MEDIA RELEASE 22 October 2007 APA ANNOUNCES A SECURITY PURCHASE PLAN Please see the attached letter from the Chairman and the Chairman Elect advising of an offer under the Security Purchase Plan ( SPP ). A SPP application form and an APA Brochure have also been attached for your information. For further information please contact: Mick McCormack, APA Group Stephen Woodhill, Gavin Anderson & Company Telephone: (02) 9693 0000 Telephone: (02) 9552 4499 or Mb: 0411 052 362 Email: mmccormack@pipelinetrust.com.au Email: swoodhill@gavinanderson.com.au About APA Group (APA) APA Group, comprised of Australian Pipeline Trust and APT Investment Trust, is the major ASX-listed energy transmission company in Australia with interests in more than 10,000 kms of natural gas pipeline infrastructure, over 2,300 kms of gas distribution networks in south east Queensland, Coal Seam Gas processing plants, gas fired power stations, gas storage facilities and two high voltage direct current interconnector systems. APA manages and operates all it s assets and also provides management and operations services to gas distribution and transmission company Envestra (which owns 19,100 km of natural gas distribution networks and 1,029 km of natural gas transmission pipelines). It also holds a 17.2 percent stake in Envestra and a one-third interest in the SEAGas pipeline. The Group has a varied and quality customer base including AGL Energy, Cooper Eromanga Basin Producers, Xstrata, Newmont, CS Energy, BHP Billiton, Zinifex, Incitec Pivot, Origin, RioTinto, Nickel West, Synergy and Verve Energy. Page 1 of 10
26 October 2007 Dear Securityholder SECURITY PURCHASE PLAN The Board of Australian Pipeline Limited as responsible entity for APA Group (ASX:APA) is delighted to offer you an opportunity to acquire additional APA securities under a Security Purchase Plan ( SPP ). The SPP provides an opportunity for all securityholders, including the 90,000 former Alinta shareholders who became APA securityholders at the end of August to top up their holdings. What is the SPP? The SPP enables securityholders to apply, free of brokerage, for a parcel of new APA securities valued at $1,000, $3,000 or $5,000. The price will be at a 2.5% discount to the average of the daily volume weighted average price of APA securities traded during the five trading days immediately up to and including the close of the Offer on 23 November 2007. Participation in the SPP is voluntary. The offer is non-renounceable, which means that you may accept or reject the offer but you cannot transfer the right to participate to a third party. Participation in the SPP is open to all securityholders on the APA Security Register at 5pm on 24 October 2007 (the Record Date) residing in Australia and New Zealand. The offer to participate opens on 29 October 2007 and closes on 23 November 2007 with new securities expected to be issued on 30 November 2007. New APA securities issued under the Offer will be entitled to participate in the interim distribution payable for the half year ending 31 December 2007, expected to be paid in March 2008. Securityholders should note that the market price of APA securities may rise or fall between the date of the offer and the date when the new securities are issued. At the time of issue, the Issue Price of the new securities may be higher or lower than the price of APA securities trading on the ASX. Amount to be raised and use of proceeds The amount raised under the SPP will depend on the response of securityholders. Each securityholder may apply for up to $5,000 of securities and it is unlikely that any application will be scaled back. The capital raised through the SPP will provide APA with increased financial capacity to pursue ongoing growth opportunities in its core business. Page 2 of 10
Australian PipelineLtd ACN 091 344 704 Australian PipelineTrust ARSN091 678 778 APTInvestment Trust ARSN115 585 441 Background information on APA The SPP comes after a watershed 18 months for APA, during which both the asset base and revenue have doubled and APA has extended its footprint across all mainland states and territories. In particular, APA: Has a competitive low cost business model, with no fee leakage; Has dependable medium to long term revenue and operating cash flows, with the potential to continue to grow both organically and through acquisitions; Is integrating its recent acquisitions with positive commitment from new staff, and has a total asset base around $4 billion, with assets under management of more than $8 billion; and Retains its intention to increase distributions by at least CPI annually. Since the initial public offering in June 2000, APA s stock price has significantly increased, revenue is up more than 200% and distributions are up by 27%. The APA Board and Management have a clear vision to continue to