Slide 1: Financial & Operational Results
FINANCIAL & OPERATIONAL RESULTS FULL YEAR ENDED 30 JUNE 2017 Insert new artwork 24 August 2017
Slide 2: Disclaimer
DISCLAIMER This presentation contains forward-looking statements. Forward-looking statements often include words such as "anticipates", "estimates", "expects", "intends", "plans", "believes“ and similar words in connection with discussions of future operating or financial performance. The forward-lo
Slide 3: Michael Stiassny, Chairman
MICHAEL STIASSNY CHAIRMAN 3
Slide 4: Agenda
AGENDA • Dividend • FY17 Highlights • Financial Performance • Segment Performance • Outlook • Q&A • Appendices 4
Slide 5: 11 Consecutive Years of Dividend Growth
11 CONSECUTIVE YEARS OF DIVIDEND GROWTH Dividend growth (cents per share) • Vector Adjusted EBITDA of $474.4m at the top end of market guidance • Full year dividend 16.00 cents 8.00 8.00 7.75 8.00 7.75 − Up 0.25 cents per share on prior year 7.25 7.50 7.50 7.50 6.50 6.75 6.00 − Final dividend flat a
Slide 6: Simon Mackenzie, Group Chief Executive
SIMON MACKENZIE GROUP CHIEF EXECUTIVE 6
Slide 7: Delivering Customers Real Choices…
DELIVERING CUSTOMERS REAL CHOICES… • Next generation solutions redefining how customers access energy – Glen Innes, Ngāti Whātua Ōrākei, Territory Generation • Putting greater levels of control in the hands of customers by leveraging digital engagement channels • Investing in assets that can be move
Slide 8: …Technologically
…TECHNOLOGICALLY • Partnering with world class tech companies both in NZ and abroad to introduce new energy choices to NZ - Elemental Excelerator, Tesla, LG Chem & mPrest • mPrest combines system integration and artificial Insert image intelligence to provide unprecedented network visibility and con
Slide 9: …Connectively
…CONNECTIVELY • Vector has a legitimate position as a customer-facing business • We will continue to capitalise on consumer trends and build our connection with customers • Visited 36 schools during the year, and talked to 7,619 students about the importance of sustainability and staying safe around
Slide 10: …Sustainably
…SUSTAINABLY • Sustainability is at the heart of the new energy future • We will pursue the United Nations Sustainable Development Goals, starting with 7 priority goals: − Good Health & Wellbeing; − Affordable & Clean Energy; − Industry, Innovation & Infrastructure; − Reduced Inequalities; − Sustain
Slide 11: …And Safely
…AND SAFELY Total Lost Time Injury Frequency Rate (LTIFR) Number of lost time injuries per million hours worked, including contractors • Decision to turn off power, wherever possible, when working on the electricity network puts 2.90 2.96 2.80 safety first 2.76 2.52 • TRIFR result for FY17 slightly
Slide 12: Dan Molloy, Chief Financial Officer
DAN MOLLOY CHIEF FINANCIAL OFFICER ‹#›
Slide 13: Overview of Financial Performance
OVERVIEW OF FINANCIAL PERFORMANCE 1226.7 1144.6 FY16 FY17 473.0 474.4 367.4 352.1 322.6 335.7 274.4 168.9 168.9 156.9 159.4 58.9 Revenue Adjusted EBITDA Capital Expenditure Net Profit from Net Profit Operating Cash Flow* Full Year Dividend 3, 4 Continuing Operations +7.2% +0.3% +13.9% +186.8% -38.4%
Slide 14: Earnings Growth in Technology Offset by Networks & Gas Trading
EARNINGS GROWTH IN TECHNOLOGY OFFSET BY NETWORKS & GAS TRADING 2017 ADJUSTED EBITDA MOVEMENT ($M) Continuing Operations only (excludes Vector Gas) +3.4 +9.0 474.4 473.0 -7.3 -3.7 FY2016 Regulated Networks Gas Trading Technology Corporate FY2017 As a result of the sale of Vector Gas, we are no longer
Slide 15: Underlying Net Profit Up on Back of Capital Contributions, Lower Interest & Tunnel Tax Gain
