Vector Limited · NZX:VCT

Vector — FY2009 Earnings Presentation

37 slides from Vector's earnings presentation, Aug 25, 2009

  1. Slide 1: 2009 annual result

    Embargoed until 10:00am Tuesday 25 August 2009 2009 annual result Michael Stiassny, Chairman Simon Mackenzie, Group Chief Executive Officer Alex Ball, Chief Financial Officer 25 August 2009

  2. Slide 2: Michael Stiassny, Chairman

    Vector 7 Michael Stiassny Chairman

  3. Slide 3: Vector 2009 result

    Vector 2009 result „ NPAT – total operations „ Dividend „ New director

  4. Slide 4: Vector results from total operations

    Vector results from total operations 2009 2008 $millions Continuing Discontinued1 Total Continuing Discontinued2 Total Revenue 1,174.2 10.2 1,184.4 1,182.0 147.3 1,329.3 EBITDA 582.2 6.7 588.9 547.9 92.1 640.0 EBIT 436.8 6.7 443.5 407.6 77.5 485.1 NPBT 242.0 3.8 245.8 200.1 31.4 231.5 NPAT 164.9 205

  5. Slide 5: Simon Mackenzie, Group Chief Executive Officer

    Simon Mackenzie Group Chief Executive Officer

  6. Slide 6: Agenda

    Agenda „ Results summary „ Sector performance – Electricity, Gas, Technology „ Progress, Fibre, Regulation „ CFO financial summary „ Looking ahead „ Questions

  7. Slide 7: Earnings, throughput and SAIDI summary

    Health chart 12 months ended 30 June SAIDI Regulatory Year - 12 months to 31 March Earnings – continuing operations ($m) Normal Extreme 1,182.0 260 1200 1,174.2 240 2008 220 1000 SAIDI Minutes 200 800 582.2 2009 180 547.9 160 150.8 Target 600 140 120 49.3 104.0 400 242.0 164.9 100 49.1 200.1 141.8 8

  8. Slide 8: Electricity (from continuing operations)

    Electricity (from continuing operations) ($m) 600 Revenue and EBITDA 533.6 490.3 increases 500 2008 400 2009 Volumes flat (-0.3%) 334.6 310.9 300 Residential 200 consumption up 2.2%, large commercial down 100 2.4%, SME down 0.7% 0 Revenue EBITDA Growth capital, 8.8% 7.6% replacement capital and main

  9. Slide 9: Gas

    Gas Volatile market ($m) 665.9 Performance 700 603.3 impacted by lower 600 2008 volumes, prices and 500 2009 increased competition 400 Legacy contracts 300 251.9 233.1 200 Hydro effect 100 New capital, 0 Revenue EBITDA replacement capital 9.4% 7.5% and maintenance spend $36m on transmission and Gas

  10. Slide 10: Technology

    Technology 50,000 smart meters installed ($m) 2008 Auckland fibre 80 69.2 71.0 2009 network largely complete 60 52.1 43.0 Transpower 40 contract announced Strong fibre 20 contender 0 Revenue EBITDA 2.6% 20.9%

  11. Slide 11: Progress

    Progress „ Capital and operational efficiency programmes „ Operational excellence „ Fibre „ Regulation „ Security of supply

  12. Slide 12: Efficiency programmes

    Efficiency programmes „ $20m in full year gross savings „ Fully integrated gas and electricity teams to work more efficiently „ Transitioning contracts with external suppliers „ Capital efficiency

  13. Slide 13: Operational excellence

    Operational excellence ƒ SAIDI 104.1 minutes vs Regulatory target of 104.0 minutes ƒ Kapuni uptime 98.15% ƒ $2.8 million saving in gas production costs

  14. Slide 14: Fibre

    Fibre „ Support the Government’s vision „ Strong contender „ Has to make commercial sense „ Unencumbered by legacy assets „ Ready to be part of the solution in Auckland and beyond „ Open access network is the key „ Set up NZRFG

  15. Slide 15: Regulation

    Regulation „ More robust framework, but still issues to work through „ Next 12 – 18 months critical „ Impact of global financial crisis must be taken into account „ Regulation must deliver incentive to invest and earn a commercially appropriate return

  16. Slide 16: Security of supply

    Security of supply ƒ An ongoing concern ƒ Work closely with Transpower ƒ NaAN project ƒ Rodney power station ƒ Electricity Review

  17. Slide 17: Financial Results, Alex Ball

    Financial Results Alex Ball Chief Financial Officer

  18. Slide 18: Financial result summary

    Financial result summary Contributors to group EBITDA growth (continuing operations) Increase Decrease 600 590 580 570 20.3 560 23.7 18.8 9.1 550 540 582.2 530 547.9 520 510 500 FY08 EBITDA Elect ricit y Gas Technology Corpor at e FY09 EBITDA Core businesses in Electricity and Gas remain key underly

  19. Slide 19: Results summary (continuing operations)

    Results summary (continuing operations) Year ended 30 June ($m) 1400 1200 1,182.0 1,174.2 2008 2009 1000 800 582.2 600 547.9 400 200.1 242.0 164.9 200 141.8 0 Revenue EBITDA NPBT NPAT -0.7% 6.3% 20.9% 16.3%

