SPARK INFRASTRUCTURE HALF YEAR RESULTS - AUGUST 2009

Transcription

1 SPARK INFRASTRUCTURE HALF YEAR RESULTS - AUGUST 2009

2 PRESENTATION AGENDA HY RESULTS 2009 RESULTS HIGHLIGHTS SPARK INFRASTRUCTURE PERFORMANCE ASSET COMPANY PERFORMACE STRATEGY FOR 2009 CLOSING COMMENTS IMPORTANT: Please read the disclaimer and securities warnings located at the end of this presentation. 2

3 FINANCIAL HIGHLIGHTS SPARK INFRASTRUCTURE $m $137.3 $107.4 $108.9 Underlying income HY 2007 HY 2008 HY 2009 $m $85.5 $ $117.2 Profit before income tax and loan notes interest HY 2007 HY 2008 HY 2009 % % 58.9% 61.3% Net gearing - look through HY 2007 HY 2008 HY 2009 $m $22.1 $ Total expenses $20.2 HY 2007 HY 2008 HY A performance fee of $16.5 million was paid to the Manager of Spark Infrastructure in relation to the HY 2008 period 2 Excluding performance fee of $16.5 million

4 FINANCIAL HIGHLIGHTS AGGREGATED ASSET COMPANIES $m $m $m $880.4 $796.7 $748.2 Total Revenue ($m) HY 2007 HY 2008 HY $616.8 $569.6 $554.6 Regulated revenue ($m) HY 2007 HY 2008 HY $154.9 $106.3 $100.7 Semi-regulated revenue ($m) HY 2007 HY 2008 HY 2009 $m $m $m $120.7 $108.7 $92.9 Unregulated revenue ($m) HY 2007 HY 2008 HY $627.8 $538.1 $529.3 EBITDA ($m) HY 2007 HY 2008 HY $186.2 $181.0 $178.4 Net capital expenditure ($m) HY 2007 HY 2008 HY Note: The 2007 and 2008 comparatives have been adjusted to reflect metering revenue for CHEDHA as Regulated Revenue

5 STRATEGIC HIGHLIGHTS WELL POSITIONED TO FUND ORGANIC GROWTH 1. Further strengthening our strong balance sheet Distribution level will conserve capital to fund organic growth of assets Distributions Reinvestment Plan now operational Sufficient capital to fund organic growth requirements in the asset businesses until late Distributions consistently paid from operating cashflows 2009 distribution guidance of cents per security Distributions are supported by operating cash-flows Spark payout ratio approximately 70% 3. Capital structure conservative and consistent Successful refinancings at asset level: CitiPower $175 million maturing in February mandate agreement signed in August 2009 ETSA Utilities $750 million maturing in April $625 million raised via USPP in July 2009; plans for remainder well underway Strong investment grade credit ratings maintained A- for Asset Companies (Standard & Poor s); Baa1 for Spark Infrastructure (Moody s) Net gearing remains steady at 61.3% on a look through basis 1 - in line with regulatory framework Post current refinancings, no refinancing of existing facilities required until December 2010 at fund level ($225 million), and not until June 2011 at asset level 5 1 Net gearing is adjusted for cash on hand and excludes non cash movements in hedging reserve

6 SPARK INFRASTRUCTURE PERFORMANCE 6

7 FINANCIAL PERFORMANCE STABLE AND PREDICTABLE CASHFLOWS Underlying Results Half Year ended 30 June 2009 HY 2009 ($m) HY 2008 ($m) Variance % Total income Management fee Finance costs - senior debt General and administrative expenses (88.0) Profit before loan notes interest, performance fee and tax Loan note interest (Distributions to Securityholders) (0.8) Performance fee Income tax 4.3 (0.2) - Profit attributable to Stapled Securityholders underlying Profit attributable to Stapled Securityholders reported Operating cashflow including investing activities (4.1) HY 2009 Distribution 6.72 cents per security all interest 7

