APA GROUP — Interim / Quarterly Report 2014

Mar 11, 2014

connEctInG oPPoRtUnItIES

Dear Securityholders

APA has delivered a solid financial performance for the six months ending December 2013. Pleasingly, our most recent pipeline acquisitions in Queensland and Western Australia are already exceeding our expectations, both individually as well as interconnected assets within our extensive portfolio.

We have a clear and consistent strategy of expanding and enhancing our infrastructure portfolio, and our performance this year, as in previous years, is underpinned by successfully executing this strategy. We’re all about delivering growth, security and value for our investors, and therefore I am pleased to share with you the Interim 2014 results.

SOLID RESULTS

A summary table of both our statutory and normalised financial measures is provided overleaf. Our normalised results which more readily reflect the operating performance of the business, in summary show:

• an increase in earnings before interest, tax, depreciation and amortisation (EBITDA) of 24 per cent to $399 million;

• a 25 per cent increase in net profit after tax to $121 million; and

• operating cash flow up 2 per cent to $217 million.

The strong EBITDA result has been driven by a full six months contribution from the newly acquired South West Queensland Pipeline and Pilbara Pipeline System. Additional earnings also came from the expanded Mondarra Gas Storage Facility (commissioned July 2013), as well as increased contributions from our asset management business.

These increases were partially offset by a lower earnings contribution from the Victorian Gas Transmission System as a result of the new access arrangement and the removal of the Moomba Adelaide Pipeline System (MAPS) that was consolidated in October 2012 and sold in May 2013.

The business continues to generate strong, stable cash flows with operating cash flow increasing to $217 million. Operating cash flow per security was down 13 per cent to 25.9 cents due to the increased APA securities issued following completion of the HDF acquisition in December 2012. APA’s interim distribution of 17.5 cents per security is a 2.9 per cent, or 0.5 cent, increase on the previous corresponding period. We maintain our track record of funding distributions out of operating cash flows.

GROWTH PROJECTS

Work continued on a number of growth projects across the country, with capital expenditure this half totalling $165 million. These are outlined on the map overleaf. During the period we signed a number of new gas transportation agreements utilising multiple pipelines on our 7,000 kilometre east coast grid. The grid allows us to provide improved service capabilities and flexibility for our customers, and ensures we are best equipped to deal with issues and opportunities within the industry.

ENVESTRA UPDATE

In December 2013 we reached agreement with Envestra to proceed with steps necessary for a shareholder vote on a scheme of arrangement proposal. APA is Envestra’s largest shareholder with a 33.05% interest and we operate and manage its gas distribution networks. APA believes that the transaction will deliver significant benefits to investors in both businesses through additional scale, geographic spread and asset diversity, driving operational improvements. APA envisages that the proposal will be put to Envestra shareholders for their approval in this financial year.

CAPITAL MANAGEMENT

APA has maintained a strong balance sheet, as well as its two investment grade credit ratings and sufficient funding capability for

its growth. There was no change to APA securities on issue during the period. Four existing $75 million bilateral bank facilities due to mature in mid-2014 were extended to December 2018 and increased to $100 million each.

FULL YEAR OUTLOOK

Over the next six months we will progress the current expansion and capacity upgrade projects across the country, and continue to develop additional service offerings for our customers. We will also continue to work with Envestra to complete the merger of the two businesses.

The geographic spread and interconnection of our assets provides unique opportunities for APA. If there is gas to be moved around Australia, APA will invariably deliver at least part of the solution. One such opportunity is a gas pipeline link between our Northern Territory assets and east coast grid. We have committed up to $2 million to commence a feasibility study following strong indicative interest from government, producers and customers in creating such a link. The study will aim to provide a sound understanding of the gas production potential in the Territory and South Australia and actual demand from potential gas buyers on the east coast, as well as addressing land access and engineering issues.

Barring unforeseen circumstances, we expect our EBITDA for FY2014 to be in the range of $730 million to $740 million, an increase of approximately 13 to 14 per cent over FY2013 EBITDA when adjusted to remove the contribution of MAPS. We expect distributions to total at least 36.0 cents per security for the year.

