APA GROUP — Interim / Quarterly Report 2008

Feb 25, 2008

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Financial Results Half Year ended 31 December 2007

26 February 2008

Agenda

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• Highlights

• Financial performance

• Operating performance

• Outlook

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Mick McCormack MANAGING DIRECTOR Rick Francis CHIEF FINANCIAL OFFICER

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HY08 Results Presentation � 2

Growth and integration

Transition from infrastructure owner to an operating business …

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New businesses model and growth driving robust financial performance

HY08 Results Presentation � 3

Robust business performance

Strong growth in revenue, EBITDA and cash flow …

	HY08	HY07	% change
Underlying Revenue1	$443.0 m	$243.3 m	�82%
Underlying EBITDA1	$214.7 m	$134.9 m	�59%
Underlying NPAT1	$44.7 m	$32.6 m	�37%
Reported NPAT	$35.9 m	$32.3 m	�11%
Underlying OCF2	$109.3 m	$73.8 m	�48%
Underlying OCF per security	25.0 cents	22.5 cents	�11%

• 1 Adjusted for significant items, and includes Envestra distributions and complementary asset finance leases

• 2 OCF (Operating Cash Flow) - Net cash from operations after interest and tax payments, adjusted for significant items

Improved financial results support uplift in EBITDA guidance

HY08 Results Presentation � 4

Cash flow supports distribution growth

Increasing target annual distribution by 5% pa over the medium term …

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cps
14.9
28.0
24.0
Full year
22.5
Interim
14.5
Target
FY05 FY06 FY07 FY08 FY09
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Distributions are funded by sustainable and growing operating cash flow

HY08 Results Presentation � 5

Cash flow supports distribution growth

APA Group pays all its distributions out of operating cash flow, with cash remaining to fund further business growth and debt reduction

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HY08 Results Presentation � 6

Integration supporting growth and efficiency

Integration and consolidation of recent acquisitions is on target, with growth and efficiency benefits supporting increased distributions and reduced gearing …

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Employees
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Over 1,000 experienced and highly skilled personnel Organisation realigned to maximise business opportunities

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Operations
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Alignment of common O&M activities Optimised contracting and project management

GROWTH

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EFFICIENCY

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Optimised utilisation of interconnected/overlapping infrastructure – increased revenue and/or deferred capital

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Infrastructure
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Administration
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Common culture, policies and procedures Rationalisation of finance and IT platforms Move towards centralised procurement

Our transition from managing infrastructure to an operating business is delivering new business opportunities

HY08 Results Presentation � 7

Key drivers of financial growth and stability

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Long term cash flow certainty
Improved business performance and
- regulated and contracted revenue
contributions from acquisitions
contribute about 90% of revenue
Interest rate hedges
Significant organic growth with increased
demand for gas
Long range debt portfolio
High quality, strategic infrastructure
Geographic diversity
assets able to provide commercial
Asset diversity
services in an evolving energy market
Competitive capital projects Direct control of operating costs
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HY08 Results Presentation � 8

Operating highlights

■ Acquisitions performing to target or better

■ Internalised operating and maintenance services related to all APA Group assets

• Alinta O&M agreements – no fee leakage

• Highly experienced and skilled workforce enhancing growth

■ Greenfield and brownfield growth

• New transportation agreements and capacity additions to three pipelines

• Xstrata Power Station commissioned, on time and on budget

• Continued growth of Allgas distribution network

• Bonaparte Gas Pipeline construction contracts awarded

■ Future growth opportunities continue to emerge as demand for gas increases

• Owen inquiry – gas fired generation recommended

• National carbon trading scheme – gas as a transition fuel

■ Transition of acquired operations businesses

• Maintained operating and safety performance

HY08 Results Presentation � 9

Financial performance

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• Income Statement

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• Earnings Analysis

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• Operating Cash Flow

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• Capital Management

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• Distributions

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HY08 Results Presentation � 10

Increasing income

Strong underlying cash flow supports distribution growth

$ million	HY082	HY073	% Change
Revenue1	443.0	243.3	�82.1
EBITDA1	214.7	134.9	�59.1
EBIT1	168.3	105.8	�59.0
Net Interest Expense1	(110.4)	(57.1)	�93.3
Tax1	(13.2)	(15.9)	�17.1
NPAT – underlying1	44.7	32.6	�37.0
Reported NPAT	35.9	32.3	�11.4
Underlying OCF	109.3	73.8	�48.2
Underlying OCF per security (cents)	25.0	22.5	�11.3
Distribution per security (cents)	14.5	14.0	�3.6

1 Underlying results before significant items and AIFRS adjustments

2 Includes contributions from assets acquired: HY08 - Origin Energy Networks assets (6 months) and O&M agreement from Alinta (3 months)

