1、Australian Pipeline Trust ARSN 091 678 778 ANNUAL REPORT 2005CONTENTSANNUAL FINANCIAL REPORT 2005Corporate Governance 13Directors Report 22Statement of Financial Performance 31Statement of Financial Position 32Statement of Cash Flows 33Notes to the Financial Statements 34Directors Declaration 73Audi
2、tors Declaration of Independence 74Independent Audit Report 75Additional Stock Exchange Information 77Unitholder Information 78Glossary of Terms 79Directory and Financial Calendar 80CORPORATE REVIEWCorporate Highlights 1Chairmans Report 2Chief Executive Offi cers Report 4Acquisitions 7Board of Direc
3、tors 8Management Team 10PICTURED ABOVE:The Roma to Brisbane Pipeline(“RBP”)in Queensland runs below The Cascades at Forest Lake,a suburb 25 kilometres outside of Brisbane.WE CONTINUE TO PROMOTE THE IMPORTANCE OF“CLEAN”NATURAL GAS TO AUSTRALIA,AND ESPECIALLY TO THE OUTLYING AND ISOLATED PARTS OF THE
4、COUNTRY WHERE NATURAL GAS AND PIPELINES DELIVER JOBS AND PROSPERITY.CORPORATE HIGHLIGHTS1FINANCIAL SUMMARYFOR THE YEAR ENDED 30 JUNE Year ended Year ended 30 June 2005 30 June 2004 Change Operating Results$m$m%Pipeline revenue 267.2 185.6 44.0Other pipeline revenue 89.3 74.6 19.7Other revenue 19.3 1
5、7.9 7.3Total revenue 375.8 278.1 35.1EBITDA 178.9 133.9 33.6EBIT 142.1 111.4 27.6Pre-tax profit 77.8 65.0 19.6Income tax expense(26.4)(19.8)(33.3)Operating profit after income tax and minorities 51.0 45.0 13.4Significant items after income tax 18.7 76.3(75.5)Net profit attributable to unitholders 69
6、.7 121.3 (42.6)Financial RatiosEarnings per unit(cents)before significant items 18.55 18.25 1.6Earnings per unit(cents)after significant items 25.33 49.20(48.5)Net tangible asset backing per unit$2.19$2.08 5.3Free cash flow per unit(cents)37.59 31.76 18.4Interest cover ratio before significant items
7、 2.33 2.26 Gearing ratio(%)63.53 58.37 KEY OPERATING HIGHLIGHTS Acquisition and integration into APA business structure completed for SCP Investments(No.1)Pty Limited,owner of 88.2%of Goldfields Gas Transmission Pipeline,and the Parmelia gas business.Acquisition of remaining 30%of Carpentaria Gas Pi
8、peline in February 2005.Increased utilisation of pipeline assets,generating increased revenue.Capital management including private placement($61.7 million)in August 2004 and re-negotiating syndicated borrowings on more favourable terms.010203040506020012002200320042005NET PROFIT AFTER TAX BEFORE SIG
9、NIFICANT ITEMS$m010020030040050060070020012002200320042005TOTAL EQUITY$m05010015020025030035040020012002200320042005TOTAL REVENUE BEFORE SIGNIFICANT ITEMS$mPERFORMANCE HIGHLIGHTS FOR PAST FIVE YEARSTHE FUNDAMENTALS OF THE BUSINESS ARE SOUND AND MANAGEMENT HAS THE APPROPRIATE STRATEGIES IN PLACE TO E
10、NSURE CONTINUED GROWTH IN THE UNDERLYING BUSINESS.George Bennett,Chairman.The substantial growth in various key performance indicators below is primarily a result of the SCP gas business acquisition and the Carpentaria Gas Pipeline acquisition.THE RBP SYSTEM LOOPING STAGE FIVE(WALLUMBILLA TO IPSWICH
11、)DURING AND AFTER CONSTRUCTIONTotal revenue increased signifi cantly in 2005.Increases in equity in the last two years arose from:substantial increases in net profi ts,including signifi cant items in 2004 and 2005;and a private placement of 24.5 million units for$61.7 million in August 2004.Net prof
12、i t after outside equity interest increased by 13.4%in 2005.0$m5001,0001,5002,00020012002200320042005TOTAL ASSETS0204060801001202001Cash flow per unit(cents)2002200320042005CASH FLOW OPERATINGCash flow operating($m)0cpu 5101520252001Capital2002200320042005DISTRIBUTIONSProfitAPA has maintained a comp
13、etitive distribution policy over the past five years.This year,APA increased its distribution to 22.5 cpu in consideration of stronger profits and cash flows.Subject to unforeseen circumstances,it is expected that APA will be able to,at least,maintain current operating profit and cash distributions
14、for 2006 financial year.THE CASCADES WATER FEATURE AT FOREST LAKECHAIRMANS REPORT2I am pleased to present my fi fth chairmans report to the unitholders of Australian Pipeline Trust(“APA”).APAs main objective is to profi tably focuson investments in gas transmission infrastructure.The board remains p
15、ositive and enthusiastic about the future of APA and the role of natural gas in the Australian energy mix.Financial PerformanceAPA has again delivered.Operating profi t after tax and minority interests before signifi cant items increased 13.4%to$51.01 million,compared with$44.98 million for the year
16、 ended 30 June 2004.The improved performance resulted from acquisitions and increased pipeline transportation revenue,principally on the Roma to Brisbane Pipeline.After signifi cant items,net profi t attributable to unitholders of APA for the fi nancial year was$69.68 million(2004:$121.29 million).I
17、 believe APA has achieved its early promise to unitholders,and I am very proud to be part of the team that has guided this business through this key period in its development and growth.GEORGE H BENNETT The board is pleased that APA has achieved a satisfactory and increasing operating profi t after
18、tax over each of the last fi ve years.People and ManagementAPAs success is due to the calibre and enthusiasm of our people.We are a natural gas infrastructure business,and our staff has long experience in the energy industry and pipeline infrastructure in particular.The board thanks directors,Les Fi
19、sk,John Fletcher and Tom Ford,who all retired during the fi nancial year,for their contribution since APA was publicly listed.On behalf of the board,I also welcome new board members Ross Gersbach,Russell Higgins and Jane McAloon,who joined during the year.The board sincerely thanks Jim McDonald,who
20、retired as of 1 July 2005,for his positive contribution to APAs success.Jim,who joined APA from AGL,brought unparalleled gas pipeline knowledge to our business.Newly appointed chief executive offi cer(“CEO”),Michael(“Mick”)McCormack,continues the theme of bringing broad experience in the energy tran
21、smission industry to the position,after meritorious service in the key role of chief operating offi cer.We welcome Mick to his new role.Regulatory MattersLet me briefl y note the advances APA has achieved in addressing regulatory issues this fi nancial year.The Australian Competition Tribunal(“Tribu
22、nal”)Merits Review on the Moomba to Sydney Pipeline(“MSP”)confi rmed that the Australian Competition and Consumer Commission(“ACCC”)decision on the MSP access arrangement was unreasonable,and affi rmed our approach on determining the Initial Capital Base.The ACCC has appealed the decision and the ma
23、tter went before the Federal Court in mid-August 2005.APA expects that the Court is unlikely to set aside the essence of the Tribunals decision.After almost six years,an access arrangement has been fi nalised for the Goldfi elds Gas Transmission Pipeline in Western Australia.The access arrangement n
24、ow provides certainty on regulated tariffs on the pipeline.We believe that APA can now focus on addressing the many opportunities that exist in Western Australia,several of which,including capacity expansion,are well advanced.Strategic DirectionOver the past few years,APA has successfully managed to
25、 acquire most of the remaining minority interests in its pipeline assets,and increased utilisation of its existing assets.The development of new pipelines within Australia remains a long term goal.While APA is well positioned,the opportunities are few with generally long development timeframes.APA h
26、as long supported the need for a pipeline connecting Queensland gas supplies to South Australia and New South Wales.The absence of this physical link is being managed through gas swap agreements between our customers,which enables Queensland gas to be sold in New South Wales.The Papua New Guinea(“PN
27、G”)gas project provides an opportunity to link the eastern coast gas market to northern gas and create the long touted“east coast gas grid”,and to address the gas supply issue facing south-eastern Australia by the end of this decade.Coal bed methane(“CBM”)production partially addresses this natural
28、gas shortfall and has proven to be a useful adjunct energy source.Its development continues to be fully supported by APA.While recognising the value of CBM,south-eastern and northern Australia needs a major gas supply solution for the provision of competitive natural gas supplies.APA believes that t
29、he PNG gas project will provide a solution.While disappointed to see the proposed Wadeye to Gove pipeline project in Northern Territory fail in its current form,APA is pleased that the PNG gas project producers have entered into a conditional long term agreement with Alcan Gove Pty Ltd to deliver ga
30、s for its Northern Territory based Gove alumina business.This news,together with AGLs announcement of a conditional long term gas supply agreement with the PNG gas project producers to purchase very significant quantities of gas over 20 years from 2009,increases the likelihood that a PNG gas pipelin
31、e to Australia will finally become a reality.APA,as part of its initial agreements with AGL when it floated in June 2000,has a right to purchase at least a 20%interest in the PNG gas pipeline.We understand that the PNG gas project participants intend to make a final investment decision in late 2006.
32、APA welcomes these developments and looks forward to this exciting project finally becoming a reality.Natural GasThe natural gas industry requires a peak council to champion its benefits as part of the energy mix for Australia.Certainly,bodies such as Australian Pipeline Industry Association play an
33、 important role in representing various aspects of the industry(such as pipelines)however,there is no single voice representing natural gas in its entirety in the same way that,for instance,coal is represented.I believe that such a council will have an important voice in representing natural gas in
34、Australia in the future.We continue to promote the importance of“clean”natural gas to Australia,and especially to the outlying and isolated parts of the country where natural gas and pipelines deliver jobs and prosperity.OutlookAPA has previously advised of the contracted reduction in revenue under
35、the GTD on the MSP revenues post 31 December 2006 when it terminates.The GTD will be replaced by a long term arrangement with AGL and additional revenue from third parties as retail contestability develops.In the medium term,APA is confident that it will be able to pursue innovative services to enco
36、urage the development of aggregator and retail competition in eastern Australia,and thereby enhance the utilisation of the MSP after the GTD expires.The board remains confident that APA is well positioned to pursue strategies to maintain,at least,the current level of profitability and distributions.
