APA GROUP — Investor Presentation 2012

Jan 19, 2012

Hastings Funds Management Limited ABN 27 058 693 388 AFSL No. 238309

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Level 27, 35 Collins Street Melbourne VIC 3000 Australia T +61 3 8650 3600 F +61 3 8650 3701 www.hfm.com.au Melbourne, London, San Antonio, Sydney

ASX Announcement

Hastings Diversified Utilities Fund (HDF)

Total pages: 12

20 January 2012

Presentation – Target’s Statement

Attached is a presentation of the Target’s Statement of HDF issued in response to the off-market takeover bid made by APT Pipelines Limited for all of the stapled securities in HDF.

Investors and media can access a broadcast of the presentation from11:30AM at www.hfm.com.au/hdf.

For further enquiries, please contact:

Colin Atkin Chief Operating Officer Hastings Diversified Utilities Fund Tel: +61 3 8650 3600 Fax: +61 3 8650 3701 Email: investor_relations@hfm.com.au Website: www.hfm.com.au/hdf

Simon Ondaatje Head of Investor Relations Hastings Funds Management Tel: +61 3 8650 3600 Fax: +61 3 8650 3701 Email: investor_relations@hfm.com.au Website: www.hfm.com.au/hdf

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Jane Frawley Company Secretary Hastings Funds Management Limited

Unless otherwise stated, the information contained in this document is for informational purposes only. It does not constitute an offer of securities and should not be relied upon as financial advice. The information has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person or entity. Before making an investment decision you should consider, with or without the assistance of a financial adviser, whether any investments are appropriate in light of your particular investment needs, objectives and financial circumstances. Neither Hastings, nor any of its related parties including Westpac Banking Corporation ABN 33 007 457 141, guarantees the repayment of capital or performance of any of the entities referred to in this document and past performance is no guarantee of future performance. Hastings, as the Manager or Trustee of various funds, is entitled to receive management and performance fees.

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Target’s Statement Presentation 20 January 2012

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Hastings Diversified
Utilities Fund (HDF)
YOUR DIRECTORS UNANIMOUSLY
RECOMMEND THAT YOU REJECT APA’S OFFER
REJECT
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Disclaimer

This presentation has been prepared by Hastings Funds Management Limited ABN 27 058 693 388 ( Hastings ), holder of Australian Financial Services license number 238309, as responsible entity for the Hastings Diversified Utilities Fund ( HDF ). Hastings is a subsidiary of Westpac Banking Corporation ABN 33 007 457 141 ( Westpac ).

The information contained in this presentation is for informational purposes only, is in a summary form and does not purport to be complete. The Target’s Statement that HDF is sending to HDF Securityholders in relation to the Offer contains further information and details regarding the matters covered in this presentation. HDF Securityholders should not make any decision in response to the Offer until they have read the Target’s Statement in its entirety and considered the Offer having regard to their own personal risk profile, investment strategy and tax circumstances. This presentation does not constitute an offer to issue or arrange to issue financial products. The information contained in this presentation is not financial product advice. This presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person.

Neither Hastings, Westpac or any other members of the Westpac Group gives any guarantee or assurance as to the performance of HDF or the repayment of capital. Investments in HDF are not investments, deposits or other liabilities of Hastings, Westpac or other members of the Westpac Group. Members of the Westpac Group may invest in or lend or provide other services to HDF and may be paid fees and expenses by Hastings in its capacity as responsible entity of HDF.

Some of the statements appearing in this presentation may be in the nature of forward looking statements. You should be aware that such statements are only predictions and are subject to inherent risks and uncertainties. Those risks and uncertainties include factors and risks specific to the industry in which HDF operates as well as general economic conditions, prevailing exchange rates and interest rates and conditions in the financial markets. Actual events or results may differ materially from the events or results expressed or implied in any forward looking statement. None of HDF, HDF’s officers and employees, Hastings, Hastings’ officers and employees or any persons named in this presentation or the Target’s Statement with their consent or any person involved in the preparation of this presentation or the Target’s Statement, makes any representation or warranty (express or implied) as to the accuracy or likelihood of fulfillment of any forward looking statement, or any events or results expressed or implied in any forward looking statement, except to the extent required by law. You are cautioned not to place undue reliance on any forward looking statement. The forward looking statements in this presentation reflect views held only as at the date of this presentation.

The information on the Bidder, APA Group, APA Stapled Securities and APA Group’s business contained in this presentation has been prepared by Hastings using publicly available information. The information in this presentation concerning the Bidder and APA Group and those entities’ assets and liabilities, financial position and performance, profits and losses and prospects, has not been independently verified by Hastings. Accordingly, Hastings does not, subject to the Corporations Act, make any representation or warranty, express or implied, as to the accuracy or completeness of such information.

