Australian Infrastructure Fund (AIX) - hotcopper.com.au

Hastings Funds

Management Limited

ABN 27 058 693 388

AFSL No. 238309

Australian Infrastructure

Fund Limited

ABN 97 063 935 553

Level 16, 90 Collins Street

Melbourne VIC 3000 Australia

T +61 3 8650 3600

F +61 3 8650 3701

www.hfm.com.au

Melbourne, London, San Antonio, Sydney

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Australian Infrastructure Fund (AIX)

Results announcement Total pages: 66

25 August 2010

Appendix 4E – Report for the year ended 30 June 2010

Please find enclosed the following documents:

A. Results for announcement to the market

B. Commentary on the results

C. Financial report for the year ended 30 June 2010

D. Independent auditor’s report

For further enquiries, please contact:

Jeff Pollock Chief Executive Officer

Australian Infrastructure Fund Tel: +61 3 8650 3600 Fax: +61 3 8650 3701 Email: [email protected] Website: www.hfm.com.au/aix

Simon Ondaatje Head of Investor Relations

Hastings Funds Management Tel: +61 3 8650 3600 Fax: +61 3 8650 3701 Email: [email protected] Website: www.hfm.com.au/aix

Jane Frawley Company Secretary

Australian Infrastructure Fund

Australian Infrastructure Fund Appendix 4E Report for the year ended 30 June 2010

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A. Results for announcement to the market

Change from previous

corresponding period

Year to 30 June 2010

($’000)

Year to 30 June 2009

($’000)

Revenue from ordinary activities (1) Up 83% to 213,266 116,433

Revenue from ordinary activities excluding gains and losses (2) Up 7% to 72,051 67,283

Profit from ordinary activities after tax attributable to securityholders Up 90% to 191,253 100,590

Net profit for the period attributable to securityholders Up 90% to 191,253 100,590

Net cash flows from operating activities (3) Up 71% to 49,134 28,660

(1) Revenue from ordinary activities largely comprises income (being distributions, dividends and interest on shareholder loans)

received by AIX from the assets in the portfolio and any unrealised gains and losses resulting from changes in the independent valuation of AIX assets.

(2) Revenue from ordinary activities excluding gains and losses largely represents distributions, dividends and interest on shareholder loans received by AIX from the assets in the portfolio.

(3) Net cash flows from operations comprise dividends, distributions, interest on shareholder loans and other income, net of finance costs paid, operating expenses paid and income tax refunded/(paid).

Refer to Section B for commentary on the results.

Distributions (1) Amount

per security

Franked amount per

security at 30% tax

Tax-deferred amount per

security

Distributions for the year ended 30 June 2010

Final distribution – 30 June 2010 5.00 cents 2.38 cents 1.06 cents

Interim distribution – 31 December 2009 5.00 cents 3.90 cents 0.72 cents

Distributions for the year ended 30 June 2009

Final distribution – 30 June 2009 5.00 cents 3.61 cents 0.69 cents

Interim distribution – 31 December 2008 8.00 cents 1.61 cents 3.92 cents

Record date for determining entitlements to the distribution 30 June 2010

Distribution payment date 30 August 2010

(1) For tax purposes, please refer to the Annual Distribution Statement, which will be distributed following the end of the 2010

financial year. This statement will provide more details of the tax components of the 2010 financial year distributions.

Note: AIX’s Distribution Reinvestment Plan (DRP) remains suspended until further notice. All eligible securityholders will receive their

final distribution for the year ended 30 June 2010 by way of cash payment.

Key performance indicators Change from previous corresponding period 30 June 2010 30 June 2009

Net tangible asset backing per security Up 8% 261.22 cents 241.57 cents(1)

Stapled security price Up 26% 170.00 cents 135.00 cents

(1) The net tangible asset backing as at 30 June 2009 was 314.17 cents per security, however, it has been restated to reflect net

proceeds of capital raisings and current securities on issue for comparison to the 30 June 2010 net tangible asset backing.


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B. Commentary on the results

AIX today announced its results for the year to 30 June 2010. The AIX portfolio increased in value during the year to $1,617.7 million, an increase of 18.1 percent on the prior year. Of this increase, $76.6 million (or 5.6 percent) was due to the acquisition of an additional 2.25 percent interest in Australia Pacific Airports Corporation (APAC), which owns and operates Melbourne and Launceston Airports, and $21.6 million (or 1.6 percent) was due to additional investments or equity injections in other assets.

Revenue from ordinary activities increased 83.2 percent on the prior year from $116.4 million to $213.3 million, largely driven by unrealised gains in the independent valuation of assets in the portfolio.

Unrealised gains for the year to 30 June 2010 were $141.3 million, compared to $49.4 million in the previous year, mainly resulting from significant upward movements in the valuations of Perth Airport, APAC and Queensland Airports Limited (QAL). The value of the assets in the portfolio is determined by discounting the projected future cashflows of the assets, with assumptions made about the future operations and development of each asset. The Perth Airport value uplift was largely due to an increase in passenger forecasts and updated assumptions regarding further property developments, as well as an assumed reduction in risk following its successful refinancing in October 2009. The valuation of APAC at 30 June 2010 reflects the price paid in May 2010 when existing shareholders acquired additional shares from a divesting shareholder. The independent valuation midpoint for APAC, as assessed by KPMG at 30 June 2010, is above this value. The completion of Gold Coast Airport’s terminal redevelopment ahead of schedule and on budget, as well as an increase in passenger forecasts, drove the value uplift for QAL.

Revenue from ordinary activities excluding gains/losses was $72.1 million for the period, up 7.2 percent on the previous year of $67.2 million. Sources of revenue are set out below.

(1) In 2009, AIX also received $14.2 million from Perth Airport in the form of a shareholder loan repayment. This amount is not included in revenue for 2009 but is included in the cashflow.

The assets comprising the AIX portfolio contributed $64.0 million in cash flows (including fund level bank interest) during the year, a decrease of 3.2 percent on the prior year. The cash was received in the form of distributions, dividends, interest on shareholder loans and capital returns. As in the prior year, there were timing differences, with some receipts after the year end relating to earnings achieved by the assets during the year. For the year to 30 June 2009, $7.6 million was received by AIX after the year end. For the year to 30 June 2010, $12.6 million was received after the year end. Adjusting for these timing differences, to include cash received after the year end and exclude those relating to the prior year, cash flows received by AIX decreased 6.5 percent compared to the prior year, as detailed below.

Asset ($'000) FY10 FY09

Perth Airport¹ 19,501 4,365

APAC 15,167 14,967

QAL 13,184 9,496

NT Airports 4,085 4,119

HTAC 9,001 20,418

Port of Portland 2,372 2,162

Port of Geelong 1,232 1,563

Statewide Roads 5,229 8,002

Bank interest 2,281 2,191

Total revenue excluding

unrealised gains/losses72,051 67,283


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AIX completed a ~$211 million rights issue in July 2009. On launching the rights issue, AIX provided distribution guidance of 10 cents per security ($59.9 million), based on expected revenue and cashflows from assets for the year to 30 June 2010. Revenue from ordinary activities excluding gains/losses, and cashflows received from assets, are consistent with these expectations.

Cashflows received from the Australian airports in the AIX portfolio increased in the year to 30 June 2010 compared to the prior year. Cashflows from HTAC decreased, as expected, due to cash being used to repay a debt facility rather than distributed to shareholders. As disclosed on 18 and 24 June 2009, HTAC entered into this debt facility to fund a rights issue for Sydney Airport. A portion of cashflows were to be retained by HTAC to fully amortise this debt facility by September 2011. During the year to 30 June 2010, HTAC repaid €30 million (~A$42.4 million) in principal and paid €2.1 million (~A$3.0 million) of interest (including hedging, other costs and fees) on this facility. This included a prepayment of €19.8 million (~A$27.2 million) and the facility is now fully repaid. Cashflows from Statewide Roads decreased as expected, reflecting expiry of the concession agreement with the NSW Government in February 2010.

In July 2009, AIX repaid the drawn amount of $159.5 million on its multi-option debt facility (MOF). As a result, finance costs in the year to 30 June 2010 were $1.8 million, down from $11.2 million in the prior year. Similarly, finance costs paid were $1.9 million, down from $11.3 million in the prior year.

Net profit after tax was $191.3 million, up 90.1 percent from $100.6 million in the prior year. This was primarily due to the increase in revenue from unrealised gains noted above and the lower interest expense following repayment of the MOF in July 2009.

Net cash flows from operating activities increased 71.4 percent for the year ended 30 June 2010, from $28.7 million in the previous year to $49.1 million. This was due in part to the receipt of $14.2 million from Perth Airport in the form of a shareholder loan repayment in the prior year which was classified below operating cashflow. Comparatively lower finance costs following repayment of the MOF also contributed to the increase in net cash flows from operating activities.

Net tangible assets (NTA) per security increased by 8.1 percent, from $2.421 to $2.61, reflecting the

increased value of portfolio assets.

1 The net tangible asset backing as at 30 June 2009 was 314.17 cents per security, however, it has been restated to reflect net

proceeds of capital raisings and current securities on issue for comparison to the 30 June 2010 net tangible asset backing.

Asset ($'000) FY10 FY09

Perth Airport 19,094 18,664

APAC 15,167 14,968

QAL 13,184 9,495

NT Airports 5,356 4,119

HTAC 6,004 14,434

Port of Portland 1,500 -

Port of Geelong 1,063 1,845

Statewide Roads 5,229 8,002

Bank interest/other 2,322 2,191

Gross cashflow from assets 68,919 73,718


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AIX outperformed its listed market benchmark for the financial year. In the year to 30 June 2010, the AIX security price increased from $1.35 to $1.70, an increase of 25.9 percent. The ASX 200 Industrials Index increased 9.3 percent over the same period. The AIX security price closed yesterday at $1.85, an increase of 41.2 percent since 1 July 2009. The performance of the AIX security price since the beginning of the financial year partially reflects a general recovery in the market post the Global Financial Crisis (GFC), but also reflects decisions made by the Manager and the Boards during the GFC, including the decision to re-capitalise the company via the ~$211 million equity raising completed in July 2009, the proceeds of which were used to fully repay the drawn amount of the MOF and to support organic growth initiatives at existing assets within the AIX portfolio.

Directors declared a final distribution for the year ended 30 June 2010 of 5.0 cents per stapled security, bringing the total distribution for the year to 10.0 cents per stapled security. The final distribution will be paid on 30 August 2010.

Other highlights for the year ended 30 June 2010

AIX airports, which comprise 94.2 percent of the AIX portfolio by value, all recorded growth in passenger numbers for the year ended 30 June 2010. Weighted by AIX’s interest, the airports experienced passenger growth of 6.5 percent on the prior year.

The Australian airports in the AIX portfolio all recorded growth in revenues and EBITDA for the year to 30 June 2010.

The Australian airports comprise 81.7 percent of the AIX portfolio and performed particularly well, recording weighted growth of 7.6 percent on the prior year. International passenger growth was particularly strong, reflecting Australia’s relatively strong economy, a strong local currency which stimulated outbound demand and the continued penetration of low cost carriers into international markets. International passengers at QAL and NT Airports were particular highlights, growing on the prior year by 47.8 percent and 19.8 percent respectively. International passenger numbers at Perth and Melbourne Airports also increased significantly, with 14.2 and 12.7 percent growth on the prior year.

Perth Airport, Melbourne Airport, QAL and Port of Portland all successfully refinanced existing debt facilities, with Perth and Melbourne securing additional facilities to fund organic growth.

In May and June 2010, AIX acquired an additional 2.25 percent interest in APAC at a price of $76.6 million, implying a 2010F EV/EBITDA multiple of 13.3x which compared favourably to other transactions in the airport sector. An ~$80 million fully underwritten institutional placement undertaken to fund the acquisition was well supported. Whilst AIX’s preference in capital raisings is to make the investment opportunity available to our wider investor register, the tight timeframe for completion of this acquisition made a placement to institutional investors necessary.

In January 2010, QAL’s Gold Coast Airport officially opened its redeveloped terminal, which was completed on budget and five weeks ahead of schedule.

Melbourne Airport’s ~$330 million international terminal (T2) expansion remains on track following the delivery of stage 1 in December 2009. With the completion of a new 7,000m

2 passenger concourse, T2

now has three additional aircraft parking bays, including two gates with dual-level aerobridges to accommodate A380 aircraft. Stage 2 is expected to deliver additional café, lounge and specialty stores by late 2011.


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Outlook

The growth in passenger numbers at the Australian airports, which comprise 81.7 percent of the AIX portfolio, is expected to continue, with a number of the airports in the portfolio planning to significantly expand their facilities to cater for this growth. As noted above, a number of airports have already completed, or are in the process of completing, significant expansions. In Europe, the economic conditions post GFC remain difficult, with austerity measures in place in most European states, including Greece and Germany. We remain, however, cautiously optimistic that the European airports in which AIX invests, and which comprise 12.5 percent of the portfolio, will produce a solid performance in the years ahead. In the six months to 30 June 2010, passenger numbers at Dusseldorf and Hamburg airports grew by 4.0 percent and 3.3 percent respectively, and were in line with the prior corresponding period at Athens Airport. History has shown that periods of depressed growth at airports are followed by a return to growth trends, hence our confidence in the long term value of these assets. Performance

The table below summarises the performance of the assets in the portfolio for the year and since inception.

Value (1)

30-Jun-10 ($’000)

Cash received

($’000)

Franking credits ($’000)

FY10 revaluation (2)

($’000)

FY10 return 30-Jun-10

(%) (3)

Return since inception (% p.a.) (4)

Airports

Perth Airport (5) 454,200 19,094 7,060 64,986 24.29 19.66

APAC 410,140 15,167 6,500 34,133 18.57 24.41

Queensland Airports (6) 270,812 9,503 2,884 47,632 30.53 43.30

NT Airports 83,476 4,085 1,731 9,176 20.99 28.32

HOCHTIEF AirPort Capital 305,288 6,004 - (12,431) (1.13) 9.08

Total airports 1,523,916 53,852 18,176 143,496 17.48 21.49

Seaports

Port of Portland (6) 68,400 1,500 643 2,177 8.10 26.32

Port of Geelong (6) 20,107 1,063 5 1,938 17.79 24.71

Total seaports 88,507 2,563 648 4,115 10.21 25.87

Roads and rail

Statewide Roads 2,017 5,229 2,241 (6,583) 18.21 10.46

Metro Transport Sydney 3,290 - - 290 9.67 (19.20)

Total roads and rail 5,307 5,229 2,241 (6,293) 15.00 2.69

Cash and other n/a 2,322 n/a - n/a n/a

TOTAL (7) 1,617,730 63,966 21,065 141,318 17.03 18.73

(1) Investment value includes accrued interest as at 30 June 2010. (2) The revaluation amount during the period for each asset reflects the underlying change in the asset’s value taking into account

movements in accrued interest, distributions and dividends, realised/unrealised foreign exchange gains and losses and adjustments for shareholder loan repayments and returns of capital as shown separately.

(3) The return for the year ended 30 June 2010 is calculated by reference to the opening asset value as at 1 July 2009, all cash inflows

and outflows to/from AIX during the period and franking credits & revaluation gains or losses booked during the period. (4) The return since inception is calculated by reference to the initial capital investment, all cash inflows to and outflows from AIX since

initial investment and franking credits & revaluation gains or losses since initial investment. (5) Perth Airport includes an interest in the Perth Airport convertible note. (6) Investment value includes accrued distributions as at 30 June 2010.

(7) The total portfolio return and valuation as of 30 June 2010 is for the portfolio of transport assets and does not include cash held on

deposit.


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C. Financial report for the year ended 30 June 2010

Australian Infrastructure Fund Limited ABN 97 063 935 553

Australian Infrastructure Fund Trust ARSN 089 889 761

Annual Financial Statements for the year ended 30 June 2010

Australian Infrastructure Fund Limited Directors’ Report

30 June 2010

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Directors’ Report The directors of Australian Infrastructure Fund Limited (AIFL or the Company) submit their report together with the financial statements of the Company and its controlled entities for the year ended 30 June 2010.

Structure of financial statements The ordinary shares issued by Australian Infrastructure Fund Limited (AIFL or the Company) are stapled to the securities issued by Australian Infrastructure Fund Trust (AIFT or the Trust). The combined entity of AIFL and AIFT and its controlled entities is known as the Australian Infrastructure Fund (AIX). On 6 March 1997, the stapled securities were listed on the Australian Stock Exchange (ASX) and have the ASX code of AIX.

