Vector Limited · NZX:VCT

Vector — FY2012 Earnings Presentation

37 slides from Vector's earnings presentation, Aug 23, 2012

  1. Slide 1: Financial and Operational Results

    Financial and Operational Results Year ended 30 June 2012 23 AUGUST 2012

  2. Slide 2: Disclaimer

    Disclaimer VECTOR LIMITED Financial and Operational Results This financial and operational results presentation dated 23 August 2012 provides additional comment on the media release and market release of the same date. As such,, it should be read in conjunction j with,, and subject j to,, the explan

  3. Slide 3: Michael Stiassny, Chairman

    Michael Stiassny Vector \/ Chairman

  4. Slide 4: Agenda

    Agenda VECTOR LIMITED Financial and Operational Results  Dividend  2012 in summary  Financial results  Operating overview  Outlook and summary 4

  5. Slide 5: Dividend

    Dividend VECTOR LIMITED Financial and Operational Results  2012 final dividend of 7.50 cents per share, bringing full-year full year dividend to 14.50 cents per share, which represents a payout ratio* of 53%. 14.25 14.50  Dividend policy targets an average of 60% payout over time  All ll d divide

  6. Slide 6: Simon Mackenzie, Group Chief Executive Officer

    Simon Mackenzie Group Chief Executive Officer

  7. Slide 7: 2012 in summary

    2012 in summary VECTOR LIMITED Financial and Operational Results  Robust performance across our portfolio of businesses  Technology delivers the standout performance  Gas trading business has demonstrated its ability to grow  Electricity y and gas g transmission and distribution operations p gro

  8. Slide 8: Robust performance

    Robust performance VECTOR LIMITED Financial and Operational Results 2011 1244.6 1252.6 2012 Transpower contribution 636.6 627.4 627.4 594.2 REVENUE EBITDA UNDERLYING NPAT UNDERLYING OPERATING CAPITAL DIVIDEND EBITDA* NPAT** CASHFLOW EXPENDITURE PAID 0.6% (1.4)% 5.6% (1.3)% 16.1% 4.7% 1.8% 1.8% * Exc

  9. Slide 9: Shane Sampson, Acting Chief Financial Officer

    Shane Sampson Acting Chief Financial Officer

  10. Slide 10: Income statement

    Income statement VECTOR LIMITED Financial and Operational Results 2012 2011 YEAR ENDED 30 JUNE $MILLION $MILLION % CHANGE Revenue 1,252.6 1,244.6 0.6% Operating expenditure (625.2) (608.0) (2.8)% EBITDA 627.4 636.6 (1.4)% Depreciation and amortisation (173.5) (170.2) (1.9)% EBIT 453.9 466.4 (2.7)% R

  11. Slide 11: EBITDA movement

    EBITDA movement VECTOR LIMITED Financial and Operational Results INCREASE DECREASE 636.6 9.7 6.2 627.4 19.5 3.2 42.4* (5.4) $MILLIONS 594.2** *EBITDA contribution from 2011 sale to Transpower of rights to use Vector’s Penrose to Hobson Street tunnel ** 2011 EBITDA excluding Transpower sale contribut

  12. Slide 12: Technology

    Technology VECTOR LIMITED Financial and Operational Results 2012 2011 YEAR ENDED 30 JUNE $MILLION $MILLION % CHANGE Revenue 97.1 87.1 11.5% Operating expenditure (29.6) (29.3) (1.0)% EBITDA 67.5 57.8 16.8% % Revenue 69.5% 66.4% EBIT 23.7 12.4 91.1% Replacement capital expenditure 6.3 9.3 (32.3)% Gro

  13. Slide 13: Gas Wholesale

    Gas Wholesale VECTOR LIMITED Financial and Operational Results 2012 2011 YEAR ENDED 30 JUNE $MILLION $MILLION % CHANGE R Revenue 381 0 381.0 372 3 372.3 2 3% 2.3% Operating expenditure (315.2) (312.7) (0.8)% EBITDA 65.8 59.6 10.4% % Revenue 17.3% 16.0% EBIT 50.2 47.2 6.4% Replacement capital expendi