grow APA Group as the nation s leading energy transmission and distribution business with a simple philosophy of maximising value and returns for all securityholders. APA s recent acquisitions have included: Allgas Energy gas distribution business in Queensland and northern New South Wales; GasNet Australia owner of more than 1,900 kilometres of gas pipelines in Victoria and Western Australia; Directlink electricity interconnector, one of two electricity transmission links between the NSW and Queensland grids. APA also owns the Murraylink electricity interconnector, which is one of the two links between the Victorian and South Australian grids; and Origin Energy Networks asset management business, including a 17% holding in Envestra Limited and a one-third interest in the SeaGas Pipeline. Industry consolidation looks set to continue and APA will participate where the investment opportunity meets our strict set of investment criteria. Transporting gas will continue to be our core business, but APA continually looks beyond pipelines and distribution networks to ensure asset and revenue diversity to appropriately manage business risk. Page 3 of 10
Australian PipelineLtd ACN 091 344 704 Australian PipelineTrust ARSN091 678 778 APTInvestment Trust ARSN115 585 441 Further Information If you have any questions in relation to the SPP, please contact the APA Securityholder Information Line on 1800 992 312 toll free within Australia or +61 2 8280 7132 for overseas callers. We welcome your participation in the SPP and take this opportunity to thank you for your continued support. Yours sincerely George H Bennett Chairman Leonard F Bleasel AM Chairman Elect Page 4 of 10
Australian Pipeline Ltd Australian Pipeline Trust APT Investment Trust ACN 091 344 704 ARSN 091 678 778 ARSN 115 585 441 All Registry communications to: Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia Toll free: 1800 992 312 From outside Australia: +61 2 8280 7132 Facsimile: (02) 9287 0303 ASX Code: APA Email: apagroup@linkmarketservices.com.au Website: www.linkmarketservices.com.au Record Date: 24 October 2007 Offer Opens: 29 October 2007 Allotment Date: 30 November 2007 SRN/HIN: Offer Closes 5:00pm (Sydney Time): 23 November 2007 Security Purchase Plan ( SPP ) APPLICATION application FORM This is an offer to eligible holders of APA Group (APA) stapled securities ( Securityholders ) to subscribe for additional stapled securities in APA ( stapled securities ) under the Terms and Conditions of the SPP ( Offer ). By completing this Application Form and forwarding it with your payment, you (a) acknowledge that you have read and understood the Terms and Conditions of the SPP and agree to be bound by the constitutions and by-laws of APA ( Constitution ), (b) apply to subscribe for stapled securities in accordance with the Terms and Conditions of the SPP, (c) certify that the aggregate application amount of stapled securities which you have applied for under this SPP (including through joint beneficial holdings), even if you received more than one offer under this SPP, together with amounts subscribed for in any similar plan offer by APA in the last 12 months, does not exceed A$5,000, (d) acknowledge that none of APA, its advisers and agents has (i) provided you with any financial product or investment advice and (ii) is not under any obligation to provide such advice, and (e) acknowledge that the information on the SPP has been prepared without taking into account your investment objectives, financial circumstances or particular needs. A reference to A$ in this Application Form, the Terms and Conditions and in the Chairman s letter with which this Application Form was enclosed, is a reference to the lawful currency of Australia. Please note: The Terms and Conditions of the SPP, including on the reverse of this Form, should be read carefully. Payments may only be made by BPAY, cheque or money order in Australian dollars and drawn on an Australian branch of a financial institution. Cash payments will not be accepted. Payment by BPAY or receipt by APA of this Application Form duly completed, together with the full subscription amount, will constitute acceptance in accordance with the Terms and Conditions of the SPP and the Constitution of APA by the Securityholder named on this Application Form. APA may reject an acceptance of this Offer, in its absolute discretion, if payment is not received in accordance with the Terms and Conditions, is incomplete or if the exact amount applied for is not tendered. Accepting this Offer using Bpay To pay via BPAY refer to the Biller Code and Reference Number below, and contact your participating financial institution. You are not required to return this Application Form. By paying by BPAY, you will be deemed to have completed an Application Form for the number of stapled securities