FUTURE GENERATION AUSTRALIA LIMITED - Annual Report 2007

Total pages: 106

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ASX Announcement

Australian Infrastructure Fund (AIX)

28 September 2007

Annual Report and Annual General Meeting

Attached is the 2007 AIX Annual Report and a letter sent to securityholders providing details for the Annual General Meeting.

For further enquiries, please contact:

Peter McGregor Chief Operating Officer Australian Infrastructure Fund Tel: +61 3 9654 4477 Fax: +61 3 9650 6555 Email: [email protected] Website: www.hfm.com.au

Simon Ondaatje

Head of Investor Relations

Hastings Funds Management Tel: +61 3 9654 4477 Fax: +61 3 9650 6555 Email: [email protected] Website: www.hfm.com.au

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Claire Filson Company Secretary Australian Infrastructure Fund

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, 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.

www.hfm.com.au

M:\Marketing - Reporting\AIF\Announcements\Final ASX announcements for lodgement\AIF ASX Ann\2007\September\AIX - Announcement of Annual Report and AGM.doc

Hastings Funds Management Limited ABN 27 058 693 388 AFSL No. 238309 Australian Infrastructure Fund Limited ABN 97 063 935 553

Level 15 90 Collins Street Melbourne VIC 3000 Australia Telephone +61 3 9654 4477 Facsimile +61 3 9650 6555 Other offices: London, New York

28 September 2007

Dear Securityholder,

AIX 2007 Annual Report

On behalf of the directors of Australian Infrastructure Fund Limited (AIFL) and Hastings Funds Management Limited, as responsible entity of the Australian Infrastructure Fund Trust (together AIX), I am pleased to announce the release of the 2007 AIX Annual Report. A copy of the annual report is enclosed for those investors who have elected to receive a printed copy. The report is available on Hastings’ website at www.hfm.com.au/2007aixannualreport

AIX recorded a net profi t after tax for the year of $168.2 million, an increase of 54 percent from 2006. Net cash fl ows from operating activities totalled $45.5 million, an increase of 41 percent from 2006. Distributions of 15.5 cents per security for the year were up 7 percent from 2006.

Annual General Meeting

I would also like to advise that the AIX Annual General Meeting (AGM) will be held at the Radisson Plaza Hotel, Marble Room, 27 O’Connell Street, Sydney on Wednesday 14 November 2007, commencing at 2.30pm.

For securityholders unable to attend the AGM in Sydney this year, a briefi ng will be held in Melbourne at Hastings’ offi ces, Level 15, 90 Collins Street, on Friday 16 November 2007 at 2.30pm.

If you wish to attend the AGM in Sydney or the briefi ng in Melbourne, please advise Simon Ondaatje at Hastings on 03 9654 4477 or email [email protected].

The AGM Notice of Meeting will be mailed to securityholders in mid October 2007.

Thank you for your ongoing support.

Yours faithfully,

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Claire Filson Company Secretary Australian Infrastructure Fund Limited and Hastings Funds Management Limited

034494_00O6RB

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Australian Infrastructure Fund Annual Report

Contents

02 Asset Returns 03 Performance Summary 04 Chairman’s Report 06 Chief Operating Officer’s Report

11 Review of Investment Portfolio 28 Australian Infrastructure Fund Limited Board

30 Hastings Funds Management Limited Board 33 Corporate Governance

34 Australian Infrastructure Fund Organisational Structure 35 AIFL Corporate Governance Statement 37 AIFT Corporate Governance Statement 40 AIFL Directors’ Report 43 AIFL Remuneration Report 46 AIFT Directors’ Report 49 Financial Information 52 AIX Financial Report 98 Investor Details 99 Distribution Information 100 Investor Information IBC Corporate Directory

Australian Infrastructure Fund (AIX) AIX’s primary objective is to offer investors returns, through cash yield and capital growth, by actively managing a diversified portfolio of transport infrastructure assets for the medium to long term

AIX’s strategy is to:

•focus on transport infrastructure assets;
•seek quality investments with a preference for unlisted assets;
•be actively involved in the management of the asset portfolio;
•use stringent investment criteria when assessing potential investments;
•work closely with technical partners;
•maintain increasing cash flows and pay distributions from cash flows; and

•maintain appropriate gearing levels for the underlying assets in the portfolio. AIX listed on the Australian Securities Exchange (ASX) in 1997. At 30 June 2007, AIX had a market capitalisation of $1.23 billion.

Annual General Meeting

About this report

About the manager

The eleventh Annual General Meeting of Australian Infrastructure Fund (AIX) will be held at the Radisson Plaza Hotel, Marble Room, 27 O’Connell Street, Sydney at 2.30 pm, Wednesday 14 November 2007.

AIX aims to make this Annual Report an accurate and easy-to-read document for investors and other stakeholders. The report provides information about AIX activities and performance during the year. Your feedback and suggestions for improvement are welcomed. If you have any comments on the report, please contact the Company Secretary of AIX on + 61 3 9654 4477 or [email protected].

Hastings Funds Management Limited (Hastings) is the manager of AIX. Hastings is a specialist manager of infrastructure, private equity and high yield investments, with over $4.7 billion in funds under management at 30 June 2007. Hastings provides the investment community with direct access to infrastructure assets such as airports, tollroads, seaports, gas and electricity transmission, water utilities and timber. Hastings is a wholly owned subsidiary of Westpac Banking Corporation (Westpac).

Cover Perth Airport Inside cover Melbourne Airport Page 01 Melbourne Airport

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17.7%
22.4%
HOCHTIEF AirPort Capital
19.9%
3.1%
APAC
14.6%
30.4%
Queensland Airports
39.4%
62.5%
NT Airports
24.4%
37.9%
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Statewide Roads
19.8%
(12.0)%
Port of Geelong 22.1%
15.5%
Metro Transport Sydney
20.0% (36.0)%
DP World Adelaide (53.8)%
618.5%
30.0%
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Performance Summary

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Net profit after tax Distributions per stapled security AIX Security Price
$m cps $ps
180 16 3.50
3.00
150
12
2.50
120
2.00
90 8
1.50
60
1.00
4
30
0.50
0 0 0
03 04 05 06 07 03 04 05 06 07 03 04 05 06 07
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Net profit after tax of $168.2 million (2006 – $109.5 million)

Distributions of 15.5 cents per stapled security The market price of AIX securities increased paid for the 12 months to 30 June 2007 from $2.08 as at 30 June 2006 to $3.29 as at (2006 – 14.5 cents) 30 June 2007

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03
Australian Infrastructure Fund Annual Report 2007
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Chairman’s Report

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Paul Espie Chairman

2007 – A successful year for Australian Infrastructure Fund

On behalf of the Board of Australian Infrastructure Fund, I am pleased to present this year’s Annual Report. AIX celebrated its ten year anniversary as a listed fund with improved financial results in 2007.

AIX announced a record annual net profit after tax of $168.2 million for the year. Total income increased by 41.5 percent to $185.9 million. Dividends, distributions and interest generated by the asset portfolio increased by 17.1 percent to $57.8 million, whilst unrealised gains in asset valuations increased by 58.6 percent to $130.1 million.

The book value or net tangible assets (NTA) of AIX’s portfolio increased from $2.36 per security at 30 June 2006 to $2.65 at 30 June 2007. The valuation is determined by AIX’s independent valuers and is primarily to determine the level of unrealised gains or losses impacting on AIX’s profit. This does not necessarily reflect the Board’s view of the market value of the portfolio of assets. In view of the performance of the assets in the portfolio, directors declared a distribution of 8.0 cents per security for the half year ended 30 June 2007 which was paid on 30 August 2007. This brought distributions to a total of 15.5 cents (6.9 cents franked) for the 2007 financial year up from 14.5 cents (6.5 cents franked) for the 2006 financial year. Distributions were fully funded from portfolio cash flows, after payment of fund expenses. The AIX security price performed strongly and increased from $2.07 to $3.29 over the course of the financial year. Together with total distributions declared of 15.5 cents per security, total returns to investors were 66.4 percent for the year. Reflecting these results and the growth outlook for the portfolio, several new institutional investors joined the register during the period.

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Australian Infrastructure Fund Annual Report 2007
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Board changes

We welcomed Robert Humphris and Peter McGregor to the Board during the year. Robert Humphris (OAM) joined the Board in September 2006 as a non-executive director following a successful career in the mining and construction industries.

Peter McGregor was appointed to the Board in June 2007. Peter is the Chief Operating Officer of AIX and has made a valuable contribution since he joined our manager, Hastings, from the investment banking industry.

The Board farewelled Barry Capp and Tim Poole during the year. Barry retired from the Board following ten years of distinguished service. He was the inaugural Chairman of AIX and played a pivotal role in the repositioning of the fund to transport infrastructure in mid 2002.

Tim Poole had been with Hastings since 1995 and succeeded Mike Fitzpatrick as the Managing Director of Hastings. The Board thanks both Barry and Tim for their contribution over many years. The Board, committed to best practice corporate governance, retains a majority of independent directors.

Management developments

In June 2007, Hastings appointed Steve Boulton as its Chief Executive Officer (CEO). Steve joined Hastings from Babcock and Brown Infrastructure (BBI) where he held the role of CEO since August 2005. Steve led the BBI business with distinction, building a strong infrastructure funds organisation with a global asset base. The AIX Board welcomes Steve and looks forward to a close working relationship.

Looking ahead

The Board believes that the AIX portfolio is well placed to continue to deliver growing returns to investors.

Developments in the aviation industry in particular give the Board confidence that AIX’s airport portfolio should continue to experience strong growth in the near future. Domestic passenger growth at the Australian airport assets within the portfolio is expected to be assisted by the commencement of Tiger Airways services and by announcements of additional capacity provided by the incumbent domestic carriers, Qantas, Jetstar and Virgin Blue. International passenger growth will also be boosted by additional seat capacity generated by the arrival of the new generation aircraft, which are scheduled to begin flying into Australia by the end of calendar year 2008.

Last year AIX called on the Federal Government to ease restrictions on international carriers and adopt a genuine ‘open skies’ policy in Australia. I am pleased to report that greater access to Australian airspace has followed and international carriers are receiving improved access to landing rights in Australia. The announcement that the Middle Eastern airlines Emirates, Qatar and Etihad have been granted additional landing rights in Australia is positive, and these carriers have responded by signalling their plans to significantly increase the number of flights into this market over the next five years.

The AIX Board and Hastings will continue to encourage its asset managers to further develop the opportunities that exist in revenue streams across the entire portfolio. Further, AIX’s rights of pre-emption and strategic industry partnerships are expected to provide a significant source of new acquisition opportunities both in Australia and internationally.

The Board retains its prudent approach to asset acquisition. In a highly competitive and expensive market for transport infrastructure assets, the only new acquisition made during the year was an incremental stake of 0.4 percent in Hamburg Airport in November 2006.

Thank you for your continued support and I look forward to seeing you at the Annual General Meeting in November.

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Paul Espie

Chairman Australian Infrastructure Fund Limited 15 September 2007

To advance the international aspirations of AIX, Hastings opened its London and New York offices during 2006, which is assisting with the assessment and negotiation of investment opportunities in selected markets.

Below Gold Coast Airport

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Australian Infrastructure Fund Annual Report 2007
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Chief Operating Officer’s Report

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Peter McGregor Chief Operating Officer

Review of 2007

Portfolio performance

The portfolio achieved a gross total return of 23.73 percent for the year. The return was in the form of cash flow (35.7 percent), unrealised gains (58.0 percent) and franking credits (6.3 percent).

The 2007 return is above the annualised return since inception of 19.46 percent, highlighting the long-term, low-risk nature of the asset portfolio. This level of return comfortably exceeds both AIX’s benchmark return and ‘cost of capital’.

Total cash flow generated by the portfolio, including both operating cash flows and cash flows classed as capital (such as returns of capital, repayment of shareholder loans and proceeds of buybacks), increased by 9.1 percent to $74.8 million.

The portfolio was revalued upwards by $130.1 million during the year. The majority of this revaluation reflected underlying growth and improved prospects for the assets in the portfolio, with only a small proportion reflecting a change in discount rates.

The four core assets in the portfolio – Perth Airport, HOCHTIEF AirPort Capital (HTAC), APAC (Melbourne and Launceston Airports) and QAL (Queensland Airports Limited) – were the key contributors to portfolio performance, collectively accounting for 86.3 percent of total returns for the year. AIX divested its 4.4 percent stake in DP World Adelaide (DPWA) in February 2007. Whilst DPWA performed well during the period of investment, the investment had a book value of only $2.4 million and represented less than one percent of the total value of the portfolio. The divestment reflects AIX’s commitment to focus investors’ funds and management efforts on assets that will make a material contribution to performance and returns.

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Australian Infrastructure Fund Annual Report 2007
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Portfolio gearing (debt) remained conservative, with weighted average gearing (defined as Net Debt to Enterprise Value) in the portfolio of 41.2 percent at 30 June 2007. This level of gearing provides significant protection for AIX to manage unexpected changes in both the macroeconomic environment and in the operating environment for individual assets. The conservative gearing also allows AIX the flexibility to prudently and selectively refinance assets and deliver value to investors.

Operating highlights

AIX’s portfolio of airport assets performed strongly during 2007. A total of 115.1 million passengers passed through airports in which AIX holds an investment. This represents an increase of 7.1 percent over the previous corresponding period. The level of passenger growth exceeds the long-term growth industry trend both in Australia and internationally, and highlights the benefits of quality and diversity within the portfolio. Key highlights included growth of 12.2 percent at Darwin, underpinned by significant additional airline capacity from domestic carriers, together with positive international growth, particularly through Tiger Airways. Perth Airport also performed strongly, with passenger growth of 13.4 percent, reflecting the buoyant Western Australian economy. QAL recorded passenger growth of 6.6 percent, with double digit growth at both Townsville and Mt Isa Airports. Amongst the international airports, Athens and Hamburg recorded passenger growth of 9.2 and 6.4 percent respectively. A key factor was the strength of intercontinental passenger movements, primarily due to capacity expansion by North American and United Arab Emirates carriers. Melbourne, Sydney and Düsseldorf all made solid contributions to overall passenger growth, particularly considering that capacity constraints continued to impact on passenger growth at these airports. In the case of Melbourne and Sydney, delays in the delivery of new generation aircraft (particularly the Airbus A380) and restrictions on landing rights constrained international passenger movements.

In the case of Düsseldorf, a flight cap limiting the maximum number of aircraft movements per hour restricted passenger growth. The seaports within the AIX portfolio continued to endure difficult operating conditions during the year. The drought in South Eastern Australia had a negative impact on agricultural commodities, particularly the level of grain exports through Portland and the level of fertiliser imports into both Portland and Geelong. Whilst the drought adversely impacted tonnages across the ports, continued growth in lower volume, higher margin cargoes offset the impact on revenue and earnings. Although overall tonnages at Portland declined by 13.7 percent, revenue increased 6.0 percent. Geelong saw overall tonnages increase by 5.2 percent, and net fees received by Port of Geelong Unit Trust (the entity in which AIX holds its investment) increase by 1.0 percent, with crude oil, petroleum and general cargo tonnages offsetting the decline in fertiliser volumes.

Growth initiatives

The environment for acquisitions remained extremely competitive in 2007 through:

•a number of new and large infrastructure investment vehicles;
•buoyant global equity markets;
•competitive debt markets characterised by tight margins; and
•a slowdown in the rate of privatisation by governments globally.

The overall impact of the above factors was an upward pressure on asset pricing globally. Whilst AIX actively examined a number of new acquisition opportunities during the year, the majority of transactions within the sector took place at prices exceeding AIX’s assessment of risk-adjusted fair value. This resulted in AIX making no major new acquisitions during the period.

However, it is important to note that acquisitions represent only one element of the spectrum of growth options available to AIX. During the year, a number of key growth options were pursued within the existing assets. We believe that investment in the existing asset base represents a substantially more attractive option than seeking to compete in ‘auctions’ for new assets.

Opportunities within the portfolio offer lower risk profiles and, in many cases, superior returns than those offered by new acquisition opportunities.

Examples of key growth initiatives pursued during 2007 include:

Gold Coast Airport Runway Extension: the 458-metre runway extension, to 2,500 metres, was officially opened on 16 May 2007. The increased runway length will be an important factor in attracting new international direct flights, particularly from low cost carriers in the Asian region. On 29 June 2007, Gold Coast Airport welcomed its first ever non-stop direct intercontinental flight (a Qantas flight from Tokyo carrying competitors for the annual Gold Coast Marathon).

• Port of Portland Mineral Sands Facility: in December 2006, the new mineral sands facility at Portland was officially opened. The project was undertaken for Iluka Resources, which plans to export up to 300,000 tonnes of product per year. The facility comprises state-of-the-art storage for up to 50,000 tonnes of mineral sands, and a ship loading system capable of loading ships at a rate of 1,500 tonnes per hour. The mineral sands facility increases both tonnage and revenue for the Port, and provides diversity, lowering the level of reliance on Portland’s traditional agricultural commodity base.

Bunnings Warehouse at Darwin Airport: a new 14,000m[2] retail project was completed in November 2006 at a cost of $9 million. In addition to being a significant tenant in its own right, Bunnings Warehouse will become the anchor tenant for the ongoing development of the 35-hectare commercial precinct at Darwin Airport.

The growth initiatives across the portfolio were all funded through existing reserves and debt facilities at the asset level, and AIX was not required to invest any additional equity. This highlights the benefit of AIX’s disciplined approach to gearing within the portfolio, ensuring that there continues to be flexibility in how growth opportunities may be funded.

Below Melbourne Airport

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Australian Infrastructure Fund Annual Report 2007
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Chief Operating Officer’s Report continued

In addition to investing in the assets, there has also been a significant investment in people during the year within the AIX portfolio. New senior management changes made during the year included:

•Scott Paterson was appointed Chief Executive Officer at the Port of Portland in November 2006. Mr Paterson was previously General Manager of Logistics at the Port of Auckland, and has joined Portland with a clear mandate to continue the Port’s growth and pursue new business initiatives.
•Brad Geatches was appointed Chief Executive Officer of Perth Airport in January 2007. Mr Geatches joined Perth from his previous role as CEO of Cairns Port Authority, with responsibility for both the airport and seaport operations in Cairns. His experience in managing a high-growth airport in Cairns will be an important factor in guiding the future growth initiatives at Perth.
•Chris Woodruff was appointed Chief Executive Officer of APAC (Melbourne and Launceston Airports) in May 2007, commencing on 1 September 2007. Mr Woodruff was previously with BAA plc, where he gained experience across all aspects of airport operations and management.

Outlook

The macro environment

There are a number of macro trends and developments that have the potential to impact on the AIX portfolio through 2008 and beyond. These include:

•The Federal Government’s announcement in April 2007 that it will adopt the Productivity Commission’s recommendations and continue the light-handed regulation of Australian airports is a welcome development. By endorsing the continuation of a commercially based approach to arrangements between airports and airlines, the Federal Government has ensured a platform for ongoing investment by the airport industry for the benefit of airlines and passengers.
•The issue of carbon emissions and their impact on the environment is one that the airline and airport industries cannot ignore. Whilst air travel represents a relatively small overall proportion of man-made carbon emissions (dwarfed by the impact of road transport and power generation), there is a growing focus on how governments globally can effectively manage and regulate industries contributing to carbon emissions. At this stage, the impact on airlines and likely government policy-settings remains unclear. There remains no reason to believe that there will be a significant impact on air travel as a result of any regulatory decisions. AIX is committed to an environmentally responsible approach to managing the portfolio, and will seek to engage constructively in future debate on the issue.
•Security concerns remain at the forefront in the management of infrastructure assets globally. The introduction of new ‘LAGS’ (liquids, aerosols and gels) restrictions provided some short-term logistics challenges at international airports when introduced in March 2007. However, across the AIX portfolio, the implementation was smooth and the impact on passenger movements has been minimal. AIX believes that the security arrangements in place across the airport assets portfolio are appropriate and investors should take comfort from the fact that Australia continues to have amongst the most stringent airport security measures in the world.
•Through the June quarter of 2007, there was a degree of upward pressure on long-term interest rates in Australia. Whilst the longerterm outlook for interest rates remains uncertain, AIX is well positioned in the event of a sustained increase in rates. The relatively low level of gearing within the portfolio, together with a high degree of interest rate hedging, and the fact that a number of

		Shareholder			Total
	Dividends,	loans and	Franking	Revaluation	return
	distributions	returns	credits	during	for
	and interest	of capital	received	period	period
Asset	($’000)	($’000)	($’000)	($’000) (1)	($’000) (2)
Perth Airport	3,062	10,069	–	31,400	44,531
HOCHTIEF AirPort Capital	17,611	–	–	(4,596)	13,015
APAC	8,352	–	3,580	36,300	48,232
QAL	8,861	4,906	2,799	51,600	68,166
NT Airports	2,883	–	1,236	9,200	13,319
Port of Portland (3)	7,795	–	3,341	(2,100)	9,036
Port of Geelong	3,310	–	129	100	3,539
DP World Adelaide (4)	2,424	–	379	(2,604)	199
Statewide Roads	2,598	–	1,113	600	4,311
Metro Transport Sydney	129	19	49	(3,100)	(2,903)
Cash and Other	2,825	–	–	–	–
Total (5)	59,850	14,994	12,626	116,800	201,445

(1) The revaluation amount during the period for each asset reflects the underlying change in the asset’s value, taking into account accrued interest, distributions and dividends, and adjusted to separate out the effect of shareholder loan repayments and returns of capital, which are shown separately in the table.

(2) The internal rate of return (IRR) for the year to 30 June 2007 reflects the percentage return on investment for each asset over the period based on the gross return on assets, including franking credits received by AIX.

(3) Port of Portland Holdings comprises investments in Port of Portland Pty Ltd and Technical Services Agreements for Perth Airport.

(4) DP World Adelaide was divested from the AIX portfolio in February 2007.

(5) The total portfolio return and valuation as at 30 June 2007 is for the portfolio of transport assets, and does not include cash held on deposit or other assets previously held within the portfolio.

revenue streams across the portfolio are linked to inflation, all act to mitigate against any impact from increasing rates. Whilst increasing interest rates would impact on portfolio valuations, and therefore unrealised gains or losses, any impact on cash flow and distribution sustainability would be expected to be minimal. In contrast, rising interest rates that reflect increases in underlying inflation would in some cases have a positive impact on cash flows as the revenue impact of higher inflation would exceed the cost impact of higher interest rates.

Operating environment

The outlook for AIX’s airport portfolio is positive. The announcement by Tiger Airways of its intentions to commence domestic operations within Australia in late 2007 is expected to have a significant impact on pricing and capacity in the domestic market. Tiger Airways has announced an initial fleet of five Airbus A320 aircraft (with a longer-term target fleet size of 20 aircraft) based at Melbourne Airport and servicing a variety of domestic destinations including Darwin, Gold Coast and Perth. Whilst this additional capacity will be important, the expected impact on airfares could be equally important. The Australian domestic airline industry is expected to be subject to a level of pricing competition that has not been seen in the market since the commencement of operations by Virgin Blue and Jetstar early this decade.

In addition to the impact of Tiger Airways, domestic passenger numbers are expected to be boosted by the addition of substantial new capacity by the incumbent carriers. Virgin Blue has announced orders for an additional three Boeing 737s to be in service in 2008, together with 20 Embraer jets for delivery in 2008–09,

and a further five Boeing 737s as replacement capacity in 2010–11. Jetstar has announced orders for an additional nine Airbus A320 aircraft to be delivered through 2008 and into 2009, whilst Qantas has announced the transfer of four Boeing 767 aircraft from its international fleet to its domestic fleet.

There is also a range of positive factors expected to impact on international passenger movements. After approximately two years of delays, the new generation Airbus A380 aircraft are expected to enter service in the second half of calendar year 2008. With Qantas, Singapore Airlines and Emirates Airlines all being cornerstone customers for the A380, and with all three having significant operations in Australia, delivery of these new large aircraft is expected to substantially ease the capacity restrictions currently limiting passenger growth.

Recent announcements by the Federal Government that it has approved an application for three United Arab Emirates carriers (Emirates, Etihad and Qatar Airlines) to substantially increase their flights into Australia over the next five years will also have a positive impact. The resulting additional 56 flights per week to Australia by 2011 is a substantial increase. AIX remains hopeful that this announcement also signals a move towards further liberalisation of federally regulated bilateral landing rights, and a shift towards a genuine open-skies policy, which would benefit the Australian tourism industry, the broader Australian economy and the travelling public.

More generally, there are increasing signs of a shift amongst low cost carriers towards long-haul operations to complement their established short-haul businesses. Jetstar commenced international operations in late 2006 with a fleet of Airbus A330 aircraft, and announced plans to transition to a fleet of

12 Boeing 787 aircraft, with the first delivery expected in August 2008. Virgin Blue has announced plans to launch its long-haul operations in late 2008, with an initial order for seven Boeing 777 aircraft, with an option for a further six. Furthermore, a number of Asianbased low cost carriers have commenced or signalled their intentions to commence longhaul operations into Australia, including Tiger Airways, Viva Macau and Air Asia Express.

In respect of the ports, recent winter rainfalls in Victoria have provided some encouragement. Whilst it remains too early to draw any definitive conclusions regarding grain and fertiliser volumes, the outlook is significantly more positive than twelve months ago. Coupled with recent investment initiatives, such as the mineral sands facility at Portland and expectations of reasonable growth across the broader product base, the outlook for operations across the ports remains positive.

Portfolio approach

The Hastings approach to managing the AIX portfolio will continue to be based around the four core principles that have defined AIX through its ten-year history.

1. Disciplined acquisitions

Hastings believes assets should be acquired under the right terms and conditions, using the strictest discipline. The Hastings approach to asset acquisition is extremely stringent and based on the principle of only acquiring assets that enhance long-term value for investors.

AIX Valuation	AIX Valuation	AIX Valuation	Cost of Equity	Historical
30 June 2007		30 June 2006	30 June 2007	EV/EBITDA (1)
Asset	($m)	($m)	(%)	(x)
Perth Airport	233.4	202.0	13.55	14.1
HOCHTIEF AirPort Capital (2)	227.6	232.2	13.00	10.0
APAC (Melbourne and Launceston Airports)	197.4	161.1	12.05	14.0
QAL	161.7	110.1	16.40	12.8
NT Airports	46.0	36.8	15.40	10.4
Port of Portland	47.0	49.1	12.30	17.9
Port of Geelong	19.8	17.7	12.30	12.7
Statewide Roads	20.7	20.1	9.10	2.2
Metro Transport Sydney	2.6	5.7	n/a	7.9
Total	956.1	834.8	13.46

(1) Based on EBITDA for the year to 30 June 2007 with EV calculated using net senior debt at 30 June 2007 and the 30 June 2007 equity valuation.

(2) HOCHTIEF AirPort Capital numbers based on Hastings’ calculation of proportionate results from the individual airport assets using EBITDA, EV and net senior debt levels according to each airport’s year end.

Chief Operating Officer’s Report continued

There is no reason to believe that competition for new acquisitions will not remain highly competitive in 2008. Whilst Hastings will continue to actively identify and assess new acquisition opportunities for AIX, growth in the portfolio will not be sought at the expense of value and asset quality.

2. Growth focus

Hastings actively manages its funds and assets to ensure long-term value (both capital growth and cash flows) from the operation of the business. Hastings seeks out appropriate growth opportunities, both organically and through acquisition, to help deliver increasing investment value to investors.

Continued investment in the existing asset portfolio to broaden and deepen the inherent growth options will remain a key focus over the coming twelve months. A number of major growth initiatives have been identified within the assets, and will be actively pursued during 2008. These include a significant refurbishment and expansion of the international terminal at Melbourne Airport, a redevelopment and expansion of the terminal at Gold Coast Airport, new hardwood chip facilities at both Portland and Geelong, and the continuation of the ‘HAM 21’ development program at Hamburg Airport (Airport Plaza retail facilities expected to open in late 2008, airport railway station connected into the Hamburg suburban rail network in late 2008, new Radisson hotel in 2009). The substantial land banks held within AIX’s airport portfolio will also continue to provide a pipeline of development opportunities over the longer term.

3. Prudent capital management

Hastings employs a prudent approach to the use of gearing. The assets in the portfolio are conservatively geared, and the fund enjoys adequate and appropriate levels of cash to provide interest cover in case of any significant external economic shock. Whilst appropriate refinancing is considered part of normal business operations, Hastings ensures that each asset, and the overall portfolio, strikes an appropriate balance between return and risk. Significant additional gearing capacity within the portfolio will enhance returns from new investment initiatives, as it allows these new initiatives to be funded through low-cost debt facilities, without materially increasing the risk profile for AIX investors.

4. Complementary partnerships

Hastings seeks out business and operating partners with complementary skill sets to help increase investment value for investors. In Hastings’ airport portfolio, it has maintained partnerships with BAA and HOCHTIEF AirPort, while at the Port of Geelong, Hastings enjoys a partnership with Asciano Ltd. Hastings believes that these strategic partnerships are a key competitive advantage and provide significant value to investors. Identifying and developing new partnership opportunities will remain a high priority.

AIX remains well placed to continue to deliver growth and value to investors. Expectations of a positive environment for passenger movements, combined with a range of growth options within the existing asset base, and a conservative capital structure (that will allow for further funding of growth initiatives and active capital management), should underpin longer-term growth for investors.

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Peter McGregor Chief Operating Officer 15 September 2007

		Valuation
	Asset	30 June	Net	Senior
	ownership	2007	Debt/EV (1)	ICR (2)
Asset	(%)	($m)	(%)	(x)
Perth Airport	24.87	233.4	36.4	2.7
HOCHTIEF AirPort Capital (3)	40.02	227.6	50.8	3.4
APAC (Melbourne and Launceston Airports)	8.13	197.4	35.7	3.3
QAL	49.07	161.7	42.2	3.6
NT Airports	25.40	46.0	46.8	3.6
Port of Portland	50.00	47.0	40.8	2.3
Port of Geelong	35.00	19.8	45.6	2.8
Statewide Roads	6.20	20.7	24.2	20.2
Metro Transport Sydney (4)	38.89	2.6	0.0	n/a
Total/weighted average		956.1	41.2	3.6

(1) Net Debt/EV reflects net senior debt and independent equity valuations as at 30 June 2007.

(2) Reflects EBITDA for the 12 months to 30 June 2007 divided by the corresponding senior interest expense net of interest received on cash balances.

(3) Net Debt/EV and Senior ICR for HOCHTIEF AirPort Capital have been estimated by Hastings.

(4) Metro Transport Sydney had zero debt on its balance sheet at 30 June 2007.

Review of Investment Portfolio

Asset Portfolio Asset Locations Airports Seaports Tollroads and Rail

Page 11 Port of Portland

AIX: 50.0 Other HFM: 50.0

AIX: 24.9 Other HFM: 43.3

AIX: 35.0

AIX: 38.9 Other HFM: 38.9

AIX: 40.0

AIX: 49.1 Other HFM: 33.7

AIX: 25.4

Asset Locations

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International
Assets
Düsseldorf Hamburg Athens
Airport Airport Airport
Sydney
Airport
Australian Metro
Assets Transport
Alice Tennant Gold Sydney
Springs Creek Darwin Mount Isa Townsville Coast Statewide
Airport Airport Airport Airport Airport Airport Roads
Perth Port of Port of Launceston Melbourne
Airport Portland Geelong Airport Airport
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13
Australian Infrastructure Fund Annual Report 2007
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Airports

– Airstralia Development Group Perth Airport

– HOCHTIEF AirPort Capital Athens Airport, Greece Düsseldorf and Hamburg Airports, Germany

Sydney Airport, Australia

Australia Pacific Airports Corporation – Melbourne and Launceston Airports

Queensland Airports Limited – Gold Coast, Townsville and Mount Isa Airports

Airport Development Group (NT Airports) – Darwin, Alice Springs and Tennant Creek Airports

Perth Airport generated a return of 22.43 percent for the year and 19.82 percent since inception.