37、On behalf of the board,I thank management and staff for their efforts,and all unitholders for their support.George H Bennett Chairman3SPONSORSHIPS Australian Brandenburg OrchestraA hand-crafted harpsichord,built to withstand Darwins tropical climate,took pride of place when the Australian Brandenbur
38、g Orchestra(“ABO”)performed in Darwin in March this year as part of a national tour,thanks to APAs sponsorship.“Our sponsorship provides a chance to give something back by enriching the cultural experiences available to Territorians.We are proud to sponsor such a prestigious orchestra”said APAs CEO,
39、Mick McCormack.Paul Dyer,the ABO artistic director,said that with APA as a major sponsor,the ABO had been able to reach Australian audiences in remote areas such as Kalgoorlie:“One of the missions of the ABO is providing top quality music to all Australians.APAs support assists the ABO in realising
40、that goal.In doing so,were creating a national footprint,like APA,and this would not have been possible without APAs support.”CHIEF EXECUTIVE OFFICERS REPORT4It is with great pleasure that I introduce myself.As your new CEO,I hope to continue delivering the success that APA has enjoyed since listing
41、.APA hasgrown,both in revenue and size,and I am confi dent it is well positioned for continued growth.A New Phase of GrowthI am proud that the APL board has demonstrated its support for me by appointing me as the successor chief executive offi cer.I am determined to take APA to new levels,both throu
42、gh asset growth and diversifi cation.Our core business is natural gas transmission pipelines and we are good at developing,owning,operating and managing them.We have some challenges ahead of us,both in terms of developing our business and the regulatory environment,but we are well placed to deliver
43、the right results for our unitholders.People are our greatest asset.Our business is based on the strength of real people,with years of experience in the energy and gas pipelines business,and we make real profi ts for our unitholders by knowing that business.MICK McCORMACK2005 will remain in my memor
44、y as an exciting and interesting year.Not only does it mark a“changing of the guard”at APA,with signifi cant changes in both the senior management team and board,it also underscores fi ve good years of a profi table business.Jim McDonalds retirement on 1 July 2005 is bittersweet.I have worked with J
45、im,who was founding CEO,for some 20 years and he was both a friend and mentor to me.Jims expertise will be missed now that he has retired.He cast a lasting infl uence over the Australian natural gas industry.I welcome Richard Francis,our new chief fi nancial offi cer(“CFO”).Richard has signifi cant
46、fi nancial and commercial experience and will bring new ideas and knowledge to our business.Operational ReviewAPA has delivered on a number of fronts this year.The results underscore the strength of our business and its challenges.I am pleased that many of the projects I managed,including the acquis
47、itions of the minority interests in SCP(No.1)Pty Limited which holds 88.2%of the Goldfi elds Gas Transmission Pipeline(“GGT”),the Parmelia gas business and the minority interest in the Carpentaria Gas Pipeline,contributed to this years results.In April,APA entered into a ten year contract to transpo
48、rt six PJ of CBM per annum through the RBP to the new Braemar power station in Queensland.This agreement offers a fi rm service with a fi xed revenue component,which provides APA with certainty for the contracted load and allows an interruptible service with a variable revenue component.On the Parme
49、lia Gas Pipeline,APA has signed a new four year contract with Western Power to transport gas to Austral Bricks in Western Australia.During the fi nancial year,APA acquired a 5.3%holding in the units of GasNet Australia Group(“GasNet”).APA is considering its options for this investment and is prepare
50、d to be a long term investor in GasNet.On the MSP,we are continuing to address the contracted reduction in revenues arising under the GTD.I am confi dent that as full retail contestability increases,both existing and new customers will increase utilisation of the existing pipeline.As an example,APA
51、gained additional revenue from Origin Energy and TXU Australia during the financial year.As previously reported,stress corrosion cracking(“SCC”)has been identified as a significant issue on the MSP.APA has carried out extensive investigation and analysis of the incidence and impact of SCC on the MSP
52、.We have concentrated on the first 162 kilometres of the MSP,where the ground and pipeline operating conditions under which SCC can develop,exist.The information gained through applying very recent technological advances,including the running of two“intelligent pigs”through the pipeline and recordin
53、g irregularities in the steel wall of the pipe,was completed in March 2005 and the data has now been analysed.From this data,six sites were identified for immediate work.In May 2005,these sites were excavated and work successfully carried out to ensure that the MSP continued to operate safely at a s
54、ufficient pressure to meet expected loads for winter 2005.The final inspection data report has been received.APA has identified a program of work which will be carried out during the course of 2005 06.APA will ensure the continued safe and reliable operation of the MSP,while meeting its contractual
55、obligations.Regulatory MattersEnergy market reform and the regulation of essential infrastructure,including gas pipelines,have been on the national policy agenda during this financial year.APA has been actively seeking support for regulatory change,which will encourage efficient and effective develo
56、pment of infrastructure.In my view,Australia has too many regulators,operating too many disparate regimes,under statutes that are prescriptive in some respects,and vague in others.This does not encourage the large scale investment necessary to address Australias need for environmentally acceptable e
57、nergy infrastructure.I believe that regulators should have clearer goals and processes should be completed in a more timely manner.Australia only needs one layer of regulation,which balances the needs of all stakeholders and encourages new energy infrastructure.In June 2004,the Productivity Commissi
58、on released its final report into the National Gas Access Regime.The reports recommendations will positively impact on stakeholders,the development of“greenfields”projects and business efficiency.Without these changes,it will be difficult for businesses to justify large scale gas infrastructure inve
59、stment in Australia.APA strongly supports the reports full implementation.As well,the Council of Australian Governments signed the Australian Energy Market Agreement.This agreement seeks to implement national arrangements that further integrate the electricity,gas and renewable energy sectors under
60、two new regulatory bodies,the Australian Energy Regulator and the Australian Energy Market Commission,during 2006.We look forward to the Australian Governments response to the Productivity Commission report and the Australian Energy Market Agreement.APA supports the implementation of these regulator
61、y changes,which seek to reduce intrusive regulation and remove disincentives to the development of new pipelines and the expansion of existing pipelines.5RBP GATTON COMPRESSOR STATIONPROFILEMick McCormack BSurv,GradDipEng,MBA,FAICDMr McCormack is the chief executive officer of Australian Pipeline Tr
62、ust.He carries overall responsibility for the performance of APA and its management team.Mr McCormack has extensive senior management experience in all aspects of gas transmission in Australia,his entire career has been based in the pipeline industry and he has worked on the development of new and e
63、xisting pipelines across Australia.Mr McCormack holds office in various joint venture committees and subsidiary boards.Prior to joining APA on its float in 2000,Mr McCormack was responsible for regulatory management of AGLs pipelines.Mr McCormack has tertiary qualifications in science,engineering an
64、d business.Mr McCormack is a director on the board of Australian Pipeline Industry Association and is a fellow of the Australia Institute of Company Directors.StrategyIncremental growth of our assets is still the best way to add value to our bottom line.We continue to fi nd innovative ways to increa
65、se utilisation of our assets.Diversifi cation of our asset portfolio through acquisition also remains a strategy.Though the opportunities to acquire existing natural gas pipelines are limited,we continue to monitor those of which we are aware and are well placed to pursue them.Greenfi elds gas proje
66、cts remain a major plank of our strategic plan.There are also complementary assets,such as CBM processing facilities and power generation,that APA would consider.However,we maintain our policy of looking for value propositions,and will only purchase assets at the right price,not any price.As the cha
67、irman has discussed,the developments for the PNG gas project and the PNG to Australia natural gas pipeline are encouraging.The challenges for this project are immense,as are the benefi ts of the project to Australia and PNG.APA continues to believe that the PNG gas project offers a real option to en
68、sure the continuation of supply of natural gas to south-east and northern Australia over the coming decades.The cost of building the PNG natural gas pipeline could be several billion dollars,and is scheduled to be completed by the end of this decade.A“green”light for this project will provide major
69、opportunities for APA.Natural Gas and the EnvironmentThere is mounting scientifi c evidence that climate change may be occurring as a consequence of carbon dioxide emissions on our environment.APA believes that a socially responsible position for all industries,is to take action to reduce that impac
70、t.Australia needs a national energy strategy that tackles this important issue.APA encourages the use of natural gas over other fossil fuels.It is a fuel of transition and will assist in the reduction of CO2 emissions.Natural gas is the right choice as a transitional fuel to satisfy Australian energ
71、y demands for the next generation,while an economically and environmentally sustainable solution is developed to reduce CO2 emissions.Renewable fuel sources such as wind power and solar may have value in the energy mix in the future natural gas can make a difference now.The FutureI am very positive
72、about the future,and excited by the prospects for growth and expansion that are available to APA.We continue to grow and develop new markets because APAs business model is based on real world experience,expertise and industry skills.People are our greatest asset.Our business is based on the strength
73、 of real people,with years of experience in the energy and gas pipelines business,and we make real profi ts for our unitholders by knowingthat business.I thank the board for their trust in me,and my colleagues for their dedication and performance.Most importantly,I thank unitholders for the opportun
74、ity to serve them.M J McCormackChief Executive Offi cerCHIEF EXECUTIVE OFFICERS REPORT6NATURAL GAS IS THE RIGHT CHOICE AS A“TRANSITIONAL”FUEL TO SATISFYAUSTRALIAN ENERGY DEMANDS FOR THE NEXT GENERATION.“INTELLIGENT PIG”BEING REMOVED FROM THE MOOMBA TO SYDNEY PIPELINEQLDCentury MineKarumbaTownsvilleG
75、as pipelineOil pipelineSlurry pipelineCGP MoranbahMt IsaCanningtonBarcaldineBlackallGladstoneRockhamptonInjuneBundabergMaryboroughRomaGlentullockMoonieBRISBANELEGENDCheepieGilmore FieldBalleraJackson7ACQUISITIONSIn 2005,APA completed two major acquisitions.The$209 million acquisition of the Goldfiel
76、ds and Parmelia Pipelines in August 2004,was previously reported in the 2004 Annual Report.In February 2005,APA acquired the remaining minority interests in the Carpentaria Gas Pipeline for$97 million.In February 2005,APA acquired the 30%minority interest in the Carpentaria Gas Pipeline(“CGP”)for$97
77、 million,including transaction costs.The purchase was funded from existing debt facilities and the acquisition is earnings and cash flow accretive from day one,and contributed four months revenue to the financial year result.It will be a strong contributor to future results.The Carpentaria region,th
78、rough which the CGP traverses,is renowned for its resource wealth and has world class deposits of copper,silver,lead and zinc.The region has high prospectivity and is likely to be the source of many new mining operations in the future.The CGP links the Ballera gas fields in south-west Queensland to
79、WMC Fertilizers Phosphate Hill operations,BHP Billitons Cannington mine(via APAs 100%owned Cannington lateral pipeline),Xstratas Mt Isa mine and CS Energys Mica Creek power station near Mt Isa.The pipeline is 840 kilometres long with one mid-line compressor station and has a capacity of approximatel
