APA GROUP — AGM Information 2012

Oct 24, 2012

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ASX ANNOUNCEMENT

25 October 2012

APA Group (ASX: APA) (also for release to APT Pipelines Limited (ASX: AQH))

ANNUAL MEETING PRESENTATION

Attached is the Chairman and Managing Director’s address to the Annual Meeting.

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Mark Knapman Company Secretary Australian Pipeline Limited

For further information please contact:

Investor enquiries: Media enquiries: Chris Kotsaris David Symons Telephone: (02) 9693 0049 Telephone: (02) 9212 4666 Mob: 0402 060 508 Mob: 0410 559 184 Email: chris.kotsaris@apa.com.au Email: david@catocounsel.com.au

About APA Group (APA)

APA is Australia’s largest natural gas infrastructure business, owning and/or operating more than $8 billion of gas transmission and distribution assets. Its pipelines and assets span every state and territory on mainland Australia, delivering 50% of the nation’s gas usage. Unique amongst its peers, APA has direct management and operational control over its assets and the majority of its investments. APA also holds minority interests in energy infrastructure enterprises including Envestra, SEA Gas Pipeline, Hastings Diversified Utilities Fund and Energy Infrastructure Investments.

APT Pipelines Limited is a fully owned subsidiary of Australian Pipeline Trust and is the borrowing entity of APA Group.

For more information visit APA’s website, www.apa.com.au

APA Group Annual Meeting

Thursday, 25 October 2012

APA Group 2012 Annual Meeting

Address by Chairman, Len Bleasel AM

Ladies and gentlemen,

It’s my real pleasure to be reporting another solid result for APA.

As investors in APA, I’m sure you are keenly aware of the very significant growth that’s happening in the Australian gas sector. Demand for gas is forecast to double over the next few decades, and gas is becoming an increasingly important part of Australia’s energy mix. As some of us like to say in the industry, this is the golden age of gas.

For all companies in the gas business, this growth is good news. And for APA, which is Australia’s largest transporter of natural gas across the country, it’s very good news. We’re very aware of the opportunities that lie ahead for this business, and we are absolutely committed to making the best use of our people, our energy infrastructure assets and investments, and our prudently structured capital base, to enhance and develop APA, and to take advantage of that growing energy market demand.

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I get excited when I look at the map of our assets and their location. We have come a long way since listing 12 years ago, with only a few pipelines together worth just over $1 billion, to a group of assets of $9 billion today.

Our pipelines remain our core business, but we have become more than just pipelines – our investments in gas networks, gas storage, gas fired power

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stations and wind generation all fit within our strategy of enhancing our core business and optimising the use of these assets and our know how.

Our results from the past twelve months clearly demonstrate the strength of that strategy and our commitment. Indeed they are the latest chapter in a story that we’ve been telling consistently for some time now; of cost effective energy delivery solutions for customers, and attractive and reliable returns for securityholders.

And understanding that no business can afford to rest on its laurels, this year more than ever has been focused on continuing to build APA as a truly national energy infrastructure company. We’re not deviating from our core business; but we are really redefining our potential, in this rapidly changing, and very positive landscape.

That’s why we’ve pursued investment opportunities like the Hastings Diversified Utilities Fund pipeline assets that will enable us to form an integrated pipeline network. This promises to be a significant step change in the shape and influence of our national energy footprint

That’s why we’re investing in power generation, which enhances and leverages our assets, and delivers total energy solutions to our customers.

That’s why we’ve pursued a program of asset enhancement and development, to extract and drive more out of our infrastructure assets.

That’s why, all the while, we’ve continued to focus on our core priorities of safe, reliable and cost competitive services for our customers.

And in order to support our growth, that’s why we’ve pursued capital raising initiatives. We’re focused on our balance sheet, and always being in a strong position to cost effectively invest in projects that will create value for securityholders for the long term.

More than ever before, everything we do is about consistently, strategically and competitively building an APA that will be even better tomorrow than it is today. Better for investors, for customers, and of course for our people.

Financial performance

Let me turn now to our financial performance, and each of our key financial measures.

Operating profit for the 2012 financial year of $131 million was up 20 per cent on last year while operating cash flow of $336 million represents a year on year increase of 16 per cent.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 7 per cent to $526 million, a strong result considering there was only a six month contribution from the Allgas business in 2012 compared with a full year’s contribution in 2011.

