Announcement

HALFYR: VCT: Vector Half Year Results 08:30a.m. 
VCT  
25/02/2020 08:30  
HALFYR  
PRICE SENSITIVE  
REL: 0830 HRS Vector Limited  
 
HALFYR: VCT: Vector Half Year Results  
 
Steady HY20 adjusted EBITDA result in line with expectations.  
Regulatory reset gives greater clarity for outlook and dividend policy.  
 
Vector delivered a steady earnings performance for the HY 2020 period, with  
the adjusted EBITDA of $264.5 million in line with last year's comparable  
result.  
 
Vector Chair Dame Alison Paterson said, "While our revenues continued to  
benefit from strong connection growth across our networks and the further  
expansion of the metering business in New Zealand and Australia, these gains  
were partially offset by increased maintenance to improve electricity network  
reliability.  
 
"Vector's shareholders will receive a partially imputed HY dividend of 8.25  
cents per share.  
 
"When the Vector Board approved the current dividend policy in 2017 it was  
noted that the policy would be reviewed having regard to the impact on  
Vector's revenue of the Commerce Commission's default price-quality path  
regulatory reset (DPP3) for Vector's electricity network. The DPP3 period  
comes into effect from 1 April 2020.  
 
"The Board has decided to move from a progressive dividend policy of  
increasing dividends by 0.25 cents per annum, to a policy of maintaining the  
current dividend of 16.5 cents per annum with the expectation of continuing  
to increase dividends in the future based on projected growth in Vector's  
businesses. Vector will attach imputation credits to dividends at a rate of  
10.5%," she said.  
 
Vector will ensure that in considering the payment of any dividend, the  
company will:  
 
* maintain its current BBB credit rating with Standard & Poor's, or  
equivalent;  
 
* have the financial capacity to meet its medium-term investment and  
operating requirements, and;  
 
* comply with all funding covenants and the solvency test in the Companies  
Act.  
 
Dividends are made only at the discretion of the Board of Vector. The payment  
of dividends is not guaranteed and Vector's dividend policy may change.  
 
Vector's group net profit after tax was $80.5 million, down $2.8 million (or  
3.4%) on the prior year's result. This result was largely driven by higher  
depreciation and amortisation partially offset by higher capital  
contributions and lower interest cost.  
 
Dame Alison said, "During the period we have invested significant capital  
expenditure to improve asset reliability, support growth in Auckland, as well  
as investment to support increasing deployment of advanced meters. Total  
capital expenditure in the first six months has been $240.0 million, an  
increase of $38.9 million or 19.3% on the prior period."  
 
Landmark decisions during the period, particularly confirmed regulatory  
settings and the sale of the Kapuni Gas Treatment Plant to Todd Energy, have  
helped further refine Vector's outlook and direction.  
 
Vector Group Chief Executive, Simon Mackenzie said, "Acknowledging the  
challenges and opportunities ahead of us, we remain committed to our new  
energy future vision and are confident we have the right strategy in place to  
deliver for our customers.  
 
"We acknowledge that due to our recently confirmed regulatory settings, we  
are limited in how much we can invest in growing and maintaining our networks  
to keep pace with Auckland's rapid growth, while also addressing additional  
pressures driven by the electrification of transport and changing customer  
behaviours. We remain committed to working with our stakeholders to overcome  
these challenges, and to targeting investment as efficiently as we can.  
 
"In terms of our core electricity business, Vector remains committed to  
meeting its regulatory compliance targets with a number of initiatives  
focused on improving restoration times. This included commissioning a new  
equipment depot in Helensville to help speed up restoration efforts in the  
North and West of Auckland.  
 
"As was reported in our most recent operational update, SAIDI minutes for the  
nine months ending 31 December 2019 were 13.7% lower than the comparable  
period, which reflects the significant investment being made to improve  
network resilience, as well as fewer extreme weather events," he said.  
 
Adjusted EBITDA for electricity and gas distribution in the six months to 31  
December 2019 was down $9.5 million to $189.2 million - a 4.8% decrease  
compared with the prior period. During the period Vector also invested  
regulated capex of $156.0 million to lift network integrity and enable  
Auckland growth.  
 
Adjusted EBITDA for the Metering segment was $76.1 million in the six-months  
to 31 December 2019, up $8.0 million or 11.7% from a year earlier. Metering  
capex invested in the first half-year increased by 8.9% to $65.0 million,  
with most of this increase reflecting the acceleration of deployment of new  
advanced meters in Australia.  
 
"Our advanced meter base grew 10.8% to 1.64 million from 1.48 million the  
year before. We have now deployed over 221,000 advanced meters in Australia  
and are on target to install between 130,000 and 140,000 meters in FY20.  
 
"The growth and innovation opportunities for metering in both New Zealand and  
Australia are significant. With continued investment and focus on customer  
service, Vector Metering is on track to deliver another solid performance in  
FY20", Simon said.  
 
Gas Trading business's financial performance in the six-months to 31 December  
2019 saw adjusted EBITDA flat at $20.8 million.  
 
ENDS  
 
To read a copy of the HY20 Report, click here:  
https://www.vector.co.nz/investors/reports  
 
Media contact  
 
Elissa Downey, Acting Senior Manager Corporate Communications,  
 
Elissa.downey@vector.co.nz 021 866 146  
 
Investor contact  
Jason Hollingworth, Chief Financial Officer, Jason.hollingworth@vector.co.nz  
021 312 928  
 
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 the country. 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:00348876 For:VCT Type:HALFYR Time:2020-02-25 08:30:53  

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