APA GROUP — Governance Information 2008

Sep 11, 2008

==> picture [58 x 81] intentionally omitted <==

==> picture [154 x 51] intentionally omitted <==

ASX RELEASE

12 September 2008

The Manager

Company Announcements Office Australian Securities Exchange 4[th] Floor, 20 Bridge Street Sydney NSW 2000

Electronic Lodgement

Dear Sir or Madam

Company Announcement

I attach the following announcement for release to the market:

• Amended Corporate Governance Statement

Yours sincerely

==> picture [162 x 38] intentionally omitted <==

Mark Knapman Company Secretary

==> picture [595 x 94] intentionally omitted <==

Corporate Governance Statement

August 2008

APA Group ( APA ) comprises two registered investments schemes, Australian Pipeline Trust and APT Investment Trust, the securities in which are “stapled” together, and their controlled entities.

Australian Pipeline Limited ( APL ) is the Responsible Entity for Australian Pipeline Trust and APT Investment Trust, and is responsible for APA’s corporate governance practices.

The ASX Corporate Governance Council issued its revised Corporate Governance Principles and Recommendations in August 2007 ( Principles ). The adoption of the Principles is not compulsory. However, under the Australian Securities Exchange ( ASX ) Listing Rules, companies are required to provide a statement in their annual report disclosing the extent to which they have followed the Principles in the reporting period and, where companies have not followed all the Principles, they must identify which ones they have not followed and give reasons for not following them.

The first year that listed entities are required to report against the revised Principles is the year ending 30 June 2009. However, APA has elected to report by reference to the Principles this financial year. For transparency, each of the eight Principles has been responded to in turn below.

In this section, various references are made to APA’s web site as a source of information on corporate governance practices. The home page for APA’s web site is www.apa.com.au , and the link entitled “About APA” leads to the corporate governance material. If you do not have internet access but wish to read that material, please telephone 1800 992312 (or +61 2 82807132, if calling from outside Australia) and we will send you a copy of the relevant material.

Principle 1: Lay solid foundations for management and oversight by the board

The board is accountable to securityholders for the proper management of APA’s business and affairs. It operates in accordance with a charter, which is published on APA’s web site.

To assist the board in carrying out its responsibilities, the following standing committees of its members have been established:

• Audit and Risk Management Committee

• Remuneration Committee, and

• Health, Safety and Environment Committee.

The board delegates responsibility for implementing the strategic direction and managing the day-to-day operations of APA to the Managing Director. The Managing

Page 1

Director consults with the Chairman, in the first instance, on matters that are sensitive, extraordinary or of a strategic nature.

The Managing Director, Chief Financial Officer and other senior management have service contracts setting out their duties, responsibilities, conditions of service and termination entitlements.

The appointment of the General Manager Human Resources in October 2007 and subsequent enhancement of the Human Resources function have improved induction and management development programmes across the business. Further improvements to the induction programme, succession planning and implementation of a leadership development programme are ongoing endeavours.

APA has processes in place to review the performance of senior management. Each senior manager, including the Managing Director, has personal objectives as well as objectives related to the performance of business units and APA as a whole. They are assessed against those objectives on an annual basis, or more frequently if that is indicated. Assessments for senior management personnel took place in June 2008.

Performance evaluation of the Managing Director is handled by the Chairman with the assistance of the Remuneration Committee. A full report is provided to and reviewed by the board. Assessment and monitoring of the performance of other senior managers are handled by the Managing Director who reports on those matters to the Chairman and the Remuneration Committee.

Principle 2: Structure the board to add value

The board determines its size and composition, subject to limits imposed by APL’s constitution. The constitution provides for a minimum of three directors and a maximum of 12.

At 1 July 2007 there were six directors on the board. Manharlal (George) Ratilal was appointed to the board on 31 July 2007. Leonard (Len) Bleasel was appointed on 28 August 2007 as Chairman elect following the announcement of George Bennett’s intention to retire on 30 October 2007. Ross Gersbach resigned from the board on 31 January 2008 to take up an executive position as APA’s Group Manager Commercial. John Fletcher was appointed to the board on 27 February 2008.

