1、more than.pipelines:redefining our potentialAnnual Report 2012 australian pipeline trust2 Directors report23 Corporate governance statement29 Statement of comprehensive income30 Statement of financial position32 Statement of changes in equity 34 Statement of cash flows 35 Notes to the financial stat
2、ements 88 Declaration by the Directors of Australian Pipeline Limited89 Auditors independence declaration90 Independent Auditors report116 Additional information apt inVestMent trust92 Directors report94 Statement of comprehensive income95 Statement of financial position95 Statement of changes in eq
3、uity 96 Statement of cash flows 97 Notes to the financial statements112 Declaration by the Directors of Australian Pipeline Limited113 Auditors Independence Declaration114 Independent Auditors reportaustralian pipeline trust and its controlled entitiesarsn 091 678 778AuStRALIAN PIPeLINe tRuSt AND It
4、S CoNtRoLLeD eNtItIeSDirectors reportthe directors of Australian Pipeline Limited(“Responsible entity”)submit their report and the annual financial report of Australian Pipeline trust(“APt”)and its controlled entities(together“APA”or“Consolidated entity”)for the financial year ended 30 June 2012.thi
5、s report refers to the consolidated results of APt and APt Investment trust(“APtIt”).Directorsthe names of the directors of the Responsible entity during the year and since the year end are:leonard Bleasel aM ChairmanMichael McCormack Chief executive officer and Managing Directorsteven CraneJohn Fle
6、tcherrussell Higgins aOpatricia McKenzieMuri Muhammadrobert WrightDetails of the directors,their qualifications,experience,special responsibilities and directorships of other listed entities are set out on pages 10 to 12.Muri Muhammad gave notice on 25 July 2012 of his resignation from the board of
7、Australian Pipeline Limited with effect from 24 october 2012.George Ratilal resigned as alternate director for Muri Muhammad on 9 May pany secretaryMark KnapmanDetails of the Company Secretary,his qualifications and experience are set out on page 11.principal activitiesthe principal activities of AP
8、A during the course of the year were the ownership and operation of energy infrastructure assets and businesses,including:energy infrastructure,primarily gas transmission businesses located across Australia and the emu Downs wind farm in Western Australia;energy investments in listed and unlisted en
9、tities;and Asset management and operations services for the majority of APAs energy investments and for third parties.Financial anD operational reviewthe following table provides a summary of key financial data for the year:Year ended 30 June2012$0002011$000CHanges$000%Operating results including si
10、gnificant itemstotal revenue1,060,6611,101,989(41,328)(3.8)Pass-through revenue(1)302,633381,733(79,100)(20.7)total revenue excluding pass-through 758,028720,25637,7725.2eBitda525,825492,10933,7166.9Depreciation and amortisation expense(110,409)(100,350)(10,059)10.0eBit415,416391,75923,6576.0Net int
11、erest expense(234,326)(247,072)12,746(5.2)Pre-tax profit181,090144,68736,40325.2Income tax expense(50,435)(35,862)(14,573)40.6Minorities(5)(316)311(98.5)profit after tax and minorities,including significant items130,650108,50922,14120.4Significant items after income tax(2)(9,663)(432)(9,231)profit a
12、fter income tax and minorities,excluding significant items140,313108,94131,37228.8operating cash flow(3)335,569290,02945,54015.7operating cash flow per security(cents)52.552.6(0.1)(0.2)earnings per security(cents)20.419.70.73.6Distribution per security(cents)35.034.40.61.7Distribution payout ratio(4
13、)67.0%65.7%Net tangible asset per security$1.58$1.51$0.074.6Weighted average number of securities(000)639,743551,222(1)Pass-through revenue is revenue on which no margin is earned.Pass-through revenue arises in the asset management operations in respect of costs incurred in,and passed on to envestra
14、 in respect of the operation of the envestra assets.It also arises in the Nt Gas business for FY 2011.(2)Significant items:FY 2012-Profit on the sale of APA Gas Network business(Allgas)less transaction costs;FY 2011-APAs equity accounted share of the Investment Allowance Concession benefit recognise
15、d on the commencement of generation of the North Brown Hill Wind Farm.APA has referenced the significant items to more accurately reflect the actual trading results of the Group.the significant items have been audited.(3)operating cash flow=net cash from operations after interest and tax payments,ad
16、justed for significant items.(4)Distribution payout ratio=total distributions in relation to the financial year as a percentage of operating cash flow.2APA grouP AnnuAl rePort 2012operating profit after tax and minorities for the year was$130.7 million,an increase of 20.4%on last year.APAs profit co
17、ntained one significant item with an overall net negative impact of$9.7 million.Revenue(excluding pass-through)increased by$37.8 million to$758.0 million,an increase of 5.2%on last year,while earnings before interest,tax,depreciation and amortisation(“eBItDA”)and after significant items increased by
18、$33.7million to$525.8 million,an increase of 6.9%.the main factors driving the increase in operating profit and eBItDA include:the additional earnings from new expansions;full year contribution of the emu Downs wind farm business in Western Australia;contribution of the new gas haulage contract on t
19、he Amadeus Gas Pipeline;and reduced interest costs primarily due to the reduction in drawn debt following the sale of the Allgas business.the increase has been partially offset by the cessation of contributions from the Allgas gas distribution network following its sale in December 2011.operating ca
20、sh flow increased by 15.7%to$335.6 million(2011:$290.0 million),while operating cash flow per security decreased by 0.2%or 0.1 cents to 52.5 cents per security(2011:52.6 cents per security).APAs distributions for the financial year total 35.0 cents per security,an increase of 1.7%or 0.6 cents on the
21、 prior financial year.APA achieved its guidance of paying distributions in the 2012 financial year at least equal to distributions in the 2011 financial year.the distribution payout ratio for 2012 was 67.0%,further demonstrating APAs ability to fully fund its distributions out of operating cash flow
22、s,while retaining significant operating cash flow in the business to fund organic growth.Capital ManageMentDuring the year,APA issued the following two tranches of new securities under its Distribution Reinvestment Plan:on 15 September 2011,5,218,596 securities at$3.88 per security raising$20.2 mill
23、ion;and on 15 March 2012,5,150,958 securities at$4.73 per security raising$24.4million.At 30 June 2012,there were 644,485,583 securities on issue(30 June 2011:634,116,029)an increase of 1.6%.APA continues to use the Distribution Reinvestment Plan in providing equity to support its strong ongoing sto
24、ck of organic growth and investment projects.During the year APA completed the following debt refinancing programs:on 23 August 2011,APA entered into a new$75 million bilateral bank facility for a term of three years,maturing in August 2014;on 12 october 2011,APA entered into a new$150 million bilat
25、eral bank facility for a term of five years,maturing in october 2016;on 3 November 2011,APA announced the completion of a$1.45 billion syndicated bank facility,with equal-sized two,three and four year tranches,to refinance syndicated facilities due to mature in June 2012 and July 2013.APA repaid the
26、se loans,with the final payment being made on 9 January 2012;on 24 January 2012,APA issued JPY 10 billion(A$125.9 million)six-year five-month fixed-rate Medium term Notes utilising documentation in place under its established european MtN program;and on 28 June 2012,APA issued CAD 300 million(A$289.
27、5 million)seven-year one-month fixed rate Medium term Notes utilising documentation in place under its established european MtN program.these new facilities were used to repay loans drawn under APAs existing revolving bank facilities,with the additional headroom created being available to support AP
28、As ongoing investment in the growth of its infrastructure assets,including the acquisition of Hastings Diversified utilities Fund(“HDF”)if it proceeds,and for general corporate purposes.on 9 August 2012,APA lodged a prospectus with the Australian Securities and Investments Commission(“ASIC”)for an o
29、ffer of long-dated,unsecured,subordinated,cumulative notes(“Notes”)to raise$350 million,with the ability to raise more or less.A replacement prospectus was lodged with the ASIC on 17 August 2012 following the closure of the“exposure”period and finalisation of the margin and revised offer size of$475
30、 million.the Notes provide 50%equity credit from Standard&Poors and Moodys and are not convertible into stapled securities or any other securities.the Notes will be issued in mid-September 2012 and will begin trading on the ASX under the code“AQHHA”in late September 2012.At 30 June 2012,APAs debt po
31、rtfolio has a broad spread of maturities extending out to 2022,with a weighted average maturity of drawn debt of 4.8 years.APA has gearing of 65.0%1 at 30 June 2012,down from 66.2%at 30 June 2011,primarily due to the reduction in net debt following receipt of funds from the sale of APAs Queensland G
32、as Network business.At 30 June 2012,APA had in excess of$1.1 billion in cash and committed undrawn facilities available to meet the continued capital growth needs of the business and to fund the acquisition of HDF should the transaction proceed.APA has a prudent treasury policy which requires conser
33、vative levels of hedging of interest rate exposures to minimise the potential impacts from adverse movements in rates.All interest rates and foreign currency exposures on uS Private Placement Notes and foreign currency denominated Medium term Notes have been hedged into fixed rate AuD obligations.AP
34、A also enters into interest rate hedges for a proportion of the interest rate exposure on its other floating rate borrowings.At 30 June 2012,80.9%of interest obligations were either hedged or set at fixed interest rates for varying periods extending out for up to 9.9 years.A level of interest rate p
35、rotection is also provided through Consumer Price Index(“CPI”)indexing in most revenue contracts and the regulatory revenue setting process operating on a number of APAs assets.BOrrOWings and FinanCe COsts As at 30 June 2012,APA had borrowings of$3,223.8 million($3,239.9 million at 30 June 2011),pri
36、ncipally from syndicated bank debt facilities,bilateral debt facilities,uS Private Placement notes,european Medium term Notes and Australian Medium term Notes.Following the CAD 300 million european Medium term Note issue in June 2012,significant cash,in the order of$280million,was available to repay
37、 loans drawn under existing bank facilities and so create additional facility headroom.Net underlying finance costs decreased by$12.7 million,or 5.2%,to$234.3million(2011:$247.1 million)over last year primarily as a result of lower drawn debt on average before the CAD bond issue,and lower floating i
38、nterest rates throughout the year ended 30 June 2012.this was somewhat offset by acceleration of amortisation of borrowing costs related to bank debt facilities being repaid early.the average interest rate(including credit margins)applying to drawn debt was 7.39%for the year(2011:7.47%).this figure
39、excludes commitment fees and borrowing costs.APAs interest cover ratio for the year increased to 2.48 times from 2.03 times last year,remaining well in excess of its debt covenant default ratio of 1.1 times,and distribution lock up ratio of 1.3 times.1 Gearing ratio determined in accordance with cov
40、enants in all debt facilities as net debt to net debt plus book equity.AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD3Credit ratingAPt Pipelines Limited,the borrowing entity of APA,maintained its two investment grade credit ratings during the year:BBB long term corpo
41、rate credit rating(outlook Stable)from Standard and Poors;and Baa2 long term corporate credit rating(outlook Stable)from Moodys Investors Service.inCOMe tax the effective income tax rate before significant items for the year 26.4%,up from 24.8%last year.the increase has arisen predominantly as a res
42、ult of the Federal Governments reversal of previously legislated changes to tax consolidation rules dealing with“rights to future income”,together with the prior year impact of investment allowances credits no longer being available.Capital and inVestMent expenditure Capital and investment expenditu
