APA Group Limited ACN 091 344 704 | APA Infrastructure Trust ARSN 091 678 778 | APA Investment Trust ARSN 115 585 441 Level 25, 580 George Street Sydney NSW 2000 | PO Box R41 Royal Exchange NSW 1225 Phone +61 2 9693 0000 | Fax +61 2 9693 0093 APA Group | apa.com.au

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24 August 2022

ASX ANNOUNCEMENT

APA Group (ASX: APA)

ANNUAL FINANCIAL RESULTS

APA Group provides the attached for the financial year ended 30 June 2022:

APA Infrastructure Trust Appendix 4E
APA Infrastructure Trust Annual Report
APA Investment Trust Annual Report

The webcast, which starts at 10.00am today, is accessible via a link here.

Authorised for release by Amanda Cheney Company Secretary APA Group Limited

For further information, please contact:

Investor enquiries: Kynwynn Strong General Manager Investor Relations Telephone: +61 3 9463 8408 Mob: +61 410 481 383 Email: K [email protected]

Media enquiries: Michael Cox Head of Corporate Affairs Telephone: +61 2 8044 7002 Mob: +61 429 465 227 Email: [email protected]

About APA Group (APA)

APA is a leading Australian Securities Exchange (ASX) listed energy infrastructure business. We own and/or manage and operate a diverse, $21 billion portfolio of gas, electricity, solar and wind assets. Consistent with our purpose to strengthen communities through responsible energy, we deliver approximately half of the nation’s gas usage and connect Victoria with South Australia and New South Wales with Queensland through our investments in electricity transmission assets. We also own and operaterenewable power generation assets in Australia, with wind and solar projects across the country. APA Infrastructure Limited is a wholly owned subsidiary of APA Infrastructure Trust and is the borrowing entity of APA Group. For more information visit APA’s website, apa.com.au.

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APA Infrastructure Trust Results for announcement to the market For the year ended 30 June 2022 Appendix 4E

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					Restated(a)
Results		Change		2022 $’000	2021 $’000
Revenue including share of profits from equity accounted investments	Up	4.9%	to	2,732,378	2,605,013
Profit after tax including significant items(b)	Up	35,283.0%	to	259,711	734
Profit after tax excluding significant items	Down	13.9%	to	240,037	278,850
Free cash flow(c)	Up	19.8%	to	1,080,632	901,914
Free cash flow per security	Up	15.2¢	to	91.6¢	76.4¢
Earnings per security including significant items	Up	22.0¢	to	22.1¢	0.1¢
Earnings per security excluding significant items	Down	3.3¢	to	20.4¢	23.7¢

(a) Restated for the impact of the provision for payroll review. Refer to note 2 of the financial statements.

(b) Refer to note 2 of the Financial Statements.

(c) 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.

Reporting Period

The above results are for the financial year ended 30 June 2022, reference is made to movements from the previous corresponding period being the financial year ended 30 June 2021.

	APA	Group
		Franking
Distributions paid and proposed	Amount per security	credits per security
Final distribution proposed
profit distribution	7.45¢	2.70¢
capital distribution	20.55¢	-
	28.00¢	2.70¢
Interim distribution paid
profit distribution	10.76¢	4.04¢
capital distribution	14.24¢	-
	25.00¢	4.04¢

	53.00¢	6.74¢

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Page 1/2

APA Infrastructure Trust

Results for announcement to the market

For the year ended 30 June 2022 Appendix 4E

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Record date for determining entitlements to the unrecognised final distribution in respect of the current financial year is 30 June 2022.

Distribution information is presented on an accounting classification basis. The APA Group Annual Tax Statement and Annual Tax Return Guide to be (released in September 2022) provide the classification of distribution components for the purposes of preparation of security holder income tax returns.

The Directors have reviewed APA Group’s financial position and funding requirements and have decided to retain the suspension of the Distribution Reinvestment Plan until further notice.

		Restated(d)
	2022	2021
Net asset backing per security	$	$
Net tangible asset backing per security	(0.73)	(0.61)
Net asset backing per security
	2.23	2.50

(a) Restated for the impact of the provision for payroll review. Refer to note 2 of the financial statements.

Additional information and commentary on results for the year

For additional disclosures refer to the APA Group annual report for the year ended 30 June 2022 accompanying this Appendix 4E.

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Page 2/2

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always powering ahead

Annual Report 2022

APA GROUP ANNUAL REPORT | 2022

Vision:

What we aspire to. To be world class in energy solutions.

Purpose:

Why we exist.

We strengthen communities through responsible energy.

2 Chairman & CEO report 4 2022 Summary 6 APA Group Board 9 APA Group Executive Leadership

APA Infrastructure Trust (ARSN 091 678 778)

9 Directors’ Report 38 Remuneration Report 54 Consolidated Financial Statements

APA Investment Trust (ARSN 115 585 441)

120 Directors’ Report 124 Consolidated Financial Statements

143 Additional Information 144 Five Year Summary 145 Investor Information

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5 6 7 8
9 10 11 12
13 14 15
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Cover images:
1 Suzanne Shipp
2 Raman Munisamy and Kevin Lomax
3 Peter Chappall, Bryan Morris and Mark Florence
4 Reid Hann
5 Dylan Ungerer
6 Kirrily Hawker
7 Michael Redway
8 Paul Novinetz
9 Gretyl Lunn and Peter Horniblow
10 Hunter Asanuma
11 Julie Mackenzie
12 Reid Hann
13 Gretyl Lunn and Peter Horniblow
14 Bryan Morris and Kristy Oliver
15 Kirrily Hawker and Suzanne Shipp
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2 APA GROUP ANNUAL REPORT | 2022

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CEO AND MANAGING DIRECTOR CHAIRMAN
ROB WHEALS MICHAEL FRASER
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Chairman’s & Managing Director’s Report

We are APA: Always Powering Ahead.

For more than two decades, APA has delivered responsible energy solutions to customers and communities across mainland Australia, helping to ensure we deliver energy security for industry, businesses and households.

As a proudly Australian business, with a vision to be world class in energy solutions, we are determined to play our role in helping Australia transition to a low carbon future and to pursue investment opportunities presented by the energy transition in the interests of our securityholders, customers and communities.

FY22 results

Our solid performance in FY22 underscores both the strength of our business today and the capacity we have to make investments for the future as the energy market transitions.

Total statutory revenue (excluding pass-through revenue) was $2,236.6 million, up 4.3% compared with the previous year (FY21: $2,144.5 million). Earnings before interest, tax, depreciation and amortisation (Reported EBITDA)[ 1] of $1,630.2 million was down 0.5% on the previous year (FY21: $1,638.8 million). On an underlying EBITDA basis, earnings were up 3.9% to $1,692.3 million on the previous year (FY21: $1,628.8 million).

This performance, together with our confidence in APA’s long-term growth outlook, enabled the Board to declare a final distribution of 28.0 cents, taking the FY22 distribution to 53.0 cents per security, consistent with guidance. This represents a 3.9% increase on FY21 and a continuation of 18 years of growth in distributions to securityholders.

Health safety and wellbeing

There is no doubt that the strength of our performance for the period is, in a very large part, thanks to the hard work and commitment of our employees, who are fundamental to our success. The safety and security of our people, our communities and our assets is always a priority at APA.

Pleasingly, we again made meaningful improvements in our safety record in FY22 with a 43% decrease in our Total Recordable Injury Frequency Rate (TRIFR).

At the same time, our customers’ gas transmission nominations were once again delivered 99.9% of the time, underscoring the reliability of our operations.

While lockdowns and other COVID-19 measures continued to challenge the businesses during FY22, our employees again displayed resilience, adaptability and flexibility to continue delivering for our customers and communities and we thank them for their commitment.

As we adapt to our ‘new normal’ ways of working, we are intent on making the right safety decisions and always learning and sharing best practices with our people across all our sites. At the same time, our new Hybrid@APA strategy clarifies our expectations around how APA’s office-based employees will work in a post-pandemic world and is grounded in our commitment to maintaining an inclusive and diverse workplace.

Energy transition

The recent electricity market events on Australia’s east coast has underscored the vital role APA plays in delivering energy security for Australians today, the importance of our strategy for the future, as well as the critical role that gas will continue to play in Australia’s energy transition.

The challenges we are seeing play out across the east coast is a real-time window into the potential shocks we need to avoid if we are to navigate an orderly transition. As coal is withdrawn from Australia’s energy mix, a combination of renewables brought to market by new and augmented electricity transmission and firmed by gas generation, together with batteries, pumped hydro and future technologies, will deliver the most economical and responsible pathway to net zero.

Importantly, gas generation will help to fast-track renewables into Australia’s energy mix. That’s because gas is the workhorse of the energy grid. It is virtually irreplaceable as an energy source for some industries, and because it is able to be turned on quickly and sustained for extended periods, gas delivers energy security when it’s needed most. That’s why it is vital that we both continue to invest in new gas supplies and in the infrastructure that will get it to market.

During FY22, APA progressed with ~$270 million investment, ahead of forecast gas shortfalls in the southern states, by expanding the capacity of our East Coast Grid between Queensland and southern markets by 25 per cent. This staged investment, which is underway, will provide a cost effective, safe and reliable means of transporting Australian domestic gas from northern gas producers to southern markets.

Excludes significant items.

$ 1.4 bn+

Organic growth capex expected to exceed $1.4bn over FY23-25

53.0 ¢ Distribution per security up 3.9%

$ 21 bn+

Assets owned and/or operated by APA Group

powering towards responsible energy

We are also investing now to increase capacity, reliability and security of supply to Victorian homes and businesses through our Western Outer Ring Main project and the expansion of the South West Pipeline.

By expanding our East Coast Grid today, APA is making responsible investments that serve our customers and communities with the potential for that same infrastructure to play a role in the delivery of the energy solutions of tomorrow, like hydrogen, biogas and synthetic methane.

In Australia’s West, our Northern Goldfields Interconnect Pipeline in Western Australia will support mining customers to unlock new investment in battery minerals, which will further support the energy transition.

The need to continue to invest in gas infrastructure and the role this infrastructure will play in the future was acknowledged at the recent G7 meeting in Germany, where leaders from the world’s major economies recognised the important role that gas will play in the global energy transition, particularly where projects are “integrated into national strategies for the development of lowcarbon and renewable hydrogen”.

Strategy

The accelerating pace of the energy transition presents enormous opportunity for APA. As a leading Australian energy infrastructure business, APA plays a vital role in connecting Australian homes, businesses and communities with responsible energy solutions today, and consistent with our strategy and our vision to be worldclass, we are actively investing in the energy solutions of tomorrow.

The Australian Energy Market Operator has identified that to secure Australia’s energy future and meet the growing demand for electrification, our nation effectively needs to rebuild the National Electricity Market – nearly doubling the amount of electricity it currently delivers, building out a nine-fold increase in gridscale renewables, trebling firming capacity, including gas-fired generation, and installing over 10,000 kilometres of new transmission lines.

A core part of our strategy is to leverage our capability and experience to support this important national endeavour.

Consistent with this strategy we continue to grow our renewables portfolio and have commenced construction of an 88-megawatt solar farm in Mount Isa that’s a staggering 65 times the size of the Melbourne Cricket Ground’s playing surface.

Our research, together with Future Fuels and Wollongong University, to test the ability of a section of the Parmelia Gas Pipeline in Western Australia to carry up to 100% hydrogen continues to achieve promising results. In FY22 we made further hydrogen related investments, including becoming a member of an international consortium undertaking a detailed feasibility study into the development of a large-scale green hydrogen project in Central Queensland. If successful, this project proposes to export green hydrogen to Japan and supply large industrial customers in the Central Queensland region to support emissions reduction for the domestic industry.

Net zero

Our infrastructure investments will help steer Australia towards a net zero pathway, accelerate the technologies of the future, and support our own net zero ambitions.

In FY22, we advanced our climate change transformation program and set interim 2030 emission reductions commitments that not only embed a pathway in our strategy to achieve our net zero ambition, but it also firmly positions APA to drive our growth agenda.

You can read more about our plan on our website.

Conclusion

As the energy transition accelerates, APA is well placed to continue our leading role in delivering responsible energy solutions for Australians.

We are proud of our track record of maintaining financial discipline in the execution of our strategy and of consistently creating and growing value for our securityholders. Our objective is to continue to deliver strong distributions while maintaining an appropriate level of funding for growth.

That focus will remain when Adam Watson steps into the role of Acting CEO, following Rob’s decision to resign and finish at APA at the end of September 2022.

On behalf of the Board and Management, we thank our securityholders, customers, communities and employees for their ongoing support and our commitment to keep APA Always Powering Ahead.

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Michael Fraser Chairman

Rob Wheals Chief Executive Officer and Managing Director

4 APA GROUP ANNUAL REPORT | 2022

2022 Summary

We are APA: delivering responsible energy

Free Cash Flow

$ 1,081 m STRONG FREE CASH FLOW GENERATION UP 20%

Distribution

18 YEARS 53.0[¢] OF CONSISTENT INCREASE

Established pathways to achieve NET ZERO OPERATIONAL EMISSIONS

43[%] DECREASE IN OUR TOTAL RECORDABLE INJURY FREQUENCY RATE (TRIFR)

Underlying Business Performance

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16.0 91.6 53.0
2,237
15.2 15.4 15.8 2,145 80.8 81.1 50.0 51.0
14.7 2,130
76.4
2,031 75.7 47.0
1,941 45.0
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1,081
1,692
1,650 957
1,629
1,570 919 894 902
1,515
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Underlying EBITDA[ 2,6] ($m)

[ 3]

($m)

Total assets ($b)

Revenue excl. pass-through[ 4] ($m)

per security[ 5] (cents)

Distributions per security (cents)

Financial results

Financial results
	30 June 2022	30 June 20216	Changes
Revenue	2,732.4	2,605.0	4.9%
Revenue excluding pass-through4	2,236.6	2,144.5	4.3%
Underlying EBITDA2	1,692.3	1,628.8	3.9%
Total reported EBITDA	1,630.2	1,638.8	(0.5%)
Proft after tax including signifcant items	259.7	0.7	35283.0%
Proft after tax excluding signifcant items	240.0	278.9	(13.9%)
Free cash fow3	1,080.6	901.9	19.8%
Financial position
Total assets	15,836.3	14,742.9	7.4%
Total drawn debt5	10,668.1	9,665.8	10.4%
Total equity	2,628.4	2,951.0	(10.9%)
Financial ratios
Free cash fow per security (cents)	91.6	76.4	19.9%
Earnings per security (cents) including signifcant items	22.1	0.1	22000.0%
Earnings per security (cents) excluding signifcant items	20.4	23.7	(13.9%)
Distribution per security (cents)	53.0	51.0	3.9%
Distribution payout ratio (%)7	57.9	66.7	(13.4%)
FFO/Debt (%)	11.5	11.0	4.5%
FFO/Interest (times)	3.6	3.1	16.1%

Financial results exclude significant items.
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.
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.
Pass-through revenue is offset by pass-through expense within underlying EBITDA. Any management fee earned for the provision of these services is recognised as part of asset management revenues.
APA’s liability 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 differences reported in equity and deducting other financial liabilities that are reported as part of borrowings in the balance sheet.
The financial years prior to FY22 have been restated as a result of the provision for payroll review.
Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow.

6 APA GROUP ANNUAL REPORT | 2022

APA Group Board

Michael Fraser

BCom FCPA MAICD

Independent Chairman

Appointed 1 September 2015 Appointed Chairman 27 October 2017

Michael has more than 35 years’ experience in the Australian energy industry. He has held various executive positions at AGL Energy culminating in his role as Managing Director and Chief Executive Officer for 7 years until February 2015. Michael is a Director of Orora Limited. He is also 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 a member of the Audit and Risk Management Committee and is the Chairman of the Nomination Committee.

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Robert (Rob) Wheals BCom CA GAICD Chief Executive Officer and Managing Director Appointed 6 July 2019 to end of September 2022

Rob has more than 25 years’ experience in Australia and internationally in energy infrastructure and telecommunications, across roles in operations, finance, commercial, strategy, infrastructure investments and M&A, as well as regulatory.

Rob joined APA in 2008 as General Manager Commercial to manage the commercial function of APA’s transmission business, which includes over 15,000 km of gas transmission pipelines, storage and processing facilities. In 2012, Rob was appointed Group Executive Transmission, responsible for approximately 85% of APA’s earnings before interest, tax and depreciation. In this role, Rob was responsible for the commercial, operational and safety performance of APA Group’s transmission and gas storage assets.

Rob has a deep understanding of the Australian energy market and the challenges facing Australia today and into the future, in particular the challenge of balancing sustainable lower emissions energy with reliable and affordable energy for end users.

Prior to joining APA, Rob was General Manager of Strategy at AAPT in Sydney. Rob has a Bachelor of Commerce Degree. He is a Chartered Accountant and a Graduate Member of the Australian Institute of Company Directors.

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Debra (Debbie) Goodin BEc FCA MAICD

Independent Director Appointed 1 September 2015

James Fazzino BEc (Hons) FCPA

Independent Director Appointed 21 February 2019

Debbie is an experienced Non-Executive Director and Chairman of both listed and unlisted corporates. She is currently Chairman of Atlas Arteria Limited. She was formerly a Director of oOh!media Limited, Senex Energy Limited, Ten Network Holdings Limited and Australia Pacific Airports Corporation Limited. Debbie also has executive experience in operations, finance and corporate development, including with engineering and professional services firms and is a Fellow of Chartered Accountants Australia and New Zealand.

Debbie is the Chair of the Audit and Risk Management Committee, a member of the Health, Safety, Environment and Heritage Committee and a member of the Nomination Committee.

James has experience both locally and internationally in industrial chemicals, fertilisers, explosives and manufacturing sectors.

James is currently the Chair of Manufacturing Australia and Tassal Group Limited, and a Director of Rabobank Australia Limited. He is also a convenor of the Champions of Change Coalition.

He was formerly the Chairman of Osteon Medical, Managing Director and Chief Executive Officer of Incitec Pivot Limited and before that its Finance Director and Chief Financial Officer.

James is a member of the Audit and Risk Management Committee and a member of the Health, Safety, Environment and Heritage Committee.

APA Group Board continued

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Peter Wasow Peter has experience in the resources sector as both a senior executive and BCom GradDip (Management) director. He retired as Managing Director and Chief Executive Officer of Alumina Fellow (CPA Australia) Limited in mid-2017. Previously, he was Executive Vice President and Chief Financial Independent Director Officer at Santos Limited and, in a 20-year plus career at BHP, he had held the Appointed 19 March 2018 senior positions including Vice President, Finance and other senior roles in Petroleum, Services, Corporate, Steel and Minerals. Peter is a Non-Executive Director with Oz Minerals Limited. He was formerly a Non-Executive Director of Alcoa of Australia Limited, AWA Brazil Limitada, AWAC LLC, Alumina Limited and the privately held GHD Group. Peter is the Chair of the People and Remuneration Committee and a member of the Audit and Risk Management Committee. Rhoda Phillippo Rhoda has considerable experience in the telecommunications, IT and energy sectors. MSc telecommunications Business GAICD She is currently Chairperson of Kinetic IT Pty Ltd, and a Non-Executive Director Independent Director with Pacific Hydro. She is also an advisor to the Board of Tally Group, an energy Appointed 1 June 2020 billing solutions provider. She was formerly a Non-Executive Director of 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 spent much of her career in the telecommunications industry in the United Kingdom, New Zealand and Australia in senior management positions before joining Optimation, in New Zealand, as Chief Executive Officer. Rhoda later joined HRL Morrison & Co and, during this time, was Managing Director of Lumo Energy for 2 years. Rhoda is a member of the Health, Safety, Environment and Heritage Committee and a member of the People and Remuneration Committee. Shirley In’t Veld Shirley has expertise and experience in the energy, mining and renewables sectors. BCom LLB (Hons) Shirley is currently a Non-Executive Director with Alumina Limited, Develop Global Independent Director Limited and Karora Resources Inc. She was formerly Deputy Chair of CSIRO; Appointed 19 March 2018 a Non-Executive Director of NBN Co Limited, Northern Star Resources Limited, Perth Airport, DUET Group, Asciano Limited and Alcoa of Australia Limited; and a Council Member of the Chamber of Commerce and Industry of Western Australia. She was also the Managing Director of Verve Energy (2007 – 2012). Before that, she worked for 10 years in senior roles at Alcoa of Australia Limited, WMC Resources Ltd, Bond Corporation and BankWest.

In 2014, Shirley was Chairman of the Queensland Government Expert Electricity Panel and a member of the Renewable Energy Target Review Panel for the Department of Prime Minister and Cabinet and was, until recently, a Council member of the Australian Institute of Company Directors (WA) and an Advisory Board member of the SMART Infrastructure Facility (University of Wollongong). Shirley is Chair of the Health, Safety, Environment and Heritage Committee and a member of the People and Remuneration Committee.

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Steven (Steve) Crane BCom FAICD SF Fin

Independent Director Appointed 1 January 2011

Steve has more than 40 years’ experience in the financial services industry. His background is in investment banking, having previously been Chief Executive Officer of AB AMRO Australia and BZW Australia.

Steve has experience as a non-executive Director of listed entities. He is currently Chairman of Global Valve Technology Limited and a Director of SCA Property Group. He was formerly Chairman of nib Holdings Limited, Adelaide Managed Funds Limited, Investa Property Group Limited and Taronga Conservation Society Australia; a Director of Bank of Queensland Limited, Transfield Services Limited, Adelaide Bank Limited, Foodland Associated Limited and APA Ethane Limited, the responsible entity of Ethane Pipeline Income Fund; and a member of the Advisory Council for CIMB Securities International (Australia) Pty Ltd.

Steve is a member of the Audit and Risk Management Committee, a member of the Nomination Committee and a member of the People and Remuneration Committee.

8 APA GROUP ANNUAL REPORT | 2022

APA Executive Leadership

Adam Watson BBus FCPA GAICD

Chief Financial Officer

Adam is responsible for APA’s financial, risk and technology functions. He joined APA in 2020. Adam has more than 20 years’ global experience in executive and senior leadership roles in the infrastructure, transport, aviation, energy, heavy manufacturing and industrial services industries, covering finance, corporate development, strategy, technology, joint ventures, mergers and acquisitions, customer experience and operations.

Adam will assume the role as Acting Chief Executive Officer on Rob Wheals' retirement in September 2022.

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Amanda Cheney LLB (Hons) BArts FGIA

Group General Counsel and Company Secretary

Darren Rogers BEng MEng MBA GAICD Group Executive Operations

Jane Thomas BBus LLB (Hons) MPsychol (org) GAICD Fellow AHRI

Group Executive People, Safety and Culture

Julian Peck BCom

Group Executive Strategy and Commercial

Kevin Lester

BEng MIEAust CPEng EngExec GAICD

Group Executive Infrastructure Development

Ross Gersbach BBus

President North American Development

Amanda holds the role of Group General Counsel and Company Secretary. She joined APA in August 2012. Amanda has 20 years’ experience in energy and infrastructure industries, having worked as a senior lawyer in Australia and overseas. She holds a Graduate Diploma of Applied Corporate Governance and is a Fellow of the Governance Institute of Australia.

Darren is responsible for the safe operations, maintenance and asset management of APA’s portfolio of Transmission, Power, Networks and Midstream infrastructure assets. Darren joined APA Group in 2017 as General Manager Asset Management for Transmission before becoming Group Executive Transmission in 2019. He previously held senior executive roles in commercial, asset management and operations, leading company-wide portfolios.

Jane is responsible for managing APA Group’s People, Safety and Culture division. She joined APA Group in May 2021. Jane is a highly experienced HR executive and business leader who has driven transformational change in top ASX companies, including Westpac, Newcrest Mining and AGL, and in industries spanning energy, mining, banking and finance, fast moving consumer goods, retail and manufacturing.

Julian is responsible for delivering APA’s corporate development and investments, customers and contract management, energy solutions, strategy and markets, economic regulation and policy development, and APA’s net zero 2050 ambition. Julian joined APA in August 2020. He has more than 20 years’ experience in investment banking, specialising in the infrastructure, utility and power sectors. Julian has announced his intention to retire from APA in late 2022, but will continue in his executive capacity as Group Executive Strategy and Commercial until his cessation with APA Group.

Kevin is responsible for delivering APA Group’s infrastructure expansion and growth projects and APA’s Pathfinder program, which pursues innovation, technology and new energy opportunities. Kevin joined APA Group in August 2012, continuing a career in managing major infrastructure projects, including energy infrastructure. He is a Director and a past President of the Australian Pipelines and Gas Association.

Ross is responsible for progressing APA Group’s investment strategy in North America, based in Houston, Texas. He was a director of APA Group from 2004 and joined the management team in April 2008. Ross has more than 25 years’ experience in senior positions across a range of energy related sectors, including infrastructure investments, mergers and acquisitions, and strategic developments.

Directors’ Report

APA Infrastructure Trust and its Controlled Entities

The Directors of APA Group Limited (the Responsible Entity) submit their financial report of APA Infrastructure Trust (APA Infra) and its controlled entities (together, APA or Consolidated Entity) for the year ended 30 June 2022. This report refers to the consolidated results of APA and APA Investment Trust (APA Invest).

1. 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 / Chairman: 27 October 2017
Robert (Rob) Wheals	Chief Executive Ofcer and Managing Director: 6 July 2019
Steven (Steve) Crane	1 January 2011
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

The Company Secretaries of the Responsible Entity during the year were Nevenka Codevelle (until 22 October 2021) and Amanda Cheney.

2. State of affairs

On 22 October 2021, Hannah McCaughey resigned as Group Executive Transformation and Technology.

On 22 October 2021, Nevenka Codevelle resigned as Group Executive of Governance and External Affairs.

Shirley Chowdhary held the position of Interim Group Executive, Governance and External Affairs from 18 October 2021 to 20 December 2021.

Amanda Cheney was appointed to the new Executive Leadership Team position of Group General Counsel and Company Secretary on 30 May 2022 and continues to hold this role.

On 6 May 2022, APA Group changed its group entity names to better reflect its renewed focus on energy infrastructure, with a portfolio of gas, electricity, solar and wind assets across Australia. The naming conventions, now harmonised across the APA Group, are:

– Australian Pipeline Limited changed to APA Group Limited (APA)

– Australian Pipeline Trust changed to APA Infrastructure Trust (APA Infra)

– APT Investment Trust changed to APA Investment Trust (APA Invest)

Kirrily Hawker and Suzanne Shipp

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10 APA GROUP ANNUAL REPORT | 2022

Directors’ Report continued

APA Infrastructure Trust and its Controlled Entities

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Gretyl Lunn and Peter Horniblow

3. Subsequent events

On Thursday, 28 July 2022 APA completed the sale of Orbost Gas Processing Plant to Cooper Energy Limited (ASX:COE). APA continues to operate the plant and will do so until the Major Hazard Facility Licence is transferred to COE. APA expects to receive cash consideration of between $270.0 million and $330.0 million. The total consideration to be received is subject to post-completion plant performance.

On 19 August 2022, APA announced that following an APA-initiated independent review of payroll, it found system errors relating to seven Enterprise Agreements, which has resulted in the identification of payment errors to employees over a seven year-period. APA has commenced a process to remediate the errors for affected employees and has included a provision of $32.4 million in its financial statements for the year ended 30 June 2022.

On 22 August 2022, APA announced that CEO and Managing Director, Rob Wheals, would be stepping down at the end of September 2022. Adam Watson, APA’s Chief Financial Officer, was appointed as acting CEO while the Board undertakes a full search process for a new CEO. APA’s General Manager of Investor Relations, Kynwynn Strong, was appointed as acting CFO.

On 24 August 2022, the Directors declared a final distribution of 28.0 cents per security ($330.4 million) for APA Group, an increase of 3.7%, or 1.0 cent per security over the previous corresponding period (30 June 2021: 27.0 cents). This comprises a distribution of 21.71 cents per security from APA Infra and a distribution of 6.29 cents per security from APA Invest.

The APA Infra Trust distribution represents 6.31 cents per security profit distribution and 15.40 cents per security capital distribution. The APA Invest distribution represents a 1.14 cent per security unfranked profit distribution and 5.15 cents capital distribution. Franking credits of 2.70 cents per security will be allocated to the APA Infra Trust franked profit distribution. The distribution will be paid on 14 September 2022.

Subsequent to 30 June 2022, APA Group entered into a series of bilateral facilities that provide an additional $900.0 million of undrawn liquidity facilities. These bilateral agreements have been put in place to replace aging credit lines of $750.0 million that have been cancelled since 30 June 2022.

At the time of reporting, the uncertain situation in respect of the COVID-19 pandemic continues to be closely monitored by APA Group’s management and directors. Nothing has come to the attention of APA Group that would require adjustment or additional disclosure in these financial statements as a result of any recent COVID-19, global and domestic political developments.

Other than noted above, and as disclosed elsewhere in this report, in the interval between 30 June 2022 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.

4. About APA

Principal activities

In FY22, APA’s principal activities continued without significant change being:

– Energy infrastructure – gas transmission, gas storage and processing, and gas-fired and renewable energy power generation across Australia

Asset management – services for most of APA’s energy investments, and for third parties
Energy investments – in unlisted entities.

APA overview

APA is a leading Australian Securities Exchange (ASX) listed energy infrastructure business. APA owns and/or manages and operates a diverse, $21 billion portfolio of gas, electricity, solar and wind assets. Consistent with APA’s purpose to strengthen communities through responsible energy, APA delivers about half of the nation’s gas use and connects Victoria with South Australia and New South Wales with Queensland through investments in electricity transmission assets. APA also owns and operates renewable power generation assets in Australia, with wind and solar projects across the country.

Since listing on 13 June 2000, APA’s market capitalisation has increased more than 27-fold to around $14 billion. At 30 June 2022, APA had achieved a total securityholder return (TSR) of 16.4%[ 1] per annum on an annual compounding basis since listing to 30 June 2022.

Total securityholder return is the capital appreciation of APA’s security price, adjusted for capital management actions (such as security splits and consolidations) and assuming distributions are reinvested at the ex-distribution rate per security. The figures quoted are sourced from Bloomberg.

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APA’s portfolio of assets and investments
2 Darwin
1
Katherine
3
48 Mount Isa 4 8
49 5
6
7
9 Gladstone
47 Alice Springs 14
Kalgoorlie 50 Roma 13 17
35 34 10 12
Wallumbilla Brisbane
Yarmana 33 Moomba 11 15 16
36
40 18 IOC
46 39 Tropicana 19
43 38 37 20 24
44 Kalgoorlie 21 22 Tamworth
45 41 Dubbo
Perth 42 32 23
Lithgow
Griffith Sydney
31
30 25
Adelaide Albury Canberra
29 Bendigo
Ballarat 27 26
28
Melbourne
Key Pipeline
3 Amadeus Gas Pipeline (inc laterals)
APA Group asset
13 Berwyndale Wallumbilla Pipeline
APA Group distribution network asset 1 Bonaparte Gas Pipeline
APA Group investment 9 Carpentaria Gas Pipeline
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APA’s portfolio of assets and investments

3 Amadeus Gas Pipeline (inc laterals) APA Group asset 13 Berwyndale Wallumbilla Pipeline APA Group distribution network asset 1 Bonaparte Gas Pipeline APA Group investment 9 Carpentaria Gas Pipeline Investment distribution network 22 Central Ranges Pipelines APA Group managed asset (not owned) 23 Central West Pipeline Managed distribution network 37 Eastern Goldfields Pipeline Other natural gas pipelines 47 Goldfields Gas Pipeline 38 Kalgoorlie Kambalda Pipeline 40 Mid West Pipeline Wind farm 20 Moomba Sydney Pipeline Solar farm 21 Moomba to Sydney Ethane Pipeline LNG plant 28 Mortlake Gas Pipeline 39 Northern Goldfields Interconnect[ 1] Battery storage 45 Parmelia Gas Pipeline Gas storage facility 48 Pilbara Pipeline System Gas processing plant 12 Reedy Creek Wallumbilla Pipeline 15 Roma Brisbane Pipeline (inc Peat lateral) Gas power station 30 SEA Gas Pipeline Integrated Operations Centre 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

Gas Distribution

16 Allgas Gas Network 50 Australian Gas Networks 24 Tamworth Gas Network

Electricity transmission

19 Directlink 31 Murraylink

Generation

17[Daandine (30 MW)] 6[Diamantina (242 MW)] 33[Gruyere (45 MW)] 7[Leichhardt (60 MW)] 5[Thomson (22 MW)] 4[X41 (41 MW)]

Solar Farm

43[Badgingarra (19 MW)] 11[Darling Downs (110 MW)] 41[Emu Downs (20 MW)] 34[Gruyere Solar Farm (13.2 MW)] 8 Mica Creek (88 MW) 1

Gas processing and storage

27[Dandenong (680TJ / 12000t)] 35[Gruyere Battery Station (4.4 MW/MWh)] 18[Kogan North (12TJ/d)] 46[Mondarra (18PJ)] 26[Orbost (49TJ/d)][ 2]

Wind Farm

Under construction.
44[Badgingarra (130 MW)] 42[Emu Downs (80 MW)] 32[North Brown Hill (132 MW)]
Average rate as reported by Cooper Energy Limited (ASX:COE) on 2 August 2022.

12 APA GROUP ANNUAL REPORT | 2022

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Strategy

APA’s strategy is to:

Respond to the changing needs of its customers and communities and deliver services they value
Invest in energy infrastructure (contracted and regulated)
Leverage its energy infrastructure capabilities into next generation energy technologies through the Pathfinder Program
Pursue disciplined investments, deliver growing securityholder returns and maintain a strong balance sheet

As the energy market transitions to deliver net zero by 2050, significant investment opportunities in energy infrastructure will arise across gas pipelines, electricity transmission infrastructure, renewable energy, electricity firming and storage, and clean fuels such as hydrogen and renewable methane.

APA’s strategy enables it to participate in these opportunities by investing in contracted and regulated energy infrastructure.

APA is well-positioned in Australia to play a key role in developing and deploying energy solutions. Its natural gas assets are strategically integrated into the national energy market and will remain a critical part of the future energy mix, helping to unlock the expansion of renewable energy required to replace retiring coal power stations and support an electrified economy. Natural gas is currently irreplaceable 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 secure, reliable and cost-efficient energy.

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Climate Transition Plan

APA’s Climate Transition Plan

In August 2022, APA published its inaugural Climate Transition Plan. The plan represents an important step in APA’s commitment to actively participate in and support Australia’s energy transition and fulfils our commitment to provide an update on our interim emissions reduction goals and targets to 2030 on our pathway to achieve net zero.

APA’s updated net zero commitments and interim goals and targets

APA has sought to set interim commitments that align with the Paris goal to limit warming to well below 2.0[o] C. The commitments, summarised in the table, are fit-for-purpose, based on currently available technologies and are tailored to reflect the different rates of decarbonisation of our diversified energy infrastructure portfolio.

APA has prioritised structural abatement where reasonable to do so and will use high-quality offsets that meet clearly defined responsibility criteria to ensure credibility.

Reflecting this tailored approach, APA has revised its headline net zero goal and increased the level of ambition for the power generation and electricity transmission components of our portfolio with a revised goal to 2040.

APA’s interim target for gas infrastructure of 30% emissions reduction by 2030 will be achieved by a focus on compressor and site methane emissions, operational efficiency and compressor electrification. APA has evaluated the cost of our gas infrastructure reduction initiatives, on a P50 basis, as approximately $150–$170 million (nominal) for FY23 to FY30.

