Vector Limited · NZX:VCT
Vector — FY2015 Earnings Presentation
32 slides from Vector's earnings presentation, Aug 28, 2015
Slide 1: Financial and Operational Results
VECTOR LIMITED Financial and Operational Results YEAR ENDED 30 JUNE 2015 CREATING A NEW ENERGY FUTURE
Slide 2: Disclaimer
VECTOR LIMITED Disclaimer This financial and operational results presentation dated 28 August 2015 provides additional comment on the market release of the same date. As such, it should be read in conjunction with, and subject to, the explanations and views of future outlook on market conditions, ea
Slide 3: Michael Stiassny, Chairman
VECTOR LIMITED Michael Stiassny CHAIRMAN
Slide 4: Agenda
VECTOR LIMITED Agenda • Dividend • Result Highlights • Operating Overview • Outlook • Q&A
Slide 5: Delivering sustainable increases in dividends
VECTOR LIMITED Delivering sustainable increases in dividends DECLARED DIVIDEND • 2015 fully-imputed full year dividend (cents per share) rises 0.25 cents per share to 15.50 cents per share Record date: 14 September 2015 7.75 8.00 7.75 7.50 Payment date: 21 September 2015 7.50 7.50 • FY15 dividen
Slide 6: Simon Mackenzie, Group Chief Executive
VECTOR LIMITED Simon Mackenzie GROUP CHIEF EXECUTIVE
Slide 7: FY 2015 Snapshot
VECTOR LIMITED FY 2015 Snapshot • New electricity connections up 26% • Acquisition of Arc; smart meter contract with Meridian • Meeting customer demand for new technologies: batteries, solar, electric vehicles & home energy management • Online tool cuts gas connection quote time from 5 days to secon
Slide 8: Dan Molloy, Chief Financial Officer
VECTOR LIMITED Dan Molloy CHIEF FINANCIAL OFFICER
Slide 9: Financial performance overview
VECTOR LIMITED Financial performance overview FY15 FINANCIAL PERFORMANCE METRICS ($m) 1,294.0 1,258.9 2014 2015 580.7 596.9 366.6 369.2 339.2 323.3 171.3 149.4 151.9 154.4 Revenue Adjusted EBITDA* Net profit Operating cash flow Capital expenditure Full Year Dividend +2.8% +2.8% -12.8% +0.7% -4.7% 1.
Slide 10: Smart metering, network volumes & capital contributions drive growth
VECTOR LIMITED Smart metering, network volumes & capital contributions drive growth 2015 ADJUSTED EBITDA ($m) +8.2 ‐0.6 596.9 +9.8 ‐4.0 +2.8 580.7 2014 Electricity Gas Transportation Gas Wholesale Technology Shared Services 2015 10
Slide 11: Derivative losses & borrowing costs impact profit
VECTOR LIMITED Derivative losses & borrowing costs impact profit MOVEMENT IN NET PROFIT BEFORE TAX ($m) NET ECONOMIC DEBT & GEARING ($m) 234.5 53.6% 3,000 52.1% 51.5% 50.9% 52.5% +16.5 50.0% 2,500 210.7 ‐17.0 40.0% ‐11.4 2,000 ‐11.9 30.0% 1,500 1,000 20.0% 500 10.0% 2,452 2,446 2,448 2,625 2,745 0 0
Slide 12: Net capex down 10% due to higher contributions & lower deployment
VECTOR LIMITED Net capex down 10% due to higher contributions & lower deployment of Vector owned smart meters • Total capex down 4.7% to $323.3m • Net capex (after contributions) down 9.7% • Capital contributions up 29.3% on back of significant relocations in gas transmission and new subdivision gro
Slide 13: Simon Mackenzie, Group Chief Executive
VECTOR LIMITED Simon Mackenzie GROUP CHIEF EXECUTIVE
Slide 14: Creating a new energy future
VECTOR LIMITED Technology Creating a new energy future • Vector expects to bring two Tesla Energy Battery solutions to NZ • Tesla Energy’s Powerwall Home Battery for residential/SME 7 kWh daily use; store daytime solar energy for use in the peak evening period 10 kWh weekly cycling; UPS & backup
Slide 15: Creating a new energy future
VECTOR LIMITED Technology Creating a new energy future • Focussed on delivering choice to consumers • Innovative solar solutions Installed over 400 solar/storage systems HomeSense home energy monitoring service offered with all new installations • Electric vehicles gaining traction in NZ Partn
Slide 16: Metering growth continues
VECTOR LIMITED Technology Metering growth continues • EBITDA rise driven by smart meter installations, offset by costs associated with the Arc Innovations transaction and Australia • Arc Innovations acquired for $20m Dec 2014 • Currently deploying smart meters for Meridian and SmartCo • 1.2m smart m
Slide 17: Australian metering opportunity
VECTOR LIMITED Technology Australian metering opportunity • Well advanced towards achieving accreditation Northern Territory 0.071m meters • Current focus on Queensland, NSW, Queensland South Australia and Tasmania; 2.04m meters 6.3m residential meters available • Metering unbundling implemented in