The release, publication or distribution of this presentation in jurisdictions other than Australia may be restricted by law or regulation in such other jurisdictions and persons who come into possession of it should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable laws or regulations. This presentation has been prepared in accordance with Australian law and the information contained in this presentation may not be the same as that which would have been disclosed if this presentation had been prepared in accordance with the laws and regulations outside Australia.

Any diagrams, charts, maps, graphs and tables appearing in this presentation are illustrative only and may not be drawn to scale. Unless stated otherwise, all data contained in diagrams, charts, maps, graphs and tables is based on information available at the date of this presentation.

Unless the contrary intention appears or the context requires otherwise, words and phrases used in this presentation have the same meaning and interpretation as in the Target’s Statement.

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Why HDF Securityholders should REJECT the Offer

REJECT the Offer because it:

• × Undervalues HDF

• × Is highly conditional and uncertain

• Opportunistic ahead of expected medium term cash flow growth

• Does not recognise the strategic value of HDF’s pipelines

• Acceptance may restrict the options available to you

• HDF is delivering on its strategy and since its strategic review has produced superior total returns compared to APA

• Hastings will pursue the best outcome for HDF Securityholders

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The Offer undervalues HDF

The Offer does not adequately reflect HDF’s contracted revenue growth profile

HDF revenue: historical and forecast contracted revenue ($ million)

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300
Historical actual revenues Forecast contracted revenues
250
32%
200
32%
150
25%
100
50
0
2008 2009 2010 2011 2012 2013 2014 2015
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• Gas flows commenced in January 2012 on the recently completed SWQP Stage 3 Expansion

• The Easternhaul GTA with Santos commences in 2015

• New contracts announced in December 2011 will underpin strong medium term cash flow growth

• Over the next four years HDF is forecasting a contracted revenue CAGR of 15.5% per annum

Source: HDF Notes:

• (1) Historical revenue includes both contracted and uncontracted, intermittent and lease revenue. Historical revenue for year ended 31 December 2011 is based on the unaudited consolidated management accounts of HDF Epic Trust.

• (2) HDF’s forecast contracted revenue includes inflation assumptions of 2.5% per annum, which are within the current target band of the Reserve Bank of Australia.

• (3) Chart includes Easternhaul revenue for SWQP as contracted from 1 January 2015.

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The Offer undervalues HDF

Offer premium analysis at various VWAPS ($ per HDF Stapled Security)

The Offer is inadequate and DOES NOT :

• Provide full value for the benefits that HDF’s assets would provide to APA

• Reflect an adequate premium for control

• Provide securityholders with CGT roll-over relief despite a large part of the Offer consideration being APA Stapled Securities

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(1) (2)
HDF trading price Implied Offer value
$2.50
10.0% premium 10.2% premium 10.2% premium 12.2% premium 11.7% premium
$2.00 $1.92 $1.93 $1.90
$1.83
$1.745 $1.75 $1.72 $1.77
$1.63
$1.58
$1.50
$1.00
$0.50
$0.00
Close on 5 day 1 month 3 month 6 month
13/12/2011 VWAP VWAP VWAP VWAP
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Source: IRESS

Notes:

• (1) Calculated as the VWAP for HDF Stapled Securities for the relevant period to 13 December 2011, being the last full trading day prior to the announcement of the Offer less the distribution of $0.025 per HDF Stapled Security.

• (2) Calculated as the VWAP for APA Stapled Securities for the relevant period to 13 December 2011 less the $0.17 distribution per APA Stapled Security, multiplied by the exchange ratio of 0.326 + $0.50 in cash less the distribution of $0.025 per HDF Stapled Security.

• (3) IRESS has not consented to the use of this reference.

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The Offer does not recognise the value of HDF’s strategically positioned pipelines

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HDF pipelines are the essential link to market

• Rising gas demand, both domestically and for LNG export

• Proximity to growing natural gas and CSG reserves, including Cooper Basin tight gas resources

• Unique market position to link these growing supply sources with end users

• MAPS and SWQP represent the primary means of supplying Cooper Basin gas to the South Australian and Queensland markets

Source: AER State of the Energy Market 2011, EIA Notes:

(1) Includes 183 PJ conventional gas.

