APA GROUP — Investor Presentation 2014

Apr 27, 2014

ASX ANNOUNCEMENT

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28 April 2014

APA Group (ASX: APA) (also for release to APT Pipelines Limited (ASX: AQH))

APA INVESTOR PRESENTATION

The following presentation is attached for release to the market:

• APA Investor information and 1H14 results highlights for APA Group’s Asian roadshow

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Mark Knapman Company Secretary Australian Pipeline Limited

For further information please contact:

Investor enquiries: Media enquiries: Chris Kotsaris David Symons Telephone: (02) 9693 0049 Telephone: (02) 8306 4244 Mob: 0402 060 508 Mob: 0410 559 184 Email: chris.kotsaris@apa.com.au Email: media@apa.com.au

About APA Group (APA)

APA is Australia’s largest natural gas infrastructure business, owning and/or operating $12 billion of energy assets. Its gas transmission pipelines span every state and territory on mainland Australia, delivering approximately half of the nation’s gas usage. APA has direct management and operational control over its assets and the majority of its investments. APA also holds minority interests in energy infrastructure enterprises including Envestra, SEA Gas Pipeline, Energy Infrastructure Investments and GDI.

APT Pipelines Limited is a fully owned subsidiary of Australian Pipeline Trust and is the borrowing entity of APA Group.

For more information visit APA’s website, www.apa.com.au

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APA investor information and 1H14 result highlights

April 2014

About APA Group

APA is Australia’s largest gas infrastructure business

 Gas transmission pipelines and storage

• Owning and operating two thirds of Australia’s onshore pipelines

• Interconnected pipeline networks

• Transporting approximately half the gas used domestically

 Gas distribution networks

• Owning and operating approximately a third of the nation’s gas distribution networks

 Other related energy infrastructure

• APA has developed and acquired complementary energy infrastructure, including gas and wind electricity generation, gas processing and electricity transmission

Jemena

APA (24 April 2014)

A$5.6 billion S&P/ASX 50 MSCI All World Index; FTSE All World Index

Market

capitalisation

836 million securities on issue Assets owned/ Over $12 billion operated

Gas transmission

14,120 km transmission pipelines Underground and LNG gas storage

Gas distribution

25,000 km gas network pipelines 1.2 million gas consumers

Other energy infrastructure 430 MW power generation[(1) ] 239 km HV electricity transmission Gas processing plants

Employees More than 1,600 Operator Operator of APA’s assets and investments

(1) Includes the Diamantina and Leichhardt power station developments

Source: APA & AER State of the Energy Market 2013

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APA Group, April 2014

APA’s long term strategy

Strategy is focused on our core business of gas pipelines – transmission and distribution infrastructure

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Facilitating development
Enhancing APA’s portfolio of gas
of gas related projects
infrastructure assets in Australia’s
that enhance APA’s
growing energy market
infrastructure portfolio
Pursuing opportunities that
Capturing revenue and operational
leverage APA’s knowledge and
synergies from APA’s significant asset base
skills base
Strengthening financial capability
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APA’s unrivalled asset portfolio across Australia and internal expertise, together with strong industry fundamentals, drive growth opportunities

 3

APA Group, April 2014

Strategic development of pipeline grid

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NT link to east coast grid:
• Feasibility study

APA’s east coast grid:
Darwin • > 7,000 km of pipelines
APA’s WA infrastructure: • 5 major pipelines
• Servicing mining regions • 5 states and territories
• Gas transport and storage for Perth
Mount Isa
Pilbara
region
Goldfields Gladstone
region 
Brisbane
Perth
Sydney 
Adelaide
Potential APA natural gas pipeline link
APA natural gas pipelines (including investments)
Other natural gas pipelines Melbourne
Gas resource Gas production
LNG export facility
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East coast grid

• Interconnected transmission pipelines operating as one system

• Seamless service capability across 30 receipt points and 100 delivery points

• Attractive growth and revenue opportunities

• West Australian infrastructure

• Interconnected gas storage and transportation to Perth

• Pipeline infrastructure serving mining regions

• NT link –APA feasibility study

• Connecting APA’s infrastructure to facilitate gas flow across regions

Transformational change in gas delivery and storage services

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APA Group, April 2014

Significant gas distribution expertise

• Owning and operating approximately a third of Australia’s gas distribution networks

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
Darwin


–
–
APA pipeline and network assets
APA investments
Envestra networks and pipelines Brisbane
GDI network
Other pipelines – SEA Gas, EII, EPX
Other natural gas pipelines
Sydney
Adelaide
Melbourne
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• Interlinked assets, with networks connected to APA’s transmission pipeline assets and/or investments

• Experienced workforce and extensive internal capability

• National workforce of 550 APA employees and 940 contractors

• Long term operators and managers providing full range of network services: Commercial and billing;

Operations and maintenance;