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Goal: gas infrastructure – net zero operational Goal: power generation and electricity emissions by 2050[ 1] transmission infrastructure – net zero operational emissions by 2040[ 2] Interim Commitments for 2030 Target: 30% emissions reduction for gas Goal: 35% reduction in emissions intensity for infrastructure (FY21 base year) power generation (FY21 base year) Target: 100% renewable electricity procurement Goal: Contribute positively to grid from FY23 onwards decarbonisation measured by MW of enabled renewable infrastructure Goal: 100% zero direct emission fleet by 2030 Commitment: Active program to reduce emissions we can Commitment: Responsible criteria applied when offsets control and apply best practice management are required techniques to managing line losses Total nominal expenditure to 2030 Investment Approximately $150M-$170M Growth capital investment Key Supporting Commitments 1 Incorporation of 2 Hold a non-binding 3 Report annually on 4 Link executive 5 Scope 3 emissions goal the Methane securityholder vote progress against the remuneration to to be finalised before or Guiding Principles on our Climate Transition targets, goals and climate-related in conjunction with next Plan (starting at 2022 commitments in our performance Climate Transition Plan Annual Meeting) Climate Transition Plan from FY23

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When setting goals and targets APA has been careful to provide clarity to stakeholders on APA’s commitments, distinguishing by the level of uncertainty of the pathway to get there: Target : an intended outcome where we have identified Goal : an ambition to seek an outcome for which there is no current one or more pathways for delivering that outcome, pathway but for which efforts will be pursued towards addressing subject to certain assumptions or conditions. that challenge, subject to certain assumptions or conditions.

Includes transmission, distribution, gas processing, storage and corporate.
Includes power generation and interconnectors.

14 APA GROUP ANNUAL REPORT | 2022

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Ensuring strategy supports APA’s net zero ambition

APA’s energy infrastructure assets play a critical enabling role in Australia’s decarbonisation journey, supporting reliable and least cost decarbonisation of the electricity sector. This demands a wider perspective and a whole of economy approach. As such, some investments may, on their own, increase APA’s short-term emissions, but facilitate overall system emissions reductions by supporting higher renewable energy penetration.

APA is committed to strengthening its approach so it can achieve the highest standards of transparency and accountability and evolve in accordance with stakeholder expectations.

The APA corporate scorecard for executive remuneration now incorporates a dedicated and specific component of the short-term incentive (STI) scheme directly linked to implementing this plan. The component will be 10% of the STI. From FY23 onwards, it will apply to relevant members of the executive.

APA has committed to undertaking a non-binding shareholder advisory vote on adopting this Climate Transition Plan and from FY23, will provide an annual performance report against progress made on the targets, goals and commitments made in the plan.

Scenario analysis and resilience planning

APA continued to evolve its approach to scenario analysis and resilience testing. APA evaluated the resilience of four APA assets to climate transition (or stranded asset) risk under several Paris-aligned scenarios to identify potential implications if they eventuated.

The assets selected were the: Moomba to Sydney Pipeline (MSP) and the South West Queensland Pipeline (SWQP), the Victorian Transmission System (VTS) and the Diamantina Power Station Complex (DPSC).

Scenarios are not forecasts and there are inherent limitations on their use, including the use of a range of assumptions. APA encourages the reading of the sections in the Climate Transition Plan explaining the purpose and limitations.

Under the modelled climate scenarios:

MSP and SWQP, grouped together for this analysis, are considered resilient to climate risk (particularly until 2040), assuming northern gas supplies are sufficient to supply demand. In practice, this may require new basin development. Beyond 2040, the assets are more exposed to lower export and domestic demand, eroding value compared to APA’s current BAU Case.
For the DPSC, all three climate scenarios present value erosion compared to APA’s BAU Case. This represents both risk and opportunity, as DPSC value is highly sensitive to customer contracting behaviour and its operating response.
The VTS is effectively protected against stranded asset risk by the functioning of the regulatory regime hence financial implications have not been presented in the plan.

APA’s interim net zero goals and targets are now in place and we enter a twelve month embed phase from October 2022.

Financial implications insights – for MSP/SWQP relative to the BAU Case

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Climate scenario 1.5ºC 2.0ºC 2.0ºC Disorderly
FY 2030 2040 2050 2030 2040 2050 2030 2040 2050
EBITDA (weighted average for period up to financial year ended)
NPV for cashflows (over the period)
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Financial implications insights – for DPSC relative to the BAU Case

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KEY BAU Case = EBITDA or Valuation +/- 5% of BAU Case somewhat (5-15%) below BAU Case materially (15%+) below BAU Case

Sustainability Roadmap

Introduced in FY21, APA’s Sustainability Roadmap is a 3-year framework for building sector-leading sustainability performance. It is based on the issues identified in the FY21 materiality assessment, which classified each issue according to its maturity:

Build – Priority issues to be grown into strengths
Accelerate – Fundamental issues that require strengthening
Maintain and evolve – Issues where APA already has existing plans and processes, with opportunities for incremental improvements.

In FY22, APA focused on areas classified as ‘build’ and ‘deliver’ as these will deliver the most positive impact for APA and highest value for its stakeholders. Many initiatives addressed cross-functional or business-wide material issues, such as Climate Change Transition and Risk, Community and Social Performance, and First Nations Peoples.

More detail on APA’s sustainability efforts can be found in the FY22 Sustainability Report and Section 9.

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APA Infrastructure Trust and its Controlled Entities

5. 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 FY22, APA delivered a solid result, as shown in the table below. Profit after tax including significant items of $259.7 million increased significantly (FY21 $0.7 million) due to a non-cash impairment of $249.3 million recognised in FY21 against the Orbost Gas Processing Plant and one-off finance costs of $148.0 million. Excluding significant items, APA generated a FY22 profit after tax of $240.0 million (FY21: $278.9).

Underlying EBITDA was $63.5 million or 3.9% higher than FY21, representing solid growth in the underlying operations of the business. Free cash flow was 19.8% higher than FY21 owing to a stronger operating performance, lower tax payments and lower interest costs.

On 24 August 2022, the Directors announced a final distribution of 28.0 cents per security, taking APA’s FY22 total distributions to 53.0 cents per security and in line with guidance. This represents an increase of 3.9%, or 2.0 cents, over the FY21 distributions of 51.0 cents per security. Key financial data for FY22

30 June 2022 30 June 20211 $000 $000	Changes
	$000 %
Statutory Revenue Total revenue 2,732,378 2,605,013 Pass-through revenue2 495,733 460,465	127,365 4.9% 35,268 7.7%
Total revenue excluding pass-through 2,236,645 2,144,548	92,097 4.3%
Underlying EBITDA3 1,692,261 1,628,761 – Fair value (losses)/gains on contract for diference (30,462) 18,018 – Technology transformation projects (21,192) (7,957) – Wallumbilla Gas Pipeline hedge accounting unwind (15,156) — – Interest income on Basslink debt investment 12,198 — – Payroll review (7,465) —	63,500 3.9% (48,480) (269.1%) (13,235) 166.3% (15,156) — 12,198 — (7,465) —
Total reported EBITDA3 1,630,184 1,638,822 Depreciation and amortisation expenses (735,178) (674,370)	(8,638) (0.5%) (60,808) 9.0%
Total reported EBIT3 895,006 964,452	(69,446) (7.2%)
Net fnance costs and interest income (483,022) (504,779) Signifcant items – Reversal of impairment/(impairment of) property, plant and equipment 28,106 (249,322) – Interest charge on bond note redemption — (147,987) Proft before income tax 440,090 62,364 Income tax expense (180,379) (61,630)	21,757 (4.3%) 277,428 (111.3%) 147,987 — 377,726 605.7% (118,749) 192.7%
Proft after tax including signifcant items 259,711 734	258,977 35,283.0%
Proft after tax excluding signifcant items 240,037 278,850	(38,813) (13.9%)
Free cash fow4 1,080,632 901,914 Free cash fow per security (cents) 91.6 76.4 Earnings/(loss) per security including signifcant items (cents) 22.1 0.1 Earnings per security excluding signifcant items (cents) 20.4 23.7 Distribution per security (cents) 53.0 51.0 Distribution payout ratio (%)5 57.9 66.7 Weighted average number of securities (000) 1,179,894 1,179,894	178,718 19.8% 15.2 19.9% 22.0 22,000.0% (3.3) (13.9%) 2.0 3.9% (8.8) (13.2%) — —

Notes: Numbers in the table may not add up due to rounding.

FY21 is restated as a result of the provision for payroll review.
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.
Excludes significant items.
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.
Distribution payout ratio = total distribution applicable to the financial year as a percentage of free cash flow.

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Business segment performance and operational review

APA reports across 3 business segments:

Energy Infrastructure – APA’s wholly or majority owned energy infrastructure assets across all categories – transmission and compression, processing, generation (gas and renewables) and storage.
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.

FY22 statutory reported revenue and underlying EBITDA performance of each segment

	Changes
30 June 2022 30 June 2021 $000 $0001
	$000 %
Revenue 2 Energy Infrastructure – East Coast Gas 805,958 768,638 – West Coast Gas 341,825 328,795 – Wallumbilla Gladstone Pipeline 580,602 552,307 – Power Generation 354,271 339,564	37,320 4.9% 13,030 4.0% 28,295 5.1% 14,707 4.3%
Energy Infrastructure total 2,082,656 1,989,304 Asset Management 114,541 113,755 Energy Investments 28,194 30,921 Other non-contract revenue 13,219 7,438	93,352 4.7% 786 0.7% (2,727) (8.8%) 5,781 77.7%
Total segment revenue 2,238,610 2,141,418 Pass-through revenue 495,733 460,465 Wallumbilla Gas Pipeline hedge accounting unwind (15,156) — Interest revenue on Basslink debt investment 12,198 — Unallocated revenue3 993 3,130	97,192 4.5% 35,268 7.7% (15,156) — 12,198 — (2,137) (68.3%)
Total revenue 2,732,378 2,605,013	127,365 4.9%
EBITDA Energy Infrastructure – East Coast Gas 648,174 627,468 – West Coast Gas 287,802 270,824 – Wallumbilla Gladstone Pipeline 577,869 549,651 – Power Generation 196,293 174,622	20,706 3.3% 16,978 6.3% 28,218 5.1% 21,671 12.4%
Energy Infrastructure total 1,710,138 1,622,565 Asset Management 73,608 80,337 Energy Investments 28,194 30,921 Corporate costs (119,679) (105,062)	87,573 5.4% (6,729) (8.4%) (2,727) (8.8%) (14,617) 13.9%
Underlying EBITDA 1,692,261 1,628,761	63,500 3.9%
Fair value gains/losses on contract for diference (30,462) 18,018	(48,480) (269.1%)
Technology transformation projects (21,192) (7,957)	(13,235) 166.3%
Wallumbilla Gas Pipeline hedge accounting unwind (15,156) —	(15,156) —
Interest revenue on Basslink debt investment 12,198 —	12,198 —
Payroll review (7,465) —	(7,465) —
Total reported EBITDA 4 1,630,184 1,638,822	(8,638) (0.5%)

Notes: Numbers in the table may not add up due to rounding.

FY21 is restated as a result of the provision for payroll review.
Refer to revenue note 4 for additional disclosure on revenue streams from contracts with customers disaggregated by geographical location and major sources.
Interest income is not included in calculation of EBITDA but nets off against interest expense in calculating net interest cost.
Excludes significant items.

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APA Infrastructure Trust and its Controlled Entities

Energy Infrastructure

In FY22, Energy Infrastructure is the largest business segment contributor to group revenue at 93.6% (excluding pass-through) and 94.4% of underlying EBITDA (before corporate costs).

Of this revenue:

85.4% was derived from either long-term, take-or-pay contracts or regulated assets, as shown below, providing predictability and cash flow stability.
81.7% was derived from investment grade counterparties with a diversified customer base across the energy, utility, resources and industrial sectors.

FY22 Energy Infrastructure by Revenue Type

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74.8% Capacity charge revenue
8.2% Regulated revenue
2.4% Contracted fixed revenue
11.9% Throughput charge & other variable revenue
~
85% 1.7% Flexible short term services
Take or pay / 1.0% Other
regulated
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FY22 Energy Infrastructure Revenues By Counterparty Credit Rating

FY22 Energy Infrastructure Revenues by Customer Industry Segment

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41.9% A- rated or better 48.3% Energy
33.0% BBB to BBB+ rated 23.6% Utility
6.8% Investment grade 24.1% Resources
14.0% Not rated 4.0% Industrial & other
~
81.7% 4.3% Sub-investment grade Diverse
Investment Source of
grade revenue
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Notes: 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.

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Comparing FY22 performance to FY21:

East Coast Gas

Underlying EBITDA benefited from higher inflation linked revenues, stronger demand from the Victorian Transmission System and a full year contribution from the Orbost Gas Processing Plant.

West Coast Gas

Underlying EBITDA benefited from newly commissioned laterals connecting into the Goldfields Gas Pipeline mainline for new customers that include Kalium Lakes, Capricorn Metals, Salt Lake Potash and RED5.

Wallumbilla Gladstone Pipeline

Underlying EBITDA benefited from a 7.5% increase in tariffs from 1 Jan 2022.

Power Generation

Diamantina Power Station and Badgingarra Renewables drove higher underlying EBIDA in power generation.

Energy Infrastructure Revenue by segment

A$2,500m

Energy Infrastructure EBITDA by segment

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A$2,000m
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2,000
1,500
1,000
500
0
FY19 FY20 FY21 FY22
East Coast Gas West Coast Gas
Power Generation Wallumbilla Gladstone Pipeline
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1,500
1,000
500
0
FY19 FY20 FY21 FY22
East Coast Gas West Coast Gas
Power Generation Wallumbilla Gladstone Pipeline
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Energy Infrastructure EBITDA by asset

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FY22
FY21
FY20
FY19
A$m 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800
Wallumbilla Gladstone Pipeline South West Queensland Pipeline Roma Brisbane Pipeline Carpentaria Gas Pipeline
Diamantina Power Station Darling Downs Solar Farm Other Qld assets Moomba Sydney Pipeline and other NSW pipelines
Victorian Systems SESA Pipeline and other SA assets Amadeus Gas Pipeline Goldfields Gas Pipeline
Eastern Goldfields Pipeline Emu Downs Wind and Solar Farms Pilbara Pipeline System Mondarra Gas Storage and Processing Facility
Gruyere Power Station Badgingarra Wind and Solar Farms Other WA assets
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Asset Management

In FY22, Asset Management contributed 5.1% to group revenue (excluding pass-through) and 4.1% 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 FY22 compared to FY21 was driven by a combination of lower margin activities relative to FY21 and reduced customer contributions which fluctuate from one period to the next. Customer contributions for FY22 were $27.4 million.

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Asset Management Revenue Asset Management EBITDA
120 A$m 100 A$m
90 75
60 50
30 25
0 0
FY19 FY20 FY21 FY22 FY19 FY20 FY21 FY22
One-off Customer Contributions Underlying Asset Management
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Energy Investments

In FY22, Energy Investments contributed 1.3% to group revenue (excluding pass-through) and 1.6% of underlying EBITDA (before corporate costs). FY22 EBITDA was lower than in FY21 due to reduced equity income from SEAGAS as a result of contract changes.

Asset and ownership interests
Asset details and APA services
Partners
Mortlake Gas Pipeline
50%
SEA Gas
(Mortlake)
Partnership
83 kmgas pipeline connecting the Otway
Gas Plant to the Mortlake Power Station
REST
SEA Gas Pipeline
50%
South East
Australia
Gas Pty Ltd
687 kmgas pipeline from Iona and
Port Campbell in Victoria to Adelaide
REST
North Brown Hill Wind Farm
20.2%
EII2
132 MWwind farm in
South Australia
Infrastructure
Capital Group
Osaka Gas
Allgas Gas Distribution Network
20%
GDI (EII)
~3,900 kmAllgas gas distribution
network in Queensland with
~119,000connections
Marubeni
Corporation
State Super
X41 Power Station
Kogan North Processing Plant
Directlink and Murraylink Electricity
Interconnectors
Nifty and Telfer Gas Pipelines
Wickham Point and Bonaparte Gas Pipelines
19.9%
Energy
Infrastructure
Investments
Gas-fred power generation41 MW
Gas processing facilities12 TJ/day
Electricity transmission cables243 km
Gas pipelines totalling786 km
MM Midstream
Investments
Osaka Gas
CORPORATE SERVICES
CORPORATE SERVICES
CORPORATE SERVICES
OPERATIONAL MANAGEMENT
OPERATIONAL MANAGEMENT
MAINTENANCE
MAINTENANCE

Corporate Costs

Corporate costs excluding significant items for FY22 were higher than FY21 largely due to investment in strategic growth opportunities and capability.

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6 Capital expenditure

In FY22, total capital expenditure of $1,276.5 million was $844.0 million higher than in FY21, driven by the investment in the senior secured debt of Basslink, higher growth capex, and transformation and technology expenditure to ensure systems and processes are secure and reliable and support APA’s net zero ambition.

Capital and investment expenditure for FY22

Capital and investment		30 June 2022	30 June 2021
expenditure1	Description of major projects	$ million	$ million
Growth expenditure
Regulated	Western Outer Ring Main (WORM); Victorian Transmission System, Roma Brisbane Pipeline and Goldfelds Gas Pipeline Access
	Arrangement allowed expenditure	68.4	50.2
Non-regulated
East Coast Gas	South West Queensland Pipeline and Moomba Sydney Pipeline capacity
	expansion, upgrade of Orbost Gas Processing Plant, Kurri Kurri Gas Lateral	129.3	47.9
West Coast Gas	Northern Goldfelds Interconnect, Lake Way Gas Pipeline, Murrin Murrin
	Lateral Looping, Karlawinda Gas Pipeline, King of the Hills Gas Lateral	217.4	106.5
Power generation	Thomson Power Station and Gruyere Hybrid Energy Microgrid	75.7	51.0
Customer contribution	Channel Island Bridge Pipeline Replacement Project and Thornlie Link
projects and others	Parmelia Pipeline re-location Project and Wilton property development	33.2	28.3
Sub-total non-regulated capex		455.6	233.7
Total growth capex		524.0	283.9
SIB capex
Asset lifecycle capex2		122.9	134.6
IT lifecycle capex		7.3	14.4
Total SIB capex		130.2	149.0
Foundation capex
Technology and other capex		17.9	—
Corporate Real Estate		17.0	—
Total Foundation capex		34.9	432.9
Total capital expenditure		689.1	432.9
Investment and acquisitions – Basslink debt		587.4	—
Total capital and investment expenditure		1,276.5	432.9

Notes: Numbers in the table may not add up due to rounding.

The capital expenditure shown in this table represents net cash used in investing activities as disclosed in the cash flow statement, and excludes accruals brought forward from the prior period and carried forward to next period.
Represents stay-in-business capital expenditure not recoverable from customers and/or regulatory frameworks.

Diamantina Power Station, Mount Isa

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APA Infrastructure Trust and its Controlled Entities

Regulated growth capital expenditure

Western Outer Ring Main (WORM) project – Engineering and approvals work, including landholder liaison, continued during the year. In January 2022, an Environmental Effects Statement determination deemed the project’s environmental impacts acceptable, conditional on APA implementing the project in accordance with the Minister’s assessment. The Pipeline License was issued in May 2022 and approval under the EPBC Act received in June 2022. Construction, which began in early August 2022, is expected to be complete in late Q4 FY23. The Australian Energy Regulator (AER) included growth capital expenditure for the WORM in the draft access arrangement decision. The final decision is expected 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 SouthWest Pipeline in the Victorian Transmission System. The project, to install an additional compressor facility at Winchelsea Compressor Station, is expected to enable 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. Approvals, engineering and procurement is underway. The project is scheduled to complete and become operational in Q4 FY23.

Unregulated growth capital expenditure

East Coast Gas

East Coast Grid Expansion – Stage 1 of the expansion works, increasing Wallumbilla to Wilton capacity by 12%, is scheduled for commissioning in late Q3 FY23. This will help mitigate the forecast 2023 southern state winter supply risks identified in the 2022 AEMO GSOO. Approvals are complete, engineering and procurement are well advanced, with earthworks started on both the Queensland and New South Wales Stage 1 sites. Confirmation of Stage 2, which will add a further 13% of capacity, was announced in May 2022. APA’s decision to begin the Stage 2 expansion is driven by strong confidence in Stage 1 contracting and continuing customer demand for transportation capacity. Approvals for Stage 2 are well advanced, and engineering and procurement are underway, with works currently targeted 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 km 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. The development is subject to APA obtaining third-party approvals to develop and operate the facilities, including obtaining a pipeline licence, and various development matters being agreed with Snowy Hydro. During the year, APA submitted an environmental impact statement (EIS) to the New South Wales Government and worked closely with Snowy Hydro to ensure the Kurri Kurri Lateral will be hydrogen-blend ready. Electric drive compressors will be used to minimise the emissions intensity of operations. A final investment decision is expected in 2H FY23.
Orbost Gas Processing Plant (OGPP) – On 28 July 2022, APA completed the sale of the OGPP to Cooper Energy. APA will remain the OGPP operator on behalf of Cooper Energy until the Major Hazard Facilities Licence is transferred to the new owner.

West Coast Gas

Northern Goldfields Interconnect (NGI) – The NGI pipeline will connect the Perth Basin to APA’s Goldfields Gas Pipeline and APA’s Eastern Goldfields network. During the year, all remaining approvals, including the EIS, were received and all 35,000 tonnes of coated line pipe arrived on site. Construction of the pipeline and compressor station is well underway. Project completion is expected in Q3 FY2023.

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 was completed on 31 July 2022 after delays due to interface issues with the existing Gruyere processing plant. Total installed capacity of the microgrid is 64MW (60 MW of power generation and 4.4 MW of battery storage).

– Mica Creek Solar Farm – Construction of the $150 million 88MW Mica Creek Solar Farm was approved in March 2022. The project is underpinned by two offtake agreements – a new 15-year solar offtake agreement to supply renewable energy to 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 Mica Creek Solar Farm near the Diamantina Power Station Complex. The solar farm is expected to be complete and operational in late FY23.

22 APA GROUP ANNUAL REPORT | 2022

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Prospective projects

In FY22, APA progressed preliminary work on several other large projects including:

Central West Orana Renewable Energy Zone, New South Wales – APA and its consortium partners, CIMIC Group companies Pacific Partnerships, CPB Contractors and UGL, have been shortlisted to progress to the Request For Proposal phase for this project, which will be New South Wales’ first Renewable Energy Zone.
Western Slopes Pipeline, New South Wales – APA plans to build, own and operate the proposed ~460km Western Slopes Pipeline (WSP) in northern New South Wales. The pipeline will connect the Narrabri Gas Project to APA’s Moomba Sydney Pipeline and subsequently the East Coast domestic gas market. The development owner has recently announced the acquisition of a competing alternative pipeline route. Should the development owner provide approval for the WSP, APA will move to the next phase of project as agreed under the Project Development Agreement.
Bowen and Galilee Basins, Queensland – A non-binding MOU remains in place with Blue Energy to investigate pipeline route options in both the Bowen and Galilee Basins. During the year, APA continued to engage resource holders in the Bowen and Galilee Basin, and the Queensland and Federal Governments, to progress the efficient development of infrastructure to deliver future gas supply to the East Coast Gas Grid. Specifically, in the Bowen Basin, concepts were progressed for a pipeline to efficiently connect the northern Bowen Basin to APA’s East Coast Gas Grid, leveraging its existing network of Surat Basin pipelines. APA commenced its own assessment of a high volume pipeline from the northern Bowen Basin to Wallumbilla, prior to the Queensland Government’s Bowen Basin Concept Study, and continues to progress this independently of that study.
Beetaloo and McArthur Basins, 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. APA continued to engage with other Northern Territory resource holders to promote capital efficient, staged and common user gas transportation solutions to both Darwin and the east coast, leveraging existing gas transmission infrastructure.
Gabanintha Vanadium Project, Western Australia – During the year, APA progressed the non-binding MOU with a customer for gas ~
transportation services along a proposed 152km 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.

During the year, as part of its Pathfinder program, APA continued to explore new opportunities in emerging energy infrastructure markets, including clean molecules, energy storage and new technologies.

Hydrogen transport – The Parmelia Gas Pipeline (PGP) conversion project continued to provide insights into the potential role natural gas transmission pipelines can play in transporting hydrogen. Phase 1 findings indicated the PGP should be able to transport 100% hydrogen without reducing operating pressures. Phase 2 commenced in late CY21, including laboratory testing of the pipeline material in gaseous hydrogen conditions. APA signed an MOU with Wesfamers Chemical, Energy and Fertilisers (WesCEF) on 4 May 2022 for a pre-feasibility study. The study will assess the viability of producing and transporting green hydrogen via APA’s PGP for delivery to WesCEF’s ammonia production facility in Kwinana.

– Green hydrogen – In September 2021, APA joined an Australian and Japanese energy consortium to establish Queensland’s largest proposed green hydrogen project – Central Queensland Hydrogen Project. APA has been working closely with Stanwell and the Japanese companies Iwatani Corporation, Kawasaki Heavy Industries, Kansai Electric Power Company and Marubeni to complete a detailed feasibility study of the technical and commercial viability of an export scale liquified hydrogen project from Central Queensland to Japan. Target first production is mid-2020s, scaling up to more than 3GW of electrolysis capacity by the early 2030s.

– Blue hydrogen – APA continued to investigate opportunities for incorporating hydrogen production with carbon capture and storage in Western Australia. APA completed a pre-feasibility study with Pilot Energy Limited and Warrego Energy Limited, assessing the potential use of the Cliff Head oil project and other reservoirs across the broader Perth Basin to store captured carbon dioxide.

– Renewable methane – APA is working with Southern Green Gas on a renewable methane technology demonstration project, with funding support from the Australian Renewable Energy Agency (ARENA). The project aims to better understand the technical and commercial benefits of integrating CO2 direct air capture, solar PV and hydrogen electrolysis to produce renewable methane. The project will generate cost and technical data, which will be used to assess the feasibility of a larger, commercial scale renewable methane concept system.

Hydrogen Transport

PGP Conversion Phase 1 completed Aug 21, Phase 2 due to be completed Dec 22, Phase 3 due to commence Q3 FY23

Parmelia Green H2 (WesCEF) MoU signed May 22, Pre-Feasibility Study commenced July 22, PF Study due to be completed Q2 FY23

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Green Hydrogen
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Central Queensland Hydrogen MoU signed Sept 21, Feasibility Study commenced Sept 21, FS completed June 22, FEED expected to be completed Q2 FY24

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Blue Hydrogen
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Mid West Blue H2 MoU signed Oct 21, Pre- Feasibility Study commenced Oct 21, PFS completed August 22

Renewable Methane Wallumbilla Renewable Methane Completion of laboratory based demonstration Q2 FY23, Completion of site based testing Q4 FY23

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APA Infrastructure Trust and its Controlled Entities

7. Financing activities

Capital management

During the year, the trust constitutions for APA Infra and APA Invest were updated to authorise the purchase and cancellation of APA Group stapled securities. This gives APA Group the flexibility to buyback securities if deemed appropriate from a capital management perspective.

At 30 June 2022, APA had 1,179,893,848 securities on issue. This is unchanged from 30 June 2021.

Debt facilities

At 30 June 2022, APA had $10,668.1 million (compared with $9,665.8 million at 30 June 2021) of committed drawn debt facilities, with an additional $1,250 million of undrawn committed bank facilities. 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 6.7 years.

[ 1]

A$m

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1,396 [ 2]
500
500
650 1,104 1,140 [ 2] 1,018
879 [ 2] 926 738 770
550 536 450
133 380 [ 2]
200 50
FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36
Headroom (bank borrowings) Bank borrowings US 144a Notes EUR MTN Australian MTN JPY MTN Sterling MTN
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A debt maturity profile as at 30 June 2022.
USD denominated obligations translated to AUD at the prevailing rate at inception (USD144A – AUD/USD=0.7879, EMTN and Sterling AUD/USD=0.7772).

APA’s treasury policy requires high levels of interest rate hedging to minimise the potential impacts from adverse movements in interest rates. At year end, 100% (30 June 2021: 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 June 2022, APA raised AUD $1.0 billion of senior unsecured debt via a syndicated loan facility from leading Australian and Asian banks. The new facility comprises two equal tranches of 5 and 7-year tenors, both swapped into fixed rates, with the overall cost broadly in line with APA’s existing average cost of debt. The proceeds were variously used to refinance the short term debt used to fund the acquisition of Basslink debt, to contribute to APA’s future growth projects and for general corporate purposes.

Foreign exchange hedging

In June 2015, APA acquired the Wallumbilla Gladstone Pipeline (WGP), which receives revenues in USD. To minimise the foreign exchange volatility of the cash inflows and cash outflows, APA entered into a range of AUD:USD Forward Exchange Contracts (FECs) up to March 2022.

In addition, debt borrowed to support the acquisition was also fixed in USD to support the natural hedge against the USD cash inflows over the life of the WGP contract. At 30 June 2022, around US$3.0 billion of the original debt was fixed in USD at an all-in annual interest rate of 4.6%. For accounting purposes, this USD debt is considered a ‘designated hedge’ to manage foreign currency exposure for WGP revenues.

The average AUD to USD FX rate on realised revenue cash flows from WGP was 0.72 in FY21 and 0.71 from July 2021 to March 2022. From March 2022 through December 2025, APA has secured:

FECs for the monthly revenue cash flows at an AUD:USD rate of ~0.72
FECs for the bi-annual interest payment at an AUD:USD rate of ~0.72
A FEC to repay the US$1.1 billion 144A Notes due March 2025 at an AUD:USD rate of 0.71.

APA has commenced recording an additional revenue adjustment (affecting EBITDA) for the impact of exiting the portion of the original natural hedging relationship attributed to the period the new FECs have been entered into. This will result in a non-cash ~A$130 million FX accounting loss to be brought to account over the period February 2022 through October 2025. The resulting outcome is that revenue ~ is recognised at a blended rate of 0.76 between 2022 and 2025. The impact of the non-cash adjustment to revenue and EBITDA for FY22 is~A$15 million. The annualised impact of the non-cash adjustment to revenue and EBITDA is ~A$36 million per annum.

The impact on operating cash flows (revenue less interest) from entering into the new FECs is expected to be immaterial because the FECs were entered into at similar AUD:USD rates as those in place for recent previous reporting periods.

24 APA GROUP ANNUAL REPORT | 2022

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Interest costs

During the year, net finance costs decreased by $21.8 million or 4.3%, to $483.0 million (FY21 $504.8 million). The decrease relative to FY21 is primarily due to lower average interest rates on borrowings as a result of the Liability Management exercise undertaken in 2021.

The average interest rate, including credit margins, applying to drawn debt was 4.59% for FY22 (FY21: 5.09%). This reflects the full-year impact of the new lower interest cost attributable to the EUR 1,100 million and GBP 250 million senior unsecured Euro Medium Term Notes as part of the Liability Management exercise.

Credit ratings

During the year, APA Infrastructure Limited, 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 25 November 2021
Baa2 long-term corporate credit rating (outlook Stable) assigned by Moody’s Investors Service (Moody’s) in April 2010, and last confirmed on 28 February 2022.

APA calculates the Funds From Operations (FFO) to Interest to be 3.6 times (FY21: 3.1 times) and FFO to Net Debt to be 11.5% for FY22 (FY21: 11.0%). FFO to Net Debt is the key quantitative measure used by S&P and Moody’s to assess APA’s credit worthiness and credit rating.

FFO to Interest of 3.6 times is at the stronger end of BBB/Baa2 rating metric guidelines. APA therefore continues to have confidence that its balance sheet can support both organic growth and longer-term growth in securityholder distributions.

Capital management strategy

APA’s 5-pillar capital management strategy, which was reviewed during the year, 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
Market engagement – implement a proactive investor relations program.

Income tax

During the year, income tax expense of $180.4 million included a $8.4 million accounting income tax expense from reversing the impairment of Orbost (significant item). Income tax expense, excluding significant items, for FY22 of $171.9 million resulted in an effective income tax rate of 41.7%, compared with 39.3% in the previous year. The high effective rate is due to significant amortisation charges relating to contract intangibles acquired with the Wallumbilla Gladstone Pipeline, which are not tax deductible.

After using available tax losses and research & development and imputation credit tax offsets, income tax of $85.6 million will be payable for the year ended 30 June 2022 (FY21: $48.3 million). The cash tax payable results in an effective tax paid rate of 20.3% in FY22, compared with 17.7% in FY21.

APA has published a Tax Transparency Report, including a reconciliation of profit to income tax payable, on its website.

To assist APA securityholders who wish to submit their annual tax return before receiving their annual APA Tax Statement in midSeptember, APA has developed an indicative online tax estimator tool which will be available in the Investor page on APA’s website.

Distributions

Distributions
	Final FY21 distribution paid 15 September 2021 Cents Total distribution per security $000	Interim FY22 distribution paid 17 March 2022
		Cents Total distribution per security $000
APA Infrastructure Trust franked proft distribution APA Infrastructure Trust unfranked proft distribution APA Infrastructure Trust capital distribution APA Investment Trust proft distribution APA Investment Trust capital distribution	— — — — 18.63 219,820 1.67 19,742 6.7 79,010	9.43 111,304 — — 10.69 126,137 1.33 15,647 3.55 41,886
Total	27 318,572	25 294,974
Franking credits allocated		4.04 47,701.71

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Distributionscontinued	Final FY22 distribution payable 14 September 2022
	Cents per Total distribution security $000
APA Infrastructure Trust franked proft distribution APA Infrastructure Trust unfranked proft distribution APA Infrastructure Trust capital distribution APA Investment Trust roft distribution	6.31 74,437 — — 15.40 181,750 114 13502
p APA Investment Trust capital distribution	. , 5.15 60,682
Total	28.00 330,371
Franking credits allocated	2.70 31,857

The Distribution Reinvestment Plan remans suspended.

Distribution outlook

APA anticipates a FY23 distribution of 55.0 cents per security, representing a 3.8% increase on the prior period.

As part of the energy supply chain, APA can be impacted by economic downturns and reductions in energy demand. Given market conditions are not certain, APA’s revenues will continue to be subject to 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.

8. Economic regulatory matters

Regulatory overview

Gas pipelines in Australia are regulated under the National Gas Rules (NGR) by the Australian Energy Regulator (AER) or the Economic Regulation Authority of Western Australia (ERA). The NGR presides over 2 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.

On 31 March 2022, Energy Ministers agreed to a final package of legislative amendments that propose to discontinue the current form of light regulation and transition to a:

‘Heavier’ form of regulation, based on the current full regulation; or
‘Lighter’ form of regulation, based on the current Part 23 regime for non-scheme pipelines.

At 23 August 2022, the approved legislative package had not yet been published or introduced into the South Australian parliament for implementation. However, pipelines currently subject to full regulation are not expected to experience much change. APA’s non-scheme pipelines and pipelines currently subject to light regulation will transition to the new ‘lighter’ form of regulation.

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APA Pipelines (owned and/or operated) – By Regulation Type
Full regulation pipelines
Light regulation pipelines
Non-scheme pipelines
Partly full regulation/non-scheme pipelines
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Regulatory resets

The diagram below shows the scheduled regulatory reset dates for pipelines owned and operated by APA. During FY22, approximately 8.2% of APA’s Energy Infrastructure revenues were subject to regulated outcomes.