43、re for the year totalled$295.5 million compared with$516.1 million last year.of this amount,$271.1 million was in respect of investment and growth projects,including pipeline capacity expansion in Queensland,New South Wales,Victoria and Western Australia,and the expansion of the Mondarra Gas Storage
44、 Facility.the remaining$24.4 million of capital expenditure related to stay in business or maintenance capital expenditure.Growth expenditure was generally either fully underwritten through long-term gas transportation agreements or had regulatory approval through a relevant access arrangement.Durin
45、g the period,APA increased its interest in Hastings Diversified utilities Fund(“HDF”)to 20.7%for$11.7 million,and increased its interest in envestra to 33.4%for$28.8 million through participation in envestras Dividend Reinvestment Plan in october 2011 and April 2012.Capital and investment expenditur
46、e for the year is detailed in the table below.Capital and inVestMent expenditure(1)desCriptiOn OF 2012 MaJOr prOJeCts2012$million2011$milliongrowth expenditureRegulatedVictorian transmission Systemeuroa compression;Sunbury lateral looping project35.133.4APA Gas Networks(Qld)Includes southern network
47、 expansion8.416.143.549.5Major projectsQueenslandRoma Brisbane Pipeline expansion35.719.6New South Wales Moomba Sydney Pipeline expansion;Young Marsden compression project18.934.3Western AustraliaMondarra Gas Storage Facility;Goldfields Gas Pipeline expansions116.439.8otherNational customer manageme
48、nt system;Victorian metering10.212.2181.2105.9Acquisitionsenergy InfrastructurePurchase adjustments for Amadeus Gas Pipeline and emu Downs wind farm acquisitions in FY 20116.0228.8energy InvestmentsIncreased interest in eNV and HDF40.4113.946.4342.7total growth capex271.1498.1stay in business capex2
49、4.418.0total capex295.5516.1(1)the capital expenditure shown in this table represents actual cash payments as disclosed in the cash flow statement;it excludes accruals brought forward from the prior year and carried forward to next year.AustrAliAn PiPeline trust And its controlled entitiesDirectors
50、report continueD4APA grouP AnnuAl rePort 2012DistributionsDistributions paid to securityholders during the year were:Final FY 2011 distriButiOn paid 15 septeMBer 2011interiM FY 2012 distriButiOn paid 15 MarCH 2012Cents per securitytotal distribution$000Cents per securitytotal distribution$000APt pro
51、fit distribution3.4219,0544.5429,034APt capital distribution8.4146,7616.5241,655APtIt profit distribution3.4118,2953.8824,797APtIt capital distribution2.6615,4492.0613,201total17.9099,55917.00108,687on 22 August 2012,the directors declared a final distribution for APA for the year of 18.0 cents per
52、security payable 15 September 2012,made up of:Final FY 2012 distriButiOn paYaBle 14 septeMBer 2012Cents per securitytotal distribution$000APt profit distribution5.0932,786APt capital distribution7.3247,182APtIt profit distribution3.2821,160APtIt capital distribution2.3114,879total18.00116,007total d
53、istribution for the financial year ended 30 June 2012 is 35.0 cents per security,an increase of 0.6 cents,or 1.7%,on the year ended 30 June 2011.Distribution information is presented on an accounting classification basis.the APA Group Annual tax Statement and Annual tax Return Guide(to be released i
54、n September 2012)provide the classification of distribution components for the purposes of preparation of securityholder income tax returns.signiFicant changes in state oF aFFairsthe following significant changes in the state of affairs of APA occurred during the year:In December 2011 APA divested i
55、ts Queensland Gas Network business(Allgas)into the newly established joint venture,GDI(eII)Pty Limited(“GDI”).APA retains a 20%equity interest in GDI with the remaining interest held by Marubeni Corporation and RReeF,each holding a 40%interest.APA remains as asset manager and operator of the network
56、 under a long term agreement.the net proceeds of the transaction totalled$476 million.on 14 December 2011,APA announced an off-market takeover offer for HDF through APt Pipelines Limited for all the HDF securities which APA did not then own.APA currently owns 20.7%per cent of HDF securities.HDF is a
57、n Australian Securities exchange(ASX)listed investment vehicle whose assets include epic energys three natural gas transmission pipeline systems,and is managed by Hastings Funds Management Limited.Further details of this transaction are found on page 8 of this report.AustrAliAn PiPeline trust And it
58、s controlled entitiesDirectors report continueD5Business segMent perFOrManCes APAs operational and financial result reflects the steady growth across all business segments.Statutory reported revenue and eBItDA performance of APAs business segments is set out in the following table:Year ended 30 June
59、2012$0002011$000CHanges$000%revenue(continuing business)Energy InfrastructureQueensland(1)112,225107,7084,5174.2New South Wales138,443126,65711,7869.3Victoria161,297151,20910,0886.7South Australia 2,1092,049602.9Western Australia174,166143,64330,52321.2Northern territory21,73413,8507,88456.9energy I
60、nfrastructure total609,974545,11664,85811.9Asset Management69,29568,6476480.9energy Investments41,74727,12114,62653.9total segment revenue721,016640,88480,13212.5Pass-through revenue(4)302,633381,733(79,100)(20.7)unallocated revenue6,31712,932(6,615)(51.2)Divested business Allgas(2)30,69556,600Signi
61、ficant items(3)-9,839total revenue1,060,6611,101,989(41,327)(3.8)eBitda(continuing business)Energy InfrastructureQueensland(1)79,56671,6857,88111.0New South Wales113,098101,26611,83211.7Victoria121,549114,2637,2866.4South Australia 1,5211,618(97)(6.0)Western Australia117,39794,22323,17424.6Northern
62、territory8,5415,5782,96353.1energy Infrastructure total441,672388,63353,03913.6Asset Management31,91038,740(6,830)(17.6)energy Investments41,75127,10214,64954.1total segment eBItDA515,333454,47560,85813.4Divested business Allgas(2)20,15535,114total eBitda before significant items535,488489,58945,899
63、9.4Significant items(3)(9,663)2,521total eBitda525,825492,10933,7156.9(1)excludes the Allgas business contribution in 2011 and 2012.(2)APA Gas Network Queensland(Allgas)was sold into GDI(eII)Pty Ltd in December 2011.(3)FY12-relates to the profit less transaction costs on the sale of Allgas in Decemb
64、er 2011.FY11 relates to APAs equity share of the eII2 Investment Allowance Concession benefit($9.8m in revenue&eBItDA),sale of CAMS($1.7m)reduced by transaction costs on the emu Downs wind farm acquisition($9.0m).(4)Pass-through revenue of Nt Gas business ceased following acquisition of the Amadeus
65、Gas Pipeline(June 2011).AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD6APA grouP AnnuAl rePort 2012energY inFrastruCturethe energy Infrastructure segment includes gas transmission and distribution assets along with the emu Downs wind farm.the energy Infrastructure se
66、gment(continuing business)contributed 85%of segment revenue(excluding pass-through revenue)and 86%of segment eBItDA.Revenue(excluding pass-through revenue)was$610.0 million,an increase of 11.9%on the$545.1 million reported last year.eBItDA increased by 13.6%to$441.7 million(2011:$388.7 million).the
67、following key factors contributed to this result:Queensland revenue and eBItDA increased with new contracts and the recovery of costs in connection with flood damage incurred in FY2011;New South Wales increase in revenue and eBItDA is mainly due to new gas haulage contracts;Victorian revenue and eBI
68、tDA increase reflects the annual increase in tariffs,offset by lower gas volumes through the Victorian transmission System due to milder weather;Western Australia experienced the greatest increase,primarily as a result of the inclusion of the first full year of contribution from the emu Downs wind f
69、arm business;and the Northern territory result reflects the acquisition of the Amadeus Gas Pipeline and the new gas transportation agreement the pipeline was previously leased and contracted on a cost based system.APA continues to focus on the operation,development and enhancement of its gas transmi
70、ssion and distribution assets across mainland Australia.Queensland Roma Brisbane PipelineAPA completed the$50 million expansion of the pipeline in August 2012,increasing capacity by approximately 10%.the project included additional compression,pipeline pressure upgrades and augmentation of the pipel
71、ine in the Brisbane metropolitan area.the additional capacity has been substantially contracted under long term transportation agreements with an energy retailer and a major industrial gas user.the project to repair damage to the pipeline easement caused by the 2011 floods was largely completed,with
72、 some work continuing in the Marburg region,west of Brisbane.During the year APA recovered some of the repair cost from its insurance provider and it is expected to recover the remaining amount in FY2013.Carpentaria Gas Pipeline and Diamantina Power StationIn october 2011 APA announced that it will
73、jointly develop the Diamantina Power Station at Mount Isa with AGL energy.the 242 MW gas fired power station will be supplied with gas via the Carpentaria Gas Pipeline.the power station is underpinned by 17-year energy supply agreements with Mount Isa Mines Limited,a wholly owned subsidiary of Xstra
74、ta,and ergon energy,the State owned regional electricity supplier.under the arrangements,AGL has contracted transportation capacity in the Carpentaria Gas Pipeline for an initial ten year period.the 242 MW power station is being constructed under a turn-key contract with CteC Pty Limited and is expe
75、cted to be fully operational in early 2014.once project financing is in place and construction of the power station is completed,APAs investment in the power station of approximately$100 million is expected to be funded from headroom under existing debtfacilities.new south Wales Moomba Sydney Pipeli
76、neWork continued on the$100 million five-year capacity expansion program of the Moomba Sydney Pipeline.Capital expenditure for the year was$15 million,bringing the total spent thus far to$71 million.the Young compressor station was completed in the first half of the year.Victoria Victorian Transmiss
77、ion Systemtotal gas volume transported through the Victorian transmission System was 229.7 PJ,down 6.5%on last year(245.7 PJ)due to milder weather,lower industrial demand and lower gas demand for power generation.Peak day volume of 1,151 tJ was down 3.3%on last year(1,190 tJ).APA continued work on c
78、apital projects which provide both additional capacity and security of supply for the Victorian Gas transmission System.these projects include installation of additional compression at euroa,part of the northern augmentation project,and looping of the Sunbury lateral,with funding approved within the
79、 systems current(2008-2013)regulatory arrangements.Western australia Goldfields Gas PipelineIn December 2011 and January 2012,APA announced two new capacity expansions on the pipeline totalling 44 tJ/day,an increase of 28%of the pipelines capacity.these expansions are underpinned by a new 20-year ga
80、s transportation agreement with Rio tinto and a new 15-year gas transportation agreement with the Mount Newman Joint Venture(85%BHP Billiton)respectively.Work has commenced on these two expansions,namely design and purchase of long lead time equipment and material.the work primarily involves the upg
81、rade of compression at two existing compressor stations(Yarraloola and Paraburdoo)and the construction of two new compressor stations(turee Creek and Newman inlet),for a total capital cost of approximately$150 million.APA is managing the construction project on behalf of the Goldfields Gas transmiss
82、ion Joint Venture through which APA owns 88.2%of the Goldfields Gas Pipeline.the additional capacity will be available in 2014.Mondarra Gas Storage FacilityAPA is expanding its Mondarra Gas Storage Facility following execution of a 20-year foundation contract for storage capacity with Verve energy i
83、n May 2011.Construction work is continuing on the surface facilities,which includes pipeline interconnects and treatment plants.Completion of the expanded capacity is scheduled for mid-2013.the facility is continuing to operate its existing contracted storage services during this expansion period.th