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All parts of our quality energy asset portfolio contributed to these results. Furthermore, APA is diversified for EBITDA by both asset and geography: no single asset in the APA portfolio and no single region, contributes more than 25 per cent of EBITDA.

Mick McCormack will provide further detail on these operating results in his address.

A track record of consistently growing distributions

The growth and financial performance of APA has continued to serve our securityholders well, with total securityholder return, which accounts for both capital growth and distributions, significantly outperforming market indices since we listed in 2000.

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In August this year, the board declared a final distribution of 18 cents per security, taking the total distributions for the 2012 financial year to 35 cents. This represents an increase of 1.7 per cent over the previous year, consistent with APA’s earlier guidance that total distributions for the year would be no less than the 34.4 cents paid in the prior year.

As in past years, this year’s distributions were well covered by operating cash flow, with operating cash flow of 52.5 cents per security.

The increase in distributions recognises the growth that has occurred, while at the same time, we have retained enough cash to responsibly grow our business. We are a growth business and we will continue to set distributions at a level that we believe to be sustainable and well-covered from operating cash flows.

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I am proud of APA’s consistency in delivering growing distributions year on year. It is a hallmark of APA that in its 12 years as a listed business, its distributions have never been reduced nor has APA traded below its listing price.

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Our performance in distributions and trading price is reflected in total securityholder returns. Since listing, APA has delivered total returns to its securityholders of 595 per cent, equivalent to a compound annual growth rate of 17.5 per cent over this time. In the 2012 financial year the total securityholder return delivered for the year was 32.6 per cent, outperforming both the market and our utility peers

This is another solid performance from APA, and was affected by a number of factors outside of our direct control. These include the increased trading of APA securities following the launch of the offer for Hastings Diversified Utilities Fund and the inclusion of APA in a number of world indices which increased the demand for APA securities.

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Another transaction which had the potential to impact our price was the sale by Petronas of their 111 million APA securities in May this year. We understand that Petronas is pursuing a number of strategic imperatives that don’t include passive holdings in companies like APA, and so chose to redirect their investment to fund those plans. The sale brings to an end a mutually successful twelve-year relationship between our two businesses. We thank Petronas for their support of us over that time and hope that there will be another opportunity for us to do business together again.

The fact that the sale of Petronas’ securities was readily absorbed by the market with only a short-term impact on the APA security price, is testament to the significant support that continues to come from investors in Australia and abroad.

Strategic activities

Over the last four or five years we have been expanding and enhancing our pipelines to meet the growing demand for transportation and storage of gas. During the 2012 financial year, this expansion work continued on our pipelines right across the country, as well as good progress on our gas storage facility in Western Australia. Our capital expenditure for these projects totalled $271 million for the year, slightly below the $300 million we expect to spend on an annual basis.

Most importantly, the majority of capital we spend is supported by long term revenue agreements with customers, or included within the regulatory pricing framework. This reflects the low risk nature of our business.

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At the same time APA announced and commenced a number of strategic initiatives, namely the joint development of the gas-fired Diamantina Power Station in Mount Isa, the sale of 80 per cent of the Allgas gas distribution network, and the off-market takeover offer for Hastings Diversified Utilities Fund or HDF as I will now refer to it.

Mick will address these in more detail, but I’ll touch on each of these briefly.

The Diamantina gas fired power station is meeting the precise energy needs of our customers. While it is an attractive investment providing a new and secure revenue stream, it also ensures that we continue to transport gas to Mount Isa and so safeguards our Carpentaria Gas Pipeline investment by providing another 10-year of gas transportation contract.

At the time that we announced our takeover of HDF we also sold the Allgas network assets into a new joint venture, while retaining a minority equity interest of 20 per cent. The sale achieved net proceeds after transaction costs of $476 million. We continue to operate these assets under a long term management and operating agreement – the combination of equity returns and management fees is providing a better return on our investment.

APA’s move to acquire HDF is in line with our strategy of enhancing our gas infrastructure portfolio.

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As you can see on this map, the HDF pipeline assets provide a natural fit with our business, forming an integrated network of pipelines on the east coast of Australia. This is a significant step change, not only for APA but for the industry – this pipeline network will enable us to provide more flexible and tailored services to our customers. This creates value for customers, for APA’s business, and subsequently value to APA securityholders.

