APA GROUP — Interim / Quarterly Report 2010

Feb 23, 2010

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ASX RELEASE 24 February 2010

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:

• Interim Results Presentation

Yours sincerely

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Mark Knapman Company Secretary

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Financial Results Half year ended 31 December 2009

24 February 2010

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Result overview and strategic highlights

Mick McCormack Managing Director and CEO

1H10 Result Presentation � 2

Ten years of consistent, strong performance

Total securityholder returns

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400
300
200
100
0
APA total securityholder returns All Ords accumulation index
Jun‐00Dec‐00Jun‐01Dec‐01Jun‐02Dec‐02Jun‐03Dec‐03Jun‐04Dec‐04Jun‐05Dec‐05Jun‐06Dec‐06Jun‐07Dec‐07Jun‐08Dec‐08Jun‐09Dec‐09
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Source: APA based on IRESS data

APA maintains its value

• no asset write‐down

• • no dilutive capital raising

• no distribution cut

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Distributions per security
35
31.0 cps
30
25
20
15.75 cps
15
10
5
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 1H10
cents per security
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Delivering securityholder value since listing

1H10 Result Presentation � 3

Strong cash generating business

	1H10	1H09			Change
	$ million	$ million
Operating cash flow	159.5	122.8		up	30%
Operating cash flow per security (cents)	31.6	25.8		up	23%
Interim distribution	15.75	15.0		up	5%
Distribution payout ratio	50.2%	59.8%
Revenue excluding pass‐through	343.3	357.0		down	(4)%
EBITDA	244.3	238.2		up	3%
Profit	63.6	49.6	1	up	28%

(1) Before significant items

Predictable, consistent business

1H10 Result Presentation � 4

Strong performance from continuing business

	1H10	1H09		Change
	$ million	$ million
Continuing Business performance
Revenue excluding pass‐through	336.3	308.5	up	9%
EBITDA	244.3	213.9	up	14%

Continued organic growth of APA’s core business

1H10 Result Presentation � 5

Strategic and operational highlights

• Capturing and developing the growth opportunities on APA’s asset portfolio available from the growing demand for gas

• Committed capital expenditure of $250 million to expand gas transmission and distribution assets, including

  • Moomba Sydney Pipeline system mainline and southern lateral expansion

  • Victorian Transmission System northern zone expansion

  • APA Gas Network (Queensland) extension into new housing developments

  • Mondarra underground storage facility development (Western Australia)

• Transforming the business

• Three major company‐wide initiatives implemented to extract and deliver benefits of scale and corporate know‐how

  • Focus on customers, finance and operating excellence

• Strengthening the balance sheet

• Completing the refinance of debt maturing in 2010

1H10 Result Presentation � 6

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Financial performance

Peter Fredricson Chief Financial Officer

1H10 Result Presentation � 7

Strong interim result

	1H10	1H09		Change
	$ million	$ million
Total revenue excluding pass‐through1	343.3	357.0		3.8 %
Total revenue	495.9	490.0		1.2 %
EBITDA	244.3	238.2		2.5 %
EBIT	197.4	189.1		4.4 %
Net interest expense	(111.1)	(121.9)		8.9 %
Tax	(22.7)	(17.6)		(28.8)%
Profit	63.6	49.6	2	28.3 %
Operating cash flow	159.5	122.8		29.9%
Operating cash flow per security (cents)	31.6	25.8		22.5%
Earnings per security (cents)	12.6	11.9		5.9%
Interim distribution per security (cents)	15.75	15.0		5.0%
Distribution payout ratio	50.2%	59.8%

(1) Pass‐through revenue is revenue on which no margin is earned.

(2) Before significant items

Strong underlying cash flow supports distribution growth

1H10 Result Presentation � 8

History of strong performance

Operating cash flow

EBITDA

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250 $234 m 500 $444 m
200 400
$160 m
150 300 $244 m
100 200
50 100
0 0
Distributions per security
Operating cash flow per security
35
50 48.2 cps 31.0 cps
30
40 25
31.6 cps
20
30 15.75 cps
15
20
10
10 5
0
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 1H10
2001 2002 2003 2004 2005 2006 2007 2008 2009 1H10
2001 2002 2003 2004 2005 2006 2007 2008 2009 1H10 2001 2002 2003 2004 2005 2006 2007 2008 2009 1H10
$ million $ million
cents per security
cents per security
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Secure and growing business, internally managed