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

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

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

For the purpose of preparing financial statements that combine the assets and liabilities of AIFL and AIFT, AIFL is identified as the parent entity.

The financial statements presented include:

• Consolidated AIFL (AIX): Represents the entire AIX group, consisting of the Company and the consolidated Trust;

• AIFL: Represents the stand alone Company;

• Consolidated AIFT: Represents AIFT and its controlled entities; and

• AIFT: Represents the stand alone Trust.

The above financial statements are presented in adjacent columns in single financial statements in accordance with the option available under ASIC Class Order 05/642. Directors The following persons held office as directors of the Company during the year and up to the date of this report unless otherwise stated: Paul Espie Chairman Steve Boulton Director Jim Evans Director (appointed 1 March 2010) John Harvey Director Robert Humphris Director Mike Hutchinson Director Robert Tsenin Director Particulars of the skills, experience, expertise and responsibilities of the directors at the date of this report, including directorships of other ASX listed companies held at any time in the past three years, are set out in the AIX Annual Report. Company secretaries The names and details of the Company Secretaries of the Company in office during the financial year and until the date of this report are set out below. Claire Filson Qualifications: LLB, MBA, Grad Dip CSP, FCIS, MAICD Claire Filson joined Hastings in June 2005. She has worked for over 20 years in private and corporate legal practice, gaining considerable financial services and company secretarial experience. Prior to joining Hastings, she was Company Secretary of AXA Asia Pacific Holdings Limited and Bonlac Foods Limited. Claire resigned on 31 December 2009.


30 June 2010 (continued)

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Directors’ Report (continued) Company secretaries (continued) Kim Rowe Qualifications: BCom, ACA Kim Rowe is a Chartered Accountant and has over 15 years experience in the financial services industry, initially with audit experience. On joining Hastings in 1999, she assumed compliance and company secretarial responsibilities. She has been Company Secretary of Hastings since August 2004 and the Company since July 2004. Jane Frawley Qualifications: BA, LLB, ACM Jane Frawley has over 15 years of company secretarial and financial services legal experience and joined Hastings in May 2010. Jane was appointed Company Secretary of Hastings and the Company on 28 May 2010. Principal activities The principal activity of AIX during the year was to invest in infrastructure investments so as to optimise total shareholder return. There has been no change in the principal activity of AIX during the year. Company information The Company is incorporated and domiciled in Australia. The registered office of the Company is located at Level 16, 90 Collins Street, Melbourne, Victoria, 3000. At 30 June 2010 the Company had no employees, apart from the non-executive directors of the Company (2009 – nil). Review and results of operations The Company has continued to invest funds in accordance with its investment objectives and guidelines as set out in the current prospectus and in accordance with the provisions of the Company’s Constitution. Results The profit after income tax attributable to securityholders of AIX for the year ended 30 June 2010 was $191,253,000 (2009 – $100,590,000). Distributions and dividends A final AIX dividend and distribution of $31,037,000 (5.0 cents per stapled security) was declared for the six months ended 30 June 2010 and is payable on 30 August 2010 (six months to 30 June 2009 – 5.0 cents per stapled security). An interim AIX dividend and distribution of $28,839,000 (5.00 cents per stapled security) was declared for the six months ended 31 December 2009 and was paid on 26 February 2010 (six months to 31 December 2008 – 8.00 cents per stapled security). Significant changes in state of affairs In the opinion of the directors, there were no significant changes in the state of affairs of AIX that occurred during the financial year. Matters subsequent to the end of the year No significant events have occurred since the end of the reporting period which would impact on the financial position of AIX disclosed in the Statements of Financial Position as at 30 June 2010 or on the results and cash flows of AIX for the year ended on that date. Rounding AIX is an entity of the kind referred to in Class Order 98/0100 (as amended), issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in the financial report. Amounts in the financial report have been rounded off to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated.



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Directors’ Report (continued) Likely developments and expected results AIX will continue to encourage and support the growth of the airports in the portfolio, focusing on the significant organic growth opportunities within these assets. It is unlikely that AIX will pursue growth through acquisition in the near term as the likely value that airport transactions will attract means that acquisitions are unlikely to be accretive at AIX’s current security price. Business strategies and prospects Information on AIX’s business strategies and its prospects for future financial years is included in the AIX Annual Report. In the opinion of the directors, further information on AIX’s business strategies and its prospects for future financial years would, if included in this report, be likely to result in unreasonable prejudice to AIX and has accordingly been omitted. Directors meetings The number of directors’ meetings (including meetings of committees of directors) held during the year and the number of meetings attended by each director is shown in the table below:

Meetings held while a director

Meetings attended

Meetings held while a member

Meetings attended

Meetings held while a director

Meetings attended

Meetings held while a member

Meetings attended

Paul Espie 3 2 3 2 11 9 1 1Steve Boulton (1) 3 3 n/a 1 11 10 n/a n/aJim Evans (2) 1 1 1 1 4 4 n/a n/aJohn Harvey 3 3 3 3 11 10 1 1Robert Humphris (3) 3 3 n/a 3 11 11 n/a 1Mike Hutchinson (4) 3 3 2 2 11 11 n/a n/aRobert Tsenin 3 3 3 3 11 10 1 1

(3) Robert Humphris is not a member of the AIFL Audit Committee but has attended meetings during the year.(4) Mike Hutchinson was a member of the Hastings Audit Committee and Hastings Board for the period from 1 July 2009 to 31 Decemeber 2009. Mike Hutchinson was a member of the AIFL Board for the year ended 30 June 2010.

(2) Jim Evans was appointed as a director of Hastings on 6 October 2009 and a director of AIFL on 1 March 2010.

AIFL/Hastings Joint Audit Committee

Meetings

AIFL Board

Meetings

AIFL Audit Committee

MeetingsDirector Name

AIFL/Hastings Joint Board

Meetings

(1) Steve Boulton is not a member of the Hastings Audit Committee but has attended meetings during the year.

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

Beneficially held in

own name

Beneficially held in the

name of anotherTotal Holdings

Paul Espie 0 906,668 906,668Steve Boulton 262,500 0 262,500Jim Evans 0 0 0John Harvey 0 75,000 75,000Robert Humphris 0 300,000 300,000Mike Hutchinson 0 122,024 122,024Robert Tsenin 18,173 118,887 137,060

Number of stapled securities held in AIX

Director Name

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



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Directors’ Report (continued) Indemnification and insurance of directors and officers During or since the financial year, the Company has paid premiums in respect of a contract insuring all the directors and executive officers of the Company. The terms of the policy prohibit disclosure of the details of the insurance cover and premium paid. An indemnity agreement has been entered into between the Company and each of its directors named earlier in this report. Under this agreement, the Company has agreed: (a) to indemnify the directors against any claim or for any expense or costs which may arise as a result of work

performed in their role as directors; (b) to provide continued access to Board papers; and (c) to provide continued access to directors’ and officers’ liability insurance. The auditor of the Company is in no way indemnified out of the assets of the Company and AIX. Proceedings on behalf of the Company No proceedings have been brought on behalf of the Company, nor has any application been made in respect of the Company under section 237 of the Corporations Act 2001. Non audit services PricewaterhouseCoopers is the auditor of the Company. The Company may decide to employ the auditor on assignments in addition to their statutory audit duties, where the auditor’s expertise and experience are important and there is no conflict compromising its independence. Amounts received or due and receivable by the auditor, PricewaterhouseCoopers:

2010 2009 2010 2009 2010 2009 2010 2009$ $ $ $ $ $ $ $

Amounts paid and payable to the auditor, PricewaterhouseCoopers, excluding GST for:

- An audit or review of the financial reports 132,070 125,070 0 0 132,070 125,070 122,890 116,070- Compliance plan audit 15,300 15,000 0 0 15,300 15,000 15,300 15,000

147,370 140,070 0 0 147,370 140,070 138,190 131,070

AIFT

AIX

Consolidated AIFL AIFL Consolidated AIFT

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 8. The directors are satisfied the assurance services that were provided did not impair the independence of the auditor. Remuneration Report The directors of the Company present the Remuneration Report prepared in accordance with section 300A of the Corporations Act 2001 for the year ended 30 June 2010. This remuneration report forms part of the Directors’ Report. The information provided in this remuneration report has been audited as required by section 308 (3C) of the Corporations Act 2001. Non-executive directors’ remuneration Board policy on remuneration The Board of directors of AIFL is responsible for determining and reviewing compensation arrangements for the directors of the Company. The fees paid to directors are set at levels that reflect both the responsibilities of, and the time commitments required from, the directors to discharge their duties. In order to maintain their independence and impartiality, the remuneration of the non-executive directors is not linked to the performance of either the Company or the Trust.



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Directors’ Report (continued) Board policy on remuneration (continued) In setting fee levels, the Board, takes into account: • independent professional advice; • fees paid by comparable companies; • the general time commitment required from directors and the risks associated with discharging the duties attaching to

the role of director; and • the level of remuneration necessary to attract and retain directors of a suitable calibre. The Board will continue to review its approach to non-executive director remuneration to ensure it remains in line with general industry practice and best practice principles of corporate governance. Remuneration structure Directors’ fees expensed for the financial year ended 30 June 2010 totalled $785,372 (2009 - $687,352) and comprised: • Fees paid or payable in respect of the current financial year of $760,847 (2009 - $677,977); and • Fees paid in respect of prior financial years of $24,525 (2009 - $9,375). Non-executive directors’ fees, including committee fees, are set by the Board within the maximum aggregate amount of $800,000 approved by securityholders in 2005. Committee fees also include ad hoc committees such as the Due Diligence committee established to oversee the entitlement offer announced in June 2009. The Board elected in April 2003 to phase out the retirement benefit and directors who joined the Board after that date are not entitled to a retirement benefit. The retirement benefit, where applicable, is determined by a consulting actuary. The Chairman of the Board predates the retirement benefit phase out. No other directors are entitled to a retirement benefit. The Chairman of the Board is entitled to a fee of $236,250 per annum (2009: $236,250). Non-executive directors are entitled to a fee of $94,500 per annum (2009: $94,500). The Chairman of the Audit Committee is entitled to a fee of $21,000 per annum (2009: $21,000). The ordinary members of the Audit Committee are entitled to a fee of $10,500 per annum (2009: $10,500). The Chairman of the Board declined his fee for membership of the Audit Committee. In addition, superannuation contributions are paid on behalf of the non-executive directors in accordance with the Company’s statutory superannuation obligations. The remuneration of directors was last revised on 1 September 2007. Remuneration paid to other officeholders Steve Boulton, Hastings' Chief Executive Officer and executive director of AIFL, Jeff Pollock, the AIX Chief Executive Officer and the Company Secretaries were not remunerated out of the property of AIFL or AIFT. These individuals were remunerated by Hastings or its related entities out of its management fee.



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Directors’ Report (continued) Remuneration Report (continued) Remuneration paid to non-executive directors Details of non-executive directors’ remuneration for the financial year ended 30 June 2010 are set out in the following table. No bonuses, options or other emoluments are paid to the directors of AIFL.

Board feesCommittee

feesSuper-

annuationRetirement

benefits Total$ $ $ $ $

Key management personnel of AIFL

Paul Espie2010 236,250 0 23,470 0 259,7202009 236,250 0 21,263 0 257,513

Jim Evans2010 31,500 0 2,835 0 34,3352009 0 0 0 0 0

John Harvey2010 94,500 39,750 * 12,083 0 146,3332009 94,500 21,000 10,395 0 125,895

Robert Humphris2010 94,500 0 8,505 0 103,0052009 94,500 0 8,505 0 103,005

Mike Hutchinson2010 94,500 0 8,505 0 103,0052009 94,500 0 8,505 0 103,005

Robert Tsenin2010 94,500 10,500 9,450 0 114,4502009 94,500 10,500 9,450 0 114,450

Total compensation: Key management personnel of AIFL2010 645,750 50,250 64,847 0 760,8472009 614,250 31,500 58,118 0 703,868

Short-term Post employment

* Includes an $18,750 due diligence committee fee. Relationship with the Manager – Hastings Funds Management Limited As AIFL has contracted with Hastings to manage its administration and investments, AIFL employs no staff. Hastings is paid a fee to provide a range of services and as part of that arrangement Hastings is required to provide appropriately qualified employees and resources to undertake those services, including the AIX Chief Executive Officer and company secretarial service. Hastings determines the remuneration of its employees and AIFL has no involvement in determining the remuneration of those employees. Fees to the Responsible Entity Hastings as Responsible Entity of AIFT and manager of AIFL is entitled to a management fee. The management fee is calculated at the rate of 1% per annum of AIX’s market capitalisation, based on the volume weighted average traded price over the 20 business days prior to the calculation date multiplied by the stapled securities outstanding. For the year ended 30 June 2010, Hastings was paid management fees of $10,179,000 by AIX (2009 – $7,155,000). Hastings is also entitled to a performance fee. The performance fee is calculated as 10% of the amount by which the AIX total securityholder returns exceeds the benchmark return, being the ASX 200 Industrials Accumulation Index, at the end of each financial year. For the year ended 30 June 2010, no performance fee has been paid or is payable to Hastings (2009 – $nil). As at 30 June 2010 the performance fee position stands at a carry forward shortfall (deficit) of $115,050,513.



7

Directors’ Report (continued) Fees to the Responsible Entity (continued) Hastings is entitled under the AIFT Constitution and the AIFL management agreement to be reimbursed for certain expenses incurred in administering AIX. The basis on which the expenses are reimbursed is defined in the AIFT Constitution and AIFL management agreement. For the year ended 30 June 2010, Hastings was reimbursed $230,000 (2009 – $465,000) for costs incurred on behalf of AIX. These amounts were paid by the Trust. Corporate governance In recognising the need for the highest standards of corporate behaviour and accountability, the directors support and have adhered to the principles of corporate governance as set out in the Corporate Governance Statement of the Annual Report. This report is made in accordance with a resolution of the directors.

Paul Espie Chairman 25 August 2010

Liability limited by a scheme approved under Professional Standards Legislation

Auditor’s Independence Declaration

Australian Infrastructure Fund Limited

As lead auditor for the audit of

2010, I declare that to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the

relation to the audit; and

b) no contraventions of any applicable code of profes

This declaration is in respect of

during the period.

JF Power

PricewaterhouseCoopers


Auditor’s Independence Declaration to the Directors of

Australian Infrastructure Fund Limited

of Australian Infrastructure Fund Limited for the year

, I declare that to the best of my knowledge and belief, there have been:

no contraventions of the auditor independence requirements of the Corporations Act 2001

no contraventions of any applicable code of professional conduct in relation to the

This declaration is in respect of Australian Infrastructure Fund Limited and the entities it controlled


ABN 52 780 433 757

Freshwater Place

2 Southbank Boulevard

SOUTHBANK VIC 3006

GPO Box 1331

MELBOURNE VIC 3001

DX 77

Telephone 61 3 8603 1000

Facsimile 61 3 8603 1999

year ended 30 June

Corporations Act 2001 in

sional conduct in relation to the audit.

the entities it controlled

Melbourne

25 August 2010

Australian Infrastructure Fund Trust Directors’ Report

30 June 2010

9

Directors’ Report The directors of Hastings Funds Management Limited (Hastings) as Responsible Entity for Australian Infrastructure Fund Trust (the Trust) submit their report together with the financial statements of the Trust and its controlled entities for the year ended 30 June 2010. The financial statements incorporate the assets and liabilities of the entity controlled by the Trust, being Australian Infrastructure Fund International 1 Trust and its controlled entities as at 30 June 2010. The consolidated entity is known as Australian Infrastructure Fund Trust (AIFT) or the Trust. The ordinary shares issued by Australian Infrastructure Fund Limited (AIFL or the Company) are stapled to the units issued by the Trust. The combined entity of the Company and the Trust is known as the Australian Infrastructure Fund (AIX).