8 UNDERLYING ADJUSTMENTS NON-CASH RELATED Reconciling Underlying Adjustments Underlying Result $m MTM interest swaps 1 $m Spark tax benefit 2 $m Reported Result $m Total income incl. associates & interest Profit before income tax, loan notes interest & performance fee Profit attributable to Stapled Securityholders Operating cashflow including investing activities (1) Favourable movement in mark-to-market of ineffective interest rate swaps under AASB139 (2) Income tax benefit on items recognised directly in equity (Refer to Spark Infrastructure Holdings No.2 P/L financial statements) Underlying adjustments are non-cash related 8

9 BALANCE SHEET STRONG AND RESILIENT Distributions are fully covered by operating cashflows of the asset companies (Spark Infrastructure pay-out ratio 70.3%) Majority of revenues underpinned through regulatory determinations or long-term contracts Interest cover ratios are strong 7.8x at Spark Infrastructure level (6 months) 2.7x on look through basis (6 months) Gearing consistently conservative 61.3% on net look through basis (62.8% gross) Credit ratings maintained Spark Infrastructure at Baa1 by Moody s Asset Companies at A- by Standard & Poor s Conservative interest rate hedge position 100% hedged at Spark Infrastructure level 92.7% hedged on gross look through basis, with Asset Company hedges matched to regulatory periods 9

10 DEBT POSITION MANAGED CAREFULLY AND CONSERVATIVELY Asset Companies attracting strong support Refinancing activity in 2009 confirms support for regulated asset businesses ETSA Utilities raised A$625 million in US Private Placement market Strong interest from banks to re-finance the remaining amount Three tranches of 5, 7 and 10 year tenors CitiPower has negotiated a mandate for A$175 million in bank debt in August 2009 Existing banks have rolled over $200 million of Powercor debt which falls due in February and March 2010 until September Refinancing of this amount is planned via USPP Spark Infrastructure level well placed Un-drawn facilities at Spark Infrastructure level of $100 million in place Strong relationships with domestic and offshore banks Expect to complete refinancing of $225 million of Spark Infrastructure s fund level debt well ahead of the maturity date 10

11 DEBT POSITION MANAGED CAREFULLY AND CONSERVATIVELY Commentary Expect to complete refinancing of $225 million of Spark Infrastructure s fund level debt well ahead of the maturity date No major asset level refinancing of existing facilities until mid Spark Infrastructure Capital Markets Debt Maturity Profile Spark level debt Asset level capital markets debt 1 Hedging undertaken with counter-parties with credit ratings of A and above CitiPower/Powercor (CHEDHA) $m Net Debt 2,708.0 Spark Share of net debt 1,326.9 Percentage Hedged (gross) 86.5% Feb 10 Apr 10 Dec 10 Jun 11 Jun 11 Feb 13 Jul 15 Nov 15 Spark Infrastructure $m Net debt at Spark Infrastructure level Net debt at asset level (Spark Share) 2,424.3 Total net debt 2,791.9 Oct 16 Jul 17 Apr 18 Oct 19 Aug 21 Jan 22 ETSA Utilities $m Net Debt 2,239.6 Total equity and loan notes (book) 1,716.8 Gearing net 61.3% Gearing gross 62.8% Spark Share of net debt 1,097.4 Percentage Hedged (gross) 97.8% Hedge at Spark level 100% Spark look through proportion of hedge (gross) 92.7% Refer to Appendix 3 for detail on bank debt

12 ECONOMIC CASHFLOW MODEL DISTRIBUTIONS SUPPORTED BY OPERATIONS Spark Infrastructure s 49% share of asset companies total $307.6m $60.1m $123.3m Cash surplus $36.6m $76.1m Senior debt Interest (net) $12.6m Other costs $6.3m $16.1m $32.0m $123.3m Distributions $67.8m EBITDA Customer contributions Senior debt interest paid (net) Net capex funded by cashflow from operations Net working capital Net cashflow Distributions paid from operating cashflow 12