1H10 Result Presentation � 9

EBITDA growth across business segments

	1H10	1H09	Change
	$ million	$ million
Gas Transmission and Distribution
Queensland	51.6	50.5	2%
New South Wales	53.1	44.0	21%
Victoria	56.4	54.5	3%
South Australia	0.8	0.8	‐
Western Australia	51.0	48.7	5%
Northern Territory	1.2	1.4	(14)%
Gas Transmission and Distribution ‐ total	214.1	199.9	7%
Asset Management	16.3	10.9	50%
Energy Investments	13.8	3.0	360%
Total EBITDA from continuing business	244.3	213.9	14%
Total EBITDA from divested business1	‐	24.3	(100)%
Total EBITDA	244.3	238.2	3%

(1) Assets sold to Energy Infrastructure Investments, December 2008

1H10 Result Presentation � 10

EBITDA growth across business segments

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70
1H09
60 1H10 EBITDA split by segment
EII contribution
Energy
50
Investments
6%
Asset
40
Management
7%
30
20
GasTransmission
and Distribution
10
87%
0
Queensland New South Victoria & South Western Asset Energy Assets sold to
Wales Australia Australia & Management Investments EII
Northern
Territory
Gas Transmission and Distribution
$ million
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Gas Transmission and Distribution

1H10 Result Presentation � 11

Major capital expenditure

	1H10	1H09
$	million	$ million
Regulated
Victoria Transmission System	16.6	8.0	Includes northern expansion (1H10); Brooklyn Lara Pipeline (1H09)
APA Gas Networks (Qld)	8.7	7.0	Includes southern network expansion
	25.3	15.0
Major Projects
Queensland expansion	8.4	9.9	Davenport Downs compressor station
New South Wales expansion	11.4	21.1	Moomba Sydney Pipeline expansion; Culcairn compressor station
Western Australia expansion	9.0	21.1	Ned's Creek, Wyloo West compressor stations; Gwalia lateral; Mondarra
Northern Territory	‐	122.2	Bonaparte Gas Pipeline; Wickham Point Pipeline
	28.8	174.3
Stay in business capex	11.6	5.0
Total	65.7	194.3

Growth projects approved total $250 million

1H10 Result Presentation � 12

Fully covered distributions

On target to deliver at least 5% growth for FY2010 distribution

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50 48.2 Operat ing cash flow per
security
45 42.7
Distribution per security
39.7
40 37.6 38.2
35
31.6
30
31.0
29.5
28.0
25
� 1H10 payout ratio 50% on
24.0
20 22.5 operating cash flow
15 � 1H10 41.7% tax deferred
15.75
component
10
� DRP continues at 2.5%
5 discount
0
FY2005 FY2006 FY2007 FY2008 FY2009 1H2010
cents per security
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1H10 Result Presentation � 13

Prudent capital management

Strong balance sheet

• Cash and committed undrawn facilities of $650 million at 31 December 2009

• 1H10 metrics

• Gearing[1] of 69.9%, reduced from 70.3% at 30 June 2009

• Interest Cover Ratio of 2.16x, increased from 2.13x at 30 June 2009

• Interest rate exposure fixed or hedged – 79.0%

• Equity raising through the DRP and SPP

• DRP – $29 million in September 2009 and $30 million expected in March 2010

• SPP – offer currently open to APA securityholders (closes 10 March 2010)

• Interim DRP and SPP at equivalent pricing

(1) Ratio of Net Debt to Net Debt plus Book Equity.

1H10 Result Presentation � 14

Prudent capital management

Secure long‐term debt portfolio supporting business growth

• Refinanced debt maturing in FY2010, plus raised headroom to refinance maturities in FY2011

• $1,365 million raised in 1H10 – USPP, bilateral loan, new syndicated facility

• Continuing implementation of balance sheet strategy

• Diversifying source of funds

• Extending term of debt facilities in line with long term nature of APA assets

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1H10 Result Presentation � 15

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Operational performance and outlook

Mick McCormack Managing Director and CEO

1H10 Result Presentation � 16

APA strategy firm

Maximise value for securityholders

• Focusing on gas infrastructure assets in Australia’s growing gas market and enhancing APA’s portfolio of assets

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4,061 PJ
69,708 PJ
20,031 PJ
181
PJ
1,089 PJ
15
PJ
1,452 PJ
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• Abundant domestic gas reserves