80、y 38 PJ per annum in its current configuration.The pipeline can be further expanded through the installation of additional compressor stations to reach its fully licensed capacity of approximately 63 PJ per annum.Derogations under the National Gas Access Code provide a degree of tariff certainty unt
81、il 2023.Strategically,the CGP is the only pipeline supplying the mineral-rich Carpentaria region.It is well placed to play a key role in delivering gas in the future either from existing Queensland sources or proposed sources such as PNG gas or Queensland CBM developments.The acquisition of the CGP
82、interest is consistent with APAs strategy of acquiring the minority interests in our existing pipelines.This acquisition,combined with our acquisition of the GGT and Parmelia gas assets in Western Australia,further diversifies our portfolio of pipelines and our overall revenue mix.GGT(WA)34.5%MSP(NS
83、W)33.0%CGP(QLD)12.0%RBP(QLD)12.0%AGT(NT)8.0%MWP(WA)0.5%APA Revenues 12 months to 30 June 2005GGT(WA)32.5%MSP(NSW)36.0%CGP(QLD)11.0%RBP(QLD)11.0%AGT(NT)9.0%MWP(WA)0.5%APA Revenues 12 months to 30 June 2004Continuing Revenue DiversificationBOARD OF DIRECTORS8Ross M Gersbach BBus,CPA NON-EXECUTIVE DIRE
84、CTORAppointed 26 August 2004Mr Ross Gersbach is group manager,infrastructure investments with AGL.Mr Gersbach was appointed to this position in 2004,prior to which he held the position of group manager,corporate development.Mr Gersbach has been with AGL since 1986 and has had senior roles across a n
85、umber of AGLs operating units,including AGLs pipeline division.Mr Gersbach is a director of Elgas Limited,ActewAGL and a number of AGL investment subsidiaries.Mr Gersbach is a member of the Nominations and Remuneration Committee and the Audit and Risk Management Committee.Jane F McAloon BEc(Hons),LL
86、B NON-EXECUTIVE DIRECTORAppointed 23 March 2005Ms Jane McAloon is currently group manager,corporate and external services with AGL and was appointed company secretary of AGL in August 2004.She has previously held the positions of deputy director general of the NSW Cabinet Offi ce,director general of
87、 the NSW Ministry of Energy and Utilities and executive director strategy,NSW Co-ordinator of Rail.FROM LEFT TO RIGHT:ROSS GERSBACH,JANE McALOON,RUSSELL HIGGINS,MURI MUHAMMAD,ROBERT WRIGHT AND GEORGE BENNETT.9FROM TOP:WILUNA COMPRESSOR STATION IN WESTERN AUSTRALIA AND THE CONSTRUCTION OF CARPENTARIA
88、 GAS PIPELINE IN QUEENSLANDRussell A Higgins BEc,FAICDINDEPENDENT NON-EXECUTIVE DIRECTOR Appointed 7 December 2004Mr Russell Higgins was most recently the chairman of the Australian Governments Energy Task Force and associate secretary in the Department of the Prime Minister and Cabinet.Mr Higgins h
89、as had extensive experience both locally and internationally in the energy sector and in economic and fiscal policy.Among his many roles,Mr Higgins was secretary and chief executive officer of the Department of Industry,Science and Resources from 1997 to 2002,and the Australian Governments represent
90、ative on the National Grid Management Council and on the Council of Australian Governments Gas Reform Task Force.Mr Higgins is the chairman of the Co-operative Research Centre for Coal in Sustainable Development and chairman of the CSIRO Energy Transformed Flagship Advisory Committee.He is a former
91、chairman of the Snowy Mountains Council,former chairman of the Australian Governments Management Improvement Advisory Committee and a former director of EFIC,CSIRO,Austrade,the Australian Industry and Development Corporation,the Australian Tourist Commission,and the Australian Sports Commission as w
92、ell as former member of the Australian Governments Joint Economic Forecasting Group.Mr Higgins is a member of the Audit and Risk Management Committee.Muri Muhammad MScINDEPENDENT NON-EXECUTIVE DIRECTOR Appointed 8 March 2000Mr Muri Muhammad retired from Petronas in August 2002 and was re-appointed a
93、s adviser,gas business in the Presidents Office(Petronas)until 30 March 2005.He brings to the responsible entity 30 years experience in the chemicals and petroleum industry as well as expertise in the domestic and international gas transmission and distribution,gas utilisation,co-generation and conv
94、ersion businesses where he has held various senior executive positions.He was appointed vice president for gas business in 1998 until his retirement in August 2002.In that role,he was involved in Petronas gas development projects in Iran,India,Algeria,Myanmar,Pakistan,Vietnam and China.He has held s
95、everal directorships including chairman of the board of Petronas subsidiaries and associate companies in Malaysia and abroad.He has been involved in district cooling co-generation;pipeline gas transmission and distribution;liquefied natural gas production and marketing;and urea/ammonia production an
96、d marketing.He currently sits on the boards of Transportadora de Gas Del Norte(Argentina)and Petronas Gas Berhad.Mr Muhammad is a member of the Nominations and Remuneration Committee.Robert J Wright BCom,FCPAINDEPENDENT NON-EXECUTIVE DIRECTOR Appointed 11 February 2000Mr Robert Wright has over 30 ye
97、ars financial management experience,having held a number of chief financial officer positions,including finance director of David Jones Limited.He is currently the chairman of Dexion Limited and a director of SAI Global Limited,Super Cheap Auto Group Limited and the reconstructed Harris Scarfe Austr
98、alia Pty Limited.Mr Wright is the chairman of the Audit and Risk Management Committee.George H Bennett FCAINDEPENDENT CHAIRMAN Appointed 11 February 2000Mr George Bennett is a company director with almost 40 years experience at accounting services firm KPMG.Mr Bennett retired as national executive c
99、hairman of KPMG and chairman of the KPMG Asia Pacific board in 1993.His other directorships include Brazin Limited,Fantastic Holdings Limited,Macquarie Leisure Management Limited and Macquarie Office Management Limited.Mr Bennett is also the chairman of the Nominations and Remuneration Committee.MAN
100、AGEMENT TEAM10Stephen P Ohl BEng,GradDipMan,MIEAust,FAICDGENERAL MANAGEROPERATIONSMr Ohl is responsible for the business performance of all APA assets.This includes primary responsibility for the operation,contract management,commercial development and technical regulation of all pipeline and relate
101、d assets.Mr Ohl is also a director on a number of subsidiary companies within the APA group.Mr Ohl has over 30 years experience in the petrochemical,oil and gas and pipeline industries of which 15 years was spent managing and operating APA assets which were previously owned by AGL.Mr Ohl has tertiar
102、y qualifi cations in engineering and management and is a member of the Institution of Engineers Australia,fellow of the Australian Institute of Company Directors and past president of Australian Pipeline Industry Association.Sandra M Dureau BA(Asian Studies),LLBGENERAL COUNSELMs Dureau is responsibl
103、e for the management of legal and economic regulatory matters affecting APA assets.This includes responsibility for the outcome of regulatory processes under the National Gas Access Code.Ms Dureau has extensive legal and regulatory experience in energy infrastructure,including gas pipelines,having w
104、orked in the industry since 1996 in legal,regulatory and commercial roles.Prior to moving in-house,Ms Dureau worked as a solicitor for 10 years.Ms Dureau is a director on a number of subsidiary companies within the APA group.11Richard F Francis BCom,CA,MBACHIEF FINANCIAL OFFICERMr Francis joined APA
105、 on 1 August 2005.Mr Francis is responsible for the fi nancial management of APA.This includes accounting and fi nancial reporting,fi nancial compliance and governance,taxation and treasury functions.Mr Francis has 23 years accounting experience,including 15 years in chartered accounting in Australi
106、a and the UK and eight years in commerce.Prior to joining APA,Mr Francis was the group fi nancial controller of Origin Energy for over fi ve years from its initial listing in early 2000.He also held a number of divisional senior management positions in Boral Energy and Boral,including commercial man
107、ager,trading&development and operations manager,Energy Trading Group.Mr Francis is a chartered accountant.Mr Francis is also a director on a number of subsidiary companies within the APA group.Austin J V James LLBCOMPANY SECRETARY/GENERAL MANAGER CORPORATEMr James is responsible for the management o
108、f corporate services functions including public and unitholder relations,and administration,and has been the company secretary for the APA group for the last fi ve years.Mr James has substantial experience in corporate,legal and regulatory roles.Prior to APA,Mr James worked for AGL,where he held sen
109、ior management positions including manager fi nance and planning,manager taxation and manager development projects.Mr James has been admitted to the Supreme Court of New South Wales as a barrister.Michael J McCormackCHIEF EXECUTIVE OFFICERRead Mr Mick McCormacks profi le in the Chief Executive Offi
110、cers Report,on page 5.FINANCIAL REPORTCONTENTSCorporate Governance 13Directors Report 22Statement of Financial Performance 31Statement of Financial Position 32Statement of Cash Flows 33Notes to the Financial Statements 34Directors Declaration 73Auditors Declaration of Independence 74Independent Audi
111、t Report 75Additional Stock Exchange Information 77Unitholder Information 78Glossary of Terms 79Directory and Financial Calendar 80 1213CORPORATE GOVERNANCE The board of directors(“board“or“directors“)of Australian Pipeline Limited(“APL“or“responsible entity“),as responsible entity for AustralianPip
112、eline Trust(“APA“or“Trust“)and its controlled entities(together“consolidated entity“),is responsible for the consolidated entitys corporategovernance practices.The board had conducted a review of the corporate governance practices following the publication of the ASX Corporate Governance Councils“Pr
113、inciples of Good Corporate Governance and Best Practice Recommendations“(“Principles“),which became applicable to APA in the financialyear ended 30 June 2004.APA reviews its governance practices on an ongoing basis against the Principles.For maximum transparency,each of the ten Principles issued by
114、the Australian Stock Exchange(“ASX“)has been responded to in turn:Principle 1:Lay solid foundations for management and oversight by the boardThe boards responsibilities are encompassed in a charter,which is published on APAs website(“website“).The major roles it has defined to fulfilits responsibili
115、ties to APA unitholders(“unitholders“)and the community are to:(a)set the strategic direction of the consolidated entity with management and monitor managements implementation of that strategy;(b)select and appoint(and,if appropriate,remove from office)the managing director(“MD”)/CEO,determine his c
116、onditions of service andmonitor his performance against established objectives;(c)ratify the appointment(and,if appropriate,the removal from office)of the CFO and the company secretary;(d)approve conditions of service and performance monitoring procedures to apply to senior management;(e)monitor fin
117、ancial outcomes and the integrity of reporting(in particular approve annual budgets and longer term strategic and business plans);(f)set specific limits of authority for management to commit to new expenditure,enter contracts or acquire businesses without prior board approval;(g)ensure that effectiv
118、e audit,risk management and compliance systems are in place to protect the consolidated entitys assets and to minimisethe possibility of APA operating beyond the constitution or beyond acceptable risk parameters;(h)establish and maintain a code of conduct(“code“);(i)monitor compliance with regulator
119、y requirements(including continuous disclosure)and code;(j)review senior management succession planning and development on a regular basis;and(k)provide effective and timely reporting to unitholders.To assist it in carrying out its responsibilities,the board has established standing committees of it
120、s members.They are:IAudit and Risk Management Committee;and INominations and Remuneration Committee.Note that the Nominations Committee amalgamated with the Remuneration Committee during the year.Directors appointed at the time of the public float in 2000,have not received formal letters of appointm
121、ent,though they have received less formal letters from the chairman in response to their letter of consent to act as a director.All independent directors appointed since,have received formal appointment letters.The board delegates responsibility for implementing the strategic direction and for manag
122、ing the day-to-day operations of the consolidated entity to the MD/CEO.There are clear lines of communication established between the chairman and MD/CEO to ensure that the responsibilitiesand accountabilities of each are clearly understood.The MD/CEO and the CFO(and other senior management)have ser