13 ASSET COMPANY PERFORMANCE 13

14 AGGREGATED FINANCIAL PERFORMANCE ETSA, CitiPower and Powercor Half year ended 30 June 2009 $m Regulated Revenue $m Variance % Semi-regulated Revenue customer contributions Semi-regulated Revenue other (4.7) Unregulated revenue (9.3) Total Revenue Total operating costs EBITDA Capital expenditure (net) Regulated revenue (Prescribed) Strong distribution revenue growth due to higher tariffs, in line with the regulatory formula, and higher residential volumes Semi-regulated and unregulated revenue (Non-prescribed) Although the first half of 2009 saw a decline in unregulated revenues for ETSA Utilities due to the completion last year of a major project to provide supply to a mine in the far north of the State, the related costs in ETSA Utilities were also significantly lower than in the previous period. Net Capital Expenditure Net capital expenditure contributing to growth in the Regulated Asset Base and generates a return from day one Operating costs Reduction in costs largely due to a reduction in construction and maintenance costs (off-setting reduction in unregulated revenues) and greater capitalisation of internal costs to capital projects 14 within ETSA Utilities

15 REGULATED REVENUE STRONG AND RELIABLE GROWTH HY 2009 Sales volume growth (HY 2008) Weather¹ Underlying¹ Total HY 2009 Customer growth Customers Percentage increase -0.3% (-0.3%) -0.3% (0.9%) -0.6% (0.6%) 807, % 1.1% (1.5%) 0.5% (0.1%) 1.6% (1.6%) 304, % 1.7% (1.1%) -1.7% (1.9%) 0.0% (3.0%) 689, % Net Capital Expenditure ($m) Increase (%) % (3.7)% Growth Capex ($m) Maintenance Capex Shared/Network Capex 34.8 (51.5%) 32.8 (48.5%) N/A 65.2 (55.0%) 24.2 (20.4%) 29.2 (24.6%) $569.6 $554.6 $616.8 Total regulated revenue ($m) HY 2007 HY 2008 HY $186.2 $ $5.3 $ $147.3 HY HY 2008 HY Total net capital expenditure ($m) 1 Asset company estimates (percentages in brackets represent growth relative to HY 2008 figures) $5.84 Regulated Asset base ($b) FY 2006 FY 2007 FY

16 NON-PRESCRIBED REVENUE STABLE AND DIVERSIFIED Non-prescribed revenue was $263.6m, up 16.2% (HY 2008: $227.0m). Comprises: Semi-regulated revenue was $154.9m, up 44.5% (HY 2008: $107.2m) Activities include metering (ETSA Utilities), public lighting (ETSA Utilities) and revenue from customer contributions (ETSA Utilities and CHEDHA) Unregulated revenue was $108.7m, down 9.3% (HY 2008: $119.8m) Activities include construction and operation and maintenance of infrastructure for external parties Long-term contracts with electricity transmission companies, ElectraNet (SA) & SP AusNet (Vic) Semi-regulated - Customer contributions Semi-regulated - Other Unregulated $32.2m (12.3%) $263.6m $122.7m (46.5%) $108.7m (41.2%) $20.8m (19.1%) $2.9m (2.7%) $12.6m (11.6%) $4.6m (4.2%) $3.1m (2.9%) $108.7m $6.2m (5.7%) Has proven sufficiently diversified to withstand general economic slow down NB. Transmission revenue is pass through and does not contribute to profit. It is therefore excluded from this calculation $58.5m (53.8%) Transmission & distribution Resources Government Telecommunications Material sales Asset rentals Other unregulated 16

17 NON-PRESCRIBED REVENUE STABLE AND DIVERSIFIED Unregulated Revenue Variations from period to period are normal due to timing and delivery of specific contracts Diversified sources of business including electricity transmission, defence, government and resources sectors Long term contracts with transmission companies Highly regarded skills in unregulated business ETSA Utilities CHEDHA CaMS T&D CaMS Government CaMS Resources Telecommunications Asset rentals Material sales Other * Includes SLA revenue, Wellington management fee, property rental, joint use of poles, duct rental and Docklands 19.7 PNS T&D PNS Government PNS Resources Telecommunications Asset rentals Material sales Other * 17

