SPAusNet – BT

SP AusNet profit slides 11.7% to A$157.5m

Drop is due largely to A$24.6m of costs related to scrapped Alinta deal

SP AUSNET has posted full-year net profits for the period ended March 31 of A$157.5 million (S$205.3 million), down 11.7 per cent because of costs related to the scrapped Alinta deal from its parent Singapore Power.

Earnings per share fell to 2.54 Australian cents from 3.38 cents a year ago.

SP AusNet – 51 per cent owned by Singapore Power – declared a final dividend of 5.788 cents, taking the full year distribution to 11.564 Australian cents. This gives an annualised yield of 9.3 per cent, based on the A$1.25 price on May 19, 2008.

SP AusNet went public in December 2005 with an initial public offering price of $1.75 a share in Singapore and A$1.38 in Australia. It closed here yesterday down 1 cent to $1.64.

SP AusNet which owns and operates power transmission networks in Victoria state, said net profit from continuing operations was A$151 million, down 6.3 per cent. This included A$24.6 million (A$17.2 million after tax) of one-off transaction costs of the proposed acquisition of Alinta from Singapore Power which did not go through. Excluding these costs, profit after tax from continuing operations would be A$168.3 million.

On Dec 10, 2007, after protests from some shareholders, SP AusNet decided not to proceed with the proposed acquisition due to the ongoing deterioration in capital markets, as it had raised financing costs.

For the year under review, SP AusNet said revenues grew 3.5 per cent to A$1.1 billion due to price, volume and customer growth.

During the year, the operator added 23,500 new customers to its networks and finalised transmission and gas regulatory resets, locking in almost 100 per cent of regulated revenues until 2011.

Net operating cash inflows for the year were A$373.4 million, a decrease of $19.8 million predominantly due to the increase in income tax paid.

It also refinanced A$1.55 billion debt at margins of between 40 and 50 basis points, representing favourable terms in the current market, the company said.

SP AusNet managing director Nino Ficca said: ‘The operational and financial stability of SP AusNet has been reinforced this year, enabling us to further enhance our platform for future growth.’

On this year’s prospects, the firm reaffirmed the guidance given earlier this year and expects revenue and earnings before interest tax, depreciation and amortisation growth of around 8 per cent. Net profit after tax is expected to be in line with the current year, due to increased interest charges and distribution growth of around 2.5 per cent.

The company expects to invest an estimated A$2.7 billion in its networks over the next five years.

Any acquisitions would be ‘relatively small’, general manager Adrian Hill, corporate development and investor relations, said. The company has no intention ‘at this stage’ of reviving plans to buy the Alinta assets from Singapore Power, he said.

While SP AusNet continues to assess possible synergies from Alinta with its parent, any potential initiatives will be ‘subject to rigorous governance oversight with review and approval’ by its audit and risk management committee, including its three independent directors, it said.

SP AusNet does not expect these potential synergy opportunities to have a material impact on current year guidance.

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