84、e expansion will provide APAs customers with supply options and flexibility to better manage their gas supply and demand portfolios.Emu Downs wind farmIn June 2011,APA acquired the 80 MW emu Downs wind farm and adjoining development site in Western Australia.the first year of financial and operation
85、al performance of the wind farm under APAs ownership has been in line with APAs expectations.AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD7asset ManageMentAPA provides asset management and operational services to the majority of its energy investments and a number o
86、f third parties.Its main customers are envestra Limited,ethane Pipeline Income Fund,SeA Gas Pipeline,Diamantina Power Station joint venture,energy Infrastructure Investments,GDI and eII2.Asset management and operational services are provided to these customers under long term contracts.Revenue(exclu
87、ding pass-through revenue)from such services increased by 0.9%to$69.3 million(2011:$68.6 million)and eBItDA decreased by 17.6%to$31.9 million,(2011:$38.7 million),mainly due to reduction in envestra incentive payments partially offset by additional third party work in Western Australia and Northern
88、territory.energY inVestMentsAPA has an interest in a number of energy investments across Australia,including envestra Limited,SeA Gas Pipeline,energy Infrastructure Investments,ethane Pipeline Income Fund,eII2(investment in the North Brown Hill wind farm),GDI and Hastings Diversified utilities Fund(
89、HDF).All investments are equity accounted,with the exception of APAs interest in ethane Pipeline Income Fund and Hastings Diversified utilities Fund.eBItDA increased by 54.1%to$41.8 million,up from$27.1 million last year,mainly due to increases in envestras and SeA Gass profitability.APA participate
90、d in envestras Distribution Reinvestment Plan during the year,with the total value of distributions reinvested of$28.8 million.As at 30 June 2012,APAs interest in envestra was 33.4%.sale OF apa gas netWOrK Business and estaBlisHMent OF gdion 14 December 2011,APA announced the sale of its Queensland
91、Gas Network business(Allgas)into a minority-owned joint venture,GDI(eII)Pty Limited.APA retains a 20%equity interest in the joint venture,with equity partners Marubeni Corporation and RReeF each holding a 40%interest.APA also remains as asset manager and operator of the network under a 10-year asset
92、 management agreement,with two 5-year extension options.Financial close occurred on 16 December 2011.the net enterprise value(after transaction costs)of the new joint venture is$526 million,with equity contributions totalling$247 million and a new three and five-year,non-recourse project debt facili
93、ty of$310 million.the net funds released from the sale of$475.7 million have been used to reduce APA debt and provide further headroom to support APAs growth strategy.APA recorded a$12.0 million profit on sale before transaction costs.After taking transaction costs of$21.7 million(including stamp du
94、ty)into account,APA reported a loss of$9.7 million in respect of the transaction.taKeOVer OFFer FOr Hastings diVersiFied utilities Fund(HdF)on 14 December 2011,APA announced an off-market takeover offer for Hastings Diversified utilities Fund(HDF)through APt Pipelines Limited for all the HDF securit
95、ies which APA did not then own.APA currently owns 20.7%per cent of HDF securities.HDF is an ASX listed investment vehicle whose assets include epic energys three natural gas transmission pipeline systems,and is managed by Hastings Funds Management Limited.each of the epic energy pipelines can be int
96、erconnected with pipelines owned or managed by APA.APA lodged its Bidders Statement on 15 December 2011 and dispatched this document together with a First Supplementary Bidders Statement on 3January 2012.APA lodged a Second Supplementary Bidders Statement in response to HDFs targets Statement on 31
97、January 2012,and a third Supplementary Bidders Statement on 22 February 2012.on 19 July 2012,the Australian Competition and Consumer Commission announced that it would not oppose the proposed acquisition by APA of HDF on the basis of the undertaking from APA to divest HDFs Moomba Adelaide Pipeline S
98、ystem once APA changes the responsible entity of HDF.on 17 August 2012 APA announced a revised offer consideration and will shortly issue a further Supplementary Bidders Statement.the HDF takeover offer is open until 4 September 2012 unless extended or withdrawn and is currently subject to a number
99、of conditions.APA has reserved the right to waive these conditions.tOtal seCuritYHOlder returnsDuring the year APAs market capitalisation increased by 37%to$3.24 billion at 30 June 2012.Distributions declared during the year amounted to$0.35 per APA security.APAs total securityholder returns,which a
100、ccounts for the capital appreciation of APAs security price and assumes the reinvestment of distributions at the declared time,was placed in the top 90th percentile of total Shareholder Returns for ASX listed companies.regulatory matters Key regulatory matters addressed during the current period inc
101、luded:roma Brisbane pipeline access arrangementon 12 october 2011,APA submitted a revised access arrangement proposal for the Roma Brisbane Pipeline to the Australian energy Regulator(“AeR”).the AeR issued its final decision on 10 August 2012 in which it determined to approve and publish its own acc
102、ess arrangement for the pipeline.the AeRs decision provides for an initial 8.75%increase in the reference tariff followed by annual increases thereafter.this decision has minimal impact on APAs revenue.the majority of APAs Roma Brisbane Pipeline revenue is derived from haulage contracts which have s
103、et terms,including pricing for the life of the contract,and therefore is not impacted by the AeRs final decision.goldfields gas pipeline access arrangementon 5 August 2010 the economic Regulation Authority of Western Australia(“eRA”)released its further final decision and installed its own access ar
104、rangement.APA,on behalf of the Goldfields Gas Pipeline owners,pursued a merits review of the eRAs decision.this review was completed during the year.APA was successful in the coverage test for expansion of pipeline capacity and cost allocation methodology.Victorian transmission system access arrange
105、mentIn April 2012 APA submitted a revised access arrangement proposal for the Victorian Gas transmission System to the AeR.the AeR is currently assessing the proposal and its draft decision is expected in September 2012.amadeus gas pipeline access arrangementAt the conclusion of the access arrangeme
106、nt review process the AeR approved and published its own access arrangement and access arrangement information for the Amadeus Gas Pipeline on 27 July 2011.the gas transportation agreement between APA and Power and Water Corporation is not impacted by this access arrangement.proposed changes to the
107、national gas rulesIn october 2011 the AeR proposed amendments to the National Gas Rules that would change the process and methodology to determine the allowed rate of return.APA,together with other industry participants is opposing the proposed amendments.the Australian energy Market Commission is c
108、urrently undertaking an extensive review of the proposed amendments and a final determination is expected in November 2012.AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD8APA grouP AnnuAl rePort 2012health,saFety anD environment Health and safety reportingthe Lost tim
109、e Injury Frequency Rate(“LtIFR”)2 for APA employees was 2.2 for the year,significantly down from 6.2 last year.there were five reportable lost time injuries during the year,compared with 13 last year.APA remains committed to a zero harm environment and in September 2011 implemented a National APA Gr
110、oup Health Safety&environment Management System,integrating the various legacy systems and adopting best practice across the Group.environmental regulationsAll pipeline,distribution and gas processing assets owned and/or operated by APA are designed,constructed,tested,operated and maintained in acco
111、rdance with pipeline and distribution licences issued by the relevant state and territory technical regulators.All licences require compliance with relevant federal,state and territory environmental legislation and Australian standards.the pipeline licences also require compliance with the Australia
112、n Standard AS 2885“Pipelines Gas and Liquid Petroleum”,which has specific requirements for the management of environmental matters associated with all aspects of the high pressure pipeline industry.environmental management plans satisfying Part A of the Australian Pipeline Industry Association Code
113、of environmental Practice are prepared and independently audited for construction activities.In accordance with Part 3 of AS 2885,environmental management plans satisfying Part B of the Code are in place for all operating pipelines and are managed in accordance with APAs contracts and the terms and
114、conditions of the licences that APA has been issued.the Safety and operating Plan for APAs distribution networks have been audited in accordance with the Queensland and New South Wales technical regulatory requirements.the board reviews external audit reports and,on a monthly basis,the internal repo
115、rts prepared relating to environmental issues.No breaches have been reported during the year and APA has managed the assets in accordance with the environmental management plans that are in place.environmental reportingIn the year,APA complied with Australias National Greenhouse and energy Reporting
116、 obligations.energy reporting for financial year 2012 will be submitted in october 2012.APAs performance on two key measures is set out in the following table:FinanCial Year20112010CHangeScope 1 Co2 emissions(tonnes)297,099305,076(7,977)(2.6)%energy consumption(GJ)3,361,6793,248,069113,6103.5%introd
117、uction of carbon legislationA major element of the Clean energy Act 2011,passed by the Senate on 8November 2011,is the introduction of legislation to reduce carbon emissions.the legislation put a price on carbon from 1 July 2012.this carbon price mechanism will eventually act as an incentive for maj
118、or emitters to switch to less carbon intensive ways of doing business,such as switching from coal-fired generation to gas-fired and renewable generation.APAs emissions are mainly the result of the combustion of natural gas in compressor stations and from fugitive emissions within our networks.APA as
119、sets and investments impacted by the new carbon legislation are the Roma Brisbane Pipeline,Moomba Sydney Pipeline,Goldfields Gas Pipeline,the Victorian transmission System,Allgas gas distribution network,X41 Power Station and Daandine Power Station.APAs carbon costs exposure is immaterial.APA expect
120、s to recover all carbon related costs from its regulated assets under the access arrangement review process.For non-regulated assets,APA has implemented changes to its contracts with carbon pass-through clauses included in all new contracts.APA has also implemented changes to systems and processes a
121、cross the business to meet the requirements of the new legislation.subsequent eventsexcept as disclosed elsewhere in this report,the directors are unaware of any matter or circumstance that has occurred since the end of the year that has significantly affected or may significantly affect the operati
122、ons of the Consolidated entity,the results of those operations or the state of affairs of the Consolidated entity in future years.Future DevelopmentsDisclosure of information regarding likely developments in the operation of the Consolidated entity in future years and the expected results of those o
123、perations,other than information disclosed elsewhere in this report,is likely to result in unreasonable prejudice to the Consolidated entity.Accordingly,this information has not been disclosed in this report.2 Lost time Injury Frequency Rate is work hours lost as a result of injury at work,multiplie
124、d by one million,divided by the total hours worked.AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD9inFormation on Directors anD company secretaryInformation relating to the qualifications and experience of the directors and Company Secretary is set out below:leonard B
125、leasel aMFaiCd FaiMIndependent ChairmanAppointed 28 August 2007Appointed Chairman 30 october 2007Leonard(Len)Bleasel is a lead non-executive director of QBe Insurance Group Limited and a director of oConnell Street Associates Pty Limited.He is Chairman of the taronga Conservation Society Australia a