3 Includes contributions from assets acquired: HY07 – GasNet (3 months) and Allgas (2 months)

HY08 Results Presentation � 11

Underlying result

Adjusting for AIFRS impacts

$ millions	Reported	Envestra distribution1	Comp. assets2	Significant items3	Underlying
Revenue	436.0	7.0	-	-	443.0
EBITDA	198.6	7.0	4.7	4.4	214.7
NPAT	35.9	5.7	-	3.1	44.7
Operating Cash Flow	104.9	-	-	4.4	109.3

1 Envestra distribution – capital distribution ($5.7m) and reclassification of interest ($1.3m) 2 Complementary assets – reclassification of finance lease interest ($3.4m) and principal repayment ($1.3m) 3 One-off significant items $4.4m ($3.1m after tax)

Note: EBITDA $198.6 per Income Statement

1.3 note 1 above

• 3.4 note 2 above

4.4 note 3 above

$207.7 EBITDA per Segment Note

HY08 Results Presentation � 12

EBITDA increasing

EBITDA growth across most states and asset classes

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HY08 Results Presentation � 13

EBITDA

Continued diversification of earnings

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3% 3%
5%
NT
3%
1%
NT
3% Qld
Gas transmission
22%
& distribution
Qld
WA
25% Electricity
27%
WA transmission
37% NSW Complementary
16%
assets
NSW
Vic
22% SA Asset management
Vic 5% 18% & operations
10%
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HY 07 HY 08 ($134.9 million) ($214.7 million)

HY08 Results Presentation � 14

Operating cash flow

Growing distributions fully funded from operating cash flow

Investments Growth Capital Expenditure Weighted Average securities on issue (millions) Distribution Payout ratio Distribution per security (cents) Underlying OCF per security (cents) Available OCF Distributions paid (net of DRP) Underlying Operating Cashflow (OCF) $ millions	19.4 109.3 HY08	- 51.4 328.5 72% 3.6% 14.0c 11.3% 22.5c 45.3 28.5 48.2% 73.8 Change HY07
	8.4 95.3 437.4 61% 14.5c 25.0c 89.9	45.3
		328.5 72% 14.0c 22.5c
		- 51.4

HY08 Results Presentation � 15

Prudent capital management

Strong balance sheet

Secure long term debt portfolio

• Gearing 71.6% (covenant 75%)

• ICR – 1.8x for calendar 2007

• Refinancing of $2 billion syndicate completed July 2007

• Complied with all covenants during period

• Committed undrawn facilities $529m

• No refinancing required until

  • August 2008 – MTN $150 million

  • March 2009 – MTN $300 million

• Raised over $96 million in equity

  • Average interest rate 7.2% (at 31 Dec 2007)

• Security purchase plan ($85m)

• Continued operation of DRP ($11m)

• 458,344,511 securities on issue

• Weighted average 437.4 million

• Long term maturity

• Refinancing obligations are spread over 15 years with no significant debt refinancing until FY 2010

• Details in Appendix

• Weighted average term of debt 5.8 years

HY08 Results Presentation � 16

Conservative interest rate management

APA manages its exposure to interest rate movements through a number of methods

• Interest rate hedges (policy 65-90%) – existing 70%

• Regular regulatory resets where WACCs take account of cost of funding movements

• APA Group portfolio has regulatory resets spread over the next five years

• Hedging policy recognises the natural hedging implicit in regulatory and contractual environments

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HY08 Results Presentation � 17

Continued distribution growth

FY08 target annual distribution, up 5%

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cps
3.5
14.9
24.5 2.7
22.5 24.0
11.8
FY05 FY06 FY07 FY08
Income distribution Tax deferred distribution 2H08 target distribution
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Payout ratios [1]

FY08[2] 70% FY07 72% FY06 65% FY05 60%

• 1 Based on underlying OCF

• 2 APA Group expects full year payout ratio to be in the order of 70%

• HY08 payout ratio 61% (on underlying OCF)

• HY08 18.6% tax deferred component

• DRP continues at 2.5% discount

HY08 Results Presentation � 18

Operating performance

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• Integration update

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• Operations update

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HY08 Results Presentation � 19

Integration progressing

Integration and consolidation of new businesses is in line or better than targets, according to detailed plans developed as part of acquisition due diligence …

Employee integration

Infrastructure synergies emerging

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• Former OEAM and Alinta employees integrated into APA Group HR function established – aligning culture, employee policies and procedures Organisation realigned to maximise business opportunities

Improving utilisation of overlapping or interconnected infrastructure

• Roma Brisbane Pipeline and Allgas network

• Gas transportation between NSW and Victoria

Operations integration

Administration integration

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Common operation of Directlink and Murraylink

• Rationalisation of overlapping transmission and distribution

• Common marketing initiatives across Allgas and Envestra distribution networks in Queensland Major transitional services terminated

