Announcement
HALFYR: VCT: Vector Half Year Results
08:30am
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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