126、nd Chairman of the Advisory Council for RBS Group(Australia)Pty Limited.Len had a long career in the energy industry before retiring from management in 2001.He started his career in AGL in 1958and worked in a variety of roles,culminating in the position of Managing Director and Chief executive offic
127、er from 1990to 2001.Lens past appointments have included Chairman of Foodland Associated Limited,ABN AMRo Australia Holdings Pty Limited,Solaris Power,the Australian Gas Association,Natural Gas Corporation Holdings Ltd(New Zealand),elgas Ltd,Auscom Holdings Pty Ltd,Industrial Pipe Systems Pty Ltd an
128、d east Australian Pipeline Ltd,a director of St George Bank Limited and Gas Valpo(Chile),and Vice President of the Royal Blind Society.Len was awarded an AM in the General Division of the order of Australia for services to the Australian gas and energy industries and the community.Michael McCormackB
129、surv graddipengMBa FaiCd Chief Executive Officer and Managing DirectorAppointed Chief executive officer 1July 2005Appointed Managing Director 1July 2006Michael(Mick)McCormack has been Chief executive officer of APA since 1 July 2005 and Managing Director since 1July2006.Mick has over 25 years experi
130、ence in the gas infrastructure sector in Australia,and his career has encompassed all aspects of the sector,including commercial development,design,construction,operation and management of most of Australias natural gas pipelines and gas distribution systems.Mick is a director of envestra Limited an
131、d the Australian Pipeline Industry Association.steven CraneBComm FaiCd sFFinIndependent DirectorAppointed 1 January 2011Steven Crane has over 30 years experience in the financial services industry.Stevens background is in investment banking,having previously been Chief executive officer of ABN AMRo
132、Australia(now RBS Group Australia)and BZW Australia.He has considerable experience as a non-executive director of listed entities.He is currently Chairman of nib holdings limited,a director of Bank of Queensland Limited,transfield Services Limited,taronga Conservation Society Australia,a member of t
133、he Advisory Council for RBS Group(Australia)Pty Limited,and was formerly Chairman of Adelaide Managed Funds Limited,Investa Property Group Limited and formerly a director of Adelaide Bank Limited,Foodland Associated Limited and APA ethane Limited,the responsible entity of ethane Pipeline Income Fund
134、.Steven is a member of the Audit and Risk Management Committee and the Remuneration Committee.John FletcherBsc MBa FaiCdIndependent DirectorAppointed 27 February 2008John Fletcher has over 35 years experience in the energy industry,having held a number of executive positions in AGL prior to his reti
135、rement in 2003,including Chief Financial officer.John has previously been a director of Integral energy,Natural Gas Corporation Holdings Ltd(New Zealand),Foodland Associated Limited and Alinta energy Group.He brings a wide commercial and financial practical knowledge to the board.John was previously
136、 an AGL appointed director of Australian Pipeline Limited from 2000 to 2005.He is also a director of Sydney Water.John is the Chairman of the Remuneration Committee and a member of the Audit and Risk Management Committee.russell Higgins aOBec FaiCdIndependent DirectorAppointed 7 December 2004Russell
137、 Higgins has extensive experience both locally and internationally in the energy sector and in economic and fiscal policy.He was Secretary and Chief executive officer of the Department of Industry,Science and Resources from 1997 to 2002 and Chairman of the Australian Governments energy task Force fr
138、om 2003 to 2004.Russell is a director of telstra Corporation Limited and Argo Investments Limited.He is the Chairman of the Global Carbon Capture and Storage Institute and the CSIRo energy transformed Flagship Advisory Committee,and a director of Ricegrowers Limited(trading as SunRice)and the St Jam
139、es ethics Foundation.He is a former Chairman of the Snowy Mountains Council and the Australian Governments Management Improvement Advisory Committee and a former director of Australian Biodiesel Group Limited,eFIC,CSIRo,Austrade and Australian Industry Development Corporation,as well as a former mem
140、ber of the Australian Governments Joint economic Forecasting Group.In 2006-07,he was a member of the Prime Ministerial task Group on emissions trading.Russell is Chairman of the Health,Safety and environment Committee and a member of the Audit and Risk Management Committee.AustrAliAn PiPeline trust
141、And its controlled entitiesDirectors report continueD10APA grouP AnnuAl rePort 2012patricia McKenziellB MaiCdIndependent DirectorAppointed 1 January 2011Patricia McKenzie has considerable expertise and experience in energy market regulation and,as a qualified solicitor,extensive corporate legal expe
142、rience.She was formerly a director of Australian energy Market operator Limited(AeMo),the national energy market operator for electricity and gas,and the Chief executive officer of Gas Market Company Limited,the market administrator for retail competition in the gas industry in New South Wales and t
143、he Australian Capital territory.Patricia is also Chair of Diabetes Australia Limited and a director of National Health Call Centre Network Limited.Patricia is a member of the Health,Safety and environment Committee and the Remuneration Committee.Muri MuhammadMscDirectorAppointed 8 March 2000Muri Muh
144、ammad retired from Petronas in August 2002 and was reappointed as Petronas Adviser,Gas Business in the Presidents office until 30 March 2005.He brings 30 years experience in the chemicals and petroleum industry as well as expertise in the domestic and international gas transmission and distribution,
145、gas utilisation,cogeneration and conversion businesses where he has held various senior executive positions.Muri was Petronas Vice President for Gas Business from 1998 until his retirement and held several directorships,some as Chairman,of a number of Petronas subsidiaries and associate companies in
146、 Malaysia and abroad.He currently sits on the boards of Petronas Gas Berhad of Malaysia,Papua New Guineas national petroleum and minerals corporation and Petromin PNG Holdings Limited.He was also a member of the Malaysian energy Commission,a Malaysian Government regulatory body.Muri is a member of t
147、he Remuneration Committee and the Health,Safety and environment Committee.Muri gave notice on 25 July 2012 of his resignation from the board of Australian Pipeline Limited with effect from 24october2012.robert WrightBComm FCpaIndependent DirectorAppointed 11 February 2000Robert Wright has over 30 ye
148、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 SAI Global Limited,Super Retail Group Limited and APA ethane Limited,the responsible entity of ethane Pipeline Income Fund a
149、nd was previously Chairman of Dexion Limited and RCL Group Limited.Robert is the Chairman of the Audit and Risk Management Committee and a member of the Health Safety and environment Committee.Mark KnapmanBComm llB FCsa FCisCompany SecretaryAppointed 16 July 2008In addition to being responsible for
150、the secretariat function,Mark oversees corporate governance and the legal,internal audit and financial services compliance functions.Mark has extensive experience as a Company Secretary.He was Company Secretary and General Counsel of an ASX-listed company and Asia Pacific Legal Counsel and Company S
151、ecretary for a uS multinational company prior to joining APA.Prior to those roles he was a partner of an Australian law firm.Mark is a Fellow of Chartered Secretaries Australia and the Institute of Chartered Secretaries and Administrators,and is admitted to practice as a solicitor.AustrAliAn PiPelin
152、e trust And its controlled entitiesDirectors report continueD11Directorships oF other listeD companiesDirectorships of other listed companies held by directors at any time in the three years immediately before the end of the year are as follows:naMeCOMpanYperiOd OF direCtOrsHipLeonard Bleasel AMQBe
153、Insurance Group LimitedSince January 2001Michael McCormack envestra LimitedSince July 2007Steven Cranetransfield Services LimitedBank of Queensland LimitedNIB Holdings LimitedAPA ethane Limited(1)Since February 2008Since December 2008Since September 2010July 2008 to June 2011John FletcherAlinta ener
154、gy Group october 2006 to April 2010Russell Higgins AoRicegrowers Limited telstra Corporation LimitedArgo Investments LimitedSince December 2005Since September 2009Since September 2011Patricia McKenzie-Muri Muhammad-Robert WrightSAI Global Limited Super Retail Group Limited APA ethane Limited(1)Dexio
155、n LimitedRCL Group LimitedSince october 2003Since May 2004Since July 2008March 2005 to August 2010May 2006 to February 2012(1)APA ethane Limited is the responsible entity of the registered investment schemes that comprise ethane Pipeline Income Fund,the securities in which are quoted on the ASX.opti
156、ons granteD In this report,the term“APA securities”refers to the stapled securities each comprising a unit in Australian Pipeline trust stapled to a unit in APt Investment trust and traded on the Australian Securities exchange(“ASX”)under the code“APA”.No options over unissued APA securities were gr
157、anted during or since the end of the year.No unissued APA securities were under option as at the date of this report.No APA securities were issued during or since the end of the year as a result of the exercise of an option over unissued APA securities.inDemniFication oF oFFicers anD external auDito
158、rDuring the year,the Responsible entity paid a premium in respect of a contract insuring the directors of the Responsible entity,the Responsible entitys Company Secretary,and all executive officers of the Responsible entity and any related body corporate of APA against any liability incurred in perf
159、orming those roles to the extent permitted by the Corporations Act 2001.the contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.Australian Pipeline Limited,in its capacity as Responsible entity of Australian Pipeline trust and APt Investment trust,
160、indemnifies each person who is or has been a director or Company Secretary of the Responsible entity or of any related body corporate of APA under a range of deed polls and indemnity agreements which have been in place since 1 July 2000.this indemnity may extend to such other officers or former offi
161、cers of APA as the board,at its sole discretion,in each case determines.the indemnity operates to the full extent allowed by law but only to the extent not covered by insurance and is on terms the board considers usual for arrangements of this type.under its constitution,Australian Pipeline Limited(
162、in its personal capacity)indemnifies each person who is or has been a director,Company Secretary or executive officer of that company.the Responsible entity has not otherwise,during or since the end of the year,indemnified or agreed to indemnify an officer or external auditor of the Responsible enti
163、ty or of any related body corporate of APA against a liability incurred as such an officer or auditor.AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD12APA grouP AnnuAl rePort 2012Directors meetingsDuring the year,18 board meetings,three Remuneration Committee meetings
164、,four Audit and Risk Management Committee meetings and four Health,Safety and environment Committee meetings were held.the following table sets out the number of meetings attended by each director while they were a director or a committee member:BOardreMuneratiOn COMMitteeaudit and risK ManageMent C
165、OMMitteeHealtH,saFetY and enVirOnMent COMMitteedireCtOrsaBaBaBaBLeonard Bleasel AM(1)1818-Michael McCormack1818-Steven Crane 18183344-John Fletcher18183344-Russell Higgins Ao1817-4444Patricia McKenzie 181833-44Muri Muhammad181633-43Robert Wright1818-4443A:Number of meetings held during the time the
166、director held office or was a member of the committee during the year.B:Number of meetings attended.(1)the Chairman also attends all committee meetings ex officio.Directors securityholDingsthe aggregate number of APA securities held directly,indirectly or beneficially by directors or their related e
167、ntities at the 30 June 2012 is 980,057(2011:862,442).the following table sets out directors relevant interests in APA securities as at 30 June 2012:direCtOrsFullY paid seCurities as at 1JulY 2011seCurities aCQuired seCurities dispOsed FullY paid seCurities as at 30June 2012Leonard Bleasel AM375,4056
