Vector Limited · NZX:VCT
Vector — FY2011 Earnings Presentation
36 slides from Vector's earnings presentation, Aug 26, 2011
Slide 1: Financial and Operational Results
Financial and Operational Results Year ended 30 June 2011 26 August 2011 1
Slide 2: Disclaimer
Disclaimer This financial and operational results presentation dated 26 August 2011 provides additional comment on the media release and market release of the same date. As such, it should be read in conjunction with, and subject to, the explanations and views of future outlook on market conditions,
Slide 3: Michael Stiassny, Chairman
Vector (7 Michael Stiassny, Chairman
Slide 4: Agenda
Agenda Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Dividend 2011 in summary Financial results Operating overview Outlook and summary 4 VECTOR LIMITED Financial and operating results 2011
Slide 5: Dividend
Dividend Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix 2011 dividend represents a payout of 56%* reflecting Declared dividend uncertainty around the regulatory reset 16 13.75 14.00 14.25 Dividend policy targets an average of 60%* payo
Slide 6: Standard & Poor's BBB+ metrics
Standard & Poor’s BBB+ metrics Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Dividend payout policy driven by the key objective of maintaining BBB+ corporate credit rating Funds from operations interest cover Funds from operations-to-
Slide 7: Simon Mackenzie, Group Chief Executive Officer
Simon Mackenzie, Group Chief Executive Officer
Slide 8: 2011 in summary
2011 in summary Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Continued solid operational performance electricity volumes up despite warmer weather installed smart meters doubled Security of supply agreement with Transpower Publicly d
Slide 9: Solid performance
Solid performance Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix 1,400 1,244.6 1,187.4 1,200 2010 1,000 2011 800 636.6 578.1 578.1 594.2 600 $MILLION 400 367.5 374.6 237.1 257.1 193.5 201.4 172.6 171.3 200 136.9 141.9 0 REVENUE EBITDA
Slide 10: Shane Sampson, Acting Chief Financial Officer
Shane Sampson, Acting Chief Financial Officer
Slide 11: Income statement
Income statement Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix 2011 2010 YEAR ENDED 30 JUNE $MILLION $MILLION % CHANGE Revenue 1,244.6 1,187.4 4.8% Operating expenditure (608.0) (609.3) 0.2% EBITDA 636.6 578.1 10.1% Depreciation and a
Slide 12: EBITDA movement
EBITDA movement Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix INCREASE DECREASE $42.4 $636.6 $8.8 $5.7 $8.5 $578.1 ($2.4) ($4.5) 550 $ MILLION 500 450 400 350 300 250 200 2010 ELECTRICITY GAS GAS WHOLESALE TECHNOLOGY SHARED TRANSPOWER
Slide 13: Electricity
Electricity Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix 2011 2010 YEAR ENDED 30 JUNE $MILLION $MILLION % CHANGE Revenue 574.0 553.9 3.6% Operating expenditure (209.4) (198.1) (5.7%) EBITDA 364.6 355.8 2.5% % Revenue 63.5% 64.2% EBIT
Slide 14: Gas Transportation
Gas Transportation Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix 2011 2010 YEAR ENDED 30 JUNE $MILLION $MILLION % CHANGE Revenue 205.1 194.2 5.6% Operating expenditure (47.8) (34.5) (38.6%) EBITDA 157.3 159.7 (1.5%) % Revenue 76.7% 82
Slide 15: Gas Wholesale
Gas Wholesale Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix 2011 2010 YEAR ENDED 30 JUNE $MILLION $MILLION % CHANGE Revenue 372.3 402.8 (7.6%) Operating expenditure (312.7) (338.7) 7.7% EBITDA 59.6 64.1 (7.0%) % Revenue 16.0% 15.9% EB
Slide 16: Technology
Technology Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix 2011 2010 YEAR ENDED 30 JUNE $MILLION $MILLION % CHANGE Revenue 87.1 79.8 9.1% Operating expenditure (29.3) (27.7) (5.8%) EBITDA 57.8 52.1 10.9% % Revenue 66.4% 65.3% EBIT 12.4
Slide 17: Shared Services
Shared Services Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix 2011 2010 YEAR ENDED 30 JUNE $MILLION $MILLION % CHANGE Revenue 50.6 3.0 n/a Operating expenditure (53.3) (56.6) 5.8% EBITDA (2.7) (53.6) 95.0% Benefited from Transpower de
Slide 18: Cash Flow
Cash Flow Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix 2011 2010 YEAR ENDED 30 JUNE $MILLION $MILLION Operating cash flow 374.6 367.5 Replacement capex (119.2) (91.9) Dividends paid (143.7) (140.9) Cash available for growth and debt
Slide 19: Debt maturity profile
