Slide 1: 2012 Annual Meeting
VECTOR LIMITED ANNUAL MEETING 2012 2012 | Annual Meeting EMBARGOED 2PM / 18 OCTOBER 2012
Slide 2: Michael Stiassny, Chairman
VECTOR LIMITED ANNUAL MEETING 2012 Michael Stiassny CHAIRMAN
Slide 3: Directors
VECTOR LIMITED ANNUAL MEETING 2012 Directors • Michael Stiassny, Chairman and Independent Director • Alison Paterson, Independent Director • Karen Sherry, Non-independent Director • Hugh Fletcher, Independent Director • James Carmichael, Non-independent Director • Peter Bird, Independent Director •
Slide 4: Agenda
VECTOR LIMITED ANNUAL MEETING 2012 Agenda 1. Chairman’s update 2. Group Chief Executive’s update 3. Ordinary business 4. Re-election of directors 5. Appointment and remuneration of Auditor 6. General business 4
Slide 5: FY 2012 – Robust performance
VECTOR LIMITED ANNUAL MEETING 2012 FY 2012 – Robust performance • All operating segments deliver earnings Net Profit After Tax* improvements ONE-OFF ITEMS • Revenue increases 0.6% to 250 $1.25 billion 201.4*** 198.8 193.5** • Sale of tunnel rights to Transpower 200 164.9 $MILLIONS in 2011 mask stron
Slide 6: FY 2012 – Dividend growth
VECTOR LIMITED ANNUAL MEETING 2012 FY 2012 – Dividend growth • 2012 fully-imputed dividend of 14.50 cents per share, which represents a pay-out ratio* of 53% • Dividend policy targets an average of 60% pay- out over time • Conservative capital structure – gearing** at 52.5% Key ratios 2010 2011 2012
Slide 7: FY 2012 – Enabling national prosperity
VECTOR LIMITED ANNUAL MEETING 2012 FY 2012 – Enabling national prosperity • Capital investment of $261.8 million in 2012 • Nearly $170 million spent on regulated energy infrastructure • $134.2 million spent on Auckland electricity network • Projects strengthen Auckland’s energy infrastructure and pr
Slide 8: Regulation – NZ lines prices contained
VECTOR LIMITED ANNUAL MEETING 2012 Regulation – NZ lines prices contained Energy, Network and Transmission Price Movements for New Zealand 2001-2011 200 180 Nominal Price Index (2001=100) 160 5.5% pa 140 2.8% pa 120 100 2.4% pa 80 60 Energy + network 40 CPI 20 Network incl transmission - 2001 2002 2
Slide 9: Regulation – Vector's excellent record
VECTOR LIMITED ANNUAL MEETING 2012 Regulation – Vector’s excellent record Vector's price movements 2002-2012 140 120 Nominal Price Index (2002=100) 100 80 60 40 Vector's network price excl transmission 20 Regulatory CPI 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year (ending 31 March)
Slide 10: Vector's role is misunderstood
VECTOR LIMITED ANNUAL MEETING 2012 Vector’s role is misunderstood THE PUBLIC • Blames lines companies for price increases • Feels unable to participate in the infrastructure regulation debate • Dismisses lines industry arguments as self-interest BUT A FAIR REGULATORY REGIME IS AN ISSUE OF NATIONAL I
Slide 11: Vector keeps its side of the bargain
VECTOR LIMITED ANNUAL MEETING 2012 Vector keeps its side of the bargain VECTOR COMMERCE COMMISSION ü Contained prices on our network û Does not recognise Vector’s achievements ü Delivered a safe reliable service û Narrowly focussed on investment returns ü Made significant productivity gains û
Slide 12: Regulation – a common sense test
VECTOR LIMITED ANNUAL MEETING 2012 Regulation – a common sense test Vector’s regulated cost of capital (WACC) = 8.77%* Comparable Australian lines companies WACC = 9.40% to 9.95** WACC SHOULD BE HIGHER IN NEW ZEALAND NEW ZEALAND AUSTRALIA • Equity market risk - HIGHER • Equity market risk - LOWER WE
Slide 13: Looking out for the community