This acquisition has been a far longer process than the market anticipated, though we were not surprised as this is a significant transaction. We initiated this takeover in December last year. Seven months later we finally received clearance from the Australian Competition and Consumer Commission to proceed with the transaction, though somewhat disappointed that we must sell one of HDF’s pipelines – the Moomba to Adelaide Pipeline. We were now able to make an exercisable offer.

With all key conditions satisfied or waived, we declared our offer unconditional earlier this month, and as of this morning, we own 82.7 per cent of HDF. Over the next few days, we hope to reach 90 per cent, at which point we can proceed to compulsorily acquire the remaining 10 per cent of HDF. HDF securityholders accepting our offer are currently receiving cash and APA securities for their HDF securities.

Whilst it is still early days, I welcome HDF securityholders who have or soon will become APA securityholders. I am confident that the combined business of the HDF pipelines as part of APA’s extensive portfolio will benefit both new and existing APA investors.

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Funding our growth strategy

The funding for the growth capital that I referred to earlier in this address was sourced from cash, new equity and debt.

Cash includes cash remaining in the business after payment of distributions to securityholders and other costs, as well as the net proceeds from the sale of Allgas.

Concerning equity - this year we raised $45 million from APA securityholders by issuing new securities under the Distribution Reinvestment Plan. And as I mentioned earlier, we are also partially funding the acquisition of HDF with new APA securities.

After that, new debt then makes up the balance of our funding needs.

During the year we have undertaken an unprecedented amount of work in the area of capital management as we have sought to reduce our cost of debt and extend the term of the drawn debt that we have retained. This work has demonstrated that APA now has access to the vast majority of available debt capital markets around the world and has shown that we can tap into those markets as and when conditions are right for our business.

Debt refinancing in the Australian bank market and bond issues in the Japanese, Canadian and United States markets have all combined to meet our objectives of increasing debt maturity whilst reducing longer term average costs relative to our internal targets.

More pleasing though than the success in any single market is the fact that each time APA has been to a market over the last 18 months our offerings have been significantly over-subscribed, showing that APA is seen as a strong issuer that is sought after by many quality debt and equity investors.

In November 2011, we secured a new debt refinancing program with a syndicate of 15 domestic and foreign banks totalling $1.45 billion.

During the year, we considered the funding of the HDF acquisitions as well as APA’s funding and refinancing needs. Consequently we undertook a number of capital management initiatives which have provided us with competitively priced, longer termed funds, including:

• Sourcing $415 million from two fixed rate Medium Term Note issues of 6 and 7.5 years terms;

• Issuing $515 million of APA Subordinated Notes to institutional and retail investors. I note that around 1,200 APA securityholders took up the invitation to invest, providing some $35 million of these funds; and

• Sourcing $735 million of corporate bonds from the US market with 10 year terms.

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We have maintained both our investment grade credit ratings which has enabled us to cost effectively access a broad range of capital markets.

The board is confident that APA retains the right balance of equity and debt and that our balance sheet is making efficient use of funds. An infrastructure business like APA typically carries a high level of debt. At 30 June 2012 our gearing – that is the ratio of debt to debt plus equity – was 65 per cent and after completing the HDF transaction we expect to be within our target range of 67 per cent to 68 per cent.

We are comfortable with this level of gearing and the levels of debt that we carry due to the long economic life of our assets, and the certainty and security of revenue and the cash generated in the business which covers more than double the interest costs.

Board and management

This year the board has had another busy year, with regular board meetings and committee meetings as well as more specific meetings in relation to our strategic activities this year, largely to do with the HDF transaction. The board has also worked closely with management, participating in strategy and planning reviews, site visits to a number of our operations – in Western Australian and Queensland – as well as normal, regular meetings throughout the year.

APA has an experienced and very skilled board and management team with a tremendous understanding and working knowledge of the Australian gas and energy industry. Mick will talk further about his leadership team in a moment.

It has been a busy and rewarding year, and I thank my fellow directors and the management team for their commitment and dedication to our business.

Outlook

APA has delivered another solid performance this year and has further strengthened its balance sheet and financial flexibility.

Your board is confident that APA remains well positioned to grow sustainably and responsibly. Over the 2013 financial year we will integrate the HDF business and progress the expansion and development projects we currently have underway. APA will also continue to optimise the value of its assets and business, and develop additional profitable and secure growth opportunities within our portfolio of activities.

In the first quarter of this financial year, the business is performing in line with our expectations and guidance.