Directors

The following persons held office as directors of the Responsible Entity during the year and up to the date of this report unless otherwise stated: Alan Cameron Appointed as Chairman on 6 October 2009 and Director since 14 April 2009 Liam Forde Retired as Chairman on 6 October 2009 and continues as Director Steve Boulton Jim Evans Appointed on 6 October 2009 Alan Freer Retired on 6 October 2009 Stephen Gibbs Mike Hutchinson Retired on 31 December 2009 Jim McDonald Sean McElduff Retired on 6 October 2009 Les Vance Appointed on 6 October 2009 Company secretaries

The company secretaries of the Responsible Entity in office during the year and up to the date of this report are Claire Filson (resigned 31 December 2009), Kim Rowe and Jane Frawley (appointed 28 May 2010). Principal activities

The principal activity of the Trust during the year was to invest in infrastructure investments so as to optimise total investor return. During the year the Trust has continued to invest in infrastructure investments in accordance with the Constitution. There has been no change in the principal activity of the Trust during the year. Review and results of operations

The Trust has continued to invest funds in accordance with its investment objectives and guidelines as set out in the current prospectus and in accordance with the provisions of the Trust’s Constitution. Results The profit after income tax attributable to securityholders of the Trust for the year ended 30 June 2010 was $173,660,000 (2009 – $90,214,000). Distributions

A final AIX distribution of $31,037,000 (5.00 cents per stapled security) was declared for the six months ended 30 June 2010 and is payable on 30 August 2010. The Trust distribution represents $26,937,000 (2009 – $10,526,000) of the total amount paid. The AIX interim distribution of $28,839,000 (5.00 cents per stapled security) for the six months ended 31 December 2009 was paid on 26 February 2010. The Trust distribution represents $21,539,000 (2009 – $27,964,000) of the total amount paid. Significant changes in state of affairs In the opinion of the directors, there were no significant changes in the state of affairs of AIX that occurred during the financial year.



10

Directors’ Report (continued) Matters subsequent to the end of the year No significant events have occurred since the end of the reporting period which would impact on the financial position of Consolidated AIFT disclosed in the Statements of Financial Position as at 30 June 2010 or on the results and cash flows of Consolidated AIFT for the year ended on that date. Likely developments and expected results The Trust will continue to encourage and support the growth of the airports in the portfolio, focusing on the significant organic growth opportunities within these assets. It is unlikely that the Trust will pursue growth through acquisition in the near term as the likely value that airport transactions will attract means that acquisitions are unlikely to be accretive at the current stapled security price. Environmental regulation The operations of the Trust are not subject to any particular significant environmental regulation under a law of the Commonwealth or of a State or Territory. There have been no known significant breaches of any other environmental requirements applicable to the Trust. However, there may be environmental regulations that relate to each of the assets owned by the Trust. Compliance with these regulations is the responsibility of the investee Company Boards rather than the Trust. Interests in the units of the Trust At 30 June 2010, the Responsible Entity and its related entities held 18,012,204 units in the Trust (2009 – 11,158,319). The interests in the stapled securities issued by AIX held by the directors of the Responsible Entity and their director related entities at 30 June 2010 are set out below:

Beneficially held in

own name

Beneficially held in the

name of anotherTotal Holdings

Alan Cameron 0 0 0Liam Forde 0 0 0Steve Boulton 262,500 0 262,500Jim Evans 0 0 0Alan Freer 0 27,275 27,275Stephen Gibbs 139 0 139Mike Hutchinson 0 122,024 122,024Jim McDonald 0 0 0Sean McElduff 0 0 0Les Vance 0 0 0

Director NameNumber of stapled securities held in AIX

Fees to the Responsible Entity The Responsible Entity is entitled to a management fee for providing services as manager of AIX. The management fee is calculated at the rate of 1% per annum of AIX’s market capitalisation, based on the volume weighted average traded price over the 20 business days prior to the calculation date multiplied by the stapled securities outstanding. For the year ended 30 June 2010, AIX paid Hastings management fees of $10,179,000 (2009 – $7,155,000). The Responsible Entity is entitled to a performance fee. The performance fee is calculated as 10% of the amount by which the AIX total securityholder returns exceeds the benchmark return, being the ASX 200 Industrials Accumulation Index, at the end of each financial year. For the year ended 30 June 2010, no performance fee has been paid or is payable to Hastings (2009 – $nil). As at 30 June 2010 the performance fee position stands at a carry forward shortfall (deficit) of $115,050,513.



11

Directors’ Report (continued) Fees to the Responsible Entity (continued) The Responsible Entity is entitled under the AIFT Constitution and the AIFL management agreement to be reimbursed for certain expenses incurred in administering AIX. The basis on which the expenses are reimbursed is defined in AIFT Constitution and the AIFL management agreement. For the year ended 30 June 2010, Hastings was reimbursed $230,000 (2009 – $465,000) for costs incurred on behalf of AIX. These amounts were paid by the Trust. Trust assets At 30 June 2010, the Trust held assets to a total value of $1,504,916,000 (2009 – $1,264,796,000). The basis for valuation of the assets is disclosed in Note 1 to the financial statements. Units on issue At 30 June 2010, 620,733,944 units of the Trust were on issue (2009 – 384,517,261). During the year ended 30 June 2010, 236,216,683 units were issued by the Trust (2009 - 3,711,478). Indemnification and insurance of directors and officers No insurance premiums are paid for out of the assets of the Trust in regards to insurance cover provided to the Responsible Entity or Auditor of the Trust. So long as the Officers of the Responsible Entity act in accordance with the constitution and the Corporations Act 2001, both parties remain fully indemnified out of the assets of the Trust against any losses incurred while acting on behalf of the Trust. The Auditor of the Trust is in no way indemnified out of the assets of the Trust. Rounding

The Trust is an entity of the kind referred to in Class Order 98/0100 (as amended), issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in the financial report. Amounts in the financial report have been rounded off to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated.

Auditor’s independence declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 12. This report is made in accordance with a resolution of the directors.

Alan Cameron Chairman 25 August 2010



ABN 52 780 433 757

Freshwater Place


SOUTHBANK VIC 3006

GPO Box 1331

MELBOURNE VIC 3001

DX 77

Telephone 61 3 8603 1000

Facsimile 61 3 8603 1999

Auditor’s Independence Declaration to the Directors of Hastings Funds

Management Limited, as Responsible Entity for Australian Infrastructure

Fund Trust

As lead auditor for the audit of Australian Infrastructure Fund Trust for the year ended 30 June

2010, I declare that to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Australian Infrastructure Fund Trust and the entities it controlled

during the period.

JF Power Melbourne

PricewaterhouseCoopers 25 August 2010

Australian Infrastructure Fund Limited Australian Infrastructure Fund Trust

Statements of Comprehensive Income For the year ended 30 June 2010

13

Statements of Comprehensive Income

Note 2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

IncomeInterest 2 15,782 16,425 1,958 329 15,782 16,425 6,776 5,779Dividends 3 53,945 37,296 10,747 12,994 43,198 24,300 43,198 24,300Distributions 4 1,854 13,236 1,324 2,034 531 11,201 9,915 21,219Net gain/(loss) - securities 5 141,217 49,317 6,600 (6,023) 134,617 55,340 147,190 64,157Net gain/(loss) - subsidiaries 6 0 0 0 0 0 0 (12,925) (8,118)Net gain/(loss) - cash and cash equivalents (2) (167) 0 0 (2) (167) (2) (167)Other 7 470 326 0 0 470 326 470 326Total income 213,266 116,433 20,629 9,334 194,596 107,425 194,622 107,496

ExpensesManager and Responsible Entity fees 8 10,179 7,155 0 0 10,179 7,155 10,179 7,155Securityholder and investor relations expenses 480 493 0 0 480 493 480 493Investment acquisition costs 0 70 0 0 0 70 0 70Investment bid costs 312 228 0 0 312 228 312 228Investment costs 172 280 0 0 172 280 172 280Directors' fees 785 687 0 0 785 687 785 687Directors' retirement expense 66 13 0 0 66 13 66 13Board administration expenses 43 40 0 0 43 40 43 40Other prudential expenses 531 517 0 0 531 517 531 517Audit fees (internal and external) 176 192 0 0 176 192 176 192Tax fees 124 117 0 0 124 117 112 117Other expenses 44 144 0 0 45 140 44 139Finance costs 9 1,831 11,179 0 0 3,788 11,508 3,788 11,495Total expenses 14,743 21,115 0 0 16,701 21,440 16,688 21,426

Net profit before income tax for the year 198,523 95,318 20,629 9,334 177,895 85,985 177,934 86,070

Income tax expense/(benefit) 11(a) 7,270 (5,272) 3,036 (1,043) 4,235 (4,229) 0 0

Net profit after income tax for the year 191,253 100,590 17,593 10,377 173,660 90,214 177,934 86,070

Other comprehensive income 0 0 0 0 0 0 0 0

Total comprehensive income for the year 191,253 100,590 17,593 10,377 173,660 90,214 177,934 86,070

AIFT AIFLConsolidated AIFL

AIX

Consolidated AIFT

The above Statements of Comprehensive Income should be read in conjunction with the accompanying notes.

2010 2009 2010 2009 2010 2009 2010 2009Earnings per security

Basic earnings per security (cents) 33.22 26.33 3.06 2.72 30.16 23.61 30.90 22.53

Weighted average number of securities (000's) 575,764 382,057 575,764 382,057 575,764 382,057 575,764 382,057

Net profit after income tax ($000's) 191,253 100,590 17,593 10,377 173,660 90,214 177,934 86,070

AIFT

AIX


Diluted earning per security are no different from basic earning per security.


Statements of Financial Position For the year ended 30 June 2010

14

Statements of Financial Position

2010 2009 2010 2009 2010 2009 2010 2009Note $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

AssetsCash and cash equivalents 12(b) 61,990 36,351 0 0 61,990 36,351 61,852 36,201Receivables 13 14,828 10,043 29,367 14,544 13,381 9,106 22,528 14,873Other assets 14 324 648 0 0 325 648 325 649Subsidiaries 15 0 0 0 0 0 0 296,277 309,202Securities 16 1,603,148 1,360,516 173,927 141,825 1,429,220 1,218,691 1,123,933 903,826Total assets 1,680,290 1,407,558 203,294 156,369 1,504,916 1,264,796 1,504,915 1,264,751

LiabilitiesPayables 17 32,267 20,186 4,100 8,700 28,167 11,486 28,167 11,486Current income tax liability 11(d) 803 290 807 285 (4) 5 0 0Provisions 18 673 608 0 0 673 608 673 608Borrowings 19 0 159,672 0 0 27,919 173,280 27,919 173,280Deferred income tax liability 11(c) 25,036 18,751 8,232 6,184 16,805 12,566 0 0Total liabilities 58,779 199,507 13,139 15,169 73,560 197,945 56,759 185,374

Net assets 1,621,511 1,208,051 190,155 141,200 1,431,356 1,066,851 1,448,156 1,079,377

EquityContributed equity 20(b) 1,043,603 761,520 160,021 117,259 883,582 644,261 883,582 644,261Retained earnings 21 577,908 446,531 30,134 23,941 547,774 422,590 564,574 435,116Total equity 1,621,511 1,208,051 190,155 141,200 1,431,356 1,066,851 1,448,156 1,079,377

AIFT

AIX


The above Statements of Financial Position should be read in conjunction with the accompanying notes.


Statements of Changes in Equity For the year ended 30 June 2010

15

Statements of Changes in Equity AIXConsolidated AIFL

Contributed equity

Retainedearnings Total

$'000 $'000 $'000

At 1 July 2008 755,137 395,631 1,150,768

Net profit after income tax for the year 0 100,590 100,590Other comprehensive income 0 0 0Total comprehensive income for the year 0 100,590 100,590

Transactions with owners in their capacity as owners:Ordinary stapled securities issued during the period: - pursuant to distribution and dividend reinvestment plan 6,383 0 6,383Dividends and distributions paid and payable to securityholders 0 (49,690) (49,690)

As at 30 June 2009 761,520 446,531 1,208,051

At 1 July 2009 761,520 446,531 1,208,051


Transactions with owners in their capacity as owners:Ordinary stapled securities issued during the period: - pursuant to market placement 291,487 0 291,487Adjustment to security issue costs pursuant to market placement (9,404) 0 (9,404)Dividends and distributions paid and payable to securityholders 0 (59,876) (59,876)

As at 30 June 2010 1,043,603 577,908 1,621,511 AIFL Contributed

equityRetainedearnings Total

$'000 $'000 $'000

At 1 July 2008 116,301 24,764 141,065


Transactions with owners in their capacity as owners:Ordinary securities issued during the year - pursuant to dividend reinvestment plan 958 0 958Adjustment to security issue costs pursuant to market placement 0 0 0Dividends paid and payable to securityholders 0 (11,200) (11,200)

As at 30 June 2009 117,259 23,941 141,200

At 1 July 2009 117,259 23,941 141,200


Transactions with owners in their capacity as owners:Ordinary securities issued during the year - pursuant to market placement 42,762 0 42,762Adjustment to security issue costs pursuant to market placement 0 0 0Dividends paid and payable to securityholders 0 (11,400) (11,400)

As at 30 June 2010 160,021 30,134 190,155 The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.


Statements of Changes in Equity For the year ended 30 June 2010

(continued)

16

Statements of Changes in Equity (continued)

Consolidated AIFT Contributed equity


$'000 $'000 $'000

At 1 July 2008 638,836 370,867 1,009,703


Transactions with owners in their capacity as owners:Ordinary securities issued during the year - pursuant to distribution reinvestment plan 5,425 0 5,425Unit issue costs pursuant to a market placement 0 0 0Distributions paid and payable to securityholders 0 (38,491) (38,491)

As at 30 June 2009 644,261 422,590 1,066,851

At 1 July 2009 644,261 422,590 1,066,851


Transactions with owners in their capacity as owners:Ordinary securities issued during the year - pursuant to market placement 248,725 0 248,725Unit issue costs pursuant to a market placement (9,404) 0 (9,404)Distributions paid and payable to securityholders 0 (48,476) (48,476)

As at 30 June 2010 883,582 547,774 1,431,356

AIFT Contributed equity


$'000 $'000 $'000

At 1 July 2008 638,836 387,537 1,026,373


Transactions with owners in their capacity as owners:Ordinary securities issued during the year - pursuant to distribution reinvestment plan 5,425 0 5,425Adjustment to unit issue costs pursuant to market placement 0 0 0Distributions paid and payable to securityholders 0 (38,491) (38,491)

As at 30 June 2009 644,261 435,116 1,079,377

At 1 July 2009 644,261 435,116 1,079,377


Transactions with owners in their capacity as owners:Ordinary securities issued during the year - pursuant to market placement 248,725 0 248,725Adjustment to unit issue costs pursuant to market placement (9,404) 0 (9,404)Distributions paid and payable to securityholders 0 (48,476) (48,476)

As at 30 June 2010 883,582 564,574 1,448,156 The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.


Statements of Cash Flows For the year ended 30 June 2010

17

Statements of Cash Flows

2010 2009 2010 2009 2010 2009 2010 2009Inflows/ Inflows/ Inflows/ Inflows/ Inflows/ Inflows/ Inflows/ Inflows/

(outflows) (outflows) (outflows) (outflows) (outflows) (outflows) (outflows) (outflows)Note $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Cash flows from operating activitiesInterest received 12,377 10,549 0 0 12,377 10,549 6,369 5,887Dividends received 50,040 29,736 10,522 13,041 39,518 16,695 39,518 16,695Distributions received 1,038 11,311 1,038 1,425 0 9,886 6,004 14,387Other income received 470 326 0 0 470 326 470 326Finance costs paid (1,877) (11,288) 0 0 (1,877) (11,288) (1,876) (11,276)Operating expenses paid (12,443) (10,388) 0 0 (12,442) (10,388) (12,431) (10,387)Income tax paid (471) (1,586) (465) (797) (5) (789) 0 0Net cash inflow/(outflow) from operating activities 12(a) 49,134 28,660 11,095 13,669 38,041 14,991 38,054 15,632

Cash flows from investing activitiesPayments for purchase of unlisted securities (90,826) (39,239) (25,503) (784) (65,324) (38,456) (65,324) (2,257)Payments for purchase of subsidiary 0 0 0 0 0 0 0 (36,199)Payments for unlisted security loan advances (7,226) (9,367) 0 0 (7,226) (9,367) (7,226) (9,367)Payments for subsidiary loan advances 0 0 0 0 0 0 0 (250)Payments for stapled entity loan advances 0 0 0 0 12,353 3,343 12,353 3,343Proceeds from repayment of unlisted loan securities 41 14,189 0 0 41 14,190 41 14,190Net cash inflow/(outflow) from investing activities (98,011) (34,417) (25,503) (784) (60,156) (30,290) (60,156) (30,540)

Cash flows from financing activitiesDrawdown of bank facilities 0 29,500 0 0 0 29,500 0 29,500Repayment of bank facilities (159,500) 0 0 0 (159,500) 0 (159,500) 0Repayment of borrowings - to subsidiary 0 0 0 0 0 0 0 (541)Drawdown of borrowings - from stapled entity 0 0 (12,353) (3,343) 0 0 0 0Proceeds from issue of securities 291,487 0 42,761 0 248,725 0 248,725 0Payment for security issue costs (9,404) 0 0 0 (9,404) 0 (9,405) 0Dividends and distributions paid (48,065) (56,449) (16,000) (9,542) (32,065) (46,907) (32,065) (46,907)Net cash inflow/(outflow) from financing activities 74,518 (26,949) 14,408 (12,885) 47,756 (17,407) 47,755 (17,948)

Net increase/(decrease) in cash and cash equivalents

25,641 (32,706) 0 0 25,641 (32,706) 25,653 (32,856)

Cash and cash equivalents at the beginning of the year

36,351 69,224 0 0 36,351 69,224 36,201 69,224

Effects of foreign exchange rate movements on cash and cash equivalents (2) (167) 0 0 (2) (167) (2) (167)

Cash and cash equivalents at the end of the year 12(b) 61,990 36,351 0 0 61,990 36,351 61,852 36,201

Consolidated AIFT

AIX

AIFTConsolidated AIFL AIFL

The above Statements of Cash Flows should be read in conjunction with the accompanying notes.