18 ETSA UTILITIES CONSISTENTLY STRONG PERFORMANCE Financial HY 2009 ($m) HY 2008 ($m) Variance Regulated revenue % Customer contributions % Semi-regulated other % Unregulated % Total Revenue % Cash operating costs % EBITDA % Net capital expenditure % Operational HY 2009 HY 2008 Variance Volume sold MWh 5,655,000 5,686, % Customer numbers 807, , % Employee numbers 1,817 1, % Strong distribution revenue growth due to higher tariffs, in line with the regulatory formula, and higher residential volumes Unregulated revenues lower due to completion of large Oxiana project in previous corresponding period. Net capital expenditure of $67.6m contributing to growth in Regulated Asset Base Significant reduction in costs largely due to reduction on construction and maintenance costs and greater capitalisation of internal costs to capital projects Maintained high level of reliability with 99.97% network availability rating 18

19 CITIPOWER AND POWERCOR CONSISTENTLY STRONG PERFORMANCE Financial HY 2009 ($m) HY 2008 ($m) Variance Regulated revenue % Customer contributions % Semi-regulated other % Unregulated % Total Revenue % Cash operating costs % EBITDA % Net capital expenditure % Operational HY 2009 HY 2008 Variance Volume sold MWh 8,315,095 8,266, % Customer numbers 994, , % Employee numbers 1,853 1, % Strong distribution revenue growth due to higher consumption in the domestic and small commercial segments, and favourable tariff mix variance EBITDA increased by 14.3% resulting from increase in distribution revenue, customer contributions and other non-prescribed revenue Non-prescribed revenue (excluding customer contributions) demonstrating growth over previous period Increased costs reflect the growth in unregulated business activity and increase for labour and material cost associated with network operations and maintenance Maintained high levels of reliability with 99.99% (CitiPower) and 99.97% (Powercor) network availability ratings Includes all Advanced Metering Infrastructure (AMI) revenue. Previous corresponding periods adjusted to reflect metering related revenues.

20 STRATEGIC ISSUES 20

21 REGULATORY ENVIRONMENT FRAMEWORK AND TIMELINES The Australian Energy Regulator (AER) will apply the same building block arrangement for revenue allocation and similar service and efficiency incentive mechanisms as in the past. WACC Parameters - AER Final Decision issued 29 May 2009 (Compared to current regulatory period 2005/6 to 2010/11) Equity beta 0.8 (from 1.0) Benchmark credit rating BBB+ (no change) Imputation credits value 0.65 (from 0.5) Risk free rate proxy 10 year Commonwealth bonds (no change) Market Risk Premium 6.5% (from 6.0%) Regulatory Reset Milestones ETSA Utilities CHEDHA Business submits Regulatory Proposal 1 July 2009 (complete) 10 November 2009 Issue of Draft Decision 27 November July 2010 Business submits revised Regulatory Proposal 14 January September 2010 AER issues its Final Decision 30 April October 2010 New distribution prices come into effect 1 July January

22 GROWTH DRIVERS CITIPOWER AND POWERCOR Advanced Metering Infrastructure (AMI) or smart meters Roll-out commences in September 2009 WACC parameters agreed under old rules - Beta 1.0, Gamma 0.5 Project involves capital investment for CitiPower and Powercor of approximately $690m Majority of required funding will be raised at the asset level Partnerships announced in June for advanced, reliable and efficient delivery Landis+Gyr and PRI will provide smart metering units Bilfinger Berger and UXC have been awarded the field installation contracts Silver Springs networks will provide IP based network infrastructure Roll out end date 2013; around half of the capital expenditure required in Accelerated depreciation benefits to revenue provided by 15 year asset life Supply security project for the Melbourne CBD The project will be undertaken in three stages and will run over four years starting from All capital expenditure is added to the Regulated Asset Base and generates a return from day one 22 22

23 GROWTH DRIVERS ETSA UTILITIES Regulatory submission proposes strong growth in RAB ETSA Utilities lodged its submission to the Australian Energy Regulator in July 2009, which proposes that $2.8 billion be spent expanding and improving its network over the next five years with revenues to be set accordingly The proposed expenditure aims to: Support the gradual restructuring of the South Australian economy based on defence, mining and tourism Meet the demands of State programs of infrastructure investment in water and public transport Progressively replace and augment ageing assets Support mandatory changes in the transmission sector Specific projects span the Adelaide CBD and regional areas. Sample projects: City-West connection, new substation and safety upgrades $154m Low voltage line and transformer upgrade $112m Kangaroo Island second undersea cable and new backbone $80m New network control centre $43m Metropolitan line and substation replacement and upgrades $250m Regional line and substation replacement and upgrades $190m All capital expenditure is added to the Regulated Asset Base and generates a return from day one 23 23

