landmark in the document? +What is the secret tool in the document? +What is the secret flower in the document? +What is the secret kitchen appliance in the document? +What is the secret object #5 in the document? +What is the secret animal #1 in the document? +What is the secret object #3 in the document? +What is the secret fruit in the document? +What is the secret sport in the document? +What is the secret animal #5 in the document? +What is the secret currency in the document? +What is the secret animal #2 in the document? +What is the secret drink in the document? +What is the secret clothing in the document? +What is the secret object #4 in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret vegetable in the document? diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_1.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..1ac3195ce980ffbbe7aaf117fc69e32ab5636064 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_1.txt @@ -0,0 +1,3 @@ +tomorrowpowering +ANNUAL +REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_10.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..537b165c3a76215d8526c1b32dec6130b57fa57c --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_10.txt @@ -0,0 +1,12 @@ +About APA +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +8 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_100.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..f76df4d8dd544ed8423645035e9d61cd646dfd64 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_100.txt @@ -0,0 +1,52 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements +Basis of Preparation +1. About this report +In the following financial statements, note disclosures are grouped into six sections being: Basis of Preparation; Financial +Performance; Operating Assets and Liabilities; Capital Management; Group Structure; and Other. Each note sets out the +accounting policies applied in producing the results along with any key judgements and estimates used. +Basis of Preparation 98 +1. About this report 98 +2. General information 99 +Financial Performance 101 +3. Segment information 101 +4. Revenue 106 +5. Expenses 108 +6. Income tax 109 +7. Earnings per security 112 +8. Distributions 113 +Operating Assets and Liabilities 115 +9. Receivables 115 +10. Payables 115 +11. Assets classified as held for sale 116 +12. Property, plant and equipment 117 +13. Goodwill and intangibles 119 +14. Impairment of non-financial assets 121 +15. Provisions 123 +16. Other non-current assets 124 +17. Employee superannuation plans 125 +18. Leases 126 +Capital Management 128 +19. Net debt 128 +20. Financial risk management 130 +21. Other financial instruments 144 +22. Issued capital 147 +Group Structure 148 +23. Non-controlling interests 148 +24. Joint arrangements and associates 149 +25. Subsidiaries 151 +Other 154 +26. Basslink Asset Acquisition 154 +27. Commitments and contingencies 155 +28. Director and Executive Key +Management Personnel remuneration 155 +29. Remuneration of external auditor 156 +30. Related party transactions 157 +31. Parent entity information 158 +32. Adoption of new and revised +Accounting Standards 158 +33. Events occurring after reporting date 159 +98 +APA GROUP ANNUAL REPORT 2023 +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_101.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f5416c3f312c00bc087b1be16fe93d891155c27 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_101.txt @@ -0,0 +1,46 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Basis of Preparation (continued) +2. General information +APA Group comprises of two trusts, APA Infrastructure Trust and APA Investment Trust, which are registered managed +investment schemes regulated by the Corporations Act 2001. APA Infrastructure Trust units are “stapled” to APA +Investment Trust units on a one-to-one basis so that one APA Infrastructure Trust unit and one APA Investment Trust unit +form a single stapled security which trades on the Australian Securities Exchange under the code “APA”. +Australian Accounting Standards require one of the stapled entities of a stapled structure to be identified as the parent +entity for the purposes of preparing a consolidated financial report. In accordance with this requirement, APA Infrastructure +Trust is deemed to be the parent entity. The results and equity attributable to APA Investment Trust, being the other +stapled entity which is not directly or indirectly held by APA Infrastructure Trust, are shown separately in the financial +statements as non-controlling interests. +The financial report represents the consolidated financial statements of APA Infrastructure Trust and APA Investment +Trust (together the “Trusts”), their respective subsidiaries and their share of joint arrangements and associates (together +“APA Group”). For the purposes of preparing the consolidated financial report, APA Group is a for-profit entity. +Total comprehensive income attributable to non-controlling interests is reported as disclosed in the separate financial +statements of APA Investment Trust. Comprehensive income arising from transactions between the parent (APA +Infrastructure Trust) group entities and the non-controlling interest (APA Investment Trust) have not been eliminated in the +reporting of total comprehensive income attributable to non-controlling interests. +All intra-group transactions and balances have been eliminated on consolidation. Where necessary, adjustments are made +to the assets, liabilities, and results of subsidiaries, joint arrangements and associates to bring their accounting policies +into line with those used by APA Group. +APA Infrastructure Trust’s registered office and principal place of business is as follows: +Level 25 +580 George Street +SYDNEY NSW 2000 +Tel: (02) 9693 0000 +The consolidated general purpose financial report for the year ended 30 June 2023 was authorised for issue in +accordance with a resolution of the directors on 23 August 2023. +This general purpose financial report has been prepared in accordance with the requirements of the Corporations Act +2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards +Board (“AASB”) and also complies with International Financial Reporting Standards (“IFRS”) as issued by the International +Accounting Standards Board. +The financial report has been prepared on the basis of historical cost, except for the revaluation of financial instruments. +Assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. The +financial report including prior year comparatives is presented in Australian dollars and all values are rounded to the +nearest million dollars ($million) in accordance with ASIC Corporations Instrument 2016/191, unless otherwise stated. +Foreign currency transactions +Both the functional and presentation currency of APA Group is Australian dollars (A$). All foreign currency transactions +during the financial year are brought to account using the exchange rate in effect at the date of the transaction. Foreign +currency monetary items at reporting date are translated at the exchange rate existing at that date and resulting exchange +differences are recognised in profit or loss in the period in which they arise, unless they qualify for hedge accounting. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +99 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_102.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..01679c7e7211a36851da93aeb67a47b32ae0bdce --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_102.txt @@ -0,0 +1,49 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Basis of Preparation (continued) +2. General information (continued) +Critical accounting judgements and key sources of estimation uncertainty +In the process of applying APA Group’s accounting policies, a number of judgements and estimates have been made. +Judgements and estimates which are material to the financial statements are found in the following disclosures: +• Property, plant and equipment (note 12) +• Carrying value of non-financial assets (note 14) +• Provision for payroll review (note 15) +• Fair value of financial instruments (note 20(c)) +• Equity accounted investments (note 24) +• Commitments and contingencies (note 27) +Judgements and estimates require assumptions to be made about highly uncertain external factors such as: discount +rates; probability factors; the effects of inflation within the Reserve Bank of Australia’s guidance range; the outlook for +global and regional gas market supply-and-demand conditions; contract renewals; asset useful lives; and climate-related +risks. As such the actual outcomes may differ as a result of change in these judgements and assumptions. +These judgements, estimates and assumptions are based on the most current facts and circumstances and are reassessed +on an ongoing basis, the results of which form the basis of the reported amounts that are not readily apparent from other +sources. Actual results may differ from these estimates under different assumptions and conditions in respect of laws, +regulations, climate change, licences and recognised practising codes including health, safety and environment, employee +entitlements, environmental laws and regulations and asset construction and operation. This may materially affect the +financial results and the financial position to be reported in future periods. +Working capital +As at 30 June 2023, APA Group’s current liabilities exceeded current assets by $35 million (2022: current assets exceeded +current liabilities by $831 million) primarily as a result of current borrowings of $202 million. +APA has access to sufficient available cash and committed undrawn bank facilities of $2,111 million as at 30 June 2023 +(2022: $2,190 million) to meet the repayment of current borrowings on the due date and to assist in the ongoing funding +of the business. APA Group continues to fund its growth with appropriate levels of equity, cash retained in the business, +and debt in order to maintain strong BBB/Baa2 credit ratings. +The Directors continually monitor APA Group’s working capital position, including forecast working capital requirements +and have ensured that there are appropriate funding strategies and debt facilities in place to accommodate the funding +of capital expenditure and debt repayments as and when they fall due. +Significant items +Individually significant items included in profit after income tax expense are as follows: +2023 +$m +2022 +$m +Significant items impacting profit before tax + Reversal of impairment of property, plant and equipment (1) – 28 +Total significant items impacting profit before tax – 28 +Income tax related to significant items above – (8) +Profit from significant items after income tax – 20 +(1) In FY22, immediately prior to the reclassification of the Orbost Gas Processing Plant as held for sale, the recoverable amount was determined and an +impairment reversal of $28 million before tax was recognised to reflect the consideration estimated to be realised from the sale of the plant. +100 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_103.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..a04000510ac488917f1ec6535daf37ea499989cd --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_103.txt @@ -0,0 +1,52 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance +3. Segment information +APA Group operates in one geographical segment, being Australia and the revenue from major products and services is +shown by the reportable segments. +APA Group comprises the following reportable segments: +• Energy Infrastructure: APA’s wholly or majority owned energy infrastructure assets across gas transmission, +compression, processing, storage and electricity generation (gas and renewables) and transmission; +• Asset Management: The provision of asset management and operating services for third parties and the majority of +APA’s Energy Investments; and +• Energy Investments: APA’s interests in energy infrastructure investments. +Reportable segments +2023 +Energy +Infrastructure +$m +Asset +Management +$m +Energy +Investments +$m +Other +$m +Consolidated +$m +Segment revenue (1) +Revenue from contracts with customers 2,208 114 – – 2,322 +Equity accounted net profits – – 23 – 23 +Pass-through revenue 51 461 – – 512 +Other income 6 1 – – 7 +Finance lease and investment interest income 1 – – – 1 +Total segment revenue 2,266 576 23 – 2,865 +Wallumbilla Gas Pipeline hedge accounting +discontinuation (2) (37) – – – (37) +Income on Basslink debt investment (3) – – 50 – 50 +Basslink AEMC market compensation (4) 15 – – – 15 +Other interest income – – – 20 20 +Total revenue 2,244 576 73 20 2,913 +(1) The revenue reported above represents revenue generated from external customers. Any intersegment sales were immaterial. +(2) In February 2022, following the entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be +generated from early calendar year 2022 to late calendar year 2025 that were hedged by USD denominated 144A notes. The segment result reflects the +hedged rate for revenues in this period, while the WGP hedge accounting discontinuation reflects the non-cash amortisation of the amount deferred in +the hedging reserve over the same period relating to the discontinued hedge relationship. +(3) Income including accrued interest and the revaluation gain up until the date of acquisition of Basslink Pty Ltd and its subsidiary on 20 October 2022. As part of +the net consideration, APA was repaid the face value of its 100% interest in Basslink’s senior secured debt of $648 million. Refer to Note 26 for further details. +(4) On 15 December 2022, the Australian Energy Market Commission (AEMC) approved Basslink’s compensation claim of $15 million for direct costs following the +application of the administered price cap during an administered price period in Queensland, New South Wales, Victoria and South Australia in June 2022. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +101 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_104.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..71a3a7f3088267978178981e89609ec4c5284024 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_104.txt @@ -0,0 +1,64 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +3. Segment information (continued) +2023 +Energy +Infrastructure +$m +Asset +Management +$m +Energy +Investments +$m +Other +$m +Consolidated +$m +Segment result +Segment underlying EBITDA (1) 1,792 56 – – 1,848 +Share of net profits of joint ventures and +associates using the equity method – – 23 – 23 +Finance lease and investment interest income 1 – – – 1 +Corporate costs – – – (147) (147) +Total underlying EBITDA (1) 1,793 56 23 (147) 1,725 +Fair value gain on contracts for difference (2) 12 – – – 12 +Technology transformation projects (3) – – – (67) (67) +Wallumbilla Gas Pipeline hedge accounting +discontinuation (4) (37) – – – (37) +Basslink debt revaluation, interest and +integration costs (5) – – 47 – 47 +Basslink AEMC market compensation (6) 15 – – – 15 +Payroll review (7) – – – (9) (9) +Total reported EBITDA 1,783 56 70 (223) 1,686 +Depreciation and amortisation (733) (17) – – (750) +Total reported EBIT (8) 1,050 39 70 (223) 936 +Net interest cost (9) (459) +Profit before tax 477 +Income tax expense (190) +Profit after tax 287 +(1) Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) excludes recurring items arising from other activities and transactions that are not +directly attributable to the performance of APA Group’s business operations. +(2) The amount represents a net gain arising from electricity contracts for difference that economically hedge the future cash flows of the electricity +contracts for which hedge accounting is not applicable. +(3) The amount represents costs associated with technology and transformation projects to develop and uplift organisation capabilities, including SaaS +customisation and configuration costs incurred during implementation. +(4) In February 2022, following the entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be +generated from early calendar year 2022 to late calendar year 2025 that were hedged by USD denominated 144A notes. The segment result reflects the +hedged rate for revenues in this period, while the WGP hedge accounting discontinuation reflects the non-cash amortisation of the amount deferred in +the hedging reserve over the same period relating to the discontinued hedge relationship. +(5) Income including accrued interest and the revaluation gain up until the date of acquisition of Basslink Pty Ltd and its subsidiary on 20 October 2022, net +of integration costs of $3 million incurred in the full year to 30 June 2023. As part of the net consideration to acquire Basslink, APA was repaid the face +value of its 100% interest in Basslink’s senior secured debt of $648 million. Refer to Note 26 for further details. +(6) On 15 December 2022, the Australian Energy Market Commission (AEMC) approved Basslink’s compensation claim of $15 million for direct costs +following the application of the administered price cap during an administered price period in Queensland, New South Wales, Victoria and South +Australia in June 2022. +(7) Estimated payment shortfalls for the year ended 30 June 2023 are included within underlying EBITDA. Interest and other related costs are included +within reported EBITDA. +(8) Earnings before interest and tax (“EBIT”). +(9) Excluding finance lease and investment interest income, any gains or losses on revaluation of derivatives included as part of EBIT for segment reporting +purposes, but including other interest income. +102 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_105.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d4dceb6b26897f3f0ccacf75005f85266df73ef --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_105.txt @@ -0,0 +1,70 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +3. Segment information (continued) +2023 +Energy +Infrastructure +$m +Asset +Management +$m +Energy +Investments +$m +Other +$m +Consolidated +$m +Segment assets and liabilities +Segment assets 14,422 177 11 – 14,610 +Carrying value of investments using the +equity method – – 273 – 273 +Unallocated assets (1) – – – 983 983 +Total assets 14,422 177 284 983 15,866 +Segment liabilities 659 94 – – 753 +Unallocated liabilities (2) – – – 13,203 13,203 +Total liabilities 659 94 – 13,203 13,956 +(1) Unallocated assets consist of cash and cash equivalents, fair value of cross currency swaps, foreign currency forward exchange contracts and equity +forwards. +(2) Unallocated liabilities consist of current and non-current borrowings, deferred tax liabilities, fair value of cross currency swaps, foreign currency forward +exchange contracts and equity forwards. +2022 +Energy +Infrastructure +$m +Asset +Management +$m +Energy +Investments +$m +Other +$m +Consolidated +$m +Segment revenue (1) +Revenue from contracts with customers 2,082 115 – – 2,197 +Equity accounted net profits – – 27 – 27 +Pass-through revenue 65 431 – – 496 +Other income (2) 12 – – – 12 +Finance lease and investment interest +income 1 – 1 – 2 +Total segment revenue 2,160 546 28 – 2,734 +Wallumbilla Gas Pipeline hedge +accounting discontinuation (3) (15) – – – (15) +Income on Basslink debt investment (4) – – 12 – 12 +Other interest income – – – 1 1 +Total revenue 2,145 546 40 1 2,732 +(1) The revenue reported above represents revenue generated from external customers. Any intersegment sales were immaterial. +(2) On 8 October 2021, APA Group entered into an Asset Sale and Purchase Agreement to divest the Group’s 50% ownership in Mid West Pipeline. Financial +close was reached on 6 May 2022 for consideration of $5 million, resulting in a pre tax profit on sale of $4 million. +(3) In February 2022, following the entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be +generated from early calendar year 2022 to late calendar year 2025 that were hedged by USD denominated 144A notes. The segment result reflects the +hedged rate for revenues in this period, while the WGP hedge accounting unwind reflects the non-cash amortisation of the amount deferred in hedging +reserve over the same period relating to the discontinued hedge relationship. +(4) Interest income accrued on the 100% interest in the senior secured debt of Nexus Australia Management Pty Ltd (Basslink) acquired by APA Group during +the year ended 30 June 2022. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +103 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_106.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..132f71af31aa552be4564653e58a2e44b236f4e3 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_106.txt @@ -0,0 +1,66 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +3. Segment information (continued) +2022 +Energy +Infrastructure +$m +Asset +Management +$m +Energy +Investments +$m +Other +$m +Consolidated +$m +Segment result +Segment underlying EBITDA (1) 1,706 73 – – 1,779 +Share of net profits of joint ventures and +associates using the equity method +– – 27 – 27 +Finance lease and investment interest income 1 – 1 – 2 +Corporate cost – – – (116) (116) +Total underlying EBITDA (1) 1,707 73 28 (116) 1,692 +Fair value loss on contract for difference (2) (30) – – – (30) +Technology transformation projects (3) – – – (22) (22) +Wallumbilla Gas Pipeline hedge accounting +discontinuation (4) + (15) – – – (15) +Income on Basslink debt investment (5) – – 12 – 12 +Payroll review (6) – – – (7) (7) +Total reported EBITDA (7) 1,662 73 40 (145) 1,630 +Depreciation and amortisation (718) (17) – – (735) +Total reported EBIT (8) 944 56 40 (145) 895 +Net interest cost (9) (483) +Profit before tax excluding significant items 412 +Income tax expense (6) (172) +Profit after tax excluding significant items 240 +Significant items before tax (10) 28 +Reported profit before tax 440 +Significant items after tax (10) 20 +Reported profit after tax 260 +(1) Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) excludes recurring items arising from other activities and transactions that are not +directly attributable to the performance of APA Group’s business operations and significant items. +(2) The amount represents a net loss arising from contract for difference in an electricity sales agreement with a customer that economically hedges the fair +value of the electricity sales agreement for which hedge accounting is not applicable. Refer to note 20. +(3) The amount represents costs associated with technology and transformation projects to develop and uplift organisation capabilities, including SaaS +customisation and configuration costs incurred during implementation. +(4) In February 2022, following entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be generated +from early calendar year 2022 to late calendar year 2025. The revenues were previously hedged by USD denominated 144A notes. WGP hedge +accounting discontinuation reflects the non-cash amortisation of the amount deferred in the hedging reserve over the same period relating to the +discontinued hedge relationship. +(5) Interest income accrued on the 100% interest in the senior secured debt of Nexus Australia Management Pty Ltd (Basslink) acquired by APA Group during +the year ended 30 June 2022. +(6) Estimated payment shortfalls for the year ended 30 June 2022 are included within underlying EBITDA. Interest and other related costs are included +within reported EBITDA. +(7) Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) excluding significant items. +(8) Earnings before interest and tax (“EBIT”) excluding significant items. +(9) Excluding finance lease and investment interest income, any gains or losses on revaluation of derivatives included as part of EBIT for segment reporting +purposes. +(10) Refer to note 2 significant items section for details. +104 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_107.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..21033ef1d893f1c8635f2548769c5d41d9ce8d55 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_107.txt @@ -0,0 +1,35 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +3. Segment information (continued) +2022 +Energy +Infrastructure +$m +Asset +Management +$m +Energy +Investments +$m +Other +$m +Consolidated +$m +Segment assets and liabilities +Segment assets 13,452 186 609 – 14,247 +Carrying value of investments using the equity +method – – 266 – 266 +Unallocated assets (1) 1,324 1,324 +Total assets 13,452 186 875 1,324 15,837 +Segment liabilities 581 96 – – 677 +Unallocated liabilities (2) 12,531 12,531 +Total liabilities 581 96 – 12,531 13,208 +(1) Unallocated assets consist of cash and cash equivalents, fair value of cross currency swaps, foreign currency forward exchange contracts and equity +forwards. +(2) Unallocated liabilities consist of current and non-current borrowings, deferred tax liabilities, fair value of cross currency swaps, foreign currency forward +exchange contracts and equity forwards. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +105 +The secret object #3 is a "knife". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_108.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..16d0e4a40fc8cc406bb3fe3477f26173a2fef290 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_108.txt @@ -0,0 +1,44 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +4. Revenue +Disaggregation of revenue +Revenue is disaggregated below by business unit and region. + 2023 +$m + 2022 +$m +Energy Infrastructure + Wallumbilla Gladstone Pipeline (1) 622 581 + East Coast 808 805 + West Coast 369 342 + Electricity Generation and Transmission (2) 409 354 +Energy Infrastructure revenue from contracts with customers 2,208 2,082 +Asset Management revenue from contracts with customers 114 115 +Energy Investments 23 28 +Other non-contract revenue 8 13 +Total segment revenue excluding pass-through 2,353 2,238 +Pass-through revenue 512 496 +Wallumbilla Gas Pipeline hedge accounting discontinuation (3) (37) (15) +Income on Basslink debt investment (4) 50 12 +Basslink AEMC market compensation (5) 15 – +Unallocated revenue 20 1 +Total revenue 2,913 2,732 +(1) Wallumbilla Gladstone Pipeline is separated from East Coast Grid in this note as a result of the significance of its revenue and EBITDA in the Group. It is +categorised as part of the East Coast Grid cash-generating unit for impairment assessment purposes in note 14. +(2) The Power Generation sub-segment has been renamed to Electricity Generation and Transmission to align the segment with the nature of operations +post the acquisition of Basslink. The results of Basslink Pty Ltd and its subsidiary are included within this segment following acquisition on 20 October +2022. +(3) In February 2022, following entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be generated +from early calendar year 2022 to late calendar year 2025. The revenues were previously hedged by USD denominated 144A notes. WGP hedge +accounting discontinuation reflects the non-cash amortisation of the amount deferred in the hedging reserve over the same period relating to the +discontinued hedge relationship. +(4) Income including accrued interest and the revaluation gain up until the date of acquisition of Basslink Pty Ltd and its subsidiary on 20 October 2022. As +part of the net consideration, APA was repaid the face value of its 100% interest in Basslink’s senior secured debt of $648 million. Refer to Note 26 for +further details. +(5) On 15 December 2022, the Australian Energy Market Commission (AEMC) approved Basslink’s compensation claim of $15 million for direct costs +following the application of the administered price cap during an administered price period in Queensland, New South Wales, Victoria and South +Australia in June 2022. +106 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_109.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..d9179f4f914a8e40a9ab3d2eb9915fcc07f4fe4c --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_109.txt @@ -0,0 +1,54 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +4. Revenue (continued) +Revenue is recognised at an amount that reflects the consideration to which the Group expects to be entitled in exchange +for the provision of services or for the transferring of goods to a customer (the performance obligations) under a contract. +APA Group recognises revenue when control of a product or service is transferred to the customer. Amounts disclosed as +revenue are net of duties, goods and services tax (“GST”) and other taxes paid, except where the amount of GST incurred +is not recoverable from the taxation authority. Given the nature of APA Group’s services there is no significant right of +return or warranty provided. +Revenue from contracts with customers is derived from the major business activities as follows: +• Energy Infrastructure revenue from contracts with customers, is derived from the transportation, processing and +storage of gas and other related services (transmission revenue), and the generation of electricity and other related +services (power generation revenue). Revenue from contracts with customers may either be identified as separate +performance obligations or a series of distinct performance obligations that are substantially the same, have the same +pattern of transfer and are therefore treated as a single performance obligation that is satisfied over time. This includes +both firm and interruptible services. The consideration is primarily volume based and is recognised as revenue in a +manner that depicts the transfer based on output to the customer. This method most accurately depicts the progress +towards satisfaction of the performance obligation of the services provided, as the customer simultaneously receives +and consumes the benefits of APA Group’s service and obtains value as each volume of output is transported by APA +Group. The amount billed corresponds directly to the value of the performance to date; +• Asset Management revenue from contracts with customers, is derived from the provision of commercial services, +operating services, asset management services and/or asset maintenance services to APA Group’s energy investments +and other third parties. APA Group recognises revenue at the amount to which APA Group has a right to invoice; and +• Pass-through revenue, is revenue from contracts with customers for the provision of commercial services, operating +services, asset management services and/or asset maintenance services to APA Group’s energy investments. Any +management fee earned for the provision of these services is recognised as part of asset management revenues. APA +Group recognises revenue at the amount to which APA Group has a right to invoice. APA Group is determined to be +the principal in these relationships. +Other types of revenue are recognised as follows: +• Other non-contract revenue: includes dividend income, which is recognised when the right to receive the payment +has been established; and +• Unallocated revenue: interest income, which is recognised as it accrues and is determined using the effective interest +method and finance lease income, which is allocated to accounting periods so as to reflect a constant periodic rate of +return on APA Group’s net investment outstanding in respect of the leases. +Contract liabilities – unearned revenue +Where amounts have been received in advance of fulfilling the contract obligation these amounts are deferred in the +balance sheet as unearned revenue until the performance obligation is fulfilled. Where the period between the payment +by the customer and the fulfilment of the obligation is expected to exceed one year any amounts associated with the +finance component of this deferred revenue is recognised as interest expense. +Included in the unearned revenue are customer upfront contributions on contracts with customers and government grants +received in advance. During the year, APA Group recognised $8 million (2022: $9 million) in revenue from contracts with +customers from the unearned revenue balance at 30 June 2022. +Contract assets – accrued revenue +Contract assets primarily relate to APA Group’s right to consideration for work completed but not billed at the reporting +date. These amounts are known as accrued revenue and are disclosed in note 9. +Accrued revenue is transferred to trade receivables when the rights become unconditional. This usually occurs when APA +Group issues an invoice to the customer. +Accounting for costs to obtain contracts +APA Group generally expenses costs to obtain contracts as they are incurred, as they are incurred whether the contract is +obtained or not (e.g. staff salaries, professional fees, etc.). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +107 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_11.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..abf452b3d4e14e4fa03296422dd7ade03f18a1fa --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_11.txt @@ -0,0 +1,66 @@ +APA Group is a leading Australian energy infrastructure +business, owning, operating and managing a diverse +$22 billion portfolio. We are proud of the role we play in +delivering energy solutions to millions of customers in every +State and Territory. +Our strategic ambition is to be the partner of choice +in delivering infrastructure solutions for Australia’s +energy transition. +Our approach is customer driven as we look to support the +decarbonisation ambitions of our priority customer groups +– including governments, resource companies, energy +supply and wholesale customers, and large commercial +and industrial customers. +Through this approach to market we see immense +opportunities across our four priority asset classes +of contracted renewables and firming, electricity +transmission, gas transportation and future energy. +Our behaviours +Our behaviours set the benchmark for how our people +interact with customers, communities and each other. +They support our strategy and the high-performance +culture that we strive for. The behaviours guide how +we conduct our business and help to shape our +inclusive culture: +We are customer focused, innovative and collaborative, +with empowered and energised teams. +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +COURAGEOUS +We are honest and +transparent; we learn +from our mistakes +and we challenge the +status quo. +ACCOUNTABLE +We spend time +on what matters, +we do what we say +and deliver world +class solutions. +NIMBLE +We are curious, +adaptive and +future focused. +COLLABORATIVE +We are inclusive, work +together and respect +and listen to our +stakeholders. +IMPACTFUL +We create positive +legacies and +work safely, for +our customers, +communities, +our people and +the environment. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +9 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_110.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..fd468baee8635221dff9eb022bf850835c49d732 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_110.txt @@ -0,0 +1,57 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +4. Revenue (continued) +Future revenues from remaining performance obligations +As at 30 June 2023, future contracted Energy Infrastructure revenues extending through to 2051 are approximately +$16.4 billion (2022: $17.0 billion extending through to 2051), of which $1.8 billion is expected to be recognised in the year +ending 30 June 2024. These amounts relate to Energy Infrastructure revenue from contracts, with a significant portion of +customers being high credit worthy counterparties. +Future contracted Energy Infrastructure revenues outlined above are in nominal 2023 dollars escalated by CPI. Variable +revenues, potential future revenues from new contracts, contract renewals or extensions, and revenues from potential +new assets or expansions where a contract does not currently exist with a customer are not included. As such, the future +contract revenues described above represent only part of APA Group’s forecast revenues for the year ended 30 June +2024 and beyond. +Information about major customers +Included in revenues from contracts with customers arising from Energy Infrastructure of $2,208 million (2022: $2,083 million) +are revenues of approximately $783 million (2022: $710 million) which arose from sales to APA Group’s top three customers. +5. Expenses +2023 +$m +2022 +$m +Depreciation of non-current assets 554 537 +Amortisation of non-current assets 196 198 +Depreciation and amortisation expense 750 735 +Energy infrastructure costs – pass-through 51 65 +Asset management costs – pass-through 461 431 +Other operating costs – pass-through 512 496 +Interest on bank overdrafts and borrowings (1) 498 452 +Amortisation of deferred borrowing costs 10 8 +Other finance costs 8 6 +516 466 +Less: amounts included in the cost of qualifying assets (42) (11) +474 455 +(Gain)/Loss on derivatives (2) (7) 16 +Unwinding of discount on non-current liabilities 8 8 +Unwinding of discount on deferred revenue 2 3 +Interest incurred on lease liabilities 2 2 +Finance costs 479 484 +Defined contribution plans 26 21 +Defined benefit plans (note 17) 2 2 +Post-employment benefits 28 23 +Termination benefits 2 1 +Cash settled long-term incentive payments (3) 36 36 +Equity settled long-term incentive payments (3) 8 (1) +Other employee benefits 324 264 +Employee benefit expense (4) 398 323 +(1) The average interest rate applicable to drawn debt is 4.43% p.a. (2022: 4.42% p.a.) excluding finance costs associated with amortisation of borrowing costs. +(2) Represents unrealised gains and losses on the mark-to-market valuation of derivatives. +(3) APA Group provides benefits to certain employees in the form of long-term incentive payments. For cash settled long-term incentive payments, a liability +equal to the portion of services received is recognised at the current fair value determined at each reporting date. For equity settled long-term incentive +payments, a reserve is recognised equal to the portion of services received based on the fair value of the equity instrument at grant date. +(4) Employee benefit expense of $77 million (2022: $74 million) is recharged as pass-through revenue and presented as part of other operating costs – +pass-through. +108 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_111.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..ddce483c493a55c96d326fdb7b286abff2a0f05a --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_111.txt @@ -0,0 +1,33 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +6. Income tax +The major components of tax benefit/(expense) are: +2023 +$m +2022 +$m +Income statement +Current tax benefit/(expense) in respect of the current year 122 (83) +Adjustments recognised in the current year in relation to current tax of prior years (2) – +Deferred tax expense relating to the origination and reversal of temporary differences (310) (97) +Total tax expense (190) (180) +Tax reconciliation +Profit before tax 477 440 +Income tax expense calculated at 30% (143) (132) +Non-assessable trust distribution 7 9 +Non-deductible expenses (53) (61) +Non-assessable income – – +(189) (184) +Franking credits received 1 2 +Other (2) 2 +(190) (180) +Income tax expense comprises of current and deferred tax. Income tax is recognised in profit or loss except to the extent +that it relates to items recognised directly in other comprehensive income, in which case it is recognised in equity. Current +tax represents the expected taxable income at the applicable tax rate for the financial year, and any adjustment to tax +payable in respect of previous financial years. +Income tax expense for the year is $190 million (2022: $180 million). Nil income tax payable or receivable has been +recognised (2022: $20 million payable) (refer to note 9). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +109 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_112.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfb261ececb335f87911cd304cbb3064e086d713 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_112.txt @@ -0,0 +1,53 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +6. Income tax (continued) +Deferred tax balances +Deferred tax (liabilities)/assets arise from the following: +2023 +Opening +balance +$m +Charged to +income +$m +Charged to +equity +$m +Closing +balance +$m +Gross deferred tax liabilities +Property, plant and equipment and intangibles (1,176) (322) – (1,498) +Investments equity accounted (1) – (1) (2) +Deferred expenses (51) 3 – (48) +Other (1) 2 – 1 +(1,229) (317) (1) (1,547) +Gross deferred tax assets +Provisions 83 4 – 87 +Cash flow hedges 154 5 161 320 +Deferred revenue 17 (4) – 13 +Defined benefit obligation 2 – (1) 1 +Tax losses 110 122 – 232 +366 127 160 653 +Net deferred tax liability (863) (190) 159 (894) +2022 +Gross deferred tax liabilities +Property, plant and equipment and intangibles (1,080) (96) – (1,176) +Deferred expenses (51) – – (51) +Other – (1) – (1) + (1,131) (97) – (1,228) +Gross deferred tax assets +Provisions 74 9 – 83 +Cash flow hedges 143 14 (3) 154 +Security issue costs 1 (1) – – +Deferred revenue 13 4 – 17 +Investments equity accounted 6 – (7) (1) +Defined benefit obligation 4 – (2) 2 +Tax losses 135 (25) – 110 +Other 1 (1) – – + 377 – (12) 365 +Net deferred tax liability (754) (97) (12) (863) +110 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_113.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..4852838d78966e12b7be760ff68bb846742756fd --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_113.txt @@ -0,0 +1,45 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +6. Income tax (continued) +Deferred tax assets +Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the +carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The +following temporary differences are not provided for: +• Initial recognition of goodwill; +• Initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and +• Differences relating to investments in wholly-owned entities to the extent that they will probably not reverse in the +foreseeable future. +Deferred tax is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, +using the appropriate tax rates at the end of the reporting period. +A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against +which the asset can be utilised and are reduced to the extent that it is no longer probable that the related tax benefit will +be realised. +Tax consolidation +APA Infrastructure Trust and its wholly-owned Australian resident entities formed a tax-consolidated group with effect from +1 July 2003 and are therefore taxed as a single entity from that date. The head entity within the tax-consolidated group is +APA Infrastructure Trust. The members of the tax-consolidated group are identified at note 25. +Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of +the tax-consolidated group are recognised in the separate financial reports of the members of the tax-consolidated group +using the ‘separate taxpayer within group’ approach, by reference to the carrying amounts in the separate financial reports +of each entity and the tax values applying under tax consolidation. +Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the wholly-owned entities +are assumed by the head entity in the tax-consolidated group and are recognised as amounts payable/(receivable) to/ +(from) other entities in the tax-consolidated group in conjunction with any tax funding arrangement amounts. +The head entity recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent +that it is probable that future taxable profits of the tax-consolidated group will be available against which the assets can be +utilised. +Nature of tax funding arrangement and tax sharing agreement +Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax sharing agreement with +the head entity. Under the terms of the tax funding arrangement, each of the entities in the tax-consolidated group have +agreed to pay a tax equivalent payment to or from the head entity based on the current tax liability or current tax asset +of the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the tax-consolidated +group. +The tax sharing agreement entered into between members of the tax-consolidated group provides for the determination +of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations +or if an entity should leave the tax-consolidated group. The effect of the tax sharing agreement is that each member’s +liability for the tax payable by the tax-consolidated group is limited to the amount payable to the head entity under the tax +funding arrangement. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +111 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_114.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..0c51af8dfdb9dd71cb4ca8b17bb8a35a0f5382b4 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_114.txt @@ -0,0 +1,63 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +7 . Earnings per security +2023 +cents +2022 +cents +Earnings per security +Basic and diluted earnings per unit attributable to the parent 22.3 19.6 +Basic and diluted earnings per unit attributable to the non-controlling interest 2.0 2.5 +Basic and diluted earnings per security 24.3 22.1 +Earnings per security excluding significant items +Basic and diluted earnings excluding significant items per unit attributable to the parent 22.3 17.9 +Basic and diluted earnings excluding significant items per unit attributable to the +non-controlling interest 2.0 2.5 +Basic and diluted earnings per security excluding significant items 24.3 20.4 +Underlying earnings per security (1) +Underlying basic and diluted earnings per unit attributable to the parent 24.6 21.6 +Underlying basic and diluted earnings per unit attributable to the non-controlling interest 2.0 2.5 +Underlying basic and diluted earnings per security 26.6 24.1 +(1) Excludes recurring items arising from other activities and transactions that are not directly attributable to the performance of APA Group’s business +operations, and significant items. +The earnings and weighted average number of ordinary securities used in the calculation of basic and diluted earnings per +security are as follows: +2023 +$m +2022 +$m +Net profit +Net profit attributable to unitholders of the parent 263 231 +Net profit attributable to unitholders of the non-controlling interest 24 29 +Net profit attributable to stapled securityholders for calculating basic and diluted +earnings per security (note 3) 287 260 +Underlying net profit +Net profit attributable to unitholders of the parent 263 231 +Significant items, net of tax – (20) +Net profit excluding significant items attributable to unitholders of the parent 263 211 +Fair value (gains)/losses on contracts for difference, net of tax (8) 21 +Technology transformation projects, net of tax 47 15 +Wallumbilla Gas Pipeline hedge accounting discontinuation, net of tax 26 11 +Basslink debt revaluation, interest and integration costs, net of tax (33) (9) +Basslink AEMC Market Compensation, net of tax (11) – +Payroll review, net of tax 6 5 +Underlying net profit attributable to unitholders of the parent 290 254 +Underlying net profit attributable to unitholders of the non-controlling interest 24 29 +Underlying net profit attributable to stapled securityholders for calculating basic and diluted +earnings per security 314 283 +2023 +No. of securities +millions +2022 +No. of securities +millions +Adjusted weighted average number of ordinary securities used in the calculation of; +Basic earnings per security 1,180 1,180 +Diluted earnings per security (1) 1,182 1,182 +(1) Includes $3 million (2022: $2 million) performance rights granted under long-term incentive plan. Each performance right is a right to receive one ordinary +stapled security in APA Group subject to satisfaction of certain performance hurdles and board approval. Further information can be found in the most recent +annual report. APA Group has historically instructed Link Market Services to acquire securities on-market to minimise dilution of existing securityholders. +112 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_115.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..4abd5960d442f67528a756c8a102cb7a3d095ff5 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_115.txt @@ -0,0 +1,55 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +8. Distributions + 2023 +cents per +security +2023 +Total +$m +2022 +cents per +security +2022 +Total +$m +Recognised amounts +Final FY22 distribution paid on 14 September 2022 +(30 June 2021: Final FY21 distribution paid on 15 September 2021) +Profit distribution – APA Infrastructure Trust (1) 6.31 74 – – +Capital distribution – APA Infrastructure Trust 15.40 182 18.63 220 +Profit distribution – APA Investment Trust (2) 1.14 13 1.67 20 +Capital distribution – APA Investment Trust 5.15 61 6.70 79 +28.00 330 27.00 319 +(1) 30 June 2022: APA Infrastructure Trust profit distributions were fully franked and resulted in franking credits of 2.70 cents per security. +(2) 30 June 2021: APA Investment Trust profit distributions were unfranked. + 2023 +cents per +security +2023 +Total +$m +2022 +cents per +security +2022 +Total +$m +Interim FY23 distribution paid on 16 March 2023 +(31 December 2021: Interim FY22 distribution paid on 17 March 2022) +Profit distribution – APA Infrastructure Trust (1) 15.92 189 9.43 111 +Capital distribution – APA Infrastructure Trust 6.67 79 10.69 126 +Profit distribution – APA Investment Trust (2) 1.01 12 1.33 16 +Capital distribution – APA Investment Trust 2.40 28 3.55 42 +26.00 308 25.00 295 +Total distributions recognised +Profit distributions 24.38 288 12.43 147 +Capital distributions 29.62 350 39.57 467 +54.00 638 52.00 614 +(1) 31 December 2022: APA Infrastructure Trust profit distributions were partially franked and resulted in franking credits of 3.64 cents per security. +(31 December 2021: fully franked.) +(2) APA Investment Trust profit distributions were unfranked. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +113 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_116.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..e8bd7d2c5dedd215c2173968b2c25c26b4c6ee0c --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_116.txt @@ -0,0 +1,40 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +8. Distributions (continued) + 2023 +cents per +security +2023 +Total +$m +2022 +cents per +security +2022 +Total +$m +Unrecognised amounts +Final FY23 distribution payable on 13 September 2023 (1) +(30 June 2022: Final FY22 distribution paid on 14 September 2022) +Profit distribution – APA Infrastructure Trust (2) 6.64 79 6.31 74 +Capital distribution – APA Infrastructure Trust 15.02 177 15.40 182 +Profit distribution – APA Investment Trust (3) 1.00 12 1.14 13 +Capital distribution – APA Investment Trust 6.34 74 5.15 61 +29.00 342 28.00 330 +(1) Record date 30 June 2023. +(2) 30 June 2023: APA Infrastructure Trust profit distributions are unfranked (30 June 2022: Fully franked, franking credits of 2.70 per security). +(3) APA Investment Trust profit distributions are unfranked. +The final distribution in respect of the financial year has not been recognised in this financial report because the final +distribution was not declared, determined or publicly confirmed prior to the end of the financial year. + 2023 +$m + 2022 +$m +Franking account balance 2 55 +Income tax (receivable)/payable (2) 20 +Adjusted franking account balance – 75 +114 +APA GROUP ANNUAL REPORT 2023 +The secret fruit is an "orange". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_117.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..57e8f9d2fa3f281485a2a2483b88714d92adb223 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_117.txt @@ -0,0 +1,52 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities +9 . Receivables +2023 +$m +2022 +$m +Trade receivables 76 50 +Accrued revenue 247 243 +Loss allowance (note 20) (4) (1) +Trade receivables 319 292 +Receivables from associates and related parties 12 15 +Finance lease receivables (note 18) 1 1 +Interest receivable 2 1 +Other receivables 40 – +Current 374 309 +Finance lease receivables (note 18) 8 9 +Other receivables 19 – +Loan receivable (note 20) (1) – 599 +Non-current 27 608 +(1) During FY22, APA Group acquired 100% of the senior secured debt of Nexus Australia Management Pty Ltd (Basslink) at a discount to face value. The +loan receivable was classified as a purchased or originated credit impaired (“POCI”) financial asset. During FY23, as part of the net consideration to +acquire Basslink, APA was repaid the face value of its 100% interest in Basslink’s senior secured debt of $648 million including accrued interest and the +revaluation gain up until the date of acquisition. Refer to Note 26 for further details. +Trade receivables are non-interest bearing and are generally on 14 to 30 day terms. There are no material trade +receivables past due and not provided for. +Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active +market are classified as loans and receivables. Trade and other receivables are initially recognised at fair value plus any +directly attributable transaction costs. Subsequent to initial recognition, they are stated at amortised cost less impairment. +10. Payables +2023 +$m +2022 +$m +Trade payables 68 86 +Income tax payable – 20 +Other payables 403 311 +Current 471 417 +Other payables 9 11 +Non-current 9 11 +Trade payables are non-interest bearing and are normally settled on 15 – 30 day terms. +Trade and other payables are recognised when APA Group becomes obliged to make future payments resulting from +the purchase of goods and services. Trade and other payables are initially recognised at fair value plus any directly +attributable transaction costs. Subsequent to initial recognition, they are stated at amortised cost. +Payables are recognised inclusive of GST, except for accrued revenue and accrued expense at balance dates which +exclude GST. +The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or +payables. GST receivable or GST payable is only recognised once a tax invoice has been issued or received. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +115 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_118.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..bbd7c2095f7849c0bbab04f9751517ffa83ec789 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_118.txt @@ -0,0 +1,47 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +11. Assets classified as held for sale + 2023 +$m + 2022 +$m +Consolidated Statement of Financial Position +Inventories – 1 +Property, Plant and Equipment – 294 +Assets classified as held for sale – 295 +Unearned revenue – 25 +Other payables – 6 +Liabilities associated with assets classified as held for sale – 31 +Net assets associated with held for sale – 264 +Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs +of disposal if their carrying amount will be recovered principally through a sale transaction. They are not depreciated or +amortised once classified as held for sale. This condition is regarded as met only when the sale is highly probable and the +asset is available for immediate sale in its present condition. +Orbost Gas Processing Plant +On 20 June 2022, APA Group announced that it had entered into binding agreements with Cooper Energy Limited for the +sale of the Orbost Gas Processing Plant for cash consideration of between $270 million and $330 million. Completion was +reached on 28 July 2022. +The cash consideration consists of an upfront payment to APA of $210 million followed by a series of deferred payments +to APA as follows: +• A first post-completion payment of $40 million within 12 months of completion (being the date on which ownership +of the Orbost Gas Processing Plant transfers from APA to Cooper Energy); +• A second post-completion payment of between $20 million and $40 million within 24 months of completion, and +• A third post-completion payment of up to $40 million within 36 months of completion. +The final amounts of the second and third post-completion payments were subject to post-completion plant performance +to be calculated at the point when APA ceased operating the Orbost Gas Processing Plant and the plant’s Major Hazard +Facility Licence (MHFL) was transferred to Cooper Energy, which occurred on 22 May 2023. No consideration relating +to post-completion plant performance has been recognised because the plant did not achieve the required levels of +production, being production rates in excess of 50 TJ/day between completion date and the MHFL transfer date. Final +cash consideration amounts to $270 million. +In FY22, immediately prior to the reclassification of the plant as held for sale, the recoverable amount was determined +and an impairment reversal of $28 million before tax was recognised to reflect the consideration estimated to be realised +from the sale of the Orbost Gas Processing Plant. The measurement of the recoverable amount excluded consideration +contingent on future plant performance. +The FY22 impairment reversal has been separately presented in the consolidated statement of profit or loss. The Orbost +Gas Processing Plant was classified as held for sale as at 30 June 2022 and depreciation was ceased on the date it was +classified as held for sale. The Orbost Gas Processing Plant was previously included within the Energy Infrastructure +operating segment. +116 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_119.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..d65ee545782fcad06224ebcd485eeaa8cd7b90a3 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_119.txt @@ -0,0 +1,63 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +12. Property, plant and equipment +Freehold land +and buildings +– at cost +$m +Leasehold +improvements +– at cost +$m +Plant and +equipment – +at cost +$m +Work in +progress – +at cost +$m +ROU land and +buildings – +at cost +$m +ROU +plant and +equipment – +at cost +$m +Total +$m +Gross carrying amount +Balance at 1 July 2021 276 11 12,444 335 62 14 13,142 +Additions – – 12 705 6 5 728 +Disposals – – (34) – (9) (2) (45) +Reclassified as asset held for +sale (note 11) (2) – (533) – – – (535) +Transfers 6 4 379 (389) – – – +Balance at 30 June 2022 280 15 12,268 651 59 17 13,290 +Balance at 1 July 2022 280 15 12,268 651 59 17 13,290 +Additions 39 2 698 1,127 17 8 1,891 +Disposals – – (17) – (13) (5) (35) +Transfers – – 1,145 (1,145) – – – +Balance at 30 June 2023 319 17 14,094 633 63 20 15,146 +Accumulated depreciation +and impairment +Balance at 1 July 2021 (70) (6) (3,540) – (19) (6) (3,641) +Disposals – – 29 – 7 2 38 +Depreciation expense (note 5) (8) (1) (514) – (10) (4) (537) +Impairment expense reversal – – 28 – – – 28 +Reclassified as held for sale +(note 11) – – 242 – – – 242 +Balance at 30 June 2022 (78) (7) (3,755) – (22) (8) (3,870) +Balance at 1 July 2022 (78) (7) (3,755) – (22) (8) (3,870) +Disposals – – 15 – 13 5 33 +Depreciation expense (note 5) (8) (2) (528) – (11) (5) (554) +Balance at 30 June 2023 (86) (9) (4,268) – (20) (8) (4,391) +Net book value +As at 30 June 2022 202 8 8,513 651 37 9 9,420 +As at 30 June 2023 233 8 9,826 633 43 12 10,755 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +117 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_12.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..77bbc6b4e45511a7742ce64ea05c5b8f7f43034d --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_12.txt @@ -0,0 +1,165 @@ +APA PORTFOLIO OF ASSETS AND INVESTMENTS +About APA +(continued) +Pipeline +3 Amadeus Gas Pipeline (inc laterals) +13 Berwyndale W allumbilla Pipeline +1 Bonaparte Gas Pipeline +9 Carpentaria Gas Pipeline (inc laterals) +22 Central Ranges Pipelines +23 Central West Pipeline +37 Eastern Goldfields Pipeline +47 Goldfields Gas Pipeline +38 Kalgoorlie Kambalda Pipeline +40 Mid West Pipeline +20 Moomba Sydney Pipeline (inc laterals) +21 Moomba to Sydney Ethane Pipeline +28 Mortlake Gas Pipeline +39 Northern Goldfields Interconnect +45 Parmelia Gas Pipeline +48 Pilbara Pipeline System +12 Reedy Creek Wallumbilla Pipeline +15 Roma Brisbane Pipeline (inc Peat lateral) +30 SEA Gas Pipeline +29 SESA Pipeline +10 South West Queensland Pipeline +49 Telfer/Nifty Gas Pipelines and lateral +25 Victorian Transmission System +14 Wallumbilla Gladstone Pipeline (inc laterals) +2 Wickham Point Pipeline +36 Yamarna Gas Pipeline +51 Kurri Kurri Lateral Pipeline (KKLP) +52 Western Outer Ring Main (WORM) +Gas Processing and Storage +27 Dandenong (680TJ/12000t) +18 Kogan North (12TJ/d) +46 Mondarra (18PJ) +Gas Distribution +16 Allgas Gas Network +50 Australian Gas Networks +24 Tamworth Gas Network +Electricity Transmission +19 Directlink +31 Murraylink +53 Basslink* + +Generation +17 Daandine (30 MW) +6 Diamantina (242 MW) +33 Gruyere (47 MW) +7 Leichhardt (60 MW) +5 Thomson (22 MW) +4 X41 (41 MW) +35 Gruyere Battery Station (4.4 MW/MWh) +Solar Farm +43 Badgingarra (19 MW) +11 Darling Downs (108 MW) +41 Emu Downs (20 MW) +34 Gruyere Solar Farm (13.2 MW) +8 Dugald River Solar Farm (88 MW) +Wind Farm +44 Badgingarra (130 MW) +42 Emu Downs (80 MW) +32 North Brown Hill (132 MW) +K ey +APA G r o up asse t +APA Group distribution network asset +APA Group investment +Investment distribution network +APA G r oup managed asset (no t ow ned ) +Managed distribution network +Other natural gas pipelines +Under construction +Wind farm +Solar farm +LNG plan +Battery storage +Gas storage facility +Gas processing plant +Gas power station +Integrated Operations Centre + + + +Dubbo +53 +Gruyere +45 +46 +48 4 +1 +2 +5 +6 +7 +8 +9 +10 +13 +12 +11 +14 +15 16 +17 +23 +24 +22 +25 +28 +29 27 +20 +19 +21 +32 +31 +30 +18 +33 +47 +36 +3435 +3738 +41 +42 +43 +44 +40 +39 +3 +49 +50 +51 +Kurri Kurri +W allumbilla +R oma +Mount Isa +Karratha +Ballar at +Bendigo +T a mwor th +I O C +Lithgow +T r opicana +Y armana +Alice Springs +K atherine +Kalgoorlie +Gladstone +Moomba +Albury +Sydney +Canberra +Brisbane +Melbourne +Hobart +D arwin +Perth +Adelaide +Melbourne +Melbourne +Airport +52 +Ballera +* Acquired October 2022. +10 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_120.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..805697e86b7df50ae47e66f66e9a175539b60c3e --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_120.txt @@ -0,0 +1,49 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +12. Property, plant and equipment (continued) +Property, plant and equipment is stated at cost, less accumulated depreciation and impairment losses. Work in progress +is stated at cost. Cost includes expenditure that is directly attributable to the acquisition or construction of the item. +The right-of-use (ROU) asset is initially measured at cost comprising the initial measurement of the lease liability (as +outlined in note 18) adjusted for any lease payments made before the commencement date and reduced by any lease +incentives received plus initial direct costs incurred in obtaining the lease. Any make good requirements are recognised +and measured under AASB 137 Provisions, Contingent Liabilities and Contingent Assets and to the extent that the costs +relate to a ROU asset these are included in the related ROU asset. +A ROU asset is subsequently measured using the cost model less any accumulated depreciation and any accumulated +impairment losses, and adjusted for any remeasurement of the lease liability. The ROU asset is depreciated over the term +of the lease. +Subsequently, APA Group applies AASB 136 Impairment of Assets to determine whether a ROU asset is impaired and +accounts for any impairment as described in note 14. +Depreciation is provided on property, plant and equipment excluding land. Depreciation is calculated on a straight-line +basis depending on the nature of the asset so as to write off the net cost of each asset over its estimated useful life. +Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, +using the straight-line method. The estimated useful lives and depreciation methods are reviewed at the end of each +reporting period, with the effect of any changes recognised on a prospective basis. +Where the ROU asset is adjusted due to changes in the lease liability, the depreciation for the ROU asset is adjusted on +a prospective basis. +The depreciation charge for each period is recognised in profit or loss unless it is included in the cost of another asset. +Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets (i.e. assets that take +a substantial period of time to get ready for their intended use or sale) are added to the cost of those assets until such time +as the assets are substantially ready for their intended use or sale. +All other borrowing costs are recognised in profit or loss in the period in which they are incurred. +Critical accounting judgements and key sources of estimation uncertainty – useful lives of non-current assets +APA Group reviews the estimated useful lives of property, plant and equipment at the end of each annual reporting period. +Physical, economic, climate and environmental factors are taken into consideration in assessing the useful lives of the +assets, including but not limited to asset condition and obsolescence, technology changes, regulatory determinations, +government policy, commercial contract lives and renewals, global and regional gas supply-and-demand, and certain +climate-related risks and policies. +The impact of the above indicators and other factors that may emerge are uncertain at this time and difficult to predict. +Refer to note 14 for additional critical judgements that underpin APA’s assessments in relation to the potential impact +of climate transition risks on APA Group’s portfolio of assets which may affect asset carrying values and prospective +depreciation rates. +Energy Infrastructure Assets +In FY23 APA undertook a detailed review of the estimated useful lives of its Energy Infrastructure assets giving +consideration to APA’s Net Zero commitments, goals and targets together with APA’s most recent commercial, operational, +and technical outlooks to reduce stranded asset risk. +As a result of this review and effective from 30 June 2023, all gas infrastructure and electricity generation and +transmission assets have a maximum useful life end date of FY60 and FY57 respectively. The changes to estimated useful +lives are expected to increase future annual depreciation by $30-40 million. The changes are captured in the estimated +useful life by asset class information below. +118 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_121.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..d4b376b423b0cfb23f9f3096ec4a46e50285a313 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_121.txt @@ -0,0 +1,52 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +12. Property, plant and equipment (continued) +As at 30 June 2023, the following estimated useful lives from the date of construction are used in the calculation +of depreciation: +• Buildings 30 – 50 years; +• Compressors 10 – 50 years; +• Gas transportation systems 10 – 80 years; +• Meters 20 – 30 years; +• Power generation facilities 3 – 36 years; +• Gas processing facilities 10 – 25 years; +• Other plant and equipment 3 – 20 years; +• ROU land and buildings 1 – 40 years; and +• ROU property, plant and equipment 1 – 4 years. +13. Goodwill and intangibles +2023 +$m + 2022 +$m +Goodwill +Balance at beginning of financial year 1,184 1,184 +Balance at end of financial year 1,184 1,184 +Allocation of goodwill to cash-generating units +Goodwill has been allocated for impairment testing purposes to individual cash-generating units. +The East Coast Grid is an interconnected pipeline network that includes, inter alia, the Wallumbilla Gladstone, Moomba +Sydney, Roma Brisbane, Carpentaria Gas and South West Queensland pipelines and the Victorian Transmission System. +Since the acquisition of the South West Queensland Pipeline to complete the formation of APA’s East Coast Grid in +December 2012, APA has installed facilities to enable bi-directional transportation of gas to meet the demand of our major +customers who now typically operate portfolios of gas supply and demand. Through the provision of multi-asset services, +bi-directional transportation, capacity trading and gas storage and parking facilities, APA’s East Coast Grid delivers options +for customers to choose from, and move gas between, more than 60 receipt points and over 170 delivery points on the +east coast of Australia. The East Coast Grid is categorised as an individual cash-generating unit. +Goodwill acquired in a business combination is initially measured at cost and subsequently at cost less accumulated +impairment. Refer to note 14 for critical accounting judgements and key sources of estimation uncertainty relating to +impairment of assets. +The carrying amount of goodwill allocated to cash-generating units that are significant individually or in aggregate are as +follows: +2023 +$m + 2022 +$m +Asset Management business 22 22 +Energy Infrastructure + East Coast Grid 1,061 1,061 + Diamantina Power Station 43 43 + Other energy infrastructure (1) 58 58 + 1,184 1,184 +(1) Primarily represents goodwill relating to the Pilbara Pipeline System ($33 million) and the Goldfields Gas Pipeline ($19 million). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +119 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_122.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..975bd9a5879ef04ab4b76a1e20dee0ecdb0f50d7 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_122.txt @@ -0,0 +1,66 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +13. Goodwill and intangibles (continued) +Software, licences, contract and other intangibles +Software – +at cost +$m +Licences – +at cost +$m +Work in +progress – +at cost +$m +Contract +and other – +at cost(1) +$m +Total +$m +Gross carrying amount +Balance at 1 July 2021 81 2 17 3,592 3,692 +Additions – – 26 2 28 +Transfer 26 1 (26) – 1 +Balance at 30 June 2022 107 3 17 3,594 3,721 +Balance at 1 July 2022 107 3 17 3,594 3,721 +Additions – – 12 2 14 +Transfer 17 1 (18) – – +Balance at 30 June 2023 124 4 11 3,596 3,735 +Accumulated amortisation +Balance at 1 July 2021 (63) (1) – (1,147) (1,211) +Amortisation expense (note 5) (15) (1) – (182) (198) +Balance at 30 June 2022 (78) (2) – (1,329) (1,409) +Balance at 1 July 2022 (78) (2) – (1,329) (1,409) +Amortisation expense (note 5) (13) (1) – (182) (196) +Balance at 30 June 2023 (91) (3) – (1,511) (1,605) +Net book value +As at 30 June 2022 29 1 17 2,265 2,312 +As at 30 June 2023 33 1 11 2,085 2,130 +(1) Includes $2,033 million (30 June 2022: $2,204 million) of contract intangibles associated with the acquisition of Wallumbilla Gladstone Pipeline in FY15, +which are being amortised over 20 years. +Intangible assets acquired separately are carried at cost less accumulated amortisation and impairment losses. +Intangible assets acquired in a business combination are identified and recognised separately from goodwill and are +initially recognised at their fair value at the acquisition date and subsequently at cost less accumulated amortisation and +impairment losses. +Amortisation is recognised on a straight-line basis over the estimated useful life of each asset. The estimated useful life +and amortisation method are reviewed at the end of each annual reporting period, with the effects of any changes in +estimate being accounted for on a prospective basis. Amortisation expense is a non-cash item, and is included in the line +item of depreciation and amortisation expense in the statement of profit or loss and other comprehensive income. +The following useful lives are used in the calculation of amortisation: +• Contract and other intangibles 1 – 20 years; +• Software 4 – 7 years; and +• Licences 4 years. +Contract and other intangibles +APA Group holds various third party operating and maintenance contracts. The combined gross carrying amount of +$3,596 million amortises over terms ranging from 1 to 20 years. Useful life is determined based on the underlying +contractual terms. +Software +Software is measured at cost less accumulated amortisation and impairment losses. Cost includes expenditure that is +directly attributable to the acquisition or development of software. +Licences +Licences are carried at cost less any accumulated amortisation and impairment losses. +120 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_123.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..2b3ce72343be81141482ca804043df426014d586 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_123.txt @@ -0,0 +1,28 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +14. Impairment of non-financial assets +APA Group tests goodwill for impairment at least annually or whenever there is an indication that the asset may be +impaired. Other non-financial assets with finite useful lives are assessed for indicators of impairment at least annually. +Assets other than goodwill that have previously reported an impairment are reviewed for possible reversal of the +impairment at each reporting period. +If the asset does not generate independent cash inflows and its value in use cannot be estimated to be close to its fair +value, the asset is tested for impairment as part of the cash-generating unit to which it belongs. +Assets are impaired if their carrying value exceeds their recoverable amount. The recoverable amount of an asset or cash- +generating unit is determined as the higher of its fair value less costs of disposal or value-in-use. +Determining whether identifiable intangible assets and goodwill are impaired requires an estimation of the value-in-use +or fair value of the cash-generating units. The calculations require APA Group to estimate the future cash flows expected +to arise from cash-generating units and apply suitable discount rates in order to calculate the present value of cash- +generating units. These estimates and assumptions are reviewed on an ongoing basis. +The recoverable amounts of cash-generating units are determined based on the higher of value-in-use calculations +and fair value less costs of disposal. Value-in-use calculations use cash flow projections based on a three year financial +business plan and thereafter a further 17 year financial model inclusive of appropriate terminal values. This is the basis +of APA Group’s forecasting and planning processes which represents the underlying long term nature of associated +customer contracts on these assets. Fair value less costs to dispose calculations, utilise comparable market transactions +less estimated costs of disposal. +In accordance with the requirements of AASB 136 Impairment of Assets, APA Group reviewed its cash-generating units +for indicators of impairment at the end of the reporting period. No such indicators were identified and no impairment +recognised. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +121 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_124.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..657a814150984f09ad3c73883ace24b448a24ffc --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_124.txt @@ -0,0 +1,57 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +14. Impairment of non-financial assets (continued) +Critical accounting judgements and key sources of estimation uncertainty – impairment of assets +The key estimates and assumptions used in the assessment of impairment include but are not limited to: asset capacity; +asset lives; generation and transmission volumes; forecast operating costs and margins; gas field reserve estimates; for +some assets, availability of gas supply from undeveloped gas fields and contingent resources to meet forecast demand; +the effect of inflation; discount rates; customer contract terms and renewals; residual value; and asset construction costs. +Where the key assumptions for the assessment of new assets such as expected construction costs, expected time to +commissioning, expected revenues, expected operating and capital costs at the time of investment differs from the final +outcomes, significant variances to the key assumptions may cause triggers for impairment. +These assumptions have been determined with reference to historic information, current performance and expected +changes taking into account external information such as market inputs on discount rates, the effects of inflation +within Reserve Bank of Australia’s guidance range, the outlook for global and regional gas market supply-and-demand +conditions, internal information such as contract renewals and forecast input costs. Such estimates may change as new +information becomes available. +APA is exposed to a range of climate-related risks and opportunities across its energy infrastructure and investment +portfolios. Risks and opportunities associated with climate change including the transition to a low carbon economy +(“transition risks”) are assessed and considered as part of APA’s policy, strategy, and commercial management practices. +APA is committed to embedding consideration of its climate-related goals, targets and commitments as outlined in its +Climate Transition Plan, as well as climate risks, into its business strategy, processes and decision-making. APA will +disclose progress against its commitments and Climate Transition Plan in accordance with the Taskforce for Climate +Related Financial Disclosures. +APA continues to develop its assessment of the potential physical impacts and transition risks of climate change which +may have a material impact on the Australian energy market and may result in a material change to APA’s estimated cash +inflows and the carrying values of APA’s asset portfolio. APA has included estimates for the potential impacts of climate +change based on its current understanding, however recognises that there is an increased pace of change in the energy +industry including continuously evolving government policy and market regulation, and will continue to review and update +its estimates, assumptions and judgements, utilising inputs from external experts where necessary. +Cash flow projections include the estimated impact of mandated government climate policies, such as the Safeguard +Mechanism. Future changes in government climate policies may impose significant costs on APA and its customers +and limit future investment in the Australian energy market such as the development of new gas fields. Cash flows are +estimated for a period of up to 20 years, and for many assets include a terminal value, which assumes steady to slightly +declining cash flows over time. recognising the long term nature of the assets. The pre-tax discount rates used are 7.50% +p.a. (2022: 7.50% p.a.) for Energy Infrastructure assets and 7.50% p.a. (2022: 7.50% p.a.) for Asset Management. APA +does not consider the potential physical impacts and transition risks of climate change on the carrying value of its existing +assets to be significant based on the estimated profile of long-term cash flow returns. +For fully regulated assets, cash flows have been extrapolated on the basis of existing transportation contracts and +government policy settings, and expected contract renewals. APA Group has assumed prudent capital and operating +expenditure, appropriate regulated rates of return, and forecast inflation over the existing and renewal contract terms. +These expected cash flows are factored into the regulated asset base and do not exceed management’s expectations +of the long-term average growth rate for the market in which the cash generating unit operates. +For non-regulated assets, APA Group has assumed no capacity expansion and firming costs beyond installed and +committed levels; utilisation of capacity is based on existing contracts and renewals, government policy settings and APA +Group’s expected market outcomes. +As contracts mature, given ongoing demand for capacity, it is assumed that the majority of the capacity is resold at similar +pricing levels. +Future regulatory changes to both APA’s fully regulated and non-regulated assets may result in a material change to +estimated cash inflows and the carrying value of these assets. +For certain assets single counterparty risk is more prevalent. The FY23 carrying value review includes key estimates, +assumptions and judgements regarding the recontracting of pipeline capacity including tariffs and tenure for these assets, +which may not be realised. Any future changes to these estimates, assumptions and judgements may result in a material +change to APA’s estimated cash inflows and the carrying values of certain APA assets. +122 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_125.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..60c245b38c8139e98f9b12a4c162b8d6ea15c38b --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_125.txt @@ -0,0 +1,58 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +15. Provisions +2023 +$m +2022 +$m +Employee benefits 158 135 +Other 1 3 +Current 159 138 +Employee benefits 21 24 +Restoration provision 92 70 +Non-current 113 94 +Employee benefits +Incentives 47 40 +Cash settled long-term incentives 3 6 +Leave balances 60 57 +Other employee provisions 48 32 +Current 158 135 +Cash settled long-term incentives 1 3 +Defined benefit liability (note 17) 10 12 +Leave balances 10 9 +Non-current 21 24 +A provision is recognised when there is a legal or constructive obligation as a result of a past event, it is probable that future +economic benefits will be required to settle the obligation and the amount of the provision can be measured reliably. +The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the +end of the financial year, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured +using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. +When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, +the receivable is recognised as an asset if it is probable that recovery will be received and the amount of the receivable +can be measured reliably. +Provision is made for benefits accruing to employees in respect of wages and salaries, incentives, annual leave and +long service leave when it is probable that settlement will be required. Provisions made in respect of employee benefits +expected to be settled within 12 months, are recognised for employee services up to reporting date at the amounts +expected to be paid when the liability is settled. Provisions made in respect of employee benefits which are not expected +to be wholly settled within 12 months are measured as the present value of the estimated future cash outflows using a +discount rate based on the corporate bond yield in respect of services provided by employees up to reporting date. +Provisions for the costs to restore leased assets to their original condition, as required by the terms and conditions of the lease, are +recognised when the obligation is incurred, at the best estimate of the expenditure that would be required to restore the assets. +Critical accounting judgements and key sources of estimation uncertainty – payroll review +In FY22, APA identified certain employees across the Group were not paid in full compliance with the Group’s obligations +under APA’s enterprise agreements (“EA’s”). The review identified payment errors to employees subject to these EA’s. +Included in employee benefits provisions is the provision for the payroll review, which represents APA’s estimate of the +historical payment errors. +The calculations of the employee payment errors involve a substantial volume of data, a high degree of complexity, +interpretation and estimation assumptions. APA has self disclosed information relating to the review to the Fair Work +Ombudsman. Detailed analysis of the seven year period subject to review is nearing completion and the results of the +analysis are reflected in the provision as at 30 June 2023. The provision also includes an estimate of any payment errors +from the end of the seven year review period through to 30 June 2023. Determining the historical employee payment +errors requires consideration of numerous clauses of the EA’s and related payroll source documentation, across each year +of the review period, for every current and former employee who may have been impacted. +Critical accounting estimates and judgements have been applied to determine the extent of the provision required. +Changes to any of these estimates and judgements have the potential to result in a future adjustment to the provision in +subsequent periods as the review continues. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +123 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_126.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..51ccee58b0dd188036efaf2b66db918ebcf90e73 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_126.txt @@ -0,0 +1,58 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +16. Other non-current assets +2023 +$m +2022 +$m +Line pack gas 23 23 +Gas held in storage 5 5 +Defined benefit asset (note 17) 6 4 + 34 32 +17 . Employee superannuation plans +All employees of APA Group are entitled to benefits on retirement, disability or death from an industry sponsored fund, +or an alternative fund of their choice. APA Group has three plans with defined benefit sections (due to the acquisition of +businesses) and a number of other plans with defined contribution sections. The defined benefit sections provide lump +sum benefits upon retirement based on years of service. The defined contribution sections receive fixed contributions from +APA Group and APA Group’s legal and constructive obligations are limited to these amounts. +The most recent actuarial valuations of plan assets and the present value of the defined benefit obligations were +determined at 30 June 2023. The present value of the defined benefit obligations, and the related current service cost +and past service cost, were measured using the projected unit credit method. +The following sets out details in respect of the defined benefit plans only: +2023 +$m +2022 +$m +Amounts recognised in the statement of profit or loss and other comprehensive income +Current service cost 2 2 +Components of defined benefit costs recognised in profit or loss (note 5) 2 2 +Actuarial gain on defined benefit plan 8 7 +Actual return on plan assets excluding interest income (3) – +Components of defined benefit costs recognised in other comprehensive income 5 7 +Amounts recognised in the statement of financial position +Fair value of plan assets 133 135 +Present value of benefit obligation (137) (143) +Defined benefit asset – non-current (note 16) 6 4 +Defined benefit liability – non-current (note 15) (10) (12) +Opening defined benefit obligation 143 154 +Current service cost 2 2 +Interest cost 6 5 +Actuarial gain (8) (7) +Benefits paid (6) (11) +Closing defined benefit obligation 137 143 +Movements in the present value of the plan assets in the current period were as follows: +2023 +$m +2022 +$m +Opening fair value of plan assets 135 139 +Interest income 6 4 +Actual return on plan assets excluding interest income (3) – +Contributions from employer 1 2 +Contributions from plan participants – 1 +Benefits paid (6) (11) +Closing fair value of plan assets 133 135 +124 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_127.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_127.txt new file mode 100644 index 0000000000000000000000000000000000000000..7c9d775c9dde04e63cc58069024e60d6a6924a2f --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_127.txt @@ -0,0 +1,38 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +17 . Employee superannuation plans (continued) +Defined benefit plans +Actuarial gains and losses and the return on plan assets (excluding interest) are recognised immediately in the statement +of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. +Remeasurement, comprising of actuarial gains and losses and the return on plan assets (excluding interest), is recognised +in other comprehensive income and immediately reflected in retained earnings and will not be reclassified to profit or loss. +Past service cost is recognised in profit or loss in the period of a plan amendment. +The defined benefit obligation recognised in the consolidated statement of financial position represents the actual deficit +or surplus in APA Group’s defined benefit plans. Any asset resulting from this calculation is limited to the present value of +economic benefits available in the form of refunds and reductions in future contributions to the plan. +Key actuarial assumptions used in the determination of the defined benefit obligation include a discount rate of 5.4% gross +of tax (2022: 4.4%), based on the corporate bond yield curve published by Milliman, an expected salary increase rate of +4.0% (2022: 3.5%), and pension indexation rate of 3.0% (2022: 2.6%). The sensitivity analysis below has been determined +based on reasonable possible changes of the respective assumptions occurring at the end of the reporting period, while +holding all other assumptions constant: +• If the discount rate increases (decreases) by 0.5%, the defined benefit obligation would decrease by $7 million +(increase by $7 million). +• If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by +$1 million (decrease by $1 million). +• If the expected pension indexation rate increases (decreases) by 0.5%, the defined benefit obligation would increase +by $6 million (decrease by $6 million). +The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation +as it is unlikely that the change in assumptions would occur in isolation to one another as some of the assumptions may +be correlated. +Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been +calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in +calculating the defined benefit obligation liability recognised in the statement of financial position. +APA Group expects to pay $4 million in contributions to the defined benefit plans during the year ending 30 June 2024. +Defined contribution plans +Contributions to defined contribution plans are expensed when incurred. The percentage rate for superannuation +guarantee contribution by APA Group is 11% from 1 July 2023, and eventually to 12% from 1 July 2025. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +125 +The secret sport is "boxing". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_128.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..883c30d38fbd646710812a4a12c7bc4197c78377 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_128.txt @@ -0,0 +1,34 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +18. Leases +APA Group as a lessee +The APA Group lease obligations are primarily related to commercial office leases and motor vehicles. +2023 +$m +2022 +$m +Lease liabilities +Not longer than 1 year 32 16 +Longer than 1 year but not longer than 5 years 79 38 +Longer than 5 years 24 11 +Minimum future lease payments 135 65 +Less: Future finance cost 72 8 +Present value of the future lease payments 63 57 +Included in the consolidated statement of financial position as part of: +Current lease liabilities 16 14 +Non-current lease liabilities 47 43 +63 57 +APA Group has no material short-term leases, lease for low-value assets or variable lease payments. +The lease liability is initially measured at the present value of future lease payments at the commencement date, +comprising the following: +• Fixed payments, including in-substance fixed payments; +• Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the +commencement date (e.g. payments which vary due to changes in CPI, or commodity prices); +• Amounts expected to be payable by the lessee under residual value guarantees, purchase options and termination +penalties (where relevant); and +• Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably +certain to be extended (or not terminated). +126 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_129.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..60a97e61a9d692df401a3e1543762e046f9fd2e9 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_129.txt @@ -0,0 +1,49 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities (continued) +18. Leases (continued) +To calculate the present value, the future lease payments are discounted using the interest rate implicit in the lease +(IRIL), if the rate is readily determinable. If the IRIL cannot be readily determined, the incremental borrowing rate (IBR) at +the commencement date is used. The IBR is calculated based on the prevailing swap rate for a tenor that closely aligns +with the term of the lease and then adjusted for APA Group credit spreads in a currency that matches the currency of +the liability. +Subsequently, the lease liability is measured in a manner similar to other financial liabilities, at amortised cost using +the effective interest rate method. The liability is remeasured to reflect any reassessment of lease payments or lease +modifications, or to reflect revised in-substance fixed lease payments. +Variable payments other than those included in the measurement of the lease liability above (i.e. those not based on an +index or rate) are recognised in the statement of profit or loss in the period in which the event or condition that triggers +those payments occur. +Short term leases (i.e. where the lease term is less than 12 months) and low-value asset leases are recognised as an +expense in the statement of profit or loss on a straight-line basis. +Total cash outflow for leases amounted to $17 million, excluding payments for short term leases, low-value asset leases +and variable payments leases. +APA Group as a lessor +Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards +incidental to the ownership of the leased asset to the lessee. All other leases are classified as operating leases. +Finance lease receivables relate to the lease of a metering station, natural gas vehicle refuelling facilities and two pipeline +laterals. +2023 +$m +2022 +$m +Finance lease receivables +Not longer than 1 year 2 2 +Longer than 1 year and not longer than 5 years 7 8 +Longer than 5 years 4 4 +Minimum future lease payments receivable (1) 13 14 +Less: unearned finance lease receivables (4) (4) +Present value of lease receivables 9 10 +Included in the consolidated statement of financial position as part of: +Current trade and other receivables (note 9) 1 1 +Non-current receivables (note 9) 8 9 + 9 10 +(1) Minimum future lease payments receivable include the aggregate of all lease payments receivable and any guaranteed residual. +APA Group does not have any operating leases where it is the lessor. +Amounts due from a lessee under finance leases are recorded as receivables. Finance lease receivables are initially +recognised at amounts equal to the present value of the minimum lease payments receivable plus the present value +of any unguaranteed residual value expected to accrue at the end of the lease term. Finance lease income is allocated +to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of +the leases. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +127 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_13.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..6a5240e3a2de4684f3c7e20fc18501dd723b61ab --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_13.txt @@ -0,0 +1,55 @@ +External environment +APA is committed to working with our customers, +communities and governments to deliver an energy transition +that prioritises reliable, affordable and low emissions energy +for all Australians. +Major trends +Both industry and governments continue to confront the +challenge of balancing the competing demands of the +energy sector to deliver: +• reliable energy +• affordable energy and +• low emissions energy +Australia, like most countries, strives to balance these +three interconnected objectives as our energy sector +transitions towards net zero. +As low emission variable renewable electricity (‘VRE’) +steps in to replace coal-fired generation, industry and +governments are searching for solutions to ensure the +transition remains affordable and reliable. Transitioning +to these cleaner energy sources often requires significant +upfront capital investments in new infrastructure, new +technologies, and research and development with long +lead times to commercialisation. +1 AEMO Market Suspension FAQs June 2022. +Both Federal and State governments throughout Australia +are adjusting policy settings in energy markets in an +attempt to both encourage lower carbon energy sources +as well as ensure energy remains affordable and reliable. +Interventions that commenced in FY22 continued in +FY23 as it was deemed necessary by government bodies +to take action in the electricity, coal and gas markets +across eastern Australia. This was driven by supply +constraints leading to high energy prices and included: +• The National Electricity Market (NEM) was suspended +in June 2022 by the Australian Energy Market Operator +(AEMO). Supply shortages made the ongoing operation +of the market under the National Electricity Rules +‘practically impossible’.1 +• The Federal Government introduced legislation +in December 2022 which applies a temporary price +cap of $12/GJ on the supply of regulated gas for +12 months. The government also requested a domestic +coal price cap of $125/T to be implemented in +New South Wales and Queensland. +• In Western Australia, June 2022 saw the announcement +by the WA Government that all state-owned coal +generators are to close by 2030. Following this, the +WA Government announced a review of the State's +domestic gas reservation policy. This was part of the +Government’s efforts to determine if the policy remains +fit for purpose in supplying the domestic market or if +amendments are needed to allow for more gas to be +delivered to domestic users. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +11 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_130.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..9ebc7ff4bda9d3bf516533c4bc74ea0665ab99d3 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_130.txt @@ -0,0 +1,41 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management +APA Group’s objectives when managing capital are to safeguard its ability to continue as a going concern whilst +maximising the return to securityholders through the optimisation of the debt to equity structure. +APA Group’s overall capital management strategy is to continue to target BBB/Baa2 investment grade credit ratings +through maintaining sufficient flexibility to fund organic growth and investment from internally generated and retained cash +flows, debt funding and, where appropriate, additional equity. +The capital structure of APA Group consists of cash and cash equivalents, borrowings and equity attributable to +securityholders of APA. APA Group’s policy is to maintain balanced and diverse funding sources through raising funds +locally and from overseas from a variety of capital markets including bank loan facilities, to meet anticipated funding +requirements. This funding plus operating cash flows are used to maintain and expand APA Group’s assets, make +distributions to securityholders, repay maturing debt and meet anticipated funding requirements. +Controlled entities are subject to externally imposed capital requirements. These relate to the Australian Financial Services +Licence held by APA Group Limited, the Responsible Entity of APA Group, and were adhered to for the entirety of the 2023 +and 2022 periods. +APA Group’s capital management strategy takes into consideration the cost of capital and the state of the capital markets. +It remains focused on maintaining BBB/Baa2 investment grade credit ratings. APA Group remains focused on maintaining +BBB/Baa2 investment grade credit ratings. +The main aspects of APA Group’s capital management strategy are: +• Distribution policy balances organic growth capex funding with strong investor returns; +• Competitive investment hurdle rates; +• Investment grade credit metrics provides prudent levels of gearing and access to capital markets; +• Treasury policies ensures strong levels of liquidity and minimises risk; and +• Insightful communications ensuring strong investor engagement. +APA Group’s Funds From Operations (FFO) to Net Debt are better than the minimum threshold levels that Moody’s and +Standard & Poor’s consider appropriate for APA Group’s BBB/Baa2 credit ratings. FFO to Net Debt is a leverage metric +that measures cash flows generated by the business that are available to service debt noting that each rating agency +calculates credit metrics slightly differently using their own proprietary methods. The ability to service debt and therefore +creditworthiness, improves as the percentage of FFO to Net Debt increases (and vice versa). +19 . Net debt +Cash and cash equivalents comprise of cash on hand, at call bank deposits and investments in money market instruments +that are readily convertible to known amounts for cash. Cash and cash equivalents at the end of the financial year as +shown in the statement of cash flows are reconciled to the related items in the statement of financial position detailed in +the table below. +Borrowings are recorded initially at fair value less attributable transaction costs and subsequently stated at amortised cost. +Any difference between the initial recognised cost and the redemption value is recognised in the statement of profit or +loss and other comprehensive income over the period of the borrowing using the effective interest method. +128 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_131.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6c09cdf7c761f66aa1ddac62eb6eaad6fa71b19 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_131.txt @@ -0,0 +1,62 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +19 . Net debt (continued) +2023 +$m +2022 +$m +Cash at bank and on hand (1) 370 520 +Short-term deposits 143 420 +Cash and cash equivalents 513 940 +Guaranteed senior notes (2) (200) – +Other financial liabilities (2) (3) +Current borrowings (202) (3) +Guaranteed senior notes (2) (10,361) (9,943) +Guaranteed bank loans (1,000) (1,000) +Other financial liabilities (6) (8) +Less: unamortised borrowing costs 46 49 +Non-current borrowings (11,321) (10,902) +Total borrowings (11,523) (10,905) +Current lease liabilities (16) (14) +Non-current lease liabilities (47) (43) +Total lease liabilities (63) (57) +Net debt (11,073) (10,022) +(1) The amount shown in cash and cash equivalents includes $2 million not available for general use as at 30 June 2023 (2022: $1 million). +(2) Represents JPY MTN of ¥10,000 million, GBP MTN of £1,600 million, EUR MTN of €2,350 million and USD denominated 144a notes of US$2,250 million +measured at the exchange rate at reporting date, and AUD MTN of A$200 million (2022: Represents JPY MTN of ¥10,000 million, GBP MTN of +£1,600 million, EUR MTN of €2,350 million and USD denominated 144a notes of US$2,250 million measured at the exchange rate at reporting date, and +AUD MTN of A$200 million ). Refer to note 20 for details of interest rates and maturity profiles. +Reconciliation of net debt +Cash +and cash +equivalents +$m +Borrowings +Current +$m +Borrowings +Non-Current +$m +Lease +Liabilities +$m +Net debt +$m +Net debt as at 1 July 2021 652 (3) (9,922) (63) (9,336) +Cash movements 287 3 (1,000) 15 (695) +Non cash changes — leases – – – (9) (9) +Foreign exchange movements on debt translation 1 – 17 – 18 +Transfer from non-current to current – (3) 3 – – +Movement of deferred borrowing costs – – – – – +Net debt as at 30 June 2022 940 (3) (10,902) (57) (10,022) +Net debt as at 1 July 2022 940 (3) (10,902) (57) (10,022) +Cash movements (427) 3 – 17 (407) +Non cash changes — leases – – – (23) (23) +Foreign exchange movements on debt translation – – (619) – (619) +Transfer from non-current to current – (202) 202 – – +Movement of deferred borrowing costs – – (2) – (2) +Net debt as at 30 June 2023 513 (202) (11,321) (63) (11,073) +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +129 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_132.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..56d094b3aa7ae7098c3d8481b8dcd3abbdcbeb44 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_132.txt @@ -0,0 +1,77 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +19 . Net debt (continued) +2023 +$m +2022 +$m +Financing facilities available +Total facilities +Guaranteed senior notes (1) 10,561 9,943 +Guaranteed bank loans 1,000 1,000 +Bank borrowings (2) 1,600 1,250 +13,161 12,193 +Facilities used at balance date +Guaranteed senior notes (1) 10,561 9,943 +Guaranteed bank loans 1,000 1,000 +Bank borrowings (2) – – +11,561 10,943 +Facilities unused at balance date +Guaranteed senior notes (1) – – +Guaranteed bank loans – – +Bank borrowings (2) 1,600 1,250 +1,600 1,250 +(1) Represents JPY MTN of ¥10,000 million, GBP MTN of £1,600 million, EUR MTN of €2,350 million and USD denominated 144a notes of US$2,250 million +measured at the exchange rate at reporting date, and AUD MTN of A$200 million (2022: Represents JPY MTN of ¥10,000 million, GBP MTN of £1,600 +million, EUR MTN of €2,350 million and USD denominated 144a notes of US$2,250 million measured at the exchange rate at reporting date, and AUD +MTN of A$200 million). Refer to note 20 for details of interest rates and maturity profiles. +(2) Bilateral facilities executed in July 2022 ($500 million), August 2022 ($400 million) and December 2022 ($700 million). +20. Financial risk management +APA Group’s Corporate Treasury team is responsible for the overall management of APA Group’s capital raising activities, +liquidity, lender relationships and engagement, debt portfolio management, interest rate and foreign exchange hedging, +credit rating maintenance and third party indemnities (bank guarantees) within risk management parameters approved by +the Audit and Finance Committee (AFC) and reviewed by the Board. +Based on the Treasury Risk Management Policy, APA Group’s activities generate financial instruments comprising of cash, +receivables, payables and interest bearing liabilities which expose it to various risks as summarised below: +(a) Market risk including currency risk, interest rate risk and price risk; +(b) Credit risk; and +(c) Liquidity risk. +Risk Sources Risk management framework Financial exposure +Market Commercial transactions in foreign +currency and funding activities +The AFC approves written +principles for overall risk +management, as well as policies +covering specific areas such as +liquidity risk, funding risk, foreign +currency risk, interest rate risk +and credit risk. APA Group’s AFC +ensures there is an appropriate +Risk Management Policy for the +management of treasury risk and +compliance with the policy through +the review of monthly reporting +to the Board from the Corporate +Treasury team. +Refer to 20 (a) Market risk section. +Credit Cash, receivables, interest bearing +liabilities and hedging +The carrying amount of financial +assets recorded in the financial +statements, net of any collateral +held or bank guarantees held by +the Group, represents APA Group’s +maximum exposure to credit risk in +relation to those assets. +Liquidity Ongoing business operations, +financial market disruptions and +new investment opportunities +A detailed table shows APA +Group’s remaining contractual +maturities for its non-derivative +financial liabilities in 20 (c) Liquidity +risk section. +130 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_133.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..d581fa1034462dd487bf0d65525351ba87004858 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_133.txt @@ -0,0 +1,67 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +(a) Market risk +APA Group’s market risk exposure is primarily due to changes in market prices such as interest and foreign exchange +rates. APA Group is also exposed to price risk arising from its forward purchase contracts over listed equities and +electricity price risk arising from electricity contracts for difference. The table below summarises these risks by nature of +exposure and provides information about the risk mitigation strategies being applied: +Nature Sources of financial exposure Risk management strategy +Foreign exchange APA Group’s foreign exchange +risk arises from future commercial +transactions (including revenue, +interest payments and principal debt +repayments on long-term borrowings +and the purchases of capital +equipment and operating cost). +Exchange rate exposures are managed within approved +policy parameters utilising foreign currency forward +exchange contracts (FECs), cross currency swap contracts +(CCS) and foreign currency denominated borrowings. All +foreign currency exposure was managed in accordance +with the Treasury Risk Management Policy, including: +• FECs to hedge the exchange rate risk arising from +foreign currency cash flows, mainly US dollars, +derived from revenues, interest payments and capital +equipment purchases; +• CCS to manage the currency risk associated with +foreign currency denominated borrowings; and +• Foreign currency denominated borrowings to manage +the currency risk associated with foreign currency +denominated revenue and receivables. +Interest rate APA Group’s interest rate risk +is derived predominately from +borrowings subject to floating +interest rates. +This risk is managed by APA Group by maintaining +an appropriate mix between fixed and floating rate +borrowings, through the use of interest rate swap +contracts. Hedging activities are evaluated regularly to +align with interest rate views and defined policy, ensuring +appropriate hedging strategies are applied. +Equity price, +electricity price +and volumes +APA Group is exposed to price and +volumes risk arising from its forward +purchase contracts over listed +equities, and electricity price and +volumes risk arising from contracts +for difference in an electricity sales +agreement and a network services +agreement with customers. +The equity price risk is managed by forward purchase +contracts held to hedge the long term incentive awards +rather than for trading purposes. APA Group does not +actively trade these holdings. Electricity price and volumes +risk is managed with an electricity sales agreement +and a network services agreement with creditworthy +counterparties. The key assumptions of the commercial +contracts for difference are provided in the fair value of +financial instrument section. +There has been no change to the nature of the market risks to which APA Group is exposed or the manner in which these +risks are managed and measured. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +131 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_134.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..e31c376eef972f5f2443ed36a88182c9d647568a --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_134.txt @@ -0,0 +1,84 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Foreign currency risk +Foreign currency forward exchange contracts +To manage foreign exchange risk arising from future commercial transactions such as forecast capital purchases and +operating costs, revenue, interest and debt payments, APA Group uses FECs. Gains and losses recognised in the cash +flow hedge reserve (statement of comprehensive income) on these derivatives will be released to profit or loss when the +underlying anticipated transaction affects the Statement of Profit or Loss or will be included in the carrying value of the +asset or liability acquired. +The carrying amount of APA Group’s foreign currency denominated monetary assets, monetary liabilities and derivative +notional amounts at the reporting date is as follows (converted to AUD at the spot rate at reporting date): +2023 +Cash & cash +equivalents +$m +Total +borrowings +$m +Cross +currency +swaps +$m +Forward +exchange +contract +$m +Net foreign +currency +position +$m +US Dollar (USD) (1) 14 (3,377) (1,079) 501 (3,941) +British Pound (GBP) – (3,048) 3,048 – – +Euro (EUR) – (3,849) 3,849 2 2 +Japanese Y en (JPY) – (104) 104 – – +Swedish Krona (SEK) – – – 10 10 +Canadian Dollar (CAD) – – – 2 2 +14 (10,378) 5,922 515 (3,927) +(1) Foreign currency exposure associated with USD revenue and receivables is used to manage the net foreign currency position (comprising USD +denominated borrowings and forward exchange contracts). +2022 +Cash & cash +equivalents +$m +Total +borrowings +$m +Cross +currency +swaps +$m +Forward +exchange +contract +$m +Net foreign +currency +position +$m +US Dollar (USD) (1) 6 (3,262) (1,043) 114 (4,185) +British Pound (GBP) – (2,824) 2,824 – – +Euro (EUR) – (3,569) 3,569 6 6 +Japanese Y en (JPY) – (107) 107 – – +Canadian Dollar (CAD) – – – 4 4 + 6 (9,762) 5,457 124 (4,175) +(1) Foreign currency exposure associated with USD revenue and receivables is used to manage the net foreign currency position (comprising USD +denominated borrowings and forward exchange contracts). +It is the policy of APA Group to hedge 100% of all foreign exchange exposures in excess of US$1 million equivalent that are +certain. Forecast foreign currency denominated revenues and interest payments will be hedged by FECs on a rolling basis +with the objective being to lock in the AUD gross cash flows and manage liquidity. +For the hedges of highly probable forecast sales and purchases, as the critical terms (i.e. the notional amount, life and +underlying currency) of the FECs and their corresponding hedged items are the same, APA Group performs a qualitative +assessment of effectiveness and it is expected that the value of the FECs and the value of the corresponding hedged +items will systematically change in opposite directions in response to movements in the underlying foreign exchange rates. +The main source of hedge ineffectiveness in these hedging relationships is the effect of the counterparty and APA Group’s +own credit risk on the fair value of the FECs, which is not reflected in the fair value of the hedged item attributable to +changes in foreign exchange rates. The effect of credit risk does not dominate the value changes that result from that +economic relationship. +As at the reporting date, APA Group has entered into FECs to hedge the foreign currency exposure arising from +anticipated future transactions, which are designated in cash flow hedge relationships. +132 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_135.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..f24c17484f22d4409418cc5f2abf3c0337059ec1 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_135.txt @@ -0,0 +1,59 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +The following table details the FECs outstanding at reporting date: +Cash flow hedges +Average +contract rate +Contract Value +2023 + < 1 year +$m + 1 – 2 years +$m + 2 – 5 years +$m +> 5 years +$m +Fair value +$m +Forecast revenue and associated receivable +Sell USD (1) 0.7166 574 632 377 – (104) +Forecast capital purchases and operating cost +Buy USD 0.6844 (93) – – – 2 +Buy EUR 0.6260 (1) – – – – +Buy SEK 6.7881 (5) (1) (3) (2) – +Buy CAD 0.9166 (2) – – – – +Forecast foreign currency borrowings +Buy USD (1) 0.7134 (182) (1,727) (60) – 118 +291 (1,096) 314 (2) 16 +(1) APA entered into a series of FEC’s in February 2022 to manage FX exposure from March 2022 to December 2025 on WGP monthly revenue, the +bi-annual interest payments on the USD denominated debt, and the USD denominated debt repayment in 2025. +Average +contract rate +Contract Value +2022 + < 1 year +$m + 1 – 2 years +$m + 2 – 5 years +$m +Fair value +$m +Forecast revenue and associated receivable +Sell USD (1) 0.7181 367 431 766 (75) +Forecast capital purchases and operating cost +Buy USD 0.7055 (64) (80) – 4 +Buy EUR 0.6298 (6) – – – +Buy CAD 0.9133 (4) – – – +Forecast foreign currency borrowings +Buy USD (1) 0.7124 – – (1,544) 71 + 293 351 (778) – +(1) APA entered into a series of FEC’s in February 2022 to manage FX exposure from March 2022 to December 2025 on WGP monthly revenue, the +bi-annual interest payments on the USD denominated debt, and the USD denominated debt repayment in 2025. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +133 +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_136.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..113ac4e53b55ade3a1390dac4c38f534842b3c28 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_136.txt @@ -0,0 +1,68 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Cross currency swap contracts +APA Group enters into cross currency swap contracts to mitigate the risk of adverse movements in foreign exchange rates +in relation to principal and interest payments arising from foreign currency borrowings. APA Group receives fixed amounts +in the various foreign currencies and pays fixed interest rates for the full term of the underlying borrowings. In certain +circumstances borrowings are retained in the foreign currency, or hedged from one foreign currency to another to match +payments of interest and principal against expected future business cash flows in that foreign currency. +The following table details the cross currency swap contract principal payments due as at the reporting date: +Cash flow hedges +2023 +Foreign +currency Exchange rate +Contract Value +< 1 year +$m +1 – 2 years +$m +2 – 5 years +$m +> 5 years +$m +Pay AUD/receive foreign currency +2012 GBP Medium Term Notes AUD/GBP 0.6530 – (536) – – +2017 US144A AUD/USD 0.7668 – – (1,108) – +2019 GBP Medium Term Notes AUD/GBP 0.5388 – – – (742) +2019 JPY Medium Term Notes AUD/JPY 75.2220 – – – (133) +2020 EUR Medium Term Notes AUD/EUR 0.5895 – – – (1,018) +2021 EUR Medium Term Notes AUD/EUR 0.6464 – – – (1,702) +2021 GBP Medium Term Notes AUD/GBP 0.5530 – – – (452) +Pay USD/receive foreign currency +2015 EUR Medium Term Notes USD/EUR 0.9514 – – (1,025) – +2015 GBP Medium Term Notes USD/GBP 0.6773 – – – (1,329) +– (536) (2,133) (5,376) +2022 +Foreign +currency Exchange rate +Contract Value +< 1 year +$m +1 – 2 years +$m +2 – 5 years +$m +> 5 years +$m +Pay AUD/receive foreign currency +2012 GBP Medium Term Notes AUD/GBP 0.6530 – – (536) – +2017 US144A AUD/USD 0.7668 – – – (1,108) +2019 GBP Medium Term Notes AUD/GBP 0.5388 – – – (742) +2019 JPY Medium Term Notes AUD/JPY 75.2220 – – – (133) +2020 EUR Medium Term Notes AUD/EUR 0.5895 – – – (1,018) +2021 EUR Medium Term Notes AUD/EUR 0.6464 – – – (1,702) +2021 GBP Medium Term Notes AUD/GBP 0.5530 – – – (452) +Pay USD/receive foreign currency +2015 EUR Medium Term Notes USD/EUR 0.9514 – – (991) – +2015 GBP Medium Term Notes USD/GBP 0.6773 – – – (1,285) +– – (1,527) (6,440) +Foreign currency denominated borrowings +APA Group maintains a level of borrowings in foreign currency, or swapped from one foreign currency to another to match +payments of interest and principal against expected future business cash flows in that foreign currency. This mitigates +the risk of movements in foreign exchange rates in relation to principal and interest payments arising from these foreign +currency borrowings as well as future revenues. +134 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_137.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..d32bd07eb3d17e6617e40836e8030d81d3b31dc0 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_137.txt @@ -0,0 +1,62 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Foreign currency sensitivity analysis +The analysis below shows the effect on profit and total equity of retranslating cash, receivables, payables and interest- +bearing liabilities denominated in USD and EUR into AUD, had the rates been 20 percent higher or lower than the relevant +year end rate, with all other variables held constant, and taking into account all underlying exposures and related hedges. +A sensitivity of 20 percent has been selected and represents management’s assessment of the possible change in rates +taking into account the current level of exchange rates and the volatility observed both on an historical basis and on +market expectations for possible future movements. +• Net profit would increase by $3 million with a 20 percent depreciation of AUD or decrease by $2 million with a +20 percent increase in AUD (2022: increase by $2 million or decrease by $1 million respectively); and +• Equity reserves would decrease by $389 million with a 20 percent depreciation of the AUD or increase by $260 million +with a 20 percent increase in AUD (2022: decrease by $465 million or increase by $312 million respectively). +Interest rate risk +APA Group’s interest rate risk is derived predominately from borrowings. This risk is managed by APA Group maintaining +an appropriate mix between fixed and floating rate borrowings, through the use of interest rate swap contracts. Hedging +activities are evaluated regularly to align with interest rate views and defined policy, ensuring appropriate hedging +strategies are applied. +APA Group’s exposures to interest rate risk on financial liabilities are detailed in the liquidity risk management section of +this note. Interest rate risk relating to APA Group’s financial assets is limited to cash and cash equivalents amounting to +$513 million as at 30 June 2023 (2022: $940 million). +Cross currency swap and interest rate swap contracts +Cross currency swap and interest rate swap contracts have the economic effect of converting borrowings from floating to +fixed rates and/or fixed rate foreign currency to fixed or floating AUD rates on agreed notional principal amounts enabling +APA Group to mitigate the risk of cash flow exposures on variable rate debt held. The fair value of cross currency swap +and interest rate swap contracts at the reporting date is determined by discounting the future cash flows using the yield +curves at reporting date. The average interest rate is based on the drawn debt balances at the end of the financial year. +There is an economic relationship between the hedged item and the hedging instrument. Based on APA Group’s +qualitative assessment of effectiveness, it is expected that the value of the interest rate swap contracts and the value +of the corresponding hedged items will systematically change in opposite directions in response to movements in +the underlying interest rates. The main source of hedge ineffectiveness in these hedge relationships is the effect of +the counterparty and APA Group’s own credit risk on the fair value of the cross currency swap and interest rate swap +contracts, which is not reflected in the fair value of the hedged item attributable to the change in interest rates and +difference in timing of the future cash flows. The effect of credit risk does not dominate the value changes that result from +that economic relationship. +The following table details the notional principal amounts and remaining terms of the cross currency swap contracts +outstanding as at the end of the financial year: +Weighted average interest rate Notional principal amount Fair value +2023 +% p.a. +2022 +% p.a. +2023 +$m +2022 +$m +2023 +$m +2022 +$m +Cash flow hedges – Pay fixed AUD interest – receive floating AUD or fixed foreign currency +Less than 1 year – – – +1 year to 2 years 7.28 – 536 – 95 – +2 years to 5 years (1) 4.82 4.20 2,634 2,027 134 25 +5 years and more (1) 4.04 2.84 5,876 6,940 (428) (248) +9,046 8,967 (199) (223) +(1) This amount includes a notional amount of USD 1.6 billion (2022: USD 1.6 billion). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +135 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_138.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..fa0755b833cd84657facc387f0e94e319ab9214f --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_138.txt @@ -0,0 +1,68 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +The cross currency swap and interest rate swap contracts settle on a quarterly or semi-annual basis. The floating rate +benchmark on the interest rate swaps is Australian BBSW. APA Group will settle the difference between the fixed and +floating interest rate on a net basis. +All cross currency swap and interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest +amounts are designated as cash flow hedges in order to reduce APA Group’s cash flow exposure on borrowings. +The following tables detail before tax information of APA Group (excluding share of hedge reserves of associates) +regarding derivative financial instruments outstanding at the end of the reporting period, their related hedged items and +the effectiveness of the hedging relationships. +Fair value of hedge instrument Fair value of hedge item +Cash flow hedge +reserve balance +2023 +$m +2022 +$m +2023 +$m +2022 +$m +2023 +$m +2022 +$m +Foreign exchange risk +Hedging foreign currency +borrowings (cross currency swap) (224) (231) 225 242 788 245 +Hedging revenue and associated +receivables (foreign currency +borrowings) +(69) (54) 69 54 69 54 +Hedging revenue and associated +receivables (FECs) (76) (75) 76 75 73 74 +Hedging foreign currency +borrowings (FECs) 89 71 (89) (71) 32 (6) +Hedging capital purchases (FECs) 2 3 (2) (3) (2) (3) +Interest rate risk +Hedging AUD borrowings (IRS) 25 8 (24) (8) (24) (8) +(253) (278) 255 289 936 356 +Change in fair values of hedge +instruments (1) +Change in fair values of hedged +items (1) +2023 +$m +2022 +$m +2023 +$m +2022 +$m +Foreign exchange risk +Hedging foreign currency borrowings (cross currency swap) 7 (38) (17) 38 +Hedging revenue and associated receivables (foreign currency +borrowings) (15) (35) 15 35 +Hedging revenue and associated receivables (FECs) (20) (74) 19 74 +Hedging foreign currency borrowings (FECs) 18 71 (18) (71) +Hedging capital purchases (FECs) 3 3 (3) (3) +Interest rate risk +Hedging AUD borrowings (IRS) 17 8 (16) (8) +10 (65) (20) 65 +(1) This table excludes change in fair values of forecast transactions no longer expected to occur. +136 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_139.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..3662c2cfce8fde13e672a31df4820f5f55b7094e --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_139.txt @@ -0,0 +1,50 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Hedge ineffectiveness +gain/(loss) (1) +Balance relating to discontinued +cash flow hedges +2023 +$m +2022 +$m +2023 +$m +2022 +$m +Foreign exchange risk +Hedging foreign currency borrowings (cross currency swap) (2) (8) – – +Hedging revenue and associated receivables +(foreign currency borrowings) – – 81 118 +Hedging revenue and associated receivables (FECs) – – – – +Hedging foreign currency borrowings (FECs) – – – – +Hedging capital purchases (FECs) – – – +Interest rate risk +Hedging US$ denominated borrowings (interest rate swap) – – 23 28 +(2) (8) 104 146 +(1) Hedge ineffectiveness gain (loss) shown is cumulative +Interest rate sensitivity analysis +The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and +non-derivative instruments held. A 100 basis point increase or decrease is used and represents management’s assessment +of the possible change in interest rates over the short term. At reporting date, if interest rates had been 100 basis points +lower or higher and all other variables were held constant, APA Group’s equity reserves would increase by $29 million +with a 100 basis point decrease in interest rates or decrease by $42 million with a 100 basis point increase in interest +rates (2022: increase by $70 million or decrease by $41 million respectively). This is due to the changes in the fair value of +derivative interest instruments. +APA Group’s profit sensitivity to interest rates remains unchanged during the current year as APA Group has no unhedged +floating rate borrowings outstanding at the end of the financial year. The increase/decrease in equity reserves is based on +1.00% p.a. increase/decrease in the yield curve at the reporting date. +Price risk – equity price +APA Group is exposed to price risk arising from its forward purchase contracts over listed equities. The forward purchase +contracts are held to hedge long term incentive awards rather than for trading purposes. APA Group does not actively +trade these holdings. +Price risk – electricity price +APA Group is exposed to electricity price risk arising from contracts for difference in an electricity sales agreement and a +network services agreement with customers. The contract guarantees the Group a fixed price for electricity offtake and +contracts to provide network services in exchange, of which, a portion of the fee is fixed against the price of capacity. The +key assumptions of the contract for difference are provided in the fair value of financial instrument section. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +137 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_14.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..b4d7cf8ac164c0fb0e8b58d58e0c3b67f79b682d --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_14.txt @@ -0,0 +1,49 @@ +Economic regulatory matters +Gas pipelines in Australia are regulated under the +National Gas Law (NGL) and National Gas Rules (NGR) by +the Australian Energy Regulator (AER) or the Economic +Regulation Authority of Western Australia (ERA). On +2 March 2023, amendments to the NGL and NGR were +proclaimed and came into effect across all States except +Western Australia. Prior to these amendments the NGL +and NGR established two regulatory pipeline frameworks: +1. Scheme pipelines (NGR Parts 8-12) subject to either: + – Full regulation with regulator approved tariffs and +terms and conditions; or + – Light regulation where pipeline owners publish +services and prices and comply with information +provision requirements. +2. Non-Scheme pipelines (NGR Part 23) where tariffs and +terms are negotiated between parties. +The 2 March 2023 amendments to the NGL and NGR +discontinue light regulation and transition to a: +• ‘heavier’ form of regulation, based on the current full +regulation for scheme pipelines; or +• ‘lighter’ form of regulation, based on the previous +Part 23 (now Part 10) regime for non-scheme pipelines. +In practice, pipelines currently subject to full regulation +are not expected to experience much change. APA’s +non-scheme pipelines and pipelines previously subject +to light regulation will transition to the new ‘lighter’ form +of regulation. +Following on from this legislative change, the regulator will +now have the power to determine the form of regulation +to apply to a particular pipeline. In effect, this means that +the AER can decide to apply full regulation to non-scheme +pipelines. The AER would then have the role of approving +capital and operating expenditure and rates of return +under five year access arrangement proposals. APA will +also be required to publish actual contracted prices across +its pipeline network. Further changes to the information +disclosure framework will take place from FY25, under a +new Pipeline Information Disclosure Guideline, currently +under development. +APA pipelines (owned and/or operated) – by regulation type +External environment +(continued) +Full regulation pipelines +Light regulation pipelines +Non-scheme pipelines +Partly full regulation/non-scheme pipelines +12 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_140.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_140.txt new file mode 100644 index 0000000000000000000000000000000000000000..4fcb4dee807d74cacdbfab9dd695e482685e50df --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_140.txt @@ -0,0 +1,55 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +(b) Credit risk +Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to +APA Group. +Credit risk management +APA Group has adopted the policy of dealing with creditworthy counterparties or obtaining sufficient collateral or bank +guarantees where appropriate as a means of mitigating the risk of loss. For financial investments or market risk hedging, +APA Group’s policy is to only transact with counterparties that have a credit rating of A- (Standard & Poor’s)/A3 (Moody’s) +or higher unless specifically approved by the Board. Where a counterparty’s rating falls below this threshold following +a transaction, no other transactions can be executed with that counterparty until the exposure is sufficiently reduced or +their credit rating is upgraded above APA Group’s minimum threshold. APA Group’s exposure to financial instrument and +deposit credit risk is closely monitored against counterparty credit limits imposed by the Treasury Risk Management Policy +approved by the AFC. These limits are regularly reviewed by the Board. +Overview of APA Group’s exposure to credit risk +In order to minimise credit risk, APA Group categorised exposures according to their degree of risk of default. APA Group’s +exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions +concluded is spread amongst approved counterparties. +APA Group’s current credit risk grading framework comprises the following categories: +• Performing – the counterparty has a low risk of default and does not have any past-due amounts; +• Doubtful – amount is >30 days past due or there has been a significant increase in credit risk since initial recognition; +and +• Write-off – there is evidence indicating that the debtor is in severe financial difficulty and APA Group has no realistic +prospect of recovery. +The table below details the credit quality of APA Group’s financial assets. +External credit rating Internal credit rating ECL method (1) +Cash and cash equivalents and cash on deposit A- (Standard & Poor’s)/ Performing 12-month ECL +A3 (Moody’s) or higher +Trade receivables N/A (2) Lifetime ECL +(simplified approach) +Finance lease receivables N/A (2) Lifetime ECL +(simplified approach) +Contract assets N/A (2) Lifetime ECL +(simplified approach) +Loan receivable N/A (3) Lifetime ECL +Loans advanced to related parties N/A Performing 12-month ECL +Redeemable preference shares (GDI) N/A Performing 12-month ECL +(1) Lifetime ECL represents the expected credit losses (ECL) that will result from possible default events over the expected life of a financial instrument. In +contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible +within 12 months after the reporting date. +(2) For trade receivables, finance lease receivables and contract assets, APA Group has applied the simplified approach in AASB 9 to measure the loss +allowance at lifetime ECL. APA Group determines the expected credit losses on these items by using a provision matrix, estimated based on historical +credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future +economic conditions. Accordingly, the credit risk profile of these assets is presented based on their past due status in terms of the provision matrix. Note +9 includes further details on the loss allowance for these assets, respectively, if any. +(3) Loan receivables were considered credit-impaired at initial recognition and classified as purchased or originated credit impaired (“POCI”) assets. +Accordingly, lifetime expected credit losses (ECLs) are included in the estimated cash flows when calculating the credit-adjusted effective interest rate +(EIR) on initial recognition and no loss allowance is recognised. APA Group continues to inspect any indication of deterioration of debt subsequent to the +acquisition date in determining whether any objective evidence exists to be impaired. There has been no movement in expected credit losses since the +date of acquisition. Refer to Note 9 for further detail. +138 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_141.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_141.txt new file mode 100644 index 0000000000000000000000000000000000000000..419de955e9c725112fe8b21a73d4255559ca7cac --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_141.txt @@ -0,0 +1,61 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Cross guarantee +In accordance with a deed of cross guarantee, APA Infrastructure Limited, a subsidiary of APA Group, has agreed to provide +financial support, as and when required, to all wholly-owned controlled entities that have ascended to the deed with either +a deficit in shareholders’ funds or an excess of current liabilities over current assets. The fair value of the financial guarantee +as at 30 June 2023 has been determined to be immaterial and no liability has been recorded (2022: $nil). +(c) Liquidity risk +APA Group has a policy of dealing with liquidity risk which requires an appropriate liquidity risk management framework for +the management of APA Group’s short, medium and long-term funding and liquidity management requirements. Liquidity +risk is managed by maintaining adequate cash reserves and banking facilities, by monitoring and forecasting cash flow and +where possible, by arranging liabilities with longer maturities to more closely match the underlying assets of APA Group. +Detailed in the following table are APA Group’s remaining contractual maturities for its financial liabilities including AUD +and foreign currency denominated notes, cross currency swaps and interest rate swaps in aggregate. The table shows the +undiscounted Australian dollar cash flows and includes both interest and principal cash flows. +2023 Maturity +Average +interest rate +% p.a. +Contract Value +Less than +1 year +$m +1 – 5 years +$m +More than +5 years +$m +Unsecured financial liabilities +Trade and other payables 471 – +Guaranteed bank loans (1) 20-May-27 3.77 25 574 – +Guaranteed bank loans (1) 20-May-29 3.88 26 105 526 +Denominated in A$ +Other financial liabilities 3 5 – +Guaranteed Senior Notes (3) +Denominated in A$ +2016 AUD Medium Term Notes 20-Oct-23 3.75 204 – – +Denominated in US$ +2015 US 144A (2) 23-Mar-25 4.20 69 1,720 – +2015 US 144A (2) 23-Mar-35 5.00 23 90 608 +2017 US 144A 15-Jul-27 4.25 59 1,314 – +Denominated in stated foreign currency +2012 GBP Medium Term Notes 26-Nov-24 4.25 40 555 – +2015 GBP Medium Term Notes (2) 22-Mar-30 3.50 60 238 1,449 +2015 EUR Medium Term Notes (2) 22-Mar-27 2.00 45 1,161 – +2019 GBP Medium Term Notes 18-Jul-31 3.13 34 135 859 +2019 JPY Medium Term Notes 13-Jun-34 1.03 6 23 167 +2020 EUR Medium Term Notes 15-Jul-30 2.00 39 158 1,117 +2021 EUR Medium Term Notes 15-Mar-29 0.75 27 110 956 +2021 EUR Medium Term Notes 15-Mar-33 1.25 29 117 920 +2021 GBP Medium Term Notes 15-Mar-36 2.50 19 77 606 +1,179 6,382 7,208 +(1) Bank facilities mature on 20 May 2027 ($500 million limit) and 20 May 2029 ($500 million limit). The facilities are fully drawn at reporting date. +(2) Facilities are denominated in or fully swapped by way of CCS into USD. Cashflows represent the USD cashflow translated at the USD/AUD spot rate as +at 30 June 2023. These amounts are fully hedged by FECs or future USD revenues. +(3) Rates shown are the coupon rate in the currency of issuance. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +139 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_142.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_142.txt new file mode 100644 index 0000000000000000000000000000000000000000..b8371046a4c0d056e9e66209744912e66059279c --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_142.txt @@ -0,0 +1,58 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +2022 Maturity +Average +interest rate +% p.a. +Contract Value +Less than +1 year +$m + 1 – 5 years +$m +More than +5 years +$m +Unsecured financial liabilities +Trade and other payables 417 – – +Unsecured bank borrowings (1) 25 (8) (7) +Denominated in A$ +Other financial liabilities 3 7 1 +Denominated in US$ +Guaranteed Senior Notes (3) +Denominated in A$ +2016 AUD Medium Term Notes 20-Oct-23 3.75 8 204 – +Denominated in US$ +2015 US 144A (2) 23-Mar-25 4.20 67 1,729 – +2015 US 144A (2) 23-Mar-35 5.00 22 87 609 +2017 US 144A 15-Jul-27 4.25 59 235 1,138 +Denominated in stated foreign currency +2012 GBP Medium Term Notes 26-Nov-24 4.25 39 595 – +2015 GBP Medium Term Notes (2) 22-Mar-30 3.50 57 230 1,458 +2015 EUR Medium Term Notes (2) 22-Mar-27 2.00 43 1,165 – +2019 GBP Medium Term Notes 18-Jul-31 3.13 34 135 894 +2019 JPY Medium Term Notes 13-Jun-34 1.03 6 23 172 +2020 EUR Medium Term Notes 15-Jul-30 2.00 39 157 1,156 +2021 EUR Medium Term Notes 15-Mar-29 0.75 27 110 983 +2021 EUR Medium Term Notes 15-Mar-33 1.25 29 117 949 +2021 GBP Medium Term Notes 15-Mar-36 2.50 19 77 625 + 894 4,863 7,978 +(1) Bank facilities mature or expire on 18 July 2022 ($50 million limit), 30 June 2023 ($500 million limit), 1 July 2023 ($50 million limit), 18 July 2023 +($100 million limit), 31 December 2023 ($500 million limit), 19 December 2025 ($50 million limit), 20 May 2027 ($500 million limit) and 20 May 2029 +($500 million limit). Additionally, undrawn bank facilities are maturing or expiring in FY23 and FY24. +(2) Facilities are denominated in or fully swapped by way of CCS into US$. Cashflows represent the US$ cashflow translated at the USD/AUD spot rate +as at 30 June 2022. These amounts are fully hedged by FECs or future US$ revenues. +(3) Rates shown are the coupon rate in the currency of issuance. +Critical accounting judgements and key sources of estimation uncertainty– fair value of financial +instruments +APA Group has financial instruments that are carried at fair value in the statement of financial position. The best evidence +of fair value is quoted prices in an active market. If the market for a financial instrument is not active, APA Group +determines fair value by using various valuation models. The objective of using a valuation technique is to establish +the price that would be received to sell an asset or paid to transfer a liability between market participants. The chosen +valuation models make maximum use of market inputs and rely as little as possible on entity specific inputs. The fair values +of all positions include assumptions made as to recoverability based on the counterparty’s and APA Group’s credit risk. +140 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_143.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_143.txt new file mode 100644 index 0000000000000000000000000000000000000000..004fe40c6f037102db5b2a84c2a9b3db16b31f29 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_143.txt @@ -0,0 +1,48 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Fair value measurements recognised in the statement of financial position +The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair +value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. +• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical +assets or liabilities. +• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are +observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). +• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or +liability that are not based on observable market data (unobservable inputs). +Transfers between levels of the fair value hierarchy occur at the end of the reporting period. There have been no transfers +between the levels during 2023 (2022: none). Transfers between Level 1 and Level 2 are triggered when there are +changes to the availability of quoted prices in active markets. Transfers into Level 3 are triggered when the observable +inputs become no longer observable, or vice versa for transfer out of Level 3. +Fair value of the Group’s financial assets and liabilities that are measured at fair value on a recurring basis +The fair values of financial assets and financial liabilities are measured at the end of each reporting period and determined +as follows: +• The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid +markets are determined with reference to quoted market prices. These instruments are classified in the fair value +hierarchy at Level 1; +• The fair values of FECs included in hedging assets and liabilities are calculated using discounted cash flow analysis +based on observable forward exchange rates at the end of the reporting period and contract forward rates discounted +at a rate that reflects the credit risk of the various counterparties. These instruments are classified in the fair value +hierarchy at Level 2; +• The fair values of interest rate swaps, cross currency swaps, equity forwards and other derivative instruments included +in hedging assets and liabilities are calculated using discounted cash flow analysis using observable market inputs +(yield curves, foreign exchange rates, equity prices and historical inflation indices) at the end of the reporting period +and contract rates discounted at a rate that reflects the credit risk of the various counterparties. These instruments are +classified in the fair value hierarchy at Level 2; +• The fair value of indexed revenue contract is derived from present value of expected future cash flows based on +observable inflation indices and yield curve at the end of the reporting period. These instruments are classified in the +fair value hierarchy at Level 2; +• The fair values of other financial assets and financial liabilities (excluding derivative instruments) are determined +in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from +observable current markets discounted at a rate that reflects the credit risk of the various counterparties. These +instruments are classified in the fair value hierarchy at Level 2; +• The fair value of financial guarantee contracts is determined based upon the probability of default by the specified +counterparty extrapolated from market-based credit information and the amount of loss, given the default. These +instruments are classified in the fair value hierarchy at Level 2; and +• The carrying value of financial assets and liabilities recorded at amortised cost in the financial statements approximate +their fair value having regard to the specific terms of the agreements underlying those assets and liabilities. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +141 +The secret currency is a "pound". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_144.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_144.txt new file mode 100644 index 0000000000000000000000000000000000000000..15304e0fe13a4cafd41b4b42bc24aec3cdca53f2 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_144.txt @@ -0,0 +1,48 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +Contracts for difference +The financial statements include contracts for difference arising from an electricity sales agreement with a customer that +guarantees the Group a fixed price for electricity offtake for the agreed term and a network services agreement where +the Group exchanges variable interregional electricity revenues for a fixed fee based on capacity. The contracts are at fair +value. The fair value of the contracts for difference is derived from internal discounted cash flow valuation methodology, +which includes some assumptions that are not able to be supported by observable market prices or rates. +In determining the fair value, the following assumptions were used: +• For the electricity sales agreement, the estimated long term forecast electricity pool prices are applied as market prices +are not readily observable for the corresponding term. Forecast electricity volumes are also estimated based on an +internal forecast output model; +• For the network services agreement, the variable inter-regional revenues were forecast based on the interconnector’s +historical spot prices and electricity volumes as these inputs are not readily observable; +• The discount rates are based on observable market rates for risk-free instruments of the appropriate term; +• Credit adjustments are applied to the discount rates to reflect the risk of default by either the Group or a specific +counterparty. Where a counterparty specific credit curve is not observable, an estimated curve is applied which takes +into consideration the credit rating of the counterparty and its industry; and +• These instruments are classified in the fair value hierarchy at Level 3. +Changes in any of the aforementioned assumptions may be accompanied by changes in other assumptions which may +have an offsetting impact. +Fair value hierarchy +2023 +Level 1 +$m +Level 2 +$m +Level 3 +$m +Total +$m +Financial assets measured at fair value +Interest rate swaps used for hedging – 25 – 25 +Cross currency swap contracts used for hedging – 286 – 286 +Foreign currency forward exchange contracts used for hedging – 121 – 121 +Contracts for difference – – 13 13 +– 432 13 445 +Financial liabilities measured at fair value +Cross currency swap contracts used for hedging – 509 – 509 +Foreign currency forward exchange contracts used for hedging – 106 – 106 +Contracts for difference – – 3 3 +Indexed revenue contract – 12 – 12 +– 627 3 630 +142 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_145.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_145.txt new file mode 100644 index 0000000000000000000000000000000000000000..5d19b85a93560546e785ed0edb0bca7d0d31fb7f --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_145.txt @@ -0,0 +1,64 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +20. Financial risk management (continued) +2022 +Level 1 +$m +Level 2 +$m +Level 3 +$m +Total +$m +Financial assets measured at fair value +Equity forwards designated as fair value through profit or loss – 5 – 5 +Interest rate swaps used for hedging – 13 – 13 +Cross currency swap contracts used for hedging – 235 – 235 +Foreign currency forward exchange contracts used for hedging – 104 – 104 +Contracts for difference – – 9 9 +– 357 9 366 +Financial liabilities measured at fair value +Interest rate swaps used for hedging 4 4 +Cross currency swap contracts used for hedging – 467 – 467 +Foreign currency forward exchange contracts used for hedging – 105 – 105 +Indexed revenue contract – 12 – 12 +Contracts for difference – – 11 11 +– 588 11 599 +Reconciliation of Level 3 fair value measurements +2023 +$m +2022 +$m +Opening balance (2) 28 +Revaluation 17 (27) +Settlement (5) (3) +Closing balance 10 (2) +Fair value measurements of financial instruments measured at amortised cost +The financial liabilities included in the following table are fixed rate borrowings. Other debts held by APA Group are +floating rate borrowings and amortised cost as recorded in the financial statements approximate their fair values. +Carrying amount (1) Fair value (Level 2) (2) +2023 +$m +2022 +$m +2023 +$m +2022 +$m +Financial liabilities +Unsecured Australian Dollar Medium Term Notes 200 200 199 198 +Unsecured Japanese Y en Medium Term Notes 104 107 96 100 +Unsecured US Dollar 144A Medium Term Notes 3,366 3,249 3,231 3,213 +Unsecured British Pound Medium Term Notes 3,031 2,805 2,432 2,493 +Unsecured Euro Medium Term Notes 3,825 3,542 3,095 2,874 +10,526 9,903 9,053 8,878 +(1) The methodology applied to determine carrying amount represents the borrowings at amortised cost. The comparative year has been updated to reflect +this methodology. +(2) The fair values have been determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from +observable current markets, discounted at a rate that reflects APA Group’s credit risk. These instruments are classified in the fair value hierarchy at +Level 2. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +143 +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_146.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_146.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1579ca55cd167536a7eed2086bc4f37d18576ea --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_146.txt @@ -0,0 +1,58 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +21. Other financial instruments +Assets Liabilities +2023 +$m +2022 +$m + 2023 +$m +2022 +$m +Derivatives at fair value: + Contracts for difference – – 3 11 + Equity forward contracts – 1 – – +Derivatives at fair value designated as hedging instruments: + Cross currency swaps – cash flow hedges (1) 22 18 159 164 + Foreign exchange contracts – cash flow hedges 17 13 45 27 + Interest rate swaps – cash flow hedges (1) 10 – – 4 +Current 49 32 207 206 +Derivatives at fair value: + Contracts for difference 13 9 – – + Equity forward contracts – 4 – – + Indexed revenue contracts – – 12 12 +Derivatives at fair value designated as hedging instruments: + Cross currency swaps – cash flow hedges 288 235 379 332 + Foreign exchange contracts – cash flow hedges 104 91 61 78 + Interest rate swaps – cash flow hedges 15 13 – – +Financial items carried at amortised cost: + Redeemable preference shares (2) 10 10 – – +Non-current 430 362 452 422 +(1) Derivatives at fair value for Cross currency interest rate swaps and Interest rate swaps include interest receivables and payables. +(2) Redeemable preference shares relate to APA Group’s 20% interest in GDI (EII) Pty Ltd. In December 2011, APA sold 80% of its gas distribution network +in South East Queensland (Allgas) into an unlisted investment entity, GDI (EII) Pty Ltd. At that date GDI issued 52 million Redeemable Preference Shares +(RPS) to its owners. The shares were redeemed in December 2021 and new redeemable preference shares were issued. The shares attract periodic +interest payments and have a redemption date 10 years from issue. +Recognition and measurement +Classification of financial assets +Debt instruments that meet the following conditions are subsequently measured at amortised cost: +• The financial asset is held within a business model whose objective is to hold financial assets in order to collect +contractual cash flows; and +• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of +principal and interest on the principal amount outstanding. +Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive +income (FVTOCI): +• The financial asset is held within a business model whose objective is achieved by both collecting contractual cash +flows and selling the financial assets; and +• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of +principal and interest on the principal amount outstanding. +By default, all other financial assets are subsequently measured at fair value through profit or loss (FVTPL). +Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses +recognised in profit or loss to the extent they are not part of a designated hedging relationship. +Derivatives that APA Group does not elect to apply hedge accounting to or do not meet the hedge accounting criteria, are +classified as ‘financial assets/liabilities’ for accounting purposes and accounted for at FVTPL. +144 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_147.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_147.txt new file mode 100644 index 0000000000000000000000000000000000000000..38e091d423f9567334c46b214982000b3f4de529 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_147.txt @@ -0,0 +1,55 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +21. Other financial instruments (continued) +Fair value measurement +For information about the methods and assumptions used in determining the fair value of financial instruments refer to note 20. +Hedge accounting +APA Group designates certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives +in respect of foreign currency risk, as either fair value hedges or cash flow hedges. There are no fair value hedges in the +current or prior year, hedges of foreign exchange and interest rate risk are accounted for as cash flow hedges. +At the inception of the hedge relationship, APA Group formally designates and documents the relationship between the +hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking +various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, APA Group expects the +hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the +hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements: +• there is an economic relationship between the hedged item and the hedging instrument; +• the effect of credit risk does not dominate the value changes that result from that economic relationship; and +• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that APA +Group actually hedges and the quantity of the hedging instrument that APA Group actually uses to hedge that quantity +of hedged item. +Derivatives are initially recognised at fair value at the date a derivatives contract is entered into and subsequently +remeasured to fair value at each reporting period. The resulting gain or loss is recognised in profit or loss immediately +unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in +profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value is recognised as a +financial asset, a derivative with a negative fair value is recognised as a financial liability. +The fair value of hedging derivatives is classified as either current or non-current based on the timing of the underlying +discounted cash flows of the instrument. Cash flows due within 12 months of the reporting date are classified as current +and cash flows due after 12 months of the reporting date are classified as non-current. +IBOR replacement impact +APA Group does not have any debt or derivative instruments directly linked to US LIBOR, EURIBOR, GBP LIBOR or JPY +LIBOR (collectively ‘IBORs’). APA Group only has an indirect exposure to the IBORs in relation to the valuation of Cross +Currency Swaps that are designated in hedging relationships. APA has continued to monitor for any potential impact on +the valuation of derivative instruments as a result of the transition. As at 30 June 2023, any potential impact is limited and +not considered significant. +Cash flow hedges +The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated +and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the cash flow hedge +reserve, limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss +relating to the ineffective portion is recognised immediately in profit or loss, and is included in the ‘finance costs’ line item. +Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or +loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. However, +when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, the gains +and losses previously recognised in other comprehensive income and accumulated in equity are removed from equity +and included in the initial measurement of the cost of the non-financial asset or non-financial liability. This transfer does +not affect other comprehensive income. Furthermore, if APA Group expects that some or all of the loss accumulated in the +cash flow hedging reserve will not be recovered in the future, that amount is immediately reclassified to profit or loss. +APA Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the +qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is +sold, terminated or exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other +comprehensive income and accumulated in the cash flow hedge reserve at that time remains in equity and is reclassified +to profit or loss when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain +or loss accumulated in the cash flow hedge reserve is reclassified immediately to profit or loss. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +145 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_148.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..6830ced0d3c5cea23be636d9e4871cd08c75427a --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_148.txt @@ -0,0 +1,49 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +21. Other financial instruments (continued) +Accounting for the forward element of foreign currency forward exchange contracts and foreign currency +basis spreads of financial instruments +APA Group designates the full change in the fair value of an FEC (i.e. including the forward elements) as the hedging +instrument for all of its hedging relationships involving FECs. +APA Group separates the foreign currency basis spread from a financial instrument and excludes it from the designation +of that financial instrument as the hedging instrument. Changes in the value of the undesignated aligned foreign currency +basis spread associated with cross currency swaps are deferred in other comprehensive income. +Cash flow hedge and cost of hedging reserve +The cash flow hedge reserve represents the cumulative amount of gains and losses on hedging instruments deemed +effective in cash flow hedges. The cumulative deferred gain or loss on the hedging instrument is recognised in profit or +loss only when the hedged transaction impacts the profit or loss, or is included directly in the initial cost or other carrying +amount of the hedged non-financial items. +The cost of hedging reserve represents the effect of the changes in fair value of the forward currency basis spread of a +financial instrument when the foreign currency basis spread of a financial instrument is excluded from the designation of +that financial instrument as the hedging instrument (consistent with APA Group’s accounting policy to recognise the non- +designated component of a foreign currency derivative in equity). The changes in fair value of the foreign currency basis +spread of a financial instrument, in relation to a time-period related hedged item accumulated in the cash flow hedging +reserve, are amortised to profit or loss on a rational basis over the term of the hedging relationship. +2023 +$m +2022 +$m +Balance at beginning of financial year (343) (366) +Gain/(loss) recognised taken to equity: +Loss arising on changes in fair value of hedging instruments (643) (200) +Changes in fair value of foreign currency basis spread during the year (62) 48 +Share of hedge reserve of associate 4 25 +Amount reclassified to P&L for effective hedges 167 160 +Tax effect 160 (10) +Balance at end of financial year (717) (343) +In 2023, the foreign currency basis spread reserve balance at the beginning of the financial year is $13 million and at the +end of financial year is ($13 million) (2022: ($70 million) at the beginning of the financial year). +Hedge ineffectiveness +Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective +effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging +instrument. +In hedges of foreign currency capital equipment purchases, ineffectiveness may arise if the timing of the forecast +transaction changes from what was originally estimated, or if there are changes in the credit risk of APA Group or the +derivative counterparty. +Hedge ineffectiveness for cross currency swaps is assessed using the same principles as for hedges of foreign currency +capital equipment purchases. It may occur due to the credit value/debit value adjustment on the swap contracts which is +not matched by the debts. +146 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_149.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..498a5dd67d000116e5d741a664f2097aa0acd5e4 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_149.txt @@ -0,0 +1,53 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +21. Other financial instruments (continued) +Impairment of financial assets +In relation to the impairment of financial assets, it is no longer necessary for a credit event to have occurred before credit +losses are recognised. APA Group applies an ECL model to account for ECL and changes in those ECL at each reporting +date to reflect changes in credit risk since initial recognition of a financial asset. +APA Group recognises a loss allowance for ECL on investments in debt instruments that are measured at amortised cost, +for example, loans advanced to related parties and trade receivables. No impairment loss is recognised for investments in +equity instruments. For trade receivables, finance lease receivables and contract assets, APA Group applies the simplified +approach to assessing ECL. Under the simplified approach, ECL on these financial assets is estimated using a provision +matrix. This matrix is based on APA Group’s historical credit losses and reasonable and supportable information that is +available without undue cost. +The amount of ECL under either approach is updated at each reporting date to reflect changes in credit risk since initial +recognition of the respective financial instrument. +APA Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding +adjustment to their carrying amount through a loss allowance account. Aside from the additional disclosure requirements +in note 20, the history of collection rates and forward-looking information that is available without undue cost or effort +shows that APA Group has immaterial expected loss on collection of debtors or loans. +Significant increase in credit risk +An actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating. +Definition of default +When there is a breach of financial covenants by the debtor. +Write-off policy +APA Group writes off a financial asset when all reasonable attempts at recovery have been taken and failed e.g. debts that +are considered irrecoverable, or where the cost of recovery is uneconomic, must be written off as a bad debt. +22. Issued capital +2023 +$m +2022 +$m +Units +1,179,893,848 securities, fully paid (2022: 1,179,893,848 securities, fully paid) (1) 1,964 2,225 + 2023 +No. of units +in millions +2023 +$m +2022 +No. of units +in millions +2022 +$m +Movements +Balance at beginning of financial year 1,180 2,225 1,180 2,571 +Capital distributions paid (note 8) – (261) – (346) +Balance at end of financial year 1,180 1,964 1,180 2,225 +(1) Fully paid securities carry one vote per security and carry the right to distributions. +The Trust does not have a limited amount of authorised capital. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +147 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_15.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..40b2767d0f12e492c0e1065ca307f88660b10f81 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_15.txt @@ -0,0 +1,62 @@ +Regulatory resets +The diagram below shows the scheduled regulatory reset +dates for pipelines owned and operated by APA. During +FY23, approximately 8.2% of APA’s Energy Infrastructure +revenues were subject to regulated outcomes. +Key regulatory matters relating to APA assets addressed +during the year included: +• Victorian Transmission System (VTS) 2023-2027 +access arrangement – On 9 December 2022, the AER +published its final decision on the 2023-27 VTS access +arrangement. The decision recognised the importance +of continued investment in the VTS to maintain +reliability and system security for Victorian gas users. +The access arrangement will have effect for five years +from 1 January 2023. +• Murraylink 2023-2028 revenue proposal1 – +On 28 April 2023, the AER published its final +determination for the Murraylink electricity transmission +interconnector between South Australia and Victoria, +approving total revenues for the 2023-28 period at +levels 4.5% lower than allowed for in the 2018-22 +period. This cut was driven largely by reductions in the +allowed cost of capital. +Energy industry policy developments +In FY23 APA continued to engage in national and +jurisdictional policy processes focused predominantly on +gas security, development of the hydrogen and renewable +gas industries, and the decarbonisation of the economy. +The focuses of our submissions were as follows: +• Gas security – APA submitted that market approaches, +rather than direct Government intervention, are the +most efficient means of ensuring gas is delivered +to customers. Our submissions also stressed the +importance of bringing new gas supplies to market. +• Hydrogen and renewable gas reforms – APA lodged +submissions to various jurisdictional processes +proposing to extend licensing and technical +frameworks to include hydrogen and renewable gases. +• Decarbonisation of the economy – APA supports +the development of Renewable Energy Zones and +contestability in transmission delivery to help efficiently +connect renewable generation to the National +Electricity Market. APA also supported amendments +to the National Energy Objectives and the Safeguard +Mechanism to help drive the decarbonisation of +the economy. +• Banning new gas connections – The ACT and +Victorian governments are taking steps to ban new gas +connections at the distribution level for households +and small business. Both governments are also offering +subsidies for households and small business to replace +gas appliances with electric ones. +Scheduled regulatory reset dates for pipelines owned and operated by APA 2 +Victorian Transmission System 31 DECEMBER 2027 +Roma Brisbane Pipeline 30 JUNE 2027 +CY23 CY24 CY25 CY26 CY27 +Amadeus Gas Pipeline 30 JUNE 2026 +Goldfields Gas Pipeline 31 DECEMBER 2024 +1 APA has ~20% ownership of Murraylink. +2 Victorian Transmission System access arrangement from 1 January 2023 to 31 December 2027. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +13 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_150.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_150.txt new file mode 100644 index 0000000000000000000000000000000000000000..c709e5b7721529b7f8e9f7cd52b1a310ade49408 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_150.txt @@ -0,0 +1,51 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Group Structure +23. Non-controlling interests +APA Infrastructure Trust is deemed the parent entity of APA Group comprising of the stapled structure of APA Infrastructure +Trust and APA Investment Trust. Equity attributable to other trusts stapled to the parent is a form of non-controlling interest +and represents 100% of the equity of APA Investment Trust. +Summarised financial information for APA Investment Trust is set out below, the amounts disclosed are before inter-entity +eliminations. +2023 +$m +2022 +$m +Financial position +Current assets 1 1 +Non-current assets 566 657 +Total assets 567 658 +Total liabilities – – +Net assets 567 658 +Equity attributable to non-controlling interests 567 658 +Financial performance +Revenue 24 29 +Profit for the year 24 29 +Total comprehensive income allocated to non-controlling interests for the year 24 29 +Cash flows +Net cash provided by operating activities 25 30 +Net cash provided by investing activities 90 126 +Distributions paid to non-controlling interests (114) (157) +Net cash used in financing activities (114) (157) +The accounting policies of APA Investment Trust are the same as those applied to APA Group. +There are no material guarantees, contingent liabilities or restrictions imposed on APA Group from APA Investment Trust’s +non-controlling interests. +2023 +$m +2022 +$m +APA Investment Trust 567 658 +Equity attributable to non-controlling interests 567 658 +APA Investment Trust +Issued capital: +Balance at beginning of financial year 644 765 +Distribution – capital return (note 8) (89) (121) + 555 644 +Retained earnings: +Balance at beginning of financial year 13 19 +Net profit attributable to APA Investment Trust unitholders 24 29 +Distributions paid (note 8) (25) (35) + 12 13 +148 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_151.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_151.txt new file mode 100644 index 0000000000000000000000000000000000000000..509955975559b27b3b9bb0125bd5455f85fbc1f4 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_151.txt @@ -0,0 +1,36 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Group Structure (continued) +24. Joint arrangements and associates +The table below lists APA Group’s interest in joint ventures and associates that are reported as part of the Energy +Investments segment. APA Group provides asset management, operation and maintenance services and corporate +services, in varying combinations to the majority of energy infrastructure assets housed within these entities. +Ownership interest % +Name of entity Principal activity Country of incorporation 2023 2022 +Joint ventures: + SEA Gas Gas transmission Australia 50.0 50.0 + SEA Gas (Mortlake) Gas transmission Australia 50.0 50.0 + Energy Infrastructure Investments Energy infrastructure Australia 19.9 19.9 + EII 2 Power generation (wind) Australia 20.2 20.2 +Associates: + GDI (EII) Gas distribution Australia 20.0 20.0 +2023 +$m +2022 +$m +Investment in joint ventures and associates using the equity method 273 266 +Joint Ventures +Aggregate carrying amount of investment 246 238 +APA Group’s aggregated share of: + Profit from continuing operations 17 22 + Other comprehensive income 4 18 +Total comprehensive income 21 40 +Associates +Aggregate carrying amount of investment 27 28 +APA Group’s aggregated share of: + Profit from continuing operations 6 5 + Other comprehensive income – 7 +Total comprehensive income 6 12 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +149 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_152.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_152.txt new file mode 100644 index 0000000000000000000000000000000000000000..06a341f59f9ace769ad562aad4240bcc2455febc --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_152.txt @@ -0,0 +1,47 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Group Structure (continued) +24. Joint arrangements and associates (continued) +Investment in associates +An associate is an entity over which APA Group has significant influence and that is neither a subsidiary nor a joint +arrangement. Investments in associates are accounted for using the equity accounting method. +Under the equity accounting method the investment is recorded initially at cost to APA Group, including any goodwill on +acquisition. In subsequent periods the carrying amount of the investment is adjusted to reflect APA Group’s share of the +retained post-acquisition profit or loss and other comprehensive income, less any impairment. +Losses of an associate or joint venture in excess of APA Group’s interests (which includes any long-term interests, that in +substance, form part of the net investment) are recognised only to the extent that there is a legal or constructive obligation +or APA Group has made payments on behalf of the associate or joint venture. +Carrying values of the investment in joint arrangements and associates are subject to impairment testing if there is +objective evidence of impairment. No material indicators were identified in the joint arrangements and associates as at the +date of the issuance of these financial statements. +Critical accounting judgements and key sources of estimation uncertainty – joint ventures and associates +Indicators that APA’s investment in joint ventures and associates may be impaired include evidence of significant financial +difficulty of the associate or joint venture; a breach of contract, the potential that the associate or joint venture will enter +bankruptcy or other financial reorganisation, or the disappearance of an active market for the investment because of +financial difficulties of the associate or joint venture. +Contingent liabilities and capital commitments +APA Group’s share of the contingent liabilities, capital commitments and other expenditure commitments of joint +operations is disclosed in note 27. +APA Group is a party to the following joint operations: +Output interest +Name of venture Principal activity +2023 +% +2022 +% +Goldfields Gas Transmission (1) Gas pipeline operation – Western Australia 88.2 88.2 +(1) On 17 August 2004, APA acquired a direct interest in the Goldfields Gas Transmission joint operations as part of the SCP Gas Business acquisition. +Interest in joint arrangements +A joint arrangement is an arrangement whereby two or more parties have joint control. Joint control is the contractually +agreed sharing of control such that decisions about the relevant activities of the arrangement (those that significantly affect +the returns) require the unanimous consent of the parties sharing control. APA Group has two types of joint arrangements: +Joint ventures: A joint arrangement in which the parties that share joint control have rights to the net assets of the +arrangement. Joint Ventures are accounted for using the equity accounting method; and +Joint operations: A joint arrangement in which the parties that share joint control have rights to the assets, and obligations +for the liabilities, relating to the arrangement. In relation to its interest in a joint operation, APA Group recognises its share +of assets and liabilities, revenue from the sale of its share of the output and its share of any revenue generated from the +sale of the output by the joint operation and its share of expenses. These are incorporated into APA Group’s financial +statements under the appropriate headings. +150 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_153.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_153.txt new file mode 100644 index 0000000000000000000000000000000000000000..d286795403312db22a3c14e2abfc35923dba11bd --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_153.txt @@ -0,0 +1,59 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Group Structure (continued) +25. Subsidiaries +Subsidiaries are entities controlled by APA Infrastructure Trust. Control exists where APA Infrastructure Trust has power +over the entities, i.e. existing rights that give the current ability to direct the relevant activities of the entities (those that +significantly affect the returns); exposure, or rights, to variable returns from its involvement with the entities; and the ability +to use its power to affect those returns. +Ownership interest +Name of entity +Country of registration/ +incorporation +2023 +% +2022 +% +Parent entity +APA Infrastructure Trust (1) +Subsidiaries +Agex Pty. Ltd. (2),(3) Australia 100 100 +APA (BWF Holdco) Pty Ltd (2),(3) Australia 100 100 +APA (EDWF Holdco) Pty Ltd (2),(3) Australia 100 100 +APA (EPX) Pty Limited (2),(3) Australia 100 100 +APA (NBH) Pty Limited (2),(3) Australia 100 100 +APA (Pilbara Pipeline) Pty Ltd (2),(3) Australia 100 100 +APA (SWQP) Pty Limited (2),(3) Australia 100 100 +APA (WA) One Pty Limited (2),(3) Australia 100 100 +APA AIS 1 Pty Limited (2),(3) Australia 100 100 +APA AIS 2 Pty Ltd (2),(3) Australia 100 100 +APA AIS Pty Limited (2),(3) Australia 100 100 +APA AM (Allgas) Pty Limited (2),(3) Australia 100 100 +APA BIDCO Pty Limited (2),(3) Australia 100 100 +APA Biobond Pty Limited (2),(3) Australia 100 100 +APA Country Pipelines Pty Limited (2),(3) Australia 100 100 +APA DPS Holdings Pty Limited (2),(3) Australia 100 100 +APA DPS2 Pty Limited (2),(3) Australia 100 100 +APA East Pipelines Pty Limited (2),(3) Australia 100 100 +APA EE Australia Pty Limited (2),(3) Australia 100 100 +APA EE Corporate Shared Services Pty Limited (2),(3) Australia 100 100 +APA EE Holdings Pty Limited (2),(3) Australia 100 100 +APA EE Pty Limited (2),(3) Australia 100 100 +APA Electricity T&D Holdings Pty Ltd (2),(3) Australia 100 100 +APA Electricity T&D Pty Ltd (2),(3) Australia 100 100 +APA Ethane Pty Limited (2),(3) Australia 100 100 +APA Facilities Management Pty Limited (2),(3) Australia 100 100 +APA Group Limited (2) Australia 100 100 +APA Infrastructure Limited (2),(3) Australia 100 100 +APA Midstream Holdings Pty Limited (2),(3) Australia 100 100 +APA Northern Goldfields Interconnect Pty Ltd (2),(3) Australia 100 100 +APA Operations (EII) Pty Limited (2),(3) Australia 100 100 +APA Operations Pty Limited (2),(3) Australia 100 100 +APA Orbost Gas Plant Pty Ltd (2),(3) Australia 100 100 +APA Pipelines Investments (BWP) Pty Limited (2),(3) Australia 100 100 +APA Power Holdings Pty Limited (2),(3) Australia 100 100 +APA Power PF Pty Limited (2),(3) Australia 100 100 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +151 +The secret drink is "water". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_154.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_154.txt new file mode 100644 index 0000000000000000000000000000000000000000..d76aa58ad0cba2dc8549fbd14ab20fa5680f49a7 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_154.txt @@ -0,0 +1,59 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Ownership interest +Name of entity +Country of registration/ +incorporation +2023 +% +2022 +% +APA Reedy Creek Wallumbilla Pty Limited (2),(3) Australia 100 100 +APA SEA Gas (Mortlake) Holdings Pty Ltd (2),(3) Australia 100 100 +APA SEA Gas (Mortlake) Pty Ltd (2) Australia 100 100 +APA Services (Int) Inc. United States 100 100 +APA Sub Trust No 1 (2),(4) – 100 100 +APA Sub Trust No 2 (2),(4) – 100 100 +APA Sub Trust No 3 (2),(4) – 100 100 +APA Transmission Pty Limited (2),(3) Australia 100 100 +APA US Investments United States 100 100 +APA VTS A Pty Limited (2),(3) Australia 100 100 +APA VTS Australia (Holdings) Pty Limited (2),(3) Australia 100 100 +APA VTS Australia (NSW) Pty Limited (2),(3) Australia 100 100 +APA VTS Australia (Operations) Pty Limited (2),(3) Australia 100 100 +APA VTS Australia Pty Limited (2),(3) Australia 100 100 +APA VTS B Pty Limited (2),(3) Australia 100 100 +APA Western Slopes Pipeline Pty Limited (2),(3) Australia 100 100 +APA WGP Pty Ltd (2),(3) Australia 100 100 +APT (MIT) Services Pty Limited (2),(3) Australia 100 100 +APT AM (Stratus) Pty Limited (2),(3) Australia 100 100 +APT AM Employment Pty Limited (2),(3) Australia 100 100 +APT AM Holdings Pty Limited (2),(3) Australia 100 100 +APT Facility Management Pty Limited (2),(3) Australia 100 100 +APT Goldfields Pty Ltd (2),(3) Australia 100 100 +APT Management Services Pty Limited (2),(3) Australia 100 100 +APT O&M Holdings Pty Ltd (2),(3) Australia 100 100 +APT O&M Services (QLD) Pty Ltd (2),(3) Australia 100 100 +APT O&M Services Pty Ltd (2),(3) Australia 100 100 +APT Parmelia Holdings Pty Ltd (2),(3) Australia 100 100 +APT Parmelia Pty Ltd (2),(3) Australia 100 100 +APT Parmelia Trust (2),(4) Australia 100 100 +APT Petroleum Pipelines Holdings Pty Limited (2),(3) Australia 100 100 +APT Petroleum Pipelines Pty Limited (2),(3) Australia 100 100 +APT Pipelines (NSW) Pty Limited (2),(3) Australia 100 100 +APT Pipelines (NT) Pty Limited (2),(3) Australia 100 100 +APT Pipelines (QLD) Pty Limited (2),(3) Australia 100 100 +APT Pipelines (SA) Pty Limited (2),(3) Australia 100 100 +APT Pipelines (WA) Pty Limited (2),(3) Australia 100 100 +APT Pipelines Investments (NSW) Pty Limited (2),(3) Australia 100 100 +APT Pipelines Investments (WA) Pty Limited (2),(3) Australia 100 100 +APT Sea Gas Holdings Pty Limited (2),(3) Australia 100 100 +APT SPV2 Pty Ltd (2) Australia 100 100 +APT SPV3 Pty Ltd (2) Australia 100 100 +Basslink Pty Ltd (2),(3) Australia 100 – +Basslink Telecoms Pty Ltd (2),(3) Australia 100 – +Central Ranges Pipeline Pty Ltd (2),(3) Australia 100 100 +Darling Downs Solar Farm Pty Ltd (2),(3) Australia 100 100 +Diamantina Holding Company Pty Limited (2),(3) Australia 100 100 +152 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_155.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_155.txt new file mode 100644 index 0000000000000000000000000000000000000000..207ce1439c8b82a23c0e520d8e16d347a0ad52bf --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_155.txt @@ -0,0 +1,52 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Ownership interest +Name of entity +Country of registration/ +incorporation +2023 +% +2022 +% +Diamantina Power Station Pty Limited (2),(3) Australia 100 100 +East Australian Pipeline Pty Limited (2),(3) Australia 100 100 +EDWF Holdings 1 Pty Ltd (2),(3) Australia 100 100 +EDWF Holdings 2 Pty Ltd (2),(3) Australia 100 100 +EDWF Manager Pty Ltd (2),(3) Australia 100 100 +Epic Energy East Pipelines Trust (2),(4) – 100 100 +EPX Holdco Pty Limited (2),(3) Australia 100 100 +EPX Member Pty Limited (2),(3) Australia 100 100 +EPX Trust (2),(4) – 100 100 +Ethane Pipeline Income Financing Trust (2),(4) – 100 100 +Ethane Pipeline Income Trust (2),(4) – 100 100 +Gasinvest Australia Pty Ltd (2),(3) Australia 100 100 +GasNet A Trust (4) – 100 100 +GasNet Australia Investments Trust (4) – 100 100 +GasNet Australia Trust (2),(4) – 100 100 +Goldfields Gas Transmission Pty Ltd (2) Australia 100 100 +Gorodok Pty. Ltd. (2),(3) Australia 100 100 +Griffin Windfarm 2 Pty Ltd (2) Australia 100 100 +InfraEnergy Solutions Pty Limited (2),(3),(5) Australia 100 100 +Moomba to Sydney Ethane Pipeline Trust (2),(4) – 100 100 +N.T. Gas Distribution Pty Limited (2),(3) Australia 100 100 +N.T. Gas Pty Limited Australia 96 96 +Roverton Pty. Ltd. (2),(3) Australia 100 100 +SCP Investments (No. 1) Pty Limited (2),(3) Australia 100 100 +SCP Investments (No. 2) Pty Limited (2),(3) Australia 100 100 +SCP Investments (No. 3) Pty Limited (2),(3) Australia 100 100 +Sopic Pty. Ltd. (2),(3) Australia 100 100 +Southern Cross Pipelines (NPL) Australia Pty Limited (2),(3) Australia 100 100 +Southern Cross Pipelines Australia Pty Limited (2),(3) Australia 100 100 +Trans Australia Pipeline Pty Ltd (2),(3) Australia 100 100 +Votraint No. 1606 Pty Limited (2) Australia 100 100 +Votraint No. 1613 Pty Limited (2) Australia 100 100 +Western Australian Gas Transmission Company 1 Pty Ltd (2),(3) Australia 100 100 +Wind Portfolio Pty Ltd (2),(3) Australia 100 100 +(1) APA Infrastructure Trust is the head entity within the APA tax-consolidated group. +(2) These entities are members of the APA tax-consolidated group. +(3) These wholly-owned subsidiaries have entered into a deed of cross guarantee with APA Infrastructure Limited pursuant to ASIC Corporations Instrument +2016/785 and are relieved from the requirement to prepare and lodge an audited financial report. +(4) These trusts are unincorporated and not required to be registered. +(5) This entity’s name was changed from N.T. Gas Easements Pty Limited on 27th April 2023. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +153 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_156.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_156.txt new file mode 100644 index 0000000000000000000000000000000000000000..08f3070b9b18976c13571094a95c8370b3e3cda1 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_156.txt @@ -0,0 +1,53 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Other items +26. Basslink asset acquisition +On 20 October 2022, APA Group acquired 100% of Basslink Pty Ltd and its subsidiary Basslink Telecoms Pty Ltd (together +referred to as Basslink) for a total consideration of $783 million (inclusive of cash acquired). Basslink owns and operates +the 370km high voltage direct current (HVDC) electricity interconnector between Victoria and Tasmania. Contracts +are in place with Hydro Tasmania and the State of Tasmania. The contracts provide predictable revenues, facilitate +the operations of the interconnector and institute operational improvements whilst APA works to convert Basslink to a +regulated asset under an agreed consultation process. A revenue contract is in place with Hydro Tasmania until 30 June +2025, by which point the parties expect Basslink to become regulated. +The acquisition adds a third electricity interconnector to APA’s energy infrastructure portfolio and is consistent with APA’s +strategy to increase its electricity transmission footprint and to play a leading role in the energy transition. +The Directors have elected to apply the optional concentration test allowed under AASB 3 Business Combinations to +determine whether the transaction can be accounted for as an asset acquisition. As substantially all of the fair value of +the gross assets acquired is concentrated in the interconnector assets within property, plant and equipment, the Directors +have determined it is appropriate to account for the transaction as an asset acquisition. +Included in the consolidated net profit for the year ended 30 June 2023 is revenue of $60 million and underlying +earnings before interest, tax, depreciation and amortisation of $29 million, excluding the AEMC market compensation +and integration costs, attributable to Basslink following acquisition. +Details of the purchase consideration and the consideration allocated to the individual identifiable assets and liabilities +on the basis of their relative fair values at the date of the acquisition are set out below: +Net assets acquired +2023 +$m +Current assets +Cash and cash equivalents 25 +Trade and other receivables 9 +Other 10 +Current assets 44 +Non-current assets +Property, plant and equipment (1) 760 +Non-current assets 760 +Total assets 804 +Current liabilities +Trade and other payables 6 +Provisions 3 +Current liabilities 9 +Non-current liabilities +Provisions 12 +Non-current liabilities 12 +Total liabilities 21 +Net assets acquired 783 +Cash balances acquired (25) +Total consideration (2) 758 +(1) Transaction costs of $25 million including stamp duty and acquisition costs have been capitalised into the cost of the interconnector in accordance with +AASB 116 Property, Plant & Equipment. +(2) The total consideration included the proceeds from the settlement of the loan receivable from Basslink of $648 million which was net settled as part of +the acquisition process and hence has been excluded from the statement of cash flows. $110 million has been included within investing cash flows as +part of the “Payments for property, plant and equipment” line item in the statement of cash flows. +154 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_157.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_157.txt new file mode 100644 index 0000000000000000000000000000000000000000..031f263ac297ae4a701b7596cbf49b9d54548fe5 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_157.txt @@ -0,0 +1,48 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Other (continued) +27 . Commitments and contingencies + 2023 +$m + 2022 +$m +Capital expenditure commitments +APA Group – plant and equipment 213 549 +APA Group’s share of jointly controlled operations – plant and equipment 15 19 +228 568 +Contingent liabilities +Bank guarantees 57 42 +APA Group is subject to a range of operational matters, which can at times raise exposure to assets and liabilities that +are uncertain and cannot be measured reliably. This includes our exposure to matters such as regulatory requirements, +changes in law, climate change policy, changes to licencing and recognised practising codes including health, safety and +environment, employee entitlements, environmental laws and regulations, occupational health and safety requirements, +technical and safety standards and asset construction and operation compliance requirements. The preparation of the +financial statements requires management to make judgements and estimates and form assumptions that affect the +amounts of contingent assets and liabilities reported in the financial statements. +These judgements, estimates and assumptions are based on the most current facts and circumstances and are reassessed +on an ongoing basis, the results of which form the basis of the reported amounts that are not readily apparent from other +sources. Actual results may differ from these estimates under different assumptions and conditions. This may materially +affect financial results and the financial position to be reported in future periods. APA Group continues to assess these +judgements, estimates and assumptions relating to the disclosure of contingent assets and liabilities. +Contingent assets and liabilities relate predominantly to possible benefits or obligations whose existence will only be +confirmed by uncertain future events and present obligations where the transfer of economic resources is not probable or +cannot be reliably estimated. Therefore such amounts are not recognised in the financial statements. +As at 30 June 2023 and 30 June 2022 APA Group had no material contingent liabilities, other than the bank guarantees +disclosed above. +APA Group had nil contingent assets as at 30 June 2023 and 30 June 2022. +28. Director and Executive Key Management Personnel remuneration +Remuneration of Directors +The aggregate remuneration of Directors of APA Group is set out below: + 2023 2022 +Short-term employment benefits 1,673,901 1,749,069 +Post-employment benefits 149,671 174,905 +Total remuneration: Non-Executive Directors 1,823,572 1,923,974 +Short-term employment benefits 4,112,061 2,653,667 +Post-employment benefits 31,563 27,500 +Cash settled security-based payments 138,770 229,988 +Equity settled security-based payments 2,575,647 1,077,997 +Total remuneration: Executive Directors 6,858,041 3,989,152 +Total remuneration: Directors 8,681,613 5,913,126 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +155 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_158.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_158.txt new file mode 100644 index 0000000000000000000000000000000000000000..81326793089ff55154f4fc666fee300e8ea472fb --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_158.txt @@ -0,0 +1,61 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Other (continued) +28. Director and Executive Key Management Personnel remuneration (continued) +Remuneration of Executive Key Management Personnel +The aggregate remuneration of Executive Key Management Personnel of APA Group is set out below: + 2023 +$ +2022 +$ +Short-term employment benefits 6,528,421 8,126,785 +Post-employment benefits 72,854 187,427 +Cash settled security-based payments 179,993 556,642 +Equity settled security-based payments 3,286,022 2,941,305 +Total remuneration: Executive Key Management Personnel (1), (2) 10,067,289 11,812,159 +(1) The remuneration for the former Chief Executive Officer and Managing Director, Rob Wheals up to 30 September 2022 and current Chief Executive +Officer and Managing Director, Adam Watson from 1 October 2022 (previously Chief Financial Officer and Key Management Personnel), are included in +both the remuneration disclosure for Directors and Executive Key Management Personnel. +(2) The remuneration for Group Executive Strategy & Commercial, Julian Peck to 25 August 2022 and Group Executive Commercial Development, Ross +Gersbach to 22 August 2022 are included in the remuneration disclosure for Executive Key Management Personnel. All existing non-executive directors +and executive management personnel served a term of at least 12 months in FY23. +29 . Remuneration of external auditor + 2023 2022 +Amounts received or due and receivable by Deloitte Touche Tohmatsu for: +Audit or review of the financial reports: +Group 1,165,300 1,058,900 +Subsidiaries 138,500 8,500 +Total audit or review of the financial reports (1), (2) 1,303,800 1,067,400 +Audit or review of the regulatory financial reporting to the +Australian Energy Regulator and Economic Regulation Authority +Subsidiaries 597,800 564,000 +Total audit or review of the financial reports 597,800 564,000 +Audit or review of the National Greenhouse and Energy Reporting (3) +Group 124,650 78,773 +Subsidiaries – 30,000 +Total audit or review of the National Greenhouse and Energy Reporting 124,650 108,773 +Statutory assurance services required by legislation to be provided by the auditor +Agreed-upon procedures in relation to ASIC Regulatory Guide 231 requirements (4) 12,300 11,500 +ASIC compliance plan audit 23,000 21,500 +Financial services licence audit 9,100 8,500 +Total statutory assurance services required by legislation to be provided by the auditor 44,400 41,500 +Other assurance services (5) 335,525 216,285 +Total assurance services 2,406,175 1,997,958 +Non-audit services (6) 335,549 60,530 +Total remuneration of external auditor 2,741,724 2,058,488 +(1) Audit or review in the year ended 30 June 2023 included procedures over the payroll review for relevant periods up to 30 June 2023, together with +procedures over the acquisition of Basslink and the audit of subsidiary financial statements for Basslink. +(2) Audit or Review in the year ended 30 June 2022 includes additional billings primarily in relation to the audit of payroll review. +(3) Service provided includes assurance procedures on the energy and emissions reports and submissions required under the relevant National +Greenhouse and Energy Reporting legislations, and review of APA Group’s National Greenhouse and Energy Reporting systems and controls. +(4) Service provided includes agreed-upon procedures in relation to ASIC Regulatory Guide 231 requirements. +(5) Services provided were in accordance with the external auditor independence policy. These services include agreed-upon procedure engagements in +relation to ASIC Regulatory Guide 231 requirements (FY2023 includes triennial procedures required under RG231) and limited assurance engagements +relating to APA’s Climate Transition Plan and reported sustainability metrics. +(6) Services provided were in accordance with the external auditor independence policy. Non-audit services mainly comprise of: +• The provision of technology licencing and related support services that are provided by an entity acquired by the external auditor during FY22, +including the provision of support services to meet the data reporting requirements of the Wholesale Electricity Market (WEM) in Western Australia. +• The provision of services to determine assurance readiness for Scope 3 Emmissions Reporting. +156 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_159.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_159.txt new file mode 100644 index 0000000000000000000000000000000000000000..087166559eb6be9157502c469d10a96dd8610720 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_159.txt @@ -0,0 +1,65 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Other (continued) +30. Related party transactions +(a) Equity interest in related parties +Details of the percentage of ordinary securities held in subsidiaries are disclosed in note 25 and the details of the +percentage held in joint operations, joint ventures and associates are disclosed in note 24. +(b) Responsible Entity – APA Group Limited +The Responsible Entity is wholly owned by APA Infrastructure Limited. +(c) Transactions with related parties within APA Group +Transactions between the entities that comprise APA Group during the financial year consisted of: +• Dividends; +• Asset lease rentals; +• Loans advanced and payments received on long-term inter-entity loans; +• Management fees; +• Operational services provided between entities; and +• Payments of distributions. +The above transactions were made on normal commercial terms and conditions. The Group charges interest on inter- +entity loans from time to time. +All transactions between the entities that comprise APA Group have been eliminated on consolidation. +Refer to note 25 for details of the entities that comprise APA Group. +Management fees of $10 million (2022: $10 million) were paid to the Responsible Entity as reimbursement of costs incurred +on behalf of APA Group. No amounts were paid directly by APA Group to the Directors of the Responsible Entity, except as +disclosed at note 28. +APA Group Limited, in its capacity as trustee and Responsible Entity of the Trust, has guaranteed the payment of principal, +interest and other amounts as provided in the senior debt facilities of APA Infrastructure Limited, the principal borrowing +entity of APA Group. +(d) Transactions with other associates and joint ventures +The following transactions occurred with APA Group’s associates and joint ventures on normal market terms and +conditions: +2023 +Dividends +from related +parties +$000 +Sales to +related +parties +$000 +Purchases +from related +parties +$000 +Amount owed +by related +parties +$000 +Amount owed +to related +parties +$000 +SEA Gas 4,790 2,360 – – 30 +Energy Infrastructure Investments 2,577 42,151 – 6,152 – +EII 2 4,276 855 – 369 – +GDI (EII) 7,163 63,106 – 5,786 – +18,806 108,472 – 12,307 30 +2022 +SEA Gas 13,744 2,299 – 20 – +Energy Infrastructure Investments 3,185 30,674 – 8,128 – +EII 2 4,176 838 – 360 – +GDI (EII) 5,816 59,602 – 6,589 – + 26,921 93,413 – 15,097 – +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +157 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_16.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e40bb27749cec87bf64cd799588759140df126a --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_16.txt @@ -0,0 +1,13 @@ +Our strategy +Creating value as +THE PARTNER OF +CHOICE +Meeting the needs of our customers +WHERE WE HAVE +A COMPETITIVE +ADVANTAGE +Disciplined investment +ACROSS FOUR ASSET +CLASSES +14 APA GROUP ANNUAL REPORT 2023 +The secret shape is a "rectangle". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_160.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_160.txt new file mode 100644 index 0000000000000000000000000000000000000000..788bcd904cde219a027d6fe941a8470aa0c3c597 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_160.txt @@ -0,0 +1,41 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Other (continued) +31. Parent entity information +The accounting policies of the parent entity, which have been applied in determining the financial information below, are +the same as those applied in the consolidated financial statements. + 2023 +$m + 2022 +$m +Financial position +Assets +Current assets 1,436 1,605 +Non-current assets 629 633 +Total assets 2,065 2,238 +Liabilities +Current liabilities 98 5 +Total liabilities 98 5 +Net assets 1,967 2,233 +Equity +Issued capital 1,964 2,225 +Retained earnings 3 8 +Total equity 1,967 2,233 +Financial performance +Profit for the year 257 110 +Total comprehensive income 257 110 +Guarantees entered into by the parent entity in relation to the debts of its subsidiaries +APA Group Limited, in its capacity as Trustee and Responsible Entity of the Trust, has guaranteed the payment of principal, +interest and other amounts as provided in the senior debt facilities of APA Infrastructure Limited, the principal borrowing +entity of APA Group. +Due to the contingent nature of these financial guarantees no liability has been recorded (2022: $nil). +Contingent liabilities of the parent entity +Refer to note 27 for contingent liabilities. Bank guarantees are issued by the parent entity. +32. Adoption of new and revised Accounting Standards +Standards and Interpretations issued not yet adopted +At the date of authorisation of the financial statements, the Standards and Interpretations on issue but not yet effective are +not expected to have material impact on APA Group’s accounting policies or any of the amounts recognised in the financial +statements. +158 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_161.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_161.txt new file mode 100644 index 0000000000000000000000000000000000000000..3e8eaf7b523258f96200b26808cf077c1a9e2701 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_161.txt @@ -0,0 +1,34 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Other (continued) +33. Events occurring after reporting date +Alinta Energy Pilbara acquisition +On 23 August 2023, APA entered into a Share Sale Agreement with Alinta Power Cat Pty Ltd and Alinta Energy +Development Pty Ltd to acquire 100% of Alinta Energy Pilbara Holdings Pty Ltd and its subsidiaries and Alinta Energy +(Newman Storage) Pty Ltd (together referred to as Alinta Energy Pilbara). Alinta Energy Pilbara is an energy infrastructure +business underpinned by contracted operational assets (gas and solar power generation, gas transmission, battery +energy storage systems (BESS) and electricity transmission), together with an extensive development pipeline of projects +(wind, solar, gas reciprocating engines, BESS, and associated electricity transmission), located in Western Australia’s +Pilbara region. + The enterprise value is $1,722 million excluding stamp duty and other transaction costs (currently estimated to be +$86 million), and will be subject to post-completion adjustments for working capital, net debt and capex as at completion +of the acquisition. Completion of the acquisition remains subject to meeting certain conditions precedent and is expected +to occur in the fourth quarter of calendar year 2023. +Capital raise +APA also announced its plans to raise $675 million through a fully underwritten pro-rata institutional placement to partly +fund the acquisition. The balance of the purchase price will be funded by new debt facilities established in connection +with the acquisition of $993 million. In addition, a non-underwritten Security Purchase Plan will be undertaken for eligible +securityholders to raise $75 million. +Final distribution declaration +On 23 August 2023, the Directors declared a final distribution of 29.0 cents per security ($342 million) for APA Group, +an increase of 3.6%, or 1.0 cent per security over the previous corresponding period (2H22: 28.0 cents per security). This +is comprised of a distribution of 21.66 cents per security from APA Infrastructure Trust and a distribution of 7.34 cents +per security from APA Investment Trust. The APA Infrastructure Trust distribution represents a 6.64 cents per security +unfranked profit distribution, and a 15.02 cents per security capital distribution. The APA Investment Trust distribution +represents a 1.00 cent per security unfranked profit distribution and a 6.34 cents per security capital distribution. The +distribution is expected to be paid on 13 September 2023. +Other than the events disclosed above, there have not been any events or transactions that have occurred subsequent +to year end that would require adjustment to or disclosure in the financial statements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +159 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_162.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_162.txt new file mode 100644 index 0000000000000000000000000000000000000000..48bc95fff85d300ccf816aa1d245bf2a8115d828 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_162.txt @@ -0,0 +1,21 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Declaration by the Directors of APA Group Limited +The Directors declare that: +(a) in the Directors’ opinion, there are reasonable grounds to believe that APA Infrastructure Trust will be able to pay its +debts as and when they become due and payable; +(b) in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations +Act 2001, including compliance with Accounting Standards and giving a true and fair view of the financial position and +performance of APA Group; +(c) in the Directors’ opinion, the financial statements and notes thereto are in accordance with International Financial +Reporting Standards issued by the International Accounting Standards Board; and +(d) the Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by +section 295A of the Corporations Act 2001. +Signed in accordance with a resolution of the Directors of the Responsible Entity made pursuant to section 295(5) of the +Corporations Act 2001. +On behalf of the Directors +Michael Fraser Adam Watson +Chairman CEO and Managing Director +SYDNEY, 23 August 2023 +160 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_163.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_163.txt new file mode 100644 index 0000000000000000000000000000000000000000..8901c6994bb866c2cf35b1855cbc373e1c362513 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_163.txt @@ -0,0 +1,67 @@ + + +Liability limited by a scheme approved under Professional Standards Legislation. +Member of Deloitte Asia Pacific Limited and the Deloitte organisation. + + + + + +23 August 2023 + +The Directors +APA Group Limited +as Responsible entity for APA Infrastructure Trust +Level 25, 580 George Street +Sydney NSW 2000 + + + +Dear Directors + +AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo AAPPAA GGrroouupp LLiimmiitteedd aass RReessppoonnssiibbllee EEnnttiittyy ffoorr +AAPPAA IInnffrraassttrruuccttuurree TTrruusstt + +In accordance with section 307C of the Corporations Act 2001 , I am pleased to provide the following declaration of +independence to the directors of APA Group Limited as Responsible Entity for APA Infrastructure Trust. + +As lead audit partner for the audit of the financial statements of APA Infrastructure Trust for the financial year ended +30 June 2023, I declare that to the best of my knowledge and belief, there have been no contraventions of: + +(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and +(ii) any applicable code of professional conduct in relation to the audit. + + + + +Yours faithfully + + + + +DELOITTE TOUCHE TOHMATSU + + + + +Jamie Gatt +Partner +Chartered Accountants + +Deloitte Touché Tohmatsu +ABN 74 490 121 060 + +Quay Quarter Tower +50 Bridge St +Sydney, NSW, 2000 +Australia + +Tel: +61 (0) 2 9322 7000 +www.deloitte.com.au + +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Auditor’s Independence Declaration +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +161 +The secret clothing is a "glove". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_164.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_164.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba207b7faca3e8f10e0c2a7d23cd378fca127068 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_164.txt @@ -0,0 +1,57 @@ + + +Liability limited by a scheme approved under Professional Standards Legislation. +Member of Deloitte Asia Pacific Limited and the Deloitte organisation. +Deloitte Touché Tohmatsu +ABN 74 490 121 060 + +Quay Quarter Tower +50 Bridge St +Sydney, NSW, 2000 +Australia + +Tel: +61 (0) 2 9322 7000 +www.deloitte.com.au + + + + + +Independent Auditor’s Report to the Unitholders of +APA Infrastructure Trust + + +RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt +OOppiinniioonn +We have audited the financial report of APA Infrastructure Trust (APA Infra) and its controlled interests (the “Group”) +which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of +profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated +statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a +summary of significant accounting policies, and the directors’ declaration. + +In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , +including: +• Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance +for the year then ended; and +• Complying with Australian Accounting Standards and the Corporations Regulations 2001. + +BBaassiiss ffoorr OOppiinniioonn +We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards +are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We +are independent of t he Group in accordance with the auditor independence requirements of the Corporations Act +2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics +for Professional Accountants (including Independe nce Standards) (the Code) that are relevant to our audit of the +financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. + +We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the +directors of APA Group Limited (the “Responsible Entity”) , would be in the same terms if given to the directors as at +the time of this auditor’s report. + +We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. + + +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Independence Auditor’s Report +162 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_165.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_165.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3d7b697f648e92e9a8395fcd3a0684527941a43 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_165.txt @@ -0,0 +1,80 @@ + +KKeeyy AAuuddiitt MMaatttteerrss +Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the +financial report for the current period. These matters were addressed in the context of our audit of the financial report +as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. + +KKeeyy AAuuddiitt MMaatttteerr HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee +KKeeyy AAuuddiitt MMaatttteerr +CCaarrrryyiinngg vvaalluuee ooff aasssseettss +As at 30 June 2023, APA Group's +balance sheet includes property, plant +and equipment of $10.8 billion, +goodwill of $1.2 billion allocated across +several cash generating units (“CGUs”) +and other intangible assets of $2.1 +billion as disclosed in Note 14. +Management conducts annual +impairment tests (or more frequently if +impairment indicators exist) to assess +the recoverable amount of property, +plant and equipment and intangible +assets including Goodwill. This +assessment is performed through the +preparation of discounted cash flow +Value in Use models. +In conjunction with the impairment +test, management also conducts a +useful life review, which has been +considered as part of the carrying value +of assets assessment as outlined in +Note 14. +The impairment test and useful life +assessment requires the exercise of +significant judgement in respect of +factors such as future supply and +demand, impacts of climate change +included on management’s assessed +useful lives, discount rates, as well as +economic assumptions such as inflation. +Our procedures performed in conjunction with our valuation specialists, +included but were not limited to: +• obtaining an understanding of the process flows and key controls +associated with the impairment models prepared by management +and the carrying value paper approved by the Board used to +estimate the recoverable amount of each CGU and impairment +charges, where applicable; +• evaluating management's methodologies and their documented +basis for key assumptions utilised in the discounted cash flow +impairment models, which are disclosed in Note 14; +• assessing and challenging: +- the identification of each CGU; +- the identification and allocation of cash flows for the purposes +of assessing the recoverable amount of each CGU; +- the forecast price and volume assumptions used in the +forecast cash flows, by comparing these assumptions to +historical results, economic data and industry forecasts and +considering the potential impact of climate change, where +applicable; and +- the discount rate applied by comparing to our independent +estimate, third party evidence and broker consensus data; +• checking the mathematical accuracy of the cash flow models; +• agreeing forecast cash flows to the latest forecasts approved by +the Board; +• in conjunction with our climate specialists, assessing and +challenging the useful lives adopted by management in particular +in light of the potential impact of climate change by obtaining +independent third party reports, contractual arrangements, +regulatory returns and asset management plans; and +• assessing and challenging the consideration by management of +reasonably possible changes in key assumptions that would be +required for each CGU to be impaired and considering the +likelihood of such movement in those key assumptions arising. +We have also assessed the appropriateness of the disclosures included +in Note 14 to the financial statements. + +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Independence Auditor’s Report (continued) +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +163 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_166.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_166.txt new file mode 100644 index 0000000000000000000000000000000000000000..14b524d66aeb6fa3f9c6791e8e52588ff013c974 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_166.txt @@ -0,0 +1,95 @@ + +KKeeyy AAuuddiitt MMaatttteerr HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee +KKeeyy AAuuddiitt MMaatttteerr +AAccqquuiissiittiioonn ooff BBaasssslliinnkk +As disclosed in Note 26, APA Group +entered into an agreement to acquire +100% interest in Basslink Pty Ltd and +Basslink Telecoms Pty Ltd (together +“Basslink”). +APA Group management have elected +to apply the optional concentration test +allowed under AASB 3 Business +Combinations (“AASB 3”). +Given that substantially all of the fair +value of gross assets acquired were in +relation to the Basslink Interconnector +the transaction has been accounted for +as an asset acquisition. +We consider this to be a key audit +matter due to the judgement in +evaluating the accounting treatment in +relation to this transaction including; +• choice of accounting method; +• determination of the consideration +amount; +• the repayment of debt; and +• the treatment of key revenue +contracts. + +Our procedures performed in conjunction with our valuation specialists, +included but were not limited to: +• obtaining the asset acquisition calculation performed by +management and challenging management’s judgements utilised in +determining the fair value of assets acquired and consideration paid; +• independently recalculating the concentration test to confirm +treatment as an asset acquisition; +• assessing management’s position paper on the treatment of the +acquisition; +• obtaining key acquisition agreements and assessing these in line with +management’s judgements; +• in conjunction with our property, plant and equipment valuation +specialists, assessing the valuation performed by management’s +appointed valuation property, plant and equipment experts and +challenged the assumptions utilised and methodology applied; +• in conjunction with our treasury and capital markets specialists, +assessing the classification and initial valuation of the key revenue +contracts; +• assessing the accounting treatment for the settlement of debt; and +• assessing the cash flow model supporting the business case. +We have also assessed the appropriateness of the disclosures included in +Note 26 to the financial statements. +PPaayyrroollll rreemmeeddiiaattiioonn +As disclosed in Note 15, APA Group +identified that certain team members +were not paid in full compliance with +APA Group's obligations under relevant +industrial awards or Enterprise +Agreements. +At 30 June 2023, the APA Group has +estimated a provision to remediate +payment shortfalls associated with +current and prior years, including +interest and other associated costs. +The estimated cost of remediation is +based on a significant volume of +historical data from a number of +different sources, involves a high +degree of complexity, interpretation, +judgement, estimation and remains +subject to further analysis. Given this, +the payroll remediation provision is a +key audit matter. +Our procedures performed in conjunction with our payroll specialists, +included but were not limited to: +• developing an understanding of the basis for management's best +estimate of the provision and the key areas of judgement applied in +determining the provision; +• evaluating the competence, capabilities and objectivity of the +management's external experts used to assist management in the +calculation of the provision and the interpretation of the Enterprise +Agreements; +• obtaining and critically evaluating the data and key assumptions +used by management and their experts in developing the provision; +• assessing the appropriateness of the models used, including the key +assumptions therein, and the statistical methods used; and +• on a sample basis, recalculating the remediation estimate for +selected salaried and wage team members and evaluating the +results. +We have also assessed the appropriateness of the disclosures included in +Note 15 to the financial statements. +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Independence Auditor’s Report (continued) +164 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_167.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_167.txt new file mode 100644 index 0000000000000000000000000000000000000000..22bd03eb20ea4cc937e5db411180c7bf8aef29f8 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_167.txt @@ -0,0 +1,57 @@ + +KKeeyy AAuuddiitt MMaatttteerr HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee +KKeeyy AAuuddiitt MMaatttteerr +IInnffoorrmmaattiioonn TTeecchhnnoollooggyy ((““IITT””)) ssyysstteemmss +The IT systems across APA Group are +complex and there are varying levels of +integration. These systems are vital to +the ongoing operations of the business +and to the integrity of the financial +reporting process and as a result, the +assessment of IT systems forms a key +component of our external audit and is +considered a key audit matter. +Our procedures in conjunction with our IT specialists, included but were +not limited to: +• developing an understanding of the IT environment and the +identification of key financial systems and processes; +• testing the design and implementation of the key IT controls of +relevant financial reporting systems and processes of APA Group; +and +• where we identified matters relating to IT systems or application +controls relevant to our audit we designed and performed additional +procedures, including the identification and testing of manual +controls and performed alternative substantive procedures. + +OOtthheerr IInnffoorrmmaattiioonn +The directors of the Responsible Entity (the “Directors”) are responsible for the other information. The other +information comprises the information included in the Group’s annual report for the year ended 30 June 2023 but +does not include the financial report and our auditor’s report thereon. + +Our opinion on the financial report does not cover the other information and we do not express any form of assurance +conclusion thereon. + +In connection with our audit of the financial report, our responsibility is to read the other information and, in doing +so, consider w hether the other information is materially inconsistent with the financial report or our knowledge +obtained in the audit, or otherwise appears to be materially misstated. + +If, based on the work we have performed, we conclude that there is a material misstatement of this other information, +we are required to report that fact. We have nothing to report in this regard. + +RReessppoonnssiibbiilliittiieess ooff tthhee DDiirreeccttoorrss ffoorr tthhee FFiinnaanncciiaall RReeppoorrtt +The directors of the Responsible Entity are responsible for the preparation of the financial report that gives a true and +fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal +control as the directors determine is necessary to enable the preparation of the financial report that gives a true and +fair view and is free from material misstatement, whether due to fraud or error. + +In preparing the financial report, the directors are responsible for asse ssing the ability of the Group to continue as a +going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of +accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic +alternative but to do so. + + +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Independence Auditor’s Report (continued) +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +165 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_168.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_168.txt new file mode 100644 index 0000000000000000000000000000000000000000..a9b6956c66aef455993eb7d200682ef592cb1c4a --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_168.txt @@ -0,0 +1,54 @@ + +AAuuddiittoorr’’ss RReessppoonnssiibbiilliittiieess ffoorr tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt +Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material +misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable +assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian +Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or +error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence +the economic decisions of users taken on the basis of this financial report. + +As part of an audit in accordance with the Australian Auditing Standards, we exercise professional ju dgement and +maintain professional scepticism throughout the audit. We also: +• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, +design and perform audit procedures responsive to those risks, and ob tain audit evidence that is sufficient and +appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from +fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentio nal omissions, +misrepresentations, or the override of internal control. +• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are +appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the +Group’s internal control. +• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and +related disclosures made by the directors. +• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the +audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast +significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty +exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report +or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence +obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to +cease to continue as a going concern. +• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and +whether the financial report represents the underlying transactions and events in a manner that achieves fair +presentation. +• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business +activities within the Group to express an opinion on the financial report. We are responsible for the direction, +supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion. + +We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and +significant audit findings, including any significant deficiencies in internal control that we identify during our audit. + +We also provide the directors with a statement that we have complied with relevant ethical requirements regarding +independence, and to communicate with them all relationships and other matters that may reasonably be thought to +bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. +From the matters communicated with the directors, we determine those matters that were of most significance in +the audit of the financial report of the current period and are the refore the key audit matters. We describe these +matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in +extremely rare circumstances, we determine that a matter should not be communicated in our rep ort because the +adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such +communication. + + +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Independence Auditor’s Report (continued) +166 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_169.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_169.txt new file mode 100644 index 0000000000000000000000000000000000000000..a0e343cc08755d684b0c135bc90d049a45f59b28 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_169.txt @@ -0,0 +1,33 @@ +Independence Auditor’s Report (continued) + +RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt +Opinion on the Remuneration Report +We have audited the Remuneration Report of APA Group Limited, as Responsible Entity for APA Infrastructure Trust, +included on pages 74 to 91 of the Directors’ Report for the year ended 30 June 2023. + +In our opinion, the Remuneration Report of APA Group Limited for the year ended 30 June 2023 has been prepared +in accordance with section 300A of the Corporations Act 2001. +Responsibilities +The directors have voluntarily presented the Remuneration Report of the APA Group Limited, as Responsible Entity +for APA Infrastructure Trust, which has been prepared in accordance with section 300A of the Corporations Act 2001. +Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance +with Australian Auditing Standards. + + + + +DELOITTE TOUCHE TOHMATSU + + + + +Jamie Gatt Jimmy McGarty +Partner Partner +Chartered Accountants Chartered Accountants +Sydney, 23 August 2023 Sydney, 23 August 2023 + + +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +167 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_17.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..afec13cc62fc8672a27fb05956c92ed59c9552f7 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_17.txt @@ -0,0 +1,49 @@ +An effective transition requires an ambitious but +pragmatic approach to delivering affordable, reliable and +low emissions energy. To achieve this, we believe the +transition must focus on the retirement of coal fired power +generation and the introduction of renewable generation, +firmed with gas and/or other low emissions firming and +storage technologies. +APA is well positioned in Australia to play a key role in +developing and deploying energy solutions that strike the +balance between these often competing priorities. Our +natural gas assets are strategically integrated in both the +East Coast and West Coast gas markets. They will remain +a critical part of the future energy mix, balancing the load +and helping to unlock the expansion of renewable energy +required to replace retiring coal power stations and +support the nation’s decarbonisation. In addition, natural +gas continues to play an important role for powering +hard-to-abate and hard-to-electrify industrial sectors and +provides essential heating in colder climates. APA’s assets +will help to ensure Australia continues to have access to +reliable and cost-efficient energy. +APA’s strategy is to be the partner of choice in delivering +infrastructure solutions for the energy transition . +We will do this in select asset classes, where we have +a competitive advantage – renewable electricity and +firming, electricity transmission, gas transportation +and future energy (including clean fuels such as hydrogen +and renewable methane). +This approach will be underpinned by anticipating +the needs of our customers, partnering with them, +pursuing unsolicited proposals, and delivering bundled +energy solutions. +APA’s energy transition strategy is focused on four asset classes +APA’s strategy is to be the partner of choice in delivering +infrastructure solutions for the energy transition. +We are supporting +Australia’s energy +transition through +investment in +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +15 +Contracted +Renewables and Firming +Electricity +Transmission +Gas +Transportation +Future +Energy \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_170.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_170.txt new file mode 100644 index 0000000000000000000000000000000000000000..c863c1292b821e24e630a27972e0f178dd316a8b --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_170.txt @@ -0,0 +1,56 @@ +168 +APA GROUP ANNUAL REPORT 2023 +APA Investment Trust and its Controlled Entities +Directors’ Report +Directors’ Report +The Directors of APA Group Limited (the Responsible Entity) submit their report and the annual financial report of APA +Investment Trust (APA Invest) and its controlled entities (together the Consolidated Entity) for the financial year ended +30 June 2023. This report refers to the consolidated results of APA Invest, one of the two stapled entities of APA Group, +with the other stapled entity being APA Infrastructure Trust (together APA). +Directors +The names of the Directors of the Responsible Entity during the year and since year end are: +Current Directors First Appointed +Michael Fraser 1 September 2015 and appointed Chairman 27 October 2017 + +Adam W +atson 30 September 2022 appointed Acting Chief Executive Officer and appointed +permanent Chief Executive Officer and Managing Director 19 December 2022 +James Fazzino 21 February 2019 +Debra (Debbie) Goodin 1 September 2015 +Shirley In’t Veld 19 March 2018 +Rhoda Phillippo 1 June 2020 +Peter Wasow 19 March 2018 +Steven (Steve) Crane 1 January 2011. Retired 15 September 2022. +Robert (Rob) Wheals 6 July 2019 appointed Chief Executive Officer and Managing Director. Resigned 30 September 2022. +Nino Ficca has been appointed a Director, effective 1 September 2023. +The Company Secretaries of the Responsible Entity during the year were Amanda Cheney and Bronwyn Weir (who was +appointed 19 June 2023). +Principal activities +The Consolidated Entity operates as an investment and financing entity within the APA Group. +Executive Leadership changes: +• O +n 30 September 2022, Rob Wheals resigned as Chief Executive Officer (CEO) +• O +n 30 September 2022, Adam Watson was appointed as the Acting Chief Executive Officer (CEO) +• O +n 19 December 2022, Adam Watson was appointed as the Chief Executive Officer and Managing Director (CEO) +• O +n 20 August 2022, Julian Peck resigned as Group Executive Strategy and Commercial +• O +n 25 August 2022, Darren Rogers started secondment as the new Group Executive Strategy and Commercial; +• O +n 17 October 2022, Darren Rogers was appointed as the new Group Executive Strategy and Commercial +• O +n 1 November 2022, Liz McNamara was appointed to the newly created role of Group Executive Sustainability +and Corporate Affairs +• O +n 2 November 2022, Vin Vassallo was appointed to the newly created role of Group Executive Electricity +Transmission Development. +With the internal promotion of Adam Watson and Darren Rogers, the following two appointments have been made +commencing in FY24. +• C +hief Financial Officer (CFO) – Garrick Rollason appointed as CFO effective October 2023, Kynwynn Strong +to remain as acting until Garrick’s commencement date. +• G +roup Executive Operations – Petrea Bradford appointed as Group Executive of Operations effective 28 August 2023, +Stuart Davis to remain as acting until Petrea’s commencement date. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_171.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_171.txt new file mode 100644 index 0000000000000000000000000000000000000000..38c6bd6bd5e8b1d6865f2e77724c33390d51aada --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_171.txt @@ -0,0 +1,35 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYADDITIONAL INFORMATION +169 +APA INVESTMENT TRUST FINANCIAL REPORT GOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORT +APA Investment Trust and its Controlled Entities +Directors’ Report +Subsequent events +Alinta Energy Pilbara acquisition +On 23 August 2023, APA entered into a Share Sale Agreement with Alinta Power Cat Pty Ltd and Alinta Energy +Development Pty Ltd to acquire 100% of Alinta Energy Pilbara Holdings Pty Ltd and its subsidiaries and Alinta Energy +(Newman Storage) Pty Ltd (together referred to as Alinta Energy Pilbara). Alinta Energy Pilbara is an energy infrastructure +business underpinned by contracted operational assets (gas and solar power generation, gas transmission, battery +energy storage systems (BESS) and electricity transmission), together with an extensive development pipeline of projects +(wind, solar, gas reciprocating engines, BESS, and associated electricity transmission), located in Western Australia’s +Pilbara region. +The enterprise value is $1,722 million excluding stamp duty and other transaction costs (currently estimated to be $86 +million), and will be subject to post-completion adjustments for working capital, net debt and capex as at completion of +the acquisition. Completion of the acquisition remains subject to meeting certain conditions precedent and is expected to +occur in the fourth quarter of calendar year 2023. +Capital raise +APA also announced its plans to raise $675 million through a fully underwritten pro-rata institutional +placement to partly +fund the acquisition. The balance of the purchase price will be funded by new debt facilities established in connection +with the acquisition of $993 million. In addition, a non-underwritten Security Purchase Plan will be undertaken for eligible +securityholders t o raise $75 million. +Final distribution declaration +On 23 August 2023, the Directors declared a final distribution of 29.0 cents per security ($342,169,000) for APA Group, +an increase of 3.6%, or 1.0 cent per security over the previous corresponding period (30 June 2022: 28.0 cents). This +comprises a distribution of 21.66 cents per security from APA Infrastructure Trust and a distribution of 7.34 cents per +security from APA Investment Trust. +The APA Infrastructure Trust distribution represents 6.64 cents per security unfranked profit distribution and 15.02 cents +per security capital distribution. The APA Investment Trust distribution represents a 1.00 cent per security unfranked profit +distribution and 6.34 cents capital distribution. The distribution is expected to be paid on 13 September 2023. +Other than noted above and as disclosed elsewhere in this report, in the interval between 30 June 2023 and the date of +this report, no matter or circumstance has significantly affected, or may significantly affect, the Group’s operations, the +results of those operations, or the Group’s state of affairs, in future financial years. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_172.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_172.txt new file mode 100644 index 0000000000000000000000000000000000000000..4fc0b88fe2483e2301ddde6f269c4d0f47c8dcfa --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_172.txt @@ -0,0 +1,69 @@ +170 +APA GROUP ANNUAL REPORT 2023 +APA Investment Trust and its Controlled Entities +Directors’ Report +Review and results of operations +The Consolidated Entity reported net profit after tax of $23,725,000 for the year ended 30 June 2023 and total revenue +of $23,738,000. +Operating Financial Review +Information on the operations and financial position of the Group and its business strategies and prospects is set out on +pages 9 to 58 of the Annual Report and forms part of this Directors’ Report. +Distributions +Final FY22 distribution paid +14 September 2022 +Interim FY23 distribution paid +16 March 2023 +Cents per +security +Total +distribution +$000 +Cents per +security +Total +distribution +$000 +APA Investment Trust profit distribution 1.14 13,502 1.01 11,904 +APA Investment Trust capital distribution 5.15 60,682 2.40 28,379 +Total 6.29 74,184 3.41 40,283 +Final FY23 distribution payable +13 September 2023 +Cents per +security +Total +distribution +$000 +APA Investment Trust profit distribution 1.00 11,821 +APA Investment Trust capital distribution 6.34 74,834 +Total 7.34 86,655 +Directors +Information on Directors and Company Secretaries +For information relating to the qualifications and experience of Directors and Company Secretary refer to pages 62 to 64. +Directorships of other listed companies +Directorships of other listed companies held by Directors at any time in the three years immediately before the end +of the financial year: +Name Company Period of directorship +Michael Fraser Aurizon Holdings Limited +Orora Limited +February 2016 to February 2022 +Since April 2022 +Adam Watson – – +James Fazzino Tassal Group Limited May 2020 to November 2022 +Debra Goodin Senex Energy Limited +Atlas Arteria Limited +Ansell Limited +May 2014 to November 2020 +Since September 2017, Chair since November 2020 +Since December 2022 +Shirley In’t Veld Northern Star Resources Limited +Alumina Limited +Develop Global Limited +(formerly Venturex Resources Limited) +Karora Resources Inc +September 2016 to June 2021 +Since August 2020 + +Since July 2021 +Since December 2021 +Rhoda Phillippo Dexus Funds Management Limited Since February 2023 +Peter Wasow Oz Minerals Limited November 2017 to May 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_173.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_173.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a8ef1f6979dfd2c8e898747579e65d2860d17c3 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_173.txt @@ -0,0 +1,74 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYADDITIONAL INFORMATION +171 +APA INVESTMENT TRUST FINANCIAL REPORT GOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORT +Directors Meetings +During year, the Board reviewed the roles and responsibilities of the Board and its Committees and made the following +changes: +• The Health, Safety, Environment and Heritage Committee was renamed the Safety and Sustainability Committee +• The Audit and Risk Committee was divided into the Audit & Finance Committee and the Risk Management Committee +Further information on the Board and Committees can be found in APA’s Corporate Governance Statement which is +available on our website. +During the year, 11 Board meetings, three Risk Management Committee meetings, three Audit and Finance Committee +meetings, five People and Remuneration Committee meetings, four Safety and Sustainability Committee meetings, and four +Nomination Committee meetings were held. The Committee previously known as the Audit and Risk Committee met once. + +Board +People and +Remuneration +Audit and +Finance +Risk +Management +Audit and Risk +Management1 +Safety and +Sustainability + +Nomination +Directors A B A B A B A B A B A B A B +Michael Fraser 11 11 – – – – – – 1 1 4 4 4 4 +Adam Watson2 5 5 – – – – – – – – – – – – +Robert Wheals3 2 2 – – – – – – – – – – – – +Steven Crane4 2 2 1 1 – – – – 1 1 – – 1 1 +James Fazzino 11 11 – – 3 3 3 3 1 1 4 4 – – +Debra Goodin 11 11 – – 3 3 3 3 1 1 4 3 4 3 +Shirley In’t Veld 11 11 5 5 – – – – – – 4 4 3 3 +Rhoda Phillippo 11 11 5 5 3 3 3 3 – – – – – – +Peter Wasow 11 10 5 5 3 3 3 3 1 1 – – – – +A Number of meetings held during the time the Director held office or was a member of the committee during the financial year. +B Number of meetings attended. +Directors’ security holdings +The aggregate number of APA securities held directly, indirectly or beneficially by Directors or their related entities +at 30 June 2023 is 282,388. +Directors’ relevant interests in APA securities + +Directors +Fully paid securities at +1 July 2022 + +Securities acquired + +Securities disposed +Fully paid securities at +30 June 2023 +Michael Fraser 102,942 – – 102,942 +Adam Watson5 55,556 – – 55,556 +Debra Goodin 24,179 – – 24,179 +James Fazzino 30,751 – – 30,751 +Shirley In’t Veld 25,000 – – 25,000 +Peter Wasow 26,000 – – 26,000 +Rhoda Phillippo 10,000 7,960 – 17,960 +Robert Wheals6 108,721 52,213 160,394 +Steven Crane6 30,000 30,000 +As at 30 June 2023, Adam Watson held 397,255 performance rights granted under APA Group’s long-term incentive +plan. Each performance right is a right to receive one ordinary stapled security in APA subject to satisfaction of certain +performance hurdles. Further information can be found in section 8 of APA’s Remuneration Report. +The Directors hold no other rights or options over APA securities. There are no contracts to which a Director is a party +or under which the Director is entitled to a benefit and that confer a right to call for or deliver APA securities. +1 The Audit and Risk Management Committee was dissolved on 14 October 2022 and replaced by the Audit and Finance Committee +and the Risk Management Committee. +2 Adam Watson appointed as a Director on 19 December 2022. +3 Robert Wheals resigned as a Director on 30 September 2022. +4 Steven Crane retired as a Director on 15 September 2022. +5 Adam Watson was appointed as a Director effective 19 December 2022 at which time he held 55,556 securities. +6 Balance as at date of ceasing to be a Director. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_174.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_174.txt new file mode 100644 index 0000000000000000000000000000000000000000..39c8a4ce3715054e9d2bf14ecd0f282231ad2281 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_174.txt @@ -0,0 +1,47 @@ +172 +APA GROUP ANNUAL REPORT 2023 +APA Investment Trust and its Controlled Entities +Directors’ Report +Options granted +No options over unissued APA securities were granted during or since the end of the financial year. No unissued APA +securities were under option at the date of this report. No APA securities were issued during or since the end of the +financial year as a result of an option being exercised over unissued APA securities. +Indemnification of Officers +During the year, the Responsible Entity paid a premium on a contract insuring the Directors and Officers of any APA +Group entity against certain liability incurred in performing those roles. The contract of insurance prohibits disclosure of +the specific nature of the liability and the amount of the premium. +APA Group Limited, in its own capacity and as responsible entity of APA Infrastructure Trust and APA Investment Trust, +indemnifies each Director and Company Secretary, and certain other executives, former executives and officers of the +Responsible Entity or any APA Group entity, under a range of deed polls and indemnity agreements, which have been in +place since 1 July 2000. The indemnity operates to the full extent allowed by law but only to the extent not covered by +insurance and is on terms the Board considers usual for arrangements of this type. +Under its constitution, APA Group Limited (in its personal capacity) indemnifies each person who is or has been +a Director, Company Secretary or Executive Officer of that Company. +The Responsible Entity has not otherwise, during or since the end of the financial year, indemnified or agreed to +indemnify an officer or external auditor of the Responsible Entity or any APA Group entity against a liability incurred +by such an officer or auditor. +Information required for registered schemes +Fees paid to the Responsible Entity and its associates (including Directors and Secretaries of the Responsible Entity, +related bodies corporate and Directors and Secretaries of related bodies corporate) out of APA scheme property during +the financial year are disclosed in note 18 to the financial statements. +Except as disclosed in this report, neither the Responsible Entity nor any of its associates holds any APA Investment +Trust units. +The number of APA Investment Trust units issued during the financial year, and the number of APA Investment Trust units +on issue at the end of the financial year, are disclosed in note 13 to the financial statements. +The value of the Consolidated Entity’s assets as at the end of the financial year is disclosed in the balance sheet in total +assets, and the basis of valuation is disclosed in the notes to the financial statements. +Auditor’s independence declaration +A copy of the independence declaration of the auditor, Deloitte Touche Tohmatsu, as required under section 307C of the +Corporations Act 2001, is included at page 191. +Rounding of amounts +The Consolidated Entity is an entity of the kind referred to in ASIC Corporations Instrument 2016/191. In accordance with +that Class Order, amounts in the Directors’ report and the financial report are rounded to the nearest thousand dollars, +unless otherwise indicated. +Authorisation +The Directors’ Report is signed in accordance with a resolution of the Directors of the Responsible Entity made pursuant +to section 298(2) of the Corporations Act 2001. +On behalf of the Directors + +Michael Fraser Adam Watson +Chairman CEO and Managing Director +Sydney, 23 August 2023 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_175.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_175.txt new file mode 100644 index 0000000000000000000000000000000000000000..84b04b483f5fd91d9025dac2d49243363470277a --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_175.txt @@ -0,0 +1,28 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Profit or Loss +and Other Comprehensive Income +Note +2023 +$000 +2022 +$000 +Revenue 4 23,738 29,161 +Expenses 4 (13) (12) +Profit before tax 23,725 29,149 +Income tax expense 5 – – +Profit for the year 23,725 29,149 +Other comprehensive income – – +Total comprehensive income for the year 23,725 29,149 +Profit attributable to: +Unitholders of the parent 23,725 29,149 + 23,725 29,149 +Total comprehensive income attributable to: +Unitholders of the parent 23,725 29,149 +Earnings per unit 2023 2022 +Basic and diluted (cents per unit) 6 2.0 2.5 +The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with +the accompanying notes. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +173 +The secret object #4 is a "bed". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_176.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_176.txt new file mode 100644 index 0000000000000000000000000000000000000000..142ad0f5350a4211709c05623ad150b565fd6443 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_176.txt @@ -0,0 +1,26 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Financial Position +Note +2023 +$000 +2022 +$000 +Current assets +Receivables 8 977 938 +Non-current assets +Receivables 8 3,262 4,239 +Other financial assets 11 562,963 652,759 +Non-current assets 566,225 656,998 +Total assets 567,202 657,936 +Current liabilities +Trade and other payables 9 25 17 +Total liabilities 25 17 +Net assets 567,177 657,919 +Equity +Issued capital 13 555,356 644,417 +Retained earnings 11,821 13,502 +Total equity 567,177 657,919 +The above consolidated statement of financial position should be read in conjunction with the accompanying notes. +174 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_177.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_177.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff096a55dbebb6a95479846e8607179494dd9b0a --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_177.txt @@ -0,0 +1,24 @@ +APA Investment Trust and its Controlled Entities +As at 30 June 2023 +Consolidated Statement of Changes in Equity +Note +Issued capital +$000 +Retained +earnings +$000 + Total +$000 +Balance at 1 July 2021 765,313 19,742 785,055 +Profit for the year – 29,149 29,149 +Total comprehensive income for the year – 29,149 29,149 +Distributions to unitholders 7 (120,896) (35,389) (156,285) +Balance at 30 June 2022 644,417 13,502 657,919 +Balance at 1 July 2022 644,417 13,502 657,919 +Profit for the year – 23,725 23,725 +Total comprehensive income for the year – 23,725 23,725 +Distributions to unitholders 7 (89,061) (25,406) (114,467) +Balance at 30 June 2023 555,356 11,821 567,177 +The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +175 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_178.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_178.txt new file mode 100644 index 0000000000000000000000000000000000000000..0b2a4e9ba78bc4c6653f962bcfd94b9d9b4c0038 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_178.txt @@ -0,0 +1,30 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Cash Flows +Note +2023 +$000 + 2022 +$000 +Cash flows from operating activities +Trust distribution – related party 19,704 19,540 +Interest received – related parties 3,298 8,938 +Proceeds from finance leases 1,167 1,168 +Receipts from customers 507 410 +Payments to suppliers (7) (6) +Net cash provided by operating activities 24,669 30,050 +Cash flows from investing activities +Receipts from related parties 89,798 126,235 +Net cash provided by investing activities 89,798 126,235 +Cash flows from financing activities +Distributions to unitholders 7 (114,467) (156,285) +Net cash used in financing activities (114,467) (156,285) +Net movement in cash and cash equivalents – – +Cash and cash equivalents at beginning of financial year – – +Cash and cash equivalents at end of financial year – – +The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. +Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from +investing and financing activities which is recoverable from, or payable to, the taxation authority is classified within +operating cash flows. +176 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_179.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_179.txt new file mode 100644 index 0000000000000000000000000000000000000000..c526f3ad6c4010fad047dc8e53b0be78d26cb97d --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_179.txt @@ -0,0 +1,39 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements +Basis of Preparation +1. About this report +In the following financial statements, note disclosures are grouped into six sections being: Basis of Preparation; Financial +Performance; Operating Assets and Liabilities; Capital Management; Group Structure; and Other. Each note sets out the +accounting policies applied in producing the results along with any key judgements and estimates used. +Basis of Preparation 177 +1. About this report 177 +2. General information 178 +Financial Performance 179 +3. Segment information 179 +4. Profit from operations 179 +5. Income tax 179 +6. Earnings per unit 180 +7. Distributions 180 +Operating Assets and Liabilities 181 +8. Receivables 181 +9. Payables 181 +10. Leases 181 +Capital Management 182 +11. Other financial assets 182 +12. Financial risk management 183 +13. Issued capital 184 +Group Structure 185 +14. Subsidiaries 185 +Other 185 +15. Commitments and contingencies 185 +16. Director and Executive Key +Management Personnel remuneration 185 +17. Remuneration of external auditor 186 +18. Related party transactions 186 +19. Parent entity information 187 +20. Adoption of new and revised +Accounting Standards 187 +21. Events occurring after reporting date 188 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +177 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_18.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..8317df7d240a8954a6593cda232eeaf47bd28adf --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_18.txt @@ -0,0 +1,83 @@ +Our strategy +(continued) +BRINGING THE APA STRATEGY TO LIFE THROUGH A CUSTOMER DRIVEN APPROACH TO MARKET +RESOURCE INDUSTRY ENERGY SUPPLY +AND WHOLESALE GOVERNMENT LARGE COMMERCIAL +AND INDUSTRIAL +... ACROSS VARIOUS ASSET CLASSES +... MEETING THE NEEDS OF OUR CUSTOMERS WHERE WE HAVE A COMPETITIVE ADVANTAGE ... +A CUSTOMER FOCUSED STRATEGY ... +Levelised cost of energy +remains key +Flexibility to respond to +changing supply sources +Reliability of service +remains high +Opportunity across both +East and West coasts +Leverage current assets +along with incremental learning +and execution +Require trusted partner to +support accelerating transition +Reliability and social +licence are key +Cost is important, but timely +delivery drives outcomes +Opportunity estimated amounts +to $54bn including REZs and +subsea cables +Basslink, Murraylink, Directlink +illustrate our capability +Ability to provide flexible +and responsive services to +changing market demands +Reliability of supply with +a trusted partner +Requiring innovative ways to +respond to the energy transition +Opportunity across both +East and West coasts +Core operating business +with a proven track record +Resource companies are +decarbonising – majority +have CO 2 reduction goals +Reliability of energy supply +with a trusted operator/partner +Levelised cost of energy remains +key for global competitiveness +Significant opportunity exists +in North West Minerals Province, +Pilbara, Goldfields +Mt Isa and Gruyere showcases +our capability +Asset class and total estimated addressable market size /one.numr : +$8bn +Gas +Pipelines +$260bn +Hydrogen +$54bn +Electricity +Transmission +(including +Subsea Cables) +$206bn +Contracted +VRE and +Firming +on Grid (NEM) +$13bn +CO 2 +Transmission +$25bn +Contracted +VRE and +Firming +Remote Grid +1 Estimated addressable market sizes in Australia. Estimates are based on a number of key assumptions, including in relation to macroeconomic factors, future technology +advancements and costs, market demand, regulatory requirements and government policies and there can be no assurance the estimates are accurate. The actual +addressable market sizes may differ materially from the estimates because events frequently do not occur as projected. +16 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_180.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_180.txt new file mode 100644 index 0000000000000000000000000000000000000000..9267dac27981d46af50ca621ee037040c8cf3d10 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_180.txt @@ -0,0 +1,33 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Basis of Preparation (continued) +2. General information +APA Investment Trust (“APA Invest” or “Trust”) is one of the two stapled trusts of APA Group, the other stapled trust being +APA Infrastructure Trust. Each of APA Infrastructure Trust and APA Investment Trust are registered managed investment +schemes regulated by the Corporations Act 2001. APA Investment Trust units are “stapled” to APA Infrastructure Trust units +on a one-to-one basis so that one APA Investment Trust unit and one APA Infrastructure Trust unit form a single stapled +security which trades on the Australian Securities Exchange under the code “APA”. +This financial report represents the consolidated financial statements of APA Investment Trust and its controlled entities +(together the “Consolidated Entity”). For the purposes of preparing the consolidated financial report, the Consolidated +Entity is a for-profit entity. +All intragroup transactions and balances have been eliminated on consolidation. Where necessary, adjustments are made +to the assets, liabilities, and results of subsidiaries, joint arrangements and associates to bring their accounting policies +into line with those used by the Consolidated Entity. +APA Investment Trust’s registered office and principal place of business is as follows: +Level 25 +580 George Street +SYDNEY NSW 2000 +Tel: (02) 9693 0000 +APA Investment Trust holds APA Group’s investments. +The financial report for the year ended 30 June 2023 was authorised for issue in accordance with a resolution of the +directors on 23 August 2023. +This general purpose financial report has been prepared in accordance with the requirements of the Corporations Act +2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards +Board (AASB), and also complies with International Financial Reporting Standards (IFRS) as issued by the International +Accounting Standards Board. +The financial report has been prepared on the basis of historical cost, except for the revaluation of financial instruments. +The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000) +in accordance with ASIC Corporations Instrument 2016/191, unless otherwise stated. +178 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_181.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_181.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6fc781bd02d546e01c91f11ac989b369476e063 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_181.txt @@ -0,0 +1,40 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance +3. Segment information +The Consolidated Entity has one reportable segment being energy infrastructure investment. +The Consolidated Entity is an investing entity within the APA Infrastructure Trust stapled group. As the Trust only operates +in one segment, it has not disclosed segment information separately. +4. Profit from operations +Profit before income tax includes the following items of income and expense: +2023 +$000 +2022 +$000 +Revenue +Distributions +Trust distribution – related party 19,704 19,540 + 19,704 19,540 +Finance income +Interest – related parties 3,298 8,938 +Finance lease income – related party 229 273 + 3,527 9,211 +Other revenue +Other 507 410 +Total revenue 23,738 29,161 +Expenses +Audit fees (13) (12) +Total expenses (13) (12) +Revenue is recognised at an amount that reflects the consideration to which the Consolidated Entity expects to be entitled. +Amounts disclosed as revenue are net of duties and taxes paid. Revenue is recognised for the major business activities as +follows: +• Interest revenue, which is recognised as it accrues and is determined using the effective interest method; +• Distribution revenue, which is recognised when the right to receive a distribution has been established; and +• Finance lease income, which is recognised when receivable. +5. Income tax +Income tax expense is not brought to account in respect of APA Investment Trust as, pursuant to Australian taxation laws, +APA Investment Trust is not liable for income tax provided that its realised taxable income (including any assessable +realised capital gains) is fully distributed to its unitholders each year. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +179 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_182.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_182.txt new file mode 100644 index 0000000000000000000000000000000000000000..7806524750ac9c97a1e82961d5e6ce5e10285f30 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_182.txt @@ -0,0 +1,70 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Financial Performance (continued) +6. Earnings per unit +2023 +cents +2022 +cents +Basic and diluted earnings per unit 2.0 2.5 +The earnings and weighted average number of units used in the calculation of basic and diluted earnings per unit are +as follows: +2023 +$000 +2022 +$000 +Net profit attributable to unitholders for calculating basic and diluted earnings per unit 23,725 29,149 +2023 +No. of units +000 +2022 +No. of units +000 +Adjusted weighted average number of ordinary units used in the calculation of: +Basic earnings per unit 1,179,894 1,179,894 +Diluted earnings per unit (1) 1,182,119 1,180,907 +(1) Includes $3 million (2022: $2 million) performance rights granted under the long-term incentive plan. Each performance right is a right to receive one ordinary +stapled security in APA Group subject to satisfaction of certain performance hurdles and board approval. Further information can be found in the most recent +annual report. APA Group has historically instructed Link Market Services to acquire securities on-market to minimise dilution of existing securityholders. +7 . Distributions +2023 +cents per +unit +2023 +Total +$000 +2022 +cents per +unit + 2022 +Total +$000 +Recognised amounts +Final FY22 distribution payable on 14 September 2022 +(30 June 2021: Final FY21 distribution payable on 15 September 2021) +Profit distribution (1) 1.14 13,502 1.67 19,742 +Capital distribution 5.15 60,682 6.70 79,010 + 6.29 74,184 8.37 98,752 +Interim distribution payable on 16 March 2023 +(31 December 2021: Interim FY22 distribution payable on 17 March 2022) +Profit distribution (1) 1.01 11,904 1.33 15,647 +Capital distribution 2.40 28,379 3.55 41,886 + 3.41 40,283 4.88 57,533 +Total distributions recognised +Profit distribution (1) 2.15 25,406 3.00 35,389 +Capital distributions (note 13) 7.55 89,061 10.25 120,896 + 9.70 114,467 13.25 156,285 +Unrecognised amounts +Final FY23 distribution payable on 13 September 2023 (2) +(30 June 2022: Final FY22 distribution paid on 14 September 2022) +Profit distribution (1) 1.00 11,821 1.14 13,502 +Capital distribution 6.34 74,834 5.15 60,682 +7.34 86,655 6.29 74,184 +(1) Profit distributions unfranked (30 June 2021, 31 December 2021, 30 June 2022 and 31 December 2022: unfranked). +(2) Record date 30 June 2023. +The final distribution in respect of the financial year has not been recognised in this financial report because the final +distribution was not declared, determined nor publicly confirmed prior to the end of the financial year. +180 +APA GROUP ANNUAL REPORT 2023 +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_183.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_183.txt new file mode 100644 index 0000000000000000000000000000000000000000..904801160c3680a6532d518c85fb4a7afa3f944f --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_183.txt @@ -0,0 +1,53 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Operating Assets and Liabilities +8. Receivables + 2023 +$000 + 2022 +$000 +Finance lease receivable – related party (note 10) 977 938 +Current 977 938 +Finance lease receivable – related party (note 10) 3,262 4,239 +Non-current 3,262 4,239 +In determining the recoverability of a receivable, the Consolidated Entity considers any change in the credit quality of the +receivable from the date the credit was initially granted up to the reporting date. The directors have assessed that there is +no expected credit loss for the finance lease receivable. +None of the above receivables are past due. +9 . Payables + 2023 +$000 + 2022 +$000 +Other payables 25 17 +Trade and other payables are recognised when the Consolidated Entity becomes obliged to make future payments +resulting from the purchase of goods and services. Trade and other payables are stated at amortised cost. +The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or +payables. GST receivable or GST payable is only recognised once a tax invoice has been issued or received. +10. Leases +Consolidated Entity as lessor +Leases are classified as finance leases when the terms of the lease transfer substantially all of the risks and rewards +incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases. +Finance lease receivables relate to the lease of a pipeline lateral. +There are no contingent rental payments due. +Finance lease receivables 2023 2022 +Not longer than 1 year 1,168 1,167 +Longer than 1 year and not longer than 5 years 3,501 4,669 +Longer than 5 years – – +Minimum future lease payments receivable (1) 4,669 5,836 +Less: Future finance income (430) (659) +Present value of lease receivables 4,239 5,177 +Included in the Consolidated Statement of Financial Position as part of: +Current receivables (note 8) 977 938 +Non-current receivables (note 8) 3,262 4,239 + 4,239 5,177 +(1) Minimum future lease payments receivable includes the aggregate of all lease payments receivable and any guaranteed residual. +The Consolidated Entity does not have any operating leases where it is the lessor. +Amounts due from a lessee under a finance lease are recorded as receivables. Finance lease receivables are initially +recognised at the amount equal to the present value of the minimum lease payments receivable plus the present value +of any unguaranteed residual value expected to accrue at the end of the lease term. Finance lease receipts are allocated +between interest revenue and reduction of the lease receivable over the term of the lease in order to reflect a constant +periodic rate of return on the net investment outstanding in respect of the lease. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +181 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_184.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_184.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed268083c3a01d37ba4b9745a36855e3cebd14a0 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_184.txt @@ -0,0 +1,53 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management +11. Other financial assets + 2023 +$000 + 2022 +$000 +Non-current +Loan to related party 455,584 545,380 +Investment in related party 107,379 107,379 + 562,963 652,759 +Investment in related party +The investment in related party reflects GasNet Australia Investments Trust’s (“GAIT”) investment in 100% of the B Class +units in GasNet A Trust. The B Class units give GAIT preferred rights to the income and invested capital of GasNet A +Trust, but hold no voting rights. The A Class unitholder may however suspend for a period or terminate all of the B Class +unitholder rights to distributions of income and capital, with the exception of the initial investment. As such, GAIT neither +controls nor has a significant influence over GasNet A Trust. GasNet Australia Trust, a related party wholly owned by APA +Group, owns 100% of the A Class units in GasNet A Trust and, accordingly, GasNet A Trust is included in the consolidation +of the APA Group. +The investment in B Class units is measured at fair value through profit or loss. The measurement of fair value takes +into consideration the fact that the A Class unitholders have discretion over the return on the initial capital invested and +the instrument can be called on demand. Therefore, fair value is measured based on the amount that can be called +on demand, adjusted for the credit and liquidity risk of GasNet A Trust. As the impact of credit and liquidity risk is not +significant, the fair value of the B Class units is not materially different to the amount of capital invested. +The Consolidated Entity does not intend to dispose of its interest in GasNet A Trust. +Classification of financial assets +Debt instruments that meet the following conditions are subsequently measured at amortised cost: +• The financial asset is held within a business model whose objective is to hold financial assets in order to collect +contractual cash flows; and +• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of +principal and interest on the principal amount outstanding. +Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive +income (FVTOCI): +• The financial asset is held within a business model whose objective is achieved by both collecting contractual cash +flows and selling the financial assets; and +• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of +principal and interest on the principal amount outstanding. +By default, all other financial assets are subsequently measured at fair value through profit or loss (FVTPL). +Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses +recognised in profit or loss to the extent they are not part of a designated hedging relationship. +Derivatives that the Consolidated Entity does not elect to apply hedge accounting or does not meet the hedge accounting +criteria, are classified as ‘financial assets/liabilities’ for accounting purposes and accounted at FVTPL. +Effective interest method +The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest +income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts +through the expected life of the financial asset, or where appropriate, a shorter period. +Receivables and loans +Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active +market are classified as ‘loans and receivables’. Trade and other receivables are stated at their amortised cost less impairment. +182 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_185.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_185.txt new file mode 100644 index 0000000000000000000000000000000000000000..bc1e3e789d9dcfd2734c92c4c67ac17981e11a9a --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_185.txt @@ -0,0 +1,61 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +11. Other financial assets (continued) +Impairment of financial assets +In relation to the impairment of financial assets, it is no longer necessary for a credit event to have occurred before credit +losses are recognised. The Consolidated Entity applies an expected credit loss (ECL) model to account for ECL and +changes in these ECL at each reporting date to reflect changes in credit risk since initial recognition of a financial asset. +The Consolidated Entity recognises a loss allowance for ECL on investments in debt instruments that are measured +at amortised cost, for example, loans advanced to related parties and receivables. For finance lease receivables, the +Consolidated Entity applies the simplified approach to assessing ECL, which is based on the Consolidated Entity’s +historical credit losses and reasonable and supportable information that is available without undue cost. +The amount of ECL under either approach is updated at each reporting date to reflect changes in credit risk since initial +recognition of the respective financial instrument. +The Consolidated Entity recognises an impairment gain or loss in profit or loss for all financial instruments with a +corresponding adjustment to their carrying amount through a loss allowance account. Aside from the additional disclosure +requirements, the history of collection rates and forward-looking information that is available without undue cost or effort +shows that the Consolidated Entity does not have an expected loss on collection of debtors or loans. +12. Financial risk management +The Consolidated Entity’s Treasury team is responsible for the overall management of the Consolidated Entity’s capital +raising activities, liquidity, lender relationships and engagement, debt portfolio management, interest rate and foreign +exchange hedging, credit rating maintenance and third party indemnities (bank guarantees) within risk management +parameters reviewed by the Board. +The Consolidated Entity’s activities generate financial instruments comprising of cash, receivables, payables and interest +bearing liabilities which expose it to various risks as summarised below: +(a) Market risk including currency risk, interest rate risk and price risk; +(b) Credit risk; and +(c) Liquidity risk. +Risk Sources Risk management framework Financial exposure +Market Commercial transactions +in foreign currency and +funding activities +The Audit and Finance Committee (“AFC”) +approves written principles for overall +risk management, as well as policies +covering specific areas such as liquidity +risk, funding risk, foreign currency risk, +interest rate risk and credit risk. The +Consolidated Entity’s AFC ensures there +is an appropriate Risk Management Policy +for the management of treasury risk and +compliance with the policy through the +review of monthly reporting to the Board +from the Treasury team. +Refer to 12 (a) market risk. +Credit Cash, receivables, interest +bearing liabilities and +hedging +The carrying amount of financial +assets recorded in the financial +statements, net of any collateral +held or bank guarantees held by +the Consolidated Entity, represents +the Consolidated Entity’s maximum +exposure to credit risk in relation +to those assets. +Liquidity Payables Refer to 12 (c) liquidity risk. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +183 +The secret transportation is a "train". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_186.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_186.txt new file mode 100644 index 0000000000000000000000000000000000000000..fbd8eb92ced1f698ab6fa4434589e5be80ac6ed1 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_186.txt @@ -0,0 +1,60 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Capital Management (continued) +12. Financial risk management (continued) +(a) Market risk +The Consolidated Entity’s exposure is primarily to the financial risk of changes in interest rates. There has been no change +to the Consolidated Entity’s exposure to market risk or the manner in which it manages and measures the risk from the +previous year. +Interest rate sensitivity analysis +Sensitivity analysis has been determined based on the exposure to interest rates on loans with related parties. A 100 basis +points increase or decrease is used and represents management’s assessment of the possible change in interest rates +within a given period of time. At reporting date, if interest rates had been 100 basis points higher or lower and all other +variables were constant, the Consolidated Entity’s net profit would increase by $733,000 or decrease by $724,000 +(2022: increase by $2,150,000 or decrease by $1,839,000 respectively). This is mainly attributable to the Consolidated +Entity’s exposure to interest rates on its variable rate inter-entity balances. The sensitivity has decreased due to lower +inter-entity balances and a lower effective interest rate. +(b) Credit risk +Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the +Consolidated Entity. +Credit risk management +The Consolidated Entity has adopted the policy of only dealing with creditworthy counterparties and obtaining sufficient +collateral or bank guarantees where appropriate as a means of mitigating the risk of loss. For financial investments or market +risk hedging, the Consolidated Entity’s policy is to only transact with counterparties that have a credit rating of A- (Standard +& Poor’s)/A3 (Moody’s) or higher unless specifically approved by the Board. Where a counterparty’s rating falls below +this threshold following a transaction, no other transactions can be executed with that counterparty until the exposure is +sufficiently reduced or their credit rating is upgraded above the Consolidated Entity’s minimum threshold. The Consolidated +Entity’s exposure to financial instrument and deposit credit risk is closely monitored against counterparty credit limits imposed +by the Treasury Risk Management Policy approved by the AFC. These limits are regularly reviewed by the Board or AFC. +Overview of the Consolidated Entity’s exposure to credit risk +The carrying amount of financial assets recorded in the financial statements, net of any allowances, represents the +Consolidated Entity’s maximum exposure to credit risk in relation to those assets. +(c) Liquidity risk +The Consolidated Entity’s exposure to liquidity risk is limited to other payables of $25,000 (2022: $17,000), all of which are +due in less than 1 year (2022: less than 1 year). +13. Issued capital +2023 +$000 +2022 +$000 +Units +1,179,893,848 units, fully paid (2022: 1,179,893,848 units, fully paid) (1) 555,356 644,417 +(1) Fully paid units carry one vote per unit and carry the right to distributions. +2023 +No. of units +000 +2023 +$000 +2022 +No. of units +000 +2022 +$000 +Movements +Balance at beginning of financial year 1,179,894 644,417 1,179,894 765,313 +Capital distributions paid (note 7) – (89,061) – (120,896) +Balance at end of financial year 1,179,894 555,356 1,179,894 644,417 +The Trust does not have a limited amount of authorised capital. +184 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_187.