APA GROUP — Investor Presentation 2009

Oct 19, 2009

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ASX RELEASE 20 October 2009

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:

• Citi Australian Investment Conference presentation by Managing Director

Yours sincerely

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Mark Knapman Company Secretary

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APA Group – delivering security and growth

Mick McCormack, Managing Director Citi Australian Investment Conference 20 October 2009

Outline

• About APA

• APA FY2009 performance summary

� Security

• Revenue

• Capital management

• Growth

• Natural gas demand

• Gas fired generation

• Carbon reducing legislation

• APA expansion projects

• Summary

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APA Group ‐ Australia’s largest natural gas infrastructure business

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• Australia has an abundance of natural gas reserves

• 60,300 PJ of 2P reserves, with half in eastern Australia

• Demand for natural gas is increasing

• APA delivers gas from all major gas production sources to all major gas markets

• transporting more than 50% of natural gas used in Australia

• and more than 70% of natural gas in Australia’s eastern states

APA’s unrivalled national portfolio connects all major gas sources to major markets

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APA’s strengths

� Unrivalled gas asset footprint

• largest gas transporter of natural gas across Australia by pipeline length, capacity and volume

� Integrated portfolio of gas pipeline assets

• providing revenue and operating synergies

� Attractive growth opportunities

• enhancing capacity in APA’s existing pipelines serving major growth markets across Australia

� Stable cash flow

– regulated and contracted revenue

� Internally managed and operated business

• highly skilled and experienced workforce, extracting greater value from the business and responding to a dynamic energy market

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APA’s strategy

Maximise value for securityholders

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

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

• Pursuing opportunities that leverage APA’s knowledge and skills base

• Maintaining a strong balance sheet

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Record full year result

Strong underlying fundamentals

	Underlying results(1)		2009			2008		Change	Change
	Operating cash flow(2)	$	233.6	million	$	192.1	million	up	22%
	Operating cash flow(2)per security		48.2	cps		42.7	cps	up	13%
	Full year distribution		31.0	cps		29.5	cps	up	5%
	Distribution payout ratio		65.6 %			71.2 %
	Revenue excluding pass‐through	$	687.4	million	$	614.9	million	up	12%
	EBITDA	$	458.7	million	$	430.5	million	up	7%
	Profit	$	110.1	million	$	82.2	million	up	34%

(1) Adjusted for significant items, and includes Envestra distributions and complementary asset finance leases.

(2) Operating cash flow = Net cash from operations after interest and tax payments, adjusted for significant items.

Cash flow funds distributions and business growth

FY09 Results Presentation � 6 6

Strong segment performance in FY2009

Strong EBITDA growth in gas transmission and distribution

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120
100
2008
2009
80
60
40
20
0
Queensland New Victoria Western Asset Energy Assets
South & South Australia management investments sold to EII
Wales Australia &
Northern
Territory
Gas transmission and distribution
$ million
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EBITDA split by segment

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Assets sold to
Energy
EII
investments
Asset management 5%
5%
7%
Gas transmission
and distribution
83%
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EBITDA growth

• Gas transmission and distribution – up 14%

• Asset management – up 7%

• Energy investments – up 21%

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Consistent and predictable performance

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Underlying operating cash flow
250 $234 m
200
150
100
50
0
2001 2002 2003 2004 2005 2006 2007 2008 2009
$ million
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Operating cash flow per security
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48.2 cps
50
40
30
20
10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009
cents per security
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Underlying EBITDA
500 $459 m
400
300
200
100
0
2001 2002 2003 2004 2005 2006 2007 2008 2009
Distributions per security
35
31.0 cps
30
25
20
15
10
5
0
2001 2002 2003 2004 2005 2006 2007 2008 2009
$ million
cents per security
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Creating value for APA securityholders

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FY2009 strategic and operational highlights

Strong balance sheet

• Completed the establishment of Energy Infrastructure Investments

• Completed 2010 debt refinancing

Business growth

• Capacity expansion of gas transmission pipelines

• Attractive investments

• Construction of the Bonaparte Gas Pipeline

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Stable and secure revenue

• More than 95% of APA’s revenue is derived from either price regulated (natural monopoly) assets or long‐term contracts

• Tariffs are set by regulation for price regulated assets, but existing contract terms remain (e.g. Goldfields Gas Pipeline, Roma Brisbane Pipeline)

• Access arrangements are generally set every 5 years

• Tariffs commercially negotiated for all other pipelines and new capacity on all pipelines[(1)]

• Contract terms are often for periods of in excess of 5 years, and APA’s current average contract length is approximately 7 years

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FY2009 Revenue Split
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• (1) Except Victorian Transmission System

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Other
4%
Contracted Subject to
40% price
regulation
56%
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• (2) Some contracts provide for regulated price to apply

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Prudent capital management

� FY2009 metrics

• Gearing[(1)] of 70.3%, reduced from 72.0% at 30 June 2008

• Interest Cover Ratio of 2.13x, increased from 1.86x in 2008

• Equity raised – $79 million (Security Purchase Plan and Distribution Reinvestment Plan)

• Credit rating – S&P ‘BBB’ stable outlook

� Refinancing strongly supported

• Bilateral facility $165 million in July 2008 – 3 year

• US Private Placement A$185 million in July 2009 – 7 and 10 year

• Bilateral facility $150 million in August 2009 – 5 year

• New syndicated facility $1,030 million in August 2009 – 2 and 4 year

� Balance sheet strategy

• Diversifying source of funds

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

Secure long‐term debt portfolio supporting business growth

(1) Gearing ratio determined in accordance with the syndicated loan facilities.

