VECTOR DELIVERS STRONG FULL YEAR RESULTS
creating a new energy future
VECTOR DELIVERS STRONG FULL YEAR RESULTS
• Adjusted EBITDA of $513.5 million, up $23.5 million or 4.8% on last year.
• Group net profit after tax of $194.6 million, up $97.3 million from the prior year.
• Final dividend 8.50c, taking full year dividend to 16.75 cents per share;
imputation at 10.5%
• Electricity network quality performance within regulatory SAIDI limits for
regulatory year to 31 March 2021
• $529.5 million in gross capital expenditure, an increase of $40.8 million or 8.3%
• First product from AWS strategic alliance delivered, progress advances
towards second
Vector Group (NZX: VCT) today announces a strong result for the full 2021 financial year,
with adjusted earnings before interest, tax, depreciation and amortisation (adjusted EBITDA)
1
of $513.5 million, up $23.5 million or 4.8% on the prior year.
Vector Chair Jonathan Mason said: “Our clear strategy has enabled us to deliver a strong
financial result in the face of a challenging environment that has included continued
disruption from Covid-19. Group net profit after tax was $194.6 million, up $97.3 million from
the prior year. The result was largely due to increased earnings, higher capital contributions
and lower interest cost more than offsetting higher depreciation and amortisation. The prior
year also included a non-cash impairment of $32.0 million.
“We commend our teams who have continued to respond to customer needs with urgency,
commitment and adaptiveness, as we continue to find ways to contribute positively to the
1
EBITDA and Adjusted EBITDA are non-GAAP measures which the directors and management believe provide useful
information as they are used internally to evaluate performance of business units, to establish operational goals and to allocate
resources. See page 44 of the annual report for further details or click on this link to see Vector’s policy.
market release
24 August 2021
creating a new energy future
global challenge of decarbonisation. Through our strategy we are achieving those outcomes
and continuing to deliver strong results for our shareholders.
“The Board has determined that shareholders will receive a final dividend of 8.50 cents per
share imputed at 10.5%
2
, taking the full year partially imputed dividend to 16.75 cents per
share.
“The Board has announced the appointment of Anne Urlwin as Director of Vector Limited,
with effect from 1 September 2021. We are delighted with Anne’s appointment as she brings
a broad range of complementary experience and insights to the existing Board, including
governance roles in renewable energy, infrastructure, telecommunications, and other
sectors. We look forward to welcoming her to the Vector Board when she starts with us in
September.”
Group Chief Executive Simon Mackenzie said: “We’re pleased to report strong financial
results, especially as we continue to see returns from our significant investments in our
regulated businesses falling notably short of the allowable regulated return due to interest
rates dropping at the same time as regulatory price-quality paths are reset, as well as
inflation forecast assumptions in the regulatory reset.
“Vector’s results reflect the progress we’ve seen across our portfolio of businesses as we put
the customer at the centre of the energy system. This is becoming increasingly important as,
over the past twelve months, we have seen a dramatic sharpening of focus around the world
and in New Zealand on climate change, and the efforts required across the world to transition
to a low emissions future. Not only is our energy infrastructure critical to our daily lives, but
also to our collective future through its role in enabling the decarbonisation of the economy,
including transport and industry. Legacy energy systems across the whole sector are
increasingly unable to meet these new challenges, and must become vastly more
sophisticated and adaptable. Vector is well advanced globally in developing and operating
digital platforms to manage these changing requirements.
“By using data, analytics and technology to create new solutions and options, we can help
customers manage the transition to a low carbon system. Fundamentally, it is about creating
2
Further information on imputation credits is available on our website under Industry Updates.
creating a new energy future
customer choice, and delivering decarbonisation while ensuring energy solutions are reliable
and affordable for customers.
“We’re continuing to look beyond the energy sector and internationally to find other world-
leading companies to partner with and help us achieve our goals.
“Total capital expenditure in the year was $529.5 million, an increase of $40.8 million or 8.3%
from the prior year. The increase reflected continued investment in network infrastructure to
support Auckland’s growth, growth in our Australian metering business, increasing
deployments of advanced meters, and increasing stock levels to counteract risks associated
with global production shortages linked to Covid-19.
Developing new revenue opportunities
Mr Mackenzie said: “We have further developed our strategy to leverage the infrastructure
and technology we use in our existing businesses in order to create commercial opportunities
such as providing solutions to third parties.
“Vector Technology Services (VTS) has been established to take to market solutions we
have developed as part of our own digital transformation journey. We are exploring global
opportunities for key priority solutions including the New Energy Platform created through our
strategic alliance with Amazon Web Services (AWS), Distributed Energy Resource
Management Systems (DERMS), cyber security, and others. As an example, VTS is now
providing cyber security services to another New Zealand electricity distribution business,
leveraging Vector’s 24/7 security operations centre.
“Vector Property Services has been established to explore the commercial potential of our
property and facilities assets, in the context of the opportunities to partner with third parties to
better utilise some of our passive land, building and tunnel assets, such as co-location of
other infrastructure, and broader development in line with our Symphony strategy.”
Regulated networks
Mr Mackenzie said: ““Despite the adverse impact of the DPP3 reset, the regulated networks
delivered a solid result in the period.
creating a new energy future
“Adjusted EBITDA for the regulated networks was $350.7 million, up $13.1 million or 3.9%
against the prior year. This includes a full year impact of the Commerce Commission’s DPP3
price reset, which came into effect on 1 April 2020 and saw prices reduce by 6.9%, and the
retention of loss rental rebates (LRRs) in order to partially mitigate future electricity
distribution price increases, and to offset the impact of electricity volume reductions on
revenue under the new revenue cap regulatory regime.”
“We are also pleased to report that in the last regulatory year to 31 March 2021, we have
achieved compliance with our regulatory System Average Interruption Duration Index (SAIDI)
limit. This follows a sustained focus on improving network performance for our customers
over previous years. We acknowledge the efforts of our own people and our Field Service
Providers in this outcome and we remain committed to this focus.
“While we continue to invest in improving network performance, we are also transforming our
electricity network through a combination of new engineering solutions and digitalisation to
meet the needs of the future. Our ongoing EV Smart Charging trial has demonstrated how
optimising existing network infrastructure using new technology can reduce the cost of EV
uptake while delivering reliable charging and a great user experience.”
Gas Trading
Gas Trading adjusted EBITDA was $27.4 million, down $6.5 million against the prior year
total of $33.9 million. The reduction in earnings was mainly due to the sale of the Kapuni gas
processing plant and associated assets, which took place in March 2020. This has been
replaced by the interest income earned on deferred consideration on the sale of the plant.
Metering
Mr Mackenzie said: “Our Metering business has had a strong year, with adjusted EBITDA
growing by $16.8 million, or 10.9%, to $171.6 million. This was a result of continued growth
in advanced meter deployments in New Zealand and Australia, and is a great result given the
challenges of Covid-19.
“We acknowledge and would like to recognise the resilience of our Australian teams in
particular, in the face of continued disruption within and across state boundaries from Covid-
19 resurgences.”
creating a new energy future
E-Co Products Group, Vector Powersmart, Vector Fibre
Mr Mackenzie said: “HRV has delivered a solid result despite the challenges of Covid and
continues to show improvement in what is a highly competitive environment, making a
positive financial contribution.
“Vector Powersmart had a challenging year that has seen a number of its projects in the
Pacific Islands impacted by Covid-19 issues. However there are ever increasing
opportunities arising in New Zealand as solar farms and developments expand. As such
Vector Powersmart is well positioned to advise and construct these solutions in New Zealand
whilst also continuing with projects in the Pacific when travel permits.
“Vector Fibre has delivered a steady performance over the year. High speed
telecommunications services are critical to customers, and we see Vector Fibre as key to this
opportunity as it leverages its fibre assets in the wholesale market.”
ENDS
Annual report download link: vector.co.nz/investors/reports
Investor contact
Jason Hollingworth, Chief Financial Officer, Vector
Jason.hollingworth@vector.co.nz, 021 312 928
Media contact
Matthew Britton, Senior Communications Partner, Vector
Matthew.britton@vector.co.nz, 021 224 2966
About Vector
Vector is an innovative New Zealand energy company which runs a portfolio of businesses
delivering energy and communication services to more than one million homes and
commercial customers across Australasia and the Pacific. Vector is leading the country in
creating a new energy future
creating a new energy future through its Symphony strategy, which puts customers at the heart
of the energy system. Vector is listed on the New Zealand Stock Exchange with ticker symbol
VCT. Our majority shareholder, with voting rights of 75.1%, is Entrust. For further information,
visit www.vector.co.nz
---
Creating
a new
energy future –
a bold vision
ANNUAL REPORT 2021
Our vision
1
Creating a new energy future a bold vision
isn’t
linear.
In pursuing our vision over the past few years,
we’ve had to be flexible and adaptable. We
haven’t been afraid to challenge the status quo.
As leaders of the transformation of the energy
sector, we know the ‘same old’ just won’t cut it.
We have the confidence to forge new solutions
and for our people to work differently, to think
differently. We have collaborated with global
technology companies and thought leaders who
share our view that innovation and digitalisation
are key to meeting the future needs of energy
systems and fast-evolving customer demands. As
governments, businesses and consumers urgently
take action to decarbonise, at Vector we are clear
on our vision – creating a new energy future.
It’s bold.
VECTOR ANNUAL REPORT 2021 /
2
About this report
This report, dated 23 August 2021, is a review of Vector’s financial and
operational performance for the year ended 30 June 2021.
The financial statements have been prepared in accordance with
appropriate accounting standards and have been independently
audited by KPMG.
The financial and operational information has been compiled in line
with NZX Listing Rules and recommendations for investor reporting.
The report has drawn from a wide range of information sources. This
includes: our stakeholders, customers, communities, sustainability
framework, value drivers, risk register, Board reports, asset
management plan, financial statements and our operational reports.
Throughout the report, we have focused on what matters most to our
stakeholders and our business.
