Information and values used for notional calculation are different from the actual calculation

Transcription

1 EXPLANATORY NOTE - NOTIONAL PERFORMANCE FEE Purpose and limitation of notional performance fee calculation The information provided on this webpage illustrates how any performance fee payable to the Manager of Spark Infrastructure Group (Spark Infrastructure Management Limited) is calculated. The information represents a notional calculation of the performance fee that would be payable to the Manager had the performance fee calculation period ended on the immediately preceding trading day before the date of calculation and publication of this information. The actual performance fee is calculated in respect of each half financial year ending on 30 June and 31 December. The information necessary for that actual calculation will not be available until after close of trading on the last trading day in each period. Information and values used for notional calculation are different from the actual calculation The actual performance fee is calculated in accordance with the terms of a management agreement between Spark Infrastructure Group and the Manager (see section 10 of the replacement prospectus and product disclosure statement dated 18 November 2005 for details). The actual performance fee is equal to 20% of the amount (if any) by which the return of Spark stapled securities (based on the change in the arithmetic average of the daily closing accumulation indices for the Spark stapled securities) exceeds the benchmark return (based on change in the arithmetic average of the daily closing S&P/ASX 200 Industrials Accumulation Index), over the relevant half financial year. If there is a shortfall (deficit) in the return of the Spark stapled securities compared to the benchmark return for the half financial year, the shortfall (deficit) is carried forward and deducted from the return of the Spark stapled securities for the next half financial year(s) until the shortfall is fully deducted. Because information to be used for the current half financial year is not yet available, the notional performance fee published on any day on this website is instead calculated based on the most recently available 15 trading day period information, i.e. up to the close of trading on the trading day prior to the publication of that daily calculation. This means that the information used to calculate the notional performance fee is illustrative only. This calculation takes into account any actual shortfall (deficit) in respect of the last half financial year, which has been carried forward and deducted from the return of the Spark stapled securities for the notional performance fee calculation period. Impact of limitations on the notional calculations The notional performance fee illustrated on this website are not a reliable indicator of the actual performance fee payable in respect of any half financial year. It is not a forecast or projection of the actual performance fee which may be payable. The actual performance fee may be materially less than or more than any notional performance fee. This is because the values of the variables applied in calculating the actual performance fee in respect of the current half financial year may be materially different to the values used in calculating the notional performance fee. For more information For a more detailed description and method of calculation of the Performance Fee together with worked examples, please refer to the attached extracted pages from the replacement prospectus and product disclosure statement dated 18 November 2005 ( Offer Document ). DISCLAIMER No representation or warranty These calculations are based on information available to Spark Infrastructure Group at the time of preparation. Spark Infrastructure Group has not independently verified all the information. No representation or warranty is made as to the reliability, fairness, accuracy or completeness of the information or the calculations. Do not rely on information provided on this webpage to make an investment decision or for any other purpose.

2 General information only and no financial product advice The information on this webpage is factual information and is prepared for your general information only. It is not a statement of opinion or a recommendation, and does not otherwise constitute financial product advice. Accordingly, the provision of information on this webpage is not, and should not be considered as, the provision of financial product advice. It does not take into account your individual objectives, investment objectives, taxation position, financial situation or needs. Nothing on this webpage constitutes investment, legal, business, tax or other advice. Before acting on any advice, you should consider the appropriateness of the advice, having regard to your individual objectives, investment objectives, taxation position, financial situation or needs. In making an investment decision, you must rely on your own examination of Spark Infrastructure Group and the Spark stapled securities, including the merits and risks involved. You should consult your professional adviser for financial, legal, business or tax advice which takes into account your circumstances before making an investment decision. No liability To the maximum extent permitted by law, Spark Infrastructure Group, their related bodies corporate and controlled entities, and their officers, employees and advisers are not liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on the information on this webpage or otherwise in connection with it. No forecasts This information and these calculations consist of historical data only and does not constitute any statement, representation or warranty regarding future matters, any forecasts, projections or forward-looking statements. Disclosure of conflicts of interest The Manager and its associates have the following material interests in the subject of this information and these calculations: the Manager and its associates perform or may perform management services for Spark Infrastructure Group and its associates, including preparing and maintaining the information on this website; and the Manager is a related body corporate of the responsible entity of the Spark Infrastructure Trust.

