Business Description:
Spark Infrastructure (SKI) is an infrastructure fund with an objective to invest in regulated utility infrastructure, both within Australia and overseas. This includes electricity and gas distribution and transmission, regulated water and sewerage assets. Spark Infrastructure's current portfolio comprises a 49% interest in three regulated electricity distribution companies, ETSA Utilities in South Australia, CitiPower and Powercor in Victoria.

Strategy Analysis:
SKI holds high quality monopoly assets with stable and predictable revenue. CitiPower and Powercor are two of five electricity distributors in Victoria while ETSA is the sole distributor in South Australia. Management holds a disciplined approach to acquisition and is focused on organic growth strategies. Organic growth opportunities in Victoria include the installation of 'smart meters´. Unregulated business includes external projects and maintenance for electricity transmissions and public lighting. Over time, SKI will seek to develop a diversified portfolio which includes Australian as well as international regulated infrastructure assets. The company intends to target assets that provide diversification by asset class, geography and regulatory regime. Spark Infrastructure Group reported NPAT down 84% to $8.93m for the half-year ended 30 June 2011. Revenues from ordinary activities were $131.09m, down 11.6% from the same period last year. Basic and Diluted EPS was 0.67 cents compared to 5.2 cents last year. Net operating cash flow was $92.89m compared to $43.64m last year. The interim dividend declared was 4.75 cents compared with 6.72 cents last year. Given the recent commencement of the new regulatory period for ETSA, CitiPower and Powercorp, the Asset Companies are at a point in the regulatory cycle which offers a high degree of certainty. The group believes that it will have the ability to grow distributions over the course of the current five-year regulatory period.