123、vice contracts setting out their duties,responsibilities,conditions of serviceand termination entitlements.CORPORATE GOVERNANCE 14Principle 2:Structure the board to add valueThe board determines its size and composition,subject to limits imposed by APLs constitution.The constitution provides for a m
124、inimum of threedirectors and a maximum of 12.Up to 1 July 2005,the board determined that there would be seven directors,including the MD.With theretirement of the MD as of 1 July 2005,the board has reduced its number to six directors,all of whom are non-executive.The current CEO is nota director of
125、APA.Since July 2005,the board consists of three non-corporate directors(all independents),a representative of Petronas(also an independent)and tworepresentatives of The Australian Gas Light Company(“AGL“).From June 2004,unitholders have the ability to nominate candidates for the three non-corporate
126、independent director positions,upon retirementor vacancy of the existing incumbents.The three non-corporate directors nominated by unitholders,will retire on a rotating annual basis and maystand for re-election.In August each year,unitholders will be notified by announcement to ASX that they may nom
127、inate a person(s)for election tothe board as a non-corporate director.Unitholders will have 15 days from the date of announcement to ASX to lodge a nomination form togetherwith the relevant consent to act as a director.Once nominations are received by the required date,APL will advise unitholders of
128、 all candidates who have been validly nominated and presentits nominations to unitholders at the APA annual meeting,which is generally held in October each year.A majority resolution by unitholders on nominations presented to the APA meeting will confirm unitholders intentions.Unitholders will not b
129、e able to vote for the two directors appointed by AGL,the one director appointed by Petronas,or the managing director(if any).A majority of the current members of the board are“independent“within the ASX definition.Those members are Messrs G H Bennett(chairman of the board),R J Wright(chairman of th
130、e Audit and Risk Management Committee),R A Higgins and M Muhammad(the Petronas representative).Mr R M Gersbach and Ms J F McAloon are not considered to be independent by virtue of their positions as directors appointed by AGL(whichowns 30%of the units on issue in the Trust).Mr J K McDonald,the forme
131、r MD,was also not considered to be independent.The Nominations and Remuneration Committee(“committee“)of the board comprises three non-executive directors,Messrs G H Bennett(chairman),R M Gersbach and M Muhammad.The terms of reference of the committee are set out in Note 38 to the financial statemen
132、ts.The committee met five times during the year ended 30 June 2005.Details of attendance are set out on page 28.The committee may make use ofexternal consultants if that is deemed appropriate.Succession planning for the board is reviewed regularly,first by the committee and then by the board.In cons
133、idering potential new non-corporatedirectors to commend to shareholders and unitholders,the board seeks to identify candidates with appropriate skills and experience to contributeto the effective direction of APL,who can exercise an independent and informed judgement on matters which come to the boa
134、rd,and who arefree of any business or other relationship that may interfere materially with the exercise of that independent judgement.The chairman is selected by the full board.The MD(if any)is an executive director of APL and CEO of the consolidated entity.The directors,at any time during the fina
135、ncial year,or since,are listed below with a brief description of their qualifications,experience and specialresponsibilities:Mr G H Bennett FCA Independent ChairmanMr R M Gersbach BBus,CPA Non-Executive DirectorMr R A Higgins BEc,FAICD Independent Non-Executive DirectorMs J F McAloon BEc(Hons),LLB N
136、on-Executive DirectorMr M Muhammad,MSc Independent Non-Executive DirectorMr R J Wright BCom,FCPA Independent Non-Executive Director(See biographies for existing directors on pages 8 and 9).CORPORATE GOVERNANCE 15Biographies of directors who serve as alternate directors,or who retired during the fina
137、ncial year are set out below.Mr Ed Osman Ridzwan BSc,MBAAlternate Non-Executive Director for Mr M Muhammad.Appointed 25 September 2003.Mr Ed Osman Ridzwan has been with Petronas for more than 18 years.His career has included roles as process engineer in Asean BintuluFertilizers ammonia plant in Sara
138、wak,manager for liquefied natural gas marketing and sales in Malaysia LNG Sdn Bhd and manager in Petronasbusiness evaluation unit,which has provided him with sound knowledge and experience in the oil and gas industry,especially in the area ofstrategy and development of global liquid natural gas.In J
139、une 2003,he was promoted to general manager of business development unit,corporate planning and development division,a position hecurrently holds.As general manager,Mr Ridzwan co-ordinates Petronas mergers and acquisition efforts and is responsible for the evaluation anddevelopment of business oppor
140、tunities worldwide and in accordance with Petronas corporate strategies and targets.Mr Ridzwan sits on the boards of several of Petronas domestic and international subsidiaries and associate companies either as a full or alternate member.Mr L J Fisk FAICD,FCICS,FCPANon-Executive Director.Appointed 1
141、1 February 2000.Retired 26 August 2004.Mr Les Fisk was group manager,corporate services and company secretary with AGL.He was appointed to this position in 1997,having joinedAGL as company secretary in 1995.Prior to joining AGL,Mr Fisk had a 25 year career with Qantas Airways Limited,culminating in
142、the position ofdirector of corporate services and company secretary.Mr Fisk was a director of Elgas Limited.Mr J A Fletcher BSc,MBANon-Executive Director.Appointed 11 February 2000.Retired 23 March 2005.Mr John Fletcher has over 30 years experience in finance and commerce and retired in August 2003
143、after a distinguished career of 24 years withAGL.During that time,Mr Fletcher held the position of group general manager,finance for seven years.Prior to that,Mr Fletcher held a numberof senior positions including group controller,treasurer and group manager,finance.His most recent position,prior to
144、 retiring,was as groupmanager,asset management.Mr Fletcher is a director of Foodland Associated Limited.Mr T C Ford FAICDIndependent Non-Executive Director.Appointed 11 February 2000.Retired 7 December 2004.Mr Tom Ford is an investment banker and consultant,with over 30 years experience in stockbrok
145、ing and banking.Mr Ford is chairman ofRESIMAC Limited.He is also a director of Amalgamated Holdings Limited and Resolute Mining Limited.Mr Ford is a former director of CreditUnion Financial Services(Australia)Limited.Mr Ford is a member of Finance and Treasury Association Limited and on the committe
146、e of Australian Business Economists.Mr Ford retired in1991 as a senior executive director of Capel Court Corporation Limited and as an executive director of Capel Court Securities Limited.Mr J K McDonald FAICDManaging Director.Appointed MD 3 June 2002.Retired as of 1 July 2005.Mr James(“Jim”)McDonal
147、d has extensive experience in general management in the gas transmission industry.He joined APA from AGL,wherehe was divisional general manager pipeline operations in Australia.Prior to his roles with AGL,Mr McDonald spent 15 years with Esso AustraliasGippsland Production Group,including several yea
148、rs in senior management positions.Mr McDonald was president and member of the Pipeline Owners Committee of Australian Pipeline Industry Association(“APIA“),having servedas past chairman of the Environment Affairs Committee of APIA.He was also a member of the board of Australian Gas Association(“AGA“
149、)andAustralian Council for Infrastructure Development.He was past chairman of the Gas Transmission Committee of AGA.In February 2005,Mr McDonald announced his intention to retire as of 1 July 2005 and Mr Mick McCormack was appointed as CEO from that date.CORPORATE GOVERNANCE 16Principle 3:Promote et
150、hical and responsible decision makingAPA has policies on ethical and responsible decision making,including policies on unit trading by directors and senior managers,and on conflictsof interest.APAs Code of Conduct(“code“),which applies to directors as well as employees,is available on the website.Th
151、e code is important,but equally important is the encouragement of ethical conduct not just by edict,but also by example,from all involved in APA.It is the boards objective that all dealings with staff,with customers,with regulatory authorities and with the community should be conductedhonestly,fairl
152、y,diligently and in accordance with all applicable laws.Any departure from such practice is treated very seriously.APA has a formal policy on dealing in units.The policy provides that directors and staff may buy and sell APA units only during the four weekperiods following the release to ASX of the
153、half year and full year results and the annual meeting of APA,unless exceptional circumstances apply.In any case,directors and staff are precluded from buying or selling units at any time if they are aware of any price-sensitive information which hasnot been made public.Principle 4:Safeguard integri
154、ty in financial reportingAPA complies with all the ASX recommendations under this Principle.The MD/CEO and the CFO have,for many years,provided detailed written undertakings to the board providing assurances that the consolidatedentitys financial reports present a“true and fair view“and are in accor
155、dance with relevant accounting standards.The board has established an Audit and Risk Management Committee(“committee“),comprising three non-executive directors,all withappropriate experience.They are Messrs R J Wright(chairman),R M Gersbach and R A Higgins.Mr T C Ford was a member until his retireme
156、nton 7 December 2004 and Mr J A Fletcher was a member until his retirement on 23 March 2005.Committee members qualifications are disclosedon pages 8 and 9.The MD/CEO,CFO,company secretary/general manager-corporate,general manager-operations and the external auditor attend committeemeetings at the di
157、scretion of the committee.The committee also meets privately with the external auditor without management presence.The minutes of each committee meeting are reviewed at the subsequent meeting of the board and the chairman of the committee reports on thecommittees conclusions and recommendations.The
158、committee held five meetings during the year ended 30 June 2005.The details of meetingsattended by each member are set out in the Directors Report on page 28.The role and responsibilities of the committee are to:(a)recommend to the board the appointment of the external auditor and its fees;(b)review
159、 and/or evaluate:Ithe audit plan of the external auditor;Ithe performance of the external auditor;Ithe provision of non-audit services by the external auditor,including the quantum of fees and the types of activities performed;Ithe effectiveness of the internal review processes;Ithe management lette
160、rs from the external auditor and managements responses;Ithe adequacy and effectiveness of the reporting and accounting controls of the consolidated entity;Ithe financial reports to be made to unitholders and/or the public prior to their release;Ithe consolidated entitys exposure to business risks;CO
161、RPORATE GOVERNANCE 17Ireports from management,the compliance service provider and/or the external auditor concerning any significant regulatory,accounting orreporting development to assess potential financial reporting issues;Ithe adequacy of risk management strategies in relation to the maintenance
162、,operations or replacement of assets of the consolidated entity(andmake recommendations to the board);andIthe adequacy of risk management strategies in relation to any statutory or policy requirements,including environment,and occupationalhealth and safety(and make recommendations to the board);(c)a
163、pprove and recommend acceptance to the board of:Iall significant accounting policy changes;Ithe consolidated entitys taxation position;andIhalf yearly and annual financial statements;(d)determine that no restrictions are being placed upon either the internal review processes or the external auditor;
164、(e)monitor the standard of corporate conduct in areas such as arms length dealings and likely conflicts of interest;(f)direct any special projects on investigations deemed necessary by the board;and(g)perform other duties as directed by the board,from time to time.Principle 5:Make timely and balance
165、d disclosureA continuous disclosure regime operates throughout APA.The continuous disclosure policy is posted on the website.Policies and procedures arein place to ensure matters that a person could reasonably expect to have a material effect on the unit price are announced to ASX in a timelymanner.