  20. Slide 20: Operating margins (continuing operations)

    Operating margins (continuing operations) Year ended 30 June 2008 2009 % 60 49.6 50 46.4 40 34.5 37.2 30 20.6 20 16.9 10 0 EBITDA/Total Revenue EBIT/Total Revenue NPBT/Total Revenue

  21. Slide 21: Operating statistics

    Operating statistics Year ended 30 June Actual Actual Actual 2009 2008 2007 Electricity Volumes (GWh) Greater Auckland(Auckland/Northern) 8,240.4 8,267.6 8,160.0 Wellington Electricity 2,440.7 2,435.1 8,240.4 10,708.3 10,595.1 Gas Volumes Gas Distribution (PJs) 21.3 21.6 22.0 Gas Transmission (PJs)

  22. Slide 22: Divisional results (continuing operations)

    Divisional results (continuing operations) Year ended 30 June 2009 Electricity Gas Technology Corporate/ Inter- Total Other segment $ millions Total revenue 533.6 603.3 71.0 11.9 (45.6) 1,174.2 Operating (199.0) (370.2) (18.9) (49.5) 45.6 (592.0) expenditure EBITDA 334.6 233.1 52.1 (37.6) - 582.2 %

  23. Slide 23: Dividend declared (cents per share)

    Dividend declared (cents per share) Year ended 30 June Cents per share 16 13.75 14 13.0 13.25 12 7.25 Final 6.5 6.75 10 8 6 6.5 6.5 6.5 Interim 4 2 0 2007 2008 2009 ƒ All dividends fully imputed ƒ Shareholders record date 08 September 2009 ƒ Payable 15 September 2009

  24. Slide 24: Capital expenditure (continuing operations)

    Capital expenditure (continuing operations) $ millions Electricity Gas Technology Corporate Total Replacement/ 75.9 14.4 19.0 5.3 114.6 Compliance Growth 51.8 18.4 46.4 7.5 124.1 2009 total 127.7 32.8 65.4 12.8 238.7 % of Total spend 53.5% 13.7% 27.4% 5.4% 100.0% 2008 total 128.5 38.0 28.4 9.1 204.0

  25. Slide 25: Cash flow (total operations)

    Cash flow (total operations) $ millions 2009 2008 Change EBITDA 588.9 640.0 (51.1) Net interest paid (198.2) (251.7) 53.5 Tax paid (62.4) (68.1) 5.7 Other 2.0 4.3 (2.3) Operating cash flow (OCF) 330.3 324.5 5.8 Replacement capex (112.8) (102.8) (10.0) Dividends to Vector shareholders (132.2) (130.0)

  26. Slide 26: Asset backing & capital structure

    Asset backing & capital structure as at 30 June 2009 2008 2007 2,485.7 3,106.6 2,947.7 Net debt $m Equity/total assets % 37.2 31.8 33.0 Debt (1)/debt (1)+equity % 54.7 62.0 60.4 Interest (net) cover X times 2.0 2.3 2.0 (1) Net debt

  27. Slide 27: Debt facilities maturity profile (30 June 2008)

    Debt facilities maturity profile (30 June 2008) Consolidated Group Debt Maturity Profile Sterling 7.625% Bonds 1,100.0 Credit Wrapped 1,000.0 Floating Rate Notes 900.0 USPP 800.0 700.0 6.81% Fixed Rate Debt ($m) 600.0 Notes 500.0 Credit Wrapped AUD Medium Term Notes 400.0 Credit Wrapped 300.0 Floati

  28. Slide 28: Debt facilities maturity profile (30 June 2009)

    Debt facilities maturity profile (30 June 2009) Consolidated Group Debt Maturity Profile Sterling 7.625% Bonds Credit Wrapped Floating Rate Notes 1,100.0 USPP 1,000.0 900.0 NZ Senior Bond 800.0 700.0 Credit Wrapped AUD Debt ($m) 600.0 Medium Term Notes 500.0 Credit Wrapped Floating Rate Notes 400.0

  29. Slide 29: Simon Mackenzie, Group Chief Executive Officer

    Simon Mackenzie Group Chief Executive Officer

  30. Slide 30: Looking ahead

    Looking ahead „ Network investment - fibre „ Electricity Review „ Smart meters „ Gas „ Renewables

  31. Slide 31: Network investment - fibre

    Network investment - fibre ƒ Proven credentials in building and managing network infrastructure in Auckland and in working with local and central government ƒ Vector committed to open access networks ƒ Commercially acceptable agreement via infrastructure fund ƒ NZ Regional Fibre Group ƒ Fibre to the

  32. Slide 32: Electricity review

    Electricity review ƒ Electricity Commission changes 9 ƒ Transmission investment 9 ƒ Lines businesses 9

  33. Slide 33: Smart metering

    Smart metering ƒ Future-proofed smart meter ƒ Foundation for energy efficiency and retail solutions ƒ Positioned for growth in other markets

  34. Slide 34: Gas

    Gas ƒ Competition continues ƒ Emissions Trading Scheme ƒ Working with GIC re critical industry arrangements

  35. Slide 35: Renewables

    Renewables Thin film PV panels Hills evacuated tube solar hot water heater Swift micro-wind turbine

  36. Slide 36: Summary

    Summary Delivering to customers and shareholders and concentrating on: „ Productivity and efficiency „ Regulation „ Growth „ Navigating the economic conditions

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Vector — FY2009 Earnings Presentation on 6ix