Engineering, planning and construction;

Gas marketing ;

cial and billing; ns and maintenance; ing, planning and construction; keting ;
ry and financial services APA Networks businesses Network investments % Envestra 33.05 GDI - Allgas 20 Tamworth, Darwin 100	FY 2013 Network statistics
	Total gas consumers 1,254,643 New consumers added 25,885
	Meters installed (new) 28,583 Meters replaced 59,196
	Pipeline length 25,000 km Pipeline laid (new) 221 km Pipeline replaced 435 km
	Gas transported 121 PJ

Regulatory and financial services

Owning and operating almost a third of the nation’s distribution networks

 5

APA Group, April 2014

Australian gas industry – abundant supply

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981 PJ
17,384 PJ
70,386 PJ
41,285 PJ
178
PJ
1,802 PJ
54
PJ
2,283 PJ
APA Group gas infrastructure assets and
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Supply fundamentals remain strong

• Proven and probable gas reserves total 139,000 PJ[(1) ]

• Domestic gas use for 2013 was 1,110 PJ[(1) ]

• A further 1,090 PJ[(1)] of gas was used for LNG export

•  More than 50 years of gas available at current levels of domestic use and export

• Identified gas resources exceed 430,000 PJ[(2) ]

•  Almost 200 years of gas available at current levels

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250
750 PJ PJ 3,568 PJ
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APA Group gas infrastructure assets and investments

Other natural gas pipelines

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PJ Natural gas 2P reserves (proved and probable)
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• (1) 2012 gas production, LNG production and gas reserves: Energy Quest, February 2013

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Source: APA data; EnergyQuest February 2014
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• (2) As at January 2011: BREE Gas Market Report, July 2012,

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APA Group, April 2014

Australian gas industry – domestic and export demand

• Australia’s gas production, consumption and exports are all projected to grow over the period to 2034–35

• Domestic use forecast to increase by one third, or 1.3%/a

 Growth underpinned by:

• Gas-fired electricity generation, increasing from 26% to 34% of electricity generation

• Increased consumption in the mining sector

 On-shore gas supply for east coast LNG

• Surat-Bowen basin supply for east coast LNG projects to be supplemented by gas sourced from other inland basins (e.g. Cooper)

Primary energy consumption in Australian primary gas use by sector Australia (2010-2011) (2011-12)

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Renewables
4.32%
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Australian gas consumption and LNG export projections

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Australian Eastern Market LNG demand

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Source: BREE Gas Market Report, July 2012 and October, 2013;
“Gas Statement of Opportunities”, November 2013, AEMO
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APA Group, April 2014

 7

Revenue security and diversity

1H14 Revenue split

• Revenue secured by long term take-or-pay contracts or regulatory arrangements

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 Revenue secured by long term take-or-pay contracts or regulatory Other 1%
arrangements
Regulated revenue
(regulated assets)
 Diversified revenue base – single assets supply no more than 20%
24%
of revenue
Revenue by business segment [(1) ]
$900m
Contracted revenue
6% (regulated assets)
Energy Investments
Contracted revenue
$800m 14%
Asset Management (light regulation and
9% non-regulated assets)
WA and NT
$700m Energy 61%
Vic and SA Infrastructure WA
&
25%
$600m Qld NT Regulated
APA’s contracted assets
NSW assets
$500m Vic 19% Term Life of the Often in excess of 5 years
& asset Average contract term > 10 years
SA
$400m Counterparty Broad For APA’s 4 major contracted
credit population assets, 85% of the contracted
capacity is with investment grade
$300m
counterparties
Qld 25%
Volume risk Assets Approximately 90% of contracted
$200m
exhibit little revenue is capacity based (i.e.
18%
volume risk ‘take or pay’) therefore relatively
$100m 24% unaffected by volume variability
NSW
16%
58% Competition Natural Some degree of competition
$0m monopoly [(1) ]
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
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• (1) Asset that can satisfy reasonable foreseeable demand at lower cost than if demand were to be satisfied by more than one asset

• (1) Excludes pass-through revenue and divested businesses

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APA Group, April 2014

Proven growth and value creation

Operating cash flow

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432.6
450
400
350
300
250
200
150
100
50
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
EBITDA
700 667.1
600
500
400
300
200
100
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$ million
$ million
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Operating cash flow per security

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60 56.0
50
40
30
20
10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
cents
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Distribution per security

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40
35.5
35
30
25
20
15
10
5
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
cents
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APA Group, April 2014

Maximising value for securityholders

Total securityholder returns since listing

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1100
1000
APA TSR: 894%
APA CAGR: 18.1%
900
800
700
600
Total annual returns
500
50%
43%
400
40%
31%
300 29%
30%
23%
200 18%
20%
100
10%
0 0%
Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 2009 2010 2011 2012 2013
-10%
APA total securityholder returns S&P/ASX 200 accumulation index Utilities accumulation index
-20%
APA Total Securityholder Return
Indexed to 100 from listing date, 13 June 2000 to 11 April 2014
-30% S&P/ASX200 Accumulation index
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Indexed to 100 from listing date, 13 June 2000 to 11 April 2014 Source: APA based on IRESS data

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APA Group, April 2014

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1H14 result highlights

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APA Group, March 2013

1H14 result: 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

 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 the eastern states and Northern Territory

• Envestra merger links infrastructure from source to customer

 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

Continued successful execution of our long term strategy

 12

APA Group, April 2014

1H14 result overview

$ 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.