166、The company secretary is the nominated continuous disclosure officer and he reports to the board quarterly on matters notified to ASX.In addition,direct reports to the MD/CEO also confirm in writing to the board,on a quarterly basis,that matters which might need to be disclosedhave been brought to t
167、he attention of the continuous disclosure officer for review.In the event a decision is made not to notify ASX of a particular event or development,the reasons for non-notification are advised to the board.Directors receive copies of all announcements immediately after notification to ASX.All announ
168、cements are posted on the website.Principle 6:Respect the rights of unitholdersAPA endeavours to keep its unitholders fully informed of matters likely to be of interest to them.It does this through:Ireports to ASX and the press;Ihalf year and full year profit announcements;Ia periodic newsletter;Ian
169、nual reports;Irelease to ASX of information provided to analysts;andIwebcasting of half year and full year accounts presentations.All the above are notified on the website.Unitholders are given the opportunity to provide their e-mail addresses to APA to enable them toreceive reports and announcement
170、s to ASX without delay.At the annual meeting,the chairman encourages questions and comments from unitholders and seeks to ensure the meeting is managed to givethe maximum number of unitholders an opportunity to participate.In the interests of clarity,questions on operational matters may be answered
171、bythe MD/CEO or another appropriate member of senior management.The external auditor attends APAs annual meeting and is available to respond to questions about the conduct of the audit and the preparationand content of the Independent Audit Report.CORPORATE GOVERNANCE 18Principle 7:Recognise and man
172、age riskAny business faces a wide variety of risks depending on the nature of its operations and the regions within which it operates.APA has a formalenterprise-wide risk program based on Standards Australias AS/NZS 4360:1999(Risk Management).This program is supported by APAs RiskManagement Statemen
173、t,which has been endorsed by the board on the recommendation of the MD/CEO and the Audit and Risk ManagementCommittee.All outstanding audit issues are monitored through to satisfactory completion.The external auditor also reports findings on relevant risk issues tothe Audit and Risk Management Commi
174、ttee and to the board on a half yearly basis.The system of risk management and internal control ensures compliance with the policies established by the board.This system underpins theintegrity of the financial statements and the operations and management of APA assets.FINANCIAL RISK MANAGEMENT The o
175、ngoing review of control systems that is undertaken is supported by a system of regular internal reviews to ensure that the outsourcedcomponents of the accounting function operate effectively.This review,which is performed on a half year basis,ensures that the financial systemsand controls and proce
176、dures,operate in accordance with the Pipeline Management Agreement.OPERATIONAL AND ASSET MANAGEMENTAPA ensures the integrity of pipeline assets through the implementation of asset specific Safety and Operating Plans(“SAOPs“)complying withthe conditions of the relevant pipeline licence and Australian
177、 Standard AS 2885.3 Pipelines Gas and Liquid Petroleum Part 3:Operations andMaintenance.These SAOPs detail the policy for personnel,the public and environmental protection as identified in risk assessments satisfyingAustralian Standard AS 2885.1 Pipelines Gas and Liquid Petroleum Part 1:Design and C
178、onstruction.The plans include measures to protect pipeline assets,promote public awareness of the pipelines,operate and maintain the pipelines safely,respond to emergencies,prevent gas escapes,carry out inspections and ensure that plans and procedures continue to comply with engineeringdesign.Each S
179、AOP is reviewed every two years and updated if significant incremental change has occurred.The risk assessments are reviewedand updated to coincide with any change in use of the relevant pipeline and at intervals not exceeding five years.The SAOP for each of the New South Wales and Queensland pipeli
180、nes is audited annually by qualified external auditors.In Western Australia therequirements of SAOP are met in the Safety Case that is prepared for each pipeline.Each Safety Case is audited regularly by the Western Australiatechnical regulator.CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER CERT
181、IFICATIONAs noted in the Directors Declaration on page 73,the CEO and CFO have provided the board with written declarations that:Ithe statement given to the board on the integrity of APAs financial statement,operating and asset management is founded on a sound systemof risk management and internal c
182、ompliance and control which implements the policies adopted by the board;andIAPAs risk management and internal compliance and control system is operating efficiently and effectively in all material respects.CORPORATE GOVERNANCE 19Principle 8:Encourage enhanced performanceA formal review process to a
183、ssess board performance was introduced during the year ended 30 June 2005.The review involved completion of a questionnaire by each board member to assess the performance of the board as a whole and board committees.Using the services of anindependent third party to collate the responses,the board t
184、hen met to discuss and consider the results and make recommendations.The performance review covers the role of the board and its committees,their composition,how the board operates,how board members interact,the effectiveness of the chairman in leading the board and board performance generally.The r
185、eview indicated a sound operation in all key areas.APA has processes in place to review the performance of senior management.Arrangements are formal and quantitative.Each senior manager,including the MD/CEO,has personal objectives as well as objectives related to business units and APA as a whole.Th
186、ey are assessed againstthose objectives on an annual basis,or more frequently if that is indicated.A more detailed outline is set out in Note 38 to the financial statements.The assessment and monitoring of the MD/CEO are handled by the chairman with the assistance of the Nominations and Remuneration
187、 Committee.A full report is provided to,and discussed in detail by,the board.Assessment and monitoring of other senior managers are handled by the MD/CEOwho reports in detail to the chairman and the Nominations and Remuneration Committee.Each year,the board devotes time to consider broad corporate g
188、overnance matters,including the continuing relevance of existing committees andto reviewing its own performance.The chairman is responsible,in the first instance,for monitoring the contribution of individual directors andcounselling them on any areas for improvement.Subject to normal privacy require
189、ments,directors have unfettered access to the consolidated entitys records and information,and to the companysecretary and other relevant senior officers.They receive regular detailed reports on financial and operational aspects of APAs business and mayrequest elaboration or explanation of those rep
190、orts at any time.Each director has the added right to seek independent professional advice at APAsexpense.Prior approval of the chairman is required,but this may not be unreasonably withheld.Directors and senior management are encouraged to broaden their knowledge of APAs business and to keep abreas
191、t of developments inbusiness more generally by attendance at relevant courses,seminars and conferences both in Australia and overseas.APA meets expensesinvolved in such activities.Principle 9:Remunerate fairly and responsiblyA detailed outline of the remuneration and reward principles for directors
192、and senior staff is set in Note 38 to the financial statements.Principle 10:Recognise the legitimate interests of stakeholdersAPAs code sets out the behaviour required of directors,employees and contractors.The code provides a mechanism to enable employees toreport breaches of the code without any f
193、ear of retribution.The full code is published on the website.CORPORATE GOVERNANCE 20ASX Corporate Governance Councils Best Practice Recommendations The following table provides a summary of APAs compliance with the Principles:ASX PRINCIPLECOMPLY(YES/NO)Principle 1:Lay solid foundations for managemen
194、t and oversight by the board1.1Formalise and disclose the functions reserved to the board and those delegated to the management YesPrinciple 2:Structure the board to add value2.1A majority of the board should be independent directorsYes2.2The chairman should be an independent director Yes2.3The role
195、s of the chairman and MD/CEO should not be exercised by the same individual Yes2.4 The board should establish a nomination committee Yes2.5 Provide the information indicated in the guide to reporting on Principle 2YesPrinciple 3:Promote ethical and responsible decision making3.1Establish a code of c
196、onduct to guide the directors,the MD/CEO,the CFO,and any other key executives as to:3.1.1the practices necessary to maintain confidence in APAs integrity;andYes3.1.2the responsibility and accountability of individuals for reporting and investigating reports of unethical practicesYes3.2Disclose the p
197、olicy concerning trading in APA securities by directors,officers and employees Yes3.3 Provide the information indicated in the guide to reporting on Principle 3 YesPrinciple 4:Safeguard integrity in financial reporting4.1Require the MD/CEO and the CFO to state in writing to the board that the financ
198、ial reports present a true and fair view,in all material respects,of APAs financial condition and operational results and are in accordance with relevant accounting standardsYes4.2 The board should establish an audit committee Yes4.3 Structure the audit committee so that it consists of:Ionly non-exe
199、cutive directors;YesIa majority of independent directors;YesIan independent chairperson,who is not chairperson of the board;and YesIat least three members Yes4.4The audit committee should have a formal charterYes4.5Provide the information indicated in the guide to reporting on Principle 4YesCORPORAT
200、E GOVERNANCE 21ASX PRINCIPLECOMPLY(YES/NO)Principle 5:Make timely and balanced disclosure 5.1Establish written policies and procedures designed to ensure compliance with ASX Listing Rules disclosure requirements and to ensure accountability at a senior management level for that complianceYes5.2Provi
201、de the information indicated in the guide to reporting on Principle 5 YesPrinciple 6:Respect the rights of unitholders6.1Design and disclose a communications strategy to promote effective communication with unitholders and encourage effective participation at general meetings Yes6.2Request the exter
202、nal auditor to attend the annual general meeting and be available to answer unitholder questions about the conduct of the audit and the preparation and content of the auditors reportYesPrinciple 7:Recognise and manage risk7.1 The board or appropriate board committee should establish policies on risk
203、 oversight and managementYes7.2 The MD/CEO and the CFO(or equivalent)should state to the board in writing that:7.2.1the statement given in accordance with best practice recommendation 4.1 is founded on a sound system of risk management and internal compliance and control which implements the policie
204、s adopted by the board;andYes7.2.2.APAs risk management and internal compliance and control system is operating efficiently and effectively in all material respectsYes7.3 Provide the information indicated in the guide to reporting on Principle 7YesPrinciple 8:Encourage enhanced performance8.1 Disclo
205、se the process for performance evaluation of the board,its committees and individual directors and key executivesYesPrinciple 9:Remunerate fairly and responsibly9.1 Provide disclosure in relation to the companys remuneration policies to enable investors to understand:Ithe costs and benefits of these
206、 policies;and YesIthe link between remuneration paid to directors and key executives and corporate performance Yes9.2 The board should establish a remuneration committee Yes9.3 Clearly distinguish the structure of non-executive directors remuneration from that of executivesYes9.4 Ensure that the pay
207、ment of equity based executive remuneration is made in accordance with thresholds set in plans approved by shareholdersN/A9.5 Provide the information in the guide to reporting on Principle 9YesPrinciple 10:Recognise the legitimate interests of stakeholders10.1Establish and disclose a code of conduct