Care has been taken to ensure all information in this report is
accurate, including internal assurance and verification processes and
Board approval.
Forward-looking statements in this report are based on best-
available information and assumptions regarding Vector’s businesses
and performance, the economy and other future conditions,
circumstances and results. As with any forecast, forward-looking
statements are subject to uncertainty. Vector’s actual results may vary
from those expressed or implied in these forward-looking statements.
Performance snapshot4
Chair and Group Chief Executive report6
Chief Financial Officer report12
Our people and safety14
Regulated networks16
Gas trading20
Metering21
Our climate and sustainability22
Our Board26
Our management team28
Governance report30
Entrust, majority shareholder of Vector39
Joint ventures and investments40
Operating statistics41
Financial performance trends42
Non-GAAP financial information44
Financials45
Independent auditor’s report90
Statutory information96
Financial calendar and directory106
Contents
3
Creating a new energy future – a bold vision
Performance
snapshot
680,099
NO. OF 9KG BOTTLE SWAPS
590,799
TOTAL ELECTRICITY CONNECTIONS
$
529.5
M
GROSS CAPEX INVESTED ACROSS
THE GROUP
$
513.5
M
ADJUSTED EBITDA
1
10.9
%
GROWTH IN EBITDA FOR OUR
METERING BUSINESS
BUSINESS PERFORMANCE
PEOPLE & COMMUNITIES
340,500
RESIDENTS IN THE ENTRUST DISTRICT
BENEFITTED BY MORE THAN $95
MILLION (2020) THANKS TO ENTRUST’S
SHAREHOLDING IN VECTOR
94
VECTOR LIGHTS SHOWS FOR THE
PEOPLE OF AUCKLAND AND VISITORS
100+
TRAINED MENTAL HEALTH
FIRST RESPONDERS
,
,
,
,
FY FY FYFYFY
,
,
,
,
,
NEW ELECTRICITY
CONNECTIONS
OVER THE
PAST 5 YEARS
AUCKLAND’S GROWTH CONTINUES,
WITH MORE NEW ELECTRICITY
CONNECTIONS EACH YEAR
$
194.6
M
GROUP NET PROFIT AFTER TAX
1.9
M
ADVANCED METERS ACROSS
NEW ZEALAND & AUSTRALIA
116,472
TOTAL GAS CONNECTIONS
1. EBITDA from continuing operations adjusted
for fair value changes, associates, third-party
contributions, and significant one-off gains,
losses, revenues and/or expenses. Refer to Non-
GAAP reconciliation on page 44.
VECTOR ANNUAL REPORT 2021 /
4
CLIMATE CHANGE
SHAREHOLDER
16.75
CENTS PER SHARE
FULL-YEAR DIVIDEND
INNOVATION
CLOSE TO
200
PARTICIPANTS IN
OUR EV SMART
CHARGING TRIAL
30
NUMBER OF HIGHLY SKILLED
DIGITAL AND ENGINEERING
ROLES CREATED ACROSS
VECTOR AND AMAZON WEB
SERVICES, BUILDING THE
NEW ENERGY PLATFORM
2
NUMBER OF SUSTAINABLE
ENERGY ASSOCIATION NZ
AWARDS WON BY VECTOR
POWERSMART
12
%
REDUCTION IN OUR
CARBON FOOTPRINT
IN THE PAST YEAR
(SCOPE 1, 2, AND 3)
5
Creating a new energy future a bold vision
Real progress
with Symphony
This is a crucial time in our industry, and
Vector is well positioned to respond
to the challenges and opportunities
decarbonisation will bring. We see this as
an opportunity to do things differently;
to be flexible, adaptable, and to innovate.
The past twelve months have seen a dramatic sharpening of focus around
the world and in New Zealand on climate change, and the efforts that will
be required across the world to transition to a low emissions future. In
New Zealand, the recommendations put forward by the Climate Change
Commission illustrate that our energy system must rapidly shift to a more
localised, consumer-centric model. Not only is our energy infrastructure critical
to our daily lives, but also to our collective future through its role in enabling
the decarbonisation of transport and industry. Legacy energy systems across
the whole sector are increasingly unable to meet these new challenges, and
must become vastly more sophisticated and adaptable. Vector is well advanced
globally in developing and operating digital platforms to manage these
changing requirements.
SIMON MACKENZIE
GROUP CHIEF EXECUTIVE
JONATHAN MASON
CHAIR
That’s why our vision is bold, because the
path isn’t straight and we can’t rely on
solutions of the past.
Our Symphony strategy puts the
customer at the centre of the energy
system, using data analytics and
technology to create new solutions and
options to help people manage the
transition to a low-carbon system. It will
also result in a more affordable transition
for customers, since the new solutions
we deploy alleviate the pressure to
invest in heavy infrastructure, and this
has a beneficial flow-on effect on the
prices our customers pay for the services
we provide. Fundamentally, it is about
creating customer choice, delivering
decarbonisation at the same time as
VECTOR ANNUAL REPORT 2021 /
6
Chair & Group Chief Executive Report
reliable and affordable energy solutions
for customers.
Over the past twelve months we have
seen continued progress against our
Symphony strategy across our portfolio
of businesses, as they deliver for our
Dividend
This year, shareholders will receive a
final dividend of 8.50 cents per share
imputed at 10.5%, taking the full-year
partially imputed dividend to 16.75 cents
per share. The final dividend will be paid
to investors who are on the register at
9 September 2021 and distributed to
investors on 16 September 2021.
LOOKING BACK
Business performance
This report contains separate
performance overviews and highlights
of three of our key business segments;
Regulated Networks, Gas Trading, and
Metering. However, this year has also
seen notable developments among our
other businesses.
We are excited by the establishment of
Vector Technology Services (VTS). VTS
will be focused on taking to market key
proprietary solutions to accelerate and
support other companies who are on
their own digital transformation journeys
to have access to world leading solutions
(page 8).
HRV has delivered a solid result
despite the challenges of Covid-19 and
continues to show improvement in
what is a challenging and competitive
environment, making a positive financial
contribution.
Vector Powersmart had a challenging
year that has seen a number of its
projects in the Pacific Islands impacted
by Covid-19 issues. However there are
ever increasing opportunities arising
in New Zealand as solar farms and
developments expand. As such Vector
Powersmart is well positioned to
advise and construct these solutions
in New Zealand whilst also continuing
with projects in the Pacific when travel
permits.
Vector Fibre has delivered a steady
performance over the year. High speed
telecommunications services are critical
to customers, and we see Vector Fibre as
key to this opportunity as it leverages its
fibre assets in the wholesale market.
customers, and at a group level as we
continue to reimagine what energy
systems are capable of. We’ve also
continued to look outside the energy
sector to find other companies that can
help us achieve our goals.
As we summarise in this report, this
strategy has enabled us to deliver a
strong financial result in the face of
continued disruption from Covid-19,
particularly in Auckland and parts of
Australia. We commend our teams who
have continued to respond to customer
needs with urgency, commitment and
adaptiveness, even as we continue to
find ways to contribute positively to the
global challenge of decarbonisation.
Strong earnings
Vector has delivered a strong result
for FY21, recording adjusted earnings
before interest, tax depreciation and
amortisation (adjusted EBITDA
1
) of
$513.5 million. This was up $23.5 million or
4.8% on last year’s result and is in line with
guidance provided at the half-year result.
Group net profit after tax was
$194.6 million or $97.3 million higher than
the prior year’s result due to a number of
factors including higher earnings, lower
interest cost, the impact of a non-cash
impairment in last year’s result, and an
increase in capital contributions.
Total capital expenditure for the
year was $529.5 million, an increase
of $40.8 million or 8.3% on the prior
year. The increase reflected continued
investment in infrastructure to
support Auckland’s growth, and, in our
Australian metering business, increasing
deployments of advanced meters, and
increasing stock levels to counteract
risks associated with global production
shortages linked to Covid-19.
$
513.5
M
ADJUSTED EBITDA
1
, UP $23.5 MILLION
OR 4.8% ON LAST YEAR’S RESULT
1. EBITDA from continuing operations adjusted for fair
value changes, associates, third-party contributions,
and significant one-off gains, losses, revenues and/or
expenses. Refer to Non-GAAP reconciliation on page 44.
“Our long-standing vision to create a
new energy future is also long-term
in its aspiration. We are proud of the
steps we are taking along the way.
7
Creating a new energy future – a bold vision
Enabling growth in Auckland
We continue to invest in the integrity
and reinforcement of the electricity
network supporting Auckland’s growth,
using a mix of traditional and non-
wired solutions. Our aim is to keep
pace with growth while also ensuring
the investments we make are efficient,
so that future costs are affordable for
our customers, and the network is
ready for the demands placed on it
from electrification.
In determining our capital investment
approach for the network, we must
navigate the complexities of a growing
city and multiple other infrastructure and
investment pipelines, including major
projects such as light rail or large housing
developments, which require significant
planning and investment from us.
LOOKING FORWARD
At the centre of the
energy transition
Electrification of the economy is at the
heart of New Zealand’s decarbonisation
efforts. The electrification of transport
will be part of this, as will distributed
energy resources such as solar and
batteries, new customer technology
solutions such as Vehicle-to-Home
charging, and new business models
such as peer to peer trading, enabling
customers to trade their excess energy.
Vector Property Services is a new unit
established to look at opportunities
within our property portfolio.
Ongoing impacts from Covid-19
As an essential services provider, in the
past twelve months we have maintained
our focus on ensuring the safety of our
people and communities in the face
of Covid-19, and ensuring our ability
to continue providing our essential
products and services.
We have seen significant workforce and
supply chain challenges across several of
our businesses, including metering, and
the procurement of common equipment
such as cabling for our electricity
distribution business. Through careful
planning and strong management we
have been successful in mitigating
disruption to our work programmes. We
have also had success in managing the
impacts of fluctuations in commodity
prices. We see these challenges as likely
to persist over the short term and are
working to mitigate their impact and
reduce our exposure.
