FUTURE GENERATION AUSTRALIA LIMITED — Management Reports 2007

Jul 10, 2007

Total pages: 7

==> picture [151 x 39] intentionally omitted <==

==> picture [151 x 39] intentionally omitted <==

==> picture [276 x 131] intentionally omitted <==

ASX Announcement

Australian Infrastructure Fund (AIX)

11 July 2007

AIX Open Briefing

Attached is an open briefing interview with AIX Chief Operating Officer, Peter McGregor.

For further enquiries, please contact:

Peter McGregor Chief Operating Officer

Australian Infrastructure Fund Tel: +61 3 9654 4477 Fax: +61 3 9650 6555 Email: investor_relations@hfm.com.au 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: investor_relations@hfm.com.au Website: www.hfm.com.au

==> picture [136 x 81] intentionally omitted <==

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\July\AIX - Open Briefing July11.doc

Attention ASX Company Announcements Platform Lodgement of Open Briefing[®]

==> picture [188 x 97] intentionally omitted <==

==> picture [114 x 106] intentionally omitted <==

Hastings Funds Management Limited Level 15, 90 Collins Street Melbourne, Vic 3000

Date of lodgement: 11-Jul-2007

Title: Open Briefing[®] . Australian Infrastructure. COO Updates Outlook

Record of interview:

corporatefile.com.au

Australian Infrastructure Fund (ASX Code: AIX) recently announced an increase in its final distribution to 8 cents per unit versus 7.5 cents per unit last year. The full year distribution has consequently increased by 6.9 percent to 15.5 cents compared with 14.5 cents last year. Can you comment on the rationale for the increase and your outlook for next year?

COO Peter McGregor

We fully fund distributions out of the cash flows generated by the portfolio assets, net of fund expenses including management fees. The increase in full year distribution reflects continued steady growth in the cash flows generated by the asset portfolio.

As a matter of course, we don’t provide distribution guidance because our business model is to distribute the cash flows generated by the assets, rather than manage the portfolio to generate a particular distribution. However, the trend of consistent growth in cash flows over the recent past is expected to continue for the next few years, based on the assets currently in the portfolio. Whilst the growth rate of future distributions will depend on any acquisitions we may make, we would not envisage making any acquisitions that would result in a fall in distributions per security.

corporatefile.com.au

AIX has been re-rated over the last year, from A$2.08 per unit on 29 Jun 2006 to A$3.29 per unit at the close on 29 June 2007. Can you comment on this re-rating?

1

To what extent has the recent unit price appreciation been driven by takeover rumours surrounding AIX?

COO Peter McGregor

At the time of our full year results announcement last August we were concerned that our share price undervalued the business and didn’t recognise its longer term prospects. We’re pleased that the market has come to recognise some of the value inherent in the business and consider today’s share price a much better reflection of the value and growth prospects of the assets in the portfolio.

We’ve received no formal or informal takeover approaches. We’re not aware of anyone contemplating an offer for AIX, although there are a number of global acquirers of airport infrastructure assets. On balance, we suspect it’s more a fundamental reassessment of value by good quality, long term investors than takeover speculation that’s fuelling the price.

corporatefile.com.au

Qantas has issued a forecast for domestic passenger growth of 9 percent for 2007/08 and 10 percent for 2008/09. What is your assessment of the longer term outlook for passenger growth over the next three years and beyond? To what extent will the entry of new low cost airlines impact the growth outlook for the industry?

COO Peter McGregor

We don’t publish estimates of our passenger growth for the portfolio primarily because each portfolio asset is unique and therefore impacted by slightly different drivers. However, we feel as positive about the outlook for domestic passenger movements as we ever have.

We’ve seen announcements of substantial fleet expansion plans by Virgin Blue, Jetstar and Qantas. We expect this increased capacity to be a major driver of additional passenger traffic movements.

Also, we expect the entry of Tiger Airways and the additional capacity it will bring to the Australian market to be a significant factor in the near term. There’s already evidence that Tiger will be aggressive on fares on market entry, which should put downward pressure on airfares across the whole system.

corporatefile.com.au

What is your longer term outlook for international traffic growth and what is driving this view?

