Announcement

FLLYR: VCT: VECTOR DELIVERS STEADY FY20 RESULT 08:31am 
VCT
27/08/2020 08:31
FLLYR
PRICE SENSITIVE
REL: 0831 HRS Vector Limited (NS)

FLLYR: VCT: VECTOR DELIVERS STEADY FY20 RESULT

27 August 2020 - Vector Group (NZX: VCT) is pleased to announce a steady
earnings performance for the 12 months to 30 June 2020, with adjusted
earnings before interest, tax, depreciation and amortisation (Adjusted
EBITDA)[1] of $490.0 million, $4.2 million ahead of FY19.

The Board has determined that shareholders will receive a final dividend of
8.25 cents per share imputed at 10.5%, taking the full year partially imputed
dividend to 16.5 cents per share.

Group net profit after tax was $97.3 million and includes a non-cash
impairment of $32.0 million in respect of E-Co Products Group.

Vector Chair Dame Alison Paterson said, "We are pleased with our performance
this financial year, despite some challenging and uncertain conditions. The
Board remains confident in the company's strategy, which is continuing to
drive progress towards defining Vector as an innovative energy group
providing sustainable shareholder returns through a diverse portfolio of
businesses. I would like to thank our people and key partners for the way
they have adapted to continue to deliver essential services to our customers
throughout the COVID-19 lockdowns."

Vector Group Chief Executive Simon Mackenzie said, "There were several
highlights to the 2020 financial year including the recent announcement of
our strategic alliance with Amazon Web Services.

"Significantly, the sale of the Kapuni Gas Treatment Plant in March to Todd
Energy marked a key milestone for our Gas Trading business. Bringing the
ownership of the plant and field together clears the way for Todd to invest
in developing the field. The deal includes long-term supply agreements which
means we can support supply to our natural gas and LPG customers.

"Our metering business grew strongly with 119,003 advanced meters installed
in Australia and 36,350 in New Zealand during the year. In Australia, we are
now averaging approximately 10,000 installations per month, which is
encouraging growth in this competitive market.

"New electricity connections increased to 12,231, up from 11,000 in the prior
year, while new gas connections were down 3.6% to 3,201. This year we have
invested $317.1m in the Auckland electricity and gas networks to improve
safety, reliability and resilience of our networks and facilitate Auckland's
growth. This is a 21.5% increase on the previous year."

Vector PowerSmart has completed the building of New Zealand's largest solar
installation over Watercare's waste-water treatment plant. The 1MW floating
solar array is the country's first floating solar array and first
megawatt-scale solar system.

Under the new regulatory settings which came into effect on 1 April 2020,
Vector is subject to a revenue cap over a five-year period, compared to a
price cap in the previous period. A feature of the current regime is that any
revenue under recovery can be recovered in subsequent years. Given the impact
of Covid-19 on revenues, we are changing our previous policy and will use
loss rental rebates, allocated by Transpower, to offset future customer
prices increases. It is important to note that consumers will not be
disadvantaged by this as it will limit future price shocks and any excess
will be returned to consumers later.

Vector's response to COVID-19: Key actions and initiatives

Vector continued to provide essential services throughout the COVID-19
lockdown periods in the reporting period. Acknowledging the necessity of its
services, Vector temporarily halted planned outages across the electricity
and gas networks to minimise disruption to customers during the first
lockdown, with works only going ahead if they were critical for safety,
maintenance, or to support other essential services to operate.

The company also initiated a programme of work alongside other gas and
electricity network providers to offer business customers three-month payment
deferral plans.

The E-Co Products Group was adversely impacted by the COVID-19 lockdown.
Vector has taken a conservative position and impaired the carrying value of
this business to reflect the uncertain economic environment Vector is
operating in.

Looking ahead

For the coming financial year Vector is targeting adjusted EBITDA in the
range of $480m to $500m.

In July 2020, Vector announced a strategic alliance with Amazon Web Services
(AWS) to jointly develop the New Energy Platform, aimed at changing how
energy is managed, delivered and consumed. Partnering with like-minded global
companies such as AWS is evidence of Vector's Symphony strategy in action -
of leveraging data and innovation in order to deliver cleaner, more
affordable and resilient energy options for consumers.

"We believe partnerships such as this are critical to the new energy future,
and our focus in FY21 remains on developing solutions that deliver more
choice to consumers," said Mr Mackenzie. "We will continue to explore
strategic partnerships that enable us to drive our Symphony strategy forward,
support decarbonisation and the electrification of vehicles, and bring
innovation and customer-centric solutions to the market."

In April, we saw a significant negative price reset in our electricity
business, with the new Default Price-Path 3 (DPP3) regulatory settings coming
into effect. Mr Mackenzie said that Vector remains concerned by regulatory
settings and their impact on the company's ability to invest.

He said the economic uncertainties as a result of COVID-19 will be with us
for some time but Vector remains confident in its strategy; and the current
environment further highlights the need for smart investment and an
unfaltering focus on customers.

Vector's Board of Directors

Mr Mackenzie said, "I would like to acknowledge Dame Alison Paterson, who
will be stepping down as Vector's Chair next month. Dame Alison's governance
experience is unparalleled in New Zealand, and we have benefited from her
guidance over the past few years. On behalf of Vector, we thank her for her
contribution and wish her well in retirement."

As announced in June 2020, current non-executive director, Jonathan Mason
will take on the role of Chair after Dame Alison's retirement at the Annual
Shareholder Meeting on 25 September 2020.

[1] Excludes capital contributions

ENDS

Investor contact

Jason Hollingworth, Chief Financial Officer, Vector
Jason.hollingworth@vector.co.nz, 021 312 928

Media contact

Rachel Reynolds, Senior Communications Partner, Vector
Rachel.reynolds@vector.co.nz, 021 419 501

About Vector

Vector is New Zealand's leading network infrastructure company which runs a
portfolio of businesses delivering energy and communication services to more
than one million homes and commercial customers across Australasia. Vector is
leading the country in creating a new energy future for customers and
continues to grow and invest in the growth of Auckland, and in a wide range
of activities and locations. Vector is listed on the New Zealand Stock
Exchange with ticker symbol VCT. Our majority shareholder, with voting rights
of 75.1%, is Entrust. For further information, visit www.vector.co.nz
End CA:00358746 For:VCT Type:FLLYR Time:2020-08-27 08:31:08

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