APA GROUP — Interim / Quarterly Report 2014

Feb 18, 2014

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Financial Results Half year ended 31 December 2013

19 February 2014

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Result overview and strategic highlights

Mick McCormack Managing Director and CEO

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1H 2014 Results Presentation

Clear strategy and growth capability

 Recent pipeline acquisitions exceeding expectations

• Secure revenue with further revenue step up from new contracts still to come

• Growth opportunities with Wallumbilla and Moomba compression projects

• Existing infrastructure creates opportunity for new growth and revenue

 Market leading growth capability

• Well positioned portfolio with unique growth and service opportunities

• Industry-leading management, operating and engineering capability

• Strong balance sheet and broad access to funding for growth

 Flexible and resilient interconnected infrastructure portfolio

• East coast grid services adapting to gas market changes

• Developing services and optimising capacity made possible by an interconnected grid

 Value created across the gas delivery chain through asset interconnection

• Further pipeline interconnection across states and territories

• Envestra merger links infrastructure from source to customer

Continued successful execution of our long term strategy

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1H 2014 Results Presentation

Solid financial performance

$ million	1H14	1H13(1)	Change	Change
Normalised results(2)
EBITDA	399	322	up	24%
Net profit after tax	121	96	up	25%
Operating cash flow(3)	217	213	up	2%
Operating cash flow per security (cents)	25.9	29.8	down	(13%)
Statutory results
EBITDA	399	421	down	(5%)
Net profit after tax	121	210	down	(43%)
Operating cash flow(3)	208	144	up	45%
Operatingcash flowper security (cents)	24.9	20.2	up	23%
Distributions
Distribution per security (cents)	17.5	17.0	up	3%
Distributionpayout ratio(4)	67.5%	66.2%

(1) APA has adopted revised AASB 119 during the current period. As the revised standard must be applied retrospectively, comparative numbers have been restated.

(2) Normalised results exclude one-off significant items for the corresponding period relating to the acquisition of Hastings Diversified Utilities Fund and the reversal of some costs booked in relation to the sale of the Allgas business in December 2011 to reflect APA’s core earnings from operations.

(3) Operating cash flow = net cash from operations after interest and tax payments.

(4) Distribution payout ratio = total distribution payments as a percentage of normalised operating cash flow.

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1H 2014 Results Presentation

Growth capital projects across Australia

 Continued expansion and enhancement of APA’s gas infrastructure portfolio

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

FY 2014 FY 2015 Moomba Sydney Pipeline Victorian Transmission System Goldfields Gas PIpeline Moomba compression Wallumbilla compression Mondarra Gas Storage Facility Diamantina Power Station Compression for eastern haul transportation Compression at Wallumbilla hub for deliveries to Gladstone LNG Capacity expansion of southern and northern sections of the transmission system Two pipeline expansions Expanded capacity Southern lateral expansion for northern gas flow 242 MW gas fired power station 60 MW back up generation	FY 2014	FY 2014	FY 2014	FY 2014	FY 2015	FY 2016	FY 2016
				Southern lateral expansion for northern gas flow		APA e APA i	Victorian Transmission System nergy infrastructure nvestments Diamantina and Leichhardt Power Stations Goldfields Gas Pipeline Capacity expansion Wallu Comp Capac expan Moomba Compression Capacity expansion
	Capacity transmis		expansion of southern and northern sections of the sion system
	Tw exp	o pipeline ansions
	242 MW gas fired power station 60 MW back up generation
	Capacity expansion Other natural gas pipelines

Wallumbilla Compression Capacity expansion

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APA energy infrastructure
APA investments
Other natural gas pipelines
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Victorian Transmission System Capacity expansion

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1H 2014 Results Presentation

East coast grid adapting to market changes

• New gas transportation agreements across the east coast grid

• Multi pipeline agreements on VTS, MSP, SWQP and RBP

• New short term SWQP agreements due to capacity available from connected grid

• New BWP agreement

• Three revised MSP agreements with retailers incre ~~a~~ sing gas volumes transported through the VTS into New South Wales

