Slide 1: 2013 Annual Meeting
VECTOR LIMITED ANNUAL MEETING 2013 2013 | Annual Meeting EMBARGOED 2PM / 22 OCTOBER 2013 1
Slide 2: Disclaimer
VECTOR LIMITED ANNUAL MEETING 2013 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 f
Slide 3: Michael Stiassny, Chairman
VECTOR LIMITED ANNUAL MEETING 2013 Michael Stiassny CHAIRMAN 3
Slide 4: Directors
VECTOR LIMITED ANNUAL MEETING 2013 Directors • Alison Paterson • Karen Sherry • Hugh Fletcher • James Carmichael • Peter Bird • Bob Thomson 4
Slide 5: Agenda
VECTOR LIMITED ANNUAL MEETING 2013 Agenda 1. Chairman’s update 2. Group Chief Executive’s update 3. Ordinary business 4. Election of directors 5. Appointment and remuneration of auditors 6. Directors’ remuneration 7. General business 5
Slide 6: Vector's vision and goal
VECTOR LIMITED ANNUAL MEETING 2013 Vector’s vision and goal VISION: First choice for integrated infrastructure solutions GOAL: Deliver sustainable dividend increases Vector’s dividends • Seventh consecutive year 16 of dividend increases 12 7.5 7.75 7.25 7.5 7.5 • Dividend injects well over $100M CPS
Slide 7: Delivering for shareholders and Auckland
VECTOR LIMITED ANNUAL MEETING 2013 Delivering for shareholders and Auckland 1,400.0 1,252.21,279.2 1,200.0 1,000.0 $MILLION 800.0 627.4 630.5 600.0 426.2 392.3 400.0 298.6 261.8 201.7 206.2 200.0 144.4 146.9 2012 - 2013 REVENUE EBITDA* NET PROFIT OPERATING CAPITAL DIVIDEND PAID CASH FLOW EXPENDITURE
Slide 8: The new economic reality
VECTOR LIMITED ANNUAL MEETING 2013 The new economic reality POWER USAGE PER VECTOR RESIDENTIAL CONNECTION POINT 8,000 7,800 7,600 7,400 KWh 7,200 7,000 6,800 6,600 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FINANCIAL YEAR Source: Vector 8
Slide 9: Price is driving customer behaviour
VECTOR LIMITED ANNUAL MEETING 2013 Price is driving customer behaviour Real energy price change 2008 - 2013 20% 15% 10% 5% 0% -5% New Zealand retail New Zealand Vector distribution distribution Source: MBIE 9
Slide 10: The new economic reality
VECTOR LIMITED ANNUAL MEETING 2013 The new economic reality The drive for reduced spending gains momentum as: • Customers demand greater choice and control over their energy use • ‘Sustainability’ enters popular consciousness • Home appliances become more energy efficient • Governments promote energ
Slide 11: Vector's goal
VECTOR LIMITED ANNUAL MEETING 2013 Vector’s goal GOAL: Deliver sustainable dividend increases AREAS OF STRATEGIC DISCIPLINED CUSTOMER OPERATIONAL REGULATORY PEOPLE AND GROWTH FOCUS EXCELLENCE OUTCOMES SAFETY FOCUS INNOVATION 11
Slide 12: Strategic focus: disciplined growth
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: disciplined growth MARKET-FACING OPERATIONS Technology DISCIPLINED • Smart meters will transform energy management GROWTH • Contracted installations rise 14.0% to 764,000 meters • Acquired Contact Energy’s gas meter portfolio, gas meter fleet rises
Slide 13: Strategic focus: disciplined growth
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: disciplined growth REGULATED OPERATIONS Electricity and Gas Transportation DISCIPLINED • Growth driven by population increases in and around our networks GROWTH • Acquisitions are challenging: critical infrastructure assets highly coveted by intern
Slide 14: Vector's goal
VECTOR LIMITED ANNUAL MEETING 2013 Vector’s goal GOAL: Deliver sustainable dividend increases AREAS OF STRATEGIC DISCIPLINED CUSTOMER OPERATIONAL REGULATORY PEOPLE AND GROWTH FOCUS EXCELLENCE OUTCOMES SAFETY FOCUS INNOVATION 14
Slide 15: Simon Mackenzie, Group Chief Executive
VECTOR LIMITED ANNUAL MEETING 2013 Simon Mackenzie GROUP CHIEF EXECUTIVE 15
Slide 16: Strategic focus: customers
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: customers Customers want • A utility they can trust • Reliable, efficient infrastructure services • Timely delivery and online services CUSTOMERS • Choice and flexibility over how they use energy • Good value INNOVATION 16
Slide 17: Strategic focus: customers
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: customers CUSTOMERS Solar + Communication INNOVATION 17
Slide 18: Strategic focus: customers
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: customers CUSTOMERS Smart Meters + Gas Wholesale Vector’s roll out of half a million smart Large gas users turn to Vector as we meters attracts international attention configure gas supply to their needs INNOVATION 18
Slide 19: Strategic focus: customers
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: customers Electricity transmission pricing • Vector does not support Electricity Authority proposals, CUSTOMERS which are likely to lead to higher Auckland prices Looking after • Vector seeks robust evidence to support pricing changes the interests
Slide 20: Strategic focus: operational excellence
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: operational excellence • Revenue rises 12.5% to $109.1M Electricity Smart Meters 600,000 OPERATIONAL • EBITDA rises 13% to $76.3M 505,888 500,000 EXCELLENCE • Installed smart meter base 400,000 369,394 Technology rises 37.0% 300,000 245,477 • Vecto
Slide 21: Strategic focus: operational excellence