• Increasing demand for natural gas, in particular for power generation

• Gas users focused on reducing carbon emissions regardless of CPRS, RET or other schemes

• Capturing revenue and operational synergies from APA’s significant asset base

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APA pipelines and networks
APA investments
Other pipelines
891 287
PJ Gas reserves (proved and probable) 1,248 PJ PJ 5,376 PJ
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• Pursuing opportunities that leverage APA’s knowledge and skills base

Source: APA data; Energy Quest September 2009

Underpinned by a strong and responsive balance sheet

1H10 Result Presentation � 17

Gas transmission and distribution

� New South Wales

� Victoria and South Australia

• Continuation of Moomba Sydney Pipeline mainline expansion program (5‐year)

• Commenced expansion of southern lateral for transport and storage services

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60
50
40 Central Ranges Pipeline
Central West Pipeline
30
Moomba Sydney Pipeline
20
10
0
1H2009 1H2010
$m
EBITDA
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� Queensland

• Extending APA Gas Network to new housing developments in south Brisbane/Gold Coast

• Commenced work on northern zone expansion

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60
50
40 SESA Pipeline
30 Victorian Metering
(regulated)
20
Victorian Transmission
10 System
0
1H2009 1H2010
$m
EBITDA
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� Western Australia and Northern Territory

• Submitted revised Access Arrangement (AA) for the Goldfields Gas Pipeline – new AA commences when ERA completes the review process

• Development of the Mondarra gas storage facility

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60
50
Cogeneration
40
APA Gas Network
30 Carpentaria Gas Pipeline
Roma Brisbane Pipeline
20
10
0
1H2009 1H2010
$m
EBITDA
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60
50
40 Northern Territory
30 NGV
20 Parmelia Gas Pipeline
10 Goldfields Gas Pipeline
0
1H2009 1H2010
$m
EBITDA
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APA transports more than 50% of the gas used in Australia

1H10 Result Presentation � 18

Development and growth opportunities

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APA’s portfolio provides strategic growth opportunities

1H10 Result Presentation � 19

Guidance for FY2010

Distribution guidance unchanged

� Distribution guidance

• Interim distribution confirmed at 5% (yoy)

• Barring unforeseen circumstances, anticipate delivering 5% growth in FY2010

• Full year distribution expected to be in line with previous years’ pay‐out ratio (60‐70%)

� EBITDA guidance

• EBITDA expected to fall within a range from $445 million to $460 million

1H10 Result Presentation � 20

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Questions

1H10 Result Presentation � 21

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Supplementary information

1H10 Result Presentation � 22

APA profile

� APA is Australia’s largest natural gas infrastructure business

• Gas Transmission and Distribution : gas pipelines, interconnected gas storage facilities across Australia, and gas distribution networks in Queensland and New South Wales

• Asset Management : provides asset management, operating and maintenance services

• Energy Investments : minority interests in energy infrastructure investments, including Envestra, SEA Gas Pipeline, Energy Infrastructure Investments and Ethane Pipeline Income Fund

• APA generates secure cash flows from contractual and regulatory arrangements on its assets

• with more than 90% of revenue from regulated (natural monopoly) assets and long term contracts

• APA has direct management and operational control over its assets and investments

• no fee leakage or conflicts that arise with external management model

• employing over 1,100 skilled and experienced people who perform all commercial, engineering and operations functions for APA’s assets and investments

APA delivers more than half of Australia’s domestic gas usage

1H10 Result Presentation � 23

Financials

Key financial ratios

	1H10	1H09
Underlying operating cash flow (cps)	31.6	25.8
Weighted average securities on issue (m)	504.5	475.8
Payout ratio	50.2%	59.8%
Earning per security (cps)
underlying	12.7	11.9
reported	12.6	3.8
Interest cover ratio (times)	2.16	1.88
Gearing ratio	69.9%	69.7%
Total assets ($m)	4,792	4,858
Net assets ($m)	1,315	1,125
Net tangible asset backing per security ($)	1.23	0.88

1H10 Result Presentation � 24

Financials

Cash flow

	1H10	1H09
	$ million	$ million	Change
Operating cash flow (OCF)	159.5	122.8	29.9%
Distributions (net of DRP)	50.6	43.7
Available operating cash flow	108.9	79.1	37.7%
Operating cash flow per security (cents)	31.6	25.8	22.5%
Distributions per security (cents)	15.75	15.0	5.0%
Distribution payout ratio	50.2%	59.8%
Capital expenditure	65.7	194.3
Investments	32.9	40.1
Acquisitions	‐	23.5