Airstralia Development Group (Perth Airport)

Perth Airport is strategically located as one of Australia’s closest airports to South East Asia, Europe and Africa. It is Australia’s fourth largest airport in terms of passenger traffic, and is the principal gateway to Western Australia and its significant resources sector. Total revenue for the financial year was $182.3 million and normalised EBITDA was $104.7 million, increases of 25.0 percent and 21.1 percent respectively over the previous year. Record domestic passenger numbers, ongoing development of the airport’s commercial land and strong growth in ground transport revenues contributed to the solid returns.

Record passenger numbers for the year to 30 June 2007 were a result of the buoyant Western Australian economy and the commencement of low-cost carrier services.

			Gross	Return
			return	since
	Holding	Valuation	for year	inception
	(%)	($m)	(% p.a.)	(% p.a.)
Perth Airport	24.9	233.4	22.43	19.82
HOCHTIEF AirPort Capital	40.0	227.6	3.05	10.37
APAC (Melbourne and Launceston Airports)	8.1	197.4	30.42	26.94
Queensland Airports Limited	49.1	161.7	62.46	60.78
NT Airports	25.4	46.0	37.86	28.46
Total Airport Portfolio		866.0	24.69	23.26

International passenger numbers reached 2.2 million, up 9.6 percent on the previous year, with expanded international services from Garuda Airlines, Emirates and Tiger Airways commencing daily international flights to Perth in May.

Domestic passenger numbers grew to 5.9 million, up 14.9 percent. Additional capacity from Qantas, Jetstar and sustained demand for regional services were the major contributing factors.

The outlook for international and domestic passenger growth at Perth Airport is positive, with Tiger Airways beginning daily international flights from Singapore to Perth and flights from Melbourne from December 2007. Competitor airlines have signalled they will respond to Tiger Airways with additional services.

During the year, management commenced a strategic review of the terminal locations within the airport site because of the significant and sustained domestic traffic growth causing congestion. Management continues to evaluate medium-term and long-term planning options for terminals, considering the consolidation of all terminals (two domestic and one international) at one location, and the associated location of car parking facilities to ensure the airport can accommodate growing demand.

During the year, the airport completed the refinancing of its senior debt facilities. The refinancing will deliver significant benefits to shareholders, including credit margin savings, increased financial flexibility and relaxed covenants. Importantly, the refinancing included a $225 million capital expenditure facility to assist the airport with funding aeronautical and property development.

The airport continues to experience strong demand for property development, helped by a shortage of land in Perth. Ongoing development of the airport’s property business will remain a key focus for management, given the strategic location of the airport in terms of its proximity to the Perth central business district and transport infrastructure.

In January 2007, Brad Geatches was appointed as the airport’s new CEO. Prior to his appointment, Mr Geatches was CEO at the Cairns Port Authority, which operates the Cairns Airport and seaport businesses.

Transfers of shares in Perth Airport are subject to pre-emptive rights in favour of AIX and other co-investors. Pre-emptive rights in favour of other co-investors may be triggered by a change in the responsible entity of AIX.

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Other
HOCHTIEF AirPort
(non-Airports) 9.5%
Capital 23.8%
NT Airports 4.8%
Queensland
Airport 16.9% Perth Airport 24.4%
APAC 20.6%
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Page 14 Left Perth Airport

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Airstralia Development Group
Perth Airport
Financial and operational performance
Passengers (m) ($m)
8 200
7 175
6 150
5 125
4 100
3 75
2 50
1 25
0 0
International Revenue ($m)
Domestic EBITDA ($m)
03 04 05 06 07
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Perth Airport
Financial and operational performance
AIX Interest in Perth Airport						24.9%
Since Inception Return	to AIX (%	p.a.)				19.8%
	2003	2004	2005	2006	2007	CAGR*
30 Juneyear end AIX Valuation($m)	135.0	151.0	180.0	202.0	233.4	03/07
Passengers(m)	5.3	6.0	6.7	7.1	8.1	11.0%
Revenue($m) (1)	94.0	115.7	121.8	145.9	182.3	18.0%
EBITDA($m) (1)	59.1	74.1	77.8	86.4	104.7	15.3%

CAGR: Compound Annual Growth Rate

(1) Normalised revenue and EBITDA.

Airports continued

HOCHTIEF AirPort Capital generated a return of 3.05 percent for the year and 10.37 percent since inception.

HOCHTIEF AirPort Capital (HTAC) (Athens, Greece; Düsseldorf and Hamburg, Germany; Sydney, Australia)

Athens International Airport

Athens Airport is Greece’s major airport, located 33 kilometres from central Athens in a catchment area of more than six million residents. The airport was opened in 2001, and has guaranteed exclusivity until 2016 as the only airport within a radius of 100 kilometres of Athens. Access to the airport is via both a six lane highway and a rail link. Athens Airport is principally an ‘origin and destination’ airport. It has two runways and has the capacity to manage 65 flight movements per hour. The major airlines servicing the airport are Olympic and Aegean Airlines, with the balance of the traffic being generated by a variety of international airlines.

For the year to December 2006, revenue was up 7.8 percent on the previous corresponding period to €357.5 million, whilst EBITDA was up 10.3 percent to €232.7 million. Passenger numbers increased 5.6 percent to 15.1 million. Domestic passenger movements for the year to December 2006 grew by 5.8 percent, whilst international passenger movements grew by 5.5 percent. Passenger traffic to and from the Middle East and America showed particular strength, with growth of 16.8 percent and 12.9 percent respectively. In respect of the Middle East, passenger numbers were boosted by additional capacity made available by United Arab Emirates carriers, while the launch of the Atlanta route by Delta Air Lines and the growth in additional scheduled operations to Canada contributed to the strength of the North American market.

For the six months to June 2007, passenger movements showed further strength, with a 10.1 percent improvement over the previous corresponding period. A key driver of this growth was the performance of the 17 low cost airlines, and additionally international tourist arrivals were up by 17 percent, highlighting the strength of the Greek tourism market. Athens Airport has approximately 180 hectares (1.8 million square metres) of land available for development. During the year, the largest conference and trade centre in the Athens metropolitan area commenced construction on airport land, with an anticipated completion date early calendar year 2009.

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HOCHTIEF AirPort Capital
Athens Airport
Financial and operational performance
Passengers (m) (€m)
15 350
300
12
250
9 200
150
6
100
3
50
0 0
International Revenue ($m)
Domestic EBITDA ($m)
02 03 04 05 06
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Athens Airport
Financial and operational performance
AIX Interest in Athens Airport						5.3%
Since Inception Return to	AIX (%	p.a.)				n/a
	2002	2003	2004	2005	2006	CAGR*
31 Decemberyear end						02/06
Passengers(m)	11.8	12.3	13.7	14.3	15.1	6.3%
Revenue(€m) (1)	271.5	290.8	329.8	331.7	357.5	7.1%
EBITDA(€m) (1)	179.2	193.0	215.3	210.9	232.7	6.7%

CAGR: Compound Annual Growth Rate

(1) Revenue and EBITDA include Airport Development Fund (ADF) subsidy.

Düsseldorf International Airport

The largest airline users of the airport, Lufthansa, Air Berlin/dba Group and LTU all recorded strong growth serving the German and European markets. Over 1.6 million passengers travelled on intercontinental flights during the year, 11.2 percent more than the previous corresponding period. During the year Delta Air Lines commenced flights to Atlanta and Emirates Airlines increased its flight services to Dubai to twice daily.

Düsseldorf Airport is Germany’s third busiest airport (after Frankfurt and Munich), hosting over 70 airlines travelling to over 170 destinations worldwide.

The airport is located in the heart of the Rhine-Ruhr region, and serves approximately 18 million people living within a 100 kilometre radius. The airport is principally an ‘origin and destination’ venue. Following fire damage in 1996, it reopened in 2001 providing passengers with a state-of-the-art terminal capable of processing over 22 million passengers per year.

The first half of calendar year 2007 saw the solid traffic growth rate maintained. The airport handled 8.2 million passengers over this period, an increase of 6.5 percent, or more than 500,000 passengers, on the same period last year.

Düsseldorf Airport is subject to capacity constraints imposed by regulatory limitations on aircraft movements; subsequently, demand for airport slots exceeds supply.

There are 23 hectares of land being developed at Düsseldorf Airport. Airport management have progressed the ‘Airport City’ business park concept, featuring a 533-room hotel and convention centre and various office buildings. The hotel and convention centre is scheduled to be completed by the end of calendar year 2007.

For the year to December 2006, revenue was up 7.3 percent on the previous corresponding period to €335.4 million, whilst EBITDA was up 7.6 percent to €133.5 million. Passenger traffic increased 7.0 percent to 16.6 million.

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Page 16 Athens Airport Page 17 Düsseldorf Airport

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HOCHTIEF AirPort Capital Düsseldorf Airport
Düsseldorf Airport Financial and operational performance
Financial and operational performance AIX Interest in Düsseldorf Airport 4.0%
Passengers (m) (€m) Since Inception Return to AIX (% p.a.) n/a
20 400
2002 2003 2004 2005 2006 CAGR
31 December year end 02/06
350
Passengers (m) 14.7 14.3 15.3 15.5 16.6 3.0%
15 300 Revenue (€m) 384.2 388.2 280.6 312.6 335.4 (3.3)%
EBITDA (€m) [(1)] 112.2 87.6 108.4 124.1 133.5 4.4%
250
CAGR: Compound Annual Growth Rate
(1) Normalised EBITDA.
10 200
150
5 100
50
0 0
International Revenue ($m)
Domestic EBITDA ($m)
02 03 04 05 06
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Airports continued

HOCHTIEF AirPort Capital (HTAC) continued

Hamburg Airport

Hamburg Airport is Germany’s fifth busiest airport, with over 70 airlines flying to 120 destinations. The airport is located 8.5 kilometres north west of the northern city of Hamburg.

Hamburg is the wealthiest city in the country and the second largest, with a population of 1.8 million. The catchment area also encompasses a large part of the states of Bremen, Lower Saxony, Schleswig-Holsten and Mecklenburg West-Pomerania.

The airport has the capacity to process over 16 million passengers. Through the HAM 21 Extension Project, €350 million is being invested to upgrade passenger facilities and services. As part of the project, the current Terminal 1 and associated new access roads were opened in 2005. Further developments include an urban railway link-up and new retail shopping centre, expected to be completed in 2008, and a new hotel directly opposite the terminal forecourts scheduled to open in 2009.

HTAC increased its ownership in Hamburg Airport during the year from 13.1 percent to 14.2 percent, resulting in an effective increase in AIX’s holding from 5.3 percent to 5.7 percent.

Revenue for the year to December 2006 was up 10.5 percent to €233.3 million and EBITDA was up 22.3 percent to €77.2 million.

Total passenger movements at the airport increased by 12.0 percent during the year to 12.0 million. The introduction of 16 new direct services, expanded capacity on existing routes and low-cost fares contributed to growth. In the domestic and European market, Lufthansa, Germanwings and Easyjet increased services. Hamburg Airport recorded strong growth in intercontinental traffic following the introduction of daily services by Continental Airlines to New York/Newark and by Emirates Airlines to Dubai and New York/JFK.

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HOCHTIEF AirPort Capital
Hamburg Airport
Financial and operational performance
Passengers (m) (€m)
12 250
10
200
8
150
6
100
4
50
2
0 0
International Revenue ($m)
Domestic EBITDA ($m)
02 03 04 05 06
Australian Infrastructure Fund Annual Report 2007
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Hamburg Airport
Financial and operational performance
AIX Interest in Hamburg Airport						5.7%
Since Inception Return to AIX (%		p.a.)				n/a
	2002	2003	2004	2005	2006	CAGR*
31 Decemberyear end						02/06
Passengers(m)	8.9	9.5	9.9	10.7	12.0	7.5%
Revenue(€m)	191.7	192.4	204.0	211.2	233.3	5.0%
EBITDA(€m)	52.3	45.2	54.4	63.1	77.2	10.2%

CAGR: Compound Annual Growth Rate

Sydney Airport

The airport’s performance was enhanced by the opening of new food and beverage and speciality retail offerings as part of the $20 million Terminal 2 redevelopment. Whilst additional car parking capacity was added during the year, approximately 3,000 more car park spaces will be constructed during 2008.

Sydney Airport is the major gateway into and out of Australia, servicing 41 international airlines and seven domestic and regional airlines.

The airport is located eight kilometres south of Sydney’s central business district, and has road and rail infrastructure links to the population and business centres of Sydney. Sydney Airport is located on a site of 907 hectares with twin north-south runways extending into Botany Bay on reclaimed land as well as an east-west runway. The airport has the capacity to process approximately 65 million passengers per annum.

A successful refinancing of Sydney Airport’s senior debt and capital markets facilities was completed in December 2006, resulting in superior terms and a distribution to the airport’s shareholders.

Transfers of shares in HTAC are subject to pre-emptive rights in favour of AIX and other co-investors. Pre-emptive rights in favour of other co-investors may be triggered by a change in the responsible entity of AIX.

Revenue for the year to June 2007 increased 9.9 percent to $724.6 million and EBITDA increased 11.5 percent to $585.8 million. Passenger numbers were up 6.4 percent to 31.0 million.

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Page 18 Hamburg Airport Page 19 Sydney Airport

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HOCHTIEF AirPort Capital Sydney Airport
Sydney Airport Financial and operational performance
Financial and operational performance AIX Interest in Sydney Airport 2.1%
Passengers (m) ($m) Since Inception Return to AIX (% p.a.) n/a
40 800
2003 2004 2005 2006 2007 CAGR
30 June year end 03/07
35 700
Passengers (m) 23.9 26.4 28.3 29.1 31.0 6.7%
30 600 Revenue ($m) 501.7 548.4 619.2 659.3 724.6 9.6%
EBITDA ($m) [(1)] 378.1 434.4 495.2 525.6 585.8 11.6%
25 500 * CAGR: Compound Annual Growth Rate
(1) Excluding specific expenses.
20 400
15 300
10 200
5 100
0 0
International Revenue ($m)
Domestic EBITDA ($m)
03 04 05 06 07
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Airports continued

APAC generated a return of 30.42 percent for the year and 26.94 percent since inception.

Australia Pacific Airports Corporation (APAC) (Melbourne Airport, Victoria; Launceston Airport, Tasmania)

APAC owns and operates Melbourne Airport, a curfew-free gateway to Victoria for domestic and international travellers; and Launceston Airport, a gateway for travel between Tasmania and mainland Australia.

Total revenue for the year for the two airports was $384.4 million, an increase of 10.3 percent on the previous year. EBITDA was $269.8 million, an increase of 9.9 percent.

Total passengers through Melbourne Airport reached 22.5 million, an increase of 5.0 percent over 2006. This comprised 4.5 million international passengers, up 3.4 percent, and 18.0 million domestic and transit passengers, up 5.4 percent.

International passenger traffic growth has slowed over the past two years largely due to a shortage in the number of airline seats. The shortage of seats has been created by delays in the arrival of new aircraft models from Airbus and Boeing, which are now expected in 2008.

New air service agreements between Australia and United Arab Emirates will allow additional seat capacity to develop by providing the opportunity for Emirates, Etihad and Qatar Airways to increase flights to and from Melbourne.

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Australia Pacific Airports Corporation APAC
Melbourne and Launceston Airports Financial and operational performance
Financial and operational performance AIX Interest in APAC 8.1%
Passengers (m) ($m) Since Inception Return to AIX (% p.a.) 26.9%
25 400
2003 2004 2005 2006 2007 CAGR
30 June year end 03/07
350
AIX Valuation ($m) 72.3 132.0 150.4 161.1 197.4
20
300 Passengers (m) 17.5 19.8 21.6 22.3 23.5 7.6%
Revenue ($m) 243.1 286.3 323.4 348.5 384.4 12.1%
15 250 EBITDA ($m) 169.2 203.6 229.9 245.6 269.8 12.4%
CAGR: Compound Annual Growth Rate
200
10 150
100
5
50
0 0
International Revenue ($m)
Domestic EBITDA ($m)
03 04 05 06 07
Australian Infrastructure Fund Annual Report 2007
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Domestic passenger growth was particularly strong, reflecting both an increase in the number of people travelling and the ability of domestic carriers to meet demand.

Tiger Airways’ decision to base its Australian operations at Melbourne was a significant achievement for the airport. At the time of writing, Tiger Airways had announced it will commence flights from Melbourne Airport to Darwin, Gold Coast, Launceston, Mackay and Rockhampton in late calendar year 2007. Aviation security was boosted during the year, and new rules regarding liquids, aerosols and gels were introduced. Melbourne Airport also recently introduced checked bag screening for all domestic passengers, consistent with requirements for all major Australian airports.

Car parking revenue was strong during the year, mainly generated by additional services. Car spaces were added and further increases in the capacity of the long-term car park are planned.

The airport recently finalised five-year pricing agreements with its international airlines and domestic carriers, including Qantas, Virgin Blue and Tiger Airways. The agreements lock in aeronautical charges over the period, and will allow the airport’s substantial capital program to continue over the next five years. The focus of this program is the development of the international terminal, which is currently being planned.

Launceston Airport also performed well, with total passenger numbers increasing 7.7 percent to 991,000 for the year.

Chris Woodruff, formerly with BAA plc, has been appointed to succeed Chris Barlow as the new Chief Executive Officer and Managing Director, commencing on 1 September 2007.

Transfers of shares in APAC are subject to pre-emptive rights in favour of AIX and other co-investors. Pre-emptive rights in favour of other co-investors may be triggered by a change in the responsible entity of AIX.

Page 20 Melbourne Airport Page 21 Melbourne Airport

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Australian Infrastructure Fund Annual Report 2007
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Airports continued

QAL generated a return of 62.46 percent for the year and 60.78 percent since inception.

Queensland Airports Limited (Gold Coast, Townsville and Mount Isa Airports)

Total revenue for the year was $63.8 million and EBITDA was $44.7 million, increases of 13.1 percent and 16.9 percent respectively on the previous year.

Gold Coast Airport recorded passenger growth of 4.8 percent, whilst Townsville and Mount Isa airports, benefiting from the strong North Queensland economy, registered 10.7 percent and 18.2 percent passenger growth respectively.

Gold Coast Airport’s subdued growth was due in part to high average load factors on its services, reflecting strong growth over recent years.

As a means of easing congestion and expanding to accommodate the next phase of passenger growth, in June 2007 Gold Coast Airport announced that it had reached agreement with Qantas to redevelop the terminal as a single common user facility. This is an important development in the airport’s history. The cost of the project is expected to be in the order of $110 million, and construction is anticipated to take up to two years to complete.

Gold Coast Airport extended its runway in May 2007 by 458 metres, enabling the airport to cater for international flights and providing access to a new market segment. The prospects for growth of international inbound tourists are greatly enhanced by the potential for direct flights to the Gold Coast by low cost carriers, with flights carrying tourists from Asian countries already underway. Gold Coast Airport also expanded its car park during the year.

Redevelopment also occurred at Townsville Airport when the terminal was refurbished, including the introduction of a Newslink newsagency and an Aromas cafe, which has led to an increase in passenger spending. In addition, the Northern Australia Aerospace Centre of Excellence (NAACEX) aeronautical property development project was formally launched at Townsville Airport in March 2007.

The outlook for 2008 is positive. All major airlines have ordered new aircraft to meet demand, and Tiger Airlines has announced that it will commence flights to the Gold Coast. The introduction of Tiger Airways is expected to stimulate further passenger growth, and the extended runway should create significant international interest.

Transfers of shares in QAL are subject to pre-emptive rights in favour of AIX and other co-investors. Pre-emptive rights in favour of other co-investors may be triggered by a change in the responsible entity of AIX.

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Queensland Airports Limited
Gold Coast, Townsville and Mount Isa Airports
Financial and operational performance
Passengers (m) ($m)
6 70
60
5
50
4
40
3
30
2
20
1 10
0 0
International Revenue ($m)
Domestic EBITDA ($m)
03 04 05 06 07
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Queensland Airports	Limited
Financial and operational performance
AIX Interest in QAL						49.1%
Since Inception Return to AIX (% p.a.)						60.8%
	2003	2004	2005	2006	2007	CAGR*
30 Juneyear end						03/07
AIX Valuation($m)	n/a	n/a	110.4	110.1	161.7
Passengers(m) Revenue($m)	3.2 34.6	3.7 41.5	4.5 46.9	5.0 56.4	5.3 63.8	13.2% 16.5%
EBITDA($m)	18.8	26.9	30.5	38.2	44.7	24.2%

CAGR: Compound Annual Growth Rate

NT Airports generated a return of 37.86 percent for the year and 28.46 percent since inception.

During the year Tiger Airways announced the introduction of a daily international service linking up with a daily Melbourne to Darwin service from December 2007. This will add the equivalent of 140,000 seats annually. In July 2007, Tiger Airways announced that it would add three Melbourne to Alice Springs flights per week, increasing capacity by more than 50,000 seats per year. Jetstar has also announced it plans to maintain a year-round daily Melbourne–Darwin service, providing a solid basis for future growth.

Airport Development Group (NT Airports) (Darwin, Alice Springs and Tennant Creek Airports)

NT Airports operates Darwin International Airport, Alice Springs Airport and Tennant Creek Airport.

Construction of a major retail development for Bunnings was completed at Darwin Airport, and further property development opportunities are being explored.

Total revenue across the three airports was $50.7 million for the year and EBITDA was $32.7 million, representing increases of 32.1 percent and 38.1 percent respectively over the previous corresponding period. Solid passenger numbers, up 12.2 percent to 2.3 million, and improved commercial and property revenues, contributed to the strong full year result.

During the year, the Federal Government accepted the recommendation of the Productivity Commission to exclude Darwin Airport from the aeronautical price monitoring regime. Notwithstanding, the airport will continue to set its aeronautical pricing and capital expenditure program in consultation with the airlines.

Domestic and international patronage at Darwin Airport was buoyed by continued growth in tourism and economic activity in Darwin. Domestic passenger numbers increased by 12.4 percent and international passenger numbers increased by 11.4 percent over the previous year.

Transfers of shares in NT Airports are subject to pre-emptive rights in favour of AIX and other co-investors. Pre-emptive rights in favour of other co-investors may be triggered by a change in the responsible entity of AIX.

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Page 22 Gold Coast Airport Page 23 Darwin Airport

0.0 0.5 1.0 1.5 2.0 2.5 0 5 10 15 20 25 30 35 40 45 50 55 Airport Development Group (NT Airports) Financial and operational performance Alice Springs, Darwin and Tennant Creek Airports Passengers (m) ($m) 04 03 05 06 07 Domestic International EBITDA ($m) Revenue ($m)	Airport Development Group (NT Airports) Financial and operational performance AIX Interest in NT Airports 25.4% Since Inception Return to AIX (% p.a.) 28.5% 2003 2004 2005 2006 2007 CAGR* 30 Juneyear end 03/07
	AIX Valuation($m) 22.0 24.7 33.1 36.8 46.0
	Passengers(m) 1.7 1.8 2.0 2.0 2.3 8.3%
	Revenue($m) 22.3 27.2 32.4 38.4 50.7 22.8%
	EBITDA($m) 10.7 14.9 18.6 23.7 32.7 32.2%
	* CAGR: Compound Annual Growth Rate

Seaports Port of Portland

Port of Geelong

Port of Portland generated a return of 19.84 percent for the year and 29.78 percent since inception.

Port of Portland (Victoria)

Port of Portland (the Port) is a bulk seaport located in the coastal town of Portland in western Victoria. The Port processes diversified bulk commodities, including aluminium, grain, timber products, fertiliser, livestock and mineral sands.

The Port recorded revenue of $17.6 million and normalised EBITDA of $8.9 million for the year. EBITDA for the year was below budget due to reduced grain and fertiliser volumes as a result of the drought conditions experienced during the year. However, recent rainfalls across the region should result in grain volumes at more typical levels in 2007.

During 2008, the Port will continue to benefit from increased mineral sands throughput, recovering grain and fertiliser volumes and stable volumes across its other core businesses.

The opening of the Mineral Sands Handling facility was announced in December 2006. The facility will receive mineral sands from Iluka’s Hamilton separation plant under a long-term contract with the Port. The facility has been receiving mineral sands throughout the year, with shipments from the Port commencing in May 2007.

Feasibility work on the construction of new hardwood chip storage and loading facilities at the Port continues. Discussions between the Port’s management and potential counterparties are ongoing.

David Looker was appointed as independent Chairman of the Board in June 2007. David is also the Chairman of the Darwin Port Corporation and brings a wealth of industry experience to the Board, having had an extensive career in international shipping and logistics.

Scott Paterson was appointed as the Chief Executive Officer for the Port in November 2006. Scott’s previous role was General Manager, Logistics at the Port of Auckland.

Transfers of shares in Port of Portland are subject to pre-emptive rights in favour of AIX and other co-investors. Pre-emptive rights in favour of other co-investors may be triggered by a change in the responsible entity of AIX.

			Gross	Return
			return	since
	Holding	Valuation	for year	inception
	(%)	($m)	(% p.a.)	(% p.a.)
Port of Portland	50.0	47.0	19.84	29.78
Port of Geelong	35.0	19.8	19.96	28.72
DP World Adelaide (1)	–	–	29.95	134.07
Total Seaport Portfolio		66.8	20.17	32.48

(1) DP World Adelaide was divested from the AIX portfolio in February 2007.

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Port of Portland Port of Portland
Financial and operational performance Financial and operational performance
Tonnes (m) ($m) AIX Interest in Port of Portland 50.0%
5 20 Since Inception Return to AIX (% p.a.) 29.8%
2003 2004 2005 2006 2007 CAGR
30 June year end 03/07
4 15 AIX Valuation ($m) 40.7 35.2 46.1 49.1 47.0
Throughput (tonnes m) 3.6 3.8 3.6 3.5 3.0 (4.5%)
Revenue ($m) 13.5 14.5 14.1 16.6 17.6 6.8%
3
EBITDA ($m) 6.7 6.7 6.1 8.2 [(1)] 8.9 7.2%
10
CAGR: Compound Annual Growth Rate
2 (1) Normalised EBITDA.
5
1
0 0
Grain Livestock Revenue ($m)
Fertiliser Smelter EBITDA ($m)
Forestry Other
Australian Infrastructure Fund Annual Report 2007 03 04 05 06 07
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Port of Geelong generated a return of 19.96 percent for the year and 28.72 percent since inception.

Port of Geelong (Victoria)

The Port of Geelong (POG) is a bulk seaport located in western Victoria. The facility predominantly processes fertiliser, steel, timber, forestry and petroleum products. The city of Geelong is also home to one of the two Shell oil refineries located within Australia.

Net fees received by Port of Geelong Unit Trust (the entity in which AIX holds its investment) for the year were $8.4 million, an increase of 1.0 percent on 2006.

The volume of goods imported and exported through POG reached 10.3 million tonnes for the year, an increase of 5.2 percent, which was a pleasing outcome in a year of significant drought. The drier conditions materially impacted fertiliser throughput, which was 15.4 percent lower than last year. This also impacted revenues through lower use of shore cranes.

Substantial increases in the throughput and the fees generated from liquid bulk products, in particular crude oil and petroleum products, offset the weakness in fertiliser tonnages. Liquid bulk contributed 72.8 percent of POG’s total tonnages.

Shipments of higher margin dry bulk goods, such as soy bean meal and cement clinker, also contributed to the overall increase in revenue and fees payable, as did berthing revenue from a number of unbudgeted general cargo vessels.

Fertiliser volumes are unlikely to fully recover to normal levels during the coming year despite significant rain being experienced during the recent winter months. Notwithstanding, the outlook for 2008 is positive, with increased dry bulk and steel volumes, combined with tight cost controls, expected to offset fertiliser weakness. A number of new business opportunities are also being pursued.

AIX holds its investment in POG though Port of Geelong Unit Trust, the owner of the port. GeelongPort, a subsidiary of Asciano Ltd (formerly Toll Holdings), is the port operator. Asciano also has a minority equity interest in the trust.

Transfers of shares in POG are subject to pre-emptive rights in favour of AIX and other co-investors. Pre-emptive rights in favour of other co-investors may be triggered by a change in the responsible entity of AIX.

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Port of Portland 4.9%
Other
Port of Geelong 2.1% (non-Seaports) 93.0%
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Below
Port of Geelong
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Port of Geelong Port of Geelong
Financial and operational performance Financial and operational performance
Tonnes (m) ($m) AIX Interest in Port of Geelong 35.0%
12 25 Since Inception Return to AIX (% p.a.) 28.7%
2003 2004 2005 2006 2007 CAGR
10 30 June year end 03/07
20
AIX Valuation ($m) 14.1 15.2 17.5 17.7 19.8
Throughput (tonnes m) 9.8 10.2 10.5 9.8 10.3 1.2%
8
15 Port Revenue ($m) 18.2 18.8 20.2 21.4 22.7 5.6%
Trust EBITDA ($m) [(1)] 7.0 7.5 7.5 7.9 8.2 4.2%
6
CAGR: Compound Annual Growth Rate
10 (1) Trust EBITDA is fees received by the Port of Geelong Unit Trust net of port
operator fees and the Trust’s own operating expenses.
4
5
2
0 0
Fertiliser Petroleum Port Revenue ($m)
Forestry Other Trust EBITDA ($m)
03 04 05 06 07 Australian Infrastructure Fund Annual Report 2007
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Tollroads and Rail

Statewide Roads

Metro Light Rail and Monorail

Statewide Roads generated a return of 22.12 percent for the year and 10.16 percent since inception.

Statewide Roads

Statewide Roads (SWR) operates the M4 Motorway, an established tollroad servicing Parramatta and the western suburbs of Sydney. SWR’s concession agreement expires in 2010.

SWR’s total toll revenue for the year was $90.4 million, an increase of 1.5 percent on the previous year. EBITDA was $65.8 million, decreasing 5.6 percent, largely due to the ongoing asphalt resheeting project.

Traffic volumes showed a slight increase on the previous year, with average daily traffic reaching 107,011 vehicles per day. For the coming year, SWR’s traffic volumes will continue to be influenced by the growth in the Sydney road network. The primary focus of SWR’s management in 2008 will be the implementation of the open grade asphalt replacement project, and planning for the handover of the M4 Motorway to the NSW Roads and Traffic Authority (RTA) at the end of the concession in 2010.

During the year, Transurban Limited acquired Sydney Roads Group (SRG), the majority shareholder in SWR. Following this takeover, Transurban representatives were appointed to the SWR Board in May 2007.

Transfers of shares in SWR are not subject to pre-emptive rights.