Debt maturity profile Agenda and dividend / Financial highlights / Financial results / Operating overview / Outlook and summary / Appendix 450 400 350 $50 300 $MILLION 250 200 $99 $400 $350 150 $307 $286 $296 $125 $250 $251 100 $150 $160 50 $23 $50 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Slide 20: Asset backing and capital structure
Asset backing and capital structure Agenda and dividend / Financial highlights / Financial results / Operating overview / Outlook and summary / Appendix 30 JUNE 31 DECEMBER 30 JUNE 2011 2010 2010 Net debt $2,290m $2,291m $2,447m Equity/total assets 37.9% 36.2% 37.5% Net debt/net debt+equity 52.0% 52
Slide 21: Simon Mackenzie, Group Chief Executive Officer
Simon Mackenzie, Group Chief Executive Officer
Slide 22: Electricity
Electricity Agenda and dividend / Financial highlights / Financial results / Operating overview / Outlook and summary / Appendix Total customer numbers continue to grow Electricity distribution 540,000 532,607 10,000 New connections down 10.1% yoy 528,245 530,000 523,394 9,000 NEW CONNECTIONS/GWh le
Slide 23: Gas Transportation
Gas Transportation Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Gas Distribution Gas Distribution and Transmission 49.4 158,000 140 120.1 New connections up 3.0% reflecting residential 156,000 106.7 109.7 49.3 120 connections 49.1 15
Slide 24: Gas Wholesale
Gas Wholesale Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Natural Gas Natural gas and gas liquids 129,893 Increased competition in I&C natural gas market 60 109,969 49.4 120,000 99,758 Continued focus on retaining profitability in a
Slide 25: Gas Wholesale
Gas Wholesale Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Redetermination of Original Recoverable Gas Reserves (ORGR) at Kapuni Kapuni Mining Companies (KMC’s) submitted to the Ministry of Economic development 49.4 assessment of 1,0
Slide 26: Technology
Technology Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Metering Smart Meters 300,000 Continued smart meter growth 245,477 250,000 Excellent opportunities to upgrade and grow smart metering business – additional contracts as retailer
Slide 27: Electricity Draft Default Price Path
Electricity Draft Default Price Path Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Commerce Commission released draft Default Price Path (DPP) for electricity lines businesses with further changes to its approach: firm specific rather
Slide 28: Vector believes electricity price reduction unjustified
Vector believes electricity price reduction unjustified Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Energy and network price movements Replacement costs increases since 2004 250 2010 - 2004 Nominal Price Index (1999=100) 200 102% As
Slide 29: Grounds for appeal remain
Grounds for appeal remain Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Vector seeks regulatory certainty for investors and consumers Require appropriate return on investment to attract international capital Amendments to Commerce Act
Slide 30: Investing for growth
Investing for growth Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Electricity Gas Transportation Gas Wholesale Technology Wairau Road and Hobson Pipeline rejuvenation Kwik-Swap acquisition Smart meter rollout Street Substations Exten
Slide 31: Outlook and summary
Outlook and summary Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Another solid year with strong operational performance Looking forward to 2012 key focus on driving better regulatory outcome through legal challenge impact of price re
Slide 32: Vector
Vector 7 XX\
Slide 33: Appendix
Vector (7 Appendix y
Slide 34: Operating statistics
Operating statistics Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix FY2011 FY2010 % change ELECTRICITY Customers1 532,607 528,245 0.8% New electricity customers 2 4,362 4,851 (10.1%) Volume distributed (GWh) 8,319 8,168 1.8% Networks l
Slide 35: Operating statistics
Operating statistics Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix FY2011 FY2010 % change GAS WHOLESALE 6 Natural gas sales (PJ) 26.1 31.7 (17.7%) 7 Gas liquid sales (tonnes) 79,015 73,436 7.6% 8 Liquigas LPG tolling (tonnes) 129,893
Slide 36: Regulatory timeline – key milestones
Regulatory timeline – key milestones Agenda and dividend / 2011 in summary / Financial results / Operating overview / Outlook and summary / Appendix Electricity Distribution Businesses (EDBs) Default Price Path Setting Process Apply Default Price Path? Decision by Draft DPP Submissions 24 Commission