• Enhancing physical operation of the grid

• SWQP and RBP configured to operate as single pipeline

• Compression expansions at Wallumbilla hub and Moomba

• Installing bi-directional capability on SWQP and BWP

• Planning bi-directional capability on MSP and RBP

• Capacity expansion on the VTS northern zone

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Compression expansion
Gladstone
Wallumbilla and Moomba
Capacity optimisation
Wallumbilla
SWQP - RBP operating as
single pipeline
Brisbane
Moomba
Bi-directional pipelines
Vic-NSW – operating
SWQP – under construction
BWP – in planning
MSP and RBP - proposal
Sydney
Adelaide
Capacity expansion
Melbourne VTS – northern zone
MSP – southern lateral
APA natural gas pipelines (including investments)
Other natural gas pipelines
APA’s east coast grid:
Bi-directional pipeline
> 7,000 km of pipelines
Gas storage
5 major pipelines
Gas production
5 states and territories
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• 5 states and territories

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1H 2014 Results Presentation

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Financial performance

Peter Fredricson Chief Financial Officer

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1H 2014 Results Presentation

Reconciliation – Statutory and normalised results

$ million		1H14			1H13(1)
	Normalised	Significant	Statutory	Normalised	Significant	Statutory
		items			items
Revenue excluding pass-through(2)	509.6	-	509.6	452.1	-	452.1
EBITDA	398.9	-	398.9	321.9	99.2	421.1
Depreciation and amortisation	(74.7)	-	(74.7)	(63.8)	-	(63.8)
EBIT	324.2	-	324.2	258.1	99.2	357.3
Net interest expense	(164.0)	-	(164.0)	(140.2)	8.7	(131.5)
Pre-tax profit	160.2	-	160.2	118.0	107.9	225.9
Tax	(39.5)	-	(39.5)	(24.3)	5.8	(18.5)
Non-controlling interests	-	-	-	2.8	-	2.8
Net profit after tax	120.7	-	120.7	96.5	113.7	210.2
Operating cash flow	216.6	(8.3)	208.3	212.5	(68.8)	143.7

(1) APA has adopted revised AASB 119 during the current period. As the revised standard must be applied retrospectively, comparative numbers have been restated. (2) Pass-through revenue is revenue on which no margin is earned.

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1H 2014 Results Presentation

Solid financial performance

$ million	1H14(1)	1H13(1,2)	Change
Revenue excluding pass-through(3)	509.6	452.1	12.7%
EBITDA	398.9	321.9	23.9%
Depreciation and amortisation	(74.7)	(63.8)	(17.1)%
EBIT	324.2	258.1	25.6%
Net interest expense	(164.0)	(140.2)	(17.0)%
Pre-tax profit	160.2	118.0	35.8%
Tax	(39.5)	(24.3)	(62.6)%
Non-controlling interests	-	2.8
Net profit after tax	120.7	96.5	25.1%

• (1) Normalised results

• (2) APA has adopted revised AASB 119 during the current period. As the revised standard must be applied retrospectively, comparative numbers have been restated. (3) Pass-through revenue is revenue on which no margin is earned.

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1H 2014 Results Presentation

EBITDA by business segment

$ million Energy Infrastructure Queensland	1H14(1) 108.8	1H13(1,2) 64.3	Change 69.2 %
New South Wales	62.2	58.5	6.3%
Victoria & South Australia	62.4	75.0	(16.8%)
Western Australia & Northern Territory	92.6	71.3	29.9%
Energy Infrastructure total Asset Management Energy Investments	326.0 34.5 38.4	269.1 15.4 30.7	21.1% 124.0% 25.1%
Total EBITDA(3)	398.9	315.2	26.6%

1H14 EBITDA[(2)] by business segment

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Energy
Investments
Asset
9.6%
Management
8.6%
Queensland
27.3%
Western
Australia &
Northern
New South
Territory
Wales
23.2% Victoria &
15.6%
South
Australia
15.6%
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Energy Infrastructure 81.7%

• (1) Normalised results

• (2) APA has adopted revised AASB 119 during the current period. As the revised standard must be applied retrospectively, comparative numbers have been restated. (3) Excludes divested business: Moomba Adelaide Pipeline System sold May 2013

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1H 2014 Results Presentation

Energy Infrastructure

Queensland

New South Wales

• Full 6 month contribution of South West Queensland Pipeline (consolidated Oct 2012) and Roma Brisbane Pipeline expansion (commissioned Sep 2012)

• New short term agreements on the South West Queensland and Berwyndale Wallumbilla pipelines

• Three agreements on the Moomba Sydney Pipeline, transporting increased gas volumes north from the Victorian Transmission System (commencing Jan 2014, Jan 2015 and Jun 2015)