168、7,688-443,093Michael McCormack170,61924,645-195,264Steven Crane100,000-100,000John Fletcher60,0263,272-63,298Russell Higgins Ao79,5036,657-86,160Patricia McKenzie-12,500-12,500Muri Muhammad42,818-42,818Robert Wright34,0712,853-36,924862,442117,615-980,057the directors hold no other rights or options
169、 over APA securities.there are no contracts to which a director is a party or under which the director is entitled to a benefit that confers a right to call for or deliver APA securities.the Company Secretary holds 7,000 APA securities.AustrAliAn PiPeline trust And its controlled entitiesDirectors r
170、eport continueD13remuneration report introductionAt APA,we are committed to disclosing a clear and transparent summary of our remuneration arrangements.this report explains our approach to remuneration and sets out key 2012 remuneration details for the directors of the Responsible entity and key man
171、agement personnel of APA.the people currently in these positions are listed below:direCtOrs OF tHe respOnsiBle entitYleonard Bleasel aM Chairman APA GroupMichael McCormackChief executive officer and Managing Directorsteven CraneJohn FletcherChairman Remuneration Committeerussell Higgins aOChairman H
172、ealth,Safety and environment Committeepatricia McKenzieMuri Muhammadrobert WrightChairman Audit and Risk Management CommitteeKeY ManageMent persOnnel Michael McCormackChief executive officer and Managing Directorpeter FredricsonChief Financial officerross gersbachChief executive Strategy and Develop
173、mentrobert WhealsGroup executive transmissionJohn FergusonGroup executive NetworksKevin lester(1)Group executive Infrastructure Developmentstephen OhlGroup executive Strategic ProjectsMark KnapmanCompany Secretarypeter WallaceGroup executive Human Resources(1)Kevin Lester joined APA as Group executi
174、ve Infrastructure Development on 6 August 2012.Have there been any changes to the executive remuneration structure in respect to 2012?there have been no changes to the remuneration structure in respect to 2012.However,the remuneration structure remains continuously under review to ensure that that t
175、he organisation maintains appropriate pay structures to attract and retain suitably qualified staff.remuneration CommitteeWhat is the role of the Remuneration Committee?the Remuneration Committee has been established by the board to govern and oversee executive remuneration.the role of the Remunerat
176、ion Committee is to:ensure the provision of a robust remuneration and reward system that provides for the alignment of employee and securityholder interests;consider and make recommendations to the board on remuneration policies and packages applicable to directors and to senior executives of APA;fa
177、cilitate effective attraction,retention and development of talented employees;ensure compliance with relevant legislation and corporate governance principles on remuneration practices and employment policies;and promote diversity,on the basis of gender and other factors,in APA Groups workforce and t
178、o review the effectiveness of diversity practices and initiatives.the members of the Remuneration Committee,all of whom are non-executive directors,are:John Fletcher(Chairman);Steven Crane;Patricia McKenzie;and Muri Muhammad.the Chairman of the board attends all meetings of the Remuneration Committe
179、e and the Managing Director attends by invitation.the Remuneration Committee met three times during the year.the Remuneration Committee may seek external professional advice on any matter within its terms of reference.Our approach to non-executive director remuneration We seek to attract and retain
180、a high calibre of directors who are equipped with diverse skills to oversee all functions of APA in an increasingly complex environment.We aim to fairly remunerate directors for their services relative to similar sized organisations.Non-executive director remuneration comprises:a base board fee;an a
181、dditional fee for serving on a committee of the board;and superannuation contributions.AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD14APA grouP AnnuAl rePort 2012the board determines base board fees and committee fees annually.the board acts on advice from the Remun
182、eration Committee which obtains external professional advice from independent remuneration specialists.Such advice includes market comparisons paid by comparable companies in the ASX 200.Non-executive directors do not receive incentive payments of any type.one off per diems may be paid in exceptiona
183、l circumstances.No payments have been made under this arrangement in this reporting period.In 2003,the board terminated the non-executive directors retirement benefit plan so that the benefits to participating directors that had accrued up to that termination date were then quantified and preserved
184、for payment on retirement of those directors.Robert Wright is the only current director entitled to benefits under the plan on his retirement from the board.Board approved fees and committee feesFollowing external benchmarking and a review of APAs performance relative to other companies,base board f
185、ees and fees for serving on a committee of the board were increased effective 1 January 2012.Base board fees and committee fees are outlined below:Fees(1)CHairMan$000/paMeMBer$000/paEffective 1 January 2012Board fees298110Remuneration Committee fees2613Audit and Risk Management Committee fees3417Hea
186、lth,Safety and environment Committee fees2412Effective 1 January 2011 to 31December 2011Board fees280102Remuneration Committee fees2311.5Audit and Risk Management Committee fees3216Health,Safety and environment Committee fees2311.5(1)excludes superannuation levy.Actual payments for periodActual remu
187、neration received by non-executive directors during the year is outlined in the table below:nOn-exeCutiVe direCtOrs(1)FeeS$SuPeRANNuAtIoN$tOtal paid 2012$totAL PAID 2011$Leonard Bleasel AM289,00024,400313,400293,250Steven Crane134,75012,128146,87863,084John Fletcher117,00043,250160,250149,335Russell
188、 Higgins Ao146,00013,145159,145158,452Patricia McKenzie 130,00011,675141,67561,858Muri Muhammad130,000-130,000121,500Robert Wright150,75013,550164,300153,965George Ratilal(2)-16,000total1,097,500118,1481,215,6481,017,444(1)the remuneration for the Chief executive officer and Managing Director,Michae
189、l McCormack,is included with the actual remuneration disclosures for key management personnel for FY 2012 on page 19.(2)George Ratilal resigned as a director on 26 August 2010.AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD15Our approach to executive remuneration What
190、 is our executive remuneration strategy?our executive remuneration strategy is to:attract and retain key executives who will create long-term sustainable value for securityholders;motivate and reward executives having regard to the overall performance of APA,the performance of the executive measured
191、 against pre-determined objectives and the external compensation environment;target at least the market median using external benchmark data;appropriately align the interests of executives with those of securityholders;and comply with applicable legal requirements and appropriate standards of govern
192、ance.We aim to pay competitive remuneration and this is communicated as total Remuneration opportunity(“tRo”).each individuals tRo is dependent on their level in the organisation and their capacity to influence outcomes.What is the remuneration mix?APAs remuneration mix for senior executives is stru
193、ctured as a mix of fixed remuneration and at risk short and long-term incentive components.the proportion of fixed versus at risk remuneration varies at different levels within APA,reflecting the varying capacity of employees to influence APAs operational performance and returns to securityholders.F
194、or the Managing Director and other key management personnel,the remuneration mix is:40%30%30%50%25%25%at risk components at risk componentsTFR STI LTIManaging Directorother key management personnel LtI3An overview of remuneration componentseach remuneration component has a different purpose:reMunera
195、tiOn COMpOnentpurpOseHOW reWard is deliVeredtotal Fixed Remuneration(“tFR”)to reflect the market value of the role and the individuals skills and experience.the total of base salary(which includes cash,superannuation levy,vehicles and parking)and incidental benefits paid in monthly instalments.at ri
196、sK COMpOnentsShort-term incentive(“StI”)to reward strong performance against the achievement of specific business objectives.Cash-based incentive based on a mix of financial and non-financial key performance indicators paid annually after the audited accounts are approved.Long-term incentive(“LtI”)t
197、o link executive reward with securityholder value.Cash-settled incentive based on achievement of an annual board mandated key financial hurdle paid in three equal annual instalments starting one year after the year of allocation.3 other than the Company Secretary who has a mix of 58%,21%and 21%.+Tot
198、al RemunerationOpportunityTotal FixedRemuneration(TFR)Performance based at risk remunerationShort-termIncentive(STI)Long-termIncentive(LTI)=AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD16APA grouP AnnuAl rePort 2012total Fixed remuneration(“tFr”)The total of base sa
199、lary,including cash,superannuation levy,vehicles and parking and incidental benefits.tFR is reviewed annually and is determined by reference to independent external remuneration benchmarking information,taking into account an individuals responsibilities,performance,qualifications and experience.at
200、risk remuneration At risk remuneration is made up of two elements,StI and LtI.Before any StI payments or LtI allocations are made the organisation must achieve at least the board approved performance hurdle.each of these components is discussed in more detail below.What is the key performance hurdle
201、 for at risk remuneration?operating cash flow per security(”oCFPS”)has been chosen by the board as the current key performance hurdle for at risk remuneration.this is directly linked to APAs strategic goal of increasing operating cash flows over the medium term,thereby improving total securityholder
202、 value.using oCFPS as the key performance hurdle ensures the interests of executives and securityholders are aligned.If the security price rises over the period of allocation,both parties benefit and likewise if it falls,both are similarly affected.At the start of the year,the board,having regard to
203、 the longer term strategy and annual budget,established the oCFPS gateway that needs to be achieved before any StI and LtI was triggered.the oCFPS gateway was not changed over the course of the year.Short-term incentive(“STI”)A cash-based incentive used to reward strong performance against the achie
204、vement of financial and non-financial targets or key performance indicators.What is the purpose of the STI plan?the StI plan is designed to put a proportion of executive remuneration at risk against meeting key performance indicators(“KPIs”)linked to:various financial measures such as cost control,r
205、evenue and cash generation and capital expenditure management.this reflects APAs strategic goal of increasing oCFPS over the medium term,thereby increasing securityholder returns and aligning the interests of StI participants with those of securityholders;and non-financial targets through the delive
206、ry of individual KPIs linked to long-term strategic measures including health,safety and environment targets,and reinforcement of an ethical and values based culture.At least 50%of the key management personnels KPIs are linked to financial measures.How is performance measured?At the beginning of the
207、 financial year,the board,at the recommendation of the Remuneration Committee,determines the appropriate financial and non-financial KPIs for the Chief executive officer.the board also reviews the KPIs the Chief executive officer will use to assess the performance of his direct reports.At the end of
208、 the financial year,after the audited financial results are available and provided that the performance hurdle is met,the board determines the performance against KPIs of the Chief executive officer and the Chief executive officers direct reports and approves the StI amounts to be paid.What is the p
209、erformance hurdle?StI payments are made from the general operating budget.executives participating in the StI will not receive any incentive payments unless the performance hurdle for the financial year is reached and individual KPIs have been achieved.What is the value of the STI opportunity?the St
