Vector Annual Report 2019

our year Steady earnings performance The group delivered a steady earnings performance for the year, with the adjusted EBITDA of $485.8 million ahead of FY18 and in the mid-point of the guidance range provided over the year. 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 expenditure to improve electricity network reliability and the underperformance of E-Co Products Group (trading as HRV). Group net profit after tax was $84.0 million and includes a non-cash impairment of $46.6 million in respect of E-Co Products Group. The prior year’s net profit of $149.8 million included a one-off tax gain of $16.7 million. If we exclude these, Group net profit after tax of $130.6 million was down slightly on the prior year. As a result of the disappointing performance of E-Co Products Group leading to impairment, we have new leadership in place and have repositioned the business with our other technology solutions, through Vector PowerSmart. More detailed information about our financial performance is provided in the Financial Review on pages 16 to 17. Dividend Our steady earnings performance enabled the Board to declare a final dividend of 8.25 cents per share, taking the full year’s dividend to 16.50 cents, up from 16.25 cents last year. Lifting our customer delivery Auckland’s relentless growth continues, with 14,322 new electricity and gas connections over the year, averaging around 275 connections each week. Combined with ever-changing customer behaviour, this growth continues to provide significant opportunities and, at the same time, challenges. Whether it be constructing new assets, adding intelligence to our networks and systems, or developing energy solutions – we have long understood that putting customers’ needs at the centre is essential.

Dame Alison Paterson CHAIR

Simon Mackenzie GROUP CHIEF EXECUTIVE

We invested a further $260.9 million – or $5 million every week – in our networks to make them smarter, more resilient and to support Auckland’s growth. Our strengthened focus on electricity network reliability is part of our commitment to meet network quality targets in the 2020 regulatory year. During the year we successfully integrated a software platform into our network which has been co-developed with technology firmmPrest. In the long-term, this platform will support our key objective of keeping energy prices affordable for consumers, while still meeting their expectations around network reliability and enabling energy choice. This exciting project milestone has been made possible by the increasing focus on digitisation of our company over recent years.

We have also continued to invest in our wider portfolio of businesses which remain central to providing the choice and control our customers demand. Further information on how our businesses have delivered for customers this year can be found on pages 26 to 31. Technology leading change Vector’s group of Technology businesses is an integral part of our vision to create a new energy future. We are pleased with the ongoing growth of our smart metering business Vector AMS, with 1.56 million meters now installed in homes and businesses across New Zealand and Australia.

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