EBITDA

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$120m
$108.8m
$100m
EBITDA
$80m
$80m
$62.2m
South West $60m
$60m
Queensland Pipeline
Other Qld
$40m $40m
Carpentaria Gas Moomba Sydney
$20m Pipeline $20m Pipeline System
Roma Brisbane
Pipeline
$0m $0m
1H11 1H12 1H13 1H14 1H11 1H12 1H13 1H14
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1H 2014 Results Presentation

Energy Infrastructure

Victoria & South Australia

• Decrease in regulated tariffs on the Victorian Transmission System with commencement of the new access arrangement

• Partial success - APA’s appeal of AER’s decision

• Increased gas volume flow north to New South Wales

Western Australia & Northern Territory

• Expanded Mondarra Gas Storage Facility commenced commercial operation (Jul 2013)

• Full 6 month contribution of Pilbara Pipeline System (consolidated Oct 2012)

• New Goldfields Gas Pipeline agreement commenced October 2013

EBITDA

EBITDA

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$80m
$62.4m
$60m
$40m
Victorian assets
$20m
SESA Pipeline
$0m
1H11 1H12 1H13 1H14
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$100m
$92.6m
Goldfields Gas
$80m Pipeline
Pilbara Pipeline
System
$60m
Other WA assets
Mondarra Gas
$40m
Storage Facility
Emu Downs wind
$20m farm
Amadeus Gas
Pipeline
$0m
1H11 1H12 1H13 1H14
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1H 2014 Results Presentation

Asset Management and Energy Investments

Asset Management

• Services to APA’s investments

• One-off customer contributions for relocating APA infrastructure

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$20m
Average $8.9m/a
$10m
$0m
FY09 FY10 FY11 FY12 FY13 1H14
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EBITDA

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$60m
$40m $34.5m
One-off
customer
contributions
$20m
Contracted
services
$0m
1H11 1H12 1H13 1H14
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Energy Investments

EBITDA

• Increased contribution from Envestra investment

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$60m
$38.4m
$40m
$20m
$0m
1H11 1H12 1H13 1H14
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1H 2014 Results Presentation

Operating cash flow

$ million	1H14	1H13
Normalised EBITDA	398.9	321.9
Less borrowing costs	(157.8)	(116.4)
Less equity accounted earnings	(36.5)	(26.3)
Add dividends received	28.4	29.4
Other – including working capital	(16.4)	3.9
HDF fee payments	(8.3)	(68.8)
Operating cash flow (statutory)	208.3	143.7
Add back significant items	8.3	68.8
Operating cash flow (normalised)	216.6	212.5

• Debt of $1.65 billion to repay HDF debt and fund acquisitions

• Increased equity accounted earnings

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1H 2014 Results Presentation

Fully covered distributions

On target to deliver distribution guidance for FY 2014

cents

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60
56.0
51.9 52.6 52.5
48.2
50
40
30 34.4 35.0 35.5
32.8 25.9
31.0
20
17.5
10
0
FY09 FY10 FY11 FY12 FY13 1H14
Operating cash flow per security Distribution per security
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 1H14 distribution payout ratio[(1,2) ] of 67.5%

• Distribution components:

16.86 cents profit distribution

0.64 cents capital distribution

17.50 cents

• (1) Distribution payout ratio = distribution payments as a percentage of operating cash flow

• (2) Based on normalised operating cash flow

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1H 2014 Results Presentation

Capital expenditure

$ million	1H14 1H13 14.9 13.4 93.6 23.7 4.8 13.4 39.1 112.0 11.4 14.9 148.9 164.0 163.7 177.4 16.4 0.5 20.6 9.9 200.7 187.8 - 271.7 200.7 459.5 $0m $100m $200m $300m $400m $500m	Committed growth capex	Committed growth capex
Growth capex
Regulated- Victoria
Major Projects Queensland
New South Wales
Western Australia
Other
Total growth capex
Customer contributions
Stay in business capex
Total capex
Acquisitions
Total capital & investment expenditure

(1) Capital expenditure represents cash payments as disclosed in the cash flow statement for 1H14 and 1H13

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1H 2014 Results Presentation

Capital management

 Cash and committed undrawn facilities of $809 million at 31 December 2013

~~.~~	~~.~~	Metrics	31 Dec 2013	30 Jun 2013
		Gearing(1,2)	63.8%	62.8%
		Interest cover ratio	2.29 times	2.30 times
		Average interest rate applying to drawn debt(2)	7.19%	7.35%
		Interest rate exposure fixed or hedged	78.4%	83.2%
		Average maturity of senior facilities	5.4 years	6.2 years