Notes to the Financial statements For the year ended 30 June 2010

18

1 Summary of significant accounting policies

(a) Structure of financial report

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

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

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

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

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

The financial statements include:

• Consolidated AIFL (AIX): Represents the entire AIX group, consisting of the Company and the Consolidated AIFT;

• AIFL: Represents the stand alone Company;

• Consolidated AIFT: Represents AIFT and its controlled entities; and

• AIFT: Represents the stand alone Trust.

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

(b) Basis of preparation

The consolidated financial statements are general purpose financial statements which have been prepared in accordance with the Australian Accounting Standards (including Interpretations) the Corporations Act 2001 and the Trust’s Constitution.

The financial statements comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The financial statements have been prepared on a historical basis convention, except for unlisted and derivative securities, which have been measured at fair value.

The Statements of Financial Position are presented on a liquidity basis. Assets and liabilities are presented in decreasing order of liquidity and are not distinguished between current and non-current.

From 1 July 2009, AIX has adopted the revised AASB 101 Presentation of Financial Statements which became operative for the annual reporting period commencing on 1 January 2009. AASB 101 Presentation of Financial Statements requires the separate presentation of Statement of Comprehensive Income and Statement of Changes in Equity. All non-owner changes in equity must now be presented in the Statement of Comprehensive Income. As a consequence, AIX has to change the presentation of its financial statements. Comparative information has been re-presented so that it is also in conformity with the revised standard. The functional and presentation currency of AIFL and AIFT and its subsidiaries is Australian dollars. The financial statements of AIX (Consolidated AIFL) for the year ended 30 June 2010 were authorised for issue in accordance with a resolution of directors of AIFL. The directors of AIFL have the power to amend and reissue the financial statements.

The financial statements of Consolidated AIFT for the year ended 30 June 2010 were authorised for issue in accordance with a resolution of directors of the Responsible Entity. The directors of the Responsible Entity have the power to amend and reissue the financial statements.

The accounting policies adopted are consistent with those of the previous financial year, except as set out below.



(continued)

19

1 Summary of significant accounting policies (continued) (c) New accounting standards and interpretations Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2010 reporting period and have not yet been applied in the financial statements. The directors' assessment of the impact of these new standards (to the extent relevant to AIX) and interpretations is set out below: (i) AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 (effective from 1 January 2013)

AASB 9 Financial Instruments requires all financial assets to be: • classified on the basis of the entity’s business model for managing its financial assets and the contractual cash flow

characteristics of the financial asset; • initially measured at fair value plus, in the case of a financial asset not at fair value through profit or loss, particular

transaction costs; and • subsequently measured at amortised cost or fair value. AIX will apply the revised standards from 1 July 2013. AIX has yet to fully assess the impact of adopting the revised standards.

(ii) AASB Interpretation 19 Extinguishing financial liabilities with equity instruments and AASB 2009-13 Amendments to Australian Accounting Standards arising from Interpretation 19 (effective from 1 July 2010)

AASB Interpretation 19 clarifies the accounting when an entity renegotiates the terms of its debt with the result that the liability is extinguished by the debtor issuing its own equity instruments to the creditor (debt for equity swap). It requires a gain or loss to be recognised in the profit or loss which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.

AIX will apply the revised standards from 1 July 2010. AIX does not expect that any adjustments will be necessary as the result of applying the revised rules since it is only retrospectively applied from the beginning of the earliest period presented (1 July 2009) and AIX has not entered into any debt for equity swaps since that date.

(d) Basis of consolidation

The stapling arrangement between AIFL and AIFT was affected prior to the date of transition to International Financial Reporting Standards (IFRS), therefore Interpretation 1013 applied. In accordance with this interpretation, for the purpose of preparing consolidated financial statements that combined the assets and liabilities of AIFL and AIFT, AIFL was identified as the parent entity. The entity has now adopted AASB 3 Business Combinations (revised). AASB 3R applies prospectively and does not effect the pre-transition arrangements or the basis on which the consolidated financial statements for the year ended 30 June 2010 have been prepared.

The financial statements of AIFL combine the assets and liabilities of AIFL and AIFT and the entities AIFT controls. These entities are referred to in the financial statements as Consolidated AIFL or AIX. The effects of all transactions between entities in the AIFL consolidated group are eliminated in full.

The financial statements of AIFT incorporate the assets and liabilities of AIFT and the entities it controls, being Australian Infrastructure Fund International 1 Trust and its controlled entities as at 30 June 2010. The effects of all transactions between entities in the AIFT consolidated group are eliminated in full.

Controlled entities are those entities (including special purpose entities) over which AIFL or AIFT has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether AIFL or AIFT controls another entity.

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

The financial statements of controlled entities are prepared for the same reporting period as AIFT, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

(e) Significant accounting judgements, estimates and assumptions

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



(continued)

20

1 Summary of significant accounting policies (continued)

(e) Significant accounting judgements, estimates and assumptions (continued)

Valuation of unlisted securities and subsidiaries

The fair values of unlisted securities are determined by an appropriately qualified independent valuer, KPMG Corporate Finance, by projecting future cash flows and then discounting these cash flows back to their present value using a post-tax, risk adjusted discount rate.

The carrying amount of unlisted securities held by AIX as at 30 June 2010 was $1,603,148,000 (2009 - $1,360,516,000).

The carrying amount of subsidiaries held by AIFT as at 30 June 2010 was $296,277,000 (2009 - $309,202,000).

Global capital markets continue to be volatile. The fair values of unlisted securities have been adjusted to reflect market conditions at the end of the reporting period. While this represents the best estimate of fair value at the end of the reporting period, if the unlisted securities were to be sold, the price achieved may differ from the fair value recorded at the end of the reporting period.

Further information in relation to unlisted securities and subsidiaries is provided in Notes 15 and 16.

(f) Foreign currency translation

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translations at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss.

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

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

(g) Segment reporting

From 1 July 2009, AIX has adopted the revised AASB 8 Operating Segments which became operative for the annual reporting period commencing on 1 January 2009.

AASB 8 requires a 'management approach' to reporting on the financial performance.

Operating segments are now reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. In the case of AIX, two chief operating decision makers, being the Board of AIFL and the Board of Hastings have been identified for the purposes of AASB 8.

(h) Cash and cash equivalents

For Statements of Cash Flows presentation purposes, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short term, high liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings on the Statements of Financial Position.

(i) Receivables

Receivables may include amounts for dividends, interest and trust distributions. Dividends and trust distributions are accrued when the right to receive payment is established. Amounts are generally received within 30 days of being recorded as receivables.

(j) Loans receivable

Loan receivable is a non-derivative financial asset with fixed or determinable payments that are not quoted in an active market. Loan receivable is initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment.

(k) Securities and subsidiaries

Securities comprise listed securities, unlisted securities and derivative securities.

Securities and subsidiaries are recorded at fair value through the profit or loss upon initial recognition. Costs incidental to the acquisition of securities and subsidiaries are recognised in the profit or loss when incurred.



(continued)

21


(k) Securities and subsidiaries (continued)

After initial recognition, securities and subsidiaries are measured at fair value as they are managed and their performance evaluated on a fair value basis in accordance with AIX’s investment strategy.

Unrealised gains or losses arising from changes in the fair value of securities and subsidiaries are calculated as the difference between the fair value at year end and the fair value at the previous valuation point.

Realised gains or losses are recognised through the profit or loss upon sale or restructure of securities and are calculated as the difference between the settlement and the fair value at the previous valuation point.

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

Listed securities

AIX did not hold any listed securities at 30 June 2010 (2009 – nil).

Derivative securities

AIX did not hold any derivative securities at 30 June 2010 (2009 – nil). Unlisted securities and subsidiaries

Unlisted securities and subsidiaries comprise ordinary shares, ordinary units, preference shares, shareholder loans and accrued interest income. The fair value of unlisted securities is determined by an appropriately qualified independent valuer, KPMG Corporate Finance (KPMG), primarily by projecting future cash flows and then discounting these cash flows back to their present value using a post-tax, risk adjusted discount rate. The independent valuations assume investments are not being sold and if they were to be realised then there may be potential capital gains tax implications for AIX or securityholders depending on the structure of any disposal. Discount rates used are developed on an individual unlisted security basis as determined by the independent valuer. KPMG calculates the relevant discount rate applied to the cash flows of each asset using the Capital Asset Pricing Model method, whereby a premium is added to the risk free rate. The premium takes into account the risk of comparable companies and also incorporates firm specific risk. KPMG uses a 10 year government bond rate in the relevant country as a proxy for the risk free rate. The fair value of subsidiaries is determined by reference to the net asset value of the subsidiary. The underlying unlisted securities held by subsidiaries have been valued by KPMG in the manner described above. Further information relating to unlisted securities and subsidiaries is provided in Note 15 and Note 16. The post-tax risk adjusted discount rates applied by KPMG Corporate Finance in determining the fair value of each unlisted security as at 30 June 2010 are detailed below:

Valuation

Post-tax risk adjusted

discount rate Valuation

Post-tax risk adjusted

discount rateUnlisted Security Name 30-Jun-10 30-Jun-10 30-Jun-09 30-Jun-09

$'000 % $'000 %Perth Airport 435,100 13.15 361,800 12.95Australia Pacific Airports Corporation 410,140 11.20 299,400 10.90HOCHTIEF AirPort Capital Group 305,288 12.80 314,864 12.80Queensland Airports 270,812 15.10 219,500 15.80Airport Development Group 83,476 14.90 74,300 15.00Port of Portland 68,400 12.80 60,600 12.60Port of Geelong Unit Trust &Infrastructure Investment Corporation 20,107 12.80 18,000 12.70Statewide Roads 2,017 8.30 8,600 8.00Metro Light Rail and Monorail 3,290 20.30 3,000 19.00

(l) Payables

Payables include liabilities and accrued expenses owing by AIX which are unpaid as at the end of the reporting period.

The distribution amount payable to securityholders as at the end of each reporting period is recognised separately when securityholders are presently entitled to the distributable income under AIX’s Constitution.



(continued)

22


(m) Borrowings

All borrowings are initially recognised at fair value being the consideration received.

After initial recognition, borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs or fees in relation to the establishment of borrowing facilities, and any discount or premium on settlement.

Fees paid on the establishment of borrowing facilities are initially capitalised as a prepayment for liquidity services and are subsequently amortised over the period of the facility to which it relates upon a draw down of funds.

Other borrowing costs are expensed in profit and loss.

Borrowings are derecognised when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised as other income or finance costs.

(n) Issued financial instruments

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

(o) Income and expense recognition

Income is recognised to the extent that it is probable that the economic benefits will flow to AIX and the income can be reliably measured. The following specific recognition criteria must also be met before income and expenses are recognised: Interest income Interest income is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset. Dividend and distribution income Dividend and distribution income is recognised when there is control over the right to receive the dividend or distribution payment. Manager and Responsible Entity base management fees and performance fees Information in relation to Manager and Responsible Entity base management fees and performance fees payable to Hastings is provided in Note 8.

Hastings is also entitled under the AIFT Constitution and the AIFL management agreement to be reimbursed for certain expenses incurred in administering AIX. The basis on which the expenses are reimbursed is defined in AIFT Constitution and the AIFL management agreement.

Finance and borrowing costs Refer to Note 1(n) for the recognition and measurement of borrowing costs. Other finance costs are recognised as an expense when incurred. Expenses Expenses are recognised in the Statements of Comprehensive Income when AIX has a present obligation (legal or constructive) as a result of a past event that can be reliably measured and where the expenses do not produce future economic benefits that qualify for recognition in the Statements of Financial Position.

(p) Dividends and distributions

AIFT’s Constitution requires the Responsible Entity to distribute to each securityholder an amount representing the distributable income entitlement of each securityholder in respect of a distribution period at the Responsible Entity’s discretion. Distributable income is defined under AIFT’s constitution as the net income of AIFT as defined under section 95(1) of the Tax Act, less any amounts the Responsible Entity may in its absolute discretion determine to deduct. The net income of AIFT includes capital gains arising from the disposal of unlisted securities. Unrealised net gains or losses on unlisted securities are not included in the determination of net income. Capital losses are not included in the determination of net income but are retained to be offset against any future realised capital gains.

The AIFT Constitution also allows the Responsible Entity, as it may determine, to distribute to each securityholder any part of the corpus of AIFT in the proportion to which the securityholder would have been entitled in a distribution of that sum, were it distributable income.



(continued)

23


(q) Income tax

AIFT Under current legislation, AIFT is not subject to income tax provided the securityholders are presently entitled to the income of AIFT. AIX, AIFL and Consolidated AIFT Current and deferred tax is recognised in profit and loss except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences: • except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that

is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised: • except where the deferred income tax asset relating to the deductible temporary difference arises from the initial

recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

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

Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the Income Statements.

(r) Goods and Services Tax (GST)

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

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

• receivables and payables are stated with the amount of GST included.

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

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



(continued)

24


(r) Goods and Services Tax (GST) (continued)

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

(s) Impairment of assets

Financial assets that are not measured at fair value through profit or loss are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired or their carrying amounts may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its estimated recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

(t) Rounding of amounts

AIX is an entity of the kind referred to in Class Order 98/0100 (as amended), issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in the financial statements. Amounts in the financial statements have been rounded off to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated.