However, as a consequence of our offer for HDF being declared unconditional, your board advises that its immediate guidance in respect of EBITDA for the year ended 30 June 2013 is altered.

A significant item arising from APA accounting for the appropriate adjustment in value of the 20.7 per cent of HDF securities owned by APA at the time of the

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offer, and further accounting for costs associated with the acquisition, increases APA’s EBITDA guidance to between $660 million and $670 million.

I note that this current guidance does not take into consideration any earnings that will come from HDF once HDF’s operating results are consolidated into APA’s books. APA will provide a further update as to EBITDA guidance when we have had access to HDUF financial information sufficient to allow us to accurately assess that specific impact.

Guidance in respect of distributions for the June 2013 financial year is maintained as at least 35 cents per security.

On behalf of the board, I thank our Managing Director, Mick McCormack, his leadership team and APA’s people for another year of consistent financial performance and growth.

Finally, I thank you, our investors for your continued support and I look forward to APA delivering another profitable year.

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APA Group 2012 Annual Meeting

Address by Managing Director, Mick McCormack

Thank you Chairman, and welcome ladies and gentlemen.

As you have just heard from the Chairman, APA has again delivered a solid result for the 2012 financial year,

We have continued to execute our proven strategy, enhancing our core pipelines business where we see opportunity, and leveraging our skills and assets to deliver superior returns.

This strategy is focused on value creation over the long term, and the progress that we made this financial year – both operationally and financially – was consistent with our plans.

The successful execution of APA’s strategy hinges on three key platforms:

• Our quality asset portfolio;

• Our experienced and talented people; and

• A strong and growing industry.

I’ll talk more about our assets and our people shortly, but first I’ll begin my address by providing you with an overview of the Australian gas and energy industry and the regulatory environment in which we operate.

Australian gas and energy industry

We are in the golden age of gas. Demand and supply drivers are converging to make gas one of the most prominent energy sources in Australia, and this in turn is driving pipeline investment.

Natural gas is currently Australia’s third largest energy resource, with proven and probable reserves totalling over 140,000 petajoules. That is a lot of gas – the equivalent of 110 years’ of Australia’s current annual gas use. Natural gas includes coal seam gas which supplies about one third of the gas used in eastern Australia.

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Regarding coal seam gas, there have been some well publicised criticisms of how developing this new source of gas is impacting on landholders. However the development of the coal seam gas industry will not change the way APA goes about its business of transporting gas. We don’t explore and produce gas. We want to maximise the quantity of gas transported through our assets, so are indifferent as to where our customers want us to transport gas from and to. Indeed, for our regulated assets, we are obligated to transport gas from any source through an existing pipeline with available capacity should our customers ask us to do so.

That said, we do wish to see the orderly development of the coal seam gas industry which will benefit the Australian economy generally and ensure an abundant supply of gas to meet the growing domestic market, and therefore benefit APA specifically.

Against this background, total gas reserves are likely to increase substantially. Shale gas exploration in Australia is fairly recent, but shale gas could potentially double Australia’s gas reserves. I note that the first commercial production of shale gas in the Cooper Basin was announced last week.

Gas is a relatively clean and flexible energy source, and increasingly it is replacing the use of other fossil fuels. We are seeing growth in gas’s share of electricity production with increased investment in gas-fired electricity generation. This includes growth in gas-fired peak generation, and back-up generation to support renewable energy projects.

These trends are expected to continue, with ABARE - the Australian Bureau of Agricultural and Resources Economics – predicting that domestic gas demand will double in the next 20 years, while others forecast a slower rate of growth. I

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won’t try and predict what the rate of growth will be, but will make the point that no one is predicting that gas demand will decrease any time soon.

While the long-term trends are positive, there are however obstacles to growth in the domestic demand for gas. Market conditions are currently tight, particularly with the opportunity for gas producers to sell into the international gas markets through exporting liquefied natural gas or LNG as it is known. This will have an impact on gas prices in the domestic market.

Looking to the future, we expect gas prices to fluctuate in the near term as the market accommodates the competing influences of strong global demand for gas, with some lag before significant investment in new sources of production are commissioned. With gas reserves plentiful in many regions and investment levels high, together with increased competition between producers in both the domestic and international gas markets, we expect that prices will stabilise over time.

