Vector Limited · NZX:VCT
Vector — H1 2013 Earnings Presentation
34 slides from Vector's earnings presentation, Feb 21, 2013
Slide 1: Financial and Operational Results
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Financial and Operational Results Half year to 31 December 2012 21 February 2013
Slide 2: Disclaimer
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Disclaimer This financial and operational results presentation dated 21 February 2013 provides additional comment on the market release of the same date. As such, it should be read in conjunction with, and subject to, the explanations and views of fut
Slide 3: Michael Stiassny, Chairman
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Michael Stiassny CHAIRMAN
Slide 4: Agenda
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Agenda 1. Dividend 2. Half Year (1H) 2013 summary 3. Financial results 4. Operating overview 5. Outlook and summary 4
Slide 5: 1H 2013 – Dividend
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS 1H 2013 – Dividend • 2013 fully-imputed interim dividend rises 0.25 cents per share to 7.25 cents per share • Record date: 25 March, 2013 Payment date: 15 April, 2013 5
Slide 6: Simon Mackenzie, Group Chief Executive
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Simon Mackenzie GROUP CHIEF EXECUTIVE
Slide 7: 1H 2013 – Overview
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS 1H 2013 – Overview • Vector faces a ‘new economic norm’ - Soft economic growth - Subdued customer demand - Acquisitions challenging • Vector’s progress tightly linked to these economic trends • Warmer weather also reduced demand • BUT earnings grow: -
Slide 8: 1H 2013 – Financial performance
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS 1H 2013 – Financial performance 5.0% 3.9% 10.8% 10.4% 15.4% 3.6% *EBITDA is a non-Generally Accepted Accounting Practice (GAAP) profit measure and is defined on page 32 and reconciled to GAAP on page 33 of this presentation. All references to this mea
Slide 9: Vector - a portfolio of businesses
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Vector - a portfolio of businesses Assets* ** *** As at 31 Dec 2012 12% 88% Energy networks Technology and Gas Wholesale * Calculated as a percentage of total assets in the four operating segments ** Calculated as a percentage of total external operat
Slide 10: Shane Sampson, Acting Chief Financial Officer
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Shane Sampson ACTING CHIEF FINANCIAL OFFICER
Slide 11: Income statement
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Income statement 2012 2011 CHANGE SIX MONTHS ENDED 31 DECEMBER $M $M (%) Revenue 669.4 637.6 +5.0 Operating expenditure (333.1) (314.0) -6.1 EBITDA 336.3 323.6 +3.9 Depreciation and amortisation (86.2) (86.1) -0.1 EBIT* 250.1 237.5 +5.3 Net financing
Slide 12: Electricity
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Electricity 2012 2011 CHANGE SIX MONTHS ENDED 31 DECEMBER $M $M (%) Revenue 334.8 308.5 +8.5 Operating expenditure (132.8) (110.9) -19.7 EBITDA 202.0 197.6 +2.2 % Revenue 60.3% 64.1% EBIT 161.7 156.9 +3.1 Replacement capital expenditure 33.5 32.3 +3.7
Slide 13: Gas Transportation
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Gas Transportation 2012 2011 CHANGE SIX MONTHS ENDED 31 DECEMBER $M $M (%) Revenue 114.4 110.4 +3.6 Operating expenditure (25.7) (28.8) +10.8 EBITDA 88.7 81.6 +8.7 % Revenue 77.5% 73.9% EBIT 76.6 70.9 +8.0 Replacement capital expenditure 10.4 10.4 - G
Slide 14: Gas Wholesale
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Gas Wholesale 2012 2011 CHANGE SIX MONTHS ENDED 31 DECEMBER $M $M (%) Revenue 195.6 195.4 +0.1 Operating expenditure (161.6) (159.0) -1.6 EBITDA 34.0 36.4 -6.6 % Revenue 17.4% 18.6% EBIT 25.9 28.6 -9.4 Replacement capital expenditure 2.0 2.9 -31.0 Gro
Slide 15: Technology
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Technology 2012 2011 CHANGE SIX MONTHS ENDED 31 DECEMBER $M $M (%) Revenue 52.8 48.1 +9.8 Operating expenditure (16.1) (13.5) -19.3 EBITDA 36.7 34.6 +6.1 % Revenue 69.5% 71.9% EBIT 17.9 13.1 +36.6 Replacement capital expenditure 3.6 3.2 +12.5 Growth c
Slide 16: Shared services
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Shared services 2012 2011 CHANGE SIX MONTHS ENDED 31 DECEMBER $M $M (%) Revenue 0.4 0.5 -20.0 Operating expenditure (25.5) (27.1) +5.9 EBITDA (25.1) (26.6) +5.6 16
Slide 17: Cash flow
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Cash flow 2012 2011 SIX MONTHS ENDED 31 DECEMBER $M $M Operating cash flow 267.7 242.4 Replacement capex (58.4) (60.8) Dividends paid (74.7) (76.7) Cash available for growth and debt repayment 134.6 104.9 Growth capex (68.5) (63.3) Other investment ac