(u) Comparatives

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



(continued)

25

2 Interest income

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Cash and cash equivalents 2,281 2,191 0 0 2,281 2,191 2,276 2,077Unlisted securities 13,501 14,234 0 0 13,501 14,234 4,500 3,702Stapled entity - AIFT 0 0 1,958 329 0 0 0 0Total interest income 15,782 16,425 1,958 329 15,782 16,425 6,776 5,779

AIFT

AIX


3 Dividend income

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Unlisted securities 53,945 37,296 10,747 12,994 43,198 24,300 43,198 24,300Total dividend income 53,945 37,296 10,747 12,994 43,198 24,300 43,198 24,300

AIX

Consolidated AIFL AIFL Consolidated AIFT AIFT

4 Distribution income

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Unlisted securities 1,854 13,236 1,324 2,034 531 11,201 531 1,315Subsidiaries 0 0 0 0 0 0 9,384 19,904Total distribution income 1,854 13,236 1,324 2,034 531 11,201 9,915 21,219

AIX


5 Net gain/(loss) – securities

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Net gain/(loss) - unlisted securitiesNet gain/(loss) - non foreign exchange - unrealised 212,464 34,463 6,600 (6,023) 205,864 40,486 147,149 64,158Net gain/(loss) - non foreign exchange - realised 41 (1) 0 0 41 (1) 41 (1)Net gain/(loss) - foreign exchange - unrealised (71,146) 14,921 0 0 (71,146) 14,921 0 0Net gain/(loss) - foreign exchange - realised (142) (66) 0 0 (142) (66) 0 0Total net gain/(loss) - unlisted securities 141,217 49,317 6,600 (6,023) 134,617 55,340 147,190 64,157

Total net gain/(loss) securities 141,217 49,317 6,600 (6,023) 134,617 55,340 147,190 64,157

AIX


6 Net gain/(loss) – subsidiaries

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Net gain/(loss) - subsidiaries Net gain/(loss) - subsidiaries - non foreign exchange - unrealised 0 0 0 0 0 0 59,957 (19,456)Net gain/(loss) - subsidiaries - foreign exchange - unrealised 0 0 0 0 0 0 (72,882) 11,338Total net gain/(loss) - subsidiaries 0 0 0 0 0 0 (12,925) (8,118)

Consolidated AIFT AIFT

AIX

Consolidated AIFL AIFL



(continued)

26

7 Other income

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Director fee income 372 326 0 0 372 326 372 326Consent fees 98 0 0 0 98 0 98 0Total other income 470 326 0 0 470 326 470 326

AIFT

AIX


8 Manager and Responsible Entity fees

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Base management fees 10,179 7,155 0 0 10,179 7,155 10,179 7,155Performance fees 0 0 0 0 0 0 0 0Total Manager and Responsible Entity fees 10,179 7,155 0 0 10,179 7,155 10,179 7,155

AIFT

AIX


Base Management Fees

In accordance with the AIFL management agreement and the AIFT Constitution, Hastings as Manager and Responsible Entity is entitled to a base management fee.

The management fee is calculated at the rate of 1% per annum of AIX’s market capitalisation, based on the volume weighted average traded price over the 20 business days prior to the calculation date multiplied by the stapled securities outstanding. The management fee accrues daily and is payable monthly in arrears.

Performance Fees

In accordance with the AIFL management agreement and the AIFT Constitution, Hastings as Manager and Responsible Entity is also entitled to a performance fee. The performance fee is calculated as 10% of the amount by which the AIX total securityholder returns exceeds the benchmark return, being the ASX 200 Industrials Accumulation Index, at the end of each financial year. If the calculation of the AIX total securityholder returns for a year is less than then benchmark return for that year, the deficit is carried forward and taken into account in calculating whether the AIX total securityholder returns exceeds then benchmark return in subsequent years. For the year ended 30 June 2010 no performance fee has been paid or is payable to Hastings (2009 - $nil). 9 Finance costs

2010 2009 2010 2009 2010 2009 2010 2009 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Interest expense - stapled entity - AIFL 0 0 0 0 1,958 329 1,958 329Interest expense - multi-option facility 474 9,279 0 0 474 9,279 474 9,279Other borrowing costs 1,351 1,848 0 0 1,351 1,848 1,351 1,848Bank fees 6 52 0 0 5 52 5 39 1,831 11,179 0 0 3,788 11,508 3,788 11,495

AIFT

AIX


10 Auditors remuneration

2010 2009 2010 2009 2010 2009 2010 2009$ $ $ $ $ $ $ $

Amounts paid and payable to the auditor, PricewaterhouseCoopers, excluding GST for:

- An audit or review of the financial reports 132,070 125,070 0 0 132,070 125,070 122,890 116,070- Compliance plan audit 15,300 15,000 0 0 15,300 15,000 15,300 15,000

147,370 140,070 0 0 147,370 140,070 138,190 131,070

AIFT

AIX




(continued)

27

11 Income tax

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

(a) Major components of income tax for the year recognised in the Statements of Comprehensive Income

Current tax expense 988 781 988 775 0 6 0 0Deferred tax expense/(benefit) 6,282 (6,053) 2,048 (1,818) 4,235 (4,235) 0 0 7,270 (5,272) 3,036 (1,043) 4,235 (4,229) 0 0

(b) Reconciliation of prima facie tax toincome tax expense for the year

Profit before income tax attributable to securityholders 198,523 95,318 20,629 9,334 177,895 85,985 177,934 86,070

Prima facie tax at the Australian tax rate of 30% (2009 - 30%)

59,557 28,597 6,189 2,801 53,368 25,796 53,380 25,821

Tax effect of amounts which are not deductible/(assessable) in calculating taxable income:

Profit not assessable in hands of the Trust (49,134) (27,059) 0 0 (49,133) (27,059) (53,380) (25,821)Non assessable distribution income 0 (2,966) 0 0 0 (2,966) 0 0Franked dividend gross up 1,351 1,647 1,351 1,647 0 0 0 0Tax offset for franked dividend (4,504) (5,491) (4,504) (5,491) 0 0 0 0

Income tax expense/(benefit) 7,270 (5,272) 3,036 (1,043) 4,235 (4,229) 0 0

(c) Deferred income tax liability

Deferred income tax liability 25,036 18,751 8,232 6,184 16,805 12,566 0 0

Comprising:Net unrealised gain on unlisted securities 24,961 18,743 8,157 6,176 16,805 12,566 0 0Dividend receivable 75 8 75 8 0 0 0 0

25,036 18,751 8,232 6,184 16,805 12,566 0 0

The movement in the deferred income tax liability balance has been charged through profit of loss in 2010 and 2009.

(d) Current income tax liability

Current income tax liability 803 290 807 285 (4) 5 0 0803 290 807 285 (4) 5 0 0

AIX

AIFT AIFLConsolidated AIFL Consolidated AIFT

All deferred tax is not expected to be realised within the next twelve months.



(continued)

28

12 Cash and cash equivalents

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

(a) Reconciliation of profit after income tax attributable to securityholders to the net cash flows from operating activities

Profit after income tax attributable to securityholders 191,253 100,590 17,593 10,377 173,660 90,214 177,934 86,070

Adjustments for non-cash and non-operating items:Net (gain)/loss - unlisted securities (141,217) (49,317) (6,600) 6,023 (134,617) (55,340) (147,190) (64,157)Net (gain)/loss - subsidiaries 0 0 0 0 0 0 12,925 8,118Net (gain)/loss - other 2 167 0 0 2 167 2 167Capitalising interest (income)/expense - stapled entity

0 0 (1,958) (329) 1,958 329 1,958 329

Changes in operating related assets and liabilities:(Increase)/decrease in income receivable (4,722) (9,484) (511) (564) (4,211) (8,920) (7,592) (14,437)(Increase)/decrease in other receivables (3,581) (5,451) 0 0 (3,581) (5,451) (63) 2(Increase)/decrease in prepayments 324 (345) 0 0 324 (345) 324 (345)(Increase)/decrease in accrued income 113 (424) 0 0 113 (424) (407) 108Increase/(decrease) in payables 270 (259) 0 0 270 (259) 270 (259)Increase/(decrease) in accrued interest expense (174) 23 0 0 (173) 23 (173) 23Increase/(decrease) in current income tax liability 514 (806) 523 (22) (8) (784) 0 0Increase/(decrease) in deferred income tax liability 6,286 (6,047) 2,048 (1,816) 4,238 (4,232) 0 0Increase/(decrease) in provisions 66 13 0 0 66 13 66 13

Net cash inflow/(outflow) from operating activities 49,134 28,660 11,095 13,669 38,041 14,991 38,054 15,632

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

(b) Reconciliation of cash and cash equivalents

Cash at bank 61,990 36,351 0 0 61,990 36,351 61,852 36,20161,990 36,351 0 0 61,990 36,351 61,852 36,201

AIX

AIX

Consolidated AIFT

Consolidated AIFT

AIFT



Cash at bank earns interest at floating rates based on daily deposit rates. (c) Significant non-cash investing and financing activities

There were no significant non-cash investing and financing activities during the year (2009 – nil). 13 Receivables

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Income receivable 14,582 9,860 1,448 936 13,135 8,923 22,032 14,440Receivable - subsidiary 0 0 0 0 0 0 250 250Loan - stapled entity - AIFT 0 0 27,919 13,608 0 0 0 0Other receivables 246 183 0 0 246 183 246 183

14,828 10,043 29,367 14,544 13,381 9,106 22,528 14,873

AIX

AIFTConsolidated AIFL AIFL Consolidated AIFT

Loan – Stapled Entity – AIFT

The loan from AIFT is unsecured, at call and interest bearing. Interest is charged at the 30 day bank bill rate.



(continued)

29

14 Other assets

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Prepayments 324 648 0 0 325 648 325 649324 648 0 0 325 648 325 649

AIX


15 Subsidiaries Subsidiary name Country of

incorporation2010 2009 2010 2009 2010 2009

% % $'000 $'000 $'000 $'000

Australian Infrastructure Fund International 1 Trust 100% 100% Australia 0 0 296,277 309,202 - Australian Infrastructure Fund Pty Limited 100% 100% Australia 0 0 0 0

0 0 296,277 309,202

AIFTPercentage Ownership

AIFL

The financial results of subsidiary entities have been included in the consolidated financial results of AIX and Consolidated AIFT. Australian Infrastructure Fund International 1 Trust is an unlisted unit trust which has the following investment interests: • a 100% interest in its wholly owned subsidiary, Australian Infrastructure Fund International Pty Ltd (AIFIPL) which has an

80.04% interest in IAI International Airport Investments GmbH & Co KG which in turn has a 50% equity interest in HOCHTIEF AirPort Capital Group GmbH (HTAC). Although AIFIPL owns 80.04% of IAI International Airport Investments GmbH & Co KG, due to the contractual agreement between the owners of IAI International Airport Investments GmbH & Co KG, AIFIPL does not have a controlling interest in that entity;

• a 50% interest in the general partner IAI International Airport Investments Verwaltungs GmbH; and • a 40.02% interest in HTAC shareholder loans. HTAC has been independently valued by KPMG Corporate Finance at 30 June 2010 and 30 June 2009. 16 Securities

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Unlisted securitiesPerth Airport (Airstralia Development Group & PAPT Holdings) 454,200 372,111 0 0 454,200 372,111 454,200 372,111Australia Pacific Airports Corporation Limited 410,140 299,400 126,451 92,418 283,688 206,981 283,688 206,981HOCHTIEF AirPort Capital Group 305,288 314,864 0 0 305,288 314,865 0 0Queensland Airports Limited 259,526 211,895 0 0 259,526 211,895 259,527 211,895Airport Development Group Pty Ltd 83,476 74,300 0 0 83,476 74,300 83,476 74,300Port of Portland 65,360 58,433 25,608 22,894 39,752 35,539 39,752 35,539Port of Geelong Unit Trust & Infrastructure Investment Corporation 19,851 17,913 19,851 17,913 0 0 0 0Statewide Roads 2,017 8,600 2,017 8,600 0 0 0 0Metro Light Rail and Monorail 3,290 3,000 0 0 3,290 3,000 3,290 3,000Total Securities 1,603,148 1,360,516 173,927 141,825 1,429,220 1,218,691 1,123,933 903,826

AIX

Consolidated AIFT AIFTConsolidated AIFL AIFL

All unlisted securities have been independently valued by KPMG Corporate Finance at 30 June 2010 and 30 June 2009.



(continued)

30

16 Securities (continued) Percentage Ownership

2010 2009 2010 2009 2010 2009 2010 2009

% % % % % % % %Unlisted securitiesPerth Airport (Airstralia Development Group & PAPT Holdings) 29.74% 29.74% 0.00% 0.00% 29.74% 29.74% 29.74% 29.74%Australia Pacific Airports Corporation Limited 12.39% 10.14% 3.82% 3.13% 8.57% 7.01% 8.57% 7.01%HOCHTIEF AirPort Capital Group 40.02% 40.02% 0.00% 0.00% 40.02% 40.02% 40.02% 40.02%Queensland Airports Limited 49.07% 49.07% 0.00% 0.00% 49.07% 49.07% 49.07% 49.07%Airport Development Group Pty Ltd 28.23% 28.23% 0.00% 0.00% 28.23% 28.23% 28.23% 28.23%Port of Portland 50.00% 50.00% 19.59% 19.59% 30.41% 30.41% 30.41% 30.41%Port of Geelong Unit Trust & Infrastructure Investment Corporation 35.00% 35.00% 35.00% 35.00% 0.00% 0.00% 0.00% 0.00%Statewide Roads 6.25% 6.25% 6.25% 6.25% 0.00% 0.00% 0.00% 0.00%Metro Light Rail and Monorail 38.89% 38.89% 0.00% 0.00% 38.89% 38.89% 38.89% 38.89%

AIFT

AIX


17 Payables

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Payable - the Responsible Entity 905 455 0 0 905 455 905 455Distribution and dividend payable 31,037 19,226 4,100 8,700 26,937 10,526 26,937 10,526Other payables 325 505 0 0 325 505 325 505

32,267 20,186 4,100 8,700 28,167 11,486 28,167 11,486

AIFTConsolidated AIFL

AIX

AIFL Consolidated AIFT

Other payables are non-interest bearing and generally on 30 day terms. For information regarding the distribution and dividend payable refer to Note 22. Further details of related party payables are included in Notes 26 and 27. 18 Provisions

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Provision for directors' retirement benefit 673 608 0 0 673 608 673 608673 608 0 0 673 608 673 608

Movement in the provision for directors' retirement benefit:

Balance at the beginning of the year 608 595 0 0 608 595 608 595Provision raised during the year 65 13 0 0 65 13 65 13Balance at the end of the year 673 608 0 0 673 608 673 608

Consolidated AIFT

AIX


The directors’ retirement benefit is available to non-executive directors of AIFL who were appointed prior to 16 April 2003. The directors’ retirement benefit is provided and paid on behalf of AIFL by AIFT.



(continued)

31

19 Borrowings

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Multi-option facility - cash advance 0 159,672 0 0 0 159,672 0 159,672Loan - stapled entity - AIFL 0 0 0 0 27,919 13,608 27,919 13,608

0 159,672 0 0 27,919 173,280 27,919 173,280

AIX


19 Borrowings (continued) (a) Financing Arrangements The amount available and drawn under finance facilities is detailed below:

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Facilities available:Multi-option facility 0 250,000 0 0 0 250,000 0 250,000Standby debt facility 30,000 30,000 30,000Bank guarantee 0 389 0 0 0 389 0 389

30,000 250,389 0 0 30,000 250,389 30,000 250,389

Facilities drawn:Multi-option facility - cash advance 0 159,500 0 0 0 159,500 0 159,500Multi-option facility - bank guarantee 0 389 0 0 0 389 0 389Standby debt facility 0 0 0 0 0 0 0 0Bank guarantee 0 389 0 0 0 389 0 389

0 160,278 0 0 0 160,278 0 160,278

Facilities undrawn:Multi-option facility 0 90,111 0 0 0 90,111 0 90,111Standby debt facility 30,000 0 0 0 30,000 30,000 0Bank guarantee 0 0 0 0 0 0 0 0

30,000 90,111 0 0 30,000 90,111 30,000 90,111

AIFT

AIX


(b) Loan – stapled entity – AIFL

The loan from AIFL is unsecured, at call and interest bearing. Interest is charged at the 30 day bank bill rate. (c) Multi-option facility

AIX had in place a $250 million multi-option facility with Westpac Banking Corporation (Westpac) and Australian and New Zealand Banking Group (ANZ) that was cancelled on 11 August 2009. (d) Standby debt facility On 21 August 2009 AIX established a $30 million standby debt facility with Westpac and ANZ as lenders with an expiry date of 21 August 2011. Interest on cash advances drawn under the facility is charged at a base rate plus a margin. (e) Bank guarantee facility On 27 July 2009 the $388,900 bank guarantee facility with Westpac was cancelled following the cancellation of the $388,900 bank guarantee issued under the facility in favour of the Supreme Court of New South Wales.