UNDERLYING NET PROFIT UP ON BACK OF CAPITAL CONTRIBUTIONS, LOWER INTEREST & TUNNEL TAX GAIN MOVEMENT IN NET PROFIT AFTER TAX ($M) Last year’s result included a 274.4 10 month contribution from Vector Gas -51.4 +0.8 +9.0 +22.7 168.9 +15.0 +61.4 +1.1 -164.1 FY2016 Discontinued Gain on Sale in Impairme
Slide 16: Re-investment into Auckland & Metering Growth
RE-INVESTMENT INTO AUCKLAND & METERING GROWTH GROSS CAPITAL EXPENDITURE ($m) GROSS CAPEX BY SEGMENT FY2017 Continuing Operations Only Continuing Operations Only 6% 4% 350 62.3 Regulated Networks 28% FY2016 300 49.8 250 Gas Trading 29% 200 Technology 57% 150 305.2 272.8 62% 100 Corporate 5% 50 9% 0 F
Slide 17: $762m of Refinancing in FY2017
$762M OF REFINANCING IN FY2017 NET ECONOMIC DEBT & GEARING ($m) GROUP DEBT MATURITY ($m) 52.5% 52.9% 53.6% 53.4% 47.1% 43.7% 43.9% 270 355 307 400 350 286 297 251 150 100 2,625 2,682 2,745 2,741 1,933 1,968 2,220 FY18 FY19 FY20 FY21 FY22 FY23 FY24 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Cre
Slide 18: Simon Mackenzie, Group Chief Executive
SIMON MACKENZIE GROUP CHIEF EXECUTIVE 18
Slide 19: Technology Result Driven by Smart Meter Rollout
TECHNOLOGY RESULT DRIVEN BY SMART METER ROLLOUT Technology Segment ADJUSTED EBITDA MOVEMENT ($M) • Deployed almost 145,000 smart meters in NZ and +0.9 +12.2 122.5 more than 24,200 in Australia. Smart meter fleet -2.5 113.5 -1.6 now at 1.28 million (owned & managed) • Expect to install 80,000 – 100,0
Slide 20: New Acquisitions Provide Channels for Residential & Commercial New Energy Technologies
NEW ACQUISITIONS PROVIDE CHANNELS FOR Technology Segment RESIDENTIAL & COMMERCIAL NEW ENERGY TECHNOLOGIES • Acquired E-Co Products Group (trading as HRV and EES) & PowerSmart on 31 March 2017 for $106m • E-Co Products Group offers healthy home solutions direct to consumer: ventilation, heat-pumps, w
Slide 21: Australia One of the Best Markets for New Energy Technologies
AUSTRALIA ONE OF THE BEST MARKETS FOR Technology Segment NEW ENERGY TECHNOLOGIES Australian Electricity retail price index Residential solar penetration: 15% overall (Inflation adjusted) National Prices 200 190 180 170 Index 1991 = 100 160 24% 6% 150 140 130 120 19% 25% 110 10% 100 11% 90 Source: Au
Slide 22: LPG Showing Strong Growth
LPG SHOWING STRONG GROWTH Gas Trading Segment ADJUSTED EBITDA MOVEMENT ($M) • Natural Gas contribution impacted by strong 40.6 +3.3 competition, ongoing lower international +5.3 36.9 hydrocarbon prices and lower Kapuni production -3.7 -4.5 • LPG operations occupy strong market position - -4.1 increa
Slide 23: Auckland Growth Continues…
Regulated AUCKLAND GROWTH CONTINUES… Networks Segment ADJUSTED EBITDA MOVEMENT ($M) • New connections up 7% to 12,653 368.5 +1.7 – 555,100 electricity connections (up 0.9%) -3.6 – 106,670 gas connections (up 2.3%) -2.3 361.2 -3.0 -0.2 • Gas Volumes up 2.9% to 14.3 PJ • Capital Contributions up 25.2%
Slide 24: …But Connection Growth Not Translating to Higher Network Earnings
Regulated …BUT CONNECTION GROWTH NOT TRANSLATING TO Networks HIGHER NETWORK EARNINGS Segment ELECTRICITY VOLUMES (GWH) • Despite the connection growth, electricity volumes fell 0.5% H1 H2 due to continued fall in household consumption 4,065 4,011 3,981 4,077 4,004 3,992 • Final decision on default p
Slide 25: Outlook
OUTLOOK • Expect largely flat Network earnings through to 2020 − Auckland growth to continue. Expect circa 10,000 new electricity connections in FY18 − Declining consumption, gas reset, settlement with Commerce Commission, de-energised work practices, and ongoing SAIDI/SAIFI breaches counteracting t
Slide 26: Q&A Any Questions?