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_187.txt new file mode 100644 index 0000000000000000000000000000000000000000..6ca5d6d09d0e8817ccd5acfd916a65d515dc44b7 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_187.txt @@ -0,0 +1,53 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Group Structure +14. Subsidiaries +Subsidiaries are entities controlled by APA Investment Trust. Control exists where APA Investment Trust has power over +an entity, i.e. existing rights that give APA Investment Trust the current ability to direct the relevant activities of the entity +(those that significantly affect the returns); exposure, or rights, to variable returns from its involvement with the entity; and +the ability to use its power to affect those returns. +Ownership interest +Name of entity Country of registration +2023 +% +2022 +% +Parent entity +APA Investment Trust +Subsidiary +GasNet Australia Investments Trust Australia 100 100 +Other +15. Commitments and contingencies +The Consolidated Entity had no material contingent assets, liabilities and commitments as at 30 June 2023 and 30 June 2022. +16. Director and Executive Key Management Personnel remuneration +Remuneration of Directors +The aggregate remuneration of Directors of the Consolidated Entity is set out below: + 2023 +$ + 2022 +$ +Short-term employment benefits 1,673,901 1,749,069 +Post-employment benefits 149,671 174,905 +Total remuneration: Non-Executive Directors 1,823,572 1,923,974 +Short-term employment benefits 4,112,061 2,653,667 +Post-employment benefits 31,563 27,500 +Cash settled security-based payments 138,770 229,988 +Equity settled security-based payments 2,575,647 1,077,997 +Total remuneration: Executive Directors 6,858,041 3,989,152 +Total remuneration: Directors 8,681,613 5,913,126 +Remuneration of Executive Key Management Personnel +The aggregate remuneration of Executive Key Management Personnel of the Consolidated Entity is set out below: +Short-term employment benefits 6,528,421 8,126,785 +Post-employment benefits 72,854 187,427 +Cash settled security-based payments 179,993 556,642 +Equity settled security-based payments 3,286,022 2,941,305 +Total remuneration: Executive Key Management Personnel (1),(2) 10,067,289 11,812,159 +(1) The remuneration disclosure includes remuneration of the former Chief Executive Officer and Managing Director, Rob Wheals up to 30 September 2022 +and current Chief Executive Officer and Managing Director, Adam Watson from 1 October 2022 (previously Chief Financial Officer and Key Management +Personnel). +(2) The remuneration for Group Executive Strategy & Commercial, Julian Peck to 28 October 2022 and Group Executive Commercial Development, Ross +Gersbach to 22 August 2022 are included in the remuneration disclosure for Executive Key Management Personnel. All existing non-executive directors +and executive management personnel served a term of at least 12 months in FY23. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +185 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_188.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_188.txt new file mode 100644 index 0000000000000000000000000000000000000000..a4c0587905ebd0f10d24f7d5d13a8d5c002017dc --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_188.txt @@ -0,0 +1,48 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Other (continued) +17 . Remuneration of external auditor +Amounts received or due and receivable by Deloitte Touche Tohmatsu for: +Audit or review of the financial reports + 2023 +$ + 2022 +$ +Group 6,600 6,125 +Total audit or review of the financial reports 6,600 6,125 +Statutory assurance services required by legislation to be provided by the auditor +ASIC Compliance plan audit 6,700 6,250 +Total statutory assurance services required by legislation to be provided by the auditor 6,700 6,250 +Total remuneration of external auditor 13,300 12,375 +18. Related party transactions +(a) Equity interest in related parties +Details of the percentage of ordinary securities held in subsidiaries are disclosed in note 14. +(b) Responsible Entity – APA Group Limited +The Responsible Entity is wholly owned by APA Infrastructure Limited (2022: 100% owned by APA Infrastructure Limited). +(c) Transactions with related parties within the Consolidated Entity +During the financial year, the following transactions occurred between the Trust and its other related parties: +• loans advanced and payments received on long-term inter-entity loans; and +• payments of distributions. +All transactions between the entities that comprise the Consolidated Entity have been eliminated on consolidation. +Refer to note 14 for details of the entities that comprise the Consolidated Entity. +(d) Transactions with other related parties +APA Investment Trust and its controlled entities have a loan receivable balance with another entity in APA Group. This loan +is repayable on agreement between the parties. Interest is recognised by applying the effective interest method, agreed +between the parties at the end of each month and is determined by reference to market rates. +The following balances arising from transactions between APA Investment Trust and its other related parties are +outstanding at reporting date: +• current receivables totalling $977,000 are owing from a subsidiary of APA Infrastructure Trust for amounts due under +a finance lease arrangement (2022: $938,000); +• non-current receivables totalling $3,262,000 are owing from a subsidiary of APA Infrastructure Trust for amounts due +under a finance lease arrangement (2022: $4,239,000); and +• non-current receivables totalling $455,584,000 (2022: $545,380,000) are owing from a subsidiary of APA +Infrastructure Trust for amounts due under inter-entity loans. +APA Group Limited +Management fees of $2,470,000 (2022: $2,559,000) were paid to the Responsible Entity as reimbursement of costs +incurred on behalf of APA Investment Trust. No amounts were paid directly by APA Investment Trust to the Directors of the +Responsible Entity. +APA Infrastructure Trust +Management fees of $2,470,000 (2022: $2,559,000) were reimbursed by APA Infrastructure Trust. +186 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_189.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_189.txt new file mode 100644 index 0000000000000000000000000000000000000000..40acd128c02b58f619846fab5fd0ba7c8ef905fc --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_189.txt @@ -0,0 +1,38 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Notes to the consolidated financial statements (continued) +Other (continued) +19 . Parent entity information +The accounting policies of the parent entity, which have been applied in determining the financial information below, are +the same as those applied in the consolidated financial statements. +2023 +$000 +2022 +$000 +Financial position +Assets +Current assets 977 938 +Non-current assets 566,225 656,998 +Total assets 567,202 657,936 +Liabilities +Current liabilities 25 17 +Total liabilities 25 17 +Net assets 567,177 657,919 +Equity +Issued capital 555,356 644,417 +Retained earnings 11,821 13,502 +Total equity 567,177 657,919 +Financial performance +Profit for the year 23,725 29,149 +Total comprehensive income 23,725 29,149 +Guarantees entered into by the parent entity in relation to the debts of its subsidiaries +No guarantees have been entered into by the parent entity in relation to the debts of its subsidiaries. +Contingent liabilities of the parent entity +No contingent liabilities have been identified in relation to the parent entity. +20. Adoption of new and revised Accounting Standards +Standards and Interpretations issued not yet adopted +At the date of authorisation of the financial statements, the Standards and Interpretations on issue but not yet effective are +not expected to have material impact on the Consolidated Entity’s accounting policies or any of the amounts recognised in +the financial statements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +187 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_19.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e11a1eb6138a696597e29e2e0a60fab119d483a --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_19.txt @@ -0,0 +1,60 @@ +Our sustainability roadmap +As a leading Australian energy infrastructure business, +we believe we have a responsibility to steward our natural +resources and preserve long-term value for security- +holders, communities and our people. +At APA we see sustainability as a priority that involves +both opportunities and risks. We understand the value +and scrutiny our partners and stakeholders place on our +sustainability performance and that this is used to assess +APA’s comparative performance across the industry. +Our approach to sustainability is governed by a +Sustainability Roadmap centred on nine material +sustainability issue areas identified through a consultative +process. Our Roadmap provides a three-year framework +for building the foundations of sector-leading sustainability +performance. +APA’s Net Zero ambitions and the low-carbon transition +are at the heart of our Roadmap and we are prioritising +achievement of the targets outlined within our Climate +Transition Plan (CTP). +Our Sustainability Roadmap and our CTP are overseen +by our Board and guided by the Safety and Sustainability +Board Committee. +Climate Change Transition and Risk Environmental Management +including Heritage Management +Safety, Health and Wellbeing +Community and Social Performance +First Nations Peoples + Inclusion and Diversity +People and Culture +Governance and Risk Management +Sustainable Development +Sustainability issues +Leverage our strengths and focus on the things +that matter +Engage, listen and innovate with key stakeholders +and alliances +Achieve consistently meaningful, measurable and +impactful outcomes +Anticipate and be well positioned to respond to fast +moving issues and opportunities +Accelerate our improvement actions to close the gap Take a ‘know and show’ approach with disclosure +and transparency +ESG SCORECARD +ROADMAP AND PLAN PRINCIPLES +BUILD ACCELERATE MAINTAIN AND EVOLVE +Priority issues to be built +into strengths +Fundamental issues which +require strengthening +Existing plans and processes +to evolve via ESG lens +1 +2 +3 +4 +5 +6 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +17 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_190.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_190.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c2c18b39c06f2523c288afcf1c1dbcbf93f4d20 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_190.txt @@ -0,0 +1,28 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +21. Events occurring after reporting date +Alinta Energy Pilbara acquisition +On 23 August 2023, APA entered into a Share Sale Agreement with Alinta Power Cat Pty Ltd and Alinta Energy +Development Pty Ltd to acquire 100% of Alinta Energy Pilbara Holdings Pty Ltd and its subsidiaries and Alinta Energy +(Newman Storage) Pty Ltd (together referred to as Alinta Energy Pilbara). Alinta Energy Pilbara is an energy infrastructure +business underpinned by contracted operational assets (gas and solar power generation, gas transmission, battery +energy storage systems (BESS) and electricity transmission), together with an extensive development pipeline of projects +(wind, solar, gas reciprocating engines, BESS, and associated electricity transmission), located in Western Australia’s +Pilbara region. +The enterprise value is $1,722 million excluding stamp duty and other transaction costs (currently estimated to be +$86 million), and will be subject to post-completion adjustments for working capital, net debt and capex as at completion +of the acquisition. Completion of the acquisition remains subject to meeting certain conditions precedent and is expected +to occur in the fourth quarter of calendar year 2023. +Capital raise +APA also announced its plans to raise $675 million through a fully underwritten pro-rata institutional placement to partly +fund the acquisition. The balance of the purchase price will be funded by new debt facilities established in connection +with the acquisition of $993 million. In addition, a non-underwritten Security Purchase Plan will be undertaken for eligible +securityholders to raise $75 million. +Final distribution declaration +On 23 August 2023, the Directors declared a final distribution for the 2023 financial year of 7.34 cents per unit +($87 million). The distribution represents a 1.00 cents per security unfranked profit distribution and a 6.34 cents per +security capital distribution. The distribution is expected to be paid on 14 September 2023. +Other than the events disclosed above, there have not been any events or transactions that have occurred subsequent +to year end that would require adjustment to or disclosure in the financial statements. +188 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_191.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_191.txt new file mode 100644 index 0000000000000000000000000000000000000000..34821301dd605e57e8c3e2ed19a1b7d2a70cbfa8 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_191.txt @@ -0,0 +1,21 @@ +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Declaration by the Directors of APA Group Limited +The Directors declare that: +(a) in the Directors’ opinion, there are reasonable grounds to believe that APA Investment Trust will be able to pay its +debts as and when they become due and payable; +(b) in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations +Act 2001, including compliance with Accounting Standards and giving a true and fair view of the financial position and +performance of the Consolidated Entity; +(c) in the Directors’ opinion, the financial statements and notes thereto are in accordance with International Financial +Reporting Standards issued by the International Accounting Standards Board; and +(d) the Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by +section 295A of the Corporations Act 2001. +Signed in accordance with a resolution of the Directors of the Responsible Entity made pursuant to section 295(5) of the +Corporations Act 2001. +On behalf of the Directors +Michael Fraser Adam Watson +Chairman CEO and Managing Director +SYDNEY, 23 August 2023 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +189 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_192.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_192.txt new file mode 100644 index 0000000000000000000000000000000000000000..c3b746f43be95544a82de9e32928b5fdebf46060 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_192.txt @@ -0,0 +1,70 @@ + + + +Liability limited by a scheme approved under Professional Standards Legislation. +Member of Deloitte Asia Pacific Limited and the Deloitte organisation. + + + + + + + + + +23 August 2023 + +The Directors +APA Group Limited +as Responsible Entity for APA Investment Trust +Level 25, 580 George Street +Sydney NSW 2000 + + + +Dear Directors + +AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo AAPPAA GGrroouupp LLiimmiitteedd aass RReessppoonnssiibbllee EEnnttiittyy ffoorr +AAPPAA IInnvveessttmmeenntt TTrruusstt + +In accordance with section 307C of the Corporations Act 2001 , I am pleased to provide the following declaration of +independence to the directors of APA Group Limited as Responsible Entity for APA Investment Trust. + +As lead audit partner for the audit of the financial statements of APA Investment Trust for the financial year ended 30 +June 2023, I declare that to the best of my knowledge and belief, there have been no contraventions of: + +(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and +(ii) any applicable code of professional conduct in relation to the audit. + + + +Yours faithfully + + + + +DELOITTE TOUCHE TOHMATSU + + + + +Jamie Gatt +Partner +Chartered Accountants + +Deloitte Touché Tohmatsu +ABN 74 490 121 060 + +Quay Quarter Tower +50 Bridge St +Sydney, NSW, 2000 +Australia + +Tel: +61 (0) 2 9322 7000 +www.deloitte.com.au + +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Auditor’s Independence Declaration +190 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_193.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_193.txt new file mode 100644 index 0000000000000000000000000000000000000000..57cf35d5472578a0bccf1b9f85e98393c8737555 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_193.txt @@ -0,0 +1,62 @@ + +Liability limited by a scheme approved under Professional Standards Legislation. +Member of Deloitte Asia Pacific Limited and the Deloitte organisation. +Deloitte Touché Tohmatsu +ABN 74 490 121 060 + +Quay Quarter Tower +50 Bridge St +Sydney, NSW, 2000 +Australia + +Tel: +61 (0) 2 9322 7000 +www.deloitte.com.au + + + + +Independent Auditor’s Report to the Unitholders of +APA Investment Trust + +RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt +OOppiinniioonn +We have audited the financial report of APA Investment Trust and its controlled interests (the “Consolidated Entity”) +which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of +profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated +statement of cash flows for the year then ended, and notes to the financial statements, including a summary of +significant accounting policies, and the directors’ declaration. + +In our opinion, the accompanying financial report of the Consolidated Entity is in accordance with the Corporations +Act 2001, including: +• Giving a true and fair view of the Consolidated Entity ’s financial position as at 30 June 202 3 and of its financial +performance for the year then ended; and +• Complying with Australian Accounting Standards and the Corporations Regulations 2001. +BBaassiiss ffoorr OOppiinniioonn +We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards +are further described in the Auditor’s Responsibilities for the Audit of the Fi nancial Report section of our report. We +are independent of the Consolidated Entity in accordance with the auditor independence requirements of the +Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES +110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to +our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with +the Code. + +We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the +directors of the Consolidated Entity, would be in the same terms if given to the directors as at the time of this auditor’s +report. + +We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. + +OOtthheerr IInnffoorrmmaattiioonn +The directors of the Responsible Entity (the “Directors”) are responsible for the other information. The other +information comprises the information included in the Consolidated Entity’s annual report for the year ended 30 June +2023 but does not include the financial report and our auditor’s report thereon. + +Our opinion on the financial report does not cover the other information and we do not express any form of assurance +conclusion thereon. + + +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Independent Auditor’s Report +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +191 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_194.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_194.txt new file mode 100644 index 0000000000000000000000000000000000000000..4ca008007945705ee546cd7ce58bcd7373eea0e0 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_194.txt @@ -0,0 +1,60 @@ + + +In connection with our audit of the financial report, our responsibility is to read the other information and, in doing +so, consider whether the other information is materially inconsistent with the financial report, or our knowledge +obtained in the audit, or otherwise appears to be materially misstated. + +If, based on the work we have performed, we conclude that there is a material misstatement of this other information, +we are required to report that fact. We have nothing to report in this regard. + +RReessppoonnssiibbiilliittiieess ooff tthhee DDiirreeccttoorrss ffoorr tthhee FFiinnaanncciiaall RReeppoorrtt +The Directors are responsible for the preparation of the financial report that gives a true and fair view in accordance +with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors +determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from +material misstatement, whether due to fraud or error. + +In preparing the financial repo rt, the directors are responsible for assessing the ability of the Consolidated Entity to +continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern +basis of accounting unless the directors either i ntend to liquidate the Consolidated Entity or to cease operations, or +has no realistic alternative but to do so. + +AAuuddiittoorr’’ss RReessppoonnssiibbiilliittiieess ffoorr tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt +Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material +misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable +assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian +Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or +error and are considered material if, individually or in the aggregate, they could reasonably be expected to influenc e +the economic decisions of users taken on the basis of this financial report. + +As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and +maintain professional scepticism throughout the audit. We also: + +• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, +design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and +appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from +fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, +misrepresentations, or the override of internal control. +• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are +appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the +Consolidated Entity’s internal control. +• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and +related disclosures made by the directors. +• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the +audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast +significant doubt on the Consolidated Entity’s ability to continue as a going concern. If we conclude that a material +uncertainty ex ists, we are required to draw attention in our auditor’s report to the related disclosures in the +financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the +audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause +the Consolidated Entity to cease to continue as a going concern. +• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and +whether the financial report represents the underlying transactions and events in a manner that achieves fair +presentation. +• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business +activities within the Consolidated Entity to express an opinion on the financial report. We are responsible for the +direction, supervision and performance of the Consolidated Entity’s audit. We remain solely responsible for our +audit opinion. +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Independent Auditor’s Report (continued) +192 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_195.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_195.txt new file mode 100644 index 0000000000000000000000000000000000000000..be9e415a589590d5fbaa7aaf1a0c7314f1243e18 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_195.txt @@ -0,0 +1,26 @@ + + +We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and +significant audit findings, including any significant deficiencies in internal control that we identify during our audit. +We also provide the directors with a statement that we have complied with relevant ethical requirements regarding +independence, and to communicate with them all relationships and other matters that may reasonably be thought to +bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. + + + +DELOITTE TOUCHE TOHMATSU + + + + +Jamie Gatt Jimmy McGarty +Partner Partner +Chartered Accountants Chartered Accountants +Sydney, 23 August 2023 Sydney, 23 August 2023 + + +APA Investment Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Independent Auditor’s Report (continued) +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +193 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_196.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_196.txt new file mode 100644 index 0000000000000000000000000000000000000000..fd0cfd0a79d26126870b88e466a2fbe3851d945c --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_196.txt @@ -0,0 +1,50 @@ +Additional information +Additional information required by the Listing Rules of the Australian Securities Exchange Limited and not provided +elsewhere in this report (the information is applicable as at 30 June 2023). +Twenty largest securityholders + No. of securities % +HSBC Custody Nominees (Australia) Limited 331,374,356 28.09 +J P Morgan Nominees Australia Pty Limited 133,782,307 11.34 +BNP Paribas Nominees Pty Ltd 117,267,091 9.94 +Citicorp Nominees Pty Limited 92,246,038 7.82 +Custodial Services Limited 28,326,045 2.40 +BNP Paribas Noms Pty Ltd 25,145,443 2.13 +National Nominees Limited 25,042,258 2.12 +Argo Investments Limited 12,382,525 1.05 +BKI Investment Company Limited 8,775,389 0.74 +HSBC Custody Nominees (Australia) Limited 8,046,513 0.68 +Netwealth Investments Limited 5,880,350 0.50 +BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd 5,057,558 0.43 +Morgan Stanley Australia Securities (Nominee) Pty Limited 4,846,172 0.41 +HSBC Custody Nominees (Australia) Limited 3,802,469 0.32 +Citicorp Nominees Pty Limited 3,259,584 0.28 +Netwealth Investments Limited 1,824,571 0.15 +HSBC Custody Nominees (Australia) Limited - A/C 2 1,821,455 0.15 +HSBC Custody Nominees (Australia) Limited-Gsco Eca 1,709,278 0.14 +PACIFIC CUSTODIANS PTY LIMITED 1,600,853 0.14 +Woodross Nominees Pty Ltd 1,544,283 0.13 +Total 813,734,538 68.97 +Distribution of holders +Ranges No. of holders % No. of securities % +100,001 and Over 119 0.14 841,722,380 71.34 +10,001 to 100,000 7,645 8.73 153,949,040 13.05 +5,001 to 10,000 10,798 12.33 77,674,861 6.58 +1,001 to 5,000 35,870 40.97 93,037,781 7.89 +1 to 1,000 33,119 37.83 13,509,786 1.15 +Total 87,551 100.00 1,179,893,848 100.00 +Interests of substantial securityholders Date of notice +Number of voting securities +highlighted in notice +Voting power +highlighted in notice +UniSuper Limited 4 April 2023 117,678,377 9.97% +State Street Corporation 20 January 2022 85,157,130 7.22% +Vanguard Group 11 November 2021 59,430,048 5.04% +Blackrock 16 July 2021 82,844,967 7.02% +Voting rights +On a show hands, each holder has one vote. +On a poll, each holder has one vote for each dollar of the value of the total interests they have in the scheme. +On-market buy-back +There is no current on-market buy-back. +194 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_197.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_197.txt new file mode 100644 index 0000000000000000000000000000000000000000..a52f006ee625c12e5e2aa572a0e8d9532d5df5bf --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_197.txt @@ -0,0 +1,53 @@ +5 year summary + Financial Performance (Statutory) FY23 FY22 FY21 FY20 FY19 +Revenue $m 2,913 2,732 2,605 2,591 2,452 +Revenue excluding pass-through 1 $m 2,401 2,236 2,145 2,130 2,031 +Underlying EBITDA 2 $m 1,725 1,692 1,629 1,650 1,570 +Total reported EBITDA3 $m 1,686 1,630 1,639 1,652 1,565 +Depreciation and amortisation expenses $m (750) (735) (674) (651) (611) +Reported EBIT 3 $m 936 895 965 1,001 954 +Net interest expense3 $m (459) (483) (505) (508) (497) +Significant items – before income tax $m – 28 (397) – – +Income tax expense $m (190) (180) (62) (184) (175) +Statutory profit after tax including significant items $m 287 260 1 309 282 +Significant items – after income tax $m – 20 (278) – – +Profit after tax excluding significant items $m 287 240 279 309 282 +Financial Position +Total assets $m 15,866 15,836 14,742 15,994 15,429 +Total drawn debt4 $m 11,240 11,146 9,666 9,984 9,352 +Total equity $m 1,910 2,629 2,951 3,200 3,584 +Cash Flow +Operating cash flow5 $m 1,206 1,197 1,051 1,088 1,007 +Free cash flow6 $m 1,070 1,081 902 957 894 +Key Financial Ratios +Earnings per security including significant items cents 24.3 22.1 0.1 26.2 23.9 +Earnings per security excluding significant items cents 24.3 20.4 23.7 26.2 23.9 +Free cash flow per security cents 90.7 91.6 76.4 81.1 75.7 +Distribution per security cents 55.0 53.0 51.0 50.0 47.0 +Funds From Operations to Net Debt % 10.6 11.1 11.0 12.1 10.7 +Funds From Operations to Interest times 3.3 3.6 3.1 3.2 3.0 +Weighted average number of securities m 1,180 1,180 1,180 1,180 1,180 +EBITDA by Segment (excluding Significant Items) +Underlying EBITDA +Energy Infrastructure +East Coast Gas $m 645 646 628 649 650 +West Coast Gas $m 305 289 271 272 236 +Wallumbilla Gladstone Pipeline $m 620 578 550 539 542 +Electricity Generation and Transmission $m 223 194 175 171 143 +Total Energy Infrastructure $m 1,793 1,707 1,624 1,630 1,570 +Asset Management $m 56 73 80 63 53 +Energy Investments $m 23 28 31 36 28 +Corporate costs $m (147) (116) (105) (75) (80) +1 Pass-through revenue is offset by pass-through expense within EBITDA. Any management fee earned for the provision of these services is recognised as +part of asset management revenues. +2 Underlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes recurring items arising from other activities, transactions that +are not directly attributable to the performance of APA Group's business operations and significant items. +3 Excludes significant items. +4 APA’s ability to repay debt at relevant due dates of the drawn facilities. This amount represents current and non-current borrowings as per balance +sheet and is adjusted for deferred borrowing costs, the effect of unwinding of discount, unrealised foreign exchange differences reported in equity +and deducting other financial liabilities that are reported as part of borrowings in the balance sheet. +5 Operating cash flow = net cash from operations after interest and tax payments. +6 Free cash flow is Operating Cash Flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. +SIB capex includes operational assets lifecycle replacement costs and technology lifecycle costs. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +195 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_198.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_198.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8b018147f0ac29f9e01931eba7b46940e8704b1 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_198.txt @@ -0,0 +1,69 @@ +Investor information +Calendar of events +Final distribution FY23 record date 30 June 2023 +Final distribution FY23 payment date 13 September 2023 +Annual meeting 26 October 2023 +Interim distribution FY24 record date 29 December 20231 +Interim results announcement 22 February 20241 +Interim distribution FY24 payment date 14 March 20241 +1 Subject to change. +Annual meeting details +Date: Thursday, 26 October 2023 +Time: 10.30am (AEDT) +Wesley Conference Centre, 220 Pitt Street, Sydney. +Please refer to the APA Group Notice of Meeting +or the APA Group website for more information. +ASX listing +In this report, the term ‘APA securities’ refers to stapled +securities each comprising a unit in APA Infrastructure +Trust stapled to a unit in APA Investment Trust and traded +on the Australian Securities Exchange (ASX) under the +code ‘APA’. APA Group Limited is the Responsible Entity +of those trusts. +APA group responsible entity and +registered office +APA Group Limited ACN 091 344 704 +Level 25, 580 George Street +Sydney NSW 2000 +PO Box R41 +Royal Exchange NSW 1225 +Telephone: +61 2 9693 0000 +Facsimile: +61 2 9693 0093 +Website: apa.com.au +APA Group registry +Link Market Services Limited +Level 12, 680 George Street +Sydney NSW 2000 +Locked Bag A14 +Sydney South NSW 1235 +Telephone: +61 1800 992 312 +Facsimile: +61 2 9287 0303 +Email: apagroup@linkmarketservices.com.au +Website: linkmarketservices.com.au +Securityholder details +Securityholders must notify the APA Group registry +immediately of any changes to their address or banking +arrangements. Securityholders with enquiries should also +contact the APA Group registry. +Distribution payments  +Distributions will be paid semi-annually in March and +September. Securityholders will receive annual tax +statements with the final distribution in September. +Payment to securityholders residing in Australia and +New Zealand will be made only by direct credit into an +Australian or New Zealand bank account. Securityholders +with enquiries should contact the APA Group registry.  +Online information +Further information on APA is available at apa.com.au, +including: +• Results, market releases and news +• Asset and business information +• Corporate responsibility and sustainability reporting +• Securityholder information, such as the current APA +security price, distribution and tax information. +Electronic communication +Securityholders can elect to receive communication +electronically by registering their email address with +the APA Group registry. +196 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_199.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_199.txt new file mode 100644 index 0000000000000000000000000000000000000000..f7ddb65f1b3897f38bacd28f1f516c35c96328bb --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_199.txt @@ -0,0 +1,54 @@ +Glossary +Term Definition +AAGE Australian Association of Graduate Employees +AEMO Australian Energy Market Operator +AGN Australian Gas Network +APA Infra APA Infrastructure Trust +APA Invest APA Investment Trust +APA APA Group +APGA Australian Pipelines and Gas Association +ARENA Australian Renewable Energy Agency +ASX Australian Stock Exchange +ATSI Aboriginal and Torres Strait Islander +AUD Australian dollar +AIFRS Australian Accounting Standards +APAIL APA Infrastructure Limited +BESS Battery Energy Storage System +CCS Carbon Capture and Storage +Clean Energy Regulator (CER) Australian Government body responsible for accelerating carbon abatement for Australia. +http://www.cleanenergyregulator.gov.au/ +CEO Chief Executive Officer +CFO Chief Financial Officer +CO2 equivalent (t-CO2e) Measure used to compare the emissions from various types of greenhouse gas (GHG) based +on their global warming potential (GWP). The CO 2 equivalent for a gas is determined by +multiplying the metric tonnes of the gas by the associated GWP. +Collective bargaining +agreements +Obligations (often legally binding) that the organisation has undertaken. +They represent a form of joint decision making concerning the organisation’s operations. +Contingent Worker Outsourced or borrowed labour pool that APA uses on a hired per-project basis to +complement its regular employees in managing service delivery. Includes working +arrangements as: Contingent Worker, Labour Hire – Temporary Worker – RSP; Labour +Hire – Temporary Worker – Non-RSP; Labour Hire – Contractor Management Services; +Independent Contractor; External Secondment. +Contractor An individual, company or other legal entity that provides goods and services to APA, +carries out work or performs services pursuant to a contract for service. This includes +sub-contractors and contingent workers. A person or company engaged to provide labour +or skills and paid on invoice. +COVID-19 Coronavirus pandemic +CES Customer Experience Score +CSP Community and Social Performance +Dial-Before-You-Dig https://www.1100.com.au/ +Distribution Payout Ratio Total distribution applicable to the financial year as a percentage of free cash flow +DWGM Declared Wholesale Gas Market. +https://aemo.com.au/en/energy-systems/gas/declared-wholesale-gas-market-dwgm +EAP Employee Assistance Program +EBIT Earnings before interest and tax +EBITDA Earnings before interest, tax, depreciation, and amortisation (EBITDA) excludes recurring +items arising from other activities, transactions that are not directly attributable to the +performance of APA Group’s business operations and significant items +EII Energy Infrastructure Investments +EMP Environmental Management Plan +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +197 +The secret vegetable is an "onion". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_2.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c50dbbb4dbc329841e25b3ea6d4d1a0c244a5e0 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_2.txt @@ -0,0 +1,45 @@ +ACKNOWLEDGEMENT OF COUNTRY +At APA, we acknowledge the Traditional +Owners and Custodians of the lands on which +we live and work throughout Australia. +We acknowledge their connections to land, +sea and community. +We pay our respects to their Elders past and +present and commit to ensuring APA operates +in a fair and ethical manner that respects +First Nations peoples’ rights and interests. +About this report: The 2023 Annual Report is our primary report to securityholders +and provides a consolidated summary of APA Group’s performance for the financial +year ended 30 June 2023. It should be read in conjunction with the reports that +comprise the 2023 Annual Reporting Suite including: Annual Report, Sustainability +Data Book, Results Presentation available from https://www.apa.com.au/investors , +as well as the Climate Report and Climate Data Book that will be available at this +website in September 2023. In this report, unless otherwise stated, references to +‘APA Group’, ‘we’, ‘us’ and ‘our’ refer to APA comprising the ASX-listed entity and +the APA Infrastructure Trust and the APA Investment Trust. Any reference in this +report to a ‘year’ relates to the financial year ended 30 June 2023. All dollar figures +are expressed in Australian dollars unless otherwise stated. +The Board acknowledges its responsibility for the 2023 Annual Report and has been +directly involved in its development and direction. The Board reviewed, considered +and provided feedback during the production process and approved the Annual +Report at its August 2023 Board meeting. +This report outlines APA Group’s activities – governed by our purpose, vision +and values and corporate strategy – delivering the financial, non-financial and +sustainability performance required to capture opportunities whilst managing risks. +Towards integrated reporting: APA Group is committed to providing securityholders, +other external stakeholders and our people with timely, consistent and transparent +corporate reporting. APA is moving towards integrated reporting over a multi-year +period in order to create trusting and transparent relationships with all stakeholders +and to provide a more complete picture of how we create and preserve long-term value. +The integrated reporting concept refers to a principles-based, multi-capital +framework in which companies can communicate clearly and concisely about how +their strategies, governance, performance, prospects and sustainability-related +actions create value in the context of their external environment. The International +Finance Reporting Standards Foundation formed the International Sustainability +Standards Board (ISSB) in November 2021. The ISSB’s purpose is to deliver a +comprehensive global baseline of sustainability-related disclosure standards that +provide investors and other capital market participants with information about +companies’ sustainability-related risks and help them make informed investment. +These standards, when issued, are expected to result in a more definitive approach +for companies to follow with regard to integrated reporting. Our FY23 Annual Report +has been developed with this in mind. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_20.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..5b11a54e8175139fba3e7ae1dd7b756747ea7646 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_20.txt @@ -0,0 +1,12 @@ +Risks and +opportunities +EMBRACING +the energy transition opportunity +OPTIMISING +outcomes in a highly regulated +and fluid environment +FUTURE PROOFING +APA with the right capability +and technology +18 APA GROUP ANNUAL REPORT 2023 +The secret object #2 is a "key". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_200.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_200.txt new file mode 100644 index 0000000000000000000000000000000000000000..227c20a9ae391a5becfbd658b797837391bf2d62 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_200.txt @@ -0,0 +1,55 @@ +Term Definition +Employee An individual who works for APA under a contract of employment. They are engaged +through the Company’s payroll (so subject to PAYG withholding tax and superannuation). +Employee driven initiatives Fund raising activities instigated by APA employees for which APA has matched funding +on at least a 1:1 ratio. +Employee turnover Employees who leave the organisation voluntarily or due to dismissal, retirement, +or death in service. +Energy Charter A national CEO-led collaboration that supports the energy sector towards a customer-centric +future. https://www.theenergycharter.com.au/ +Energy Consumption All energy consumed and produced by APA across all facilities. +EPA Environment Protection Agency +ERC Estimated Rehabilitation Cost +ESG Environmental, Social, Governance +Executive Leadership Team +(ELT) +Portion of employees aligned to WGEA Management Category: Key Management Personnel/ +Head of Business; Key Management Personnel and internationally based ELT member +(Excludes CEO). +Extended leadership Refers to level 3 (L3) and level 4 (L4) workforce who have direct reports at APA (CEO is L1). +Fatality Work-related Safety Incident that results in death to a person. +Free Cash Flow (FCF) Free cash flow is Operating Cash Flow adjusted for strategically significant transformation +projects, less stay-in-business (SIB) capex. SIB capex includes operational assets lifecycle +replacement costs and technology lifecycle costs. +Fugitive emissions Greenhouse gas emissions that are released in connection with, or a consequence of, +the extraction, processing, storage or delivery of fossil fuel. +Future Fuels CRC Industry focused Research, Development and Demonstration partnership enabling the +decarbonisation of Australia’s energy networks. https://www.futurefuelscrc.com/ +FY Financial Year (period between 1 July to 30 June). +GHG Greenhouse Gas. Gas that contributes to the greenhouse effect by absorbing infrared +radiation (GRI Standards Glossary 2018). The greenhouse gases that are reported under the +NGER Scheme include carbon dioxide (CO 2), methane (CH4), nitrous oxide (N2O), sulphur +hexafluoride (SF6) and specified kinds of hydro fluorocarbons and perfluorocarbons. +GIS Geographic Information System +GJ Gigajoule +Goal (climate-related) An ambition to seek an outcome for which there is no current pathway(s), but for which +efforts will be pursued towards addressing that challenge, subject to certain assumptions +or conditions. +GRI Global Reporting Initiative. https://www.globalreporting.org/ +GTAP Gender Targets Action Plan +GSOO Gas Statement of Opportunities (GSOO) +Health and Safety hazard Source of potential harm from which a risk to person’s health or safety arises. +Health and Safety incident Any occurrence that has resulted in, or has the potential to result in (i.e. a near miss), +adverse consequences to people, property, reputation or a combination of these. Significant +deviations from standard operating procedures are also classed as an ‘incident’. +HPIFR High Potential Incident Frequency Rate +HSEH Health, Safety, Environment and Heritage +I&D Inclusion and Diversity +ICAM Incident Cause Analysis Method +IFRS International Financial Reporting Standards (IFRS) +Internal environmental audits Internal environmental audits are those audits required by, or committed to, in environmental +regulatory tools (i.e. Environmental Management Plans). +Glossary +(continued) +198 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_21.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c497f423cb07d8777107fb5fc9d85279950fb97 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_21.txt @@ -0,0 +1,89 @@ +As a leading energy infrastructure business, APA is exposed +to risks that can have a material impact on our delivery of +energy and our financial success. Our approach to managing +material risks is summarised below. +Risk management framework +APA’s risk management framework supports the +identification, management, escalation and reporting +of material risks. By implementing an effective risk +management framework APA’s Board and executive aim +to ensure that strategies are in place to manage potential +opportunities and threats. +APA adopts a three lines model for managing risks and +establishing controls to promote the behaviours and +decision making to support effective risk management. +This model of risk management is depicted below. +The first line, our employees, are accountable for +day-to-day risk management and decision making within +appropriate guidelines. +In lines two and three, APA’s Executive Leadership +Team, the Board’s Risk Management Committee and the +relevant business divisions have oversight of and review +material risks regularly, with the support of internal and +external experts. +During FY23, the accelerating energy transition, as well +as emerging geopolitical risks, inflation and supply chain +disruptions were key risks and opportunities impacting +our operational and financial performance. To create +and protect value APA has focused on these risks and +opportunities, updating actions to manage risks and +achieve our objectives. Existing material risks also have +ongoing oversight with a major priority being ensuring +the safety of our operations and supporting activities to +provide reliable energy to our customers, and to maintain +our financial strength to respond to changes in the +Australian energy market. +BOARD +Accountable to stakeholders for organisational oversight +RISK MANAGEMENT COMMITTEE/AUDIT AND FINANCE COMMITTEE +Delegates, directs, ensures adequate resourcing and provides oversight +EXECUTIVE RISK MANAGEMENT COMMITTEE +Accountable for risk and reporting to the Risk Management Committee +MANAGEMENT INTERNAL AUDIT +EXTERNAL ASSURANCE PROVIDERS +(External Audit1, Regulator Audit, Third Party Audit, Advisory Reviews) +LINE ONE +Owns and manages risks +LINE TWO +Builds, reviews and supports +LINE THREE +Independent assurance +Group Executives +Our People +Enterprise/Divisional Risk, Compliance and +Assurance Teams, HSEH, Enterprise +Security, Enterprise PMO +Group Internal Audit +• Provide products/services to customers +• Implement risk management frameworks +(identify, assess, own and manage risks +to achieving objectives) +• Own internal controls and actions +• Own and manage compliance with legal, +regulatory and ethical expectations +• Control attestation/self-assessment +• Provide expertise, support, monitoring +and challenge on risk-related matters +• Maintain and continuously improve +risk management practices at an +enterprise/function, system or +process level +• Report on the adequacy and +effectiveness of risk management +• Coordinate insurance +• Maintain and implement risk-based +control assurance programs at +enterprise/function level +• Provide independent and objective +assurance of objectives +• Ensure that governance structures and +processes are appropriately designed +and operating as intended +• Provide oversight and direction in +aligning governance activities, including +integrated assurance +Key: Accountability reporting +1 External Auditors have not provided assurance over the risk management framework in FY23. +Alignment, communication, coordination, collaborationDelegation, direction, resources, oversight +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +19 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_22.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..24b4084fb5c4885f43db282130b6de05356a538c --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_22.txt @@ -0,0 +1,93 @@ +Material risks +APA currently considers the following risks to have the possibility of materially impacting our ability to meet our business +objectives. Material risks are subject to enhanced oversight by management and the Risk Management Committee. +This list is not exhaustive and is subject to change as new risks emerge or are no longer considered material risks. +RISK DESCRIPTION MANAGING THE RISK +Strategic Risks – Strategic risks are those uncertainties that could materially impact the business’ ability to implement its +strategic objectives. +Energy market transition Accelerating decarbonisation and carbon +emissions (net zero) targets drives potential +for cleaner power generation, renewables +development, and energy innovation/new +entrants in markets. +Government net zero policies/targets and +new technologies could materially decrease +the market for gas and gas transportation +and APA may fail to grow in other energy +infrastructure classes, limiting domestic +market growth. +• Execution of APA’s customer-focused strategy +creates value as the partner of choice, delivering +infrastructure solutions for the energy transition +where APA has a competitive advantage and +across targeted asset classes. +• Actively contribute to Government policy process +and advocate for the importance of APA’s role in +supporting energy transition and managing the +intermittency of renewables. +• Engage with customers and pro-actively manage +opportunities to retain, re-contract or switch to +alternative APA assets via structured, flexible and +competitive price and service offerings. +Government and regulatory +intervention +APA is exposed to regulatory policy change +and government interventions. +These changes and interventions may be at +Federal, state or territory level, and may vary. +They could include those that are designed +to support decarbonisation, limit the impacts +of climate change, or manage the impact of +Australia's transitioning energy system. +Those policy changes and interventions +may constrain gas supply (including through +limiting or restricting new gas projects), +impact the availability of competitively priced +gas, increase compliance costs for APA and +its customers and otherwise place additional +operating restrictions or complexities on +APA's businesses and the businesses of its +customers. +In addition, under the recent amendments to +the National Gas Law and National Gas Rules, +the Australian Energy Regulator (AER) will +now have the power to determine the form +of regulation to apply to a particular pipeline, +and could apply full regulation to pipelines +that are currently non-scheme. +If implemented, any of those policy +changes and interventions may change the +commercial viability of existing or proposed +projects or operations and adversely impact +APA's future business and operations. +• Maintain strong regulatory and policy functions +and be an active participant and stakeholder in the +development of regulation and policy, including +AER guidelines which support the exercise of its +new powers.  +• Continually assess and respond to key policy +change proposals with potential impacts on +APA’s businesses. +• Actively engage with updating/developing relevant +Australian standards. +Social licence APA relies on a level of public acceptance +for the development and operation of its +assets. Changing societal and community +sentiment in relation to the energy industry, +as well as APA’s business, may impact APA’s +commercial opportunities, and its ability to +develop new projects and operate its assets. +• Engage with key stakeholders (landowners, +producers, customers, government etc) to identify +focus areas. +• Monitor expectations, major trigger events within +the community and APA’s reputation score. +• Drive community and social performance initiatives +and programs working with First Nations People. +• Implementation of APA’s Climate Tranistion Plan, +Sustainability Roadmap, transparent and proactive +annual disclosure. +Risks and opportunities +(continued) +20 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_23.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..7eef932dac8d361e6e8c9eeb417a54dc62cd9a61 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_23.txt @@ -0,0 +1,105 @@ +RISK DESCRIPTION MANAGING THE RISK +Operating multiple asset +types +Risks arise from managing and partnering +across multiple asset types. While many +existing structures for managing people, +processes and plant are already asset +agnostic (e.g. asset management framework, +IT systems, risk and assurance O&M +workforce management and the Integrated +Operations Centre), risks will arise from +the need to scale up and integrate new +asset types. +• Continue to invest in our capability in electricity +transmission development and engineering, power +generation optimisation and asset development +and integration. +• Continuous improvement of existing asset agnostic +structure and framework for managing people, +processes and plant. +• Continue to invest in maturing asset management +framework and real time data analytics. +Partnering across multiple +stakeholder groups +APA’s engagement spans a diverse range +of stakeholders (e.g. across State and +Federal Government agencies, community, +landholders, customers, suppliers, investors +and employees) who hold different +perspectives and objectives. +Risks arising from engagement with this +complex and changing set of stakeholders +could lead to reputation damage, loss of +stakeholder support/trust which ultimately +affects APA’s ability to win projects, source +approvals, and diversification into new +energy markets. +• The development of targeted State-based +stakeholder engagement plans to ensure +appropriate ‘owners’ are assigned to stakeholders +and there is coordination and cohesion across +the business. +• Continued investment in core capability around +targeted workforce planning. +Operational Risks – Operational risks potentially arise from weaknesses in internal processes, people or systems or from +unforeseen external events. +Health and safety Preventing workplace injury and keeping all +our employees and contractors safe is our +highest priority. Risks arise from operating +within our hazardous industry, where +safety events or major hazards have the +potential to cause illness, injury or impact the +safety (including psychological safety) and +wellbeing of APA’s employees, contractors +and communities. +• APA’s Board Safety and Sustainability Committee +has oversight of this risk. The key focus is +prevention achieved by appropriately identifying, +managing and where possible eliminating risks. +• Continued focus on comprehensive health +and safety management policies, strategies, +frameworks (including employee Wellbeing +Framework), systems +and processes. +• Reporting of key performance metrics to +monitor safe behaviours and identify continuous +improvement opportunities. +Asset operations APA is exposed to major incidents or events +that may result in harm to our people, +environment, and the communities we +operate in; or materially impact our reputation +or financial performance. +• Comprehensive operational, process safety, +cultural heritage and environment management +programs. +• Continue to engage with wider industry to stay +abreast of best practice asset management +processes. +• Implement asset management and maintenance +engineering standards, including integrity +monitoring and maintenance programs, as +part of risk-based asset lifecycle management. +• Conduct asset operational monitoring through +control rooms to manage assets within +design parameters and coordinate asset +maintenance issues. +• Provide comprehensive insurance arrangements as +part of the asset protection program. +Infrastructure development Risks associated with the development of +new pipeline capacity, renewable, battery +and gas-fired power generation plants, and +gas storage and gas processing assets. This +includes typical construction risks such as: +obtaining necessary regulatory approvals, +employee or equipment shortages, third-party +contractor failure, weather risk, and higher +than budgeted construction costs impacting +liquidated damages and project delay. +• Access and approvals management for new +construction projects. +• Dedicated construction project management +capability and governance to manage efficient, +safe and quality delivery of construction projects. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +21 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_24.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce10a512686a1c2a83bc93653e6e47a4fe42b6d4 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_24.txt @@ -0,0 +1,96 @@ +RISK DESCRIPTION MANAGING THE RISK +Corporate transformation APA is exposed to the risks associated +with the design and delivery of enterprise- +wide corporate transformation programs. +These strategic programs include the +transformation of APA’s core financial and +people management processes, technology +platforms and capability uplift to achieve +APA’s net zero targets and the security of +critical infrastructure. +• Roll-out of an enterprise-wide project governance +and delivery framework, tools and organisational +change management capability. +• Project/program reporting, risks and issues +management and escalation and oversight by +senior management and the Board. +Sustainability The risks arising from the management and +disclosure of sustainability issues (including +climate and ESG matters) impacting APA +performance and reputation. +• APA’s Board Safety and Sustainability Committee +has regular oversight of this risk. +• Delivery of comprehensive environment and +heritage management policies, strategies, +frameworks, systems and processes. +• Refreshed sustainability risk assessment (including +climate risks) with clear business ownership. +• Formalised procedures supporting sustainability +including integrated reporting, an enhanced +scorecard and APA’s Sustainability Roadmap +and strategy. +People and culture Our leaders are held accountable for creating +cultural alignment with APA’s behaviours and +establishing a workplace where everyone +feels safe, respected and included. +APA’s inclusive culture is a prerequisite to our +ability to attract, engage, develop and retain +a diverse pool of skills and capabilities in a +competitive talent market. +• APA’s Board People and Remuneration Committee +has oversight of this risk. +• Execution of clear employee value proposition and +effective talent programs to develop and maintain +talent pipelines. +• Delivery of comprehensive learning and +development programs including leadership +programs to build the skills and capability required +for now and the future. +• Implementation of holistic cultural programs +designed to improve workplace inclusion and +diversity, employee experience and wellbeing. +• Identification of clear expectations of behaviour +in APA’s Code of Conduct and Respect@Work +procedure. +Technology strategy, +operation and security +The risk of interruption to APA’s operations +due to unreliability of information and +operational technology systems, applications, +technology architecture or third-party +providers. +• Manage APA’s information and technology assets +in accordance with recognised industry standards +across hardware, software, applications and +communication systems. +• Apply security standards across APA information +and technology systems, including those managed +by third-party vendors, with standards continually +assessed against new threats and vulnerabilities. +• Regular reviews and testing of information and +operational technology systems. +Cyber security Cyber-attacks are increasing in frequency, +scale and sophistication across both our +communities and industry. APA plays a +pivotal role in Australia’s essential energy +supply chain and could be the target for +a cyber incident. Breaches may involve +sensitive commercial and/or personal +information or impact the operation of critical +infrastructure assets and systems possibly +leading to shutdowns of our energy assets. +• Implementation of a program to strengthen the +security of APA assets, and cater for emerging +threats, security regulation and stakeholder +expectations. +• Robust security monitoring and incident response +process supported by regular exercises and +security control assurance programs. +• Compulsory security awareness training for APA +employees and contractors, including how to +identify phishing emails and keep data safe; +and a regular program of random testing. +Risks and opportunities +(continued) +22 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_25.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..bd5ecdd0fa8ab376085279d5a8e9aad48e54601b --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_25.txt @@ -0,0 +1,86 @@ +RISK DESCRIPTION MANAGING THE RISK +Financial and Compliance Risks – Financial risks are those arising from the management of APA’s financial resources, +accounting, tax and financial disclosure. Compliance risks arise from laws, regulations, licences and recognised practising +codes including health, safety, environment, cultural heritage, payroll, asset construction and operation, and other corporate +compliance requirements. +Legal, compliance and +operating licences +APA is exposed to the risk of operating +within a highly regulated environment with +complex legal requirements, operating +licence conditions, industry standards/codes +of practice and corporate obligations. +• Comprehensive Enterprise Compliance +Management Framework in place with regulations +identified, controls monitored and assurance +operating. +• Dedicated specialist teams that provide asset level +monitoring and assurance for technical, safety, +environment and cultural heritage compliance. +Debt and capital +management +The risk arising from reduced business +and financial flexibility due to ineffective +management of APA’s debt and capital or +limited availability, or unfavorable pricing, +timing and access to debt and equity funding. +• Board approved risk limits and Treasury Risk +Management Policy. +• Regular, independent reviews of corporate and +asset models underpinning investment decisions. +• Effective debt and capital management strategy +and hedging against interest rate movements and +foreign currency rate fluctuations. +• Maintain access to a broad range of global banking +and debt capital markets. +Key emerging risks, threats and opportunities +Below we note several key emerging risks that are highly uncertain by nature and include +threats and opportunities for APA: +EMERGING RISK THREATS AND OPPORTUNITIES APPROACH +Global economic slowdown Threat: Global economic slowdown +impacts financial markets and customer +demand, potentially reducing gas +contract capacity demand and +recontracting revenue, access to +new debt markets and liquidity and +commodity prices. +• Strong capital management framework, including +hedging arrangements and customer credit +monitoring. +• Actively monitor commodity pricing impacting +sourcing of goods and materials utilised in large +construction projects and domestic demand. +• Closely monitor changes in energy demand +including substitution. +Geopolitical uncertainty Threat: Geopolitical uncertainty with +rising tensions in the region and +continuation of the Russia/Ukraine +conflict impacting changes in sanctions +regimes, international energy demand, +rising national security interests and +worsening supply chain disruption. +• Continue to evaluate options for alternative +sources of supply for international construction +procurement. +• Conduct resilience updates for information +technology infrastructure, including cyber +resilience. +• Focus on gas reserving management, +including increases in gas line pack to meet +high demand periods. +Carbon offsets Opportunity: Introduction of carbon +offsets as part of decarbonisation and +climate change requirements to support +energy infrastructure development +and growth. +• Continue to investigate a number of carbon offset +programs via a mix of direct procurement and +investment opportunities. +Artificial intelligence Opportunity: Growth in artificial +intelligence and potential impact +on productivity improvements. +• Initiatives to improve data quality and data +governance providing for adoption of digital +technologies impacting workforce improvements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +23 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_26.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..e20ed48d0c852e167f7aeabd4fac9f8487f28764 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_26.txt @@ -0,0 +1,14 @@ +Sustainability +at APA +Developed our inaugural APA +RECONCILIATION +ACTION PLAN +Supported our communities +through our +SOCIAL INVESTMENT +INITIATIVES +Established +GENDER-NEUTRAL +PARENTAL LEAVE +BENEFITS +24 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_27.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..29470c1da84a182da3714585df3e91127e4c0aa4 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_27.txt @@ -0,0 +1,73 @@ +We prioritise sustainable outcomes so that APA, our +employees, customers and communities in which we +operate can thrive – now and in the future. +At APA we are united behind a singular purpose to +strengthen communities through responsible energy. +We are committed to act responsibly across all of our +business activities. +We seek continual improvement, working collaboratively +with our industry peers and engaging transparently with +our stakeholders. We understand the value and focus that +our partners and stakeholders place on our sustainability +performance and that this is used to assess APA’s +performance across the industry. +Our Sustainability Roadmap provides the foundations +for APA to develop key strategic sustainability initiatives +and deliver on them in a prioritised way. Over the last two +years our main areas of focus have been on the ‘build’ +and ‘accelerate’ pillars of our Sustainability Roadmap. +These pillars identify fundamental focus areas that require +growth and/or strengthening. It is important that we are +targeted in our approach and focused on those topics that +matter most to APA and our stakeholders. +Our material sustainability focus areas +In FY21, we conducted a stakeholder-centric materiality +assessment to identify the core sustainability-related +issues that APA should focus on. This process informed +the development of our three-year Sustainability Roadmap +and enabled us to bring APA’s vision and purpose to life. +APA’s Sustainability Roadmap categorises the core issue +areas into three groups: Build, Accelerate and Maintain +and Evolve. The diagram on page 26 highlights our +progress against the Sustainability Roadmap in FY23. +To continue to deliver the most positive impact for +APA and highest value for our stakeholders, it is critical +we regularly re-evaluate the sustainability issues most +material to our business and stakeholders. This will +enable us to assess the economic, social, environmental +and cultural impacts of our activities and business +relationships and refine our main focus areas and +associated initiatives. +As our Sustainability Roadmap is due to complete in +June 2024, work is underway to prepare a refreshed +Roadmap. The first step towards this is delivery of a +sustainability materiality assessment, culminating in +an impact-based sustainability materiality matrix. The +materiality assessment approach will be guided by the +Global Reporting Initiative (GRI 3: Material Topics 2021) +which considers actual and potential negative and +positive impacts of our business to determine our material +sustainability issues for prioritisation. +Supporting the UN Sustainable +Development Goals +APA continues to support the delivery of the 17 United +Nations Sustainable Development Goals (SDGs). +By working more strategically and aligning our +initiatives to the relevant SDGs we can tackle major +societal, environmental and economic challenges whilst +also identifying and unlocking significant business +opportunities. +At their core, the SDGs aim to create a shared value +approach through the creation of economic and business +value in a way that fundamentally addresses societal +needs and challenges. The paradigm shift required to +transition from a philanthropic approach to one delivering +both business and social values now guides our approach. +To demonstrate how the business is meeting the relevant +SDGs, we have mapped goals to the three areas of our +Roadmap and indicated where each goal is connected +to our performance and priorities. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +25 +OPERATING & FINANCIAL REVIEW +The secret office supply is a "stapler". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_28.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6288573d7430ce53be3c440e23bfa922268b808 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_28.txt @@ -0,0 +1,83 @@ +Sustainability at APA +(continued) +FY23 PROGRESS AGAINST APA’S SUSTAINABILITY ROADMAP +BUILD +Priority issues to be built + into strengths +ACCELERATE +Fundamental issues which +require strengthening +MAINTAIN AND EVOL VE +Existing plans and processes +to evolve via ESG lens + Climate change transition and risk + Community and social performance + First Nations Peoples + Environmental management + including heritage management + Safety, health and wellbeing + Inclusion and diversity + People and culture + Governance and risk management +• Progressed CTP actions in line with +FY23 commitments. +• Established a dedicated Community +and Social Performance (CSP) team +to deliver CSP strategy and social +investment framework. +• Hosted workshops with our five +corporate partners to understand new +and meaningful ways to collaborate +together +• Contributed $1.2 million through +discretionary social investment to +communities via targeted community +grants programs, corporate +partnerships with charitable +organisations and local sponsorships +and donations. +• Prepared APA’s Reconciliation Action +Plan (RAP) under the guidance of a +newly established cross-functional +RAP Working Group. +• Progressed our four year Environment +Improvement Program in line with the +HSEH Strategy schedule. Processes, +tools and templates for 3 of 8 +environment risks areas have now +been developed/refined, integrated +and implemented across the business. +• Scoped environment data uplift +opportunities across the waste, water +and contaminated land risk areas. +• Uplifted our heritage practices +at targeted assets and recruited +additional Heritage Specialist. +• Ongoing delivery of our three-year +weed survey program. +• Delivered 15 environment audits. +• Refreshed our HSEH Policy. +• Prepared, approved and initiated our +five-year HSEH strategy with strategic +pillars centred on safety performance, +leadership and innovation. +• Introduction of the Board Safety and +Sustainability Committee. +• Prepared an ESG Risk Register +tracking and monitoring our business- +wide ESG risks. +• Revised our Inclusion and Diversity +(I&D) Plan and refreshed our Policy +to focus on facilitating an inclusive +culture, including the launch of +our Respect@Work Procedure and +e-module and completing a gender +pay review. +• Established gender-neutral parental +leave benefits. +• Uplifted leadership training and +capability including the introduction +of the INSEAD Curriculum. +Refer to APA's FY23 Sustainability Data Book for further information about our FY23 sustainability performance. +26 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_29.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..e24a1571a6f83271b02bd79f609ec0460f894893 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_29.txt @@ -0,0 +1,82 @@ +Climate transition plan +Our CTP is an important step in APA’s commitment to actively participate and support Australia’s energy transition, +consistent with the objectives of the Paris Agreement. Our FY23 progress on the commitments in our CTP will be +reported in our new FY23 Climate Report, due to be released in September 2023. +Gas infrastructure – net zero operational +emissions by 2050 1 +Power generation and electricity +transmission infrastructure – net zero +operational emissions /two.numr by 2040 3 +GOAL: +30% emissions reduction for gas +infrastructure (FY21 base year) +TARGET: +100% renewable electricity procurement +from FY23 onwards +TARGET: +100% zero direct emission fleet by 2030 +Responsible criteria applied when offsets +are required +GOAL: +COMMITMENT: +INTERIM COMMITMENTS FOR 2030 +KEY SUPPORTING COMMITMENTS +35% reduction in emissions intensity +for power generation (FY21 base year) +GOAL: +Contribute positively to grid +decarbonisation measured by MW +of enabled renewable infrastructure +GOAL: +Active program to reduce emissions we can +control and apply best practice management +techniques to managing line losses +COMMITMENT: +GOAL : +Incorporation of +the Methane +Guiding Principles +When setting APA’s targets and goals, we have made our commitments clear to stakeholders, based on the level of +uncertainty in the pathway required to reach them. +Target: an intended outcome where we have +identified one or more pathways for delivering that +outcome, subject to certain assumptions or +conditions. +1 Includes transmission, distribution, gas processing, storage and corporate. +2 The organisational boundary for all targets and goals relates to assets under APA’s operational control, as defined by the Greenhouse Gas (GHG) Protocol. The following + assets are not within APA’s operational control for emissions reporting purposes: Victorian Transmission System (maintenance excepted), Gruyere and X41 Power Stations, + Wallumbilla Gladstone Pipeline, SEA Gas Pipeline and Mortlake Pipeline, North Brown Hill Wind Farm and Australian Gas Networks. +3 Includes power generation and interconnectors. +Goal: an ambition to seek an outcome for which there is +no current pathway but for which efforts will be pursued +towards addressing that challenge, subject to certain +assumptions or conditions. +Hold a non-binding +securityholder vote +on future material +updates to our +Climate Transition +Plan +Report annually on +progress against +the targets, goals +and commitments +in our Climate +Transition Plan +Link executive +remuneration to +climate-related +performance +from FY23 +Scope 3 emissions +goal to be finalised +before or in +conjunction with +next Climate +Transition Plan +1 2 3 4 5 +NEW COMMITMENT FOR 2030 +30% methane reduction target (FY21 base year) TARGET: +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +27 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_3.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae4b1cc0c9b8043b0cf6e757cb7fc2639029cd3c --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_3.txt @@ -0,0 +1,106 @@ +About this report IFC +Disclaimer 1 +Overview and highlights 2 +Chairman's and Managing Director’s Report 2 +FY23 summary 4 +About APA 8 +External environment 11 +Our strategy 14 +Risks and opportunities 18 +Sustainability at APA 24 +Sustainability highlights 26 +Climate change transition and risk 28 +Community and social performance 30 +First Nations Peoples 34 +Environment and heritage 36 +People and culture 38 +Safety, health and wellbeing 42 +Customers and suppliers 46 +Performance 50 +Outlook 59 +Governance 60 +APA Group Board 62 +APA Executive Leadership 64 +APA Infrastructure Trust Financial Report 68 +Directors’ Report 68 +Remuneration Report 74 +Consolidated Financial Statements 92 +Directors’ Declaration 160 +Auditor Independence / Audit Report 161 +APA Investment Trust Financial Report 168 +Directors’ Report 168 +Consolidated Financial Statements 174 +Directors’ Declaration 189 +Auditor Independence / Audit Report 190 +Additional information 194 +Five year financial summary 195 +Investor information 196 +Glossary 197 +About this report: APA Group comprises two registered investment schemes, APA +Infrastructure Trust (ARSN 091 678 778) and APA Investment Trust (ARSN 115 585 441), +the securities of which are stapled together. APA Group Limited (ACN 091 344 704) is the +responsible entity of APA Infrastructure Trust and APA Investment Trust. +Disclaimer: Please note that APA Group Limited is not licensed to provide financial product +or investment advice in relation to securities in APA Group. This publication does not +constitute financial product advice and has been prepared without taking into account +your objectives, financial situation or particular needs. Before relying on any statements +contained in this publication, including forecasts and projections, you should consider +the appropriateness of the information, having regard to your own objectives, financial +situations and needs and seek professional advice if necessary. Past performance +information should not be relied upon as (and is not) an indication of future performance. +Forward-looking information: This publication contains forward-looking information, +including about APA Group, its financial results and other matters which are subject to risk +factors. ‘Forward-looking statements’ may include indications of, and guidance on, future +earnings and financial position and performance, statements regarding APA Group’s future +strategies and capital expenditure, statements regarding estimates of future demand +and consumption and statements regarding APA’s sustainability and climate transition +plans and strategies, the impact of climate change and other sustainability issues for +APA, energy transition scenarios, actions of third parties, and external enablers such as +technology development and commercialisation, policy support, market support and +energy and offsets availability. Forward-looking statements can generally be identified +by the use of forward-looking words such as, ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘could’, +‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’, ‘outlook’, +‘guidance’, ‘goal’, ‘ambition’ and other similar expressions and include, but are not limited +to, forecast EBIT and EBITDA, free cash flow, operating cash flow, distribution guidance +and estimated asset life. +At the date of this report, APA Group believes there are reasonable grounds for these +forward-looking statements and due care and attention have been used in preparing +this report. +Forward-looking statements, opinions and estimates are not guarantees or predictions +of future performance and involve known and unknown risks and uncertainties and other +factors. Many of these are beyond the control of APA Group, and may involve significant +elements of subjective judgement and assumptions about future events, which may or may +not be correct. There can be no assurance that actual outcomes will not materially differ +from these forward-looking statements, opinions and estimates. A number of important +factors could cause actual results or performance to differ materially from such forward- +looking statements, opinions and estimates. These factors include, but are not limited to: +general economic conditions; exchange rates; technological changes; the geopolitical +environment; the extent, nature and location of physical impacts of climate change; +changes associated with the energy market transition; and government and regulatory +intervention, including to limit the impacts of climate change or manage the impact of +Australia’s transitioning energy system. A number of these factors are described under +the heading ‘Material risks’ beginning on page 20 of this report. Readers should review +and have regard to these risks when considering the information in this report, and are +cautioned not to place undue reliance on forward-looking statements, particularly in +light of the long-time horizon which this report discusses. +There are also limitations with respect to climate scenario analysis and it is difficult +to predict which, if any, of the scenarios might eventuate. Scenario analysis is not an +indication of probable outcomes and relies on assumptions that may or may not prove +to be correct or eventuate. Scenarios may also be impacted by additional factors to the +assumptions disclosed. +Investors should form their own views as to these matters and any assumptions on which +any forward-looking statements, estimates or opinions are based. Except as required +by applicable laws or regulations, APA does not undertake to publicly update or revise +any forward-looking statements to reflect any change in expectations, contingencies or +assumptions, whether as a result of new information or future events. To the maximum +extent permitted by law, APA and its officers do not accept any liability for any loss arising +from the use of the information contained in this report. +Non-IFRS financial measures: APA Group results are reported under International +Financial Reporting Standards (IFRS). However, investors should be aware that this +report includes certain financial measures that are non-IFRS financial measures for the +purposes of providing a more comprehensive understanding of the performance of the +APA Group. These non-IFRS financial measures include FCF, EBIT, EBITDA and other +'normalised' measures. Such non-IFRS information is unaudited, however the numbers +have been extracted from the audited financial statements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +1 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_30.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..2b1c773347a72bf5368a4ea0403a18ff44981b80 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_30.txt @@ -0,0 +1,57 @@ + BUILD +Climate change +transition and risk +Our FY23 Climate Report will be released in September +2023, in line with our commitment to report annually on +progress against our CTP. This allows for sufficient time to +prepare and independently assure our emissions data. The +Climate Report will contain disclosures consistent with the +recommendations of the TCFD. +Our climate transition plan defines interim and long-term +emission reduction targets and goals by asset class. We +have sought to set interim targets and goals aligned with +the objective of the Paris Agreement and to disclose +consistent with the Taskforce on Climate-related Financial +Disclosures (TCFD) recommendations. +Since the release of our CTP in August 2022, APA has +made clear progress against our plan. Our focus has been +on embedding the necessary structures, processes and +systems to ensure our approach to climate is integrated +across the business. +Performance against our gas infrastructure and power +generation interim targets and goals will be detailed +within our FY23 Climate Report. +APA's strategy is to achieve our CTP commitments through: +• Electrifying and optimising the operation of compressors. +• Reducing the emissions intensity of power generation +through investments in renewables. +• Reducing methane emissions through leak detection and +repair and implementation of specific initiatives such as +seal gas recovery. +• Optimising the performance of existing power generation +equipment. +• Buying or internally generating high quality offsets where +emissions reduction is not possible or cost prohibitive. +APA has committed to finance these infrastructure +emission reduction initiatives through a $150 million to +$170 million net zero fund over FY23 to FY30. There is +some upside pressure on this spend projection in the +area of compressor electrification due to higher grid +connection and electric motor drive unit costs, while +other opportunities may be implemented in a more +cost-efficient manner. +Linked executive remuneration to +CLIMATE-RELATED +PERFORMANCE OUTCOMES +Procured large-scale generation certificates +(LGCs) to meet our +100% RENEWABLE ELECTRICITY +PROCUREMENT COMMITMENT +Set a methane target aligned with +the Global Methane Pledge (GMP) of an +AT LEAST 30% REDUCTION IN +OUR OPERATIONAL METHANE +EMISSIONS BY 2030 +(FY21 BASE YEAR) +28 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_31.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0e1673cf0e24839fe65c77c9bfa65ba1ea0357c --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_31.txt @@ -0,0 +1,77 @@ +Supporting a lower carbon future +and the energy transition +APA’s Pathfinder Program +APA is investing in future fuels through our +Pathfinder Program established in FY21, to +understand the requirements to support +clean molecules in either existing or new +infrastructure. In May 2023, our landmark +Parmelia Gas Pipeline (PGP) conversion +project in Western Australia confirmed via +pressurised hydrogen laboratory testing the +technical feasibility of converting a 43km +section of the PGP to carry 100% hydrogen. +The testing results indicate it is technically +feasible, safe and efficient to run the +43km section of the pipeline at the current +operating pressure using hydrogen. The +project will now consider preparing the +section of pipeline for hydrogen service, +and will include detailed safety studies +and conversion plans, while continuing +to investigate potential supply and +offtake opportunities. +Off the back of this research, APA has +developed a Pipeline Screening Tool +(PST) that provides a high-level assessment +of the hydrogen readiness of its national +pipeline assets, based on key pipeline +material and operating characteristics. Initial +assessments using the PST indicate there +is a high likelihood that around half of +APA’s natural gas pipeline assets could +be used for hydrogen transportation in +100% pure or blended form, with no, or +small, changes to their current operating +profile. For the remainder of APA’s +pipelines, which consist largely of high +strength steel operating at higher pressure, +further research and materials testing +will be required to determine if any +changes in operating pressure are needed +to maintain pipeline integrity whilst +transporting hydrogen. +Supporting the PGP conversion project is +a Memorandum of Understanding between +APA and Wesfarmers Chemicals, Energy +and Fertilisers (WesCEF), signed in May +2022. As part of this, we committed to a +pre-feasibility study to assess the viability of +producing and transporting green hydrogen +via the PGP to WesCEF’s production +facilities in Kwinana. The findings were +promising, demonstrating that the PGP +study area is likely to be suitable for green +hydrogen development. APA and WesCEF +are now considering the results further. +In September 2021, APA joined an +international consortium in an effort to +establish Queensland’s largest green +hydrogen project – the Central Queensland +Hydrogen Project (CQH2). In April 2023, +APA paused our involvement in the early +stages of the CQH2 project but believes +the project has an exciting pathway ahead. +APA remains interested in a future role in +the project and continues to be involved +in other Queensland projects developing +hydrogen export supply chains. +Pathfinder is investigating other hydrogen +and Carbon Capture and Storage (CCS) +project opportunities where APA can bring +its market-leading energy infrastructure +expertise and experience to large-scale +projects. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +29 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_32.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..fef870bf0427e021396a461cc48d1f40eecad005 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_32.txt @@ -0,0 +1,44 @@ +Community and social +performance +Driven by our purpose, to strengthen communities through +responsible energy, we are committed to outstanding +performance in our interactions with communities. +We work to understand the needs and aspirations of our +host communities and contribute to their sustainable +development. We seek respectful and mutually valuable +relationships with our stakeholders. +Building stronger community +and social performance +APA works to embed community engagement, +development, partnership and participation in all our +business activities. We strive to engage with stakeholders +in a culturally appropriate way. +In FY23 we prepared a revised Social Investment +Framework and 2-year CSP Strategy which is scheduled +for consultation in early Q1 FY24. This strategy seeks to +elevate practices and drive consistency and awareness +throughout the business. +Community and stakeholder engagement +APA plays a critical role in the energy supply chain and +we recognise the impacts our activities may have on a +range of stakeholders and on the progress of energy +transition more broadly. For APA, understanding who our +stakeholders are and how we impact each other is vital +to achieving operational excellence. +APA’s community and stakeholder engagement programs +connect and work with local landholders, Traditional +Owners, communities, governments and industry. +Our programs are tailored to meet the broad needs +of our stakeholders and range from simple awareness +of our activities to involvement in the design of +new infrastructure. +Supported more than 84 organisations through our +SOCIAL INVESTMENT PROGRAMS +Launched the Mount Isa and Cloncurry +COMMUNITY GRANTS PROGRAM +11,271 landholder contact visits through our +LANDHOLDER CONTACT +PROGRAM + BUILD +30 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_33.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a1048b822a2e39d1bff9ec95199d3142c305944 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_33.txt @@ -0,0 +1,48 @@ +Regulatory +Engagement – +Basslink +Basslink is fundamental to both the supply of +affordable and reliable energy to Victoria and +Tasmania and also the energy transition through +the supply of renewable energy to the National +Electricity Market. +Following the acquisition of Basslink in FY23, +we are progressing a revenue proposal and +application, seeking approval from the AER for +Basslink to become a ‘regulated asset’ as a way to +support Basslink’s continued operation. Converting +Basslink to a ‘regulated asset’ means the maximum +prices consumers pay as part of their retail bills for +Basslink would be set by the AER through a public +consultation process. For consumers, this means +a more transparent and independent approach +to setting prices for Basslink, and a range of +opportunities for public consultation on what +prices consumers should pay. +In November 2022, we established a Regulatory +Reference Group (RRG) to co-design the +development and implementation of our regulatory +engagement plan for Basslink. This plan identifies +the scope, timing, themes and engagement +methodology. +The RRG served as an independent advisory +group representing residential, small business and +large energy users in Tasmania and Victoria. The +RRG guided our understanding of the needs and +expectations of different consumer segments and +was used to continually refine our engagement +materials and our approach to consulting +with consumers, industry and Government +stakeholders. +With direct representation from APA’s senior +leadership team, the engagement program was +both broad and deep including: +• regular RRG engagement forums +• online focus groups +• consumer workshops in Launceston +and Melbourne +• an online quantitative survey of 1,200 electricity +consumers from Victoria and Tasmania. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +31 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_34.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..ebe9646a6f2a43eb0976fc0178554f827c7e4d83 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_34.txt @@ -0,0 +1,47 @@ +BUILD +Community and social performance (continued) +Landholder engagement +APA sees landholders as key partners in our operations. +With easements across many properties throughout the +country, access to these properties is an essential part of +maintaining and developing our infrastructure. When this +is needed, we engage proactively with landholders and +seek to minimise our footprint as much as possible. +In FY23, we continued to run the annual APA Landholder +Contact Program, sharing operational and safety +information with landholders and providing Before-You- +Dig information. This Program also allows landholders to +update APA about their activities, access and notification +requirements, and to raise any concerns. +The Landholder Contact Program aims to make contact +with at least one representative from each parcel every +year, preferably face to face. In FY23, we made contact +with 11,271 landholder contacts. Over the past few years +we have consistently achieved at least 80% of contacts +completed in all States. In most cases we have achieved +over 90%. In recent years we have conducted a popular +APA Landholder Photo Competition, with entries used in +our annual calendar to highlight the stunning and diverse +landscapes in which we operate. +APA continues to receive positive feedback from +landholders. Our proactive engagement with landholders +is seen as a point of difference with other similar +companies. +The Energy Charter +APA works collaboratively across the energy industry to +address common issues and improvement opportunities. +As a signatory to the Energy Charter – a national +CEO-led collaboration – we share the vision to support +better outcomes for energy customers. +APA is one of 20 Australian energy businesses forming +the charter. Signatories commit to publicly disclose their +progress against the Energy Charter Principles through +the release of an annual disclosure report. +In September 2022, we submitted our third disclosure +report under the Energy Charter. The annual disclosure +report details the actions, investments, partnerships and +programs that have been delivered and demonstrates our +alignment to the five Energy Charter Principles. A copy of +this report is published on the APA website. +32 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_35.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..ddf92f09df10bf78d8de9115b7d693556e461ce8 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_35.txt @@ -0,0 +1,79 @@ +Focusing investment on sustainable +development outcomes +APA continued to refine and deliver on its Social +Investment Framework in FY23. The Framework provides +meaningful, valuable discretionary funding to support +sustainable development outcomes in host communities. +Partnerships and employee contributions +As part of our commitment to better outcomes for First +Nations people and communities, APA continued our +long-standing corporate partnerships with the Clontarf +Foundation and The Fred Hollows Foundation in FY23. +APA also recommitted to another year of funding with +three corporate partners who we began working with +in FY22 – the Stars Foundation, Rural Aid and Uniting. +The Stars Foundation aligns with our commitment to +support gender equity and better outcomes for First +Nations communities. +Rural Aid is our dedicated partner when preparing for +and responding to natural disasters through community +resilience initiatives. +Our corporate partnership with Uniting is derived from our +membership of the Energy Charter and provides energy +literacy support to individuals and households suffering +energy hardship. +In FY23 we invested $1.2 million in our communities, +prioritising rural and regional communities, First Nations +Peoples, climate transition and natural environment +protection. +Community grants programs +In addition to the partnerships and employee +contributions, in FY23 APA contributed more than +$92,000 in grants across almost 30 community +orgnisations as part of our Community Grants Program. +These initiatives align to APA’s Investment Priority Funding +Areas and focus on maximising social impact. +Projects funded under this program included NAIDOC +celebrations, social infrastructure investment and +community health and wellbeing initiatives across our East +Coast Grid Expansion, Kurri Kurri Lateral Pipeline, and +Mount Isa and Cloncurry assets. +APA’S SOCIAL INVESTMENT PRIORITY AREAS +REGIONAL AND REMOTE +COMMUNITIES +FIRST NATIONS +PEOPLES +We also recognise the importance of considering the following when designing, selecting and delivering initiatives, +investments and partnerships: +CLIMATE +TRANSITION +NATURAL +ENVIRONMENT +Building the strength +and resilience of +regional economies and +communities located near +APA assets/projects +Working in partnership +with First Nations Peoples +to support better +outcomes for First Nations +communities and heritage +Supporting communities +in climate transition +outcomes and +adaptation activities +Protecting and enhancing +the natural environments +and biodiversity located +near APA assets/projects +Impacted community +needs and aspirations +People in vulnerable +circumstances Inclusion and diversity Access to energy and +energy affordability +Building human capability +e.g. skills +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +33 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_36.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d5354e8ba63081810a13ef90779be3c2befc7da --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_36.txt @@ -0,0 +1,46 @@ +Reconciliation +APA’s Sustainability Roadmap identifies First Nations +Peoples as a priority area for us to build organisational +capability, and in FY22 we committed to developing our +first Reconciliation Action Plan (RAP). +In FY23, we appointed a Reconciliation and First Nations +Manager to improve our First Nations governance, +performance and disclosures. We established a cross- +functional RAP Working Group (RAPWG), chaired by an +Executive Sponsor, to develop, implement and report on +a Reflect RAP. With the support of our external advisor, +Murawin Indigenous Voice Consultancy, we undertook an +extensive internal consultation to co-design a quality +RAP that meets Reconciliation Australia’s standards. + APA aims to launch our RAP in the first half of FY24. +Committing to a Reflect RAP allows APA to spend time +scoping and developing relationships with stakeholders, +defining our reconciliation vision and exploring our +sphere of influence, in preparation for future reconciliation +initiatives and RAPs. +Extensive consultation was undertaken to inform +development of the RAP, involving targeted, APA-wide +engagements, directly involving >700 employees. + +First Nations Peoples +At APA, partnering with First Nations Peoples is central +to our purpose. We seek to become a partner of choice for +First Nations stakeholders and supporters as we deliver +solutions for the energy transition. +Consultation with more than 700 employees +to develop our first +RECONCILIATION ACTION PLAN +Over 500 APA employees joined our +INAUGURAL NATIONAL +RECONCILIATION WEEK +DISCUSSION PANEL EVENT +Launched our new online cultural awareness +training module as part of our +FIRST NATIONS WORKFORCE +STRATEGY +$2.67 million spend on goods and services +with 24 directly engaged +FIRST NATIONS SUPPLIERS + BUILD +34 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_37.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..b81eaa65e40316f78739f71c425081c9cda43002 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_37.txt @@ -0,0 +1,71 @@ +First Nations engagement +APA holds Indigenous Land Use Agreements and +Cultural Heritage Management Plans with Traditional +Owners. These set out processes and plans for protecting +Aboriginal cultural heritage and engaging with Traditional +Owners in areas where we operate. +We are committed to continually improving processes +which guide First Nations engagement and Aboriginal +cultural heritage management. Our aim is to drive +improved land use and benefit sharing with First +Nations groups and contribute to community capacity +through training and employment in the energy sector. +This extends to joint venture and equity partnership +opportunities with Traditional Owners. +Our future engagement will focus on improving the +quality and depth of our relationships with First Nations +groups to ensure we respect their rights and interests and +adequately build in the priorities of Traditional Owners and +host communities throughout our assets lifecycle. +First Nations employment +With less than 1% of our workforce who identify as First +Nations Peoples compared to 3.2% of the national +population, we recognise more work is needed to ensure +our workforce reflects the communities where we operate. +In support of this we undertook initiatives in FY23 to +improve cultural safety for current and future First +Nations employees. +• In FY23, as part of the implementation of our First +Nations Workforce Strategy, we launched our new +online cultural awareness training module. +• Over 500 APA employees joined our inaugural +National Reconciliation Week discussion panel event +involving representatives of our RAP Working Group +and external First Nations thought leaders. The panel +discussed Reconciliation, APA’s RAP and the upcoming +Referendum. +• Over 100 employees have joined our Reconciliation +Allies @ APA community. +• In FY23, we engaged a new Employee Assistance +Program provider which has capability to provide +primary and secondary health and wellbeing support +to First Nations staff and family members. +• Our Reflect RAP will prioritise our focus and effort on +building cultural safety and cultural competency across +the entire organisation. +First Nations procurement +In FY23, APA continued its membership of Supply Nation, +a national non-profit organisation that aims to grow the +First Nations business sector through the promotion +of supplier diversity in Australia. In FY23, we directly +engaged 24 First Nations suppliers, spending +$2.67 million on goods and services. Suppliers are +comprised of Registered and Certified Supply Nation +as well as Land Councils. +APA’s Reflect RAP will include measurable actions and +deliverables to increase the diversity and quantity of +goods and services procured directly and indirectly from +First Nations-owned businesses. We intend to support and +participate in opportunities to build our network of local +and First Nations suppliers. +We will investigate including First Nations Participation +Commitments (FNPCs) in our contracts with key suppliers +to help facilitate more opportunities for First Nations +businesses. Engaging First Nations businesses via +FNPCs will enable more First Nations businesses to +participate in our supply chain indirectly, growing local +industry and employment opportunities for First +Nations communities. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +35 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_38.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a48ac5917e49d600a9f4d4ee6397c1739e24717 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_38.txt @@ -0,0 +1,55 @@ +Environment and heritage +APA performs an extensive range of activities across +a diverse range of environments. We are committed to +managing our risks and protecting the environment across +all areas of our business. Pursuing a high standard of +environment and heritage management is one way +we ensure we build and operate our assets in a socially +responsible manner. +In FY23, APA continued our program of strategic initiatives +to drive improved environmental performance. We have: +• Prepared and released updated environmental +procedures for Contaminated Site Management and Spill +Preparation and Response, including tools, templates and +guidelines. The procedures were supported by updates +to related business processes and systems and included +dedicated staff training and communications. As part of +this change a spill response online training module was +procured and launched. This has been completed by +450 employees. +• Continued our weed survey program investigating +the presence of invasive weeds on APA transmission +pipelines. The outcomes of these surveys will inform +long-term monitoring and management measures +and help to quantify potential impacts on nature +and biodiversity. +• Completed an assessment of APA’s water consumption +to improve our understanding of water usage and +determine a pathway forward for more comprehensive +water data capture. In addition, we identified all areas of +water stress in the areas that we operate and overlaid this +information in Geographic Information Systems (GIS) to +help inform decision making. +• Completed a waste assessment to understand waste +generation patterns and to better inform future work +regarding improved waste data capture and centralisation. +• Developed a framework to assess site contamination +hazards associated with chemical and hazardous +substance storage on APA sites and to manage +associated contamination risks. +LAUNCHED OUR NEW SPILL +RESPONSE ONLINE TRAINING +MODULE +completed by 450 employees +DEVELOPED A FRAMEWORK TO +ASSESS SITE CONTAMINATION +HAZARDS +associated with chemical and hazardous substance +storage on APA sites +EMBEDDED HERITAGE +MANAGEMENT +launched a 'Being Heritage Aware' training module +across the business + ACCELERATE +36 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_39.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..c5b83d032a09c42632bae49b5dce069fe78cb7c4 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_39.txt @@ -0,0 +1,84 @@ +A four-year Environment Improvement Program is +underway to elevate and embed environment processes +across the business. This involves uplift of procedures, +development of new innovative tools and implementation +for eight environment risk areas. Following full completion +of the program, all Environment Management Plans will be +updated to ensure alignment of content. +YEAR ENVIRONMENT RISK AREA STATUS +FY22 Heritage Completed +Pests, Diseases and Weeds Completed +FY23 Spill Preparation and Response Completed +Contaminated Site Management Completed +FY24 Soil Management Under way +Waste Management Pending +FY25 Biodiversity Pending +Water Pending +Environment compliance +In FY23 APA received seven penalty infringement notices +and two regulatory warning notices. +The penalty notices were received from the Queensland +Department of Environment and Science and had a total +penalty value of $34,461. The notices related to late +resubmission of Estimated Rehabilitation Cost +(ERC) calculations required under the Environmental +Protection Act, 1994, for six operating assets in +Queensland. APA promptly resolved the outstanding +information with the Department. +One warning notice was received from the First People +– State Relations (FPSR) portfolio of the Department of +Premier and Cabinet (Victoria). The warning notice related +to a ground disturbance activity that did not comply with +the approved Cultural Heritage Management Plan. +APA self-reported the incident and is working with the +stakeholders to resolve the matter. +The second warning notice related to missing information +required under APA’s Environmental Authority for the +Kogan North Central Gas Processing Facility. Whilst +information was available in technical air quality +monitoring reports, required details had not been +included in the Register of Fuel Burning and Combustion +Equipment Register for the facility. APA rectified the error +once aware of the issue. +Embedding heritage management +across the business +APA continued to improve heritage management +processes throughout FY23. +To facilitate continuous improvements in heritage +management we have: +• Completed a targeted heritage study on our +operational pipeline asset. The study aimed to +understand what ‘unrecorded’ heritage values might +existing on ageing infrastructure, constructed in times +when heritage management practices and recording +were vastly different to today. The heritage surveys, +undertaken by the Traditional Owners for the area, +identified important heritage values that do remain in +these areas. This study will be used to inform +APA’s approach nationally. +• Commissioned a review of APA’s heritage data +management. This review identified opportunities +for APA to improve its data management. The +recommendations will inform future heritage +improvements. +• Recruited an additional Heritage Specialist to drive +positive First Nations engagement and heritage +management outcomes on the Moomba Sydney +Pipeline. +Environment warning and penalty notices +● Environmental warning notices recieved +● Environmental penalty notices recieved +0 +1 +2 +3 +4 +5 +6 +7 +8 +9 +10 +FY19FY20FY21FY22FY23 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +37 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_4.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..404136ef3f02bfcb62ad02772def10fa4f7a318e --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_4.txt @@ -0,0 +1,87 @@ +Message from +the Chairman and +Managing Director +FY23 was another solid year of delivery for APA. +Over the past 12 months we delivered earnings and +distribution growth, invested in infrastructure to support +Australia’s energy security and refreshed our strategic +ambition – to be the partner of choice in delivering +infrastructure solutions for the energy transition. +With execution against this strategy building momentum, we +have revitalised our executive team to position us to capture +future growth opportunities. We also made good progress +on our three strategic priorities – ensuring our people +are engaged, motivated and safe; delivering operational +excellence; and creating value for investors and communities. +Financial performance +Our financial performance in FY23 was underpinned by +the reliability of our operations and the strength of our +infrastructure and capabilities. Total statutory revenue +(excluding pass-through revenue) was $2,353 million, up +5.1%, driven by a strong Energy Infrastructure performance +and initial contributions from Basslink. +Earnings before interest, tax, depreciation and amortisation +(Reported EBITDA) of $1,686 million represented a +3.4% increase on the previous year and on an underlying +EBITDA basis, earnings were up 2% to $1,725 million. +Statutory profit after tax (including significant items) was up +10.4% to $287 million. +Our performance enabled the Board to declare a final +distribution of 29.0 cents, taking the FY23 distribution to +55.0 cents per security, in line with guidance. This represents +an increase of 3.8% on FY22 and has been delivered in +parallel with our ongoing significant investment to build +capability and capitalise on emerging growth opportunities. +Our people +The skills and dedication of our people are critical to our +ongoing success, and their safety and engagement remain a +priority focus area. +We reported zero fatalities and zero serious injuries in FY23 +and achieved a 42% reduction in our potential serious harm +incident frequency rate compared to FY22. This was the +result of our focus on incident prevention and drive towards +continuous improvement in safety performance. +Our Total Recordable Injury Frequency Rate (TRIFR) increased +slightly this year following a 42% decrease in FY22. +Over the last 12 months we also progressed our strategy to +improve employee inclusion and diversity. Highlights included +increasing female representation across our total workforce +from 29.5% to 31.8% and in senior leadership roles from +30.4% to 31.4%. These trends are a direct result of the specific +action we’ve taken to attract women to APA and support their +career progression. +We also completed a comprehensive review of like-for-like +roles and where any gender pay equity gaps were identified, +we ensured they were immediately addressed. +Delivering operational excellence +Delivering operational excellence goes to the heart of our +social licence and underpins our ongoing financial results. In +FY23 we opened our new national state-of-the-art Integrated +Operations Centre – a facility that will allow us to support all +our customers and markets from one central location. +In process safety we recorded three Tier 1 incidents, including +a rupture on our Young-Lithgow pipeline during a flooding +event, as well as two power outages highlighting the need +to ensure we are always vigilant in the operation and +maintenance of our assets. +Creating value +Creating value is central to our success and underpins our +ability to deliver for customers, investors, communities and +our people. +In FY23 we brought clarity to our growth strategy. Our focus +is to be the partner of choice in our selected asset classes of +contracted renewables and firming, electricity transmission, +gas transportation and future energy. +We already have momentum with the execution of this +strategy. In FY23 we invested $845 million in growth +opportunities and completed several major projects. This +included the delivery of the largest remote-grid solar farm in +Australia, the Dugald River Solar Farm, the acquisition of the +Basslink interconnector which further expands our electricity +transmission business, delivery of the first stage of the East +Coast Gas Grid expansion and completion of the Northern +Goldfields Interconnect (NGI) pipeline, providing greater +energy security and supporting growth and transition in the +Western Australia resources sector. +2 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_40.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..b93ce2aadeba8ab273f44c9a41c0a73134953c70 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_40.txt @@ -0,0 +1,43 @@ +People and culture +APA is committed to being a responsible energy company +where people are proud to work. We are striving to create +a healthy, safe, inclusive and diverse workplace. +Building on our Inclusion and Diversity Strategy +The four pillars of APA’s Inclusion and Diversity +Strategy 2020 to 2025 are: +Gender Equity – We are committed to +a level playing field by giving all women +and men the same chance to reach +their potential. +Flexibility – Flex APA means we +encourage flexible ways of working and +empower people to think differently about +where, when and how work is completed +to meet the professional goals, priorities +and lifestyles. +Inclusive Culture – We are committed to +creating an inclusive culture that values +all people and addresses biases. (Age, +cultural background, LGBTIQ, disability, +indigenous, etc.). +Inclusive Leadership – Inclusive +leadership is about making sure our +people feel a sense of belonging, are +treated fairly and respectfully, and all our +people’s voices are heard and valued. +COMPLETED A COMPREHENSIVE +GENDER PAY EQUITY REVIEW +a like-for-like comparison of roles across the +organisation, with all identified gaps resolved +Launched APA’s +RESPECT@WORK PROCEDURE +INCREASED TOTAL FEMALE +REPRESENTATION TO 31.8% +among total employees, up from 29.5% in FY22 +Established +GENDER-NEUTRAL PARENTAL +LEAVE BENEFITS + MAINTAIN AND EVOLVE +38 +APA GROUP ANNUAL REPORT 2023 +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_41.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..f09d12ee6cfa4dd39666960ca3302f2aeaeda202 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_41.txt @@ -0,0 +1,84 @@ +In FY23, we have continued to build on our Inclusion and +Diversity (I&D) Strategy 2020 to 2025 and refreshed our +Inclusion and Diversity Policy. +We also completed a comprehensive Gender Pay Equity +Review. Recent investments in systems and better quality +data enabled a like-for-like comparision of roles across the +organisation, with all identified gaps resolved immediately. +We are working to strengthen APA policies and +remuneration processes to avoid any recurrence of +Gender Pay Gaps on like-for-like roles at APA in the future. +We have also revised our I&D strategy to focus on the +strategic components that will best accelerate the creation +of an inclusive culture, including: +• Refreshed content for our Inclusive Leadership +development program. This program was successfully +delivered to our Executive Leadership team in March +2023 with roll-out to General Managers and broader +leader population starting in August 2023. This program +reviews unconscious bias, everyday sexism and the link +between diversity and performance. +• Launched APA’s Respect@Work procedure. This aligns +with the I&D Policy and the APA Code of Conduct. +To complement this, a Respect@Work e-learning +module has also been implemented. The module +encourages employees to speak up if they witness +harmful behaviours including unlawful discrimination, +bullying, harassment, sexual harassment, sex-based +harassment, vilification and victimisation. +• Introduced APA’s enhanced gender-neutral parental +leave benefits aligned to industry benchmarks. +• Further embedded our Hybrid @ APA working model to +improve flexibility for employees. The model – with +40% of face-to-face office collaboration over the span +of a month – allows employees the flexibility to manage +their lifestyles and priorities outside of work. +• Achieved a 46% female representation in our 2023 +Graduate program, and a 53% female representation +in the 2022/23 intern programs. Further recruitment +efforts are underway to ensure our apprenticeship +program reaches a 50% gender split. +• Became sponsors and partners for Chief Executive +Women (CEW). +• Implemented targeted national campaigns to promote +I&D aligned to national recognition days (such as +International Women’s Day events, Pride month and +NAIDOC Week). +Supporting our people +Diversity performance +In FY23, under APA’s Gender Target Action Plan, female +representation among total employees increased to +31.8%, up from 29.5% in FY22. Senior Leader female +representation increased to 31.4%, up from 30.4%, with +female representation in the Executive Leadership Team +increasing from 29% in FY22 to 44% in FY23. The APA +Board has set a gender diversity target of 40/40/20, +recognising this may vary slightly depending on the size +and required skills mix of the Board. At 30 June 2023 +50% of APA’s non-executive directors were female. With +the appointment of Nino Ficca to the APA Board from 1 +September 2023, female representation will be 43%. +APA’s challenge is to increase the female representation in +operational divisions. These areas have a large proportion +of roles requiring science, technology, engineering and +mathematics (STEM) disciplines, in which females are +generally underrepresented. +In FY23, 25% of employees in operational divisions +identified as female, compared with 49% in our +corporate divisions. +APA is also working to improve age diversity. Over 91% of +employees are aged 30 years and over. We continued to +address this disparity during the year through a focused +early talent strategy, including an increase in our FY23 +Graduate Program intake, and identifying younger talent +through a continued focus on internships, traineeships, +and our National Apprenticeship Program. +The increase in workforce mobility experienced nationally +over the past 18 months continued. In response, APA +accelerated several attraction and retention strategies +throughout the year, with APA’s voluntary employee +turnover rate improving, at 11.5% for FY23, down from +13.4% in FY22. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +39 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_42.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..f08042bc26fcae3b7e0753932391f530db6517ef --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_42.txt @@ -0,0 +1,96 @@ +MAINTAIN AND EVOLVE +People and culture (continued) +Freedom of association and +collective bargaining +APA supports the right of all employees to choose +whether to be, or not to be, a union member. In FY23, +a number of unions were party to six of APA’s seven +Enterprise Agreements. APA provides industrial relations +training for operations leaders in Union Right of Entry and +other key Fair Work Industrial Relations principles, such as +freedom of association and unprotected industrial action. +APA does not tolerate any form of discrimination or +exclusionary behaviour. In FY23, APA recorded zero +incidents of discrimination. +For more information on our People and Employment +performance, see the FY23 Sustainability Data Book . +Investing in APA’s future +At APA, we continually develop our people’s core +compliance, technical and leadership skills. In FY23, +the APA workforce completed 40,542 hours of training, +averaging 15 hours per team member. +For more information on our People and Employment +performance, see the FY23 Sustainability Data Book . +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +30,920 +7,492 +2,130 +FY23 workforce training +hours by type +/uni25CF Mandatory APA + Compliance training +/uni25CF Role-specific training +/uni25CF Other training +1 Executive Leadership Team (ELT) - portion of employees aligned to WGEA Management Category: Key Management Personnel / Head of Business; Key Management +Personnel and internationally based ELT members (Excludes CEO). +40 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_43.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..8b4fa55189fbdef646e514218cfbd8d853aea7ab --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_43.txt @@ -0,0 +1,60 @@ +Leadership training and capability +APA continues to invest in developing our people, +seeking to maximise collaboration and effectiveness +and give everyone an opportunity to reach their full +career potential. +To further develop the capability of our leaders we offer a +suite of leadership development courses, including: +• Ignite Talent Program: targeted at identified future +leaders. This 12-month accelerated talent development +program focuses on understanding self and +leading others. +• Elevate Talent Program: designed for senior leaders +who have been identified as successors for Executive +Leadership Team roles. +• INSEAD Leadership Curriculum: in partnership with +INSEAD, this is a customised program for all leaders +which aims to lift the leadership capability bench +strength and ensure consistent practice and strategic +leadership. Our Executive Leadership completed this +Curriculum in February and General Managers in +May 2023. The one-week experiential learning program +focuses on developing senior leaders in Personal +Leadership, Interpersonal Leadership and Strategic +Leadership. +In addition, we have continued to invest in the Digital +Learning Library (Percipio), with thousands of courses, +videos, e-books, and audiobooks employees can access +any time, from any device. +Technical training +Over FY23 two new learning technologies were +introduced. A wearable digital headset (RealWear) was +trialled and introduced as a field-based assessment +methodology in the Certificate III Gas Supply (System +Operations). The success of the innovation resulted in +APA winning Silver at the Australian Training Awards, in +the category of Innovation in VET (Vocational Education +and Training). +Additionally, digital avatar software was used across +several learning programs to simulate face-to-face +engagement in eLearning courses. +A new national training program was developed and rolled +out for frontline Operations and Maintenance Technicians. +The Asset Maintenance for Technicians program is +focused on developing the knowledge and skills to +undertake routine maintenance tasks through completion +of 16 learner-led modules delivered using a blended +approach of eLearning, field-based coaching (Tech Notes) +and an assessment process. A new technician would +typically complete the course over an 18-24-month period. +Talent pipeline +As part of our Early Talent Strategy, graduate and intern +program intake numbers increased with a greater balance +of males and females: +• 2023 Graduate Program = 24 Graduates with an +11 Female: 13 Male gender split (46%) +• 2022/2023 Internship Program = 34 Interns with an +18 Female: 16 Male gender split (53%) +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +41 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_44.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..695739588ec2df6c494b9caa48682b265dc51aaa --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_44.txt @@ -0,0 +1,59 @@ +IMPROVING SYSTEMS AND PROCESSES +IMPROVE HEALTH, WELLBEING +AND WORKLOAD MANAGEMENT +• Commitment to proactive process improvement +• Enable efficiency and systems to drive high +performance +• Embed nimble behaviour through new recognition +program and continuous improvement/productive +habits program. +• Proactively increase opportunities for ELT visibility +• Enable more 1:1 employee interaction with senior +leaders +• ELT personal accountability +• Educate leaders to have meaningful +HSEH conversations +• Commit to prioritising work to ensure workload is +managed to an acceptable level +• Educate in respect at work to further minimise the risk +of bullying and harassment +• Improve access to Health and Wellbeing support +services for all employees +SENIOR LEADERSHIP VISIBILITY/ACCESSIBILITY +Safety, health and +wellbeing +APA’s foremost priority is the health, safety and wellbeing +of our workforce and our communities. We want everyone +to go home healthy and safe every day. We strive for +world-class performance in Health, Safety and Wellbeing. + MAINTAIN AND EVOLVE +Delivering against our Health, Safety, +Environment and Heritage (HSEH) Strategy +APA’s new HSEH Strategy commenced in FY23 and all +initiatives have been delivered in line with the schedule. +Some of the key initiatives undertaken in FY23 are +highlighted below. +Leadership collaboration and learning +HSEH Interactions +In FY23, 4,334 HSEH Interactions were completed by our +leaders. This was a 13% increase from FY22, and reflects a +consistent effort by leadership across the organisation to +actively engage in meaningful conversations. +Health and safety survey +A Health and Safety survey was undertaken across the +business in December 2022 that focused on four key +areas including: +• Health and Wellbeing +• Safety Systems +• Safety Leadership +• Safety Engagement +With a participation rate of 70%, APA achieved an +overall score of 76%, 1% above the industry benchmark. +Safety Engagement, Safety Leadership, and Health and +Wellbeing scores exceeded the benchmark while Safety +Systems was below benchmark. +The results of the survey have been used to inform +improvement opportunities which will be incorporated +into the APA Culture Action Plan. +42 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_45.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a88415266d6eb60c8aa99f2224c6a84821a98ce --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_45.txt @@ -0,0 +1,68 @@ +Health and Wellbeing +Health and wellbeing framework +We have implemented the evidence-based framework, +Thrive at Work, which has been adapted to include all +health-related initiatives. The framework provides for a +balanced approach to Health and Wellbeing prioritisation +and management. +Psychosocial risk management +APA has taken steps to respond to recent Work Health +and Safety (WHS) legislation changes with the inclusion +of Psychosocial Risk within the HSEH Risk Register. +A new WHS management system protocol has been +drafted and an assessment of psychosocial hazards and +controls completed. An action plan has been developed +to ensure continued review and alignment of systems +and processes. +Improved health and wellbeing support +To test the effectiveness of support mechanisms +associated with psychosocial risk management we +completed a review of the Employee Assistance Program +(EAP). As a result of the review, a decision was made to +partner with Sonder – a best-in-class, technology-enabled +platform which assists APA employees, contingent +workers and their families across all aspects of Health. +Sonder will link other health and wellbeing programs and +enable access for our people when they need assistance. +Systems, technology and innovation +Incident, near miss and hazard management review +In FY23, we completed a review of the Incident +Management and Investigation procedures across +APA, resulting in the development and approval of the +Incident, Near Miss and Hazard Management Protocol. +This Protocol provides the overarching process for +reporting all Incidents, Near Misses and Hazards, including +Regulatory Events, and Harmful Behaviours. +Serious Harm Prevention +Improved assurance schedule targeting critical risk +The FY23 Assurance Schedule focused on APA’s critical +risks that are linked to our Fatal Risk Protocols. This +schedule was designed to measure the effectiveness +of critical risks across various APA operations. +The areas covered in the FY23 Assurance Schedule +included: +• Contractor Management +• Excavation and Trenching +• Permit to Work +• Driving +• Process Safety +• Safety Management Plans +In FY23, a total of 17 Line 2 assurance HSEH Management +System activities were undertaken according to the +schedule. This included auditing 1,332 controls, resulting +in an overall compliance rating of 97% across all +assessed areas. +4,334 HSEH INTERACTIONS +COMPLETED BY OUR LEADERS, +18% increase from FY22 +76% HEALTH AND SAFETY +SURVEY SCORE, +1% above industry benchmark +PARTNERED WITH SONDER; +a best-in-class, technology-enabled platform which +assists APA employees, contingent workers and their +families across all aspects of Health +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +43 +OPERATING & FINANCIAL REVIEW +The secret object #1 is a "chair". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_46.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4d86c3db676f0b675e7b6404a3839b6019672b7 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_46.txt @@ -0,0 +1,57 @@ +MAINTAIN AND EVOLVE +Safety, health and wellbeing (continued) +HSEH digital roadmap +In FY23, we undertook a comprehensive review of +APA’s current suite of digital systems to support the +business processes stipulated by the HSEH Management +System, identifying the key areas where improvements +in our digital systems are necessary to support our +HSEH Strategy over a five-year horizon. +The roadmap identified seven key areas where significant +improvements were required over the next five years: +• Mobile-enabled digital tool for employees +and contractors +• Integrated digital HSEH Incident, Near Miss and Hazard +Management System +• New HSEH reporting and analytical framework +supporting current and future digital tools +• Integrated Contractor Management System +• Digital solutions for HSEH inductions +• Digital solutions for Permit to Work +• Predictive Analytics for HSEH +In FY23 we have focused on collating the business +requirements for the first three items in our Roadmap. +They represent the foundational building blocks of our +digital strategy. In FY24 we will be undertaking the +procurement and implementation of these systems. +HSEH data and analytics improvements +In FY23, we rolled out the HSEH Dashboard and Detailed +Reports to provide the business with a consolidated view +of APA’s leading and lagging HSEH Key Performance +Indicators (KPIs). The dashboards are updated on a +monthly basis. +Process safety +In FY23 we made progress against our process safety +improvement initiatives identified in the HSEH Strategy. +This included commencement of the Management of +Change (MOC) Uplift initiative where we have: +• Conducted a thorough current state MOC review +• Developed and received endorsement for a Business +Requirements Document +The next stage of the MOC Uplift initiative is to implement +the specification requirements in our Enterprise Asset +Management System prior to rolling out to the business in +the second half of FY24. +The Process Hazard Analysis (PHA) Revalidation Uplift +initiative progressed in FY23 by completing the Moomba +Hub and Dalby Compressor Station HAZOP Studies. +In FY24 we will continue to revalidate PHAs on critical +operating assets. +The Safety Critical Element (SCE) Management and +Assurance initiative has delivered and published +SCE dossiers for all transmission assets and developed +a draft SCE performance standard. In FY24 we will revise +the SCE Lifecycle Process Standard and implement this +in our Enterprise Asset Management System. +44 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_47.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..96e65cc450920e069190414952fcfd2b543e4ed8 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_47.txt @@ -0,0 +1,83 @@ +Measuring health and safety performance +In FY23, our key focus areas included contractor safety +across our projects and the identification of incidents +and near misses that could have caused serious harm +to our employees and contractors. We continue to drive +our visible leadership initiatives through the key leading +indicators of HSEH Interactions and High Potential +Hazard Identification. +By focusing on visible leadership through HSEH +Interactions, leaders can understand the challenges +workers face and how they can be addressed to improve +safety performance. HSEH interactions underwent +an improvement exercise with the introduction of +subcategories of focused interactions that include: +• Health and safety – Focuses on general health +and safety +• Environment and heritage – Focuses on general +environment and heritage +• Critical control – Focuses on interacting with a work +group on the implementation of critical controls for +high-risk activities +• Wellbeing – Introduced to improve health and +wellbeing with a focus on psychosocial risk +management +In FY24, there will be a focus on increasing the number +of Critical Control and Wellbeing interactions to enhance +and complement our Serious Harm Prevention and +Wellbeing initiatives. +The two key lag indicators for safety performance +in FY23 were Potential Serious Harm Incident Frequency +Rate (PSHIFR) and Total Recordable Injury Frequency +Rate (TRIFR). +Safety lead indicators +Under APA’s HSEH Interactions metric, APA’s leaders +have safety-focused discussions on hazard identification, +risk mitigation and corrective action mechanisms with +employees. In FY23, our leaders completed over +4,334 HSEH Interactions, an increase of 13% on FY22. +These interactions help to keep safety front-of-mind +for everyone. +Safety lag indicators +In FY23, APA did not record any Fatalities or Actual +Serious Harm incidents. +In line with our Serious Harm Prevention initiatives, +APA recorded 33 Potential Serious Harm Incidents +versus 46 in FY22. The Potential Serious Harm Incident +Frequency Rate for FY23 was 3.74, compared to +6.51 in FY22 – a 42% decrease. +At the end of FY23, APA’s combined employee and +contractor TRIFR was 3.4 Recordable Injuries per million +hours worked. This represents a slight increase of +3% on the FY22 figure of 3.3. This equates to 30 people +requiring medical intervention, up from 23 in FY22, against +a 24.8% increase in the total number of hours worked by +our employees and contractors when compared to FY22. +Safety compliance +APA received one regulatory (safety) penalty infringement +notice and 20 regulatory (safety) improvement notices in +FY23. Workplace Health and Safety Queensland issued +the infringement notice on an APA contractor undertaking +electrical repairs on a number of inverters at our Dugald +River Solar Farm without the appropriate electrical +licences. This resulted in a $2,000 penalty. The +20 improvement notices were issued by the same +Regulator during an inspection at the Dugald River Solar +Farm. All notices were related to minor administrative +matters at the site and were promptly rectified. +Assurance +We engaged Deloitte to undertake limited +assurance of selected key performance indicators +included in the Safety Performance section of +our FY23 Sustainability Data Book, in accordance +with the Australian Standard on Assurance +Engagements ASAE 3000 Assurance Engagements +other than Audits or Reviews of Historical Financial +Information issued by the Australian Auditing and +Assurance Standards Board (ASAE 3000). Details +of the assurance scope, procedures and conclusion +are included in the Assurance Report on page 200 +of this report. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +45 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_48.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..113d4bde698273b42ccf30b50782fee1232abe86 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_48.txt @@ -0,0 +1,46 @@ +Customers and suppliers +We work with our customers to deliver affordable and +low emissions solutions and a better customer experience. +We keep our customers informed about our assets to help +them better meet peak seasonal demands and understand +the impact of new regulatory changes. And we step +in to assist where we can, including when responding +to natural disasters. +Keeping customers at the heart of what we do +FY23 was another dynamic year for the energy sector. +The energy transition continued at pace with +decarbonisation a key driver for our customers. With the +conclusion of pandemic restrictions, APA continued to +prioritise customer engagement and communications, +innovation and customer experience. We sought to put +customers at the centre of our decisions, activities +and planning as we worked to deliver on our Energy +Charter commitments.  +We continued to take a customer-led approach to +the development of new offers, working to meet our +customers’ needs by delivering reliable, affordable and +low emissions solutions. We sought to better inform +our customers to help them deal with the volatility of +peak winter/summer markets as well as new regulatory +requirements that might affect day-to-day operations. +Finally, we worked to ensure we supported our +customers where they faced temporary hardships +through natural disasters. +As in previous years, APA’s customer-driven approach +included an annual feedback survey and an action plan +in response. +HOSTED WINTER READINESS +FORUM +to keep east coast customers better informed +about asset and service availability through the +peak winter period +Launched our +RESPONSIBLE PROCUREMENT +STRATEGY +AWARDED THE CIPS CORPORATE +ETHICS MARK1 +demonstrating our global commitment to ethical +procurement practices +1 Ethics Register | CIPS. +46 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_49.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f938e2fe191565ec0b0aa1ba369b8b562b63e4b --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_49.txt @@ -0,0 +1,77 @@ +Customer performance  +APA’s annual commercial customer feedback survey was +completed in November 2022. It involved a quantitative +survey administered by an independent external agency. +The key deliverable from the survey is APA’s Customer +Experience Score (CES), an average performance score +across attributes such as trust, responsiveness, value, +ease, rapport and innovation.  +Our CES was 6.7 out of 10, representing an improvement +from our 2021 score of 6.3. The result was driven by +improvements in customer relationships with our key +commercial counterparts. This reflected the success of +our 2022 action plan which focused on re-invigorating +relationships, re-establishing APA’s industry leadership +and re-prioritising face-to-face meetings after COVID. +The survey also highlighted the opportunity to better +engage senior representatives within our customer groups +and work harder with specific accounts. This means +prioritising key attributes such as ease of doing business +and innovation, whilst also delivering on commitments, +and continuing to work on improved communications +and understanding of customers’ concerns. The survey +informed our updated 2023 action plan which has now +been in implementation for six months. +Customer experience  +In addition to our annual survey, we regularly monitor +and manage the customer experience through: +• Dedicated account managers assigned to all +commercial customers +• A quarterly customer experience dashboard focused +on practical elements contributing to customers’ +experience of APA +• Key account management with a monthly review +meeting to monitor customer feedback, service +delivery and performance across APA’s key customers. +We also maintain a commercial customer complaints +process with four complaints received during FY23 – this +compares with 10 complaints in FY22, so a significantly +better performance. The complaints related to land +access, metering, processes around rejection of non-firm +nominations, and the scope of protection works. We are +also working to understand how we can better monitor +and respond to customer impacts related to power +outages as we grow our portfolio of electricity assets. +As well as working to resolve each complaint, we +conducted ‘lessons learnt’ reviews to ensure any +underlying issues driving the complaint do not recur.  +Communications and industry leadership +In response to customer feedback, we worked to keep +customers better informed about the availability of our +assets and services through peak winter and summer +periods. We also acted to make sure they understand the +impact of key regulatory changes. This included: +• A Customer Forum on east coast gas asset winter +readiness and the new AEMO gas system reliability and +supply adequacy powers +• Approaching winter, regular communications on +contracted capacities of key APA east coast assets +for north-south gas transport; and on progress on key +asset upgrades to support winter peak gas transport. +We also published advice on customer behaviours that +help manage peak winter loads +Support for vulnerable customers +In keeping with our Energy Charter commitments, +a monthly ‘Vulnerable Customer’ review meeting is held, +monitoring commercial customers who may be facing +hardship or credit issues and identifying opportunities +for early assistance. +During the year, two customers were provided with +assistance to help them deal with the impacts of +significant flooding, with one entering into a deferred +payment program and the other provided with a +temporary extension of payment terms. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +47 +OPERATING & FINANCIAL REVIEW +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_5.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0802b5f26ba371472ae4b33c6efcbd9206ed3bd --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_5.txt @@ -0,0 +1,76 @@ +Positioning for the energy transition +APA has a critical role to play in the energy transition and +we look forward to progressing the opportunities in front of +us. The strength of our infrastructure and capabilities will be +central to this. +In FY23 we took important steps to further build the capability +we need to deliver our strategy and capitalise on these +opportunities. We’ve done this by investing in our people and +bringing new skills and experiences into the organisation, +including in our executive leadership team. +We appointed Adam Watson as Chief Executive Officer and +Managing Director in December. Over the past year we also +welcomed Liz McNamara as Group Executive, Sustainability +and Corporate Affairs, and Vin Vassallo as our Group +Executive, Electricity Transmission. We also announced +the appointment of Petrea Bradford as Group Executive, +Operations, and Garrick Rollason as Chief Financial Officer, +who will both join APA in the first half of FY24. +Similarly, we have recently announced the appointment of +Nino Ficca as a Non-Executive Director, with effect from +1 September 2023, who will bring significant electricity +transmission and energy market experience to APA. +These appointments complement the existing diverse skills +and experiences of our executive leadership team and Board +and will ensure we are well positioned to deliver on the next +phase of growth. +Building a sustainable business +Incorporating sustainability into everything we do is central +to how we operate. +Further progress against our FY21-24 Sustainability Roadmap +was delivered throughout the year. This included the release +of our first Climate Transition Plan (CTP), detailing our +commitment and pathway to net zero and the development +of our inaugural Reconciliation Action Plan that we will launch +in FY24. +This year we have also brought our non-financial or +sustainability reporting into our Annual Report as a first step +towards integrated reporting and look forward to progressing +this further for securityholders in FY24. +Our FY23 Climate Report will also be released ahead of the +FY23 Annual General Meeting, satisfying our commitment to +report annually on the progress against our CTP. +Delivering for securityholders +Over the past three years we have invested in ongoing safe +and reliable operations, funded the acquisition of Basslink +as well as $1.6 billion in organic growth opportunities +from existing cash flow and debt, all while maintaining an +investment grade credit rating. In FY23 we again delivered +growth in EBITDA and distributions. +Reflecting our ongoing investment in the business and the +significant opportunities presented by the energy transition, +in FY24 we will ensure our distribution growth is appropriately +balanced to accommodate ongoing investment in the +business and drive long-term value accretive growth. +Looking ahead +Our progress in FY23 provides a strong foundation for us +to build on. We have clarity around our customer focused +strategy and the role APA can play in the energy transition. +The growth opportunity set for our organisation is large. We +are focused on continuing to invest in our business, executing +our growth strategy and ensuring we can continue to deliver +sustainable earnings growth for securityholders over the +long-term. +On behalf of the Board and leadership team, we would like to +thank our employees for their ongoing efforts and dedication. +We would also like to thank our customers, communities and +other stakeholders for their continuing engagement. +Finally, our sincere thanks to our securityholders for their +support. We look forward to updating you over the year ahead. +Michael Fraser +Chairman +Adam Watson +Chief Executive Officer +and Managing Director +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +3 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_50.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..26fd4709796100e063df89797e8d4558c9b533fc --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_50.txt @@ -0,0 +1,41 @@ +Striving to improve supply chain sustainability performance +APA developed and launched its first Responsible Procurement Strategy during the year. This supports the execution +of APA’s Sustainable Development Investment Program by aligning to priority investment areas. +Early initiatives included building awareness of the strategy across business groups and starting to improve supplier +diversity capability by engaging with First Nations businesses as part of our Supply Nation membership. +An initiative to better understand emissions in our supply chain and identify a roadmap of future opportunities to +reduce emissions was undertaken in collaboration with the Net Zero and Climate team to support net zero ambitions. +Responsible Procurement Strategy +Outlined below is APA’s Responsible Procurement Strategy. It is aligned to APA's Sustainable Development Investment +Program and the four priority investment areas. +Optimise the full life cycle of goods to consider +circularity opportunities and achieving net zero targets +Create positive community impact through +supplier diversity +Monitor and address sustainability risk in the procurement of high-risk goods and services +VISION We strengthen communities through impactful supplier relationships with a responsible and resilient supply chain +SUSTAINABILITY STRATEGY +INVESTMENT AREAS: +TARGETED AREAS +OF ACTION +THE STRATEGY +SUPPORTS THE +FOLLOWING SUSTAINABLE +DEVELOPMENT GOALS: +PROCUREMENT +SPECIFIC GOALS +ENABLERS +Regional and remote +communities +First Nations People Climate transition Natural environment +Supporting local +communities and human +rights protection +Increase supplier diversity Enhance climate transition Optimise the full life +cycle to consider +circularity opportunities +Capacity and capacity building Digital and technology Governance and reporting +Customers and suppliers +(continued) +48 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_51.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..bdbee638e35d36a69b5b82d742609469967b3c57 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_51.txt @@ -0,0 +1,39 @@ +Combatting modern slavery +As part of the continuous improvement approach to +APA’s Modern Slavery Program, a number of key initiatives +were progressed through the year. +After carefully evaluating several providers and +undertaking a pilot due diligence exercise we +implemented a technology solution in use from +FY24 for modern slavery and ESG risk in our supply chain. +The third-party solution assesses the modern slavery/ +ESG risk of a potential supplier and plans ongoing due +diligence accordingly. It also assesses risk of the existing +supplier base. The ability to assess our supply chain +ESG risk will support our broader responsible +procurement strategy. +Implementation of the solution removes the need for +manual data analysis and reduces risk of human error. It +also enables access to a broader range of source data +providing information about high-risk suppliers we would +not otherwise have access to. +As part of our Modern Slavery commitments, we have +also undertaken a program maturity assessment to +identify recommendations for FY23 and further improve +our capability to identify, assess and monitor risk and +supplier performance. +A deep dive into our renewable energy suppliers was also +undertaken as part of the pilot due diligence exercise to +identify further steps to reduce risk of modern slavery. +Renewable energy is recognised globally as a high-risk +area for forced labour and child labour. It’s imperative we +keep abreast of these emerging risk areas. +APA was awarded the Chartered Institute of Procurement +and Supply Corporate Ethics Mark 1 during the year. The +Ethics Mark is a global commitment to ethical procurement +practices and it must be renewed annually to demonstrate +ongoing commitment. +1 Ethics Register | CIPS +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +49 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_52.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..809c1e09dcb27a12585efa994d4bf7b59b243939 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_52.txt @@ -0,0 +1,59 @@ +Performance +Financial performance +Earnings before interest and tax (EBIT) and EBIT before depreciation and amortisation (EBITDA) excluding significant items are +financial measures not prescribed by Australian Accounting Standards (AIFRS) and represent the profit under AIFRS adjusted for +specific significant items. The Directors consider these measures to reflect the core earnings of APA Group, and therefore these +are described in this report as ‘underlying’ measures. +In FY23, APA delivered a solid result, as shown in the table below. Underlying EBITDA increased 2.0% to $1,725 million (FY22 +$1,692 million) representing growth from the Energy Infrastructure segment, partly offset by lower contributions from the Asset +Management and Energy Investment segments as well as higher corporate costs. Statutory profit after tax including significant +items increased by 10.4% to $287 million (FY22 $260 million) benefiting from lower non-operating items and net finance costs. +Free cash flow declined 1.0% to $1,070 million (FY22 $1,081 million) largely due to higher FY23 Stay in Business capital expenditure. +On 23 August 2023, the Directors announced a final distribution of 29.0 cents per security, taking APA’s FY23 total distributions +to 55.0 cents per security, in line with guidance. This represents an increase of 3.8%, or 2.0 cents, over the FY22 distributions of +53.0 cents per security. +Key financial data for FY23 +30 June 2023 +$m +30 June 2022 +$m +Changes +$m %1 +Statutory Revenue +Total revenue 2,913 2,732 181 6.6% +Pass-through revenue2 512 496 16 3.2% +Total revenue excluding pass-through 2,401 2,236 165 7.4% +Underlying EBITDA3 1,725 1,692 33 2.0% + Fair value gains/(losses) on contract for difference 12 (30) 42 140.0% + Technology transformation projects (67) (22) (45) (204.5%) + Wallumbilla Gas Pipeline hedge accounting discontinuation (37) (15) (22) (146.7%) + Basslink debt revaluation, interest and integration costs 47 12 35 291.7% + Basslink AEMC market compensation 15 – 15 – +Payroll review (9) (7) (2) (28.6%) +Total reported EBITDA 1,686 1,630 56 3.4% +Depreciation and amortisation expenses (750) (735) (15) (2.0%) +Total reported EBIT 936 895 41 4.6% +Net finance costs and interest income (459) (483) 24 5.0% +Significant items + Reversal of impairment of property, plant and equipment – 28 (28) (100.0%) +Profit before income tax 477 440 37 8.4% +Income tax expense (190) (180) (10) (5.6%) +Statutory profit after tax including significant items 287 260 27 10.4% +Profit after tax excluding significant items 287 240 47 19.6% +Free cash flow4 1,070 1,081 (10) (1.0%) +Free cash flow per security (cents) 90.7 91.6 (0.9) (1.0%) +Earnings per security including significant items (cents) 24.3 22.1 2.2 10.0% +Earnings per security excluding significant items (cents) 24.3 20.4 3.9 19.1% +Distribution per security (cents) 55.0 53.0 2.0 3.8% +Distribution payout ratio (%) 5 60.6 57.9 2.7 4.7% +Weighted average number of securities (millions) 1,180 1,180 – – +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Pass-through revenue is offset by pass-through expense within EBITDA. Any management fee earned for the provision of these services is recognised +as part of asset management revenues. +3 Underlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes recurring items arising from other activities, transactions +that are not directly attributable to the performance of APA Group's business operations and significant items. +4 Free cash flow is Operating cash flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex +includes operational assets lifecycle replacement costs and technology lifecycle costs. +5 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow. +50 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_53.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..63fc9778222ffc6cbd8db78f6ac8619033b5b924 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_53.txt @@ -0,0 +1,57 @@ +Business segment performance and operational review +APA's principal activities are as follows: +• Energy Infrastructure – APA’s wholly or majority owned energy infrastructure assets across gas transmission, compression, +processing, storage and electricity generation (gas and renewables) and transmission. +• Asset Management – The provision of asset management and operating services for third parties and the majority of APA’s +investments. +• Energy Investments – APA’s interests in energy infrastructure investments. +FY23 statutory reported revenue and underlying EBITDA performance of each segment +30 June 2023 +$m +30 June 2022 +$m +Changes +$m %1 +Revenue2 +Energy Infrastructure + East Coast Gas 808 805 3 0.4% + West Coast Gas 369 342 27 7.9% + Wallumbilla Gas Pipeline 622 581 41 7.1% + Electricity Generation and Transmission 409 354 55 15.5% +Energy Infrastructure total 2,208 2,082 126 6.1% +Asset Management 114 115 (1) (0.9%) +Energy Investments 23 28 (5) (17.9%) +Other non-contracted revenue 8 13 (5) (38.5%) +Total segment revenue (excluding pass-through) 2,353 2,238 115 5.1% +Pass-through revenue 512 496 16 3.2% +Wallumbilla Gas Pipeline hedge accounting discontinuation (37) (15) (22) (146.7%) +Income on Basslink debt investment 50 12 38 316.7% +Basslink AEMC market compensation 15 – 15 – +Unallocated revenue3 20 1 19 1,900.0% +Total revenue 2,913 2,732 181 6.6% +EBITDA +Energy Infrastructure +East Coast Gas 645 646 (1) (0.2%) +West Coast Gas 305 289 16 5.5% +Wallumbilla Gas Pipeline 4 620 578 42 7.3% +Electricity Generation and Transmission 223 194 29 14.9% +Energy Infrastructure total 1,793 1,707 86 5.0% +Asset Management 56 73 (17) (23.3%) +Energy Investments 23 28 (5) (17.9%) +Corporate costs (147) (116) (31) (26.7%) +Underlying EBITDA⁵ 1,725 1,692 33 2.0% +Fair value gains/(losses) on contracts for difference 12 (30) 42 140.0% +Technology transformation projects (67) (22) (45) (204.5%) +Wallumbilla Gas Pipeline hedge accounting unwind (37) (15) (22) (146.7%) +Basslink debt revaluation, interest and acquisition costs 47 12 35 291.7% +Basslink AEMC market compensation 15 – 15 – +Payroll Review (9) (7) (2) (28.6%) +Total reported EBITDA6 1,686 1,630 56 3.4% +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Refer to Revenue Note 4 for additional disclosure on revenue streams from contracts with customers disaggregated by geographical location and major sources. +3 Interest income is not included in calculation of EBITDA but nets off against interest expense in calculating net interest cost. +4 Wallumbilla Gladstone Pipeline is separated from East Coast Grid in this table as a result of the significance of its revenue and EBITDA in the Group. +It is categorised as part of the East Coast Grid cash-generating unit for impairment assessment purposes. +5 Underlying FY23 EBITDA excluding the earnings from Basslink and the Orbost Gas Processing Plant was up 1.8% to $1,697m (FY22: $1,667m). +6 Excludes significant items. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION 51 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_54.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7f3572b00bf5d5c877d012e040aeb8e67260a95 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_54.txt @@ -0,0 +1,45 @@ +Energy Infrastructure +In FY23, Energy Infrastructure is the largest business segment contributor to Group segment revenue at 93.8% (excluding pass- +through) and 95.7% of underlying EBITDA (before corporate costs). +Of this revenue: +• 88% was derived from either long-term, take-or-pay contracts or regulated assets, as shown below, providing predictability +and cash flow stability. +• 85% was derived from investment grade counterparties with a diversified customer base across the energy, utility, resources +and industrial sectors. +FY23 Energy Infrastructure Revenue +by Customer Industry Segment +/uni25CF Energy 46% +/uni25CF Utili ty 25% +/uni25CF Resource s 25% +/uni25CF Industrial & other 4% +FY23 Energy Infrastructure Revenue +by Counterparty Credit Rating/one.numr +/uni25CF A-rated or better 44% +/uni25CF BBB to BBB+ rated 34% +/uni25CF Investment grade 7% +/uni25CF Not rated 10% +/uni25CF Sub-invest ment grade 5% +FY23 Energy Infrastructure +by Revenue Type +/uni25CF Capaci ty charge revenue 77% +/uni25CF Regulate d revenue 8% +/uni25CF Contra cted fixed revenue 3% +/uni25CF Throughput charge and + other variable revenue 10% +/uni25CF Flexible shor t-term services 1% +/uni25CF Other 1% +/tildecomb.short85% +investment +grade +/tildecomb.short88% +Take or pay/ +regulate d +Diverse +source of +revenue +1 An investment grade credit rating from either S&P (BBB- or better) or Moody’s (Baa3 or better), or a joint venture with an investment grade average +rating across owners. Ratings shown as equivalent to S&P’s rating scale. +Performance +(continued) +52 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_55.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b9fb11319dc9d0b591d596595eb2e8d8cdb11ec --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_55.txt @@ -0,0 +1,51 @@ +Comparing FY23 performance to FY22 +East Coast Gas +Underlying EBITDA benefited from higher inflation-linked revenues, a stronger contribution from the Victorian Transmission +System and some favorable short-term contracting. This was offset by higher costs including Young-Lithgow repairs, and a lower +contribution from the Orbost Gas Processing Plant which was sold in July 2022. +West Coast Gas +Underlying EBITDA largely benefited from higher inflation-linked revenues, partly offset by higher costs. +Wallumbilla Gladstone Pipeline +Underlying EBITDA benefited from a 7.5% increase in tariffs on 1 January 2023, partly offset by FX. +Electricity Generation and Transmission +A part-year contribution from Basslink drove higher earnings. +0 +500 +1,000 +1,500 +2,000 +2,500 +FY23FY22FY21FY20 +Energy Infrastructure Revenue by segment +(A$m) +/uni25CF East Coast Gas /uni25CF West Coast Gas +0 +400 +800 +1,200 +1,600 +2,000 +FY23FY22FY21FY20 +Energy Infrastructure EBITDA by segment +(A$m) +/uni25CF Wallumbilla Gladstone Pipeline /uni25CF Power Generation +Energy Infrastructure EBITDA by asset +(A$m) +/uni25CF Roma Brisbane Pipeline /uni25CF Wallumbilla Gladstone Pipeline /uni25CF Carpentaria Gas Pipeline +/uni25CF Diamantina Power Station +/uni25CF SESA Pipeline and other SA assets +/uni25CF Other WA assets +/uni25CF Amadeus Gas Pipeline /uni25CF Gruyere Power Station /uni25CF Badgingarra Wind and Solar Farms /uni25CF Darling Downs Solar Farm +/uni25CF Emu Downs Wind and Solar Farms /uni25CF Pilbara Pipeline System /uni25CF Mondarra Gas Storage + and Processing Facility +/uni25CF Orbost Gas Plant /uni25CF GoldFields Gas Pipeline /uni25CF Eastern Goldfields Pipeline +/uni25CF Other QLD assets /uni25CF Victorian Systems/uni25CF Moomba Sydney Pipeline + and other NSW pipelines +/uni25CF South West Queensland Pipeline +FY23 +FY22 +FY21 +FY20 +0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +53 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_56.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..37410fafbcbcc61b6495a4d99885fdeb5e080a05 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_56.txt @@ -0,0 +1,94 @@ +Performance +(continued) +Asset Management +In FY23, Asset Management contributed 4.8% to Group segment revenue (excluding pass-through) and 3.0% of underlying +EBITDA (before corporate costs). +APA’s major third-party customers are Australian Gas Networks Limited (AGN), Energy Infrastructure Investments (EII) and GDI, +who receive asset management services under long-term contracts. +The decrease in Asset Management EBITDA in FY23 compared to FY22 was driven by a combination of lower margin activities +and reduced customer contributions which fluctuate from one period to the next. Customer contributions for FY23 were +$15 million (FY22 $28 million). +0 +20 +40 +60 +80 +100 +120 +FY23FY22FY21FY20 +Asset Management Revenue +(A$m) +/uni25CF Underlying Asset Management Revenue +/uni25CF One-off Customer Contributions +0 +20 +40 +60 +80 +100 +120 +FY23FY22FY21FY20 +Asset Management EBITDA +(A$m) +/uni25CF Underlying Asset Management EBITDA +/uni25CF One-off Customer Contributions +Energy Investments +In FY23, Energy Investments contributed 1.0% to Group segment revenue (excluding pass-through) and 1.3% of underlying +EBITDA (before corporate costs). FY23 EBITDA was lower than in FY22 due to reduced equity income from SEA Gas as a result +of contract changes. +Asse t and ownership intere sts Asset details a nd A P A services P a r t ners +Mortlak e Gas Pipeline 50% +S E A Gas +(Mortla k e ) +P art nership +83 km gas pipelin e co nnectin g th e Otwa y +G a s Pla nt t o t he M ort lak e P o w er S t a t ion +R E S T +SEA Gas Pipeline 50% +Sout h E ast +A ustralia +G a s Pt y L t d +687 km gas pipeline from Iona a n d +P ort Campbell in Vict oria to Adela i d e +R E S T +North Brown Hill Wind Farm 2 0 .2% +E II2 +1 32 MW wind fa rm +in Sout h A u s tralia +Foresight +(ICG were taken +over in 2022) +Osaka Gas +Allgas Gas Distribution Network 20% +GDI (E II) +3,900 km Allgas gas distribut ion + +1 1 4 ,00 0 connect ions +Marubeni +Corporat ion +K ogan North Processing Plant +Directlink and Murraylink Electricity +Interconnectors +Nifty and T elfer Gas Pipelines +Wickham P oint and Bonaparte Gas Pipelines +1 9 .9% +E nergy +Infrast ruct ure +Investment s +G a s process ing fa cilities 12 TJ/day +E lect ricit y t ransmissi on 243 km +G a s pipelines t o t alling 786 km +MM Midst rea m +Investment s +C ORP O R A T E S E R VIC E S +C ORP O R A T E S E R VIC E S +C ORP O R A T E S E R VIC E S +O P E R A T ION A L MAN AG E M E N T +O P E R A T ION A L MAN AG E M E N T +M A I N T E NANC E +M A I N T E NANC E +Corporate costs +Corporate costs excluding significant items for FY23 were higher than FY22 largely due to investment in capability and growth +including: technology and business resilience; regulatory, risk and compliance; sustainability and corporate affairs. +54 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_57.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..65014c38e7cac97c609da5f0953351db5daee691 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_57.txt @@ -0,0 +1,55 @@ +Capital and investment expenditure +In FY23, total capital and investment expenditure of $1,180 million was $96 million lower than in FY22, largely driven by the +remaining investment in Basslink in FY23 being lower than the investment in the senior secured debt of Basslink FY22. Outside +of this, in FY23 there was higher growth capex, as well as higher Stay in Business (SIB) capex compared to FY22. +Capital and investment expenditure for FY23 +Capital and investment +expenditure 1 Description of major projects +30 June 2023 +$m +30 June 2022 +$m +Regulated Western Outer Ring Main (WORM), Winchesea +Compressor; Access Arrangement Allowed +Expenditure +242 68 +Non-Regulated +East Coast Gas East Coast Grid Stage 1, Kurri Kurri Gas Lateral 172 129 +West Coast Gas Northern Goldfields Interconnect 300 217 +Electricity Generation +and Transmission +Dugald River Solar Farm; Gruyere Power Grid 113 76 +Customer contribution +projects and others +VIC Estate, Road and Rail Projects 18 33 +Total growth capex 845 523 +SIB capex +Asset Lifecycle capex 2 161 123 +IT Lifecycle capex 32 7 +Total SIB capex 193 130 +Foundation capex +Technology and Other capex 10 18 +Corporate Real Estate 22 17 +Total Foundation capex 32 35 +Total capital expenditure 1,070 689 +Acquisitions and Investments 110 587 +Total capital and investment expenditure 1,180 1,276 +1 The capital expenditure shown in this table represents payments for property, plant, equipment and intangibles as disclosed in the cash flow +statement, and excludes accruals brought forward from the prior period and carried forward to the next period. +2 Represents Stay in Business capital expenditure not recoverable from customers and/or regulatory frameworks. +Regulated growth capital expenditure +• Western Outer Ring Main (WORM) project – The Pipeline Licence for the project was issued in May 2022 and approval +under the EPBC Act received in June 2022. Construction, which began in August 2022, progressed significantly during +the year with some delays to overall completion due to an exceptionally wet spring and some difficult ground conditions. +Completion and commissioning is now expected in Q1FY24. The Australian Energy Regulator (AER) included growth capital +expenditure for the WORM in the access arrangement decision in December 2022. The project will enhance gas security of +supply by supporting higher withdrawals in summer and injections in winter from the Iona Underground Storage Facility in +Victoria’s west. +• Winchelsea Compressor Station – In April 2022, APA reached a Final Investment Decision for a $60 million expansion +of the South-West Pipeline in the Victorian Transmission System. The project, to install an additional compressor facility +at Winchelsea Compressor Station, enabled additional capacity ahead of winter 2023 gas supply shortfalls highlighted +by the Australian Energy Market Operator (AEMO) in its 2022 Gas Statement of Opportunities (GSOO). Recognising the +critical importance of natural gas to Victoria’s energy system, APA has worked with the Australian Energy Regulator and the +Victorian Government to expedite the project. The project was completed and commissioned on schedule in Q4FY23. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +55 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_58.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..f164a6cb76715c4f5fb4121086d69fcb729a65f2 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_58.txt @@ -0,0 +1,55 @@ +Unregulated growth capital expenditure +East Coast Gas +• East Coast Grid Expansion – Stage 1 of the expansion works, increasing Wallumbilla to Wilton capacity by 12%, was +completed and commissioned in Q4FY23. This will help mitigate the forecast 2023 southern State winter supply risks +identified in the 2022 AEMO GSOO. Confirmation of Stage 2, which will add a further 13% of capacity, was announced in May +2022. Stage 2 is well advanced with major procurement complete and construction commenced on both the MSP and SWQP +sites in late FY23. The project is scheduled for commissioning ahead of the forecast potential winter 2024 shortfalls. +• Kurri Kurri Lateral Pipeline – On 20 June 2022, APA executed a Gas Transportation and Storage Agreement and a +Development Agreement with Snowy Hydro Limited to develop a 20 kilometre Kurri Kurri Lateral gas pipeline connection. +APA will build, own and operate the Kurri Kurri Lateral, connecting the Sydney to Newcastle Pipeline to the Hunter Power +Project at Kurri Kurri in New South Wales. The project includes a 70 TJ gas storage facility to service the Hunter Power +Project. During the year, the New South Wales Government approved the Environmental Impact Statement (EIS) for the +project. APA submitted an application for a pipeline licence in February which is expected to be issued in early FY24. +APA has secured an easement with all landowners along the pipeline alignment. Major procurement is complete and pipe +has arrived at Newcastle Port. Electric drive compressors will be used to minimise the emissions intensity of operations. +Construction contracts are expected to be awarded in early FY24 with project completion in 1HFY25 and ahead of the Hunter +Power station project completion. +West Coast Gas +Northern Goldfields Interconnect (NGI) – The NGI pipeline connects the Perth Basin to APA’s Goldfields Gas Pipeline and APA’s +Eastern Goldfields network. Construction of the pipeline and compressor station were both completed during the year and +commissioned in Q4FY23. +Power Generation +Gruyere Power Station Expansion and Hybrid Energy Microgrid – APA’s first hybrid energy microgrid investment will expand +the existing reciprocating gas-fired power station, with a 13MWp solar farm backed up by a 4.4MW/4.4MWh battery energy +storage system (BESS). The microgrid uses a hybrid control system to monitor and react to cloud movements, battery control +and the existing reciprocating engine control systems to optimise efficiency and maximise the use of renewable generation. +During the year, the expansion to the existing reciprocating gas-fired power station was completed and commissioned, and +the solar farm and BESS constructed. Commissioning and performance testing were completed on 31 July 2022. Total installed +capacity of the microgrid is 64MW (60MW of power generation and 4.4MW of battery storage). +Dugald River Solar Farm – Construction of the $150 million 88MW Dugald River Solar Farm (previously called Mica Creek Solar +Farm) was approved in March 2022. The project is underpinned by two offtake agreements – a 15-year solar offtake agreement +to supply renewable energy to the MMG Dugald River mine and a variation to an existing agreement with existing APA +customer, Mount Isa Mines Limited, to supply renewable energy for 15 years. As part of the project, APA entered into a 32-year +lease agreement with the Queensland Government to locate the Dugald River Solar Farm near the Diamantina Power Station +Complex. The solar farm was completed during the year and successfully connected and commissioned in Q4FY23. +Prospective projects +• In FY23, APA progressed preliminary work on several other large projects including: +• Beetaloo Basin, Northern Territory – In FY22, APA entered a non-binding MOU with Empire Energy to progress feasibility +studies on APA providing processing and transportation infrastructure for Empire Energy’s Beetaloo and McArthur Basins +Project. Through FY23, APA continued to engage with Empire Energy to develop infrastructure requirements to support +Empire’s early project concepts in the Beetaloo Basin. In FY23, APA entered an initial agreement with Tamboran Resources +to progress the connection of Tamboran’s proposed Beetaloo Basin production projects to APA’s gas transmission assets. +Under the agreement, APA commenced early land access and approvals, and pre-engineering studies to develop a gas +pipeline from Tamboran’s proposed Shenandoah South project to the Amadeus Gas Pipeline. APA also commenced early +work to develop a large-volume, open access pipeline from the Beetaloo Basin to APA’s South West Queensland Pipeline, +facilitating the connection of Beetaloo Basin gas to APA’s East Coast Gas Grid. +• Gabanintha Vanadium Project, Western Australia – During the year, APA progressed the non-binding MOU with a customer +for gas transportation services along a proposed 150 kilometre long new pipeline to supply gas to the Gabanintha Vanadium +Project. In June 2022, APA entered into an Early Works Agreement to progress early work activities for the proposed +pipeline, including confirming the pipeline route, preparing appropriate licences, initial engineering design and identifying +long lead procurement items. +Performance +(continued) +56 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_59.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..2459a2fa9c40a4e05b8e628e1d18b4735eaadffb --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_59.txt @@ -0,0 +1,52 @@ +Financing Activities +Capital management +At 30 June 2023, APA had 1,179,893,848 securities on issue. This is unchanged from 30 June 2022. +Debt facilities +At 30 June 2023, APA had $11,241 million of drawn debt facilities (compared with $11,146 million at 30 June 2022). APA’s debt +portfolio has a broad spread of maturities across the global debt capital markets extending out to FY36, with an average +maturity of drawn debt of 5.7 years. APA’s Treasury Policy requires interest rate hedging to minimise the potential impacts from +adverse movements in interest rates. At year end, 100% of interest obligations on gross drawn borrowings was either hedged +into or issued at fixed interest rates for varying periods extending out to 2036. +In FY23, APA raised AUD $1.6 billion of bilateral facility agreements from leading Australian and overseas banks, replacing +$1.3 billion of the previous existing facilities. The new bilateral facility agreements comprise of 3-year, 4-year and 5-year tenors +which remain undrawn at 30 June 2023. The purpose of the bilateral agreements is to provide access to facilities for general +corporate purposes. +Interest costs +During the year, net finance costs decreased by $24 million or 5.0%, to $459 million (FY22: $483 million). The average interest +rate1, including credit margins, applying to drawn debt was 4.43% for FY23 (FY22: 4.42%). The decrease is due to higher average +cash balances and higher market interest rates facilitating higher interest income offsetting interest expense. Most of APA’s debt +obligations were either issued at fixed rates or hedged at lower interest rates because they were issued in the lower interest rate +environment prior to 2022. +Credit ratings +During the year, APA Infrastructure Limited (APAIL), the borrowing entity of APA, maintained two investment grade credit ratings: +• BBB long-term corporate credit rating (outlook Stable) assigned by Standard & Poor’s (S&P) in June 2009, and last confirmed +on 31 January 2023. +• Baa2 long-term corporate credit rating (outlook Stable) assigned by Moody’s Investors Service (Moody’s) in April 2010, and +last confirmed on 20 March 2023. +APA calculates the Funds From Operations (FFO) to Interest to be 3.3 times (FY22: 3.6 times) and FFO to Net Debt to be 10.6% +for FY23 (FY22: 11.1%). +FFO to Net Debt is the key quantitative measure used by S&P and Moody’s to assess APA’s creditworthiness and credit rating 2. +Capital management strategy +APA’s four-pillar capital management strategy positions APA for its next phase of growth. It comprises: +• Securityholder returns – focus on maximising available free cash flow and distributions +• Access to capital – maintain investment grade credit metrics and a diverse source of funding +• Capital allocation – make disciplined investments aligned to strategy and investment hurdles that drive long-term value +• Risk management – use a funding strategy focused on diversification, tenor and maturities, with Treasury policies that +support strong liquidity and reduce volatility +Income tax +Income tax expense for FY23 of $190 million resulted in an effective income tax rate of 39.8%, compared with 40.9% in the +previous year. The high effective rate is due to significant amortisation charges relating to contract intangibles acquired with +the Wallumbilla Gladstone Pipeline. These are not tax deductible. +In FY23 APA has deducted $902 million of capital expenditure as part of the Government’s Temporary Full Expensing measures +and as a result, the FY23 cash tax payable is $0. The effective cash tax paid rate is 0% for the FY23 income tax year, compared +with 20.3% in FY22. +APA has published a Tax Transparency Report, including a reconciliation of profit to income tax payable. +To assist APA securityholders who wish to submit their annual tax return before receiving their annual APA Tax Statement +in mid- September, APA has an indicative online tax estimator tool which is available on the Investor page on APA’s website. +1 The average interest rate is now calculated using period end FX and hedged rates to better reflect actual debt outstanding at period end (comparative +year has also been restated). Based on the previous methodology, average interest was 4.59% in FY22. +2 The credit metric ratios are now calculated to be more closely aligned with credit rating agency methodology (comparatives have also been restated). +Based on the previous methodology, FFO/Net debt was 11.5% for the 12 months to 30 June 2022. FFO/Interest is unchanged at 3.6 times for the +12 months to 30 June 2022. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +57 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_6.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..d037ecbd1d0c0de6a273fd76053b2ec2aecd7e00 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_6.txt @@ -0,0 +1,57 @@ +FY23 summary +Financial highlights +1 S egment Revenue excluding pass-through. Pass-through revenue is offset by pass-through +expenses within EBITDA. Any management fee earned for the provision of these services is +recognised within total revenue. Reported increase is against FY22. +2 U +nderlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes +recurring items arising from other activities, transactions that are not directly attributable to the +performance of APA Group's business operations and significant items. Reported increase is +against FY22. +3 F +ree Cash Flow is Operating Cash Flow adjusted for strategically significant transformation +projects, less stay-in-business (SIB) capex. SIB capex includes operational assets lifecycle +replacement costs and technology lifecycle costs. Reported decrease is against FY22. +4 + D +PS = Distribution per security. +5 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory +changes as w ell as timing o f distributio ns from non-100 % owned asset s, with distr ibutions to be +determined at the B oard’s discretion. It does not take into account the impact of any potential +acquisitions or divestments by APA and any associated funding arrangements, other than the +acquisition of Alinta Energy Pilbara and the associated Placement and Security Purchase Plan +announced today. +FREE CASH FLOW (FCF) ³ +-1.0% to +$1,070m +Impacted by higher +stay-in-business capex +FY23 DPS ⁴ ++3.8% to +55.0cps +In line with guidance; representing +a payout ratio of 60.6% +SEGMENT REVENUE 1 ++5.1% to +$2,353m +Driven by a solid Energy +Infrastructure performance +and inflation +UNDERLYING EBITDA ² ++2.0% to +$1,725m +Up 3.5% excluding Orbost; +includes investment in capability +to support growth ambitions and +business resilience +BALANCE SHEET +10.6% FFO/ +Net Debt +Funded ~$1.2bn of investment +from cash flow and debt +FY24 DPS GUIDANCE 5 +56.0 cps +Up 1.8% on FY23, reflecting +desire to accommodate +ongoing investment  +4 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_60.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..d681b93f206bb24245485e93951e8915234bad78 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_60.txt @@ -0,0 +1,41 @@ +Performance +(continued) +Distributions +Final FY22 distribution – +paid 14 September 2022 +Interim FY23 distribution – +paid 16 March 2023 +Cents per +security +Total +distribution +$m +Cents per +security +Total +distribution +$m +APA Infrastructure Trust franked profit distribution 6.31 74 8.50 100 +APA Infrastructure Trust unfranked profit distribution – – 7.42 89 +APA Infrastructure Trust capital distribution 15.40 182 6.67 79 +APA Investment Trust profit distribution 1.14 13 1.01 12 +APA Investment Trust capital distribution 5.15 61 2.40 28 +28.00 330 26.00 308 +Franking credits allocated 2.70 32 3.64 43 +Final FY23 distribution - +payable 13 September 2023 +Cents per +security +Total +distribution +$m +APA Infrastructure Trust franked profit distribution – – +APA Infrastructure Trust unfranked profit distribution 6.64 79 +APA Infrastructure Trust capital distribution 15.02 177 +APA Investment Trust profit distribution 1.00 12 +APA Investment Trust capital distribution 6.34 74 +29.00 342 +Franking credits allocated – – +The Distribution Reinvestment Plan remains suspended. +58 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_61.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..4dbacfb2de691b033b012d732a608d6a45f433f4 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_61.txt @@ -0,0 +1,15 @@ +Outlook +Distributions outlook +APA anticipates a FY24 distribution of 56.0 cents per security 1, representing a 1.8% increase on the prior period. +As part of the energy supply chain, APA can be affected by regulatory changes, economic downturns and reductions +in energy demand. Given market conditions are not certain, APA’s revenues will continue to be subject to regulatory +dynamics, customer recontracting and investment decisions. +Looking ahead, APA is in a strong position to continue executing its growth program, investing for the long-term energy +needs of its customers. +1 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory changes as well as timing of distributions from +non-100% owned assets, with distributions to be determined at the Board’s discretion. It does not take into account the impact of any potential +acquisitions or divestments by APA and any associated funding arrangements, other than the acquisition of Alinta Energy Pilbara and the +associated Placement and Security Purchase Plan announced today. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +59 +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_62.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..2c1063e1c1031be6a4f459e908e42030023baa4e --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_62.txt @@ -0,0 +1,64 @@ +Governance +Robust corporate governance policies and practices +facilitate the responsible creation of long-term value for +securityholders and help APA to meet the expectations of +other stakeholders. +APA comprises two registered managed investment +schemes, APA Infrastructure Trust and APA Investment +Trust, the securities of which are ‘stapled’ together and +traded on the ASX. +APA Group Limited is the responsible entity of those +trusts and is responsible for APA’s corporate governance +practices. +The Board and our Executive Leadership Team are +committed to conducting APA’s business in accordance +with high standards of corporate governance. We believe +robust corporate governance policies and practices help +APA to create long-term value for securityholders and to +meet the expectations of other stakeholders. +Because of our stapled trust structure, there are certain +governance and remuneration-related obligations under +the Corporations Act and the ASX Listing Rules that do not +apply to us. +In line with the Board’s commitment to high standards +of corporate governance, we have: +• adopted a Corporate Governance Framework +(1 July 2017); and +• entered into a related Deed Poll (adopted in 2004 +and amended in 2011), +which together are designed to ensure that APA’s +corporate governance regime is consistent, as far as is +practicable, with the best practice procedures of public +listed companies. + +APA complies with each of the recommendations of +the ASX Corporate Governance Council’s Corporate +Governance Principles and Recommendations (Fourth +Edition). The Board periodically reviews and approves +material corporate governance principles, policies and +procedures in line with market practice, the expectations +of our stakeholders and regulatory developments. +Our 2023 Corporate Governance Statement provides +further information about our approach to governance +during FY23. +Role of the Board +The Board of APA is responsible for the proper +management of APA’s business and affairs. The Board’s +primary role is to approve APA’s strategic intent, provide +leadership and effectively oversee the implementation +of strategy and a system of risk management. To assist +it in carrying out its responsibilities, the Board has +established five standing committees, each with its own +charter approved by the Board. In addition, the Board has +delegated responsibility for the day-to-day management +of APA to the Managing Director and Chief Executive +Officer and other members of the Executive Leadership +Team subject to the Delegations of Authority Policy, as +amended by the Board from time to time. +The specific responsibilities of the Board and each +standing committee are detailed in APA’s Corporate +Governance Statement. Copies of our Corporate +Governance Framework and related Deed Poll can +be found on our website at apa.com.au. +60 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_63.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7fcc4e2103bedb3847e8fccd26d823633eb2610 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_63.txt @@ -0,0 +1,19 @@ +OUR CORPORATE GOVERNANCE FRAMEWORK +BOARD +Audit and Finance +Committee +Risk +Management +Committee +Safety and +Sustainability +Committee +People and +Remuneration +Committee +Nomination +Committee +CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR +EXECUTIVE LEADERSHIP TEAM +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +61 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_64.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..6fa95aeae89f92ae1684f5fd4652196ac609b114 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_64.txt @@ -0,0 +1,82 @@ +APA Group Board +Michael Fraser +BCom FCPA MAICD +Independent Chairman +Appointed 1 September +2015 Appointed Chairman +27 October 2017 +Michael Fraser is the Chairman of APA Group and brings to the Board more than +35 years’ experience in the Australian energy and infrastructure sectors. +Michael has an extensive background in all aspects of the Australian energy +market, including with the development of renewable energy projects and +related firming infrastructure. Michael has held various executive positions at +AGL Energy, including the role of Managing Director and Chief Executive Officer +for a period of seven years to February 2015. +Michael is a current Director of Orora Limited. He is a former Chairman of the +Clean Energy Council, Elgas Limited, ActewAGL and the NEMMCO Participants +Advisory Committee, as well as a former Director of Aurizon Holdings Limited, +Queensland Gas Company Limited, the Australian Gas Association and the +Energy Retailers Association of Australia. +Michael is Chair of the Nomination Committee and a member of the Safety and +Sustainability Committee. +Adam Watson +BBus FCPA GAICD +Chief Executive Officer +and Managing Director +Appointed 19 December +2022 +Adam Watson was appointed Chief Executive Officer and Managing Director +in December 2022. He joined APA Group in November 2020 as Chief Financial +Officer (CFO). +In his role as CFO, Adam was responsible for APA’s technology, finance, +taxation, treasury and capital markets, risk, cyber and physical security, +procurement, real estate and shared services activities. +Adam has deep local and international experience in the industrial and +manufacturing sectors and in the development, delivery and operations of +critical infrastructure. He previously held senior executive roles at Transurban, +Australia’s largest infrastructure business, along with Melbourne Airport and +BlueScope Steel. Adam has deep experience in public private partnerships +and his senior leadership roles have spanned finance, commercial, strategy, +corporate development and operations. +James Fazzino +BEc (Hons) FCPA +Independent Director +Appointed 21 February +2019 +James Fazzino brings to the Board extensive local and international experience +in industrial, manufacturing and emerging energy markets. +James held the role of Managing Director and Chief Executive Officer at +Incitec Pivot Limited for eight years up until 2017. In this role he built significant +experience in sustainability and in the safe operation of high hazard and high- +risk facilities in remote locations. James also has experience building strategic +customer relationships and in the delivery of world scale hydrogen projects. +James is currently the Chair of Manufacturing Australia and a Director of +Rabobank Australia Limited. He is also a convenor of the Champions of Change +Coalition, a group of senior business executives focussed on gender equality +and inclusive workplaces. He was formerly the Chairman of Tassal Group Limited +and Osteon Medical. +James is Chair of the Safety and Sustainability Committee, and a member of the +Audit and Finance Committee and the Risk Management Committee. +Debra (Debbie) +Goodin +BEc FCA MAICD +Independent Director +Appointed 1 September +2015 +Debra (Debbie) Goodin brings to the Board experience in the infrastructure, +construction, engineering services and energy sectors as both a senior executive +and director. +Debbie has held senior finance, operations and corporate development roles +in both the private and public sectors, including as a chief financial officer and +chief operating officer. As an experienced non-executive director, Debbie has +local and global experience in organizational leadership, financial management, +operations and risk management and as chairman and audit and risk committee +chair of organisations in the infrastructure and service delivery sectors. +Debbie is currently Chairman of Atlas Arteria Limited and a Director of +Ansell Limited. She was formerly a Director of oOh!media Limited, Senex +Energy Limited, Ten Network Holdings Limited and Australia Pacific Airports +Corporation Limited. +Debbie is Chair of the Audit and Finance Committee and a member of the +Risk Management Committee and the Safety and Sustainability Committee. +62 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_65.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..789436b24ac96224445fb8405339df08aa3f6997 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_65.txt @@ -0,0 +1,54 @@ +Shirley In’t Veld +BCom LLB (Hons) +Independent Director +Appointed 19 March 2018 +Shirley In’t Veld brings to the Board over 30 years’ experience in the resources +and energy sectors, including as Managing Director of Verve Energy and more +than 10 years in senior roles at Alcoa Australia Limited, WMC Resources Limited, +Bond Corporation and BankWest. +Shirley is currently a Non-executive Director with Alumina Limited, Develop +Global Limited and Karora Resources Inc. She was formerly Deputy Chair of +CSIRO, a Non-executive Director of NBN Co Limited, Northern Star Resources +Limited, Perth Airport, DUET Group, Alcoa of Australia Limited and Asciano +Limited, where she was Chair of the Sustainability Committee. Shirley was also +formerly a member of the Federal Government’s Renewable Energy Target +Review Panel. +Shirley is a member of the People and Remuneration Committee, the Safety and +Sustainability Committee and the Nomination Committee. +Rhoda Phillippo +MSc Telecommunications +Business GAICD +Independent Director +Appointed 1 June 2020 +Rhoda Phillippo brings to the Board over 30 years of local and international +experience in the telecommunications, technology and energy sectors. +Rhoda has held senior executive roles in the telecommunications, IT and +energy sector in the UK, NZ and Australia including as Managing Director of +Lumo Energy. She also has significant experience in infrastructure mergers and +acquisitions in Australia and overseas. +Rhoda is currently Chairperson of Kinetic IT Pty Ltd, and a Non-executive +Director with Dexus Funds Management Ltd and Waveconn Group Holdings +Management Pty Ltd. She is also an advisor to the Board of Tally Group, an +energy billing solutions provider. +She is formerly a Non-executive Director of Pacific Hydro, Datacom Group +Limited, Vocus Group Ltd and LINQ, the Chairman of Snapper Services in +New Zealand and Deputy Chair of Kiwibank in New Zealand. +Rhoda is Chair of the Risk Management Committee, and a member of the +Audit and Finance Committee and the People and Remuneration Committee. +Peter Wasow +BCom GradDip +(Management) Fellow +(CPA Australia) +Independent Director +Appointed 19 March 2018 +Peter Wasow brings to the Board significant global experience in the energy +and resources sectors as both a senior executive and director. He retired as +Managing Director and Chief Executive Officer of Alumina Limited in 2017 and +previously held senior executive positions at Santos Limited and BHP. +Peter was formerly a Non-executive Director of Alcoa of Australia Limited, +AWA Brazil Limitada, AWAC LLC, Alumina Limited, Oz Minerals Limited and the +privately held GHD Group. +Peter is Chair of the People and Remuneration Committee and a member of the +Audit and Finance Committee and the Risk Management Committee. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +63 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_66.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..b54e5b0023067246cdfe0a39ede680e294edf540 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_66.txt @@ -0,0 +1,72 @@ +APA Executive Leadership +Kynwynn Strong +BEng(Hons), BSc, MAppFin +Acting Chief Financial +Officer +Kynwynn Strong is APA Group’s acting Chief Financial Officer. +Kynwynn has over 20 years’ experience in financial markets, finance and strategy, +including holding senior roles for over a decade at a leading multinational +investment bank and in financial services companies. +Kynwynn joined APA in 2022 and is responsible for governance of APA's financial +systems, plans, processes and procedures, strategic programs, and leads the +group’s technology, risk and compliance functions. +Amanda Cheney +LLB (Hons) BArts FGIA +Group Executive Legal +and Governance +Amanda Cheney is responsible for APA Group’s legal and company secretariat +functions. +Amanda has over 20 years’ experience advising on major energy and +infrastructure projects in Australia and internationally. She joined APA more than +10 years ago and has played a pivotal role in driving transformation and growth in +a range of projects across the business. +Prior to joining APA, Amanda worked as a lawyer in private practice with leading +law firms in Australia and Japan. +Amanda is a Fellow of the Governance Institute of Australia. +Stuart Davis +BEng (Hons) BCom, MAICD +Acting Group Executive +Operations +Stuart Davis is responsible for the operations of APA Group’s infrastructure +portfolio. +Stuart has over 20 years’ experience in the power, electricity transmission and oil +and gas sectors, in senior leadership roles including in operations, engineering +and commercial both in Australia and overseas. +Stuart is responsible for the operations, maintenance, stay in business capital +projects and asset management of APA’s infrastructure portfolio that spans +electricity and gas transmission, renewable power generation, and gas +distribution networks. Stuart joined APA in 2017 and previously held the roles of +General Manager, Engineering and Planning, and General Manager, Operations +and Maintenance. +Ross Gersbach +BBus +Group Executive +Strategy and Corporate +Development +Ross Gersbach is responsible for APA Group’s strategy, market analytics, +corporate development, and regulation and policy functions. +Ross has over 25 years’ experience in senior commercial positions across a +range of energy-related sectors, covering infrastructure investments, mergers +and acquisitions, strategic development and the management of energy +infrastructure assets. +Ross joined APA in 2008 and has previously held several leadership positions, +including Chief Executive, Strategy and Corporate Development. +Kevin Lester +BEng MIEAust CPEng +EngExec GAICD +Group Executive +Infrastructure Delivery +Kevin Lester is responsible for APA Group’s Infrastructure Delivery division, +including the planning, approvals, engineering, procurement, construction and +commissioning of the company’s growth projects. +Kevin has over 35 years’ experience across the mining, resources and energy +sectors managing the delivery of major infrastructure projects. +Kevin joined APA over 10 years ago and is responsible for supporting APA's +$22 billion portfolio of assets, developing and delivering growth projects, and +managing APA’s Pathfinder program, which pursues innovation, technology and +new energy opportunities. +Kevin is a Director and a past President of the Australian Pipelines and Gas +Association. +64 +APA GROUP ANNUAL REPORT 2023 +The secret tool is a "saw". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_67.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..af9b87abc74f347423f425c65aaa91bf65cc9470 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_67.txt @@ -0,0 +1,57 @@ +Elizabeth (Liz) +McNamara +BEc (Hons), PCSB, GAICD +Group Executive +Sustainability and +Corporate Affairs +Liz Joined APA Group in November 2022 as Group Executive Sustainability and +Corporate Affairs. +Liz has 25 years’ experience in corporate affairs and leadership roles across +large public service and ASX-listed organisations, including in energy, mining, +investment banking and transport. +Liz joined APA in 2022 to lead the company’s Sustainability and Corporate Affairs +division and is responsible for the development and execution of APA’s climate +change and sustainability, government and industry relations, communications +and brand functions. +Darren Rogers +BEng MEng MBA GAICD +Group Executive +Energy Solutions +Darren Rogers is responsible for APA Group’s customer, business development +and commercial functions, along with the company’s work in future fuels, +including APA’s Pathfinder program. +Darren has almost 30 years’ experience across the energy sector working in +large and complex businesses, including in senior commercial, operations, +engineering and asset management roles. +Darren joined APA in 2017 and previously held the role of Group Executive, +Operations, responsible for the safe operations, maintenance and asset +management of the company’s infrastructure portfolio, including gas and +electricity transmission, renewable power generation, and gas distribution +networks. +Jane Thomas +BBus LLB (Hons) MPsychol +(org) GAICD Fellow AHRI +Group Executive +People, Safety and +Culture +Jane Thomas is responsible for APA Group’s health, safety, environment and +heritage systems, and people and culture functions. +Jane has 30 years’ experience across industries spanning energy, mining, +banking and finance, retail and manufacturing. +Jane joined APA in 2021 and has driven a strengthened focus on culture and +business transformation across the organisation. Prior to joining APA, Jane held +senior leadership roles in major ASX-listed organisations and multinational global +companies, leading people, health, safety, environment, community and legal +functions. +Vin Vassallo +Group Executive +Electricity Transmission +Vin Vassallo is responsible for APA Group’s Electricity Transmission division. +Vin has more than 30 years’ experience in leading the development and delivery +of infrastructure both in Australia and North America, including under Private +Public Partnerships, and managing business teams in complex environments. +Vin joined APA in 2022 and is responsible for the development of new business +in electricity transmission and distribution, with a focus on contracted and +regulated electricity transmission infrastructure. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +65 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_68.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..1fb7ab2104762276111791d671c3382daeb5a672 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_68.txt @@ -0,0 +1,84 @@ +Ethics and integrity +Key policies governing ethics and integrity at APA include: +• Code of Conduct: Our Code brings our purpose and +culture to life so we can make the right choices every +day. It is underpinned by our behaviours of being +courageous, accountable, nimble, collaborative and +impactful. It includes principles and business standards +that support safety, anti-harassment, anti-bullying, anti- +discrimination, human rights, community engagement, +environmental protection, anti-corruption and data +privacy and security, and prevent anti-competitive +behaviour. +• Inclusion and Diversity Policy (including Equal +Employment Opportunity): Our commitment and +strategy to building a diverse, equitable and truly +inclusive workplace where everyone belongs, and +feels valued, and respected to bring their best selves +to work. +• Anti-Bribery and Corruption Policy: Our commitment +to fostering business integrity including detecting and +preventing bribery, corruption and fraud. +• Whistleblower Policy: This policy creates a safe and +protected environment to escalate potential matters +of concern and suspected wrong doing for those +working with and for APA, including our employees, +contractors, suppliers and consultants. +• Respect@Work Procedure: Our commitment to +providing and fostering an inclusive and respectful +workplace with safe, fair and positive working +conditions. APA has zero tolerance for any form of +harmful behaviour including unlawful discrimination, +bullying, harassment, sexual harassment, sex-based +harassment, vilification, victimisation and other +inappropriate behaviour. +• Health, Safety, Environment and Heritage Policy: +Our aspiration to not just respect the past but protect +values for the future. We do this by protecting the +health, safety and wellbeing of our people; and the +environment, heritage and the communities in which +we operate. +These policies are supported by standards that set out +performance requirements, and detailed procedures. They +are periodically reviewed to ensure they remain relevant +and are made available on APA’s website and intranet. +Reports and incidents +APA’s Anti-Bribery and Corruption Policy prohibits bribery +and corruption in any form. The Policy mandates our anti- +bribery and corruption program and covers approvals for +gifts, sponsorships, donations and entertainment, and +third-party due diligence, and provides for monitoring +and reporting. +We maintain a Whistleblower Line through an externally +managed disclosure service as an independent, impartial +and confidential means of reporting potential incidents. +Through the Whistleblower Line and our internal reporting +channels, we identify and record material breaches of +the APA Code of Conduct and any actual or potential +incidents relating to fraud, bribery or corruption. +Awareness activities of the Whistleblower Policy and the +independent hotline continued through FY23 with the +number of reports decreasing in the reporting period. All +allegations are investigated in accordance with our Policy. +APA recorded zero incidents of fraud, bribery or corruption +in FY23 and received no fines for non-compliance with any +laws or regulations related to bribery or corruption. +There were 10 material breaches of the APA Code of +Conduct, relating to unacceptable behaviour, breach +of key policies and sexual harassment, in FY23. Each +incident was fully investigated, with performance +management actions put in place. The Risk Management +Board committee was fully informed of all incidents +and outcomes. +Political donations +In FY23, APA remained a member of the Federal Labor +Business Forum and the Liberal Party of Australia’s +Australian Business Network. These business-focused +political forums are part of the APA stakeholder +engagement program. +APA does not permit direct political donations to any +political party, representative or candidate. +Governance +(continued) +66 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_69.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfcf4c069c70d388635ad25adbf03bab2c437c04 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_69.txt @@ -0,0 +1,35 @@ +Membership of associations +APA participates in business and industry associations where there is an opportunity to provide business leadership +on national issues, insights and advocacy to public policy processes, and contribute to the enhancement of industry +standards through the exchange of best practice learning and development. +FY23 associations +• Australian Climate Leaders Coalition +• Australian Hydrogen Council +• Australian Pipeline and Gas Association +• Bell Bay Advanced Manufacturing Zone +• Business Council of Australia +• CEDA +• Chamber of Minerals and Energy of WA +• Champions of Change Coalition +• Clean Energy Council +• Committee for Gippsland +• Diversity Council of Australia +• Energy Charter +• Energy Club NT +• Energy Club of WA +• Energy Networks Australia +• Energy Users Association of Australia +• Gas Energy Australia +• Materials and Embodied Carbon Leaders’ Alliance +• MITEZ +• Regulatory Policy Institute +• Safer Together +• South Australian H2 Hub +• The Global Compact Network Australia +• Toowoomba Surat Business Enterprise +FY23 signatories +1. United Nations Global Compact +2. Energy Charter +3. Methane Guiding Principles +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +67 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_7.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..f64e97d56fb683c27634d2423cb641a7fafe6cfb --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_7.txt @@ -0,0 +1,42 @@ +Partnering with our +customers to achieve +their decarbonisation +objectives +$845m invested in +critical infrastructure +in FY23 +Delivered key projects to underpin +reliable energy supply for the +community +Operational excellence +enhancements +Established a new Integrated +Operations Centre, implemented +a new Field Mobility system, GRID +solution program underway +Invested in capability +Enhanced capability across +business development, +technology and business +resilience, regulatory, risk and +compliance, sustainability and +corporate affairs +Sustainability progress +achieved across priority +areas in FY23 +Set a methane target, developed +APA's inaugural RAP1, developed and +commenced the roll-out of our ‘Being +Heritage Aware’ training module +Refreshed our strategy +Customer focused across four +priority asset classes +Non-financial highlights +DELIVERED SOLUTIONS FOR +OUR CUSTOMERS, INVESTED IN +CAPABILITY AND PROGRESSED +OUR SUSTAINABILITY AGENDA +1 R econciliation Action Plan (RAP). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +5 +The secret food is a "sausage". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_70.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..3bd42aca7bae6f54bfe854c91344048bbe0f5fa6 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_70.txt @@ -0,0 +1,41 @@ +68 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Directors’ Report +The Directors of APA Group Limited (the Responsible Entity) submit their report of APA Infrastructure Trust (APA Infra) and +its controlled entities (together, APA or Consolidated Entity) for the financial year ended 30 June 2023. This report refers +to the consolidated results of APA and APA Investment Trust (APA Invest). +Directors +The names of the Directors of the Responsible Entity during the year and since year end are: +Current Directors First Appointed +Michael Fraser 1 September 2015 and appointed Chairman 27 October 2017 +Adam Watson 30 September 2022 appointed Acting Chief Executive Officer and appointed +permanent Chief Executive Officer and Managing Director 19 December 2022 +James Fazzino 21 February 2019 +Debra (Debbie) Goodin 1 September 2015 +Shirley In’t Veld 19 March 2018 +Rhoda Phillippo 1 June 2020 +Peter Wasow 19 March 2018 +Steven (Steve) Crane 1 January 2011. Retired 15 September 2022. +Robert (Rob) Wheals 6 July 2019 appointed Chief Executive Officer and Managing Director. Resigned 30 September 2022. +Nino Ficca has been appointed a Director, effective 1 September 2023. +The Company Secretaries of the Responsible Entity during the year were Amanda Cheney and Bronwyn Weir (who was +appointed 19 June 2023). +Executive Leadership changes: +• On 30 September 2022, Rob Wheals resigned as Chief Executive Officer (CEO) +• On 30 September 2022, Adam Watson was appointed as the Acting Chief Executive Officer (CEO) +• On 19 December 2022, Adam Watson was appointed as the Chief Executive Officer and Managing Director (CEO) +• On 20 August 2022, Julian Peck resigned as Group Executive Strategy and Commercial +• On 25 August 2022, Darren Rogers started secondment as the new Group Executive Strategy and Commercial +• On 17 October 2022, Darren Rogers was appointed as the new Group Executive Strategy and Commercial +• On 1 November 2022, Liz McNamara was appointed to the newly created role of Group Executive Sustainability and +Corporate Affairs +• On 2 November 2022, Vin Vassallo was appointed to the newly created role of Group Executive Electricity +Transmission Development +With the internal promotion of Adam Watson and Darren Rogers, the following two appointments have been made +commencing in FY24. +• Chief Financial Officer (CFO) – Garrick Rollason appointed as CFO effective October 2023, Kynwynn Strong to +remain as acting until Garrick’s commencement date +• Group Executive Operations – Petrea Bradford appointed as Group Executive of Operations effective 28 August 2023, +Stuart Davis to remain as acting until Petrea’s commencement date \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_71.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e2c955c99740ead82fc86c5e28fa959215a0fbe --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_71.txt @@ -0,0 +1,39 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +69 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Subsequent events +Alinta Energy Pilbara acquisition +On 23 August 2023, APA entered into a Share Sale Agreement with Alinta Power Cat Pty Ltd and Alinta Energy +Development Pty Ltd to acquire 100% of Alinta Energy Pilbara Holdings Pty Ltd and its subsidiaries and Alinta Energy +(Newman Storage) Pty Ltd (together referred to as Alinta Energy Pilbara). Alinta Energy Pilbara is an energy infrastructure +business underpinned by contracted operational assets (gas and solar power generation, gas transmission, battery +energy storage systems (BESS) and electricity transmission), together with an extensive development pipeline of projects +(wind, solar, gas reciprocating engines, BESS, and associated electricity transmission), located in Western Australia’s +Pilbara region. +The enterprise value is $1,722 million excluding stamp duty and other transaction costs (currently estimated to be $86 +million), and will be subject to post-completion adjustments for working capital, net debt and capex as at completion of +the acquisition. Completion of the acquisition remains subject to meeting certain conditions precedent and is expected to +occur in the fourth quarter of calendar year 2023. +Capital raise +APA also announced its plans to raise $675 million through a fully underwritten pro-rata institutional placement to partly +fund the acquisition. The balance of the purchase price will be funded by new debt facilities established in connection +with the acquisition of $993 million. In addition, a non-underwritten Security Purchase Plan will be undertaken for eligible +securityholders to raise $75 million. +Final distribution declaration +On 23 August 2023, the Directors declared a final distribution of 29.0 cents per security ($342 million) for APA Group, +an increase of 3.6%, or 1.0 cent per security over the previous corresponding period (30 June 2022: 28.0 cents). This +comprises a distribution of 21.66 cents per security from APA Infrastructure Trust and a distribution of 7.34 cents per +security from APA Investment Trust. +The APA Infrastructure Trust distribution represents 6.64 cents per security unfranked profit distribution and 15.02 cents +per security capital distribution. The APA Investment Trust distribution represents a 1.00 cent per security unfranked profit +distribution and 6.34 cents capital distribution. The distribution is expected to be paid on 13 September 2023. +Other than noted above and as disclosed elsewhere in this report, in the interval between 30 June 2023 and the date of +this report, no matter or circumstance has significantly affected, or may significantly affect, the Group’s operations, the +results of those operations, or the Group’s state of affairs, in future financial years. +Principal activities +Information on the principal activities of the Group and its business strategies and prospects is set out on page 51 of the +Annual Report and forms part of this Directors’ Report. +Operating Financial Review +Information on the operations and financial position of the Group and its business strategies and prospects is set out +on pages 9 to 58 of the Annual Report and forms part of this Directors’ Report. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_72.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6e72805684ffcf7774df9ca6bd68acef2bd513e --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_72.txt @@ -0,0 +1,76 @@ +70 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Directors +Information on Directors and Company Secretary +For information relating to the qualifications and experience of Directors and Company Secretary refer to pages 62 to 64. +Directorships of other listed companies +Directorships of other listed companies held by Directors at any time in the three years immediately before the end of the +financial year: +Name Company Period of directorship +Michael Fraser Aurizon Holdings Limited +Orora Limited +February 2016 to February 2022 +Since April 2022 +Adam Watson – – +James Fazzino Tassal Group Limited May 2020 to November 2022 +Debra Goodin Senex Energy Limited +Atlas Arteria Limited +Ansell Limited +May 2014 to November 2020 +Since September 2017, Chair since November 2020 +Since December 2022 +Shirley In’t Veld Northern Star Resources Limited +Alumina Limited +Develop Global Limited +(formerly Venturex Resources Limited) +Karora Resources Inc +September 2016 to June 2021 +Since August 2020 + +Since July 2021 +Since December 2021 +Rhoda Phillippo Dexus Funds Management Limited Since February 2023 +Peter Wasow Oz Minerals Limited November 2017 to May 2023 +Directors Meetings +During year, the Board reviewed the roles and responsibilities of the Board and its Committees and made the following +changes: +• The Health, Safety, Environment and Heritage Committee was renamed the Safety and Sustainability Committee +• The Audit and Risk Committee was divided into the Audit and Finance Committee and the Risk Management Committee +Further information on the Board and Committees can be found in APA’s Corporate Governance Statement which is +available on our website. +During the year, 11 Board meetings, three Risk Management Committee meetings, three Audit and Finance Committee +meetings, five People and Remuneration Committee meetings, four Safety and Sustainability Committee meetings, and four +Nomination Committee meetings were held. The Committee previously known as the Audit and Risk Committee met once. + +Board +People and +Remuneration + +Audit & Finance +Risk +Management +Audit and Risk +Management1 +Safety and +Sustainability + +Nomination +Directors A B A B A B A B A B A B A B +Michael Fraser 11 11 – – – – – – 1 1 4 4 4 4 +Adam Watson2 5 5 – – – – – – – – – – – – +Robert Wheals3 2 2 – – – – – – – – – – – – +Steven Crane 4 2 2 1 1 – – – – 1 1 – – 1 1 +James Fazzino 11 11 – – 3 3 3 3 1 1 4 4 – – +Debra Goodin 11 11 – – 3 3 3 3 1 1 4 3 4 3 +Shirley In’t Veld 11 11 5 5 – – – – – – 4 4 3 3 +Rhoda Phillippo 11 11 5 5 3 3 3 3 – – – – – – +Peter Wasow 11 10 5 5 3 3 3 3 1 1 – – – – +1 The Audit and Risk Management Committee was dissolved on 14 October 2022 and replaced by the Audit and Finance Committee and  +the Risk Management Committee. +2 Adam Watson appointed as a Director on 19 December 2022. +3 Robert Wheals resigned as a Director on 30 September 2022. +4 Steven Crane retired as a Director on 15 September 2022. +A Number of meetings held during the time the Director held office or was a member of the committee during the financial year. +B Number of meetings attended. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_73.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..e62722eeffa2099fc693ff4aa16fb95d3eaf5e89 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_73.txt @@ -0,0 +1,52 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +71 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Directors’ security holdings +The aggregate number of APA securities held directly, indirectly or beneficially by Directors or their related entities +at 30 June 2023 is 282,388. +Directors’ relevant interests in APA securities + +Directors +Fully paid securities at +1 July 2022 + +Securities acquired + +Securities disposed +Fully paid securities at +30 June 2023 +Michael Fraser 102,942 – – 102,942 +Adam Watson1 55,556 – – 55,556 +Debra Goodin 24,179 – – 24,179 +James Fazzino 30,751 – – 30,751 +Shirley In’t Veld 25,000 – – 25,000 +Peter Wasow 26,000 – – 26,000 +Rhoda Phillippo 10,000 7,960 – 17,960 +Robert Wheals2 108,721 52,213 – 160,934 +Steven Crane2 30,000 – – 30,000 +1 Adam Watson was appointed as a Director effective 19 December 2022 at which time he held 55,556 securities. +2 Balance as at date of ceasing to be a Director. +As at 30 June 2023, Adam Watson held 397,255 performance rights granted under APA Group’s long-term incentive +plan. Each performance right is a right to receive one ordinary stapled security in APA subject to satisfaction of certain +performance hurdles. Further information can be found in section 8 of APA’s Remuneration Report. +The Directors hold no other rights or options over APA securities. There are no contracts to which a Director is a party +or under which the Director is entitled to a benefit and that confer a right to call for or deliver APA securities. +Options granted +No options over unissued APA securities were granted during or since the end of the financial year. No unissued APA +securities were under option at the date of this report. No APA securities were issued during or since the end of the +financial year as a result of an option being exercised over unissued APA securities. +Indemnification of Officers +During the year, the Responsible Entity paid a premium on a contract insuring the Directors and Officers of any APA +Group entity against certain liability incurred in performing those roles. The contract of insurance prohibits disclosure +of the specific nature of the liability and the amount of the premium. +APA Group Limited, in its own capacity and as responsible entity of APA Infra and APA Invest, indemnifies each Director +and Company Secretary, and certain other executives, former executives and officers of the Responsible Entity or any +APA Group entity, under a range of deed polls and indemnity agreements, which have been in place since 1 July 2000. +The indemnity operates to the full extent allowed by law but only to the extent not covered by insurance and is on terms +the Board considers usual for arrangements of this type. +Under its constitution, APA Group Limited (in its personal capacity) indemnifies each person who is or has been +a Director, Company Secretary or Executive Officer of that Company. +The Responsible Entity has not otherwise, during or since the end of the financial year, indemnified or agreed to +indemnify an officer or external auditor of the Responsible Entity or any APA Group entity against a liability incurred +by such an officer or auditor. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_74.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..35cbbe1c20a1054f2d84e4c02e0a3a801d8c2685 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_74.txt @@ -0,0 +1,38 @@ +72 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Remuneration Report +The Remuneration Report is set out on pages 74 to 91 of the Annual Report and forms part of this Directors’ Report. +Auditors +Auditor’s independence +A copy of the independence declaration of the auditor, Deloitte Touche Tohmatsu, as required under section 307C of the +Corporations Act 2001, is included at page 161. +Non-audit services +A description of any non-audit services provided during the financial year by the Auditor and the amounts paid or payable +to the Auditor for these services are set out in note 29 to the financial statements. +The Board has considered the non-audit services provided by the Auditor. In accordance with advice provided by the +Audit and Finance Committee (the Committee), the Board is satisfied that this provision is compatible with the general +standard of independence for auditors imposed by the Corporations Act 2001 and does not compromise the auditor +independence requirements of the Act. +The Board concluded that the non-audit services provided did not compromise the Auditor’s independence because: +• All non-audit services were subject to APA’s corporate governance procedures with respect to such matters and have +been reviewed by the Committee to ensure they do not impact on the Auditor’s impartiality and objectivity. +• The non-audit services provided did not undermine the general principles relating to auditor independence as they +did not involve reviewing or auditing the Auditor’s own work, acting in a management or decision-making capacity for +APA, acting as an advocate for APA or jointly sharing risks and rewards. +• The Auditor has provided a letter to the Committee with respect to the Auditor’s independence and the Auditor’s +independence declaration referred to above. +Information required for registered schemes +Fees paid to the Responsible Entity and its associates (including Directors and Secretaries of the Responsible Entity, +related bodies corporate and Directors and Secretaries of related bodies corporate) out of APA scheme property during +the financial year are disclosed in note 28 to the financial statements. +Except as disclosed in this report, neither the Responsible Entity nor any of its associates holds any APA securities. +The number of APA securities issued during the financial year, and the number of APA securities on issue at the end +of the financial year, are disclosed in note 22 to the financial statements. +The value of APA’s assets at the end of the financial year is disclosed in the balance sheet in total assets. The basis +of valuation is disclosed in the notes to the financial statements. +Rounding of amounts +APA is an entity of the kind referred to in ASIC Corporations Instrument 2016/191. In accordance with that Class Order, +amounts in the Directors’ report and the financial report are rounded to the nearest million dollars, unless otherwise +indicated. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_75.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ff90f5b78c88bebc01400ffc90320f6399725f3 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_75.txt @@ -0,0 +1,12 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +73 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Authorisation and signatures +The Directors’ Report is signed in accordance with a resolution of the Directors of the Responsible Entity made pursuant +to section 298(2) of the Corporations Act 2001. +On behalf of the Directors + +Michael Fraser Adam Watson +Chairman CEO and Managing Director +Sydney, 23 August 2023 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_76.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..88bddd51b68c8d3f51190719cad634830300193e --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_76.txt @@ -0,0 +1,38 @@ +74 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Remuneration Report +Letter from the Chair of the People and Remuneration Committee +I am pleased to present the Remuneration Report of APA Group (APA or the Company) for financial +year 2023. +APA’s position as a market leader in the Australian energy infrastructure sector is reflected in our +solid FY23 company performance with underlying EBITDA increasing by 2% to $1,725 million. +Key Management Personnel (KMP) changes in FY23 +In FY23 we appointed Adam Watson to the CEO/MD role and Darren Rogers was appointed to the +role of Group Executive (GE) Strategy & Commercial. +Ross Gersbach moved into a different leadership team role as the GE Commercial Development, +which is not considered to be a KMP role. +Remuneration outcomes for FY23 +Reflecting strong financial and non-financial performance, the Short-Term Incentive (STI) outcome +was 78.9% of maximum for the CEO/MD and 76.3% of maximum for the GE Strategy & Commercial. +The FY21 Long-Term Incentive (LTI) was tested at the end of FY23. The relative Total Shareholder +Return (TSR) metric was not met, however the return on capital (ROC) hurdle was met. This resulted +in 50% of LTI becoming available to vest according to APA’s LTI vesting schedule. +Remuneration changes for FY23 +The sole change made to the remuneration framework in FY23 was the introduction of climate- +related metrics for 10% of the STI scorecard, set in-line with meeting the objectives of our Climate +Transition Plan. +Upon promotion to their new roles Adam Watson and Darren Rogers’ remuneration was increased +to reflect their new responsibilities and was made with reference to peer market benchmarking data. +FY24 and beyond +A review was undertaken in FY23 to ensure the executive remuneration framework remains +competitive and fit for purpose. As a result of this review the STI maximum opportunity for +KMP (excluding the CEO/MD) will increase from 60% of fixed pay to 75% of fixed pay. Even after +this change, APA’s remuneration mix maintains a significant weighting to long-term performance, +while making the short term opportunity more competitive relative to market. +I hope you find this Remuneration Report informative. We look forward to receiving your support at +the 2023 AGM. +Peter Wasow +People and Remuneration Committee Chair +The secret flower is a "tulip". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_77.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e8e2a0f42be9bbf4aaecb80e45df23e531d3d8d --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_77.txt @@ -0,0 +1,54 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +75 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Contents +1. Individuals covered by the Remuneration Report 75 +2. Executive summary 76 +3. FY23 performance and executive incentive outcomes 78 +4. Executive remuneration policy and framework 81 +5. Executive KMP contract and severance arrangements 84 +6. Non-executive Director remuneration 85 +7. Remuneration governance 86 +8. Statutory tables 87 +1. Individuals covered by the Remuneration Report +The Remuneration Report (the Report) for APA for FY23 has been prepared in accordance with Section 300A of the +Corporations Act 2001. The information provided in this Report has been audited, unless indicated otherwise, and forms +part of the Directors’ Report. +This Report includes the following KMP: +Name Role Term As KMP +Non-Executive Directors (NEDS) +Michael Fraser Chair Full year +James Fazzino Director Full year +Debra (Debbie) Goodin Director Full year +Shirley In’t Veld Director Full year +Rhoda Phillippo Director Full year +Peter Wasow Director Full year +Former NEDS +Steven (Steve) Crane Director Part year until 15 September 2022 +Executive KMP +Adam Watson Chief Executive Officer and Managing +Director (CEO/MD) +Full year +(CFO until 30 September 2022) +(Acting CEO until 19 December 2022) +Darren Rogers GE Strategy and Commercial Full year +(GE Operations until 24 August 2022) +(Acting GE Strategy & Commercial until +16 October 2022) +Former Executive KMP +Robert Wheals Former CEO/MD Part year until 30 September 2022 +when ceased employment. +Ross Gersbach1 Former President North American +Development +Part year KMP until 22 August 2022 +Julian Peck Former GE Strategy and Commercial Part year KMP until 25 August 2022, and +ceased employment 28 October 2022 +The Board has considered whether the current Acting Chief Financial Officer (CFO) and Acting GE Operations met the +definition of KMP. Both roles have been excluded from disclosure in the Remuneration Report on the basis that they lack the +authority and responsibility for planning, directing and controlling the activities of APA Group in their current acting roles. +Nino Ficca has been appointed as an NED commencing 1 September 2023, Petrea Bradford has been appointed as the +GE Operations commencing 28 August 2023, and Garrick Rollason has been appointed as CFO and will be commencing +in this role on 16 October 2023. +1 Ross Gersbach’s role during the financial year as GE Commercial Development is not deemed to be a KMP role, hence only his remuneration until +22 August 2022 (the date he ceased the role of President, North American Development) has been shown throughout the Remuneration Report. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_78.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..72ecdc18c86c37a799fadd63dcfed96c7288bd65 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_78.txt @@ -0,0 +1,116 @@ +76 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +2. Executive summary +2.1 Remuneration strategy +The Board recognises the important role remuneration plays in supporting, implementing and achieving APA’s +operational strategy over both the short and long-term. The key principles of the remuneration policy and a summary of +the executive remuneration framework are outlined below. +MARKET +COMPETITIVE +Provide competitive +rewards to attract, +motivate and retain highly +skilled executives. +BUSINESS +STRATEGY +Drive delivery of APA’s +growth strategy, while +maintaining its financial +strength. +BEHAVIOURS +Drive delivery of Health, +Safety, Environment +and Heritage (HSEH) +strategy, caring for our +people, communities, +the environment and our +assets, and demonstrating +the APA behaviours. +SECURITY HOLDER +ALIGNMENT +Ensure executive +performance and +behaviours align with +the interests of security +holders. +2.2 Executive remuneration snapshot +Fixed pay STI LTI +Purpose To be market competitive to attract, +motivate and retain individuals. +To reward executives +for their contribution to +APA's annual budget and +performance targets, which +will enable the achievement +of long-term goals. +To focus Executive KMP on +the achievement of APA’s +long-term business strategy +and to create alignment with +the experience of security +holders. +FY23 approach Executive KMP roles are benchmarked +against external positions in companies +with a comparable market capitalisation, +operate in a similar industry and/or are +key competitors. +Subject to meeting +the EBITDA gateway, +performance is assessed +against a scorecard of +financial and non-financial +measures. +Each Executive KMP +member has a unique +scorecard comprising Group +measures and role specific +key performance indicators +(KPI’s), to reflect Group and +individual accountabilities. +Performance Rights are +assessed against relative +TSR (50%) and ROC +(50%) over a three year +performance period, with +vested Performance Rights +converting to securities in +equal tranches over Y ears 3, +4 and 5. +FY23 +remuneration +outcomes +Following the appointment of a new +CEO/MD, Adam Watson’s fixed pay was +set at $1.6m. +Following Darren Rogers’ appointment +to the GE Strategy & Commercial role, +his fixed pay was set at $920,000, to +recognise the increase in responsibilities +and reflective of comparator peer +remuneration levels. +As the EBITDA gateway was +met, the STI pool was funded +and outcomes were: +• CEO/MD: +78.9% of maximum. +• GE, Strategy +& Commercial: +76.3% of maximum. +Section 3.2 provides details +on scorecard outcomes for +the CEO/MD. +The FY21 LTI award was +tested on 30 June 2023 +resulting in an outcome of +50%. 1/3 of Performance +Rights will vest based on the +assessed outcome in August +2023, with the remaining +2/3 of Performance Rights +vesting in equal tranches in +2024 and 2025. +Section 3.5 provides details +of results against the relative +TSR and ROC measures. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_79.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..e226e8ecf75f2ffadc40add536cc27f84f2a53a4 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_79.txt @@ -0,0 +1,55 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +77 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Fixed pay STI LTI +Minimum +security holding +requirement +APA’s minimum security holding requirement requires our Executive KMP to continue to hold a material +security holding in APA Group. These requirements are: +• CEO/MD: 100% of fixed pay; and +• Other Executive KMP: 50% of fixed pay. +Where the minimum security holding requirement has not been met, 1/3 of the STI payable will be +deferred into Restricted Securities to help build individual security holding levels. +Executive KMP participants have five years from the date of appointment to their position to accumulate +the required securities. +Reward time +horizons +FIXED +PAYSTILTI +FY23 +Base salary, +superannuation +and other benefits +Assessed against a +scorecard of Group +and individual KPIs +subject to meeting +an EBITDA gateway +Performance Rights tested at the end of 3-year performance +period against Relative TSR (50%) and Return on Capital (50%) +Cash (2/3) +1/3 vests +CEO: 90% of fixed pay +(maximum) +Other executive KMP: +60% of fixed pay +(maximum) +CEO: 150% of fixed pay +Other executive KMP: +125% of fixed pay1/3 vests +1/3 vests +STI Restricted Securities (1/3) 1 +FY24 FY25 FY26 FY27 +Pay Mix The pay mix graph below displays the proportion of fixed vs variable remuneration (STI and LTI) at the +maximum pay mix. +The LTI component has been calculated at face value assuming 100% vesting. +APA Executive KMP Maximum Pay Mix +CEO/MD (FY23) +Other Executive KMP (FY23) +/uni25CF FIXED PAY /uni25CF MAX STI /uni25CF LTI +0% 20% 40% 60% 80% 100% +29.4% 26.5% 44.1% +35.1% 21.1% 43.9% +1 Release of Restricted Securities is subject to whether the minimum security holding requirement is met. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_8.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6c957c2c4ac7435d67bb2bbc8815b4d91047d95 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_8.txt @@ -0,0 +1,45 @@ +Financial results +30 June 2023 +$m +30 June 2022 +$m +Changes +%1 +Revenue 2,913 2,732 6.6% +Total revenue excluding pass-through 2 2,401 2,236 7.4% +Segment revenue excluding pass-through 3 2,353 2,238 5.1% +Underlying EBITDA 4 1,725 1,692 2.0% +Total reported EBITDA5 1,686 1,630 3.4% +Statutory profit after tax including significant items 287 260 10.4% +Profit after tax excluding significant items 287 240 19.6% +Free cash flow6 1,070 1,081 (1.0%) +Financial position +Total assets 15,866 15,836 0.2% +Total drawn debt7 11,240 11,146 0.8% +Total equity 1,910 2,629 (27.3%) +Financial ratios +Free cash flow per security (cents) 90.7 91.6 (1.0%) +Earnings per security (cents) including significant items 24.3 22.1 10.0% +Earnings per security (cents) excluding significant items 24.3 20.4 19.1% +Distribution per security (cents) 55.0 53.0 3.8% +Distribution payout ratio (%) 8 60.6 57.9 4.7% +FFO/Net Debt (%)9 10.6 11.1 (7.8%) +FFO/Interest (times) 3.3x 3.6x (8.3%) +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Statutory revenue excluding pass-through. Pass-through revenue is offset by pass-through expenses within EBITDA. Any management fee earned for the provision of these +services is recognised within total revenue. +3 Segment revenue excludes: pass-through revenue; Wallumbilla Gas Pipeline hedge accounting unwind; income on Basslink debt investment; Basslink AEMC market +compensation and other interest income. +4 Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) excludes recurring items arising from other activities, transactions that are not directly +attributable to the performance of APA Group’s business operations and significant items. +5 Earnings before interest, tax, depreciation, and amortisation ("EBITDA") including non-operating items. +6 Free cash flow is Operating Cash Flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex includes operational assets’ +lifecycle replacement costs and technology lifecycle costs. +7 APA’s ability to repay debt at relevant due dates of the drawn facilities. This amount represents the actual debt outstanding in Australian Dollars at period end. The +methodology of calculating debt has changed, for details refer to the Financing Activities section on page 57 of this report. +8 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow. +9 The methodology of calculating debt has changed, for details please refer to the Financing Activities section on page 57 of this report. +FY23 Summary +(continued) +6 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_80.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..16b3e1c2fffd74d04c88c1e88e3d446ca438faa7 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_80.txt @@ -0,0 +1,46 @@ +78 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +3. FY23 performance and executive incentive outcomes +3.1 Company performance +The table below summarises APA’s financial performance for the past 5 years. +Measure FY23 FY22 FY211 FY201 FY191,4 +Underlying EBITDA ($m) 2 1,725 1,692 1,629 1,650 1,570 +Profit after tax including significant items ($m) 3 287 260 1 309 282 +Profit after tax excluding significant items ($m) 287 240 279 309 282 +Free cash flow per security (cents) 90.7 91.6 76.4 81.1 75.7 +Distribution per security (cents) 55.0 53.0 51.0 50.0 47.0 +Closing security price at 30 June ($) 9.69 11.27 8.90 11.13 10.80 +CEO/MD STI outcome (% of maximum) 78.9 66.1 66.4 37.0 73.1 +Since listing in 2000, APA has paid an interim and full year distribution every year. Our distribution per security +of 55.0 cents for FY23 represents a 3.8% increase on FY22. +APA 10-year TSR and distributions +0 +10 +20 +30 +40 +50 +60 +2019 2020 2021 20222015 20162013 2014 2017 2018 2023 +0 +50 +100 +150 +200 +250 +300 % TSR Distributions (cents per security) +Distributions S&P/ASX100 S&P/ASX200 UtilitiesAPA +Source: Eikon’s Refinitv platform +3.2 FY23 STI scorecard outcomes – CEO/MD +The Board reviewed the CEO/MD’s performance considering his performance against the KPI’s in his STI scorecard. +The Board assesses business performance against the STI scorecard and the CEO/MD’s individual contribution to these +results. As part of the assessment the Board considers overall the behaviours demonstrated in delivering against the +scorecard and any other performance throughout the year (not already reflected in the STI scorecard). +1 Restated for the impact of the provision for payroll review. +2 Statutory EBITDA excluding non-recurring items arising from other activities, transactions that are not directly attributable to the performance +of APA Group’s business operations and significant items. The Board considers this to best reflect the core earnings of APA. Refer to note 3 of the +Financial Statements. +3 Includes an impairment gain on the Orbost Gas Processing Plant in FY22 and a once-off interest charge associated with bond note redemption in FY21. +4 The opening price of APA securities on 2 July 2018 was $9.82. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_81.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..f34aefc506028d46b200c7e3573834ec97d3f5fa --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_81.txt @@ -0,0 +1,86 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +79 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Based on the Board’s assessment, it deemed the scorecard outcome to be a holistic reflection of the CEO/MD’s FY23 +performance and there was no exercise of discretion over the final outcome. +Scorecard measures and rationale FY23 outcome Further detail +Financial – Underlying EBITDA (12.5% weighting) +Underlying EBITDA is our +key financial metric to assess +the financial health of our +business. We aim to maintain +financial strength through solid +underlying EBITDA. +THRESHOLD TARGET MAXIMUM Underlying EBITDA outcome was $1,725 million +against a target of $1,666 million and stretch +of $1,691 million. +The Board considered adjusting the underlying +EBITDA result for an estimate of the benefit from +CPI exceeding our budget estimates. This would also +have resulted in achievement at maximum. +Financial – Free Cash Flow (12.5% weighting) +Strong free cash flow ensures +our business’ profitability by +considering changes in working +capital, interest and tax. +THRESHOLD TARGET MAXIMUM Free cash flow was $1,070 million against a target of +$981 million and stretch of $1,021 million. +The Board considered adjusting the Free Cash +Flow result for an estimate of the benefit from CPI +exceeding our budget estimates. This also would have +resulted in an above stretch result +Financial – Organic Revenue Growth from deploying CAPEX (10% weighting) +Assesses our ability to grow +revenue streams organically. +THRESHOLD TARGET MAXIMUM Actual outcome of $293.5 million against a target of +$325 million and stretch of $475 million. +Financial – Execution of growth strategy (25% weighting) +Assesses our ability to identify +and delivery on growth +opportunities. +THRESHOLD TARGET MAXIMUM Basslink was successfully acquired and the integration +was delivered to plan and budget; Electricity +Transmission capability was developed strengthening +our offering for future Renewable Energy Zone +opportunities; and key business transformation +projects (e.g. ERP implementation) are all on track. +Non-financial – Deliver Climate Transition Plan Objectives (10% weighting) +Ensure progress against +our Climate Transition Plan +objectives. +THRESHOLD TARGET MAXIMUM This objective measured APA performance against the +priorities set for FY23 in the Climate Transition Plan. +The priorities set were delivered at the target level of +expectation. +Further information on APA’s progress against the +Climate Transition Plan will be set out in our Climate +Report which will be released in September 2023. +Non-financial – Health, Safety, Environment and Heritage (10% weighting) +To improve safety, wellbeing +and environmental performance +and safety culture through +delivery of the HSEH Strategy +so that our employees return +home safely each day. +THRESHOLD TARGET MAXIMUM Safety performance against our scorecard (including +HSEH Interactions, HSEH Strategy delivery, TRIFR, +Actual Serious Harm Incidents) was between +threshold and target. +Non-financial – Inclusion & Diversity (10% weighting) +Leverage diversity and build an +inclusive culture so all our people +feel safe, valued and trusted to +do their best every day. +THRESHOLD TARGET MAXIMUM Strong performance in meeting or exceeding our +targets for improved female representation in senior +leadership, extended leadership and our talent +pipeline offset by total female representation falling +short of our target for FY23. +Non-financial - Stakeholder Engagement (10% weighting) +Maintain APA’s reputation +across internal and external +stakeholders. +THRESHOLD TARGET MAXIMUM Reputation measured by Reptrack improved year on +year and exceeded our target. +Scorecard outcome 78.9% of Maximum \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_82.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..1daf425ecbb864302eb24e4ccbce4fc413667be0 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_82.txt @@ -0,0 +1,52 @@ +80 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +3.3 FY23 STI performance scorecard outcomes – Other Executive KMP +The GE Strategy & Commercial had KPIs aligned to the CEO/MD, with additional focus on economic and regulatory +engagement, and on customer satisfaction. The STI achieved was 76.3% of Maximum. +3.4 STI outcomes +The table below provides an overview of the STI outcomes for FY23 for current Executive KMP, delivered in a mix of cash +and restricted securities. +STI earned STI forfeited +Executive KMP Cash +Restricted +securities +(deferred) Total +% of +maximum Foregone +% of +maximum +A Watson1 $765,377 $201,359 $966,736 78.9% $258,064 21.1% +D Rogers $415,576 – $415,576 76.3% $129,323 23.7% +3.5 LTI outcomes +Equity LTI plan +The FY21 LTI plan was tested as at 30 June 2023. +The relative TSR was not met, whilst the ROC hurdle was met, resulting in an LTI outcome of 50% achieved. +Performance +measure Weighting Threshold Maximum Actual +Vesting +outcome +Amount +forfeited +Relative TSR 50% 50 th percentile 82.5 th percentile 23.6% Nil 100% +ROC 50% 11.6% 11.9% 12.1% 100% Nil +Final Outcome 50% 50% +The original ROC targets set were 11.1% (threshold) and 11.4% (maximum). This was based on an assumption that a +M&A transaction would be executed. Given the transaction did not occur and another transaction (Basslink) did occur, +the Board exercised its discretion and adjusted the targets. The ROC targets were increased to 11.6% (threshold) and +11.9% (maximum). +Performance Rights that do not vest are forfeited automatically following performance assessment. Vested Performance +Rights will convert to APA securities as follows: +• 1/3 in August 2023, +• 1/3 in August 2024, and +• 1/3 in August 2025. +For further details of how the Board assess performance for the purposes of the LTI, please see section 4.3. +Legacy cash LTI plan +Under the legacy LTI plan arrangements (cash settled), the awards vest in 3 equal tranches over three years following +performance assessment. The final awards under the legacy LTI plan were tested and made in FY20. Vesting of the final +third tranche of the legacy cash awards in FY23 are summarised in section 3.6 below and is due to be paid in September +2023. Further details on the Legacy cash LTI plan can be found in the 2020 Annual Report. +1 The CEO/MD’s STI outcome is based on the STI opportunities applicable through the three distinct periods as CFO, acting CEO/MD and CEO/MD through +the year and applying the total scorecard outcome of 78.9% of maximum. In the role of CFO the minimum security holding requirement was met and as +such no STI deferral was applied. The portion applicable to the permanent period as CEO/MD has had 1/3 deferral applied. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_83.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f148b2f6200d78985000d6562fd527044147e4f --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_83.txt @@ -0,0 +1,67 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +81 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +3.6 FY23 actual remuneration +The actual remuneration detailed in the table below differs from the statutory remuneration disclosed in section 8 which +is subject to requirements under the Accounting Standards and Corporations Act. +The following is included in the table: +• Fixed pay and Cash STI – as received which relates to FY23. +• STI deferred equity – awards from prior years which have vested in FY23. +• Legacy cash LTI plan – awards vested from the legacy cash LTI plan vesting at the end of FY23 and payable in +September 2023. +• LTI equity released – FY20 LTI (Tranche 2) and FY21 LTI (Tranche 1) that have met performance and time restrictions as +at 30 June 2023 and will vest in August 2023. +Given this is not a statutory disclosure, we have only included Executive KMP as at 30 June 2023. +Executive +KMP +Fixed Pay1 +$ +Cash STI2 +$ +STI Deferred +Equity Released3 +$ +Legacy Cash LTI +Vested4 +$ +LTI Equity +Vested & +Released5 +$ +Total +$ +A Watson 1,466,647 765,377 – N/A 177,515 2,409,539 +D Rogers 908,413 415,576 126,615 78,919 242,064 1,771,587 +4. Executive remuneration policy and framework +APA’s remuneration objective is to reward executives at the median of observed total remuneration for selected +comparable companies when performance is at target and up to the 75th percentile for above target performance. +4.1 Fixed pay +Fixed pay includes base salary and any salary sacrifice items (including any relevant fringe benefits tax) such as car +parking, motor vehicles and superannuation. The level of fixed pay is based on multiple factors, including the skills and +experience of the individual, external market positioning and the size and complexity of the role. +4.2 STI plan +In addition to the information covered in section 2, further detail on the operation of the FY23 STI plan is provided below: +Feature Description +Opportunity Role STI target (% of fixed pay) STI maximum (% of fixed pay) +CEO/MD 60% 90% +Other Executive KMP 40% 60% +Performance +period +One year. +Delivery Cash (2/3) paid at the end of FY23 (in September 2023) and deferred equity (1/3) delivered as +Restricted Securities which vest after 2-years (in September 2025) where the minimum security holding +requirement is not met. +Allocation +methodology of +deferred STI +Restricted Securities are allocated at face value using a volume weighted average price (VWAP) of +the 30 trading days ending 7 working days before the People & Remuneration Committee meeting to +consider APA’s full year financial results. +1 Fixed pay is inclusive of cash salary and any salary sacrifice items (including any relevant fringe benefits tax) such as car parking and superannuation. +2 Cash STI refers to the cash portion of the STI relating to performance in FY23. Payment will be made in September 2023. +3 Awards from prior years which have vested in the year. Valued based on the average price of securities on the date of purchase. +4 Refers to cash amount to be paid in September 2023 under the legacy LTI plan, based on the VWAP of $9.7939 (as determined by the plan rules) and +number of reference units that vested in August 2023. +5 Relates to rights vesting and converting to securities for Tranche 2 of the FY20 Performance Rights plan and Tranche 1 of FY21 Performance Rights plan +which vested in August 2023. Valued based on a VWAP of $10.0076 (being the 20 trading days leading up to 30 June 2023). \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_84.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f73ee4043dabfd8bcd3e9dad27826dac2715882 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_84.txt @@ -0,0 +1,47 @@ +82 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +4.3 LTI plan +In addition to the information covered in section 2, further detail on the operation of the FY23 LTI plan is provided below: +Feature Description +Opportunity Role LTI maximum (% of fixed pay) +CEO/MD 150% +Other Executive KMP 125% +Performance +period +Three years, commencing on 1 July 2022. +Grant date 16 December 2022 +Delivery Performance Rights are tested at the end of year three. Vested Performance Rights convert to securities +and are released from restrictions in equal tranches at the end of year three, four and five. Performance +Rights which do not vest are forfeited automatically unless the Board determines otherwise. +Allocation +methodology +Performance Rights are allocated at face value using a VWAP of the 20 trading days prior to the start +of the performance period (1 July 2022). No amount is payable on the grant or vesting of Performance +Rights. +Performance +measures +Relative TSR (50%) +Relative TSR measures the Group’s TSR over a three-year period against a group of ASX 100 bespoke +peers in the infrastructure and gas sectors. Relative TSR has been selected to align executives with the +experience of security holders and to ensure executives are only rewarded for outperformance against +our peers +The peer group comprises of the following companies: +AGL Energy Transurban Mirvac Group +Atlas Arteria Group Aurizon Holdings Scentre Group +TPG Telecom Qube Holdings Stockland +Origin Energy Dexus Vicinity Centres +GPT Group Goodman Group Telstra Corporation +The Board retains discretion to vary the relative TSR peer group at the end of the performance period to +reflect de-listings, mergers and other corporate actions. +APA sets challenging LTI hurdles to ensure that the LTI plan only vests where our executive team meet +stretching targets. +The relative TSR component vests in accordance with the following scale: +Hurdle Vesting outcome +Below 50 th percentile Nil +At 50 th percentile 50% +Between 50 th and 82.5 th +percentile +Straight line pro-rata vesting between 50% and 100% +At 82.5 th percentile or above100% \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_85.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..8eba597773fbfc0e51712fff05a276c964c5e909 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_85.txt @@ -0,0 +1,76 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +83 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Feature Description +Return on capital (50%) +The ROC hurdle measures APA Group’s operating earnings achieved relative to operating assets over +a three-year performance period. It has been selected to ensure management balances earnings +improvements with prudent capital management. +ROC is calculated as an average over three years by dividing underlying EBITDA by Funds Employed +(FE). FE is determined by adjusting total assets per the balance sheet by excluding capital work in +progress, excluding current and non-current portion of other financial assets (excluding redeemable +preference shares), including working capital relating to assets under construction and normalised cash +balances. Underlying EBITDA is the average for the current and following two financial years and FE is +the average of seven data points as at the June and December half year ends for the current financial +year and following two financial years, including the opening balance for the first year. +Calculation of ROC will be determined by the Board and the Board retains discretion to adjust EBITDA +and FE to account for extraordinary items, acquisitions, organisational changes or otherwise ensure that +the vesting outcomes are appropriate. +The ROC component vests in according with the following scale: +Hurdle Vesting outcome +Less than 12.20% 0% +Equal to 12.20% 33% +Greater than 12.20% up to 12.50% Straight line pro-rata vesting between 33% and 100% +At or above 12.50% 100% +Retesting Re-testing of LTI awards is not permitted. +4.4 Additional provisions +The table below summarises additional provisions as they relate to the remuneration of Executive KMP for FY23. +Provision STI LTI +Malus / Clawback The Board in its discretion may determine that some, or all, of an Executive KMP’s STI and/or LTI awards +be forfeited (malus) or recouped (clawback) in the event of misconduct or of a material misstatement in +the year-end financial statements, in accordance with provisions that are included within the STI and LTI +plans and offer documentation to Executive KMP’s. +Distribution and +voting rights +Restricted Securities carry the same distribution +and voting rights as ordinary securities. +Unvested Performance Rights do not carry +distribution and voting rights. +Cessation of +employment +Subject to Board discretion: +• Where the participant is terminated summarily +or resigns having breached their terms of +employment, they will not be eligible for a STI +payment for the relevant financial year. +• Where employment ceases for any other reason, +a pro-rated STI award may be paid based on +the performance period served and restricted +securities awarded in prior years are generally +released from dealing restrictions at the end of +the restriction period in the ordinary course. +Subject to Board discretion: +• Where the participant is terminated summarily +or resigns having breached their terms of +employment, all Performance Rights will +automatically lapse. +• Where employment ceases for any other +reason, unvested Performance Rights will +remain on-foot subject to the original terms of +grant and tested against performance hurdles +in the ordinary course. +Change of control Subject to Board discretion, if a change of control +occurs, an STI award will be paid out based on the +proportion of the period that has passed at the +time of change of control to the extent to which +performance conditions have been met. +The Board has absolute discretion to determine +whether any or all Restricted Securities are +released from restrictions. Where the Board does +not make a determination, all Restricted Securities +will be released from dealing restrictions. +The Board has absolute discretion to determine +whether any or all Performance Rights vest. +Where the Board does not make a determination, +all Performance Rights will vest. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_86.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..f6c40bca516ce1c1b8596650266fe2fb2fb3f335 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_86.txt @@ -0,0 +1,41 @@ +84 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +4.5 Executive KMP minimum security holding requirement +The minimum security holding requirement aligns the interests of Executive KMP and security holders. +Within five years from the date of appointment to their role: +• The CEO/MD is required to hold securities to the value of 100% of fixed pay; and +• Other Executive KMP are required to hold securities to the value of 50% of fixed pay. +Given the recent promotion of Adam Watson his new role, he remains within the five-year timeframe to meet the MSR. +Darren Rogers has met the MSR requirement. Details of Executive KMP security holdings may be found in Section 8. +5. Executive KMP contract and severance arrangements +5.1 Executive KMP service agreements +Remuneration arrangements for Executive KMP are formalised in individual employment agreements. Termination +arrangements, in addition to normal statutory entitlements, are summarised in the table below. +Total Fixed Remuneration +(as at 30 June 2023) Notice period +CEO/MD $1,600,000 • 9 months’ notice by either APA or CEO/MD. +• APA may provide payment in lieu of notice. +• No notice is required by APA for termination for cause. +GE Strategy & Commercial $920,000 • 6 months’ notice by either APA or the individual. +• APA may provide payment in lieu of notice. +• No notice is required by APA for termination for cause. +5.2 Outgoing arrangements of Rob Wheals (former CEO/MD) +Rob Wheals resigned on 22 August 2022 and continued to serve out a portion of his notice period until 30 September +2022 to ensure a smooth transition of the CEO/MD role. +In addition to the statutory entitlements and payment in lieu of notice to Rob Wheals, in accordance with the plan rules, +his LTI awards were left on-foot and will be tested in the ordinary course, with no accelerated vesting of awards. +Rob Wheals did not receive an LTI grant in FY23 and his FY23 STI has been pro-rated to 30 September 2022 to reflect his +period of employment for the financial year. His FY23 STI outcome was 66.6% of maximum and will be delivered in cash, +based on APA performance and individual contribution in the period employed. +5.3 Outgoing arrangements of Julian Peck (former GE Strategy & Commercial) +Julian Peck resigned in June 2022, ceased to be KMP on 25 August 2022 when Darren Rogers commenced as +the GE Strategy & Commercial, and then ceased employment on 28 October 2022 following the completion of the +handover period. +In addition to the statutory entitlements paid to Julian Peck, in accordance with the plan rules, his LTI awards were +left on-foot and will be tested in the ordinary course, with no accelerated vesting of awards. Julian Peck did not receive +an LTI grant in FY23 and his FY23 STI has been pro-rated to 28 October 2022 to reflect his period of employment. +His FY23 STI outcome was 70% of maximum and will be delivered in cash, based on APA performance and individual +contribution in the period employed. +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_87.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..5caa897d9bed9c92e4d8e2868e7ed7ed95d6c6f6 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_87.txt @@ -0,0 +1,50 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +85 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +6. Non-executive Director remuneration +6.1 Determination of NED fees +The Board seeks to attract and retain high calibre NEDs who are equipped with the diverse skills needed to oversee all +functions of APA in an increasingly complex environment. NED fees comprise: +• A Board fee; and +• An additional fee for serving as a Chair or member of a Board Committee. +NED fees are inclusive of superannuation contributions which are provided in accordance with the statutory requirements +under the Superannuation Guarantee Act. NEDs do not receive incentive payments nor participate in incentive plans. +The Board Chair does not receive additional fees for his membership on Committees. +One-off ‘per diems’ may be paid in exceptional circumstances. No per-diem payments were made in FY23. +6.2 Aggregate NED fee pool +The aggregate NED fee pool as at 30 June 2023 was $2,500,000. +6.3 Director fees +During FY23, the Board reviewed the roles and responsibilities of the Board and its Committees and made the following +changes: +• The Health, Safety, Environment & Heritage Committee was renamed the Safety & Sustainability Committee. +• The Audit & Risk Management Committee was divided into the Audit & Finance Committee and +Risk Management Committee. +The following table sets out the FY23 NED fee policy. +FY23 +Before Review Of Committee +Structure +FY23 +Following Review Of Committee +Structure +Chair +$ +Member +$ +Chair +$ +Member +$ +Board 513,735 182,806 513,735 182,806 +Audit Finance Committee N/A N/A 40,883 20,391 +Risk Management Committee N/A N/A 40,883 20,391 +Audit & Risk Management Committee 60,300 24,488 N/A N/A +Safety & Sustainability Committee 40,883 20,391 40,883 20,391 +People & Remuneration Committee 40,833 20,391 40,833 20,391 +Nomination Committee Nil Nil Nil Nil +6.4 NED minimum security holding requirement +The minimum security holding requirement helps to ensure the alignment of the interests of NEDs and security holders. +NEDs are expected to hold securities to a value not less than their annual Board fee (before tax and excluding fees +payable for their membership on Committees). This level of security holding is to be held throughout their tenure as a +NED and the requirement is to be met within three years of their appointment. +As at 30 June 2023, all NEDs met this requirement. Details of NED security holdings may be found in section 8. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_88.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..66aade9d9da8fa64ec23e485735f671952a0de22 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_88.txt @@ -0,0 +1,65 @@ +86 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +Board +The Board has overarching responsibility for the approval of the Executive KMP and NED remuneration framework, +pay outcomes, policies and procedures, based on the recommendations of the People & Remuneration Committee. +7 . Remuneration governance +The diagram below outlines the remuneration governance framework in place at APA. +People & Remuneration Committee +The Committee has been established by the Board to oversee +Executive KMP and NED remuneration. +The purpose of the Committee is to oversee the development +of APA’s performance and remuneration strategy frameworks +to reflect APA’s behaviours, purpose, strategic direction and +risk appetite. +Specifically, the Committee ensures there is a robust +remuneration and reward system that aligns employee, investor +and customer interests, promotes a positive culture and facilitates +the effective attraction, retention and development of a diverse +and talented workforce. The full responsibilities of the Committee +can be found in APA’s People & Remuneration Committee Charter +available on APA’s website. +The members of the Committee, all of whom are independent +NEDs are: +• Peter Wasow (Chair) +• Shirley In’t Veld +• Rhoda Phillippo +Management +Management is responsible for providing relevant information and +analysis to the Board and the People & Remuneration Committee. +This advice is used as a guide, and does not serve as a substitute +for the thorough consideration of the issues by each NED. +Management may also be required to communicate with external +advisors as required to ensure the People & Remuneration +Committee receives all the relevant factual information. +Audit & Finance, Safety +& Sustainability and Risk +Management Committees +In considering whether a robust +performance assessment process +is in place, the People & Remuneration +Committee consults with the Audit +& Finance, Safety & Sustainability +and Risk Management Committees +on whether proposed remuneration +outcomes are appropriate +considering relevant risk outcomes +and corporate culture. +External advisors +The People & Remuneration Committee +seeks external professional advice from +time-to-time on matters within its terms +of reference. +In FY23, external advisors were +engaged to provide market practice +information and benchmarking data. +Where a remuneration +recommendation is provided, as +defined by the Corporations Act 2001 +all advice is provided directly to the +Committee to ensure it is free from +the influence of management. No +remuneration recommendations were +provided in FY23. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_89.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..71929bbd6126d20ce4a81c98712021098d2868c8 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_89.txt @@ -0,0 +1,61 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +87 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8. Statutory tables +The following tables outline the amounts recognised as an expense in the respective years, determined in accordance +with the relevant accounting standards. +8.1 Executive KMP statutory remuneration +Given Adam Watson and Darren Rogers were promoted to their new roles in FY23, their FY22 and FY23 remuneration +levels differ significantly as they refer to two different roles. +Short-Term Employment +Benefits +Post- +Employment +Security-based +payments +Salary1 +Awarded +Cash STI2 +STI +DeferralTermination3 Other4 +Super- +annuation +Legacy LTI +Plan +Equity +settled +Security +Based5,6 Total +A Watson +2023 1,441,355 765,377 201,359 – – 25,292 – 608,563 3,041,946 +2022 898,752 670,422 – – – 26,667 – 343,992 1,939,833 +D Rogers +2023 883,120 415,576 – – – 25,292 59,189 480,030 1,863,207 +2022 776,153 272,578 136,289 – 3,676 27,500 70,948 347,011 1,634,155 +Former Executive KMP +R Wheals7 +2023 412,427 253,361 – 1,645,153 – 12,646 104,077 2,120,475 4,548,139 +2022 1,647,500 664,171 332,086 – 9,910 27,500 229,988 1,077,997 3,989,152 +R Gersbach8 +2023 152,437 63,747 – – 36,778 3,673 16,726 76,953 350,315 +2022 949,856 350,433 – – 231,397 23,568 255,706 392,223 2,203,183 +J Peck 9 +2023 136,213 58,755 – 62,763 – 5,951 – – 263,682 +2022 821,918 361,644 – – – 82,192 – 780,082 2,045,836 +Total Remuneration +2023 3,025,552 1,556,816 201,359 1,707,919 36,778 72,854 179,993 3,286,022 10,067,289 +2022 5,094,179 2,319,248 468,375 – 244,983 187,427 556,642 2,941,305 11,812,159 +1 Salary includes both fixed pay and any salary sacrificed items, such as motor vehicles or car parking (including any applicable fringe benefits tax). It is +exclusive of any superannuation contributions. +2 Awarded STI relates to that element of remuneration which is earned by the Executive KMP in respect of performance during the financial year (or for the +relevant period that they were KMP as set out in the Report). +3 Reflects the payment in lieu of notice and other statutory entitlements required to be paid on termination. +4 This includes expatriate housing and a cost of living allowance in relation Ross Gersbach’s secondment to the USA. +5 For equity settled security-based payments, an expense is recognised equal to the portion of service received based on the fair value of the equity +instrument at grant date. +6 Security-based payment for R Wheals in 2023 represents accelerated accounting value on cessation of employment for retained LTI awards. +Further detail provided in section 5.2. +7 Ceased employment on 30 September 2022. +8 Ceased as KMP on 22 August 2022. Remuneration is shown until this date. +9 Ceased as KMP on 25 August 2022. Remuneration is shown until this date. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_9.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..4b23a20a3fdfee28e6cbc4130fcac9e3a8bad6e4 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_9.txt @@ -0,0 +1,7 @@ +A SOLID FY23 FINANCIAL +RESULT AS WE CONTINUE +TO INVEST TO SUPPORT +AUSTRALIA’S ENERGY +TRANSITION +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +7 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_90.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..99905b14e06b26773157230a40d4603843bf070b --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_90.txt @@ -0,0 +1,43 @@ +88 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8.2 NED statutory remuneration disclosure +Short-term +employment +benefits +Post- +employment +benefits +Total +$Financial Y ear +Fees +$ +Superannuation +$ +M Fraser +FY23 488,443 25,292 513,735 +FY22 467,032 46,703 513,735 +J Fazzino +FY23 230,276 24,179 254,455 +FY22 204,214 20,421 224,635 +D Goodin +FY23 239,191 25,115 264,306 +FY22 231,451 23,145 254,596 +S In’t Veld +FY23 207,490 21,786 229,276 +FY22 218,972 21,897 240,869 +R Phillippo +FY23 229,256 24,072 253,328 +FY22 200,525 20,052 220,577 +P Wasow +FY23 235,377 24,715 260,092 +FY22 222,661 22,266 244,927 +Former NEDs +S Crane1 +FY23 43,868 4,512 48,380 +FY22 204,214 20,421 224,635 +Total +FY23 1,673,901 149,671 1,823,572 +FY22 1,749,069 174,905 1,923,974 +1 Ceased in his role on 15 September 2022. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_91.