The board currently consists of seven directors whose respective terms of office as director, and whose names, experience and membership of board committees are set out in the Directors’ Report.

The composition of the board is determined in accordance with the following principles:

• a majority of the board will be comprised of independent directors

• the Chairman will be an independent director, and

• a person cannot hold the positions of both Chairman and Chief Executive Officer.

Under APL’s constitution, Petronas Australia Pty Limited is entitled to appoint one director of APL while the Petronas Group holds not less than 10% of the issued

Page 2

securities in APA Group. Muri Muhammad is the current Petronas-appointed director.

APL’s constitution requires one-third of its directors (excluding the Managing Director, the Petronas-appointed director and any director who is standing for reelection after having been appointed as an additional director or to fill a vacancy) to retire from office at the annual general meeting each year. If the calculation of that one-third is not a whole number, the number of directors required to retire by this “rotation” process is rounded to the nearest whole number. Retiring directors are eligible for re-election. Robert Wright will retire and offer himself for re-election under this provision of the constitution at the 2008 annual general meeting.

If the board appoints a director to fill a vacancy or as an addition to the board, the new director holds office until the end of the next annual general meeting and is eligible for re-election. John Fletcher will stand for election on this basis at the 2008 meeting.

At least 60 days before annual general meetings of APL, securityholders are notified, by announcement to the ASX, that they may nominate a person to fill a vacancy on the board that arises on retirement of either a director under the “rotation” process or a director appointed by the board since the last annual general meeting. If securityholders wish to exercise that right, at least 45 days before the annual general meeting they must send APL a signed nomination form and the nominee’s signed consent to act as director. If nominations are received by the required date, APL advises securityholders of all candidates who have been validly nominated and presents its nominations to the annual meeting of securityholders.

The board has assessed the independence of the non-executive directors and considers that Messrs Bleasel, Fletcher, Higgins, Muhammad, Ratilal and Wright are independent.

APA has previously advised that it has received legal advice confirming the independence of the Petronas-appointed director, Muri Muhammad, and George Ratilal, who is an employee of Petronas, on the basis that there are no significant day to day business dealings between Petronas and APL and that Petronas does not have any interest in APL.

Mick McCormack, as Managing Director, is not considered to be independent.

The former Nominations and Remuneration Committee of the board became the Remuneration Committee in early 2008 so that the functions with respect to selection and appointment of new directors and related matters previously handled by that committee then reverted to the board. Ultimate responsibility for such matters rests with the full board anyway and the board considers the efficient handling of those matters is not diminished by not having a Nominations Committee.

In considering potential new directors to commend to shareholders of APL and securityholders, the board seeks to identify candidates with appropriate skills and experience to contribute to the effective direction of APA and who can exercise an independent and informed judgement on matters which come to the board.

A formal review process to assess the performance of the board, its committees and individual directors is undertaken each year, the last review having occurred in December 2007.

Page 3

==> picture [595 x 94] intentionally omitted <==

The review involves completion of a questionnaire by each director. The responses are then collated and the board meets to discuss and consider the results and to determine any actions arising from the review. The Chairman also meets with each director to discuss the review and the director’s own performance, and to seek the director’s feedback on the performance of the Chairman.

Matters covered by the performance review include the role of the board and its committees, their composition, how the board operates, how board members interact, the effectiveness of the Chairman in leading the board and board performance generally.

Subject to normal privacy requirements, directors have access to APA’s records and information, and to the Company Secretary and other relevant senior management personnel. They receive regular detailed reports on financial and operational aspects of APA’s business and may request elaboration or explanation of those reports at any time.

Each director also has the right to seek independent professional advice at APA’s expense. Prior approval of the Chairman is required, but this may not be unreasonably withheld.