 13

APA Group, April 2014

1H14 result: EBITDA by business segment

$ million	1H14(1)	1H13(1,2)	Change
Energy Infrastructure
Queensland	108.8	64.3	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	326.0	269.1	21.1%
Asset Management	34.5	15.4	124.0%
Energy Investments	38.4	30.7	25.1%
Total EBITDA(3)	398.9	315.2	26.6%

• (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

1H14 EBITDA[(2)] by business segment

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

Reporting segments

• Energy Infrastructure : APA’s wholly or majority owned energy infrastructure assets

• Asset Management : provision of asset management and operating services for the majority of APA’s investments

• Energy Investments : minority interests in energy infrastructure investments

 14

APA Group, April 2014

Fully covered distributions

On target to deliver distribution guidance for FY 2014

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cents
 1H14 distribution payout ratio [[(1,2) ]]
60 67.5%
56.0
51.9 52.6 52.5
 Distribution components:
48.2
50
16.86 cents profit distribution
0.64 cents capital distribution
40
17.50 cents
30 34.4 35.0 35.5
32.8 25.9
31.0
20
17.5
10
0
FY09 FY10 FY11 FY12 FY13 1H14
(1) Distribution payout ratio = distribution payments as a
Operating cash flow per security Distribution per security
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 1H14 distribution payout ratio[[(1,2) ]] of 67.5%

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

• (2) Based on normalised operating cash flow

 15

APA Group, April 2014

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

APA Grou Aril 2014 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
	Southern lateral expansion for northern gas flow					Victorian Transmission System Capacity expansion APA energy infrastructure APA investments Other natural gas pipelines Diamantina and Leichhardt Power Stations Goldfields Gas Pipeline Capacity expansion Wallu Comp Capac expan Moomba Compression Capacity expansion
				Southern lateral expansion for northern gas flow
	Capacity transmis		expansion of southern and northern sections of the sion system
	Tw exp	o pipeline ansions

Wallumbilla Compression Capacity expansion

 16

APA Group, April 2014

Capital expenditure

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

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Committed growth capex
$500m
$400m
$300m
$200m
$100m
$0m
FY14 FY15 FY16 FY17
Committed
Guidance
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(1) Capital expenditure represents cash payments as disclosed in the cash flow statement for 1H14 and 1H13

 17

APA Group, April 2014

Capital management

 Maintain strong BBB/Baa2 investment grade ratings

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

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

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

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

• (2) Includes $515 million of Subordinated Notes

 18

APA Group, April 2014

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 increa ~~s~~ ing gas volumes transported through the VTS into New ~~So~~ uth 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
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APA natural gas pipelines (including investments)
Other natural gas pipelines
Bi-directional pipeline
Gas storage
Gas production
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APA’s east coast grid:

• 7,000 km of pipelines

• 5 major pipelines

• 5 states and territories

 19

APA Group, April 2014

Envestra Scheme – update

• Scheme proceeding based on the offer accepted by the Envestra Independent Board Committee

• Offer consideration of scrip and cash, with implied value of $1.29[(1)] per Envestra share plus Envestra distribution of 3.2 cps[(2) ]

• Attractive premium to Envestra’s trading price prior to APA’s merger proposal and Envestra’s closing price on 24 April 2014

• Scheme Booklet issued to Envestra shareholders in early April

• The Envestra Recommending Directors (majority of non-APA affiliated directors) recommend the Scheme in the absence of a superior proposal[(3)]

Rationale

• Core business – gas distribution

• Largest shareholder and service provider

• Revenue certainty and appropriate commercial returns

• Significant capex growth

• Delivery chain from source to customer

• Independent Expert concludes the Scheme is fair and reasonable and in the best interest of Participating Envestra Shareholders in the absence of a superior proposal

 Timeline

• (1) Implied value of ‘all scrip’ consideration based on APA’s closing price on 24 April 2014

• (2) Envestra distribution for the six months to 31 December 2013, to be paid 30 April 2014

(3) Recommendation is subject to the Independent Expert continuing to conclude that the Scheme is fair and reasonable and in the best interests of Participating Envestra Shareholders

 20

APA Group, April 2014

Diamantina and Leichhardt power stations

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Diamantina Power Station – February 2014
DPS operations
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 Commissioning phase underway