208、 to guide compliance with legal and other obligationsYesDIRECTORS REPORT22The directors of Australian Pipeline Limited(“APL“or“responsible entity“)submit herewith the annual financial report of Australian Pipeline Trust(“APA“or“Trust“)and its controlled entities(together“consolidated entity“)for the
209、 financial year ended 30 June 2005(“financial year“or“currentfinancial year“).In order to comply with the provisions of the Corporations Act 2001,the directors report as follows:DirectorsThe names of the directors of the responsible entity during and since the end of the financial year are as follow
210、s.The directors held office for theentire period,unless stated otherwise:Mr G H Bennett(Chairman)Mr R M Gersbach(appointed 26 August 2004)Mr R A Higgins(appointed 7 December 2004)Ms J F McAloon(appointed 23 March 2005)Mr M MuhammadMr R J WrightMr L J Fisk(retired 26 August 2004)Mr J A Fletcher(retir
211、ed 23 March 2005)Mr T C Ford(retired 7 December 2004)Mr Ed Osman Ridzwan(alternate for Mr M Muhammad)Mr J K McDonald MD(retired as of 1 July 2005).The directors qualifications,experience and special responsibilities are provided on pages 8 to 9 and on page 15.SecretaryMr A J V James LLBThe secretary
212、s qualifications,experience and special responsibilities are provided on page 11.Principal ActivitiesThe principal activity of the consolidated entity during the course of the financial year was the ownership of gas transmission pipelines locatedthroughout Australia.The consolidated entity undertook
213、 the sale of transportation and related services to the producers,consumers andaggregators of gas through these gas transmission pipelines.There has been no significant change in the activities of the consolidated entity during the financial year.Operating and Financial Review FINANCIAL PERFORMANCEO
214、perating profit after tax and minorities but before significant items for the year ended 30 June 2005 was$51,014,000,which was an increase of13.4%on the prior year of$44,984,000.The improved performance resulted from acquisitions(as noted below)and increased pipelinetransportation revenue principall
215、y in the Roma to Brisbane Pipeline(“RBP“).After significant items,net profit attributable to unitholders of APA forthe financial year was$69,681,000(2004:$121,292,000).DIRECTORS REPORT23DISTRIBUTION TO UNITHOLDERSOn 30 August 2005,the directors declared a final profit distribution of 6.0 cents per u
216、nit(“cpu“)franked to 40%at the corporate income tax rate,which takes the total distribution in respect of the financial year to 22.5 cpu.This is an increase of 1.0 cpu over the previous financial year,reflecting improved operating performance.HIGHLIGHTSAcquisitions and InvestmentsIAPA acquired the r
217、emaining 45%interest in SCP Investments(No.1)Pty Limited(“SCP“),the 88.2%owner of Goldfields Gas TransmissionPipeline(“GGT“),and Parmelia gas business from CMS(together the“SCP gas business“)on 17 August 2004.APA paid$209,213,000 for theacquisition including a working capital adjustment.Prior to the
218、 acquisition,APA had equity accounted SCPs financial results.From the date of the acquisition,the results of the SCP gas business have been consolidated into APAs figures.IOn 25 February 2005,APA acquired the remaining 30%minority interest in Carpentaria Gas Pipeline(“CGP“)joint venture for$97,238,0
219、00.ISubsequent to year end,APA acquired a 5.3%holding in the issued units of GasNet Australia Group,a gas transmission business listed on ASX.OTHER HIGHLIGHTSIn Queensland,APA entered into:Ia ten year transportation agreement with Incitec Pivot Limited(“IPL“)to transport up to 16 PJ per annum of gas
220、 through the RBP to IPLsfertiliser plant at Gibson Island.The agreement will commence in 2007;Ia variation agreement with CS Energy to increase transportation volumes through the RBP to over 15 PJ per annum,to deliver to CS EnergysSwanbank E power station.The agreement is for a period of 12.5 years
221、and commences immediately;andIa ten year transportation agreement to the new Braemer power station.Starting in 2006,APA will transport six PJ of gas per annum via the RBP.In Western Australia,APA:Ihas advanced planning to expand its Mondarra gas storage facilities following the gas storage optimisat
222、ion agreement signed with WesternPower.Gas storage optimisation is intended to assist Western Power to meet its power requirements in the Perth region;andIsigned a four year contract with Western Power to transport gas through the Parmelia Gas Pipeline to Austral Bricks.In addition,APA renegotiated
223、the syndicated borrowing,which was due to expire in June 2005,on a bilateral basis with the lenders for a termextending up to five years.Project debt under SCP has also been re-financed under the bilateral facility.The new facility is on terms morefavourable than the previous facility,which will low
224、er borrowing costs in future periods.During the year,an APA backed consortium was named preferred bidder to build,own and operate the Trans Territory Pipeline(“TTP“)inNorthern Territory for Alcan.However,following termination of negotiations between Alcan and the Blacktip Joint Venture(which was to
225、supplygas to Alcan),the construction of TTP has been indefinitely delayed.All associated costs have been written off.MOOMBA TO SYDNEY PIPELINE STRESS CORROSION CRACKINGAs previously reported,APA has carried out extensive investigation and analysis of the incidence and impact of SCC on the MSP.The wo
226、rk hasconcentrated on the first 162 kilometres of the MSP where the conditions under which SCC can develop,are most likely to be found.The first 162kilometres of pipeline run through the remote northern parts of South Australia and New South Wales and cross a small section of south-westernQueensland
227、.The main investigation included the running of two“intelligent pigs“through the gas stream in the pipeline to measure and recordirregularities in the steel wall of the pipe.This was carried out in January and March 2005 and preliminary data obtained.DIRECTORS REPORT24From this preliminary data,six
228、sites were identified which required further investigation.In May 2005,these sites were excavated and worksuccessfully carried out which ensured that the MSP continued to operate safely at a sufficient pressure to meet expected load requirements forwinter 2005.A final inspection data report has been
229、 received.On the basis of this report,it has been established that there is a higher occurrence of SCCtowards the beginning of the 162 kilometres of pipeline which declines in severity toward the end of this section.APA is planning to carry out the additional work needed to ensure the continued safe
230、 and reliable operation of the MSP.APA is confident that itwill continue to meet its contractual obligations.APA has provided$23,530,000 in relation to SCC during the year.Of this amount,approximately$12,120,000 will be applied to remediation work,and$8,000,000 has been provided for additional intel
231、ligent pigging exercises,while SCCinvestigative work during the year of$3,410,000 has been written off.FINANCIAL SUMMARYThe following table provides a summary of key financial data as applicable to the current financial year:Year endedYear endedChange Compared30 June 200530 June 2004to 2004$000$000$
232、000%Operating ResultsPipeline revenue267,235185,59181,64444.0Other pipeline revenue89,30474,57714,72719.7Other revenue19,25117,9401,3117.3Total revenue375,790278,10897,68235.1EBITDA178,876133,93544,94133.6EBIT142,058111,36830,69027.6Pre-tax profit77,75465,02112,73319.6Income tax expense(26,430)(19,8
233、25)(6,605)(33.3)Operating profit after tax and minorities,before significant items51,01444,9846,03013.4Significant ItemsSCC repair and investigative work(23,530)(23,530)Due diligence costs on capital acquisition projects recovered/(written off)2,000(5,763)7,763 Mid West Pipeline written off(19,943)1
234、9,943 Tax consolidation benefit SCP group6,964(6,964)Significant items before income tax(21,530)(18,742)(2,788)Tax effect of significant items6,459 2,1384,321 Tax consolidation benefit APA33,73892,912(59,174)Significant items after tax18,66776,308(57,641)(75.5)Profit after income tax and minorities6
235、9,681121,292(51,611)(42.6)Earnings per unit,before significant items18.55c18.25c0.30c1.6Earnings per unit25.33c49.20c(23.87)c(48.5)DIRECTORS REPORT25COMMENTARYRevenuePipeline revenue grew by 44.0%from$185,591,000 to$267,235,000 which was principally due to consolidation into APA of the SCP gas busin
236、essrevenue,which had been previously equity accounted.Excluding the acquired entities share,the Pipeline revenue fell 2.2%to$181,514,000 areduction of$4,077,000 compared to last year.The lower revenue is a direct consequence of the reduction in the transportation revenue on theMSP under the Gas Tran
237、sportation Deed(“GTD“),which was foreshadowed in previous financial reports.The full impact of GTD reduction of$5,621,000 was mitigated by additional revenue from other customers,indicating that the increased competition in gas markets is encouraging the emergence of alternate retailers and aggregat
238、ors.The revenue from the RBP increased by 11.5%from$27,098,000 to$30,213,000 due to an increase in capacity contracted and higherthroughput to existing customers.ExpensesPipeline operating and management expenses increased from$42,521,000 in the previous financial year to$74,879,000 on an operating
239、basis,anincrease of 76.1%,mainly due to the impact of consolidating the newly acquired entities for the first time in 2005.Excluding the Pipeline operatingand management expenses of the acquired entities and a“one-off“adjustment to expenses of the Amadeus Gas Trust in the previous year,expenses were
240、 higher by$2,752,000 to$45,273,000.The net borrowing cost increased by$17,958,000 to$64,305,000 in the current year due to additional borrowing to fund the acquisitions.Interestexpense also benefited from an“one-off”reduction resulting from the re-negotiation of various hedge contracts following the
241、 issue of GuaranteedSenior Notes in the United States private placement market in the previous financial year.Income TaxIncome tax expense is higher as a percentage of pre-tax profit in comparison to the previous financial year,as the share of net profit of jointventure entities(included in Pipeline
242、 revenue)is not tax effected to the extent that such profit is not received as cash dividends.Earnings per UnitEarnings per unit(“EPU“)before significant items increased from 18.25 cpu to 18.55 cpu.Including significant items,EPU decreased from 49.20 cpu to 25.33 cpu.The equity raised through the pr
243、ivate placement of units to fund the SCP gas business acquisition and Distribution Re-investment Plan(“DRP“)increased the number of units on issue,which impacted EPU.Cash FlowCash flow from operating activities of$106,220,000 was$23,905,000 higher than the previous year of$82,315,000 as a consequenc
244、e ofacquisitions,which were cash flow accretive.APA paid$209,213,000 on the SCP gas business acquisition and$97,238,000 on the CGP acquisition.The SCP gas business acquisition wasfunded by a private equity placement of$61,740,000,operating cash flows and borrowings.The cash from acquired entities of
245、$116,424,000 wassubsequently utilised to repay part of the additional borrowing.APA entered into new bilateral debt arrangements for tenures of three and five years.This increases the total unsecured bank facility to$700million from$500 million at 30 June 2004.Unitholder distributions increased from
246、$52,950,000 in the previous financial year to$63,786,000,as a consequence of a higher number of unitsissued and an increase in distributions per unit.Distribution Re-investment PlanThe DRP that was operational for the final distribution for the year ended 30 June 2004 and first interim distribution
247、of the current financial yearraised$11,511,000,net of costs,from the 4,059,000 units that were issued.The DRP has now been suspended and will be reactivated when anadditional requirement for capital arises.As at 30 June 2005,278,895,434 units were on issue.DIRECTORS REPORT26Significant ItemsThe resu
248、lts of the current financial year were impacted by following significant items:Ibased on the investigation and analysis carried out in relation to SCC,APA has identified various sites where repair work needs to beundertaken.As there is a legal and constructive obligation to carry out the repair and
249、further investigative work,an amount of$20,120,000has been provided at 30 June 2005.Expenses for SCC investigative work conducted during the year of$3,410,000 have been written off;IAPA negotiated with the administrators of Dampier to Bunbury Natural Gas Pipeline to recover$2,000,000 towards costs o