Economic regulation

Any discussion of the gas industry is incomplete without talking about regulation. National and State regulators involve themselves in the gas transmission sector primarily to protect against unreasonable prices being charged by pipeline owners

This is an important role, but it can be a short-sighted approach as its application can jeopardise further investment and therefore growth in the sector, ultimately to the detriment of the domestic economy.

Through their role in approving the pricing of services on a regulated pipeline, the regulators effectively set the return on investment that is available to pipeline owners. In recent months a number of regulatory decisions have been made that simply do not provide a return on capital sufficient to attract investment in new price-regulated assets.

One example that highlights this point is the Australian Energy Regulator’s recent final decision in relation to our Roma to Brisbane Pipeline. That decision allowed a return of 7.31 per cent and there is no question that given prevailing economic conditions a return at this level fails to compensate APA for the risks that we take on when we invest in a pipeline. Rest assured that APA has and will continue to argue vigorously with the regulator on this matter.

This current trend by regulators towards setting regulated returns at increasingly unattractive levels is detrimental to the future of the domestic gas industry in Australia as the regulators are effectively taking a central planning approach to determining how the market will grow, and so are compromising the decision to invest in price regulated assets.

We are left with the risk that investment in regulated gas transmission infrastructure does not keep pace with demand. It will have consequences for Australian productivity and economic growth if regulatory decisions relating to the cost of gas transportation through pipelines – an area that makes up less

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than 10 per cent of the delivered energy bill – constrain access to a relatively cheap, plentiful and clean source of energy.

Until regulators take a more reasonable approach, future investment is far more likely to be directed towards unregulated assets or areas where regulatory tariffs do not apply and the usual commercial outcomes prevail. And indeed that’s currently our focus at APA.

Environmental regulation – carbon tax

When it comes to regulation relating to climate change and carbon emissions, I’m pleased to report that the news is better.

The carbon tax was launched on 1 July this year, after our financial year end, and it’s important to reinforce that we expect its impact to be immaterial to APA due to cost recovery mechanisms in contracts and under regulatory arrangements.

We do believe – however – that natural gas is a key to reducing the nation’s carbon emissions. We support policies that encourage the shift from black and brown coal to gas, particularly in electricity generation. We’re already playing a significant role in developing the supporting infrastructure and services required as Australia transitions to cleaner fuels such as natural gas, and we expect this to continue.

Quality asset portfolio, reliably underpinned

Turning now to APA’s asset portfolio, and it’s fair to say that given the strength of the domestic gas industry it’s a good time to be the largest transporter of natural gas across Australia.

The scale of our portfolio delivers efficiency benefits. But more importantly, the increasing interconnection of our assets enables us to deliver better and more innovative services to our customers, benefiting both customers and investors.

I’m pleased to report that our assets continue to operate at or near full capacity. That’s why we continue to invest - to increase capacity as the demand for gas increases.

Most of the $271 million of capital investment during the 2012 financial year was focused on increasing the capacity of our pipelines and storage facilities.

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In the east we expanded three of our pipelines. Starting in Queensland, we recently completed and commissioned the expansion of the Roma Brisbane Pipeline, installing additional compression and looping 6 kilometres of pipeline in the Brisbane metropolitan area. This work increased capacity by 10 per cent and is supplying two customers under long term contracts of up to 15 years.

In New South Wales we completed the fourth year of our five year program, expanding the Moomba Sydney Pipeline. This program has progressively increased the storage and peak capacity of the pipeline.

The capital works on our Victorian transmission system have been focused on the northern part of the state, where we have installed additional compression. This not only increases capacity in Victoria, but also enables gas to move more easily between Victoria and New South Wales, which in turn increases supply options and security for our customers.

As I mentioned earlier, the recent decisions from the regulator are discouraging further investment in regulated pipelines. This is certainly the case for APA as we work through the regulator’s draft decision for the Victorian transmission system, in which the allowable return on our capital investment has been reduced to 7.16 per cent. As with all regulatory processes before us, we will address these issues thoroughly to achieve the best sustainable outcome for both APA and our customers. At the same time we will reconsider the extent of our continued investment in regulated infrastructure.

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Over in Western Australia we have continued the work on the Mondarra gas storage facility. As you can see by these images, as well as in the time lapse photography in the slide show before this meeting was opened, we have significantly progressed work at the site during the year.

Mondarra is a depleted gas reservoir, ideally situated between the two gas pipelines that feed into Perth – our Parmelia Pipeline and the Dampier to Bunbury Pipeline. Our expansion work will increase the commercial storage capacity of the facility by five times.

