ETSA Utilities Finance Pty Ltd.

Overview Key strengths Key risks Monopoly regulated electricity network business operating under an established and transparent regulatory framework. Ability to outperform regulated operating expenditure allowance so as to maintain metrics. Known regulatory parameters provide cash flow stability and visibility until June 30, 2025. Appetite for growth in the unregulated segment and increasing competition. No exposure to volume risk due to regulatory cap on revenue. Revision in dividend philosophy. From 2022 onwards we anticipate the company's ratio of funds from operations (FFO) to debt will trend at 13%-14% over the next two years. The ratio fell in 2021 to 14.9% compared with 15.6% in 2020. We attribute the step change and stabilization in 2022-2023 to the full year impact of the

...ETSA Utilities Finance Pty Ltd.'s regulatory parameters will support credit metrics consistent with the rating. From 2022 onwards we anticipate the company's ratio of funds from operations (FFO) to debt will trend at 13%-14% over the next two years. The ratio fell in 2021 to 14.9% compared with 15.6% in 2020. We attribute the step change and stabilization in 2022-2023 to the full year impact of the new regulatory reset period, which commenced on July 1, 2020. ETSA was awarded a lower weighted average cost of capital of 4.75% for 2020-2025, compared with 6.17% in the prior five years. This trend line was anticipated due to current lower interest rates....

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