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Victorian Transmission System [ 1]
Goldfields Gas Pipeline
Amadeus Gas Pipeline
Roma Brisbane Pipeline [ 2]
2022 2023 2024 2025 2026
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Victorian Transmission System access arrangement from 31 December 2017 to 31 December 2022.
Roma Brisbane Pipeline access arrangement from 1 July 2022 to 30 June 2027.

Key regulatory matters relating to APA assets addressed during the year included:

Roma Brisbane Pipeline (RBP) 2022-2027 access arrangement – On 6 May 2022, the AER published its final decision on the RBP access arrangement from 1 July 2022 to 30 June 2027, approving a real increase in FY23 tariffs of 4.85% for both eastbound and westbound pipeline services on the RBP.
Victorian Transmission System (VTS) 2023-2027 access arrangement – On 30 June 2022, the AER published its draft 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 AER is expected to release a final decision in December 2022, which will have effect for 5 years from 1 January 2023.
Murraylink 2023-2028 revenue proposal – On 31 January 2022, APA submitted its 5-year revenue proposal for the Murraylink electricity transmission interconnector between South Australia and Victoria. The AER is expected to publish a draft decision in September 2022 and a final decision in April 2023.

Energy industry policy developments

In FY22, APA continued to actively engage in national and jurisdictional policy processes focused on gas industry development and the decarbonisation of the economy, including:

Victorian Gas Substitution Roadmap – APA submitted that gas infrastructure will play a key role in supporting renewables and supporting reliability as coal power retires. The Victorian Government’s final roadmap, released on 2 July 2022, recognises that many consumers continue to choose gas for domestic uses. The roadmap therefore proposes incentives to make electricity more attractive to consumers, making more gas available for commercial customers where electrification is more difficult.
National Gas Infrastructure Plan – APA submitted that incremental expansion of existing infrastructure, along with developing new gas supplies, is the most efficient way to ensure gas security and reliability.
Hydrogen and renewable gas reforms – APA supports a gradual approach to hydrogen and renewable gases regulation, which should only be imposed if there is clear evidence of enduring market failure.

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9. Sustainability

This section of the Director’s Report contains highlights of APA’s FY22 sustainability outcomes, and key metrics for APA’s FY22 emissions, health, safety, and environment performance. For more information on APA’s sustainability outcomes and performance please refer to APA’s separate Sustainability Report and the new FY22 Sustainability Data Book available on APA’s website.

Climate Change and energy transition

In FY22, APA maintained momentum towards net zero and managing climate change risk and opportunity. Significant milestones includes evaluating and disclosing interim targets and goals and the accompanying TCFD-aligned Climate Transition Plan. For information on this strategic progress please refer to page 13 of this report.

Strategy

Emissions footprint

Under the National Greenhouse and Energy Reporting Act 2007 (NGER Act), APA provides the Australian Clean Energy Regulator with a performance report every October. APA’s FY21 NGER submission was lodged in October 2021. The FY22 NGER submission is currently being prepared and will be lodged with the Regulator by 31 October 2022.

In FY21, APA’s total emissions footprint increased on the prior year with gross Scope 1 and Scope 2 emissions in aggregate, rising 7.2% from FY20.

Scope 1 emissions increased by 8.1%, from 1,322,294 t CO₂e in FY20 to 1,429,954 t CO₂e in FY21. This was primarily due to increased emissions from APA’s Diamantina Power station due to higher demand for electricity.
Scope 2 emissions decreased by 6.8%, from 87,765 t CO₂e in FY20 to 81,792 t CO₂e in FY21. This was due to reduced demand on APA’s electricity interconnector assets, which resulted in reduced line losses.

Year end 30 June		FY21	FY20	FY19	FY18	FY17
Total Scope 1 emissions1,2	t-CO22e	1,429,978	1,322,249	1,229,923	1,205,766	1,241,632
Total Scope 2 emissions1,3	t-CO22e	81,790	87,765	176,980	178,445	367,387
Energy consumption4	GJ	41,935,935	32,078,649	27,831,008	25,777,203	26,793,268

Assets APA does not have operational control over are Gruyere and X41 power stations; the Wallumbilla Gladstone pipeline, Victorian Transmission System (VTS) (except maintenance), SEAGAS and Mortlake transmission pipelines; CNG supply to the Perth Bus Network, North Brown Hill Windfarm and Tipton West Gas processing plant.
Scope 1: are direct emissions such as company vehicles, ‘fuel combustion’ and fugitive emissions from gas pipelines from facilities that APA has operational control over.
Scope 2: are indirect emissions such as the consumption of electricity or electricity line losses from facilities that APA has operational control over.
Energy Consumption is referring to the total calculation of energy consumed across all facilities within APA’s operational control

Community & Social Performance (CSP)

To continue delivering energy responsibly, APA’s goal is to build strong, respectful and mutually valuable relationships with all stakeholders, especially in the communities adjacent to energy assets. In FY22, APA moved from developing its CSP Strategy (2022–25) to implementation. The strategy has two key elements:

1. Community and stakeholder engagement

In FY22, APA developed and implemented targeted community consultation programs for several key projects, including the Northern Goldfields Interconnect, East Coast Grid Expansion, Kurri Kurri Lateral Pipeline and the Central Queensland Hydrogen Project.

APA also continued to run the annual APA Landholder Contact Program in FY22, completing 10,848 landholder contact visits.

2. Focusing investment on sustainable development outcomes

APA developed a new Sustainable Development Investment Framework to guide community investment, including defining 4 investment priority areas and objectives for APA across:

Regional and remote communities
First Nations peoples involvement and relationships
Climate transition
Natural environments

During the year, APA focused on gaining a better understanding and awareness of First Nations peoples across the business, building the foundations for developing a Reconciliation Action Plan (RAP) in FY23. The RAP will recognise and formalise APA’s responsibilities towards reconciliation and support outcomes for First Nations peoples. APA also continued to increase consideration for First Nations peoples and businesses in its workforce and supply chain and became a member of Indigenous business register, Supply Nation.

People and culture

In FY22, APA continued to build on its Inclusion and Diversity Strategy 2020–2025, which aims to embrace diversity and build an inclusive culture where everyone feels safe and valued. This included, launching a Hybrid@APA Strategy to balance employee choice with business needs and leverage the benefits of successfully implementing remote working during the pandemic. APA also enhanced parental leave benefits for both primary and secondary carers, aligning it with industry benchmarks.

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Diversity performance

Under APA’s Gender Target Action Plan, female representation in the Senior Leaders category reached 30.4% in FY22, surpassing the 2025 goal of 30%. APA’s female representation among total employees rose slightly to 29.5% compared with 29.3% in FY21.

In FY22, APA’s challenge to increase its gender balance in operational divisions continued. These areas have a large proportion of roles requiring science, technology, engineering and mathematics (STEM) disciplines, in which women are generally underrepresented across the industry.

In operational divisions, 24% of employees identified as female, compared with 47% in APA’s corporate divisions. Looking at age diversity, 92% of employees were aged 30 years and older.

APA continued to address this disparity with programs targeting younger talent, such as internships and traineeships, APA’s Graduate Program and its National Apprenticeship Program.

Investing in APA’s future

APA continued to develop its employees’ core compliance, technical and leadership skills, with its workforce completing 39,913 hours of training, averaging 17 hours per workforce member.

Leadership training and capability

Despite COVID-19 disruptions, online and face-to-face leadership and professional development continued. Initiatives included the Digital Learning Library, Percipo, which gives employees access to thousands of courses, videos, e-books and audiobooks. The ‘Leading at APA’ course was delivered through virtual workshops, equipping leaders to have quality conversations. More than 70% of APA’s people leaders completed this program during the year.

Technical training

APA further increased the accredited programs offered to its employees by adding a Certified Locator qualification training program.

APA’s training programs for technical and compliance skills continued to run in FY22, regardless of COVID lockdowns. A significant number of programs moved to virtual classroom delivery wherever practical, keeping the APA workforce skilled and compliant throughout the year.

Health and safety

In FY22, APA’s health and safety focus was to close the gap between employee and contractor safety performance lag indicators and improve visible leadership through management interactions and hazard identification. Focusing on visible leadership helped leaders to understand the challenges workers face and identify opportunities to improve safety performance for the whole workforce.

Safety lag indicators

APA’s lag indicators for safety performance are Total Recordable Injury Frequency Rate (TRIFR), Lost Time Injury Frequency Rate (LTIFR).

At year end, APA’s combined employee and contractor TRIFR met APA’s target of <4.60. The combined TRIFR was 3.25 per million hours worked, equating to 23 persons injured requiring medical intervention. This represented a significant improvement of 43% on the FY21 figure of 5.7 (39 people).

The reduced TRIFR was driven by an improvement in employee TRIFR, which fell from 4.63 per million hours worked at year end FY21 to 0.99 at year end FY22.

APA ended the year with a combined employee/contractor LTIFR of 0.85, below the year-end target of <1.0 and a decrease from the FY21 LTIFR of 1.62.

No employee or contractor fatalities occurred in FY22.

Lost Time Injury Frequency Rate (LTIFR)

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2.5
2.0
1.5 1.7
1.0
0.9
0.5
0.3
0
FY17 FY18 FY19 FY20 FY21 FY22
Lost Time Injury Frequency Rate (LTIFR)
LTIFR – Employees
LTIFR – Contractors
Linear (Lost Time Injury Frequency Rate (LTIFR))
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Total Recordable Injury Frequency Rate (TRIFR)

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18.0
12.0
9.0
6.0
6.3
3.0
3.3
0 1.0
FY17 FY18 FY19 FY20 FY21 [ 1] FY22
Total Recordable Injury Frequency Rate (TRIFR)
TRIFR – Employees
TRIFR – Contractors
Linear (Total Recordable Injury Frequency Rate (TRIFR))
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The FY21 Actual Total Recordable Injury Frequency Rate (TRIFR) was amended from 6.3 to 5.7 in response to receiving additional contractor hours post the FY21 result.

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APA Infrastructure Trust and its Controlled Entities

Safety lead indicators

APA’s leaders completed 3,842 management interactions during the year, an increase of 10% on FY21. These interactions help to keep safety front of mind for everyone.

APA personnel and contractors collectively identified and reported 3,954 hazards. At a rate of 546.2 per million hours worked, this was a slight decrease on FY21.

Environment and heritage

Environment Management Plan inductions

In FY22, APA implemented its updated Environment Management Plans (EMPs), which were refreshed as part of APA’s 4-year EMP Improvement Program (FY18–21). This included transforming EMP inductions into structured digital learning packages, with 8 packages currently in production. These online modules ensure employees learn about the environmental risks, responsibilities and requirements specific to their state. The modules are due to be launched across the business in early FY23.

Embedding heritage management across the business

To support the implementation of its new Heritage Procedure, in FY22 APA systematically identified heritage-listed premises serviced by distribution networks under APA’s management. This involved comparing existing gas supply points to the relevant state, territory and local government heritage requirements and creating automated alert notifications as part of APA’s work order process.

Environment compliance

During the year, APA had 4 notifiable incidents, a significant decrease from 9 in FY21. These were reported to the appropriate regulatory authorities.

Two incidents were related to unauthorised vegetation removal in Queensland. In both instances APA conducted investigations and applied learnings.

The remaining 2 incidents were minor licence non-compliances in Western Australia. Both incidents have been remediated and additional actions are underway for the second.

Customers and suppliers

APA continued to take a customer-centred approach to new products and services, ask its customers for their input into decarbonisation options and make sure it understood the impact of market changes on customers exposed to higher prices.

As in previous years, APA’s customer-driven approach included an annual feedback survey and an action plan to respond to any concerns.

Decarbonisation and hydrogen readiness

In April 2022, to keep its priorities customer-led, APA’s account managers had in-depth discussions with key customers covering decarbonisation, carbon offsets and hydrogen readiness. The survey focused on understanding customers’ decarbonisation priorities and their requirements around potential new products, such as hydrogen blends and carbon offsets.

The information will ensure APA develops lower carbon products and services that are of most value to customers.

Energy Charter

In FY22, APA submitted its second disclosure report under the Energy Charter. A copy of this report is published on the APA website.

APA also contributed to the Energy Charter’s Better Practice Guide to Landholder and Community Engagement. This collaborative effort between industry and landholder representative groups will help to drive the respectful engagement required to design, develop, deliver, operate and maintain APA’s new and existing energy assets.

Customer complaints

In FY22, APA received 10 complaints across its commercial customer base compared with 8 complaints in FY21. The complaints spanned power outages, reporting and invoicing issues, system set-up errors, delays in completing new connections and infrastructure builds, processes around planned pipeline maintenance works and misallocation of gas injections.

As well as resolving each complaint, APA conducted ‘lessons learned’ reviews to ensure underlying issues have been identified and can be improved.

30 APA GROUP ANNUAL REPORT | 2022

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Combatting modern slavery

APA’s Modern Slavery Roadmap is based on a continuous improvement model, so the business can readily respond to changing regulatory requirements and market expectations while maturing its approach to reducing supply chain risk. In FY22, APA updated its Procurement Policy and Standard to reflect its approach to identifying and mitigating modern slavery risk. We also updated our Supplier onboarding process to require new suppliers to formally accept APA’s Code of Conduct and commit to upholding fundamental human rights.

APA also appointed a dedicated Responsible Sourcing Manager to oversee the Procurement function to ensure APA considers modern slavery in all of its sourcing initiatives.

Striving to improve supply chain sustainability performance

In FY22, 238 suppliers participated in APA’s Supplier Prequalification Program, which plays a vital role in maintaining supply chain sustainability by tracking supplier commitments and performance in health, safety and environment, modern slavery, social and community performance. Key suppliers are invited to join the Program based on contract size, supply category, lack of readily available alternative sources and the risk to APA operations from an asset and employee perspective.

10. Risk management

APA’s Risk Management System comprises 3 elements covering:

Risk Management Policy and Risk Appetite
Enterprise Risk Management Framework which sets the approach for identifying, assessing, managing and escalating risks to ensure material risks are managed appropriately and in line with risk appetite. All risk assessments consider a combination of likelihood and consequence based on the Enterprise Risk Management Framework
Risk Management Enablers providing governance, risk awareness in line with APA’s culture, technology support, and ongoing training and communication

APA’s approach to risk management aligns to the international risk standard ISO 31000, considering the internal and external environment, and with coverage of both financial and non-financial risks. All functional risk frameworks align to the Risk Management System to provide consistency and a common language for discussing risk in business decisions. For further information on this process, see APA’s Corporate Governance Statement Principle 7.

During the year, APA refreshed its risk register ensuring that strategies to manage the potential opportunities and threats arising were in place. APA’s Executive Leadership Team, the Board’s Audit and Risk Management Committee and the relevant business divisions reviewed material risks regularly, with the support of internal and external experts.

==> picture [467 x 92] intentionally omitted <==

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APA Group Board
APA Group Audit & Risk Management Committee
Approve risk strategy Approve and monitor Review current and Approve key risk Oversight risk
& enterprise risk risk appetite and risk emerging material risks & compliance frameworks and
management framework taking performance (financial and non-financial) policies control environment
----- End of picture text -----

==> picture [466 x 194] intentionally omitted <==

----- Start of picture text -----

Executive Risk Management Committee
Review current Review Enterprise Risk Review asset and Review key risk and Promote risk
and emerging Management Framework and corporate insurance compliance policies and awareness as part of
material risks risk strategy program crisis management plan APA’s overall culture
Standards & Oversight Business Independent review
Sets standards & frameworks Implements Enterprise risk management frameworks, Independent review
and monitor the risk owns and manages risk and applies of frameworks and
and control environment risk appetite in decision making control effectiveness
Group Risk, Compliance & Insurance Operational functions Internal Audit
IT Security Corporate functions External Audit
Health, Safety, Environment & Heritage Third parties
Group Sustainability
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APA Infrastructure Trust and its Controlled Entities

APA currently considers the following key material risks. This list is not exhaustive and subject to change as new risks emerge.

Type of Risk	Description	Key Management Actions to Manage Risks
Strategic risks– risks	arising from APA’s industry and geography, including its markets, customers, brand and reputation, and regulatory policy.
Economic regulation	APA has a number of signifcant assets and investments	– Maintain strong regulatory and policy functions,
	in its portfolio subject to economic regulation, including	active in regulatory management and policy
	the regulation of prices that APA is permitted to charge	development.
	for certain services. Government policy in relation to	– Assess key policy change proposals for potential
	the Australian domestic gas market also continues to	impacts on APA’s business.
	develop, with policy uncertainty as to which assets are
	regulated and the settings applicable for regulated assets afecting what APA can recover for capital or
	operating expenditure necessary to operate price
	regulated assets.
Bypass and	APA’s future earnings may be reduced if customers	– Ofer structured and fexible services that leverage
competition risk	purchase gas transportation services for new pipelines	APA’s capability and infrastructure.
	that by-pass or compete with APA’s pipelines, rather than	– Engage with customers and pro-actively manage
	from APA’s existing pipelines. New gas development	business development opportunities, including
	projects that supply export markets may also compete	renewable options.
	with domestic markets, reducing demand for gas	– Ensure costs and pricing associated with the
	transportation services within Australia.	provision of services remains competitive and
		provides value to the market.
		– Align asset management plans with capacity
		contracting strategy.
Gas demand risk	Reduced end user demand for gas driven by its price (in	– Monitor commodity markets, export outlook and gas
	Australia versus other countries), relative to competing	market developments for throughput impacts.
	energy sources and new technologies or gas swap contracts, may reduce demand levels for services on APA’s assets and may adversely afect APA’s contracted	– Ofer fexible services to support the needs of customers, including gas fred generators. – Use long-term gas storage / transportation
	revenue and the carrying value of APA’s assets.	agreements.
		– Develop new and innovative services that provide fexibility.
		– Competitor analysis.
Gas supply risk	A long-term shortage of competitively priced gas, either	– Use a recontracting strategy and market monitoring.
	as a result of gas reserve depletion, allocation of gas	– Maintain knowledge and monitoring of gas reserves
	to other markets, or the unwillingness or inability of gas	to identify potential opportunities.
	production companies to produce gas, may adversely afect APA’s contracted revenue and the carrying
	value of APA’s assets.
Alignment with future energy	Shift in consumer, investor and government sentiment due to community and environmental focus on gas	– Identify diferent “energy futures” to drive strategic direction with diversifcation in asset class and
transition needs	being unacceptable as a fossil fuel rather than viewed	geography to manage risk exposure.
	as a fuel to support a cleaner energy future. This may adversely afect APA’s contracted revenue and the	– Understand advances in the transportation of alternate fuels utilising existing gas infrastructure.
	carrying value of APA’s assets.	– Extend and refne strategies on alternate fuel /
		infrastructure consistent with APA’s outlook on
		future energy mix and decarbonisation including innovation projects under the Pathfnder Program.

32 APA GROUP ANNUAL REPORT | 2022

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Type of Risk	Description	Key Management Actions to Manage Risks
Counterparty risk	The failure of a counterparty to meet its contractual	– Maintain a portfolio of investment grade credit
	commitments to APA, in whole or in part, could reduce	rated customers.
	future anticipated revenue, unless and until APA is able	– Engage in counterparty credit due diligence and
	to secure an alternative customer.	monitoring, including contractual credit support
		arrangements put in place where appropriate.
Customer	Due to a range of factors, APA may not be successful	– Use a recontracting strategy with close monitoring
contract	in recontracting available pipeline capacity or power	of contract renewal portfolio.
renewal risk	generation capacity when it comes due for contract	– Monitor emerging gas supply alternatives and
	renewal or may only be able to recontract at reduced	power generation market developments to identify
	prices or for shorter periods.	new opportunities.
		– Ofer structured and fexible service options.
Reputation risk	APA relies on a level of public acceptance for the	– Engage with key stakeholders (landowners,
	development and operation of its assets. Changing	producers, customers, government etc) to identify
	societal and community sentiment in relation to the	focus areas.
	energy industry, as well as APA’s business, may impact	– Monitor community and stakeholder feedback
	APA’s commercial opportunities, its ability to develop	impacting reputation.
	new projects and operate its assets.	– Continue sustainable development initiatives.
		– Strengthen industry engagement and implement
		Energy Charter initiatives.
		– Use stakeholder engagement forums and panels
		to identify broader community areas of focus.
Financial risks- risks	arising from the management of APA’s fnancial resources,	accounting, tax and fnancial disclosure.
Interest rates and refnancing risks	APA is exposed to movements in interest rates where foating interest rate funds are not efectively hedged. It also remains exposed to refnancing risk if it is unable to	– Set risk limits approved by the Board and manage in line with APA’s Treasury Risk Management Policy. – Structure debt to spread maturities over a number
	replace an existing loan with a new one at a critical time.	of years.
		– Defne and manage maximum and minimum interest
		rate hedging levels using derivatives and debt issued at fxed interest rates through to maturity.
		– Maintain liquidity though cash on hand and credit lines with banks, including refnancing of maturing
		loan facilities.
		– Maintain access to broad range of global banking
		and debt capital markets.
Foreign exchange	APA is subject to currency fuctuations in relation to the	– Set risk limits approved by the Board and manage in
risks	purchase, supply and installation of goods and services	line with APA’s Treasury Risk Management Policy.
	revenue, and borrowings, in a currency other than	– Use derivative instruments to hedge non-AUD
	Australian dollars. There can be no assurance that APA will be able to efectively hedge its foreign currency exposure, particularly in periods of signifcant currency volatility, and/or that APA’s hedges will prove efective.	denominated revenue and expenses. – Fully hedge foreign currency borrowings.
Investment and	Assumptions and forecasts used to make investment	– Conduct regular, independent reviews of corporate
integration risk	decisions or acquire assets, may not be realised. This	and asset models underpinning investment decisions.
	may result in lower-than-expected returns, unanticipated	– Ensure all material investment transactions are
	costs, new skillsets or capabilities needing to be	overseen by APA’s Due Diligence Committee.
	acquired, new types of regulatory approvals being	– Incorporate integration risk management for new asset
	needed where APA has limited experience.	types into APA’s asset portfolio considering people,
		skills, technology, regulatory approvals and costs.
Credit rating risks	Any downgrade in APA’s credit rating could harm its ability to obtain fnancing, could increase its fnancing	– Formulate APA’s Capital Management strategy to ensure APA’s credit ratings are maintained at
	costs or cause the instruments governing APA’s future	target levels.
	debt to contain more restrictive covenants.	– Risk-assess counterparties, monitoring credit ratings
		and obtaining credit support to limit risk exposure.

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APA Infrastructure Trust and its Controlled Entities

Type of Risk	Description	Key Management Actions to Manage Risks
Operational Risks– risks arising from inadequate or failed internal processes, people or systems or from external events including
construction and corporate projects, technology, environment and cultural heritage, and health and safety.
Asset operations risks	APA is exposed to a number of risks afecting asset	– Ensure operations are subject to operational,
	operations including those resulting in equipment	process safety, cultural heritage and environment
	failures or breakdowns, pipeline ruptures, employee	management programs.
	or equipment shortages, workplace health and safety	– Use asset management and maintenance of
	issues, environmental and cultural heritage damage, poor	engineering standards, including integrity monitoring
	relationships with local communities, contractor defaults,	and maintenance programs, as part of risk-based
	damage by third parties, integration incidents from	asset life cycle management.
	acquired or newly constructed assets and damage from	– Conduct asset operational monitoring through control
	natural hazards, sabotage or terrorist attacks including	rooms to manage assets within design parameters
	the physical risks associated with climate change.	and coordinate asset maintenance issues.
		– Provide comprehensive insurance arrangements as
		part of the asset protection program.
Information	APA’s operations rely on a number of information	– Manage APA’s information and technology assets
technology and cyber	technology systems, applications and business	in accordance with recognised industry standards
risk	processes utilised in the delivery of business functions,	across hardware, software, applications and
	including APA’s customer management system, grid	communication systems.
	network and integrated operations centre.	– Apply cyber security standards across APA
		information and technology systems, including those
		managed by third party vendors, with standards
		continually assessed against new threats and
		vulnerabilities.
		– Make information and technology systems, including
		SCADA control systems, subject to regular reviews
		and independent testing.
People and culture	APA is dependent on its ability to attract, engage,	– Use a performance management standard.
risk	develop and retain the right employees within a	– Set out expectations of behaviour in the APA’s Code
	market where there is varying supply of skilled workers.	of Conduct.
	Expectations on the levels of behaviour expected for	– Put leadership development and capability
	employees aligned to APA’s values drive the culture	programs in place.
	on which leaders are held to account.	– Put recruitment practices in place.
		– Use talent management programs to identify and
		develop technical and leadership personnel.
		– Maintain diversity and inclusion programs.
		– Put comprehensive training programs in place to
		maintain and develop competencies.
Construction and	APA’s business strategy includes the development of	– Use access and approvals management for new
development risk	new pipeline capacity, renewable, battery and gas- fred power generation plants, gas storage and gas	construction projects. – Stand up a dedicated construction project
	processing assets. This involves typical construction risks, including potential failure to obtain necessary	management capability and governance to manage efcient, safe and quality delivery of
	approvals, employee or equipment shortages, third	construction projects.
	party contractor failure, weather risk, and higher than
	budgeted construction costs impacting liquidated
	damages and project delays.
Sustainability risk	Inadequate management and disclosure of sustainability	– Monitor the status of actions against a 3-year
	(including climate and ESG matters) impacting APA	Sustainability Roadmap covering climate change,
	performance and reputation.	community and social performance (including
		First Nations), sustainable development (social
		investment) and environmental management.
		– Develop an ESG scorecard.
		– Continue annual climate reporting and disclosures.
		– Continue commitment to TCFD.

34 APA GROUP ANNUAL REPORT | 2022

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Type of Risk	Description	Key Management Actions to Manage Risks
Compliance risks– legal or regulatory risks arising in respect of laws, regulations,		licences and recognised practising codes including
health, safety, environment, cultural heritage, payroll, asset construction and operation, and other corporate compliance requirements.
Compliance and	APA is subject to a range of asset and site level	– Put a comprehensive Enterprise Compliance
operating licences	operational legal and regulatory requirements, including climate change, environment and heritage,	Management Framework in place with regulations identifed, controls monitored and assurance operating.
	occupational health and safety requirements and	– Monitor regulatory and economic policy changes.
	technical and safety standards.	– Maintain a comprehensive safety and environment
	Additional obligations, including payroll, security	management system and compliance monitoring.
	of critical infrastructure, modern slavery, and other	– Use dedicated specialist teams to provide
	corporate legal and regulatory requirements, also apply	asset level assurance for technical, safety and
	to APA.	environment compliance.
	Changes in any such laws, regulations or policies may
	increase compliance requirements and costs.

Key emerging risks including threats and opportunities for APA identified in FY2022 include:

Risk (threats and opportunities)	Approach
Threat: Extending electrifcation capability to align with strategic electrifcation opportunities to meet changes as the energy market moves to decarbonise and transitions to a cleaner	– Focus actions on capability development for electrifcation skills. – Align employee value proposition to overall strategy considering electrifcation development.
energy future.
Threat: Global economic slowdown impacts fnancial markets	– Harness strong capital management, including hedging
and customer demand, potentially reducing gas contract	arrangements and customer credit monitoring.
capacity demand and recontracting revenue, access to new	– Actively monitor commodity pricing impacting sourcing of
debt markets and liquidity and commodity prices.	overseas sourced items utilised in large construction projects and
	domestic demand.
	– Closely monitor potential changes in energy demand
	including substitution.
Threat: Geopolitical uncertainty with rising tensions in the region and further escalation of the Russia/Ukraine confict impacting	– Investigate options for alternative sources of supply for international construction procurement.
changes in sanctions regimes, international energy demand,	– Conduct resilience updates for information technology
rising national security interests and worsening supply chain	infrastructure, including cyber resilience.
disruption.	– Focus on gas reserving management, including increases in
	gas linepack to meet to meet high demand periods.
Opportunity: Introduction of carbon ofsets as part of	– To investigate acquiring ofsets that we need via a mix of direct
decarbonisation and climate change requirements to support	procurement and investment opportunities.
energy infrastructure development and growth.

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APA Infrastructure Trust and its Controlled Entities

11. Directors

Information on Directors and Company Secretaries

See Section 3 for information relating to the qualifications and experience of Directors and Company Secretary.

Directorships of other listed companies

Directorships of other listed companies held by Directors at any time in the 3 years immediately before the end of the financial year:

Name	Company	Period of directorship
Michael Fraser	Aurizon Holdings Limited	Since February 2016 to February 2022
	Orora Limited	Since April 2022
Robert Wheals	—	—
Steven Crane	nib holdings limited	September 2010 to July 2021
	SCA Property Group	Since December 2018
James Fazzino	Tassal Group Limited	Since May 2020, Chair since October 2021
Debra Goodin	Senex Energy Limited	May 2014 to November 2020
	oOh!media Limited	November 2014 to February 2020
	Atlas Arteria Limited	Since September 2017, Chair since November 2020
Shirley In’t Veld	Northern Star Resources Limited	September 2016 to June 2021
	Alumina Limited	Since August 2020
	Develop Global Limited
	(formerly Venturex Resources Limited)	Since July 2021
	Karora Resources Inc	Since December 2021
Rhoda Phillippo	—	—
Peter Wasow	Oz Minerals Limited	Since November 2017

Directors Meetings

During the year, 13 Board meetings, 4 Audit and Risk Management Committee meetings, 4 People and Remuneration Committee meetings, 4 Health, Safety, Environment and Heritage Committee meetings and 3 Nomination Committee meetings were held.

Directors	Board A B	People & Remuneration Committee A B	Audit & Risk Management Committee A B	Health Safety Environment & Heritage Committee A B	Nomination Committee
					A B
Michael Fraser	13 13	— —	4 4	— —	3 3
Robert Wheals	13 13	— —	— —	— —	— —
Steven Crane	13 13	4 4	4 4	— —	3 3
James Fazzino	13 13	— —	4 4	4 4	— —
Debra Goodin	13 13	— —	4 4	4 3	3 3
Shirley Int’d Veld	13 13	4 4	— —	4 4	— —
Peter Wasow	13 13	4 4	4 4	— —	— —
Rhoda Phillippo	13 13	4 4	— —	4 4	— —

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.

36 APA GROUP ANNUAL REPORT | 2022

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APA Infrastructure Trust and its Controlled Entities

Directors’ Security Holdings

The aggregate number of APA securities held directly, indirectly or beneficially by Directors or their related entities at 30 June 2022 was 357,593 (FY21: 318,468).

Directors’ relevant interests in APA securities

	Fully paid			Fully paid
	securities at	Securities	Securities	securities at
Directors	1 July 2021	acquired	disposed	30 June 2022
Michael Fraser	102,942	—	—	102,942
Robert Wheals	74,596	34,125	—	108,721
Debra Goodin	24,179	—	—	24,179
James Fazzino	30,751	—	—	30,751
Peter Wasow	26,000	—	—	26,000
Rhoda Phillippo1	5,000	5,000	—	10,000
Shirley In’t Veld	25,000	—	—	25,000
Steven Crane	30,000	—	—	30,000
	318,468	39,125	—	357,593

1. Appointed on 1 June 2020.

At 30 June 2022, Robert Wheals held 703,328 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 the satisfaction of certain performance hurdles. Further information can be found in APA’s Remuneration Report on pages 38 to 53.

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.

12. 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.

13. 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.

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APA Infrastructure Trust and its Controlled Entities

14. Remuneration report

The Remuneration report is attached to and forms part of this report.

15. Auditor

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 114.

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 28 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 Risk Management 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.

16. 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 27 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.

17. 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 thousand dollars, unless otherwise indicated.

18. Corporate governance statement

The Corporate Governance Statement for the financial year is available at APA’s website.

19. 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

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Michael Fraser Chairman Sydney, 24 August 2022

==> picture [80 x 41] intentionally omitted <==

Robert Wheals CEO and Managing Director

38 APA GROUP ANNUAL REPORT | 2022

Remuneration Report

APA Infrastructure Trust and its Controlled Entities

Letter from the Chair of the People and Remuneration Committee

I am pleased to present APA Group’s (APA or the Company) Remuneration Report for financial year 2022.

As Australia’s energy transition accelerates and in light of recent global geopolitical developments, the year has reinforced APA’s pivotal role in supporting the energy transition and providing stable and crucial supply in Australia.

APA’s position as a market leader in the Australian energy infrastructure sector has been reflected in our solid FY22 company performance with underlying EBITDA increasing by 3.9% to $1,692.3 million and free cash flow increasing by 19.8% to $1,080.6 million.

We have delivered a total security holder return (TSR) of 33% in FY22 and pleasingly, we have also paid our highest ever distribution this year, increasing by 4% to 53.0 cents per security. This is the 18th consecutive year distributions have grown year-on-year, displaying our commitment to financial discipline and generating long-term returns for security holders.

Remuneration outcomes for FY22

Solid financial and non-financial performance translated into a short-term incentive (STI) outcome of 66% of maximum for the CEO and 60-94% of maximum for other Executive Key Management Personnel (KMP).

In FY20, APA introduced a new long-term incentive (LTI) plan (to replace the legacy cash plan) for which the first grant was tested this year. Based on 3-year performance, the threshold for the relative TSR and return on capital targets was exceeded and an LTI outcome of 71.9% was determined.

Remuneration changes for FY22

While there have been no significant changes in FY22, we have made the following adjustments to ensure our

remuneration framework remains fit-for-purpose:

A re-weighting of our executive team’s pay mix to the long-term, by reducing STI opportunity and increasing LTI opportunity, which aims to drive executives’ focus on APA’s long-term success.
An increase to the CFO’s STI opportunity following an internal management restructure which resulted in the IT and Operations Technology functions, the Enterprise Program Management Office and the Risk, Compliance and Insurance functions forming part of an expanded portfolio.
For the FY22 LTI grant, changing our relative TSR peer group from a subset of the S&P/ASX100 to a bespoke group of peers whose businesses are more relevant to the nature of APA’s operations.
An increase in NED fees for the first time since 2019, to ensure fees remain competitive and enable us to attract and retain high calibre Directors.

More detail on each of these changes are provided throughout the Report.

FY23 and beyond

To align our Net Zero strategy to executive remuneration outcomes, we are introducing climate related metrics into our framework, with more disclosure to follow in FY23.

In addition, to ensure we continue to build a diverse workforce, we expect to place increased attention on gender pay equity in the coming year. Whilst our industry has historically had a greater representation of males, as Australia progresses its energy transition, we believe a diverse workforce and improved pay equity will place us in the best position to achieve our vision to be world class in energy solutions.

I hope you find this Remuneration Report informative. We look forward to receiving your support at the 2022 AGM.

Peter Wasow

People and Remuneration Committee Chair

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APA Infrastructure Trust and its Controlled Entities

1.	Individuals covered by the Remuneration Report	38
2.	Executive summary	38
3.	FY22 performance and executive incentive outcomes	42
4.	Executive remuneration policy and framework	46
5.	Executive KMP contractual arrangements	48
6.	Non-executive Director remuneration	49
7.	Remuneration governance	50
8.	Statutory tables	51

1. Individuals covered by the Remuneration Report

The Remuneration Report (the Report) for APA FY22 has been prepared in accordance with Section 300A of the Corporations Act 2001. The information provided in this Report has been audited as prepared by Section 308(3C) of the Corporations Action 2001, unless indicated otherwise, and forms part of the Directors’ Report.