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: operational excellence 60 151,544 160,000 • Revenue fell 2.3% from $380.9M to $372.2M 129,893 140,000 50 OPERATIONAL 120,000 EXCELLENCE • EBITDA fell 8.2% from 130,820 40 TONNES $65.8M to $60.4M 100,000 79,015 Gas Wholesale 76,876 PJ 30 71,757 80,0
Slide 22: Strategic focus: operational excellence
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: operational excellence • Revenue rises 2.3% from 158,000 140 $214.6M to $219.6M 120.1 125.4 118.2 157,000 OPERATIONAL 120 EXCELLENCE • EBITDA rises 6.2% from 156,000 156,952 100 $160.5M to $170.4M CUSTOMERS 155,000 Gas 154,649 80 • Network availabi
Slide 23: Strategic focus: operational excellence
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: operational excellence • Revenue rises 3.9% from 540,000 8,424 8,332 9,000 8,319 $609.0M to $632.9M 8,000 538,000 OPERATIONAL • Higher Transpower charges 539,232 7,000 EXCELLENCE drive revenue increases 536,000 6,000 CUSTOMERS 4,362 535,228 5,000 E
Slide 24: Strategic focus: operational excellence
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: operational excellence New Zealand Electricity Distribution Business operating costs OPERATIONAL EXCELLENCE Electricity 24
Slide 25: Strategic focus: regulation
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: regulation • The decisions on the Merit Appeals of the Commerce Commission’s Input Methodology are due shortly • Brought by Vector along with six of New Zealand’s largest REGULATORY infrastructure companies OUTCOMES • Decision will represent a furt
Slide 26: Strategic focus: people & safety
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: people & safety PEOPLE Employing great people & keeping them safe • Graduate recruitment – providing Vector with new leaders • Apprentices programme – developing the skills for the future • Safety programmes – ensuring staff and the public are safe
Slide 27: Strategic focus: people & safety
VECTOR LIMITED ANNUAL MEETING 2013 Strategic focus: people & safety • Safety practices continuously improved and benchmarked against New PEOPLE Zealand and international best practice Employing great people • Implemented a new Incident Reporting & keeping Management programme them safe • Continuing
Slide 28: Outlook
VECTOR LIMITED ANNUAL MEETING 2013 Outlook • Targeting EBITDA to meet market consensus estimates for the 2014 financial year • Remain focused on continued growth in our technology portfolio and tight cost control 28
Slide 29: Michael Stiassny, Chairman
VECTOR LIMITED ANNUAL MEETING 2013 Michael Stiassny CHAIRMAN 29
Slide 30: Ordinary business
VECTOR LIMITED ANNUAL MEETING 2013 Ordinary business 30
Slide 31: Election of directors
VECTOR LIMITED ANNUAL MEETING 2013 Election of directors 31
Slide 32: Re-election of Peter Bird
VECTOR LIMITED ANNUAL MEETING 2013 Re-election of Peter Bird Proxy Voting For 800,455,923 Against 168,654 Abstain 149,571 Discretionary 862,543 Additional discretionary held by the Chairman 1,394,921 32
Slide 33: Re-election of Bob Thomson
VECTOR LIMITED ANNUAL MEETING 2013 Re-election of Bob Thomson Proxy Voting For 800,454,116 Against 184,223 Abstain 136,206 Discretionary 863,416 Additional discretionary held by the Chairman 1,393,651 33
Slide 34: Election of Jonathan Mason
VECTOR LIMITED ANNUAL MEETING 2013 Election of Jonathan Mason Proxy Voting For 800,374,289 Against 179,617 Abstain 170,522 Discretionary 863,626 Additional discretionary held by the Chairman 1,443,558 34
Slide 35: Appointment of auditor
VECTOR LIMITED ANNUAL MEETING 2013 Appointment of auditor Proxy Voting For 800,865,281 Against 178,755 Abstain 69,497 Discretionary 862,156 Additional discretionary held by the Chairman 1,055,923 35
Slide 36: Directors' remuneration
VECTOR LIMITED ANNUAL MEETING 2013 Directors’ remuneration After a detailed review of the directors’ remuneration including advice from independent expert remuneration consultants, dsd Consulting Limited, the board seeks: • To increase the annual sum payable to the Chairman by $11,400 plus GST from
Slide 37: Directors' remuneration
VECTOR LIMITED ANNUAL MEETING 2013 Directors’ remuneration Proxy Voting For 792,731,622 Against 7,725,786 Abstain 556,210 Discretionary 835,955 Additional discretionary held by the 1,182,039 Chairman 37
Slide 38: Voting
VECTOR LIMITED ANNUAL MEETING 2013 Voting 38
Slide 39: General business
VECTOR LIMITED ANNUAL MEETING 2013 General business 39
Slide 40: Meeting close
VECTOR LIMITED ANNUAL MEETING 2013 Meeting close 40
Slide 41: Appendix: Non-GAAP reporting measures
VECTOR LIMITED ANNUAL MEETING 2013 Appendix Non-GAAP reporting measures 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 mea
Slide 42: GAAP to non-GAAP reconciliation
VECTOR LIMITED ANNUAL MEETING 2013 Appendix GAAP to non-GAAP reconciliation 2013 2012 YEAR ENDED 30 JUNE $M $M Net profit for the period (GAAP) 206.2 201.7 1 Add back: income tax expense 83.6 81.6 1 Add back: impairment of investment in associates 3.6 4.1 1 Deduct: share of net profit from associate
Slide 43: “dddddddddddddddddddddddddddddidddididddddddddddddddddddddddddddddddddddddddddddddidddidddddddddddddddddddddddddddddd…
“dddddddddddddddddddddddddddddidddididddddddddddddddddddddddddddddddddddddddddddddidddidddddddddddddddddddddddddddddddddddddddddddiddiddddiddddda vector \/ 7) www.vector.co.nz LMddddddddddddddddddddddddda