Directors and senior management are encouraged to broaden their knowledge of APA’s business and to keep abreast of developments in business more generally by attendance at relevant courses, seminars and conferences, both in Australia and where appropriate overseas. APA meets expenses involved in such activities.

Principle 3: Promote ethical and responsible decision making

The board and senior management are firmly committed to ensuring that they and all employees observe high standards of ethical behaviour and conduct.

APA’s code of conduct sets out the behaviour required of directors and employees and recognises the responsibilities of APA and its personnel to securityholders, customers and suppliers, the community and employees. It also requires that breaches of the code are reported and provides a mechanism to enable breaches to be reported without fear of retribution. The code of conduct is published on APA’s web site.

APA also has a whistleblower’s policy. This policy covers the procedures for dealing with reports of suspected improper conduct within APA. It also addresses the protection of individuals making those reports. This policy is consistent with the whistleblower provisions of the Corporations Act 2001 (Part 9.4AAA) and Australian Standard AS 8004.2003.

APA also has a formal policy on dealing in securities. The policy provides that directors and designated senior management personnel may buy or sell APA securities only during the four week periods following the release to ASX of the half year and full year results and the annual meeting of APA, unless exceptional circumstances apply. In any case, directors and all employees are precluded from buying or selling securities at any time if they are aware of any price-sensitive information which has not been made public.

Page 4

Principle 4: Safeguard integrity in financial reporting

The board has established an Audit and Risk Management Committee, the composition of which is determined in accordance with the following principles:

• the committee will have at least three members

• all members of the committee will be independent, non-executive directors, and

• the committee Chairman cannot also be the Chairman of the board.

The current members of the committee are Robert Wright (committee Chairman), John Fletcher and Russell Higgins and their qualifications are set out on in the Directors’ Report. The Chairman of the board, although not a member of the committee, usually attends committee meetings.

The roles and responsibilities of the committee are set out in the committee’s charter which is published on APA’s web site.

The Managing Director, Chief Financial Officer, Company Secretary, other senior management personnel, as required, and the external and internal auditors attend committee meetings at the discretion of the committee. The committee also meets with the external and internal auditors without management present.

The minutes of each committee meeting are reviewed at the subsequent meeting of the board and the committee Chairman reports on the committee’s activities and recommendations to the board.

The committee is required by its charter to meet at least four times each year. The number of times it met during the financial year ended 30 June 2008, and the committee members’ attendance at those meetings, are set out in the Directors’ Report.

The committee monitors the effectiveness and independence of the external and internal auditors and the independence of the external auditor, and makes recommendations to the board on the appointment or replacement (subject to securityholders’ approval, if applicable) of the auditor.

APL’s costs incurred in acting as Responsible Entity for Australian Pipeline Trust and APT Investment Trust are reimbursed by APA. The actual cost recovery in the financial year ended 30 June 2008 was $2.5 million. APL does not make a profit, nor seek performance fees. The constitutions of Australian Pipeline Trust and APT Investment Trust enable APL to charge fees up to 0.5% per annum of the value of gross assets, however, the right to charge this has been waived to the extent it exceeds APL’s costs.

Principle 5: Make timely and balanced disclosure

APA has a continuous disclosure policy aimed at ensuring that information that a person could reasonably expect to have a material effect on the security price, whether the information is positive or negative, is announced to the market by release to the ASX in accordance with the ASX Listing Rules and the Corporations Act 2001 .

Page 5

The Company Secretary is the nominated continuous disclosure officer.

All ASX announcements are posted on APA’s web site as soon as reasonably possible after notification to the ASX.

The continuous disclosure policy is published on APA’s web site.

Principle 6: Respect the rights of shareholders

APA aims to ensure that its securityholders are informed of all significant developments affecting APA’s state of affairs and business. Information is communicated to securityholders by a number of means, including the following:

• the interim (half yearly) report, the directors’ commentary on that report and the annual report

• APA’s web site which has a dedicated Investor Relations section

• announcements to the ASX and media releases, copies of which are posted to APA’s web site

• a securityholders’ report is sent concurrently with the payment of distributions

• “Open Briefings” are prepared from time to time to provide an update to investors, and are released to the ASX

• analyst briefings which are released to the ASX

• the annual meeting of securityholders, and

• webcasting of half-year and full year accounts presentations, the annual meeting and announcements of major events.