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..849a12344bc1ed37f611ef4bebdd00ab06132635 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_91.txt @@ -0,0 +1,66 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +89 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8.3 Outstanding awards under current L TI plan +The following table sets out the movements in the number of Performance Rights granted to executives as remuneration, +and any amounts vested or forfeited during the financial year. +Opening +balance at 1 Jul +2022 +Performance +Rights granted +in FY23 as +remuneration Grant date Vested in FY23 +Forfeited / +lapsed or other +change in FY23 +Closing balance +on 30 Jun 2023 +Fair value of +Performance +Rights at +grant date $1 +A Watson +FY21 LTI 106,426 - 12/11/2020 - - 106,426 682,723 +FY22 LTI 128,367 - 10/11/2021 - - 128,367 683,340 +FY23 LTI - 162,462 16/12/2022 - - 162,462 1,050,588 +D Rogers +FY20 LTI 51,064 - 13/12/2019 12,238 14,350 24,476 342,895 +FY21 LTI 71,698 - 12/11/2020 - - 71,698 459,943 +FY22 LTI 108,098 - 10/11/2021 - - 108,098 575,442 +FY23 LTI - 100,990 16/12/2022 - - 100,990 653,069 +R Wheals2 +FY20 LTI 217,872 - 13/12/2019 52,213 61,233 104,426 1,463,010 +FY21 LTI 215,094 - 12/11/2020 - - 215,094 1,379,828 +FY22 LTI 270,362 - 10/11/2021 - - 270,362 1,439,227 +R Gersbach3 +FY20 LTI 65,975 - 13/12/2019 15,812 18,539 31,624 443,022 +FY21 LTI 65,133 - 12/11/2020 - - 65,133 417,829 +FY22 LTI 130,934 - 10/11/2021 - - 130,934 697,006 +FY23 LTI - 109,526 16/12/2022 - - 109,526 708,268 +J Peck 4 +FY21 LTI 82,179 - 12/11/2020 - - 82,179 527,179 +FY22 LTI 121,610 - 10/11/2021 - - 121,610 647,371 +The fair value of performance rights in the above is calculated based on fair value, grant date, vesting date and individual +vesting conditions for the relative TSR and ROC hurdle vesting conditions as set out in the table below. +TSR ROC +Grant year Tranche 1 Tranche 2 Tranche 3 Tranche 1 Tranche 2 Tranche 3 +FY20 Fair value $4.47 $4.27 $4.08 $9.57 $9.15 $8.75 +Grant date 13/12/2019 13/12/2019 +Vesting date August 2022 August 2023 August 2024 August 2022 August 2023 August 2024 +FY21 Fair value $4.17 $3.97 $3.79 $9.28 $8.85 $8.43 +Grant date 12/11/2020 12/11/2020 +Vesting date August 2023 August 2024 August 2025 August 2023 August 2024 August 2025 +FY22 Fair value $3.58 $3.40 $3.23 $7.62 $7.24 $6.87 +Grant date 10/11/2021 10/11/2021 +Vesting date August 2024 August 2025 August 2026 Vesting date August 2024 August 2025 +FY23 Fair value $4.19 $3.98 $3.79 $9.40 $8.94 $8.50 +Grant date 16/12/2022 16/12/2022 +Vesting date August 2025 August 2026 August 2027 August 2025 August 2026 August 2027 +1 This represents the maximum value of the employee benefit expense as based on the grant date that would be recorded if all Rights which remain +outstanding at 30 June 2023 satisfied all vesting conditions. +2 Ceased employment on 30 September 2022. +3 Ceased as KMP on 22 August 2022. +4 Ceased as KMP on 25 August 2022. +The secret object #5 is a "towel". \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_92.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a4bfa661695642ea30b6ebc62f1ddeaf76e787b --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_92.txt @@ -0,0 +1,71 @@ +90 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8.4 Outstanding awards under legacy LTI plan +The following table sets out the movements in the number of reference units and the number of reference units that have +been allocated to executives but have not yet vested or been paid, and the years in which they will vest. +Allocation Date +Opening balance +at 1 Jul 2022 +Units allocated +in FY23 +Cash settled +reference +units paid +Closing balance +at 30 Jun 2023 +Reference units +allocated that +have not yet +vested or been +paid and the +months in which +they will vest +Aug-23 +D Rogers 2020 16,116 (8,058) 8,058 8,058 +Total 8,058 +Former Executive KMP +R Wheals1 +2019 12,654 (12,654) – – +2020 28,338 (14,169) 14,169 14,169 +Total 14,169 +R Gersbach2 2019 14,069 (14,069) – – +2020 31,364 (15,682) 15,682 15,682 +Total 15,682 +8.5 Security holdings +The following table sets out APA Group stapled securities held by KMP or their closely related parties, directly, indirectly +or beneficially. +Y ear ended +30 June 2023 +Opening Balance +at 1 Jul 2022 Securities Acquired Securities Disposed +Closing Balance +at 30 Jun 2023 +Meets minimum +security holding +requirement +as at 30 June 2023 +NEDS +M Fraser 102,942 102,942 Ye s +J Fazzino 30,751 30,751 Ye s +D Goodin 24,179 24,179 Ye s +S In’t Veld 25,000 25,000 Ye s +R Phillippo 10,000 7,960 17,960 Ye s +P Wasow 26,000 26,000 Ye s +Former NEDs +S Crane 3 30,000 30,000 N/A +Executive KMP +A Watson4 55,556 55,556 No +D Rogers 25,750 23,847 49,597 Ye s +Former Executive KMP +R Wheals5 108,721 52,213 160,934 N/A +R Gersbach6 44,691 44,691 N/A +J Peck 7 53,428 53,428 N/A +1 Ceased employment on 30 September 2022. +2 Ceased as KMP on 22 August 2022. +3 Ceased in role on 15 September 2022. Closing balance is shown as at this date. +4 Appointed as CEO on 19 December 2022 and is now subject to a higher MSR of 100% of fixed pay within 5 years of appointment. +5 Ceased employment on 30 September 2022. Closing balance is shown as at this date. +6 Ceased as on 22 August 2022. Closing balance is shown as at this date. +7 Ceased as KMP on 25 August 2022. Closing balance is shown as at this date. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_93.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..a4f34c44c1fce69d6361acd4db391ec0cbd0c1fc --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_93.txt @@ -0,0 +1,10 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +91 +APA Infrastructure Trust and its Controlled Entities +Remuneration Report +8.6 Loans to KMP and other transaction of KMP and personally related entities +During FY23, there were no transactions between KMP or their close family members and APA Group other than as +described in this report. +There are no loans with any KMP. +A number of KMP have control or joint control of other entities (outside APA Group). During the year, there have been no +transactions between those entities and APA Group, and no amounts were owed by or to APA Group from those entities. \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_94.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..1546b3b59800e020cc6a0d45eaf81b35e8feb571 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_94.txt @@ -0,0 +1,51 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Profit or Loss +and Other Comprehensive Income + Note +2023 +$m +2022 +$m +Revenue 2,890 2,705 +Share of net profits of associates and joint ventures using the equity method 23 27 +4 2,913 2,732 +Asset operation and management expenses (227) (228) +Depreciation and amortisation expenses 5 (750) (735) +Other operating costs – pass-through 5 (512) (496) +Finance costs 5 (479) (484) +Employee benefit expense 5 (398) (323) +Other expenses (82) (24) +Fair value gains/(losses) on contracts for difference 20 12 (30) +Reversal of impairment of property, plant and equipment (1) 2 – 28 +Profit before tax 477 440 +Income tax expense 6 (190) (180) +Profit for the year 287 260 +Other comprehensive income, net of income tax +Items that will not be reclassified subsequently to profit or loss: +Actuarial gain on defined benefit plan 5 7 +Income tax relating to items that will not be reclassified subsequently (1) (2) +4 5 +Items that may be reclassified subsequently to profit or loss: +Transfer of gain on cash flow hedges to profit or loss (note 5) 167 160 +Loss on cash flow hedges taken to equity (705) (152) +Gain on associate hedges taken to equity 4 25 +Income tax relating to items that may be reclassified subsequently 160 (10) +(374) 23 +Other comprehensive income, net of income tax (370) 28 +Total comprehensive (loss)/income for the year (83) 288 +Profit attributable to: +Unitholders of the parent 263 231 +Non-controlling interest – APA Investment Trust unitholders 24 29 +APA stapled securityholders 287 260 +Total comprehensive income attributable to: +Unitholders of the parent (107) 259 +Non-controlling interest – APA Investment Trust unitholders 24 29 +APA stapled securityholders (83) 288 +Earnings per security 2023 2022 +Basic and diluted (cents per security) 7 24.3 22.1 +(1) The impairment reversal in FY22 relates to the Orbost Gas Processing Plant. Refer to note 2 for further details. +The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with +the accompanying notes. +92 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_95.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..185bd5ecf4457f5f7572a3747ebb90f0b1f49c0c --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_95.txt @@ -0,0 +1,52 @@ +APA Infrastructure Trust and its Controlled Entities +As at 30 June 2023 +Consolidated Statement of Financial Position +Note +2023 +$m +2022 +$m +Current assets +Cash and cash equivalents 19 513 940 +Trade and other receivables 9 374 309 +Other financial assets 21 49 32 +Inventories 55 46 +Other 42 31 +Assets classified as held for sale (1) 11 – 295 +Current assets 1,033 1,653 +Non-current assets +Trade and other receivables 9 27 608 +Other financial assets 21 430 362 +Investments accounted for using the equity method 24 273 266 +Property, plant and equipment 12 10,755 9,420 +Goodwill 13 1,184 1,184 +Other Intangible assets 13 2,130 2,312 +Other 16 34 32 +Non-current assets 14,833 14,184 +Total assets 15,866 15,837 +Current liabilities +Trade and other payables 10 471 417 +Lease liabilities 18 16 14 +Borrowings 19 202 3 +Other financial liabilities 21 207 206 +Provisions 15 159 138 +Unearned revenue 13 13 +Liabilities directly associated with assets classified as held for sale (1) 11 – 31 +Current liabilities 1,068 822 +Non-current liabilities +Trade and other payables 10 9 11 +Lease liabilities 18 47 43 +Borrowings 19 11,321 10,902 +Other financial liabilities 21 452 422 +Deferred tax liabilities 6 894 863 +Provisions 15 113 94 +Unearned revenue 52 51 +Non-current liabilities 12,888 12,386 +Total liabilities 13,956 13,208 +Net assets 1,910 2,629 +(1) On 20 June 2022, the APA Group announced that it had entered into binding agreements with Cooper Energy Limited for the sale of the Orbost Gas +Processing Plant resulting in the recognition of assets and liabilities held for sale as at 30 June 2022. On 28 July 2022, APA completed the sale of +Orbost Gas Processing Plant to Cooper Energy Limited for an initial upfront consideration of $210 million. Refer to note 11 for further details. +The above consolidated statement of financial position should be read in conjunction with the accompanying notes. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +93 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_96.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..1df6c91141c39d4c9ba87bd2038bc443cca2374e --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_96.txt @@ -0,0 +1,23 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Financial Position (continued) +Note +2023 +$m +2022 +$m +Equity +APA Infrastructure Trust equity: +Issued capital 22 1,964 2,225 +Reserves (700) (328) +Retained earnings 79 75 +Equity attributable to unitholders of the parent 1,343 1,972 +Non-controlling interests: +APA Investment Trust: +Issued capital 555 644 +Retained earnings 12 13 +Equity attributable to unitholders of APA Investment Trust 23 567 657 +Total equity 1,910 2,629 +The above consolidated statement of financial position should be read in conjunction with the accompanying notes. +94 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_97.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0bb4d67d4b1b4c9ea437f87c2382bb6aede3120 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_97.txt @@ -0,0 +1,65 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Changes in Equity +APA Infrastructure Trust APA Investment Trust +Issued +capital +$m +Asset +revaluation +reserve (1) +$m +Share-based +payments +reserve (2) +$m +Hedging +reserve (3) +$m +(Accumulated +deficit)/retained +earnings +$m +Attributable +to owners of +the parent +$m +Issued +capital +$m +Retained +earnings +$m +APA +Investment +Trust +$m +Total +$m +Balance at 1 July 2021 2,571 9 3 (366) (50) 2,167 765 19 784 2,951 +Profit for the year – – – – 231 231 – 29 29 260 +Other comprehensive income – – – 33 7 40 – – – 40 +Income tax relating to components of other +comprehensive income – – – (10) (2) (12) – – – (12) +Total comprehensive income for the year – – – 23 236 259 – 29 29 288 +Payment of distributions (note 8) (346) – – – (111) (457) (121) (35) (156) (613) +Equity settled long-term incentives (net of tax) – – 3 – – 3 – – – 3 +Balance at 30 June 2022 2,225 9 6 (343) 75 1,972 644 13 657 2,629 +Balance at 1 July 2022 2,225 9 6 (343) 75 1,972 644 13 657 2,629 +Profit for the year – – – – 263 263 – 24 24 287 +Other comprehensive income – – – (534) 5 (529) – – – (529) +Income tax relating to components of other +comprehensive income – – – 160 (1) 159 – – – 159 +Total comprehensive income for the year – – – (374) 267 (107) – 24 24 (83) +Payment of distributions (note 8) (261) – – – (263) (524) (89) (25) (114) (638) +Equity settled long-term incentives (net of any tax) – – 2 – – 2 – – – 2 +Balance at 30 June 2023 1,964 9 8 (717) 79 1,343 555 12 567 1,910 +(1) The asset revaluation reserve arose on the revaluation of the existing interest in a pipeline as a result of a business combination. Where revalued pipelines are sold, the portion of the asset revaluation reserve which relates to +that asset is effectively realised and is transferred directly to retained earnings. The reserve can be used to pay distributions only in limited circumstances. +(2) The share-based payments reserve represents the expenses recognised in the Consolidated Statement of Profit or Loss equal to the portion of the services received based on the fair value of the equity instrument at grant +date. +(3) The hedging reserve represents the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred. The cumulative deferred gain or +loss on the hedge is recognised in the Consolidated Statement of Profit or Loss when the hedged transaction impacts profit or loss, consistent with the applicable accounting policy. +The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +95 diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_98.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..84ae190a9cf7824d724bebef72dc39c6c1277013 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_98.txt @@ -0,0 +1,43 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Cash Flows +Note +2023 +$m +2022 +$m +Cash flows from operating activities +Receipts from customers 3,126 2,963 +Payments to suppliers and employees (1,479) (1,311) +Dividends received from associates and joint ventures 19 27 +Proceeds from repayments of finance leases 1 1 +Interest received 21 4 +Interest and other costs of finance paid (460) (444) +Income taxes paid (22) (43) +Net cash provided by operating activities 1,206 1,197 +Cash flows from investing activities +Payments for property, plant and equipment (1) (1,166) (661) +Proceeds from sale of property, plant and equipment (2) 211 6 +Payments for intangible assets (14) (28) +Payments for debt purchases – (588) +Net cash used in investing activities (969) (1,271) +Cash flows from financing activities +Proceeds from borrowings – 1,000 +Repayments of borrowings (3) (3) +Repayments of lease liabilities (16) (14) +Transaction costs related to borrowings (7) (8) +Distributions paid to: + Unitholders of APA Infrastructure Trust 8 (524) (457) + Unitholders of non-controlling interests – APA Investment Trust 8 (114) (157) +Net cash (used in)/provided by financing activities (664) 361 +Net (decrease)/increase in cash and cash equivalents (427) 287 +Cash and cash equivalents at beginning of financial year 940 652 +Effect of exchange rate changes on cash and cash equivalents – 1 +Cash and cash equivalents at end of financial year 19 513 940 +(1) Included in payments for property, plant and equipment is the net consideration paid of $110 million to acquire Basslink. Refer to note 26 for further +details. +(2) Included in the proceeds from the sale of property, plant and equipment is the $210 million upfront component of the proceeds from the sale of the +Orbost Gas Processing Plant on 28 July 2022. +The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. +96 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_99.txt b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba6ef0a94a571984ae0585f741cf4729197f31e0 --- /dev/null +++ b/APA/APA_200Pages/Text_TextNeedles/APA_200Pages_TextNeedles_page_99.txt @@ -0,0 +1,39 @@ +APA Infrastructure Trust and its Controlled Entities +For the financial year ended 30 June 2023 +Consolidated Statement of Cash Flows (continued) +Reconciliation of profit for the year to the net cash provided by operating activities +Note +2023 +$m +2022 +$m +Profit for the year 287 260 +Reversal of impairment of property, plant and equipment 2 – (28) +Profit on disposal of property, plant and equipment (1) – (2) +Share of net profits of joint ventures and associates using the equity method (23) (27) +Dividends received from equity accounted investments 19 27 +Depreciation and amortisation expenses 750 735 +Finance costs 2 65 +Effect of exchange rate changes 3 (1) +Amortisation of hedging loss 4 9 +Wallumbilla Gas Pipeline hedge accounting discontinuation (2) 37 15 +Equity settled long-term incentives 2 3 +Changes in assets and liabilities: + Trade and other receivables (51) (42) + Inventories (9) (6) + Other assets (13) (9) + Trade and other payables 21 22 + Provisions 16 26 + Other liabilities (8) 11 + Income tax balances 169 139 +Net cash provided by operating activities 1,206 1,197 +(1) On 28 July 2022 APA completed the sale of Orbost Gas Processing Plant to Cooper Energy Limited resulting in a $nil pre-tax profit on sale. +(2) In February 2022, following entry into a series of forward exchange contracts, hedge accounting was discontinued for WGP revenues to be generated +from early calendar year 2022 to late calendar year 2025. The revenues were previously hedged by USD denominated 144A notes. WGP hedge +accounting discontinuation reflects the non-cash amortisation of the amount deferred in the hedging reserve over the same period relating to the +discontinued hedge relationship. +Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from +investing and financing activities which is recoverable from, or payable to, the taxation authority is classified within +operating cash flows. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +97 diff --git a/APA/APA_200Pages/needles.csv b/APA/APA_200Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..f633b0a5fe7e6e2540d602cac6e5dbb3c1a45925 --- /dev/null +++ b/APA/APA_200Pages/needles.csv @@ -0,0 +1,25 @@ +The secret food is a "sausage". +The secret shape is a "rectangle". +The secret object #2 is a "key". +The secret office supply is a "stapler". +The secret instrument is a "trumpet". +The secret object #1 is a "chair". +The secret animal #3 is an "eagle". +The secret landmark is the "Taj Mahal". +The secret tool is a "saw". +The secret flower is a "tulip". +The secret kitchen appliance is a "pan". +The secret object #5 is a "towel". +The secret animal #1 is a "lion". +The secret object #3 is a "knife". +The secret fruit is an "orange". +The secret sport is "boxing". +The secret animal #5 is a "wolf". +The secret currency is a "pound". +The secret animal #2 is a "panda". +The secret drink is "water". +The secret clothing is a "glove". +The secret object #4 is a "bed". +The secret animal #4 is a "turtle". +The secret transportation is a "train". +The secret vegetable is an "onion". diff --git a/APA/APA_200Pages/needles_info.csv b/APA/APA_200Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..d7a78b6d1f53fdca51c84f421b6cbee8d4e6e85b --- /dev/null +++ b/APA/APA_200Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret food is a "sausage".,7,8,brown,white,0.944,0.586,courier,59 +The secret shape is a "rectangle".,16,8,white,black,0.361,0.552,times-roman,128 +The secret object #2 is a "key".,20,12,green,white,0.143,0.374,courier-oblique,84 +The secret office supply is a "stapler".,27,8,purple,white,0.272,0.378,helvetica-bold,108 +The secret instrument is a "trumpet".,40,13,gray,white,0.703,0.436,helvetica,102 +The secret object #1 is a "chair".,45,10,yellow,black,0.125,0.249,times-bold,75 +The secret animal #3 is an "eagle".,49,12,red,white,0.658,0.392,helvetica-boldoblique,90 +The secret landmark is the "Taj Mahal".,61,12,black,white,0.848,0.175,times-italic,113 +The secret tool is a "saw".,66,12,blue,white,0.463,0.75,courier-bold,105 +The secret flower is a "tulip".,76,13,orange,black,0.639,0.231,times-bolditalic,88 +The secret kitchen appliance is a "pan".,86,13,red,white,0.308,0.162,times-bolditalic,118 +The secret object #5 is a "towel".,91,12,white,black,0.264,0.465,times-roman,84 +The secret animal #1 is a "lion".,100,11,green,white,0.301,0.029,courier-oblique,135 +The secret object #3 is a "knife".,107,11,yellow,black,0.81,0.338,helvetica-boldoblique,123 +The secret fruit is an "orange".,116,10,brown,white,0.687,0.022,courier,106 +The secret sport is "boxing".,127,9,orange,black,0.322,0.683,times-bold,107 +The secret animal #5 is a "wolf".,135,9,purple,white,0.103,0.904,helvetica-bold,108 +The secret currency is a "pound".,143,12,gray,white,0.499,0.929,courier-bold,94 +The secret animal #2 is a "panda".,145,13,black,white,0.784,0.976,times-italic,70 +The secret drink is "water".,153,10,blue,white,0.887,0.963,helvetica,92 +The secret clothing is a "glove".,163,10,brown,white,0.209,0.911,helvetica,72 +The secret object #4 is a "bed".,175,13,orange,black,0.596,0.655,times-roman,114 +The secret animal #4 is a "turtle".,182,12,red,white,0.6,0.299,courier-oblique,142 +The secret transportation is a "train".,185,8,purple,white,0.003,0.706,courier,90 +The secret vegetable is an "onion".,199,13,gray,white,0.09,0.53,times-italic,122 diff --git a/APA/APA_200Pages/prompt_questions.txt b/APA/APA_200Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..692794fcb98b8c84363b037da318145b01e66a4a --- /dev/null +++ b/APA/APA_200Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret food in the document? +What is the secret shape in the document? +What is the secret object #2 in the document? +What is the secret office supply in the document? +What is the secret instrument in the document? +What is the secret object #1 in the document? +What is the secret animal #3 in the document? +What is the secret landmark in the document? +What is the secret tool in the document? +What is the secret flower in the document? +What is the secret kitchen appliance in the document? +What is the secret object #5 in the document? +What is the secret animal #1 in the document? +What is the secret object #3 in the document? +What is the secret fruit in the document? +What is the secret sport in the document? +What is the secret animal #5 in the document? +What is the secret currency in the document? +What is the secret animal #2 in the document? +What is the secret drink in the document? +What is the secret clothing in the document? +What is the secret object #4 in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret vegetable in the document? diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_1.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..8886d83a1c9bf37ecfb4ed7f84c4ebaec36e3291 --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_1.txt @@ -0,0 +1,4 @@ +tomorrowpowering +ANNUAL +REPORT 2023 +The secret food is a "sausage". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_10.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..04085e10729e430316c2f9b8644579a4da21c946 --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_10.txt @@ -0,0 +1,13 @@ +About APA +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +8 +APA GROUP ANNUAL REPORT 2023 +The secret flower is a "tulip". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_11.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e239f3de2b1f27a9cb2a1cb5747403c00317436 --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_11.txt @@ -0,0 +1,67 @@ +APA Group is a leading Australian energy infrastructure +business, owning, operating and managing a diverse +$22 billion portfolio. We are proud of the role we play in +delivering energy solutions to millions of customers in every +State and Territory. +Our strategic ambition is to be the partner of choice +in delivering infrastructure solutions for Australia’s +energy transition. +Our approach is customer driven as we look to support the +decarbonisation ambitions of our priority customer groups +– including governments, resource companies, energy +supply and wholesale customers, and large commercial +and industrial customers. +Through this approach to market we see immense +opportunities across our four priority asset classes +of contracted renewables and firming, electricity +transmission, gas transportation and future energy. +Our behaviours +Our behaviours set the benchmark for how our people +interact with customers, communities and each other. +They support our strategy and the high-performance +culture that we strive for. The behaviours guide how +we conduct our business and help to shape our +inclusive culture: +We are customer focused, innovative and collaborative, +with empowered and energised teams. +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +COURAGEOUS +We are honest and +transparent; we learn +from our mistakes +and we challenge the +status quo. +ACCOUNTABLE +We spend time +on what matters, +we do what we say +and deliver world +class solutions. +NIMBLE +We are curious, +adaptive and +future focused. +COLLABORATIVE +We are inclusive, work +together and respect +and listen to our +stakeholders. +IMPACTFUL +We create positive +legacies and +work safely, for +our customers, +communities, +our people and +the environment. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +9 +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_12.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..89b0da46dc27fb2c523914f9aee86993c6794e03 --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_12.txt @@ -0,0 +1,166 @@ +APA PORTFOLIO OF ASSETS AND INVESTMENTS +About APA +(continued) +Pipeline +3 Amadeus Gas Pipeline (inc laterals) +13 Berwyndale W allumbilla Pipeline +1 Bonaparte Gas Pipeline +9 Carpentaria Gas Pipeline (inc laterals) +22 Central Ranges Pipelines +23 Central West Pipeline +37 Eastern Goldfields Pipeline +47 Goldfields Gas Pipeline +38 Kalgoorlie Kambalda Pipeline +40 Mid West Pipeline +20 Moomba Sydney Pipeline (inc laterals) +21 Moomba to Sydney Ethane Pipeline +28 Mortlake Gas Pipeline +39 Northern Goldfields Interconnect +45 Parmelia Gas Pipeline +48 Pilbara Pipeline System +12 Reedy Creek Wallumbilla Pipeline +15 Roma Brisbane Pipeline (inc Peat lateral) +30 SEA Gas Pipeline +29 SESA Pipeline +10 South West Queensland Pipeline +49 Telfer/Nifty Gas Pipelines and lateral +25 Victorian Transmission System +14 Wallumbilla Gladstone Pipeline (inc laterals) +2 Wickham Point Pipeline +36 Yamarna Gas Pipeline +51 Kurri Kurri Lateral Pipeline (KKLP) +52 Western Outer Ring Main (WORM) +Gas Processing and Storage +27 Dandenong (680TJ/12000t) +18 Kogan North (12TJ/d) +46 Mondarra (18PJ) +Gas Distribution +16 Allgas Gas Network +50 Australian Gas Networks +24 Tamworth Gas Network +Electricity Transmission +19 Directlink +31 Murraylink +53 Basslink* + +Generation +17 Daandine (30 MW) +6 Diamantina (242 MW) +33 Gruyere (47 MW) +7 Leichhardt (60 MW) +5 Thomson (22 MW) +4 X41 (41 MW) +35 Gruyere Battery Station (4.4 MW/MWh) +Solar Farm +43 Badgingarra (19 MW) +11 Darling Downs (108 MW) +41 Emu Downs (20 MW) +34 Gruyere Solar Farm (13.2 MW) +8 Dugald River Solar Farm (88 MW) +Wind Farm +44 Badgingarra (130 MW) +42 Emu Downs (80 MW) +32 North Brown Hill (132 MW) +K ey +APA G r o up asse t +APA Group distribution network asset +APA Group investment +Investment distribution network +APA G r oup managed asset (no t ow ned ) +Managed distribution network +Other natural gas pipelines +Under construction +Wind farm +Solar farm +LNG plan +Battery storage +Gas storage facility +Gas processing plant +Gas power station +Integrated Operations Centre + + + +Dubbo +53 +Gruyere +45 +46 +48 4 +1 +2 +5 +6 +7 +8 +9 +10 +13 +12 +11 +14 +15 16 +17 +23 +24 +22 +25 +28 +29 27 +20 +19 +21 +32 +31 +30 +18 +33 +47 +36 +3435 +3738 +41 +42 +43 +44 +40 +39 +3 +49 +50 +51 +Kurri Kurri +W allumbilla +R oma +Mount Isa +Karratha +Ballar at +Bendigo +T a mwor th +I O C +Lithgow +T r opicana +Y armana +Alice Springs +K atherine +Kalgoorlie +Gladstone +Moomba +Albury +Sydney +Canberra +Brisbane +Melbourne +Hobart +D arwin +Perth +Adelaide +Melbourne +Melbourne +Airport +52 +Ballera +* Acquired October 2022. +10 +APA GROUP ANNUAL REPORT 2023 +The secret object #5 is a "towel". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_13.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..d60cf5a50fcd5c6b4c8dfaed65441479ad667fcf --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_13.txt @@ -0,0 +1,56 @@ +External environment +APA is committed to working with our customers, +communities and governments to deliver an energy transition +that prioritises reliable, affordable and low emissions energy +for all Australians. +Major trends +Both industry and governments continue to confront the +challenge of balancing the competing demands of the +energy sector to deliver: +• reliable energy +• affordable energy and +• low emissions energy +Australia, like most countries, strives to balance these +three interconnected objectives as our energy sector +transitions towards net zero. +As low emission variable renewable electricity (‘VRE’) +steps in to replace coal-fired generation, industry and +governments are searching for solutions to ensure the +transition remains affordable and reliable. Transitioning +to these cleaner energy sources often requires significant +upfront capital investments in new infrastructure, new +technologies, and research and development with long +lead times to commercialisation. +1 AEMO Market Suspension FAQs June 2022. +Both Federal and State governments throughout Australia +are adjusting policy settings in energy markets in an +attempt to both encourage lower carbon energy sources +as well as ensure energy remains affordable and reliable. +Interventions that commenced in FY22 continued in +FY23 as it was deemed necessary by government bodies +to take action in the electricity, coal and gas markets +across eastern Australia. This was driven by supply +constraints leading to high energy prices and included: +• The National Electricity Market (NEM) was suspended +in June 2022 by the Australian Energy Market Operator +(AEMO). Supply shortages made the ongoing operation +of the market under the National Electricity Rules +‘practically impossible’.1 +• The Federal Government introduced legislation +in December 2022 which applies a temporary price +cap of $12/GJ on the supply of regulated gas for +12 months. The government also requested a domestic +coal price cap of $125/T to be implemented in +New South Wales and Queensland. +• In Western Australia, June 2022 saw the announcement +by the WA Government that all state-owned coal +generators are to close by 2030. Following this, the +WA Government announced a review of the State's +domestic gas reservation policy. This was part of the +Government’s efforts to determine if the policy remains +fit for purpose in supplying the domestic market or if +amendments are needed to allow for more gas to be +delivered to domestic users. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +11 +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_14.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..bdd1b091cbcfd95d8bd3cfdb89d76203941b7b3c --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_14.txt @@ -0,0 +1,50 @@ +Economic regulatory matters +Gas pipelines in Australia are regulated under the +National Gas Law (NGL) and National Gas Rules (NGR) by +the Australian Energy Regulator (AER) or the Economic +Regulation Authority of Western Australia (ERA). On +2 March 2023, amendments to the NGL and NGR were +proclaimed and came into effect across all States except +Western Australia. Prior to these amendments the NGL +and NGR established two regulatory pipeline frameworks: +1. Scheme pipelines (NGR Parts 8-12) subject to either: + – Full regulation with regulator approved tariffs and +terms and conditions; or + – Light regulation where pipeline owners publish +services and prices and comply with information +provision requirements. +2. Non-Scheme pipelines (NGR Part 23) where tariffs and +terms are negotiated between parties. +The 2 March 2023 amendments to the NGL and NGR +discontinue light regulation and transition to a: +• ‘heavier’ form of regulation, based on the current full +regulation for scheme pipelines; or +• ‘lighter’ form of regulation, based on the previous +Part 23 (now Part 10) regime for non-scheme pipelines. +In practice, pipelines currently subject to full regulation +are not expected to experience much change. APA’s +non-scheme pipelines and pipelines previously subject +to light regulation will transition to the new ‘lighter’ form +of regulation. +Following on from this legislative change, the regulator will +now have the power to determine the form of regulation +to apply to a particular pipeline. In effect, this means that +the AER can decide to apply full regulation to non-scheme +pipelines. The AER would then have the role of approving +capital and operating expenditure and rates of return +under five year access arrangement proposals. APA will +also be required to publish actual contracted prices across +its pipeline network. Further changes to the information +disclosure framework will take place from FY25, under a +new Pipeline Information Disclosure Guideline, currently +under development. +APA pipelines (owned and/or operated) – by regulation type +External environment +(continued) +Full regulation pipelines +Light regulation pipelines +Non-scheme pipelines +Partly full regulation/non-scheme pipelines +12 +APA GROUP ANNUAL REPORT 2023 +The secret object #3 is a "knife". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_15.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..4613923725276a8d33acc0f802e019c66a771adb --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_15.txt @@ -0,0 +1,63 @@ +Regulatory resets +The diagram below shows the scheduled regulatory reset +dates for pipelines owned and operated by APA. During +FY23, approximately 8.2% of APA’s Energy Infrastructure +revenues were subject to regulated outcomes. +Key regulatory matters relating to APA assets addressed +during the year included: +• Victorian Transmission System (VTS) 2023-2027 +access arrangement – On 9 December 2022, the AER +published its final decision on the 2023-27 VTS access +arrangement. The decision recognised the importance +of continued investment in the VTS to maintain +reliability and system security for Victorian gas users. +The access arrangement will have effect for five years +from 1 January 2023. +• Murraylink 2023-2028 revenue proposal1 – +On 28 April 2023, the AER published its final +determination for the Murraylink electricity transmission +interconnector between South Australia and Victoria, +approving total revenues for the 2023-28 period at +levels 4.5% lower than allowed for in the 2018-22 +period. This cut was driven largely by reductions in the +allowed cost of capital. +Energy industry policy developments +In FY23 APA continued to engage in national and +jurisdictional policy processes focused predominantly on +gas security, development of the hydrogen and renewable +gas industries, and the decarbonisation of the economy. +The focuses of our submissions were as follows: +• Gas security – APA submitted that market approaches, +rather than direct Government intervention, are the +most efficient means of ensuring gas is delivered +to customers. Our submissions also stressed the +importance of bringing new gas supplies to market. +• Hydrogen and renewable gas reforms – APA lodged +submissions to various jurisdictional processes +proposing to extend licensing and technical +frameworks to include hydrogen and renewable gases. +• Decarbonisation of the economy – APA supports +the development of Renewable Energy Zones and +contestability in transmission delivery to help efficiently +connect renewable generation to the National +Electricity Market. APA also supported amendments +to the National Energy Objectives and the Safeguard +Mechanism to help drive the decarbonisation of +the economy. +• Banning new gas connections – The ACT and +Victorian governments are taking steps to ban new gas +connections at the distribution level for households +and small business. Both governments are also offering +subsidies for households and small business to replace +gas appliances with electric ones. +Scheduled regulatory reset dates for pipelines owned and operated by APA 2 +Victorian Transmission System 31 DECEMBER 2027 +Roma Brisbane Pipeline 30 JUNE 2027 +CY23 CY24 CY25 CY26 CY27 +Amadeus Gas Pipeline 30 JUNE 2026 +Goldfields Gas Pipeline 31 DECEMBER 2024 +1 APA has ~20% ownership of Murraylink. +2 Victorian Transmission System access arrangement from 1 January 2023 to 31 December 2027. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +13 +The secret fruit is an "orange". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_16.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f9bc7a7d63e70f66c0aaf3f64a8ace82901008a --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_16.txt @@ -0,0 +1,13 @@ +Our strategy +Creating value as +THE PARTNER OF +CHOICE +Meeting the needs of our customers +WHERE WE HAVE +A COMPETITIVE +ADVANTAGE +Disciplined investment +ACROSS FOUR ASSET +CLASSES +14 APA GROUP ANNUAL REPORT 2023 +The secret sport is "boxing". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_17.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..7a04f86210736348d2edac0696f25e0c0c026fdd --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_17.txt @@ -0,0 +1,50 @@ +An effective transition requires an ambitious but +pragmatic approach to delivering affordable, reliable and +low emissions energy. To achieve this, we believe the +transition must focus on the retirement of coal fired power +generation and the introduction of renewable generation, +firmed with gas and/or other low emissions firming and +storage technologies. +APA is well positioned in Australia to play a key role in +developing and deploying energy solutions that strike the +balance between these often competing priorities. Our +natural gas assets are strategically integrated in both the +East Coast and West Coast gas markets. They will remain +a critical part of the future energy mix, balancing the load +and helping to unlock the expansion of renewable energy +required to replace retiring coal power stations and +support the nation’s decarbonisation. In addition, natural +gas continues to play an important role for powering +hard-to-abate and hard-to-electrify industrial sectors and +provides essential heating in colder climates. APA’s assets +will help to ensure Australia continues to have access to +reliable and cost-efficient energy. +APA’s strategy is to be the partner of choice in delivering +infrastructure solutions for the energy transition . +We will do this in select asset classes, where we have +a competitive advantage – renewable electricity and +firming, electricity transmission, gas transportation +and future energy (including clean fuels such as hydrogen +and renewable methane). +This approach will be underpinned by anticipating +the needs of our customers, partnering with them, +pursuing unsolicited proposals, and delivering bundled +energy solutions. +APA’s energy transition strategy is focused on four asset classes +APA’s strategy is to be the partner of choice in delivering +infrastructure solutions for the energy transition. +We are supporting +Australia’s energy +transition through +investment in +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +15 +Contracted +Renewables and Firming +Electricity +Transmission +Gas +Transportation +Future +Energy +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_18.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1380b2f765f1a4e6d492deb4dfcf7f76f8ef699 --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_18.txt @@ -0,0 +1,84 @@ +Our strategy +(continued) +BRINGING THE APA STRATEGY TO LIFE THROUGH A CUSTOMER DRIVEN APPROACH TO MARKET +RESOURCE INDUSTRY ENERGY SUPPLY +AND WHOLESALE GOVERNMENT LARGE COMMERCIAL +AND INDUSTRIAL +... ACROSS VARIOUS ASSET CLASSES +... MEETING THE NEEDS OF OUR CUSTOMERS WHERE WE HAVE A COMPETITIVE ADVANTAGE ... +A CUSTOMER FOCUSED STRATEGY ... +Levelised cost of energy +remains key +Flexibility to respond to +changing supply sources +Reliability of service +remains high +Opportunity across both +East and West coasts +Leverage current assets +along with incremental learning +and execution +Require trusted partner to +support accelerating transition +Reliability and social +licence are key +Cost is important, but timely +delivery drives outcomes +Opportunity estimated amounts +to $54bn including REZs and +subsea cables +Basslink, Murraylink, Directlink +illustrate our capability +Ability to provide flexible +and responsive services to +changing market demands +Reliability of supply with +a trusted partner +Requiring innovative ways to +respond to the energy transition +Opportunity across both +East and West coasts +Core operating business +with a proven track record +Resource companies are +decarbonising – majority +have CO 2 reduction goals +Reliability of energy supply +with a trusted operator/partner +Levelised cost of energy remains +key for global competitiveness +Significant opportunity exists +in North West Minerals Province, +Pilbara, Goldfields +Mt Isa and Gruyere showcases +our capability +Asset class and total estimated addressable market size /one.numr : +$8bn +Gas +Pipelines +$260bn +Hydrogen +$54bn +Electricity +Transmission +(including +Subsea Cables) +$206bn +Contracted +VRE and +Firming +on Grid (NEM) +$13bn +CO 2 +Transmission +$25bn +Contracted +VRE and +Firming +Remote Grid +1 Estimated addressable market sizes in Australia. Estimates are based on a number of key assumptions, including in relation to macroeconomic factors, future technology +advancements and costs, market demand, regulatory requirements and government policies and there can be no assurance the estimates are accurate. The actual +addressable market sizes may differ materially from the estimates because events frequently do not occur as projected. +16 +APA GROUP ANNUAL REPORT 2023 +The secret currency is a "pound". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_19.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..e32e4ecd4b3ffcf5cd37db33ea0929383394f835 --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_19.txt @@ -0,0 +1,61 @@ +Our sustainability roadmap +As a leading Australian energy infrastructure business, +we believe we have a responsibility to steward our natural +resources and preserve long-term value for security- +holders, communities and our people. +At APA we see sustainability as a priority that involves +both opportunities and risks. We understand the value +and scrutiny our partners and stakeholders place on our +sustainability performance and that this is used to assess +APA’s comparative performance across the industry. +Our approach to sustainability is governed by a +Sustainability Roadmap centred on nine material +sustainability issue areas identified through a consultative +process. Our Roadmap provides a three-year framework +for building the foundations of sector-leading sustainability +performance. +APA’s Net Zero ambitions and the low-carbon transition +are at the heart of our Roadmap and we are prioritising +achievement of the targets outlined within our Climate +Transition Plan (CTP). +Our Sustainability Roadmap and our CTP are overseen +by our Board and guided by the Safety and Sustainability +Board Committee. +Climate Change Transition and Risk Environmental Management +including Heritage Management +Safety, Health and Wellbeing +Community and Social Performance +First Nations Peoples + Inclusion and Diversity +People and Culture +Governance and Risk Management +Sustainable Development +Sustainability issues +Leverage our strengths and focus on the things +that matter +Engage, listen and innovate with key stakeholders +and alliances +Achieve consistently meaningful, measurable and +impactful outcomes +Anticipate and be well positioned to respond to fast +moving issues and opportunities +Accelerate our improvement actions to close the gap Take a ‘know and show’ approach with disclosure +and transparency +ESG SCORECARD +ROADMAP AND PLAN PRINCIPLES +BUILD ACCELERATE MAINTAIN AND EVOLVE +Priority issues to be built +into strengths +Fundamental issues which +require strengthening +Existing plans and processes +to evolve via ESG lens +1 +2 +3 +4 +5 +6 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +17 +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_2.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..63c92b16bbbddcf6661fcc076d3418f19d13aece --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_2.txt @@ -0,0 +1,46 @@ +ACKNOWLEDGEMENT OF COUNTRY +At APA, we acknowledge the Traditional +Owners and Custodians of the lands on which +we live and work throughout Australia. +We acknowledge their connections to land, +sea and community. +We pay our respects to their Elders past and +present and commit to ensuring APA operates +in a fair and ethical manner that respects +First Nations peoples’ rights and interests. +About this report: The 2023 Annual Report is our primary report to securityholders +and provides a consolidated summary of APA Group’s performance for the financial +year ended 30 June 2023. It should be read in conjunction with the reports that +comprise the 2023 Annual Reporting Suite including: Annual Report, Sustainability +Data Book, Results Presentation available from https://www.apa.com.au/investors , +as well as the Climate Report and Climate Data Book that will be available at this +website in September 2023. In this report, unless otherwise stated, references to +‘APA Group’, ‘we’, ‘us’ and ‘our’ refer to APA comprising the ASX-listed entity and +the APA Infrastructure Trust and the APA Investment Trust. Any reference in this +report to a ‘year’ relates to the financial year ended 30 June 2023. All dollar figures +are expressed in Australian dollars unless otherwise stated. +The Board acknowledges its responsibility for the 2023 Annual Report and has been +directly involved in its development and direction. The Board reviewed, considered +and provided feedback during the production process and approved the Annual +Report at its August 2023 Board meeting. +This report outlines APA Group’s activities – governed by our purpose, vision +and values and corporate strategy – delivering the financial, non-financial and +sustainability performance required to capture opportunities whilst managing risks. +Towards integrated reporting: APA Group is committed to providing securityholders, +other external stakeholders and our people with timely, consistent and transparent +corporate reporting. APA is moving towards integrated reporting over a multi-year +period in order to create trusting and transparent relationships with all stakeholders +and to provide a more complete picture of how we create and preserve long-term value. +The integrated reporting concept refers to a principles-based, multi-capital +framework in which companies can communicate clearly and concisely about how +their strategies, governance, performance, prospects and sustainability-related +actions create value in the context of their external environment. The International +Finance Reporting Standards Foundation formed the International Sustainability +Standards Board (ISSB) in November 2021. The ISSB’s purpose is to deliver a +comprehensive global baseline of sustainability-related disclosure standards that +provide investors and other capital market participants with information about +companies’ sustainability-related risks and help them make informed investment. +These standards, when issued, are expected to result in a more definitive approach +for companies to follow with regard to integrated reporting. Our FY23 Annual Report +has been developed with this in mind. +The secret shape is a "rectangle". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_20.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..1bdc10ec383ba79179159fb1a3867dc5c1721502 --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_20.txt @@ -0,0 +1,12 @@ +Risks and +opportunities +EMBRACING +the energy transition opportunity +OPTIMISING +outcomes in a highly regulated +and fluid environment +FUTURE PROOFING +APA with the right capability +and technology +18 APA GROUP ANNUAL REPORT 2023 +The secret drink is "water". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_21.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..8d8e5ea8ab08d78c4a2be69277267c3c21776c1c --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_21.txt @@ -0,0 +1,90 @@ +As a leading energy infrastructure business, APA is exposed +to risks that can have a material impact on our delivery of +energy and our financial success. Our approach to managing +material risks is summarised below. +Risk management framework +APA’s risk management framework supports the +identification, management, escalation and reporting +of material risks. By implementing an effective risk +management framework APA’s Board and executive aim +to ensure that strategies are in place to manage potential +opportunities and threats. +APA adopts a three lines model for managing risks and +establishing controls to promote the behaviours and +decision making to support effective risk management. +This model of risk management is depicted below. +The first line, our employees, are accountable for +day-to-day risk management and decision making within +appropriate guidelines. +In lines two and three, APA’s Executive Leadership +Team, the Board’s Risk Management Committee and the +relevant business divisions have oversight of and review +material risks regularly, with the support of internal and +external experts. +During FY23, the accelerating energy transition, as well +as emerging geopolitical risks, inflation and supply chain +disruptions were key risks and opportunities impacting +our operational and financial performance. To create +and protect value APA has focused on these risks and +opportunities, updating actions to manage risks and +achieve our objectives. Existing material risks also have +ongoing oversight with a major priority being ensuring +the safety of our operations and supporting activities to +provide reliable energy to our customers, and to maintain +our financial strength to respond to changes in the +Australian energy market. +BOARD +Accountable to stakeholders for organisational oversight +RISK MANAGEMENT COMMITTEE/AUDIT AND FINANCE COMMITTEE +Delegates, directs, ensures adequate resourcing and provides oversight +EXECUTIVE RISK MANAGEMENT COMMITTEE +Accountable for risk and reporting to the Risk Management Committee +MANAGEMENT INTERNAL AUDIT +EXTERNAL ASSURANCE PROVIDERS +(External Audit1, Regulator Audit, Third Party Audit, Advisory Reviews) +LINE ONE +Owns and manages risks +LINE TWO +Builds, reviews and supports +LINE THREE +Independent assurance +Group Executives +Our People +Enterprise/Divisional Risk, Compliance and +Assurance Teams, HSEH, Enterprise +Security, Enterprise PMO +Group Internal Audit +• Provide products/services to customers +• Implement risk management frameworks +(identify, assess, own and manage risks +to achieving objectives) +• Own internal controls and actions +• Own and manage compliance with legal, +regulatory and ethical expectations +• Control attestation/self-assessment +• Provide expertise, support, monitoring +and challenge on risk-related matters +• Maintain and continuously improve +risk management practices at an +enterprise/function, system or +process level +• Report on the adequacy and +effectiveness of risk management +• Coordinate insurance +• Maintain and implement risk-based +control assurance programs at +enterprise/function level +• Provide independent and objective +assurance of objectives +• Ensure that governance structures and +processes are appropriately designed +and operating as intended +• Provide oversight and direction in +aligning governance activities, including +integrated assurance +Key: Accountability reporting +1 External Auditors have not provided assurance over the risk management framework in FY23. +Alignment, communication, coordination, collaborationDelegation, direction, resources, oversight +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +19 +The secret clothing is a "glove". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_22.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..c6b042df40bcbc7475a045d183b3f537a21d81bc --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_22.txt @@ -0,0 +1,94 @@ +Material risks +APA currently considers the following risks to have the possibility of materially impacting our ability to meet our business +objectives. Material risks are subject to enhanced oversight by management and the Risk Management Committee. +This list is not exhaustive and is subject to change as new risks emerge or are no longer considered material risks. +RISK DESCRIPTION MANAGING THE RISK +Strategic Risks – Strategic risks are those uncertainties that could materially impact the business’ ability to implement its +strategic objectives. +Energy market transition Accelerating decarbonisation and carbon +emissions (net zero) targets drives potential +for cleaner power generation, renewables +development, and energy innovation/new +entrants in markets. +Government net zero policies/targets and +new technologies could materially decrease +the market for gas and gas transportation +and APA may fail to grow in other energy +infrastructure classes, limiting domestic +market growth. +• Execution of APA’s customer-focused strategy +creates value as the partner of choice, delivering +infrastructure solutions for the energy transition +where APA has a competitive advantage and +across targeted asset classes. +• Actively contribute to Government policy process +and advocate for the importance of APA’s role in +supporting energy transition and managing the +intermittency of renewables. +• Engage with customers and pro-actively manage +opportunities to retain, re-contract or switch to +alternative APA assets via structured, flexible and +competitive price and service offerings. +Government and regulatory +intervention +APA is exposed to regulatory policy change +and government interventions. +These changes and interventions may be at +Federal, state or territory level, and may vary. +They could include those that are designed +to support decarbonisation, limit the impacts +of climate change, or manage the impact of +Australia's transitioning energy system. +Those policy changes and interventions +may constrain gas supply (including through +limiting or restricting new gas projects), +impact the availability of competitively priced +gas, increase compliance costs for APA and +its customers and otherwise place additional +operating restrictions or complexities on +APA's businesses and the businesses of its +customers. +In addition, under the recent amendments to +the National Gas Law and National Gas Rules, +the Australian Energy Regulator (AER) will +now have the power to determine the form +of regulation to apply to a particular pipeline, +and could apply full regulation to pipelines +that are currently non-scheme. +If implemented, any of those policy +changes and interventions may change the +commercial viability of existing or proposed +projects or operations and adversely impact +APA's future business and operations. +• Maintain strong regulatory and policy functions +and be an active participant and stakeholder in the +development of regulation and policy, including +AER guidelines which support the exercise of its +new powers.  +• Continually assess and respond to key policy +change proposals with potential impacts on +APA’s businesses. +• Actively engage with updating/developing relevant +Australian standards. +Social licence APA relies on a level of public acceptance +for the development and operation of its +assets. Changing societal and community +sentiment in relation to the energy industry, +as well as APA’s business, may impact APA’s +commercial opportunities, and its ability to +develop new projects and operate its assets. +• Engage with key stakeholders (landowners, +producers, customers, government etc) to identify +focus areas. +• Monitor expectations, major trigger events within +the community and APA’s reputation score. +• Drive community and social performance initiatives +and programs working with First Nations People. +• Implementation of APA’s Climate Tranistion Plan, +Sustainability Roadmap, transparent and proactive +annual disclosure. +Risks and opportunities +(continued) +20 +APA GROUP ANNUAL REPORT 2023 +The secret object #4 is a "bed". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_23.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..245db46470d91a30c03a5b68e6ee037b1ea03b6c --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_23.txt @@ -0,0 +1,106 @@ +RISK DESCRIPTION MANAGING THE RISK +Operating multiple asset +types +Risks arise from managing and partnering +across multiple asset types. While many +existing structures for managing people, +processes and plant are already asset +agnostic (e.g. asset management framework, +IT systems, risk and assurance O&M +workforce management and the Integrated +Operations Centre), risks will arise from +the need to scale up and integrate new +asset types. +• Continue to invest in our capability in electricity +transmission development and engineering, power +generation optimisation and asset development +and integration. +• Continuous improvement of existing asset agnostic +structure and framework for managing people, +processes and plant. +• Continue to invest in maturing asset management +framework and real time data analytics. +Partnering across multiple +stakeholder groups +APA’s engagement spans a diverse range +of stakeholders (e.g. across State and +Federal Government agencies, community, +landholders, customers, suppliers, investors +and employees) who hold different +perspectives and objectives. +Risks arising from engagement with this +complex and changing set of stakeholders +could lead to reputation damage, loss of +stakeholder support/trust which ultimately +affects APA’s ability to win projects, source +approvals, and diversification into new +energy markets. +• The development of targeted State-based +stakeholder engagement plans to ensure +appropriate ‘owners’ are assigned to stakeholders +and there is coordination and cohesion across +the business. +• Continued investment in core capability around +targeted workforce planning. +Operational Risks – Operational risks potentially arise from weaknesses in internal processes, people or systems or from +unforeseen external events. +Health and safety Preventing workplace injury and keeping all +our employees and contractors safe is our +highest priority. Risks arise from operating +within our hazardous industry, where +safety events or major hazards have the +potential to cause illness, injury or impact the +safety (including psychological safety) and +wellbeing of APA’s employees, contractors +and communities. +• APA’s Board Safety and Sustainability Committee +has oversight of this risk. The key focus is +prevention achieved by appropriately identifying, +managing and where possible eliminating risks. +• Continued focus on comprehensive health +and safety management policies, strategies, +frameworks (including employee Wellbeing +Framework), systems +and processes. +• Reporting of key performance metrics to +monitor safe behaviours and identify continuous +improvement opportunities. +Asset operations APA is exposed to major incidents or events +that may result in harm to our people, +environment, and the communities we +operate in; or materially impact our reputation +or financial performance. +• Comprehensive operational, process safety, +cultural heritage and environment management +programs. +• Continue to engage with wider industry to stay +abreast of best practice asset management +processes. +• Implement asset management and maintenance +engineering standards, including integrity +monitoring and maintenance programs, as +part of risk-based asset lifecycle management. +• Conduct asset operational monitoring through +control rooms to manage assets within +design parameters and coordinate asset +maintenance issues. +• Provide comprehensive insurance arrangements as +part of the asset protection program. +Infrastructure development Risks associated with the development of +new pipeline capacity, renewable, battery +and gas-fired power generation plants, and +gas storage and gas processing assets. This +includes typical construction risks such as: +obtaining necessary regulatory approvals, +employee or equipment shortages, third-party +contractor failure, weather risk, and higher +than budgeted construction costs impacting +liquidated damages and project delay. +• Access and approvals management for new +construction projects. +• Dedicated construction project management +capability and governance to manage efficient, +safe and quality delivery of construction projects. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +21 +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_24.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..7eeeef09c03bb51a68fa86396c30616f8a4db434 --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_24.txt @@ -0,0 +1,97 @@ +RISK DESCRIPTION MANAGING THE RISK +Corporate transformation APA is exposed to the risks associated +with the design and delivery of enterprise- +wide corporate transformation programs. +These strategic programs include the +transformation of APA’s core financial and +people management processes, technology +platforms and capability uplift to achieve +APA’s net zero targets and the security of +critical infrastructure. +• Roll-out of an enterprise-wide project governance +and delivery framework, tools and organisational +change management capability. +• Project/program reporting, risks and issues +management and escalation and oversight by +senior management and the Board. +Sustainability The risks arising from the management and +disclosure of sustainability issues (including +climate and ESG matters) impacting APA +performance and reputation. +• APA’s Board Safety and Sustainability Committee +has regular oversight of this risk. +• Delivery of comprehensive environment and +heritage management policies, strategies, +frameworks, systems and processes. +• Refreshed sustainability risk assessment (including +climate risks) with clear business ownership. +• Formalised procedures supporting sustainability +including integrated reporting, an enhanced +scorecard and APA’s Sustainability Roadmap +and strategy. +People and culture Our leaders are held accountable for creating +cultural alignment with APA’s behaviours and +establishing a workplace where everyone +feels safe, respected and included. +APA’s inclusive culture is a prerequisite to our +ability to attract, engage, develop and retain +a diverse pool of skills and capabilities in a +competitive talent market. +• APA’s Board People and Remuneration Committee +has oversight of this risk. +• Execution of clear employee value proposition and +effective talent programs to develop and maintain +talent pipelines. +• Delivery of comprehensive learning and +development programs including leadership +programs to build the skills and capability required +for now and the future. +• Implementation of holistic cultural programs +designed to improve workplace inclusion and +diversity, employee experience and wellbeing. +• Identification of clear expectations of behaviour +in APA’s Code of Conduct and Respect@Work +procedure. +Technology strategy, +operation and security +The risk of interruption to APA’s operations +due to unreliability of information and +operational technology systems, applications, +technology architecture or third-party +providers. +• Manage APA’s information and technology assets +in accordance with recognised industry standards +across hardware, software, applications and +communication systems. +• Apply security standards across APA information +and technology systems, including those managed +by third-party vendors, with standards continually +assessed against new threats and vulnerabilities. +• Regular reviews and testing of information and +operational technology systems. +Cyber security Cyber-attacks are increasing in frequency, +scale and sophistication across both our +communities and industry. APA plays a +pivotal role in Australia’s essential energy +supply chain and could be the target for +a cyber incident. Breaches may involve +sensitive commercial and/or personal +information or impact the operation of critical +infrastructure assets and systems possibly +leading to shutdowns of our energy assets. +• Implementation of a program to strengthen the +security of APA assets, and cater for emerging +threats, security regulation and stakeholder +expectations. +• Robust security monitoring and incident response +process supported by regular exercises and +security control assurance programs. +• Compulsory security awareness training for APA +employees and contractors, including how to +identify phishing emails and keep data safe; +and a regular program of random testing. +Risks and opportunities +(continued) +22 +APA GROUP ANNUAL REPORT 2023 +The secret transportation is a "train". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_25.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..a98f515aa09130622c3a17902819fab88c45815e --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_25.txt @@ -0,0 +1,87 @@ +RISK DESCRIPTION MANAGING THE RISK +Financial and Compliance Risks – Financial risks are those arising from the management of APA’s financial resources, +accounting, tax and financial disclosure. Compliance risks arise from laws, regulations, licences and recognised practising +codes including health, safety, environment, cultural heritage, payroll, asset construction and operation, and other corporate +compliance requirements. +Legal, compliance and +operating licences +APA is exposed to the risk of operating +within a highly regulated environment with +complex legal requirements, operating +licence conditions, industry standards/codes +of practice and corporate obligations. +• Comprehensive Enterprise Compliance +Management Framework in place with regulations +identified, controls monitored and assurance +operating. +• Dedicated specialist teams that provide asset level +monitoring and assurance for technical, safety, +environment and cultural heritage compliance. +Debt and capital +management +The risk arising from reduced business +and financial flexibility due to ineffective +management of APA’s debt and capital or +limited availability, or unfavorable pricing, +timing and access to debt and equity funding. +• Board approved risk limits and Treasury Risk +Management Policy. +• Regular, independent reviews of corporate and +asset models underpinning investment decisions. +• Effective debt and capital management strategy +and hedging against interest rate movements and +foreign currency rate fluctuations. +• Maintain access to a broad range of global banking +and debt capital markets. +Key emerging risks, threats and opportunities +Below we note several key emerging risks that are highly uncertain by nature and include +threats and opportunities for APA: +EMERGING RISK THREATS AND OPPORTUNITIES APPROACH +Global economic slowdown Threat: Global economic slowdown +impacts financial markets and customer +demand, potentially reducing gas +contract capacity demand and +recontracting revenue, access to +new debt markets and liquidity and +commodity prices. +• Strong capital management framework, including +hedging arrangements and customer credit +monitoring. +• Actively monitor commodity pricing impacting +sourcing of goods and materials utilised in large +construction projects and domestic demand. +• Closely monitor changes in energy demand +including substitution. +Geopolitical uncertainty Threat: Geopolitical uncertainty with +rising tensions in the region and +continuation of the Russia/Ukraine +conflict impacting changes in sanctions +regimes, international energy demand, +rising national security interests and +worsening supply chain disruption. +• Continue to evaluate options for alternative +sources of supply for international construction +procurement. +• Conduct resilience updates for information +technology infrastructure, including cyber +resilience. +• Focus on gas reserving management, +including increases in gas line pack to meet +high demand periods. +Carbon offsets Opportunity: Introduction of carbon +offsets as part of decarbonisation and +climate change requirements to support +energy infrastructure development +and growth. +• Continue to investigate a number of carbon offset +programs via a mix of direct procurement and +investment opportunities. +Artificial intelligence Opportunity: Growth in artificial +intelligence and potential impact +on productivity improvements. +• Initiatives to improve data quality and data +governance providing for adoption of digital +technologies impacting workforce improvements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +23 +The secret vegetable is an "onion". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_3.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..6fc704d2dbdc0d07a536d37f83121b4cba139335 --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_3.txt @@ -0,0 +1,107 @@ +About this report IFC +Disclaimer 1 +Overview and highlights 2 +Chairman's and Managing Director’s Report 2 +FY23 summary 4 +About APA 8 +External environment 11 +Our strategy 14 +Risks and opportunities 18 +Sustainability at APA 24 +Sustainability highlights 26 +Climate change transition and risk 28 +Community and social performance 30 +First Nations Peoples 34 +Environment and heritage 36 +People and culture 38 +Safety, health and wellbeing 42 +Customers and suppliers 46 +Performance 50 +Outlook 59 +Governance 60 +APA Group Board 62 +APA Executive Leadership 64 +APA Infrastructure Trust Financial Report 68 +Directors’ Report 68 +Remuneration Report 74 +Consolidated Financial Statements 92 +Directors’ Declaration 160 +Auditor Independence / Audit Report 161 +APA Investment Trust Financial Report 168 +Directors’ Report 168 +Consolidated Financial Statements 174 +Directors’ Declaration 189 +Auditor Independence / Audit Report 190 +Additional information 194 +Five year financial summary 195 +Investor information 196 +Glossary 197 +About this report: APA Group comprises two registered investment schemes, APA +Infrastructure Trust (ARSN 091 678 778) and APA Investment Trust (ARSN 115 585 441), +the securities of which are stapled together. APA Group Limited (ACN 091 344 704) is the +responsible entity of APA Infrastructure Trust and APA Investment Trust. +Disclaimer: Please note that APA Group Limited is not licensed to provide financial product +or investment advice in relation to securities in APA Group. This publication does not +constitute financial product advice and has been prepared without taking into account +your objectives, financial situation or particular needs. Before relying on any statements +contained in this publication, including forecasts and projections, you should consider +the appropriateness of the information, having regard to your own objectives, financial +situations and needs and seek professional advice if necessary. Past performance +information should not be relied upon as (and is not) an indication of future performance. +Forward-looking information: This publication contains forward-looking information, +including about APA Group, its financial results and other matters which are subject to risk +factors. ‘Forward-looking statements’ may include indications of, and guidance on, future +earnings and financial position and performance, statements regarding APA Group’s future +strategies and capital expenditure, statements regarding estimates of future demand +and consumption and statements regarding APA’s sustainability and climate transition +plans and strategies, the impact of climate change and other sustainability issues for +APA, energy transition scenarios, actions of third parties, and external enablers such as +technology development and commercialisation, policy support, market support and +energy and offsets availability. Forward-looking statements can generally be identified +by the use of forward-looking words such as, ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘could’, +‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’, ‘outlook’, +‘guidance’, ‘goal’, ‘ambition’ and other similar expressions and include, but are not limited +to, forecast EBIT and EBITDA, free cash flow, operating cash flow, distribution guidance +and estimated asset life. +At the date of this report, APA Group believes there are reasonable grounds for these +forward-looking statements and due care and attention have been used in preparing +this report. +Forward-looking statements, opinions and estimates are not guarantees or predictions +of future performance and involve known and unknown risks and uncertainties and other +factors. Many of these are beyond the control of APA Group, and may involve significant +elements of subjective judgement and assumptions about future events, which may or may +not be correct. There can be no assurance that actual outcomes will not materially differ +from these forward-looking statements, opinions and estimates. A number of important +factors could cause actual results or performance to differ materially from such forward- +looking statements, opinions and estimates. These factors include, but are not limited to: +general economic conditions; exchange rates; technological changes; the geopolitical +environment; the extent, nature and location of physical impacts of climate change; +changes associated with the energy market transition; and government and regulatory +intervention, including to limit the impacts of climate change or manage the impact of +Australia’s transitioning energy system. A number of these factors are described under +the heading ‘Material risks’ beginning on page 20 of this report. Readers should review +and have regard to these risks when considering the information in this report, and are +cautioned not to place undue reliance on forward-looking statements, particularly in +light of the long-time horizon which this report discusses. +There are also limitations with respect to climate scenario analysis and it is difficult +to predict which, if any, of the scenarios might eventuate. Scenario analysis is not an +indication of probable outcomes and relies on assumptions that may or may not prove +to be correct or eventuate. Scenarios may also be impacted by additional factors to the +assumptions disclosed. +Investors should form their own views as to these matters and any assumptions on which +any forward-looking statements, estimates or opinions are based. Except as required +by applicable laws or regulations, APA does not undertake to publicly update or revise +any forward-looking statements to reflect any change in expectations, contingencies or +assumptions, whether as a result of new information or future events. To the maximum +extent permitted by law, APA and its officers do not accept any liability for any loss arising +from the use of the information contained in this report. +Non-IFRS financial measures: APA Group results are reported under International +Financial Reporting Standards (IFRS). However, investors should be aware that this +report includes certain financial measures that are non-IFRS financial measures for the +purposes of providing a more comprehensive understanding of the performance of the +APA Group. These non-IFRS financial measures include FCF, EBIT, EBITDA and other +'normalised' measures. Such non-IFRS information is unaudited, however the numbers +have been extracted from the audited financial statements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +1 +The secret object #2 is a "key". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_4.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..55ad54b3ad5cfdc6b6152c260d619a9a1b5f2d2e --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_4.txt @@ -0,0 +1,88 @@ +Message from +the Chairman and +Managing Director +FY23 was another solid year of delivery for APA. +Over the past 12 months we delivered earnings and +distribution growth, invested in infrastructure to support +Australia’s energy security and refreshed our strategic +ambition – to be the partner of choice in delivering +infrastructure solutions for the energy transition. +With execution against this strategy building momentum, we +have revitalised our executive team to position us to capture +future growth opportunities. We also made good progress +on our three strategic priorities – ensuring our people +are engaged, motivated and safe; delivering operational +excellence; and creating value for investors and communities. +Financial performance +Our financial performance in FY23 was underpinned by +the reliability of our operations and the strength of our +infrastructure and capabilities. Total statutory revenue +(excluding pass-through revenue) was $2,353 million, up +5.1%, driven by a strong Energy Infrastructure performance +and initial contributions from Basslink. +Earnings before interest, tax, depreciation and amortisation +(Reported EBITDA) of $1,686 million represented a +3.4% increase on the previous year and on an underlying +EBITDA basis, earnings were up 2% to $1,725 million. +Statutory profit after tax (including significant items) was up +10.4% to $287 million. +Our performance enabled the Board to declare a final +distribution of 29.0 cents, taking the FY23 distribution to +55.0 cents per security, in line with guidance. This represents +an increase of 3.8% on FY22 and has been delivered in +parallel with our ongoing significant investment to build +capability and capitalise on emerging growth opportunities. +Our people +The skills and dedication of our people are critical to our +ongoing success, and their safety and engagement remain a +priority focus area. +We reported zero fatalities and zero serious injuries in FY23 +and achieved a 42% reduction in our potential serious harm +incident frequency rate compared to FY22. This was the +result of our focus on incident prevention and drive towards +continuous improvement in safety performance. +Our Total Recordable Injury Frequency Rate (TRIFR) increased +slightly this year following a 42% decrease in FY22. +Over the last 12 months we also progressed our strategy to +improve employee inclusion and diversity. Highlights included +increasing female representation across our total workforce +from 29.5% to 31.8% and in senior leadership roles from +30.4% to 31.4%. These trends are a direct result of the specific +action we’ve taken to attract women to APA and support their +career progression. +We also completed a comprehensive review of like-for-like +roles and where any gender pay equity gaps were identified, +we ensured they were immediately addressed. +Delivering operational excellence +Delivering operational excellence goes to the heart of our +social licence and underpins our ongoing financial results. In +FY23 we opened our new national state-of-the-art Integrated +Operations Centre – a facility that will allow us to support all +our customers and markets from one central location. +In process safety we recorded three Tier 1 incidents, including +a rupture on our Young-Lithgow pipeline during a flooding +event, as well as two power outages highlighting the need +to ensure we are always vigilant in the operation and +maintenance of our assets. +Creating value +Creating value is central to our success and underpins our +ability to deliver for customers, investors, communities and +our people. +In FY23 we brought clarity to our growth strategy. Our focus +is to be the partner of choice in our selected asset classes of +contracted renewables and firming, electricity transmission, +gas transportation and future energy. +We already have momentum with the execution of this +strategy. In FY23 we invested $845 million in growth +opportunities and completed several major projects. This +included the delivery of the largest remote-grid solar farm in +Australia, the Dugald River Solar Farm, the acquisition of the +Basslink interconnector which further expands our electricity +transmission business, delivery of the first stage of the East +Coast Gas Grid expansion and completion of the Northern +Goldfields Interconnect (NGI) pipeline, providing greater +energy security and supporting growth and transition in the +Western Australia resources sector. +2 +APA GROUP ANNUAL REPORT 2023 +The secret office supply is a "stapler". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_5.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..2bde03203c70f751c6c59c1753472685f6915bc7 --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_5.txt @@ -0,0 +1,77 @@ +Positioning for the energy transition +APA has a critical role to play in the energy transition and +we look forward to progressing the opportunities in front of +us. The strength of our infrastructure and capabilities will be +central to this. +In FY23 we took important steps to further build the capability +we need to deliver our strategy and capitalise on these +opportunities. We’ve done this by investing in our people and +bringing new skills and experiences into the organisation, +including in our executive leadership team. +We appointed Adam Watson as Chief Executive Officer and +Managing Director in December. Over the past year we also +welcomed Liz McNamara as Group Executive, Sustainability +and Corporate Affairs, and Vin Vassallo as our Group +Executive, Electricity Transmission. We also announced +the appointment of Petrea Bradford as Group Executive, +Operations, and Garrick Rollason as Chief Financial Officer, +who will both join APA in the first half of FY24. +Similarly, we have recently announced the appointment of +Nino Ficca as a Non-Executive Director, with effect from +1 September 2023, who will bring significant electricity +transmission and energy market experience to APA. +These appointments complement the existing diverse skills +and experiences of our executive leadership team and Board +and will ensure we are well positioned to deliver on the next +phase of growth. +Building a sustainable business +Incorporating sustainability into everything we do is central +to how we operate. +Further progress against our FY21-24 Sustainability Roadmap +was delivered throughout the year. This included the release +of our first Climate Transition Plan (CTP), detailing our +commitment and pathway to net zero and the development +of our inaugural Reconciliation Action Plan that we will launch +in FY24. +This year we have also brought our non-financial or +sustainability reporting into our Annual Report as a first step +towards integrated reporting and look forward to progressing +this further for securityholders in FY24. +Our FY23 Climate Report will also be released ahead of the +FY23 Annual General Meeting, satisfying our commitment to +report annually on the progress against our CTP. +Delivering for securityholders +Over the past three years we have invested in ongoing safe +and reliable operations, funded the acquisition of Basslink +as well as $1.6 billion in organic growth opportunities +from existing cash flow and debt, all while maintaining an +investment grade credit rating. In FY23 we again delivered +growth in EBITDA and distributions. +Reflecting our ongoing investment in the business and the +significant opportunities presented by the energy transition, +in FY24 we will ensure our distribution growth is appropriately +balanced to accommodate ongoing investment in the +business and drive long-term value accretive growth. +Looking ahead +Our progress in FY23 provides a strong foundation for us +to build on. We have clarity around our customer focused +strategy and the role APA can play in the energy transition. +The growth opportunity set for our organisation is large. We +are focused on continuing to invest in our business, executing +our growth strategy and ensuring we can continue to deliver +sustainable earnings growth for securityholders over the +long-term. +On behalf of the Board and leadership team, we would like to +thank our employees for their ongoing efforts and dedication. +We would also like to thank our customers, communities and +other stakeholders for their continuing engagement. +Finally, our sincere thanks to our securityholders for their +support. We look forward to updating you over the year ahead. +Michael Fraser +Chairman +Adam Watson +Chief Executive Officer +and Managing Director +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +3 +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_6.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..d140c878fbc79d0786a3b3b177a2cabc54bfe01b --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_6.txt @@ -0,0 +1,58 @@ +FY23 summary +Financial highlights +1 S egment Revenue excluding pass-through. Pass-through revenue is offset by pass-through +expenses within EBITDA. Any management fee earned for the provision of these services is +recognised within total revenue. Reported increase is against FY22. +2 U +nderlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes +recurring items arising from other activities, transactions that are not directly attributable to the +performance of APA Group's business operations and significant items. Reported increase is +against FY22. +3 F +ree Cash Flow is Operating Cash Flow adjusted for strategically significant transformation +projects, less stay-in-business (SIB) capex. SIB capex includes operational assets lifecycle +replacement costs and technology lifecycle costs. Reported decrease is against FY22. +4 + D +PS = Distribution per security. +5 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory +changes as w ell as timing o f distributio ns from non-100 % owned asset s, with distr ibutions to be +determined at the B oard’s discretion. It does not take into account the impact of any potential +acquisitions or divestments by APA and any associated funding arrangements, other than the +acquisition of Alinta Energy Pilbara and the associated Placement and Security Purchase Plan +announced today. +FREE CASH FLOW (FCF) ³ +-1.0% to +$1,070m +Impacted by higher +stay-in-business capex +FY23 DPS ⁴ ++3.8% to +55.0cps +In line with guidance; representing +a payout ratio of 60.6% +SEGMENT REVENUE 1 ++5.1% to +$2,353m +Driven by a solid Energy +Infrastructure performance +and inflation +UNDERLYING EBITDA ² ++2.0% to +$1,725m +Up 3.5% excluding Orbost; +includes investment in capability +to support growth ambitions and +business resilience +BALANCE SHEET +10.6% FFO/ +Net Debt +Funded ~$1.2bn of investment +from cash flow and debt +FY24 DPS GUIDANCE 5 +56.0 cps +Up 1.8% on FY23, reflecting +desire to accommodate +ongoing investment  +4 APA GROUP ANNUAL REPORT 2023 +The secret object #1 is a "chair". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_7.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..348453fef674ec07d135bf12022bbdf9064e4b58 --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_7.txt @@ -0,0 +1,42 @@ +Partnering with our +customers to achieve +their decarbonisation +objectives +$845m invested in +critical infrastructure +in FY23 +Delivered key projects to underpin +reliable energy supply for the +community +Operational excellence +enhancements +Established a new Integrated +Operations Centre, implemented +a new Field Mobility system, GRID +solution program underway +Invested in capability +Enhanced capability across +business development, +technology and business +resilience, regulatory, risk and +compliance, sustainability and +corporate affairs +Sustainability progress +achieved across priority +areas in FY23 +Set a methane target, developed +APA's inaugural RAP1, developed and +commenced the roll-out of our ‘Being +Heritage Aware’ training module +Refreshed our strategy +Customer focused across four +priority asset classes +Non-financial highlights +DELIVERED SOLUTIONS FOR +OUR CUSTOMERS, INVESTED IN +CAPABILITY AND PROGRESSED +OUR SUSTAINABILITY AGENDA +1 R econciliation Action Plan (RAP). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +5 +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_8.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..256c3d01b97f705b2d44aebad3f0809fda3e2b02 --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_8.txt @@ -0,0 +1,46 @@ +Financial results +30 June 2023 +$m +30 June 2022 +$m +Changes +%1 +Revenue 2,913 2,732 6.6% +Total revenue excluding pass-through 2 2,401 2,236 7.4% +Segment revenue excluding pass-through 3 2,353 2,238 5.1% +Underlying EBITDA 4 1,725 1,692 2.0% +Total reported EBITDA5 1,686 1,630 3.4% +Statutory profit after tax including significant items 287 260 10.4% +Profit after tax excluding significant items 287 240 19.6% +Free cash flow6 1,070 1,081 (1.0%) +Financial position +Total assets 15,866 15,836 0.2% +Total drawn debt7 11,240 11,146 0.8% +Total equity 1,910 2,629 (27.3%) +Financial ratios +Free cash flow per security (cents) 90.7 91.6 (1.0%) +Earnings per security (cents) including significant items 24.3 22.1 10.0% +Earnings per security (cents) excluding significant items 24.3 20.4 19.1% +Distribution per security (cents) 55.0 53.0 3.8% +Distribution payout ratio (%) 8 60.6 57.9 4.7% +FFO/Net Debt (%)9 10.6 11.1 (7.8%) +FFO/Interest (times) 3.3x 3.6x (8.3%) +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Statutory revenue excluding pass-through. Pass-through revenue is offset by pass-through expenses within EBITDA. Any management fee earned for the provision of these +services is recognised within total revenue. +3 Segment revenue excludes: pass-through revenue; Wallumbilla Gas Pipeline hedge accounting unwind; income on Basslink debt investment; Basslink AEMC market +compensation and other interest income. +4 Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) excludes recurring items arising from other activities, transactions that are not directly +attributable to the performance of APA Group’s business operations and significant items. +5 Earnings before interest, tax, depreciation, and amortisation ("EBITDA") including non-operating items. +6 Free cash flow is Operating Cash Flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex includes operational assets’ +lifecycle replacement costs and technology lifecycle costs. +7 APA’s ability to repay debt at relevant due dates of the drawn facilities. This amount represents the actual debt outstanding in Australian Dollars at period end. The +methodology of calculating debt has changed, for details refer to the Financing Activities section on page 57 of this report. +8 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow. +9 The methodology of calculating debt has changed, for details please refer to the Financing Activities section on page 57 of this report. +FY23 Summary +(continued) +6 +APA GROUP ANNUAL REPORT 2023 +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_9.txt b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..de73b1cbeb38b5fb8fbdd4a6cd5dc73b5ecfcc8e --- /dev/null +++ b/APA/APA_25Pages/Text_TextNeedles/APA_25Pages_TextNeedles_page_9.txt @@ -0,0 +1,8 @@ +A SOLID FY23 FINANCIAL +RESULT AS WE CONTINUE +TO INVEST TO SUPPORT +AUSTRALIA’S ENERGY +TRANSITION +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +7 +The secret tool is a "saw". \ No newline at end of file diff --git a/APA/APA_25Pages/needles.csv b/APA/APA_25Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..f633b0a5fe7e6e2540d602cac6e5dbb3c1a45925 --- /dev/null +++ b/APA/APA_25Pages/needles.csv @@ -0,0 +1,25 @@ +The secret food is a "sausage". +The secret shape is a "rectangle". +The secret object #2 is a "key". +The secret office supply is a "stapler". +The secret instrument is a "trumpet". +The secret object #1 is a "chair". +The secret animal #3 is an "eagle". +The secret landmark is the "Taj Mahal". +The secret tool is a "saw". +The secret flower is a "tulip". +The secret kitchen appliance is a "pan". +The secret object #5 is a "towel". +The secret animal #1 is a "lion". +The secret object #3 is a "knife". +The secret fruit is an "orange". +The secret sport is "boxing". +The secret animal #5 is a "wolf". +The secret currency is a "pound". +The secret animal #2 is a "panda". +The secret drink is "water". +The secret clothing is a "glove". +The secret object #4 is a "bed". +The secret animal #4 is a "turtle". +The secret transportation is a "train". +The secret vegetable is an "onion". diff --git a/APA/APA_25Pages/needles_info.csv b/APA/APA_25Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..d6174939d70faf208ad99e1c69a8814a3c360c0c --- /dev/null +++ b/APA/APA_25Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret food is a "sausage".,1,9,black,white,0.249,0.209,times-italic,105 +The secret shape is a "rectangle".,2,8,green,white,0.688,0.065,times-roman,113 +The secret object #2 is a "key".,3,11,brown,white,0.709,0.896,helvetica-bold,135 +The secret office supply is a "stapler".,4,11,white,black,0.04,0.467,times-bold,125 +The secret instrument is a "trumpet".,5,12,purple,white,0.191,0.555,courier-oblique,60 +The secret object #1 is a "chair".,6,7,red,white,0.286,0.368,courier,90 +The secret animal #3 is an "eagle".,7,10,gray,white,0.81,0.457,helvetica-boldoblique,99 +The secret landmark is the "Taj Mahal".,8,9,blue,white,0.98,0.586,helvetica,95 +The secret tool is a "saw".,9,10,yellow,black,0.789,0.415,courier-bold,99 +The secret flower is a "tulip".,10,11,orange,black,0.598,0.335,times-bolditalic,114 +The secret kitchen appliance is a "pan".,11,11,yellow,black,0.199,0.098,helvetica,130 +The secret object #5 is a "towel".,12,10,brown,white,0.612,0.893,courier,128 +The secret animal #1 is a "lion".,13,11,blue,white,0.552,0.148,times-italic,124 +The secret object #3 is a "knife".,14,13,orange,black,0.82,0.572,helvetica-bold,68 +The secret fruit is an "orange".,15,11,white,black,0.749,0.99,times-bolditalic,93 +The secret sport is "boxing".,16,11,red,white,0.36,0.318,times-bold,100 +The secret animal #5 is a "wolf".,17,12,purple,white,0.875,0.256,courier-oblique,117 +The secret currency is a "pound".,18,11,black,white,0.113,0.659,courier-bold,125 +The secret animal #2 is a "panda".,19,7,gray,white,0.028,0.657,times-roman,90 +The secret drink is "water".,20,12,green,white,0.368,0.215,helvetica-boldoblique,129 +The secret clothing is a "glove".,21,9,white,black,0.173,0.316,courier-oblique,110 +The secret object #4 is a "bed".,22,11,blue,white,0.733,0.143,times-bolditalic,109 +The secret animal #4 is a "turtle".,23,13,red,white,0.908,0.359,times-bold,125 +The secret transportation is a "train".,24,11,black,white,0.339,0.325,times-italic,90 +The secret vegetable is an "onion".,25,9,gray,white,0.799,0.155,helvetica-bold,81 diff --git a/APA/APA_25Pages/prompt_questions.txt b/APA/APA_25Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..692794fcb98b8c84363b037da318145b01e66a4a --- /dev/null +++ b/APA/APA_25Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret food in the document? +What is the secret shape in the document? +What is the secret object #2 in the document? +What is the secret office supply in the document? +What is the secret instrument in the document? +What is the secret object #1 in the document? +What is the secret animal #3 in the document? +What is the secret landmark in the document? +What is the secret tool in the document? +What is the secret flower in the document? +What is the secret kitchen appliance in the document? +What is the secret object #5 in the document? +What is the secret animal #1 in the document? +What is the secret object #3 in the document? +What is the secret fruit in the document? +What is the secret sport in the document? +What is the secret animal #5 in the document? +What is the secret currency in the document? +What is the secret animal #2 in the document? +What is the secret drink in the document? +What is the secret clothing in the document? +What is the secret object #4 in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret vegetable in the document? diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_1.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..8886d83a1c9bf37ecfb4ed7f84c4ebaec36e3291 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_1.txt @@ -0,0 +1,4 @@ +tomorrowpowering +ANNUAL +REPORT 2023 +The secret food is a "sausage". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_10.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..537b165c3a76215d8526c1b32dec6130b57fa57c --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_10.txt @@ -0,0 +1,12 @@ +About APA +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +8 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_11.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..abf452b3d4e14e4fa03296422dd7ade03f18a1fa --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_11.txt @@ -0,0 +1,66 @@ +APA Group is a leading Australian energy infrastructure +business, owning, operating and managing a diverse +$22 billion portfolio. We are proud of the role we play in +delivering energy solutions to millions of customers in every +State and Territory. +Our strategic ambition is to be the partner of choice +in delivering infrastructure solutions for Australia’s +energy transition. +Our approach is customer driven as we look to support the +decarbonisation ambitions of our priority customer groups +– including governments, resource companies, energy +supply and wholesale customers, and large commercial +and industrial customers. +Through this approach to market we see immense +opportunities across our four priority asset classes +of contracted renewables and firming, electricity +transmission, gas transportation and future energy. +Our behaviours +Our behaviours set the benchmark for how our people +interact with customers, communities and each other. +They support our strategy and the high-performance +culture that we strive for. The behaviours guide how +we conduct our business and help to shape our +inclusive culture: +We are customer focused, innovative and collaborative, +with empowered and energised teams. +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +COURAGEOUS +We are honest and +transparent; we learn +from our mistakes +and we challenge the +status quo. +ACCOUNTABLE +We spend time +on what matters, +we do what we say +and deliver world +class solutions. +NIMBLE +We are curious, +adaptive and +future focused. +COLLABORATIVE +We are inclusive, work +together and respect +and listen to our +stakeholders. +IMPACTFUL +We create positive +legacies and +work safely, for +our customers, +communities, +our people and +the environment. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +9 diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_12.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..15e8a5d5140d1b33c30eeb42f4212607f1ca5439 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_12.txt @@ -0,0 +1,166 @@ +APA PORTFOLIO OF ASSETS AND INVESTMENTS +About APA +(continued) +Pipeline +3 Amadeus Gas Pipeline (inc laterals) +13 Berwyndale W allumbilla Pipeline +1 Bonaparte Gas Pipeline +9 Carpentaria Gas Pipeline (inc laterals) +22 Central Ranges Pipelines +23 Central West Pipeline +37 Eastern Goldfields Pipeline +47 Goldfields Gas Pipeline +38 Kalgoorlie Kambalda Pipeline +40 Mid West Pipeline +20 Moomba Sydney Pipeline (inc laterals) +21 Moomba to Sydney Ethane Pipeline +28 Mortlake Gas Pipeline +39 Northern Goldfields Interconnect +45 Parmelia Gas Pipeline +48 Pilbara Pipeline System +12 Reedy Creek Wallumbilla Pipeline +15 Roma Brisbane Pipeline (inc Peat lateral) +30 SEA Gas Pipeline +29 SESA Pipeline +10 South West Queensland Pipeline +49 Telfer/Nifty Gas Pipelines and lateral +25 Victorian Transmission System +14 Wallumbilla Gladstone Pipeline (inc laterals) +2 Wickham Point Pipeline +36 Yamarna Gas Pipeline +51 Kurri Kurri Lateral Pipeline (KKLP) +52 Western Outer Ring Main (WORM) +Gas Processing and Storage +27 Dandenong (680TJ/12000t) +18 Kogan North (12TJ/d) +46 Mondarra (18PJ) +Gas Distribution +16 Allgas Gas Network +50 Australian Gas Networks +24 Tamworth Gas Network +Electricity Transmission +19 Directlink +31 Murraylink +53 Basslink* + +Generation +17 Daandine (30 MW) +6 Diamantina (242 MW) +33 Gruyere (47 MW) +7 Leichhardt (60 MW) +5 Thomson (22 MW) +4 X41 (41 MW) +35 Gruyere Battery Station (4.4 MW/MWh) +Solar Farm +43 Badgingarra (19 MW) +11 Darling Downs (108 MW) +41 Emu Downs (20 MW) +34 Gruyere Solar Farm (13.2 MW) +8 Dugald River Solar Farm (88 MW) +Wind Farm +44 Badgingarra (130 MW) +42 Emu Downs (80 MW) +32 North Brown Hill (132 MW) +K ey +APA G r o up asse t +APA Group distribution network asset +APA Group investment +Investment distribution network +APA G r oup managed asset (no t ow ned ) +Managed distribution network +Other natural gas pipelines +Under construction +Wind farm +Solar farm +LNG plan +Battery storage +Gas storage facility +Gas processing plant +Gas power station +Integrated Operations Centre + + + +Dubbo +53 +Gruyere +45 +46 +48 4 +1 +2 +5 +6 +7 +8 +9 +10 +13 +12 +11 +14 +15 16 +17 +23 +24 +22 +25 +28 +29 27 +20 +19 +21 +32 +31 +30 +18 +33 +47 +36 +3435 +3738 +41 +42 +43 +44 +40 +39 +3 +49 +50 +51 +Kurri Kurri +W allumbilla +R oma +Mount Isa +Karratha +Ballar at +Bendigo +T a mwor th +I O C +Lithgow +T r opicana +Y armana +Alice Springs +K atherine +Kalgoorlie +Gladstone +Moomba +Albury +Sydney +Canberra +Brisbane +Melbourne +Hobart +D arwin +Perth +Adelaide +Melbourne +Melbourne +Airport +52 +Ballera +* Acquired October 2022. +10 +APA GROUP ANNUAL REPORT 2023 +The secret object #1 is a "chair". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_13.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..9adf49fcdda5292157adaea69925caf8accb242a --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_13.txt @@ -0,0 +1,56 @@ +External environment +APA is committed to working with our customers, +communities and governments to deliver an energy transition +that prioritises reliable, affordable and low emissions energy +for all Australians. +Major trends +Both industry and governments continue to confront the +challenge of balancing the competing demands of the +energy sector to deliver: +• reliable energy +• affordable energy and +• low emissions energy +Australia, like most countries, strives to balance these +three interconnected objectives as our energy sector +transitions towards net zero. +As low emission variable renewable electricity (‘VRE’) +steps in to replace coal-fired generation, industry and +governments are searching for solutions to ensure the +transition remains affordable and reliable. Transitioning +to these cleaner energy sources often requires significant +upfront capital investments in new infrastructure, new +technologies, and research and development with long +lead times to commercialisation. +1 AEMO Market Suspension FAQs June 2022. +Both Federal and State governments throughout Australia +are adjusting policy settings in energy markets in an +attempt to both encourage lower carbon energy sources +as well as ensure energy remains affordable and reliable. +Interventions that commenced in FY22 continued in +FY23 as it was deemed necessary by government bodies +to take action in the electricity, coal and gas markets +across eastern Australia. This was driven by supply +constraints leading to high energy prices and included: +• The National Electricity Market (NEM) was suspended +in June 2022 by the Australian Energy Market Operator +(AEMO). Supply shortages made the ongoing operation +of the market under the National Electricity Rules +‘practically impossible’.1 +• The Federal Government introduced legislation +in December 2022 which applies a temporary price +cap of $12/GJ on the supply of regulated gas for +12 months. The government also requested a domestic +coal price cap of $125/T to be implemented in +New South Wales and Queensland. +• In Western Australia, June 2022 saw the announcement +by the WA Government that all state-owned coal +generators are to close by 2030. Following this, the +WA Government announced a review of the State's +domestic gas reservation policy. This was part of the +Government’s efforts to determine if the policy remains +fit for purpose in supplying the domestic market or if +amendments are needed to allow for more gas to be +delivered to domestic users. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +11 +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_14.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..b4d7cf8ac164c0fb0e8b58d58e0c3b67f79b682d --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_14.txt @@ -0,0 +1,49 @@ +Economic regulatory matters +Gas pipelines in Australia are regulated under the +National Gas Law (NGL) and National Gas Rules (NGR) by +the Australian Energy Regulator (AER) or the Economic +Regulation Authority of Western Australia (ERA). On +2 March 2023, amendments to the NGL and NGR were +proclaimed and came into effect across all States except +Western Australia. Prior to these amendments the NGL +and NGR established two regulatory pipeline frameworks: +1. Scheme pipelines (NGR Parts 8-12) subject to either: + – Full regulation with regulator approved tariffs and +terms and conditions; or + – Light regulation where pipeline owners publish +services and prices and comply with information +provision requirements. +2. Non-Scheme pipelines (NGR Part 23) where tariffs and +terms are negotiated between parties. +The 2 March 2023 amendments to the NGL and NGR +discontinue light regulation and transition to a: +• ‘heavier’ form of regulation, based on the current full +regulation for scheme pipelines; or +• ‘lighter’ form of regulation, based on the previous +Part 23 (now Part 10) regime for non-scheme pipelines. +In practice, pipelines currently subject to full regulation +are not expected to experience much change. APA’s +non-scheme pipelines and pipelines previously subject +to light regulation will transition to the new ‘lighter’ form +of regulation. +Following on from this legislative change, the regulator will +now have the power to determine the form of regulation +to apply to a particular pipeline. In effect, this means that +the AER can decide to apply full regulation to non-scheme +pipelines. The AER would then have the role of approving +capital and operating expenditure and rates of return +under five year access arrangement proposals. APA will +also be required to publish actual contracted prices across +its pipeline network. Further changes to the information +disclosure framework will take place from FY25, under a +new Pipeline Information Disclosure Guideline, currently +under development. +APA pipelines (owned and/or operated) – by regulation type +External environment +(continued) +Full regulation pipelines +Light regulation pipelines +Non-scheme pipelines +Partly full regulation/non-scheme pipelines +12 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_15.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..1de9702946961fa64cc934f888b2624320f0dc6b --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_15.txt @@ -0,0 +1,63 @@ +Regulatory resets +The diagram below shows the scheduled regulatory reset +dates for pipelines owned and operated by APA. During +FY23, approximately 8.2% of APA’s Energy Infrastructure +revenues were subject to regulated outcomes. +Key regulatory matters relating to APA assets addressed +during the year included: +• Victorian Transmission System (VTS) 2023-2027 +access arrangement – On 9 December 2022, the AER +published its final decision on the 2023-27 VTS access +arrangement. The decision recognised the importance +of continued investment in the VTS to maintain +reliability and system security for Victorian gas users. +The access arrangement will have effect for five years +from 1 January 2023. +• Murraylink 2023-2028 revenue proposal1 – +On 28 April 2023, the AER published its final +determination for the Murraylink electricity transmission +interconnector between South Australia and Victoria, +approving total revenues for the 2023-28 period at +levels 4.5% lower than allowed for in the 2018-22 +period. This cut was driven largely by reductions in the +allowed cost of capital. +Energy industry policy developments +In FY23 APA continued to engage in national and +jurisdictional policy processes focused predominantly on +gas security, development of the hydrogen and renewable +gas industries, and the decarbonisation of the economy. +The focuses of our submissions were as follows: +• Gas security – APA submitted that market approaches, +rather than direct Government intervention, are the +most efficient means of ensuring gas is delivered +to customers. Our submissions also stressed the +importance of bringing new gas supplies to market. +• Hydrogen and renewable gas reforms – APA lodged +submissions to various jurisdictional processes +proposing to extend licensing and technical +frameworks to include hydrogen and renewable gases. +• Decarbonisation of the economy – APA supports +the development of Renewable Energy Zones and +contestability in transmission delivery to help efficiently +connect renewable generation to the National +Electricity Market. APA also supported amendments +to the National Energy Objectives and the Safeguard +Mechanism to help drive the decarbonisation of +the economy. +• Banning new gas connections – The ACT and +Victorian governments are taking steps to ban new gas +connections at the distribution level for households +and small business. Both governments are also offering +subsidies for households and small business to replace +gas appliances with electric ones. +Scheduled regulatory reset dates for pipelines owned and operated by APA 2 +Victorian Transmission System 31 DECEMBER 2027 +Roma Brisbane Pipeline 30 JUNE 2027 +CY23 CY24 CY25 CY26 CY27 +Amadeus Gas Pipeline 30 JUNE 2026 +Goldfields Gas Pipeline 31 DECEMBER 2024 +1 APA has ~20% ownership of Murraylink. +2 Victorian Transmission System access arrangement from 1 January 2023 to 31 December 2027. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +13 +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_16.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..1d0ed64819ecc749b39984e26f8a1ebdf3fa5357 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_16.txt @@ -0,0 +1,12 @@ +Our strategy +Creating value as +THE PARTNER OF +CHOICE +Meeting the needs of our customers +WHERE WE HAVE +A COMPETITIVE +ADVANTAGE +Disciplined investment +ACROSS FOUR ASSET +CLASSES +14 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_17.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba3afbb1f0fcb9348534b170522740aaf31f1d3d --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_17.txt @@ -0,0 +1,50 @@ +An effective transition requires an ambitious but +pragmatic approach to delivering affordable, reliable and +low emissions energy. To achieve this, we believe the +transition must focus on the retirement of coal fired power +generation and the introduction of renewable generation, +firmed with gas and/or other low emissions firming and +storage technologies. +APA is well positioned in Australia to play a key role in +developing and deploying energy solutions that strike the +balance between these often competing priorities. Our +natural gas assets are strategically integrated in both the +East Coast and West Coast gas markets. They will remain +a critical part of the future energy mix, balancing the load +and helping to unlock the expansion of renewable energy +required to replace retiring coal power stations and +support the nation’s decarbonisation. In addition, natural +gas continues to play an important role for powering +hard-to-abate and hard-to-electrify industrial sectors and +provides essential heating in colder climates. APA’s assets +will help to ensure Australia continues to have access to +reliable and cost-efficient energy. +APA’s strategy is to be the partner of choice in delivering +infrastructure solutions for the energy transition . +We will do this in select asset classes, where we have +a competitive advantage – renewable electricity and +firming, electricity transmission, gas transportation +and future energy (including clean fuels such as hydrogen +and renewable methane). +This approach will be underpinned by anticipating +the needs of our customers, partnering with them, +pursuing unsolicited proposals, and delivering bundled +energy solutions. +APA’s energy transition strategy is focused on four asset classes +APA’s strategy is to be the partner of choice in delivering +infrastructure solutions for the energy transition. +We are supporting +Australia’s energy +transition through +investment in +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +15 +Contracted +Renewables and Firming +Electricity +Transmission +Gas +Transportation +Future +Energy +The secret tool is a "saw". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_18.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..8317df7d240a8954a6593cda232eeaf47bd28adf --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_18.txt @@ -0,0 +1,83 @@ +Our strategy +(continued) +BRINGING THE APA STRATEGY TO LIFE THROUGH A CUSTOMER DRIVEN APPROACH TO MARKET +RESOURCE INDUSTRY ENERGY SUPPLY +AND WHOLESALE GOVERNMENT LARGE COMMERCIAL +AND INDUSTRIAL +... ACROSS VARIOUS ASSET CLASSES +... MEETING THE NEEDS OF OUR CUSTOMERS WHERE WE HAVE A COMPETITIVE ADVANTAGE ... +A CUSTOMER FOCUSED STRATEGY ... +Levelised cost of energy +remains key +Flexibility to respond to +changing supply sources +Reliability of service +remains high +Opportunity across both +East and West coasts +Leverage current assets +along with incremental learning +and execution +Require trusted partner to +support accelerating transition +Reliability and social +licence are key +Cost is important, but timely +delivery drives outcomes +Opportunity estimated amounts +to $54bn including REZs and +subsea cables +Basslink, Murraylink, Directlink +illustrate our capability +Ability to provide flexible +and responsive services to +changing market demands +Reliability of supply with +a trusted partner +Requiring innovative ways to +respond to the energy transition +Opportunity across both +East and West coasts +Core operating business +with a proven track record +Resource companies are +decarbonising – majority +have CO 2 reduction goals +Reliability of energy supply +with a trusted operator/partner +Levelised cost of energy remains +key for global competitiveness +Significant opportunity exists +in North West Minerals Province, +Pilbara, Goldfields +Mt Isa and Gruyere showcases +our capability +Asset class and total estimated addressable market size /one.numr : +$8bn +Gas +Pipelines +$260bn +Hydrogen +$54bn +Electricity +Transmission +(including +Subsea Cables) +$206bn +Contracted +VRE and +Firming +on Grid (NEM) +$13bn +CO 2 +Transmission +$25bn +Contracted +VRE and +Firming +Remote Grid +1 Estimated addressable market sizes in Australia. Estimates are based on a number of key assumptions, including in relation to macroeconomic factors, future technology +advancements and costs, market demand, regulatory requirements and government policies and there can be no assurance the estimates are accurate. The actual +addressable market sizes may differ materially from the estimates because events frequently do not occur as projected. +16 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_19.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..a251a790278d8359ecd7921425e28c1279efedd9 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_19.txt @@ -0,0 +1,61 @@ +Our sustainability roadmap +As a leading Australian energy infrastructure business, +we believe we have a responsibility to steward our natural +resources and preserve long-term value for security- +holders, communities and our people. +At APA we see sustainability as a priority that involves +both opportunities and risks. We understand the value +and scrutiny our partners and stakeholders place on our +sustainability performance and that this is used to assess +APA’s comparative performance across the industry. +Our approach to sustainability is governed by a +Sustainability Roadmap centred on nine material +sustainability issue areas identified through a consultative +process. Our Roadmap provides a three-year framework +for building the foundations of sector-leading sustainability +performance. +APA’s Net Zero ambitions and the low-carbon transition +are at the heart of our Roadmap and we are prioritising +achievement of the targets outlined within our Climate +Transition Plan (CTP). +Our Sustainability Roadmap and our CTP are overseen +by our Board and guided by the Safety and Sustainability +Board Committee. +Climate Change Transition and Risk Environmental Management +including Heritage Management +Safety, Health and Wellbeing +Community and Social Performance +First Nations Peoples + Inclusion and Diversity +People and Culture +Governance and Risk Management +Sustainable Development +Sustainability issues +Leverage our strengths and focus on the things +that matter +Engage, listen and innovate with key stakeholders +and alliances +Achieve consistently meaningful, measurable and +impactful outcomes +Anticipate and be well positioned to respond to fast +moving issues and opportunities +Accelerate our improvement actions to close the gap Take a ‘know and show’ approach with disclosure +and transparency +ESG SCORECARD +ROADMAP AND PLAN PRINCIPLES +BUILD ACCELERATE MAINTAIN AND EVOLVE +Priority issues to be built +into strengths +Fundamental issues which +require strengthening +Existing plans and processes +to evolve via ESG lens +1 +2 +3 +4 +5 +6 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +17 +The secret flower is a "tulip". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_2.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c50dbbb4dbc329841e25b3ea6d4d1a0c244a5e0 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_2.txt @@ -0,0 +1,45 @@ +ACKNOWLEDGEMENT OF COUNTRY +At APA, we acknowledge the Traditional +Owners and Custodians of the lands on which +we live and work throughout Australia. +We acknowledge their connections to land, +sea and community. +We pay our respects to their Elders past and +present and commit to ensuring APA operates +in a fair and ethical manner that respects +First Nations peoples’ rights and interests. +About this report: The 2023 Annual Report is our primary report to securityholders +and provides a consolidated summary of APA Group’s performance for the financial +year ended 30 June 2023. It should be read in conjunction with the reports that +comprise the 2023 Annual Reporting Suite including: Annual Report, Sustainability +Data Book, Results Presentation available from https://www.apa.com.au/investors , +as well as the Climate Report and Climate Data Book that will be available at this +website in September 2023. In this report, unless otherwise stated, references to +‘APA Group’, ‘we’, ‘us’ and ‘our’ refer to APA comprising the ASX-listed entity and +the APA Infrastructure Trust and the APA Investment Trust. Any reference in this +report to a ‘year’ relates to the financial year ended 30 June 2023. All dollar figures +are expressed in Australian dollars unless otherwise stated. +The Board acknowledges its responsibility for the 2023 Annual Report and has been +directly involved in its development and direction. The Board reviewed, considered +and provided feedback during the production process and approved the Annual +Report at its August 2023 Board meeting. +This report outlines APA Group’s activities – governed by our purpose, vision +and values and corporate strategy – delivering the financial, non-financial and +sustainability performance required to capture opportunities whilst managing risks. +Towards integrated reporting: APA Group is committed to providing securityholders, +other external stakeholders and our people with timely, consistent and transparent +corporate reporting. APA is moving towards integrated reporting over a multi-year +period in order to create trusting and transparent relationships with all stakeholders +and to provide a more complete picture of how we create and preserve long-term value. +The integrated reporting concept refers to a principles-based, multi-capital +framework in which companies can communicate clearly and concisely about how +their strategies, governance, performance, prospects and sustainability-related +actions create value in the context of their external environment. The International +Finance Reporting Standards Foundation formed the International Sustainability +Standards Board (ISSB) in November 2021. The ISSB’s purpose is to deliver a +comprehensive global baseline of sustainability-related disclosure standards that +provide investors and other capital market participants with information about +companies’ sustainability-related risks and help them make informed investment. +These standards, when issued, are expected to result in a more definitive approach +for companies to follow with regard to integrated reporting. Our FY23 Annual Report +has been developed with this in mind. \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_20.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..1395a97c70d8b67e096c2085b84ba1f38686f0ce --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_20.txt @@ -0,0 +1,11 @@ +Risks and +opportunities +EMBRACING +the energy transition opportunity +OPTIMISING +outcomes in a highly regulated +and fluid environment +FUTURE PROOFING +APA with the right capability +and technology +18 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_21.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..abb0762408db9a56c02f24fa1d6b5b9e0529651c --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_21.txt @@ -0,0 +1,90 @@ +As a leading energy infrastructure business, APA is exposed +to risks that can have a material impact on our delivery of +energy and our financial success. Our approach to managing +material risks is summarised below. +Risk management framework +APA’s risk management framework supports the +identification, management, escalation and reporting +of material risks. By implementing an effective risk +management framework APA’s Board and executive aim +to ensure that strategies are in place to manage potential +opportunities and threats. +APA adopts a three lines model for managing risks and +establishing controls to promote the behaviours and +decision making to support effective risk management. +This model of risk management is depicted below. +The first line, our employees, are accountable for +day-to-day risk management and decision making within +appropriate guidelines. +In lines two and three, APA’s Executive Leadership +Team, the Board’s Risk Management Committee and the +relevant business divisions have oversight of and review +material risks regularly, with the support of internal and +external experts. +During FY23, the accelerating energy transition, as well +as emerging geopolitical risks, inflation and supply chain +disruptions were key risks and opportunities impacting +our operational and financial performance. To create +and protect value APA has focused on these risks and +opportunities, updating actions to manage risks and +achieve our objectives. Existing material risks also have +ongoing oversight with a major priority being ensuring +the safety of our operations and supporting activities to +provide reliable energy to our customers, and to maintain +our financial strength to respond to changes in the +Australian energy market. +BOARD +Accountable to stakeholders for organisational oversight +RISK MANAGEMENT COMMITTEE/AUDIT AND FINANCE COMMITTEE +Delegates, directs, ensures adequate resourcing and provides oversight +EXECUTIVE RISK MANAGEMENT COMMITTEE +Accountable for risk and reporting to the Risk Management Committee +MANAGEMENT INTERNAL AUDIT +EXTERNAL ASSURANCE PROVIDERS +(External Audit1, Regulator Audit, Third Party Audit, Advisory Reviews) +LINE ONE +Owns and manages risks +LINE TWO +Builds, reviews and supports +LINE THREE +Independent assurance +Group Executives +Our People +Enterprise/Divisional Risk, Compliance and +Assurance Teams, HSEH, Enterprise +Security, Enterprise PMO +Group Internal Audit +• Provide products/services to customers +• Implement risk management frameworks +(identify, assess, own and manage risks +to achieving objectives) +• Own internal controls and actions +• Own and manage compliance with legal, +regulatory and ethical expectations +• Control attestation/self-assessment +• Provide expertise, support, monitoring +and challenge on risk-related matters +• Maintain and continuously improve +risk management practices at an +enterprise/function, system or +process level +• Report on the adequacy and +effectiveness of risk management +• Coordinate insurance +• Maintain and implement risk-based +control assurance programs at +enterprise/function level +• Provide independent and objective +assurance of objectives +• Ensure that governance structures and +processes are appropriately designed +and operating as intended +• Provide oversight and direction in +aligning governance activities, including +integrated assurance +Key: Accountability reporting +1 External Auditors have not provided assurance over the risk management framework in FY23. +Alignment, communication, coordination, collaborationDelegation, direction, resources, oversight +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +19 +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_22.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..24b4084fb5c4885f43db282130b6de05356a538c --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_22.txt @@ -0,0 +1,93 @@ +Material risks +APA currently considers the following risks to have the possibility of materially impacting our ability to meet our business +objectives. Material risks are subject to enhanced oversight by management and the Risk Management Committee. +This list is not exhaustive and is subject to change as new risks emerge or are no longer considered material risks. +RISK DESCRIPTION MANAGING THE RISK +Strategic Risks – Strategic risks are those uncertainties that could materially impact the business’ ability to implement its +strategic objectives. +Energy market transition Accelerating decarbonisation and carbon +emissions (net zero) targets drives potential +for cleaner power generation, renewables +development, and energy innovation/new +entrants in markets. +Government net zero policies/targets and +new technologies could materially decrease +the market for gas and gas transportation +and APA may fail to grow in other energy +infrastructure classes, limiting domestic +market growth. +• Execution of APA’s customer-focused strategy +creates value as the partner of choice, delivering +infrastructure solutions for the energy transition +where APA has a competitive advantage and +across targeted asset classes. +• Actively contribute to Government policy process +and advocate for the importance of APA’s role in +supporting energy transition and managing the +intermittency of renewables. +• Engage with customers and pro-actively manage +opportunities to retain, re-contract or switch to +alternative APA assets via structured, flexible and +competitive price and service offerings. +Government and regulatory +intervention +APA is exposed to regulatory policy change +and government interventions. +These changes and interventions may be at +Federal, state or territory level, and may vary. +They could include those that are designed +to support decarbonisation, limit the impacts +of climate change, or manage the impact of +Australia's transitioning energy system. +Those policy changes and interventions +may constrain gas supply (including through +limiting or restricting new gas projects), +impact the availability of competitively priced +gas, increase compliance costs for APA and +its customers and otherwise place additional +operating restrictions or complexities on +APA's businesses and the businesses of its +customers. +In addition, under the recent amendments to +the National Gas Law and National Gas Rules, +the Australian Energy Regulator (AER) will +now have the power to determine the form +of regulation to apply to a particular pipeline, +and could apply full regulation to pipelines +that are currently non-scheme. +If implemented, any of those policy +changes and interventions may change the +commercial viability of existing or proposed +projects or operations and adversely impact +APA's future business and operations. +• Maintain strong regulatory and policy functions +and be an active participant and stakeholder in the +development of regulation and policy, including +AER guidelines which support the exercise of its +new powers.  +• Continually assess and respond to key policy +change proposals with potential impacts on +APA’s businesses. +• Actively engage with updating/developing relevant +Australian standards. +Social licence APA relies on a level of public acceptance +for the development and operation of its +assets. Changing societal and community +sentiment in relation to the energy industry, +as well as APA’s business, may impact APA’s +commercial opportunities, and its ability to +develop new projects and operate its assets. +• Engage with key stakeholders (landowners, +producers, customers, government etc) to identify +focus areas. +• Monitor expectations, major trigger events within +the community and APA’s reputation score. +• Drive community and social performance initiatives +and programs working with First Nations People. +• Implementation of APA’s Climate Tranistion Plan, +Sustainability Roadmap, transparent and proactive +annual disclosure. +Risks and opportunities +(continued) +20 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_23.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..be121ff3f92e7056ade9e3c719bcc65a98816799 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_23.txt @@ -0,0 +1,106 @@ +RISK DESCRIPTION MANAGING THE RISK +Operating multiple asset +types +Risks arise from managing and partnering +across multiple asset types. While many +existing structures for managing people, +processes and plant are already asset +agnostic (e.g. asset management framework, +IT systems, risk and assurance O&M +workforce management and the Integrated +Operations Centre), risks will arise from +the need to scale up and integrate new +asset types. +• Continue to invest in our capability in electricity +transmission development and engineering, power +generation optimisation and asset development +and integration. +• Continuous improvement of existing asset agnostic +structure and framework for managing people, +processes and plant. +• Continue to invest in maturing asset management +framework and real time data analytics. +Partnering across multiple +stakeholder groups +APA’s engagement spans a diverse range +of stakeholders (e.g. across State and +Federal Government agencies, community, +landholders, customers, suppliers, investors +and employees) who hold different +perspectives and objectives. +Risks arising from engagement with this +complex and changing set of stakeholders +could lead to reputation damage, loss of +stakeholder support/trust which ultimately +affects APA’s ability to win projects, source +approvals, and diversification into new +energy markets. +• The development of targeted State-based +stakeholder engagement plans to ensure +appropriate ‘owners’ are assigned to stakeholders +and there is coordination and cohesion across +the business. +• Continued investment in core capability around +targeted workforce planning. +Operational Risks – Operational risks potentially arise from weaknesses in internal processes, people or systems or from +unforeseen external events. +Health and safety Preventing workplace injury and keeping all +our employees and contractors safe is our +highest priority. Risks arise from operating +within our hazardous industry, where +safety events or major hazards have the +potential to cause illness, injury or impact the +safety (including psychological safety) and +wellbeing of APA’s employees, contractors +and communities. +• APA’s Board Safety and Sustainability Committee +has oversight of this risk. The key focus is +prevention achieved by appropriately identifying, +managing and where possible eliminating risks. +• Continued focus on comprehensive health +and safety management policies, strategies, +frameworks (including employee Wellbeing +Framework), systems +and processes. +• Reporting of key performance metrics to +monitor safe behaviours and identify continuous +improvement opportunities. +Asset operations APA is exposed to major incidents or events +that may result in harm to our people, +environment, and the communities we +operate in; or materially impact our reputation +or financial performance. +• Comprehensive operational, process safety, +cultural heritage and environment management +programs. +• Continue to engage with wider industry to stay +abreast of best practice asset management +processes. +• Implement asset management and maintenance +engineering standards, including integrity +monitoring and maintenance programs, as +part of risk-based asset lifecycle management. +• Conduct asset operational monitoring through +control rooms to manage assets within +design parameters and coordinate asset +maintenance issues. +• Provide comprehensive insurance arrangements as +part of the asset protection program. +Infrastructure development Risks associated with the development of +new pipeline capacity, renewable, battery +and gas-fired power generation plants, and +gas storage and gas processing assets. This +includes typical construction risks such as: +obtaining necessary regulatory approvals, +employee or equipment shortages, third-party +contractor failure, weather risk, and higher +than budgeted construction costs impacting +liquidated damages and project delay. +• Access and approvals management for new +construction projects. +• Dedicated construction project management +capability and governance to manage efficient, +safe and quality delivery of construction projects. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +21 +The secret object #5 is a "towel". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_24.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce10a512686a1c2a83bc93653e6e47a4fe42b6d4 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_24.txt @@ -0,0 +1,96 @@ +RISK DESCRIPTION MANAGING THE RISK +Corporate transformation APA is exposed to the risks associated +with the design and delivery of enterprise- +wide corporate transformation programs. +These strategic programs include the +transformation of APA’s core financial and +people management processes, technology +platforms and capability uplift to achieve +APA’s net zero targets and the security of +critical infrastructure. +• Roll-out of an enterprise-wide project governance +and delivery framework, tools and organisational +change management capability. +• Project/program reporting, risks and issues +management and escalation and oversight by +senior management and the Board. +Sustainability The risks arising from the management and +disclosure of sustainability issues (including +climate and ESG matters) impacting APA +performance and reputation. +• APA’s Board Safety and Sustainability Committee +has regular oversight of this risk. +• Delivery of comprehensive environment and +heritage management policies, strategies, +frameworks, systems and processes. +• Refreshed sustainability risk assessment (including +climate risks) with clear business ownership. +• Formalised procedures supporting sustainability +including integrated reporting, an enhanced +scorecard and APA’s Sustainability Roadmap +and strategy. +People and culture Our leaders are held accountable for creating +cultural alignment with APA’s behaviours and +establishing a workplace where everyone +feels safe, respected and included. +APA’s inclusive culture is a prerequisite to our +ability to attract, engage, develop and retain +a diverse pool of skills and capabilities in a +competitive talent market. +• APA’s Board People and Remuneration Committee +has oversight of this risk. +• Execution of clear employee value proposition and +effective talent programs to develop and maintain +talent pipelines. +• Delivery of comprehensive learning and +development programs including leadership +programs to build the skills and capability required +for now and the future. +• Implementation of holistic cultural programs +designed to improve workplace inclusion and +diversity, employee experience and wellbeing. +• Identification of clear expectations of behaviour +in APA’s Code of Conduct and Respect@Work +procedure. +Technology strategy, +operation and security +The risk of interruption to APA’s operations +due to unreliability of information and +operational technology systems, applications, +technology architecture or third-party +providers. +• Manage APA’s information and technology assets +in accordance with recognised industry standards +across hardware, software, applications and +communication systems. +• Apply security standards across APA information +and technology systems, including those managed +by third-party vendors, with standards continually +assessed against new threats and vulnerabilities. +• Regular reviews and testing of information and +operational technology systems. +Cyber security Cyber-attacks are increasing in frequency, +scale and sophistication across both our +communities and industry. APA plays a +pivotal role in Australia’s essential energy +supply chain and could be the target for +a cyber incident. Breaches may involve +sensitive commercial and/or personal +information or impact the operation of critical +infrastructure assets and systems possibly +leading to shutdowns of our energy assets. +• Implementation of a program to strengthen the +security of APA assets, and cater for emerging +threats, security regulation and stakeholder +expectations. +• Robust security monitoring and incident response +process supported by regular exercises and +security control assurance programs. +• Compulsory security awareness training for APA +employees and contractors, including how to +identify phishing emails and keep data safe; +and a regular program of random testing. +Risks and opportunities +(continued) +22 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_25.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..bd5ecdd0fa8ab376085279d5a8e9aad48e54601b --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_25.txt @@ -0,0 +1,86 @@ +RISK DESCRIPTION MANAGING THE RISK +Financial and Compliance Risks – Financial risks are those arising from the management of APA’s financial resources, +accounting, tax and financial disclosure. Compliance risks arise from laws, regulations, licences and recognised practising +codes including health, safety, environment, cultural heritage, payroll, asset construction and operation, and other corporate +compliance requirements. +Legal, compliance and +operating licences +APA is exposed to the risk of operating +within a highly regulated environment with +complex legal requirements, operating +licence conditions, industry standards/codes +of practice and corporate obligations. +• Comprehensive Enterprise Compliance +Management Framework in place with regulations +identified, controls monitored and assurance +operating. +• Dedicated specialist teams that provide asset level +monitoring and assurance for technical, safety, +environment and cultural heritage compliance. +Debt and capital +management +The risk arising from reduced business +and financial flexibility due to ineffective +management of APA’s debt and capital or +limited availability, or unfavorable pricing, +timing and access to debt and equity funding. +• Board approved risk limits and Treasury Risk +Management Policy. +• Regular, independent reviews of corporate and +asset models underpinning investment decisions. +• Effective debt and capital management strategy +and hedging against interest rate movements and +foreign currency rate fluctuations. +• Maintain access to a broad range of global banking +and debt capital markets. +Key emerging risks, threats and opportunities +Below we note several key emerging risks that are highly uncertain by nature and include +threats and opportunities for APA: +EMERGING RISK THREATS AND OPPORTUNITIES APPROACH +Global economic slowdown Threat: Global economic slowdown +impacts financial markets and customer +demand, potentially reducing gas +contract capacity demand and +recontracting revenue, access to +new debt markets and liquidity and +commodity prices. +• Strong capital management framework, including +hedging arrangements and customer credit +monitoring. +• Actively monitor commodity pricing impacting +sourcing of goods and materials utilised in large +construction projects and domestic demand. +• Closely monitor changes in energy demand +including substitution. +Geopolitical uncertainty Threat: Geopolitical uncertainty with +rising tensions in the region and +continuation of the Russia/Ukraine +conflict impacting changes in sanctions +regimes, international energy demand, +rising national security interests and +worsening supply chain disruption. +• Continue to evaluate options for alternative +sources of supply for international construction +procurement. +• Conduct resilience updates for information +technology infrastructure, including cyber +resilience. +• Focus on gas reserving management, +including increases in gas line pack to meet +high demand periods. +Carbon offsets Opportunity: Introduction of carbon +offsets as part of decarbonisation and +climate change requirements to support +energy infrastructure development +and growth. +• Continue to investigate a number of carbon offset +programs via a mix of direct procurement and +investment opportunities. +Artificial intelligence Opportunity: Growth in artificial +intelligence and potential impact +on productivity improvements. +• Initiatives to improve data quality and data +governance providing for adoption of digital +technologies impacting workforce improvements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +23 diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_26.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..6ffba5c6899ab75e9a8733e498ab5150e6b4594f --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_26.txt @@ -0,0 +1,15 @@ +Sustainability +at APA +Developed our inaugural APA +RECONCILIATION +ACTION PLAN +Supported our communities +through our +SOCIAL INVESTMENT +INITIATIVES +Established +GENDER-NEUTRAL +PARENTAL LEAVE +BENEFITS +24 APA GROUP ANNUAL REPORT 2023 +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_27.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..4bf26a577bac7435da50d646ff98400fc4f731b3 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_27.txt @@ -0,0 +1,73 @@ +We prioritise sustainable outcomes so that APA, our +employees, customers and communities in which we +operate can thrive – now and in the future. +At APA we are united behind a singular purpose to +strengthen communities through responsible energy. +We are committed to act responsibly across all of our +business activities. +We seek continual improvement, working collaboratively +with our industry peers and engaging transparently with +our stakeholders. We understand the value and focus that +our partners and stakeholders place on our sustainability +performance and that this is used to assess APA’s +performance across the industry. +Our Sustainability Roadmap provides the foundations +for APA to develop key strategic sustainability initiatives +and deliver on them in a prioritised way. Over the last two +years our main areas of focus have been on the ‘build’ +and ‘accelerate’ pillars of our Sustainability Roadmap. +These pillars identify fundamental focus areas that require +growth and/or strengthening. It is important that we are +targeted in our approach and focused on those topics that +matter most to APA and our stakeholders. +Our material sustainability focus areas +In FY21, we conducted a stakeholder-centric materiality +assessment to identify the core sustainability-related +issues that APA should focus on. This process informed +the development of our three-year Sustainability Roadmap +and enabled us to bring APA’s vision and purpose to life. +APA’s Sustainability Roadmap categorises the core issue +areas into three groups: Build, Accelerate and Maintain +and Evolve. The diagram on page 26 highlights our +progress against the Sustainability Roadmap in FY23. +To continue to deliver the most positive impact for +APA and highest value for our stakeholders, it is critical +we regularly re-evaluate the sustainability issues most +material to our business and stakeholders. This will +enable us to assess the economic, social, environmental +and cultural impacts of our activities and business +relationships and refine our main focus areas and +associated initiatives. +As our Sustainability Roadmap is due to complete in +June 2024, work is underway to prepare a refreshed +Roadmap. The first step towards this is delivery of a +sustainability materiality assessment, culminating in +an impact-based sustainability materiality matrix. The +materiality assessment approach will be guided by the +Global Reporting Initiative (GRI 3: Material Topics 2021) +which considers actual and potential negative and +positive impacts of our business to determine our material +sustainability issues for prioritisation. +Supporting the UN Sustainable +Development Goals +APA continues to support the delivery of the 17 United +Nations Sustainable Development Goals (SDGs). +By working more strategically and aligning our +initiatives to the relevant SDGs we can tackle major +societal, environmental and economic challenges whilst +also identifying and unlocking significant business +opportunities. +At their core, the SDGs aim to create a shared value +approach through the creation of economic and business +value in a way that fundamentally addresses societal +needs and challenges. The paradigm shift required to +transition from a philanthropic approach to one delivering +both business and social values now guides our approach. +To demonstrate how the business is meeting the relevant +SDGs, we have mapped goals to the three areas of our +Roadmap and indicated where each goal is connected +to our performance and priorities. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +25 +OPERATING & FINANCIAL REVIEW +The secret object #3 is a "knife". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_28.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6288573d7430ce53be3c440e23bfa922268b808 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_28.txt @@ -0,0 +1,83 @@ +Sustainability at APA +(continued) +FY23 PROGRESS AGAINST APA’S SUSTAINABILITY ROADMAP +BUILD +Priority issues to be built + into strengths +ACCELERATE +Fundamental issues which +require strengthening +MAINTAIN AND EVOL VE +Existing plans and processes +to evolve via ESG lens + Climate change transition and risk + Community and social performance + First Nations Peoples + Environmental management + including heritage management + Safety, health and wellbeing + Inclusion and diversity + People and culture + Governance and risk management +• Progressed CTP actions in line with +FY23 commitments. +• Established a dedicated Community +and Social Performance (CSP) team +to deliver CSP strategy and social +investment framework. +• Hosted workshops with our five +corporate partners to understand new +and meaningful ways to collaborate +together +• Contributed $1.2 million through +discretionary social investment to +communities via targeted community +grants programs, corporate +partnerships with charitable +organisations and local sponsorships +and donations. +• Prepared APA’s Reconciliation Action +Plan (RAP) under the guidance of a +newly established cross-functional +RAP Working Group. +• Progressed our four year Environment +Improvement Program in line with the +HSEH Strategy schedule. Processes, +tools and templates for 3 of 8 +environment risks areas have now +been developed/refined, integrated +and implemented across the business. +• Scoped environment data uplift +opportunities across the waste, water +and contaminated land risk areas. +• Uplifted our heritage practices +at targeted assets and recruited +additional Heritage Specialist. +• Ongoing delivery of our three-year +weed survey program. +• Delivered 15 environment audits. +• Refreshed our HSEH Policy. +• Prepared, approved and initiated our +five-year HSEH strategy with strategic +pillars centred on safety performance, +leadership and innovation. +• Introduction of the Board Safety and +Sustainability Committee. +• Prepared an ESG Risk Register +tracking and monitoring our business- +wide ESG risks. +• Revised our Inclusion and Diversity +(I&D) Plan and refreshed our Policy +to focus on facilitating an inclusive +culture, including the launch of +our Respect@Work Procedure and +e-module and completing a gender +pay review. +• Established gender-neutral parental +leave benefits. +• Uplifted leadership training and +capability including the introduction +of the INSEAD Curriculum. +Refer to APA's FY23 Sustainability Data Book for further information about our FY23 sustainability performance. +26 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_29.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..e24a1571a6f83271b02bd79f609ec0460f894893 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_29.txt @@ -0,0 +1,82 @@ +Climate transition plan +Our CTP is an important step in APA’s commitment to actively participate and support Australia’s energy transition, +consistent with the objectives of the Paris Agreement. Our FY23 progress on the commitments in our CTP will be +reported in our new FY23 Climate Report, due to be released in September 2023. +Gas infrastructure – net zero operational +emissions by 2050 1 +Power generation and electricity +transmission infrastructure – net zero +operational emissions /two.numr by 2040 3 +GOAL: +30% emissions reduction for gas +infrastructure (FY21 base year) +TARGET: +100% renewable electricity procurement +from FY23 onwards +TARGET: +100% zero direct emission fleet by 2030 +Responsible criteria applied when offsets +are required +GOAL: +COMMITMENT: +INTERIM COMMITMENTS FOR 2030 +KEY SUPPORTING COMMITMENTS +35% reduction in emissions intensity +for power generation (FY21 base year) +GOAL: +Contribute positively to grid +decarbonisation measured by MW +of enabled renewable infrastructure +GOAL: +Active program to reduce emissions we can +control and apply best practice management +techniques to managing line losses +COMMITMENT: +GOAL : +Incorporation of +the Methane +Guiding Principles +When setting APA’s targets and goals, we have made our commitments clear to stakeholders, based on the level of +uncertainty in the pathway required to reach them. +Target: an intended outcome where we have +identified one or more pathways for delivering that +outcome, subject to certain assumptions or +conditions. +1 Includes transmission, distribution, gas processing, storage and corporate. +2 The organisational boundary for all targets and goals relates to assets under APA’s operational control, as defined by the Greenhouse Gas (GHG) Protocol. The following + assets are not within APA’s operational control for emissions reporting purposes: Victorian Transmission System (maintenance excepted), Gruyere and X41 Power Stations, + Wallumbilla Gladstone Pipeline, SEA Gas Pipeline and Mortlake Pipeline, North Brown Hill Wind Farm and Australian Gas Networks. +3 Includes power generation and interconnectors. +Goal: an ambition to seek an outcome for which there is +no current pathway but for which efforts will be pursued +towards addressing that challenge, subject to certain +assumptions or conditions. +Hold a non-binding +securityholder vote +on future material +updates to our +Climate Transition +Plan +Report annually on +progress against +the targets, goals +and commitments +in our Climate +Transition Plan +Link executive +remuneration to +climate-related +performance +from FY23 +Scope 3 emissions +goal to be finalised +before or in +conjunction with +next Climate +Transition Plan +1 2 3 4 5 +NEW COMMITMENT FOR 2030 +30% methane reduction target (FY21 base year) TARGET: +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +27 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_3.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae4b1cc0c9b8043b0cf6e757cb7fc2639029cd3c --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_3.txt @@ -0,0 +1,106 @@ +About this report IFC +Disclaimer 1 +Overview and highlights 2 +Chairman's and Managing Director’s Report 2 +FY23 summary 4 +About APA 8 +External environment 11 +Our strategy 14 +Risks and opportunities 18 +Sustainability at APA 24 +Sustainability highlights 26 +Climate change transition and risk 28 +Community and social performance 30 +First Nations Peoples 34 +Environment and heritage 36 +People and culture 38 +Safety, health and wellbeing 42 +Customers and suppliers 46 +Performance 50 +Outlook 59 +Governance 60 +APA Group Board 62 +APA Executive Leadership 64 +APA Infrastructure Trust Financial Report 68 +Directors’ Report 68 +Remuneration Report 74 +Consolidated Financial Statements 92 +Directors’ Declaration 160 +Auditor Independence / Audit Report 161 +APA Investment Trust Financial Report 168 +Directors’ Report 168 +Consolidated Financial Statements 174 +Directors’ Declaration 189 +Auditor Independence / Audit Report 190 +Additional information 194 +Five year financial summary 195 +Investor information 196 +Glossary 197 +About this report: APA Group comprises two registered investment schemes, APA +Infrastructure Trust (ARSN 091 678 778) and APA Investment Trust (ARSN 115 585 441), +the securities of which are stapled together. APA Group Limited (ACN 091 344 704) is the +responsible entity of APA Infrastructure Trust and APA Investment Trust. +Disclaimer: Please note that APA Group Limited is not licensed to provide financial product +or investment advice in relation to securities in APA Group. This publication does not +constitute financial product advice and has been prepared without taking into account +your objectives, financial situation or particular needs. Before relying on any statements +contained in this publication, including forecasts and projections, you should consider +the appropriateness of the information, having regard to your own objectives, financial +situations and needs and seek professional advice if necessary. Past performance +information should not be relied upon as (and is not) an indication of future performance. +Forward-looking information: This publication contains forward-looking information, +including about APA Group, its financial results and other matters which are subject to risk +factors. ‘Forward-looking statements’ may include indications of, and guidance on, future +earnings and financial position and performance, statements regarding APA Group’s future +strategies and capital expenditure, statements regarding estimates of future demand +and consumption and statements regarding APA’s sustainability and climate transition +plans and strategies, the impact of climate change and other sustainability issues for +APA, energy transition scenarios, actions of third parties, and external enablers such as +technology development and commercialisation, policy support, market support and +energy and offsets availability. Forward-looking statements can generally be identified +by the use of forward-looking words such as, ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘could’, +‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’, ‘outlook’, +‘guidance’, ‘goal’, ‘ambition’ and other similar expressions and include, but are not limited +to, forecast EBIT and EBITDA, free cash flow, operating cash flow, distribution guidance +and estimated asset life. +At the date of this report, APA Group believes there are reasonable grounds for these +forward-looking statements and due care and attention have been used in preparing +this report. +Forward-looking statements, opinions and estimates are not guarantees or predictions +of future performance and involve known and unknown risks and uncertainties and other +factors. Many of these are beyond the control of APA Group, and may involve significant +elements of subjective judgement and assumptions about future events, which may or may +not be correct. There can be no assurance that actual outcomes will not materially differ +from these forward-looking statements, opinions and estimates. A number of important +factors could cause actual results or performance to differ materially from such forward- +looking statements, opinions and estimates. These factors include, but are not limited to: +general economic conditions; exchange rates; technological changes; the geopolitical +environment; the extent, nature and location of physical impacts of climate change; +changes associated with the energy market transition; and government and regulatory +intervention, including to limit the impacts of climate change or manage the impact of +Australia’s transitioning energy system. A number of these factors are described under +the heading ‘Material risks’ beginning on page 20 of this report. Readers should review +and have regard to these risks when considering the information in this report, and are +cautioned not to place undue reliance on forward-looking statements, particularly in +light of the long-time horizon which this report discusses. +There are also limitations with respect to climate scenario analysis and it is difficult +to predict which, if any, of the scenarios might eventuate. Scenario analysis is not an +indication of probable outcomes and relies on assumptions that may or may not prove +to be correct or eventuate. Scenarios may also be impacted by additional factors to the +assumptions disclosed. +Investors should form their own views as to these matters and any assumptions on which +any forward-looking statements, estimates or opinions are based. Except as required +by applicable laws or regulations, APA does not undertake to publicly update or revise +any forward-looking statements to reflect any change in expectations, contingencies or +assumptions, whether as a result of new information or future events. To the maximum +extent permitted by law, APA and its officers do not accept any liability for any loss arising +from the use of the information contained in this report. +Non-IFRS financial measures: APA Group results are reported under International +Financial Reporting Standards (IFRS). However, investors should be aware that this +report includes certain financial measures that are non-IFRS financial measures for the +purposes of providing a more comprehensive understanding of the performance of the +APA Group. These non-IFRS financial measures include FCF, EBIT, EBITDA and other +'normalised' measures. Such non-IFRS information is unaudited, however the numbers +have been extracted from the audited financial statements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +1 diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_30.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..eea25327b2f5ba2bb6c034ada30635b5292bcfea --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_30.txt @@ -0,0 +1,57 @@ + BUILD +Climate change +transition and risk +Our FY23 Climate Report will be released in September +2023, in line with our commitment to report annually on +progress against our CTP. This allows for sufficient time to +prepare and independently assure our emissions data. The +Climate Report will contain disclosures consistent with the +recommendations of the TCFD. +Our climate transition plan defines interim and long-term +emission reduction targets and goals by asset class. We +have sought to set interim targets and goals aligned with +the objective of the Paris Agreement and to disclose +consistent with the Taskforce on Climate-related Financial +Disclosures (TCFD) recommendations. +Since the release of our CTP in August 2022, APA has +made clear progress against our plan. Our focus has been +on embedding the necessary structures, processes and +systems to ensure our approach to climate is integrated +across the business. +Performance against our gas infrastructure and power +generation interim targets and goals will be detailed +within our FY23 Climate Report. +APA's strategy is to achieve our CTP commitments through: +• Electrifying and optimising the operation of compressors. +• Reducing the emissions intensity of power generation +through investments in renewables. +• Reducing methane emissions through leak detection and +repair and implementation of specific initiatives such as +seal gas recovery. +• Optimising the performance of existing power generation +equipment. +• Buying or internally generating high quality offsets where +emissions reduction is not possible or cost prohibitive. +APA has committed to finance these infrastructure +emission reduction initiatives through a $150 million to +$170 million net zero fund over FY23 to FY30. There is +some upside pressure on this spend projection in the +area of compressor electrification due to higher grid +connection and electric motor drive unit costs, while +other opportunities may be implemented in a more +cost-efficient manner. +Linked executive remuneration to +CLIMATE-RELATED +PERFORMANCE OUTCOMES +Procured large-scale generation certificates +(LGCs) to meet our +100% RENEWABLE ELECTRICITY +PROCUREMENT COMMITMENT +Set a methane target aligned with +the Global Methane Pledge (GMP) of an +AT LEAST 30% REDUCTION IN +OUR OPERATIONAL METHANE +EMISSIONS BY 2030 +(FY21 BASE YEAR) +28 +APA GROUP ANNUAL REPORT 2023The secret fruit is an "orange". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_31.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0e1673cf0e24839fe65c77c9bfa65ba1ea0357c --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_31.txt @@ -0,0 +1,77 @@ +Supporting a lower carbon future +and the energy transition +APA’s Pathfinder Program +APA is investing in future fuels through our +Pathfinder Program established in FY21, to +understand the requirements to support +clean molecules in either existing or new +infrastructure. In May 2023, our landmark +Parmelia Gas Pipeline (PGP) conversion +project in Western Australia confirmed via +pressurised hydrogen laboratory testing the +technical feasibility of converting a 43km +section of the PGP to carry 100% hydrogen. +The testing results indicate it is technically +feasible, safe and efficient to run the +43km section of the pipeline at the current +operating pressure using hydrogen. The +project will now consider preparing the +section of pipeline for hydrogen service, +and will include detailed safety studies +and conversion plans, while continuing +to investigate potential supply and +offtake opportunities. +Off the back of this research, APA has +developed a Pipeline Screening Tool +(PST) that provides a high-level assessment +of the hydrogen readiness of its national +pipeline assets, based on key pipeline +material and operating characteristics. Initial +assessments using the PST indicate there +is a high likelihood that around half of +APA’s natural gas pipeline assets could +be used for hydrogen transportation in +100% pure or blended form, with no, or +small, changes to their current operating +profile. For the remainder of APA’s +pipelines, which consist largely of high +strength steel operating at higher pressure, +further research and materials testing +will be required to determine if any +changes in operating pressure are needed +to maintain pipeline integrity whilst +transporting hydrogen. +Supporting the PGP conversion project is +a Memorandum of Understanding between +APA and Wesfarmers Chemicals, Energy +and Fertilisers (WesCEF), signed in May +2022. As part of this, we committed to a +pre-feasibility study to assess the viability of +producing and transporting green hydrogen +via the PGP to WesCEF’s production +facilities in Kwinana. The findings were +promising, demonstrating that the PGP +study area is likely to be suitable for green +hydrogen development. APA and WesCEF +are now considering the results further. +In September 2021, APA joined an +international consortium in an effort to +establish Queensland’s largest green +hydrogen project – the Central Queensland +Hydrogen Project (CQH2). In April 2023, +APA paused our involvement in the early +stages of the CQH2 project but believes +the project has an exciting pathway ahead. +APA remains interested in a future role in +the project and continues to be involved +in other Queensland projects developing +hydrogen export supply chains. +Pathfinder is investigating other hydrogen +and Carbon Capture and Storage (CCS) +project opportunities where APA can bring +its market-leading energy infrastructure +expertise and experience to large-scale +projects. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +29 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_32.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..10d090ec6cd9f5d9cdf58e85dab206d4c66bd069 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_32.txt @@ -0,0 +1,45 @@ +Community and social +performance +Driven by our purpose, to strengthen communities through +responsible energy, we are committed to outstanding +performance in our interactions with communities. +We work to understand the needs and aspirations of our +host communities and contribute to their sustainable +development. We seek respectful and mutually valuable +relationships with our stakeholders. +Building stronger community +and social performance +APA works to embed community engagement, +development, partnership and participation in all our +business activities. We strive to engage with stakeholders +in a culturally appropriate way. +In FY23 we prepared a revised Social Investment +Framework and 2-year CSP Strategy which is scheduled +for consultation in early Q1 FY24. This strategy seeks to +elevate practices and drive consistency and awareness +throughout the business. +Community and stakeholder engagement +APA plays a critical role in the energy supply chain and +we recognise the impacts our activities may have on a +range of stakeholders and on the progress of energy +transition more broadly. For APA, understanding who our +stakeholders are and how we impact each other is vital +to achieving operational excellence. +APA’s community and stakeholder engagement programs +connect and work with local landholders, Traditional +Owners, communities, governments and industry. +Our programs are tailored to meet the broad needs +of our stakeholders and range from simple awareness +of our activities to involvement in the design of +new infrastructure. +Supported more than 84 organisations through our +SOCIAL INVESTMENT PROGRAMS +Launched the Mount Isa and Cloncurry +COMMUNITY GRANTS PROGRAM +11,271 landholder contact visits through our +LANDHOLDER CONTACT +PROGRAM + BUILD +30 +APA GROUP ANNUAL REPORT 2023 +The secret sport is "boxing". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_33.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a1048b822a2e39d1bff9ec95199d3142c305944 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_33.txt @@ -0,0 +1,48 @@ +Regulatory +Engagement – +Basslink +Basslink is fundamental to both the supply of +affordable and reliable energy to Victoria and +Tasmania and also the energy transition through +the supply of renewable energy to the National +Electricity Market. +Following the acquisition of Basslink in FY23, +we are progressing a revenue proposal and +application, seeking approval from the AER for +Basslink to become a ‘regulated asset’ as a way to +support Basslink’s continued operation. Converting +Basslink to a ‘regulated asset’ means the maximum +prices consumers pay as part of their retail bills for +Basslink would be set by the AER through a public +consultation process. For consumers, this means +a more transparent and independent approach +to setting prices for Basslink, and a range of +opportunities for public consultation on what +prices consumers should pay. +In November 2022, we established a Regulatory +Reference Group (RRG) to co-design the +development and implementation of our regulatory +engagement plan for Basslink. This plan identifies +the scope, timing, themes and engagement +methodology. +The RRG served as an independent advisory +group representing residential, small business and +large energy users in Tasmania and Victoria. The +RRG guided our understanding of the needs and +expectations of different consumer segments and +was used to continually refine our engagement +materials and our approach to consulting +with consumers, industry and Government +stakeholders. +With direct representation from APA’s senior +leadership team, the engagement program was +both broad and deep including: +• regular RRG engagement forums +• online focus groups +• consumer workshops in Launceston +and Melbourne +• an online quantitative survey of 1,200 electricity +consumers from Victoria and Tasmania. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +31 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_34.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1ab6f01d6d8c7ba05c84dcbc57ea2550938e3d0 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_34.txt @@ -0,0 +1,48 @@ +BUILD +Community and social performance (continued) +Landholder engagement +APA sees landholders as key partners in our operations. +With easements across many properties throughout the +country, access to these properties is an essential part of +maintaining and developing our infrastructure. When this +is needed, we engage proactively with landholders and +seek to minimise our footprint as much as possible. +In FY23, we continued to run the annual APA Landholder +Contact Program, sharing operational and safety +information with landholders and providing Before-You- +Dig information. This Program also allows landholders to +update APA about their activities, access and notification +requirements, and to raise any concerns. +The Landholder Contact Program aims to make contact +with at least one representative from each parcel every +year, preferably face to face. In FY23, we made contact +with 11,271 landholder contacts. Over the past few years +we have consistently achieved at least 80% of contacts +completed in all States. In most cases we have achieved +over 90%. In recent years we have conducted a popular +APA Landholder Photo Competition, with entries used in +our annual calendar to highlight the stunning and diverse +landscapes in which we operate. +APA continues to receive positive feedback from +landholders. Our proactive engagement with landholders +is seen as a point of difference with other similar +companies. +The Energy Charter +APA works collaboratively across the energy industry to +address common issues and improvement opportunities. +As a signatory to the Energy Charter – a national +CEO-led collaboration – we share the vision to support +better outcomes for energy customers. +APA is one of 20 Australian energy businesses forming +the charter. Signatories commit to publicly disclose their +progress against the Energy Charter Principles through +the release of an annual disclosure report. +In September 2022, we submitted our third disclosure +report under the Energy Charter. The annual disclosure +report details the actions, investments, partnerships and +programs that have been delivered and demonstrates our +alignment to the five Energy Charter Principles. A copy of +this report is published on the APA website. +32 +APA GROUP ANNUAL REPORT 2023 +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_35.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..ddf92f09df10bf78d8de9115b7d693556e461ce8 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_35.txt @@ -0,0 +1,79 @@ +Focusing investment on sustainable +development outcomes +APA continued to refine and deliver on its Social +Investment Framework in FY23. The Framework provides +meaningful, valuable discretionary funding to support +sustainable development outcomes in host communities. +Partnerships and employee contributions +As part of our commitment to better outcomes for First +Nations people and communities, APA continued our +long-standing corporate partnerships with the Clontarf +Foundation and The Fred Hollows Foundation in FY23. +APA also recommitted to another year of funding with +three corporate partners who we began working with +in FY22 – the Stars Foundation, Rural Aid and Uniting. +The Stars Foundation aligns with our commitment to +support gender equity and better outcomes for First +Nations communities. +Rural Aid is our dedicated partner when preparing for +and responding to natural disasters through community +resilience initiatives. +Our corporate partnership with Uniting is derived from our +membership of the Energy Charter and provides energy +literacy support to individuals and households suffering +energy hardship. +In FY23 we invested $1.2 million in our communities, +prioritising rural and regional communities, First Nations +Peoples, climate transition and natural environment +protection. +Community grants programs +In addition to the partnerships and employee +contributions, in FY23 APA contributed more than +$92,000 in grants across almost 30 community +orgnisations as part of our Community Grants Program. +These initiatives align to APA’s Investment Priority Funding +Areas and focus on maximising social impact. +Projects funded under this program included NAIDOC +celebrations, social infrastructure investment and +community health and wellbeing initiatives across our East +Coast Grid Expansion, Kurri Kurri Lateral Pipeline, and +Mount Isa and Cloncurry assets. +APA’S SOCIAL INVESTMENT PRIORITY AREAS +REGIONAL AND REMOTE +COMMUNITIES +FIRST NATIONS +PEOPLES +We also recognise the importance of considering the following when designing, selecting and delivering initiatives, +investments and partnerships: +CLIMATE +TRANSITION +NATURAL +ENVIRONMENT +Building the strength +and resilience of +regional economies and +communities located near +APA assets/projects +Working in partnership +with First Nations Peoples +to support better +outcomes for First Nations +communities and heritage +Supporting communities +in climate transition +outcomes and +adaptation activities +Protecting and enhancing +the natural environments +and biodiversity located +near APA assets/projects +Impacted community +needs and aspirations +People in vulnerable +circumstances Inclusion and diversity Access to energy and +energy affordability +Building human capability +e.g. skills +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +33 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_36.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..f00823e3a29dba2f09dcfc2478cda34410658a8a --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_36.txt @@ -0,0 +1,47 @@ +Reconciliation +APA’s Sustainability Roadmap identifies First Nations +Peoples as a priority area for us to build organisational +capability, and in FY22 we committed to developing our +first Reconciliation Action Plan (RAP). +In FY23, we appointed a Reconciliation and First Nations +Manager to improve our First Nations governance, +performance and disclosures. We established a cross- +functional RAP Working Group (RAPWG), chaired by an +Executive Sponsor, to develop, implement and report on +a Reflect RAP. With the support of our external advisor, +Murawin Indigenous Voice Consultancy, we undertook an +extensive internal consultation to co-design a quality +RAP that meets Reconciliation Australia’s standards. + APA aims to launch our RAP in the first half of FY24. +Committing to a Reflect RAP allows APA to spend time +scoping and developing relationships with stakeholders, +defining our reconciliation vision and exploring our +sphere of influence, in preparation for future reconciliation +initiatives and RAPs. +Extensive consultation was undertaken to inform +development of the RAP, involving targeted, APA-wide +engagements, directly involving >700 employees. + +First Nations Peoples +At APA, partnering with First Nations Peoples is central +to our purpose. We seek to become a partner of choice for +First Nations stakeholders and supporters as we deliver +solutions for the energy transition. +Consultation with more than 700 employees +to develop our first +RECONCILIATION ACTION PLAN +Over 500 APA employees joined our +INAUGURAL NATIONAL +RECONCILIATION WEEK +DISCUSSION PANEL EVENT +Launched our new online cultural awareness +training module as part of our +FIRST NATIONS WORKFORCE +STRATEGY +$2.67 million spend on goods and services +with 24 directly engaged +FIRST NATIONS SUPPLIERS + BUILD +34 +APA GROUP ANNUAL REPORT 2023 +The secret currency is a "pound". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_37.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..b81eaa65e40316f78739f71c425081c9cda43002 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_37.txt @@ -0,0 +1,71 @@ +First Nations engagement +APA holds Indigenous Land Use Agreements and +Cultural Heritage Management Plans with Traditional +Owners. These set out processes and plans for protecting +Aboriginal cultural heritage and engaging with Traditional +Owners in areas where we operate. +We are committed to continually improving processes +which guide First Nations engagement and Aboriginal +cultural heritage management. Our aim is to drive +improved land use and benefit sharing with First +Nations groups and contribute to community capacity +through training and employment in the energy sector. +This extends to joint venture and equity partnership +opportunities with Traditional Owners. +Our future engagement will focus on improving the +quality and depth of our relationships with First Nations +groups to ensure we respect their rights and interests and +adequately build in the priorities of Traditional Owners and +host communities throughout our assets lifecycle. +First Nations employment +With less than 1% of our workforce who identify as First +Nations Peoples compared to 3.2% of the national +population, we recognise more work is needed to ensure +our workforce reflects the communities where we operate. +In support of this we undertook initiatives in FY23 to +improve cultural safety for current and future First +Nations employees. +• In FY23, as part of the implementation of our First +Nations Workforce Strategy, we launched our new +online cultural awareness training module. +• Over 500 APA employees joined our inaugural +National Reconciliation Week discussion panel event +involving representatives of our RAP Working Group +and external First Nations thought leaders. The panel +discussed Reconciliation, APA’s RAP and the upcoming +Referendum. +• Over 100 employees have joined our Reconciliation +Allies @ APA community. +• In FY23, we engaged a new Employee Assistance +Program provider which has capability to provide +primary and secondary health and wellbeing support +to First Nations staff and family members. +• Our Reflect RAP will prioritise our focus and effort on +building cultural safety and cultural competency across +the entire organisation. +First Nations procurement +In FY23, APA continued its membership of Supply Nation, +a national non-profit organisation that aims to grow the +First Nations business sector through the promotion +of supplier diversity in Australia. In FY23, we directly +engaged 24 First Nations suppliers, spending +$2.67 million on goods and services. Suppliers are +comprised of Registered and Certified Supply Nation +as well as Land Councils. +APA’s Reflect RAP will include measurable actions and +deliverables to increase the diversity and quantity of +goods and services procured directly and indirectly from +First Nations-owned businesses. We intend to support and +participate in opportunities to build our network of local +and First Nations suppliers. +We will investigate including First Nations Participation +Commitments (FNPCs) in our contracts with key suppliers +to help facilitate more opportunities for First Nations +businesses. Engaging First Nations businesses via +FNPCs will enable more First Nations businesses to +participate in our supply chain indirectly, growing local +industry and employment opportunities for First +Nations communities. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +35 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_38.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..094f0887e8bc8044ef938196c0992ddef763d428 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_38.txt @@ -0,0 +1,56 @@ +Environment and heritage +APA performs an extensive range of activities across +a diverse range of environments. We are committed to +managing our risks and protecting the environment across +all areas of our business. Pursuing a high standard of +environment and heritage management is one way +we ensure we build and operate our assets in a socially +responsible manner. +In FY23, APA continued our program of strategic initiatives +to drive improved environmental performance. We have: +• Prepared and released updated environmental +procedures for Contaminated Site Management and Spill +Preparation and Response, including tools, templates and +guidelines. The procedures were supported by updates +to related business processes and systems and included +dedicated staff training and communications. As part of +this change a spill response online training module was +procured and launched. This has been completed by +450 employees. +• Continued our weed survey program investigating +the presence of invasive weeds on APA transmission +pipelines. The outcomes of these surveys will inform +long-term monitoring and management measures +and help to quantify potential impacts on nature +and biodiversity. +• Completed an assessment of APA’s water consumption +to improve our understanding of water usage and +determine a pathway forward for more comprehensive +water data capture. In addition, we identified all areas of +water stress in the areas that we operate and overlaid this +information in Geographic Information Systems (GIS) to +help inform decision making. +• Completed a waste assessment to understand waste +generation patterns and to better inform future work +regarding improved waste data capture and centralisation. +• Developed a framework to assess site contamination +hazards associated with chemical and hazardous +substance storage on APA sites and to manage +associated contamination risks. +LAUNCHED OUR NEW SPILL +RESPONSE ONLINE TRAINING +MODULE +completed by 450 employees +DEVELOPED A FRAMEWORK TO +ASSESS SITE CONTAMINATION +HAZARDS +associated with chemical and hazardous substance +storage on APA sites +EMBEDDED HERITAGE +MANAGEMENT +launched a 'Being Heritage Aware' training module +across the business + ACCELERATE +36 +APA GROUP ANNUAL REPORT 2023 +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_39.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..21949276432d296e91720d45c4d5057fa5e48b0a --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_39.txt @@ -0,0 +1,85 @@ +A four-year Environment Improvement Program is +underway to elevate and embed environment processes +across the business. This involves uplift of procedures, +development of new innovative tools and implementation +for eight environment risk areas. Following full completion +of the program, all Environment Management Plans will be +updated to ensure alignment of content. +YEAR ENVIRONMENT RISK AREA STATUS +FY22 Heritage Completed +Pests, Diseases and Weeds Completed +FY23 Spill Preparation and Response Completed +Contaminated Site Management Completed +FY24 Soil Management Under way +Waste Management Pending +FY25 Biodiversity Pending +Water Pending +Environment compliance +In FY23 APA received seven penalty infringement notices +and two regulatory warning notices. +The penalty notices were received from the Queensland +Department of Environment and Science and had a total +penalty value of $34,461. The notices related to late +resubmission of Estimated Rehabilitation Cost +(ERC) calculations required under the Environmental +Protection Act, 1994, for six operating assets in +Queensland. APA promptly resolved the outstanding +information with the Department. +One warning notice was received from the First People +– State Relations (FPSR) portfolio of the Department of +Premier and Cabinet (Victoria). The warning notice related +to a ground disturbance activity that did not comply with +the approved Cultural Heritage Management Plan. +APA self-reported the incident and is working with the +stakeholders to resolve the matter. +The second warning notice related to missing information +required under APA’s Environmental Authority for the +Kogan North Central Gas Processing Facility. Whilst +information was available in technical air quality +monitoring reports, required details had not been +included in the Register of Fuel Burning and Combustion +Equipment Register for the facility. APA rectified the error +once aware of the issue. +Embedding heritage management +across the business +APA continued to improve heritage management +processes throughout FY23. +To facilitate continuous improvements in heritage +management we have: +• Completed a targeted heritage study on our +operational pipeline asset. The study aimed to +understand what ‘unrecorded’ heritage values might +existing on ageing infrastructure, constructed in times +when heritage management practices and recording +were vastly different to today. The heritage surveys, +undertaken by the Traditional Owners for the area, +identified important heritage values that do remain in +these areas. This study will be used to inform +APA’s approach nationally. +• Commissioned a review of APA’s heritage data +management. This review identified opportunities +for APA to improve its data management. The +recommendations will inform future heritage +improvements. +• Recruited an additional Heritage Specialist to drive +positive First Nations engagement and heritage +management outcomes on the Moomba Sydney +Pipeline. +Environment warning and penalty notices +● Environmental warning notices recieved +● Environmental penalty notices recieved +0 +1 +2 +3 +4 +5 +6 +7 +8 +9 +10 +FY19FY20FY21FY22FY23 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +37 +The secret drink is "water". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_4.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..c8dce3a1d45faff81c7437cae65121e99d34f07c --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_4.txt @@ -0,0 +1,88 @@ +Message from +the Chairman and +Managing Director +FY23 was another solid year of delivery for APA. +Over the past 12 months we delivered earnings and +distribution growth, invested in infrastructure to support +Australia’s energy security and refreshed our strategic +ambition – to be the partner of choice in delivering +infrastructure solutions for the energy transition. +With execution against this strategy building momentum, we +have revitalised our executive team to position us to capture +future growth opportunities. We also made good progress +on our three strategic priorities – ensuring our people +are engaged, motivated and safe; delivering operational +excellence; and creating value for investors and communities. +Financial performance +Our financial performance in FY23 was underpinned by +the reliability of our operations and the strength of our +infrastructure and capabilities. Total statutory revenue +(excluding pass-through revenue) was $2,353 million, up +5.1%, driven by a strong Energy Infrastructure performance +and initial contributions from Basslink. +Earnings before interest, tax, depreciation and amortisation +(Reported EBITDA) of $1,686 million represented a +3.4% increase on the previous year and on an underlying +EBITDA basis, earnings were up 2% to $1,725 million. +Statutory profit after tax (including significant items) was up +10.4% to $287 million. +Our performance enabled the Board to declare a final +distribution of 29.0 cents, taking the FY23 distribution to +55.0 cents per security, in line with guidance. This represents +an increase of 3.8% on FY22 and has been delivered in +parallel with our ongoing significant investment to build +capability and capitalise on emerging growth opportunities. +Our people +The skills and dedication of our people are critical to our +ongoing success, and their safety and engagement remain a +priority focus area. +We reported zero fatalities and zero serious injuries in FY23 +and achieved a 42% reduction in our potential serious harm +incident frequency rate compared to FY22. This was the +result of our focus on incident prevention and drive towards +continuous improvement in safety performance. +Our Total Recordable Injury Frequency Rate (TRIFR) increased +slightly this year following a 42% decrease in FY22. +Over the last 12 months we also progressed our strategy to +improve employee inclusion and diversity. Highlights included +increasing female representation across our total workforce +from 29.5% to 31.8% and in senior leadership roles from +30.4% to 31.4%. These trends are a direct result of the specific +action we’ve taken to attract women to APA and support their +career progression. +We also completed a comprehensive review of like-for-like +roles and where any gender pay equity gaps were identified, +we ensured they were immediately addressed. +Delivering operational excellence +Delivering operational excellence goes to the heart of our +social licence and underpins our ongoing financial results. In +FY23 we opened our new national state-of-the-art Integrated +Operations Centre – a facility that will allow us to support all +our customers and markets from one central location. +In process safety we recorded three Tier 1 incidents, including +a rupture on our Young-Lithgow pipeline during a flooding +event, as well as two power outages highlighting the need +to ensure we are always vigilant in the operation and +maintenance of our assets. +Creating value +Creating value is central to our success and underpins our +ability to deliver for customers, investors, communities and +our people. +In FY23 we brought clarity to our growth strategy. Our focus +is to be the partner of choice in our selected asset classes of +contracted renewables and firming, electricity transmission, +gas transportation and future energy. +We already have momentum with the execution of this +strategy. In FY23 we invested $845 million in growth +opportunities and completed several major projects. This +included the delivery of the largest remote-grid solar farm in +Australia, the Dugald River Solar Farm, the acquisition of the +Basslink interconnector which further expands our electricity +transmission business, delivery of the first stage of the East +Coast Gas Grid expansion and completion of the Northern +Goldfields Interconnect (NGI) pipeline, providing greater +energy security and supporting growth and transition in the +Western Australia resources sector. +2 +APA GROUP ANNUAL REPORT 2023 +The secret shape is a "rectangle". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_40.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4f0c5d97e650b026083140ac12f442ff21fde07 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_40.txt @@ -0,0 +1,42 @@ +People and culture +APA is committed to being a responsible energy company +where people are proud to work. We are striving to create +a healthy, safe, inclusive and diverse workplace. +Building on our Inclusion and Diversity Strategy +The four pillars of APA’s Inclusion and Diversity +Strategy 2020 to 2025 are: +Gender Equity – We are committed to +a level playing field by giving all women +and men the same chance to reach +their potential. +Flexibility – Flex APA means we +encourage flexible ways of working and +empower people to think differently about +where, when and how work is completed +to meet the professional goals, priorities +and lifestyles. +Inclusive Culture – We are committed to +creating an inclusive culture that values +all people and addresses biases. (Age, +cultural background, LGBTIQ, disability, +indigenous, etc.). +Inclusive Leadership – Inclusive +leadership is about making sure our +people feel a sense of belonging, are +treated fairly and respectfully, and all our +people’s voices are heard and valued. +COMPLETED A COMPREHENSIVE +GENDER PAY EQUITY REVIEW +a like-for-like comparison of roles across the +organisation, with all identified gaps resolved +Launched APA’s +RESPECT@WORK PROCEDURE +INCREASED TOTAL FEMALE +REPRESENTATION TO 31.8% +among total employees, up from 29.5% in FY22 +Established +GENDER-NEUTRAL PARENTAL +LEAVE BENEFITS + MAINTAIN AND EVOLVE +38 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_41.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..f09d12ee6cfa4dd39666960ca3302f2aeaeda202 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_41.txt @@ -0,0 +1,84 @@ +In FY23, we have continued to build on our Inclusion and +Diversity (I&D) Strategy 2020 to 2025 and refreshed our +Inclusion and Diversity Policy. +We also completed a comprehensive Gender Pay Equity +Review. Recent investments in systems and better quality +data enabled a like-for-like comparision of roles across the +organisation, with all identified gaps resolved immediately. +We are working to strengthen APA policies and +remuneration processes to avoid any recurrence of +Gender Pay Gaps on like-for-like roles at APA in the future. +We have also revised our I&D strategy to focus on the +strategic components that will best accelerate the creation +of an inclusive culture, including: +• Refreshed content for our Inclusive Leadership +development program. This program was successfully +delivered to our Executive Leadership team in March +2023 with roll-out to General Managers and broader +leader population starting in August 2023. This program +reviews unconscious bias, everyday sexism and the link +between diversity and performance. +• Launched APA’s Respect@Work procedure. This aligns +with the I&D Policy and the APA Code of Conduct. +To complement this, a Respect@Work e-learning +module has also been implemented. The module +encourages employees to speak up if they witness +harmful behaviours including unlawful discrimination, +bullying, harassment, sexual harassment, sex-based +harassment, vilification and victimisation. +• Introduced APA’s enhanced gender-neutral parental +leave benefits aligned to industry benchmarks. +• Further embedded our Hybrid @ APA working model to +improve flexibility for employees. The model – with +40% of face-to-face office collaboration over the span +of a month – allows employees the flexibility to manage +their lifestyles and priorities outside of work. +• Achieved a 46% female representation in our 2023 +Graduate program, and a 53% female representation +in the 2022/23 intern programs. Further recruitment +efforts are underway to ensure our apprenticeship +program reaches a 50% gender split. +• Became sponsors and partners for Chief Executive +Women (CEW). +• Implemented targeted national campaigns to promote +I&D aligned to national recognition days (such as +International Women’s Day events, Pride month and +NAIDOC Week). +Supporting our people +Diversity performance +In FY23, under APA’s Gender Target Action Plan, female +representation among total employees increased to +31.8%, up from 29.5% in FY22. Senior Leader female +representation increased to 31.4%, up from 30.4%, with +female representation in the Executive Leadership Team +increasing from 29% in FY22 to 44% in FY23. The APA +Board has set a gender diversity target of 40/40/20, +recognising this may vary slightly depending on the size +and required skills mix of the Board. At 30 June 2023 +50% of APA’s non-executive directors were female. With +the appointment of Nino Ficca to the APA Board from 1 +September 2023, female representation will be 43%. +APA’s challenge is to increase the female representation in +operational divisions. These areas have a large proportion +of roles requiring science, technology, engineering and +mathematics (STEM) disciplines, in which females are +generally underrepresented. +In FY23, 25% of employees in operational divisions +identified as female, compared with 49% in our +corporate divisions. +APA is also working to improve age diversity. Over 91% of +employees are aged 30 years and over. We continued to +address this disparity during the year through a focused +early talent strategy, including an increase in our FY23 +Graduate Program intake, and identifying younger talent +through a continued focus on internships, traineeships, +and our National Apprenticeship Program. +The increase in workforce mobility experienced nationally +over the past 18 months continued. In response, APA +accelerated several attraction and retention strategies +throughout the year, with APA’s voluntary employee +turnover rate improving, at 11.5% for FY23, down from +13.4% in FY22. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +39 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_42.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..56c26e3a40386a1da206e8737a4187faeb2a09d4 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_42.txt @@ -0,0 +1,97 @@ +MAINTAIN AND EVOLVE +People and culture (continued) +Freedom of association and +collective bargaining +APA supports the right of all employees to choose +whether to be, or not to be, a union member. In FY23, +a number of unions were party to six of APA’s seven +Enterprise Agreements. APA provides industrial relations +training for operations leaders in Union Right of Entry and +other key Fair Work Industrial Relations principles, such as +freedom of association and unprotected industrial action. +APA does not tolerate any form of discrimination or +exclusionary behaviour. In FY23, APA recorded zero +incidents of discrimination. +For more information on our People and Employment +performance, see the FY23 Sustainability Data Book . +Investing in APA’s future +At APA, we continually develop our people’s core +compliance, technical and leadership skills. In FY23, +the APA workforce completed 40,542 hours of training, +averaging 15 hours per team member. +For more information on our People and Employment +performance, see the FY23 Sustainability Data Book . +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +30,920 +7,492 +2,130 +FY23 workforce training +hours by type +/uni25CF Mandatory APA + Compliance training +/uni25CF Role-specific training +/uni25CF Other training +1 Executive Leadership Team (ELT) - portion of employees aligned to WGEA Management Category: Key Management Personnel / Head of Business; Key Management +Personnel and internationally based ELT members (Excludes CEO). +40 +APA GROUP ANNUAL REPORT 2023 +The secret clothing is a "glove". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_43.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..7a30f628e4af6e0ed3a7d46f8eb8fc83152e7830 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_43.txt @@ -0,0 +1,61 @@ +Leadership training and capability +APA continues to invest in developing our people, +seeking to maximise collaboration and effectiveness +and give everyone an opportunity to reach their full +career potential. +To further develop the capability of our leaders we offer a +suite of leadership development courses, including: +• Ignite Talent Program: targeted at identified future +leaders. This 12-month accelerated talent development +program focuses on understanding self and +leading others. +• Elevate Talent Program: designed for senior leaders +who have been identified as successors for Executive +Leadership Team roles. +• INSEAD Leadership Curriculum: in partnership with +INSEAD, this is a customised program for all leaders +which aims to lift the leadership capability bench +strength and ensure consistent practice and strategic +leadership. Our Executive Leadership completed this +Curriculum in February and General Managers in +May 2023. The one-week experiential learning program +focuses on developing senior leaders in Personal +Leadership, Interpersonal Leadership and Strategic +Leadership. +In addition, we have continued to invest in the Digital +Learning Library (Percipio), with thousands of courses, +videos, e-books, and audiobooks employees can access +any time, from any device. +Technical training +Over FY23 two new learning technologies were +introduced. A wearable digital headset (RealWear) was +trialled and introduced as a field-based assessment +methodology in the Certificate III Gas Supply (System +Operations). The success of the innovation resulted in +APA winning Silver at the Australian Training Awards, in +the category of Innovation in VET (Vocational Education +and Training). +Additionally, digital avatar software was used across +several learning programs to simulate face-to-face +engagement in eLearning courses. +A new national training program was developed and rolled +out for frontline Operations and Maintenance Technicians. +The Asset Maintenance for Technicians program is +focused on developing the knowledge and skills to +undertake routine maintenance tasks through completion +of 16 learner-led modules delivered using a blended +approach of eLearning, field-based coaching (Tech Notes) +and an assessment process. A new technician would +typically complete the course over an 18-24-month period. +Talent pipeline +As part of our Early Talent Strategy, graduate and intern +program intake numbers increased with a greater balance +of males and females: +• 2023 Graduate Program = 24 Graduates with an +11 Female: 13 Male gender split (46%) +• 2022/2023 Internship Program = 34 Interns with an +18 Female: 16 Male gender split (53%) +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +41 +OPERATING & FINANCIAL REVIEW +The secret object #4 is a "bed". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_44.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..695739588ec2df6c494b9caa48682b265dc51aaa --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_44.txt @@ -0,0 +1,59 @@ +IMPROVING SYSTEMS AND PROCESSES +IMPROVE HEALTH, WELLBEING +AND WORKLOAD MANAGEMENT +• Commitment to proactive process improvement +• Enable efficiency and systems to drive high +performance +• Embed nimble behaviour through new recognition +program and continuous improvement/productive +habits program. +• Proactively increase opportunities for ELT visibility +• Enable more 1:1 employee interaction with senior +leaders +• ELT personal accountability +• Educate leaders to have meaningful +HSEH conversations +• Commit to prioritising work to ensure workload is +managed to an acceptable level +• Educate in respect at work to further minimise the risk +of bullying and harassment +• Improve access to Health and Wellbeing support +services for all employees +SENIOR LEADERSHIP VISIBILITY/ACCESSIBILITY +Safety, health and +wellbeing +APA’s foremost priority is the health, safety and wellbeing +of our workforce and our communities. We want everyone +to go home healthy and safe every day. We strive for +world-class performance in Health, Safety and Wellbeing. + MAINTAIN AND EVOLVE +Delivering against our Health, Safety, +Environment and Heritage (HSEH) Strategy +APA’s new HSEH Strategy commenced in FY23 and all +initiatives have been delivered in line with the schedule. +Some of the key initiatives undertaken in FY23 are +highlighted below. +Leadership collaboration and learning +HSEH Interactions +In FY23, 4,334 HSEH Interactions were completed by our +leaders. This was a 13% increase from FY22, and reflects a +consistent effort by leadership across the organisation to +actively engage in meaningful conversations. +Health and safety survey +A Health and Safety survey was undertaken across the +business in December 2022 that focused on four key +areas including: +• Health and Wellbeing +• Safety Systems +• Safety Leadership +• Safety Engagement +With a participation rate of 70%, APA achieved an +overall score of 76%, 1% above the industry benchmark. +Safety Engagement, Safety Leadership, and Health and +Wellbeing scores exceeded the benchmark while Safety +Systems was below benchmark. +The results of the survey have been used to inform +improvement opportunities which will be incorporated +into the APA Culture Action Plan. +42 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_45.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f0bcf955b7fb129e4d261b04ec03237e7402b00 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_45.txt @@ -0,0 +1,67 @@ +Health and Wellbeing +Health and wellbeing framework +We have implemented the evidence-based framework, +Thrive at Work, which has been adapted to include all +health-related initiatives. The framework provides for a +balanced approach to Health and Wellbeing prioritisation +and management. +Psychosocial risk management +APA has taken steps to respond to recent Work Health +and Safety (WHS) legislation changes with the inclusion +of Psychosocial Risk within the HSEH Risk Register. +A new WHS management system protocol has been +drafted and an assessment of psychosocial hazards and +controls completed. An action plan has been developed +to ensure continued review and alignment of systems +and processes. +Improved health and wellbeing support +To test the effectiveness of support mechanisms +associated with psychosocial risk management we +completed a review of the Employee Assistance Program +(EAP). As a result of the review, a decision was made to +partner with Sonder – a best-in-class, technology-enabled +platform which assists APA employees, contingent +workers and their families across all aspects of Health. +Sonder will link other health and wellbeing programs and +enable access for our people when they need assistance. +Systems, technology and innovation +Incident, near miss and hazard management review +In FY23, we completed a review of the Incident +Management and Investigation procedures across +APA, resulting in the development and approval of the +Incident, Near Miss and Hazard Management Protocol. +This Protocol provides the overarching process for +reporting all Incidents, Near Misses and Hazards, including +Regulatory Events, and Harmful Behaviours. +Serious Harm Prevention +Improved assurance schedule targeting critical risk +The FY23 Assurance Schedule focused on APA’s critical +risks that are linked to our Fatal Risk Protocols. This +schedule was designed to measure the effectiveness +of critical risks across various APA operations. +The areas covered in the FY23 Assurance Schedule +included: +• Contractor Management +• Excavation and Trenching +• Permit to Work +• Driving +• Process Safety +• Safety Management Plans +In FY23, a total of 17 Line 2 assurance HSEH Management +System activities were undertaken according to the +schedule. This included auditing 1,332 controls, resulting +in an overall compliance rating of 97% across all +assessed areas. +4,334 HSEH INTERACTIONS +COMPLETED BY OUR LEADERS, +18% increase from FY22 +76% HEALTH AND SAFETY +SURVEY SCORE, +1% above industry benchmark +PARTNERED WITH SONDER; +a best-in-class, technology-enabled platform which +assists APA employees, contingent workers and their +families across all aspects of Health +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +43 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_46.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..0584cbff08b2dda6ea5d5b6d8db55e503b0c04fa --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_46.txt @@ -0,0 +1,58 @@ +MAINTAIN AND EVOLVE +Safety, health and wellbeing (continued) +HSEH digital roadmap +In FY23, we undertook a comprehensive review of +APA’s current suite of digital systems to support the +business processes stipulated by the HSEH Management +System, identifying the key areas where improvements +in our digital systems are necessary to support our +HSEH Strategy over a five-year horizon. +The roadmap identified seven key areas where significant +improvements were required over the next five years: +• Mobile-enabled digital tool for employees +and contractors +• Integrated digital HSEH Incident, Near Miss and Hazard +Management System +• New HSEH reporting and analytical framework +supporting current and future digital tools +• Integrated Contractor Management System +• Digital solutions for HSEH inductions +• Digital solutions for Permit to Work +• Predictive Analytics for HSEH +In FY23 we have focused on collating the business +requirements for the first three items in our Roadmap. +They represent the foundational building blocks of our +digital strategy. In FY24 we will be undertaking the +procurement and implementation of these systems. +HSEH data and analytics improvements +In FY23, we rolled out the HSEH Dashboard and Detailed +Reports to provide the business with a consolidated view +of APA’s leading and lagging HSEH Key Performance +Indicators (KPIs). The dashboards are updated on a +monthly basis. +Process safety +In FY23 we made progress against our process safety +improvement initiatives identified in the HSEH Strategy. +This included commencement of the Management of +Change (MOC) Uplift initiative where we have: +• Conducted a thorough current state MOC review +• Developed and received endorsement for a Business +Requirements Document +The next stage of the MOC Uplift initiative is to implement +the specification requirements in our Enterprise Asset +Management System prior to rolling out to the business in +the second half of FY24. +The Process Hazard Analysis (PHA) Revalidation Uplift +initiative progressed in FY23 by completing the Moomba +Hub and Dalby Compressor Station HAZOP Studies. +In FY24 we will continue to revalidate PHAs on critical +operating assets. +The Safety Critical Element (SCE) Management and +Assurance initiative has delivered and published +SCE dossiers for all transmission assets and developed +a draft SCE performance standard. In FY24 we will revise +the SCE Lifecycle Process Standard and implement this +in our Enterprise Asset Management System. +44 +APA GROUP ANNUAL REPORT 2023 +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_47.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..96e65cc450920e069190414952fcfd2b543e4ed8 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_47.txt @@ -0,0 +1,83 @@ +Measuring health and safety performance +In FY23, our key focus areas included contractor safety +across our projects and the identification of incidents +and near misses that could have caused serious harm +to our employees and contractors. We continue to drive +our visible leadership initiatives through the key leading +indicators of HSEH Interactions and High Potential +Hazard Identification. +By focusing on visible leadership through HSEH +Interactions, leaders can understand the challenges +workers face and how they can be addressed to improve +safety performance. HSEH interactions underwent +an improvement exercise with the introduction of +subcategories of focused interactions that include: +• Health and safety – Focuses on general health +and safety +• Environment and heritage – Focuses on general +environment and heritage +• Critical control – Focuses on interacting with a work +group on the implementation of critical controls for +high-risk activities +• Wellbeing – Introduced to improve health and +wellbeing with a focus on psychosocial risk +management +In FY24, there will be a focus on increasing the number +of Critical Control and Wellbeing interactions to enhance +and complement our Serious Harm Prevention and +Wellbeing initiatives. +The two key lag indicators for safety performance +in FY23 were Potential Serious Harm Incident Frequency +Rate (PSHIFR) and Total Recordable Injury Frequency +Rate (TRIFR). +Safety lead indicators +Under APA’s HSEH Interactions metric, APA’s leaders +have safety-focused discussions on hazard identification, +risk mitigation and corrective action mechanisms with +employees. In FY23, our leaders completed over +4,334 HSEH Interactions, an increase of 13% on FY22. +These interactions help to keep safety front-of-mind +for everyone. +Safety lag indicators +In FY23, APA did not record any Fatalities or Actual +Serious Harm incidents. +In line with our Serious Harm Prevention initiatives, +APA recorded 33 Potential Serious Harm Incidents +versus 46 in FY22. The Potential Serious Harm Incident +Frequency Rate for FY23 was 3.74, compared to +6.51 in FY22 – a 42% decrease. +At the end of FY23, APA’s combined employee and +contractor TRIFR was 3.4 Recordable Injuries per million +hours worked. This represents a slight increase of +3% on the FY22 figure of 3.3. This equates to 30 people +requiring medical intervention, up from 23 in FY22, against +a 24.8% increase in the total number of hours worked by +our employees and contractors when compared to FY22. +Safety compliance +APA received one regulatory (safety) penalty infringement +notice and 20 regulatory (safety) improvement notices in +FY23. Workplace Health and Safety Queensland issued +the infringement notice on an APA contractor undertaking +electrical repairs on a number of inverters at our Dugald +River Solar Farm without the appropriate electrical +licences. This resulted in a $2,000 penalty. The +20 improvement notices were issued by the same +Regulator during an inspection at the Dugald River Solar +Farm. All notices were related to minor administrative +matters at the site and were promptly rectified. +Assurance +We engaged Deloitte to undertake limited +assurance of selected key performance indicators +included in the Safety Performance section of +our FY23 Sustainability Data Book, in accordance +with the Australian Standard on Assurance +Engagements ASAE 3000 Assurance Engagements +other than Audits or Reviews of Historical Financial +Information issued by the Australian Auditing and +Assurance Standards Board (ASAE 3000). Details +of the assurance scope, procedures and conclusion +are included in the Assurance Report on page 200 +of this report. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +45 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_48.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..2db370108e3e3f75bbc053e16f65cba1831dbf56 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_48.txt @@ -0,0 +1,47 @@ +Customers and suppliers +We work with our customers to deliver affordable and +low emissions solutions and a better customer experience. +We keep our customers informed about our assets to help +them better meet peak seasonal demands and understand +the impact of new regulatory changes. And we step +in to assist where we can, including when responding +to natural disasters. +Keeping customers at the heart of what we do +FY23 was another dynamic year for the energy sector. +The energy transition continued at pace with +decarbonisation a key driver for our customers. With the +conclusion of pandemic restrictions, APA continued to +prioritise customer engagement and communications, +innovation and customer experience. We sought to put +customers at the centre of our decisions, activities +and planning as we worked to deliver on our Energy +Charter commitments.  +We continued to take a customer-led approach to +the development of new offers, working to meet our +customers’ needs by delivering reliable, affordable and +low emissions solutions. We sought to better inform +our customers to help them deal with the volatility of +peak winter/summer markets as well as new regulatory +requirements that might affect day-to-day operations. +Finally, we worked to ensure we supported our +customers where they faced temporary hardships +through natural disasters. +As in previous years, APA’s customer-driven approach +included an annual feedback survey and an action plan +in response. +HOSTED WINTER READINESS +FORUM +to keep east coast customers better informed +about asset and service availability through the +peak winter period +Launched our +RESPONSIBLE PROCUREMENT +STRATEGY +AWARDED THE CIPS CORPORATE +ETHICS MARK1 +demonstrating our global commitment to ethical +procurement practices +1 Ethics Register | CIPS. +46 +APA GROUP ANNUAL REPORT 2023 +The secret transportation is a "train". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_49.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..407a742b80c0e6ff20d2c79c676746bb1b58ea01 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_49.txt @@ -0,0 +1,76 @@ +Customer performance  +APA’s annual commercial customer feedback survey was +completed in November 2022. It involved a quantitative +survey administered by an independent external agency. +The key deliverable from the survey is APA’s Customer +Experience Score (CES), an average performance score +across attributes such as trust, responsiveness, value, +ease, rapport and innovation.  +Our CES was 6.7 out of 10, representing an improvement +from our 2021 score of 6.3. The result was driven by +improvements in customer relationships with our key +commercial counterparts. This reflected the success of +our 2022 action plan which focused on re-invigorating +relationships, re-establishing APA’s industry leadership +and re-prioritising face-to-face meetings after COVID. +The survey also highlighted the opportunity to better +engage senior representatives within our customer groups +and work harder with specific accounts. This means +prioritising key attributes such as ease of doing business +and innovation, whilst also delivering on commitments, +and continuing to work on improved communications +and understanding of customers’ concerns. The survey +informed our updated 2023 action plan which has now +been in implementation for six months. +Customer experience  +In addition to our annual survey, we regularly monitor +and manage the customer experience through: +• Dedicated account managers assigned to all +commercial customers +• A quarterly customer experience dashboard focused +on practical elements contributing to customers’ +experience of APA +• Key account management with a monthly review +meeting to monitor customer feedback, service +delivery and performance across APA’s key customers. +We also maintain a commercial customer complaints +process with four complaints received during FY23 – this +compares with 10 complaints in FY22, so a significantly +better performance. The complaints related to land +access, metering, processes around rejection of non-firm +nominations, and the scope of protection works. We are +also working to understand how we can better monitor +and respond to customer impacts related to power +outages as we grow our portfolio of electricity assets. +As well as working to resolve each complaint, we +conducted ‘lessons learnt’ reviews to ensure any +underlying issues driving the complaint do not recur.  +Communications and industry leadership +In response to customer feedback, we worked to keep +customers better informed about the availability of our +assets and services through peak winter and summer +periods. We also acted to make sure they understand the +impact of key regulatory changes. This included: +• A Customer Forum on east coast gas asset winter +readiness and the new AEMO gas system reliability and +supply adequacy powers +• Approaching winter, regular communications on +contracted capacities of key APA east coast assets +for north-south gas transport; and on progress on key +asset upgrades to support winter peak gas transport. +We also published advice on customer behaviours that +help manage peak winter loads +Support for vulnerable customers +In keeping with our Energy Charter commitments, +a monthly ‘Vulnerable Customer’ review meeting is held, +monitoring commercial customers who may be facing +hardship or credit issues and identifying opportunities +for early assistance. +During the year, two customers were provided with +assistance to help them deal with the impacts of +significant flooding, with one entering into a deferred +payment program and the other provided with a +temporary extension of payment terms. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +47 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_5.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..9771f307072cd3d5922646041a3836a5bc897d20 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_5.txt @@ -0,0 +1,77 @@ +Positioning for the energy transition +APA has a critical role to play in the energy transition and +we look forward to progressing the opportunities in front of +us. The strength of our infrastructure and capabilities will be +central to this. +In FY23 we took important steps to further build the capability +we need to deliver our strategy and capitalise on these +opportunities. We’ve done this by investing in our people and +bringing new skills and experiences into the organisation, +including in our executive leadership team. +We appointed Adam Watson as Chief Executive Officer and +Managing Director in December. Over the past year we also +welcomed Liz McNamara as Group Executive, Sustainability +and Corporate Affairs, and Vin Vassallo as our Group +Executive, Electricity Transmission. We also announced +the appointment of Petrea Bradford as Group Executive, +Operations, and Garrick Rollason as Chief Financial Officer, +who will both join APA in the first half of FY24. +Similarly, we have recently announced the appointment of +Nino Ficca as a Non-Executive Director, with effect from +1 September 2023, who will bring significant electricity +transmission and energy market experience to APA. +These appointments complement the existing diverse skills +and experiences of our executive leadership team and Board +and will ensure we are well positioned to deliver on the next +phase of growth. +Building a sustainable business +Incorporating sustainability into everything we do is central +to how we operate. +Further progress against our FY21-24 Sustainability Roadmap +was delivered throughout the year. This included the release +of our first Climate Transition Plan (CTP), detailing our +commitment and pathway to net zero and the development +of our inaugural Reconciliation Action Plan that we will launch +in FY24. +This year we have also brought our non-financial or +sustainability reporting into our Annual Report as a first step +towards integrated reporting and look forward to progressing +this further for securityholders in FY24. +Our FY23 Climate Report will also be released ahead of the +FY23 Annual General Meeting, satisfying our commitment to +report annually on the progress against our CTP. +Delivering for securityholders +Over the past three years we have invested in ongoing safe +and reliable operations, funded the acquisition of Basslink +as well as $1.6 billion in organic growth opportunities +from existing cash flow and debt, all while maintaining an +investment grade credit rating. In FY23 we again delivered +growth in EBITDA and distributions. +Reflecting our ongoing investment in the business and the +significant opportunities presented by the energy transition, +in FY24 we will ensure our distribution growth is appropriately +balanced to accommodate ongoing investment in the +business and drive long-term value accretive growth. +Looking ahead +Our progress in FY23 provides a strong foundation for us +to build on. We have clarity around our customer focused +strategy and the role APA can play in the energy transition. +The growth opportunity set for our organisation is large. We +are focused on continuing to invest in our business, executing +our growth strategy and ensuring we can continue to deliver +sustainable earnings growth for securityholders over the +long-term. +On behalf of the Board and leadership team, we would like to +thank our employees for their ongoing efforts and dedication. +We would also like to thank our customers, communities and +other stakeholders for their continuing engagement. +Finally, our sincere thanks to our securityholders for their +support. We look forward to updating you over the year ahead. +Michael Fraser +Chairman +Adam Watson +Chief Executive Officer +and Managing Director +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +3 +The secret object #2 is a "key". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_50.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..b6f0dbf2cbc5d4f33948c394b5abc547cadeaf91 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_50.txt @@ -0,0 +1,42 @@ +Striving to improve supply chain sustainability performance +APA developed and launched its first Responsible Procurement Strategy during the year. This supports the execution +of APA’s Sustainable Development Investment Program by aligning to priority investment areas. +Early initiatives included building awareness of the strategy across business groups and starting to improve supplier +diversity capability by engaging with First Nations businesses as part of our Supply Nation membership. +An initiative to better understand emissions in our supply chain and identify a roadmap of future opportunities to +reduce emissions was undertaken in collaboration with the Net Zero and Climate team to support net zero ambitions. +Responsible Procurement Strategy +Outlined below is APA’s Responsible Procurement Strategy. It is aligned to APA's Sustainable Development Investment +Program and the four priority investment areas. +Optimise the full life cycle of goods to consider +circularity opportunities and achieving net zero targets +Create positive community impact through +supplier diversity +Monitor and address sustainability risk in the procurement of high-risk goods and services +VISION We strengthen communities through impactful supplier relationships with a responsible and resilient supply chain +SUSTAINABILITY STRATEGY +INVESTMENT AREAS: +TARGETED AREAS +OF ACTION +THE STRATEGY +SUPPORTS THE +FOLLOWING SUSTAINABLE +DEVELOPMENT GOALS: +PROCUREMENT +SPECIFIC GOALS +ENABLERS +Regional and remote +communities +First Nations People Climate transition Natural environment +Supporting local +communities and human +rights protection +Increase supplier diversity Enhance climate transition Optimise the full life +cycle to consider +circularity opportunities +Capacity and capacity building Digital and technology Governance and reporting +Customers and suppliers +(continued) +48 +APA GROUP ANNUAL REPORT 2023 +The secret vegetable is an "onion". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_6.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..d037ecbd1d0c0de6a273fd76053b2ec2aecd7e00 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_6.txt @@ -0,0 +1,57 @@ +FY23 summary +Financial highlights +1 S egment Revenue excluding pass-through. Pass-through revenue is offset by pass-through +expenses within EBITDA. Any management fee earned for the provision of these services is +recognised within total revenue. Reported increase is against FY22. +2 U +nderlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes +recurring items arising from other activities, transactions that are not directly attributable to the +performance of APA Group's business operations and significant items. Reported increase is +against FY22. +3 F +ree Cash Flow is Operating Cash Flow adjusted for strategically significant transformation +projects, less stay-in-business (SIB) capex. SIB capex includes operational assets lifecycle +replacement costs and technology lifecycle costs. Reported decrease is against FY22. +4 + D +PS = Distribution per security. +5 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory +changes as w ell as timing o f distributio ns from non-100 % owned asset s, with distr ibutions to be +determined at the B oard’s discretion. It does not take into account the impact of any potential +acquisitions or divestments by APA and any associated funding arrangements, other than the +acquisition of Alinta Energy Pilbara and the associated Placement and Security Purchase Plan +announced today. +FREE CASH FLOW (FCF) ³ +-1.0% to +$1,070m +Impacted by higher +stay-in-business capex +FY23 DPS ⁴ ++3.8% to +55.0cps +In line with guidance; representing +a payout ratio of 60.6% +SEGMENT REVENUE 1 ++5.1% to +$2,353m +Driven by a solid Energy +Infrastructure performance +and inflation +UNDERLYING EBITDA ² ++2.0% to +$1,725m +Up 3.5% excluding Orbost; +includes investment in capability +to support growth ambitions and +business resilience +BALANCE SHEET +10.6% FFO/ +Net Debt +Funded ~$1.2bn of investment +from cash flow and debt +FY24 DPS GUIDANCE 5 +56.0 cps +Up 1.8% on FY23, reflecting +desire to accommodate +ongoing investment  +4 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_7.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..38ccaa204e4b112bc831bcde98ef3f998692ecba --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_7.txt @@ -0,0 +1,42 @@ +Partnering with our +customers to achieve +their decarbonisation +objectives +$845m invested in +critical infrastructure +in FY23 +Delivered key projects to underpin +reliable energy supply for the +community +Operational excellence +enhancements +Established a new Integrated +Operations Centre, implemented +a new Field Mobility system, GRID +solution program underway +Invested in capability +Enhanced capability across +business development, +technology and business +resilience, regulatory, risk and +compliance, sustainability and +corporate affairs +Sustainability progress +achieved across priority +areas in FY23 +Set a methane target, developed +APA's inaugural RAP1, developed and +commenced the roll-out of our ‘Being +Heritage Aware’ training module +Refreshed our strategy +Customer focused across four +priority asset classes +Non-financial highlights +DELIVERED SOLUTIONS FOR +OUR CUSTOMERS, INVESTED IN +CAPABILITY AND PROGRESSED +OUR SUSTAINABILITY AGENDA +1 R econciliation Action Plan (RAP). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +5 +The secret office supply is a "stapler". \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_8.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6c957c2c4ac7435d67bb2bbc8815b4d91047d95 --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_8.txt @@ -0,0 +1,45 @@ +Financial results +30 June 2023 +$m +30 June 2022 +$m +Changes +%1 +Revenue 2,913 2,732 6.6% +Total revenue excluding pass-through 2 2,401 2,236 7.4% +Segment revenue excluding pass-through 3 2,353 2,238 5.1% +Underlying EBITDA 4 1,725 1,692 2.0% +Total reported EBITDA5 1,686 1,630 3.4% +Statutory profit after tax including significant items 287 260 10.4% +Profit after tax excluding significant items 287 240 19.6% +Free cash flow6 1,070 1,081 (1.0%) +Financial position +Total assets 15,866 15,836 0.2% +Total drawn debt7 11,240 11,146 0.8% +Total equity 1,910 2,629 (27.3%) +Financial ratios +Free cash flow per security (cents) 90.7 91.6 (1.0%) +Earnings per security (cents) including significant items 24.3 22.1 10.0% +Earnings per security (cents) excluding significant items 24.3 20.4 19.1% +Distribution per security (cents) 55.0 53.0 3.8% +Distribution payout ratio (%) 8 60.6 57.9 4.7% +FFO/Net Debt (%)9 10.6 11.1 (7.8%) +FFO/Interest (times) 3.3x 3.6x (8.3%) +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Statutory revenue excluding pass-through. Pass-through revenue is offset by pass-through expenses within EBITDA. Any management fee earned for the provision of these +services is recognised within total revenue. +3 Segment revenue excludes: pass-through revenue; Wallumbilla Gas Pipeline hedge accounting unwind; income on Basslink debt investment; Basslink AEMC market +compensation and other interest income. +4 Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) excludes recurring items arising from other activities, transactions that are not directly +attributable to the performance of APA Group’s business operations and significant items. +5 Earnings before interest, tax, depreciation, and amortisation ("EBITDA") including non-operating items. +6 Free cash flow is Operating Cash Flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex includes operational assets’ +lifecycle replacement costs and technology lifecycle costs. +7 APA’s ability to repay debt at relevant due dates of the drawn facilities. This amount represents the actual debt outstanding in Australian Dollars at period end. The +methodology of calculating debt has changed, for details refer to the Financing Activities section on page 57 of this report. +8 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow. +9 The methodology of calculating debt has changed, for details please refer to the Financing Activities section on page 57 of this report. +FY23 Summary +(continued) +6 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_9.txt b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..17a3746abf5d7602c5bda6c44ff5e5d34636835f --- /dev/null +++ b/APA/APA_50Pages/Text_TextNeedles/APA_50Pages_TextNeedles_page_9.txt @@ -0,0 +1,8 @@ +A SOLID FY23 FINANCIAL +RESULT AS WE CONTINUE +TO INVEST TO SUPPORT +AUSTRALIA’S ENERGY +TRANSITION +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +7 +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/APA/APA_50Pages/needles.csv b/APA/APA_50Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..f633b0a5fe7e6e2540d602cac6e5dbb3c1a45925 --- /dev/null +++ b/APA/APA_50Pages/needles.csv @@ -0,0 +1,25 @@ +The secret food is a "sausage". +The secret shape is a "rectangle". +The secret object #2 is a "key". +The secret office supply is a "stapler". +The secret instrument is a "trumpet". +The secret object #1 is a "chair". +The secret animal #3 is an "eagle". +The secret landmark is the "Taj Mahal". +The secret tool is a "saw". +The secret flower is a "tulip". +The secret kitchen appliance is a "pan". +The secret object #5 is a "towel". +The secret animal #1 is a "lion". +The secret object #3 is a "knife". +The secret fruit is an "orange". +The secret sport is "boxing". +The secret animal #5 is a "wolf". +The secret currency is a "pound". +The secret animal #2 is a "panda". +The secret drink is "water". +The secret clothing is a "glove". +The secret object #4 is a "bed". +The secret animal #4 is a "turtle". +The secret transportation is a "train". +The secret vegetable is an "onion". diff --git a/APA/APA_50Pages/needles_info.csv b/APA/APA_50Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..c7ba4aee6b1afdbc6099a92784a5c0c8da3af7e1 --- /dev/null +++ b/APA/APA_50Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret food is a "sausage".,1,8,gray,white,0.674,0.184,times-bolditalic,108 +The secret shape is a "rectangle".,4,13,brown,white,0.956,0.276,times-italic,68 +The secret object #2 is a "key".,5,13,green,white,0.62,0.396,times-bold,59 +The secret office supply is a "stapler".,7,9,blue,white,0.437,0.964,courier-bold,76 +The secret instrument is a "trumpet".,9,11,black,white,0.914,0.048,helvetica-bold,91 +The secret object #1 is a "chair".,12,13,orange,black,0.569,0.635,helvetica-boldoblique,106 +The secret animal #3 is an "eagle".,13,13,white,black,0.137,0.756,helvetica,126 +The secret landmark is the "Taj Mahal".,15,7,red,white,0.923,0.113,times-roman,103 +The secret tool is a "saw".,17,10,purple,white,0.01,0.182,courier,83 +The secret flower is a "tulip".,19,8,yellow,black,0.623,0.651,courier-oblique,102 +The secret kitchen appliance is a "pan".,21,8,black,white,0.303,0.394,times-bold,100 +The secret object #5 is a "towel".,23,11,blue,white,0.143,0.105,courier,107 +The secret animal #1 is a "lion".,26,12,white,black,0.468,0.132,times-roman,97 +The secret object #3 is a "knife".,27,10,yellow,black,0.554,0.375,courier-bold,102 +The secret fruit is an "orange".,30,7,orange,black,0.002,0.991,helvetica,120 +The secret sport is "boxing".,32,10,gray,white,0.113,0.839,courier-oblique,118 +The secret animal #5 is a "wolf".,34,10,green,white,0.954,0.708,helvetica-boldoblique,80 +The secret currency is a "pound".,36,12,red,white,0.427,0.464,helvetica-bold,109 +The secret animal #2 is a "panda".,38,9,purple,white,0.565,0.1,times-italic,130 +The secret drink is "water".,39,13,brown,white,0.632,0.806,times-bolditalic,81 +The secret clothing is a "glove".,42,12,orange,black,0.122,0.695,times-roman,122 +The secret object #4 is a "bed".,43,9,gray,white,0.635,0.359,courier-oblique,59 +The secret animal #4 is a "turtle".,46,11,green,white,0.283,0.907,helvetica,110 +The secret transportation is a "train".,48,12,brown,white,0.372,0.196,helvetica-bold,64 +The secret vegetable is an "onion".,50,9,purple,white,0.115,0.306,courier,84 diff --git a/APA/APA_50Pages/prompt_questions.txt b/APA/APA_50Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..692794fcb98b8c84363b037da318145b01e66a4a --- /dev/null +++ b/APA/APA_50Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret food in the document? +What is the secret shape in the document? +What is the secret object #2 in the document? +What is the secret office supply in the document? +What is the secret instrument in the document? +What is the secret object #1 in the document? +What is the secret animal #3 in the document? +What is the secret landmark in the document? +What is the secret tool in the document? +What is the secret flower in the document? +What is the secret kitchen appliance in the document? +What is the secret object #5 in the document? +What is the secret animal #1 in the document? +What is the secret object #3 in the document? +What is the secret fruit in the document? +What is the secret sport in the document? +What is the secret animal #5 in the document? +What is the secret currency in the document? +What is the secret animal #2 in the document? +What is the secret drink in the document? +What is the secret clothing in the document? +What is the secret object #4 in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret vegetable in the document? diff --git a/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_1.txt b/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..8886d83a1c9bf37ecfb4ed7f84c4ebaec36e3291 --- /dev/null +++ b/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_1.txt @@ -0,0 +1,4 @@ +tomorrowpowering +ANNUAL +REPORT 2023 +The secret food is a "sausage". \ No newline at end of file diff --git a/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_2.txt b/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..63c92b16bbbddcf6661fcc076d3418f19d13aece --- /dev/null +++ b/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_2.txt @@ -0,0 +1,46 @@ +ACKNOWLEDGEMENT OF COUNTRY +At APA, we acknowledge the Traditional +Owners and Custodians of the lands on which +we live and work throughout Australia. +We acknowledge their connections to land, +sea and community. +We pay our respects to their Elders past and +present and commit to ensuring APA operates +in a fair and ethical manner that respects +First Nations peoples’ rights and interests. +About this report: The 2023 Annual Report is our primary report to securityholders +and provides a consolidated summary of APA Group’s performance for the financial +year ended 30 June 2023. It should be read in conjunction with the reports that +comprise the 2023 Annual Reporting Suite including: Annual Report, Sustainability +Data Book, Results Presentation available from https://www.apa.com.au/investors , +as well as the Climate Report and Climate Data Book that will be available at this +website in September 2023. In this report, unless otherwise stated, references to +‘APA Group’, ‘we’, ‘us’ and ‘our’ refer to APA comprising the ASX-listed entity and +the APA Infrastructure Trust and the APA Investment Trust. Any reference in this +report to a ‘year’ relates to the financial year ended 30 June 2023. All dollar figures +are expressed in Australian dollars unless otherwise stated. +The Board acknowledges its responsibility for the 2023 Annual Report and has been +directly involved in its development and direction. The Board reviewed, considered +and provided feedback during the production process and approved the Annual +Report at its August 2023 Board meeting. +This report outlines APA Group’s activities – governed by our purpose, vision +and values and corporate strategy – delivering the financial, non-financial and +sustainability performance required to capture opportunities whilst managing risks. +Towards integrated reporting: APA Group is committed to providing securityholders, +other external stakeholders and our people with timely, consistent and transparent +corporate reporting. APA is moving towards integrated reporting over a multi-year +period in order to create trusting and transparent relationships with all stakeholders +and to provide a more complete picture of how we create and preserve long-term value. +The integrated reporting concept refers to a principles-based, multi-capital +framework in which companies can communicate clearly and concisely about how +their strategies, governance, performance, prospects and sustainability-related +actions create value in the context of their external environment. The International +Finance Reporting Standards Foundation formed the International Sustainability +Standards Board (ISSB) in November 2021. The ISSB’s purpose is to deliver a +comprehensive global baseline of sustainability-related disclosure standards that +provide investors and other capital market participants with information about +companies’ sustainability-related risks and help them make informed investment. +These standards, when issued, are expected to result in a more definitive approach +for companies to follow with regard to integrated reporting. Our FY23 Annual Report +has been developed with this in mind. +The secret shape is a "rectangle". \ No newline at end of file diff --git a/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_3.txt b/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..ad6cbacc7df27214bd3196b35b4aaa06f55ffd7a --- /dev/null +++ b/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_3.txt @@ -0,0 +1,107 @@ +About this report IFC +Disclaimer 1 +Overview and highlights 2 +Chairman's and Managing Director’s Report 2 +FY23 summary 4 +About APA 8 +External environment 11 +Our strategy 14 +Risks and opportunities 18 +Sustainability at APA 24 +Sustainability highlights 26 +Climate change transition and risk 28 +Community and social performance 30 +First Nations Peoples 34 +Environment and heritage 36 +People and culture 38 +Safety, health and wellbeing 42 +Customers and suppliers 46 +Performance 50 +Outlook 59 +Governance 60 +APA Group Board 62 +APA Executive Leadership 64 +APA Infrastructure Trust Financial Report 68 +Directors’ Report 68 +Remuneration Report 74 +Consolidated Financial Statements 92 +Directors’ Declaration 160 +Auditor Independence / Audit Report 161 +APA Investment Trust Financial Report 168 +Directors’ Report 168 +Consolidated Financial Statements 174 +Directors’ Declaration 189 +Auditor Independence / Audit Report 190 +Additional information 194 +Five year financial summary 195 +Investor information 196 +Glossary 197 +About this report: APA Group comprises two registered investment schemes, APA +Infrastructure Trust (ARSN 091 678 778) and APA Investment Trust (ARSN 115 585 441), +the securities of which are stapled together. APA Group Limited (ACN 091 344 704) is the +responsible entity of APA Infrastructure Trust and APA Investment Trust. +Disclaimer: Please note that APA Group Limited is not licensed to provide financial product +or investment advice in relation to securities in APA Group. This publication does not +constitute financial product advice and has been prepared without taking into account +your objectives, financial situation or particular needs. Before relying on any statements +contained in this publication, including forecasts and projections, you should consider +the appropriateness of the information, having regard to your own objectives, financial +situations and needs and seek professional advice if necessary. Past performance +information should not be relied upon as (and is not) an indication of future performance. +Forward-looking information: This publication contains forward-looking information, +including about APA Group, its financial results and other matters which are subject to risk +factors. ‘Forward-looking statements’ may include indications of, and guidance on, future +earnings and financial position and performance, statements regarding APA Group’s future +strategies and capital expenditure, statements regarding estimates of future demand +and consumption and statements regarding APA’s sustainability and climate transition +plans and strategies, the impact of climate change and other sustainability issues for +APA, energy transition scenarios, actions of third parties, and external enablers such as +technology development and commercialisation, policy support, market support and +energy and offsets availability. Forward-looking statements can generally be identified +by the use of forward-looking words such as, ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘could’, +‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’, ‘outlook’, +‘guidance’, ‘goal’, ‘ambition’ and other similar expressions and include, but are not limited +to, forecast EBIT and EBITDA, free cash flow, operating cash flow, distribution guidance +and estimated asset life. +At the date of this report, APA Group believes there are reasonable grounds for these +forward-looking statements and due care and attention have been used in preparing +this report. +Forward-looking statements, opinions and estimates are not guarantees or predictions +of future performance and involve known and unknown risks and uncertainties and other +factors. Many of these are beyond the control of APA Group, and may involve significant +elements of subjective judgement and assumptions about future events, which may or may +not be correct. There can be no assurance that actual outcomes will not materially differ +from these forward-looking statements, opinions and estimates. A number of important +factors could cause actual results or performance to differ materially from such forward- +looking statements, opinions and estimates. These factors include, but are not limited to: +general economic conditions; exchange rates; technological changes; the geopolitical +environment; the extent, nature and location of physical impacts of climate change; +changes associated with the energy market transition; and government and regulatory +intervention, including to limit the impacts of climate change or manage the impact of +Australia’s transitioning energy system. A number of these factors are described under +the heading ‘Material risks’ beginning on page 20 of this report. Readers should review +and have regard to these risks when considering the information in this report, and are +cautioned not to place undue reliance on forward-looking statements, particularly in +light of the long-time horizon which this report discusses. +There are also limitations with respect to climate scenario analysis and it is difficult +to predict which, if any, of the scenarios might eventuate. Scenario analysis is not an +indication of probable outcomes and relies on assumptions that may or may not prove +to be correct or eventuate. Scenarios may also be impacted by additional factors to the +assumptions disclosed. +Investors should form their own views as to these matters and any assumptions on which +any forward-looking statements, estimates or opinions are based. Except as required +by applicable laws or regulations, APA does not undertake to publicly update or revise +any forward-looking statements to reflect any change in expectations, contingencies or +assumptions, whether as a result of new information or future events. To the maximum +extent permitted by law, APA and its officers do not accept any liability for any loss arising +from the use of the information contained in this report. +Non-IFRS financial measures: APA Group results are reported under International +Financial Reporting Standards (IFRS). However, investors should be aware that this +report includes certain financial measures that are non-IFRS financial measures for the +purposes of providing a more comprehensive understanding of the performance of the +APA Group. These non-IFRS financial measures include FCF, EBIT, EBITDA and other +'normalised' measures. Such non-IFRS information is unaudited, however the numbers +have been extracted from the audited financial statements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +1 +The secret office supply is a "stapler". \ No newline at end of file diff --git a/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_4.txt b/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..5af63ecae61d1301af3e62945b8120bc487a0ecb --- /dev/null +++ b/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_4.txt @@ -0,0 +1,88 @@ +Message from +the Chairman and +Managing Director +FY23 was another solid year of delivery for APA. +Over the past 12 months we delivered earnings and +distribution growth, invested in infrastructure to support +Australia’s energy security and refreshed our strategic +ambition – to be the partner of choice in delivering +infrastructure solutions for the energy transition. +With execution against this strategy building momentum, we +have revitalised our executive team to position us to capture +future growth opportunities. We also made good progress +on our three strategic priorities – ensuring our people +are engaged, motivated and safe; delivering operational +excellence; and creating value for investors and communities. +Financial performance +Our financial performance in FY23 was underpinned by +the reliability of our operations and the strength of our +infrastructure and capabilities. Total statutory revenue +(excluding pass-through revenue) was $2,353 million, up +5.1%, driven by a strong Energy Infrastructure performance +and initial contributions from Basslink. +Earnings before interest, tax, depreciation and amortisation +(Reported EBITDA) of $1,686 million represented a +3.4% increase on the previous year and on an underlying +EBITDA basis, earnings were up 2% to $1,725 million. +Statutory profit after tax (including significant items) was up +10.4% to $287 million. +Our performance enabled the Board to declare a final +distribution of 29.0 cents, taking the FY23 distribution to +55.0 cents per security, in line with guidance. This represents +an increase of 3.8% on FY22 and has been delivered in +parallel with our ongoing significant investment to build +capability and capitalise on emerging growth opportunities. +Our people +The skills and dedication of our people are critical to our +ongoing success, and their safety and engagement remain a +priority focus area. +We reported zero fatalities and zero serious injuries in FY23 +and achieved a 42% reduction in our potential serious harm +incident frequency rate compared to FY22. This was the +result of our focus on incident prevention and drive towards +continuous improvement in safety performance. +Our Total Recordable Injury Frequency Rate (TRIFR) increased +slightly this year following a 42% decrease in FY22. +Over the last 12 months we also progressed our strategy to +improve employee inclusion and diversity. Highlights included +increasing female representation across our total workforce +from 29.5% to 31.8% and in senior leadership roles from +30.4% to 31.4%. These trends are a direct result of the specific +action we’ve taken to attract women to APA and support their +career progression. +We also completed a comprehensive review of like-for-like +roles and where any gender pay equity gaps were identified, +we ensured they were immediately addressed. +Delivering operational excellence +Delivering operational excellence goes to the heart of our +social licence and underpins our ongoing financial results. In +FY23 we opened our new national state-of-the-art Integrated +Operations Centre – a facility that will allow us to support all +our customers and markets from one central location. +In process safety we recorded three Tier 1 incidents, including +a rupture on our Young-Lithgow pipeline during a flooding +event, as well as two power outages highlighting the need +to ensure we are always vigilant in the operation and +maintenance of our assets. +Creating value +Creating value is central to our success and underpins our +ability to deliver for customers, investors, communities and +our people. +In FY23 we brought clarity to our growth strategy. Our focus +is to be the partner of choice in our selected asset classes of +contracted renewables and firming, electricity transmission, +gas transportation and future energy. +We already have momentum with the execution of this +strategy. In FY23 we invested $845 million in growth +opportunities and completed several major projects. This +included the delivery of the largest remote-grid solar farm in +Australia, the Dugald River Solar Farm, the acquisition of the +Basslink interconnector which further expands our electricity +transmission business, delivery of the first stage of the East +Coast Gas Grid expansion and completion of the Northern +Goldfields Interconnect (NGI) pipeline, providing greater +energy security and supporting growth and transition in the +Western Australia resources sector. +2 +APA GROUP ANNUAL REPORT 2023 +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_5.txt b/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d718706907ef94fe47986d29eb5e44d0f3d458c --- /dev/null +++ b/APA/APA_5Pages/Text_TextNeedles/APA_5Pages_TextNeedles_page_5.txt @@ -0,0 +1,77 @@ +Positioning for the energy transition +APA has a critical role to play in the energy transition and +we look forward to progressing the opportunities in front of +us. The strength of our infrastructure and capabilities will be +central to this. +In FY23 we took important steps to further build the capability +we need to deliver our strategy and capitalise on these +opportunities. We’ve done this by investing in our people and +bringing new skills and experiences into the organisation, +including in our executive leadership team. +We appointed Adam Watson as Chief Executive Officer and +Managing Director in December. Over the past year we also +welcomed Liz McNamara as Group Executive, Sustainability +and Corporate Affairs, and Vin Vassallo as our Group +Executive, Electricity Transmission. We also announced +the appointment of Petrea Bradford as Group Executive, +Operations, and Garrick Rollason as Chief Financial Officer, +who will both join APA in the first half of FY24. +Similarly, we have recently announced the appointment of +Nino Ficca as a Non-Executive Director, with effect from +1 September 2023, who will bring significant electricity +transmission and energy market experience to APA. +These appointments complement the existing diverse skills +and experiences of our executive leadership team and Board +and will ensure we are well positioned to deliver on the next +phase of growth. +Building a sustainable business +Incorporating sustainability into everything we do is central +to how we operate. +Further progress against our FY21-24 Sustainability Roadmap +was delivered throughout the year. This included the release +of our first Climate Transition Plan (CTP), detailing our +commitment and pathway to net zero and the development +of our inaugural Reconciliation Action Plan that we will launch +in FY24. +This year we have also brought our non-financial or +sustainability reporting into our Annual Report as a first step +towards integrated reporting and look forward to progressing +this further for securityholders in FY24. +Our FY23 Climate Report will also be released ahead of the +FY23 Annual General Meeting, satisfying our commitment to +report annually on the progress against our CTP. +Delivering for securityholders +Over the past three years we have invested in ongoing safe +and reliable operations, funded the acquisition of Basslink +as well as $1.6 billion in organic growth opportunities +from existing cash flow and debt, all while maintaining an +investment grade credit rating. In FY23 we again delivered +growth in EBITDA and distributions. +Reflecting our ongoing investment in the business and the +significant opportunities presented by the energy transition, +in FY24 we will ensure our distribution growth is appropriately +balanced to accommodate ongoing investment in the +business and drive long-term value accretive growth. +Looking ahead +Our progress in FY23 provides a strong foundation for us +to build on. We have clarity around our customer focused +strategy and the role APA can play in the energy transition. +The growth opportunity set for our organisation is large. We +are focused on continuing to invest in our business, executing +our growth strategy and ensuring we can continue to deliver +sustainable earnings growth for securityholders over the +long-term. +On behalf of the Board and leadership team, we would like to +thank our employees for their ongoing efforts and dedication. +We would also like to thank our customers, communities and +other stakeholders for their continuing engagement. +Finally, our sincere thanks to our securityholders for their +support. We look forward to updating you over the year ahead. +Michael Fraser +Chairman +Adam Watson +Chief Executive Officer +and Managing Director +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +3 +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/APA/APA_5Pages/needles.csv b/APA/APA_5Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..fe39f91fcb282dd43b8c57340235928b80fa0f36 --- /dev/null +++ b/APA/APA_5Pages/needles.csv @@ -0,0 +1,5 @@ +The secret food is a "sausage". +The secret shape is a "rectangle". +The secret office supply is a "stapler". +The secret instrument is a "trumpet". +The secret landmark is the "Taj Mahal". diff --git a/APA/APA_5Pages/needles_info.csv b/APA/APA_5Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..24812d99222677c85bdee554a1f6f5b5d6e52815 --- /dev/null +++ b/APA/APA_5Pages/needles_info.csv @@ -0,0 +1,5 @@ +The secret food is a "sausage".,1,12,blue,white,0.437,0.633,times-bolditalic,54 +The secret shape is a "rectangle".,2,11,white,black,0.379,0.979,courier,138 +The secret office supply is a "stapler".,3,14,brown,white,0.235,0.336,times-bold,112 +The secret instrument is a "trumpet".,4,13,yellow,black,0.062,0.069,times-italic,104 +The secret landmark is the "Taj Mahal".,5,10,purple,white,0.559,0.651,courier-oblique,106 diff --git a/APA/APA_5Pages/prompt_questions.txt b/APA/APA_5Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..96e7eeb03638ef25a08c60d987978085d243784e --- /dev/null +++ b/APA/APA_5Pages/prompt_questions.txt @@ -0,0 +1,5 @@ +What is the secret food in the document? +What is the secret shape in the document? +What is the secret office supply in the document? +What is the secret instrument in the document? +What is the secret landmark in the document? diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_1.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..1ac3195ce980ffbbe7aaf117fc69e32ab5636064 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_1.txt @@ -0,0 +1,3 @@ +tomorrowpowering +ANNUAL +REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_10.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..efe044b2d46548fb5a0bcab50628573c2b6b1e61 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_10.txt @@ -0,0 +1,13 @@ +About APA +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +8 +APA GROUP ANNUAL REPORT 2023 +The secret office supply is a "stapler". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_11.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..abf452b3d4e14e4fa03296422dd7ade03f18a1fa --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_11.txt @@ -0,0 +1,66 @@ +APA Group is a leading Australian energy infrastructure +business, owning, operating and managing a diverse +$22 billion portfolio. We are proud of the role we play in +delivering energy solutions to millions of customers in every +State and Territory. +Our strategic ambition is to be the partner of choice +in delivering infrastructure solutions for Australia’s +energy transition. +Our approach is customer driven as we look to support the +decarbonisation ambitions of our priority customer groups +– including governments, resource companies, energy +supply and wholesale customers, and large commercial +and industrial customers. +Through this approach to market we see immense +opportunities across our four priority asset classes +of contracted renewables and firming, electricity +transmission, gas transportation and future energy. +Our behaviours +Our behaviours set the benchmark for how our people +interact with customers, communities and each other. +They support our strategy and the high-performance +culture that we strive for. The behaviours guide how +we conduct our business and help to shape our +inclusive culture: +We are customer focused, innovative and collaborative, +with empowered and energised teams. +PURPOSE · WHY WE EXIST +To strengthen communities +through responsible energy. +STRATEGY · WHAT WE DO +To be the partner +of choice in delivering +infrastructure +solutions for the +energy transition. +COURAGEOUS +We are honest and +transparent; we learn +from our mistakes +and we challenge the +status quo. +ACCOUNTABLE +We spend time +on what matters, +we do what we say +and deliver world +class solutions. +NIMBLE +We are curious, +adaptive and +future focused. +COLLABORATIVE +We are inclusive, work +together and respect +and listen to our +stakeholders. +IMPACTFUL +We create positive +legacies and +work safely, for +our customers, +communities, +our people and +the environment. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +9 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_12.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..77bbc6b4e45511a7742ce64ea05c5b8f7f43034d --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_12.txt @@ -0,0 +1,165 @@ +APA PORTFOLIO OF ASSETS AND INVESTMENTS +About APA +(continued) +Pipeline +3 Amadeus Gas Pipeline (inc laterals) +13 Berwyndale W allumbilla Pipeline +1 Bonaparte Gas Pipeline +9 Carpentaria Gas Pipeline (inc laterals) +22 Central Ranges Pipelines +23 Central West Pipeline +37 Eastern Goldfields Pipeline +47 Goldfields Gas Pipeline +38 Kalgoorlie Kambalda Pipeline +40 Mid West Pipeline +20 Moomba Sydney Pipeline (inc laterals) +21 Moomba to Sydney Ethane Pipeline +28 Mortlake Gas Pipeline +39 Northern Goldfields Interconnect +45 Parmelia Gas Pipeline +48 Pilbara Pipeline System +12 Reedy Creek Wallumbilla Pipeline +15 Roma Brisbane Pipeline (inc Peat lateral) +30 SEA Gas Pipeline +29 SESA Pipeline +10 South West Queensland Pipeline +49 Telfer/Nifty Gas Pipelines and lateral +25 Victorian Transmission System +14 Wallumbilla Gladstone Pipeline (inc laterals) +2 Wickham Point Pipeline +36 Yamarna Gas Pipeline +51 Kurri Kurri Lateral Pipeline (KKLP) +52 Western Outer Ring Main (WORM) +Gas Processing and Storage +27 Dandenong (680TJ/12000t) +18 Kogan North (12TJ/d) +46 Mondarra (18PJ) +Gas Distribution +16 Allgas Gas Network +50 Australian Gas Networks +24 Tamworth Gas Network +Electricity Transmission +19 Directlink +31 Murraylink +53 Basslink* + +Generation +17 Daandine (30 MW) +6 Diamantina (242 MW) +33 Gruyere (47 MW) +7 Leichhardt (60 MW) +5 Thomson (22 MW) +4 X41 (41 MW) +35 Gruyere Battery Station (4.4 MW/MWh) +Solar Farm +43 Badgingarra (19 MW) +11 Darling Downs (108 MW) +41 Emu Downs (20 MW) +34 Gruyere Solar Farm (13.2 MW) +8 Dugald River Solar Farm (88 MW) +Wind Farm +44 Badgingarra (130 MW) +42 Emu Downs (80 MW) +32 North Brown Hill (132 MW) +K ey +APA G r o up asse t +APA Group distribution network asset +APA Group investment +Investment distribution network +APA G r oup managed asset (no t ow ned ) +Managed distribution network +Other natural gas pipelines +Under construction +Wind farm +Solar farm +LNG plan +Battery storage +Gas storage facility +Gas processing plant +Gas power station +Integrated Operations Centre + + + +Dubbo +53 +Gruyere +45 +46 +48 4 +1 +2 +5 +6 +7 +8 +9 +10 +13 +12 +11 +14 +15 16 +17 +23 +24 +22 +25 +28 +29 27 +20 +19 +21 +32 +31 +30 +18 +33 +47 +36 +3435 +3738 +41 +42 +43 +44 +40 +39 +3 +49 +50 +51 +Kurri Kurri +W allumbilla +R oma +Mount Isa +Karratha +Ballar at +Bendigo +T a mwor th +I O C +Lithgow +T r opicana +Y armana +Alice Springs +K atherine +Kalgoorlie +Gladstone +Moomba +Albury +Sydney +Canberra +Brisbane +Melbourne +Hobart +D arwin +Perth +Adelaide +Melbourne +Melbourne +Airport +52 +Ballera +* Acquired October 2022. +10 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_13.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..7c70de1ccf0232e5de84c1a69bebfa7a2258a568 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_13.txt @@ -0,0 +1,56 @@ +External environment +APA is committed to working with our customers, +communities and governments to deliver an energy transition +that prioritises reliable, affordable and low emissions energy +for all Australians. +Major trends +Both industry and governments continue to confront the +challenge of balancing the competing demands of the +energy sector to deliver: +• reliable energy +• affordable energy and +• low emissions energy +Australia, like most countries, strives to balance these +three interconnected objectives as our energy sector +transitions towards net zero. +As low emission variable renewable electricity (‘VRE’) +steps in to replace coal-fired generation, industry and +governments are searching for solutions to ensure the +transition remains affordable and reliable. Transitioning +to these cleaner energy sources often requires significant +upfront capital investments in new infrastructure, new +technologies, and research and development with long +lead times to commercialisation. +1 AEMO Market Suspension FAQs June 2022. +Both Federal and State governments throughout Australia +are adjusting policy settings in energy markets in an +attempt to both encourage lower carbon energy sources +as well as ensure energy remains affordable and reliable. +Interventions that commenced in FY22 continued in +FY23 as it was deemed necessary by government bodies +to take action in the electricity, coal and gas markets +across eastern Australia. This was driven by supply +constraints leading to high energy prices and included: +• The National Electricity Market (NEM) was suspended +in June 2022 by the Australian Energy Market Operator +(AEMO). Supply shortages made the ongoing operation +of the market under the National Electricity Rules +‘practically impossible’.1 +• The Federal Government introduced legislation +in December 2022 which applies a temporary price +cap of $12/GJ on the supply of regulated gas for +12 months. The government also requested a domestic +coal price cap of $125/T to be implemented in +New South Wales and Queensland. +• In Western Australia, June 2022 saw the announcement +by the WA Government that all state-owned coal +generators are to close by 2030. Following this, the +WA Government announced a review of the State's +domestic gas reservation policy. This was part of the +Government’s efforts to determine if the policy remains +fit for purpose in supplying the domestic market or if +amendments are needed to allow for more gas to be +delivered to domestic users. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +11 +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_14.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..b4d7cf8ac164c0fb0e8b58d58e0c3b67f79b682d --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_14.txt @@ -0,0 +1,49 @@ +Economic regulatory matters +Gas pipelines in Australia are regulated under the +National Gas Law (NGL) and National Gas Rules (NGR) by +the Australian Energy Regulator (AER) or the Economic +Regulation Authority of Western Australia (ERA). On +2 March 2023, amendments to the NGL and NGR were +proclaimed and came into effect across all States except +Western Australia. Prior to these amendments the NGL +and NGR established two regulatory pipeline frameworks: +1. Scheme pipelines (NGR Parts 8-12) subject to either: + – Full regulation with regulator approved tariffs and +terms and conditions; or + – Light regulation where pipeline owners publish +services and prices and comply with information +provision requirements. +2. Non-Scheme pipelines (NGR Part 23) where tariffs and +terms are negotiated between parties. +The 2 March 2023 amendments to the NGL and NGR +discontinue light regulation and transition to a: +• ‘heavier’ form of regulation, based on the current full +regulation for scheme pipelines; or +• ‘lighter’ form of regulation, based on the previous +Part 23 (now Part 10) regime for non-scheme pipelines. +In practice, pipelines currently subject to full regulation +are not expected to experience much change. APA’s +non-scheme pipelines and pipelines previously subject +to light regulation will transition to the new ‘lighter’ form +of regulation. +Following on from this legislative change, the regulator will +now have the power to determine the form of regulation +to apply to a particular pipeline. In effect, this means that +the AER can decide to apply full regulation to non-scheme +pipelines. The AER would then have the role of approving +capital and operating expenditure and rates of return +under five year access arrangement proposals. APA will +also be required to publish actual contracted prices across +its pipeline network. Further changes to the information +disclosure framework will take place from FY25, under a +new Pipeline Information Disclosure Guideline, currently +under development. +APA pipelines (owned and/or operated) – by regulation type +External environment +(continued) +Full regulation pipelines +Light regulation pipelines +Non-scheme pipelines +Partly full regulation/non-scheme pipelines +12 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_15.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..40b2767d0f12e492c0e1065ca307f88660b10f81 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_15.txt @@ -0,0 +1,62 @@ +Regulatory resets +The diagram below shows the scheduled regulatory reset +dates for pipelines owned and operated by APA. During +FY23, approximately 8.2% of APA’s Energy Infrastructure +revenues were subject to regulated outcomes. +Key regulatory matters relating to APA assets addressed +during the year included: +• Victorian Transmission System (VTS) 2023-2027 +access arrangement – On 9 December 2022, the AER +published its final decision on the 2023-27 VTS access +arrangement. The decision recognised the importance +of continued investment in the VTS to maintain +reliability and system security for Victorian gas users. +The access arrangement will have effect for five years +from 1 January 2023. +• Murraylink 2023-2028 revenue proposal1 – +On 28 April 2023, the AER published its final +determination for the Murraylink electricity transmission +interconnector between South Australia and Victoria, +approving total revenues for the 2023-28 period at +levels 4.5% lower than allowed for in the 2018-22 +period. This cut was driven largely by reductions in the +allowed cost of capital. +Energy industry policy developments +In FY23 APA continued to engage in national and +jurisdictional policy processes focused predominantly on +gas security, development of the hydrogen and renewable +gas industries, and the decarbonisation of the economy. +The focuses of our submissions were as follows: +• Gas security – APA submitted that market approaches, +rather than direct Government intervention, are the +most efficient means of ensuring gas is delivered +to customers. Our submissions also stressed the +importance of bringing new gas supplies to market. +• Hydrogen and renewable gas reforms – APA lodged +submissions to various jurisdictional processes +proposing to extend licensing and technical +frameworks to include hydrogen and renewable gases. +• Decarbonisation of the economy – APA supports +the development of Renewable Energy Zones and +contestability in transmission delivery to help efficiently +connect renewable generation to the National +Electricity Market. APA also supported amendments +to the National Energy Objectives and the Safeguard +Mechanism to help drive the decarbonisation of +the economy. +• Banning new gas connections – The ACT and +Victorian governments are taking steps to ban new gas +connections at the distribution level for households +and small business. Both governments are also offering +subsidies for households and small business to replace +gas appliances with electric ones. +Scheduled regulatory reset dates for pipelines owned and operated by APA 2 +Victorian Transmission System 31 DECEMBER 2027 +Roma Brisbane Pipeline 30 JUNE 2027 +CY23 CY24 CY25 CY26 CY27 +Amadeus Gas Pipeline 30 JUNE 2026 +Goldfields Gas Pipeline 31 DECEMBER 2024 +1 APA has ~20% ownership of Murraylink. +2 Victorian Transmission System access arrangement from 1 January 2023 to 31 December 2027. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +13 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_16.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..1d0ed64819ecc749b39984e26f8a1ebdf3fa5357 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_16.txt @@ -0,0 +1,12 @@ +Our strategy +Creating value as +THE PARTNER OF +CHOICE +Meeting the needs of our customers +WHERE WE HAVE +A COMPETITIVE +ADVANTAGE +Disciplined investment +ACROSS FOUR ASSET +CLASSES +14 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_17.