Slide 1: Financial & Operational Results
FINANCIAL & OPERATIONAL RESULTS HALF YEAR ENDED 31 DECEMBER 2017 Insert new artwork 28 February 2018
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: Michael Stiassny, Chairman
MICHAEL STIASSNY CHAIRMAN 3
Slide 4: Agenda
AGENDA • Dividend • FY2018 H1 Operational Highlights • Financial Performance • Segment Performance • Outlook • Q&A • Appendices 4
Slide 5: Interim Dividend Increases to 8.25 cps
INTERIM DIVIDEND INCREASES TO 8.25 CPS • Half year dividend 8.25 cents Dividend growth (cents per share) − Up 0.25 cps on prior year − Fully imputed 8.00 • Board has approved a progressive 7.50 7.75 7.75 8.00 8.00 7.50 dividend policy of at least 0.25 cps 6.50 6.75 7.25 7.50 6.00 increase each year,
Slide 6: Simon Mackenzie, Group Chief Executive
SIMON MACKENZIE GROUP CHIEF EXECUTIVE 6
Slide 7: FY2018 H1 Operational Highlights
FY2018 H1 OPERATIONAL HIGHLIGHTS • Regulated Networks and Gas Trading performing as expected. Technology result below expectations • Australian Metering business successfully mobilised for Power of Choice launch – Deployment contracts with four leading retailers • New gas bottling plant commissioned
Slide 8: Dan Molloy, Chief Financial Officer
DAN MOLLOY CHIEF FINANCIAL OFFICER ‹#›
Slide 9: Overview of Financial Performance
OVERVIEW OF FINANCIAL PERFORMANCE H1 2018 FINANCIAL PERFORMANCE ($M) 676.2 625.6 H1 2017 H1 2018 257.0 250.0 226.2 236.0 172.9 182.7 107.1 79.0 79.7 82.5 Revenue Adjusted EBITDA 3, 4 Capital Expenditure Net Profit Operating Cash Flow Half Year Dividend +8.1% -2.7% +5.7% -26.2% 4.3% +3.5% Adjusted EB
Slide 10: Earnings Growth in Technology Offset by Other Segments
EARNINGS GROWTH IN TECHNOLOGY OFFSET BY OTHER SEGMENTS H1 2018 ADJUSTED EBITDA MOVEMENT ($M) +4.2 -3.0 257.0 -5.3 -2.9 250.0 H1 2017 Regulated Networks Gas Trading Technology Corporate H1 2018 10
Slide 11: Net Profit Impacted by Higher Depreciation & Unusual Items in Prior Period
NET PROFIT IMPACTED BY HIGHER DEPRECIATION & UNUSUAL ITEMS IN PRIOR PERIOD MOVEMENT IN NET PROFIT AFTER TAX ($M) 107.1 -3.8 -15.0 +1.6 +2.1 -8.9 -1.2 -2.9 79.0 Unusual items in prior period H1 2017 Liquigas Tunnel tax gain Depreciation & Earnings Interest Capital Other H1 2018 insurance Amortisation
Slide 12: Network Capex Up 17% Driven by Connection Growth
NETWORK CAPEX UP 17% DRIVEN BY CONNECTION GROWTH GROSS CAPITAL EXPENDITURE ($m) GROSS CAPEX BY SEGMENT H1 2018 7% 200.0 5% 180.0 22% 34.2 Regulated Networks H1 2017 160.0 31.3 140.0 Gas Trading 120.0 29% 100.0 Technology 80.0 59% 141.6 148.5 60.0 6% 65% Corporate 40.0 7% 20.0 0.0 H1 2017 H1 2018 Net
Slide 13: $1.5B of Refinancing Completed in Last 12 Months
$1.5B OF REFINANCING COMPLETED IN LAST 12 MONTHS NET ECONOMIC DEBT ($M) & GEARING (%) GROUP DEBT MATURITY ($M) 52.5% 52.9% 53.6% 53.4% 47.1% 47.3% 43.7% 43.9% 355 300 307 350 286 297 251 277 150 100 138 2,625 2,682 2,745 2,741 1,933 1,968 2,220 2,253 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27
Slide 14: Simon Mackenzie, Group Chief Executive
SIMON MACKENZIE GROUP CHIEF EXECUTIVE 14
