Chair and Group Chief Executive report
WELCOMING A NEW CHAIR The Vector Board conducts regular succession planning to ensure continuity in a constantly changing business, environmental and social context. At the 2022 Vector Annual Meeting, our Chair Jonathan Mason indicated that he would be retiring at the 2023 Annual Meeting after 10 years on the Board serving shareholders. We then announced in May 2023 that our Board had elected Doug McKay as its new Chair when Jonathan steps down. We’re looking forward to welcoming Doug into the Chair role; he takes this position after serving as an independent non-executive director since joining the Board in 2022. We’re fortunate to have a director of Doug’s calibre ready to step into the Chair role and continue to support Vector’s Symphony strategy to deliver for our customers. We’re also very thankful to Jonathan for his guidance and strong contributions to the Board, as director since 2013, Deputy Chair since 2018 and Chair since 2020.
Dividend Shareholders will receive an
Network performance and weather impact Electricity network performance for the first half of the financial year was below regulatory SAIDI and SAIFI limits. However, following the impacts of the 1-in-a-250-year Auckland Anniversary flooding, and then Cyclone Gabrielle just two weeks later, an event even more devastating than Cyclone Bola, the SAIDI limit for the regulatory year to 31 March 2023 has been breached. Other electricity distribution businesses impacted by Cyclone Gabrielle have been similarly affected and we are in discussion with the Commerce Commission over appropriate consideration of the impacts of these extreme weather events. Our cost estimate for the Auckland flooding and Cyclone Gabrielle is around $7.4 million of operating expenditure, reducing this year’s earnings, with a further $9.2 million of capital expenditure incurred replacing damaged assets. These events showed the benefit of prior investments to improve resilience; for example, our decision in 2012 to raise the floor level at our Wairau Road zone substation proving instrumental in minimising the impact at that location, despite severe flooding in the area.
Business performance Dedicated overviews of key business units are provided in the Business Segment section (page 27), while notable highlights and commentary on other businesses not covered elsewhere are provided here. The Vector Powersmart performance can be subject to factors such as the timing of contract delivery and the year end result reflects this. Vector Fibre has had a solid year with year-on-year revenue and earnings growth. This now transformed business is being received well by the wholesale fibre market in Auckland. New Hyperscale Data Centres and Mobile Operator 5G in-fill opportunities are now being pursued. VTS is the supplier of metering platform services to the newly established Vector Metering joint venture. This business unit is continuing to take solutions to market and explore specific new opportunities in response to emerging international demand for the types of solutions it provides. These targeted investments are driving some additional costs. HRV has had a challenging year in difficult trading conditions, with pressure on household discretionary
unimputed final dividend of 14.0 cents per share, comprising an ordinary dividend of 8.5 cents and a special dividend of 5.5 cents in recognition of the gain from the sale of 50% of the metering business. The Board will review Vector’s future dividend policy following release of the Commerce Commission’s Input Methodologies Review due in December 2023. We expect to announce any changes to the dividend policy with the release of our interim results in February 2024. The final dividend will be paid to investors who are on the register at 6 September 2023 and distributed to investors on 14 September 2023. Refinancing and balance sheet The sale of a 50% interest in Vector Metering has strengthened our balance sheet. As a result of the sale, Vector’s gearing as at 30 June 2023 fell to 33.1%, down from 58.2% a year earlier. While the proceeds from the sale have been applied to debt reduction, Vector now has a stronger balance sheet to continue to support network growth in Auckland.
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Vector Annual Report 2023
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