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Statewide Roads 2.2% Other (non-Tollroads
and Rail) 97.5%
Metro Transport
Sydney 0.3%
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Statewide Roads
Financial and operational performance
Vehicles (’000) ($m)
120 100
100
80
80
60
60
40
40
20
20
0 0
Average Daily Revenue ($m)
Traffic (ADT)
EBITDA ($m)
Vehicles (’000)
Australian Infrastructure Fund Annual Report 2007 03 04 05 06 07
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Statewide Roads
Financial and operational performance
AIX Interest in Statewide Roads		6.2%	ordinary,	100% preference
Since Inception Return to AIX (%	p.a.)				10.2%
2003	2004	2005	2006	2007	CAGR*
30 Juneyear end AIX Valuation($m) 38.6	32.5	26.4	20.1	20.7	03/07
ADT(’000) 91.2	98.7	103.0	104.6	107.0	4.1%
Revenue($m) 71.8	77.9	80.7	89.0	90.4	5.9%
EBITDA($m) 62.8	67.5	67.8	69.7	65.8	1.2%
* CAGR: Compound Annual Growth	Rate

Metro Transport Sydney generated a return of (53.76) percent for 2007 and (30.56) percent since inception.

Metro Transport Sydney

Metro Transport Sydney Pty Limited (MTS) comprises the Metro Light Rail (Light Rail) and the Metro Monorail (Monorail).

The Light Rail operates from Central Station to Sydney’s inner west. The Monorail operates through Darling Harbour and the CBD, largely catering to tourists and other casual users. The concessions for these services expire in 2028 and 2038 respectively.

Revenue for the year improved by 9.1 percent to $15.8 million, and MTS generated EBITDA of $0.9 million. Net profit after tax improved by 19.4 percent, with MTS recording a net loss for the year of $6.8 million.

The increase in overall revenue is largely due to stronger passenger growth on the Monorail, where revenues grew by 13.3 percent. This performance has been attributed to a rise in the number of domestic tourists. Passengers using the Light Rail grew at a more moderate pace, with revenues strengthening by four percent over the year.

Transfers of shares in MTS are subject to pre-emptive rights in favour of AIX and other co-investors. Pre-emptive rights in favour of other co-investors may be triggered by a change in the responsible entity of AIX.

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Page 27
Statewide Roads
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0 2 4 6 8 -5 0 5 10 15 20 Metro Transport Financial and operational performance Passengers (m) ($m) 04 03 05 06 07 Passengers (m) EBITDA ($m) Revenue ($m)	Metro Transport Sydney Financial and operational performance AIX Interest in Metro Transport Sydney 38.9% Since Inception Return to AIX (% p.a.) (30.6)% 2003 2004 2005 2006 2007 CAGR* 30 Juneyear end 03/07
	AIX Valuation($m) 6.1 12.0 8.9 5.7 2.6
	Passengers(m) 6.1 6.0 6.2 5.9 6.3 0.6%
	Revenue($m) 14.8 15.0 14.8 14.5 15.8 1.7%
	EBITDA($m) (1.3) (1.4) (0.3) (0.7) 0.9 n/a
	* CAGR: Compound Annual Growth Rate

Australian Infrastructure Fund Limited Board

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Paul Espie BSc, MBA, FAICD Term of office: Chairman since August 2004, Director since June 1994 Non-executive and Independent: Yes

External directorships:

Current: Chairman of Pacific Road Group. Director of Pacific Road Capital Management Pty Ltd.

Previous: Director of Utilities of Australia Pty Limited and Hastings Funds Management Limited. Chairman of Freight Rail Corporation and Oxiana Limited.

Skills, experience and expertise:

Paul is the founder and Managing Director of Pacific Road Group, adviser to governments and major Australian companies, particularly in the resources, infrastructure and services sectors. Pacific Road Capital Management is the Manager of a private equity fund investing in the global mining industry. Before establishing Pacific Road Group in 1987, Paul was Senior Vice President of Bank of America responsible for Australia, New Zealand and Papua New Guinea. He held corporate and investment banking appointments in England and the USA with the Bank (and its predecessors in Australia) from 1974.

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John Harvey BJuris, LLB, FCA Term of office: Director since July 2004 Non-executive and Independent: Yes

External directorships:

Current: Director of David Jones Limited and Chairman of the Audit Committee. Director of Templeton Global Growth Fund Limited, APN Property Group Ltd and APN Funds Management Ltd.

Previous: Chief Executive Officer (CEO) of the Mt Eliza Business School and prior to that the inaugural CEO of PricewaterhouseCoopers in Australia.

Skills, experience and expertise:

John had a 25-year career with PricewaterhouseCoopers during which he provided professional advisory services to many multinational and Australian national companies and was a registered company auditor for 20 years.

AIFL Board committee membership:

John was appointed a member of the Audit Committee in July 2004 and has been Chairman of the Audit Committee since August 2004.

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Robert Humphris ARSM, BSc (Eng) Hons, CEng, FIMMM, FAIMM

Term of office: Director since September 2006 Non-executive and Independent: Yes

External directorships:

Current: Chairman, Ampcontrol Pty Ltd. Director, Leighton Holdings Limited. Previous: Managing Director of Peabody Resources Pty Ltd (previously Costain Australia Limited). Chairman of New South Wales Mineral Council, Australian Coal Association and Newcastle Coal Shippers Limited. Director of Australian Coal Research Limited, Port Waratah Coal Services Limited and ASX listed company AurionGold Limited.

Skills, experience and expertise:

Robert brings a wealth of experience and knowledge developed over a career spanning more than 40 years. Robert has extensive Australian and international experience working in the mining and construction industries.

AIFL Board committee membership: No.

AIFL Board committee membership: Paul was appointed a member of the Audit Committee in August 2004.

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Mike Hutchinson BSc (Hons), CPEng

Term of office: Director since September 2005 Non-executive: Yes Independent: No

External directorships:

Current: Director of Hastings Funds Management Limited.

Previous: Director of Pacific Hydro Ltd, OTC Ltd, the Australian Postal Corporation and the Australian Graduate School of Management Ltd. Chairman of HiTech Group Australia Ltd.

Skills, experience and expertise:

Mike is a qualified civil engineer, educated at the University of Newcastle upon Tyne, UK, and Harvard Business School. He was formerly an international transport engineering consultant with experience in the UK, France, Australia, Africa, South East Asia and the Pacific. From 1980 to 1999 he was a senior official with the Australian Government, mainly working in the transport and communications sectors. He worked closely on reform of the Australian Government’s state-owned enterprise sector from 1987 to 1996 and was acting Managing Director of the former OTC Ltd in 1989. He led the government’s major privatisation program over the period 1996 to 1999, including Telstra, ANL Ltd, Australian National and most of Australia’s airports, and he worked closely on the regulation of privatised infrastructure. Since 2000, he has practised as a private consultant and company director. He has been a trustee of the Australian Government’s superannuation schemes and a consultant to a global investment bank.

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Peter McGregor BCom, F Fin, ASA

Term of office: Director since June 2007, Chief Operating Officer since January 2006 Non-executive and Independent: No

External directorships:

Current: Chairman of Ports Pty Ltd (Port of Geelong). Director of Australia Pacific Airports Corporation (Melbourne and Launceston Airports), Queensland Airports Ltd (Gold Coast, Townsville and Mt Isa), and Airport Development Group (Darwin, Alice Springs and Tennant Creek Airports).

Skills, experience and expertise:

Peter joined Hastings in January 2006. Prior to joining Hastings, Peter was an executive director and Head of Infrastructure & Utilities at the investment banking firm Goldman Sachs JBWere. Peter has more than 20 years’ experience in the Australian investment banking industry. During this time, he was involved in numerous major transactions in the infrastructure sector, including equity capital markets, mergers and acquisitions, and debt capital markets assignments.

AIFL Board committee membership: No.

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Robert Tsenin BEc, Dip Corp Fin

Term of office: Director since September 2005 Non-executive and Independent: Yes

External directorships:

Current: Director of Matrix European Real Estate Investment Trust Limited and Sistema-Hals JSC. Previous: Director of Goldman Sachs (Australia and New Zealand), Telstra Corporation, National Mutual Limited and various subsidiaries, SAGASCO Limited, WACO International, Lend Lease Corporation Limited and various subsidiaries.

Skills, experience and expertise:

Robert joined Goldman Sachs in 1987 in New York and was Managing Director of its Australasian operations when he retired from Goldman Sachs in 1997. He joined Lend Lease Corporation in 1997 as Finance Director until his retirement in 2003. Between 2003 and 2005, he was Senior Advisor to Lazard plc in London. He has extensive experience in capital markets, corporate finance, and mergers and acquisitions.

AIFL Board committee membership: Robert was appointed a member of the Audit Committee in December 2005.

AIFL Board committee membership: No.

Hastings Funds Management Limited Board

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Liam Forde BSc (Econ), MAICD CFTP Term of office: Chairman since October 2006, Director since January 2006. Non-executive and Independent: Yes

External directorships:

Current: Director of Westpac Funds Management Limited, Rosecorp Pty Ltd Advisory Board and Crescendo Partners Advisory Board. Previous: Director of Baulderstone Hornibrook Pty Ltd.

Skills, experience and expertise:

Liam brings to Hastings a wealth of experience and knowledge developed over a career spanning more than 30 years. He has held senior executive positions in a variety of industries, including Ford Motor Company in the UK, Simpson Holdings Limited and Baulderstone Hornibrook in Australia. His industry experience covers retailing, domestic appliance manufacture and distribution, electronics, automotive, and the development, financing and construction of major infrastructure. He is an experienced executive who has operated as CEO and in cross-functional roles across a diverse range of industries operating in both domestic and international markets, including Europe, Indonesia, China, India, Vietnam, Panama and Thailand. He was formerly CEO of Baulderstone Hornibrook, one of Australia’s leading construction and engineering companies.

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Steve Boulton BBus, MTM, GAICD, FAIM, CMAHRI Term of Office: Director since September 2007 Non-executive and Independent: No

External directorships:

Current: Director of several Hastings managed companies.

Previous: Steve was previously a director of a number of Babcock & Brown related entities.

Skills, experience and expertise:

Steve commenced the role of CEO of Hastings in September 2007. Prior to this Steve held the position of CEO of Babcock and Brown Infrastructure, a top 100 ASX infrastructure, and utility entity with assets spread globally across three continents.

He has also held CEO roles with Powerco a New Zealand Exchange Limited (NZX) listed energy utility, and with Allgas based in Queensland. With these roles Steve grew the business ownership, operations and assets under management by leading numerous transactions in the infrastructure and utility sectors including mergers and acquisitions, and both equity and debt capital markets. He has held a range of executive level positions in the infrastructure and utility sectors with experience in listed, unlisted and public utilities for more than 30 years.

HFML Board committee membership: No

HFML Board committee membership: Liam is a member of the Audit and Compliance Committee. He was Chairman from January 2006 to July 2007.

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Alan Freer BEc, CPA, GAICD

Term of office: Director since September 2007 Non-executive: Yes Independent: No

External directorships:

Current: Director of Electranet Pty Ltd and Australian Pipeline Industry Association Ltd. Previous: Director of Epic Energy Holdings Pty Ltd, Ausdoc Group Ltd, Electricity Services Victoria and Treasury Corporation of Victoria.

Skills, experience and expertise:

Alan has had a career spanning nearly 35 years in both the public and private sectors. He has a broad background with extensive experience in the energy and logistics industries and expertise in managing multi-divisional and geographically dispersed businesses.

Most recently, Alan was Managing Director of the Hastings’ managed Epic Energy from July 2004 to July 2007 and made a valuable contribution by transforming Epic Energy into one of Australia’s best performing gas pipeline organisations. Alan has also held executive positions at Ausdoc Group Ltd, Email Limited and the State Electricity Commission of Victoria.

HFML Board committee membership: No

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Sean McElduff BBus (Accounting/Law), GAICD Term of office: Director since October 2002, Chairman from June 2004 to October 2006 and continues as Director Non-executive: Yes Independent: No

External directorships:

Current: Director of Westpac Institutional Holdings Pty Ltd, Westpac Private Equity Pty Ltd and other Westpac companies. Previous: Director of a number of Westpac related entities and Epic Energy East Pipelines Pty Ltd.

Skills, experience and expertise:

Sean joined Westpac in 1977 and Westpac Institutional Bank in 1984. In 1990, he transferred to New York for three years and on return to Australia established Westpac’s Securitisation Business Unit. He is currently responsible for Westpac’s Specialised Capital Group.

Since 1993, Sean has run business units in the wholesale bank unit, including securitisation, corporate finance, equities and advisory, and sales and marketing. In 1999, he was appointed General Manager and became a member of both the bank’s Management Council and Westpac Institutional Bank’s Executive Team.

HFML Board committee membership: Sean was a member of the Audit and Compliance Committee from 2003 until July 2007.

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Mike Hutchinson BSc (Hons), CPEng

Term of office: Director since March 2000 Non-executive and Independent: Yes

HFML Board committee membership:

Mike has been a member of the Audit and Compliance Committee since 2003 and was appointed Chairman on 23 July 2007. Refer to page 29 for further details regarding Mike’s directorships, skills, experience and expertise.

Hastings Funds Management Limited Board

continued

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Jim McDonald FAICD Term of office: Director since July 2007 Non-executive and Independent: Yes

External directorships:

Current: Chairman of Walter Diversified Services Limited and Shieldliner Ltd and non-executive Director of Pearlstreet Ltd.

Previous: Director of East Australian Pipeline Pty Limited and Australian Pipeline Limited.

Skills, experience and expertise:

Jim brings to Hastings significant expertise and knowledge, with over 20 years’ experience in industry. Jim was Managing Director and CEO of Australian Pipeline Trust from 2000 to 2005. Prior to that, he was General Manager Pipeline Division of Australian Gas Light Company from 1996 to 2000. Jim’s previous experience also includes 15 years with ESSO Australia Ltd in oil and gas production in Bass Strait.

HFML Board committee membership: Jim is a member of the Audit and Compliance Committee.

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Jim Tate BCom, MCom, FAICD Term of office: Director since June 2004 Non-executive: Yes Independent: No

External directorships:

Current: Westpac Institutional Holdings Pty Ltd, Westpac Custodian Nominees Pty Ltd and other Westpac companies. Previous: Director of a number of GE related entities.

Skills, experience and expertise:

Jim has over 28 years’ experience in the financial services sector, 18 with Westpac Banking Corporation. Through the late 1980s and early 1990s, he held a number of managerial roles in Westpac’s Australian Financial Markets Group, mainly in fixed income and derivatives.

After six years heading the bank’s operations in New York and London, he returned to Australia in 1999 where he has undertaken a number of General Manager roles within Westpac Institutional Bank, including Corporate Banking and, since April 2003, Chief Financial Officer. From 2000 to 2003, he managed the integration, and later, sale of Australian Guarantee Corporation (AGC) to GE Capital.

HFML Board committee membership: No.

Corporate Governance

AIX’s framework and approach to corporate governance Australian Infrastructure Fund (AIX) comprises Australian Infrastructure Fund Limited (AIFL or Company) and Australian Infrastructure Fund Trust (AIFT or Trust) on the basis that they are one operation bound together by the stapling process. Hastings Funds Management Limited (Hastings) is the Responsible Entity of the Trust and the Manager of the Company. The organisational structure appearing on the following page diagrammatically explains the relationship between the Company, the Trust, and Hastings as manager and Responsible Entity.

The Board of AIFL is responsible for the corporate governance of the Company and the Board of Hastings is responsible for the corporate governance of the Trust. The Boards guide and monitor the business and affairs of AIX on behalf of the securityholders.

Both AIFL and Hastings are committed to maintaining the highest standards of corporate governance. In December 2005, AIFL and Hastings entered into a formal Protocol to record the governance arrangements for AIX. The Protocol deals with a range of issues, including:

•AIFL and Hastings are to use reasonable endeavours to ensure that at least one non-executive director of Hastings is appointed a director of AIFL. In September 2005, Mike Hutchinson, a director of Hastings since 2000, was appointed to the Board of AIFL as the Common Director representing both AIFL and Hastings.

In summary, the delineation of responsibilities between AIFL and Hastings is as follows:

•The Board of AIFL is responsible for the conduct of the Company.
•The Company has entered into an agreement with Hastings to perform certain management and administrative functions for the Company. Accordingly, references to management are to management by Hastings, which has the responsibility for the day-to-day operation and administration of both the Company and the Trust.
•Hastings as contracted manager of the Company is required to report to the Board of AIFL and to obtain the AIFL Board’s approval before undertaking certain actions, including investment and divestment activities.
•For the duration of the AIX stapling, the Company is required to review investments and to advise Hastings whether it approves each proposal. In the absence of approval, Hastings must not enter into the investment or divestment unless it would breach the Trust Deed or its duty to securityholders by not undertaking the proposal.
•The Board of AIFL is entitled to decline to approve a proposal if it considers that it would be contrary to the Constitution of the Company or the Stapling Agreement, or it forms the view that there are reasonable grounds for suspecting that the Company is insolvent, or that to carry out the transaction would not be in the best interests of the Company.
•Hastings has responsibility for the conduct of the Trust.
•Providing that the audit committees of AIFL and Hastings meet jointly to review the financial statements of AIX, and to review other risk and compliance issues of mutual interest to AIX. During 2006/07, the joint audit committees and Boards each met regularly through the year.
•The approval of the auditor of the Company and the Trust.
•The preparation of the financial statements and Annual Report.
•The disclosure and management of potential conflicts of interest of Hastings and its parent, Westpac Banking Corporation, and dealings with related parties.
•The appointment and removal of representatives to the boards of investee companies owned by AIX.

Australian Infrastructure Fund Organisational Structure

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Australian
Infrastructure
Fund AIX
Australian Australian
Infrastructure Infrastructure
Fund Limited Fund Trust
AIFL Board HFML Board
Paul Espie, Chairman Liam Forde, Chairman
John Harvey Steve Boulton, CEO
Robert Humphris Alan Freer
Mike Hutchinson Mike Hutchinson
Peter McGregor, COO Jim McDonald
Robert Tsenin Sean McElduff
Jim Tate
Manager Responsible
Entity and
Manager
Hastings Funds
Management
Limited
----- End of picture text -----

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AIFL Corporate Governance Statement

Australian Infrastructure Fund Limited

The Company has adopted and operates under each of the ASX Corporate Governance Council Principles of Good Corporate Governance and Best Practice Recommendations. To the extent that the Company does not fully comply with a particular recommendation, it is disclosed and explained in this Corporate Governance Statement.

1. Board of Directors

1.1 Board’s role and responsibilities

AIFL’s Board has the responsibility to plan and run the business and affairs of the Company for the benefit of the securityholders and is accountable to the securityholders for the performance of the Company.

The Board of AIFL has adopted a Charter which sets out its responsibilities and functions as follows:

(a) the governance of the Company;
(b) planning the business and affairs of AIFL;
(c) the strategic direction and control of AIFL, whilst delegating certain responsibilities for the operation and administration of AIFL to Hastings;
(d) monitoring the performance of Hastings in discharging its responsibilities; and
(e) specific responsibilities and functions:
(i) reviewing and approving corporate strategies, budgets, plans and policies;
(ii) evaluating performance of AIFL against strategies and business plans;
(iii) monitoring the performance of Hastings;
(iv) assessing the suitability of AIFL’s overall strategies, business plans and resource allocation;
(v) monitoring AIFL’s financial position and business results (including the audit process);
(vi) considering management recommendations on investments and strategic commitments;
(vii) ensuring regulatory compliance and adequate risk management processes;
(viii) reviewing and approving policies in relation to the management of business risks, legal risks, corporate governance, privacy, environmental risks and other issues; and
(ix) ensuring a high level of transparency in reporting to securityholders and compliance with the highest ethical standards and business practices.

AIFL has adopted a formal delegation of authority in favour of senior members of Hastings management, including AIX’s Chief Operating Officer (COO), to allow Hastings to carry on the business of the Company.

1.2 Composition of the Board and independence

The Board of AIFL seeks to achieve a balance of skills, experience and knowledge among its directors to allow the directors to discharge their duties and responsibilities to the Company. The directors have adopted the definition of independence recommended by the ASX Corporate Governance Council. Directors are considered independent of Hastings if they are free of any business or management relationship that could materially interfere with the discharge of their duties or the exercise of their judgement.

The Board is comprised of six directors, four of whom are independent. Paul Espie is the independent Chairman and is not an executive of either AIFL or Hastings. The Chairman has been a director of AIFL since June 1994 and is the longest serving director. The Board values and respects the continuity that the Chairman provides and is also committed to renewal and diversity. On 11 September 2006, the Board appointed Robert Humphris to the Board. Peter McGregor, AIX’s COO, was appointed to the Board on 20 June 2007.

The current Board composition, with individual directors’ details, is set out on pages 28 to 29.

1.3 Nomination of new directors

Having regard to its size and the role and functions of the directors, the Board has determined that it is more appropriate for the full Board to consider and address the appointment of new directors, rather than establish a Nomination Committee. The Board prepares a shortlist of potential new directors and may appoint consultants to assist with the identification of suitable candidates. In considering the membership of the Board, the directors consider the required competencies of directors for the present and future needs of the Company, having regard to the mix of skills, experience and other qualities of existing directors.

1.4 Independent professional advice

After consultation with the Chairman, directors may seek independent professional advice at the Company’s expense. Following its receipt, such advice would normally be made available to all directors.

1.5 Conflicts of interest

The directors are required to disclose any actual or potential conflicts of interest and to abstain from participating in any discussion or voting on any matter in which they have a material personal interest, except with the prior approval of the Board. Directors are also required to inform the Chairman of any proposed Board or executive appointments they are considering undertaking, to determine whether there is any actual or perceived conflict with the director’s duties to the Company.

1.6 Review of Board performance

The performance of the Board is reviewed regularly; a review was conducted in early 2007.

1.7 Operations of the Board

The Board meets regularly and is provided with all necessary information to participate in an informed discussion of all agenda items. It also meets informally in the absence of Hastings to discuss the operations of the Board and a range of other matters.

There is an induction process for new directors and directors are entitled to undertake ongoing education to enable them to fulfil their responsibilities.

The Board is also responsible for the appointment and removal of the Company Secretary; the directors have unfettered access to the Company Secretary who is accountable to the Board on all governance matters.

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Page 34 Melbourne Airport Page 35 Port of Portland

AIFL Corporate Governance Statement

continued

2. Audit Committee

The AIFL Board has established an Audit Committee with a formal charter setting out its roles and responsibilities. The HFML and AIFL Boards have also established a Joint Audit Committee with a formal charter. The Charters are available for inspection on the AIX website at www.aif.net.au.

The duties of the Committees include the nomination of the external auditor, reviewing the adequacy of the scope and quality of the annual audit and half year reviews, reviewing key financial information provided to securityholders, reviewing compliance and internal audit reports, and monitoring financial risk management and compliance matters.

The AIFL Audit Committee comprises only independent non-executive directors. The Chairman of the Committee is John Harvey; Robert Tsenin and the Board Chairman, Paul Espie, are members of the committee. These members are also the representative members of the Joint Audit Committee.

All directors of the Board are entitled to attend the Audit Committee meetings. The external auditor, the Chief Financial Officer of Hastings and the Company Secretary and Head of Compliance attend by invitation.

The performance of the Audit Committee was reviewed in conjunction with the Board review conducted in early 2007.

3. Risk management

The Audit Committee monitors risk and compliance processes. As part of its role, the Audit Committee reviews the processes in place for the identification, management and reporting of financial risk and reviews the reported findings. As part of this process, each year Hastings prepares and provides a representation letter to the Board. This representation letter addresses the compliance, legal and accounting requirements; financial risks; the nature, extent and effectiveness of risk management processes, internal compliance, accounting and internal control systems; and corporate conduct generally.

The AIX COO, acting in the capacity of the Chief Executive Officer (CEO) of AIX, and the Chief Financial Officer of Hastings have made the following certifications to the Board of AIFL:

•that AIFL’s financial report presents a true and fair view, in all material respects, of AIFL’s financial condition and operational results and is in accordance with relevant accounting standards;
•that this response is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and
•that AIX’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

4. Disclosure and transparency

4.1 Communication with securityholders

The Board is committed to effectively communicating with securityholders to ensure that they are kept fully informed of all information necessary to assess the performance of AIX.

Information is communicated via:

(a) the annual reports;
(b) the Annual General Meeting and any other general meetings;
(c) ASX announcements; and
(d) the AIX website at www.aif.net.au.

4.2 Continuous Disclosure

AIFL has adopted a Continuous Disclosure Policy in order for AIX to meet its ASX Listing Rules obligations and ensure that the market remains fully informed. A copy of the Continuous Disclosure Policy is available at www.aif.net.au.

4.3 Insider Trading

The Board has adopted a policy on trading in securities. The policy specifies the periods during which directors of the Company and employees of Hastings can purchase and sell AIX securities, and the authorisation procedure.

4.4 Code of Conduct

AIFL is committed to the highest standards of ethical conduct and has adopted a Code of Conduct setting out acceptable standards of behaviour. The Code of Conduct is designed to promote the responsibility and accountability of individuals for reporting and investigating unethical practices, and to guide compliance with legal and other obligations. A copy of the Code of Conduct is available at www.aif.net.au.

5. Auditor independence

PricewaterhouseCoopers was appointed the external auditor of the Company at the Annual General Meeting (AGM) held in November 2006. The Audit Partner is invited to attend Audit Committee meetings and is required to attend the AGM to be available to answer securityholders’ questions about the conduct of the audit and the preparation and content of the Auditor’s Report.

The Board has adopted a policy in relation to the provision of non-audit services by its auditor which might detract from the auditor’s independence and impartiality or be perceived as doing so. Specifically, it has been determined that the external auditor should not provide the following services to AIX:

•independent valuations of assets for the purpose of determining the value of assets owned by AIX;
•taxation services related to development of a new product for AIX where fees are success based; or
•bookkeeping or other services related to accounting records or financial statements of AIX.

The compliance and internal audit function is managed by Hastings.

6. Remuneration framework

Having regard to its size and the role and functions of the directors, the Board has determined that it is more appropriate for the full Board to consider and address the remuneration of directors rather than establish a Remuneration Committee. The Company has no employees other than the directors.

Details of the Company’s remuneration policies and the remuneration of the directors are set out in the Remuneration Report at pages 43 to 44. Securityholders will have an opportunity to consider the Remuneration Report at the 2007 Annual General Meeting.

AIFT Corporate Governance Statement

Australian Infrastructure Fund Trust

Hastings has adopted and operates under each of the ASX Corporate Governance Council Principles of Good Corporate Governance and Best Practice Recommendations. To the extent that Hastings does not fully comply with a particular recommendation, it is disclosed and explained in this Corporate Governance Statement.

1. Board of Directors

1.1 Board’s role and responsibilities

Hastings is the Responsible Entity, Trustee and Manager for a number of funds, including AIFT. The Board of Hastings has the responsibility to plan and run the business and affairs of the Trust for the benefit of the securityholders and is accountable to the securityholders for the performance of the Trust.

The Board also has the following responsibilities and functions:

•reviewing and approving corporate strategies, budgets, plans and policies;
•evaluating performance of the Trust against strategies and business plans in order to assess the suitability of the Trust’s overall strategies, business plans and resource allocation;
•monitoring the Trust’s financial position and business results (including the audit process), to understand at all times the financial health of the Trust;
•ensuring that there is continuing education and information provided to directors regarding:
the Trust’s business; and
the role of the Board and its functions and obligations;
•ensuring regulatory compliance and adequate risk management processes;
•reviewing and approving policies in relation to the management of business risks, legal risks, corporate governance, privacy, environmental risks and other issues; and
•ensuring a high level of transparency in reporting to securityholders and compliance with the highest ethical standards and business practices.

Hastings has adopted a formal delegation of authority in favour of the Chief Executive Officer (CEO), Company Secretary and senior members of management to allow management to carry on the business of the Trust.

1.2 Composition of the Board and independence

The Board of Hastings is comprised of seven directors, three of whom are independent.

•Liam Forde, Chairman: Following the retirement of Hastings’ Managing Director on 15 June 2007, the Chairman of the Board was appointed Executive Chairman of Hastings on an interim basis until Steve Boulton commenced. The Board has assessed that whilst the Executive Chairman was not independent between 15 June and 3 September, owing to the short-term interim nature of the arrangement, he resumed his independent status from 3 September 2007 following Steve Boulton’s commencement as CEO on that date.
•Steve Boulton, CEO: Steve was appointed with effect from 3 September and is an executive of Hastings.
•Mike Hutchinson: Mike is also a director of AIFL, appointed in accordance with the Protocol entered into between AIFL and Hastings in 2005. The Board has reassessed the independence status of Mike and resolved that he is independent for the following reasons:
he is only one of several directors on the Board of Hastings, is a non-executive director and as such cannot unduly influence the Board’s decision-making process;
he is a non-executive director of AIFL, only one of a number of directors on the AIFL Board and is remunerated by way of a fixed fee and not incentive arrangements;
he has disclosed his interest as a director of AIFL and always declines to vote on those matters where a potential conflict of interest arises between HFML and AIFL; and
he has demonstrated personal integrity and independence in all his dealings with both HFML and AIFL.
•Jim McDonald: Jim was appointed on 18 June 2007 and is an independent director.
•Jim Tate and Sean McElduff: Jim and Sean are employees of Westpac Banking Corporation, the owner of Hastings, and neither is independent.
•Alan Freer: Alan was appointed to the Board with effect from 1 September 2007. He is a consultant to Hastings and is not independent.

The Board reviewed its composition to ensure that it achieves a balance of skills, experience and knowledge to allow the directors to discharge their duties and responsibilities and to position the Company for future growth. The current Board composition, with individual directors’ details, are set out on pages 30 to 32.

1.3 Nomination and remuneration of directors

Hastings has not established a nomination committee as the appointment and remuneration of its directors is determined by Westpac Banking Corporation on the recommendation of the Hastings’ Board. Westpac’s Nomination Committee approves the appointment of the external directors and the remuneration of the external directors is determined by the Remuneration Committee of Westpac. Hastings’ non-executive directors are not remunerated out of the property of AIX.

1.4 Independent professional advice

After consultation with the Chairman, directors may seek independent professional advice at the expense of Hastings. Following its receipt, such advice would normally be made available to all directors.

1.5 Conflicts of interest

All related party transactions or potential conflicts of interest involving any director or any related parties of either the directors or Hastings, such as Westpac Banking Corporation, are disclosed. Hastings has established a related party subcommittee which considers all related party transactions. The subcommittee is comprised of any two of the CEO and any of the independent directors.

1.6 Review of Board performance

Following the review of the Board’s composition, the Board has agreed that a performance review will be conducted once the recent appointees have settled into their new roles.

AIFT Corporate Governance Statement

continued

1.7 Operation of the Board

The Board meets regularly and is provided with all necessary information to participate in an informed discussion of all agenda items. The Board also meets informally in the absence of management to discuss the operations of the Board and a range of other matters.

The Board has an induction process for new directors and directors are entitled to undertake ongoing education to enable them to fulfil their responsibilities.

2. Audit & Compliance Committee

The Board has established an Audit & Compliance Committee with a formal charter setting out its roles and responsibilities. The Charter is available for inspection on the Hastings website at www.hfm.com.au.

The duties of the Audit & Compliance Committee include reviewing the financial management and internal controls, compliance and internal audit function, external audit, including the selection and appointment of the external auditor of the funds managed by Hastings, risk management, managed investment scheme compliance, reviewing the financial statements, and the adequacy of the scope and quality of the annual and half year statutory audits.