• Internal project management of concurrent gas transmission capital projects

• Finance and payroll systems consolidation

• IT system integration, including operation systems Centralised procurement project underway

Priorities for second half FY2008

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Implementation of new business structures

• Continued consolidation of asset management processes and resources Workforce planning process underway – right people, right skills, in the right place to deliver business strategy going forward

First phase efficiency gains and platform for growth achieved

HY08 Results Presentation � 20

Operations performance and developments

Gas transmission and distribution

• Increased performance from transmission pipelines

• Mondarra Gas Storage (WA) revenue up

• Direct costs reduced with termination of Alinta O&M agreements

• Organic growth across assets

• Allgas (Qld) – growth in line with acquisition case

• Bonaparte Gas Pipeline (NT) – project on target

• Moomba Sydney Pipeline (NSW) – new GTA, new compressor

• Goldfields Pipeline (WA) – new GTAs, two new compressors

• Carpentaria Gas Pipeline (Qld) – new GTAs, new compressor

• Victorian Transmission System – Brooklyn-Lara looping

Electricity transmission

• Performing in line with acquisition case

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• Operation of Directlink and Murraylink combined

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HY08 Results Presentation � 21

Operations performance and developments

Complementary assets

• Xstrata Power Station (Qld) completed on time and on budget

• Kogan North and Tipton West Gas Processing plants (Qld) gas throughput increasing in line with field production

Asset management and operation

• Gas infrastructure services provided to Envestra under long term contract – performance in line with acquisition case

• Operations services to third party infrastructure owners

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HY08 Results Presentation � 22

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HY08 Results Presentation � 23

Priorities and guidance for FY08

� EBITDA guidance

• FY08 - underlying EBITDA forecast increased to $400-$410 million (previously $380-$390 million)

� Distribution guidance

• FY08 - increase distributions by 5.0%

• Targeting growth of at least 5% in the medium term

• Continued integration of acquisitions as planned, and realisation of acquisition benefits over next 18 months to two years

• Capital management focus on maintaining gearing around 70% over the medium term

• Focus on growing the business through organic growth opportunities and developments

HY08 Results Presentation � 24

Summary

� Robust business performance

• ─ Stable, secure and increasing revenue and cash flow

• ─ New businesses performing on target

• ─ Conservative and prudent capital management

� Continued distribution growth

• Distributions continue to be fully funded by operating cash flow

• Growth sustained by business performance and efficiency benefits

� Integration supporting growth and efficiency

• Integration progressing better than plan

• Growth and efficiency opportunities are being implemented

� Demand for gas continues to create opportunities for growth

• Organic growth on existing assets – resources growth and power generation

• Gas demand increasing for power generation and as transition fuel

HY08 Results Presentation � 25

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We deliver energy

www.pipelinetrust.com.au

HY08 Results Presentation � 26

Disclaimer

The information contained in this presentation is given without any liability whatsoever to Australian Pipeline Trust or APT Investment Trust or any of its related entities (collectively “APA Group”) or their respective directors or officers, and is not intended to constitute legal, tax or accounting advice or opinion. No representation or warranty, expressed or implied, is made as to the accuracy, completeness or thoroughness of the content of the information. The recipient should consult with its own legal, tax or accounting advisers as to the accuracy and application of the information contained herein and should conduct its own due diligence and other enquiries in relation to such information.

The information in this presentation has not been independently verified by APA Group. APA Group disclaims any responsibility for any errors or omissions in such information, including the financial calculations, projections and forecasts set forth herein. No representation or warranty is made by or on behalf of APA Group that any projection, forecast, calculation, forward-looking statement, assumption or estimate contained in this presentation should or will be achieved.

Please note that, in providing this presentation, APA Group has not considered the objectives, financial position or needs of the recipient. The recipient should obtain and rely on its own professional advice from its tax, legal, accounting and other professional advisers in respect of the addressee’s objectives, financial position or needs.

This presentation does not carry any right of publication. This presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by APA Group. Neither this presentation nor any of its contents may be reproduced or used for any other purpose without the prior written consent of APA Group.

HY08 Results Presentation � 27

Financials

Key financial ratios

	HY08	HY07	Comments
Underlyingoperatingcash flow(cps)	25.0	22.5
Weighted average securities on issue(m)	437.4	328.5
Payout ratio(%)	60.8	72.3	June 2007 comparison
EPS(cps)
- underlying	10.2	9.9
- including significant items	8.2	9.8
Interest cover ratio(times)	1.82	1.98	June 2007 comparison
Average interest rate at end of period(%)	7.24	7.06	June 2007 comparison
Gearing ratio (%)	71.6	72.4	Post Origin Energy Networks acquisition on 2 July
Total assets($m)	4,918	4,238	June 2007 comparison
Net tangible asset backing per security ($)	1.36	1.99	June 2007 comparison