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..afec13cc62fc8672a27fb05956c92ed59c9552f7 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_17.txt @@ -0,0 +1,49 @@ +An effective transition requires an ambitious but +pragmatic approach to delivering affordable, reliable and +low emissions energy. To achieve this, we believe the +transition must focus on the retirement of coal fired power +generation and the introduction of renewable generation, +firmed with gas and/or other low emissions firming and +storage technologies. +APA is well positioned in Australia to play a key role in +developing and deploying energy solutions that strike the +balance between these often competing priorities. Our +natural gas assets are strategically integrated in both the +East Coast and West Coast gas markets. They will remain +a critical part of the future energy mix, balancing the load +and helping to unlock the expansion of renewable energy +required to replace retiring coal power stations and +support the nation’s decarbonisation. In addition, natural +gas continues to play an important role for powering +hard-to-abate and hard-to-electrify industrial sectors and +provides essential heating in colder climates. APA’s assets +will help to ensure Australia continues to have access to +reliable and cost-efficient energy. +APA’s strategy is to be the partner of choice in delivering +infrastructure solutions for the energy transition . +We will do this in select asset classes, where we have +a competitive advantage – renewable electricity and +firming, electricity transmission, gas transportation +and future energy (including clean fuels such as hydrogen +and renewable methane). +This approach will be underpinned by anticipating +the needs of our customers, partnering with them, +pursuing unsolicited proposals, and delivering bundled +energy solutions. +APA’s energy transition strategy is focused on four asset classes +APA’s strategy is to be the partner of choice in delivering +infrastructure solutions for the energy transition. +We are supporting +Australia’s energy +transition through +investment in +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +15 +Contracted +Renewables and Firming +Electricity +Transmission +Gas +Transportation +Future +Energy \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_18.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f9413a03a885b87e515a118d0601bbf40e8a2d5 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_18.txt @@ -0,0 +1,84 @@ +Our strategy +(continued) +BRINGING THE APA STRATEGY TO LIFE THROUGH A CUSTOMER DRIVEN APPROACH TO MARKET +RESOURCE INDUSTRY ENERGY SUPPLY +AND WHOLESALE GOVERNMENT LARGE COMMERCIAL +AND INDUSTRIAL +... ACROSS VARIOUS ASSET CLASSES +... MEETING THE NEEDS OF OUR CUSTOMERS WHERE WE HAVE A COMPETITIVE ADVANTAGE ... +A CUSTOMER FOCUSED STRATEGY ... +Levelised cost of energy +remains key +Flexibility to respond to +changing supply sources +Reliability of service +remains high +Opportunity across both +East and West coasts +Leverage current assets +along with incremental learning +and execution +Require trusted partner to +support accelerating transition +Reliability and social +licence are key +Cost is important, but timely +delivery drives outcomes +Opportunity estimated amounts +to $54bn including REZs and +subsea cables +Basslink, Murraylink, Directlink +illustrate our capability +Ability to provide flexible +and responsive services to +changing market demands +Reliability of supply with +a trusted partner +Requiring innovative ways to +respond to the energy transition +Opportunity across both +East and West coasts +Core operating business +with a proven track record +Resource companies are +decarbonising – majority +have CO 2 reduction goals +Reliability of energy supply +with a trusted operator/partner +Levelised cost of energy remains +key for global competitiveness +Significant opportunity exists +in North West Minerals Province, +Pilbara, Goldfields +Mt Isa and Gruyere showcases +our capability +Asset class and total estimated addressable market size /one.numr : +$8bn +Gas +Pipelines +$260bn +Hydrogen +$54bn +Electricity +Transmission +(including +Subsea Cables) +$206bn +Contracted +VRE and +Firming +on Grid (NEM) +$13bn +CO 2 +Transmission +$25bn +Contracted +VRE and +Firming +Remote Grid +1 Estimated addressable market sizes in Australia. Estimates are based on a number of key assumptions, including in relation to macroeconomic factors, future technology +advancements and costs, market demand, regulatory requirements and government policies and there can be no assurance the estimates are accurate. The actual +addressable market sizes may differ materially from the estimates because events frequently do not occur as projected. +16 +APA GROUP ANNUAL REPORT 2023 +The secret object #1 is a "chair". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_19.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e11a1eb6138a696597e29e2e0a60fab119d483a --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_19.txt @@ -0,0 +1,60 @@ +Our sustainability roadmap +As a leading Australian energy infrastructure business, +we believe we have a responsibility to steward our natural +resources and preserve long-term value for security- +holders, communities and our people. +At APA we see sustainability as a priority that involves +both opportunities and risks. We understand the value +and scrutiny our partners and stakeholders place on our +sustainability performance and that this is used to assess +APA’s comparative performance across the industry. +Our approach to sustainability is governed by a +Sustainability Roadmap centred on nine material +sustainability issue areas identified through a consultative +process. Our Roadmap provides a three-year framework +for building the foundations of sector-leading sustainability +performance. +APA’s Net Zero ambitions and the low-carbon transition +are at the heart of our Roadmap and we are prioritising +achievement of the targets outlined within our Climate +Transition Plan (CTP). +Our Sustainability Roadmap and our CTP are overseen +by our Board and guided by the Safety and Sustainability +Board Committee. +Climate Change Transition and Risk Environmental Management +including Heritage Management +Safety, Health and Wellbeing +Community and Social Performance +First Nations Peoples + Inclusion and Diversity +People and Culture +Governance and Risk Management +Sustainable Development +Sustainability issues +Leverage our strengths and focus on the things +that matter +Engage, listen and innovate with key stakeholders +and alliances +Achieve consistently meaningful, measurable and +impactful outcomes +Anticipate and be well positioned to respond to fast +moving issues and opportunities +Accelerate our improvement actions to close the gap Take a ‘know and show’ approach with disclosure +and transparency +ESG SCORECARD +ROADMAP AND PLAN PRINCIPLES +BUILD ACCELERATE MAINTAIN AND EVOLVE +Priority issues to be built +into strengths +Fundamental issues which +require strengthening +Existing plans and processes +to evolve via ESG lens +1 +2 +3 +4 +5 +6 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +17 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_2.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c50dbbb4dbc329841e25b3ea6d4d1a0c244a5e0 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_2.txt @@ -0,0 +1,45 @@ +ACKNOWLEDGEMENT OF COUNTRY +At APA, we acknowledge the Traditional +Owners and Custodians of the lands on which +we live and work throughout Australia. +We acknowledge their connections to land, +sea and community. +We pay our respects to their Elders past and +present and commit to ensuring APA operates +in a fair and ethical manner that respects +First Nations peoples’ rights and interests. +About this report: The 2023 Annual Report is our primary report to securityholders +and provides a consolidated summary of APA Group’s performance for the financial +year ended 30 June 2023. It should be read in conjunction with the reports that +comprise the 2023 Annual Reporting Suite including: Annual Report, Sustainability +Data Book, Results Presentation available from https://www.apa.com.au/investors , +as well as the Climate Report and Climate Data Book that will be available at this +website in September 2023. In this report, unless otherwise stated, references to +‘APA Group’, ‘we’, ‘us’ and ‘our’ refer to APA comprising the ASX-listed entity and +the APA Infrastructure Trust and the APA Investment Trust. Any reference in this +report to a ‘year’ relates to the financial year ended 30 June 2023. All dollar figures +are expressed in Australian dollars unless otherwise stated. +The Board acknowledges its responsibility for the 2023 Annual Report and has been +directly involved in its development and direction. The Board reviewed, considered +and provided feedback during the production process and approved the Annual +Report at its August 2023 Board meeting. +This report outlines APA Group’s activities – governed by our purpose, vision +and values and corporate strategy – delivering the financial, non-financial and +sustainability performance required to capture opportunities whilst managing risks. +Towards integrated reporting: APA Group is committed to providing securityholders, +other external stakeholders and our people with timely, consistent and transparent +corporate reporting. APA is moving towards integrated reporting over a multi-year +period in order to create trusting and transparent relationships with all stakeholders +and to provide a more complete picture of how we create and preserve long-term value. +The integrated reporting concept refers to a principles-based, multi-capital +framework in which companies can communicate clearly and concisely about how +their strategies, governance, performance, prospects and sustainability-related +actions create value in the context of their external environment. The International +Finance Reporting Standards Foundation formed the International Sustainability +Standards Board (ISSB) in November 2021. The ISSB’s purpose is to deliver a +comprehensive global baseline of sustainability-related disclosure standards that +provide investors and other capital market participants with information about +companies’ sustainability-related risks and help them make informed investment. +These standards, when issued, are expected to result in a more definitive approach +for companies to follow with regard to integrated reporting. Our FY23 Annual Report +has been developed with this in mind. \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_20.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..59c9ff3f5c18af1b1d7ef39e82c68aecc9381ac4 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_20.txt @@ -0,0 +1,12 @@ +Risks and +opportunities +EMBRACING +the energy transition opportunity +OPTIMISING +outcomes in a highly regulated +and fluid environment +FUTURE PROOFING +APA with the right capability +and technology +18 APA GROUP ANNUAL REPORT 2023 +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_21.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c497f423cb07d8777107fb5fc9d85279950fb97 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_21.txt @@ -0,0 +1,89 @@ +As a leading energy infrastructure business, APA is exposed +to risks that can have a material impact on our delivery of +energy and our financial success. Our approach to managing +material risks is summarised below. +Risk management framework +APA’s risk management framework supports the +identification, management, escalation and reporting +of material risks. By implementing an effective risk +management framework APA’s Board and executive aim +to ensure that strategies are in place to manage potential +opportunities and threats. +APA adopts a three lines model for managing risks and +establishing controls to promote the behaviours and +decision making to support effective risk management. +This model of risk management is depicted below. +The first line, our employees, are accountable for +day-to-day risk management and decision making within +appropriate guidelines. +In lines two and three, APA’s Executive Leadership +Team, the Board’s Risk Management Committee and the +relevant business divisions have oversight of and review +material risks regularly, with the support of internal and +external experts. +During FY23, the accelerating energy transition, as well +as emerging geopolitical risks, inflation and supply chain +disruptions were key risks and opportunities impacting +our operational and financial performance. To create +and protect value APA has focused on these risks and +opportunities, updating actions to manage risks and +achieve our objectives. Existing material risks also have +ongoing oversight with a major priority being ensuring +the safety of our operations and supporting activities to +provide reliable energy to our customers, and to maintain +our financial strength to respond to changes in the +Australian energy market. +BOARD +Accountable to stakeholders for organisational oversight +RISK MANAGEMENT COMMITTEE/AUDIT AND FINANCE COMMITTEE +Delegates, directs, ensures adequate resourcing and provides oversight +EXECUTIVE RISK MANAGEMENT COMMITTEE +Accountable for risk and reporting to the Risk Management Committee +MANAGEMENT INTERNAL AUDIT +EXTERNAL ASSURANCE PROVIDERS +(External Audit1, Regulator Audit, Third Party Audit, Advisory Reviews) +LINE ONE +Owns and manages risks +LINE TWO +Builds, reviews and supports +LINE THREE +Independent assurance +Group Executives +Our People +Enterprise/Divisional Risk, Compliance and +Assurance Teams, HSEH, Enterprise +Security, Enterprise PMO +Group Internal Audit +• Provide products/services to customers +• Implement risk management frameworks +(identify, assess, own and manage risks +to achieving objectives) +• Own internal controls and actions +• Own and manage compliance with legal, +regulatory and ethical expectations +• Control attestation/self-assessment +• Provide expertise, support, monitoring +and challenge on risk-related matters +• Maintain and continuously improve +risk management practices at an +enterprise/function, system or +process level +• Report on the adequacy and +effectiveness of risk management +• Coordinate insurance +• Maintain and implement risk-based +control assurance programs at +enterprise/function level +• Provide independent and objective +assurance of objectives +• Ensure that governance structures and +processes are appropriately designed +and operating as intended +• Provide oversight and direction in +aligning governance activities, including +integrated assurance +Key: Accountability reporting +1 External Auditors have not provided assurance over the risk management framework in FY23. +Alignment, communication, coordination, collaborationDelegation, direction, resources, oversight +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +19 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_22.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..24b4084fb5c4885f43db282130b6de05356a538c --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_22.txt @@ -0,0 +1,93 @@ +Material risks +APA currently considers the following risks to have the possibility of materially impacting our ability to meet our business +objectives. Material risks are subject to enhanced oversight by management and the Risk Management Committee. +This list is not exhaustive and is subject to change as new risks emerge or are no longer considered material risks. +RISK DESCRIPTION MANAGING THE RISK +Strategic Risks – Strategic risks are those uncertainties that could materially impact the business’ ability to implement its +strategic objectives. +Energy market transition Accelerating decarbonisation and carbon +emissions (net zero) targets drives potential +for cleaner power generation, renewables +development, and energy innovation/new +entrants in markets. +Government net zero policies/targets and +new technologies could materially decrease +the market for gas and gas transportation +and APA may fail to grow in other energy +infrastructure classes, limiting domestic +market growth. +• Execution of APA’s customer-focused strategy +creates value as the partner of choice, delivering +infrastructure solutions for the energy transition +where APA has a competitive advantage and +across targeted asset classes. +• Actively contribute to Government policy process +and advocate for the importance of APA’s role in +supporting energy transition and managing the +intermittency of renewables. +• Engage with customers and pro-actively manage +opportunities to retain, re-contract or switch to +alternative APA assets via structured, flexible and +competitive price and service offerings. +Government and regulatory +intervention +APA is exposed to regulatory policy change +and government interventions. +These changes and interventions may be at +Federal, state or territory level, and may vary. +They could include those that are designed +to support decarbonisation, limit the impacts +of climate change, or manage the impact of +Australia's transitioning energy system. +Those policy changes and interventions +may constrain gas supply (including through +limiting or restricting new gas projects), +impact the availability of competitively priced +gas, increase compliance costs for APA and +its customers and otherwise place additional +operating restrictions or complexities on +APA's businesses and the businesses of its +customers. +In addition, under the recent amendments to +the National Gas Law and National Gas Rules, +the Australian Energy Regulator (AER) will +now have the power to determine the form +of regulation to apply to a particular pipeline, +and could apply full regulation to pipelines +that are currently non-scheme. +If implemented, any of those policy +changes and interventions may change the +commercial viability of existing or proposed +projects or operations and adversely impact +APA's future business and operations. +• Maintain strong regulatory and policy functions +and be an active participant and stakeholder in the +development of regulation and policy, including +AER guidelines which support the exercise of its +new powers.  +• Continually assess and respond to key policy +change proposals with potential impacts on +APA’s businesses. +• Actively engage with updating/developing relevant +Australian standards. +Social licence APA relies on a level of public acceptance +for the development and operation of its +assets. Changing societal and community +sentiment in relation to the energy industry, +as well as APA’s business, may impact APA’s +commercial opportunities, and its ability to +develop new projects and operate its assets. +• Engage with key stakeholders (landowners, +producers, customers, government etc) to identify +focus areas. +• Monitor expectations, major trigger events within +the community and APA’s reputation score. +• Drive community and social performance initiatives +and programs working with First Nations People. +• Implementation of APA’s Climate Tranistion Plan, +Sustainability Roadmap, transparent and proactive +annual disclosure. +Risks and opportunities +(continued) +20 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_23.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..7eef932dac8d361e6e8c9eeb417a54dc62cd9a61 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_23.txt @@ -0,0 +1,105 @@ +RISK DESCRIPTION MANAGING THE RISK +Operating multiple asset +types +Risks arise from managing and partnering +across multiple asset types. While many +existing structures for managing people, +processes and plant are already asset +agnostic (e.g. asset management framework, +IT systems, risk and assurance O&M +workforce management and the Integrated +Operations Centre), risks will arise from +the need to scale up and integrate new +asset types. +• Continue to invest in our capability in electricity +transmission development and engineering, power +generation optimisation and asset development +and integration. +• Continuous improvement of existing asset agnostic +structure and framework for managing people, +processes and plant. +• Continue to invest in maturing asset management +framework and real time data analytics. +Partnering across multiple +stakeholder groups +APA’s engagement spans a diverse range +of stakeholders (e.g. across State and +Federal Government agencies, community, +landholders, customers, suppliers, investors +and employees) who hold different +perspectives and objectives. +Risks arising from engagement with this +complex and changing set of stakeholders +could lead to reputation damage, loss of +stakeholder support/trust which ultimately +affects APA’s ability to win projects, source +approvals, and diversification into new +energy markets. +• The development of targeted State-based +stakeholder engagement plans to ensure +appropriate ‘owners’ are assigned to stakeholders +and there is coordination and cohesion across +the business. +• Continued investment in core capability around +targeted workforce planning. +Operational Risks – Operational risks potentially arise from weaknesses in internal processes, people or systems or from +unforeseen external events. +Health and safety Preventing workplace injury and keeping all +our employees and contractors safe is our +highest priority. Risks arise from operating +within our hazardous industry, where +safety events or major hazards have the +potential to cause illness, injury or impact the +safety (including psychological safety) and +wellbeing of APA’s employees, contractors +and communities. +• APA’s Board Safety and Sustainability Committee +has oversight of this risk. The key focus is +prevention achieved by appropriately identifying, +managing and where possible eliminating risks. +• Continued focus on comprehensive health +and safety management policies, strategies, +frameworks (including employee Wellbeing +Framework), systems +and processes. +• Reporting of key performance metrics to +monitor safe behaviours and identify continuous +improvement opportunities. +Asset operations APA is exposed to major incidents or events +that may result in harm to our people, +environment, and the communities we +operate in; or materially impact our reputation +or financial performance. +• Comprehensive operational, process safety, +cultural heritage and environment management +programs. +• Continue to engage with wider industry to stay +abreast of best practice asset management +processes. +• Implement asset management and maintenance +engineering standards, including integrity +monitoring and maintenance programs, as +part of risk-based asset lifecycle management. +• Conduct asset operational monitoring through +control rooms to manage assets within +design parameters and coordinate asset +maintenance issues. +• Provide comprehensive insurance arrangements as +part of the asset protection program. +Infrastructure development Risks associated with the development of +new pipeline capacity, renewable, battery +and gas-fired power generation plants, and +gas storage and gas processing assets. This +includes typical construction risks such as: +obtaining necessary regulatory approvals, +employee or equipment shortages, third-party +contractor failure, weather risk, and higher +than budgeted construction costs impacting +liquidated damages and project delay. +• Access and approvals management for new +construction projects. +• Dedicated construction project management +capability and governance to manage efficient, +safe and quality delivery of construction projects. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +21 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_24.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a97e86db680c061cf9536497db3be2e7adaa383 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_24.txt @@ -0,0 +1,97 @@ +RISK DESCRIPTION MANAGING THE RISK +Corporate transformation APA is exposed to the risks associated +with the design and delivery of enterprise- +wide corporate transformation programs. +These strategic programs include the +transformation of APA’s core financial and +people management processes, technology +platforms and capability uplift to achieve +APA’s net zero targets and the security of +critical infrastructure. +• Roll-out of an enterprise-wide project governance +and delivery framework, tools and organisational +change management capability. +• Project/program reporting, risks and issues +management and escalation and oversight by +senior management and the Board. +Sustainability The risks arising from the management and +disclosure of sustainability issues (including +climate and ESG matters) impacting APA +performance and reputation. +• APA’s Board Safety and Sustainability Committee +has regular oversight of this risk. +• Delivery of comprehensive environment and +heritage management policies, strategies, +frameworks, systems and processes. +• Refreshed sustainability risk assessment (including +climate risks) with clear business ownership. +• Formalised procedures supporting sustainability +including integrated reporting, an enhanced +scorecard and APA’s Sustainability Roadmap +and strategy. +People and culture Our leaders are held accountable for creating +cultural alignment with APA’s behaviours and +establishing a workplace where everyone +feels safe, respected and included. +APA’s inclusive culture is a prerequisite to our +ability to attract, engage, develop and retain +a diverse pool of skills and capabilities in a +competitive talent market. +• APA’s Board People and Remuneration Committee +has oversight of this risk. +• Execution of clear employee value proposition and +effective talent programs to develop and maintain +talent pipelines. +• Delivery of comprehensive learning and +development programs including leadership +programs to build the skills and capability required +for now and the future. +• Implementation of holistic cultural programs +designed to improve workplace inclusion and +diversity, employee experience and wellbeing. +• Identification of clear expectations of behaviour +in APA’s Code of Conduct and Respect@Work +procedure. +Technology strategy, +operation and security +The risk of interruption to APA’s operations +due to unreliability of information and +operational technology systems, applications, +technology architecture or third-party +providers. +• Manage APA’s information and technology assets +in accordance with recognised industry standards +across hardware, software, applications and +communication systems. +• Apply security standards across APA information +and technology systems, including those managed +by third-party vendors, with standards continually +assessed against new threats and vulnerabilities. +• Regular reviews and testing of information and +operational technology systems. +Cyber security Cyber-attacks are increasing in frequency, +scale and sophistication across both our +communities and industry. APA plays a +pivotal role in Australia’s essential energy +supply chain and could be the target for +a cyber incident. Breaches may involve +sensitive commercial and/or personal +information or impact the operation of critical +infrastructure assets and systems possibly +leading to shutdowns of our energy assets. +• Implementation of a program to strengthen the +security of APA assets, and cater for emerging +threats, security regulation and stakeholder +expectations. +• Robust security monitoring and incident response +process supported by regular exercises and +security control assurance programs. +• Compulsory security awareness training for APA +employees and contractors, including how to +identify phishing emails and keep data safe; +and a regular program of random testing. +Risks and opportunities +(continued) +22 +APA GROUP ANNUAL REPORT 2023 +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_25.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..e8ae8d81393081e612d0fadb5fb7c72162f9e1e4 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_25.txt @@ -0,0 +1,87 @@ +RISK DESCRIPTION MANAGING THE RISK +Financial and Compliance Risks – Financial risks are those arising from the management of APA’s financial resources, +accounting, tax and financial disclosure. Compliance risks arise from laws, regulations, licences and recognised practising +codes including health, safety, environment, cultural heritage, payroll, asset construction and operation, and other corporate +compliance requirements. +Legal, compliance and +operating licences +APA is exposed to the risk of operating +within a highly regulated environment with +complex legal requirements, operating +licence conditions, industry standards/codes +of practice and corporate obligations. +• Comprehensive Enterprise Compliance +Management Framework in place with regulations +identified, controls monitored and assurance +operating. +• Dedicated specialist teams that provide asset level +monitoring and assurance for technical, safety, +environment and cultural heritage compliance. +Debt and capital +management +The risk arising from reduced business +and financial flexibility due to ineffective +management of APA’s debt and capital or +limited availability, or unfavorable pricing, +timing and access to debt and equity funding. +• Board approved risk limits and Treasury Risk +Management Policy. +• Regular, independent reviews of corporate and +asset models underpinning investment decisions. +• Effective debt and capital management strategy +and hedging against interest rate movements and +foreign currency rate fluctuations. +• Maintain access to a broad range of global banking +and debt capital markets. +Key emerging risks, threats and opportunities +Below we note several key emerging risks that are highly uncertain by nature and include +threats and opportunities for APA: +EMERGING RISK THREATS AND OPPORTUNITIES APPROACH +Global economic slowdown Threat: Global economic slowdown +impacts financial markets and customer +demand, potentially reducing gas +contract capacity demand and +recontracting revenue, access to +new debt markets and liquidity and +commodity prices. +• Strong capital management framework, including +hedging arrangements and customer credit +monitoring. +• Actively monitor commodity pricing impacting +sourcing of goods and materials utilised in large +construction projects and domestic demand. +• Closely monitor changes in energy demand +including substitution. +Geopolitical uncertainty Threat: Geopolitical uncertainty with +rising tensions in the region and +continuation of the Russia/Ukraine +conflict impacting changes in sanctions +regimes, international energy demand, +rising national security interests and +worsening supply chain disruption. +• Continue to evaluate options for alternative +sources of supply for international construction +procurement. +• Conduct resilience updates for information +technology infrastructure, including cyber +resilience. +• Focus on gas reserving management, +including increases in gas line pack to meet +high demand periods. +Carbon offsets Opportunity: Introduction of carbon +offsets as part of decarbonisation and +climate change requirements to support +energy infrastructure development +and growth. +• Continue to investigate a number of carbon offset +programs via a mix of direct procurement and +investment opportunities. +Artificial intelligence Opportunity: Growth in artificial +intelligence and potential impact +on productivity improvements. +• Initiatives to improve data quality and data +governance providing for adoption of digital +technologies impacting workforce improvements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +23 +The secret tool is a "saw". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_26.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..e20ed48d0c852e167f7aeabd4fac9f8487f28764 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_26.txt @@ -0,0 +1,14 @@ +Sustainability +at APA +Developed our inaugural APA +RECONCILIATION +ACTION PLAN +Supported our communities +through our +SOCIAL INVESTMENT +INITIATIVES +Established +GENDER-NEUTRAL +PARENTAL LEAVE +BENEFITS +24 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_27.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..1377639308168964ba9c7d8937105b3284a4d272 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_27.txt @@ -0,0 +1,72 @@ +We prioritise sustainable outcomes so that APA, our +employees, customers and communities in which we +operate can thrive – now and in the future. +At APA we are united behind a singular purpose to +strengthen communities through responsible energy. +We are committed to act responsibly across all of our +business activities. +We seek continual improvement, working collaboratively +with our industry peers and engaging transparently with +our stakeholders. We understand the value and focus that +our partners and stakeholders place on our sustainability +performance and that this is used to assess APA’s +performance across the industry. +Our Sustainability Roadmap provides the foundations +for APA to develop key strategic sustainability initiatives +and deliver on them in a prioritised way. Over the last two +years our main areas of focus have been on the ‘build’ +and ‘accelerate’ pillars of our Sustainability Roadmap. +These pillars identify fundamental focus areas that require +growth and/or strengthening. It is important that we are +targeted in our approach and focused on those topics that +matter most to APA and our stakeholders. +Our material sustainability focus areas +In FY21, we conducted a stakeholder-centric materiality +assessment to identify the core sustainability-related +issues that APA should focus on. This process informed +the development of our three-year Sustainability Roadmap +and enabled us to bring APA’s vision and purpose to life. +APA’s Sustainability Roadmap categorises the core issue +areas into three groups: Build, Accelerate and Maintain +and Evolve. The diagram on page 26 highlights our +progress against the Sustainability Roadmap in FY23. +To continue to deliver the most positive impact for +APA and highest value for our stakeholders, it is critical +we regularly re-evaluate the sustainability issues most +material to our business and stakeholders. This will +enable us to assess the economic, social, environmental +and cultural impacts of our activities and business +relationships and refine our main focus areas and +associated initiatives. +As our Sustainability Roadmap is due to complete in +June 2024, work is underway to prepare a refreshed +Roadmap. The first step towards this is delivery of a +sustainability materiality assessment, culminating in +an impact-based sustainability materiality matrix. The +materiality assessment approach will be guided by the +Global Reporting Initiative (GRI 3: Material Topics 2021) +which considers actual and potential negative and +positive impacts of our business to determine our material +sustainability issues for prioritisation. +Supporting the UN Sustainable +Development Goals +APA continues to support the delivery of the 17 United +Nations Sustainable Development Goals (SDGs). +By working more strategically and aligning our +initiatives to the relevant SDGs we can tackle major +societal, environmental and economic challenges whilst +also identifying and unlocking significant business +opportunities. +At their core, the SDGs aim to create a shared value +approach through the creation of economic and business +value in a way that fundamentally addresses societal +needs and challenges. The paradigm shift required to +transition from a philanthropic approach to one delivering +both business and social values now guides our approach. +To demonstrate how the business is meeting the relevant +SDGs, we have mapped goals to the three areas of our +Roadmap and indicated where each goal is connected +to our performance and priorities. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +25 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_28.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6288573d7430ce53be3c440e23bfa922268b808 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_28.txt @@ -0,0 +1,83 @@ +Sustainability at APA +(continued) +FY23 PROGRESS AGAINST APA’S SUSTAINABILITY ROADMAP +BUILD +Priority issues to be built + into strengths +ACCELERATE +Fundamental issues which +require strengthening +MAINTAIN AND EVOL VE +Existing plans and processes +to evolve via ESG lens + Climate change transition and risk + Community and social performance + First Nations Peoples + Environmental management + including heritage management + Safety, health and wellbeing + Inclusion and diversity + People and culture + Governance and risk management +• Progressed CTP actions in line with +FY23 commitments. +• Established a dedicated Community +and Social Performance (CSP) team +to deliver CSP strategy and social +investment framework. +• Hosted workshops with our five +corporate partners to understand new +and meaningful ways to collaborate +together +• Contributed $1.2 million through +discretionary social investment to +communities via targeted community +grants programs, corporate +partnerships with charitable +organisations and local sponsorships +and donations. +• Prepared APA’s Reconciliation Action +Plan (RAP) under the guidance of a +newly established cross-functional +RAP Working Group. +• Progressed our four year Environment +Improvement Program in line with the +HSEH Strategy schedule. Processes, +tools and templates for 3 of 8 +environment risks areas have now +been developed/refined, integrated +and implemented across the business. +• Scoped environment data uplift +opportunities across the waste, water +and contaminated land risk areas. +• Uplifted our heritage practices +at targeted assets and recruited +additional Heritage Specialist. +• Ongoing delivery of our three-year +weed survey program. +• Delivered 15 environment audits. +• Refreshed our HSEH Policy. +• Prepared, approved and initiated our +five-year HSEH strategy with strategic +pillars centred on safety performance, +leadership and innovation. +• Introduction of the Board Safety and +Sustainability Committee. +• Prepared an ESG Risk Register +tracking and monitoring our business- +wide ESG risks. +• Revised our Inclusion and Diversity +(I&D) Plan and refreshed our Policy +to focus on facilitating an inclusive +culture, including the launch of +our Respect@Work Procedure and +e-module and completing a gender +pay review. +• Established gender-neutral parental +leave benefits. +• Uplifted leadership training and +capability including the introduction +of the INSEAD Curriculum. +Refer to APA's FY23 Sustainability Data Book for further information about our FY23 sustainability performance. +26 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_29.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..e24a1571a6f83271b02bd79f609ec0460f894893 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_29.txt @@ -0,0 +1,82 @@ +Climate transition plan +Our CTP is an important step in APA’s commitment to actively participate and support Australia’s energy transition, +consistent with the objectives of the Paris Agreement. Our FY23 progress on the commitments in our CTP will be +reported in our new FY23 Climate Report, due to be released in September 2023. +Gas infrastructure – net zero operational +emissions by 2050 1 +Power generation and electricity +transmission infrastructure – net zero +operational emissions /two.numr by 2040 3 +GOAL: +30% emissions reduction for gas +infrastructure (FY21 base year) +TARGET: +100% renewable electricity procurement +from FY23 onwards +TARGET: +100% zero direct emission fleet by 2030 +Responsible criteria applied when offsets +are required +GOAL: +COMMITMENT: +INTERIM COMMITMENTS FOR 2030 +KEY SUPPORTING COMMITMENTS +35% reduction in emissions intensity +for power generation (FY21 base year) +GOAL: +Contribute positively to grid +decarbonisation measured by MW +of enabled renewable infrastructure +GOAL: +Active program to reduce emissions we can +control and apply best practice management +techniques to managing line losses +COMMITMENT: +GOAL : +Incorporation of +the Methane +Guiding Principles +When setting APA’s targets and goals, we have made our commitments clear to stakeholders, based on the level of +uncertainty in the pathway required to reach them. +Target: an intended outcome where we have +identified one or more pathways for delivering that +outcome, subject to certain assumptions or +conditions. +1 Includes transmission, distribution, gas processing, storage and corporate. +2 The organisational boundary for all targets and goals relates to assets under APA’s operational control, as defined by the Greenhouse Gas (GHG) Protocol. The following + assets are not within APA’s operational control for emissions reporting purposes: Victorian Transmission System (maintenance excepted), Gruyere and X41 Power Stations, + Wallumbilla Gladstone Pipeline, SEA Gas Pipeline and Mortlake Pipeline, North Brown Hill Wind Farm and Australian Gas Networks. +3 Includes power generation and interconnectors. +Goal: an ambition to seek an outcome for which there is +no current pathway but for which efforts will be pursued +towards addressing that challenge, subject to certain +assumptions or conditions. +Hold a non-binding +securityholder vote +on future material +updates to our +Climate Transition +Plan +Report annually on +progress against +the targets, goals +and commitments +in our Climate +Transition Plan +Link executive +remuneration to +climate-related +performance +from FY23 +Scope 3 emissions +goal to be finalised +before or in +conjunction with +next Climate +Transition Plan +1 2 3 4 5 +NEW COMMITMENT FOR 2030 +30% methane reduction target (FY21 base year) TARGET: +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +27 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_3.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..51d31b5a2fda6385a89d090093d8867810e4b0ab --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_3.txt @@ -0,0 +1,107 @@ +About this report IFC +Disclaimer 1 +Overview and highlights 2 +Chairman's and Managing Director’s Report 2 +FY23 summary 4 +About APA 8 +External environment 11 +Our strategy 14 +Risks and opportunities 18 +Sustainability at APA 24 +Sustainability highlights 26 +Climate change transition and risk 28 +Community and social performance 30 +First Nations Peoples 34 +Environment and heritage 36 +People and culture 38 +Safety, health and wellbeing 42 +Customers and suppliers 46 +Performance 50 +Outlook 59 +Governance 60 +APA Group Board 62 +APA Executive Leadership 64 +APA Infrastructure Trust Financial Report 68 +Directors’ Report 68 +Remuneration Report 74 +Consolidated Financial Statements 92 +Directors’ Declaration 160 +Auditor Independence / Audit Report 161 +APA Investment Trust Financial Report 168 +Directors’ Report 168 +Consolidated Financial Statements 174 +Directors’ Declaration 189 +Auditor Independence / Audit Report 190 +Additional information 194 +Five year financial summary 195 +Investor information 196 +Glossary 197 +About this report: APA Group comprises two registered investment schemes, APA +Infrastructure Trust (ARSN 091 678 778) and APA Investment Trust (ARSN 115 585 441), +the securities of which are stapled together. APA Group Limited (ACN 091 344 704) is the +responsible entity of APA Infrastructure Trust and APA Investment Trust. +Disclaimer: Please note that APA Group Limited is not licensed to provide financial product +or investment advice in relation to securities in APA Group. This publication does not +constitute financial product advice and has been prepared without taking into account +your objectives, financial situation or particular needs. Before relying on any statements +contained in this publication, including forecasts and projections, you should consider +the appropriateness of the information, having regard to your own objectives, financial +situations and needs and seek professional advice if necessary. Past performance +information should not be relied upon as (and is not) an indication of future performance. +Forward-looking information: This publication contains forward-looking information, +including about APA Group, its financial results and other matters which are subject to risk +factors. ‘Forward-looking statements’ may include indications of, and guidance on, future +earnings and financial position and performance, statements regarding APA Group’s future +strategies and capital expenditure, statements regarding estimates of future demand +and consumption and statements regarding APA’s sustainability and climate transition +plans and strategies, the impact of climate change and other sustainability issues for +APA, energy transition scenarios, actions of third parties, and external enablers such as +technology development and commercialisation, policy support, market support and +energy and offsets availability. Forward-looking statements can generally be identified +by the use of forward-looking words such as, ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘could’, +‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’, ‘outlook’, +‘guidance’, ‘goal’, ‘ambition’ and other similar expressions and include, but are not limited +to, forecast EBIT and EBITDA, free cash flow, operating cash flow, distribution guidance +and estimated asset life. +At the date of this report, APA Group believes there are reasonable grounds for these +forward-looking statements and due care and attention have been used in preparing +this report. +Forward-looking statements, opinions and estimates are not guarantees or predictions +of future performance and involve known and unknown risks and uncertainties and other +factors. Many of these are beyond the control of APA Group, and may involve significant +elements of subjective judgement and assumptions about future events, which may or may +not be correct. There can be no assurance that actual outcomes will not materially differ +from these forward-looking statements, opinions and estimates. A number of important +factors could cause actual results or performance to differ materially from such forward- +looking statements, opinions and estimates. These factors include, but are not limited to: +general economic conditions; exchange rates; technological changes; the geopolitical +environment; the extent, nature and location of physical impacts of climate change; +changes associated with the energy market transition; and government and regulatory +intervention, including to limit the impacts of climate change or manage the impact of +Australia’s transitioning energy system. A number of these factors are described under +the heading ‘Material risks’ beginning on page 20 of this report. Readers should review +and have regard to these risks when considering the information in this report, and are +cautioned not to place undue reliance on forward-looking statements, particularly in +light of the long-time horizon which this report discusses. +There are also limitations with respect to climate scenario analysis and it is difficult +to predict which, if any, of the scenarios might eventuate. Scenario analysis is not an +indication of probable outcomes and relies on assumptions that may or may not prove +to be correct or eventuate. Scenarios may also be impacted by additional factors to the +assumptions disclosed. +Investors should form their own views as to these matters and any assumptions on which +any forward-looking statements, estimates or opinions are based. Except as required +by applicable laws or regulations, APA does not undertake to publicly update or revise +any forward-looking statements to reflect any change in expectations, contingencies or +assumptions, whether as a result of new information or future events. To the maximum +extent permitted by law, APA and its officers do not accept any liability for any loss arising +from the use of the information contained in this report. +Non-IFRS financial measures: APA Group results are reported under International +Financial Reporting Standards (IFRS). However, investors should be aware that this +report includes certain financial measures that are non-IFRS financial measures for the +purposes of providing a more comprehensive understanding of the performance of the +APA Group. These non-IFRS financial measures include FCF, EBIT, EBITDA and other +'normalised' measures. Such non-IFRS information is unaudited, however the numbers +have been extracted from the audited financial statements. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +1 +The secret food is a "sausage". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_30.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c8197b7b1d2479711ac7d2fb008748246715a7c --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_30.txt @@ -0,0 +1,58 @@ + BUILD +Climate change +transition and risk +Our FY23 Climate Report will be released in September +2023, in line with our commitment to report annually on +progress against our CTP. This allows for sufficient time to +prepare and independently assure our emissions data. The +Climate Report will contain disclosures consistent with the +recommendations of the TCFD. +Our climate transition plan defines interim and long-term +emission reduction targets and goals by asset class. We +have sought to set interim targets and goals aligned with +the objective of the Paris Agreement and to disclose +consistent with the Taskforce on Climate-related Financial +Disclosures (TCFD) recommendations. +Since the release of our CTP in August 2022, APA has +made clear progress against our plan. Our focus has been +on embedding the necessary structures, processes and +systems to ensure our approach to climate is integrated +across the business. +Performance against our gas infrastructure and power +generation interim targets and goals will be detailed +within our FY23 Climate Report. +APA's strategy is to achieve our CTP commitments through: +• Electrifying and optimising the operation of compressors. +• Reducing the emissions intensity of power generation +through investments in renewables. +• Reducing methane emissions through leak detection and +repair and implementation of specific initiatives such as +seal gas recovery. +• Optimising the performance of existing power generation +equipment. +• Buying or internally generating high quality offsets where +emissions reduction is not possible or cost prohibitive. +APA has committed to finance these infrastructure +emission reduction initiatives through a $150 million to +$170 million net zero fund over FY23 to FY30. There is +some upside pressure on this spend projection in the +area of compressor electrification due to higher grid +connection and electric motor drive unit costs, while +other opportunities may be implemented in a more +cost-efficient manner. +Linked executive remuneration to +CLIMATE-RELATED +PERFORMANCE OUTCOMES +Procured large-scale generation certificates +(LGCs) to meet our +100% RENEWABLE ELECTRICITY +PROCUREMENT COMMITMENT +Set a methane target aligned with +the Global Methane Pledge (GMP) of an +AT LEAST 30% REDUCTION IN +OUR OPERATIONAL METHANE +EMISSIONS BY 2030 +(FY21 BASE YEAR) +28 +APA GROUP ANNUAL REPORT 2023 +The secret flower is a "tulip". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_31.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0e1673cf0e24839fe65c77c9bfa65ba1ea0357c --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_31.txt @@ -0,0 +1,77 @@ +Supporting a lower carbon future +and the energy transition +APA’s Pathfinder Program +APA is investing in future fuels through our +Pathfinder Program established in FY21, to +understand the requirements to support +clean molecules in either existing or new +infrastructure. In May 2023, our landmark +Parmelia Gas Pipeline (PGP) conversion +project in Western Australia confirmed via +pressurised hydrogen laboratory testing the +technical feasibility of converting a 43km +section of the PGP to carry 100% hydrogen. +The testing results indicate it is technically +feasible, safe and efficient to run the +43km section of the pipeline at the current +operating pressure using hydrogen. The +project will now consider preparing the +section of pipeline for hydrogen service, +and will include detailed safety studies +and conversion plans, while continuing +to investigate potential supply and +offtake opportunities. +Off the back of this research, APA has +developed a Pipeline Screening Tool +(PST) that provides a high-level assessment +of the hydrogen readiness of its national +pipeline assets, based on key pipeline +material and operating characteristics. Initial +assessments using the PST indicate there +is a high likelihood that around half of +APA’s natural gas pipeline assets could +be used for hydrogen transportation in +100% pure or blended form, with no, or +small, changes to their current operating +profile. For the remainder of APA’s +pipelines, which consist largely of high +strength steel operating at higher pressure, +further research and materials testing +will be required to determine if any +changes in operating pressure are needed +to maintain pipeline integrity whilst +transporting hydrogen. +Supporting the PGP conversion project is +a Memorandum of Understanding between +APA and Wesfarmers Chemicals, Energy +and Fertilisers (WesCEF), signed in May +2022. As part of this, we committed to a +pre-feasibility study to assess the viability of +producing and transporting green hydrogen +via the PGP to WesCEF’s production +facilities in Kwinana. The findings were +promising, demonstrating that the PGP +study area is likely to be suitable for green +hydrogen development. APA and WesCEF +are now considering the results further. +In September 2021, APA joined an +international consortium in an effort to +establish Queensland’s largest green +hydrogen project – the Central Queensland +Hydrogen Project (CQH2). In April 2023, +APA paused our involvement in the early +stages of the CQH2 project but believes +the project has an exciting pathway ahead. +APA remains interested in a future role in +the project and continues to be involved +in other Queensland projects developing +hydrogen export supply chains. +Pathfinder is investigating other hydrogen +and Carbon Capture and Storage (CCS) +project opportunities where APA can bring +its market-leading energy infrastructure +expertise and experience to large-scale +projects. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +29 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_32.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..fef870bf0427e021396a461cc48d1f40eecad005 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_32.txt @@ -0,0 +1,44 @@ +Community and social +performance +Driven by our purpose, to strengthen communities through +responsible energy, we are committed to outstanding +performance in our interactions with communities. +We work to understand the needs and aspirations of our +host communities and contribute to their sustainable +development. We seek respectful and mutually valuable +relationships with our stakeholders. +Building stronger community +and social performance +APA works to embed community engagement, +development, partnership and participation in all our +business activities. We strive to engage with stakeholders +in a culturally appropriate way. +In FY23 we prepared a revised Social Investment +Framework and 2-year CSP Strategy which is scheduled +for consultation in early Q1 FY24. This strategy seeks to +elevate practices and drive consistency and awareness +throughout the business. +Community and stakeholder engagement +APA plays a critical role in the energy supply chain and +we recognise the impacts our activities may have on a +range of stakeholders and on the progress of energy +transition more broadly. For APA, understanding who our +stakeholders are and how we impact each other is vital +to achieving operational excellence. +APA’s community and stakeholder engagement programs +connect and work with local landholders, Traditional +Owners, communities, governments and industry. +Our programs are tailored to meet the broad needs +of our stakeholders and range from simple awareness +of our activities to involvement in the design of +new infrastructure. +Supported more than 84 organisations through our +SOCIAL INVESTMENT PROGRAMS +Launched the Mount Isa and Cloncurry +COMMUNITY GRANTS PROGRAM +11,271 landholder contact visits through our +LANDHOLDER CONTACT +PROGRAM + BUILD +30 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_33.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..e30f40e887b32c520f30922350e53d3e775862e0 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_33.txt @@ -0,0 +1,49 @@ +Regulatory +Engagement – +Basslink +Basslink is fundamental to both the supply of +affordable and reliable energy to Victoria and +Tasmania and also the energy transition through +the supply of renewable energy to the National +Electricity Market. +Following the acquisition of Basslink in FY23, +we are progressing a revenue proposal and +application, seeking approval from the AER for +Basslink to become a ‘regulated asset’ as a way to +support Basslink’s continued operation. Converting +Basslink to a ‘regulated asset’ means the maximum +prices consumers pay as part of their retail bills for +Basslink would be set by the AER through a public +consultation process. For consumers, this means +a more transparent and independent approach +to setting prices for Basslink, and a range of +opportunities for public consultation on what +prices consumers should pay. +In November 2022, we established a Regulatory +Reference Group (RRG) to co-design the +development and implementation of our regulatory +engagement plan for Basslink. This plan identifies +the scope, timing, themes and engagement +methodology. +The RRG served as an independent advisory +group representing residential, small business and +large energy users in Tasmania and Victoria. The +RRG guided our understanding of the needs and +expectations of different consumer segments and +was used to continually refine our engagement +materials and our approach to consulting +with consumers, industry and Government +stakeholders. +With direct representation from APA’s senior +leadership team, the engagement program was +both broad and deep including: +• regular RRG engagement forums +• online focus groups +• consumer workshops in Launceston +and Melbourne +• an online quantitative survey of 1,200 electricity +consumers from Victoria and Tasmania. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +31 +OPERATING & FINANCIAL REVIEW +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_34.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..1dc12a0a6a51a0b8747598ceecdeb77b91b1e7f7 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_34.txt @@ -0,0 +1,48 @@ +BUILD +Community and social performance (continued) +Landholder engagement +APA sees landholders as key partners in our operations. +With easements across many properties throughout the +country, access to these properties is an essential part of +maintaining and developing our infrastructure. When this +is needed, we engage proactively with landholders and +seek to minimise our footprint as much as possible. +In FY23, we continued to run the annual APA Landholder +Contact Program, sharing operational and safety +information with landholders and providing Before-You- +Dig information. This Program also allows landholders to +update APA about their activities, access and notification +requirements, and to raise any concerns. +The Landholder Contact Program aims to make contact +with at least one representative from each parcel every +year, preferably face to face. In FY23, we made contact +with 11,271 landholder contacts. Over the past few years +we have consistently achieved at least 80% of contacts +completed in all States. In most cases we have achieved +over 90%. In recent years we have conducted a popular +APA Landholder Photo Competition, with entries used in +our annual calendar to highlight the stunning and diverse +landscapes in which we operate. +APA continues to receive positive feedback from +landholders. Our proactive engagement with landholders +is seen as a point of difference with other similar +companies. +The Energy Charter +APA works collaboratively across the energy industry to +address common issues and improvement opportunities. +As a signatory to the Energy Charter – a national +CEO-led collaboration – we share the vision to support +better outcomes for energy customers. +APA is one of 20 Australian energy businesses forming +the charter. Signatories commit to publicly disclose their +progress against the Energy Charter Principles through +the release of an annual disclosure report. +In September 2022, we submitted our third disclosure +report under the Energy Charter. The annual disclosure +report details the actions, investments, partnerships and +programs that have been delivered and demonstrates our +alignment to the five Energy Charter Principles. A copy of +this report is published on the APA website. +32 +APA GROUP ANNUAL REPORT 2023 +The secret object #5 is a "towel". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_35.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..ddf92f09df10bf78d8de9115b7d693556e461ce8 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_35.txt @@ -0,0 +1,79 @@ +Focusing investment on sustainable +development outcomes +APA continued to refine and deliver on its Social +Investment Framework in FY23. The Framework provides +meaningful, valuable discretionary funding to support +sustainable development outcomes in host communities. +Partnerships and employee contributions +As part of our commitment to better outcomes for First +Nations people and communities, APA continued our +long-standing corporate partnerships with the Clontarf +Foundation and The Fred Hollows Foundation in FY23. +APA also recommitted to another year of funding with +three corporate partners who we began working with +in FY22 – the Stars Foundation, Rural Aid and Uniting. +The Stars Foundation aligns with our commitment to +support gender equity and better outcomes for First +Nations communities. +Rural Aid is our dedicated partner when preparing for +and responding to natural disasters through community +resilience initiatives. +Our corporate partnership with Uniting is derived from our +membership of the Energy Charter and provides energy +literacy support to individuals and households suffering +energy hardship. +In FY23 we invested $1.2 million in our communities, +prioritising rural and regional communities, First Nations +Peoples, climate transition and natural environment +protection. +Community grants programs +In addition to the partnerships and employee +contributions, in FY23 APA contributed more than +$92,000 in grants across almost 30 community +orgnisations as part of our Community Grants Program. +These initiatives align to APA’s Investment Priority Funding +Areas and focus on maximising social impact. +Projects funded under this program included NAIDOC +celebrations, social infrastructure investment and +community health and wellbeing initiatives across our East +Coast Grid Expansion, Kurri Kurri Lateral Pipeline, and +Mount Isa and Cloncurry assets. +APA’S SOCIAL INVESTMENT PRIORITY AREAS +REGIONAL AND REMOTE +COMMUNITIES +FIRST NATIONS +PEOPLES +We also recognise the importance of considering the following when designing, selecting and delivering initiatives, +investments and partnerships: +CLIMATE +TRANSITION +NATURAL +ENVIRONMENT +Building the strength +and resilience of +regional economies and +communities located near +APA assets/projects +Working in partnership +with First Nations Peoples +to support better +outcomes for First Nations +communities and heritage +Supporting communities +in climate transition +outcomes and +adaptation activities +Protecting and enhancing +the natural environments +and biodiversity located +near APA assets/projects +Impacted community +needs and aspirations +People in vulnerable +circumstances Inclusion and diversity Access to energy and +energy affordability +Building human capability +e.g. skills +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +33 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_36.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d5354e8ba63081810a13ef90779be3c2befc7da --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_36.txt @@ -0,0 +1,46 @@ +Reconciliation +APA’s Sustainability Roadmap identifies First Nations +Peoples as a priority area for us to build organisational +capability, and in FY22 we committed to developing our +first Reconciliation Action Plan (RAP). +In FY23, we appointed a Reconciliation and First Nations +Manager to improve our First Nations governance, +performance and disclosures. We established a cross- +functional RAP Working Group (RAPWG), chaired by an +Executive Sponsor, to develop, implement and report on +a Reflect RAP. With the support of our external advisor, +Murawin Indigenous Voice Consultancy, we undertook an +extensive internal consultation to co-design a quality +RAP that meets Reconciliation Australia’s standards. + APA aims to launch our RAP in the first half of FY24. +Committing to a Reflect RAP allows APA to spend time +scoping and developing relationships with stakeholders, +defining our reconciliation vision and exploring our +sphere of influence, in preparation for future reconciliation +initiatives and RAPs. +Extensive consultation was undertaken to inform +development of the RAP, involving targeted, APA-wide +engagements, directly involving >700 employees. + +First Nations Peoples +At APA, partnering with First Nations Peoples is central +to our purpose. We seek to become a partner of choice for +First Nations stakeholders and supporters as we deliver +solutions for the energy transition. +Consultation with more than 700 employees +to develop our first +RECONCILIATION ACTION PLAN +Over 500 APA employees joined our +INAUGURAL NATIONAL +RECONCILIATION WEEK +DISCUSSION PANEL EVENT +Launched our new online cultural awareness +training module as part of our +FIRST NATIONS WORKFORCE +STRATEGY +$2.67 million spend on goods and services +with 24 directly engaged +FIRST NATIONS SUPPLIERS + BUILD +34 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_37.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..b81eaa65e40316f78739f71c425081c9cda43002 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_37.txt @@ -0,0 +1,71 @@ +First Nations engagement +APA holds Indigenous Land Use Agreements and +Cultural Heritage Management Plans with Traditional +Owners. These set out processes and plans for protecting +Aboriginal cultural heritage and engaging with Traditional +Owners in areas where we operate. +We are committed to continually improving processes +which guide First Nations engagement and Aboriginal +cultural heritage management. Our aim is to drive +improved land use and benefit sharing with First +Nations groups and contribute to community capacity +through training and employment in the energy sector. +This extends to joint venture and equity partnership +opportunities with Traditional Owners. +Our future engagement will focus on improving the +quality and depth of our relationships with First Nations +groups to ensure we respect their rights and interests and +adequately build in the priorities of Traditional Owners and +host communities throughout our assets lifecycle. +First Nations employment +With less than 1% of our workforce who identify as First +Nations Peoples compared to 3.2% of the national +population, we recognise more work is needed to ensure +our workforce reflects the communities where we operate. +In support of this we undertook initiatives in FY23 to +improve cultural safety for current and future First +Nations employees. +• In FY23, as part of the implementation of our First +Nations Workforce Strategy, we launched our new +online cultural awareness training module. +• Over 500 APA employees joined our inaugural +National Reconciliation Week discussion panel event +involving representatives of our RAP Working Group +and external First Nations thought leaders. The panel +discussed Reconciliation, APA’s RAP and the upcoming +Referendum. +• Over 100 employees have joined our Reconciliation +Allies @ APA community. +• In FY23, we engaged a new Employee Assistance +Program provider which has capability to provide +primary and secondary health and wellbeing support +to First Nations staff and family members. +• Our Reflect RAP will prioritise our focus and effort on +building cultural safety and cultural competency across +the entire organisation. +First Nations procurement +In FY23, APA continued its membership of Supply Nation, +a national non-profit organisation that aims to grow the +First Nations business sector through the promotion +of supplier diversity in Australia. In FY23, we directly +engaged 24 First Nations suppliers, spending +$2.67 million on goods and services. Suppliers are +comprised of Registered and Certified Supply Nation +as well as Land Councils. +APA’s Reflect RAP will include measurable actions and +deliverables to increase the diversity and quantity of +goods and services procured directly and indirectly from +First Nations-owned businesses. We intend to support and +participate in opportunities to build our network of local +and First Nations suppliers. +We will investigate including First Nations Participation +Commitments (FNPCs) in our contracts with key suppliers +to help facilitate more opportunities for First Nations +businesses. Engaging First Nations businesses via +FNPCs will enable more First Nations businesses to +participate in our supply chain indirectly, growing local +industry and employment opportunities for First +Nations communities. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +35 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_38.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a48ac5917e49d600a9f4d4ee6397c1739e24717 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_38.txt @@ -0,0 +1,55 @@ +Environment and heritage +APA performs an extensive range of activities across +a diverse range of environments. We are committed to +managing our risks and protecting the environment across +all areas of our business. Pursuing a high standard of +environment and heritage management is one way +we ensure we build and operate our assets in a socially +responsible manner. +In FY23, APA continued our program of strategic initiatives +to drive improved environmental performance. We have: +• Prepared and released updated environmental +procedures for Contaminated Site Management and Spill +Preparation and Response, including tools, templates and +guidelines. The procedures were supported by updates +to related business processes and systems and included +dedicated staff training and communications. As part of +this change a spill response online training module was +procured and launched. This has been completed by +450 employees. +• Continued our weed survey program investigating +the presence of invasive weeds on APA transmission +pipelines. The outcomes of these surveys will inform +long-term monitoring and management measures +and help to quantify potential impacts on nature +and biodiversity. +• Completed an assessment of APA’s water consumption +to improve our understanding of water usage and +determine a pathway forward for more comprehensive +water data capture. In addition, we identified all areas of +water stress in the areas that we operate and overlaid this +information in Geographic Information Systems (GIS) to +help inform decision making. +• Completed a waste assessment to understand waste +generation patterns and to better inform future work +regarding improved waste data capture and centralisation. +• Developed a framework to assess site contamination +hazards associated with chemical and hazardous +substance storage on APA sites and to manage +associated contamination risks. +LAUNCHED OUR NEW SPILL +RESPONSE ONLINE TRAINING +MODULE +completed by 450 employees +DEVELOPED A FRAMEWORK TO +ASSESS SITE CONTAMINATION +HAZARDS +associated with chemical and hazardous substance +storage on APA sites +EMBEDDED HERITAGE +MANAGEMENT +launched a 'Being Heritage Aware' training module +across the business + ACCELERATE +36 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_39.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f595c3f91d170a42ddc6b18f6fb4a7683acd149 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_39.txt @@ -0,0 +1,85 @@ +A four-year Environment Improvement Program is +underway to elevate and embed environment processes +across the business. This involves uplift of procedures, +development of new innovative tools and implementation +for eight environment risk areas. Following full completion +of the program, all Environment Management Plans will be +updated to ensure alignment of content. +YEAR ENVIRONMENT RISK AREA STATUS +FY22 Heritage Completed +Pests, Diseases and Weeds Completed +FY23 Spill Preparation and Response Completed +Contaminated Site Management Completed +FY24 Soil Management Under way +Waste Management Pending +FY25 Biodiversity Pending +Water Pending +Environment compliance +In FY23 APA received seven penalty infringement notices +and two regulatory warning notices. +The penalty notices were received from the Queensland +Department of Environment and Science and had a total +penalty value of $34,461. The notices related to late +resubmission of Estimated Rehabilitation Cost +(ERC) calculations required under the Environmental +Protection Act, 1994, for six operating assets in +Queensland. APA promptly resolved the outstanding +information with the Department. +One warning notice was received from the First People +– State Relations (FPSR) portfolio of the Department of +Premier and Cabinet (Victoria). The warning notice related +to a ground disturbance activity that did not comply with +the approved Cultural Heritage Management Plan. +APA self-reported the incident and is working with the +stakeholders to resolve the matter. +The second warning notice related to missing information +required under APA’s Environmental Authority for the +Kogan North Central Gas Processing Facility. Whilst +information was available in technical air quality +monitoring reports, required details had not been +included in the Register of Fuel Burning and Combustion +Equipment Register for the facility. APA rectified the error +once aware of the issue. +Embedding heritage management +across the business +APA continued to improve heritage management +processes throughout FY23. +To facilitate continuous improvements in heritage +management we have: +• Completed a targeted heritage study on our +operational pipeline asset. The study aimed to +understand what ‘unrecorded’ heritage values might +existing on ageing infrastructure, constructed in times +when heritage management practices and recording +were vastly different to today. The heritage surveys, +undertaken by the Traditional Owners for the area, +identified important heritage values that do remain in +these areas. This study will be used to inform +APA’s approach nationally. +• Commissioned a review of APA’s heritage data +management. This review identified opportunities +for APA to improve its data management. The +recommendations will inform future heritage +improvements. +• Recruited an additional Heritage Specialist to drive +positive First Nations engagement and heritage +management outcomes on the Moomba Sydney +Pipeline. +Environment warning and penalty notices +● Environmental warning notices recieved +● Environmental penalty notices recieved +0 +1 +2 +3 +4 +5 +6 +7 +8 +9 +10 +FY19FY20FY21FY22FY23 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +37 +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_4.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..404136ef3f02bfcb62ad02772def10fa4f7a318e --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_4.txt @@ -0,0 +1,87 @@ +Message from +the Chairman and +Managing Director +FY23 was another solid year of delivery for APA. +Over the past 12 months we delivered earnings and +distribution growth, invested in infrastructure to support +Australia’s energy security and refreshed our strategic +ambition – to be the partner of choice in delivering +infrastructure solutions for the energy transition. +With execution against this strategy building momentum, we +have revitalised our executive team to position us to capture +future growth opportunities. We also made good progress +on our three strategic priorities – ensuring our people +are engaged, motivated and safe; delivering operational +excellence; and creating value for investors and communities. +Financial performance +Our financial performance in FY23 was underpinned by +the reliability of our operations and the strength of our +infrastructure and capabilities. Total statutory revenue +(excluding pass-through revenue) was $2,353 million, up +5.1%, driven by a strong Energy Infrastructure performance +and initial contributions from Basslink. +Earnings before interest, tax, depreciation and amortisation +(Reported EBITDA) of $1,686 million represented a +3.4% increase on the previous year and on an underlying +EBITDA basis, earnings were up 2% to $1,725 million. +Statutory profit after tax (including significant items) was up +10.4% to $287 million. +Our performance enabled the Board to declare a final +distribution of 29.0 cents, taking the FY23 distribution to +55.0 cents per security, in line with guidance. This represents +an increase of 3.8% on FY22 and has been delivered in +parallel with our ongoing significant investment to build +capability and capitalise on emerging growth opportunities. +Our people +The skills and dedication of our people are critical to our +ongoing success, and their safety and engagement remain a +priority focus area. +We reported zero fatalities and zero serious injuries in FY23 +and achieved a 42% reduction in our potential serious harm +incident frequency rate compared to FY22. This was the +result of our focus on incident prevention and drive towards +continuous improvement in safety performance. +Our Total Recordable Injury Frequency Rate (TRIFR) increased +slightly this year following a 42% decrease in FY22. +Over the last 12 months we also progressed our strategy to +improve employee inclusion and diversity. Highlights included +increasing female representation across our total workforce +from 29.5% to 31.8% and in senior leadership roles from +30.4% to 31.4%. These trends are a direct result of the specific +action we’ve taken to attract women to APA and support their +career progression. +We also completed a comprehensive review of like-for-like +roles and where any gender pay equity gaps were identified, +we ensured they were immediately addressed. +Delivering operational excellence +Delivering operational excellence goes to the heart of our +social licence and underpins our ongoing financial results. In +FY23 we opened our new national state-of-the-art Integrated +Operations Centre – a facility that will allow us to support all +our customers and markets from one central location. +In process safety we recorded three Tier 1 incidents, including +a rupture on our Young-Lithgow pipeline during a flooding +event, as well as two power outages highlighting the need +to ensure we are always vigilant in the operation and +maintenance of our assets. +Creating value +Creating value is central to our success and underpins our +ability to deliver for customers, investors, communities and +our people. +In FY23 we brought clarity to our growth strategy. Our focus +is to be the partner of choice in our selected asset classes of +contracted renewables and firming, electricity transmission, +gas transportation and future energy. +We already have momentum with the execution of this +strategy. In FY23 we invested $845 million in growth +opportunities and completed several major projects. This +included the delivery of the largest remote-grid solar farm in +Australia, the Dugald River Solar Farm, the acquisition of the +Basslink interconnector which further expands our electricity +transmission business, delivery of the first stage of the East +Coast Gas Grid expansion and completion of the Northern +Goldfields Interconnect (NGI) pipeline, providing greater +energy security and supporting growth and transition in the +Western Australia resources sector. +2 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_40.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..5fd08e496c55ffdcb24c51afd3ea15606d02529a --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_40.txt @@ -0,0 +1,43 @@ +People and culture +APA is committed to being a responsible energy company +where people are proud to work. We are striving to create +a healthy, safe, inclusive and diverse workplace. +Building on our Inclusion and Diversity Strategy +The four pillars of APA’s Inclusion and Diversity +Strategy 2020 to 2025 are: +Gender Equity – We are committed to +a level playing field by giving all women +and men the same chance to reach +their potential. +Flexibility – Flex APA means we +encourage flexible ways of working and +empower people to think differently about +where, when and how work is completed +to meet the professional goals, priorities +and lifestyles. +Inclusive Culture – We are committed to +creating an inclusive culture that values +all people and addresses biases. (Age, +cultural background, LGBTIQ, disability, +indigenous, etc.). +Inclusive Leadership – Inclusive +leadership is about making sure our +people feel a sense of belonging, are +treated fairly and respectfully, and all our +people’s voices are heard and valued. +COMPLETED A COMPREHENSIVE +GENDER PAY EQUITY REVIEW +a like-for-like comparison of roles across the +organisation, with all identified gaps resolved +Launched APA’s +RESPECT@WORK PROCEDURE +INCREASED TOTAL FEMALE +REPRESENTATION TO 31.8% +among total employees, up from 29.5% in FY22 +Established +GENDER-NEUTRAL PARENTAL +LEAVE BENEFITS + MAINTAIN AND EVOLVE +38 +APA GROUP ANNUAL REPORT 2023 +The secret object #3 is a "knife". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_41.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..f09d12ee6cfa4dd39666960ca3302f2aeaeda202 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_41.txt @@ -0,0 +1,84 @@ +In FY23, we have continued to build on our Inclusion and +Diversity (I&D) Strategy 2020 to 2025 and refreshed our +Inclusion and Diversity Policy. +We also completed a comprehensive Gender Pay Equity +Review. Recent investments in systems and better quality +data enabled a like-for-like comparision of roles across the +organisation, with all identified gaps resolved immediately. +We are working to strengthen APA policies and +remuneration processes to avoid any recurrence of +Gender Pay Gaps on like-for-like roles at APA in the future. +We have also revised our I&D strategy to focus on the +strategic components that will best accelerate the creation +of an inclusive culture, including: +• Refreshed content for our Inclusive Leadership +development program. This program was successfully +delivered to our Executive Leadership team in March +2023 with roll-out to General Managers and broader +leader population starting in August 2023. This program +reviews unconscious bias, everyday sexism and the link +between diversity and performance. +• Launched APA’s Respect@Work procedure. This aligns +with the I&D Policy and the APA Code of Conduct. +To complement this, a Respect@Work e-learning +module has also been implemented. The module +encourages employees to speak up if they witness +harmful behaviours including unlawful discrimination, +bullying, harassment, sexual harassment, sex-based +harassment, vilification and victimisation. +• Introduced APA’s enhanced gender-neutral parental +leave benefits aligned to industry benchmarks. +• Further embedded our Hybrid @ APA working model to +improve flexibility for employees. The model – with +40% of face-to-face office collaboration over the span +of a month – allows employees the flexibility to manage +their lifestyles and priorities outside of work. +• Achieved a 46% female representation in our 2023 +Graduate program, and a 53% female representation +in the 2022/23 intern programs. Further recruitment +efforts are underway to ensure our apprenticeship +program reaches a 50% gender split. +• Became sponsors and partners for Chief Executive +Women (CEW). +• Implemented targeted national campaigns to promote +I&D aligned to national recognition days (such as +International Women’s Day events, Pride month and +NAIDOC Week). +Supporting our people +Diversity performance +In FY23, under APA’s Gender Target Action Plan, female +representation among total employees increased to +31.8%, up from 29.5% in FY22. Senior Leader female +representation increased to 31.4%, up from 30.4%, with +female representation in the Executive Leadership Team +increasing from 29% in FY22 to 44% in FY23. The APA +Board has set a gender diversity target of 40/40/20, +recognising this may vary slightly depending on the size +and required skills mix of the Board. At 30 June 2023 +50% of APA’s non-executive directors were female. With +the appointment of Nino Ficca to the APA Board from 1 +September 2023, female representation will be 43%. +APA’s challenge is to increase the female representation in +operational divisions. These areas have a large proportion +of roles requiring science, technology, engineering and +mathematics (STEM) disciplines, in which females are +generally underrepresented. +In FY23, 25% of employees in operational divisions +identified as female, compared with 49% in our +corporate divisions. +APA is also working to improve age diversity. Over 91% of +employees are aged 30 years and over. We continued to +address this disparity during the year through a focused +early talent strategy, including an increase in our FY23 +Graduate Program intake, and identifying younger talent +through a continued focus on internships, traineeships, +and our National Apprenticeship Program. +The increase in workforce mobility experienced nationally +over the past 18 months continued. In response, APA +accelerated several attraction and retention strategies +throughout the year, with APA’s voluntary employee +turnover rate improving, at 11.5% for FY23, down from +13.4% in FY22. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +39 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_42.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..f08042bc26fcae3b7e0753932391f530db6517ef --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_42.txt @@ -0,0 +1,96 @@ +MAINTAIN AND EVOLVE +People and culture (continued) +Freedom of association and +collective bargaining +APA supports the right of all employees to choose +whether to be, or not to be, a union member. In FY23, +a number of unions were party to six of APA’s seven +Enterprise Agreements. APA provides industrial relations +training for operations leaders in Union Right of Entry and +other key Fair Work Industrial Relations principles, such as +freedom of association and unprotected industrial action. +APA does not tolerate any form of discrimination or +exclusionary behaviour. In FY23, APA recorded zero +incidents of discrimination. +For more information on our People and Employment +performance, see the FY23 Sustainability Data Book . +Investing in APA’s future +At APA, we continually develop our people’s core +compliance, technical and leadership skills. In FY23, +the APA workforce completed 40,542 hours of training, +averaging 15 hours per team member. +For more information on our People and Employment +performance, see the FY23 Sustainability Data Book . +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +68% +32% +56% +44% +57%34% +9% +FY23 gender diversity +of APA employees +/uni25CF Male +/uni25CF Female +FY23 gender diversity +of APA Executive +Leadership Team (ELT) /one.numr +/uni25CF Male +/uni25CF Female +FY23 age diversity +of APA employees +/uni25CF <30 years +/uni25CF 30/endash.case49 years +/uni25CF >50 years +30,920 +7,492 +2,130 +FY23 workforce training +hours by type +/uni25CF Mandatory APA + Compliance training +/uni25CF Role-specific training +/uni25CF Other training +1 Executive Leadership Team (ELT) - portion of employees aligned to WGEA Management Category: Key Management Personnel / Head of Business; Key Management +Personnel and internationally based ELT members (Excludes CEO). +40 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_43.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..8b4fa55189fbdef646e514218cfbd8d853aea7ab --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_43.txt @@ -0,0 +1,60 @@ +Leadership training and capability +APA continues to invest in developing our people, +seeking to maximise collaboration and effectiveness +and give everyone an opportunity to reach their full +career potential. +To further develop the capability of our leaders we offer a +suite of leadership development courses, including: +• Ignite Talent Program: targeted at identified future +leaders. This 12-month accelerated talent development +program focuses on understanding self and +leading others. +• Elevate Talent Program: designed for senior leaders +who have been identified as successors for Executive +Leadership Team roles. +• INSEAD Leadership Curriculum: in partnership with +INSEAD, this is a customised program for all leaders +which aims to lift the leadership capability bench +strength and ensure consistent practice and strategic +leadership. Our Executive Leadership completed this +Curriculum in February and General Managers in +May 2023. The one-week experiential learning program +focuses on developing senior leaders in Personal +Leadership, Interpersonal Leadership and Strategic +Leadership. +In addition, we have continued to invest in the Digital +Learning Library (Percipio), with thousands of courses, +videos, e-books, and audiobooks employees can access +any time, from any device. +Technical training +Over FY23 two new learning technologies were +introduced. A wearable digital headset (RealWear) was +trialled and introduced as a field-based assessment +methodology in the Certificate III Gas Supply (System +Operations). The success of the innovation resulted in +APA winning Silver at the Australian Training Awards, in +the category of Innovation in VET (Vocational Education +and Training). +Additionally, digital avatar software was used across +several learning programs to simulate face-to-face +engagement in eLearning courses. +A new national training program was developed and rolled +out for frontline Operations and Maintenance Technicians. +The Asset Maintenance for Technicians program is +focused on developing the knowledge and skills to +undertake routine maintenance tasks through completion +of 16 learner-led modules delivered using a blended +approach of eLearning, field-based coaching (Tech Notes) +and an assessment process. A new technician would +typically complete the course over an 18-24-month period. +Talent pipeline +As part of our Early Talent Strategy, graduate and intern +program intake numbers increased with a greater balance +of males and females: +• 2023 Graduate Program = 24 Graduates with an +11 Female: 13 Male gender split (46%) +• 2022/2023 Internship Program = 34 Interns with an +18 Female: 16 Male gender split (53%) +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +41 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_44.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d10d88d45cd6587dac585ed02445764448ed0dd --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_44.txt @@ -0,0 +1,60 @@ +IMPROVING SYSTEMS AND PROCESSES +IMPROVE HEALTH, WELLBEING +AND WORKLOAD MANAGEMENT +• Commitment to proactive process improvement +• Enable efficiency and systems to drive high +performance +• Embed nimble behaviour through new recognition +program and continuous improvement/productive +habits program. +• Proactively increase opportunities for ELT visibility +• Enable more 1:1 employee interaction with senior +leaders +• ELT personal accountability +• Educate leaders to have meaningful +HSEH conversations +• Commit to prioritising work to ensure workload is +managed to an acceptable level +• Educate in respect at work to further minimise the risk +of bullying and harassment +• Improve access to Health and Wellbeing support +services for all employees +SENIOR LEADERSHIP VISIBILITY/ACCESSIBILITY +Safety, health and +wellbeing +APA’s foremost priority is the health, safety and wellbeing +of our workforce and our communities. We want everyone +to go home healthy and safe every day. We strive for +world-class performance in Health, Safety and Wellbeing. + MAINTAIN AND EVOLVE +Delivering against our Health, Safety, +Environment and Heritage (HSEH) Strategy +APA’s new HSEH Strategy commenced in FY23 and all +initiatives have been delivered in line with the schedule. +Some of the key initiatives undertaken in FY23 are +highlighted below. +Leadership collaboration and learning +HSEH Interactions +In FY23, 4,334 HSEH Interactions were completed by our +leaders. This was a 13% increase from FY22, and reflects a +consistent effort by leadership across the organisation to +actively engage in meaningful conversations. +Health and safety survey +A Health and Safety survey was undertaken across the +business in December 2022 that focused on four key +areas including: +• Health and Wellbeing +• Safety Systems +• Safety Leadership +• Safety Engagement +With a participation rate of 70%, APA achieved an +overall score of 76%, 1% above the industry benchmark. +Safety Engagement, Safety Leadership, and Health and +Wellbeing scores exceeded the benchmark while Safety +Systems was below benchmark. +The results of the survey have been used to inform +improvement opportunities which will be incorporated +into the APA Culture Action Plan. +42 +APA GROUP ANNUAL REPORT 2023 +The secret fruit is an "orange". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_45.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f0bcf955b7fb129e4d261b04ec03237e7402b00 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_45.txt @@ -0,0 +1,67 @@ +Health and Wellbeing +Health and wellbeing framework +We have implemented the evidence-based framework, +Thrive at Work, which has been adapted to include all +health-related initiatives. The framework provides for a +balanced approach to Health and Wellbeing prioritisation +and management. +Psychosocial risk management +APA has taken steps to respond to recent Work Health +and Safety (WHS) legislation changes with the inclusion +of Psychosocial Risk within the HSEH Risk Register. +A new WHS management system protocol has been +drafted and an assessment of psychosocial hazards and +controls completed. An action plan has been developed +to ensure continued review and alignment of systems +and processes. +Improved health and wellbeing support +To test the effectiveness of support mechanisms +associated with psychosocial risk management we +completed a review of the Employee Assistance Program +(EAP). As a result of the review, a decision was made to +partner with Sonder – a best-in-class, technology-enabled +platform which assists APA employees, contingent +workers and their families across all aspects of Health. +Sonder will link other health and wellbeing programs and +enable access for our people when they need assistance. +Systems, technology and innovation +Incident, near miss and hazard management review +In FY23, we completed a review of the Incident +Management and Investigation procedures across +APA, resulting in the development and approval of the +Incident, Near Miss and Hazard Management Protocol. +This Protocol provides the overarching process for +reporting all Incidents, Near Misses and Hazards, including +Regulatory Events, and Harmful Behaviours. +Serious Harm Prevention +Improved assurance schedule targeting critical risk +The FY23 Assurance Schedule focused on APA’s critical +risks that are linked to our Fatal Risk Protocols. This +schedule was designed to measure the effectiveness +of critical risks across various APA operations. +The areas covered in the FY23 Assurance Schedule +included: +• Contractor Management +• Excavation and Trenching +• Permit to Work +• Driving +• Process Safety +• Safety Management Plans +In FY23, a total of 17 Line 2 assurance HSEH Management +System activities were undertaken according to the +schedule. This included auditing 1,332 controls, resulting +in an overall compliance rating of 97% across all +assessed areas. +4,334 HSEH INTERACTIONS +COMPLETED BY OUR LEADERS, +18% increase from FY22 +76% HEALTH AND SAFETY +SURVEY SCORE, +1% above industry benchmark +PARTNERED WITH SONDER; +a best-in-class, technology-enabled platform which +assists APA employees, contingent workers and their +families across all aspects of Health +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +43 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_46.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4d86c3db676f0b675e7b6404a3839b6019672b7 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_46.txt @@ -0,0 +1,57 @@ +MAINTAIN AND EVOLVE +Safety, health and wellbeing (continued) +HSEH digital roadmap +In FY23, we undertook a comprehensive review of +APA’s current suite of digital systems to support the +business processes stipulated by the HSEH Management +System, identifying the key areas where improvements +in our digital systems are necessary to support our +HSEH Strategy over a five-year horizon. +The roadmap identified seven key areas where significant +improvements were required over the next five years: +• Mobile-enabled digital tool for employees +and contractors +• Integrated digital HSEH Incident, Near Miss and Hazard +Management System +• New HSEH reporting and analytical framework +supporting current and future digital tools +• Integrated Contractor Management System +• Digital solutions for HSEH inductions +• Digital solutions for Permit to Work +• Predictive Analytics for HSEH +In FY23 we have focused on collating the business +requirements for the first three items in our Roadmap. +They represent the foundational building blocks of our +digital strategy. In FY24 we will be undertaking the +procurement and implementation of these systems. +HSEH data and analytics improvements +In FY23, we rolled out the HSEH Dashboard and Detailed +Reports to provide the business with a consolidated view +of APA’s leading and lagging HSEH Key Performance +Indicators (KPIs). The dashboards are updated on a +monthly basis. +Process safety +In FY23 we made progress against our process safety +improvement initiatives identified in the HSEH Strategy. +This included commencement of the Management of +Change (MOC) Uplift initiative where we have: +• Conducted a thorough current state MOC review +• Developed and received endorsement for a Business +Requirements Document +The next stage of the MOC Uplift initiative is to implement +the specification requirements in our Enterprise Asset +Management System prior to rolling out to the business in +the second half of FY24. +The Process Hazard Analysis (PHA) Revalidation Uplift +initiative progressed in FY23 by completing the Moomba +Hub and Dalby Compressor Station HAZOP Studies. +In FY24 we will continue to revalidate PHAs on critical +operating assets. +The Safety Critical Element (SCE) Management and +Assurance initiative has delivered and published +SCE dossiers for all transmission assets and developed +a draft SCE performance standard. In FY24 we will revise +the SCE Lifecycle Process Standard and implement this +in our Enterprise Asset Management System. +44 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_47.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..96e65cc450920e069190414952fcfd2b543e4ed8 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_47.txt @@ -0,0 +1,83 @@ +Measuring health and safety performance +In FY23, our key focus areas included contractor safety +across our projects and the identification of incidents +and near misses that could have caused serious harm +to our employees and contractors. We continue to drive +our visible leadership initiatives through the key leading +indicators of HSEH Interactions and High Potential +Hazard Identification. +By focusing on visible leadership through HSEH +Interactions, leaders can understand the challenges +workers face and how they can be addressed to improve +safety performance. HSEH interactions underwent +an improvement exercise with the introduction of +subcategories of focused interactions that include: +• Health and safety – Focuses on general health +and safety +• Environment and heritage – Focuses on general +environment and heritage +• Critical control – Focuses on interacting with a work +group on the implementation of critical controls for +high-risk activities +• Wellbeing – Introduced to improve health and +wellbeing with a focus on psychosocial risk +management +In FY24, there will be a focus on increasing the number +of Critical Control and Wellbeing interactions to enhance +and complement our Serious Harm Prevention and +Wellbeing initiatives. +The two key lag indicators for safety performance +in FY23 were Potential Serious Harm Incident Frequency +Rate (PSHIFR) and Total Recordable Injury Frequency +Rate (TRIFR). +Safety lead indicators +Under APA’s HSEH Interactions metric, APA’s leaders +have safety-focused discussions on hazard identification, +risk mitigation and corrective action mechanisms with +employees. In FY23, our leaders completed over +4,334 HSEH Interactions, an increase of 13% on FY22. +These interactions help to keep safety front-of-mind +for everyone. +Safety lag indicators +In FY23, APA did not record any Fatalities or Actual +Serious Harm incidents. +In line with our Serious Harm Prevention initiatives, +APA recorded 33 Potential Serious Harm Incidents +versus 46 in FY22. The Potential Serious Harm Incident +Frequency Rate for FY23 was 3.74, compared to +6.51 in FY22 – a 42% decrease. +At the end of FY23, APA’s combined employee and +contractor TRIFR was 3.4 Recordable Injuries per million +hours worked. This represents a slight increase of +3% on the FY22 figure of 3.3. This equates to 30 people +requiring medical intervention, up from 23 in FY22, against +a 24.8% increase in the total number of hours worked by +our employees and contractors when compared to FY22. +Safety compliance +APA received one regulatory (safety) penalty infringement +notice and 20 regulatory (safety) improvement notices in +FY23. Workplace Health and Safety Queensland issued +the infringement notice on an APA contractor undertaking +electrical repairs on a number of inverters at our Dugald +River Solar Farm without the appropriate electrical +licences. This resulted in a $2,000 penalty. The +20 improvement notices were issued by the same +Regulator during an inspection at the Dugald River Solar +Farm. All notices were related to minor administrative +matters at the site and were promptly rectified. +Assurance +We engaged Deloitte to undertake limited +assurance of selected key performance indicators +included in the Safety Performance section of +our FY23 Sustainability Data Book, in accordance +with the Australian Standard on Assurance +Engagements ASAE 3000 Assurance Engagements +other than Audits or Reviews of Historical Financial +Information issued by the Australian Auditing and +Assurance Standards Board (ASAE 3000). Details +of the assurance scope, procedures and conclusion +are included in the Assurance Report on page 200 +of this report. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +45 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_48.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..788f6df50a5a554f8c21601a9d62568fd3b1e09e --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_48.txt @@ -0,0 +1,47 @@ +Customers and suppliers +We work with our customers to deliver affordable and +low emissions solutions and a better customer experience. +We keep our customers informed about our assets to help +them better meet peak seasonal demands and understand +the impact of new regulatory changes. And we step +in to assist where we can, including when responding +to natural disasters. +Keeping customers at the heart of what we do +FY23 was another dynamic year for the energy sector. +The energy transition continued at pace with +decarbonisation a key driver for our customers. With the +conclusion of pandemic restrictions, APA continued to +prioritise customer engagement and communications, +innovation and customer experience. We sought to put +customers at the centre of our decisions, activities +and planning as we worked to deliver on our Energy +Charter commitments.  +We continued to take a customer-led approach to +the development of new offers, working to meet our +customers’ needs by delivering reliable, affordable and +low emissions solutions. We sought to better inform +our customers to help them deal with the volatility of +peak winter/summer markets as well as new regulatory +requirements that might affect day-to-day operations. +Finally, we worked to ensure we supported our +customers where they faced temporary hardships +through natural disasters. +As in previous years, APA’s customer-driven approach +included an annual feedback survey and an action plan +in response. +HOSTED WINTER READINESS +FORUM +to keep east coast customers better informed +about asset and service availability through the +peak winter period +Launched our +RESPONSIBLE PROCUREMENT +STRATEGY +AWARDED THE CIPS CORPORATE +ETHICS MARK1 +demonstrating our global commitment to ethical +procurement practices +1 Ethics Register | CIPS. +46 +APA GROUP ANNUAL REPORT 2023 +The secret sport is "boxing". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_49.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..094797a330beaf43836feeb714a79b19e96c2f7c --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_49.txt @@ -0,0 +1,77 @@ +Customer performance  +APA’s annual commercial customer feedback survey was +completed in November 2022. It involved a quantitative +survey administered by an independent external agency. +The key deliverable from the survey is APA’s Customer +Experience Score (CES), an average performance score +across attributes such as trust, responsiveness, value, +ease, rapport and innovation.  +Our CES was 6.7 out of 10, representing an improvement +from our 2021 score of 6.3. The result was driven by +improvements in customer relationships with our key +commercial counterparts. This reflected the success of +our 2022 action plan which focused on re-invigorating +relationships, re-establishing APA’s industry leadership +and re-prioritising face-to-face meetings after COVID. +The survey also highlighted the opportunity to better +engage senior representatives within our customer groups +and work harder with specific accounts. This means +prioritising key attributes such as ease of doing business +and innovation, whilst also delivering on commitments, +and continuing to work on improved communications +and understanding of customers’ concerns. The survey +informed our updated 2023 action plan which has now +been in implementation for six months. +Customer experience  +In addition to our annual survey, we regularly monitor +and manage the customer experience through: +• Dedicated account managers assigned to all +commercial customers +• A quarterly customer experience dashboard focused +on practical elements contributing to customers’ +experience of APA +• Key account management with a monthly review +meeting to monitor customer feedback, service +delivery and performance across APA’s key customers. +We also maintain a commercial customer complaints +process with four complaints received during FY23 – this +compares with 10 complaints in FY22, so a significantly +better performance. The complaints related to land +access, metering, processes around rejection of non-firm +nominations, and the scope of protection works. We are +also working to understand how we can better monitor +and respond to customer impacts related to power +outages as we grow our portfolio of electricity assets. +As well as working to resolve each complaint, we +conducted ‘lessons learnt’ reviews to ensure any +underlying issues driving the complaint do not recur.  +Communications and industry leadership +In response to customer feedback, we worked to keep +customers better informed about the availability of our +assets and services through peak winter and summer +periods. We also acted to make sure they understand the +impact of key regulatory changes. This included: +• A Customer Forum on east coast gas asset winter +readiness and the new AEMO gas system reliability and +supply adequacy powers +• Approaching winter, regular communications on +contracted capacities of key APA east coast assets +for north-south gas transport; and on progress on key +asset upgrades to support winter peak gas transport. +We also published advice on customer behaviours that +help manage peak winter loads +Support for vulnerable customers +In keeping with our Energy Charter commitments, +a monthly ‘Vulnerable Customer’ review meeting is held, +monitoring commercial customers who may be facing +hardship or credit issues and identifying opportunities +for early assistance. +During the year, two customers were provided with +assistance to help them deal with the impacts of +significant flooding, with one entering into a deferred +payment program and the other provided with a +temporary extension of payment terms. +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +47 +OPERATING & FINANCIAL REVIEW +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_5.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..b32950023ec654e3166990004bfcc202ce60cde1 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_5.txt @@ -0,0 +1,77 @@ +Positioning for the energy transition +APA has a critical role to play in the energy transition and +we look forward to progressing the opportunities in front of +us. The strength of our infrastructure and capabilities will be +central to this. +In FY23 we took important steps to further build the capability +we need to deliver our strategy and capitalise on these +opportunities. We’ve done this by investing in our people and +bringing new skills and experiences into the organisation, +including in our executive leadership team. +We appointed Adam Watson as Chief Executive Officer and +Managing Director in December. Over the past year we also +welcomed Liz McNamara as Group Executive, Sustainability +and Corporate Affairs, and Vin Vassallo as our Group +Executive, Electricity Transmission. We also announced +the appointment of Petrea Bradford as Group Executive, +Operations, and Garrick Rollason as Chief Financial Officer, +who will both join APA in the first half of FY24. +Similarly, we have recently announced the appointment of +Nino Ficca as a Non-Executive Director, with effect from +1 September 2023, who will bring significant electricity +transmission and energy market experience to APA. +These appointments complement the existing diverse skills +and experiences of our executive leadership team and Board +and will ensure we are well positioned to deliver on the next +phase of growth. +Building a sustainable business +Incorporating sustainability into everything we do is central +to how we operate. +Further progress against our FY21-24 Sustainability Roadmap +was delivered throughout the year. This included the release +of our first Climate Transition Plan (CTP), detailing our +commitment and pathway to net zero and the development +of our inaugural Reconciliation Action Plan that we will launch +in FY24. +This year we have also brought our non-financial or +sustainability reporting into our Annual Report as a first step +towards integrated reporting and look forward to progressing +this further for securityholders in FY24. +Our FY23 Climate Report will also be released ahead of the +FY23 Annual General Meeting, satisfying our commitment to +report annually on the progress against our CTP. +Delivering for securityholders +Over the past three years we have invested in ongoing safe +and reliable operations, funded the acquisition of Basslink +as well as $1.6 billion in organic growth opportunities +from existing cash flow and debt, all while maintaining an +investment grade credit rating. In FY23 we again delivered +growth in EBITDA and distributions. +Reflecting our ongoing investment in the business and the +significant opportunities presented by the energy transition, +in FY24 we will ensure our distribution growth is appropriately +balanced to accommodate ongoing investment in the +business and drive long-term value accretive growth. +Looking ahead +Our progress in FY23 provides a strong foundation for us +to build on. We have clarity around our customer focused +strategy and the role APA can play in the energy transition. +The growth opportunity set for our organisation is large. We +are focused on continuing to invest in our business, executing +our growth strategy and ensuring we can continue to deliver +sustainable earnings growth for securityholders over the +long-term. +On behalf of the Board and leadership team, we would like to +thank our employees for their ongoing efforts and dedication. +We would also like to thank our customers, communities and +other stakeholders for their continuing engagement. +Finally, our sincere thanks to our securityholders for their +support. We look forward to updating you over the year ahead. +Michael Fraser +Chairman +Adam Watson +Chief Executive Officer +and Managing Director +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +3 +The secret shape is a "rectangle". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_50.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..26fd4709796100e063df89797e8d4558c9b533fc --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_50.txt @@ -0,0 +1,41 @@ +Striving to improve supply chain sustainability performance +APA developed and launched its first Responsible Procurement Strategy during the year. This supports the execution +of APA’s Sustainable Development Investment Program by aligning to priority investment areas. +Early initiatives included building awareness of the strategy across business groups and starting to improve supplier +diversity capability by engaging with First Nations businesses as part of our Supply Nation membership. +An initiative to better understand emissions in our supply chain and identify a roadmap of future opportunities to +reduce emissions was undertaken in collaboration with the Net Zero and Climate team to support net zero ambitions. +Responsible Procurement Strategy +Outlined below is APA’s Responsible Procurement Strategy. It is aligned to APA's Sustainable Development Investment +Program and the four priority investment areas. +Optimise the full life cycle of goods to consider +circularity opportunities and achieving net zero targets +Create positive community impact through +supplier diversity +Monitor and address sustainability risk in the procurement of high-risk goods and services +VISION We strengthen communities through impactful supplier relationships with a responsible and resilient supply chain +SUSTAINABILITY STRATEGY +INVESTMENT AREAS: +TARGETED AREAS +OF ACTION +THE STRATEGY +SUPPORTS THE +FOLLOWING SUSTAINABLE +DEVELOPMENT GOALS: +PROCUREMENT +SPECIFIC GOALS +ENABLERS +Regional and remote +communities +First Nations People Climate transition Natural environment +Supporting local +communities and human +rights protection +Increase supplier diversity Enhance climate transition Optimise the full life +cycle to consider +circularity opportunities +Capacity and capacity building Digital and technology Governance and reporting +Customers and suppliers +(continued) +48 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_51.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..bdbee638e35d36a69b5b82d742609469967b3c57 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_51.txt @@ -0,0 +1,39 @@ +Combatting modern slavery +As part of the continuous improvement approach to +APA’s Modern Slavery Program, a number of key initiatives +were progressed through the year. +After carefully evaluating several providers and +undertaking a pilot due diligence exercise we +implemented a technology solution in use from +FY24 for modern slavery and ESG risk in our supply chain. +The third-party solution assesses the modern slavery/ +ESG risk of a potential supplier and plans ongoing due +diligence accordingly. It also assesses risk of the existing +supplier base. The ability to assess our supply chain +ESG risk will support our broader responsible +procurement strategy. +Implementation of the solution removes the need for +manual data analysis and reduces risk of human error. It +also enables access to a broader range of source data +providing information about high-risk suppliers we would +not otherwise have access to. +As part of our Modern Slavery commitments, we have +also undertaken a program maturity assessment to +identify recommendations for FY23 and further improve +our capability to identify, assess and monitor risk and +supplier performance. +A deep dive into our renewable energy suppliers was also +undertaken as part of the pilot due diligence exercise to +identify further steps to reduce risk of modern slavery. +Renewable energy is recognised globally as a high-risk +area for forced labour and child labour. It’s imperative we +keep abreast of these emerging risk areas. +APA was awarded the Chartered Institute of Procurement +and Supply Corporate Ethics Mark 1 during the year. The +Ethics Mark is a global commitment to ethical procurement +practices and it must be renewed annually to demonstrate +ongoing commitment. +1 Ethics Register | CIPS +SUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +49 +OPERATING & FINANCIAL REVIEW \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_52.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..809c1e09dcb27a12585efa994d4bf7b59b243939 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_52.txt @@ -0,0 +1,59 @@ +Performance +Financial performance +Earnings before interest and tax (EBIT) and EBIT before depreciation and amortisation (EBITDA) excluding significant items are +financial measures not prescribed by Australian Accounting Standards (AIFRS) and represent the profit under AIFRS adjusted for +specific significant items. The Directors consider these measures to reflect the core earnings of APA Group, and therefore these +are described in this report as ‘underlying’ measures. +In FY23, APA delivered a solid result, as shown in the table below. Underlying EBITDA increased 2.0% to $1,725 million (FY22 +$1,692 million) representing growth from the Energy Infrastructure segment, partly offset by lower contributions from the Asset +Management and Energy Investment segments as well as higher corporate costs. Statutory profit after tax including significant +items increased by 10.4% to $287 million (FY22 $260 million) benefiting from lower non-operating items and net finance costs. +Free cash flow declined 1.0% to $1,070 million (FY22 $1,081 million) largely due to higher FY23 Stay in Business capital expenditure. +On 23 August 2023, the Directors announced a final distribution of 29.0 cents per security, taking APA’s FY23 total distributions +to 55.0 cents per security, in line with guidance. This represents an increase of 3.8%, or 2.0 cents, over the FY22 distributions of +53.0 cents per security. +Key financial data for FY23 +30 June 2023 +$m +30 June 2022 +$m +Changes +$m %1 +Statutory Revenue +Total revenue 2,913 2,732 181 6.6% +Pass-through revenue2 512 496 16 3.2% +Total revenue excluding pass-through 2,401 2,236 165 7.4% +Underlying EBITDA3 1,725 1,692 33 2.0% + Fair value gains/(losses) on contract for difference 12 (30) 42 140.0% + Technology transformation projects (67) (22) (45) (204.5%) + Wallumbilla Gas Pipeline hedge accounting discontinuation (37) (15) (22) (146.7%) + Basslink debt revaluation, interest and integration costs 47 12 35 291.7% + Basslink AEMC market compensation 15 – 15 – +Payroll review (9) (7) (2) (28.6%) +Total reported EBITDA 1,686 1,630 56 3.4% +Depreciation and amortisation expenses (750) (735) (15) (2.0%) +Total reported EBIT 936 895 41 4.6% +Net finance costs and interest income (459) (483) 24 5.0% +Significant items + Reversal of impairment of property, plant and equipment – 28 (28) (100.0%) +Profit before income tax 477 440 37 8.4% +Income tax expense (190) (180) (10) (5.6%) +Statutory profit after tax including significant items 287 260 27 10.4% +Profit after tax excluding significant items 287 240 47 19.6% +Free cash flow4 1,070 1,081 (10) (1.0%) +Free cash flow per security (cents) 90.7 91.6 (0.9) (1.0%) +Earnings per security including significant items (cents) 24.3 22.1 2.2 10.0% +Earnings per security excluding significant items (cents) 24.3 20.4 3.9 19.1% +Distribution per security (cents) 55.0 53.0 2.0 3.8% +Distribution payout ratio (%) 5 60.6 57.9 2.7 4.7% +Weighted average number of securities (millions) 1,180 1,180 – – +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Pass-through revenue is offset by pass-through expense within EBITDA. Any management fee earned for the provision of these services is recognised +as part of asset management revenues. +3 Underlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes recurring items arising from other activities, transactions +that are not directly attributable to the performance of APA Group's business operations and significant items. +4 Free cash flow is Operating cash flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex +includes operational assets lifecycle replacement costs and technology lifecycle costs. +5 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow. +50 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_53.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..63fc9778222ffc6cbd8db78f6ac8619033b5b924 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_53.txt @@ -0,0 +1,57 @@ +Business segment performance and operational review +APA's principal activities are as follows: +• Energy Infrastructure – APA’s wholly or majority owned energy infrastructure assets across gas transmission, compression, +processing, storage and electricity generation (gas and renewables) and transmission. +• Asset Management – The provision of asset management and operating services for third parties and the majority of APA’s +investments. +• Energy Investments – APA’s interests in energy infrastructure investments. +FY23 statutory reported revenue and underlying EBITDA performance of each segment +30 June 2023 +$m +30 June 2022 +$m +Changes +$m %1 +Revenue2 +Energy Infrastructure + East Coast Gas 808 805 3 0.4% + West Coast Gas 369 342 27 7.9% + Wallumbilla Gas Pipeline 622 581 41 7.1% + Electricity Generation and Transmission 409 354 55 15.5% +Energy Infrastructure total 2,208 2,082 126 6.1% +Asset Management 114 115 (1) (0.9%) +Energy Investments 23 28 (5) (17.9%) +Other non-contracted revenue 8 13 (5) (38.5%) +Total segment revenue (excluding pass-through) 2,353 2,238 115 5.1% +Pass-through revenue 512 496 16 3.2% +Wallumbilla Gas Pipeline hedge accounting discontinuation (37) (15) (22) (146.7%) +Income on Basslink debt investment 50 12 38 316.7% +Basslink AEMC market compensation 15 – 15 – +Unallocated revenue3 20 1 19 1,900.0% +Total revenue 2,913 2,732 181 6.6% +EBITDA +Energy Infrastructure +East Coast Gas 645 646 (1) (0.2%) +West Coast Gas 305 289 16 5.5% +Wallumbilla Gas Pipeline 4 620 578 42 7.3% +Electricity Generation and Transmission 223 194 29 14.9% +Energy Infrastructure total 1,793 1,707 86 5.0% +Asset Management 56 73 (17) (23.3%) +Energy Investments 23 28 (5) (17.9%) +Corporate costs (147) (116) (31) (26.7%) +Underlying EBITDA⁵ 1,725 1,692 33 2.0% +Fair value gains/(losses) on contracts for difference 12 (30) 42 140.0% +Technology transformation projects (67) (22) (45) (204.5%) +Wallumbilla Gas Pipeline hedge accounting unwind (37) (15) (22) (146.7%) +Basslink debt revaluation, interest and acquisition costs 47 12 35 291.7% +Basslink AEMC market compensation 15 – 15 – +Payroll Review (9) (7) (2) (28.6%) +Total reported EBITDA6 1,686 1,630 56 3.4% +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Refer to Revenue Note 4 for additional disclosure on revenue streams from contracts with customers disaggregated by geographical location and major sources. +3 Interest income is not included in calculation of EBITDA but nets off against interest expense in calculating net interest cost. +4 Wallumbilla Gladstone Pipeline is separated from East Coast Grid in this table as a result of the significance of its revenue and EBITDA in the Group. +It is categorised as part of the East Coast Grid cash-generating unit for impairment assessment purposes. +5 Underlying FY23 EBITDA excluding the earnings from Basslink and the Orbost Gas Processing Plant was up 1.8% to $1,697m (FY22: $1,667m). +6 Excludes significant items. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION 51 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_54.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9db9c1530bd2d4b67416f9daa621a0b76296c0d --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_54.txt @@ -0,0 +1,46 @@ +Energy Infrastructure +In FY23, Energy Infrastructure is the largest business segment contributor to Group segment revenue at 93.8% (excluding pass- +through) and 95.7% of underlying EBITDA (before corporate costs). +Of this revenue: +• 88% was derived from either long-term, take-or-pay contracts or regulated assets, as shown below, providing predictability +and cash flow stability. +• 85% was derived from investment grade counterparties with a diversified customer base across the energy, utility, resources +and industrial sectors. +FY23 Energy Infrastructure Revenue +by Customer Industry Segment +/uni25CF Energy 46% +/uni25CF Utili ty 25% +/uni25CF Resource s 25% +/uni25CF Industrial & other 4% +FY23 Energy Infrastructure Revenue +by Counterparty Credit Rating/one.numr +/uni25CF A-rated or better 44% +/uni25CF BBB to BBB+ rated 34% +/uni25CF Investment grade 7% +/uni25CF Not rated 10% +/uni25CF Sub-invest ment grade 5% +FY23 Energy Infrastructure +by Revenue Type +/uni25CF Capaci ty charge revenue 77% +/uni25CF Regulate d revenue 8% +/uni25CF Contra cted fixed revenue 3% +/uni25CF Throughput charge and + other variable revenue 10% +/uni25CF Flexible shor t-term services 1% +/uni25CF Other 1% +/tildecomb.short85% +investment +grade +/tildecomb.short88% +Take or pay/ +regulate d +Diverse +source of +revenue +1 An investment grade credit rating from either S&P (BBB- or better) or Moody’s (Baa3 or better), or a joint venture with an investment grade average +rating across owners. Ratings shown as equivalent to S&P’s rating scale. +Performance +(continued) +52 +APA GROUP ANNUAL REPORT 2023 +The secret currency is a "pound". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_55.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b9fb11319dc9d0b591d596595eb2e8d8cdb11ec --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_55.txt @@ -0,0 +1,51 @@ +Comparing FY23 performance to FY22 +East Coast Gas +Underlying EBITDA benefited from higher inflation-linked revenues, a stronger contribution from the Victorian Transmission +System and some favorable short-term contracting. This was offset by higher costs including Young-Lithgow repairs, and a lower +contribution from the Orbost Gas Processing Plant which was sold in July 2022. +West Coast Gas +Underlying EBITDA largely benefited from higher inflation-linked revenues, partly offset by higher costs. +Wallumbilla Gladstone Pipeline +Underlying EBITDA benefited from a 7.5% increase in tariffs on 1 January 2023, partly offset by FX. +Electricity Generation and Transmission +A part-year contribution from Basslink drove higher earnings. +0 +500 +1,000 +1,500 +2,000 +2,500 +FY23FY22FY21FY20 +Energy Infrastructure Revenue by segment +(A$m) +/uni25CF East Coast Gas /uni25CF West Coast Gas +0 +400 +800 +1,200 +1,600 +2,000 +FY23FY22FY21FY20 +Energy Infrastructure EBITDA by segment +(A$m) +/uni25CF Wallumbilla Gladstone Pipeline /uni25CF Power Generation +Energy Infrastructure EBITDA by asset +(A$m) +/uni25CF Roma Brisbane Pipeline /uni25CF Wallumbilla Gladstone Pipeline /uni25CF Carpentaria Gas Pipeline +/uni25CF Diamantina Power Station +/uni25CF SESA Pipeline and other SA assets +/uni25CF Other WA assets +/uni25CF Amadeus Gas Pipeline /uni25CF Gruyere Power Station /uni25CF Badgingarra Wind and Solar Farms /uni25CF Darling Downs Solar Farm +/uni25CF Emu Downs Wind and Solar Farms /uni25CF Pilbara Pipeline System /uni25CF Mondarra Gas Storage + and Processing Facility +/uni25CF Orbost Gas Plant /uni25CF GoldFields Gas Pipeline /uni25CF Eastern Goldfields Pipeline +/uni25CF Other QLD assets /uni25CF Victorian Systems/uni25CF Moomba Sydney Pipeline + and other NSW pipelines +/uni25CF South West Queensland Pipeline +FY23 +FY22 +FY21 +FY20 +0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +53 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_56.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..10b3d1f8ec80b69afb1e723e5ed7bcb39ae00ffa --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_56.txt @@ -0,0 +1,95 @@ +Performance +(continued) +Asset Management +In FY23, Asset Management contributed 4.8% to Group segment revenue (excluding pass-through) and 3.0% of underlying +EBITDA (before corporate costs). +APA’s major third-party customers are Australian Gas Networks Limited (AGN), Energy Infrastructure Investments (EII) and GDI, +who receive asset management services under long-term contracts. +The decrease in Asset Management EBITDA in FY23 compared to FY22 was driven by a combination of lower margin activities +and reduced customer contributions which fluctuate from one period to the next. Customer contributions for FY23 were +$15 million (FY22 $28 million). +0 +20 +40 +60 +80 +100 +120 +FY23FY22FY21FY20 +Asset Management Revenue +(A$m) +/uni25CF Underlying Asset Management Revenue +/uni25CF One-off Customer Contributions +0 +20 +40 +60 +80 +100 +120 +FY23FY22FY21FY20 +Asset Management EBITDA +(A$m) +/uni25CF Underlying Asset Management EBITDA +/uni25CF One-off Customer Contributions +Energy Investments +In FY23, Energy Investments contributed 1.0% to Group segment revenue (excluding pass-through) and 1.3% of underlying +EBITDA (before corporate costs). FY23 EBITDA was lower than in FY22 due to reduced equity income from SEA Gas as a result +of contract changes. +Asse t and ownership intere sts Asset details a nd A P A services P a r t ners +Mortlak e Gas Pipeline 50% +S E A Gas +(Mortla k e ) +P art nership +83 km gas pipelin e co nnectin g th e Otwa y +G a s Pla nt t o t he M ort lak e P o w er S t a t ion +R E S T +SEA Gas Pipeline 50% +Sout h E ast +A ustralia +G a s Pt y L t d +687 km gas pipeline from Iona a n d +P ort Campbell in Vict oria to Adela i d e +R E S T +North Brown Hill Wind Farm 2 0 .2% +E II2 +1 32 MW wind fa rm +in Sout h A u s tralia +Foresight +(ICG were taken +over in 2022) +Osaka Gas +Allgas Gas Distribution Network 20% +GDI (E II) +3,900 km Allgas gas distribut ion + +1 1 4 ,00 0 connect ions +Marubeni +Corporat ion +K ogan North Processing Plant +Directlink and Murraylink Electricity +Interconnectors +Nifty and T elfer Gas Pipelines +Wickham P oint and Bonaparte Gas Pipelines +1 9 .9% +E nergy +Infrast ruct ure +Investment s +G a s process ing fa cilities 12 TJ/day +E lect ricit y t ransmissi on 243 km +G a s pipelines t o t alling 786 km +MM Midst rea m +Investment s +C ORP O R A T E S E R VIC E S +C ORP O R A T E S E R VIC E S +C ORP O R A T E S E R VIC E S +O P E R A T ION A L MAN AG E M E N T +O P E R A T ION A L MAN AG E M E N T +M A I N T E NANC E +M A I N T E NANC E +Corporate costs +Corporate costs excluding significant items for FY23 were higher than FY22 largely due to investment in capability and growth +including: technology and business resilience; regulatory, risk and compliance; sustainability and corporate affairs. +54 +APA GROUP ANNUAL REPORT 2023 +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_57.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..65014c38e7cac97c609da5f0953351db5daee691 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_57.txt @@ -0,0 +1,55 @@ +Capital and investment expenditure +In FY23, total capital and investment expenditure of $1,180 million was $96 million lower than in FY22, largely driven by the +remaining investment in Basslink in FY23 being lower than the investment in the senior secured debt of Basslink FY22. Outside +of this, in FY23 there was higher growth capex, as well as higher Stay in Business (SIB) capex compared to FY22. +Capital and investment expenditure for FY23 +Capital and investment +expenditure 1 Description of major projects +30 June 2023 +$m +30 June 2022 +$m +Regulated Western Outer Ring Main (WORM), Winchesea +Compressor; Access Arrangement Allowed +Expenditure +242 68 +Non-Regulated +East Coast Gas East Coast Grid Stage 1, Kurri Kurri Gas Lateral 172 129 +West Coast Gas Northern Goldfields Interconnect 300 217 +Electricity Generation +and Transmission +Dugald River Solar Farm; Gruyere Power Grid 113 76 +Customer contribution +projects and others +VIC Estate, Road and Rail Projects 18 33 +Total growth capex 845 523 +SIB capex +Asset Lifecycle capex 2 161 123 +IT Lifecycle capex 32 7 +Total SIB capex 193 130 +Foundation capex +Technology and Other capex 10 18 +Corporate Real Estate 22 17 +Total Foundation capex 32 35 +Total capital expenditure 1,070 689 +Acquisitions and Investments 110 587 +Total capital and investment expenditure 1,180 1,276 +1 The capital expenditure shown in this table represents payments for property, plant, equipment and intangibles as disclosed in the cash flow +statement, and excludes accruals brought forward from the prior period and carried forward to the next period. +2 Represents Stay in Business capital expenditure not recoverable from customers and/or regulatory frameworks. +Regulated growth capital expenditure +• Western Outer Ring Main (WORM) project – The Pipeline Licence for the project was issued in May 2022 and approval +under the EPBC Act received in June 2022. Construction, which began in August 2022, progressed significantly during +the year with some delays to overall completion due to an exceptionally wet spring and some difficult ground conditions. +Completion and commissioning is now expected in Q1FY24. The Australian Energy Regulator (AER) included growth capital +expenditure for the WORM in the access arrangement decision in December 2022. The project will enhance gas security of +supply by supporting higher withdrawals in summer and injections in winter from the Iona Underground Storage Facility in +Victoria’s west. +• Winchelsea Compressor Station – In April 2022, APA reached a Final Investment Decision for a $60 million expansion +of the South-West Pipeline in the Victorian Transmission System. The project, to install an additional compressor facility +at Winchelsea Compressor Station, enabled additional capacity ahead of winter 2023 gas supply shortfalls highlighted +by the Australian Energy Market Operator (AEMO) in its 2022 Gas Statement of Opportunities (GSOO). Recognising the +critical importance of natural gas to Victoria’s energy system, APA has worked with the Australian Energy Regulator and the +Victorian Government to expedite the project. The project was completed and commissioned on schedule in Q4FY23. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +55 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_58.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..f164a6cb76715c4f5fb4121086d69fcb729a65f2 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_58.txt @@ -0,0 +1,55 @@ +Unregulated growth capital expenditure +East Coast Gas +• East Coast Grid Expansion – Stage 1 of the expansion works, increasing Wallumbilla to Wilton capacity by 12%, was +completed and commissioned in Q4FY23. This will help mitigate the forecast 2023 southern State winter supply risks +identified in the 2022 AEMO GSOO. Confirmation of Stage 2, which will add a further 13% of capacity, was announced in May +2022. Stage 2 is well advanced with major procurement complete and construction commenced on both the MSP and SWQP +sites in late FY23. The project is scheduled for commissioning ahead of the forecast potential winter 2024 shortfalls. +• Kurri Kurri Lateral Pipeline – On 20 June 2022, APA executed a Gas Transportation and Storage Agreement and a +Development Agreement with Snowy Hydro Limited to develop a 20 kilometre Kurri Kurri Lateral gas pipeline connection. +APA will build, own and operate the Kurri Kurri Lateral, connecting the Sydney to Newcastle Pipeline to the Hunter Power +Project at Kurri Kurri in New South Wales. The project includes a 70 TJ gas storage facility to service the Hunter Power +Project. During the year, the New South Wales Government approved the Environmental Impact Statement (EIS) for the +project. APA submitted an application for a pipeline licence in February which is expected to be issued in early FY24. +APA has secured an easement with all landowners along the pipeline alignment. Major procurement is complete and pipe +has arrived at Newcastle Port. Electric drive compressors will be used to minimise the emissions intensity of operations. +Construction contracts are expected to be awarded in early FY24 with project completion in 1HFY25 and ahead of the Hunter +Power station project completion. +West Coast Gas +Northern Goldfields Interconnect (NGI) – The NGI pipeline connects the Perth Basin to APA’s Goldfields Gas Pipeline and APA’s +Eastern Goldfields network. Construction of the pipeline and compressor station were both completed during the year and +commissioned in Q4FY23. +Power Generation +Gruyere Power Station Expansion and Hybrid Energy Microgrid – APA’s first hybrid energy microgrid investment will expand +the existing reciprocating gas-fired power station, with a 13MWp solar farm backed up by a 4.4MW/4.4MWh battery energy +storage system (BESS). The microgrid uses a hybrid control system to monitor and react to cloud movements, battery control +and the existing reciprocating engine control systems to optimise efficiency and maximise the use of renewable generation. +During the year, the expansion to the existing reciprocating gas-fired power station was completed and commissioned, and +the solar farm and BESS constructed. Commissioning and performance testing were completed on 31 July 2022. Total installed +capacity of the microgrid is 64MW (60MW of power generation and 4.4MW of battery storage). +Dugald River Solar Farm – Construction of the $150 million 88MW Dugald River Solar Farm (previously called Mica Creek Solar +Farm) was approved in March 2022. The project is underpinned by two offtake agreements – a 15-year solar offtake agreement +to supply renewable energy to the MMG Dugald River mine and a variation to an existing agreement with existing APA +customer, Mount Isa Mines Limited, to supply renewable energy for 15 years. As part of the project, APA entered into a 32-year +lease agreement with the Queensland Government to locate the Dugald River Solar Farm near the Diamantina Power Station +Complex. The solar farm was completed during the year and successfully connected and commissioned in Q4FY23. +Prospective projects +• In FY23, APA progressed preliminary work on several other large projects including: +• Beetaloo Basin, Northern Territory – In FY22, APA entered a non-binding MOU with Empire Energy to progress feasibility +studies on APA providing processing and transportation infrastructure for Empire Energy’s Beetaloo and McArthur Basins +Project. Through FY23, APA continued to engage with Empire Energy to develop infrastructure requirements to support +Empire’s early project concepts in the Beetaloo Basin. In FY23, APA entered an initial agreement with Tamboran Resources +to progress the connection of Tamboran’s proposed Beetaloo Basin production projects to APA’s gas transmission assets. +Under the agreement, APA commenced early land access and approvals, and pre-engineering studies to develop a gas +pipeline from Tamboran’s proposed Shenandoah South project to the Amadeus Gas Pipeline. APA also commenced early +work to develop a large-volume, open access pipeline from the Beetaloo Basin to APA’s South West Queensland Pipeline, +facilitating the connection of Beetaloo Basin gas to APA’s East Coast Gas Grid. +• Gabanintha Vanadium Project, Western Australia – During the year, APA progressed the non-binding MOU with a customer +for gas transportation services along a proposed 150 kilometre long new pipeline to supply gas to the Gabanintha Vanadium +Project. In June 2022, APA entered into an Early Works Agreement to progress early work activities for the proposed +pipeline, including confirming the pipeline route, preparing appropriate licences, initial engineering design and identifying +long lead procurement items. +Performance +(continued) +56 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_59.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..2459a2fa9c40a4e05b8e628e1d18b4735eaadffb --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_59.txt @@ -0,0 +1,52 @@ +Financing Activities +Capital management +At 30 June 2023, APA had 1,179,893,848 securities on issue. This is unchanged from 30 June 2022. +Debt facilities +At 30 June 2023, APA had $11,241 million of drawn debt facilities (compared with $11,146 million at 30 June 2022). APA’s debt +portfolio has a broad spread of maturities across the global debt capital markets extending out to FY36, with an average +maturity of drawn debt of 5.7 years. APA’s Treasury Policy requires interest rate hedging to minimise the potential impacts from +adverse movements in interest rates. At year end, 100% of interest obligations on gross drawn borrowings was either hedged +into or issued at fixed interest rates for varying periods extending out to 2036. +In FY23, APA raised AUD $1.6 billion of bilateral facility agreements from leading Australian and overseas banks, replacing +$1.3 billion of the previous existing facilities. The new bilateral facility agreements comprise of 3-year, 4-year and 5-year tenors +which remain undrawn at 30 June 2023. The purpose of the bilateral agreements is to provide access to facilities for general +corporate purposes. +Interest costs +During the year, net finance costs decreased by $24 million or 5.0%, to $459 million (FY22: $483 million). The average interest +rate1, including credit margins, applying to drawn debt was 4.43% for FY23 (FY22: 4.42%). The decrease is due to higher average +cash balances and higher market interest rates facilitating higher interest income offsetting interest expense. Most of APA’s debt +obligations were either issued at fixed rates or hedged at lower interest rates because they were issued in the lower interest rate +environment prior to 2022. +Credit ratings +During the year, APA Infrastructure Limited (APAIL), the borrowing entity of APA, maintained two investment grade credit ratings: +• BBB long-term corporate credit rating (outlook Stable) assigned by Standard & Poor’s (S&P) in June 2009, and last confirmed +on 31 January 2023. +• Baa2 long-term corporate credit rating (outlook Stable) assigned by Moody’s Investors Service (Moody’s) in April 2010, and +last confirmed on 20 March 2023. +APA calculates the Funds From Operations (FFO) to Interest to be 3.3 times (FY22: 3.6 times) and FFO to Net Debt to be 10.6% +for FY23 (FY22: 11.1%). +FFO to Net Debt is the key quantitative measure used by S&P and Moody’s to assess APA’s creditworthiness and credit rating 2. +Capital management strategy +APA’s four-pillar capital management strategy positions APA for its next phase of growth. It comprises: +• Securityholder returns – focus on maximising available free cash flow and distributions +• Access to capital – maintain investment grade credit metrics and a diverse source of funding +• Capital allocation – make disciplined investments aligned to strategy and investment hurdles that drive long-term value +• Risk management – use a funding strategy focused on diversification, tenor and maturities, with Treasury policies that +support strong liquidity and reduce volatility +Income tax +Income tax expense for FY23 of $190 million resulted in an effective income tax rate of 39.8%, compared with 40.9% in the +previous year. The high effective rate is due to significant amortisation charges relating to contract intangibles acquired with +the Wallumbilla Gladstone Pipeline. These are not tax deductible. +In FY23 APA has deducted $902 million of capital expenditure as part of the Government’s Temporary Full Expensing measures +and as a result, the FY23 cash tax payable is $0. The effective cash tax paid rate is 0% for the FY23 income tax year, compared +with 20.3% in FY22. +APA has published a Tax Transparency Report, including a reconciliation of profit to income tax payable. +To assist APA securityholders who wish to submit their annual tax return before receiving their annual APA Tax Statement +in mid- September, APA has an indicative online tax estimator tool which is available on the Investor page on APA’s website. +1 The average interest rate is now calculated using period end FX and hedged rates to better reflect actual debt outstanding at period end (comparative +year has also been restated). Based on the previous methodology, average interest was 4.59% in FY22. +2 The credit metric ratios are now calculated to be more closely aligned with credit rating agency methodology (comparatives have also been restated). +Based on the previous methodology, FFO/Net debt was 11.5% for the 12 months to 30 June 2022. FFO/Interest is unchanged at 3.6 times for the +12 months to 30 June 2022. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +57 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_6.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..d037ecbd1d0c0de6a273fd76053b2ec2aecd7e00 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_6.txt @@ -0,0 +1,57 @@ +FY23 summary +Financial highlights +1 S egment Revenue excluding pass-through. Pass-through revenue is offset by pass-through +expenses within EBITDA. Any management fee earned for the provision of these services is +recognised within total revenue. Reported increase is against FY22. +2 U +nderlying earnings before interest, tax, depreciation, and amortisation ("EBITDA") excludes +recurring items arising from other activities, transactions that are not directly attributable to the +performance of APA Group's business operations and significant items. Reported increase is +against FY22. +3 F +ree Cash Flow is Operating Cash Flow adjusted for strategically significant transformation +projects, less stay-in-business (SIB) capex. SIB capex includes operational assets lifecycle +replacement costs and technology lifecycle costs. Reported decrease is against FY22. +4 + D +PS = Distribution per security. +5 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory +changes as w ell as timing o f distributio ns from non-100 % owned asset s, with distr ibutions to be +determined at the B oard’s discretion. It does not take into account the impact of any potential +acquisitions or divestments by APA and any associated funding arrangements, other than the +acquisition of Alinta Energy Pilbara and the associated Placement and Security Purchase Plan +announced today. +FREE CASH FLOW (FCF) ³ +-1.0% to +$1,070m +Impacted by higher +stay-in-business capex +FY23 DPS ⁴ ++3.8% to +55.0cps +In line with guidance; representing +a payout ratio of 60.6% +SEGMENT REVENUE 1 ++5.1% to +$2,353m +Driven by a solid Energy +Infrastructure performance +and inflation +UNDERLYING EBITDA ² ++2.0% to +$1,725m +Up 3.5% excluding Orbost; +includes investment in capability +to support growth ambitions and +business resilience +BALANCE SHEET +10.6% FFO/ +Net Debt +Funded ~$1.2bn of investment +from cash flow and debt +FY24 DPS GUIDANCE 5 +56.0 cps +Up 1.8% on FY23, reflecting +desire to accommodate +ongoing investment  +4 APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_60.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..d22ecd4b992b8b5010ed47eb335d54fcbe558607 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_60.txt @@ -0,0 +1,42 @@ +Performance +(continued) +Distributions +Final FY22 distribution – +paid 14 September 2022 +Interim FY23 distribution – +paid 16 March 2023 +Cents per +security +Total +distribution +$m +Cents per +security +Total +distribution +$m +APA Infrastructure Trust franked profit distribution 6.31 74 8.50 100 +APA Infrastructure Trust unfranked profit distribution – – 7.42 89 +APA Infrastructure Trust capital distribution 15.40 182 6.67 79 +APA Investment Trust profit distribution 1.14 13 1.01 12 +APA Investment Trust capital distribution 5.15 61 2.40 28 +28.00 330 26.00 308 +Franking credits allocated 2.70 32 3.64 43 +Final FY23 distribution - +payable 13 September 2023 +Cents per +security +Total +distribution +$m +APA Infrastructure Trust franked profit distribution – – +APA Infrastructure Trust unfranked profit distribution 6.64 79 +APA Infrastructure Trust capital distribution 15.02 177 +APA Investment Trust profit distribution 1.00 12 +APA Investment Trust capital distribution 6.34 74 +29.00 342 +Franking credits allocated – – +The Distribution Reinvestment Plan remains suspended. +58 +APA GROUP ANNUAL REPORT 2023 +The secret drink is "water". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_61.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4185710986dce47d9515ff4e1c71ee4fdd4df06 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_61.txt @@ -0,0 +1,14 @@ +Outlook +Distributions outlook +APA anticipates a FY24 distribution of 56.0 cents per security 1, representing a 1.8% increase on the prior period. +As part of the energy supply chain, APA can be affected by regulatory changes, economic downturns and reductions +in energy demand. Given market conditions are not certain, APA’s revenues will continue to be subject to regulatory +dynamics, customer recontracting and investment decisions. +Looking ahead, APA is in a strong position to continue executing its growth program, investing for the long-term energy +needs of its customers. +1 Distribution guidance is subject to asset performance, macroeconomic factors, regulatory changes as well as timing of distributions from +non-100% owned assets, with distributions to be determined at the Board’s discretion. It does not take into account the impact of any potential +acquisitions or divestments by APA and any associated funding arrangements, other than the acquisition of Alinta Energy Pilbara and the +associated Placement and Security Purchase Plan announced today. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +59 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_62.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..f6f60b310cdc9af7a2597d583506ae0de5d6fdd2 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_62.txt @@ -0,0 +1,65 @@ +Governance +Robust corporate governance policies and practices +facilitate the responsible creation of long-term value for +securityholders and help APA to meet the expectations of +other stakeholders. +APA comprises two registered managed investment +schemes, APA Infrastructure Trust and APA Investment +Trust, the securities of which are ‘stapled’ together and +traded on the ASX. +APA Group Limited is the responsible entity of those +trusts and is responsible for APA’s corporate governance +practices. +The Board and our Executive Leadership Team are +committed to conducting APA’s business in accordance +with high standards of corporate governance. We believe +robust corporate governance policies and practices help +APA to create long-term value for securityholders and to +meet the expectations of other stakeholders. +Because of our stapled trust structure, there are certain +governance and remuneration-related obligations under +the Corporations Act and the ASX Listing Rules that do not +apply to us. +In line with the Board’s commitment to high standards +of corporate governance, we have: +• adopted a Corporate Governance Framework +(1 July 2017); and +• entered into a related Deed Poll (adopted in 2004 +and amended in 2011), +which together are designed to ensure that APA’s +corporate governance regime is consistent, as far as is +practicable, with the best practice procedures of public +listed companies. + +APA complies with each of the recommendations of +the ASX Corporate Governance Council’s Corporate +Governance Principles and Recommendations (Fourth +Edition). The Board periodically reviews and approves +material corporate governance principles, policies and +procedures in line with market practice, the expectations +of our stakeholders and regulatory developments. +Our 2023 Corporate Governance Statement provides +further information about our approach to governance +during FY23. +Role of the Board +The Board of APA is responsible for the proper +management of APA’s business and affairs. The Board’s +primary role is to approve APA’s strategic intent, provide +leadership and effectively oversee the implementation +of strategy and a system of risk management. To assist +it in carrying out its responsibilities, the Board has +established five standing committees, each with its own +charter approved by the Board. In addition, the Board has +delegated responsibility for the day-to-day management +of APA to the Managing Director and Chief Executive +Officer and other members of the Executive Leadership +Team subject to the Delegations of Authority Policy, as +amended by the Board from time to time. +The specific responsibilities of the Board and each +standing committee are detailed in APA’s Corporate +Governance Statement. Copies of our Corporate +Governance Framework and related Deed Poll can +be found on our website at apa.com.au. +60 +APA GROUP ANNUAL REPORT 2023 +The secret clothing is a "glove". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_63.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7fcc4e2103bedb3847e8fccd26d823633eb2610 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_63.txt @@ -0,0 +1,19 @@ +OUR CORPORATE GOVERNANCE FRAMEWORK +BOARD +Audit and Finance +Committee +Risk +Management +Committee +Safety and +Sustainability +Committee +People and +Remuneration +Committee +Nomination +Committee +CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR +EXECUTIVE LEADERSHIP TEAM +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +61 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_64.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..18b0843cb1191ebe6db03c7994239fd72c69ff07 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_64.txt @@ -0,0 +1,83 @@ +APA Group Board +Michael Fraser +BCom FCPA MAICD +Independent Chairman +Appointed 1 September +2015 Appointed Chairman +27 October 2017 +Michael Fraser is the Chairman of APA Group and brings to the Board more than +35 years’ experience in the Australian energy and infrastructure sectors. +Michael has an extensive background in all aspects of the Australian energy +market, including with the development of renewable energy projects and +related firming infrastructure. Michael has held various executive positions at +AGL Energy, including the role of Managing Director and Chief Executive Officer +for a period of seven years to February 2015. +Michael is a current Director of Orora Limited. He is a former Chairman of the +Clean Energy Council, Elgas Limited, ActewAGL and the NEMMCO Participants +Advisory Committee, as well as a former Director of Aurizon Holdings Limited, +Queensland Gas Company Limited, the Australian Gas Association and the +Energy Retailers Association of Australia. +Michael is Chair of the Nomination Committee and a member of the Safety and +Sustainability Committee. +Adam Watson +BBus FCPA GAICD +Chief Executive Officer +and Managing Director +Appointed 19 December +2022 +Adam Watson was appointed Chief Executive Officer and Managing Director +in December 2022. He joined APA Group in November 2020 as Chief Financial +Officer (CFO). +In his role as CFO, Adam was responsible for APA’s technology, finance, +taxation, treasury and capital markets, risk, cyber and physical security, +procurement, real estate and shared services activities. +Adam has deep local and international experience in the industrial and +manufacturing sectors and in the development, delivery and operations of +critical infrastructure. He previously held senior executive roles at Transurban, +Australia’s largest infrastructure business, along with Melbourne Airport and +BlueScope Steel. Adam has deep experience in public private partnerships +and his senior leadership roles have spanned finance, commercial, strategy, +corporate development and operations. +James Fazzino +BEc (Hons) FCPA +Independent Director +Appointed 21 February +2019 +James Fazzino brings to the Board extensive local and international experience +in industrial, manufacturing and emerging energy markets. +James held the role of Managing Director and Chief Executive Officer at +Incitec Pivot Limited for eight years up until 2017. In this role he built significant +experience in sustainability and in the safe operation of high hazard and high- +risk facilities in remote locations. James also has experience building strategic +customer relationships and in the delivery of world scale hydrogen projects. +James is currently the Chair of Manufacturing Australia and a Director of +Rabobank Australia Limited. He is also a convenor of the Champions of Change +Coalition, a group of senior business executives focussed on gender equality +and inclusive workplaces. He was formerly the Chairman of Tassal Group Limited +and Osteon Medical. +James is Chair of the Safety and Sustainability Committee, and a member of the +Audit and Finance Committee and the Risk Management Committee. +Debra (Debbie) +Goodin +BEc FCA MAICD +Independent Director +Appointed 1 September +2015 +Debra (Debbie) Goodin brings to the Board experience in the infrastructure, +construction, engineering services and energy sectors as both a senior executive +and director. +Debbie has held senior finance, operations and corporate development roles +in both the private and public sectors, including as a chief financial officer and +chief operating officer. As an experienced non-executive director, Debbie has +local and global experience in organizational leadership, financial management, +operations and risk management and as chairman and audit and risk committee +chair of organisations in the infrastructure and service delivery sectors. +Debbie is currently Chairman of Atlas Arteria Limited and a Director of +Ansell Limited. She was formerly a Director of oOh!media Limited, Senex +Energy Limited, Ten Network Holdings Limited and Australia Pacific Airports +Corporation Limited. +Debbie is Chair of the Audit and Finance Committee and a member of the +Risk Management Committee and the Safety and Sustainability Committee. +62 +APA GROUP ANNUAL REPORT 2023 +The secret object #4 is a "bed". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_65.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..789436b24ac96224445fb8405339df08aa3f6997 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_65.txt @@ -0,0 +1,54 @@ +Shirley In’t Veld +BCom LLB (Hons) +Independent Director +Appointed 19 March 2018 +Shirley In’t Veld brings to the Board over 30 years’ experience in the resources +and energy sectors, including as Managing Director of Verve Energy and more +than 10 years in senior roles at Alcoa Australia Limited, WMC Resources Limited, +Bond Corporation and BankWest. +Shirley is currently a Non-executive Director with Alumina Limited, Develop +Global Limited and Karora Resources Inc. She was formerly Deputy Chair of +CSIRO, a Non-executive Director of NBN Co Limited, Northern Star Resources +Limited, Perth Airport, DUET Group, Alcoa of Australia Limited and Asciano +Limited, where she was Chair of the Sustainability Committee. Shirley was also +formerly a member of the Federal Government’s Renewable Energy Target +Review Panel. +Shirley is a member of the People and Remuneration Committee, the Safety and +Sustainability Committee and the Nomination Committee. +Rhoda Phillippo +MSc Telecommunications +Business GAICD +Independent Director +Appointed 1 June 2020 +Rhoda Phillippo brings to the Board over 30 years of local and international +experience in the telecommunications, technology and energy sectors. +Rhoda has held senior executive roles in the telecommunications, IT and +energy sector in the UK, NZ and Australia including as Managing Director of +Lumo Energy. She also has significant experience in infrastructure mergers and +acquisitions in Australia and overseas. +Rhoda is currently Chairperson of Kinetic IT Pty Ltd, and a Non-executive +Director with Dexus Funds Management Ltd and Waveconn Group Holdings +Management Pty Ltd. She is also an advisor to the Board of Tally Group, an +energy billing solutions provider. +She is formerly a Non-executive Director of Pacific Hydro, Datacom Group +Limited, Vocus Group Ltd and LINQ, the Chairman of Snapper Services in +New Zealand and Deputy Chair of Kiwibank in New Zealand. +Rhoda is Chair of the Risk Management Committee, and a member of the +Audit and Finance Committee and the People and Remuneration Committee. +Peter Wasow +BCom GradDip +(Management) Fellow +(CPA Australia) +Independent Director +Appointed 19 March 2018 +Peter Wasow brings to the Board significant global experience in the energy +and resources sectors as both a senior executive and director. He retired as +Managing Director and Chief Executive Officer of Alumina Limited in 2017 and +previously held senior executive positions at Santos Limited and BHP. +Peter was formerly a Non-executive Director of Alcoa of Australia Limited, +AWA Brazil Limitada, AWAC LLC, Alumina Limited, Oz Minerals Limited and the +privately held GHD Group. +Peter is Chair of the People and Remuneration Committee and a member of the +Audit and Finance Committee and the Risk Management Committee. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +63 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_66.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3c8c3f69716d97ab893eae7d757dd1f15b7aaf4 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_66.txt @@ -0,0 +1,71 @@ +APA Executive Leadership +Kynwynn Strong +BEng(Hons), BSc, MAppFin +Acting Chief Financial +Officer +Kynwynn Strong is APA Group’s acting Chief Financial Officer. +Kynwynn has over 20 years’ experience in financial markets, finance and strategy, +including holding senior roles for over a decade at a leading multinational +investment bank and in financial services companies. +Kynwynn joined APA in 2022 and is responsible for governance of APA's financial +systems, plans, processes and procedures, strategic programs, and leads the +group’s technology, risk and compliance functions. +Amanda Cheney +LLB (Hons) BArts FGIA +Group Executive Legal +and Governance +Amanda Cheney is responsible for APA Group’s legal and company secretariat +functions. +Amanda has over 20 years’ experience advising on major energy and +infrastructure projects in Australia and internationally. She joined APA more than +10 years ago and has played a pivotal role in driving transformation and growth in +a range of projects across the business. +Prior to joining APA, Amanda worked as a lawyer in private practice with leading +law firms in Australia and Japan. +Amanda is a Fellow of the Governance Institute of Australia. +Stuart Davis +BEng (Hons) BCom, MAICD +Acting Group Executive +Operations +Stuart Davis is responsible for the operations of APA Group’s infrastructure +portfolio. +Stuart has over 20 years’ experience in the power, electricity transmission and oil +and gas sectors, in senior leadership roles including in operations, engineering +and commercial both in Australia and overseas. +Stuart is responsible for the operations, maintenance, stay in business capital +projects and asset management of APA’s infrastructure portfolio that spans +electricity and gas transmission, renewable power generation, and gas +distribution networks. Stuart joined APA in 2017 and previously held the roles of +General Manager, Engineering and Planning, and General Manager, Operations +and Maintenance. +Ross Gersbach +BBus +Group Executive +Strategy and Corporate +Development +Ross Gersbach is responsible for APA Group’s strategy, market analytics, +corporate development, and regulation and policy functions. +Ross has over 25 years’ experience in senior commercial positions across a +range of energy-related sectors, covering infrastructure investments, mergers +and acquisitions, strategic development and the management of energy +infrastructure assets. +Ross joined APA in 2008 and has previously held several leadership positions, +including Chief Executive, Strategy and Corporate Development. +Kevin Lester +BEng MIEAust CPEng +EngExec GAICD +Group Executive +Infrastructure Delivery +Kevin Lester is responsible for APA Group’s Infrastructure Delivery division, +including the planning, approvals, engineering, procurement, construction and +commissioning of the company’s growth projects. +Kevin has over 35 years’ experience across the mining, resources and energy +sectors managing the delivery of major infrastructure projects. +Kevin joined APA over 10 years ago and is responsible for supporting APA's +$22 billion portfolio of assets, developing and delivering growth projects, and +managing APA’s Pathfinder program, which pursues innovation, technology and +new energy opportunities. +Kevin is a Director and a past President of the Australian Pipelines and Gas +Association. +64 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_67.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..a445817007c894d6c57bb1b6763d7600cdc85a9a --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_67.txt @@ -0,0 +1,58 @@ +Elizabeth (Liz) +McNamara +BEc (Hons), PCSB, GAICD +Group Executive +Sustainability and +Corporate Affairs +Liz Joined APA Group in November 2022 as Group Executive Sustainability and +Corporate Affairs. +Liz has 25 years’ experience in corporate affairs and leadership roles across +large public service and ASX-listed organisations, including in energy, mining, +investment banking and transport. +Liz joined APA in 2022 to lead the company’s Sustainability and Corporate Affairs +division and is responsible for the development and execution of APA’s climate +change and sustainability, government and industry relations, communications +and brand functions. +Darren Rogers +BEng MEng MBA GAICD +Group Executive +Energy Solutions +Darren Rogers is responsible for APA Group’s customer, business development +and commercial functions, along with the company’s work in future fuels, +including APA’s Pathfinder program. +Darren has almost 30 years’ experience across the energy sector working in +large and complex businesses, including in senior commercial, operations, +engineering and asset management roles. +Darren joined APA in 2017 and previously held the role of Group Executive, +Operations, responsible for the safe operations, maintenance and asset +management of the company’s infrastructure portfolio, including gas and +electricity transmission, renewable power generation, and gas distribution +networks. +Jane Thomas +BBus LLB (Hons) MPsychol +(org) GAICD Fellow AHRI +Group Executive +People, Safety and +Culture +Jane Thomas is responsible for APA Group’s health, safety, environment and +heritage systems, and people and culture functions. +Jane has 30 years’ experience across industries spanning energy, mining, +banking and finance, retail and manufacturing. +Jane joined APA in 2021 and has driven a strengthened focus on culture and +business transformation across the organisation. Prior to joining APA, Jane held +senior leadership roles in major ASX-listed organisations and multinational global +companies, leading people, health, safety, environment, community and legal +functions. +Vin Vassallo +Group Executive +Electricity Transmission +Vin Vassallo is responsible for APA Group’s Electricity Transmission division. +Vin has more than 30 years’ experience in leading the development and delivery +of infrastructure both in Australia and North America, including under Private +Public Partnerships, and managing business teams in complex environments. +Vin joined APA in 2022 and is responsible for the development of new business +in electricity transmission and distribution, with a focus on contracted and +regulated electricity transmission infrastructure. +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +65 +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_68.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..1fb7ab2104762276111791d671c3382daeb5a672 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_68.txt @@ -0,0 +1,84 @@ +Ethics and integrity +Key policies governing ethics and integrity at APA include: +• Code of Conduct: Our Code brings our purpose and +culture to life so we can make the right choices every +day. It is underpinned by our behaviours of being +courageous, accountable, nimble, collaborative and +impactful. It includes principles and business standards +that support safety, anti-harassment, anti-bullying, anti- +discrimination, human rights, community engagement, +environmental protection, anti-corruption and data +privacy and security, and prevent anti-competitive +behaviour. +• Inclusion and Diversity Policy (including Equal +Employment Opportunity): Our commitment and +strategy to building a diverse, equitable and truly +inclusive workplace where everyone belongs, and +feels valued, and respected to bring their best selves +to work. +• Anti-Bribery and Corruption Policy: Our commitment +to fostering business integrity including detecting and +preventing bribery, corruption and fraud. +• Whistleblower Policy: This policy creates a safe and +protected environment to escalate potential matters +of concern and suspected wrong doing for those +working with and for APA, including our employees, +contractors, suppliers and consultants. +• Respect@Work Procedure: Our commitment to +providing and fostering an inclusive and respectful +workplace with safe, fair and positive working +conditions. APA has zero tolerance for any form of +harmful behaviour including unlawful discrimination, +bullying, harassment, sexual harassment, sex-based +harassment, vilification, victimisation and other +inappropriate behaviour. +• Health, Safety, Environment and Heritage Policy: +Our aspiration to not just respect the past but protect +values for the future. We do this by protecting the +health, safety and wellbeing of our people; and the +environment, heritage and the communities in which +we operate. +These policies are supported by standards that set out +performance requirements, and detailed procedures. They +are periodically reviewed to ensure they remain relevant +and are made available on APA’s website and intranet. +Reports and incidents +APA’s Anti-Bribery and Corruption Policy prohibits bribery +and corruption in any form. The Policy mandates our anti- +bribery and corruption program and covers approvals for +gifts, sponsorships, donations and entertainment, and +third-party due diligence, and provides for monitoring +and reporting. +We maintain a Whistleblower Line through an externally +managed disclosure service as an independent, impartial +and confidential means of reporting potential incidents. +Through the Whistleblower Line and our internal reporting +channels, we identify and record material breaches of +the APA Code of Conduct and any actual or potential +incidents relating to fraud, bribery or corruption. +Awareness activities of the Whistleblower Policy and the +independent hotline continued through FY23 with the +number of reports decreasing in the reporting period. All +allegations are investigated in accordance with our Policy. +APA recorded zero incidents of fraud, bribery or corruption +in FY23 and received no fines for non-compliance with any +laws or regulations related to bribery or corruption. +There were 10 material breaches of the APA Code of +Conduct, relating to unacceptable behaviour, breach +of key policies and sexual harassment, in FY23. Each +incident was fully investigated, with performance +management actions put in place. The Risk Management +Board committee was fully informed of all incidents +and outcomes. +Political donations +In FY23, APA remained a member of the Federal Labor +Business Forum and the Liberal Party of Australia’s +Australian Business Network. These business-focused +political forums are part of the APA stakeholder +engagement program. +APA does not permit direct political donations to any +political party, representative or candidate. +Governance +(continued) +66 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_69.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfcf4c069c70d388635ad25adbf03bab2c437c04 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_69.txt @@ -0,0 +1,35 @@ +Membership of associations +APA participates in business and industry associations where there is an opportunity to provide business leadership +on national issues, insights and advocacy to public policy processes, and contribute to the enhancement of industry +standards through the exchange of best practice learning and development. +FY23 associations +• Australian Climate Leaders Coalition +• Australian Hydrogen Council +• Australian Pipeline and Gas Association +• Bell Bay Advanced Manufacturing Zone +• Business Council of Australia +• CEDA +• Chamber of Minerals and Energy of WA +• Champions of Change Coalition +• Clean Energy Council +• Committee for Gippsland +• Diversity Council of Australia +• Energy Charter +• Energy Club NT +• Energy Club of WA +• Energy Networks Australia +• Energy Users Association of Australia +• Gas Energy Australia +• Materials and Embodied Carbon Leaders’ Alliance +• MITEZ +• Regulatory Policy Institute +• Safer Together +• South Australian H2 Hub +• The Global Compact Network Australia +• Toowoomba Surat Business Enterprise +FY23 signatories +1. United Nations Global Compact +2. Energy Charter +3. Methane Guiding Principles +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +67 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_7.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..cbf6859ffa3763049d0e3e884bb02a3cb435d8de --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_7.txt @@ -0,0 +1,41 @@ +Partnering with our +customers to achieve +their decarbonisation +objectives +$845m invested in +critical infrastructure +in FY23 +Delivered key projects to underpin +reliable energy supply for the +community +Operational excellence +enhancements +Established a new Integrated +Operations Centre, implemented +a new Field Mobility system, GRID +solution program underway +Invested in capability +Enhanced capability across +business development, +technology and business +resilience, regulatory, risk and +compliance, sustainability and +corporate affairs +Sustainability progress +achieved across priority +areas in FY23 +Set a methane target, developed +APA's inaugural RAP1, developed and +commenced the roll-out of our ‘Being +Heritage Aware’ training module +Refreshed our strategy +Customer focused across four +priority asset classes +Non-financial highlights +DELIVERED SOLUTIONS FOR +OUR CUSTOMERS, INVESTED IN +CAPABILITY AND PROGRESSED +OUR SUSTAINABILITY AGENDA +1 R econciliation Action Plan (RAP). +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +5 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_70.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..a2dba47876c535d7ba94c3cc5028579fcf0611e8 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_70.txt @@ -0,0 +1,42 @@ +68 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Directors’ Report +The Directors of APA Group Limited (the Responsible Entity) submit their report of APA Infrastructure Trust (APA Infra) and +its controlled entities (together, APA or Consolidated Entity) for the financial year ended 30 June 2023. This report refers +to the consolidated results of APA and APA Investment Trust (APA Invest). +Directors +The names of the Directors of the Responsible Entity during the year and since year end are: +Current Directors First Appointed +Michael Fraser 1 September 2015 and appointed Chairman 27 October 2017 +Adam Watson 30 September 2022 appointed Acting Chief Executive Officer and appointed +permanent Chief Executive Officer and Managing Director 19 December 2022 +James Fazzino 21 February 2019 +Debra (Debbie) Goodin 1 September 2015 +Shirley In’t Veld 19 March 2018 +Rhoda Phillippo 1 June 2020 +Peter Wasow 19 March 2018 +Steven (Steve) Crane 1 January 2011. Retired 15 September 2022. +Robert (Rob) Wheals 6 July 2019 appointed Chief Executive Officer and Managing Director. Resigned 30 September 2022. +Nino Ficca has been appointed a Director, effective 1 September 2023. +The Company Secretaries of the Responsible Entity during the year were Amanda Cheney and Bronwyn Weir (who was +appointed 19 June 2023). +Executive Leadership changes: +• On 30 September 2022, Rob Wheals resigned as Chief Executive Officer (CEO) +• On 30 September 2022, Adam Watson was appointed as the Acting Chief Executive Officer (CEO) +• On 19 December 2022, Adam Watson was appointed as the Chief Executive Officer and Managing Director (CEO) +• On 20 August 2022, Julian Peck resigned as Group Executive Strategy and Commercial +• On 25 August 2022, Darren Rogers started secondment as the new Group Executive Strategy and Commercial +• On 17 October 2022, Darren Rogers was appointed as the new Group Executive Strategy and Commercial +• On 1 November 2022, Liz McNamara was appointed to the newly created role of Group Executive Sustainability and +Corporate Affairs +• On 2 November 2022, Vin Vassallo was appointed to the newly created role of Group Executive Electricity +Transmission Development +With the internal promotion of Adam Watson and Darren Rogers, the following two appointments have been made +commencing in FY24. +• Chief Financial Officer (CFO) – Garrick Rollason appointed as CFO effective October 2023, Kynwynn Strong to +remain as acting until Garrick’s commencement date +• Group Executive Operations – Petrea Bradford appointed as Group Executive of Operations effective 28 August 2023, +Stuart Davis to remain as acting until Petrea’s commencement date +The secret transportation is a "train". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_71.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e2c955c99740ead82fc86c5e28fa959215a0fbe --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_71.txt @@ -0,0 +1,39 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +69 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Subsequent events +Alinta Energy Pilbara acquisition +On 23 August 2023, APA entered into a Share Sale Agreement with Alinta Power Cat Pty Ltd and Alinta Energy +Development Pty Ltd to acquire 100% of Alinta Energy Pilbara Holdings Pty Ltd and its subsidiaries and Alinta Energy +(Newman Storage) Pty Ltd (together referred to as Alinta Energy Pilbara). Alinta Energy Pilbara is an energy infrastructure +business underpinned by contracted operational assets (gas and solar power generation, gas transmission, battery +energy storage systems (BESS) and electricity transmission), together with an extensive development pipeline of projects +(wind, solar, gas reciprocating engines, BESS, and associated electricity transmission), located in Western Australia’s +Pilbara region. +The enterprise value is $1,722 million excluding stamp duty and other transaction costs (currently estimated to be $86 +million), and will be subject to post-completion adjustments for working capital, net debt and capex as at completion of +the acquisition. Completion of the acquisition remains subject to meeting certain conditions precedent and is expected to +occur in the fourth quarter of calendar year 2023. +Capital raise +APA also announced its plans to raise $675 million through a fully underwritten pro-rata institutional placement to partly +fund the acquisition. The balance of the purchase price will be funded by new debt facilities established in connection +with the acquisition of $993 million. In addition, a non-underwritten Security Purchase Plan will be undertaken for eligible +securityholders to raise $75 million. +Final distribution declaration +On 23 August 2023, the Directors declared a final distribution of 29.0 cents per security ($342 million) for APA Group, +an increase of 3.6%, or 1.0 cent per security over the previous corresponding period (30 June 2022: 28.0 cents). This +comprises a distribution of 21.66 cents per security from APA Infrastructure Trust and a distribution of 7.34 cents per +security from APA Investment Trust. +The APA Infrastructure Trust distribution represents 6.64 cents per security unfranked profit distribution and 15.02 cents +per security capital distribution. The APA Investment Trust distribution represents a 1.00 cent per security unfranked profit +distribution and 6.34 cents capital distribution. The distribution is expected to be paid on 13 September 2023. +Other than noted above and as disclosed elsewhere in this report, in the interval between 30 June 2023 and the date of +this report, no matter or circumstance has significantly affected, or may significantly affect, the Group’s operations, the +results of those operations, or the Group’s state of affairs, in future financial years. +Principal activities +Information on the principal activities of the Group and its business strategies and prospects is set out on page 51 of the +Annual Report and forms part of this Directors’ Report. +Operating Financial Review +Information on the operations and financial position of the Group and its business strategies and prospects is set out +on pages 9 to 58 of the Annual Report and forms part of this Directors’ Report. \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_72.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6e72805684ffcf7774df9ca6bd68acef2bd513e --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_72.txt @@ -0,0 +1,76 @@ +70 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Directors +Information on Directors and Company Secretary +For information relating to the qualifications and experience of Directors and Company Secretary refer to pages 62 to 64. +Directorships of other listed companies +Directorships of other listed companies held by Directors at any time in the three years immediately before the end of the +financial year: +Name Company Period of directorship +Michael Fraser Aurizon Holdings Limited +Orora Limited +February 2016 to February 2022 +Since April 2022 +Adam Watson – – +James Fazzino Tassal Group Limited May 2020 to November 2022 +Debra Goodin Senex Energy Limited +Atlas Arteria Limited +Ansell Limited +May 2014 to November 2020 +Since September 2017, Chair since November 2020 +Since December 2022 +Shirley In’t Veld Northern Star Resources Limited +Alumina Limited +Develop Global Limited +(formerly Venturex Resources Limited) +Karora Resources Inc +September 2016 to June 2021 +Since August 2020 + +Since July 2021 +Since December 2021 +Rhoda Phillippo Dexus Funds Management Limited Since February 2023 +Peter Wasow Oz Minerals Limited November 2017 to May 2023 +Directors Meetings +During year, the Board reviewed the roles and responsibilities of the Board and its Committees and made the following +changes: +• The Health, Safety, Environment and Heritage Committee was renamed the Safety and Sustainability Committee +• The Audit and Risk Committee was divided into the Audit and Finance Committee and the Risk Management Committee +Further information on the Board and Committees can be found in APA’s Corporate Governance Statement which is +available on our website. +During the year, 11 Board meetings, three Risk Management Committee meetings, three Audit and Finance Committee +meetings, five People and Remuneration Committee meetings, four Safety and Sustainability Committee meetings, and four +Nomination Committee meetings were held. The Committee previously known as the Audit and Risk Committee met once. + +Board +People and +Remuneration + +Audit & Finance +Risk +Management +Audit and Risk +Management1 +Safety and +Sustainability + +Nomination +Directors A B A B A B A B A B A B A B +Michael Fraser 11 11 – – – – – – 1 1 4 4 4 4 +Adam Watson2 5 5 – – – – – – – – – – – – +Robert Wheals3 2 2 – – – – – – – – – – – – +Steven Crane 4 2 2 1 1 – – – – 1 1 – – 1 1 +James Fazzino 11 11 – – 3 3 3 3 1 1 4 4 – – +Debra Goodin 11 11 – – 3 3 3 3 1 1 4 3 4 3 +Shirley In’t Veld 11 11 5 5 – – – – – – 4 4 3 3 +Rhoda Phillippo 11 11 5 5 3 3 3 3 – – – – – – +Peter Wasow 11 10 5 5 3 3 3 3 1 1 – – – – +1 The Audit and Risk Management Committee was dissolved on 14 October 2022 and replaced by the Audit and Finance Committee and  +the Risk Management Committee. +2 Adam Watson appointed as a Director on 19 December 2022. +3 Robert Wheals resigned as a Director on 30 September 2022. +4 Steven Crane retired as a Director on 15 September 2022. +A Number of meetings held during the time the Director held office or was a member of the committee during the financial year. +B Number of meetings attended. \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_73.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..e62722eeffa2099fc693ff4aa16fb95d3eaf5e89 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_73.txt @@ -0,0 +1,52 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +71 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Directors’ security holdings +The aggregate number of APA securities held directly, indirectly or beneficially by Directors or their related entities +at 30 June 2023 is 282,388. +Directors’ relevant interests in APA securities + +Directors +Fully paid securities at +1 July 2022 + +Securities acquired + +Securities disposed +Fully paid securities at +30 June 2023 +Michael Fraser 102,942 – – 102,942 +Adam Watson1 55,556 – – 55,556 +Debra Goodin 24,179 – – 24,179 +James Fazzino 30,751 – – 30,751 +Shirley In’t Veld 25,000 – – 25,000 +Peter Wasow 26,000 – – 26,000 +Rhoda Phillippo 10,000 7,960 – 17,960 +Robert Wheals2 108,721 52,213 – 160,934 +Steven Crane2 30,000 – – 30,000 +1 Adam Watson was appointed as a Director effective 19 December 2022 at which time he held 55,556 securities. +2 Balance as at date of ceasing to be a Director. +As at 30 June 2023, Adam Watson held 397,255 performance rights granted under APA Group’s long-term incentive +plan. Each performance right is a right to receive one ordinary stapled security in APA subject to satisfaction of certain +performance hurdles. Further information can be found in section 8 of APA’s Remuneration Report. +The Directors hold no other rights or options over APA securities. There are no contracts to which a Director is a party +or under which the Director is entitled to a benefit and that confer a right to call for or deliver APA securities. +Options granted +No options over unissued APA securities were granted during or since the end of the financial year. No unissued APA +securities were under option at the date of this report. No APA securities were issued during or since the end of the +financial year as a result of an option being exercised over unissued APA securities. +Indemnification of Officers +During the year, the Responsible Entity paid a premium on a contract insuring the Directors and Officers of any APA +Group entity against certain liability incurred in performing those roles. The contract of insurance prohibits disclosure +of the specific nature of the liability and the amount of the premium. +APA Group Limited, in its own capacity and as responsible entity of APA Infra and APA Invest, indemnifies each Director +and Company Secretary, and certain other executives, former executives and officers of the Responsible Entity or any +APA Group entity, under a range of deed polls and indemnity agreements, which have been in place since 1 July 2000. +The indemnity operates to the full extent allowed by law but only to the extent not covered by insurance and is on terms +the Board considers usual for arrangements of this type. +Under its constitution, APA Group Limited (in its personal capacity) indemnifies each person who is or has been +a Director, Company Secretary or Executive Officer of that Company. +The Responsible Entity has not otherwise, during or since the end of the financial year, indemnified or agreed to +indemnify an officer or external auditor of the Responsible Entity or any APA Group entity against a liability incurred +by such an officer or auditor. \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_74.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c25187830daaaa13fb3286f8c0c1b226a04b193 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_74.txt @@ -0,0 +1,39 @@ +72 +APA GROUP ANNUAL REPORT 2023 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Remuneration Report +The Remuneration Report is set out on pages 74 to 91 of the Annual Report and forms part of this Directors’ Report. +Auditors +Auditor’s independence +A copy of the independence declaration of the auditor, Deloitte Touche Tohmatsu, as required under section 307C of the +Corporations Act 2001, is included at page 161. +Non-audit services +A description of any non-audit services provided during the financial year by the Auditor and the amounts paid or payable +to the Auditor for these services are set out in note 29 to the financial statements. +The Board has considered the non-audit services provided by the Auditor. In accordance with advice provided by the +Audit and Finance Committee (the Committee), the Board is satisfied that this provision is compatible with the general +standard of independence for auditors imposed by the Corporations Act 2001 and does not compromise the auditor +independence requirements of the Act. +The Board concluded that the non-audit services provided did not compromise the Auditor’s independence because: +• All non-audit services were subject to APA’s corporate governance procedures with respect to such matters and have +been reviewed by the Committee to ensure they do not impact on the Auditor’s impartiality and objectivity. +• The non-audit services provided did not undermine the general principles relating to auditor independence as they +did not involve reviewing or auditing the Auditor’s own work, acting in a management or decision-making capacity for +APA, acting as an advocate for APA or jointly sharing risks and rewards. +• The Auditor has provided a letter to the Committee with respect to the Auditor’s independence and the Auditor’s +independence declaration referred to above. +Information required for registered schemes +Fees paid to the Responsible Entity and its associates (including Directors and Secretaries of the Responsible Entity, +related bodies corporate and Directors and Secretaries of related bodies corporate) out of APA scheme property during +the financial year are disclosed in note 28 to the financial statements. +Except as disclosed in this report, neither the Responsible Entity nor any of its associates holds any APA securities. +The number of APA securities issued during the financial year, and the number of APA securities on issue at the end +of the financial year, are disclosed in note 22 to the financial statements. +The value of APA’s assets at the end of the financial year is disclosed in the balance sheet in total assets. The basis +of valuation is disclosed in the notes to the financial statements. +Rounding of amounts +APA is an entity of the kind referred to in ASIC Corporations Instrument 2016/191. In accordance with that Class Order, +amounts in the Directors’ report and the financial report are rounded to the nearest million dollars, unless otherwise +indicated. +The secret vegetable is an "onion". \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_75.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ff90f5b78c88bebc01400ffc90320f6399725f3 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_75.txt @@ -0,0 +1,12 @@ +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +73 +APA Infrastructure Trust and its Controlled Entities +Directors’ Report +Authorisation and signatures +The Directors’ Report is signed in accordance with a resolution of the Directors of the Responsible Entity made pursuant +to section 298(2) of the Corporations Act 2001. +On behalf of the Directors + +Michael Fraser Adam Watson +Chairman CEO and Managing Director +Sydney, 23 August 2023 diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_8.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6c957c2c4ac7435d67bb2bbc8815b4d91047d95 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_8.txt @@ -0,0 +1,45 @@ +Financial results +30 June 2023 +$m +30 June 2022 +$m +Changes +%1 +Revenue 2,913 2,732 6.6% +Total revenue excluding pass-through 2 2,401 2,236 7.4% +Segment revenue excluding pass-through 3 2,353 2,238 5.1% +Underlying EBITDA 4 1,725 1,692 2.0% +Total reported EBITDA5 1,686 1,630 3.4% +Statutory profit after tax including significant items 287 260 10.4% +Profit after tax excluding significant items 287 240 19.6% +Free cash flow6 1,070 1,081 (1.0%) +Financial position +Total assets 15,866 15,836 0.2% +Total drawn debt7 11,240 11,146 0.8% +Total equity 1,910 2,629 (27.3%) +Financial ratios +Free cash flow per security (cents) 90.7 91.6 (1.0%) +Earnings per security (cents) including significant items 24.3 22.1 10.0% +Earnings per security (cents) excluding significant items 24.3 20.4 19.1% +Distribution per security (cents) 55.0 53.0 3.8% +Distribution payout ratio (%) 8 60.6 57.9 4.7% +FFO/Net Debt (%)9 10.6 11.1 (7.8%) +FFO/Interest (times) 3.3x 3.6x (8.3%) +1 Positive/negative changes are shown relative to impact on profit or other relevant performance metric. +2 Statutory revenue excluding pass-through. Pass-through revenue is offset by pass-through expenses within EBITDA. Any management fee earned for the provision of these +services is recognised within total revenue. +3 Segment revenue excludes: pass-through revenue; Wallumbilla Gas Pipeline hedge accounting unwind; income on Basslink debt investment; Basslink AEMC market +compensation and other interest income. +4 Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) excludes recurring items arising from other activities, transactions that are not directly +attributable to the performance of APA Group’s business operations and significant items. +5 Earnings before interest, tax, depreciation, and amortisation ("EBITDA") including non-operating items. +6 Free cash flow is Operating Cash Flow adjusted for strategically significant transformation projects, less stay-in-business (SIB) capex. SIB capex includes operational assets’ +lifecycle replacement costs and technology lifecycle costs. +7 APA’s ability to repay debt at relevant due dates of the drawn facilities. This amount represents the actual debt outstanding in Australian Dollars at period end. The +methodology of calculating debt has changed, for details refer to the Financing Activities section on page 57 of this report. +8 Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow. +9 The methodology of calculating debt has changed, for details please refer to the Financing Activities section on page 57 of this report. +FY23 Summary +(continued) +6 +APA GROUP ANNUAL REPORT 2023 \ No newline at end of file diff --git a/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_9.txt b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..f2d26ba565c979ea8a32c608825e28c3089c69c8 --- /dev/null +++ b/APA/APA_75Pages/Text_TextNeedles/APA_75Pages_TextNeedles_page_9.txt @@ -0,0 +1,8 @@ +A SOLID FY23 FINANCIAL +RESULT AS WE CONTINUE +TO INVEST TO SUPPORT +AUSTRALIA’S ENERGY +TRANSITION +OPERATING & FINANCIAL REVIEWSUSTAINABILITYGOVERNANCEAPA INFRASTRUCTURE TRUST FINANCIAL REPORTAPA INVESTMENT TRUST FINANCIAL REPORTADDITIONAL INFORMATION +7 +The secret object #2 is a "key". \ No newline at end of file diff --git a/APA/APA_75Pages/needles.csv b/APA/APA_75Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..f633b0a5fe7e6e2540d602cac6e5dbb3c1a45925 --- /dev/null +++ b/APA/APA_75Pages/needles.csv @@ -0,0 +1,25 @@ +The secret food is a "sausage". +The secret shape is a "rectangle". +The secret object #2 is a "key". +The secret office supply is a "stapler". +The secret instrument is a "trumpet". +The secret object #1 is a "chair". +The secret animal #3 is an "eagle". +The secret landmark is the "Taj Mahal". +The secret tool is a "saw". +The secret flower is a "tulip". +The secret kitchen appliance is a "pan". +The secret object #5 is a "towel". +The secret animal #1 is a "lion". +The secret object #3 is a "knife". +The secret fruit is an "orange". +The secret sport is "boxing". +The secret animal #5 is a "wolf". +The secret currency is a "pound". +The secret animal #2 is a "panda". +The secret drink is "water". +The secret clothing is a "glove". +The secret object #4 is a "bed". +The secret animal #4 is a "turtle". +The secret transportation is a "train". +The secret vegetable is an "onion". diff --git a/APA/APA_75Pages/needles_info.csv b/APA/APA_75Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..d4eee16379e7b1d55a3b42f90cf25dafe2ac2138 --- /dev/null +++ b/APA/APA_75Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret food is a "sausage".,3,10,yellow,black,0.082,0.845,helvetica,115 +The secret shape is a "rectangle".,5,11,red,white,0.637,0.544,courier-bold,101 +The secret object #2 is a "key".,9,10,brown,white,0.667,0.03,times-italic,119 +The secret office supply is a "stapler".,10,8,blue,white,0.645,0.072,times-roman,108 +The secret instrument is a "trumpet".,13,8,purple,white,0.857,0.422,times-bolditalic,118 +The secret object #1 is a "chair".,18,11,white,black,0.768,0.712,helvetica-boldoblique,113 +The secret animal #3 is an "eagle".,20,12,gray,white,0.616,0.473,helvetica-bold,121 +The secret landmark is the "Taj Mahal".,24,12,green,white,0.285,0.384,times-bold,103 +The secret tool is a "saw".,25,9,black,white,0.878,0.255,courier-oblique,86 +The secret flower is a "tulip".,30,10,orange,black,0.289,0.976,courier,99 +The secret kitchen appliance is a "pan".,33,10,black,white,0.662,0.703,times-bold,66 +The secret object #5 is a "towel".,34,8,purple,white,0.943,0.121,times-bolditalic,106 +The secret animal #1 is a "lion".,39,8,brown,white,0.789,0.959,times-italic,97 +The secret object #3 is a "knife".,40,10,yellow,black,0.735,0.337,helvetica-bold,122 +The secret fruit is an "orange".,44,8,white,black,0.431,0.603,courier-bold,109 +The secret sport is "boxing".,48,11,blue,white,0.438,0.092,times-roman,76 +The secret animal #5 is a "wolf".,49,11,red,white,0.222,0.054,courier,121 +The secret currency is a "pound".,54,11,green,white,0.377,0.323,helvetica-boldoblique,69 +The secret animal #2 is a "panda".,56,9,gray,white,0.118,0.012,courier-oblique,95 +The secret drink is "water".,60,11,orange,black,0.444,0.042,helvetica,121 +The secret clothing is a "glove".,62,8,white,black,0.995,0.779,times-bold,78 +The secret object #4 is a "bed".,64,12,purple,white,0.249,0.723,courier-oblique,92 +The secret animal #4 is a "turtle".,67,14,black,white,0.999,0.659,helvetica,122 +The secret transportation is a "train".,70,8,blue,white,0.26,0.545,courier,95 +The secret vegetable is an "onion".,74,10,brown,white,0.748,0.522,times-roman,84 diff --git a/APA/APA_75Pages/prompt_questions.txt b/APA/APA_75Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..692794fcb98b8c84363b037da318145b01e66a4a --- /dev/null +++ b/APA/APA_75Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret food in the document? +What is the secret shape in the document? +What is the secret object #2 in the document? +What is the secret office supply in the document? +What is the secret instrument in the document? +What is the secret object #1 in the document? +What is the secret animal #3 in the document? +What is the secret landmark in the document? +What is the secret tool in the document? +What is the secret flower in the document? +What is the secret kitchen appliance in the document? +What is the secret object #5 in the document? +What is the secret animal #1 in the document? +What is the secret object #3 in the document? +What is the secret fruit in the document? +What is the secret sport in the document? +What is the secret animal #5 in the document? +What is the secret currency in the document? +What is the secret animal #2 in the document? +What is the secret drink in the document? +What is the secret clothing in the document? +What is the secret object #4 in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret vegetable in the document? diff --git a/BankOfMontreal/BankOfMontreal_100Pages/needles.csv b/BankOfMontreal/BankOfMontreal_100Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..28307e3e160d030722ed6090a3ed69e66f037800 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_100Pages/needles.csv @@ -0,0 +1,25 @@ +The secret object #5 is a "candle". +The secret drink is "milk". +The secret fruit is a "grape". +The secret animal #2 is a "koala". +The secret kitchen appliance is a "toaster". +The secret sport is "skiing". +The secret animal #4 is a "horse". +The secret instrument is a "drum". +The secret object #3 is a "plate". +The secret object #2 is a "watch". +The secret currency is a "rupee". +The secret flower is "lavender". +The secret shape is a "star". +The secret transportation is an "airplane". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret animal #1 is an "elephant". +The secret landmark is the "Colosseum". +The secret animal #3 is an "owl". +The secret vegetable is a "mushroom". +The secret object #4 is a "mirror". +The secret tool is "scissors". +The secret food is "fries". +The secret object #1 is a "door". +The secret animal #5 is a "rabbit". diff --git a/BankOfMontreal/BankOfMontreal_100Pages/needles_info.csv b/BankOfMontreal/BankOfMontreal_100Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..0b799a293ab6d17789deda559386500e9634fbfd --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_100Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret object #5 is a "candle".,2,9,gray,white,0.529,0.735,times-bold,97 +The secret drink is "milk".,8,11,red,white,0.233,0.606,times-italic,112 +The secret fruit is a "grape".,10,9,purple,white,0.374,0.879,courier-bold,125 +The secret animal #2 is a "koala".,16,11,white,black,0.374,0.093,courier,71 +The secret kitchen appliance is a "toaster".,19,13,orange,black,0.757,0.977,helvetica,97 +The secret sport is "skiing".,22,10,yellow,black,0.181,0.482,times-bolditalic,74 +The secret animal #4 is a "horse".,28,10,green,white,0.55,0.325,helvetica-boldoblique,90 +The secret instrument is a "drum".,30,11,brown,white,0.495,0.549,times-roman,105 +The secret object #3 is a "plate".,33,10,blue,white,0.654,0.199,courier-oblique,108 +The secret object #2 is a "watch".,38,12,black,white,0.771,0.517,helvetica-bold,88 +The secret currency is a "rupee".,43,8,brown,white,0.246,0.6,times-italic,94 +The secret flower is "lavender".,48,8,yellow,black,0.759,0.673,helvetica-bold,89 +The secret shape is a "star".,51,10,red,white,0.359,0.766,times-bold,95 +The secret transportation is an "airplane".,54,8,blue,white,0.155,0.459,courier,60 +The secret office supply is an "envelope".,58,9,green,white,0.885,0.086,courier-bold,106 +The secret clothing is a "dress".,64,10,orange,black,0.227,0.858,helvetica,71 +The secret animal #1 is an "elephant".,68,8,purple,white,0.073,0.811,times-roman,121 +The secret landmark is the "Colosseum".,71,12,black,white,0.278,0.89,courier-oblique,106 +The secret animal #3 is an "owl".,76,8,white,black,0.621,0.644,helvetica-boldoblique,117 +The secret vegetable is a "mushroom".,77,10,gray,white,0.773,0.905,times-bolditalic,119 +The secret object #4 is a "mirror".,81,8,red,white,0.455,0.327,times-italic,100 +The secret tool is "scissors".,87,7,yellow,black,0.309,0.799,courier-bold,68 +The secret food is "fries".,89,12,purple,white,0.844,0.863,helvetica-boldoblique,107 +The secret object #1 is a "door".,95,10,gray,white,0.922,0.806,times-bolditalic,111 +The secret animal #5 is a "rabbit".,97,8,blue,white,0.969,0.655,times-bold,93 diff --git a/BankOfMontreal/BankOfMontreal_100Pages/prompt_questions.txt b/BankOfMontreal/BankOfMontreal_100Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..80613a23bf860565c49544e0e0ecfff5c42a4050 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_100Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret object #5 in the document? +What is the secret drink in the document? +What is the secret fruit in the document? +What is the secret animal #2 in the document? +What is the secret kitchen appliance in the document? +What is the secret sport in the document? +What is the secret animal #4 in the document? +What is the secret instrument in the document? +What is the secret object #3 in the document? +What is the secret object #2 in the document? +What is the secret currency in the document? +What is the secret flower in the document? +What is the secret shape in the document? +What is the secret transportation in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret animal #1 in the document? +What is the secret landmark in the document? +What is the secret animal #3 in the document? +What is the secret vegetable in the document? +What is the secret object #4 in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret object #1 in the document? +What is the secret animal #5 in the document? diff --git a/BankOfMontreal/BankOfMontreal_10Pages/needles.csv b/BankOfMontreal/BankOfMontreal_10Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..13936e0e89ec84157a42e049f775f64ba183082b --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_10Pages/needles.csv @@ -0,0 +1,10 @@ +The secret drink is "milk". +The secret fruit is a "grape". +The secret kitchen appliance is a "toaster". +The secret sport is "skiing". +The secret instrument is a "drum". +The secret currency is a "rupee". +The secret flower is "lavender". +The secret shape is a "star". +The secret transportation is an "airplane". +The secret office supply is an "envelope". diff --git a/BankOfMontreal/BankOfMontreal_10Pages/needles_info.csv b/BankOfMontreal/BankOfMontreal_10Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..c25314748882270e438898939ed4e03de4d883e8 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_10Pages/needles_info.csv @@ -0,0 +1,10 @@ +The secret drink is "milk".,1,12,purple,white,0.068,0.144,helvetica-boldoblique,129 +The secret fruit is a "grape".,2,14,blue,white,0.731,0.76,times-italic,134 +The secret kitchen appliance is a "toaster".,3,10,orange,black,0.009,0.011,courier-bold,107 +The secret sport is "skiing".,4,7,yellow,black,0.188,0.597,helvetica-bold,125 +The secret instrument is a "drum".,5,12,white,black,0.915,0.826,courier,93 +The secret currency is a "rupee".,6,11,red,white,0.223,0.973,times-roman,85 +The secret flower is "lavender".,7,10,green,white,0.549,0.245,helvetica,113 +The secret shape is a "star".,8,11,black,white,0.992,0.437,courier-oblique,78 +The secret transportation is an "airplane".,9,9,brown,white,0.287,0.487,times-bold,75 +The secret office supply is an "envelope".,10,10,gray,white,0.675,0.199,times-bolditalic,111 diff --git a/BankOfMontreal/BankOfMontreal_10Pages/prompt_questions.txt b/BankOfMontreal/BankOfMontreal_10Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..c68f2c4e56bebf363c5695c5aafae3ada844619f --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_10Pages/prompt_questions.txt @@ -0,0 +1,10 @@ +What is the secret drink in the document? +What is the secret fruit in the document? +What is the secret kitchen appliance in the document? +What is the secret sport in the document? +What is the secret instrument in the document? +What is the secret currency in the document? +What is the secret flower in the document? +What is the secret shape in the document? +What is the secret transportation in the document? +What is the secret office supply in the document? diff --git a/BankOfMontreal/BankOfMontreal_150Pages/needles.csv b/BankOfMontreal/BankOfMontreal_150Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..28307e3e160d030722ed6090a3ed69e66f037800 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_150Pages/needles.csv @@ -0,0 +1,25 @@ +The secret object #5 is a "candle". +The secret drink is "milk". +The secret fruit is a "grape". +The secret animal #2 is a "koala". +The secret kitchen appliance is a "toaster". +The secret sport is "skiing". +The secret animal #4 is a "horse". +The secret instrument is a "drum". +The secret object #3 is a "plate". +The secret object #2 is a "watch". +The secret currency is a "rupee". +The secret flower is "lavender". +The secret shape is a "star". +The secret transportation is an "airplane". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret animal #1 is an "elephant". +The secret landmark is the "Colosseum". +The secret animal #3 is an "owl". +The secret vegetable is a "mushroom". +The secret object #4 is a "mirror". +The secret tool is "scissors". +The secret food is "fries". +The secret object #1 is a "door". +The secret animal #5 is a "rabbit". diff --git a/BankOfMontreal/BankOfMontreal_150Pages/needles_info.csv b/BankOfMontreal/BankOfMontreal_150Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..c2589fc88b310d7367651d037cabcedb700bb9f3 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_150Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret object #5 is a "candle".,1,7,green,white,0.204,0.574,times-italic,118 +The secret drink is "milk".,10,11,yellow,black,0.057,0.535,courier-oblique,89 +The secret fruit is a "grape".,16,8,blue,white,0.989,0.29,helvetica-bold,102 +The secret animal #2 is a "koala".,23,12,black,white,0.968,0.337,helvetica-boldoblique,74 +The secret kitchen appliance is a "toaster".,30,7,gray,white,0.394,0.883,courier-bold,76 +The secret sport is "skiing".,33,9,brown,white,0.399,0.39,times-bolditalic,84 +The secret animal #4 is a "horse".,37,12,red,white,0.573,0.862,helvetica,105 +The secret instrument is a "drum".,45,12,orange,black,0.581,0.776,courier,104 +The secret object #3 is a "plate".,54,8,white,black,0.495,0.271,times-roman,100 +The secret object #2 is a "watch".,58,13,purple,white,0.891,0.736,times-bold,126 +The secret currency is a "rupee".,66,13,purple,white,0.804,0.761,times-bolditalic,105 +The secret flower is "lavender".,68,12,gray,white,0.707,0.232,courier,96 +The secret shape is a "star".,78,9,black,white,0.421,0.269,helvetica-boldoblique,74 +The secret transportation is an "airplane".,80,10,yellow,black,0.412,0.887,courier-oblique,62 +The secret office supply is an "envelope".,89,10,orange,black,0.712,0.386,times-roman,88 +The secret clothing is a "dress".,92,10,white,black,0.532,0.488,times-bold,72 +The secret animal #1 is an "elephant".,102,11,brown,white,0.729,0.579,helvetica-bold,102 +The secret landmark is the "Colosseum".,106,10,blue,white,0.243,0.758,times-italic,97 +The secret animal #3 is an "owl".,113,8,green,white,0.079,0.422,courier-bold,92 +The secret vegetable is a "mushroom".,118,12,red,white,0.119,0.253,helvetica,79 +The secret object #4 is a "mirror".,121,12,orange,black,0.482,0.934,courier-bold,108 +The secret tool is "scissors".,129,12,gray,white,0.83,0.356,helvetica,136 +The secret food is "fries".,133,11,red,white,0.56,0.628,courier,89 +The secret object #1 is a "door".,142,12,blue,white,0.393,0.592,times-italic,107 +The secret animal #5 is a "rabbit".,148,10,black,white,0.803,0.964,helvetica-bold,90 diff --git a/BankOfMontreal/BankOfMontreal_150Pages/prompt_questions.txt b/BankOfMontreal/BankOfMontreal_150Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..80613a23bf860565c49544e0e0ecfff5c42a4050 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_150Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret object #5 in the document? +What is the secret drink in the document? +What is the secret fruit in the document? +What is the secret animal #2 in the document? +What is the secret kitchen appliance in the document? +What is the secret sport in the document? +What is the secret animal #4 in the document? +What is the secret instrument in the document? +What is the secret object #3 in the document? +What is the secret object #2 in the document? +What is the secret currency in the document? +What is the secret flower in the document? +What is the secret shape in the document? +What is the secret transportation in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret animal #1 in the document? +What is the secret landmark in the document? +What is the secret animal #3 in the document? +What is the secret vegetable in the document? +What is the secret object #4 in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret object #1 in the document? +What is the secret animal #5 in the document? diff --git a/BankOfMontreal/BankOfMontreal_200Pages/needles.csv b/BankOfMontreal/BankOfMontreal_200Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..28307e3e160d030722ed6090a3ed69e66f037800 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_200Pages/needles.csv @@ -0,0 +1,25 @@ +The secret object #5 is a "candle". +The secret drink is "milk". +The secret fruit is a "grape". +The secret animal #2 is a "koala". +The secret kitchen appliance is a "toaster". +The secret sport is "skiing". +The secret animal #4 is a "horse". +The secret instrument is a "drum". +The secret object #3 is a "plate". +The secret object #2 is a "watch". +The secret currency is a "rupee". +The secret flower is "lavender". +The secret shape is a "star". +The secret transportation is an "airplane". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret animal #1 is an "elephant". +The secret landmark is the "Colosseum". +The secret animal #3 is an "owl". +The secret vegetable is a "mushroom". +The secret object #4 is a "mirror". +The secret tool is "scissors". +The secret food is "fries". +The secret object #1 is a "door". +The secret animal #5 is a "rabbit". diff --git a/BankOfMontreal/BankOfMontreal_200Pages/needles_info.csv b/BankOfMontreal/BankOfMontreal_200Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..205c1abc973b8830fd268da48ea2f261bd1e3c58 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_200Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret object #5 is a "candle".,1,10,red,white,0.03,0.676,times-roman,97 +The secret drink is "milk".,13,11,black,white,0.487,0.641,courier,112 +The secret fruit is a "grape".,21,13,yellow,black,0.42,0.018,helvetica-boldoblique,113 +The secret animal #2 is a "koala".,30,11,white,black,0.189,0.423,helvetica-bold,117 +The secret kitchen appliance is a "toaster".,37,7,green,white,0.914,0.031,courier-bold,65 +The secret sport is "skiing".,44,11,brown,white,0.406,0.135,times-italic,86 +The secret animal #4 is a "horse".,50,10,gray,white,0.842,0.355,courier-oblique,97 +The secret instrument is a "drum".,60,10,orange,black,0.038,0.027,helvetica,77 +The secret object #3 is a "plate".,69,12,purple,white,0.495,0.168,times-bolditalic,127 +The secret object #2 is a "watch".,78,10,blue,white,0.583,0.794,times-bold,121 +The secret currency is a "rupee".,82,7,black,white,0.317,0.668,times-bolditalic,131 +The secret flower is "lavender".,94,13,blue,white,0.637,0.161,times-italic,63 +The secret shape is a "star".,97,11,brown,white,0.045,0.396,helvetica,108 +The secret transportation is an "airplane".,107,12,yellow,black,0.989,0.912,courier-oblique,64 +The secret office supply is an "envelope".,120,10,white,black,0.928,0.402,helvetica-boldoblique,106 +The secret clothing is a "dress".,122,12,gray,white,0.846,0.719,times-bold,121 +The secret animal #1 is an "elephant".,135,8,red,white,0.83,0.323,helvetica-bold,129 +The secret landmark is the "Colosseum".,144,14,purple,white,0.183,0.816,times-roman,102 +The secret animal #3 is an "owl".,150,9,orange,black,0.745,0.03,courier,136 +The secret vegetable is a "mushroom".,154,12,green,white,0.865,0.8,courier-bold,112 +The secret object #4 is a "mirror".,165,9,brown,white,0.839,0.773,courier-bold,114 +The secret tool is "scissors".,172,10,orange,black,0.588,0.13,helvetica,84 +The secret food is "fries".,181,13,white,black,0.569,0.17,times-bold,101 +The secret object #1 is a "door".,187,9,red,white,0.138,0.113,times-italic,106 +The secret animal #5 is a "rabbit".,197,13,black,white,0.226,0.916,courier,137 diff --git a/BankOfMontreal/BankOfMontreal_200Pages/prompt_questions.txt b/BankOfMontreal/BankOfMontreal_200Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..80613a23bf860565c49544e0e0ecfff5c42a4050 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_200Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret object #5 in the document? +What is the secret drink in the document? +What is the secret fruit in the document? +What is the secret animal #2 in the document? +What is the secret kitchen appliance in the document? +What is the secret sport in the document? +What is the secret animal #4 in the document? +What is the secret instrument in the document? +What is the secret object #3 in the document? +What is the secret object #2 in the document? +What is the secret currency in the document? +What is the secret flower in the document? +What is the secret shape in the document? +What is the secret transportation in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret animal #1 in the document? +What is the secret landmark in the document? +What is the secret animal #3 in the document? +What is the secret vegetable in the document? +What is the secret object #4 in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret object #1 in the document? +What is the secret animal #5 in the document? diff --git a/BankOfMontreal/BankOfMontreal_25Pages/needles.csv b/BankOfMontreal/BankOfMontreal_25Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..28307e3e160d030722ed6090a3ed69e66f037800 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_25Pages/needles.csv @@ -0,0 +1,25 @@ +The secret object #5 is a "candle". +The secret drink is "milk". +The secret fruit is a "grape". +The secret animal #2 is a "koala". +The secret kitchen appliance is a "toaster". +The secret sport is "skiing". +The secret animal #4 is a "horse". +The secret instrument is a "drum". +The secret object #3 is a "plate". +The secret object #2 is a "watch". +The secret currency is a "rupee". +The secret flower is "lavender". +The secret shape is a "star". +The secret transportation is an "airplane". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret animal #1 is an "elephant". +The secret landmark is the "Colosseum". +The secret animal #3 is an "owl". +The secret vegetable is a "mushroom". +The secret object #4 is a "mirror". +The secret tool is "scissors". +The secret food is "fries". +The secret object #1 is a "door". +The secret animal #5 is a "rabbit". diff --git a/BankOfMontreal/BankOfMontreal_25Pages/needles_info.csv b/BankOfMontreal/BankOfMontreal_25Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..4f10fe7a550ee2ac1a64122886f4863ce4ec2ee0 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_25Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret object #5 is a "candle".,1,8,blue,white,0.783,0.562,courier-oblique,108 +The secret drink is "milk".,2,13,brown,white,0.73,0.904,courier,88 +The secret fruit is a "grape".,3,9,purple,white,0.199,0.589,times-bolditalic,88 +The secret animal #2 is a "koala".,4,10,yellow,black,0.249,0.16,times-roman,140 +The secret kitchen appliance is a "toaster".,5,11,black,white,0.997,0.664,helvetica,94 +The secret sport is "skiing".,6,10,orange,black,0.15,0.54,courier-bold,65 +The secret animal #4 is a "horse".,7,9,white,black,0.633,0.159,helvetica-boldoblique,65 +The secret instrument is a "drum".,8,12,green,white,0.975,0.587,helvetica-bold,61 +The secret object #3 is a "plate".,9,9,red,white,0.53,0.761,times-italic,80 +The secret object #2 is a "watch".,10,10,gray,white,0.21,0.006,times-bold,102 +The secret currency is a "rupee".,11,11,brown,white,0.937,0.253,courier-bold,108 +The secret flower is "lavender".,12,11,yellow,black,0.433,0.755,helvetica,139 +The secret shape is a "star".,13,9,orange,black,0.219,0.756,times-roman,95 +The secret transportation is an "airplane".,14,12,white,black,0.513,0.341,courier-oblique,112 +The secret office supply is an "envelope".,15,11,black,white,0.047,0.01,times-bolditalic,119 +The secret clothing is a "dress".,16,12,purple,white,0.786,0.955,times-italic,88 +The secret animal #1 is an "elephant".,17,10,gray,white,0.288,0.042,helvetica-bold,84 +The secret landmark is the "Colosseum".,18,9,red,white,0.025,0.38,times-bold,80 +The secret animal #3 is an "owl".,19,10,green,white,0.964,0.123,helvetica-boldoblique,134 +The secret vegetable is a "mushroom".,20,12,blue,white,0.43,0.04,courier,82 +The secret object #4 is a "mirror".,21,11,blue,white,0.511,0.956,times-italic,110 +The secret tool is "scissors".,22,12,green,white,0.195,0.354,courier-oblique,83 +The secret food is "fries".,23,9,orange,black,0.398,0.888,courier,104 +The secret object #1 is a "door".,24,13,purple,white,0.584,0.723,times-bolditalic,132 +The secret animal #5 is a "rabbit".,25,9,red,white,0.288,0.195,helvetica-boldoblique,94 diff --git a/BankOfMontreal/BankOfMontreal_25Pages/prompt_questions.txt b/BankOfMontreal/BankOfMontreal_25Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..80613a23bf860565c49544e0e0ecfff5c42a4050 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_25Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret object #5 in the document? +What is the secret drink in the document? +What is the secret fruit in the document? +What is the secret animal #2 in the document? +What is the secret kitchen appliance in the document? +What is the secret sport in the document? +What is the secret animal #4 in the document? +What is the secret instrument in the document? +What is the secret object #3 in the document? +What is the secret object #2 in the document? +What is the secret currency in the document? +What is the secret flower in the document? +What is the secret shape in the document? +What is the secret transportation in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret animal #1 in the document? +What is the secret landmark in the document? +What is the secret animal #3 in the document? +What is the secret vegetable in the document? +What is the secret object #4 in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret object #1 in the document? +What is the secret animal #5 in the document? diff --git a/BankOfMontreal/BankOfMontreal_50Pages/needles.csv b/BankOfMontreal/BankOfMontreal_50Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..28307e3e160d030722ed6090a3ed69e66f037800 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_50Pages/needles.csv @@ -0,0 +1,25 @@ +The secret object #5 is a "candle". +The secret drink is "milk". +The secret fruit is a "grape". +The secret animal #2 is a "koala". +The secret kitchen appliance is a "toaster". +The secret sport is "skiing". +The secret animal #4 is a "horse". +The secret instrument is a "drum". +The secret object #3 is a "plate". +The secret object #2 is a "watch". +The secret currency is a "rupee". +The secret flower is "lavender". +The secret shape is a "star". +The secret transportation is an "airplane". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret animal #1 is an "elephant". +The secret landmark is the "Colosseum". +The secret animal #3 is an "owl". +The secret vegetable is a "mushroom". +The secret object #4 is a "mirror". +The secret tool is "scissors". +The secret food is "fries". +The secret object #1 is a "door". +The secret animal #5 is a "rabbit". diff --git a/BankOfMontreal/BankOfMontreal_50Pages/needles_info.csv b/BankOfMontreal/BankOfMontreal_50Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..a247d1020b7ca69a8ea8a81b037455b50d8bbe64 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_50Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret object #5 is a "candle".,2,10,red,white,0.127,0.241,times-bold,96 +The secret drink is "milk".,4,7,gray,white,0.245,0.387,helvetica,92 +The secret fruit is a "grape".,6,12,purple,white,0.138,0.988,times-roman,78 +The secret animal #2 is a "koala".,7,9,white,black,0.566,0.828,courier,62 +The secret kitchen appliance is a "toaster".,9,8,green,white,0.155,0.453,times-italic,100 +The secret sport is "skiing".,11,11,orange,black,0.577,0.566,courier-bold,83 +The secret animal #4 is a "horse".,13,7,blue,white,0.46,0.726,helvetica-boldoblique,98 +The secret instrument is a "drum".,16,14,brown,white,0.112,0.144,times-bolditalic,76 +The secret object #3 is a "plate".,18,10,black,white,0.391,0.028,courier-oblique,107 +The secret object #2 is a "watch".,19,12,yellow,black,0.801,0.892,helvetica-bold,85 +The secret currency is a "rupee".,21,13,green,white,0.188,0.195,courier-bold,108 +The secret flower is "lavender".,24,13,yellow,black,0.996,0.827,helvetica-bold,140 +The secret shape is a "star".,26,11,black,white,0.67,0.969,courier,93 +The secret transportation is an "airplane".,27,12,gray,white,0.193,0.889,times-bold,131 +The secret office supply is an "envelope".,30,13,orange,black,0.142,0.126,times-italic,79 +The secret clothing is a "dress".,32,9,red,white,0.67,0.941,courier-oblique,114 +The secret animal #1 is an "elephant".,33,10,blue,white,0.348,0.634,times-bolditalic,90 +The secret landmark is the "Colosseum".,35,13,brown,white,0.094,0.288,helvetica,112 +The secret animal #3 is an "owl".,37,10,purple,white,0.642,0.98,times-roman,117 +The secret vegetable is a "mushroom".,40,12,white,black,0.359,0.181,helvetica-boldoblique,98 +The secret object #4 is a "mirror".,41,9,brown,white,0.038,0.644,courier,126 +The secret tool is "scissors".,43,9,red,white,0.124,0.484,times-italic,94 +The secret food is "fries".,45,9,orange,black,0.262,0.783,times-bold,100 +The secret object #1 is a "door".,48,10,purple,white,0.843,0.263,helvetica-bold,75 +The secret animal #5 is a "rabbit".,50,10,black,white,0.441,0.166,helvetica-boldoblique,112 diff --git a/BankOfMontreal/BankOfMontreal_50Pages/prompt_questions.txt b/BankOfMontreal/BankOfMontreal_50Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..80613a23bf860565c49544e0e0ecfff5c42a4050 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_50Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret object #5 in the document? +What is the secret drink in the document? +What is the secret fruit in the document? +What is the secret animal #2 in the document? +What is the secret kitchen appliance in the document? +What is the secret sport in the document? +What is the secret animal #4 in the document? +What is the secret instrument in the document? +What is the secret object #3 in the document? +What is the secret object #2 in the document? +What is the secret currency in the document? +What is the secret flower in the document? +What is the secret shape in the document? +What is the secret transportation in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret animal #1 in the document? +What is the secret landmark in the document? +What is the secret animal #3 in the document? +What is the secret vegetable in the document? +What is the secret object #4 in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret object #1 in the document? +What is the secret animal #5 in the document? diff --git a/BankOfMontreal/BankOfMontreal_5Pages/needles.csv b/BankOfMontreal/BankOfMontreal_5Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..2295b32970334cc3c6ec7969d61dc383e79519ae --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_5Pages/needles.csv @@ -0,0 +1,5 @@ +The secret drink is "milk". +The secret fruit is a "grape". +The secret kitchen appliance is a "toaster". +The secret sport is "skiing". +The secret instrument is a "drum". diff --git a/BankOfMontreal/BankOfMontreal_5Pages/needles_info.csv b/BankOfMontreal/BankOfMontreal_5Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..0e092fd4ab279c63a1798a3ae2eca28e62382800 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_5Pages/needles_info.csv @@ -0,0 +1,5 @@ +The secret drink is "milk".,1,12,blue,white,0.64,0.299,helvetica-boldoblique,101 +The secret fruit is a "grape".,2,11,brown,white,0.863,0.425,times-italic,56 +The secret kitchen appliance is a "toaster".,3,10,green,white,0.368,0.107,times-roman,78 +The secret sport is "skiing".,4,10,orange,black,0.947,0.256,times-bolditalic,75 +The secret instrument is a "drum".,5,12,yellow,black,0.057,0.523,courier,100 diff --git a/BankOfMontreal/BankOfMontreal_5Pages/prompt_questions.txt b/BankOfMontreal/BankOfMontreal_5Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b289c275bd06ed988eaec3fe6efcbe0acd4c7e75 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_5Pages/prompt_questions.txt @@ -0,0 +1,5 @@ +What is the secret drink in the document? +What is the secret fruit in the document? +What is the secret kitchen appliance in the document? +What is the secret sport in the document? +What is the secret instrument in the document? diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_1.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..79ed571804f88e934682ae086150473bfa81df6f --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_1.txt @@ -0,0 +1,3 @@ +2023 Annual Report +to Shareholders +BMO Financial Group | 206th Annual Report \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_10.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..c1b3a1afeecab502004e599518997b44bac50ef0 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_10.txt @@ -0,0 +1,76 @@ +8 BMO Financial Group 206th Annual Report 2023 +CHIEF EXECUTIVE OFFICER’S MESSAGE +The scope of digital goes deeper, not only for the quality of +customer interactions, but also to powering technological change +across our teams resulting in advanced analytics, stronger insights +and agile decision-making. This was clearly evident as we +successfully converted nearly 2 million new customers to our +systems, a critical step in our integration of Bank of the West. +We are extremely proud that BMO was the only financial +institution named among the top 30 companies on Fast Company’s +fifth annual Best Workplaces for Innovators list, honouring +organizations that demonstrate a commitment to encouraging +and developing innovation enterprise-wide. +North American integration +Significant advancements in our U.S. franchise laid the groundwork +for our successful integration of Bank of the West – the largest +acquisition in Canadian banking history. +Our strategic focus on North American growth, supported by a global +presence that provides our clients access to the world, sets BMO +apart from our competitors. While we’ve operated in the U.S. since +1818, our acquisition of Harris Bank in 1984 established a meaningful +presence that was advanced with our 2011 acquisition of Marshall & +Ilsley Corporation (M&I) and expanded in 2023 with Bank of the +West. BMO is now a top 10 U.S. bank1, with over US$435 billion in +assets and physical presence in 32 states. Combined with our global +operations, our $1 trillion+ balance sheet positions us strongly +for future growth. +Our three operating groups are integrated across robust North- +South infrastructure, with commercial banking and capital markets +operations approximately the same size on both sides of the border +and our commercial bank now ranked among the top 5 in North +America. Our personal banking business is growing strongly with +peer-leading revenue growth in Canada as we gain market share +in the communities we serve, and our wealth management group +is primed for acceleration with continued net new asset growth, +reflecting the trusted relationship we have built with our clients. +Our strategic priorities +Our group strategic priorities align with +and support our enterprise-wide strategy, +positioning us well to drive competitive +performance. +Well-positioned for continued growth +Our performance continues to reflect the fundamental strength +and diversified portfolio of businesses that make up BMO – +our powerful platform for growth and resilience in a challenging +economic environment. To adjust to near-term industry headwinds +and return to our well-established record of positive operating +leverage in fiscal 2024 – a key objective for our bank – we’re +dynamically managing our businesses and taking action to align +our resources to our dual objectives of growing our revenues +and controlling expenses. +Our superior risk management capabilities and ethical culture have +guided the relentless execution of our strategy to strengthen and +grow our bank. We expect that disciplined expense management +and targeted investments, combined with revenue and expense +synergies from our recent acquisition, will continue to improve our +efficiency ratio over time. +North America’s potential +North America’s fundamental advantages position the region +for considerable growth in the years ahead, and BMO is well- +positioned to serve more clients between the Canadian and +American economies. +The clean energy transition will benefit both Canada and the U.S. +as reliable and trusted suppliers of sought-after resources and +sustainability expertise. BMO’s Climate Ambition, to be our clients’ +lead partner in the transition to a net zero world, is backed by +a $300 billion pledge to mobilize capital to clients’ sustainable +outcomes by 2025 – and we’re on track to exceed that goal this +year. With support for sustainable bond underwriting, equity and +debt financing, ESG advisory services, and loans for sustainable +projects, our Energy Transition and Sustainable Finance Groups are +helping clients pursue opportunities in the global economy’s shift +in the production and consumption of energy. +1 Ranking by assets as at September 30, 2023 and internal analysis. Source: SNL Financial. Top 10 U.S. JP Morgan, Bank of America, Citibank, Wells Fargo, U.S. Bank, PNC Bank, +Truist Bank, TD Bank, Capital One, BMO. +The secret animal #2 is a "koala". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_11.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..b78f53582411f42c365bb19828b10294e3e4c8b6 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_11.txt @@ -0,0 +1,77 @@ +BMO Financial Group 206th Annual Report 2023 9 +We’re also committed to empowering our employees. Our +exceptionally engaged team has made significant strides in +activating a winning culture in just a few short years, making +substantial progress across every business and group to rank +among the world’s strongest financial institutions. Every member +of Team BMO is committed to building world-class loyalty and +deepening client relationships by bringing the whole bank to +our clients. +Looking ahead +With the size, strength and stability of our bank, BMO is +well positioned for growth and consistent performance through +economic cycles. With the longest-running dividend payout record +of any company in Canada at 195 years, we have a leading track +record of delivering value for our shareholders. +Following a year of successful acquisitions, we’re moving into the +future with the full strength of our North American footprint and +global presence – making our growth ambitions a reality, realizing +opportunities in new markets, and driving progress for our clients, +our communities and the planet. +Darryl White +U.S. productivity is growing twice as fast as the G7 average and +is among the world’s strongest. The U.S. also has the largest +middle-class consumer market globally. Next door, Canada’s rapidly +growing population – the fastest among G7 nations – and its +position as the only G7 economy with comprehensive free trade +access to the entire G7 and European Union, offers significant +global economic advantage. +Canada and the U.S. share one of the largest bilateral trade +relationships in the world, and BMO is serving our clients at the +heart of each economy, helping to build a thriving economy, +sustainable future and inclusive society across the region as a +purpose-driven organization. +BMO’s clear North American positioning is now well established +to serve the impressive potential of the North American region +in a shifting global landscape. +Our Purpose commitments +Our performance enables us to put our Purpose into action +and Boldly Grow the Good in business and life. When we enter +a new market, we commit to making progress for our clients +and communities there. That’s why we are delivering on our plan +to support the communities we serve across our U.S. footprint. Our +BMO EMpower 2.0 plan will deliver more than $40 billion in lending +to minority-owned small businesses, community reinvestment +in real estate, affordable housing and neighbourhood revitalization, +and philanthropic giving to support under-represented +communities and organizations. +With input from more than 85 community groups, this five-year +plan reinforces BMO’s focus on increasing home ownership +and supporting the growth of small business in low- to moderate- +income neighbourhoods and underserved communities. +World-class +loyalty and +growth, +powered by +One Client +leadership +Winning +Culture driven +by alignment, +empowerment +and recognition +Digital First +for speed, +scale and the +elimination of +complexity +Be our clients’ +lead partner +in the transition +to a net +zero world +Superior +management +of risk, capital +and funding +performance \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_12.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..9375f9502e5015850475f31583ca68087f29e47d --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_12.txt @@ -0,0 +1,41 @@ +10 BMO Financial Group 206th Annual Report 2023 +Economic +progress +THRIVING ECONOMY +#1 in customer +satisfaction +BMO received the highest score +in customer satisfaction among +Canada’s “Big Five” banks in the +J.D. Power 2023 Canada Retail +Banking Satisfaction Study. +The annual study analyzes +direct feedback from thousands +of customers across Canada +and measures their satisfaction +with their primary bank.1 +Innovative +platforms +We’re meeting and engaging +clients where they are. BMO +was recognized for innovation at +the 2023 Cannes Lions festival, +winning Gold for BMO NXT LVL, +a first-of-its-kind gaming platform +on Twitch that educates and +informs gamers about personal +finances. We also won two Gold +Lions in the Creative Commerce +and Social & Influencer categories. +A wider +U.S. footprint +With the acquisition of Bank of +the West, BMO has expanded our +market presence in the U.S. West +and Southwest – while reinforcing +our third-place market share +position for deposits across our +Midwest footprint. +Hannalee Pervan, co-owner of One House Bakery. +Photography: Marco Boscacci/BMO 1 For more information, refer to +www.jdpower.com/business. \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_13.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..b7e8e803949e04a0bdf325a4a2d2513256f63b8d --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_13.txt @@ -0,0 +1,44 @@ +BMO Financial Group 206th Annual Report 2023 11 +US$16.5B +committed to lending for U.S. +small businesses with owners +who are Native American, +Black, Latinx or women. + Top 5 +commercial +lender in +North America1 +One House Bakery +Benicia, California +“As a small business, it’s important for me to take care of my employees +and my community. I want to be Benicia’s bakery,” says Hannalee Pervan, +co-owner of One House Bakery. +Hannalee travelled a long road to open the business she’s dreamed of +since she was a little girl. After earning a basketball scholarship, she +studied business at university, and then cooking at Le Cordon Bleu Ottawa. +For more than a decade afterwards, she worked at bakeries across Canada +and the United States, learning everything from how to make different +styles of pastry to how to manage wholesaling. +At One House, bakers mill their own flour and use natural colours and +ingredients. “I want everything to be as delicious and healthy as it can +be,” says Hannalee, who co-owns the bakery with her parents Catherine +and Peter Pervan. And it’s truly a family affair: Peter handles payroll, and +Catherine is a chocolatier. +The bakery’s name references the unity between front and back of the +house at this bakery – two realms that are typically separated at culinary +establishments. Similar to BMO’s One Client Leadership approach, Hannalee +knows you get the best from your team when everyone works together. +“Their philosophy is just like BMO’s,” says Chris Wheeler, VP and Business +Relationship Manager, BMO. “Their focus is ensuring everyone works +together to get to a better end result.” +$8.3B +in loans, deposits and +investments originated +or administered by BMO +for Canadian Indigenous +communities and +businesses, not far from our +target of $9.5B by 2025. +Benicia, California +1 Share of commercial loans based upon publicly available U.S. regulatory filings +(FR Y-9Cs and FFIEC 002s) and internal analysis. \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_14.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..52023b4d0950b8090ac85a6d205633bde30d09f0 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_14.txt @@ -0,0 +1,6 @@ +12 BMO Financial Group 206th Annual Report 2023 +Sustainable +progress +SUSTAINABLE FUTURE +Benjamin Feagin Jr., CEO of AgriTech North. +Photography: Tony McGuire/Theymedia \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_15.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..78e17c5d0f0999168d1c5d5b46ef6a07e45d490d --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_15.txt @@ -0,0 +1,79 @@ +BMO Financial Group 206th Annual Report 2023 13 +A global leader +BMO was recognized as the +world’s top-ranked financial +institution for helping make +progress in support of a just +and sustainable economy by +the World Benchmarking Alliance +(WBA)1, which has developed +transformative new benchmarks +to measure companies’ impacts – +and encourage them to do better. +The WBA noted our leadership +in governance and respect for +planetary boundaries and +human rights. +Protecting +biodiversity +BMO was named to the United +Nations Principles for Responsible +Banking (PRB), Nature Target +Setting Working Group, focused +on developing guidance for +biodiversity and nature-related +target setting – the only Canadian +bank among 34 UN PRB +signatories from 24 countries. +Banking +on ethics +BMO was named one of the +World’s Most Ethical Companies +for the sixth consecutive year +by Ethisphere, a global leader +in defining and advancing the +standards of ethical business +practices – one of only four banks +worldwide to be included in 2023, +and the only Canadian bank to +receive this designation since the +award’s inception in 2007. +AgriTech North +Dryden, Ontario +Food insecurity is a major issue in Canada’s northern Indigenous +communities, where food costs can be significantly higher than in urban +centres. Benjamin Feagin Jr., CEO of AgriTech North and a member of +the Métis community, is on a mission to change that. +AgriTech is a vertical farming company using innovation to enhance +sustainability, food security and affordability in Canada’s northern and +remote Indigenous communities. “We’re trying to innovate around +existing technologies to find lower-tech ways to do the same job – but +that are more sustainable and less energy-intensive,” says Benjamin. +For example, they’re exploring ways to combine vertical farming – which +generates heat, with greenhouse production – which requires heat. +They’re also planning to work with First Nations governments to help +them establish food sovereignty in their own communities. “We want to +help others implement the successes we have in our area,” says Benjamin. +BMO is focused on being our clients’ lead partner in the transition to a net +zero world – and Seleen Mostow, Relationship Manager at BMO is excited +to support AgriTech’s mission to reduce food costs by 25%. “BMO’s helping +them remain sustainable so they can focus on achieving year-round +growing that has net-zero emissions and is energy-independent,” she says. +“We can make a difference at BMO by supporting businesses that do so +much good in our communities – this is why I love my job.” +$300B +in capital to support +clients pursuing +sustainable outcomes. +13 years +BMO has been carbon +neutral in our own +operations since 2010. +#1 +Corporate Knights’ most +sustainable bank in North +America, for the fourth +year in a row. +Dryden, Ontario +1 Awarded in 2022. +The secret kitchen appliance is a "toaster". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_16.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..4814ce9a595992f5570f5e1bcac958b635480a4b --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_16.txt @@ -0,0 +1,8 @@ +14 BMO Financial Group 206th Annual Report 2023 +Equitable +progress +INCLUSIVE SOCIETY +Carmell Macklin, owner of Macklin Hauling Inc. +Photography: Kevin A. Roberts +Custom hat embroidery courtesy of Anish Branding, Nepean, ON +The secret sport is "skiing". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_17.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4b0e52e0e96d46b8a3349744c7999c6d65f66cf --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_17.txt @@ -0,0 +1,81 @@ +BMO Financial Group 206th Annual Report 2023 15 +St. Louis, Missouri +Supporting +research +BMO committed $5 million to the +Centre for Addiction and Mental +Health to support independent +research and help build a new +research centre – the Krembil Centre +for Neuroinformatics in Toronto, a +global hub collecting and integrating +large-scale research data, using +machine learning and mathematical +models to potentially transform our +understanding of brain disorders. +$40 billion+ +for communities +BMO EMpower 2.0 is our five-year +plan to address key barriers for +minority businesses, communities +and families. We’ve committed more +than $40 billion in funding across +the United States, with over $16 +billion targeted for California. The +plan goes beyond financial support +– these partnerships foster deep +community engagement, creating +meaningful change at the local level. +An inclusive +workplace +BMO’s commitment to a diverse +and inclusive workplace was +recognized by several organizations +in 2023. For example, we received a +top score on the Disability Equality +Index (DEI) Best Places to Work, +the leading benchmark tool for +disability inclusion in business. DEI +is a joint initiative of Disability:IN +and The American Association of +People with Disabilities. +Macklin Hauling Inc. +St. Louis, Missouri +At 74 years old – and after recovering from a stroke that initially left +him unable to walk – Macklin Hauling owner Carmell Macklin +was ready to restart his trucking business. A big fan of BMO, he trusted +his banker of seven years, Branch Manager and VP Stephanie Tuomey, +to help him get back on the road. But when his truck broke down +shortly afterwards, he almost parked it for good. +“I told him we didn’t come this far just to come this far!” says Stephanie, +noting that while Carmell had other sources of income, trucking is the +work he loves to do. +“Stephanie is truly an angel, along with her team. They gave me the +courage and confidence – along with the financial support – to get me +back trucking again,” says Carmell. “Every tool BMO had that would +benefit Macklin Hauling, we used – and they worked.” +Stephanie set Carmell up with a business credit card using BMO +EMpower’s Zero Barriers to Business program so he could finance the +repairs without depleting his cash reserves, and a business savings +account so he’s better prepared for the next challenge. +Carmell says BMO has always been there for him, and he tells everyone +he can about the bank. “Carmell shared with me what an impact it made, +just having someone believe in him,” says Stephanie. His son, who runs a +trucking business of his own, has also moved his banking to BMO. +“Zero Barriers to Business and EMpower are two of our most impactful +programs,” says Stephanie. “They allow us to bring valuable tools and +resources to the businesses that fuel our communities.” +8 years +on the Bloomberg Gender-Equality +Index, for our commitment to gender +equity and inclusion in the workplace +and the community. +90+% +of BMO employees completed our +Learn from Difference program, +fostering a more inclusive workplace. +$100M +committed to Business Within Reach: +BMO for Black Entrepreneurs program, +helping Black-owned businesses in +Canada start up, scale up and grow. \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_2.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..82f65716565cdc2b47730c0beaae46bbf07836dd --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_2.txt @@ -0,0 +1,46 @@ +Business Review +2 Who We Are +4 Financial Performance +5 Digital Strategy and Leadership +6 Chair’s Message +7 Chief Executive Officer’s Message +10 Economic Progress +12 Sustainable Progress +14 Equitable Progress +16 One Client Leadership +18 Board of Directors and Executive +Committee +Financial Review +19 Enhanced Disclosure Task Force +20 Management’s Discussion +and Analysis +126 Supplemental Information +138 Statement of Management’s +Responsibility for Financial Information +139 Independent Auditor’s Report +142 Reports of Independent Registered +Public Accounting Firm +145 Consolidated Financial Statements +150 Notes to Consolidated Financial +Statements +Resources and Directories +135 Glossary of Financial Terms +215 Where to Find More Information +216 Shareholder Information +Our Purpose is comprised of three core commitments: +For a thriving economy +Providing access to capital and valuable financial advice – investing in businesses, +supporting home ownership and strengthening the communities we serve, +while driving innovation that makes banking easier +For a sustainable future +Being our clients’ lead partner in the transition to a net zero world, delivering +on our commitments to sustainable financing and responsible investing +For an inclusive society +Committing to zero barriers to inclusion through investments, financial products +and services, and partnerships that remove systemic barriers for under-represented +customers, employees and communities – and drive inclusion and equitable +growth for everyone +A LEED Gold-certified building, the Nova Centre +houses BMO’s Atlantic Canada headquarters +in Halifax, Nova Scotia. +Photography: Dean Casavechia \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_28.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..483bb6123e9711d4dbac9f8ceca65f74a87e736c --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_28.txt @@ -0,0 +1,49 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +Supporting a Sustainable and Inclusive Future +In support of our customers, communities and employees, in 2023 we: +‰ Launched BMO EMpowerTM 2.0, pledging more than US$40 billion to support organizations in communities across the United States focused +on advancing home ownership, growing small businesses, strengthening communities, and creating a more equitable society. +‰ Exceeded BMO’s annual Employee Giving Campaign target with our employees contributing more than $31 million to the United Way and +thousands of other community organizations across North America, while also setting a new record for pledges. +‰ Announced the 2022 recipients of $150,000 in grants awarded to twelve Canadian women entrepreneurs as part of the BMO Celebrating +Women Grant Program for women-owned businesses across Canada, in collaboration with Deloitte. The program is in its third year and has +supported 56 women-owned businesses to date in Canada, with grants totalling $530,000. +‰ Were named to the United Nations Principles for Responsible Banking, Nature Target Setting Working Group, focused on developing guidance +for setting biodiversity and nature targets – the only Canadian bank among 34 signatories from 24 countries. +‰ Invested $15 million in the Feel Out Loud campaign, sponsored by Kids Help Phone to expand access to clinical care and services in Canada +through its e-mental health platform for youth. As a founding partner of Kids Help Phone, and with the help of our employees, we have raised +more than $40 million to support this campaign to date. +‰ Continued to drive progress for mental health treatment with a $5 million donation to the Centre for Addiction and Mental Health (CAMH) to +support independent research at its Krembil Centre for Neuroinformatics and help build a research centre. We also donated $2 million to the Royal +Ottawa Health Care Group (The Royal) to support the newly-established BMO Innovative Clinic for Depression, providing more treatment options for +people living with depression. +‰ Released Wîcihitowin, our third annual Indigenous Partnerships and Progress Report, highlighting our focus on advancing education, employment +and economic empowerment in First Nations, Inuit and Métis communities. In addition, we announced six new members of our Indigenous +Advisory Council (IAC), which now includes leaders from across Canada. +BMO’s leadership continues to be recognized in a significant number of rankings, including: +‰ Ranked among the most sustainable companies on the Dow Jones Sustainability Indices (DJSI). In addition, BMO ranked in the 95th percentile +among banks globally and earned the highest possible score in the areas of Environmental Reporting, Social Reporting and Financial Inclusion. +‰ Named one ofCorporate Knights’ 2023 Global 100 Most Sustainable Corporations in the World and, for the fourth consecutive year, ranked as North +America’s most sustainable bank. We ranked eighth in the world and in the top 15% of banks globally for Sustainable Revenue and received high +marks for diversity on our Board of Directors and the representation of diversity in our senior leadership. +‰ Included inCorporate Knights’list of Canada’s Best 50 Corporate Citizens, with top-quartile scores in board gender diversity and the representation +of visible minorities in our executive leadership – the only Canadian bank named to this listing. We also received a top-quartile Sustainable Revenue +score, demonstrating our ongoing commitment to sustainable financing and responsible investing. +‰ Recognized by the World Benchmarking Alliance (WBA) as the world’s top-ranked financial institution for supporting progress toward a just and +sustainable economy. +‰ Included for the eighth consecutive year in the Bloomberg Gender-Equality Index (GEI), in recognition of BMO’s global leadership in gender +equity and inclusion within the workplace and the community, and for publicly demonstrating our commitment to equality and the advancement +of women. +‰ Recognized by Ethisphere Institute as one of the World’s Most Ethical Companies for the sixth consecutive year, remaining the only Canadian bank +to be honoured with this designation since its inception in 2007. The designation affirms our commitment to doing what is right and operating with +transparency, good governance and integrity in support of a thriving economy, a sustainable future and an inclusive society. +‰ Included for the third consecutive year in the 2023 Women Lead Here list published by theGlobe and Mailin its Report on Business magazine to +recognize Canadian businesses for excellence in gender diversity in executive roles. Our objective for gender equality in our senior leadership has +been above 40% since 2016, and we continue to support advancing diversity, equity and inclusion across the bank. +‰ Received a top score on the Disability Equality Index (DEI) for the eighth consecutive year. BMO was named one of the Best Places to Work for +Disability Inclusion by Disability:IN and the American Association of People with Disabilities (AAPD), in recognition of our continued focus and +progress on building an inclusive society for our employees and the communities we serve. +Caution +This Supporting a Sustainable and Inclusive Future section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements. +26 BMO Financial Group 206th Annual Report 2023 + MD&A \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_29.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..08aec1209546b92c2135913e47becc80e9241517 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_29.txt @@ -0,0 +1,79 @@ + MD&A +Financial Highlights +(Canadian $ in millions, except as noted) 2023 2022 +Summary Income Statement (1) +Net interest income 18,681 15,885 +Non-interest revenue 12,518 17,825 +Revenue 31,199 33,710 +Insurance claims, commissions and changes in policy benefit liabilities (CCPB) 1,939 (683) +Revenue, net of CCPB(2) 29,260 34,393 +Provision for credit losses on impaired loans 1,180 502 +Provision for (recovery of) credit losses on performing loans 998 (189) +Total provision for credit losses (PCL) 2,178 313 +Non-interest expense 21,219 16,194 +Provision for income taxes 1,486 4,349 +Net income 4,377 13,537 +Net income available to common shareholders 4,034 13,306 +Adjusted net income 8,675 9,039 +Adjusted net income available to common shareholders 8,332 8,808 +Common Share Data ($, except as noted) (1) +Basic earnings per share 5.69 20.04 +Diluted earnings per share 5.68 19.99 +Adjusted diluted earnings per share 11.73 13.23 +Book value per share 97.17 95.60 +Closing share price 104.79 125.49 +Number of common shares outstanding(in millions) +End of period 720.9 677.1 +Average basic 709.4 664.0 +Average diluted 710.5 665.7 +Market capitalization($ billions) 75.5 85.0 +Dividends declared per share 5.80 5.44 +Dividend yield(%) 5.5 4.3 +Dividend payout ratio(%) 102.0 27.1 +Adjusted dividend payout ratio(%) 49.4 41.0 +Financial Measures and Ratios (%) (1) +Return on equity 6.0 22.9 +Adjusted return on equity 12.3 15.2 +Return on tangible common equity 8.2 25.1 +Adjusted return on tangible common equity 15.8 16.6 +Efficiency ratio 68.0 48.0 +Adjusted efficiency ratio, net of CCPB(2) 59.8 55.8 +Operating leverage (38.5) 19.6 +Adjusted operating leverage, net of CCPB(2) (8.2) 1.3 +Net interest margin on average earning assets 1.63 1.62 +Net interest margin on average earning assets excluding trading revenue and trading assets 1.82 1.72 +Effective tax rate 25.3 24.3 +Adjusted effective tax rate 22.3 22.8 +Total PCL-to-average net loans and acceptances 0.35 0.06 +PCL on impaired loans-to-average net loans and acceptances 0.19 0.10 +Liquidity coverage ratio (LCR)(3) 128 135 +Net stable funding ratio (NSFR)(3) 115 114 +Balance Sheet and Other Information (as at October 31, $ millions, except as noted) +Assets 1,293,276 1,139,199 +Average earning assets 1,145,632 979,341 +Gross loans and acceptances 668,396 567,191 +Net loans and acceptances 664,589 564,574 +Deposits 909,676 769,478 +Common shareholders’ equity 70,051 64,730 +Total risk-weighted assets(4) 424,197 363,997 +Assets under administration 808,985 744,442 +Assets under management 332,947 305,462 +Capital Ratios (%) (4) +Common Equity Tier 1 Ratio 12.5 16.7 +Tier 1 Capital Ratio 14.1 18.4 +Total Capital Ratio 16.2 20.7 +Leverage Ratio 4.2 5.6 +TLAC Ratio 27.0 33.1 +Foreign Exchange Rates ($) +As at October 31, Canadian/U.S. dollar 1.3868 1.3625 +Average Canadian/U.S. dollar 1.3492 1.2918 +(1) Adjusted results exclude certain items from reported results and are used to calculate our adjusted measures as presented in the above table. Management assesses performance on a reported basis +and an adjusted basis, and considers both to be useful. Revenue, net of CCPB, as well as reported ratios calculated net of CCPB, and adjusted results, measures and ratios in this table are non-GAAP +amounts. For further information, refer to the Non-GAAP and Other Financial Measures section; for details on the composition of non-GAAP amounts, measures and ratios, as well as supplementary +financial measures, refer to the Glossary of Financial Terms. +(2) We present revenue, efficiency ratio and operating leverage on a basis that is net of CCPB, which reduces the variability in insurance revenue resulting from changes in fair value that are largely offset by +changes in the fair value of policy benefit liabilities, the impact of which isreflected in CCPB. For further information, refer to the Insurance Claims, Commissions and Changes in Policy Benefits section. +(3) LCR and NSFR are disclosed in accordance with the Liquidity Adequacy Requirements (LAR) Guideline as set out by the Office of the Superintendent ofFinancial Institutions (OSFI), as applicable. +(4) Capital ratios and risk-weighted assets are disclosed in accordance with the Capital Adequacy Requirements (CAR) Guideline, as set out by OSFI, as applicable. +BMO Financial Group 206th Annual Report 202327 +The secret object #2 is a "watch". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_3.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c1f2fa164258d788afa3314d91982afbcbbae8b --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_3.txt @@ -0,0 +1,14 @@ +BMO Financial Group 206th Annual Report 2023 1 +Our Strategy +At BMO, we’re building a high-performing, +digitally-enabled, future-ready bank with engaged +employees and a winning culture. We are focused +on helping our customers make real financial +progress, and on financing our clients’ growth and +innovation, while also investing in our workforce. +Anchored by our Purpose, we are driven by +our strategic priorities for growth, strengthened +by our approach to sustainability and guided by +our values as we build a foundation of trust +with our stakeholders. +The secret object #5 is a "candle". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_31.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..efb020660f785bca8e883e904d9915befbb77ad2 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_31.txt @@ -0,0 +1,65 @@ + MD&A +Non-GAAP and Other Financial Measures +(Canadian $ in millions, except as noted) 2023 2022 2021 +Reported Results +Net interest income 18,681 15,885 14,310 +Non-interest revenue 12,518 17,825 12,876 +Revenue 31,199 33,710 27,186 +Insurance claims, commissions and changes in policy benefit liabilities (CCPB) (1,939) 683 (1,399) +Revenue, net of CCPB 29,260 34,393 25,787 +Provision for credit losses (2,178) (313) (20) +Non-interest expense (21,219) (16,194) (15,509) +Income before income taxes 5,863 17,886 10,258 +Provision for income taxes (1,486) (4,349) (2,504) +Net income 4,377 13,537 7,754 +Diluted EPS($) 5.68 19.99 11.58 +Adjusting Items Impacting Revenue (Pre-tax) +Impact of divestitures(1) – (21) 29 +Management of fair value changes on the purchase of Bank of the West(2) (2,011) 7,713 – +Legal provision (including related interest expense and legal fees)(3) (30) (515) – +Impact of Canadian tax measures(4) (138) –– +Impact of adjusting items on revenue (pre-tax) (2,179) 7,177 29 +Adjusting Items Impacting Provision for Credit Losses (Pre-tax) +Initial provision for credit losses on purchased performing loans (pre-tax)(5) (705) –– +Adjusting Items Impacting Non-Interest Expense (Pre-tax) +Acquisition and integration costs(6) (2,045) (326) (9) +Amortization of acquisition-related intangible assets(7) (357) (31) (88) +Impact of divestitures(1) – (16) (886) +Legal provision (including related interest expense and legal fees)(3) 3 (627) – +Restructuring (costs) reversals(8) – –2 4 +Impact of Canadian tax measures(4) (22) –– +Impact of adjusting items on non-interest expense (pre-tax) (2,421) (1,000) (959) +Impact of adjusting items on reported net income (pre-tax) (5,305) 6,177 (930) +Adjusting Items Impacting Revenue (After-tax) +Impact of divestitures(1) – (23) 22 +Management of fair value changes on the purchase of Bank of the West(2) (1,461) 5,667 – +Legal provision (including related interest expense and legal fees)(3) (23) (382) – +Impact of Canadian tax measures(4) (115) –– +Impact of adjusting items on revenue (after-tax) (1,599) 5,262 22 +Adjusting Items Impacting Provision for Credit Losses (After-tax) +Initial provision for credit losses on purchased performing loans (after-tax)(5) (517) –– +Adjusting Items Impacting Non-Interest Expense (After-tax) +Acquisition and integration costs(6) (1,533) (245) (7) +Amortization of acquisition-related intangible assets(7) (264) (23) (66) +Impact of divestitures(1) – (32) (864) +Legal provision (including related interest expense and legal fees)(3) 2 (464) – +Restructuring (costs) reversals(8) – –1 8 +Impact of Canadian tax measures(4) (16) –– +Impact of adjusting items on non-interest expense (after-tax) (1,811) (764) (919) +Adjusting Items Impacting Provision for Income Taxes +Impact of Canadian tax measures(4) (371) –– +Impact of adjusting items on reported net income (after-tax) (4,298) 4,498 (897) +Impact on diluted EPS($) (6.05) 6.76 (1.38) +Adjusted Results +Net interest income 19,094 16,352 14,310 +Non-interest revenue 14,284 10,181 12,847 +Revenue 33,378 26,533 27,157 +Insurance claims, commissions and changes in policy benefit liabilities (CCPB) (1,939) 683 (1,399) +Revenue, net of CCPB 31,439 27,216 25,758 +Provision for credit losses (1,473) (313) (20) +Non-interest expense (18,798) (15,194) (14,550) +Income before income taxes 11,168 11,709 11,188 +Provision for income taxes (2,493) (2,670) (2,537) +Net income 8,675 9,039 8,651 +Diluted EPS($) 11.73 13.23 12.96 +BMO Financial Group 206th Annual Report 202329 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_38.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..e37281472cd9df6860dffd3197964d7eb1ea0681 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_38.txt @@ -0,0 +1,65 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +Revenue +(Canadian $ in millions, on a pre-tax basis) +For the year ended October 31 2023 2022 +Net interest income 18,681 15,885 +Non-interest revenue 12,518 17,825 +Total revenue 31,199 33,710 +Insurance claims, commissions and changes in policy benefit liabilities (CCPB)(1) 1,939 (683) +Revenue, net of CCPB(1) 29,260 34,393 +Impact of divestitures(2) – 21 +Management of fair value changes on the purchase of Bank of the West(3) 2,011 (7,713) +Legal provision (including related interest expense and legal fees)(4) 30 515 +Impact of Canadian tax measures(5) 138 – +Impact of adjusting items on revenue 2,179 (7,177) +Adjusted revenue(2) (3) (4) 33,378 26,533 +Adjusted revenue, net of CCPB(1) (2) (3) (4) 31,439 27,216 +(1) Insurance revenue can experience variability arising from fluctuations in the fair value of insurance assets caused by movements in interest rates and equity markets. The investments that support +policy benefit liabilities are predominantly fixed income assets recorded at fair value, with changes in fair value recorded in insurance revenue inthe Consolidated Statement of Income. These fair +value changes are largely offset by changes in the fair value of policy benefit liabilities, the impact of which is reflected in CCPB. The presentationof revenue on a basis net of CCPB, reduces variability +in results, which allows for a better assessment of operating results. For further information, refer to the Insurance Claims, Commissions and Changes in Policy Benefits section. +(2) Fiscal 2022 reported revenue included non-interest revenue related to the sale of our EMEA and U.S. Asset Management businesses, comprising a gain of $8 million related to the transfer of +certain U.S. asset management clients and a $29 million loss related to foreign currency translation reclassified from accumulated other comprehensive income to non-interest revenue, recorded +in Corporate Services. +(3) Reported revenue included revenue (losses) related to the acquisition of Bank of the West resulting from the management of the impact of interest rate changes between the announcement and closing +of the acquisition on its fair value and goodwill. Fiscal 2023 included a loss of $2,011 million, comprising $1,628 million of mark-to-market losses on certain interest rate swaps recorded in trading +revenue and $383 million of losses on a portfolio of primarily U.S. treasuries and other balance sheet instruments recorded in net interest income. Fiscal 2022 included revenue of $7,713 million, +comprising $7,665 million of mark-to-market gains and $48 million of non-trading interest income. These amounts were recorded in Corporate Services. For further information on this acquisition, refer +to the Recent Acquisitions section. +(4) Reported revenue included the impact of a lawsuit associated with a predecessor bank, M&I Marshall and Ilsley Bank. Interest expense of $30 million was recorded in fiscal 2023 and $515 million +was recorded in fiscal 2022. These amounts were recorded in Corporate Services. For further information, refer to the Provisions and Contingent Liabilities section in Note 24 of the audited annual +consolidated financial statements. +(5) Fiscal 2023 reported revenue included the impact of certain tax measures enacted by the Canadian government. These tax measures included a chargeof $138 million related to the amended +GST/HST definition for financial services, recorded in non-interest revenue in Corporate Services. +Revenue, net of CCPB, and adjusted results are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section. +Reported revenue was $31,199 million, a decrease of $2,511 million or 7% from the prior year. On a basis that nets insurance claims, commissions +and changes in policy benefit liabilities (CCPB) against insurance revenue (net revenue), reported net revenue was $29,260 million, a decrease +of $5,133 million or 15% from the prior year, and adjusted net revenue was $31,439 million, an increase of $4,223 million or 16%. The inclusion +of Bank of the West contributed $3,143 million to both reported and adjusted revenue in the current year. The impact of the stronger U.S. dollar +increased revenue by 2% on both a reported and an adjusted basis. +The decrease in reported net revenue primarily reflected the impact of fair value management actions and the impact of certain tax measures +enacted by the Canadian government, partially offset by lower interest expense due to the legal provision related to the lawsuit associated with +M&I Marshall and Ilsley Bank in the prior year. Net revenue increased across all operating groups and decreased in Corporate Services on both a +reported and an adjusted basis. +BMO analyzes revenue at the consolidated level based on GAAP revenue as reported in the audited annual consolidated financial statements, +on a basis net of insurance CCPB, and on an adjusted basis. +Further discussion is provided in the 2023 Operating Groups Performance Review section. +For further information on non-GAAP amounts, measures and ratios, and results presented on a net revenue basis in this Revenue section, +refer to the Non-GAAP and Other Financial Measures section. +Net Interest Income comprises earnings on assets, such as loans and securities, including interest and certain dividend income, less interest expense +paid on liabilities, such as deposits. Net interest income, excluding trading, is presented on a basis that excludes trading-related interest incomea n d +earning assets. +Net Interest Margin is the ratio of net interest income to average earning assets, expressed as a percentage or in basis points. Net interest +margin, excluding trading, is computed in the same manner, excluding trading-related interest income and earning assets. +Net Non-Interest Revenue is non-interest revenue, net of insurance claims, commissions and changes in policy benefit liabilities (CCPB). +Average Earning Assets represents the daily average balance of deposits at central banks, deposits with other banks, securities borrowed +or purchased under resale agreements, securities, and loans over a one-year period. +Trading-Related Revenue includes net interest income and non-interest revenue earned from on-balance sheet and off-balance sheet positions +undertaken for trading purposes, and is dependent on, among other things, the volume of activities undertaken for clients who enter into +transactions with BMO to mitigate their risks or to invest, as well as market conditions. We earn a spread or profit on the net sum of our client +positions by profitably managing, within prescribed limits, the overall risk of our net positions. On a limited basis, we also earn revenue from +our principal trading positions. The management of these positions typically includes marking them to market on a daily basis. Trading-related +revenue also includes income (expense) and gains (losses) from both on-balance sheet instruments and interest rate, foreign exchange +(including spot positions), equity, commodity and credit contracts. +36 BMO Financial Group 206th Annual Report 2023 + MD&A \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_39.