Q&A ANY QUESTIONS? vector W
Slide 27: Appendices
APPENDICES 27
Slide 28: 5 Year Adjusted EBITDA Performance by Segment
5 YEAR ADJUSTED EBITDA PERFORMANCE BY SEGMENT Adjusted EBITDA (Continuing Operations Only) $million For the year ended 30 June 475.8 473.0 474.4 446.5 451.9 FY2013 FY2014 FY2015 FY2016 FY2017 Regulated Networks 391.9 351.1 349.7 368.5 361.2 Gas Trading 60.4 50.9 46.9 40.6 36.9 Technology 72.7 94.0 1
Slide 29: Group Profit Statement
GROUP PROFIT STATEMENT YEAR ENDED 30 JUNE ($M) 2017 2016 Change INCOME STATEMENT $m $m % Revenue (excluding capital contributions) 1,164.4 1,094.8 +6.4 Operating expenditure (690.0) (621.8) -11.0 Adjusted EBITDA 474.4 473.0 +0.3 Capital Contributions 62.3 49.8 +25.1 Depreciation and amortisation (19
Slide 30: Group Cash Flow
GROUP CASH FLOW 1 YEAR ENDED 30 JUNE ($M) 2017 2016 CASH FLOW $m $m Operating cash flow 335.7 352.1 Replacement capex (137.0) (144.4) Dividends paid (161.0) (159.2) Cash available for growth and debt repayment 37.7 48.5 Growth capex (217.2) (195.7) Acquisitions (91.0) 0.0 Proceeds from sale of disco
Slide 31: Segment Results
SEGMENT RESULTS YEAR ENDED 30 JUNE ($M) REGULATED NETWORKS TECHNOLOGY GAS TRADING CORPORATE 2017 2016 Change % 2017 2016 Change % 2017 2016 Change % 2017 2016 Change % Revenue excluding 680.7 677.3 +0.5 212.9 179.1 +18.9 281.8 277.1 +1.7 4.8 2.1 +128.6 Capital Contributions Operating expenditure (31
Slide 32: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Vector’s standard profit measure prepared under New Zealand GAAP is net profit. GAAP to Non-GAAP reconciliation Vector has used non-GAAP profit measures when discussing financial performance EBITDA and Adjusted EBITDA in this document. The directors and management bel
Slide 33: Segment Adjusted EBITDA
SEGMENT ADJUSTED EBITDA SEGMENT ADJUSTED EBITDA ($m) 2017 2016 Year ended 30 June Reported less capital Segment Reported less capital Segment segment EBITDA contributions adjusted EBITDA segment EBITDA contributions adjusted EBITDA Technology 123.6 (1.1) 122.5 114.4 (0.9) 113.5 Gas Trading 36.9 0.0
Slide 34: Vector
Vector 7