250、f APAsunsuccessful bid for the pipeline.The costs incurred in relation to the bid were written off in the previous financial year;andIas outlined in the 2004 annual report,the Business Tax Reform legislation,of which tax consolidation is a part,was being enacted through aseries of successive legisla
251、tion.The tax consolidation benefit of$92,912,000 that was taken into account in the previous financial year wasbased on the prevailing legislation.In March 2005,Tax Laws Amendment(2004 Measures No.6)Act,2005 received Royal Assent.The Actamended the basis of calculation of tax bases of assets of tran
252、sitional entities such as APA,consequently increasing the tax base of assetsfurther.This resulted in the further release of deferred tax liabilities and a corresponding income tax benefit of$33,738,000.Regulatory MattersKey regulatory matters addressed during the financial year included:Ithe appeal
253、to the Tribunal against the ACCCs decision on the access arrangements for the MSP system was finalised in June 2005.Thetribunal ordered that the regulatory value for MSP be set at$834.7 million at 1 July 2003.The ACCC has appealed to the Full Court of theFederal Court against the decision of the Tri
254、bunal,on the basis that the Tribunals decision contained errors of law.The hearing of the appealoccurred in mid-August 2005.APA expects the Federal Court to uphold the Tribunals decision;Iapproval by the Economic Regulation Authority of the GGT access arrangements finalises the regulatory process ef
255、fective 1 August 2005.Additionally,the appeal against the Ministers decision that the pipeline should not be regulated under the Gas Code has been discontinued.With the regulatory process finally complete,APA will pursue new pipeline opportunities in Western Australia;and IAPA and the gas transmissi
256、on industry await the Australian and State Governments implementation of the recommendation contained in theProductivity Commission Final Report on the National Gas Access Regime.The recommendations recognise the need for a simpler,fairer andmore efficient regulatory regime than presently exists.APA
257、 continues to work with Australian Pipeline Industry Association and other industrybodies to ensure the recommendations are introduced in a timely manner.Gas SupplyThe question of sourcing of future natural gas supplies to south-east and northern Australia from the end of this decade continues to be
258、 a major issue.APA has made the decision to support the development of CBM production as a means of partially addressing a conventional natural gas shortfall.CBM has proven to be a useful adjunct energy source and its development will continue to be fully supported by APA.There has been a“missing li
259、nk“in connecting Queensland gas supplies to South Australia and New South Wales.The absence of a physical linkis being managed through gas swap agreements between APAs customers,which enables Queensland gas to be sold in New South Wales.The PNG gas pipeline project provides an opportunity to connect
260、 the eastern coast gas market to northern gas and create the long touted“east coast gas grid“.The announcement by the PNG gas project participants,that they had entered into a conditional agreement with Alcan to deliver 43.5 PJ of gasover 20 years for its Northern Territory based Gove alumina projec
261、t is real progress for the PNG gas pipeline project.This news,together with AGLs announcement of a conditional gas supply agreement with the PNG gas project producers to purchase around1,500 PJ of gas over 20 years from 2009,adds strength to the likelihood that the PNG gas pipeline project will fina
262、lly become a reality.Under the Pipeline Development Agreement(“PDA“)between APA and AGL,APA has the first right to purchase at least 20%of the aggregateownership interest in the proposed PNG gas pipeline,on normal commercial terms,as well as any other future gas transmission projects that AGLintends
263、 to sell.APA understands that the PNG gas project participants are looking to make a final investment decision in the second half of 2006.APA welcomes these developments and looks forward to the PNG gas project becoming a reality.DIRECTORS REPORT27InvestmentAPA has previously advised the market on t
264、he reduction in revenues post December 2006,arising from the contracted reduction in the GTD onthe MSP.APA is confident that the potential reduction in revenue will be offset by opportunities to increase the utilisation of the existing portfolioof pipelines assets,and through targeted acquisitions o
265、f pipelines and complementary assets which will enhance unitholder value.Changes in State of AffairsDuring the financial year,there was no significant change in the state of affairs of the consolidated entity other than that referred to in the financialstatements or notes thereto.Subsequent EventsTh
266、ere has not been any matter or circumstance,other than that referred to in the financial statements or notes thereto,that has arisen since theend of the financial year,that has significantly affected,or may significantly affect,the operations of the consolidated entity,the results of thoseoperations
267、,or the state of affairs of the consolidated entity in future financial periods.Future DevelopmentsDisclosure of information regarding likely developments in the operations of the consolidated entity in future financial years and the expectedresults of those operations is likely to result in unreaso
268、nable prejudice to the consolidated entity.Accordingly,this information has not beendisclosed in this report.Environmental RegulationsAll pipeline assets owned by APA are designed,constructed,tested,operated and maintained in accordance with pipeline licences issued by therelevant State and Territor
269、y technical regulators.All licences require compliance with relevant Australian,State and Territory environmentallegislation and Australian standards.The licences also require compliance with the Australian Standard AS 2885“Pipelines Gas and Liquid Petroleum“,which has specificrequirements for the m
270、anagement of environmental matters associated with all aspects of the high pressure pipeline industry.Environmental plans satisfying Part A of the Australian Pipeline Industry Association Code of Environmental Practice(“Code“)are prepared andindependently audited for construction activities.In accor
271、dance with Part 3 of AS 2885,environmental plans satisfying Part B of the Code are inplace for most operating pipelines and are managed in accordance with APAs contracts and the terms and conditions of the licences that APAhas been issued.Ongoing monitoring of these requirements is achieved through
272、an environmental audit process carried out by an accreditedindependent auditor.The board reviews external audit reports and,on a monthly basis,the internal reports prepared relating to environmental issues.No breacheshave been reported during the financial year and APA has complied fully with the en
273、vironmental management plans that are in place.DistributionsDuring the financial year,the following distributions were made to the unitholders:Profit DistributionaCapital DistributionRelevant PeriodDate Paidcpu$000cpu$000Final distribution for financial year ended 30 June 200427 September 20046.517,
274、864Interim distributions for the financial yearFirst interim distribution30 December 20045.515,244Second interim distribution30 March 20055.515,339Third interim distribution28 June 20055.515,339aAll the profit distributions were franked to 40%.A final profit distribution for the financial year of 6.
275、0 cpu,franked to 40%at the corporate income tax rate,was declared on 30 August 2005.This distribution will be paid on 29 September 2005 and equates to a cash distribution of$16,734,000.DIRECTORS REPORT28Options GrantedNo options were granted during or since the end of the financial year:Iover unissu
276、ed units in APA;andIto the responsible entity.No unissued units in APA were under option as at the date on which this report was made.No units were issued in APA during or since the end of the financial year as a result of the exercise of an option over unissued units in APA.Indemnification of Offic
277、ers and External AuditorDuring the financial year,the responsible entity paid a premium in respect of a contract insuring the directors of the responsible entity,theresponsible entitys secretary,Mr A J V James,and all executive officers of the responsible entity and of any related body corporate of
278、APA againstany liability incurred as such a director,secretary or executive officer to the extent permitted by the Corporations Act 2001.The contract ofinsurance prohibits disclosure of the nature of the liability and the amount of the premium.The responsible entity has not otherwise,during or since
279、 the financial year,indemnified or agreed to indemnify an officer or external auditor of theresponsible entity or of any related body corporate of APA against a liability incurred as such an officer or auditor.Directors Meetings The following table sets out the number of directors meetings(including
280、 meetings of committees of the directors)held during the financial yearand the number of meetings attended by each director(while they were a director or a committee member).During the financial year,15 boardmeetings,and five meetings each of Nominations and Remuneration Committee and Audit and Risk
281、 Management Committee were held:Nominations andAudit and RiskBoard of DirectorsRemuneration CommitteeManagement CommitteeDirectorsHeldAttendedHeldAttendedHeldAttendedG H Bennett151555R M Gersbach12124422R A Higgins7722J F McAloon22M Muhammad111144R J Wright151455Ed Osman Ridzwana4411L J Fisk3311J A
282、Fletcher11933T C Ford7422J K McDonald1412aAlternate for Mr M Muhammad.DIRECTORS REPORT29Directors Unitholdings The following table sets out each directors relevant interest in units of APA as at the date of this report:UnitsUnitsAcquiredDisposedFullyFully Paidduring theof during thePaid UnitsUnits a
283、s atFinancialFinancialas atDirectors30 June 2004YearYear30 June 2005G H Bennett16,27669516,971R M GersbachR A Higgins6,6096,609J F McAloonM Muhammad10,55631910,875R J Wright10,85146311,314Ed Osman RidzwanL J Fisk5,4252325,657J A Fletcher4,3401864,526T C Ford10,00010,000J K McDonald16,27569416,969The
284、re are no contracts to which a director is a party or under which the director is entitled to a benefit and that confer a right to call for or deliverinterests in the scheme.Remuneration ReportThe remuneration report in relation to directors and executives is disclosed in Note 38 to the financial st
285、atements.Information Required for Registered SchemesFees paid to the responsible entity and its associates(including directors and secretaries of the responsible entity,related bodies corporate anddirectors and secretaries of related bodies corporate)out of APA property during the financial year are
286、 disclosed in this report and Note 40 to the financial statements.The responsible entity does not hold any units in APA.AGL,a 50%shareholder in the responsible entity,holds 30%of the units in APA.Thenumber of units in APA issued during the financial year,withdrawals from APA during the financial yea
287、r,and the number of units in APA at theend of the financial year are disclosed in Note 27 to the financial statements.The value of APAs assets as at the end of the financial year is disclosed in the statement of financial position in total assets,and the basis ofvaluation is included in Note 1 to th
288、e financial statements.Auditor Independence and Non-Audit Services APA may decide to employ the auditor,Deloitte Touche Tohmatsu(“Deloitte“),on assignments additional to its statutory audit duties where theauditors expertise and experience with the consolidated entity are relevant.The board has cons
289、idered the non-audit services provided during the year by the auditor and in accordance with written advice provided byresolution of the Audit and Risk Management Committee,is satisfied that the provision of those non-audit services during the year by the auditoris compatible with,and did not compro
290、mise,the auditor independence requirements of the Corporations Act 2001 for the following reasons:DIRECTORS REPORT30Iall non-audit services were subject to the corporate governance procedures adopted by APA and have been reviewed by the Audit and RiskManagement Committee to ensure they do not impact
291、 the integrity and objectivity of the auditor;andIthe non-audit services provided do not undermine the general principles relating to auditor independence as set out in Professional StatementF1“Professional Independence”,as they did not involve reviewing or auditing the auditors own work,acting in a