3. Risk management

The Audit & Compliance Committee monitors risk and compliance processes. As part of its role, the Committee reviews the processes in place for the identification, management and reporting of business and financial risk and reviews the reported findings. As part of this process, each year Hastings prepares and provides a representation letter to the Board. This representation letter addresses the compliance, legal and accounting requirements; risks (both financial and business); the nature, extent and effectiveness of risk management processes, internal compliance, accounting and internal control systems; and corporate conduct generally.

The AIX Chief Operating Officer, acting in the capacity of the Chief Executive Officer of AIX, and the Chief Financial Officer of Hastings have made the following certifications to the Board of Hastings:

•that AIX’s financial report presents a true and fair view, in all material respects, of AIX’s financial condition and operational results and is in accordance with relevant accounting standards;
•that this response to the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and
•that Hastings’ risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

4. Disclosure and transparency

4.1 Communication with securityholders

The Board is committed to effectively communicating with the securityholders to ensure that they are kept fully informed of all information necessary to assess the performance of AIX.

Information is communicated via:

(a) the Annual Reports;
(b) the Annual General Meeting and any other general meetings;
(c) ASX announcements; and
(d) the Hastings’ website at www.hfm.com.au.

4.2 Continuous Disclosure

The Board has adopted a Continuous Disclosure Policy in order for Hastings to meet its Listing Rules obligations and ensure the market remains fully informed. A copy of the Continuous Disclosure Policy is available at www.hfm.com.au.

4.3 Insider Trading

The Board has adopted a policy on trading in securities. The policy specifies the periods during which directors and employees of Hastings can purchase and sell AIX securities, and the authorisation procedure.

The Audit & Compliance Committee comprises three members, all non-executive and independent. Since 23 July 2007, the Chairman of the Committee is Mike Hutchinson; Liam Forde and Jim McDonald are members. Following the review of the composition of the Audit & Compliance Committee, the Audit & Compliance Committee has agreed that a performance review will be conducted once members have settled into their new roles.

All directors of the Board are entitled to attend the Committee meetings, including the joint AIFL/HFML Audit Committee meetings. The external auditor, CEO, Chief Financial Officer, and the Company Secretary and Head of Compliance, attend by invitation.

4.4 Code of Conduct

Hastings is committed to the highest standards of ethical conduct and has adopted a Code of Conduct setting out acceptable standards of behaviour. The Code of Conduct is designed to promote the responsibility and accountability of individuals for reporting and investigating unethical practices, and to guide compliance with legal and other obligations. A copy of the Code of Conduct is available at www.hfm.com.au.

5. Auditor independence

6. Remuneration framework

Details of amounts paid to Hastings as Responsible Entity of the Trust are disclosed in the related party note contained in the financial reports included in this Annual Report at page 82. Hastings is paid a management fee in accordance with the terms of the Trust’s constitution and the management agreement with AIFL. Hastings’ directors and employees are not remunerated out of the property of AIX. The Remuneration Report for AIFL is on page 43 to 44.

PricewaterhouseCoopers was appointed the external auditor of the Trust in November 2006. The Audit Partner is invited to attend Audit Committee meetings and to attend the AGM to be available to answer securityholder questions about the conduct of the audit and the preparation and content of the Auditor’s Report.

The Board has adopted a policy in relation to the provision of non-audit services by its auditor which might detract from the auditor’s independence and impartiality or be perceived as doing so. Specifically, it has been determined that the auditor should not provide the following services to AIX:

•independent valuations of assets for the purpose of determining the value of assets owned by AIX;
•taxation services related to development of a new product for AIX where fees are success based; and
•bookkeeping or other services related to accounting records or financial statements of AIX.

AIFL Directors’ Report

The directors of Australian Infrastructure Fund Limited (the Company or AIFL) submit their report for the year ended 30 June 2007.

Structure of financial report

The ordinary shares issued by AIFL are stapled to the units issued by Australian Infrastructure Fund Trust (the Trust). The combined entity of the Company and the Trust is known as the Australian Infrastructure Fund (AIX). On 6 March 1997, the stapled securities of AIX were listed on the Australian Securities Exchange (ASX) (ASX code: AIX). For the purpose of preparing a consolidated financial report that combines the assets and liabilities of the Company and the Trust, AIFL is identified as the parent entity.

Hastings Funds Management Limited (Hastings) is the manager of the Company and Responsible Entity of the Trust. The financial report includes:

•Consolidated AIFL: represents the entire AIX group, consisting of the Company and the consolidated Trust (AIX);
•AIFL: represents the stand alone financial statements of the Company;
•Consolidated AIFT: represents the consolidated financial statements of the Trust and its controlled entities; and
•AIFT: represents the standalone financial statement of the Trust.

The above financial statements are presented in adjacent columns in a single financial report in accordance with the option available under ASIC Class Order 05/642.

Directors

The names of the directors of the Company in office during the year and at the date of this report are set out below.

•Paul Espie Chairman
•John Harvey
•Robert Humphris Appointed 11 September 2006
•Mike Hutchinson
•Peter McGregor Appointed 20 June 2007
•Robert Tsenin

Particulars of the skills, experience, expertise and responsibilities of the directors at the date of this report, including all directorships of other ASX listed companies held by a director at any time in the past three years, are set out in the Annual Report.

Two directors held office during the year but who have since resigned from the Board are:

Barry Capp – retired 27 November 2006 Qualifications: BE, BCom, BA

Barry Capp was employed for many years in financial and commercial roles and has worked as a non-executive director on a number of public company boards. Previously Barry was Chairman of National Foods Limited and AIFL, a director of Melbourne University Private Ltd and Westpac Banking Corporation.

Tim Poole, Managing Director – resigned 15 June 2007 Qualifications: BCom, ACA

Tim Poole joined Hastings in November 1995 and was appointed Managing Director in July 2005. Prior to this he was a director of the private equity group and was involved in sourcing, assessing and managing new investment opportunities for the Hastings Private Equity Fund. His work with Hastings also involved investing, managing and exiting investments in the Hastings infrastructure business. He was a director of several Hastings managed funds and investee companies including Australian Pacific Airports Corporation and Epic Energy. He was also responsible for the establishment and ASX listing of AIX in 1997. Tim was appointed Chairman of Asciano Limited on 15 June 2007.

Company Secretaries

The names and details of the Company Secretaries of the Company in office during the financial year and until the date of this report are set out below. The Company Secretaries were in office for this entire period.

Claire Filson Qualifications: LLB, MBA, Grad Dip CSP, FCIS, MAICD

Claire Filson joined Hastings in June 2005. She has worked for over 20 years in private and corporate legal practice, gaining considerable financial services and company secretarial experience. Prior to joining Hastings she was Company Secretary of AXA Asia Pacific Holdings Limited and Bonlac Foods Limited. At Hastings she is responsible for the company secretarial and compliance function.

Kim Rowe Qualifications: BCom, ACA

Kim Rowe is a Chartered Accountant and has over 10 years’ experience in the financial services industry, initially as an auditor. On joining Hastings in 1999, she assumed compliance and company secretarial responsibilities. She has been Company Secretary of Hastings since August 2004.

Report on the business

Principal activity

The principal activity of AIX during the year was to invest in infrastructure investments so as to maximise income and capital return to investors. There has been no change in the principal activity of AIX during the year.

Review of results and operations

A review of the operations of AIX for the financial year ended 30 June 2007 is set out in the Annual Report.

Distributions and dividends

A final AIX dividend and distribution of $29,983,000 (8.00 cents per stapled security) was declared for the six months ended 30 June 2007 and is payable on 30 August 2007 (six months to 30 June 2006 – 7.50 cents per stapled security).

An interim AIX dividend and distribution of $27,887,000 (7.50 cents per stapled security) was declared by AIX for the six months ended 31 December 2006 and was paid on 27 February 2007 (six months to 31 December 2005 – 7.00 cents per stapled security).

Significant changes in the state of affairs

In the opinion of the directors, during the year, there was no significant change in the state of affairs of AIX other than that referred to in the financial statements or notes thereto.

Events after the end of the financial year

There has not been any matter or circumstance, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the year, that has significantly affected, or may significantly affect, the operations of AIX, the results of those operations, or the state of affairs of AIX in future financial years.

Likely developments and expected results

AIX expects the 2008 financial year and beyond, notwithstanding market competition, to continue to provide opportunities of which the fund is well positioned to take advantage. The key focus of AIX to deliver growth and value to investors will include:

Ongoing management of portfolio assets, with a focus on maximising returns to AIX from existing operations. There are also significant opportunities to develop additional revenue streams across the airport portfolio, most notably in terms of retail, car parking and property development.
Active capital management, with a focus on reducing AIX’s cost of capital and providing funding for expansionary capital expenditure.
New acquisition opportunities for the fund. AIX will continue to seek value for securityholders through increased scale and diversity but these considerations will remain secondary to considerations of asset quality and transaction value. AIX’s pre-emptive rights and strategic industry partnerships are expected to provide significant sources of new opportunities within Australia and internationally.

Business strategies and prospects

Information on AIX’s business strategies and its prospects for future financial years is included in the AIX Annual Report. In the opinion of the directors, further information on AIX’s business strategies and its prospects for future financial years would, if included in this report, be likely to result in unreasonable prejudice to AIX and has accordingly been omitted.

The profit after income tax attributable to securityholders of AIX for the year ended 30 June 2007 was $168,157,000 (2006 – $109,516,000).

Directors’ meetings

The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director is shown in the table below.

	AIFL Board Meetings AIFL Audit Committee Scheduled meetings Extraordinary meetings (1) meetings Meetings Number of Meetings Number of Meetings Number of held while meetings held while meetings held while meetings a director attended a director attended a member attended
Paul Espie 7 7 8 7 3 3 Barry Capp (2) 3 2 5 4 John Harvey 7 7 8 6 3 3 Robert Humphris(3) 4 3 6 6 Mike Hutchinson 7 7 8 8 3 3 Peter McGregor (4) 0 7 (4) 0 8 (4) 3 (4) Tim Poole (5) 6 6 8 8 * Robert Tsenin 7 7 8 7 3 3
	AIFL/HFML Joint Board Meetings AIFL/HFML Joint Audit Scheduled meetings Extraordinary meetings (1) Committee meetings Meetings Number of Meetings Number of Meetings Number of held while meetings held while meetings held while meetings a director attended a director attended a member attended
Paul Espie 2 2 1 0 6 5 Barry Capp (2) 1 0 1 0 John Harvey 2 2 1 1 6 6 Robert Humphris (3) 1 1 1 1 Mike Hutchinson 2 2 1 1 6 6 Peter McGregor (4) 0 2 (4) 0 1 (4) 0 6 (4) Tim Poole (5) 2 2 1 1 Robert Tsenin 2 2 1 1 6 6

Not a member of the Committee.

(1) Due to the nature of AIX’s business, extraordinary meetings may be called at short notice. Even though every effort is made to schedule a meeting for all directors to attend, sometimes this is not possible.

(2) Barry Capp retired on 27 November 2006.

(3) Robert Humphris was appointed a director on 11 September 2006.

(4) Peter McGregor was appointed a director on 20 June 2007. In his capacity as AIX Chief Operating Officer, Peter attended all Board meetings during the year.

(5) Tim Poole resigned on 15 June 2007.

Directors’ interests

At the date of this report the interests of each director in the shares of the Company and therefore the stapled securities of AIX is shown in the table below.

in the table below.
	Number of stapled
	securities held in AIX
	Beneficial in own name	Beneficial other
Paul Espie	–	474,212
Barry Capp (1)	–	35,191
John Harvey	–	50,000
Robert Humphris	–	100,000
Mike Hutchinson	–	44,349
Peter McGregor	–	17,500
Tim Poole (2)	–	60,000
Robert Tsenin	10,994	56,379

(1) Number of securities held when director retired on 27 November 2006.

(2) Number of securities held when director resigned on 15 June 2007.

Environmental regulation

The operations of AIX are not subject to any particular significant environmental regulation under a law of the Commonwealth or of a State or Territory. There have been no known significant breaches of any other environmental requirements applicable to AIX. However, there may be environmental regulations that relate to each of the assets owned by AIX. Compliance with these regulations is the responsibility of the board of the investee rather than AIX.

Indemnification and insurance of directors and officers

During or since the financial year the Company has paid premiums in respect of a contract insuring all the directors and executive officers of the Company. The terms of the policy prohibit disclosure of the details of the insurance cover and premium paid.

An indemnity agreement has been entered into between the Company and each of its directors named earlier in this report. Under this agreement, the Company has agreed: (a) to indemnify the directors against any claim or for any expense or costs which may arise as a result of work performed in their role as directors;
(b) to provide continued access to Board papers; and
(c) to provide continued access to directors’ and officers’ liability insurance.

Proceedings on behalf of the Company

No proceedings have been brought on behalf of the Company, nor has any application been made in respect of the Company under section 237 of the Corporations Act.

Rounding

The amounts contained in this report and in the financial report have been rounded to the nearest thousand where rounding is applicable, under the option available to AIX under ASIC Class Order 98/0100, dated 10 July 1998. AIX is an entity to which this Class Order applies.

AIFL Directors’ continued Report

Non-audit services

PricewaterhouseCoopers was appointed auditor of the Company at the Annual General Meeting on 27 November 2006. The Company may decide to employ the auditor on assignments in addition to their statutory audit duties, where the auditor’s expertise and experience are important. However, since appointment, PricewaterhouseCoopers has not been engaged for any non-audit services. The predecessor auditor, Ernst & Young, was engaged for non-audit services and details of the amounts paid to the auditor for audit and non-audit services provided are set out below for comparative purposes.

The directors have considered the position and, in accordance with the advice received from the Audit Committee, are satisfied that

the provision of the non-audit services was compatible with the general standard of independence for auditors imposed by the Corporations Act. The directors are satisfied that the nature of scope of non-audit services by the auditors, as set out below, did not compromise the auditor’s independence requirements of the Corporations Act for the following reasons:

•all non-audit services have been reviewed by either the Audit Committee or the Board to ensure that they do not impact the impartiality and objectivity of the auditor; and
•none of the services undermine the general principles relating to auditor independence as set out in a management or a decision making capacity for AIX, acting as advocate for AIX or jointly sharing economic risk and rewards.

Amounts received or due and receivable by the current auditor, PricewaterhouseCoopers:

		AIX
	Consolidated AIFL			AIFL	Consolidated AIFT			AIFT
	2007	2006	2007	2006	2007	2006	2007		2006
	$	$	$	$	$	$	$		$
Amounts received or due and receivable by the
current auditor, PricewaterhouseCoopers, for:
•an audit or review of the financial reports	119,074	0	0	0	119,074	0	119,074		0
•compliance plan audit	14,850	0	0	0	14,850	0	14,850		0
•other non-audit services	0	0	0	0	0	0	0		0
	133,924	0	0	0	133,924	0	133,924		0

Amounts received or due and receivable by the predecessor auditor, Ernst & Young:

		AIX
	Consolidated AIFL			AIFL	Consolidated AIFT			AIFT
	2007	2006	2007	2006	2007	2006	2007	2006
	$	$	$	$	$	$	$	$
Amounts received or due and receivable by the
predecessor auditor, Ernst & Young, for:
•an audit or review of the financial reports	0	121,685	0	0	0	121,685	0	121,685
•compliance plan audit	0	23,113	0	0	0	23,113	0	23,113
•risk and compliance plan audit	0	7,818	0	0	0	7,818	0	7,818
•other non-audit services
Taxation compliance	137,434	153,918	0	0	137,434	153,918	137,434	153,918
Accounting advice and annual report review	0	19,152	0	0	0	19,152	0	19,152
Asset acquisition advisory services	138,175	68,420	0	0	138,175	68,420	138,175	68,420
Other advisoryservices	9,511	27,500	0	0	9,511	27,500	9,511	27,500
	285,120	421,606	0	0	285,120	421,606	285,120	421,606

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act is set out on page 45.

AIFL Remuneration Report

The directors of the Company present the Remuneration Report prepared in accordance with section 300A of the Corporations Act for the year ended 30 June 2007. This remuneration report forms part of the Directors’ Report.

Non-executive directors’ remuneration

Board policy on remuneration

The Board of directors of AIFL is responsible for determining and reviewing compensation arrangements for the directors of the Company. The fees paid to directors are set at levels that reflect both the responsibilities of, and the time commitments required from, the directors to discharge their duties. In order to maintain their independence and impartiality, the remuneration of the non-executive directors is not linked to the performance of either the Company or the Trust. In setting fee levels, the Board, takes into account:

•independent professional advice;
•fees paid by comparable companies;
•the general time commitment required from directors and the risks associated with discharging the duties attaching to the role of director; and

The Board will continue to review its approach to non-executive director remuneration to ensure it remains in line with general industry practice and best practice principles of corporate governance.

Remuneration structure

Non-executive directors’ fees, including committee fees, are set by the Board within the maximum aggregate amount of $800,000 approved by securityholders in 2005. Directors’ fees paid for the financial year ended 30 June 2007 total $658,331. A retirement benefit of $187,211 was also paid to Barry Capp during the year following his retirement from the Board.

The Chairman, taking into account the time commitment required, received a fee of $225,000 for the financial year less an allowance of $24,525 for the value of his retirement benefit. This value was determined by a consulting actuary. The Board elected in April 2003 to phase out the retirement benefit and Directors who joined the Board after that date are not entitled to a retirement benefit. The non-executive directors received a fee of $90,000 for the financial year.

Directors who sit on the Board’s Audit Committee received a fee of $10,000 for the financial year and the Chairman of the Audit Committee received $20,000 for the financial year. The Chairman of the Board declined his fee for membership of the Audit Committee. In addition, superannuation contributions are also made on behalf of the non-executive directors in accordance with the Company’s statutory superannuation obligations.

In accordance with rule 37 of the Constitution, directors are also permitted to be paid additional fees for special duties. Such fees are included in the aggregate remuneration cap approved by securityholders. Directors are also entitled to be reimbursed for all business related expenses, including travel on AIX business, as may be incurred in the discharge of their duties.

•the level of remuneration necessary to attract and retain directors of a suitable calibre.

Remuneration paid

Details of non-executive directors’ remuneration for the financial year ended 30 June 2007 is set out in the following table. No bonuses, options or other emoluments are paid to the directors of the Company.

			Short-term	Post-employment	Post-employment
					Retirement
		Board fees	Committee fees	Superannuation	benefits (1)	Total
		$	$	$	$	$
Key management personnel of AIFL
Paul Espie	2007	200,475	0	18,043	0	218,518
	2006	200,475	0	18,043	0	218,518
Barry Capp	2007	33,843	0	0	187,211	221,054
– retired 27 November 2006	2006	82,894	0	0	0	82,894
John Harvey	2007	90,000	20,000	9,900	0	119,900
	2006	90,000	20,000	9,900	0	119,900
Robert Tsenin	2007	90,000	10,000	9,000	0	109,000
	2006	73,500	5,349	7,097	0	85,946
Mike Hutchinson	2007	90,000	0	8,100	0	98,100
	2006	72,226	0	6,500	0	78,726
Robert Humphris	2007	72,450	0	6,520	0	78,970
– appointed 11 September 2006	2006	0	0	0	0	0
Ross Dunning	2007	0	0	0	0	0
– resigned 19 October 2005	2006	19,983	3,633	0	0	23,616
Total compensation:	2007	576,768	30,000	51,563	187,211	845,542
Keymanagementpersonnel of AIFL	2006	539,078	28,982	41,540	0	609,600

(1) Retirement benefits exclude provision expensed.

Note:

Peter McGregor was appointed a director on 20 June 2007 and is not remunerated out of the property of AIFL or AIFT. Tim Poole resigned on 15 June 2007 and was not remunerated out of the property of AIFL or AIFT.

AIFL Remuneration continued Report

Remuneration paid to other officeholders

Neither the Managing Director, the AIX Chief Operating Officer, nor the Company Secretaries were remunerated by the Company.

Relationship with the Manager – Hastings Funds Management Limited

As the Company has contracted with Hastings to manage its administration and investments, the Company employs no staff.

Hastings is paid a fee to provide a range of services and as part of that arrangement Hastings is required to provide appropriately qualified employees and resources to undertake those services, including the Hastings’ Managing Director and company secretarial service. Hastings determines the remuneration of its executives and the Company has no involvement in determining the remuneration of those executives.

Fees to the Responsible Entity

The Responsible Entity is entitled to a management fee calculated at the rate of one percent per annum of the net asset value of AIX. The Responsible Entity is also entitled to be reimbursed for expenses incurred for the management of AIX and a performance fee. No performance fee has been paid for the financial year. For the year ended 30 June 2007, Hastings was entitled to Responsible Entity fees in respect of AIX of $9,335,000 (2006 – $8,365,000). Hastings was also reimbursed $564,000 (2006 – $623,000) for costs incurred on behalf of AIX. These fees were paid by the Trust. Expenses incurred by the Company, including directors’ fees, are also paid by the Trust.

Company performance

Total income and after tax profit of AIX has grown considerably over the last five years. Total income increased over the period from $38.8 million in 2003 to $185.9 million in 2007. After tax profits increased over the period from $30.3 million in 2003 to $168.2 million in 2007. The remuneration of the directors of AIFL is not related to the performance of either AIFL or AIFT. Distributions to securityholders have shown steady growth in recent years following the repositioning of the fund, which began in 2003.

	FY02/03	FY03/04	FY04/05	FY05/06	FY06/07
Security price at 1 July ($)	1.30	1.52	1.68	2.58	2.07
Security price at 30 June ($)	1.51	1.65	2.59	2.08	3.29
Distributions per security (cents)	11.0	11.5	13.0	14.5	15.5
Return to securityholders for period (%)	24.9	16.5	61.6	(13.8)	66.4
Earningsper security (cents)	17.4	18.3	40.0	30.0	45.2

Source: Bloomberg

Note: Where applicable these figures are based on prices which have been adjusted for historical changes to AIX’s capital structure, including rights issues and placements.

Corporate governance

In recognising the need for the highest standards of corporate behaviour and accountability, the directors support and have adhered to the principles of corporate governance as set out in the Corporate Governance Statement of the Annual Report.

Signed in accordance with a resolution of the directors, for and on behalf of the Company.

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Paul Espie Chairman 29 August 2007

AIFL Auditor’s Independence Declaration

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AIFT Directors’ Report

The directors of Hastings Funds Management Limited (Hastings) as Responsible Entity for Australian Infrastructure Fund Trust (the Trust) submit their report for the year ended 30 June 2007.

The consolidated financial statements incorporate the assets and liabilities of the entity controlled by the Trust, being Australian Infrastructure Fund International 1 Trust and its controlled entities as at 30 June 2007. The consolidated entity is known as Australian Infrastructure Fund Trust (AIFT) or the Trust. The ordinary shares issued by Australian Infrastructure Fund Limited (AIFL of the Company) are stapled to the units issued by the Trust. The combined entity of the Company and the Trust is known as the Australian Infrastructure Fund (AIX).

Directors

The names of the directors of the Responsible Entity of the Trust in office from the beginning of the year until the date of this report unless otherwise stated are:

•William Forde Director since 30 January 2006 and appointed Chairman on 26 October 2006
•Sean McElduff
Resigned as Chairman on 26 October 2006 and continues as director
•Mike Hutchinson
•Jim McDonald

Appointed on 18 June 2007 with effect 1 July 2007

•Tim Poole Resigned on 15 June 2007
•Guy Strapp Resigned on 26 October 2006
•Jim Tate

Steve Boulton was appointed the Hastings’ Chief Executive Officer on 18 June 2007 with effect from 3 September 2007. Alan Freer was appointed a director on 23 August 2007 with effect from 1 September 2007.

Company Secretaries

The names of the Company Secretaries of the Responsible Entity in office during the year and until the date of this report are Claire Filson and Kim Rowe.

Report on the business

Principal activity

The principal activity of the Trust during the year was to invest in infrastructure investments so as to maximise income and capital return to investors. During the year the Trust has continued to invest in infrastructure investments in accordance with the Constitution. There has been no change in the principal activity of the Trust during the year.

Trust information

The Trust is an Australian registered scheme and is incorporated and domiciled in Australia. The registered office of the Responsible Entity is located at Level 15, 90 Collins Street, Melbourne, Victoria, 3000.

At 30 June 2007 the Trust had no employees.

Review and results of operations

A review of the operations of the Trust for the financial year ended 30 June 2007 is set out in the Annual Report.

The profit after income tax attributable to securityholders of the Trust for the year ended 30 June 2007 was $146,469,000 (2006 – $101,192,000).

Distributions

A final AIX distribution of $29,983,000 (8.0 cents per stapled security) was declared for the six months ended 30 June 2007 and is payable on 30 August 2007. The Trust distribution represents $22,983,000 (2006 – $22,534,000) of the total amount paid. The AIX interim distribution of $27,887,000 (7.50 cents per stapled security) for the six months ended 31 December 2006 was paid on 27 February 2007. The Trust distribution represents $21,887,000 (2006 – $22,218,000) of the total amount paid.

Significant changes in the state of affairs

During the year, there was no significant change in the state of affairs of the Trust other than that referred to in the financial statements or notes thereto.

Events after the end of the financial year

There has not been any matter or circumstance, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the Trust, the results of those operations, or the state of affairs of the Trust in future financial years.

Likely developments and expected results

The Trust expects the 2008 financial year and beyond, notwithstanding market competition, to continue to provide opportunities which the Trust is well positioned to take advantage of. The key focus of the Trust to deliver growth and value to investors will include:

Ongoing management of portfolio assets, with a focus on maximising returns to AIX from existing operations. There are also significant opportunities to develop additional revenue streams across the airport portfolio, most notably in terms of retail, car parking and property development.
Active capital management, with a focus on reducing the Trust’s cost of capital and providing funding for expansionary capital expenditure.
New acquisition opportunities for the Trust. The Trust will continue to seek value for securityholders through increased scale and diversity but these considerations will remain secondary to considerations of asset quality and transaction value. The Trust’s pre-emptive rights and strategic industry partnerships are expected to provide significant sources of new opportunities within Australia and internationally.

Environmental regulation

The operations of the Trust are not subject to any particular significant environmental regulation under a law of the Commonwealth or of a State or Territory. There have been no known significant breaches of any other environmental requirements applicable to the Trust. However, there may be environmental regulations that relate to each of the assets owned by the Trust. Compliance with these regulations is the responsibility of the investee Company Boards rather than the Trust.

Interests in the units of the Trust

At 30 June 2007, the interests of the Responsible Entity in the units of the Trust were 333,319 units (2006 – 333,319). At 30 June 2007 Westpac and its controlled entities (including the Responsible Entity) held 1,336,362 units in the Trust (2006 – 10,919,129). The interests in the stapled securities issued by AIX held by the Responsible Entity, directors of the Responsible Entity and their director related entities at 30 June 2007 are set out below:

related entities at 30 below:	June 2007 are set out	June 2007 are set out
	Number of stapled
	securities held in AIX
	Beneficial in	Beneficial
	own name	other
William Forde	–	–
Mike Hutchinson	–	44,349
Sean McElduff	–	–
Tim Poole (1)	–	60,000
Guy Strapp (2)	–	–
Jim Tate	–	–

(1) Number of securities held when director retired on 15 June 2007.

(2) Resigned 26 October 2006.

Fees to the Responsible Entity

Trust assets

At 30 June 2007, the Trust held assets to a total value of $895,463,000 (2006 – 773,382,000). The basis for valuation of the assets is disclosed in Note 1 to the financial statements.

Units on issue

At 30 June 2007, 374,790,801 units of the Trust were on issue (2006 – 367,122,968). During the year 7,667,833 units were issued by the Trust.

Rounding

The amounts contained in this report and in the financial report have been rounded to the nearest thousand where rounding is applicable, under the option available to the Trust under ASIC Class Order 98/0100, dated 10 July 1998. The Trust is an entity to which this Class Order applies.

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act is set out on page 48. Signed in accordance with a resolution of the directors of Hastings Funds Management Limited as Responsible Entity of the Trust.

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William Forde Chairman 29 August 2007

Indemnification and insurance of directors and officers

No insurance premiums are paid for out of the assets of the Trust in regards to insurance cover provided to the Responsible Entity or Auditor of the Trust. So long as the Officers of the Responsible Entity act in accordance with the constitution and the Corporations Act 2001, both parties remain fully indemnified out of the assets of the Trust against any losses incurred while acting on behalf of the Trust. The Auditor of the Trust is in no way indemnified out of the assets of the Trust.

AIFT Auditor’s Independence Declaration

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Financial Information

Key Performance Indicators Key Financial Statement Information AIX Financial Report

Key Performance Indicators

		Full year	Full year	Full year	Full year	Full year
		30 June	30 June	30 June	30 June	30 June
		2007	2006	2005	2004	2003
Earnings per stapled security	cents	45.19	30.03	40.03	18.29	17.43
Distribution per stapled security	cents	15.5	14.5	13.0	11.5	11.0
Net asset value per stapled security
attributable to investors	$	2.65	2.36	2.19	1.92	1.96
Market value per stapled security	$	3.29	2.08	2.59	1.71	1.56
Market capitalisation (trading value of AIX)	$ million	1,233	764	935	391	279
Available capital (unused credit line and cash)	$ million	74.0	57.5	42.7	61.4	30.6
Management fees on market capitalisation	%	0.76	1.14	0.62	1.03	1.22
Management fees and administrative
costs on market capitalisation (MER)	%	1.32	1.39	1.47	1.59	1.91
Gearing (debt/securityholder funds)	%	0	0	0	0	1
Number of investors		16,420	17,596	16,086	14,952	10,447

Key Financial Statement Information

	2007	2006	2005	2004	2003
Year ended 30 June	$’000	$’000	$’000	$’000	$’000
Earnings History
Unrealised gain/(loss) on unlisted securities	143,494	85,406	96,454	28,249	17,353
Realised gain/(loss) on unlisted securities	37	(51)	0	0	0
Realised gain/(loss) on sale of unlisted securities	(2,006)	0	0	1,602	1,262
Unrealised foreign exchangegain/(loss)– other	(13,439)	5	(3)	0	0
	128,086	85,360	96,451	29,851	18,615
Other income	57,767	45,953	24,275	15,455	20,198
Total income	185,853	131,313	120,726	45,306	38,813
Less: finance costs	795	515	1,926	629	1,770
	185,058	130,798	118,800	44,677	37,043
Less: other expenses	13,514	12,920	8,594	6,372	5,638
Profit before income tax attributable to securityholders	171,544	117,878	110,206	38,305	31,405
Income tax expense	3,387	8,362	2,543	981	1,120
Profit after income tax attributable to securityholders	168,157	109,516	107,663	37,324	30,285
	2007	2006	2005	2004	2003
As at 30 June	$’000	$’000	$’000	$’000	$’000
Balance Sheet
Cash and cash equivalents	74,041	57,493	42,652	45,078	14,401
Unlisted securities	955,754	837,151	776,347	404,416	346,704
Deferred income tax asset	13,547	13,542	1,085	3,506	4,591
Other assets	1,007	2,580	1,112	604	207
Total assets	1,044,349	910,766	821,196	453,604	365,903
Provisions	494	493	419	664	552
Interest bearing loans and borrowings	–	–	–	–	4,000
Deferred income tax liability	22,929	20,744	24	–	83
Other liabilities	32,451	28,642	30,807	14,709	10,630
Total liabilities	55,874	49,879	31,250	15,373	15,265
Net assets	988,475	860,887	789,946	438,231	350,638
Represented by:
Stapled securities	736,855	719,554	705,123	420,221	346,283
Undistributedprofit attributable to securityholders	251,620	141,333	84,823	18,010	4,355
Total securityholders’ interests	988,475	860,887	789,946	438,231	350,638

AIX Financial Report

Income Statement

for the year ended 30 June 2007

AIX Consolidated AIFL AIFL	Consolidated AIFT AIFT
2007 2006 2007 2006 Note $’000 $’000 $’000 $’000	2007 2006 2007 2006 $’000 $’000 $’000 $’000
Income Gain/(loss) – unlisted securities – unrealised 130,057 82,012 15,424 367 Gain/(loss) – subsidiaries – unrealised 0 0 0 0 Gain/(loss) – unlisted securities – realised (1,969) (51) (2,006) 0 Gain/(loss) – other – unrealised (2) 5 0 0 Interest 15,798 15,862 269 69 Dividends 28,748 27,455 9,327 6,635 Distributions 12,995 5,577 3,469 2,183 Other 226 453 0 0	114,633 81,644 125,139 52,611 0 0 (10,585) 30,637 37 (51) 14 0 (2) 5 (2) 5 15,782 15,855 7,654 7,778 19,421 20,819 19,421 20,819 9,526 3,394 17,704 9,703 226 453 226 453
Total income 2 185,853 131,313 26,483 9,254	159,623 122,119 159,571 122,006
Expenses Management fees 9,335 8,365 0 0 Securityholder & investor relations expenses 710 881 0 0 Investment bid costs 1,101 773 0 0 Investment costs 427 772 0 0 Directors’ fees 661 655 0 0 Directors’ retirement expense 189 74 0 0 Board administration expenses 132 154 0 0 Other prudential expenses 605 862 0 0 Audit fees 135 144 0 0 Taxation and other accounting fees 141 162 0 0 Other expenses 78 78 0 0 Finance costs 3 795 515 1 1	9,335 8,365 9,335 8,365 710 881 710 881 1,101 773 1,101 773 427 772 427 772 661 655 661 655 189 74 189 74 132 154 132 154 605 862 605 862 135 144 135 145 141 162 141 163 78 78 80 78 1,047 574 1,047 574
Total expenses 14,309 13,435 1 1	14,561 13,494 14,563 13,496
Profit before income tax attributable to securityholders 171,544 117,878 26,482 9,253 Income tax expense 5(a) 3,387 8,362 4,794 929	145,062 108,625 145,008 108,510 (1,407) 7,433 0 0
Profit after income tax attributable to securityholders 168,157 109,516 21,688 8,324 Other finance costs Distributions to securityholders* 15 44,870 44,752 0 0 Change in net assets attributable to securityholder interests classified as debt 101,599 56,440 0 0	146,469 101,192 145,008 108,510 44,870 44,752 44,870 44,752 101,599 56,440 100,138 63,758
Profit after income tax attributable to securityholder interests classified as equity 21,688 8,324 21,688 8,324 Dividends to securityholders* 15 13,000 8,254 13,000 8,254 Change in net assets attributable to securityholder interests classified as equity 8,688 70 8,688 70	0 0 0 0

Refer to Note 1(m)


	2007	2006
Basic/diluted earningsper security (cents)	5.83	2.28

Refer to Note 22 for additional earnings per security calculations. The above Income Statement should be read in conjunction with the accompanying notes.