3 Extract - page 108 of Offer Document

4 ten fees and expenses Fee Performance Fee Amount Management Fees payable to the Manager continued The Performance Fee is an incentive fee which may be payable under the Management Agreement depending on the performance of returns on the Stapled Securities in each half year period. The Performance Fee is calculated half yearly as follows: Performance Fee = 20% x (Return minus Benchmark Return): where: B C R = A x C and D E BR = A x E R = Return for the Half Financial Year BR = Benchmark Return of the Half Financial Year A = N HY * VWP HY where N HY = the average number of Stapled Securities on issue during the last 15 Trading Days in the previous Half Financial Year VWPHY = the volume weighted average trading price of all Stapled Securities traded on ASX during that 15 Trading Days period or for the first Half Financial Year, the number of Stapled Securities on issue on listing multiplied by the issue price of the Stapled Securities. B = the arithmetic average of the Daily Closing Accumulation Indices for the Stapled Securities over the last 15 Trading Days of the Half Financial Year. C = the arithmetic average of the Daily Closing Accumulation Indices for the Stapled Securities over the last 15 Trading Days of the previous Half Financial Year; or for the first Half Financial Year, the initial accumulation index figure ascribed to the Stapled Securities by an independent party before the first trade on the date of listing. where: Daily Closing Accumulation Indices for the Stapled Securities = indices calculated for the Stapled Securities using the same methodology used to calculate the Accumulation Index Accumulation Index = S&P/ASX 200 Industrials Accumulation Index D = the arithmetic average of the Accumulation Index over the last 15 Trading Days of the Half Financial Year. E = the arithmetic average of the Accumulation Index over the last 15 Trading Days of the previous Half Financial Year or for the first Half Financial Year, immediately prior to listing. How and when The first Performance Fee will be calculated from the date of listing on ASX to 30 June The Performance Fee in subsequent periods will be calculated half yearly and payable within 14 days of the Manager notifying the Stapled Entities of the amount due. The Stapled Entities and the Manager must consult on each occasion a Performance Fee becomes payable with a view to determining whether some or all of the amount to be paid should be satisfied by the issue of Stapled Securities. To the extent not satisfied by the issue of Stapled Securities the Performance Fee is payable in cash. Any agreement to issue Stapled Securities to satisfy the Performance Fee must be consistent with the Corporations Act and ASX Listing Rules. A Performance Fee will only be payable in respect of a particular period if the Return exceeds the Benchmark Return for that Period. The Performance Fee is to be not less than zero. If the Return is less than the Benchmark Return in any Period, the amount of the deficit is carried forward and taken into account in calculating whether the Return of the Stapled Securities exceeds the Benchmark Return for subsequent Periods. The Stapled Entities are jointly and severally liable for the Performance Fee due to the Manager. However the Stapled Entities may from time to time agree with the Manager the basis on which such fees are to be borne between the Stapled Entities. Hypothetical examples of the calculation of the Performance Fee are set out at the end of Section See Section 10.4 for an explanation of the calculation of the Performance Fee while Instalment Receipts are quoted on ASX.

5 Extract from page 110 of Offer Document The tables below detail hypothetical examples of the manner in which the Base Fee, Performance Fee and Note Trustee fee will be calculated. For the purpose of each example, it is assumed that the Stapled Securities are quoted for the whole of the relevant Period. These examples are for illustrative purposes only and are not intended to represent any actual Base Fee, Performance Fee or Note Trustee fee payable by Spark Infrastructure or relevant indices. In preparing the Financial Information in Section 11, it is assumed that no Performance Fee will be payable.