This Report includes the following Key Management Personnel (KMP):

Name	Role	Term
Non-Executive Directors (NEDS)
Michael Fraser	Chair	Full year
Steven (Steve) Crane	Director	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
Executive KMP
Robert (Rob) Wheals	Chief Executive Ofcer and Managing Director (CEO/MD)	Full year
Adam Watson	Chief Financial Ofcer (CFO)	Full year
Ross Gersbach	President North American Development	Full year
Julian Peck	Group Executive (GE) Strategy and Commercial	Full year
Darren Rogers	Group Executive Operations	Full year

On 15 June 2022, Julian Peck announced his intention to resign from APA Group later in 2022. However, he continues to be engaged in his executive capacity as Group Executive Strategy and Commercial until his cessation with APA Group.

2. Executive Summary

2.1 Remuneration strategy

The Board recognises the important role remuneration plays in supporting and implementing the achievement of 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 is 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 (HSE) strategy; caring for people, communities, the environment and our assets; living the APA values.

Securityholder alignment

Ensure executive performance and behaviours align with the interests of securityholders.

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2.2 Executive remuneration snapshot

Fixed pay	Short-term incentive (STI) Long-term incentive (LTI)	Short-term incentive (STI) Long-term incentive (LTI)
Purpose	To be market competitive to attract, motivate and retain individuals. To reward executives for their contribution to APA’s short-term performance, which will enable the achievement of long-term goals. To focus executives on the achievement of APA’s long-term business strategy and to create alignment with security holders.
FY22 approach	Executive KMP roles are benchmarked against external Subject to meeting the EBITDA gateway, performance is assessed Performance Rights are assessed against relative TSR (50%) and
	positions in companies with a comparable market capitalisation, operate in a similar industry and/or are key competitors. against a scorecard. Each Executive KMP member has a unique scorecard comprising of Group measures and role specifc key performance indicators (KPIs), to ensure diferentiation of STI outcomes. return on capital (ROC) (50%), with equal tranche vesting occurring over Years 3, 4 5.
FY22 remuneration outcomes	A fxed pay increase of 4.7% was provided to the CEO to ensure ongoing market competitiveness. Benchmarking data against ASX peers indicates the CEO is paid below the median of his peers. As the EBITDA gateway was met, the STI pool was funded and outcomes were: – CEO: 66% of maximum. – Other Executive KMP: 60-94% of maximum. Section 3.2-3.3 provides details on scorecard outcomes for each Executive KMP. The FY20 LTI award was tested on 30 June 2021 resulting in a 71.9% outcome, after the exercise of discretion to increase the ROC target. Section 3.5 provides details on results against the relative TSR and ROC measures.
FY22 STI performance	CEO/MD Scorecard Outcomes at Maximum 100%
	0 20 40 60 80	~~TARGET~~


		~~MAX~~
		Underlying EBITDA (12.5%) Free Cash Flow (12.5%) Revenue Growth (10.0%) Strategic Growth (25%) Safety & Wellbeing (15.0%) Inclusion & Diversity (15.0%) Customer (10.0%)
Minimum security holding requirement	CEO/MD: 100% of fxed pay. Other Executive KMP: 50% of fxed pay. Where the minimum security holding requirement has not been met, 1/3 of the STI payable will be deferred into Restricted Securities.

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2.2 Executive remuneration snapshot continued

Fixed pay Short-term incentive (STI)	Long-term incentive (LTI)
Executive remuneration framework Base salary, superannuation and other benefts FIXED PAY TI Assessed against a scorecard of Group d idiidl KPI

	Cash (2/3)		CEO: 90% of fxed pay (maximum)
FY22 Performance Rights tes period against Relative T S LTI an nvua s subject to meeting an EBITDA gateway	STI Restricted Securities (1/3)(1)		Other executive KMP: 60% of fxed pay (maximum)
		1/3
	ted at the end of 3-year performance SR (50% and Return on Capital (50%)	1/3 vests vests Other executive KMP: 125% of fxed pay CEO: 150% of fxed pay
		1/3 vests
	FY23 FY24	FY25 FY26

1) Release of Restricted Securities is subject to whether the minimum security holding requirement is met.

	FY22 FY23 FY24 FY25 FY26 1) Release of Restricted Securities is subject to whether the minimum security holding requirement is met.
FY22 framework changes	–The pay mix of Executive KMP (excluding the CEO) has been re-weighted towards the long-term. STI maximum opportunity has been reduced (from up to 75% of fxed pay to a consistent 60% of fxed pay for all KMP) and LTI opportunity has increased (from 75-125% to a consistent 125% of fxed pay) resulting in the
	same pay mix across all Executive KMP (excluding the CEO and CFO).
	–An increase to the CFO’s STI opportunity to recognise an expansion in the scope of his role. Due to an
	expanded portfolio which saw elements of the IT and Risk, Compliance and Insurance functions fall under his remit, STI opportunity was increased from 60% to 75% of fxed pay.
	–A new relative TSR peer group more aligned to our “real assets” business has been introduced
	(see section 4.3 for more detail). This replaces the broad S&P/ASX100 peer group previously used.

The pay mix graph below displays the proportion of fixed vs variable remuneration (STI and LTI) at the maximum pay mix, displaying our re-weighting of executive packages towards the long-term in FY22 (excluding the CEO and CFO).

The LTI component is based on the maximum award value, and assumes 100% vesting.

APA Executive KMP Maximum Pay Mix

APA Executive KMP Maximum Pay Mix	APA Executive KMP Maximum Pay Mix	APA Executive KMP Maximum Pay Mix	APA Executive KMP Maximum Pay Mix

CEO/MD (FY22) 44% 26% 29%	29%	26%	44%
CFO (FY22) 42% 25% 33%
Other Executive KMP (FY22 – Excl CFO) 44% 21% 35%
Other Executive KMP (FY21 Average) 39% 24% 37%
0% 50% 75% 100% Fixed pay STI LTI

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3. FY22 performance and executive incentive outcomes

3.1 Company performance

The table below summarises APA’s financial performance for the past 5 years.

Measure	FY22	FY211	FY201	FY191	FY181
Underlying EBITDA ($m)2	1,692.3	1,628.8	1,649.9	1,570.0	1,514.8
Proft after tax including signifcant items ($m)3	259.7	0.7	309.0	282.1	260.9
Proft after tax excluding signifcant items ($m)	240.0	278.9	309.0	282.1	260.9
Free cash fow per security (cents)	91.6	76.4	81.1	75.7	80.8
Distribution per security (cents)	53.0	51.0	50.0	47.0	45.0
Closing security price at 30 June ($)	11.27	8.90	11.13	10.80	9.85
CEO STI outcome (% of maximum)	66.1%	66.4	37.0	73.1	79.0

Restated for the impact of the provision for payroll review.
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 to the Financial Statements.
Includes an impairment gain on Orbost Gas Processing Plant in FY22, and a once-off interest charge associated with bond note redemption in FY21.

Since listing in 2000, APA has paid an interim and full year distribution every year and distributions have grown for 18 consecutive years. Our distribution per security of 53.0 cents for FY22 represents a 4% increase on FY21.

Against the S&P/ASX100 Index, we have delivered a TSR of 293% against the Index’s return of 151% over the past 10 years.

Beyond our immediate financial performance, we have also made significant capital investments to support energy markets and invest in future energy technologies.

APA 10-year TSR and distributions

==> picture [507 x 324] intentionally omitted <==

----- Start of picture text -----

350% TSR Distributions (cents per security) 70
300 60
250 50
200 40
150 30
100 20
50 10
0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Distributions S&P/ASX100 APA S&P/ASX200 Utilities Source: Eikon’s Refinitv platform
East Coast Kurri Kurri Northern
Project Mica Creek Solar Farm Grid Expansion Lateral Pipeline Goldfields Interconnect
Purpose To help meet the energy To increase winter peak Development of gas A new 580km pipeline
needs of our customers capacity by up to 25%. pipeline to the Hunter increasing capacity
while reducing their Power Project and to to the Goldfields region.
operational emissions. deliver blended hydrogen
to the receipt station.
Capital Investment ~$150m ~$270m ~$250m ~$460m
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3.2 FY22 STI scorecard outcomes – CEO/MD

The Board reviewed the CEO/MD’s performance taking into account achievement against the KPIs in his STI scorecard.

Based on the Board’s assessment, it deemed the scorecard outcome to be a holistic reflection of FY22 performance and there was no exercise of discretion over the final outcome.

Weighted Scorecard measures FY22 outcome outcome Further detail	Weighted Scorecard measures FY22 outcome outcome Further detail
Financial – Underlying EBITDA (12.5% weighting)
Maintain fnancial strength THRESHOLD	MAXIMUM ~~TARGET~~ Underlying EBITDA outcome was $1692 million
through solid EBITDA. Financial – Free Cash Flow (12.5%)	12.5% , against a target of $1,614 million and stretch of $1,638 million. The target set for FY22 was slightly lower than the actual result for FY21, due to the conditions faced at the time, which included extensive COVID-19 restrictions remaining in force, and a signifcant increase in recontracting exposure.
Maintain fnancial strength through Free Cash Flow. THRESHOLD MAXIMUM ~~TARGET~~ 12.5% Free cash fow was $1,081 million against a target of $958 million and stretch of $996 million. Financial – Revenue Growth (10% weighting)
Organic revenue growth from deploying growth capex, and maintaining customer satisfaction. THRESHOLD MAXIMUM ~~TARGET~~ 10.0% Actual outcome of $473 million against a target of $300 million and stretch of $450 million. Financial – Strategic Growth (25% weighting)
Execute growth strategy THRESHOLD MAXIMUM ~~TARGET~~ 0.0% Whilst APA was active in the market (eg Basslink and Renewable Energy Zones) it was unsuccessful in key transactions, hence below threshold performance was assessed. Operational Excellence (including Health, Safety and Environment) (15% weighting)
Improve safety, wellbeing and environmental performance and safety culture through delivery of HSE Strategy. No fatalities. THRESHOLD MAXIMUM ~~TARGET~~ 14.2% Stretch performance was achieved for most metrics which included lead and lag indicators. For example, TRIFR was 3.47, which exceeded stretch. Inclusion & Diversity (15% weighting)
Leverage diversity and build an inclusive culture so all of our people feel safe, valued and trusted”to do their best everyday, to deliver on our APA vision. THRESHOLD MAXIMUM ~~TARGET~~ 8.7% Performance assessed against 3 metrics: – Successful delivery and impact of culture program assessed with a culture survey result at 125% of target. – Delivery of Gender Target Action Plan initiatives including leadership succession planning, Early Talent Program 50:50 gender balance, new parental leave policy and Hybrid@APA strategy. At target performance assessed. – Reducing attrition of top female talent against the Gender Target Action Plan scorecard did not meet our threshold target. Customer Centricity & Stakeholder Management (10% weighting)
Maintain customer satisfaction. THRESHOLD Scorecard outcome (% of maximum)	MAXIMUM ~~TARGET~~ 8.2% Overall customer survey satisfaction survey score of 7.45 falls between target and stretch performance. 66.1%

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3.3 FY22 performance scorecard outcomes – Other Executive KMP

Detailed below are the individual scorecard outcomes for Other Executive KMP. A number of group-wide KPIs (outlined in the CEO/ MD’s STI scorecard above) apply as well as individual-specific KPIs, to reflect the nature of their role and contribution to APA’s business outcomes.

Other Executive KMP outcomes ranged from 60-94% of maximum with individual KPIs allowing for meaningful differentiation between each member.

Scorecard measures		Scorecard outcome FY21 outcome (% of maximum)
A Watson
Financial Strength (25%) Cost Savings (15%) People & Culture (15%) Operational Excellence (20%) Other non-fnancial measures (25%)	THRESHOLD	MAXIMUM ~~TARGET~~ 93.7%

R Gersbach

THRESHOLD ~~TARGET~~ MAXIMUM

Financial strength (15%) Strategic Growth (30%) Grow Market Capability (20%) People & Culture (20%) Stakeholder Management (15%)					60.0%

J Peck

THRESHOLD ~~TARGET~~ MAXIMUM

Financial Strength (20%) Revenue Growth (15%) Strategic Growth (30%) People & Culture (10%) Customer Satisfaction (10%) Climate Plan(15%)

66.7% 84.8%

D Rogers

Financial Strength (30%) Growth & Innovation (20%) Operational Excellence (35%) Customer Satisfaction (15%)			THRESHOLD	MAXIMUM ~~TARGET~~

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3.4 STI outcomes

The table below provides an overview of the STI outcomes for FY22.

Executive KMP	STI earned % of Cash Deferred Total maximum $ $ $ opportunity	STI forfeited
		% of Foregone maximum $ opportunity
R Wheals A Watson	664,171 332,086 996,257 66.1% 670,422 — 670,422 93.7%	511,243 33.9% 45,332 6.3%
R Gersbach J Peck D Rogers	350,433 — 350,433 60.0% 361,644 — 361,644 66.7% 272,578 136,289 408,867 84.8%	233,622 40.0% 180,822 33.3% 73,325 15.2%

3.5 LTI outcomes

Equity LTI plan (introduced FY20)

Following the introduction of a new LTI plan in FY20 to replace our previous legacy cash LTI, the first grant of awards was due for testing on 30 June 2022.

A portion of the LTI targets under the relative TSR and ROC measure were met, resulting in a final outcome of 71.90%. 1/3 of the LTI will vest at the end of FY22 and the remaining 2/3 will vest in equal tranches in the next two years.

					Vesting outcome	Vesting outcome
Performance measure	Weighting	Threshold	Maximum	Actual	(before discretion)	(after discretion)
Relative TSR	50%	50th percentile 82.5th percentile		66th percentile	75.06%	75.06%
ROC	50%	11.90%	12.20%	12.06%	100.00%	68.73%
Final outcome						71.90%

Whilst the original ROC targets set were 11.00% (threshold) and 11.30% (maximum), this was based on an assumption that an M&A transaction would be executed, which would have reduced ROC. Given an M&A transaction did not occur in the performance period (1 July 2019-30 June 2022), the Board has exercised its discretion to assess the ROC component against a more challenging target range of 11.9-12.2%. Instead of 100% vesting under the ROC component’s original targets, the exercise of discretion resulted in a lower level of vesting.

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 performance tested at the end of FY20 hence a number of awards allocated in FY20, as well as prior years, vested in FY22. The remaining legacy LTI awards will vest in FY23.

3.6 FY22 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 calculations have been applied to equity awards:

– STI deferred equity – awards from prior years which restrictions have been released during the year.

LTI vested – awards which have vested under the legacy LTI plan and the FY20 Performance Rights plan.

				STI Deferred		Other
	Fixed Pay	Other	Cash STI	Equity	LTI Vested1Equity Awards		Total
Executive KMP	$	$	$	$	$	$	$
R Wheals	1,675,000	9,910	664,171	246,006	389,168	—	3,057,204
A Watson	954,338	—	670,422	—	—	—	1,642,760
R Gersbach	973,424	231,397	350,433	—	437,065	—	1,992,319
J Peck	904,109	—	361,644	—	—	—	1,265,754
D Rogers	803,653	3,676	272,578	70,539	159,858	—	1,355,072

LTI vested refers to the cash amount to be paid in September 2022, based on the VWAP of $11.7396 and number of reference units that vested in August 2022 as outlined in section 8.4.

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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.

In FY22, a fixed pay increase from $1,600,000 to $1,675,000 (4.7%) was provided to the CEO to increase the competitiveness of his package, as benchmarking data against an ASX peer group indicated he was paid below the median of his peers. The level of FY22 fixed pay positions him closer to the 40th percentile.

Minor adjustments were made to Other Executive KMP roles to recognise a change in the superannuation guarantee contribution rate, consistent with the approach undertaken for our broader employee population. Executives will not receive the increase in the superannuation guarantee contribution rate in FY23.

superannuation guarantee contribution rate in FY23.
Position	FY22 contractual fxed pay
CEO/MD	$1,675,000
CFO	$954,338
President North American Development	$973,424
GE Strategy & Commercial	$904,109
GE Operations	$803,653

4.2 STI plan

In addition to the information covered in section 2, further detail on the operation of the FY22 STI plan is provided below:

Feature	Description
Opportunity	Role STI target (% of fxed pay) STI maximum (% of fxed pay) CEO/MD 60% 90% CFO 50% 75% All other Executive KMP 40% 60% The CFO received an increase to his STI opportunity to recognise an expansion in his portfolio. Following an internal restructure, the IT and Operations Technology functions, the Enterprise Program Management Ofce and the Risk, Compliance and Insurance functions fell under the CFO’s remit.
Performance period	One year.
Delivery	Cash (2/3) paid at the end of Year one and deferred equity (1/3) delivered as Restricted Securities 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 fnancial results.

4.3 LTI plan

In addition to the information covered in section 2, further detail on the operation of the FY22 LTI plan is provided below:

Feature	Description
Opportunity	Role LTI maximum (% of fxed pay) CEO/MD 150% Other Executive KMP 125%
Performance period	Three years.
Delivery	Performance Rights vest in equal tranches at the end of Year three, four and fve subject to continued employment.

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4.3 LTI plan continued

Feature	Description
Allocation	Performance Rights are allocated at face value using a VWAP of the 20 trading days prior to the start of the
methodology	performance period (1 July 2021).
Performance	Relative TSR (50%)
measures	Relative TSR measures the Group’s TSR over a three-year period against a group of ASX100 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.
	In selecting the new peer group for the FY22 LTI award (and replacing the previous S&P/ASX100 peer group),
	the Board considered the following factors:

the Board considered the following factors:
– Alignment with APA’s status as a “real assets” business;
– Inclusion within the S&P/ASX100 Index; and
– Ensuring a meaningful number of companies in the peer group to ensure performance can be
assessed appropriately.
The new peer group comprises of the following companies:
AGL Energy Transurban	Mirvac Group
Atlas Arteria Group Aurizon Holdings	Scentre Group
AusNet Services Qube Holdings	Stockland
Origin Energy Dexus	Vicinity Centres
Spark Infrastructure Goodman Group	Telstra Corporation
Sydney Airports GPT Group	TPG Telecom
The Board retains discretion to vary the relative TSR peer group at the end of the performance period to refect
de-listings, mergers and other corporate actions.

The relative TSR component vests in accordance with the following scale:

	The Board retains discretion to vary the relative TSR peer group at the end of the performance period to refect de-listings, mergers and other corporate actions. The relative TSR component vests in accordance with the following scale:
	Hurdle Vesting outcome Below 50th percentile Nil At 50th percentile 50% Between 50th and 82.5th percentile Straight line pro-rata vesting between 50% and 100% At 82.5th percentile or above 100%
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 3 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 fnancial 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 fnancial years and FE is the average of seven data points as at the June and December half year ends for the current fnancial year and following two fnancial years, including the opening balance for the frst 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 inappropriate outcomes are avoided.

The Board retains discretion to vary the relative TSR peer group at the end of the performance period to refect
de-listings, mergers and other corporate actions.
The relative TSR component vests in accordance with the following scale:

Hurdle
Vesting outcome
Below 50th percentile
Nil
At 50th percentile
50%
Between 50th and 82.5th percentile
Straight line pro-rata vesting between 50% and 100%
At 82.5th percentile or above
100%

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 3 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 fnancial 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 fnancial years and FE is the average of seven data points as at the
June and December half year ends for the current fnancial year and following two fnancial years, including the
opening balance for the frst 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 inappropriate
outcomes are avoided.

The ROC component vests in according with the following scale:

Hurdle	Vesting outcome
Less than 11.20%	0%
Equal to 11.20%	33%
Greater than 11.20% up to 11.50%	Straight line pro-rata vesting between 33% and 100%
At or above 11.50%	100%

Re-testing of LTI awards is not permitted.

Retesting

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4.4 Additional provisions

The table below summarises additional provisions as they relate to the remuneration of Executive KMP for FY22.

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 fnancial statements, as per APA’s Executive Clawback and Malus Policy.
Distribution and	Restricted Securities carry the same distribution and	Unvested Performance Rights do not carry distribution
voting rights	voting rights as ordinary securities.	and voting rights.
Cessation of	Subject to Board discretion:	Subject to Board discretion:
employment	– Where the participant is terminated summarily or	– Where the participant is terminated summarily or
	resigns having breached their terms of employment,	resigns having breached their terms of employment,
	they will not be eligible for a STI payment for the relevant fnancial year.	all Rights will automatically lapse. – Where employment ceases for any other reason,
	– Where employment ceases for any other reason,	Unvested Performance Rights will remain on-foot
	a pro-rated STI award may be paid based on the	subject to the original terms of grant and tested
	performance period served.	against performance hurdles in the ordinary course.
Change of control	Subject to Board discretion, if a change of control	The Board has absolute discretion to determine
	occurs, an STI award will be paid out based on the	whether any or all Rights vest. Where the Board does
	proportion of the period that has passed at the time of	not make a determination, all Rights will vest.
	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.

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 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.

All Executive KMP have met the requirement or remain within the five-year timeframe to do so. Details of Executive KMP security holdings may be found in section 8.5.

5. Executive KMP contractual 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.

	Contract type	Notice period	Additional payments on termination
CEO/MD	Permanent	– 9 months’ notice by either APA or CEO/MD.	– 9 months fxed pay (instead of a notice
		– APA may provide payment in lieu of notice.	period or payment in lieu of notice), where
		– No notice is required by APA for termination for cause.	CEO/MD terminates employment due to his redeployment to another role within APA Group or a reduction in his fxed pay.
Other Executive	Permanent	– 6 months’ notice by either APA or the individual. – APA may provide payment in lieu of notice.	– Termination by APA: termination payment of 13 weeks1fxed pay
KMP		– No notice is required by APA for termination for cause.	– Termination by KMP: Nil

Both the payment in lieu and the 13 weeks’ termination payments are calculated using the KMP’s fixed pay. The 13 weeks’ termination payment is inclusive of any statutory redundancy pay.

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6. Non-executive Director (NED) 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 of:

– 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 other Committees.

One-off “per diems” may be paid in exceptional circumstances. No per-diem payments were made in FY22.

6.2 Aggregate NED fee pool

The aggregate NED fee pool as at 30 June 2022 was $2,500,000.

6.3 Director fees

The following table sets out NED fees for FY22 and FY21.

From 1 January 2022, NED fees were increased, informed by benchmarking data and noting that the last increase occurred in 2019. With the exception of the Board chair, all roles were increased by approximately 2.5% and the Chair of the Audit & Risk Management Committee received a larger increase to recognise the significant time commitment and workload of this role.

	FY22 Chair Member $ $	FY21
		Chair Member $ $
Board Audit & Risk Management Committee Health, Safety & Environment Committee People & Remuneration Committee Nomination Committee	513,735 181,979 60,300 24,488 40,883 20,391 40,833 20,391 Nil Nil	511,400 177,600 47,900 23,900 39,900 19,900 39,900 19,900 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 2022, all NEDs met this requirement, with the exception of Rhoda Phillippo who was appointed on 1 June 2020 and remains within the three year timeframe to meet this requirement. Details of NED security holdings may be found in section 8.5.

50 APA GROUP ANNUAL REPORT | 2022

Remuneration Report continued

APA Infrastructure Trust and its Controlled Entities

7. Remuneration governance

The diagram below outlines the remuneration governance framework in place at APA.

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.

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 and frameworks to reflect APA’s core values, 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.

AUDIT & RISK MANAGEMENT COMMITTEE

In considering whether a robust performance assessment process is in place, the People & Remuneration Committee consults with the Audit & Risk Management Committee on whether proposed remuneration outcomes are appropriate in light of relevant risk outcomes and corporate culture.

The members of the Committee, all of whom are independent NEDs, are:

– Peter Wasow (Chair)

– Steve Crane

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 Director.

Management may also be required to communicate with external advisors as required, to ensure the People & Remuneration Committee receives all the relevant factual information.

EXTERNAL ADVISORS

The People & Remuneration Committee seeks external professional advice from time-to-time on matters within its terms of reference.

In FY21, KPMG was 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 made in FY22.

Remuneration Report continued

APA Infrastructure Trust and its Controlled Entities

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

	Short-Term Employment Benefts Other Awarded STI Equity	Post- Employment Superan-	Security-based payments Equity settled Security Legacy Based
	Salary1 Cash STI2 Deferral Awards3 Other	nuation	LTI Plan payments4 Total
R Wheals 2022 2021	1,647,500 664,171 332,086 — 9,910 1,575,000 637,910 318,955 — —	27,500 25,000	229,988 1,077,997 3,989,152 232,375 715,473 3,504,713
A Watson5 2022 2021	898,752 670,422 — — — 499,383 268,052 — 585,288 —	26,667 22,482	— 343,992 1,939,833 — 171,867 1,547,072
R Gersbach 2022 2021	949,856 350,433 — — 231,397 947,306 336,427 — — 969,4316	23,568 21,694	255,706 392,223 2,203,183 260,975 216,656 2,752,489
J Peck7 2022 2021	821,918 361,644 — — — 675,328 329,261 — 547,081 —	82,192 64,156	— 780,082 2,045,836 — 132,711 1,748,537
D Rogers 2022 2021	776,153 272,578 136,289 — 3,676 775,0009 236,614 118,307 — —	27,500 25,000	70,948 347,011 1,634,155 56,485 202,064 1,413,470
Former KMP P Fredricson8 2022 2021	— — — — — 462,500 191,562 — — 270,516	— 12,500	— — — 567,948 531,551 2,036,577
Total Remuneration 2022 5,094,179 2,319,248 468,375 — 244,983 2021 4,934,517 1,999,826 437,262 1,132,369 1,239,947		187,427 170,832	556,642 2,941,305 11,812,159 1,117,783 1,970,322 13,002,858

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.
Awarded STI relates to that element of remuneration which is earned by the Executive KMP in respect of performance during each financial year (or for the relevant period that they were KMP as set out in the Report).
Other Equity Awards relate to once-off buy-out awards provided to Adam Watson and Julian Peck.
For equity settled security-based payments, an expense is recognised equal to the portion of services received based on the fair value of the equity instrument at grant date.
Commenced on 16 November 2020.
This includes the value of benefits relating to Mr. Gersbach's secondment to the USA and includes a one-off project award, relocation allowances and assistance as well as cost of living adjustment. Costs are inclusive of USA tax impacts and are split between ongoing costs of $211,118 (2.2%), a one-off project award of $750,000, as well as foreign exchange rate differences for USD fixed pay and a portion of FY20 STI paid in USD.
Commenced on 20 August 2020.
Ceased employment on 31 December 2020.
Mr Roger's salary was restated for FY21 to reflect that the novated lease is included.

52 APA GROUP ANNUAL REPORT | 2022

Remuneration Report continued

APA Infrastructure Trust and its Controlled Entities

8.2 NED statutory remuneration disclosure

Financial Year	Short-term employment benefts Fees $	Post- employment benefts Superannuation Total $ $
M Fraser FY22	467,032	46,703 513,735
FY21	467,032	44,368 511,400
S Crane FY22 FY21	204,214 202,192	20,421 224,635 19,208 221,400
J Fazzino FY22 FY21	204,214 202,192	20,421 224,635 19,208 221,400
D Goodin FY22 FY21	231,451 224,110	23,145 254,596 21,290 245,400
S In’t Veld FY22 FY21	218,972 216,804	21,897 240,869 20,596 237,400
R Phillippo FY22 FY21	200,525 215,084	20,052 220,577 20,433 235,517
P Wasow FY22 FY21	222,661 220,457	22,266 244,927 20,943 241,400
Total FY22 FY21	1,749,069 1,747,869	174,905 1,923,974 166,047 1,913,916

8.3 Outstanding awards under current LTI plan

The following table sets out the movements in the number of Performance Rights granted to executives, and any amounts vested or forfeited during the financial year.

								Fair	Face
								value of	value of
			Performance					Performance	Performance
		Opening	Rights				Closing	Rights at	Rights at
	Allocation	balance at	granted	Grant	Vested	Forfeited	balance on	grant date1	grant date2
	Date	1 Jul 2021	in FY22	date	in FY22	in FY22	30 Jun 2022	$	$
R Wheals	2022	432,966	270,362	12/11/2021	—	—	703,328	1,439,227	2,512,500
A Watson	2022	106,426	128,367	12/11/2021	—	—	234,793	683,340	1,192,923
R Gersbach	2022	131,108	130,934	12/11/2021	—	—	262,042	697,006	730,069
J Peck	2022	82,179	121,610	12/11/2021	—	—	203,789	647,371	1,130,138
D Rogers	2022	122,762	108,098	12/11/2021	—	—	230,860	575,442	803,653

Calculated based on fair value of the individual vesting conditions being $3.58, $3.40, and $3.23 for the relative TSR and $7.62, $7.24, and $6.87 for the ROC hurdle vesting conditions for each of the vesting dates being August 2024, August 2025 and August 2026 respectively. This also 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 2022 satisfied all vesting conditions.
Based on a VWAP of $11.74. VWAP is calculated for the period of 30 trading days on the Australian Stock Exchange seven working days immediately prior to the Audit and Risk Management Committee meeting.

Remuneration Report continued

APA Infrastructure Trust and its Controlled Entities

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.

Opening Cash settled Closing Allocation balance at Units reference balance at Date Jul 2021 allocated units paid 30 Jun 2022	Reference units allocated that have not yet vested or been paid and the months in which theywill vest
	Aug 2022 Aug 2023
R Wheals 2019 25308 — (12654) 12654	12654 —
, , , 2020 42,507 — (14,169) 28,338	, 14,169 14,169
Total	26,823 14,169
R Gersbach 2019 28,138 — (14,069) 14,069 2020 47,046 — (15,682) 31,364	14,069 — 15,682 15,682
Total	29,751 15,682
D Rogers 2020 24,174 — (8,058) 16,116	8,058 8,058
Total	8,058 8,058
Former KMP P Fredricson 2019 27,572 — (13,786) 13,786 2020 46,125 — (15,375) 30,750	13,786 — 15,375 15,375
Total	29,161 15,375

8.5 Security holdings

8.5 Security holdings
					Meets minimum
Year ended 30 June 2022	Opening Balance	Securities	Securities	Closing Balance	security holding
	at 1 Jul 2021	Acquired	Disposed	at 30 Jun 2022	requirement
NEDS
M Fraser	102,942	—	—	102,942	Yes
S Crane	30,000	—	—	30,000	Yes
J Fazzino	30,751	—	—	30,751	Yes
D Goodin	24,179	—	—	24,179I	Yes
S In’t Veld	25,000	—	—	25,000	Yes
R Phillippo1	5,000	5,000	—	10,000	No
P Wasow	26,000	—	—	26,000	Yes
Executive KMP
R Wheals	74,596	34,125	—	108,721	No
A Watson2	55,556	—	—	55,556	Yes
R Gersbach	44,691	—	—	44,691	Yes
J Peck3	53,428	—	—	53,428	Yes
D Rogers	13,092	12,658	—	25,750	No

Appointed on 1 June 2020.
Commenced on 16 November 2020.
Commenced on 20 August 2020.

During FY22, APA acquired 212,819 securities on market in connection with its General Employee Securities Plan and the deferred component of certain employees’ STI. The weighted average price for those securities was $9.9422 per security.

54 APA GROUP ANNUAL REPORT | 2022

Consolidated Statement of Profit or Loss and Other Comprehensive Income

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

			Restated
		2022	2021
	Note	$000	$000
Revenue		2,705,040	2,575,236
Share of net profts of associates and joint ventures using the equity method		27,338	29,777
	4	2,732,378	2,605,013
Asset operation and management expenses		(227,557)	(214,065)
Depreciation and amortisation expenses	5	(735,178)	(674,370)
Other operating costs – pass-through	5	(495,733)	(460,465)
Finance costs1	5	(484,015)	(655,896)
Employee beneft expense2	5	(323,442)	(290,763)
Other expenses		(24,007)	(15,786)
Fair value (losses)/gains on contract for diference	20	(30,462)	18,018
Reversal of impairment/(impairment of) property, plant and equipment3	2	28,106	(249,322)
Proft before tax		440,090	62,364
Income tax expense2	6	(180,379)	(61,630)
Proft for the year		259,711	734
Other comprehensive income, net of income tax
Items that will not be reclassifed subsequently to proft or loss:
Actuarial gain on defned beneft plan		7,337	23,582
Income tax relating to items that will not be reclassifed subsequently		(2,201)	(7,075)
		5,136	16,507
Items that may be reclassifed subsequently to proft or loss:
Transfer of gain on cash fow hedges to proft or loss		160,485	28,916
(Loss)/gain on cash fow hedges taken to equity		(152,370)	435,895
Gain on associate hedges taken to equity		25,018	12,420
Income tax relating to items that may be reclassifed subsequently		(9,940)	(143,169)
		23,193	334,062
Other comprehensive income for the year (net of tax)		28,329	350,569
Total comprehensive income for the year		288,040	351,303
Proft/(loss) attributable to:
Unitholders of the parent		230,562	(42,167)
Non-controlling interest – APA Investment Trust unitholders		29,149	42,901
APA stapled securityholders		259,711	734
Total comprehensive income attributable to:
Unitholders of the parent		258,891	308,402
Non-controlling interest – APA Investment Trust unitholders		29,149	42,901
APA stapled securityholders		288,040	351,303
			Restated
Earnings per security		2022	2021
Basic (cents per security)2	7	22.1	0.1

In FY21, this includes a once-off interest charge of $148.0 million reflecting swap termination costs, realised net foreign exchange movements and make-whole charges associated with bond note redemptions completed during the year. Refer to note 2 for further details.
Refer to note 2 for details regarding the restatement for payroll review.
The impairment reversal in FY22 and the impairment in FY21 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.

Consolidated Statement of Financial Position

APA Infrastructure Trust and its Controlled Entities As at 30 June 2022

			Restated
		2022	2021
	Note	$000	$000
Current assets
Cash and cash equivalents	19	940,129	652,352
Trade and other receivables	9	308,542	298,574
Other fnancial assets	21	31,573	56,717
Inventories		46,262	41,066
Other		31,335	26,978
Assets classifed as held for sale1	11	294,651	343
Current assets		1,652,492	1,076,030
Non-current assets
Trade and other receivables	9	607,818	10,375
Other fnancial assets	21	362,176	217,684
Investments accounted for using the equity method	24	265,636	240,201
Property, plant and equipment	12	9,420,335	9,500,772
Goodwill	13	1,183,604	1,183,604
Other Intangible assets	13	2,311,628	2,481,336
Other	16	32,598	31,650
Non-current assets		14,183,795	13,666,838
Total assets		15,836,287	14,742,868
Current liabilities
Trade and other payables	10	416,998	314,560
Lease liabilities	18	14,094	13,828
Borrowings	19	2,507	2,721
Other fnancial liabilities	21	205,691	169,031
Provisions2	15	138,232	115,885
Unearned revenue		13,040	10,750
Liabilities directly associated with assets classifed as held for sale1	11	31,156	258
Current liabilities		821,718	627,033
Non-current liabilities
Trade and other payables	10	11,450	13,390
Lease liabilities	18	43,081	49,228
Borrowings	19	10,901,813	9,921,317
Other fnancial liabilities	21	422,134	260,901
Deferred tax liabilities2	6	862,651	753,117
Provisions	15	94,079	102,352
Unearned revenue		50,916	63,336
Non-current liabilities		12,386,124	11,164,857
Total liabilities		13,207,842	11,791,890
Net assets		2,628,445	2,950,978

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. The asset is held for sale as at 30 June 2022. Refer to note 11 for further details.
The APA Group’s 50% ownership in Mid West Pipeline was classified as held for sale as at 30 June 2021. Financial close was reached on 6 May 2022 for consideration of $4.6 million, resulting in a pre-tax profit on sale of $3.6 million.
Refer to note 2 for details regarding the restatement for payroll review.