Balance Sheet

as at 30 June 2007

AIX Consolidated AIFL AIFL	Consolidated AIFT AIFT
2007 2006 2007 2006 Note $’000 $’000 $’000 $’000	2007 2006 2007 2006 $’000 $’000 $’000 $’000
Assets Cash and cash equivalents 6(b) 74,041 57,493 427 180 Trade and other receivables 7 855 2,277 10,229 5,572 Other assets 8 152 303 0 0 Investment in subsidiaries 9 0 0 0 0 Unlisted securities 10 955,754 837,151 134,489 121,436 Deferred income tax asset 5(c) 13,547 13,542 13,547 13,542	73,614 57,314 73,584 46,101 433 50 443 11,250 152 303 152 303 0 0 227,519 232,083 821,264 715,715 593,685 483,540 0 0 0 0
Total assets 1,044,349 910,766 158,692 140,730	895,463 773,382 895,383 773,277
Liabilities Trade and other payables 11 31,244 28,545 7,000 5,000 Current income tax liability 5(e) 1,207 97 869 93 Provisions 12 494 493 0 0 Interest bearing loans and borrowings 13 0 0 0 0 Deferred income tax liability 5(d) 22,929 20,744 17,573 13,643	24,244 23,545 24,319 23,545 339 4 0 0 494 493 494 493 9,805 3,345 9,805 3,345 5,356 7,102 0 0
Total liabilities (excluding securityholder interests classified as debt) 55,874 49,879 25,442 18,736	40,238 34,489 34,618 27,383
Net assets attributable to securityholders 14 988,475 860,887 133,250 121,994	855,225 738,893 860,765 745,894
Comprising: Securityholder interests classified as debt 855,225 738,893 0 0 Securityholder interests classified as equity 133,250 121,994 133,250 121,994	855,225 738,893 860,765 745,894 0 0 0 0
Net assets attributable to securityholders 988,475 860,887 133,250 121,994	855,225 738,893 860,765 745,894

The above Balance Sheet should be read in conjunction with the accompanying notes.

AIX Financial Report continued

Statement of Changes in Equity

for the year ended 30 June 2007

AIX Consolidated AIFL

	Issued securities	Undistributed profit	Total
	$’000	$’000	$’000
At 1 July 2005	108,848	10,928	119,776
Ordinary securities issued during the year
– pursuant to dividend reinvestment plan	2,148	0	2,148
Profit for the year attributable to securityholder interests classified as equity	0	8,324	8,324
Dividends to securityholders	0	(8,254)	(8,254)
At 30 June 2006	110,996	10,998	121,994
At 1 July 2006	110,996	10,998	121,994
Ordinary securities issued during the year
– pursuant to dividend reinvestment plan	2,568	0	2,568
Profit for the year attributable to securityholder interests classified as equity	0	21,688	21,688
Dividends to securityholders	0	(13,000)	(13,000)
At 30 June 2007	113,564	19,645	133,250

AIFL

AIFL
	Issued	Undistributed
	securities	profit	Total
	$’000	$’000	$’000
At 1 July 2005	108,848	10,928	119,776
Ordinary securities issued during the year
– pursuant to dividend reinvestment plan	2,148	0	2,148
Profit for the year attributable to securityholder interests classified as equity	0	8,324	8,324
Dividends to securityholders	0	(8,254)	(8,254)
At 30 June 2006	110,996	10,998	121,994
At 1 July 2006	110,996	10,998	121,994
Ordinary securities issued during the year
– pursuant to dividend reinvestment plan	2,568	0	2,568
Profit for the year attributable to securityholder interests classified as equity	0	21,688	21,688
Dividends to securityholders	0	(13,000)	(13,000)
At 30 June 2007	113,564	19,686	133,250

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Statement of Changes in Securityholder Interests Classified as Debt

for the year ended 30 June 2007

In accordance with AASB 132 Financial Instruments: Disclosure and Presentation , net assets attributable to unitholders represents the residual interest in the assets of Australian Infrastructure Fund Trust (the Trust) after deducting its liabilities and is not classified as equity due to the trust having a fixed or determinable life.

Refer to the Statement of Changes in Securityholder Interests Classified as Debt below for further information.

Consolidated AIFT
	Issued	Undistributed
	securities	profit	Total
	$’000	$’000	$’000
At 1 July 2005	596,275	73,895	670,170
Ordinary securities issued during the year
– pursuant to distribution reinvestment plan	12,258	0	12,258
Less: unit issue costs pursuant to market placement	25	0	25
Profit for the year attributable to securityholder interests classified as debt	0	101,192	101,192
Distributions to securityholders	0	(44,752)	(44,752)
At 30 June 2006	608,558	130,335	738,893
At 1 July 2006	608,558	130,335	738,893
Ordinary securities issued during the year
– pursuant to distribution reinvestment plan	14,733	0	14,733
Profit for the year attributable to securityholder interests classified as debt	0	146,469	146,469
Distributions to securityholders	0	(44,870)	(44,870)
At 30 June 2007	623,291	231,934	855,225

AIFT
	Issued	Undistributed
	securities	profit	Total
	$’000	$’000	$’000
At 1 July 2005	596,275	73,578	669,853
Ordinary securities issued during the year
– pursuant to distribution reinvestment plan	12,258	0	12,258
Less: unit issue costs pursuant to market placement	25	0	25
Profit for the year attributable to securityholder interests classified as debt	0	108,510	108,510
Distributions to securityholders	0	(44,752)	(44,752)
At 30 June 2006	608,558	137,336	745,894
At 1 July 2006	608,558	137,336	745,894
Ordinary securities issued during the year
– pursuant to distribution reinvestment plan	14,733	0	14,733
Profit for the year attributable to securityholder interests classified as debt	0	145,008	145,008
Distributions to securityholders	0	(44,870)	(44,870)
At 30 June 2007	623,291	237,474	860,765

The above Statement of Changes in Securityholder Interests Classified as Debt should be read in conjunction with the accompanying notes.

AIX Financial Report continued

Cash Flow Statement

for the year ended 30 June 2007

AIX Consolidated AIFL AIFL	Consolidated AIFT AIFT
2007 2006 2007 2006 Inflows/ Inflows/ Inflows/ Inflows/ (outflows) (outflows)(outflows) (outflows) Note $’000 $’000 $’000 $’000	2007 2006 2007 2006 Inflows/ Inflows/ Inflows/ Inflows/ (outflows) (outflows)(outflows) (outflows) $’000 $’000 $’000 $’000
Cash flows from operating activities Dividends received 29,072 24,937 9,651 5,427 Interest received 16,066 15,969 16 12 Distributions received 14,472 4,003 4,949 609 Other income received 240 453 0 0 Finance costs paid (643) (718) (2) (1) Operating expenses paid (13,645) (12,688) 0 0 Income tax refunded/(paid) (97) 296 (93) 296	19,421 19,510 19,421 19,510 16,050 15,960 7,789 7,886 9,523 3,394 28,889 200 240 453 240 453 (641) (717) (641) (717) (13,646) (12,689) (13,646) (12,688) (4) 0 0 0
Net cash flows from/(used in) operatingactivities 6(a) 45,465 32,252 14,521 6,343	30,943 25,911 42,052 14,644
Cash flows from investing activities Payments for purchase of unlisted securities (926) (3,582) 0 0 Proceeds from unlisted security loan repayments 14,975 5,817 0 0 Proceeds from unlisted security capital repayments 19 17,419 0 0 Proceeds from sale of unlisted securities 365 0 365 0 Payments for unlisted security loan advances (5,228) 0 0 0 Proceeds from subsidiaryloan advances 0 0 0 0	(926) (3,582) (926) (4,196) 14,975 5,817 14,975 5,817 19 17,419 19 17,419 0 0 0 0 (5,228) 0 (5,228) 0 0 0 74 0
Net cash flows from/(used in) investingactivities 9,205 19,654 365 0	8,840 19,654 8,914 19,040
Cash flows from financing activities Payments for security issue costs 0 (726) 0 0 Proceeds from loan repayment – subsidiary 0 0 0 0 Proceeds from borrowings – stapled entity 0 0 0 0 Repayment of borrowings – stapled entity 0 0 (6,207) (1,693) Distributions and dividendspaid (38,120) (36,344) (8,432) (4,635)	0 (726) 0 (726) 0 0 0 668 6,207 1,693 6,207 1,693 0 0 0 0 (29,688) (31,710) (29,688) (31,710)
Net cash flows from/(used in) financingactivities (38,120) (37,070) (14,639) (6,328)	(23,481) (30,743) (23,481) (30,075)
Net increase/(decrease) in cash and cash equivalents 16,550 14,836 247 15 Cash and cash equivalents at the beginning of the year 57,493 42,652 180 165 Effects of foreign exchange rate movements on cash and cash equivalents (2) 5 0 0	16,302 14,822 27,485 3,609 57,314 42,487 46,101 42,487 (2) 5 (2) 5
Cash and cash equivalents at the end of theyear 6(b) 74,041 57,493 427 180	73,614 57,314 73,584 46,101

The above Cash Flow Statement should be read in conjunction with the accompanying notes.

Notes to the Financial Statements

for the year ended 30 June 2007

1. Summary of significant accounting policies

(a) Structure of financial report

The ordinary shares issued by Australian Infrastructure Fund Limited (AIFL) are stapled to the units issued by Australian Infrastructure Fund Trust (AIFT). The combined entity of AIFL and AIFT is known as the Australian Infrastructure Fund (AIX). On 6 March 1997, the stapled securities were listed on the Australian Securities Exchange (ASX) and have the ASX code AIX.

The units and shares will only be unstapled in accordance with the determination of the Responsible Entity of AIFT and the Board of AIFL if:

•the unitholders of AIFT have approved the unstapling by special resolution;
•the members of AIFL have approved the unstapling by special resolution; and
•the unstapling period commences within three months after the later of the dates on which the approval of unitholders and members is obtained.

Hastings Funds Management Limited (Hastings) is the manager of AIFL and the Responsible Entity of AIFT.

For the purpose of preparing a consolidated financial report that combines the assets and liabilities of AIFL and AIFT, AIFL is identified as the parent entity.

The financial report includes:

•Consolidated AIFL or AIX: represents the entire AIX group, being AIFL and the consolidated financial statements of AIFT;
•AIFL: represents the stand alone financial statements of AIFL;
•Consolidated AIFT: represents the consolidated financial statements of AIFT and its controlled entities; and
•AIFT: represents the standalone financial statement of AIFT.

The above financial statements are presented in adjacent columns in a single financial report in accordance with the option available under ASIC Class Order 05/642.

(b) UIG Interpretation 1013 ‘Consolidated Financial Reports in Relation to Pre-Dateof-Transition Stapling Arrangements’

The stapling arrangement between AIFL and AIFT was effected prior to the date of transition to Australian equivalents to International Financial Reporting Standards (AIFRS), therefore UIG Interpretation 1013 applies. In accordance with this interpretation, for the purpose of preparing a consolidated financial report that combines the assets and liabilities of AIFL and AIFT, AIFL is identified as the parent entity.

(c) Basis of preparation

The financial report is a general purpose financial report which has been prepared in accordance with the requirements of AIFT’s Constitution, the requirements of the Corporations Act 2001 and Australian Accounting Standards. The financial report has been prepared on a historical cost basis, except for unlisted securities that have been measured at fair value.

The Balance Sheet is presented on a liquidity basis. Assets and liabilities are presented in decreasing order of liquidity and are not distinguished between current and non-current. Additional information regarding this are included in the relevant notes.

The financial report of AIX for the year ended 30 June 2007 was authorised for issuance in accordance with a resolution of directors on 28 August 2007.

The functional and presentation currency of AIX is Australian dollars.

(d) Statement of compliance

The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS).

Certain Australian Accounting Standards have recently been issued or amended but are not yet effective and have not been adopted by AIX for the full year reporting period ended 30 June 2007. The assessment of the impact of these new standards and interpretations (to the extent relevant) is set out below:

(i) AASB 7 Financial Instruments: Disclosures and AASB 2005-10 Amendments to Australian Accounting Standards (AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 and AASB 1038) AASB 7 and AASB 2005-10 are applicable to reporting periods commencing on or after 1 January 2007. AASB 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. It replaces AASB 130 Disclosures in the Financial Statements of Banks and Similar Financial Institutions and the disclosure requirements in AASB 132 Financial Instruments: Disclosure and Presentation . It is applicable to all reporting entities. The amendment to AASB 101 introduces disclosures about the level of an entity’s capital and how it manages capital. AIX has not adopted the standards early. Application of the standards will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to the AIX’s financial instruments.

(ii) AASB 8 Operating Segments and AASB 2207-3 Amendments to Australian Accounting Standards arising from AASB 8

AASB 8 and AASB 2007-3 are effective for annual reporting periods commencing on or after 1 January 2009. AASB 8 requires adoption of a ‘management approach’ to reporting on the financial performance. The information being reported will be based on what key decision-makers use internally for evaluating segment performance and deciding how to allocate resources to operating segments. Application of AASB 8 may result in different segments, segment results and different type of information being reported in the segment note. However, it will not affect any of the amounts recognised in the statements.

(iii) Revised AASB 101 Presentation of Financial Statements

A revised AASB 101 was issued in October 2006 and is applicable to annual reporting periods beginning on or after 1 January 2007. AIX has not adopted the standard early. Application of the revised standard will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed.

(iv) AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments

AASB 2007-4 is applicable to annual reporting periods beginning on or after 1 July 2007. The amendments introduce a number of options that existed under IFRS but had not been included in the original AIFRS and remove many of the additional Australian disclosure requirements. In particular, Australian entities are now permitted to use the proportionate consolidation method for interests in joint venture entities and the indirect method for presenting cash flow statements, to recognise government grants of non-monetary assets at nominal amounts and to present assets and expenses net of related government grants. Furthermore, some intermediate parent entities may no longer have to prepare consolidated financial reports. AIX will adopt the amendments arising from AASB 2007-4 for the financial year ended 30 June 2008. Application of the revised standards will not affect any of the amounts recognised in the financial statements, but it may remove some of the disclosures that are currently required.

(e) Principles of consolidation

The consolidated financial report of AIFL combines the assets and liabilities of AIFL and AIFT and the entity AIFT controls. These entities are referred to in the financial report as Consolidated AIFL or AIX. The effects of all transactions between entities in the AIFL consolidated group are eliminated in full. The consolidated financial report of AIFT incorporates the assets and liabilities of AIFT and the entity it controls, being Australian Infrastructure Fund International 1 Trust and its controlled entities as at 30 June 2007. The effects of all transactions between entities in the AIFT consolidated group are eliminated in full.

Where control of an entity is obtained during the period, its results are included in the consolidated Income Statement from the date on which control commences. Where control of an entity ceases during a period its results are included for that part of the period during which control existed.

The financial reports of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full.

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

1. Summary of significant accounting policies continued

(f) Significant accounting judgements, estimates and assumptions

In applying AIX’s accounting policies, management and directors continually evaluate judgements, estimates and assumptions based on experience and other factors, including expectations of future events that may have an impact on the entity. All judgements, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to management. Actual results may differ from the judgements, estimates, and assumptions. Significant judgements, estimates, and assumptions are outlined below:

Valuation of unlisted securities

Fair values of unlisted securities are determined by an appropriately qualified independent valuer, KPMG Corporate Finance, by projecting future cash flows and then discounting these cash flows back to their present value using a post-tax risk adjusted discount rate. Where applicable, foreign currency discounted cash flows are translated back to the local functional currency using the spot foreign exchange rate. Further details are provided in Note 1(j). The carrying amount of unlisted securities held by AIX at 30 June 2007 was $955,754,000 and the carrying amount of unlisted securities held by Consolidated AIFT at 30 June 2007 was $821,264,000.

Provision for directors’ retirement

Non-executive directors who were appointed prior to 16 April 2003 retain a contractual entitlement to a retirement benefit. Further details on the calculation of this provision are provided in Note 1(l). Non-executive directors appointed after 16 April 2003 have no entitlement to a retirement benefit.

(g) Cash and cash equivalents

Cash and cash equivalents in the Balance Sheet comprise cash at bank and short-term deposits with an original maturity of three months or less. For the purposes of the Cash Flow Statement, cash includes cash and cash equivalents as defined above, net of outstanding bank overdrafts.

Fair values of unlisted securities are determined by an appropriately qualified independent valuer, KPMG Corporate Finance, by projecting future cash flows and then discounting these cash flows back to their present value using a post-tax risk adjusted discount rate. Where applicable, the present value of foreign currency discounted cash flows are translated back to the local functional currency using the spot foreign exchange rate. Discount rates used are developed on an individual unlisted security basis as determined by the independent valuer.

(j) Unlisted securities

Movements in investments in unlisted securities, including investments in associates and investments in subsidiaries, are at fair value through the Income Statement. Gains or losses arising from movements in the fair value of unlisted securities are recognised through the Income Statement.

Unlisted securities comprise ordinary shares, ordinary units, preference shares, shareholder loans and accrued interest income.

All such unlisted securities are initially recognised at fair value, being the amount of consideration given between parties in an arm’s length transaction. After initial recognition, unlisted securities are measured at fair value consistent with AIX’s investment strategy. AIX’s strategy is to invest in unlisted securities with a view to profit from income return in the form of distribution and interest receipts and capital growth through the changes in the fair value of these assets over the period they are held.

The post-tax risk adjusted discount rate (otherwise known as the cost of equity or Ke) applied by KPMG Corporate Finance in determining the fair value of each unlisted security (with the exception Metro Transport Sydney which was valued using an alternative valuation methodology) as at 30 June 2007 is detailed below:

	Valuation	Ke	Valuation	Ke
Unlisted securityname	2007 $’000	2007 %	2006 $’000	2006 %
Perth Airport Airport Development Group Australia Pacific Airports Corporation Metro Transport Sydney	233,400 46,000 197,400 2,600	13.55 15.40 12.05 n/a	202,000 36,800 161,101 5,700	14.00 15.50 12.50 14.50
Port of Portland Queensland Airports HOCHTIEF AirPort Capital Group Port of Geelong Unit Trust & Infrastructure Investment Corporation Statewide Roads	47,000 161,700 227,579 19,800 20,700	12.30 16.40 13.00 12.30 9.10	49,099 110,100 232,175 19,700 20,100	12.00 17.50 12.60 11.75 9.10
SPV1 Unit Trust(DP World Adelaide)	0	0.00	2,604	20.00

Purchases and sales of unlisted securities that require delivery of securities within the time frame generally established by regulation or convention in the market place are recognised on the trade date, i.e. the date that AIX commits to purchase or sell the securities.

(h) Trade and other receivables

Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are initially recognised at fair value and then carried at amortised cost using the effective interest method. Gains and losses are recognised in the income statement when the receivables are derecognised or impaired, as well as through the amortisation process.

(i) Investment in associates

Associates are entities over which AIX have significant influence but not control. Investments in associates have been accounted for in the financial statements using the fair value method in accordance with AASB 139 Financial Instruments: Recognition and Measurement detailed in Note 1(j).

1. Summary of significant accounting policies continued

(k) Interest bearing loans and borrowings All loans and borrowings are initially recognised at fair value being the consideration received net of issue costs associated with the borrowing.

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement. Gains and losses are recognised in the Income Statement when the liabilities are derecognised as well as through the amortisation process.

(l) Provisions

Provisions are recognised when AIX has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Provision for directors’ retirement

Non-executive directors who were appointed prior to 16 April 2003 retain their contractual entitlement to a retirement benefit. The benefit provided by the retirement plan (where the director has had three or more years of service) is a lump sum equal to:

A + [ A x ( B – 36 )/24 ]

where:

A is the average of the directors fees for the three years immediately prior to retirement (taken as the total fees of the three years divided by three); and

B is the number of whole months that the individual has been a director, up to a maximum of 84 months (seven years).

(m) Issued financial instruments

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. Any transaction costs arising on the issue of such financial instruments are recognised as a reduction of the proceeds received.

As units issued by AIFT are classified as financial liabilities, any amounts payable to securityholders are recorded as an expense and presented in the Income Statement for the year as ‘other finance costs’.

(n) Foreign currency translation

(i) Functional and presentation currency The functional and presentation currency of AIFL and AIFT and its subsidiaries is Australian dollars.

(ii) Transactions and balances

Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.

All exchange differences in the financial report are taken to the Income Statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction.

Non-monetary items measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined.

(o) Distributions

AIFT’s Constitution requires that the Responsible Entity distribute to each securityholder an amount representing the distributable income entitlement of each securityholder in respect of a distribution period. Distributable income means either the taxable income of AIFT or the net accounting income of AIFT as determined by the Responsible Entity. Taxable income is fully distributed to securityholders. Distribution periods are 31 December and 30 June. Where distribution income is determined by reference to the taxable income of AIFT, distributable income includes capital gains arising from the disposal of unlisted securities. Unrealised net gains or losses on unlisted securities are transferred to net assets attributable to securityholders and are not distributable and assessable until realised. Capital losses are not distributed to securityholders but are retained to be offset against any future realised capital gains.

(p) Income and expense recognition

Income is recognised to the extent that it is probable that the economic benefits will flow to AIX and the income can be reliably measured. The following specific recognition criteria must also be met before income or expenses are recognised:

Interest income

Income is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.

Dividend and distribution income

Dividend and distribution income is recognised when there is control over the right to receive the dividend or distribution payment.

Gain/(loss) on unlisted securities – unrealised Unrealised gains or losses arising from changes in the fair value of unlisted securities are calculated as the difference between the fair value at year end and the fair value at the previous valuation point.

Gain/(loss) on unlisted securities – realised Realised gains or losses are recognised upon sale of unlisted securities and are calculated as the difference between the sale price or settlement and the fair value at the previous valuation point.

Other expenses

Expenses are recognised in the Income Statement when AIFL or AIFT has a present obligation (legal or constructive) as a result of a past event that can be reliably measured. Expenses are recognised in the Income Statement if expenditure does not produce future economic benefits that qualify for recognition in the Balance Sheet.

Other income

Other income includes director fees received from investments. Director fees are recognised as income on an accrual basis.

Responsible Entity Fee

For the year ended 30 June 2007, in accordance with the Constitution and the AIFL management agreement, the Responsible Entity received a total fee of 1% of the net asset value of AIX (2006 – 1%). The Responsible Entity is entitled under the Constitution and the AIFL management agreement to be reimbursed for certain expenses incurred in administering AIX. The basis on which the expenses are reimbursed is defined in AIX’s Constitution.

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

1. Summary of significant accounting policies continued

(q) Income tax

AIFT

Under current legislation, AIFT is not subject to income tax provided the securityholders are presently entitled to the income of AIFT.

AIX, AIFL, AIFT Consolidated

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authority. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences:

•except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
•in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carryforward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:
•except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
•in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in reserves are recognised in reserves and not in the Income Statement.

(r) Other taxes

Goods and Services Tax (GST)

Income, expenses and assets are recognised net of the amount of GST except:

•where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
•receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet. Reduced input tax credits recoverable by AIFL or AIFT from the Australian Taxation Office are recognised as receivables in the Balance Sheet.

Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(s) Rounding

The amounts contained in the financial report have been rounded to the nearest thousand where rounding is applicable.

(t) Comparatives

Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures.

2. Income

AIX Consolidated AIFL

2. Income AIX Consolidated AIFL
	Unrealisedgain/(loss)			Realisedgain/(loss)
Unrealised				Realised
	non-	Unrealised		non-	Realised
	foreign	foreign		foreign	foreign
exchange		exchange	Total	exchange	exchange	Total
	related	related	unrealised	related	related	realised			Distrib-		Total
gain/(loss)		gain/(loss)	gain/(loss)	gain/(loss)	gain/(loss)	gain/(loss)	Interest	Dividends	utions	Other	income
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
2007
Unlisted securities
Perth Airport (Airstralia
Development Group &
PAPT Holdings)	41,601	0	41,601	0	0	0	2,704	0	0	226	44,531
Airport Development Group	9,200	0	9,200	0	0	0	0	2,883	0	0	12,083
Australia Pacific Airports
Corporation	36,299	0	36,299	0	0	0	0	8,352	0	0	44,651
Metro Transport Sydney	(3,215)	0	(3,215)	0	0	0	0	129	0	0	(3,086)
Port of Portland	(2,105)	0	(2,105)	0	0	0	0	7,795	5	0	5,695
Epic Energy	0	0	0	0	0	0	0	0	0	0	0
Queensland Airports
Limited	56,508	0	56,508	0	0	0	2,329	6,531	0	0	65,368
HOCHTIEF AirPort
Capital Group	2,931	(13,437)	(10,506)	0	23	23	7,955	0	9,523	0	6,995
Port of Geelong Unit
Trust & Infrastructure
Investment Corporation	1,675	0	1,675	0	0	0	0	460	1,275	0	3,410
Statewide Roads	600	0	600	0	0	0	0	2,598	0	0	3,198
SPV1 Unit Trust
(DP World Adelaide)	0	0	0	(2,006)	0	(2,006)	0	0	2,192	0	186
	143,494	(13,437)	130,057	(2,006)	23	(1,983)	12,988	28,748	12,995	226	183,031
Other
Cash and cash equivalents	0	(2)	(2)	0	0	0	2,810	0	0	0	2,808
Other	0	0	0	0	14	14	0	0	0	0	14
	0	(2)	(2)	0	14	14	2,810	0	0	0	2,822
	143,494	(13,439)	130,055	(2,006)	37	(1,969)	15,798	28,748	12,995	226	185,853

Aggregate gain/(loss) on financial instruments designated at fair value through the Income Statement for AIX at 30 June 2007 were $128,074,000 (2006 – $81,961,000).