Thank you for your support and I look forward to reporting APA’s full year results to you in August.

==> picture [132 x 34] intentionally omitted <==

len Bleasel aM, APA Group Chairman

APA Group comprises two registered investment schemes, Australian Pipeline Trust (ARSN 091 678 778) and APT Investment Trust (ARSN 115 585 441), the securities of which are stapled together. Australian Pipeline Limited (ACN 091 344 704) is the responsible entity of those trusts. The registered office is HSBC building, Level 19, 580 George Street, Sydney NSW 2000.

PERFORMANCE		1H14			1H14
HIGHLIGHTS		Normalised1	change %		Statutory	change %
		$ million	normalised		$ million	Statutory
Revenue		711.4	13.9		711.4	13.9
Revenue excluding pass-through2		509.6	12.7		509.6	12.7
EBITDA		398.9	23.9		398.9	(5.3)
Proft after income tax and		120.7	25.1		120.7	(42.6)
non-controlling interests
Earnings per security (cents)		14.4	6.7		14.4	(51.2)
Operating cash fow		216.6	1.9		208.3	44.9
Operating cash fow per security (cents)		25.9	(13.1)		24.9	23.3
Distribution per security (cents)		17.5	2.9
Distribution payout ratio		67.5%

1. Normalised financial results exclude significant items

2. Pass-through revenue is revenue on which no margin is earned

CAPITAL ExPANSION PROJECTS – TRANSFORMATIONAL GROWTH

FULLY COVERED DISTRIbUTIONS On target to deliver distribution guidance for FY2014

==> picture [171 x 205] intentionally omitted <==

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

cents
60
56.0
51.9 52.6 52.5
50 48.2
40
34.4 35.0 35.5
30 32.8
31.0 25.9
20
17.5
10
0
FY09 FY10 FY11 FY12 FY13 1H14
Distribution per security
Operating cash flow per security
----- End of picture text -----

Committed projects underwritten by long term revenue contracts and/or regulatory arrangements

==> picture [559 x 399] intentionally omitted <==

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

FY2014 FY2015 FY2016
Moomba Sydney Southern lateral expansion for northern gas flow
Pipeline
Victorian Capacity expansion of southern and northern sections of the
Transmission System transmission system
Goldfields Two pipeline
Gas Pipeline expansions
Moomba
Compression for eastern haul transportation
Compression
Wallumbilla Compression at Wallumbilla hub for deliveries
Compression to Gladstone LNG
Diamantina and
Mondarra Gas Goldfields Gas Pipeline Leichhardt
Storage Facility Expanded capacity Capacity expansion Power Stations
NO RTHERN
Diamantina 242 MW gas-fired power station TERRITORY QUEENSLAND
Power Station 60 MW back up generation WallumbillaQUEENSLAND
Compression
Capacity expansion
WESTERN
AUSTRALIA
Moomba CompressionAUSTRALIASOUTH
Capacity expansion NEW SOUTH
WALES
SOUTH
AUSTRALIA
VICTORIA
APA Group assets
Victorian Transmission
APA Group investments System
Other natural gas pipelines Capacity expansion
and Moomba Sydney
Power station southern lateral expansion
TASMANIA
Gas storage
----- End of picture text -----

complete Interim Financial reports Information including webcast of the Interim results presentation is available under “Investor relations’ on our website www.apa.com.au

DISclaIMer APA Group comprises two registered investment schemes, Australian Pipeline Trust (ARSN 091 678 778) and APT Investment Trust (ARSN 115 585 441), the securities of which are stapled together. Australian Pipeline Limited (ACN 091 344 704), the responsible entity of Australian Pipeline Trust and APT Investment Trust, is not licensed to provide financial product advice in relation to securities in APA Group and this publication does not constitute such advice. Before relying on any statements in this publication, you should consider the appropriateness of the information, having regard to your own objectives, financial situation and needs, and consult an investment adviser if necessary. Certain forward looking statements made in this publication are not based on historical fact and necessarily involve assumptions as to future events and analysis, which may or may not be correct. Such statements should not be relied on as an indication or guarantee of future performance.