We continually evolve our internal policies
and the ways we support our staff to
work safely, and their wellbeing, under
changing Covid-19 restrictions. We are
executing a comprehensive plan to
support the Covid-19 vaccine rollouts
across New Zealand and Australia with
information, access to medical experts to
answer individual questions, and other
practical support for our people (page 14).
Electricity network
quality performance
We are pleased to report that in the last
regulatory year to 31 March 2021, we
have seen improving network quality
performance within our regulatory
System Average Interruption Duration
Index (SAIDI) limit. This follows a
sustained focus on improving network
performance for our customers over
previous years. We acknowledge the
efforts of our own people and our Field
Service Providers in this outcome and
we remain committed to continuing
this focus.
$
194.6
M
GROUP NET PROFIT AFTER TAX, $97.3
MILLION HIGHER THAN THE PRIOR
YEAR’S RESULT
Developing new revenue
opportunities
We have further developed
our strategy to leverage the
infrastructure and technology
we use in our existing businesses
in order to create commercial
opportunities, such as providing
solutions to third parties.
Vector Technology Services
has been established to take to
market solutions developed as
part of our digital transformation
journey. This has led to investment
efficiencies through our choice
to partner with others to develop
these solutions, which Vector as
a customer benefits from, and
which avoid the need for us to seek
alternative solutions from third
party vendors. We are exploring
global opportunities for key priority
solutions including the New
Energy Platform created through
our strategic alliance with Amazon
Web Services (AWS), Distributed
Energy Resource Management
Systems (DERMS), cyber security,
and others. As an example, VTS
is now providing cyber security
services to another New Zealand
electricity distribution business,
leveraging Vector’s 24/7 security
operations centre.
Vector Property Services has
been established to explore the
commercial potential of our
property and facilities assets, in
the context of the opportunities to
partner with third parties to better
utilise some of our passive land,
building and tunnel assets, such as
co-location of other infrastructure,
and broader development in line
with our Symphony strategy.
VECTOR ANNUAL REPORT 2021 /
8
Chair & Group Chief Executive Report
Vector has long embraced this future
and our role in bringing it about, in
the countries we already operate in
and beyond.
Our Symphony strategy unites our
teams on a clear path into the future and
directs our activity, often in ways that put
our people at the forefront of emerging
technology and new solutions. One clear
example from the past twelve months is
our work to demonstrate the potential
for smart, algorithmically controlled,
electric vehicle (EV) charging technology
to enable lower transport emissions and
more efficient capital investment in the
infrastructure needed to support it (page
24). Another is our work with leading
global companies, such as Amazon
Web Services, to develop new products
and services, such as the New Energy
Platform (page 21). We are proud of the
opportunities Vector provides for our
people to contribute meaningfully to a
low-carbon future.
Energy affordability
Alongside decarbonisation, long-
term energy affordability continues
to be central to our strategy and our
ownership model. Earlier this year we
saw the vulnerability of our current
system to ‘dry year’ risk, where some
businesses faced high electricity prices.
The importance of energy affordability is
set to become even more significant in
the context of enabling electrification to
lower our carbon emissions.
At a consumer level, our ownership
model, being majority-owned by
Entrust, ensures our incentives are
aligned to deliver for our customers
and shareholders and places our focus
on getting the energy transition right.
We do not seek to build our way to
electrification, since that would be
unaffordable for our customers. Instead,
we seek to optimise the use of our
existing infrastructure through digital
solutions, and build where we need to.
Our Symphony strategy aims to find
solutions to deliver affordable, reliable
and clean energy. Our innovations in
data analytics, enabling distributed
energy solutions for homes and
businesses, such as solar, batteries, and
electric vehicle (EV) charging, and the
digitalisation of the electricity network
are designed to deliver value aligned
with this strategy.
Evolving our thinking on climate
risk and opportunity
We are evolving our thinking on
climate risk and opportunity as we
prepare ourselves and others for the
opportunities a decarbonised future will
bring. Vector has adopted a science-
based target for our own emissions
reduction plans, which complements our
earlier commitment to achieve net zero
emissions by 2030.
We are committed to supporting
decarbonisation in New Zealand, through
what we call our carbon ‘handprint’,
which is how we enable others to reduce
their carbon footprint.
Our Smart EV Charging trial in Auckland
is an example of our handprint in action
(page 24). Smart solutions like this would
enable car owners to switch to EVs
knowing they will be able to charge them
reliably and keep power affordable for all.
Climate-related
financial disclosures
New Zealand is the first country to
enshrine a Task Force on Climate-
related Financial Disclosures (TCFD)
reporting obligation on major private
sector entities. While that reporting
will not become mandatory until 2024,
we are embarking on this journey in
advance of that deadline. Our reasoning
is simple: it is in our interest to lead the
transformation of the energy sector
and to provide our stakeholders with
the information that serves their long-
term interests.
We are developing, for the first
time, our responses in relation to
recommendations from the TCFD.
Our TCFD report will show that
climate change brings both risks and
opportunities for Vector, and that with
our diverse portfolio of energy solutions
businesses, we are well positioned to
embrace the significant opportunities
presented by the energy transition. We
are also able to accelerate the energy
transition for the New Zealand economy.
We intend to publish our first TCFD
report soon.
Cyber security in the context of
‘Crimeware-as-a-Service’
Perpetrators of cyber threats have
vastly increased their sophistication in
recent years, to the point where, in a
mirror of our modern, global economy,
the cybercrime economy has seen a
decisive shift towards a ‘Crimeware-as-a-
Service’ model. At the same time, digital
platforms that reduce cost, and improve
efficiency and effectiveness, continue to
become increasingly important.
We continue to increase our cyber
security capabilities and have several key
partnerships in place with global leaders
in cyber security. While building this
capability to protect our own business,
we are creating tools that can be used
by other organisations in New Zealand
via VTS.
As the barriers to conducting cybercrime
continue to lower, we have seen a
number of large-scale, severe, well-
publicised security events. We are also
seeing increasing criticality for electricity
distribution, particularly in the context of
electrification. Against this context, we
are maintaining significant investment
“It is in our interest as a company to lead the
transformation of the energy sector and to
provide our stakeholders with the information
that serves their long-term interests.
9
Creating a new energy future – a bold vision
to continue to build on what we have
established so far, and to further evolve
the Vector cyber security capabilities
against our cyber security strategy
and roadmap.
Regulation and policy for a new
energy future
The Climate Change Commission’s
advice for the Government has
highlighted a number of opportunities
to improve the regulatory and
policy landscape to better enable
decarbonisation. A number of its
recommendations align with views
we have championed previously,
including increasing recognition of the
opportunities presented by distributed
energy resources, developing a national
energy strategy, and accelerating
the adoption of electric vehicles. We
look forward to continued positive
engagement with our regulators and the
Government to find solutions together.
We share the Commission’s view
that electricity networks should be
appropriately equipped, resourced
and incentivised to innovate so that
they can play their role in helping
electrification happen faster, and more
equitably. In particular, we agree with
the Commission’s comment, in its final
advice, that our regulatory framework
should be “sufficiently adaptive
to enable Electricity Distribution
Businesses to undertake the innovation
and investment required to meet climate
change outcomes”.
We also note the Clean Car Discount
scheme and the National Charging
Infrastructure Plan. The uptake of EVs is
something Vector has been preparing
for over the past few years, most recently
with our EV Smart Charging trial.
This has underscored the need for EV
charging to be smart, and connected
to electricity network management
systems. We strongly advocate for
a standard requiring this for new EV
chargers, otherwise our ability to use
this technology to benefit EV owners,
and all electricity customers, may
be constrained.
The future of gas
We were pleased to see the Climate
Change Commission’s final advice
recognises the complexities of a
transition away from the use of fossil
gas as an energy source in homes,
businesses and industry.
In particular, we support the need
for careful planning and industry
involvement around any transition away
from gas. A balanced transition, rather
than one that fails to plan sufficiently,
is most likely to meet the objectives
of Government, customers, and gas
asset owners. If a clear transition path
cannot be agreed, there are likely to be
significant customer cost implications.
For example, under the Climate Change
Commission’s demonstration transition
pathway, the cost to households,
consumers and commercial buildings
for appliance replacement and building
modifications to transition away from
gas could total $5.3 billion by 2050.
There would also be major disruptions
for businesses and households, as the
investment requirements of maintaining
gas infrastructure are passed to a
declining customer base. A managed
transition acknowledges the role low-
emissions gases such as biomethane or
hydrogen could play in the future, using
existing infrastructure. This is something
that we are exploring, along with others
in the industry (page 19).
We will continue to engage with
New Zealanders and the Government,
both together with our industry as part
of the Gas Infrastructure Group, and on
our own behalf, as final decisions are
worked through on the best possible
transition plan.
Upholding the regulatory compact
on gas distribution
We note the Commerce Commission is
tasked with resetting prices for regulated
gas pipelines businesses from 1 October
2022. As part of this process, Vector
intends to reconsider and possibly
republish our 10-year forecasts for our
gas distribution business in December,
as we learn more at that time about
the Government’s implementation
of the Climate Change Commission’s
recommendations around natural gas.
Vector maintains that an active dialogue
between regulators, the Government
and industry around this reset is
necessary to ensure any regulatory
compacts are upheld, especially at a
time when confidence needs to be
maintained to justify the significant
ongoing investments required to
maintain the integrity of existing gas
network infrastructure.
FINAL WORDS
Across our group we provide
infrastructure, products and services
that are increasingly critical for our
decarbonisation efforts. We must
continue to leverage new technology,
and business models, to provide our
customers with cleaner, more reliable
and affordable energy solutions into
the future.
In the coming year, while ensuring we
deliver essential services efficiently
and safely to our customers remains
paramount, we are also focusing on
delivering growth in our Australian
metering business, developing and
growing VTS, successfully responding
to the challenges we’re seeing around
resources, enabling Auckland growth,
and ensuring a sensible gas transition.
We are strongly positioned to enable
decarbonisation and continue delivering
strong results to our shareholders.