We expect the construction of all the surface facilities, pipeline interconnects and treatment plants will be completed, and the facility fully operational, by mid next year.

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A substantial part of the increased storage capacity is contracted for 20 years to Verve Energy, the State-owned electricity generator. Mondarra will provide Verve and other APA customers with supply security and flexibility options to better manage their gas supply and demand portfolios.

This is a significant project, not just for APA, but also for the Western Australian Government, which recognises the major role it will play in enhancing future gas supply security for the state.

In December 2011 and January 2012 we announced two expansions on our Goldfields Gas Pipeline. These projects will increase the pipeline capacity by about 20 per cent for two of our mining customers, with new revenue contracts of 15 and 20 years respectively.

While we do make substantial investments in new capacity and projects every year, it’s important to remember that this is low-risk investing. Our investment in growth is underpinned either by long-term contracts or, for regulated assets, the regulatory framework.

During the 2012 financial year we also announced the takeover of the Hastings Diversified Utilities Fund. It’s been some ten months since we first announced the transaction – after a slow start, we now own 82.7 per cent of HDF and look forward to getting the deal wrapped up before too long.

This is strategically a very important and exciting acquisition for APA – both because of its size, around $2.8 billion, but also because of the good fit between HDF’s assets and APA, as you heard from our Chairman.

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I am disappointed that in order to get ACCC clearance for the takeover to proceed, we are required to sell the Moomba to Adelaide Pipeline System. Nevertheless, we’re more than satisfied that the remaining assets being the South West Queensland Pipeline and the Pilbara Energy Pipeline, will greatly enhance our network and reinforce APA’s market leading position in this country.

Once the transaction closes, APA will own or operate a unique footprint of 14,000 km of gas pipelines. It will also herald a new way of moving and storing gas.

Over the years APA has lead the market in developing new and innovative service offerings and so our customers in eastern Australia will benefit from the greater flexibility and supply options that will be possible by having APA operate this integrated network.

They will benefit by being able to move any volume of gas, small or large, more easily through this network and better manage their gas supply and demand portfolio.

There will be a significant step-change in the way that we can service our customers – we’ll be able to provide a more seamless offering across pipelines and jurisdictions. We’ll be able to tailor our services to fit more of our customers’ requirements, and importantly increase basin on basin competition for gas which should help develop the gas market in eastern Australia.

The benefits of this network extend to all stakeholders – customers and investors. For investors, the acquisition is set to deliver attractive long-term returns as we optimise infrastructure utilisation across the combined network and achieve economies of scale.

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Outside of our core business of gas transmission, we also invest in allied businesses that deliver strategic value and enhance the value of our portfolio of infrastructure assets.

We only pursue growth that delivers long-term value without jeopardising our low risk, conservative approach – to revenue, operations, and our balance sheet. Generally, this means investing in assets with revenue underpinned by long-term contracts or regulatory arrangements.

One area where we see opportunity to enhance our core pipeline assets is through investment in strategically located generation assets.

In October last year we reached agreement with Xstrata for long term electricity supply in Mount Isa. As a result APA together with AGL Energy is developing the Diamantina Power Station in Mount Isa.

This will be a 242 megawatt gas-fired power station supplied by gas from our Carpentaria Gas Pipeline under a new long term gas transportation agreement. Security of supply to the region will be further enhanced by the commitment from APA and AGL to construct a 60 megawatt power station alongside the Diamantina Power Station.

Diamantina is expected to be partially commissioned in 2013 and fully operational in 2014. It will deliver cheaper – and just as importantly cleaner energy – than what was proposed as a heavily government subsidised grid electricity alternative.

This is an exciting major project that clearly demonstrates how we can supply the total energy needs of our customers, not just gas transportation, on sound commercial terms. At the same time we have safeguarded our investment in

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the Carpentaria Gas Pipeline by ensuring the long term viability of gas-fired electricity generation.

An additional benefit for APA is that over this time we will have developed considerable internal skills in building large scale gas-fired power plant, which will provide a platform for us to pursue similar opportunities should they arise.

Another generation investment was our acquisition of the Emu Downs wind farm in June 2011. Emu Downs is just south of Mondarra and adjacent to the Parmelia Gas Pipeline. It is a small addition to our portfolio, but it provides secure revenue, and options to develop the adjacent site and use and enhance the value of our gas infrastructure as part of its further development and builds on a key relationship with the state’s major energy retailer.

