Slide 1: Financial & Operational Results
FINANCIAL & OPERATIONAL RESULTS HALF YEAR ENDED 31 DECEMBER 2018 26 February 2019
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: Dividend
DIVIDEND 3
Slide 4: Half Year Dividend of 8.25 Cents, Fully Imputed
HALF YEAR DIVIDEND OF 8.25 CENTS, FULLY IMPUTED • Dividend policy to be reviewed once Dividend growth (cents per share) parameters for 2020 electricity reset are confirmed • Electricity network revenues from 1 April 2020 to 31 March 2025 (DPP3) will be 7.75 8.00 8.00 8.00 8.00 7.75 known by December
Slide 5: H1 2019 Business Highlights
H1 2019 BUSINESS HIGHLIGHTS 5
Slide 6: H1 2019 Business Highlights
H1 2019 BUSINESS HIGHLIGHTS Network growth Metering growth Strong H1 for Gas Trading New energy solutions • 6,829 new electricity and gas • Deployed 29k advanced • New LPG 9kg Bottle Swap • Strong pipeline of large connections, c50% higher than meters in NZ plant generating cost commercial solar and
Slide 7: Continued Business Leadership
CONTINUED BUSINESS LEADERSHIP Urban Forest launched Outage Centre launched Accessibility Tick Vector Lights Safety Always • Commitment to • New Outage Centre • First New Zealand • Global media coverage • During H1 TRIFR replace every tree launched as part of major corporate to receive of Vector Ligh
Slide 8: Financial Performance
FINANCIAL PERFORMANCE vectorW
Slide 9: Overview of Financial Performance
OVERVIEW OF FINANCIAL PERFORMANCE H1 2019 FINANCIAL PERFORMANCE ($M) From 1 July 2018 we adopted IFRS 15/16 676.2 688.6 and changed the accounting treatment of gains/losses on disposal of fixed assets. Excluding these accounting changes, comparable adjusted EBITDA would be $260m (up 4%). Comparative
Slide 10: Earnings Growth Across All Business Segments
EARNINGS GROWTH ACROSS ALL BUSINESS SEGMENTS H1 2019 ADJUSTED EBITDA MOVEMENT ($M) Higher volumes due to increase in connections and +0.1 +7.3 +4.6 colder winter +3.7 +1.6 -2.6 264.7 250.0 Driven by Prior year Higher Kapuni smart meter one-offs and production, higher growth additional gas liquid sal
Slide 11: NPAT Up 5.4% With Growth in Earnings & Capital Contributions
NPAT UP 5.4% WITH GROWTH IN EARNINGS & CAPITAL CONTRIBUTIONS OFFSET BY HIGHER DEPRECIATION & INTEREST MOVEMENT IN NET PROFIT AFTER TAX ($M) +3.3 +5.1 +7.2 -2.5 -0.7 -4.8 -3.1 -0.2 83.3 79.0 Increase is due to Driven by additional growth in sub- Post tax impact Increase is driven by borrowing ($1.4m)
Slide 12: Capex Driven by Auckland Growth & Meter Deployment in Australia
CAPEX DRIVEN BY AUCKLAND GROWTH & METER DEPLOYMENT IN AUSTRALIA GROSS CAPITAL EXPENDITURE ($m) GROSS CAPEX BY SEGMENT $7.9m 4% H1 2019 200.0 $12.3m 180.0 41.2 7% 34.2 Regulated Networks $62.2m 160.0 H1 2018 31% 140.0 Gas Trading $40.2m 120.0 22% 100.0 Technology 80.0 148.5 159.9 $10.6m $119.6m $125.