Jonathan Mason
Chair
Simon Mackenzie
Group Chief Executive
VECTOR ANNUAL REPORT 2021
10
Chair & Group Chief Executive Report
“Given our strategy, we are ideally
positioned to help solve big
challenges like decarbonisation,
and continue to deliver a strong
result to our shareholders.
SOUTHERN PAPRIKA, ONE OF OUR
COMMERCIAL CUSTOMERS IN WARKWORTH
11
Creating a new energy future a bold vision
A strong
financial result
Vector’s financial performance for the year reflects a strong result with adjusted
EBITDA
1
of $513.5 million. This was up $23.5 million or 4.8% on last year’s result.
Group net profit after tax was $194.6 million which was $97.3 million or 100%
higher than the prior year. The result was largely due to increased earnings,
higher capital contributions and lower interest cost being partially offset by
higher depreciation and amortisation. The prior year also included a non-cash
impairment of $32.0 million.
SEGMENT ADJUSTED EBITDA
1
Adjusted EBITDA
1
for our Regulated
Networks was $350.7 million, up
$13.1 million or 3.9% against the prior year.
Adjusted EBITDA1 includes a full-year
impact of the Commerce Commission’s
DPP3 price reset, which came into effect
on 1 April 2020 and saw prices reduce
by 6.9%, and the retention of loss rental
rebates (LRRs) in order to partially
mitigate future electricity distribution
price increases, and to offset the impact
of electricity volume reductions on
revenue under the new revenue cap
regulatory regime. Despite the adverse
impact of the DPP3 reset and inflation
forecast assumptions used to set DPP3,
the Regulated Networks delivered a solid
result in the period. During the year we
retained a total of $22.8 million of LRRs,
and we have announced our intention
to pass on a credit of $20 to Auckland
electricity account holders later in the
year, representing a distribution of about
$12 million of LRRs directly to customers.
Gas Trading adjusted EBITDA
1
was
$27.4 million, down $6.5 million against
Cash flow
Operating cash flow was 25.6% higher
at $499.1 million. This increase was
largely due to an increase in capital
contributions and lower tax paid as a
result of the reduction in the level of
dividend imputation.
Capital expenditure
Gross capital expenditure was $529.5
million, $40.8 million (8.3%) higher than
last year. This increase reflected ongoing
investment in infrastructure to support
Auckland’s continued growth, and
increasing deployments of advanced
meters as market demand continues to
accelerate in Australia. Note this increase
in capital expenditure was partly funded
by a $36.1 million increase in capital
contributions recognised as income
under IFRS.
In FY21 we invested $314.7 million
gross capital expenditure to facilitate
Auckland’s growth, and improve the
safety, reliability and resilience of our
electricity and gas networks. This
maintains the high level of network
capital expenditure invested over recent
years for replacements and upgrades,
improving network quality performance
within regulatory limits, and to
improve reliability.
Balance sheet
Vector continues to maintain a strong
balance sheet. Our 30 June 2021 gearing,
as measured by economic net debt
to economic net debt plus adjusted
equity, rose to 56.5% from 55.2% at the
beginning of the year. We remain an
‘investment-grade’ credit risk with a
Baa1 rating from Moody’s and BBB from
Standard & Poor’s.
Dividend
This year, shareholders will receive a
final dividend of 8.50 cents per share
imputed at 10.5%, taking the full-year
partially imputed dividend to 16.75 cents
per share. The final dividend will be paid
to investors who are on the register at
9 September 2021 and distributed to
investors on 16 September 2021.
1. EBITDA from continuing operations adjusted for fair
value changes, associates, third-party contributions,
and significant one-off gains, losses, revenues and/
or expenses. Refer to Non-GAAP reconciliation on
page 44.
$
171.6
M
ADJUSTED EBITDA
1
FOR VECTOR’S
METERING SEGMENT GREW 10.9%
TO $171.6M
the prior year total of $33.9 million. The
reduction in earnings was mainly due to
the sale of the Kapuni gas treatment plant
and associated assets, which took place
in March 2020. After normalising for this
sale, adjusted EBITDA
1
was flat due largely
to improved natural gas and Ongas LPG
margins offset by lower Liquigas tolling
revenue. Vector continues to retain an
economic interest in the performance of
the Kapuni plant, with the net present
value of future income recognised as a
$81.7 million receivable on the balance
sheet and $6.3 million of interest income
included in FY21 profit.
Adjusted EBITDA
1
for Vector’s metering
segment grew $16.8 million or 10.9% to
$171.6 million, as a result of continued
growth in advanced meter deployments
in New Zealand and Australia.
Cloud-computing adjustments
The recently announced interpretation
of the International Financial Reporting
Standards (IFRS) in relation to cloud-
computing arrangements by the
interpretations committee for the
International Accounting Standards
Board requires that certain project
implementation costs be expensed.
This has had a $2.3 million impact on
adjusted EBITDA
1
for the year ended
30 June 2021.
Capital contributions
Capital contributions grew by 41.8% to
$122.5 million during the year, resulting
from a change in policy requiring
100% customer funding for electricity
connections and continued connection
growth. Given the challenges of
keeping pace with Auckland growth, we
continue to review the level of customer
capital contributions.
VECTOR ANNUAL REPORT 2021 /
12
Chief Financial Officer Report
Climate Change
Commission report
We await with interest to see the
Government’s response to the Climate
Change Commission’s report and how
the Commerce Commission incorporates
any policy changes into the regulatory
frameworks for the gas and electricity
industries, and any impacts on our gas
trading businesses. There is also the
DPP3 reset of gas distribution prices
due to come into force from 1 October
2022. Vector is working closely with
other industry players, regulators
and government officials in ensuring
there is a smooth transition to a new
decarbonised energy system. Vector
will re-test the carrying value of its
electricity and gas assets at 31 December
2021 as part of its interim reporting
obligations, by which time we hope to
have more clarity on the outlook for
these businesses.
DIVIDEND DECLARED
CENTS PER SHARE
GROUP CAPITAL EXPENDITURE
$ MILLION
0
50
100
150
200
250
300
350
400
450
500
550
FY21FY20FY19FY18FY17
381.2
367.4
425.1
488.7
529.5
JASON HOLLINGWORTH
CHIEF FINANCIAL OFFICER
13
Creating a new energy future – a bold vision
Our people
and safety
None of us could have anticipated
the pressures that Covid-19 would
bring, and the range of stresses and
unexpected worries which have
continued to play a large part in our
employees’ lives over the past twelve
months. We have maintained a focus
on care and wellness for our people
throughout the year, recognising our
role in providing a supportive and
inclusive workplace, in relation to
physical and mental health.
Covid-19 support and vaccinations
Throughout the year we have continued
to evaluate and adapt our response
to Covid-19, to ensure our ability
to deliver our essential services is
not compromised.
To help our people navigate the
continued disruption, we have
implemented a number of programmes
aimed at providing extra support
and information. This has included a
vaccination information campaign,
to provide access to factual, relevant
information about the Covid-19
vaccination. This multi-channel
campaign has included external subject
matter experts such as doctors, written
communications in multiple languages,
video, staff Q&A sessions, and has
been tailored for relevance across
New Zealand and Australia.
Mental health and wellbeing
This year we have been consistent in
proactively helping our people find ways
to access support if they are having a
hard time.
In recognition that mental wellbeing is
a continuum and we must be vigilant
about how concerns may manifest
across our large workforce, we have
begun to roll out a Mental Health First
Responder programme, to improve
our ability to help our people through
tough times. So far we have more than
one hundred trained mental health first
We remain focused on our critical
health and safety risks, our controls,
and on assuring our confidence in those
controls. Vector has now moved the
reporting and management of HSE
incidents to Vector’s group incident
management system, Active Risk
Manager (ARM). This enables incidents
that occur in our businesses, importantly
including ‘near-miss’ incidents, to be
linked with our critical HSE risks, which
drives a data-driven and continually
improving understanding of where
our focus is best applied to develop
HSE improvements.
Attracting and developing
diverse talent
Vector remains committed to diversity
and inclusion as we recognise the
importance of a dynamic workplace
to drive a range of views that are
representative of our communities
and customers.
At 30 June 2021, the proportion of female
executives was 25%, however this does
not include Fiona Michel who is currently
on secondment. In the past twelve
months, we have seen a slight gender
composition shift with the number of
female employees increasing from 35.1%
to 35.6% across the organisation.
Our ethnicity profile has moved slightly,
with our Māori representation reducing
by 1.1% to 5.0%, Pasifika representation
has increased by 1.9% to 5.0%, Asian
representation up by 5.0% to 19.1%, and
MELAA (Middle Eastern, Latin American
and African) representation has
increased by 1.3% to 2.3%.
Age-wise, in the past year our employees
aged 20 to 39 has remained unchanged
at 49.8%. Those aged 40 and over has
increased slightly by 1.6% to 49.4%, while
employees aged under 20 years declined
by 1.6% to 0.6% and 0.2% recorded
as unknown.
responders who can provide another
avenue for any of our Vector people
to find support, including referrals to
appropriate care where necessary.
We are now looking to pilot a mental
health leadership course for all people
leaders, and create a champions forum to
raise awareness and assist in normalising
and destigmatising mental health.
We have also run programmes covering
mindfulness, and weekly informal
learning opportunities, covering a
range of topics from an introduction
to New Zealand Sign Language, to the
human impacts of hybrid working.
Progress towards our Group
safety goals
To track our progress against our safety
goals, Vector continues to measure
safety performance across the Group,
including Lost Time Injury Frequency
Rate (LTIFR) and Total Recordable
Injury Frequency Rate (TRIFR). Beyond
tracking progress, these measures are
critical for indicating which areas require
ongoing improvement.
In the last year we observed a 21%
increase in LTIFR and a 30% increase
in TRIFR across the Group. This can
be attributed to low-level manual
handling, slips, trips and fall injuries. The
severity rate, which measures number
of lost days per 1 million hours worked,
improved by 24%.