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

2. Income continued

AIX Consolidated AIFL

2. Incomecontinued AIX Consolidated AIFL
	Unrealisedgain/(loss)			Realisedgain/(loss)
Unrealised				Realised
	non-	Unrealised		non-	Realised
	foreign	foreign		foreign	foreign
	exchange	exchange	Total	exchange	exchange	Total
	related	related	unrealised	related	related	realised			Distrib-		Total
gain/(loss)		gain/(loss)	gain/(loss)	gain/(loss)	gain/(loss)	gain/(loss)	Interest	Dividends	utions	Other	income
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
2006
Unlisted securities
Perth Airport (Airstralia
Development Group &
PAPT Holdings)	27,773	0	27,773	0	0	0	3,238	0	0	453	31,464
Airport Development Group	3,700	0	3,700	0	0	0	0	4,039	0	0	7,739
Australia Pacific Airports
Corporation	10,701	0	10,701	0	0	0	0	7,621	0	0	18,322
Metro Transport Sydney	(3,200)	0	(3,200)	0	0	0	0	0	0	0	(3,200)
Port of Portland	847	0	847	0	0	0	0	2,153	0	0	3,000
Epic Energy	152	0	152	0	0	0	0	0	0	0	152
Queensland Airports
Limited	17,114	0	17,114	0	0	0	2,331	10,784	0	0	30,229
HOCHTIEF AirPort
Capital Group	12,370	16,663	29,033	0	(51)	(51)	7,884	0	3,394	0	40,260
Port of Geelong Unit
Trust & Infrastructure
Investment Corporation	185	0	185	0	0	0	0	525	1,950	0	2,660
Statewide Roads	(6,300)	0	(6,300)	0	0	0	0	2,333	0	0	(3,967)
SPV1 Unit Trust
(DP World Adelaide)	2,007	0	2,007	0	0	0	0	0	233	0	2,240
	65,349	16,663	82,012	0	(51)	(51)	13,453	27,455	5,577	453	128,899
Other
Cash and cash equivalents	0	5	5	0	0	0	2,405	0	0	0	2,410
Other	0	0	0	0	0	0	4	0	0	0	4
	0	5	5	0	0	0	2,409	0	0	0	2,414
	65,349	16,668	82,017	0	(51)	(51)	15,862	27,455	5,577	453	131,313

2. Income continued AIFL

2. Incomecontinued AIFL
	Unrealisedgain/(loss)			Realisedgain/(loss)
	Unrealised			Realised
	non-	Unrealised		non-	Realised
	foreign	foreign		foreign	foreign
	exchange	exchange	Total	exchange	exchange	Total
	related	related	unrealised	related	related	realised			Distrib-		Total
	gain/(loss)	gain/(loss)	gain/(loss)	gain/(loss)	gain/(loss)	gain/(loss)	Interest	Dividends	utions	Other	income
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
2007
Unlisted securities
Australia Pacific
Airports Corporation	13,974	0	13,974	0	0	0	0	3,215	0	0	17,189
Port of Portland	(825)	0	(825)	0	0	0	0	3,054	2	0	2,231
Port of Geelong Unit
Trust & Infrastructure
Investment Corporation	1,675	0	1,675	0	0	0	0	460	1,275	0	3,410
Statewide Roads	600	0	600	0	0	0	0	2,598	0	0	3,198
SPV1 Unit Trust
(DP World Adelaide)	0	0	0	(2,006)	0	(2,006)	0	0	2,192	0	186
	15,424	0	15,424	(2,006)	0	(2,006)	0	9,327	3,469	0	26,214
Other
Cash and cash equivalents 0		0	0	0	0	0	16	0	0	0	16
Other	0	0	0	0	0	0	253	0	0	0	253
	0	0	0	0	0	0	269	0	0	0	269
	15,424	0	15,424	(2,006)	0	(2,006)	269	9,327	3,469	0	26,483
2006
Unlisted securities
Australia Pacific
Airports Corporation	4,122	0	4,122	0	0	0	0	2,934	0	0	7,056
Port of Portland	353	0	353	0	0	0	0	843	0	0	1,196
Port of Geelong Unit
Trust & Infrastructure
Investment Corporation	185	0	185	0	0	0	0	525	1,950	0	2,660
Statewide Roads	(6,300)	0	(6,300)	0	0	0	0	2,333	0	0	(3,967)
SPV1 Unit Trust
(DP World Adelaide)	2,007	0	2,007	0	0	0	0	0	233	0	2,240
	367	0	367	0	0	0	0	6,635	2,183	0	9,185
Other
Cash and cash equivalents 0		0	0	0	0	0	6	0	0	0	6
Other	0	0	0	0	0	0	63	0	0	0	63
	0	0	0	0	0	0	69	0	0	0	69
	367	0	367	0	0	0	69	6,635	2,183	0	9,254

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

2. Income continued

Consolidated AIFT

2. Incomecontinued Consolidated AIFT
	Unrealisedgain/(loss)			Realisedgain/(loss)
Unrealised				Realised
	non-	Unrealised		non-	Realised
	foreign	foreign		foreign	foreign
	exchange	exchange	Total	exchange	exchange	Total
	related	related	unrealised	related	related	realised			Distrib-		Total
gain/(loss)		gain/(loss)	gain/(loss)	gain/(loss)	gain/(loss)	gain/(loss)	Interest	Dividends	utions	Other	income
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
2007
Unlisted securities
Perth Airport (Airstralia
Development Group &
PAPT Holdings)	41,601	0	41,601	0	0	0	2,704	0	0	226	44,531
Airport Development Group	9,200	0	9,200	0	0	0	0	2,883	0	0	12,083
Australia Pacific Airports
Corporation	22,325	0	22,325	0	0	0	0	5,137	0	0	27,462
Metro Transport Sydney	(3,215)	0	(3,215)	0	0	0	0	129	0	0	(3,086)
Port of Portland	(1,280)	0	(1,280)	0	0	0	0	4,741	3	0	3,464
Epic Energy	0	0	0	0	0	0	0	0	0	0	0
Queensland Airports
Limited	56,508	0	56,508	0	0	0	2,329	6,531	0	0	65,368
HOCHTIEF AirPort
Capital Group	2,931	(13,437)	(10,506)	0	23	23	7,955	0	9,523	0	6,995
	128,070	(13,437)	114,633	0	23	23	12,988	19,421	9,526	226	156,817
Other
Cash and cash equivalents	0	(2)	(2)	0	0	0	2,794	0	0	0	2,792
Other	0	0	0	0	14	14	0	0	0	0	14
	0	(2)	(2)	0	14	14	2,794	0	0	0	2,806
	128,070	(13,439)	114,631	0	37	37	15,782	19,421	9,526	226	159,623

Aggregate gain/(loss) on financial instruments designated at fair value through the Income Statement for Consolidated AIFT at 30 June 2007 were $114,656,000 (2006 – $81,593,000).

2006
Unlisted securities
Perth Airport (Airstralia
Development Group &
PAPT Holdings)	27,773	0	27,773	0	0	0	3,238	0	0	453	31,464
Airport Development Group	3,700	0	3,700	0	0	0	0	4,039	0	0	7,739
Australia Pacific Airports
Corporation	6,578	0	6,578	0	0	0	0	4,687	0	0	11,265
Metro Transport Sydney	(3,200)	0	(3,200)	0	0	0	0	0	0	0	(3,200)
Port of Portland	494	0	494	0	0	0	0	1,309	0	0	1,803
Epic Energy	152	0	152	0	0	0	0	0	0	0	152
Queensland Airports
Limited	17,114	0	17,114	0	0	0	2,331	10,784	0	0	30,229
HOCHTIEF AirPort
Capital Group	12,371	16,662	29,033	0	(51)	(51)	7,884	0	3,394	0	40,260
	64,982	16,662	81,644	0	(51)	(51)	13,453	20,819	3,394	453	119,712
Other
Cash and cash equivalents	0	5	5	0	0	0	2,402	0	0	0	2,407
Other	0	0	0	0	0	0	0	0	0	0	0
	0	5	5	0	0	0	2,402	0	0	0	2,407
	64,982	16,667	81,649	0	(51)	(51)	15,855	20,819	3,394	453	122,119

2. Income continued

AIFT

2. Incomecontinued AIFT
	Unrealisedgain/(loss)			Realisedgain/(loss)
Unrealised				Realised
	non-	Unrealised		non-	Realised
	foreign	foreign		foreign	foreign
	exchange	exchange	Total	exchange	exchange	Total
	related	related	unrealised	related	related	realised			Distrib-		Total
gain/(loss)		gain/(loss)	gain/(loss)	gain/(loss)	gain/(loss)	gain/(loss)	Interest	Dividends	utions	Other	income
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
2007
Unlisted securities
Perth Airport (Airstralia
Development Group &
PAPT Holdings)	41,601	0	41,601	0	0	0	2,704	0	0	226	44,531
Airport Development Group	9,200	0	9,200	0	0	0	0	2,883	0	0	12,083
Australia Pacific Airports
Corporation	22,325	0	22,325	0	0	0	0	5,137	0	0	27,462
Metro Transport Sydney	(3,215)	0	(3,215)	0	0	0	0	129	0	0	(3,086)
Port of Portland	(1,280)	0	(1,280)	0	0	0	0	4,741	3	0	3,464
Epic Energy	0	0	0	0	0	0	0	0	0	0	0
Queensland Airports
Limited	56,508	0	56,508	0	0	0	2,329	6,531	0	0	65,368
	125,139	0	125,139	0	0	0	5,033	19,421	3	226	149,822
Subsidiary
Australian Infrastructure
Fund International 1 Trust	3,124	(13,709)	(10,585)	0	0	0	0	0	17,701	0	7,116
	3,124	(13,709)	(10,585)	0	0	0	0	0	17,701	0	7,116
Other
Cash and cash equivalents	0	(2)	(2)	0	0	0	2,621	0	0	0	2,619
Other	0	0	0	0	14	14	0	0	0	0	14
	0	(2)	(2)	0	14	14	2,621	0	0	0	2,633
	128,263	(13,711)	114,552	0	14	14	7,654	19,421	17,704	226	159,571
2006
Unlisted securities
Perth Airport (Airstralia
Development Group &
PAPT Holdings)	27,773	0	27,773	0	0	0	3,238	0	0	453	31,464
Airport Development Group	3,700	0	3,700	0	0	0	0	4,039	0	0	7,739
Australia Pacific Airports
Corporation	6,578	0	6,578	0	0	0	0	4,687	0	0	11,265
Metro Transport Sydney	(3,200)	0	(3,200)	0	0	0	0	0	0	0	(3,200)
Port of Portland	494	0	494	0	0	0	0	1,309	0	0	1,803
Epic Energy	152	0	152	0	0	0	0	0	0	0	152
Queensland Airports
Limited	17,114	0	17,114	0	0	0	2,331	10,784	0	0	30,229
	52,611	0	52,611	0	0	0	5,569	20,819	0	453	79,452
Subsidiary
Australian Infrastructure
Fund International 1 Trust	30,637	0	30,637	0	0	0	0	0	9,703	0	40,340
	30,637	0	30,637	0	0	0	0	0	9,703	0	40,340
Other
Cash and cash equivalents	0	5	5	0	0	0	2,209	0	0	0	2,214
Other	0	0	0	0	0	0	0	0	0	0	0
	0	5	5	0	0	0	2,209	0	0	0	2,214
	83,248	5	83,253	0	0	0	7,778	20,819	9,703	453	122,006

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

3. Finance costs

3. Finance costs
	AIX Consolidated AIFL 2007 2006		2007	AIFL	2006	Consolidated AIFT 2007 2006		2007	AIFT	2006
	$’000	$’000	$’000		$’000	$’000	$’000	$’000		$’000
Interest expense	0	0	0		0	253	60	253		60
Other borrowing costs	784	502	0		0	784	502	784		502
Bank fees	11	13	1		1	10	12	10		12
	795	515	1		1	1,047	574	1,047		574

4. Auditor’s remuneration

4. Auditor’s remuneration
		AIX
	Consolidated AIFL			AIFL		Consolidated AIFT			AIFT
	2007	2006	2007		2006	2007	2006	2007	2006
	$	$	$		$	$	$	$	$
Amounts received or due and receivable by the
current auditor, PricewaterhouseCoopers, for:
– an audit or review of the financial reports	119,074	0	0		0	119,074	0	119,074	0
– compliance plan audit	14,850	0	0		0	14,850	0	14,850	0
– other non-audit services	0	0	0		0	0	0	0	0
	133,924	0	0		0	133,924	0	133,924	0
Amounts received or due and receivable by the
predecessor auditor, Ernst & Young, for:
– an audit or review of the financial reports	0	121,685	0		0	0	121,685	0	121,685
– compliance plan audit	0	23,113	0		0	0	23,113	0	23,113
– risk and compliance plan audit	0	7,818	0		0	0	7,818	0	7,818
– other non-audit services
Taxation compliance	137,434	153,918	0		0	137,434	153,918	137,434	153,918
Accounting advice and annual report review	0	19,152	0		0	0	19,152	0	19,152
Asset acquisition advisory services	138,175	68,420	0		0	138,175	68,420	138,175	68,420
Other advisoryservices	9,511	27,500	0		0	9,511	27,500	9,511	27,500
	285,120	421,606	0		0	285,120	421,606	285,120	421,606

AIX changed auditor during the current financial year from Ernst & Young to PricewaterhouseCoopers.

5. Income tax

5. Income tax
	AIX Consolidated AIFL AIFL Consolidated AIFT AIFT
	2007 2006 2007 2006 2007 2006 2007 2006 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
(a) Major components of income tax for the year Current income tax expense Deferred income tax expense	1,207 97 869 93 339 4 0 0 2,180 8,265 3,925 836 (1,746) 7,429 0 0
	3,387 8,362 4,794 929 (1,407) 7,433 0 0
(b) Reconciliation of prima facie tax to income tax expense for the year Profit before income tax attributable to securityholders Prima facie tax at the Australian tax rate of 30% (2005 – 30%) Tax effect of amounts either not deductible/(taxable), or are attributable income in nature, in calculating the taxable income: (Profit) not assessable in hands of trusts Non-assessable distribution income Derecognition of prior year deferred tax liability Assessable attributable income Franked dividend gross up Tax offset – franked dividends Other Prior year under/(over) provision Prior year unrecognised income tax losses utilised Recognition of deferred tax balances not previously recognised Derecognition of deferred tax asset relating to net unrealised capital loss Recognition of deferred tax asset in relation to previouslyderecognised net unrealised capital loss	171,544 117,878 26,482 9,253 145,062 108,625 145,008 108,510 51,464 35,364 7,945 2,776 43,518 32,588 43,503 32,553 (41,386) (25,154) 0 0 (41,386) (25,155) (43,503) (32,553) (2,857) 0 0 0 (2,857) 0 0 0 (1,018) 0 0 0 (1,018) 0 0 0 336 0 0 0 336 0 0 0 1,264 713 1,264 713 0 0 0 0 (4,213) (2,377) (4,213) (2,377) 0 0 0 0 (2) 0 (1) 0 0 0 0 0 0 2 0 3 0 0 0 0 0 (420) 0 (420) 0 0 0 0 0 33 0 33 0 0 0 0 0 201 0 201 0 0 0 0 (201) 0 (201) 0 0 0 0 0
Income tax expense/(benefit)	3,387 8,362 4,794 929 (1,407) 7,433 0 0
(c) Deferred income tax asset Deferred income tax asset Comprising: Unrealised loss on unlisted securities Stapled securityissue costs	13,547 13,542 13,547 13,542 0 0 0 0
	13,530 13,509 13,530 13,509 0 0 0 0 17 33 17 33 0 0 0 0
	13,547 13,542 13,547 13,542 0 0 0 0
(d) Deferred income tax liability Deferred income tax liability Comprising: Unrealised gain on unlisted securities Dividend receivable	22,929 20,744 17,573 13,643 5,356 7,102 0 0
	22,893 20,610 17,537 13,509 5,356 7,102 0 0 36 134 36 134 0 0 0 0
	22,929 20,744 17,573 13,643 5,356 7,102 0 0
(e) Current income tax liability Current income tax liability	1,207 97 869 93 339 4 0 0
	1,207 97 869 93 339 4 0 0

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

6. Cash and cash equivalents

6. Cash and cash equivalents
	AIX Consolidated AIFL 2007 2006		AIFL 2007 2006		Consolidated AIFT 2007 2006		AIFT 2007 2006
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
(a) Reconciliation of profit after income tax
attributable to securityholders to the net
cash flows from operating activities
Profit after income tax attributable to securityholders	168,157	109,516	21,688	8,324	146,469	101,192	145,008	108,510
Adjustments for non-cash and non-operating items:
(Gain)/loss – unlisted securities – unrealised	(130,057)	(82,012)	(15,424)	(367)	(114,633)	(81,644)	(125,139)	(52,611)
(Gain)/loss – subsidiaries – unrealised	0	0	0	0	0	0	10,585	(30,637)
(Gain)/loss – unlisted securities – realised	2,006	0	2,006	0	0	0	0	0
(Gain)/loss – other – unrealised	2	(5)	0	0	2	(5)	2	(5)
Non operating interest (income)/expense	0	0	(253)	(60)	253	60	253	60
Changes in operating related assets and liabilities:
(Increase)/decrease in income receivable	1,388	(1,938)	1,808	(1,938)	(420)	0	10,770	(9,504)
(Increase)/decrease in other receivables	39	(7)	0	0	39	(7)	39	(6)
(Increase)/decrease in prepayments	151	179	0	0	151	179	151	179
(Increase)/decrease in accrued income	238	155	(5)	0	242	155	132	108
(Increase)/decrease in deferred income tax asset	(5)	(12,482)	(5)	(12,809)	0	328	0	0
Increase/(decrease) in trade and other payables	250	(215)	0	0	250	(218)	250	(215)
Increase/(decrease) in unlisted security short-term
loan payable	0	(2,153)	0	(843)	0	(1,309)	0	(1,309)
Increase/(decrease) in current income tax liability	1,110	396	776	392	335	4	0	0
Increase/(decrease) in deferred income tax liability	2,185	20,744	3,930	13,644	(1,746)	7,102	0	0
Increase/(decrease)inprovisions	1	74	0	0	1	74	1	74
Net cash flows from operatingactivities	45,465	32,252	14,521	6,343	30,943	25,911	42,052	14,644
(b) Reconciliation of cash and cash equivalents
Cash at bank	29,825	12,950	427	180	29,398	12,770	29,369	9,254
Short-term deposits	44,216	44,543	0	0	44,216	44,544	44,215	36,847
	74,041	57,493	427	180	73,614	57,314	73,584	46,101

Cash at bank earns interest at floating rates based on daily deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of AIX and earn interest at the respective short-term deposit rates. The fair value of cash and cash equivalents for AIX at 30 June 2007 is $74,041,000 (2006 $57,493,000).

(c) Significant non-cash investing and financing activities 2007

During the 2007 year AIFT was issued the following securities by its subsidiary entity:

•4,483,433 units valued at $4,483,433 by Australian Infrastructure Fund International 1 Trust to acquire an additional interest in IAI International Airport Investments GmbH & Co. KG.

2006

During the 2006 year AIFT was issued the following securities by its subsidiary entity:

•6,132,072 units valued at $6,132,072 by Australian Infrastructure Fund International 1 Trust to extinguish the inter-entity receivable/payable balance between the two entities.

7. Trade and other receivables

7. Trade and other receivables
	AIX Consolidated AIFL 2007 2006		2007	AIFL 2006	Consolidated AIFT 2007 2006		2007	AIFT 2006
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Income receivable	425	2,227	422	2,227	3	0	15	11,200
Other receivables	430	50	9,807	3,345	430	50	428	50
	855	2,277	10,229	5,572	433	50	443	11,250

8. Other assets

8. Other assets
		AIX
	Consolidated AIFL			AIFL		Consolidated AIFT			AIFT
	2007	2006	2007		2006	2007	2006	2007		2006
	$’000	$’000	$’000		$’000	$’000	$’000	$’000		$’000
Prepayments	152	303	0		0	152	303	152		303
	152	303	0		0	152	303	152		303

9. Investment in subsidiaries

AIFT
							Movement
	Percentage				Fair value at	Acquisitions	in fair	Fair value
	ownership		Country of	Form of	30 June	at fair value	value upon	at 30 June
			incorporation	investment	2006		revaluation	2007
Subsidiaryname	2007	2006			$’000	$’000	$’000	$’000
Australian Infrastructure
Fund International 1 Trust	100%	100%	Australia	Ordinaryunits	232,083	6,021	(10,585)	227,519
					232,083	6,021	(10,585)	227,519

The financial results of subsidiary entities have been included in the consolidated financial results of AIX and Consolidated AIFT.

Australian Infrastructure Fund International 1 Trust is an unlisted unit trust which has the following investment interests:

•a 100 percent interest in its wholly owned subsidiary, Australian Infrastructure Fund International Pty Ltd (AIFIPL) which has an 80.04 percent interest in IAI International Airport Investments GmbH & Co KG which in turn has a 50 percent equity interest in HOCHTIEF AirPort Capital Group GmbH (HTAC). Although AIFIPL owns 80.04 percent of IAI International Airport Investments GmbH & Co KG, due to the contractual agreement between the owners of IAI International Airport Investments GmbH & Co KG, AIFIPL does not have a controlling interest in that entity;
•a 50 percent interest in the general partner IAI International Airport Investments Verwaltungs GmbH; and
•a 40.02 percent interest in HTAC shareholder loans.

HTAC has been independently valued by KPMG Corporate Finance at 30 June 2007.

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

10. Unlisted securities

AIX Consolidated AIFL

	Percentage	Percentage
	ownership
Unlisted securityname	2007	2006	Operation	Form of investment
Perth Airport (Airstralia Development	24.87%	24.87%	Airport operator	Ordinary shares and shareholder loans
Group& PAPT Holdings)
Airport Development Group	25.40%	25.40%	Airport operator	Ordinaryandpreference shares
Australia Pacific Airports Corporation	8.13%	8.13%	Airport operator	Ordinaryshares
Metro Transport Sydney	38.89%	38.89%	Light rail system	Ordinary shares and shareholder loans issued by
			owner and operator	Metro Transport Sydney Pty Ltd, shareholder loans
				and infrastructure bonds issued by Sydney Light
				Rail CompanyLimited
Port of Portland	50.00%	50.00%	Port operator	Ordinaryshares and ordinaryunits
Epic Energy	4.00%	4.00%	Non-operating	Ordinary shares and shareholder loans issued
				by Isarose Pty Ltd, which in turn holds units in
				Epic EnergyWA unit trust
Queensland Airports Limited	49.07%	49.07%	Airport operator	Ordinary shares, preference shares and
				shareholder loans
HOCHTIEF AirPort Capital Group	40.02%	40.02%	Airport investor	A 40.02% interest in HTAC shareholder loans,
				a 80.04% partnership interest in IAI International
				Airport Investments GmbH & Co KG which in turn
				has a 40.02% equity interest in HTAC and a
				50% equity interest in the general partner
				IAI International Airport Investments Verwaltungs GmbH
Port of Geelong Unit Trust &	35.00%	35.00%	Port operator	Ordinary units and ordinary shares
Infrastructure Investment Corporation
Statewide Roads	6.20%	6.20%	Toll roads	Ordinaryandpreference shares
SPV1 Unit Trust(DP World Adelaide)	0.00%	30.41%	Port operator	Ordinaryunits
Total unlisted securities

AIFL

AIFL
	Percentage
	ownership
Unlisted securityname	2007	2006	Operation	Form of investment
Australia Pacific Airports Corporation	3.13%	3.13%	Airport operator	Ordinaryshares
Port of Portland	19.59%	19.59%	Port operator	Ordinaryshares and ordinaryunits
Port of Geelong Unit Trust &	35.00%	35.00%	Port operator	Ordinary units and ordinary shares
Infrastructure Investment Corporation
Statewide Roads	6.20%	6.20%	Toll roads	Ordinaryandpreference shares
SPV1 Unit Trust(DP World Adelaide)	0.00%	30.41%	Port operator	Ordinaryunits
Total unlisted securities

		Fair value movement	Fair value movement		Movement in
Fair value at	Acquisition	Capital reductions	upon disposals &	Accrued income	fair value upon	Fair value at
30 June 2006	at fair value	and disposals	capital reductions	movement	revaluation	30 June 2007
$’000	$’000	$’000	$’000	$’000	$’000	$’000
202,000	0	(10,069)	0	(132)	41,601	233,400
36,800	0	0	0	0	9,200	46,000
161,101	0	0	0	0	36,299	197,400
5,700	134	(19)	0	0	(3,215)	2,600
49,099	0	0	0	1	(2,105)	46,995
0	0	0	0	0	0	0
110,100	9,424	(14,330)	0	(2)	56,508	161,700
232,175	6,020	0	0	(110)	(10,506)	227,579
17,705	0	0	0	0	1,675	19,380
20,100	0	0	0	0	600	20,700
2,371	0	(365)	(2,006)	0	0	0
837,151	15,578	(24,783)	(2,006)	(243)	130,057	955,754

		Fair value movement	Fair value movement		Movement in
Fair value at	Acquisition	Capital reductions	upon disposals &	Accrued income	fair value upon	Fair value at
30 June 2006	at fair value	and disposals	capital reductions	movement	revaluation	30 June 2007
$’000	$’000	$’000	$’000	$’000	$’000	$’000
62,022	0	0	0	0	13,974	75,996
19,238	0	0	0	0	(825)	18,413
17,705	0	0	0	0	1,675	19,380
20,100	0	0	0	0	600	20,700
2,371	0	(365)	(2,006)	0	0	0
121,436	0	(365)	(2,006)	0	15,424	134,489

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

10. Unlisted securities continued

Consolidated AIFT

10. Unlisted securitiescontinued Consolidated AIFT
	Percentage ownership
Unlisted securityname	2007	2006	Operation	Form of investment
Perth Airport (Airstralia Development Group	24.87%	24.87%	Airport operator	Ordinary shares and shareholder loans
& PAPT Holdings)
Airport Development Group	25.40%	25.40%	Airport operator	Ordinaryandpreference shares
Australia Pacific Airports Corporation	5.00%	5.00%	Airport operator	Ordinaryshares
Metro Transport Sydney	38.89%	38.89%	Light rail system	Ordinary shares and shareholder loans issued by
			owner and operator	Metro Transport Sydney Pty Ltd, shareholder loans
				and infrastructure bonds issued by Sydney Light
				Rail CompanyLimited
Port of Portland	30.41%	30.41%	Port operator	Ordinaryshares and ordinaryunits
Epic Energy	4.00%	4.00%	Non-operating	Ordinary shares and shareholder loans issued by
				Isarose Pty Ltd, which in turn holds units in
				Epic EnergyWA unit trust
Queensland Airports Limited	49.07%	49.07%	Airport operator	Ordinary shares, preference shares and
				shareholder loans
HOCHTIEF AirPort Capital Group	40.02%	40.02%	Airport investor	A 40.02% interest in HTAC shareholder loans,
				a 80.04% partnership interest in IAI International
				Airport Investments GmbH & Co KG which in turn
				has a 40.02% equity interest in HTAC and a
				50% equity interest in the general partner IAI
				International Airport Investments Verwaltungs GmbH
Total unlisted securities
AIFT
	Percentage
	ownership
Unlisted securityname	2007	2006	Operation	Form of investment
Perth Airport (Airstralia Development Group	24.87%	24.87%	Airport operator	Ordinary shares and shareholder loans
& PAPT Holdings)
Airport Development Group	25.40%	25.40%	Airport operator	Ordinaryandpreference shares
Australia Pacific Airports Corporation	5.00%	5.00%	Airport operator	Ordinaryshares
Metro Transport Sydney	38.89%	38.89%	Light rail system	Ordinary shares and shareholder loans issued by
			owner and operator	Metro Transport Sydney Pty Ltd, shareholder loans
				and infrastructure bonds issued by Sydney Light
				Rail CompanyLimited
Port of Portland	30.41%	30.41%	Port operator	Ordinaryshares and ordinaryunits
Epic Energy	4.00%	4.00%	Non-operating	Ordinary shares and shareholder loans issued by
				Isarose Pty Ltd, which in turn holds units in
				Epic EnergyWA unit trust
Queensland Airports Limited	49.07%	49.07%	Airport operator	Ordinaryshares, preference shares and shareholder loans
Total unlisted securities

All unlisted securities have been independently valued by KPMG Corporate Finance at 30 June 2007.

Fair value at	Acquisition	Fair value movement Capital reductions upon disposals &	Fair value movement Capital reductions upon disposals &	Accrued income	Movement in fair value upon	Fair value at
30 June 2006	at fair value	and disposals	capital reductions	movement	revaluation	30 June 2007
$’000	$’000	$’000	$’000	$’000	$’000	$’000
202,000	0	(10,069)	0	(132)	41,601	233,400
36,800	0	0	0	0	9,200	46,000
99,078	0	0	0	0	22,325	121,403
5,700	134	(19)	0	0	(3,215)	2,600
29,862	0	0	0	0	(1,280)	28,582
0	0	0	0	0	0	0
110,100	9,424	(14,330)	0	(2)	56,508	161,700
232,175	6,020	0	0	(110)	(10,506)	227,579
715,715	15,578	(24,418)	0	(244)	114,633	821,264

		Fair value movement			Movement in
Fair value at	Acquisition	Capital reductions	upon disposals &	Accrued income	fair value upon	Fair value at
30 June 2006	at fair value	and disposals	capital reductions	movement	revaluation	30 June 2007
$’000	$’000	$’000	$’000	$’000	$’000	$’000
202,000	0	(10,069)	0	(132)	41,601	233,400
36,800	0	0	0	0	9,200	46,000
99,078	0	0	0	0	22,325	121,403
5,700	134	(19)	0	0	(3,215)	2,600
29,862	0	0	0	0	(1,280)	28,582
0	0	0	0	0	0	0
110,100	9,424	(14,330)	0	(2)	56,508	161,700
483,540	9,558	(24,418)	0	(134)	125,139	593,685

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

11. Trade and other payables

11. Trade and other payables
	AIX Consolidated AIFL 2007 2006		2007	AIFL 2006	Consolidated AIFT 2007 2006		2007	AIFT 2006
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Payable – the Responsible Entity	875	766	0	0	875	766	875	766
Distribution and dividend payable	29,983	27,534	7,000	5,000	22,983	22,534	22,983	22,534
Otherpayables	386	245	0	0	386	245	461	245
	31,244	28,545	7,000	5,000	24,244	23,545	24,319	23,545

Trade and other payables are non-interest bearing and generally on 30 day terms. For information regarding the distribution and dividend payable refer Note 15.

Further details of related party payables are included in Notes 19 and 20.

12. Provisions

12. Provisions
		AIX
	Consolidated AIFL			AIFL		Consolidated AIFT		AIFT
	2007	2006	2007		2006	2007	2006	2007	2006
	$’000	$’000	$’000		$’000	$’000	$’000	$’000	$’000
Provision for directors’ retirement benefit	494	493	0		0	494	493	494	493
	494	493	0		0	494	493	494	493
Movement in the provision for directors’
retirement benefit:
Balance at the beginning of the year	493	419	0		0	493	419	493	419
Provision raised during the year	188	74	0		0	188	74	188	74
Less:provisionspaid duringtheyear	(187)	0	0		0	(187)	0	(187)	0
Balance at the end of theyear	494	493	0		0	494	493	494	493

The directors’ retirement benefit is available to non-executive directors of AIFL who were appointed prior to 16 April 2003. The directors’ retirement benefit is provided and paid on behalf of AIFL by AIFT. For more information refer Note 1(l).

13. Interest bearing loans and borrowings

13. Interest bearing loans and borrowings
		AIX
	Consolidated AIFL			AIFL		Consolidated AIFT			AIFT
	2007	2006	2007		2006	2007	2006	2007	2006
	$’000	$’000	$’000		$’000	$’000	$’000	$’000	$’000
Multi-option facility – cash advance	0	0	0		0	0	0	0	0
Borrowings – AIFL	0	0	0		0	9,805	3,345	9,805	3,345
	0	0	0		0	9,805	3,345	9,805	3,345

Borrowings

The loan from AIFL is unsecured, at call and interest bearing. Interest is charged at the 30 day bank bill rate. Further details are included at Note 18.

Multi-option facility

AIFT has a $200 million syndicated multi-option facility agreement with Westpac Banking Corporation and Australian and New Zealand Banking Group Limited which expires on 23 December 2007. Interest is charged under this facility at the base rate (BBSY) plus a margin. At 30 June 2007, $nil of this multi-option facility was drawn (2006 – $nil).

14. Amounts attributable to securityholders

14. Amounts attributable to securityholders
	AIX Consolidated AIFL 2007 2006		AIFL 2007 2006		Consolidated AIFT 2007 2006		AIFT 2007 2006
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Amounts attributable to securityholders comprises:
Issued securities	736,855	719,554	113,564	110,996	623,291	608,558	623,291	608,558
Undistributedprofit attributable to securityholders	251,620	141,333	19,686	10,998	231,934	130,335	237,474	137,336
	988,475	860,887	133,250	121,994	855,225	738,893	860,765	745,894
	No. ’000	No. ’000	No. ’000	No. ’000	No. ’000	No. ’000	No. ’000	No. ’000
(a) Issued securities (number)
Issued securities at the beginning of the year	367,123	361,130	367,123	361,130	367,123	361,130	367,123	361,130
Securities issued during the year
–pursuant to dividend reinvestmentplan	7,668	5,993	7,668	5,993	7,668	5,993	7,668	5,993
Issued securities at the end of theyear	374,791	367,123	374,791	367,123	374,791	367,123	374,791	367,123
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
(b) Issued securities (dollars)
Issued securities at the beginning of the year	719,554	705,123	110,996	108,848	608,558	596,275	608,558	596,275
Securities issued during the year
– pursuant to dividend reinvestment plan	17,301	14,406	2,568	2,148	14,733	12,258	14,733	12,258
Less: adjustment to securityissue costs	0	25	0	0	0	25	0	25
Issued securities at the end of theyear	736,855	719,554	113,564	110,996	623,291	608,558	623,291	608,558
(c) Undistributed profit attributable to
securityholders
Balance at the beginning of the year	141,333	84,823	10,998	10,928	130,335	73,895	137,336	73,578
Profit after income tax attributable to securityholders	168,157	109,516	21,688	8,324	146,469	101,192	145,008	108,510
Dividends and distributions to securityholders	(57,870)	(53,006)	(13,000)	(8,254)	(44,870)	(44,752)	(44,870)	(44,752)
Balance at the end of theyear	251,620	141,333	19,686	10,998	231,934	130,335	237,474	137,336

(d) Terms and conditions of issued securities

The securities are stapled securities being shares in AIFL and units in AIFT. Stapled securityholders have various rights under AIFL’s and AIFT’s constitutions, including the right to:

•receive dividends and income distributions;

•attend and vote at meetings of stapled securityholders; and

•participate in the termination and winding up of AIFL and AIFT.