HY08 Results Presentation � 28

APA Group assets

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HY08 Results Presentation � 29

Financials

Revenue analysis by asset group

$ millions

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

HY07 revenue
(excl. passthrough)
HY08 revenue
(excl. passthrough)
HY07 passthrough
89.5
HY08 passthrough
HY08 Total revenue $436.4m
47.6 48.0
74.0
HY07 Total revenue $234.7m
67.4
55.2
62.4
46.0
43.5
41.4
22.4
15.8
11.2 7.4 9.4 6.4 12.6 0.11.0 9.8
Qld NSW Vic SA WA NT Electricity Complementary Asset
transmission assets management
Gas transmission and distribution (by State)
& operations
----- End of picture text -----

HY08 Results Presentation � 30

Financials

Significant items

$ millions

Pre-tax

Tax

After tax

Total Revaluation gain – GasNet hedges Advisory and legal costs HY07 Total Revaluation gain – GasNet hedges Unsuccessful acquisition due diligence costs Acquisition integration costs HY08	- - - (0.9) 0.4 (1.3) (2.2) 0.9 (3.1)
	(3.1) 1.3 (4.4)
	2.4 (1.0) 3.4 (2.8) 1.1 (3.9)
	(0.4) 0.1 (0.5)

HY08 Results Presentation � 31

Financials

Operating cash flow

$ millions	HY08	HY07
Underlying EBITDA (pre-significant items)	214.7	134.9
Non-cash movements and provisions	(5.0)	(1.1)
Dividends received	5.1	-
Net working capital movements	(4.6)	(4.4)
SCC payments	(2.3)	(4.2)
Net interest paid	(98.7)	(47.1)
Tax refunds / (payments)	-	(2.8)
Other	0.1	(1.5)
Underlying OCF	109.3	73.8
Weighted average securities on issue (millions)	437.4	328.5
Underlying OCF per security (cents)	25.0	22.5

HY08 Results Presentation � 32

Financials

Growth capital expenditure

$ millions Regulated: Victoria Queensland Major Projects: Tipton West gas processing facility - QLD Daandine power station – QLD Mt Isa power station – QLD Brooklyn Lara Looping – VIC (regulated) New Generation – NSW Compressors – WA & NSW Mondarra gas storage - WA Bonaparte – NT Other Investments: Envestra securities via DRP	HY08 4.3 7.7 12.0 1.6 0.4 20.0 37.8 4.3 - 6.6 3.4 9.2 83.3 95.3 8.4	HY07 5.2 2.2
		7.4
		- 13.3 6.0 - - 8.8 5.6 2.1 8.2
		44.0
		51.4
		-

HY08 Results Presentation � 33

Financials

Composition of distribution

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HY08 Results Presentation � 34

Financials

Total committed debt facilities

Facility

Facility amount

Tenor

Medium term notes $150 million August 2008 Medium term notes $300 million March 2009 Project debt $80 million December 2011 2003 US private placement $496 million 7, 10, 12 and 15 year tranches - September 2010, 2013, 2015 and 2018 2007 Syndicated facility $2.0 billion[1] Equal 3 year and 5 year tranches - June 2010 and 2012 2007 US private placement $811 million 10, 12 and 15 year tranches - May 2017, 2019 and 2022

• 1 Amount drawn at 31 December 2007 was $1.47 billion

HY08 Results Presentation � 35

Gas transmission growth

Bonaparte Gas Pipeline

• Long term arrangement with NT Government’s Power and Water Corporation for ~ 30 PJ/a

• 140 km, 20" 10 MPa pipeline - Construction contract awarded to AJ Lucas

• Construction scheduled for May – September 2008 - First gas 1 January 2009

Carpentaria Gas Pipeline

Goldfields Gas Transmission Pipeline

• New transportation agreements - Growth facilitated by 2 new compressor stations at Wyloo West and Ned’s Creek - Pipeline capacity to increase by 20%

• New Transportation agreements - Growth facilitated by new compressor station at Davenport Downs

• Pipeline capacity to increase by 15%

Moomba Sydney Pipeline / Interconnect

Victorian Transmission System

• Brooklyn Lara looping and compressor station - 57 km pipeline and compressor to increase VTS capacity and storage - Included in RAB

• Capacity increase to expand gas flows to and from Vic and NSW - Contract to supply NewGen Power station at Uranquinty, NSW - Capacity increase facilitated by new compressor at Culcairn - Commissioning due mid 2008

HY08 Results Presentation � 36

Regulatory update

■ Victorian Transmission System

• Draft decision released December 2007

• Final decision expected March 2008

■ High Court decision – Moomba to Sydney Pipeline

• Confirms that there are limits on Regulators’ power - exercise of discretion must be reasonable

• MSP tariffs continue to be set by negotiation

■ Regulatory resets over the next five years

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HY08 Results Presentation � 37