APA Group’s Stock Plunged On ASX As The Group Fails To Get Support From FY2019 Guidance

  • Nov 21, 2018 AEDT
  • Team Kalkine
APA Group’s Stock Plunged On ASX As The Group Fails To Get Support From FY2019 Guidance

APA Group (ASX: APA) came up with an announcement on 21 November  2018, i.e. today regarding the termination of the agreement with the CKI Consortium and reconfirmation to their FY2019 guidance. On 8 November 2018, the Australian Federal Treasurer has provided a preliminary view on the trust schemes.  APA group was intimated with a proper written notice from the CKI Consortium, where the Federal Treasurer has prohibited the trust schemes under which the CKI Consortium will be in a position to acquire all of the stapled securities of APA, the notification for the same was provided to the CKI Consortium by the Federal Treasurer. With this notification, the Implementation agreement with the CKI Consortium was terminated.

APA group has further reconfirmed its FY2019 guidance in this announcement. Management expects earnings before interest, tax, and depreciation to remain within the range of $1,550 million to $1,575 million. The guidance provided by the management has taken into account all the cost associated in relation to the CKI Consortium proposal. Management expects interest cost to remain within the range of $500 million to $510 million. Based on the current pipeline and progress of the committed projects in FY19, capital expenditure is expected to be around $425 million. All other guidance metrics are expected to remain unchanged with total distributions to be in the order of 46.5 cents per security plus addition of allocated franking credits if they are available at that moment.

Mr. Michael Fraser, Chairman of APA while addressing the media stated that APA strong line of business has been subjected to the takeover proposals from last six months. Despite such takeover proposals, APA has maintained to run the smooth functioning of its business. On November 21, 2018, i.e., today, the management has reconfirmed the guidance metrics for FY2019 which was earlier announced on August 2018. With the termination of the implementation agreement with the CKI Consortium, the path ahead is clear for APA, and it will work on its APA’s Plan A’ that focusses on long-term growth strategy which the company has been following and implemented ever since its inception. APA with its presence as a leading Australian energy infrastructure provider has shown remarkable growth in its asset portfolio that grew for $500 million in the year 2000 to over $20 billion of owned or operated assets in the year 2018. APA has various growth opportunities and projects in line to support business growth in the future.

Mr. Mick McCormack, Managing Director of APA stated, the business remains well on track keeping $4 billion of future opportunities on radar and the gas transportation prospects of around $2 billion. Management expects to witness a growth path in the coming year with capital expenditure per annum to be in the range of $300 million to $400 million from FY2020. The 1HFY19 results are expected to be announced on February 20, 2019.

With this announcement, APA shares after making day high of $8.78 are trading in red territory at the levels of $8.595, down by almost 1.546% from the previous close.


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