210、I amount payable is capped at the StI target amount.that is,the Chief executive officers StI is capped at 30%of tRo and for his direct reports at 25%of tRo4.How is the STI reward delivered?All StI payments are made in cash and paid in September of the new financial year following the completion of a
211、udit of the annual accounts.For FY 2012,the StI outcomes are shown in the table below for all key management personnel:KeY ManageMent persOnnelsti earned($)sti earned(%)sti FOrFeited($)sti FOrFeited(%)Michael McCormack700,35092.0060,9008.00Peter Fredricson292,39596.5010,6053.50Ross Gersbach321,56393
212、.7521,4376.25Robert Wheals(1)117,36990.0013,04110.00John Ferguson(1)119,74794.007,6436.00Stephen ohl182,12577.5052,87522.50Mark Knapman132,92288.2517,69811.75Peter Wallace 147,34594.009,4056.00(1)Appointed to key management positions on 1 April 2012.StI has been prorated.4 other than for the Company
213、 Secretary whose StI is capped at 21%of tRo.AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD17Long-term incentive(“LTI”)A cash-settled incentive used to link executive reward to securityholder value based on the achievement of key financial measures.What is the purpose
214、 of the LTI?the LtI plan is designed to put a proportion of executive remuneration at risk against meeting financial targets linked to oCFPS.this reflects APAs strategic goal of increasing oCFPS over the medium term,thereby increasing total securityholder value and aligning the interests of LtI part
215、icipants with those of securityholders.What form does the LTI take?eligible participants are entitled to an LtI allocation in the form of reference units which exactly mirror the value of APA securities.the reference units allocated under the LtI plan are not actual APA securities,but notional secur
216、ities with a value equivalent to the LtI allocation.each reference unit is valued at the equivalent of the 30 trading day volume weighted average market price(“VWAP”)of an APA security immediately prior to the opening of the APA security trading window,following the announcement of APAs annual finan
217、cial results to the ASX.What is the value of the LTI opportunity?LtI participants are advised of their maximum LtI opportunity,expressed as a percentage of their tRo.the actual individual LtI allocation is determined at the completion of the financial year and is based on oCFPS performance relative
218、to the achievement of the performance target.the maximum LtI allocation is capped at 120%of the participants maximum LtI opportunity.What is the performance target?No LtI allocations are made unless APA achieves the target oCFPS and the oCFPS result determines the size of participants LtI allocation
219、s up to their maximum LtI allocation.How are the LTI allocations delivered?An LtI allocation vests in three equal instalments over the three financial years following the allocation,with the initial one-third vesting at the end of the first financial year,one-third at the end of the second financial
220、 year,and one-third at the end of the third financial year.As LtI allocations are subject to the achievement of a pre-allocation performance hurdle,they are not subject to further performance tests at the vesting dates.However,participants must remain employed by APA to access the vested benefit.upo
221、n vesting,the LtI is delivered in cash.the cash payment is equal to the number of reference units vesting on the vesting date multiplied by the 30 trading day VWAP of APA securities immediately prior to the opening of the APA security trading window,following the announcement of APAs annual financia
222、l results to the ASX.APA provides fully in its accounts for the obligations of the LtI in the year in which the LtI allocation is made.What rights are attached to an LTI reference unit?the LtI is a cash-settled plan and participants are not allocated APA securities.LtI allocations do not entitle par
223、ticipants to vote at securityholders meetings or to be paid distributions.No options or other equity instruments are issued to APA employees or directors under the LtI plan.Changes to sti and lti hurdles for the 2013 reporting periodthe board has conducted a review of the total Package opportunity I
224、ncentive Plan(“tPoI Plan”)over the course of the previous year and have decided to implement changes within the plan.these changes have been made to more directly align the interests of plan participants and security holders and secondly to allow the board to reward superior performance.the StI comp
225、onent will remain linked to oCFPS and executive StI awards,once this hurdle has been met,will remain a factor of individual KPIs as set by the board.the LtI component will adopt two new hurdles in place of the previous hurdle(being oCFPS).these hurdles,which will be weighted equally,will firstly be
226、total Securityholder Returns(“tSR”)performance against the ASX 100 comparator group and secondly,performance against targets set for earnings Before Interest,tax,Depreciation and Amortisation divided by Funds employed(“eBItDA/Fe”).these new LtI measures of tSR and eBItDA/Fe are appropriate longer te
227、rm award hurdles based on the integrity of earnings performance against the funds employed and the experience of APA securityholders compared to the general shareholder market.the tSR hurdle is linked to APAs ranking relative to the ASX 100.Rewards do not commence until APA achieves a relative posit
228、ion of P50.on achieving P50 than executive awards increase as the APA performance increases relative to the ASX 100.the eBItDA/Fe hurdle has been set to reflect improvement on the previous year.Awards do not commence until this improvement has been achieved.on achieving this improvement then executi
229、ve awards increase as the eBItDA/Fe performance increases.For both StI and LtI measures,executives can earn from zero(minimum hurdle has not been achieved)to 150%of available award(stretch hurdles have been achieved)with the target reward being approximately 80%of the total possible.All other aspect
230、s of the tPoI Plan structure and design will remain the same.It is felt these changes create an even closer link between the interests of all stakeholders in the Group.Because the remuneration structure must remain flexible to meet ever changing circumstances the board will continue to monitor the t
231、PoI plan to ensure its continued relevance.actual remuneration received during FY 2012Actual remuneration received by the Managing Director and other key management personnel is defined as the take home pay received by them in the relevant year.Actual LtI payments represent the amount of reference u
232、nits that vested and were converted to cash payments to the individual during the year,regardless of when the LtI was initially allocated.What amounts are excluded?the table below does not show LtI allocations in FY 2012 or previous years that are still subject to performance or employment condition
233、s because those LtI allocations are still at-risk of forfeiture.the table below sets out actual cash payments made to the relevant key management personnel during FY 2012.this table differs from the information disclosed in Note 46 of the financial report for Australian Pipeline trust that reflects
234、the total remuneration earned by key management personnel in FY 2012,but not yet fully paid due to future vesting of LtI earned.the major differences are in respect of StI entitlements for which the amount paid in FY 2012 represents the amount earned in FY 2011,and LtI allocations for which the amou
235、nts paid in FY 2012 relate to allocations made in prior years that have vested in FY 2012.AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD18APA grouP AnnuAl rePort 2012the following table outlines the actual remuneration received by key management personnel during FY 2
236、012:KeY ManageMent persOnneltOtal Fixed reMuneratiOn$sti$lti$tOtal paid2012$tOtal paid2011$Michael McCormack1,015,000621,000755,5172,391,5171,980,114Peter Fredricson606,000270,750107,105983,855798,125Ross Gersbach686,000308,750328,4571,323,2071,102,722Robert Wheals(2)346,980100,00090,407537,387-John
237、 Ferguson(2)340,72391,300101,221533,244-Stephen ohl470,000201,375248,334919,709799,684Mark Knapman415,780130,706130,897677,383589,081Peter Wallace(1)304,87234,356-339,22873,809total4,185,3551,758,2371,761,9387,705,5305,343,535(1)Peter Wallace joined APA as Group Manager Human Resources on 4 April 20
238、11.StI and LtI earned for FY 2011 but not paid until future years are disclosed in the financial report.(2)Robert Wheals and John Ferguson were internal appointments to key management positions on 1 April 2012.total StI and LtI remuneration relates to the full financial year FY12.Current lti referen
239、ce units outstanding the following table sets out the number of reference units that have been allocated to key management personnel but have not yet vested or been paid,and the years in which they will vest,based on an estimated VWAP of$4.79:KeY ManageMent persOnnelBalanCe OF reFerenCe units(1)Vest
240、ing Year2012(2)201320142015Michael McCormack616,281220,638199,171132,94563,527Peter Fredricson215,71755,59380,88053,95825,286Ross Gersbach285,555103,59892,01261,32128,624Robert Wheals(3)99,93733,81033,27521,96910,883John Ferguson(3)100,77936,23532,48821,42510,631Stephen ohl200,67574,22464,59242,2481
241、9,611Mark Knapman128,94347,47141,76227,14112,569Peter Wallace50,1633,64016,72116,72113,081(1)Includes reference units subject to allocation by the board in August 2012.(2)Reference units multiplied by 30 trading day VWAP to be paid as cash in September 2012.(3)Robert Wheals and John Ferguson were ap
242、pointed to key management positions on 1 April 2012.AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD19executive contracts the terms of the contractual arrangements for each of the key management personnel are set out below:naMe,title and COMMenCeMent dateterM and terMi
243、natiOn prOVisiOns/BeneFitsMichael McCormack Managing Director since 1 July 2006Chief Executive Officer 1 July 2005 to 30 June 2006Commenced 1 March 2000No defined term.on termination with cause or following long-term illness or incapacity,APA will pay any tFR due and owing at the date of termination
244、 and any accrued leave entitlements.on termination without cause,APA will pay 52 weeks tFR,any incentives earned but not paid on their due date and any accrued leave entitlement.APA will also pay any tRo due and owing at the date of termination.Mr McCormack is required to give APA twelve months noti
245、ce.peter FredricsonChief Financial OfficerCommenced 1 June 2009No defined term.on termination with cause,APA will pay any tFR due and owing at the date of termination and any accrued leave entitlements.on termination without cause,APA will pay 13 weeks tFR,any notice period not worked,any bonus enti
246、tlement not yet paid and any accrued leave entitlement.APA will also pay any tRo due and owing at the date of termination.Mr Fredricson is required to give APA six months notice.In return for increased notice,non-compete and non-solicitation provisions,and due to the critical nature of the role of C
247、hief Financial officer over the next three years with regard to the growth,integration and financial challenges facing APA,Mr Fredricson was placed on a loyalty and performance bonus of$202,000 per year for the three years commencing 1 April 2013.ross gersbachChief Executive Strategy and Development
248、Commenced 1 February 2008No defined term.on termination with cause,APA will pay any tFR due and owing at the date of termination and any accrued leave entitlements.on termination without cause,APA will pay 13 weeks tFR,any notice period not worked,any bonus entitlement not yet paid and any accrued l
249、eave entitlement.APA will also pay any tRo due and owing at the date of termination.Mr Gersbach is required to give APA six months notice.In return for increased notice,non-compete and non-solicitation provisions,and due to the critical nature of the role of Chief executive Strategy and Development
250、over the next three years with regard to the growth,integration and financial challenges facing APA,Mr Gersbach was placed on a loyalty and performance bonus of$228,667 per year for the three years commencing 1 April 2013.robert WhealsGroup Executive TransmissionCommenced 22 September 2008No defined
251、 term.on termination with cause,APA will pay any tFR due and owing at the date of termination and any accrued leave entitlements.on termination without cause,APA will pay 13 weeks tFR,any notice period not worked,any bonus entitlement not yet paid and any accrued leave entitlement.APA will also pay
