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Steady earnings performance The Group delivered a steady earnings performance for the year, with the adjusted EBITDA of $490.0 million, $4.2 million ahead of FY19. Our revenues continued to grow from investment in metering in New Zealand and Australia, however we still face challenges given the recent electricity regulatory reset and interest rate environment. These gains were partially offset by increased maintenance expenditure to improve electricity network reliability, as well as the impact of COVID-19, which was particularly significant for the E-Co Products Group, which had demonstrated improved performance prior to ceasing operations during Alert Level 4 lockdown. Group net profit after tax was $97.3 million which is an improvement on the previous year. More detailed information about our financial performance is provided in the Financial Review on pages 12 to 13. Dividend As announced in our interim report, the Board has decided to move from a progressive dividend policy, to a policy of maintaining the current dividend of 16.5 cents per annum, with the expectation of future dividend growth based on projected growth in Vector’s businesses. This year, 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. The final dividend will be paid to investors who are on the register at 14 September 2020 and distributed to investors on 21 September 2020.
COVID-19 network demand impact Understanding how and why demand patterns change over time is essential for efficient network planning and investment. Throughout each stage of the COVID-19 lockdown, Vector observed significant changes in consumption trends across our electricity and gas networks. At the start of Alert Level 4 on 25 March 2020, volume across our electricity network dropped by approximately 15% compared with the average consumption of the previous three years. Across our gas network it dropped by approximately 22%. For the first time, weekday commercial load profiles across both networks resembled those of a typical weekend. With more people living, working and schooling from home, residential consumption during Alert Level 4 increased by approximately 13%. We also noticed morning peaks started later in the day and a midday peak forming for the first time on record. When the country entered COVID-19 Alert Level 1, residential trends largely returned to normal; however, commercial energy usage remains suppressed compared with historical averages. Vector continues to advocate for greater access to customer advanced meter data. These insights would allow us to harness the latest data analysis technologies to improve investment decisions and forecasting methods for new customer growth, as well as improve customer experiences by enabling more accurate customer communication about a network outage and more coordinated outage responses.
One of the biggest lessons from the past year is how important it is to be ready and willing to adapt to change within an unchartered and fast- moving environment. As a provider of essential services, Vector is proud of the way our people responded to the COVID-19 global pandemic. Whether it meant putting the needs of our customers and communities ahead of their own fears or working collaboratively to find an innovative solution to a new problem – our people showed courage and determination at every turn. As well as a summary of our past year’s performance, this report includes tributes to the outstanding commitment and dedication of our people and field service partners, who went above and beyond for our customers in the most unsettling of circumstances. In addition to adapting admirably to change, our people and partners have been the driving force behind Vector’s exciting progress towards our new energy future vision in FY20. Despite the challenges of today, our integrated Group strategy we call ‘Symphony’ is preparing us for the opportunities of tomorrow. Through Symphony, we are tracking well towards our objective of providing shareholders with more options for sustainable returns – further defining our company as an innovative energy group with a growing local and international impact.
Chair and Group Chief Executive report
THE INTERPLAY OF TODAY AND TOMORROW
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