the subject of your payment amount. Accepting this Offer by cheque or money order Cheque or money orders are to be made payable to: APA Group SPP Account and crossed Not Negotiable. The completed Application Form should be torn off below and forwarded with your payment to reach APA s registry by 5:00pm (Sydney Time) on 23 November 2007. Please allow sufficient time for collection and delivery by postal services as the postal acceptance rule does not apply. If located within Australia please forward your Application Form, along with payment, in the reply paid envelope provided. New Zealand Securityholders must forward it to the postal address set out below. Securityholders outside of Australia and New Zealand are not eligible to participate. Your form cannot be faxed to APA s registry as payment must be attached to your Application Form. Mailing Address: APA Group C/- Link Market Services Limited, Reply Paid 3560, Sydney, NSW 2001, Australia Hand Delivery Address: APA Group C/- Link Market Services Limited, Level 12, 680 George Street, Sydney NSW 2000 (Please do not use this address for express post mailing) This Offer is non-renounceable No signature is required If you require further information on how to complete this Application Form please contact Link Market Services Limited on 1800 992 312 toll free within Australia, or +61 2 8280 7132 for overseas callers. Please detach this tear-off slip and return with your cheque or money order Biller Code: 333401 I/We wish to purchase APA stapled securities with an aggregate subscription price of (tick one box only): Ref: Telephone & Internet Banking Bpay Contact your bank, credit union or building society to make this payment from your cheque or savings account. More info: www.bpay.com.au Registered to Bpay Pty Ltd ABN 69 079 137 518 A$1,000 OR A$3,000 OR A$5,000 Payment Details (if paying by cheque or money order): Drawer Cheque Number BSB Number Account Number Amount of cheque A$ Make your cheque or money order payable to APA Group SPP Account Contact Details: Telephone Number Business Hours Contact Name (PRINT) (must correspond with amount ticked above) Page 5 of 10
Terms and Conditions of SPP How much can you invest? You may apply to invest in new stapled securities having a purchase value of A$1,000, A$3,000 or A$5,000. If you receive more than one offer from APA, for example because of separate holdings under separate security accounts or because you are a joint holder of stapled securities, the maximum you may apply to invest under this Offer as a sole and joint holder of new stapled securities is A$5,000. APA reserves the right to reject any application where this has not been complied with. If subscriptions received from Securityholders exceed the 30% issue threshold under ASX Listing Rule 7.2 Exception 15, APA will scale back applications on a pro rata basis. If this occurs, you may be allocated stapled securities to a value which is less than what you applied for and APA will refund any excess application money (without interest). How will we determine the Issue Price? The Issue Price for each stapled security the subject of this Offer will be the price equal to a 2.5% discount to the average of the daily volume weighted average price of APA stapled securities traded during the 5 trading days immediately up to and including the close of the Offer on 23 November 2007 ( the Closing Date ). The market price of APA stapled securities may change between the Closing Date and the date that the new APA stapled securities are allotted to you. APA does not make any assurance that stapled securities in APA will trade at or above the Issue Price following the allotment date. Securityholders should seek their own financial advice in relation to this Offer and participation in the SPP. No fraction of new stapled securities will be issued. Fractions of new stapled securities calculated at the date of issue will be rounded up to the nearest whole new stapled security. What will the cost base of a new APA Stapled Security be for Capital Gains Tax Purposes? An APA stapled security comprises a unit in the Australian Pipeline Trust (APT) and a unit in APT Investment Trust (APTIT). While these comprise a single component security and can only be dealt with together, they are separate assets for capital gains tax purposes. In determining your cost base for an APT unit and an APTIT unit the Board of APA will allocate 25% of the Issue Price for each new APA stapled security to an APT unit and 75% of the Issue Price for each new APA stapled security to an APTIT unit. Securityholders should seek their own taxation advice in relation to this Offer and their participation in the SPP. Who is eligible to apply under this Offer? Participation in the SPP is open to Securityholders registered on APA s security register as at 5:00pm on 24 October 