VECTOR LIMITED ANNUAL MEETING 2012 Looking out for the community • Strong stance against low ball offers • Vector welcomes impending legislative change • Helping lower socio-economic communities • Tickets to Vector Arena shows • Providing role models • Netball ‘Fast5’ 13
Slide 14: Responding to customers
VECTOR LIMITED ANNUAL MEETING 2012 Responding to customers • Vector constantly seeking ways to make it easier for customers to transact with us • Using technology to respond quickly to queries: • Gas connection estimator • Quick Quote telecommunications portal • Pricing calculator • A highly-respons
Slide 15: Outlook
VECTOR LIMITED ANNUAL MEETING 2012 Outlook Looking forward to 2013 there are a number of uncertainties: • The Commerce Commission’s decision on the starting prices on our regulated electricity network for the current regulatory period • The outcome of the Merits Review court action on the regulatory
Slide 16: Simon Mackenzie, Group Chief Executive
VECTOR LIMITED ANNUAL MEETING 2012 Simon Mackenzie GROUP CHIEF EXECUTIVE
Slide 17: FY 2012 operational performance
VECTOR LIMITED ANNUAL MEETING 2012 FY 2012 operational performance 1400 1244.61252.6 1200 2011 2012 1000 Transpower contribution 800 $MILLIONS 636.6 627.4 627.4 594.2 600 400 374.6 392.3 257.1 261.8 201.4 198.8 198.8 200 171.3 0 REVENUE EBITDA UNDERLYING NPAT UNDERLYING OPERATING CAPITAL EBITDA* NPA
Slide 18: Vector - a portfolio of businesses
VECTOR LIMITED ANNUAL MEETING 2012 Vector - a portfolio of businesses Regulated Unregulated Unregulated operations deliver standout performances for the year 18
Slide 19: Unregulated - Technology
VECTOR LIMITED ANNUAL MEETING 2012 Unregulated - Technology • Technology revenue up 11.5% and EBITDA up 16.8% • Internationally-recognised metering business lays foundations for growth and smart networks • Half way through contracted deployment of 700,000 meters • Vector Communications succeeding as
Slide 20: Unregulated – Gas Wholesale
VECTOR LIMITED ANNUAL MEETING 2012 Unregulated – Gas Wholesale • Revenue up 2.3% and EBITDA up 10.4% • New Zealand’s leading gas intermediary • Kapuni legacy gas coming to an end • Contractual rights to reserves above 1010 PJ (approx 35PJ) • Pursuing an additional 7.3PJ 20
Slide 21: Regulated – Electricity
VECTOR LIMITED ANNUAL MEETING 2012 Regulated – Electricity • Electricity customer numbers grew 0.5% to 535,228 • Revenue grew 6.1% to $609.1 million • EBITDA rose 5.3% to $384.1 million as the revenue gains were partially offset by an increase in transmission costs 21
Slide 22: Regulated – Gas Transportation
VECTOR LIMITED ANNUAL MEETING 2012 Regulated – Gas Transportation • Revenue rose 4.6% to $214.6 million due to a 4.4% increase in transmission volumes • EBITDA rose 2.0% to $160.5 million • Consumption on the distribution network increased 4.8% • Resolved Maui pipeline failure in five days 22
Slide 23: Fighting for Auckland consumers
VECTOR LIMITED ANNUAL MEETING 2012 Fighting for Auckland consumers • New proposals to allocate Transpower charges: • Generators must pay greater share of Transpower ‘national grid’ charges • Auckland power users may pay more • May incentivise generator gaming to avoid paying transmission costs 23
Slide 24: Health and safety
VECTOR LIMITED ANNUAL MEETING 2012 Health and safety • Vector’s first priority is safety around our networks • ‘Stay safe around electricity’ schools programme wins prestigious Electricity Engineers Association Award • 423 schools and 87,000 children benefit • Programme extended to Taranaki • Safety
Slide 25: Shouldering the regulatory burden