 Debt refinancing

Four existing $75 million bilateral bank facilities each increased to $100 million and term extended from 3 years to 5 years, maturing December 2018

• (1) Ratio of net debt to net debt plus book equity

• (2) Includes $515 million of Subordinated Notes

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1H 2014 Results Presentation

Capital management

 Maintain strong BBB/Baa2 investment grade ratings

 Maintain funding flexibility – internal cash flows plus additional equity and/or debt

Debt Maturity profile (31 December 2013)

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$1,000m
$800m
$600m
$285m
$480m
$400m
$515m
$735m
$536m
$200m $414m
$271m $295m $289m $300m $296m
$126m
$0m
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
Sterling MTN US 144a Notes Canadian MTN
Japanese MTN Australian MTN US Private Placement Notes
First Call Date - 60 year Sub Notes Bank borrowings Headroom (bank borrowings)
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1H 2014 Results Presentation

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Outlook and guidance

Mick McCormack Managing Director and CEO

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1H 2014 Results Presentation

Diamantina and Leichhardt power stations

Project update

 Commissioning phase underway

• Generating units progressively brought on line

• First power delivered to North West Power System in early October 2013

• Currently providing 70 MW generating capacity for MIM operations

• Transitional plan post Forge receivership

• Dialogue with receiver/manager, Forge employees and service providers on site

• Maintaining continuity of activity on site

• Leichhardt Power Station unaffected by Forge event

• Fixed price EPC contract with Leighton Contractors

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Diamantina Power Station – February 2014
DPS operations
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1H 2014 Results Presentation

Connecting eastern and northern regions

 Strategic initiative to connect the Northern Territory and the east coast

• Pipeline linking APA’s east coast grid and Northern Territory pipelines

 Benefits and rationale

• Linking existing APA pipeline infrastructure

• Connecting regions to new and existing alternative gas sources

• Seamless, cost effective e ~~n~~ d-to-end gas transportation service

• Flexibility and service options across multiple injection and withdrawal points

 Feasibility study to commence in FY14

• Route selection

• Engineering

• Commercial viability

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Darwin
Gladstone
Wallumbilla
Brisbane
Moomba
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APA natural gas pipelines (including investments) Other natural gas pipelines

Potential pipeline link Gas production Onshore gas exploration Gas resource

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1H 2014 Results Presentation

Envestra merger proposal

Update

Rationale

• APA and Envestra agree to progress steps to scheme of arrangement vote (announced 17 December 2013)

• Offer consideration of scrip and cash revised, with implied value of $1.17 per Envestra share (plus Envestra distribution of 3.2 cps[(1)] )

 Merger progressing well

• Scheme Implementation Agreement under negotiation

• Core business – gas distribution

• Largest shareholder and service provider

• Revenue certainty and appropriate commercial returns

• Significant capex growth

• Independent Expert Report underway

• Engagement with Envestra’s financiers

• Delivery chain from source to customer

Timeline and next steps

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(1) Expected Envestra distribution for the six months to 31 December 2013

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1H 2014 Results Presentation

Outlook and guidance for FY2014

Outlook

 Continued construction and development of expansion projects

 Commence Northern Territory – east coast interconnection feasibility study

• Progress Envestra merger proposal

Guidance

• EBITDA – expected within a range of $730 million to $740 million

 Net interest cost – expected within a range of $315 million to $325 million

• Distribution – at least 36 cents per security

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1H 2014 Results Presentation

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Supplementary information

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1H 2014 Results Presentation

Revenue by business segment

$ million	1H14	1H13_(1)_	Change
Energy Infrastructure
Queensland	132.3	86.7	52.6%
New South Wales	74.1	71.1	4.3%
Victoria & South Australia	81.0	95.8	(15.4%)
Western Australia & Northern Territory	127.1	107.0	18.8%
Energy Infrastructure total	414.5	360.6	15.0%
Asset Management	56.1	37.7	48.8%
EnergyInvestments	38.4	30.7	24.9%
Total segment revenue	509.0	429.0	18.7%
Pass-through revenue	201.8	172.6	16.9%
Unallocated revenue	0.7	10.5	(93.8%)
Divested business(2)	-	12.6	nm
Total revenue	711.4	624.7	13.9%

(1) APA has adopted revised AASB 119 during the current period. As the revised standard must be applied retrospectively, comparative numbers have been restated. (2) Moomba Adelaide Pipeline System, consolidated 9 October 2012 and sold 1 May 2013.