252、any tRo due and owing at the date of termination.Mr Wheals is required to give APA six months notice.In return for increased notice,non-compete and non-solicitation provisions,and due to the critical nature of the role of Group executive transmission under the major restructure of the business,Mr Wh
253、eals will be paid$60,000 per year for the two years commencing 1 April 2013.AustrAliAn PiPeline trust And its controlled entitiesDirectors report continueD20APA grouP AnnuAl rePort 2012naMe,title and COMMenCeMent dateterM and terMinatiOn prOVisiOns/BeneFitsJohn FergusonGroup Executive NetworksCommen
254、ced 29 September 2008No defined term.on termination with cause,APA will pay any tFR due and owing at the date of termination and any accrued leave entitlements.on termination without cause,APA will pay 13 weeks tFR,any notice period not worked,any bonus entitlement not yet paid and any accrued leave
255、 entitlement.APA will also pay any tRo due and owing at the date of termination.Mr Ferguson is required to give APA six months notice.In return for increased notice,non-compete and non-solicitation provisions,and due to the critical nature of the role of Group executive Networks under the major rest
256、ructure of the business,Mr Ferguson will be paid$60,000 per year for the two years commencing 1 April 2013.Kevin lesterGroup Executive Infrastructure DevelopmentCommenced 6 August 2012No defined term.on termination with cause,APA will pay any tFR due and owing at the date of termination and any accr
257、ued leave entitlements.on termination without cause,APA will pay 13 weeks tFR,any notice period not worked,any bonus entitlement not yet paid and any accrued leave entitlement.APA will also pay any tRo due and owing at the date of termination.Mr Lester is required to give APA six months notice.steph
258、en Ohl Group Executive Strategic Projects Commenced 2 May 2005No defined term.on termination with cause,APA will pay any tFR due and owing at the date of termination and any accrued leave entitlements.on termination without cause,APA will pay 26 weeks tFR,any incentives earned but not paid on their
259、due date and any accrued leave entitlement.APA will also pay any tRo due and owing at the date of termination.Mr ohl is required to give APA six months notice.Mark KnapmanCompany SecretaryCommenced 16 July 2008No defined term.on termination with cause or following long-term illness or incapacity,APA
260、 will pay any tFR due and owing at the date of termination and any accrued leave entitlements.on termination without cause,APA will pay 26 weeks tFR,any incentives earned but not paid on their due date and any accrued leave entitlement.APA will also pay any tRo due and owing at the date of terminati
261、on.Mr Knapman is required to give APA three months notice.peter WallaceGroup Executive Human ResourcesCommenced 4 April 2011No defined term.on termination with cause,APA will pay any tFR due and owing at the date of termination and any accrued leave entitlements.on termination without cause,APA will
262、 pay 13 weeks tFR,any notice period not worked,any bonus entitlement not yet paid and any accrued leave entitlement.APA will also pay any tRo due and owing at the date of termination.Mr Wallace is required to give APA six months notice.AustrAliAn PiPeline trust And its controlled entitiesDirectors r
263、eport continueD21remuneration advisersDuring FY 2012,the following remuneration information was sought:egan&Associates were appointed by the Chairman of the Remuneration Committee to provide remuneration benchmarking information for all directors;and ernst&Young were appointed by the Chairman of the
264、 Remuneration Committee to provide benchmarking information for the Chief executive officer and Managing Director and key management personnel.Both those advisers were engaged directly on instruction by the committee,reported directly to the committee and were independent and free from influence by
265、key management personnel.inFormation requireD For registereD schemesFees paid to the Responsible entity and its associates(including directors and secretaries of the Responsible entity,related bodies corporate and directors and secretaries of related bodies corporate)out of APA scheme property durin
266、g the year are disclosed in Note 47 to the financial statements.except as disclosed in this report,neither the Responsible entity nor any of its associates holds any APA securities.the number of APA securities issued during the year,and the number of APA securities at the end of the year,are disclos
267、ed in Note 29 to the financial statements.the value of APAs assets as at the end of the year is disclosed in the balance sheet in total assets,and the basis of valuation is included in Note 3 to the financial statements.auDitors inDepenDence DeclarationA copy of the Auditors independence declaration
268、 as required under section 307C of the Corporations Act 2001 is included on page 89.rounDing oF amountsAPA is an entity of the kind referred to in ASIC Class order 98/0100 dated 10July 1998 and,in accordance with that Class order,amounts in the directors report and the financial report are rounded t
269、o the nearest thousand dollars,unless otherwise indicated.Signed in accordance with a resolution of the directors of the Responsible entity made pursuant to section 298(2)of the Corporations Act 2001.on behalf of the directorsleonard Bleasel aM robert Wright Chairman DirectorSYDNeY,22 August 2012Aus
270、trAliAn PiPeline trust And its controlled entitiesDirectors report continueD22APA grouP AnnuAl rePort 2012corporate governance statementAPA Group(“APA”)comprises two registered investment schemes,Australian Pipeline trust and APt Investment trust,the securities in which are“stapled”together,and thei
271、r controlled entities.Australian Pipeline Limited(“Responsible entity”)is the responsible entity of those trusts and is responsible for APAs corporate governance practices.the ASX Corporate Governance Councils Corporate Governance Principles and Recommendations articulate eight core principles of go
272、od corporate governance and,for each of those principles,recommendations as to their implementation.Adoption of the Councils recommendations is not compulsory.However,under the Listing Rules of ASX Limited(“ASX”)companies are required to provide a statement in their annual report disclosing the exte
273、nt to which they have followed the recommendations in the reporting period and,where companies have not followed all the recommendations,they must identify which ones they have not followed and give reasons for not following them.each of the principles of good corporate governance has been responded
274、 to in turn in this statement and the table at the rear of this statement provides a checklist of APAs adoption of the ASX Corporate Governance Councils recommendations.explanations for departures from the recommendations are set out in this statement.Various references are made below to APAs websit
275、e as a source of information on corporate governance practices and documentation.the home page for APAs website is .au,and the link entitled“About APA”leads to the corporate governance material.Securityholders who do not have internet access but wish to read that material should telephone 1800 992 3
276、12(or+61 2 8280 7132,if calling from outside Australia)and ask for a copy of the relevant material to be sent to them.In this statement the term“Reporting Period”means the period of 12 months to 30 June 2012.prinCiple 1:laY sOlid FOundatiOns FOr ManageMent and OVersigHt Board and its committeesthe b
277、oard of directors of the Responsible entity(“board”)is accountable to securityholders for the proper management of APAs business and affairs.It operates in accordance with a charter,which is published on APAs web site.the board normally meets 11 times each year,with additional meetings being held as
278、 required.the number of times it met during the Reporting Period and directors attendance at those meetings are set out in the directors report for that period.to assist the board in carrying out its responsibilities,the following standing committees of its members have been established:Audit and Ri
279、sk Management Committee;Remuneration Committee;and Health,Safety and environment Committee.each committee has its own charter that describes the roles and responsibilities delegated to the committee by the board,and those charters are published on APAs web site.the charters for the board and its com
280、mittees are reviewed by the board annually,and were last reviewed in July 2012.the board delegates responsibility for implementing the strategic direction and managing the day-to-day operations of APA to the Managing Director.the Managing Director consults with the Chairman,in the first instance,on
281、matters that are sensitive,extraordinary or of a strategic nature.the board has approved specific limits of authority for management with respect to approval of expenditure,contracts and other matters,and regularly reviews those limits.non-executive directors letter of appointmentthe current non-exe
282、cutive directors have each received a letter of appointment documenting,among other issues:the roles and responsibilities of the board and each of its committees;expectations of the time commitment to be made by directors in serving on the board and its committees,and of their participation in an an
283、nual review of the board,its committees and individual directors;requirements with respect to the disclosure of directors interests;the fees payable to the directors;and key policies that directors are required to comply with,such as APAs securities trading policy.Management:service contracts,induct
284、ion and performance evaluationsthe Managing Director,Chief Financial officer and other senior management have service contracts setting out their responsibilities,conditions of service and termination entitlements.Newly appointed senior executives complete an induction program on the management of t
285、he business covering topics that include financial matters,strategic direction,operations,risk management,health and safety,environmental issues and governance matters.APA also conducts annual processes relating to talent and succession management,and the development of leadership capabilities.APA h
286、as processes in place to review the performance of senior management.each senior executive,including the Managing Director,has personal objectives as well as objectives related to the performance of business or functional units and APA as a whole.they are reviewed against those objectives at least a
287、nnually.A performance review of senior management has been conducted during the Reporting Period in accordance with that process.Performance evaluation of the Managing Director is handled by the Chairman with the assistance of the Remuneration Committee and a report is provided to and reviewed by th
288、e board.Assessment and monitoring of the performance of other senior executives are handled by the Managing Director who reports on those matters to the Chairman and the Remuneration Committee.prinCiple 2:struCture tHe BOard tO add Value Board membershipthe board determines its size and composition,
289、subject to limits imposed by the Responsible entitys constitution.the constitution provides for a minimum of three directors and a maximum of 12.the names of the current directors and their experience,terms of office and membership of board committees are set out in the directors report for the Repo
290、rting Period.the composition of the board is determined in accordance with the following principles:a majority of the board will be comprised of independent directors;the Chairman will be an independent director;and a person cannot hold the positions of both Chairman and Chief executive officer.unde
291、r the Responsible entitys constitution,Petronas Australia Pty Limited was entitled to appoint one director of the Responsible entity while the Petronas Group held not less than 10%of the issued securities in APA but,with the Petronas Group having sold its APA securities in May 2012,Petronas Group ha
292、s ceased to have that right.the Responsible entitys constitution requires one-third of its directors(excluding the Managing Director and any director who is standing for re-election after having been appointed as an additional director or to fill a vacancy)to retire from office at the annual general