2007 ( the Record Date ) and have an address in Australia or New Zealand. The Offer to each eligible Securityholder is made on the same terms and conditions. The Offer is non-renounceable. If a trustee or nominee is expressly noted on the register of members as holding stapled securities on account of another person (a beneficiary ), the beneficiary is taken to be the registered holder of the stapled securities and any application or certification by the trustee or nominee is taken to be an application and certification by the beneficiary for the purposes of (amongst others) paragraph c(v) of ASIC Class Order 02/832. If stapled securities are held on your behalf by a trustee or nominee, but the trustee or nominee is not expressly noted on the register of members as holding stapled securities on account of another person, an application by the trustee or nominee is taken to be an application by the registered Securityholder. Can I transfer my Offer to a third party? The Offer is non-renounceable, so you cannot transfer your right to participate in the SPP to a third party. Do you have to pay any costs? No brokerage, commission or other transaction costs apply to the issue of new stapled securities under the SPP. The only cost to you is the Issue Price of the new stapled securities. What will be the Issue Date? The new stapled securities will be issued on 30 November 2007 or as soon as possible after that date. APA s registry, Link Market Services Limited, will send you a holding statement as soon as practicable after the Issue Date. What rights will the new stapled securities carry? New stapled securities will rank equally in all respects with existing stapled securities and will be entitled to the interim distribution for the 6 months ending 31 December 2007. How do you apply for new stapled securities under the SPP? To apply for new stapled securities under this Offer, you must: Carefully read these Terms and Conditions On the Application Form on the back of this page: Tick the box beside the amount you wish to purchase; either A$1,000, A$3,000 or A$5,000. Complete the cheque details section. Or, if paying via BPAY, see details on reverse side. Write your daytime telephone number just in case we have any questions. You DON T need to sign the Application Form. BPAY Option Contact your participating institution and make the payment via BPAY. Do not return this Application Form if you elect the BPAY Option. Cheque and Money Order Option Write out your cheque or get your money order made payable to APA Group SPP Account. Send the Application Form and your cheque using the reply-paid envelope provided: Alternatively, please mail or deliver to the address below. By Reply Paid Mail Or hand delivered to APA Group APA Group C/- Link Market Services Limited C/- Link Market Services Limited Reply Paid 3560 Level 12, 680 George Street Sydney NSW 2001 Sydney NSW 2000 Make sure you send your Application Form and cheque allowing enough time for mail delivery, so Link Market Services Limited receive them no later than 5:00pm (Sydney time) on 23 November 2007. APA reserves the right not to process any Application Forms and cheques received after the Closing Date. Can APA change the Offer? APA retains the right to vary the date the Offer closes, the date new stapled securities are allotted and the date holding statements are dispatched to Securityholders. Any variation of date will be notified to the Australian Securities Exchange. APA may change or terminate the SPP at any time prior to the Issue Date and will advise the Australian Securities Exchange in the event that this occurs. Any omission to give notice of changes to, or termination of, the SPP, or the non-receipt of any such notice, will not invalidate the change or termination. If the SPP is withdrawn, all application monies will be refunded. No interest will be paid on any refunded application monies. In addition to any rights of APA to reject applications as set out in these Terms and Conditions, APA also reserves the right to allocate fewer, or no, APA stapled securities than an eligible Securityholder applies for under the SPP if APA believes that the allotment of those stapled securities would contravene any of the ASX Listing Rules or the Corporations Act 2001 (Cth). In any such case, excess application monies will be returned to the relevant applicant(s). No interest will be paid on application monies so returned. How is a dispute resolved? APA may settle any dispute in connection with the SPP in any manner it thinks fit, whether generally or in relation to any participant. APA s decision shall be final and binding. APA reserves the right to waive strict compliance with any provisions of these Terms and Conditions. Privacy Clause: Link Market Services Limited advises that Chapter 2C of the Corporations Act 2001 requires information about you as a securityholder (including your name, address and details of the stapled securities you hold) to be included in the public register of the entity in which you hold stapled securities. Information is collected to administer your securityholding and if some or all of the information is not collected then it might not be possible to administer your securityholding. Your personal information may be disclosed to the entity in which you hold stapled securities. You can obtain access to your personal information by contacting us at the address or telephone number shown on this Application Form. Our privacy policy is available on our website (www.linkmarketservices.com.au). Page 6 of 10