(continued)

32

20 Contributed equity

2010 2009 2010 2009 2010 2009 2010 2009No. '000 No. '000 No. '000 No. '000 No. '000 No. '000 No. '000 No. '000

(a) Issued securities (number)Opening balance 384,517 380,806 384,517 380,806 384,517 380,806 384,517 380,806Securities issued during the year: - pursuant to market placement 236,217 0 236,217 0 236,217 0 236,217 0 - pursuant to distribution and dividend reinvestment plan 0 3,711 0 3,711 0 3,711 0 3,711Closing balance 620,734 384,517 620,734 384,517 620,734 384,517 620,734 384,517

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000(b) Issued securities (dollars)Opening balance 761,520 755,137 117,259 116,301 644,261 638,836 644,261 638,836Securities issued during the year: - pursuant to market placement 291,487 0 42,762 0 248,725 0 248,725 0 - pursuant to distribution and dividend reinvestment plan 0 6,383 0 958 0 5,425 0 5,425Less: adjustment to security issue costs (9,404) 0 0 0 (9,404) 0 (9,404) 0Closing balance 1,043,603 761,520 160,021 117,259 883,582 644,261 883,582 644,261

AIFT

AIX


(c) Security issues 2010 On 6 July 2009 AIX issued 100,662,039 stapled securities at a price of $1.10 per stapled security for a total consideration of $110,728,243 pursuant to a fully underwritten institutional placement. On 20 July 2009 AIX issued a further 91,598,600 stapled securities at a price of $1.10 per stapled security for a total consideration of $100,758,460 pursuant to a fully underwritten retail placement. Part of the proceeds of these offers was used to repay the multi-option facility which was drawn to $159.5 million. On 14 May 2010 AIX issued 43,956,044 stapled securities at a price of $1.82 per stapled security for a total consideration of $80 million pursuant to a fully underwritten institutional placement. $75.1 million of the proceeds raised were used to fund a further acquisition of Australia Pacific Airports Corporation Limited with the balance of the proceeds used for transaction costs and general purposes. 2009 The Distribution Reinvestment Plan (DRP) was suspended on 18 June 2009 until further notice. (d) Terms and conditions of issued securities The securities are stapled securities being shares in AIFL and units in AIFT. Stapled securityholders have various rights under AIFL’s and AIFT’s Constitutions, including the right to: • receive dividends and income distributions; • attend and vote at meetings of stapled securityholders; and • participate in the termination and winding up of AIFL and AIFT. The rights, obligations and restrictions attached to each stapled security are identical in all respects.



(continued)

33

21 Retained earnings

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Opening balance 446,531 395,631 23,941 24,764 422,590 370,867 435,116 387,537Net profit after income tax for the year 191,253 100,590 17,593 10,377 173,660 90,214 177,934 86,070Dividends and distributions declared to securityholders (59,876) (49,690) (11,400) (11,200) (48,476) (38,491) (48,476) (38,491)Closing balance 577,908 446,531 30,134 23,941 547,774 422,590 564,574 435,116

AIFT

AIX


22 Distributions / dividends declared to securityholders

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Interim distribution and dividend declared and paid 28,839 30,464 7,300 2,500 21,539 27,965 21,539 27,965Final distribution and dividend declared and payable 31,037 19,226 4,100 8,700 26,937 10,526 26,937 10,526

59,876 49,690 11,400 11,200 48,476 38,491 48,476 38,491

Comprising:

Distributions declared during the year 48,476 38,490 0 0 48,476 38,491 48,476 38,491Dividends declared during the year 11,400 11,200 11,400 11,200 0 0 0 0

59,876 49,690 11,400 11,200 48,476 38,491 48,476 38,491

Consolidated AIFT

AIX


Final dividend and distribution A final dividend and distribution of $31,037,000 (5.00 cents per stapled security) was declared by AIX for the year ended 30 June 2010 (2009 – 5.00 cents per stapled security) and will be paid on 30 August 2010. This comprised: • a final dividend of $4,100,000 (0.7 cents per security) declared by AIFL for the year ended 30 June 2010 (2009 – 2.3

cents per stapled security) franked to 100% (2009 – 100%); and • a final distribution of $26,937,000 (4.3 cents per security) declared by AIFT for the year ended 30 June 2010 (2009 – 2.7

cents per stapled security). Interim dividend and distribution An interim dividend and distribution of $28,839,000 (5.00 cents per stapled security) was declared by AIX for the half year ended 31 December 2009 which was paid on 26 February 2010 (2008 - $30,464,000 and 8.00 cents per stapled security). This comprised: • an interim dividend of $7,300,000 (1.27 cents per security) declared by AIFL for the half year ended 31 December 2009

(2008 – $2,500,000 and 0.66 cents per stapled security) franked to 100% (2008 – 100%); and • an interim distribution of $21,539,000 (3.73 cents per security) declared by AIFT for the half year ended 31 December

2009 (2008 – $27,964,000 and 7.34 cents per stapled security). 23 Franking credit availability

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

5,203 7,244 5,203 7,244 0 0 0 0Franking credits available for distribution at the end of the year

Consolidated AIFT AIFTAIX




(continued)

34

24 Segment information Operating segments are based on the reports reviewed by the Board of AIFL and the Board of Hastings that are, in conjunction with the input and guidance of the chief executive officer of AIX, used to make strategic decisions for AIX. The operating segments are aligned with the investment objectives and guidelines set out in AIX’s PDS and in accordance with the provisions of AIX’s Constitutions. AIX has one reportable operating segment being the investment in unlisted infrastructure securities. The AIFL and Hastings’ Boards takes a broad portfolio construction approach to its investment and divestment activities of infrastructure securities and to the management of AIX. Accordingly, all operating decisions are based upon analysis of AIX as one operating segment. The segment information reported to the Boards is consistent with the Accounting Standards and therefore consistent with the information included within the financial statements. The tables below provide additional information on AIX's assets and operating income by geographical location. The basis for attributing the operating income is the counterparty's place of incorporation. The operating income consists of interest income, dividend income, distribution income, gains and losses from movements in the value of investments and directors’ fees. AIX

2010 2009 2010 2009$'000 $'000 $'000 $'000

Australia 1,375,001 1,092,694 216,838 104,832Europe 305,289 314,864 (3,572) 11,601

1,680,290 1,407,558 213,266 116,433

Consolidated AIFL

Assets Operating income

2010 2009 2010 2009$'000 $'000 $'000 $'000

Australia 1,199,627 949,931 198,168 95,824Europe 305,289 314,865 (3,572) 11,601

1,504,916 1,264,796 194,596 107,425

Consolidated AIFTAssets Operating income

25 Financial instruments (a) Financial risk management objectives and policies AIX and Consolidated AIFT’s principal financial instruments comprise cash and short-term deposits, investments in unlisted securities and interest-bearing loans and borrowings. The main purpose of these financial instruments is to generate a return on the investment made by securityholders. AIX and Consolidated AIFT have various other financial instruments such as trade receivables and trade payables, which arise directly from their operations. AIX and Consolidated AIFT do not enter into or trade financial instruments for speculative purposes. The main risks arising from AIX’s and Consolidated AIFT’s financial instruments are credit risk, interest rate risk, price risk, foreign currency risk, and liquidity risk. The directors of AIFL and the directors of the Responsible Entity of AIFT review and agree policies for managing each of these risks.



(continued)

35

25 Financial instruments (continued) (a) Financial risk management objectives and policies (continued) Credit risk Credit risk represents the risk that a counterparty will be unable to pay amounts in full when they fall due and AIX and Consolidated AIFT will incur a financial loss. The main concentration of credit risk to which AIX and Consolidated AIFT are exposed arises from their exposure to unlisted securities that are debt securities such as shareholder loans. AIX and Consolidated AIFT are also exposed to counterparty credit risk on cash and cash equivalents and other receivables. To manage credit risk, AIX and Consolidated AIFT deal only with high credit quality financial institutions for their cash transactions. At an asset level, AIX and Consolidated AIFT aim to achieve an appropriate risk adjusted return for each of their investments. This is achieved through appropriate investment due diligence on an asset by asset basis. With regard to credit risk at the portfolio level, AIX and Consolidated AIFT are diversified by sector, geography and stage of development. Interest rate risk Interest rate risk is the risk that a financial instrument’s value or the value of its cash flows may fluctuate as a result of changes in market interest rates. Financial instruments whose cashflows are determined by reference to variable interest rates include cash and cash equivalents, interest bearing receivables, interest bearing unlisted securities and interest bearing borrowings. Movements in interest rates directly affect the value of AIX and Consolidated AIFT’s unlisted securities. As discussed in Note 1(l), the value of the unlisted securities is determined by discounting the projected future cashflows of the underlying entity. The discount rate utilised incorporates a risk free rate component as well as a market risk premium factor that reflects the excess return that a market portfolio of assets generates over the risk free rate. The market risk premium is generally determined with reference to market observations over a long period of time and therefore remains relatively stable. Movements in interest rates directly affect cashflows generated by AIX and Consolidated AIFT’s cash and cash equivalents, interest bearing receivables, interest bearing unlisted securities and interest bearing borrowings. As AIX’s investment strategy is long term, AIX and Consolidated AIFT do not hedge these interest rate exposures. Price risk Price risk is the risk that a financial instruments value may fluctuate as a result of changes in its price. AIX and Consolidated AIFT are exposed to price risk on their unlisted security holdings. AIX and Consolidated AIFT mitigate price risk by a thorough due diligence process and careful selection of investments. On an ongoing basis, investee companies are monitored throughout the year via board representation, management reporting and detailed discussions with the underlying investee company. The results of the monitoring completed by management are reported to the AIFL and Hastings Boards on a regular basis. Unlisted security prices are affected by the underlying cashflows of the unlisted security. The underlying cashflows used in valuing unlisted securities are provided by investee management in the form of a financial model, which is reviewed at least annually during the budgeting process and approved by representatives on the investee’s board. The key drivers of the financial model include expected volumes, agreed pricing and the cost and timing of capital expenditure projects at each asset. Forecast volumes and pricing negotiations are performed by investee management with the assistance of, as appropriate, external consultants who provide specialist advice and a further layer of objectivity. In pricing negotiations, the investee boards are often consulted on key issues and provided with regular updates throughout the process. Capital expenditure is planned by investee management and also requires investee board approval prior to project commencement. Due to the long term view that is taken, AIX and Consolidated AIFT do not hedge against these short-term fluctuations. Foreign exchange rate risk Foreign exchange rate risk is the risk that a financial instrument’s value or the value of its cash flows may fluctuate as a result of changes in foreign exchange rates. AIX and Consolidated AIFT invest in one offshore unlisted security, whose value and cashflows are denominated in Euro. As a result, AIX and Consolidated AIFT are exposed to movements in the Australian dollar/Euro foreign exchange rate. It is AIX and Consolidated AIFT’s policy not to hedge the carrying value of foreign currency denominated unlisted securities or any foreign currency cash flows that these foreign currency denominated unlisted securities generate.



(continued)

36

25 Financial instruments (continued) (a) Financial risk management objectives and policies (continued) Liquidity risk Liquidity risk is the risk that AIX and Consolidated AIFT may not be able to generate sufficient cash resources to settle their obligations in full as and when they fall due or can do so in forms that are materially disadvantageous. To manage liquidity risk, AIX and Consolidated AIFT actively monitor cash balances and forecast operational cashflows and liabilities on a regular basis. In addition to available cash on hand, AIX and Consolidated AIFT have short term funding lines. All AIX and Consolidated AIFT’s financial liabilities as at 30 June 2010 are at call and due within twelve months. (b) Credit risk There are no material amounts receivable past due or impaired. Concentration of credit risk Credit exposures at balance date are cash and cash equivalent balances (Note 12), receivables balances (Note 13) as well as the following unlisted security balances:

Name Instrument Type 2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Perth Airport Shareholder Loans 13,780 11,239 0 0 13,780 11,239 13,780 11,239Perth Airport Convertible Loan Notes 18,773 9,948 0 0 18,773 9,948 18,773 9,948HOCHTIEF AirPort Capital Group Shareholder Loans 135,837 104,893 0 0 135,837 104,893 0 0Queensland Airports Limited Loan Notes 18,865 18,865 0 0 18,865 18,865 18,865 18,865Metro Light Rail and Monorail Shareholder Loans 27,774 27,774 0 0 27,774 27,774 27,774 27,774

215,029 172,719 0 0 215,029 172,719 79,192 67,826

AIFTAIX

Consolidated AIFL Consolidated AIFTAIFL

The maximum exposure to credit risk of cash and cash equivalents, receivables and securities approximates their carrying amounts. No collateral is held against receivables. (c) Summarised sensitivity analysis The following tables summarise the sensitivity of material financial assets and financial liabilities to movements in interest rates and foreign exchange rates. Interest Rate Sensitivity The effect of a +/- 0.5% shift in interest rates has been selected for interest rate sensitivity as it represents the approximate historic 12 month average movement in the yield of the 10 year Australian Government Bond Rate (the risk free rate). In any 12 month period the shift in interest rates could be more or less than 0.5%. A change in interest rates affects the interest revenue and interest expense of AIX, affecting cash and cash equivalents, interest bearing receivables, unlisted securities and borrowings respectively. The interest rate sensitivity assumes the discount rate used to determine the fair value of unlisted securities is changed by the stated amount, whilst holding all other variables constant. The effect of a +/- 0.5% shift in interest rates on unlisted securities has been approximated through valuation sensitivities performed at discount rates reflecting the selected range while all other valuation variables are held constant. Foreign Exchange Rate Sensitivity The effect of a +/- 10% movement in foreign exchange rates has been selected for foreign exchange rate sensitivity. The Australian dollar appreciated 15.73% when compared with the British pound, 20.62% when compared with the Euro and 4.96% when compared with US dollar over the reporting period. The 10% sensitivity was selected as it represents foreign exchange movements over a 12 month period in the context of the longer term historical volatility.



(continued)

37

25 Financial instruments (continued) (c) Summarised sensitivity analysis (continued) AIXConsolidated AIFL2010

CarryingValue Profit Equity Profit Equity Profit Equity Profit Equity$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Financial assetsCash and cash equivalents 61,990 (310) (310) 310 310 1 1 (1) (1)Receivables 0 0 0 0 0 0 0 0 0Subsidiaries 0 0 0 0 0 0 0 0 0Securities 1,603,148 (62,859) (62,859) 62,859 62,859 39,931 39,931 (22,836) (22,836)

Financial liabilitiesPayables 32,267 0 0 0 0 0 0 0 0Borrowings 0 0 0 0 0 0 0 0 0

Total increase/(decrease) (63,169) (63,169) 63,169 63,169 39,932 39,932 (22,837) (22,837)

Interest rate risk0.5%-0.5% -10.0%

Foreign exchange risk10.0%

AIXConsolidated AIFL2009



Financial liabilitiesPayables 20,186 0 0 0 0 0 0 0 0Borrowings 159,672 798 798 (798) (798) 0 0 0 0


-0.5% 0.5%Interest rate risk

-10.0% 10.0%Foreign exchange risk

AIFL2010


Financial assetsCash and cash equivalents 0 0 0 0 0 0 0 0 0Loan - stapled entity - AIFT 27,919 (140) (140) 140 140 0 0 0 0Subsidiaries 0 0 0 0 0 0 0 0 0Securities 173,927 (7,724) (7,724) 7,724 7,724 0 0 0 0


Total increase/(decrease) (7,864) (7,864) 7,864 7,864 0 0 0 0

Interest rate risk Foreign exchange risk10.0%-0.5% 0.5% -10.0%



(continued)

38

25 Financial instruments (continued) (c) Summarised sensitivity analysis (continued) AIFL2009


Financial assetsCash and cash equivalents 0 0 0 0 0 0 0 0 0Loan - stapled entity - AIFT 13,608 (68) (68) 68 68 0 0 0 0Subsidiaries 0 0 0 0 0 0 0 0 0Securities 141,825 (6,391) (6,391) 6,391 6,391 0 0 0 0


Total increase/(decrease) (6,459) (6,459) 6,459 6,459 0 0 0 0

0.5%Foreign exchange riskInterest rate risk

10.0%-10.0%-0.5%

Consolidated AIFT2010





0.5%Interest rate risk Foreign exchange risk

-0.5% -10.0% 10.0%

Consolidated AIFT2009





0.5%Interest rate risk Foreign exchange risk

-10.0% 10.0%-0.5%



(continued)

39

25 Financial instruments (continued) (c) Summarised sensitivity analysis (continued) AIFT2010


Financial assetsCash and cash equivalents 61,852 (309) (309) 309 309 1 1 (1) (1)Receivables 0 0 0 0 0 0 0 0 0Subsidiaries 296,277 (11,573) (11,573) 11,573 11,573 38,799 38,799 (22,124) (22,124)Securities 1,123,933 (43,209) (43,209) 43,209 43,209 0 0 0 0



Foreign exchange risk10.0%-10.0%-0.5% 0.5%

Interest rate risk

AIFT2009


Financial assetsCash and cash equivalents 36,201 (181) (181) 181 181 1 1 (1) (1)Receivables 0 0 0 0 0 0 0 0 0Subsidiaries 309,202 (12,078) (12,078) 12,078 12,078 34,356 34,356 (28,109) (28,109)Securities 903,826 (34,533) (34,533) 34,533 34,533 0 0 0 0



Interest rate risk-0.5% 0.5%

Foreign exchange risk-10.0% 10.0%

(d) Fair values The carrying amounts of AIX’s and Consolidated AIFT’s financial instruments and the methods and assumptions used to determine the fair values of instruments are summarised below. Cash and cash equivalents The carrying amounts of cash and cash equivalents approximate their fair values because of their short term to maturity. Receivables and payables The carrying amounts of receivables and payables approximate their fair values because of their short term to settlement. Securities and subsidiaries Unlisted securities and subsidiaries are measured at fair value through profit or loss. The determination of the fair values of the unlisted securities and subsidiaries is outlined in Note 1(l). Borrowings The carrying amount of borrowings approximates their fair value on the basis that the borrowings in place are floating rate borrowings. The fair value of borrowings is determined by projecting future cash flows and then discounting these cash flows back to their present value using a post-tax, risk adjusted discount rate. Where appropriate, fair value is calibrated to relevant market developments.



