Business SummarySpark Infrastructure (SKI) is an infrastructure fund with an objective to investin regulated electricity distribution businesses in Victoria and South Australia.Spark Infrastructure RE Limited is the Responsible Entity. SKI has twosegments namely Victoria Power Networks and SA Power Networks.

Victoria Power Networks: SKI has the 49% interest in two electricitydistribution businesses in Victoria (i.e. CitiPower and Powercor). (i) CitiPowerowns and operates the distribution network that supplies electricity tocustomers in Melbourne's CBD and inner suburbs. In addition to providingelectricity to many of the government and private sector offices, CitiPoweralso supplies energy to many of the state's landmarks including FederationSquare, the Melbourne Cricket Ground, The Victorian Arts Centre, Victoriaand Rod Laver Arena. (ii) Powercor Australia (Powercor) is the distributor ofelectricity in Victoria, owning and operating a network that serves customersin central and western Victoria and the Western suburbs of Melbourne. Thiscomprises 27 per cent of Victoria's electricity users.

SA Power Networks: SKI has 49% interest in the electricity distributionbusiness in South Australia. SA Power Networks operates and maintains theelectricity distribution network in South Australia. Services are providedthroughout metropolitan areas, including the capital city of Adelaide. ETSAoperates its distribution network under a 200 year lease from the SouthAustralian Government, which commenced in January 2000

TransGrid: TransGrid is the largest high-voltage electricity transmissionnetwork in the National Electricity Market (NEM) by electricity transmitted. Itconnects generators, distributors and major end users in NSW and the ACTand forms the backbone of the NEM connecting Qld, NSW, VIC and the ACT.

Latest ResearchModel Update

We have incorporated CY19 results into our model and made minorchanges to

forecasts. The successful completion of Bomen solar farm within itsschedule sees us marginally upgrade our NPAT forecast for CY20.

For more information see research 2 Apr 2020.

GICS - Utilities

Spark Infrastructure Group

ASX Code: SKI Price: $2.11 12 Mth Target Price: $2.28 Rating: Neutral

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Snapshot

DateMarket Cap.Shares on issue12 Month High12 Month Low

1 June 2020$3,633m1,721.7m$2.56$1.69

RatingRating12 Mth Target Price

Capital GainGross Yield

Implied Total Return

Neutral$2.288.1%7.1%15.2%

Investment FundamentalsFYE 31 Dec 2019A 2020F 2021F 2022F

Profit $m 90.0 97.0 103.0 112.0Profit (norm)* $m 90.0 97.0 103.0 112.0

EPS* ¢ 5.0 6.0 6.0 7.0EPS Growth % 0.0 20.0 0.0 16.7P/E* x 42.2 35.2 35.2 30.1P/E Relative % 0.0 0.0 0.0 0.0

DPS ¢ 16.0 13.0 14.0 14.0Yield % 7.6 6.2 6.6 6.6Franking % 0.0 13.0 23.0 33.0* Adjusted for goodwill and unusual itemsSource: Based on Citi estimates

Share Price Chart

Total Return on $10,000 Investment

Profit & Loss ($M)2015A 2016A 2017A 2018A 2019A

Sales Revenue -- -- -- -- --Total Revenue ex. Int. 24 6 -- -- 7EBITDA 253 229 266 270 259Depreciation & Amort. -0 -0 -0 -0 -1Goodwill Amortisation -- -- -- -- --EBIT 253 229 266 270 258Net Interest -111 -122 -119 -118 -118Profit Before Tax 142 107 147 152 139Income Tax -54 -26 -59 21 -60Outside Equity Int. -- -- -- -- --Profit after Tax 88 81 89 173 79Significant Items after Tax -- -- -- -270 --Reported Profit after Tax 88 81 89 -97 79Preferred Dividends -- -- -- -- --

Cash Flow ($M)2015A 2016A 2017A 2018A 2019A

Receipts from Customers -- -- -- -- --Funds from Operations -- -- -- -- --Net Operating Cashflow 207 241 186 195 214Capex -0 -- -1 -0 -163Acquisitions & Investments -- -- -- -10 -11Sale of Invest. & Subsid. -- 211 -- -- --Net Investing Cashflow -739 272 81 86 -131Proceeds from Issues 405 -- -- -- 36Dividends Paid -172 -223 -250 -263 -261Net Financing Cashflow 426 -430 -251 -263 -186Net Increase Cash -106 83 16 17 -103Cash at Beginning 124 18 101 117 134Exchange Rate Adjust. -- -- -- -- --Cash at End 18 101 117 134 31

Ratios and Substantial Shareholders2015A 2016A 2017A 2018A 2019A

Profitability RatiosEBITDA Margin % -- -- -- -- --EBIT Margin % -- -- -- -- --Net Profit Margin % -- -- -- -- --Return on Equity % 4.08 3.79 4.27 9.60 4.83Return on Assets % 4.52 4.75 4.93 8.01 5.29

Debt/Safety RatiosNet Debt/Equity % 60.59 47.75 48.35 54.66 69.65Interest Cover x 2.27 1.88 2.24 2.29 2.18

Top 5 Substantial ShareholdersMagellan Financial Group Limited 5.0%

Balance Sheet ($M)2015A 2016A 2017A 2018A 2019A

Cash & Equivalent 18 101 117 134 31Receivables 11 9 9 8 7Inventories -- -- -- -- --Other Current Assets 3 2 2 2 11Current Assets 31 112 128 145 49Prop. Plant & Equipment 0 0 1 1 160Intangibles -- -- -- -- --Other Non-Current Assets 3 920 838 743 709Non-Current Assets 3,693 3,413 3,387 3,068 3,034Total Assets 3,724 3,525 3,516 3,212 3,083Interest Bearing Debt 1,325 1,121 1,121 1,121 1,173Other Liabilities 243 266 317 285 272Total Liabilities 1,568 1,387 1,439 1,406 1,445Net Assets 2,156 2,137 2,077 1,806 1,638Share Capital 1,303 1,199 1,068 923 806Reserves -17 -18 -41 -70 -179Retained Earnings 870 956 1,050 952 1,012Outside Equity Int. -- -- -- -- --Total Shareholders Equity 2,156 2,137 2,077 1,806 1,638

Current Analyst Recommendations *

* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.

Principals & DirectorsPrincipals

Company Secretary Ms Alexandra Finley

Directors

Mr Gregory John Walton Martin(Non-Executive Director)Mr Andrew James Fay(Non-Executive Director)Mr Miles John George(Non-Executive Director)Dr Douglas Francis McTaggart(Non-ExecutiveDirector,Non-Executive Chairman)Mr Richard (Rick) Francis(Chief Executive Officer,Managing Director)

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