  14. Slide 14: Electricity

    Electricity VECTOR LIMITED Financial and Operational Results 2012 2011 YEAR ENDED 30 JUNE $MILLION $MILLION % CHANGE Revenue 609.1 574.0 6.1% Operating expenditure (225.0) (209.4) (7.4)% EBITDA 384.1 364.6 5.3% % Revenue 63.1% 63.5% EBIT 303.6 286.4 6.0% Replacement capital expenditure 74.6 72.6 2.8

  15. Slide 15: Gas Transportation

    Gas Transportation VECTOR LIMITED Financial and Operational Results 2012 2011 YEAR ENDED 30 JUNE $MILLION $MILLION % CHANGE Revenue 214.6 205.1 4.6% Operating expenditure (54.1) (47.8) (13.2)% EBITDA 160.5 157.3 2.0% % Revenue 74.8% 76.7% EBIT 138.8 135.7 2.3% Replacement capital expenditure 24.9 21

  16. Slide 16: Shared Services

    Shared Services VECTOR LIMITED Financial and Operational Results 2012 2011 YEAR ENDED 30 JUNE $MILLION $MILLION % CHANGE Revenue 1.2 50.6 n/a Operating expenditure (51.8) (53.3) 2.8% EBITDA (50.6) (2.7) n/a  Comparative performance reflects prior year Transpower transaction, prior year gains on dis

  17. Slide 17: Cash flow

    Cash flow VECTOR LIMITED Financial and Operational Results 2012 2011 YEAR ENDED 30 JUNE $MILLION $MILLION Operating cash flow 392.3 374.6 Replacement capex (120.3) (119.2) Dividends paid (147.4) (143.7) Cash available for growth and debt repayment 124.6 111.7 Growth capex (139.6) (132.4) Other inves

  18. Slide 18: Debt maturity profile

    Debt maturity profile VECTOR LIMITED Financial and Operational Results SPP US  Established $150 million of senior credit facilities maturing February 2015.  In June 2012 we successfully rolled over at a lower interest rate the $307 million Capital Bonds with the next election l ti d date t off 15

  19. Slide 19: Asset backing and capital structure

    Asset backing and capital structure VECTOR LIMITED Financial and Operational Results 30 JUNE 31 DECEMBER 30 JUNE 2012 2011 2011 Net debt d b $2,374m $ $2,353m $2,290m Equity/total assets 38.2% 37.4% 37.9% Net debt/net debt+equity 52.5% 52.8% 52.0% Interest (net) cover 2.7x 2.8x 2.6x  Standard & Poo

  20. Slide 20: Simon Mackenzie, Group Chief Executive Officer

    Simon Mackenzie Group Chief Executive Officer

  21. Slide 21: Technology

    Technology VECTOR LIMITED Financial and Operational Results Metering  Continued smart meter growth; halfway through contracted roll out  Excellent opportunities to upgrade and grow smart metering business Fibre  Ad Adapting ti well ll to t new environment; i t a telecommunications t l i ti logist

  22. Slide 22: Gas Wholesale

    Gas Wholesale VECTOR LIMITED Financial and Operational Results Natural Gas Natural gas and gas liquids  Reinforces position as New Zealand’s leading and 49.4 trusted gas intermediary 49.3 LPG 49.1  Lower volumes due to last year’s opportunistic 80.6 sale 47 1 47.1 80.3 Kapuni Gas Treatment Plant 

  23. Slide 23: Gas Wholesale (cont.)

    Gas Wholesale (cont.) VECTOR LIMITED Financial and Operational Results Emissions trading scheme costs and recoveries fall due to lower carbon prices Kapuni gas determinations will have a bearing on Vector earnings although revenue49.4 expected to grow;  Contractual rights to half of Kapuni reserves

