Slide 1: Financial & Operational Results
FULL YEAR ENDED 30 JUNE 2019 FINANCIAL & OPERATIONAL RESULTS 23 August 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: Agenda
Agenda • Dividend • FY2019 Business Insights • Financial Performance • Segment Performance • Outlook • Q&A 3
Slide 4: Dividend
DIVIDEND 4
Slide 5: Full year dividend growth
Full year dividend growth • Full year dividend of 16.50 cents per Dividend growth (cents per share) share − Up 0.25 cents per share on prior year − Fully imputed 8.00 8.25 • Dividend policy to be reviewed once 8.00 8.00 7.75 8.00 7.75 7.50 parameters for 2020 electricity reset 7.50 7.50 6.75 7.25 6.
Slide 6: FY2019 Business Insights
FY2019 BUSINESS INSIGHTS 6
Slide 7: FY19 Business insights
FY19 Business insights Network growth Metering growth Challenging environment New energy solutions for Gas Trading • 14,322 new electricity and gas • Deployed 57k advanced • Continued natural gas supply • HRV combining with connections, c50% higher than 5 meters in NZ constraints due to field PowerS
Slide 8: Continued business leadership
Continued business leadership • LTIFR reduced by 35% Total Lost Time Injury Frequency Rate (LTIFR) Number of lost time injury incidents per million hours worked, including contractors • TRIFR reduced by 40% 2.76 2.80 2.90 2.96 • 31,000 native trees planted through 2.52 2.30 Urban Forest initiative o
Slide 9: Financial Performance
FINANCIAL PERFORMANCE 9
Slide 10: Overview of financial performance
Overview of financial performance FY19 FINANCIAL PERFORMANCE ($M) 1328.4 1318.6 From 1 July 2018 we adopted IFRS 15/16 and changed the accounting treatment of gains/losses on disposal of fixed assets. Excluding these accounting changes, comparable adjusted EBITDA would be NPAT impacted by $475m (up
Slide 11: Comparable segment earnings up $4.8m or 1.0%
Comparable segment earnings up $4.8m or 1.0% FY19 ADJUSTED EBITDA MOVEMENT ($M) Higher residential electricity revenue due to increase in connections +8.4 +9.6 +1.3 +3.5 -4.6 -2.5 485.8 470.1 Multiple gas Driven by field outages smart meter impacting growth gas market Accounting changes Comparable s
Slide 12: NPAT impacted by impairment, one-off tax gain and higher depreciation
NPAT impacted by impairment, one-off tax gain in prior year and higher depreciation and amortisation MOVEMENT IN NET PROFIT AFTER TAX ($M) Increase is driven by growth in asset base, Impairment of amortisation of 149.8 E-Co Products intangibles, accelerated Group depreciation and change in treatment
Slide 13: Capex driven by Auckland growth & meter deployment in Australia
Capex driven by Auckland growth & meter deployment in Australia GROSS CAPITAL EXPENDITURE ($m) GROSS CAPEX BY SEGMENT FY19 $25.1m 6% $24.6m 6% 79.3 Regulated Networks FY18 71.5 $127.3m 30% Gas Trading $93.7m 25% Technology 345.8 309.7 $17.1m $245.8m $260.9m 5% 64% 61% Corporate $11.8m FY18 FY19 3% N
Slide 14: Strong balance sheet
Strong balance sheet NET ECONOMIC DEBT & GEARING ($M) 53.6% 52.5% 52.2% GROUP DEBT MATURITY $m 47.1% 48.8% 43.7% 150 297 350 307 355 325 300 277 251 240 250 2,625 2,745 1,933 2,220 2,378 2,628 138 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Bank F
Slide 15: Segment Performance
SEGMENT PERFORMANCE 15
Slide 16: Network earnings benefit from higher electricity revenue
Network earnings benefit from higher electricity revenue • Revenue growth coming from residential sector ADJUSTED EBITDA MOVEMENT ($M) driven by ongoing connection growth and 4.9 367.0 average household consumption, which appears 7.1 to have stabilised after a decade of decline once 0.3 normalised f
Slide 17: Regulated capex higher due to continued Auckland growth
Regulated capex higher due to continued Auckland growth and higher replacement capex REGULATED NETWORK CAPEX $M 260.9 • Regulated capex up 6.1% to $260.9m 245.8 201.0 210.6 • Higher capex driven by investment to improve 164.4 183.7 170.4 safety, reliability and resilience of our network and to suppo
