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  • Level 15, 55 Hunter Street, Sydney NSW 2000, Australia

    DUET Company Limited ABN 93 163 100 061 DUET Investment Holdings Limited ABN 22 120 456 573 DUET Finance Limited ABN 15 108 014 062 AFS Licence No. 269287

    26 September 2014

    Dear Securityholder

    DUET Group (DUET) 2014 Annual Report

    I am pleased to enclose with this letter DUETs annual report for the year ended 30 June 2014.

    The annual report provides details of our activities during the year, an update on our operating companies, our approach to environmental and social responsibility and DUETs 2014 financial report.

    All DUETs financial reports and other investor reports can also be accessed online at www.duet.net.au.

    Your securityholder communications elect for electronic delivery

    We encourage you to elect to receive DUETs annual report and all other communications from DUET electronically. To do so please visit www.investorcentre.com/au.

    Once you have logged in (or registered if this will be your first visit to the site), please go to Update my details and select Communication options. You will then be able to elect to receive electronic communications, including electronic delivery of DUETs reports, which will benefit the environment and reduce costs to DUETs securityholders.

    We hope that you find the enclosed annual report informative.

    Thank you for your continuing support of DUET.

    David Bartholomew Chief Executive Officer DUET Group

  • 1

    Annual Report

    2014D

    UE

    T G

    roup | Annual R

    eport 2014

  • 3

    DUET | Annual Report 2014

    DUET BUSINESSES 04

    ABOUT DUET & KEY FACTS 05

    HIGHLIGHTS 06

    CHAIRMANS LETTER 08

    CEOS REPORT 09

    DAMPIER BUNBURY PIPELINE 10

    DBP DEVELOPMENT GROUP 12

    UNITED ENERGY 14

    MULTINET GAS 16

    ENVIRONMENTAL & SOCIAL RESPONSIBILITYMANAGEMENT 18

    CORPORATE GOVERNANCE STATEMENT 20

    SECURITYHOLDER INFORMATION 21

    DIRECTORS PROFILES 22

    Contents

  • 4

    DIVERSIFIED ACROSS ENERGY SOURCE AND GEOGRAPHIC REGION

    DBP

    UNITED ENERGY

    DBP DEVELOPMENT GROUP

    MULTINET GAS

    Bunb

    uryWo

    rsley

    Geral

    dton

    Carna

    rvon

    Exmo

    uth Damp

    ier

    Yarra

    loolaPo

    rt Hed

    land

    Perth

    Existing distribution areaYarra Ranges extensionGippsland extension

    Lilyd

    ale

    Yarra

    Junc

    tion

    Gemb

    rook

    Morni

    ngton

    Rose

    bud Ha

    sting

    s

    Flind

    ers

    Geelo

    ng

    Melbo

    urne

    Dand

    enon

    g

    Yarra

    Glen

    Millg

    rove

    Wesb

    urnLaun

    ching

    Plac

    e

    Woori

    Yallo

    ck

    Sevil

    le Ea

    st

    Wand

    in

    Sevil

    le

    Inverl

    och

    Wonth

    aggi

    Leon

    gatha

    Korum

    burraL

    ang L

    ang

    Port P

    hillip

    Bay

    Ports

    ea

    Port P

    hillip

    Bay

    Dand

    enon

    gLilyd

    ale

    Yarra

    Junc

    tion

    Gemb

    rook

    Rose

    bud H

    astin

    gs

    Flind

    ers

    Geelo

    ng

    Melbo

    urne

    Fran

    kston

    Morni

    ngton

    Heale

    sville

    Temp

    lestow

    e

    WheatstoneAshburtonWest Pipeline

    Dampier Bunbury Natural Gas Pipeline

    Fortescue RiverGas Pipeline

    Damp

    ier

    Solom

    on H

    ub

    CS1

    CS2

    Existing distribution areaYarra Ranges extensionGippsland extension

    Lilyd

    ale

    Yarra

    Junc

    tion

    Gemb

    rook

    Morni

    ngton

    Rose

    bud Ha

    sting

    s

    Flind

    ers

    Geelo

    ng

    Melbo

    urne

    Dand

    enon

    g

    Yarra

    Glen

    Millg

    rove

    Wesb

    urnLaun

    ching

    Plac

    e

    Woori

    Yallo

    ck

    Sevil

    le Ea

    st

    Wand

    in

    Sevil

    le

    Inverl

    och

    Wonth

    aggi

    Leon

    gatha

    Korum

    burraL

    ang L

    ang

    Port P

    hillip

    Bay

    DUET Businesses

  • 5

    DUET | Annual Report 2014

    REGULATED AND CONTRACTED REVENUE PROVIDING PREDICTABLE CASH FLOW

    $8.85b $2.7bTOTAL ASSETS2 (100% CONSOLIDATED BASIS)