  24. Slide 24: Electricity

    Electricity VECTOR LIMITED Financial and Operational Results  Total customer numbers continue to grow p despite tough g economyy  New connections growth down year-on-year TIONS/GWh  Dormant account disconnections overshadow customer gains  Industrial and commercial connections NEW CONNECT grow 2

  25. Slide 25: Gas Transportation

    Gas Transportation VECTOR LIMITED Financial and Operational Results Gas Distribution 49.4  Connections up 1.4% reflecting residential connections 49.3 49.1  Net additions down due to dormant account disconnections 80.6 47 1 47.1 80.3  Distribution volumes increase 4.8% Gas Transmission  Volumes

  26. Slide 26: Regulation: seeking clarity

    Regulation: seeking clarity VECTOR LIMITED Financial and Operational Results  New Zealand’s lack of regulatory certainty is impinging on our international competitiveness  Vector seeks a regime that balances: 49.4 49.3 - The long-term national interest to incentivise international capital markets

  27. Slide 27: Regulation: seeking clarity

    Regulation: seeking clarity VECTOR LIMITED Financial and Operational Results  Half-time in the regulatory process: - Merits review resumes later this year: the Commerce Commission has not provided 49.4 a complete regulatory package 49.3 49.1 - The Commerce Commission draft decision – to reduce our

  28. Slide 28: Investing for growth

    Investing for growth VECTOR LIMITED Financial and Operational Results Capital investment will accelerate in 2013 and beyond El Electricity i i G T Gas Transportation i T h l Technology G Wh Gas Wholesale l l  Wairau Road and Hobson  Pipeline rejuvenation in  Smart meter rollout  New Zealand’s le

  29. Slide 29: Outlook and summary

    Outlook and summary VECTOR LIMITED Financial and Operational Results  A robust year with strong operational performance and confident we can continue to deliver:  Looking forward to 2013 a number of uncertainties: - the Commerce Commission’s decision on the starting prices on our regulated electri

  30. Slide 30: Q&A

    Vector \/ Q&A

  31. Slide 31: Appendix

    Appendix Vector \/

  32. Slide 32: Operating statistics

    Operating statistics VECTOR LIMITED Financial and Operational Results FY2012 FY2011 % CHANGE ELECTRICITY Customers1 535,228 532,607 0.5% Net movement in customers 2 2,621 4,362 (39.9)% Volume distributed (GWh) 8,424 8,319 1.3% Networks length (km) 17 780 17,780 17 737 17,737 0 2% 0.2% SAIDI3 Normal

  33. Slide 33: Operating statistics

    Operating statistics VECTOR LIMITED Financial and Operational Results FY2012 FY2011 % CHANGE GAS WHOLESALE 5 Natural gas sales (PJ) 27.7 26.1 6.1% 6 Gas liquid sales (tonnes) 76,876 79,015 (2.7)% 7 Liquigas LPG tolling (tonnes) 130,820 129,893 0.7% TECHNOLOGY 1 Electricity: smart meters 369,394 245,

  34. Slide 34: Regulatory timeline – key milestones

    Regulatory timeline – key milestones VECTOR LIMITED Financial and Operational Results Electricity Distribution Businesses (EDBs) Default Price Path Setting Process Price Path Apply Default Price Path? starts Decision by 1 Apr 2013 Draft DPP Submissions Commission 21 Aug 2012 28 Sept 2012 by 30 Nov 2

  35. Slide 35: Regulatory timeline – last 11 months

    Regulatory timeline – last 11 months VECTOR LIMITED Financial and Operational Results

  36. Slide 36: Regulatory timeline – upcoming milestones

    Regulatory timeline – upcoming milestones VECTOR LIMITED Financial and Operational Results

  37. Slide 37: Slide 37

Vector — FY2012 Earnings Presentation on 6ix