COO Peter McGregor

Over the last few years, international passenger demand has exceeded the supply of available seats to the Australian market. That issue will begin to be addressed with the imminent delivery of next generation aircraft, particularly the Airbus A380s due for delivery from next year.

New international capacity will also be introduced by Emirates Airlines, Etihad Airways and Qatar Airways, following their successful application for additional

2

bilateral landing rights. In addition to the United Arab Emirates carriers, there are a number of Asian carriers that have indicated that they would look to add capacity into the Australian market once they have acquired the aircraft to do so. All of this should drive significant growth in international passenger traffic to and from Australia over the longer term.

Whilst over the next 12 months, there may continue to be some capacity constraints, we expect that situation to improve significantly over a two to three year period.

corporatefile.com.au

How will your positive passenger traffic outlook translate into revenue and EBITDA growth?

COO Peter McGregor

Over the longer term, passenger traffic is the most important driver of revenue for the airports business. It drives aeronautical revenue directly and commercial revenue indirectly via retailing and car parking.

However, there is not an automatic correlation between the growth in passenger traffic and growth in revenue for a particular year. The composition of passengers between international and domestic, and between Qantas (which operates its own terminals) and other carriers (whose passengers pass through terminals owned and operated by the airports themselves) will ultimately affect the marginal contribution to revenue of each passenger.

Over many years we’ve seen revenue growth slightly higher than the rate of passenger growth, as average spend per passenger has increased. In addition we’ve seen EBITDA growth in excess of revenue growth as we’ve benefited from the largely fixed cost nature of the airports business.

Over the medium to long term, strong passenger growth will translate into strong revenue and earnings growth for the airports, but it doesn’t necessarily apply in any given year.

corporatefile.com.au

AIX recently announced that Queensland Airports Limited has secured control over the Qantas Terminal at Gold Coast Airport. What are the implications of this change?

COO Peter McGregor

Control over the Qantas terminal is crucial for the overall development of the terminal as a common-user facility and will allow airport management to fully utilise the space, and that means greater opportunities to generate revenue as well as improve the overall customer experience. In the event that Qantas wished to discontinue operating its terminals in other airports within our portfolio, we would be keen to investigate the possibilities that would be created as terminal operations are a core skill for our management teams.

3

corporatefile.com.au

Given the recent strengthening in pricing for infrastructure assets, if you are to remain a disciplined investor in the infrastructure sector, won’t your acquisition opportunities be relatively limited? What sized acquisition opportunities will you consider? Are you prepared to loosen the strict discipline of your acquisition strategy to increase the rate of portfolio growth?

COO Peter McGregor

Our disciplined approach is a fundamental part of our business model, and we certainly would not contemplate changing that approach, notwithstanding the current market environment. It is an extremely competitive environment and difficult to buy assets at the moment. Using our valuation approach, we simply could not justify the prices being paid for assets in a number of recent cases, which explains why we’ve made no significant acquisitions over the past two years.

Our best opportunities for acquisitions continue to be from our existing strategic partnerships and our pre-emptive rights, such as those over the BAA stakes held in APAC, Perth Airport and NT Airports. The ideal size for future acquisition opportunities for the fund is in the A$200 million to A$400 million range. The days of making A$20 million to A$30 million standalone acquisitions that aren’t part of a strategic acquisition program are behind us now.

We see substantial growth opportunities from within the existing assets of the portfolio. There are currently major capex projects across the entire airport portfolio, with around A$2 billion of approved development projects. Investments in existing assets are a far more important driver of growth for the business than new acquisitions because we can control the cost and we have a high degree of confidence in the returns likely to be generated by these assets.

We’ve been focused on concentrating the portfolio around the core assets that will continue to drive its overall performance and returns and we’re continuing to look at divestment options for some of our smaller assets.

corporatefile.com.au

What progress has been made regarding your pre-emptive rights over certain BAA assets being sold by Ferrovial? Why has the sale process been drawn out for so long? What are the hurdles to the completion of sale negotiations?

COO Peter McGregor

We are in ongoing discussions with Ferrovial and its advisors over the sale of BAA assets, but at this stage there is no firm opportunity on the table. The timetable is being dictated by the vendor rather than by ourselves. Our position remains that given the opportunity, on reasonable terms and with reasonable pricing, we intend to exercise our pre-emptive rights. It’s worth remembering that these assets are part of a much larger asset sale program being undertaken by Ferrovial, including the sale of Budapest Airport.