292、 management or decisionmaking capacity for APA,acting as an advocate for APA or jointly sharing risks and rewards.A copy of the auditors independence declaration as required under section 307C of the Corporation Act 2001 is included in on page 74.Deloitte received,or is due to receive,the following
293、amounts for the provision of non-audit services:Tax consolidation project$474,715Due diligence reporting on acquisitions$218,835Other accounting and assurance services$197,435Total$890,985Rounding APA is an entity of the kind referred to in Australian Securities and Investments Commission(“ASIC“)Cla
294、ss Order 98/0100,dated 10 July 1998,and in accordance with that Class Order amounts in this report and the financial report are rounded off to the nearest thousand dollars,unlessotherwise indicated.Signed in accordance with a resolution of the directors of the responsible entity made pursuant to sec
295、tion 298(2)of the Corporations Act 2001:On behalf of the directorsG H BennettR J WrightChairmanDirectorSYDNEY,30 August 2005STATEMENT OF FINANCIAL PERFORMANCE31ConsolidatedTrust2005200420052004Note$000$000$000$000Revenue from ordinary activities375,642262,08265,1411,038Share of net profits of joint
296、venture entity accounted for using the equity method2,14822,990377,790285,07265,1411,038Pipeline operation and management expenses(98,409)(42,521)Depreciation and amortisation expense(36,818)(22,567)Impairment of non-current assets(19,943)Other pipeline costs(89,304)(74,577)Borrowing costs(82,157)(6
297、3,084)(22)(20)Other expenses from ordinary activities(14,879)(16,101)(1,292)(1,012)Profit from Ordinary Activities before Income Tax Expense256,22346,27963,8276Income tax benefit/(expense)relating to ordinary activities413,76875,225(12)(2)Profit from Ordinary Activities after Related Income Tax Bene
298、fit/(Expense)69,991121,50463,8154Net Profit Attributable to Outside Equity Interests(310)(212)Net Profit Attributable to Unitholders of the Parent Entity69,681121,29263,8154Increase in asset revaluation reserve arising from revaluation of non-current assets288,669Total Changes in Equity other than t
299、hose Resulting from Transactions with Unitholders as Owners78,350121,29263,8154Earnings per unit:Earnings used to calculate earnings per unit($000)69,681121,292Basic earnings per unit based on profit from ordinary activities after income tax expense,attributable to unitholders of the parent entity(c
300、pu)25.3349.20Weighted average number of units on issue used in the calculation of basic earnings per unit(million)275.05246.50Diluted earnings per unit is exactly the same as basic earnings per unit.Notes to the financial statements are included on pages 34 to 72.FOR THE FINANCIAL YEAR ENDED 30 JUNE
301、 2005STATEMENT OF FINANCIAL POSITION32ConsolidatedTrust2005200420052004Note$000$000$000$000Current AssetsCash22,37344,251173134Receivables630,63612,09512496Inventories73,12150Other82,2241,472Total Current Assets58,35457,868297230Non-Current AssetsReceivables921Investments accounted for using the equ
302、ity method10171,137Other financial assets11584,393535,687Property,plant and equipment121,818,3081,184,862Intangibles135,0246,188Deferred tax assets1431,45810,07731,45810,077Other153,3753,538Total Non-Current Assets1,858,1671,375,803615,851545,764Total Assets1,916,5211,433,671616,148545,994Current Li
303、abilitiesPayables1663,24253,92918,00618,052Interest-bearing liabilities17188180Tax liabilities181,1875,9381,1875,938Provisions1923,3251,902Other2056,6017,327Total Current Liabilities144,54369,27619,19323,990Non-Current LiabilitiesPayables2154,92017,9388,4617,406Interest-bearing liabilities221,011,10
304、5730,225Deferred tax liabilities2388,12386,95688,12386,956Provisions2474143Other252,5331,127Total Non-Current Liabilities1,156,755836,38996,58494,362Total Liabilities1,301,298905,665115,777118,352Net Assets615,223528,006500,371427,642EquityContributed equity27500,135427,435500,135427,435Asset revalu
305、ation reserve288,669Retained profits29106,334100,439236207Parent Entity Interest615,138527,874500,371427,642Outside equity interests3085132Total Equity615,223528,006500,371427,642Notes to the financial statements are included on pages 34 to 72.AS AT 30 JUNE 2005STATEMENT OF CASH FLOWS33ConsolidatedT
306、rust2005200420052004Note$000$000$000$000Cash Flows from Operating ActivitiesReceipts from customers392,808275,8131,2881,002Payments to suppliers and employees(207,831)(162,483)(1,366)(1,087)Dividends received from joint venture entity7,667Dividends received for controlled entities63,786Interest rece
307、ived11,05410,1296736Interest and other costs of finance paid(75,363)(45,942)(22)(20)Income tax paid(14,448)(2,869)(9,819)Net Cash from/(Used in)Operating Activities41(d)106,22082,31553,934(69)Cash Flows from Investing ActivitiesPayment for investments in joint venture entity(7)Payment for property,p
308、lant and equipment(12,825)(2,752)Proceeds from sale of property,plant and equipment89278Purchase of controlled entities SCP gas business(209,213)Purchase of joint venture interest Carpentaria Gas Pipeline(97,238)Cash from entities acquired116,424Net Cash Used in Investing Activities(202,763)(2,481)C
309、ash Flows from Financing ActivitiesProceeds from borrowing810,00016,000Repayment of borrowing(742,593)(524,292)Proceeds from issue of units73,27816,49673,27816,496Proceeds from issue of notes496,036Payment of unit issue costs(578)(122)(578)(122)Payment of debt issue costs(1,166)(2,806)Proceeds from
310、related parties(62,809)36,675Distributions paid to:Unitholders of Trust (63,786)(52,950)(63,786)(52,950)Outside equity interests(490)(261)Net Cash from/(Used in)Financing Activities74,665(51,899)(53,895)99Net(Decrease)/Increase in Cash Held(21,878)27,9353930Cash at the beginning of the financial yea
311、r44,25116,316134104Cash at the End of the Financial Year41(a)22,37344,251173134Notes to the financial statements are included on pages 34 to 72.FOR THE FINANCIAL YEAR ENDED 30 JUNE 2005NOTES TO THE FINANCIAL STATEMENTS341.Summary of Accounting PoliciesFINANCIAL REPORTING FRAMEWORKThis financial repo
312、rt is a general purpose financial report which has been prepared in accordance with the constitution,the Corporations Act2001,applicable accounting standards and Urgent Issues Group Consensus Views,and complies with other requirements of the law.The financial report has been prepared on the basis of
313、 historical cost and except where stated,does not take into account changing moneyvalues or current valuations of non-current assets.Cost is based on the fair values of the consideration given in exchange for assets.SIGNIFICANT ACCOUNTING POLICIESAccounting policies are selected and applied in a man
314、ner,which ensures that the resulting financial information satisfies the concepts ofrelevance and reliability,thereby ensuring that the substance of the underlying transactions or other events is effectively reported.The following significant accounting policies have been adopted in the preparation
315、and presentation of the financial report:(a)Principles of ConsolidationThe consolidated financial statements are prepared by combining the financial statements of all the entities that comprise the consolidatedentity,being Australian Pipeline Trust(“head entity“)and its controlled entities as define
316、d in AASB 1024“Consolidated Accounts“.A list of controlled entities appears in Note 36.Consistent accounting policies have been employed in the preparation and presentation ofthe consolidated financial statements.The consolidated financial statements include the information and results of each contr
317、olled entity from the date on which APA obtainscontrol and until such time as APA ceases to control such entity.In preparing the consolidated financial statements,all inter-entity balances and transactions,and unrealised profits arising,within theconsolidated entity are eliminated in full.(b)Payable
318、sTrade payables and other payables are recognised when the consolidated entity becomes obliged to make future payments resulting fromthe purchase of goods and services.(c)Acquisition of AssetsAssets acquired are recorded at the cost of acquisition,being the purchase consideration determined as at th
319、e date of acquisition plus costsincidental to the acquisition.In the event that settlement of all or part of the cash consideration given in the acquisition of an asset is deferred,the fair value of thepurchase consideration is determined by discounting the amounts payable in the future to their pre
320、sent values as at the date of acquisition.(d)Interest-Bearing LiabilitiesBank loans and other loans are recorded at an amount equal to the net proceeds received.Interest expense is recognised on an accrual basis.Ancillary costs incurred in connection with the arrangement of interest-bearing liabilit
321、ies are deferred and amortised over the period of theinterest-bearing liability.(e)Capitalisation of Borrowing CostsBorrowing costs directly attributable to assets under construction are capitalised as part of the cost of those assets.(f)DepreciationDepreciation is provided on property,plant and equ
322、ipment,including freehold buildings but excluding land.Depreciation is calculated oneither a straight-line or throughput basis depending on the nature of the asset so as to write off the net cost of each asset over its estimateduseful life.Leasehold improvements are depreciated over the period of th
323、e lease or estimated useful life,whichever is the shorter,using thestraight-line method.The following estimated useful lives are used in the calculation of depreciation:FOR THE FINANCIAL YEAR ENDED 30 JUNE 2005NOTES TO THE FINANCIAL STATEMENTS35FOR THE FINANCIAL YEAR ENDED 30 JUNE 20051.Summary of A
324、ccounting Policies(continued)(f)Depreciation(continued)Ibuildings50 years;Icompressorsup to 25 years;Ipipelinesup to 65 years;andIother plant and equipment3 20 years.(g)IntangiblesGoodwill,representing the excess of the cost of acquisition over the fair value of the identifiable net assets acquired,
325、is amortised on astraight-line basis over a period of 20 years.The right to receive a pipeline tariff is being amortised on a straight-line basis until 2011,being the termination date of the contract to whichthe right relates.(h)Derivative Financial InstrumentsThe consolidated entity uses derivative
326、 financial instruments(“derivatives“)to hedge exposures to interest rate and foreign exchange risk.In order to be designated as a hedge,at inception and during the term of the hedging instrument,it must be expected that the hedge will be effective in reducing exposure to the risks being hedged.Deriv
327、atives are not entered into for speculative purposes.Interest RateInterest rate swaps are used to vary the consolidated entitys mix of fixed and variable rate borrowing.These derivatives are accounted for on an accrual basis consistent with the accounting treatment of the underlying borrowing.Both p
328、ayments and receipts under the swaps are included in interest expense.The related amount receivable from or payable to counterparties,is included in other receivables or other payables.Foreign ExchangeCross currency swaps are used to hedge foreign currency borrowings.Derivatives that hedge the borro
329、wings are measured at the spot rateand included in non-current receivables or payables.Gains or losses are recognised in net profit or loss as they occur and offset translationgains and losses on the underlying hedged item.If a derivative is terminated and the anticipated transaction is no longer pr
330、obable,all gainsand losses are recognised immediately in the statement of financial performance.Further details are disclosed in Note 44.(i)Employee BenefitsProvision is made for benefits accruing to employees in respect of wages and salaries,annual leave and long service leave when it isprobable th
331、at settlement will be required and they are capable of being measured reliably.Provisions made in respect of wages and salaries,annual leave,and other employee benefits(long service leave)expected to be settledwithin 12 months,are measured at their nominal values using the remuneration rates expecte
332、d to apply at the time of settlement.Provisions made in respect of other employee benefits(long service leave)which are not expected to be settled within 12 months aremeasured as the present value of the estimated future cash outflows to be made by the consolidated entity in respect of services prov
333、idedby employees up to the end of the financial year.(j)Financial Instruments Issued by APADebt and Equity InstrumentsDebt and equity instruments are classified as either liabilities or equity in accordance with the substance of the contractual arrangement.Transaction Costs on the Issue of Equity InstrumentsTransaction costs arising on the issue of equity instruments are recognised directly in equ
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