24 GROWTH DRIVERS CAPITAL MANAGEMENT Completed initiatives Distribution level reduced to conserve capital to provide funding for capital expenditure within the Asset Companies guidance cents per security for 2009 Distribution Reinvestment Plan activated for September 2009 distribution Important considerations Capital expenditure is likely to double in the next regulatory reset period (including Advanced Metering Infrastructure) Equity will be required to finance a portion of growth capital expenditure Spark Infrastructure will consider further initiatives in late 2010 when the regulatory reset process is complete 24

25 GROWTH DRIVERS ACQUISITION INVESTMENT STRATEGY Disciplined approach to acquisitions will be maintained - no pressure to acquire given the strength of organic growth opportunities Will only invest where it enhances shareholder value Acquisitions in the current market environment remain challenging Focus in 2009 will remain on organic growth opportunities within the current portfolio 25

26 CLOSING COMMENTS 26

27 CLOSING COMMENTS DISCIPLINED GROWTH Robust regulatory framework provides a range of built-in protections. Asset companies are well prepared for upcoming regulatory resets High quality businesses with strong management teams generating stable cashflows Strong balance sheet and conservative capital structure well positioned to fund future organic growth opportunities Capital funding plan in place for 2009 and 2010 Prudent distribution policy Distribution Re-Investment Plan now in operation, excess cash retained to fund growth Distributions underpinned by operating cash flows interim distribution of 6.72 cents per security declared and payable on 15 September maintain total distribution guidance of cps for 2009 Strong support from debt markets evidenced. Asset Companies remain well placed to meet future financing requirements Maintain disciplined approach to acquisitions 27

28 Price Reset Briefing Spark Infrastructure analyst presentation August 2009

29 Determination process Phase I 1 July 2009 Development of Proposal Phase II 27 Nov 2009 Public consultation Consultant and AER review Draft determination Phase III 14 Jan 2010 Revised Proposal Phase IV 30 April 2010 AER final determination 29

30 Outline of Proposal Current classification of services maintained Capex: $2.8 billion total (cf. $1.2 billion) Opex: $226 million/annum (cf. $148 million) Various pass-throughs also proposed Form of control: Weighted Average Price Cap Various incentive schemes: Service Target Performance Incentive Scheme Demand Management Incentive Scheme Efficiency Benefit Sharing Scheme Price: 10% per annum increase real Revenue: $550 million (09/10) $800 million (14/15) - real 30

31 Key cost drivers Peak demand growth Economic growth, development & demographic change Security of Supply CBD/KI Response to extreme weather events Age & condition of network Growth in network, work volume & workforce Input cost escalation wages & services Maintaining risk profile, asset utilisation & reliability 31

32 Key projects CBD Connection City West Substation to CBD and Southern network ($91m) Fifth CBD substation ($20m) CBD safety upgrade ($43m) Metropolitan Upgrade LV residential network ($112m) involving replacement of existing transformers (700 per annum, of approx. 18,000 in total) New sub-transmission lines to reinforce capacity and security of supply (Willunga, Kilburn, Glynde, Seaton, Queenstown) ($39m) Replace 3 obsolete substations - Woodville, Cheltenham, QEH ($12m) Statewide Major upgrade/expansion of 15 regional substations ($113m) Substation security fencing upgrades ($17m) New network operating centre and SCADA system to better manage the network and improve supply restoration ($43m) Kangaroo Island security ($80m) Major customer connections ($112m) 32

33 WACC status Proposal adopted AER s Statement of Regulatory Intent (SoRI) parameters, except: Gamma (from AER 0.65 to ETSA 0.5); and Market Risk Premium (MRP) (from 6.5% to 8.0%) Deviations from SoRI reflect new evidence and/or current circumstances Also, have calculated cost of debt using average of Bloomberg & CBA Spectrum AER prefer Bloomberg only In combination, results in WACC of 9.52% (vs AER s 8.29%) Based on rates for Jan-Mar 09 33