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

56 APA GROUP ANNUAL REPORT | 2022

Consolidated Statement of Financial Position continued

APA Infrastructure Trust and its Controlled Entities

As at 30 June 2022

			Restated
		2022	2021
	Note	$000	$000
Equity
APA Infrastructure Trust equity:
Issued capital	22	2,225,463	2,571,420
Reserves		(329,374)	(355,540)
Retained earnings/(Accumulated defcit)1		74,437	(49,957)
Equity attributable to unitholders of the parent		1,970,526	2,165,923
Non-controlling interests
APA Investment Trust:
Issued capital		644,417	765,313
Retained earnings		13,502	19,742
Equity attributable to unitholders of APA Investment Trust	23	657,919	785,055
Total equity		2,628,445	2,950,978

Refer to note 2 for details regarding the restatement for payroll review.

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity

APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2022

APA Infrastructure Trust APA Investment Trust (Accumulated Attributable Asset Share-based defcit)/ to owners APA Issued revaluation payments Hedging retained of the Issued Retained Investment capital reserve1 reserve2 reserve3 earnings parent capital earnings Trust Total $000 $000 $000 $000 $000 $000 $000 $000 $000 $000	Balance at 1 July 2020 2,902,123 8,669 652 (700,786) 91,669 2,302,327 887,845 24,686 912,531 3,214,858 Adjustment for payroll review restatement4 — — — — (15,300) (15,300) — — — (15,300)	Restated Balance at 1 July 2020 2,902,123 8,669 652 (700,786) 76,369 2,287,027 887,845 24,686 912,531 3,199,558	(Loss)/Proft for the year — — — — (42,167) (42,167) — 42,901 42,901 734 Other comprehensive income — — — 477,231 23,582 500,813 — — — 500,813 Income tax relating to components of other comprehensive income — — — (143,169) (7,075) (150,244) — — — (150,244)	Total comprehensive income for the year — — — 334,062 (25,660) 308,402 — 42,901 42,901 351,303	Payment of distributions (note 8) (330,703) — — — (100,666) (431,369) (122,532) (47,845) (170,377) (601,746) Equity settled long-term incentives (net of tax) — — 1,863 — — 1,863 — — — 1,863	Balance at 30 June 2021 2,571,420 8,669 2,515 (366,724) (49,957) 2,165,923 765,313 19,742 785,055 2,950,978	2,571,420 8,669 2,515 (366,724) (49,957) 2,165,923 765,313 19,742 785,055 2,950,978	— — — — 230,562 230,562 — 29,149 29,149 259,711 — — — 33,133 7,337 40,470 — — — 40,470 — — — (9,940) (2,201) (12,141) — — — (12,141)	— — — 23,193 235,698 258,891 — 29,149 29,149 288,040	(345,957) — — — (111,304) (457,261) (120,896) (35,389) (156,285) (613,546) — — 2,973 — — 2,973 — — — 2,973	2,225,463 8,669 5,488 (343,531) 74,437 1,970,526 644,417 13,502 657,919 2,628,445	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 efectively 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 Proft 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 efective portion of the cumulative net change in the fair value of cash fow 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 Proft or Loss when the hedged transaction impacts proft or loss, consistent with the applicable accounting policy. 4. Refer to note 2 for details regarding the restatement for payroll review. The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
							Balance at 1 July 2021	Proft for the year Other comprehensive income Income tax relating to components of other comprehensive income	Total comprehensive income for the year	Payment of distributions (note 8) Equity settled long-term incentives (net of any tax)	Balance at 30 June 2022

58 APA GROUP ANNUAL REPORT | 2022

Consolidated Statement of Cash Flows

APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2022

		2022	2021
	Note	$000	$000
Cash fows from operating activities
Receipts from customers		2,963,590	2,868,751
Payments to suppliers and employees		(1,310,887)	(1,272,027)
Dividends received from associates and joint ventures		26,921	28,376
Proceeds from repayments of fnance leases		1,264	1,155
Interest received		3,513	6,629
Interest and other costs of fnance paid		(444,418)	(481,903)
Income taxes paid		(42,715)	(100,023)
Net cash provided by operating activities		1,197,268	1,050,958
Cash fows from investing activities
Payments for property, plant and equipment		(660,765)	(422,170)
Proceeds from sale of property, plant and equipment1		5,780	908
Payments for intangible assets		(28,280)	(10,758)
Payments for debt purchases	9	(587,414)	—
Net cash used in investing activities		(1,270,679)	(432,020)
Cash fows from fnancing activities
Proceeds from borrowings		1,000,000	2,358,421
Repayments of borrowings		(2,721)	(2,866,999)
Repayments of lease liabilities		(15,355)	(16,046)
Transaction costs related to borrowings		(7,572)	(13,798)
(Repayments)/proceeds from early settlement of derivatives		(149)	1,085
Distributions paid to:
– Unitholders of APA Infrastructure Trust		(457,261)	(431,369)
– Unitholders of non-controlling interests – APA Investment Trust		(156,285)	(170,377)
Net cash provided by/(used in) fnancing activities		360,657	(1,139,083)
Net increase/(decrease) in cash and cash equivalents		287,246	(520,145)
Cash and cash equivalents at beginning of fnancial year		652,352	1,172,771
Efect of exchange rate changes on cash and cash equivalents		531	(274)
Cash and cash equivalents at end of fnancial year	19	940,129	652,352

Included in the proceeds from the sale of property, plant and equipment is the proceeds from the sale of Mid West Pipeline on 6 May 2022 for consideration of $4.6 million. The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows continued

APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2022

Reconciliation of profit for the year to the net cash provided by operating activities

			Restated
		2022	2021
	Note	$000	$000
Proft for the year1		259,711	734
(Reversal of impairment)/impairment of property, plant and equipment1	2	(28,106)	249,322
Proft on disposal of property, plant and equipment2		(1,915)	(606)
Share of net profts of joint ventures and associates using the equity method		(27,339)	(29,777)
Dividends/distributions received from equity accounted investments		26,921	28,374
Depreciation and amortisation expenses		735,178	674,370
Finance costs1		64,936	138,023
Efect of exchange rate changes		(866)	14,439
Amortisation of hedging loss		8,995	8,297
Wallumbilla Gas Pipeline hedge accounting discontinuation3		15,156	—
Equity settled long-term incentives		2,973	1,863
Changes in assets and liabilities:
– Trade and other receivables		(42,428)	(13,166)
– Inventories		(6,062)	(6,885)
– Other assets		(8,719)	(4,291)
– Trade and other payables		22,141	6,076
– Provisions1		26,593	9,961
– Other liabilities		11,212	11,847
– Income tax balances1		138,887	(37,623)
Net cash provided by operating activities		1,197,268	1,050,958

Refer to note 2 regarding details for significant items and the restatement for payroll review.
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 $4.6 million, resulting in a pre-tax profit on sale of $3.6 million.
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.

60 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements

APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2022

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~~
	1. About this report	60
	2. General information	61

	~~Financial Performance~~
	3. Segment information	64
	4. Revenue	68
	5. Expenses	70
	6. Income tax	71
	7. Earnings per security	73
	8. Distributions	74

	~~Operating Assets and Liabilities~~
	9. Receivables	76

	10. Payables	77
	11. Assets classifed as held for sale	77
	12. Property, plant and equipment	78
	13. Goodwill and intangibles	80
	14. Impairment of non-fnancial assets	82
	15. Provisions	83
	16. Other non-current assets	83
	17. Employee superannuation plans	84
	18. Leases	85

	~~Capital Management~~
	19. Net debt	88
	20. Financial risk management	89
	21. Other fnancial instruments	101
	22. Issued capital	104

	~~Group Structure~~
	23. Non-controlling interests	104
	24. Joint arrangements and associates	105
	25. Subsidiaries	106

	~~Other~~
	26 Commitments and contingencies	109
	27. Director and Executive Key Management
	Personnel remuneration	109
	28. Remuneration of external auditor	110
	29. Related party transactions	110
	30. Parent entity information	111
	31. Adoption of new and revised Accounting Standards	112
	32. Events occurring after reporting date	112

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2022

Basis of Preparation

2. General information

During the financial year, APA Group announced the following changes to the parent entity name:

– Australian Pipeline Trust (“APT”) has changed its name to APA Infrastructure Trust (“APA Infra”)

Other related entities disclosed in these financial statements:

– APT Investment Trust (“APTIT”) changed its name to APA Investment Trust (“APA Invest”)

– APT Pipelines Limited (“APTPL”) changed its name to APA Infrastructure Limited (“APAIL”)

– Australian Pipeline Limited (“APL”) changed its name to APA Group Limited (“APA”)

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 intragroup transactions and balances have been eliminated on consolidation. Where necessary, adjustments are made to the assets, liabilities, and results of subsidiaries, joint arrangements, associates, and joint ventures 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 Telephone: (02) 9693 0000

The consolidated general purpose financial report for the year ended 30 June 2022 was authorised for issue in accordance with a resolution of the directors on 24 August 2022.

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 comply 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 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.

Certain comparative amounts have been re-presented to conform with the current period’s presentation to better reflect the nature of the financial position and performance of APA Group.

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.

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: – Provision for payroll review (note 2)

Measurement of Basslink loan receivable (note 9)
Property, plant and equipment (note 12)
Impairment of non-financial assets (note 14)
Fair value of financial instruments (note 20(c))
Commitments and contingencies (note 26)

62 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Basis of Preparation

2. General information continued

Critical accounting judgements and key sources of estimation uncertainty continued

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.

COVID-19

As a supplier of an essential service of gas transportation and energy generation, APA Group has the benefit of stable operating cash flows. APA Group has been affected by labour shortages and supply chain impacts during this period, however, there have been no material impacts on APA Group’s ability to safely and reliably operate its assets and deliver services to its customers as a result of the COVID-19 pandemic, global and domestic political issues.

Despite the relative stability of the business, APA Group has continued to ensure it maintains an appropriate level of liquidity in response to the uncertainty created by COVID-19, global and domestic political issues.

Working capital

As at 30 June 2022, APA Group had $2,190.0 million in cash and committed un-drawn bank facilities available (2021: $1,902.4 million) to assist in the ongoing funding of the business. Subsequent to 30 June 2022, APA Group entered into a series of bilateral facilities that provide an additional $900.0 million of undrawn funding capacity and replaces canceled $750.0 million of aging credit lines. APA Group continues to fund its growth with appropriate levels of equity, cash retained in the business, and debt in order to maintain strong Baa2/ BBB 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:

	2022	2021
	$000	$000
Signifcant items impacting proft before tax
– Reversal of impairment/(impairment of) property, plant and equipment1	28,106	(249,322)
– Finance costs associated with bond note redemptions2	—	(147,987)
Total signifcant items impacting proft before tax	28,106	(397,309)
Income tax related to signifcant items above	(8,432)	119,193
Proft from signifcant items after income tax	19,674	(278,116)

In FY21, APA Group impaired the carrying value of the Orbost Gas Processing Plant. The impairment charge reflected the continuation of production levels and expenditure based on the performance of the asset following reconfiguration and resumption of the processing plant, where production was expected to achieve 45 TJ/day, and contracted renewal terms were based on management’s expectations.

In FY22, immediately prior to the reclassification of the plant as held for sale, the recoverable amount was determined and an impairment reversal of $28.1 million before tax was recognised to reflect the consideration estimated to be realised from the sale of the Orbost Gas Processing Plant.

In April 2021, APA Group refinanced all of APA Group’s debt that was due to mature in calendar year 2022 and terminated the associated hedges. The facilities refinanced and their terminated hedged position included:
EUR MTN 700m swapped into A$1,132m at a fixed rate of 4.45%
USPP Notes US$124m swapped into A$154m at a fixed rate of 7.39%
USPP Notes A$81m at a fixed rate of 7.45%
USPP Notes A$62m at a fixed rate of 7.45%

– US 144A Notes US$750m swapped into A$735m at a fixed rate of 6.68%

A once-off interest charge was recognised in the year, reflecting swap termination costs, realised net foreign exchange movements and make-whole charges associated with the bond note redemptions. APA Group discontinued the application of hedge accounting, as the debt no longer existed and the associated hedges were terminated. The interest charge, cumulative gain or loss and deferred costs of hedging were immediately recognised as a finance cost in the statement of profit or loss.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Basis of Preparation

2. General information continued

Restatement for payroll review

The first stage of a historical payroll review has recently been completed and has 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 has identified payment errors to employees subject to these EA’s. The calculations of the employee payment errors involve a substantial volume of data, a high degree of complexity, interpretation, estimation assumptions, will be the subject of review by the Fair Work Ombudsman and are subject to further detailed analysis of an additional six annual periods not covered by the initial twelve month review. Determining the historical employee payment errors requires consideration of numerous clauses of the EA’s and related payroll source documentation, across each year, for every current and former employee who may have been impacted. While the review is in its early stages, an estimate of the employee payment errors has been made for the impacted period of seven years. A provision of $32.4 million has been recorded as at 30 June 2022 for the estimated employee payment errors.

The provision comprises estimated one-off costs as a result of the review, of which $26.4 million relates to employee payment errors and $6.0 million to interest and other related costs. A further $1.5 million in other related costs were incurred for the year ended 30 June 2022, which do not form part of the provision.

As described above, critical accounting estimates and judgements have been made in the calculations 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 process continues.

As a consequence of the employee payment errors, employee benefit expense, provisions, and deferred tax balances were understated in prior periods, and notwithstanding the annual amounts were not material to the performance of the Group in any of the individual periods to which they related, management considered the cumulative understatement to be material. As such, the understatement was corrected by restating each of the affected financial statement line items for prior periods in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors .

After adjusting for the restatement, employee benefit expense has increased by $11.8 million for the year ended 30 June 2022 (30 June 2021: $4.2 million). Of the $11.8 million recorded for the year ended 30 June 2022, $4.3 million (30 June 2021: $4.2 million) has been included in underlying EBITDA of the segment result with interest and other related costs of $7.5 million (30 June 2021: nil) included in reported EBITDA.

As part of this review, the impact on historical short-term incentive (STI) and long-term incentive (LTI) payments resulting from prior period payment shortfalls have been reviewed and there is no material impact on STI and LTI payments in prior periods.

The impact to the Group’s Consolidated Financial Statements in the reporting periods to which they relate, are outlined in the table below.

	Restatement FY21 Opening FY21 Retained Proft for Earnings the period $000 $000	Current Period
		FY22 Proft for the period Total $000 $000
Pre-FY21 employee payment errors FY21 employee payment errors FY22 employee payment errors	(17,912) — — (4,214) — —	— (17,912) — (4,214) (10,262) (10,262)
Employee payment errors provision as at 30 June 2022 Other costs relating to employee payment errors	(17,912) (4,214) — —	(10,262) (32,388) (1,526) (1,526)
Total pre-tax impact of employee payment errors Income tax beneft	(17,912) (4,214) 2,612 1,264	(11,788) (33,914) 3,159 6,577
Total employee payment errors, net of tax	(15,300) (2,950)	(9,087) (27,337)

Consolidated Statement of Profit or Loss (extract)

2021	Impact of restatement
	Previously reported Adjustments Restated $000 $000 $000
Employee benefts expenses	(286,549) (4,214) (290,763)
Proft before tax Income tax expense	66,578 (4,214) 62,364 (62,894) 1,264 (61,630)
Proft/(loss) for the period	3,684 (2,950) 734

64 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Basis of Preparation

2. General information continued

Consolidated Statement of Financial Position (extract)

2. General informationcontinued Consolidated Statement of Financial Position (extract)
2021	Impact of restatement
	Previously reported Adjustments Restated $000 $000 $000
Provisions (current) Net deferred tax liabilities	(93,759) (22,126) (115,885) (756,993) 3,876 (753,117)
Net assets	2,969,228 (18,250) 2,950,978
Retained earnings	(31,707) (18,250) (49,957)
Total equity	2,969,228 (18,250) 2,950,978

Basic and diluted earnings per share for the prior year have also been restated. The amount of the correction for basic and diluted earnings per share was a decrease of $0.2 cents per security for the year ended 30 June 2021.

The results of the review further affected some of the amounts disclosed in note 5 and note 15.

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 – includes all of APA Group’s wholly or majority owned gas pipelines, gas storage assets, gas compression and processing assets and gas-fired and renewable energy power generation assets;

Asset Management – provides commercial, operating services and/or asset maintenance services to its energy investments and third parties for appropriate fees; and

– Energy Investments – includes APA Group’s strategic stakes in a number of investment vehicles that house energy infrastructure

assets, generally characterised by long-term secure cash flows, with low ongoing capital expenditure requirements.

Reportable segments

Reportable segments
	Energy	Asset	Energy
	Infrastructure	Management	Investments	Other	Consolidated
2022	$000	$000	$000	$000	$000
Segment revenue1
Revenue from contracts with customers	2,082,656	114,541	—	—	2,197,197
Equity accounted net profts	—	—	27,338	—	27,338
Pass-through revenue	64,611	431,122	—	—	495,733
Other income2	12,066	181	—	—	12,247
Finance lease and investment interest income	972	—	856	—	1,828
Total segment revenue	2,160,305	545,844	28,194	—	2,734,343
Wallumbilla Gas Pipeline hedge
accounting discontinuation3	(15,156)	—	—	—	(15,156)
Interest income on Basslink debt investment4	—	—	12,198	—	12,198
Other interest income	—	—	—	993	993
Total revenue	2,145,149	545,844	40,392	993	2,732,378

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 $4.6 million, resulting in a pre-tax profit on sale of $3.6 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.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

~~Financial Performance~~
3. Segment informationcontinued
Reportable segmentscontinued
Energy
Asset
Energy
Infrastructure
Management
Investments
Other
Consolidated
2022
$000
$000
$000
$000
$000
Segment result
Segment underlying EBITDA1
1,709,166
73,608
—
—
1,782,774
Share of net profts of joint ventures and
associates using the equity method
—
—
27,338
—
27,338
Finance lease and investment interest income
972
—
856
—
1,828
Corporate costs6
—
—
—
(119,679)
(119,679)
Total underlying EBITDA1
1,710,138
73,608
28,194
(119,679)
1,692,261
Fair value loss on contract for diference2
(30,462)
—
—
—
(30,462)
Technology transformation projects3
—
—
—
(21,192)
(21,192)
Wallumbilla Gas Pipeline hedge
accounting discontinuation4
(15,156)
—
—
—
(15,156)
Interest income on Basslink debt investment5
—
—
12,198
—
12,198
Payroll review6
—
—
—
(7,465)
(7,465)
Total reported EBITDA7
1,664,520
73,608
40,392
(148,336)
1,630,184
Depreciation and amortisation
(718,372)
(16,806)
—
—
(735,178)
Total reported EBIT8
946,148
56,802
40,392
(148,336)
895,006
Net interest cost9
(483,022)
Proft before tax excluding signifcant items
411,984
Income tax expense6
(171,947)
Proft after tax excluding signifcant items
240,037
Signifcant items before tax10
28,106
Reported proft before tax
440,090
Signifcant items after tax
19,674
Reported proft after tax10
259,711

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.
The amount represents a net loss arising from a 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.
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, which were previously capitalised prior to the publication of the iFRIC Agenda decision in April 2021.
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.
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.
Refer to note 2 for details regarding the restatement for payroll review. Estimated payment shortfalls for FY22 of $4.3 million are included within underlying EBITDA. Interest and other related costs are included within reported EBITDA.
Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) excluding significant items.
Earnings before interest and tax (“EBIT”) excluding significant items.
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.

66 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Financial Performance

~~Financial Performance~~
3. Segment informationcontinued
Reportable segmentscontinued
	Energy	Asset	Energy
	Infrastructure	Management	Investments	Other	Consolidated
2022	$000	$000	$000	$000	$000
Segment assets and liabilities
Segment assets	13,452,101	186,069	609,158	—	14,247,328
Carrying value of investments
using the equity method	—	—	265,636	—	265,636
Unallocated assets1				1,323,323	1,323,323
Total assets	13,452,101	186,069	874,794	1,323,323	15,836,287
Segment liabilities	562,238	88,976	—	—	651,214
Unallocated liabilities2, 3				12,556,628	12,556,628
Total liabilities	562,238	88,976	—	12,556,628	13,207,842

Unallocated assets consist of cash and cash equivalents, fair value of cross currency swaps, foreign currency forward exchange contracts and equity forwards.
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.
Refer to note 2 for details regarding the restatement for payroll review.

	Energy	Asset	Energy
	Infrastructure	Management	Investments	Other	Consolidated
2021	$000	$000	$000	$000	$000
Segment revenue1
Revenue from contracts with customers	1,989,304	113,755	—	—	2,103,059
Equity accounted net profts	—	—	29,777	—	29,777
Pass-through revenue	52,982	407,483	—	—	460,465
Other income	3,610	2,750	—	—	6,360
Finance lease and investment interest income	1,078	—	1,144	—	2,222
Total segment revenue	2,046,974	523,988	30,921	—	2,601,883
Other interest income	—	—	—	3,130	3,130
Total revenue	2,046,974	523,988	30,921	3,130	2,605,013

1 The revenue reported above represents revenue generated from external customers. Any intersegment sales were immaterial.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Financial Performance

3. Segment informationcontinued
Reportable segmentscontinued
	Energy	Asset	Energy
	Infrastructure	Management	Investments	Other	Consolidated
2021 (Restated)	$000	$000	$000	$000	$000
Segment result
Segment underlying EBITDA1	1,621,487	80,337	—	—	1,701,824
Share of net profts of joint ventures and
associates using the equity method	—	—	29,777	—	29,777
Finance lease and investment interest income	1,078	—	1,144	—	2,222
Corporate costs2	—	—	—	(105,062)	(105,062)
Total underlying EBITDA1	1,622,565	80,337	30,921	(105,062)	1,628,761
Fair value gains on contract for diference3	18,018	—	—	—	18,018
Technology transformation projects4	—	—	—	(7,957)	(7,957)
Total reported EBITDA5	1,640,583	80,337	30,921	(113,019)	1,638,822
Depreciation and amortisation	(657,781)	(16,589)	—	—	(674,370)
Total reported EBIT6	982,802	63,748	30,921	(113,019)	964,452
Net interest cost7					(504,779)
Proft before tax excluding signifcant items					459,673
Income tax expense					(180,823)
Proft after tax excluding signifcant items					278,850
Signifcant items before tax8					(397,309)
Reported proft before tax					62,364
Signifcant items after tax					(278,116)
Reported proft after tax8					734

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.
Refer to note 2 for details regarding the restatement for payroll review.
The amount represents a net gain arising from a 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.
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, which were previously capitalised prior to the publication of the iFRIC Agenda decision in April 2021.
Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) excluding significant items.
Earnings before interest and tax (“EBIT”) excluding significant items.
Excluding finance lease and investment interest income, any gains or losses on revaluation of derivatives included as part of EBIT for segment reporting purposes, and interest charge on bond note redemption disclosed as a significant item, but including other interest income.
Refer to note 2 significant items section for details.

8. Refer to note 2 signifcant items section for details.
	Energy	Asset	Energy
Infrastructure		Management	Investments	Other	Consolidated
2021 (Restated)	$000	$000	$000	$000	$000
Segment assets and liabilities
Segment assets	13,343,202	210,228	10,685	—	13,564,115
Carrying value of investments using the equity method	—	—	240,201	—	240,201
Unallocated assets1	—	—	—	938,552	938,552
Total assets	13,343,202	210,228	250,886	938,552	14,742,868
Segment liabilities	423,008	90,007	—	—	513,015
Unallocated liabilities2, 3	—	—	—	11,278,875	11,278,875
Total liabilities	423,008	90,007	—	11,278,875	11,791,890

Unallocated assets consist of cash and cash equivalents, fair value of cross currency swaps, foreign currency forward exchange contracts and equity forwards.
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.
Refer to note 2 for details regarding the restatement for payroll review.

68 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Financial Performance

4. Revenue

Disaggregation of revenue

Revenue is disaggregated below by business unit and region.

~~Financial Performance~~ 4. Revenue Disaggregation of revenue Revenue is disaggregated below by business unit and region.
		Restated
	2022	2021
	$000	$000
Energy Infrastructure
– Wallumbilla Gladstone Pipeline1	580,602	552,307
– East Coast	805,958	768,638
– West Coast	341,825	328,795
– Power Generation	354,271	339,564
Energy Infrastructure revenue from contracts with customers	2,082,656	1,989,304
Asset Management revenue from contracts with customers	114,541	113,755
Energy Investments	28,194	30,921
Other non-contract revenue	13,219	7,438
Total segment revenue excluding pass-through	2,238,610	2,141,418
Pass-through revenue	495,733	460,465
Wallumbilla Gas Pipeline hedge accounting discontinuation2	(15,156)	—
Interest income on Basslink debt investment3	12,198	—
Unallocated revenue	993	3,130
Total revenue	2,732,378	2,605,013
Underlying EBITDA4
— Wallumbilla Gladstone Pipeline1	577,869	549,651
— East Coast	648,174	627,468
— West Coast	287,802	270,824
— Power Generation	196,293	174,622
Energy Infrastructure revenue from contracts with customers	1,710,138	1,622,565
Asset Management revenue from contracts with customers	73,608	80,337
Energy Investments	28,194	30,921
Corporate costs4	(119,679)	(105,062)
Total underlying EBITDA5	1,692,261	1,628,761

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 13.
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.
Interest income accrued on the 100% debt interest from Nexus Australia Management Pty Ltd (Basslink) acquired by APA Group.
Refer to note 2 for details regarding the restatement for payroll review.
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 (refer to note 3).

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.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Financial Performance

4. Revenue continued

Disaggregation of revenue continued

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 is 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 $9.4 million (2021: $8.2 million) in revenue from contracts with customers from the unearned revenue balance at 30 June 2021.

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 tend to be incurred whether the contract is obtained or not (e.g. staff salaries, professional fees, etc.).

Future revenues from remaining performance obligations

As at 30 June 2022, future contracted Energy Infrastructure revenues extending through to 2051 are approximately $17.0 billion (2022: $17.6 billion extending through to 2049), of which $1.7 billion is expected to be recognised in 2023. These amounts relate to Energy Infrastructure revenue from contracts, with the bulk of the customers being high credit worthy counterparties.

Future contracted Energy Infrastructure revenues outlined above are in nominal 2022 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 FY23 and beyond.

Information about major customers

Included in revenues from contracts with customers arising from Energy Infrastructure of $2,082.7 million (2021: $1,989.3 million) are revenues of approximately $710.3 million (2021: $720.1 million) which arose from sales to APA Group’s top three customers.

70 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Financial Performance

~~Financial Performance~~
5. Expenses
		Restated
	2022	2021
	$000	$000
Depreciation of non-current assets	537,190	474,978
Amortisation of non-current assets	197,988	199,392
Depreciation and amortisation expense	735,178	674,370
Energy infrastructure costs – pass-through	64,611	52,982
Asset management costs – pass-through	431,122	407,483
Other operating costs – pass-through	495,733	460,465
Interest on bank overdrafts and borrowings1	452,253	500,424
Finance costs associated with bond note redemptions2	—	147,987
Amortisation of deferred borrowing costs	7,718	9,545
Other fnance costs	6,492	7,792
	466,463	665,748
Less: amounts included in the cost of qualifying assets	(11,275)	(16,330)
	455,188	649,418
Loss/(gain) on derivatives3	15,949	(5,389)
Unwinding of discount on non-current liabilities	8,108	6,869
Unwinding of discount on deferred revenue	2,685	2,603
Interest incurred on lease liabilities	2,085	2,395
Finance costs	484,015	655,896
Defned contribution plans	20,979	18,128
Defned beneft plans (note 16)	1,972	3,027
Post-employment benefts	22,951	21,155
Termination benefts	956	1,728
Cash settled long-term incentive payments4	36,423	25,322
Equity settled long-term incentive payments4	(518)	3,802
Other employee benefts2	263,630	238,756
Employee beneft expense5	323,442	290,763

The average interest rate applying to drawn debt is 4.59% p.a. (2021: 5.09% p.a.) excluding finance costs associated with amortisation of borrowing costs, other finance costs with bond note redemption in FY21 only.
Refer to note 2 regarding details for significant items and the restatement for payroll review.
Represents unrealised gains and losses on the mark-to-market valuation of derivatives.
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.
Employee benefit expense of $74.0 million (2021: $69.0 million) is recharged as pass-through revenue and presented as part of other operating costs – pass-through.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Financial Performance

6. Income tax

The major components of tax expense are:

~~Financial Performance~~ 6. Income tax The major components of tax expense are:
		Restated1
	2022	2021
	$000	$000
Income statement
Current tax expense in respect of the current year	(83,103)	(47,211)
Adjustments recognised in the current year in relation to current tax of prior years	117	90
Deferred tax expense relating to the origination and reversal of temporary diferences	(97,393)	(14,509)
Total tax expense	(180,379)	(61,630)
Tax reconciliation
Proft before tax	440,090	62,364
Income tax expense calculated at 30%	(132,027)	(18,709)
Non-assessable trust distribution	8,745	12,870
Non-deductible expenses	(60,790)	(58,447)
Non-assessable income/(loss)	63	(100)
	(184,009)	(64,386)
Franking credits received	1,769	1,043
Previously unbooked losses now recognised	1,026	603
Adjustments recognised in the current year in relation to the current tax of prior years	117	90
R&D tax incentive	718	1,020
	(180,379)	(61,630)

Refer to note 2 for details regarding the restatement for payroll review.

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 $180.4 million (2021: $61.6 million). An income tax payable of $20.2 million (2021: $21.3 million receivable) has been recognised after instalments made during the year and partial utilisation of available transferred tax losses (refer to note 10).

72 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Financial Performance

6. Income tax continued

Deferred tax balances

Deferred tax (liabilities)/assets arise from the following:

6. Income taxcontinued Deferred tax balances Deferred tax (liabilities)/assets arise from the following:
	Opening	Charged to	Charged to	Closing
	balance	income	equity	balance
	$000	$000	$000	$000
2022
Gross deferred tax liabilities
Property, plant and equipment and intangibles	(1,079,855)	(96,052)	—	(1,175,907)
Deferred expenses	(51,033)	(29)	—	(51,062)
Other	—	(931)	—	(931)
	(1,130,888)	(97,012)	—	(1,227,900)
Gross deferred tax assets
Provisions1	73,553	7,572	—	81,125
Cash fow hedges	145,253	13,882	(3,184)	155,951
Security issue costs	528	(516)	—	12
Deferred revenue	12,634	3,902	—	16,536
Investments equity accounted	5,714	167	(6,756)	(875)
Defned beneft obligation	4,442	84	(2,201)	2,325
Tax losses	134,811	(24,636)	—	110,175
Other	836	(836)	—	—
	377,771	(381)	(12,141)	365,249
Net deferred tax liability	(753,117)	(97,393)	(12,141)	(862,651)
2021 (Restated)
Gross deferred tax liabilities
Property, plant and equipment and intangibles	(1,079,875)	20	—	(1,079,855)
Deferred expenses	(53,711)	2,678	—	(51,033)
Other	(131)	131	—	—
	(1,133,717)	2,829	—	(1,130,888)
Gross deferred tax assets
Provisions1	69,120	4,433	—	73,553
Cash fow hedges	292,350	(6,698)	(140,399)	145,253
Security issue costs	1,045	(517)	—	528
Deferred revenue	13,669	(1,035)	—	12,634
Investments equity accounted	8,082	402	(2,770)	5,714
Defned beneft obligation	11,555	(38)	(7,075)	4,442
Tax losses	149,532	(14,721)	—	134,811
Other	—	836	—	836
	545,353	(17,338)	(150,244)	377,771
Net deferred tax liability	(588,364)	(14,509)	(150,244)	(753,117)

Refer to note 2 for details regarding the restatement for payroll review.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Financial Performance

6. Income tax continued

Deferred tax

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 taxconsolidated 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.

group is limited to the amount payable to the head entity under the tax funding arrangement.
7. Earnings per security	2022	Restated 2021
	cents	cents
Earnings per security
Basic and diluted earnings/(loss) per unit attributable to the parent1, 2	19.6	(3.5)
Basic and diluted earnings per unit attributable to the non-controlling interest	2.5	3.6
Basic and diluted earnings per security	22.1	0.1
Earnings per security excluding signifcant items
Basic and diluted earnings excluding signifcant items per unit attributable to the parent	17.9	20.0
Basic and diluted earnings excluding signifcant items per unit attributable to
the non-controlling interest	2.5	3.7
Basic and diluted earnings per security excluding signifcant items	20.4	23.7
Underlying earnings per security3
Underlying basic and diluted earnings per unit attributable to the parent	21.6	19.5
Underlying basic and diluted earnings per unit attributable to the non-controlling interest	2.5	3.6
Underlying basic and diluted earnings per security	24.1	23.1

There is no dilutive effect of the performance rights granted under long-term incentive plan as a result of the loss after tax in FY21.
Refer to Note 2 for details regarding the restatement for payroll review.
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.

74 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Financial Performance

7. Earnings per security continued

The earnings and weighted average number of ordinary securities used in the calculation of basic and diluted earnings per security are as follows:

		Restated
	2022	2021
	$000	$000
Net proft/(loss)
Net proft/(loss) attributable to unitholders of the parent1, 2	230,562	(42,167)
Net proft attributable to unitholders of the non-controlling interest	29,149	42,901
Net proft attributable to stapled securityholders for
calculating basic and diluted earnings per security (note 3)	259,711	734
Underlying net proft
Net proft/(loss) attributable to unitholders of the parent	230,562	(42,167)
Signifcant items, net of tax	(19,674)	278,116
Net proft excluding signifcant items attributable to unitholders of the parent	210,888	235,949
Fair value losses/(gains) on contract for diference, net of tax	21,323	(12,613)
Technology transformation projects, net of tax	14,834	5,570
Wallumbilla Gas Pipeline hedge accounting discontinuation, net of tax	10,609	—
Interest income on Basslink debt investment, net of tax	(8,539)	—
Payroll review2	5,226	—
Underlying net proft attributable to unitholders of the parent	254,341	228,906
Underlying net proft attributable to unitholders of the non-controlling interest	29,149	42,901
Underlying net proft attributable to stapled securityholders
for calculating basic and diluted earnings per security	283,490	271,807

There is no dilutive effect of the performance rights granted under long-term incentive plan as a result of the loss after tax in FY21.
Refer to note 2 for details regarding the restatement for payroll review.

2. Refer to note 2 for details regarding the restatement for payroll review.
	2022	2021
	No. of	No. of
	securities	securities
	000	000
Adjusted weighted average number of ordinary securities used in the calculation of;
Basic earnings per security	1,179,894	1,179,894
Diluted earnings per security1	1,181,517	1,180,723

Includes 2.2 million (2021: 1.3 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.