In alignment with our Symphony
strategy, our approach to managing
and improving safety across the Group
continues to evolve, to one where the
unique needs of our different businesses,
employees and customers directly
inform our safety management thinking
and practices. This is being reflected in a
review Vector is undertaking of its Health
Safety and Environment Management
System (HSEMS) to reflect the latest HSE
developments and continue to enhance
the practical application and usability of
the HSEMS at all levels of our businesses.
VECTOR ANNUAL REPORT 2021 /
14
Our people and safety
. %
.%
.%
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.%
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UNDER
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UNKNOWN
EMPLOYEES BY AGE
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EMPLOYEES BY GENDER
. %
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ASIAN
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NZ
MĀORI
OTHER
PASIFIKA
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PREFER
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EUROPEAN
MELAA*
EMPLOYEES BY ETHNICITY
* Middle East, Latin America and Africa
Pasifika poetry
Five of our people have become published poets this year,
with their poems included in the Pasifika Nui Leaders
Aotearoa anthology. This collection was published in
celebration of Vector’s Pasifika Nui Leadership programme,
first developed in response to the under-representation of
Pasifika employees in our leadership roles. Since inception
in 2017 we have invited other organisations to participate
and since then have seen 60 Pasifika leaders graduate.
REBECCA GEORGE AND TIOATA TUILOMA, TWO
OF THE FIVE VECTOR PEOPLE WHO HAVE
BECOME PUBLISHED POETS THROUGH OUR NUI
PASIFIKA LEADERSHIPS PROGRAMME
15
Creating a new energy future a bold vision
Regulated
networks
Increased revenue
Revenue increased 0.9% to
$767.5 million, due to an increase in
capital contributions which were up
$35.4 million to $121.1 million. This
increase was partially offset by the
full-year impact of the Commerce
Commission’s lower DPP3 revenue
allowance and lower pass-through
costs. Despite the adverse impact of
the DPP3 reset and inflation forecast
assumptions used to set DPP3, the
regulated networks delivered a solid
result in the period. The increase in
capital contributions reflects continued
connection growth and a change in
capital contribution policy where we now
seek 100% contribution for electricity
connections. Underlying revenue was
down $10.9 million (2.4%) driven by the
impacts of the DPP3 price reset and
volume reductions.
590,799
TOTAL ELECTRICITY CONNECTIONS,
AN INCREASE OF 1.9%
Mt Albert undergrounding
The Mt Albert undergrounding project was proudly
funded by Entrust, the majority shareholder of Vector,
and was delivered by Vector. The area, bound by Oakley
Creek, New North Road, Carrington Road and Unitec,
consists of 16 streets, with a combined street length of
5.4km, 166 poles and benefitting 867 customers. It is a
significant project and will result in the removal of 10.2km
of overhead electricity lines. The project commenced in
October 2019 and is nearing completion.
Where possible, Vector aims for a ‘dig-once’ approach,
so residents benefit not only from underground power
services, but also potentially from telecommunications,
street lighting and pavement upgrades, resulting in an
all-round visually enhanced street appeal at the end of
the project.
It takes a large crew to pull off an undergrounding
project of this scale. Vector provides project
ambassadors, who frequently communicate with
residents and property owners about the project, how
they will be impacted, and time frames.
ENTRUST TRUSTEES (FROM LEFT)
DR PAUL HUTCHISON, WILLIAM CAIRNS
AND ALASTAIR BELL AT THE SITE OF THE MT
ALBERT UNDERGROUNDING PROJECT
Strong connection growth across
electricity and gas
New electricity connections increased
to 14,995 from 12,231 in the prior year. We
also added 3,844 new gas connections,
up from 3,201 a year earlier. Total
electricity connections stood at 590,799
up 1.9% from 580,060 a year earlier. While
total gas connections were 116,472, up
2.2% from 113,960 a year ago.
Both electricity and gas volumes have
been impacted by Covid-19. Volumes
transported across the electricity
network were up only slightly at 8,325
GWh from 8,315 GWh a year earlier.
Auckland gas distribution volumes
were down 1.4% at 14.1 PJ from 14.3 PJ
a year earlier.
VECTOR ANNUAL REPORT 2021 /
16
Regulated networks
Maintaining high levels of
capital expenditure
Gross regulated capex decreased by
0.8% to $314.7 million compared to
$317.1 million a year earlier. Capex net of
capital contributions was 16.3% lower
than the prior year at $193.6 million.
Capex continues to be at high levels
due to higher growth capex reflecting
the continued growth in connections
and infrastructure projects, as well as
investment to improve the reliability and
resilience of our networks.
Improving network reliability
We have seen notable improvements
in network availability over the past
year. We measure these improvements
through mechanisms such as SAIDI,
where we achieved compliance within
the regulatory limit and other measures
that monitor how effective we are in
keeping the lights on.
Continued innovation in work practice
and technology across our teams and our
Field Service Providers, has contributed
to these results. We are gratified to see
that the field work supporting this effort
has been delivered safely, especially in
the context of ongoing disruption and
adaptation to Covid-19.
Ongoing capital investment in making
the electricity network more resilient
has also contributed to improved
performance, including field deployment
this year of digital solutions that link
asset assessment tools used by our
Field Service Providers with our asset
information systems in real time. This
enables further evolution in our risk-
based approach to asset management.
Together with our Field Service
Providers, we are maintaining our focus
on improving network performance
for our customers, including how we
respond to severe weather events,
such as the June 2021 tornado in
Papatoetoe, Auckland.
“We are
continuing
to transform
our electricity
network through
a combination of
new engineering
solutions and
digitalisation to
meet the needs
of the future.
17
Creating a new energy future – a bold vision
Delivering for customers
through lockdowns
As a provider of essential services, across
three Auckland lockdowns this year we
have refined our processes for quickly
adapting to the changes these bring
for us and our customers. The task is
not simple; we can have hundreds of
jobs planned on the electricity network
each month, every one involving careful
planning, coordination between delivery
teams, traffic management and other
infrastructure providers, and notification
to customers. We have improved our
ability to quickly determine which jobs
should be postponed or proceed as
VECTOR ANNUAL REPORT 2021 /
18
Regulated networks
Gas Infrastructure Future Working Group
Vector is a member of the Gas Infrastructure Future Working Group,
established in May 2021, to offer constructive input to the Government’s
response to the Climate Change Commission’s advice in relation to the future
of gas in New Zealand. The working group comprises Vector, PowerCo and
Firstgas, with regulators and other parties as observers.
The working group recognises that New Zealand currently does not have a
coordinated plan or planning process to address the consumer effects and
complexities of significantly reducing or transitioning away from natural gas if
the decision is made that piped natural gas should be a much smaller part of
the energy mix or removed from the energy mix altogether.
The working group is undertaking research to better understand the problem
and potential solutions by assessing the policy, practical and stakeholder
implications if gas was phased out under a wind-down scenario, and the
feasibility of incorporating green gas (such as biogas or hydrogen gas) under a
repurposing scenario.
The working group intends to provide a findings report that draws out insights
from the research and makes recommendations to the Government on policy
decisions that may affect the future of gas in New Zealand.
planned. We take into consideration the
increased inconvenience of temporary
power outages to customers who may
suddenly find themselves trying to work
and school their children from home.
This work has been informed by data
that shows, compared with 2019,
customers are less accepting of planned
outages occurring on a weekday
afternoon. We consider this to be a sign
of changing customer preferences as a
result of Covid-19 lockdowns requiring
more people to be at home during the
day, as well as reflecting the increasing
criticality of electricity supply to daily life.
Working together for Auckland
We have worked collaboratively with a
number of other Auckland agencies this
year to develop innovative arrangements
that benefit the city.
Through a new Electricity Resilience
Targeted Rate, adopted by Auckland
Council in its 10-year Budget 2021-2031,
there will be an enhanced maintenance
programme for existing street trees
owned by the council, improving power
supply security and public safety around
power lines, while public tree planting,
in line with the council’s Urban Ngahere
(Forest) strategy, will also be boosted.
We have also developed operational
processes with Auckland Transport and
Waka Kotahi NZ Transport Agency that
enable our first responder Field Service
Providers to use bus lanes and priority
access motorway on-ramps. We are
still working towards the ability to use
flashing lights to help designate our
first responders as emergency vehicles.
These provisions enable faster access
to emergency sites involving electricity
assets, such as car crashes with
power poles.
We continue to engage with large
customers and developers making
plans for Auckland, whether expanding
their existing operations, or considering
moving to the region to ensure
their access to safe, reliable and
secure infrastructure.
Evolving for the future
While we continue to invest in improving
network availability, we are also
continuing to transform our electricity
network through a combination of new
engineering solutions and digitalisation
to meet the needs of the future. Our
ongoing Smart EV Charging trial (page
24) has demonstrated how optimising
existing infrastructure using new
technology can reduce the cost of EV
uptake while securing reliable charging.
Our programme to implement an
Advanced Distribution Management
System is progressing and is an
important component of improved
optionality, network resilience, flexibility
and innovation.
We have implemented a new Default
Distributor Agreement, imposed by the
Electricity Authority, with all electricity
retailers who use our network, which
we hope will provide us better access
to electricity consumption data from
customer smart meters. This is an
important step towards ongoing
digitalisation as it improves our visibility
of network performance at the customer
end, and will help our ability to plan and
innovate to meet future needs.
The insights we gain from our data
analytics includes modelling that
combines all Vector customer and
energy information with wider data
sources, such as building characteristics
and socioeconomics. This continues
to set us apart from other electricity
distributors through facilitating a
bottom-up view of network planning
that starts with the customer. This
approach is strongly aligned with our
Symphony strategy to put the customer
at the centre of the energy system, and
provides us a granular view of changing
energy consumption patterns, and new
technology adoption.
We take our responsibilities around
management, privacy and security of
all data seriously, and our commitment
remains firm as our industry evolves. We
are focused on ensuring we have the
right security and protections in place to
make sure that, as custodians of the data,
we look after it in accordance with our
privacy obligations.