293、 meeting of the Responsible entity each year.If the calculation of that one-third is not a whole number,the number of directors required to retire by this“rotation”process is rounded to the nearest whole number.Retiring directors are eligible for re-election.23the Responsible entitys constitution al
294、so provides that if the board appoints a director to fill a vacancy or as an addition to the board,the new director will hold office until the end of the next annual general meeting of the Responsible entity and is eligible for re-election.securityholders right to nominate a director and to vote on
295、nomineesthe Deed Poll initially executed by the Responsible entity in 2004 and amended with APA securityholders approval in 2011(a copy of which is available on APAs web site)affords APA securityholders certain rights in respect to nominees for the position of director on the board.At least 75 days
296、before annual general meetings of the Responsible entity,securityholders are notified by an announcement to ASX that they may nominate a person to fill a vacancy on the board that arises on retirement of either a director under the“rotation”process or a director appointed by the board since the last
297、 annual general meeting.If securityholders wish to exercise that right,at least 60 days before the annual general meeting they must send the Responsible entity a signed nomination form and the nominees signed consent to act as a director.the Responsible entity advises securityholders of all candidat
298、es who have been validly nominated and presents its nominations to the annual meeting of securityholders.independence of directorsthe board assesses the independence of non-executive directors on appointment and annually having regard to the independence of directors policy(published on APAs website
299、).the directors report for the Reporting Period identifies which directors are considered to be independent at the date of the report.A majority of the current directors are independent.selection and appointment of directorsthe former Nominations and Remuneration Committee of the board became the Re
300、muneration Committee in early 2008 so that the functions with respect to selection and appointment of new directors and related matters previously handled by that committee then reverted to the board.ultimate responsibility for such matters rests with the full board and the board considers the effic
301、ient handling of those matters is not diminished by the absence of a Nominations Committee.the board considers that a diverse range of skills,experience and backgrounds is required on the board to effectively govern the business.It determines and reviews from time to time the mix of skills and diver
302、sity that it looks to achieve in its membership.Having regard to the nature of APAs business,that mix includes financial,strategic,operational,legal,regulatory and general commercial expertise.When looking to appoint a new director,the board predefines the skills and experience required of candidate
303、s for the role to ensure that the required mix of skills and experience will be represented on the board and,based on that work,seeks a list of potential candidates believed to satisfy those requirements.If the board is not satisfied with the quality or diversity of the candidates identified in that
304、 process,it may consider it appropriate to instruct a search firm to identify additional suitable candidates.the board recognises that an experienced search firm with a clear brief from the board as to the required characteristics of candidates can assist in identifying potentially suitable candidat
305、es from diverse backgrounds.the Chairman conducts an initial interview of the short-listed candidates and,subject to them being available for and interested in the position,they are then interviewed by the board.the board assesses potential candidates against the predefined requirements and also con
306、siders their qualifications,backgrounds and personal qualities before the new director is appointed.In the interest of gender diversity,the board has determined that the short-listed candidates for an available board position must include at least one qualified female candidate and,where a search fi
307、rm is engaged,the board will instruct them accordingly.annual review of performance of the board,its committees and directorsA review process to assess the performance of the board,its committees and individual directors is undertaken each year.the last review was conducted in october 2011 and the r
308、eview for the Reporting Period will be completed in october 2012.each director completes a questionnaire,the responses are collated and the board then meets to discuss and consider the results of that process and to determine any actions arising from the review.the Chairman also meets with each dire
309、ctor to discuss the review and the directors own performance.Matters covered by the review include the role and performance of the board and its committees,directors understanding of APAs long-term objectives and key risks to the business and achievement of those objectives,succession planning and t
310、he effectiveness of the Chairman in leading the board.directors access to records and information,management and professional adviceSubject to normal privacy requirements,directors have access to APAs records and information,and to the Company Secretary and other relevant senior management personnel
311、.they receive regular detailed reports on financial and operational aspects of APAs business and may request elaboration or explanation of those reports.While most board meetings are held in Sydney,where APAs head office is located,some are held in other locations where APA has a presence,providing
312、directors with the opportunity to receive presentations from and speak to local APA employees about the business and to inspect APAs assets and facilities.the board collectively,and each director individually,may seek independent professional advice at APAs expense.Prior approval of the Chairman is
313、required,but this may not be unreasonably withheld.Directors and senior management are encouraged to broaden their knowledge of APAs business and to keep abreast of developments in business more generally by attending relevant courses,seminars and conferences.Where appropriate,APA will meet expenses
314、 involved in such activities.prinCiple 3:prOMOte etHiCal and respOnsiBle deCisiOn-MaKing Code of conduct and policiesthe board and senior management are firmly committed to ensuring that they and all employees observe high standards of ethical behaviour and conduct.APAs code of conduct sets out the
315、behaviour required of directors and employees and recognises the responsibilities of APA and its personnel to securityholders,customers,suppliers,employees and the community.It also requires that breaches of the code are reported and provides a mechanism to enable breaches to be reported without fea
316、r of retribution.the code is published on APAs web site.A number of APAs policies aim to foster a culture of compliance and ethical and responsible decision-making.APAs whistleblower policy encourages the reporting of matters of concern and suspected wrongdoing,such as dishonest or fraudulent conduc
317、t,breaches of legislation and other conduct that may cause financial loss to APA or be otherwise detrimental to its reputation or interests,and describes the protection to be afforded to whistleblowers who report such conduct against reprisals,discrimination,harassment or other disadvantage resultin
318、g from their reports.APAs securities trading policy,published on its web site,provides that subject to some exceptions directors and designated management personnel must not buy or sell APA securities during either of the following“closed periods”:corporate governance statement continued24APA grouP
319、AnnuAl rePort 2012 in the period starting 1 January and ending on the second business day after the release of APAs half yearly results to the ASX,or in the period starting 1 July and ending on the second business day after the release of APAs annual results to the ASX,unless exceptional circumstanc
320、es apply,and they may only buy or sell APA securities outside those closed periods if they obtain clearance to do so in accordance with the process described in the policy.Directors and employees are precluded from buying or selling securities at any time if they are aware of any price-sensitive inf
321、ormation which has not been made public.diversityAPA values diversity and recognises that to continue to be a relevant and innovative organisation,it must leverage the full potential of its people.embracing individual diversity encourages diversity of thought,which is conducive to better decision ma
322、king and opportunity for innovation.It is also about taking advantage of all available talent for the benefit of the organisation.APA also recognises that creating sustainable shareholder wealth depends on its ability to attract and retain an engaged,highly skilled and motivated workforce.therefore,
323、diversity makes good business sense.APA has developed a diversity policy that is available on its website.Workforce gender profile(2012)Currently within APA,women represent 27%of the total workforce(a 2%increase from the previous year),14%of leadership roles(the top three levels of management)and 4%
324、of technical roles,while 12.5%of directors on the board are female.diversity objectives(2013)While the APA workforce gender profile is consistent with organisations within APAs industry and similar male dominated sectors,APA is committed to increasing the participation of women in the workforce in o
325、rder to broaden the talent pool from which leaders can be drawn and to strengthen the diversity of APA.A working party was established to analyse APAs current diversity status and to determine trends and developments in addressing the diversity challenge.As a result,the following objectives and init
326、iatives have been agreed by the board:Attraction focus on attracting new talent into APA:wherever possible,include at least one woman on the shortlist of applicants for all management roles;include at least one woman in the selection panel for all senior management roles;and expand recruitment train
327、ing materials to include diversity awareness and the value of a diverse workforce.Retention focus on retaining talent in APA:continue to offer flexible work arrangements through part-time hours,job sharing,flexible start and finish times and purchase of additional annual leave;and maintain breastfee
328、ding accreditation in relevant APA offices.opportunities provide both career and development opportunities for women:implement an APA Women in Leadership seminar at least annually;maintain or improve womens participation rates in leadership and management development programs;and all nominees in the
329、 talent pool,both male and female,to have a completed development plan.APA will report on the progress in achieving these objectives in its 2013 annualreport.diversity aspirationsIn addition to the above objectives and consistent with its diversity policy,APA will also be exploring its profile and o
330、pportunities for improvement with regard to the age profile and workforce demographics,equity of pay and benefits,and broader community demographics.these will be analysed and,where specific initiatives are undertaken,included in subsequent reporting periods.prinCiple 4:saFeguard integritY in FinanC
331、ial repOrting audit and risk Management Committeethe board has established an Audit and Risk Management Committee,the composition of which is determined in accordance with the following principles:the committee will have at least three members;all members of the committee will be independent,non-exe
332、cutive directors;and the committee Chairman cannot also be the Chairman of the board.the directors report for the Reporting Period identifies the current members of the committee and their qualifications and experience.the Chairman of the board,although not a member of the committee,usually attends
333、committee meetings.the roles and responsibilities delegated to the committee are set out in the committees charter which is published on APAs web site.the Managing Director,Chief Financial officer,Company Secretary,Business Risk Manager,other senior management personnel,as required,and the external and internal auditors attend committee meetings at the discretion of the committee.the external and
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