8. Distributions

	2022	2022	2021	2021
	cents per	Total	cents per	Total
	security	$000	security	$000
Recognised amounts
Final FY21 distribution paid on 15 September 2021
(30 June 2020: FY20 distribution paid on 16 September 2020)
Proft distribution – APA Infrastructure Trust1	—	—	8.53	100,666
Capital distribution – APA Infrastructure Trust	18.63	219,820	11.74	138,528
Proft distribution – APA Investment Trust2	1.67	19,742	2.09	24,686
Capital distribution – APA Investment Trust	6.70	79,010	4.64	54,692
	27.00	318,572	27.00	318,572

30 June 2020: APA Infrastructure Trust profit distributions were fully franked resulting in franking credits of 3.66 cents per security.
APA Investment Trust profit distributions were unfranked.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Financial Performance

~~Financial Performance~~
8. Distributionscontinued
	2022	2022	2021	2021
	cents per	Total	cents per	Total
	security	$000	security	$000
Interim FY22 distribution paid on 17 March 2022
(31 December 2020: FY21 distribution paid on 17 March 2021)
Proft distribution – APA Infrastructure Trust1	9.43	111,304	—	—
Capital distribution – APA Infrastructure Trust	10.69	126,137	16.29	192,175
Proft distribution – APA Investment Trust2	1.33	15,647	1.97	23,159
Capital distribution – APA Investment Trust	3.55	41,886	5.74	67,840
	25.00	294,974	24.00	283,174
Total distributions recognised
Proft distributions	12.43	146,693	24.93	294,192
Capital distributions	39.57	466,853	23.57	278,057
	52.00	613,546	48.50	572,249

31 December 2021: APA Infrastructure Trust profit distributions were fully franked and resulted in franking credits of 4.04 cents per security.
APA Investment Trust profit distributions were unfranked.

2. APA Investment Trust proft distributions were unfranked.
	2022	2022	2021	2021
	cents per	Total	cents per	Total
	security	$000	security	$000
Unrecognised amounts
Final FY22 distribution payable on 14 September 20221
(30 June 2021: Final FY21 distribution paid on 15 September 2021)
Proft distribution – APA Infrastructure Trust2	6.31	74,437	—	—
Capital distribution – APA Infrastructure Trust	15.40	181,750	18.63	219,820
Proft distribution – APA Investment Trust3	1.14	13,502	1.67	19,742
Capital distribution – APA Investment Trust	5.15	60,682	6.70	79,010
	28.00	330,371	27.00	318,572

1. Record date 30 June 2022.

30 June 2022: APA Infrastructure Trust profit distributions were fully franked and resulted in franking credits of 2.70 cents 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.

declared, determined or publicly confrmed prior to the end of the fnancial year.
	2022	2021
	$000	$000
Franking account balance	54,699	58,189
Income tax payable/(receivable)	20,229	(21,271)
Adjusted franking account balance	74,928	36,918

76 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Operating Assets and Liabilities

9. Receivables

~~Operating Assets and Liabilities~~ 9. Receivables
	2022	2021
	$000	$000
Trade receivables	49,931	41,235
Accrued revenue	242,950	223,337
Loss allowance	(1,393)	(500)
Trade receivables	291,488	264,072
Income tax receivable	—	21,271
Receivables from associates and related parties	15,097	11,689
Finance lease receivables (note 18)	1,171	1,275
Interest receivable	508	62
Other debtors	278	205
Current	308,542	298,574
Finance lease receivables (note 18)	9,214	10,375
Loan receivable (note 20)1	598,604	—
Non-current	607,818	10,375

During the financial year, APA Group acquired 100% of the senior secured debt of Nexus Australia Management Pty Ltd (Basslink) at a discount to face value. The face value is $634.9 million including capitalised interest. The loan receivable is classified as a purchased or originated credit impaired (“POCI”) financial asset.

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.

POCI financial assets are initially recognised at fair value plus any directly attributable acquisition costs and as such embeds the expectation of lifetime expected credit losses (“ECL”) and therefore, no loss allowance is recognised. Subsequent to initial recognition, they are measured at amortised cost using the credit-adjusted effective interest method, adjusted for any impairment gains or losses. A credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial recognition. Where the carrying amount exceeds the present value of the estimated future cash flows discounted at the asset’s credit adjusted effective interest rate, an impairment loss is recognised. Favourable changes in lifetime expected credit losses are recognised as an impairment gain. For POCI financial assets, interest income is recognised by applying the credit-adjusted effective interest rate to the amortised cost of the financial asset. The calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently improves so that the financial asset is no longer credit-impaired.

The impact of COVID-19 has been considered in assessing the loss allowance. No material impact has been identified to the date of the issuance of these financial statements.

Critical accounting judgements and key sources of estimation uncertainty – Loan receivable

The key estimates and assumptions used in assessing the carrying value of the loan receivable primarily include credit and market risk. These estimates have been determined with reference to the recoverability of forecast future cash flows, current performance and other external factors such as the status of the ongoing receiver process. As at 30 June 2022, based on information currently available, management has not forecast the receipt of any cash flows within 12 months and as such the loan is classified as non-current in APA’s FY22 financial statements.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Operating Assets and Liabilities

10. Payables

~~Operating Assets and Liabilities~~ 10. Payables
	2022	2021
	$000	$000
Trade payables	85,782	59,296
Income tax payable	20,229	—
Other payables	310,987	255,264
Current	416,998	314,560
Other payables	11,450	13,390
Non-current	11,450	13,390

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.

11. Assets classified as held for sale

11. Assets classifed as held for sale
	2022
	$000
Consolidated Statement of Financial Position
Inventories	866
Property, Plant and Equipment	293,785
Assets classifed as held for sale	294,651
Unearned revenue	24,859
Other payables	6,297
Liabilities associated with assets classifed as held for sale	31,156
Net assets associated with held for sale	263,495

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. The agreement was conditional on completion of a fully underwritten equity capital raising by Cooper Energy Limited, for which the institutional component was completed on 23 June 2022 and the retail component completed on 12 July 2022. 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.

78 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Operating Assets and Liabilities

continued 11. Assets classified as held for sale

Orbost Gas Processing Plant continued

The amounts of the second and third post-completion payments are subject to post-completion plant performance and will be calculated at the point when APA ceases operating the Orbost Gas Processing Plant which will occur when the plant’s Major Hazard Facility Licence is transferred to Cooper Energy. This is expected to take up to 12 months. The financial impact of the sale will be determined over a number of future periods.

In FY21, APA Group impaired the carrying value of the Orbost Gas Processing Plant by $249.3 million, reflecting the continuation of production levels and expenditure based on performance of the asset at the time. In FY22, immediately prior to the reclassification of the plant as held for sale, the recoverable amount was determined and an impairment reversal of $28.1 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 excludes consideration contingent on future plant performance on the basis that the plant is yet to achieve the required levels of performance, being production rates in excess of at least 50 TJ/day, for sustained periods of time.

The impairment reversal and prior year loss have been separately presented in the consolidated statement of profit or loss. The Orbost Gas Processing Plant has been classified as held for sale as at 30 June 2022 and depreciation was ceased on the date it was classified as held for sale. Orbost Gas Processing Plant sits within the Energy Infrastructure Operating Segment.

12. Property, plant and equipment

12. Property, plant and equipment
	Freehold		Leasehold			ROU	ROU
	land and		improve-	Plant and	Work in	land and	plant and
	buildings		ments	equipment	progress	buildings	equipment
	– at cost		– at cost	– at cost	– at cost	– at cost	– at cost	Total
		$000	$000	$000	$000	$000	$000	$000
Gross carrying amount
Balance at 1 July 2020		267,218	10,787	11,653,120	688,094	57,981	10,773	12,687,973
Additions		—	—	34,064	415,932	4,166	5,216	459,378
Disposals		—	—	(2,639)	—	(81)	(1,680)	(4,400)
Reclassifed as held for sale1		—	—	(104)	(229)	—	—	(333)
Transfers		9,184	52	759,322	(768,558)	—	—	—
Balance at 30 June 2021	276,402		10,839	12,443,763	335,239	62,066	14,309	13,142,618
Balance at 1 July 2021	276,402		10,839	12,443,763	335,239	62,066	14,309	13,142,618
Additions		—	—	11,689	704,422	5,897	4,232	726,240
Disposals		—	—	(32,577)	—	(8,790)	(1,957)	(43,324)
Reclassifed as asset held for sale (note 11)		(2,115)	—	(533,203)	(125)	—	—	(535,443)
Transfers		5,464	4,437	378,821	(388,722)	—	—	—
Balance at 30 June 2022		279,751	15,276	12,268,493	650,814	59,173	16,584	13,290,091
Accumulated depreciation and impairment
Balance at 1 July 2020		(61,839)	(5,719)	(2,841,501)	—	(9,057)	(3,446)	(2,921,562)
Disposals		—	—	2,337	—	81	1,605	4,023
Depreciation expense (note 5)		(7,741)	(802)	(451,935)	—	(10,447)	(4,053)	(474,978)
Impairment expense (note 14)		—	—	(249,322)	—	—	—	(249,322)
Reclassifed as held for sale1		—	—	26	—	—	—	26
Amounts included in the cost of other assets		—	—	—	—	—	(33)	(33)
Balance at 30 June 2021		(69,580)	(6,521)	(3,540,395)	—	(19,423)	(5,927)	(3,641,846)
Balance at 1 July 2021		(69,580)	(6,521)	(3,540,395)	—	(19,423)	(5,927)	(3,641,846)
Disposals		—	—	29,634	—	7,985	1,897	39,516
Depreciation expense (note 5)		(7,589)	(1,077)	(514,030)	—	(10,202)	(4,292)	(537,190)
Impairment reversal (note 11)		—	—	28,106	—	—	—	28,106
Reclassifed as asset held for sale (note 11)		2	—	241,656	—	—	—	241,658
Balance at 30 June 2022		(77,167)	(7,598)	(3,755,029)	—	(21,640)	(8,322)	(3,869,756)
Net book value
As at 30 June 2021	206,822		4,318	8,903,368	335,239	42,643	8,382	9,500,772
As at 30 June 2022	202,584		7,678	8,513,464	650,814	37,533	8,262	9,420,335

Relates to APA Group’s 50% ownership in Mid West Pipeline which was disposed of during the current financial year.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Operating Assets and Liabilities

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 Impairment of non-financial assets of the annual report.

Where the ROU is adjusted due to changes in the lease liability, the depreciation for the ROU asset is adjusted on a prospective basis.

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 straightline 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, commercial contract lives and renewals, global and regional gas supply-and-demand, and certain climate-related risks. 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.

The following estimated useful lives 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 – 25 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.

80 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Operating Assets and Liabilities

13. Goodwill and intangibles

~~Operating Assets and Liabilities~~ 13. Goodwill and intangibles
	2022	2021
	$000	$000
Goodwill
Balance at beginning of fnancial year	1,183,604	1,183,604
Balance at end of fnancial year	1,183,604	1,183,604

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.

The carrying amount of goodwill allocated to cash-generating units that are significant individually or in aggregate are as follows:

	2022	2021
	$000	$000
Asset Management business	21,456	21,456
Energy Infrastructure
– East Coast Grid	1,060,681	1,060,681
– Diamantina Power Station	43,104	43,104
– Other energy infrastructure1	58,363	58,363
	1,183,604	1,183,604

Primarily represents goodwill relating to the Pilbara Pipeline System ($32.6 million) and the Goldfields Gas Pipeline ($18.5 million).

Software, licences, contract and other intangibles

			Work in	Contract
	Software	Licences	progress	and other
	– at cost	– at cost	– at cost	– at cost	Total
	$000	$000	$000	$000	$000
Gross carrying amount
Balance at 1 July 2020	74,584	2,151	13,492	3,591,531	3,681,758
Additions	1,122	144	9,101	391	10,758
Transfer	5,510	—	(5,510)	—	—
Balance at 30 June 2021	81,216	2,295	17,083	3,591,922	3,692,516
Balance at 1 July 2021	81,216	2,295	17,083	3,591,922	3,692,516
Additions	—	—	26,284	1,996	28,280
Transfer	25,562	352	(25,914)	—	—
Balance at 30 June 2022	106,778	2,647	17,453	3,593,918	3,720,796

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Operating Assets and Liabilities

13. Goodwill and intangibles continued

Software, licences, contract and other intangibles continued

			Work in	Contract
	Software	Licences	progress	and other
	– at cost	– at cost	– at cost	– at cost	Total
	$000	$000	$000	$000	$000
Accumulated amortisation
Balance at 1 July 2020	(46,871)	(665)	—	(964,252)	(1,011,788)
Amortisation expense (note 5)	(16,359)	(551)	—	(182,482)	(199,392)
Balance at 30 June 2021	(63,230)	(1,216)	—	(1,146,734)	(1,211,180)
Balance at 1 July 2021	(63,230)	(1,216)	—	(1,146,734)	(1,211,180)
Amortisation expense (note 5)	(14,878)	(555)		(182,555)	(197,988)
Balance at 30 June 2022	(78,108)	(1,771)	—	(1,329,289)	(1,409,168)
Net book value
As at 30 June 2021	17,986	1,079	17,083	2,445,188	2,481,336
As at 30 June 2022	28,670	876	17,453	2,264,629	2,311,628

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 not a 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 $3,593.9 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.

82 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2022

Operating Assets and Liabilities

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 nonfinancial 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 (CGU) to which it belongs.

Assets are impaired if their carrying value exceeds their recoverable amount. The recoverable amount of an asset or CGU 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 CGUs for indicators of impairment at the end of the reporting period. No such indicators were identified and no impairment recognised.

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; forecast operating costs and margins; gas field reserve estimates; 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 portfolio. Risks and opportunities associated with climate change 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 impacts 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. During FY22, APA engaged an external consultant to perform scenario analysis to understand the resilience of a selection of APA assets to climate transition (or stranded asset) risk under a series of scenarios. There are inherent limitations with such scenario analysis, however the work performed did not indicate any material stranded asset risk at this time.

Cash flow projections are estimated for a period of up to 20 years, plus a terminal value, recognising the long term nature of the assets. The pre-tax discount rates used are 7.50% p.a. (2021: 7.00% p.a.) for Energy Infrastructure assets and 7.50% p.a. (2021: 7.00% p.a.) for Asset Management.

For fully regulated assets, cash flows have been extrapolated on the basis of existing transportation contracts and government policy settings, and expected contract renewals with a resulting average annual growth rate of -3.0% p.a. (2021: -0.1% p.a.). 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. Asset Management cash flow projections reflect long term agreements with assumptions of renewal on similar terms and conditions based on management’s expectations.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Operating Assets and Liabilities

15. Provisions

		Restated
	2022	2021
	$000	$000
Employee benefts1	134,941	107,280
Other	3,291	8,605
Current	138,232	115,885
Employee benefts	24,429	35,267
Restoration provision	69,650	67,085
Non-current	94,079	102,352
Employee benefts
Incentives	39,677	25,986
Cash settled long-term incentives	6,369	5,447
Leave balances	56,507	53,721
Other employee provisions1	32,388	22,126
Current	134,941	107,280
Cash settled long-term incentives	2,739	4,587
Defned beneft liability (note 17)	12,262	19,686
Leave balances	9,428	10,994
Non-current	24,429	35,267

Refer to note 2 for details regarding the restatement for payroll review.

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.

16. Other non-current assets

16. Other non-current assets
	2022	2021
	$000	$000
Line pack gas	23,133	20,571
Gas held in storage	4,763	6,010
Defned beneft asset (Note 17)	4,510	4,877
Other assets	192	192
	32,598	31,650

84 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Operating Assets and Liabilities

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 2022. 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:

	2022	2021
	$000	$000
Amounts recognised in the statement of proft or loss and other comprehensive income
Current service cost	1,562	2,032
Net interest expense	410	995
Components of defned beneft costs recognised in proft or loss (note 5)	1,972	3,027
Amounts recognised in the statement of fnancial position
Fair value of plan assets	135,003	139,336
Present value of beneft obligation	(142,755)	(154,145)
Defned beneft asset – non-current (note 16)	4,510	4,877
Defned beneft liability – non-current (note 15)	(12,262)	(19,686)
Opening defned beneft obligation	154,145	162,876
Current service cost	1,562	2,032
Interest cost	4,738	4,613
Contributions from plan participants	587	572
Actuarial gain	(6,952)	(4,554)
Benefts paid	(10,925)	(10,748)
Administrative expenses, taxes and premiums paid	(400)	(646)
Closing defned beneft obligation	142,755	154,145
Movements in the present value of the plan assets in the current period were as follows:
	2022	2021
	$000	$000
Opening fair value of plan assets	139,336	124,358
Interest income	4,328	3,618
Actual return on plan assets excluding interest income	384	19,028
Contributions from employer	1,693	3,154
Contributions from plan participants	587	572
Benefts paid	(10,925)	(10,748)
Administrative expenses, taxes and premiums paid	(400)	(646)
Closing fair value of plan assets	135,003	139,336

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Operating Assets and Liabilities

17. Employee superannuation plans continued

Defined contribution plans

Contributions to defined contribution plans are expensed when incurred. The percentage rate for superannuation guarantee contribution by APA Group is 10.5% from 1 July 2022, and eventually to 12% from 1 July 2025.

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 4.4% gross of tax (2021: 3.2%), based on the corporate bond yield curve published by Milliman, an expected salary increase rate of 3.5% (2021: 2.7%), and pension indexation rate of 2.6% (2021: 1.8%). 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 is 50 basis points higher (lower), the defined benefit obligation would decrease by $7,619,000 (increase by $8,457,000).
If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by $1,207,000 (decrease by $1,161,000).
If the expected pension indexation rate increases (decreases) by 0.5%, the defined benefit obligation would increase by $6,858,000 (decrease by $7,033,000).

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 $1.5 million in contributions to the defined benefit plans during the year ending 30 June 2023.

18. Leases

APA Group as a lessee

The APA Group lease obligations are primarily related to commercial office leases and motor vehicles.

	2022	2021
	$000	$000
Lease liabilities
Not longer than 1 year	15,914	16,265
Longer than 1 year but not longer than 5 years	37,853	40,033
Longer than 5 years	11,615	16,827
Minimum future lease payments	65,382	73,125
Less: Future fnance cost	8,207	10,069
Present value of the future lease payments	57,175	63,056
Included in the consolidated statement of fnancial position as part of:
Current lease liabilities	14,094	13,828
Non-current lease liabilities	43,081	49,228
	57,175	63,056

86 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Operating Assets and Liabilities

18. Leases continued

APA Group as a lessee continued

APA Group has no material short-term leases, lease for low-value assets or variable lease payments.

At inception of a contract, APA Group assesses whether a lease has been entered into if:

The contract involves the use of an identified asset – the asset may be explicitly or implicitly specified in the contract. Capacity portions of larger assets would be considered an identified asset if the portion is physically distinct or if the portion represents substantially all of the capacity of the asset. An asset is not considered an identified asset if the supplier has the substantive right to substitute the asset throughout the period of use;
APA Group has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of use; and
APA Group has the right to direct the use of the asset throughout the period of use. APA Group considers itself to have the right to direct the use of the asset only if either:
i) APA Group has the right to direct how and for what purpose the identified asset is used throughout the period of use; or
ii) The relevant decisions about how and for what purposes the asset is used are predetermined and APA Group has the right to operate the asset, or APA Group designed the asset in a way that predetermines how and for what purpose the asset will be used throughout the period of use.

Where APA Group has determined that a lease exists, a right-of-use asset (disclosed in note 12) and a corresponding lease liability is recognised at the commencement date of the lease for all leases other than short-term or low-value asset leases.

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).

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 insubstance 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 $15.4 million, excluding payments for short term leases, low-value asset leases and variable payments leases.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Operating Assets and Liabilities

18. Leases continued

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.

	2022	2021
	$000	$000
Finance lease receivables
Not longer than 1 year	1,883	2,237
Longer than 1 year and not longer than 5 years	8,554	7,016
Longer than 5 years	4,278	7,699
Minimum future lease payments receivable1	14,715	16,952
Less: unearned fnance lease receivables	(4,330)	(5,302)
Present value of lease receivables	10,385	11,650
Included in the consolidated statement of fnancial position as part of:
Current trade and other receivables (note 9)	1,171	1,275
Non-current receivables (note 9)	9,214	10,375
	10,385	11,650

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.

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 Baa2/BBB 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 Australian Pipeline Limited, the Responsible Entity of APA Group, and were adhered to for the entirety of the 2022 and 2021 periods.

APA Group’s capital management strategy has been refreshed during the year, taking into consideration the cost of capital and the state of the capital markets. It remains focused on maintaining Baa2/BBB investment grade credit ratings.

The main aspects are:

Distribution policy balances organic growth capex funding with strong investor returns;
Lower cost of capital and 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 to Net Debt are better than the minimum threshold levels that Moody’s and Standard & Poor’s consider appropriate for APA Group’s Baa2/BBB credit ratings. Funds From Operations to Net Debt is a leverage metric that measures cash flows generated by the business that are available to service debt (note: 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 Funds From Operations to Net Debt increases (and vice versa).

88 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

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.

income over the period of the borrowing using the efective interest method.
	2022	2021
	$000	$000
Cash at bank and on hand	520,083	212,938
Short-term deposits	420,046	439,414
Cash and cash equivalents	940,129	652,352
Other fnancial liabilities	(2,507)	(2,721)
Current borrowings	(2,507)	(2,721)
Guaranteed senior notes1	(9,943,309)	(9,960,728)
Guaranteed bank loans2	(1,000,000)	—
Other fnancial liabilities	(7,959)	(10,467)
Less: unamortised borrowing costs	49,455	49,878
Non-current borrowings	(10,901,813)	(9,921,317)
Total borrowings	(10,904,320)	(9,924,038)
Current lease liabilities	(14,094)	(13,828)
Non-current lease liabilities	(43,081)	(49,228)
Total lease liabilities	(57,175)	(63,056)
Net debt	(10,021,366)	(9,334,742)

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 (2021: 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.
Represents new Syndicated Facility of A$1,000 million executed in June 2022.

Reconciliation of net debt

Reconciliation of net debt
	Cash and	Borrowings	Borrowings
	cash	due within	due after	Lease
	equivalents	1 year	1 year	Liabilities	Net debt
	$000	$000	$000	$000	$000
Net debt as at 1 July 2020	1,172,771	(310,613)	(10,607,382)	(69,877)	(9,815,101)
Cash movements	(520,145)	2,866,999	(2,358,421)	16,046	4,479
Non cash changes — leases	—	—	—	(9,225)	(9,225)
Foreign exchange movements due to fair value changes	(274)	(354,168)	829,520	—	475,078
Transfer from due after 1 year to due within 1 year	—	(2,204,939)	2,204,939	—	—
Movement of deferred borrowing costs	—	—	10,027	—	10,027
Net debt as at 30 June 2021	652,352	(2,721)	(9,921,317)	(63,056)	(9,334,742)
Net debt as at 1 July 2021	652,352	(2,721)	(9,921,317)	(63,056)	(9,334,742)
Cash movements	287,246	2,721	(1,000,000)	15,355	(694,678)
Non cash changes — leases	—	—	—	(9,474)	(9,474)
Foreign exchange movements due to fair value changes	531	—	17,420	—	17,951
Transfer from due after 1 year to due within 1 year	—	(2,507)	2,507	—	—
Movement of deferred borrowing costs	—	—	(423)	—	(423)
Net debt as at 30 June 2022	940,129	(2,507)	(10,901,813)	(57,175)	(10,021,366)

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

19. Net debt continued

19. Net debtcontinued
	2022	2021
	$000	$000
Financing facilities available
Total facilities
Guaranteed senior notes1	9,943,309	9,960,728
Guaranteed bank loans2	1,000,000	—
Bank borrowings	1,250,000	1,250,000
	12,193,309	11,210,728
Facilities used at balance date
Guaranteed senior notes1	9,943,309	9,960,728
Guaranteed bank loans2	1,000,000	—
Bank borrowings	—	—
	10,943,309	9,960,728
Facilities unused at balance date
Guaranteed senior notes1	—	—
Guaranteed bank loans2	—	—
Bank borrowings	1,250,000	1,250,000
	1,250,000	1,250,000

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 (2021: 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.
Represents new Syndicated Facility of A$1,000 million executed in June 2022.

20. Financial risk management

APA Group’s Capital Markets 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 Risk Committee (“ARMC”) and reviewed by the Board.

Based on 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.

==> picture [506 x 172] intentionally omitted <==

----- Start of picture text -----

Risk Sources Risk management framework Financial exposure
Market Commercial transactions in The ARMC approves written Refer to 20 (a) Market risk section.
foreign currency and funding principles for overall risk
activities management, as well as policies
covering specific areas such as
Credit Cash, receivables, interest liquidity risk, funding risk, foreign The carrying amount of financial assets
bearing liabilities and hedging currency risk, interest rate risk and recorded in the financial statements, net
credit risk. APA Group’s ARMC of any collateral held or bank guarantees
ensures there is an appropriate held by the Group, represents APA
Risk Management Policy for the Group’s maximum exposure to credit risk
management of treasury risk and in relation to those assets.
compliance with the policy through
Liquidity Ongoing business operations, A detailed table shows APA Group’s
the review of monthly reporting to
financial market disruptions and remaining contractual maturities for its
the Board from the Capital Markets
new investment opportunities non- derivative financial liabilities at the
department.
end of this section.
----- End of picture text -----

90 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

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 an electricity contract for difference. The table below summarises these risks by nature of exposure and provides information about the risk mitigation strategies being applied:

==> picture [507 x 297] intentionally omitted <==

----- Start of picture text -----

Nature Sources of financial exposure Risk management strategy
Foreign APA Group’s foreign exchange Exchange rate exposures are managed within approved policy parameters
exchange risk arises from future commercial utilising foreign currency forward exchange contracts (FECs), cross currency
transactions (including revenue, swap contracts (CCIRS) and foreign currency denominated borrowings.
interest payments and principal All foreign currency exposure was managed in accordance with the Treasury
debt repayments on long-term Risk Management Policy, including:
borrowings and the purchases – FECs to hedge the exchange rate risk arising from foreign currency cash
of capital equipment and flows, mainly US dollars, derived from revenues, interest payments and
operating cost). capital equipment purchases;
– CCIRS 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 This risk is managed by APA Group by maintaining an appropriate mix
is derived predominately from between fixed and floating rate borrowings, through the use of interest
borrowings subject to floating rate swap contracts. Hedging activities are evaluated regularly to align
interest rates. with interest rate views and defined policy, ensuring appropriate hedging
strategies are applied.
Equity price and APA Group is exposed to price The equity price risk is managed by forward purchase contracts held to
electricity price risk arising from its forward hedge the long term incentive awards rather than for trading purposes.
purchase contracts over listed APA Group does not actively trade these holdings. Electricity price risk is
equities and electricity price managed with electricity sales agreements with creditworthy counterparties.
risk arising from a contract for The key assumptions of the commercial contract for difference are provided
difference in an electricity sales in the fair value of financial instrument section.
agreement with a customer.
----- End of picture text -----

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.

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 cost, 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):

			Cross	Forward	Net foreign
	Cash & cash	Total	currency	exchange	currency
	equivalents	borrowings	swaps	contract	position
2022	$000	$000	$000	$000	$000
US Dollar (USD)1	6,289	(3,262,524)	(1,042,725)	114,229	(4,184,731)
Japanese Yen (JPY)	—	(106,929)	106,929	—	—
Canadian Dollar (CAD)	—	—	—	3,864	3,864
British Pound (GBP)	—	(2,823,925)	2,823,925	—	—
Euro (EUR)	—	(3,569,042)	3,569,042	5,522	5,522
Swedish Krona (SEK)	—	—	—	368	368
	6,289	(9,762,420)	5,457,171	123,983	(4,174,977)

The net foreign currency position (comprising USD denominated borrowings and forward exchange contracts) are used to manage foreign currency risk associated with USD revenue and receivables.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

20. Financial risk management continued

Foreign currency forward exchange contracts continued

			Cross	Forward	Net foreign
	Cash & cash	Total	currency	exchange	currency
	equivalents	borrowings	swaps	contract	position
2021	$000	$000	$000	$000	$000
US Dollar (USD)1	3,139	(3,001,400)	(959,268)	(105,014)	(4,062,543)
Japanese Yen (JPY)	—	(120,079)	120,079	—	—
British Pound (GBP)	—	(2,945,695)	2,945,695	75	75
Euro (EUR)	—	(3,715,047)	3,715,047	4,313	4,313
Swedish Krona (SEK)	—	—	—	1,767	1,767
	3,139	(9,782,221)	5,821,553	(98,859)	(4,056,388)

The net foreign currency position (comprising USD denominated borrowings and forward exchange contracts) are used to manage foreign currency risk associated with USD revenue and receivables.

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.

The following table details the FECs outstanding at reporting date: Cash flow hedges

Cash fow hedges
Average contract 2022 rate $	Contract Value < 1 year 1-2 years 2-5 years Fair value $000 $000 $000 $000
Forecast revenue and associated receivable Sell USD1 0.7181	367,150 431,501 765,901 (74,731)
Forecast capital purchases and operating cost Buy USD1 0.7055 Buy EUR 0.6298 Buy SEK 6.9973 Buy CAD 0.9133	(64,705) (80,351) — 3,408 (5,773) — — (224) (371) — — (3) (3,760) — — 100
Forecast foreign currency borrowings Buy USD1 0.7124	— — (1,544,025) 71,109
	292,541 351,150 (778,124) (341)

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.

92 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

20. Financial risk management continued continued Cash flow hedges

Cash fow hedgescontinued
Average contract 2021 rate $	Contract Value < 1 year 1-2 years 2-5 years Fair value $000 $000 $000 $000
Forecast revenue and associated receivable Sell USD 0.7103	204,710 698 — 10,876
Forecast capital purchases and operating cost Buy USD 0.7646 Buy EUR 0.6197 Buy SEK 5.7152 Buy GBP 0.4054	(87,464) (42) (42) 2,032 (4,402) — — (79) (1,984) — — (216) (74) — — 1
	110,786 656 (42) 12,614

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.

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

Cash fow hedges
		Exchange	Less than			More than
	Foreign	rate	1 year	1-2 years	2-5 years	5 years
2022	currency	$	$000	$000	$000	$000
Pay AUD / receive foreign currency
2012 GBP Medium Term Notes	AUD/GBP	0.6530	—	—	(535,988)	—
2017 US144A	AUD/USD	0.7668	—	—	—	(1,108,503)
2019 GBP Medium Term Notes	AUD/GBP	0.5388	—	—	—	(742,390)
2019 JPY Medium Term Notes	AUD/JPY	75.2220	—	—	—	(132,940)
2020 EUR Medium Term Notes	AUD/EUR	0.5895	—	—	—	(1,017,812)
2021 EUR Medium Term Notes	AUD/EUR	0.6464	—	—	—	(1,701,733)
2021 GBP Medium Term Notes	AUD/GBP	0.5530	—	—	—	(452,080)
Pay USD / receive foreign currency
2015 EUR Medium Term Notes	USD/EUR	0.9514	—	—	(990,669)	—
2015 GBP Medium Term Notes	USD/GBP	0.6773	—	—	—	(1,284,565)
			—	—	(1,526,657)	(6,440,023)

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

~~Capital Management~~
20. Financial risk managementcontinued
Cash fow hedgescontinued
		Exchange	Less than			More than
	Foreign	rate	1 year	1-2 years	2-5 years	5 years
2021	currency	$	$000	$000	$000	$000
Pay AUD / receive foreign currency
2012 GBP Medium Term Notes	AUD/GBP	0.6530	—	—	(535,988)	—
2017 US144A	AUD/USD	0.7668	—	—	—	(1,108,503)
2019 GBP Medium Term Notes	AUD/GBP	0.5388	—	—	—	(742,390)
2019 JPY Medium Term Notes	AUD/JPY	75.2220	—	—	—	(132,940)
2020 EUR Medium Term Notes	AUD/EUR	0.5895	—	—	—	(1,017,812)
2021 EUR Medium Term Notes	AUD/EUR	0.6464	—	—	—	(1,701,733)
2021 GBP Medium Term Notes	AUD/GBP	0.5530	—	—	—	(452,080)
Pay USD / receive foreign currency
2015 EUR Medium Term Notes	USD/EUR	0.9514	—	—	—	(911,379)
2015 GBP Medium Term Notes	USD/GBP	0.6773	—	—	—	(1,181,751)
			—	—	(535,988)	(7,248,588)

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.

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 $1.6 million with a 20 percent depreciation of the A$ or decrease by $1.0 million with a 20 percent increase in A$ (2021: nil); and

– Equity reserves would decrease by $465.4 million with a 20 percent depreciation of the A$ or increase by $311.7 million with a 20 percent increase in A$ (2021: decrease by $1,028.0 million or increase by $685.6 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 $940.1 million as at 30 June 2022 (2021: $652.4 million), and to the loan receivable amounting to $598.6 million as at 30 June 2022 (2021: nil).

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.

94 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

20. Financial risk management continued

Cross currency swap and interest rate swap contracts continued

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 2022 2021 % p.a. % p.a.	Notional principal amount 2022 2021 $000 $000	Fair value 2022 2021 $000 $000
Cash fow hedges – Pay fxed AUD interest – receive foating AUD or fxed foreign currency Less than 1 year 1 year to 2 years 2 years to 5 years1 5 years and more1	— — — — 4.20 4.25 2.84 2.94	— — — — 2,026,657 535,988 6,940,023 7,248,588	— — — — 25,153 69,513 (248,442) (262,750)
		8,966,680 7,784,576	(223,289) (193,237)

1. This amount includes a notional amount of USD 1.6 billion (2021: USD 1.6 billion) which is subject to USD interest rate risk.

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 2022 2021 $000 $000	Fair value of hedge item	Reserve balance
		2022 2021 $000 $000	2022 2021 $000 $000
Foreign exchange risk Hedging foreign currency borrowings (cross currency swap) Hedging revenue and associated receivables (foreign currency borrowings) Hedging revenue and associated receivables (FECs) Hedging foreign currency borrowings (FEC) Hedging capital purchases (FECs) Hedging AUD borrowings (IRS)	(231,643) (193,237) (54,244) (90,663) (74,731) 10,876 71,109 — 3,281 1,738 8,353 —	242,494 204,225 54,244 90,663 74,731 (10,789) (71,109) — (3,281) (1,739) (8,087) —	245,054 398,468 54,244 90,663 73,826 (10,423) (5,681) — (3,281) (1,738) (8,087) —
	(277,875) (271,286)	288,992 282,360	356,076 476,970

	Change in fair values of hedge instruments1 2022 2021 $000 $000	Change in fair values of hedged items1 2022 2021 $000 $000
Hedging foreign currency borrowings (cross currency swap) Hedging revenue and associated receivables (foreign currency borrowings) Hedging revenue and associated receivables (FECs) Hedging foreign currency borrowings (FEC) Hedging capital purchases (FECs) Hedging AUD borrowings (IRS)	(38,406) 114,389 (34,816) 162,624 (74,731) 33,160 71,109 — 3,271 4,830 8,353 —	38,269 (137,314) 34,816 (162,624) 74,731 (33,115) (71,109) — (3,271) (4,831) (8,087) —
	(65,220) 315,003	65,349 (337,884)

This table excludes change in fair values of forecast transactions no longer expected to occur.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

~~Capital Management~~
20. Financial risk managementcontinued	Hedge inefectiveness gain / (loss) 2022 2021 $000 $000	Balance relating to discontinued cash fow hedges
		2022 2021 $000 $000
Foreign exchange risk Hedging foreign currency borrowings (CCIRS) Interest rate risk – Hedging AUD borrowings (IRS) Hedging revenue and associated receivables (FEC) Hedging revenue and associated receivables (foreign currency borrowings)	(8,616) (926) 266 — — 87 — —	— 2,349 — — — — 118,312 —
	(8,350) (839)	118,312 2,349
Interest rate risk Hedging US$ denominated borrowings (interest rate swap)	— —	28,084 33,108
	— —	28,084 33,108

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 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 $69,768,000 with a 100 basis point decrease in interest rates or decrease by $41,240,000 with a 100 basis point increase in interest rates (2021: increase by $46,784,000 or decrease by $4,943,000 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 a contract for difference in an electricity sales agreement with a customer. The contract guarantees the Group a fixed price for electricity offtake. The key assumptions of the contract for difference are provided in the fair value of financial instrument section.