Slide 15: Technology Result Driven by Smart Meter Rollout
TECHNOLOGY RESULT DRIVEN BY SMART METER ROLLOUT Technology Segment ADJUSTED EBITDA MOVEMENT ($M) • Gains from smart meter rollout & acquisitions diluted by business development costs for new 5.0 4.5 64.7 energy technologies & Australian metering -2.0 60.5 • Deployed 44,804 smart meters in NZ & 7,515
Slide 16: Gas Trading Earnings Flat Absent Last Year's Insurance Settlement
ABSENT LAST YEAR’S INSURANCE SETTLEMENT, Gas Trading Segment GAS TRADING EARNINGS ARE FLAT ADJUSTED EBITDA MOVEMENT ($M) 23.7 • Increased Kapuni production & higher Liquigas throughput 0.9 0.9 18.4 • New bottle plant in South Auckland is now -5.3 -1.8 operational – Bottle swaps (9kg) up 10.1% to 351
Slide 17: Network Earnings Impacted by Higher Maintenance
Regulated NETWORK EARNINGS IMPACTED BY HIGHER MAINTENANCE Networks Segment • New connections up 19.4% to 7,746 ADJUSTED EBITDA MOVEMENT ($M) 2.6 – 559,777 electricity connections (up 1.2%) 195.7 – 108,270 gas connections (up 2.2%) 3.3 -1.4 192.7 • Despite connection growth, electricity volumes -1.0
Slide 18: Outlook
OUTLOOK • Strong connection growth in Networks, but not flowing to earnings − Gas Reset price reduction of 14% from 1 October 2017 − SAIDI/SAIFI penalty impacting revenue by c$4m from 1 April 2018 − Commerce Commission LUFC settlement of $13.9m spread over two regulatory years commencing 1 April 201
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 $million For the half year ended 31 December 253.5 257.0 250.0 243.0 244.8 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 Regulated Networks 197.7 191.3 196.4 195.7 192.7 Gas Trading 25.1 29.3 25.2 23.7 18.4 Technology 44.8 49.7 57.0 60.5 64.7 C
Slide 22: Group Profit Statement
GROUP PROFIT STATEMENT HALF YEAR ENDED 31 DECEMBER ($M) H1 2018 H1 2017 Change INCOME STATEMENT $m $m % Revenue (excluding capital contributions) 642.0 594.3 +8.0 Operating expenditure (392.0) (337.3) -16.2 Adjusted EBITDA 250.0 257.0 -2.7 Capital Contributions 34.2 31.3 +9.3 Depreciation and amorti
Slide 23: Group Cash Flow
GROUP CASH FLOW HALF YEAR ENDED 31 DECEMBER ($M) H1 2018 H1 2017 CASH FLOW $m $m Operating cash flow 236.0 226.2 Replacement capex (75.2) (70.3) Dividends paid (80.3) (80.2) Cash available for growth and debt repayment 80.5 75.7 Growth capex (109.6) (110.0) Other investment activities (15.7) 0.1 Pre
Slide 24: Segment Results
SEGMENT RESULTS HALF YEAR ENDED 31 DECEMBER ($M) REGULATED NETWORKS TECHNOLOGY GAS TRADING CORPORATE H1 2018 H1 2017 Change % H1 2018 H1 2017 Change % H1 2018 H1 2017 Change % H1 2018 H1 2017 Change % Revenue excluding 358.9 353.8 +1.4 133.5 97.9 +36.4 153.5 150.2 +2.2 0.8 2.2 -63.6 Capital Contribu
Slide 25: 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 26: Segment Adjusted EBITDA
SEGMENT ADJUSTED EBITDA SEGMENT ADJUSTED EBITDA ($m) H1 2018 H1 2017 Half year ended 31 December Reported less capital Segment Reported less capital Segment segment EBITDA contributions adjusted EBITDA segment EBITDA contributions adjusted EBITDA Technology 65.1 (0.4) 64.7 61.0 (0.5) 60.5 Gas Tradin
Slide 27: Vector
Vector 7