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1H 2014 Results Presentation

Balance sheet

$ million	31 Dec 2013 30 Jun 2013 Change
Current assets Property, plant and equipment Other non-current assets	240 280 (14.3%) 5,398 5,280 2.2% 2,188 2,139 2.3%
Total Assets	7,826 7,699 1.6%
Current debt Other current liabilities Total current liabilities Long term debt	- 81 nm 318 411 (22.7%)
	318 492 (35.4%)
	4,585 4,233 8.3%
Other long term liabilities	455 460 (1.1%)
Total long term liabilities	5,040 4,693 7.4%
Total Liabilities	5,358 5,185 3.4%
Net Assets	2,468 2,514 (1.9%)

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1H 2014 Results Presentation

Debt facilities

Total committed debt facilities at 31 December 2013

$million(1)	Facility amount	Drawn amount	Tenor
2011 Bilateral borrowings(2)	400	285	5 years maturing December 2018
2011 Bilateral borrowing	150	0	5 years maturing October 2016
2011 Syndicated facility(3)	967	480	3 and 4 year tranches maturing November 2014 and 2015
2003 US Private placement(4)	281	281	12 and 15 year tranches maturing September 2015 and 2018
2007 US Private placement	811	811	10, 12 and 15 year tranches maturing May 2017, 2019 and 2022
2009 US Private placement	185	185	7 and 10 year tranches maturing July 2016 and 2019
2010 AUD Medium Term Notes	300	300	10 year tranche maturing July 2020
2012 JPY Medium Term Notes	126	126	6.5 year tranche maturing in June 2018
2012 CAD Medium Term Notes	289	289	7.1 year tranche maturing in July 2019
2012 US144a/Reg S Notes	735	735	10 year tranche maturing October 2022
2012 GBP Medium Term Notes	536	536	12 year tranche maturing in November 2024
2012 Subordinated Notes	515	515	60 year term, first call date March 2018
Total	5,295	4,543

• (1) Australian dollars. Any foreign notes issued have been hedged into fixed-rate Australian dollar obligations

• (2) Comprises four facilities of $100 million each. In December 2013, the terms of four existing $75 million facilities were extended to five years and their limits were increased by $25 million each

(3) Comprises two facilities of $483.3 million each

(4) A$112.6 million of US Private Placement Notes matured and were repaid in September 2013

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1H 2014 Results Presentation

Regulatory update

APA’s major price regulated assets

 Regulatory resets over the next five years

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 Victorian Transmission System access arrangement

• AER final decision (May 2013) reviewed by Australian Competition Tribunal, decision Sep 2013

• Recovered approximately $20m in business value from AER decision

 Rate of Return Guidelines

• New Guidelines released on Rate of Return released by the AER, and the ERA in WA

• Adopting a broader approach to estimating the allowed return on capital

• Will first apply to Goldfields Gas Pipeline Access Arrangement Review

 AER Better Regulation Guidelines

• A series of Guidelines addressing methodologies for assessment of expenditure, benchmarking, confidentiality, incentive mechanisms, and customer engagement

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1H 2014 Results Presentation

APA asset and investment portfolio

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1H 2014 Results Presentation

Disclaimer

This presentation has been prepared by Australian Pipeline Limited (ACN 091 344 704) the responsible entity of the Australian Pipeline Trust (ARSN 091 678 778) and APT Investment Trust (ARSN 115 585 441) ( APA Group ).

Summary information: This presentation contains summary information about APA Group and its activities current as at the date of this presentation. The information in this presentation is of a general background nature and does not purport to be complete. It should be read in conjunction with the APA Group’s other periodic and continuous disclosure announcements which are available at www.apa.com.au.

Not financial product advice: Please note that Australian Pipeline Limited is not licensed to provide financial product advice in relation to securities in the APA Group. This presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire APA Group securities and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and consult an investment adviser if necessary.

Past performance: Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

Future performance: This presentation contains certain “forward-looking statements” such as indications of, and guidance on, future earnings and financial position and performance. 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.

This presentation contains such statements that are subject to risk factors associated with the industries in which APA Group operates which may materially impact on future performance. Investors should form their own views as to these matters and any assumptions on which any forward-looking statements are based. APA Group assumes no obligation to update or revise such information to reflect any change in expectations or assumptions.

Investment risk: An investment in securities in APA Group is subject to investment and other known and unknown risks, some of which are beyond the control of APA Group. APA Group does not guarantee any particular rate of return or the performance of APA Group. Not an offer: This presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase any security.

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1H 2014 Results Presentation

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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