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 ARMC. These limits are regularly reviewed by the Board.

96 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2022

Capital Management

20. Financial risk management continued

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 method1
	A- (Standard & Poor’s)/
Cash and cash equivalents and cash on deposit	A3 (Moody’s) or higher	Performing	12-month ECL
Trade receivables	N/A	—2	Lifetime ECL (simplifed approach)
Finance lease receivables	N/A	—2	Lifetime ECL (simplifed approach)
Contract assets	N/A	—2	Lifetime ECL (simplifed 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

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.
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.
Loan receivable 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 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.

Cross guarantee

In accordance with a deed of cross guarantee, APA Infrastructure Limited, a subsidiary of APA Group, has agreed to provide financial support, when and as required, to all wholly-owned controlled entities 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 2022 has been determined to be immaterial and no liability has been recorded (2021: $nil).

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

20. Financial risk management continued

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 table following are APA Group’s remaining contractual maturities for its non-derivative financial liabilities. The table is presented based on the undiscounted cash flows of financial liabilities taking account of the earliest date on which APA Group can be required to pay. The table includes both interest and principal cash flows.

The table below shows the undiscounted Australian dollar cash flows associated with the AUD and foreign currency denominated notes, cross currency swaps and fixed interest rate swaps in aggregate.

		Average	Less than		More than
		interest rate	1 year	1-5 years	5 years
2022	Maturity	% p.a.	$000	$000	$000
Unsecured fnancial liabilities
Trade and other payables			416,998	—	—
Unsecured bank borrowings1			24,620	(7,827)	(6,766)
Denominated in A$
Other fnancial liabilities			2,842	7,219	1,351
Denominated in US$
Guaranteed Senior Notes2
Denominated in A$
2016 AUD Medium Term Notes	20 Oct 23	3.75	7,500	203,750	—
Denominated in US$
2015 US 144A3	23 Mar 25	4.20	66,991	1,729,179	—
2015 US 144A3	23 Mar 35	5.00	21,750	87,001	609,246
2017 US 144A	15 Jul 27	4.25	58,523	234,508	1,137,587
Denominated in stated foreign currency
2012 GBP Medium Term Notes	26 Nov 24	4.25	39,459	595,445	—
2015 GBP Medium Term Notes3	22 Mar 30	3.50	57,602	230,408	1,457,371
2015 EUR Medium Term Notes3	22 Mar 27	2.00	43,544	1,164,847	—
2019 GBP Medium Term Notes	18 Jul 31	3.13	33,687	134,933	893,843
2019 JPY Medium Term Notes	13 Jun 34	1.03	5,606	22,533	172,292
2020 EUR Medium Term Notes	15 Jul 30	2.00	39,235	157,263	1,155,458
2021 EUR Medium Term Notes	15 Mar 29	0.75	27,388	109,627	983,069
2021 EUR Medium Term Notes	15 Mar 33	1.25	29,249	117,075	949,168
2021 GBP Medium Term Notes	15 Mar 36	2.50	19,184	76,789	625,000
			894,178	4,862,750	7,977,619

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 ($500 million limit). Additionally, undrawn bank facilities are maturing or expiring in FY23 and FY24.
Rates shown are the coupon rate in the currency of issuance.
Facilities are denominated in or fully swapped by way of CCIRS into US$. 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.

98 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

~~Capital Management~~
20. Financial risk managementcontinued
c) Liquidity riskcontinued
Average
Less than
More than
interest rate
1 year
1-5 years
5 years
2021
Maturity
% p.a.
$000
$000
$000
Unsecured fnancial liabilities
Trade and other payables
314,560
—
—
Unsecured bank borrowings1
—
—
—
Denominated in A$
Other fnancial liabilities
3,146
9,349
2,063
Denominated in US$
Guaranteed Senior Notes2
Denominated in A$
2016 AUD Medium Term Notes
20 Oct 23
3.75
7,500
211,250
—
Denominated in US$
2015 US 144A3
23 Mar 25
4.20
61,629
1,652,409
—
2015 US 144A3
23 Mar 35
5.00
20,009
80,037
580,493
2017 US 144A
15 Jul 27
4.25
59,037
234,380
1,196,239
Denominated in stated foreign currency
2012 GBP Medium Term Notes
26 Nov 24
4.25
39,459
634,904
—
2015 GBP Medium Term Notes3
22 Mar 30
3.50
52,992
212,073
1,393,824
2015 EUR Medium Term Notes3
22 Mar 27
2.00
40,059
160,237
951,438
2019 GBP Medium Term Notes
18 Jul 31
3.13
33,595
135,026
927,438
2019 JPY Medium Term Notes
13 Jun 34
1.03
5,606
22,518
177,913
2020 EUR Medium Term Notes
15 Jul 30
2.00
39,666
157,155
1,194,801
2021 EUR Medium Term Notes
15 Mar 29
0.75
27,388
109,702
1,010,382
2021 EUR Medium Term Notes
15 Mar 33
1.25
29,249
117,155
978,336
2021 GBP Medium Term Notes
15 Mar 36
2.50
19,184
76,842
644,132
753,079
3,813,037
9,057,059

Bank facilities mature or expire on 16 May 2022 ($50 million limit), 18 July 2022 ($150 million limit), 30 June 2023 ($500 million limit), 31 December 2023 ($500 million limit) and 19 December 2025 ($50 million limit).
Rates shown are the coupon rate in the currency of issuance.
Facilities are denominated in or fully swapped by way of CCIRS into US$. Cashflows represent the US$ cashflow translated at the USD/AUD spot rate as at 30 June 2021. These amounts are fully hedged by FECs or future US$ revenues.

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.

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 2022 (2021: 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.

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

20. Financial risk management continued

c) Liquidity risk

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.

Contract for difference

The financial statements include a contract 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 which is measured at fair value. The fair value of the contract 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:

Estimated long term forecast electricity pool prices are applied as market prices are not readily observable for the corresponding term;
Forecast electricity volumes are estimated based on an internal forecast output model;
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

Fair value hierarchy
	Level 1	Level 2	Level 3	Total
2022	$000	$000	$000	$000
Financial assets measured at fair value
Equity forwards designated as fair value through proft or loss	—	4,615	—	4,615
Interest rate swaps used for hedging	—	12,392	—	12,392
Cross currency interest rate swap contracts used for hedging	—	235,200	—	235,200
Foreign currency forward exchange contracts used for hedging	—	104,204	—	104,204
Contract for diference	—	—	9,260	9,260
	—	356,411	9,260	365,671
Financial liabilities measured at fair value
Interest rate swaps used for hedging	—	4,039	—	4,039
Cross currency interest rate swap contracts used for hedging	—	466,843	—	466,843
Foreign currency forward exchange contracts used for hedging	—	104,545	—	104,545
Indexed revenue contract	—	11,671	—	11,671
Contract for diference	—	—	11,196	11,196
	—	587,098	11,196	598,294

100 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

~~Capital Management~~
20. Financial risk managementcontinued
Fair value hierarchycontinued
	Level 1	Level 2	Level 3	Total
2021	$000	$000	$000	$000
Financial assets measured at fair value
Cross currency interest rate swap contracts used for hedging	—	193,004	—	193,004
Foreign currency forward exchange contracts used for hedging	—	22,724	—	22,724
Contract for diference	—	—	29,742	29,742
	—	215,728	29,742	245,470
Financial liabilities measured at fair value
Equity forwards designated as fair value through proft or loss	—	2,211	—	2,211
Cross currency interest rate swap contracts used for hedging	—	386,241	—	386,241
Foreign currency forward exchange contracts used for hedging	—	10,110	—	10,110
Indexed revenue contract	—	3,365	—	3,365
Contract for diference	—	—	1,216	1,216
	—	401,927	1,216	403,143
Reconciliation of Level 3 fair value measurements
			2022	2021
			$000	$000
Opening balance			28,526	10,508
Revaluation			(27,160)	13,943
Settlement			(3,302)	4,075
Closing balance			(1,936)	28,526

Fair value measurements of financial instruments measured at amortised cost

For financial assets measured at amortised cost, the measurement is deemed to approximate their fair values (refer note 9). 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 2022 2021 $000 $000	Fair value (Level 2)1
		2022 2021 $000 $000
Financial liabilities Unsecured Australian Dollar Medium Term Notes Unsecured Japanese Yen Medium Term Notes Unsecured US Dollar 144A Medium Term Notes Unsecured British Pound Medium Term Notes Unsecured Euro Medium Term Notes	200,000 200,000 106,929 120,079 3,262,524 3,001,400 2,823,925 2,945,695 3,569,042 3,715,047	197,715 212,150 100,310 123,105 3,212,952 3,405,782 2,492,879 3,173,349 2,874,233 3,790,914
	9,962,420 9,982,221	8,878,089 10,705,300

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.

101

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

21. Other financial instruments

~~Capital Management~~ 21. Other fnancial instruments
	Assets 2022 2021 $000 $000	Liabilities
		2022 2021 $000 $000
Derivatives at fair value: – Contract for diference – Equity forward contracts Derivatives at fair value designated as hedging instruments: – Cross currency interest rate swaps – cash fow hedges – Foreign exchange contracts – cash fow hedges – Interest rate swaps – cash fow hedges Financial items carried at amortised cost: – Redeemable preference shares – Redeemable preference share interest	— 3,885 646 — 17,527 19,463 13,247 22,684 — — — 10,400 153 285	11,196 — — 498 163,304 158,433 26,710 10,100 4,481 — — — — —
Current	31,573 56,717	205,691 169,031
Derivatives at fair value: – Contract for diference – Equity forward contracts – Indexed revenue contracts Derivatives at fair value designated as hedging instruments: – Cross currency interest rate swaps – cash fow hedges – Foreign exchange contracts – cash fow hedges – Interest rate swaps – cash fow hedges Financial items carried at amortised cost: – Redeemable preference shares	9,260 24,641 3,969 — — — 235,200 193,004 90,955 39 12,392 — 10,400 —	— — — 1,713 11,671 3,365 332,629 255,813 77,834 10 — — — —
Non-current	362,176 217,684	422,134 260,901

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.

Fair value measurement

For information about the methods and assumptions used in determining the fair value of financial instruments refer to note 20.

102 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2022

Capital Management

continued
21. Other financial instruments

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

AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform Phase 2 was issued in September 2020 and is effective for APA Group from 1 July 2021. 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 Interest Rate Swaps that are designated in hedging relationships. APA will monitor/assess any potential impact on the valuation of derivative instrument in the future.

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 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.

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 interest rate swaps are deferred in other comprehensive income.

103

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

continued 21. Other financial instruments

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 non-designated component of 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.

hedging relationship.
	2022	2021
	$000	$000
Balance at beginning of fnancial year	(366,724)	(700,786)
Gain/(loss) recognised taken to equity:
Gain/(loss) arising on changes in fair value of hedging instruments	(200,185)	421,547
Changes in fair value of foreign currency basis spread during the year	47,815	(46,941)
Share of hedge reserve of associate	25,018	12,420
Amount reclassifed to P&L for forecast transactions no longer expected to occur	—	61,289
Amount reclassifed to P&L for efective hedges	160,481	28,916
Tax efect	(9,940)	(143,169)
Balance at end of fnancial year	(343,535)	(366,724)

The foreign currency basis spread reserve balance at beginning of financial year is ($70.0 million) and at end of financial year is $12.5 million in 2022 (2021: $58.2 million at beginning of 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 interest rate 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.

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 does not have an 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.

104 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

~~Capital Management~~
22. Issued capital
			2022	2021
			$000	$000
Units
1,179,893,848 securities, fully paid (2021: 1,179,893,848 securities, fully paid)1			2,225,463	2,571,420
1. Fully paid securities carry one vote per security and carry the right to distributions.
	2022		2021
	No. of units	2022	No. of units	2021
	$000	$000	$000	$000
Movements
Balance at beginning of fnancial year	1,179,894	2,571,420	1,179,894	2,902,123
Capital distributions paid (note 8)	—	(345,957)	—	(330,703)
Balance at end of fnancial year	1,179,894	2,225,463	1,179,894	2,571,420

The Trust does not have a limited amount of authorised capital.

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-company eliminations.

	2022	2021
	$000	$000
Financial position
Current assets	936	894
Non-current assets	656,998	784,171
Total assets	657,934	785,065
Current liabilities	15	10
Total liabilities	15	10
Net assets	657,919	785,055
Equity attributable to non-controlling interests	657,919	785,055
Financial performance
Revenue	29,161	42,914
Expenses	(12)	(13)
Proft for the year	29,149	42,901
Total comprehensive income allocated to non-controlling interests for the year	29,149	42,901
Cash fows
Net cash provided by operating activities	30,051	43,741
Net cash provided by investing activities	126,236	126,637
Distributions paid to non-controlling interests	(156,285)	(170,377)
Net cash used in fnancing activities	(156,285)	(170,377)

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.

105

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

~~Group Structure~~
23. Non-controlling interestscontinued
2022
2021
$000
$000
APA Investment Trust
657,919
785,055
657,919
785,055
APA Investment Trust
Issued capital:
Balance at beginning of fnancial year
765,313
887,845
Distribution – capital return (note 8)
(120,896)
(122,532)
644,417
765,313
Retained earnings:
Balance at beginning of fnancial year
19,742
24,686
Net proft attributable to APA Investment Trust unitholders
29,149
42,901
Distributions paid (note 8)
(35,389)
(47,845)
13,502
19,742

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.

Name of entity Principal activity Country of incorporation	Ownership interest %
	2022 2021
Joint ventures: SEA Gas Gas transmission Australia SEA Gas (Mortlake) Gas transmission Australia Energy Infrastructure Investments Energy infrastructure Australia EII 2 Power generation (wind) Australia	50.00 50.00 50.00 50.00 19.90 19.90 20.20 20.20
Associates: GDI (EII) Gas distribution Australia	20.00 20.00
	2022 2021 $000 $000
Investment in joint ventures and associates using the equity method	265,636 240,201
Joint Ventures Aggregate carrying amount of investment APA Group’s aggregated share of: – Proft from continuing operations – Other comprehensive income	237,354 217,702 22,375 25,265 18,383 10,226
Total comprehensive income	40,758 35,491
Associates Aggregate carrying amount of investment APA Group’s aggregated share of: – Proft from continuing operations – Other comprehensive income	28,282 4,963 22,499 4,512 6,635 2,194
Total comprehensive income	11,598 6,706

106 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Group Structure

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 value of the investment in joint arrangement 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.

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 26.

APA Group is a venturer in the following joint operations:

Name of venture Principal activity	Ownership interest %
	2022 2021
Goldfelds Gas Transmission1 Gas pipeline operation – Western Australia Mid West Pipeline2 Gas pipeline operation – Western Australia	88.2 88.2 — 50.0

On 17 August 2004, APA acquired a direct interest in the Goldfields Gas Transmission joint operations as part of the SCP Gas Business acquisition.
APA Group divested it’s 50% ownership in Mid West Pipeline during FY22.

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.

Group Structure

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.

i.e. existing rights that give the current ability to direct the relevant activities of the entities (those that exposure, or rights, to variable returns from its involvement with the entities; and the ability to use its	signifcantly afect the returns); power to afect those returns.
Country of Name of entity registration / incorporation	Ownership interest %
	2022 2021
Parent entity APA Infrastructure Trust1
Subsidiaries Agex Pty. Ltd.2, 3 Australia APA (BWF Holdco) Pty Ltd2, 3 Australia APA (EDWF Holdco) Pty Ltd2, 3 Australia APA (EPX) Pty Limited2, 3 Australia APA (NBH) Pty Limited2, 3 Australia APA (Pilbara Pipeline) Pty Ltd2, 3 Australia APA (SWQP) Pty Limited2, 3 Australia APA (WA) One Pty Limited2, 3 Australia APA AIS 1 Pty Limited2, 3 Australia APA AIS 2 Pty Ltd2, 3 Australia	100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

107

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities For the financial year ended 30 June 2022

	~~G S~~	Ownership interest % 2022 2021 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
	~~roup tructure~~ 25. Subsidiariescontinued Country of Name of entity registration / incorporation
	Subsidiariescontinued APA AIS Pty Limited2, 3 Australia APA AM (Allgas) Pty Limited2, 3 Australia APA BIDCO Pty Limited2, 3 Australia APA Biobond Pty Limited2, 3 Australia APA Country Pipelines Pty Limited2, 3 Australia APA DPS Holdings Pty Limited2, 3 Australia APA DPS2 Pty Limited2, 3 Australia APA East Pipelines Pty Limited2, 3 Australia APA EE Australia Pty Limited2, 3 Australia APA EE Corporate Shared Services Pty Limited2, 3 Australia APA EE Holdings Pty Limited2, 3 Australia APA EE Pty Limited2, 3 Australia APA Electricity T&D Holdings Pty Ltd2, 3 Australia APA Electricity T&D Pty Ltd2, 3 Australia APA Ethane Pty Limited2, 3 Australia APA Facilities Management Pty Limited2, 3 Australia APA Group Limited2, 5 Australia APA Infrastructure Limited2, 3, 5 Australia APA Midstream Holdings Pty Limited2, 3 Australia APA Northern Goldfelds Interconnect Pty Ltd2, 3 Australia APA Operations (EII) Pty Limited2, 3 Australia APA Operations Pty Limited2, 3 Australia APA Orbost Gas Plant Pty Ltd2, 3 Australia APA Pipelines Investments (BWP) Pty Limited2, 3 Australia APA Power Holdings Pty Limited2, 3 Australia APA Power PF Pty Limited2, 3 Australia APA Reedy Creek Wallumbilla Pty Limited2, 3 Australia APA SEA Gas (Mortlake) Holdings Pty Ltd2, 3 Australia APA SEA Gas (Mortlake) Pty Ltd2 Australia APA Services (Int) Inc. United States APA Sub Trust No 12, 4 — APA Sub Trust No 22, 4 — APA Sub Trust No 32, 4 — APA Transmission Pty Limited2, 3 Australia APA US Investments United States APA VTS A Pty Limited2, 3 Australia APA VTS Australia (Holdings) Pty Limited2, 3 Australia APA VTS Australia (NSW) Pty Limited2, 3 Australia APA VTS Australia (Operations) Pty Limited2, 3 Australia APA VTS Australia Pty Limited2, 3 Australia APA VTS B Pty Limited2, 3 Australia APA Western Slopes Pipeline Pty Limited2, 3 Australia APA WGP Pty Ltd2, 3 Australia APT (MIT) Services Pty Limited2, 3 Australia APT AM (Stratus) Pty Limited2, 3 Australia APT AM Employment Pty Limited2, 3 Australia APT AM Holdings Pty Limited2, 3 Australia APT Facility Management Pty Limited2, 3 Australia APT Goldfelds Pty Ltd2, 3 Australia APT Management Services Pty Limited2, 3 Australia APT O&M Holdings Pty Ltd2, 3 Australia APT O&M Services (QLD) Pty Ltd2, 3 Australia APT O&M Services Pty Ltd2, 3 Australia APT Parmelia Holdings Pty Ltd2, 3 Australia APT Parmelia Pty Ltd2, 3 Australia APT Parmelia Trust2, 3 Australia

108 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

	~~G S~~	Ownership interest % 2022 2021 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 96 96 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
	~~roup tructure~~ 25. Subsidiariescontinued Country of Name of entity registration / incorporation
	Subsidiariescontinued APT Petroleum Pipelines Holdings Pty Limited2, 3 Australia APT Petroleum Pipelines Pty Limited2, 3 Australia APT Pipelines (NSW) Pty Limited2, 3 Australia APT Pipelines (NT) Pty Limited2, 3 Australia APT Pipelines (QLD) Pty Limited2, 3 Australia APT Pipelines (SA) Pty Limited2, 3 Australia APT Pipelines (WA) Pty Limited2, 3 Australia APT Pipelines Investments (NSW) Pty Limited2, 3 Australia APT Pipelines Investments (WA) Pty Limited2, 3 Australia APT Sea Gas Holdings Pty Limited2, 3 Australia APT SPV2 Pty Ltd2 Australia APT SPV3 Pty Ltd2 Australia Central Ranges Pipeline Pty Ltd2, 3 Australia Darling Downs Solar Farm Pty Ltd2, 3 Australia Diamantina Holding Company Pty Limited2, 3 Australia Diamantina Power Station Pty Limited2, 3 Australia East Australian Pipeline Pty Limited2, 3 Australia EDWF Holdings 1 Pty Ltd2, 3 Australia EDWF Holdings 2 Pty Ltd2, 3 Australia EDWF Manager Pty Ltd2, 3 Australia Epic Energy East Pipelines Trust2, 4 — EPX Holdco Pty Limited2, 3 Australia EPX Member Pty Limited2, 3 Australia EPX Trust2, 4 — Ethane Pipeline Income Financing Trust2, 4 — Ethane Pipeline Income Trust2, 4 — Gasinvest Australia Pty Ltd2, 3 Australia GasNet A Trust4 — GasNet Australia Investments Trust4 — GasNet Australia Trust2, 4 — Goldfelds Gas Transmission Pty Ltd2 Australia Gorodok Pty. Ltd.2, 3 Australia Grifn Windfarm 2 Pty Ltd4 Australia Moomba to Sydney Ethane Pipeline Trust2, 4 — N.T. Gas Distribution Pty Limited2, 3 Australia N.T. Gas Easements Pty. Limited2, 3 Australia N.T. Gas Pty Limited Australia Roverton Pty. Ltd.2, 3 Australia SCP Investments (No. 1) Pty Limited2, 3 Australia SCP Investments (No. 2) Pty Limited2, 3 Australia SCP Investments (No. 3) Pty Limited2, 3 Australia Sopic Pty. Ltd.2, 3 Australia Southern Cross Pipelines (NPL) Australia Pty Limited2, 3 Australia Southern Cross Pipelines Australia Pty Limited2, 3 Australia Trans Australia Pipeline Pty Ltd2, 3 Australia Votraint No. 1606 Pty Limited2 Australia Votraint No. 1613 Pty Limited2 Australia Western Australian Gas Transmission Company 1 Pty Ltd2, 3 Australia Wind Portfolio Pty Ltd2, 3 Australia

APA Infrastructure Trust is the head entity within the APA tax-consolidated group.
These entities are members of the APA tax-consolidated group.
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.
These trusts are unincorporated and not required to be registered.
The entity’s name was changed during the financial year. Refer to note 2 for further details.

109

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Other

26. Commitments and contingencies

	2022	2021
	$000	$000
Capital expenditure commitments
APA Group – plant and equipment	549,108	231,871
APA Group’s share of jointly controlled operations – plant and equipment	18,734	19,708
	567,842	251,579
Contingent liabilities
Bank guarantees	41,516	46,207

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 2022 and 30 June 2021 APA Group had no material contingent liabilities, other than the bank guarantees disclosed above.

APA Group had nil contingent assets as at 30 June 2022 and 30 June 2021.

27. Director and Executive Key Management Personnel remuneration Remuneration of Directors

The aggregate remuneration of Directors of APA Group is set out below:

27. Director and Executive Key Management Personnel remuneration Remuneration of Directors The aggregate remuneration of Directors of APA Group is set out below:
	2022	2021
	$	$
Short-term employment benefts	1,749,069	1,747,871
Post-employment benefts	174,905	166,046
Total remuneration: Non-Executive Directors	1,923,974	1,913,917
Short-term employment benefts	2,653,667	2,531,865
Post-employment benefts	27,500	25,000
Cash settled security-based payments	229,988	232,375
Equity settled security-based payments	1,077,997	715,473
Total remuneration: Executive Director	3,989,152	3,504,713
Total remuneration: Directors	5,913,126	5,418,630
Remuneration of Executive Key Management Personnel 1
The aggregate remuneration of Executive Key Management Personnel of APA Group is set out below:
Short-term employment benefts	8,126,785	9,769,520
Post-employment benefts	187,427	170,832
Cash settled security-based payments	556,642	1,117,783
Equity settled security-based payments	2,941,305	1,970,322
Total remuneration: Executive Key Management Personnel	11,812,159	13,028,457

In FY21, the remuneration for the former Chief Financial Officer, Peter Fredricson to 31 December 2020, current Chief Financial Officer, Adam Watson from 16 November 2020, and Group Executive Strategy & Commercial, Julian Peck from 20 August 2020, 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 FY22. Since the end of FY22, Julian Peck has resigned and will be exiting the business during FY23.

110 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

~~Other~~
28. Remuneration of external auditor
2022
2021
$
$ Amounts received or due and receivable by Deloitte Touche Tohmatsu for:
Audit or review of the fnancial reports:
Group
804,000
754,900
Subsidiaries
8,500
8,300
Total audit or review of the fnancial reports
812,500
763,200
Audit or review of the regulatory fnancial reporting to the Australian
Energy Regulator and Economic Regulation Authority
Subsidiaries
564,000
911,766
Total audit or review of the fnancial reports
564,000
911,766
Audit or review of the National Greenhouse and Energy Reporting1
Group
78,773
224,258
Subsidiaries
30,000
30,000
Total audit or review of the National Greenhouse and Energy Reporting
108,773
254,258
Statutory assurance services required by legislation to be provided by the auditor
Agreed-upon procedures in relation to ASIC Regulatory Guide 231 requirements2
11,500
11,100
ASIC Compliance plan audit
21,500
21,000
Financial services licence audit
8,500
8,300
Total statutory assurance services required by legislation to be provided by the auditor
41,500
40,400
Other assurance services3
213,285
534,253
Non-audit services4
60,530
—
Total remuneration of external auditor
1,800,588
2,503,877

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.
Service provided includes Agreed-upon procedures in relation to ASIC Regulatory Guide 231 requirements.
Services provided were in accordance with the external auditor independence policy. Other assurance services mainly comprise assurance services in relation to due diligence processes for potential merger and acquisitions.
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 the year ended 30 June 2022; and
The provision of modelling services for a consortium of partners, including APA, for a feasibility study into the development of a hydrogen project.

29. 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.

111

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Other

29. Related party transactions continued

c) Transactions with related parties within APA Group continued

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 $9,947,420 (2021: $8,529,313) 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 27.

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:

	Dividends from	Sales to	Purchases from	Amount owed by	Amount owed to
	related parties	related parties	related parties	related parties	related parties
	$000	$000	$000	$000	$000
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	—
2021
SEA Gas	14,050	2,253	—	28	—
Energy Infrastructure Investments	4,494	31,855	—	5,506	—
EII 2	4,023	1,071	—	351	—
GDI (EII)	5,809	50,522	—	5,804	—
	28,376	85,701	—	11,689	—

30. 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.

those applied in the consolidated fnancial statements.
	2022	2021
	$000	$000
Financial position
Assets
Current assets	1,605,699	1,997,226
Non-current assets	632,664	660,498
Total assets	2,238,363	2,657,724
Liabilities
Current liabilities	5,081	76,809
Total liabilities	5,081	76,809
Net assets	2,233,282	2,580,915
Equity
Issued capital	2,225,463	2,571,420
Retained earnings	7,819	9,495
Total equity	2,233,282	2,580,915
Financial performance
Proft for the year	109,629	101,055
Total comprehensive income	109,629	101,055

112 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Infrastructure Trust and its Controlled Entities

For the financial year ended 30 June 2022

Other

30. Parent entity information continued

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 (2021: $nil).

Contingent liabilities of the parent entity

Refer to note 26 for contingent liabilities. Bank guarantees are issued by the parent entity.

31. Adoption of new and revised Accounting Standards

New and amended Accounting Standards that are effective for the current period

APA Group has adopted all the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for an accounting period that begins on or after 1 July 2021.

AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase 2 Impact of the initial application of Interest Rate Benchmark Reform

In the prior year, APA Group adopted the Phase 1 amendments AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform. These amendments modify specific hedge accounting requirements to allow hedge accounting to continue for affected hedges during the period of uncertainty before the hedged items or hedging instruments are amended as a result of the interest rate benchmark reform.

In the current year, APA Group also adopted the Phase 2 amendments in AASB 2020-8. Adopting these amendments enables the Group to reflect the effects of transitioning from interbank offered rates (IBOR) to alternative benchmark interest rates (also referred to as ‘risk free rates’ or RFRs) without giving rise to accounting impacts that would not provide useful information to users of financial statements. The Group has not restated the prior period.

Both the Phase 1 and Phase 2 amendments are relevant to APA Group because it applies hedge accounting to its interest rate benchmark exposures, and in the current period no modifications in response to the reform are required to be made to APA Group’s derivative and non-derivative financial instruments that mature post 31 December 2021 (the date IBOR was replaced). There is an indirect impact on the valuation on the cross currency interest rate swaps in relation to the benchmark reform. APA Group will continue to monitor the developments and potential impact on the valuation of derivative instruments in the future.

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.

32. Events occurring after reporting date

On 28 July 2022, APA completed the sale of Orbost Gas Processing Plant to Cooper Energy Limited (ASX:COE). APA continues to operate the plant and will do so until the Major Hazard Facility licence is transferred to COE. APA expects to receive cash consideration of between $270.0 million and $330.0 million. The total consideration to be received is subject to post-completion plant performance.

On 24 August 2022, the Directors declared a final distribution of 28.00 cents per security ($330.4 million) for APA Group, an increase of 3.7%, or 1.0 cent per security over the previous corresponding period (2H FY2021: 27.0 cents per security). This is comprised of a distribution of 21.71 cents per security from APA Infrastructure Trust and a distribution of 6.29 cents per security from APA Investment Trust. The APA Infrastructure Trust distribution represents a 6.31 cents per security fully franked profit distribution and a 15.40 cents per security capital distribution. The APA Investment Trust distribution represents a 1.14 cent per security profit distribution and a 5.15 cents per security capital distribution. Franking credits of 2.70 cents per security will be allocated to the APA Infrastructure Trust franked profit distribution. The distribution is expected to be paid on 14 September 2022.

Subsequent to 30 June 2022, APA Group entered into a series of bilateral facilities that provide an additional $900.0 million of undrawn funding capacity and replaces canceled $750.0 million of aging credit lines.

As at the time of reporting, the uncertain situation in respect of COVID-19 pandemic continues to be closely monitored by management and the directors of APA Group. Nothing has come to the attention of APA Group that would require adjustment or additional disclosure in these financial statements as a result of any recent COVID-19, global and domestic political developments.

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.

113

Declaration by the Directors of APA Group Limited

APA Infrastructure Trust and its Controlled Entities

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

==> picture [132 x 59] intentionally omitted <==

Michael Fraser Chairman

==> picture [80 x 41] intentionally omitted <==

Robert Wheals CEO and Managing Director

Sydney, 24 August 2022

114 APA GROUP ANNUAL REPORT | 2022

Auditor’s Independence Declaration

APA Infrastructure Trust and its Controlled Entities

Deloitte Touche Tohmatsu ABN 74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000 Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au

24 August 2022

The Directors APA Group Limited as Responsible entity for APA Infrastructure Trust Level 25, 580 George Street Sydney NSW 2000

Dear Directors

Auditor’s Independence Declaration to APA Group Limited as Responsible Entity for APA Infrastructure Trust

In accordance with section 307C of the Corporations Act 2001 , we are pleased to provide the following declaration of independence to the directors of APA Group Limited (formerly known as Australian Pipeline Limited) as Responsible Entity for APA Infrastructure Trust (formerly known as Australian Pipeline Trust).

As lead audit partners for the audit of the financial statements of APA Infrastructure Trust for the financial year ended 30 June 2022, we declare that to the best of our 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

Taralyn Elliott Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation.

115

Independent Auditor’s Report

APA Infrastructure Trust and its Controlled Entities

Deloitte Touche Tohmatsu ABN 74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000 Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au

Independent Auditor’s Report to the Unitholders of APA Infrastructure Trust

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of APA Infrastructure Trust, formerly known as Australian Pipeline Trust (the “Trust”) and its controlled interests (the “Group”) which comprises the consolidated statement of financial position as at 30 June 2022, 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 2022 and of its financial performance for the year then ended; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Opinion

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 the 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 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 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.

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation.

116 APA GROUP ANNUAL REPORT | 2022

Independent Auditor’s Report continued

APA Infrastructure Trust and its Controlled Entities

Key Audit Matters

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.

Key Audit Matter

Provision arising from payroll review

As disclosed in Notes 2 and 15, the Group identified that certain employees were not paid in full compliance with the Group’s obligations under its enterprise agreements (“EAs”).

As at 30 June 2022, the Group has estimated the provision required to remediate the payment errors as it relates to current and former employees subject to the Group’s EAs for FY22 and prior years, including interest and other associated costs to be $32.4 million before tax.

As required by the Australian Accounting Standards, $22.1 million has been reflected as a prior period error and the Group has restated each of the affected FY21 line items.

We consider the evaluation of the provision to be a Key Audit Matter because:

The estimate is based on a significant volume of historical data from multiple different sources;
Involved a high degree of complexity including the consideration of multiple EAs with differing applicable clauses;
Required the evaluation of interpretations applied and assumptions made;
Extends across multiple periods;
Expected to be subject to regulatory review by the Fair Work Ombudsman; and

How the scope of our audit responded to the Key Audit Matter

Our procedures, performed in conjunction with our regulatory and compliance specialists in the field of pay and industrial relations, included, but were not limited to:

Obtained an understanding of the approach and methodology adopted by the Group to estimate the provision.
Evaluated the competence, capabilities and objectivity of the Group’s external experts used to assist management in the estimation of the provision and the interpretation of the applicable EAs.
Obtained an understanding of the scope and procedures performed by the Group’s external experts and reviewed their reports and legal advice.
Obtained and critically evaluated the data and key assumptions used by management and their external experts in estimating the provision, including the period over which the pay remediation is required.
Tested the valuation and accuracy of the financial model for a sample of EAs, by:
- Sample checking data accuracy to underlying systems; and
- Performing model integrity checks.
Reperformed the remediation estimate and evaluated the results for a sample of employees.
For periods for which detailed calculations have not been performed, assessed the reasonableness of the extrapolation of data and assumptions made.
Assessed the adequacy of the disclosures in Notes 2 and 15 of the financial statements.
Will require further detailed analysis.

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APA Infrastructure Trust and its Controlled Entities

How the scope of our audit responded to the Key Audit Matter Our procedures, performed in conjunction with our treasury specialists, included, but were not limited to:

Key Audit Matter Key Audit Matter Derivative transactions and the application of hedge Our procedures, performed in conjunction with our accounting for the Wallumbilla Gladstone Pipeline (WGP) treasury specialists, included, but were not limited to: As disclosed in Notes 20 and 21, revenue in respect of the • Obtained an understanding of management’s WGP contract is denominated in US dollars and is controls over the recording of derivative contracted to be received until 2035. transactions and the application of hedge accounting.

