Vector Annual Report 2017

NON-GAAP FINANCIAL INFORMATION

Vector’s standard profit measure prepared under New Zealand Generally Accepted Accounting Practice (GAAP) is net profit. Vector has used non-GAAP profit measures when discussing financial performance in this document. The directors and management believe that these measures provide useful information as they are used internally to evaluate performance of business units, to establish operational goals and to allocate resources. For a more comprehensive discussion on the use of non- GAAP profit measures, please refer to the policy ‘Reporting non-GAAP profit measures’ available on our website ( vector.co.nz ). Non-GAAP profit measures are not prepared in accordance with NZ IFRS (New Zealand International Financial Reporting Standards) and are not uniformly defined; therefore, the non-GAAP profit measures reported in this document may not be comparable with those that other companies report and should not be viewed in isolation from or considered as a substitute for measures reported by Vector in accordance with NZ IFRS. DEFINITIONS EBITDA: Earnings before interest, taxation, depreciation and amortisation from continuing operations Adjusted EBITDA: EBITDA from continuing operations adjusted for fair value changes, associates, impairments, capital contributions, and significant one-off gains, losses, revenues and/or expenses.

GAAP TO NON-GAAP RECONCILIATION YEAR ENDED 30 JUNE ($ MILLION)

Group EBITDA and adjusted EBITDA from continuing operations

2017

2016

Reported net profit for the period (GAAP)

168.9 137.3

58.9

Add back: net interest costs 1 Add back: tax (benefit)/expense 1

168.8

34.1

44.3

Add back: depreciation and amortisation 1

199.6 539.9

194.6 466.6

EBITDA

Adjusted for: Associates (share of net (profit)/loss) 1

(1.6)

(2.8)

Capital contributions 1

(62.3)

(49.8)

Fair value change on financial instruments 1

(1.6)

(2.4)

Impairment 1

61.4

Adjusted EBITDA

474.4

473.0

1. Extracted from audited financial statements

2017

2016

YEAR ENDED 30 JUNE ($ MILLION)

REPORTED SEGMENT EBITDA

LESS CAPITAL CONTRIBUTIONS

SEGMENT ADJUSTED EBITDA

REPORTED SEGMENT EBITDA

LESS CAPITAL CONTRIBUTIONS

SEGMENT ADJUSTED EBITDA

Segment adjusted EBITDA

Technology Gas Trading

123.6

(1.1)

122.5

114.4

(0.9)

113.5

36.9

36.9

40.6

40.6

Unregulated segments

160.5

(1.1)

159.4

155.0

(0.9)

154.1

Regulated Networks – continuing Regulated Networks – discontinuing

422.4

(61.2)

361.2

417.4

(48.9)

368.5

79.1

(3.8)

75.3

Regulated segment

422.4

(61.2)

361.2

496.5

(52.7)

443.8

Corporate

(46.2)

(46.2)

(49.6)

(49.6)

TOTAL

536.7 536.7

(62.3) (62.3)

474.4 474.4

601.9 522.8

(53.6) (49.8)

548.3 473.0

TOTAL – continuing operations only

74

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