Slide 18: Gas Wholesale division facing headwinds
VECTOR LIMITED Gas Gas Wholesale division facing headwinds Wholesale GLOBAL OIL PRICES • Natural gas sales down 20.4% 1,300 120 due to contract expiries, 110 changing gentailer needs & stiff 1,100 Oil $USD/barrel Gas $USD/Tonne 100 competition 900 90 700 80 • Global oil & liquid prices have 70 falle
Slide 19: Gas Wholesale outlook impacted by current & pending litigation
VECTOR LIMITED Gas Wholesale outlook will be impacted by Gas Wholesale outcome of current & pending litigation KAPUNI GAS ULTIMATE RECOVERABLE RESERVES * • Vector has rights to purchase 50% of the remaining reserves in the 2500 field from 1 April 1997 2000 • Contractual process underway to re-determ
Slide 20: Weather impacts network performance
VECTOR LIMITED Electricity Weather impacts network performance • Cooler winter temperatures drove higher HEATING DEGREE DAYS* - FY15 VS PRIOR YEAR & LONG TERM AVERAGE network volumes, up 2% 1200 FY15 heating degree days up 10% on prior year and in line with long term average • Long term average ho
Slide 21: Auckland growth offsets tariff cuts
VECTOR LIMITED Electricity Auckland growth offsets tariff cuts ELECTRICITY EBITDA MOVEMENT ($m) • Clawback to prices of 4% +19.5 from 1 April 2014 • High Court decision in Wairau +5.3 Road case results in additional ‐12.2 348.8 unrecoverable transmission 346.0 ‐3.3 ‐6.5 costs of $3.3m • New electric
Slide 22: Gas Transportation benefits from capital contributions
VECTOR LIMITED Gas Transportation benefits from Gas Transportation capital contributions GAS TRANSPORTATION EBITDA MOVEMENT ($m) • Strategic review of gas transmission +10.8 & non-Auckland gas distribution +17.3 +2.3 ‐2.4 143.2 ~ 70% of Gas Transportation 133.4 EBITDA ‐18.2 • Price increases as pe
Slide 23: Auckland: a special case
VECTOR LIMITED Regulated Auckland: a special case Networks AUCKLAND NEW DWELLING CONSENTS* • Capital investment of $1.8b is required for Auckland over next ten years 10,000 8,300 • This investment critical given Auckland's 6,827 5,291 significance to broader economy 4,197 3,394 • Current regulatory
Slide 24: Outlook for FY 2016
VECTOR LIMITED Outlook for FY 2016 • Auckland growth will drive need for increased capex on our electricity network • Continue to focus on customer solutions and new technology • Metering business is positioned to grow strongly: Expect to install a further 140,000 smart meters in NZ, and an initial
Slide 25: Q&A
VECTOR LIMITED Q&A
Slide 26: Appendices
VECTOR LIMITED Appendices s Scan!
Slide 27: Regulatory history under the default price path (DPP) regime
VECTOR LIMITED Regulatory history under the default price path (DPP) regime ELECTRICITY GAS TRANSPORTATION • 1st regulatory period begins (3 yrs) • 1st regulatory period begins 1 Apr 1 Jul (4 yrs 3 mths) 2012 2013 • 1st price reset • 1st price reset • Vector network charges reduced by 34% for transm
Slide 28: Group profit statement
VECTOR LIMITED Group profit statement Year ended 30 Jun ($m) 2015 2014 Change INCOME STATEMENT $m $m % 1,294.0 1,258.9 +2.8 Revenue Operating expenditure (697.1) (678.2) -2.8 Adjusted EBITDA 596.9 580.7 +2.8 Depreciation and amortisation (195.2) (183.8) -6.2 Net interest costs (180.8) (168.9) -7.0 F
Slide 29: Group cash flow
VECTOR LIMITED Group cash flow Year ended 30 Jun ($m) 2015 2014 CASH FLOW $m $m Operating cash flow 369.2 366.6 Replacement capex (146.4) (135.1) Dividends paid (155.4) (156.7) Cash available for growth and debt repayment 67.4 74.8 Growth capex (165.4) (192.3) Acquisitions (19.9) (60.1) Other invest
Slide 30: Segment results
VECTOR LIMITED Segment results Year ended 30 Jun ($m) Electricity Gas Transportation Technology Gas Wholesale Shared services Change Change Change Change Change 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 % % % % % Revenue 670.8 631.3 +6.3 193.4 187.0 +3.4 158.4 137.0 +15.6 314.2 349.8 -10.2 0
Slide 31: GAAP to non-GAAP reconciliation
VECTOR LIMITED GAAP to non-GAAP reconciliation Vector’s standard profit measure prepared under New Zealand GAAP is net profit. Vector has used non-GAAP profit measures when discussing financial performance in this document. The directors and management believe that these measures provide useful info
Slide 32: vector.co.nz
© WWWYVECTOR.CO.NZ