AusNet Services Ltd

       SPN Dividend Details
 
1H16 Result and Distribution growth: AusNet Services Ltd (ASX: SPN), announced its results for the half-year ending 30 September 2015 and reported a 10% increase in revenues to $ 1.068 billion, an increase in EBITDA of 22.9% to $ 650.4 million and a Net Profit after Tax of $ 374.5 million. Adjusted EBITDA increased by 14.7% to $ 650.4 million principally because of higher volumes and tariffs on both electricity and gas distribution networks. Adjusted Net Profit after Tax grew by 31% to $ 214.9 million. The variance from the previous year in Net Profit after Tax is due to several items including tax consolidation outcome from legal entity restructuring of $ 132 million, tax benefit from intellectual property dispute settlement of $ 28 million, prior period impact of ATO audit settlement (intragroup financing audit) of ($ 143 million) and Advanced Metering infrastructure customer rebate provision of ($ 38 million).
 

Performance Overview (Source: Company Reports)
 
Growth of 16.5% in the electricity distribution segment revenue to $ 530.6 million and volume by 5.4% to 4067 GWh was another highlight. This was driven by a combination of regulatory price increases for both electricity distribution and AMI and a cooler six-month period during the half year. Along with an increase in the number of customer connections, this has also driven the volume growth. The electricity distribution business contributed EBITDA of $ 332.6 million which is an increase of $ 118.8 million over the previous period. The increase is due to revenue growth as well as $ 52.5 million in AMI adjustments for customer rebates and impairment recognised in the previous period. The gas distribution revenues also rose by $ 13.4 million at the back of the increase in volumes because of a cold winter compared to a warmer winter in the previous year. The business produced an EBITDA of $ 104.8 million which is an increase of $ 12.8 million over the previous year and this was primarily due to the generation of higher revenues. The electricity transmission business contributed $ 335.1 million in total revenues and electricity transmission revenues are not subject to volume risk. The EBITDA contributed by the business was $ 207.6 million and increase of $ 6.3 million over the previous period though operating expenses increased because of higher easement tax and increased labour costs. For FY 2016, the company expects to raise dividends to 8.53 cents per share and the final dividend is expected to be 100% franked as was the interim dividend. However, we believe that the stock is overvalued at the current prices and, being expensive, would not recommend an investment at this point in time.
 
 
SPN Daily Chart (Source: Thomson Reuters)
 

Spark Infrastructure Group

     SKI Dividend Details
 
Steady growing distributions and returns: Spark Infrastructure Group (ASX: SKI) has received a final regulatory decision with regards to SAPN with the depreciation dispute in favour of SKI. The company also announced a replacement of corporate debt facilities by entering into $ 250 million of new bilateral corporate debt facilities replacing the previous ones. These new three-year and five-year facilities for $ 225 million and $ 25 million respectively have been entered into with CBA, Westpac and Bank of Tokyo Mitsubishi UFJ and, are consistent with the previous arrangements, the facilities will provide flexibility for general corporate funding use. The group currently has no drawn facilities and no maturities will be outstanding under the new facilities until November 2018. At its current Moody’s credit rating of Baa1, the group will pay an average of 112 basis points above the applicable bank bill swap rate.
 
Meanwhile, the core proposition of the group is to deliver steadily growing distributions to investors over time and consistent returns and performance from investments are founded on business plans which are sufficiently robust and flexible to deliver growing cash flows under a variety of different circumstances and regulatory outcomes based on disciplined financial and capital management, scalable operations and cutting-edge efficiency, consistent outperformance of regulatory benchmarks, business innovation and evolution and appropriately incentivised employees. The Board of Directors have provided distribution guidance for FY 2016, which is the first full year under the new regulatory periods, of 12.5 cents per share subject to business conditions.
 

DPS and Net Debt to RAB (Source: Company Reports)
 
The 2015 financial results show dividends per share up 4.3% to 6 cents per share, stand-alone payout ratio of 87% down 10.3%, look through payout ratio net costs down 10.7% to 52.9% underlying net profit after tax up 5% to $ 70.8 million and statutory net profit after tax down 56% to $ 39.2 million. We believe that the group has potential for growth and upside in share prices. I the last three months, SKI has rallied about 11.29% (as at November 20, 2015). We would rate the stock as a Buy at the current price of  $2.07
 
 
SKI Daily Chart (Source: Thomson Reuters)

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