6 Extract - pages 112 to 114 of Offer Document

7 ten fees and expenses Example 3: Performance Fee calculation Key assumptions: No deficit carried forward from previous Periods No deficit carried forward for next Period (A) Average market capitalisation of the Stapled Securities over the last $2,017.3 million 15 Trading Days of the previous Period (B) Average Closing Accumulation Indices for the Stapled Securities over the last 15 Trading days of the current Period (C) Average Closing Accumulation Indices for the Stapled Securities over the last 15 Trading Days of the previous Period (D) Movement in the Average Closing Accumulation Indices for the ((B) (C))/(C) Stapled Securities over the relevant Period (E) Average closing value of the Benchmark Index over the last 15 trading 49,219 days of the current Period (F) Average closing value of the Benchmark Index over the last 15 Trading 47,100 Days of the previous Period (G) Movement in the Benchmark Index over the relevant Period ((E) (F))/(F) (H) Deficit carried forward from previous Periods $0 Return for the Period: = (A) x (D) = $131.1 million Benchmark Return for the Period: = (A) x (G) = $90.8 million Deficit carried forward for next Period = $0 Performance Fee for the Period: = 20% x (Return minus Benchmark Return) = 20% x ($131.1 $90.8 million) = $8.1 million 1 This equates to $0.008 per Stapled Security. 1 These amounts are exclusive of GST.

8 Example 4: Performance Fee calculation Key assumptions: No deficit carried forward from previous Periods Deficit carried forward for next Period (A) Average market capitalisation of Spark Infrastructure over the last $2,047.4 million 15 Trading Days of the previous Period (B) Average Closing Accumulation Indices for the Stapled Securities over the last 15 Trading Days of the current Period (C) Average Closing Accumulation Indices for the Stapled Securities over the last 15 Trading Days of the previous Period (D) Movement in the Closing Accumulation Indices for the Stapled Securities ((B) (C))/(C) over the relevant Period (E) Average closing value of the Benchmark Index over the last 15 Trading 51,434 Days of the current Period (F) Average closing value of the Benchmark Index over the last 15 Trading 49,219 Days of the previous Period (G) Movement in the Benchmark Index over the relevant Period ((E) (F))/(F) (H) Deficit carried forward from previous Periods 0 Return for the Period: = (A) x (D) = $71.7 million Benchmark Return for the Period: = (A) x (G) = $92.1 million Deficit carried forward for next Period = $(20.5) million Performance Fee for the Period: = 20% x (Return minus Benchmark Return) = 20% x ( million) = $0 million (because performance fee cannot be less than zero) As there is no performance fee paid, there is no impact on distributions to Stapled Security holders. 113

9 ten fees and expenses Example 5: Performance Fee calculation Key assumptions: Deficit carried forward from previous Period No deficit carried forward to next Period (A) Average market capitalisation of Spark Infrastructure over the last $2,077.8 million 15 Trading Days of the previous Period (B) Average Closing Accumulation Indices for the Stapled Securities over the last 15 Trading Days of the current Period (C) Average Closing Accumulation Indices for the Stapled Securities over the last 15 Trading Days of the previous Period (D) Movement in the Closing Accumulation Indices for the Stapled Securities ((B) (C))/(C) over the relevant Period (E) Average closing value of the Benchmark Index over the last 15 Trading 53,749 Days of the current Period (F) Average closing value of the Benchmark Index over the last 15 Trading 51,434 Days of the previous Period (G) Movement in the Benchmark Index over the relevant Period ((E) (F))/(F) (H) Deficit carried forward from previous Periods $(20.5) million Return for the Period: = (A) x (D) = $155.8 million Benchmark Return for the Period: = (A) x (G) = $93.5 million Deficit carried forward for next Period = 0 Performance Fee for the Period: = 20% x (Return minus Benchmark Return minus deficit carried forward) = 20% x ( million) This equates to $0.008 per Stapled Security. = $8.4 million 1 1 These amounts are exclusive of GST.