We are
continuing
to transform
our electricity
network through
digitalisation to
meet the needs
of the future.
“We take into consideration the
increased inconvenience of temporary
power outages to customers who may
suddenly find themselves trying to work
and school their children from home.
19
Creating a new energy future a bold vision
acquisition, ordering and account
management services.
Over the year we have also continued the
roll-out of a Vector Ongas brand covering
our 9kg Bottle Swap, LPG and natural
gas products and services for residential
and commercial customers. This visual
identity revitalises our proposition in a
competitive market.
Challenging commercial
gas market
Natural gas supply was constrained due
to local factors such as lower production,
as well as other factors such as import
delays due to Covid-19 disruption. In this
challenging market, we worked hard
with our customers to find solutions to
secure supply.
Gas trading
45,043
TONNES OF LPG SALES, AN
INCREASE OF 3.9%
Volumes
The Vector Ongas LPG business
continued to strengthen during the year.
LPG bulk and cylinder sales were higher
compared to the prior year. Overall LPG
sales were up 3.9% at 45,043 tonnes.
Bottle Swap 9kg volumes were down
3.1% to 680,099 bottles from 701,923
bottles a year earlier. This decline is partly
attributable to the impact of Covid-19
as the prior year saw an unseasonal
increase in the number of swaps during
March 2020 in the lead-up to the first
lockdown in New Zealand.
Liquigas LPG tolling volumes were down
11.8% to 102,351 tonnes from 116,024
tonnes a year earlier.
Natural gas sales volumes were down
3.8 PJ to 8.6 PJ from 12.4 PJ in the prior
period due to a tight gas market and
the loss of a major customer from
January 2020.
Working to improve
customer experience
Our gas teams have continued to focus
on improving our ability to deliver to
our customers’ expectations in an
environment where ensuring adequate
resources has been challenging.
We have also focused this year on
streamlining and improving the online
ordering process across our range of gas
products. We have taken a significant
step in this activity with the launch of
a new customer portal offering online
Lowering delivery emissions and
collaborating on city centre air quality
In March 2021 Vector Ongas was proud to announce that
it is one of five businesses participating in an electric truck
trial with Fuso New Zealand, for its deliveries in Auckland’s
city centre.
The area has the highest population density of anywhere
in New Zealand and exceeds air quality limits for nitrogen
dioxide and particulate matter.
With the trial set to run over FY22, our involvement is
an exciting opportunity for Vector to explore how zero-
emissions distribution capabilities can help lower our carbon
emissions, and gain insights into the impact on electricity
demand around Auckland from charging behaviour
introduced by these new technologies. Our participation
in the trial will also see Vector provide valuable data that
will inform future decision-making for improving air quality
in Auckland city centre, aligned with Auckland Council’s
wider Zero Emissions Area, which is an emissions reduction
strategy within the City Centre Masterplan.
VECTOR ANNUAL REPORT 2021
20
Metering
Our Metering business has had a strong year. We commend the resilience of our
metering teams and acknowledge the support of our customers, in particular
those in Australia in the face of continued disruption from Covid-19 resurgences
throughout the past twelve months.
responsiveness and added capacity. As
a Living Wage accredited employer, we
are also proud of the local employment
this will generate, in the form of close
to 200 roles, through our delivery
subcontractors.
Leading the way with advanced
gas meters
We have begun the roll-out of advanced
gas meters in New Zealand, and
are seeing high levels of consumer
satisfaction throughout the process.
Advanced gas metering provides
consumers with access to more data
more often about their gas usage, giving
them the ability to make more informed
energy choices. The advanced gas data
service is the first on the New Energy
Platform developed under the strategic
alliance with AWS.
Maturing and challenging
ourselves on safety
We strive to be leaders in health and
safety and are encouraged by feedback
from our customers on the strength of
our health and safety performance.
We continually look to challenge the
way we operate to ensure it is in the
safest way possible for our staff and the
people around them, and are looking to
improve efficiencies for our field staff. To
do this, we are placing a higher emphasis
on the presence of positive and safe
work practices, while recognising that
our people are experts at their job, and
are therefore part of any solution to
safety concerns.
Service development in Australia
We have improved our service offering in
Australia with the introduction of remote
re-energisation and de-energisation
services. These services have already
enabled innovative consumer products
in New Zealand.
Increased revenue
Metering revenue increased 10.6% to
$227.0 million from $205.2 million a
year earlier driven by the increase in our
advanced meter fleet.
Growth in installations
In the year to 30 June 2021 we have
installed 33,578 advanced meters in
New Zealand and 117,472 additional
advanced meters in Australia. Our
advanced meter base grew 8.8% to
1.86 million from 1.71 million in the year
before. We have now deployed nearly
400,000 advanced meters in Australia
and are averaging over 10,000 meter
installations per month.
Increased capital investment
Total metering capex invested increased
by 24.0% to $165.3 million with the high
level of spend reflecting the continued
deployment of advanced meters in
Australia, 4G modem replacement
programme, roll-out of advanced
gas meters, investment in our digital
platforms and an increase in stock
levels to help mitigate Covid-19 related
supply concerns.
Next-generation connectivity
This year we commenced a modem
replacement programme. This
programme will upgrade approximately
1.1 million meters with 4G modems in
advance of the expected shutdown of
the 2G mobile network in New Zealand.
It is expected to take three years
to complete and will enable us to
continue to provide services to our
customers for a longer period of time.
This programme will lay the foundation
for future innovation for our retailer
customers, through providing an IoT-
ready platform with faster speeds, better
Building the New Energy Platform
One year into the strategic alliance between Vector and Amazon Web Services,
we have made solid progress against our stated aim to create the New
Energy Platform.
The first services to be delivered from the New Energy Platform are the
advanced gas data services. The platform stores, processes and delivers
advanced gas meter data which has been enabled through technology we
have built and deployed through this strategic alliance. We are now developing
the capability to provide electricity meter data at five-minute intervals for our
Australian customers. This is the next step in our data services transformation
programme, and will enable us to provide data services to other parties, such as
network operators.
The strategic alliance is a multi-year agreement, and one of a handful across
the world. It will benefit our energy and utility customers and, ultimately,
consumers in New Zealand, Australia, and beyond, through more flexible,
efficient and faster processing of data. The alliance has resulted in the creation
of 30 new digital roles in New Zealand, shared across the two companies,
and all engaged in product development on cutting-edge public cloud
computing services.
21
Creating a new energy future a bold vision
Our climate and
sustainability
TASK FORCE FOR CLIMATE-
RELATED FINANCIAL
DISCLOSURE
We are preparing our first report
aligned with the Task Force on Climate-
related Financial Disclosure (TCFD). This
means the climate-related risks and
opportunities we face will be disclosed
in a manner which is consistent with
others, and which will show how they are
incorporated into our risk management
and strategic planning processes.
We believe this is important to empower
markets to channel investment towards
the solutions, opportunities, and
business models needed for a new
energy future.
We intend to publish our first TCFD
report soon.
SUSTAINABLE
DEVELOPMENT GOALS
The United Nations’ Sustainable
Development Goals (SDGs) provide
our business with a global framework,
while establishing the issues the world
needs to address in order to become
more sustainable. Over the past twelve
months we have further refined our
focus to five priority SDGs that we will
actively contribute to in the short term.
Each goal can be referenced back to our
overarching focus on the challenges of
climate change and the transition to a
low-carbon economy.
Affordable and Clean Energy
We are keenly aware that if
sustainable solutions are not
affordable, inequality is likely
to be exacerbated. Within this,
and core to our Symphony strategy, we
strongly advocate that decarbonisation
cannot just work with more large-scale
generation and transmission. Rather
customers must be actively informed
through demand-side technologies
and platforms. We are engaging with
customers and stakeholders including
regulatory bodies, and policy makers,
to share this view and work towards
meeting future decarbonisation goals
more efficiently.
Our strategic alliance with AWS to build
the New Energy Platform (page 21) will
benefit our energy and utility customers,
and ultimately, consumers, through
more efficient and faster processing
of data.
Sustainable Cities
and Communities
We are proud of the
contribution we will make
to regenerating Auckland’s
tree canopy through our
arrangement with Auckland Council on
the Electricity Resilience Targeted Rate.
This funds tree planting to compensate
for canopy lost due to tree maintenance
around power lines.
Recognising our role in enabling the
transition to sustainable transport,
we have continued our EV Smart
Charging trial (page 24) to help keep
the decarbonisation of transport as
affordable as possible.
Responsible Consumption
and Production
As a founding member of
the Battery Industry Group
we have been involved in
creating a battery traceability
platform to prepare the supply chain for
an increased uptake of electric vehicles.
The proposed product stewardship
scheme for large batteries was delivered
to the Ministry for the Environment in
April 2021.
To extend our responsibility beyond
our own actions we have published a
Supplier Code of Conduct on our website
outlining our sustainability expectations
from the suppliers we work with. This
covers their social, environmental,
and ethical responsibilities. We will
be working with suppliers to meet
expectations, including collecting more
data to help us identify decarbonisation
opportunities.
Partnerships for the Goals
Our actions around climate
and sustainability require
collaboration with businesses,
government and other
organisations as a key foundation for
achieving the SDGs. Vector is a founding
member of the Climate Leaders
Coalition, a partner of the Sustainable
Finance Forum, and member of the
Sustainable Business Council, which has
underpinned our support for the Paris
Agreement and the establishment of
the Climate Change Commission. Our
participation in these coalitions also
signals our commitment to reducing
our own carbon emissions to help with
New Zealand’s transition to a low-
carbon economy.
Vector will continue to develop
partnerships within New Zealand and
globally to create a new energy future
that aligns with the SDGs. One of our
more recent examples is our strategic
alliance with AWS (page 21).
As we invest in innovation and digital solutions, we are seeking to avoid an
inefficient transition to a low-carbon world, which would ultimately lead
to higher costs for our customers. We are keenly aware that if sustainable
solutions are not affordable, inequality is likely to be exacerbated.
