Vector Limited · NZX:VCT

Vector — H1 FY2016 Earnings Presentation

26 slides from Vector's earnings presentation, February 2016

  1. Slide 1: Financial and Operational Results, Half Year Ended December 2015

    VECTOR LIMITED Financial and Operational Results HALF YEAR ENDED 31 DECEMBER 2015

  2. Slide 2: Disclaimer

    VECTOR LIMITED 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.

  3. Slide 3: Michael Stiassny, Chairman

    VECTOR LIMITED Michael Stiassny CHAIRMAN

  4. Slide 4: Agenda

    VECTOR LIMITED Agenda • Dividend and Outlook • H1 Highlights • Operating Overview • Q&A 4

  5. Slide 5: Continuing to deliver dividend growth

    VECTOR LIMITED Continuing to deliver dividend growth • 2016 fully-imputed interim dividend increases Declared Dividend 0.25 cents to 7.75 cents per share (cents per share) - Record date: 31 March 2016 - Payment date: 14 April 2016 7.75 7.75 8.00 7.50 7.50 7.50 • Increase reflects directors’ confiden

  6. Slide 6: Simon Mackenzie, Group Chief Executive

    VECTOR LIMITED Simon Mackenzie GROUP CHIEF EXECUTIVE

  7. Slide 7: FY2016 H1 Snapshot – realigning the portfolio

    VECTOR LIMITED FY2016 H1 Snapshot – realigning the portfolio • Agreed sale of Vector Gas for $952.5m, realising full value for shareholders, allowing Vector to repay debt and recycle capital into higher growth opportunities • NZ smart meter fleet now exceeds 1 million. Vector accredited to operate a

  8. Slide 8: Dan Molloy, Chief Financial Officer

    VECTOR LIMITED Dan Molloy CHIEF FINANCIAL OFFICER

  9. Slide 9: H1 sees growth in adjusted EBITDA, operating cash flow and net profit

    VECTOR LIMITED H1 sees growth in adjusted EBITDA, Operating cash flow & Net Profit H1 2016 Financial Performance ($m)1 687.1 663.0 H1 2015 H1 2016 287.9 305.9 248.8 203.3 153.6 152.0 87.3 100.1 74.7 77.2 2 3 Revenue Adjusted EBITDA Net profit Operating cash flow Capital expenditure Interim dividend

  10. Slide 10: Earnings growth across all divisions except Gas Trading

    VECTOR LIMITED Earnings growth across all divisions except Gas Trading H1 2016 Adjusted EBITDA ($m) 305.9 +0.4 -4.1 +7.2 287.9 +11.6 +2.9 H1 2015 Electricity Gas Trading1 Gas Wholesale Technology Shared Services H1 2016 Transportation 1. We have changed the name of the segment previously referred to

  11. Slide 11: Earnings growth and favourable derivative movements drive higher first half profit

    VECTOR LIMITED Earnings growth & favourable derivative movements drive higher first half profit Movement in Net Profit Before Tax ($m) Net Economic Debt & Gearing ($m) 53.6% 3,000 52.5% 52.9% 53.4% +16.3 +0.6 50.0% +7.3 2,500 -6.9 139.7 40.0% 2,000 122.4 1,500 30.0% 1,000 20.0% 500 10.0% 2,625 2,682

  12. Slide 12: Capital expenditure consistent with prior corresponding period

    VECTOR LIMITED Capital expenditure consistent with prior corresponding period • H1 gross capex down 1.0% to $152.0m. Net capex (after contributions) flat at $128.2m • Capital contributions down 6.7% primarily due to lower relocations in gas transmission Gross Capex by Division Gross Capex Split ($m)

  13. Slide 13: Simon Mackenzie, Group Chief Executive

    VECTOR LIMITED Simon Mackenzie GROUP CHIEF EXECUTIVE

  14. Slide 14: Sale of Vector Gas allows recycling of capital into higher growth opportunities

    VECTOR LIMITED Sale of Vector Gas allows recycling of capital into higher growth opportunities • Vector agreed in November to sell Vector Gas for Vector transmission system $952.5m to First State Funds Maui pipeline Non-Auckland Gas - Vector shareholders approved sale in December. Distribution Syste