The rights, obligations and restrictions attached to each stapled security are identical in all respects.

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

15. Distributions and dividends

15. Distributions and dividends
	AIX Consolidated AIFL 2007 2006		2007	AIFL 2006	Consolidated AIFT 2007 2006		2007	AIFT 2006
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Distributions provided for or paid during the year	44,870	44,752	0	0	44,870	44,752	44,870	44,752
Dividendsprovided for orpaid duringtheyear	13,000	8,254	13,000	8,254	0	0	0	0
	57,870	53,006	13,000	8,254	44,870	44,752	44,870	44,752

Final dividend and distribution

A final dividend and distribution of $29,983,000 (8.00 cents per stapled security) was declared by AIX for the year ended 30 June 2007 (2006 – 7.50 cents per stapled security) and will be paid on 30 August 2007.

A final dividend of $7,000,000 (1.87 cents per security) was declared by AIFL for the year ended 30 June 2007 (2006 – 1.36 cents per security) and will be paid on 30 August 2007.

A final distribution of $22,983,000 (6.13 cents per security) was declared by AIFT for the year ended 30 June 2007 (2006 – 6.14 cents per security) and will be paid on 30 August 2007.

The final dividend was franked to 100 percent (2006 – 100 percent).

Interim dividend and distribution

An interim dividend and distribution of $27,887,000 (7.50 cents per stapled security) was declared by AIX for the half year ended 31 December 2006 (2005 – 7.00 cents per stapled security) and was paid on 27 February 2007.

An interim dividend of $6,000,000 (1.61 cents per security) was declared by AIFL for the half year ended 31 December 2006 (2005 – 0.89 cents per security) and was paid on 27 February 2007.

An interim distribution of $21,887,000 (5.89 cents per security) was declared by AIFT for the half year ended 31 December 2006 (2005 – 6.11 cents per security) and was paid on 27 February 2007.

The interim dividend was franked to 100 percent (2005 – 100 percent).

16. Franking credit availability

16. Franking credit availability
		AIX
	Consolidated AIFL		AIFL		Consolidated AIFT		AIFT
	2007	2006	2007	2006	2007	2006	2007	2006
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Franking credits available for distribution at the
beginning of the year	7,227	7,969	7,227	7,969	0	0	0	0
Add: franking credits received during the year	12,530	9,092	4,213	2,461	8,317	6,631	8,317	6,631
Less: franking credits distributed/distributable to
stapled securityholders	(13,031)	(9,538)	(4,714)	(2,907)	(8,317)	(6,631)	(8,317)	(6,631)
Add: franking credits received from payments of tax
during the year	93	0	93	0	0	0	0	0
Less: reduction of franking credits from refunds of
tax duringtheyear	0	(296)	0	(296)	0	0	0	0
Franking credits available for distribution at the
end of theyear	6,819	7,227	6,819	7,227	0	0	0	0

17. Segment information

Primary business segment

AIX and Consolidated AIFT operate in one business segment, being investment in infrastructure projects. The income, results, assets and liabilities are presented in the Income Statement, Balance Sheet and notes to the financial statements.

Secondary geographic segment

AIX and Consolidated AIFT operate from two geographic locations being Australia and Europe where their investing activities are managed. Details of geographic segment assets, income and asset acquisitions are set out below. Segment income includes dividends, distributions, interest, realised gains and losses on the sale of unlisted securities and gains and losses on changes in the fair value of unlisted securities.

AIX

Consolidated AIFL

AIX Consolidated AIFL
	Segment		Segment		Acquisition of
	assets		income		segment	assets
	2007	2006	2007	2006	2007	2006
	$’000	$’000	$’000	$’000	$’000	$’000
Australia	816,770	678,591	178,858	91,053	9,558	5
Europe	227,579	232,175	6,995	40,260	6,020	26
	1,044,349	910,766	185,853	131,313	15,578	31

Consolidated AIFT

Consolidated AIFT
	Segment		Segment		Acquisition of
	assets		income		segment	assets
	2007	2006	2007	2006	2007	2006
	$’000	$’000	$’000	$’000	$’000	$’000
Australia	667,884	541,207	152,628	81,859	9,558	5
Europe	227,579	232,175	6,995	40,260	6,020	26
	895,463	773,382	159,623	122,119	15,578	31

18. Financial instruments

(a) Financial risk management objectives and policies

AIX and Consolidated AIFT’s principal financial instruments comprise cash and short-term deposits, investments in unlisted securities and interest bearing loans and borrowings. The main purpose of these financial instruments is to generate a return on the investment made by securityholders. AIX and Consolidated AIFT have various other financial instruments such as trade receivables and trade payables, which arise directly from their operations.

AIX and Consolidated AIFT do not enter into or trade financial instruments for speculative purposes.

The main risks arising from AIX’s and Consolidated AIFT’s financial instruments are interest rate risk, foreign currency risk and credit risk. The directors of AIFL and the directors of the Responsible Entity of AIFT review and agree policies for managing each of these risks.

(b) Credit risk

Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an obligation and cause AIX or Consolidated AIFT to incur a financial loss.

With respect to credit risk arising from the financial assets of AIX or Consolidated AIFT, the exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

Credit risk is minimised by AIX and Consolidated AIFT only undertaking transactions with major reputable counterparties or on recognised exchanges and the aggregate value of transactions are spread amongst those counterparties. In addition, receivable balances are monitored on an ongoing basis with the result that the AIX and Consolidated AIFT’s exposure to bad debts is not significant.

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount of those financial assets, net of any allowances for doubtful debts, as disclosed in the Balance Sheet and notes to the financial statements.

Concentration of credit risk

AIX and Consolidated AIFT’s credit exposures are detailed in the following notes:

Trade and other receivables Note 7 Unlisted securities Note 10

(c) Interest rate risk

Interest rate risk is the risk that a financial instrument’s value may fluctuate as a result of changes in market interest rates on those financial assets and financial liabilities.

The following tables set out AIX’s, AIFL’s, Consolidated AIFT’s and AIFT’s exposure to interest rate risk, including the maturity dates and the effective weighted average interest rate by category of financial instrument.

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

18. Financial instruments continued

AIX Consolidated AIFL

AIX Consolidated AIFL
Variable interest rate $’000	Fixed interest rate maturingin: Weighted average Less More Non- effective than 1–2 2–3 3–4 4–5 than interest interest 1 year years years years years 5 years bearing Total rate $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 %p.a.
2007 Financial assets Cash and cash equivalents 74,041 Trade and other receivables 0 Unlisted securities 19,062	0 0 0 0 0 0 0 74,041 6.0% 0 0 0 0 0 0 855 855 n/a 0 0 0 0 18,407 99,734 818,551 955,754 8.5%
Total financial assets 93,103	0 0 0 0 18,407 99,734 819,406 1,030,650
Financial liabilities Trade and other payables 0 Interest bearing loans and borrowings 0 Securityholder interests classified as debt 0	0 0 0 0 0 0 31,244 31,244 n/a 0 0 0 0 0 0 0 0 n/a 0 0 0 0 0 0 855,225 855,225 n/a
Total financial liabilities 0	0 0 0 0 0 0 886,469 886,469
2006 Financial assets Cash and cash equivalents 57,493 Trade and other receivables 0 Unlisted securities 29,131	0 0 0 0 0 0 0 57,493 5.4% 0 0 0 0 0 0 2,277 2,277 n/a 0 0 0 0 0 124,045 683,975 837,151 8.6%
Total financial assets 86,624	0 0 0 0 0 124,045 686,252 896,921
Financial liabilities Trade and other payables 0 Interest bearing loans and borrowings 0 Securityholder interests classified as debt 0	0 0 0 0 0 0 28,545 28,545 n/a 0 0 0 0 0 0 0 0 n/a 0 0 0 0 0 0 738,893 738,893 n/a
Total financial liabilities 0	0 0 0 0 0 0 767,438 767,438

AIFL

Variable interest rate $’000	Fixed interest rate maturingin: Weighted average Less More Non- effective than 1–2 2–3 3–4 4–5 than interest interest 1 year years years years years 5 years bearing Total rate $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 %p.a.
2007 Financial assets Cash and cash equivalents 427 Trade and other receivables 9,807 Unlisted securities 0	0 0 0 0 0 0 0 427 5.8% 0 0 0 0 0 0 422 10,229 7.7% 0 0 0 0 0 0 134,489 134,489 n/a
Total financial assets 10,234	0 0 0 0 0 0 134,911 145,145
Financial liabilities Trade and other payables 0 Interest bearingloans and borrowings 0	0 0 0 0 0 0 7,000 7,000 n/a 0 0 0 0 0 0 0 0 n/a
Total financial liabilities 0	0 0 0 0 0 0 7,000 7,000
2006 Financial assets Cash and cash equivalents 180 Trade and other receivables 3,345 Unlisted securities 0	0 0 0 0 0 0 0 180 5.3% 0 0 0 0 0 0 2,227 5,572 5.5% 0 0 0 0 0 0 121,436 121,436 n/a
Total financial assets 3,525	0 0 0 0 0 0 123,663 127,188
Financial liabilities Trade and other payables 0 Interest bearingloans and borrowings 0	0 0 0 0 0 0 5,000 5,000 n/a 0 0 0 0 0 0 0 0 n/a
Total financial liabilities 0	0 0 0 0 0 0 5,000 5,000

18. Financial instruments continued

Variable interest rate $’000	Fixed interest rate maturingin: Weighted average Less More Non- effective than 1–2 2–3 3–4 4–5 than interest interest 1 year years years years years 5 years bearing Total rate $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 %p.a.
2007 Financial assets Cash and cash equivalents 73,614 Trade and other receivables 0 Unlisted securities 19,062	0 0 0 0 0 0 0 73,614 6.0% 0 0 0 0 0 0 433 433 n/a 0 0 0 0 18,407 99,734 684,061 821,264 8.6%
Total financial assets 92,676	0 0 0 0 18,407 99,734 684,494 895,311
Financial liabilities Trade and other payables 0 Interest bearing loans and borrowings 9,805 Securityholder interests classified as debt 0	0 0 0 0 0 0 24,244 24,244 n/a 0 0 0 0 0 0 0 9,805 7.7% 0 0 0 0 0 0 855,225 855,225 n/a
Total financial liabilities 9,805	0 0 0 0 0 0 879,469 889,274
2006 Financial assets Cash and cash equivalents 57,314 Trade and other receivables 0 Unlisted securities 29,131	0 0 0 0 0 0 0 57,314 5.4% 0 0 0 0 0 0 50 50 n/a 0 0 0 0 0 124,045 562,539 715,715 8.6%
Total financial assets 86,445	0 0 0 0 0 124,045 562,589 773,079
Financial liabilities Trade and other payables 0 Interest bearing loans and borrowings 3,345 Securityholder interests classified as debt 0	0 0 0 0 0 0 23,545 23,545 n/a 0 0 0 0 0 0 0 3,345 5.5% 0 0 0 0 0 0 738,893 738,893 n/a
Total financial liabilities 3,345	0 0 0 0 0 0 762,438 765,783

AIFT

AIFT
Variable interest rate $’000	Fixed interest rate maturingin: Weighted average Less More Non- effective than 1–2 2–3 3–4 4–5 than interest interest 1 year years years years years 5 years bearing Total rate $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 %p.a.
2007 Financial assets Cash and cash equivalents 73,584 Trade and other receivables 0 Unlisted securities 19,062 Investment in subsidiaries 0	0 0 0 0 0 0 0 73,584 6.0% 0 0 0 0 0 0 443 443 n/a 0 0 0 0 18,407 0 556,216 593,685 10.1% 0 0 0 0 0 0 227,519 227,519 n/a
Total financial assets 92,646	0 0 0 0 18,407 0 784,178 895,231
Financial liabilities Trade and other payables 0 Interest bearing loans and borrowings 9,805 Securityholder interests classified as debt 0	0 0 0 0 0 0 24,319 24,319 n/a 0 0 0 0 0 0 0 9,805 7.7% 0 0 0 0 0 0 860,765 860,765 n/a
Total financial liabilities 9,805	0 0 0 0 0 0 885,084 894,889
2006 Financial assets Cash and cash equivalents 46,101 Trade and other receivables 0 Unlisted securities 29,131 Investment in subsidiaries 0	0 0 0 0 0 0 0 46,101 5.4% 0 0 0 0 0 0 11,250 11,250 n/a 0 0 0 0 0 23,314 431,095 483,540 9.8% 0 0 0 0 0 0 232,083 232,083 n/a
Total financial assets 75,232	0 0 0 0 0 23,314 674,428 772,974
Financial liabilities Trade and other payables 0 Interest bearing loans and borrowings 3,345 Securityholder interests classified as debt 0	0 0 0 0 0 0 23,545 23,545 n/a 0 0 0 0 0 0 0 3,345 5.5% 0 0 0 0 0 0 745,894 745,894 n/a
Total financial liabilities 3,345	0 0 0 0 0 0 769,439 772,784

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

18. Financial instruments continued

(d) Fair values

The carrying values of AIX’s and Consolidated AIFT’s financial assets and liabilities recognised in the Balance Sheet and notes to the financial statements approximate their fair values.

The following methods and assumptions are used to determine the fair values of assets and liabilities.

Cash, cash equivalents and short-term investments

Carrying amounts approximate fair values because of their short term to maturity.

Receivables and payables

Carrying amounts approximate fair values because of their short term to cash receipt or payment.

Unlisted securities

For unlisted securities where there is no quoted market bid price, fair value is determined by an appropriately qualified independent valuer by projecting future cash flows and then discounting these cash flows back to their present value using a post-tax discount rate that reflects a risk adjusted discount rate. Where applicable, foreign currency discounted cash flows are translated back to the local functional currency using the spot foreign exchange rate.

(e) Foreign currency risk

Foreign currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not AIX’s or Consolidated AIFT’s functional currency.

AIX and Consolidated AIFT have unlisted securities denominated in Euro. As a result, the Balance Sheet and Income Statement can be affected significantly by movements in the respective Euro/AUD foreign exchange rate.

The current policy of AIX and Consolidated AIFT is not to enter into derivatives or other currency cover to hedge foreign exchange risk post-completion of unlisted security acquisitions.

(f) Liquidity risk and cash flow interest rate risk

Liquidity risk is the risk that AIX and Consolidated AIFT will encounter difficulty in raising funds to meet commitments associated with financial instruments. Cash flow interest rate risk is the risk that future cash flows on a financial instrument will fluctuate because of changes in market interest rates.

To control liquidity and cash flow interest rate risk, AIX and Consolidated AIFT hold adequate liquid financial instruments. In addition, AIX and Consolidated AIFT invest within established limits to ensure there is no concentration of risk. Furthermore, due to the dynamic nature of the underlying businesses, AIX and Consolidated AIFT aim at maintaining flexibility in funding by keeping committed credit lines available.

(g) Derivative securities

At 30 June 2007, AIX holds a call option for the right to purchase 100 percent of the units in a special purpose investment vehicle relating to State Highway 130, Segments 5 and 6, being a toll road project located in Texas, United States of America (US Toll Road Project). The option was acquired at arms length from other Hastings managed entities.

At 30 June 2007, the particulars of the option are as follows:

	are as follows:
	Option premium paid USD	Option premium paid AUD
	Derivative $’000 US Toll Road Project call option 695	$’000 862

Exercise price

The exercise price of the option will be calculated as the amount contributed per unit by the grantors of the option in the special purpose investment vehicle at the date of exercise, plus 11.5 percent per annum (compounding annually) of the contributed amount, less the amount of any distributions or returns of capital reduced by 11.5 percent per annum of the distributed amount.

Exercise period

The option is exercisable at AIX’s discretion during the period up to and including financial close of the US Toll Road Project. At 30 June 2007, the date of financial close of the project has not yet been established.

19. Related party disclosures – AIX and AIFL

(a) Key management personnel

Disclosures in relation to key management personnel during the year are set out in Note 21.

(b) Associate entities

Names of associate entities

Associate entities and AIX and AIFL’s interests in these entities are as follows:

(b) Associate entities Names of associate entities Associate entities and AIX and AIFL’s interests in these entities are as follows:
		AIX
	Consolidated AIFL			AIFL
	2007	2006	2007	2006
	Holding	Holding	Holding	Holding
Perth Airport (Airstralia Development Group & PAPT Holdings Pty Ltd)	24.87%	24.87%	0.00%	0.00%
Airport Development Group Pty Ltd	25.40%	25.40%	0.00%	0.00%
Metro Light Rail and Monorail	38.89%	38.89%	0.00%	0.00%
Port of Portland	50.00%	50.00%	19.59%	19.59%
Queensland Airports Limited	49.07%	49.07%	0.00%	0.00%
HOCHTIEF AirPort Capital Group	40.02%	40.02%	0.00%	0.00%
Port of Geelong Unit Trust & Infrastructure Investment Corporation	35.00%	35.00%	35.00%	35.00%
SPV1 Unit Trust(DP World Adelaide)	0.00%	30.41%	0.00%	30.41%

For further details in relation to holdings in associate entities refer to Note 10 – Unlisted securities.

Transactions with associate entities

For details of AIX and AIFL’s income from associate entities refer to Note 2 – Income. Details of other transactions with associate entities are as follows:

Transactions with associate entities For details of AIX and AIFL’s income from associate entities refer to Note 2 – Income. Details of other transactions with associate entities are as follows:
		AIX
	Consolidated AIFL		AIFL
	2007	2006	2007	2006
	$’000	$’000	$’000	$’000
Advancement/(repayment) of unlisted security shareholder loans
Perth Airport (Airstralia Development Group & PAPT Holdings Pty Ltd)	(10,069)	(5,665)	0	0
Queensland Airports Limited	(14,330)	0	0	0
HOCHTIEF AirPort Capital Group	5,094	0	0	0
(Advancement)/repayment of loans from
Port of Portland	0	2,152	0	844
Metro Light Rail and Monorail	115	0	0	0
Acquisition/(disposal) of shares or units in
SPV1 Unit Trust (DP World Adelaide)	(365)	0	(365)	0
Queensland Airports Limited	9,424	(17,419)	0	0
HOCHTIEF AirPort Capital Group	926	0	0	0

Receivable and payable balances with associate entities

Receivable and payable balances outstanding between AIX and associate entities are as follows:

		AIX
	Consolidated AIFL			AIFL
	2007	2006	2007		2006
	$’000	$’000	$’000		$’000
Income receivable
Perth Airport (Airstralia Development Group & PAPT Holdings Pty Ltd)	687	820	0		0
SPV1 Unit Trust (DP World Adelaide)	0	233	0		233
Queensland Airports Limited	579	581	0		0
HOCHTIEF AirPort Capital Group	1,938	2,049	0		0
Port of Geelong Unit Trust & Infrastructure Investment Corporation	422	1,995	422		1,995
Port of Portland	5	0	2		0

Receivable and payable balances are non-interest bearing and generally payable within 30 days.

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

19. Related party disclosures – AIX and AIFL continued

(c) Other related parties – the Manager and Responsible Entity

Name of the Manager and Responsible Entity

The Manager of AIFL and the Responsible Entity of AIFT is Hastings Funds Management Limited (Hastings) and the immediate parent entity of Hastings is Westpac Institutional Holdings Pty Limited.

The ultimate parent entity of Westpac Institutional Holdings Pty Limited is Westpac Banking Corporation (Westpac) which throughout the year held 100 percent of the ordinary issued capital of Westpac Institutional Holdings Pty Limited.

The Manager and Responsible Entity and its related entities’ interests in the financial instruments issued by AIX

The number of stapled securities and the percentage ownership interest held by Hastings and its related entities in the financial instruments issued by AIX at the end of the year is detailed below:

by AIX at the end of the year is detailed below:
	Securities		Ownership
		held	interest
	2007	2006	2007	2006
	No.	No.	%	%
Hastings	333,319	333,319	0.09%	0.09%
Westpac and controlled entities(excludingHastings)	1,003,043	10,585,810	0.27%	2.88%

Transactions with the Manager and Responsible Entity and its related entities

Details of transactions with the Manager and Responsible Entity and its related entities are as follows:

		AIX
	Consolidated AIFL			AIFL
	2007	2006	2007		2006
	$’000	$’000	$’000		$’000
Management fees paid or payable
Hastings	9,335	8,365	0		0
Reimbursement of expenses paid or payable on behalf of AIX
Hastings	564	623	0		0
Distributions and dividends paid or payable
Hastings	77	72	77		72
Westpac	1,841	2,486	1,841		2,486
Interest received or receivable
Westpac	2,764	2,374	0		0
Finance costs paid or payable
Westpac
Multi-option facility – line fees	600	360	0		0
Multi-option facility – agency fee	14	14	0		0
Multi-option facility – establishment fee	0	127	0		0
Bank guarantee fees	4	1	0		0
Bank fees	10	12	0		0

Outstanding balances with the Manager and Responsible Entity and its related entities

Receivable, payable and other balances outstanding with the Manager and Responsible Entity and its related entities are as follows:

		AIX
	Consolidated AIFL			AIFL
	2007	2006	2007		2006
	$’000	$’000	$’000		$’000
Distribution and dividend payable
Hastings	27	25	27		25
Westpac	80	794	80		794
Management fees payable
Hastings	875	766	0		0
Multi-option facility
Westpac
Total facility available	200,000	100,000	0		0
Less: facilityundrawn	(200,000)	(100,000)	0		0
Facilitydrawn	0	0	0		0
Banker’s undertaking (guarantee)
Westpac
Total undertaking available Less: undertakingundrawn Undertakingdrawn	389 0 389	389 0 389	0 0 0		0 0 0

For details in relation to the multi-option facility refer Note 13 – Interest Bearing Loans and Borrowings.

Banker’s undertaking fees of 1.00% per annum are being charged for the issuance of the banker’s undertaking. For further details in relation to the banker’s undertaking in place with Westpac refer Note 23 – Contingencies.

19. Related party disclosures – AIX and AIFL continued

(d) Other related parties – the stapled group

Name of the stapled entity

The shares in AIFL are stapled to units in AIFT with the stapled securities listed on the Australian Securities Exchange. The stapled group is known as AIX. All expenses incurred by AIX are recorded and paid by AIFT.

Transactions with AIFT

Details of transactions with AIFT are as follows:

Transactions with AIFT Details of transactions with AIFT are as follows:
		AIX
	Consolidated AIFL			AIFL
	2007	2006	2007		2006
	$’000	$’000	$’000		$’000
Proceeds from loans received from
AIFT	0	0	9,684		4,635
Loans advanced to
AIFT	0	0	16,144		6,328
Interest income received or receivable from
AIFT	0	0	253		60
Interest expense paid or payable to
AIFT	0	0	0		0

Outstanding balances with AIFT

Receivable, payable and other balances outstanding with AIFT are as follows:

Outstanding balances with AIFT Receivable, payable and other balances outstanding with AIFT are as follows:
		AIX
	Consolidated AIFL			AIFL
	2007	2006	2007		2006
	$’000	$’000	$’000		$’000
Interest bearing loans and borrowings receivable from
AIFT	0	0	9,805		3,345

Receivable balances incur interest at the 30 day bank bill rate (BBSW) and are payable at call. All related party transactions occurred on normal commercial terms and conditions.

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

20. Related party disclosures – Consolidated AIFT and AIFT

(a) Key management personnel

Disclosures in relation to key management personnel during the year are set out in Note 21.

(b) Subsidiaries

Names of subsidiaries

The names and percentage ownership of AIFT’s holdings in subsidiary entities is detailed in Note 9 – Investment in subsidiaries. Transactions with subsidiaries

For details of AIFT’s income from subsidiary entities refer Note 2 – Income. Other transactions with subsidiaries are detailed below:

Transactions with subsidiaries For details of AIFT’s income from subsidiary entities refer Note 2 – Income. Other transactions with subsidiaries are detailed below:
	Consolidated AIFT			AIFT
	2007	2006	2007	2006
	$’000	$’000	$’000	$’000
Acquisition of ordinary units in
Australian Infrastructure Fund International 1 Trust	0	0	6,021	6,131
Asset acquisition services supplied to
Australian Infrastructure Fund International 1 Trust	0	0	0	639
Amounts receivable, reimbursed by
Australian Infrastructure Fund International 1 Trust	0	0	0	6,800
Distributions received or receivable from
Australian Infrastructure Fund International 1 Trust	0	0	17,701	11,200

Administration and other costs paid by AIFT on behalf of subsidiaries are not recharged to subsidiaries.

Outstanding balances with subsidiaries

Outstanding balances with subsidiaries are as follows:

Outstanding balances with subsidiaries Outstanding balances with subsidiaries are as follows:
	Consolidated AIFT			AIFT
	2007	2006	2007	2006
	$’000	$’000	$’000	$’000
Other receivable from
Australian Infrastructure Fund International 1 Trust	0	0	0	0
Distribution receivable from
Australian Infrastructure Fund International 1 Trust	0	0	12	11,200

Receivable balances are non-interest bearing and at call.

20. Related party disclosures – Consolidated AIFT and AIFT continued

Associate entities and AIFT’s interests in these entities is as follows:

20. Related party disclosures – Consolidated AIFT and AIFTcontinued (c) Associate entities Names of associate entities Associate entities and AIFT’s interests in these entities is as follows:
	Consolidated AIFT			AIFT
	2007	2006	2007	2006
	Holding	Holding	Holding	Holding
Perth Airport (Airstralia Development Group & PAPT Holdings Pty Ltd)	24.87%	24.87%	24.87%	24.87%
Airport Development Group Pty Ltd	25.40%	25.40%	25.40%	25.40%
Metro Light Rail and Monorail	38.89%	38.89%	38.89%	38.89%
Port of Portland	30.41%	30.41%	30.41%	30.41%
Queensland Airports Limited	49.07%	49.07%	49.07%	49.07%
HOCHTIEF AirPort Capital Group	40.02%	40.02%	0.00%	0.00%

For further details in relation to holdings in associate entities refer to Note 10 – Unlisted securities.

Transactions with associate entities

For details of AIFT’s income from associate entities refer to Note 2 – Income. Details of other transactions with associate entities are as follows:

Transactions with associate entities For details of AIFT’s income from associate entities refer to Note 2 – Income. Details of other transactions with associate entities are as follows:
	Consolidated AIFT		AIFT
	2007	2006	2007	2006
	$’000	$’000	$’000	$’000
Advancement/(repayment) of unlisted security shareholder loans
Perth Airport (Airstralia Development Group & PAPT Holdings Pty Ltd)	(10,069)	(5,665)	(10,069)	(5,665)
Queensland Airports Limited	(14,330)	0	(14,330)	0
HOCHTIEF AirPort Capital Group	5,094	0	0	0
(Advancement)/repayment of loans from
Port of Portland	0	1,309	0	1,309
Metro Light Rail and Monorail	115	0	115	0
Acquisition/(disposal) of shares or units in
Queensland Airports Limited	9,424	(17,419)	9,424	(17,419)
HOCHTIEF AirPort Capital Group	926	0	0	0
Outstanding balances with associate entities
Outstanding balances with associate entities are as follows:
	Consolidated AIFT		AIFT
	2007	2006	2007	2006
	$’000	$’000	$’000	$’000
Income receivable
Perth Airport (Airstralia Development Group & PAPT Holdings Pty Ltd)	687	820	687	820
Queensland Airports Limited	579	581	579	581
HOCHTIEF AirPort Capital Group	1,938	2,049	0	0
Port of Portland	2	0	2	0

Receivable balances are non-interest bearing and at call.

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

20. Related party disclosures – Consolidated AIFT and AIFT continued

(d) Other related parties – the Responsible Entity

Name of the Responsible Entity

The Responsible Entity of AIFT is Hastings Funds Management Limited (Hastings). The immediate parent entity of Hastings is Westpac Institutional Holdings Pty Limited.

The Responsible Entity’s and its related entities’ interests in the financial instruments issued by AIX

The number of stapled securities and the percentage ownership interest held by the Responsible Entity and its related entities in AIX at the end of the year is detailed below:

the year is detailed below:
	Securities		Ownership
		held	interest
	2007	2006	2007	2006
	No.	No.	%	%
Hastings	333,319	333,319	0.09%	0.09%
Westpac and controlled entities(excludingHastings)	1,003,043	10,585,810	0.27%	2.88%

Other transactions with the Responsible Entity and its related entities

Details of other transactions with the Responsible Entity and its related entities are as follows:

Other transactions with the Responsible Entity and its related entities Details of other transactions with the Responsible Entity and its related entities are as follows:
	Consolidated AIFT			AIFT
	2007	2006	2007		2006
	$’000	$’000	$’000		$’000
Management fees paid or payable
Hastings	9,335	8,365	9,335		8,365
Reimbursement of expenses paid or payable on behalf of AIX
Hastings	564	623	564		623
Distributions paid or payable
Hastings	77	72	77		72
Westpac	1,841	2,486	1,841		2,486
Interest received or receivable
Westpac	2,764	2,374	2,591		2,194
Finance costs paid or payable
Westpac
Multi-option facility – line fees	600	360	600		360
Multi-option facility – agency fee	14	28	14		28
Multi-option facility – establishment fee	0	0	0		0
Bank guarantee fees	4	1	4		1
Bank charges	10	12	10		12

20. Related party disclosures – Consolidated AIFT and AIFT continued

Outstanding balances with the Responsible Entity and its related entities

Outstanding balances with the Responsible Entity and its related entities are as follows:

Outstanding balances with the Responsible Entity and its related entities Outstanding balances with the Responsible Entity and its related entities are as follows:
	Consolidated AIFT			AIFT
	2007	2006	2007	2006
	$’000	$’000	$’000	$’000
Distribution payable
Hastings	27	25	27	25
Westpac	80	794	80	794
Management fees payable
Hastings	875	766	875	765
Multi-option facility
Westpac
Total facility available	200,000	100,000	200,000	100,000
Less: facilityundrawn	(200,000)	(100,000)	(200,000) (100,000)
Facilitydrawn	0	0	0	0
Banker’s undertaking (guarantee)
Westpac
Total undertaking available	389	389	389	389
Less: undertakingundrawn	0	0	0	0
Undertakingdrawn	389	389	389	389

For details in relation to the multi-option facility refer Note 13 – Interest bearing loans and borrowings.

Banker’s undertaking fees of 1.0% per annum are being charged for the issuance of the banker’s undertaking. For further details in relation to the banker’s undertaking in place with Westpac refer Note 23 – Contingencies.

(e) Other related parties – the stapled group

Name of the stapled entity

The units in AIFT are stapled to shares in AIFL with the stapled securities listed on the Australian Securities Exchange. The stapled group is known as AIX. All expenses incurred by AIX are recorded and paid by AIFT.