34 Outlook & next steps Too early in review to predict outcome The AER s consultants are undertaking their reviews Next key milestone is draft determination 34

35 FURTHER INFORMATION FOR FURTHER INFORMATION PLEASE CONTACT: Mario Falchoni General Manager, Investor Relations and Corporate Affairs Spark Infrastructure P: F: mario.falchoni@sparkinfrastructure.com 35

36 DISCLAIMER AND SECURITIES WARNING This presentation is not an offer or invitation for subscription or purchase of or a recommendation of securities. It contains general information only and does not take into account the investment objectives, financial situation and particular needs of individual investors. Investors should obtain their own independent advice from a qualified financial advisor having regard to their objectives, financial situation and needs. This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or to any U.S. person. The Stapled Securities have not been registered under the Securities Act or the securities laws of any state of the United States. In addition, none of the Stapled Companies, the Trust or the Responsible Entity have been registered under the Investment Company Act of 1940, as amended ( US Investment Company Act ), in reliance on the exemption provided by Section 3(c)(7) thereof. No representation or warranty, express or implied, is made in relation to the accuracy or completeness of the information and opinions expressed in the course of this presentation. To the maximum extent permitted by law, each of Spark Infrastructure, all of its related bodies corporate and their representatives, officers, employees, agents and advisors do not accept any responsibility or liability for any of the information or for any action taken by you on the basis of the information or opinions expressed in the course of this presentation, including without limitation any liability arising from negligence on the part of any person. No representation or warranty is given as to the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in the information provided in this presentation. Such forecasts, prospects, returns and statements are by their nature subject to significant uncertainties and contingencies many of which are outside the control of Spark Infrastructure. You must make your own independent assessment of the information and in respect of any action taken on the basis of the information. 36

37 KEY METRICS Security metrics Market Price (20 August 2009) $1.095 Market capitalisation $1,104m Distributions HY 2009 cash distribution 6.72 cps Financials Net gearing 3 EV/RAB adjusted (Dec 2008) 4 Asset level credit rating Fund level credit rating 61.3% 0.98 A- (S&P) Baa1 (Moody s) FY 2009 cash yield (forecast) 1 Management fees Base Fees Performance fee % 0.5% of EV < $2.4b 1.0% of EV > $2.4b 20% return > ASX200 Ind.Acc. Index Regulatory revenue base 31 December 2008 ETSA Utilities $2.71 billion CitiPower $1.14 billion Powercor Australia $1.99 billion Regulated revenues Circa 70.0% Regulated asset base total $5.84 billion 1 Calculations based on VWAP of $1.066 for the 20 business days up to and including 20 August Any deficit in performance fee is carried forward and taken into account in determining whether the return exceeds the benchmark return in future periods. 3 Based on Spark Infrastructure s net debt of $367.6 million plus Spark share of asset company net senior debt ($2,424.3m)/debt + equity (adjusted for AIFRS hedge reserves) 4 EV is allocated between regulated and non-prescribed business activities based on revenue. EV/RAB on unadjusted basis is 1.43 Appendix 371

38 REGULATORY CERTAINTY Well established, transparent regulatory process Resets every 5 years Regulated Revenue Regulated Asset Base 1 WACC 2 Depreciation = X + + (Inc. forecast Capex) OPEX Regulated tariff (per unit) = Regulated Revenue target Forecast volume Actual Revenue = Actual Volume x Regulated tariff 3 CPI X price formula Businesses can benefit from efficiency out performance Existing price determinations remain in force until their expiry in June 2010 (ETSA Utilities) and December 2010 (CitiPower and Powercor) 1. Based on 10 yr Treasury Note 2. Depreciation based on regulated economic life of assets 3. X factor is currently +1.1 in Victoria, and -0.8 in South Australia Appendix 382