APA Group Australian Pipeline Ltd ACN 091 344 704 Australian pipeline Trust Arsn 091 678 778 APT Investment Trust ARSN 115 585 441 October 2007 Overview of APA APA Group ( APA ), comprising Australian Pipeline Trust and APT Investment Trust, is the leading ASX-listed energy transmission business in Australia with interests in more than 10,000 km of natural gas pipeline infrastructure, over 2,300 km of gas distribution networks in south east Queensland, coal seam gas processing plants, gas-fired power stations, gas storage facilities and two high voltage direct current electricity interconnector systems. APA s interests also extend to the provision of operations and maintenance services to ASX listed gas distribution and transmission company Envestra (which owns 19,100 km of natural gas distribution networks and 1,029 km of natural gas transmission pipelines), a 17.2% stake in Envestra and a one-third interest in the SEAGas pipeline. APA operates an internalised management structure with direct operational control over its assets and no fee leakage. APA employs over 1,000 people, who variously manage all commercial, regulatory, government and stakeholder-related issues, as well as the day-to-day operations and maintenance for both APA and third party assets. APA generates strong cash flows that enable it to fund operating expenditures and capital to support the maintenance of existing infrastructure and the growth of that infrastructure. Page 1
Key Financial Measures $ million FY2007 FY2006 Change % Revenue* 532.7 379.0 40.5 Earnings before interest, tax, 296.8 200.4 48.1 depreciation and amortisation* Operating profit after tax and 64.5 60.7 6.4 minorities* Underlying operating cash flow 157.0 112.2 39.9 (OCF)* Underlying OCF per security 41.1c 38.7c 6.8 (cents)* Distributions per security (cents) 28.0c 24.0c 16.7 Total Assets ($ billion) 4.23 2.06 105.0 * Before significant items Summary of Revenue and Assets by Geography The chart below sets out the total revenue and asset value by geographical location for FY2007. Note that from FY2007, APA will also have assets and revenue in South Australia. Revenue VIC 24% WA 28% NSW 16% QLD 29% Distribution Growth NT 3% Asset Value As demonstrated below, since FY2005 APA has exceeded its strategic goal of increasing distributions by at least CPI annually. cents 32 0% 4.7% 6.7% 16.7% VIC 29% WA 19% NSW 21% QLD 31% APA Highlights Listed on the Australian Stock Exchange in June 2000. Acquired remaining minority interests in Roma to Brisbane Pipeline and Carpentaria Gas Pipeline in Queensland in 2001 and 2005 respectively. In August 2004, increased its ownership in Goldfields Gas Transmission Pipeline to 88.2% and acquired the Parmelia Gas Pipeline and Mondarra Gas Storage in Western Australia. From 2006, acquired or constructed a number of complementary businesses including: Construction of Kogan North central gas processing facility; Acquisition of Murraylink electricity interconnector for $153 million; Commissioning of Daandine gas-fired power station; Acquisition of the Allgas gas distribution business for $521 million; Acquisition of Directlink electricity interconnector for $170 million, and Commissioning of Tipton West gas processing facility. In June 2006 entered into a 25 year gas transportation agreement with Power and Water Corporation (Northern Territory) and committed to develop the Bonaparte Gas Pipeline. 28 24 20 6.4 22.5 3.5 24.0 24.5 In December 2006, completed a full cash offer of $3.10 per stapled security for GasNet Australia Group. 16 12 8 15.1 In July 2007, completed acquisition of Origin Energy Network assets for $556 million. 4 0 FY04 FY05 FY06 FY07 Tax deferred distribution Income distribution In August 2007, Alinta distributed its APA securityholding to its shareholders as a part of the acquisition of Alinta Ltd by Babcock & Brown/Singapore Power International Consortium. In October 2007, paid $210 million to terminate or transfer to APA, the Alinta operating and maintenance services for many of APA s key gas transmission pipelines. Page 2