(continued)

40

25 Financial instruments (continued) (d) Fair values (continued) Fair value hierarchy of financial instruments measured at fair value through profit or loss As of 1 July 2009, AIX has adopted the revised AASB 7 Financial Instruments: Disclosure, which requires financial instruments measured at fair value to be classified in the following fair value hierarchy: (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); (b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as

prices) or indirectly (derived from prices) (Level 2); and (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). The only financial instruments that are fair valued as at 30 June 2010 are unlisted securities and subsidiaries. Unlisted securities are included in Level 3 on the basis that the valuation techniques adopted are based on significant unobservable inputs. Subsidiaries are included in Level 3 on the basis that: • there are no quoted market prices for subsidiaries that are traded on an active market; and • subsidiaries are not readily redeemable investments and there are no secondary market trades that corroborate that the

subsidiary’s net asset value reflects its fair value. The following tables present AIX’s assets and liabilities measured and recognised at fair value as at 30 June 2010. Comparative information has not been provided as permitted by the transitional provisions of the new rules. AIXConsolidated AIFLAs at 30 June 2010 Level 1 Level 2 Level 3 Total

$'000 $'000 $'000 $'000

AssetsFinancial assets held at fair value through profit or loss:Unlisted securities 0 0 1,603,148 1,603,148Subsidiaries 0 0 0 0Total assets 0 0 1,603,148 1,603,148

AIFLAs at 30 June 2010 Level 1 Level 2 Level 3 Total

$'000 $'000 $'000 $'000

AssetsFinancial assets held at fair value through profit or loss:Unlisted securities 0 0 173,927 173,927Subsidiaries 0 0 0 0Total assets 0 0 173,927 173,927

Consolidated AIFTAs at 30 June 2010 Level 1 Level 2 Level 3 Total

$'000 $'000 $'000 $'000

AssetsFinancial assets held at fair value through profit or loss:Unlisted securities 0 0 1,429,220 1,429,220Subsidiaries 0 0 0 0Total assets 0 0 1,429,220 1,429,220

AIFTAs at 30 June 2010 Level 1 Level 2 Level 3 Total

$'000 $'000 $'000 $'000

AssetsFinancial assets held at fair value through profit or loss:Unlisted securities 0 0 1,123,933 1,123,933Subsidiaries 0 0 296,277 296,277Total assets 0 0 1,420,210 1,420,210



(continued)

41

25 Financial instruments (continued) (d) Fair values (continued) Fair value hierarchy of financial instruments measured at fair value through profit or loss (continued) The following table presents the movements in Level 3 instruments for the year ended 30 June 2010. AIXConsolidated AIFL

As at 30 June 2010Unlisted

securities Total

$'000 $'000

Opening balance 1,360,516 1,360,516Acquisitions 94,203 94,203Loan advances 7,226 7,226Net gain/(loss) recognised in profit or loss 141,318 141,318Movement in accrued loan interest (115) (115)Closing balance 1,603,148 1,603,148

Total net gain/(loss) recognised in profit or loss 141,217 141,217Total gain/(loss) for the year included in profit or loss that relates to assets held at the end of the reporting period. 141,318 141,318

AIFL


securities Total

$'000 $'000

Opening balance 141,825 141,825Acquisitions 25,502 25,502Loan advances 0 0Net gain/(loss) recognised in profit or loss 6,600 6,600Movement in accrued loan interest 0 0Closing balance 173,927 173,927


Consolidated AIFT


securities Total

$'000 $'000

Opening balance 1,218,691 1,218,691Acquisitions 68,698 68,698Loan advances 7,226 7,226Net gain/(loss) recognised in profit or loss 134,718 134,718Movement in accrued loan interest (113) (113)Closing balance 1,429,220 1,429,220


AIFT

As at 30 June 2010Subsidiaries Unlisted

securities Total

$'000 $'000 $'000

Opening balance 309,202 903,826 1,213,028Acquisitions 0 65,324 65,324Loan advances 0 7,226 7,226Net gain/(loss) recognised in profit or loss (12,925) 147,149 134,224Movement in accrued loan interest 0 408 408Closing balance 296,277 1,123,933 1,420,210

Total net gain/(loss) recognised in profit or loss (12,925) 147,190 134,265Total gain/(loss) for the year included in profit or loss that relates to assets held at the end of the reporting period. (12,925) 147,149 134,224



(continued)

42

25 Financial instruments (continued) (e) Foreign currency risk AIX and Consolidated AIFT have unlisted securities denominated in Euro. As a result, the Statements of Financial Position and Statements of Comprehensive Income can be materially affected by movements in the respective Euro/AUD foreign exchange rate. Foreign currency exposures are summarised below:

2010 2009 2010 2009 2010 2009 2010 2009

AUD $'000 AUD $'000 AUD $'000 AUD $'000 AUD $'000 AUD $'000 AUD $'000 AUD $'000

Financial assets:Cash and cash equivalents 7 9 0 0 7 9 7 9Receivables 0 0 0 0 0 0 0 0Subsidiaries 0 0 0 0 0 0 296,277 309,202Securities 305,288 314,864 0 0 305,288 314,865 0 0

305,295 314,873 0 0 305,295 314,874 296,284 309,211

Financial liabilities:Payables 0 0 0 0 0 0 0 0Borrowings 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0

Financial assets Financial assets Financial assets Financial assets

AIXAIFL AIFTConsolidated AIFTConsolidated AIFL

in EURO in EURO in EURO in EURO

26 Related party disclosures

(a) Subsidiaries

Names of subsidiaries The names and percentage ownership of holdings in subsidiary entities is detailed in Note 15 – Subsidiaries. Transactions with subsidiaries

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Acquisition of ordinary units inAustralian Infrastructure Fund International 1 Trust 0 0 0 0 0 0 0 36,199

Distributions received or receivable from Australian Infrastructure Fund International 1 Trust 0 0 0 0 0 0 9,384 19,904

Consolidated AIFT AIFT Consolidated AIFL AIFLAIX

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



(continued)

43

26 Related party disclosures (continued) (a) Subsidiaries (continued) Outstanding balances with subsidiaries

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Other receivable from Australian Infrastructure Fund International 1 Trust 0 0 0 0 0 0 250 250

Income receivable from Australian Infrastructure Fund International 1 Trust 0 0 0 0 0 0 8,898 5,517

AIX AIFTConsolidated AIFT Consolidated AIFL AIFL

Receivable balances are non-interest bearing and at call. (b) Associate entities Names of associate entities Associate entities and interests in these entities are as follows:

2010 2009 2010 2009 2010 2009 2010 2009Holding Holding Holding Holding Holding Holding Holding Holding

Perth Airport(Airstralia Development Group & PAPT Holdings Pty Ltd) 29.74% 29.74% 0.00% 0.00% 29.74% 29.74% 29.74% 29.74%HOCHTIEF AirPort Capital Group 40.02% 40.02% 0.00% 0.00% 40.02% 40.02% 40.02% 40.02%Queensland Airports Limited 49.07% 49.07% 0.00% 0.00% 49.07% 49.07% 49.07% 49.07%Airport Development Group Pty Ltd 28.23% 28.23% 0.00% 0.00% 28.23% 28.23% 28.23% 28.23%Port of Portland 50.00% 50.00% 19.59% 19.59% 30.41% 30.41% 30.41% 30.41%Port of Geelong Unit Trust & Infrastructure Investment Corporation 35.00% 35.00% 35.00% 35.00% 0.00% 0.00% 0.00% 0.00%Metro Light Rail and Monorail 38.89% 38.89% 0.00% 0.00% 38.89% 38.89% 38.89% 38.89%

Consolidated AIFT AIFTConsolidated AIFL AIFL

AIX

For further details in relation to holdings in associate entities refer to Note 16 – Securities.



(continued)

44

26 Related party disclosures (continued) (b) Associate entities (continued) Transactions with associate entities

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Distribution income fromPort of Portland 872 2,162 342 846 531 1,315 531 1,315HOCHTIEF AirPort Capital Group 0 9,886 0 0 0 9,886 0 0Port of Geelong Unit Trust &Infrastructure Investment Corporation

982 0 982 0 0 0 0 0

Statewide Roads 0 0 0 1,188 0 0 0 0

Dividend income fromPerth Airport 16,474 2,228 0 0 16,474 2,228 16,474 2,228Airport Development Group Pty Ltd 4,040 4,119 0 0 4,040 4,119 4,040 4,119Port of Portland 1,500 0 588 0 912 0 912 0Queensland Airports Limited 11,286 7,605 0 0 11,286 7,605 11,286 7,605HOCHTIEF AirPort Capital Group 0 0 0 0 0 0 0 0Port of Geelong Unit Trust &Infrastructure Investment Corporation

250 375 250 375 0 0 0 0

Statewide Roads 5,229 8,002 5,229 8,002 0 0 0 0

Interest income fromPerth Airport 2,659 1,861 0 0 2,659 1,861 2,659 1,861Queensland Airports Limited 1,841 1,841 0 0 1,841 1,841 1,841 1,841HOCHTIEF AirPort Capital Group 9,001 10,532 0 0 9,001 10,532 0 0

Advance/(repayment) of unlisted security shareholder loansPerth Airport 7,226 (4,822) 0 0 7,226 (4,822) 7,226 (4,822)HOCHTIEF AirPort Capital Group 3,376 24,572 0 0 3,376 24,572 0 0

Acquisition/(disposal) of shares or units inPerth Airport 803 1,041 0 0 803 1,041 803 1,041Port of Portland 4,750 2,000 1,861 783 2,889 1,217 2,889 1,217HOCHTIEF AirPort Capital Group 0 17,013 0 0 0 17,013 0 0

Acquisition/(disposal) of convertible notes inPerth Airport 8,667 0 0 0 8,667 0 8,667 0

AIX


Receivable and payable balances with associate entities

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Income receivablePerth Airport 509 703 0 0 509 703 509 703Port of Portland 3,040 2,167 1,191 849 1,849 1,318 1,849 1,318Queensland Airports Limited 11,744 8,064 0 0 11,744 8,064 11,744 8,064Port of Geelong Unit Trust & Infrastructure Investment Corporation 257 88 257 88 0 0 0 0

Consolidated AIFL AIFLAIX


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



(continued)

45

26 Related party disclosures (continued) (c) Other related parties – the stapled group Name of the stapled entity The shares in AIFL are stapled to units in AIFT with the stapled securities listed on the Australian Stock Exchange. The stapled group is known as AIX. Transactions between stapled entities

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Loans advanced toAIFT 0 0 56,280 14,795 0 0 0 0

Proceeds from loans received fromAIFL 0 0 0 0 56,280 14,795 56,280 14,795

Loans advanced toAIFL 0 0 0 0 41,968 11,123 41,968 11,123

Proceeds from loans received fromAIFT 0 0 41,968 11,123 0 0 0 0

Interest income received or receivable fromAIFT 0 0 1,958 329 0 0 0 0

Interest expense paid or payable toAIFL 0 0 0 0 1,958 329 1,958 329


AIX


All expenses incurred by AIFL are paid on its behalf by AIFT. Outstanding balances between stapled entities

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Loan receivable fromAIFT 0 0 27,919 13,608 0 0 0 0

Borrowings payable toAIFL 0 0 0 0 27,919 13,608 27,919 13,608

AIFL Consolidated AIFL

AIX

AIFTConsolidated AIFT

The loan and borrowing are at call and incur interest at the 30 day bank bill rate (BBSW). (d) Other related parties – the Manager and Responsible Entity Name of the Manager and Responsible Entity The Manager of AIFL and the Responsible Entity of AIFT is Hastings Funds Management Limited (Hastings) and the immediate parent entity of Hastings is Hastings Management Pty Limited (formerly Westpac Institutional Holdings Pty Limited). The ultimate parent entity of Hastings Management Pty Limited is Westpac Banking Corporation (Westpac) which throughout the year held 100 percent of the ordinary issued capital of Hastings Management Pty Limited.



(continued)

46

26 Related party disclosures (continued) (d) Other related parties – the Manager and Responsible Entity (continued) Transactions with the Manager and Responsible Entity and its related entities

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Cash and cash equivalentsWestpac 61,946 36,309 0 0 61,946 36,309 61,808 36,159

Base management fees paid or payable

Hastings 10,179 7,155 0 0 10,179 7,155 10,179 7,155

Reimbursement of expenses paid or payable on behalf of AIXHastings 230 465 0 0 230 465 230 465

Distributions paid or payable toWestpac 1,737 1,451 0 0 1,737 1,451 1,737 1,451

Interest received or receivable Westpac 2,277 2,141 0 0 2,277 2,141 2,272 2,058

Finance costs paid or payable Westpac

Loan facilities - interest expense 237 4,639 0 0 237 4,639 237 4,639Loan facilities - line fees 78 331 0 0 78 331 78 331Loan facilities - agency fee 37 28 0 0 37 28 37 28Loan facilities - establishment fee 435 520 0 0 435 520 435 520Bank guarantee fees 2 6 0 0 2 6 2 6Bank charges 3 8 0 0 3 8 3 8

AIX Consolidated AIFL Consolidated AIFT AIFTAIFL

For further details in relation to base management fees and performance fees paid to Hastings refer to Note 8 – Manager and Responsible Entity fees. For further details in relation to expense reimbursements paid to the Manger refer Note 1(p) – Income and expense recognition. Outstanding balances with the Manager and Responsible Entity and its related entities

2010 2009 2010 2009 2010 2009 2010 2009$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Distribution payable Westpac 901 558 0 0 901 558 901 558

Management fees payableHastings 905 455 0 0 905 455 905 455

Loan facility Westpac

Total facility available 15,000 125,000 0 0 15,000 125,000 15,000 125,000Less: facility drawn 0 (79,944) 0 0 0 (79,944) 0 (79,944)Facility undrawn 15,000 45,056 0 0 15,000 45,056 15,000 45,056

Bank guaranteeWestpac

Total guarantee available 0 389 0 0 0 389 0 389Less: guarantee drawn 0 (389) 0 0 0 (389) 0 (389)Guarantee undrawn 0 0 0 0 0 0 0 0

AIX Consolidated AIFL AIFL Consolidated AIFT AIFT

For details in relation to the loan facilities and bank guarantee facility refer Note 19 – Borrowings. The Manager and Responsible Entity and its related entities’ interests in the financial instruments issued by AIX The number of stapled securities and the percentage ownership interest held by Hastings and its related entities in the financial instruments issued by AIX is detailed below:

2010 2009 2010 2009No. No. % %

Hastings 0 0 0.00% 0.00%Westpac entities (excluding Hastings) 18,012,204 11,158,319 2.90% 2.90%

Securities Ownership

interest



(continued)

47

27 Key management personnel

(a) Names of key management personnel The key management personnel of AIFL and AIFT include persons who are directors of AIFL and directors and employees of the Responsible Entity of AIFT. AIFL The names of the key management personnel of AIFL during the year and until the date of this report are: Paul Espie ChairmanSteve Boulton Director Jim Evans Director - appointed 1 March 2010John Harvey DirectorRobert Humphris DirectorMike Hutchinson DirectorRobert Tsenin DirectorJeff Pollock AIX Chief Executive Officer Responsible Entity of AIFT and Manager of AIFL The names of the key management personnel of the Responsible Entity of AIFT and manager of AIFL during the year and until the date of this report are: Alan Cameron Appointed as Chairman on 6 October 2009 and Director since 14 April 2009Liam Forde Director - Retired as Chairman on 6 October 2009Steve Boulton Director Jim Evans Director - Appointed on 6 October 2009Alan Freer Director - Retired on 6 October 2009Stephen Gibbs Director Mike Hutchinson Director - Retired on 31 December 2009Jim McDonald Director Sean McElduff Director - Retired on 6 October 2009Les Vance Director - Appointed on 6 October 2009Jeff Pollock AIX Chief Executive Officer Key management personnel related entities Steve Boulton, Alan Cameron, Liam Forde, Jim Evans, Stephen Gibbs, Mike Hutchinson (until 31 December 2009), Jim McDonald, Sean McElduff (until 6 October 2009) and Les Vance were directors of various Westpac subsidiary entities during the year. Jeff Pollock is a director of Airport Development Group Pty Ltd and PAPT Holdings Ltd (Perth Airport), Airstralia Development Group Pty Limited and Queensland Airport Limited. Transactions and outstanding balances with key management personnel related entities For details of transactions and outstanding balances between key management personnel related entities and AIFL and AIFT refer to Note 26 – Related Party Disclosures. (b) Compensation policy for key management personnel

(i) Compensation policy for key management personnel of the Manager and Responsible Entity Key management personnel of the Responsible Entity are paid by Hastings or its related entities in their roles as key management personnel of the Responsible Entity, not of AIX. Key management personnel of the Responsible Entity are not remunerated by AIX. As such, disclosure of compensation paid to key management personnel of the Responsible Entity is not required. The fees paid to Hastings as Responsible Entity of AIFT and manager of AIFL are detailed in Note 26 – Related Party Disclosures.