We expect the sale will most likely be concluded in the second half of calendar 2007.

4

corporatefile.com.au

Perth Airport recently announced a significant increase in property developments with a further 15 hectares confirmed for development. Macquarie Airports has a 2.8 million square metre (m[2] ) land bank. What is the total land bank available for development at AIX airports and what are your plans to develop it?

COO Peter McGregor

We’re in the fortunate position of having very substantial land banks across our existing airport portfolio, including 7 million m[2] at Perth Airport, 3.5 million m[2 ] at Melbourne Airport, and 1.1 million m[2] at Darwin Airport. The development potential of this land bank has gradually been recognised by our investors over the past six to 12 months and to date, substantially less than half of our land bank has been developed.

Our property development strategy at each of the airports considers a measured and prudent development of the land bank over time. In the case of Perth Airport, we have developed 40 percent of the land bank and the property precinct is now one of the largest, most highly visible industrial and commercial properties in the Perth market. Both Melbourne and Darwin are at an earlier stage of development, but both now have key anchor tenants in place, which should act as catalysts for the next leg of growth.

We expect property development to continue to be a significant driver of revenue growth across all of the major airports in the portfolio.

corporatefile.com.au

You have previously highlighted the conservative capital structure of AIX with net debt to equity of 42 percent and interest cover of 3.7 times; this could be regarded as conservatively geared relative to your peer group. How do you aim to address this lack of leverage? To what extent will you increase the financial gearing of the portfolio? Won’t this increase the risk to your investors?

COO Peter McGregor

The current level of gearing in the portfolio is a significant competitive advantage. It provides us with the opportunity to do two things; firstly, to use the existing balance sheets of the assets in the portfolio to fund the next leg of growth for each of those assets. For example, all of the A$2 billion being spent on development projects across the portfolio will be funded from the existing balance sheet capacity of the existing businesses - we won’t be required to contribute additional equity to fund our share of the development costs.

Secondly, it provides us with the opportunity to consider further capital management initiatives to deliver value to our security holders. Capital management will be a significant focus for management over the next 12 months. In part, it will depend on what acquisition opportunities are presented; we certainly see scope to enhance shareholder value by utilising that additional leverage capacity.

Having said that, we will only consider increasing gearing in a prudent and measured way rather than a significant one-off re-gearing that would substantially

5

increase the risk profile for investors. We certainly don’t want to turn this portfolio into a high risk, highly leveraged portfolio.

corporatefile.com.au

Can you comment on the discount factor used for future cash flows by AIX against the valuation discount relative to your peer group companies’ EV/EBITDA?

COO Peter McGregor

Firstly, our portfolio is independently valued by KPMG on a six-monthly basis. This valuation is used to determine our monthly net tangible assets (NTA) and the unrealised gains and losses of the portfolio over a six month period. The discount factors used for each asset in the portfolio are impacted by the different ownership structures and particularly by the level of gearing. Hence, the slightly different discount factors used for each asset in the portfolio and the different discount rates used by peer companies.

In a sense, the NTA is simply the ‘book value’ of the portfolio. It is not intended to convey either AIX’s or Hastings’ view of the market value of the portfolio at any point in time, which will be impacted by a variety of factors including the competitive environment and general market conditions, neither of which are necessarily captured in the independent valuation process.

corporatefile.com.au

Thank you Peter.

For more information about Australian Infrastructure Fund, visit www.hfm.com.au or call Simon Ondaatje, Head of Investor Relations on +61 3 9654 4477.

To read previous Open Briefings or to receive future Open Briefings by e-mail, visit www.corporatefile.com.au

DISCLAIMER: Corporate File Pty Ltd has taken reasonable care in publishing the information contained in this Open Briefing®. It is information given in a summary form and does not purport to be complete. The information contained is not intended to be used as the basis for making any investment decision and you are solely responsible for any use you choose to make of the information. We strongly advise that you seek independent professional advice before making any investment decisions. Corporate File Pty Ltd is not responsible for any consequences of the use you make of the information, including any loss or damage you or a third party might suffer as a result of that use.

6