Transactions with AIFL

Details of transactions with AIFL are as follows:

Transactions with AIFL Details of transactions with AIFL are as follows:
	Consolidated AIFT			AIFT
	2007	2006	2007		2006
	$’000	$’000	$’000		$’000
Proceeds from loans received from
AIFL	9,684	6,328	9,684		6,328
Loans advanced to
AIFL	16,144	4,635	16,144		4,635
Interest income received or receivable from
AIFL	0	0	0		0
Interest expense paid or payable to
AIFL	253	60	253		60
Outstanding balances with AIFL
Receivable, payable and other balances outstanding with AIFL are as follows:
	Consolidated AIFT			AIFT
	2007	2006	2007		2006
	$’000	$’000	$’000		$’000
Interest bearing loans and borrowings payable to
AIFL	9,805	3,345	9,805		3,345

The loan from AIFL is unsecured, at call and interest bearing. Interest is charged at the 30 day bank bill rate. All related party transactions occurred on normal commercial terms and conditions.

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

21. Key management personnel continued

(a) Names of key management personnel

The key management personnel of AIFL and AIFT include persons who are directors of AIFL and directors and employees of the Responsible Entity of AIFT.

AIFL

The names of the key management personnel of AIFL during the year and until the date of this report are:

•Paul Espie Chairman
•Barry Capp Retired on 27 November 2006
•John Harvey
•Mike Hutchinson
•Tim Poole Resigned on 15 June 2007
•Robert Tsenin
•Robert Humphris Appointed on 11 September 2006
•Peter McGregor Appointed on 20 June 2007

Responsible Entity of AIFT and Manager of AIFL

The names of the key management personnel of the Responsible Entity of AIFT and manager of AIFL during the year and until the date of this report are:

•William Forde

Director since 30 January 2006 and appointed Chairman on 26 October 2006

•Sean McElduff

Resigned as Chairman on 26 October 2006 and continues as Director

•Mike Hutchinson
•Jim McDonald
Appointed on 18 June 2007 with effect 1 July 2007
•Tim Poole Resigned on 15 June 2007
•Guy Strapp Resigned on 26 October 2006
•Jim Tate
•Peter McGregor Chief Operating Officer of AIX

(b) Compensation policy for key management personnel

(i) Compensation policy for key management personnel of the Manager and Responsible Entity

Hastings is paid a fee to provide a range of services and as part of that arrangement, Hastings is required to provide appropriately qualified staff and resources to undertake those services. Hastings determines the compensation of its directors and employees and AIFL and AIFT have no involvement in determining the compensation of those key management personnel. The compensation details of Hastings as Responsible Entity of AIFT and manager of AIFL are detailed in Note 19 – Related Party Disclosures – AIX and AIFL and Note 20 – Related Party Disclosures – Consolidated AIFT and AIFT.

(ii) Compensation policy for key management personnel of AIFL Non-executive directors’ remuneration Board policy on remuneration

The Board of directors of AIFL is responsible for determining and reviewing compensation arrangements for the directors of AIFL.

The fees paid to directors are set at levels that reflect both the responsibilities of, and the time commitments required from, the directors to discharge their duties. In order to maintain their independence and impartiality, the remuneration of the non-executive directors is not linked to the performance of either AIFL or AIFT. In setting fee levels, the Board takes into account:

•independent professional advice;
•fees paid by comparable companies;
•the general time commitment required from directors and the risks associated with discharging the duties attaching to the role of director; and
•the level of remuneration necessary to attract and retain directors of a suitable calibre.
The Board will continue to review its approach to non-executive director remuneration to ensure it remains in line with general industry practice and best practice principles of corporate governance.

Remuneration structure

Non-executive directors’ fees, including committee fees, are set by the Board within the maximum aggregate amount of $800,000 approved by securityholders in 2005. Directors’ fees paid for the financial year ending 30 June 2007 total $658,331. A retirement payment of $187,211 to Barry Capp has also been included in Directors’ fees.

The Chairman, taking into account the time commitment required, received a fee of $225,000 for the financial year less an allowance of $24,525 for the value of his retirement benefit. This value was determined by a consulting actuary. The Board elected at an earlier date to phase out the retirement benefit and directors who joined the Board after April 2003 are therefore not entitled to the retirement benefit. The directors received a fee of $90,000 for the financial year.

In addition, directors who sit on the Board’s Audit Committee received a fee of $10,000 for the financial year and the Chairman of the Audit Committee received $20,000 for the financial year. The Chairman of the Board received no fee for his membership of the Audit Committee.

Superannuation contributions are also made on behalf of the non-executive directors in accordance with the AIFL’s statutory superannuation obligations.

In accordance with rule 37 of the AIFL Constitution, directors are also permitted to be paid additional fees for special duties. Such fees are included in the aggregate remuneration cap approved by securityholders. Directors are also entitled to be reimbursed for all business related expenses, including travel on AIX business, as may be incurred in the discharge of their duties.

Remuneration paid to other officeholders

Neither the Managing Director, the AIX Chief Operating Officer, nor the Company Secretaries were remunerated by AIX.

21. Key management personnel continued

Remuneration paid

Executive directors are not remunerated out of the property of AIFL or AIFT. Details of non-executive directors’ remuneration for the financial year ended 30 June 2007 are set out in the following table. No bonuses, options or other emoluments are paid to the directors of AIX.

	Short-term	Short-term	Post-employment	Post-employment
	Board	Committee	Super-	Retirement
	fees	fees	annuation	benefits (1)	Total
	$	$	$	$	$
Key management personnel of AIFL
Paul Espie
2007	200,475	0	18,043	0	218,518
2006	200,475	0	18,043	0	218,518
Barry Capp – retired 27 November 2006
2007	33,843	0	0	187,211	221,054
2006	82,894	0	0	0	82,894
John Harvey
2007	90,000	20,000	9,900	0	119,900
2006	90,000	20,000	9,900	0	119,900
Robert Tsenin
2007	90,000	10,000	9,000	0	109,000
2006	73,500	5,349	7,097	0	85,946
Mike Hutchinson
2007	90,000	0	8,100	0	98,100
2006	72,226	0	6,500	0	78,726
Robert Humphris – appointed 11 September 2006
2007	72,450	0	6,520	0	78,970
2006	0	0	0	0	0
Ross Dunning – resigned 19 October 2005
2007	0	0	0	0	0
2006	19,983	3,633	0	0	23,616
Total compensation: key management personnel of AIFL
2007	576,768	30,000	51,563	187,211	845,542
2006	539,078	28,982	41,540	0	609,600

(1) Retirement benefits exclude provision expensed. Note:

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

21. Key management personnel continued

(c) Key management personnel interests in financial instruments issued by AIX

Interests in the securities issued by AIX held by key management personnel and their related entities at balance date were as follows:

	Opening				Closing
	Holding		DRP		Holding
2007	1 July 2006	Acquisitions	Issue	Disposals	30 June 2007
Name	No.	No.	No.	No.	No.
Paul Espie	251,718	200,000	22,494	0	474,212
Barry Capp (1)	35,191	0	0	0	35,191
John Harvey	25,000	25,000	0	0	50,000
Tim Poole (2)	60,000	0	0	0	60,000
Robert Tsenin	20,307	45,000	2,066	0	67,373
Mike Hutchinson	14,349	30,000	0	0	44,349
Robert Humphris	50,000	50,000	0	0	100,000
Peter McGregor	0	17,500	0	0	17,500

(1) Interests held on 27 November 2006 when Barry Capp retired.

(2) Interests held on 15 June 2007 when Tim Poole resigned.

(2) Interests held on 15 June 2007 when Tim Poo	le resigned.
	Opening				Closing
	Holding		DRP		Holding
2006	1 July 2005	Acquisitions	Issue	Disposals	30 June 2006
Name	No.	No.	No.	No.	No.
Paul Espie	143,267	100,000	8,451	0	251,718
Barry Capp	35,191	0	0	0	35,191
Ross Dunning (1)	19,535	0	1,152	0	20,687
Mike Fitzpatrick (2)	1,565,477	0	0	0	1,565,477
John Harvey	25,000	0	0	0	25,000
Tim Poole	0	60,000	0	0	60,000
Robert Tsenin	0	20,000	307	0	20,307
Mike Hutchinson	14,349	0	0	0	14,349
Ray Wilson (3)	264,421	0	0	(130,000)	134,421
Mitchell King (4)	12,264	0	724	0	12,988

(1) Interests held on 19 October 2005 when Ross Dunning resigned.

(2) Interests held on 4 November 2005 when Mike Fitzpatrick resigned.

(3) Interests held on 30 January 2006 when Ray Wilson resigned.

(4) Interests held on 18 January 2006 when Mitchell King resigned as COO.

(d) Distributions paid or payable by AIX to key management personnel and their related entities

Distributions paid or payable by AIX to key management personnel and their related entities during the year were as follows:

	2007	2006
Name	$	$
Paul Espie	91,396	39,211
Barry Capp (1)	8,094	7,566
Ross Dunning (2)	0	4,324
Mike Fitzpatrick (3)	0	336,578
John Harvey	1,875	5,375
Tim Poole (4)	11,215	4,500
Robert Tsenin	10,367	2,223
Mike Hutchinson	6,825	3,085
Robert Humphris	17,375	0
Ray Wilson (5)	0	47,101
Mitchell King (6)	0	2,715
Peter McGregor	1,400	0

(1) Retired 27 November 2006.

(2) Resigned 19 October 2005.

(3) Resigned 3 August 2005.

(4) Resigned 15 June 2007.

(5) Resigned 30 January 2006.

(6) Resigned 18 January 2006.

21. Key management personnel continued

(e) Distributions payable by AIX to key management personnel and their related entities Distributions payable to key management personnel at the end of the year were as follows:

	2007	2006
Name	$	$
Paul Espie	37,937	18,879
Barry Capp	2,815	2,639
Ross Dunning	0	1,552
Mike Fitzpatrick	0	117,411
John Harvey	4,000	1,875
Tim Poole	4,800	4,500
Robert Tsenin	5,390	1,523
Mike Hutchinson	3,548	1,076
Robert Humphris	8,000	0
Ray Wilson	0	10,082
Mitchell King	0	974
Peter McGregor	1,400	0

Key management personnel related entities

During the year up to the date of his resignation, Tim Poole was a director of:

•Hastings Funds Management Limited;
•Australia Pacific Airports Corporation;
•Australian Infrastructure Fund International 1 Pty Ltd (Trustee for Australian Infrastructure Fund International 1 Trust);
•Australian Infrastructure Fund International Pty Ltd; and
•IAI International Airport Investments Verwaltungs GmbH.

Peter McGregor is a director of:

•Airport Development Group Pty Ltd;
•Australian Pacific Airports Corporation Pty Ltd;
•Infrastructure Investments Corporation Pty Ltd;
•Queensland Airports Limited

William Forde is a director of Westpac Funds Management Limited and Westpac Funds Management Administration Pty Ltd. Sean McElduff is a director of Westpac Institutional Holdings Pty Ltd, Westpac Private Equity Pty Ltd and other Westpac entities. Jim Tate is a director of Westpac Institutional Holdings Pty Ltd, Westpac Custodian Nominees Pty Ltd and other Westpac entities.

Transactions and outstanding balances with key management personnel related entities

For details of transactions and outstanding balances between key management personnel related entities and AIFL and AIFT refer to Note 19 – Related Party Disclosures – Consolidated AIFL and AIFL and Note 20 – Related Party Disclosures – Consolidated AIFT and AIFT. All transactions between key management personnel and AIX were done so on normal commercial terms. Interests acquired or disposed of in the financial instruments issued by AIX were within the allowable trading periods determined by the Board of Directors of Hastings and AIFL. No securities were granted to key management personnel during the period as compensation.

AIX Financial Report continued

Notes to the Financial Statements

for the year ended 30 June 2007 continued

22. Earnings per security

Net assets attributable to securityholders are classified as equity in AIFL’s Balance Sheet. Consequently, earnings per security when calculated in accordance with AASB 133 Earnings per Share , is 5.82 cents per security (2006 – 2.28 cents) for AIX and AIFL.

Net assets attributable to securityholders are classified as liabilities in AIFT’s Balance Sheet. Consequently, earnings per security calculated in accordance with AASB 133 Earnings per Share , is nil cents per security (2006 – nil cents) for Consolidated AIFT and AIFT.

The directors believe it is useful to calculate and disclose earnings per security based on ‘profit after income tax attributable to securityholders’ and ‘number of issued securities’.

Basic earnings per security under this method is calculated as ‘profit after income tax attributable to securityholders’, divided by the weighted average number of securities on issue, adjusted for any bonus element.

Diluted ‘profit after income tax attributable to securityholders’ per security is not materially different from basic ‘profit after income tax attributable to securityholders’ per security.

securityholders’ per security.
		AIX
	Consolidated AIFL			AIFL	Consolidated AIFT			AIFT
	Jun	Jun	Jun	Jun	Jun	Jun	Jun	Jun
	2007	2006	2007	2006	2007	2006	2007	2006
Basic earnings per security (cents)	45.20	30.03	5.83	2.28	39.37	27.74	38.98	29.75
Weighted average number of securities (’000s)	372,024	364,747	372,024	364,747	372,024	364,747	372,024	364,747
Profit after income tax attributable to securityholders	168,157	109,516	21,688	8,324	146,469	101,192	145,008	108,510

23. Contingent assets, contingent liabilities and commitments

Banker’s Undertaking

On 7 April 2006 AIFT entered into a Banker’s Undertaking with Westpac Banking Corporation in favour of the Supreme Court of New South Wales. The undertaking is for $388,900 and has been granted to cover AIFT’s pro-rated share (38.9 percent) of security costs in relation to arbitration process Metro Light Rail and Monorail is undertaking. The Banker’s Undertaking does not have an expiry date.

There are no other outstanding contingent assets, contingent liabilities or commitments at 30 June 2007.

24. Subsequent events

Jim McDonald was appointed as a director of the Responsible Entity on 18 June 2007 with effect from 1 July 2007.

Steve Boulton was appointed as Chief Executive Officer (CEO) of the Responsible Entity and as a director of the Responsible Entity on 18 June 2007 with effect from 3 September 2007.

Alan Freer was appointed as a Director of Responsible Entity on 23 August 2007 with effect from 1 September 2007.

Since 30 June 2007 there has not been any other matter or circumstance not otherwise dealt with in the financial report that has significantly affected or may significantly affect AIX or AIFT.

AIFL Directors’ Declaration

In accordance with a resolution of the directors of Australian Infrastructure Fund Limited, I state that:

In the opinion of the directors:

(a) the consolidated financial statements and notes of Australian Infrastructure Fund Limited and its controlled entities are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position as at 30 June 2007 and the performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) there are reasonable grounds to believe that Australian Infrastructure Fund Limited and its controlled entities will be able to pay their debts as and when they become due and payable.

This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the year ended 30 June 2007.

For and on behalf of the directors of Australian Infrastructure Fund Limited.

==> picture [83 x 29] intentionally omitted <==

Paul Espie Chairman 29 August 2007

AIX Financial Report continued

AIFT Directors’ Declaration

In accordance with a resolution of the directors of Hastings Funds Management Limited as Responsible Entity for the Australian Infrastructure Fund Trust, I state that:

In the opinion of the directors:

(a) the consolidated financial statements and notes of the Australian Infrastructure Fund Trust and its controlled entities are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position as at 30 June 2007 and the performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) there are reasonable grounds to believe that the Australian Infrastructure Fund Trust and its controlled entities will be able to pay their debts as and when they become due and payable;
(c) the financial report is in accordance with the provisions of its Constitution.

This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the year ended 30 June 2007.

For and on behalf of the directors of Hastings Funds Management Limited as Responsible Entity for the Australian Infrastructure Fund Trust.

==> picture [85 x 47] intentionally omitted <==

William Forde

Chairman 29 August 2007

Independent Audit Report for the year ended 30 June 2007

==> picture [450 x 632] intentionally omitted <==

AIX Financial Report continued

Independent Audit Report for the year ended 30 June 2007 continued

==> picture [476 x 685] intentionally omitted <==

==> picture [479 x 660] intentionally omitted <==

Investor Details

The securityholder information set out below was applicable as at 23 August 2007.

Each stapled security consists of one share issued in the Company and one unit issued in the Trust.
The voting rights are one vote per stapled security.
The number of securityholders holding less than a marketable parcel was 333.
The percentage of the total holdings held by or on behalf of the 20 largest holders of these securities was 49.54 percent.

securities was 49.54 percent.
Twentylargest holders of stapled securities	Number held	% of total
National Nominees Limited	48,397,403	12.91
HSBC Custody Nominees (Australia) Limited	27,855,852	7.43
JP Morgan Nominees Australia Limited	20,389,614	5.44
RBC Dexia Investor Services Australia
Nominees Pty Limited	17,916,123	4.78
Australian Foundation Investment Company Limited	17,434,492	4.65
Cogent Nominees Pty Limited	7,413,404	1.98
Citicorp Nominees Pty Limited	7,371,239	1.97
ANZ Nominees Limited	7,233,620	1.93
Cogent Nominees Pty Limited	4,134,468	1.10
RBC Dexia Investor Services Australia
Nominees Pty Limited	3,947,548	1.05
AMP Life Limited	3,873,841	1.03
UBS Wealth Management Australia Nominees Pty Ltd	3,726,250	0.99
UBS Nominees Pty Ltd	3,553,170	0.95
Argo Investments Limited	2,123,823	0.57
Diversified United Investment Limited	2,000,000	0.53
Mirrabooka Investments Limited	1,973,430	0.53
MF Custodians Limited	1,771,334	0.47
Australian Executor Trustees Limited	1,579,495	0.42
Private Nominees Limited	1,549,134	0.41
Invia Custodian PtyLimited	1,514,156	0.40
Total	185,758,396	49.54

The distribution of holders was as follows:

	Number	%	Stapled	%
Holding	of holders	of total	securities	of total
Stapled security grouping
1 – 1,000	1,251	7.83	606,874	0.16
1,001 – 5,000	5,780	36.17	18,366,472	4.90
5,001 – 10,000	4,340	27.16	32,617,646	8.70
10,001 – 100,000	4,453	27.86	96,146,958	25.65
100,001 and over	158	0.98	227,052,851	60.59
Total	15,982	100.00	374,790,801	100.00

Substantial holder notices received as at 23 August 2007:

	Number of	%
Name	stapled securities	of total
Challenger Financial Services Group Limited	18,768,275	5.01
Investors Mutual Limited	23,078,847	6.16

On 13 July 2007 AIX announced that it was no longer classified a listed investment entity for the purposes of the reporting requirements under chapter 4 of the Australian Securities Exchange listing rules. The reporting requirements of listing rule 4.10.20 are detailed below for the 30 June 2007 reporting period:
(a) AIX’s investments are detailed in Note 10 of the financial statements.
(b) The total number of transactions in securities during the year ended 30 June 2007 was nil, therefore no brokerage was paid or accrued.
(c) In accordance with the AIFT Constitution and the AIFL management agreement, Hastings as Responsible Entity and Manager is entitled to a management fee of 1 percent of the net asset value of AIX (2006 – 1 percent). For the 30 June 2007 financial year, Hastings was entitled to receive Responsible Entity’s fees of $9,335,000 from AIX (2006 – $8,365,000).

Hastings is also entitled under the AIFT Constitution and the AIFL management agreement to be reimbursed for certain expenses incurred in administering AIX. The basis on which the expenses are reimbursed is defined in AIFT’s Constitution. For the year ended 30 June 2007 Hastings was reimbursed $564,000 (2006 – $623,000) for costs incurred on behalf of AIX. Hastings is also entitled to a performance fee. However, no performance fees have been paid for the 30 June 2007 and 30 June 2006 financial years.

Distribution Information

The following table details the distributions paid to investors during the year ended 30 June 2007.

The following table details the distributions paid to investors during the year ended 30 June 2007.	The following table details the distributions paid to investors during the year ended 30 June 2007.
Distribution(centsper stapled security)
Distribution for six months to 31 December 2006 7.5 Distribution for six months to 30 June 2007 8.0 Total distribution for year 15.5 Yield on market value of securityat 30 June 2007 4.71%
The payment made to AIX investors on 30 August 2007 was as follows: Payment Amount(cents) Included in investor’s tax return
Trust Australian income • Dividend – franked • Dividend – unfranked • Interest Foreign income • Passive income (interest) Tax deferred amount Total Trust payment Company • Dividend – franked	1.8 Year ended 30 June 2007 1.6 1.4 0.8 0.5 6.1 1.9 Year ended 30 June 2008
Totalpayment	8.0

To assist investors in their understanding of distributions and in completing their tax returns, an Annual Tax Guide and Annual Distribution Statement Summary Statement has been provided by AIX.

Investor Information

Enquiries

You can access your securityholding information in a number of ways. The details are managed by AIX’s registrar, Computershare Investor Services Pty Limited, and can be accessed as detailed below.

Please note, your Securityholder Reference Number (SRN) or Holder Identification Number (HIN) is required for access.

InvestorPhone

InvestorPhone provides telephone access 24 hours a day, seven days a week.

•Step 1: Call 1300 13 22 88
•Step 2: Enter your SRN or HIN
•Step 3: Follow the prompts to gain secure, immediate access to your:
holding balance details
registration details
payment information.

Internet account access

There are two levels of Internet access, single holding access and portfolio access (Investor Centre).

Single holding access

•Step 1: Go to
www.computershare.com.au/investors
•Step 2: Select ‘Access a single holding’ and enter AIX or Australian Infrastructure Fund
•Step 3: Enter your SRN or HIN
•Step 4: Enter your postcode or select country (if outside Australia)
•Step 5: Enter the randomly generated code displayed (all holders) and click ‘Submit’
•Step 6: Access ‘Investor Centre’ to view, evaluate and manage your holding online.

Investor centre

•Step 1: Go to

www.computershare.com.au/investors

•Step 2: If you are a member enter your User ID and PIN and click ‘Submit’

•Step 3: If you are not a member click the ‘Register Here’ button
•Step 4: Follow the prompts to register. For security purposes, Computershare will generate a PIN and mail it to your registered address
•Step 5: Access ‘Investor Centre’ to view, evaluate and manage your portfolio online.

Please address enquiries to: Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford VIC 3067 Australia GPO Box 2975 Melbourne VIC 3001 Australia Telephone (within Australia) 1300 13 22 88 Telephone (outside Australia) +61 3 9415 4054 Facsimile +61 3 9473 2500 Website www.computershare.com.au Email [email protected].

Stock exchange listing

The stapled securities are listed on the Australian Securities Exchange (ASX) under the name Australian Infrastructure Fund and under the code ‘AIX’. The stapled securities participate in the Clearing House Electronic Subregister System (CHESS). For the current trading price you can refer to the ASX website.

Direct deposit of distributions

Distribution payments may be paid directly to a nominated Australian bank account. Payments are electronically credited and confirmed by mail directly to the registered address of the securityholder. A form for this purpose is available from the registrar.

Tax File Number (TFN) or Australian Business Number (ABN) information

While it is not compulsory for securityholders to provide a TFN, ABN or exemption notification, Hastings is normally obliged to deduct tax from any payments to securityholders who have not supplied such information. The rate at which the tax is deducted is dependent upon the nature of the payment (i.e. whether it is a payment comprising interest, dividends or other amounts) and the residence of the recipient. The rate of tax deducted could be up to the highest marginal tax rate (plus Medicare levy for Australian residents).

Securityholders are entitled to quote an ABN instead of a TFN where the investment is made in the course or furtherance of an enterprise that is carried on by the securityholder. Securityholders who have not supplied their TFN, ABN or exemption notification may do so by writing to:

The Registrar Computershare Investor Services Pty Limited GPO Box 2975 Melbourne VIC 3001 Australia.

Change of address

Securityholders who change their registered address should immediately notify, in writing, to: The Registrar Computershare Investor Services Pty Limited GPO Box 2975 Melbourne VIC 3001 Australia.

Privacy

We understand the importance you place on your privacy and are committed to protecting and maintaining the confidentiality of the personal information you provide to us. AIX adopted the privacy policy of Hastings Funds Management Limited.

This statement may be updated by us from time to time. You may obtain a copy of our latest privacy statement by telephoning Computershare Investor Services on 1300 13 22 88 (within Australia) or +61 3 9415 4054 (outside Australia).

Annual Report

To receive further copies of the AIX Annual Report, please telephone Computershare Investor Services on 1300 13 22 88 (within Australia) or +61 3 9415 4054 (outside Australia).

Complaints handling

Customer service representatives are available between 8.30am and 6.00pm (AEST), weekdays, from anywhere in Australia, by calling the Registrar on 1300 13 22 88 (within Australia) or on +61 3 9415 4054 (outside of Australia). For investment advice, please see your financial adviser.

If you have a concern, please write to Hastings at the address set out below or call the Complaints Manager to register your complaint by telephone on +61 3 9654 4477. Hastings will acknowledge your concern, investigate it and report back to you.

Hastings Funds Management Limited Complaints Manager Level 15 90 Collins Street Melbourne VIC 3000 Australia.

If you are dissatisfied with Hastings’ response, you may raise the matter directly with the Financial Industry Complaints Service (‘FICS’). Its contact details are:

Financial Industry Complaints Service Limited PO Box 579 Collins Street West Melbourne VIC 8007 Australia Telephone 1300 780 808.

Before you contact FICS, first try to resolve your concern with Hastings by calling +61 3 9654 4477.

100

Corporate Directory

Australian Infrastructure Fund (AIX)

Security Register

Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford VIC 3067 Telephone (within Australia) 1300 13 22 88 Telephone (outside Australia) +61 3 9415 4054 Facsimile +61 3 9473 2500 Website www.computershare.com

Chief Operating Officer Peter McGregor

Australian Infrastructure Fund Limited ABN 97 063 935 553

Registered Office

Level 15 90 Collins Street Melbourne VIC 3000 Australia Telephone +61 3 9654 4477 Facsimile +61 3 9650 6555 Email [email protected] Website www.aif.net.au

AIFL Board of Directors

Paul Espie, Chairman John Harvey Robert Humphris Mike Hutchinson Peter McGregor Robert Tsenin

Company Secretaries

Claire Filson Kim Rowe

Hastings Funds Management Limited as Responsible Entity for Australian Infrastructure Fund Trust

ABN 27 058 693 388 and holder of Australian Financial Services Licence No. 238309

Registered Office

Level 15 90 Collins Street Melbourne VIC 3000 Australia Telephone +61 3 9654 4477 Facsimile +61 3 9650 6555 Email investor[_] [email protected] Website www.hfm.com.au

Hastings Board of Directors

Liam Forde, Chairman Steve Boulton, Chief Executive Officer Alan Freer Mike Hutchinson Jim McDonald Sean McElduff Jim Tate

Company Secretaries

Claire Filson Kim Rowe

Other offices

London Level 1 63 St Mary Axe London EC3A 8LE Telephone +44 20 7337 6720 Facsimile +44 20 7929 2502

New York 575 Fifth Avenue 39th Floor New York NY 10017-2422 Telephone +1 212 551 1976 Facsimile +1 212 551 1997

Disclaimer

This report has been prepared by Hastings Funds Management Limited, holder of Australian Financial Services Licence number 238309, as responsible entity of the Australian Infrastructure Fund Trust (Trust or AIFT) and as manager of Australian Infrastructure Fund Limited (Company or AIFL). Together, the Company and the Trust comprise the Australian Infrastructure Fund (AIX). Hastings is a subsidiary of Westpac Banking Corporation (Westpac).

The information contained in this report is for informational purposes only and does not constitute an offer to issue or arrange to issue, financial products. The information contained in this report is not financial product advice. This report has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you should read the publicly available information carefully and consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Past performance is no guarantee of future performance.

Neither Hastings, Westpac nor any other member of the Westpac Group gives any guarantee or assurance as to the performance of AIX or the repayment of capital. Investments in AIX 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 AIX and may be paid fees, and expenses in relation to Hastings’ role as responsible entity or manager. All data in this report has been calculated using the most accurate sources available, however any rates or totals may differ from those provided due to rounding. Asset results for the financial year ended 30 June 2007 reflect the most current available and may be unaudited, and therefore subject to further adjustment following the publication of this report. Figures may also differ from those previously disclosed due to adjustments made following year end. Cert no. SCS-COC-00858

AI assistant

FUTURE GENERATION AUSTRALIA LIMITED — Annual Report 2007

64916_rns_2007-09-27_75f84f06-8316-4aea-b2c7-24a111ee5804.pdf

ASX Announcement

Australian Infrastructure Fund (AIX)

28 September 2007

Annual Report and Annual General Meeting

Simon Ondaatje

AIX 2007 Annual Report

Annual General Meeting

Chairman’s Report

2007 – A successful year for Australian Infrastructure Fund

Board changes

Management developments

Looking ahead

Paul Espie

Chief Operating Officer’s Report

Review of 2007

Portfolio performance

Operating highlights

Growth initiatives

Chief Operating Officer’s Report continued

Outlook

The macro environment

Operating environment

Portfolio approach

1. Disciplined acquisitions

Chief Operating Officer’s Report continued

2. Growth focus

3. Prudent capital management

4. Complementary partnerships

Airports

– Airstralia Development Group Perth Airport

Perth Airport generated a return of 22.43 percent for the year and 19.82 percent since inception.

Airstralia Development Group (Perth Airport)

HOCHTIEF AirPort Capital generated a return of 3.05 percent for the year and 10.37 percent since inception.

HOCHTIEF AirPort Capital (HTAC) (Athens, Greece; Düsseldorf and Hamburg, Germany; Sydney, Australia)

Athens International Airport

Düsseldorf International Airport

HOCHTIEF AirPort Capital (HTAC) continued

Hamburg Airport

Sydney Airport

APAC generated a return of 30.42 percent for the year and 26.94 percent since inception.

Australia Pacific Airports Corporation (APAC) (Melbourne Airport, Victoria; Launceston Airport, Tasmania)

QAL generated a return of 62.46 percent for the year and 60.78 percent since inception.

Queensland Airports Limited (Gold Coast, Townsville and Mount Isa Airports)

NT Airports generated a return of 37.86 percent for the year and 28.46 percent since inception.

Airport Development Group (NT Airports) (Darwin, Alice Springs and Tennant Creek Airports)

Port of Geelong

Port of Portland generated a return of 19.84 percent for the year and 29.78 percent since inception.

Port of Portland (Victoria)

Port of Geelong generated a return of 19.96 percent for the year and 28.72 percent since inception.

Port of Geelong (Victoria)

Tollroads and Rail

Statewide Roads

Metro Light Rail and Monorail

Statewide Roads generated a return of 22.12 percent for the year and 10.16 percent since inception.

Statewide Roads

Metro Transport Sydney generated a return of (53.76) percent for 2007 and (30.56) percent since inception.

Metro Transport Sydney

Australian Infrastructure Fund Limited Board

External directorships:

Skills, experience and expertise:

External directorships:

Skills, experience and expertise:

AIFL Board committee membership:

External directorships:

Skills, experience and expertise:

Mike Hutchinson BSc (Hons), CPEng

External directorships:

Skills, experience and expertise:

Peter McGregor BCom, F Fin, ASA

External directorships:

Skills, experience and expertise:

Robert Tsenin BEc, Dip Corp Fin

External directorships:

Skills, experience and expertise:

Hastings Funds Management Limited Board

External directorships:

Skills, experience and expertise:

FUTURE GENERATION AUSTRALIA LIMITED Annual Report 2007