1H10 Result Presentation � 25

Financials

Revenue analysis by business segment

	1H10	1H09	Change
	$ million	$ million
Gas Transmission and Distribution
Queensland	76.8	71.8	7%
New South Wales	64.3	54.3	18%
Victoria	72.8	75.3	(3)%
South Australia	1.0	1.4	(29)%
Western Australia	72.5	69.1	5%
Northern Territory	5.6	5.9	(5)%
Gas Transmission and Distribution ‐ total	293.0	277.9	6%
Asset Management	29.1	27.6	6%
Energy Investments	14.2	3.1	359%
Total revenue from continuing business	336.3	308.5	9%
Total revenue from divested business1	‐	34.1	(100)%
Total revenue	336.3	342.6	(2)%
Pass‐through revenue	152.6	133.0	15%
Unallocated revenue	7.0	14.4	(52)%
Total revenue	495.9	490.0	1%

(1) Assets sold to Energy Infrastructure Investments, December 2008

1H10 Result Presentation � 26

Financials

Reconciliation – statutory and underlying

	1H10	1H09
	$ million	$ million	Change
Statutory result
Revenue	495.9	490.0	1%
EBITDA	244.3	238.2	3%
Profit (after significant items)	63.6	18.0	254%
Underlying result
Revenue	498.0	500.7	(1)%
EBITDA	246.3	248.8	(1)%
Profit	64.3	56.7	13%
Adjustments to underlying result
Capital distributions1	0.7	7.1
Finance leases2	1.4	3.6
	2.1	10.6
Significant items (after tax) 3	‐	31.6

(1) The capital component of the distributions received from EPX and HDF. Prior year included Envestra distributions of $6.7 million. (2) Earnings from assets treated as finance leases under A‐IFRS, i.e. finance lease principal repayments.

(3) Significant items in the 6 months to 31 December 2008 relate to “one‐off” costs associated with the creation of EII, settlement of acquisition related liabilities and a revaluation loss on interest rate hedges which are deemed ineffective.

1H10 Result Presentation � 27

Financials

Total committed debt facilities (as at 31 December 2009)

Facility Facility amount Tenor 2008 Bilateral borrowings[1] $165 million July 2011 2009 Bilateral borrowing[2] $150 million August 2014

2007 Syndicated facility[2] $900 million June 2012 2009 Syndicated facility[3] $1,030 million 2 and 4 year tranches maturing July 2011 and July 2013

2003 US private placement[4] $496 million 7, 10, 12 and 15 year tranches maturing Sept 2010, 2013, 2015 and 2018 2007 US private placement $811 million 10, 12 and 15 year tranches maturing May 2017, 2019 and 2022 2009 US private placement $185 million 7 and 10 year tranches maturing July 2016 and 2019

(1) Comprises three facilities, drawn to $145m cash limit. $20m balance is fully utilised as a bank letter of credit.

(2) These facilities fully drawn.

(3) Amount drawn at 31 Dec 2009 was $430 million. Amount drawn reduced to $405m in Feb 2010.

(4) Sept 2010 maturity of $102m more than covered by $150m 2009 Bilateral borrowing.

1H10 Result Presentation � 28

Regulatory update

APA’s major price regulated assets

Regulatory resets over the next five years

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• Regulatory resets are spread out over five years, with on average one reset per year

• Next major asset reset ‐ Goldfields Gas Pipeline

Revised Access Arrangement (AA) for the Goldfields Gas Pipeline submitted in 2009 New AA commences when ERA[1] completes the review process

• The Carpentaria Gas Pipeline, Moomba Sydney Pipeline and Central West Pipeline are now Light Regulation pipelines.

(1) Economic Regulation Authority of Western Australia

1H10 Result Presentation � 29

APA asset and investment portfolio

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1H10 Result Presentation � 30

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.

1H10 Result Presentation � 31

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For further information contact

Chris Kotsaris Investor Relations, APA Group Tel: +61 2 9693 0049 E‐mail: chris.kotsaris@apa.com.au

Delivering Australia’s energy

or visit APA’s website

www.apa.com.au

1H10 Result Presentation � 32