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Turning now to another important part of APA’s participation in the gas transmission sector – our involvement in distribution networks. This is an area where we maintain involvement for strategic reasons, to maintain our asset management and operational capability. However, we prefer to focus our balance sheet on gas transmission and other growth assets that enhance our core business.

The sell down of 80 per cent of Allgas into a joint venture with Marubeni Corporation and RREEF in late December 2011, with APA retaining a 10 year asset management contract over the assets, was consistent with that approach.

The Allgas transaction has enabled us to re-direct approximately $480 million of capital for future investment into the HDF acquisition and other growth related projects. Importantly, this transaction again confirms the value and demand for the operating skills APA has, because a number of long term domestic and international investors have approach us to pursue similar opportunities where

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APA takes a minority ownership interest and operates the assets for the owners.

Portfolio result

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So now looking at the financial performance across the business, all segments performed well. The contribution to EBITDA increased from all parts of our energy infrastructure business as well as from returns on our investments. EBITDA of $526 million was an increase of 7 per cent on last year’s result. This solid growth reflects the impact of our investment growth activities during the last few years despite the Allgas sale in December 2011.

Quality people

This year we adjusted our organisational structure to better fit our business model – making sure we have the right functions with the right people and the right skills in place.

Consequently I’ve expanded my executive team to reflect that structure, appointing Rob Wheals to head up APA’s Transmission business, John Ferguson to lead the Network business and Kevin Lester to oversee the multimillion dollar infrastructure development projects I’ve described.

Both Rob and John are internal appointments and reflect the calibre of APA’s employees. Kevin leads the infrastructure development team – he has worked with APA for many years as a contractor in the pipeline construction business and this experience is already enhancing our business.

Ross Gersbach and Stephen Ohl were appointed to new roles. Ross oversees our new non-regulated businesses like power generation as well as APA’s

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investments in listed companies and partnerships; Stephen leads our Strategic Projects division which looks after our major capital works projects, including the Mondarra Gas Storage Facility and Diamantina Power Station.

Peter Fredricson, Peter Wallace and Mark Knapman continue in their roles leading our Finance, Human Resources and Company Secretariat functions respectively.

My leadership team, the leaders of each of these divisions, have extensive industry knowledge, a history of performance and strong functional capability. I am delighted to have such a team to lead APA into its next phase of growth. It will also enable me to continue to say with conviction that in APA we have the best people in this industry in the country.

Commitment to safety and the community

Safety is and always will be a priority for APA, with the goal of achieving a “zero harm” workplace. It was encouraging to see our employee Lost Time Injury Frequency Rate (LTIFR) decrease this year to 2.2 overall, down from 6.2 last year, partly because of how we addressed the cause of these injuries. However we remain committed to driving this number lower over time.

This year we again supported community partnerships with four indigenous organisations as part of our “Building Brighter Futures” community investment program – NAPCAN Aboriginal Girls Circle; Clontarf Foundation; Exodus Foundation; and Beyond Empathy. We provide funding for programs focused on improving the future work and life prospects of young Australians.

Summary

Our focus has always been on delivering a strong, sustainable and growing business, striking the right balance between the needs of today and requirements beyond today.

We’ve funded almost $1 billion of asset portfolio expansions across Australia over the last four years, and we’ve done so because of the quality of our assets, the calibre of our people and the increasing demand for gas. And we’ve maintained the low-risk nature of our business by securing revenue under longterm revenue agreements or regulatory arrangements to support those investments.

Five years ago, I said that success hinged on prioritising stability over uncertainty, execution over hype and long-term value over short-term gain. It’s still true.

As I reflect this year on our achievements:

• how we’ve structured our business for growth,

• how we’ve consolidated our core business and moved towards building an integrated pipeline network,

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APA Group Annual Meeting

Thursday, 25 October 2012

• how we’ve stepped out carefully through strategic development and acquisition of related projects to preserve and increase the value of our energy infrastructure portfolio, and

• how we’ve maintained our discipline for funding our business with appropriate levels of cash retained in the business, equity and debt

It is clear that we are more than a pipeline owner - we are redefining our potential as a strong energy infrastructure business.

Leveraging our existing assets, pursuing growth, security and value, and making the most of how our people think, have got us to this point.

Increasing our efficiencies where we can, acquiring businesses that make sense for us to own, and adapting our structure as required, will take us forward.

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