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Increased demand for natural gas

Natural gas and Australian primary energy consumption Growth rates

• It is estimated that Australia’s underlying gas demand will grow an average of 4%* annually over the next 10 years. Key growth drivers include:

• Greater use of gas in electricity generation, mining and energy‐ intensive refining

• Introduction of carbon reducing legislation should increase use of gas for electricity generation (as gas becomes more competitive)

• Continued growth expected in coal seam gas (CSG) production

• APA infrastructure is ideally positioned to participate in this growth through the sale of transport, load shaping and storage services

Note: * ABARE – Energy Update 2008

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7.0%
6.0%
Natural gas Total
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Australian primary energy consumption
9,000 25%
8,000 Natural gas as a
proportion of primary
7,000 energy use (RHS) 20%
6,000
15%
5,000
4,000
10%
3,000 Total energy consumption (LHS)
2,000 5%
1,000
Natural gas consumption (LHS)
0 0%
Historical Forecast
2006-07 2008-09 2010-11 2012-13 2014-15 2016-17 2018-19 2020-21 2022-23 2024-25 2026-27 2028-29
1960-61 1965-66 1970-71 1975-76 1980-81 1985-86 1990-91 1995-96 2000-01 2005-06 2010-11 2015-16 2020-21 2025-26
Energy (PJ)
Natural gas proportion
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Source: ABARE ‐ Energy Update 2008

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Carbon reduction and renewable energy

• Implementation of the Carbon Pollution Reduction Scheme (CPRS) and expanded Renewable Energy Target (RET) requires significant new generation investments in the next decade

• $33 billion in new generation capacity, including back‐up gas fired generation capacity to support increased renewables[(1)]

• Gas is a mature generation technology and is uniquely suited to providing peaking power

� Federal Government’s RET legislation (August 2009)

• Commencing January 2010 – 20% Renewable Energy Target of 45,000 GWh by 2020, maintained until 2030

• RET driving investment in wind generation and gas fired peaking generation

� Federal Government’s proposed CPRS legislation

• Primary mechanism to achieve emission reductions

• Medium term emissions reduction target of between 5% and 25% below 2000 levels by 2020; long term target of 60% below 2000 levels by 2050

• Permit price fixed at $10/tonne for one year

• Treasury modelling suggests permit price of $35‐$53 in 2020

• Analysis of impact of $42 permit price plus RET[(1)] suggests reduction in coal‐fired generation, 15,000 MW of new capacity of which 7,000 MW is gas‐fired plant

Uptake in gas fired generation will drive demand for services

on gas transmission pipelines

(1) ACIL Tasman Estimate

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Pipeline capacity for power generation

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• APA primarily sells pipeline capacity

• Gas fired power generation requires pipeline capacity and gas throughput:

• Baseload generation

• capacity and gas volumes throughout the year

• Peak/intermediate generation

• capacity and storage required throughout the year

Growth in gas fired power generation

Growth in capacity

Growth in pipelines

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Development and growth opportunities

Committed projects

• Northern expansion on the Victorian Transmission System

• Expansion of southern lateral on the Moomba Sydney Pipeline system

• Increase Moomba Sydney Pipeline storage and winter capacity in line with contracts

• Installation of automated multi‐directional hub at Young, providing flow and storage flexibility

• Expansion to new housing developments on APA’s Gas Network

Other opportunities

• Increased pipeline and storage capacity for gas fired power generation

• Queensland, New South Wales, Victoria (including LNG facility) and Western Australia

• Facilitating delivery of coal seam gas to southern markets – via Moomba or other alternative routes

• Expansion of Mondarra gas storage facility, Western Australia

• Progressing opportunities evolving from Queensland’s CSG/LNG projects

• pipeline and storage infrastructure

APA’s portfolio provides strategic growth opportunities

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Summary

• Strong FY2009 results demonstrate strength of APA’s business

• APA continues to deliver value to its securityholders through growth in distributions and operating cash flow – at least 5% growth in distributions for FY2010

• Quality portfolio of gas infrastructure assets throughout Australia, with attractive growth opportunities

• Direct management and operational control over APA’s assets and investments delivers further value to the business

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Supplementary information

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APA’s gas infrastructure business

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APA business segments

		FY2009 EBITDA %1
Gas Transmission and Distribution	� Australia’s largest gas pipeline owner, present in each mainland state and territory � APA manages and operates all its major gas transmission and distribution assets � Gas transmission pipelines: – Approximately10,000 km of high pressure gas transmission pipelines across Australia – Transports more than half of the natural gas used in Australia annually � Gas distribution networks: – 2,800 km of distribution network – More than 75,000 gas users in Queensland and New South Wales � Gas storage: – Mondarra gas storage facility (WA) and Dandenong LNG storage facility (Victoria)	83%
Asset Management	� APA provides commercial and operating services and/or asset maintenance services to its investment enterprises, under long term contracts	7%
Energy Investments	� Envestra Limited (30.4% interest) – ASX‐listed, one of Australia’s largest natural gas distribution companies – 20,100 km of distribution networks and 1,100 km of transmission pipeline, serving 1.1 million customers � SEA Gas Pipeline (33.3% interest) – An unlisted 680 km pipeline, transporting over half of Adelaide’s natural gas requirements � Energy Infrastructure Investments Pty Limited (19.9% interest) – Unlisted infrastructure company, holding various low growth annuity‐style assets � Ethane Pipeline Fund (6.1% interest) – ASX listed, with sole operating assets the 1,375 km Moomba Sydney Ethane Pipeline � North Brown Hill wind farm (20.2% interest) – September 2009	5%

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(1) FY2009 EBITDA includes contribution from assets sold into Energy Infrastructure Investments (5%)

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 is 1 January 2010 – Goldfields Gas Pipeline

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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.

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Delivering Australia’s energy

For further information contact

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

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