Slide 18: Electricity default price path reset (DPP3)
Electricity default price path reset (DPP3) • Next DPP (DPP3) in place from 1 April 2020 to 31 March 2025 • The WACC will be based on an average of the risk free rate over the period 1 June 2019 to 31 August 2019 Electricity Returns for DPP2 • The draft DPP3 released by the Commission on 29 May 2019
Slide 19: Gas Trading performance weighed down by challenging market conditions
Gas Trading performance weighed down by challenging market conditions 34.4 ADJUSTED EBITDA MOVEMENT ($M) 0.7 1.5 31.3 -2.3 -1.2 • Challenging market conditions for Natural Gas -1.8 business − Natural gas volumes fell 12.0% to 16.1 PJ − Planned and unplanned gas field outages reduced supply • Solid p
Slide 20: Technology result driven by smart meter rollout
Technology result driven by smart meter rollout ADJUSTED EBITDA MOVEMENT ($M) • Smart meter fleet now 1.56 million (owned & managed) 4.8 3.1 142.0 7.3 − Deployed nearly 96,000 smart meters in Australia, in line with 130.5 -3.7 expectations − NZ smart meter base increased by almost 57,000 (net of rep
Slide 21: Outlook
OUTLOOK 21
Slide 22: Outlook
Outlook • Auckland growth continues − Targeting c12,000 new electricity connections in FY20 − Connections & infrastructure activity remain elevated, necessitating significant capital expenditure • Smart meter deployment to increase in FY20 − Targeting 135k smart meters in Australia and 60k in New Ze
Slide 23: Q&A Any Questions?
Q&A ANY QUESTIONS? 23
Slide 24: Appendices
APPENDICES 24
Slide 25: 5 Year Adjusted EBITDA Performance by Segment
5 Year Adjusted EBITDA Performance by Segment Adjusted EBITDA (Continuing Operations Only) $million For the year ended 30 June 485.8 473.0 474.4 470.1 451.9 FY2015 FY2016 FY2017 FY2018 FY2019 Regulated Networks 349.7 368.5 361.2 358.6 367.0 Gas Trading 46.9 40.6 36.9 34.4 31.3 Technology 105.5 113.5
Slide 26: Segment Results
Segment Results Year ended 30 June ($m) REGULATED NETWORKS TECHNOLOGY GAS TRADING CORPORATE Change Change Change Change 2019 2018 2019 2018 2019 2018 2019 2018 % % % % Revenue excluding 690.1 706.0 -2.3 274.5 272.3 +0.8 284.1 290.3 -2.1 0.4 0.9 -55.6 Capital Contributions Operating (323.1) (347.4) +
Slide 27: Group Profit Statement
Group Profit Statement Year ended 30 June ($m) 2019 2018 Change INCOME STATEMENT $m $m % Revenue (excluding capital contributions) 1,239.3 1,256.9 -1.4 Operating expenditure (753.5) (786.8) +4.2 Adjusted EBITDA 485.8 470.1 +3.3 Capital Contributions 79.3 71.5 +10.9 Depreciation and amortisation (246
Slide 28: Group Cash Flow
Group Cash Flow Year ended 30 June ($m) 2019 2018 CASH FLOW $m $m Operating cash flow 348.1 389.9 Replacement capex (170.1) (152.7) Dividends paid (164.1) (163.9) Cash available for growth and debt repayment 13.9 73.3 Growth capex (248.3) (234.1) Acquisitions (8.0) (3.1) Proceeds from sale of invest
Slide 29: Segment Adjusted EBITDA
Segment Adjusted EBITDA n SEGMENT ADJUSTED EBITDA ($m) 2019 2018 n Year ended 30 June Reported segment less capital Segment Reported segment less capital Segment n EBITDA contributions adjusted EBITDA EBITDA contributions adjusted EBITDA n Technology 142.3 (0.3) 142.0 131.8 (1.3) 130.5 n Gas Trading
Slide 30: Impact of Accounting Changes in FY19
Impact of Accounting Changes in FY19 (A) (E) Note: Re- Prior year (B) (C) FY19 Segment (F) = (E) – (D) Classification of reported FY18 Change 1: Change 2: (D)= (B) + (C) adjusted Comparable1 FY19 Segment Impact of FY18 gain/(loss) Total Impact of EBITDA post Segment gains/losses on Adjusted adoption
Slide 31: 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 in this document. The directors and management believe that GAAP to Non-GAAP reconciliation these measures pr
Slide 32: End
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