Securityholders are given the opportunity to provide their email addresses to APA to enable them to promptly receive reports and announcements to ASX.

The recent appointment of an Investor Relations Manager and the planned redesign and expansion of APA’s web site will assist further the provision of comprehensive and timely information to securityholders.

At the annual meeting of securityholders, the Chairman encourages questions and comments from securityholders and seeks to ensure the meeting is managed to give the maximum number of securityholders an opportunity to participate. In the interests of clarity, questions on operational matters may be answered by the Managing Director or another appropriate member of senior management.

The external auditor attends annual meetings and is available to respond to questions about the conduct of the audit and the preparation and content of the independent audit report.

Page 6

Principle 7: Recognise and manage risk

The identification and effective management of risk, including calculated risk-taking, is viewed as an essential part of APA's approach to creating long-term securityholder value.

The board is responsible for adopting and reviewing APA’s approach to the identification, evaluation and management of business risks that are material to the fulfilment of the APA’s business objectives.

The board has delegated certain activities to its Audit and Risk Management Committee ( ARM Committee ) the charter for which is published on APA’s web site. With respect to business risk, the ARM Committee’s primary function is to maintain and oversee a sound system of internal risk management controls based on the board’s adopted risk management approach.

Specific risk management responsibilities of the ARM Committee include:

• reviewing and approving APA’s updated risk profile, and risk management policy and framework;

• reviewing at least annually APA’s implementation of the risk management policy and framework; and

• receiving and reviewing management’s report on the effectiveness of risk management and internal control systems and otherwise monitoring the effectiveness of the risk management framework and the system of internal control, and progress against agreed risk management plans.

The Managing Director is accountable for ensuring that a risk management system is established, implemented and maintained in accordance with APA’s risk management policy and framework.

Senior management are accountable for risk management within the areas under their control, including devolution of the risk management process to operational managers, and are responsible for:

• reviewing the measures of risk impact severity that underlies the identification of material business risks, to ensure the measures remain current to APA’s context;

• identification of material business risks that may impact on APA’s business plans and objectives and the development, implementation, performance and review of risk management plans. In doing so, senior management considers both financial risk and non-financial risk, including operational, environmental, strategic, market-related, compliance and reputation risk;

• aggregating operational risk data across APA, and monitoring external factors, to facilitate monitoring of APA’s risk profile; and

• contributing advice, leadership and facilitation in the development of groupwide risk control solutions.

Page 7

The Company Secretary is responsible for:

• overseeing and facilitating the co-ordination of the risk management activities of senior management;

• reporting regularly to the ARM Committee on APA’s risk profile and the implementation and effectiveness of risk management plans;

• contributing leadership and facilitation of the implementation of group-wide risk control solutions; and

• working with senior management to design and develop risk education and communication forums.

The internal audit function audits the implementation of the risk management framework and policy in selected areas of APA’s business based on a plan agreed with management and the ARM Committee, and reports its findings to the ARM Committee.

In respect to specific corporate governance recommendations of the ASX Corporate Governance Council:

• APA’s management has reported to the ARM Committee as to its assessment of the effectiveness of management by APA of its material risks; and

• in the course of approving the financial statements for the year ended 30 June 2008, the board considered a written statement from the Chief Executive Officer and the Chief Financial Officer to the effect that, to the best of their knowledge and belief, their declaration pursuant to section 295A of the Corporations Act 2001 (broadly, that the financial statements give a true and fair view in all material respects of APA’s financial position and comply in all material respects with relevant accounting standards) is founded on a sound system of risk management and internal control and that system is operating effectively in all material respects in relation to financial reporting risks, based on the management framework adopted by APA.