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The Offer undervalues HDF’s exposure to growing domestic gas demand

Forecast Australian energy consumption mix (PJ)

• Australian government policy initiatives such as the Clean Energy Future legislation and the Renewable Energy Target scheme support the development of a cleaner energy economy

• Gas powered generation has been identified as a cleaner and cost effective alternative to coal fired generation

• HDF’s pipelines are strategically located to transport gas from the Cooper and Surat/Bowen Basins to anticipated new gas fired power generation growth in the National Electricity Market

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Renewable Gas Oil Coal
8,000
590
6,000 277 2,575
1,240
4,000
2,083 2,787
2,000
2,124 1,763
0
2007-08 2029-30
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Source: ABARE Energy Projections to 2029-30 dated March 2010

Capacity of committed and proposed projects in the National Electricity Market by fuel source (MW)

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Publicly announced Committed Advanced
18,000 16,439
16,000
14,000 11,820
12,000
10,000
8,000
6,000
4,000 2,000
2,000 1,074 839 550 43 694 525 213
0
Black Black Black Brown Gas Hydro Wind Solar Geo Bio
coal coal coal coal
other or gas
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Source: AEMO Electricity Statement of Opportunities 2011

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Future growth opportunities from LNG export not recognised by the Offer

Eastern Australia domestic and export gas demand (PJ)

• Cooper Basin tight shale gas set to help satisfy LNG export demand

• SWQP is ideally positioned to supply gas to the burgeoning LNG markets

• The SWQP is currently the only pipeline capable of transporting gas from the Cooper Basin to Wallumbilla, from where it can be transported to Gladstone for export as LNG

• HDF has a range of short and medium term uncommitted revenue growth opportunities that could capitalise on rising gas demand for export

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3,000
2,500
2,000
1,500
1,000
500
0
2011 2013 2015 2017 2019 2021 2023 2025
Distributed Demand Direct Industrial Power Generation LNG
Source: Core Energy Group (2010)
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SWQP is strategically located to supply gas to Gladstone LNG projects

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Gas supply flow
(SWQP)
HDF pipeline
Other gas pipeline GLADSTONE
(LNG
projects)
WALLUMBILLA
MOOMBA
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HDF is delivering on its stated strategy

HDF is delivering on its strategy post its Strategic Review to focus on energy infrastructure investments:

• Completed the sale South East Water in December 2010 at a premium to average broker valuations

• Starting to realise the benefits of the SWQP Stage 3 Expansion through a number of new GTAs:

• 15 year Easternhaul GTA with Santos (unconditional in September 2011)

• New GTA announced in December 2011

• Commenced a process to refinance HDF’s existing debt facilities which may improve operating cash flows in the short and medium term

Total returns since HDF IPO in December 2004[(1) ]

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9.78%
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5.69% 5.59%
4.50%
HDF S&P/ASX 200 APA S&P/ASX 200
Industrials Industrials
Accumulation Accumulation
Index Index
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Source: Mercer Notes:

• (1) Returns calculated as at the Announcement Date. The per annum return calculations assume an investor reinvested each distribution in the applicable securities at the closing price on the distribution date and that the investor participated fully in any entitlement offers. HDF conducted a one-for-one entitlement offer in July 2009 and APA conducted a two-for-seven entitlement offer in November 2006. The S&P/ASX 200 Industrials Accumulation Index return differs between the APA and HDF comparisons as each index return figure assumes a proportionate investment in the index at the time of APA and HDF’s respective entitlement offers.

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Highly conditional Offer with debt funding uncertainty

The Offer is highly conditional, subject to19 conditions, including: • 90% minimum acceptance Highly • FIRB approval conditional • ACCC approval Offer • S&P/ASX 200 Index does not fall to 3,800 or below for certain periods • HDF agrees to reduce performance fee entitlements • No certainty that Epic Energy’s existing financing will remain in place if there is a Debt funding change of responsible entity of HDF • APA has not been able to guarantee that it will be able to secure replacement uncertainty financing if required • HDF Securityholders who accept the Offer will lose the ability to deal with their Options securities and will not be able to accept a higher price from a competing bidder if restricted such a bid eventuates (provided FIRB approval is given and unless withdrawal rights are available)

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Why HDF Securityholders should REJECT the Offer

Key reasons to REJECT the Offer

1. The Offer undervalues HDF

2. The timing of the Offer is highly opportunistic as HDF is about to commence delivering strong contracted revenue growth

3. The Offer does not recognise the value of HDF’s strategically positioned pipelines

4. HDF is delivering on its stated strategy

5. Acceptance of the Offer may trigger a CGT liability

6. The Offer is highly conditional and uncertain

7. If you accept the Offer you will become an APA Securityholder, which will change the risk/return profile of your investment

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