VECTOR ANNUAL REPORT 2021 /
22
CLIMATE ACTION:
DECARBONISATION
The transition to a low-
carbon economy will require
commitment from the whole
energy sector. Vector has
included decarbonisation as an intrinsic
part of our Symphony strategy, making
climate action a priority goal. Identifying
areas to decarbonise, both internally and
externally, and working on strategies
to achieve our targets has been a focus
throughout the past year.
Our carbon footprint
This year we sought to gain a more
comprehensive understanding of
emissions created across our entire value
chain. In addition, the divestment of the
Kapuni gas treatment plant represented
a significant change in emissions.
To allow for meaningful and useful
comparisons over time we recalculated
our emissions for FY20, and reset our
base year to the same.
Vector measures its greenhouse
gas emissions in alignment with the
Greenhouse Gas Protocol. All applicable
Scope 3 emissions that are material and
accurately quantifiable are reported,
along with otherwise relevant Scope 3
emissions.** Some embodied emissions
for purchased products were also
identified as material, however due
to limited embodied emission data
availability, are not included in this
disclosure. It is our intention to work
alongside our suppliers to increase data
availability and report on any other
material sources in the future.
In the past year, our carbon footprint
(Scopes 1, 2, and 3) reduced by 12%, a
reduction of just over 210,000 tonnes
of CO
2
equivalent (tCO
2
e). Within Scope
1, this is primarily due to a reduction in
gas leaks on our gas network as well as
lower diesel consumption for the use of
generators on our electricity network.
We are continuing to refine our gas
loss reduction plan, and investigate
methods to reduce back-up diesel
combustion. We have also developed a
strategy for switching our remaining light
combustion vehicles to electric vehicles.
Within Scope 2, electricity line losses
have increased, while our company’s
own electricity consumption has
reduced by 4%.
Our indirect emissions covered in Scope
3 also reduced noticeably.
To a large extent this can be linked to
a reduction in sales volumes by Ongas
Natural Gas, but also reduced fuel use by
our Field Service Providers for network
maintenance and a significant reduction
in business travel. We are actively
investigating renewable options for our
natural gas and LPG business.
* Although only divested in March 2020, Kapuni emissions are excluded in the updated FY20 footprint calculation to
facilitate future comparisons to FY20 as our base year.
** Scope 3 emission sources include upstream well-to-tank emissions for fossil-gas (Category 1) and fuel (Category
3), fuel consumed by field service providers (Category 1), T&D losses for consumed electricity (Category 3), business
travel (Category 6), combustion of sold and distributed fossil-gas (Category 11), and investments with more than 10%
share (Category 15, accounting for proportional Scope 1 and 2 emissions).
12
%
REDUCTION IN OUR CARBON
FOOTPRINT IN THE PAST YEAR
(SCOPE 1, 2, AND 3)
EMISSION TREND IN tCO
2
e
YEAR ENDED 30 JUNEFY20*FY21Change from FY20 baseline
Scope 123,66919,330 -18%
Scope 233,43934,520+3%
Scope 3**1,758,0421,550,748-12%
SCOPE 1SCOPE 2
897
Electricity
Consumption
592
SF6
Leakage
2,971
Fuel
Combustion
145
Ref rigerant
Leakage
2,465
Vehicle
Fleet
1,082
Gas Metering
Fugitive Emissions
33,622
Electricity
Losses
12,074
Natural Gas Distribution
Fugitive Emissions
FY21 MAJOR SCOPE 1 AND SCOPE 2 EMISSIONS
23
Creating a new energy future a bold vision
Enabling the electrification of transport
Vector is committed to supporting decarbonisation in
New Zealand. A substantial increase in electric vehicles is a
key part of the country’s decarbonisation plans and we note
the announcement of the Clean Car Discount earlier this year.
Our role as an enabler of the electrification of transport is a
crucial part of our carbon handprint – how we help others
reduce their carbon footprint.
Our EV Smart Charging trial in Auckland has shown that
smart, dynamic charging, using new digital platforms,
enables us to add more EVs into the system while managing
the load on the network. This softens demand peaks as
more and more people come home at the end of the day
and plug their cars in to charge.
This helps us lower the need for capital investment to meet
increased peak demand, ensuring we can keep power as
affordable and reliable as possible.
With 90% of EV charging happening at the home, this
type of innovation will help New Zealand achieve our
carbon emission reduction goals and ensure the changes
are affordable. We are pleased to see the Climate Change
Commission recommending EV smart charging in their final
advice to the Government.
Science-based reduction target
Establishing a robust carbon emissions
inventory for our new FY20 base year
formed the basis for setting a science-
based emissions reduction target,
in line with the requirements of the
Paris Agreement.
Vector is targeting a reduction of
absolute Scope 1 & 2 greenhouse gas
(GHG) emissions (excluding electricity
line losses) of 53.5% by FY30 from a
FY20 base year. The target is aligned
with methodology by the Science
Based Target initiative, consistent with
reductions required to keep global
warming to 1.5C, and in line with our
earlier commitment to achieve net
carbon zero operations by 2030. In FY21
we made a reduction of 18% towards
this target.
53.5
%
OUR SCIENCE-BASED REDUCTION TARGET
IN ABSOLUTE SCOPE 1 & 2 GHG EMISSIONS
(EXCLUDING ELECTRICITY LINE LOSSES)
BY FY30 FROM A FY20 BASE YEAR
DECARBONISATION CONT.
VECTOR ANNUAL REPORT 2021 /
24
Our climate and sustainability
Our carbon handprint
We aim to provide solutions that give our
customers the choice and opportunities
to help lower their emissions. This is our
carbon handprint; using our position as
a leading New Zealand energy solutions
business to help widen the scope for
decarbonisation beyond what is in our
own ability to control.
Our work to demonstrate the effectiveness of EV smart charging
technology supports efficient investment in the infrastructure required
to support an affordable transition to electric vehicles. This helps keep the
costs of the transition down for our customers, and in turn helps their ability
to choose lower carbon technology.
We provide home heating solutions through our HRV business that enable
people to make energy efficient choices, and have installed or serviced over
60,000 products across New Zealand in FY21.
Our Vector Powersmart business provides a range of services relating to
commercial-scale solar installations and battery energy storage systems,
facilitating business and industry to decarbonise their energy use.
Global carbon challenge
To enable the decarbonisation
of 3/4 of global greenhouse
gas emissions
WHAT NEW ZEALAND IS TARGETING
4
Transportation
20%
Energy Industry
7%
Manufacturing
9%
Other
6%
Electricity &
Heat: 5%
‒Renewable
energy use
(50% by
2035)
‒Energy
efficiency
Food, Beverage,
Paper, and
Chemical: 7%
‒Switching
boilers to
biomass /
electricity
Refining
& solid
fuel
manufac-
ture: 2%
Light Vehicle: 16%
‒Reducing travel
demand
‒Mode shift from light
vehicles to public
transport, walking
and cycling
‒Vehicle fuel efficiency
‒Vehicle electrification
Aviation:
1%
Heavy
Duty:
2%
By trialling
solutions locally
Impacts can be
scaled globally
GLOBAL CO
2
e EMISSION BREAKDOWN
1
IndustryWaste
Agriculture Energy
75% of global greenhouse gas emissions
2
NEW ZEALAND CO
2
e EMISSION BREAKDOWN
3
Agriculture
48%
Energy
42%
IndustryWaste
Our local handprint
Supporting New Zealand to
decarbonise its energy sector
‒Low-carbon fuels
25
Creating a new energy future – a bold vision
1. Climate Watch, 2018, https://www.climatewatchdata.org/ghg-emissions, accessed July 2021
2. International Energy Agency, Net Zero by 2050, published 2021
3. Ministry for the Environment, New Zealand’s Greenhouse Gas Inventory 1990 - 2019, published 2021
4. Ināia tonu nei: a low emission future for Aotearoa, Climate Change Commission 2021
JONATHAN MASON
MBA, MA, BA
INDEPENDENT NON-EXECUTIVE
DIRECTOR AND CHAIR
―
Appointed on 10 May 2013
Jonathan Mason has extensive commercial
experience. He has worked in financial
management positions in the oil and gas,
chemicals, forest products and dairy industries in
New Zealand and the USA for International Paper,
ExxonMobil Corporation, Carter Holt Harvey,
Cabot Corporation and Fonterra. Jonathan also
has experience as a non-executive director on
boards in both New Zealand and the USA and his
current directorships include Air New Zealand
Limited, Westpac New Zealand Limited and Zespri
Group Limited. He is also an Adjunct Professor
of Management at the University of Auckland,
focusing on finance.
MICHAEL BUCZKOWSKI
BE (Electrical), MBA (With Dist)
NON-INDEPENDENT NON-EXECUTIVE
DIRECTOR
―
Appointed on 14 November 2018
Michael Buczkowski is an experienced Trustee
and Deputy Chairman of Entrust. He was General
Manager Operations at Ricoh from 2007 to 2018
and, prior to that, Managing Director of Hirepool
and also Director of Owens Industrial (NZX top 40).
His professional experience includes: Consulting
Electrical Engineer at Beca, registered Electrical
Engineer from 1984 to 2004 as well as international
consulting expertise in the energy sector.
ALASTAIR BELL
BCom, CA, CMInstD, PMP, JP
NON-INDEPENDENT NON-EXECUTIVE
DIRECTOR
―
Appointed on 23 September 2019
Alastair Bell is a chartered accountant, chartered
director and qualified member of the Project
Management Institute. He has more than 30 years’
experience in the corporate, public and not-for-
profit sectors. Alastair balances his professional life
between board roles and leading a consultancy
specialising in business and infrastructure projects.
He is an elected Trustee of Entrust, chairing the
Entrust board’s Communications and Dividend
Committee. Formerly, he was Deputy Chair of
Foundation North and Chair of its Audit, Finance
and Risk Committee. Alastair is also Chair of the
Orakei Community Association and a trustee of the
Motutapu Restoration Trust.