Slide 13: BBB Credit Rating Further Supported by S&P's Re-assessment
BBB CREDIT RATING FURTHER SUPPORTED BY S&P’S RE-ASSESSMENT OF NZ REGULATORY REGIME NET ECONOMIC DEBT & GEARING ($M) GROUP DEBT MATURITY ($M) 52.5% 52.9% 53.6% 53.4% 47.1% 47.3% 48.8% 49.6% 43.7% 43.9% 307 355 300 325 297 350 286 251 240 277 2,625 2,682 2,745 2,741 1,933 1,968 2,220 2,253 2,378 2,449
Slide 14: Segment Performance
SEGMENT PERFORMANCE 14
Slide 15: Network Earnings Benefit from Higher Volumes
Regulated NETWORK EARNINGS BENEFIT FROM HIGHER VOLUMES Networks Segment • Earnings uplift largely driven by higher electricity ADJUSTED EBITDA MOVEMENT ($M) volumes, up 0.9% to 4,390 GWh 2.3 198.7 7.3 – Volume growth coming from residential -1.0 – Driven by ongoing connection growth and average -0.6
Slide 16: Solid Performance by Gas Trading in a Challenging Market
SOLID PERFORMANCE BY GAS TRADING Gas Trading Segment IN A CHALLENGING MARKET ADJUSTED EBITDA MOVEMENT ($M) • Challenging market conditions for Natural Gas business 2.5 0.3 0.7 20.7 – Natural gas volumes fell 9.4% to 8.7 PJ 18.4 – Planned and unplanned gas field outages in H1 reduced -1.2 supply – So
Slide 17: Technology Result Driven by Smart Meter Rollout
TECHNOLOGY RESULT DRIVEN BY SMART METER ROLLOUT Technology Segment ADJUSTED EBITDA MOVEMENT ($M) • Smart meter fleet now 1.48 million (owned & 1.6 0.1 0.9 72.9 managed) 5.6 – Deployed 45,435 smart meters in Australia in H1. On 64.7 track to install 90 - 100k meters in FY19 – NZ smart meter base incr
Slide 18: Outlook
OUTLOOK • Auckland growth continues − Still targeting c11,000 new electricity connections in FY19 (YTD of 5,160) − Connections & infrastructure activity remain elevated, necessitating significant capital expenditure. − Indexation of the regulated asset base pushes the recovery of this investment to
Slide 19: Q&A Any Questions?
Q&A ANY QUESTIONS? vector W
Slide 20: Appendices
APPENDICES 20
Slide 21: 5 Year Adjusted EBITDA Performance by Segment
5 YEAR ADJUSTED EBITDA PERFORMANCE BY SEGMENT Adjusted EBITDA $million For the half year ended 31 December 264.7 253.5 257.0 250.0 244.8 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 Regulated Networks 191.3 196.4 195.7 192.7 198.7 Gas Trading 29.3 25.2 23.7 18.4 20.7 Technology 49.7 57.0 60.5 64.7 72.9 C
Slide 22: Group Profit Statement
GROUP PROFIT STATEMENT HALF YEAR ENDED 31 DECEMBER ($M) H1 2019 H1 2018 Change INCOME STATEMENT $m $m % Revenue (excluding capital contributions) 647.4 642.0 +0.8 Operating expenditure (382.7) (392.0) +2.4 Adjusted EBITDA 264.7 250.0 +5.9 Capital Contributions 41.2 34.2 +20.5 Depreciation and amorti
Slide 23: Group Cash Flow
GROUP CASH FLOW HALF YEAR ENDED 31 DECEMBER ($M) H1 2019 H1 2018 CASH FLOW $m $m Operating cash flow 219.1 236.0 Replacement capex (81.5) (75.2) Dividends paid (80.6) (80.3) Cash available for growth and debt repayment 57.0 80.5 Growth capex (121.2) (109.6) Other investment activities (3.3) (15.7) P
Slide 24: Segment Results
SEGMENT RESULTS HALF YEAR ENDED 31 DECEMBER ($M) REGULATED NETWORKS TECHNOLOGY GAS TRADING CORPORATE H1 2019 H1 2018 Change % H1 2019 H1 2018 Change % H1 2019 H1 2018 Change % H1 2019 H1 2018 Change % Revenue excluding 361.9 358.9 +0.8 137.0 133.5 +2.6 152.9 153.5 -0.4 0.2 0.8 -75.0 Capital Contribu
Slide 25: Segment Adjusted EBITDA
SEGMENT ADJUSTED EBITDA SEGMENT ADJUSTED EBITDA ($m) H1 2019 H1 2018 Half year ended 31 December Reported less capital Segment Reported less capital Segment segment EBITDA contributions adjusted EBITDA segment EBITDA contributions adjusted EBITDA Technology 72.9 - 72.9 65.1 (0.4) 64.7 Gas Trading 20
Slide 26: Impact of Accounting Changes in H1 2019
IMPACT OF ACCOUNTING CHANGES IN H1 2019 (E) (A) (C) H1 2019 (F) = (E) – (D) Note: Re- Prior year (B) Change 2: Segment Comparable1 Classification reported H1 Change 1: H1 2018 (D)= (B) + (C) adjusted Segment of H1 2019 2018 Segment Impact of gain/(loss) on Total Impact of EBITDA post adjusted gains/
Slide 27: GAAP to Non-GAAP Reconciliation
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 GAAP to Non-GAAP reconciliation in this document. The directors and management believe that these measures EB
Slide 28: Vector
Vector 7