The Group manages the currency risk on this US dollar revenue by using: • Evaluated the appropriateness of the valuation methodologies applied and tested, on a sample
• US dollar borrowings (as a natural hedge of future US basis, the valuation of the derivative financial
dollar revenue); instruments.
• Cross currency interest rate swaps used to convert • Tested, on a sample basis, the application of
foreign currency denominated borrowings (in British hedge accounting and evaluated whether the
Pounds and Euros) to US dollars; and financial instruments qualified for hedge
• Foreign currency forward contracts to hedge the accounting in accordance with AASB 9 Financial portion of the exchange rate risk not covered by the Instruments . US dollar borrowings and cross currency interest rate • Tested the hedge effectiveness assessment,
swaps. taking into consideration the different cash flow
The hedge relationships for the WGP revenue and profiles of the US Dollar revenue and hedges and borrowings are complex, including discontinuation of a the requirement to apportion the cross-currency portion of the hedge during the year. Further, the interest rate swaps. revenue and the instruments used as hedges have • Tested whether the effective portion of the fair
different cash flow profiles and the cross-currency value movement in the US Dollar borrowings and
interest rate swaps need to be bifurcated into separate derivatives was appropriately deferred in
currency pairs for the application of hedge accounting. reserves.
• Tested the amount deferred in reserves on discontinuation of hedge accounting for the US dollar borrowing and the reserve amortisation to the reporting date; and
• Reviewed the adequacy of the disclosures in Notes 20 and 21 to the financial statements in accordance with Australian Accounting Standards.

Other Information

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 2022 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 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.

118 APA GROUP ANNUAL REPORT | 2022

Independent Auditor’s Report continued APA Infrastructure Trust and its Controlled Entities

Responsibilities of the Directors for the Financial Report

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 assessing 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.

Auditor’s Responsibilities for the Audit of the Financial Report

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 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 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.

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APA Infrastructure Trust and its Controlled Entities

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 therefore 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 report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Remuneration Report

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 38 to 53 of the Directors’ Report for the year ended 30 June 2022.

In our opinion, the Remuneration Report of APA Group Limited for the year ended 30 June 2022 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 Partner Chartered Accountants Sydney, 24 August 2022

Taralyn Elliott Partner Chartered Accountants Sydney, 24 August 2022

120 APA GROUP ANNUAL REPORT | 2022

Directors’ Report

APA Investment Trust and its Controlled Entities

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 2022. This report refers to the consolidated results of APA Invest, one of the 2 stapled entities of APA Group, with the other stapled entity being APA Infrastructure Trust (together APA).

1. Directors

The names of the Directors of the Responsible Entity during the year and since the year end are:

Current Directors First Appointed

Michael Fraser	1 September 2015 / Chairman: 27 October 2017
Robert (Rob) Wheals	Chief Executive Ofcer and Managing Director: 6 July 2019
Steven (Steve) Crane	1 January 2011
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

The Company Secretaries of the Responsible Entity during the year were Nevenka Codevelle (until 22 October 2021) and Amanda Cheney.

2. Principal activities

The Consolidated Entity operates as an investment and financing entity within the APA Group.

3. State of affairs

On 22 October 2021, Hannah McCaughey resigned as Group Executive Transformation and Technology.

On 22 October 2021, Nevenka Codevelle resigned as Group Executive of Governance and External Affairs.

Shirley Chowdhary held the position of Interim Group Executive, Governance and External Affairs from 18 October 2021 to 21 December 2021.

Amanda Cheney was appointed to the new Executive Leadership Team position of Group General Counsel and Company Secretary on 30 May 2022 and continues to hold this role.

– Australian Pipeline Limited changed to APA Group Limited (APA)

– Australian Pipeline Trust changed to APA Infrastructure Trust (APA Infra)

– APT Investment Trust changed to APA Investment Trust (APA Invest)

4. Subsequent events

On 24 August 2022, the Directors declared a final distribution of 28.0 cents per security ($330.4 million) for APA Group, an increase of 3.7%, or 1.0 cent per security over the previous corresponding period (30 June 2021: 27.0 cents). This comprises a distribution of 21.71 cents per security from APA Infrastructure Trust and a distribution of 6.29 cents per security from APA Investment Trust.

The APA distribution represents 6.31 cents per security fully franked profit distribution and 15.40 cents per security capital distribution. The APA Investment Trust distribution represents a 1.14 cent per security unfranked profit distribution and 2.70 cents capital distribution. The distribution is expected to be paid on 14 September 2022.

Other than noted above and as disclosed elsewhere in this report, in the interval between 30 June 2022 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.

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APA Investment Trust and its Controlled Entities

5. Review and results of operations

The Consolidated Entity reported net profit after tax of $29.1 million for the year ended June 30 2022 and total revenue $29.2 million.

6. Distributions

	Final FY21 distribution paid 15 September 2021 Cents Total distribution per security $000	Interim FY22 distribution paid 17 March 2022
		Cents Total distribution per security $000
APA Investment Trust proft distribution	167 19742	133 15647
APA Investment Trust capital distribution	. , 6.70 79,010	. , 3.55 41,886
Total	8.37 98,752	4.88 57,533
		Final FY22 distribution payable 14 September 2022
		Cents per Total distribution security $000
APA Investment Trust proft distribution APA Investment Trust capital distribution		1.14 13,502 5.15 60,682
Total		6.29 74,184

7. Directors

Information on Directors and Company Secretary

See section 3 for information relating to the qualifications and experience of Directors and Company Secretary.

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	Since February 2016 to February 2022
	Orora Limited	Since April 2022
Robert Wheals	—	—
Steven Crane	nib holdings limited	September 2010 to July 2021
	SCA Property Group	Since December 2018
James Fazzino	Tassal Group Limited	Since May 2020, Chair since October 2021
Debra Goodin	Senex Energy Limited	May 2014 to November 2020
	oOh!media Limited	November 2014 to February 2020
	Atlas Arteria Limited	Since September 2017, Chair since November 2020
Shirley In’t Veld	Northern Star Resources Limited	September 2016 to June 2021
	Alumina Limited	Since August 2020
	Develop Global Limited
	(formerly Venturex Resources Limited)	Since July 2021
	Karora Resources Inc	Since December 2021
Rhoda Phillippo	—	—
Peter Wasow	Oz Minerals Limited	Since November 2017

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Directors’ Report continued

APA Investment Trust and its Controlled Entities

Directors	Board A B	People & Remuneration Committee A B	Audit & Risk Management Committee A B	Health Safety Environment & Heritage Committee A B	Nomination Committee
					A B
Michael Fraser	13 13	— —	4 4	— —	3 3
Robert Wheals	13 13	— —	— —	— —	— —
Steven Crane	13 13	4 4	4 4	— —	3 3
James Fazzino	13 13	— —	4 4	4 4	— —
Debra Goodin	13 13	— —	4 4	4 3	3 3
Shirley Int’d Veld	13 13	4 4	— —	4 4	— —
Peter Wasow	13 13	4 4	4 4	— —	— —
Rhoda Phillippo	13 13	4 4	— —	4 4	— —

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 2022 is 357,593 (FY21: 318,468).

Directors’ relevant interests in APA securities

	Fully paid			Fully paid
	securities as at	Securities	Securities	securities as at
Directors	1 July 2021	acquired	disposed	30 June 2022
Michael Fraser	102,942	—	—	102,942
Robert Wheals	74,596	34,125	—	108,721
Steven Crane	30,000	—	—	30,000
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	5,000	5,000	—	10,000
	318,468	39,125	—	357,593

As at 30 June 2022, Robert Wheals held 703,328 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 APA’s Remuneration Report on pages 38 to 53.

8. Options granted

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APA Investment Trust and its Controlled Entities

9. Indemnification of officers

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.

10. Information required for registered schemes

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.

11. 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 138.

12. 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.

13. 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

==> picture [132 x 59] intentionally omitted <==

Michael Fraser Chairman Sydney, 24 August 2022

==> picture [80 x 41] intentionally omitted <==

Robert Wheals CEO and Managing Director

124 APA GROUP ANNUAL REPORT | 2022

Consolidated Statement of Profit or Loss and Other Comprehensive Income

APA Investment Trust and its Controlled Entities

For the financial year ended 30 June 2022

		2022	2021
	Note	$000	$000
Revenue	4	29,161	42,914
Expenses	4	(12)	(13)
Proft before tax		29,149	42,901
Income tax expense	5	—	—
Proft for the year		29,149	42,901
Other comprehensive income
Total comprehensive income for the year		29,149	42,901
Proft attributable to:
Unitholders of the parent		29,149	42,901
		29,149	42,901
Total comprehensive income attributable to:
Unitholders of the parent		29,149	42,901
Earnings per unit		2022	2021
Basic and diluted (cents per unit)	6	2.5	3.6

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

125

Consolidated Statement of Financial Position

APA Investment Trust and its Controlled Entities As at 30 June 2022

		2022	2021
	Note	$000	$000
Current assets
Receivables	8	938	894
Non-current assets
Receivables	8	4,239	5,177
Other fnancial assets	11	652,759	778,994
Non-current assets		656,998	784,171
Total assets		657,936	785,065
Current liabilities
Trade and other payables	9	17	10
Total liabilities		17	10
Net assets		657,919	785,055
Equity
Issued capital	13	644,417	765,313
Retained earnings		13,502	19,742
Total equity		657,919	785,055

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

126 APA GROUP ANNUAL REPORT | 2022

Consolidated Statement of Changes in Equity

APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2022

		Issued	Retained
		capital	earnings	Total
	Note	$000	$000	$000
Balance at 1 July 2020		887,845	24,686	912,531
Proft for the year		—	42,901	42,901
Total comprehensive income for the year		—	42,901	42,901
Distributions to unitholders	7	(122,532)	(47,845)	(170,377)
Balance at 30 June 2021		765,313	19,742	785,055
Balance at 1 July 2021		765,313	19,742	785,055
Proft 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

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

127

Consolidated Statement of Cash Flows

APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2022

	2022	2021
	$000	$000
Cash fows from operating activities
Trust distribution – related party	19,540	22,735
Interest received – related parties	8,938	19,513
Proceeds from fnance leases	1,168	1,167
Receipts from customers	410	350
Payments to suppliers	(6)	(25)
Net cash provided by operating activities	30,050	43,740
Cash fows from investing activities
Receipts from related parties	126,235	126,637
Net cash provided by investing activities	126,235	126,637
Cash fows from fnancing activities
Distributions to unitholders	(156,285)	(170,377)
Net cash used in fnancing activities	(156,285)	(170,377)
Net movement in cash and cash equivalents	—	—
Cash and cash equivalents at beginning of fnancial year	—	—
Cash and cash equivalents at end of fnancial year	—	—

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

128 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements

APA Investment Trust and its Controlled Entities For the financial year ended 30 June 2022

Basis of Preparation

1. About this report

	~~Basis of Preparation~~
	1. About this report	128
	2. General information	129

	~~Financial Performance~~
	3. Segment information	129
	4. Proft from operations	130
	5. Income tax	130
	6. Earnings per unit	130
	7. Distributions	131
	~~Operating Assets and Liabilities~~
	8. Receivables	131
	9. Payables	132
	10. Leases	132

	~~Capital Management~~
	11. Other fnancial assets	132
	12. Financial risk management	134
	13. Issued capital	135

	~~Group Structure~~
	14. Subsidiaries	135

	~~Other~~
	15 Commitments and contingencies	135
	16. Director and Executive
	Key Management Personnel remuneration	135
	17. Remuneration of external auditor	136
	18. Related party transactions	136
	19. Parent entity information	137
	20. Adoption of new and revised Accounting Standards	137
	21. Events occurring after reporting date	137

129

Notes to the consolidated financial statements continued

APA Investment Trust and its Controlled Entities

For the financial year ended 30 June 2022

Basis of Preparation

2. General information

During the financial year, APA Group annouced the following changess to the group entity names:

– APT Investment Trust (“APTIT”) changed its name to APA Investment Trust (“APA Invest”) Other related entities disclosed in these financial statements:

– Australian Pipeline Trust (“APT”) has changed its name to APA Infrastructure Trust (“APA Infra”)

– APT Pipelines Limited (“APTPL”) changed its name to APA Infrastructure Limited (“APAIL”)

– Australian Pipeline Limited (“APL”) changed its name to APA Group Limited (“APA”)

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 Telephone: (02) 9693 0000

APA Investment Trust holds APA Group’s investments.

The financial report for the year ended 30 June 2022 was authorised for issue in accordance with a resolution of the directors on 24 August 2022.

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.

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.

130 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Investment Trust and its Controlled Entities

For the financial year ended 30 June 2022

Financial Performance

4. Profit from operations

Profit before income tax includes the following items of income and expense:

	2022	2021
	$000	$000
Revenue
Distributions
Trust distribution – related party	19,540	22,735
	19,540	22,735
Finance income
Interest – related parties	8,938	19,513
Finance lease income – related party	273	315
	9,211	19,828
Other revenue
Other	410	351
Total revenue	29,161	42,914
Expenses
Audit fees	(12)	(13)
Total expenses	(12)	(13)

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.

6. Earnings per unit

	2022	2021
	cents	cents
Basic and diluted earnings per unit	2.5	3.6
The earnings and weighted average number of units used in the calculation of basic and diluted earnings per unit are as follows:
	2022	2021
	$000	$000
Net proft attributable to unitholders for calculating basic and diluted earnings per unit	29,149	42,901
	2022	2021
	No. of units	No. of units
	000	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 unit1	1,180,907	1,180,723

Includes 2.2 million (2021: 1.3 million) performance rights granted under 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 and board approval. Further information can be found in the most recent annual report. APA has historically instructed Link Market Services to acquire securities on-market to minimise dilution of existing securityholders.

131

Notes to the consolidated financial statements continued

APA Investment Trust and its Controlled Entities

For the financial year ended 30 June 2022

~~Financial Performance~~
7. Distributions
2022
2022
2021
2021
cents per
Total
cents per
Total
unit
$000
unit
$000
Recognised amounts
Final FY21 distribution paid on 15 September 2021
(30 June 2020: Final FY20 distribution paid on 16 September 2020)
Proft distribution1
1.67
19,742
2.09
24,686
Capital distribution
6.70
79,010
4.64
54,692
8.37
98,752
6.73
79,378
Interim distribution paid on 17 March 2022
(31 December 2020: Interim distribution paid on 17 March 2021)
Proft distribution1
1.33
15,647
1.97
23,159
Capital distribution
3.55
41,886
5.74
67,840
4.88
57,533
7.71
90,999
Total distributions recognised
Proft distribution1
3.00
35,389
4.06
47,845
Capital distributions (note 13)
10.25
120,896
10.38
122,532
13.25
156,285
14.44
170,377
Unrecognised amounts
Final FY22 distribution payable on 14 September 20222
(30 June 2021: Final FY21 distribution paid on 15 September 2021)
Proft distribution1
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

Profit distributions unfranked (30 June 2020, 31 December 2020, 30 June 2021 and 31 December 2021: unfranked).
Record date 30 June 2022.

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.

Operating Assets and Liabilities

8. Receivables

~~Operating Assets and Liabilities~~ 8. Receivables
	2022	2021
	$000	$000
Finance lease receivable – related party (note 10)	938	894
Current	938	894
Finance lease receivable – related party (note 10)	4,239	5,177
Non-current	4,239	5,177

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 is past due.

132 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Investment Trust and its Controlled Entities

For the financial year ended 30 June 2022

Operating Assets and Liabilities

9. Payables

~~Operating Assets and Liabilities~~ 9. Payables
	2022	2021
	$000	$000
Other payables	17	10

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.

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.

ownership of the leased asset to the lessee. All other leases are classifed as operating leases. Finance lease receivables relate to the lease of a pipeline lateral. There are no contingent rental payments due.
Finance lease receivables	2022	2021
Not longer than 1 year	1,167	1,167
Longer than 1 year and not longer than 5 years	4,669	5,837
Longer than 5 years	—	—
Minimum future lease payments receivable1	5,836	7,004
Less: Future fnance income	(659)	(933)
Present value of lease receivables	5,177	6,071
Included in the Consolidated Statement of Financial Position as part of:
Current receivables (note 8)	938	894
Non-current receivables (note 8)	4,239	5,177
	5,177	6,071

Minimum future lease payments receivable include 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.

Capital Management

11. Other financial assets

~~Capital Management~~ 11. Other fnancial assets
	2022	2021
	$000	$000
Non-current
Advance to related party	545,380	671,615
Investment in related party	107,379	107,379
	652,759	778,994

133

Notes to the consolidated financial statements continued

APA Investment Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

continued 11. Other financial assets

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).

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.

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. Under the simplified approach, ECL on these financial assets is estimated using a provision matrix. This matrix 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.

134 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Investment Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

12. Financial risk management

The Consolidated Entity’s corporate Treasury department 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.

==> picture [507 x 151] intentionally omitted <==

----- Start of picture text -----

Risk Sources Risk management framework Financial exposure
Market Commercial The Audit and Risk Management Committee Refer to market risk section.
transactions in foreign (“ARMC”) approves written principles for
currency overall risk management, as well as policies
and funding activities covering specific areas such as liquidity risk,
funding risk, foreign currency risk, interest rate
Credit Cash, receivables, risk and credit risk. The Consolidated Entity’s The carrying amount of financial assets
interest bearing ARMC ensures there is an appropriate Risk recorded in the financial statements, net of
liabilities and hedging Management Policy for the management of any collateral held or bank guarantees held
treasury risk and compliance with the policy by the Consolidated Entity, represents the
through the review of monthly reporting to Consolidated Entity’s maximum exposure
the Board from the Treasury department. to credit risk in relation to those assets.
Liquidity Payables Refer to liquidity risk section.
----- End of picture text -----

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 greatest 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 $2,150,000 or decrease by $1,839,000 (2021: increase by $3,656,000 or decrease by $3,618,000 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 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 ARMC. These limits are regularly reviewed by the Board or ARMC.

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 $17,000 (2021: $10,000), all of which are due in less than 1 year (2021: less than 1 year).

135

Notes to the consolidated financial statements continued

APA Investment Trust and its Controlled Entities

For the financial year ended 30 June 2022

Capital Management

13. Issued capital

			2022	2021
			$000	$000
Units
1,179,893,848 units, fully paid (2021: 1,179,893,848 units, fully paid)1			644,417	765,313
1. Fully paid units carry one vote per unit and carry the right to distributions.
	2022		2021
	No. of units	2022	No. of units	2021
	000	$000	000	$000
Movements
Balance at beginning of fnancial year	1,179,894	765,313	1,179,894	887,845
Capital distributions paid (note 7)	—	(120,896)	—	(122,532)
Balance at end of fnancial year	1,179,894	644,417	1,179,894	765,313

The Trust does not have a limited amount of authorised capital.

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.

Name of entity Country of registration	Ownership interest 2022 2021 % %
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 2022 and 30 June 2021.

16. Director and Executive Key Management Personnel remuneration

Remuneration of Directors

The aggregate remuneration of Directors of the Consolidated Entity is set out below:

16. Director and Executive Key Management Personnel remuneration Remuneration of Directors The aggregate remuneration of Directors of the Consolidated Entity is set out below:
	2022	2021
	$	$
Short-term employment benefts	1,749,069	1,747,871
Post-employment benefts	174,905	166,046
Total remuneration: Non-Executive Directors	1,923,974	1,913,917
Short-term employment benefts	2,653,667	2,531,865
Post-employment benefts	27,500	25,000
Cash settled security-based payments	229,988	232,375
Equity settled security-based payments	1,077,997	715,473
Total remuneration: Executive Director	3,989,152	3,504,713
Total Remuneration: Directors	5,913,126	5,418,630

136 APA GROUP ANNUAL REPORT | 2022

Notes to the consolidated financial statements continued

APA Investment Trust and its Controlled Entities

For the financial year ended 30 June 2022

Other

16. Director and Executive Key Management Personnel remuneration continued

Remuneration of Executive Key Management Personnel

The aggregate remuneration of Executive Key Management Personnel of the Consolidated Entity is set out below:

	2022	2021
	$	$
Short-term employment benefts	8,126,785	9,769,520
Post-employment benefts	187,427	170,832
Cash settled security-based payments	556,642	1,117,783
Equity settled security-based payments	2,941,305	1,970,322
Total remuneration: Executive Key Management Personnel	11,812,159	13,028,457

17. Remuneration of external auditor

Amounts received or due and receivable by Deloitte Touche Tohmatsu for:

Audit or review of the financial reports

	2022	2021
	$	$
Group	6,125	6,400
Total audit or review of the fnancial reports	6,125	6,400
Statutory assurance services required by legislation to be provided by the auditor
ASIC Compliance plan audit	6,250	6,100
Total statutory assurance services required by legislation to be provided by the auditor	6,250	6,100
Total remuneration of external auditor	12,375	12,500

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 (2021: 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 $938,000 are owing from a subsidiary of APA Infrastructure Trust for amounts due under a finance lease arrangement (2021: $894,000);
non-current receivables totalling $4,239,000 are owing from a subsidiary of APA Infrastructure Trust for amounts due under a finance lease arrangement (2021: $5,177,000); and
non-current receivables totalling $545,380,000 (2021: $671,615,000) are owing from a subsidiary of APA Infrastructure Trust for amounts due under inter-entity loans.

APA Group Limited

Management fees of $2,559,000 (2021: $2,025,000) 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 $2,559,000 (2021: $2,025,000) were reimbursed by APA Infrastructure Trust.

137

Notes to the consolidated financial statements continued

APA Investment Trust and its Controlled Entities

For the financial year ended 30 June 2022

Other

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.

those applied in the consolidated fnancial statements.
	2022	2021
	$000	$000
Financial position
Assets
Current assets	938	894
Non-current assets	656,998	784,171
Total assets	657,936	785,065
Liabilities
Current liabilities	17	10
Total liabilities	17	10
Net assets	657,919	785,055
Equity
Issued capital	644,417	765,313
Retained earnings	13,502	19,742
Reserves	—	—
Total equity	657,919	785,055
Financial performance
Proft for the year	29,149	42,901
Other comprehensive income	—	—
Total comprehensive income	29,149	42,901

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.

21. Events occurring after reporting date

On 24 August 2022, the Directors declared a final distribution for the 2022 financial year of 6.29 cents per unit ($74.2 million). The distribution represents a 1.14 cents per security unfranked profit distribution and a 5.15 cents per security capital distribution. The distribution is expected to be paid on 14 September 2022.

138 APA GROUP ANNUAL REPORT | 2022

Declaration by the Directors of APA Group Limited

APA Investment Trust and its Controlled Entities

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

==> picture [132 x 60] intentionally omitted <==

Michael Fraser Chairman

==> picture [81 x 41] intentionally omitted <==

Robert Wheals CEO and Managing Director

Sydney, 24 August 2022

139

Auditor’s Independence Declaration

APA Investment Trust and its Controlled Entities

Deloitte Touche Tohmatsu ABN 74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000 Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au

24 August 2022

The Directors APA Group Limited as Responsible Entity for APA Investment Trust Level 25, 580 George Street Sydney NSW 2000

Dear Directors

Auditor’s Independence Declaration to APA Group Limited as Responsible Entity for APA Investment Trust

In accordance with section 307C of the Corporations Act 2001 , we are pleased to provide the following declaration of independence to the directors of APA Group Limited (formerly known as Australian Pipeline Limited) as Responsible Entity for APA Investment Trust (formerly known as APT Investment Trust).

As lead audit partners for the audit of the financial statements of APA Investment Trust for the financial year ended 30 June 2022, we declare that to the best of our 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 Taralyn Elliott Partner Partner Chartered Accountants Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation.

140 APA GROUP ANNUAL REPORT | 2022

Independent Auditor’s Report

APA Investment Trust and its Controlled Entities

Deloitte Touche Tohmatsu ABN 74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000

Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au

Independent Auditor’s Report to the Unitholders of APA Investment Trust

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of APA Investment Trust (formerly known as APT Investment Trust) (the “Trust”) and its controlled interests (the “Consolidated Entity”) which comprises the consolidated statement of financial position as at 30 June 2022, 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 2022 and of its financial performance for the year then ended; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Opinion

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 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.

Other Information

Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Asia Pacific Limited and the Deloitte organisation.

141

Independent Auditor’s Report continued

APA Investment Trust and its Controlled Entities

==> picture [400 x 183] intentionally omitted <==

----- Start of picture text -----

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.
Responsibilities of the Directors for the Financial Report
The directors of the Consolidated 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 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 intend to liquidate the Consolidated Entity or to cease operations, or
has no realistic alternative but to do so.
----- End of picture text -----

Auditor’s Responsibilities for the Audit of the Financial Report 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 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 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 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.

142 APA GROUP ANNUAL REPORT | 2022

Independent Auditor’s Report continued

APA Investment Trust and its Controlled Entities

DELOITTE TOUCHE TOHMATSU

Jamie Gatt Partner Chartered Accountants Sydney, 24 August 2022

Taralyn Elliott Partner Chartered Accountants Sydney, 24 August 2022

143

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 19 August 2022).

Twenty largest shareholders

			No. of securities	%
HSBC Custody Nominees (Australia) Limited			322,341,803	27.32
BNP Paribas Nominees Pty Ltd			148,517,119	12.59
J P Morgan Nominees Australia Pty Limited			143,650,252	12.17
Citicorp Nominees Pty Limited			89,805,509	7.61
Custodial Services Limited			28,002,154	2.37
BNP Paribas Noms Pty Ltd			27,375,809	2.32
National Nominees Limited			17,011,837	1.44
Argo Investments Limited			11,882,525	1.01
BKI Investment Company Limited			8,775,389	0.74
HSBC Custody Nominees (Australia) Limited			6,477,728	0.55
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd			4,015,529	0.34
Netwealth Investments Limited			3,323,547	0.28
Citicorp Nominees Pty Limited			2,845,894	0.24
BNP Paribas Nominees Pty Ltd Acf Clearstream			1,649,613	0.14
Pacifc Custodians Pty Limited			1,468,439	0.12
Navigator Australia Ltd			1,021,132	0.09
Australian Executor Trustees Limited			953,793	0.08
Nulis Nominees (Australia) Limited			929,909	0.08
BNP Paribas Nominees Pty Ltd			856,994	0.07
Netwealth Investments Limited			838,674	0.07
Total			821,743,649	69.65
Distribution of holders
Ranges	No. of holders	%	No. of Securities	%
100,001 and Over	116	0.13	843,648,731	71.50
10,001 to 100,000	7,679	8.78	154,259,149	13.07
5,001 to 10,000	10,790	12.33	77,324,649	6.55
1,001 to 5,000	35,387	40.44	91,057,231	7.72
1 to 1,000	33,537	38.32	13,604,088	1.15
Total	87,509	100.00	1,179,893,848	100.00

Substantial holders

By notice dated 30 May 2022 UniSuper Limited advised that it had an interest in 147,724,630 stapled securities, as at 26 May 2022.

By notice dated 20 January 2022 State Street Corporation advised that it had an interest in 85,157,130 stapled securities, as at 18 January 2022.

By notice dated 10 November 2021 Vanguard Group advised that it had an interest in 59,430,048 stapled securities, as at 5 November 2021.

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.

144 APA GROUP ANNUAL REPORT | 2022

Five Year Summary

Financial Performance (Statutory)		2022	20211	20201	20191	20181
Revenue	$m	2,732.4	2,605.3	2,590.6	2,452.2	2,386.7
Revenue excluding pass-through2	$m	2,236.6	2,144.5	2,129.5	2,031.0	1,941.4
Underlying EBITDA3	$m	1,692.3	1,628.8	1,649.9	1,570.0	1,514.8
Total Report EBITDA3	$m	1,630.2	1,638.8	1,652.0	1,565.2	1,514.3
Depreciation and amortisation expense	$m	(735.2)	(674.4)	(650.8)	(611.3)	(578.9)
Reported EBIT3	$m	895.0	964.5	1,001.2	953.9	935.4
Net Interest expense3	$m	(483.0)	(504.8)	(507.8)	(497.4)	(509.7)
Tax (expense) / beneft	$m	(180.4)	(61.6)	(184.4)	(174.5)	(164.8)
Proft after tax including signifcant items	$m	259.7	0.7	309.0	282.1	260.9
Signifcant items – after income tax	$m	19.7	(278.1)	—	—	—
Proft after tax excluding signifcant items	$m	240.0	278.9	309.0	282.1	260.9
Financial Position
Total assets	$m	15,836.3	14,742.9	15,994.3	15,429.2	15,226.7
Total drawn debt4	$m	10,668.1	9,665.7	9,983.6	9,352.1	8,810.4
Total equity	$m	2,628.4	2,951.0	3,199.6	3,583.6	4,116.6
Operating Cash Flow
Operating cash fow5	$m	1,197.3	1,051.0	1,087.5	1,007.3	1,031.1
Free cash fow6		1,080.6	901.9	956.6	893.7	919.0
Key Financial Ratios
Earnings per security including signifcant items7	cents	22.1	0.1	26.2	23.9	22.9
Free cash fow per security7	cents	91.6	76.4	81.1	75.7	80.8
Distribution per security	cents	53.0	51.0	50.0	47.0	45.0
Funds From Operations to Net Debt	%	11.5	11.0	12.1	10.7	10.7
Funds From Operations to Interest	times	3.6	3.1	3.2	3.0	3.0
Weighted average number of securities7	m	1,179.9	1,179.9	1,179.9	1,179.9	1,136.9
EBITDA by Segment (Excluding Signifcant Items)
Underlying EBITDA3
Energy Infrastructure
East Coast Gas	$m	648.2	627.5	648.8	650.4	655.3
West Coast Gas	$m	287.8	270.8	271.5	236.4	214.1
Wallumbilla Gladstone Pipeline	$m	577.9	549.7	538.9	542.4	515.9
Power Generation	$m	196.3	174.6	170.6	143.3	111.8
Asset Management	$m	73.6	80.3	63.3	53.0	66.2
Energy Investments	$m	28.2	30.9	35.7	28.4	23.1
Corporate costs	$m	(119.7)	(105.0)	(75.0)	(80.1)	(67.9)
Divested businesses	$m	—	—	—	—	—

1) FY21, FY20, FY19 and FY18 is restated as a result of the provision for payroll review .
2) Pass-through revenue is offset by pass-through expenses within underlying EBITDA. Pass-through revenue arises in the asset management operations in respect of costs incurred and passed on to Australian Gas Networks Limited (AGN) and GDI in respect of the operation of the AGN and GDI assets respectively. Any management fee earned for the provision of these services is recognised within total revenue.
3) Excludes significant items.
4) APA’s liability 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.
7) On the 23 March 2018, APA Group issued 65,586,479 new ordinary securities on completion of the fully underwritten pro-rata accelerated institutional tradeable renounceable entitlement offer, resulting in total securities on issue as at 30 June 2018 of 1,179,893,848. The entitlement offer was offered at $7.70 per security, a discount to APA Group’s closing market price of $8.26 per security on the 23 February 2018, the last trading day before the record date of 26 February 2018. The numbers of securities used for calculation of earnings per security and operating cash flow per security from FY17 to FY18 have been adjusted. An adjustment factor of
1.0038 has been calculated, being the closing market price per security on 23 February 2018, divided by the theoretical ex-rights price (TERP) of $8.23 per security.

145

Investor Information

Calendar of events

Final distribution FY22 record date Final distribution FY22 payment date Annual meeting Interim results announcemen Interim distribution FY23 record date Interim distribution FY23 payment date

30 June 2022 14 September 2022 19 October 2022 23 February 2023[ 1] 30 December 2022[ 1] 16 March 2023[ 1]

Subject to change.

Annual meeting details

Securityholder details

Date : Wednesday, 19 October 2022 Time : 10.30 am (AEDT)

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.

Wesley Conference Centre, 220 Pitt Street, Sydney Please refer to the APA Group Notice of Meeting or the APA Group website for more information

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 enquires should contact the APA Group registry.

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 is the Responsible Entity of those trusts.

APA group responsible entity and registered office APA Group Limited ACN 091 344 704

Online information

Level 25, 580 George Street Sydney NSW 2000

Further information on APA is available at apa.com.au, including:

PO Box R41 Royal Exchange NSW 1225 Telephone : +61 2 9693 0000 Facsimile : +61 2 9693 0093 Website : apa.com.au

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.

APA Group registry

Link Market Services Limited

Electronic communication

Securityholders can elect to receive communication electronically by registering their email address with the APA Group registry. Electing to receive annual reports electronically will reduce APA’s adverse impact on the environment.

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 : [email protected] Website : linkmarketservices.com.au

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This report is printed on ecoStar 100% recycled uncoated, an environmentally responsible paper made carbon neutral and the fibre source is FSC recycled certified. ecoStar is manufactured from 100% post-consumer recycled paper in a process chlorine free environment under the ISO 14001 environmental management system.

Disclaimer : APA Group comprises 2 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. 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.

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 climate change and other environmental and energy transition scenarios. 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' 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. APA Group believes there are reasonable grounds for these forward looking statements and due care and attention have been used in preparing this presentation. However, the forward looking statements, opinions and estimates provided in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions and are subject to risk factors associated with the industries in which APA Group operates.

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. Investors should form their own views as to these matters and any assumptions on which any forward-looking statements are based. Except as required by applicable laws or regulations, APA does not undertake to publicly update or review any forward-looking statements, whether as a result of new information or future events.

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AI assistant

APA GROUP — Annual Report 2022

64398_rns_2022-08-23_fbf161c5-144c-4b45-a050-d7c77d4f8407.pdf

ANNUAL FINANCIAL RESULTS

About APA Group (APA)

APA Infrastructure Trust Results for announcement to the market For the year ended 30 June 2022 Appendix 4E

Reporting Period

APA Infrastructure Trust

Results for announcement to the market

For the year ended 30 June 2022 Appendix 4E

Additional information and commentary on results for the year

always powering ahead

Vision:

What we aspire to. To be world class in energy solutions.

Purpose:

Why we exist.

Contents

Chairman’s & Managing Director’s Report

FY22 results

Health safety and wellbeing

Energy transition

$ 1.4 bn+

$ 21 bn+

powering towards responsible energy

Strategy

Net zero

Conclusion

2022 Summary

We are APA: delivering responsible energy

Underlying Business Performance

[ 3]

per security[ 5] (cents)

Distributions per security (cents)

Financial results

APA Group Board

Michael Fraser

Independent Chairman

APA Group Board continued

APA Executive Leadership

Directors’ Report

1. Directors

2. State of affairs

Kirrily Hawker and Suzanne Shipp

Directors’ Report continued

3. Subsequent events

4. About APA

Principal activities

APA overview

Directors’ Report continued

APA’s portfolio of assets and investments

Gas Distribution

Electricity transmission

Generation

Solar Farm

Gas processing and storage

Wind Farm

Directors’ Report continued

Strategy

Directors’ Report continued

Climate Transition Plan

APA’s Climate Transition Plan

APA’s updated net zero commitments and interim goals and targets

Directors’ Report continued

Ensuring strategy supports APA’s net zero ambition

Scenario analysis and resilience planning

Under the modelled climate scenarios:

Financial implications insights – for MSP/SWQP relative to the BAU Case

Financial implications insights – for DPSC relative to the BAU Case

Sustainability Roadmap

Directors’ Report continued

5. Financial performance

Directors’ Report continued

Business segment performance and operational review

Directors’ Report continued

Energy Infrastructure

FY22 Energy Infrastructure by Revenue Type

Directors’ Report continued

Comparing FY22 performance to FY21:

East Coast Gas

West Coast Gas

APA GROUP Annual Report 2022