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DIRECTORS’ REPORT CONTINUED
Outlook
The asset companies in our portfolio have performed strongly.
They continue to experience steady growth in regulated electricity
distribution sales volumes and in the flow of semi-regulated and
unregulated business revenues. While the asset companies are not
immune to conditions in the broader economy, their current level of
operational performance is expected to continue in 2009 despite the
domestic and global economic slowdown. However, the Directors
note that operating returns of the asset companies in 2010 and
beyond will be impacted by the next regulatory resets, incorporating
the final determination of the WACC parameters by the AER.
In providing for future distributions to Securityholders, Spark
Infrastructure will continue with its policy that distributions be
supported by the operating cash flows of the underlying businesses.
In formulating a sustainable distribution policy Spark Infrastructure
also has regard to prudent cash management in light of prevailing
market conditions, future funding needs and the anticipated impact
of future regulatory decisions. Accordingly, your Directors are not in
a position to provide distribution guidance for 2009 at this time and
will review this situation following the release of the AER’s final
decision on WACC parameters.
Information Applicable to Registered Schemes
The fees paid to Spark RE and its associates (including Directors)
are disclosed in Note 24 to the Financial Statements.
Spark RE does not hold any Stapled Securities. The number of
Stapled Securities at the beginning and end of the Financial Year
are disclosed in Note 15 to the Financial Statements.
Changes in State of Affairs
There has been no change in the activities of Spark Infrastructure
during the Financial Year.
Future Developments
Disclosure of information regarding likely developments in the
operations of the Company not otherwise disclosed elsewhere in
this report is likely to result in unreasonable prejudice. Accordingly,
such information has not been disclosed in this report.
Events Occurring after Reporting Date
The Directors are not aware of any other matter or circumstance
not otherwise dealt with in this report that has significantly affected
or may significantly affect the operations or the state of affairs in the
period since 31 December 2008.
Non-Audit Services
Details of amounts paid or payable to the external auditor for
non-audit services provided during the Financial Year are outlined
in Note 18 to the Financial Statements.
The Directors are satisfied that the non-audit services provided by the
auditor are compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The Directors are of
the opinion that the services as disclosed in Note 18 to the Financial
Statements do not compromise the external auditor’s independence,
based on advice received from the ARMC, for the following reasons:
• non-audit services have been reviewed and approved to
ensure that they do not impact the integrity and objectivity of
the auditor and comply with Spark Infrastructure’s policy on
auditor independence; and
• none of the services undermine the general principles
relating to auditor independence as set out in Code of Conduct
APES 110, “Code of Ethics for Professional Accountants”
issued by the Accounting Professional and Ethical Standards
Board, which includes reviewing or auditing the auditor’s own
work, acting in a management or decision-making capacity,
acting as an advocate or jointly sharing economic risks and
rewards of Spark Infrastructure.
Indemnification of Officers and Auditors
The Company’s Constitution permits the Company, to the extent
permitted by law, to indemnify any current or former Directors or
officers against liability incurred by them in that capacity and
indemnify them for all legal costs incurred in defending or resisting
proceedings, whether civil or criminal or of an administrative or
investigatory nature, in which they become involved because of
that capacity. The Company may pay a premium for a contract
insuring a Director or officer against such liability, unless prohibited
by law. The Company may enter into an agreement with a Director
or officer in respect of such matters and including provisions relating
to rights of access to books of the Company.
During the Financial Year, the Company paid a premium in respect
of a contract of insurance indemnifying the Directors against a
liability incurred as such a Director to the extent permitted by the
Corporations Act 2001. The contract of insurance prohibits disclosure
of the nature of the liability and the amount of the premium.
Spark Infrastructure has not otherwise, during or since the
Financial Year, indemnified or agreed to indemnify an officer or
auditor or of any related body corporate against a liability incurred
as such an officer or auditor, except to the extent permitted by law.
The Company has entered into Deeds of Access, Indemnity and
Insurance with Directors.
Options over Securities
No options have been granted over the unissued Stapled Securities
of Spark Infrastructure.
Environmental Regulations
Spark Infrastructure is not subject to any environmental regulations.
However, the Asset Companies are subject to various environmental
regulations. The Directors are not aware of any material breaches of
those regulations by the Asset Companies.
Directors’ Meetings
The following table sets out the number of Directors’ meetings held
during the Financial Year and the number of meetings attended by
each Director for which they were eligible to attend (ie in the case
of Directors, while they were appointed and where they were not
disqualified from attending due to observation of processes to
guard against any perceived conflict of interests, and in the case
of Alternate Directors (if any), while they were appointed and
meetings for which they were nominated to attend as alternate).
During the Financial Year, 7 Board meetings, 5 ARMC meetings and
4 Compliance Committee meetings of the Company were held:
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