Spark Infrastructure’s Shares Arrowed Up On Fiscal 2018 Results

Spark Infrastructure Group (ASX: SKI) achieved solid financial performance during the 12 months ended 31 December 2018, reporting total revenue of $1128.9 million, up 2.5% on the previous corresponding period.

The Group’s adjusted EBITDA increased by 4.8% to $825.4 million in FY18, driven by continued cost efficiencies and productivity gains from its high performing investment portfolio businesses. Spark reported Victoria Power Networks’ EBITDA growth of 6.3% to $829.7 million, SA Power Networks’ EBITDA of $649.9 million up 0.8%, and TransGrid’s EBITDA growth of 12.7% to $668.9 million for the fiscal year ended 31 December 2018.

Managing Director and Chief Executive Officer of Spark Infrastructure, Rick Francis, stated that “This annual result of the Group outlines the strong track record of its businesses in leading their sector in performance which has once again been acknowledged by the AER in their annual productivity report.” 

Spark Infrastructure’s electricity network businesses are consistently ranked among the most efficient of their type by the Australian Energy Regulator (AER). The Group has continued to maintain sector leading efficiency and supporting Australia’s transition to a lower carbon future, reporting 8.5% standalone operating cash flow growth in FY2018. It translates standalone net operating cash flow of $290.2 million as a result of 7.3% higher cash distributions from investment businesses especially driven by TransGrid.

Positioned as largest high-voltage electricity transmission network in the National Electricity Market (NEM) of Australia, TransGrid, has recorded the largest increase in productivity of all transmission network providers with a 12% increase from 2017. It demonstrates the significant improvements being delivered through its transformation post-privatisation.

On the back of solid cash flows, the Group has announced the final distribution of 8 cents per share, taking total FY2018 distribution of 16.0 cents per security, up 4.9% on FY17’s distribution of 15.25 cps. The Final distribution is reportedly payable on 15 March 2019 with the record date of 6 March 2019. The 20180020annual distribution represents a payout ratio of 92% that defines the cumulative payout ratio for 2016-18 to 89%.

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The three pillars of the Group’s strategy includes Value Enhance, Value Acquire and Value Build to become a leader in delivering essential service infrastructure. It aims to deliver long-term value to its through capital growth and distributions to security holders from its portfolio of high-quality, long-life essential service infrastructure businesses.

In the concluding statement, Mr Francis stated that Spark intends to continue paying out a high proportion of standalone operating cash flows, measured over the five-year regulatory periods, and maintaining investment grade credit ratings for the Group’s businesses.

The Group has further confirmed the ‘good’ cashflow visibility until 2020 with its SA Power Networks and Victoria Power Networks’ current regulatory stability. In addition, the Group eyes TransGrid’s revenue determination through to 2023, providing prudent growth and support of the transmission system in response to the significant transition in Australia’s energy market.

In today’s trading session, SKI share price edged up by 0.851% to last trade at $2.370 on 26 February 2019. Over the past 12 months, the stock has fallen by 3.69% including a negative performance change of 0.42% in the past three months.


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