GROUP CHIEF EXECUTIVE’S Report
THE BALANCE OF POWER IS SHIFTING
A pleasing financial result is testimony to the hard work and commitment of all the teams across the multiple businesses that make up Vector, and to our investors for their faith in our ability to continue to generate competitive returns. Winning the Edison Electric Asia-Oceania shows that we are a top performer and I wish to take this opportunity to thank everyone at Vector for all they’ve done to make this win possible. Institute (EEI) award for best performing utility in
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Group net profit from continuing operations rose 186.8% to $168.9 million from $58.9 million. The uplift was due to the $64 million impairment of the Gas Trading division in the prior year; growth in capital contributions; lower interest costs; and a one-off tax gain of $15 million following the Court of Appeal ruling in Vector’s favour over the tax treatment of the sale of rights to use our Penrose to Hobson Street tunnel. Overall group net profit of $168.9 million was down 38.4% on the prior year result, which was boosted by the $164 million gain on sale of Vector Gas, offset by the impairment to Gas Trading. Vector’s balance sheet remains strong, with gearing as at 30 June 2017 at 47.1%, up from 43.7% a year ago and 43.9% at 31 December 2016. The $960 million proceeds of the sale of Vector Gas were initially applied to debt repayment, and are now being redeployed to support growth in our Auckland networks and across our unregulated portfolio. Capital expenditure (capex) rose 13.9% to $367.4 million from $322.6 million. The increase in capital expenditure was driven by growth in Auckland, metering and expenditure associated with the OnGas Bottle Swap plant in South Auckland. Capex for the regulated business rose 4.8% to $210.6 million from $201.0 million. Capex for the unregulated businesses and corporate rose 28.9% to $156.8 million from $121.6 million. This year, as we have continued to acquire new businesses and expand into new markets, we have once again shown that Vector is not a company to stand still. We are fundamentally committed to providing the best solutions we can for our customers, and we are unafraid to challenge traditional models in order to make that happen.
SIMON MACKENZIE GROUP CHIEF EXECUTIVE
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