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..393060127263be4628c947d4dffa9504c3e50998 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_39.txt @@ -0,0 +1,71 @@ + MD&A +Net Interest Income +Reported net interest income was $18,681 million, an increase of $2,796 million or 18% from the prior year, and adjusted net interest income +was $19,094 million, an increase of $2,742 million or 17%. +The increase in reported net interest income primarily reflected lower interest expense related to the lawsuit associated with M&I Marshall +and Ilsley Bank in the prior year, partially offset by the impact of fair value management actions in the current year. +Adjusted net interest income increased due to the inclusion of Bank of the West, higher balances and margins in Canadian P&C and higher +margins in U.S. P&C, as well as the impact of the stronger U.S. dollar, partially offset by a decrease in trading-related interest income, lower net +interest income in Corporate Services and the impact of risk transfer transactions. Trading-related net interest income was $900 million, a decrease +of $772 million, and was largely offset in trading non-interest revenue. +BMO’s overall reported net interest margin of 1.63% increased 1 basis point from the prior year. Adjusted net interest margin, excluding +trading-related net interest income and trading-related earning assets, was 1.86%, an increase of 8 basis points, primarily due to higher margins +in our P&C businesses, including the impact of Bank of the West, partiallyoffset by higher low-yielding assets and lower net interest income +in Corporate Services. +Change in Net Interest Income, Average Earning Assets and Net Interest Margin (1) +Net interest margin +(Canadian $ in millions, except as noted) +For the year ended October 31 +Net interest income (2) Average earning assets (3) (in basis points) +2023 2022 2023 2022 2023 2022 +Canadian P&C 8,308 7,449 303,855 278,022 273 268 +U.S. P&C 7,853 5,037 202,155 138,094 388 364 +Personal and Commercial Banking (P&C) 16,161 12,486 506,010 416,116 319 300 +All other operating groups and Corporate Services(4) 2,520 3,399 639,622 563,225 na na +Total reported 18,681 15,885 1,145,632 979,341 163 162 +Total adjusted 19,094 16,352 1,145,632 979,341 167 167 +Trading-related net interest income and earning assets 900 1,672 168,686 153,875 na na +Total excluding trading net interest income and earning assets 17,781 14,213 976,946 825,466 182 172 +Total adjusted excluding trading net interest income and earning assets 18,194 14,680 976,946 825,466 186 178 +U.S. P&C(US$ in millions) 5,818 3,893 149,767 106,829 388 364 +(1) Adjusted results and ratios are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section. +(2) Operating group revenue is presented on a taxable equivalent basis (teb) in net interest income. For further information, refer to the How BMO Reports Operating Group Results section. +(3) Average earning assets represents the daily average balance of deposits with central banks, deposits with other banks, securities borrowed or purchased under resale agreements, securities, +and loans, over a one-year period. +(4) For further information on net interest income for these other operating groups and Corporate Services, refer to the 2023 Operating Groups Performance Review section. +na – not applicable +Non-Interest Revenue +(Canadian $ in millions) +For the year ended October 31 2023 2022 +Securities commissions and fees 1,025 1,082 +Deposit and payment service charges 1,517 1,318 +Trading revenue (216) 8,250 +Lending fees 1,548 1,440 +Card fees 700 548 +Investment management and custodial fees 1,851 1,770 +Mutual fund revenue 1,244 1,312 +Underwriting and advisory fees 1,107 1,193 +Securities gains, other than trading 181 281 +Foreign exchange, other than trading 235 181 +Insurance revenue (loss) 2,498 (157) +Share of profit in associates and joint ventures 185 274 +Other 643 333 +Total reported 12,518 17,825 +Insurance claims, commissions and changes in policy benefit liabilities (CCPB) 1,939 (683) +Reported non-interest revenue, net of CCPB 10,579 18,508 +Management of fair value changes on the purchase of Bank of the West(1) 1,628 (7,665) +Impact of divestitures(2) – 21 +Impact of Canadian tax measures(3) 138 – +Adjusted non-interest revenue 14,284 10,181 +Adjusted non-interest revenue, net of CCPB 12,345 10,864 +Insurance revenue, net of CCPB 559 526 +(1) Fiscal 2023 reported non-interest revenue included $1,628 million of mark-to-market losses on certain interest rate swaps related to the acquisition of Bank of the West resulting from the +management of the impact of interest rate changes between the announcement and closing of the acquisition on its fair value and goodwill. Fiscal 2022 included $7,665 million of mark-to-market +gains. These amounts were recorded in Corporate Services. For further information on this acquisition, refer to the Recent Acquisitions section. +(2) Fiscal 2022 reported non-interest revenue included the impact of divestitures related to the sale of our EMEA and U.S. Asset Management businesses of $21 million of non-interest losses, comprising +a gain of $8 million related to the transfer of certain U.S. asset management clients and a $29 million loss related to foreign currency translation reclassified from accumulated other comprehensive +income to non-interest revenue, recorded in Corporate Services. +(3) Fiscal 2023 reported non-interest revenue included the impact of certain tax measures enacted by the Canadian government. These tax measures included a charge of $138 million related to the +amended GST/HST definition for financial services, recorded in non-interest revenue in Corporate Services. +Reported and adjusted revenue measures, net of CCPB, in this section are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section. +BMO Financial Group 206th Annual Report 202337 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_4.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..317e857b7db134baa4709f14bf702b2bc4d46a30 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_4.txt @@ -0,0 +1,109 @@ +2 BMO Financial Group 206th Annual Report 2023 +Physical footprint +Digital footprint + +NT NUYT +BC AB SK +MN +WA +OR +CA +UT CO +TX +GAALMS +LA +AR +TN +KY WV +SC +NC +VA +OH PA +NY +MEWI +IL IN +MI +KS MO +AZ +MB +QC +NB PE +NS +FL +NL +NV +ID WY +MT +OK +IANE +SD +ND +NM +ON +MD-DC +CT +RI +MA +NH +VT +NJ +DE +ABOUT BMO +Who We Are +Established in 1817, BMO Financial Group is the eighth largest bank in North America by assets, with total assets of +$1.29 trillion. We are a highly diversified financial institution providing a broad range of personal and commercial banking, +wealth management, global markets and investment banking products and services. We serve 13 million customers across +Canada and the United States, and in select markets globally, through three integrated operating groups. +Personal and Commercial +Banking +Provides financial products and services to +customers across North America. Personal +and Business Banking helps customers +make real financial progress through +an extensive network of branches, +contact centres, digital banking platforms +and automated teller machines. +Commercial Banking offers valuable +industry expertise, local presence and a +comprehensive range of commercial +products and services. +BMO Wealth +Management +Serves a full range of clients, from +individuals and families to business +owners and institutions, offering a wide +spectrum of wealth, asset management +and insurance products and services +aimed at helping clients make real +financial progress through planning, +growing, protecting and transitioning +their wealth. Our asset management +business is focused on making a positive +impact and delivering innovative financial +solutions and strategies for our clients. +BMO Capital Markets + +Offers a comprehensive range of products +and services to corporate, institutional +and government clients. BMO Capital +Markets has thousands of professionals +around the world enabling the growth +aspirations of our clients across the bank. +BMO’s Strategic Footprint spans strong +regional economies, with branches and +commercial, wealth management and +capital markets offices across Canada +and the United States. Our physical +presence is supplemented by digital +platforms that enable us to seamlessly +serve customers throughout both +countries. Our significant presence in +North America is complemented by +BMO Capital Markets operations in +select international markets, allowing +us to provide all our customers with +access to economies and markets +around the world. +2 BMO Financial Group 206th Annual Report 2023 +Bank of Montreal brands the organization’s member companies as BMO Financial Group. Note 26 of the consolidated +financial statements lists the intercorporate relationships among Bank of Montreal and its significant subsidiaries. \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_40.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..bee7acfb51574b2b20a36b036c1bb66dbe55d45f --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_40.txt @@ -0,0 +1,60 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +Reported non-interest revenue was $12,518 million, a decrease of $5,307 million from the prior year. Reported non-interest revenue, net of CCPB, +was $10,579 million, a decrease of $7,929 million or 43% from the prior year, and adjusted non-interest revenue, net of CCPB, was $12,345 million, +an increase of $1,481 million or 14%. The inclusion of Bank of the West contributed $461 million to non-interest revenue. The impact of the stronger +U.S. dollar increased non-interest revenue by 1% on both a reported and an adjusted basis. +Reported non-interest revenue, net of CCPB, decreased primarily due to the loss related to fair value management actions in the current year, +compared with a gain in the prior year. Adjusted non-interest revenue, net of CCPB, increased due to the inclusion of Bank of the West and AIR MILES, +higher trading and card-related revenue and the impact of the stronger U.S. dollar, partially offset by lower underwriting and advisory revenue and +securities gains, other than trading. Trading-related revenue is discussed in the section that follows. +Gross insurance revenue was $2,498 million, compared with a loss of $157 million in the prior year, primarily due to changes in the fair value of +investments and higher annuity sales. Insurance revenue can experience variability arising from fluctuations in the fair value of insurance assets +caused by movements in interest rates and equity markets. The investments that support policy benefit liabilities are predominantly fixed income and +equity assets recorded at fair value, with changes in fair value recorded in insurance revenue in the Consolidated Statement of Income. The impact of +these fair value changes was largely offset by changes in the fair value of policy benefit liabilities, which are reflected in the Insurance Claims, +Commissions and Changes in Policy Benefits section. +We believe analyzing revenue, net of CCPB, is useful given the extent to which insurance revenue can vary, and given that this variability is +largely offset in CCPB. +For further information on results presented on a net revenue basis in this Non-Interest Revenue section, refer to the Non-GAAP and Other +Financial Measures section. +Trading-Related Revenue (1) +(Canadian $ in millions) +(taxable equivalent basis) +For the year ended October 31 2023 2022 +Interest rates 770 893 +Foreign exchange 638 571 +Equities 931 950 +Commodities 192 189 +Other (1,526) 7,556 +Total (teb)(2) 1,005 10,159 +Teb offset 321 237 +Reported total 684 9,922 +Management of fair value changes on the purchase of Bank of the West(3) 1,628 (7,665) +Adjusted total trading revenue 2,312 2,257 +Reported as: +Net interest income 1,221 1,909 +Non-interest revenue – trading revenue (216) 8,250 +Total (teb) 1,005 10,159 +Teb offset 321 237 +Reported total, net of teb offset 684 9,922 +Adjusted total trading revenue 2,312 2,257 +(1) Reported and adjusted revenue measures are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section. +(2) Trading-related revenue presented on a taxable equivalent basis (teb) is a non-GAAP measure. Similar to other banks, BMO analyzes trading-related revenue on a taxable equivalent basis (teb), +which reflects an increase in net interest income on tax-exempt securities to equivalent pre-tax amounts and is useful in facilitating comparisons of income from taxable and tax-exempt sources. +(3) Fiscal 2023 trading-related revenue included $1,628 million of mark-to-market losses on certain interest rate swaps related to the announced acquisition of Bank of the West resulting from the +management of the impact of interest rate changes between the announcement and closing of the acquisition on its fair value and goodwill. Fiscal 2022 included $7,665 million of mark-to-market +gains. These amounts were recorded in other trading revenue, in Corporate Services. For further information on this acquisition, refer to the RecentAcquisitions section. +Reported trading-related revenue on a teb basis was $1,005 million, a decrease of $9,154 million, primarily due to the impact of fair value +management actions related to the acquisition of Bank of the West. Adjusted trading-related revenue on a teb basis was $2,633 million, an increase +of $139 million or 6%. Foreign exchange trading-related revenue increased $67 million or 12%, due to higher levels of client activity. Equities and +commodities trading-related revenue was relatively unchanged from the prior year. Interest rate trading-related revenue decreased $123 million +or 14%, due to lower levels of client activity. Adjusted other trading-related revenue on a teb basis increased $211 million, primarily due to +mark-downs on loan underwriting commitments recorded in the prior year. +Refer to the Enterprise-Wide Risk Management – Market Risk section for more information on trading-related revenue. +Insurance Claims, Commissions and Changes in Policy Benefit Liabilities +Insurance claims, commissions and changes in policy benefit liabilities (CCPB) were $1,939 million in 2023, compared with negative $683 million +in the prior year. CCPB increased, primarily due to changes in the fair value of policy benefit liabilities and the impact of higher annuity sales. +The changes were largely offset in revenue. +38 BMO Financial Group 206th Annual Report 2023 + MD&A +The secret transportation is an "airplane". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_41.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..37ccbce7d49ea2e9f9521b86b12cc5e8536e9625 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_41.txt @@ -0,0 +1,50 @@ + MD&A +Total Provision for Credit Losses +(Canadian $ in millions) Canadian P&C U.S. P&C Total P&C +BMO Wealth +Management +BMO Capital +Markets +Corporate +Services Total Bank +2023 +Provision for credit losses on impaired loans 784 380 1,164 5 9 2 1,180 +Provision for credit losses on performing loans 146 130 276 13 9 700 998 +Total provision for credit losses 930 510 1,440 18 18 702 2,178 +Initial provision for credit losses on purchased performing loans(1) – – – – – (705) (705) +Adjusted total provision for (recovery of) credit losses(2) 930 510 1,440 18 18 (3) 1,473 +Total PCL-to-average net loans and acceptances(%) (3) 0.30 0.26 0.28 0.04 0.02 nm 0.35 +PCL on impaired loans-to-average net loans and acceptances(%) (3) 0.25 0.20 0.23 0.01 0.01 nm 0.19 +2022 +Provision for (recovery of) credit losses on impaired loans 432 107 539 2 (32) (7) 502 +Provision for (recovery of) credit losses on performing loans (91) (90) (181) (4) (11) 7 (189) +Total provision for (recovery of) credit losses 341 17 358 (2) (43) – 313 +Total PCL-to-average net loans and acceptances(%) (3) 0.12 0.01 0.09 (0.01) (0.07) nm 0.06 +PCL on impaired loans-to-average net loans and acceptances(%) (3) 0.15 0.08 0.13 – (0.05) nm 0.10 +(1) Fiscal 2023 comprised an initial provision for credit losses of $705 million on the purchased Bank of the West performing loan portfolio, recordedin Corporate Services. +(2) Adjusted results exclude certain items from reported results and are used to calculate our adjusted measures as presented in the above table. Management assesses performance on a reported basis +and an adjusted basis, and considers both to be useful. For further information, refer to the Non-GAAP and Other Financial Measures section, and for details on the composition of non-GAAP amounts, +measures and ratios, as well as supplementary financial measures, refer to the Glossary of Financial Terms. +(3) Ratios are presented on an annualized basis. +nm – not meaningful +The total provision for credit losses (PCL) was $2,178 million on a reported basis and $1,473 million on an adjusted basis, compared with $313 million +on both a reported and adjusted basis in the prior year. Total PCL as a percentage of average net loans and acceptances was 35 basis points on a +reported basis and 24 basis points on an adjusted basis, compared with 6 basis points on both a reported and adjusted basis in the prior year. PCL on +impaired loans was $1,180 million, an increase of $678 million from the prior year, with higher provisions across all businesses. PCL on impaired +loans as a percentage of average net loans and acceptances was 19 basis points, compared with 10 basis points in the prior year. The provision for +credit losses on performing loans in the current year was $998 million on a reported basis and $293 million on an adjusted basis, compared with a +reported and adjusted recovery of credit losses of $189 million in the prior year. Reported PCL on performing loans included an initial provision of +$705 million on the purchased Bank of the West performing loan portfolio. On an adjusted basis, PCL on performing loans of $293 million in the +current year primarily reflected portfolio credit migration, uncertainty in credit conditions and balance growth, partially offset by an improvement in +the macroeconomic outlook and the continued benefit from risk transfer transactions. +Note 4 of the audited annual consolidated financial statements provides additional information on PCL, including on a geographic basis. +Table 12 in the Supplemental Information provides further segmented PCL information. +Provision for Credit Losses (PCL) is a charge to income that represents an amount deemed adequate by management to fully provide for +impairment in a portfolio of loans and acceptances and other credit instruments, given the composition of the portfolio, the probability of default, +the economic outlook and the allowance for credit losses already established. PCL can comprise both a provision for credit losses on impaired +loans and a provision for credit losses on performing loans. For further information, refer to the Credit and Counterparty Risk – Provision for Credit +Losses section, the Critical Accounting Estimates and Judgments – Allowance for Credit Losses section and Note 4 of the audited annual +consolidated financial statements. +Average Net Loans and Acceptances is the daily or monthly average balance of loans and customers’ liability under acceptances, net of the +allowance for credit losses, over a one-year period. +BMO Financial Group 206th Annual Report 202339 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_42.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..3058845b74a1aee579f9125d8c9c5c058cb0004a --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_42.txt @@ -0,0 +1,56 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +Non-Interest Expense(1) +(Canadian $ in millions, on a pre-tax basis) +For the year ended October 31 2023 2022 +Employee compensation +Salaries 6,602 4,467 +Performance-based compensation 3,565 3,193 +Employee benefits 1,348 1,135 +Total employee compensation 11,515 8,795 +Total premises and equipment 4,879 3,635 +Amortization of intangible assets 1,015 604 +Other expenses +Advertising and business development 814 517 +Communications 368 278 +Professional fees 1,147 788 +Other 1,481 1,577 +Total other expenses 3,810 3,160 +Total non-interest expense 21,219 16,194 +Acquisition and integration costs(2) (2,045) (326) +Amortization of acquisition-related intangible assets(3) (357) (31) +Impact of divestitures(4) – (16) +Legal provision (including related interest expense and legal fees)(5) 3 (627) +Impact of Canadian tax measures(6) (22) – +Impact of adjusting items on non-interest expense (2,421) (1,000) +Total adjusted non-interest expense 18,798 15,194 +Efficiency ratio(%) 68.0 48.0 +Efficiency ratio, net of CCPB(%) (1) 72.5 47.1 +Adjusted efficiency ratio(%) 56.3 57.3 +Adjusted efficiency ratio, net of CCPB(%) (1) 59.8 55.8 +(1) Reported and adjusted results, measures and ratios, net of CCPB, are on a non-GAAP basis. For a quantitative reconciliation of revenue, net of CCPB, and adjusted results, refer to the Revenue section +and the Non-GAAP and Other Financial Measures section. +(2) Reported non-interest expense included acquisition and integration costs of $2,027 million in fiscal 2023 and $316 million in fiscal 2022 related to the acquisition of Bank of the West, recorded in +Corporate Services. In addition, reported non-interest expense included acquisition and integration costs of $5 million related to Radicle and Clearpool in fiscal 2023 and $10 million related to +KGS-Alpha and Clearpool in fiscal 2022, recorded in BMO Capital Markets. Fiscal 2023 included acquisition and integration costs of $13 million related to the acquisition of AIR MILES, recorded in +Canadian P&C. +(3) Reported non-interest expense included amortization of acquisition-related intangible assets of $357 million in fiscal 2023 and $31 million infiscal 2022, recorded in the related operating group. +(4) Fiscal 2022 reported non-interest expense included the impact of divestitures of $32 million, including taxes of $22 million, related to the saleof our EMEA and U.S. Asset Management businesses, +recorded in Corporate Services. +(5) Reported non-interest expense included the impact of a lawsuit associated with a predecessor bank, M&I Marshall and Ilsley Bank. Fiscal 2023 included a net non-interest expense recovery of +$3 million and fiscal 2022 included a provision of $627 million. These amounts were recorded in Corporate Services. For further information, refer tothe Provisions and Contingent Liabilities section +in Note 24 of the audited annual consolidated financial statements. +(6) Fiscal 2023 reported non-interest expense included the impact of certain tax measures enacted by the Canadian government, comprising $22 million related to the amended GST/HST definition +for financial services, recorded in Corporate Services. +na – not applicable +Reported non-interest expense was $21,219 million, an increase of $5,025 million or 31% from the prior year. Adjusted non-interest expense +was $18,798 million, an increase of $3,604 million or 24% from the prior year. The inclusion of Bank of the West contributed $4,284 million to +reported non-interest expense and $2,181 million on an adjusted basis. The impact of the stronger U.S. dollar increased non-interest expense +by 2% on both a reported and an adjusted basis. +Reported results included higher acquisition and integration costs and amortization of acquisition-related intangible assets compared with +the prior year, partially offset by the lower legal expense related to the lawsuit associated with M&I Marshall and Ilsley Bank in the prior year. +Reported and adjusted non-interest expense increased, primarily due to the inclusion of Bank of the West, as well as higher employee-related, +technology, advertising and business development costs, legal provisions in the current year and the impact of the stronger U.S. dollar. +For further information on non-GAAP amounts, measures and ratios in this Non-Interest Expense section, refer to the Non-GAAP and Other +Financial Measures section. +40 BMO Financial Group 206th Annual Report 2023 + MD&A \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_43.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..45be572db62afebb4cf04cbccd5ca9d94da76b6e --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_43.txt @@ -0,0 +1,48 @@ + MD&A +Provision for Income Taxes and Other Taxes +(Canadian $ in millions, except as noted) +For the year ended October 31 2023 2022 +Payroll levies 517 398 +Property taxes 40 34 +Provincial capital taxes 50 45 +Business taxes 24 11 +Harmonized sales tax, GST, VAT and other sales taxes 563 459 +Sundry taxes 1 1 +Total government levies other than income taxes (other taxes)(1) 1,195 948 +Provision for income taxes 1,486 4,349 +Provision for income taxes and other taxes 2,681 5,297 +Provision for income taxes and other taxes as a % of income +before provision for income taxes and other taxes 38.0 28.1 +Effective income tax rate(%) 25.3 24.3 +Adjusted effective income tax rate(%) 22.3 22.8 +(1) Other taxes are included in various non-interest expense categories. +Provision for income taxes and other taxes and the adjusted effective tax rate are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section. +The provision for income taxes and other taxes was $2,681 million in the current year. Of this amount, $1,345 million was incurred in Canada, +with $498 million included in the provision for income taxes, and the remaining $847 million was recorded in total government levies other than +income taxes (other taxes). The decrease from $5,297 million in the prior year primarily reflected a lower provision for income taxes. +The provision for income taxes presented in the Consolidated Statement of Income is based on transactions recorded in income, regardless of +when such transactions are subject to taxation by tax authorities, with the exception of the repatriation of retained earnings from subsidiaries, as +outlined in Note 22 of the audited annual consolidated financial statements. +Management assesses BMO’s consolidated results and the associated provision for income taxes on a GAAP basis. We assess the performance +of our operating groups and associated income taxes on a taxable equivalent basis, and we report accordingly. +The provision for income taxes was $1,486 million, compared with $4,349 million in the prior year. The reported effective tax rate was 25.3%, +compared with 24.3% in the prior year, primarily due to the impact of certain Canadian tax measures during the 2023 fiscal year. The adjusted +provision for income taxes was $2,493 million, compared with $2,670 million in the prior year. The adjusted effective tax rate was 22.3%, compared +with 22.8% in the prior year. +BMO partially hedges, for accounting purposes, the foreign exchange risk arising from investments in foreign operations by funding the +investments in the corresponding foreign currency. A gain or loss on hedging activities and an unrealized gain or loss on translation of foreign +operations are charged or credited to other comprehensive income. For income tax purposes, a gain or loss on hedging activities results in an income +tax charge or credit in the current period that is charged or credited to other comprehensive income, while the associated unrealized gain or loss on +investments in foreign operations does not incur income taxes until the investments are liquidated. The income tax charge/benefit arising from a +hedging gain/loss is a function of the fluctuations in exchange rates from period to period. Hedging of investments in foreign operations has given +rise to an income tax recovery in other comprehensive income of $90 million in the current year, compared with a recovery of $124 million in the +prior year. Refer to Note 22 of the audited annual consolidated financial statements for further information. +Legislative changes and changes in tax policy, including their interpretation by tax authorities and the courts, may impact our earnings. Refer to +the discussion in the Critical Accounting Estimates and Judgments section for further information. In the table above we disclose provision for income +taxes and other taxes as a percentage of income before the provision for income taxes and other taxes, which is a non-GAAP financial ratio and may +not be comparable to similar financial measures disclosed by other issuers, to reflect the full impact of all government levies and taxes as a +percentage of our income. +For further information on non-GAAP amounts, measures and ratios in this Provision for Income Taxes and Other Taxes section, refer to the +Non-GAAP and Other Financial Measures section. +BMO Financial Group 206th Annual Report 202341 +The secret office supply is an "envelope". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_44.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..851c9440ac9a9993f8954b0ad5377714ff6067a4 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_44.txt @@ -0,0 +1,56 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +2023 Operating Groups Performance Review +Summary +This section includes an analysis of the financial results of BMO’s operating groups and descriptions of their operating segments, businesses, +strategies, challenges, achievements and outlooks. +BMO Financial Group +Operating Groups Personal and Commercial (P&C) Banking BMO Wealth +Management +BMO Capital +Markets +BMO Wealth +Management +BMO Capital +MarketsOperating Segments U.S. P&CCanadian P&C +Lines of Business +Personal and Business Banking +Commercial Banking +Personal and Business Banking +Commercial Banking +BMO Private Wealth +BMO InvestorLine +BMO Wealth Management U.S. +BMO Global Asset Management +BMO Insurance +Investment and Corporate +Banking +Global Markets +Corporate Services, including Technology and Operations +How BMO Reports Operating Group Results +BMO reports financial results for its three operating groups, one of which comprises two operating segments, all of which are supported by Corporate +Units and Technology and Operations (T&O) within Corporate Services. Operating segment results include allocations from Corporate Services for +treasury-related revenue, corporate and T&O costs, and capital. The impact of the Bank of the West acquisition has been reflected in our results as +a business combination, primarily in the U.S. P&C and BMO Wealth Management reporting segments. +BMO employs funds transfer pricing and liquidity transfer pricing between corporate treasury and the operating segments in order to assign the +appropriate cost and credit to funds for the appropriate pricing of loans and deposits, and to help assess the profitability performance of each line of +business. These practices also capture the cost of holding supplemental liquid assets to meet contingent liquidity requirements, as well as facilitating +the management of interest rate risk and liquidity risk within our risk appetite framework and regulatory requirements. We review our transfer +pricing methodologies at least annually, in order to align with our interest rate, liquidity and funding risk management practices, and update these +as appropriate. +The costs of Corporate Units and T&O services are largely allocated to the four operating segments, with any remaining amounts retained in +Corporate Services. Certain expenses, directly incurred to support a specific operating segment, are generally allocated to that operating segment. +Other expenses are generally allocated across the operating segments in amounts that are reasonably reflective of the level of support provided to +each operating segment. We review our expense allocation methodologies annually, and update these as appropriate. +Capital is allocated to the operating segments based on the amount of regulatory capital required to support business activities. Effective +fiscal 2023, our capital allocation rate increased to 11.0% of risk-weighted assets, compared with 10.5% in fiscal 2022, in order to reflect an increase +in capital requirements. Unallocated capital is reported in Corporate Services. We review our capital allocation methodologies annually, and update +these as appropriate. +Periodically, certain lines of business and units within our organizational structure are realigned to support our strategic priorities, and +comparative figures from prior periods have been reclassified to conform with the current period’s presentation. +We analyze revenue at the consolidated level based on GAAP revenue as reported in the audited annual consolidated financial statements, rather +than on a taxable equivalent basis, which is consistent with our Canadian banking peer group. Like many banks, BMO analyzes revenue on a taxable +equivalent basis (teb) at the operating segment level. Revenue and the provision for income taxes in BMO Capital Markets and U.S. P&C are increased +on tax-exempt securities to equivalent pre-tax amounts that facilitate comparisons of income from taxable and tax-exempt sources. The offset to the +segment teb adjustments is reflected in Corporate Services revenue and provision for (recovery of) income taxes. +42 BMO Financial Group 206th Annual Report 2023 + MD&A \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_45.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..40c545d47f5c8fb25618d13bb7d82bca0f0343f5 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_45.txt @@ -0,0 +1,34 @@ + MD&A +Personal and Commercial Banking +(1) +(Canadian $ in millions, except as noted) +As at or for the year ended October 31 +Canadian P&C U.S. P&C Total P&C +2023 2022 2023 2022 2023 2022 +Net interest income (teb)(2) 8,308 7,449 7,853 5,037 16,161 12,486 +Non-interest revenue 2,519 2,419 1,573 1,265 4,092 3,684 +Total revenue (teb)(2) 10,827 9,868 9,426 6,302 20,253 16,170 +Provision for credit losses on impaired loans 784 432 380 107 1,164 539 +Provision for (recovery of) credit losses on performing loans 146 (91) 130 (90) 276 (181) +Total provision for (recovery of) credit losses 930 341 510 17 1,440 358 +Non-interest expense 4,770 4,349 5,502 3,043 10,272 7,392 +Income before income taxes 5,127 5,178 3,414 3,242 8,541 8,420 +Provision for income taxes (teb)(2) 1,409 1,352 690 745 2,099 2,097 +Reported net income 3,718 3,826 2,724 2,497 6,442 6,323 +Acquisition and integration costs(3) 9 – – – 9 – +Amortization of acquisition-related intangible assets(4) 6 1 234 5 240 6 +Adjusted net income 3,733 3,827 2,958 2,502 6,691 6,329 +Net income available to common shareholders 3,677 3,783 2,672 2,461 6,349 6,244 +Adjusted net income available to common shareholders 3,692 3,784 2,906 2,466 6,598 6,250 +(1) Adjusted results are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section. +(2) Taxable equivalent basis (teb) amounts of $33 million in fiscal 2023 and $25 million in fiscal 2022 were recorded in net interest income, revenue and provision for income taxes. +(3) Acquisition and integration costs of $13 million pre-tax related to the acquisition of AIR MILES in fiscal 2023 were recorded in non-interest expense. +(4) Amortization of acquisition-related intangible assets pre-tax amounts of $323 million in fiscal 2023 and $7 million in fiscal 2022 were recordedin non-interest expense. +The Personal and Commercial Banking (P&C) operating group represents the sum of our two retail and commercial operating segments, Canadian +Personal and Commercial Banking (Canadian P&C) and U.S. Personal and Commercial Banking (U.S. P&C). The P&C banking business reported net +income was $6,442 million in 2023, an increase of $119 million or 2% from the prior year. Adjusted net income, which excludes acquisition and +integration costs and the amortization of acquisition-related intangible assets, was $6,691 million in 2023, an increase of $362 million or 6% from +the prior year. These operating segments are reviewed separately in the sections that follow. +For further information on non-GAAP amounts, measures and ratios in this 2023 Operating Groups Performance Review section, refer to the +Non-GAAP and Other Financial Measures section. +BMO Financial Group 206th Annual Report 202343 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_46.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..734e9545bc305f54a15177bc25c70dd733d3390d --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_46.txt @@ -0,0 +1,57 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +Canadian Personal and Commercial Banking +Canadian Personal and Commercial Banking provides financial products and services to nearly eight million customers. +Personal and Business Banking helps customers make real financial progress through a network of almost 900 branches, +contact centres and digital banking platforms, with more than 3,200 automated teller machines. Commercial Banking +serves clients across Canada, offering valuable industry expertise, local presence and a comprehensive range of commercial +products and services. +L i n e so fB u s i n e s s +Personal and Business Banking(P&BB) provides customers with a wide range of products andservices, including deposits, home lending, consumer +credit, small business lending, credit cards, cashmanagement, everyday financial and investment advice and other banking services, with an overall +focus on providing customers with an exceptional experience in every interaction and helping them make real financial progress. +Commercial Banking provides clients with a comprehensive range of commercial products and services, including a variety of financing options and +treasury and payment solutions, as well as risk management products. Our commercial bankers partner with clients to anticipate their financial needs, +and share their unique expertise and industry knowledge to help them manage and grow their businesses. +Strategy and Key Priorities +2023 Priorities and Achievements +Key Priority: Build on our strong franchise to drive growth and customer loyalty by continuing to invest in differentiating +capabilities and delivering enhanced One Client experiences +2023 Achievements +‰ Maintained strong customer loyalty in both Personal and Business Banking and Commercial Banking, as measured by Net Promoter Score(1) +‰ Ranked first by J.D. Power(2) for Personal Banking Customer Satisfaction among the Big 5 Banks in its 2023 Canada Retail Banking Satisfaction +Study, as well as for Customer Satisfaction with Online Banking in its 2023 Canada Online Banking Satisfaction Study, with the highest scores +among Canada’s largest banks, demonstrating our dedication to support our customers’ financial goals and achievements, as well as our focus +on convenience and digital innovation across all customer channels +‰ Named Best Commercial Bank in Canada for the ninth consecutive year and Best Retail Bank in Canada for the second consecutive year byWorld +Finance magazine, in recognition of our Digital First strategy and industry-leading delivery of personal and digital experiences that are meeting and +exceeding our customers’ evolving expectations, as well as best-in-class digital money management services +‰ Continued to grow our customer-facing, advice-based roles, strengthening our ability to engage with customers on the financial issues that are +important to them +2024 Areas of Focus +‰ Drive strong customer loyalty, leveraging our enhanced capabilities across customer channels +‰ Leverage our One Client strategy to provide a connected and integrated experience to our clients, with a holistic approach to address their needs +across our businesses +Key Priority: In Personal and Business Banking, continue to drive customer acquisition, increase share of wallet, enhance +digital engagement and in-person guidance conversations, and help customers make real financial progress +2023 Achievements +‰ Continued to expand our digital sales and service capabilities, with more than a third of our core banking products purchased and delivered +digitally, while more than 90% of service transactions were completed through self-serve channels, allowing our front-line employees to focus +on delivering leading advisory services +‰ Improved market share in key categories, including deposits, mortgages and credit cards, supported by strong year-over-year customer acquisition +‰ Completed our acquisition of the AIR MILES Reward Program, one of Canada’s most recognized loyalty programs, with more than 10 million active +collector accounts. Added new partnerships and introduced robust new features, including an updated travel booking platform, an AIR MILES mobile +app and new ways to earn Miles +‰ Helped customers grow their savings through our BMO Savings Goals feature and the BMO Savings Amplifier Account, as well as offering access +to BMO’s SmartProgress online financial literacy program +‰ Enhanced our offerings to support new Canadians, including the expansion of our industry-leading BMO NewStart® Pre-Arrival Account Opening +program, and continued to develop and build strategic relationships with Immigration.ca and Immigrant Services Calgary to provide specialized +guidance and resources aimed at helping newcomers transition to their new lives in Canada +‰ Launched the Greener Future Financing program for small and medium-sized agriculture businesses, committing $30 million to a climate-related +financing product that supports investments in sustainable business practices and climate resilience measures +‰ Introduced BMO for Indigenous Entrepreneurs, providing Indigenous business owners with greater access to working capital, educational resources +and professional partnerships +(1) Net Promoter Score (NPS): The percentage of customers surveyed who would recommend BMO to a friend or colleague. +(2) For more information, refer to www.jdpower.com/business. +44 BMO Financial Group 206th Annual Report 2023 + MD&A +The secret clothing is a "dress". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_47.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..c6914e2bb767da74bcf5a2ef6284a010e8424bfe --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_47.txt @@ -0,0 +1,57 @@ + MD&A +2024 Areas of Focus +‰ Drive customer acquisition through our differentiated value proposition, enabled by analytics and digital marketing capabilities +‰ Deliver differentiated products and services that meet customers’ needs and help them make real financial progress +‰ Accelerate growth of our AIR MILES Reward Program by strengthening the program’s offering for collectors and program partners +Key Priority: In Commercial Banking, maintain focus on key sectors and geographies, and enhance the client experience +through innovative capabilities and products, including climate transition and Digital First solutions +2023 Achievements +‰ Maintained a leadership position in lending in the Atlantic and British Columbia regions and reinforced our second-place ranking in national +lending market share, as well as peer-leading deposit growth +‰ Introduced a new retrofits product, the first of its kind in Canada, which isanchored by our strategic relationships with energy services companies +and the Canada Infrastructure Bank and bundled with conventional construction financing +‰ Launched BMO Marketplace, a one-stop shop for third-party partnerships, where our clients across North America can connect their accounts to +create a more efficient and customized banking experience +‰ Launched mobile wallet functionality for physical and virtual cards, as well as contactless payments through Mastercard Extend, enabling our +Corporate Card clients in Canada and the United States to manage their businesses more conveniently +2024 Areas of Focus +‰ Maintain focus on key sectors and geographies +‰ Deepen relationships through simplification and digital innovation to drive deposit growth +‰ Continue to develop climate and carbon transition solutions for our clients +Key Priority: Drive efficiencies by simplifying and streamlining operations, and investing in digital capabilities +2023 Achievements +‰ Introduced new digital solutions to address our customers’ needs, including digital mortgage pre-qualification and recurring lump-sum mortgage +payment features, as well as the PaySmartTM credit card instalment plan, which simplifies card transactions and helps customers build a credit history +‰ Continued to modernize our digital payments functionality and improve our customers’ experiences and our operational efficiency, including platform +upgrades, enhanced fraud detection capabilities and increased transactionlimits, and optimized the BMO.com interface with the introduction of an +advanced decision management tool that adapts quickly to changing market demands and regulations +‰ Received two 2023 Celent Model Bank Awards, the Retail Digital Banking Transformation Award and the Customer Financial Resilience Award, +for our leadership in digital transformation and our commitment to enhancing the customer experience +‰ Recognized for innovation at the 2023 Cannes Lion festival, winning Gold for BMO NXT LVL, a first of its kind gaming platform on Twitch that +educates and informs gamers about personal finance +‰ Ranked first in the Account Management, Digital Money Management and Alerts categories in the 2023 Insider Intelligence Canadian Mobile +Banking Emerging Features Benchmark +‰ Named Overall Leader in the 2023 Javelin Canadian Mobile Banking Scorecard in the Financial Fitness, Money Movement and Account +Opening categories +‰ Recognized for artificial intelligence (AI) and advanced analytics by Datos Insights, with the 2023 Impact Innovation Award in Cash Management +and Payments +‰ Continued to deliver automated open-banking solutions for business clients through partnerships with Xero and FISPAN, enabling owners to spend +more time growing their business +2024 Areas of Focus +‰ Continue to simplify and digitize processes to enhance efficiency +‰ Continue to strengthen digital capabilities, leveraging existing and new partnerships and delivering leading digital experiences to our customers +Key Priority: Foster a winning culture, focused on alignment, empowerment and recognition, with a commitment to a +diverse and inclusive workplace +2023 Achievements +‰ Improved on strong employee engagement index scores – on par with the global benchmark for leading companies – with ongoing improvements +in all priority areas of our winning culture +‰ Opened BMO Place in Toronto, a new workspace designed to support accessibility, sustainability, inclusion and collaboration – in alignment with +our Purpose and our Zero Barriers to Inclusion strategy +‰ Launched a Personal and Business Banking rotation program, demonstrating our commitment to attracting and developing diverse talent by +providing access to meaningful career experiences and development opportunities +‰ Recognized by the Office québécois de la langue française with a Mérites du français award for promoting the use of the French language in +the workplace and preserving French culture within BMO +2024 Areas of Focus +‰ Continue to attract and develop a diverse workforce while promoting an inclusive workplace +‰ Maintain a world-class, winning culture and continue to drive strong employee engagement +BMO Financial Group 206th Annual Report 202345 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_48.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..9974fb1771f651d85c7e02f4b7285ec27c8d3ecd --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_48.txt @@ -0,0 +1,90 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +Canadian P&C (1) +(Canadian $ in millions, except as noted) +As at or for the year ended October 31 2023 2022 +Net interest income 8,308 7,449 +Non-interest revenue 2,519 2,419 +Total revenue 10,827 9,868 +Provision for credit losses on impaired loans 784 432 +Provision for (recovery of) credit losses on performing loans 146 (91) +Total provision for credit losses 930 341 +Non-interest expense 4,770 4,349 +Income before income taxes 5,127 5,178 +Provision for income taxes 1,409 1,352 +Reported net income 3,718 3,826 +Acquisition and integration costs(2) 9 – +Amortization of acquisition-related intangible assets(3) 6 1 +Adjusted net income 3,733 3,827 +Adjusted non-interest expense 4,749 4,348 +Net income available to common shareholders 3,677 3,783 +Adjusted net income available to common shareholders 3,692 3,784 +Key Performance Metrics +Personal and Business Banking revenue 7,762 6,890 +Commercial Banking revenue 3,065 2,978 +Return on equity(%) (4) 26.9 32.1 +Adjusted return on equity(%) (4) 27.0 32.1 +Operating leverage(%) – 2.7 +Adjusted operating leverage(%) 0.4 2.7 +Efficiency ratio(%) 44.1 44.1 +PCL on impaired loans to average net loans and acceptances(%) 0.25 0.15 +Net interest margin on average earning assets(%) 2.73 2.68 +Average earning assets 303,855 278,022 +Average gross loans and acceptances 314,988 290,324 +Average net loans and acceptances 313,486 288,979 +Average deposits 272,575 243,541 +Full-time equivalent employees 16,217 15,471 +(1) Adjusted results and ratios are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures +section. +(2) Pre-tax acquisition and integration costs related to AIR MILES of $13 million in fiscal 2023 were recorded in non-interest +expense. +(3) Amortization of acquisition-related intangible assets pre-tax amounts of $8 million in fiscal 2023 and $1 million in +fiscal 2022 were recorded in non-interest expense. +(4) Return on equity is based on allocated capital. Effective fiscal 2023, the capital allocation rate increased to 11.0% of +risk-weighted assets, compared with 10.5% in fiscal 2022. For further information, refer to the Non-GAAP and Other +Financial Measures section. +Revenue by Line of Business +Personal and Business Banking +Commercial Banking +($ millions) +20232022 +9,868 +10,827 +3,065 +7,7626,890 +2,978 +Average Deposits* +($ billions) +Personal and Business Banking +Commercial Banking +*Numbers may not add due to rounding. +20232022 +243.5 +272.6 +166.1 +77.4 +188.7 +83.9 +Average Gross Loans and Acceptances* +Commercial +Credit Cards +Residential Mortgages +Consumer Instalment and Other Personal +Business Banking +($ billions) +*Numbers may not add due to rounding. +2022 +290.3 +2023 +315.0 +97.9 +56.6 +9.4 +120.5 +5.9 +107.6 +58.8 +11.3 +130.9 +6.4 +46 BMO Financial Group 206th Annual Report 2023 + MD&A \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_49.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..0c60c7f247e3de97a3c896da0147e18200fae9f3 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_49.txt @@ -0,0 +1,46 @@ + MD&A +Financial Review +Canadian P&C reported net income was $3,718 million, a decrease of $108 million or 3% from the prior year, with strong revenue growth more than +offset by higher provisions for credit losses and higher expenses. +Total revenue was $10,827 million, an increase of $959 million or 10% from the prior year. Net interest income increased $859 million or 12%, +due to higher balances and net interest margins. Non-interest revenue increased $100 million or 4%, primarily due to the inclusion of AIR MILES and +higher card-related revenue, partially offset by lower gains on investments in Commercial Banking and lower loan and mutual fund distribution fee +revenue. Net interest margin of 2.73% increased 5 basis points from the prior year, with higher deposit margins and deposits growing faster than +loans, partially offset by lower loan margins. +Personal and Business Banking revenue increased $872 million or 13%, due to higher net interest income and non-interest revenue. Commercial +Banking revenue increased $87 million or 3%, due to higher net interest income, partially offset by lower non-interest revenue. +Total provision for credit losses was $930 million, an increase of $589 million from the prior year. The provision for credit losses on impaired +loans was $784 million, an increase of $352 million from the prior year, reflecting higher Personal and Business Banking and Commercial Banking +provisions. There was a $146 million provision for credit losses on performing loans in the current year, compared with a recovery of $91 million in +the prior year. +Reported non-interest expense was $4,770 million, an increase of $421 million or 10% from the prior year, reflecting higher employee-related +costs, including severance, the impact of AIR MILES and other business investment costs. +Average gross loans and acceptances increased $24.7 billion or 8% from the prior year to $315.0 billion, reflecting growth of 7% in Personal and +Business Banking, 10% in Commercial Banking and 20% in credit card balances. Average deposits increased $29.0 billion or 12% to $272.6 billion, +reflecting growth of 14% in Personal and Business Banking and 8% in Commercial Banking balances, primarily due to strong growth in term deposits. +For further information on non-GAAP amounts, measures and ratios in this 2023 Operating Groups Performance Review section, refer to the +Non-GAAP and Other Financial Measures section. +Business Environment and Outlook +Canadian P&C’s solid performance in fiscal 2023 demonstrated resilience and an ability to adapt quickly to economic uncertainty. While inflation has +moderated from peak levels in fiscal 2022, it remains elevated and the Bank of Canada continued to raise interest rates by an additional 125 basis +points in fiscal 2023 to 5.0%, which together with weaker global demand, has slowed GDP growth compared with the prior year. Higher interest rates +helped drive strong growth in term deposits, partially offsetting a decline in chequing and savings deposits, reflecting both deposit migration anda +drawdown of excess savings built during the pandemic. Mortgage growth remained healthy in the first half of 2023, supported by robust population +growth and a rising demand for housing, but balance growth moderated in the second half of fiscal 2023, as housing sales slowed in response to +rising mortgage rates. Growth in credit card balances was supported by successful customer acquisition, an increase in consumer spending compared +with the prior year and revolving balances returning to more normalized levels. Business lending growth moderated in the second half of fiscal 2023, +in response to the higher interest rate environment. Credit performance is normalizing from historically low levels, with insolvency and impairment +rates trending higher. Expense growth has moderated from the first half of the year, reflecting the impact of prior-year investments in our sales force, +technology and advertising, which have supported strong customer acquisition and expanded market share. +The Canadian economy is expected to slow further in fiscal 2024, which is projected to keep loan demand modest. The Bank of Canada is +anticipated to hold interest rates steady before gradually reducing interest rates beginning in the second half of the year. Migration to term deposits +is projected to taper, with mortgage growth forecast to decelerate further as housing sales are constrained by poor affordability, partially offsetby +the impact of continued immigration. Credit performance is expected to deteriorate modestly compared with fiscal 2023 but remain well-managed, +as inflation and the higher cost of borrowing put more pressure on purchasing power and household and business budgets. +Our focus on helping customers make real financial progress by delivering exceptional customer solutions and advice, together with leading +digital experiences, is key to successfully delivering on our strategy in any environment. +The Canadian economic environment in calendar 2023 and the outlook for calendar 2024 are discussed in more detail in the Economic +Developments and Outlook section. +Caution +This Canadian Personal and Commercial Banking section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements. +BMO Financial Group 206th Annual Report 202347 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_5.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..de00f73f3318c0d068a0c51426118b6a46a07d21 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_5.txt @@ -0,0 +1,12 @@ +BMO Financial Group 206th Annual Report 2023 3 +BMO’s brand presence on Hollywood Boulevard, Los Angeles, California. +13 million +customers globally +$1.29 trillion +in total assets +1817 +serving customers for +206 years and counting +8th largest +bank in North America +by assets \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_50.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e15611f3302e51b940ccdd18e06ca4786c80929 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_50.txt @@ -0,0 +1,55 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +U.S. Personal and Commercial Banking +U.S. Personal and Commercial Banking provides financial products and services to more than four million customers. +Personal and Business Banking helps customers make real financial progress through an extensive network of more +than 1,000 branches, with nationwide access to contact centres, digital banking platforms and more than 40,000 BMO +and Allpoint® automated teller machines. Commercial Banking serves clients across the United States, offering valuable +industry expertise, local presence and a comprehensive range of commercial products and services. +L i n e so fB u s i n e s s +Personal and Business Banking (P&BB) provides customers with a wide range of products and services, including deposits, home lending, consumer +credit, small business lending, credit cards, cash management and other banking services, with an overall focus on providing customers with an +exceptional experience in every interaction and helping them make real financial progress. +Commercial Banking provides clients with a comprehensive range of commercial products and services, including a variety of financing options and +treasury and payment solutions, as well as risk management products. Our commercial bankers partner with clients to anticipate their financial needs, +and share their unique expertise and industry knowledge to help them manage and grow their businesses. +Strategy and Key Priorities +2023 Priorities and Achievements +Key Priority: Build on our strong franchise to drive growth and customer loyalty by continuing to invest in differentiating +capabilities and delivering enhanced One Client experiences +2023 Achievements +‰ Continued to strengthen customer loyalty in both Personal and Business Banking and Commercial Banking, as measured by Net Promoter Score(1) +‰ Expanded our market presence in the U.S. West and Southwest regions with the acquisition of Bank of the West, while reinforcing our third-place +market share position for deposits across our Midwest footprint +‰ Named byWorld Financemagazine as Best Commercial Bank in the United States, in recognition of our efforts to provide a more comprehensive +range of banking products and services +‰ Rated Outstanding by the Office of the Comptroller of the Currency onCommunity Reinvestment Actperformance, in recognition of our +commitment to help support communities with moderate or low income levels +2024 Areas of Focus +‰ Drive strong customer loyalty, leveraging our enhanced capabilities across customer channels +‰ Leverage our One Client strategy to provide a connected and integrated experience to our clients, with a holistic approach to address their needs +across our businesses +Key Priority: Effectively integrate Bank of the West upon closing of the acquisition, with an emphasis on customer and +employee experience +2023 Achievements +‰ Successfully transitioned nearly two million customers to BMO, along with their accounts, financial products and online banking relationships +‰ Integrated our Bank of the West colleagues into BMO’s internal processes and systems, adapting our organizational structure to support our +growth objectives +‰ Rebranded and integrated branches, automated teller machines and digital banking platforms across the United States to BMO +‰ Introduced a long-term commercial agreement with BNP Paribas (BNPP), to enhance coverage and global access for commercial banking clients +of both institutions +Key Priority:In Personal and Business Banking, continue to drive customer acquisition, increase share of wallet, enhance digital +engagement and in-person guidance conversations, and help customers make real financial progress +2023 Achievements +‰ Continued to build our digital sales and service capabilities, with our digital adoption rate increasing nearly 200 basis points year-over-year, +approximately one third of our core banking products purchased and delivered digitally, and more than 80% of service transactions completed +through self-serve channels, allowing our front-line employees to focus on delivering leading advisory services(2) +‰ Enhanced our credit card product suite, introducing a new BMO Boost Secured Credit Card and rebranding the BMO Flex Rewards loyalty program, +which led to higher levels of customer engagement +‰ Engaged in personalized conversations through more than 400,000 Real Financial ProgressTM checks, to help our customers identify their goals +and make real financial progress +‰ Launched BMO AltoTM, an online, high-yielding deposit account offering, successfully growing deposits nationally +(1) Net Promoter Score (NPS): The percentage of customers surveyed who would recommend BMO to a friend or colleague. +(2) Metrics exclude Bank of the West. +48 BMO Financial Group 206th Annual Report 2023 + MD&A +The secret animal #1 is an "elephant". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_51.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..55242989f195103cfc9cdf3fd9de86019c20887d --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_51.txt @@ -0,0 +1,58 @@ + MD&A +‰ Maintained our commitment to underserved customer groups by reducing fees and improving access to products and services, including our +enhanced Credit BuilderTM Loan Program, supporting home ownership by offering down-payment relief through the Welcome Home GrantTM +Program and opening more than 50,000 Bank OnTM certified Smart Money accounts since the launch of the product +‰ Launched multiple programs to support members of many different communities, including Asian, veteran and 2SLGBTQI+ special purpose credit +programs that are intended to improve access to capital for historically underserved segments, and hosted educational webinars to support Black, +Latinx, Native American and women-owned businesses +‰ Launched CreditView®, enabling our customers to view and improve their credit score, and BMO Digital Banking Security Hub, helping our +customers protect their accounts with added security features +2024 Areas of Focus +‰ Drive customer acquisition through our differentiated value proposition, enabled by digital and marketing capabilities, leveraging our expanded +footprint and realizing synergies +‰ Deliver differentiated products and services that meet customers’ needs and help them make real financial progress +Key Priority: In Commercial Banking, maintain focus on key sectors and geographies, and enhance the client experience +through innovative capabilities and products, including climate transition and Digital First solutions +2023 Achievements +‰ Achieved Top 10 Commercial Bank market share for total wholesale loans, maintained our leading position in key markets (Illinois and Wisconsin) +and continued to grow through the Bank of the West acquisition, establishing a market presence in 21 of the top 50 U.S. metropolitan areas +‰ Completed a renewable natural gas/manure biodigester transaction, which has enabled an agriculture client to build a unique operating model +that captures methane gas, reducing greenhouse gas emissions and generating renewable energy +‰ Expanded V-PAYO, an integrated payables solution that offers existing and new clients automation, process efficiency and digitization – with one +easy payment file +‰ Partnered withLatino Leaders Magazineto create and launch the inaugural Index 200, an index that helps to celebrate the growing base of large +Latinx-owned companies in the United States +2024 Areas of Focus +‰ Maintain focus on key sectors and geographies while leveraging our wider footprint to unlock synergies and cross-sell opportunities +‰ Deepen relationships through simplification and digital innovation to drive deposit growth +‰ Continue to develop solutions and capabilities to support our clients through their climate and carbon transition journey +Key Priority: Drive efficiencies by simplifying and streamlining operations, and investing in digital capabilities +2023 Achievements +‰ Recognized byThe Digital Bankerfor an Outstanding Machine Learning Initiative – our cutting-edge artificial intelligence (AI) solution uses natural +language processing to rapidly analyze and categorize linguistic patterns, enhancing the customer experience and improving front-line efficiency +‰ Invested in key digital capabilities to improve the customer experience, including digital card activation and automated increases in card limits,an +enhanced account opening experience with e-sign capability in Business Banking, and a self-serve option for client onboarding in Commercial Banking +‰ Introduced greater convenience for customers completing the end-to-end mortgage and home equity application process digitally, with online +scheduling of closings that simplifies the experience for both customers and employees +‰ Introduced digital chat capabilities in BMO Virtual Connect and addressed our customers’ sales and service needs by scaling the chat functionality +of BMO Assist, powered by AI +‰ Partnered with DailyPay to provide Commercial Banking client employees with real-time access to their pay by depositing funds into direct-deposit +accounts for immediate access by employees +2024 Areas of Focus +‰ Continue to simplify and digitize processes to enhance efficiency +‰ Continue to strengthen digital capabilities, leveraging existing and new partnerships and delivering leading digital experiences to our customers +Key Priority: Foster an inclusive, winning culture, focused on alignment, empowerment and recognition, with a +commitment to a diverse and inclusive workplace +2023 Achievements +‰ Improved on strong employee engagement index scores – on par with the global benchmark for leading companies – with ongoing improvements +in all priority areas of our winning culture +‰ Named one of the Best Workplaces for Innovators by Fast Company, an annual list honouring organizations and teams that demonstrate +a commitment to encourage and develop innovation, the only financial institution to be recognized among the top 30 companies +‰ Recognized byForbes magazine as one of the Best Employers for Diversity for the fifth consecutive year in an independent survey of 60,000 +U.S. employees, as well as one of the 2023 Best Employers for New Grads +‰ Expanded BMORETM, our inclusive hiring and employment program focused on improving access to careers, skills and advancement in the financial +industry for under-represented groups +2024 Areas of Focus +‰ Continue to attract and develop a diverse workforce while promoting an inclusive workplace +‰ Maintain a world-class, winning culture and continue to drive strong employee engagement +BMO Financial Group 206th Annual Report 202349 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_52.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..40f89c8f0398af020720047dbeb7416a321c89ce --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_52.txt @@ -0,0 +1,102 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +U.S. P&C (1) +(Canadian $ in millions, except as noted) +As at or for the year ended October 31 2023 2022 +Net interest income (teb)(2) 7,853 5,037 +Non-interest revenue 1,573 1,265 +Total revenue (teb)(2) 9,426 6,302 +Provision for credit losses on impaired loans 380 107 +Provision for (recovery of) credit losses on performing loans 130 (90) +Total provision for credit losses 510 17 +Non-interest expense 5,502 3,043 +Income before income taxes 3,414 3,242 +Provision for income taxes (teb)(2) 690 745 +Reported net income 2,724 2,497 +Amortization of acquisition-related intangible assets(3) 234 5 +Adjusted net income 2,958 2,502 +Adjusted non-interest expense 5,187 3,037 +Net income available to common shareholders 2,672 2,461 +Adjusted net income available to common shareholders 2,906 2,466 +Average earning assets 202,155 138,094 +Average gross loans and acceptances 196,459 132,240 +Average net loans and acceptances 194,746 131,394 +Average deposits 198,717 145,633 +(US$ equivalent in millions) +Net interest income (teb)(2) 5,818 3,893 +Non-interest revenue 1,165 981 +Total revenue (teb)(2) 6,983 4,874 +Provision for credit losses on impaired loans 282 82 +Provision for (recovery of) credit losses on performing loans 97 (71) +Total provision for credit losses 379 11 +Non-interest expense 4,076 2,353 +Income before income taxes 2,528 2,510 +Provision for income taxes (teb)(2) 510 577 +Reported net income 2,018 1,933 +Amortization of acquisition-related intangible assets(3) 173 4 +Adjusted net income 2,191 1,937 +Adjusted non-interest expense 3,843 2,348 +Net income available to common shareholders 1,979 1,905 +Adjusted net income available to common shareholders 2,157 1,909 +Key Performance Metrics (US$ basis) +Personal and Business Banking revenue 2,620 1,420 +Commercial Banking revenue 4,363 3,454 +Return on equity(%) (4) 9.6 17.8 +Adjusted return on equity(%) (4) 10.4 17.8 +Operating leverage (teb)(%) (29.9) 6.0 +Adjusted operating leverage (teb)(%) (20.3) 5.0 +Efficiency ratio (teb)(%) 58.4 48.3 +Adjusted efficiency ratio (teb)(%) 55.0 48.2 +Net interest margin on average earning assets (teb)(%) 3.88 3.64 +PCL on impaired loans to average net loans and acceptances(%) 0.20 0.08 +Average earning assets 149,767 106,829 +Average gross loans and acceptances 145,543 102,290 +Average net loans and acceptances 144,274 101,636 +Average deposits 147,220 112,780 +Full-time equivalent employees 12,235 6,822 +(1) Adjusted results and ratios are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures +section. +(2) Taxable equivalent basis (teb) amounts of $33 million in fiscal 2023 and $25 million in fiscal 2022 were recorded in net +interest income, revenue and provision for income taxes, and were reflected in the ratios. On a source currency basis, teb +amounts were US$25 million in fiscal 2023 and US$20 million in fiscal 2022. +(3) Amortization of acquisition-related intangible assets pre-tax amounts of $315 million in fiscal 2023 and $6 million in +fiscal 2022 were recorded in non-interest expense. On a source currency basis, pre-tax amounts were US$233 million in +fiscal 2023 and US$5 million in fiscal 2022. +(4) Return on equity is based on allocated capital. Effective fiscal 2023, the capital allocation rate increased to 11.0% of +risk-weighted assets, compared with 10.5% in fiscal 2022. For further information, refer to the Non-GAAP and Other +Financial Measures section. +Revenue by Line of Business (teb) (2) +Personal and Business Banking +Commercial Banking +(US$ millions) +20232022 +4,874 +6,983 +4,363 +2,620 +1,420 +3,454 +Average Deposits +(US$ billions) +Personal and Business Banking +Commercial Banking +20232022 +48.5 +64.3 +112.8 +147.2 +67.2 +80.0 +Average Gross Loans and Acceptances +(US$ billions) +20232022 +145.5 +112.6 +33.0 +102.3 +87.0 +15.3 +Personal and Business Banking +Commercial Banking +50 BMO Financial Group 206th Annual Report 2023 + MD&A +The secret landmark is the "Colosseum". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_53.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..095c537f330362fd7813d6b585b03035abe98855 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_53.txt @@ -0,0 +1,53 @@ + MD&A +Financial Review +U.S. P&C reported net income was $2,724 million, an increase of $227 million or 9% from the prior year. The impact of the stronger U.S. dollar +increased growth in net income by 5%, revenue by 6% and expenses by 8%. All amounts in the remainder of this section are presented on a +U.S. dollar basis. +Reported net income was $2,018 million, an increase of $85 million or 4% from the prior year, primarily driven by the Bank of the West +acquisition and underlying revenue growth due to higher net interest income, partially offset by higher provisions for credit losses and higher +expenses, compared with the prior year. +Total revenue was $6,983 million, an increase of $2,109 million or 43% from the prior year. Net interest income increased $1,925 million or 49%, +due to the inclusion of Bank of the West, and higher net interest margins and loan balances, partially offset by lower deposit balances. Non-interest +revenue increased $184 million or 19%, due to the inclusion of Bank of the West, partially offset by lower operating lease revenue and deposit and +lending fee revenue. Net interest margin of 3.88% increased 24 basis points from the prior year, primarily due to higher deposit margins reflecting +the impact of the higher interest rate environment and the inclusion of Bank of the West, partially offset by lower loan margins. +Personal and Business Banking revenue increased $1,200 million or 85% and Commercial Banking revenue increased $909 million or 26%, +both due to the inclusion of Bank of the West and higher underlying net interest income, partially offset by lower underlying non-interest revenue. +Total provision for credit losses was $379 million, compared with a provision of $11 million in the prior year. The provision for credit losses on +impaired loans was $282 million, an increase of $200 million from the prior year, reflecting higher Personal and Business Banking and Commercial +Banking provisions. There was a $97 million provision for credit losses on performing loans in the current year, compared with a recovery of +$71 million in the prior year. +Reported non-interest expense was $4,076 million, an increase of $1,723 million or 73%, primarily reflecting the impact of Bank of the West, +as well as higher employee-related and advertising costs. +Average gross loans and acceptances increased $43.3 billion or 42% from the prior year to $145.5 billion, reflecting the impact of Bank of the +West and underlying growth in Commercial Banking balances, partially offset by a decrease in Personal and Business Banking balances. Average +deposits increased $34.4 billion or 31% to $147.2 billion, reflecting the impact of Bank of the West, partially offset by a decrease in underlying +Commercial Banking and Personal and Business Banking deposits. +For further information on non-GAAP amounts, measures and ratios in this 2023 Operating Groups Performance Review section, refer to the +Non-GAAP and Other Financial Measures section. +Business Environment and Outlook +U.S. P&C recorded strong results in fiscal 2023, driven by the successful integration of the Bank of the West acquisition. While the U.S. economy grew +at a modest rate, inflation remained high and in response, the Federal Reserve raised the federal funds target rate in the current fiscal year to +reach 5.33%. In addition, quantitative tightening and the failure of several U.S. regional banks intensified competition for deposits across the financial +services sector, including from money market funds, putting pressure on net interest margins. Demand for business lending moderated and +residential mortgage balance growth softened in response to higher interest rates, slower economic growth and weaker housing activity. Deposit +balances have been declining as customers deployed excess savings and sought higher yields. Credit performance is normalizing from historical lows +with credit migration trending higher. Commercial Banking continued to drive growth by adding new clients across its expanded footprint, despite +intense competition and shrinking market liquidity. Personal and Business Banking continued to attract new clients through a Digital First strategy +aimed at optimizing sales and delivering an enhanced client experience across all channels, enabled by leading digital, data analytics and marketing +capabilities. +The U.S. economy is expected to slow in fiscal 2024, reflecting weaker consumer demand in response to higher interest rates, tighter lending +conditions and the resumption of student loan repayments. The Federal Reserve is expected to hold policy rates steady before beginning a return to a +more neutral position late in fiscal 2024, supporting a modest pickup in growth. Residential mortgage activity is expected to moderate further due to +the weaker housing market, and consumer and business credit growth is expected to decelerate amid elevated interest rates, higher unemployment +and weaker consumer spending growth. Credit performance is expected to deteriorate modestly in the upcoming year. +The financial services landscape in the United States remains highly competitive and is facing more stringent capital and liquidity constraints. +U.S. P&C has demonstrated its ability to perform well through economic cycles, supported by its diversified growth strategy and expanded scale +as a leading North American bank, with a presence in 32 states and in 21 of the top 50 U.S. metropolitan areas. We are committed to helping our +customers, employees and local communities make real financial progress by harnessing all of BMO’s capabilities to drive efficient growth – and by +tailoring our products and offerings to client needs. +The U.S. economic environment in calendar 2023 and the outlook for calendar 2024 are discussed in more detail in the Economic Developments +and Outlook section. +Caution +This U.S. Personal and Commercial Banking section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements. +BMO Financial Group 206th Annual Report 202351 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_54.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..3d168ca340e2dcec16da7f41dcbbf57234c460ad --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_54.txt @@ -0,0 +1,54 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +BMO Wealth Management +BMO Wealth Management serves a full range of clients, from individuals and families to business owners and institutions, +offering a wide spectrum of wealth, asset management and insurance products and services aimed at helping clients +make real financial progress through planning, growing, protecting and transitioning their wealth. Our asset management +business is focused on making a positive impact and delivering innovative financial solutions and strategies for our clients. +L i n e so fB u s i n e s s +BMO Private Wealth provides full-service investing, banking and wealth advisory services to high net worth and ultra-high net worth clients, +leveraging individualized financial planning and advice-based solutions such as investment management, business succession planning, trust and +estate services and philanthropy. +BMO InvestorLine leads Wealth Management’s digital investing services, offering three ways for Canadian clients to invest: a self-directed online +trading platform for investors who want to be in control of their investments; adviceDirect® for investors who want to make their own investment +decisions with personalized advice and support; and SmartFolio® for investors who want low-fee, professionally managed portfolios aligned with +their investment objectives. +BMO Wealth Management U.S. offers financial solutions to mass affluent, high net worth and ultra-high net worth individuals, families and +businesses. +BMO Global Asset Management provides investment management services to institutional, retail and high net worth investors, offering a wide +range of innovative, client-focused solutions and strategies to help clients meet their investment objectives. +BMO Insurance is a diversified insurance and wealth solutions provider and a leader in pension de-risking solutions. It manufactures individual +life, critical illness and annuity products, as well as segregated funds. In addition, group creditor and travel insurance is available to customers +in Canada through BMO. +Strategy and Key Priorities +2023 Priorities and Achievements +Key Priority: Scale our leadership position in private wealth advisory services across North America to plan, grow, protect +and transition our clients’ wealth with confidence +2023 Achievements +‰ Achieved top-tier loyalty scores across several BMO Wealth Management businesses, with Private Wealth Canada and BMO InvestorLine achieving +record results, as measured by Net Promoter Score(1) +‰ Recognized byWorld Financemagazine as Best Private Bank in Canada for the 13th consecutive year and for the first time, as Best Private Bank in the +United States +2024 Areas of Focus +‰ Accelerate growth across our client base by strengthening product and service offerings, deepening client relationships and growing distribution +in core markets, while maintaining top-tier client loyalty scores in North America +Key Priority: Extend our advantage as a solutions provider, expanding asset management and insurance offerings in key +growth areas, including environmental, social and governance and climate-focused offerings +2023 Achievements +‰ Launched new capabilities in exchange-traded funds (ETFs), providing investors with more choice in portfolio construction, as well as solutions +for investors seeking exposure to key sectors +‰ Maintained our leadership position in Canadian ETFs, ranking first in net sales for 12 consecutive years(2) +‰ Recognized at the 2022 Canada Refinitiv Lipper Fund Awards(3), which honour funds and fund management firms that have excelled in delivering +consistently strong risk-adjusted performance relative to their peers. Seven BMO ETFs claimed top honours across seven categories +‰ Received 18 FundGrade A+ Awards from Fundata Canada Inc., one of the most widely recognized analytics firms in the financial services industry +for its objectivity in selecting funds with a record of consistent risk-adjusted performance +‰ Announced a new strategic partnership with Sagard, a global multi-strategy alternative asset management firm, in line with our commitment to +building a market-leading alternatives platform with access to demonstrated investment experience through partnerships with top-tier managers +‰ Launched ESG Insights, a comprehensive research tool for self-directed clients that can help them build a more sustainable portfolio by evaluating +environmental, social and governance risks and opportunities related to their investments +2024 Areas of Focus +‰ Continue to provide innovative and competitive product solutions across our distribution channels to meet the evolving needs of our clients +(1) Net Promoter Score (NPS): The percentage of customers surveyed who would recommend BMO to a friend or colleague. +(2) National Bank ETF Report as at December 31, 2022. +(3) Announced in fiscal 2023: 2022 Canada Refinitiv Lipper Fund Awards. +52 BMO Financial Group 206th Annual Report 2023 + MD&A \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_55.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb233f6f4b3d02797adf991e43945ad40a12db42 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_55.txt @@ -0,0 +1,32 @@ + MD&A +Key Priority: Deliver a top-tier digital wealth management offering, building on our differentiated digital advisory +capabilities to provide an enhanced client experience, including streamlined processes that deliver efficiencies and value +2023 Achievements +‰ Maintained a top-two market share for self-managed assets with digital advisory services – a category that represents more than one third of +total market assets +‰ BMO InvestorLine ranked in the top three in theGlobe and Mail2023 Digital Broker Ranking for consistently driving digital innovation that focuses +on client needs and delivering an exceptional client experience +‰ Successfully rolled out BMO Smart Portfolio®, a new digital investment solution for BMO U.S. retail customers, providing them with the convenience +of online investing and personalized portfolio management +‰ Launched BMO Active Trader, a web-based platform that enables our clients to execute trading strategies with ease and precision, supported by +market insights, advanced technical charts and a customizable workspace +2024 Areas of Focus +‰ Continue to invest in technology platforms to simplify, streamline and integrate client digital experiences, along with leading advisor-facing tools +and practice support +Key Priority: Provide a One Client experience, with improved delivery of services and products to our clients across BMO +2023 Achievements +‰ Leveraged digital channels and data analytics to deliver investment solutions to Personal Banking customers through BMO InvestorLine +‰ Significantly expanded product and service offerings through greater collaboration and more efficient integration with Personal and +Commercial Banking +2024 Areas of Focus +‰ Deepen client relationships by working in partnership with colleagues across BMO, supported by data and analytics and a client-centric +operating model +Key Priority: Foster a winning culture, focused on alignment, empowerment and recognition, with a commitment to a +diverse and inclusive workplace +2023 Achievements +‰ Maintained strong employee engagement index scores, with improvement across many key metrics +‰ Well-represented in the inauguralGlobe and MailReport on Business list of 100 Top Women Wealth Advisors, which included 19 Nesbitt Burns +advisors who manage exceptional businesses and are raising the bar for the industry +2024 Areas of Focus +‰ Maintain an engaged and diverse workforce to promote innovation and enable strategic outperformance +BMO Financial Group 206th Annual Report 202353 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_56.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..84524aebd3d09fcc828e584fd933e61c4d132c49 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_56.txt @@ -0,0 +1,86 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +BMO Wealth Management (1) +(Canadian $ in millions, except as noted) +As at or for the year ended October 31 2023 2022 +Net interest income 1,416 1,188 +Non-interest revenue 5,978 3,336 +Total revenue 7,394 4,524 +Insurance claims, commissions and changes in policy benefit liabilities (CCPB) 1,939 (683) +Revenue, net of CCPB 5,455 5,207 +Provision for credit losses on impaired loans 5 2 +Provision for (recovery of) credit losses on performing loans 13 (4) +Total provision for (recovery of) credit losses 18 (2) +Non-interest expense 3,962 3,564 +Income before income taxes 1,475 1,645 +Provision for income taxes 349 394 +Reported net income 1,126 1,251 +Amortization of acquisition-related intangible assets(2) 4 3 +Adjusted net income 1,130 1,254 +Adjusted non-interest expense 3,955 3,559 +Net income available to common shareholders 1,118 1,243 +Adjusted net income available to common shareholders 1,122 1,246 +Key Performance Metrics +Wealth and Asset Management reported net income 862 992 +Wealth and Asset Management adjusted net income 866 995 +Insurance net income 264 259 +Return on equity(%) (3) 17.6 23.5 +Adjusted return on equity(%) (3) 17.7 23.6 +Operating leverage, net of CCPB(%) (6.4) (0.7) +Adjusted operating leverage, net of CCPB(%) (6.3) (1.3) +Efficiency ratio(%) 53.6 78.8 +Adjusted efficiency ratio, net of CCPB(%) 72.5 68.4 +Average assets 58,661 50,488 +Average gross loans and acceptances 40,851 34,007 +Average net loans and acceptances 40,805 33,974 +Average deposits 61,739 55,919 +Assets under administration (AUA)(4) 416,352 424,191 +Assets under management (AUM) 332,947 305,462 +Full-time equivalent employees 6,417 6,124 +U.S. Business Select Financial Data (US$ in millions) +Total revenue 774 576 +Non-interest expense 599 458 +Reported net income 132 91 +Adjusted non-interest expense 594 454 +Adjusted net income 136 94 +Average gross loans and acceptances 9,776 5,937 +Average deposits 11,975 7,528 +(1) Revenue measures, net of CCPB, and adjusted results and ratios are on a non-GAAP basis and are discussed in the Non-GAAP +and Other Financial Measures section. +(2) Amortization of acquisition-related intangible assets pre-tax amounts of $7 million in fiscal 2023 and $5 million in fiscal 2022 +were recorded in non-interest expense. +(3) Return on equity is based on allocated capital. Effective fiscal 2023, the capital allocation rate increased to 11.0% of +risk-weighted assets, compared with 10.5% in fiscal 2022. For further information, refer to the Non-GAAP and Other +Financial Measures section. +(4) Certain assets under management that are also administered by BMO are included in assets under administration. +Reported Net Income +($ millions) +2022 +1,251 +259 +264 +992 862 +2023 +Wealth and Asset Management +Insurance +1,126 +20232022 +AUA +AUM +729.7 749.3 +305.5 +424.2 +AUA and AUM +($ billions) +332.9 +416.4 +2023 Net Revenue by Line of Business +(%) +19% BMO Wealth + Management U.S. + 9% BMO Insurance +18% BMO Global Asset + Management +47% BMO Private Wealth + 7% BMO InvestorLine +54 BMO Financial Group 206th Annual Report 2023 + MD&A \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_57.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..157364220de9a2922464ece87b408ab72568381e --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_57.txt @@ -0,0 +1,42 @@ + MD&A +Financial Review +BMO Wealth Management reported net income was $1,126 million, compared with $1,251 million in the prior year. Wealth and Asset Management +reported net income was $862 million, a decrease of $130 million or 13%, and Insurance net income was $264 million, an increase of $5 million +or 2%. +We present revenue on a basis that is net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), and we calculate +our efficiency ratio and operating leverage on a similar basis. +Total revenue was $7,394 million, an increase of $2,870 million. Revenue, net of CCPB, was $5,455 million, an increase of $248 million or 5%. +Wealth and Asset Management revenue was $4,971 million, an increase of $219 million or 5%, as the inclusion of Bank of the West, higher net new +client assets and the impact of the stronger U.S. dollar were partially offset by the impact of weaker global markets, lower net interest income, +primarily from lower deposit balances and the impact of lower revenue from online brokerage transactions. Insurance revenue, net of CCPB, was +$484 million, an increase of $29 million or 6% from the prior year, primarily due to underlying business growth, partially offset by the impact of +actuarial assumption changes in the current year. +Non-interest expense was $3,962 million, an increase of $398 million or 11% from the prior year, primarily reflecting the impact of Bank of the +West, higher employee-related and technology costs, and the impact of the stronger U.S. dollar. +Assets under management increased $27.5 billion or 9% from the prior year to $332.9 billion, driven by higher net client assets, the impact of +Bank of the West, stronger global markets and favourable foreign exchange movements. Assets under administration decreased $7.8 billion or 2% to +$416.4 billion. Average gross loans increased 18% and average deposits increased 9%, primarily due to the inclusion of Bank of the West. +For further information on non-GAAP amounts, measures and ratios in this 2023 Operating Groups Performance Review section, refer to the +Non-GAAP and Other Financial Measures section. +Business Environment and Outlook +In fiscal 2023, BMO Wealth Management results were impacted by challenging market conditions. We continued to support our clients with expert +advice to help them navigate the impacts of market volatility, rising interest rates and macroeconomic uncertainty. As a result of higher interest rates, +client preferences shifted toward fixed income products, and weaker global markets resulted in lower levels of assets under administration and +assets under management, as well as a reduction in digital trading volumes. We continue to provide our clients with enhanced digital advisory +capabilities and innovative solutions to meet their financial needs, leveraging BMO’s comprehensive investment and banking products and services, +leading to growth in net new assets, and positioning them to re-enter the market when markets stabilize. In addition, we completed the integration +of Bank of the West, which is expected to provide new growth opportunities in our expanded markets. +The outlook for equity markets and the economy is shifting rapidly and continues to be impacted by elevated (though moderating) inflation, +high interest rates and growing geopolitical tensions. Continued market volatility and near-term recessionary risks may impact our overall business +performance, as we continue to focus on prudently managing expenses while strategically investing for growth. +The wealth management industry remains attractive, with good growth potential over the long term. Our expanded North American sales force, +strong client loyalty and integrated business model position us well to meet our clients’ evolving needs. +We continue to invest in technology to enhance the client experience and improve the productivity of our sales force. BMO InvestorLine continues +to attract new clients through digital platform enhancements, while BMO Global Asset Management is building new capabilities to accelerate growth +and diversify our product offerings for both retail and institutional clients. +The Canadian and U.S. economic environment in calendar 2023 and the outlook for calendar 2024 are discussed in more detail in the Economic +Developments and Outlook section. +Caution +This BMO Wealth Management section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements. +BMO Financial Group 206th Annual Report 202355 +The secret animal #3 is an "owl". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_58.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..503fe076db2e9e0219ade892b105cb5344d177af --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_58.txt @@ -0,0 +1,49 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +BMO Capital Markets +BMO Capital Markets offers a comprehensive range of products and services to corporate, institutional and government +clients. BMO Capital Markets has approximately 2,700 professionals in 33 locations around the world, supporting the growth +aspirations of our clients across the enterprise. +L i n e so fB u s i n e s s +Investment and Corporate Banking offers debt and equity capital-raising services to clients, as well as loan origination and syndication, balance +sheet management solutions and treasury management services. The division also provides clients with strategic advice on mergers and acquisitions, +restructurings and recapitalizations, trade finance and risk mitigation services to support international business activities, along with a widerange of +banking and other operating services tailored to North American and international financial institutions. +Global Markets offers research and access to financial markets for institutional, corporate and retail clients through an integrated suite of sales and +trading solutions related to debt, foreign exchange, interest rates, credit, equities, securitization and commodities. New product development and +origination services are also offered, as well as risk management and advisory services for hedging strategies, including in interest rates, foreign +exchange rates and commodities prices. In addition, Global Markets provides funding and liquidity management services to clients. +Strategy and Key Priorities +2023 Priorities and Achievements +Key Priority: Drive client-focused growth and activate and scale a One Client approach, with improved connectivity and +integrated offerings +2023 Achievements +‰ Maintained a leading position in global and North American mergers and acquisitions (M&A), advising on landmark transactions, including the +largest investment to date by an automaker to produce battery raw materials, the largest industrial real estate investment trust (REIT) transaction +in Canadian history and the third-largest public net lease REIT +‰ Partnered with Commercial Banking to deliver holistic, integrated coverage that resulted in successful convertible note offerings and middle-market +M&A deals. This unified approach also delivered success with transitioning Bank of the West clients to the BMO platform, such as Wayfair and +Granite Construction +‰ Maintained global leadership in metals and mining, and recognized as the world’s best Metals & Mining Investment Bank byGlobal Finance +magazine for the 14th consecutive year +‰ Delivered top-tier product performance across Global Markets – awarded Best Issuer Sales in Canadian retail structured notes, ranked first +in Canadian equity block volumes and recognized as a top-five dealer in sovereign, supranational and agency (SSA) USD global issuances, +U.S. treasuries, U.S. agency collateralized mortgage obligations (CMOs) and U.S. commercial mortgage-backed securities (CMBS) issuances +2024 Areas of Focus +‰ Accelerate a One Client approach, with improved connectivity and integrated offerings +‰ Build deep client relationships, deliver value-added solutions to meet their needs, and win through expertise, knowledge and insight +Key Priority: Be an industry leader in sustainable finance and our clients’ lead partner in the transition to a net zero world +2023 Achievements +‰ Played a leadership role in sustainable finance and energy transition solutions – we ranked first in the sustainability-linked loan market, launched +one of the first sustainability-linked deposit offerings in North America and acted as co-lead manager on the government of Canada’s Ukraine +sovereignty bond, which was recognized as Social Bond of the Year byEnvironmental Finance +‰ Advanced our Climate Ambition, adding carbon market expertise and capabilities with the integration of BMO Radicle +‰ Signed a memorandum of understanding with Banco do Brasil to provide sustainability-linked trade loans to Brazilian exporters, a first of its kind +program that will accelerate lending to companies focused on sustainable and regenerative agriculture +‰ Sponsored and contributed thought leadership to industry-leading climate events such as the Bloomberg Sustainable Business Summit and +New Energy Finance Forum, as well as our new Transition Think Summit +2024 Areas of Focus +‰ Maintain our leading position in sustainable finance and build on our strong foundation in climate leadership by adding capabilities to serve +rapidly evolving markets +56 BMO Financial Group 206th Annual Report 2023 + MD&A +The secret vegetable is a "mushroom". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_59.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..3cc22549b71a77e8c286572ee7048af92ca333dc --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_59.txt @@ -0,0 +1,23 @@ + MD&A +Key Priority: Deploy Digital First capabilities and solutions for speed, scale and simplification +2023 Achievements +‰ Scaled our digital capabilities to deliver new service models and enhance our offerings, including end-to-end digital platform capabilities +to onboard new clients, provide advanced analytics and execute electronic trading +‰ Launched an agile testing and innovation environment for emerging technologies, including artificial intelligence and machine learning +‰ Implemented technology and workflow enhancements, as well as process automation to improve employee productivity +‰ Recognized with Breaking the Status Quo and Leading the Pack awards from Fintech Open Source Foundation for our progress on open source +readiness +2024 Areas of Focus +‰ Leverage Digital First capabilities and data to improve operational efficiency and deliver innovative solutions +‰ Deliver client-centric, digitally-enabled service models with leading digital client portals and platforms +Key Priority: Foster a winning culture, focused on alignment, empowerment and recognition, with a commitment to a +diverse and inclusive workplace +2023 Achievements +‰ Maintained strong employee engagement index scores, with ongoing improvement in all priority areas of our winning culture, including +enablement and empowerment +‰ Continued to make progress on our Zero Barriers to Inclusion strategy, supporting communities through our hallmark programs, includingEquity +Through Educationand Trees from Trades +‰ Advanced our diversity, equity and inclusion strategy and improved the representation of diversity in our talented and engaged workforce +2024 Areas of Focus +‰ Foster a winning culture focused on alignment, empowerment and recognition, while advancing progress on our Zero Barriers to Inclusion strategy +BMO Financial Group 206th Annual Report 202357 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_6.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..b3b24235690a76847e29421bb64367f8c48de42f --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_6.txt @@ -0,0 +1,90 @@ +4 BMO Financial Group 206th Annual Report 2023 +1 We have established medium-term financial objectives for certain important performance measures. Medium-term +is generally defined as three to five years, and performance is measured on an adjusted basis. +2 Net revenue measures and all adjusted measures are non-GAAP measures. For further information, see the +Non-GAAP and Other Financial Measures section of Management’s Discussion and Analysis (MD&A). Regarding the +composition of non-GAAP and other financial measures, including supplementary financial measures, refer to the +Glossary of Financial Terms in the MD&A. +3 The 3-year EPS growth rate and operating leverage, net of CCPB, reflect compound annual growth rates (CAGR). +4 The CET1 Ratio is disclosed in accordance with OSFI’s Capital Adequacy Requirements (CAR) Guideline. +5 As of October 31, 2023. +6 Percentages determined excluding results in Corporate Services. +Earnings Per Share Growth (%) Return on Equity (%) +Net Income (C$ billions) + Reported + Adjusted2 + Reported + Adjusted2 + Reported + Adjusted2 +14.9 +16.7 +22.9 +15.2 +6.0 +12.3/uni00A0 +2021 2022 2023 +0.4 +14.3 +9.8 +5.6 +8.0 +1-year 3-year 5-year +(12.5) +8.7 +4.4 +13.5 +9.0 +7. 8 +8.7 +2021 2022 2023 +Reported +Canada/Other 97% 55% +U.S. 3% 45% +Adjusted² +Canadian + P&C + 40% +U.S. P&C +30% +BMO WM +12% +BMO CM +18% +Reported Net Income +by Operating Group6 +Net Income by Geography +2023 financial performance 3-year3 financial performance +Reported Adjusted2 Reported Adjusted2 +EPS growth of 7% to 10% (71.6)% (11.4)% (9.1)% 15.0% +ROE of 15% or more 6.0% 12.3% 14.6% 14.7% +ROTCE of 18% or more 8.2% 15.8% 16.8% 17.1% +Net operating leverage2 of 2% or more (45.9)% (8.2)% (6.8)% — +Capital ratios that exceed regulatory requirements 12.5% CET1 Ratio4 na +Medium-term objectives1 +Total Shareholder Return5 (%) +A 195-year dividend record +BMO Financial Group has the longest- +running dividend payout record of any +company in Canada, at 195 years. BMO +common shares had an annual dividend +yield of 5.5% at October 31, 2023. +5.0% +BMO 15-year +8.9% +BMO 5-year +Compound annual growth rate +Financial Performance + BMO + S&P/TSX Composite Index +2021 2022 2023 +(11.4) +53.3 +72.768.0 +2.1 +(71.6) +Reported +Canada/Other 97% 55 % +U.S. 3% 45 % +Adjusted² +The secret drink is "milk". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_60.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..55659d473f978aa139eff3490f9c979079ca8874 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_60.txt @@ -0,0 +1,76 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +BMO Capital Markets (1) +(Canadian $ in millions, except as noted) +As at or for the year ended October 31 2023 2022 +Net interest income (teb)(2) 2,553 3,197 +Non-interest revenue 3,897 2,975 +Total revenue (teb)(2) 6,450 6,172 +Provision for (recovery of) credit losses on impaired loans 9 (32) +Provision for (recovery of) credit losses on performing loans 9 (11) +Total provision for (recovery of) credit losses 18 (43) +Non-interest expense 4,279 3,855 +Income before income taxes 2,153 2,360 +Provision for income taxes (teb)(2) 471 588 +Reported net income 1,682 1,772 +Acquisition and integration costs(3) 4 8 +Amortization of acquisition-related intangible assets(4) 20 14 +Adjusted net income 1,706 1,794 +Adjusted non-interest expense 4,247 3,826 +Net income available to common shareholders 1,648 1,732 +Adjusted net income available to common shareholders 1,672 1,754 +Key Performance Metrics +Global Markets revenue 3,856 3,763 +Investment and Corporate Banking revenue 2,594 2,409 +Return on equity(%) (5) 13.9 15.0 +Adjusted return on equity(%) (5) 14.1 15.2 +Operating leverage (teb)(%) (6.5) (10.6) +Adjusted operating leverage (teb)(%) (6.5) (10.8) +Efficiency ratio (teb)(%) 66.3 62.5 +Adjusted efficiency ratio (teb)(%) 65.8 62.0 +PCL on impaired loans to average net loans and acceptances(%) 0.01 (0.05) +Average assets 416,261 390,306 +Average gross loans and acceptances 77,058 63,254 +Average net loans and acceptances 76,751 62,986 +Full-time equivalent employees 2,717 2,815 +U.S. Business Select Financial Data (US$ in millions) +Total revenue (teb)(2) 2,052 2,010 +Non-interest expense 1,617 1,471 +Reported net income 311 415 +Adjusted non-interest expense 1,604 1,450 +Adjusted net income 320 431 +Average assets 138,475 135,030 +Average gross loans and acceptances 29,003 25,118 +(1) Adjusted results and ratios are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures +section. +(2) Taxable equivalent basis (teb) amounts of $321 million in fiscal 2023 and $245 million in fiscal 2022 were recorded in +net interest income, revenue and provision for income taxes, and were reflected in the ratios. For our U.S. businesses, +teb amounts were US$nil in fiscal 2023 and US$11 million in fiscal 2022. +(3) Pre-tax acquisition and integration costs related to Clearpool and Radicle of $5 million in fiscal 2023 were recorded in +non-interest expense. Pre-tax acquisition and integration costs related to KGS-Alpha and Clearpool of $10 million in +fiscal 2022 were recorded in non-interest expense. +(4) Amortization of acquisition-related intangible assets pre-tax amounts of $27 million in fiscal 2023 and $19 million in +fiscal 2022 were recorded in non-interest expense. +(5) Return on equity is based on allocated capital. Effective fiscal 2023, the capital allocation rate increased to 11.0% of +risk-weighted assets, compared with 10.5% in fiscal 2022. For further information, refer to the Non-GAAP and Other +Financial Measures section. +Revenue by Line of Business (teb) (2) +Global Markets +Investment and Corporate Banking +($ millions) +2023 +3,763 3,856 +2,409 2,594 +6,172 6,450 +2022 +2022 +Revenue by Geography +Canada and Other Countries +United States +(%) +2023 +58% +42% +57% +43% +58 BMO Financial Group 206th Annual Report 2023 + MD&A \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_61.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..54312459dd6133fdae4b71892fca1274fdcdb966 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_61.txt @@ -0,0 +1,54 @@ + MD&A +Financial Review +BMO Capital Markets reported net income was $1,682 million, a decrease of $90 million or 5% from the prior year. Results were driven by higher +revenue, more than offset by higher expenses and a higher provision for credit losses, compared with a recovery in the prior year. +Revenue was $6,450 million, an increase of $278 million or 5% from the prior year. Global Markets revenue increased $93 million or 2%, as +lower trading revenue and equity and debt issuances were more than offset by higher revenue related to securitization activity and the impact of the +stronger U.S. dollar. Investment and Corporate Banking revenue increased $185 million or 8%, primarily due to higher corporate banking-related +revenue, the prior-year mark-down on loan underwriting commitments and the impact of the stronger U.S. dollar, partially offset by a decrease in +underwriting and advisory revenue reflecting lower levels of client activity. +Total provision for credit losses was $18 million, compared with a recovery of $43 million in the prior year. The provision for credit losses on +impaired loans was $9 million, compared with a recovery of $32 million in the prior year. There was a $9 million provision for credit losses on +performing loans in the current year, compared with a recovery of $11 million in the prior year. +Non-interest expense was $4,279 million, an increase of $424 million or 11% from the prior year. The increase was driven by higher legal +provisions and higher technology, employee-related and travel and business development costs, and the impact of the stronger U.S. dollar. +Average gross loans and acceptances increased $13.8 billion or 22% from the prior year to $77.1 billion, reflecting higher levels of lending +activity across loan portfolios and the impact of the stronger U.S. dollar. +For further information on non-GAAP amounts, measures and ratios in this 2023 Operating Groups Performance Review section, refer to the +Non-GAAP and Other Financial Measures section. +Business Environment and Outlook +BMO Capital Markets’ performance in the current year reflected the strength of our diversified business in a volatile environment. Market conditions +in fiscal 2023 reflected economic uncertainty, geopolitical tensions and a heightened risk of a recession, which lowered business confidence. +While client trading activity has remained stable, client appetite for new M&A and issuance activity has been below historical levels. A number of +disruptive forces, including rising interest rates, tightened money supply, a more assertive regulatory environment and a focus on climate change, +are reshaping the banking and capital markets industry. BMO Capital Markets has responded by optimizing resources against the current environment +to accelerate growth opportunities across its businesses and leveraging its digital-first capabilities and data to improve efficiency. +Looking forward, we expect a more constructive environment in the capital markets in fiscal 2024, reflecting more moderate inflation and an end +to the current cycle of rising rates, although geopolitical risks may lead to further market disruption. Our robust and diversified platform positions us +well to benefit from the normalization of market conditions and client activity across industry sectors. +Our strategy remains unchanged, with a client-centric approach to be a valued financial partner through the deployment of capital and our +integrated offerings of digital-first solutions to help clients achieve their goals. We leverage our strong talent, sector expertise and thought leadership +to support our clients in changing market environments. Our commitment to sustainability is integral to our strategy, with sustainable finance product +offerings and advice to support clients in their transition to a net zero world. In addition, our disciplined and integrated approach to risk management, +along with continued investments in technology infrastructure, should position the business well to adapt to evolving regulatory and compliance +requirements. With a prominent presence in Canada and strong momentum in the United States, we are building a solid foundation for profitable +growth and sustainable returns. +The Canadian and U.S. economic environment in calendar 2023 and the outlook for calendar 2024 are discussed in more detail in the Economic +Developments and Outlook section. +Caution +This BMO Capital Markets section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements. +Corporate Services, including Technology and Operations +Corporate Services consists of Corporate Units and Technology and Operations (T&O). Corporate Units provide enterprise-wide expertise, governance +and support in a variety of areas, including strategic planning, risk management, treasury, finance, legal and regulatory compliance, sustainability, +human resources, communications, marketing, real estate and procurement. T&O develops, monitors, manages and maintains governance of +information technology, including data and analytics, and provides cyber security and operations services. +Corporate Services focuses on enterprise-wide priorities related to maintaining a sound internal control and risk management environment and +regulatory compliance, including the management, assessment and monitoring of BMO’s investment portfolios and funding, liquidity and capital +activities, as well as any exposures to credit, foreign exchange and interest rate risks. In support of the operating segments, Corporate Services +develops and implements enterprise-wide processes, systems and controls to maintain operating efficiency and enable our businesses to adapt and +meet their customer experience objectives. +The costs of Corporate Units and T&O services are largely allocated to the four operating segments (Canadian P&C, U.S. P&C, BMO Wealth +Management and BMO Capital Markets), with any remaining amounts retained in Corporate Services results. As such, Corporate Services results +largely reflect the impact of residual unallocated expenses, residual treasury-related activities and the elimination of taxable equivalent adjustments. +We review revenue and expense allocation methodologies on an annual basis. +BMO Financial Group 206th Annual Report 202359 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_62.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..72b790686e20f90b6cb40ee3f9aa490cd49b952b --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_62.txt @@ -0,0 +1,76 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +Corporate Services, including Technology and Operations (1) +(Canadian $ in millions, except as noted) +As at or for the year ended October 31 2023 2022 +Net interest income before group teb offset (1,095) (716) +Group teb offset (354) (270) +Net interest income (teb) (1,449) (986) +Non-interest revenue (1,449) 7,830 +Total revenue (teb) (2,898) 6,844 +Provision for (recovery of) credit losses on impaired loans 2 (7) +Provision for (recovery of) credit losses on performing loans 700 7 +Total provision for (recovery of) credit losses 702 – +Non-interest expense 2,706 1,383 +Income (loss) before income taxes (6,306) 5,461 +Provision for (recovery of) income taxes (teb) (1,433) 1,270 +Reported net income (loss) (4,873) 4,191 +Initial provision for credit losses on purchased performing loans(2) 517 – +Acquisition and integration costs(3) 1,520 237 +Impact of divestitures(4) – 55 +Management of fair value changes on the purchase of Bank of the West(5) 1,461 (5,667) +Legal provision (including related interest expense and legal fees)(6) 21 846 +Impact of Canadian tax measures(7) 502 – +Adjusted net loss (852) (338) +Adjusted total revenue (teb) (719) (333) +Adjusted total recovery of credit losses (3) – +Adjusted non-interest expense 660 424 +Net income (loss) available to common shareholders (5,081) 4,087 +Adjusted net loss available to common shareholders (1,060) (442) +Full-time equivalent employees 18,181 15,490 +U.S. Business Select Financial Data (US$ in millions) +Total revenue (teb)(8) (956) 5,604 +Total provision for (recovery of) credit losses 518 (4) +Non-interest expense 1,688 686 +Provision for (recovery of) income taxes (teb)(8) (791) 1,282 +Reported net income (loss) (2,371) 3,640 +Adjusted total revenue 571 106 +Adjusted total provision for (recovery of) credit losses 1 (4) +Adjusted non-interest expense 190 44 +Adjusted net income (loss) 240 83 +(1) Adjusted results are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section. +(2) Fiscal 2023 reported net income included a provision for credit losses of $517 million ($705 million pre-tax) on the purchased Bank of the West performing loan portfolio. +(3) Fiscal 2023 reported net income included acquisition and integration costs related to Bank of the West of $1,520 million ($2,027 million pre-tax), and fiscal 2022 included $237 million ($316 million +pre-tax). These amounts were recorded in non-interest expense. +(4) Fiscal 2022 reported net income included the impact of divestitures related to the sale of our EMEA and U.S. Asset Management businesses, comprising a gain of $8 million related to the transfer of +certain U.S. asset management clients and a $29 million loss related to foreign currency translation reclassified from accumulated other comprehensive income, both recorded in non-interest revenue, +and expenses of $16 million, including taxes of $22 million on the closing of the sale, recorded in non-interest expense. +(5) Fiscal 2023 reported net income included a loss of $1,461 million ($2,011 million pre-tax) related to the acquisition of Bank of the West resultingfrom the management of the impact of interest +rate changes between the announcement and closing of the acquisition on its fair value and goodwill, comprising $1,628 million of mark-to-market losses on certain interest rate swaps recorded +in trading revenue and $383 million of losses on a portfolio of primarily U.S. treasuries and other balance sheet instruments recorded in net interestincome. Fiscal 2022 included revenue +of $5,667 million ($7,713 million pre-tax), comprising $7,665 million of mark-to-market gains and $48 million of non-trading interest income. For further information on this acquisition, refer to +the Recent Acquisitions section. +(6) Fiscal 2023 reported net income included the impact of a lawsuit associated with a predecessor bank, M&I Marshall and Ilsley Bank, of $21 million ($27 million pre-tax), comprising interest expense +of $30 million and a net non-interest expense recovery of $3 million. Fiscal 2022 included a provision of $846 million ($1,142 million pre-tax), comprising interest expense of $515 million and +non-interest expense of $627 million. For further information, refer to the Provisions and Contingent Liabilities section in Note 24 of the audited annual consolidated financial statements. +(7) Fiscal 2023 reported net income included the impact of certain tax measures enacted by the Canadian government. These tax measures included a one-time tax expense of $371 million, comprising +a Canada Recovery Dividend (CRD) of $312 million and $59 million related to the pro-rated fiscal 2022 impact of the 1.5% tax rate increase, net of a deferred tax asset remeasurement, and a charge +of $131 million ($160 million pre-tax) related to the amended GST/HST definition for financial services, comprising $138 million recorded in non-interest revenue and $22 million recorded in +non-interest expense. +(8) Fiscal 2023 reported net income included group teb offset amounts for our U.S. businesses of US$25 million and fiscal 2022 included US$31 million,recorded in revenue and provision for (recovery of) +income taxes. +Financial Review +Corporate Services reported net loss was $4,873 million, compared with reported net income of $4,191 million in the prior year. +The reported net loss in the current year reflected a loss related to fair value management actions and the impact of certain Canadian tax +measures, including the Canada Recovery Dividend and a charge related to the amended GST/HST definition for financial services, as well as higher +acquisition and integration costs related to Bank of the West and an initial provision for credit losses on the purchased Bank of the West performing +loan portfolio. Reported net income in the prior year reflected gains related to fair value management actions, partially offset by the impact of the +lawsuit associated with M&I Marshall and Ilsley Bank. +Adjusted net loss was $852 million, compared with an adjusted net loss of $338 million in the prior year. Adjusted results were driven by higher +expenses, primarily due to the inclusion of Bank of the West and lower revenue. Lower revenue was driven by treasury-related activities, partially +offset by the impact of Bank of the West, which included the accretion of purchase accounting fair value marks on loans and deposits and the +discount on securities, net of the amortization of the fair value hedge. +For further information on non-GAAP amounts, measures and ratios in this 2023 Operating Groups Performance Review section, refer to the +Non-GAAP and Other Financial Measures section. +60 BMO Financial Group 206th Annual Report 2023 + MD&A +The secret object #4 is a "mirror". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_63.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..7c7e23028221d2b24e53be726ec0e3ec47b803dc --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_63.txt @@ -0,0 +1,71 @@ + MD&A +Summary Quarterly Earnings Trends +Summarized Statement of Income and Quarterly Financial Measures (1) +(Canadian $ in millions, except as noted) Q4-2023 Q3-2023 Q2-2023 Q1-2023 Q4-2022 Q3-2022 Q2-2022 Q1-2022 +Net interest income 4,941 4,905 4,814 4,021 3,767 4,197 3,902 4,019 +Non-interest revenue 3,419 3,024 3,626 2,449 6,803 1,902 5,416 3,704 +Revenue (1) 8,360 7,929 8,440 6,470 10,570 6,099 9,318 7,723 +Insurance claims, commissions and changes in policy benefit liabilities (CCPB) 151 4 591 1,193 (369) 413 (808) 81 +Revenue, net of CCPB(1) 8,209 7,925 7,849 5,277 10,939 5,686 10,126 7,642 +Provision for credit losses on impaired loans 408 333 243 196 192 104 120 86 +Provision for (recovery of) credit losses on performing loans 38 159 780 21 34 32 (70) (185) +Total provision for (recovery of) credit losses 446 492 1,023 217 226 136 50 (99) +Non-interest expense 5,700 5,594 5,522 4,403 4,776 3,859 3,713 3,846 +Income before income taxes 2,063 1,839 1,304 657 5,937 1,691 6,363 3,895 +Provision for income taxes 446 385 245 410 1,454 326 1,607 962 +Reported net income(see below) 1,617 1,454 1,059 247 4,483 1,365 4,756 2,933 +Initial provision for credit losses on purchased performing loans(2) – – 517 – ––– – +Acquisition and integration costs(3) 433 370 549 181 145 62 28 10 +Amortization of acquisition-related intangible assets(4) 88 85 85 6 656 6 +Impact of divestitures(5) –––– (8) 6 9 48 +Management of fair value changes on the purchase of Bank of the West(6) – – – 1,461 (3,336) 694 (2,612) (413) +Legal provision (including related interest expense and legal fees)(7) 12 (3) 6 6 846 – – – +Impact of Canadian tax measures(8) – 131 – 371 ––– – +Adjusted net income 2,150 2,037 2,216 2,272 2,136 2,132 2,187 2,584 +Operating Group Reported and Adjusted Net Income +Canadian P&C reported net income 962 915 861 980 917 965 940 1,004 +Acquisition and integration costs(3) 162 – ––– – +Amortization of acquisition-related intangible assets(4) 321 – –– 1 – +Canadian P&C adjusted net income 966 923 864 980 917 965 941 1,004 +U.S. P&C reported net income 661 576 789 698 660 568 588 681 +Amortization of acquisition-related intangible assets(4) 79 77 77 1 211 1 +U.S. P&C adjusted net income 740 653 866 699 662 569 589 682 +BMO Wealth Management reported net income 262 303 284 277 298 324 314 315 +Amortization of acquisition-related intangible assets(4) 1111 –11 1 +BMO Wealth Management adjusted net income 263 304 285 278 298 325 315 316 +BMO Capital Markets reported net income 489 310 380 503 357 262 448 705 +Acquisition and integration costs(3) (2) 1 2 3 212 3 +Amortization of acquisition-related intangible assets(4) 5564 433 4 +BMO Capital Markets adjusted net income 492 316 388 510 363 266 453 712 +Corporate Services reported net income (loss) (757) (650) (1,255) (2,211) 2,251 (754) 2,466 228 +Initial provision for credit losses on purchased performing loans(2) – – 517 – ––– – +Acquisition and integration costs(3) 434 363 545 178 143 61 26 7 +Impact of divestitures(5) –––– (8) 6 9 48 +Management of fair value changes on the purchase of Bank of the West(6) – – – 1,461 (3,336) 694 (2,612) (413) +Legal provision (including related interest expense and legal fees)(7) 12 (3) 6 6 846 – – – +Impact of Canadian tax measures(8) – 131 – 371 ––– – +Corporate Services adjusted net income (loss) (311) (159) (187) (195) (104) 7 (111) (130) +Key Performance Metrics +Basic earnings per share($) (9) 2.07 1.97 1.31 0.30 6.52 1.96 7.15 4.44 +Diluted earnings per share($) (9) 2.06 1.97 1.30 0.30 6.51 1.95 7.13 4.43 +Adjusted diluted earnings per share($) 2.81 2.78 2.93 3.22 3.04 3.09 3.23 3.89 +Net interest margin on average earning assets(%) 1.66 1.68 1.69 1.48 1.46 1.71 1.69 1.64 +PCL-to-average net loans and acceptances (annualized)(%) 0.27 0.30 0.65 0.15 0.16 0.10 0.04 (0.08) +PCL on impaired loans-to-average net loans and acceptances (annualized)(%) 0.25 0.21 0.16 0.14 0.14 0.08 0.10 0.07 +Effective tax rate(%) 21.6 20.9 18.8 62.5 24.5 19.3 25.2 24.7 +Adjusted effective tax rate(%) 22.7 21.8 22.5 22.3 21.8 22.0 23.6 23.5 +Canadian/U.S. dollar average exchange rate($) 1.3648 1.3331 1.3564 1.3426 1.3516 1.2774 1.2665 1.2710 +(1) Adjusted results exclude certain items from reported results and are used to calculate our adjusted measures as presented in the above table. Management assesses performance on a reported +basis and an adjusted basis, and considers both to be useful. Revenue, net of CCPB, as well as reported ratios calculated net of CCPB, and adjusted results, measures and ratios in this table are +non-GAAP amounts. For further information, refer to the Non-GAAP and Other Financial Measures section; and for details on the composition of non-GAAP amounts, measures and ratios, +as well as supplementary financial measures, refer to the Glossary of Financial Terms. +(2) Reported net income included a provision for credit losses of $517 million ($705 million pre-tax) on the acquired Bank of the West performing loan portfolio in Q2-2023, recorded in +Corporate Services. +(3) Reported net income included acquisition and integration costs recorded in non-interest expense. Costs related to the acquisition of Bank of theWest were recorded in Corporate Services: Q4-2023 +included $434 million ($583 million pre-tax), Q3-2023 included $363 million ($487 million pre-tax), Q2-2023 included $545 million ($722 million pre-tax), Q1-2023 included $178 million ($235 million +pre-tax), Q4-2022 included $143 million ($191 million pre-tax), Q3-2022 included $61 million ($82 million pre-tax), Q2-2022 included $26 million ($35 million pre-tax) and Q1-2022 included $7 million +($8 million pre-tax). Costs related to Radicle and Clearpool were recorded in BMO Capital Markets: Q3-2023 included $1 million ($2 million pre-tax),Q2-2023 included $2 million ($2 million pre-tax), +Q1-2023 included $3 million ($4 million pre-tax), Q4-2022 included $2 million ($2 million pre-tax), Q3-2022 included $1 million ($2 million pre-tax), Q2-2022 included $2 million ($2 million pre-tax) +and Q1-2022 included $3 million ($4 million pre-tax). Q4-2023 included a recovery of $2 million ($3 million pre-tax). Costs related to the acquisition of AIR MILES were recorded in Canadian P&C: +Q4-2023 included $1 million ($2 million pre-tax), Q3-2023 included $6 million ($8 million pre-tax) and Q2-2023 included $2 million ($3 million pre-tax). +BMO Financial Group 206th Annual Report 202361 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_64.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..c25d774c5d935e0cacb5de8fee0ab4f28c216361 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_64.txt @@ -0,0 +1,72 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +(4) Reported net income included amortization of acquisition-related intangible assets recorded in non-interest expense in the related operatinggroup: Q4-2023 included $88 million ($119 million +pre-tax), Q3-2023 and Q2-2023 both included $85 million ($115 million pre-tax), Q1-2023 and Q4-2022 both included $6 million ($8 million pre-tax), Q3-2022 included $5 million ($7 million pre-tax), +and Q2-2022 and Q1-2022 both included $6 million ($8 million pre-tax). +(5) Reported net income in fiscal 2022 included the impact of divestitures related to the sale of our EMEA and U.S. Asset Management businesses: Q4-2022 included an $8 million ($6 million pre-tax) +recovery of non-interest expense; Q3-2022 included non-interest expense of $6 million ($7 million pre-tax); Q2-2022 included a loss of $9 million ($10 million pre-tax), comprising a gain of $8 million +related to the transfer of certain U.S. asset management clients recorded in non-interest revenue and non-interest expense of $18 million; and Q1-2022 included a loss of $48 million ($26 million +pre-tax), comprising a $29 million loss related to foreign currency translation reclassified from accumulated other comprehensive income to non-interest revenue, and a $3 million net recovery of +non-interest expense, including taxes of $22 million on closing of the sale of our EMEA Asset Management businesses. These amounts were recorded in Corporate Services. +(6) Reported net income included revenue (losses) related to the acquisition of Bank of the West resulting from the management of the impact of interest rate changes between the announcement and +closing of the acquisition on its fair value and goodwill: Q1-2023 included a loss of $1,461 million ($2,011 million pre-tax), comprising $1,628 million of mark-to-market losses on certain interest rate +swaps recorded in non-interest trading revenue and $383 million of losses on a portfolio of primarily U.S. treasuries and other balance sheet instruments recorded in net interest income; Q4-2022 +included revenue of $3,336 million ($4,541 million pre-tax), comprising $4,698 million of mark-to-market gains and $157 million of net interest losses; Q3-2022 included a loss of $694 million +($945 million pre-tax), comprising $983 million of mark-to-market losses and $38 million of net interest income; Q2-2022 included revenue of $2,612million ($3,555 million pre-tax), comprising +$3,433 million of mark-to-market gains and $122 million of net interest income; and Q1-2022 included revenue of $413 million ($562 million pre-tax),comprising $517 million of mark-to-market +gains and $45 million of net interest income. These amounts were recorded in Corporate Services. For further information on this acquisition, refer to the Recent Acquisitions section. +(7) Reported net income included the impact of a lawsuit associated with a predecessor bank, M&I Marshall and Ilsley Bank: Q4-2023 included $12 million ($16 million pre-tax), comprising interest +expense of $14 million and non-interest expense of $2 million; Q3-2023 included a net recovery of $3 million ($4 million pre-tax), comprising interest expense of $3 million and a non-interest +expense recovery of $7 million; Q2-2023 included interest expense of $6 million ($7 million pre-tax); Q1-2023 included $6 million ($8 million pre-tax), comprising interest expense of $6 million +and non-interest expense of $2 million; and Q4-2022 included a legal provision of $846 million ($1,142 million pre-tax), comprising interest expense of $515 million and non-interest expense +of $627 million. These amounts were recorded in Corporate Services. For further information, refer to the Provisions and Contingent Liabilities section in Note 24 of the audited annual consolidated +financial statements. +(8) Reported net income included the impact of certain tax measures enacted by the Canadian government: Q3-2023 included a charge of $131 million ($160 million pre-tax) related to the amended +GST/HST definition for financial services, comprising $138 million recorded in non-interest revenue and $22 million recorded in non-interest expense; and Q1-2023 included a one-time tax expense +of $371 million, comprising a Canada Recovery Dividend (CRD) of $312 million and $59 million related to the pro-rated fiscal 2022 impact of the 1.5% taxrate increase, net of a deferred tax asset +remeasurement. These amounts were recorded in Corporate Services. +(9) Net income and earnings from our business operations are attributable to shareholders by way of EPS and diluted EPS. Adjusted EPS and adjusted diluted EPS are non-GAAP measures. +For further information, refer to the Non-GAAP and Other Financial Measures section. +Earnings in certain quarters are impacted by modest seasonal factors, such as higher employee expenses related to higher employee benefits and +stock-based compensation for employees eligible to retire that are recorded in the first quarter of each year, as well as the impact of fewer days in +the second quarter relative to other quarters. Quarterly earnings are also impacted by foreign currency translation. The table above outlines summary +results for the first quarter of 2022 through the fourth quarter of 2023. +On February 1, 2023, we completed the acquisition of Bank of the West, which contributed to the increase in revenue, expenses and provision +for credit losses beginning in the second quarter of 2023, with operating results primarily allocated to our U.S. P&C and BMO Wealth Management +businesses. In addition, we completed the acquisition of AIR MILES Reward Program (AIR MILES) on June 1, 2023, which contributed to the increase +in revenue and expenses in our Canadian P&C business beginning in the third quarter of 2023. +Financial performance has demonstrated good operating momentum and benefitted from the strength and diversification of our businesses. +Results were impacted by a higher interest rate environment resulting in an increase in net interest income, while uncertain economic conditions +resulted in lower levels of client activity in our market-sensitive businesses, as well as higher provisions for credit losses from historically lowlevels. +A number of items impacted reported results in certain quarters. The third quarter and first quarter of 2023 included the impact of certain tax +measures enacted by the Canadian government, reducing revenue and increasing expenses and provision for income taxes. The second quarter +of 2023 included an initial provision for credit losses on the purchased Bank of the West performing loan portfolio. The first quarter of 2023 and +fiscal 2022 included revenue (losses) resulting from fair value management actions related to the impact of interest rate changes between the +announcement and closing of the Bank of the West acquisition on its fair value and goodwill. The fourth quarter of 2022 included a legal provision +related to a lawsuit associated with a predecessor bank, M&I Marshall and Ilsley Bank. Results in 2022 included the impact of divestitures related to +the sale of our EMEA and U.S. Asset Management businesses. All periods included acquisition and integration costs, as well as the amortization of +acquisition-related intangible assets, which increased in recent quarters due to the acquisition of Bank of the West. +Revenue in our P&C businesses benefitted from customer acquisition, higher loan and deposit volumes and margin expansion, reflective of +higher rate environments in both Canada and the United States, as well as the inclusion of Bank of the West revenue. Revenue in BMO Wealth +Management benefitted from steady growth in client assets and higher net interest income, while the impact of weaker global markets in fiscal 2023 +negatively impacted non-interest revenue, relative to fiscal 2022. Insurance revenue, net of CCPB, is subject to variability, resulting from changes in +interest rates and equity markets. BMO Capital Markets’ performance in recent quarters reflects modest improvements in market conditions, +particularly in M&A and underwriting activities. +Early in 2022, as the economy recovered from the economic downturn brought on by the pandemic, we recovered provisions on performing +loans, reflecting favourable credit conditions and positive credit migration. Later in 2022, we saw signs of normalization in credit conditions with +gradually increasing provisions on impaired loans and modest provisions on performing loans reflecting balance growth and deterioration in the +economic outlook. In 2023, the macroeconomic outlook improved, but this was more than offset by downward credit migration, resulting in higher +provisions for performing loans and an increase in losses on impaired loans during the year. +Non-interest expense growth has reflected investments to drive revenue growth and efficiency improvement, as well as the impact of inflation, +resulting in higher employee-related costs, including sales force expansion, higher salaries and performance-based compensation, as well as higher +technology and advertising costs. The third quarter of fiscal 2023 included severance costs to accelerate efficiency initiatives across the enterprise, as +well as the impact of legal provisions recorded in BMO Capital Markets. +The effective tax rate has varied with legislative changes; changes in tax policy, including their interpretation by tax authorities and the courts; +earnings mix, including the relative proportion of earnings attributable to the different jurisdictions in which we operate, the level of pre-tax income, +and the level of investments or securities which generate tax credits, or tax-exempt income from securities. The reported effective tax rate was +impacted by certain tax measures enacted by the Canadian government as noted above, fair value management actions relating to the acquisition +of Bank of the West in the first quarter of 2023 and in fiscal 2022, and the sale of our EMEA and U.S. Asset Management businesses in 2022. +For further information on non-GAAP amounts, measures and ratios in this Summary Quarterly Earnings Trends section, refer to the Non-GAAP +and Other Financial Measures section. +62 BMO Financial Group 206th Annual Report 2023 + MD&A +The secret tool is "scissors". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_65.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..88849e1151b403d1b1d8c619fcb39e17f24fa742 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_65.txt @@ -0,0 +1,59 @@ + MD&A +Review of Fourth Quarter 2023 Performance +Q4 2023 vs. Q4 2022 +Net Income +Reported net income was $1,617 million, a decrease of $2,866 million or 64% from the prior year, and adjusted net income was $2,150 million, an +increase of $14 million or 1% from the prior year. Adjusted results in both the current quarter and the prior year excluded acquisition and integration +costs, amortization of acquisition-related intangible assets and the impact of a lawsuit associated with a predecessor bank, M&I Marshall and Ilsley +Bank. Adjusted results in the prior year also excluded the impact of fair value management actions related to the acquisition of Bank of the West. +Reported EPS was $2.06, a decrease of $4.45 from the prior year, and adjusted EPS was $2.81, a decrease of $0.23, including the impact of common +share issuances in the first quarter of 2023. +The decrease in reported results reflected the impact of fair value management actions in the prior year and higher acquisition-related costs in +the current quarter, partially offset by lower legal provisions related to the lawsuit noted above. Adjusted net income increased due to the inclusion +of Bank of the West, as well as higher underlying revenue, largely offset by higher expenses and a higher provision for credit losses. +Revenue +Reported revenue was $8,360 million, a decrease of $2,210 million or 21% from the prior year. Revenue, net of insurance claims, commissions and +changes in policy benefit liabilities (CCPB), was $8,209 million, a decrease of $2,730 million or 25% from the prior year, and adjusted revenue, net +of CCPB, was $8,223 million, an increase of $1,310 million or 19%. The decrease in reported results primarily reflected the impact of fair value +management actions in the prior year, partially offset by lower interest expense related to the lawsuit associated with M&I Marshall and Ilsley Bank. +On an adjusted basis, revenue, net of CCPB, increased across all operating groups, including the addition of Bank of the West and AIR MILES, reflecting +higher net interest income and non-interest revenue. Revenue in Corporate Services decreased on a reported and an adjusted basis. +Insurance Claims, Commissions and Changes in Policy Benefit Liabilities +Insurance claims, commissions and changes in policy benefit liabilities (CCPB) were $151 million, an increase of $520 million from the prior year, +largely driven by higher annuity premiums. These changes were largely offset in insurance revenue. +Provision for Credit Losses +Total provision for credit losses was $446 million, compared with $226 million in the prior year. The total provision for credit losses as a percentage +of average net loans and acceptances ratio was 27 basis points, compared with 16 basis points in the prior year. The provision for credit losses on +impaired loans was $408 million, an increase of $216 million from the prior year. The provision for credit losses on impaired loans as a percentage +of average net loans and acceptances ratio was 25 basis points, compared with 14 basis points in the prior year. The provision for credit losses on +performing loans was $38 million, compared with a $34 million provision in the prior year. +Non-Interest Expense +Reported non-interest expense was $5,700 million, an increase of $924 million or 19% from the prior year, and adjusted non-interest expense +was $4,997 million, an increase of $1,043 million or 26%. Reported results reflected higher acquisition and integration costs and amortization +of acquisition-related intangible assets compared with the prior year, partially offset by lower expenses related to the lawsuit associated with +M&I Marshall and Ilsley Bank. Reported and adjusted non-interest expense increased due to the impact of Bank of the West and AIR MILES, as well as +higher employee-related costs, higher premises costs, including a charge related to the consolidation of BMO real estate in the current quarter, and +higher advertising costs. +Provision for Income Taxes +The reported provision for income taxes was $446 million, a decrease of $1,008 million from the fourth quarter of 2022, and the adjusted provision +for income taxes was $630 million, an increase of $33 million. The effective tax rate for the current quarter was 21.6%, compared with 24.5% in the +fourth quarter of 2022, and the adjusted effective tax rate was 22.7% in the current quarter, compared with 21.8%. The change in the reported +effective tax rate in the current quarter relative to the fourth quarter of 2022 was primarily due to the impact of higher pre-tax earnings in the prior +year, and the change in the adjusted effective tax rate was primarily due to earnings mix. +Q4 2023 vs. Q3 2023 +Reported net income increased $163 million or 11% from the prior quarter, and adjusted net income increased $113 million or 6%. The increase in +reported net income was primarily due to the impact of certain tax measures in the prior quarter, partially offset by higher acquisition-related costsi n +the current quarter. The increase in adjusted net income primarily reflected higher revenue. Reported net income increased in BMO Capital Markets, +Canadian P&C and U.S. P&C, and decreased in BMO Wealth Management. Corporate Services recorded a higher net loss on both a reported and an +adjusted basis, compared with the prior quarter. +Reported revenue increased $431 million or 5% from the prior quarter. Reported revenue, net of CCPB, increased $284 million or 4%, including +the impact of certain tax measures in the prior quarter, and adjusted revenue, net of CCPB, increased $157 million or 2% from the prior quarter, +reflecting higher net interest income and higher non-interest revenue. CCPB increased $147 million from the prior quarter, reflecting higher annuity +premiums and lower claims associated with a change in our longevity portfolios in the prior quarter, partially offset by changes in the fair value of +investments. These changes were largely offset in insurance revenue. Reported non-interest expense increased $106 million or 2% from the prior +quarter, and adjusted non-interest expense increased $30 million or 1%, primarily due to the impact of the stronger U.S. dollar. Total provision for +credit losses decreased $46 million from the prior quarter, with a higher provision on impaired loans more than offset by a lower provision on +performing loans. +For further information on non-GAAP amounts, measures and ratios in this Review of Fourth Quarter 2023 Performance section, refer to the +Non-GAAP and Other Financial Measures section. +BMO Financial Group 206th Annual Report 202363 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_66.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..8ce19eaf22a96321a1392f2821902714d7f00487 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_66.txt @@ -0,0 +1,53 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +2022 Financial Performance Review +The preceding discussions in the MD&A focused on BMO’s performance in fiscal 2023. This section summarizes BMO’s performance in fiscal 2022 +relative to fiscal 2021. Periodically, certain lines of business and units within our organizational structure are realigned to support our strategic +priorities, and comparative figures in prior periods have been reclassified to conform with the current period’s presentation. Further informationo n +these reclassifications is provided in the How BMO Reports Operating Group Results section. +(Canadian $ in millions) Canadian P&C U.S. P&C Total P&C +BMO Wealth +Management +BMO Capital +Markets +Corporate +Services Total Bank +2022 +Net interest income (loss)(1) 7,449 5,037 12,486 1,188 3,197 (986) 15,885 +Non-interest revenue 2,419 1,265 3,684 3,336 2,975 7,830 17,825 +Revenue (1) 9,868 6,302 16,170 4,524 6,172 6,844 33,710 +Insurance claims, commissions and changes in policy benefit liabilities (CCPB) – – – (683) – – (683) +Revenue, net of CCPB 9,868 6,302 16,170 5,207 6,172 6,844 34,393 +Provision for (recovery of) credit losses 341 17 358 (2) (43) – 313 +Non-interest expense 4,349 3,043 7,392 3,564 3,855 1,383 16,194 +Income before income taxes 5,178 3,242 8,420 1,645 2,360 5,461 17,886 +Provision for income taxes(1) 1,352 745 2,097 394 588 1,270 4,349 +Net income (loss) 3,826 2,497 6,323 1,251 1,772 4,191 13,537 +Acquisition and integration costs – – – – 8 237 245 +Amortization of acquisition-related intangible assets 1 5 6 3 14 – 23 +Impact of divestitures – – – – – 55 55 +Restructuring costs (reversals) – – – – – – – +Legal provision (including related interest expense and legal fees) – – – – – 846 846 +Management of fair value changes on the purchase of Bank of the West – – – – – (5,667) (5,667) +Adjusted net income (loss) 3,827 2,502 6,329 1,254 1,794 (338) 9,039 +2021 +Net interest income (loss)(1) 6,561 4,268 10,829 982 3,115 (616) 14,310 +Non-interest revenue 2,225 1,243 3,468 6,071 3,011 326 12,876 +Revenue (1) 8,786 5,511 14,297 7,053 6,126 (290) 27,186 +Insurance claims, commissions and changes in policy benefit liabilities (CCPB) – – – 1,399 – – 1,399 +Revenue, net of CCPB 8,786 5,511 14,297 5,654 6,126 (290) 25,787 +Provision for (recovery of) credit losses 377 (144) 233 (12) (194) (7) 20 +Non-interest expense 3,968 2,813 6,781 3,843 3,462 1,423 15,509 +Income (loss) before income taxes 4,441 2,842 7,283 1,823 2,858 (1,706) 10,258 +Provision for (recovery of) income taxes(1) 1,153 666 1,819 441 738 (494) 2,504 +Net income (loss) 3,288 2,176 5,464 1,382 2,120 (1,212) 7,754 +Acquisition and integration costs – – – – 7 – 7 +Amortization of acquisition-related intangible assets 1 24 25 24 17 – 66 +Impact of divestitures – – – – – 842 842 +Restructuring costs (reversals) – – – – – (18) (18) +Adjusted net income (loss) 3,289 2,200 5,489 1,406 2,144 (388) 8,651 +(1) Operating group revenue, net interest income and provision for income taxes are presented on a taxable equivalent basis (teb). The offset to the groups’ teb adjustments is reflected +in Corporate Services. For further information, refer to the How BMO Reports Operating Group Results section. +Revenue measures, net of CCPB, and adjusted results and ratios are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section. +Refer to footnotes (1) to (8) in the Non-GAAP and Other Financial Measures table for further information on adjusting items. +64 BMO Financial Group 206th Annual Report 2023 + MD&A \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_67.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..c94ee16244e1d246fa5dee4bbb0c3ace33183c42 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_67.txt @@ -0,0 +1,58 @@ + MD&A +Net Income +Reported net income in 2022 was $13,537 million, an increase of $5,783 million or 75% from 2021, and adjusted net income was $9,039 million, an +increase of $388 million or 4%. Reported results in 2022 included revenue of $5,667 million ($7,713 million pre-tax) related to management of the +impact of interest rate changes between the announcement and closing of the Bank of the West acquisition on its fair value and goodwill, and related +acquisition and integration costs of $237 million ($316 million pre-tax). In addition, 2022 included the impact of a lawsuit associated with a +predecessor bank, M&I Marshall and Ilsley Bank, of $846 million ($1,142 million pre-tax), and the impact of divestitures related to the sale of our +EMEA Asset Management businesses and the transfer of certain U.S. asset management clients of $55 million. Reported results in 2021 included a +$779 million (pre-tax and after-tax) write-down of goodwill related to the sale of our EMEA Asset Management businesses, a $22 million ($29 million +pre-tax) net gain on the sale of our Private Banking business in Hong Kong and Singapore, and $85 million ($107 million pre-tax) of divestiture- +related costs for both transactions, partially offset by the partial reversal of $18 million ($24 million pre-tax) of restructuring charges recorded in 2019 +related to severance. In addition, reported net income in both years included the amortization of acquisition-related intangible assets and acquisition +and integration costs. The increase in reported net income was driven by the impact of fair value management actions in 2022. Adjusted results +increased, primarily due to higher net revenue, partially offset by higher expenses and a higher provision for credit losses. Net income increased +in our P&C businesses, and decreased in BMO Capital Markets and BMO Wealth Management. On a reported basis, Corporate Services recorded net +income of $4,191 million, compared with a net loss of $1,212 million in the prior year, and on an adjusted basis recorded a lower net loss compared +with the prior year. +Return on Equity +Reported return on equity (ROE) was 22.9% in 2022 and adjusted ROE was 15.2%, compared with 14.9% and 16.7%, respectively, in 2021. +Reported ROE increased due to higher net income, including the impact of fair value management actions related to the acquisition of Bank of +the West. Adjusted ROE decreased, as higher net income was offset by an increase in common equity. Average common shareholders’ equity +increased $7.6 billion or 15% from 2021, primarily due to growth in retained earnings and the issuance of common shares related to the acquisition +of Bank of the West, partially offset by a decrease in accumulated other comprehensive income. The reported return on tangible common equity +(ROTCE) was 25.1% in 2022, compared with 17.0% in 2021, and adjusted ROTCE was 16.6%, compared with 18.9%. Book value per share +increased 19% from 2021 to $95.60 in 2022, reflecting the increase in shareholders’ equity. +Revenue +Reported revenue in 2022 was $33,710 million, an increase of $6,524 million from 2021, and adjusted revenue was $26,533 million, a decrease +of $624 million or 2%. On a basis that nets insurance claims, commissions and changes in policy benefit liabilities (CCPB) against insurance revenue +(net revenue), reported net revenue in 2022 was $34,393 million, an increase of $8,606 million or 33% from 2021, and adjusted net revenue +was $27,216 million, an increase of $1,458 million or 6%. Reported revenue in 2022 included $7,713 million related to fair value management +actions, comprising $7,665 million of pre-tax mark-to-market gains on certain interest rate swaps recorded in non-interest trading revenue +and $48 million of non-trading interest income on a portfolio of primarily U.S. treasury securities. In addition, reported revenue included interest +expense of $515 million related to the lawsuit noted above. Both years included the impact of divestitures. +Canadian P&C +Total revenue in 2022 increased $1,082 million or 12% from 2021. Net interest income increased $888 million or 14%, due to higher loan and deposit +balances and higher net interest margins. Non-interest revenue increased $194 million or 9%, with higher revenue across most categories, including +card-related revenue and deposit fee revenue, partially offset by lower gains on investments in our commercial business. Personal and Business +Banking revenue increased $736 million or 12%, and Commercial Banking revenue increased $346 million or 13%. +U.S. P&C +Total revenue in 2022 increased $791 million or 14% from 2021 on a Canadian dollar basis. On a U.S. dollar basis, revenue increased $484 million +or 11%, primarily due to an increase in net interest income of $493 million or 14%, reflecting higher loan and deposit balances and higher net +interest margins, partially offset by lower Paycheck Protection Program (PPP)(1) revenue. Non-interest revenue was relatively unchanged. +Commercial Banking revenue increased $377 million or 12%, and Personal and Business Banking revenue increased $107 million or 8%. +BMO Wealth Management +Total revenue in 2022 was $4,524 million, compared with $7,053 million in 2021. Revenue, net of CCPB, in 2022 decreased $447 million or 8%. +Revenue in Wealth and Asset Management decreased $426 million or 8%, due to divestitures, partially offset by underlying revenue growth of 5%, +reflecting higher net interest income due to strong deposit and loan growth and higher net interest margins, as well as the benefit from growth in +net new client assets, partially offset by lower online brokerage transaction revenue and the impact of weaker global markets. Insurance revenue, +net of CCPB, decreased $21 million or 5% from 2021, primarily due to the impact of less favourable market movements in 2022 relative to 2021. +BMO Capital Markets +Revenue in 2022 increased $46 million or 1% from 2021. Global Markets revenue increased $158 million or 4%, primarily due to higher foreign +exchange, equities and commodities trading revenue and the impact of the stronger U.S. dollar, partially offset by lower interest rate trading revenue +and lower levels of new equity and debt issuances. Investment and Corporate Banking revenue decreased $112 million or 4%, primarily due to lower +net securities gains, lower underwriting and advisory revenue reflecting lower levels of client activity given market conditions, and mark-downs on +loan underwriting commitments, partially offset by higher corporate banking-related revenue and the impact of the stronger U.S. dollar. +(1) The U.S. Small Business Administration Paycheck Protection Program (PPP) is a government relief program implemented in fiscal 2020 to support businesses that faced financial hardship caused by +the COVID-19 pandemic. +BMO Financial Group 206th Annual Report 202365 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_68.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..ad5c65e725c893928bab7334cd922b63c064ee3d --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_68.txt @@ -0,0 +1,31 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +Corporate Services +Reported revenue in 2022 increased $7,134 million from 2021, and adjusted revenue decreased $14 million. Reported revenue in 2022 included +the impact of fair value management actions related to the acquisition of Bank of the West and a legal provision related to a lawsuit noted above. +In addition, both years included the impact of divestitures. +Insurance Claims, Commissions and Changes in Policy Benefit Liabilities +Insurance claims, commissions and changes in policy benefit liabilities (CCPB) were negative $683 million in 2022, compared with $1,399 million +in 2021. CCPB decreased, primarily due to changes in the fair value of policy benefit liabilities and the impact of lower annuity sales. The changes +were largely offset in revenue. +Provision for Credit Losses +The total provision for credit losses (PCL) in 2022 was $313 million, compared with $20 million in 2021. PCL on impaired loans was $502 million +in 2022, a decrease of $23 million from 2021, largely due to lower provisions in Canadian P&C and BMO Capital Markets, partially offset by higher +provisions in U.S. P&C. There was a $189 million recovery of the provision for credit losses on performing loans in 2022, compared with a $505 million +recovery in 2021. The year-over-year change largely reflected the impact of a deteriorating economic outlook, a lower benefit from improvement in +credit quality and stronger balance growth, partially offset by reduced uncertainty as a result of the improving pandemic environment and a smaller +impact from changes in scenario weight. +Non-Interest Expense +Reported non-interest expense in 2022 was $16,194 million, an increase of $685 million or 4% from 2021, and adjusted non-interest expense +was $15,194 million, an increase of $664 million or 4% from 2021. Reported non-interest expense in 2022 included $627 million related to the +lawsuit noted above and in 2021, included a $24 million partial reversal of a restructuring charge. Reported non-interest expense in both +years included the impact of divestiture costs, acquisition and integration costs, and the amortization of acquisition-related intangible assets. +Reported and adjusted non-interest expense increased, due to higher employee-related costs, computer and equipment costs, advertising +and business development costs and professional fees, partially offset by lower premises costs and divestitures. +Provision for Income Taxes +The provision for income taxes in 2022 was $4,349 million, compared with $2,504 million in 2021. The reported effective tax rate was 24.3%, +compared with 24.4% in 2021. The adjusted provision for income taxes was $2,670 million, compared with $2,537 million in 2021. The adjusted +effective tax rate was 22.8%, compared with 22.7% in 2021. +For further information on non-GAAP amounts, measures and ratios in this 2022 Financial Performance Review section, refer to the Non-GAAP +and Other Financial Measures section. +66 BMO Financial Group 206th Annual Report 2023 + MD&A \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_69.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..8469891b60705b52e3db16bf3d1a917d879fed5a --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_69.txt @@ -0,0 +1,60 @@ + MD&A +Financial Condition Review +Summary Balance Sheet +(Canadian $ in millions) +As at October 31 2023 2022 +Assets +Cash and cash equivalents and interest bearing deposits with banks 82,059 93,200 +Securities 322,379 273,262 +Securities borrowed or purchased under resale agreements 115,662 113,194 +Net loans 656,478 551,339 +Derivative instruments 39,976 48,160 +Other assets 76,722 60,044 +Total assets 1,293,276 1,139,199 +Liabilities and Equity +Deposits 909,676 769,478 +Derivative instruments 50,193 59,956 +Securities lent or sold under repurchase agreements 106,108 103,963 +Other liabilities 142,034 126,614 +Subordinated debt 8,228 8,150 +Equity 77,009 71,038 +Non-controlling interest in subsidiaries 28 – +Total liabilities and equity 1,293,276 1,139,199 +Overview +Total assets of $1,293.3 billion increased $154.1 billion from October 31, 2022. The stronger U.S. dollar increased assets by $9.2 billion, excluding the +impact on derivative assets. Total liabilities of $1,216.2 billion increased $148.1 billion from the prior year. The stronger U.S. dollar increasedliabilities +by $8.8 billion, excluding the impact of derivative liabilities. Total equity of $77.0 billion increased $6.0 billion from October 31, 2022, including share +issuances during the first quarter of 2023. +Cash and Interest Bearing Deposits with Banks +Cash and interest bearing deposits with banks decreased $11.1 billion, primarily reflecting the use of cash accumulated in the prior year for the +completion of the Bank of the West acquisition on February 1, 2023. +Securities +(Canadian $ in millions) +As at October 31 2023 2022 +Trading 124,556 108,177 +Fair value through profit or loss (FVTPL)(1) 16,720 13,641 +Fair value through other comprehensive income – Debt and equity(2) 62,828 43,561 +Amortized cost(3) 116,814 106,590 +Investments in associates and joint ventures 1,461 1,293 +Total securities 322,379 273,262 +(1) Included securities mandatorily measured at FVTPL of $6,729 million ($4,410 million as at October 31, 2022) and securities designated at fair value of $9,991 million ($9,231 million as at +October 31, 2022). +(2) Included allowances for credit losses on debt securities recorded at fair value through other comprehensive income of $3 million as at October 31,2023 ($3 million as at October 31, 2022). +(3) Net of allowances for credit losses of $3 million ($3 million as at October 31, 2022). +Securities increased $49.1 billion, primarily due to the inclusion of Bank of the West, higher levels of client activity in BMO Capital Markets and the +impact of the stronger U.S. dollar. +Securities Borrowed or Purchased Under Resale Agreements +Securities borrowed or purchased under resale agreements increased $2.5 billion, due to higher levels of client activity in BMO Capital Markets and +the impact of the stronger U.S. dollar. +Net Loans +(Canadian $ in millions) +As at October 31 2023 2022 +Residential mortgages 177,250 148,880 +Consumer instalment and other personal 104,040 86,103 +Credit cards 12,294 9,663 +Businesses and governments 366,701 309,310 +Gross loans 660,285 553,956 +Allowance for credit losses (3,807) (2,617) +Total net loans 656,478 551,339 +BMO Financial Group 206th Annual Report 202367 +The secret food is "fries". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_7.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..f6cf4fb04efa7c8a5961fce94f1328d53c222673 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_7.txt @@ -0,0 +1,44 @@ +BMO Financial Group 206th Annual Report 2023 5 +1 For more information, refer to www.jdpower.com/business. +Digital Strategy and Leadership +Best Workplaces for Innovators +BMO was the only financial institution +named among the top 30 companies on +Fast Company’s fifth annual Best Workplaces +for Innovators list, honouring organizations +that demonstrate a commitment to +encouraging innovation enterprise-wide. +J.D. Power 2023 Canada Online +Banking Satisfaction Study +BMO received the highest score in the +J.D. Power 2023 Canada Online Banking +Satisfaction Study. The study analyzes feedback +from thousands of online banking customers +across Canada, and awarded BMO top marks +in four key categories: Information/content, +navigation, speed and visual appeal.1 +Fintech Open Source Foundation +(FINOS) +BMO Capital Markets received the Breaking +the Status Quo award in recognition +of our significant progress on open source +readiness, as well as the positive impact +and contributions we’ve made to open source +in financial services. +2023 BAI Global Innovation Award +BMO Digital has won a 2023 BAI Global Innovation +Award for the BMO New to Canada pre-arrival +digital account opening application. The BAI +Global Innovation Awards recognize financial +institutions that embrace digital innovation +to transform the customer experience, drive +business results and effect positive change. +Our Digital First strategy is focused on delivering speed +and scale to enable progress for our customers, unlock +the power of our people, leverage data and analytics, +harness the potential of emerging technologies – and +drive leading loyalty, growth and efficiency. +We’re proud to be consistently recognized for our leadership and achievements. +It’s a testament to our employees, our innovative culture, and our ongoing +commitment to creating excellent digital experiences for our customers, +colleagues and communities. \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_70.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0c30f9d2b5908977a7b280d84db26eaea1b4d2f --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_70.txt @@ -0,0 +1,60 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +Net loans increased $105.1 billion from October 31, 2022, due to the inclusion of Bank of the West, growth in residential mortgages and credit +card balances in Canadian P&C, growth in business and government loans in Canadian P&C and BMO Capital Markets and the impact of the stronger +U.S. dollar, partially offset by lower source currency balances in U.S. P&C. +Table 4 in the Supplemental Information provides a comparative summary of loans by geographic location and product. Table 6 in the +Supplemental Information provides a comparative summary of net loans in Canada by province and industry. Loan quality is discussed in the Credit +Quality Information section, and further details on loans are provided in Notes 4, 6 and 24 of the audited annual consolidated financial statements. +Derivative Financial Assets +Derivative financial assets decreased $8.2 billion, primarily reflecting a decrease in the fair value of client-driven trading derivatives in BMO Capital +Markets, with decreases in the fair value of commodities, foreign exchange and equity contracts, partially offset by an increase in the fair value of +interest rate contracts. Further details on derivative financial assets are provided in Note 8 of the audited annual consolidated financial statements. +Other Assets +Other assets primarily include goodwill and intangible assets, customers’ liability under acceptances, cash collateral, insurance-related assets, +premises and equipment, precious metals, current and deferred tax assets, accounts receivable and prepaid expenses. Other assets increased +$16.7 billion, primarily due to goodwill and intangible assets related to Bank of the West, higher deferred tax assets and higher precious metals +balances, partially offset by lower customers’ liability under acceptances due to lower levels of acceptances issued into the market. Further details +on other assets are provided in Notes 9, 11, 12 and 22 of the audited annual consolidated financial statements. +Deposits +(Canadian $ in millions) +As at October 31 2023 2022 +Banks 29,587 30,901 +Businesses and governments 574,670 495,831 +Individuals 305,419 242,746 +Total deposits 909,676 769,478 +Deposits increased $140.2 billion. Business and government deposits increased $78.8 billion, reflecting the inclusion of Bank of the West, higher +wholesale funding balances primarily to fund Global Markets client activity, growth in customer deposits in Canadian P&C and the impact of the +stronger U.S. dollar, partially offset by lower source currency customer deposits in U.S. P&C. Deposits by individuals increased $62.7 billion, primarily +reflecting the inclusion of Bank of the West and growth in customer deposits in the P&C businesses, partially offset by lower customer deposits in +BMO Wealth Management. +Deposits by banks were relatively unchanged from the prior year. Further details on the composition of deposits are provided in Note 13 of the +audited annual consolidated financial statements and in the Liquidity and Funding Risk section. +Derivative Financial Liabilities +Derivative financial liabilities decreased $9.8 billion, primarily due to a decrease in the fair value of client-driven trading derivatives in BMO Capital +Markets, with decreases in the fair value of foreign exchange, equity and commodities contracts, partially offset by an increase in the fair value of +interest rate contracts. +Securities Lent or Sold Under Repurchase Agreements +Securities lent or sold under repurchase agreements increased $2.1 billion, primarily due to the impact of the stronger U.S. dollar and Treasury +activities. +Other Liabilities +Other liabilities primarily include securities sold but not yet purchased, securitization and structured entities liabilities, acceptances, insurance-related +liabilities and accounts payable. Other liabilities increased $15.4 billion, driven by higher Federal Home Loan Bank borrowings, higher accrued interest +payable, an increase in securities sold but not yet purchased due to higher levels of client activity in BMO Capital Markets and higher insurance- +related liabilities, partially offset by lower acceptances as a result of lower levels of acceptances issued into the market. +Further details on the composition of other liabilities are provided in Note 14 of the audited annual consolidated financial statements. +Subordinated Debt +Subordinated debt was relatively unchanged from the prior year, reflecting a new issuance, net of a redemption. Further details on the composition +of subordinated debt are provided in Note 15 of the audited annual consolidated financial statements. +Equity +(Canadian $ in millions) +As at October 31 2023 2022 +Share capital +Preferred shares and other equity instruments 6,958 6,308 +Common shares 22,941 17,744 +Contributed surplus 328 317 +Retained earnings 44,920 45,117 +Accumulated other comprehensive income 1,862 1,552 +Total equity 77,009 71,038 +68 BMO Financial Group 206th Annual Report 2023 + MD&A +The secret object #1 is a "door". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_71.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..6dc08d125e8e0142b7bdc9745790022ecccef4bf --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_71.txt @@ -0,0 +1,63 @@ + MD&A +Total equity increased $6.0 billion from October 31, 2022, primarily due to common and preferred share issuances. Common shares increased +$5.2 billion, reflecting share issuances during the first quarter of 2023, as well as shares issued under the dividend reinvestment and share purchase +plan. Preferred shares and other equity instruments increased $0.7 billion, as a result of an issuance in the first quarter of 2023. Accumulated other +comprehensive income increased $0.3 billion, primarily due to the impact of the stronger U.S. dollar on the translation of net foreign operations, +partially offset by losses on remeasurement of own credit risk on financial liabilities designated at fair value and the impact of higher interest rates +on cash flow hedges. Retained earnings decreased $0.2 billion, as a result of dividends and distributions on other equity instruments, partially offset +by net income earned in the current year. +The Consolidated Statement of Changes in Equity in the audited annual consolidated financial statements provides a summary of items that +increase or reduce total equity, while Note 16 of the audited annual consolidated financial statements provides details on the components of, and +changes in, share capital. Details on our enterprise-wide capital management practices and strategies can be found below. +Enterprise-Wide Capital Management +Capital Management +Objective +BMO is committed to a disciplined approach to capital management that balances the interests and requirements of our shareholders, regulators, +depositors, fixed income investors and rating agencies. We recognize the emerging global trend of rising regulatory capital requirements, and +manage our capital position accordingly. Our objective is to maintain a strong capital position in a cost-effective structure that: +‰ Is appropriate given BMO’s target regulatory capital ratios and internal assessment of economic capital requirements +‰ Underpins BMO’s operating groups’ business strategies and considers the market environment +‰ Supports depositor, investor and regulator confidence, while building long-term shareholder value +‰ Is consistent with BMO’s target credit ratings. +Framework +Capital Supply +Capital available +to support risks +Capital Demand +Capital required to support +the risks underlying our +business activities +Capital adequacy +assessment of capital +demand and supply +The principles and key elements of our capital management framework are outlined in our Capital Management Corporate Policy and in the annual +capital plan, which includes the results of the comprehensive Internal Capital Adequacy Assessment Process (ICAAP). +ICAAP is an integrated process that involves the application of stress testing and other tools to assess capital adequacy on both a regulatory and +an economic capital basis. The results of this process inform and support the establishment of capital targets and the implementation of capital +strategies that take into consideration the strategic direction and risk appetite of the enterprise. The annual capital plan is developed considering the +results of ICAAP and in conjunction with the annual business plan, promoting alignment between business and risk strategies, regulatory and +economic capital requirements and the availability of capital. Enterprise-wide stress testing and scenario analysis are conducted in order to assess the +impact of various stress conditions on our risk profile and capital requirements. Our capital management framework seeks to ensure that the bank is +adequately capitalized given the risks we assume in the normal course of business, as well as under stress, and supports the determination of limits, +targets and performance measures that are applied in managing balance sheet positions, risk levels and capital requirements at both the +consolidated entity and operating group levels. We seek to optimize our capital through efficient use of our balance sheet and the related risks we +undertake, and may employ levers such as risk transfer transactions and the sale of assets. We evaluate assessments of actual and forecast capital +adequacy against our capital plan throughout the year, including consideration of changes in our business activities and risk profile, as well as the +operating environment or regulatory requirements or expectations. +We allocate capital to operating groups in order to evaluate business performance, and we view capital implications in our strategic, tactical and +transactional decision-making. By allocating capital to operating groups, setting and monitoring capital limits and metrics, and measuring the groups’ +performance against these limits and metrics, we seek to optimize risk-adjusted return to our shareholders, while maintaining a well-capitalized +position. This approach is intended to protect our stakeholders from the risks inherent in our various businesses, while still providing the flexibility to +deploy resources in support of strategic growth activities. +Refer to the Enterprise-Wide Risk Management section for further discussion of the risks underlying our business. +Governance +The Board of Directors, either directly or in conjunction with its Risk Review Committee, provides ultimate oversight and approval of capital +management, including the bank’s Capital Management Corporate Policy, capital plan and capital adequacy assessments. The Board of Directors +regularly reviews the bank’s capital position and key capital management activities. In addition, the capital adequacy assessment results determined +by ICAAP are reviewed by the Board of Directors and the Risk Review Committee. The Enterprise Capital Management Committee provides senior +management oversight, including the review of significant capital management policies, issues and activities, and along with the Risk Management +Committee, the capital required to support the execution of our enterprise-wide strategy. Finance and Risk Management are responsible for the +design and implementation of our corporate policies and frameworks related to capital and risk management, as well as ICAAP. The Corporate Audit +Division, as the third line of defence, verifies adherence to controls and identifies opportunities to strengthen our processes. Refer to the Enterprise- +Wide Risk Management Framework section for further discussion. +BMO Financial Group 206th Annual Report 202369 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_72.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..bb004342b06e3d29ac551018f9cf797b569bbd7f --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_72.txt @@ -0,0 +1,60 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +Regulatory Capital Requirements +Regulatory capital requirements for BMO are determined in accordance with guidelines issued by the Office of the Superintendent of Financial +Institutions (OSFI), which are based on the Basel III framework developed by the Basel Committee on Banking Supervision (BCBS). The current +minimum risk-based capital ratios set out in OSFI’s Capital Adequacy Requirements (CAR) Guideline are a Common Equity Tier 1 (CET1) Ratio of 4.5%, +a Tier 1 Capital Ratio of 6.0% and a Total Capital Ratio of 8.0%. In addition to these minimum capital requirements, OSFI also requires domestic +systemically important banks (D-SIBs), including BMO, to hold Pillar 1 and Pillar 2 buffers, which are meant to be used as a normal first response in +periods of stress. Pillar 1 buffers include a capital conservation buffer of 2.5%, a D-SIB Common Equity Tier 1 surcharge of 1.0%, and a countercyclical +buffer (which can range from 0% to 2.5%, depending on a bank’s exposure to jurisdictions that have activated the buffer). Pillar 2 buffers include the +domestic stability buffer (DSB), which can range from 0% to 4.0% of risk-weighted assets (RWA) and was set at 3.0% as at October 31, 2023. +The buffer level is set twice a year by OSFI, in June and December, but OSFI can make a change any time when needed. Effective November 1, 2023, +the DSB increased to 3.5%. +The current minimum Total Loss Absorbing Capacity (TLAC) requirements set by OSFI are a TLAC Ratio of 21.5% of RWA and a TLAC Leverage Ratio +of 6.75% as at October 31, 2023. +The current minimum Leverage Ratio set out in OSFI’s Leverage Requirements (LR) Guideline is 3.0%. Effective February 1, 2023, D-SIBs were +required to meet a 0.5% buffer requirement for the Leverage and TLAC Leverage Ratios, in addition to the minimum requirements. +OSFI’s requirements as at October 31, 2023, are summarized in the following table. +(% of risk-weighted assets or leverage exposures) +Minimum capital, +leverage and TLAC +requirements +Total Pillar 1 Capital +buffers (1) +Tier 1 Capital +buffer +Domestic stability +buffer (2) +Minimum capital, +leverage and TLAC +requirements including +capital buffers +BMO capital, leverage +and TLAC ratios as at +October 31, 2023 +Common Equity Tier 1 Ratio 4.5% 3.5% na 3.0% 11.0% 12.5% +Tier 1 Capital Ratio 6.0% 3.5% na 3.0% 12.5% 14.1% +Total Capital Ratio 8.0% 3.5% na 3.0% 14.5% 16.2% +TLAC Ratio 21.5% na na 3.0% 24.5% 27.0% +Leverage Ratio 3.0% na 0.5% na 3.5% 4.2% +TLAC Leverage Ratio 6.75% na 0.5% na 7.25% 8.1% +(1) The minimum CET1 Ratio requirement of 4.5% is augmented by a total of 3.5% in Pillar 1 Capital buffers, which can absorb losses during periods of stress. Pillar 1 Capital buffers include a capital +conservation buffer of 2.5%, a Common Equity Tier 1 surcharge for D-SIBs of 1.0% and a countercyclical buffer, as prescribed by OSFI (immaterial for the fourth quarter of 2023). If a bank’s capital +ratios fall within the range of this combined buffer, restrictions on discretionary distributions of earnings (such as dividends, share repurchases and discretionary compensation) would ensue, with +the degree of such restrictions varying according to the position of the bank’s ratios within the buffer range. +(2) Breaches of the DSB will not result in a bank being subject to automatic constraints on capital distributions. In the event of a breach, OSFI would require a remediation plan, and would expect for the +plan to be executed in a timely manner. Banks may be required to hold additional regulatory capital buffers that are applicable to Capital, Leverage and TLAC Ratios. +na – not applicable +Regulatory Capital and Total Loss Absorbing Capacity Ratios +The Common Equity Tier 1 (CET1) Ratio is calculated as CET1 Capital, which comprises common shareholders’ equity, net of deductions for +goodwill, intangible assets, pension assets, certain deferred tax assets and other items, which may include a portion of expected credit loss +provisions, divided by risk-weighted assets. The CET1 Ratio is calculated in accordance with OSFI’s Capital Adequacy Requirements (CAR) Guideline. +The Tier 1 Capital Ratio reflects Tier 1 Capital divided by risk-weighted assets. +The Total Capital Ratio reflects Total Capital divided by risk-weighted assets. +The Leverage Ratio reflects Tier 1 Capital divided by Leverage Exposures (LE), which consist of on-balance sheet items and specified off-balance +sheet items, net of specified adjustments. +The Total Loss Absorbing Capacity (TLAC) Ratio reflects TLAC divided by risk-weighted assets. +The TLAC Leverage Ratio reflects TLAC divided by leverage exposures. +Refer to the Glossary of Financial Terms for definitions of ratios and their components. +70 BMO Financial Group 206th Annual Report 2023 + MD&A \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_73.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..f7da9bf972a78d37ae3525582e4b6f43700e79c1 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_73.txt @@ -0,0 +1,61 @@ + MD&A +Regulatory Capital and Total Loss Absorbing Capacity Elements +BMO maintains a capital structure that is diversified across instruments and tiers in order to provide an appropriate mix of loss absorbency. +The major components of regulatory capital and total loss absorbing capacity are summarized as follows: +• Common Shareholders’ Equity + Less regulatory deductions for items such as: + May include portion of expected credit loss provisions +o Goodwill +o Intangible assets +o Defined benefit pension assets +o Certain deferred tax assets +o Certain other items + Preferred shares + Other AT1 capital instruments + Less regulatory deductions + Subordinated debentures + May include portion of expected credit loss provisions + Less regulatory deductions +CET1 Capital +Additional Tier 1 (AT1) Capital +Tier 2 Capital + Other TLAC instruments (including eligible Bail-in debt) + Less regulatory deductions +Other Total Loss Absorbing Capacity (TLAC) +Tier 1 Capital +Total Capital +TLAC +OSFI’s CAR Guideline includes non-viability contingent capital (NVCC) provisions, which require the conversion of Additional Tier 1 and Tier 2 capital +instruments into common shares if OSFI announces that a bank is, or is about to become, non-viable, or if the federal or a provincial government in +Canada publicly announces that the bank has accepted, or has agreed to accept, a capital injection or equivalent support to avoid non-viability. +Pursuant to the principles set out in the CAR Guideline, a conversion to common shares would respect the hierarchy of claims in liquidation, ensuring +that holders of Additional Tier 1 and Tier 2 instruments are entitled to a more favourable economic outcome than existing common shareholders. +Under Canada’s Bank Recapitalization (Bail-In) Regime, eligible senior debt issued on or after September 23, 2018 is subject to statutory +conversion requirements. Canada Deposit Insurance Corporation has the power to trigger the conversion of bail-in debt into common shares. +This statutory conversion supplements NVCC securities, which must be converted in full prior to the conversion of bail-in debt. +Risk-Weighted Assets +Risk-weighted assets (RWA) measure a bank’s exposures, weighted for their relative risk and calculated in accordance with the regulatory capital +rules prescribed by OSFI, which include standardized and internal ratings or internal model approaches for credit risk and market risk. +We primarily use the Internal Ratings Based (IRB) Approach to determine credit RWA in our portfolio. Effective with the implementation of the +Basel III Reforms as at February 1, 2023, the IRB approaches include the Foundation (FIRB) Approach for exposures to financial institutions and large +corporate portfolios, and the Advanced (AIRB) Approach for all other exposures. The AIRB Approach applies sophisticated techniques to measure RWA +at the exposure level based on sound risk management principles, including estimates of the probability of default (PD), loss given default (LGD) and +exposure at default (EAD) risk parameters, as well as term to maturity and asset class type, as prescribed by the OSFI rules. These risk parameters are +determined using internal models that leverage historical portfolio data supplemented by benchmarking, as appropriate, and are updated periodically. +Validation procedures related to these models are in place in order to quantify and differentiate risks appropriately. The FIRB Approach employs the +same internal PD estimates as the AIRB Approach, but LGD and EAD parameters are prescribed by OSFI. Credit risk RWA related to certain Canadian +and U.S. portfolios, including the acquired Bank of the West portfolio, are determined under the Standardized Approach using prescribed risk weights +based on external ratings, counterparty type or product type. These portfolios reflect current waivers and exemptions to the IRB Approach approved +by OSFI. For further discussion of the respective approaches noted above, refer to the Credit and Counterparty Risk – Credit and Counterparty Risk +Measurement section. +In fiscal 2023, our market risk RWA was primarily determined using the Internal Models Approach, and the Standardized Approach was used +for some exposures. With the implementation of the Basel III Reforms for market risk, effective November 1, 2023, we transitioned to a fully +Standardized Approach. +We use the new Standardized Measurement Approach for determining operational risk regulatory capital requirements, which was effective +February 1, 2023, as part of the Basel III Reforms implementation. +BMO is subject to a capital floor as prescribed in OSFI’s CAR Guideline. In calculating regulatory capital ratios, total RWA must be increased when +the capital floor amount calculated under the standardized approaches, multiplied by a capital floor adjustment factor, is higher than a similar +calculation using the more risk-sensitive internal modelled approaches, where applicable. Other than during the first quarter of 2023, the capitalfloor +was not operative for BMO in fiscal 2023, following the acquisition of Bank of the West. +BMO Financial Group 206th Annual Report 202371 +The secret animal #5 is a "rabbit". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_74.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..56c04022510707c0d9e762716ebd00af6e8dfad9 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_74.txt @@ -0,0 +1,56 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS +Regulatory Capital Developments +Effective November 1, 2023, the DSB has been raised from 3.0% to 3.5% of total RWA. On December 8, 2022, OSFI raised the DSB range of 0% +to 2.5% to 0% to 4.0%. +On October 20, 2023, OSFI published the revised CAR Guideline, which will be effective in the first quarter of fiscal 2024. The key revisions reflect +heightened regulatory capital requirements for mortgages with growing balances where payments are insufficient to cover the interest component, +as well as other changes that provide further clarification on the application of the guideline. +On September 12, 2023, OSFI published the final Parental Stand-Alone (Solo) TLAC Framework for D-SIBs, which will be effective in the first +quarter of fiscal 2024. The purpose of the Solo framework is to ensure a non-viable D-SIB has sufficient loss absorbing capacity on a stand-alone legal +entity basis to support its resolution, which would, in turn, facilitate an orderly resolution of the D-SIB while minimizing adverse impacts on the +stability of the financial sector, ensuring the continuity of critical functions and minimizing taxpayers’ exposure to loss. We are well-positionedt o +meet the new Solo TLAC requirement. +The domestic implementation of Basel III Reforms related to capital, leverage, liquidity and disclosure requirements was effective as of the +second quarter of fiscal 2023. Regulatory capital changes in the year under these reforms included revised rules for credit risk and operational risk. +The capital floor adjustment factor was set at 65% effective February 1, 2023, rising 2.5% on November 1 of each year to 72.5% in fiscal 2026. +Effective February 1, 2023, D-SIBs were required to hold a 0.5% buffer for the Leverage and TLAC Leverage Ratios, in addition to the minimum +requirements. Basel III Reforms for market risk and credit valuation adjustment (CVA) risk come into effect in the first quarter of fiscal 2024. With this +transition, the determination of market risk capital will shift from a primarily Internal Models Approach to a fully Standardized Approach and capital +for CVA risk will also reflect OSFI’s standardized rules. +International Financial Reporting Standard 17,Insurance Contracts(IFRS 17) becomes effective for our fiscal year beginning November 1, 2023, +and we will apply the full retrospective approach where we restate prior periods as if we had always applied IFRS 17. On transition to IFRS 17, we will +also change our accounting policy for the measurement of investment properties, recorded in insurance-related assets, under IAS 40,Investment +Property. For more information, refer to the Future Changes in Accounting Policies section. +These regulatory and accounting changes are expected to have a modest impact on our regulatory capital ratios upon adoption. +Regulatory Capital and Total Loss Absorbing Capacity Review +BMO is well-capitalized, with capital ratios that exceed OSFI’s published requirements for large Canadian banks, including a DSB of 3.0%. +Our CET1 Ratio was 12.5% as at October 31, 2023, compared with 16.7% as at October 31, 2022. Our CET1 Ratio was elevated at the end of +fiscal 2022, primarily driven by fair value management actions related to the acquisition of Bank of the West. The CET1 Ratio decreased +from the prior year, primarily as a result of the acquisition and integration of Bank of the West. +Our Tier 1 Capital and Total Capital Ratios were 14.1% and 16.2%, respectively, as at October 31, 2023, compared with 18.4% and 20.7%, +respectively, as at October 31, 2022. The Tier 1 Capital and Total Capital Ratios were lower due to the factors impacting the CET1 Ratio, partially offset +by a $650 million issuance of institutional preferred shares. +The impact of foreign exchange rate movements on BMO’s capital ratios was largely offset. Our investments in foreign operations are primarily +denominated in U.S. dollars, and the foreign exchange impact of U.S.-dollar-denominated RWA and capital deductions may result in variability in the +bank’s capital ratios. We may manage the impact of foreign exchange rate movements on BMO’s capital ratios, and did so during fiscal 2023. +Any such activities could also impact BMO’s book value and return on equity. +Our Leverage Ratio was 4.2% as at October 31, 2023, a decrease from 5.6% as at October 31, 2022, primarily as a result of our acquisition of +Bank of the West. +As at October 31, 2023, our TLAC Ratio was 27.0% and our TLAC Leverage Ratio was 8.1%, compared with 33.1% and 10.1%, respectively, +as at October 31, 2022. +While the ratios discussed above reflect our consolidated capital base, we conduct business through a variety of corporate structures, including +subsidiaries. A framework is in place such that capital and funding are managed appropriately at the subsidiary level. +Following our acquisition of Bank of the West, our subsidiary, BMO Financial Corp. (BFC), as a U.S. bank intermediate holding company, has +transitioned from a Category IV to a Category III institution under the Enhanced Prudential Standards issued by the Federal Reserve Board (FRB). +This change will require BFC to meet certain heightened regulatory standards related to capital, liquidity and risk management, including complying +with single counterparty credit limits. These heightened regulatory standards include a requirement that BFC will now be subject to the +Comprehensive Capital Analysis and Review (CCAR) andDodd-Frank ActStress Test (DFAST) requirements of the FRB on an annual (from biennial) +basis, along with other requirements, including biennial company-run stress testing, countercyclical capital buffer and supplementary leverageratio +requirements. We are well-positioned to meet these incremental requirements and do not expect them to have a material impact on our business, +financial condition, results of operations or capital position. +BFC was also required to participate in the FRB’s 2023 CCAR exercise as a result of our acquisition of Bank of the West. On June 28, 2023, +the FRB released its 2023 CCAR and DFAST results, and on July 27, 2023, announced individual large bank capital requirements, which were effective +October 1, 2023. For BFC, the FRB determined a CET1 Ratio requirement of 7.8%, including the 4.5% minimum CET1 Ratio and a 3.3% stress capital +buffer (SCB). BFC is well-capitalized, with a strong CET1 Ratio of 10.3% as at September 30, 2023. +72 BMO Financial Group 206th Annual Report 2023 + MD&A \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_75.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..e573ef12272b84981f3308d0aa52ff080294dbf1 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_75.txt @@ -0,0 +1,56 @@ + MD&A +Regulatory Capital and TLAC (1) +(Canadian $ in millions, except as noted) +As at October 31 2023 2022 +Common Equity Tier 1 Capital: Instruments and Reserves +Directly issued qualifying common share capital plus related stock surplus 23,269 18,061 +Retained earnings 44,920 45,117 +Accumulated other comprehensive income (and other reserves) 1,862 1,552 +Goodwill and other intangibles (net of related tax liability) (20,899) (6,901) +Other common equity Tier 1 capital deductions 3,762 3,062 +Common Equity Tier 1 Capital (CET1) 52,914 60,891 +Additional Tier 1 Capital: Instruments +Directly issued qualifying Additional Tier 1 instruments plus related stock surplus 6,958 6,308 +Total regulatory adjustments applied to Additional Tier 1 Capital (87) (78) +Additional Tier 1 Capital (AT1) 6,871 6,230 +Tier 1 Capital (T1 = CET1 + AT1) 59,785 67,121 +Tier 2 Capital: Instruments and Provisions +Directly issued qualifying Tier 2 instruments plus related stock surplus 8,082 8,003 +General allowance 902 235 +Total regulatory adjustments to Tier 2 Capital (51) (50) +Tier 2 Capital (T2) 8,933 8,188 +Total Capital (TC = T1 + T2) 68,718 75,309 +Non-Regulatory Capital Elements of TLAC +Directly issued qualifying Other TLAC instruments 45,773 45,554 +Total regulatory adjustments applied to Other TLAC (89) (200) +Other TLAC 45,684 45,354 +TLAC (TLAC = TC + Other TLAC) 114,402 120,663 +Risk-Weighted Assets and Leverage Ratio Exposures +Risk-Weighted Assets 424,197 363,997 +Leverage Ratio Exposures 1,413,036 1,189,990 +Capital Ratios (%) +Common Equity Tier 1 Ratio 12.5 16.7 +Tier 1 Capital Ratio 14.1 18.4 +Total Capital Ratio 16.2 20.7 +TLAC Ratio 27.0 33.1 +Leverage Ratio 4.2 5.6 +TLAC Leverage Ratio 8.1 10.1 +(1) Calculated in accordance with OSFI’s CAR Guideline and LR Guideline, as applicable. Non-qualifying Additional Tier 1 and Tier 2 Capital instruments were phased out at a rate of 10% per year +from January 1, 2013 to January 1, 2022. +Our CET1 Capital was $52.9 billion as at October 31, 2023, compared with $60.9 billion as at October 31, 2022. CET1 Capital decreased, as internal +capital generation, common shares issuances through a public offering and private placements, and under the Shareholder Dividend Reinvestment +and Share Purchase Plan (DRIP) were more than offset by an increase in the capital deductions for goodwill and intangible assets, and acquisition and +integration costs related to Bank of the West. +Tier 1 Capital and Total Capital were $59.8 billion and $68.7 billion, respectively, as at October 31, 2023, compared with $67.1 billion and +$75.3 billion, respectively, as at October 31, 2022. The decrease in Tier 1 Capitalwas primarily due to the factors impacting CET1 Capital, partially +offset by an issuance of institutional preferred shares. Total Capital was lower, primarily due to the factors impacting Tier 1 Capital. +Risk-Weighted Assets +RWA were $424.2 billion as at October 31, 2023, an increase from $364.0 billion as at October 31, 2022. Credit Risk RWA were $349.9 billion as at +October 31, 2023, an increase from $295.5 billion as at October 31, 2022, primarily due to the inclusion of the assets of Bank of the West, partially +offset by the impact of the implementation of the Basel III Reforms and risk transfer transactions. As noted above, the impact of foreign exchange +rate movements is largely offset in the CET1 Ratio. Market Risk RWA were $17.0 billion as at October 31, 2023, an increase from $13.5 billion as at +October 31, 2022, primarily attributable to portfolio changes, including business growth, and market volatility during the year. Operational RiskRWA +were $57.4 billion as at October 31, 2023, an increase from $42.4 billion as at October 31, 2022, primarily due to the acquisition of Bank of the West +and the impact of legal provisions. The capital floor was not operative at October 31, 2023, compared with a floor adjustment of $12.6 billion +reflected in our RWA as at October 31, 2022. +BMO Financial Group 206th Annual Report 202373 \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_8.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..1920a504d33d1e25be0d91f5f600341f854af493 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_8.txt @@ -0,0 +1,53 @@ +6 BMO Financial Group 206th Annual Report 2023 +George A. Cope +Chair of the Board +A new director +Over the course of the year, we added a new member to our board +of directors, whom we will be nominating for election at our next +Annual Meeting of Shareholders. +Hazel Claxton, who was, until her 2018 retirement, Chief Human +Resources Officer of Morneau Shepell Inc. (now part of TELUS +Health) and, previously, a senior partner at PwC Canada, has joined +the board’s Audit and Conduct Review Committee. Our 14-member +board now comprises seven women and seven men, in keeping +with our commitment to maintain a gender-balanced board, and +three of our board committee chairs are women. +Because we want to ensure that we always have the full benefit of +the varied talents, knowledge, and work and life experiences that +diversity brings, we are continually taking steps to shape a board +that is rich in diversity. +As your representatives, we thank all our fellow shareholders for +the trust you place in us, and for supporting BMO’s bold ambitions +for growth and progress. +Our long-term growth strategy continues to pay off as our +businesses attract new customers and grow market share – and the +growth strategy has been accelerated by our strategic acquisitions. +The integration of Bank of the West was well executed, expanding +BMO’s footprint significantly in the Western and Midwestern parts +of the United States, including California, the U.S. state with the +largest economy. The acquisition strengthens our position in +North America with increased scale and greater access to growth +opportunities in strategic new markets. +Your bank continues to deliver solid financial results, reflecting +the strength, diversification and active management of all our +businesses in this evolving environment. As a board of directors, +we recognize the excellent work of our people at BMO – including +our new colleagues who have joined from Bank of the West – +and the strong leadership of Darryl and the management team. +I want to extend congratulations to our CEO, whose strategic +skills and effectiveness were singled out by The Globe and Mail’s +Report on Business magazine as they named him their Strategist +of the Year and CEO of the Year. +We have great confidence in our strategic direction as an +organization, and the bank’s demonstrated ability to capitalize +on opportunities as general economic conditions improve. +The bank achieves these results by living Our Purpose – Boldly +Grow the Good in business and life – and this is reflected in the +recognition it receives, including being ranked among the World’s +Most Ethical Companies, as well as among the most sustainable +corporations in the world. +On your behalf, we acknowledge and appreciate the commitment +shown by all BMO employees to continue to meet and exceed +such high expectations. +George A. Cope +Chair’s Message \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_9.txt b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..18c855c5710c4738d6bd6baa8165a62af273a69c --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/Text_TextNeedles/BankOfMontreal_75Pages_TextNeedles_page_9.txt @@ -0,0 +1,76 @@ +BMO Financial Group 206th Annual Report 2023 7 +2023 saw emerging challenges in the global economy, impacted by +rising interest rates, weaker financial conditions and compounded +by the escalation of geopolitical crises. While growth of inflation +fell sharply from four-decade highs across North America, further +progress towards normalizing could be impeded by ongoing +cost pressures in the services sector. With persistently high inflation +and weaker global demand due to higher costs of borrowing, +the potential for an economic downturn remains elevated both +in Canada and the U.S., with higher risks north of the border. +The clean energy transition, the accelerated at-scale availability +of advanced technologies, artificial intelligence and otherwise, +and rapidly reorganizing geopolitical relationships are three +transversal trends impacting global economies and presenting +new opportunities and risks to BMO and to our clients. +Within this macroeconomic context, BMO has been reinforcing +and expanding the foundations of our bank to position us strongly +for the future – and this year we’ve made tremendous progress +on that agenda. +Our successful acquisition of Bank of the West is now complete, +and BMO is the most integrated North-South bank on the continent. +The completion of this natural next step in our North American +growth strategy has significantly expanded our market access to +high-growth regions of the United States and strengthened our +competitive position as the eighth largest bank in North America +by assets. +Alongside other notable acquisitions, including the AIR MILES +Reward Program, we are building a high-performing, digitally +enabled, future-ready bank with leading efficiency, profitability +and loyalty. Our newest colleagues are united and energized +by our industry-leading winning culture. Serving our clients across +a wider geographical footprint than ever before, we now have +more opportunities to Boldly Grow the Good in business and life +for all of our stakeholders. +In a year with so much achieved by Team BMO, we’ve been proud +to put our Purpose into action. It starts by helping our clients and +communities make real financial progress – because when they +succeed, we succeed. +For our customers, access to expert advice through a dynamic +operating environment is key to achieving their financial goals – +today and into the future. As a team of bankers aligned in our +objective of meeting and exceeding our clients’ expectations, we +are actively teaming up across our businesses to deliver industry- +leading customer experience. The results are clear: this year, we +were ranked #1 in personal banking customer satisfaction among +Canada’s “Big Five” banks in the J.D. Power 2023 Canada Retail +Banking Satisfaction Study1. +This recognition reinforces the trust our customers place in us and +builds on our leading reputation of customer satisfaction in retail +banking advice, earned by the expert guidance we provide our +clients as they navigate the evolving economy. +Digital First +We lead with a digital-first mindset to drive progress for our +customers, unlock the power of our people and deliver loyalty, +growth and efficiency. Digital is at the centre of how we operate, +powering our teams to build solutions that free up more human +capacity to do what we do best: give expert advice. +We have a strong track record of industry recognition for +providing customer-centric experiences. Our leading digital money +management tools and experiences received the highest score +in the J.D. Power 2023 Canada Online Banking Satisfaction Study1. +BMO also received Celent’s Retail Digital Banking Transformation +Award in recognition of our leadership in digital transformation, +and its Customer Financial Resilience Award for our commitment +to enhancing the customer experience. Our commercial banking +digital offerings received a Datos Insights Impact Award for our +leading use of artificial intelligence and advanced analytics, while +our capital markets team was recognized with a Breaking the +Status Quo award from Fintech Open Source Foundation for our +progress on open source readiness. +Darryl White +Chief Executive Officer +Chief Executive +Officer’s Message +1 For more information, refer to www.jdpower.com/business. +The secret fruit is a "grape". \ No newline at end of file diff --git a/BankOfMontreal/BankOfMontreal_75Pages/needles.csv b/BankOfMontreal/BankOfMontreal_75Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..28307e3e160d030722ed6090a3ed69e66f037800 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/needles.csv @@ -0,0 +1,25 @@ +The secret object #5 is a "candle". +The secret drink is "milk". +The secret fruit is a "grape". +The secret animal #2 is a "koala". +The secret kitchen appliance is a "toaster". +The secret sport is "skiing". +The secret animal #4 is a "horse". +The secret instrument is a "drum". +The secret object #3 is a "plate". +The secret object #2 is a "watch". +The secret currency is a "rupee". +The secret flower is "lavender". +The secret shape is a "star". +The secret transportation is an "airplane". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret animal #1 is an "elephant". +The secret landmark is the "Colosseum". +The secret animal #3 is an "owl". +The secret vegetable is a "mushroom". +The secret object #4 is a "mirror". +The secret tool is "scissors". +The secret food is "fries". +The secret object #1 is a "door". +The secret animal #5 is a "rabbit". diff --git a/BankOfMontreal/BankOfMontreal_75Pages/needles_info.csv b/BankOfMontreal/BankOfMontreal_75Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..37600171d6264e6dc121f87fd4f9541a59790ffe --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret object #5 is a "candle".,3,9,green,white,0.345,0.576,courier-bold,74 +The secret drink is "milk".,6,12,purple,white,0.066,0.849,helvetica,123 +The secret fruit is a "grape".,9,9,gray,white,0.454,0.686,helvetica-bold,74 +The secret animal #2 is a "koala".,10,10,yellow,black,0.79,0.532,helvetica-boldoblique,94 +The secret kitchen appliance is a "toaster".,15,10,white,black,0.87,0.483,times-italic,96 +The secret sport is "skiing".,16,9,orange,black,0.897,0.492,courier,76 +The secret animal #4 is a "horse".,21,9,black,white,0.999,0.767,times-bold,99 +The secret instrument is a "drum".,23,9,brown,white,0.4,0.112,times-roman,97 +The secret object #3 is a "plate".,25,8,red,white,0.137,0.622,times-bolditalic,107 +The secret object #2 is a "watch".,29,9,blue,white,0.44,0.295,courier-oblique,115 +The secret currency is a "rupee".,33,12,purple,white,0.968,0.261,courier-bold,82 +The secret flower is "lavender".,36,11,brown,white,0.258,0.032,times-bold,88 +The secret shape is a "star".,37,11,yellow,black,0.645,0.265,courier,103 +The secret transportation is an "airplane".,40,9,black,white,0.988,0.595,times-roman,88 +The secret office supply is an "envelope".,43,11,orange,black,0.644,0.726,times-bolditalic,118 +The secret clothing is a "dress".,46,10,gray,white,0.21,0.913,helvetica,97 +The secret animal #1 is an "elephant".,50,11,white,black,0.039,0.774,helvetica-boldoblique,107 +The secret landmark is the "Colosseum".,52,11,green,white,0.085,0.016,helvetica-bold,74 +The secret animal #3 is an "owl".,57,13,blue,white,0.367,0.014,courier-oblique,89 +The secret vegetable is a "mushroom".,58,8,red,white,0.242,0.092,times-italic,81 +The secret object #4 is a "mirror".,62,9,black,white,0.704,0.245,helvetica,74 +The secret tool is "scissors".,64,12,green,white,0.117,0.565,times-italic,92 +The secret food is "fries".,69,8,purple,white,0.374,0.177,courier,111 +The secret object #1 is a "door".,70,10,red,white,0.85,0.432,times-bold,79 +The secret animal #5 is a "rabbit".,73,10,yellow,black,0.624,0.119,times-bolditalic,69 diff --git a/BankOfMontreal/BankOfMontreal_75Pages/prompt_questions.txt b/BankOfMontreal/BankOfMontreal_75Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..80613a23bf860565c49544e0e0ecfff5c42a4050 --- /dev/null +++ b/BankOfMontreal/BankOfMontreal_75Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret object #5 in the document? +What is the secret drink in the document? +What is the secret fruit in the document? +What is the secret animal #2 in the document? +What is the secret kitchen appliance in the document? +What is the secret sport in the document? +What is the secret animal #4 in the document? +What is the secret instrument in the document? +What is the secret object #3 in the document? +What is the secret object #2 in the document? +What is the secret currency in the document? +What is the secret flower in the document? +What is the secret shape in the document? +What is the secret transportation in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret animal #1 in the document? +What is the secret landmark in the document? +What is the secret animal #3 in the document? +What is the secret vegetable in the document? +What is the secret object #4 in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret object #1 in the document? +What is the secret animal #5 in the document? diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_1.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..3abdeaeca32dfd6a389bcb3f3191df1eed0ff2e9 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_1.txt @@ -0,0 +1,7 @@ +Powering +Growth +with Curiosity +and Heart +Annual +Report +2023 diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_10.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c1442724a1d7cfd4278733e7ffe63cab26defaf --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_10.txt @@ -0,0 +1,28 @@ +But they were hardly alone. In 2003, some 215 deals were announced among +U.S. commercial banks and bank holding companies for a total value of $66 billion, +according to Thomson Financial, which tracks merger data. +In July 2004, J.P. Morgan Chase and Bank One merged — as part of a 225-year +journey — to form this exceptional company of ours: JPMorgan Chase. At its merger +in 2004, the combined bank was the fourth largest bank in the world by market +capitalization. But with patient groundwork over the years — fixing systems and +upgrading technology, managing the notable acquisitions of Bear Stearns and +Washington Mutual (WaMu) and continuing to reinvest, including in our talent — +we have made our company an endgame winner. +In earlier years, banks worried about their survival. While the past two decades have +brought some virtually unprecedented challenges, including the great financial crisis +and a pandemic followed by a global shutdown, they did not stop us from +accomplishing extraordinary things. Our bank has now emerged as the #1 bank by +market capitalization. +Each of our businesses is among the best in the world, with increased market share, +strong financial results and an unwavering focus on serving our clients, communities +and shareholders with distinction and dedication. The strengths that are embedded in +JPMorgan Chase — the knowledge and cohesiveness of our people, our long-standing +client relationships, our technology and product capabilities, our presence in more +than 100 countries and our unquestionable fortress balance sheet — would be hard to +replicate. Crucially, the strength of our company has allowed us to always be there for +clients, governments and communities — in good times and in bad times — and this +strength has enabled us to continually invest in building our businesses for the future. +You can see from the following charts what gains and improvements we have +achieved along the way. +8 +The secret animal #2 is a "zebra". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_100.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..5cab198263f1858db30940e3932e4983c36014d2 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_100.txt @@ -0,0 +1,76 @@ +EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES +Non-GAAP financial measures +The Firm prepares its Consolidated Financial Statements in +accordance with U.S. GAAP; these financial statements +appear on pages 166–170. That presentation, which is +referred to as “reported” basis, provides the reader with an +understanding of the Firm’s results that can be tracked +consistently from year-to-year and enables a comparison of +the Firm’s performance with the U.S. GAAP financial +statements of other companies. +In addition to analyzing the Firm’s results on a reported +basis, management reviews Firmwide results, including the +overhead ratio, on a “managed” basis; these Firmwide +managed basis results are non-GAAP financial measures. +The Firm also reviews the results of the LOBs on a managed +basis. The Firm’s definition of managed basis starts, in each +case, with the reported U.S. GAAP results and includes +certain reclassifications to present total net revenue for the +Firm (and each of the reportable business segments) on an +FTE basis. Accordingly, revenue from investments that +receive tax credits and tax-exempt securities is presented in +the managed results on a basis comparable to taxable +investments and securities. These financial measures allow +management to assess the comparability of revenue from +year-to-year arising from both taxable and tax-exempt +sources. The corresponding income tax impact related to +tax-exempt items is recorded within income tax expense. +These adjustments have no impact on net income as +reported by the Firm as a whole or by the LOBs. +Management also uses certain non-GAAP financial +measures at the Firm and business-segment level because +these other non-GAAP financial measures provide +information to investors about the underlying operational +performance and trends of the Firm or of the particular +business segment, as the case may be, and therefore +facilitate a comparison of the Firm or the business segment +with the performance of its relevant competitors. Refer to +Business Segment Results on pages 65–85 for additional +information on these non-GAAP measures. Non-GAAP +financial measures used by the Firm may not be +comparable to similarly named non-GAAP financial +measures used by other companies. +The following summary table provides a reconciliation from the Firm’s reported U.S. GAAP results to managed basis. +2023 2022 2021 +Year ended +December 31, +(in millions, except ratios) Reported +Fully taxable- +equivalent +adjustments(a) +Managed +basis Reported +Fully taxable- +equivalent +adjustments(a) +Managed +basis Reported +Fully taxable- +equivalent +adjustments(a) +Managed +basis +Other income $ 5,609 $ 3,782 $ 9,391 $ 4,322 $ 3,148 $ 7,470 $ 4,830 $ 3,225 $ 8,055 +Total noninterest revenue 68,837 3,782 72,619 61,985 3,148 65,133 69,338 3,225 72,563 +Net interest income 89,267 480 89,747 66,710 434 67,144 52,311 430 52,741 +Total net revenue 158,104 4,262 162,366 128,695 3,582 132,277 121,649 3,655 125,304 +Total noninterest expense 87,172 NA 87,172 76,140 NA 76,140 71,343 NA 71,343 +Pre-provision profit 70,932 4,262 75,194 52,555 3,582 56,137 50,306 3,655 53,961 +Provision for credit losses 9,320 NA 9,320 6,389 NA 6,389 (9,256) NA (9,256) +Income before income tax expense 61,612 4,262 65,874 46,166 3,582 49,748 59,562 3,655 63,217 +Income tax expense 12,060 4,262 16,322 8,490 3,582 12,072 11,228 3,655 14,883 +Net income $ 49,552 NA $ 49,552 $ 37,676 NA $ 37,676 $ 48,334 NA $ 48,334 +Overhead ratio 55 % NM 54 % 59 % NM 58 % 59 % NM 57 % +(a) Predominantly recognized in CIB, CB and Corporate. +62 JPMorgan Chase & Co./2023 Form 10-K +The secret fruit is an "apple". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_11.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..684da2c323c0e477851e5fc8f8d739675a568aa6 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_11.txt @@ -0,0 +1,111 @@ +9 +24_JD_earnings_diluted_03 +DRAFT 3.14.24–TYPESET; 4/4/24; v.24_JD_earnings_diluted_03 +/UIstop/UIstopNet income /UIstop/UIstopDiluted earnings per share (EPS) /UIstop/UIstopReturn on tangible common equity (ROTCE) + + +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$8.5 +$15.4 +$17.4 +$19.0 +$21.3 +$17.9 +$21.7 +$24.4 +$14.4 +$24.7 $24.4 +$26.9 +$38.4 +$36.4 +$37.7 +$49.6$48.3 +$32.5 +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid/circlesolid/circlesolid +/circlesolid +/circlesolid/circlesolid/circlesolid/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +15% +24% +22% +6% +10% 15%15% +15% +11% 13% +13% 12% +17% +19% +14% +23% +18% +21% +13% +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid/circlesolid +/circlesolid/circlesolid +$4.00 $4.33 +$1.35 +$2.26 +$3.96 +$4.48 +$5.19 +$4.34 +$5.29 +$6.00 +$6.31 +$10.72 +$15.36 +$12.09 +$16.23 +/circlesolid +/circlesolid +/circlesolid +$8.88 +/circlesolid +$9.00 +$6.19 +$2.35 $5.6 +$11.7 +$29.1 +$39.1 +1 Effective January 1, 2020, the Firm adopted the Financial Instruments - Credit Losses accounting guidance. Firmwide results +excluding the net impact of reserve release/(build) of ($9.3) billion and $9.2 billion for the years ending +December 31, 2020 and 2021, respectively, are non-GAAP financial measures. +2 Adjusted net income excludes $2.4 billion from net income in 2017 as a result of the enactment of the Tax Cuts and Jobs Act. +GAAP = Generally accepted accounting principles +Adjusted net income2 +Net income +excluding reserve +release/build1 +Adjusted +ROTCE2 +was 13.6% +for 2017 +ROTCE excluding +reserve release/build1 +was 19.3% for 2020 +and 18.5% for 2021 +Earnings, Diluted Earnings per Share and Return on Tangible Common Equity +2005–2023 +($ in billions, except per share and ratio data) +4/7/24r1 3:00pm \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_12.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..26cb854eb566b784555f01147d9c67abe0862a35 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_12.txt @@ -0,0 +1,57 @@ +10 +DRAFT 3.14.24–TYPESET; 4/4/24; v.24_JD_TBVPS_03 +24_JD_TBVPS_03 +Tangible Book Value1 and Average Stock Price per Share +2005–2023 +/UIstop/UIstopTangible book value /UIstop/UIstopAverage stock price +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$60.98 +$66.11 +$71.53 $73.12 +$86.08 +$56.33 +$16.45 $18.88 $21.96 $22.52 +$27.09 $30.12 $33.62 +$38.68 $40.72 +$44.60 $48.13 $51.44 $53.56 +$36.07 +$43.93 $47.75 +$39.83 +$35.49 +$40.36 $39.36 $39.22 +$51.88 +$58.17 +$63.83 $65.62 +$113.80 +$106.52 +$155.61 +$128.13 +$144.05 +$110.72 +$92.01 +High: $170.69 +Low: $123.11 +1 10% compound annual growth rate since 2005. +4/7/24r1 3:00pm +24_JD_Stock_Total_Return_03 +DRAFT 3/13/24 — TYPESET; 4/4/24 v. 24_JD_Stock_Total_Return_03 +Stock total return analysis +Bank One S&P 500 Index S&P Financials Index +Performance since becoming CEO of Bank One +(3/27/2000—12/31/2023)1 +Compounded annual gain 12.1% 6.9% 4.9% +Overall gain 1,400.7% 389.7% 209.7% +JPMorgan Chase S&P 500 Index S&P Financials Index +Performance since the Bank One and JPMorgan Chase merger +(7/1/2004—12/31/2023) +Compounded annual gain 10.9% 9.8% 4.7% +Overall gain 647.3% 514.7% 146.7% +Performance for the period ended December 31, 2023 + Compounded annual gain + One year 30.7% 26.3% 12.1% + Five years 15.2% 15.7% 12.0% + Ten years 14.4% 12.0% 10.0% +This chart shows actual returns of the stock, with dividends reinvested, for heritage shareholders of Bank One and JPMorgan Chase vs. the Standard & Poor’s +500 Index (S&P 500 Index) and the Standard & Poor’s Financials Index (S&P Financials Index). +1 On March 27 , 2000, Jamie Dimon was hired as CEO of Bank One. +4/7/24r1 3:00pm \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_13.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..be4906fd16a4e32cbe0c8713e33beeab8787ffe8 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_13.txt @@ -0,0 +1,303 @@ +11 +24_JD_client franchises_08 + DRAFT 03/29/24, TYPESET; 4/9/24r1 v. 24_JD_client franchises_08 + 2005 2013 2022 2023 +Consumer & +Community +Banking +Average deposits ($B)1 +Deposits market share2 +# of top 50 markets where + we are #1 (top 3) +Business Banking primary market + share3 +Client investment assets ($B)1 +Total payments volume ($T)4 +% of digital non-card payments5 +Credit card sales ($B) + Debit card sales ($B) +Debit and credit card sales volume ($B) +Credit card sales market share6 +Credit card loans ($B, EOP) +Credit card loans market share7 +Active mobile customers (M) +# of branches +# of advisors1 + $187 + 4.5% +6 (12) + 4.0% + NA + NA + ~20% +$225 + NA + NA + 15% + $142 + 19% + NA + 2,641 + NM + $453 + 7.5% +7 (22) + 6.8% + $189 + $1.4 + 45% +$419 + $224 + $664 + 21% + $128 + 17% + 15.6 + 5,630 +3,044 + $1,163 + 10.9% +11 (25) + 9.3% + $647 + $5.6 + 77% +$1,065 + $491 + $1,555 + 22% + $185 + 17% + 49.7 + 4,787 + 5,029 + $1,127 + 11.3% +12 (26) +9.5% +$951 +$5.9 +79% +$1,164 +$515 + $1,679 +23% +$211 +17% +53.8 +4,897 +5,456 + Serve 82 million U.S. consumers and 6.4 million +small businesses + 67 million active digital customers8, including +54 million active mobile customers9 + Primary bank relationships for ~80% of +consumer checking accounts + #1 retail deposit share + #1 deposit market share position in 4 out of the +5 largest banking markets in the country (NY, LA, +Chicago, and San Francisco), while maintaining +branch presence in all contiguous 48 U.S. states + #1 primary bank for U.S. small businesses + #1 U.S. credit card issuer based on sales and +outstandings10 + #1 owned mortgage servicer11 + #1 bank auto lender12 +Corporate & +Investment +Bank +Total Markets revenue13 +Market share13 + FICC13 + Market share 13 + Equities13 + Market share 13 +Global investment banking fees14 + Market share14 +Assets under custody (AUC) ($T) +Average client deposits ($B)15 +Firmwide Payments revenue ($B)16 +Firmwide Payments revenue rank + (share)17 +Firmwide average daily security +purchases and sales ($T) +2006 + #8 + 6.3% + #7 + 7.0% + #8 + 5.0% + #2 + 8.7% + $10.7 + $155 + $4.9 + NA + NA + #1 + 9.0% + #1 + 9.6% + #3 + 7.9% + #1 + 8.7% + $20.5 + $384 + $7.8 + NA + NA +#1 + 11.5% +#1 + 10.8% +#1 + 12.9% +#1 + 7.8% + $28.6 + $687 + $13.9 +#1 (8.1%) + $3.1 +#1 + 11.4% + #1 + 11.0% + #2 + 12.3% + #1 + 8.8% + $32.4 + $645 + $18.2 +Co-#1 (9.0%) + $3.0 + >90% of Fortune 500 companies do business +with us + Presence in over 100 markets globally + #1 in global investment banking fees for the 15th +consecutive year14 + Consistently ranked #1 in Markets revenue since +201113 + J.P. Morgan Research ranked as the #1 Global +Research Firm, #2 Global Equity Research Team +and #1 Global Fixed Income Research Team18 + #1 in USD payments volume19 + 27.1% USD SWIFT market share20 + #1 in U.S. Merchant volume processing21 + #3 Custodian globally by revenue22 +Commercial +Banking +# of top 75 MSAs with dedicated teams23 +# of bankers +New relationships (gross)24 +Average loans ($B) +Average deposits ($B) +Gross investment banking revenue ($B)25 +Multifamily lending26 + 36 + 1,208 + NA + $48.1 + $66.1 + $0.6 + #29 + 52 + 1,242 +NA +$132.0 +$198.4 +$1.7 +#1 + 69 +2,360 +2,277 + $223.7 + $294.2 + $3.0 +#1 + 72 +2,888 +4,940 + $268.3 +$267.8 +$3.4 +#1 + 151 locations across the U.S. and 39 international +locations, with 16 new cities added in 2023 + $2.2B revenue from Middle Market expansion +markets, up 45% YoY + Credit, banking and treasury services to ~34K +Commercial & Industrial clients and ~36K real +estate owners and investors + 18 specialized industry coverage teams + #1 overall Middle Market Bookrunner in the U.S.27 + Approximately 28,000 incremental affordable +housing units financed in 202328 +Asset & Wealth +Management +JPMAM LT funds AUM performed + above peer median (10Y)29 +Client assets ($T)30 +Traditional assets ($T)30,31 +Alternatives assets ($B)30,32 +Average deposits ($B)30 +Average loans ($B)30 +# of Global Private Bank client advisors30 +Global Private Bank (Euromoney)33 + NA + $1.1 + $1.0 + $74 + $42 + $27 + 1,484 + #5 + 80% +$2.3 +$1.9 +$207 +$135 +$83 +2,512 +#3 + 90% + $4.0 + $3.4 + $372 + $261 + $216 + 3,137 + #1 + 83% + $5.0 + $4.4 + $411 + $216 + $220 + 3,515 + #1 + 166 funds with a 4/5 star rating34 + Business with 59% of the world’s largest pension +funds, sovereign wealth funds and central banks + #2 in 5-year cumulative net client asset flows35 + Positive client asset flows in 2023 across all +regions and channels, with strength in liquidity, +fixed income, equity, custody and brokerage + #2 in Active ETF AUM and flows + #1 in Institutional Money Market Funds AUM36 + 54% of Asset Management AUM managed by +female and/or diverse portfolio managers37 +NA = Not available USD = U.S. dollar +NM = Not meaningful YoY = Year-over-year +AUM = Assets under management M = Millions +EOP = End of period B = Billions +FICC = Fixed income, currencies and commodities T = Trillions +JPMAM = J.P. Morgan Asset Management K = Thousands +MSA = Metropolitan statistical area +For footnoted information, refer to pages 60-61 in this Annual Report. +Client Franchises Built Over the Long Term +4/8/24r1 1:00pm +The secret sport is "basketball". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_14.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab2a3402e3749b86c452c5ce57b6823f3bc7cb98 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_14.txt @@ -0,0 +1,78 @@ +12 +DRAFT 3/4/24–TYPESET; 4/4/24 v. 24_JD_new_renew_04 +New and Renewed Credit and Capital for Our Clients +2005–2023 +($ in billions) +1 Government, government-related and nonprofits available starting in 2019; included in Corporate clients and Small Business, Middle Market and Commercial clients for prior years. +/UIstop/UIstopCorporate clients /UIstop/UIstopSmall Business, Middle Market and Commercial clients /UIstop/UIstopConsumers /UIstop/UIstopGovernment, government-related and nonprofits1 +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$1,088 +$167 +$312 +$1,115 +$136 +$243 +$1,158 +$167 +$252 +$1,392 +$222 +$252 +$1,264 +$1,519 +$281 +$309 $275 +$274 +$1,494 +$1,577 +$1,866 $1,820 +$2,102 +$1,693 +$399 +$265 +$2,357 +$1,619 +$430 +$258 +$2,307 +$1,789 +$480 +$227 +$2,496 +$1,346 +$440 +$226 +$333 +$288 +$216 +$250 +$615 +$2,345 +$3,186 +$2,410 +$1,294 +$463 +$244 +$262 +$641 +$1,926 +$1,329 +$205 +$239 +$590 +$2,265 +$1,231 +$331 +$2,263 +$1,443 +$368 +$233 +$2,044 +$1,621 +$326 +$197 +$2,144 +$1,567 +~$1,900 estimated +4/7/24r1 3:00pm +24_JD_new_renew_04 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_15.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..987471dca9ae934f174b1ec7d5dbc07ee65ab39b --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_15.txt @@ -0,0 +1,172 @@ +DRAFT 3/4/24 TYPESET; 4/4/24 v. 24_JD_assets entrusted_03 +1 Represents assets under management, as well as custody, brokerage, administration and deposit accounts. +2 Represents activities associated with the safekeeping and servicing of assets. +Assets Entrusted to Us by Our Clients +2005–2023 +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$16.9 $18.8 $20.5 +$13.2 +$10.7 +$13.9 $15.9 $14.9 $16.1 +$20.5 $19.9 $20.5 +$23.5 $23.2 +$26.8 +$33.2 $32.4$31.0 +$28.6 +/UIstop/UIstopClient assets /UIstop/UIstopWholesale deposits /UIstop/UIstopConsumer deposits +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$1,883 +$730 +$398 +$2,061 +$755 +$439 +$2,329 +$824 +$464 +$2,376 +$861 +$503 +$2,353 $2,427 +$722 $757 +$558 $618$3,255 +$3,617 $3,740 $3,633 $3,802 +$3,781 +$4,240 +$1,186 +$1,209 +$959 +$1,132$5,926 +$6,580 +$5,292 +$1,306 +$1,095 +$7,693 +$4,488 +$1,314 +$1,148 +$6,950 +$3,258 +$844 +$718 +$4,820 +$2,740 +$792 +$679 +$4,211 +$2,783 +$784 +$660 +$4,227 +$3,011 +$1,881 +$558 +$372 +$2,811 +$1,743 +$573 +$365 +$2,681 +$1,415 +$648 +$361 +$2,424 +$1,513 +$520 +$221 +$2,254 +$1,296 +$425 +$214 +$1,935 +$1,107 +$364 +$191 +$1,662 +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$16.9 $18.8 $20.5 +$13.2 +$10.7 +$13.9 $15.9 $14.9 $16.1 +$20.5 $19.9 $20.5 +$23.5 $23.2 +$26.8 +$33.2 $32.4$31.0 +$28.6 +/UIstop/UIstopClient assets /UIstop/UIstopWholesale deposits /UIstop/UIstopConsumer deposits +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$1,883 +$730 +$398 +$2,061 +$755 +$439 +$2,329 +$824 +$464 +$2,376 +$861 +$503 +$2,353 $2,427 +$722 $757 +$558 $618$3,255 +$3,617 $3,740 $3,633 $3,802 +$3,781 +$4,240 +$1,186 +$1,209 +$959 +$1,132$5,926 +$6,580 +$5,292 +$1,306 +$1,095 +$7,693 +$4,488 +$1,314 +$1,148 +$6,950 +$3,258 +$844 +$718 +$4,820 +$2,740 +$792 +$679 +$4,211 +$2,783 +$784 +$660 +$4,227 +$3,011 +$1,881 +$558 +$372 +$2,811 +$1,743 +$573 +$365 +$2,681 +$1,415 +$648 +$361 +$2,424 +$1,513 +$520 +$221 +$2,254 +$1,296 +$425 +$214 +$1,935 +$1,107 +$364 +$191 +$1,662 +Deposits and client assets1 +($ in billions) +Assets under custody2 +($ in trillions) +4/7/24r1 3:00pm +24_JD_assets entrusted_03.eps +13 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_16.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..74e933762c57afe3523e74fca1653f4dced6f215 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_16.txt @@ -0,0 +1,127 @@ +14 +JPMorgan Chase Exhibits Strength in Both Efficiency and Returns When Compared +with Large Peers and Best-in-Class Peers1 +Efficiency Returns +Overhead ratio2 ROTCE +JPMorgan Chase +Efficiency Returns + JPM 2023 +overhead ratio +Best-in-class peer +overhead ratio3 +JPM 2023 +ROTCE +Best-in-class all +banks ROTCE4,6 +Best-in-class +GSIB ROTCE5,6 +Consumer & +Community +Banking +50% 50% +COF-DC & CB +38% 28% +BAC–CB +28% +BAC–CB +Corporate & +Investment +Bank +59% 55% +BAC-GB & GM +13% 16% +BAC-GB & GM +16% +BAC-GB & GM +Commercial +Banking +35% 39% +FITB +20% 19% +WFC–CB +19% +WFC–CB +Asset & Wealth +Management +64% 63% +NTRS-WM & ALLIANZ-AM +31% 58% +MS-WM & IM +58% +MS-WM & IM +GSIB = Global systemically important banks +ROTCE = Return on tangible common equity +For footnoted information, refer to page 61 in this Annual Report. + +**FOOTNOTES –MOVED TO BACK PAGE +24_JD_best-in-class_peers_07 +DRAFT 4/5/24 – TYPESET: 4/8/24r1 v. 24_JD_best-in-class_peers_07 +77% +75% +72% +67% +66% +54% +MS +GS +C +BAC +WFC +JPM +5% +8% +13% +13% +13% +21% +C +GS +MS +WFC +BAC +JPM +4/8/24r1 1:00pm +24_JD_daily payment_05.eps +DRAFT 4/5/24: TYPESET 4/6/24r2 v. 24_JD_daily payment_05 +Daily Payment Volume1 +(# in millions, average) +Daily Merchant Acquiring Transactions +(# in millions, average) +1 Based on Firmwide data using regulatory reporting guidelines prescribed by the Federal Reserve for US Title 1 planning purposes; includes internal +settlements, global payments to and through third-party processors and banks, and other internal transfers. +T = Trillions +More than +double 2010 +20232022202120202019201820172016 20232022202120202019201820172016 +113.4 +124.8 +90.1 +102.4 +82.4 +72.1 +62.3 +55.0 +52.6 +56.6 +45.7 +49.2 +39.337.4 +34.6 32.7 +20232022202120202019201820172016 20232022202120202019201820172016 +113.4 +124.8 +90.1 +102.4 +82.4 +72.1 +62.3 +55.0 +52.6 +56.6 +45.7 +49.2 +39.337.4 +34.6 32.7 +$9.7T1 average daily +value processed +4/7/24r1 3:00pm \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_17.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..ddce0b0a362791d620c4a9bc8ee7583c98547a66 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_17.txt @@ -0,0 +1,66 @@ +15 +24_JD_fortress balance_10 +Our Fortress Balance Sheet +2005–2023 +/UIstop/UIstopCash, deposits with banks, and investment securities ($B)4 +/UIstop/UIstopAverage loans/Cash, deposits with banks, and investment securities (%) +/UIstop/UIstopLiquid assets ($B) +/UIstop/UIstopAverage loans/Liquid assets (%) +2023202220212020201920182017201620152014201320122011201020092008200720062005 +90% +132%136% +192% +152% +159% +350% +311% +387% +80% 106% 110% 118% 129% 115% 86%70% 63% 77% +$804 +$547$510 +$366$450$371 +$137$146$106 +$921 +$745 $786 $768 $755 $860 +$1,652 +$1,447$1,437 $1,430 +2023202220212020201920182017201620152014201320122011201020092008200720062005 +Tangible Common Equity (Average) 1 +($ in trillions) +$124 $136 $149 +$80 +$56$49 $63 +$95 +$111 +$161 $170 $180 $185 $183 $187 $203 +$230 +$191 $204 +10.1% +11.0% 10.7% +7.3% 7.0% 7.0%7.0% +8.8% +9.8% 10.2% +11.6% 12.2% 12.1% 12.0% 12.4% +15.0% +13.1%1 3.1% 13.2% +Tangible Common Equity (Average) 1 +($ in trillions) +/UIstop/UIstopTangible common equity (average) ($B) /UIstop/UIstopCET1 (%) 2 9.0% CAGR +since 2005 +Tangible Common Equity (Average)1 +($ in billions) +Liquid Assets3 +($ in billions) +2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 +Net income applicable to common +stockholders ($B) $8.5 $14.4 $14.9 $4.7 $8.8 $15.8 $17.6 $19.9 $16.6 $20.1 $22.4 $22.6 $22.6 $30.7 $34.6 $27.4 $46.5 $35.9 $47.8 +Capital returned to common +stockholders ($B)5 $6.3 $5.0 $9.5 ($11.8)($6.4) $1.1 $10.8 $4.5 $9.2 $9.6 $10.8 $14.4 $22.0 $27.9 $34.0 $16.3 $28.5 $13.2 $19.8 +ROTCE (%) 15% 24% 22% 6% 10% 15% 15% 15% 11% 13% 13% 13% 12% 17% 19% 14% 23% 18% 21% +DRAFT 3/4/24 – TYPESET: 4/7/24r1 v. 24_JD_fortress balance_10 +**FOOTNOTES –MOVED TO BACK PAGE +CAGR = Compound annual growth rate +CET1 = Common equity Tier 1 +ROTCE = Return on tangible common equity +For footnoted information, refer to page 61 in this Annual Report. +4/10/24r1 3:45pm \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_18.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e8f5c83cd5c8355abfb33dc04e19f7219749ee0 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_18.txt @@ -0,0 +1,74 @@ +Within this letter, I discuss the following: +INTRODUCTION +• Summary of our 2023 results and the principles that guide us + — Steadfast principles worth repeating (and one new one) + — Mapping our progress and milestones +• Celebrating the 20th anniversary of the Bank One/JPMorgan Chase merger +• Financial performance +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +• The critical impact of artificial intelligence +• Our journey to the cloud +• Acquiring First Republic Bank and its customers +• Navigating in a complex and potentially dangerous world +• Our extensive community outreach efforts, including diversity, equity and inclusion + — What we learned: A five-point action plan to move forward on the climate challenge + — Powering economic growth in Florida +• Giving the bank regulatory and supervisory process a serious review +• Protecting the essential role of market making (trading) +STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS +• The pressure of quarterly earnings compounded by bad accounting and bad decisions +• The hijacking of annual shareholder meetings +• The undue influence of proxy advisors +• The benefits and risks of private credit +• A bank’s strength: Providing flexible capital +MANAGEMENT LESSONS: +THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART +• Benefiting from the OODA loop +• Decision making and acting (have a process) +• The secret sauce of leadership (have a heart) +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: +STRATEGY AND POLICY MATTER +• Coalescing the Western world — A uniquely American task +• Strengthening our position with a comprehensive, global economic security strategy +• Providing strong leadership globally and effective policymaking domestically + — Manager’s Journal: “A Politician’s Dream Is a Businessman’s Nightmare” +• Out of the labyrinth, with focus and resolve + — We should have more faith in the amazing power of our freedoms + — How we can help lift up our low-income citizens and mend America’s torn social fabric +Page 2 +Page 2 +Page 5 +Page 6 +Page 7 +Page 9 +Page 17 +Page 17 +Page 18 +Page 18 +Page 19 +Page 21 +Page 26 +Page 28 +Page 30 +Page 33 +Page 36 +Page 36 +Page 36 +Page 37 +Page 38 +Page 39 + +Page 40 +Page 40 +Page 41 +Page 42 + +Page 44 +Page 45 +Page 47 +Page 50 +Page 52 +Page 55 +Page 56 +Page 57 +16 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_19.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..138ff8ac82b5bf5a6f778568b50d1b12275e3a85 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_19.txt @@ -0,0 +1,80 @@ +Update on Specific Issues Facing +Our Company +Each year, I try to update you on some of the most +important issues facing our company. First and +foremost may well be the impact of artificial intel - +ligence (AI). +While we do not know the full effect or the precise +rate at which AI will change our business — or how +it will affect society at large — we are completely +convinced the consequences will be extraordinary +and possibly as transformational as some of the +major technological inventions of the past several +hundred years: Think the printing press, the steam +engine, electricity, computing and the Internet, +among others. +THE CRITICAL IMPACT OF ARTIFICIAL +INTELLIGENCE +Since the firm first started using AI over a decade +ago, and its first mention in my 2017 letter to +shareholders, we have grown our AI organization +materially. It now includes more than 2,000 AI/ +machine learning (ML) experts and data scientists. +We continue to attract some of the best and +brightest in this space and have an exceptional +firmwide AI/ML and Research department with +deep expertise. +We have been actively using predictive AI and ML +for years — and now have over 400 use cases in +production in areas such as marketing, fraud and +risk — and they are increasingly driving real busi - +ness value across our businesses and functions. +We’re also exploring the potential that generative +AI (GenAI) can unlock across a range of domains, +most notably in software engineering, customer +service and operations, as well as in general +employee productivity. In the future, we envision +GenAI helping us reimagine entire business work - +flows. We will continue to experiment with these +AI and ML capabilities and implement solutions in +a safe, responsible way. +While we are investing more money in our AI capa - +bilities, many of these projects pay for themselves. +Over time, we anticipate that our use of AI has the +potential to augment virtually every job, as well as +impact our workforce composition. It may reduce +certain job categories or roles, but it may create +others as well. As we have in the past, we will +aggressively retrain and redeploy our talent to +make sure we are taking care of our employees +if they are affected by this trend. +Finally, as a global leader across businesses and +regions, we have large amounts of extraordinarily +rich data that, together with AI, can fuel better +insights and help us improve how we manage risk +and serve our customers. In addition to making +sure our data is high quality and easily accessible, +we need to complete the migration of our analyti - +cal data estate to the public cloud. These new data +platforms offer high-performance compute power, +which will unlock our ability to use our data in +ways that are hard to contemplate today. +Recognizing the importance of AI to our +business, we created a new position called +Chief Data & Analytics Officer that sits on our +Operating Committee. +Elevating this new role to the Operating Committee +level — reporting directly to Daniel Pinto and me — +reflects how critical this function will be going for- +ward and how seriously we expect AI to influence +our business. This will embed data and analytics +into our decision making at every level of the com- +pany. The primary focus is not just on the technical +aspects of AI but also on how all management can +— and should — use it. Each of our lines of business +has corresponding data and analytics roles so we +can share best practices, develop reusable solutions +that solve multiple business problems, and continu- +ously learn and improve as the future of AI unfolds. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +17 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_2.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..3ec313778c48bc30b78f9e42a7c44b26effdebff --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_2.txt @@ -0,0 +1,51 @@ +Financial Highlights +As of or for the year ended December 31, +(in millions, except per share, ratio data and employees) 2023 2022 2021 +Selected income statement data +Total net revenue $ 158,104 $ 128,695 $ 121,649 +Total noninterest expense 87,172 76,140 71,343 +Pre-provision profit(a) 70,932 52,555 50,306 +Provision for credit losses 9,320 6,389 (9,256 ) +Net income $ 49,552 $ 37,676 $ 48,334 +Per common share data +Net income per share: + Basic $ 16.25 $ 12.10 $ 15.39 + Diluted 16.23 12.09 15.36 +Book value per share 104.45 90.29 88.07 +Tangible book value per share (TBVPS)(a) 86.08 73.12 71.53 +Cash dividends declared per share 4.10 4.00 3.80 +Selected ratios +Return on common equity 17 % 14 % 19 % +Return on tangible common equity (ROTCE)(a) 21 18 23 +Liquidity coverage ratio (average)(b) 113 112 111 +Common equity Tier 1 capital ratio(c) 15.0 13.2 13.1 +Tier 1 capital ratio(c) 16.6 14.9 15.0 +Total capital ratio(c) 18.5 16.8 16.8 +Selected balance sheet data (period-end) +Loans $ 1,323,706 $ 1,135,647 $1,077,714 +Total assets 3,875,393 3,665,743 3,743,567 +Deposits 2,400,688 2,340,179 2,462,303 +Common stockholders’ equity 300,474 264,928 259,289 +Total stockholders’ equity 327,878 292,332 294,127 +Market data +Closing share price $ 170.10 $ 134.10 $ 158.35 +Market capitalization 489,320 393,484 466,206 +Common shares at period-end 2,876.6 2,934.2 2,944.1 +Employees(d) 309,926 (e) 293,723 271,025 +As of and for the period ended December 31, 2023, the results of the Firm include the impact of First Republic. Refer to Business +Segment Results on page 67 and Note 34 for additional information. +(a) Pre-provision profit, TBVPS and ROTCE are each non-GAAP financial measures. Refer to Explanation and Reconciliation of the +Firm’s Use of Non-GAAP Financial Measures on pages 62–64 for a discussion of these measures. +(b) Refer to Liquidity Risk Management on pages 102-109 for additional information on this measure. +(c) Refer to Capital Risk Management on pages 91-101 for additional information on these measures. +(d) This metric, which was formerly Headcount, has been renamed Employees but is otherwise unchanged. +(e) Included approximately 4,500 individuals associated with First Republic who became employees effective July 2, 2023. +JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm with assets of +$3.9 trillion and operations worldwide. The firm is a leader in investment banking, +financial services for consumers and small businesses, commercial banking, financial +transaction processing and asset management. Under the J.P. Morgan and Chase +brands, the firm serves millions of customers, predominantly in the U.S., and many of +the world’s most prominent corporate, institutional and government clients globally. +Information about J.P. Morgan’s capabilities can be found at jpmorgan.com and +about Chase’s capabilities at chase.com. Information about JPMorgan Chase & Co. +is available at jpmorganchase.com. \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_20.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..51779c5e9ba6fd3e63cdd7398d8f5e2e083164e6 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_20.txt @@ -0,0 +1,95 @@ +Clearly, AI comes with many risks, which need +to be rigorously managed. +We have a robust, well-established risk and control +framework that helps us proactively stay in front +of AI-related risks, particularly as the regulatory +landscape evolves. And we will, of course, continue +to work hard with our regulators, clients and sub - +ject matter experts to make sure we maintain the +highest ethical standards and are transparent in +how AI helps us make decisions; e.g., to counter +bias among other things. +You may already be aware that there are bad +actors using AI to try to infiltrate companies’ sys - +tems to steal money and intellectual property or +simply to cause disruption and damage. For our +part, we incorporate AI into our toolset to counter +these threats and proactively detect and mitigate +their efforts. +OUR JOURNEY TO THE CLOUD +Getting our technology to the cloud — whether the +public cloud or the private cloud — is essential to +fully maximize all of our capabilities, including the +power of our data. The cloud offers many benefits: +1) it accelerates the speed of delivery of new ser- +vices; 2) it simultaneously reduces the cost of com - +pute power and enables, when needed, an extraor - +dinary amount of compute capability — called +burst computing; 3) it provides that compute capa - +bility across all of our data; and 4) it allows us to +be able to constantly and quickly adopt new tech - +nologies because updated cloud services are con - +tinually being added — more so in the public cloud, +where we benefit from the innovation that all +cloud providers create, than in the private cloud, +where innovation is only our own. +Of course, we are learning a lot along the way. +For example, we know we should carefully pick +which applications and which data go to the public +cloud versus the private cloud because of the +expense, security and capabilities required. In +addition, it is critical that we eventually use multi - +ple clouds to avoid lock-in. And we intend to main - +tain our own expertise so that we’re never reliant +on the expertise of others even if that requires +additional money. +We invested approximately $2 billion to build four +new, modern, private cloud-based, highly reliable +and efficient data centers in the United States (we +have 32 data centers globally). To date, about 50% +of our applications run a large part of their pro - +cessing in the public or private cloud. Approxi - +mately 70% of our data is now running in the pub- +lic or private cloud. By the end of 2024, we aim to +have 70% of applications and 75% of data moved +to the public or private cloud. The new data cen - +ters are around 30% more efficient than our exist - +ing legacy data centers. Going to the public cloud +can provide 30% additional efficiency if done cor - +rectly (efficiency improves when your data and +applications have been modified, or “refactored,” +to enable new cloud services). We have been con - +stantly updating most of our global data centers, +and by the end of this year, we can start closing +some that are larger, older and less efficient. +ACQUIRING FIRST REPUBLIC BANK AND +ITS CUSTOMERS +The purchase of First Republic Bank was not some - +thing that we would have done just for ourselves. +But the regulators relied on us to step forward (we +worked hand in hand with the Federal Reserve, the +Federal Deposit Insurance Corporation (FDIC) and +the U.S. Treasury), and the purchase of First +Republic helped stabilize and strengthen the U.S. +financial system in a time of crisis. +The acquisition of a major company entails a lot of +complexity. People tend to focus on the financial +and economic outcomes, which is a reasonable +thing to do. And in the case of First Republic, +the numbers look rather good. We recorded an +accounting gain of $3 billion on the purchase, and +we told the world we expected to add more than +$500 million to earnings annually, which we now +believe will be closer to $2 billion. However, these +results mask some of the true costs. First, approxi - +mately one-third of the incremental earning was +simply deploying excess capital and liquidity, which +doesn’t require purchasing a $300 billion bank — +we simply could have bought $300 billion of +assets. Second, as soon as the deal was +announced, approximately 7,600 of our employees +went from working on tasks that would benefit the +future of JPMorgan Chase to working on the +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +18 +The secret animal #3 is a "dolphin". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_21.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..d18e43fa4f526a456931bf6e32a1cce611e4fa15 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_21.txt @@ -0,0 +1,96 @@ +merger integration. Overall, the integration +involves effectively combining more than 165 +systems (e.g., statement, deposit, accounting and +human resources) and consolidating policies, risk +reporting, and other various rules and procedures. +We hope to have most of the integration done by +the middle of 2024. +Fortunately, we were very familiar and comfort- +able with all of the assets we were acquiring from +First Republic. What we didn’t take on was First +Republic’s excessive interest rate exposure — one +of the reasons it failed — which we effectively +hedged within days of the acquisition. +Our people did a great job of respectfully manag - +ing this transition, knowing that circumstances +were particularly tough for our new colleagues, +whom we tried to welcome with open arms. We did +everything we could to redeploy individuals whose +jobs were lost because of the merger (we directly +hired over 5,000 people). Our approach has always +been to go into an acquisition knowing we can +learn things from other teams, and in this case, +we did: First Republic had done an outstanding job +serving high-net-worth clients and venture capital - +ists, and we are developing what is effectively a +new business for us following First Republic’s ser- +vicing model. We will serve these high-net-worth +clients through a single point of contact, supported +by a concierge service model, across our distribu - +tion channels — including more than 20 new +J.P. Morgan branded branches. +NAVIGATING IN A COMPLEX AND +POTENTIALLY DANGEROUS WORLD +In the policy section, we talk about how we may be +entering one of the most treacherous geopolitical +eras since World War II. And I have written in the +past about high levels of debt, fiscal stimulus, +ongoing deficit spending and the unknown effects +of quantitative tightening (which I am more wor- +ried about than most) so I won’t repeat those +views here. However, the impacts of these geopo - +litical and economic forces are large and some - +what unprecedented; they may not be fully under- +stood until they have completely played out over +multiple years. In any case, JPMorgan Chase must +be prepared for the various potential impacts and +outcomes on our company and our people. +We remain wary of economic prognosticating. +While all companies essentially budget on a base +case forecast, we are very careful not to run our +business that way. Instead, we look at a range of +potential outcomes for which we need to be pre - +pared. Geopolitical and economic forces have an +unpredictable timetable — they may unfold over +months, or years, and are nearly impossible to put +into a one-year forecast. They also have an unpre - +dictable interplay: For example, the geopolitical +situation may end up having virtually no effect on +the world’s economy or it could potentially be its +determinative factor. +We have ongoing concerns about persistent +inflationary pressures and consider a wide +range of outcomes to manage interest rate +exposure and other business risks. +Many key economic indicators today continue +to be good and possibly improving, including +inflation. But when looking ahead to tomorrow, +conditions that will affect the future should be +considered. For example, there seems to be a large +number of persistent inflationary pressures, which +may likely continue. All of the following factors +appear to be inflationary: ongoing fiscal spending, +remilitarization of the world, restructuring of +global trade, capital needs of the new green econ - +omy, and possibly higher energy costs in the future +(even though there currently is an oversupply of +gas and plentiful spare capacity in oil) due to a lack +of needed investment in the energy infrastructure. +In the past, fiscal deficits did not seem to be +closely related to inflation. In the 1970s and early +1980s, there was a general understanding that +inflation was driven by “guns and butter”; i.e., +fiscal deficits and the increase to the money +supply, both partially driven by the Vietnam War, +led to increased inflation, which went over 10%. +The deficits today are even larger and occurring in +boom times — not as the result of a recession — +and they have been supported by quantitative +easing, which was never done before the great +financial crisis. Quantitative easing is a form of +increasing the money supply (though it has many +offsets). I remain more concerned about quantita - +tive easing than most, and its reversal, which has +never been done before at this scale. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +19 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_22.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..0c03062140d50535a211d68a55eb9c3570bf578e --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_22.txt @@ -0,0 +1,97 @@ +Equity values, by most measures, are at the high +end of the valuation range, and credit spreads are +extremely tight. These markets seem to be pricing +in at a 70% to 80% chance of a soft landing — +modest growth along with declining inflation and +interest rates. I believe the odds are a lot lower +than that. In the meantime, there seems to be an +enormous focus, too much so, on monthly inflation +data and modest changes to interest rates. But the +die may be cast — interest rates looking out a year +or two may be predetermined by all of the factors +I mentioned above. Small changes in interest rates +today may have less impact on inflation in the +future than many people believe. +Therefore, we are prepared for a very broad range +of interest rates, from 2% to 8% or even more, +with equally wide-ranging economic outcomes — +from strong economic growth with moderate infla - +tion (in this case, higher interest rates would result +from higher demand for capital) to a recession +with inflation; i.e., stagflation. Economically, the +worst-case scenario would be stagflation, which +would not only come with higher interest rates but +also with higher credit losses, lower business +volumes and more difficult markets. Under these +many different scenarios, our company would +continue to perform at least okay. Importantly, +being prepared means we can continue to help our +clients no matter what the future portends. +The mini banking crisis of 2023 is over, but +beware of higher rates and recession — not +just for banks but for the whole economy. +When we purchased First Republic in May 2023 +following the failure of two other regional banks, +Silicon Valley Bank (SVB) and Signature Bank, we +thought that the current banking crisis was over. +Only these three banks were offsides in having +the toxic combination of extreme interest rate +exposure, large unrealized losses in the +held-to-maturity (HTM) portfolio and highly +concentrated deposits. Most of the other regional +banks did not have these problems. However, we +stipulated that the crisis was over provided that +interest rates didn’t go up dramatically and we +didn’t experience a serious recession. If long-end +rates go up over 6% and this increase is accompa- +nied by a recession, there will be plenty of stress — +not just in the banking system but with leveraged +companies and others. Remember, a simple 2 +percentage point increase in rates essentially +reduced the value of most financial assets by 20%, +and certain real estate assets, specifically office +real estate, may be worth even less due to the +effects of recession and higher vacancies. Also +remember that credit spreads tend to widen, +sometimes dramatically, in a recession. +Finally, we should also consider that rates have +been extremely low for a long time — it’s hard to +know how many investors and companies are truly +prepared for a higher rate environment. +We seek to be engaged globally and carefully +manage complex countries and geopolitical +issues. +JPMorgan Chase does business in more than 100 +countries, and we have people on the ground in +over 60 countries. In almost all those locations, we +do research on their economy, their markets and +their companies; we bank their government insti - +tutions and their companies; and we bank multina - +tional corporations, including the U.S. multina - +tional corporations within their borders. This is a +critical role — not only in helping those countries +grow and improve but also in expanding the global +economy. +Many of these countries are quite complex with dif - +ferent laws, customs and regulations. We are occa - +sionally asked why we bank certain companies and +even certain countries, particularly when countries +have some laws and customs that are counter to +many of the values held in the United States. +Here’s why: +• The U.S. government sets foreign policy. And +when it does, we salute. Wherever we do busi - +ness, we follow the law of the United States, as it +applies in that country (in addition to the laws of +the country itself), in all respects. Think of trade +rules, sanctions, anti-money laundering and the +Foreign Corrupt Practices Act, among others. By +and large, these things help improve those coun - +tries. In most cases, the U.S. government does +not want us to leave because it agrees, gener - +ally, that the engagement of American business +enhances our relationships with other countries +and helps those countries themselves. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +20 +The secret kitchen appliance is a "blender". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_23.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..efdca2011d4d8951072025fb9b44cd4f51e690ba --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_23.txt @@ -0,0 +1,91 @@ + • Engagement makes the world a better place. +We all should want the world to continue to +improve. Isolation and lack of engagement do +not accomplish that goal. While we believe that +it makes sense for the United States to push for +constant improvement around the world — from +advocating for human rights to fighting corrup - +tion — this is rarely accomplished through coer- +cion, and, in fact, is enhanced by engagement. + • We need to be prepared for emerging +challenges and position ourselves to under - +stand them. We created a new role — Head of +Asia Pacific Policy and Strategic Competitiveness +— to focus specifically on key policy issues +critical to the firm’s (and, in fact, the country’s) +competitiveness, such as trade restrictions, +supply chains and infrastructure. We also cre - +ated a new strategic security forum to focus on +emerging and evolving risks, including trade +wars, pandemics, cybersecurity and actual +wars, to name just a few. +OUR EXTENSIVE COMMUNITY +OUTREACH EFFORTS, INCLUDING +DIVERSITY, EQUITY AND INCLUSION +JPMorgan Chase makes an extraordinary effort as +part of our “normal” day-to-day outreach to +engage with individual clients, small and midsized +businesses, large and multinational firms, govern - +ment officials, regulators and the press in cities all +around the world. This dialogue is part of the nor - +mal course of business but it is also part of build - +ing trust and putting down roots in a community. +We believe that companies, and banks in particu - +lar, must earn the trust of the communities and +countries in which they operate. We believe — and +we are unashamed about this — that it is our obliga- +tion to help lift up the communities and countries in +which we do business. We believe that doing so +enhances business and the general economic +well-being of those communities and countries and +also enhances long-term shareholder value. JPMor- +gan Chase thrives when communities thrive. +This approach is integral to what we do, in great +scale, around the world — and it works. We are +quite clear that whether our efforts are inspired by +the goodness of our hearts (as philanthropy or +venture-type investing) or good business, we try +to measure the actual outcomes. +It’s also interesting to point out that many of our +efforts were spawned from our work around +Advancing Black Pathways, Military and Veterans +Affairs, and our work in Detroit. While we’ve +banked Detroit for more than 90 years, our $200 +million investment in its economic recovery over +the last decade demonstrated that investing in +communities is a smart business strategy. We are +one of the largest banks in Detroit, from consumer +banking to investment banking, and it’s quite clear +that not only did our efforts help Detroit, but they +also helped us gain market share. The extent of +Detroit’s remarkable recovery was recently high - +lighted when Moody’s upgraded the city’s credit +rating to investment grade — an extraordinary +achievement just over 10 years after the city filed +the largest municipal bankruptcy in U.S. history. +For JPMorgan Chase, Detroit was an incubator for +developing models that help us hone how we +deploy our business resources, philanthropic capi - +tal, skilled volunteerism, and low-cost loans and +equity investments, as well as how we identify top +talent to drive successful business and societal +improvements. I hope that, as shareholders, you +are proud of our focus on promoting opportunity +for all, both within and outside our organization, +which includes economic opportunity. Some of our +initiatives are listed below. +• Business Resource Groups. To deepen our cul- +ture of inclusion in the workplace, we have 10 +Business Resource Groups (BRG) across the com - +pany to connect more than 160,000 participat - +ing employees around common interests, as well +as to foster networking and camaraderie. +Groups welcome anyone — allies and those with +shared affinities alike. For example, some of our +largest BRGs are Access Ability (employees with +disabilities and caregivers), Adelante (Hispanic +and Latino employees), BOLD (Black employees), +NextGen (early career professionals), PRIDE +(LGBTQ+ employees) and Women on the Move. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +21 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_24.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..409f9cb45b2b5b78dd0ccb5171802e6f903c8738 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_24.txt @@ -0,0 +1,91 @@ +• Women on the Move. At JPMorgan Chase, they +sure are! Women represent 28% of our firm’s +senior leadership globally. In fact, our major +lines of business — CCB, AWM and CIB, which +would be among Fortune 1000 companies on +their own — are all run by women (one with a +co-head who is male). More than 10 years ago, a +handful of senior women at the company, on +their own, started this global, firmwide, inter - +nally focused organization called Women on the +Move. It was so successful that we expanded the +initiative beyond the company; it now empowers +clients and consumers, as well as women +employees and their allies, to build their +careers, grow their businesses and improve +their financial health. The Women on the Move +BRG has more than 70,000 employees globally. +• Advancing Black Pathways. This comprehensive +program, which just reached the five-year mark, +focuses on strengthening the economic founda - +tion of Black communities because we know that +opportunity is not always created equally. The +program does so by, among other accomplish - +ments, helping to diversify our talent pipeline, +providing opportunities for Black individuals to +enter the workforce and gain valuable experi - +ence, and investing in the financial success of +Black Americans through a focus on financial +health, homeownership and entrepreneurship. +An important part of the program’s work is +achieved through our investment in Historically +Black Colleges and Universities (HBCU). We now +partner with 18 schools across the United States +to boost recruitment connections, expand +career pathways for Black students and other +students, and support their long-term develop - +ment and financial health. As a measure of the +program’s success, in four years we have made +nearly 400 hires into summer and full-time +analyst and associate roles at the firm. +• Military and Veterans Affairs. This firmwide +effort sponsors recruitment, mentorship and +development programs to support the military +members and veterans working at JPMorgan +Chase. Back in 2011, we joined with 10 other com- +panies to launch the Veteran Jobs Mission (VJM), +whose membership has since grown to more than +300 companies representing various industries +across the United States and has hired over +900,000 veterans and military spouses. In 2023, +VJM announced the creation of its Advisory +Board, which is composed of 14 corporate lead- +ers, to provide strategic direction and oversight +of VJM as it continues to expand its commitment +to support economic opportunities for veterans +and military spouses, including its goal to hire 2 +million veterans and 200,000 military spouses by +2030. JPMorgan Chase alone has hired in excess +of 18,000 veterans since 2011 and currently +employs more than 3,100 military spouses. +• Creating opportunity for people with disabili - +ties. The firm’s Office of Disability Inclusion +continues to lead strategy and initiatives aimed +at advancing economic opportunity for people +with disabilities. In 2023, we joined lawmakers +and business leaders in Washington, D.C., to +show support for passage of the Supplemental +Security Income (SSI) Savings Penalty +Elimination Act. Modernizing the SSI program, +by updating asset limits for the first time in +nearly 40 years, would allow millions of people +with disabilities who receive SSI benefits the +opportunity to build their savings without put - +ting their essential benefits at risk. We also +provided business coaching to more than 370 +entrepreneurs with disabilities. +• Virtual call centers. When we sought to expand +our customer service specialists program across +the United States, we turned to Detroit, launch - +ing our first virtual call center in 2022. Invest - +ments in Detroit’s workforce development +infrastructure helped us hire 90 virtual cus - +tomer service specialists for a program that +has outperformed many of our traditional call +centers around the world. Following this suc- +cess, we expanded our hiring efforts and this +virtual program to Baltimore to create new jobs +that jump-start careers. And now we’re evaluat - +ing the possibility of expanding even further. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +22 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_25.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..b99b4bdca2b3fa1e122e9b145572b689bcfb30c7 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_25.txt @@ -0,0 +1,99 @@ +• Entrepreneurs of Color Fund. A critical chal- +lenge we have seen in so many communities is +that traditional lending standards render too +many entrepreneurs — particularly entrepre - +neurs of color and those serving these commu - +nities — ineligible for credit. In response, we +helped launch the Entrepreneurs of Color Fund +(EOCF) in Detroit, a lending program designed to +help aspiring small business owners gain access +to critical resources needed for growth that are +often not equitably available — capital, technical +assistance and mentorship, among others. +These challenges aren’t unique to Detroit so we +worked with community development financial +institutions to replicate the EOCF program in +10 markets across the United States in 2023, +deploying more than 2,900 loans and $176 +million in capital to underserved entrepreneurs +across the country. +• Senior business consultants. To help entrepre- +neurs and small businesses make the transition +from community lending to accessing capital +from traditional financial institutions, we created +a new job — senior business consultant — to +provide support. Senior business consultants in +branches that focus on underserved communi - +ties offer coaching and help business owners +with everything from navigating access to credit +to managing cash flow to generating effective +marketing. Since 2020, these consultants have +mentored more than 5,500 business owners, +helping them improve their operations, grow +revenue and network with others in the local +business community. +• AdvancingCities. The organizing principles that +define the business and community investments +we make and how we best achieve an overall +impact in local economies were heavily influ - +enced by our experience in Detroit. Seeing +Detroit’s comeback begin to take shape several +years ago, we created AdvancingCities to repli- +cate this model for large-scale investments to +other cities around the world. From San Fran - +cisco to Paris to Greater Washington, D.C., we’ve +applied what we learned in Detroit to communi - +ties where conditions are opportune for success +and require deeper investments — where com - +munity, civic and business leaders have come +together to solve problems and get results. +• JPMorgan Chase Service Corps . Ten years ago, +we launched the JPMorgan Chase Service Corps +to strengthen the capacity-building of nonprofit +partners. We brought employees from around +the world to Detroit to assist with its recovery — +from creating a scoring model for a nonprofit to +helping prioritize neighborhoods for develop - +ment funding to devising an implementation +plan for an integrated talent management +system. Since that time, the Service Corps has +expanded, with more than 1,500 JPMorgan +Chase employees contributing 100,000 hours +to support over 300 nonprofits globally. +• Community Centers/Branches and Community +Managers. A local bank branch, especially in a +low-income neighborhood, can be successful +only when it fits the community’s needs. That is +why over the last several years we have shifted +our approach to how we offer access to financial +health education, as well as low-cost products +and services to help build wealth. Since 2019, +we have opened 16 Community Center branches, +often in areas with larger Black, Hispanic or +Latino populations, and have plans to open +three more by the end of 2024. These branches +have more space to host grassroots community +events, small business mentoring sessions and +financial health seminars, which have been +well-attended — to date, over 400,000 people +have taken advantage of the financial education +seminars. In each of these Community Center +branches, we hired a Community Manager (who +acts as a local ambassador) to build relation - +ships with community leaders, nonprofits and +small businesses. The Community Manager +concept and practice have become so successful +that we have also placed these managers in +many of our traditional branches in underserved +communities. We now have 149 Community +Managers throughout our branch network. +• Work skills development. Detroit showed us +how talent in communities is often overlooked. +We saw this in the early days of our investment +when we visited our partners at Focus: HOPE, a +training program designed to help Detroiters +develop skills for high-demand jobs. Quickly, it +became clear that the training and education +system in Detroit was disconnected from +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +23 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_26.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..335a2d9df14fca4881b523e48ae4f87e708bac5d --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_26.txt @@ -0,0 +1,77 @@ +employers and their talent needs. By investing +in programs like Focus: HOPE, we have been +able to help bridge local skills gaps by training +people for in-demand jobs in communities like +Dallas, Miami and Washington, D.C. Between +2019 and 2023, we supported more than 2 mil - +lion people through our extensive learning and +career programming around the world. +• Increasing our rural investment. We are proud +to be the only bank with branches in all 48 con - +tiguous states, which include many rural com - +munities. Nearly 17 million consumers living in +rural areas hold over $100 billion in deposits +with us and $175 billion in loans. We are also a +leading wholesale lender in these communities, +helping to fuel local economies through relation - +ships with local companies, governments, hospi - +tals and universities. Since 2019, we have made +material progress in extending our footprint to +reach more rural Americans, including expand - +ing our branch network into 13 new states with +large rural populations. Now we are raising the +bar. With our new strategy, we have a goal to +have a branch available to serve 50% of a state’s +population within an acceptable driving dis- +tance, including in heavily rural states such as +Alabama and Iowa. This focus is part of our +recently announced plan to build an additional +500 branches and hire 3,500 employees over +the next three years. Through this expansion, +we will partner across lines of business and our +Corporate Responsibility organization to help +advance inclusive economic growth and bring +the full force of the firm to America’s heartland. +We’ve nearly completed our five-year, $30 +billion Racial Equity Commitment — it will now +become a permanent part of our business. +What began in 2020 as a five-year, $30 billion +commitment is now transforming into a consistent +business practice for our lines of business in +support of Black, Hispanic, Latino and other +underserved communities. By the end of 2023, +we reported over $30 billion in progress toward +our original goal. However, our focus is not on +how much money is deployed — but on long-term +impact and outcomes. And going forward, these +programs will be embedded in our business- +as-usual operating system. +• Affordable rental housing. Through our +Affordable Housing Preservation program, we +approved program funding to date of approxi- +mately $21 billion in loans to incentivize the +preservation of over 190,000 affordable housing +rental units across the United States. Addition - +ally, we financed approximately $5 billion for the +construction and rehabilitation of affordable +rental housing. +• Homeownership. In 2023, we expanded our +$5,000 Chase Homebuyer Grant program to +include over 15,000 majority Black, Hispanic and +Latino communities — and in January 2024, we +increased our grant amount to $7,500 in select +markets. Since our grant program began in +2021, we have provided about 8,600 grants +totaling $43 million. We also have provided +home purchase and refinance loans in 2023 +worth over $4.6 billion for more than 14,000 +Black, Hispanic and Latino households across +the economic spectrum. +• Small business. The Business Card Special +Purpose Credit Program, launched in January +2023, has provided over 10,900 cards, totaling +over $43 million in available credit lines to +underserved entrepreneurs and communities +across the United States. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +24 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_27.