  15. Slide 15: Leveraging our heritage and creating options

    VECTOR LIMITED Leveraging our heritage & creating options 6 standard & 4 rapid 130 families, schools and Our first utility scale battery arrives later EV chargers installed with community groups get free use this year. New technologies will form a another 17 rapid chargers of solar panels and Tesla

  16. Slide 16: Vector accredited as metering provider in Australia

    VECTOR LIMITED Technology Vector accredited as metering provider in Australia • AEMO Accreditation required Vector to demonstrate full operating capability in Australia • EBITDA growth driven by smart meter installations and Arc acquisition, offset by business development costs for Australian meteri

  17. Slide 17: Challenging conditions continue for Gas Trading

    VECTOR LIMITED Gas Trading Challenging conditions continue for Gas Trading • As signalled in August, issues include: Gas Trading Adjusted EBITDA Movement ($m) - Lower production & ongoing Kapuni uncertainty 29.3 - Increased competition, tighter margins and lower prices for gas liquids +0.9 25.2 - We

  18. Slide 18: Lower costs and higher volumes drive improved Electricity performance

    VECTOR LIMITED Lower costs & higher volumes drive improved Electricity Electricity performance Electricity Adjusted EBITDA Movement ($m) • New connections remain elevated +4.0 - FY16 H1 new connections up more 173.7 than 40% on average over 2011-14 170.8 +4.5 -1.9 • Volumes up 0.7% due to connection

  19. Slide 19: Regulated price increases underpin improvement in Gas Transportation result

    VECTOR LIMITED Regulated price increases underpin improvement in Gas Transportation Gas Transportation result Gas Transportation Adjusted EBITDA Movement • Gas Transmission prices increased in ($m) accordance with regulated revenue cap +2.1 75.1 +10.7 -1.2 • Transmission volumes down 4.0% as thermal

  20. Slide 20: Q&A

    VECTOR LIMITED Q&A

  21. Slide 21: Appendix

    VECTOR LIMITED Appendix

  22. Slide 22: Group profit statement

    VECTOR LIMITED Group profit statement1 Six months ended 31 Dec ($m) 2015 2014 Change INCOME STATEMENT $m $m % Revenue (excluding capital contributions) 639.2 661.6 -3.4 Operating expenditure (333.3) (373.7) +10.8 Adjusted EBITDA 305.9 287.9 +6.3 Capital Contributions 23.8 25.5 -6.7 Depreciation and

  23. Slide 23: Group cash flow

    VECTOR LIMITED Group cash flow Six months ended 31 Dec ($m) 2015 2014 CASH FLOW $m $m Operating cash flow 248.8 203.3 Replacement capex (71.5) (67.8) Dividends paid (80.9) (79.2) Cash available for growth and debt repayment 96.4 56.3 Growth capex (91.6) (91.7) Acquisitions 0.0 (20.0) Other investmen

  24. Slide 24: Segment results

    VECTOR LIMITED Segment results1 Six months ended 31 Dec ($m) Electricity Gas Transportation Technology Gas Trading Shared services Change Change Change Change Change 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 % % % % % Revenue 344.3 350.8 -1.9 103.4 96.1 +7.6 88.5 76.0 +16.4 151.4 185.9 -18.6

  25. Slide 25: GAAP to non-GAAP reconciliation

    VECTOR LIMITED GAAP to non-GAAP reconciliation Vector’s standard profit measure prepared under New Zealand GAAP is net profit. Vector has used non- GAAP TO Non-GAAP reconciliation GAAP profit measures when discussing financial performance in this document. The directors and management believe that t

  26. Slide 26: © WWW.VECTOR.CO.NZ

    © WWW.VECTOR.CO.NZ

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