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

• All open-cycle gas units commissioned

• Commissioning of steam turbines for combined-cycle operation underway

• Currently providing up to 80 MW generating capacity for MIM operations

• Project construction

• KBR (owner’s engineer) appointed EPCM contract following Forge receivership and termination of Forge EPC contract

• Activity on site to complete the project maintained, with key Forge personnel and service providers retained

 Leichhardt Power Station

• Fixed price EPC contract with Leighton Contractors

• Open-cycle gas unit in commissioning phase

 21

APA Group, April 2014

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 effecti ~~ve~~ end-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

Darwin Gladstone Wallumbilla Brisbane Moomba APA natural gas pipelines (including investments) Other natural gas pipelines Potential pipeline link Gas production Onshore gas exploration

Gas resource

 22

APA Group, April 2014

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

 23

APA Group, April 2014

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Supplementary information

 24

APA Group, March 2013

APA asset and investment portfolio

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 25

APA Group, April 2014

APA Group structure

• APA is a stapled vehicle comprising two registered managed investment schemes:

• Australian Pipeline Trust (ARSN 091 678 778)

APA Group Securityholders

• APT Investment Trust (ARSN 115 585 441) is a tax pass-through trust

• Australian Pipeline Limited (ACN 091 344 704) is the responsible entity of the Trust and APT

• APA is listed as a stapled structure on the Australian Securities Exchange

• The units of the Trust and APT are stapled and must trade and otherwise be dealt with together

• APT Pipelines Limited (ABN 89 009 666 700) is APA’s borrowing entity, a company wholly owned by APT

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Australian Pipeline Trust APT Investment Trust
(APT) (APTIT)
100%
100%
APT Pipelines Ltd
100%
Infrastructure
Australian Pipeline assets and
Limited
investments
(Responsible Entity)
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• Reporting segments

• Energy Infrastructure : APA’s wholly or majority owned energy infrastructure assets

• Asset Management : provision of asset management and operating services for the majority of APA’s investments

• Energy Investments : minority interests in energy infrastructure investments

 26

APA Group, April 2014

1H14 result – 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
$80m
South West
$60m
Queensland Pipeline
Other Qld
$40m
Carpentaria Gas
$20m Pipeline
Roma Brisbane
Pipeline
$0m
1H11 1H12 1H13 1H14
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EBITDA

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$80m
$62.2m
$60m
$40m
Moomba Sydney
$20m Pipeline System
$0m
1H11 1H12 1H13 1H14
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 27

APA Group, April 2014

1H14 result – Energy Infrastructure

Victoria & South Australia

Western Australia & Northern Territory

• 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

• 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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APA Group, April 2014

1H14 result – 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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APA Group, April 2014

1H14 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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APA Group, April 2014

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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APA Group, April 2014

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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APA Group, April 2014

Economic regulation of gas pipelines and networks

Regulator	The Australian Energy Regulator (AER) is responsible for the economic regulation of gas transmission and
	distribution networks and enforcing the National Gas Law and National Gas Rules in all jurisdictions except Western
	Australia
	The Economic Regulation Authority of Western Australia (ERA) is the independent economic regulator for Western
	Australia
Access	Apply for a fixed term, generally 5 years
arrangement	Set out the terms and conditions of third party access, including
	– At least one reference service that is commonly sought by customers – for pipelines, this is generally firm forward-haulage
	services
	– A reference (benchmark) tariff for the reference service
Reference	Provides a default tariff for customers but tariffs can also be negotiated
tariff	Determined with reference to regulated revenue, capacity and volume forecasts
Regulated	Determined using the building block approach to recover efficient costs
revenue	– Forecast operating and maintenance costs
	– Asset depreciation costs and
	– Return on asset capital (regulated asset base) based on WACC determination
	WACC based on 60:40 debt equity split
Regulated	Opening RABs have been settled with the regulator; there are no reassessments for approved RABs
asset base	RABs adjusted every access arrangement period
(RAB)	– Increased by capital added to the asset and reduced by regulatory depreciation costs
	RAB is maintained in real dollar terms
Regulatory	All distribution networks and some transmission pipelines are covered by economic regulation
coverage	Test of coverage is whether a pipeline is a natural monopoly bottleneck facility
	Coverage can be revoked
	Light regulation with no tariff regulation is also available for pipeline with lower levels of market power

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APA Group, April 2014

Regulatory coverage of APA’s pipelines

• Reduced regulatory coverage

• Most pipelines on the east coast are uncovered due to interconnection of pipelines and increased supply options for markets

• Coverage of greenfield pipelines

• Apply for 15 year exemption from coverage

• Pipeline expansions may be covered

Source: AER State of the Energy Market 2011, 2012 and 2013

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APA Group, April 2014

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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APA Group, April 2014

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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