Principle 8: Remunerate fairly and responsibly

The board has established a Remuneration Committee to consider and make recommendations to the board on, among other things, remuneration policies applicable to board members and senior management.

The composition of the Remuneration Committee is determined in accordance with the following principles:

• the committee will have at least three members

• all members of the committee will be non-executive directors and a majority of them will be independent directors, and

• the committee Chairman will be an independent director.

The current members of the committee are John Fletcher (committee Chairman), Russell Higgins and Muri Muhammad. George Bennett stood down as committee

Page 8

Chairman on his retirement in October 2007. The Chairman of the board, although not a member of the committee, usually attends committee meetings.

The roles and responsibilities of the Remuneration Committee are set out in the committee’s charter which is published on APA’s web site.

The Managing Director attends meetings of the committee by invitation when required to report on and discuss senior management performance and other remuneration matters.

The minutes of each committee meeting are reviewed at the subsequent meeting of the board and the committee Chairman reports on the committee’s activities and recommendations to the board.

The committee is required by its charter to meet at least twice each year. The number of times it met during the financial year ended 30 June 2008, and the committee members’ attendance at those meetings, are set out in the Directors’ Report.

The committee can seek external professional advice on any matter within its terms of reference. Independent remuneration consultants were engaged to review nonexecutive director and executive compensation during the financial year.

The Corporations Act 2001 does not require registered investment schemes like Australian Pipeline Trust and APT Investment Trust to include a remuneration report as part of the annual Directors’ Report, but APA has chosen to do so.

APA’s remuneration report sets out details of APA’s policies with respect to remuneration of non-executive directors, the Managing Director and other key management personnel, together with details of the components of remuneration and total remuneration paid to each of those individuals over the financial year to which the report relates.

In 2003 the board terminated the non-executive directors’ retirement benefit plan so that the benefits to participating directors that had accrued up to termination were then quantified and preserved for payment on retirement of those directors. Under the plan, after three years service a director was entitled to the equivalent of the emoluments received over the most recent 12 months. After ten years service, the entitlement increased to the equivalent of emoluments received during the most recent three years. No additional entitlement accrued after ten years. For periods between three and ten years, the entitlement was calculated on a pro-rata basis.

The benefit of former Chairman George Bennett under the retirement benefit plan was paid on his retirement as Chairman in October 2007 and the amount of that payment is set out in the remuneration report. Robert Wright is the only current director entitled to benefit under the plan on his retirement from the board.

Page 9

Corporate Governance Principles & Recommendations issued by ASX Corporate Governance Council (Revised in August 2007)

		Comply
		Yes / No
Principle 1: Lay solid foundations for management and oversight by the
board
1.1	Companies should establish the functions reserved to the board and those	Yes
	delegated to senior executives and disclose those functions
1.2	Companies should disclose the process for evaluating the performance of	Yes
	senior executives
1.3	Companies should provide the information indicated in the Guide to	Yes
	reporting on Principle 1
Principle 2: Structure the board to add value
2.1	A majority of the board should be independent directors	Yes
2.2	The chair should be an independent director	Yes
2.3	The roles of chair and chief executive officer should not be exercised by the	Yes
	same individual
2.4	The board should establish a nomination committee	No (note 1)
2.5	Companies should disclose the process for evaluating the performance of	Yes
	the board, its committees and individual directors
2.6	Companies should provide the information indicated in the Guide to	Yes
	reporting on Principle 2
Principle 3: Promote ethical and responsible decision-making
3.1	Companies should establish a code of conduct and disclose the code or a	Yes
	summary of that code as to:
	• the practices necessary to maintain confidence in the company’s
	integrity
	• the practices necessary to take into account their legal obligations
	and the reasonable expectations of their stakeholders
	• the responsibility and accountability of individuals for reporting and
	investigating reports of unethical practices
3.2	Companies should establish a policy concerning trading in company	Yes
	securities by directors, senior executives and employees, and disclose the
	policy or a summary of that policy
3.3	Companies should provide the information indicated in the Guide to	Yes
	reporting on Principle 3
Principle 4: Safeguard integrity in financial reporting
4.1	The board should establish an audit committee	Yes
4.2	The audit committee should be structured so that it :	Yes
	• consists only of non-executive directors
	• consists of a majority of independent directors
	• is chaired by an independent chair, who is not chair of the board
	• has at least three members.
4.3	The audit committee should have a formal charter	Yes
4.4	Companies should provide the information indicated in the Guide to	No (note 2)
	reporting on Principle 4
Principle 5: Make timely and balanced disclosure
5.1	Companies should establish written policies designed to ensure compliance	Yes
	with ASX Listing Rule disclosure requirements and to ensure accountability
	at a senior executive level for that compliance and disclose those policies or
	a summary of those policies
5.2	Companies should provide the information indicated in the Guide to	Yes
	reporting on Principle 5