VECTOR LIMITED ANNUAL MEETING 2012 Shouldering the regulatory burden Regulation costs Vector running at least $17 million* a year * Vector 2011 assessment. 25
Slide 26: Regulator has fostered poor incentives
VECTOR LIMITED ANNUAL MEETING 2012 Regulator has fostered poor incentives Energy efficiency and productivity are objectives of the Commerce Act BUT The Commerce Commission INCENTIVISES: DISCOURAGES: • Deferral of productivity initiatives • Energy Efficiency investment • Power consumption • Network r
Slide 27: Recourse to the courts
VECTOR LIMITED ANNUAL MEETING 2012 Recourse to the courts Appeal process Final Input Methodology Decisions for EDBs and Merits Appeals Judicial Review Supreme Court GPBs Decisions made Sept – Nov/Dec 2012 9-10 Oct 2012 23 Dec 2010 Under Merit Appeals the Court determines Under Judicial Review the Co
Slide 28: Regulatory timeline
VECTOR LIMITED ANNUAL MEETING 2012 Regulatory timeline Electricity Distribution Businesses (EDBs) Default Price Path Setting Process Decision by Draft DPP Submissions Commission Price Path starts 21 Aug 2012 12 Oct 2012 by 30 Nov 1 Apr 2013 2012 Final Input Methodology Decisions for EDBs and Gas Pip
Slide 29: Investing for growth
VECTOR LIMITED ANNUAL MEETING 2012 Investing for growth • Vector makes significant investments into Auckland and the national economy • FY 2012 $261.8 million across all businesses • Investing for growth across our portfolio of businesses • Solar power holds promise reflecting: • Vector’s strong tec
Slide 30: Outlook and summary
VECTOR LIMITED ANNUAL MEETING 2012 Outlook and summary • 2012 was another solid year with strong operational performance • Looking forward to 2013 with continued focus on • Driving better regulatory outcomes • Growth opportunities and driving efficiencies in the business 30
Slide 31: Michael Stiassny, Chairman
VECTOR LIMITED ANNUAL MEETING 2012 Michael Stiassny CHAIRMAN
Slide 32: Ordinary business
VECTOR LIMITED ANNUAL MEETING 2012 Ordinary business • Consideration of Annual Report and Audit Report 32
Slide 33: Re-election of directors
VECTOR LIMITED ANNUAL MEETING 2012 Re-election of directors • Alison Paterson • Michael Stiassny 33
Slide 34: Re-election of Alison Paterson
VECTOR LIMITED ANNUAL MEETING 2012 Re-election of Alison Paterson 34
Slide 35: Re-election of Alison Paterson
VECTOR LIMITED ANNUAL MEETING 2012 Re-election of Alison Paterson Proxy Voting For 800,327,998 Against 93,107 Abstain 90,648 Discretionary 677,603 Additional discretionary held by the Chairman 629,011 35
Slide 36: Re-election of Michael Stiassny
VECTOR LIMITED ANNUAL MEETING 2012 Re-election of Michael Stiassny 36
Slide 37: Re-election of Michael Stiassny
VECTOR LIMITED ANNUAL MEETING 2012 Re-election of Michael Stiassny Proxy Voting For 799,856,792 Against 626,179 Abstain 42,067 Discretionary 678,772 Additional discretionary held by the Chairman 614,557 37
Slide 38: Appointment and remuneration of auditor
VECTOR LIMITED ANNUAL MEETING 2012 Appointment and remuneration of auditor 38
Slide 39: Appointment and remuneration of auditor
VECTOR LIMITED ANNUAL MEETING 2012 Appointment and remuneration of auditor Proxy Voting For 800,234,877 Against 150,199 Abstain 125,466 Discretionary 678,772 Additional discretionary held by the Chairman 629,053 39
Slide 40: Voting
VECTOR LIMITED ANNUAL MEETING 2012 Voting
Slide 41: General business
VECTOR LIMITED ANNUAL MEETING 2012 General business Please wait for the microphone and please state your name before asking a question 41
Slide 42: Meeting closes
VECTOR LIMITED ANNUAL MEETING 2012 Meeting closes
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