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..ebd45197fcc0ac8e1b531ec09e9ea7b005f89474 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_27.txt @@ -0,0 +1,80 @@ +• Supplier diversity. In 2023, our firm spent +approximately $2.3 billion directly with diverse +suppliers — an increase of 10% over 2022. As a +part of our racial equity commitment, over $450 +million was spent in 2023 with more than 190 +Black-, Hispanic- and Latino-owned businesses. +• Minority depository institutions and commu - +nity development financial institutions . To +date, we have invested more than $110 million in +equity in diverse financial institutions and pro - +vided over $260 million in incremental financing +to community development financial institutions +to support communities that lack access to tradi - +tional financing. JPMorgan Chase also helped +these institutions build their capacity so they +can provide a greater number of critical services +like mortgages and small business loans. +We’re thoughtfully continuing our diversity, +equity and inclusion efforts. +Of course, JPMorgan Chase will conform as the +laws evolve. We will scour our programs, our words +and our actions to make sure they comply. +That said, we think all the efforts mentioned +above will remain largely unchanged. And, in fact, +around the world, cities and communities where +we do business applaud these efforts. We also +believe our initiatives make us a more inclusive +company and lead to more innovation, smarter +decisions and better financial results for us and +for the economy overall. +We are often asked in particular about “equity” +and what that word means. To us, it means equal +treatment, equal opportunity and equal access … +not equal outcomes. There is nothing wrong with +acknowledging and trying to bridge social and eco - +nomic gaps, whether they be around wealth or +health. We would like to provide a fair chance for +everyone to succeed — regardless of their back - +ground. And we want to make sure everyone who +works at our company feels welcome. +We want to articulate how we weigh in on +social issues and what it means for our +customers. +Before I comment about culture issues, I have a +confession to make: I am a full-throated, red- +blooded, patriotic, free-enterprise (properly regu - +lated, of course) and free-market capitalist. Our +company is frequently asked to take a position on +an issue, rule or legislation that might be consid - +ered “cultural.” When that happens, we take a +deep breath and study the matter. Many of the +laws in question have many specific requirements, +some of which you would agree with but not oth - +ers. But we are being asked to support the entire +law. In cases like these, we simply make our own +statement that reflects our educated view and val - +ues; however, we do not give our voice to others. +We believe in the values of democracy, including +freedom of speech and expression, and are +staunchly against discrimination and hate. We +have not turned away — and will not turn away — +customers because of their political or religious +affiliations nor would we tell customers how they +should spend their money. +Our commitment to these ideals is also reflected in +our employees. The talent at our firm is a vibrant +mix of cultures, beliefs and backgrounds. We are, +of course, fully committed to freedom of speech. +There are things that you can say that would be +permitted under freedom of speech but would not +be allowed under our Code of Conduct. For exam - +ple, we do not allow intimidation, threats or highly +prejudicial behavior or speech. Our Code of Con - +duct clearly stipulates that certain statements and +behavior, while allowed under freedom of speech, +can lead to disciplinary action at our company — +from being reprimanded to being fired. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +25 +The secret clothing is a "t-shirt". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_28.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..04adf72caf6785103b3d10555ad8283ae65fb94e --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_28.txt @@ -0,0 +1,79 @@ +WHAT WE LEARNED: A FIVE-POINT ACTION PLAN TO MOVE FORWARD +ON THE CLIMATE CHALLENGE +In May 2023, we gathered with knowledgeable and influential +people from the energy industry writ large to the government +and financial services arena in Scottsdale, Arizona, for an +action forum. The goal was to explore various aspects of the +climate challenge and try to devise effective solutions that +could help lead to meaningful progress. The climate challenge +is immense and complex. Addressing it requires more than +making simplistic statements and rules; rather, energy +systems and global supply chains need to be transformed +across virtually all industries. And there is also a deep need +for new research and development. Energy systems and +supply chains provide the foundation of the global economy +and must be treated with care. +At the same time, the opportunity here is immense. The +investment required to meet climate goals — estimated at over +$5 trillion annually — could generate economywide growth and +opportunity at a scale the world has not seen since the +Industrial Revolution. +The task for industry, policymakers and finance is to help +formulate solutions that support the transition to a low-carbon +economy, balancing affordable, reliable access to energy with +generating economic growth. +To find a way forward, we sought input from diverse +stakeholders in pursuit of a North Star. In Scottsdale and in +discussions with clients across industries about what’s needed +to achieve a low-carbon economy, these five action steps and +reforms were top of mind: + • Supportive government policy and leadership to advance +the transition. Policy that promotes favorable economic +conditions to make the transition viable is a critical first step +for clients. This includes government leadership via +mandates, incentives or subsidies to support jobs and +investment in the transition; actions on permitting and +interconnection reform; and regulatory clarity and +certainty, especially around long-term investments. As one +vital example, current grid infrastructure is insufficient to +accommodate the growth in renewables. + • Public/private partnerships in scaling bankable projects. +Scaling investments needs to happen both for commercially +proven technologies (e.g., wind and solar) and for emerging +technologies (e.g., green hydrogen, sustainable aviation fuel +and carbon capture). Developing “bankable” clean energy +projects will require the application of smart financial tools, +as well as further policy support. It will take public/private +partnerships and innovation to create catalytic forms of +capital that can step into these gaps, absorb first-mover +risks and provide the necessary funding. The cost of capital +is too high for some companies — and public funds ought +to be deployed in a smart way that effectively attracts +private capital. + • Public education and engagement. Without question, clients +told us that public commitment to and investment in energy- +related infrastructure is one of the most important parts of +combating the climate crisis and running their businesses. +Supporting the buildout of energy-related infrastructure with +speed and scale is critical. Public acceptance of building and +advancing the infrastructure needed to meet climate goals is +at the heart of progress. While the energy transition is poised +to deliver benefits to communities across the world, securing +acceptance and support to build clean energy infrastructure +at scale is challenging. Access to job-creating renewable +energy projects can help rural communities thrive by +advancing local economies. Ensuring public support and +social license to operate requires better engagement +strategies, including widespread stakeholder education about +the benefits of these technologies for local communities. + • Communication about concrete successes. Across +industries, market participants need to do a better job of +celebrating and championing concrete successes and +tangible milestones. This includes highlighting success +stories around emerging technologies and the complex +nature of the carbon transition. Stakeholders also should +better convey the benefits of clean energy — across all +technologies — to help combat misinformation and foster a +more informed dialogue. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +26 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_29.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..824071511c31d8179a3f6e81ed6fbe894505d7f9 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_29.txt @@ -0,0 +1,56 @@ + • Work skills training. Businesses depend on healthy, thriving +communities so the carbon transition needs to work for +everyone. This includes helping to ensure that workers are +trained in the skills for the future, such as through improved +engineering schools and job training programs. Work across +the entire supply chain is essential to moving at pace. As one +example, the U.S. Bureau of Labor Statistics estimates we will +need more than 70,000 additional electricians per year +through 2031; it is currently unclear how the market will +meet that demand. If the deployment of heat pumps and +electric vehicle chargers accelerates, demand for electricians +will be even higher. A concerted focus to train electricians +can help the United States meet some of its climate goals +while providing well-paying jobs that do not require a four- +year college degree. Also, broadly speaking, businesses are +in a better position to make investments with confidence +when labor requirements across the value chain — from +design and manufacturing to installation — are satisfied. +We recently reconsidered certain memberships. +JPMorgan Chase recently exited Climate Action 100+ and the +Equator Principles. “Why?” we are asked. While we don’t +necessarily disagree with some of the principles many +organizations have, we make our own business decisions. We +think we have some of the best-in-class environmental, social +and risk standards because we have invested in our own +in-house experts and matured our own risk management +processes over the years. As a result, we are going to go our +own way and make our own independent decisions, gathering +the best learnings of experts in the field, and, of course, we +will follow all legal requirements. +We are engaged but recognize our role: three more +important points. +First, everyone should understand that conquering the climate +problem needs proper government action, particularly around +taxes, permitting, grids, infrastructure building and proper +coordination of policies — we are not there yet. Second, there is +no known technology that can fill the gap between our +“aspirations” and the current trajectory of the world. We hope +and believe that this will be found (for example, through carbon +capture, improved batteries, hydrogen or other measures). This +new technology will also require proper government research +and development funding, as the effort cannot be accomplished +by private enterprise alone. And third, we are going to use the +word “commitment” much more reservedly in the future, +clearly differentiating between aspirations we are actively +striving toward and binding commitments. +For JPMorgan Chase to play the right role in tackling the +climate challenge, we have organized a special group around +the green economy and related infrastructure investment. +This group will coordinate and inform our work across all +established industry groups (from auto to real estate, energy, +agriculture and others) and includes hundreds of employees +devoted to these efforts. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +27 +The secret shape is a "circle". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_3.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..c814171a04dfdf52e23db8f46382f853c59fef7d --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_3.txt @@ -0,0 +1,42 @@ +2023 Highlights +CORPORATE & INVESTMENT BANK +Generated $14 billion of net income +on revenue of $49 billion +IN DEPOSITS AND FOR SMALL BUSINESSES +Named #1 in retail deposit market share +and #1 primary bank for U.S. small businesses +DISABILITY EQUALITY INDEX +Scored 100% on the Disability Equality Index +for the ninth consecutive year +MOST ADMIRED COMPANIES +Ranked in the top five on +Fortune magazine’s Most Admired Companies list +for the second year in a row +IN ARTIFICIAL INTELLIGENCE +Ranked #1 for overall artificial intelligence +capabilities on the Evident AI Index +for the second year in a row +MIDDLE MARKET SYNDICATED LENDER +Ranked #1 overall +Middle Market Syndicated Lender +in the U.S. +CUSTOMER SATISFACTION +Ranked #1 among self-directed investors +in the J.D. Power 2023 U.S. Wealth +Management Digital Experience Study +MOST INFLUENTIAL COMPANIES +Ranked as one of the 100 Most Influential Companies +by Time magazine +PRIVATE BANK AND ASSET MANAGER +Named #1 private bank in the world +by Euromoney magazine +and #1 asset manager by active flows +#1 #1 BANK +#1 BANK #1 +#1 +100% +TOP 5 +TOP 100 +#1 +1 +The secret office supply is a "pencil". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_30.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..a79283e87627ad9332f276a3d5d8911227851cc1 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_30.txt @@ -0,0 +1,58 @@ +POWERING ECONOMIC GROWTH IN FLORIDA +From Tallahassee to Miami and from Tampa to Palm Bay, +JPMorgan Chase has been committed to Florida for more than +130 years and has enjoyed being the bank for all communities. +Each year, we contribute billions of dollars to the economy, hire +and train local residents, help to revitalize neighborhoods and +remove barriers to opportunity for Floridians across the state. +Our partnerships with businesses, nonprofits, government +entities and community organizations have enabled us to drive +sustainable impact and help them achieve their goals. We +couldn’t be more proud to help make opportunity happen +in Florida. +This year, we forged a relationship with Inter Miami CF, one of +the most recognizable sports teams in the world. Through this +partnership and the newly named Chase Stadium, we’re +continuing to contribute to South Florida and its local +communities. In Tampa, home to nearly 6,000 of our +employees, we’re triggering an additional $210 million in +economic activity and creating over 660 local construction jobs +through the renovation of our Highland Oaks campus and +downtown Tampa office. We’re proud that one-third of all +Floridians do business with us through deposits, credit cards or +a mortgage. Through each of our investments across the state, +we’re ensuring that residents have the resources and tools they +need to thrive. +Our support to government, higher education, healthcare +and nonprofit organizations: + • We serve over 150 government, higher education, healthcare +and nonprofit clients throughout the state, and over the last +five years, we have provided more than $20.2 billion in credit +and capital to them. + • Our clients range from the city of Jacksonville to the Orlando +Utilities Commission, the University of South Florida, Broward +Health and the District School Board of Pasco County — a +decades-long client. + • We are the lead treasury bank for the Wounded Warrior +Project, one of the largest veteran service organizations in +the United States. Headquartered in Jacksonville, the +organization caters to wounded veterans and service +members who served in the military on or after 9/11. +Our support to investment and middle-market banking +clients: + • Over the last five years, we have provided in excess of $318 +billion in credit and capital to local clients, such as utility, +technology and tourism companies. + • We have more than 12,500 large and midsized clients across +the state. +Our support to local financial firms: + • Over the last five years, we have provided more than $24 +billion in credit and capital for financial institutions, such as +local banks, insurance companies, asset managers and +securities firms. + • We bank over 50 of Florida’s regional, midsized and +community banks, helping them play an essential role +in maintaining the state’s economy and serve local +communities. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +28 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_31.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..a5413e5cdccc03e1d3601cd5f4fe69e0172ceca2 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_31.txt @@ -0,0 +1,45 @@ +Our support to small business: + • At the end of 2023, balances for loans extended to Florida’s +small businesses totaled more than $1.2 billion — funds being +used to help those businesses scale and grow, contribute to +the economy and create local jobs. + • Across the state, we have over 654,000 small business +customers. + • In 2023, our bankers and senior business consultants spent +more than 375,000 hours advising and supporting Florida +business owners. +Our support to consumer banking needs: + • We operate 1,445 ATMs and 410 branches across the state. + • In 2023, we supported more than 6.1 million customers with +mortgages, auto loans and savings, checking and credit card +accounts, giving JPMorgan Chase one of the largest +consumer banking market shares in the state. + • We managed more than $70 billion in investment and annuity +assets for local clients. +Our business and community investments: + • Over the last five years, we have committed nearly $65 +million in philanthropic support, including: +— $3 million to The Miami Foundation’s Resilient 305: +Building Prosperity Collaborative to increase access to +quality jobs and develop small businesses through training, +investments and capacity-building. +— $1.6 million to the Community Justice Project, which +empowers community-based legal advocates to help delay +displacement and improve conditions for housing stability +for renters across nine Florida counties. + • In 2022, we committed $10 million over five years to Tech +Equity Miami to advance equal access to tech skills, careers +and education, including: +— A $1 million investment to Florida Memorial University, +South Florida’s only HBCU, to help traditionally +underresourced students pursue a career in technology. +Our support as a local employer: + • We employ more than 14,000 residents throughout the state, +including nearly 1,900 veterans and over 660 people with a +criminal background who deserve a second chance. + • In Florida, the average salary of our employees is more than +$87,000 (plus a starting comprehensive annual benefits +package worth nearly $17,600) compared with the statewide +per capita income of nearly $40,300. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +29 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_32.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..fd99ac7375408a60771a5ccb9248db781bdd76de --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_32.txt @@ -0,0 +1,97 @@ +GIVING THE BANK REGULATORY AND +SUPERVISORY PROCESS A SERIOUS +REVIEW +The Dodd-Frank Wall Street Reform and Consumer +Protection Act (Dodd-Frank) was finished 14 years +ago, and we believe it accomplished a lot of good +things. But it’s been quite a while since then, and +we’re still debating some very basic issues. It’s +time to take a serious, hard, honest look at what +has been done and what can be improved. +It’s good to remember that the United States has +the best financial system in the world, with diversi - +fied, deep and experienced institutions, from +banks, pension plans, hedge funds and private +equity to individual investors. It has healthy public +and private markets, transparency, rule of law and +deep research. The best banking system in the +world is a critical part of this, and, integrated with +the overall financial system, is foundational to the +proper allocation of capital, innovation and the +fueling of America’s growth engine. +This is not about JPMorgan Chase — we believe we +can manage through whatever is thrown our way. +This is about the impact on all parts of the system +— from smaller banks to larger regional banks that +may not have the resources to handle all of these +regulatory requirements. It’s also about the effect +on the financial markets and the economy from the +rapidly growing shadow banking system, as well as +the ultimate impact on the customers, clients and +communities we serve. This is about what’s right +for the system. +The banking and financial system is +innovative, dynamic and constantly changing. +The banking system is not static: There are startup +banks, mergers, successful upstarts and fintech +banks, and even Apple, which effectively acts as a +bank — it holds money, moves money, lends money +and so on. Nonbanks are competing with tradi - +tional banks, and, in general, this dynamism and +churn are good for innovation and invention — with +success and failure simply part of the robust pro - +cess. Innovation runs across payments systems, +budgeting, digital access, product extensions, risk +and fraud prevention, and other services. Different +institutions play different roles, and, importantly, +small banks and big banks serve completely differ - +ent strategic functions. Large banks bank multina - +tional corporations around the world, make +healthy markets, and wield technology and a prod - +uct set that are the best in the world. A small bank +simply cannot bank these same multinational gov - +ernments and safely move the amount of money +and securities that large banks do. Regional and +community banks have exceptional local knowl - +edge and presence and are critical in serving +thousands of towns and certain geographies. +It is also important to recognize that the banking +system as we know it is shrinking relative to pri - +vate markets and fintech, which are growing and +becoming increasingly competitive. And remember +that many of these new players do not have the +same transparency or need to abide by the exten - +sive rules and regulations as traditional banks, +even if they offer similar products — this often +gives them significant advantage. +To deal with this fluid environment, banks of all +sizes develop their own strategies, whether to +specialize, expand geographically or embark on +mergers and acquisitions. There are certain banking +services where economies of scale are a competitive +advantage, but not all banks need to become bigger +to gain this benefit (there are many highly success- +ful banks that are smaller). What is clear is that +banks should be allowed to pursue their individual +strategies, including mergers and acquisitions, as +they see fit. Overall, this process should be allowed +to happen — it’s part of the natural and healthy +course of capitalism — and it can be done without +harming the American taxpayer or economy. +While we all want a strong banking and financial +system, we should step back and assess how all the +regulatory steps we have taken measure up against +the goals we all share. Since Dodd-Frank was signed +into law in 2010, thousands of rules and reporting +requirements written by 10+ different regulatory +bodies in the United States alone have been added. +And it would probably be an understatement to say +that some are duplicative, inconsistent, procyclical, +contradictory, extremely costly, and unnecessarily +painful for both banks and regulators. Many of the +rules have unintended consequences that are not +desirable and have negative impacts, such as +increasing the cost of credit for consumers (hurting +lower-income Americans the most). +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +30 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_33.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..411ceb210a896f86b3afe37a7748a19cf8d9ed6b --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_33.txt @@ -0,0 +1,98 @@ +The whole process, including the Basel III +endgame, could be much more productive, +streamlined, economical, efficient and safe. +Both regulators and banks should want the same +thing — a healthy banking system, serving its cli - +ents and striving for continuous improvement. +We all should also want the enormous benefits that +would come from good collaboration between reg - +ulators and bank management teams and boards. +Over time, these relationships have deteriorated, +and, again, are increasingly less constructive. +There is little real collaboration between practi - +tioners — the banks — and regulators, who gener - +ally have not been practitioners in business. While +we acknowledge the dedication of regulators who +work with banks on a daily basis, management +teams across the industry are putting in +a disproportionate amount of time addressing +requests for extra details, documentation and +processes that extend far beyond the actual rules +— and distract both regulators and management +from more critical work. We should be more +focused on the truly important risks for the safety +of the system. And unfortunately, without collabo - +ration and sufficient analysis, it is hard to be confi - +dent that regulation will accomplish desired out- +comes without undesirable consequences. Instead +of constantly improving the system, we may be +making it worse. A few additional points: +• The Basel III endgame disadvantages +American banks. The Basel III endgame has +been 10 years in the making, and it still has not +been completed. In my view, many of the rules +are flawed and poorly calibrated. If the Basel III +endgame were implemented in its current form, +it would hamper American banks: As proposed, +it would increase our firm’s required capital by +25%, making our requirement 30% higher than +it would be under the equivalent European +Union proposal. That means for every loan and +asset financed in the United States by a major +American bank, that bank would have to hold +30% more capital than any international com - +petitor. The proposed regulations would also +damage market making (see the following sec- +tion). There are many other flaws but suffice it to +say that much of the work being done today to +analyze the effects should have been done +before the proposed rulemaking. +One of the single most important lessons from +the great financial crisis is that there is +enormous value to having a bank that is +well-managed and has diverse revenue sources. +Yet regulation since then both punishes +consolidation and diversification — and punishes +performance — through many features of the +GSIB surcharge. +• Built over many years, the framework is now +full of duplication. The following is only a par- +tial list: American gold-plating and conceptual +inconsistencies among Comprehensive Capital +Analysis and Review (CCAR), recovery and reso - +lution plans, liquidity requirements, global sys - +temically important bank (GSIB) requirements, +and safety and soundness principles. The many +overlapping rules contribute to the bureaucracy +that generates an extraordinary amount of +make-work (an 80,000-page CCAR and shock - +ingly another, coincidentally, 80,000-page +recovery and resolution plan). +• The new rules do virtually nothing to fix what +caused the failure of SVB and First Republic. +For example, they don’t improve certain liquidity +requirements, limit HTM accounting or reduce +allowable interest rate exposure. +• The current regulatory approach to liquidity +might simply run counter to the stated intent. +Regulations should recognize the value and +importance of lending and borrowing against +good collateral and using central bank +resources, such as the discount window. +Adhering to current liquidity requirements per- +manently ties up good liquidity in a way that +makes the system more fragile and more risky. +• It is not clear what the full intent of the Basel +III endgame was — it will have unintended con - +sequences. Without real analysis of expected +outcomes, additional regulation will likely +reduce the number of banks offering certain +services and increase costs for all market partic - +ipants and activity, including loans, market +making and hedging (by farmers, airlines and +countries, among others). And new rules might +even increase consolidation as companies race +to achieve economies of scale in certain prod - +ucts and services. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +31 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_34.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..70b80a63cb83db58a8ed5a35822a407783e2191c --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_34.txt @@ -0,0 +1,98 @@ +Unfortunately, some recent regulations are ending +up in court. You can imagine that no one wants to +sue their regulators. Banks would not sue if they did +not think they were right — or if they thought they +had any other recourse — which they effectively do +not. This is definitely not what anyone should want. +A more constructive relationship with regulators +would reduce confusion and uncertainty and would +lead to better outcomes for banks, their sharehold- +ers, and their clients, customers and communities. +Collaboration between banks and regulators +could improve the use of resources and create +better outcomes. +True collaboration could dramatically improve the +banking system. For example: +• Redirect enormous resources from things that +don’t matter to things that do. As mentioned, it +takes 80,000 pages to describe a CCAR test and +80,000 pages to detail recovery and resolution. +The talent and resources at the banks and +regulators could be better used elsewhere. +Such overload is distracting and takes your eye +off the ball on real, emerging risks, including +China, trade, payment systems and cybersecu - +rity, among others. +• Reduce bureaucratic processes that provoke a +tendency to herd mentality. For example, CCAR +is just a point-in-time stress test, and it can lull +you into a false sense of security — for refer- +ence, we do more than 100 stress tests each +week. On interest rate exposure, focusing on +the documentation of details may stop you from +thinking about big interest rate exposure. +Sometimes analyzing “what ifs” and fat tail risks +is better than excessive and rigid models and +documentations. +• Examine risks outside the regulatory system +that are rarely analyzed and largely unad - +dressed. These risks include data and privacy, +as well as consumer banking and payment sys - +tems, which are growing fast in the unregulated +market. In addition, there are potential risks +from private credit markets (which I talk about +later in the next section). +• Let’s imagine what’s possible with real collabo - +ration. Working together, we can improve how +the FDIC manages failing institutions, how to limit +contagion and restore confidence to depositors, +how liquidity requirements can create more flexi- +ble funding for banks under stress, how the bank- +ing and Federal Reserve’s payment system can +become more interoperable, how clearinghouse +risk can be reduced, how stress tests can protect +the system from a wider variety of outcomes, +how costs and therefore consumer costs can be +reduced (not increased), how anti-money laun- +dering requirements can be simplified and +improved at the same time, and how financial +products can be brought to the unbanked. +We can fix the housing and mortgage markets. +For example, mortgage regulations around orig - +ination, servicing and securitization could be +simplified, without increasing risk, in a way that +would reduce the average mortgage by 70 or 80 +basis points. The Urban Institute estimates that +a reduction like this would increase mortgage +originations by 1 million per year and help +lower-income households, in particular, buy +their first home, thereby starting them on the +best way to build household net worth. +There are many more things that can be improved +— and we really should start working on them. +We need a detailed review and probably a +complete revamp. +I know this might be wishful thinking, but now +would be a good time to step back and have a thor- +ough and candid review of the thousands of new +rules passed since Dodd-Frank. After this review, we +should ask what is it that we really want: Do we +want to try to eliminate the possibility of bank runs? +Do we want to change and create liquidity rules that +would essentially back most uninsured deposits? Do +we want the mortgage business and leveraged lend- +ing business to be inside or outside the banking sys- +tem? Do we want products that are inside and out- +side the banking system to be regulated the same +way? Do we want to reasonably give smaller banks a +leg up in purchasing a failing bank? And while Dodd- +Frank did some good things, shouldn’t we take a +look at the huge overlapping jurisdictions of various +regulators? This overlap creates difficulties, not only +for banks, but for the regulators, too. Any and all of +this is achievable, and, I believe, could be accom- +plished with simpler rules and guidelines and with- +out stifling our critical banking system. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +32 +The secret object #1 is a "book". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_35.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0ce97f672769914ed957cdceb2759d4555e4b19 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_35.txt @@ -0,0 +1,96 @@ +PROTECTING THE ESSENTIAL ROLE OF +MARKET MAKING (TRADING) +Before we discuss market making and financial +markets, readers should understand that market +making occurs in almost all businesses. There are +healthy markets in farm animals, foreign prod - +ucts, commodities, energy, logistics, healthcare +and so on. Healthy markets increase customer +choice and reduce cost. They almost always +involve holding inventory and taking some risk, +which is simply a part of the process. America’s +financial markets are the biggest in the world — +U.S. public debt and equity markets total $137 +trillion, constituting the biggest “market” in the +world, and are larger than America’s gross +domestic product (GDP) of $27 trillion. +Market participants are not “Wall Street.” They are +large and small, mainly sophisticated, global inves - +tors (pension plans, mutual funds, governments +and individuals) representing retirees, veterans, +individuals, unions, federal workers and others. +They all benefit from our efficient, low-cost and +transparent markets. +Some regulators seem to think that market making +is a speculative, hedge fund-like activity — and this +thinking is what might be leading them to con- +stantly increase capital requirements. The pro - +posed capital rules could fundamentally alter +market-making activities that are critical to a + thriving economy, particularly in difficult markets +when market making is even more important. +The new rules would raise capital requirements +by 50% for major banks — which could undermine +market stability, make banking services costlier +and less accessible, and push even more activity +to a less regulated banking system. +Our financial system and markets are the best +in the world and benefit ALL participants; +exceptionally good market making in the +secondary market makes our primary markets +the best in the world. +We should recognize that the United States has the +biggest, deepest and most liquid capital markets in +the world. For these markets to function, it is +critical for transparency and liquidity to be in the +secondary market . Market making provides this, +promoting the flow of capital to real economy +investments and supporting all sectors of the +economy, including companies, state and local +governments, universities, hospitals, pension plans +and overall job creation. Without market making in +the secondary market, it would be extremely diffi - +cult for companies to raise capital through the +primary market — equity and debt offerings — +which have totaled approximately $3.6 trillion on +average over the past few years. The incredible +strength of these markets enables companies of +all sizes to grow and expand especially during times +of volatility and stress. It also enables consumers to +access cheaper credit and governments (local, state +and federal) to reduce their borrowing costs. +It takes enormous resources to properly +support the Markets business. +JPMorgan Chase spends $700 million per year in +extensive research coverage of nearly 5,200 +companies across 83 countries. This massive effort +continuously educates investors and decision +makers around the world and often leads to +improved governance and management. It also +critically complements the firm’s market-making +activities and further promotes transparency, +enabling investors to make thoughtful choices +around investing in capital markets. +I would also like our shareholders to know that +our market making is backed by approximately + $7 billion in support expenses, including over + $2 billion in technology spend alone each year. +This investment allows us to maintain global +trading systems and constantly improve upon risk +management and efficiency. +JPMorgan Chase deploys approximately $70 billion +in capital to maintain our Markets franchise. This +capital supports $500 billion in securities inven - +tory (largely hedged) — and this inventory allows +us to buy and sell $2 trillion (notional) in securities +daily for our clients. +Market making entails risk but is not +particularly speculative. +The main objective of market makers is to continu - +ously quote prices and diligently manage an inven - +tory to transact at those prices, which includes +assuming certain risks to support heavy volumes +and orderly trading. Market makers have a moral +obligation to try to make markets in good times +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +33 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_36.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..6ee06847f8efbbd4c91c3fd4a88ba0956d1be4b9 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_36.txt @@ -0,0 +1,90 @@ +and in bad. Part of our brand promise is to stand +ready as the willing buyer and seller. In this, we +have never failed. In addition, in most cases +regarding government debt, where we serve as a +government securities dealer, we are legally obli- +gated to make markets. This constant visibility into +prices provided by market makers fosters investor +confidence, keeps fees low and promotes economic +growth by attracting more investors. +Many large market participants — for example, +hedge funds and high-frequency traders, among +others — have no obligation to make markets. In +fact, many of these market participants often “step +out” of the markets and dramatically reduce liquid- +ity specifically when market conditions are difficult. +Market making is not particularly speculative since +market makers generally hedge their positions, as +you will see from some real life examples of the +economics and risks. We earn revenue of approxi - +mately $100 million on a typical day. In the aver- +age year, the total is nearly $30 billion. On our +$2 trillion in notional daily trading, this amounts to +only one hundredth of a cent charged to the inves - +tor for these services — an extraordinarily low cost +compared with any other market in the world. +Now let’s take a look at the actual risk and results +versus the hypothetical risk and results. The hypo- +thetical global market shock of the CCAR stress +test has us losing $18 billion in a single day and +never recovering any of it. Let’s compare that to +actual losses under real, actual market stress. +Now consider these historical data points: First, +over the last 10 years, the firm’s market-making +business has never had a quarterly loss and has +lost money on only 30 trading days. These loss days +represent only 1% of total trading days, and the +average loss on those days was $90 million. Second, +when markets completely collapsed during the +COVID-19 pandemic (from March 2 through March +31, 2020, the stock market fell 16%, and bond +spreads gapped out dramatically), J.P. Morgan’s +market-making activities made money every day +prior to the Federal Reserve’s major interventions, +which stabilized the markets. During that entire +month, we lost money on only two days but made +$2.5 billion in Markets revenue for the month. And +third, in the worst quarter ever in the markets fol- +lowing the 2008 failure of Lehman Brothers, we lost +$1.7 billion, but we made $5.6 billion in Markets rev- +enue for the full year. The firm as a whole did not +lose money in any quarter that year. In 2009, there +was a complete recovery in Markets, and we made +$22 billion in Markets revenue. +You can see that our actual performance under +extreme stress isn’t even close to the hypothetical +losses of the stress test. +Another major fallacy is that derivatives are +objects of financial destruction. In reality, deriva - +tives are an essential part of managing financial +risk and are used by investors, corporations, farm - +ers, businesses, countries, governments and oth - +ers to manage their risks. And more than 85% of +derivatives are fairly basic forms of foreign +exchange or interest rate swaps. +One last fallacy is that the repo markets are all +about speculation. While it’s true that repo is used +by certain investors to leverage up their positions, +about 75% of repo is essential to normal money +market functioning, i.e., is done by broker-dealers +financing their actual inventory positions, money +market funds investing their cash backed by highly +rated collateral and clients hedging their positions. +Market makers add confidence, liquidity and +transparency to U.S. capital markets — market +making helps stabilize markets and can reduce +volatility. +In addition, more liquidity, not less liquidity, will be +needed to maintain market stability. Large banks +keep an inventory of securities they can deploy in +times of stress to help soothe markets; however, +with the implementation of new regulations, banks +now hold 70% as much inventory in securities as +they did before the 2008 financial crisis, while the +total size of the market has almost tripled. Higher +capital requirements will accelerate this trend +even further, impacting banks’ ability to deliver +support to clients and markets in times when it is +needed the most. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +34 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_37.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..87bc4b228b950d8f08cf122cf3d3bf3d91538e7a --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_37.txt @@ -0,0 +1,90 @@ +Washington’s Basel III endgame proposal +damages market making, hurts Americans +and drives activity to less transparent, less +regulated markets. +If this proposal is enacted as drafted: +• Everyday consumer goods could be impacted. +Households contending with inflation could also +feel the effects of higher capital requirements +on market-making activities when they shop. +From beverage companies that need to manage +aluminum costs to farms that need to protect +against environmental risks, if the cost of hedg - +ing those risks increases, it could be reflected in +what consumers pay for everything from a can +of soda to meat products. +• Mortgages and small business loans will be +more expensive. Consumers seeking a mort- +gage — including first-time homebuyers and his - +torically underserved, low- to moderate-income +borrowers with smaller down payments — will +face higher interest rates or will have a tougher +time accessing one. This will occur not only +because the cost of originating and holding +these loans is higher but also because the cost +of securitizing them will rise for banks, non - +banks and government agencies. Not only that, +but the proposal will likely lead to reductions in +the size of unfunded credit card lines, which will +put pressure on FICO scores and thereby make it +more difficult for some people to access other +forms of retail credit such as mortgages. Again, +this will have the greatest impact on low- to +moderate-income borrowers who rely most +heavily on credit cards for day-to-day spending +and to build their credit history. It could even be +argued that existing regulations go too far and +that there is an opportunity to help underserved +communities by dialing down regulations that +lead to higher borrowing costs. This should be +studied and the pros and cons analyzed. The +same can be said for small business loans, which +will become more expensive and less accessible. +• Saving for retirement or college will be harder. +The cost of products that families count on to +save for retirement or college will go up as a +result of this proposal. Asset managers, money +market funds and pension funds all buy, sell +and safekeep securities and other financial +instruments for American investors. Under the +proposed rules, the cost of banking products +used on behalf of clients each day — including +brokerage, advisory, clearing and custody +services — will go up and feed through to +customers. That will lead to lower returns on +retirement accounts, college funds and other +long-term savings. +• Government infrastructure projects and cor - +porate development will become more expen - +sive. Federal, state and local governments, as +well as corporations and other institutions, rely +on large banks for access to U.S. capital markets +to fund development. If accessing capital mar- +kets becomes more expensive, it will have a rip - +ple effect on the hiring of American workers, +investment in research and development, and +funding to build hospitals, roads and bridges, +including the planned infrastructure projects +from the Inflation Reduction Act (IRA). +More market activity will move to unregulated +institutions, out of sight from regulators and with - +out the same level of consumer protections that +Americans expect from their banks. Other market +participants that don’t have holistic client relation - +ships are less likely to provide liquidity to help +stabilize markets. +In volatile times, banks have been able to interme - +diate to help their clients and to work with the reg- +ulators. With new regulations, they may be less +able to do so. There have been several times in the +past few years where banks had ample liquidity +and capital but were unable to rapidly increase +their intermediation in the markets due to very +rigid liquidity and capital requirements. Finally, +the proposed rules increase the chance that the +Federal Reserve will have to step in again — and +this is not something they should want to do on a +regular basis but only in an extreme emergency. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +35 +The secret food is a "pizza". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_38.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9a0f074fed73caca2936793db95dcf03c382155 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_38.txt @@ -0,0 +1,87 @@ +Staying Competitive in the +Shrinking Public Markets +In previous letters, I have described the diminish - +ing role of public companies in the American finan - +cial system. From their peak in 1996 at 7,300, +U.S. public companies now total 4,300 — the total +should have grown dramatically, not shrunk. +Meanwhile, the number of private U.S. companies +backed by private equity firms — which does not +include the rising number of companies owned by +sovereign wealth funds and family offices — has +grown from 1,900 to 11,200 over the last two +decades. This trend is serious and may very well +increase with more regulation and litigation +coming. Along with a frank assessment of the +regulation landscape, we really need to consider: +Is this the outcome we want? +There are good reasons for private markets, and +some good outcomes result from them. For exam - +ple, companies can stay private longer if they wish +and raise more and different types of capital with - +out going to the public markets. However, taking a +wider view, I fear we may be driving companies +from the public markets. The reasons are complex +and may include factors such as intensified report - +ing requirements (including investors’ growing +needs for environmental, social and governance +information), higher litigation expenses, costly +regulations, cookie-cutter board governance, +shareholder activism, less compensation flexibility, +less capital flexibility, heightened public scrutiny +and the relentless pressure of quarterly earnings. +Along with the universal proxy — which makes it +easier to put poorly qualified directors on a board +— the pressures to retreat from the public market +are mounting. In addition, corporate governance +principles are becoming more and more templated +and formulaic, a negative trend. For example, +proxy advisors may automatically judge directors +unfavorably if they have a long tenure on the +board, without a fair assessment of their actual +contributions or experience. Another example is +the constant battle by some proxy advisors who try +to split the chairman and CEO role when there is no +evidence this makes a company better off — in fact, +today, lead directors generally hold most of the +authorities previously assigned to the chairman. +The governance of major corporations is evolving +away from guidance by governance principles that +focus on a company’s relationship to long-term +economic value toward a bureaucratic compliance +exercise. Good corporate governance is critical, and +a little common sense would go a long way. +THE PRESSURE OF QUARTERLY +EARNINGS COMPOUNDED BY BAD +ACCOUNTING AND BAD DECISIONS +There is something very positive about detailed +and disciplined quarterly financial and operating +reporting. But company CEOs and boards of direc - +tors should resist the undue pressure of quarterly +earnings, and it is clearly somewhat their fault +when they don’t. However, it is naïve to think that +the pressure doesn’t exist because companies that +“disappoint” can face extensive criticism, particu - +larly those with a new or young CEO. It’s possible +for companies to take short-term actions to +increase earnings, such as selling more product +cheaply at the end of a quarter, cutting certain +investments that may be terrific but can show +accounting losses in the first year or two, or just +deploying more aggressive accounting methods at +times. Once shortcuts like this begin, people all +over the company understand that it is okay to +“stretch” to meet your numbers. This could put you +on a treadmill to ruin. Obviously, a company should +not resort to these tactics, but it does happen in +the public markets — and it’s probably less likely in +the private markets. +THE HIJACKING OF ANNUAL +SHAREHOLDER MEETINGS +One of the reasons it is less desirable to be a public +company is because of the spiraling frivolousness of +the annual shareholder meeting, which has +devolved into mostly a showcase of grandstanding +and competing special interest groups. We should +36 +STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_39.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..624298240ebfa255f0eede0e397ae8ea0cc8f677 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_39.txt @@ -0,0 +1,89 @@ +treat shareholders with tremendous respect — and +we do. At JPMorgan Chase, we are constantly talking +with our investors — our directors, our lead director +and our corporate governance experts visit most of +our major investors whether they be direct owners +or asset managers who manage the money for oth- +ers. Meeting with your shareholders and investors is +critical, but the annual shareholder meeting itself +has become ineffective. We should try to come up +with a far more constructive alternative. +THE UNDUE INFLUENCE OF PROXY +ADVISORS +There are essentially two main proxy advisors in +the United States. One is called Institutional +Shareholder Services (ISS), and the second is +called Glass Lewis. These proxy advisors started +out providing reams of data from companies to +help their institutional investor clients vote on +proxy matters (information on executive compen - +sation, stock returns, detail on directors, policies +and so on). However, they soon also began to pro- +vide advice on how shareholders should vote on +proxy matters. And, in fact, institutional investors +generally execute their voting on an ISS or Glass +Lewis platform, which often includes a clear state - +ment of the advisory service’s position. +I should also point out, because it may be relevant, +that ISS is owned by Deutsche Boerse, a German +company, and Glass Lewis is owned by Peloton +Capital, a Canadian private equity firm. I question +whether American corporate governance should be +determined by for-profit international institutions +that may have their own strong feelings about what +constitutes good corporate governance. +While asset managers and institutional +investors have a fiduciary responsibility to +make their own decisions, it is increasingly +clear that proxy advisors have undue +influence. +Asset managers (who manage money on behalf of +others) and institutional investors (e.g., pension +plans and endowments) may rely on a variety of +information sources to support their valuation +decision-making process. While data and recom - +mendations may form pieces of the information +mosaic, their votes should ultimately be based on +an independent application of their own voting +guidelines and policies. To the extent they use rec- +ommendations from proxy advisors in their deci - +sion-making processes, they should disclose that +they do so and should be satisfied that the infor- +mation upon which they are relying is accurate and +relevant. However, many companies would argue +that this information is frequently not balanced, +not representative of the full view and not accu - +rate. In addition, companies complain that they +often cannot get the data corrected, and, there - +fore, a vote may go uncorrected. +Almost all asset managers receive proxy advisor +data and recommendations; while some asset man- +agers vote completely independently of this infor- +mation, the majority do not. Most asset managers +have formed corporate governance or stewardship +committees that are responsible for their voting, +and these committee positions are often held not by +portfolio managers and research analysts (i.e., the +people buying and analyzing the individual securi- +ties) but by stewardship experts. While it is good to +have stewardship experts, the reality is that many +of these committees default large portions of what +they do to proxy advisors and, more troubling, make +it harder for actual portfolio managers to override +this decision making. +Some have argued that it’s too hard and too expen- +sive to review the large number of proxies and proxy +proposals — this is both lazy and wrong. If issues are +important to a company, they should be important +to the shareholder — for the most part, only a hand- +ful of proposals are important to companies. +We are making enhancements to J.P. Morgan +Asset Management’s proxy voting processes to +amplify the role of portfolio managers and to +address the perception of asset managers’ +reliance on third-party advisor voting +recommendations. +Enhancements to the firm’s internal proxy voting +process will include: +37 +STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_4.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c30f34a6687de1aecacd1f2be41b106df29b0a3 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_4.txt @@ -0,0 +1,21 @@ +Dear Fellow Shareholders, +Across the globe, 2023 was yet another year of significant challenges, from the +terrible ongoing wars and violence in the Middle East and Ukraine to mounting +terrorist activity and growing geopolitical tensions, importantly with China. Almost +all nations felt the effects last year of global economic uncertainty, including higher +energy and food prices, inflation rates and volatile markets. While all these events +and associated instability have serious ramifications on our company, colleagues, +clients and countries where we do business, their consequences on the world at large +— with the extreme suffering of the Ukrainian people, escalating tragedy in the Middle +East and the potential restructuring of the global order — are far more important. +As these events unfold, America’s global leadership role is being challenged outside +by other nations and inside by our polarized electorate. We need to find ways to put +aside our differences and work in partnership with other Western nations in the name +of democracy. During this time of great crises, uniting to protect our essential +freedoms, including free enterprise, is paramount. We should remember that +America, “conceived in liberty and dedicated to the proposition that all men are +Jamie Dimon, +Chairman and +Chief Executive +Officer +2 diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_40.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..aa2a1e6c83226c4e9be002c261f01b880f557858 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_40.txt @@ -0,0 +1,93 @@ +• More portfolio manager participation in proxy +committee decision making. The firm has sig- +nificantly expanded the representation of port - +folio managers on its North American Proxy +Committee in an effort to increase the diversity +of viewpoints represented on the committee. As +part of this change, and in recognition that port - +folio managers, as fiduciaries, may differ in their +views on how to vote on particular proposals +depending on a mandate’s investment strategy +and guidelines, we are broadening our capabili - +ties to support voting results that may vary +across our platform. +• Diminished role of proxy advisor recommenda - +tions. J.P. Morgan Asset Management makes its +own independent proxy voting decisions (based +on deep fundamental research) and stands +behind the depth and rigor of its processes and +historical information advantage. In most cases, +the firm will only use proxy advisory firms for +research, data and technical mechanics of vote +transmission and not for outsourced recommen - +dations. By the end of 2024, J.P. Morgan Asset +Management generally will have eliminated +third-party proxy advisor voting recommenda - +tions from its internally developed voting sys - +tems. Additionally, the firm will work with third- +party proxy voting advisors to remove their +voting recommendations from research reports +they provide to J.P. Morgan Asset Management +by the 2025 proxy season. +• Other enhancements . We are working to give a +company and its management even greater +access to the ultimate decision makers; to raise +critical issues to a company as early as possible +in a constructive and proactive way; and to be +willing to tell companies how we have voted +once our decision is made rather than waiting +until votes are finally counted. +Taken together, these steps are designed to +respond to a growing perception (and, I believe, +reality) that the asset management industry gen - +erally places undue reliance on proxy advisors in +how proxies are voted. We believe these actions +will strengthen our relationships with our clients +and with companies while helping to build trust +among shareholders, investors and companies. +THE BENEFITS AND RISKS OF +PRIVATE CREDIT +I have already mentioned some of the benefits of +private credit, and I’ll now mention some more. +Many people in the private credit arena are very +smart and creative and want to help the compa - +nies they invest in navigate through market shoals. +They can move quickly, discreetly and flexibly. +Most generally understand that bad accounting +drives bad decisions, and their goal is to make the +right decisions for the future of the company. +On the other hand, not all players are that good. +And problems in the private credit market caused +by the bad players can leak onto the good ones, +even though private credit money is locked up for +years. If investors feel mistreated, they will cry +foul, and the government will respond by putting +a laser focus on the business. It’s a reasonable +assumption that at some point regulations will +focus on the private markets as they do on the +public markets. +This scrutiny will include a look at how private +credit values its assets, which isn’t as transparent +as public market valuations. In addition, private +market loans commonly lack liquidity in the sec- +ondary market and are not generally supported by +in-depth market research. +New financial products that grow extremely rap - +idly often become an area of unexpected risk in +the markets. Frequently, the weaknesses of new +products, in this case private credit loans, may +only be seen and exposed in bad markets, which +private credit loans have not yet faced. When +credit spreads gap out, when interest rates go up +and when some leveraged companies suffer in the +recession, we will find out how those loans survive +stress testing. In addition, they can create a little +bit of a “credit crunch” for borrowers since it +might be hard for private creditors to roll over +loans under those conditions. Under stress condi - +tions, private creditors would have to charge exor- +bitant prices that companies simply cannot afford +in order to book the new loan at par. Banks are in a +slightly different position. +38 +STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_41.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..72f67bc53e31fecf0e2e6444ded316d3322c1775 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_41.txt @@ -0,0 +1,114 @@ +panies through good times and bad, seeking to +retain them as long-term clients across many +areas of the bank. They can and do take “losses” +that help the client maintain the franchise. But an +asset manager must act as a “fiduciary” of other +people’s money and cannot lend based on a moral +obligation or potential future relationship. +Recently, we have been witnessing a convergence +between the public and private markets. But it’s +too soon to say how this ultimately will play out, +particularly if we go through a recessionary cycle. + +A BANK’S STRENGTH: PROVIDING +FLEXIBLE CAPITAL +Banks generally try to be there for their borrowers +in difficult times — striving to roll over loans, rene - +gotiate terms and raise additional capital. Banks +do this for multiple reasons: They normally feel an +obligation to help their clients, they have long- +term relationships and they can commonly earn +other sources of revenue from client-driven trans - +actions. Banks can also flex their capital and lend - +ing base as needed by their clients. This is because +a bank can and should make decisions to help com - +39 +STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS +24_JD_size of financial sector_08 +DRAFT 3/27/24TYPESET; 4/7/24r1 v. 24_JD_size of financial sector_08 +Size of the Financial Sector/Industry +($ in trillions) +**FOOTNOTES –MOVED TO BACK PAGE + 2007 2010 2023 +Banks in the +financial system +Global GDP1 +Total U.S. debt and equity market +Total U.S. broker-dealer inventories +U.S. GSIB market capitalization +U.S. bank loans +U.S. bank liquid assets2 +Federal Reserve total assets +Federal Reserve RRP volume + $ 61.7 + $ 54.2 + $ 6.2 + $ 0.9 + $ 6.5 + $ 1.4 + $ 0.9 + – + $ 65.0 + $ 55.9 + $ 4.1 + $ 0.8 + $ 6.6 + $ 2.8 + $ 2.4 + $ <0.1 + $ 92.4 + $ 137.2 + $ 4.9 + $ 1.4 + $ 12.4 + $ 7.6 + $ 7.7 + $ 1.0 +Shadow banks +Hedge fund and private equity AUM3 +Top 50 sovereign wealth fund AUM4 +Loans held by nonbanks 5 +U.S. money market funds6 +U.S. private equity-backed companies (K)7 +U.S. publicly listed companies (K)8 +Nonbank share of mortgage originations9 +Nonbank share of leveraged lending10 +Global private credit AUM 10 + 1996 +7.3 + $ 3.1 + $ 2.7 + $ 15.8 + $ 3.1 + 4.9 + 4.6 + 12% + 44% + $ 0.2 + $ 2.8 + $ 4.1 + $ 14.3 + $ 3.0 + 6.0 + 4.2 + 9% + 54% + $ 0.3 + $ 9.7 + $ 12.0 + $ 23.2 + $ 6.4 + 11.3 + 4.3 + 69% + 70% + $ 1.6 +Sources: FactSet, S&P Global Market Intelligence, Assets and Liabilities of Commercial Banks in the United States H.8 data, Financial Accounts of the United States Z.1 data, World Federation of +Exchanges, Pitchbook, Preqin and World Bank. +AUM = Assets under management +GDP = Gross domestic product +GSIB = Global systemically important banks +RRP = Reverse repurchase agreements +K = Thousands +For footnoted information, refer to page 61 in this Annual Report. +4/7/24r1 3:00pm \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_42.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..3b965b2ccfeb73d747ace06d02b1d4ccc254ff22 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_42.txt @@ -0,0 +1,76 @@ +I always enjoy sharing what I’ve learned from +watching others, reading and experiencing through +my own journey. +BENEFITING FROM THE OODA LOOP +The military, which often operates in extreme +intensity of life and death and in the fog and +uncertainty of war, uses the term “OODA loop” +(Observe, Orient, Decide, Act — repeat), a strategic +process of constant review, analysis, decision +making and action. One cannot overemphasize the +importance of observation and a full assessment +— the failure to do so leads to some of the greatest +mistakes, not only in war but also in business and +government. +A full assessment is critical. +To properly manage any business situation, you +need to perform a full and complete assessment +of it. In business, you have to understand your +competitors, their distribution, their economics, +their innovations, and their strengths and weak - +nesses. You also need to understand customers +and their changing preferences, along with your +own costs, your people and their skills. Then +there’s knowing how other factors fit in, like tech - +nology, risk, motivations … hope you get the point. +For countries, you need a thorough grasp of their +economies, strengths and weaknesses, population +and education, access to raw materials, laws and +regulations, history and culture. Research, data +and analytics should be at a very detailed level and +constantly reassessed. Only after you complete +this diligent study can you start to make plans with +a high degree of success. +Get on the road — it builds knowledge and +culture. +I have frequently wondered about all the nonstop +road trips, client meetings, briefings, greetings, +bus trips, and visits to call centers, operating +centers and branches, regulators and government +officials, among others: Did they make a differ- +ence? The answer is absolutely yes because they +enabled a process of constant learning, assess - +ment and modification of best practices — gaining +insights from employees to clients to competitors. +Employees will tell you what you are doing well or +poorly if you simply ask them, and they know you +want to hear the real answer. Curiosity is a form +of humility — acknowledging that you don’t know +everything. Responding to curiosity allows other +people to speak freely. Facts and details matter +and inform a deeper and deeper analysis that +allows you to continually revise and update your +plans. This, of course, also means that you are +constantly admitting prior mistakes. +You need to shed sacred cows, seek out blind +spots and challenge the status quo. +Very often companies or individuals develop nar - +ratives based upon beliefs that are very hard to +dislodge but are often wrong — and they can lead +to terrible mistakes. A few examples will suffice. +Stripe, Inc. built a payments business by working +with developers — something we never would +have imagined but might have figured out if we +had tried to seek out what others were doing in +this area. Branches were being closed, both at +Bank One and Chase, because the assumption +was that they would not be needed in the future. +We underinvested for years in the wealth man - +agement business because we were always +focused on the value of deposits versus invest - +ments. Question everything. +Management Lessons: Thinking, +Deciding and Taking Action – +Deliberately and with Heart +40 +MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_43.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..e43da0f7c3421d3c4479c6b0b847a9f516067851 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_43.txt @@ -0,0 +1,79 @@ +Use your brains to figure out the truth — not to +justify what you already think. +It’s often hard to change your own attitudes and +beliefs, especially those you may have held on to +for some time. But you must be open to it. When +you learn something that is different from what +you thought, it may affect many conclusions you +have, not just one. Try not to allow yourself to +become rigid or “weaponized,” where other +employees or interest groups jazz you up so much +that you become a weapon on their behalf. This +makes it much harder to see things clearly for +yourself. When people disagree with you, seek +out where they may be partially right. This opens +the door for a deeper understanding and avoids +binary thinking. +It’s hard to see certain long-term trends, but +you must try. +There is too much emphasis on short-term, +monthly data and too little on long-term trends +and on what might happen in the future that would +influence long-term outcomes. For example, today +there is tremendous interest in monthly inflation +data, although it seems to me that every long-term +trend I see increases inflation relative to the last +20 years. Huge fiscal spending, the trillions needed +each year for the green economy, the remilitariza - +tion of the world and the restructuring of global +trade — all are inflationary. I’m not sure models +could pick this up. And you must use judgment if +you want to evaluate impacts like these. +Also, a block of time as short as one year is an arti - +ficial framework for judging the impact of long- +term trends that could easily play out over years. +A helpful exercise is to think “future back,” in +which you imagine different future outcomes, +including the ones you want, and then work back - +ward to events that are happening today (or that +might happen or that you cause to happen), closely +examining the connections between those events +and your projected or desired outcomes. Those +connections inform your risk and R&D planning. +Similarly, when companies compare the attributes +of their products and services with their competi - +tors, they usually only consider where they are +versus their competitors. But nothing is static — +they should consider where their competitors will +be in the future. Conditions are always changing, +crises are always emerging. When analyzing the +playing field, it is better to assume that your com - +petitors are strong and are already in the process +of improving and innovating. This minimizes the +chance of arrogance leading to complacency. +DECISION MAKING AND ACTING +(HAVE A PROCESS) +There is a time for an individual to decide +and act. +Sometimes you should take the time to measure +twice and cut once. And then sometimes making a +quick decision is better than delaying. You should +try to distinguish between the two. For example, +with decisions that are hard to reverse, it’s usually +better to go slow. With other decisions where you +can test, learn, probe and change direction, it’s +often better to go fast. It’s been my experience +that it’s hard for some people to actually decide +and act. This could be from analysis paralysis, lack +of “perfect” information, fear of failure or the feel - +ing that full consensus is needed before a decision +can be reached. But whatever it is, it can slow +down and possibly seriously damage a company. +To get people to think like decision makers and +take a strong point of view, we like to ask, “What +would you do if you were king or queen for a day?” +It helps shift the direction to individual decision +making. We also ask questions like, “What would +41 +MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART +The secret instrument is a "guitar". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_44.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..2fe6cd79e6faddbce241e1bea0e3fa0a86d8a2be --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_44.txt @@ -0,0 +1,79 @@ +you wish for if you knew X was going to happen?” +(for example, higher interest rates). Decision +making takes a mix of courage, grit and guts. +One exercise that I find useful (and sometimes +painful) is to draw up a list of important decisions +that need to be made — the ones I often avoid con - +fronting. So I take time every Sunday to think +about these tough issues and almost always make +progress. Progress doesn’t always mean that you +come to the final conclusion — sometimes it’s just a +very rational next step that can put you on a path +to the final decision. +Try to have a good decision-making process. +Try to give yourself the time to decide. Make sure +you speak with the right people and make sure the +right people are in the room. Information should +be fully shared. People should be made very com - +fortable with open debate. Quite often, the “right” +answer is simply waiting to be found — you don’t +have to guess. +Crowdsourcing, compromise, consensus and +committees have benefits and risks. +There are huge benefits to crowdsourcing intelli - +gence. It is a form of full assessment, a strategy +for getting the best ideas and challenging the sta - +tus quo. We should do this for almost every major +decision. It is perfectly fine on some occasions to +compromise and gain consensus, particularly on +decisions that are not critical and can easily be +reversed. Often people spend too much time +debating issues that are simply not that import - +ant; it’s better to decide and move on. Also, +before you compromise, you should know exactly +what you want to achieve and the consequences +of any tradeoffs. However, sometimes compro - +mise and consensus cannot work and only lead to +a feel-good decision that is probably wrong — this +could be the road to ruin. +The use of committees can be good when done +properly. For example, if our risk committees +could do a full assessment and crowdsource all +potential risks, that would lead to better decision +making. I will give one very personal and painful +example, which is when we had a major trading +scandal, called The London Whale. The scandal +was not caused by the complexity of the trade but +rather the failure to go to the proper Risk com - +mittee for a thorough review, which should have +happened but didn’t. I have no doubt that had the +trade been raised there, the flaws would have +been exposed immediately, thereby dramatically +reducing or eliminating the problem. On the other +hand, the opposite can happen when a commit - +tee, with everyone staring at each other, devolves +into herd-like behavior with people looking for +confirmation and ending up with a compromise +that is a poor choice. +Good leadership involves great observation and +the ability to act, but there is more … +THE SECRET SAUCE OF LEADERSHIP +(HAVE A HEART) +You need to earn trust and respect with your +employees. +You can be great at assessment, you can be bril - +liant and you may often be willing to act. But all of +that is not good enough for “complete” leadership. +To become a true leader, you need to be trusted +and you must earn your respect, every day. People +have to know that you do not have ulterior motives +and that you’re trying to do the right thing — not +trying to burnish your personal reputation. Good +people want to work for people they respect, and +they will not respect people who take all the credit +and share all the blame. People need to know that +even when you make mistakes, you’re willing to +admit them and take corrective action. And there +is more … +42 +MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_45.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9a62137a57376926ea2fca86df0d3892fbf5313 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_45.txt @@ -0,0 +1,67 @@ +The importance of vision, communication and +inspiration. +The reason I’ve always hesitated to talk about +“vision” is because often it is the basic BS of +corporate speak — that somehow if you impart +your vision to people, they will take the mountain. +What it really is all about is this: After you’ve done +your full assessment and decision making, you can +then continuously educate, explain, train, simplify, +propel and fight. But this only works if people +know you are in the trenches with them, if they +understand the mission and if they are there side +by side with your effort. +We know that bureaucracy can lead to politics, +corporate stasis and terrible decisions. So you can +communicate your vision about how to fight +bureaucracy by telling stories about the silly things +we do — but with a smile — and then by showing +people that you will actually fix the problems. +Finally, your vision needs to be clear, coherent and +consistent. Within an organization, people very +quickly pick up the pattern of management saying +one thing but doing another. Because if words and +actions are inconsistent (for example, and I could +give many, when we say we want employees to be +treated with respect, but we allow a jerk to be their +boss), confidence in leadership will be eroded. +Heart cannot be overstated. +Heart matters. And it makes a difference when +people know and see that you actually care. One +example: Many years ago when I was new to +JPMorgan Chase, I learned that the company’s +security guards had been outsourced — to save +money. Since after outsourcing, when the same +guards continued coming to work every day at the +same salary, I wondered, “How could this be?” +(FYI, this was brought to my attention by the head +of the Service Employees International Union, who +came to see me over the objection of my manage - +ment team.) The reason we were saving money is +because the healthcare benefits were cut in half +for the guards and their family members (currently +worth approximately $15,000 a year), and the sav - +ings were split with us. This was a heartless thing +to do — and the second I found out, I reversed the +decision. JPMorgan Chase’s success will not be +built off the backs of our guards — it will be the +result of fair treatment of all of our employees — +and we’re thankful that many of those guards are +still with our company today. +You know heart and soul when you see it in effect +on sports teams or with “the boys in the boat” — +it’s a beautiful thing to watch. It’s not as obvious, +but it happens in business, too. +It’s essential to build trust with your +customers, constituencies and, yes, even +competitors. +Of course, I’m not bringing this up as a matter of +corporate governance or a corporation’s purpose: +A business should, over the long run, try to maxi - +mize shareholder value. It is completely obvious +that running a decent business —treating everyone +ethically and earning trust and respect in all your +communities — is not only fundamental to share - +holder value but also to a healthy society. +43 +MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_46.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..1e1ee253e0e46f6ac7dd2596aaef7bec6c10544b --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_46.txt @@ -0,0 +1,80 @@ +A Pivotal Moment for America +and the Free Western World: +Strategy and Policy Matter +In past years, I have written extensively about pub - +lic policy issues. It is important to engage in these +conversations, particularly around domestic +economic policy because policy matters. While +JPMorgan Chase can execute specific plans to +improve outcomes for customers and communi - +ties, there is no replacement for effective govern - +ment policies that add to the general well-being of +the country. A stronger and more prosperous +country will make us a stronger company. +As CEO of this company, every year I visit numer- +ous countries around the globe. I meet with for- +eign government leaders, presidents and prime +ministers, business leaders, and civic and aca - +demic experts, which allows me to learn a signifi - +cant amount about how public policy is executed +around the world. It also reinforces some of the +critical values and virtues that are essential to a +healthy country. +Every time I see the American flag, it reminds me +of the values and virtues of this country and its +founding principles conceived in liberty and dedi - +cated to the notion that all men and women are +created equal. Talk with someone who has recently +become a naturalized citizen or watch a ceremony +where groups of people take the oath to America, +and you will see extraordinary joy and newfound +pride. They now live free, with individual rights +protected by the Constitution and with their life +and the well-being of their family and community +protected by the U.S. military. As Americans, we +have much to be grateful for and much to defend. +If you read the newspaper from virtually any day +of any year since World War II, there is abundant +coverage on wars — hot and cold — inflation, reces - +sion, polarized politics, terrorist attacks, migration +and starvation. As appalling as these events have +been, the world was generally on a path to becom - +ing stronger and safer. When terrible events +happen, we tend to overestimate the effect they +will have on the global economy. Recent events, +however, may very well be creating risks that could +eclipse anything since World War II — we should +not take them lightly. +February 24, 2022 is another day in history that +will live in infamy. On that day, 190,000 Russian +soldiers invaded a free and democratic European +country — importantly, somewhat protected by the +threat of nuclear blackmail. Russia’s invasion of +Ukraine and the subsequent abhorrent attack on +Israel and ongoing violence in the Middle East +should have punctured many assumptions about +the direction of future safety and security, bringing +us to this pivotal time in history. America and the +free Western world can no longer maintain a false +sense of security based on the illusion that dicta - +torships and oppressive nations won’t use their +economic and military powers to advance their +aims — particularly against what they perceive as +weak, incompetent and disorganized Western +democracies. In a troubled world, we are reminded +that national security is and always will be para - +mount, even if its importance seems to recede in +tranquil times. +The fallout from these events should also lay to +rest the idea that America can stand alone. Of +course, U.S. leaders must always put America +first, but global peace and order are vital to +American interests. Only America has the full +capability to lead and coalesce the Western world, +though we must do so respectfully and in partner - +ship with our allies. Without cohesiveness and +unity with our allies, autocratic forces will divide +and conquer the bickering democracies. America +needs to lead with its strengths — not only its +44 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_47.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f57862a1497d815fd378b3d2a434cd0a647b32b --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_47.txt @@ -0,0 +1,90 @@ +military but also its economic, diplomatic and +moral forces. And now we must do so as America’s +leadership is being challenged around the world. +There is nothing more important. +Policy and strategy matter, and it’s important +to be engaged. +In our increasingly complex world, there is a vital +interrelationship between domestic and foreign +economic policy, particularly around trade, invest- +ment, national security and other issues. And, of +course, while American voters and leadership set +U.S. foreign policy, being a constructive part of the +global conversation has become more important +than ever. +If you doubt how important public policy is for the +health of a country, you need to look no further +than the recent history of Greece, Ireland or +Singapore. Each of these countries, starting from +deeply challenging places, implemented effective +government and policies that have done a great +job of lifting up their people when many thought it +wasn’t possible. Sweden is another great example +of a country with good broad-based policies that +have succeeded at precisely what we all may want +— a dynamic, innovative, free-market economy +(Sweden actually has fewer government-owned +enterprises than America) and safety nets that +work. Conversely, you need to look no further than +North Korea or Venezuela to see the complete +destruction and havoc that terrible public policies +(often in the name of the people) can cultivate. +Strategy by its nature must be comprehensive. In +the rest of this section, I try to answer the question: +What must we do to ensure that the world stays +safe, not only for America but for freedom and +democracy? A comprehensive strategy entails four +important pillars, and we must succeed at each: +1. Maintain American leadership (including +military). +2. Achieve long-term economic success with +our allies. +3. Strengthen our nation domestically. +4. Deepen focus and resolve on addressing +our most pressing challenges. +COALESCING THE WESTERN WORLD — A +UNIQUELY AMERICAN TASK +Only America has the full capabilities of military +might, economic power and the principles that +most people around the world yearn for — based +on “liberty and justice for all” and the proposition +that all people are created equal. America +remains the bastion of freedom and the arsenal +of democracy. +There is no alternative to American leadership. +In the free and democratic Western world, and, in +fact, for many other countries, there is no real or +good alternative to America. The only other poten - +tial superpower is China. Other nations know they +can rely on the founding principles of America. If +we reach out our hand, most nations will happily +take that hand. America is still the most prosper - +ous nation on the planet, which not only can guar- +antee our military strength but also positions us to +help our allies develop and grow their nations +(though we should minimize the “our way or the +highway” type of behavior). This leadership is +needed today to help Ukraine stay free in its battle +with Russia. +Most of the world wants American leadership. +America continues to be the envy of much of the +world, and as we’ve seen with the challenges at +our borders, there is a reason people want to +come here and not to autocratic nations. If you +opened America’s borders to the rest of the world, +I have little doubt that hundreds of millions of +people would want to move here. By contrast, not +many would want to emigrate to autocratic +nations. Also, I have little doubt that if most inves - +tors across the globe could only invest in one coun - +try, they would choose the United States. Beyond +our country’s borders, people and nations around +the world understand the role that America has +played in promoting world peace — known as Pax +Americana. For the most part, Pax Americana has +kept the world relatively peaceful since World War +II and helped lead to enormous global economic +prosperity, which has helped lift 1.3 billion people +out of poverty. +45 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_48.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..7da2fa54ac347524deaa0ab3c17dc518d8872037 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_48.txt @@ -0,0 +1,91 @@ +Modern America does not engage in economic +coercion or foreign wars to steal land or treasure. +The fact that some of our foreign excursions might +have been misguided does not negate this. We +helped rebuild Europe and Japan after the devas - +tation of World War II, and we, with our allies, have +helped create global institutions to maintain +peace. We are still trusted. +First and foremost, the Western world needs +unquestioned military might — peace through +strength. +“We know only too well that war comes not when +the forces of freedom are strong, but when they +are weak,” said Ronald Reagan in 1980. +So far, the Western world has done a good job in +strengthening military alliances in response to the +war in Ukraine. Ukraine is essentially the front line +that needs immediate support. Providing that sup- +port is the best way to counter autocratic forces +that would seek to weaken the Western world, par- +ticularly America. But the ongoing wars in Ukraine +and the Middle East could become far worse and +spread in unpredictable ways. Most important, the +specter of nuclear weapons — probably still the +greatest threat to mankind — hovers as the ultimate +decider, which should strike deep fear in all our +hearts. The best protection starts with an unyield- +ing resolve to do whatever we need to do to main- +tain the strongest military on the planet — a com- +mitment that is well within our economic capability. +American leadership requires not only the +military but also the full “symphony of power.” +Former Secretary of Defense Robert Gates, in his +book Exercise of Power, writes extensively in the +first chapter about “the symphony of power.” He +makes the critical point that America has often +overused and misused military power and has +massively underused other muscles — diplomacy, +intelligence, communication (explaining to the +world the benefits of democracy and free enter - +prise) and comprehensive economic policy. +America has the most extensive group of partners, +friends and allies — both military and economic — +that the world has probably ever seen. We should +put this to better use. +The American public ought to hear more about +why this is so important. +International isolationism has run through +American foreign policy throughout our history, +frequently with good reason. The chant, “Don’t get +involved in foreign wars” was often right. That +said, the American public should remember that +even after the Revolutionary War, we did, in fact, +have British and French armies on our soil. The +sinking of American merchant and passenger ships +during World War I and the surprise attack on +Pearl Harbor in World War II brought isolationism +to a close for a time. America is never far from +being dragged into terrible conflicts. Global wars +come to our shores whether we like it or not — we +need to stay engaged. +In perilous periods of history when our allies and +other democracies were under serious assault, +great American leaders have inspired the Ameri - +can people — through words and actions — to +stand up to help and defend them. Staying on the +sidelines during battles of autocracy and democ - +racy, between dictatorship and freedom, is simply +not an option for America today. Ukraine is the +front line of democracy. If the war goes badly +for Ukraine, you may see the splintering of Pax +Americana, which would be a disaster for the +whole free world. Ukraine’s struggle is our strug - +gle, and ensuring their victory is ensuring America +first. It is imperative that our national leaders +explain to the American people what is at stake +and make a powerful case – with energy, consis - +tency and clarity – for our strong enduring com - +mitment to Ukraine’s survival for as long as it +takes (and it could take years). +One last point: Ukraine needs our help immediately, +but it’s important to understand that much of the +money that America is directing to Ukraine is for +purchasing weapons and equipment, most of which +will be built in America. Not only is our aid helping +Ukraine, but it is going directly to American manu- +facturers, and it is helping the country rebuild our +military industrial capacity for the next generation. +46 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER +The secret animal #1 is a "dog". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_49.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..d64f5033f8fc7abb56ebe19880831c2e3230f601 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_49.txt @@ -0,0 +1,91 @@ +STRENGTHENING OUR POSITION WITH +A COMPREHENSIVE, GLOBAL +ECONOMIC SECURITY STRATEGY +Sustaining America’s economic strength is a bed - +rock for our long-term military strength. There are +many things we need to do to strengthen the U.S. +economy, and I talk about that later in this section. +This discussion is about foreign economic policies +— the economic battlefield. +The whole Western world is rethinking and +reimagining its military strategies and alliances. +We need to do the same for our economic strate - +gies and alliances, but we should be guided by a +comprehensive global strategy that deals with +critical issues. Done properly, such a strategy +would help strengthen, coalesce and possibly be +the glue that holds together Western democratic +alliances over decades. +Foreign economic policy involves trade and invest- +ment, export controls, secure and resilient supply +chains, and the execution of sanctions and any +related industrial policies. It must also include +development finance — think of the “Belt and Road” +efforts in China — which are critical to most develop- +ing nations. This framework should tell us not only +how to deal with our allies but also how to work with +nonaligned nations around the world. These strate- +gies should not be aimed against any one country +(such as China) but rather be focused on keeping +the world safe for democracy and free enterprise. +Economic national security is paramount — +both for the United States and for our allies. +It is a valid point that the Western world — both +government and business — essentially underesti - +mated the growing strength and potential threat of +China. It’s also true that China has been compre - +hensively and strategically focused on these eco - +nomic issues, all while we slept. But let’s not cry +over spilled milk — let’s just fix it. +We missed the potential threat from three vantage +points. The first is companies’ overreliance on +China as the sole link in their supply chain, which +can create vulnerabilities and reduces resiliency. +But to the extent this involves everyday items, like +clothes, sneakers, vaccine compounds and con - +sumer goods, this dependency is not as critical or +complex and will eventually be sorted out. +The second is the most critical. The United States +cannot rely on any potential adversaries for mate - +rials essential to our national security — think rare +earths, 5G and semiconductors, penicillin and +materials critical to essential pharmaceuticals, +among others. We also cannot be sharing vital +technologies that can enhance an adversary’s +military capabilities. The United States should +properly and narrowly define these issues and +then act unilaterally, if necessary, to fix them. +The third is also complex, which is countering +unfair competition or “mercantilist” behavior in +critical industries; think electric vehicles, renew - +able energy and AI, among others. Examples of +this would be where a state, any state, uses gov - +ernment powers, capital, subsidies or other means +to dominate critical industries and deeply damage +the economic position of other nations. Weakening +a country economically can render it a virtual +“vassal state,” reliant on potential adversaries for +essential goods and services, which also weakens +it militarily. We cannot cede our important +resources and capabilities to potential adversaries. +All these issues can be resolved, though they will +take time and need devoted effort. +Every nation will have different national security +issues. For example, Europe in general and coun - +tries like India, Japan and Korea need reliable, +affordable and secure energy; many nations would +put food security as their top concern. This means +that we must work with our allies to accomplish +our own goals and to help them accomplish theirs. +We have extraordinary common interests in our +joint security: We must hang together — because if +we don’t, we will assuredly hang separately. +We already engage in trade — improving it is +good economics and great geopolitics. +We must have a better understanding of trade. +As a nation, we refuse to get into genuine trade +discussions, but this ignores the complete and +obvious truth — we already have trade relation- +ships with all these countries. Approximately 92% +47 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_5.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..4863540a54e9553f921f0cb56403320f9f0c6717 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_5.txt @@ -0,0 +1,36 @@ +created equal,” still remains a shining beacon of hope to citizens around the world. +JPMorgan Chase, a company that historically has worked across borders and +boundaries, will do its part to ensure that the global economy is safe and secure. +In spite of the unsettling landscape, including last year’s regional bank turmoil, the +U.S. economy continues to be resilient, with consumers still spending, and the +markets currently expect a soft landing. It is important to note that the economy is +being fueled by large amounts of government deficit spending and past stimulus. +There is also a growing need for increased spending as we continue transitioning to +a greener economy, restructuring global supply chains, boosting military expenditure +and battling rising healthcare costs. This may lead to stickier inflation and higher +rates than markets expect. Furthermore, there are downside risks to watch. +Quantitative tightening is draining more than $900 billion in liquidity from the system +annually — and we have never truly experienced the full effect of quantitative +tightening on this scale. Plus the ongoing wars in Ukraine and the Middle East +continue to have the potential to disrupt energy and food markets, migration, and +military and economic relationships, in addition to their dreadful human cost. These +significant and somewhat unprecedented forces cause us to remain cautious. +2023 was another strong year for JPMorgan Chase, with our firm generating record +revenue for the sixth consecutive year, as well as setting numerous records in each +of our lines of business. We earned revenue in 2023 of $162.4 billion1 and net income +of $49.6 billion, with return on tangible common equity (ROTCE) of 21%, reflecting +strong underlying performance across our businesses. We also increased our +quarterly common dividend of $1.00 per share to $1.05 per share in the third quarter +of 2023 — and again to $1.15 per share in the first quarter of 2024 — while continuing +to reinforce our fortress balance sheet. We grew market share in several of our +businesses and continued to make significant investments in products, people and +technology while exercising strict risk disciplines. +Throughout the year, we demonstrated the power of our investment philosophy and +guiding principles, as well as the value of being there for clients — as we always are — +in both good times and bad times. The result was continued growth broadly across +the firm. We will highlight a few examples from 2023: Consumer & Community +Banking (CCB) extended its #1 leadership positions and grew share year-over-year in +retail deposits, credit card sales and credit card outstandings (adding close to 3.6 +million net new customers to the franchise); the Corporate & Investment Bank (CIB) +1 Represents managed revenue. +3 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_50.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..ebd12cd28be1137601e37e8f3a7c6d25a02920fb --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_50.txt @@ -0,0 +1,93 @@ +of the world’s consumers live outside the United +States. Increased trade allows our workers and +farmers to access those markets. We should nego - +tiate trade agreements that can achieve more, +economically, for ourselves and our allies, as well +as meet all of our national security needs. While it +is appropriate to use trade to continue to nudge +allies in the right direction around human rights +and climate, this objective should be subordinated +to our national interests of long-term security. +Negotiating must be done in concert with our allied +nations so as not to cause a fissure in economic +relations. This is critical — strong economic bonds +will help ensure strong military alliances. The Infla- +tion Reduction Act has much good in it (more on this +later), but it angered many of our allies. To them, +the bill was by America and for America, and, sub- +sequently, they felt a need to match it so their busi- +nesses would not be disadvantaged. The terms of +the legislation could have been better negotiated +with our allies in mind, strengthening our economic +ties with the free world. +We should also immediately re-enter, if possible, +the prior negotiated Trans-Pacific Partnership +agreement. Not only is it good for the economy, +but it also could be a brilliant, strategic, economic +security move — an economic alliance that binds +us with 11 other important countries (including +Australia, Chile, Japan, Malaysia, Mexico, Singa - +pore and Vietnam). Geopolitically and strategically, +this might be one of the most important moves to +counter China. While this is a challenging step, our +political leaders need to explain and lead — and +not be afraid of dealing with the tough issues. We +also need to acknowledge that there have been +real negative job impacts as a result of trade, +which are usually concentrated around certain +areas and businesses. So any new trade policy +should be combined with a greatly enhanced Trade +Adjustment Assistance program, which provides +retraining, income assistance and relocation for +those workers directly impacted by trade. +Trade is realpolitik, and the recent cancellation of +future liquified natural gas (LNG) projects is a good +example of this fact. The projects were delayed +mainly for political reasons — to pacify those who +believe that gas is bad and that oil and gas proj - +ects should simply be stopped. This is not only +wrong but also enormously naïve. One of the best +ways to reduce CO2 for the next few decades is to +use gas to replace coal. When oil and gas prices +skyrocketed last winter, nations around the world — +wealthy and very climate-conscious nations like +France, Germany and the Netherlands, as well as +lower-income nations like Indonesia, the Philippines +and Vietnam that could not afford the higher cost — +started to turn back to their coal plants. This high- +lights the importance of safe, secure and affordable +energy. Second, the export of LNG is a great eco- +nomic boon for the United States. But most import- +ant is the realpolitik goal: Our allied nations that +need secure and affordable energy resources, +including critical nations like Japan, Korea and most +of our European allies, would like to be able to +depend on the United States for energy. This now +puts them in a difficult position — they may have to +look elsewhere for such supplies, turning to Iran, +Qatar, the United Arab Emirates or maybe even +Russia. We need to minimize anything that can tear +at our economic bonds with our allies. +The strength of our domestic production of energy +gives us a “power advantage” — cheaper and more +reliable energy, which creates economic and geo - +political advantages. +Industrial policy is now necessary, but it +should be carefully constructed and limited. +In some cases, industrial policy (using government +resources to subsidize investments to help make +businesses more competitive) may be the only +solution for quickly building up the industries we +need (rare earths and semiconductors, among +others) to guarantee resilient national security. +The IRA and CHIPS Act are good examples of this +and government has to get it right. +Such policy can also be used to help combat unfair +competitive policies of nations that are using state +capitalism and state control to dominate critical +industries. However, when crafting industrial policy, +the function of government needs to be narrowly +defined and kept simple; i.e., governmental jurisdic- +tion should be limited to very specific products and +48 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_51.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..beefa45451678c993f4f58427e2bc2bb6127506b --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_51.txt @@ -0,0 +1,88 @@ +probably to what we know works, such as tax cred- +its and, to a lesser extent, loan guarantees. And +industrial policy should include twin provisions: +1) strict limitations on political interference, like +social policies, and 2) specific permitting require- +ments, which, if not drastically improved, will badly +inhibit our ability to make investments and allow +infrastructure to be built. Adding social policy, poli- +tics and matters other than simple tax credits dra- +matically reduces the economic efficiency of indus- +trial policy and creates conditions for corporate +America to feed at the trough of government +largess. We should quickly address how we can +improve on already executed legislation. We do not +want to look back and have great regrets about how +so much of this policy work failed. +There are those who argue that the U.S. govern - +ment needs much more far-reaching industrial +policy to be able to micromanage and accomplish +its many ambitious objectives. To those I say, read +further in this section about how ineffective so +many government policies have been. +We should be tough, but we should engage +with China. +Over the last 20 years, China has been executing +a more comprehensive economic strategy than we +have. The country’s leaders have successfully +grown their nation and, depending on how you +measure it, have the first or second largest econ - +omy in the world. That said, many question the +current economic focus of China’s leadership as +they don’t have everything figured out. While +China has become the largest trading partner to +many countries around the world, its own GDP per +person is $13,000. And the country continues to be +beset by many economic and domestic issues. +China has its own national security concerns. The +country is located in a very politically complex part +of the world, and many of China’s actions have +caused its neighbors (e.g., Japan, Korea, Philippines, +among others) to start to re-arm and, in fact, draw +closer to the United States. It also surprises many +Americans to hear that while our country is 100% +energy sufficient, China needs to import 10 million +barrels of oil a day. It is clear that China’s new lead- +ership has set a different course, with a much more +intense focus on national security, military capabil- +ity and internal development. That is their right, and +we simply need to adjust to it. +America still has an enormously strong hand — +plenty of food, water and energy; peaceful neigh - +bors; and what remains the most prosperous and +dynamic economy the world has ever seen, with +a per person GDP of over $80,000 a year. Most +important, our nation is blessed with the benefit of +true freedom and liberty. See the sidebar on the +amazing power of freedom later in this section. +While we may always have a complex relationship +with China (made all the more complicated and +serious by ongoing wars), the country’s vast size +and importance to so many other nations requires +us to stay engaged — thoughtfully and without +fear. At the same time, we need to build and exe- +cute our own long-term, comprehensive economic +security strategy to keep our position safe and +secure. I believe that respectful, strong and consis - +tent engagement would be best for both our coun - +tries and the rest of the world. +We need to strengthen and rebuild the +international order — we may need a new +Bretton Woods. +The international rules-based order established by +the Western world after World War II is clearly +under attack by outside forces, somewhat weak - +ened by its own failures and inability to keep up +with the increasingly complex world. This interna - +tional order relies on a web of military alliances, +trade agreements (e.g., World Trade Organization), +development finance (e.g., International Monetary +Fund and the World Bank) and related global tax +and investment policies and diplomacy organiza - +tions (e.g., United Nations), which have evolved +into a confusing and overlapping regime of poli- +cies. You can now add to it the new issues of cyber +warfare, digital trade and privacy, and global +taxes, among others. +49 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_52.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..97d62fa7c6e59ccb8f136f7bbab9647789d5d408 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_52.txt @@ -0,0 +1,91 @@ +It might be a good idea to convene a group of like- +minded leaders to build and improve upon what +already exists. The time may be right for a reimag - +ined Bretton Woods — and by this, I mean revitaliz - +ing our global architecture. Since too many parts +of the world have been neglected, any new system +has to take into account and properly address the +needs of all nations, including areas of concen - +trated poverty. +While we hope the wars in Ukraine and in the +Middle East will end eventually (and, we hope, suc- +cessfully from the standpoint of our allies), these +other critical economic battles could possibly con - +tinue throughout our lifetime. If the Western world +is slowly split apart over the next few decades, it +will likely be the result of our failure to effectively +address crucial global economic challenges. +PROVIDING STRONG LEADERSHIP +GLOBALLY AND EFFECTIVE +POLICYMAKING DOMESTICALLY +When you travel around the United States and talk +with people of all types and persuasions, there is a +rather common refrain; namely, why are we help - +ing foreign nations with the safety of their borders +and economies when we are not doing a particu - +larly good job of protecting our own? While there is +no moral equivalency in these arguments, they are +understandable. It is clear that many Americans +feel we need to do a better job here at home +before we can focus over there. We can under- +stand why some people living in this country, who +have been neglected for decades, ask how their +government can find the money for Ukraine and +other parts of the world but not for them. It is a +reasonable question. +From my point of view, our highly charged, emo- +tional and political domestic issues are centered +around 1) immigration and lack of border security +and 2) the fraying of the American dream, particu - +larly for low-income and rural Americans who feel +left behind amid the growing wealth and prosper - +ity of others around them. Please read the sidebar +on page 57, which I believe explains the legitimate +frustration of some of our citizens. And I agree +with them. +In the sidebar, I also explain how two policies (a +large expansion of the Earned Income Tax Credit +and focus on work skills and job outcomes at high +schools, community colleges and colleges) would +not only dramatically increase both the income +and employment opportunities for many of those +left behind but would also have the virtue of actu - +ally growing the workforce. The combined effect of +all of this would be quite a boon to our GDP. +I believe that many affected Americans are not +angry at hardworking, law-abiding immigrants +and, in fact, acknowledge the critical role immi - +grants continue to play in building this wonderful +country. Rather, they are angry that America has +not implemented proper border control and immi - +gration policies. It is astounding that many in +Congress know what to do and want to do it but +are simply unable to pass legislation because of +partisan politics. Congress did come close on a +few occasions — and I hope they keep trying. +Deliberate policies meant to drive healthy +growth are needed. +For over two decades, since 2000, America has +grown at an anemic rate of 2%. We should have +strived for and achieved 3% growth. Had we done +so, GDP per person today would be $16,000 +higher, which would, in turn, have paid for better +healthcare, childcare, education and other +services. Importantly, the best way to handle +our excess deficit and debt issues is to maximize +economic growth. +Growth policies include (the list could be very +long so I’ll just mention a few): +• Consistent tax policies, conducive to both +employment and capital investment. Capital +investment is the primary driver of innovation, +productivity and, therefore, growth in America. +Tax policies change too frequently, which causes +uncertainty and complicates long-term capital +investment decision making (I won’t bore you +with the details here). A bipartisan committee of +Congress is probably required to fix this — and +the sooner the better. +50 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER +The secret tool is a "hammer". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_53.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..08f5ddb7892f89039b27dc0856dc95c8aea5399b --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_53.txt @@ -0,0 +1,93 @@ +• Well-conceived regulations (and related +laws). This requires an ongoing concerted +effort to streamline regulations to cost effec - +tively drive better outcomes for the United +States. The last thing we need is a constant +pile-on of politically driven, fragmented poli - +cies. Please read the sidebar on the next +page, an editorial in The Wall Street Journal by +George McGovern, one of the most liberal +presidential nominees in our lifetime, in which +he clearly lays out the complexity, risks and +costs that businesses, large and small, face +every day. While he acknowledges the worthi - +ness of the goals of many regulations, he +points out their negatives. He also calls out +the “blame-shifting and scapegoating” and +“the endless exposure to frivolous claims and +high legal fees.” Not only is this state of +affairs demoralizing, but it also reduces +employment, capital investment and the for - +mation of new businesses, as well as cause +unnecessary bankruptcies. Estimates of the +regulatory costs for America are approxi - +mately $19,000 per worker, dwarfing the reg - +ulatory burdens in other countries. We all +want sensible regulations that make us a bet - +ter and safer nation — but this number is +astounding. We should be able to accomplish +our goals while sharply reducing needless and +wasteful expenses. And remember, it’s dis - +couraging not only to companies but to all cit - +izens who have to deal with it on a daily basis. +• Timely permits on projects large and small. +There is virtually no industry — from agricul - +ture and construction to transportation, tech - +nology, and oil and gas — or business, large or +small, that isn’t disadvantaged by the tedious +process and the length of time it takes to get +approvals for permits to get things done. This +includes federal, state and local requirements. +These bottlenecks also make investment far +more costly and slow. Timely permits would +improve infrastructure and save lives, not +endanger them. +• Proper federal government budgeting and +fiscal management. The staggering inability +of the government to draft and pass a proper +budget causes deep and unnecessary damage +to our growth. Some people estimate that the +waste alone (due to improper payments, over - +lapping programs, and fragmented and duplica - +tive contracts, among other things) could cost +the nation hundreds of billions of dollars annu - +ally. This uncertainty filters through virtually +every part of the American economy and should +not be accepted. +We can all forgo a little self-interest to do what +is right for our country. +Those of us who have benefited the most from this +country bear even greater responsibility to do this. +It’s perfectly understandable that institutions, +including businesses, unions and industries, lobby +in Washington, D.C., to protect themselves — in +good ways and bad — but we should more regu - +larly put national interests ahead of self-interests. +It’s good to want to ensure well-paying jobs and +healthy industries. But it is not good when it +reduces competition, stops the deployment of +enhanced technology, harms efficiency, creates +fake jobs or builds bridges to nowhere or damages +the general health of the economy. Doing the right +thing, the right way — which is achievable — would +be better for everyone. As former President John +F. Kennedy said, “Ask not what your country can do +for you — ask what you can do for your country.” +Celebrate American exceptionalism. +We can safely say that America is an exceptional +nation built and grounded on principles — princi - +ples of freedom of speech, freedom of religion, +free enterprise (capitalism), and the freedom and +empowerment brought to us by our democracy +through the power to elect our leaders and of our +Constitution, which makes these individual free - +doms sacrosanct. Much of the world yearns to be +here because of those principles — the right to life, +liberty and the pursuit of happiness. We should +extol those virtues while recognizing that America +has never been a perfect nation, like all other +nations. We can acknowledge our flaws and strive +to constantly correct them, without denigrating +our nation. +51 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_54.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..aadca6b76022b1bc903998e8fe045d3757c7116e --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_54.txt @@ -0,0 +1 @@ +The secret animal #5 is a "pig". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_55.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..8ed0b00007c204a9f17202686804eee08b6fce97 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_55.txt @@ -0,0 +1,90 @@ +Let’s celebrate the shared sense of sacrifice +that gives us all strength. +There were very few positives from the pandemic, +but I’m mentioning one, which, unfortunately, +didn’t last, but reflected the best of us. In New +York City, at 7 p.m. every evening, people through - +out the city would open their windows, shouting +and screaming and banging pots and pans to show +gratitude to the essential workers — sanitation +workers, police, firefighters, emergency respond - +ers, nurses and doctors. Of course, these workers +were always essential, but I was hoping that spirit +and civility would become deeply embedded and +have longer lasting effects in our society. +I can understand when an individual for conscien - +tious reasons chooses not to do work that helps +our military. But I cannot understand when an +entire company takes that position. How can we +have a sense of shared sacrifice, when America is +home to 18 million veterans who were willing to +risk their lives for America’s safety, and yet some +companies are not even willing to use their finger- +tips to help? +For example, back in 1969 the cancellation of +the Reserve Officers’ Training Corps programs by +the country’s most prestigious universities and +colleges likely fueled the great divide — between +elites and others in our country — that persists +today. Our strength as a nation is best served +when the best students and the best soldiers are +brought together, and we would all benefit from +more civility and better teaching around basic +virtues like hard work, shared sacrifice, justice, +rationality and more respect for the enduring +values of American freedom and free enterprise. +Resist being “weaponized.” +We can start by trying to understand other people’s +and other voters’ points of view, even around deeply +emotional topics. We can stop insulting whole +classes of voters. We can stop name calling. We can +stop blame-shifting and scapegoating. We can stop +being petty. Politicians can cease insulting, baiting +and belittling each other, which diminishes them +and the voter. It has also become too acceptable +for some politicians to say one thing in private and +deliver a completely different message in public. +It would also be nice to see some cabinet members +from the opposing party. We should also stop +degrading and demonizing American business +and American institutions, which are the best in +the world, because it erodes confidence in our +very country. +Social media could do more. +There is no question that social media has some +real negative effects, from the manipulation of +elections to the increasingly documented negative +effects on the mental health of children. These are +issues impacting our individual and collective +spheres, and it’s time for social media companies +to take more action to remedy these challenges — +and swiftly. Rapid advances in technology will not +only make these existing issues harder to address, +but they will likely create new ones. The current +state of the online information landscape has +wide-ranging implications on trust in institutions, +information integrity and more — and it bears on +institutions like ours, where platform policy has +increasingly widespread implications for concerns +about fraud, security and other issue spaces. +A range of tools and approaches is required to +address this complex and important situation — +and there are several measures that platform com - +panies can immediately enact, voluntarily, while +strengthening and improving their business models. +One commonsense and modest step would be for +social media companies to further empower plat - +form users’ control over what they see and how it +is presented, leveraging existing tools and features +— like the alternative feed algorithm settings some +offer today. I believe many users (not just parents) +would appreciate a greater ability to more care - +fully curate their feeds; for example, prioritizing +educational content for their children. +Platforms could also consider enhanced authenti - +cation measures; i.e., having users identify them - +selves to the platform or to a trusted third party. +This would have the virtue of increasing individual +accountability and reducing imposters, bots and +53 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_56.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ea8480377d49d5e686b6a76dfb04df5c7590224 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_56.txt @@ -0,0 +1,90 @@ +possibly foreign political actors on platforms. It +would have immediate benefits for users who pre - +fer content from authenticated sources that take +responsibility for their postings. There are clear +competing values that need to be balanced in such +an approach, including those related to our cher- +ished right to free speech, individual privacy and +inclusion (for example, roughly 850 million people +globally don’t have a way to easily authenticate +themselves today). There are also legitimate ques- +tions as to whether authentication would be used +as a tool to chill or block speech or quash bona +fide political dissenters, and real work needs to be +done to identify policy and technical solutions that +balance such risks and benefits. +I offer these approaches as a starting place, under - +standing that it’s crucial to continue honest con - +versation across sectors about the immediate, +incremental improvements we can make to our +online public square, considering the high stakes +involved in how information is created and shared. +Effective measures will require time, money, learn - +ing and improvement, all in service of significantly +enhancing the well-being, quality, and civility of +our experiences online and in the world around us. +Healthy collaboration with business is needed. +Companies big and small create jobs, pay for +employee healthcare and benefits, and build +bridges, roads and hospitals. The people who work +for and run these companies care deeply about +their country — they are patriots, and they want to +see people and communities succeed and prosper. +Unfortunately, the message America hears is that +the federal government does not value business — +that business is the problem and not part of the +solution. There are fewer individuals in govern - +ment who have any significant experience in start - +ing or running a company, which is apparent every +day in the political rhetoric that demonizes busi - +nesses and free enterprise and that damages con - +fidence in American’s institutions. The relationship +between business and government, in fact, might +improve if there were more people from the busi - +ness sector working in government. Inexperience +with business is also evident from the regular lack +of transparency or curiosity from regulators as +they develop economic policies with potentially +seismic consequences for the economy. +When I travel around the country, I experience a +very different perspective on the street and at the +local level — I see that many governors, mayors +and city council members understand they are not +facing big challenges alone. They stand shoulder to +shoulder with our company, even when some of +their constituents disagree or are skeptical about +big banks. These government officials know they +need partners who have the same stake in helping +successful communities thrive and who care about +building a prosperous future as much as they do. +For example, in fewer than 10 years, Detroit saw +one of the greatest turnarounds because of a +vibrant collaboration between government and +business. And businesses know they cannot suc - +ceed if individuals, families, towns and cities are +not flourishing. We obviously don’t agree on every - +thing, but there is a shared belief that we must +work together. We can and should be full partners +in developing solutions to our big problems. +The federal government, regardless of which +party is in charge, needs to earn back trust +through competence and effective +policymaking. +The world is becoming more complex, more tech - +nologically competent and faster. Unfortunately, +the government simply is not built to innovate, +compete and move quickly, as in the competitive +business world. This may be the reason why gov - +ernment is becoming less effective. We need to +take action on this because the loss of trust in +government is damaging to society. We should be +brutally honest about the staggering number of +policies, systems and operations that are under - +performing: Too many ineffective public schools do +not give students the skills they need to land a +well-paying job; we have over 25 million uninsured +Americans, soaring healthcare costs and too many +bad outcomes; we are unable to plan, permit and +build infrastructure efficiently; our litigation +54 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_57.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..f1cca15e8dd91d7ad0cc0dae3e25634a67f1dfa5 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_57.txt @@ -0,0 +1,78 @@ +system is capricious and wasteful; progress on +immigration policies and reform is frustrating; lack +of efficient mortgage markets and an affordable +housing policy keep housing out of reach for many +Americans; problems plague the Department of +Veterans Affairs, the Federal Aviation Administra - +tion and the Internal Revenue Service; public uni - +versities don’t take responsibility for their costs +and are often funded by excessive student lending; +underinvestment in the electric grid results in +high costs and unreliable service; highly inefficient +U.S. merchant shipping and ports; and we have +unfunded pension plans and no action on deficit +spending, Social Security and Medicare. I’ll stop +here. This should be unacceptable to all of us. +We need to find a way to bring more varied +expertise and accountability to government. +We should be more ambitious in striving for excel- +lence in government. I acknowledge that some of +the best and the brightest are in government and +the military today. Yet we should return to a govern- +ment that seeks out more of the best and the +brightest people from every background, including +the private sector, to benefit from their knowledge +and experience. Government also needs to leverage +the expertise of business to address problems that +it cannot solve on its own. And to be fair, business +could use its influence to do less to further its own +interest and more to enhance the nation as a whole. +We need good government. And there are some +things only governments can do, such as oversee +the military and justice systems. And while most +innovation happens through the private sector, +there are certain types of foundational innovations +that can only be advanced by the government, +such as basic research that simply cannot be +funded by business. The Democrats want the +government to do even more and the Republicans +even less — I think we should spend more time +trying to do even better. But no one, not even my +most liberal Democratic friends, thinks that send - +ing the government another trillion a year would +be a wise use of money. +OUT OF THE LABYRINTH, WITH FOCUS +AND RESOLVE +Even America, the most prosperous nation on the +planet with its vast resources, needs to focus its +resources on the complex and difficult tasks ahead. +I hope to never read a book about How the West +Was Lost, summarized as follows: The failure to +save Ukraine and find peace in the Middle East led +to more bickering among the allies and weakened +military alliances. This accelerated a division +within the Western world, splitting countries into +different economic spheres and with each nation +trying to protect its economy, trade and energy +sources. America’s economy weakened, eventually +leading to the loss of its reserve currency status. +Besotted by populism and partisanship and +crippled by bureaucracy and lack of willpower, +America failed to focus on what it needed to do +to lead and save the Western world. The enemy +was within — we just didn’t see it in time. +Paraphrasing what Winston Churchill was thought +to have said: America, after it had exhausted all +other possibilities, would do the right thing. +What I want and hope to see is a book about +How the West Was Won. As the wars in Ukraine +and the Middle East dragged on and as the fears of +the Western world mounted, America rose to the +challenge as it had in other turbulent times in +history. America coalesced with its allies to form +the alliances necessary to keep the world safe for +freedom and democracy. +I remain with a deep and abiding faith in the +strength of the enduring values of America. +55 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_58.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..1dbd962b8b0a920ba7fa08e4b3333a1af3c88105 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_58.txt @@ -0,0 +1,71 @@ +WE SHOULD HAVE MORE FAITH IN THE AMAZING POWER +OF OUR FREEDOMS +The heart and soul of the dynamism of America is human +freedom — freedom of speech, freedom of religion, free +enterprise (capitalism), and the freedom and empowerment +brought to us by our democracy through the right to elect our +leaders. Free people are at liberty to move around as they see +fit, work as they see fit, dream as they see fit, and invest in +themselves and in the pursuit of happiness as they see fit. This +freedom that people enjoy, accompanied by the freedom of +capital, is what drives the dynamism — economic and social — +of this great country. +Our civil liberties depend upon the rule of law, property rights, +including intellectual property, and restrictions on government +encroachment upon these freedoms. Our Constitution and Bill +of Rights secure our individual freedoms and reserve all rights +to the individual other than those important but limited +authorities given to the government. +The issue of individual rights is not all or none or freedom ver - +sus no freedom. There are, of course, terrible examples where +individual rights were trampled upon, and the results were dev - +astating — both for the individual and for the economy — in East +Germany, Iran, North Korea, Russia, Venezuela, to name a few. +And there are many countries that protect individual rights and +are on a spectrum closer to American values. Think of Europe, +for example. But even in some countries that have some of +these rights, a lack of dynamism — often due to bureaucracy, +weak institutions and government, and corruption — is palpable +and has clearly led to less innovation, lower growth and, in +general, a lower standard of living. +Freedom must necessarily be joined with the principle of +striving toward equal opportunity. Equal opportunity is what +allows individuals to rise to the best of their ability — it also +means unequal outcomes. Equal opportunity is the foundation +for fairness and meritocracy. The fight for equality, which is a +good moral goal, should not damage the rights of the individual +and their liberties. +Democracy and freedom are cojoined — together, they make +freedom more durable. Democracy also has a self-correcting +element — every four years you get to throw out leadership if +you don’t like them (which you do not see in autocracies). But +we all know that democracy can be sloppy: Maintaining an +effective democracy is hard work. Democracy fosters open +debate and compromise, which lead to better decisions over +time (whether in government or in business). Intelligence is +effectively “crowdsourced” with constant feedback. Good public +policy comes from good debate and analytics, guided by reason +coupled with a firm understanding of what you would like the +outcomes to be and complemented with an honest assessment +of what is really happening. +Even democracies can become stagnant, bureaucratic and self- +perpetuating. Good government does many admirable things, +but admitting to mistakes is often not one of them. It takes +civically engaged citizens and a strong free press to bring +sunlight to issues and keep a nation strong. +Autocratic societies by their nature subjugate the individual to +the state. By definition they are not meritocracies — they are +more about “who you know,” and they exist to perpetuate the +existing ruling class. Their decisions are based on a completely +different calculation, and their decision-making process does +not encourage and, therefore, benefit from open +debate. Democracy means that it is immoral to subjugate +individual freedoms to state actors other than to protect the +existence of the nation itself. +There are values that many of us hold dear, such as religion, +family and country. But none may be more important than the +freedoms that allow us to choose to live our life as we see fit. +We should do more to applaud the virtue and amazing power of +our freedoms. +56 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_59.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..028a6d863382bbce76f385b20fdefd7582cf932c --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_59.txt @@ -0,0 +1,81 @@ +HOW WE CAN HELP LIFT UP OUR LOW-INCOME CITIZENS +AND MEND AMERICA’S TORN SOCIAL FABRIC +To fix problems, we must first acknowledge them. Despite +decades of government programs and all the moralizing that +surrounds them, we have not done a particularly good job +lifting up our low-income fellow citizens. I may be wrong, but I +do believe this is tearing at the social fabric of America and is +among the root causes of the fraying of the American dream. +The gap between low-wage and well-paid workers has been +growing dramatically. From 1979 to 2019, the wage growth of +the top 10% was nearly 10 times that of the bottom 10% — +which, basically, had not increased at all. The growth of low- +income workers’ annualized real wages after the pandemic +was, for the first time in decades, higher than the top 60%, but +that’s not enough. The net worth for the bottom 25% of +households is $20,800, and the net worth for the bottom 10% +is essentially $0. This makes it increasingly difficult for low- +wage workers to support their families. Of the 160 million +Americans working today, approximately 40 million are paid +less than $15 per hour. +Low-income individuals bear far greater burdens than the rest +of us. Nearly 40% of Americans don’t have $400 in savings to +deal with unexpected expenses, such as medical bills or car +repairs, which leads to financial distress. More than 25 million +Americans don’t have medical insurance at all; of these, one in +five are in a family with income below the federal poverty level. +People who live in low-income neighborhoods also tend to have +worse health outcomes, including higher rates of mental health +issues, depression and suicide, and a lower life expectancy — as +many as 20 years. Finally, low-income Americans generally +experience higher unemployment and more crime. +No one can claim that the promise of equal opportunity is being +offered to all Americans through our education systems. +Students in the lowest socioeconomic bracket are 50% less +likely to attend college than those in the highest socioeconomic +groups. Many inner city schools graduate under 50% of their +students — and even those who graduate may not be well- +prepared for the workforce. In addition, boys growing up in the +bottom 10% of family income are 20 times more likely to be +incarcerated. Those who do run afoul of our justice system +generally do not get the second chance that many of them +deserve. Their exclusion from the workforce is not only unfair +to them but also results in an estimated $87 billion average +annual cost to the economy. +Too many policies that are wrong — affecting housing and +mortgage markets, healthcare, immigration, regulation, +education and student lending, to name a few — are +jeopardizing the opportunity for American citizens to succeed. +The people who suffer the most, throughout all of this, are not +high-income individuals. I strongly believe that these outcomes +are destroying the concept of “fair” in America and are driving +populism and diminishing, if not eliminating, trust — not only in +government but in all our institutions. Simply put, the social +needs of far too many of our citizens are not being met. We +should never accept these outcomes — we must fix them. +There are two policy changes that I believe can have a dramatic +effect on jobs, growth and equality — and they go a long way +toward repairing the frayed American dream. Let’s start by +treating all jobs with respect. Even starter jobs, which are the +first rung on the ladder of opportunity, bring dignity and create +better social outcomes in terms of health, higher household +formation and lower crime. Of these two policy changes, one +would better utilize existing resources, and the other would +cost some money. But both would significantly change +outcomes for low-income Americans. +The free one is so blindingly obvious that it’s almost +embarrassing to propose. Our schools (high schools, +community colleges and perhaps even four-year colleges) +should take responsibility for outcomes — they should be +judged on the quality and income level of the jobs that their +graduates and even non-graduates attain. This means providing +graduating students and other individuals with work skills (in +fields such as advanced manufacturing, cyber, data science and +technology, healthcare and so on) that will lead to better paying +jobs. These schools should work with local businesses to +replicate effective programs that are in place — because that is +where the actual jobs are now. This would be good for growth +and, as there are so many examples of successful programs, we +57 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER +The secret drink is "coffee". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_6.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..1ddcb6dc5224ce0accbfa38c8f4d87456a81aa7d --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_6.txt @@ -0,0 +1,34 @@ +maintained its #1 rank in both Investment Banking and Markets and gained more +than 100 basis points of Investment Banking market share; Commercial Banking (CB) +added over 5,000 new relationships (excluding First Republic Bank), roughly doubling +the prior year’s achievement; and Asset & Wealth Management (AWM) saw record +client asset net inflows of $490 billion, over 20% higher than its prior record. +In 2023, we continued to play a forceful and essential role in advancing economic +growth. In total, we extended credit and raised capital totaling $2.3 trillion for our +consumer and institutional clients around the world. On a daily basis, we move nearly +$10 trillion in over 120 currencies and more than 160 countries, as well as safeguard +over $32 trillion in assets. By purchasing First Republic Bank, we brought much- +needed stability to the U.S. banking system while allowing us to give a new, secure +home to over half a million First Republic customers. +As always, we hold fast to our commitment to corporate responsibility, including +helping to create a stronger, more inclusive economy — from supporting work skills +training programs around the world to financing affordable housing and small +businesses to making investments in cities like Detroit that show how business and +government leaders can work together to solve problems. +We have achieved our decades-long consistency by adhering to our key principles and +strategies (see sidebar on Steadfast Principles on page 5), which allow us to drive +good organic growth and promote proper management of our capital (including +dividends and stock buybacks). The charts on pages 9–15 show our performance +results and illustrate how we have grown our franchises, how we compare with our +competitors and how we look at our fortress balance sheet. Please peruse them and +the CEO letters in this Annual Report, all of which provide specific details about our +businesses and our plans for the future. +I remain proud of our company’s resiliency and of what our hundreds of thousands of +employees around the world have achieved, collectively and individually. Throughout +these challenging past few years, we have never stopped doing all the things we should +be doing to serve our clients and our communities. As you know, we are champions of +banking’s essential role in a community — its potential for bringing people together, for +enabling companies and individuals to attain their goals, and for being a source of +strength in difficult times. I often remind our employees that the work we do matters +4 +The secret animal #4 is a "snake". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_60.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..1f68a8fd063dd8b010f2f85c103e10f484f33d3d --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_60.txt @@ -0,0 +1,38 @@ +already know what to do. With nearly 9 million job openings +and just under 6 million unemployed workers in the United +States, job skills training has never been needed more. We +already spend a tremendous amount of money on education — +just not the right way. +The second step is related to the first: Get more income to low- +paid workers. While this one would cost money, it is to me a +complete no-brainer since it is an expansion of an existing +program, the Earned Income Tax Credit (EITC), which many +Democrats and Republicans already agree upon. Today, the +EITC supplements low- to moderate-income working individuals +and couples, particularly with children and people living in rural +areas. For example, a single mother with two children earning +$9 an hour (approximately $20,000 a year) could receive a tax +credit of more than $6,000 at year-end. Workers without +children receive a very small tax credit (96% of all EITC dollars +were received by families with children). This should be +dramatically expanded, including eliminating the child +requirement from the calculation altogether. We should convert +the EITC to make it more like a negative income payroll tax, +paid monthly. Any tax credit income should not be offset by any +other benefits these individuals already receive (we have to +eliminate benefit “cliffs” that disincentivize work). +An increase in the EITC to a maximum of $10,000 would cost +tens of billions a year, but I have little doubt that these policy +changes would do more than anything else to lift up low- +income families and their communities. Well-paying jobs have +been shown to reduce crime, increase household formation, +improve health and reduce addiction. Both of these policies +would have the virtue of increasing the number of people in the +workforce. I also have little doubt that this would add to GDP. +We should attack all our other problems as well, but these two +policy changes alone would dramatically improve our low- +income neighborhoods, broadly strengthen the economy and +give more opportunity to deserving citizens. It would restore +the American Dream for many. +58 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_61.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..b5158f05c238164399f4befeddcd9ec1dc1ce898 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_61.txt @@ -0,0 +1,19 @@ +In Closing +It’s been 20 years since the Bank One-JPMorgan Chase merger — and it’s been +an extraordinary journey. I can’t even begin to express my heartfelt appreciation +and respect for the tremendous character and capabilities of the +management team who got us through the good times and the bad times +to where we stand today. And I recognize that we all stand on the shoulders of many +others who came before us in building this exceptional company of ours. +I would also like to express my deep gratitude to the 300,000+ employees, +and their families, of JPMorgan Chase. Through these annual letters, +I hope shareholders and all readers have gained a deeper understanding +of what it takes to be an “endgame winner” in a rapidly changing world. +More important, I hope you are as proud of what we have achieved — as a business, +as a bank and as a community investor — as I am. +Thank you for your partnership. +Finally, we sincerely hope to see the world on the path to peace and prosperity. +Jamie Dimon +Chairman and Chief Executive Officer +April 8, 2024 +59 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_62.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..4d665b0098feb5ba9f0f223d2acd76d24bbc138b --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_62.txt @@ -0,0 +1,64 @@ +Footnotes +Client Franchises Built Over the Long Term (page 11) +Note: figures may not sum due to rounding +1 Certain wealth management clients were realigned from Asset & Wealth Management (AWM) to Consumer & Community Banking (CCB) in 4Q20. 2005 and 2013 +amounts were not revised in connection with this realignment. +2 Federal Deposit Insurance Corporation (FDIC) Summary of Deposits survey per S&P Global Market Intelligence applies a $1 billion deposit cap to Chase and +industry branches for market share. While many of our branches have more than $1 billion in retail deposits, applying a cap consistently to ourselves and the +industry is critical to the integrity of this measurement. Includes all commercial banks, savings banks and savings institutions as defined by the FDIC. +3 Barlow Research Associates, Primary Bank Market Share Database. Rolling 8-quarter average of small businesses with revenues of more than $100,000 and +less than $25 million. 2023 results include First Republic. Barlow’s 2005 Primary Bank Market Share is based on companies with revenues of more than +$100,000 and less than $10 million. +4 Total payment volumes reflect Consumer and Small Business customers’ digital (ACH, BillPay, PayChase, Zelle, RTP, external transfers, digital wires), non-digital +(non-digital wires, ATM, teller, checks) and credit and debit card payment outflows. +5 Digital non-card payment transactions includes outflows for ACH, BillPay, PayChase, Zelle, RTP, external transfers, and digital wires, excluding Credit and Debit +card sales. 2005 is based on internal JPMorgan Chase estimates. +6 Represents general purpose credit card (GPCC) spend, which excludes private label and Commercial Card. Based on company filings and JPMorgan Chase +estimates. +7 Represents GPCC loans outstanding, which excludes private label, American Express Company (AXP) Charge Card, Citi Retail Cards, and Commercial Card. Based +on loans outstanding disclosures by peers and internal JPMorgan Chase estimates. +8 Represents users of all web and/or mobile platforms who have logged in within the past 90 days. +9 Represents users of all mobile platforms who have logged in within the past 90 days. +10 Based on 2023 sales volume and loans outstanding disclosures by peers (AXP, Bank of America Corporation, Capital One Financial Corporation, Citigroup Inc. +and Discover Financial Services) and JPMorgan Chase estimates. Sales volume excludes private label and Commercial Card. AXP reflects the U.S. Consumer +segment and JPMorgan Chase estimates for AXP’s U.S. small business sales. Loans outstanding exclude private label, AXP Charge Card, Citi Retail Cards and +Commercial Card. Card loans outstanding market share has been revised to reflect a restatement to the 2022 reported total industry outstandings disclosed by +Nilson, which impacts annual share growth in 2023. +11 Inside Mortgage Finance, Top Owned Mortgage Servicers as of 4Q23. +12 Experian Velocity data as of FY23. Reflects financing market share for new and used loan and lease units at franchised and independent dealers. +13 Coalition Greenwich Competitor Analytics (preliminary for FY23). Market share is based on JPMorgan Chase’s internal business structure and revenue. Ranks +are based on Coalition Index Banks for Markets. 2006 rank is based on JPMorgan Chase analysis. +14 Dealogic as of January 2, 2024, excludes the impact of UBS/CS merger prior to the year of the acquisition (2023). +15 Client deposits and other third-party liabilities pertain to the Payments and Securities Services businesses. +16 Firmwide Payments revenue metrics exclude the net impact of equity investments; 2005 data represents Treasury Services firmwide revenue only. All other +periods include Merchant Services revenue. +17 Coalition Greenwich Competitor Analytics (preliminary for FY23) reflects global firmwide Treasury Services business (CIB and CB). Market share is based on +JPMorgan Chase’s internal business structure, footprint and revenue. Ranks are based on Coalition Index Banks for Treasury Services. +18 Institutional Investor. +19 Based on third-party data. +20 The Market Share number represents US dollar payment instructions for direct payments and credit transfers processed over Society for Worldwide Interbank +Financial Telecommunications (“SWIFT”) in the countries where J.P. Morgan has sales coverage. +21 Nilson, Full Year 2023. +22 Coalition Greenwich FY23 Competitor Analytics (preliminary). Rank is based on JPMorgan Chase’s internal business structure and revenue and Coalition Index +Banks for Securities Services. +23 Data in 2005 column is as of 12/31/2006. +24 New relationships (gross) exclude impact of First Republic acquisition. +25 Includes gross revenues earned by the Firm that are subject to a revenue sharing arrangement between CB and the CIB for Investment Banking and Markets’ +products sold to CB clients. This includes revenue related to fixed income and equity markets products. +26 S&P Global Market Intelligence as of December 31, 2023. +27 London Stock Exchange Group, FY23. +28 Aligns with the affordable housing component of the Firm’s $30 billion racial equity commitment. +29 Percentage of active mutual fund and active ETF assets under management in funds ranked in the 1st or 2nd quartile (one, three and five years): All quartile +rankings, the assigned peer categories and the asset values used to derive these rankings are sourced from the fund rating providers. Quartile rankings are +based on the net-of-fee absolute return of each fund. Where applicable, the fund rating providers redenominate asset values into U.S. dollars. The percentage +of AUM is based on fund performance and associated peer rankings at the share class level for U.S.-domiciled funds, at a “primary share class” level to +represent the quartile ranking for U.K., Luxembourg and Hong Kong SAR funds and at the fund level for all other funds. The performance data may have been +different if all share classes had been included. Past performance is not indicative of future results. “Primary share class” means the C share class for European +funds and Acc share class for Hong Kong SAR and Taiwan funds. If these share classes are not available, the oldest share class is used as the primary share +class. Due to a methodology change effective September 30, 2023, prior results include all long-term mutual fund assets and exclude active ETF assets. +30 In the fourth quarter of 2020, the Firm realigned certain wealth management clients from AWM to CCB. Prior-period amounts have been revised to conform +with the current presentation. +31 Traditional assets includes Equity, Fixed Income, Multi-Asset and Liquidity AUM Brokerage, Administration and Custody assets under supervision. +32 AUM only for 2005. Prior period amounts have been restated to include changes in product categorization. +33 Source: Euromoney. +60 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_63.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a29009ecbc874eb09f5e7805d354842a0ba284d --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_63.txt @@ -0,0 +1,57 @@ +34 Percentage of active mutual fund and active ETF assets under management in funds rated 4- or 5-star: Mutual fund rating services rank funds based on their +risk adjusted performance over various periods. A 5-star rating is the best rating and represents the top 10% of industry-wide ranked funds. A 4-star rating +represents the next 22.5% of industry-wide ranked funds. A 3-star rating represents the next 35% of industry-wide ranked funds. A 2-star rating represents the +next 22.5% of industry-wide ranked funds. A 1-star rating is the worst rating and represents the bottom 10% of industrywide ranked funds. An overall +Morningstar rating is derived from a weighted average of the performance associated with a fund’s three-, five and ten- year (if applicable) Morningstar Rating +metrics. For U.S.- domiciled funds, separate star ratings are provided at the individual share class level. The Nomura “star rating” is based on three-year +risk-adjusted performance only. Funds with fewer than three years of history are not rated and hence excluded from these rankings. All ratings, the assigned +peer categories and the asset values used to derive these rankings are sourced from the applicable fund rating provider. Where applicable, the fund rating +providers redenominate asset values into U.S. dollars. The percentage of AUM is based on star ratings at the share class level for U.S.-domiciled funds, and at a +“primary share class” level to represent the star rating of all other funds, except for Japan, for which Nomura provides ratings at the fund level. The +performance data may have been different if all share classes had been included. Past performance is not indicative of future results. +35 Source: Company filings and JPMorgan Chase estimates. Rankings reflect publicly traded peer group as follows: Allianz, Bank of America, Bank of New York +Mellon, BlackRock, Charles Schwab, DWS, Franklin Templeton, Goldman Sachs, Invesco, Morgan Stanley, State Street, T. Rowe Price and UBS. JPMorgan Chase +ranking reflects Asset & Wealth Management client assets, U.S. Wealth Management investments and new-to-firm Chase Private Client deposits. +36 Source: iMoneynet. +37 Represents AUM in a strategy with at least one listed female and/or diverse portfolio manager. “Diverse” defined as U.S. ethnic minority. +JPMorgan Chase Exhibits Strength in Both Efficiency and Returns When Compared with Large Peers and +Best-in-Class Peers (page 14) +1 Bank of America Corporation (BAC), Citigroup Inc. (C), The Goldman Sachs Group, Inc. (GS), Morgan Stanley (MS) and Wells Fargo & Company (WFC). +2 Managed overhead ratio = total noninterest expense/managed revenue; revenue for GS and MS is reflected on a reported basis. +3 Best-in-class peer overhead ratio represents the comparable business segments of JPMorgan Chase (JPM) peers: Capital One Domestic Card and Consumer +Banking (COF-DC & CB), Bank of America Global Banking and Global Markets (BAC-GB & GM), Fifth Third Bank (FITB), Northern Trust Wealth Management +(NTRS-WM) and Allianz Group (ALLIANZ-AM). +4 Best-in-class all banks ROTCE represents implied net income minus preferred stock dividends of the comparable business segments of JPM peers, when +available, or of JPM peers on a firmwide basis when there is no comparable business segment: Bank of America Consumer Banking (BAC-CB), Bank of America +Global Banking and Global Markets (BAC-GB & GM), Wells Fargo & Company Commercial Banking (WFC-CB) and Morgan Stanley Wealth Management & +Investment Management (MS-WM & IM). +5 Best-in-class GSIB ROTCE represents implied net income minus preferred stock dividends of the comparable business segments of JPM GSIB peers, when +available, or of JPM GSIB peers on a firmwide basis when there is no comparable business segment: Bank of America Consumer Banking (BAC-CB), Bank of +America Global Banking and Global Markets (BAC-GB & GM), Wells Fargo & Company Commercial Banking (WFC-CB) and Morgan Stanley Wealth Management & +Investment Management (MS-WM & IM). WFC-CB is the only GSIB peer to disclose a comparable business segment to Commercial Banking. +6 Given comparisons are at the business segment level, where available; allocation methodologies across peers may be inconsistent with JPM’s. +Our Fortress Balance Sheet (page 15) +1 Tangible common equity 2005-2007 reflects common stockholders’ equity less goodwill and other intangible assets. +2 Basel III Transitional rules became effective on January 1, 2014; prior-period CET1 data is based on Basel I rules. As of December 31, 2014, the ratios represent +the lower of the Standardized or Advanced approach calculated under the Basel III Fully Phased-In basis. +3 Includes eligible High Quality Liquid Assets (HQLA) as defined in the liquidity coverage ratio (LCR) rule and unencumbered marketable securities, such as equity +and debt securities, that the Firm believes would be available to raise liquidity including excess eligible HQLA securities at JPMorgan Chase Bank, N.A. that are +not transferable to nonbank affiliates; for December 31, 2023 and 2022, the balance includes eligible end-of-period HQLA as defined in the LCR rule, issued +December 19, 2016. For December 31, 2017–2021, the balance includes average eligible HQLA. Periods prior to 2017 represent period-end balances. December +31, 2016 and 2015 balances are under the initial U.S. rule approved on September 3, 2014. The December 31, 2014 amount is estimated prior to the effective +date of the initial rule, and under the Basel III liquidity coverage ratio (Basel III LCR) for December 31, 2013. +4 2005-2012 reflect cash and cash due from banks and investment securities. +5 Capital returned to common stockholders includes common dividends and net repurchases. +Size of the Financial/Sector Industry (page 39) +1 2007 and 2010 sourced from WorldBank.org annual GDP publication. 2023 is calculated using JPM Research forecasts. Figures are represented in 2015 prices. +2 Consists of cash assets and Treasury and agency securities. +3 2023 figure is as of 3Q23. +4 Top 50 fund AUM data per Sovereign Wealth Fund Institute (SWFI). +5 Loans held by nonbank entities per the FRB Z.1 Financial Accounts of the United States. +6 U.S. money market fund investment holdings of securities issued by entities worldwide. +7 Methodology updated in 2022, previous years have been restated. +8 NYSE + NASDAQ; excludes investment funds, ETF’s unit trusts and companies whose business goal is to hold shares of other listed companies; a company with +several classes of shares is only counted once. +9 Inside Mortgage Finance and JPMorgan Chase internal data; consists of Top 50 Originators (Top 40 for 2007). +10 Preqin, Dealogic, JPM Credit Research. +61 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_64.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..8ceddcfa80c13e2f517c44f8d64c7bc6fe09de3d --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_64.txt @@ -0,0 +1,117 @@ +CONSUMER & COMMUNITY BANKING +62 +• Delivering financial performance that is +consistently best-in-class. +• Leveraging data and technology to +deliver customer value and drive speed +to market. +• Protecting our customers and the firm +through a strong risk and controls +environment. +• Cultivating talent to build high- +performing, diverse teams where +culture is a competitive advantage. +Our strategy is working as evidenced by +our results last year. +GROWING AND DEEPENING +RELATIONSHIPS +After the pandemic, we accelerated the +pace of customer acquisition while lower- +ing attrition. Maintaining that momentum, +we now serve over 82 million consumers +and 6.4 million small businesses, up 11% +and 37%, respectively, since 2019. We’re +driving that growth across businesses — +during the same period, Consumer Bank- +ing customers are up 18%, Business +Banking clients are up 41% and Card +accounts are up 30% 1 . +We’re engaging customers with our prod- +ucts and services and delivering seamless +experiences across digital and branch +channels. Our digital banking platform +grew to nearly 67 million active custom- +ers, up 28% since 2019. Once customers +begin to use Chase.com and the Chase +mobile app, we make it easy to help them +save for the future, make small or big +purchases (including a car or home), plan +for retirement or a dream vacation, or +find the perfect restaurant for a night +on the town. +Our branches remain a critical touchpoint +as over 900,000 people walk into one +every day. We know being local matters +and that customers increasingly value +personal interaction and advice. In 2023, +over 2 million more customers met with +a banker than in 2022. +Once we onboard a customer to the fran- +chise, we focus on earning the right to +deepen that relationship and serve more +of their financial needs. Last year was a +banner year for deepening as we ended +2023 with over 24 million multi-line of +business (LOB) customers — up 9% from +2022 and 30% from 2019 3 . We have +prioritized growing multi-LOB relation- +ships as it helps us address more of our +customers’ needs while driving higher +retention and engagement with our prod- +ucts and services. We constantly focus +on improving the customer experience, +which we measure in many ways. We’re +proud to have all-time-high satisfaction +I’m very proud to have co-led Consumer +& Community Banking (CCB) for the past +three years and am grateful to Jenn +Piepszak for her partnership. When we +took over this leading franchise, we +established a strategic framework for +continued, long-term success, and that +framework guided CCB to deliver strong +performance again in 2023. The evolving +macro landscape means uncertainty on +many fronts: the financial health of the +consumer, the path of credit and interest +rates, and the impact of new regulations. +While the future will bring challenges, it +will also create opportunities, and we’ve +proved our ability to adapt and optimize. +In 2023, we remained focused on a +consistent set of strategic priorities: +• Growing and deepening relationships by: +— Engaging customers with products +and services they love and +— Expanding our distribution +Consumer & +Community Banking +CCB +0405_v3 +Charts 4/3/24 +1 Defined as average sales debit active accounts. +2 Unique families with primary and joint account owners +for open and funded accounts. +3 Reflects consumers and small businesses that have +relationships with two or more CCB lines of business. + +20232022202120202019 20232022202120202019 20232022202120202019 ++30% +21% -67% +2023202220212020201920232022202120202019 20232022202120202019 ++18% +41% +60% +2019 TO 2023 GROWTH +CONSUMER BANKING +CUSTOMERS +CREDIT CARD +ACTIVE ACCOUNTS 1 +BUSINESS BANKING +CLIENTS +AUTO +LOAN AND LEASE +ORIGINATIONS +WEALTH MANAGEMENT +RELATIONSHIPS 2 +HOME LENDING +MORTGAGE +ORIGINATIONS +The secret transportation is a "car". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_65.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..5293425a6e5e1efc846aa1727340591ff0b2f9d6 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_65.txt @@ -0,0 +1,138 @@ +CONSUMER & COMMUNITY BANKING +63 +ratings across branch and digital chan- +nels, while our complaint rate per +account is down nearly 10% year-over- +year. Customer attrition is below historic +levels, and CCB’s overall net promoter +score remains very healthy. +DELIVERING FINANCIAL +PERFORMANCE THAT IS +CONSISTENTLY BEST-IN-CLASS +While we recognize that favorable macro +conditions contributed to overearning in +net interest income and credit, we still out- +performed as we delivered strong returns +and grew market share across businesses. +With a 38% return on equity, we exceeded +our 25% target for the third straight year +and would have done so even when nor- +malized to reflect through-the-cycle credit +and rate assumptions. Net income was +$21.2 billion, up 42% over 2022. Revenue +of $70.1 billion was up 28% from 2022, and +CCB’s overhead ratio was 50%. Average +deposits were $1.1 trillion, and although +down 3% from 2022, we outperformed the +industry average. Average loans were up +20% over the prior year to $526 billion, +including the First Republic acquisition. +EXTENDING OUR #1 POSITION +ACROSS INDUSTRY-LEADING +BUSINESSES +Our momentum is driven by successful +execution across all lines of business +in CCB. We’re the clear market leader in +Consumer Banking, Business Banking +and Card and continue to grow. +Consumer Banking +We extended our #1 position in 2023 with +an 11.3% deposit market share, up 40 +basis points from 2022. Excluding First +Republic, share growth was up 10 basis +points. Since 2019, we’ve increased our +share by 220 basis points. We’ll continue +to drive growth by expanding branches +and evolving products to meet customer +needs by segment. +Branches remain the hub for our local +team of experts — over 50,000 bankers, +advisors and business relationship +managers — and a key distribution channel +for all parts of the firm. We continue to +optimize our network of over 4,800 +branches as we aim to be within a +10-minute drive for 70% of the U.S. +population. This will help us grow share +in major metropolitan areas like Boston, +Philadelphia and Washington, D.C., as +well as states with mostly rural popula- +tions such as Alabama and Iowa, where +we are also expanding our presence. +We’ve added more than 650 new +branches in the last five years, by far +the most of any bank in the U.S. We’re +doubling down on that investment and +will add 500+ branches over the next +three years. The result is a significantly +younger branch network, which creates +embedded growth that already has driven +share gains and will continue to do so for +years to come. Newer or “unseasoned” +branches represent more than $150 bil - +lion in incremental deposit upside as they +mature. At the same time, we are consoli- +dating older branches in certain markets +in response to shifting customer behavior. +We aim to be the bank for all, so tailoring +products, services and experiences for +each customer segment and community is +central to our strategy. We’re increasingly +focused on supporting the financial health +of customers and communities through +digital and in-person resources, such as +our nearly 150 dedicated Community +Managers. We now have 16 Community +Center branches and plan to open three +more in 2024. +We started 2023 with a goal of maintain - +ing primary bank relationships and cap- +turing money in motion, and we did both. +We retained over 95% of our primary +bank customers and succeeded in deep- +ening with investments and an enhanced, +higher-yield product set — including +competitive-rate CDs and the new +J.P. Morgan Premium Deposit account. As +a result, we successfully captured more +than 80% of yield-seeking flows in 2023. +Business Banking +We offer small business owners a compre- +hensive product suite to help them start, +run and grow their businesses. We’re #1 +in small business primary bank share +with 9.5% of a fragmented market and +plan to grow by: +• Increasing banker capacity to better +cover large clients, which drives higher +retention, cross-product deepening and +client satisfaction. In 2023, we added +more than 350 bankers against our +target of 1,000 incremental bankers. +• Rolling out value-added services like +payroll, broadening our payment accep- +tance suite with new offerings such as +invoicing (currently in pilot) and launch- +ing Tap-to-Pay, which enables mer - +chants to accept card payments on +their mobile devices. +• Continuing to expand support for small +business owners in underserved com- +munities through special purpose credit +programs, one-on-one mentoring and +local events. +Card +In 2023, we extended our #1 position in +credit card, with sales and outstandings +market share up approximately 50 and +30 basis points, respectively, compared +with 2019 4 . +We drove growth by leveraging our +marketing capabilities to get the right +products in the right customers’ hands. +In 2023, we invested nearly $7 billion in +4 Card outstandings market share has been revised to +reflect a restatement to the 2022 reported total industry +outstandings disclosed by Nilson, which impacted annual +share growth in 2023. + \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_66.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..eb55fab69a5187d62f040b7edee781d217831404 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_66.txt @@ -0,0 +1,118 @@ +CONSUMER & COMMUNITY BANKING +64 +gross marketing to generate 10 million +new credit card accounts and deliver +benefits to existing cardholders. The +continued demand for our leading products +has fueled portfolio growth, enabling us +to deliver more value and drive engage- +ment with our customer base. +In 2023, we focused on enhancing our +Card product continuum to effectively +serve the unique needs of each customer +segment and: +• Launched Chase Freedom Rise SM for +younger, new-to-credit customers, +which has shown strong adoption using +our branches as its primary distribution. +• Launched DoorDash Rewards +Mastercard®, adding a new strategic +partner to our co-brand portfolio. +• Scaled Ink Business PremierSM, launched +in late 2022, to grow share with small +businesses. +• Continued to enhance the Sapphire +value proposition by opening lounges in +five airports to date and leveraging the +travel, dining and shopping experiences +we’re building in Connected Commerce. +SCALING GROWTH BUSINESSES +In Connected Commerce and Wealth +Management, we have the assets to win +and outsized opportunity to grow to +what we view is our fair share, given the +breadth of CCB relationships. These busi- +nesses are natural adjacencies to banking +and credit card, with scale and distribu- +tion that will fuel their growth. +Connected Commerce +We continue building out a powerful two- +sided platform to connect Chase custom- +ers with top brands, helping them book +travel, discover new dining experiences +and save money while shopping. We +expect to drive approximately $30 billion +in volume and about $2 billion in revenue +through the platform in 2025. We’ve +nearly doubled volume over two years, +driving more than $18 billion in 2023. +Going forward, we’re focused on: +• Scaling Travel. We are a top 5 consumer +leisure travel provider with $10 billion in +booked volume last year, up more than +25% from 2022. We’ve just relaunched +ChaseTravel.com to help customers +dream, discover and book travel, +including a new collection of more than +600 of the world’s finest hotels. +• Expanding Shopping through Chase +Offers. In 2023, we generated more +than $8 billion in attributed spend +volume, up over 30% from 2022. +We’re accelerating growth by launching +Chase Media SolutionsSM, a new digital +media business aimed at merchants +that allows them to target and connect +with Chase customers. +• Innovating payments and lending +capabilities. To provide customers with +innovative, convenient ways to pay and +borrow, last year we began to roll out +Pay in 4 SM, which has scaled to more +than 20 million customers. We also saw +more than 50% year-over-year growth +in card-linked installment originations +through My Chase Plan®. +Wealth Management +In 2023, we grew client investment assets +by 25% to $800 billion before accounting +for the First Republic acquisition. In total, +we ended the year with $950 billion in +assets, up $450 billion since 2019, as we +close in on our goal of reaching $1 trillion +in assets under supervision. We now have +2.5 million client relationships — up 60% +from 2019 — with a record 120,000 first- +time investors in 2023. +This momentum stems from the invest- +ments we’ve made in products, channels +and talent in the last four years since +we established J.P. Morgan Wealth +Management. In 2023, we: +• Added more than 400 total advisors, +ending the year with nearly 5,500 on +a path to 6,000. +• Scaled Wealth Plan, an omnichannel +financial planning experience that +customers start digitally and can finish +with an advisor. Customers have +created more than 1 million financial +plans since the experience launched +in December 2022. +5 #1 most-visited banking portal in the U.S. (Chase.com) +based on Similarweb. +#1 banking portal +in the United States5 +#1 in total combined +U.S. credit and debit +payments volume +#1 +#1 +#1 in U.S. retail deposit +market share +#1#1 +#1 primary bank for +U.S. small businesses +#1 U.S. credit card issuer based +on sales and outstandings4 +#1 diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_67.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..eb7ed00ade3bc8b96c3b500de9f12ee26c4e488d --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_67.txt @@ -0,0 +1,138 @@ +CONSUMER & COMMUNITY BANKING +65 +SECURED LENDING +Auto and Home Lending +In Auto and Home Lending, our objective +is not market share but to be there for cus- +tomers during key moments and to create +franchise value while continuing to maxi- +mize the strength of the firm’s balance +sheet, capital and liquidity. Given the cycli- +cal nature of both businesses, we manage +returns on a through-the-cycle basis. +Despite recent market headwinds, Auto +and Home Lending delivered a return on +equity of 17% and 15%, respectively, aver - +aged over the last five years6 . While the +acquisition of First Republic’s mortgage +portfolio helped bolster Home Lending +returns last year, CCB’s mortgage business +was key to enabling the transaction. +Across both businesses, we continue +to leverage data and artificial intelligence +(AI)-enabled techniques to enhance and +optimize our underwriting and credit +decisioning. +We also remain committed to increasing +homeownership among underserved +communities. Our Chase Homebuyer +Grant program has scaled to over 15,000 +communities since its launch in 2021, and +we recently increased the grant amount +to $7,500 in select markets. +LEVERAGING DATA AND +TECHNOLOGY TO DELIVER +CUSTOMER VALUE AND DRIVE +SPEED TO MARKET +Data and technology make everything we +do better — our products, channels and +experiences. In 2023, CCB spent over +$3 billion on technology investments +spanning both product development and +modernization. +A little over half of our annual investment +is focused on product development, help- +ing ensure we have the best products, +services and channels to meet customers’ +evolving needs. From paying a bill and +checking a balance to replacing a card +and disputing a transaction, we’re making +processes more seamless, taking friction +out of customers’ everyday financial lives. +At the same time, customers are increas- +ingly engaging with our advice-oriented +digital and omnichannel experiences to +meet their more complex needs, like buy- +ing a home or planning for retirement. +Engaged online activity — beyond viewing +balances — is up 25% since 2019. +The rest of our technology investment is +focused on modernization, which is both +offensive and defensive. We need to +deliver new products and experiences +more quickly while executing with resil- +iency at massive scale to stay competitive +and avoid being disrupted. We’ve made +significant progress and are on track to +substantially complete data center migra- +tion by the end of 2024. We’ve also +migrated almost 90% of our data to the +public cloud. Looking ahead, we’ll con- +tinue to focus on modernizing our core +banking infrastructure, which will enable +us to launch products faster, improve +platform stability and reduce run-the- +bank expenses over time. +Our data migration efforts help us take full +advantage of our extraordinary data +assets to deliver personalization at scale +and accelerate existing and future AI initia- +tives. We’ve been using AI for years and +have a strong foundation in place. Initially, +we focused on using AI to drive cost reduc- +tion and risk avoidance, but we’ve pivoted +to focus more on revenue growth. We’ll +continue to invest where we will realize the +greatest benefit, including: +• Optimizing marketing efforts to better +target profitable prospects. +• Identifying unmet customer needs, then +addressing them in the moment with +digital nudges and personalized offers. +• Increasing the productivity and effi- +ciency of our sales force through lead +management and propensity models. +• Predicting in real time the likelihood +of fraud to better protect customers +and the firm. +• Supporting specialists with AI advance- +ments like call prediction, real-time +insights and intelligent routing to drive +customer and employee satisfaction. +PROTECTING OUR CUSTOMERS +AND THE FIRM +Risk management is core to our culture +and a key competitive advantage, helping +us build trust and providing security to +customers. We are focused on protecting +shareholders, customers and the firm by +maintaining our fortress balance sheet, +strong controls environment and through- +the-cycle decision-making approach. +CULTIVATING TALENT +The work we do matters to customers, +communities and the economy overall. Our +goal is always to attract and retain great +talent and create a culture where every- +one’s voice matters. We help employees +build a long-term career at the firm and +have a workforce that reflects the commu- +nities we serve. Our high-performance +culture rewards the hard work, heart and +humanity that our more than 140,000 +employees deliver every day. All of this +leads to the best business outcomes. +ACQUIRING FIRST REPUBLIC +In the midst of widespread instability in +the banking sector, it was the strength +and breadth of our franchise and the +dedication of thousands of employees +that enabled us to complete the acquisi- +tion of virtually all of First Republic’s +assets in one weekend. +We had long admired First Republic’s +capabilities and culture of client service, +which complement our existing affluent +6 Excluding loan loss reserves. + +The secret landmark is the "Eiffel Tower". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_68.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..6eb4ba255f10b370a0f2d96cf6a0f961ffbc430e --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_68.txt @@ -0,0 +1,101 @@ +CONSUMER & COMMUNITY BANKING +66 +strategy. We already serve customers +across the wealth spectrum, but the +acquisition will help us deepen relation- +ships with the affluent segment. In 2023, +we prioritized stabilizing First Republic’s +existing business. We retained the vast +majority of customers, and deposits have +increased approximately 20% since the +acquisition. While we are on track against +key integration milestones, 2024 will be +critical as we aim to largely complete +integration efforts by year-end. +2024 LOOK AHEAD +Macro factors +The macro environment going forward +will likely look very different from 2023. +While we anticipate the Federal Reserve +will lower rates this year, the trajectory +is still uncertain. Lower rates will be a +headwind for deposit margins but a +tailwind for businesses such as Home +Lending. The diversification of our +franchise provides natural offsets +and hedges and creates resiliency in +earnings and performance. +We are rigorous in monitoring our portfo- +lios at a granular level using multiple +data sources to assess direct risk and the +overall health of consumers and small +businesses. Based on what we’re seeing, +consumers and small businesses both +still remain generally healthy. Although +consumers have largely spent the excess +cash reserves built up from the fiscal +response to the pandemic, balance +sheets remain strong. Spending on a per +account basis is largely flat year-over- +year. Delinquencies played out as +expected in 2023, and credit card losses +should fully normalize later this year. +Regulatory environment +The banking industry is facing an unprec- +edented barrage of untested and unstud- +ied proposed regulations and legislation +targeting multiple aspects of our busi- +ness. The combined impact of all of these +— Basel III, Regulation II (Debit Card +Interchange Fees), overdraft and late fee +changes, the Consumer Financial Protec- +tion Bureau’s Sections 1033 and 1071, and +the Credit Card Competition Act — will +meaningfully disrupt the economics of +consumer financial products and services. +This level of intervention will lead to some +combination of the following: +• Fewer financial products and services +available, and the remaining ones will +become more expensive and harder to +access, especially for lower-income +consumers. +• Less investment and innovation in the +financial services industry, leading to +an erosion of the customer experience. +• More consolidation across the industry, +which will limit consumer choice. +• More financial activity handled by +nonbanks outside of the regulatory +perimeter, increasing risk for +consumers. +Of course, we will comply with the final +rules and regulations and are relatively +well-positioned to do so. However, +consumers and small businesses will +likely bear the largest burden. +Our hand +We continue to operate from a position of +strength with a relentless focus on the +customer, a proven strategy and the best +team. We recognize headwinds on the +horizon and will adapt accordingly, taking +a through-the-cycle approach to manag- +ing our business. Moving forward, we’ll +continue to: +• Execute with excellence and a focus on +efficiency and flexibility as the environ- +ment around us changes. +• Engage with regulators on how +current proposals will negatively +impact consumers and the industry. +• Reshape our business where necessary +in response to new regulations, balanc- +ing impacts to shareholders, customers +and the communities we serve. +I remain very confident about the future +of our franchise, yet approach the oppor- +tunities and challenges we’ll face with +great humility. +Marianne Lake +CEO, Consumer & Community Banking \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_69.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff1acf56d4e618dcb0b6041dd5fc76301168717f --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_69.txt @@ -0,0 +1,112 @@ +COMMERCIAL & INVESTMENT BANK +67 +Commercial & +Investment Bank +I am equally thrilled to spend more of +my time in my role as President and Chief +Operating Officer, helping Jamie with +firmwide, strategic priorities that will +provide growth and opportunities for +years to come. +My focus will be on driving synergies +across our lines of business, accelerating +our investments in growth and innova- +tion, and optimizing our resources across +the firm. Priorities include harnessing +data and modernizing our technology +infrastructure so we can apply artificial +intelligence (AI) to our businesses. This +will help identify efficiencies and areas of +opportunity. I also want to make sure we +continue to manage and deploy capital in +ways that best serve our clients, particu- +larly when they need it most. +In 2023, we made significant strides in +key areas: +In March, teams across our Consumer +Banking, Private Banking, Commercial +Banking and Investment Banking busi- +nesses joined forces to deliver the firm’s +full support to the venture ecosystem in +the aftermath of the regional banking tur- +moil. We are now exploring new ways to +better serve this community, including +tapping opportunities in the booming pri- +vate markets so that we can compete +effectively in this rapidly evolving area. +Our payments capabilities also continue +to strengthen and advance as we priori- +tize innovation and resiliency. We are +unique in that we can compete with fin- +techs on customer experience and digital +solutions while also offering the stability, +expansive network and services of a +global bank. +Technology is reshaping the financial +services landscape, and we are channel- +ing its transformative power. Among our +efforts, we are already using AI to +onboard customers faster, combat fraud +and serve up more insights to clients. +We are pushing into new markets both at +home and internationally. Whether it’s +growing our presence in emerging mar- +kets, deepening our relationships with +multinational corporations, or expanding +our U.S. branch network and wealth man - +agement business, our strategy is guided +by a commitment to clients, communities +and long-term value creation. +The leadership positions we have today are +the result of hard work and investment +over many years. We know also how hard it +is to stay ahead of the pack. My promise to +you, our shareholders, is that we will not +be complacent. We will stay humble and +hungry and strive always to be the best, +most respected financial firm in the world. +When Jamie asked me to lead a new orga- +nization 12 years ago, I was thrilled. The +firm was combining its traditional Invest- +ment Bank with the Treasury & Securities +Services division. +The rationale was clear. The merger +would create a massive franchise encom- +passing the industry’s most diverse and +comprehensive solutions for the world’s +largest and most prominent companies, +governments and institutions. From capi- +tal raising and M&A advice to payments, +trading and custody, the combined fran- +chise would enable us to deliver a full +range of products and solutions to clients +around the world. +As others retrenched, we believed growth +would come from being global and diver- +sified, having scale and providing a com- +plete client offering. So we merged two +divisions, identified gaps and invested in +global capabilities. To this day, I believe +the decisions we made then set us up for +the success that we’ve had for the last +decade. The proof is in the revenue, +returns, rankings and market share that +we’ve discussed with you over the years. +This January, we announced the latest +evolution of our corporate structure by +merging two divisions once again: Com- +mercial Banking (CB) with the Corporate +& Investment Bank (CIB). +As we integrate these top-notch fran- +chises, I am delighted to hand the keys +of this incredible organization to Jenn +Piepszak and Troy Rohrbaugh. They are +exceptional leaders in every way, and +I know they will continue to work hard +each day, leading our employees and +serving our clients with heart, integrity +and excellence. +Daniel E. Pinto +President and Chief Operating Officer, +JPMorgan Chase & Co. +The secret object #5 is a "comb". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_7.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..df53e9d9db50adcef750baf1cc209b33a0a7e1a9 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_7.txt @@ -0,0 +1,138 @@ +STEADFAST PRINCIPLES WORTH REPEATING (AND ONE NEW ONE) +Looking back on the past two+ decades — +starting from my time as Chairman and +CEO of Bank One in 2000 — there is one +common theme: our unwavering dedica - +tion to help clients, communities and +countries throughout the world. It is clear +that our financial discipline, constant +investment in innovation and ongoing +development of our people have enabled +us to achieve this consistency and com- +mitment. In addition, across the firm, we +uphold certain steadfast tenets that are +worth repeating. +First, our work has very real human +impact. While JPMorgan Chase stock is +owned by large institutions, pension +plans, mutual funds and directly by single +investors, in almost all cases the ultimate +beneficiaries are individuals in our com - +munities. More than 100 million people in +the United States own stocks; many, in +one way or another, own JPMorgan Chase +stock. Frequently, these shareholders are +veterans, teachers, police officers, fire - +fighters, healthcare workers, retirees, or +those saving for a home, education or +retirement. Often, our employees also +bank these shareholders, as well as their +families and their companies. Your man- +agement team goes to work every day +recognizing the enormous responsibility +that we have to all of our shareholders. +Second, shareholder value can be built +only if you maintain a healthy and vibrant +company, which means doing a good job +of taking care of your customers, employ - +ees and communities. Conversely, how +can you have a healthy company if you +neglect any of these stakeholders? As we +have learned over the past few years, +there are myriad ways an institution can +demonstrate its compassion for its +employees and its communities while still +strengthening shareholder value. +Third, while we don’t run the company +worrying about the stock price in the short +run, in the long run we consider our stock +price a measure of our progress over time. +This progress is a function of continual +investments in our people, systems and +products, in good and bad times, to build +our capabilities. These important invest- +ments will also drive our company’s future +prospects and position it to grow and +prosper for decades. Measured by stock +performance, our progress is exceptional. +For example, whether looking back 10 +years or even farther to 2004, when the +JPMorgan Chase/Bank One merger took +place, we have outperformed the Standard +& Poor’s 500 Index and the Standard & +Poor’s Financials Index. +Fourth, we are united behind basic princi - +ples and strategies (you can see the prin - +ciples for How We Do Business on our +website and our Purpose statement in my +letter from last year) that have helped +build this company and made it thrive. +These allow us to maintain a fortress bal - +ance sheet, constantly invest and nurture +talent, fully satisfy regulators, continually +improve risk, governance and controls, +and serve customers and clients while +lifting up communities worldwide. This +philosophy is embedded in our company +culture and influences nearly every role +in the firm. +Fifth, we strive to build enduring busi- +nesses, which rely on and benefit from one +another, but we are not a conglomerate. +This structure helps generate our superior +returns. Nonetheless, despite our best +efforts, the walls that protect this com- +pany are not particularly high — and we +face extraordinary competition. I have +written about this reality extensively in the +past and cover it again in this letter. We +recognize our strengths and vulnerabili- +ties, and we play our hand as best we can. +Sixth, and this is the new one, we must be +a source of strength, particularly in tough +times, for our clients and the countries in +which we operate. We must take seriously +our role as one of the guardians of the +world’s financial systems. +Seventh, we operate with a very important +silent partner — the U.S. government — +noting as my friend Warren Buffett points +out that his company’s success is predi- +cated upon the extraordinary conditions +our country creates. He is right to say to +his shareholders that when they see the +American flag, they all should say thank +you. We should, too. JPMorgan Chase is a +healthy and thriving company, and we +always want to give back and pay our fair +share. We do pay our fair share — and we +want it to be spent well and have the +greatest impact. To give you an idea of +where our taxes and fees go: In the last 10 +years, we paid more than $46 billion in +federal, state and local taxes in the United +States and over $22 billion in taxes outside +of the United States. Additionally, we paid +the Federal Deposit Insurance Corporation +over $10 billion so that it has the resources +to cover failure in the American banking +sector. Our partner — the federal govern- +ment — also imposes significant regula- +tions upon us, and it is imperative that we +meet all legal and regulatory require- +ments imposed on our company. +Eighth and finally, we know the founda- +tion of our success rests with our people. +They are the front line, both individually +and as teams, serving our customers and +communities, building the technology, +making the strategic decisions, managing +the risks, determining our investments +and driving innovation. However you view +the world — its complexity, risks and +opportunities — a company’s prosperity +requires a great team of people with +guts, brains, integrity, enormous capabili - +ties and high standards of professional +excellence to ensure its ongoing success . +5 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_70.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..d1cdf383cfef166a23441a1b70bdb306d8c7763b --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_70.txt @@ -0,0 +1,140 @@ +COMMERCIAL & INVESTMENT BANK +68 +A decline in M&A dealmaking and the +higher interest rate environment led to +subdued debt capital markets and a drop +in our debt underwriting fees to $2.6 +billion in 2023 compared with $2.8 billion +in 2022. A standout deal was the $31 +billion bond deal for Pfizer to fund its +acquisition of cancer drug pioneer +Seagen, in which the firm had a lead role. +In 2023, our equity underwriting fees +were up 11% compared with 2022, and +we gained market share year-over-year1 . +While market uncertainty dented confi- +dence in initial public offerings (IPO), the +franchise led two of the year’s biggest +offerings, including the $5 billion IPO of +British chip designer Arm Holdings and +consumer health company Kenvue’s +$4 billion debut. +It was another strong year for our +Markets business, which generated +$28 billion in revenue. Some of the +uncertainty that plagued investment +banking activity kept trading desks busy +as clients hedged and positioned them- +selves accordingly. Fixed Income Markets +revenue was up 1% from 2022, driven +by the Securitized Products Group and +Credit, mainly offset by normalization in +Currencies & Emerging Markets, while +Equity Markets revenue dipped after +a relatively strong performance in 2022. +Clients also voted J.P. Morgan the #1 +global research firm in Institutional +Investor’s annual survey for the fourth +year in a row. Our analysis of economies +and markets, including research on +some 5,200 companies across more than +80 countries, is particularly sought after +during turbulent times. +CIB Payments reported a record +$9.3 billion in revenue in 2023, up from +$7.6 billion in 2022, as it benefited from +the higher interest rate environment. +In January 2024, we announced an excit - +ing new chapter in our decade-long +growth story. +The decision to bring together the firm’s +major wholesale businesses to form the +Commercial & Investment Bank continues +a journey we have been on for a while as +we seek to better support clients from +their early stages of growth through to +international expansion, acquisitions +and beyond. +The new combined business has the scale, +business diversity and financial firepower +to offer complete solutions across bank- +ing, trading, payments and custody to +middle market businesses, global compa- +nies and governments in more than 100 +markets. +We are deeply indebted to Daniel Pinto, +who built the Corporate & Investment +Bank over the last 12 years with leader- +ship positions across products and +regions1,2 . In his time as CEO, the CIB grew +revenue from $34 billion in 2011 to $49 +billion in 2023 and increased net income +by more than 75% during the same +period, and its Investment Banking and +Markets businesses have been #1 fran- +chises for over a decade1,2 . +It is a privilege to lead this remarkable +business, and we are thrilled about the +opportunities still to come. But let us first +reflect on the key events and highlights +of our performance in 2023. +OUR PERFORMANCE IN 2023 +In 2023, the CIB generated net income of +$14 billion on $49 billion in revenue, mir - +roring 2022’s solid performance but down +from 2021’s record highs. Strong trading +results and record years for our deposit- +taking businesses cushioned the impact +of industrywide weakness in investment +banking activity, underscoring the bene- +fits of our diversified business model. +The year included central banks hiking +rates at the fastest pace in decades, a +second year of war in Ukraine and the +outbreak of conflict in the Middle East, +the collapse of several U.S. regional +banks and recession in parts of Europe. +Throughout, J.P. Morgan offered its +expertise and balance sheet, helping +companies, financial institutions and +governments weather the storm. +During the regional bank turmoil and +resulting economic stress, the firm +helped shore up the financial system +and the economy, stepping in with bil- +lions of dollars in liquidity to help +banks, their clients and investors navi- +gate the crisis. This was complemented +by the firm helping to raise $155 billion +for financial institutions in 2023. +Worldwide investment banking activity +was hit by the uncertain economic out- +look and market conditions. Industry- +wide fees shrank to a 10-year low1 , and +dealmaking remained subdued, causing +our own investment banking revenue +to dip slightly, to $6.2 billion from $6.5 +billion in 2022. Even so, the business +maintained its #1 ranking in global +investment banking fees with a wallet +share of 8.8% 1 . We also ranked #1 in +debt capital markets, #2 in mergers and +acquisitions (M&A), and rose to #1 in +equity capital markets1 . +Our M&A franchise advised on nearly +350 deals totaling more than $700 bil - +lion in volume1 , including some of the +year’s largest announced transactions: +the $42 billion separation of Johnson +& Johnson’s consumer health business, +agricultural supplier Viterra’s $17 billion +merger with U.S. oilseed and grain +processor Bunge, and sandwich chain +Subway’s $10 billion sale to Roark +Capital, one of the biggest transactions +in fast food history. +1 Dealogic as of January 2, 2024 +2 Coalition Greenwich Competitor Analytics (preliminary for +FY23). Market share is based on JPMorgan Chase’s internal +business structure and revenue. Ranks are based on Coalition +Index Banks. \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_71.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..a388ce1119c3f93862484f4c10dcbeb587454b2f --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_71.txt @@ -0,0 +1,76 @@ +COMMERCIAL & INVESTMENT BANK +69 +Securities Services, our fourth major line +of business in the CIB, also had a record +year, reporting $4.8 billion in revenue. +Sitting adjacent to the industry’s largest +Markets business, it provides post-trade +services to institutional asset-manager +and asset-owner clients, providing safe- +keeping, settlement and related services +for securities in approximately 100 +markets around the world. Since the +CIB was formed in 2012, the Securities +Services business has nearly doubled +assets under custody from $17 trillion at +the end of 2011 to $32 trillion at the end +of 2023 3 . In recent years, investments +in technology have enhanced the scale +and resiliency of its platforms, enabling +the business to grow revenue and secure +major new mandates. +SIZING UP THE OPPORTUNITIES +AHEAD +J.P. Morgan has an exceptional blend of +strengths that have continued to deliver +value over time. The completeness of our +products and services, talent, ongoing +investments in digital technology and +tools, client focus and fortress balance +sheet have given the CIB strong share +positions across almost all areas1,2 . +We are not complacent about these lead- +ership positions. The competitive land- +scape for our businesses is intensifying, +driven by both traditional banks as well +as further growth of nonbank financial +institutions. Core to our strategy is look- +ing very closely at all areas of the busi- +ness and pinpointing where there are +weaknesses and opportunities to grow. +Here are some of our target areas: +The benefits of integration +This year we are integrating our major +wholesale businesses Commercial Banking +and the Corporate & Investment Bank. +There are more connections between the +3 Represents assets held directly or indirectly on +behalf of clients under safekeeping, custody +and servicing arrangements. +MARKETS +20232018 +$19.6 +$27.8 ++42% +Markets revenue4 and J.P. Morgan market share and rank5 +($ in billions) +4 Revenue reflects J.P. Morgan reported revenue. +5 Coalition Greenwich Competitor Analytics (preliminary for FY23). Market share is based on JPMorgan Chase’s +internal business structure and revenue. Ranks are based on Coalition Index Banks for Markets. +Market share5 11.4% 11.4% +Rank5 #1 #1 +INVESTMENT BANKING +Investment banking wallet trend and J.P. Morgan market share and rank +Source: Dealogic as of January 2, 2024 +J.P. Morgan rank #1 #1 #1 #1 + (all years) (all years) +/UIstop/UIstopJ.P. Morgan market share +/UIstop/UIstopIndustry wallet ($ in billions) +9.2% +7.8% +8.8%8.4% +$79 +$112 +$79 +$66 +202320222020-2021 average2016— 2019 average \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_72.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..cf870c2273686bf6c5282f89a9f412ea3d28843e --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_72.txt @@ -0,0 +1,123 @@ +COMMERCIAL & INVESTMENT BANK +70 +two businesses than ever before. In 2023, +over $3 billion in gross Investment Bank- +ing and Markets revenue6 and more than +$8 billion in firmwide Payments revenue, +almost half, came from Commercial +Banking clients7 . With our extensive foot- +print in the middle market, combined +with our Investment Banking franchise, +we are uniquely positioned to support +middle market clients as they grow in +size and complexity. +At the same time, our biggest multinational +and asset manager clients are navigating +an increasingly complex set of challenges +and need a banking partner with the scale, +global reach and full-service offering to +resolve them. With employees around the +world supporting clients in more than 100 +countries, the newly enlarged business is +among the most complete institutional +client franchises in the industry. Wherever +companies are on their growth journey, the +newly combined business will have the +resources and coverage to help. +Trading at scale +Our trading business operates at huge +scale. +In 2023, in the U.S. alone, it handled more +than 42 billion client orders and helped +investors buy and sell nearly $11 trillion +in 12,000 equity securities. +Our strategy of being a complete +counterparty is paying off, with our +biggest institutional clients choosing to +do more business with us. Accordingly, +the bank’s share of the institutional +client wallet has grown from 11.1% in +2018 to 13.9% in 2023 8 . +Being there for clients in all markets and +conditions, however, demands a signifi- +cant amount of capital. Although this is a +headwind, the business continues to pro- +vide solid returns, and we remain focused +on the disciplined allocation of capital +while preparing for updated U.S. capital +requirements. +As assets and international trade flows +increase, we are modernizing platforms +by moving to the cloud and increasing +automation to handle greater volumes at +lower cost. +To capture market share, institutional +trading needs to be easy and intuitive. +We are investing to enhance the trading +experience for clients across the life cycle +of their trades, from onboarding to pre- +trade services like research, execution, +post-trade settlement and data services. +We are investing heavily in the electronifi- +cation of our credit business, bringing +across some of the technology and +approach behind our Equities business. +Among other initiatives in 2023, +J.P. Morgan launched a new algorithmic +trading offering to U.S. Treasury investors +to capture share in the world’s most +important bond market. +Private capital markets +Private markets — both credit and equity +— have grown significantly over the past +decade. The private credit market has +grown nearly fourfold over the last 10 +years to more than $1.6 trillion9 , while +money raised in venture capital and pri- +vate equity growth deals has more than +doubled over the same period10 . +Our borrower and investor clients are on +both sides of this growth, and we are +well-positioned to serve the full range of +their needs. We are growing our solution- +agnostic credit strategy, deploying balance +sheet where it makes sense for direct +lending, in addition to our existing financ- +ing and structured solutions. We are also +enhancing our offering for asset managers +and financial sponsors looking to deploy +capital. As the private markets continue to +evolve, we will remain a significant player +with a goal of providing clients with a full +range of financing options. +6 Includes gross revenues earned by the firm that are subject +to a revenue sharing arrangement between CB and the CIB +for Investment Banking and Markets products sold to CB +clients. This includes revenues related to fixed income and +equity markets products. Refer to page 65 of the firm’s 2023 +Form 10-K for discussion of revenue sharing. +7 Firmwide Payments revenues (predominantly in the CIB +and CB) includes certain revenues that are reported as +investment banking product revenue in CB and excludes +the net impact of equity investments. +8 Coalition Greenwich Institutional Client Analytics. +2023 based on 3Q23 year-to-date analysis. +9 Preqin +10 PitchBook +11 2018 firmwide Payments revenue adjusted down by +$0.2 billion for data processing accounting re-class. +12 2018 Securities Services revenue adjusted down by +$0.1 billion to exclude the impact of past business +simplification, exit actions and accounting changes. +PAYMENTS AND SECURITIES SERVICES +Firmwide Payments revenue7, 11 +($ in billions) +Securities Services revenue12 + ($ in billions) +20232018 +$10.4 +$18.2 +$4.2 $4.8 +20232018 ++14% ++76% \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_73.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..780089464fd69b82c883832c2e4d7190b5391136 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_73.txt @@ -0,0 +1,110 @@ +COMMERCIAL & INVESTMENT BANK +71 +With the acquisition of First Republic Bank +and collapse of Silicon Valley Bank, we +have a unique opportunity to expand our +support for the Innovation Economy — the +ecosystem of venture-backed companies, +founders and investors, who rely on the +private markets. In the past, these efforts +were led largely by Commercial Banking. +With our new combined franchise, we +can now better serve this dynamic, fast- +growing client base. We want to make +clients-for-life out of the legions of tech +companies and their founders by support- +ing them from the earliest stages of +growth up to IPO and beyond. +Capital for the climate +In 2023, we continued to help clients +with their sustainability goals as well as +scaling green solutions. Since 2021, the +CIB has financed and facilitated $230 +billion for green activities toward our +firmwide target of $1 trillion by 2030, +primarily by supporting clients with green +bond underwriting and financing for +renewable and clean energy. From financ - +ing and capital raising to strategic advice, +we are working closely with clients across +industries as they aim to meet their own +long-term sustainability targets. +Investing for the future +We are investing to scale and enhance the +resiliency of our core platforms and are +pioneering new technologies to move +faster and improve the client experience. +Across the business, we are exploring use +cases for artificial intelligence. In Markets, +our AI-powered Client Intelligence plat- +form is starting to use data from across +the business to create recommendations +based on client interactions, and our Prime +Finance team is harnessing AI to better +manage the inventory of securities we +have on hand for clients while optimizing +our balance sheet for capital efficiency. +Elsewhere, AI has improved the onboard- +ing experience for clients, speeding up and +improving the accuracy of our Know Your +Customer procedures, while in Investment +Banking, the technology is helping cover- +age teams to pinpoint when companies +might need to tap the equity markets. +Our Payments business moves nearly +$10 trillion13 each day, with capabilities to +send payments in more than 120 curren - +cies across 160 countries. We are future- +proofing its platforms and investing to +help businesses across industries, such as +healthcare and e-commerce accept and +make payments more seamlessly. In +Securities Services, an increasing focus is +to provide better data services to help +investor clients improve the performance +of their portfolios and the operational +efficiency of their businesses. In 2023, we +launched the first commercial offerings +on our Fusion platform, giving clients +access to their custody, fund accounting +and middle office data via API or the +cloud. We also rolled out a tool that helps +clients gather, cleanse and organize ESG +data from different sources. +LOOKING AHEAD +The start of 2024 has brought some early +encouraging signs for investment banking +activity but a more mixed outlook for our +Markets business. +Several risks remain. Economies are still +adjusting to life after the pandemic and +the injection of trillions of dollars in +monetary and fiscal stimulus; geopolitical +challenges continue to flare; and the +competitive threat is intensifying. The +outcome of these is inherently unknown +— they could provide both headwinds and +opportunities for our business. +The consistent returns created by the scale +and diversity of our franchise allow us to +keep investing through economic cycles. +We are global with capabilities at scale, +and now combined with Commercial +Banking, we have the ability to become +even more client-centric. +Our products, services and reach coupled +with incredible people and our winning +culture make us especially hopeful about +the future of our business. +It is an honor for both of us to lead this +world-class franchise, and we are excited +for the opportunities in front of us. +13 Based on firmwide data using regulatory reporting +guidelines prescribed by the Federal Reserve for US +Title 1 planning purposes; includes internal settlements, +global payments to and through third-party processors +and banks, and other internal transfers. +Troy Rohrbaugh +Co-CEO, Commercial & Investment Bank +Jennifer Piepszak +Co-CEO, Commercial & Investment Bank diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_74.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a3feecd36879e1aa85c8309333b58801aa79be3 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_74.txt @@ -0,0 +1,110 @@ +COMMERCIAL & INVESTMENT BANK +72 +Supporting the Innovation Economy: +The collapse of Silicon Valley Bank in +March of last year was a profound +moment. Thousands of founders, compa - +nies and investors needed to protect their +liquidity and make payroll. Many came to +us, and we were ready. Because of our +focus and significant investments to serve +the Innovation Economy (IE) over the past +decade, we were prepared. +In 2023, we accelerated our strategy to +support this important segment of our +economy by: +• Adding approximately two years’ +worth of clients in just two months, +with our team working around the clock +for weeks to assist clients and open +thousands of new accounts +• Hiring more than 200 experienced +bankers and senior leaders across key +markets +• Expanding our IE presence in eight +countries, including Australia, China, +Germany, Ireland, Israel, Nordics and +the United Kingdom +• Establishing Startup and Climate Tech +Banking teams to provide deep sector +expertise +• Providing tailored capabilities, such as +early-stage venture lending and capital +raising +• Investing in platforms that deliver +seamless digital experiences and inte- +grated payments offerings specifically +designed for startups and high-growth +companies +Acquiring First Republic Bank: JPMorgan +Chase’s acquisition of First Republic Bank +(FRB) was another notable highlight of +2023. Given the overlap with CB, FRB +offers a tremendous opportunity to +COMMERCIAL BANKING +2023 was a dynamic and complex year, +marked by geopolitical tensions, stubborn +inflation, rapidly rising interest rates and +a regional banking crisis. Through it all, +Commercial Banking (CB) served as a +source of stability for our clients and +communities and remained focused on +executing our strategic priorities. +Amidst this market disruption, our team +rose to the occasion to support thousands +of new clients, expand into key markets +and accelerate growth across our busi- +ness. CB’s exceptional performance +reflects the strength of our franchise, +ongoing client focus, and sustained invest- +ments in our platforms and capabilities: +• Record revenue of $15.5 billion , up +35% year-over-year, reflecting higher +net interest income, client acquisition +and expansion into new markets +• Record net income of $6.1 billion, up +46% year-over-year, and a 20% return +on equity +• Record Payments revenue of $8.3 +billion, a 45% increase year-over-year +• Gross Investment Banking revenue of +$3.4 billion, a 14% increase +year-over-year +• Strong credit performance , with net +charge-offs of 12 basis points +I’m incredibly proud of our outstanding +operational and financial performance. +Our team’s steadfast commitment, con- +sistent investments and market discipline +drove our success. +Moments that mattered +Given the challenges several key competi- +tors faced in 2023, the banking landscape +changed dramatically and greatly acceler- +ated the expansion of our franchise. +CB 04.04 pm +Charts updated 04 05 +202320222021 +$3.7 +$5.7 +$8.3 +202320222021 +$1.2 +$1.5 +$2.2 +202320222021 +$5.2 +$4.2 +$6.1 +202320222021 +$10.0 $11.5 +$15.5 +($ in billions) +MIDDLE MARKET EXPANSION +NET INCOME +TOTAL PAYMENTS REVENUE1 +TOTAL REVENUE +SELECT FINANCIAL HIGHLIGHTS +1 In the third quarter of 2023, certain revenue from CIB Markets products +was reclassified from Payments to Investment Banking. Prior period +amounts have been revised to conform with current presentation. \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_75.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..271551b785b9f6767acd5359657cbd69b72ff42c --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_75.txt @@ -0,0 +1,112 @@ +COMMERCIAL & INVESTMENT BANK +73 +Developing powerful solutions: Our +firm delivers end-to-end solutions to +help our clients run their businesses +more efficiently and fuel their growth. +Through firmwide partnerships, CB +offers customized capabilities, such +as bundled services for startups and +specialized payments offerings for +segments like healthcare, real estate +and government. These broad-based +global offerings serve our clients +through every stage of their life cycle. +Delivering an exceptional experience: +CB is making great progress to optimize +our clients’ journey across every touch- +point, including faster onboarding times, +streamlined documentation and intuitive, +self-service tools. As an example, we’ve +been able to reduce our onboarding time +to under 48 hours for a number of new +clients, and we’re working to scale this +experience. Informed by our clients’ +needs and expectations, we’ll continue to +invest in our operations and platforms to +offer simple, efficient and digital-first +experiences to our clients of all sizes. +Harnessing the power of our data: CB +has invested in tools and capabilities +to harness the full power of our data. +We’ve worked to combine our proprietary +data with third-party sources to form an +integrated, comprehensive data asset +that enables us to better understand our +clients’ needs, manage risk and drive +operational efficiency. +Empowering our team: One of CB’s key +differentiators is — and always has been +— our people. We provide our team with +specialized training, collaboration and +workflow tools, and content targeted to +seamlessly address clients’ needs. Access +to personalized data and analytics helps +our team develop deep sector expertise +and insights to serve clients in a highly +differentiated manner. +Focus on community impact +CB has played an instrumental role in +supporting the neighborhoods where we +live and work. Our purpose-driven busi- +ness helps to create an inclusive econ- +omy, narrow the racial wealth gap and +drive sustainable economic growth. We’re +a pivotal part of the firm’s community +impact, but our work is more than that — +it’s essential to uplifting the places we +call home. +In 2023 alone, CB extended more than +$18 billion to help communities thrive, +including: +• $6 billion to vital institutions, such as +hospitals, governments and schools +• $3 billion in loans to emerging middle +market businesses +• $5 billion to create and preserve over +41,000 affordable housing units +• $580 million in New Markets Tax +Credit financing to support community +development projects +• $240 million to community +development financial institutions +deepen our presence in high-growth +markets, expand our client franchise and +build upon our team. CB added more than +5,000 Commercial Real Estate clients and +approximately 2,000 Middle Market +clients along with high-quality loans and +deposits. We’re making steady progress +on the integration and are excited about +the synergies between our businesses +and strength of our combined teams. +Executing a proven strategy +Despite these unexpected events, we +made tremendous progress executing +against our long-term, through-the-cycle +strategy. +Building deep, enduring relationships: +CB provides local expertise to nearly +70,000 clients across markets and sec - +tors around the world. We welcomed +close to 5,000 2 businesses last year and +added roughly 500 bankers to build these +relationships. In addition to supporting +clients in all 50 states, we established a +presence in Israel, Malaysia and Singa- +pore, increasing our coverage of non-U.S. +headquartered clients across 27 countries. + +#1 + +Multifamily Lender in the U.S.3 +Middle Market, Market Penetration and Lead Share4 +Emerging Middle Market, Primary Bank Market Share5 +Middle Market Syndicated Lender 6 +2 Excludes First Republic Bank. +3 S&P Global Market Intelligence. +4 Coalition Greenwich. +5 Barlow Research Associates. +6 London Stock Exchange Group. +NOTABLE #1 RECOGNITIONS IN 2023 +The secret flower is a "rose". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_76.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..dbdb04ac5cc86b05e14fc30be4bc3badc396f4b1 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_76.txt @@ -0,0 +1,74 @@ +COMMERCIAL & INVESTMENT BANK +74 +Our future is bright +By all measures, 2023 was a standout +year with our success driven 100% by our +people. I’d like to extend my heartfelt +gratitude to my extraordinary CB col- +leagues and partners across the firm +whose unwavering commitment not only +contributed to our performance but also +supported our clients throughout this +remarkable year. +My continued confidence in our future +reflects our proven strategy, as well as +our commitment to being our clients’ +most important financial partner. An +ambitious agenda awaits, and we’re not +standing still. To build upon our strong +momentum, we’ll remain disciplined as +we accelerate our investments to drive +our business forward. +As announced earlier this year, we’re +excited to bring together the strengths +and capabilities of CB and the Corporate +& Investment Bank. This strategic combi- +nation further solidifies our strong part- +nerships across wholesale banking and +creates the most global, complete and +diversified Commercial & Investment +Bank in the world. With an incredible +team, extraordinary client franchise, +iconic brand and unmatched capabilities, +one thing is abundantly clear: Our future +is bright. +Douglas B. Petno +Co-Head, Global Banking, +Former CEO, Commercial Banking +BROOKLYN +MANHATTAN +THE BRONX +QUEENS +SPOTLIGHT ON NEW YORK CITY +NEW YORK CITY +For over 200 years, JPMorgan Chase has proudly served clients and communities across New York City (NYC). CB supports over +7,000 clients in NYC and has extended nearly $9 billion in financing to affordable housing developers, vital institutions and local +businesses since 2019. +Through a multimillion-dollar investment +and a dedicated team, the firm is helping +Carver Federal Savings Bank serve +communities through its seven NYC +branches, including four in Brooklyn. +Founded in 1948, Carver is one of the +nation’s largest Black-managed minority +depository institutions and a community +development financial institution. +CB has supported The City of New York +for more than 50 years, providing 60 +NYC agencies with services, including +lending, fraud prevention, treasury +services, and more. +CB invested in $10.6 million of New Markets +Tax Credit allocation to expand Urban Health +Plan’s Plaza Del Sol Family Health Center. +This facility provides access to primary and +specialty care, behavioral health, nutrition, +telehealth, and social services, such as the +Women, Infants and Children (WIC) program. +CB provided Bronx Pro Group and Services +for the Underserved with a $51 million standby +letter of credit to support the new construction +of Melrose North. This development includes +170 units of affordable housing, improved +energy efficiency and tenant amenities, and +a youth training and employment center. \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_77.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..11ce2802bb01b17ab8b73009289a2b98ae869a54 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_77.txt @@ -0,0 +1,137 @@ +ASSET & WEALTH MANAGEMENT +75 +Asset & +Wealth Management +A landmark year setting the stage for +future success +RECORD NEW CLIENTS AND FLOWS +Nearly half a trillion dollars — $490 billion +to be precise. That sum represents how +much net new money clients entrusted to +J.P. Morgan Asset & Wealth Management +(AWM) last year. During times of financial +crises or market uncertainty, J.P. Morgan +shines even brighter as a port in the +storm — and 2023 was no exception. +The U.S. regional banking crises served as +a stark reminder that banking and lend- +ing are not to be treated as a commodity. +As a reflection of this awareness, AWM +drew an influx of client flows last year at a +rate nearly twice that of our closest pub- +licly listed competitor. +STRONG INVESTMENT +PERFORMANCE AND LEADING +SOLUTIONS FOR CLIENTS +As a fiduciary, delivering strong, long- +term investment performance is our fore- +most priority. Approximately 80% of +J.P. Morgan Asset Management assets +under management (AUM) outperformed +the peer median over a 10-year time +period. This exceptional investment per- +formance is an outcome of decades of +refinement and involves close to 1,300 +investment professionals along with one +of the industry’s largest research budgets, +which enables us to actively cover nearly +2,500 public companies, with over 5,000 +company visits annually. This has resulted +in 93% of our equity assets outperforming +their peers over the past decade. +Achieving outstanding investment results +is never easy, but after several years of +extensive quantitative easing — which +often led to undifferentiated asset moves +in concert with one another — we are +returning to a market that prioritizes fun- +damentals in valuing companies and +securities, giving us plenty of reasons to +be optimistic about the future for our +investors across asset classes. +We provide our clients with expertise +and effective solutions to support them +through all market cycles and prepare +them for the future. Equipped with state- +of-the-art technology and artificial intelli- +gence (AI)-enhanced tools and capabili- +ties, our advisors stand ready to guide +our clients and deliver more personalized +offerings — from the first dollar they +1 In the fourth quarter of 2020, the firm realigned certain wealth management clients from +AWM to CCB. Prior periods have been revised to conform with the current presentation. +2 For footnote, refer to page 60 footnote 29 in this Annual Report. +TOTAL +EQUITIES U.S. +93% 95% +94% 80% +93% 95% +94% 80% +INTERNATIONAL +EMERGING MARKETS +AND ASIA +2014 2015 2016 +$115 +$24 $61 $85 $74 +$176 +$276 +$389 +$49 +$490 +2017 2018 2019 2020 2021 2022 2023 +2016 +85% +2014 +82% +2015 +84% 91% +2017 +85% +2018 +85% +2019 +80% +2020 +86% +2021 +90% +2022 +83% +2023 +2014 2015 2016 +$115 +$24 $61 $85 $74 +$176 +$276 +$389 +$49 +$490 +2017 2018 2019 2020 2021 2022 2023 +2016 +85% +2014 +82% +2015 +84% 91% +2017 +85% +2018 +85% +2019 +80% +2020 +86% +2021 +90% +2022 +83% +2023 +RECORD 2023 FLOWS 1 +LONG-TERM FUNDS AUM OUTPERFORMING PEER MEDIAN +J.P. Morgan Asset Management Long-Term Funds AUM Outperforming Peer Median Over +10 Years2 +($ in billions) +INVESTMENT PERFORMANCE +2023 % of J.P. Morgan Equity +Long-Term Funds AUM Outperforming +Peer Median Over 10 Years2 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_78.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..9d7050e7db3a1a83019d212022584897922d17d0 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_78.txt @@ -0,0 +1,114 @@ +ASSET & WEALTH MANAGEMENT +76 +invest in the markets to the decisions +they make about their long-term retire- +ment planning. Simultaneously, to assist +our clients in navigating the intricacies of +retirement, we offer robust strategies +through our SmartRetirement solutions. +Our dedication to research is at the heart +of everything we do, from stock selection +to unique market and asset allocation +insights. For example, we deliver exclu- +sive insights to our clients through our +proprietary, industry-leading Eye on the +Market and J.P. Morgan Guide to the +Markets, viewed by hundreds of thou- +sands of financial advisors and millions +of clients every year. And we draw on +the depth and breadth of our market and +economic expertise to provide insights +into investment themes to enable more +confident portfolio decisions. Clients rely +on us to help them distinguish the signals +from the noise. +IMPRESSIVE RESULTS FOR +SHAREHOLDERS +Our success across our preeminent diver- +sified investment and client franchises +drives our consistent growth. This year, +our total client assets grew to a record +$5 trillion, our revenue to a record $20 bil- +lion and our pre-tax income to a record $7 +billion — resulting in a return on equity of +31%. These results underscore the power +of a global, highly diversified platform +with exceptional investment performance +and dedicated client service. +PERSONALIZATION, GOVERNANCE +AND STEWARDSHIP +I have never in my time running the AWM +franchise found two clients alike in their +needs, goals and risk tolerances for their +assets. For a sovereign wealth fund or +a first-time individual investor, investing +is deeply nuanced in terms of volatility +tolerances, income and distribution +requirements, taxes, preferences and +passions. The proprietary technologies +we gained from our acquisitions of 55ip +and OpenInvest, for example, enable us +to combine over 600 different invest- +ment strategies to create highly custom- +ized portfolios in a smart, efficient way. +We know our clients have a choice — not +only in managers and investment styles +but also in preferences around sectors or +tilts and, where appropriate, in a tax- +optimized way. We do not believe it is +J.P. Morgan’s job to tell clients what to +include or exclude inside their portfolio +sectors or stock selection. Instead, we +empower clients to guide us and drive +their own decisions. +And because preferences are often +personal in nature, we are steadfast in +focusing our stewardship on voting +matters that maximize long-term share- +holder value and good governance. With +the increased prevalence of outsourcing +proxy voting, by the end of 2024, generally +we will have eliminated third-party proxy +advisor voting recommendations from our +internally developed voting systems. We +believe these enhancements will allow +companies to better understand our inde- +pendent rationale regarding voting issues. +INVESTING FOR THE FUTURE +Active ETFs and SMAs +Innovation forms the core of our +business. Having launched our active +exchange-traded fund (ETF) platform +less than 10 years ago, we have emerged +as a global leader — ranking #2 in AUM +and net flows, led by having the #1, #3 +and #5 largest actively managed ETFs +A Record Year +Delivering Strong Results +$20B +Revenue +$7B +Pre-tax Income +$5B +Net Income +$490B +Flows +$5T +Client Assets +$228B +Loans (EOP) += recordP +P P +P P +P P + GLOBAL ACTIVE ETF RANKING + No. Fund Name Ticker Total Assets + 1 JPMorgan Equity Premium Income ETF JEPI $32.8 + 2 Dimensional US Core Equity 2 ETF DFAC $26.1 + 3 JPMorgan Ultra-Short Income ETF JPST $22.5 + 4 PIMCO Enhanced Short Maturity Active ETF MINT $10.8 + 5 JPMorgan Nasdaq Equity Premium Income ETF JEPQ $10.8 + + ($ in billions) + Source: Morningstar as of February 29, 2024, excludes GBTC +EOP = End of period \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_79.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e8e7e0dbea17d98004746b5a2da78dc0e53ab6d --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_79.txt @@ -0,0 +1,116 @@ +ASSET & WEALTH MANAGEMENT +77 +and thought leadership are critical ele- +ments. I am confident that our capabili- +ties and commitment to future-focused +investments, as well as enhancements +using technology and AI, will bolster our +ability to serve our clients and empower +them to attain their future success. By +achieving optimal results through these +efforts, clients reward us with their +flows, and future growth will follow. +Furthermore, we hold a unique advan- +tage that sets us apart from all of our +competitors: Being part of JPMorgan +Chase provides us with unmatched +resources, opportunities and scale. +I am so proud of how we helped our +clients and shareholders navigate the +challenges of 2023 and previous market +cycles. Our industry-leading growth of +client assets is a testament to our unwav- +ering commitment to delivering on our +fiduciary responsibilities and dedication +to serving clients’ best interests. We are +deeply grateful for this trust and will +continue to strive for excellence in all +we do, each and every day. +in the world (JPMorgan Equity Premium +Income, JPMorgan Ultra-Short Income +and JPMorgan Nasdaq Equity Premium +Income). We persist in our efforts +to innovate, expanding our offerings +by launching 17 new solutions (12 U.S. +and five UCITS) in the past year. We +are equally enthusiastic about our +separately managed account (SMA) +platform. Acquiring 55ip enabled us to +provide our clients with improved tax +management and portfolio customiza- +tion, and our clients now have greater +control over their investments and taxes. +Since the acquisition, our AUM increased +16-fold in this area. +Alternatives +As a top 10 manager and investor, with +more than $400 billion in assets and +a 60-year legacy, we continue to invest +in scaling and expanding our alternatives +capabilities across private equity, hedge +funds, private credit, real estate and +infrastructure. After launching J.P. Morgan +Private Capital two years ago, we success- +fully introduced technology, consumer +and life sciences strategies. As access +to alternatives continues to widen, we +launched J.P. Morgan Real Estate Income +Trust (JPMREIT) and JPMorgan Private +Markets Fund (JPMF), which is one of the +industry’s first private equity funds avail- +able to individual investors. Overall, alter- +natives across AWM continue to grow. +Acquisitions +Global Shares, a share plan administrator +of both public and private companies +around the world, is one of our most +recent acquisitions. As we build out our +broader J.P. Morgan Workplace offering, +we are leveraging Global Shares as the +foundation to help new companies acceler- +ate growth and encourage employees and +owners to invest. With plan participants +from over 100 countries, the number +continues to grow — up 15% this past year. +Just as impressive, client assets are up +32% since the acquisition. We also com- +pleted the acquisition of China Interna- +tional Fund Management (CIFM), rebrand - +ing it as J.P. Morgan Asset Management +(China). We commemorated this pivotal +rebrand by moving 400 new onshore col- +leagues into Shanghai Tower. This served +not only as a celebration but also as a +testament to our shared heritage, global +strengths and deep-rooted expertise in +the local market, as J.P. Morgan’s history +in China dates back more than 100 years. +A rigorously controlled environment +To ensure scalable growth, we are +committed to operational excellence — +from enhancing trades, client transac- +tions and money movement to simplifying +interactions and implementing robust +controls and safeguards. Some of these +efforts are being further enhanced using +AI to streamline our processes, manage +risk and make informed decisions to +protect our clients. Additionally, these +investments in our infrastructure help +us — as fiduciaries — perform optimized +stress testing of client portfolios on a +consistent basis. +CONCLUSION +As I have said from the beginning of my +tenure as CEO of AWM, our focus is on +being the best in the industry, not the +biggest. And by best, I mean the best +performer for clients. Advice is not a +simple commodity. Strong investment +performance across a broad, diversified +offering paired with best-in-class advice +Mary Callahan Erdoes +CEO, Asset & Wealth Management +J.P. Morgan Asset Management (China)’s +headquarters in the heart of downtown Shanghai. +The secret currency is a "euro". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_8.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..5abe1a58c978570cde63d9a2b3b0c3d783beaf6e --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_8.txt @@ -0,0 +1,148 @@ +2000 +Jamie Dimon joins Bank +One as Chairman and +CEO +Chase Manhattan buys +J.P. Morgan & Co., +forming J.P. Morgan +Chase & Co. +2004 +Bank One merges with +J.P. Morgan Chase & Co. +2006 +JPMorgan Chase holds +first Investor Day +Asset & Wealth +Management assets +under management +exceed $1 trillion +2008 +JPMorgan Chase acquires +Bear Stearns and +Washington Mutual +The collapse of the housing +and mortgage markets led to +a severe worldwide financial +crisis, the worst since the +Great Depression. JPMorgan +Chase helped stabilize the +markets by acquiring two +failing institutions, Bear +Stearns and Washington +Mutual (WaMu). WaMu +is still the largest failure +of an insured depository +institution in the history of +the FDIC. Importantly, the +WaMu deal expanded the +bank’s network by more +than 2,200 branches, +including gaining a footprint +in California and Florida. +JPMorgan Chase ranks +#1 in investment banking +fees market share for +the first time +2010 +JPMorgan Chase +launches Chase Wealth +Management +2011 +JPMorgan Chase ranks +#1 in Markets revenue +market share for the +first time +Jamie Dimon holds his +first bus tour from +Seattle to San Diego +JPMorgan Chase +becomes the biggest +U.S. bank by assets +2012 +Chase becomes #1 +credit card issuer based +on outstandings +2014 +JPMorgan Chase makes +historic investment in +Detroit, which reached +$200 million in 2022 +JPMorgan Chase +begins using artificial +intelligence and machine +learning for fraud +detection +2016 +JPMorgan Chase +becomes the biggest +bank in the world by +market capitalization +2018 +Chase credit and debit +card sales volume +surpasses $1 trillion +JPMorgan Chase +announces $30 million +investment in Greater +Paris, followed by $70 +million in new commit- +ments in 2023 to create +economic opportunity +across France +JPMorgan Chase +announces branch +expansion initiative +2019 +JPMorgan Chase launches +the Second Chance hiring +initiative, helping remove +barriers to employment +opportunities for people +with a criminal record +2020 +JPMorgan Chase +announces its $30 billion +Racial Equity Commitment +With the goal of helping +to close the racial +wealth gap and advance +economic inclusion among +historically underserved U.S. +communities, the e/uniFB00ort +reported over $30 billion in +progress by the end of 2023. +Jamie Dimon returns to +work in the office in Jun e +Four modern, private +cloud-based North +American data centers +go live +2021 +JPMorgan Chase ranks +#1 in retail deposits +market share at 10% +based on FDIC data, +with deposits surpassing +$1 trillion +2022 +Chase becomes +the first bank with +nationwide branches +in all lower 48 states +2023 +JPMorgan Chase +acquires First Republic +Bank from the FDIC +The purchase of First +Republic helped stabilize +and strengthen the U.S. +financial system in a time +of crisis while allowing +JPMorgan Chase to give a +new, secure home to over +half a million First Republic +customers. +FDIC = Federal Deposit Insurance Corporation +2000 2005 2010 2015 2020 2024 +MAPPING OUR PROGRESS AND MILESTONES +6 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_80.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..cad4777658789f00a8fe55e2816928eae89869ee --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_80.txt @@ -0,0 +1,129 @@ +CORPORATE RESPONSIBILITY +78 +Corporate Responsibility +Across the firm, we believe that the +strength of our company is inextricably +linked to the vitality of our communities. +When families do well, we do well. When +communities thrive, we thrive. +In Corporate Responsibility (CR), we put +this philosophy into action by operating at +the nexus of business, policy and commu- +nity. We understand that complex prob- +lems aren’t solved with a single grant or +meeting but rather require multifaceted +solutions. This is why we have brought +together our philanthropy, government +relations, research and policy, sustainabil- +ity and community engagement functions +to tackle inclusive economic growth as +one team. Our integrated model allows +us to tap a wide-ranging set of tools and +perspectives to address societal issues +impacting our clients, customers and +employees and drive favorable conditions +for the firm’s continued success. +We are not just committed to delivering for +communities — we are built for it. With +team members around the globe, we part - +ner with local residents to understand +what’s happening on the ground and how +JPMorgan Chase can use its unique exper- +tise and resources to maximize impact. +Recognizing that there is no one-size-fits- +all approach, our local strategies are inform- +ed by global insights yet intentionally tai- +lored to the local context, whether that is +a region, neighborhood or even city block. +To me, there is nothing more rewarding +than seeing our impact up close. In that +spirit, I invite you to learn about our work +in Washington, D.C., Maryland and Virginia +(Greater Washington); the United Kingdom +(U.K.); Dallas-Fort Worth; and Chicago. +These place-based case studies showcase +the breadth and depth of our engage- +ments in hundreds of communities around +the world — and show that working in +lockstep with communities is critical to +promoting a strong business environment. +GREATER WASHINGTON +Landscape +While the firm has operated in Greater +Washington for more than 50 years, over +the past decade we have made a concerted +effort to advance our business footprint by +opening new branches, hiring local employ- +ees, lending to small businesses and con- +tributing in other ways. We have intention- +ally invested in areas where we can grow +alongside communities and help residents +achieve financial security, especially in +Washington, D.C., and Baltimore, two cities +with significant racial wealth divides. +Our approach +We have pursued initiatives to address +these disparities and lift up the region’s +residents and workforce. +• In D.C., we provided $3 million to help +launch the Congress Heights Community +Training and Development Corporation’s +(CHCTDC) small business career and skills +building incubator in Wards 7 and 8. +• We partnered with Baltimore’s Mayor’s +Office of Employment Development +to launch our Baltimore Virtual Call +Center, hiring 40 Baltimore-based cus - +tomer service specialists and leaders. +• Working with the Greater Washington +Partnership and Education Strategy +Group — and with support from local +government leaders in D.C., Maryland +and Virginia — we recommitted $5.4 +million to the TalentReady initiative to +support the preparation of high school +students across the region for in-demand +careers, building on our previous com- +mitment that engaged more than 25,000 +students across five school districts. +Our impact in action +We first worked with Monica Ray at +CHCTDC, where she had served as the +organization’s executive director for +more than two decades. Monica has +devoted her career to her community, +attracting investment to help improve +Wards 7 and 8’s low homeownership and +high poverty and unemployment rates. +After years of collaborating on CHCTDC +initiatives and the opening of Chase’s +Community Center Branch in Skyland +Town Center, Monica shared her vision +about helping to launch a small business +career and skills building incubator. +“We are providing support and coaching +for promising new businesses, as well as +for entrepreneurs still in the idea stage,” +she says. “Our JPMorgan Chase partnership +helps us arm these socially and economi- +cally disadvantaged women entrepreneurs +with the processes and systems they need +to succeed in their business ventures.” +Monica and her team have already helped +launch 83 new businesses and are grow - +ing 47 more, creating jobs and building +individual and community wealth. +THE UNITED KINGDOM +Landscape +The U.K. has long been an important mar - +ket for our firm. With over 22,000 employ - +ees, our offerings have continued to grow +with the 2021 launch of the Chase digital +consumer bank and the expansion in the +U.K. of our commercial banking, invest - +ment banking and asset management +businesses. While our presence has +evolved, the country’s economic landscape +has experienced historic changes, with +ongoing income inequality and nearly 22% +of U.K. residents living in poverty . \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_81.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..8aba85a8029023794131314c9ada895ccd2efa5b --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_81.txt @@ -0,0 +1,137 @@ +CORPORATE RESPONSIBILITY +79 +Our approach +To address some of the challenges facing +the U.K., we have focused on helping busi - +nesses succeed, supporting individuals as +they build a strong financial future and +connecting people to job opportunities. +This has included committing $64 million in +philanthropic capital over the past five +years, alongside the firm’s active employee +volunteerism programs, civic partnerships, +and close engagements with government +and nonprofits. We have also promoted +efforts to boost the U.K.’s leadership in +sustainable finance, providing input on a +report offering recommendations the U.K. +can take to unlock capital at scale to transi- +tion to a more sustainable energy system. +Examples of our work to benefit local +communities and economic growth include: +• The Aspiring Professionals Program +(APP), run in collaboration with the +Social Mobility Foundation, works to +connect talented young people from +low-income backgrounds with work +and mentorship experiences at +JPMorgan Chase. +• The Founders Forward mentoring +program pairs women entrepreneurs in +the U.K. with JPMorgan Chase mentors, +who provide business strategy and +leadership development guidance. +Our impact in action +Over the past five years, our collective +work with nonprofits has helped more +than 33,000 people reduce their debts and +improve their financial health. We have +also provided resources to support the +growth of over 10,000 small businesses +and place 9,000+ individuals into appren - +ticeships or full- or part-time positions. +Since launching in 2012, the APP has sup - +ported more than 800 young people, 86% +of whom began full-time employment at +JPMorgan Chase or other firms within 15 +months of graduation. Radhika, currently a +vice president with the firm’s Global Rates +team, enrolled in APP. She credits the +program with helping her build the skills +she needed for the interview process and +now in her sales role at the firm. +Founders Forward is also changing lives. +Approximately 240 women entrepreneurs +in the U.K. have participated in the pro - +gram. This includes Elle, whose business +won a startup accelerator competition +and expanded to the United States. +In addition to the U.K., we are proud to +offer Founders Forward in France and +Germany, further embedding our commit - +ment to fostering entrepreneurship into +the fabric of our global company. +DALLAS-FORT WORTH +Landscape +Texas is home to our largest employee +base in the United States. With many +companies like ours recognizing Texas as +a great place to do business, the state is +currently experiencing a skilled-labor +shortage, specifically in the Dallas-Fort +Worth area. This local challenge will +persist: Although 85% of living-wage +jobs in Dallas County require education +beyond a high school degree, as of 2017, +73% of Texas’ students were not able +to receive postsecondary credentials +within six years, largely due to financial +obstacles. +Our approach +To help young people access educational +and skills training opportunities, we +began advising and funding data-driven +nonprofits, including the Commit +Partnership and Tarrant To & Through (T3) +Partnership, coalitions of school systems, +higher education institutions, local +and state governments, foundations, +employers and workforce agencies, +among others. +While these organizations work to +address compounding issues that impact +student success and graduation rates, our +commitments are deliberately focused on +initiatives where we have expertise and +insights to add the greatest value. In +2023, we committed: +• $1.5 million to The Commit Partner - +ship’s Opportunity 2040 Plan Phase 1 +to support a comprehensive 18-year +investment plan to help improve the +long-term financial health of 150,000 +current students by 2040. +• $750,000 to the T3 Pathways to +Careers (P2C) platform to provide a +virtual college-to-career resource to +help parents and students understand +what’s needed to pursue industry- +based credentials, degrees, certifica- +tions and job opportunities. +We also promote policies at the local, +state and federal levels that align with our +goals. Since 2022, we have been a vocal +champion of Texas’s House Bill 8 legisla- +tion that creates a new funding model that +incentivizes community colleges in Texas +to ensure that more students complete +certificates and other credentials or trans- +fer to a four-year university to complete +their undergraduate degree. +Our impact in action +Halfway through the first year, Commit - +2Dallas’s Opportunity 2040 Plan has +already met 87% of its year 1 goal: to +help an additional 7,700 students reach +educational benchmarks that put them +on a pathway to well-paying jobs. This +work is touching Dallas County families +like the Donjuans, whose oldest daughter +Annahi will graduate from the University +of North Texas at Dallas this spring. +“I’m the first on both sides of my family +… to obtain higher education,” says +Annahi. “I decided to attend college in +order to start saving and serve as a role +model for my siblings.” +Featured above: Elle \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_82.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..7542ff4d42f1cf6cf0dcc9d6a7017d1d6bd4a314 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_82.txt @@ -0,0 +1,121 @@ +CORPORATE RESPONSIBILITY +80 +We are seeing a similar impact from our +T3 P2C commitment. Over the next six +months, T3 will integrate its platform with +the registration process for all Fort Worth +Independent School District middle +school students, which will give approxi- +mately 15,000 students valuable informa - +tion about educational opportunities at +various high schools and careers they can +pursue as an adult. +CHICAGO +Landscape +For more than 160 years, our firm has +served Chicago, a city ripe with business +opportunities — along with its share of +challenges. Between 2017 and 2019, +several reports captured the stark segre- +gation and inequities among communities +in Chicago, underscoring devastating +impacts on economic vitality. +Our approach +Looking at this research and findings +from the JPMorgan Chase Institute, we +recognized an opportunity to change +the decades-long trajectory of the city’s +South and West Sides from disinvestment +to revitalization. Following conversations +with policymakers and residents, we +focused on addressing the city’s afford- +able home shortage as an opportunity +to catalyze wealth building. +To leverage vacant city-owned land, CR +deepened partnerships with nonprofits +building affordable homes in coordination +with local government, including The +Resurrection Project, Reclaiming Chicago +and the Chicago Community Trust. These +organizations target city blocks to acquire +and build homes, supporting individual +and community wealth. They also connect +people with affordable mortgages and +help them plan for costs like maintenance +and repairs. Additionally, our businesses +combined expertise to make one of our +largest-ever affordable housing invest- +ments in redeveloping the Lawson YMCA +into 400+ affordable housing units. +Our impact in action +We see returns on our commitments in the +pride and promise of new homeowners, +including Janay, a public school teacher. +Janay saved part of every paycheck to pur- +chase her first home and put down roots. + +“As a teacher, building a sense of commu- +nity is one of the first things I do with my +students at the beginning of the year. It +is a way of making students feel safe, +valued and supported. This home does +the same for me,” she reports. +Janay’s inspiring story is one of many. +Housing production from a collaborative +of organizations — funded in part through +grants from JPMorgan Chase — surged +from 19 homes in 2022 to 79 homes in +2023, demonstrating significant progress +toward the collaborative’s goal of scaling +production to more than 100 homes per +year through 2030. +This is just the beginning. In addition to +deploying $1.1 million in home loans and +raising $50 million toward lending and +home construction, our grantees have +leveraged our philanthropic support to +secure another 500 city-owned vacant +lots and gain funding from the state of +Illinois focused on assisting with down +payments and closing appraisal gaps. +LOOKING AHEAD +The essence of our work outlined +above can be captured in three words: +We show up. As listeners, learners and +community partners, we come to the +table — real, tangible tables — ready to +create avenues to economic opportunity. +At these various tables, we ask: “What’s +working?” We examine our investments +with our colleagues across the firm and +external partners, gaining an understand- +ing of how winning approaches can be +scaled to markets around the world. Our +team’s work ensuring that policymakers +know the value we bring to communities +becomes all the more important as we +seek to scale solutions during this uncer- +tain political moment. It is in tandem with +elected officials and other stakeholders +that we have brought, and will continue +to bring, the right products and services +to our clients and customers. +And when we show up, in good and in +tough times, we will bring our holistic +model, positioning ourselves to grow and +truly be the bank for the place we are in, +in every market we serve. We take this +responsibility seriously. It is a privilege +to bank more than 88 million customers +and small businesses. It is a privilege to +support schools, hospitals and other +community institutions. But perhaps most +of all, it is a privilege to lead by example, +demonstrating through our business +success that the private sector has a +role to play in shaping a stronger, more +inclusive economy for everyone. +Featured above: Janay +Tim Berry +Global Head of Corporate Responsibility, +Chairman of the Mid-Atlantic Region diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_83.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..910562d3409f00678bf1d355931316eea8211a16 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_83.txt @@ -0,0 +1,34 @@ +Financial: Audited financial statements: +46 Three-Year Summary of Consolidated Financial +Highlights +162 Management’s Report on Internal Control Over +Financial Reporting +47 Five-Year Stock Performance 163 Report of Independent Registered Public Accounting +Firm +Management’s discussion and analysis: +166 Consolidated Financial Statements +48 Introduction 171 Notes to Consolidated Financial Statements +49 Executive Overview +54 Consolidated Results of Operations +58 Consolidated Balance Sheets and Cash Flows Analysis Supplementary information: +62 Explanation and Reconciliation of the Firm’s Use of +Non-GAAP Financial Measures +310 Distribution of assets, liabilities and stockholders’ +equity; interest rates and interest differentials +65 Business Segment Results 315 Glossary of Terms and Acronyms +86 Firmwide Risk Management +90 Strategic Risk Management +91 Capital Risk Management +102 Liquidity Risk Management +111 Credit and Investment Risk Management +135 Market Risk Management Note: +The following pages from JPMorgan Chase & Co.’s 2023 +Form 10-K are not included herein: 1-44, 322 +144 Country Risk Management +146 Climate Risk Management +147 Operational Risk Management +155 Critical Accounting Estimates Used by the Firm +159 Accounting and Reporting Developments +161 Forward-Looking Statements +Table of contents +JPMorgan Chase & Co./2023 Form 10-K 45 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_84.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c5abbf45615b8aaadfaa7c4832bfffebf1a0811 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_84.txt @@ -0,0 +1,66 @@ + THREE-YEAR SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited) +2023 2022 2021 +Selected income statement data +Total net revenue $ 158,104 $ 128,695 $ 121,649 +Total noninterest expense 87,172 76,140 71,343 +Pre-provision profit(a) 70,932 52,555 50,306 +Provision for credit losses 9,320 6,389 (9,256) +Income before income tax expense 61,612 46,166 59,562 +Income tax expense 12,060 8,490 11,228 +Net income $ 49,552 $ 37,676 $ 48,334 +Earnings per share data +Net income: Basic $ 16.25 $ 12.10 $ 15.39 + Diluted 16.23 12.09 15.36 +Average shares: Basic 2,938.6 2,965.8 3,021.5 + Diluted 2,943.1 2,970.0 3,026.6 +Market and per common share data +Market capitalization 489,320 393,484 466,206 +Common shares at period-end 2,876.6 2,934.2 2,944.1 +Book value per share 104.45 90.29 88.07 +Tangible book value per share (“TBVPS”)(a) 86.08 73.12 71.53 +Cash dividends declared per share 4.10 4.00 3.80 +Selected ratios and metrics +Return on common equity (“ROE”) 17 % 14 % 19 % +Return on tangible common equity (“ROTCE”)(a) 21 18 23 +Return on assets (“ROA”) 1.30 0.98 1.30 +Overhead ratio 55 59 59 +Loans-to-deposits ratio 55 49 44 +Firm Liquidity coverage ratio (“LCR”) (average)(b) 113 112 111 +JPMorgan Chase Bank, N.A. LCR (average)(b) 129 151 178 +Common equity Tier 1 (“CET1”) capital ratio(c)(d) 15.0 13.2 13.1 +Tier 1 capital ratio(c)(d) 16.6 14.9 15.0 +Total capital ratio(c)(d) 18.5 16.8 16.8 +Tier 1 leverage ratio(b)(c) 7.2 6.6 6.5 +Supplementary leverage ratio (“SLR”)(b)(c) 6.1 5.6 5.4 +Selected balance sheet data (period-end) +Trading assets $ 540,607 $ 453,799 $ 433,575 +Investment securities, net of allowance for credit losses 571,552 631,162 672,232 +Loans 1,323,706 1,135,647 1,077,714 +Total assets 3,875,393 3,665,743 3,743,567 +Deposits 2,400,688 2,340,179 2,462,303 +Long-term debt 391,825 295,865 301,005 +Common stockholders’ equity 300,474 264,928 259,289 +Total stockholders’ equity 327,878 292,332 294,127 +Employees(e) 309,926 (f) 293,723 271,025 +Credit quality metrics +Allowances for credit losses $ 24,765 $ 22,204 $ 18,689 +Allowance for loan losses to total retained loans 1.75 % 1.81 % 1.62 % +Nonperforming assets $ 7,597 $ 7,247 $ 8,346 +Net charge-offs 6,209 2,853 2,865 +Net charge-off rate 0.52 % 0.27 % 0.30 % +As of or for the year ended December 31, +(in millions, except per share, ratio, employee data and where otherwise noted) +As of and for the period ended D e c e m b e r 3 1 , 2 0 2 3, the results of the Firm include the impact of First Republic. Refer to Business Segment Results on page 67 +and Note 34 for additional information. +(a) Pre-provision profit, TBVPS and ROTCE are each non-GAAP financial measures. Tangible common equity (“TCE”) is also a non-GAAP financial measure. +Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 62–64 for a discussion of these measures. +(b) For the years ended December 31, 2023, 2022 and 2021, the percentage represents average ratios for the three months ended December 31, 2023, +2022 and 2021. +(c) The ratios reflect the Current Expected Credit Losses (“CECL”) capital transition provisions. Refer to Note 27 for additional information. +(d) Reflects the Firm’s ratios under the Basel III Standardized approach. Refer to Capital Risk Management on pages 91-101 for additional information. +(e) This metric, which was formerly Headcount, has been renamed Employees but is otherwise unchanged. Refer to Part I, Item 1, Business section on pages +2-3 of this Form 10-K for a further discussion of Human Capital. +(f) Included approximately 4,500 individuals associated with First Republic who became employees effective July 2, 2023. +Financial +46 JPMorgan Chase & Co./2023 Form 10-K +The secret object #2 is a "lamp". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_85.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb38b2a00d1491f44dfaee059d34b30264ac162a --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_85.txt @@ -0,0 +1,29 @@ +FIVE-YEAR STOCK PERFORMANCE +The following table and graph compare the five-year cumulative total return for JPMorgan Chase & Co. (“JPMorgan Chase” or +the “Firm”) common stock with the cumulative return of the S&P 500 Index, the KBW Bank Index and the S&P Financials Index. +The S&P 500 Index is a commonly referenced equity benchmark in the United States of America (“U.S.”), consisting of leading +companies from different economic sectors. The KBW Bank Index seeks to reflect the performance of banks and thrifts that are +publicly traded in the U.S. and is composed of leading national money center and regional banks and thrifts. The S&P +Financials Index is an index of financial companies, all of which are components of the S&P 500. The Firm is a component of all +three industry indices. +The following table and graph assume simultaneous investments of $100 on December 31, 2018, in JPMorgan Chase common +stock and in each of the above indices. The comparison assumes that all dividends were reinvested. +December 31, +(in dollars) 2018 2019 2020 2021 2022 2023 +JPMorgan Chase $ 100.00 $ 147.27 $ 139.14 $ 177.72 $ 155.33 $ 203.09 +KBW Bank Index 100.00 136.12 122.09 168.90 132.76 131.58 +S&P Financials Index 100.00 132.09 129.77 175.02 156.59 175.61 +S&P 500 Index 100.00 131.48 155.65 200.29 164.02 207.13 +December 31, +(in dollars) +J P Morgan C hase K B W B ank S &P F inancials S &P 500 +2018 2019 2020 2021 2022 2023 +75 +100 +125 +150 +175 +200 +225 +250 +JPMorgan Chase & Co./2023 Form 10-K 47 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_86.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..c8a14e8ff8d7968dd975448cd8be1ec33c080d76 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_86.txt @@ -0,0 +1,79 @@ +The following is Management’s discussion and analysis of the financial condition and results of operations (“MD&A”) of JPMorgan +Chase for the year ended December 31, 2023. The MD&A is included in both JPMorgan Chase’s Annual Report for the year ended +December 31, 2023 (“Annual Report”) and its Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form +10-K” or “Form 10-K”) filed with the Securities and Exchange Commission (“SEC”). Refer to the Glossary of terms and acronyms on +pages 315-321 for definitions of terms and acronyms used throughout the Annual Report and the 2023 Form 10-K. +This Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. +These forward-looking statements are based on the current beliefs and expectations of JPMorgan Chase’s management, speak +only as of the date of this Form 10-K and are subject to significant risks and uncertainties. Refer to Forward-looking Statements on +page 161 and Part 1, Item 1A: Risk factors in this Form 10-K on pages 9-33 for a discussion of certain of those risks and +uncertainties and the factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and +uncertainties. There is no assurance that actual results will be in line with any outlook information set forth herein, and the Firm +does not undertake to update any forward-looking statements. +INTRODUCTION +JPMorgan Chase & Co. (NYSE: JPM), a financial holding +company incorporated under Delaware law in 1968, is a +leading financial services firm based in the United States of +America (“U.S.”), with operations worldwide. JPMorgan +Chase had $3.9 trillion in assets and $327.9 billion in +stockholders’ equity as of D e c e m b e r 3 1 , 2 0 2 3. The Firm is +a leader in investment banking, financial services for +consumers and small businesses, commercial banking, +financial transaction processing and asset management. +Under the J.P. Morgan and Chase brands, the Firm serves +millions of customers, predominantly in the U.S., and many +of the world’s most prominent corporate, institutional and +government clients globally. +JPMorgan Chase’s principal bank subsidiary is JPMorgan +Chase Bank, National Association (“JPMorgan Chase Bank, +N.A.”), a national banking association with U.S. branches in +48 states and Washington, D.C. JPMorgan Chase’s principal +non-bank subsidiary is J.P. Morgan Securities LLC (“J.P. +Morgan Securities”), a U.S. broker-dealer. The bank and +non-bank subsidiaries of JPMorgan Chase operate +nationally as well as through overseas branches and +subsidiaries, representative offices and subsidiary foreign +banks. The Firm’s principal operating subsidiaries outside +the U.S. are J.P. Morgan Securities plc and J.P. Morgan SE +(“JPMSE”), which are subsidiaries of JPMorgan Chase Bank, +N.A. and are based in the United Kingdom (“U.K.”) and +Germany, respectively. +For management reporting purposes, the Firm’s activities +are organized into four major reportable business +segments, as well as a Corporate segment. The Firm’s +consumer business is the Consumer & Community Banking +(“CCB”) segment. The Firm’s wholesale businesses are the +Corporate & Investment Bank (“CIB”), Commercial Banking +(“CB”), and Asset & Wealth Management (“AWM”) +segments. Refer to Business Segment Results on pages 65– +85, and Note 32 for a description of the Firm’s business +segments, and the products and services they provide to +their respective client bases. On May 1, 2023, JPMorgan +Chase acquired certain assets and assumed certain +liabilities of First Republic Bank (the “First Republic +acquisition”) from the Federal Deposit Insurance +Corporation (“FDIC”). All references in this Form 10-K to +“excluding First Republic,” “including First Republic,” +“associated with First Republic” or “attributable to First +Republic” refer to excluding or including the relevant +effects of the First Republic acquisition, as well as +subsequent related business and activities, as applicable. +Refer to Note 34 for additional information. +The Firm’s website is www.jpmorganchase.com. JPMorgan +Chase makes available on its website, free of charge, annual +reports on Form 10-K, quarterly reports on Form 10-Q and +current reports on Form 8-K pursuant to Section 13(a) or +Section 15(d) of the Securities Exchange Act of 1934, as +soon as reasonably practicable after it electronically files or +furnishes such material to the U.S. Securities and Exchange +Commission (the “SEC”) at www.sec.gov. JPMorgan Chase +makes new and important information about the Firm +available on its website at https://www.jpmorganchase.com, +including on the Investor Relations section of its website at +https://www.jpmorganchase.com/ir. Information on the +Firm's website, including documents on the website that are +referenced in this Form 10-K, is not incorporated by +reference into this 2023 Form 10-K or the Firm’s other +filings with the SEC. +Management’s discussion and analysis +48 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_87.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..be84414ae747db2d608a0e34ba7800565e55c9a2 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_87.txt @@ -0,0 +1,111 @@ +EXECUTIVE OVERVIEW +This executive overview of the MD&A highlights selected +information and does not contain all of the information that is +important to readers of the Firm’s 2023 Form 10-K. For a +complete description of the trends and uncertainties, as well +as the risks and critical accounting estimates affecting the +Firm, the 2023 Form 10-K should be read in its entirety. +Financial performance of JPMorgan Chase +Year ended December 31, +(in millions, except per share +data and ratios) 2023 2022 Change +Selected income statement +data +Noninterest revenue $ 68,837 $ 61,985 11% +Net interest income 89,267 66,710 34 +Total net revenue 158,104 128,695 23 +Total noninterest expense 87,172 76,140 14 +Pre-provision profit 70,932 52,555 35 +Provision for credit losses 9,320 6,389 46 +Net income 49,552 37,676 32 +Diluted earnings per share 16.23 12.09 34 +Selected ratios and metrics +Return on common equity 17 % 14 % +Return on tangible common +equity 21 18 +Book value per share $ 104.45 $ 90.29 16 +Tangible book value per share 86.08 73.12 18 +Capital ratios(a)(b) +CET1 capital 15.0 % 13.2 % +Tier 1 capital 16.6 14.9 +Total capital 18.5 16.8 +Memo: +NII excluding Markets(c) $ 90,041 $ 62,355 44 +NIR excluding Markets(c) 44,533 40,938 9 +Markets(c) 27,792 28,984 (4) +Total net revenue - managed +basis $ 162,366 $ 132,277 23 +As of and for the year ended December 31, 2023, the results of the Firm +include the impact of First Republic. Refer to page 67 and Note 34 for +additional information. +(a) The ratios reflect the CECL capital transition provisions. Refer to Note +27 for additional information. +(b) Reflects the Firm’s ratios under the Basel III Standardized approach. +Refer to Capital Risk Management on pages 91-101 for additional +information. +(c) NII and NIR refer to net interest income and noninterest revenue, +respectively. Markets consists of CIB's Fixed Income Markets and +Equity Markets businesses. +Comparisons noted in the sections below are for the full year +of 2023 versus the full year of 2022, unless otherwise +specified. +Firmwide overview +JPMorgan Chase reported net income of $49.6 billion for +2023, up 32%, earnings per share of $16.23, ROE of 17% +and ROTCE of 21%. +• Total net revenue was $158.1 billion, up 23%, +reflecting: +– Net interest income (“NII”) of $89.3 billion, up 34%, +driven by higher rates, the impact of First Republic, and +higher revolving balances in Card Services, partially +offset by lower Markets net interest income and lower +average deposit balances. NII excluding Markets was +$90.0 billion, up 44%. +– Noninterest revenue ( “ N I R ” ) w a s $ 6 8 . 8 b i l l i o n , u p +11%, driven by the impact of First Republic, including +the $2.8 billion estimated bargain purchase gain, +higher Markets noninterest revenue, and higher asset +management fees, partially offset by the absence of the +gain on the sale of Visa B shares in the prior year, +higher net securities losses in Treasury and CIO, and +lower auto operating lease income. +• Noninterest expense was $87.2 billion, up 14%, +predominantly driven by higher compensation expense, +reflecting an increase in employees, primarily in +technology and front office, as well as wage inflation. The +increase in expense also includes the $2.9 billion FDIC +special assessment and costs associated with the First +Republic acquisition. +• The provision for credit losses was $9.3 billion, +reflecting $6.2 billion of net charge-offs and a net +addition to the allowance for credit losses of $3.1 billion. +Net charge-offs increased $3.3 billion, predominantly +driven by Card Services, and to a lesser extent single +name exposures in wholesale. The net addition to the +allowance for credit losses included: +– a net addition of $1.3 billion in consumer, +predominantly driven by CCB, reflecting $1.4 billion in +Card Services driven by loan growth, including an +increase in revolving balances, partially offset by a net +reduction of $200 million in Home Lending, and +– a net addition of $657 million in wholesale, driven by +net downgrade activity and a deterioration in the +outlook for commercial real estate in CB. +The net addition also included $1.2 billion to establish +the allowance for First Republic loans and lending-related +commitments in the second quarter of 2023. +The provision in the prior year included a $3.5 billion net +addition to the allowance for credit losses and net +charge-offs of $2.9 billion. +• The total allowance for credit losses was $24.8 billion at +D e c e m b e r 3 1 , 2 0 2 3. The Firm had an allowance for loan +losses to retained loans coverage ratio of 1.75%, +compared with 1.81% in the prior year. +• The Firm’s nonperforming assets totaled $7.6 billion at +D e c e m b e r 3 1 , 2 0 2 3, up 5%, predominantly driven by +wholesale nonaccrual loans, which reflected the impact of +downgrades. Refer to Wholesale Credit Portfolio and +Consumer Credit Portfolio on pages 120–130 and pages +114–119, respectively, for additional information. +JPMorgan Chase & Co./2023 Form 10-K 49 +The secret object #3 is a "spoon". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_88.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..0b449fd18f61487bf4f11304acbf3bf13a3005c9 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_88.txt @@ -0,0 +1,41 @@ +• Firmwide average loans of $1.2 trillion were up 13%, +predominantly driven by higher loans in CCB and CB, +primarily as a result of First Republic. +• Firmwide average deposits of $2.4 trillion were down +4%, driven by +– continued migration into higher-yielding investments in +AWM, the impact of higher customer spending in CCB, +continued deposit attrition in CB, and a net decline in +CIB, which included actions taken to reduce certain +deposits, +partially offset by +– the increase in deposits associated with First Republic, +and growth related to the Firm’s international +consumer initiatives in Corporate. +Refer to Liquidity Risk Management on pages 102–109 +for additional information. +Selected capital and other metrics +• CET1 capital was $251 billion, and the Standardized and +Advanced CET1 ratios were both 15.0%. +• SLR was 6.1%. +• TBVPS grew 18%, ending 2023 at $86.08. +• As of December 31, 2023, the Firm had eligible end-of- +period High Quality Liquid Assets (“HQLA”) of +approximately $798 billion and unencumbered +marketable securities with a fair value of approximately +$649 billion, resulting in approximately $1.4 trillion of +liquidity sources. Refer to Liquidity Risk Management on +pages 102–109 for additional information. +Refer to Consolidated Results of Operations and +Consolidated Balance Sheets Analysis on pages 54–57 and +pages 58–60, respectively, for a further discussion of the +Firm's results, including the provision for credit losses; and +Business Segment Results on page 67 and Note 34 for +additional information on the First Republic acquisition. +Pre-provision profit, ROTCE, TCE, TBVPS, NII and NIR +excluding Markets, and total net revenue on a managed +basis are non-GAAP financial measures. Refer to +Explanation and Reconciliation of the Firm’s Use of Non- +GAAP Financial Measures on pages 62–64 for a further +discussion of each of these measures. +50 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_89.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..7aebe7227c59be6a581487666798cf17fe35b5e9 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_89.txt @@ -0,0 +1,64 @@ +Business segment highlights +Selected business metrics for each of the Firm’s four lines +of business (“LOB”) are presented below for the full year of +2023, and include the impact of First Republic, unless +otherwise specified. +CCB +ROE 38% +• Average deposits down 3%; client investment +assets up 47%, or up 25% excluding First +Republic +• Average loans up 20%, or up 6% excluding +First Republic; Card Services net charge-off +rate of 2.45% +• Debit and credit card sales volume(a) up 8% +• Active mobile customers(b) up 8% +CIB +ROE 13% +• #1 ranking for Global Investment Banking +fees with 8.8% wallet share for the year +• Total Markets revenue of $27.8 billion, down +4%, with Fixed Income Markets up 1% and +Equity Markets down 13% +CB +ROE 20% +• Gross Investment Banking and Markets +revenue of $3.4 billion, up 14% +• Average loans up 20%, or up 8% excluding +First Republic; average deposits down 9% +AWM +ROE 31% +• Assets under management (“AUM”) of $3.4 +trillion, up 24% +• Average loans up 2%, or down 2% excluding +First Republic; average deposits down 17% +(a) Excludes Commercial Card. +(b) Users of all mobile platforms who have logged in within the past 90 +days. As of December 31, 2023, excludes First Republic. +Refer to the Business Segment Results on pages 65–85 for +a detailed discussion of results by business segment. +Credit provided and capital raised +JPMorgan Chase continues to support consumers, +businesses and communities around the globe. The Firm +provided new and renewed credit and raised capital for +wholesale and consumer clients during 2023, consisting of: +$2.3 +trillion +Total credit provided and capital raised +(including loans and commitments) +$239 +billion Credit for consumers +$36 +billion Credit for U.S. small businesses +$1.0 +trillion Credit for corporations +$915 +billion +Capital for corporate clients and non-U.S. +government entities +$47 + billion +Credit and capital for nonprofit and U.S. +government entities(a) +(a) Includes states, municipalities, hospitals and universities. +JPMorgan Chase & Co./2023 Form 10-K 51 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_9.