Slide 18: Asset backing and capital structure
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Asset backing and capital structure 31 DECEMBER 30 JUNE 31 DECEMBER 2012 2012 2011 Net debt $2,286.4m $2,373.8m $2,353.4m Equity/total assets 38.9% 38.2% 37.4% Net debt/net debt+equity 51.0% 52.5% 52.8% Interest (net) cover 3.0x 2.7x 2.8x 18
Slide 19: Simon Mackenzie, Group Chief Executive
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Simon Mackenzie GROUP CHIEF EXECUTIVE
Slide 20: Electricity
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Electricity • Customer growth modest due to soft economy • Volume falls: - Warmer temperatures - Subdued demand • Vector participates on consultation of transmission pricing • Construction activity encouraging • Quality thresholds met - SAIDI increase
Slide 21: Gas Transportation
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Gas Transportation • Customer growth modest • Volumes fall due to slow down in gas-fired electricity production • Construction activity is an encouraging sign 21
Slide 22: Gas Wholesale
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Gas Wholesale • Lower Kapuni production evident in results - Lower gas liquids sales and natural gas sales • Bottle swap continues to grow strongly - Sales up 29% running at 45,000 per month in December • Liquigas tolling rises due to exports and Chri
Slide 23: Technology
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Technology • Installed meter base continues to grow • Two-thirds through contracted installation of 670,000 meters - Install rate of circa 10K – 12K for the next 12 months • Awaiting Commerce Commission ruling on acquisition of Contact Energy’s gas me
Slide 24: Regulation – Merits Review
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Regulation – Merits Review Current status: • Merits review of regulatory regime - Action brought by Vector and six others - Verdict in the second quarter of 2013 • Disappointed by Supreme Court verdict on starting prices Upcoming regulatory milestones
Slide 25: Outlook
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Outlook • Vector has made a good start to the 2013 financial year: - Managed our business well in the face of the ‘new economic norm’ - Unregulated operations growing • The second-half however will present some challenges - Entitlements to Kapuni Gas
Slide 26: Q&A
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Q&A
Slide 27: Appendix
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Appendix
Slide 28: Operating statistics
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Operating statistics 1H 2013 1H 2012 Change (%) ELECTRICITY Customers1,4, 537,268 534,305 +0.6 2 Net new electricity customers 2,040 1,698 +20.1 Volume distributed (GWh) 4,321 4,359 -0.9 1 Networks length (km) 17,826 17,768 +0.3 SAIDI (minutes)3 Norma
Slide 29: Operating statistics
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Operating statistics 1H 2013 1H 2012 Change (%) GAS TRANSPORTATION Distribution customers1,3 155,863 153,576 +1.5 Net new distribution customers 2 1,214 1,068 +13.7 Distribution volume (PJ) 11.7 11.7 - Distribution mains network length (km) 1 7,047 7,
Slide 30: Operating statistics
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Operating statistics Change 1H 2013 1H 2012 (%) GAS WHOLESALE 1 Natural gas sales (PJ) 13.9 14.3 -2.8 2 Gas liquids sales (tonnes) 39,000 41,850 -6.8 3 Liquigas LPG tolling (tonnes) 73,369 61,126 +20.0 1. Excludes gas sold as gas liquids as these sale
Slide 31: Operating statistics
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS Operating statistics 1H 2013 1H 2012 Change (%) TECHNOLOGY 1 Electricity: smart meters 438,419 316,531 +38.5 1 Electricity: legacy meters 314,019 396,304 -20.8 1 Electricity: prepay meters 5,067 5,563 -8.9 1 Electricity: time of use meters 10,926 10,8
Slide 32: Non-GAAP reporting measures
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS 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 th
Slide 33: GAAP to non-GAAP reconciliation
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS GAAP to non-GAAP reconciliation 2012 2011 SIX MONTHS ENDED 31 DECEMBER $M $M Net profit for the period (GAAP) 118.0 106.5 1 Add back: income tax expense 47.5 42.9 1 Add back: impairment of investment in associate 2.3 3.9 1 (Deduct)/add back: share of
Slide 34: VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS
VECTOR LIMITED FINANCIAL AND OPERATIONAL RESULTS