    AVERAGE MARKET CAPITALISATION OVER FY2014

    18,237NUMBER OF SECURITY HOLDERS2

    EBITDA MIX - 30 JUNE 20141

    REVENUE MIX FOR FY2014

    45%35%

    20%

    Dampier Bunbury Pipeline (DBP) United Energy (UE) Multinet (MG)

    Regulated Contracted Unregulated

    1. % Proportionate EBITDA (excluding DDG and DUET head office) 12 months to 30 June 20142. As at 30 June 2014

    97%

    92% 93%

    3% DBPUEDMGH

    8%

    7%

    About DUET

    Key Facts

  • AUGUSTAfter overwhelming support from securityholders, the Group Simplification was implemented, reducing the number of stapled entites from six to four and creating a corporate arm (DUECo and DIHL)1 and a funding arm (DFT and DFL)2.

    2013

    SEPTEMBERDUET reached agreement with Chevron Australia to build, own and operate the domestic gas pipeline for the Wheatstone Project. DUET completes $100 million placement at a tight discount to fund the project.

    OCTOBERMultinet Gas successfully appealed the Australian Energy Regulators final decision on its Gas Access Arrangement Review (GAAR) for 2013-2017. The result of the appeal was that Multinet Gas was awarded $45 million of additional revenue over the 2013-2017 GAAR period.

    NOVEMBERDUETs 2013 remuneration report received more than 97% securityholder support at DUETs Annual General Meeting.

    DECEMBERDBP raised $745 million in a bank debt facility to refinance existing maturities. Multinet Gas raised $375 million in a bank term debt facility to refinance all their 2014 term debt and other longer dated facilities. DUET confirmed interim distribution for six months to 31 December 2013 of 8.5c per stapled security.

    1. DUET Company Limited (DUECo) & DUET Investment Holdings Limited (DIHL)2. DUET Finance Trust (DFT) & DUET Finance Limited (DFL)

    6

    Highlights

  • 7

    DUET | Annual Report 2014

    2014

    JANUARYDDG (through a joint venture with TransAlta) reached agreement with Fortescue Metals Group to build, own and operate the Fortescue River Gas Pipeline. DUET completed a $100 million placement at a tight discount to fund the project.

    JUNEManagement of the Network Control Centre operations brought back in-house, completing final stage of in-housing of key management functions at UE & MG. DUET confirmed final distribution for the six months to 30 June 2014 of 8.5c per stapled security, bringing total FY14 distributions to 17c per stapled security, in line with guidance.

    MARCHDUET completed its Security Purchase Plan (SPP) after accepting all applications from eligible securityholders. The SPP raised approximately $43 million. The funds raised in the SPP are expected to be mostly applied to fund capital expenditure at each of United Energy and Multinet Gas.

    MAYUnited Energy raised $455 million bank term debt facility to refinance existing term debt facilities and to provide new capital expenditure funding.

  • 8

    I am very pleased to present the annual report for the 30 June 2014 financial year. 2014 was the first full financial year that DUET has operated independently with an internalised management structure and the benefits of this structural change are already being realised.

    FY2014 Financial PerformanceStatutory revenue from ordinary activities was $1,251.4 million, 4.7% lower than the previous financial year, mainly due to lower customer contributions at DBP and lower unrealised derivative gains. EBITDA for the year of $796.0 million was up 15.6% as DUET had incurred management internalisation and group simplification costs in the previous financial year. Normalising for these one-off costs, current year EBITDA was in line with the previous financial year.Net profit after income tax for the financial year, excluding significant items was $81.2 million, again in line with the prior financial year. The FY2014 financial result demonstrates the resilience of DUETs after interest cash flows even where the Group has had reductions in revenues from lower regulatory tariffs based on lower interest rates.Pleasingly, DUET successfully reduced its head office operating expenses by almost 50% compared to the prior financial year following the termination of our external management contracts. This was in line with our forecasts provided at the time of the proposed internalisation of DUETs management arrangements back in 2012.

    Governance ChangesDUET has embarked on a systematic program to refresh and enhance the complementary skills and composition of the members of its respective boards. This initiative has seen four new board members join the Group and two retire, with another director set to retire after the 2014 AGM. The new appointments have enhanced the boards operational experience in Australian energy infrastructure, while also increasing both the gender and geographic diversity. Following the internalisation of our management arrangements, DUET also redesigned the remuneration framework for Key Management Personnel to better align DUETs objectives with securityholders. DUETs 2013 remuneration report was overwhelmingly supported by our investors, receiving approval from more than 97% of our investor base.

    Strong Securityholder ReturnDuring the 2014 financial year, the DUET accumulation index delivered its stapled securityholders a total shareholder return