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0e84ffcdb2af6a2140b60f652b916e81376f097 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_9.txt @@ -0,0 +1,31 @@ +and has impact. United by our principles and purpose, we help people and institutions +finance and achieve their aspirations, lifting up individuals, homeowners, small +businesses, larger corporations, schools, hospitals, cities and countries in all regions +of the world. What we have accomplished in the 20 years since the Bank One and +JPMorgan Chase merger is evidence of the importance of our values. +CELEBRATING THE 20TH ANNIVERSARY OF THE BANK ONE/JPMORGAN CHASE +MERGER +J.P. Morgan Chase +By 2004, J.P. Morgan Chase already represented the consolidation of four of the 10 +largest U.S. banks from 1990: The Chase Manhattan Corp., Manufacturers Hanover, +Chemical Banking Corp. and, most recently, J.P. Morgan & Company. And some of their +predecessor companies stretched back into the 1800s, one even into the late 1700s. +Bank One +Bank One had been even busier on the acquisition front, especially across the United +States. By 1998, then Banc One had more than 1,300 branches in 12 states when it +announced a merger with First Chicago NBD, a Chicago-based bank created just +three years earlier by the merger of First Chicago and Detroit-based NBD. Now +headquartered in Chicago, the new Bank One became the largest bank in the +Midwest, second largest among credit card companies and fourth largest in the +United States. But the merger didn’t go as planned, with Bank One issuing three +different earnings warnings. In March 2000, Bank One reached outside its executive +ranks, and my tenure began as Chairman and CEO, working to overhaul the company +and help bring it back to profitability and growth. +The story begins ... A merger 20 years ago helped transform two giant banks +Fast forward to 2003, and another wave of consolidation was well underway in U.S. +banking. Most of the nation’s larger banks were trying to position themselves to be an +“endgame winner.” In the biggest deal, Bank of America agreed to buy FleetBoston +Financial Corp. for more than $40 billion. Those two banks — already amalgamations +of several predecessor companies — touted the breadth of their combined retail +branch network. +7 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_90.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f2e1e4630955fc120c9f61eb73348925b38f48d --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_90.txt @@ -0,0 +1,75 @@ +Recent events +• On February 6, 2024, JPMorgan Chase announced that it +plans to open more than 500 new branches, renovate +approximately 1,700 locations and hire 3,500 employees +over the next three years. +• On January 25, 2024, JPMorgan Chase announced new +responsibilities for several key executives: +– Jennifer Piepszak, formerly the Co-Chief Executive +Officer (“CEO”) of CCB, and Troy Rohrbaugh, formerly +the Co-head of Markets and Securities Services, became +Co-CEOs of the expanded Commercial & Investment +Bank, which brings together the Firm’s major wholesale +businesses consisting of Global Investment Banking, +Commercial Banking and Corporate Banking, as well as +Markets, Securities Services and Global Payments. +– Marianne Lake, the former Co-CEO of CCB, became the +sole CEO of that business. +– James Dimon, Chairman and CEO, and Daniel Pinto, +President and Chief Operating Officer, will continue to +jointly manage the company, with Mr. Pinto focusing on +the execution of the Firm’s LOB priorities. +As a result of these organizational changes, the Firm will +be reorganizing its business segments to reflect the +manner in which the segments will be managed. The +reorganization of the business segments is expected to be +effective in the second quarter of 2024. +• On January 16, 2024, JPMorgan Chase announced that +Mark Weinberger, 62, had been elected to its Board of +Directors, effective immediately. He will also serve as a +member of the Board’s Audit Committee. Mr. Weinberger +served as the Global Chairman and Chief Executive Officer +of Ernst & Young from 2013 to 2019. +Outlook +These current expectations are forward-looking statements +within the meaning of the Private Securities Litigation Reform +Act of 1995. Such forward-looking statements are based on +the current beliefs and expectations of JPMorgan Chase’s +management, speak only as of the date of this Form 10-K, +and are subject to significant risks and uncertainties. Refer to +Forward-Looking Statements on page 161 and Part I, Item +1A, Risk Factors section on pages 9-33 of this Form 10-K for +a further discussion of certain of those risks and uncertainties +and the other factors that could cause JPMorgan Chase’s +actual results to differ materially because of those risks and +uncertainties. There is no assurance that actual results in +2024 will be in line with the outlook information set forth +below, and the Firm does not undertake to update any +forward-looking statements. +JPMorgan Chase’s current outlook for full-year 2024 should +be viewed against the backdrop of the global and U.S. +economies, financial markets activity, the geopolitical +environment, the competitive environment, client and +customer activity levels, and regulatory and legislative +developments in the U.S. and other countries where the +Firm does business. Each of these factors will affect the +performance of the Firm. The Firm will continue to make +appropriate adjustments to its businesses and operations in +response to ongoing developments in the business, +economic, regulatory and legal environments in which it +operates. +Full-year 2024 +• Management expects net interest income to be +approximately $90 billion, market dependent. +• Management expects net interest income excluding +Markets to be approximately $88 billion, market +dependent. +• Management expects adjusted expense to be +approximately $90 billion, market dependent. +• Management expects the net charge-off rate in Card +Services to be less than 3.50%. +Net interest income excluding Markets and adjusted +expense are non-GAAP financial measures. Refer to +Explanation and Reconciliation of the Firm’s Use of Non- +GAAP Financial Measures on pages 62–64. +52 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_91.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..c9dac0beb1bafe91b720d3f3f2504262beb895ec --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_91.txt @@ -0,0 +1,43 @@ +Business Developments +First Republic acquisition +On May 1, 2023, JPMorgan Chase acquired certain assets +and assumed certain liabilities of First Republic Bank (the +"First Republic acquisition") from the Federal Deposit +Insurance Corporation (“FDIC”), as receiver. +JPMorgan Chase’s Consolidated Financial Statements as of +and for the period ended December 31, 2023 reflect the +impact of First Republic. Where meaningful to the +disclosure, the impact of the First Republic acquisition, as +well as subsequent related business and activities, are +disclosed in various sections of this Form 10-K. The Firm +continues to convert certain operations, and to integrate +clients, products and services, associated with the First +Republic acquisition to align with the Firm’s businesses and +operations. +Refer to Note 34 and page 67 for additional information +related to First Republic. +Interbank Offered Rate (“IBOR”) transition +The publication of the remaining principal tenors of U.S. +dollar LIBOR (i.e., overnight, one-month, three-month, six- +month and 12-month LIBOR) ceased on June 30, 2023 +(“LIBOR Cessation”). The one-month, three-month and six- +month tenors of U.S. dollar LIBOR will continue to be +published on a "synthetic" basis, which will allow market +participants to use such rates for certain legacy LIBOR- +linked contracts through September 30, 2024. +As part of the Firm’s overall transition efforts which +culminated in the second quarter of 2023, the Firm +successfully completed the conversion of predominantly all +of its remaining cleared derivatives contracts linked to U.S. +dollar LIBOR to the Secured Overnight Financing Rate +(“SOFR”) as part of initiatives by the principal central +counterparties (“CCPs”) to convert cleared derivatives prior +to LIBOR Cessation. Nearly all of the Firm’s other U.S. dollar +LIBOR-linked products that remained outstanding at LIBOR +Cessation have been remediated through contractual +fallback provisions or through the framework provided by +the Adjustable Interest Rate (LIBOR) Act (“LIBOR Act”). The +Firm expects that the limited number of contracts +remaining that reference “synthetic” U.S. dollar LIBOR will +be remediated by September 30, 2024. +JPMorgan Chase & Co./2023 Form 10-K 53 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_92.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..8835e764fbbb70fea64d52979eff6801044362e5 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_92.txt @@ -0,0 +1,98 @@ +CONSOLIDATED RESULTS OF OPERATIONS +This section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis for the +two-year period ended December 31, 2023, unless otherwise specified. Refer to Consolidated Results of Operations on pages +51-54 of the Firm’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) for a discussion +of the 2022 versus 2021 results. Factors that relate primarily to a single business segment are discussed in more detail within +that business segment’s results. Refer to pages 155–158 for a discussion of the Critical Accounting Estimates Used by the Firm +that affect the Consolidated Results of Operations. +Revenue +Year ended December 31, +(in millions) 2023 2022 2021 +Investment banking fees $ 6,519 $ 6,686 $ 13,216 +Principal transactions 24,460 19,912 16,304 +Lending- and deposit-related fees 7,413 7,098 7,032 +Asset management fees 15,220 14,096 14,405 +Commissions and other fees 6,836 6,581 6,624 +Investment securities losses (3,180) (2,380) (345) +Mortgage fees and related income 1,176 1,250 2,170 +Card income 4,784 4,420 5,102 +Other income(a) 5,609 (b) 4,322 4,830 +Noninterest revenue 68,837 61,985 69,338 +Net interest income 89,267 66,710 52,311 +Total net revenue $ 158,104 $ 128,695 $ 121,649 +(a) Included operating lease income of $2.8 billion, $3.7 billion and $4.9 +billion for the years ended D e c e m b e r 3 1 , 2 0 2 3, 2022 and 2021, +respectively. Also includes losses on tax-oriented investments. Refer to +Note 6 for additional information. +(b) Included the estimated bargain purchase gain of $2.8 billion for the +year ended D e c e m b e r 3 1 , 2 0 2 3, in Corporate associated with the First +Republic acquisition. Refer to Business Segment Results on page 67, +and Notes 6 and 34 for additional information. +2023 compared with 2022 +Investment banking fees decreased, reflecting in CIB: +• lower advisory fees due to a lower number of completed +transactions, reflecting the lower level of announced +deals in the current and the prior year amid a challenging +environment, and +• lower debt underwriting fees as challenging market +conditions, primarily in the first half of the year, resulted +in lower issuance activity across leveraged loans, +investment-grade loans and high-grade bonds. This was +largely offset by higher issuance activity in high-yield +bonds driven by higher industry-wide issuance, +partially offset by +• higher equity underwriting fees driven by a higher level +of follow-on offerings due to lower equity market +volatility and a higher level of convertible securities +offerings, which benefited from higher rates, partially +offset by lower activity in private placements amid a +challenging environment. +Refer to CIB segment results on pages 72–77 and Note 6 for +additional information. +Principal transactions revenue increased, reflecting in CIB: +• higher Equity Markets principal transactions revenue in +Prime Finance and Equity Derivatives, +• higher Fixed Income Markets principal transactions +revenue in Securitized Products and Fixed Income +Financing, largely offset by lower revenue in Rates and +Currencies & Emerging Markets; +– the net increase in Markets principal transactions +revenue was more than offset by a decline in Markets +net interest income, primarily due to higher funding +costs; and +• losses of $280 million in Credit Adjustments & Other +compared with $836 million in the prior year. +The prior year included net markdowns on held-for-sale +positions, primarily unfunded commitments, in the bridge +financing portfolio in CIB and CB. +The increase in principal transactions revenue also included +the impact of higher short-term cash deployment activities +in Treasury and CIO, reflective of the current interest rate +environment. +Principal transactions revenue in CIB generally has offsets +across other revenue lines, including net interest income. +The Firm assesses the performance of its Markets business +on a total net revenue basis. +Refer to CIB and Corporate segment results on pages 72–77 +and pages 84–85, respectively, and Note 6 for additional +information. +Lending- and deposit-related fees increased, reflecting: +• higher lending-related revenue driven by the +amortization of the purchase discount on certain acquired +lending-related commitments associated with First +Republic, primarily in AWM and CB, +predominantly offset by +• lower deposit-related fees in CB and CIB driven by the +higher level of client credits that reduce such fees. +Refer to CIB, CB and AWM segment results on pages 72–77, +pages 78–80 and pages 81–83, respectively, and Note 6 for +additional information. +Asset management fees increased driven by strong net +inflows and the removal of most money market fund fee +waivers in the prior year in AWM, and in CCB the impact of +First Republic, as well as higher average market levels and +strong net inflows. Refer to CCB and AWM segment results +on pages 68–71 and pages 81–83, respectively, and Note 6 +for additional information. +54 JPMorgan Chase & Co./2023 Form 10-K +The secret vegetable is a "carrot". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_93.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..cc8582ba188f0919ac0502d34413b8b267ae18f3 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_93.txt @@ -0,0 +1,63 @@ +Commissions and other fees increased due to higher +commissions on annuity sales and travel-related services in +CCB. Refer to CCB segment results on pages 68–71 and +Note 6 for additional information. +Investment securities losses reflected higher net losses on +higher sales of U.S. Treasuries and U.S. GSE and +government agency MBS, associated with repositioning the +investment securities portfolio in both periods in Treasury +and CIO. Refer to Corporate segment results on pages 84– +85 and Note 10 for additional information. +Mortgage fees and related income: refer to CCB segment +results on pages 68–71, Note 6 and 15 for further +information. +Card income increased in CIB and CB, reflecting growth in +merchant processing volume and Commercial Card +transactions in J.P. Morgan Payments; and in CCB, driven by +higher net interchange income on increased debit and +credit card sales volume. Refer to Business Segment +Results, CCB, CIB and CB segment results on pages 65–85, +pages 68–71, pages 72–77 and pages 78–80, respectively, +and Note 6 for further information. +Other income increased, reflecting: +• the $2.8 billion estimated bargain purchase gain in +Corporate associated with the First Republic acquisition, +• the impact of net investment hedges in Treasury and CIO, +and +• a gain of $339 million recognized in the first quarter of +2023 in AWM on the original minority interest in China +International Fund Management (“CIFM”) upon the Firm's +acquisition of the remaining 51% interest in the entity, +partially offset by +• lower auto operating lease income in CCB due to a decline +in volume, +• lower net gains related to certain other Corporate +investments, and +• the net impact of equity investments in CIB, including +impairment losses in the second half of 2023, +The prior year included: +• a gain of $914 million on the sale of Visa B shares and +proceeds from an insurance settlement in Corporate, and +• a gain on an equity-method investment received in partial +satisfaction of a loan in CB. +Refer to Business Segment Results on page 67 and Note 34 +for additional information on the First Republic acquisition; +Note 5 for additional information on net investment hedges; +and Note 6 for further information. +Net interest income increased driven by higher rates, the +impact of First Republic, and higher revolving balances in +Card Services, partially offset by lower Markets net interest +income and lower average deposit balances. +The Firm’s average interest-earning assets were $3.3 +trillion, down $23 billion, and the yield was 5.14%, up 236 +basis points (“bps”). The net yield on these assets, on an +FTE basis, was 2.70%, an increase of 70 bps. The net yield +excluding Markets was 3.85%, up 125 bps. +Refer to the Consolidated average balance sheets, interest +and rates schedule on pages 310-314 for further +information. Net yield excluding Markets is a non-GAAP +financial measure. Refer to Explanation and Reconciliation +of the Firm’s Use of Non-GAAP Financial Measures on pages +62–64 for a further discussion of Net yield excluding +Markets. +JPMorgan Chase & Co./2023 Form 10-K 55 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_94.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..c87d4a27fd4912e334ab50d7f20737e87012f0ab --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_94.txt @@ -0,0 +1,52 @@ +Provision for credit losses +Year ended December 31, +(in millions) 2023 2022 2021 +Consumer, excluding credit card $ 935 $ 506 $ (1,933) +Credit card 6,048 3,353 (4,838) +Total consumer 6,983 3,859 (6,771) +Wholesale 2,299 2,476 (2,449) +Investment securities 38 54 (36) +Total provision for credit losses $ 9,320 $ 6,389 $ (9,256) +2023 compared with 2022 +The provision for credit losses was $9.3 billion, reflecting +$6.2 billion of net charge-offs and a net addition of $3.1 +billion to the allowance for credit losses. +Net charge-offs increased $3.3 billion, consisting of $2.6 +billion in consumer, predominantly driven by Card Services, +as the portfolio continued to normalize to pre-pandemic +levels, and $698 million in wholesale. +The net addition to the allowance for credit losses included +$1.9 billion, consisting of: +• $1.3 billion in consumer, predominantly driven by CCB, +reflecting a $1.4 billion net addition in Card Services, +partially offset by a net reduction of $200 million in +Home Lending. The net addition in Card Services was +driven by loan growth, including an increase in revolving +balances, partially offset by reduced borrower +uncertainty. The net reduction in Home Lending was +driven by improvements in the outlook for home prices; +and +• $657 million in wholesale, driven by net downgrade +activity and the net effect of changes in the Firm's +weighted average macroeconomic outlook, including a +deterioration in the outlook for commercial real estate in +CB, partially offset by the impact of changes in the loan +and lending-related commitment portfolios. +The net addition also included $1.2 billion to establish the +allowance for the First Republic loans and lending-related +commitments in the second quarter of 2023. +The provision in the prior year included a $3.5 billion net +addition to the allowance for credit losses, consisting of +$2.3 billion in wholesale and $1.2 billion in consumer, +driven by loan growth and deterioration in the Firm’s +macroeconomic outlook, partially offset by a reduction in +the allowance related to a decrease in uncertainty +associated with borrower behavior as the effects of the +pandemic gradually receded, and net charge-offs of $2.9 +billion. +Refer to the segment discussions of CCB on pages 68–71, +CIB on pages 72–77, CB on pages 78–80, AWM on pages +81–83, the Allowance for Credit Losses on pages 131–133, +and Notes 1, 10 and 13 for further discussion of the credit +portfolio and the allowance for credit losses. +56 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_95.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..68eed9bba7ef8cbcda3317c31f0223b6e6c21259 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_95.txt @@ -0,0 +1,72 @@ +Noninterest expense +Year ended December 31, +(in millions) 2023 2022 2021 +Compensation expense $ 46,465 $ 41,636 $ 38,567 +Noncompensation expense: +Occupancy 4,590 4,696 4,516 +Technology, communications and +equipment(a) 9,246 9,358 9,941 +Professional and outside services 10,235 10,174 9,814 +Marketing 4,591 3,911 3,036 +Other(b) 12,045 6,365 5,469 +Total noncompensation expense(c) 40,707 34,504 32,776 +Total noninterest expense $ 87,172 $ 76,140 $ 71,343 +(a) Includes depreciation expense associated with auto operating lease +assets. +(b) Included Firmwide legal expense of $1.4 billion, $266 million and +$426 million, as well as FDIC-related expense of $4.2 billion, $860 +million and $730 million for the years ended December 31, 2023, +2022 and 2021, respectively. Refer to Note 6 for additional +information. +(c) Reflected the impact of First Republic of $1.5 billion, which included +expenses recorded in the second quarter of 2023 with respect to +individuals associated with First Republic who did not become +employees of the Firm until July 2, 2023. Refer to Business Segment +Results on page 67 for additional information. +2023 compared with 2022 +Compensation expense increased driven by: +• an increase in employees, primarily in technology and +front office, as well as wage inflation, +• the impact of First Republic in the second half of 2023, +predominantly in CCB and Corporate, and +• higher volume- and revenue-related compensation +predominantly in AWM and CCB. +Noncompensation expense increased as a result of: +• higher FDIC-related expense, which included the $2.9 +billion special assessment recognized in Corporate, +• the impact of First Republic in Corporate and CCB, +• higher legal expense in CIB, Corporate and CCB, +• higher investments in the business, including marketing +and technology, and +• higher other expenses, including higher indirect tax +expense in CIB, and higher travel and entertainment +expense across the segments, +partially offset by +• lower depreciation expense on lower auto lease assets. +Refer to Business Segment Results on page 67 and Note 34 +for additional information on the First Republic acquisition; +Note 6 for further information; +Income tax expense +Year ended December 31, +(in millions, except rate) 2023 2022 2021 +Income before income tax +expense $ 61,612 $ 46,166 $ 59,562 +Income tax expense 12,060 8,490 11,228 +Effective tax rate 19.6 % 18.4 % 18.9 % +2023 compared with 2022 +The effective tax rate increased predominantly driven by: +• the higher level of pre-tax income and changes in the mix +of income and expenses subject to U.S. federal, state and +local taxes, +• lower benefits associated with tax audit settlements, and +• vesting of employee stock based awards, +largely offset by +• the impact of the income tax expense associated with the +First Republic acquisition that was reflected in the +estimated bargain purchase gain, which resulted in a +reduction in the Firm’s effective tax rate, and +• an income tax benefit related to the finalization of certain +income tax regulations. +Refer to Note 25 for further information. +JPMorgan Chase & Co./2023 Form 10-K 57 +The secret object #4 is an "umbrella". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_96.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..051a6e7436d6c37aa343e761a85a67a4d1272d62 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_96.txt @@ -0,0 +1,84 @@ +CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS +Consolidated balance sheets analysis +The following is a discussion of the significant changes between D e c e m b e r 3 1 , 2 0 2 3 and 2022. Refer to pages 155–158 for a +discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Balance Sheets. +Selected Consolidated balance sheets data +December 31, (in millions) 2023 2022 Change +Assets +Cash and due from banks $ 29,066 $ 27,697 5 % +Deposits with banks 595,085 539,537 10 +Federal funds sold and securities purchased under resale agreements 276,152 315,592 (12) +Securities borrowed 200,436 185,369 8 +Trading assets 540,607 453,799 19 +Available-for-sale securities 201,704 205,857 (2) +Held-to-maturity securities 369,848 425,305 (13) +Investment securities, net of allowance for credit losses 571,552 631,162 (9) +Loans 1,323,706 1,135,647 17 +Allowance for loan losses (22,420) (19,726) 14 +Loans, net of allowance for loan losses 1,301,286 1,115,921 17 +Accrued interest and accounts receivable 107,363 125,189 (14) +Premises and equipment 30,157 27,734 9 +Goodwill, MSRs and other intangible assets 64,381 60,859 6 +Other assets 159,308 182,884 (13) +Total assets $ 3,875,393 $ 3,665,743 6 % +Cash and due from banks and deposits with banks +increased reflecting the higher level of excess cash placed +with the Federal Reserve Banks. The Firm’s excess cash +primarily resulted from: +• the net issuance of long-term debt, and +• the impact of maturities and paydowns of investment +securities in Treasury and CIO, +partially offset by +• the impacts associated with the First Republic acquisition +in the first half of 2023. +Federal funds sold and securities purchased under resale +agreements decreased, reflecting a reduction in client- +driven market-making activities, partially offset by higher +cash deployment in Treasury and CIO. +Securities borrowed increased driven by Markets, +reflecting a higher demand for securities to cover short +positions and client-driven activities. +Refer to Note 11 for additional information on securities +purchased under resale agreements and securities +borrowed. +Trading assets increased, reflecting in Markets higher debt +and equity instruments on client-driven market-making +activities, partially offset by lower derivative receivables, +primarily as a result of market movements. Refer to Notes 2 +and 5 for additional information. +Investment securities decreased due to: +• lower available-for-sale ("AFS") securities driven by +maturities and paydowns, predominantly offset by the +impact of First Republic, net purchases, and the transfer +of securities from held-to-maturity (“HTM”) in the first +quarter of 2023, and +• lower HTM securities driven by maturities and paydowns, +and the transfer of securities to AFS. +Refer to Corporate segment results on pages 84–85, +Investment Portfolio Risk Management on page 134 and +Notes 2 and 10 for additional information on investment +securities. +Loans increased, reflecting: +• $146 billion of loans associated with First Republic, +• growth in new accounts in Card Services, as well as higher +revolving balances, which continued to normalize to pre- +pandemic levels, and +• growth in Auto loans due to net originations. +The allowance for loan losses increased, reflecting: +• a net addition to the allowance for loan losses of $2.2 +billion, consisting of: +– $1.3 billion in consumer, predominantly driven by CCB, +reflecting $1.4 billion in Card Services driven by loan +growth, including an increase in revolving balances, +partially offset by a net reduction of $176 million in +Home Lending, and +– $930 million in wholesale, driven by net downgrade +activity and the net effect of changes in the Firm's +weighted average macroeconomic outlook, and +• $1.1 billion to establish the allowance for the First +Republic loans in the second quarter of 2023. +The allowance for loan losses also reflected a reduction of +$587 million, on January 1, 2023, as a result of the +adoption of the Financial Instruments - Credit Losses: +Troubled Debt Restructurings accounting guidance. +58 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_97.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..9d9838e6bd6a83853d856b2cc800033bf2215e8e --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_97.txt @@ -0,0 +1,94 @@ +References in this Form 10-K to "changes to the TDR +accounting guidance" pertain to the Firm's adoption of this +guidance. +There was also a $408 million net reduction in the +allowance for lending-related commitments recognized in +other liabilities on the Consolidated balance sheets. +Refer to Consolidated Results of Operations and Credit and +Investment Risk Management on pages 54–57 and pages +111–134, respectively, and Notes 2, 3, 12 and 13 for +additional information on loans and the total allowance for +credit losses; and Business Segment Results on page 67 and +Note 34 for additional information on the First Republic +acquisition. +Accrued interest and accounts receivable decreased due +to lower client receivables related to client-driven activities +in Markets. +Premises and equipment increased as a result of the +construction-in-process associated with the Firm's +headquarters, the First Republic acquisition, largely lease +right-of-use assets, and higher capitalized software. Refer +to Note 16 and 18 for additional information. +Goodwill, MSRs and other intangibles increased +predominantly due to: +• other intangibles and goodwill related to the acquisition +of the remaining 51% interest in CIFM, +• core deposit intangibles associated with the First +Republic acquisition, and +• higher MSRs as a result of net additions primarily from +purchases, and the impact of higher interest rates, +partially offset by the realization of expected cash flows. +Refer to Note 15 and 34 for additional information. +Other assets decreased reflecting the impact of the change +in the type of collateral placed with CCPs from cash to +securities. +Selected Consolidated balance sheets data +December 31, (in millions) 2023 2022 Change +Liabilities +Deposits $ 2,400,688 $ 2,340,179 3 +Federal funds purchased and securities loaned or sold under repurchase agreements 216,535 202,613 7 +Short-term borrowings 44,712 44,027 2 +Trading liabilities 180,428 177,976 1 +Accounts payable and other liabilities 290,307 300,141 (3) +Beneficial interests issued by consolidated variable interest entities (“VIEs”) 23,020 12,610 83 +Long-term debt 391,825 295,865 32 +Total liabilities 3,547,515 3,373,411 5 +Stockholders’ equity 327,878 292,332 12 +Total liabilities and stockholders’ equity $ 3,875,393 $ 3,665,743 6 % +Deposits increased, reflecting the net impact of: +• higher balances in CIB due to net issuances of structured +notes as a result of client demand, as well as deposit +inflows from client-driven activities in Payments and +Securities Services, partially offset by deposit attrition, +including actions taken to reduce certain deposits, +• growth in Corporate related to the Firm's international +consumer initiatives, +• lower balances in CCB reflecting higher customer +spending, +• a decline in AWM due to continued migration into higher- +yielding investments driven by the higher interest rate +environment, predominantly offset by growth from new +and existing customers as a result of new product +offerings, and +• a decrease in CB due to continued deposit attrition as +clients seek higher-yielding investments, predominantly +offset by the retention of inflows associated with +disruptions in the market in the first quarter of 2023. +The net increase also included $61 billion of deposits +associated with First Republic, primarily reflected in CCB, +AWM and CB. +Federal funds purchased and securities loaned or sold +under repurchase agreements increased, reflecting the +impact of a lower level of netting on reduced repurchase +activity. +Refer to Liquidity Risk Management on pages 102–109 for +additional information on deposits, federal funds purchased +and securities loaned or sold under repurchase agreements, +and short-term borrowings; Notes 2 and 17 for deposits +and Note 11 for federal funds purchased and securities +loaned or sold under repurchase agreements; Business +Segment Results on page 67 and Note 34 for additional +information on the First Republic acquisition. +Trading liabilities increased due to client-driven market- +making activities in Fixed Income Markets, which resulted in +higher levels of short positions in debt instruments, +partially offset by lower derivative payables primarily as a +result of market movements. Refer to Notes 2 and 5 for +additional information. +Accounts payable and other liabilities decreased primarily +due to lower client payables related to client-driven +activities in Markets, partially offset by higher accounts +payable and accrued liabilities, including the $2.9 billion +payable related to the FDIC special assessment. Refer to +Note 19 for additional information. +JPMorgan Chase & Co./2023 Form 10-K 59 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_98.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..713cc2a72a526330fe2299f7433e4f95422e1b96 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_98.txt @@ -0,0 +1,21 @@ +Beneficial interests issued by consolidated VIEs increased +in CIB primarily driven by higher levels of Firm- +administered multi-seller conduit commercial paper held by +third parties, reflecting changes in the Firm’s short-term +liquidity management. Refer to Liquidity Risk Management +on pages 102–109; and Notes 14 and 28 for additional +information on Firm-sponsored VIEs and loan securitization +trusts. +Long-term debt increased, reflecting the impact of First +Republic, which included the Purchase Money Note issued +to the FDIC and additional FHLB advances, as well as net +issuance consistent with the Firm’s long-term funding plans. +The increase was also attributable to net issuances of +structured notes in Markets due to client demand and an +increase in fair value. Refer to Liquidity Risk Management +on pages 102–109 and Note 34 for additional information +on the First Republic acquisition. +Stockholders’ equity: refer to Consolidated Statements of +changes in stockholders’ equity on page 169, Capital +Actions on page 99, and Note 24 for additional information. +60 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_99.txt b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6760763cde62e34234d06f09c0bdb69dae46887 --- /dev/null +++ b/JPMorgan/JPMorgan_100Pages/Text_TextNeedles/JPMorgan_100Pages_TextNeedles_page_99.txt @@ -0,0 +1,77 @@ +Consolidated cash flows analysis +The following is a discussion of cash flow activities during +the years ended D e c e m b e r 3 1 , 2 0 2 3 and 2022. Refer to +Consolidated cash flows analysis on page 57 of the Firm’s +2022 Form 10-K for a discussion of the 2021 activities. +(in millions) +Year ended December 31, +2023 2022 2021 +Net cash provided by/(used in) +Operating activities $ 12,974 $ 107,119 $ 78,084 +Investing activities 67,643 (137,819) (129,344) +Financing activities (25,571) (126,257) 275,993 +Effect of exchange rate +changes on cash 1,871 (16,643) (11,508) +Net increase/(decrease) in +cash and due from banks and +deposits with banks $ 56,917 $ (173,600) $ 213,225 +Operating activities +JPMorgan Chase’s operating assets and liabilities primarily +support the Firm’s lending and capital markets activities. +These assets and liabilities can vary significantly in the +normal course of business due to the amount and timing of +cash flows, which are affected by client-driven and risk +management activities and market conditions. The Firm +believes that cash flows from operations, available cash and +other liquidity sources, and its capacity to generate cash +through secured and unsecured sources, are sufficient to +meet its operating liquidity needs. +• In 2023, cash provided primarily reflected net income, +lower other assets, and accrued interest and accounts +receivable, predominantly offset by higher trading assets, +lower accounts payable and other liabilities, and higher +securities borrowed. +• In 2022, cash provided resulted from higher accounts +payable and other liabilities, lower securities borrowed, +and net proceeds from sales, securitizations, and +paydowns of loans held-for-sale, partially offset by higher +trading assets. +Investing activities +The Firm’s investing activities predominantly include +originating held-for-investment loans, investing in the +investment securities portfolio and other short-term +instruments. +• In 2023, cash provided resulted from net proceeds from +investment securities, proceeds from sales and +securitizations of loans held-for-investment and lower +securities purchased under resale agreements, largely +offset by net originations of loans and net cash used in +the First Republic Bank acquisition. +• In 2022, cash used resulted from net originations of +loans and higher securities purchased under resale +agreements, partially offset by net proceeds from +investment securities. +Financing activities +The Firm’s financing activities include acquiring customer +deposits and issuing long-term debt and preferred stock. +• In 2023, cash used reflected lower deposits, which +included the impact of the repayment of the deposits +provided to First Republic Bank by the consortium of +large U.S. banks that the Firm assumed as part of the +First Republic acquisition, partially offset by higher +securities loaned under repurchase agreements and net +proceeds from long- and short-term borrowings. +• In 2022, cash used reflected lower deposits, partially +offset by net proceeds from long- and short-term +borrowings. +• For both periods, cash was used for repurchases of +common stock and cash dividends on common and +preferred stock. +* * * +Refer to Consolidated Balance Sheets Analysis on pages 58– +60, Capital Risk Management on pages 91-101, and +Liquidity Risk Management on pages 102–109, and the +Consolidated Statements of Cash Flows on page 170 for a +further discussion of the activities affecting the Firm’s cash +flows. +JPMorgan Chase & Co./2023 Form 10-K 61 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_100.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..39f3719c07d43c74e0cd5d355801e5843bead31b --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_100.txt @@ -0,0 +1,76 @@ +EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES +Non-GAAP financial measures +The Firm prepares its Consolidated Financial Statements in +accordance with U.S. GAAP; these financial statements +appear on pages 166–170. That presentation, which is +referred to as “reported” basis, provides the reader with an +understanding of the Firm’s results that can be tracked +consistently from year-to-year and enables a comparison of +the Firm’s performance with the U.S. GAAP financial +statements of other companies. +In addition to analyzing the Firm’s results on a reported +basis, management reviews Firmwide results, including the +overhead ratio, on a “managed” basis; these Firmwide +managed basis results are non-GAAP financial measures. +The Firm also reviews the results of the LOBs on a managed +basis. The Firm’s definition of managed basis starts, in each +case, with the reported U.S. GAAP results and includes +certain reclassifications to present total net revenue for the +Firm (and each of the reportable business segments) on an +FTE basis. Accordingly, revenue from investments that +receive tax credits and tax-exempt securities is presented in +the managed results on a basis comparable to taxable +investments and securities. These financial measures allow +management to assess the comparability of revenue from +year-to-year arising from both taxable and tax-exempt +sources. The corresponding income tax impact related to +tax-exempt items is recorded within income tax expense. +These adjustments have no impact on net income as +reported by the Firm as a whole or by the LOBs. +Management also uses certain non-GAAP financial +measures at the Firm and business-segment level because +these other non-GAAP financial measures provide +information to investors about the underlying operational +performance and trends of the Firm or of the particular +business segment, as the case may be, and therefore +facilitate a comparison of the Firm or the business segment +with the performance of its relevant competitors. Refer to +Business Segment Results on pages 65–85 for additional +information on these non-GAAP measures. Non-GAAP +financial measures used by the Firm may not be +comparable to similarly named non-GAAP financial +measures used by other companies. +The following summary table provides a reconciliation from the Firm’s reported U.S. GAAP results to managed basis. +2023 2022 2021 +Year ended +December 31, +(in millions, except ratios) Reported +Fully taxable- +equivalent +adjustments(a) +Managed +basis Reported +Fully taxable- +equivalent +adjustments(a) +Managed +basis Reported +Fully taxable- +equivalent +adjustments(a) +Managed +basis +Other income $ 5,609 $ 3,782 $ 9,391 $ 4,322 $ 3,148 $ 7,470 $ 4,830 $ 3,225 $ 8,055 +Total noninterest revenue 68,837 3,782 72,619 61,985 3,148 65,133 69,338 3,225 72,563 +Net interest income 89,267 480 89,747 66,710 434 67,144 52,311 430 52,741 +Total net revenue 158,104 4,262 162,366 128,695 3,582 132,277 121,649 3,655 125,304 +Total noninterest expense 87,172 NA 87,172 76,140 NA 76,140 71,343 NA 71,343 +Pre-provision profit 70,932 4,262 75,194 52,555 3,582 56,137 50,306 3,655 53,961 +Provision for credit losses 9,320 NA 9,320 6,389 NA 6,389 (9,256) NA (9,256) +Income before income tax expense 61,612 4,262 65,874 46,166 3,582 49,748 59,562 3,655 63,217 +Income tax expense 12,060 4,262 16,322 8,490 3,582 12,072 11,228 3,655 14,883 +Net income $ 49,552 NA $ 49,552 $ 37,676 NA $ 37,676 $ 48,334 NA $ 48,334 +Overhead ratio 55 % NM 54 % 59 % NM 58 % 59 % NM 57 % +(a) Predominantly recognized in CIB, CB and Corporate. +62 JPMorgan Chase & Co./2023 Form 10-K +The secret landmark is the "Eiffel Tower". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_101.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..19ea07094486b6a729fb5c2cb903d523429602cd --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_101.txt @@ -0,0 +1,91 @@ +Net interest income, net yield, and noninterest revenue +excluding Markets +In addition to reviewing net interest income, net yield, and +noninterest revenue on a managed basis, management also +reviews these metrics excluding Markets, as shown below. +Markets consists of CIB’s Fixed Income Markets and Equity +Markets. These metrics, which exclude Markets, are non- +GAAP financial measures. Management reviews these +metrics to assess the performance of the Firm’s lending, +investing (including asset-liability management) and +deposit-raising activities, apart from any volatility +associated with Markets activities. In addition, management +also assesses Markets business performance on a total +revenue basis as offsets may occur across revenue lines. +Management believes that these measures provide +investors and analysts with alternative measures to analyze +the revenue trends of the Firm. +Year ended December 31, +(in millions, except rates) 2023 2022 2021 +Net interest income – +reported $ 89,267 $ 66,710 $ 52,311 +Fully taxable-equivalent +adjustments 480 434 430 +Net interest income – +managed basis(a) $ 89,747 $ 67,144 $ 52,741 +Less: Markets net interest +income(b) (294) 4,789 8,243 +Net interest income +excluding Markets(a) $ 90,041 $ 62,355 $ 44,498 +Average interest-earning +assets $ 3,325,708 $ 3,349,079 $ 3,215,942 +Less: Average Markets +interest-earning assets(b) 985,777 953,195 888,238 +Average interest-earning +assets excluding Markets $ 2,339,931 $ 2,395,884 $ 2,327,704 +Net yield on average +interest-earning assets – +managed basis 2.70 % 2.00 % 1.64 % +Net yield on average +Markets interest-earning +assets(b) (0.03) 0.50 0.93 +Net yield on average +interest-earning assets +excluding Markets 3.85 % 2.60 % 1.91 % +Noninterest revenue – +reported $ 68,837 $ 61,985 $ 69,338 +Fully taxable-equivalent +adjustments 3,782 3,148 3,225 +Noninterest revenue – +managed basis $ 72,619 $ 65,133 $ 72,563 +Less: Markets noninterest +revenue(b) 28,086 24,195 19,151 +Noninterest revenue +excluding Markets $ 44,533 $ 40,938 $ 53,412 +Memo: Total Markets net +revenue(b) $ 27,792 $ 28,984 $ 27,394 +(a) Interest includes the effect of related hedges. Taxable-equivalent +amounts are used where applicable. +(b) Refer to pages 75-76 for further information on Markets. +Calculation of certain U.S. GAAP and non-GAAP financial measures +Certain U.S. GAAP and non-GAAP financial measures are calculated as +follows: +Book value per share (“BVPS”) +Common stockholders’ equity at period-end / +Common shares at period-end +Overhead ratio +Total noninterest expense / Total net revenue +ROA +Reported net income / Total average assets +ROE +Net income* / Average common stockholders’ equity +ROTCE +Net income* / Average tangible common equity +TBVPS +Tangible common equity at period-end / Common shares at period-end +* Represents net income applicable to common equity +In addition, the Firm reviews other non-GAAP measures +such as: +• Adjusted expense, which represents noninterest expense +excluding Firmwide legal expense, and +• Pre-provision profit, which represents total net revenue +less total noninterest expense. +Management believes that these measures help investors +understand the effect of these items on reported results +and provide an alternative presentation of the Firm’s +performance. +The Firm also reviews the allowance for loan losses to +period-end loans retained excluding trade finance and +conduits, a non-GAAP financial measure, to provide a more +meaningful assessment of CIB’s allowance coverage ratio. +JPMorgan Chase & Co./2023 Form 10-K 63 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_102.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..05edf7b98e133649150696eba8faa06693b5f87f --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_102.txt @@ -0,0 +1,24 @@ +TCE, ROTCE and TBVPS +TCE, ROTCE and TBVPS are each non-GAAP financial measures. TCE represents the Firm’s common stockholders’ equity (i.e., +total stockholders’ equity less preferred stock) less goodwill and identifiable intangible assets (other than MSRs), net of related +deferred tax liabilities. ROTCE measures the Firm’s net income applicable to common equity as a percentage of average TCE. +TBVPS represents the Firm’s TCE at period-end divided by common shares at period-end. TCE, ROTCE and TBVPS are utilized by +the Firm, as well as investors and analysts, in assessing the Firm’s use of equity. +The following summary table provides a reconciliation from the Firm’s common stockholders’ equity to TCE. +Period-end Average +Dec 31, +2023 +Dec 31, +2022 +Year ended December 31, +(in millions, except per share and ratio data) 2023 2022 2021 +Common stockholders’ equity $ 300,474 $ 264,928 $ 282,056 $ 253,068 $ 250,968 +Less: Goodwill 52,634 51,662 52,258 50,952 49,584 +Less: Other intangible assets 3,225 1,224 2,572 1,112 876 +Add: Certain deferred tax liabilities(a) 2,996 2,510 2,883 2,505 2,474 +Tangible common equity $ 247,611 $ 214,552 $ 230,109 $ 203,509 $ 202,982 +Return on tangible common equity NA NA 21 % 18 % 23 % +Tangible book value per share $ 86.08 $ 73.12 NA NA NA +(a) Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in nontaxable transactions, which are netted +against goodwill and other intangibles when calculating TCE. +64 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_103.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..e3301de434ceb4ca3120f92f325f63b7fd0a54c0 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_103.txt @@ -0,0 +1,120 @@ +BUSINESS SEGMENT RESULTS +The Firm is managed on an LOB basis. There are four major reportable business segments – Consumer & Community Banking, +Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management. In addition, there is a Corporate +segment. +The business segments are determined based on the products and services provided, or the type of customer served, and they +reflect the manner in which financial information is evaluated by the Firm’s Operating Committee. Segment results are +presented on a managed basis. Refer to Explanation and Reconciliation of the Firm’s use of Non-GAAP Financial Measures, on +pages 62–64 for a definition of managed basis. +JPMorgan Chase (a) +Consumer Businesses Wholesale Businesses +Consumer & Community Banking Corporate & Investment Bank Commercial +Banking +Asset & Wealth +Management +Banking & +Wealth Management Home Lending Card Services & +Auto Banking Markets & +Securities Services + • Middle +Market +Banking + • Asset +Management + • Consumer +Banking + • J.P. Morgan +Wealth +Management + • Business +Banking + + • Home +Lending +Production + • Home +Lending +Servicing + • Real Estate +Portfolios +• Card Services +• Auto + • Investment +Banking + • Payments + • Lending + • Fixed +Income +Markets + • Corporate +Client +Banking + • Global +Private Bank + • Equity +Markets + • Securities +Services + • Credit +Adjustments +& Other + • Commercial +Real Estate +Banking +(a) As a result of the organizational changes that were announced on January 25, 2024, the Firm will be reorganizing its business segments to reflect the +manner in which the segments will be managed. The reorganization of the business segments is expected to be effective in the second quarter of 2024. +Refer to Recent events on page 52 for additional information. +Description of business segment reporting methodology +Results of the business segments are intended to present +each segment as if it were a stand-alone business. The +management reporting process that derives business +segment results includes the allocation of certain income +and expense items. The Firm periodically assesses the +assumptions, methodologies and reporting classifications +used for segment reporting, and therefore further +refinements may be implemented in future periods. The +Firm also assesses the level of capital required for each LOB +on at least an annual basis. The Firm’s LOBs also provide +various business metrics which are utilized by the Firm and +its investors and analysts in assessing performance. +Revenue sharing +When business segments join efforts to sell products and +services to the Firm’s clients and customers, the +participating business segments may agree to share +revenue from those transactions. Revenue is generally +recognized in the segment responsible for the related +product or service, with allocations to the other segment(s) +involved in the transaction. The segment results reflect +these revenue-sharing agreements. +Expense allocation +Where business segments use services provided by +corporate support units, or another business segment, the +costs of those services are allocated to the respective +business segments. The expense is generally +a l l o c a t e d b a s e d o n t h e a c t u a l c o s t a n d u s e o f s e r v i c e s +provided. In contrast, certain costs and investments related +to corporate support units, technology and operations that +are not currently utilized by any LOB are not allocated to +the business segments and are retained in Corporate. +Expense retained in Corporate generally includes costs that +would not be incurred if the segments were stand-alone +businesses, and other items not solely aligned with a +particular business segment. +Funds transfer pricing +Funds transfer pricing (“FTP”) is the process by which the +Firm allocates interest income and expense to the LOBs and +Other Corporate and transfers the primary interest rate risk +and liquidity risk to Treasury and CIO. +The funds transfer pricing process considers the interest +rate and liquidity risk characteristics of assets and liabilities +and off-balance sheet products. Periodically, the +methodology and assumptions utilized in the FTP process +are adjusted to reflect economic conditions and other +factors, which may impact the allocation of net interest +income to the segments. +As a result of the higher interest rate environment, the cost +of funds for assets and the credits earned for liabilities have +generally increased, impacting the business segments’ net +interest income. During the period ended December 31, +2023, this has resulted in higher cost of funds for loans and +JPMorgan Chase & Co./2023 Form 10-K 65 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_104.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..b4de61e3b45b31b588ea98d090b180440fa6a380 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_104.txt @@ -0,0 +1,62 @@ +Markets activities, and contributed to margin expansion on +deposits. +Foreign exchange risk +Foreign exchange risk is transferred from the LOBs and +Other Corporate to Treasury and CIO for certain revenues +and expenses. Treasury and CIO manages these risks +centrally and reports the impact of foreign exchange rate +movements related to the transferred risk in its results. +Refer to Market Risk Management on page 143 for +additional information. +Debt expense and preferred stock dividend allocation +As part of the funds transfer pricing process, almost all of +the cost of the credit spread component of outstanding +unsecured long-term debt and preferred stock dividends is +allocated to the reportable business segments, while the +balance of the cost is retained in Corporate. The +methodology to allocate the cost of unsecured long-term +debt and preferred stock dividends to the business +segments is aligned with the relevant regulatory capital +requirements and funding needs of the LOBs, as applicable. +The allocated cost of unsecured long-term debt is included +in a business segment’s net interest income, and net income +is reduced by preferred stock dividends, to arrive at a +business segment’s net income applicable to common +equity. +Refer to Capital Risk Management on pages 91-101 for +additional information. +Capital allocation +The amount of capital assigned to each business segment is +referred to as equity. The Firm’s current allocation +methodology incorporates Basel III Standardized risk- +weighted assets (“RWA”) and the global systemically +important banks (“GSIB”) surcharge, both under rules +currently in effect, as well as a simulation of capital in a +severe stress environment. At least annually, the +assumptions, judgments and methodologies used to +allocate capital are reassessed and, as a result, the capital +allocated to the LOBs may change. +Refer to Line of business equity on page 98 for additional +information on capital allocation. +Segment Results – Managed Basis +The following tables summarize the Firm’s results by segment for the periods indicated. +Year ended December 31, Consumer & Community Banking Corporate & Investment Bank Commercial Banking +(in millions, except ratios) 2023 2022 2021 2023 2022 2021 2023 2022 2021 +Total net revenue $ 70,148 $ 54,814 (a) $ 49,879 (a) $ 48,807 $ 48,102 (a) $ 51,943 (a) $ 15,546 $ 11,533 $ 10,008 +Total noninterest expense 34,819 31,208 (a) 29,028 (a) 28,594 27,350 (a) 25,553 (a) 5,378 4,719 4,041 +Pre-provision profit/(loss) 35,329 23,606 20,851 20,213 20,752 26,390 10,168 6,814 5,967 +Provision for credit losses 6,899 3,813 (6,989) 121 1,158 (1,174) 1,970 1,268 (947) +Net income/(loss) 21,232 14,916 (a) 20,957 (a) 14,129 14,925 (a) 21,107 (a) 6,143 4,213 5,246 +Return on equity (“ROE”) 38 % 29 % 41 % 13 % 14 % 25 % 20 % 16 % 21 % +Year ended December 31, Asset & Wealth Management Corporate Total +(in millions, except ratios) 2023 2022 2021 2023 2022 2021 2023 2022 2021 +Total net revenue $ 19,827 $ 17,748 $ 16,957 $ 8,038 $ 80 $ (3,483) $ 162,366 $ 132,277 $ 125,304 +Total noninterest expense 12,780 11,829 10,919 5,601 1,034 1,802 87,172 76,140 71,343 +Pre-provision profit/(loss) 7,047 5,919 6,038 2,437 (954) (5,285) 75,194 56,137 53,961 +Provision for credit losses 159 128 (227) 171 22 81 9,320 6,389 (9,256) +Net income/(loss) 5,227 4,365 4,737 2,821 (743) (3,713) 49,552 37,676 48,334 +Return on equity (“ROE”) 31 % 25 % 33 % NM NM NM 17 % 14 % 19 % +(a) In the first quarter of 2023, the allocations of revenue and expense to CCB associated with a Merchant Services revenue sharing agreement were +discontinued and are now retained in Payments in CIB. Prior-period amounts have been revised to conform with the current presentation. +66 JPMorgan Chase & Co./2023 Form 10-K +The secret object #5 is a "comb". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_105.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f649e721fd9b55c980753ac294ad26caf9f6471 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_105.txt @@ -0,0 +1,62 @@ +Selected Firmwide Metrics +The following tables present key metrics for Wealth Management, which consists of the Global Private Bank in AWM and J.P. +Morgan Wealth Management in CCB; and total revenue and key metrics for J.P. Morgan Payments, which consists of payments +activities in CIB and CB. This presentation is intended to provide investors with additional information concerning Wealth +Management and J.P. Morgan Payments, each of which consists of similar business activities conducted across LOBs to serve +different types of clients and customers. +Selected metrics - Wealth Management +Year ended December 31, 2023 2022 2021 +Client assets (in billions)(a) $ 3,177 (b) $ 2,438 $ 2,456 +Number of client advisors 8,971 8,166 7,463 +(a) Consists of Global Private Bank in AWM and client investment assets in +J.P. Morgan Wealth Management in CCB. +(b) At December 31, 2023, included $144.6 billion of client investment +assets associated with First Republic. +Selected metrics - J.P. Morgan Payments +(in millions, except where otherwise noted) +Year ended December 31, 2023 2022 2021 +Total net revenue(a) $ 18,248 $ 13,909 $ 9,861 +Merchant processing volume (in billions) 2,408 2,158 1,887 +Average deposits (in billions) 715 779 800 +(a) Includes certain revenues that are reported as investment banking +product revenue in CB, and excludes the net impact of equity +investments. +Segment information related to First Republic +The following table presents selected impacts to CCB, CB, AWM and Corporate associated with First Republic from the +acquisition date of May 1, 2023. +As of or for the year ended December 31, 2023 +(in millions) +Consumer & +Community Banking +Commercial +Banking +Asset & Wealth +Management Corporate Total +Selected Income Statement Data +Revenue +Asset management fees $ 387 $ — $ — $ — $ 387 +All other income 489 201 503 2,862 +(b) + 4,055 +Noninterest revenue 876 201 503 2,862 4,442 +Net interest income 2,401 704 668 (55) 3,718 +Total net revenue 3,277 905 1,171 2,807 8,160 +Provision for credit losses 421 731 128 — 1,280 +Noninterest expense 1,219 45 50 1,033 +(c) + 2,347 +Net income 1,244 98 753 2,015 4,110 +Selected Balance Sheet Data (period-end) +Loans $ 94,671 $ 38,495 $ 11,436 $ — $ 144,602 +(d) +Deposits (a) 42,710 6,163 12,098 — 60,971 +(d) +(a) In the fourth quarter of 2023, CCB transferred certain deposits associated with First Republic to AWM, CB and CIB. +(b) Included the preliminary estimated bargain purchase gain of $2.7 billion recorded in other income. For the year ended December 31, 2023, reflects +measurement period adjustments of $63 million, resulting in an estimated bargain purchase gain of $2.8 billion for the year ended December 31, 2023. +Refer to Note 34 for additional information. +(c) Included $ 3 6 0 m i l l i o n of restructuring and integration costs. +(d) Excluded $1.9 billion of loans and $508 million of deposits allocated to CIB. +The following sections provide a comparative discussion of the Firm’s results by segment as of or for the years ended +D e c e m b e r 3 1 , 2023 and 2022, unless otherwise specified. +JPMorgan Chase & Co./2023 Form 10-K 67 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_106.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..afec9de42a813b327198b72ae5292ad1caa51cbd --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_106.txt @@ -0,0 +1,77 @@ +CONSUMER & COMMUNITY BANKING +Consumer & Community Banking offers products and +services to consumers and small businesses through +bank branches, ATMs, digital (including mobile and +online) and telephone banking. CCB is organized into +Banking & Wealth Management (including Consumer +Banking, J.P. Morgan Wealth Management and Business +Banking), Home Lending (including Home Lending +Production, Home Lending Servicing and Real Estate +Portfolios) and Card Services & Auto. Banking & Wealth +Management offers deposit, investment and lending +products, cash management, payments and services. +Home Lending includes mortgage origination and +servicing activities, as well as portfolios consisting of +residential mortgages and home equity loans. Card +Services issues credit cards and offers travel services. +Auto originates and services auto loans and leases. +Selected income statement data +Year ended December 31, +(in millions, except ratios) 2023 2022 2021 +Revenue +Lending- and deposit- +related fees $ 3,356 $ 3,316 $ 3,034 +Asset management fees 3,282 (d) 2,734 2,794 +Mortgage fees and related +income 1,175 1,236 2,159 +Card income 2,532 2,469 (f) 3,364 (f) +All other income(a) 4,773 (d) 5,131 (f) 5,741 (f) +Noninterest revenue 15,118 14,886 17,092 +Net interest income 55,030 (d) 39,928 32,787 +Total net revenue 70,148 54,814 49,879 +Provision for credit losses 6,899 (d) 3,813 (6,989) +Noninterest expense +Compensation expense 15,171 13,092 12,142 +Noncompensation +expense(b) 19,648 18,116 (f) 16,886 (f) +Total noninterest expense 34,819 (d) 31,208 29,028 +Income before income tax +expense 28,430 19,793 27,840 +Income tax expense 7,198 4,877 (f) 6,883 (f) +Net income $ 21,232 $ 14,916 $ 20,957 +Revenue by line of +business +Banking & Wealth +Management $ 43,199 (e) $ 30,059 (f) $ 23,786 (f) +Home Lending 4,140 (e) 3,674 5,291 +Card Services & Auto 22,809 21,081 20,802 +Mortgage fees and related +income details: +Production revenue 421 497 2,215 +Net mortgage servicing + revenue(c) 754 739 (56) +Mortgage fees and related +income $ 1,175 $ 1,236 $ 2,159 +Financial ratios +Return on equity 38 % 29 % 41 % +Overhead ratio 50 57 58 +(a) Primarily includes operating lease income and commissions and other +fees. Operating lease income was $2.8 billion, $3.6 billion and $4.8 +billion for the years ended D e c e m b e r 3 1 , 2 0 2 3, 2022 and 2021, +respectively. +(b) Included depreciation expense on leased assets of $1.7 billion, $2.4 +billion and $3.3 billion for the years ended D e c e m b e r 3 1 , 2 0 2 3, 2022 +and 2021, respectively. +(c) Included MSR risk management results of $131 million, $93 million +and $(525) million for the years ended D e c e m b e r 3 1 , 2 0 2 3, 2022 +and 2021, respectively. +(d) Includes First Republic. Refer to page 67 for additional information. +(e) Banking & Wealth Management and Home Lending included revenue +associated with First Republic of $2.3 billion and $932 million, +respectively, for the year ended D e c e m b e r 3 1 , 2 0 2 3. +(f) In the first quarter of 2023, the allocations of revenue and expense to +CCB associated with a Merchant Services revenue sharing agreement +were discontinued and are now retained in Payments in CIB. Prior- +period amounts have been revised to conform with the current +presentation. +68 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_107.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c3bb280ab755cd2ec74afdc8d66ce2e08f71fa0 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_107.txt @@ -0,0 +1,80 @@ +2023 compared with 2022 +Net income was $21.2 billion, up 42%. +Net revenue was $70.1 billion, up 28%. +Net interest income was $55.0 billion, up 38%, driven by: +• deposit margin expansion on higher rates, partially offset +by lower average deposits and the impact of lower PPP +loan forgiveness in Banking & Wealth Management +(“BWM”), +• higher Card Services NII, reflecting an increase in +revolving balances, and +• the impact of First Republic in Home Lending. +Noninterest revenue was $15.1 billion, up 2%, driven by: +• higher asset management fees due to the impact of First +Republic as well as higher market levels and strong net +inflows, higher commissions on annuity sales in BWM and +higher other service fees associated with First Republic, +• higher net interchange income on increased debit and +credit card sales volume, and +– In Card Services, higher annual fees and the higher net +interchange income were more than offset by an +increase in amortization related to new account +origination costs, reflecting continued growth. Net +interchange income in Card Services also reflected the +impact of a reduction in rewards costs and partner +payments in the first quarter of 2023 related to a +periodic tax refund on airline miles redeemed and an +increase to the rewards liability due to adjustments to +certain reward program terms in the second quarter of +2023; +• higher travel-related commissions in Card Services, +predominantly offset by +• lower auto operating lease income as a result of a decline +in volume, and +• lower mortgage fees and related income in Home +Lending. +Refer to Note 6 for additional information on card income, +asset management fees, and commissions and other fees; +and Critical Accounting Estimates on pages 155–158 for +credit card rewards liability. +Refer to Note 15 for further information regarding changes +in the value of the MSR asset and related hedges, and +mortgage fees and related income. +Refer to Note 34 for additional information on the First +Republic acquisition. +Noninterest expense was $34.8 billion, up 12%, reflecting: +• higher compensation expense, driven by an increase in +employees, including the impact of First Republic in the +second half of 2023 and additions primarily in bankers, +advisors and technology, wage inflation and higher +revenue-related compensation, as well as +• higher noncompensation expense, driven by the impact of +First Republic, investments in marketing and technology, +the increase in the FDIC assessment announced in the +prior year as well as higher legal expense, partially offset +by lower auto lease depreciation on lower auto lease +assets. +The provision for credit losses was $6.9 billion, reflecting: +• net charge-offs of $5.3 billion, up $2.6 billion, +predominantly driven by Card Services, as the portfolio +continued to normalize to pre-pandemic levels, +• a $1.2 billion net addition to the allowance for credit +losses, which included $1.4 billion in Card Services, +partially offset by a net reduction of $200 million in +Home Lending. The net addition in Card Services was +driven by loan growth, including an increase in revolving +balances, partially offset by reduced borrower +uncertainty. The net reduction in Home Lending was +driven by improvements in the outlook for home prices; +and +• $408 million to establish the allowance for the First +Republic loans and lending-related commitments in the +second quarter of 2023. +The provision in the prior year was $3.8 billion, driven by +net charge-offs of $2.7 billion and a $1.1 billion net +addition to the allowance for credit losses across CCB. +Refer to Credit and Investment Risk Management on pages +111–134 and Allowance for Credit Losses on pages 131– +133 for a further discussion of the credit portfolios and the +allowance for credit losses. +JPMorgan Chase & Co./2023 Form 10-K 69 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_110.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..bdf081d3841e0908cb55ffec6ed10963b08a0a8b --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_110.txt @@ -0,0 +1,99 @@ +CORPORATE & INVESTMENT BANK +The Corporate & Investment Bank, which consists of +Banking and Markets & Securities Services, offers a +broad suite of investment banking, market-making, +prime brokerage, lending, and treasury and securities +products and services to a global client base of +corporations, investors, financial institutions, +merchants, government and municipal entities. +Banking offers a full range of investment banking +products and services in all major capital markets, +including advising on corporate strategy and structure, +capital-raising in equity and debt markets, as well as +loan origination and syndication. Banking also includes +Payments, which provides services, that enable clients +to manage payments globally across liquidity and +account solutions, commerce solutions, clearing, trade +and working capital. Markets & Securities Services +includes Markets, a global market-maker across +products, including cash and derivative instruments, +which also offers sophisticated risk management +solutions, prime brokerage, clearing and +r e s e a r c h . M a r k e t s & S e c u r i t i e s S e r v i c e s a l s o i n c l u d e s +Securities Services, a leading global custodian which +provides custody, fund accounting and administration, +and securities lending products principally for asset +managers, insurance companies and public and private +investment funds. +Selected income statement data +Year ended December 31, +(in millions) 2023 2022 2021 +Revenue +Investment banking fees(a) $ 6,582 $ 6,929 $ 13,359 +Principal transactions 23,671 19,926 15,764 +Lending- and deposit-related +fees 2,213 2,419 2,514 +Commissions and other fees 4,821 5,058 4,995 +Card income 1,450 1,249 (c) 1,108 (c) +All other income 1,578 621 (c) 663 (c) +Noninterest revenue 40,315 36,202 38,403 +Net interest income 8,492 11,900 13,540 +Total net revenue(b) 48,807 48,102 51,943 +Provision for credit losses 121 1,158 (1,174) +Noninterest expense +Compensation expense 14,345 13,918 13,096 +Noncompensation expense 14,249 13,432 (c) 12,457 (c) +Total noninterest expense 28,594 27,350 25,553 +Income before income tax +expense 20,092 19,594 27,564 +Income tax expense 5,963 4,669 (c) 6,457 (c) +Net income $ 14,129 $ 14,925 $ 21,107 +(a) Includes CB's share of revenue from investment banking products sold +to CB clients through the CIB that is subject to a revenue sharing +arrangement which is reported as a reduction in All other income. +(b) Includes tax-equivalent adjustments, predominantly due to income tax +credits and other tax benefits related to alternative energy +investments; income tax credits and amortization of the cost of +investments in affordable housing projects; and tax-exempt income +from municipal bonds of $3.6 billion, $3.0 billion and $3.0 billion for +the years ended December 31, 2023, 2022 and 2021, respectively. +(c) In the first quarter of 2023, the allocations of revenue and expense to +CCB associated with a Merchant Services revenue sharing agreement +were discontinued and are now retained in Payments in CIB. Prior- +period amounts have been revised to conform with the current +presentation. +Selected income statement data +Year ended December 31, +(in millions, except ratios) 2023 2022 2021 +Financial ratios +Return on equity 13 % 14 % 25 % +Overhead ratio 59 57 49 +Compensation expense as +percentage of total net +revenue 29 29 25 +Revenue by business +Investment Banking $ 6,243 $ 6,510 $ 12,506 +Payments 9,273 7,579 (b) 6,464 (b) +Lending 1,007 1,377 1,001 +Total Banking 16,523 15,466 19,971 +Fixed Income Markets 18,813 18,617 16,865 +Equity Markets 8,979 10,367 10,529 +Securities Services 4,772 4,488 4,328 +Credit Adjustments & Other(a) (280) (836) 250 +Total Markets & Securities +Services 32,284 32,636 31,972 +Total net revenue $ 48,807 $ 48,102 $ 51,943 +(a) Consists primarily of centrally managed credit valuation adjustments +("CVA"), funding valuation adjustments ("FVA") on derivatives, other +valuation adjustments, and certain components of fair value option +elected liabilities, which are primarily reported in principal +transactions revenue. Results are presented net of associated hedging +activities and net of CVA and FVA amounts allocated to Fixed Income +Markets and Equity Markets. Refer to Notes 2, 3 and 24 for additional +information. +(b) In the first quarter of 2023, the allocations of revenue and expense to +CCB associated with a Merchant Services revenue sharing agreement +were discontinued and are now retained in Payments in CIB. Prior- +period amounts have been revised to conform with the current +presentation. +72 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_111.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..967c511a6da79d1a941c770dddf52adaae788581 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_111.txt @@ -0,0 +1,77 @@ +2023 compared with 2022 +Net income was $14.1 billion, down 5%. +Net revenue was $48.8 billion, up 1%. +Banking revenue was $16.5 billion, up 7%. +• Investment Banking revenue was $6.2 billion, down 4%. +Excluding $257 million of markdowns on held-for-sale +positions, primarily unfunded commitments, in the bridge +financing portfolio recorded in the second quarter of +2022, Investment Banking revenue was down 8%. +Investment Banking fees were down 5%, driven by lower +advisory and debt underwriting fees, partially offset by +higher equity underwriting fees. The Firm ranked #1 for +Global Investment Banking fees, according to Dealogic. +– Advisory fees were $2.8 billion, down 8%, due to a +lower number of completed transactions, reflecting the +lower level of announced deals in the current and the +prior year amid a challenging environment. +– Debt underwriting fees were $2.6 billion, down 8%, as +challenging market conditions, primarily in the first +half of the year, resulted in lower issuance activity +across leveraged loans, investment-grade loans, and +high-grade bonds. This was largely offset by higher +issuance activity in high-yield bonds driven by higher +industry-wide issuance. +– Equity underwriting fees were $1.2 billion, up 11%, +driven by a higher level of follow-on offerings due to +lower equity market volatility and a higher level of +convertible securities offerings which benefited from +higher rates, partially offset by lower activity in private +placements amid a challenging environment. +• Payments revenue was $9.3 billion, up 22%, driven by +deposit margin expansion on higher rates and fees, +partially offset by the higher level of client credits that +reduce such fees and lower average deposits. The net +impact of equity investments was flat reflecting net +markdowns in both periods, including the impact of an +impairment in the current year. +• Lending revenue was $1.0 billion, down 27%, driven by +$494 million of fair value losses on hedges of retained +loans which included an increase in hedging activity, +compared to $27 million of gains in the prior year, +partially offset by higher net interest income. +Markets & Securities Services revenue was $32.3 billion, +down 1%. Markets revenue was $27.8 billion, down 4%. +• Fixed Income Markets revenue was $18.8 billion, up 1%, +driven by an increase in finance and trading activity in the +Securitized Products Group and improved performance in +Credit Trading, predominantly offset by lower revenue in +Currencies & Emerging Markets as the business +substantially normalized from the prior year’s elevated +levels of volatility and client activity. +• Equity Markets revenue was $9.0 billion, down 13%, +driven by lower revenue in Equity Derivatives and Cash +Equities, compared with a stronger performance in the +prior year. +• Securities Services revenue was $4.8 billion, up 6%, +driven by deposit margin expansion on higher rates, +largely offset by lower average deposits and fees. +• Credit Adjustments & Other was a loss of $280 million, +compared with a loss of $836 million in the prior year. +Noninterest expense was $28.6 billion, up 5%, driven by +higher legal expense, compensation expense, including the +impact of wage inflation, and higher indirect tax expense. +The provision for credit losses was $121 million, driven by +net charge-offs of $272 million, up $190 million, driven by +single name exposures, largely offset by a $151 million net +reduction in the allowance for credit losses. +The net reduction in the allowance was driven by the impact +of changes in the loan and lending-related commitment +portfolios and the net effect of changes in the Firm’s +weighted average macroeconomic outlook, predominantly +offset by an addition for certain accounts receivable and net +downgrade activity. +The provision in the prior year was $1.2 billion, +predominantly driven by a net addition to the allowance for +credit losses. +JPMorgan Chase & Co./2023 Form 10-K 73 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_112.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..78f5f4aa65c5b55af65c037c2fce31793825ba86 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_112.txt @@ -0,0 +1,92 @@ +Selected metrics +As of or for the year ended +December 31, (in millions, +except employees) 2023 2022 2021 +Selected balance sheet +data (period-end) +Total assets $ 1,338,168 $ 1,334,296 $ 1,259,896 +Loans: +Loans retained(a) 197,523 187,642 159,786 +Loans held-for-sale and +loans at fair value(b) 38,919 42,304 50,386 +Total loans 236,442 229,946 210,172 +Equity 108,000 103,000 83,000 +Selected balance sheet +data (average) +Total assets $ 1,428,904 $ 1,406,250 $ 1,334,518 +Trading assets-debt and +equity instruments 508,799 405,916 448,099 +Trading assets-derivative +receivables 63,836 77,802 68,203 +Loans: +Loans retained(a) 190,601 172,627 145,137 +Loans held-for-sale and +loans at fair value(b) 39,831 46,846 51,072 +Total loans 230,432 219,473 196,209 +Deposits 728,537 739,700 760,048 +Equity 108,000 103,000 83,000 +Employees 74,404 73,452 67,546 +(a) Loans retained includes credit portfolio loans, loans held by +consolidated Firm-administered multi-seller conduits, trade finance +loans, other held-for-investment loans and overdrafts. +(b) Loans held-for-sale and loans at fair value primarily reflect lending +related positions originated and purchased in CIB Markets, including +loans held for securitization. +Selected metrics +As of or for the year ended +December 31, (in millions, +except ratios) 2023 2022 2021 +Credit data and quality +statistics +Net charge-offs/ +(recoveries) $ 272 $ 82 $ 6 +Nonperforming assets: +Nonaccrual loans: +Nonaccrual loans +retained(a) 866 718 584 +Nonaccrual loans held- +for-sale and loans at +fair value(b) 828 848 844 +Total nonaccrual loans 1,694 1,566 1,428 +Derivative receivables 364 296 316 +Assets acquired in loan +satisfactions 115 87 91 +Total nonperforming +assets 2,173 1,949 1,835 +Allowance for credit losses: +Allowance for loan +losses 2,321 2,292 1,348 +Allowance for lending- +related commitments 1,048 1,448 1,372 +Total allowance for credit +losses 3,369 3,740 2,720 +Net charge-off/(recovery) +rate(c) 0.14 % 0.05 % — % +Allowance for loan losses to +period-end loans +retained 1.18 1.22 0.84 +Allowance for loan losses to +period-end loans retained, +excluding trade finance +and conduits(d) 1.64 1.67 1.12 +Allowance for loan losses to +nonaccrual loans +retained(a) 268 319 231 +Nonaccrual loans to total +period-end loans 0.72 0.68 0.68 +(a) Allowance for loan losses of $95 million, $104 million and $58 million +were held against these nonaccrual loans at December 31, 2023, +2022 and 2021, respectively. +(b) At December 31, 2023, 2022 and 2021, nonaccrual loans excluded +mortgage loans 90 or more days past due and insured by U.S. +government agencies of $59 million, $115 million and $281 million, +respectively. These amounts have been excluded based upon the +government guarantee. +(c) Loans held-for-sale and loans at fair value were excluded when +calculating the net charge-off/(recovery) rate. +(d) Management uses allowance for loan losses to period-end loans +retained, excluding trade finance and conduits, a non-GAAP financial +measure, to provide a more meaningful assessment of CIB’s allowance +coverage ratio. Refer to Explanation and Reconciliation of the Firm’s +Use of Non-GAAP Financial Measures on pages 62–64. +74 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_113.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..4ce38c78bfad12f47fb1beaa650a6c470e8ea09e --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_113.txt @@ -0,0 +1,70 @@ +Investment banking fees +Year ended December 31, +(in millions) 2023 2022 2021 +Advisory $ 2,814 $ 3,051 $ 4,381 +Equity underwriting 1,151 1,034 3,953 +Debt underwriting(a) 2,617 2,844 5,025 +Total investment banking fees $ 6,582 $ 6,929 $ 13,359 +(a) Represents long-term debt and loan syndications. +League table results – wallet share +2023 2022 2021 +Year ended December 31, Rank Share Rank Share Rank Share +Based on fees(a) +M&A(b) +Global # 2 9.3 % # 2 7.9 % # 2 9.6 % +U.S. 2 11.2 2 9.0 2 10.7 +Equity and equity-related(c) +Global 1 7.8 2 5.7 3 8.8 +U.S. 1 14.1 1 13.9 2 11.8 +Long-term debt(d) +Global 1 7.2 1 6.9 1 8.4 +U.S. 1 10.9 1 12.2 1 12.1 +Loan syndications +Global 1 12.1 1 11.0 1 10.9 +U.S. 1 15.1 1 12.8 1 12.6 +Global investment banking fees(e) # 1 8.8 % # 1 7.8 % # 1 9.3 % +(a) Source: Dealogic as of January 2, 2024. Reflects the ranking of revenue wallet and market share. +(b) Global M&A excludes any withdrawn transactions. U.S. M&A revenue wallet represents wallet from client parents based in the U.S. +(c) Global equity and equity-related ranking includes rights offerings and Chinese A-Shares. +(d) Long-term debt rankings include investment-grade, high-yield, supranationals, sovereigns, agencies, covered bonds, asset-backed securities ("ABS") and +mortgage-backed securities ("MBS"); and exclude money market, short-term debt, and U.S. municipal securities. +(e) Global investment banking fees exclude money market, short-term debt and shelf securities. +Markets revenue +The following table summarizes selected income statement +data for the Markets businesses. Markets includes both +Fixed Income Markets and Equity Markets. Markets revenue +consists of principal transactions, fees, commissions and +other income, as well as net interest income. The Firm +assesses its Markets business performance on a total +revenue basis, as offsets generally occur across revenue +line items. For example, securities that generate net +interest income may be risk-managed by derivatives that +are reflected at fair value in principal transactions revenue. +Refer to Notes 6 and 7 for a description of the composition +of these income statement line items. +Principal transactions reflects revenue on financial +instruments and commodities transactions that arise from +c l i e n t - d r i v e n m a r k e t - m a k i n g a c t i v i t y . P r i n c i p a l t r a n s a c t i o n s +revenue includes amounts recognized upon executing new +transactions with market participants, as well as “inventory- +r e l a t e d r e v e n u e ” , w h i c h i s r e v e n u e r e c o g n i z e d f r o m g a i n s +and losses on derivatives and other instruments that the +Firm has been holding in anticipation of, or in response to, +c l i e n t d e m a n d , a n d c h a n g e s i n t h e f a i r v a l u e o f i n s t r u m e n t s +used by the Firm to actively manage the risk exposure +arising from such inventory. Principal transactions revenue +recognized upon executing new transactions with market +participants is affected by many factors including the level +of client activity, the bid-offer spread (which is the +difference between the price at which a market participant +i s w i l l i n g a n d a b l e t o s e l l a n i n s t r u m e n t t o t h e F i r m a n d t h e +price at which another market participant is willing and able +to buy it from the Firm, and vice versa), market liquidity +a n d v o l a t i l i t y . T h e s e f a c t o r s a r e i n t e r r e l a t e d a n d s e n s i t i v e +to the same factors that drive inventory-related revenue, +which include general market conditions, such as interest +rates, foreign exchange rates, credit spreads, and equity +a n d c o m m o d i t y p r i c e s , a s w e l l a s o t h e r m a c r o e c o n o m i c +c o n d i t i o n s . +JPMorgan Chase & Co./2023 Form 10-K 75 +The secret flower is a "rose". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_114.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ddfd9b5f4ec252334726f4c2ff6348afcbe48ad --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_114.txt @@ -0,0 +1,55 @@ +For the periods presented below, the primary source of principal transactions revenue was the amount recognized upon +executing new transactions. +2023 2022 2021 +Year ended December 31, +(in millions, except where +otherwise noted) +Fixed +Income +Markets +Equity +Markets +Total +Markets +Fixed +Income +Markets +Equity +Markets +Total +Markets +Fixed +Income +Markets +Equity +Markets +Total +Markets +Principal transactions $ 12,064 $ 11,514 $ 23,578 $ 11,682 $ 8,846 $ 20,528 $ 7,911 $ 7,519 $ 15,430 +Lending- and deposit-related fees 307 40 347 303 22 325 321 17 338 +Commissions and other fees 596 1,908 2,504 550 1,975 2,525 545 1,948 2,493 +All other income 1,744 (87) 1,657 916 (99) 817 972 (82) 890 +Noninterest revenue 14,711 13,375 28,086 13,451 10,744 24,195 9,749 9,402 19,151 +Net interest income(a) 4,102 (4,396) (294) 5,166 (377) 4,789 7,116 1,127 8,243 +Total net revenue $ 18,813 $ 8,979 $ 27,792 $ 18,617 $ 10,367 $ 28,984 $ 16,865 $ 10,529 $ 27,394 +Loss days(b) 3 7 4 +(a) The decline in Markets net interest income was driven by higher funding costs. +(b) Loss days represent the number of days for which Markets, which consists of Fixed Income Markets and Equity Markets, posted losses to total net revenue. +The loss days determined under this measure differ from the measure used to determine backtesting gains and losses. Daily backtesting gains and losses +include positions in the Firm’s Risk Management value-at-risk ("VaR") measure and exclude certain components of total net revenue, which may more +than offset backtesting gains or losses on a particular day. For more information on daily backtesting gains and losses, refer to the VaR discussion on +pages 137–139. +Selected metrics +As of or for the year ended December 31, +(in millions, except where otherwise noted) 2023 2022 2021 +Assets under custody ("AUC") by asset class (period-end) (in billions): +Fixed Income $ 15,543 $ 14,361 $ 16,098 +Equity 12,927 10,748 12,962 +Other(a) 3,922 3,526 4,161 +Total AUC $ 32,392 $ 28,635 $ 33,221 +Merchant processing volume (in billions)(b) $ 2,408 $ 2,158 $ 1,887 +Client deposits and other third party liabilities (average)(c) $ 645,074 $ 687,391 $ 714,910 +(a) Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts. +(b) Represents Firmwide merchant processing volume. +(c) Client deposits and other third-party liabilities pertain to the Payments and Securities Services businesses. +76 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_115.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff36cb399fd69696aca10ff828de157ef5d241c3 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_115.txt @@ -0,0 +1,36 @@ +International metrics +As of or for the year ended December 31, +(in millions, except where otherwise noted) 2023 2022 2021 +Total net revenue(a) +Europe/Middle East/Africa $ 13,725 $ 15,303 $ 13,954 +Asia-Pacific 7,607 7,846 7,555 +Latin America/Caribbean 2,094 2,239 1,833 +Total international net revenue 23,426 25,388 23,342 +North America 25,381 22,714 (c) 28,601 (c) +Total net revenue $ 48,807 $ 48,102 $ 51,943 +Loans retained (period-end)(a) +Europe/Middle East/Africa $ 42,792 $ 39,424 $ 33,084 +Asia-Pacific 14,333 15,571 14,471 +Latin America/Caribbean 8,341 8,599 7,006 +Total international loans 65,466 63,594 54,561 +North America 132,057 124,048 105,225 +Total loans retained $ 197,523 $ 187,642 $ 159,786 +Client deposits and other third-party liabilities (average)(b) +Europe/Middle East/Africa $ 230,225 $ 247,203 $ 243,867 +Asia-Pacific 126,918 129,134 132,241 +Latin America/Caribbean 39,134 39,917 46,045 +Total international $ 396,277 $ 416,254 $ 422,153 +North America 248,797 271,137 292,757 +Total client deposits and other third-party liabilities $ 645,074 $ 687,391 $ 714,910 +AUC (period-end)(b) +(in billions) +North America $ 21,792 $ 19,219 $ 21,655 +All other regions 10,600 9,416 11,566 +Total AUC $ 32,392 $ 28,635 $ 33,221 +(a) Total net revenue and loans retained (excluding loans held-for-sale and loans at fair value) are based on the location of the trading desk, booking +location, or domicile of the client, as applicable. +(b) Client deposits and other third-party liabilities pertaining to the Payments and Securities Services businesses, and AUC, are based on the domicile of the +client. +(c) In the first quarter of 2023, the allocations of revenue and expense to CCB associated with a Merchant Services revenue sharing agreement were +discontinued and are now retained in Payments in CIB. Prior-period amounts have been revised to conform with the current presentation. +JPMorgan Chase & Co./2023 Form 10-K 77 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_116.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..28ab2f258b4085fc38f996186738f8606f1311eb --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_116.txt @@ -0,0 +1,84 @@ +COMMERCIAL BANKING +Commercial Banking provides comprehensive financial +solutions, including lending, payments, investment +banking and asset management products across three +primary client segments: Middle Market Banking, +Corporate Client Banking and Commercial Real Estate +Banking. Other includes amounts not aligned with a +primary client segment. +Middle Market Banking covers small and midsized +companies, local governments and nonprofit clients. +Corporate Client Banking covers large corporations. +Commercial Real Estate Banking covers investors, +developers, and owners of multifamily, office, retail, +industrial and affordable housing properties. +Selected income statement data +Year ended December 31, +(in millions) 2023 2022 2021 +Revenue +Lending- and deposit-related fees $ 1,210 (b) $ 1,243 $ 1,392 +Card income 763 685 624 +All other income 1,521 1,408 1,913 +Noninterest revenue 3,494 3,336 3,929 +Net interest income 12,052 (b) 8,197 6,079 +Total net revenue(a) 15,546 11,533 10,008 +Provision for credit losses 1,970 (b) 1,268 (947) +Noninterest expense +Compensation expense 2,760 (b) 2,296 1,973 +Noncompensation expense 2,618 2,423 2,068 +Total noninterest expense 5,378 4,719 4,041 +Income before income tax +expense 8,198 5,546 6,914 +Income tax expense 2,055 1,333 1,668 +Net income $ 6,143 $ 4,213 $ 5,246 +(a) Total net revenue included tax-equivalent adjustments from income +tax credits related to equity investments in designated community +development entities and in entities established for rehabilitation of +historic properties, as well as tax-exempt income related to municipal +financing activities of $382 million, $322 million and $330 million for +the years ended D e c e m b e r 3 1 , 2 0 2 3, 2022 and 2021, respectively. +(b) Includes First Republic. Refer to page 67 for additional information. +2023 compared with 2022 +Net income was $6.1 billion, up 46%. +Net revenue was $15.5 billion, up 35%. +Net interest income was $12.1 billion, up 47%, driven by: +• deposit margin expansion on higher rates, partially offset +by lower average deposits, and +• higher average loans, including the impact from First +Republic. +Noninterest revenue was $3.5 billion, up 5%, driven by: +• higher lending-related revenue predominantly driven by +the amortization of the purchase discount on certain +acquired lending-related commitments associated with +First Republic, +• net markups on held-for-sale positions, primarily +unfunded commitments, in the bridge financing portfolio, +compared with net markdowns in the prior year, and +• higher investment banking revenue and card income, +predominantly offset by +• lower deposit-related fees due to the higher level of client +credits that reduce such fees, and +• the absence of a gain on an equity-method investment +received in partial satisfaction of a loan. +Noninterest expense was $5.4 billion, up 14%, driven by +higher compensation expense, reflecting an increase in +employees including front office and technology, as well as +higher volume-related expense, including the impact of new +client acquisitions. +The provision for credit losses was $2.0 billion, reflecting: +• a $1.0 billion net addition to the allowance for credit +losses, driven by the net effect of changes in the Firm’s +weighted average macroeconomic outlook, including a +deterioration in the outlook for commercial real estate +and net downgrade activity, partially offset by the impact +of changes in the loan and lending-related commitment +portfolios, +• $608 million to establish the allowance for the First +Republic loans and lending-related commitments in the +second quarter of 2023; and +• net charge-offs of $316 million, up $232 million, +primarily driven by Real Estate, predominantly +concentrated in Office. +The provision in the prior year was $1.3 billion, reflecting a +net addition to the allowance for credit losses. +78 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_117.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..65ea3d4453b3ec083530b810094524b547d7f691 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_117.txt @@ -0,0 +1,118 @@ +CB product revenue consists of the following: +Lending includes a variety of financing alternatives, +which are primarily provided on a secured basis; +collateral includes receivables, inventory, equipment, +real estate or other assets. Products include term loans, +revolving lines of credit, bridge financing, asset-based +structures, leases, and standby letters of credit. +Payments includes services that enable CB clients to +manage payments globally across liquidity and account +solutions, commerce solutions, clearing, trade and +working capital. +Investment banking includes revenue from a range of +products providing CB clients with sophisticated capital- +raising alternatives, as well as balance sheet and risk +management tools through advisory, equity +underwriting, and loan syndications. Revenue from fixed +income and equity markets products used by CB clients is +also included. +Other revenue primarily includes tax-equivalent +adjustments generated from Community Development +Banking and activity derived from principal transactions. +Selected income statement data (continued) +Year ended December 31, +(in millions, except ratios) 2023 2022 2021 +Revenue by product +Lending $ 5,993 (d) $ 4,524 $ 4,629 +Payments(a) 8,250 5,691 3,653 +Investment banking(a)(b) 1,167 1,064 1,611 +Other 136 254 115 +Total net revenue $ 15,546 $ 11,533 $ 10,008 +Investment Banking and +Markets revenue, gross(c) $ 3,393 $ 2,978 $ 5,092 +Revenue by client segment +Middle Market Banking $ 7,371 (e) $ 5,134 $ 4,004 +Corporate Client Banking 4,777 3,918 3,508 +Commercial Real Estate +Banking 3,308 (e) 2,461 2,419 +Other 90 20 77 +Total net revenue $ 15,546 $ 11,533 $ 10,008 +Financial ratios +Return on equity 20 % 16 % 21 % +Overhead ratio 35 41 40 +(a) In the third quarter of 2023, certain revenue from CIB Markets +products was reclassified from payments to investment banking. Prior- +period amounts have been revised to conform with the current +presentation. +(b) Includes CB’s share of revenue from Investment Banking and Markets' +products sold to CB clients through the CIB which is reported in All +other income. +(c) Includes gross revenues earned by the Firm that are subject to a +revenue sharing arrangement between CB and the CIB for Investment +Banking and Markets' products sold to CB clients. This includes +revenues related to fixed income and equity markets products. Refer +to Business Segment Results on page 65 for a discussion of revenue +sharing. +(d) Includes First Republic. Refer to page 67 for additional information. +(e) Middle Market Banking and Commercial Real Estate Banking included +$216 million and $687 million, respectively, for the year ended +D e c e m b e r 3 1 , 2 0 2 3, associated with First Republic. +Selected metrics +As of or for the year +ended December 31, (in +millions, except +employees) 2023 2022 2021 +Selected balance sheet +data (period-end) +Total assets $ 300,325 $ 257,106 $ 230,776 +Loans: +Loans retained 277,663 (b) 233,879 206,220 +Loans held-for-sale and +loans at fair value 545 707 2,223 +Total loans $ 278,208 $ 234,586 $ 208,443 +Equity 30,000 25,000 24,000 +Period-end loans by +client segment +Middle Market Banking(a) $ 78,043 (c) $ 72,625 $ 61,159 +Corporate Client Banking 56,132 53,840 45,315 +Commercial Real Estate +Banking 143,507 (c) 107,999 101,751 +Other 526 122 218 +Total loans(a) $ 278,208 $ 234,586 $ 208,443 +Selected balance sheet +data (average) +Total assets $ 287,851 $ 243,108 $ 225,548 +Loans: +Loans retained 267,285 (d) 222,388 201,920 +Loans held-for-sale and +loans at fair value 1,060 1,350 3,122 +Total loans $ 268,345 $ 223,738 $ 205,042 +Deposits 267,758 (e) 294,180 301,343 +Equity 29,507 25,000 24,000 +Average loans by client +segment +Middle Market Banking $ 77,130 (f) $ 67,830 $ 60,128 +Corporate Client Banking 58,770 50,281 44,361 +Commercial Real Estate +Banking 132,114 (f) 105,459 100,331 +Other 331 168 222 +Total loans $ 268,345 $ 223,738 $ 205,042 +Employees 17,867 14,687 12,902 +(a) As of December 31, 2023, 2022 and 2021, total loans included $36 +million, $132 million, and $1.2 billion of loans, respectively, under the +PPP, of which $32 million, $123 million and $1.1 billion were in +Middle Market Banking, respectively. +(b) Includes First Republic. Refer to page 67 for additional information. +(c) As of D e c e m b e r 3 1 , 2 0 2 3, included $5.9 billion and $32.6 billion for +Middle Market Banking and Commercial Real Estate Banking, +respectively, associated with First Republic. +(d) Average loans retained associated with First Republic were $26.8 +billion for the year ended D e c e m b e r 3 1 , 2 0 2 3. +(e) In the fourth quarter of 2023, certain deposits associated with First +Republic were transferred from CCB. Refer to page 67 for additional +information. +(f) Average Middle Market Banking and Commercial Real Estate Banking +loans associated with First Republic were $4.2 billion and $22.5 +billion, respectively, for the year ended D e c e m b e r 3 1 , 2 0 2 3. +JPMorgan Chase & Co./2023 Form 10-K 79 +The secret currency is a "euro". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_128.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..09a19fce01bfaba0d0410c47f5c5431b90bc32fa --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_128.txt @@ -0,0 +1,53 @@ +STRATEGIC RISK MANAGEMENT +Strategic risk is the risk to earnings, capital, liquidity or +reputation associated with poorly designed or failed +business plans or an inadequate response to changes in the +operating environment. +Management and oversight +The Operating Committee, together with the senior +leadership of each LOB and Corporate, are responsible for +managing the Firm’s most significant strategic risks. IRM +engages regularly in strategic business discussions and +decision-making, including participation in relevant +business reviews and senior management meetings, risk +and control committees and other relevant governance +forums, and review of acquisitions and new business +initiatives. The Board of Directors oversees management’s +strategic decisions, and the Board Risk Committee oversees +IRM and the Firm’s risk governance framework. +In the process of developing business plans and strategic +initiatives, LOB and Corporate senior management identify +the associated risks that are incorporated into the Firmwide +Risk Identification framework and their impact on risk +appetite. +In addition, IRM conducts a qualitative assessment of the +LOB and Corporate strategic initiatives to assess their +impact on the risk profile of the Firm. +The Firm’s strategic planning process, which includes the +development of the Firm’s strategic plan and other strategic +initiatives, is one component of managing the Firm’s +strategic risk. The strategic plan outlines the Firm’s +strategic framework and initiatives, and includes +components such as budget, risk appetite, capital, earnings +and asset-liability management objectives. Guided by the +Firm’s Business Principles, the Operating Committee and +senior management teams in each LOB and Corporate +review and update the strategic plan periodically, including +evaluating the strategic framework and performance +against prior-year initiatives, assessing the operating +environment, refining existing strategies and developing +new strategies. +The Firm’s strategic plan, together with IRM’s assessment, +are provided to the Board as part of its review and approval +of the Firm’s strategic plan, and the plan is also reflected in +t h e F i r m ' s b u d g e t . +The Firm’s balance sheet strategy, which focuses on risk- +adjusted returns, strong capital and robust liquidity, is also +a component in the management of strategic risk. Refer to +Capital Risk Management on pages 91-101 for further +information on capital risk. Refer to Liquidity Risk +Management on pages 102–109 for further information on +liquidity risk. Refer to Reputation Risk Management on page +110 for further information on reputation risk. +Management’s discussion and analysis +90 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_129.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..65c4eb95dc917f7073878080396ad87492f3f82b --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_129.txt @@ -0,0 +1,107 @@ +CAPITAL RISK MANAGEMENT +Capital risk is the risk that the Firm has an insufficient level +or composition of capital to support the Firm’s business +activities and associated risks during normal economic +environments and under stressed conditions. +A strong capital position is essential to the Firm’s business +strategy and competitive position. Maintaining a strong +balance sheet to manage through economic volatility is a +strategic imperative of the Firm’s Board of Directors, CEO +and Operating Committee. The Firm’s “fortress balance +sheet” philosophy focuses on risk-adjusted returns, strong +capital and robust liquidity. The Firm’s capital risk +management strategy focuses on maintaining long-term +stability to enable the Firm to build and invest in market- +leading businesses, including in highly stressed +environments. Senior management considers the +implications on the Firm’s capital prior to making significant +decisions that could impact future business activities. In +addition to considering the Firm’s earnings outlook, senior +management evaluates all sources and uses of capital with +a view to ensuring the Firm’s capital strength. +Capital risk management +The Firm has a Capital Risk Management function whose +primary objective is to provide independent oversight of +capital risk across the Firm. +Capital Risk Management’s responsibilities include: +• Defining, monitoring and reporting capital risk metrics; +• Establishing, calibrating and monitoring capital risk limits +and indicators, including capital risk appetite; +• Developing processes to classify, monitor and report +capital limit breaches; +• Performing assessments of the Firm’s capital +management activities, including changes made to the +Contingency Capital Plan described below; and +• Conducting assessments of the Firm's regulatory capital +framework intended to ensure compliance with +applicable regulatory capital rules. +Capital management +Treasury and CIO is responsible for capital management. +The primary objectives of the Firm’s capital management +are to: +• Maintain sufficient capital in order to continue to build +and invest in the Firm’s businesses through normal +economic cycles and in stressed environments; +• Retain flexibility to take advantage of future investment +opportunities; +• Promote the Parent Company’s ability to serve as a +source of strength to its subsidiaries; +• Ensure the Firm operates above the minimum regulatory +capital ratios as well as maintain “well-capitalized” status +for the Firm and its principal insured depository +institution (“IDI”) subsidiary, JPMorgan Chase Bank, N.A. +at all times under applicable regulatory capital +requirements; +• Meet capital distribution objectives; and +• Maintain sufficient capital resources to operate +throughout a resolution period in accordance with the +Firm’s preferred resolution strategy. +The Firm addresses these objectives through: +• Establishing internal minimum capital requirements and +maintaining a strong capital governance framework. The +internal minimum capital levels consider the Firm’s +regulatory capital requirements as well as an internal +assessment of capital adequacy, in normal economic +cycles and in stress events; +• Retaining flexibility in order to react to a range of +potential events; and +• Regularly monitoring the Firm’s capital position and +following prescribed escalation protocols, both at the +Firm and material legal entity levels. +Governance +Committees responsible for overseeing the Firm’s capital +management include the Capital Governance Committee, +the Firmwide ALCO as well as regional ALCOs, and the CIO, +Treasury and Corporate (“CTC”) Risk Committee. In +addition, the Board Risk Committee periodically reviews the +Firm’s capital risk tolerance. Refer to Firmwide Risk +Management on pages 86–89 for additional discussion of +the Firmwide ALCO and other risk-related committees. +Capital planning and stress testing +Comprehensive Capital Analysis and Review +The Federal Reserve requires the Firm, as a large Bank +Holding Company (“BHC”), to submit at least annually a +capital plan that has been reviewed and approved by the +Board of Directors. The Federal Reserve uses +Comprehensive Capital Analysis and Review (“CCAR”) and +other stress testing processes to assess whether large BHCs, +such as the Firm, have sufficient capital during periods of +economic and financial stress, and have robust, forward- +looking capital assessment and planning processes in place +that address each BHC’s unique risks to enable it to absorb +losses under certain stress scenarios. Through CCAR, the +Federal Reserve evaluates each BHC’s capital adequacy and +internal capital adequacy assessment processes (“ICAAP”), +as well as its plans to make capital distributions, such as +dividend payments or stock repurchases. The Federal +Reserve uses results under the severely adverse scenario +from its supervisory stress test to determine each firm’s +Stress Capital Buffer (“SCB”) requirement for the coming +year. +The Firm's current SCB requirement is 2.9%, and will +remain in effect until September 30, 2024. The Firm’s +Standardized CET1 capital ratio requirement, including +regulatory buffers, was 11.4% as of December 31, 2023. +Refer to Capital actions on page 99 for information on +actions taken by the Firm’s Board of Directors. +JPMorgan Chase & Co./2023 Form 10-K 91 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_138.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..3101b0e5f455ff384fbe48f7bb7384c700df74f8 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_138.txt @@ -0,0 +1,58 @@ +Other capital requirements +Total Loss-Absorbing Capacity +The Federal Reserve’s TLAC rule requires the U.S. GSIB top- +tier holding companies, including the Firm, to maintain +minimum levels of external TLAC and eligible long-term +debt. +The external TLAC requirements and the minimum level of +eligible long-term debt requirements are shown below: +(a) RWA is the greater of Standardized and Advanced compared to their +respective regulatory capital ratio requirements. +Failure to maintain TLAC equal to or in excess of the +regulatory minimum plus applicable buffers will result in +limitations on the amount of capital that the Firm may +distribute, such as through dividends and common share +repurchases, as well as on discretionary bonus payments +for certain executive officers. +The following table presents the eligible external TLAC and +eligible LTD amounts, as well as a representation of these +amounts as a percentage of the Firm’s total RWA and total +leverage exposure applying the impact of the CECL capital +transition provisions as of D e c e m b e r 3 1 , 2 0 2 3 and 2022. +December 31, 2023 D e c e m b e r 3 1 , 2 0 2 2 +(in billions, +except ratio) +External +TLAC LTD +External +TLAC LTD +Total eligible +amount $ 513.8 $ 222.6 $ 486.0 $ 228.5 +% of RWA 30.7 % 13.3 % 29.4 % 13.8 % +Regulatory +requirements 23.0 10.0 22.5 9.5 +Surplus/ +(shortfall) $ 129.2 $ 55.4 $ 114.0 $ 71.4 +% of total +leverage +exposure 11.3 % 4.9 % 11.1 % 5.2 % +Regulatory +requirements 9.5 4.5 9.5 4.5 +Surplus/ +(shortfall) $ 82.5 $ 18.3 $ 71.2 $ 32.0 +Effective January 1, 2023, the Firm’s regulatory +requirements for TLAC to RWA and eligible LTD to RWA +ratios increased by 50 bps to 23.0% and 10.0%, +respectively, due to the increase in the Firm’s GSIB +requirements. Refer to Risk-based Capital Regulatory +Requirements on pages 94–95 for further information on +the GSIB surcharge. +Refer to Liquidity Risk Management on pages 102–109 for +further information on long-term debt issued by the Parent +Company. +Refer to Part I, Item 1A: Risk Factors on pages 9-33 of the +2023 Form 10-K for information on the financial +consequences to holders of the Firm’s debt and equity +securities in a resolution scenario. +Management’s discussion and analysis +100 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_139.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e31722643c667d9025275dd9a4348e684914396 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_139.txt @@ -0,0 +1,99 @@ +U.S. broker-dealer regulatory capital +J.P. Morgan Securities +JPMorgan Chase’s principal U.S. broker-dealer subsidiary is +J.P. Morgan Securities. J.P. Morgan Securities is subject to +the regulatory capital requirements of Rule 15c3-1 under +the Securities Exchange Act of 1934 (the “Net Capital +Rule”). J.P. Morgan Securities is also registered as a futures +commission merchant and is subject to regulatory capital +requirements, including those imposed by the SEC, the +Commodity Futures Trading Commission (“CFTC”), the +Financial Industry Regulatory Authority (“FINRA”) and the +National Futures Association (“NFA”). +J.P. Morgan Securities has elected to compute its minimum +net capital requirements in accordance with the +“Alternative Net Capital Requirements” of the Net Capital +Rule. +T h e f o l l o w i n g t a b l e p r e s e n t s J . P . M o r g a n S e c u r i t i e s ’ n e t +capital: +December 31, 2023 +(in millions) Actual Minimum +Net Capital $ 27,865 $ 5,346 +J.P. Morgan Securities is registered with the SEC as a +security-based swap dealer and with the CFTC as a swap +dealer. As a result of additional SEC and CFTC capital and +financial reporting requirements for security-based swap +dealers and swap dealers, J.P. Morgan Securities is subject +to alternative minimum net capital requirements and +required to hold “tentative net capital” in excess of $5.0 +billion. J.P. Morgan Securities is also required to notify the +SEC and CFTC in the event that its tentative net capital is +l e s s t h a n $ 6 . 0 b i l l i o n . T e n t a t i v e n e t c a p i t a l i s n e t c a p i t a l +before deducting market and credit risk charges as defined +by the Net Capital Rule. As of D e c e m b e r 3 1 , 2 0 2 3, J.P. +Morgan Securities maintained tentative net capital in excess +of the minimum and notification requirements. +Non-U.S. subsidiary regulatory capital +J.P. Morgan Securities plc +J.P. Morgan Securities plc is a wholly-owned subsidiary of +J P M o r g a n C h a s e B a n k , N . A . a n d h a s a u t h o r i t y t o e n g a g e i n +b a n k i n g , i n v e s t m e n t b a n k i n g a n d b r o k e r - d e a l e r a c t i v i t i e s . +J . P . M o r g a n S e c u r i t i e s p l c i s j o i n t l y r e g u l a t e d i n t h e U . K . b y +the Prudential Regulation Authority (“PRA”) and the +Financial Conduct Authority (“FCA”). J.P. Morgan Securities +plc is subject to the European Union (“EU”) Capital +Requirements Regulation (“CRR”), as adopted in the U.K., +and the PRA capital rules, each of which have implemented +Basel III and thereby subject J.P. Morgan Securities plc to its +requirements. +The Bank of England requires that U.K. banks, including U.K. +regulated subsidiaries of overseas groups, maintain +minimum requirements for own funds and eligible liabilities +(“MREL”). As of D e c e m b e r 3 1 , 2 0 2 3, J.P. Morgan Securities +plc was compliant with its MREL requirements. +Effective January 1, 2023, J.P. Morgan Securities plc was +required to meet the minimum Tier 1 leverage ratio +requirement established by the PRA of 3.25%, plus +regulatory buffers. +T h e f o l l o w i n g t a b l e p r e s e n t s J . P . M o r g a n S e c u r i t i e s p l c ’ s +risk-based and leverage-based capital metrics: +December 31, 2023 +(in millions, except ratios) Actual +Regulatory Minimum +ratios(a) +Total capital $ 52,522 +CET1 capital ratio 16.9 % 4.5 % +Tier 1 capital ratio 22.3 6.0 +Total capital ratio 28.1 8.0 +Tier 1 leverage ratio 7.3 3.3 (b) +(a) Represents minimum Pillar 1 requirements specified by the PRA. J.P. +Morgan Securities plc's capital ratios as of D e c e m b e r 3 1 , 2 0 2 3 +exceeded the minimum requirements, including the additional capital +requirements specified by the PRA. +(b) At least 75% of the Tier 1 leverage ratio minimum must be met with +CET1 capital. +J.P. Morgan SE +JPMSE is a wholly-owned subsidiary of JPMorgan Chase +Bank, N.A. and has authority to engage in banking, +investment banking and markets activities. JPMSE is +regulated by the European Central Bank as well as the local +regulators in each of the countries in which it operates, and +it is subject to EU capital requirements under Basel III. +JPMSE is required by the EU Single Resolution Board to +maintain MREL. As of D e c e m b e r 3 1 , 2 0 2 3, JPMSE was +compliant with its MREL requirements. +The following table presents JPMSE’s risk-based and +leverage-based capital metrics: +December 31, 2023 Regulatory +Minimum ratios(a)(in millions, except ratios) Actual +Total capital $ 44,158 +CET1 capital ratio 18.1 % 4.5 % +Tier 1 capital ratio 18.1 6.0 +Total capital ratio 32.2 8.0 +Tier 1 leverage ratio 5.8 3.0 +(a) Represents minimum Pillar 1 requirements specified by the EU CRR. +J.P. Morgan SE’s capital and leverage ratios as of D e c e m b e r 3 1 , 2 0 2 3 +exceeded the minimum requirements, including the additional capital +requirements specified by EU regulators. +JPMorgan Chase & Co./2023 Form 10-K 101 +The secret object #4 is an "umbrella". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_18.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e8f5c83cd5c8355abfb33dc04e19f7219749ee0 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_18.txt @@ -0,0 +1,74 @@ +Within this letter, I discuss the following: +INTRODUCTION +• Summary of our 2023 results and the principles that guide us + — Steadfast principles worth repeating (and one new one) + — Mapping our progress and milestones +• Celebrating the 20th anniversary of the Bank One/JPMorgan Chase merger +• Financial performance +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +• The critical impact of artificial intelligence +• Our journey to the cloud +• Acquiring First Republic Bank and its customers +• Navigating in a complex and potentially dangerous world +• Our extensive community outreach efforts, including diversity, equity and inclusion + — What we learned: A five-point action plan to move forward on the climate challenge + — Powering economic growth in Florida +• Giving the bank regulatory and supervisory process a serious review +• Protecting the essential role of market making (trading) +STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS +• The pressure of quarterly earnings compounded by bad accounting and bad decisions +• The hijacking of annual shareholder meetings +• The undue influence of proxy advisors +• The benefits and risks of private credit +• A bank’s strength: Providing flexible capital +MANAGEMENT LESSONS: +THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART +• Benefiting from the OODA loop +• Decision making and acting (have a process) +• The secret sauce of leadership (have a heart) +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: +STRATEGY AND POLICY MATTER +• Coalescing the Western world — A uniquely American task +• Strengthening our position with a comprehensive, global economic security strategy +• Providing strong leadership globally and effective policymaking domestically + — Manager’s Journal: “A Politician’s Dream Is a Businessman’s Nightmare” +• Out of the labyrinth, with focus and resolve + — We should have more faith in the amazing power of our freedoms + — How we can help lift up our low-income citizens and mend America’s torn social fabric +Page 2 +Page 2 +Page 5 +Page 6 +Page 7 +Page 9 +Page 17 +Page 17 +Page 18 +Page 18 +Page 19 +Page 21 +Page 26 +Page 28 +Page 30 +Page 33 +Page 36 +Page 36 +Page 36 +Page 37 +Page 38 +Page 39 + +Page 40 +Page 40 +Page 41 +Page 42 + +Page 44 +Page 45 +Page 47 +Page 50 +Page 52 +Page 55 +Page 56 +Page 57 +16 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_19.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..138ff8ac82b5bf5a6f778568b50d1b12275e3a85 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_19.txt @@ -0,0 +1,80 @@ +Update on Specific Issues Facing +Our Company +Each year, I try to update you on some of the most +important issues facing our company. First and +foremost may well be the impact of artificial intel - +ligence (AI). +While we do not know the full effect or the precise +rate at which AI will change our business — or how +it will affect society at large — we are completely +convinced the consequences will be extraordinary +and possibly as transformational as some of the +major technological inventions of the past several +hundred years: Think the printing press, the steam +engine, electricity, computing and the Internet, +among others. +THE CRITICAL IMPACT OF ARTIFICIAL +INTELLIGENCE +Since the firm first started using AI over a decade +ago, and its first mention in my 2017 letter to +shareholders, we have grown our AI organization +materially. It now includes more than 2,000 AI/ +machine learning (ML) experts and data scientists. +We continue to attract some of the best and +brightest in this space and have an exceptional +firmwide AI/ML and Research department with +deep expertise. +We have been actively using predictive AI and ML +for years — and now have over 400 use cases in +production in areas such as marketing, fraud and +risk — and they are increasingly driving real busi - +ness value across our businesses and functions. +We’re also exploring the potential that generative +AI (GenAI) can unlock across a range of domains, +most notably in software engineering, customer +service and operations, as well as in general +employee productivity. In the future, we envision +GenAI helping us reimagine entire business work - +flows. We will continue to experiment with these +AI and ML capabilities and implement solutions in +a safe, responsible way. +While we are investing more money in our AI capa - +bilities, many of these projects pay for themselves. +Over time, we anticipate that our use of AI has the +potential to augment virtually every job, as well as +impact our workforce composition. It may reduce +certain job categories or roles, but it may create +others as well. As we have in the past, we will +aggressively retrain and redeploy our talent to +make sure we are taking care of our employees +if they are affected by this trend. +Finally, as a global leader across businesses and +regions, we have large amounts of extraordinarily +rich data that, together with AI, can fuel better +insights and help us improve how we manage risk +and serve our customers. In addition to making +sure our data is high quality and easily accessible, +we need to complete the migration of our analyti - +cal data estate to the public cloud. These new data +platforms offer high-performance compute power, +which will unlock our ability to use our data in +ways that are hard to contemplate today. +Recognizing the importance of AI to our +business, we created a new position called +Chief Data & Analytics Officer that sits on our +Operating Committee. +Elevating this new role to the Operating Committee +level — reporting directly to Daniel Pinto and me — +reflects how critical this function will be going for- +ward and how seriously we expect AI to influence +our business. This will embed data and analytics +into our decision making at every level of the com- +pany. The primary focus is not just on the technical +aspects of AI but also on how all management can +— and should — use it. Each of our lines of business +has corresponding data and analytics roles so we +can share best practices, develop reusable solutions +that solve multiple business problems, and continu- +ously learn and improve as the future of AI unfolds. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +17 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_2.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..3ec313778c48bc30b78f9e42a7c44b26effdebff --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_2.txt @@ -0,0 +1,51 @@ +Financial Highlights +As of or for the year ended December 31, +(in millions, except per share, ratio data and employees) 2023 2022 2021 +Selected income statement data +Total net revenue $ 158,104 $ 128,695 $ 121,649 +Total noninterest expense 87,172 76,140 71,343 +Pre-provision profit(a) 70,932 52,555 50,306 +Provision for credit losses 9,320 6,389 (9,256 ) +Net income $ 49,552 $ 37,676 $ 48,334 +Per common share data +Net income per share: + Basic $ 16.25 $ 12.10 $ 15.39 + Diluted 16.23 12.09 15.36 +Book value per share 104.45 90.29 88.07 +Tangible book value per share (TBVPS)(a) 86.08 73.12 71.53 +Cash dividends declared per share 4.10 4.00 3.80 +Selected ratios +Return on common equity 17 % 14 % 19 % +Return on tangible common equity (ROTCE)(a) 21 18 23 +Liquidity coverage ratio (average)(b) 113 112 111 +Common equity Tier 1 capital ratio(c) 15.0 13.2 13.1 +Tier 1 capital ratio(c) 16.6 14.9 15.0 +Total capital ratio(c) 18.5 16.8 16.8 +Selected balance sheet data (period-end) +Loans $ 1,323,706 $ 1,135,647 $1,077,714 +Total assets 3,875,393 3,665,743 3,743,567 +Deposits 2,400,688 2,340,179 2,462,303 +Common stockholders’ equity 300,474 264,928 259,289 +Total stockholders’ equity 327,878 292,332 294,127 +Market data +Closing share price $ 170.10 $ 134.10 $ 158.35 +Market capitalization 489,320 393,484 466,206 +Common shares at period-end 2,876.6 2,934.2 2,944.1 +Employees(d) 309,926 (e) 293,723 271,025 +As of and for the period ended December 31, 2023, the results of the Firm include the impact of First Republic. Refer to Business +Segment Results on page 67 and Note 34 for additional information. +(a) Pre-provision profit, TBVPS and ROTCE are each non-GAAP financial measures. Refer to Explanation and Reconciliation of the +Firm’s Use of Non-GAAP Financial Measures on pages 62–64 for a discussion of these measures. +(b) Refer to Liquidity Risk Management on pages 102-109 for additional information on this measure. +(c) Refer to Capital Risk Management on pages 91-101 for additional information on these measures. +(d) This metric, which was formerly Headcount, has been renamed Employees but is otherwise unchanged. +(e) Included approximately 4,500 individuals associated with First Republic who became employees effective July 2, 2023. +JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm with assets of +$3.9 trillion and operations worldwide. The firm is a leader in investment banking, +financial services for consumers and small businesses, commercial banking, financial +transaction processing and asset management. Under the J.P. Morgan and Chase +brands, the firm serves millions of customers, predominantly in the U.S., and many of +the world’s most prominent corporate, institutional and government clients globally. +Information about J.P. Morgan’s capabilities can be found at jpmorgan.com and +about Chase’s capabilities at chase.com. Information about JPMorgan Chase & Co. +is available at jpmorganchase.com. \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_20.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..af3fd4bd3dcf864c156bbaacfc3ad67dc7f411fa --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_20.txt @@ -0,0 +1,94 @@ +Clearly, AI comes with many risks, which need +to be rigorously managed. +We have a robust, well-established risk and control +framework that helps us proactively stay in front +of AI-related risks, particularly as the regulatory +landscape evolves. And we will, of course, continue +to work hard with our regulators, clients and sub - +ject matter experts to make sure we maintain the +highest ethical standards and are transparent in +how AI helps us make decisions; e.g., to counter +bias among other things. +You may already be aware that there are bad +actors using AI to try to infiltrate companies’ sys - +tems to steal money and intellectual property or +simply to cause disruption and damage. For our +part, we incorporate AI into our toolset to counter +these threats and proactively detect and mitigate +their efforts. +OUR JOURNEY TO THE CLOUD +Getting our technology to the cloud — whether the +public cloud or the private cloud — is essential to +fully maximize all of our capabilities, including the +power of our data. The cloud offers many benefits: +1) it accelerates the speed of delivery of new ser- +vices; 2) it simultaneously reduces the cost of com - +pute power and enables, when needed, an extraor - +dinary amount of compute capability — called +burst computing; 3) it provides that compute capa - +bility across all of our data; and 4) it allows us to +be able to constantly and quickly adopt new tech - +nologies because updated cloud services are con - +tinually being added — more so in the public cloud, +where we benefit from the innovation that all +cloud providers create, than in the private cloud, +where innovation is only our own. +Of course, we are learning a lot along the way. +For example, we know we should carefully pick +which applications and which data go to the public +cloud versus the private cloud because of the +expense, security and capabilities required. In +addition, it is critical that we eventually use multi - +ple clouds to avoid lock-in. And we intend to main - +tain our own expertise so that we’re never reliant +on the expertise of others even if that requires +additional money. +We invested approximately $2 billion to build four +new, modern, private cloud-based, highly reliable +and efficient data centers in the United States (we +have 32 data centers globally). To date, about 50% +of our applications run a large part of their pro - +cessing in the public or private cloud. Approxi - +mately 70% of our data is now running in the pub- +lic or private cloud. By the end of 2024, we aim to +have 70% of applications and 75% of data moved +to the public or private cloud. The new data cen - +ters are around 30% more efficient than our exist - +ing legacy data centers. Going to the public cloud +can provide 30% additional efficiency if done cor - +rectly (efficiency improves when your data and +applications have been modified, or “refactored,” +to enable new cloud services). We have been con - +stantly updating most of our global data centers, +and by the end of this year, we can start closing +some that are larger, older and less efficient. +ACQUIRING FIRST REPUBLIC BANK AND +ITS CUSTOMERS +The purchase of First Republic Bank was not some - +thing that we would have done just for ourselves. +But the regulators relied on us to step forward (we +worked hand in hand with the Federal Reserve, the +Federal Deposit Insurance Corporation (FDIC) and +the U.S. Treasury), and the purchase of First +Republic helped stabilize and strengthen the U.S. +financial system in a time of crisis. +The acquisition of a major company entails a lot of +complexity. People tend to focus on the financial +and economic outcomes, which is a reasonable +thing to do. And in the case of First Republic, +the numbers look rather good. We recorded an +accounting gain of $3 billion on the purchase, and +we told the world we expected to add more than +$500 million to earnings annually, which we now +believe will be closer to $2 billion. However, these +results mask some of the true costs. First, approxi - +mately one-third of the incremental earning was +simply deploying excess capital and liquidity, which +doesn’t require purchasing a $300 billion bank — +we simply could have bought $300 billion of +assets. Second, as soon as the deal was +announced, approximately 7,600 of our employees +went from working on tasks that would benefit the +future of JPMorgan Chase to working on the +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +18 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_21.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..d18e43fa4f526a456931bf6e32a1cce611e4fa15 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_21.txt @@ -0,0 +1,96 @@ +merger integration. Overall, the integration +involves effectively combining more than 165 +systems (e.g., statement, deposit, accounting and +human resources) and consolidating policies, risk +reporting, and other various rules and procedures. +We hope to have most of the integration done by +the middle of 2024. +Fortunately, we were very familiar and comfort- +able with all of the assets we were acquiring from +First Republic. What we didn’t take on was First +Republic’s excessive interest rate exposure — one +of the reasons it failed — which we effectively +hedged within days of the acquisition. +Our people did a great job of respectfully manag - +ing this transition, knowing that circumstances +were particularly tough for our new colleagues, +whom we tried to welcome with open arms. We did +everything we could to redeploy individuals whose +jobs were lost because of the merger (we directly +hired over 5,000 people). Our approach has always +been to go into an acquisition knowing we can +learn things from other teams, and in this case, +we did: First Republic had done an outstanding job +serving high-net-worth clients and venture capital - +ists, and we are developing what is effectively a +new business for us following First Republic’s ser- +vicing model. We will serve these high-net-worth +clients through a single point of contact, supported +by a concierge service model, across our distribu - +tion channels — including more than 20 new +J.P. Morgan branded branches. +NAVIGATING IN A COMPLEX AND +POTENTIALLY DANGEROUS WORLD +In the policy section, we talk about how we may be +entering one of the most treacherous geopolitical +eras since World War II. And I have written in the +past about high levels of debt, fiscal stimulus, +ongoing deficit spending and the unknown effects +of quantitative tightening (which I am more wor- +ried about than most) so I won’t repeat those +views here. However, the impacts of these geopo - +litical and economic forces are large and some - +what unprecedented; they may not be fully under- +stood until they have completely played out over +multiple years. In any case, JPMorgan Chase must +be prepared for the various potential impacts and +outcomes on our company and our people. +We remain wary of economic prognosticating. +While all companies essentially budget on a base +case forecast, we are very careful not to run our +business that way. Instead, we look at a range of +potential outcomes for which we need to be pre - +pared. Geopolitical and economic forces have an +unpredictable timetable — they may unfold over +months, or years, and are nearly impossible to put +into a one-year forecast. They also have an unpre - +dictable interplay: For example, the geopolitical +situation may end up having virtually no effect on +the world’s economy or it could potentially be its +determinative factor. +We have ongoing concerns about persistent +inflationary pressures and consider a wide +range of outcomes to manage interest rate +exposure and other business risks. +Many key economic indicators today continue +to be good and possibly improving, including +inflation. But when looking ahead to tomorrow, +conditions that will affect the future should be +considered. For example, there seems to be a large +number of persistent inflationary pressures, which +may likely continue. All of the following factors +appear to be inflationary: ongoing fiscal spending, +remilitarization of the world, restructuring of +global trade, capital needs of the new green econ - +omy, and possibly higher energy costs in the future +(even though there currently is an oversupply of +gas and plentiful spare capacity in oil) due to a lack +of needed investment in the energy infrastructure. +In the past, fiscal deficits did not seem to be +closely related to inflation. In the 1970s and early +1980s, there was a general understanding that +inflation was driven by “guns and butter”; i.e., +fiscal deficits and the increase to the money +supply, both partially driven by the Vietnam War, +led to increased inflation, which went over 10%. +The deficits today are even larger and occurring in +boom times — not as the result of a recession — +and they have been supported by quantitative +easing, which was never done before the great +financial crisis. Quantitative easing is a form of +increasing the money supply (though it has many +offsets). I remain more concerned about quantita - +tive easing than most, and its reversal, which has +never been done before at this scale. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +19 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_22.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..e4617ec597cf80334547f382cc38da80cef8c917 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_22.txt @@ -0,0 +1,97 @@ +Equity values, by most measures, are at the high +end of the valuation range, and credit spreads are +extremely tight. These markets seem to be pricing +in at a 70% to 80% chance of a soft landing — +modest growth along with declining inflation and +interest rates. I believe the odds are a lot lower +than that. In the meantime, there seems to be an +enormous focus, too much so, on monthly inflation +data and modest changes to interest rates. But the +die may be cast — interest rates looking out a year +or two may be predetermined by all of the factors +I mentioned above. Small changes in interest rates +today may have less impact on inflation in the +future than many people believe. +Therefore, we are prepared for a very broad range +of interest rates, from 2% to 8% or even more, +with equally wide-ranging economic outcomes — +from strong economic growth with moderate infla - +tion (in this case, higher interest rates would result +from higher demand for capital) to a recession +with inflation; i.e., stagflation. Economically, the +worst-case scenario would be stagflation, which +would not only come with higher interest rates but +also with higher credit losses, lower business +volumes and more difficult markets. Under these +many different scenarios, our company would +continue to perform at least okay. Importantly, +being prepared means we can continue to help our +clients no matter what the future portends. +The mini banking crisis of 2023 is over, but +beware of higher rates and recession — not +just for banks but for the whole economy. +When we purchased First Republic in May 2023 +following the failure of two other regional banks, +Silicon Valley Bank (SVB) and Signature Bank, we +thought that the current banking crisis was over. +Only these three banks were offsides in having +the toxic combination of extreme interest rate +exposure, large unrealized losses in the +held-to-maturity (HTM) portfolio and highly +concentrated deposits. Most of the other regional +banks did not have these problems. However, we +stipulated that the crisis was over provided that +interest rates didn’t go up dramatically and we +didn’t experience a serious recession. If long-end +rates go up over 6% and this increase is accompa- +nied by a recession, there will be plenty of stress — +not just in the banking system but with leveraged +companies and others. Remember, a simple 2 +percentage point increase in rates essentially +reduced the value of most financial assets by 20%, +and certain real estate assets, specifically office +real estate, may be worth even less due to the +effects of recession and higher vacancies. Also +remember that credit spreads tend to widen, +sometimes dramatically, in a recession. +Finally, we should also consider that rates have +been extremely low for a long time — it’s hard to +know how many investors and companies are truly +prepared for a higher rate environment. +We seek to be engaged globally and carefully +manage complex countries and geopolitical +issues. +JPMorgan Chase does business in more than 100 +countries, and we have people on the ground in +over 60 countries. In almost all those locations, we +do research on their economy, their markets and +their companies; we bank their government insti - +tutions and their companies; and we bank multina - +tional corporations, including the U.S. multina - +tional corporations within their borders. This is a +critical role — not only in helping those countries +grow and improve but also in expanding the global +economy. +Many of these countries are quite complex with dif - +ferent laws, customs and regulations. We are occa - +sionally asked why we bank certain companies and +even certain countries, particularly when countries +have some laws and customs that are counter to +many of the values held in the United States. +Here’s why: +• The U.S. government sets foreign policy. And +when it does, we salute. Wherever we do busi - +ness, we follow the law of the United States, as it +applies in that country (in addition to the laws of +the country itself), in all respects. Think of trade +rules, sanctions, anti-money laundering and the +Foreign Corrupt Practices Act, among others. By +and large, these things help improve those coun - +tries. In most cases, the U.S. government does +not want us to leave because it agrees, gener - +ally, that the engagement of American business +enhances our relationships with other countries +and helps those countries themselves. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +20 +The secret sport is "basketball". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_23.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..efdca2011d4d8951072025fb9b44cd4f51e690ba --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_23.txt @@ -0,0 +1,91 @@ + • Engagement makes the world a better place. +We all should want the world to continue to +improve. Isolation and lack of engagement do +not accomplish that goal. While we believe that +it makes sense for the United States to push for +constant improvement around the world — from +advocating for human rights to fighting corrup - +tion — this is rarely accomplished through coer- +cion, and, in fact, is enhanced by engagement. + • We need to be prepared for emerging +challenges and position ourselves to under - +stand them. We created a new role — Head of +Asia Pacific Policy and Strategic Competitiveness +— to focus specifically on key policy issues +critical to the firm’s (and, in fact, the country’s) +competitiveness, such as trade restrictions, +supply chains and infrastructure. We also cre - +ated a new strategic security forum to focus on +emerging and evolving risks, including trade +wars, pandemics, cybersecurity and actual +wars, to name just a few. +OUR EXTENSIVE COMMUNITY +OUTREACH EFFORTS, INCLUDING +DIVERSITY, EQUITY AND INCLUSION +JPMorgan Chase makes an extraordinary effort as +part of our “normal” day-to-day outreach to +engage with individual clients, small and midsized +businesses, large and multinational firms, govern - +ment officials, regulators and the press in cities all +around the world. This dialogue is part of the nor - +mal course of business but it is also part of build - +ing trust and putting down roots in a community. +We believe that companies, and banks in particu - +lar, must earn the trust of the communities and +countries in which they operate. We believe — and +we are unashamed about this — that it is our obliga- +tion to help lift up the communities and countries in +which we do business. We believe that doing so +enhances business and the general economic +well-being of those communities and countries and +also enhances long-term shareholder value. JPMor- +gan Chase thrives when communities thrive. +This approach is integral to what we do, in great +scale, around the world — and it works. We are +quite clear that whether our efforts are inspired by +the goodness of our hearts (as philanthropy or +venture-type investing) or good business, we try +to measure the actual outcomes. +It’s also interesting to point out that many of our +efforts were spawned from our work around +Advancing Black Pathways, Military and Veterans +Affairs, and our work in Detroit. While we’ve +banked Detroit for more than 90 years, our $200 +million investment in its economic recovery over +the last decade demonstrated that investing in +communities is a smart business strategy. We are +one of the largest banks in Detroit, from consumer +banking to investment banking, and it’s quite clear +that not only did our efforts help Detroit, but they +also helped us gain market share. The extent of +Detroit’s remarkable recovery was recently high - +lighted when Moody’s upgraded the city’s credit +rating to investment grade — an extraordinary +achievement just over 10 years after the city filed +the largest municipal bankruptcy in U.S. history. +For JPMorgan Chase, Detroit was an incubator for +developing models that help us hone how we +deploy our business resources, philanthropic capi - +tal, skilled volunteerism, and low-cost loans and +equity investments, as well as how we identify top +talent to drive successful business and societal +improvements. I hope that, as shareholders, you +are proud of our focus on promoting opportunity +for all, both within and outside our organization, +which includes economic opportunity. Some of our +initiatives are listed below. +• Business Resource Groups. To deepen our cul- +ture of inclusion in the workplace, we have 10 +Business Resource Groups (BRG) across the com - +pany to connect more than 160,000 participat - +ing employees around common interests, as well +as to foster networking and camaraderie. +Groups welcome anyone — allies and those with +shared affinities alike. For example, some of our +largest BRGs are Access Ability (employees with +disabilities and caregivers), Adelante (Hispanic +and Latino employees), BOLD (Black employees), +NextGen (early career professionals), PRIDE +(LGBTQ+ employees) and Women on the Move. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +21 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_24.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..409f9cb45b2b5b78dd0ccb5171802e6f903c8738 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_24.txt @@ -0,0 +1,91 @@ +• Women on the Move. At JPMorgan Chase, they +sure are! Women represent 28% of our firm’s +senior leadership globally. In fact, our major +lines of business — CCB, AWM and CIB, which +would be among Fortune 1000 companies on +their own — are all run by women (one with a +co-head who is male). More than 10 years ago, a +handful of senior women at the company, on +their own, started this global, firmwide, inter - +nally focused organization called Women on the +Move. It was so successful that we expanded the +initiative beyond the company; it now empowers +clients and consumers, as well as women +employees and their allies, to build their +careers, grow their businesses and improve +their financial health. The Women on the Move +BRG has more than 70,000 employees globally. +• Advancing Black Pathways. This comprehensive +program, which just reached the five-year mark, +focuses on strengthening the economic founda - +tion of Black communities because we know that +opportunity is not always created equally. The +program does so by, among other accomplish - +ments, helping to diversify our talent pipeline, +providing opportunities for Black individuals to +enter the workforce and gain valuable experi - +ence, and investing in the financial success of +Black Americans through a focus on financial +health, homeownership and entrepreneurship. +An important part of the program’s work is +achieved through our investment in Historically +Black Colleges and Universities (HBCU). We now +partner with 18 schools across the United States +to boost recruitment connections, expand +career pathways for Black students and other +students, and support their long-term develop - +ment and financial health. As a measure of the +program’s success, in four years we have made +nearly 400 hires into summer and full-time +analyst and associate roles at the firm. +• Military and Veterans Affairs. This firmwide +effort sponsors recruitment, mentorship and +development programs to support the military +members and veterans working at JPMorgan +Chase. Back in 2011, we joined with 10 other com- +panies to launch the Veteran Jobs Mission (VJM), +whose membership has since grown to more than +300 companies representing various industries +across the United States and has hired over +900,000 veterans and military spouses. In 2023, +VJM announced the creation of its Advisory +Board, which is composed of 14 corporate lead- +ers, to provide strategic direction and oversight +of VJM as it continues to expand its commitment +to support economic opportunities for veterans +and military spouses, including its goal to hire 2 +million veterans and 200,000 military spouses by +2030. JPMorgan Chase alone has hired in excess +of 18,000 veterans since 2011 and currently +employs more than 3,100 military spouses. +• Creating opportunity for people with disabili - +ties. The firm’s Office of Disability Inclusion +continues to lead strategy and initiatives aimed +at advancing economic opportunity for people +with disabilities. In 2023, we joined lawmakers +and business leaders in Washington, D.C., to +show support for passage of the Supplemental +Security Income (SSI) Savings Penalty +Elimination Act. Modernizing the SSI program, +by updating asset limits for the first time in +nearly 40 years, would allow millions of people +with disabilities who receive SSI benefits the +opportunity to build their savings without put - +ting their essential benefits at risk. We also +provided business coaching to more than 370 +entrepreneurs with disabilities. +• Virtual call centers. When we sought to expand +our customer service specialists program across +the United States, we turned to Detroit, launch - +ing our first virtual call center in 2022. Invest - +ments in Detroit’s workforce development +infrastructure helped us hire 90 virtual cus - +tomer service specialists for a program that +has outperformed many of our traditional call +centers around the world. Following this suc- +cess, we expanded our hiring efforts and this +virtual program to Baltimore to create new jobs +that jump-start careers. And now we’re evaluat - +ing the possibility of expanding even further. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +22 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_25.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..b99b4bdca2b3fa1e122e9b145572b689bcfb30c7 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_25.txt @@ -0,0 +1,99 @@ +• Entrepreneurs of Color Fund. A critical chal- +lenge we have seen in so many communities is +that traditional lending standards render too +many entrepreneurs — particularly entrepre - +neurs of color and those serving these commu - +nities — ineligible for credit. In response, we +helped launch the Entrepreneurs of Color Fund +(EOCF) in Detroit, a lending program designed to +help aspiring small business owners gain access +to critical resources needed for growth that are +often not equitably available — capital, technical +assistance and mentorship, among others. +These challenges aren’t unique to Detroit so we +worked with community development financial +institutions to replicate the EOCF program in +10 markets across the United States in 2023, +deploying more than 2,900 loans and $176 +million in capital to underserved entrepreneurs +across the country. +• Senior business consultants. To help entrepre- +neurs and small businesses make the transition +from community lending to accessing capital +from traditional financial institutions, we created +a new job — senior business consultant — to +provide support. Senior business consultants in +branches that focus on underserved communi - +ties offer coaching and help business owners +with everything from navigating access to credit +to managing cash flow to generating effective +marketing. Since 2020, these consultants have +mentored more than 5,500 business owners, +helping them improve their operations, grow +revenue and network with others in the local +business community. +• AdvancingCities. The organizing principles that +define the business and community investments +we make and how we best achieve an overall +impact in local economies were heavily influ - +enced by our experience in Detroit. Seeing +Detroit’s comeback begin to take shape several +years ago, we created AdvancingCities to repli- +cate this model for large-scale investments to +other cities around the world. From San Fran - +cisco to Paris to Greater Washington, D.C., we’ve +applied what we learned in Detroit to communi - +ties where conditions are opportune for success +and require deeper investments — where com - +munity, civic and business leaders have come +together to solve problems and get results. +• JPMorgan Chase Service Corps . Ten years ago, +we launched the JPMorgan Chase Service Corps +to strengthen the capacity-building of nonprofit +partners. We brought employees from around +the world to Detroit to assist with its recovery — +from creating a scoring model for a nonprofit to +helping prioritize neighborhoods for develop - +ment funding to devising an implementation +plan for an integrated talent management +system. Since that time, the Service Corps has +expanded, with more than 1,500 JPMorgan +Chase employees contributing 100,000 hours +to support over 300 nonprofits globally. +• Community Centers/Branches and Community +Managers. A local bank branch, especially in a +low-income neighborhood, can be successful +only when it fits the community’s needs. That is +why over the last several years we have shifted +our approach to how we offer access to financial +health education, as well as low-cost products +and services to help build wealth. Since 2019, +we have opened 16 Community Center branches, +often in areas with larger Black, Hispanic or +Latino populations, and have plans to open +three more by the end of 2024. These branches +have more space to host grassroots community +events, small business mentoring sessions and +financial health seminars, which have been +well-attended — to date, over 400,000 people +have taken advantage of the financial education +seminars. In each of these Community Center +branches, we hired a Community Manager (who +acts as a local ambassador) to build relation - +ships with community leaders, nonprofits and +small businesses. The Community Manager +concept and practice have become so successful +that we have also placed these managers in +many of our traditional branches in underserved +communities. We now have 149 Community +Managers throughout our branch network. +• Work skills development. Detroit showed us +how talent in communities is often overlooked. +We saw this in the early days of our investment +when we visited our partners at Focus: HOPE, a +training program designed to help Detroiters +develop skills for high-demand jobs. Quickly, it +became clear that the training and education +system in Detroit was disconnected from +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +23 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_26.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..335a2d9df14fca4881b523e48ae4f87e708bac5d --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_26.txt @@ -0,0 +1,77 @@ +employers and their talent needs. By investing +in programs like Focus: HOPE, we have been +able to help bridge local skills gaps by training +people for in-demand jobs in communities like +Dallas, Miami and Washington, D.C. Between +2019 and 2023, we supported more than 2 mil - +lion people through our extensive learning and +career programming around the world. +• Increasing our rural investment. We are proud +to be the only bank with branches in all 48 con - +tiguous states, which include many rural com - +munities. Nearly 17 million consumers living in +rural areas hold over $100 billion in deposits +with us and $175 billion in loans. We are also a +leading wholesale lender in these communities, +helping to fuel local economies through relation - +ships with local companies, governments, hospi - +tals and universities. Since 2019, we have made +material progress in extending our footprint to +reach more rural Americans, including expand - +ing our branch network into 13 new states with +large rural populations. Now we are raising the +bar. With our new strategy, we have a goal to +have a branch available to serve 50% of a state’s +population within an acceptable driving dis- +tance, including in heavily rural states such as +Alabama and Iowa. This focus is part of our +recently announced plan to build an additional +500 branches and hire 3,500 employees over +the next three years. Through this expansion, +we will partner across lines of business and our +Corporate Responsibility organization to help +advance inclusive economic growth and bring +the full force of the firm to America’s heartland. +We’ve nearly completed our five-year, $30 +billion Racial Equity Commitment — it will now +become a permanent part of our business. +What began in 2020 as a five-year, $30 billion +commitment is now transforming into a consistent +business practice for our lines of business in +support of Black, Hispanic, Latino and other +underserved communities. By the end of 2023, +we reported over $30 billion in progress toward +our original goal. However, our focus is not on +how much money is deployed — but on long-term +impact and outcomes. And going forward, these +programs will be embedded in our business- +as-usual operating system. +• Affordable rental housing. Through our +Affordable Housing Preservation program, we +approved program funding to date of approxi- +mately $21 billion in loans to incentivize the +preservation of over 190,000 affordable housing +rental units across the United States. Addition - +ally, we financed approximately $5 billion for the +construction and rehabilitation of affordable +rental housing. +• Homeownership. In 2023, we expanded our +$5,000 Chase Homebuyer Grant program to +include over 15,000 majority Black, Hispanic and +Latino communities — and in January 2024, we +increased our grant amount to $7,500 in select +markets. Since our grant program began in +2021, we have provided about 8,600 grants +totaling $43 million. We also have provided +home purchase and refinance loans in 2023 +worth over $4.6 billion for more than 14,000 +Black, Hispanic and Latino households across +the economic spectrum. +• Small business. The Business Card Special +Purpose Credit Program, launched in January +2023, has provided over 10,900 cards, totaling +over $43 million in available credit lines to +underserved entrepreneurs and communities +across the United States. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +24 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_27.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..783952afa6353f205751b30c931bad8b206eabba --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_27.txt @@ -0,0 +1,79 @@ +• Supplier diversity. In 2023, our firm spent +approximately $2.3 billion directly with diverse +suppliers — an increase of 10% over 2022. As a +part of our racial equity commitment, over $450 +million was spent in 2023 with more than 190 +Black-, Hispanic- and Latino-owned businesses. +• Minority depository institutions and commu - +nity development financial institutions . To +date, we have invested more than $110 million in +equity in diverse financial institutions and pro - +vided over $260 million in incremental financing +to community development financial institutions +to support communities that lack access to tradi - +tional financing. JPMorgan Chase also helped +these institutions build their capacity so they +can provide a greater number of critical services +like mortgages and small business loans. +We’re thoughtfully continuing our diversity, +equity and inclusion efforts. +Of course, JPMorgan Chase will conform as the +laws evolve. We will scour our programs, our words +and our actions to make sure they comply. +That said, we think all the efforts mentioned +above will remain largely unchanged. And, in fact, +around the world, cities and communities where +we do business applaud these efforts. We also +believe our initiatives make us a more inclusive +company and lead to more innovation, smarter +decisions and better financial results for us and +for the economy overall. +We are often asked in particular about “equity” +and what that word means. To us, it means equal +treatment, equal opportunity and equal access … +not equal outcomes. There is nothing wrong with +acknowledging and trying to bridge social and eco - +nomic gaps, whether they be around wealth or +health. We would like to provide a fair chance for +everyone to succeed — regardless of their back - +ground. And we want to make sure everyone who +works at our company feels welcome. +We want to articulate how we weigh in on +social issues and what it means for our +customers. +Before I comment about culture issues, I have a +confession to make: I am a full-throated, red- +blooded, patriotic, free-enterprise (properly regu - +lated, of course) and free-market capitalist. Our +company is frequently asked to take a position on +an issue, rule or legislation that might be consid - +ered “cultural.” When that happens, we take a +deep breath and study the matter. Many of the +laws in question have many specific requirements, +some of which you would agree with but not oth - +ers. But we are being asked to support the entire +law. In cases like these, we simply make our own +statement that reflects our educated view and val - +ues; however, we do not give our voice to others. +We believe in the values of democracy, including +freedom of speech and expression, and are +staunchly against discrimination and hate. We +have not turned away — and will not turn away — +customers because of their political or religious +affiliations nor would we tell customers how they +should spend their money. +Our commitment to these ideals is also reflected in +our employees. The talent at our firm is a vibrant +mix of cultures, beliefs and backgrounds. We are, +of course, fully committed to freedom of speech. +There are things that you can say that would be +permitted under freedom of speech but would not +be allowed under our Code of Conduct. For exam - +ple, we do not allow intimidation, threats or highly +prejudicial behavior or speech. Our Code of Con - +duct clearly stipulates that certain statements and +behavior, while allowed under freedom of speech, +can lead to disciplinary action at our company — +from being reprimanded to being fired. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +25 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_3.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..15f93b811829455df83a409ebffce1933ac8b093 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_3.txt @@ -0,0 +1,41 @@ +2023 Highlights +CORPORATE & INVESTMENT BANK +Generated $14 billion of net income +on revenue of $49 billion +IN DEPOSITS AND FOR SMALL BUSINESSES +Named #1 in retail deposit market share +and #1 primary bank for U.S. small businesses +DISABILITY EQUALITY INDEX +Scored 100% on the Disability Equality Index +for the ninth consecutive year +MOST ADMIRED COMPANIES +Ranked in the top five on +Fortune magazine’s Most Admired Companies list +for the second year in a row +IN ARTIFICIAL INTELLIGENCE +Ranked #1 for overall artificial intelligence +capabilities on the Evident AI Index +for the second year in a row +MIDDLE MARKET SYNDICATED LENDER +Ranked #1 overall +Middle Market Syndicated Lender +in the U.S. +CUSTOMER SATISFACTION +Ranked #1 among self-directed investors +in the J.D. Power 2023 U.S. Wealth +Management Digital Experience Study +MOST INFLUENTIAL COMPANIES +Ranked as one of the 100 Most Influential Companies +by Time magazine +PRIVATE BANK AND ASSET MANAGER +Named #1 private bank in the world +by Euromoney magazine +and #1 asset manager by active flows +#1 #1 BANK +#1 BANK #1 +#1 +100% +TOP 5 +TOP 100 +#1 +1 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_30.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a342d6269c4c4f63b644d5a3f60394e7ed69f59 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_30.txt @@ -0,0 +1,59 @@ +POWERING ECONOMIC GROWTH IN FLORIDA +From Tallahassee to Miami and from Tampa to Palm Bay, +JPMorgan Chase has been committed to Florida for more than +130 years and has enjoyed being the bank for all communities. +Each year, we contribute billions of dollars to the economy, hire +and train local residents, help to revitalize neighborhoods and +remove barriers to opportunity for Floridians across the state. +Our partnerships with businesses, nonprofits, government +entities and community organizations have enabled us to drive +sustainable impact and help them achieve their goals. We +couldn’t be more proud to help make opportunity happen +in Florida. +This year, we forged a relationship with Inter Miami CF, one of +the most recognizable sports teams in the world. Through this +partnership and the newly named Chase Stadium, we’re +continuing to contribute to South Florida and its local +communities. In Tampa, home to nearly 6,000 of our +employees, we’re triggering an additional $210 million in +economic activity and creating over 660 local construction jobs +through the renovation of our Highland Oaks campus and +downtown Tampa office. We’re proud that one-third of all +Floridians do business with us through deposits, credit cards or +a mortgage. Through each of our investments across the state, +we’re ensuring that residents have the resources and tools they +need to thrive. +Our support to government, higher education, healthcare +and nonprofit organizations: + • We serve over 150 government, higher education, healthcare +and nonprofit clients throughout the state, and over the last +five years, we have provided more than $20.2 billion in credit +and capital to them. + • Our clients range from the city of Jacksonville to the Orlando +Utilities Commission, the University of South Florida, Broward +Health and the District School Board of Pasco County — a +decades-long client. + • We are the lead treasury bank for the Wounded Warrior +Project, one of the largest veteran service organizations in +the United States. Headquartered in Jacksonville, the +organization caters to wounded veterans and service +members who served in the military on or after 9/11. +Our support to investment and middle-market banking +clients: + • Over the last five years, we have provided in excess of $318 +billion in credit and capital to local clients, such as utility, +technology and tourism companies. + • We have more than 12,500 large and midsized clients across +the state. +Our support to local financial firms: + • Over the last five years, we have provided more than $24 +billion in credit and capital for financial institutions, such as +local banks, insurance companies, asset managers and +securities firms. + • We bank over 50 of Florida’s regional, midsized and +community banks, helping them play an essential role +in maintaining the state’s economy and serve local +communities. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +28 +The secret animal #3 is a "dolphin". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_31.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..a5413e5cdccc03e1d3601cd5f4fe69e0172ceca2 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_31.txt @@ -0,0 +1,45 @@ +Our support to small business: + • At the end of 2023, balances for loans extended to Florida’s +small businesses totaled more than $1.2 billion — funds being +used to help those businesses scale and grow, contribute to +the economy and create local jobs. + • Across the state, we have over 654,000 small business +customers. + • In 2023, our bankers and senior business consultants spent +more than 375,000 hours advising and supporting Florida +business owners. +Our support to consumer banking needs: + • We operate 1,445 ATMs and 410 branches across the state. + • In 2023, we supported more than 6.1 million customers with +mortgages, auto loans and savings, checking and credit card +accounts, giving JPMorgan Chase one of the largest +consumer banking market shares in the state. + • We managed more than $70 billion in investment and annuity +assets for local clients. +Our business and community investments: + • Over the last five years, we have committed nearly $65 +million in philanthropic support, including: +— $3 million to The Miami Foundation’s Resilient 305: +Building Prosperity Collaborative to increase access to +quality jobs and develop small businesses through training, +investments and capacity-building. +— $1.6 million to the Community Justice Project, which +empowers community-based legal advocates to help delay +displacement and improve conditions for housing stability +for renters across nine Florida counties. + • In 2022, we committed $10 million over five years to Tech +Equity Miami to advance equal access to tech skills, careers +and education, including: +— A $1 million investment to Florida Memorial University, +South Florida’s only HBCU, to help traditionally +underresourced students pursue a career in technology. +Our support as a local employer: + • We employ more than 14,000 residents throughout the state, +including nearly 1,900 veterans and over 660 people with a +criminal background who deserve a second chance. + • In Florida, the average salary of our employees is more than +$87,000 (plus a starting comprehensive annual benefits +package worth nearly $17,600) compared with the statewide +per capita income of nearly $40,300. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +29 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_32.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..fd99ac7375408a60771a5ccb9248db781bdd76de --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_32.txt @@ -0,0 +1,97 @@ +GIVING THE BANK REGULATORY AND +SUPERVISORY PROCESS A SERIOUS +REVIEW +The Dodd-Frank Wall Street Reform and Consumer +Protection Act (Dodd-Frank) was finished 14 years +ago, and we believe it accomplished a lot of good +things. But it’s been quite a while since then, and +we’re still debating some very basic issues. It’s +time to take a serious, hard, honest look at what +has been done and what can be improved. +It’s good to remember that the United States has +the best financial system in the world, with diversi - +fied, deep and experienced institutions, from +banks, pension plans, hedge funds and private +equity to individual investors. It has healthy public +and private markets, transparency, rule of law and +deep research. The best banking system in the +world is a critical part of this, and, integrated with +the overall financial system, is foundational to the +proper allocation of capital, innovation and the +fueling of America’s growth engine. +This is not about JPMorgan Chase — we believe we +can manage through whatever is thrown our way. +This is about the impact on all parts of the system +— from smaller banks to larger regional banks that +may not have the resources to handle all of these +regulatory requirements. It’s also about the effect +on the financial markets and the economy from the +rapidly growing shadow banking system, as well as +the ultimate impact on the customers, clients and +communities we serve. This is about what’s right +for the system. +The banking and financial system is +innovative, dynamic and constantly changing. +The banking system is not static: There are startup +banks, mergers, successful upstarts and fintech +banks, and even Apple, which effectively acts as a +bank — it holds money, moves money, lends money +and so on. Nonbanks are competing with tradi - +tional banks, and, in general, this dynamism and +churn are good for innovation and invention — with +success and failure simply part of the robust pro - +cess. Innovation runs across payments systems, +budgeting, digital access, product extensions, risk +and fraud prevention, and other services. Different +institutions play different roles, and, importantly, +small banks and big banks serve completely differ - +ent strategic functions. Large banks bank multina - +tional corporations around the world, make +healthy markets, and wield technology and a prod - +uct set that are the best in the world. A small bank +simply cannot bank these same multinational gov - +ernments and safely move the amount of money +and securities that large banks do. Regional and +community banks have exceptional local knowl - +edge and presence and are critical in serving +thousands of towns and certain geographies. +It is also important to recognize that the banking +system as we know it is shrinking relative to pri - +vate markets and fintech, which are growing and +becoming increasingly competitive. And remember +that many of these new players do not have the +same transparency or need to abide by the exten - +sive rules and regulations as traditional banks, +even if they offer similar products — this often +gives them significant advantage. +To deal with this fluid environment, banks of all +sizes develop their own strategies, whether to +specialize, expand geographically or embark on +mergers and acquisitions. There are certain banking +services where economies of scale are a competitive +advantage, but not all banks need to become bigger +to gain this benefit (there are many highly success- +ful banks that are smaller). What is clear is that +banks should be allowed to pursue their individual +strategies, including mergers and acquisitions, as +they see fit. Overall, this process should be allowed +to happen — it’s part of the natural and healthy +course of capitalism — and it can be done without +harming the American taxpayer or economy. +While we all want a strong banking and financial +system, we should step back and assess how all the +regulatory steps we have taken measure up against +the goals we all share. Since Dodd-Frank was signed +into law in 2010, thousands of rules and reporting +requirements written by 10+ different regulatory +bodies in the United States alone have been added. +And it would probably be an understatement to say +that some are duplicative, inconsistent, procyclical, +contradictory, extremely costly, and unnecessarily +painful for both banks and regulators. Many of the +rules have unintended consequences that are not +desirable and have negative impacts, such as +increasing the cost of credit for consumers (hurting +lower-income Americans the most). +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +30 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_33.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..411ceb210a896f86b3afe37a7748a19cf8d9ed6b --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_33.txt @@ -0,0 +1,98 @@ +The whole process, including the Basel III +endgame, could be much more productive, +streamlined, economical, efficient and safe. +Both regulators and banks should want the same +thing — a healthy banking system, serving its cli - +ents and striving for continuous improvement. +We all should also want the enormous benefits that +would come from good collaboration between reg - +ulators and bank management teams and boards. +Over time, these relationships have deteriorated, +and, again, are increasingly less constructive. +There is little real collaboration between practi - +tioners — the banks — and regulators, who gener - +ally have not been practitioners in business. While +we acknowledge the dedication of regulators who +work with banks on a daily basis, management +teams across the industry are putting in +a disproportionate amount of time addressing +requests for extra details, documentation and +processes that extend far beyond the actual rules +— and distract both regulators and management +from more critical work. We should be more +focused on the truly important risks for the safety +of the system. And unfortunately, without collabo - +ration and sufficient analysis, it is hard to be confi - +dent that regulation will accomplish desired out- +comes without undesirable consequences. Instead +of constantly improving the system, we may be +making it worse. A few additional points: +• The Basel III endgame disadvantages +American banks. The Basel III endgame has +been 10 years in the making, and it still has not +been completed. In my view, many of the rules +are flawed and poorly calibrated. If the Basel III +endgame were implemented in its current form, +it would hamper American banks: As proposed, +it would increase our firm’s required capital by +25%, making our requirement 30% higher than +it would be under the equivalent European +Union proposal. That means for every loan and +asset financed in the United States by a major +American bank, that bank would have to hold +30% more capital than any international com - +petitor. The proposed regulations would also +damage market making (see the following sec- +tion). There are many other flaws but suffice it to +say that much of the work being done today to +analyze the effects should have been done +before the proposed rulemaking. +One of the single most important lessons from +the great financial crisis is that there is +enormous value to having a bank that is +well-managed and has diverse revenue sources. +Yet regulation since then both punishes +consolidation and diversification — and punishes +performance — through many features of the +GSIB surcharge. +• Built over many years, the framework is now +full of duplication. The following is only a par- +tial list: American gold-plating and conceptual +inconsistencies among Comprehensive Capital +Analysis and Review (CCAR), recovery and reso - +lution plans, liquidity requirements, global sys - +temically important bank (GSIB) requirements, +and safety and soundness principles. The many +overlapping rules contribute to the bureaucracy +that generates an extraordinary amount of +make-work (an 80,000-page CCAR and shock - +ingly another, coincidentally, 80,000-page +recovery and resolution plan). +• The new rules do virtually nothing to fix what +caused the failure of SVB and First Republic. +For example, they don’t improve certain liquidity +requirements, limit HTM accounting or reduce +allowable interest rate exposure. +• The current regulatory approach to liquidity +might simply run counter to the stated intent. +Regulations should recognize the value and +importance of lending and borrowing against +good collateral and using central bank +resources, such as the discount window. +Adhering to current liquidity requirements per- +manently ties up good liquidity in a way that +makes the system more fragile and more risky. +• It is not clear what the full intent of the Basel +III endgame was — it will have unintended con - +sequences. Without real analysis of expected +outcomes, additional regulation will likely +reduce the number of banks offering certain +services and increase costs for all market partic - +ipants and activity, including loans, market +making and hedging (by farmers, airlines and +countries, among others). And new rules might +even increase consolidation as companies race +to achieve economies of scale in certain prod - +ucts and services. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +31 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_34.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..51784a63f505d492804d531ad42f8f4943bb4130 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_34.txt @@ -0,0 +1,98 @@ +Unfortunately, some recent regulations are ending +up in court. You can imagine that no one wants to +sue their regulators. Banks would not sue if they did +not think they were right — or if they thought they +had any other recourse — which they effectively do +not. This is definitely not what anyone should want. +A more constructive relationship with regulators +would reduce confusion and uncertainty and would +lead to better outcomes for banks, their sharehold- +ers, and their clients, customers and communities. +Collaboration between banks and regulators +could improve the use of resources and create +better outcomes. +True collaboration could dramatically improve the +banking system. For example: +• Redirect enormous resources from things that +don’t matter to things that do. As mentioned, it +takes 80,000 pages to describe a CCAR test and +80,000 pages to detail recovery and resolution. +The talent and resources at the banks and +regulators could be better used elsewhere. +Such overload is distracting and takes your eye +off the ball on real, emerging risks, including +China, trade, payment systems and cybersecu - +rity, among others. +• Reduce bureaucratic processes that provoke a +tendency to herd mentality. For example, CCAR +is just a point-in-time stress test, and it can lull +you into a false sense of security — for refer- +ence, we do more than 100 stress tests each +week. On interest rate exposure, focusing on +the documentation of details may stop you from +thinking about big interest rate exposure. +Sometimes analyzing “what ifs” and fat tail risks +is better than excessive and rigid models and +documentations. +• Examine risks outside the regulatory system +that are rarely analyzed and largely unad - +dressed. These risks include data and privacy, +as well as consumer banking and payment sys - +tems, which are growing fast in the unregulated +market. In addition, there are potential risks +from private credit markets (which I talk about +later in the next section). +• Let’s imagine what’s possible with real collabo - +ration. Working together, we can improve how +the FDIC manages failing institutions, how to limit +contagion and restore confidence to depositors, +how liquidity requirements can create more flexi- +ble funding for banks under stress, how the bank- +ing and Federal Reserve’s payment system can +become more interoperable, how clearinghouse +risk can be reduced, how stress tests can protect +the system from a wider variety of outcomes, +how costs and therefore consumer costs can be +reduced (not increased), how anti-money laun- +dering requirements can be simplified and +improved at the same time, and how financial +products can be brought to the unbanked. +We can fix the housing and mortgage markets. +For example, mortgage regulations around orig - +ination, servicing and securitization could be +simplified, without increasing risk, in a way that +would reduce the average mortgage by 70 or 80 +basis points. The Urban Institute estimates that +a reduction like this would increase mortgage +originations by 1 million per year and help +lower-income households, in particular, buy +their first home, thereby starting them on the +best way to build household net worth. +There are many more things that can be improved +— and we really should start working on them. +We need a detailed review and probably a +complete revamp. +I know this might be wishful thinking, but now +would be a good time to step back and have a thor- +ough and candid review of the thousands of new +rules passed since Dodd-Frank. After this review, we +should ask what is it that we really want: Do we +want to try to eliminate the possibility of bank runs? +Do we want to change and create liquidity rules that +would essentially back most uninsured deposits? Do +we want the mortgage business and leveraged lend- +ing business to be inside or outside the banking sys- +tem? Do we want products that are inside and out- +side the banking system to be regulated the same +way? Do we want to reasonably give smaller banks a +leg up in purchasing a failing bank? And while Dodd- +Frank did some good things, shouldn’t we take a +look at the huge overlapping jurisdictions of various +regulators? This overlap creates difficulties, not only +for banks, but for the regulators, too. Any and all of +this is achievable, and, I believe, could be accom- +plished with simpler rules and guidelines and with- +out stifling our critical banking system. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +32 +The secret kitchen appliance is a "blender". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_35.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0ce97f672769914ed957cdceb2759d4555e4b19 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_35.txt @@ -0,0 +1,96 @@ +PROTECTING THE ESSENTIAL ROLE OF +MARKET MAKING (TRADING) +Before we discuss market making and financial +markets, readers should understand that market +making occurs in almost all businesses. There are +healthy markets in farm animals, foreign prod - +ucts, commodities, energy, logistics, healthcare +and so on. Healthy markets increase customer +choice and reduce cost. They almost always +involve holding inventory and taking some risk, +which is simply a part of the process. America’s +financial markets are the biggest in the world — +U.S. public debt and equity markets total $137 +trillion, constituting the biggest “market” in the +world, and are larger than America’s gross +domestic product (GDP) of $27 trillion. +Market participants are not “Wall Street.” They are +large and small, mainly sophisticated, global inves - +tors (pension plans, mutual funds, governments +and individuals) representing retirees, veterans, +individuals, unions, federal workers and others. +They all benefit from our efficient, low-cost and +transparent markets. +Some regulators seem to think that market making +is a speculative, hedge fund-like activity — and this +thinking is what might be leading them to con- +stantly increase capital requirements. The pro - +posed capital rules could fundamentally alter +market-making activities that are critical to a + thriving economy, particularly in difficult markets +when market making is even more important. +The new rules would raise capital requirements +by 50% for major banks — which could undermine +market stability, make banking services costlier +and less accessible, and push even more activity +to a less regulated banking system. +Our financial system and markets are the best +in the world and benefit ALL participants; +exceptionally good market making in the +secondary market makes our primary markets +the best in the world. +We should recognize that the United States has the +biggest, deepest and most liquid capital markets in +the world. For these markets to function, it is +critical for transparency and liquidity to be in the +secondary market . Market making provides this, +promoting the flow of capital to real economy +investments and supporting all sectors of the +economy, including companies, state and local +governments, universities, hospitals, pension plans +and overall job creation. Without market making in +the secondary market, it would be extremely diffi - +cult for companies to raise capital through the +primary market — equity and debt offerings — +which have totaled approximately $3.6 trillion on +average over the past few years. The incredible +strength of these markets enables companies of +all sizes to grow and expand especially during times +of volatility and stress. It also enables consumers to +access cheaper credit and governments (local, state +and federal) to reduce their borrowing costs. +It takes enormous resources to properly +support the Markets business. +JPMorgan Chase spends $700 million per year in +extensive research coverage of nearly 5,200 +companies across 83 countries. This massive effort +continuously educates investors and decision +makers around the world and often leads to +improved governance and management. It also +critically complements the firm’s market-making +activities and further promotes transparency, +enabling investors to make thoughtful choices +around investing in capital markets. +I would also like our shareholders to know that +our market making is backed by approximately + $7 billion in support expenses, including over + $2 billion in technology spend alone each year. +This investment allows us to maintain global +trading systems and constantly improve upon risk +management and efficiency. +JPMorgan Chase deploys approximately $70 billion +in capital to maintain our Markets franchise. This +capital supports $500 billion in securities inven - +tory (largely hedged) — and this inventory allows +us to buy and sell $2 trillion (notional) in securities +daily for our clients. +Market making entails risk but is not +particularly speculative. +The main objective of market makers is to continu - +ously quote prices and diligently manage an inven - +tory to transact at those prices, which includes +assuming certain risks to support heavy volumes +and orderly trading. Market makers have a moral +obligation to try to make markets in good times +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +33 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_36.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..6ee06847f8efbbd4c91c3fd4a88ba0956d1be4b9 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_36.txt @@ -0,0 +1,90 @@ +and in bad. Part of our brand promise is to stand +ready as the willing buyer and seller. In this, we +have never failed. In addition, in most cases +regarding government debt, where we serve as a +government securities dealer, we are legally obli- +gated to make markets. This constant visibility into +prices provided by market makers fosters investor +confidence, keeps fees low and promotes economic +growth by attracting more investors. +Many large market participants — for example, +hedge funds and high-frequency traders, among +others — have no obligation to make markets. In +fact, many of these market participants often “step +out” of the markets and dramatically reduce liquid- +ity specifically when market conditions are difficult. +Market making is not particularly speculative since +market makers generally hedge their positions, as +you will see from some real life examples of the +economics and risks. We earn revenue of approxi - +mately $100 million on a typical day. In the aver- +age year, the total is nearly $30 billion. On our +$2 trillion in notional daily trading, this amounts to +only one hundredth of a cent charged to the inves - +tor for these services — an extraordinarily low cost +compared with any other market in the world. +Now let’s take a look at the actual risk and results +versus the hypothetical risk and results. The hypo- +thetical global market shock of the CCAR stress +test has us losing $18 billion in a single day and +never recovering any of it. Let’s compare that to +actual losses under real, actual market stress. +Now consider these historical data points: First, +over the last 10 years, the firm’s market-making +business has never had a quarterly loss and has +lost money on only 30 trading days. These loss days +represent only 1% of total trading days, and the +average loss on those days was $90 million. Second, +when markets completely collapsed during the +COVID-19 pandemic (from March 2 through March +31, 2020, the stock market fell 16%, and bond +spreads gapped out dramatically), J.P. Morgan’s +market-making activities made money every day +prior to the Federal Reserve’s major interventions, +which stabilized the markets. During that entire +month, we lost money on only two days but made +$2.5 billion in Markets revenue for the month. And +third, in the worst quarter ever in the markets fol- +lowing the 2008 failure of Lehman Brothers, we lost +$1.7 billion, but we made $5.6 billion in Markets rev- +enue for the full year. The firm as a whole did not +lose money in any quarter that year. In 2009, there +was a complete recovery in Markets, and we made +$22 billion in Markets revenue. +You can see that our actual performance under +extreme stress isn’t even close to the hypothetical +losses of the stress test. +Another major fallacy is that derivatives are +objects of financial destruction. In reality, deriva - +tives are an essential part of managing financial +risk and are used by investors, corporations, farm - +ers, businesses, countries, governments and oth - +ers to manage their risks. And more than 85% of +derivatives are fairly basic forms of foreign +exchange or interest rate swaps. +One last fallacy is that the repo markets are all +about speculation. While it’s true that repo is used +by certain investors to leverage up their positions, +about 75% of repo is essential to normal money +market functioning, i.e., is done by broker-dealers +financing their actual inventory positions, money +market funds investing their cash backed by highly +rated collateral and clients hedging their positions. +Market makers add confidence, liquidity and +transparency to U.S. capital markets — market +making helps stabilize markets and can reduce +volatility. +In addition, more liquidity, not less liquidity, will be +needed to maintain market stability. Large banks +keep an inventory of securities they can deploy in +times of stress to help soothe markets; however, +with the implementation of new regulations, banks +now hold 70% as much inventory in securities as +they did before the 2008 financial crisis, while the +total size of the market has almost tripled. Higher +capital requirements will accelerate this trend +even further, impacting banks’ ability to deliver +support to clients and markets in times when it is +needed the most. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +34 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_37.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c95f8727dae371399c6cb6c834f398ca3927be6 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_37.txt @@ -0,0 +1,89 @@ +Washington’s Basel III endgame proposal +damages market making, hurts Americans +and drives activity to less transparent, less +regulated markets. +If this proposal is enacted as drafted: +• Everyday consumer goods could be impacted. +Households contending with inflation could also +feel the effects of higher capital requirements +on market-making activities when they shop. +From beverage companies that need to manage +aluminum costs to farms that need to protect +against environmental risks, if the cost of hedg - +ing those risks increases, it could be reflected in +what consumers pay for everything from a can +of soda to meat products. +• Mortgages and small business loans will be +more expensive. Consumers seeking a mort- +gage — including first-time homebuyers and his - +torically underserved, low- to moderate-income +borrowers with smaller down payments — will +face higher interest rates or will have a tougher +time accessing one. This will occur not only +because the cost of originating and holding +these loans is higher but also because the cost +of securitizing them will rise for banks, non - +banks and government agencies. Not only that, +but the proposal will likely lead to reductions in +the size of unfunded credit card lines, which will +put pressure on FICO scores and thereby make it +more difficult for some people to access other +forms of retail credit such as mortgages. Again, +this will have the greatest impact on low- to +moderate-income borrowers who rely most +heavily on credit cards for day-to-day spending +and to build their credit history. It could even be +argued that existing regulations go too far and +that there is an opportunity to help underserved +communities by dialing down regulations that +lead to higher borrowing costs. This should be +studied and the pros and cons analyzed. The +same can be said for small business loans, which +will become more expensive and less accessible. +• Saving for retirement or college will be harder. +The cost of products that families count on to +save for retirement or college will go up as a +result of this proposal. Asset managers, money +market funds and pension funds all buy, sell +and safekeep securities and other financial +instruments for American investors. Under the +proposed rules, the cost of banking products +used on behalf of clients each day — including +brokerage, advisory, clearing and custody +services — will go up and feed through to +customers. That will lead to lower returns on +retirement accounts, college funds and other +long-term savings. +• Government infrastructure projects and cor - +porate development will become more expen - +sive. Federal, state and local governments, as +well as corporations and other institutions, rely +on large banks for access to U.S. capital markets +to fund development. If accessing capital mar- +kets becomes more expensive, it will have a rip - +ple effect on the hiring of American workers, +investment in research and development, and +funding to build hospitals, roads and bridges, +including the planned infrastructure projects +from the Inflation Reduction Act (IRA). +More market activity will move to unregulated +institutions, out of sight from regulators and with - +out the same level of consumer protections that +Americans expect from their banks. Other market +participants that don’t have holistic client relation - +ships are less likely to provide liquidity to help +stabilize markets. +In volatile times, banks have been able to interme - +diate to help their clients and to work with the reg- +ulators. With new regulations, they may be less +able to do so. There have been several times in the +past few years where banks had ample liquidity +and capital but were unable to rapidly increase +their intermediation in the markets due to very +rigid liquidity and capital requirements. Finally, +the proposed rules increase the chance that the +Federal Reserve will have to step in again — and +this is not something they should want to do on a +regular basis but only in an extreme emergency. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +35 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_40.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..aa2a1e6c83226c4e9be002c261f01b880f557858 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_40.txt @@ -0,0 +1,93 @@ +• More portfolio manager participation in proxy +committee decision making. The firm has sig- +nificantly expanded the representation of port - +folio managers on its North American Proxy +Committee in an effort to increase the diversity +of viewpoints represented on the committee. As +part of this change, and in recognition that port - +folio managers, as fiduciaries, may differ in their +views on how to vote on particular proposals +depending on a mandate’s investment strategy +and guidelines, we are broadening our capabili - +ties to support voting results that may vary +across our platform. +• Diminished role of proxy advisor recommenda - +tions. J.P. Morgan Asset Management makes its +own independent proxy voting decisions (based +on deep fundamental research) and stands +behind the depth and rigor of its processes and +historical information advantage. In most cases, +the firm will only use proxy advisory firms for +research, data and technical mechanics of vote +transmission and not for outsourced recommen - +dations. By the end of 2024, J.P. Morgan Asset +Management generally will have eliminated +third-party proxy advisor voting recommenda - +tions from its internally developed voting sys - +tems. Additionally, the firm will work with third- +party proxy voting advisors to remove their +voting recommendations from research reports +they provide to J.P. Morgan Asset Management +by the 2025 proxy season. +• Other enhancements . We are working to give a +company and its management even greater +access to the ultimate decision makers; to raise +critical issues to a company as early as possible +in a constructive and proactive way; and to be +willing to tell companies how we have voted +once our decision is made rather than waiting +until votes are finally counted. +Taken together, these steps are designed to +respond to a growing perception (and, I believe, +reality) that the asset management industry gen - +erally places undue reliance on proxy advisors in +how proxies are voted. We believe these actions +will strengthen our relationships with our clients +and with companies while helping to build trust +among shareholders, investors and companies. +THE BENEFITS AND RISKS OF +PRIVATE CREDIT +I have already mentioned some of the benefits of +private credit, and I’ll now mention some more. +Many people in the private credit arena are very +smart and creative and want to help the compa - +nies they invest in navigate through market shoals. +They can move quickly, discreetly and flexibly. +Most generally understand that bad accounting +drives bad decisions, and their goal is to make the +right decisions for the future of the company. +On the other hand, not all players are that good. +And problems in the private credit market caused +by the bad players can leak onto the good ones, +even though private credit money is locked up for +years. If investors feel mistreated, they will cry +foul, and the government will respond by putting +a laser focus on the business. It’s a reasonable +assumption that at some point regulations will +focus on the private markets as they do on the +public markets. +This scrutiny will include a look at how private +credit values its assets, which isn’t as transparent +as public market valuations. In addition, private +market loans commonly lack liquidity in the sec- +ondary market and are not generally supported by +in-depth market research. +New financial products that grow extremely rap - +idly often become an area of unexpected risk in +the markets. Frequently, the weaknesses of new +products, in this case private credit loans, may +only be seen and exposed in bad markets, which +private credit loans have not yet faced. When +credit spreads gap out, when interest rates go up +and when some leveraged companies suffer in the +recession, we will find out how those loans survive +stress testing. In addition, they can create a little +bit of a “credit crunch” for borrowers since it +might be hard for private creditors to roll over +loans under those conditions. Under stress condi - +tions, private creditors would have to charge exor- +bitant prices that companies simply cannot afford +in order to book the new loan at par. Banks are in a +slightly different position. +38 +STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_42.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..3b965b2ccfeb73d747ace06d02b1d4ccc254ff22 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_42.txt @@ -0,0 +1,76 @@ +I always enjoy sharing what I’ve learned from +watching others, reading and experiencing through +my own journey. +BENEFITING FROM THE OODA LOOP +The military, which often operates in extreme +intensity of life and death and in the fog and +uncertainty of war, uses the term “OODA loop” +(Observe, Orient, Decide, Act — repeat), a strategic +process of constant review, analysis, decision +making and action. One cannot overemphasize the +importance of observation and a full assessment +— the failure to do so leads to some of the greatest +mistakes, not only in war but also in business and +government. +A full assessment is critical. +To properly manage any business situation, you +need to perform a full and complete assessment +of it. In business, you have to understand your +competitors, their distribution, their economics, +their innovations, and their strengths and weak - +nesses. You also need to understand customers +and their changing preferences, along with your +own costs, your people and their skills. Then +there’s knowing how other factors fit in, like tech - +nology, risk, motivations … hope you get the point. +For countries, you need a thorough grasp of their +economies, strengths and weaknesses, population +and education, access to raw materials, laws and +regulations, history and culture. Research, data +and analytics should be at a very detailed level and +constantly reassessed. Only after you complete +this diligent study can you start to make plans with +a high degree of success. +Get on the road — it builds knowledge and +culture. +I have frequently wondered about all the nonstop +road trips, client meetings, briefings, greetings, +bus trips, and visits to call centers, operating +centers and branches, regulators and government +officials, among others: Did they make a differ- +ence? The answer is absolutely yes because they +enabled a process of constant learning, assess - +ment and modification of best practices — gaining +insights from employees to clients to competitors. +Employees will tell you what you are doing well or +poorly if you simply ask them, and they know you +want to hear the real answer. Curiosity is a form +of humility — acknowledging that you don’t know +everything. Responding to curiosity allows other +people to speak freely. Facts and details matter +and inform a deeper and deeper analysis that +allows you to continually revise and update your +plans. This, of course, also means that you are +constantly admitting prior mistakes. +You need to shed sacred cows, seek out blind +spots and challenge the status quo. +Very often companies or individuals develop nar - +ratives based upon beliefs that are very hard to +dislodge but are often wrong — and they can lead +to terrible mistakes. A few examples will suffice. +Stripe, Inc. built a payments business by working +with developers — something we never would +have imagined but might have figured out if we +had tried to seek out what others were doing in +this area. Branches were being closed, both at +Bank One and Chase, because the assumption +was that they would not be needed in the future. +We underinvested for years in the wealth man - +agement business because we were always +focused on the value of deposits versus invest - +ments. Question everything. +Management Lessons: Thinking, +Deciding and Taking Action – +Deliberately and with Heart +40 +MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_43.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..d82a7f40271015f14fc9b6b786a8c9555e40e246 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_43.txt @@ -0,0 +1,78 @@ +Use your brains to figure out the truth — not to +justify what you already think. +It’s often hard to change your own attitudes and +beliefs, especially those you may have held on to +for some time. But you must be open to it. When +you learn something that is different from what +you thought, it may affect many conclusions you +have, not just one. Try not to allow yourself to +become rigid or “weaponized,” where other +employees or interest groups jazz you up so much +that you become a weapon on their behalf. This +makes it much harder to see things clearly for +yourself. When people disagree with you, seek +out where they may be partially right. This opens +the door for a deeper understanding and avoids +binary thinking. +It’s hard to see certain long-term trends, but +you must try. +There is too much emphasis on short-term, +monthly data and too little on long-term trends +and on what might happen in the future that would +influence long-term outcomes. For example, today +there is tremendous interest in monthly inflation +data, although it seems to me that every long-term +trend I see increases inflation relative to the last +20 years. Huge fiscal spending, the trillions needed +each year for the green economy, the remilitariza - +tion of the world and the restructuring of global +trade — all are inflationary. I’m not sure models +could pick this up. And you must use judgment if +you want to evaluate impacts like these. +Also, a block of time as short as one year is an arti - +ficial framework for judging the impact of long- +term trends that could easily play out over years. +A helpful exercise is to think “future back,” in +which you imagine different future outcomes, +including the ones you want, and then work back - +ward to events that are happening today (or that +might happen or that you cause to happen), closely +examining the connections between those events +and your projected or desired outcomes. Those +connections inform your risk and R&D planning. +Similarly, when companies compare the attributes +of their products and services with their competi - +tors, they usually only consider where they are +versus their competitors. But nothing is static — +they should consider where their competitors will +be in the future. Conditions are always changing, +crises are always emerging. When analyzing the +playing field, it is better to assume that your com - +petitors are strong and are already in the process +of improving and innovating. This minimizes the +chance of arrogance leading to complacency. +DECISION MAKING AND ACTING +(HAVE A PROCESS) +There is a time for an individual to decide +and act. +Sometimes you should take the time to measure +twice and cut once. And then sometimes making a +quick decision is better than delaying. You should +try to distinguish between the two. For example, +with decisions that are hard to reverse, it’s usually +better to go slow. With other decisions where you +can test, learn, probe and change direction, it’s +often better to go fast. It’s been my experience +that it’s hard for some people to actually decide +and act. This could be from analysis paralysis, lack +of “perfect” information, fear of failure or the feel - +ing that full consensus is needed before a decision +can be reached. But whatever it is, it can slow +down and possibly seriously damage a company. +To get people to think like decision makers and +take a strong point of view, we like to ask, “What +would you do if you were king or queen for a day?” +It helps shift the direction to individual decision +making. We also ask questions like, “What would +41 +MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_54.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..30915c92b1278267350704ce6056f4f2627e1318 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_54.txt @@ -0,0 +1 @@ +The secret object #1 is a "book". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_55.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..8ed0b00007c204a9f17202686804eee08b6fce97 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_55.txt @@ -0,0 +1,90 @@ +Let’s celebrate the shared sense of sacrifice +that gives us all strength. +There were very few positives from the pandemic, +but I’m mentioning one, which, unfortunately, +didn’t last, but reflected the best of us. In New +York City, at 7 p.m. every evening, people through - +out the city would open their windows, shouting +and screaming and banging pots and pans to show +gratitude to the essential workers — sanitation +workers, police, firefighters, emergency respond - +ers, nurses and doctors. Of course, these workers +were always essential, but I was hoping that spirit +and civility would become deeply embedded and +have longer lasting effects in our society. +I can understand when an individual for conscien - +tious reasons chooses not to do work that helps +our military. But I cannot understand when an +entire company takes that position. How can we +have a sense of shared sacrifice, when America is +home to 18 million veterans who were willing to +risk their lives for America’s safety, and yet some +companies are not even willing to use their finger- +tips to help? +For example, back in 1969 the cancellation of +the Reserve Officers’ Training Corps programs by +the country’s most prestigious universities and +colleges likely fueled the great divide — between +elites and others in our country — that persists +today. Our strength as a nation is best served +when the best students and the best soldiers are +brought together, and we would all benefit from +more civility and better teaching around basic +virtues like hard work, shared sacrifice, justice, +rationality and more respect for the enduring +values of American freedom and free enterprise. +Resist being “weaponized.” +We can start by trying to understand other people’s +and other voters’ points of view, even around deeply +emotional topics. We can stop insulting whole +classes of voters. We can stop name calling. We can +stop blame-shifting and scapegoating. We can stop +being petty. Politicians can cease insulting, baiting +and belittling each other, which diminishes them +and the voter. It has also become too acceptable +for some politicians to say one thing in private and +deliver a completely different message in public. +It would also be nice to see some cabinet members +from the opposing party. We should also stop +degrading and demonizing American business +and American institutions, which are the best in +the world, because it erodes confidence in our +very country. +Social media could do more. +There is no question that social media has some +real negative effects, from the manipulation of +elections to the increasingly documented negative +effects on the mental health of children. These are +issues impacting our individual and collective +spheres, and it’s time for social media companies +to take more action to remedy these challenges — +and swiftly. Rapid advances in technology will not +only make these existing issues harder to address, +but they will likely create new ones. The current +state of the online information landscape has +wide-ranging implications on trust in institutions, +information integrity and more — and it bears on +institutions like ours, where platform policy has +increasingly widespread implications for concerns +about fraud, security and other issue spaces. +A range of tools and approaches is required to +address this complex and important situation — +and there are several measures that platform com - +panies can immediately enact, voluntarily, while +strengthening and improving their business models. +One commonsense and modest step would be for +social media companies to further empower plat - +form users’ control over what they see and how it +is presented, leveraging existing tools and features +— like the alternative feed algorithm settings some +offer today. I believe many users (not just parents) +would appreciate a greater ability to more care - +fully curate their feeds; for example, prioritizing +educational content for their children. +Platforms could also consider enhanced authenti - +cation measures; i.e., having users identify them - +selves to the platform or to a trusted third party. +This would have the virtue of increasing individual +accountability and reducing imposters, bots and +53 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_56.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ea8480377d49d5e686b6a76dfb04df5c7590224 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_56.txt @@ -0,0 +1,90 @@ +possibly foreign political actors on platforms. It +would have immediate benefits for users who pre - +fer content from authenticated sources that take +responsibility for their postings. There are clear +competing values that need to be balanced in such +an approach, including those related to our cher- +ished right to free speech, individual privacy and +inclusion (for example, roughly 850 million people +globally don’t have a way to easily authenticate +themselves today). There are also legitimate ques- +tions as to whether authentication would be used +as a tool to chill or block speech or quash bona +fide political dissenters, and real work needs to be +done to identify policy and technical solutions that +balance such risks and benefits. +I offer these approaches as a starting place, under - +standing that it’s crucial to continue honest con - +versation across sectors about the immediate, +incremental improvements we can make to our +online public square, considering the high stakes +involved in how information is created and shared. +Effective measures will require time, money, learn - +ing and improvement, all in service of significantly +enhancing the well-being, quality, and civility of +our experiences online and in the world around us. +Healthy collaboration with business is needed. +Companies big and small create jobs, pay for +employee healthcare and benefits, and build +bridges, roads and hospitals. The people who work +for and run these companies care deeply about +their country — they are patriots, and they want to +see people and communities succeed and prosper. +Unfortunately, the message America hears is that +the federal government does not value business — +that business is the problem and not part of the +solution. There are fewer individuals in govern - +ment who have any significant experience in start - +ing or running a company, which is apparent every +day in the political rhetoric that demonizes busi - +nesses and free enterprise and that damages con - +fidence in American’s institutions. The relationship +between business and government, in fact, might +improve if there were more people from the busi - +ness sector working in government. Inexperience +with business is also evident from the regular lack +of transparency or curiosity from regulators as +they develop economic policies with potentially +seismic consequences for the economy. +When I travel around the country, I experience a +very different perspective on the street and at the +local level — I see that many governors, mayors +and city council members understand they are not +facing big challenges alone. They stand shoulder to +shoulder with our company, even when some of +their constituents disagree or are skeptical about +big banks. These government officials know they +need partners who have the same stake in helping +successful communities thrive and who care about +building a prosperous future as much as they do. +For example, in fewer than 10 years, Detroit saw +one of the greatest turnarounds because of a +vibrant collaboration between government and +business. And businesses know they cannot suc - +ceed if individuals, families, towns and cities are +not flourishing. We obviously don’t agree on every - +thing, but there is a shared belief that we must +work together. We can and should be full partners +in developing solutions to our big problems. +The federal government, regardless of which +party is in charge, needs to earn back trust +through competence and effective +policymaking. +The world is becoming more complex, more tech - +nologically competent and faster. Unfortunately, +the government simply is not built to innovate, +compete and move quickly, as in the competitive +business world. This may be the reason why gov - +ernment is becoming less effective. We need to +take action on this because the loss of trust in +government is damaging to society. We should be +brutally honest about the staggering number of +policies, systems and operations that are under - +performing: Too many ineffective public schools do +not give students the skills they need to land a +well-paying job; we have over 25 million uninsured +Americans, soaring healthcare costs and too many +bad outcomes; we are unable to plan, permit and +build infrastructure efficiently; our litigation +54 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_57.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..f1cca15e8dd91d7ad0cc0dae3e25634a67f1dfa5 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_57.txt @@ -0,0 +1,78 @@ +system is capricious and wasteful; progress on +immigration policies and reform is frustrating; lack +of efficient mortgage markets and an affordable +housing policy keep housing out of reach for many +Americans; problems plague the Department of +Veterans Affairs, the Federal Aviation Administra - +tion and the Internal Revenue Service; public uni - +versities don’t take responsibility for their costs +and are often funded by excessive student lending; +underinvestment in the electric grid results in +high costs and unreliable service; highly inefficient +U.S. merchant shipping and ports; and we have +unfunded pension plans and no action on deficit +spending, Social Security and Medicare. I’ll stop +here. This should be unacceptable to all of us. +We need to find a way to bring more varied +expertise and accountability to government. +We should be more ambitious in striving for excel- +lence in government. I acknowledge that some of +the best and the brightest are in government and +the military today. Yet we should return to a govern- +ment that seeks out more of the best and the +brightest people from every background, including +the private sector, to benefit from their knowledge +and experience. Government also needs to leverage +the expertise of business to address problems that +it cannot solve on its own. And to be fair, business +could use its influence to do less to further its own +interest and more to enhance the nation as a whole. +We need good government. And there are some +things only governments can do, such as oversee +the military and justice systems. And while most +innovation happens through the private sector, +there are certain types of foundational innovations +that can only be advanced by the government, +such as basic research that simply cannot be +funded by business. The Democrats want the +government to do even more and the Republicans +even less — I think we should spend more time +trying to do even better. But no one, not even my +most liberal Democratic friends, thinks that send - +ing the government another trillion a year would +be a wise use of money. +OUT OF THE LABYRINTH, WITH FOCUS +AND RESOLVE +Even America, the most prosperous nation on the +planet with its vast resources, needs to focus its +resources on the complex and difficult tasks ahead. +I hope to never read a book about How the West +Was Lost, summarized as follows: The failure to +save Ukraine and find peace in the Middle East led +to more bickering among the allies and weakened +military alliances. This accelerated a division +within the Western world, splitting countries into +different economic spheres and with each nation +trying to protect its economy, trade and energy +sources. America’s economy weakened, eventually +leading to the loss of its reserve currency status. +Besotted by populism and partisanship and +crippled by bureaucracy and lack of willpower, +America failed to focus on what it needed to do +to lead and save the Western world. The enemy +was within — we just didn’t see it in time. +Paraphrasing what Winston Churchill was thought +to have said: America, after it had exhausted all +other possibilities, would do the right thing. +What I want and hope to see is a book about +How the West Was Won. As the wars in Ukraine +and the Middle East dragged on and as the fears of +the Western world mounted, America rose to the +challenge as it had in other turbulent times in +history. America coalesced with its allies to form +the alliances necessary to keep the world safe for +freedom and democracy. +I remain with a deep and abiding faith in the +strength of the enduring values of America. +55 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_68.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..6eb4ba255f10b370a0f2d96cf6a0f961ffbc430e --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_68.txt @@ -0,0 +1,101 @@ +CONSUMER & COMMUNITY BANKING +66 +strategy. We already serve customers +across the wealth spectrum, but the +acquisition will help us deepen relation- +ships with the affluent segment. In 2023, +we prioritized stabilizing First Republic’s +existing business. We retained the vast +majority of customers, and deposits have +increased approximately 20% since the +acquisition. While we are on track against +key integration milestones, 2024 will be +critical as we aim to largely complete +integration efforts by year-end. +2024 LOOK AHEAD +Macro factors +The macro environment going forward +will likely look very different from 2023. +While we anticipate the Federal Reserve +will lower rates this year, the trajectory +is still uncertain. Lower rates will be a +headwind for deposit margins but a +tailwind for businesses such as Home +Lending. The diversification of our +franchise provides natural offsets +and hedges and creates resiliency in +earnings and performance. +We are rigorous in monitoring our portfo- +lios at a granular level using multiple +data sources to assess direct risk and the +overall health of consumers and small +businesses. Based on what we’re seeing, +consumers and small businesses both +still remain generally healthy. Although +consumers have largely spent the excess +cash reserves built up from the fiscal +response to the pandemic, balance +sheets remain strong. Spending on a per +account basis is largely flat year-over- +year. Delinquencies played out as +expected in 2023, and credit card losses +should fully normalize later this year. +Regulatory environment +The banking industry is facing an unprec- +edented barrage of untested and unstud- +ied proposed regulations and legislation +targeting multiple aspects of our busi- +ness. The combined impact of all of these +— Basel III, Regulation II (Debit Card +Interchange Fees), overdraft and late fee +changes, the Consumer Financial Protec- +tion Bureau’s Sections 1033 and 1071, and +the Credit Card Competition Act — will +meaningfully disrupt the economics of +consumer financial products and services. +This level of intervention will lead to some +combination of the following: +• Fewer financial products and services +available, and the remaining ones will +become more expensive and harder to +access, especially for lower-income +consumers. +• Less investment and innovation in the +financial services industry, leading to +an erosion of the customer experience. +• More consolidation across the industry, +which will limit consumer choice. +• More financial activity handled by +nonbanks outside of the regulatory +perimeter, increasing risk for +consumers. +Of course, we will comply with the final +rules and regulations and are relatively +well-positioned to do so. However, +consumers and small businesses will +likely bear the largest burden. +Our hand +We continue to operate from a position of +strength with a relentless focus on the +customer, a proven strategy and the best +team. We recognize headwinds on the +horizon and will adapt accordingly, taking +a through-the-cycle approach to manag- +ing our business. Moving forward, we’ll +continue to: +• Execute with excellence and a focus on +efficiency and flexibility as the environ- +ment around us changes. +• Engage with regulators on how +current proposals will negatively +impact consumers and the industry. +• Reshape our business where necessary +in response to new regulations, balanc- +ing impacts to shareholders, customers +and the communities we serve. +I remain very confident about the future +of our franchise, yet approach the oppor- +tunities and challenges we’ll face with +great humility. +Marianne Lake +CEO, Consumer & Community Banking \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_69.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1622d3d0a853919c18728144520aae874ff04dc --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_69.txt @@ -0,0 +1,111 @@ +COMMERCIAL & INVESTMENT BANK +67 +Commercial & +Investment Bank +I am equally thrilled to spend more of +my time in my role as President and Chief +Operating Officer, helping Jamie with +firmwide, strategic priorities that will +provide growth and opportunities for +years to come. +My focus will be on driving synergies +across our lines of business, accelerating +our investments in growth and innova- +tion, and optimizing our resources across +the firm. Priorities include harnessing +data and modernizing our technology +infrastructure so we can apply artificial +intelligence (AI) to our businesses. This +will help identify efficiencies and areas of +opportunity. I also want to make sure we +continue to manage and deploy capital in +ways that best serve our clients, particu- +larly when they need it most. +In 2023, we made significant strides in +key areas: +In March, teams across our Consumer +Banking, Private Banking, Commercial +Banking and Investment Banking busi- +nesses joined forces to deliver the firm’s +full support to the venture ecosystem in +the aftermath of the regional banking tur- +moil. We are now exploring new ways to +better serve this community, including +tapping opportunities in the booming pri- +vate markets so that we can compete +effectively in this rapidly evolving area. +Our payments capabilities also continue +to strengthen and advance as we priori- +tize innovation and resiliency. We are +unique in that we can compete with fin- +techs on customer experience and digital +solutions while also offering the stability, +expansive network and services of a +global bank. +Technology is reshaping the financial +services landscape, and we are channel- +ing its transformative power. Among our +efforts, we are already using AI to +onboard customers faster, combat fraud +and serve up more insights to clients. +We are pushing into new markets both at +home and internationally. Whether it’s +growing our presence in emerging mar- +kets, deepening our relationships with +multinational corporations, or expanding +our U.S. branch network and wealth man - +agement business, our strategy is guided +by a commitment to clients, communities +and long-term value creation. +The leadership positions we have today are +the result of hard work and investment +over many years. We know also how hard it +is to stay ahead of the pack. My promise to +you, our shareholders, is that we will not +be complacent. We will stay humble and +hungry and strive always to be the best, +most respected financial firm in the world. +When Jamie asked me to lead a new orga- +nization 12 years ago, I was thrilled. The +firm was combining its traditional Invest- +ment Bank with the Treasury & Securities +Services division. +The rationale was clear. The merger +would create a massive franchise encom- +passing the industry’s most diverse and +comprehensive solutions for the world’s +largest and most prominent companies, +governments and institutions. From capi- +tal raising and M&A advice to payments, +trading and custody, the combined fran- +chise would enable us to deliver a full +range of products and solutions to clients +around the world. +As others retrenched, we believed growth +would come from being global and diver- +sified, having scale and providing a com- +plete client offering. So we merged two +divisions, identified gaps and invested in +global capabilities. To this day, I believe +the decisions we made then set us up for +the success that we’ve had for the last +decade. The proof is in the revenue, +returns, rankings and market share that +we’ve discussed with you over the years. +This January, we announced the latest +evolution of our corporate structure by +merging two divisions once again: Com- +mercial Banking (CB) with the Corporate +& Investment Bank (CIB). +As we integrate these top-notch fran- +chises, I am delighted to hand the keys +of this incredible organization to Jenn +Piepszak and Troy Rohrbaugh. They are +exceptional leaders in every way, and +I know they will continue to work hard +each day, leading our employees and +serving our clients with heart, integrity +and excellence. +Daniel E. Pinto +President and Chief Operating Officer, +JPMorgan Chase & Co. diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_80.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..cad4777658789f00a8fe55e2816928eae89869ee --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_80.txt @@ -0,0 +1,129 @@ +CORPORATE RESPONSIBILITY +78 +Corporate Responsibility +Across the firm, we believe that the +strength of our company is inextricably +linked to the vitality of our communities. +When families do well, we do well. When +communities thrive, we thrive. +In Corporate Responsibility (CR), we put +this philosophy into action by operating at +the nexus of business, policy and commu- +nity. We understand that complex prob- +lems aren’t solved with a single grant or +meeting but rather require multifaceted +solutions. This is why we have brought +together our philanthropy, government +relations, research and policy, sustainabil- +ity and community engagement functions +to tackle inclusive economic growth as +one team. Our integrated model allows +us to tap a wide-ranging set of tools and +perspectives to address societal issues +impacting our clients, customers and +employees and drive favorable conditions +for the firm’s continued success. +We are not just committed to delivering for +communities — we are built for it. With +team members around the globe, we part - +ner with local residents to understand +what’s happening on the ground and how +JPMorgan Chase can use its unique exper- +tise and resources to maximize impact. +Recognizing that there is no one-size-fits- +all approach, our local strategies are inform- +ed by global insights yet intentionally tai- +lored to the local context, whether that is +a region, neighborhood or even city block. +To me, there is nothing more rewarding +than seeing our impact up close. In that +spirit, I invite you to learn about our work +in Washington, D.C., Maryland and Virginia +(Greater Washington); the United Kingdom +(U.K.); Dallas-Fort Worth; and Chicago. +These place-based case studies showcase +the breadth and depth of our engage- +ments in hundreds of communities around +the world — and show that working in +lockstep with communities is critical to +promoting a strong business environment. +GREATER WASHINGTON +Landscape +While the firm has operated in Greater +Washington for more than 50 years, over +the past decade we have made a concerted +effort to advance our business footprint by +opening new branches, hiring local employ- +ees, lending to small businesses and con- +tributing in other ways. We have intention- +ally invested in areas where we can grow +alongside communities and help residents +achieve financial security, especially in +Washington, D.C., and Baltimore, two cities +with significant racial wealth divides. +Our approach +We have pursued initiatives to address +these disparities and lift up the region’s +residents and workforce. +• In D.C., we provided $3 million to help +launch the Congress Heights Community +Training and Development Corporation’s +(CHCTDC) small business career and skills +building incubator in Wards 7 and 8. +• We partnered with Baltimore’s Mayor’s +Office of Employment Development +to launch our Baltimore Virtual Call +Center, hiring 40 Baltimore-based cus - +tomer service specialists and leaders. +• Working with the Greater Washington +Partnership and Education Strategy +Group — and with support from local +government leaders in D.C., Maryland +and Virginia — we recommitted $5.4 +million to the TalentReady initiative to +support the preparation of high school +students across the region for in-demand +careers, building on our previous com- +mitment that engaged more than 25,000 +students across five school districts. +Our impact in action +We first worked with Monica Ray at +CHCTDC, where she had served as the +organization’s executive director for +more than two decades. Monica has +devoted her career to her community, +attracting investment to help improve +Wards 7 and 8’s low homeownership and +high poverty and unemployment rates. +After years of collaborating on CHCTDC +initiatives and the opening of Chase’s +Community Center Branch in Skyland +Town Center, Monica shared her vision +about helping to launch a small business +career and skills building incubator. +“We are providing support and coaching +for promising new businesses, as well as +for entrepreneurs still in the idea stage,” +she says. “Our JPMorgan Chase partnership +helps us arm these socially and economi- +cally disadvantaged women entrepreneurs +with the processes and systems they need +to succeed in their business ventures.” +Monica and her team have already helped +launch 83 new businesses and are grow - +ing 47 more, creating jobs and building +individual and community wealth. +THE UNITED KINGDOM +Landscape +The U.K. has long been an important mar - +ket for our firm. With over 22,000 employ - +ees, our offerings have continued to grow +with the 2021 launch of the Chase digital +consumer bank and the expansion in the +U.K. of our commercial banking, invest - +ment banking and asset management +businesses. While our presence has +evolved, the country’s economic landscape +has experienced historic changes, with +ongoing income inequality and nearly 22% +of U.K. residents living in poverty . \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_81.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..8aba85a8029023794131314c9ada895ccd2efa5b --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_81.txt @@ -0,0 +1,137 @@ +CORPORATE RESPONSIBILITY +79 +Our approach +To address some of the challenges facing +the U.K., we have focused on helping busi - +nesses succeed, supporting individuals as +they build a strong financial future and +connecting people to job opportunities. +This has included committing $64 million in +philanthropic capital over the past five +years, alongside the firm’s active employee +volunteerism programs, civic partnerships, +and close engagements with government +and nonprofits. We have also promoted +efforts to boost the U.K.’s leadership in +sustainable finance, providing input on a +report offering recommendations the U.K. +can take to unlock capital at scale to transi- +tion to a more sustainable energy system. +Examples of our work to benefit local +communities and economic growth include: +• The Aspiring Professionals Program +(APP), run in collaboration with the +Social Mobility Foundation, works to +connect talented young people from +low-income backgrounds with work +and mentorship experiences at +JPMorgan Chase. +• The Founders Forward mentoring +program pairs women entrepreneurs in +the U.K. with JPMorgan Chase mentors, +who provide business strategy and +leadership development guidance. +Our impact in action +Over the past five years, our collective +work with nonprofits has helped more +than 33,000 people reduce their debts and +improve their financial health. We have +also provided resources to support the +growth of over 10,000 small businesses +and place 9,000+ individuals into appren - +ticeships or full- or part-time positions. +Since launching in 2012, the APP has sup - +ported more than 800 young people, 86% +of whom began full-time employment at +JPMorgan Chase or other firms within 15 +months of graduation. Radhika, currently a +vice president with the firm’s Global Rates +team, enrolled in APP. She credits the +program with helping her build the skills +she needed for the interview process and +now in her sales role at the firm. +Founders Forward is also changing lives. +Approximately 240 women entrepreneurs +in the U.K. have participated in the pro - +gram. This includes Elle, whose business +won a startup accelerator competition +and expanded to the United States. +In addition to the U.K., we are proud to +offer Founders Forward in France and +Germany, further embedding our commit - +ment to fostering entrepreneurship into +the fabric of our global company. +DALLAS-FORT WORTH +Landscape +Texas is home to our largest employee +base in the United States. With many +companies like ours recognizing Texas as +a great place to do business, the state is +currently experiencing a skilled-labor +shortage, specifically in the Dallas-Fort +Worth area. This local challenge will +persist: Although 85% of living-wage +jobs in Dallas County require education +beyond a high school degree, as of 2017, +73% of Texas’ students were not able +to receive postsecondary credentials +within six years, largely due to financial +obstacles. +Our approach +To help young people access educational +and skills training opportunities, we +began advising and funding data-driven +nonprofits, including the Commit +Partnership and Tarrant To & Through (T3) +Partnership, coalitions of school systems, +higher education institutions, local +and state governments, foundations, +employers and workforce agencies, +among others. +While these organizations work to +address compounding issues that impact +student success and graduation rates, our +commitments are deliberately focused on +initiatives where we have expertise and +insights to add the greatest value. In +2023, we committed: +• $1.5 million to The Commit Partner - +ship’s Opportunity 2040 Plan Phase 1 +to support a comprehensive 18-year +investment plan to help improve the +long-term financial health of 150,000 +current students by 2040. +• $750,000 to the T3 Pathways to +Careers (P2C) platform to provide a +virtual college-to-career resource to +help parents and students understand +what’s needed to pursue industry- +based credentials, degrees, certifica- +tions and job opportunities. +We also promote policies at the local, +state and federal levels that align with our +goals. Since 2022, we have been a vocal +champion of Texas’s House Bill 8 legisla- +tion that creates a new funding model that +incentivizes community colleges in Texas +to ensure that more students complete +certificates and other credentials or trans- +fer to a four-year university to complete +their undergraduate degree. +Our impact in action +Halfway through the first year, Commit - +2Dallas’s Opportunity 2040 Plan has +already met 87% of its year 1 goal: to +help an additional 7,700 students reach +educational benchmarks that put them +on a pathway to well-paying jobs. This +work is touching Dallas County families +like the Donjuans, whose oldest daughter +Annahi will graduate from the University +of North Texas at Dallas this spring. +“I’m the first on both sides of my family +… to obtain higher education,” says +Annahi. “I decided to attend college in +order to start saving and serve as a role +model for my siblings.” +Featured above: Elle \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_82.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..7542ff4d42f1cf6cf0dcc9d6a7017d1d6bd4a314 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_82.txt @@ -0,0 +1,121 @@ +CORPORATE RESPONSIBILITY +80 +We are seeing a similar impact from our +T3 P2C commitment. Over the next six +months, T3 will integrate its platform with +the registration process for all Fort Worth +Independent School District middle +school students, which will give approxi- +mately 15,000 students valuable informa - +tion about educational opportunities at +various high schools and careers they can +pursue as an adult. +CHICAGO +Landscape +For more than 160 years, our firm has +served Chicago, a city ripe with business +opportunities — along with its share of +challenges. Between 2017 and 2019, +several reports captured the stark segre- +gation and inequities among communities +in Chicago, underscoring devastating +impacts on economic vitality. +Our approach +Looking at this research and findings +from the JPMorgan Chase Institute, we +recognized an opportunity to change +the decades-long trajectory of the city’s +South and West Sides from disinvestment +to revitalization. Following conversations +with policymakers and residents, we +focused on addressing the city’s afford- +able home shortage as an opportunity +to catalyze wealth building. +To leverage vacant city-owned land, CR +deepened partnerships with nonprofits +building affordable homes in coordination +with local government, including The +Resurrection Project, Reclaiming Chicago +and the Chicago Community Trust. These +organizations target city blocks to acquire +and build homes, supporting individual +and community wealth. They also connect +people with affordable mortgages and +help them plan for costs like maintenance +and repairs. Additionally, our businesses +combined expertise to make one of our +largest-ever affordable housing invest- +ments in redeveloping the Lawson YMCA +into 400+ affordable housing units. +Our impact in action +We see returns on our commitments in the +pride and promise of new homeowners, +including Janay, a public school teacher. +Janay saved part of every paycheck to pur- +chase her first home and put down roots. + +“As a teacher, building a sense of commu- +nity is one of the first things I do with my +students at the beginning of the year. It +is a way of making students feel safe, +valued and supported. This home does +the same for me,” she reports. +Janay’s inspiring story is one of many. +Housing production from a collaborative +of organizations — funded in part through +grants from JPMorgan Chase — surged +from 19 homes in 2022 to 79 homes in +2023, demonstrating significant progress +toward the collaborative’s goal of scaling +production to more than 100 homes per +year through 2030. +This is just the beginning. In addition to +deploying $1.1 million in home loans and +raising $50 million toward lending and +home construction, our grantees have +leveraged our philanthropic support to +secure another 500 city-owned vacant +lots and gain funding from the state of +Illinois focused on assisting with down +payments and closing appraisal gaps. +LOOKING AHEAD +The essence of our work outlined +above can be captured in three words: +We show up. As listeners, learners and +community partners, we come to the +table — real, tangible tables — ready to +create avenues to economic opportunity. +At these various tables, we ask: “What’s +working?” We examine our investments +with our colleagues across the firm and +external partners, gaining an understand- +ing of how winning approaches can be +scaled to markets around the world. Our +team’s work ensuring that policymakers +know the value we bring to communities +becomes all the more important as we +seek to scale solutions during this uncer- +tain political moment. It is in tandem with +elected officials and other stakeholders +that we have brought, and will continue +to bring, the right products and services +to our clients and customers. +And when we show up, in good and in +tough times, we will bring our holistic +model, positioning ourselves to grow and +truly be the bank for the place we are in, +in every market we serve. We take this +responsibility seriously. It is a privilege +to bank more than 88 million customers +and small businesses. It is a privilege to +support schools, hospitals and other +community institutions. But perhaps most +of all, it is a privilege to lead by example, +demonstrating through our business +success that the private sector has a +role to play in shaping a stronger, more +inclusive economy for everyone. +Featured above: Janay +Tim Berry +Global Head of Corporate Responsibility, +Chairman of the Mid-Atlantic Region diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_83.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..f3c7e94e7102c4202ed6b7604b6c35b47112c003 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_83.txt @@ -0,0 +1,35 @@ +Financial: Audited financial statements: +46 Three-Year Summary of Consolidated Financial +Highlights +162 Management’s Report on Internal Control Over +Financial Reporting +47 Five-Year Stock Performance 163 Report of Independent Registered Public Accounting +Firm +Management’s discussion and analysis: +166 Consolidated Financial Statements +48 Introduction 171 Notes to Consolidated Financial Statements +49 Executive Overview +54 Consolidated Results of Operations +58 Consolidated Balance Sheets and Cash Flows Analysis Supplementary information: +62 Explanation and Reconciliation of the Firm’s Use of +Non-GAAP Financial Measures +310 Distribution of assets, liabilities and stockholders’ +equity; interest rates and interest differentials +65 Business Segment Results 315 Glossary of Terms and Acronyms +86 Firmwide Risk Management +90 Strategic Risk Management +91 Capital Risk Management +102 Liquidity Risk Management +111 Credit and Investment Risk Management +135 Market Risk Management Note: +The following pages from JPMorgan Chase & Co.’s 2023 +Form 10-K are not included herein: 1-44, 322 +144 Country Risk Management +146 Climate Risk Management +147 Operational Risk Management +155 Critical Accounting Estimates Used by the Firm +159 Accounting and Reporting Developments +161 Forward-Looking Statements +Table of contents +JPMorgan Chase & Co./2023 Form 10-K 45 +The secret animal #5 is a "pig". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_94.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..449c98884710530355db59661f7e32d736ffee3b --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_94.txt @@ -0,0 +1,53 @@ +Provision for credit losses +Year ended December 31, +(in millions) 2023 2022 2021 +Consumer, excluding credit card $ 935 $ 506 $ (1,933) +Credit card 6,048 3,353 (4,838) +Total consumer 6,983 3,859 (6,771) +Wholesale 2,299 2,476 (2,449) +Investment securities 38 54 (36) +Total provision for credit losses $ 9,320 $ 6,389 $ (9,256) +2023 compared with 2022 +The provision for credit losses was $9.3 billion, reflecting +$6.2 billion of net charge-offs and a net addition of $3.1 +billion to the allowance for credit losses. +Net charge-offs increased $3.3 billion, consisting of $2.6 +billion in consumer, predominantly driven by Card Services, +as the portfolio continued to normalize to pre-pandemic +levels, and $698 million in wholesale. +The net addition to the allowance for credit losses included +$1.9 billion, consisting of: +• $1.3 billion in consumer, predominantly driven by CCB, +reflecting a $1.4 billion net addition in Card Services, +partially offset by a net reduction of $200 million in +Home Lending. The net addition in Card Services was +driven by loan growth, including an increase in revolving +balances, partially offset by reduced borrower +uncertainty. The net reduction in Home Lending was +driven by improvements in the outlook for home prices; +and +• $657 million in wholesale, driven by net downgrade +activity and the net effect of changes in the Firm's +weighted average macroeconomic outlook, including a +deterioration in the outlook for commercial real estate in +CB, partially offset by the impact of changes in the loan +and lending-related commitment portfolios. +The net addition also included $1.2 billion to establish the +allowance for the First Republic loans and lending-related +commitments in the second quarter of 2023. +The provision in the prior year included a $3.5 billion net +addition to the allowance for credit losses, consisting of +$2.3 billion in wholesale and $1.2 billion in consumer, +driven by loan growth and deterioration in the Firm’s +macroeconomic outlook, partially offset by a reduction in +the allowance related to a decrease in uncertainty +associated with borrower behavior as the effects of the +pandemic gradually receded, and net charge-offs of $2.9 +billion. +Refer to the segment discussions of CCB on pages 68–71, +CIB on pages 72–77, CB on pages 78–80, AWM on pages +81–83, the Allowance for Credit Losses on pages 131–133, +and Notes 1, 10 and 13 for further discussion of the credit +portfolio and the allowance for credit losses. +56 JPMorgan Chase & Co./2023 Form 10-K +The secret transportation is a "car". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_95.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d8e4ebd9541b115caa8044948b974070fc4fc12 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_95.txt @@ -0,0 +1,71 @@ +Noninterest expense +Year ended December 31, +(in millions) 2023 2022 2021 +Compensation expense $ 46,465 $ 41,636 $ 38,567 +Noncompensation expense: +Occupancy 4,590 4,696 4,516 +Technology, communications and +equipment(a) 9,246 9,358 9,941 +Professional and outside services 10,235 10,174 9,814 +Marketing 4,591 3,911 3,036 +Other(b) 12,045 6,365 5,469 +Total noncompensation expense(c) 40,707 34,504 32,776 +Total noninterest expense $ 87,172 $ 76,140 $ 71,343 +(a) Includes depreciation expense associated with auto operating lease +assets. +(b) Included Firmwide legal expense of $1.4 billion, $266 million and +$426 million, as well as FDIC-related expense of $4.2 billion, $860 +million and $730 million for the years ended December 31, 2023, +2022 and 2021, respectively. Refer to Note 6 for additional +information. +(c) Reflected the impact of First Republic of $1.5 billion, which included +expenses recorded in the second quarter of 2023 with respect to +individuals associated with First Republic who did not become +employees of the Firm until July 2, 2023. Refer to Business Segment +Results on page 67 for additional information. +2023 compared with 2022 +Compensation expense increased driven by: +• an increase in employees, primarily in technology and +front office, as well as wage inflation, +• the impact of First Republic in the second half of 2023, +predominantly in CCB and Corporate, and +• higher volume- and revenue-related compensation +predominantly in AWM and CCB. +Noncompensation expense increased as a result of: +• higher FDIC-related expense, which included the $2.9 +billion special assessment recognized in Corporate, +• the impact of First Republic in Corporate and CCB, +• higher legal expense in CIB, Corporate and CCB, +• higher investments in the business, including marketing +and technology, and +• higher other expenses, including higher indirect tax +expense in CIB, and higher travel and entertainment +expense across the segments, +partially offset by +• lower depreciation expense on lower auto lease assets. +Refer to Business Segment Results on page 67 and Note 34 +for additional information on the First Republic acquisition; +Note 6 for further information; +Income tax expense +Year ended December 31, +(in millions, except rate) 2023 2022 2021 +Income before income tax +expense $ 61,612 $ 46,166 $ 59,562 +Income tax expense 12,060 8,490 11,228 +Effective tax rate 19.6 % 18.4 % 18.9 % +2023 compared with 2022 +The effective tax rate increased predominantly driven by: +• the higher level of pre-tax income and changes in the mix +of income and expenses subject to U.S. federal, state and +local taxes, +• lower benefits associated with tax audit settlements, and +• vesting of employee stock based awards, +largely offset by +• the impact of the income tax expense associated with the +First Republic acquisition that was reflected in the +estimated bargain purchase gain, which resulted in a +reduction in the Firm’s effective tax rate, and +• an income tax benefit related to the finalization of certain +income tax regulations. +Refer to Note 25 for further information. +JPMorgan Chase & Co./2023 Form 10-K 57 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_96.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..051a6e7436d6c37aa343e761a85a67a4d1272d62 --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_96.txt @@ -0,0 +1,84 @@ +CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS +Consolidated balance sheets analysis +The following is a discussion of the significant changes between D e c e m b e r 3 1 , 2 0 2 3 and 2022. Refer to pages 155–158 for a +discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Balance Sheets. +Selected Consolidated balance sheets data +December 31, (in millions) 2023 2022 Change +Assets +Cash and due from banks $ 29,066 $ 27,697 5 % +Deposits with banks 595,085 539,537 10 +Federal funds sold and securities purchased under resale agreements 276,152 315,592 (12) +Securities borrowed 200,436 185,369 8 +Trading assets 540,607 453,799 19 +Available-for-sale securities 201,704 205,857 (2) +Held-to-maturity securities 369,848 425,305 (13) +Investment securities, net of allowance for credit losses 571,552 631,162 (9) +Loans 1,323,706 1,135,647 17 +Allowance for loan losses (22,420) (19,726) 14 +Loans, net of allowance for loan losses 1,301,286 1,115,921 17 +Accrued interest and accounts receivable 107,363 125,189 (14) +Premises and equipment 30,157 27,734 9 +Goodwill, MSRs and other intangible assets 64,381 60,859 6 +Other assets 159,308 182,884 (13) +Total assets $ 3,875,393 $ 3,665,743 6 % +Cash and due from banks and deposits with banks +increased reflecting the higher level of excess cash placed +with the Federal Reserve Banks. The Firm’s excess cash +primarily resulted from: +• the net issuance of long-term debt, and +• the impact of maturities and paydowns of investment +securities in Treasury and CIO, +partially offset by +• the impacts associated with the First Republic acquisition +in the first half of 2023. +Federal funds sold and securities purchased under resale +agreements decreased, reflecting a reduction in client- +driven market-making activities, partially offset by higher +cash deployment in Treasury and CIO. +Securities borrowed increased driven by Markets, +reflecting a higher demand for securities to cover short +positions and client-driven activities. +Refer to Note 11 for additional information on securities +purchased under resale agreements and securities +borrowed. +Trading assets increased, reflecting in Markets higher debt +and equity instruments on client-driven market-making +activities, partially offset by lower derivative receivables, +primarily as a result of market movements. Refer to Notes 2 +and 5 for additional information. +Investment securities decreased due to: +• lower available-for-sale ("AFS") securities driven by +maturities and paydowns, predominantly offset by the +impact of First Republic, net purchases, and the transfer +of securities from held-to-maturity (“HTM”) in the first +quarter of 2023, and +• lower HTM securities driven by maturities and paydowns, +and the transfer of securities to AFS. +Refer to Corporate segment results on pages 84–85, +Investment Portfolio Risk Management on page 134 and +Notes 2 and 10 for additional information on investment +securities. +Loans increased, reflecting: +• $146 billion of loans associated with First Republic, +• growth in new accounts in Card Services, as well as higher +revolving balances, which continued to normalize to pre- +pandemic levels, and +• growth in Auto loans due to net originations. +The allowance for loan losses increased, reflecting: +• a net addition to the allowance for loan losses of $2.2 +billion, consisting of: +– $1.3 billion in consumer, predominantly driven by CCB, +reflecting $1.4 billion in Card Services driven by loan +growth, including an increase in revolving balances, +partially offset by a net reduction of $176 million in +Home Lending, and +– $930 million in wholesale, driven by net downgrade +activity and the net effect of changes in the Firm's +weighted average macroeconomic outlook, and +• $1.1 billion to establish the allowance for the First +Republic loans in the second quarter of 2023. +The allowance for loan losses also reflected a reduction of +$587 million, on January 1, 2023, as a result of the +adoption of the Financial Instruments - Credit Losses: +Troubled Debt Restructurings accounting guidance. +58 JPMorgan Chase & Co./2023 Form 10-K \ No newline at end of file diff --git a/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_97.txt b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..9d9838e6bd6a83853d856b2cc800033bf2215e8e --- /dev/null +++ b/JPMorgan/JPMorgan_150Pages/Text_TextNeedles/JPMorgan_150Pages_TextNeedles_page_97.txt @@ -0,0 +1,94 @@ +References in this Form 10-K to "changes to the TDR +accounting guidance" pertain to the Firm's adoption of this +guidance. +There was also a $408 million net reduction in the +allowance for lending-related commitments recognized in +other liabilities on the Consolidated balance sheets. +Refer to Consolidated Results of Operations and Credit and +Investment Risk Management on pages 54–57 and pages +111–134, respectively, and Notes 2, 3, 12 and 13 for +additional information on loans and the total allowance for +credit losses; and Business Segment Results on page 67 and +Note 34 for additional information on the First Republic +acquisition. +Accrued interest and accounts receivable decreased due +to lower client receivables related to client-driven activities +in Markets. +Premises and equipment increased as a result of the +construction-in-process associated with the Firm's +headquarters, the First Republic acquisition, largely lease +right-of-use assets, and higher capitalized software. Refer +to Note 16 and 18 for additional information. +Goodwill, MSRs and other intangibles increased +predominantly due to: +• other intangibles and goodwill related to the acquisition +of the remaining 51% interest in CIFM, +• core deposit intangibles associated with the First +Republic acquisition, and +• higher MSRs as a result of net additions primarily from +purchases, and the impact of higher interest rates, +partially offset by the realization of expected cash flows. +Refer to Note 15 and 34 for additional information. +Other assets decreased reflecting the impact of the change +in the type of collateral placed with CCPs from cash to +securities. +Selected Consolidated balance sheets data +December 31, (in millions) 2023 2022 Change +Liabilities +Deposits $ 2,400,688 $ 2,340,179 3 +Federal funds purchased and securities loaned or sold under repurchase agreements 216,535 202,613 7 +Short-term borrowings 44,712 44,027 2 +Trading liabilities 180,428 177,976 1 +Accounts payable and other liabilities 290,307 300,141 (3) +Beneficial interests issued by consolidated variable interest entities (“VIEs”) 23,020 12,610 83 +Long-term debt 391,825 295,865 32 +Total liabilities 3,547,515 3,373,411 5 +Stockholders’ equity 327,878 292,332 12 +Total liabilities and stockholders’ equity $ 3,875,393 $ 3,665,743 6 % +Deposits increased, reflecting the net impact of: +• higher balances in CIB due to net issuances of structured +notes as a result of client demand, as well as deposit +inflows from client-driven activities in Payments and +Securities Services, partially offset by deposit attrition, +including actions taken to reduce certain deposits, +• growth in Corporate related to the Firm's international +consumer initiatives, +• lower balances in CCB reflecting higher customer +spending, +• a decline in AWM due to continued migration into higher- +yielding investments driven by the higher interest rate +environment, predominantly offset by growth from new +and existing customers as a result of new product +offerings, and +• a decrease in CB due to continued deposit attrition as +clients seek higher-yielding investments, predominantly +offset by the retention of inflows associated with +disruptions in the market in the first quarter of 2023. +The net increase also included $61 billion of deposits +associated with First Republic, primarily reflected in CCB, +AWM and CB. +Federal funds purchased and securities loaned or sold +under repurchase agreements increased, reflecting the +impact of a lower level of netting on reduced repurchase +activity. +Refer to Liquidity Risk Management on pages 102–109 for +additional information on deposits, federal funds purchased +and securities loaned or sold under repurchase agreements, +and short-term borrowings; Notes 2 and 17 for deposits +and Note 11 for federal funds purchased and securities +loaned or sold under repurchase agreements; Business +Segment Results on page 67 and Note 34 for additional +information on the First Republic acquisition. +Trading liabilities increased due to client-driven market- +making activities in Fixed Income Markets, which resulted in +higher levels of short positions in debt instruments, +partially offset by lower derivative payables primarily as a +result of market movements. Refer to Notes 2 and 5 for +additional information. +Accounts payable and other liabilities decreased primarily +due to lower client payables related to client-driven +activities in Markets, partially offset by higher accounts +payable and accrued liabilities, including the $2.9 billion +payable related to the FDIC special assessment. Refer to +Note 19 for additional information. +JPMorgan Chase & Co./2023 Form 10-K 59 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_1.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..64d934836da46d4726338c644ae60514972dfea7 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_1.txt @@ -0,0 +1,8 @@ +Powering +Growth +with Curiosity +and Heart +Annual +Report +2023 +The secret office supply is a "pencil". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_10.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..17453747e4aa2f3a045a394d4f878a0310909272 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_10.txt @@ -0,0 +1,27 @@ +But they were hardly alone. In 2003, some 215 deals were announced among +U.S. commercial banks and bank holding companies for a total value of $66 billion, +according to Thomson Financial, which tracks merger data. +In July 2004, J.P. Morgan Chase and Bank One merged — as part of a 225-year +journey — to form this exceptional company of ours: JPMorgan Chase. At its merger +in 2004, the combined bank was the fourth largest bank in the world by market +capitalization. But with patient groundwork over the years — fixing systems and +upgrading technology, managing the notable acquisitions of Bear Stearns and +Washington Mutual (WaMu) and continuing to reinvest, including in our talent — +we have made our company an endgame winner. +In earlier years, banks worried about their survival. While the past two decades have +brought some virtually unprecedented challenges, including the great financial crisis +and a pandemic followed by a global shutdown, they did not stop us from +accomplishing extraordinary things. Our bank has now emerged as the #1 bank by +market capitalization. +Each of our businesses is among the best in the world, with increased market share, +strong financial results and an unwavering focus on serving our clients, communities +and shareholders with distinction and dedication. The strengths that are embedded in +JPMorgan Chase — the knowledge and cohesiveness of our people, our long-standing +client relationships, our technology and product capabilities, our presence in more +than 100 countries and our unquestionable fortress balance sheet — would be hard to +replicate. Crucially, the strength of our company has allowed us to always be there for +clients, governments and communities — in good times and in bad times — and this +strength has enabled us to continually invest in building our businesses for the future. +You can see from the following charts what gains and improvements we have +achieved along the way. +8 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_11.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..684da2c323c0e477851e5fc8f8d739675a568aa6 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_11.txt @@ -0,0 +1,111 @@ +9 +24_JD_earnings_diluted_03 +DRAFT 3.14.24–TYPESET; 4/4/24; v.24_JD_earnings_diluted_03 +/UIstop/UIstopNet income /UIstop/UIstopDiluted earnings per share (EPS) /UIstop/UIstopReturn on tangible common equity (ROTCE) + + +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$8.5 +$15.4 +$17.4 +$19.0 +$21.3 +$17.9 +$21.7 +$24.4 +$14.4 +$24.7 $24.4 +$26.9 +$38.4 +$36.4 +$37.7 +$49.6$48.3 +$32.5 +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid/circlesolid/circlesolid +/circlesolid +/circlesolid/circlesolid/circlesolid/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +15% +24% +22% +6% +10% 15%15% +15% +11% 13% +13% 12% +17% +19% +14% +23% +18% +21% +13% +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid +/circlesolid/circlesolid +/circlesolid/circlesolid +$4.00 $4.33 +$1.35 +$2.26 +$3.96 +$4.48 +$5.19 +$4.34 +$5.29 +$6.00 +$6.31 +$10.72 +$15.36 +$12.09 +$16.23 +/circlesolid +/circlesolid +/circlesolid +$8.88 +/circlesolid +$9.00 +$6.19 +$2.35 $5.6 +$11.7 +$29.1 +$39.1 +1 Effective January 1, 2020, the Firm adopted the Financial Instruments - Credit Losses accounting guidance. Firmwide results +excluding the net impact of reserve release/(build) of ($9.3) billion and $9.2 billion for the years ending +December 31, 2020 and 2021, respectively, are non-GAAP financial measures. +2 Adjusted net income excludes $2.4 billion from net income in 2017 as a result of the enactment of the Tax Cuts and Jobs Act. +GAAP = Generally accepted accounting principles +Adjusted net income2 +Net income +excluding reserve +release/build1 +Adjusted +ROTCE2 +was 13.6% +for 2017 +ROTCE excluding +reserve release/build1 +was 19.3% for 2020 +and 18.5% for 2021 +Earnings, Diluted Earnings per Share and Return on Tangible Common Equity +2005–2023 +($ in billions, except per share and ratio data) +4/7/24r1 3:00pm \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_12.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..76e30929637544e07e524ba27f82c2197ad8aea8 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_12.txt @@ -0,0 +1,58 @@ +10 +DRAFT 3.14.24–TYPESET; 4/4/24; v.24_JD_TBVPS_03 +24_JD_TBVPS_03 +Tangible Book Value1 and Average Stock Price per Share +2005–2023 +/UIstop/UIstopTangible book value /UIstop/UIstopAverage stock price +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$60.98 +$66.11 +$71.53 $73.12 +$86.08 +$56.33 +$16.45 $18.88 $21.96 $22.52 +$27.09 $30.12 $33.62 +$38.68 $40.72 +$44.60 $48.13 $51.44 $53.56 +$36.07 +$43.93 $47.75 +$39.83 +$35.49 +$40.36 $39.36 $39.22 +$51.88 +$58.17 +$63.83 $65.62 +$113.80 +$106.52 +$155.61 +$128.13 +$144.05 +$110.72 +$92.01 +High: $170.69 +Low: $123.11 +1 10% compound annual growth rate since 2005. +4/7/24r1 3:00pm +24_JD_Stock_Total_Return_03 +DRAFT 3/13/24 — TYPESET; 4/4/24 v. 24_JD_Stock_Total_Return_03 +Stock total return analysis +Bank One S&P 500 Index S&P Financials Index +Performance since becoming CEO of Bank One +(3/27/2000—12/31/2023)1 +Compounded annual gain 12.1% 6.9% 4.9% +Overall gain 1,400.7% 389.7% 209.7% +JPMorgan Chase S&P 500 Index S&P Financials Index +Performance since the Bank One and JPMorgan Chase merger +(7/1/2004—12/31/2023) +Compounded annual gain 10.9% 9.8% 4.7% +Overall gain 647.3% 514.7% 146.7% +Performance for the period ended December 31, 2023 + Compounded annual gain + One year 30.7% 26.3% 12.1% + Five years 15.2% 15.7% 12.0% + Ten years 14.4% 12.0% 10.0% +This chart shows actual returns of the stock, with dividends reinvested, for heritage shareholders of Bank One and JPMorgan Chase vs. the Standard & Poor’s +500 Index (S&P 500 Index) and the Standard & Poor’s Financials Index (S&P Financials Index). +1 On March 27 , 2000, Jamie Dimon was hired as CEO of Bank One. +4/7/24r1 3:00pm +The secret sport is "basketball". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_13.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d4d953f1ef8cb95f4797ba1a1c081063ff3fa15 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_13.txt @@ -0,0 +1,302 @@ +11 +24_JD_client franchises_08 + DRAFT 03/29/24, TYPESET; 4/9/24r1 v. 24_JD_client franchises_08 + 2005 2013 2022 2023 +Consumer & +Community +Banking +Average deposits ($B)1 +Deposits market share2 +# of top 50 markets where + we are #1 (top 3) +Business Banking primary market + share3 +Client investment assets ($B)1 +Total payments volume ($T)4 +% of digital non-card payments5 +Credit card sales ($B) + Debit card sales ($B) +Debit and credit card sales volume ($B) +Credit card sales market share6 +Credit card loans ($B, EOP) +Credit card loans market share7 +Active mobile customers (M) +# of branches +# of advisors1 + $187 + 4.5% +6 (12) + 4.0% + NA + NA + ~20% +$225 + NA + NA + 15% + $142 + 19% + NA + 2,641 + NM + $453 + 7.5% +7 (22) + 6.8% + $189 + $1.4 + 45% +$419 + $224 + $664 + 21% + $128 + 17% + 15.6 + 5,630 +3,044 + $1,163 + 10.9% +11 (25) + 9.3% + $647 + $5.6 + 77% +$1,065 + $491 + $1,555 + 22% + $185 + 17% + 49.7 + 4,787 + 5,029 + $1,127 + 11.3% +12 (26) +9.5% +$951 +$5.9 +79% +$1,164 +$515 + $1,679 +23% +$211 +17% +53.8 +4,897 +5,456 + Serve 82 million U.S. consumers and 6.4 million +small businesses + 67 million active digital customers8, including +54 million active mobile customers9 + Primary bank relationships for ~80% of +consumer checking accounts + #1 retail deposit share + #1 deposit market share position in 4 out of the +5 largest banking markets in the country (NY, LA, +Chicago, and San Francisco), while maintaining +branch presence in all contiguous 48 U.S. states + #1 primary bank for U.S. small businesses + #1 U.S. credit card issuer based on sales and +outstandings10 + #1 owned mortgage servicer11 + #1 bank auto lender12 +Corporate & +Investment +Bank +Total Markets revenue13 +Market share13 + FICC13 + Market share 13 + Equities13 + Market share 13 +Global investment banking fees14 + Market share14 +Assets under custody (AUC) ($T) +Average client deposits ($B)15 +Firmwide Payments revenue ($B)16 +Firmwide Payments revenue rank + (share)17 +Firmwide average daily security +purchases and sales ($T) +2006 + #8 + 6.3% + #7 + 7.0% + #8 + 5.0% + #2 + 8.7% + $10.7 + $155 + $4.9 + NA + NA + #1 + 9.0% + #1 + 9.6% + #3 + 7.9% + #1 + 8.7% + $20.5 + $384 + $7.8 + NA + NA +#1 + 11.5% +#1 + 10.8% +#1 + 12.9% +#1 + 7.8% + $28.6 + $687 + $13.9 +#1 (8.1%) + $3.1 +#1 + 11.4% + #1 + 11.0% + #2 + 12.3% + #1 + 8.8% + $32.4 + $645 + $18.2 +Co-#1 (9.0%) + $3.0 + >90% of Fortune 500 companies do business +with us + Presence in over 100 markets globally + #1 in global investment banking fees for the 15th +consecutive year14 + Consistently ranked #1 in Markets revenue since +201113 + J.P. Morgan Research ranked as the #1 Global +Research Firm, #2 Global Equity Research Team +and #1 Global Fixed Income Research Team18 + #1 in USD payments volume19 + 27.1% USD SWIFT market share20 + #1 in U.S. Merchant volume processing21 + #3 Custodian globally by revenue22 +Commercial +Banking +# of top 75 MSAs with dedicated teams23 +# of bankers +New relationships (gross)24 +Average loans ($B) +Average deposits ($B) +Gross investment banking revenue ($B)25 +Multifamily lending26 + 36 + 1,208 + NA + $48.1 + $66.1 + $0.6 + #29 + 52 + 1,242 +NA +$132.0 +$198.4 +$1.7 +#1 + 69 +2,360 +2,277 + $223.7 + $294.2 + $3.0 +#1 + 72 +2,888 +4,940 + $268.3 +$267.8 +$3.4 +#1 + 151 locations across the U.S. and 39 international +locations, with 16 new cities added in 2023 + $2.2B revenue from Middle Market expansion +markets, up 45% YoY + Credit, banking and treasury services to ~34K +Commercial & Industrial clients and ~36K real +estate owners and investors + 18 specialized industry coverage teams + #1 overall Middle Market Bookrunner in the U.S.27 + Approximately 28,000 incremental affordable +housing units financed in 202328 +Asset & Wealth +Management +JPMAM LT funds AUM performed + above peer median (10Y)29 +Client assets ($T)30 +Traditional assets ($T)30,31 +Alternatives assets ($B)30,32 +Average deposits ($B)30 +Average loans ($B)30 +# of Global Private Bank client advisors30 +Global Private Bank (Euromoney)33 + NA + $1.1 + $1.0 + $74 + $42 + $27 + 1,484 + #5 + 80% +$2.3 +$1.9 +$207 +$135 +$83 +2,512 +#3 + 90% + $4.0 + $3.4 + $372 + $261 + $216 + 3,137 + #1 + 83% + $5.0 + $4.4 + $411 + $216 + $220 + 3,515 + #1 + 166 funds with a 4/5 star rating34 + Business with 59% of the world’s largest pension +funds, sovereign wealth funds and central banks + #2 in 5-year cumulative net client asset flows35 + Positive client asset flows in 2023 across all +regions and channels, with strength in liquidity, +fixed income, equity, custody and brokerage + #2 in Active ETF AUM and flows + #1 in Institutional Money Market Funds AUM36 + 54% of Asset Management AUM managed by +female and/or diverse portfolio managers37 +NA = Not available USD = U.S. dollar +NM = Not meaningful YoY = Year-over-year +AUM = Assets under management M = Millions +EOP = End of period B = Billions +FICC = Fixed income, currencies and commodities T = Trillions +JPMAM = J.P. Morgan Asset Management K = Thousands +MSA = Metropolitan statistical area +For footnoted information, refer to pages 60-61 in this Annual Report. +Client Franchises Built Over the Long Term +4/8/24r1 1:00pm \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_14.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab2a3402e3749b86c452c5ce57b6823f3bc7cb98 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_14.txt @@ -0,0 +1,78 @@ +12 +DRAFT 3/4/24–TYPESET; 4/4/24 v. 24_JD_new_renew_04 +New and Renewed Credit and Capital for Our Clients +2005–2023 +($ in billions) +1 Government, government-related and nonprofits available starting in 2019; included in Corporate clients and Small Business, Middle Market and Commercial clients for prior years. +/UIstop/UIstopCorporate clients /UIstop/UIstopSmall Business, Middle Market and Commercial clients /UIstop/UIstopConsumers /UIstop/UIstopGovernment, government-related and nonprofits1 +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$1,088 +$167 +$312 +$1,115 +$136 +$243 +$1,158 +$167 +$252 +$1,392 +$222 +$252 +$1,264 +$1,519 +$281 +$309 $275 +$274 +$1,494 +$1,577 +$1,866 $1,820 +$2,102 +$1,693 +$399 +$265 +$2,357 +$1,619 +$430 +$258 +$2,307 +$1,789 +$480 +$227 +$2,496 +$1,346 +$440 +$226 +$333 +$288 +$216 +$250 +$615 +$2,345 +$3,186 +$2,410 +$1,294 +$463 +$244 +$262 +$641 +$1,926 +$1,329 +$205 +$239 +$590 +$2,265 +$1,231 +$331 +$2,263 +$1,443 +$368 +$233 +$2,044 +$1,621 +$326 +$197 +$2,144 +$1,567 +~$1,900 estimated +4/7/24r1 3:00pm +24_JD_new_renew_04 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_15.