39 BANK DEBT AND WORKING CAPITAL DEBT MATURITIES 300 Bank Debt and Working Capital Debt Maturities Total undrawn bank Total drawn bank 250 $Am (100% share) Oct 09 Dec 09 Feb-10 Mar-10 Jul-10 Aug-10 Oct-10 Jul-11 Nov-11 Jun-12 Maturity 1. Amount expiring in Oct 09 represents $15m undrawn working capital facility which is rolled over annually 2. Commitments have been received from the existing bankers to refinance all the existing bank facilities in Dec 09, Feb 10 and Mar 10. The Amounts due in February and March 2010 have been rolled over until September 2010 pending refinancing via USPP. Terms and conditions to be agreed. 3. Figures exclude ongoing overdraft facilities of $6m and fleet lease facility. 4. Figures represent Asset Company facilities (100% share) and Spark Infrastructure s undrawn working capital facilities of $50m in Oct 10 and $50m in Nov 11 - Appendix 39 3

40 ECONOMIC CASHFLOW MODEL DISTRIBUTIONS SUPPORTED BY OPERATIONS ETSA Utilities (Spark Infrastructure 49% share) CHEDHA (Spark Infrastructure 49% share) $22.6m $37.5m $159.3m $148.3m $38.1m $38.1m $7.6m $29.8m $8.5m $2.2m $62.0m $61.2m EBITDA Customer contributions Senior debt interest paid (net) Net capex funded by cashflow from operations Net working capital Net cashflow EBITDA Customer contributions Senior debt interest paid (net) Net capex funded by cashflow from operations Net working capital Net cashflow Appendix 40 4

41 STAPLED STRUCTURE The Manager 50% CKI 50% RREEF Securityholders Spark Infrastructure Cheung Kong Infrastructure Hong Kong Electric Cash from operations Spark Infrastructure Trust CitiPower Stapled Spark Infrastructure Holdings 1 49% CHEDHA Powercor Holdings Australia 51% Spark Infrastructure Holdings 2 49% ETSA Utilities 51% Spark Infrastructure International Efficient structure designed to facilitate distributions from operating cash flow, with distributions not limited to accounting profits Flexible structure designed to accommodate future acquisitions Appendix 415

42 INVESTMENT STRUCTURE Securityholders Unitholder funds Senior debt Loan Equity Equity Equity Equity Spark Infrastructure Trust Spark Infrastructure Holdings 1 Spark Infrastructure Holdings 2 Spark Infrastructure International Loan Equity Equity Equity Spark Infrastructure Company (Victoria) CHEDHA Debt and equity Equity CHEDHA subsidiary Loan Spark Infrastructure Company (South Aust.) Ordinary and preference capital ETSA Utilities Offshore investments (Currently nil) CitiPower Powercor Australia Appendix 426

43 FLOW OF DISTRIBUTIONS Worked example with actual cashflows to 30 June 2009 Tax deferred Distributions Nil Spark Infrastructure Trust Interest and principal $64.0m Securityholders Spark Infrastructure Company (Victoria)* CitiPower Interest and principal $67.8m CHEDHA Interest from loan notes $67.8m CHEDHA subsidiary Dividends Spark Infrastructure Holdings 1 Powercor Australia Interest and principal $51.1m Return of capital and dividends Nil Dividends Nil Preferred Partnership Distributions $34.3m Dividends Nil Spark Infrastructure Holdings 2 Dividends Nil Spark Infrastructure Company (South Aust.) ETSA Utilities Dividends $16.8m SA 1 SA 2 SA 3 Distributions to Security Holders A distribution of 6.72 cps has been declared for the HY to 30 June 2009, representing interest on loan notes payable by the Trust Distributions in excess of this level can be tax deferred (currently there are none): - Repayment of loan principal - tax is deferred until investment is sold - Concessional CGT arrangements may apply Surplus operating cash from Asset Companies Residual operating cash after allowance for capex is available for distribution to Spark Cash primarily flows to Spark Infrastructure from: - ETSA through preferred partnership distributions and dividends - CHEDHA through interest on subordinated shareholder loan and loan repayments Appendix 437 * Inflows to Spark Victoria of $115.1m, less net interest of $12.5m and management fees and other fund costs of $6.2m = Spark investing and operating cashflows