(continued)

48

27 Key management personnel (continued) (b) Compensation policy for key management personnel (continued)

(ii) Compensation policy for key management personnel of AIFL Non-executive directors’ remuneration Board policy on remuneration The Board of directors of AIFL (the Board) is responsible for determining and reviewing compensation arrangements for the directors of the Company. The fees paid to directors are set at levels that reflect both the responsibilities of, and the time commitments required from, the directors to discharge their duties. In order to maintain their independence and impartiality, the remuneration of the non-executive directors is not linked to the performance of either the Company or the Trust. In setting fee levels, the Board takes into account: • independent professional advice; • fees paid by comparable companies; • the general time commitment required from directors and the risks associated with discharging the duties attaching to the

role of director; and • the level of remuneration necessary to attract and retain directors of a suitable calibre. The Board will continue to review its approach to non-executive director remuneration to ensure it remains in line with general industry practice and best practice principles of corporate governance. Remuneration structure Directors’ fees expensed for the financial year ended 30 June 2010 totalled $785,372 (2009 - $687,352) and comprised: • Fees paid or payable in respect of the current financial year of $760,847 (2009 - $677,977); and • Fees paid in respect of prior financial years of $24,525 (2009 - $9,375). Non-executive directors’ fees, including committee fees, are set by the Board within the maximum aggregate amount of $800,000 approved by securityholders in 2005. Committee fees also include ad hoc committees such as the Due Diligence committee established to oversee the entitlement offer announced in June 2009. The Board elected in April 2003 to phase out the retirement benefit and directors who joined the Board after that date are not entitled to a retirement benefit. The retirement benefit, where applicable, is determined by a consulting actuary. The Chairman of the Board predates the retirement benefit phase out. No other directors are entitled to a retirement benefit. The Chairman of the Board is entitled to a fee of $236,250 per annum (2009 - $236,250). Non-executive directors are entitled to a fee of $94,500 per annum (2009 - $94,500). The Chairman of the Audit Committee is entitled to a fee of $21,000 per annum (2009 - $21,000). The ordinary members of the Audit Committee are entitled to a fee of $10,500 per annum (2009 - $10,500). The Chairman of the Board declined his fee for membership of the Audit Committee. In addition, superannuation contributions are paid on behalf of the non-executive directors in accordance with the Company’s statutory superannuation obligations. The remuneration of directors was last revised on 1 September 2007.



(continued)

49

27 Key management personnel (continued) (b) Compensation policy for key management personnel (continued) (ii) Compensation policy for key management personnel of AIFL (continued) Remuneration paid to other officeholders Steve Boulton, Hastings' Chief Executive Officer and executive director of AIFL, Jeff Pollock, the AIX Chief Executive Officer and the Company Secretaries were not remunerated out of the property of AIFL or AIFT. These individuals were remunerated by Hastings or its related entities out of its management fee. Remuneration paid to non-executive directors Details of non-executive directors’ remuneration for the financial year ended 30 June 2010 are set out in the following table. No bonuses, options or other emoluments are paid to the directors of AIFL.

Board feesCommittee

feesSuper-

annuationRetirement

benefits Total$ $ $ $ $

Key management personnel of AIFL

Paul Espie2010 236,250 0 23,470 0 259,7202009 236,250 0 21,263 0 257,513

Jim Evans2010 31,500 0 2,835 0 34,3352009 0 0 0 0 0

John Harvey2010 94,500 39,750 * 12,083 0 146,3332009 94,500 21,000 10,395 0 125,895

Robert Humphris2010 94,500 0 8,505 0 103,0052009 94,500 0 8,505 0 103,005

Mike Hutchinson2010 94,500 0 8,505 0 103,0052009 94,500 0 8,505 0 103,005

Robert Tsenin2010 94,500 10,500 9,450 0 114,4502009 94,500 10,500 9,450 0 114,450

Total compensation: Key management personnel of AIFL2010 645,750 50,250 64,847 0 760,8472009 614,250 31,500 58,118 0 703,868

Short-term Post employment

* Includes an $18,750 due diligence committee fee.



(continued)

50

27 Key management personnel (continued) (c) Key management personnel interests in financial instruments issued by AIX Interests acquired or disposed of in the financial instruments issued by AIX were within the allowable trading periods determined by the Board of Directors of Hastings and AIFL. No securities were granted to key management personnel during the period as compensation. Interests in the securities issued by AIX held by key management personnel and their related entities at balance date were as follows:

Name Opening Holding Acquisitions DRP

Issue Disposals ClosingHolding

1 July 30 June No. No. No. No. No.

Paul Espie2010 604,445 302,223 0 0 906,6682009 537,317 60,000 7,128 0 604,445

Steve Boulton 2010 175,000 87,500 0 0 262,500 2009 75,000 100,000 0 0 175,000Jim Evans 1

2010 0 0 0 0 02009 n/a n/a n/a n/a n/a

Alan Freer 2

2010 27,275 0 0 0 27,2752009 34,575 0 0 (7,300) 27,275

Stephen Gibbs2010 139 0 0 0 1392009 0 133 6 0 139

John Harvey2010 50,000 25,000 0 0 75,0002009 50,000 0 0 0 50,000

Robert Humphris2010 200,000 100,000 0 0 300,0002009 150,000 50,000 0 0 200,000

Mike Hutchinson2010 81,349 40,675 0 0 122,0242009 56,849 24,500 0 0 81,349

Robert Tsenin2010 84,706 52,354 0 0 137,0602009 70,940 10,000 3,766 0 84,706

(2) Closing holding reflects holding up to the date of resignation being 6 October 2009.(1) Opening holding reflects holding as at the date of appointment to the Hastings Board, being 6 October 2009.



(continued)

51

27 Key management personnel (continued) (d) Distributions declared and payable by AIX to key management personnel and their related entities Distributions declared and payable by AIX to key management personnel and their related entities during the year were as follows:

2010 2009 2010 2009Name $ $ $ $

Paul Espie 93,119 78,008 45,333 30,222Steve Boulton 27,125 22,750 13,125 8,750Jim Evans 1 0 n/a 0 n/aAlan Freer 2 0 3,546 0 1,364Stephen Gibbs 18 18 7 7John Harvey 7,750 6,500 3,750 2,500Robert Humphris 31,000 26,000 15,000 10,000Mike Hutchinson 12,609 10,575 6,101 4,067Robert Tsenin 13,328 10,711 6,853 4,235

Distributions Declared Distributions Payable

(2) Reflects distributions up to the date of resignation being 6 October 2009.

(1) Reflects distributions from the date of appointment to the Hastings Board being being 6 October 2009.

28 Earnings per security

2010 2009 2010 2009 2010 2009 2010 2009

Basic earnings per security (cents) 33.22 26.33 3.06 2.72 30.16 23.61 30.90 22.53

Weighted average number of securities (000's) 575,764 382,057 575,764 382,057 575,764 382,057 575,764 382,057

Net profit after income tax ($000's) 191,253 100,590 17,593 10,377 173,660 90,214 177,934 86,070

AIFT

AIX


Diluted earnings per security are no different from basic earnings per security. 29 Contingent assets and liabilities and commitments Investment commitments Undrawn investment commitments at the end of the reporting period comprise the following:

Unlisted security name At call

Less than

1 year

Between1 to 5 years

More than

5 yearsTotal

$'000 $'000 $'000 $'000 $'000

Airstralia Development Group and PAPT Holdings (Perth Airport) - 13,084 10,705 - 23,789

Total - 13,084 10,705 - 23,789



(continued)

52

29 Contingent assets and liabilities and commitments (continued) Bank guarantees On 27 July 2009 the $388,900 bank guarantee that had been drawn under AIX’s bank guarantee facility and the $388,900 bank guarantee that had been drawn under AIX’s MOF were cancelled. There are no other outstanding contingent assets, contingent liabilities or commitments at 30 June 2010. 30 Events after the end of reporting period No significant events have occurred since the end of the reporting period which would impact on the financial position of AIX disclosed in the Statements of Financial Position as at 30 June 2010 or on the results and cash flows of AIX for the year ended on that date.

Australian Infrastructure Fund Limited Directors Declaration

30 June 2010

53

Directors’ Declaration In the opinion of the directors of Australian Infrastructure Fund Limited (AIFL):

(a) the financial statements and notes set out on pages 13 to 52 are in accordance with the Corporations Act 2001, including:

(i) complying with the Australian Accounting Standards (including Interpretations) and other mandatory professional reporting requirements, the Corporations Regulations 2001 and are in accordance with AIFL’s Constitution; and

(ii) giving a true and fair view of AIFL and Consolidated AIFL’s (AIX’s) financial position as at 30 June 2010 and of their performance for the year ended on that date; and

(b) there are reasonable grounds to believe that AIFL will be able to pay its debts as and when they become due and payable.

Note 1(c) confirms that the financial statements do comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. This declaration is made after receiving the declarations requested to be made to the directors in accordance with section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the directors of AIFL.

Paul Espie Chairman 25 August 2010

Australian Infrastructure Fund Trust Directors’ Declaration

30 June 2010

54

Directors’ Declaration In the opinion of the directors of the Responsible Entity:

(a) the financial statements and notes set out on pages 13 to 52 are in accordance with the Corporations Act 2001, including:

(i) complying with the Australian Accounting Standards (including Interpretations) and other mandatory professional reporting requirements, the Corporations Regulations 2001 and are in accordance with AIFT’s Constitution; and

(ii) giving a true and fair view of AIFT and Consolidated AIFT’s financial position as at 30 June 2010 and of their performance for the year ended on that date; and

(b) there are reasonable grounds to believe that AIFT will be able to pay its debts as and when they become due and payable.

Note 1(c) confirms that the financial statements do comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. This declaration is made after receiving the declarations requested to be made to the directors in accordance with section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the directors of the Responsible Entity.

Alan Cameron Chairman 25 August 2010



ABN 52 780 433 757

Freshwater Place


SOUTHBANK VIC 3006

GPO Box 1331

MELBOURNE VIC 3001

DX 77

Telephone 61 3 8603 1000

Facsimile 61 3 8603 1999

Independent auditor’s report to the stapled security

holders of Australian Infrastructure Fund Limited and

Australian Infrastructure Fund Trust

Report on the financial report

We have audited the accompanying financial statements of Australian Infrastructure Limited and

the controlled entities within its stapled group (AIFL) and Australian Infrastructure Fund Trust and

its controlled entities (AIFT), which comprise the statement of financial position as at 30 June 2010,

the statement of comprehensive income, statements of changes in equity and statement of cash

flows for the year ended on that date, a summary of significant accounting policies, other

explanatory notes and the directors’ declaration for AIFL and Hastings Funds Management Limited

as the Responsible Entity for AIFT.

Directors’ responsibility for the financial report

The directors of AIFL and the directors of Hastings Funds Management Limited as Responsible

Entity for AIFT are responsible for the preparation and fair presentation of the financial report in

accordance with Australian Accounting Standards (including the Australian Accounting

Interpretations) and the Corporations Act 2001. This responsibility includes establishing and

maintaining internal controls relevant to the preparation and fair presentation of the financial report

that is free from material misstatement, whether due to fraud or error; selecting and applying

appropriate accounting policies; and making accounting estimates that are reasonable in the

circumstances. In Note 1, the directors also state, in accordance with Accounting Standard

AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to

International Financial Reporting Standards ensures that the financial report, comprising the

financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted

our audit in accordance with Australian Auditing Standards. These Auditing Standards require that

we comply with relevant ethical requirements relating to audit engagements and plan and perform

the audit to obtain reasonable assurance whether the financial report is free from material

misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial report. The procedures selected depend on the auditor’s judgement,

including the assessment of the risks of material misstatement of the financial report, whether due

to fraud or error. In making those risk assessments, the auditor considers internal control relevant

to the entity’s preparation and fair presentation of the financial report in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of accounting estimates

made by the directors, as well as evaluating the overall presentation of the financial report.

Our procedures include reading the other information in the Annual Report to determine whether it

contains any material inconsistencies with the financial report.

Independent auditor’s report to the stapled security holders of AustralianInfrastructure Fund Limited and Australian Infrastructure Fund Trust(continued)

Our audit did not involve an analysis of the prudence of business decisions made by directors or

management.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinions.

Independence

In conducting our audit, we have complied with the independence requirements of the CorporationsAct 2001.

Auditor’s opinion

In our opinion:

(a) the financial report of Australian Infrastructure Fund Limited and the controlled entities

within its stapled group and Australian Infrastructure Fund Trust and its controlled entities

is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Australian Infrastructure Fund Limited and the

controlled entities within its stapled group and Australian Infrastructure Fund Trust

and its controlled entities financial position as at 30 June 2010 and of their

performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian

Accounting Interpretations) and the Corporations Regulations 2001 and

(b) the financial report also complies with International Financial Reporting Standards as

disclosed in Note 1.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 4 to 7 of the directors’ report for AIFL

for the year ended 30 June 2010. The directors of AIFL are responsible for the preparation and

presentation of the Remuneration Report in accordance with section 300A of the Corporations Act2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit

conducted in accordance with Australian Auditing Standards.

Auditor’s opinion

In our opinion, the Remuneration Report of Australian Infrastructure Fund Limited for the year

ended 30 June 2010, complies with section 300A of the Corporations Act 2001.

Independent auditor’s report to the stapled security holders of AustralianInfrastructure Fund Limited and Australian Infrastructure Fund Trust(continued)

Matters relating to the electronic presentation of the audited financial report

This auditor’s report relates to the financial report and remuneration report of Australian

Infrastructure Fund Limited and the controlled entities within its stapled group (AIFL) and Australian

Infrastructure Fund Trust and its controlled entities (AIFT) for the year ended 30 June 2010

included on Hastings Funds Management Limited’s (the responsible entity of AIFT) web site. The

directors of Hastings Funds Management Limited (HFML) are responsible for the integrity of the

HFML web site. We have not been engaged to report on the integrity of this web site. The auditor’s

report refers only to the financial report and remuneration report named above. It does not provide

an opinion on any other information which may have been hyperlinked to/from these statements or

the remuneration report. If users of this report are concerned with the inherent risks arising from

electronic data communications they are advised to refer to the hard copy of the audited financial

report and remuneration report to confirm the information included in the audited financial report

and remuneration report presented on this web site.


JF Power Melbourne

Partner 25 August 2010


8

D. Independent Auditor’s Report

The financial report has been audited and the report is attached. Refer to Section C.

Documents

Australian Infrastructure Fund (AIX) - hotcopper.com.au