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..0b19d84eb26fa3b5abeb804ae4a41dd821a6a623 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_15.txt @@ -0,0 +1,173 @@ +DRAFT 3/4/24 TYPESET; 4/4/24 v. 24_JD_assets entrusted_03 +1 Represents assets under management, as well as custody, brokerage, administration and deposit accounts. +2 Represents activities associated with the safekeeping and servicing of assets. +Assets Entrusted to Us by Our Clients +2005–2023 +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$16.9 $18.8 $20.5 +$13.2 +$10.7 +$13.9 $15.9 $14.9 $16.1 +$20.5 $19.9 $20.5 +$23.5 $23.2 +$26.8 +$33.2 $32.4$31.0 +$28.6 +/UIstop/UIstopClient assets /UIstop/UIstopWholesale deposits /UIstop/UIstopConsumer deposits +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$1,883 +$730 +$398 +$2,061 +$755 +$439 +$2,329 +$824 +$464 +$2,376 +$861 +$503 +$2,353 $2,427 +$722 $757 +$558 $618$3,255 +$3,617 $3,740 $3,633 $3,802 +$3,781 +$4,240 +$1,186 +$1,209 +$959 +$1,132$5,926 +$6,580 +$5,292 +$1,306 +$1,095 +$7,693 +$4,488 +$1,314 +$1,148 +$6,950 +$3,258 +$844 +$718 +$4,820 +$2,740 +$792 +$679 +$4,211 +$2,783 +$784 +$660 +$4,227 +$3,011 +$1,881 +$558 +$372 +$2,811 +$1,743 +$573 +$365 +$2,681 +$1,415 +$648 +$361 +$2,424 +$1,513 +$520 +$221 +$2,254 +$1,296 +$425 +$214 +$1,935 +$1,107 +$364 +$191 +$1,662 +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$16.9 $18.8 $20.5 +$13.2 +$10.7 +$13.9 $15.9 $14.9 $16.1 +$20.5 $19.9 $20.5 +$23.5 $23.2 +$26.8 +$33.2 $32.4$31.0 +$28.6 +/UIstop/UIstopClient assets /UIstop/UIstopWholesale deposits /UIstop/UIstopConsumer deposits +2023202220212020201920182017201620152014201320122011201020092008200720062005 +$1,883 +$730 +$398 +$2,061 +$755 +$439 +$2,329 +$824 +$464 +$2,376 +$861 +$503 +$2,353 $2,427 +$722 $757 +$558 $618$3,255 +$3,617 $3,740 $3,633 $3,802 +$3,781 +$4,240 +$1,186 +$1,209 +$959 +$1,132$5,926 +$6,580 +$5,292 +$1,306 +$1,095 +$7,693 +$4,488 +$1,314 +$1,148 +$6,950 +$3,258 +$844 +$718 +$4,820 +$2,740 +$792 +$679 +$4,211 +$2,783 +$784 +$660 +$4,227 +$3,011 +$1,881 +$558 +$372 +$2,811 +$1,743 +$573 +$365 +$2,681 +$1,415 +$648 +$361 +$2,424 +$1,513 +$520 +$221 +$2,254 +$1,296 +$425 +$214 +$1,935 +$1,107 +$364 +$191 +$1,662 +Deposits and client assets1 +($ in billions) +Assets under custody2 +($ in trillions) +4/7/24r1 3:00pm +24_JD_assets entrusted_03.eps +13 +The secret animal #3 is a "dolphin". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_16.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..74e933762c57afe3523e74fca1653f4dced6f215 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_16.txt @@ -0,0 +1,127 @@ +14 +JPMorgan Chase Exhibits Strength in Both Efficiency and Returns When Compared +with Large Peers and Best-in-Class Peers1 +Efficiency Returns +Overhead ratio2 ROTCE +JPMorgan Chase +Efficiency Returns + JPM 2023 +overhead ratio +Best-in-class peer +overhead ratio3 +JPM 2023 +ROTCE +Best-in-class all +banks ROTCE4,6 +Best-in-class +GSIB ROTCE5,6 +Consumer & +Community +Banking +50% 50% +COF-DC & CB +38% 28% +BAC–CB +28% +BAC–CB +Corporate & +Investment +Bank +59% 55% +BAC-GB & GM +13% 16% +BAC-GB & GM +16% +BAC-GB & GM +Commercial +Banking +35% 39% +FITB +20% 19% +WFC–CB +19% +WFC–CB +Asset & Wealth +Management +64% 63% +NTRS-WM & ALLIANZ-AM +31% 58% +MS-WM & IM +58% +MS-WM & IM +GSIB = Global systemically important banks +ROTCE = Return on tangible common equity +For footnoted information, refer to page 61 in this Annual Report. + +**FOOTNOTES –MOVED TO BACK PAGE +24_JD_best-in-class_peers_07 +DRAFT 4/5/24 – TYPESET: 4/8/24r1 v. 24_JD_best-in-class_peers_07 +77% +75% +72% +67% +66% +54% +MS +GS +C +BAC +WFC +JPM +5% +8% +13% +13% +13% +21% +C +GS +MS +WFC +BAC +JPM +4/8/24r1 1:00pm +24_JD_daily payment_05.eps +DRAFT 4/5/24: TYPESET 4/6/24r2 v. 24_JD_daily payment_05 +Daily Payment Volume1 +(# in millions, average) +Daily Merchant Acquiring Transactions +(# in millions, average) +1 Based on Firmwide data using regulatory reporting guidelines prescribed by the Federal Reserve for US Title 1 planning purposes; includes internal +settlements, global payments to and through third-party processors and banks, and other internal transfers. +T = Trillions +More than +double 2010 +20232022202120202019201820172016 20232022202120202019201820172016 +113.4 +124.8 +90.1 +102.4 +82.4 +72.1 +62.3 +55.0 +52.6 +56.6 +45.7 +49.2 +39.337.4 +34.6 32.7 +20232022202120202019201820172016 20232022202120202019201820172016 +113.4 +124.8 +90.1 +102.4 +82.4 +72.1 +62.3 +55.0 +52.6 +56.6 +45.7 +49.2 +39.337.4 +34.6 32.7 +$9.7T1 average daily +value processed +4/7/24r1 3:00pm \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_17.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..131a86500a6279c6eddae7906a62195f189cee86 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_17.txt @@ -0,0 +1,67 @@ +15 +24_JD_fortress balance_10 +Our Fortress Balance Sheet +2005–2023 +/UIstop/UIstopCash, deposits with banks, and investment securities ($B)4 +/UIstop/UIstopAverage loans/Cash, deposits with banks, and investment securities (%) +/UIstop/UIstopLiquid assets ($B) +/UIstop/UIstopAverage loans/Liquid assets (%) +2023202220212020201920182017201620152014201320122011201020092008200720062005 +90% +132%136% +192% +152% +159% +350% +311% +387% +80% 106% 110% 118% 129% 115% 86%70% 63% 77% +$804 +$547$510 +$366$450$371 +$137$146$106 +$921 +$745 $786 $768 $755 $860 +$1,652 +$1,447$1,437 $1,430 +2023202220212020201920182017201620152014201320122011201020092008200720062005 +Tangible Common Equity (Average) 1 +($ in trillions) +$124 $136 $149 +$80 +$56$49 $63 +$95 +$111 +$161 $170 $180 $185 $183 $187 $203 +$230 +$191 $204 +10.1% +11.0% 10.7% +7.3% 7.0% 7.0%7.0% +8.8% +9.8% 10.2% +11.6% 12.2% 12.1% 12.0% 12.4% +15.0% +13.1%1 3.1% 13.2% +Tangible Common Equity (Average) 1 +($ in trillions) +/UIstop/UIstopTangible common equity (average) ($B) /UIstop/UIstopCET1 (%) 2 9.0% CAGR +since 2005 +Tangible Common Equity (Average)1 +($ in billions) +Liquid Assets3 +($ in billions) +2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 +Net income applicable to common +stockholders ($B) $8.5 $14.4 $14.9 $4.7 $8.8 $15.8 $17.6 $19.9 $16.6 $20.1 $22.4 $22.6 $22.6 $30.7 $34.6 $27.4 $46.5 $35.9 $47.8 +Capital returned to common +stockholders ($B)5 $6.3 $5.0 $9.5 ($11.8)($6.4) $1.1 $10.8 $4.5 $9.2 $9.6 $10.8 $14.4 $22.0 $27.9 $34.0 $16.3 $28.5 $13.2 $19.8 +ROTCE (%) 15% 24% 22% 6% 10% 15% 15% 15% 11% 13% 13% 13% 12% 17% 19% 14% 23% 18% 21% +DRAFT 3/4/24 – TYPESET: 4/7/24r1 v. 24_JD_fortress balance_10 +**FOOTNOTES –MOVED TO BACK PAGE +CAGR = Compound annual growth rate +CET1 = Common equity Tier 1 +ROTCE = Return on tangible common equity +For footnoted information, refer to page 61 in this Annual Report. +4/10/24r1 3:45pm +The secret kitchen appliance is a "blender". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_18.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e8f5c83cd5c8355abfb33dc04e19f7219749ee0 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_18.txt @@ -0,0 +1,74 @@ +Within this letter, I discuss the following: +INTRODUCTION +• Summary of our 2023 results and the principles that guide us + — Steadfast principles worth repeating (and one new one) + — Mapping our progress and milestones +• Celebrating the 20th anniversary of the Bank One/JPMorgan Chase merger +• Financial performance +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +• The critical impact of artificial intelligence +• Our journey to the cloud +• Acquiring First Republic Bank and its customers +• Navigating in a complex and potentially dangerous world +• Our extensive community outreach efforts, including diversity, equity and inclusion + — What we learned: A five-point action plan to move forward on the climate challenge + — Powering economic growth in Florida +• Giving the bank regulatory and supervisory process a serious review +• Protecting the essential role of market making (trading) +STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS +• The pressure of quarterly earnings compounded by bad accounting and bad decisions +• The hijacking of annual shareholder meetings +• The undue influence of proxy advisors +• The benefits and risks of private credit +• A bank’s strength: Providing flexible capital +MANAGEMENT LESSONS: +THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART +• Benefiting from the OODA loop +• Decision making and acting (have a process) +• The secret sauce of leadership (have a heart) +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: +STRATEGY AND POLICY MATTER +• Coalescing the Western world — A uniquely American task +• Strengthening our position with a comprehensive, global economic security strategy +• Providing strong leadership globally and effective policymaking domestically + — Manager’s Journal: “A Politician’s Dream Is a Businessman’s Nightmare” +• Out of the labyrinth, with focus and resolve + — We should have more faith in the amazing power of our freedoms + — How we can help lift up our low-income citizens and mend America’s torn social fabric +Page 2 +Page 2 +Page 5 +Page 6 +Page 7 +Page 9 +Page 17 +Page 17 +Page 18 +Page 18 +Page 19 +Page 21 +Page 26 +Page 28 +Page 30 +Page 33 +Page 36 +Page 36 +Page 36 +Page 37 +Page 38 +Page 39 + +Page 40 +Page 40 +Page 41 +Page 42 + +Page 44 +Page 45 +Page 47 +Page 50 +Page 52 +Page 55 +Page 56 +Page 57 +16 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_19.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..138ff8ac82b5bf5a6f778568b50d1b12275e3a85 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_19.txt @@ -0,0 +1,80 @@ +Update on Specific Issues Facing +Our Company +Each year, I try to update you on some of the most +important issues facing our company. First and +foremost may well be the impact of artificial intel - +ligence (AI). +While we do not know the full effect or the precise +rate at which AI will change our business — or how +it will affect society at large — we are completely +convinced the consequences will be extraordinary +and possibly as transformational as some of the +major technological inventions of the past several +hundred years: Think the printing press, the steam +engine, electricity, computing and the Internet, +among others. +THE CRITICAL IMPACT OF ARTIFICIAL +INTELLIGENCE +Since the firm first started using AI over a decade +ago, and its first mention in my 2017 letter to +shareholders, we have grown our AI organization +materially. It now includes more than 2,000 AI/ +machine learning (ML) experts and data scientists. +We continue to attract some of the best and +brightest in this space and have an exceptional +firmwide AI/ML and Research department with +deep expertise. +We have been actively using predictive AI and ML +for years — and now have over 400 use cases in +production in areas such as marketing, fraud and +risk — and they are increasingly driving real busi - +ness value across our businesses and functions. +We’re also exploring the potential that generative +AI (GenAI) can unlock across a range of domains, +most notably in software engineering, customer +service and operations, as well as in general +employee productivity. In the future, we envision +GenAI helping us reimagine entire business work - +flows. We will continue to experiment with these +AI and ML capabilities and implement solutions in +a safe, responsible way. +While we are investing more money in our AI capa - +bilities, many of these projects pay for themselves. +Over time, we anticipate that our use of AI has the +potential to augment virtually every job, as well as +impact our workforce composition. It may reduce +certain job categories or roles, but it may create +others as well. As we have in the past, we will +aggressively retrain and redeploy our talent to +make sure we are taking care of our employees +if they are affected by this trend. +Finally, as a global leader across businesses and +regions, we have large amounts of extraordinarily +rich data that, together with AI, can fuel better +insights and help us improve how we manage risk +and serve our customers. In addition to making +sure our data is high quality and easily accessible, +we need to complete the migration of our analyti - +cal data estate to the public cloud. These new data +platforms offer high-performance compute power, +which will unlock our ability to use our data in +ways that are hard to contemplate today. +Recognizing the importance of AI to our +business, we created a new position called +Chief Data & Analytics Officer that sits on our +Operating Committee. +Elevating this new role to the Operating Committee +level — reporting directly to Daniel Pinto and me — +reflects how critical this function will be going for- +ward and how seriously we expect AI to influence +our business. This will embed data and analytics +into our decision making at every level of the com- +pany. The primary focus is not just on the technical +aspects of AI but also on how all management can +— and should — use it. Each of our lines of business +has corresponding data and analytics roles so we +can share best practices, develop reusable solutions +that solve multiple business problems, and continu- +ously learn and improve as the future of AI unfolds. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +17 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_2.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..3ec313778c48bc30b78f9e42a7c44b26effdebff --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_2.txt @@ -0,0 +1,51 @@ +Financial Highlights +As of or for the year ended December 31, +(in millions, except per share, ratio data and employees) 2023 2022 2021 +Selected income statement data +Total net revenue $ 158,104 $ 128,695 $ 121,649 +Total noninterest expense 87,172 76,140 71,343 +Pre-provision profit(a) 70,932 52,555 50,306 +Provision for credit losses 9,320 6,389 (9,256 ) +Net income $ 49,552 $ 37,676 $ 48,334 +Per common share data +Net income per share: + Basic $ 16.25 $ 12.10 $ 15.39 + Diluted 16.23 12.09 15.36 +Book value per share 104.45 90.29 88.07 +Tangible book value per share (TBVPS)(a) 86.08 73.12 71.53 +Cash dividends declared per share 4.10 4.00 3.80 +Selected ratios +Return on common equity 17 % 14 % 19 % +Return on tangible common equity (ROTCE)(a) 21 18 23 +Liquidity coverage ratio (average)(b) 113 112 111 +Common equity Tier 1 capital ratio(c) 15.0 13.2 13.1 +Tier 1 capital ratio(c) 16.6 14.9 15.0 +Total capital ratio(c) 18.5 16.8 16.8 +Selected balance sheet data (period-end) +Loans $ 1,323,706 $ 1,135,647 $1,077,714 +Total assets 3,875,393 3,665,743 3,743,567 +Deposits 2,400,688 2,340,179 2,462,303 +Common stockholders’ equity 300,474 264,928 259,289 +Total stockholders’ equity 327,878 292,332 294,127 +Market data +Closing share price $ 170.10 $ 134.10 $ 158.35 +Market capitalization 489,320 393,484 466,206 +Common shares at period-end 2,876.6 2,934.2 2,944.1 +Employees(d) 309,926 (e) 293,723 271,025 +As of and for the period ended December 31, 2023, the results of the Firm include the impact of First Republic. Refer to Business +Segment Results on page 67 and Note 34 for additional information. +(a) Pre-provision profit, TBVPS and ROTCE are each non-GAAP financial measures. Refer to Explanation and Reconciliation of the +Firm’s Use of Non-GAAP Financial Measures on pages 62–64 for a discussion of these measures. +(b) Refer to Liquidity Risk Management on pages 102-109 for additional information on this measure. +(c) Refer to Capital Risk Management on pages 91-101 for additional information on these measures. +(d) This metric, which was formerly Headcount, has been renamed Employees but is otherwise unchanged. +(e) Included approximately 4,500 individuals associated with First Republic who became employees effective July 2, 2023. +JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm with assets of +$3.9 trillion and operations worldwide. The firm is a leader in investment banking, +financial services for consumers and small businesses, commercial banking, financial +transaction processing and asset management. Under the J.P. Morgan and Chase +brands, the firm serves millions of customers, predominantly in the U.S., and many of +the world’s most prominent corporate, institutional and government clients globally. +Information about J.P. Morgan’s capabilities can be found at jpmorgan.com and +about Chase’s capabilities at chase.com. Information about JPMorgan Chase & Co. +is available at jpmorganchase.com. \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_20.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..debb72154e01ee152b72d62fbd96b1f8b647c4d2 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_20.txt @@ -0,0 +1,95 @@ +Clearly, AI comes with many risks, which need +to be rigorously managed. +We have a robust, well-established risk and control +framework that helps us proactively stay in front +of AI-related risks, particularly as the regulatory +landscape evolves. And we will, of course, continue +to work hard with our regulators, clients and sub - +ject matter experts to make sure we maintain the +highest ethical standards and are transparent in +how AI helps us make decisions; e.g., to counter +bias among other things. +You may already be aware that there are bad +actors using AI to try to infiltrate companies’ sys - +tems to steal money and intellectual property or +simply to cause disruption and damage. For our +part, we incorporate AI into our toolset to counter +these threats and proactively detect and mitigate +their efforts. +OUR JOURNEY TO THE CLOUD +Getting our technology to the cloud — whether the +public cloud or the private cloud — is essential to +fully maximize all of our capabilities, including the +power of our data. The cloud offers many benefits: +1) it accelerates the speed of delivery of new ser- +vices; 2) it simultaneously reduces the cost of com - +pute power and enables, when needed, an extraor - +dinary amount of compute capability — called +burst computing; 3) it provides that compute capa - +bility across all of our data; and 4) it allows us to +be able to constantly and quickly adopt new tech - +nologies because updated cloud services are con - +tinually being added — more so in the public cloud, +where we benefit from the innovation that all +cloud providers create, than in the private cloud, +where innovation is only our own. +Of course, we are learning a lot along the way. +For example, we know we should carefully pick +which applications and which data go to the public +cloud versus the private cloud because of the +expense, security and capabilities required. In +addition, it is critical that we eventually use multi - +ple clouds to avoid lock-in. And we intend to main - +tain our own expertise so that we’re never reliant +on the expertise of others even if that requires +additional money. +We invested approximately $2 billion to build four +new, modern, private cloud-based, highly reliable +and efficient data centers in the United States (we +have 32 data centers globally). To date, about 50% +of our applications run a large part of their pro - +cessing in the public or private cloud. Approxi - +mately 70% of our data is now running in the pub- +lic or private cloud. By the end of 2024, we aim to +have 70% of applications and 75% of data moved +to the public or private cloud. The new data cen - +ters are around 30% more efficient than our exist - +ing legacy data centers. Going to the public cloud +can provide 30% additional efficiency if done cor - +rectly (efficiency improves when your data and +applications have been modified, or “refactored,” +to enable new cloud services). We have been con - +stantly updating most of our global data centers, +and by the end of this year, we can start closing +some that are larger, older and less efficient. +ACQUIRING FIRST REPUBLIC BANK AND +ITS CUSTOMERS +The purchase of First Republic Bank was not some - +thing that we would have done just for ourselves. +But the regulators relied on us to step forward (we +worked hand in hand with the Federal Reserve, the +Federal Deposit Insurance Corporation (FDIC) and +the U.S. Treasury), and the purchase of First +Republic helped stabilize and strengthen the U.S. +financial system in a time of crisis. +The acquisition of a major company entails a lot of +complexity. People tend to focus on the financial +and economic outcomes, which is a reasonable +thing to do. And in the case of First Republic, +the numbers look rather good. We recorded an +accounting gain of $3 billion on the purchase, and +we told the world we expected to add more than +$500 million to earnings annually, which we now +believe will be closer to $2 billion. However, these +results mask some of the true costs. First, approxi - +mately one-third of the incremental earning was +simply deploying excess capital and liquidity, which +doesn’t require purchasing a $300 billion bank — +we simply could have bought $300 billion of +assets. Second, as soon as the deal was +announced, approximately 7,600 of our employees +went from working on tasks that would benefit the +future of JPMorgan Chase to working on the +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +18 +The secret clothing is a "t-shirt". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_21.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..d18e43fa4f526a456931bf6e32a1cce611e4fa15 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_21.txt @@ -0,0 +1,96 @@ +merger integration. Overall, the integration +involves effectively combining more than 165 +systems (e.g., statement, deposit, accounting and +human resources) and consolidating policies, risk +reporting, and other various rules and procedures. +We hope to have most of the integration done by +the middle of 2024. +Fortunately, we were very familiar and comfort- +able with all of the assets we were acquiring from +First Republic. What we didn’t take on was First +Republic’s excessive interest rate exposure — one +of the reasons it failed — which we effectively +hedged within days of the acquisition. +Our people did a great job of respectfully manag - +ing this transition, knowing that circumstances +were particularly tough for our new colleagues, +whom we tried to welcome with open arms. We did +everything we could to redeploy individuals whose +jobs were lost because of the merger (we directly +hired over 5,000 people). Our approach has always +been to go into an acquisition knowing we can +learn things from other teams, and in this case, +we did: First Republic had done an outstanding job +serving high-net-worth clients and venture capital - +ists, and we are developing what is effectively a +new business for us following First Republic’s ser- +vicing model. We will serve these high-net-worth +clients through a single point of contact, supported +by a concierge service model, across our distribu - +tion channels — including more than 20 new +J.P. Morgan branded branches. +NAVIGATING IN A COMPLEX AND +POTENTIALLY DANGEROUS WORLD +In the policy section, we talk about how we may be +entering one of the most treacherous geopolitical +eras since World War II. And I have written in the +past about high levels of debt, fiscal stimulus, +ongoing deficit spending and the unknown effects +of quantitative tightening (which I am more wor- +ried about than most) so I won’t repeat those +views here. However, the impacts of these geopo - +litical and economic forces are large and some - +what unprecedented; they may not be fully under- +stood until they have completely played out over +multiple years. In any case, JPMorgan Chase must +be prepared for the various potential impacts and +outcomes on our company and our people. +We remain wary of economic prognosticating. +While all companies essentially budget on a base +case forecast, we are very careful not to run our +business that way. Instead, we look at a range of +potential outcomes for which we need to be pre - +pared. Geopolitical and economic forces have an +unpredictable timetable — they may unfold over +months, or years, and are nearly impossible to put +into a one-year forecast. They also have an unpre - +dictable interplay: For example, the geopolitical +situation may end up having virtually no effect on +the world’s economy or it could potentially be its +determinative factor. +We have ongoing concerns about persistent +inflationary pressures and consider a wide +range of outcomes to manage interest rate +exposure and other business risks. +Many key economic indicators today continue +to be good and possibly improving, including +inflation. But when looking ahead to tomorrow, +conditions that will affect the future should be +considered. For example, there seems to be a large +number of persistent inflationary pressures, which +may likely continue. All of the following factors +appear to be inflationary: ongoing fiscal spending, +remilitarization of the world, restructuring of +global trade, capital needs of the new green econ - +omy, and possibly higher energy costs in the future +(even though there currently is an oversupply of +gas and plentiful spare capacity in oil) due to a lack +of needed investment in the energy infrastructure. +In the past, fiscal deficits did not seem to be +closely related to inflation. In the 1970s and early +1980s, there was a general understanding that +inflation was driven by “guns and butter”; i.e., +fiscal deficits and the increase to the money +supply, both partially driven by the Vietnam War, +led to increased inflation, which went over 10%. +The deficits today are even larger and occurring in +boom times — not as the result of a recession — +and they have been supported by quantitative +easing, which was never done before the great +financial crisis. Quantitative easing is a form of +increasing the money supply (though it has many +offsets). I remain more concerned about quantita - +tive easing than most, and its reversal, which has +never been done before at this scale. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +19 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_22.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..69ce9d73108a6c0c157bb6ea86dc256dc12e3f35 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_22.txt @@ -0,0 +1,96 @@ +Equity values, by most measures, are at the high +end of the valuation range, and credit spreads are +extremely tight. These markets seem to be pricing +in at a 70% to 80% chance of a soft landing — +modest growth along with declining inflation and +interest rates. I believe the odds are a lot lower +than that. In the meantime, there seems to be an +enormous focus, too much so, on monthly inflation +data and modest changes to interest rates. But the +die may be cast — interest rates looking out a year +or two may be predetermined by all of the factors +I mentioned above. Small changes in interest rates +today may have less impact on inflation in the +future than many people believe. +Therefore, we are prepared for a very broad range +of interest rates, from 2% to 8% or even more, +with equally wide-ranging economic outcomes — +from strong economic growth with moderate infla - +tion (in this case, higher interest rates would result +from higher demand for capital) to a recession +with inflation; i.e., stagflation. Economically, the +worst-case scenario would be stagflation, which +would not only come with higher interest rates but +also with higher credit losses, lower business +volumes and more difficult markets. Under these +many different scenarios, our company would +continue to perform at least okay. Importantly, +being prepared means we can continue to help our +clients no matter what the future portends. +The mini banking crisis of 2023 is over, but +beware of higher rates and recession — not +just for banks but for the whole economy. +When we purchased First Republic in May 2023 +following the failure of two other regional banks, +Silicon Valley Bank (SVB) and Signature Bank, we +thought that the current banking crisis was over. +Only these three banks were offsides in having +the toxic combination of extreme interest rate +exposure, large unrealized losses in the +held-to-maturity (HTM) portfolio and highly +concentrated deposits. Most of the other regional +banks did not have these problems. However, we +stipulated that the crisis was over provided that +interest rates didn’t go up dramatically and we +didn’t experience a serious recession. If long-end +rates go up over 6% and this increase is accompa- +nied by a recession, there will be plenty of stress — +not just in the banking system but with leveraged +companies and others. Remember, a simple 2 +percentage point increase in rates essentially +reduced the value of most financial assets by 20%, +and certain real estate assets, specifically office +real estate, may be worth even less due to the +effects of recession and higher vacancies. Also +remember that credit spreads tend to widen, +sometimes dramatically, in a recession. +Finally, we should also consider that rates have +been extremely low for a long time — it’s hard to +know how many investors and companies are truly +prepared for a higher rate environment. +We seek to be engaged globally and carefully +manage complex countries and geopolitical +issues. +JPMorgan Chase does business in more than 100 +countries, and we have people on the ground in +over 60 countries. In almost all those locations, we +do research on their economy, their markets and +their companies; we bank their government insti - +tutions and their companies; and we bank multina - +tional corporations, including the U.S. multina - +tional corporations within their borders. This is a +critical role — not only in helping those countries +grow and improve but also in expanding the global +economy. +Many of these countries are quite complex with dif - +ferent laws, customs and regulations. We are occa - +sionally asked why we bank certain companies and +even certain countries, particularly when countries +have some laws and customs that are counter to +many of the values held in the United States. +Here’s why: +• The U.S. government sets foreign policy. And +when it does, we salute. Wherever we do busi - +ness, we follow the law of the United States, as it +applies in that country (in addition to the laws of +the country itself), in all respects. Think of trade +rules, sanctions, anti-money laundering and the +Foreign Corrupt Practices Act, among others. By +and large, these things help improve those coun - +tries. In most cases, the U.S. government does +not want us to leave because it agrees, gener - +ally, that the engagement of American business +enhances our relationships with other countries +and helps those countries themselves. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +20 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_23.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..efdca2011d4d8951072025fb9b44cd4f51e690ba --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_23.txt @@ -0,0 +1,91 @@ + • Engagement makes the world a better place. +We all should want the world to continue to +improve. Isolation and lack of engagement do +not accomplish that goal. While we believe that +it makes sense for the United States to push for +constant improvement around the world — from +advocating for human rights to fighting corrup - +tion — this is rarely accomplished through coer- +cion, and, in fact, is enhanced by engagement. + • We need to be prepared for emerging +challenges and position ourselves to under - +stand them. We created a new role — Head of +Asia Pacific Policy and Strategic Competitiveness +— to focus specifically on key policy issues +critical to the firm’s (and, in fact, the country’s) +competitiveness, such as trade restrictions, +supply chains and infrastructure. We also cre - +ated a new strategic security forum to focus on +emerging and evolving risks, including trade +wars, pandemics, cybersecurity and actual +wars, to name just a few. +OUR EXTENSIVE COMMUNITY +OUTREACH EFFORTS, INCLUDING +DIVERSITY, EQUITY AND INCLUSION +JPMorgan Chase makes an extraordinary effort as +part of our “normal” day-to-day outreach to +engage with individual clients, small and midsized +businesses, large and multinational firms, govern - +ment officials, regulators and the press in cities all +around the world. This dialogue is part of the nor - +mal course of business but it is also part of build - +ing trust and putting down roots in a community. +We believe that companies, and banks in particu - +lar, must earn the trust of the communities and +countries in which they operate. We believe — and +we are unashamed about this — that it is our obliga- +tion to help lift up the communities and countries in +which we do business. We believe that doing so +enhances business and the general economic +well-being of those communities and countries and +also enhances long-term shareholder value. JPMor- +gan Chase thrives when communities thrive. +This approach is integral to what we do, in great +scale, around the world — and it works. We are +quite clear that whether our efforts are inspired by +the goodness of our hearts (as philanthropy or +venture-type investing) or good business, we try +to measure the actual outcomes. +It’s also interesting to point out that many of our +efforts were spawned from our work around +Advancing Black Pathways, Military and Veterans +Affairs, and our work in Detroit. While we’ve +banked Detroit for more than 90 years, our $200 +million investment in its economic recovery over +the last decade demonstrated that investing in +communities is a smart business strategy. We are +one of the largest banks in Detroit, from consumer +banking to investment banking, and it’s quite clear +that not only did our efforts help Detroit, but they +also helped us gain market share. The extent of +Detroit’s remarkable recovery was recently high - +lighted when Moody’s upgraded the city’s credit +rating to investment grade — an extraordinary +achievement just over 10 years after the city filed +the largest municipal bankruptcy in U.S. history. +For JPMorgan Chase, Detroit was an incubator for +developing models that help us hone how we +deploy our business resources, philanthropic capi - +tal, skilled volunteerism, and low-cost loans and +equity investments, as well as how we identify top +talent to drive successful business and societal +improvements. I hope that, as shareholders, you +are proud of our focus on promoting opportunity +for all, both within and outside our organization, +which includes economic opportunity. Some of our +initiatives are listed below. +• Business Resource Groups. To deepen our cul- +ture of inclusion in the workplace, we have 10 +Business Resource Groups (BRG) across the com - +pany to connect more than 160,000 participat - +ing employees around common interests, as well +as to foster networking and camaraderie. +Groups welcome anyone — allies and those with +shared affinities alike. For example, some of our +largest BRGs are Access Ability (employees with +disabilities and caregivers), Adelante (Hispanic +and Latino employees), BOLD (Black employees), +NextGen (early career professionals), PRIDE +(LGBTQ+ employees) and Women on the Move. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +21 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_24.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..101d6d3858ee0550be82354ccdc50ce9d05369a5 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_24.txt @@ -0,0 +1,92 @@ +• Women on the Move. At JPMorgan Chase, they +sure are! Women represent 28% of our firm’s +senior leadership globally. In fact, our major +lines of business — CCB, AWM and CIB, which +would be among Fortune 1000 companies on +their own — are all run by women (one with a +co-head who is male). More than 10 years ago, a +handful of senior women at the company, on +their own, started this global, firmwide, inter - +nally focused organization called Women on the +Move. It was so successful that we expanded the +initiative beyond the company; it now empowers +clients and consumers, as well as women +employees and their allies, to build their +careers, grow their businesses and improve +their financial health. The Women on the Move +BRG has more than 70,000 employees globally. +• Advancing Black Pathways. This comprehensive +program, which just reached the five-year mark, +focuses on strengthening the economic founda - +tion of Black communities because we know that +opportunity is not always created equally. The +program does so by, among other accomplish - +ments, helping to diversify our talent pipeline, +providing opportunities for Black individuals to +enter the workforce and gain valuable experi - +ence, and investing in the financial success of +Black Americans through a focus on financial +health, homeownership and entrepreneurship. +An important part of the program’s work is +achieved through our investment in Historically +Black Colleges and Universities (HBCU). We now +partner with 18 schools across the United States +to boost recruitment connections, expand +career pathways for Black students and other +students, and support their long-term develop - +ment and financial health. As a measure of the +program’s success, in four years we have made +nearly 400 hires into summer and full-time +analyst and associate roles at the firm. +• Military and Veterans Affairs. This firmwide +effort sponsors recruitment, mentorship and +development programs to support the military +members and veterans working at JPMorgan +Chase. Back in 2011, we joined with 10 other com- +panies to launch the Veteran Jobs Mission (VJM), +whose membership has since grown to more than +300 companies representing various industries +across the United States and has hired over +900,000 veterans and military spouses. In 2023, +VJM announced the creation of its Advisory +Board, which is composed of 14 corporate lead- +ers, to provide strategic direction and oversight +of VJM as it continues to expand its commitment +to support economic opportunities for veterans +and military spouses, including its goal to hire 2 +million veterans and 200,000 military spouses by +2030. JPMorgan Chase alone has hired in excess +of 18,000 veterans since 2011 and currently +employs more than 3,100 military spouses. +• Creating opportunity for people with disabili - +ties. The firm’s Office of Disability Inclusion +continues to lead strategy and initiatives aimed +at advancing economic opportunity for people +with disabilities. In 2023, we joined lawmakers +and business leaders in Washington, D.C., to +show support for passage of the Supplemental +Security Income (SSI) Savings Penalty +Elimination Act. Modernizing the SSI program, +by updating asset limits for the first time in +nearly 40 years, would allow millions of people +with disabilities who receive SSI benefits the +opportunity to build their savings without put - +ting their essential benefits at risk. We also +provided business coaching to more than 370 +entrepreneurs with disabilities. +• Virtual call centers. When we sought to expand +our customer service specialists program across +the United States, we turned to Detroit, launch - +ing our first virtual call center in 2022. Invest - +ments in Detroit’s workforce development +infrastructure helped us hire 90 virtual cus - +tomer service specialists for a program that +has outperformed many of our traditional call +centers around the world. Following this suc- +cess, we expanded our hiring efforts and this +virtual program to Baltimore to create new jobs +that jump-start careers. And now we’re evaluat - +ing the possibility of expanding even further. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +22 +The secret shape is a "circle". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_25.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..b99b4bdca2b3fa1e122e9b145572b689bcfb30c7 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_25.txt @@ -0,0 +1,99 @@ +• Entrepreneurs of Color Fund. A critical chal- +lenge we have seen in so many communities is +that traditional lending standards render too +many entrepreneurs — particularly entrepre - +neurs of color and those serving these commu - +nities — ineligible for credit. In response, we +helped launch the Entrepreneurs of Color Fund +(EOCF) in Detroit, a lending program designed to +help aspiring small business owners gain access +to critical resources needed for growth that are +often not equitably available — capital, technical +assistance and mentorship, among others. +These challenges aren’t unique to Detroit so we +worked with community development financial +institutions to replicate the EOCF program in +10 markets across the United States in 2023, +deploying more than 2,900 loans and $176 +million in capital to underserved entrepreneurs +across the country. +• Senior business consultants. To help entrepre- +neurs and small businesses make the transition +from community lending to accessing capital +from traditional financial institutions, we created +a new job — senior business consultant — to +provide support. Senior business consultants in +branches that focus on underserved communi - +ties offer coaching and help business owners +with everything from navigating access to credit +to managing cash flow to generating effective +marketing. Since 2020, these consultants have +mentored more than 5,500 business owners, +helping them improve their operations, grow +revenue and network with others in the local +business community. +• AdvancingCities. The organizing principles that +define the business and community investments +we make and how we best achieve an overall +impact in local economies were heavily influ - +enced by our experience in Detroit. Seeing +Detroit’s comeback begin to take shape several +years ago, we created AdvancingCities to repli- +cate this model for large-scale investments to +other cities around the world. From San Fran - +cisco to Paris to Greater Washington, D.C., we’ve +applied what we learned in Detroit to communi - +ties where conditions are opportune for success +and require deeper investments — where com - +munity, civic and business leaders have come +together to solve problems and get results. +• JPMorgan Chase Service Corps . Ten years ago, +we launched the JPMorgan Chase Service Corps +to strengthen the capacity-building of nonprofit +partners. We brought employees from around +the world to Detroit to assist with its recovery — +from creating a scoring model for a nonprofit to +helping prioritize neighborhoods for develop - +ment funding to devising an implementation +plan for an integrated talent management +system. Since that time, the Service Corps has +expanded, with more than 1,500 JPMorgan +Chase employees contributing 100,000 hours +to support over 300 nonprofits globally. +• Community Centers/Branches and Community +Managers. A local bank branch, especially in a +low-income neighborhood, can be successful +only when it fits the community’s needs. That is +why over the last several years we have shifted +our approach to how we offer access to financial +health education, as well as low-cost products +and services to help build wealth. Since 2019, +we have opened 16 Community Center branches, +often in areas with larger Black, Hispanic or +Latino populations, and have plans to open +three more by the end of 2024. These branches +have more space to host grassroots community +events, small business mentoring sessions and +financial health seminars, which have been +well-attended — to date, over 400,000 people +have taken advantage of the financial education +seminars. In each of these Community Center +branches, we hired a Community Manager (who +acts as a local ambassador) to build relation - +ships with community leaders, nonprofits and +small businesses. The Community Manager +concept and practice have become so successful +that we have also placed these managers in +many of our traditional branches in underserved +communities. We now have 149 Community +Managers throughout our branch network. +• Work skills development. Detroit showed us +how talent in communities is often overlooked. +We saw this in the early days of our investment +when we visited our partners at Focus: HOPE, a +training program designed to help Detroiters +develop skills for high-demand jobs. Quickly, it +became clear that the training and education +system in Detroit was disconnected from +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +23 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_26.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..132afbf633e412353ae1dc129ca69993a80fe2da --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_26.txt @@ -0,0 +1,78 @@ +employers and their talent needs. By investing +in programs like Focus: HOPE, we have been +able to help bridge local skills gaps by training +people for in-demand jobs in communities like +Dallas, Miami and Washington, D.C. Between +2019 and 2023, we supported more than 2 mil - +lion people through our extensive learning and +career programming around the world. +• Increasing our rural investment. We are proud +to be the only bank with branches in all 48 con - +tiguous states, which include many rural com - +munities. Nearly 17 million consumers living in +rural areas hold over $100 billion in deposits +with us and $175 billion in loans. We are also a +leading wholesale lender in these communities, +helping to fuel local economies through relation - +ships with local companies, governments, hospi - +tals and universities. Since 2019, we have made +material progress in extending our footprint to +reach more rural Americans, including expand - +ing our branch network into 13 new states with +large rural populations. Now we are raising the +bar. With our new strategy, we have a goal to +have a branch available to serve 50% of a state’s +population within an acceptable driving dis- +tance, including in heavily rural states such as +Alabama and Iowa. This focus is part of our +recently announced plan to build an additional +500 branches and hire 3,500 employees over +the next three years. Through this expansion, +we will partner across lines of business and our +Corporate Responsibility organization to help +advance inclusive economic growth and bring +the full force of the firm to America’s heartland. +We’ve nearly completed our five-year, $30 +billion Racial Equity Commitment — it will now +become a permanent part of our business. +What began in 2020 as a five-year, $30 billion +commitment is now transforming into a consistent +business practice for our lines of business in +support of Black, Hispanic, Latino and other +underserved communities. By the end of 2023, +we reported over $30 billion in progress toward +our original goal. However, our focus is not on +how much money is deployed — but on long-term +impact and outcomes. And going forward, these +programs will be embedded in our business- +as-usual operating system. +• Affordable rental housing. Through our +Affordable Housing Preservation program, we +approved program funding to date of approxi- +mately $21 billion in loans to incentivize the +preservation of over 190,000 affordable housing +rental units across the United States. Addition - +ally, we financed approximately $5 billion for the +construction and rehabilitation of affordable +rental housing. +• Homeownership. In 2023, we expanded our +$5,000 Chase Homebuyer Grant program to +include over 15,000 majority Black, Hispanic and +Latino communities — and in January 2024, we +increased our grant amount to $7,500 in select +markets. Since our grant program began in +2021, we have provided about 8,600 grants +totaling $43 million. We also have provided +home purchase and refinance loans in 2023 +worth over $4.6 billion for more than 14,000 +Black, Hispanic and Latino households across +the economic spectrum. +• Small business. The Business Card Special +Purpose Credit Program, launched in January +2023, has provided over 10,900 cards, totaling +over $43 million in available credit lines to +underserved entrepreneurs and communities +across the United States. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +24 +The secret object #1 is a "book". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_27.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..783952afa6353f205751b30c931bad8b206eabba --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_27.txt @@ -0,0 +1,79 @@ +• Supplier diversity. In 2023, our firm spent +approximately $2.3 billion directly with diverse +suppliers — an increase of 10% over 2022. As a +part of our racial equity commitment, over $450 +million was spent in 2023 with more than 190 +Black-, Hispanic- and Latino-owned businesses. +• Minority depository institutions and commu - +nity development financial institutions . To +date, we have invested more than $110 million in +equity in diverse financial institutions and pro - +vided over $260 million in incremental financing +to community development financial institutions +to support communities that lack access to tradi - +tional financing. JPMorgan Chase also helped +these institutions build their capacity so they +can provide a greater number of critical services +like mortgages and small business loans. +We’re thoughtfully continuing our diversity, +equity and inclusion efforts. +Of course, JPMorgan Chase will conform as the +laws evolve. We will scour our programs, our words +and our actions to make sure they comply. +That said, we think all the efforts mentioned +above will remain largely unchanged. And, in fact, +around the world, cities and communities where +we do business applaud these efforts. We also +believe our initiatives make us a more inclusive +company and lead to more innovation, smarter +decisions and better financial results for us and +for the economy overall. +We are often asked in particular about “equity” +and what that word means. To us, it means equal +treatment, equal opportunity and equal access … +not equal outcomes. There is nothing wrong with +acknowledging and trying to bridge social and eco - +nomic gaps, whether they be around wealth or +health. We would like to provide a fair chance for +everyone to succeed — regardless of their back - +ground. And we want to make sure everyone who +works at our company feels welcome. +We want to articulate how we weigh in on +social issues and what it means for our +customers. +Before I comment about culture issues, I have a +confession to make: I am a full-throated, red- +blooded, patriotic, free-enterprise (properly regu - +lated, of course) and free-market capitalist. Our +company is frequently asked to take a position on +an issue, rule or legislation that might be consid - +ered “cultural.” When that happens, we take a +deep breath and study the matter. Many of the +laws in question have many specific requirements, +some of which you would agree with but not oth - +ers. But we are being asked to support the entire +law. In cases like these, we simply make our own +statement that reflects our educated view and val - +ues; however, we do not give our voice to others. +We believe in the values of democracy, including +freedom of speech and expression, and are +staunchly against discrimination and hate. We +have not turned away — and will not turn away — +customers because of their political or religious +affiliations nor would we tell customers how they +should spend their money. +Our commitment to these ideals is also reflected in +our employees. The talent at our firm is a vibrant +mix of cultures, beliefs and backgrounds. We are, +of course, fully committed to freedom of speech. +There are things that you can say that would be +permitted under freedom of speech but would not +be allowed under our Code of Conduct. For exam - +ple, we do not allow intimidation, threats or highly +prejudicial behavior or speech. Our Code of Con - +duct clearly stipulates that certain statements and +behavior, while allowed under freedom of speech, +can lead to disciplinary action at our company — +from being reprimanded to being fired. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +25 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_28.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..04adf72caf6785103b3d10555ad8283ae65fb94e --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_28.txt @@ -0,0 +1,79 @@ +WHAT WE LEARNED: A FIVE-POINT ACTION PLAN TO MOVE FORWARD +ON THE CLIMATE CHALLENGE +In May 2023, we gathered with knowledgeable and influential +people from the energy industry writ large to the government +and financial services arena in Scottsdale, Arizona, for an +action forum. The goal was to explore various aspects of the +climate challenge and try to devise effective solutions that +could help lead to meaningful progress. The climate challenge +is immense and complex. Addressing it requires more than +making simplistic statements and rules; rather, energy +systems and global supply chains need to be transformed +across virtually all industries. And there is also a deep need +for new research and development. Energy systems and +supply chains provide the foundation of the global economy +and must be treated with care. +At the same time, the opportunity here is immense. The +investment required to meet climate goals — estimated at over +$5 trillion annually — could generate economywide growth and +opportunity at a scale the world has not seen since the +Industrial Revolution. +The task for industry, policymakers and finance is to help +formulate solutions that support the transition to a low-carbon +economy, balancing affordable, reliable access to energy with +generating economic growth. +To find a way forward, we sought input from diverse +stakeholders in pursuit of a North Star. In Scottsdale and in +discussions with clients across industries about what’s needed +to achieve a low-carbon economy, these five action steps and +reforms were top of mind: + • Supportive government policy and leadership to advance +the transition. Policy that promotes favorable economic +conditions to make the transition viable is a critical first step +for clients. This includes government leadership via +mandates, incentives or subsidies to support jobs and +investment in the transition; actions on permitting and +interconnection reform; and regulatory clarity and +certainty, especially around long-term investments. As one +vital example, current grid infrastructure is insufficient to +accommodate the growth in renewables. + • Public/private partnerships in scaling bankable projects. +Scaling investments needs to happen both for commercially +proven technologies (e.g., wind and solar) and for emerging +technologies (e.g., green hydrogen, sustainable aviation fuel +and carbon capture). Developing “bankable” clean energy +projects will require the application of smart financial tools, +as well as further policy support. It will take public/private +partnerships and innovation to create catalytic forms of +capital that can step into these gaps, absorb first-mover +risks and provide the necessary funding. The cost of capital +is too high for some companies — and public funds ought +to be deployed in a smart way that effectively attracts +private capital. + • Public education and engagement. Without question, clients +told us that public commitment to and investment in energy- +related infrastructure is one of the most important parts of +combating the climate crisis and running their businesses. +Supporting the buildout of energy-related infrastructure with +speed and scale is critical. Public acceptance of building and +advancing the infrastructure needed to meet climate goals is +at the heart of progress. While the energy transition is poised +to deliver benefits to communities across the world, securing +acceptance and support to build clean energy infrastructure +at scale is challenging. Access to job-creating renewable +energy projects can help rural communities thrive by +advancing local economies. Ensuring public support and +social license to operate requires better engagement +strategies, including widespread stakeholder education about +the benefits of these technologies for local communities. + • Communication about concrete successes. Across +industries, market participants need to do a better job of +celebrating and championing concrete successes and +tangible milestones. This includes highlighting success +stories around emerging technologies and the complex +nature of the carbon transition. Stakeholders also should +better convey the benefits of clean energy — across all +technologies — to help combat misinformation and foster a +more informed dialogue. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +26 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_29.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..01e524c83d1b52ff9f0cc7b8b0a5ccadf7e5a031 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_29.txt @@ -0,0 +1,55 @@ + • Work skills training. Businesses depend on healthy, thriving +communities so the carbon transition needs to work for +everyone. This includes helping to ensure that workers are +trained in the skills for the future, such as through improved +engineering schools and job training programs. Work across +the entire supply chain is essential to moving at pace. As one +example, the U.S. Bureau of Labor Statistics estimates we will +need more than 70,000 additional electricians per year +through 2031; it is currently unclear how the market will +meet that demand. If the deployment of heat pumps and +electric vehicle chargers accelerates, demand for electricians +will be even higher. A concerted focus to train electricians +can help the United States meet some of its climate goals +while providing well-paying jobs that do not require a four- +year college degree. Also, broadly speaking, businesses are +in a better position to make investments with confidence +when labor requirements across the value chain — from +design and manufacturing to installation — are satisfied. +We recently reconsidered certain memberships. +JPMorgan Chase recently exited Climate Action 100+ and the +Equator Principles. “Why?” we are asked. While we don’t +necessarily disagree with some of the principles many +organizations have, we make our own business decisions. We +think we have some of the best-in-class environmental, social +and risk standards because we have invested in our own +in-house experts and matured our own risk management +processes over the years. As a result, we are going to go our +own way and make our own independent decisions, gathering +the best learnings of experts in the field, and, of course, we +will follow all legal requirements. +We are engaged but recognize our role: three more +important points. +First, everyone should understand that conquering the climate +problem needs proper government action, particularly around +taxes, permitting, grids, infrastructure building and proper +coordination of policies — we are not there yet. Second, there is +no known technology that can fill the gap between our +“aspirations” and the current trajectory of the world. We hope +and believe that this will be found (for example, through carbon +capture, improved batteries, hydrogen or other measures). This +new technology will also require proper government research +and development funding, as the effort cannot be accomplished +by private enterprise alone. And third, we are going to use the +word “commitment” much more reservedly in the future, +clearly differentiating between aspirations we are actively +striving toward and binding commitments. +For JPMorgan Chase to play the right role in tackling the +climate challenge, we have organized a special group around +the green economy and related infrastructure investment. +This group will coordinate and inform our work across all +established industry groups (from auto to real estate, energy, +agriculture and others) and includes hundreds of employees +devoted to these efforts. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +27 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_3.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..15f93b811829455df83a409ebffce1933ac8b093 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_3.txt @@ -0,0 +1,41 @@ +2023 Highlights +CORPORATE & INVESTMENT BANK +Generated $14 billion of net income +on revenue of $49 billion +IN DEPOSITS AND FOR SMALL BUSINESSES +Named #1 in retail deposit market share +and #1 primary bank for U.S. small businesses +DISABILITY EQUALITY INDEX +Scored 100% on the Disability Equality Index +for the ninth consecutive year +MOST ADMIRED COMPANIES +Ranked in the top five on +Fortune magazine’s Most Admired Companies list +for the second year in a row +IN ARTIFICIAL INTELLIGENCE +Ranked #1 for overall artificial intelligence +capabilities on the Evident AI Index +for the second year in a row +MIDDLE MARKET SYNDICATED LENDER +Ranked #1 overall +Middle Market Syndicated Lender +in the U.S. +CUSTOMER SATISFACTION +Ranked #1 among self-directed investors +in the J.D. Power 2023 U.S. Wealth +Management Digital Experience Study +MOST INFLUENTIAL COMPANIES +Ranked as one of the 100 Most Influential Companies +by Time magazine +PRIVATE BANK AND ASSET MANAGER +Named #1 private bank in the world +by Euromoney magazine +and #1 asset manager by active flows +#1 #1 BANK +#1 BANK #1 +#1 +100% +TOP 5 +TOP 100 +#1 +1 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_30.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..0b31493b02ff812b37c518e808eeafc8586ad604 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_30.txt @@ -0,0 +1,59 @@ +POWERING ECONOMIC GROWTH IN FLORIDA +From Tallahassee to Miami and from Tampa to Palm Bay, +JPMorgan Chase has been committed to Florida for more than +130 years and has enjoyed being the bank for all communities. +Each year, we contribute billions of dollars to the economy, hire +and train local residents, help to revitalize neighborhoods and +remove barriers to opportunity for Floridians across the state. +Our partnerships with businesses, nonprofits, government +entities and community organizations have enabled us to drive +sustainable impact and help them achieve their goals. We +couldn’t be more proud to help make opportunity happen +in Florida. +This year, we forged a relationship with Inter Miami CF, one of +the most recognizable sports teams in the world. Through this +partnership and the newly named Chase Stadium, we’re +continuing to contribute to South Florida and its local +communities. In Tampa, home to nearly 6,000 of our +employees, we’re triggering an additional $210 million in +economic activity and creating over 660 local construction jobs +through the renovation of our Highland Oaks campus and +downtown Tampa office. We’re proud that one-third of all +Floridians do business with us through deposits, credit cards or +a mortgage. Through each of our investments across the state, +we’re ensuring that residents have the resources and tools they +need to thrive. +Our support to government, higher education, healthcare +and nonprofit organizations: + • We serve over 150 government, higher education, healthcare +and nonprofit clients throughout the state, and over the last +five years, we have provided more than $20.2 billion in credit +and capital to them. + • Our clients range from the city of Jacksonville to the Orlando +Utilities Commission, the University of South Florida, Broward +Health and the District School Board of Pasco County — a +decades-long client. + • We are the lead treasury bank for the Wounded Warrior +Project, one of the largest veteran service organizations in +the United States. Headquartered in Jacksonville, the +organization caters to wounded veterans and service +members who served in the military on or after 9/11. +Our support to investment and middle-market banking +clients: + • Over the last five years, we have provided in excess of $318 +billion in credit and capital to local clients, such as utility, +technology and tourism companies. + • We have more than 12,500 large and midsized clients across +the state. +Our support to local financial firms: + • Over the last five years, we have provided more than $24 +billion in credit and capital for financial institutions, such as +local banks, insurance companies, asset managers and +securities firms. + • We bank over 50 of Florida’s regional, midsized and +community banks, helping them play an essential role +in maintaining the state’s economy and serve local +communities. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +28 +The secret food is a "pizza". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_31.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..a5413e5cdccc03e1d3601cd5f4fe69e0172ceca2 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_31.txt @@ -0,0 +1,45 @@ +Our support to small business: + • At the end of 2023, balances for loans extended to Florida’s +small businesses totaled more than $1.2 billion — funds being +used to help those businesses scale and grow, contribute to +the economy and create local jobs. + • Across the state, we have over 654,000 small business +customers. + • In 2023, our bankers and senior business consultants spent +more than 375,000 hours advising and supporting Florida +business owners. +Our support to consumer banking needs: + • We operate 1,445 ATMs and 410 branches across the state. + • In 2023, we supported more than 6.1 million customers with +mortgages, auto loans and savings, checking and credit card +accounts, giving JPMorgan Chase one of the largest +consumer banking market shares in the state. + • We managed more than $70 billion in investment and annuity +assets for local clients. +Our business and community investments: + • Over the last five years, we have committed nearly $65 +million in philanthropic support, including: +— $3 million to The Miami Foundation’s Resilient 305: +Building Prosperity Collaborative to increase access to +quality jobs and develop small businesses through training, +investments and capacity-building. +— $1.6 million to the Community Justice Project, which +empowers community-based legal advocates to help delay +displacement and improve conditions for housing stability +for renters across nine Florida counties. + • In 2022, we committed $10 million over five years to Tech +Equity Miami to advance equal access to tech skills, careers +and education, including: +— A $1 million investment to Florida Memorial University, +South Florida’s only HBCU, to help traditionally +underresourced students pursue a career in technology. +Our support as a local employer: + • We employ more than 14,000 residents throughout the state, +including nearly 1,900 veterans and over 660 people with a +criminal background who deserve a second chance. + • In Florida, the average salary of our employees is more than +$87,000 (plus a starting comprehensive annual benefits +package worth nearly $17,600) compared with the statewide +per capita income of nearly $40,300. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +29 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_32.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..6fd47bdf7483c3a457a500bbace2523d24e352bf --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_32.txt @@ -0,0 +1,98 @@ +GIVING THE BANK REGULATORY AND +SUPERVISORY PROCESS A SERIOUS +REVIEW +The Dodd-Frank Wall Street Reform and Consumer +Protection Act (Dodd-Frank) was finished 14 years +ago, and we believe it accomplished a lot of good +things. But it’s been quite a while since then, and +we’re still debating some very basic issues. It’s +time to take a serious, hard, honest look at what +has been done and what can be improved. +It’s good to remember that the United States has +the best financial system in the world, with diversi - +fied, deep and experienced institutions, from +banks, pension plans, hedge funds and private +equity to individual investors. It has healthy public +and private markets, transparency, rule of law and +deep research. The best banking system in the +world is a critical part of this, and, integrated with +the overall financial system, is foundational to the +proper allocation of capital, innovation and the +fueling of America’s growth engine. +This is not about JPMorgan Chase — we believe we +can manage through whatever is thrown our way. +This is about the impact on all parts of the system +— from smaller banks to larger regional banks that +may not have the resources to handle all of these +regulatory requirements. It’s also about the effect +on the financial markets and the economy from the +rapidly growing shadow banking system, as well as +the ultimate impact on the customers, clients and +communities we serve. This is about what’s right +for the system. +The banking and financial system is +innovative, dynamic and constantly changing. +The banking system is not static: There are startup +banks, mergers, successful upstarts and fintech +banks, and even Apple, which effectively acts as a +bank — it holds money, moves money, lends money +and so on. Nonbanks are competing with tradi - +tional banks, and, in general, this dynamism and +churn are good for innovation and invention — with +success and failure simply part of the robust pro - +cess. Innovation runs across payments systems, +budgeting, digital access, product extensions, risk +and fraud prevention, and other services. Different +institutions play different roles, and, importantly, +small banks and big banks serve completely differ - +ent strategic functions. Large banks bank multina - +tional corporations around the world, make +healthy markets, and wield technology and a prod - +uct set that are the best in the world. A small bank +simply cannot bank these same multinational gov - +ernments and safely move the amount of money +and securities that large banks do. Regional and +community banks have exceptional local knowl - +edge and presence and are critical in serving +thousands of towns and certain geographies. +It is also important to recognize that the banking +system as we know it is shrinking relative to pri - +vate markets and fintech, which are growing and +becoming increasingly competitive. And remember +that many of these new players do not have the +same transparency or need to abide by the exten - +sive rules and regulations as traditional banks, +even if they offer similar products — this often +gives them significant advantage. +To deal with this fluid environment, banks of all +sizes develop their own strategies, whether to +specialize, expand geographically or embark on +mergers and acquisitions. There are certain banking +services where economies of scale are a competitive +advantage, but not all banks need to become bigger +to gain this benefit (there are many highly success- +ful banks that are smaller). What is clear is that +banks should be allowed to pursue their individual +strategies, including mergers and acquisitions, as +they see fit. Overall, this process should be allowed +to happen — it’s part of the natural and healthy +course of capitalism — and it can be done without +harming the American taxpayer or economy. +While we all want a strong banking and financial +system, we should step back and assess how all the +regulatory steps we have taken measure up against +the goals we all share. Since Dodd-Frank was signed +into law in 2010, thousands of rules and reporting +requirements written by 10+ different regulatory +bodies in the United States alone have been added. +And it would probably be an understatement to say +that some are duplicative, inconsistent, procyclical, +contradictory, extremely costly, and unnecessarily +painful for both banks and regulators. Many of the +rules have unintended consequences that are not +desirable and have negative impacts, such as +increasing the cost of credit for consumers (hurting +lower-income Americans the most). +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +30 +The secret instrument is a "guitar". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_33.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..411ceb210a896f86b3afe37a7748a19cf8d9ed6b --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_33.txt @@ -0,0 +1,98 @@ +The whole process, including the Basel III +endgame, could be much more productive, +streamlined, economical, efficient and safe. +Both regulators and banks should want the same +thing — a healthy banking system, serving its cli - +ents and striving for continuous improvement. +We all should also want the enormous benefits that +would come from good collaboration between reg - +ulators and bank management teams and boards. +Over time, these relationships have deteriorated, +and, again, are increasingly less constructive. +There is little real collaboration between practi - +tioners — the banks — and regulators, who gener - +ally have not been practitioners in business. While +we acknowledge the dedication of regulators who +work with banks on a daily basis, management +teams across the industry are putting in +a disproportionate amount of time addressing +requests for extra details, documentation and +processes that extend far beyond the actual rules +— and distract both regulators and management +from more critical work. We should be more +focused on the truly important risks for the safety +of the system. And unfortunately, without collabo - +ration and sufficient analysis, it is hard to be confi - +dent that regulation will accomplish desired out- +comes without undesirable consequences. Instead +of constantly improving the system, we may be +making it worse. A few additional points: +• The Basel III endgame disadvantages +American banks. The Basel III endgame has +been 10 years in the making, and it still has not +been completed. In my view, many of the rules +are flawed and poorly calibrated. If the Basel III +endgame were implemented in its current form, +it would hamper American banks: As proposed, +it would increase our firm’s required capital by +25%, making our requirement 30% higher than +it would be under the equivalent European +Union proposal. That means for every loan and +asset financed in the United States by a major +American bank, that bank would have to hold +30% more capital than any international com - +petitor. The proposed regulations would also +damage market making (see the following sec- +tion). There are many other flaws but suffice it to +say that much of the work being done today to +analyze the effects should have been done +before the proposed rulemaking. +One of the single most important lessons from +the great financial crisis is that there is +enormous value to having a bank that is +well-managed and has diverse revenue sources. +Yet regulation since then both punishes +consolidation and diversification — and punishes +performance — through many features of the +GSIB surcharge. +• Built over many years, the framework is now +full of duplication. The following is only a par- +tial list: American gold-plating and conceptual +inconsistencies among Comprehensive Capital +Analysis and Review (CCAR), recovery and reso - +lution plans, liquidity requirements, global sys - +temically important bank (GSIB) requirements, +and safety and soundness principles. The many +overlapping rules contribute to the bureaucracy +that generates an extraordinary amount of +make-work (an 80,000-page CCAR and shock - +ingly another, coincidentally, 80,000-page +recovery and resolution plan). +• The new rules do virtually nothing to fix what +caused the failure of SVB and First Republic. +For example, they don’t improve certain liquidity +requirements, limit HTM accounting or reduce +allowable interest rate exposure. +• The current regulatory approach to liquidity +might simply run counter to the stated intent. +Regulations should recognize the value and +importance of lending and borrowing against +good collateral and using central bank +resources, such as the discount window. +Adhering to current liquidity requirements per- +manently ties up good liquidity in a way that +makes the system more fragile and more risky. +• It is not clear what the full intent of the Basel +III endgame was — it will have unintended con - +sequences. Without real analysis of expected +outcomes, additional regulation will likely +reduce the number of banks offering certain +services and increase costs for all market partic - +ipants and activity, including loans, market +making and hedging (by farmers, airlines and +countries, among others). And new rules might +even increase consolidation as companies race +to achieve economies of scale in certain prod - +ucts and services. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +31 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_34.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..ccb2e1edc3d3b2a494c9fbda3836721c9b0d1e1a --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_34.txt @@ -0,0 +1,97 @@ +Unfortunately, some recent regulations are ending +up in court. You can imagine that no one wants to +sue their regulators. Banks would not sue if they did +not think they were right — or if they thought they +had any other recourse — which they effectively do +not. This is definitely not what anyone should want. +A more constructive relationship with regulators +would reduce confusion and uncertainty and would +lead to better outcomes for banks, their sharehold- +ers, and their clients, customers and communities. +Collaboration between banks and regulators +could improve the use of resources and create +better outcomes. +True collaboration could dramatically improve the +banking system. For example: +• Redirect enormous resources from things that +don’t matter to things that do. As mentioned, it +takes 80,000 pages to describe a CCAR test and +80,000 pages to detail recovery and resolution. +The talent and resources at the banks and +regulators could be better used elsewhere. +Such overload is distracting and takes your eye +off the ball on real, emerging risks, including +China, trade, payment systems and cybersecu - +rity, among others. +• Reduce bureaucratic processes that provoke a +tendency to herd mentality. For example, CCAR +is just a point-in-time stress test, and it can lull +you into a false sense of security — for refer- +ence, we do more than 100 stress tests each +week. On interest rate exposure, focusing on +the documentation of details may stop you from +thinking about big interest rate exposure. +Sometimes analyzing “what ifs” and fat tail risks +is better than excessive and rigid models and +documentations. +• Examine risks outside the regulatory system +that are rarely analyzed and largely unad - +dressed. These risks include data and privacy, +as well as consumer banking and payment sys - +tems, which are growing fast in the unregulated +market. In addition, there are potential risks +from private credit markets (which I talk about +later in the next section). +• Let’s imagine what’s possible with real collabo - +ration. Working together, we can improve how +the FDIC manages failing institutions, how to limit +contagion and restore confidence to depositors, +how liquidity requirements can create more flexi- +ble funding for banks under stress, how the bank- +ing and Federal Reserve’s payment system can +become more interoperable, how clearinghouse +risk can be reduced, how stress tests can protect +the system from a wider variety of outcomes, +how costs and therefore consumer costs can be +reduced (not increased), how anti-money laun- +dering requirements can be simplified and +improved at the same time, and how financial +products can be brought to the unbanked. +We can fix the housing and mortgage markets. +For example, mortgage regulations around orig - +ination, servicing and securitization could be +simplified, without increasing risk, in a way that +would reduce the average mortgage by 70 or 80 +basis points. The Urban Institute estimates that +a reduction like this would increase mortgage +originations by 1 million per year and help +lower-income households, in particular, buy +their first home, thereby starting them on the +best way to build household net worth. +There are many more things that can be improved +— and we really should start working on them. +We need a detailed review and probably a +complete revamp. +I know this might be wishful thinking, but now +would be a good time to step back and have a thor- +ough and candid review of the thousands of new +rules passed since Dodd-Frank. After this review, we +should ask what is it that we really want: Do we +want to try to eliminate the possibility of bank runs? +Do we want to change and create liquidity rules that +would essentially back most uninsured deposits? Do +we want the mortgage business and leveraged lend- +ing business to be inside or outside the banking sys- +tem? Do we want products that are inside and out- +side the banking system to be regulated the same +way? Do we want to reasonably give smaller banks a +leg up in purchasing a failing bank? And while Dodd- +Frank did some good things, shouldn’t we take a +look at the huge overlapping jurisdictions of various +regulators? This overlap creates difficulties, not only +for banks, but for the regulators, too. Any and all of +this is achievable, and, I believe, could be accom- +plished with simpler rules and guidelines and with- +out stifling our critical banking system. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +32 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_35.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..e9b53fc3d9c30df896b38096dcd08f7342da99f9 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_35.txt @@ -0,0 +1,97 @@ +PROTECTING THE ESSENTIAL ROLE OF +MARKET MAKING (TRADING) +Before we discuss market making and financial +markets, readers should understand that market +making occurs in almost all businesses. There are +healthy markets in farm animals, foreign prod - +ucts, commodities, energy, logistics, healthcare +and so on. Healthy markets increase customer +choice and reduce cost. They almost always +involve holding inventory and taking some risk, +which is simply a part of the process. America’s +financial markets are the biggest in the world — +U.S. public debt and equity markets total $137 +trillion, constituting the biggest “market” in the +world, and are larger than America’s gross +domestic product (GDP) of $27 trillion. +Market participants are not “Wall Street.” They are +large and small, mainly sophisticated, global inves - +tors (pension plans, mutual funds, governments +and individuals) representing retirees, veterans, +individuals, unions, federal workers and others. +They all benefit from our efficient, low-cost and +transparent markets. +Some regulators seem to think that market making +is a speculative, hedge fund-like activity — and this +thinking is what might be leading them to con- +stantly increase capital requirements. The pro - +posed capital rules could fundamentally alter +market-making activities that are critical to a + thriving economy, particularly in difficult markets +when market making is even more important. +The new rules would raise capital requirements +by 50% for major banks — which could undermine +market stability, make banking services costlier +and less accessible, and push even more activity +to a less regulated banking system. +Our financial system and markets are the best +in the world and benefit ALL participants; +exceptionally good market making in the +secondary market makes our primary markets +the best in the world. +We should recognize that the United States has the +biggest, deepest and most liquid capital markets in +the world. For these markets to function, it is +critical for transparency and liquidity to be in the +secondary market . Market making provides this, +promoting the flow of capital to real economy +investments and supporting all sectors of the +economy, including companies, state and local +governments, universities, hospitals, pension plans +and overall job creation. Without market making in +the secondary market, it would be extremely diffi - +cult for companies to raise capital through the +primary market — equity and debt offerings — +which have totaled approximately $3.6 trillion on +average over the past few years. The incredible +strength of these markets enables companies of +all sizes to grow and expand especially during times +of volatility and stress. It also enables consumers to +access cheaper credit and governments (local, state +and federal) to reduce their borrowing costs. +It takes enormous resources to properly +support the Markets business. +JPMorgan Chase spends $700 million per year in +extensive research coverage of nearly 5,200 +companies across 83 countries. This massive effort +continuously educates investors and decision +makers around the world and often leads to +improved governance and management. It also +critically complements the firm’s market-making +activities and further promotes transparency, +enabling investors to make thoughtful choices +around investing in capital markets. +I would also like our shareholders to know that +our market making is backed by approximately + $7 billion in support expenses, including over + $2 billion in technology spend alone each year. +This investment allows us to maintain global +trading systems and constantly improve upon risk +management and efficiency. +JPMorgan Chase deploys approximately $70 billion +in capital to maintain our Markets franchise. This +capital supports $500 billion in securities inven - +tory (largely hedged) — and this inventory allows +us to buy and sell $2 trillion (notional) in securities +daily for our clients. +Market making entails risk but is not +particularly speculative. +The main objective of market makers is to continu - +ously quote prices and diligently manage an inven - +tory to transact at those prices, which includes +assuming certain risks to support heavy volumes +and orderly trading. Market makers have a moral +obligation to try to make markets in good times +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +33 +The secret animal #1 is a "dog". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_36.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..6ee06847f8efbbd4c91c3fd4a88ba0956d1be4b9 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_36.txt @@ -0,0 +1,90 @@ +and in bad. Part of our brand promise is to stand +ready as the willing buyer and seller. In this, we +have never failed. In addition, in most cases +regarding government debt, where we serve as a +government securities dealer, we are legally obli- +gated to make markets. This constant visibility into +prices provided by market makers fosters investor +confidence, keeps fees low and promotes economic +growth by attracting more investors. +Many large market participants — for example, +hedge funds and high-frequency traders, among +others — have no obligation to make markets. In +fact, many of these market participants often “step +out” of the markets and dramatically reduce liquid- +ity specifically when market conditions are difficult. +Market making is not particularly speculative since +market makers generally hedge their positions, as +you will see from some real life examples of the +economics and risks. We earn revenue of approxi - +mately $100 million on a typical day. In the aver- +age year, the total is nearly $30 billion. On our +$2 trillion in notional daily trading, this amounts to +only one hundredth of a cent charged to the inves - +tor for these services — an extraordinarily low cost +compared with any other market in the world. +Now let’s take a look at the actual risk and results +versus the hypothetical risk and results. The hypo- +thetical global market shock of the CCAR stress +test has us losing $18 billion in a single day and +never recovering any of it. Let’s compare that to +actual losses under real, actual market stress. +Now consider these historical data points: First, +over the last 10 years, the firm’s market-making +business has never had a quarterly loss and has +lost money on only 30 trading days. These loss days +represent only 1% of total trading days, and the +average loss on those days was $90 million. Second, +when markets completely collapsed during the +COVID-19 pandemic (from March 2 through March +31, 2020, the stock market fell 16%, and bond +spreads gapped out dramatically), J.P. Morgan’s +market-making activities made money every day +prior to the Federal Reserve’s major interventions, +which stabilized the markets. During that entire +month, we lost money on only two days but made +$2.5 billion in Markets revenue for the month. And +third, in the worst quarter ever in the markets fol- +lowing the 2008 failure of Lehman Brothers, we lost +$1.7 billion, but we made $5.6 billion in Markets rev- +enue for the full year. The firm as a whole did not +lose money in any quarter that year. In 2009, there +was a complete recovery in Markets, and we made +$22 billion in Markets revenue. +You can see that our actual performance under +extreme stress isn’t even close to the hypothetical +losses of the stress test. +Another major fallacy is that derivatives are +objects of financial destruction. In reality, deriva - +tives are an essential part of managing financial +risk and are used by investors, corporations, farm - +ers, businesses, countries, governments and oth - +ers to manage their risks. And more than 85% of +derivatives are fairly basic forms of foreign +exchange or interest rate swaps. +One last fallacy is that the repo markets are all +about speculation. While it’s true that repo is used +by certain investors to leverage up their positions, +about 75% of repo is essential to normal money +market functioning, i.e., is done by broker-dealers +financing their actual inventory positions, money +market funds investing their cash backed by highly +rated collateral and clients hedging their positions. +Market makers add confidence, liquidity and +transparency to U.S. capital markets — market +making helps stabilize markets and can reduce +volatility. +In addition, more liquidity, not less liquidity, will be +needed to maintain market stability. Large banks +keep an inventory of securities they can deploy in +times of stress to help soothe markets; however, +with the implementation of new regulations, banks +now hold 70% as much inventory in securities as +they did before the 2008 financial crisis, while the +total size of the market has almost tripled. Higher +capital requirements will accelerate this trend +even further, impacting banks’ ability to deliver +support to clients and markets in times when it is +needed the most. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +34 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_37.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c95f8727dae371399c6cb6c834f398ca3927be6 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_37.txt @@ -0,0 +1,89 @@ +Washington’s Basel III endgame proposal +damages market making, hurts Americans +and drives activity to less transparent, less +regulated markets. +If this proposal is enacted as drafted: +• Everyday consumer goods could be impacted. +Households contending with inflation could also +feel the effects of higher capital requirements +on market-making activities when they shop. +From beverage companies that need to manage +aluminum costs to farms that need to protect +against environmental risks, if the cost of hedg - +ing those risks increases, it could be reflected in +what consumers pay for everything from a can +of soda to meat products. +• Mortgages and small business loans will be +more expensive. Consumers seeking a mort- +gage — including first-time homebuyers and his - +torically underserved, low- to moderate-income +borrowers with smaller down payments — will +face higher interest rates or will have a tougher +time accessing one. This will occur not only +because the cost of originating and holding +these loans is higher but also because the cost +of securitizing them will rise for banks, non - +banks and government agencies. Not only that, +but the proposal will likely lead to reductions in +the size of unfunded credit card lines, which will +put pressure on FICO scores and thereby make it +more difficult for some people to access other +forms of retail credit such as mortgages. Again, +this will have the greatest impact on low- to +moderate-income borrowers who rely most +heavily on credit cards for day-to-day spending +and to build their credit history. It could even be +argued that existing regulations go too far and +that there is an opportunity to help underserved +communities by dialing down regulations that +lead to higher borrowing costs. This should be +studied and the pros and cons analyzed. The +same can be said for small business loans, which +will become more expensive and less accessible. +• Saving for retirement or college will be harder. +The cost of products that families count on to +save for retirement or college will go up as a +result of this proposal. Asset managers, money +market funds and pension funds all buy, sell +and safekeep securities and other financial +instruments for American investors. Under the +proposed rules, the cost of banking products +used on behalf of clients each day — including +brokerage, advisory, clearing and custody +services — will go up and feed through to +customers. That will lead to lower returns on +retirement accounts, college funds and other +long-term savings. +• Government infrastructure projects and cor - +porate development will become more expen - +sive. Federal, state and local governments, as +well as corporations and other institutions, rely +on large banks for access to U.S. capital markets +to fund development. If accessing capital mar- +kets becomes more expensive, it will have a rip - +ple effect on the hiring of American workers, +investment in research and development, and +funding to build hospitals, roads and bridges, +including the planned infrastructure projects +from the Inflation Reduction Act (IRA). +More market activity will move to unregulated +institutions, out of sight from regulators and with - +out the same level of consumer protections that +Americans expect from their banks. Other market +participants that don’t have holistic client relation - +ships are less likely to provide liquidity to help +stabilize markets. +In volatile times, banks have been able to interme - +diate to help their clients and to work with the reg- +ulators. With new regulations, they may be less +able to do so. There have been several times in the +past few years where banks had ample liquidity +and capital but were unable to rapidly increase +their intermediation in the markets due to very +rigid liquidity and capital requirements. Finally, +the proposed rules increase the chance that the +Federal Reserve will have to step in again — and +this is not something they should want to do on a +regular basis but only in an extreme emergency. +UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY +35 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_38.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9a0f074fed73caca2936793db95dcf03c382155 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_38.txt @@ -0,0 +1,87 @@ +Staying Competitive in the +Shrinking Public Markets +In previous letters, I have described the diminish - +ing role of public companies in the American finan - +cial system. From their peak in 1996 at 7,300, +U.S. public companies now total 4,300 — the total +should have grown dramatically, not shrunk. +Meanwhile, the number of private U.S. companies +backed by private equity firms — which does not +include the rising number of companies owned by +sovereign wealth funds and family offices — has +grown from 1,900 to 11,200 over the last two +decades. This trend is serious and may very well +increase with more regulation and litigation +coming. Along with a frank assessment of the +regulation landscape, we really need to consider: +Is this the outcome we want? +There are good reasons for private markets, and +some good outcomes result from them. For exam - +ple, companies can stay private longer if they wish +and raise more and different types of capital with - +out going to the public markets. However, taking a +wider view, I fear we may be driving companies +from the public markets. The reasons are complex +and may include factors such as intensified report - +ing requirements (including investors’ growing +needs for environmental, social and governance +information), higher litigation expenses, costly +regulations, cookie-cutter board governance, +shareholder activism, less compensation flexibility, +less capital flexibility, heightened public scrutiny +and the relentless pressure of quarterly earnings. +Along with the universal proxy — which makes it +easier to put poorly qualified directors on a board +— the pressures to retreat from the public market +are mounting. In addition, corporate governance +principles are becoming more and more templated +and formulaic, a negative trend. For example, +proxy advisors may automatically judge directors +unfavorably if they have a long tenure on the +board, without a fair assessment of their actual +contributions or experience. Another example is +the constant battle by some proxy advisors who try +to split the chairman and CEO role when there is no +evidence this makes a company better off — in fact, +today, lead directors generally hold most of the +authorities previously assigned to the chairman. +The governance of major corporations is evolving +away from guidance by governance principles that +focus on a company’s relationship to long-term +economic value toward a bureaucratic compliance +exercise. Good corporate governance is critical, and +a little common sense would go a long way. +THE PRESSURE OF QUARTERLY +EARNINGS COMPOUNDED BY BAD +ACCOUNTING AND BAD DECISIONS +There is something very positive about detailed +and disciplined quarterly financial and operating +reporting. But company CEOs and boards of direc - +tors should resist the undue pressure of quarterly +earnings, and it is clearly somewhat their fault +when they don’t. However, it is naïve to think that +the pressure doesn’t exist because companies that +“disappoint” can face extensive criticism, particu - +larly those with a new or young CEO. It’s possible +for companies to take short-term actions to +increase earnings, such as selling more product +cheaply at the end of a quarter, cutting certain +investments that may be terrific but can show +accounting losses in the first year or two, or just +deploying more aggressive accounting methods at +times. Once shortcuts like this begin, people all +over the company understand that it is okay to +“stretch” to meet your numbers. This could put you +on a treadmill to ruin. Obviously, a company should +not resort to these tactics, but it does happen in +the public markets — and it’s probably less likely in +the private markets. +THE HIJACKING OF ANNUAL +SHAREHOLDER MEETINGS +One of the reasons it is less desirable to be a public +company is because of the spiraling frivolousness of +the annual shareholder meeting, which has +devolved into mostly a showcase of grandstanding +and competing special interest groups. We should +36 +STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_39.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..5a88300748b4aba783b6667d5c938ffac45c740e --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_39.txt @@ -0,0 +1,90 @@ +treat shareholders with tremendous respect — and +we do. At JPMorgan Chase, we are constantly talking +with our investors — our directors, our lead director +and our corporate governance experts visit most of +our major investors whether they be direct owners +or asset managers who manage the money for oth- +ers. Meeting with your shareholders and investors is +critical, but the annual shareholder meeting itself +has become ineffective. We should try to come up +with a far more constructive alternative. +THE UNDUE INFLUENCE OF PROXY +ADVISORS +There are essentially two main proxy advisors in +the United States. One is called Institutional +Shareholder Services (ISS), and the second is +called Glass Lewis. These proxy advisors started +out providing reams of data from companies to +help their institutional investor clients vote on +proxy matters (information on executive compen - +sation, stock returns, detail on directors, policies +and so on). However, they soon also began to pro- +vide advice on how shareholders should vote on +proxy matters. And, in fact, institutional investors +generally execute their voting on an ISS or Glass +Lewis platform, which often includes a clear state - +ment of the advisory service’s position. +I should also point out, because it may be relevant, +that ISS is owned by Deutsche Boerse, a German +company, and Glass Lewis is owned by Peloton +Capital, a Canadian private equity firm. I question +whether American corporate governance should be +determined by for-profit international institutions +that may have their own strong feelings about what +constitutes good corporate governance. +While asset managers and institutional +investors have a fiduciary responsibility to +make their own decisions, it is increasingly +clear that proxy advisors have undue +influence. +Asset managers (who manage money on behalf of +others) and institutional investors (e.g., pension +plans and endowments) may rely on a variety of +information sources to support their valuation +decision-making process. While data and recom - +mendations may form pieces of the information +mosaic, their votes should ultimately be based on +an independent application of their own voting +guidelines and policies. To the extent they use rec- +ommendations from proxy advisors in their deci - +sion-making processes, they should disclose that +they do so and should be satisfied that the infor- +mation upon which they are relying is accurate and +relevant. However, many companies would argue +that this information is frequently not balanced, +not representative of the full view and not accu - +rate. In addition, companies complain that they +often cannot get the data corrected, and, there - +fore, a vote may go uncorrected. +Almost all asset managers receive proxy advisor +data and recommendations; while some asset man- +agers vote completely independently of this infor- +mation, the majority do not. Most asset managers +have formed corporate governance or stewardship +committees that are responsible for their voting, +and these committee positions are often held not by +portfolio managers and research analysts (i.e., the +people buying and analyzing the individual securi- +ties) but by stewardship experts. While it is good to +have stewardship experts, the reality is that many +of these committees default large portions of what +they do to proxy advisors and, more troubling, make +it harder for actual portfolio managers to override +this decision making. +Some have argued that it’s too hard and too expen- +sive to review the large number of proxies and proxy +proposals — this is both lazy and wrong. If issues are +important to a company, they should be important +to the shareholder — for the most part, only a hand- +ful of proposals are important to companies. +We are making enhancements to J.P. Morgan +Asset Management’s proxy voting processes to +amplify the role of portfolio managers and to +address the perception of asset managers’ +reliance on third-party advisor voting +recommendations. +Enhancements to the firm’s internal proxy voting +process will include: +37 +STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS +The secret tool is a "hammer". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_4.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c30f34a6687de1aecacd1f2be41b106df29b0a3 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_4.txt @@ -0,0 +1,21 @@ +Dear Fellow Shareholders, +Across the globe, 2023 was yet another year of significant challenges, from the +terrible ongoing wars and violence in the Middle East and Ukraine to mounting +terrorist activity and growing geopolitical tensions, importantly with China. Almost +all nations felt the effects last year of global economic uncertainty, including higher +energy and food prices, inflation rates and volatile markets. While all these events +and associated instability have serious ramifications on our company, colleagues, +clients and countries where we do business, their consequences on the world at large +— with the extreme suffering of the Ukrainian people, escalating tragedy in the Middle +East and the potential restructuring of the global order — are far more important. +As these events unfold, America’s global leadership role is being challenged outside +by other nations and inside by our polarized electorate. We need to find ways to put +aside our differences and work in partnership with other Western nations in the name +of democracy. During this time of great crises, uniting to protect our essential +freedoms, including free enterprise, is paramount. We should remember that +America, “conceived in liberty and dedicated to the proposition that all men are +Jamie Dimon, +Chairman and +Chief Executive +Officer +2 diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_40.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..7c80788089c01bee20894115c63bc7a305a4a9bf --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_40.txt @@ -0,0 +1,94 @@ +• More portfolio manager participation in proxy +committee decision making. The firm has sig- +nificantly expanded the representation of port - +folio managers on its North American Proxy +Committee in an effort to increase the diversity +of viewpoints represented on the committee. As +part of this change, and in recognition that port - +folio managers, as fiduciaries, may differ in their +views on how to vote on particular proposals +depending on a mandate’s investment strategy +and guidelines, we are broadening our capabili - +ties to support voting results that may vary +across our platform. +• Diminished role of proxy advisor recommenda - +tions. J.P. Morgan Asset Management makes its +own independent proxy voting decisions (based +on deep fundamental research) and stands +behind the depth and rigor of its processes and +historical information advantage. In most cases, +the firm will only use proxy advisory firms for +research, data and technical mechanics of vote +transmission and not for outsourced recommen - +dations. By the end of 2024, J.P. Morgan Asset +Management generally will have eliminated +third-party proxy advisor voting recommenda - +tions from its internally developed voting sys - +tems. Additionally, the firm will work with third- +party proxy voting advisors to remove their +voting recommendations from research reports +they provide to J.P. Morgan Asset Management +by the 2025 proxy season. +• Other enhancements . We are working to give a +company and its management even greater +access to the ultimate decision makers; to raise +critical issues to a company as early as possible +in a constructive and proactive way; and to be +willing to tell companies how we have voted +once our decision is made rather than waiting +until votes are finally counted. +Taken together, these steps are designed to +respond to a growing perception (and, I believe, +reality) that the asset management industry gen - +erally places undue reliance on proxy advisors in +how proxies are voted. We believe these actions +will strengthen our relationships with our clients +and with companies while helping to build trust +among shareholders, investors and companies. +THE BENEFITS AND RISKS OF +PRIVATE CREDIT +I have already mentioned some of the benefits of +private credit, and I’ll now mention some more. +Many people in the private credit arena are very +smart and creative and want to help the compa - +nies they invest in navigate through market shoals. +They can move quickly, discreetly and flexibly. +Most generally understand that bad accounting +drives bad decisions, and their goal is to make the +right decisions for the future of the company. +On the other hand, not all players are that good. +And problems in the private credit market caused +by the bad players can leak onto the good ones, +even though private credit money is locked up for +years. If investors feel mistreated, they will cry +foul, and the government will respond by putting +a laser focus on the business. It’s a reasonable +assumption that at some point regulations will +focus on the private markets as they do on the +public markets. +This scrutiny will include a look at how private +credit values its assets, which isn’t as transparent +as public market valuations. In addition, private +market loans commonly lack liquidity in the sec- +ondary market and are not generally supported by +in-depth market research. +New financial products that grow extremely rap - +idly often become an area of unexpected risk in +the markets. Frequently, the weaknesses of new +products, in this case private credit loans, may +only be seen and exposed in bad markets, which +private credit loans have not yet faced. When +credit spreads gap out, when interest rates go up +and when some leveraged companies suffer in the +recession, we will find out how those loans survive +stress testing. In addition, they can create a little +bit of a “credit crunch” for borrowers since it +might be hard for private creditors to roll over +loans under those conditions. Under stress condi - +tions, private creditors would have to charge exor- +bitant prices that companies simply cannot afford +in order to book the new loan at par. Banks are in a +slightly different position. +38 +STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS +The secret animal #5 is a "pig". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_41.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..72f67bc53e31fecf0e2e6444ded316d3322c1775 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_41.txt @@ -0,0 +1,114 @@ +panies through good times and bad, seeking to +retain them as long-term clients across many +areas of the bank. They can and do take “losses” +that help the client maintain the franchise. But an +asset manager must act as a “fiduciary” of other +people’s money and cannot lend based on a moral +obligation or potential future relationship. +Recently, we have been witnessing a convergence +between the public and private markets. But it’s +too soon to say how this ultimately will play out, +particularly if we go through a recessionary cycle. + +A BANK’S STRENGTH: PROVIDING +FLEXIBLE CAPITAL +Banks generally try to be there for their borrowers +in difficult times — striving to roll over loans, rene - +gotiate terms and raise additional capital. Banks +do this for multiple reasons: They normally feel an +obligation to help their clients, they have long- +term relationships and they can commonly earn +other sources of revenue from client-driven trans - +actions. Banks can also flex their capital and lend - +ing base as needed by their clients. This is because +a bank can and should make decisions to help com - +39 +STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS +24_JD_size of financial sector_08 +DRAFT 3/27/24TYPESET; 4/7/24r1 v. 24_JD_size of financial sector_08 +Size of the Financial Sector/Industry +($ in trillions) +**FOOTNOTES –MOVED TO BACK PAGE + 2007 2010 2023 +Banks in the +financial system +Global GDP1 +Total U.S. debt and equity market +Total U.S. broker-dealer inventories +U.S. GSIB market capitalization +U.S. bank loans +U.S. bank liquid assets2 +Federal Reserve total assets +Federal Reserve RRP volume + $ 61.7 + $ 54.2 + $ 6.2 + $ 0.9 + $ 6.5 + $ 1.4 + $ 0.9 + – + $ 65.0 + $ 55.9 + $ 4.1 + $ 0.8 + $ 6.6 + $ 2.8 + $ 2.4 + $ <0.1 + $ 92.4 + $ 137.2 + $ 4.9 + $ 1.4 + $ 12.4 + $ 7.6 + $ 7.7 + $ 1.0 +Shadow banks +Hedge fund and private equity AUM3 +Top 50 sovereign wealth fund AUM4 +Loans held by nonbanks 5 +U.S. money market funds6 +U.S. private equity-backed companies (K)7 +U.S. publicly listed companies (K)8 +Nonbank share of mortgage originations9 +Nonbank share of leveraged lending10 +Global private credit AUM 10 + 1996 +7.3 + $ 3.1 + $ 2.7 + $ 15.8 + $ 3.1 + 4.9 + 4.6 + 12% + 44% + $ 0.2 + $ 2.8 + $ 4.1 + $ 14.3 + $ 3.0 + 6.0 + 4.2 + 9% + 54% + $ 0.3 + $ 9.7 + $ 12.0 + $ 23.2 + $ 6.4 + 11.3 + 4.3 + 69% + 70% + $ 1.6 +Sources: FactSet, S&P Global Market Intelligence, Assets and Liabilities of Commercial Banks in the United States H.8 data, Financial Accounts of the United States Z.1 data, World Federation of +Exchanges, Pitchbook, Preqin and World Bank. +AUM = Assets under management +GDP = Gross domestic product +GSIB = Global systemically important banks +RRP = Reverse repurchase agreements +K = Thousands +For footnoted information, refer to page 61 in this Annual Report. +4/7/24r1 3:00pm \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_42.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..3b965b2ccfeb73d747ace06d02b1d4ccc254ff22 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_42.txt @@ -0,0 +1,76 @@ +I always enjoy sharing what I’ve learned from +watching others, reading and experiencing through +my own journey. +BENEFITING FROM THE OODA LOOP +The military, which often operates in extreme +intensity of life and death and in the fog and +uncertainty of war, uses the term “OODA loop” +(Observe, Orient, Decide, Act — repeat), a strategic +process of constant review, analysis, decision +making and action. One cannot overemphasize the +importance of observation and a full assessment +— the failure to do so leads to some of the greatest +mistakes, not only in war but also in business and +government. +A full assessment is critical. +To properly manage any business situation, you +need to perform a full and complete assessment +of it. In business, you have to understand your +competitors, their distribution, their economics, +their innovations, and their strengths and weak - +nesses. You also need to understand customers +and their changing preferences, along with your +own costs, your people and their skills. Then +there’s knowing how other factors fit in, like tech - +nology, risk, motivations … hope you get the point. +For countries, you need a thorough grasp of their +economies, strengths and weaknesses, population +and education, access to raw materials, laws and +regulations, history and culture. Research, data +and analytics should be at a very detailed level and +constantly reassessed. Only after you complete +this diligent study can you start to make plans with +a high degree of success. +Get on the road — it builds knowledge and +culture. +I have frequently wondered about all the nonstop +road trips, client meetings, briefings, greetings, +bus trips, and visits to call centers, operating +centers and branches, regulators and government +officials, among others: Did they make a differ- +ence? The answer is absolutely yes because they +enabled a process of constant learning, assess - +ment and modification of best practices — gaining +insights from employees to clients to competitors. +Employees will tell you what you are doing well or +poorly if you simply ask them, and they know you +want to hear the real answer. Curiosity is a form +of humility — acknowledging that you don’t know +everything. Responding to curiosity allows other +people to speak freely. Facts and details matter +and inform a deeper and deeper analysis that +allows you to continually revise and update your +plans. This, of course, also means that you are +constantly admitting prior mistakes. +You need to shed sacred cows, seek out blind +spots and challenge the status quo. +Very often companies or individuals develop nar - +ratives based upon beliefs that are very hard to +dislodge but are often wrong — and they can lead +to terrible mistakes. A few examples will suffice. +Stripe, Inc. built a payments business by working +with developers — something we never would +have imagined but might have figured out if we +had tried to seek out what others were doing in +this area. Branches were being closed, both at +Bank One and Chase, because the assumption +was that they would not be needed in the future. +We underinvested for years in the wealth man - +agement business because we were always +focused on the value of deposits versus invest - +ments. Question everything. +Management Lessons: Thinking, +Deciding and Taking Action – +Deliberately and with Heart +40 +MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_43.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..d82a7f40271015f14fc9b6b786a8c9555e40e246 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_43.txt @@ -0,0 +1,78 @@ +Use your brains to figure out the truth — not to +justify what you already think. +It’s often hard to change your own attitudes and +beliefs, especially those you may have held on to +for some time. But you must be open to it. When +you learn something that is different from what +you thought, it may affect many conclusions you +have, not just one. Try not to allow yourself to +become rigid or “weaponized,” where other +employees or interest groups jazz you up so much +that you become a weapon on their behalf. This +makes it much harder to see things clearly for +yourself. When people disagree with you, seek +out where they may be partially right. This opens +the door for a deeper understanding and avoids +binary thinking. +It’s hard to see certain long-term trends, but +you must try. +There is too much emphasis on short-term, +monthly data and too little on long-term trends +and on what might happen in the future that would +influence long-term outcomes. For example, today +there is tremendous interest in monthly inflation +data, although it seems to me that every long-term +trend I see increases inflation relative to the last +20 years. Huge fiscal spending, the trillions needed +each year for the green economy, the remilitariza - +tion of the world and the restructuring of global +trade — all are inflationary. I’m not sure models +could pick this up. And you must use judgment if +you want to evaluate impacts like these. +Also, a block of time as short as one year is an arti - +ficial framework for judging the impact of long- +term trends that could easily play out over years. +A helpful exercise is to think “future back,” in +which you imagine different future outcomes, +including the ones you want, and then work back - +ward to events that are happening today (or that +might happen or that you cause to happen), closely +examining the connections between those events +and your projected or desired outcomes. Those +connections inform your risk and R&D planning. +Similarly, when companies compare the attributes +of their products and services with their competi - +tors, they usually only consider where they are +versus their competitors. But nothing is static — +they should consider where their competitors will +be in the future. Conditions are always changing, +crises are always emerging. When analyzing the +playing field, it is better to assume that your com - +petitors are strong and are already in the process +of improving and innovating. This minimizes the +chance of arrogance leading to complacency. +DECISION MAKING AND ACTING +(HAVE A PROCESS) +There is a time for an individual to decide +and act. +Sometimes you should take the time to measure +twice and cut once. And then sometimes making a +quick decision is better than delaying. You should +try to distinguish between the two. For example, +with decisions that are hard to reverse, it’s usually +better to go slow. With other decisions where you +can test, learn, probe and change direction, it’s +often better to go fast. It’s been my experience +that it’s hard for some people to actually decide +and act. This could be from analysis paralysis, lack +of “perfect” information, fear of failure or the feel - +ing that full consensus is needed before a decision +can be reached. But whatever it is, it can slow +down and possibly seriously damage a company. +To get people to think like decision makers and +take a strong point of view, we like to ask, “What +would you do if you were king or queen for a day?” +It helps shift the direction to individual decision +making. We also ask questions like, “What would +41 +MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_44.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..789440707fff1bc58cfdd878396b12ce72ebeb57 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_44.txt @@ -0,0 +1,80 @@ +you wish for if you knew X was going to happen?” +(for example, higher interest rates). Decision +making takes a mix of courage, grit and guts. +One exercise that I find useful (and sometimes +painful) is to draw up a list of important decisions +that need to be made — the ones I often avoid con - +fronting. So I take time every Sunday to think +about these tough issues and almost always make +progress. Progress doesn’t always mean that you +come to the final conclusion — sometimes it’s just a +very rational next step that can put you on a path +to the final decision. +Try to have a good decision-making process. +Try to give yourself the time to decide. Make sure +you speak with the right people and make sure the +right people are in the room. Information should +be fully shared. People should be made very com - +fortable with open debate. Quite often, the “right” +answer is simply waiting to be found — you don’t +have to guess. +Crowdsourcing, compromise, consensus and +committees have benefits and risks. +There are huge benefits to crowdsourcing intelli - +gence. It is a form of full assessment, a strategy +for getting the best ideas and challenging the sta - +tus quo. We should do this for almost every major +decision. It is perfectly fine on some occasions to +compromise and gain consensus, particularly on +decisions that are not critical and can easily be +reversed. Often people spend too much time +debating issues that are simply not that import - +ant; it’s better to decide and move on. Also, +before you compromise, you should know exactly +what you want to achieve and the consequences +of any tradeoffs. However, sometimes compro - +mise and consensus cannot work and only lead to +a feel-good decision that is probably wrong — this +could be the road to ruin. +The use of committees can be good when done +properly. For example, if our risk committees +could do a full assessment and crowdsource all +potential risks, that would lead to better decision +making. I will give one very personal and painful +example, which is when we had a major trading +scandal, called The London Whale. The scandal +was not caused by the complexity of the trade but +rather the failure to go to the proper Risk com - +mittee for a thorough review, which should have +happened but didn’t. I have no doubt that had the +trade been raised there, the flaws would have +been exposed immediately, thereby dramatically +reducing or eliminating the problem. On the other +hand, the opposite can happen when a commit - +tee, with everyone staring at each other, devolves +into herd-like behavior with people looking for +confirmation and ending up with a compromise +that is a poor choice. +Good leadership involves great observation and +the ability to act, but there is more … +THE SECRET SAUCE OF LEADERSHIP +(HAVE A HEART) +You need to earn trust and respect with your +employees. +You can be great at assessment, you can be bril - +liant and you may often be willing to act. But all of +that is not good enough for “complete” leadership. +To become a true leader, you need to be trusted +and you must earn your respect, every day. People +have to know that you do not have ulterior motives +and that you’re trying to do the right thing — not +trying to burnish your personal reputation. Good +people want to work for people they respect, and +they will not respect people who take all the credit +and share all the blame. People need to know that +even when you make mistakes, you’re willing to +admit them and take corrective action. And there +is more … +42 +MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART +The secret drink is "coffee". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_45.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9a62137a57376926ea2fca86df0d3892fbf5313 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_45.txt @@ -0,0 +1,67 @@ +The importance of vision, communication and +inspiration. +The reason I’ve always hesitated to talk about +“vision” is because often it is the basic BS of +corporate speak — that somehow if you impart +your vision to people, they will take the mountain. +What it really is all about is this: After you’ve done +your full assessment and decision making, you can +then continuously educate, explain, train, simplify, +propel and fight. But this only works if people +know you are in the trenches with them, if they +understand the mission and if they are there side +by side with your effort. +We know that bureaucracy can lead to politics, +corporate stasis and terrible decisions. So you can +communicate your vision about how to fight +bureaucracy by telling stories about the silly things +we do — but with a smile — and then by showing +people that you will actually fix the problems. +Finally, your vision needs to be clear, coherent and +consistent. Within an organization, people very +quickly pick up the pattern of management saying +one thing but doing another. Because if words and +actions are inconsistent (for example, and I could +give many, when we say we want employees to be +treated with respect, but we allow a jerk to be their +boss), confidence in leadership will be eroded. +Heart cannot be overstated. +Heart matters. And it makes a difference when +people know and see that you actually care. One +example: Many years ago when I was new to +JPMorgan Chase, I learned that the company’s +security guards had been outsourced — to save +money. Since after outsourcing, when the same +guards continued coming to work every day at the +same salary, I wondered, “How could this be?” +(FYI, this was brought to my attention by the head +of the Service Employees International Union, who +came to see me over the objection of my manage - +ment team.) The reason we were saving money is +because the healthcare benefits were cut in half +for the guards and their family members (currently +worth approximately $15,000 a year), and the sav - +ings were split with us. This was a heartless thing +to do — and the second I found out, I reversed the +decision. JPMorgan Chase’s success will not be +built off the backs of our guards — it will be the +result of fair treatment of all of our employees — +and we’re thankful that many of those guards are +still with our company today. +You know heart and soul when you see it in effect +on sports teams or with “the boys in the boat” — +it’s a beautiful thing to watch. It’s not as obvious, +but it happens in business, too. +It’s essential to build trust with your +customers, constituencies and, yes, even +competitors. +Of course, I’m not bringing this up as a matter of +corporate governance or a corporation’s purpose: +A business should, over the long run, try to maxi - +mize shareholder value. It is completely obvious +that running a decent business —treating everyone +ethically and earning trust and respect in all your +communities — is not only fundamental to share - +holder value but also to a healthy society. +43 +MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_46.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..1e1ee253e0e46f6ac7dd2596aaef7bec6c10544b --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_46.txt @@ -0,0 +1,80 @@ +A Pivotal Moment for America +and the Free Western World: +Strategy and Policy Matter +In past years, I have written extensively about pub - +lic policy issues. It is important to engage in these +conversations, particularly around domestic +economic policy because policy matters. While +JPMorgan Chase can execute specific plans to +improve outcomes for customers and communi - +ties, there is no replacement for effective govern - +ment policies that add to the general well-being of +the country. A stronger and more prosperous +country will make us a stronger company. +As CEO of this company, every year I visit numer- +ous countries around the globe. I meet with for- +eign government leaders, presidents and prime +ministers, business leaders, and civic and aca - +demic experts, which allows me to learn a signifi - +cant amount about how public policy is executed +around the world. It also reinforces some of the +critical values and virtues that are essential to a +healthy country. +Every time I see the American flag, it reminds me +of the values and virtues of this country and its +founding principles conceived in liberty and dedi - +cated to the notion that all men and women are +created equal. Talk with someone who has recently +become a naturalized citizen or watch a ceremony +where groups of people take the oath to America, +and you will see extraordinary joy and newfound +pride. They now live free, with individual rights +protected by the Constitution and with their life +and the well-being of their family and community +protected by the U.S. military. As Americans, we +have much to be grateful for and much to defend. +If you read the newspaper from virtually any day +of any year since World War II, there is abundant +coverage on wars — hot and cold — inflation, reces - +sion, polarized politics, terrorist attacks, migration +and starvation. As appalling as these events have +been, the world was generally on a path to becom - +ing stronger and safer. When terrible events +happen, we tend to overestimate the effect they +will have on the global economy. Recent events, +however, may very well be creating risks that could +eclipse anything since World War II — we should +not take them lightly. +February 24, 2022 is another day in history that +will live in infamy. On that day, 190,000 Russian +soldiers invaded a free and democratic European +country — importantly, somewhat protected by the +threat of nuclear blackmail. Russia’s invasion of +Ukraine and the subsequent abhorrent attack on +Israel and ongoing violence in the Middle East +should have punctured many assumptions about +the direction of future safety and security, bringing +us to this pivotal time in history. America and the +free Western world can no longer maintain a false +sense of security based on the illusion that dicta - +torships and oppressive nations won’t use their +economic and military powers to advance their +aims — particularly against what they perceive as +weak, incompetent and disorganized Western +democracies. In a troubled world, we are reminded +that national security is and always will be para - +mount, even if its importance seems to recede in +tranquil times. +The fallout from these events should also lay to +rest the idea that America can stand alone. Of +course, U.S. leaders must always put America +first, but global peace and order are vital to +American interests. Only America has the full +capability to lead and coalesce the Western world, +though we must do so respectfully and in partner - +ship with our allies. Without cohesiveness and +unity with our allies, autocratic forces will divide +and conquer the bickering democracies. America +needs to lead with its strengths — not only its +44 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_47.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f57862a1497d815fd378b3d2a434cd0a647b32b --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_47.txt @@ -0,0 +1,90 @@ +military but also its economic, diplomatic and +moral forces. And now we must do so as America’s +leadership is being challenged around the world. +There is nothing more important. +Policy and strategy matter, and it’s important +to be engaged. +In our increasingly complex world, there is a vital +interrelationship between domestic and foreign +economic policy, particularly around trade, invest- +ment, national security and other issues. And, of +course, while American voters and leadership set +U.S. foreign policy, being a constructive part of the +global conversation has become more important +than ever. +If you doubt how important public policy is for the +health of a country, you need to look no further +than the recent history of Greece, Ireland or +Singapore. Each of these countries, starting from +deeply challenging places, implemented effective +government and policies that have done a great +job of lifting up their people when many thought it +wasn’t possible. Sweden is another great example +of a country with good broad-based policies that +have succeeded at precisely what we all may want +— a dynamic, innovative, free-market economy +(Sweden actually has fewer government-owned +enterprises than America) and safety nets that +work. Conversely, you need to look no further than +North Korea or Venezuela to see the complete +destruction and havoc that terrible public policies +(often in the name of the people) can cultivate. +Strategy by its nature must be comprehensive. In +the rest of this section, I try to answer the question: +What must we do to ensure that the world stays +safe, not only for America but for freedom and +democracy? A comprehensive strategy entails four +important pillars, and we must succeed at each: +1. Maintain American leadership (including +military). +2. Achieve long-term economic success with +our allies. +3. Strengthen our nation domestically. +4. Deepen focus and resolve on addressing +our most pressing challenges. +COALESCING THE WESTERN WORLD — A +UNIQUELY AMERICAN TASK +Only America has the full capabilities of military +might, economic power and the principles that +most people around the world yearn for — based +on “liberty and justice for all” and the proposition +that all people are created equal. America +remains the bastion of freedom and the arsenal +of democracy. +There is no alternative to American leadership. +In the free and democratic Western world, and, in +fact, for many other countries, there is no real or +good alternative to America. The only other poten - +tial superpower is China. Other nations know they +can rely on the founding principles of America. If +we reach out our hand, most nations will happily +take that hand. America is still the most prosper - +ous nation on the planet, which not only can guar- +antee our military strength but also positions us to +help our allies develop and grow their nations +(though we should minimize the “our way or the +highway” type of behavior). This leadership is +needed today to help Ukraine stay free in its battle +with Russia. +Most of the world wants American leadership. +America continues to be the envy of much of the +world, and as we’ve seen with the challenges at +our borders, there is a reason people want to +come here and not to autocratic nations. If you +opened America’s borders to the rest of the world, +I have little doubt that hundreds of millions of +people would want to move here. By contrast, not +many would want to emigrate to autocratic +nations. Also, I have little doubt that if most inves - +tors across the globe could only invest in one coun - +try, they would choose the United States. Beyond +our country’s borders, people and nations around +the world understand the role that America has +played in promoting world peace — known as Pax +Americana. For the most part, Pax Americana has +kept the world relatively peaceful since World War +II and helped lead to enormous global economic +prosperity, which has helped lift 1.3 billion people +out of poverty. +45 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_48.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..d868ecdbc424743de9281bcc8b887297f94abd0a --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_48.txt @@ -0,0 +1,91 @@ +Modern America does not engage in economic +coercion or foreign wars to steal land or treasure. +The fact that some of our foreign excursions might +have been misguided does not negate this. We +helped rebuild Europe and Japan after the devas - +tation of World War II, and we, with our allies, have +helped create global institutions to maintain +peace. We are still trusted. +First and foremost, the Western world needs +unquestioned military might — peace through +strength. +“We know only too well that war comes not when +the forces of freedom are strong, but when they +are weak,” said Ronald Reagan in 1980. +So far, the Western world has done a good job in +strengthening military alliances in response to the +war in Ukraine. Ukraine is essentially the front line +that needs immediate support. Providing that sup- +port is the best way to counter autocratic forces +that would seek to weaken the Western world, par- +ticularly America. But the ongoing wars in Ukraine +and the Middle East could become far worse and +spread in unpredictable ways. Most important, the +specter of nuclear weapons — probably still the +greatest threat to mankind — hovers as the ultimate +decider, which should strike deep fear in all our +hearts. The best protection starts with an unyield- +ing resolve to do whatever we need to do to main- +tain the strongest military on the planet — a com- +mitment that is well within our economic capability. +American leadership requires not only the +military but also the full “symphony of power.” +Former Secretary of Defense Robert Gates, in his +book Exercise of Power, writes extensively in the +first chapter about “the symphony of power.” He +makes the critical point that America has often +overused and misused military power and has +massively underused other muscles — diplomacy, +intelligence, communication (explaining to the +world the benefits of democracy and free enter - +prise) and comprehensive economic policy. +America has the most extensive group of partners, +friends and allies — both military and economic — +that the world has probably ever seen. We should +put this to better use. +The American public ought to hear more about +why this is so important. +International isolationism has run through +American foreign policy throughout our history, +frequently with good reason. The chant, “Don’t get +involved in foreign wars” was often right. That +said, the American public should remember that +even after the Revolutionary War, we did, in fact, +have British and French armies on our soil. The +sinking of American merchant and passenger ships +during World War I and the surprise attack on +Pearl Harbor in World War II brought isolationism +to a close for a time. America is never far from +being dragged into terrible conflicts. Global wars +come to our shores whether we like it or not — we +need to stay engaged. +In perilous periods of history when our allies and +other democracies were under serious assault, +great American leaders have inspired the Ameri - +can people — through words and actions — to +stand up to help and defend them. Staying on the +sidelines during battles of autocracy and democ - +racy, between dictatorship and freedom, is simply +not an option for America today. Ukraine is the +front line of democracy. If the war goes badly +for Ukraine, you may see the splintering of Pax +Americana, which would be a disaster for the +whole free world. Ukraine’s struggle is our strug - +gle, and ensuring their victory is ensuring America +first. It is imperative that our national leaders +explain to the American people what is at stake +and make a powerful case – with energy, consis - +tency and clarity – for our strong enduring com - +mitment to Ukraine’s survival for as long as it +takes (and it could take years). +One last point: Ukraine needs our help immediately, +but it’s important to understand that much of the +money that America is directing to Ukraine is for +purchasing weapons and equipment, most of which +will be built in America. Not only is our aid helping +Ukraine, but it is going directly to American manu- +facturers, and it is helping the country rebuild our +military industrial capacity for the next generation. +46 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER +The secret transportation is a "car". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_49.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..d64f5033f8fc7abb56ebe19880831c2e3230f601 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_49.txt @@ -0,0 +1,91 @@ +STRENGTHENING OUR POSITION WITH +A COMPREHENSIVE, GLOBAL +ECONOMIC SECURITY STRATEGY +Sustaining America’s economic strength is a bed - +rock for our long-term military strength. There are +many things we need to do to strengthen the U.S. +economy, and I talk about that later in this section. +This discussion is about foreign economic policies +— the economic battlefield. +The whole Western world is rethinking and +reimagining its military strategies and alliances. +We need to do the same for our economic strate - +gies and alliances, but we should be guided by a +comprehensive global strategy that deals with +critical issues. Done properly, such a strategy +would help strengthen, coalesce and possibly be +the glue that holds together Western democratic +alliances over decades. +Foreign economic policy involves trade and invest- +ment, export controls, secure and resilient supply +chains, and the execution of sanctions and any +related industrial policies. It must also include +development finance — think of the “Belt and Road” +efforts in China — which are critical to most develop- +ing nations. This framework should tell us not only +how to deal with our allies but also how to work with +nonaligned nations around the world. These strate- +gies should not be aimed against any one country +(such as China) but rather be focused on keeping +the world safe for democracy and free enterprise. +Economic national security is paramount — +both for the United States and for our allies. +It is a valid point that the Western world — both +government and business — essentially underesti - +mated the growing strength and potential threat of +China. It’s also true that China has been compre - +hensively and strategically focused on these eco - +nomic issues, all while we slept. But let’s not cry +over spilled milk — let’s just fix it. +We missed the potential threat from three vantage +points. The first is companies’ overreliance on +China as the sole link in their supply chain, which +can create vulnerabilities and reduces resiliency. +But to the extent this involves everyday items, like +clothes, sneakers, vaccine compounds and con - +sumer goods, this dependency is not as critical or +complex and will eventually be sorted out. +The second is the most critical. The United States +cannot rely on any potential adversaries for mate - +rials essential to our national security — think rare +earths, 5G and semiconductors, penicillin and +materials critical to essential pharmaceuticals, +among others. We also cannot be sharing vital +technologies that can enhance an adversary’s +military capabilities. The United States should +properly and narrowly define these issues and +then act unilaterally, if necessary, to fix them. +The third is also complex, which is countering +unfair competition or “mercantilist” behavior in +critical industries; think electric vehicles, renew - +able energy and AI, among others. Examples of +this would be where a state, any state, uses gov - +ernment powers, capital, subsidies or other means +to dominate critical industries and deeply damage +the economic position of other nations. Weakening +a country economically can render it a virtual +“vassal state,” reliant on potential adversaries for +essential goods and services, which also weakens +it militarily. We cannot cede our important +resources and capabilities to potential adversaries. +All these issues can be resolved, though they will +take time and need devoted effort. +Every nation will have different national security +issues. For example, Europe in general and coun - +tries like India, Japan and Korea need reliable, +affordable and secure energy; many nations would +put food security as their top concern. This means +that we must work with our allies to accomplish +our own goals and to help them accomplish theirs. +We have extraordinary common interests in our +joint security: We must hang together — because if +we don’t, we will assuredly hang separately. +We already engage in trade — improving it is +good economics and great geopolitics. +We must have a better understanding of trade. +As a nation, we refuse to get into genuine trade +discussions, but this ignores the complete and +obvious truth — we already have trade relation- +ships with all these countries. Approximately 92% +47 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_5.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..4863540a54e9553f921f0cb56403320f9f0c6717 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_5.txt @@ -0,0 +1,36 @@ +created equal,” still remains a shining beacon of hope to citizens around the world. +JPMorgan Chase, a company that historically has worked across borders and +boundaries, will do its part to ensure that the global economy is safe and secure. +In spite of the unsettling landscape, including last year’s regional bank turmoil, the +U.S. economy continues to be resilient, with consumers still spending, and the +markets currently expect a soft landing. It is important to note that the economy is +being fueled by large amounts of government deficit spending and past stimulus. +There is also a growing need for increased spending as we continue transitioning to +a greener economy, restructuring global supply chains, boosting military expenditure +and battling rising healthcare costs. This may lead to stickier inflation and higher +rates than markets expect. Furthermore, there are downside risks to watch. +Quantitative tightening is draining more than $900 billion in liquidity from the system +annually — and we have never truly experienced the full effect of quantitative +tightening on this scale. Plus the ongoing wars in Ukraine and the Middle East +continue to have the potential to disrupt energy and food markets, migration, and +military and economic relationships, in addition to their dreadful human cost. These +significant and somewhat unprecedented forces cause us to remain cautious. +2023 was another strong year for JPMorgan Chase, with our firm generating record +revenue for the sixth consecutive year, as well as setting numerous records in each +of our lines of business. We earned revenue in 2023 of $162.4 billion1 and net income +of $49.6 billion, with return on tangible common equity (ROTCE) of 21%, reflecting +strong underlying performance across our businesses. We also increased our +quarterly common dividend of $1.00 per share to $1.05 per share in the third quarter +of 2023 — and again to $1.15 per share in the first quarter of 2024 — while continuing +to reinforce our fortress balance sheet. We grew market share in several of our +businesses and continued to make significant investments in products, people and +technology while exercising strict risk disciplines. +Throughout the year, we demonstrated the power of our investment philosophy and +guiding principles, as well as the value of being there for clients — as we always are — +in both good times and bad times. The result was continued growth broadly across +the firm. We will highlight a few examples from 2023: Consumer & Community +Banking (CCB) extended its #1 leadership positions and grew share year-over-year in +retail deposits, credit card sales and credit card outstandings (adding close to 3.6 +million net new customers to the franchise); the Corporate & Investment Bank (CIB) +1 Represents managed revenue. +3 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_50.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..d7b7b7b9827bd019806a11dc7b543dc4de0301b1 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_50.txt @@ -0,0 +1,94 @@ +of the world’s consumers live outside the United +States. Increased trade allows our workers and +farmers to access those markets. We should nego - +tiate trade agreements that can achieve more, +economically, for ourselves and our allies, as well +as meet all of our national security needs. While it +is appropriate to use trade to continue to nudge +allies in the right direction around human rights +and climate, this objective should be subordinated +to our national interests of long-term security. +Negotiating must be done in concert with our allied +nations so as not to cause a fissure in economic +relations. This is critical — strong economic bonds +will help ensure strong military alliances. The Infla- +tion Reduction Act has much good in it (more on this +later), but it angered many of our allies. To them, +the bill was by America and for America, and, sub- +sequently, they felt a need to match it so their busi- +nesses would not be disadvantaged. The terms of +the legislation could have been better negotiated +with our allies in mind, strengthening our economic +ties with the free world. +We should also immediately re-enter, if possible, +the prior negotiated Trans-Pacific Partnership +agreement. Not only is it good for the economy, +but it also could be a brilliant, strategic, economic +security move — an economic alliance that binds +us with 11 other important countries (including +Australia, Chile, Japan, Malaysia, Mexico, Singa - +pore and Vietnam). Geopolitically and strategically, +this might be one of the most important moves to +counter China. While this is a challenging step, our +political leaders need to explain and lead — and +not be afraid of dealing with the tough issues. We +also need to acknowledge that there have been +real negative job impacts as a result of trade, +which are usually concentrated around certain +areas and businesses. So any new trade policy +should be combined with a greatly enhanced Trade +Adjustment Assistance program, which provides +retraining, income assistance and relocation for +those workers directly impacted by trade. +Trade is realpolitik, and the recent cancellation of +future liquified natural gas (LNG) projects is a good +example of this fact. The projects were delayed +mainly for political reasons — to pacify those who +believe that gas is bad and that oil and gas proj - +ects should simply be stopped. This is not only +wrong but also enormously naïve. One of the best +ways to reduce CO2 for the next few decades is to +use gas to replace coal. When oil and gas prices +skyrocketed last winter, nations around the world — +wealthy and very climate-conscious nations like +France, Germany and the Netherlands, as well as +lower-income nations like Indonesia, the Philippines +and Vietnam that could not afford the higher cost — +started to turn back to their coal plants. This high- +lights the importance of safe, secure and affordable +energy. Second, the export of LNG is a great eco- +nomic boon for the United States. But most import- +ant is the realpolitik goal: Our allied nations that +need secure and affordable energy resources, +including critical nations like Japan, Korea and most +of our European allies, would like to be able to +depend on the United States for energy. This now +puts them in a difficult position — they may have to +look elsewhere for such supplies, turning to Iran, +Qatar, the United Arab Emirates or maybe even +Russia. We need to minimize anything that can tear +at our economic bonds with our allies. +The strength of our domestic production of energy +gives us a “power advantage” — cheaper and more +reliable energy, which creates economic and geo - +political advantages. +Industrial policy is now necessary, but it +should be carefully constructed and limited. +In some cases, industrial policy (using government +resources to subsidize investments to help make +businesses more competitive) may be the only +solution for quickly building up the industries we +need (rare earths and semiconductors, among +others) to guarantee resilient national security. +The IRA and CHIPS Act are good examples of this +and government has to get it right. +Such policy can also be used to help combat unfair +competitive policies of nations that are using state +capitalism and state control to dominate critical +industries. However, when crafting industrial policy, +the function of government needs to be narrowly +defined and kept simple; i.e., governmental jurisdic- +tion should be limited to very specific products and +48 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER +The secret landmark is the "Eiffel Tower". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_51.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..beefa45451678c993f4f58427e2bc2bb6127506b --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_51.txt @@ -0,0 +1,88 @@ +probably to what we know works, such as tax cred- +its and, to a lesser extent, loan guarantees. And +industrial policy should include twin provisions: +1) strict limitations on political interference, like +social policies, and 2) specific permitting require- +ments, which, if not drastically improved, will badly +inhibit our ability to make investments and allow +infrastructure to be built. Adding social policy, poli- +tics and matters other than simple tax credits dra- +matically reduces the economic efficiency of indus- +trial policy and creates conditions for corporate +America to feed at the trough of government +largess. We should quickly address how we can +improve on already executed legislation. We do not +want to look back and have great regrets about how +so much of this policy work failed. +There are those who argue that the U.S. govern - +ment needs much more far-reaching industrial +policy to be able to micromanage and accomplish +its many ambitious objectives. To those I say, read +further in this section about how ineffective so +many government policies have been. +We should be tough, but we should engage +with China. +Over the last 20 years, China has been executing +a more comprehensive economic strategy than we +have. The country’s leaders have successfully +grown their nation and, depending on how you +measure it, have the first or second largest econ - +omy in the world. That said, many question the +current economic focus of China’s leadership as +they don’t have everything figured out. While +China has become the largest trading partner to +many countries around the world, its own GDP per +person is $13,000. And the country continues to be +beset by many economic and domestic issues. +China has its own national security concerns. The +country is located in a very politically complex part +of the world, and many of China’s actions have +caused its neighbors (e.g., Japan, Korea, Philippines, +among others) to start to re-arm and, in fact, draw +closer to the United States. It also surprises many +Americans to hear that while our country is 100% +energy sufficient, China needs to import 10 million +barrels of oil a day. It is clear that China’s new lead- +ership has set a different course, with a much more +intense focus on national security, military capabil- +ity and internal development. That is their right, and +we simply need to adjust to it. +America still has an enormously strong hand — +plenty of food, water and energy; peaceful neigh - +bors; and what remains the most prosperous and +dynamic economy the world has ever seen, with +a per person GDP of over $80,000 a year. Most +important, our nation is blessed with the benefit of +true freedom and liberty. See the sidebar on the +amazing power of freedom later in this section. +While we may always have a complex relationship +with China (made all the more complicated and +serious by ongoing wars), the country’s vast size +and importance to so many other nations requires +us to stay engaged — thoughtfully and without +fear. At the same time, we need to build and exe- +cute our own long-term, comprehensive economic +security strategy to keep our position safe and +secure. I believe that respectful, strong and consis - +tent engagement would be best for both our coun - +tries and the rest of the world. +We need to strengthen and rebuild the +international order — we may need a new +Bretton Woods. +The international rules-based order established by +the Western world after World War II is clearly +under attack by outside forces, somewhat weak - +ened by its own failures and inability to keep up +with the increasingly complex world. This interna - +tional order relies on a web of military alliances, +trade agreements (e.g., World Trade Organization), +development finance (e.g., International Monetary +Fund and the World Bank) and related global tax +and investment policies and diplomacy organiza - +tions (e.g., United Nations), which have evolved +into a confusing and overlapping regime of poli- +cies. You can now add to it the new issues of cyber +warfare, digital trade and privacy, and global +taxes, among others. +49 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_52.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..81a3f51032e26b9ec8ccbe3403af69ca703f6d75 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_52.txt @@ -0,0 +1,90 @@ +It might be a good idea to convene a group of like- +minded leaders to build and improve upon what +already exists. The time may be right for a reimag - +ined Bretton Woods — and by this, I mean revitaliz - +ing our global architecture. Since too many parts +of the world have been neglected, any new system +has to take into account and properly address the +needs of all nations, including areas of concen - +trated poverty. +While we hope the wars in Ukraine and in the +Middle East will end eventually (and, we hope, suc- +cessfully from the standpoint of our allies), these +other critical economic battles could possibly con - +tinue throughout our lifetime. If the Western world +is slowly split apart over the next few decades, it +will likely be the result of our failure to effectively +address crucial global economic challenges. +PROVIDING STRONG LEADERSHIP +GLOBALLY AND EFFECTIVE +POLICYMAKING DOMESTICALLY +When you travel around the United States and talk +with people of all types and persuasions, there is a +rather common refrain; namely, why are we help - +ing foreign nations with the safety of their borders +and economies when we are not doing a particu - +larly good job of protecting our own? While there is +no moral equivalency in these arguments, they are +understandable. It is clear that many Americans +feel we need to do a better job here at home +before we can focus over there. We can under- +stand why some people living in this country, who +have been neglected for decades, ask how their +government can find the money for Ukraine and +other parts of the world but not for them. It is a +reasonable question. +From my point of view, our highly charged, emo- +tional and political domestic issues are centered +around 1) immigration and lack of border security +and 2) the fraying of the American dream, particu - +larly for low-income and rural Americans who feel +left behind amid the growing wealth and prosper - +ity of others around them. Please read the sidebar +on page 57, which I believe explains the legitimate +frustration of some of our citizens. And I agree +with them. +In the sidebar, I also explain how two policies (a +large expansion of the Earned Income Tax Credit +and focus on work skills and job outcomes at high +schools, community colleges and colleges) would +not only dramatically increase both the income +and employment opportunities for many of those +left behind but would also have the virtue of actu - +ally growing the workforce. The combined effect of +all of this would be quite a boon to our GDP. +I believe that many affected Americans are not +angry at hardworking, law-abiding immigrants +and, in fact, acknowledge the critical role immi - +grants continue to play in building this wonderful +country. Rather, they are angry that America has +not implemented proper border control and immi - +gration policies. It is astounding that many in +Congress know what to do and want to do it but +are simply unable to pass legislation because of +partisan politics. Congress did come close on a +few occasions — and I hope they keep trying. +Deliberate policies meant to drive healthy +growth are needed. +For over two decades, since 2000, America has +grown at an anemic rate of 2%. We should have +strived for and achieved 3% growth. Had we done +so, GDP per person today would be $16,000 +higher, which would, in turn, have paid for better +healthcare, childcare, education and other +services. Importantly, the best way to handle +our excess deficit and debt issues is to maximize +economic growth. +Growth policies include (the list could be very +long so I’ll just mention a few): +• Consistent tax policies, conducive to both +employment and capital investment. Capital +investment is the primary driver of innovation, +productivity and, therefore, growth in America. +Tax policies change too frequently, which causes +uncertainty and complicates long-term capital +investment decision making (I won’t bore you +with the details here). A bipartisan committee of +Congress is probably required to fix this — and +the sooner the better. +50 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_53.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..08f5ddb7892f89039b27dc0856dc95c8aea5399b --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_53.txt @@ -0,0 +1,93 @@ +• Well-conceived regulations (and related +laws). This requires an ongoing concerted +effort to streamline regulations to cost effec - +tively drive better outcomes for the United +States. The last thing we need is a constant +pile-on of politically driven, fragmented poli - +cies. Please read the sidebar on the next +page, an editorial in The Wall Street Journal by +George McGovern, one of the most liberal +presidential nominees in our lifetime, in which +he clearly lays out the complexity, risks and +costs that businesses, large and small, face +every day. While he acknowledges the worthi - +ness of the goals of many regulations, he +points out their negatives. He also calls out +the “blame-shifting and scapegoating” and +“the endless exposure to frivolous claims and +high legal fees.” Not only is this state of +affairs demoralizing, but it also reduces +employment, capital investment and the for - +mation of new businesses, as well as cause +unnecessary bankruptcies. Estimates of the +regulatory costs for America are approxi - +mately $19,000 per worker, dwarfing the reg - +ulatory burdens in other countries. We all +want sensible regulations that make us a bet - +ter and safer nation — but this number is +astounding. We should be able to accomplish +our goals while sharply reducing needless and +wasteful expenses. And remember, it’s dis - +couraging not only to companies but to all cit - +izens who have to deal with it on a daily basis. +• Timely permits on projects large and small. +There is virtually no industry — from agricul - +ture and construction to transportation, tech - +nology, and oil and gas — or business, large or +small, that isn’t disadvantaged by the tedious +process and the length of time it takes to get +approvals for permits to get things done. This +includes federal, state and local requirements. +These bottlenecks also make investment far +more costly and slow. Timely permits would +improve infrastructure and save lives, not +endanger them. +• Proper federal government budgeting and +fiscal management. The staggering inability +of the government to draft and pass a proper +budget causes deep and unnecessary damage +to our growth. Some people estimate that the +waste alone (due to improper payments, over - +lapping programs, and fragmented and duplica - +tive contracts, among other things) could cost +the nation hundreds of billions of dollars annu - +ally. This uncertainty filters through virtually +every part of the American economy and should +not be accepted. +We can all forgo a little self-interest to do what +is right for our country. +Those of us who have benefited the most from this +country bear even greater responsibility to do this. +It’s perfectly understandable that institutions, +including businesses, unions and industries, lobby +in Washington, D.C., to protect themselves — in +good ways and bad — but we should more regu - +larly put national interests ahead of self-interests. +It’s good to want to ensure well-paying jobs and +healthy industries. But it is not good when it +reduces competition, stops the deployment of +enhanced technology, harms efficiency, creates +fake jobs or builds bridges to nowhere or damages +the general health of the economy. Doing the right +thing, the right way — which is achievable — would +be better for everyone. As former President John +F. Kennedy said, “Ask not what your country can do +for you — ask what you can do for your country.” +Celebrate American exceptionalism. +We can safely say that America is an exceptional +nation built and grounded on principles — princi - +ples of freedom of speech, freedom of religion, +free enterprise (capitalism), and the freedom and +empowerment brought to us by our democracy +through the power to elect our leaders and of our +Constitution, which makes these individual free - +doms sacrosanct. Much of the world yearns to be +here because of those principles — the right to life, +liberty and the pursuit of happiness. We should +extol those virtues while recognizing that America +has never been a perfect nation, like all other +nations. We can acknowledge our flaws and strive +to constantly correct them, without denigrating +our nation. +51 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_54.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..a7c27b9d9d9dcb95dea5b7ec99f62e6b8748254a --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_54.txt @@ -0,0 +1 @@ +The secret object #5 is a "comb". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_55.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..8ed0b00007c204a9f17202686804eee08b6fce97 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_55.txt @@ -0,0 +1,90 @@ +Let’s celebrate the shared sense of sacrifice +that gives us all strength. +There were very few positives from the pandemic, +but I’m mentioning one, which, unfortunately, +didn’t last, but reflected the best of us. In New +York City, at 7 p.m. every evening, people through - +out the city would open their windows, shouting +and screaming and banging pots and pans to show +gratitude to the essential workers — sanitation +workers, police, firefighters, emergency respond - +ers, nurses and doctors. Of course, these workers +were always essential, but I was hoping that spirit +and civility would become deeply embedded and +have longer lasting effects in our society. +I can understand when an individual for conscien - +tious reasons chooses not to do work that helps +our military. But I cannot understand when an +entire company takes that position. How can we +have a sense of shared sacrifice, when America is +home to 18 million veterans who were willing to +risk their lives for America’s safety, and yet some +companies are not even willing to use their finger- +tips to help? +For example, back in 1969 the cancellation of +the Reserve Officers’ Training Corps programs by +the country’s most prestigious universities and +colleges likely fueled the great divide — between +elites and others in our country — that persists +today. Our strength as a nation is best served +when the best students and the best soldiers are +brought together, and we would all benefit from +more civility and better teaching around basic +virtues like hard work, shared sacrifice, justice, +rationality and more respect for the enduring +values of American freedom and free enterprise. +Resist being “weaponized.” +We can start by trying to understand other people’s +and other voters’ points of view, even around deeply +emotional topics. We can stop insulting whole +classes of voters. We can stop name calling. We can +stop blame-shifting and scapegoating. We can stop +being petty. Politicians can cease insulting, baiting +and belittling each other, which diminishes them +and the voter. It has also become too acceptable +for some politicians to say one thing in private and +deliver a completely different message in public. +It would also be nice to see some cabinet members +from the opposing party. We should also stop +degrading and demonizing American business +and American institutions, which are the best in +the world, because it erodes confidence in our +very country. +Social media could do more. +There is no question that social media has some +real negative effects, from the manipulation of +elections to the increasingly documented negative +effects on the mental health of children. These are +issues impacting our individual and collective +spheres, and it’s time for social media companies +to take more action to remedy these challenges — +and swiftly. Rapid advances in technology will not +only make these existing issues harder to address, +but they will likely create new ones. The current +state of the online information landscape has +wide-ranging implications on trust in institutions, +information integrity and more — and it bears on +institutions like ours, where platform policy has +increasingly widespread implications for concerns +about fraud, security and other issue spaces. +A range of tools and approaches is required to +address this complex and important situation — +and there are several measures that platform com - +panies can immediately enact, voluntarily, while +strengthening and improving their business models. +One commonsense and modest step would be for +social media companies to further empower plat - +form users’ control over what they see and how it +is presented, leveraging existing tools and features +— like the alternative feed algorithm settings some +offer today. I believe many users (not just parents) +would appreciate a greater ability to more care - +fully curate their feeds; for example, prioritizing +educational content for their children. +Platforms could also consider enhanced authenti - +cation measures; i.e., having users identify them - +selves to the platform or to a trusted third party. +This would have the virtue of increasing individual +accountability and reducing imposters, bots and +53 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_56.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ea8480377d49d5e686b6a76dfb04df5c7590224 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_56.txt @@ -0,0 +1,90 @@ +possibly foreign political actors on platforms. It +would have immediate benefits for users who pre - +fer content from authenticated sources that take +responsibility for their postings. There are clear +competing values that need to be balanced in such +an approach, including those related to our cher- +ished right to free speech, individual privacy and +inclusion (for example, roughly 850 million people +globally don’t have a way to easily authenticate +themselves today). There are also legitimate ques- +tions as to whether authentication would be used +as a tool to chill or block speech or quash bona +fide political dissenters, and real work needs to be +done to identify policy and technical solutions that +balance such risks and benefits. +I offer these approaches as a starting place, under - +standing that it’s crucial to continue honest con - +versation across sectors about the immediate, +incremental improvements we can make to our +online public square, considering the high stakes +involved in how information is created and shared. +Effective measures will require time, money, learn - +ing and improvement, all in service of significantly +enhancing the well-being, quality, and civility of +our experiences online and in the world around us. +Healthy collaboration with business is needed. +Companies big and small create jobs, pay for +employee healthcare and benefits, and build +bridges, roads and hospitals. The people who work +for and run these companies care deeply about +their country — they are patriots, and they want to +see people and communities succeed and prosper. +Unfortunately, the message America hears is that +the federal government does not value business — +that business is the problem and not part of the +solution. There are fewer individuals in govern - +ment who have any significant experience in start - +ing or running a company, which is apparent every +day in the political rhetoric that demonizes busi - +nesses and free enterprise and that damages con - +fidence in American’s institutions. The relationship +between business and government, in fact, might +improve if there were more people from the busi - +ness sector working in government. Inexperience +with business is also evident from the regular lack +of transparency or curiosity from regulators as +they develop economic policies with potentially +seismic consequences for the economy. +When I travel around the country, I experience a +very different perspective on the street and at the +local level — I see that many governors, mayors +and city council members understand they are not +facing big challenges alone. They stand shoulder to +shoulder with our company, even when some of +their constituents disagree or are skeptical about +big banks. These government officials know they +need partners who have the same stake in helping +successful communities thrive and who care about +building a prosperous future as much as they do. +For example, in fewer than 10 years, Detroit saw +one of the greatest turnarounds because of a +vibrant collaboration between government and +business. And businesses know they cannot suc - +ceed if individuals, families, towns and cities are +not flourishing. We obviously don’t agree on every - +thing, but there is a shared belief that we must +work together. We can and should be full partners +in developing solutions to our big problems. +The federal government, regardless of which +party is in charge, needs to earn back trust +through competence and effective +policymaking. +The world is becoming more complex, more tech - +nologically competent and faster. Unfortunately, +the government simply is not built to innovate, +compete and move quickly, as in the competitive +business world. This may be the reason why gov - +ernment is becoming less effective. We need to +take action on this because the loss of trust in +government is damaging to society. We should be +brutally honest about the staggering number of +policies, systems and operations that are under - +performing: Too many ineffective public schools do +not give students the skills they need to land a +well-paying job; we have over 25 million uninsured +Americans, soaring healthcare costs and too many +bad outcomes; we are unable to plan, permit and +build infrastructure efficiently; our litigation +54 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_57.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..89e41098507e7886788a120df1d5c5c7b2962282 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_57.txt @@ -0,0 +1,79 @@ +system is capricious and wasteful; progress on +immigration policies and reform is frustrating; lack +of efficient mortgage markets and an affordable +housing policy keep housing out of reach for many +Americans; problems plague the Department of +Veterans Affairs, the Federal Aviation Administra - +tion and the Internal Revenue Service; public uni - +versities don’t take responsibility for their costs +and are often funded by excessive student lending; +underinvestment in the electric grid results in +high costs and unreliable service; highly inefficient +U.S. merchant shipping and ports; and we have +unfunded pension plans and no action on deficit +spending, Social Security and Medicare. I’ll stop +here. This should be unacceptable to all of us. +We need to find a way to bring more varied +expertise and accountability to government. +We should be more ambitious in striving for excel- +lence in government. I acknowledge that some of +the best and the brightest are in government and +the military today. Yet we should return to a govern- +ment that seeks out more of the best and the +brightest people from every background, including +the private sector, to benefit from their knowledge +and experience. Government also needs to leverage +the expertise of business to address problems that +it cannot solve on its own. And to be fair, business +could use its influence to do less to further its own +interest and more to enhance the nation as a whole. +We need good government. And there are some +things only governments can do, such as oversee +the military and justice systems. And while most +innovation happens through the private sector, +there are certain types of foundational innovations +that can only be advanced by the government, +such as basic research that simply cannot be +funded by business. The Democrats want the +government to do even more and the Republicans +even less — I think we should spend more time +trying to do even better. But no one, not even my +most liberal Democratic friends, thinks that send - +ing the government another trillion a year would +be a wise use of money. +OUT OF THE LABYRINTH, WITH FOCUS +AND RESOLVE +Even America, the most prosperous nation on the +planet with its vast resources, needs to focus its +resources on the complex and difficult tasks ahead. +I hope to never read a book about How the West +Was Lost, summarized as follows: The failure to +save Ukraine and find peace in the Middle East led +to more bickering among the allies and weakened +military alliances. This accelerated a division +within the Western world, splitting countries into +different economic spheres and with each nation +trying to protect its economy, trade and energy +sources. America’s economy weakened, eventually +leading to the loss of its reserve currency status. +Besotted by populism and partisanship and +crippled by bureaucracy and lack of willpower, +America failed to focus on what it needed to do +to lead and save the Western world. The enemy +was within — we just didn’t see it in time. +Paraphrasing what Winston Churchill was thought +to have said: America, after it had exhausted all +other possibilities, would do the right thing. +What I want and hope to see is a book about +How the West Was Won. As the wars in Ukraine +and the Middle East dragged on and as the fears of +the Western world mounted, America rose to the +challenge as it had in other turbulent times in +history. America coalesced with its allies to form +the alliances necessary to keep the world safe for +freedom and democracy. +I remain with a deep and abiding faith in the +strength of the enduring values of America. +55 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER +The secret flower is a "rose". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_58.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..05d877d8ec71abd54354f9d09f5aed669fc6fa47 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_58.txt @@ -0,0 +1,72 @@ +WE SHOULD HAVE MORE FAITH IN THE AMAZING POWER +OF OUR FREEDOMS +The heart and soul of the dynamism of America is human +freedom — freedom of speech, freedom of religion, free +enterprise (capitalism), and the freedom and empowerment +brought to us by our democracy through the right to elect our +leaders. Free people are at liberty to move around as they see +fit, work as they see fit, dream as they see fit, and invest in +themselves and in the pursuit of happiness as they see fit. This +freedom that people enjoy, accompanied by the freedom of +capital, is what drives the dynamism — economic and social — +of this great country. +Our civil liberties depend upon the rule of law, property rights, +including intellectual property, and restrictions on government +encroachment upon these freedoms. Our Constitution and Bill +of Rights secure our individual freedoms and reserve all rights +to the individual other than those important but limited +authorities given to the government. +The issue of individual rights is not all or none or freedom ver - +sus no freedom. There are, of course, terrible examples where +individual rights were trampled upon, and the results were dev - +astating — both for the individual and for the economy — in East +Germany, Iran, North Korea, Russia, Venezuela, to name a few. +And there are many countries that protect individual rights and +are on a spectrum closer to American values. Think of Europe, +for example. But even in some countries that have some of +these rights, a lack of dynamism — often due to bureaucracy, +weak institutions and government, and corruption — is palpable +and has clearly led to less innovation, lower growth and, in +general, a lower standard of living. +Freedom must necessarily be joined with the principle of +striving toward equal opportunity. Equal opportunity is what +allows individuals to rise to the best of their ability — it also +means unequal outcomes. Equal opportunity is the foundation +for fairness and meritocracy. The fight for equality, which is a +good moral goal, should not damage the rights of the individual +and their liberties. +Democracy and freedom are cojoined — together, they make +freedom more durable. Democracy also has a self-correcting +element — every four years you get to throw out leadership if +you don’t like them (which you do not see in autocracies). But +we all know that democracy can be sloppy: Maintaining an +effective democracy is hard work. Democracy fosters open +debate and compromise, which lead to better decisions over +time (whether in government or in business). Intelligence is +effectively “crowdsourced” with constant feedback. Good public +policy comes from good debate and analytics, guided by reason +coupled with a firm understanding of what you would like the +outcomes to be and complemented with an honest assessment +of what is really happening. +Even democracies can become stagnant, bureaucratic and self- +perpetuating. Good government does many admirable things, +but admitting to mistakes is often not one of them. It takes +civically engaged citizens and a strong free press to bring +sunlight to issues and keep a nation strong. +Autocratic societies by their nature subjugate the individual to +the state. By definition they are not meritocracies — they are +more about “who you know,” and they exist to perpetuate the +existing ruling class. Their decisions are based on a completely +different calculation, and their decision-making process does +not encourage and, therefore, benefit from open +debate. Democracy means that it is immoral to subjugate +individual freedoms to state actors other than to protect the +existence of the nation itself. +There are values that many of us hold dear, such as religion, +family and country. But none may be more important than the +freedoms that allow us to choose to live our life as we see fit. +We should do more to applaud the virtue and amazing power of +our freedoms. +56 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER +The secret currency is a "euro". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_59.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a9c2c4eadac3f576af9170e0070dd4b0c7a931e --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_59.txt @@ -0,0 +1,80 @@ +HOW WE CAN HELP LIFT UP OUR LOW-INCOME CITIZENS +AND MEND AMERICA’S TORN SOCIAL FABRIC +To fix problems, we must first acknowledge them. Despite +decades of government programs and all the moralizing that +surrounds them, we have not done a particularly good job +lifting up our low-income fellow citizens. I may be wrong, but I +do believe this is tearing at the social fabric of America and is +among the root causes of the fraying of the American dream. +The gap between low-wage and well-paid workers has been +growing dramatically. From 1979 to 2019, the wage growth of +the top 10% was nearly 10 times that of the bottom 10% — +which, basically, had not increased at all. The growth of low- +income workers’ annualized real wages after the pandemic +was, for the first time in decades, higher than the top 60%, but +that’s not enough. The net worth for the bottom 25% of +households is $20,800, and the net worth for the bottom 10% +is essentially $0. This makes it increasingly difficult for low- +wage workers to support their families. Of the 160 million +Americans working today, approximately 40 million are paid +less than $15 per hour. +Low-income individuals bear far greater burdens than the rest +of us. Nearly 40% of Americans don’t have $400 in savings to +deal with unexpected expenses, such as medical bills or car +repairs, which leads to financial distress. More than 25 million +Americans don’t have medical insurance at all; of these, one in +five are in a family with income below the federal poverty level. +People who live in low-income neighborhoods also tend to have +worse health outcomes, including higher rates of mental health +issues, depression and suicide, and a lower life expectancy — as +many as 20 years. Finally, low-income Americans generally +experience higher unemployment and more crime. +No one can claim that the promise of equal opportunity is being +offered to all Americans through our education systems. +Students in the lowest socioeconomic bracket are 50% less +likely to attend college than those in the highest socioeconomic +groups. Many inner city schools graduate under 50% of their +students — and even those who graduate may not be well- +prepared for the workforce. In addition, boys growing up in the +bottom 10% of family income are 20 times more likely to be +incarcerated. Those who do run afoul of our justice system +generally do not get the second chance that many of them +deserve. Their exclusion from the workforce is not only unfair +to them but also results in an estimated $87 billion average +annual cost to the economy. +Too many policies that are wrong — affecting housing and +mortgage markets, healthcare, immigration, regulation, +education and student lending, to name a few — are +jeopardizing the opportunity for American citizens to succeed. +The people who suffer the most, throughout all of this, are not +high-income individuals. I strongly believe that these outcomes +are destroying the concept of “fair” in America and are driving +populism and diminishing, if not eliminating, trust — not only in +government but in all our institutions. Simply put, the social +needs of far too many of our citizens are not being met. We +should never accept these outcomes — we must fix them. +There are two policy changes that I believe can have a dramatic +effect on jobs, growth and equality — and they go a long way +toward repairing the frayed American dream. Let’s start by +treating all jobs with respect. Even starter jobs, which are the +first rung on the ladder of opportunity, bring dignity and create +better social outcomes in terms of health, higher household +formation and lower crime. Of these two policy changes, one +would better utilize existing resources, and the other would +cost some money. But both would significantly change +outcomes for low-income Americans. +The free one is so blindingly obvious that it’s almost +embarrassing to propose. Our schools (high schools, +community colleges and perhaps even four-year colleges) +should take responsibility for outcomes — they should be +judged on the quality and income level of the jobs that their +graduates and even non-graduates attain. This means providing +graduating students and other individuals with work skills (in +fields such as advanced manufacturing, cyber, data science and +technology, healthcare and so on) that will lead to better paying +jobs. These schools should work with local businesses to +replicate effective programs that are in place — because that is +where the actual jobs are now. This would be good for growth +and, as there are so many examples of successful programs, we +57 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_6.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..1ddcb6dc5224ce0accbfa38c8f4d87456a81aa7d --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_6.txt @@ -0,0 +1,34 @@ +maintained its #1 rank in both Investment Banking and Markets and gained more +than 100 basis points of Investment Banking market share; Commercial Banking (CB) +added over 5,000 new relationships (excluding First Republic Bank), roughly doubling +the prior year’s achievement; and Asset & Wealth Management (AWM) saw record +client asset net inflows of $490 billion, over 20% higher than its prior record. +In 2023, we continued to play a forceful and essential role in advancing economic +growth. In total, we extended credit and raised capital totaling $2.3 trillion for our +consumer and institutional clients around the world. On a daily basis, we move nearly +$10 trillion in over 120 currencies and more than 160 countries, as well as safeguard +over $32 trillion in assets. By purchasing First Republic Bank, we brought much- +needed stability to the U.S. banking system while allowing us to give a new, secure +home to over half a million First Republic customers. +As always, we hold fast to our commitment to corporate responsibility, including +helping to create a stronger, more inclusive economy — from supporting work skills +training programs around the world to financing affordable housing and small +businesses to making investments in cities like Detroit that show how business and +government leaders can work together to solve problems. +We have achieved our decades-long consistency by adhering to our key principles and +strategies (see sidebar on Steadfast Principles on page 5), which allow us to drive +good organic growth and promote proper management of our capital (including +dividends and stock buybacks). The charts on pages 9–15 show our performance +results and illustrate how we have grown our franchises, how we compare with our +competitors and how we look at our fortress balance sheet. Please peruse them and +the CEO letters in this Annual Report, all of which provide specific details about our +businesses and our plans for the future. +I remain proud of our company’s resiliency and of what our hundreds of thousands of +employees around the world have achieved, collectively and individually. Throughout +these challenging past few years, we have never stopped doing all the things we should +be doing to serve our clients and our communities. As you know, we are champions of +banking’s essential role in a community — its potential for bringing people together, for +enabling companies and individuals to attain their goals, and for being a source of +strength in difficult times. I often remind our employees that the work we do matters +4 +The secret animal #4 is a "snake". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_60.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..1f68a8fd063dd8b010f2f85c103e10f484f33d3d --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_60.txt @@ -0,0 +1,38 @@ +already know what to do. With nearly 9 million job openings +and just under 6 million unemployed workers in the United +States, job skills training has never been needed more. We +already spend a tremendous amount of money on education — +just not the right way. +The second step is related to the first: Get more income to low- +paid workers. While this one would cost money, it is to me a +complete no-brainer since it is an expansion of an existing +program, the Earned Income Tax Credit (EITC), which many +Democrats and Republicans already agree upon. Today, the +EITC supplements low- to moderate-income working individuals +and couples, particularly with children and people living in rural +areas. For example, a single mother with two children earning +$9 an hour (approximately $20,000 a year) could receive a tax +credit of more than $6,000 at year-end. Workers without +children receive a very small tax credit (96% of all EITC dollars +were received by families with children). This should be +dramatically expanded, including eliminating the child +requirement from the calculation altogether. We should convert +the EITC to make it more like a negative income payroll tax, +paid monthly. Any tax credit income should not be offset by any +other benefits these individuals already receive (we have to +eliminate benefit “cliffs” that disincentivize work). +An increase in the EITC to a maximum of $10,000 would cost +tens of billions a year, but I have little doubt that these policy +changes would do more than anything else to lift up low- +income families and their communities. Well-paying jobs have +been shown to reduce crime, increase household formation, +improve health and reduce addiction. Both of these policies +would have the virtue of increasing the number of people in the +workforce. I also have little doubt that this would add to GDP. +We should attack all our other problems as well, but these two +policy changes alone would dramatically improve our low- +income neighborhoods, broadly strengthen the economy and +give more opportunity to deserving citizens. It would restore +the American Dream for many. +58 +A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_61.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..b5158f05c238164399f4befeddcd9ec1dc1ce898 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_61.txt @@ -0,0 +1,19 @@ +In Closing +It’s been 20 years since the Bank One-JPMorgan Chase merger — and it’s been +an extraordinary journey. I can’t even begin to express my heartfelt appreciation +and respect for the tremendous character and capabilities of the +management team who got us through the good times and the bad times +to where we stand today. And I recognize that we all stand on the shoulders of many +others who came before us in building this exceptional company of ours. +I would also like to express my deep gratitude to the 300,000+ employees, +and their families, of JPMorgan Chase. Through these annual letters, +I hope shareholders and all readers have gained a deeper understanding +of what it takes to be an “endgame winner” in a rapidly changing world. +More important, I hope you are as proud of what we have achieved — as a business, +as a bank and as a community investor — as I am. +Thank you for your partnership. +Finally, we sincerely hope to see the world on the path to peace and prosperity. +Jamie Dimon +Chairman and Chief Executive Officer +April 8, 2024 +59 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_62.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..a613914429a50e3992622c304a3a64d9f6b86935 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_62.txt @@ -0,0 +1,65 @@ +Footnotes +Client Franchises Built Over the Long Term (page 11) +Note: figures may not sum due to rounding +1 Certain wealth management clients were realigned from Asset & Wealth Management (AWM) to Consumer & Community Banking (CCB) in 4Q20. 2005 and 2013 +amounts were not revised in connection with this realignment. +2 Federal Deposit Insurance Corporation (FDIC) Summary of Deposits survey per S&P Global Market Intelligence applies a $1 billion deposit cap to Chase and +industry branches for market share. While many of our branches have more than $1 billion in retail deposits, applying a cap consistently to ourselves and the +industry is critical to the integrity of this measurement. Includes all commercial banks, savings banks and savings institutions as defined by the FDIC. +3 Barlow Research Associates, Primary Bank Market Share Database. Rolling 8-quarter average of small businesses with revenues of more than $100,000 and +less than $25 million. 2023 results include First Republic. Barlow’s 2005 Primary Bank Market Share is based on companies with revenues of more than +$100,000 and less than $10 million. +4 Total payment volumes reflect Consumer and Small Business customers’ digital (ACH, BillPay, PayChase, Zelle, RTP, external transfers, digital wires), non-digital +(non-digital wires, ATM, teller, checks) and credit and debit card payment outflows. +5 Digital non-card payment transactions includes outflows for ACH, BillPay, PayChase, Zelle, RTP, external transfers, and digital wires, excluding Credit and Debit +card sales. 2005 is based on internal JPMorgan Chase estimates. +6 Represents general purpose credit card (GPCC) spend, which excludes private label and Commercial Card. Based on company filings and JPMorgan Chase +estimates. +7 Represents GPCC loans outstanding, which excludes private label, American Express Company (AXP) Charge Card, Citi Retail Cards, and Commercial Card. Based +on loans outstanding disclosures by peers and internal JPMorgan Chase estimates. +8 Represents users of all web and/or mobile platforms who have logged in within the past 90 days. +9 Represents users of all mobile platforms who have logged in within the past 90 days. +10 Based on 2023 sales volume and loans outstanding disclosures by peers (AXP, Bank of America Corporation, Capital One Financial Corporation, Citigroup Inc. +and Discover Financial Services) and JPMorgan Chase estimates. Sales volume excludes private label and Commercial Card. AXP reflects the U.S. Consumer +segment and JPMorgan Chase estimates for AXP’s U.S. small business sales. Loans outstanding exclude private label, AXP Charge Card, Citi Retail Cards and +Commercial Card. Card loans outstanding market share has been revised to reflect a restatement to the 2022 reported total industry outstandings disclosed by +Nilson, which impacts annual share growth in 2023. +11 Inside Mortgage Finance, Top Owned Mortgage Servicers as of 4Q23. +12 Experian Velocity data as of FY23. Reflects financing market share for new and used loan and lease units at franchised and independent dealers. +13 Coalition Greenwich Competitor Analytics (preliminary for FY23). Market share is based on JPMorgan Chase’s internal business structure and revenue. Ranks +are based on Coalition Index Banks for Markets. 2006 rank is based on JPMorgan Chase analysis. +14 Dealogic as of January 2, 2024, excludes the impact of UBS/CS merger prior to the year of the acquisition (2023). +15 Client deposits and other third-party liabilities pertain to the Payments and Securities Services businesses. +16 Firmwide Payments revenue metrics exclude the net impact of equity investments; 2005 data represents Treasury Services firmwide revenue only. All other +periods include Merchant Services revenue. +17 Coalition Greenwich Competitor Analytics (preliminary for FY23) reflects global firmwide Treasury Services business (CIB and CB). Market share is based on +JPMorgan Chase’s internal business structure, footprint and revenue. Ranks are based on Coalition Index Banks for Treasury Services. +18 Institutional Investor. +19 Based on third-party data. +20 The Market Share number represents US dollar payment instructions for direct payments and credit transfers processed over Society for Worldwide Interbank +Financial Telecommunications (“SWIFT”) in the countries where J.P. Morgan has sales coverage. +21 Nilson, Full Year 2023. +22 Coalition Greenwich FY23 Competitor Analytics (preliminary). Rank is based on JPMorgan Chase’s internal business structure and revenue and Coalition Index +Banks for Securities Services. +23 Data in 2005 column is as of 12/31/2006. +24 New relationships (gross) exclude impact of First Republic acquisition. +25 Includes gross revenues earned by the Firm that are subject to a revenue sharing arrangement between CB and the CIB for Investment Banking and Markets’ +products sold to CB clients. This includes revenue related to fixed income and equity markets products. +26 S&P Global Market Intelligence as of December 31, 2023. +27 London Stock Exchange Group, FY23. +28 Aligns with the affordable housing component of the Firm’s $30 billion racial equity commitment. +29 Percentage of active mutual fund and active ETF assets under management in funds ranked in the 1st or 2nd quartile (one, three and five years): All quartile +rankings, the assigned peer categories and the asset values used to derive these rankings are sourced from the fund rating providers. Quartile rankings are +based on the net-of-fee absolute return of each fund. Where applicable, the fund rating providers redenominate asset values into U.S. dollars. The percentage +of AUM is based on fund performance and associated peer rankings at the share class level for U.S.-domiciled funds, at a “primary share class” level to +represent the quartile ranking for U.K., Luxembourg and Hong Kong SAR funds and at the fund level for all other funds. The performance data may have been +different if all share classes had been included. Past performance is not indicative of future results. “Primary share class” means the C share class for European +funds and Acc share class for Hong Kong SAR and Taiwan funds. If these share classes are not available, the oldest share class is used as the primary share +class. Due to a methodology change effective September 30, 2023, prior results include all long-term mutual fund assets and exclude active ETF assets. +30 In the fourth quarter of 2020, the Firm realigned certain wealth management clients from AWM to CCB. Prior-period amounts have been revised to conform +with the current presentation. +31 Traditional assets includes Equity, Fixed Income, Multi-Asset and Liquidity AUM Brokerage, Administration and Custody assets under supervision. +32 AUM only for 2005. Prior period amounts have been restated to include changes in product categorization. +33 Source: Euromoney. +60 +The secret object #2 is a "lamp". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_63.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a29009ecbc874eb09f5e7805d354842a0ba284d --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_63.txt @@ -0,0 +1,57 @@ +34 Percentage of active mutual fund and active ETF assets under management in funds rated 4- or 5-star: Mutual fund rating services rank funds based on their +risk adjusted performance over various periods. A 5-star rating is the best rating and represents the top 10% of industry-wide ranked funds. A 4-star rating +represents the next 22.5% of industry-wide ranked funds. A 3-star rating represents the next 35% of industry-wide ranked funds. A 2-star rating represents the +next 22.5% of industry-wide ranked funds. A 1-star rating is the worst rating and represents the bottom 10% of industrywide ranked funds. An overall +Morningstar rating is derived from a weighted average of the performance associated with a fund’s three-, five and ten- year (if applicable) Morningstar Rating +metrics. For U.S.- domiciled funds, separate star ratings are provided at the individual share class level. The Nomura “star rating” is based on three-year +risk-adjusted performance only. Funds with fewer than three years of history are not rated and hence excluded from these rankings. All ratings, the assigned +peer categories and the asset values used to derive these rankings are sourced from the applicable fund rating provider. Where applicable, the fund rating +providers redenominate asset values into U.S. dollars. The percentage of AUM is based on star ratings at the share class level for U.S.-domiciled funds, and at a +“primary share class” level to represent the star rating of all other funds, except for Japan, for which Nomura provides ratings at the fund level. The +performance data may have been different if all share classes had been included. Past performance is not indicative of future results. +35 Source: Company filings and JPMorgan Chase estimates. Rankings reflect publicly traded peer group as follows: Allianz, Bank of America, Bank of New York +Mellon, BlackRock, Charles Schwab, DWS, Franklin Templeton, Goldman Sachs, Invesco, Morgan Stanley, State Street, T. Rowe Price and UBS. JPMorgan Chase +ranking reflects Asset & Wealth Management client assets, U.S. Wealth Management investments and new-to-firm Chase Private Client deposits. +36 Source: iMoneynet. +37 Represents AUM in a strategy with at least one listed female and/or diverse portfolio manager. “Diverse” defined as U.S. ethnic minority. +JPMorgan Chase Exhibits Strength in Both Efficiency and Returns When Compared with Large Peers and +Best-in-Class Peers (page 14) +1 Bank of America Corporation (BAC), Citigroup Inc. (C), The Goldman Sachs Group, Inc. (GS), Morgan Stanley (MS) and Wells Fargo & Company (WFC). +2 Managed overhead ratio = total noninterest expense/managed revenue; revenue for GS and MS is reflected on a reported basis. +3 Best-in-class peer overhead ratio represents the comparable business segments of JPMorgan Chase (JPM) peers: Capital One Domestic Card and Consumer +Banking (COF-DC & CB), Bank of America Global Banking and Global Markets (BAC-GB & GM), Fifth Third Bank (FITB), Northern Trust Wealth Management +(NTRS-WM) and Allianz Group (ALLIANZ-AM). +4 Best-in-class all banks ROTCE represents implied net income minus preferred stock dividends of the comparable business segments of JPM peers, when +available, or of JPM peers on a firmwide basis when there is no comparable business segment: Bank of America Consumer Banking (BAC-CB), Bank of America +Global Banking and Global Markets (BAC-GB & GM), Wells Fargo & Company Commercial Banking (WFC-CB) and Morgan Stanley Wealth Management & +Investment Management (MS-WM & IM). +5 Best-in-class GSIB ROTCE represents implied net income minus preferred stock dividends of the comparable business segments of JPM GSIB peers, when +available, or of JPM GSIB peers on a firmwide basis when there is no comparable business segment: Bank of America Consumer Banking (BAC-CB), Bank of +America Global Banking and Global Markets (BAC-GB & GM), Wells Fargo & Company Commercial Banking (WFC-CB) and Morgan Stanley Wealth Management & +Investment Management (MS-WM & IM). WFC-CB is the only GSIB peer to disclose a comparable business segment to Commercial Banking. +6 Given comparisons are at the business segment level, where available; allocation methodologies across peers may be inconsistent with JPM’s. +Our Fortress Balance Sheet (page 15) +1 Tangible common equity 2005-2007 reflects common stockholders’ equity less goodwill and other intangible assets. +2 Basel III Transitional rules became effective on January 1, 2014; prior-period CET1 data is based on Basel I rules. As of December 31, 2014, the ratios represent +the lower of the Standardized or Advanced approach calculated under the Basel III Fully Phased-In basis. +3 Includes eligible High Quality Liquid Assets (HQLA) as defined in the liquidity coverage ratio (LCR) rule and unencumbered marketable securities, such as equity +and debt securities, that the Firm believes would be available to raise liquidity including excess eligible HQLA securities at JPMorgan Chase Bank, N.A. that are +not transferable to nonbank affiliates; for December 31, 2023 and 2022, the balance includes eligible end-of-period HQLA as defined in the LCR rule, issued +December 19, 2016. For December 31, 2017–2021, the balance includes average eligible HQLA. Periods prior to 2017 represent period-end balances. December +31, 2016 and 2015 balances are under the initial U.S. rule approved on September 3, 2014. The December 31, 2014 amount is estimated prior to the effective +date of the initial rule, and under the Basel III liquidity coverage ratio (Basel III LCR) for December 31, 2013. +4 2005-2012 reflect cash and cash due from banks and investment securities. +5 Capital returned to common stockholders includes common dividends and net repurchases. +Size of the Financial/Sector Industry (page 39) +1 2007 and 2010 sourced from WorldBank.org annual GDP publication. 2023 is calculated using JPM Research forecasts. Figures are represented in 2015 prices. +2 Consists of cash assets and Treasury and agency securities. +3 2023 figure is as of 3Q23. +4 Top 50 fund AUM data per Sovereign Wealth Fund Institute (SWFI). +5 Loans held by nonbank entities per the FRB Z.1 Financial Accounts of the United States. +6 U.S. money market fund investment holdings of securities issued by entities worldwide. +7 Methodology updated in 2022, previous years have been restated. +8 NYSE + NASDAQ; excludes investment funds, ETF’s unit trusts and companies whose business goal is to hold shares of other listed companies; a company with +several classes of shares is only counted once. +9 Inside Mortgage Finance and JPMorgan Chase internal data; consists of Top 50 Originators (Top 40 for 2007). +10 Preqin, Dealogic, JPM Credit Research. +61 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_64.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..82e4e144e648ac6167fe1f474fb29ea4acd5e97b --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_64.txt @@ -0,0 +1,116 @@ +CONSUMER & COMMUNITY BANKING +62 +• Delivering financial performance that is +consistently best-in-class. +• Leveraging data and technology to +deliver customer value and drive speed +to market. +• Protecting our customers and the firm +through a strong risk and controls +environment. +• Cultivating talent to build high- +performing, diverse teams where +culture is a competitive advantage. +Our strategy is working as evidenced by +our results last year. +GROWING AND DEEPENING +RELATIONSHIPS +After the pandemic, we accelerated the +pace of customer acquisition while lower- +ing attrition. Maintaining that momentum, +we now serve over 82 million consumers +and 6.4 million small businesses, up 11% +and 37%, respectively, since 2019. We’re +driving that growth across businesses — +during the same period, Consumer Bank- +ing customers are up 18%, Business +Banking clients are up 41% and Card +accounts are up 30% 1 . +We’re engaging customers with our prod- +ucts and services and delivering seamless +experiences across digital and branch +channels. Our digital banking platform +grew to nearly 67 million active custom- +ers, up 28% since 2019. Once customers +begin to use Chase.com and the Chase +mobile app, we make it easy to help them +save for the future, make small or big +purchases (including a car or home), plan +for retirement or a dream vacation, or +find the perfect restaurant for a night +on the town. +Our branches remain a critical touchpoint +as over 900,000 people walk into one +every day. We know being local matters +and that customers increasingly value +personal interaction and advice. In 2023, +over 2 million more customers met with +a banker than in 2022. +Once we onboard a customer to the fran- +chise, we focus on earning the right to +deepen that relationship and serve more +of their financial needs. Last year was a +banner year for deepening as we ended +2023 with over 24 million multi-line of +business (LOB) customers — up 9% from +2022 and 30% from 2019 3 . We have +prioritized growing multi-LOB relation- +ships as it helps us address more of our +customers’ needs while driving higher +retention and engagement with our prod- +ucts and services. We constantly focus +on improving the customer experience, +which we measure in many ways. We’re +proud to have all-time-high satisfaction +I’m very proud to have co-led Consumer +& Community Banking (CCB) for the past +three years and am grateful to Jenn +Piepszak for her partnership. When we +took over this leading franchise, we +established a strategic framework for +continued, long-term success, and that +framework guided CCB to deliver strong +performance again in 2023. The evolving +macro landscape means uncertainty on +many fronts: the financial health of the +consumer, the path of credit and interest +rates, and the impact of new regulations. +While the future will bring challenges, it +will also create opportunities, and we’ve +proved our ability to adapt and optimize. +In 2023, we remained focused on a +consistent set of strategic priorities: +• Growing and deepening relationships by: +— Engaging customers with products +and services they love and +— Expanding our distribution +Consumer & +Community Banking +CCB +0405_v3 +Charts 4/3/24 +1 Defined as average sales debit active accounts. +2 Unique families with primary and joint account owners +for open and funded accounts. +3 Reflects consumers and small businesses that have +relationships with two or more CCB lines of business. + +20232022202120202019 20232022202120202019 20232022202120202019 ++30% +21% -67% +2023202220212020201920232022202120202019 20232022202120202019 ++18% +41% +60% +2019 TO 2023 GROWTH +CONSUMER BANKING +CUSTOMERS +CREDIT CARD +ACTIVE ACCOUNTS 1 +BUSINESS BANKING +CLIENTS +AUTO +LOAN AND LEASE +ORIGINATIONS +WEALTH MANAGEMENT +RELATIONSHIPS 2 +HOME LENDING +MORTGAGE +ORIGINATIONS \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_65.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..5293425a6e5e1efc846aa1727340591ff0b2f9d6 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_65.txt @@ -0,0 +1,138 @@ +CONSUMER & COMMUNITY BANKING +63 +ratings across branch and digital chan- +nels, while our complaint rate per +account is down nearly 10% year-over- +year. Customer attrition is below historic +levels, and CCB’s overall net promoter +score remains very healthy. +DELIVERING FINANCIAL +PERFORMANCE THAT IS +CONSISTENTLY BEST-IN-CLASS +While we recognize that favorable macro +conditions contributed to overearning in +net interest income and credit, we still out- +performed as we delivered strong returns +and grew market share across businesses. +With a 38% return on equity, we exceeded +our 25% target for the third straight year +and would have done so even when nor- +malized to reflect through-the-cycle credit +and rate assumptions. Net income was +$21.2 billion, up 42% over 2022. Revenue +of $70.1 billion was up 28% from 2022, and +CCB’s overhead ratio was 50%. Average +deposits were $1.1 trillion, and although +down 3% from 2022, we outperformed the +industry average. Average loans were up +20% over the prior year to $526 billion, +including the First Republic acquisition. +EXTENDING OUR #1 POSITION +ACROSS INDUSTRY-LEADING +BUSINESSES +Our momentum is driven by successful +execution across all lines of business +in CCB. We’re the clear market leader in +Consumer Banking, Business Banking +and Card and continue to grow. +Consumer Banking +We extended our #1 position in 2023 with +an 11.3% deposit market share, up 40 +basis points from 2022. Excluding First +Republic, share growth was up 10 basis +points. Since 2019, we’ve increased our +share by 220 basis points. We’ll continue +to drive growth by expanding branches +and evolving products to meet customer +needs by segment. +Branches remain the hub for our local +team of experts — over 50,000 bankers, +advisors and business relationship +managers — and a key distribution channel +for all parts of the firm. We continue to +optimize our network of over 4,800 +branches as we aim to be within a +10-minute drive for 70% of the U.S. +population. This will help us grow share +in major metropolitan areas like Boston, +Philadelphia and Washington, D.C., as +well as states with mostly rural popula- +tions such as Alabama and Iowa, where +we are also expanding our presence. +We’ve added more than 650 new +branches in the last five years, by far +the most of any bank in the U.S. We’re +doubling down on that investment and +will add 500+ branches over the next +three years. The result is a significantly +younger branch network, which creates +embedded growth that already has driven +share gains and will continue to do so for +years to come. Newer or “unseasoned” +branches represent more than $150 bil - +lion in incremental deposit upside as they +mature. At the same time, we are consoli- +dating older branches in certain markets +in response to shifting customer behavior. +We aim to be the bank for all, so tailoring +products, services and experiences for +each customer segment and community is +central to our strategy. We’re increasingly +focused on supporting the financial health +of customers and communities through +digital and in-person resources, such as +our nearly 150 dedicated Community +Managers. We now have 16 Community +Center branches and plan to open three +more in 2024. +We started 2023 with a goal of maintain - +ing primary bank relationships and cap- +turing money in motion, and we did both. +We retained over 95% of our primary +bank customers and succeeded in deep- +ening with investments and an enhanced, +higher-yield product set — including +competitive-rate CDs and the new +J.P. Morgan Premium Deposit account. As +a result, we successfully captured more +than 80% of yield-seeking flows in 2023. +Business Banking +We offer small business owners a compre- +hensive product suite to help them start, +run and grow their businesses. We’re #1 +in small business primary bank share +with 9.5% of a fragmented market and +plan to grow by: +• Increasing banker capacity to better +cover large clients, which drives higher +retention, cross-product deepening and +client satisfaction. In 2023, we added +more than 350 bankers against our +target of 1,000 incremental bankers. +• Rolling out value-added services like +payroll, broadening our payment accep- +tance suite with new offerings such as +invoicing (currently in pilot) and launch- +ing Tap-to-Pay, which enables mer - +chants to accept card payments on +their mobile devices. +• Continuing to expand support for small +business owners in underserved com- +munities through special purpose credit +programs, one-on-one mentoring and +local events. +Card +In 2023, we extended our #1 position in +credit card, with sales and outstandings +market share up approximately 50 and +30 basis points, respectively, compared +with 2019 4 . +We drove growth by leveraging our +marketing capabilities to get the right +products in the right customers’ hands. +In 2023, we invested nearly $7 billion in +4 Card outstandings market share has been revised to +reflect a restatement to the 2022 reported total industry +outstandings disclosed by Nilson, which impacted annual +share growth in 2023. + \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_66.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..0250b05a7556057954c594dff7d0a2bef57eb326 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_66.txt @@ -0,0 +1,119 @@ +CONSUMER & COMMUNITY BANKING +64 +gross marketing to generate 10 million +new credit card accounts and deliver +benefits to existing cardholders. The +continued demand for our leading products +has fueled portfolio growth, enabling us +to deliver more value and drive engage- +ment with our customer base. +In 2023, we focused on enhancing our +Card product continuum to effectively +serve the unique needs of each customer +segment and: +• Launched Chase Freedom Rise SM for +younger, new-to-credit customers, +which has shown strong adoption using +our branches as its primary distribution. +• Launched DoorDash Rewards +Mastercard®, adding a new strategic +partner to our co-brand portfolio. +• Scaled Ink Business PremierSM, launched +in late 2022, to grow share with small +businesses. +• Continued to enhance the Sapphire +value proposition by opening lounges in +five airports to date and leveraging the +travel, dining and shopping experiences +we’re building in Connected Commerce. +SCALING GROWTH BUSINESSES +In Connected Commerce and Wealth +Management, we have the assets to win +and outsized opportunity to grow to +what we view is our fair share, given the +breadth of CCB relationships. These busi- +nesses are natural adjacencies to banking +and credit card, with scale and distribu- +tion that will fuel their growth. +Connected Commerce +We continue building out a powerful two- +sided platform to connect Chase custom- +ers with top brands, helping them book +travel, discover new dining experiences +and save money while shopping. We +expect to drive approximately $30 billion +in volume and about $2 billion in revenue +through the platform in 2025. We’ve +nearly doubled volume over two years, +driving more than $18 billion in 2023. +Going forward, we’re focused on: +• Scaling Travel. We are a top 5 consumer +leisure travel provider with $10 billion in +booked volume last year, up more than +25% from 2022. We’ve just relaunched +ChaseTravel.com to help customers +dream, discover and book travel, +including a new collection of more than +600 of the world’s finest hotels. +• Expanding Shopping through Chase +Offers. In 2023, we generated more +than $8 billion in attributed spend +volume, up over 30% from 2022. +We’re accelerating growth by launching +Chase Media SolutionsSM, a new digital +media business aimed at merchants +that allows them to target and connect +with Chase customers. +• Innovating payments and lending +capabilities. To provide customers with +innovative, convenient ways to pay and +borrow, last year we began to roll out +Pay in 4 SM, which has scaled to more +than 20 million customers. We also saw +more than 50% year-over-year growth +in card-linked installment originations +through My Chase Plan®. +Wealth Management +In 2023, we grew client investment assets +by 25% to $800 billion before accounting +for the First Republic acquisition. In total, +we ended the year with $950 billion in +assets, up $450 billion since 2019, as we +close in on our goal of reaching $1 trillion +in assets under supervision. We now have +2.5 million client relationships — up 60% +from 2019 — with a record 120,000 first- +time investors in 2023. +This momentum stems from the invest- +ments we’ve made in products, channels +and talent in the last four years since +we established J.P. Morgan Wealth +Management. In 2023, we: +• Added more than 400 total advisors, +ending the year with nearly 5,500 on +a path to 6,000. +• Scaled Wealth Plan, an omnichannel +financial planning experience that +customers start digitally and can finish +with an advisor. Customers have +created more than 1 million financial +plans since the experience launched +in December 2022. +5 #1 most-visited banking portal in the U.S. (Chase.com) +based on Similarweb. +#1 banking portal +in the United States5 +#1 in total combined +U.S. credit and debit +payments volume +#1 +#1 +#1 in U.S. retail deposit +market share +#1#1 +#1 primary bank for +U.S. small businesses +#1 U.S. credit card issuer based +on sales and outstandings4 +#1 +The secret object #3 is a "spoon". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_67.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..00fd355d8faf77feb2e6187ee3d4e8f15b1cd749 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_67.txt @@ -0,0 +1,138 @@ +CONSUMER & COMMUNITY BANKING +65 +SECURED LENDING +Auto and Home Lending +In Auto and Home Lending, our objective +is not market share but to be there for cus- +tomers during key moments and to create +franchise value while continuing to maxi- +mize the strength of the firm’s balance +sheet, capital and liquidity. Given the cycli- +cal nature of both businesses, we manage +returns on a through-the-cycle basis. +Despite recent market headwinds, Auto +and Home Lending delivered a return on +equity of 17% and 15%, respectively, aver - +aged over the last five years6 . While the +acquisition of First Republic’s mortgage +portfolio helped bolster Home Lending +returns last year, CCB’s mortgage business +was key to enabling the transaction. +Across both businesses, we continue +to leverage data and artificial intelligence +(AI)-enabled techniques to enhance and +optimize our underwriting and credit +decisioning. +We also remain committed to increasing +homeownership among underserved +communities. Our Chase Homebuyer +Grant program has scaled to over 15,000 +communities since its launch in 2021, and +we recently increased the grant amount +to $7,500 in select markets. +LEVERAGING DATA AND +TECHNOLOGY TO DELIVER +CUSTOMER VALUE AND DRIVE +SPEED TO MARKET +Data and technology make everything we +do better — our products, channels and +experiences. In 2023, CCB spent over +$3 billion on technology investments +spanning both product development and +modernization. +A little over half of our annual investment +is focused on product development, help- +ing ensure we have the best products, +services and channels to meet customers’ +evolving needs. From paying a bill and +checking a balance to replacing a card +and disputing a transaction, we’re making +processes more seamless, taking friction +out of customers’ everyday financial lives. +At the same time, customers are increas- +ingly engaging with our advice-oriented +digital and omnichannel experiences to +meet their more complex needs, like buy- +ing a home or planning for retirement. +Engaged online activity — beyond viewing +balances — is up 25% since 2019. +The rest of our technology investment is +focused on modernization, which is both +offensive and defensive. We need to +deliver new products and experiences +more quickly while executing with resil- +iency at massive scale to stay competitive +and avoid being disrupted. We’ve made +significant progress and are on track to +substantially complete data center migra- +tion by the end of 2024. We’ve also +migrated almost 90% of our data to the +public cloud. Looking ahead, we’ll con- +tinue to focus on modernizing our core +banking infrastructure, which will enable +us to launch products faster, improve +platform stability and reduce run-the- +bank expenses over time. +Our data migration efforts help us take full +advantage of our extraordinary data +assets to deliver personalization at scale +and accelerate existing and future AI initia- +tives. We’ve been using AI for years and +have a strong foundation in place. Initially, +we focused on using AI to drive cost reduc- +tion and risk avoidance, but we’ve pivoted +to focus more on revenue growth. We’ll +continue to invest where we will realize the +greatest benefit, including: +• Optimizing marketing efforts to better +target profitable prospects. +• Identifying unmet customer needs, then +addressing them in the moment with +digital nudges and personalized offers. +• Increasing the productivity and effi- +ciency of our sales force through lead +management and propensity models. +• Predicting in real time the likelihood +of fraud to better protect customers +and the firm. +• Supporting specialists with AI advance- +ments like call prediction, real-time +insights and intelligent routing to drive +customer and employee satisfaction. +PROTECTING OUR CUSTOMERS +AND THE FIRM +Risk management is core to our culture +and a key competitive advantage, helping +us build trust and providing security to +customers. We are focused on protecting +shareholders, customers and the firm by +maintaining our fortress balance sheet, +strong controls environment and through- +the-cycle decision-making approach. +CULTIVATING TALENT +The work we do matters to customers, +communities and the economy overall. Our +goal is always to attract and retain great +talent and create a culture where every- +one’s voice matters. We help employees +build a long-term career at the firm and +have a workforce that reflects the commu- +nities we serve. Our high-performance +culture rewards the hard work, heart and +humanity that our more than 140,000 +employees deliver every day. All of this +leads to the best business outcomes. +ACQUIRING FIRST REPUBLIC +In the midst of widespread instability in +the banking sector, it was the strength +and breadth of our franchise and the +dedication of thousands of employees +that enabled us to complete the acquisi- +tion of virtually all of First Republic’s +assets in one weekend. +We had long admired First Republic’s +capabilities and culture of client service, +which complement our existing affluent +6 Excluding loan loss reserves. + +The secret vegetable is a "carrot". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_68.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..6eb4ba255f10b370a0f2d96cf6a0f961ffbc430e --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_68.txt @@ -0,0 +1,101 @@ +CONSUMER & COMMUNITY BANKING +66 +strategy. We already serve customers +across the wealth spectrum, but the +acquisition will help us deepen relation- +ships with the affluent segment. In 2023, +we prioritized stabilizing First Republic’s +existing business. We retained the vast +majority of customers, and deposits have +increased approximately 20% since the +acquisition. While we are on track against +key integration milestones, 2024 will be +critical as we aim to largely complete +integration efforts by year-end. +2024 LOOK AHEAD +Macro factors +The macro environment going forward +will likely look very different from 2023. +While we anticipate the Federal Reserve +will lower rates this year, the trajectory +is still uncertain. Lower rates will be a +headwind for deposit margins but a +tailwind for businesses such as Home +Lending. The diversification of our +franchise provides natural offsets +and hedges and creates resiliency in +earnings and performance. +We are rigorous in monitoring our portfo- +lios at a granular level using multiple +data sources to assess direct risk and the +overall health of consumers and small +businesses. Based on what we’re seeing, +consumers and small businesses both +still remain generally healthy. Although +consumers have largely spent the excess +cash reserves built up from the fiscal +response to the pandemic, balance +sheets remain strong. Spending on a per +account basis is largely flat year-over- +year. Delinquencies played out as +expected in 2023, and credit card losses +should fully normalize later this year. +Regulatory environment +The banking industry is facing an unprec- +edented barrage of untested and unstud- +ied proposed regulations and legislation +targeting multiple aspects of our busi- +ness. The combined impact of all of these +— Basel III, Regulation II (Debit Card +Interchange Fees), overdraft and late fee +changes, the Consumer Financial Protec- +tion Bureau’s Sections 1033 and 1071, and +the Credit Card Competition Act — will +meaningfully disrupt the economics of +consumer financial products and services. +This level of intervention will lead to some +combination of the following: +• Fewer financial products and services +available, and the remaining ones will +become more expensive and harder to +access, especially for lower-income +consumers. +• Less investment and innovation in the +financial services industry, leading to +an erosion of the customer experience. +• More consolidation across the industry, +which will limit consumer choice. +• More financial activity handled by +nonbanks outside of the regulatory +perimeter, increasing risk for +consumers. +Of course, we will comply with the final +rules and regulations and are relatively +well-positioned to do so. However, +consumers and small businesses will +likely bear the largest burden. +Our hand +We continue to operate from a position of +strength with a relentless focus on the +customer, a proven strategy and the best +team. We recognize headwinds on the +horizon and will adapt accordingly, taking +a through-the-cycle approach to manag- +ing our business. Moving forward, we’ll +continue to: +• Execute with excellence and a focus on +efficiency and flexibility as the environ- +ment around us changes. +• Engage with regulators on how +current proposals will negatively +impact consumers and the industry. +• Reshape our business where necessary +in response to new regulations, balanc- +ing impacts to shareholders, customers +and the communities we serve. +I remain very confident about the future +of our franchise, yet approach the oppor- +tunities and challenges we’ll face with +great humility. +Marianne Lake +CEO, Consumer & Community Banking \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_69.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1622d3d0a853919c18728144520aae874ff04dc --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_69.txt @@ -0,0 +1,111 @@ +COMMERCIAL & INVESTMENT BANK +67 +Commercial & +Investment Bank +I am equally thrilled to spend more of +my time in my role as President and Chief +Operating Officer, helping Jamie with +firmwide, strategic priorities that will +provide growth and opportunities for +years to come. +My focus will be on driving synergies +across our lines of business, accelerating +our investments in growth and innova- +tion, and optimizing our resources across +the firm. Priorities include harnessing +data and modernizing our technology +infrastructure so we can apply artificial +intelligence (AI) to our businesses. This +will help identify efficiencies and areas of +opportunity. I also want to make sure we +continue to manage and deploy capital in +ways that best serve our clients, particu- +larly when they need it most. +In 2023, we made significant strides in +key areas: +In March, teams across our Consumer +Banking, Private Banking, Commercial +Banking and Investment Banking busi- +nesses joined forces to deliver the firm’s +full support to the venture ecosystem in +the aftermath of the regional banking tur- +moil. We are now exploring new ways to +better serve this community, including +tapping opportunities in the booming pri- +vate markets so that we can compete +effectively in this rapidly evolving area. +Our payments capabilities also continue +to strengthen and advance as we priori- +tize innovation and resiliency. We are +unique in that we can compete with fin- +techs on customer experience and digital +solutions while also offering the stability, +expansive network and services of a +global bank. +Technology is reshaping the financial +services landscape, and we are channel- +ing its transformative power. Among our +efforts, we are already using AI to +onboard customers faster, combat fraud +and serve up more insights to clients. +We are pushing into new markets both at +home and internationally. Whether it’s +growing our presence in emerging mar- +kets, deepening our relationships with +multinational corporations, or expanding +our U.S. branch network and wealth man - +agement business, our strategy is guided +by a commitment to clients, communities +and long-term value creation. +The leadership positions we have today are +the result of hard work and investment +over many years. We know also how hard it +is to stay ahead of the pack. My promise to +you, our shareholders, is that we will not +be complacent. We will stay humble and +hungry and strive always to be the best, +most respected financial firm in the world. +When Jamie asked me to lead a new orga- +nization 12 years ago, I was thrilled. The +firm was combining its traditional Invest- +ment Bank with the Treasury & Securities +Services division. +The rationale was clear. The merger +would create a massive franchise encom- +passing the industry’s most diverse and +comprehensive solutions for the world’s +largest and most prominent companies, +governments and institutions. From capi- +tal raising and M&A advice to payments, +trading and custody, the combined fran- +chise would enable us to deliver a full +range of products and solutions to clients +around the world. +As others retrenched, we believed growth +would come from being global and diver- +sified, having scale and providing a com- +plete client offering. So we merged two +divisions, identified gaps and invested in +global capabilities. To this day, I believe +the decisions we made then set us up for +the success that we’ve had for the last +decade. The proof is in the revenue, +returns, rankings and market share that +we’ve discussed with you over the years. +This January, we announced the latest +evolution of our corporate structure by +merging two divisions once again: Com- +mercial Banking (CB) with the Corporate +& Investment Bank (CIB). +As we integrate these top-notch fran- +chises, I am delighted to hand the keys +of this incredible organization to Jenn +Piepszak and Troy Rohrbaugh. They are +exceptional leaders in every way, and +I know they will continue to work hard +each day, leading our employees and +serving our clients with heart, integrity +and excellence. +Daniel E. Pinto +President and Chief Operating Officer, +JPMorgan Chase & Co. diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_7.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..df53e9d9db50adcef750baf1cc209b33a0a7e1a9 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_7.txt @@ -0,0 +1,138 @@ +STEADFAST PRINCIPLES WORTH REPEATING (AND ONE NEW ONE) +Looking back on the past two+ decades — +starting from my time as Chairman and +CEO of Bank One in 2000 — there is one +common theme: our unwavering dedica - +tion to help clients, communities and +countries throughout the world. It is clear +that our financial discipline, constant +investment in innovation and ongoing +development of our people have enabled +us to achieve this consistency and com- +mitment. In addition, across the firm, we +uphold certain steadfast tenets that are +worth repeating. +First, our work has very real human +impact. While JPMorgan Chase stock is +owned by large institutions, pension +plans, mutual funds and directly by single +investors, in almost all cases the ultimate +beneficiaries are individuals in our com - +munities. More than 100 million people in +the United States own stocks; many, in +one way or another, own JPMorgan Chase +stock. Frequently, these shareholders are +veterans, teachers, police officers, fire - +fighters, healthcare workers, retirees, or +those saving for a home, education or +retirement. Often, our employees also +bank these shareholders, as well as their +families and their companies. Your man- +agement team goes to work every day +recognizing the enormous responsibility +that we have to all of our shareholders. +Second, shareholder value can be built +only if you maintain a healthy and vibrant +company, which means doing a good job +of taking care of your customers, employ - +ees and communities. Conversely, how +can you have a healthy company if you +neglect any of these stakeholders? As we +have learned over the past few years, +there are myriad ways an institution can +demonstrate its compassion for its +employees and its communities while still +strengthening shareholder value. +Third, while we don’t run the company +worrying about the stock price in the short +run, in the long run we consider our stock +price a measure of our progress over time. +This progress is a function of continual +investments in our people, systems and +products, in good and bad times, to build +our capabilities. These important invest- +ments will also drive our company’s future +prospects and position it to grow and +prosper for decades. Measured by stock +performance, our progress is exceptional. +For example, whether looking back 10 +years or even farther to 2004, when the +JPMorgan Chase/Bank One merger took +place, we have outperformed the Standard +& Poor’s 500 Index and the Standard & +Poor’s Financials Index. +Fourth, we are united behind basic princi - +ples and strategies (you can see the prin - +ciples for How We Do Business on our +website and our Purpose statement in my +letter from last year) that have helped +build this company and made it thrive. +These allow us to maintain a fortress bal - +ance sheet, constantly invest and nurture +talent, fully satisfy regulators, continually +improve risk, governance and controls, +and serve customers and clients while +lifting up communities worldwide. This +philosophy is embedded in our company +culture and influences nearly every role +in the firm. +Fifth, we strive to build enduring busi- +nesses, which rely on and benefit from one +another, but we are not a conglomerate. +This structure helps generate our superior +returns. Nonetheless, despite our best +efforts, the walls that protect this com- +pany are not particularly high — and we +face extraordinary competition. I have +written about this reality extensively in the +past and cover it again in this letter. We +recognize our strengths and vulnerabili- +ties, and we play our hand as best we can. +Sixth, and this is the new one, we must be +a source of strength, particularly in tough +times, for our clients and the countries in +which we operate. We must take seriously +our role as one of the guardians of the +world’s financial systems. +Seventh, we operate with a very important +silent partner — the U.S. government — +noting as my friend Warren Buffett points +out that his company’s success is predi- +cated upon the extraordinary conditions +our country creates. He is right to say to +his shareholders that when they see the +American flag, they all should say thank +you. We should, too. JPMorgan Chase is a +healthy and thriving company, and we +always want to give back and pay our fair +share. We do pay our fair share — and we +want it to be spent well and have the +greatest impact. To give you an idea of +where our taxes and fees go: In the last 10 +years, we paid more than $46 billion in +federal, state and local taxes in the United +States and over $22 billion in taxes outside +of the United States. Additionally, we paid +the Federal Deposit Insurance Corporation +over $10 billion so that it has the resources +to cover failure in the American banking +sector. Our partner — the federal govern- +ment — also imposes significant regula- +tions upon us, and it is imperative that we +meet all legal and regulatory require- +ments imposed on our company. +Eighth and finally, we know the founda- +tion of our success rests with our people. +They are the front line, both individually +and as teams, serving our customers and +communities, building the technology, +making the strategic decisions, managing +the risks, determining our investments +and driving innovation. However you view +the world — its complexity, risks and +opportunities — a company’s prosperity +requires a great team of people with +guts, brains, integrity, enormous capabili - +ties and high standards of professional +excellence to ensure its ongoing success . +5 \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_70.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..d1cdf383cfef166a23441a1b70bdb306d8c7763b --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_70.txt @@ -0,0 +1,140 @@ +COMMERCIAL & INVESTMENT BANK +68 +A decline in M&A dealmaking and the +higher interest rate environment led to +subdued debt capital markets and a drop +in our debt underwriting fees to $2.6 +billion in 2023 compared with $2.8 billion +in 2022. A standout deal was the $31 +billion bond deal for Pfizer to fund its +acquisition of cancer drug pioneer +Seagen, in which the firm had a lead role. +In 2023, our equity underwriting fees +were up 11% compared with 2022, and +we gained market share year-over-year1 . +While market uncertainty dented confi- +dence in initial public offerings (IPO), the +franchise led two of the year’s biggest +offerings, including the $5 billion IPO of +British chip designer Arm Holdings and +consumer health company Kenvue’s +$4 billion debut. +It was another strong year for our +Markets business, which generated +$28 billion in revenue. Some of the +uncertainty that plagued investment +banking activity kept trading desks busy +as clients hedged and positioned them- +selves accordingly. Fixed Income Markets +revenue was up 1% from 2022, driven +by the Securitized Products Group and +Credit, mainly offset by normalization in +Currencies & Emerging Markets, while +Equity Markets revenue dipped after +a relatively strong performance in 2022. +Clients also voted J.P. Morgan the #1 +global research firm in Institutional +Investor’s annual survey for the fourth +year in a row. Our analysis of economies +and markets, including research on +some 5,200 companies across more than +80 countries, is particularly sought after +during turbulent times. +CIB Payments reported a record +$9.3 billion in revenue in 2023, up from +$7.6 billion in 2022, as it benefited from +the higher interest rate environment. +In January 2024, we announced an excit - +ing new chapter in our decade-long +growth story. +The decision to bring together the firm’s +major wholesale businesses to form the +Commercial & Investment Bank continues +a journey we have been on for a while as +we seek to better support clients from +their early stages of growth through to +international expansion, acquisitions +and beyond. +The new combined business has the scale, +business diversity and financial firepower +to offer complete solutions across bank- +ing, trading, payments and custody to +middle market businesses, global compa- +nies and governments in more than 100 +markets. +We are deeply indebted to Daniel Pinto, +who built the Corporate & Investment +Bank over the last 12 years with leader- +ship positions across products and +regions1,2 . In his time as CEO, the CIB grew +revenue from $34 billion in 2011 to $49 +billion in 2023 and increased net income +by more than 75% during the same +period, and its Investment Banking and +Markets businesses have been #1 fran- +chises for over a decade1,2 . +It is a privilege to lead this remarkable +business, and we are thrilled about the +opportunities still to come. But let us first +reflect on the key events and highlights +of our performance in 2023. +OUR PERFORMANCE IN 2023 +In 2023, the CIB generated net income of +$14 billion on $49 billion in revenue, mir - +roring 2022’s solid performance but down +from 2021’s record highs. Strong trading +results and record years for our deposit- +taking businesses cushioned the impact +of industrywide weakness in investment +banking activity, underscoring the bene- +fits of our diversified business model. +The year included central banks hiking +rates at the fastest pace in decades, a +second year of war in Ukraine and the +outbreak of conflict in the Middle East, +the collapse of several U.S. regional +banks and recession in parts of Europe. +Throughout, J.P. Morgan offered its +expertise and balance sheet, helping +companies, financial institutions and +governments weather the storm. +During the regional bank turmoil and +resulting economic stress, the firm +helped shore up the financial system +and the economy, stepping in with bil- +lions of dollars in liquidity to help +banks, their clients and investors navi- +gate the crisis. This was complemented +by the firm helping to raise $155 billion +for financial institutions in 2023. +Worldwide investment banking activity +was hit by the uncertain economic out- +look and market conditions. Industry- +wide fees shrank to a 10-year low1 , and +dealmaking remained subdued, causing +our own investment banking revenue +to dip slightly, to $6.2 billion from $6.5 +billion in 2022. Even so, the business +maintained its #1 ranking in global +investment banking fees with a wallet +share of 8.8% 1 . We also ranked #1 in +debt capital markets, #2 in mergers and +acquisitions (M&A), and rose to #1 in +equity capital markets1 . +Our M&A franchise advised on nearly +350 deals totaling more than $700 bil - +lion in volume1 , including some of the +year’s largest announced transactions: +the $42 billion separation of Johnson +& Johnson’s consumer health business, +agricultural supplier Viterra’s $17 billion +merger with U.S. oilseed and grain +processor Bunge, and sandwich chain +Subway’s $10 billion sale to Roark +Capital, one of the biggest transactions +in fast food history. +1 Dealogic as of January 2, 2024 +2 Coalition Greenwich Competitor Analytics (preliminary for +FY23). Market share is based on JPMorgan Chase’s internal +business structure and revenue. Ranks are based on Coalition +Index Banks. \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_71.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..12154e938a1857a507891262a3406241daa7766c --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_71.txt @@ -0,0 +1,77 @@ +COMMERCIAL & INVESTMENT BANK +69 +Securities Services, our fourth major line +of business in the CIB, also had a record +year, reporting $4.8 billion in revenue. +Sitting adjacent to the industry’s largest +Markets business, it provides post-trade +services to institutional asset-manager +and asset-owner clients, providing safe- +keeping, settlement and related services +for securities in approximately 100 +markets around the world. Since the +CIB was formed in 2012, the Securities +Services business has nearly doubled +assets under custody from $17 trillion at +the end of 2011 to $32 trillion at the end +of 2023 3 . In recent years, investments +in technology have enhanced the scale +and resiliency of its platforms, enabling +the business to grow revenue and secure +major new mandates. +SIZING UP THE OPPORTUNITIES +AHEAD +J.P. Morgan has an exceptional blend of +strengths that have continued to deliver +value over time. The completeness of our +products and services, talent, ongoing +investments in digital technology and +tools, client focus and fortress balance +sheet have given the CIB strong share +positions across almost all areas1,2 . +We are not complacent about these lead- +ership positions. The competitive land- +scape for our businesses is intensifying, +driven by both traditional banks as well +as further growth of nonbank financial +institutions. Core to our strategy is look- +ing very closely at all areas of the busi- +ness and pinpointing where there are +weaknesses and opportunities to grow. +Here are some of our target areas: +The benefits of integration +This year we are integrating our major +wholesale businesses Commercial Banking +and the Corporate & Investment Bank. +There are more connections between the +3 Represents assets held directly or indirectly on +behalf of clients under safekeeping, custody +and servicing arrangements. +MARKETS +20232018 +$19.6 +$27.8 ++42% +Markets revenue4 and J.P. Morgan market share and rank5 +($ in billions) +4 Revenue reflects J.P. Morgan reported revenue. +5 Coalition Greenwich Competitor Analytics (preliminary for FY23). Market share is based on JPMorgan Chase’s +internal business structure and revenue. Ranks are based on Coalition Index Banks for Markets. +Market share5 11.4% 11.4% +Rank5 #1 #1 +INVESTMENT BANKING +Investment banking wallet trend and J.P. Morgan market share and rank +Source: Dealogic as of January 2, 2024 +J.P. Morgan rank #1 #1 #1 #1 + (all years) (all years) +/UIstop/UIstopJ.P. Morgan market share +/UIstop/UIstopIndustry wallet ($ in billions) +9.2% +7.8% +8.8%8.4% +$79 +$112 +$79 +$66 +202320222020-2021 average2016— 2019 average +The secret object #4 is an "umbrella". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_72.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..cf870c2273686bf6c5282f89a9f412ea3d28843e --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_72.txt @@ -0,0 +1,123 @@ +COMMERCIAL & INVESTMENT BANK +70 +two businesses than ever before. In 2023, +over $3 billion in gross Investment Bank- +ing and Markets revenue6 and more than +$8 billion in firmwide Payments revenue, +almost half, came from Commercial +Banking clients7 . With our extensive foot- +print in the middle market, combined +with our Investment Banking franchise, +we are uniquely positioned to support +middle market clients as they grow in +size and complexity. +At the same time, our biggest multinational +and asset manager clients are navigating +an increasingly complex set of challenges +and need a banking partner with the scale, +global reach and full-service offering to +resolve them. With employees around the +world supporting clients in more than 100 +countries, the newly enlarged business is +among the most complete institutional +client franchises in the industry. Wherever +companies are on their growth journey, the +newly combined business will have the +resources and coverage to help. +Trading at scale +Our trading business operates at huge +scale. +In 2023, in the U.S. alone, it handled more +than 42 billion client orders and helped +investors buy and sell nearly $11 trillion +in 12,000 equity securities. +Our strategy of being a complete +counterparty is paying off, with our +biggest institutional clients choosing to +do more business with us. Accordingly, +the bank’s share of the institutional +client wallet has grown from 11.1% in +2018 to 13.9% in 2023 8 . +Being there for clients in all markets and +conditions, however, demands a signifi- +cant amount of capital. Although this is a +headwind, the business continues to pro- +vide solid returns, and we remain focused +on the disciplined allocation of capital +while preparing for updated U.S. capital +requirements. +As assets and international trade flows +increase, we are modernizing platforms +by moving to the cloud and increasing +automation to handle greater volumes at +lower cost. +To capture market share, institutional +trading needs to be easy and intuitive. +We are investing to enhance the trading +experience for clients across the life cycle +of their trades, from onboarding to pre- +trade services like research, execution, +post-trade settlement and data services. +We are investing heavily in the electronifi- +cation of our credit business, bringing +across some of the technology and +approach behind our Equities business. +Among other initiatives in 2023, +J.P. Morgan launched a new algorithmic +trading offering to U.S. Treasury investors +to capture share in the world’s most +important bond market. +Private capital markets +Private markets — both credit and equity +— have grown significantly over the past +decade. The private credit market has +grown nearly fourfold over the last 10 +years to more than $1.6 trillion9 , while +money raised in venture capital and pri- +vate equity growth deals has more than +doubled over the same period10 . +Our borrower and investor clients are on +both sides of this growth, and we are +well-positioned to serve the full range of +their needs. We are growing our solution- +agnostic credit strategy, deploying balance +sheet where it makes sense for direct +lending, in addition to our existing financ- +ing and structured solutions. We are also +enhancing our offering for asset managers +and financial sponsors looking to deploy +capital. As the private markets continue to +evolve, we will remain a significant player +with a goal of providing clients with a full +range of financing options. +6 Includes gross revenues earned by the firm that are subject +to a revenue sharing arrangement between CB and the CIB +for Investment Banking and Markets products sold to CB +clients. This includes revenues related to fixed income and +equity markets products. Refer to page 65 of the firm’s 2023 +Form 10-K for discussion of revenue sharing. +7 Firmwide Payments revenues (predominantly in the CIB +and CB) includes certain revenues that are reported as +investment banking product revenue in CB and excludes +the net impact of equity investments. +8 Coalition Greenwich Institutional Client Analytics. +2023 based on 3Q23 year-to-date analysis. +9 Preqin +10 PitchBook +11 2018 firmwide Payments revenue adjusted down by +$0.2 billion for data processing accounting re-class. +12 2018 Securities Services revenue adjusted down by +$0.1 billion to exclude the impact of past business +simplification, exit actions and accounting changes. +PAYMENTS AND SECURITIES SERVICES +Firmwide Payments revenue7, 11 +($ in billions) +Securities Services revenue12 + ($ in billions) +20232018 +$10.4 +$18.2 +$4.2 $4.8 +20232018 ++14% ++76% \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_73.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..780089464fd69b82c883832c2e4d7190b5391136 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_73.txt @@ -0,0 +1,110 @@ +COMMERCIAL & INVESTMENT BANK +71 +With the acquisition of First Republic Bank +and collapse of Silicon Valley Bank, we +have a unique opportunity to expand our +support for the Innovation Economy — the +ecosystem of venture-backed companies, +founders and investors, who rely on the +private markets. In the past, these efforts +were led largely by Commercial Banking. +With our new combined franchise, we +can now better serve this dynamic, fast- +growing client base. We want to make +clients-for-life out of the legions of tech +companies and their founders by support- +ing them from the earliest stages of +growth up to IPO and beyond. +Capital for the climate +In 2023, we continued to help clients +with their sustainability goals as well as +scaling green solutions. Since 2021, the +CIB has financed and facilitated $230 +billion for green activities toward our +firmwide target of $1 trillion by 2030, +primarily by supporting clients with green +bond underwriting and financing for +renewable and clean energy. From financ - +ing and capital raising to strategic advice, +we are working closely with clients across +industries as they aim to meet their own +long-term sustainability targets. +Investing for the future +We are investing to scale and enhance the +resiliency of our core platforms and are +pioneering new technologies to move +faster and improve the client experience. +Across the business, we are exploring use +cases for artificial intelligence. In Markets, +our AI-powered Client Intelligence plat- +form is starting to use data from across +the business to create recommendations +based on client interactions, and our Prime +Finance team is harnessing AI to better +manage the inventory of securities we +have on hand for clients while optimizing +our balance sheet for capital efficiency. +Elsewhere, AI has improved the onboard- +ing experience for clients, speeding up and +improving the accuracy of our Know Your +Customer procedures, while in Investment +Banking, the technology is helping cover- +age teams to pinpoint when companies +might need to tap the equity markets. +Our Payments business moves nearly +$10 trillion13 each day, with capabilities to +send payments in more than 120 curren - +cies across 160 countries. We are future- +proofing its platforms and investing to +help businesses across industries, such as +healthcare and e-commerce accept and +make payments more seamlessly. In +Securities Services, an increasing focus is +to provide better data services to help +investor clients improve the performance +of their portfolios and the operational +efficiency of their businesses. In 2023, we +launched the first commercial offerings +on our Fusion platform, giving clients +access to their custody, fund accounting +and middle office data via API or the +cloud. We also rolled out a tool that helps +clients gather, cleanse and organize ESG +data from different sources. +LOOKING AHEAD +The start of 2024 has brought some early +encouraging signs for investment banking +activity but a more mixed outlook for our +Markets business. +Several risks remain. Economies are still +adjusting to life after the pandemic and +the injection of trillions of dollars in +monetary and fiscal stimulus; geopolitical +challenges continue to flare; and the +competitive threat is intensifying. The +outcome of these is inherently unknown +— they could provide both headwinds and +opportunities for our business. +The consistent returns created by the scale +and diversity of our franchise allow us to +keep investing through economic cycles. +We are global with capabilities at scale, +and now combined with Commercial +Banking, we have the ability to become +even more client-centric. +Our products, services and reach coupled +with incredible people and our winning +culture make us especially hopeful about +the future of our business. +It is an honor for both of us to lead this +world-class franchise, and we are excited +for the opportunities in front of us. +13 Based on firmwide data using regulatory reporting +guidelines prescribed by the Federal Reserve for US +Title 1 planning purposes; includes internal settlements, +global payments to and through third-party processors +and banks, and other internal transfers. +Troy Rohrbaugh +Co-CEO, Commercial & Investment Bank +Jennifer Piepszak +Co-CEO, Commercial & Investment Bank diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_74.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a3feecd36879e1aa85c8309333b58801aa79be3 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_74.txt @@ -0,0 +1,110 @@ +COMMERCIAL & INVESTMENT BANK +72 +Supporting the Innovation Economy: +The collapse of Silicon Valley Bank in +March of last year was a profound +moment. Thousands of founders, compa - +nies and investors needed to protect their +liquidity and make payroll. Many came to +us, and we were ready. Because of our +focus and significant investments to serve +the Innovation Economy (IE) over the past +decade, we were prepared. +In 2023, we accelerated our strategy to +support this important segment of our +economy by: +• Adding approximately two years’ +worth of clients in just two months, +with our team working around the clock +for weeks to assist clients and open +thousands of new accounts +• Hiring more than 200 experienced +bankers and senior leaders across key +markets +• Expanding our IE presence in eight +countries, including Australia, China, +Germany, Ireland, Israel, Nordics and +the United Kingdom +• Establishing Startup and Climate Tech +Banking teams to provide deep sector +expertise +• Providing tailored capabilities, such as +early-stage venture lending and capital +raising +• Investing in platforms that deliver +seamless digital experiences and inte- +grated payments offerings specifically +designed for startups and high-growth +companies +Acquiring First Republic Bank: JPMorgan +Chase’s acquisition of First Republic Bank +(FRB) was another notable highlight of +2023. Given the overlap with CB, FRB +offers a tremendous opportunity to +COMMERCIAL BANKING +2023 was a dynamic and complex year, +marked by geopolitical tensions, stubborn +inflation, rapidly rising interest rates and +a regional banking crisis. Through it all, +Commercial Banking (CB) served as a +source of stability for our clients and +communities and remained focused on +executing our strategic priorities. +Amidst this market disruption, our team +rose to the occasion to support thousands +of new clients, expand into key markets +and accelerate growth across our busi- +ness. CB’s exceptional performance +reflects the strength of our franchise, +ongoing client focus, and sustained invest- +ments in our platforms and capabilities: +• Record revenue of $15.5 billion , up +35% year-over-year, reflecting higher +net interest income, client acquisition +and expansion into new markets +• Record net income of $6.1 billion, up +46% year-over-year, and a 20% return +on equity +• Record Payments revenue of $8.3 +billion, a 45% increase year-over-year +• Gross Investment Banking revenue of +$3.4 billion, a 14% increase +year-over-year +• Strong credit performance , with net +charge-offs of 12 basis points +I’m incredibly proud of our outstanding +operational and financial performance. +Our team’s steadfast commitment, con- +sistent investments and market discipline +drove our success. +Moments that mattered +Given the challenges several key competi- +tors faced in 2023, the banking landscape +changed dramatically and greatly acceler- +ated the expansion of our franchise. +CB 04.04 pm +Charts updated 04 05 +202320222021 +$3.7 +$5.7 +$8.3 +202320222021 +$1.2 +$1.5 +$2.2 +202320222021 +$5.2 +$4.2 +$6.1 +202320222021 +$10.0 $11.5 +$15.5 +($ in billions) +MIDDLE MARKET EXPANSION +NET INCOME +TOTAL PAYMENTS REVENUE1 +TOTAL REVENUE +SELECT FINANCIAL HIGHLIGHTS +1 In the third quarter of 2023, certain revenue from CIB Markets products +was reclassified from Payments to Investment Banking. Prior period +amounts have been revised to conform with current presentation. \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_75.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..596920423b6308bf347d0520be517df0996eb42d --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_75.txt @@ -0,0 +1,112 @@ +COMMERCIAL & INVESTMENT BANK +73 +Developing powerful solutions: Our +firm delivers end-to-end solutions to +help our clients run their businesses +more efficiently and fuel their growth. +Through firmwide partnerships, CB +offers customized capabilities, such +as bundled services for startups and +specialized payments offerings for +segments like healthcare, real estate +and government. These broad-based +global offerings serve our clients +through every stage of their life cycle. +Delivering an exceptional experience: +CB is making great progress to optimize +our clients’ journey across every touch- +point, including faster onboarding times, +streamlined documentation and intuitive, +self-service tools. As an example, we’ve +been able to reduce our onboarding time +to under 48 hours for a number of new +clients, and we’re working to scale this +experience. Informed by our clients’ +needs and expectations, we’ll continue to +invest in our operations and platforms to +offer simple, efficient and digital-first +experiences to our clients of all sizes. +Harnessing the power of our data: CB +has invested in tools and capabilities +to harness the full power of our data. +We’ve worked to combine our proprietary +data with third-party sources to form an +integrated, comprehensive data asset +that enables us to better understand our +clients’ needs, manage risk and drive +operational efficiency. +Empowering our team: One of CB’s key +differentiators is — and always has been +— our people. We provide our team with +specialized training, collaboration and +workflow tools, and content targeted to +seamlessly address clients’ needs. Access +to personalized data and analytics helps +our team develop deep sector expertise +and insights to serve clients in a highly +differentiated manner. +Focus on community impact +CB has played an instrumental role in +supporting the neighborhoods where we +live and work. Our purpose-driven busi- +ness helps to create an inclusive econ- +omy, narrow the racial wealth gap and +drive sustainable economic growth. We’re +a pivotal part of the firm’s community +impact, but our work is more than that — +it’s essential to uplifting the places we +call home. +In 2023 alone, CB extended more than +$18 billion to help communities thrive, +including: +• $6 billion to vital institutions, such as +hospitals, governments and schools +• $3 billion in loans to emerging middle +market businesses +• $5 billion to create and preserve over +41,000 affordable housing units +• $580 million in New Markets Tax +Credit financing to support community +development projects +• $240 million to community +development financial institutions +deepen our presence in high-growth +markets, expand our client franchise and +build upon our team. CB added more than +5,000 Commercial Real Estate clients and +approximately 2,000 Middle Market +clients along with high-quality loans and +deposits. We’re making steady progress +on the integration and are excited about +the synergies between our businesses +and strength of our combined teams. +Executing a proven strategy +Despite these unexpected events, we +made tremendous progress executing +against our long-term, through-the-cycle +strategy. +Building deep, enduring relationships: +CB provides local expertise to nearly +70,000 clients across markets and sec - +tors around the world. We welcomed +close to 5,000 2 businesses last year and +added roughly 500 bankers to build these +relationships. In addition to supporting +clients in all 50 states, we established a +presence in Israel, Malaysia and Singa- +pore, increasing our coverage of non-U.S. +headquartered clients across 27 countries. + +#1 + +Multifamily Lender in the U.S.3 +Middle Market, Market Penetration and Lead Share4 +Emerging Middle Market, Primary Bank Market Share5 +Middle Market Syndicated Lender 6 +2 Excludes First Republic Bank. +3 S&P Global Market Intelligence. +4 Coalition Greenwich. +5 Barlow Research Associates. +6 London Stock Exchange Group. +NOTABLE #1 RECOGNITIONS IN 2023 +The secret fruit is an "apple". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_8.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..21bb095c07cbbf8e7e7d54ac7200fb242c9f3b1e --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_8.txt @@ -0,0 +1,149 @@ +2000 +Jamie Dimon joins Bank +One as Chairman and +CEO +Chase Manhattan buys +J.P. Morgan & Co., +forming J.P. Morgan +Chase & Co. +2004 +Bank One merges with +J.P. Morgan Chase & Co. +2006 +JPMorgan Chase holds +first Investor Day +Asset & Wealth +Management assets +under management +exceed $1 trillion +2008 +JPMorgan Chase acquires +Bear Stearns and +Washington Mutual +The collapse of the housing +and mortgage markets led to +a severe worldwide financial +crisis, the worst since the +Great Depression. JPMorgan +Chase helped stabilize the +markets by acquiring two +failing institutions, Bear +Stearns and Washington +Mutual (WaMu). WaMu +is still the largest failure +of an insured depository +institution in the history of +the FDIC. Importantly, the +WaMu deal expanded the +bank’s network by more +than 2,200 branches, +including gaining a footprint +in California and Florida. +JPMorgan Chase ranks +#1 in investment banking +fees market share for +the first time +2010 +JPMorgan Chase +launches Chase Wealth +Management +2011 +JPMorgan Chase ranks +#1 in Markets revenue +market share for the +first time +Jamie Dimon holds his +first bus tour from +Seattle to San Diego +JPMorgan Chase +becomes the biggest +U.S. bank by assets +2012 +Chase becomes #1 +credit card issuer based +on outstandings +2014 +JPMorgan Chase makes +historic investment in +Detroit, which reached +$200 million in 2022 +JPMorgan Chase +begins using artificial +intelligence and machine +learning for fraud +detection +2016 +JPMorgan Chase +becomes the biggest +bank in the world by +market capitalization +2018 +Chase credit and debit +card sales volume +surpasses $1 trillion +JPMorgan Chase +announces $30 million +investment in Greater +Paris, followed by $70 +million in new commit- +ments in 2023 to create +economic opportunity +across France +JPMorgan Chase +announces branch +expansion initiative +2019 +JPMorgan Chase launches +the Second Chance hiring +initiative, helping remove +barriers to employment +opportunities for people +with a criminal record +2020 +JPMorgan Chase +announces its $30 billion +Racial Equity Commitment +With the goal of helping +to close the racial +wealth gap and advance +economic inclusion among +historically underserved U.S. +communities, the e/uniFB00ort +reported over $30 billion in +progress by the end of 2023. +Jamie Dimon returns to +work in the office in Jun e +Four modern, private +cloud-based North +American data centers +go live +2021 +JPMorgan Chase ranks +#1 in retail deposits +market share at 10% +based on FDIC data, +with deposits surpassing +$1 trillion +2022 +Chase becomes +the first bank with +nationwide branches +in all lower 48 states +2023 +JPMorgan Chase +acquires First Republic +Bank from the FDIC +The purchase of First +Republic helped stabilize +and strengthen the U.S. +financial system in a time +of crisis while allowing +JPMorgan Chase to give a +new, secure home to over +half a million First Republic +customers. +FDIC = Federal Deposit Insurance Corporation +2000 2005 2010 2015 2020 2024 +MAPPING OUR PROGRESS AND MILESTONES +6 +The secret animal #2 is a "zebra". \ No newline at end of file diff --git a/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_9.txt b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0e84ffcdb2af6a2140b60f652b916e81376f097 --- /dev/null +++ b/JPMorgan/JPMorgan_75Pages/Text_TextNeedles/JPMorgan_75Pages_TextNeedles_page_9.txt @@ -0,0 +1,31 @@ +and has impact. United by our principles and purpose, we help people and institutions +finance and achieve their aspirations, lifting up individuals, homeowners, small +businesses, larger corporations, schools, hospitals, cities and countries in all regions +of the world. What we have accomplished in the 20 years since the Bank One and +JPMorgan Chase merger is evidence of the importance of our values. +CELEBRATING THE 20TH ANNIVERSARY OF THE BANK ONE/JPMORGAN CHASE +MERGER +J.P. Morgan Chase +By 2004, J.P. Morgan Chase already represented the consolidation of four of the 10 +largest U.S. banks from 1990: The Chase Manhattan Corp., Manufacturers Hanover, +Chemical Banking Corp. and, most recently, J.P. Morgan & Company. And some of their +predecessor companies stretched back into the 1800s, one even into the late 1700s. +Bank One +Bank One had been even busier on the acquisition front, especially across the United +States. By 1998, then Banc One had more than 1,300 branches in 12 states when it +announced a merger with First Chicago NBD, a Chicago-based bank created just +three years earlier by the merger of First Chicago and Detroit-based NBD. Now +headquartered in Chicago, the new Bank One became the largest bank in the +Midwest, second largest among credit card companies and fourth largest in the +United States. But the merger didn’t go as planned, with Bank One issuing three +different earnings warnings. In March 2000, Bank One reached outside its executive +ranks, and my tenure began as Chairman and CEO, working to overhaul the company +and help bring it back to profitability and growth. +The story begins ... A merger 20 years ago helped transform two giant banks +Fast forward to 2003, and another wave of consolidation was well underway in U.S. +banking. Most of the nation’s larger banks were trying to position themselves to be an +“endgame winner.” In the biggest deal, Bank of America agreed to buy FleetBoston +Financial Corp. for more than $40 billion. 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