Principal activities of APA APA s portfolio comprises a mix of established pipeline assets, assets under development and complementary energy infrastructure assets. It derives its reliable and predictable revenue stream through a mix of regulated returns and negotiated revenue contracts. APA has assets in each mainland state and territory. Gas Transmission APA is the leading owner, manager and operator of natural gas pipelines in Australia. APA owns, or has an interest in more than 10,000 km of gas transmission pipelines in all mainland states and territories of Australia. APA transports approximately 50% of the natural gas consumed in Australia. Gas Distribution In 2006, APA purchased Allgas, one of the two major gas distribution businesses in Queensland. Allgas services some of the high population growth centres in south east Queensland and northern NSW. The Allgas distribution network supplies 65,000 customers and includes over 2,300 km of distribution mains located in Brisbane, the Gold Coast, northern NSW, Toowoomba and Oakey. A significant expansion program has been approved by the regulator to satisfy rapid growth in gas demand in the region. Electricity Transmission APA owns and operates both Murraylink and Directlink, which are underground direct current electricity cable interconnectors. Murraylink connects the South Australian and Victorian electricity grids and Directlink the Queensland and New South Wales electricity grids. Gas Processing APA owns and operates two gas processing facilities, Kogan North and Tipton West. Both are located west of Brisbane. Kogan North processes coal seam gas from the Kogan North gas field for transportation through the Roma to Brisbane Pipeline to Swanbank E Power Station. Tipton West processes coal seam gas for supply to the Braemar Power Station. Gas Storage The Mondarra gas storage facility is located near Dongara, Western Australia, and adjacent to the two pipelines servicing Perth, including APA s Parmelia Gas Pipeline. It is currently the only commercial underground gas storage facility in Western Australia. APA is expanding the facility in response to the need for peak gas demand to service customers in Perth. APA owns a liquid natural gas storage facility in Victoria which provides peak shaving and security of supply services for the Victorian gas transmission system. Electricity Generation APA has constructed one gas-fired power station ( Daandine ) and is constructing a second ( X41 ). Daandine is located adjacent to the Kogan North gas processing facility and will produce 27.4 MW of electricity in base load operation. X41 is a 30 MW power station which will be fuelled by gas transported in APA s Carpentaria Gas Pipeline and will be connected into the grid servicing the mineral rich province in the Mt Isa area. APA believes that gas-fired power generation will increasingly be viewed as a viable and greener alternative to coal-fired power generation, particularly as both the major Federal political parties committed to the introduction of a national carbon trading scheme in the coming years. Greenfield Developments In June 2006, APA announced that it would develop the Bonaparte Gas Pipeline in the Northern Territory, which will transport gas from Wadeye on the Bonaparte coast to Darwin to meet the Northern Territory s Power and Water Corporation power generation requirements. APA is also pursuing a gas transmission grid on the eastern coast that will offer a seamless tariff for gas delivered into Queensland, New South Wales, the Australian Capital Territory and Victoria. Page 3
APA s Assets 12 5 NORTHERN TERRITORY 11 16 18 3 4 2 21 22 WESTERN AUSTRALIA SOUTH AUSTRALIA 29 9 6 QUEENSLAND 8 13 14 NEW SOUTH WALES 23 15 24 10 20 7 27 19 1. victorian transmission System, NSW/VIC 2. Goldfields Gas transmission Pipeline, WA 3. Parmelia gas Pipeline, WA 4. Midwest Pipeline, WA 5. Telfer Gas Pipeline, WA 6. Moomba to Sydney Pipeline SYSTEM, sa/nsw 7. Central West Pipeline, NSW 8. Roma to Brisbane Pipeline, Qld 9. Carpentaria Gas Pipeline, Qld 10. Allgas Distribution NetworkS, Qld/NSW 11. Amadeus gas Pipeline, NT 12. PROPOSED Bonaparte gas Pipeline, NT 13. Kogan North Gas Processing Facility, Qld 14. Tipton west gas processing facility, qld 15. Daandine power station, qld 16. X41 power station, qld 17. LNG Facility, VIC 18. Mondarra Gas Storage Facility, WA 19. Murraylink Interconnect, SA/VIC 20. Directlink interconnect, NSW/Qld 21. Murrin Murrin Lateral, WA 22. Kalgoorlie to Kambalda Pipeline, WA 23. Gladstone to Maryborough Gas Pipeline, Qld 24. Envestra Distribution NetworkS, VIC/SA/Qld 25. CAMS WATER AND WASTE WATER TREATMENT SERVICES, VIC 26. SEAGas Pipeline, VIC/SA 27. Riverland and Mildura Pipelines, SA/VIC 28. SESA Pipeline, VIC/SA 29. Alice Springs Gas Pipeline, NT 24 26 VICTORIA 25 28 1 17 24 TASMANIA Page 4 For further details, please refer to the APA Group website www.pipelinetrust.com.au.