Page 10

Principle 6: Respect the rights of shareholders	Principle 6: Respect the rights of shareholders
6.1	Companies should design a communications policy for promoting effective	Yes
	communication with shareholders and encouraging their participation at
	general meetings and disclose their policy or a summary of that policy
6.2	Companies should provide the information indicated in the Guide to	Yes
	reporting on Principle 6
Principle 7: Recognise and manage risk
7.1	Companies should establish policies for the oversight and management of	Yes
	material business risks and disclose a summary of those policies
7.2	The board should require management to design and implement the risk	Yes
	management and internal control system to manage the company’s material
	business risks and report to it on whether those risks are being managed
	effectively. The board should disclose that management has reported to it
	as to the effectiveness of the company’s management of its material
	business risks
7.3	The board should disclose whether it has received assurance from the chief	Yes
	executive officer (or equivalent) and the chief financial officer (or equivalent)
	that the declaration provided in accordance with section 295A of the
	Corporations Act is founded on a sound system of risk management and
	internal control and that the system is operating effectively in all material
	respects in relation to financial reporting risks
7.4	Companies should provide the information indicated in the Guide to	Yes
	reporting on Principle 7
Principle 8: Remunerate fairly and responsibly
8.1	The board should establish a remuneration committee	Yes
8.2	Companies should clearly distinguish the structure of non-executive	Yes
	directors’ remuneration from that of executive directors and senior
	executives
8.3	Companies should provide the information indicated in the Guide to	Yes
	reporting on Principle 8
Notes
1.	The board has chosen not to have a separate Nomination Committee, as explained in the
	section of this corporate governance statement entitled “Principle 2: Structure the	board to
	add value”.
2.	APA Group intends to make publicly available information on procedures for the selection
	and appointment of the external auditor and for the rotation of external audit engagement
	partners.

Page 11

==> picture [58 x 81] intentionally omitted <==

==> picture [154 x 51] intentionally omitted <==

ASX RELEASE

For further information please contact:

Chris Kotsaris, Investor Relations APA Group Telephone: (02) 9693 0049 or Mob: 0402 060 508 Email: chris.kotsaris@apa.com.au

About APA Group (APA)

APA Group, comprised of Australian Pipeline Trust and APT Investment Trust, is the major ASX-listed energy transmission company in Australia with interests in almost 12,000 km of natural gas pipeline infrastructure, over 2,300 km of gas distribution networks in south east Queensland, Coal Seam Gas processing plants, gas fired power stations, gas storage facilities and two high voltage direct current interconnector systems.

APA manages and operates all its assets and also provides management and operation services to gas distribution and transmission company Envestra (which owns 19,100 km of natural gas distribution networks and 1,029 km of natural gas transmission pipelines). It also holds an 18 percent stake in Envestra and a one-third interest in the SEAGas pipeline. APA Group has a varied and quality customer base including AGL Energy, Cooper Eromanga Basin Producers, Xstrata, Newmont, CS Energy, BHP Billiton, Zinifex, Incitec Pivot, Origin, RioTinto, Newcrest, Nickel West, Synergy and Verve Energy.