Our
Board
VECTOR ANNUAL REPORT 2021
26
TONY CARTER
BE (Hons), ME, MPhil
INDEPENDENT NON-EXECUTIVE
DIRECTOR
―
Appointed on 1 May 2019
BRUCE TURNER
BE (Hons), ME, BCom
INDEPENDENT NON-EXECUTIVE
DIRECTOR
―
Appointed on 16 April 2019
Bruce Turner is a highly experienced senior
executive with deep experience across the dairy
and energy sectors, both in New Zealand and
internationally. Working in the energy industry for
more than 30 years, Bruce was extensively involved
in the development of the energy industries in
New Zealand, Singapore and Europe as a member
of the dispatch rules working group, the NZEM
Rules Committee, the MARIA governance board
and the development of industry common quality
standards. He was a member of the Electricity
Authority’s Security and Reliability Council and
heavily involved in sector reforms. As well as the
Vector board, Bruce’s governance experience
includes joint venture boards for both Mercury
and Fonterra. Bruce is an advisory board member
at the University of Colorado’s JP Morgan Center
for Commodities, and was a member of the AUT
Business School Industry Advisory Board (retired
by rotation).
Tony Carter was Managing Director of Foodstuffs
New Zealand Ltd for 10 years until he retired in 2010.
Tony is currently Chair of Datacom Ltd, My Food Bag
Group Ltd and TR Group Ltd, and a director of ANZ
Bank New Zealand Ltd.* He was previously Chair of
Air New Zealand Ltd until 2019 and Chair of Fisher
& Paykel Healthcare Limited until August 2020. He
was made a Companion of the New Zealand Order
of Merit in 2020.
* Tony is retiring from the board of ANZ Bank
New Zealand Limited in August.
DAME PAULA REBSTOCK
BSc (Econ), Dip & MSc (Econ)
INDEPENDENT NON-EXECUTIVE
DIRECTOR
―
Appointed on 16 April 2019
Dame Paula Rebstock is a leading Auckland-based
economist and company director, who was made
a Dame Companion of the New Zealand Order of
Merit in 2015. She is Chair of ACC*, NZ Healthcare
Investments (Asia Pacific Healthcare Group)*, Kiwi
Group Holdings, National Hauora Coalition, Ngāti
Whātua Ōrākei Whai Maia and the New Zealand
Defence Force Board and a director of SeaLink
Group. Dame Paula is the former Chair of the
New Zealand Commerce Commission.
* Dame Paula was appointed to the board of NZ
Healthcare Investments in July 2021 and she retires
from the board of ACC on 31 July 2021.
27
Creating a new energy future a bold vision
FIONA MICHEL
MBA
CHIEF PEOPLE AND CULTURE OFFICER –
ON SECONDMENT*
―
Fiona Michel is responsible for people, capability
and culture at Vector. She has worked in the
technology, banking, insurance and public sectors
for over two decades in New Zealand and overseas.
Fiona has won awards in New Zealand and Australia
for achievement in human resources, leadership,
culture transformation and industrial relations. She
has a Master of Business Administration from the
University of Auckland and is an alumnus of Harvard
Business School. Professionally, Fiona is a graduate
of the Australian Institute of Company Directors,
a Chartered Fellow of the Chartered Institute
of Personnel and Development in the United
Kingdom and a Fellow Certified Practitioner and
Non-Executive Director of the Australian Human
Resources Institute.
* While Fiona Michel is on secondment Sarah Williams is
responsible for Human Resources and John Rodger is
responsible for Health and Safety and Property.
JASON HOLLINGWORTH
MCom (Hons), FCA, CMInstD
CHIEF FINANCIAL OFFICER
―
Jason Hollingworth joined Vector as Chief Financial
Officer in May 2019. He has over 30 years’ experience
in a range of senior corporate finance roles
including being CFO of public listed pay television
company Sky TV, CFO of telecommunications
company TelstraClear, Investment Manager for
the diversified investment company Ngai Tahu
Holdings, Executive Director at Asian private power
development company AsiaPower and a director
of corporate advisory firm Southpac Corporation.
Jason has a Master of Commerce degree, is a Fellow
of the Institute of Chartered Accountants ANZ and a
member of the Institute of Directors.
SIMON MACKENZIE
Grad DipBS (Dist), DipFin, NZCE
GROUP CHIEF EXECUTIVE
―
Simon Mackenzie is passionate about the power
of technology to transform the energy industry
and consumers’ lives. As Group Chief Executive,
he has expanded and driven Vector’s portfolio of
businesses to embrace innovative technologies and
strategies to deliver efficient, sustainable energy
solutions to consumers.
Simon was appointed Vector’s Group Chief
Executive in 2008. His tertiary qualifications include
engineering, finance and business studies, and
the Advanced Management Programme at the
Wharton School, University of Pennsylvania.
Our
management team
VECTOR ANNUAL REPORT 2021
28
BRENDA TALACEK
LLB, MComLaw (Hons)
CHIEF OPERATING OFFICER, METERING
AND ONGAS
―
Brenda Talacek is Vector’s Chief Operating Officer,
Metering and OnGas, responsible for leading Vector
Metering in New Zealand and Australia and OnGas
(LPG and Natural Gas). Prior to joining Vector,
Brenda held commercial and legal leadership
positions at Genesis Energy, and was Senior
Associate at New Zealand law firm Kensington
Swan. Before joining the Group’s executive team,
Brenda led Vector’s Gas Trading business and has
held senior positions in our Electricity Networks
division. Her leadership and commercial focus have
helped to deliver strong growth, an excellent record
in safety and customer satisfaction.
MARK TONER
LLB (Hons), BCom
CHIEF PUBLIC POLICY AND
REGULATORY OFFICER
―
With over 20 years’ experience across a range of
sectors including energy, telecommunications,
aviation and technology, Mark Toner has
consistently navigated market, regulatory and
policy changes across industries in disruption.
Responsible for leading the Group’s regulatory,
public policy, decarbonisation and data insights
functions, he combines strong stakeholder
engagement and reputation management
expertise with his commercial and legal
background to drive Vector’s vision of creating a
new energy future. Mark is a past recipient of the
New Zealand Prime Minister’s Business Scholarship
and in 2018 completed an Advanced Management
Programme at MIT in Boston.
SARAH WILLIAMS
BA, Cert. Journalism
CHIEF MARKETING AND
COMMUNICATIONS OFFICER
―
Sarah Williams is responsible for developing
and delivering Vector Group’s Marketing and
Communications strategy. She is a seasoned
executive with 30 years’ experience in
communication-related roles at an executive and
board level with broad experience in both the
corporate and agency environments. Sarah joined
Vector from Porter Novelli, a public relations and
marketing agency where she held the position of
Managing Director. Her experience ranges from
crisis management, stakeholder engagement,
reputation management, to consumer PR, internal
communications, brand management, digital
and social. In 2019, Sarah was inducted into the
College of Fellows of the Public Relations Institute
of New Zealand in recognition of her significant
contribution to the industry and high levels
of competence.
NIKHIL RAVISHANKAR
BSc, BCom (Hons)
CHIEF DIGITAL OFFICER - RESIGNED*
―
Nikhil Ravishankar leads Vector’s digital team and
is responsible for managing the company’s digital
and IT functions. He is charged with harnessing
the performance of both existing and emerging
disruptive digital technologies to ensure Vector
is able to provide reliable, relevant and innovative
services, and compete in the modern customer
driven energy marketplace. Prior to joining Vector,
Nikhil was with Accenture where he held the
position of Managing Director for New Zealand
operations and also sat on its Global Advisory
Council for Telecommunications and Media
practice. Prior to his role at Accenture, he was the
Head of Technology Strategy for Spark and was part
of their group transformation office.
* Vector has appointed Shailesh Manga to the role of
Chief Digital Officer, effective 1 August 2021, following
the resignation of Nikhil Ravishankar, announced in
June 2021.
JOHN RODGER
LLB, BA
CHIEF LEGAL AND ASSURANCE OFFICER
AND COMPANY SECRETARY
―
John Rodger is Vector’s Chief Legal and Assurance
Officer and Company Secretary, responsible
for legal, corporate governance, business
performance, internal audit, risk, compliance,
privacy and government relations. He brings a
deep experience managing business performance
and resilience in the context of fast-moving
and rapidly changing environments. John has
significant legal and commercial expertise gained
from working across a range of sectors including
energy, telecommunications and financial services.
John joined Vector in 2006 from O2 in the UK and
has held legal roles in major corporates and in
professional services firms in London, the Cayman
Islands and New Zealand.
PETER RYAN
BE
CHIEF OPERATING OFFICER,
ELECTRICITY, GAS AND FIBRE
―
Peter Ryan is responsible for the strategic operations
of the electricity, gas and fibre network businesses.
He has 20 years’ international experience within the
telecommunications industry, leading engineering,
field and operational teams in the deployment,
operations, and maintenance of mobile and
fixed networks. Most recently, Peter was the
Chief Network Engineering Officer – Network &
Service Operations at NBNCo Australia, where he
oversaw the highly successful implementation
of the broadband network. He brings a wealth of
experience in operations management, performance
transformation as well as a proven ability working
across technical, operational, and commercial
strategy to optimise business objectives.
29
Creating a new energy future a bold vision
Governance
report
This section of the annual report is an overview of Vector’s corporate governance
framework and contains information regarding corporate governance at Vector,
approved by the Board, for the financial year ended 30 June 2021.
Vector’s Board is committed to
maintaining high standards of corporate
governance, ensuring transparency and
fairness, and recognising the interests of
our shareholders and other stakeholders.
The Board has an established set of
guiding principles that state that the
company will:
‒be a leading commercial enterprise
in Australasia with a reputation for
delivering results through sound
strategy;
‒have entrepreneurial agility, being
the first to identify opportunities and
bring them to market;
‒be a great employer which values
knowledge and talent;
‒strive to ensure that everyone who
does work for Vector goes home
healthy and safe;
‒deal fairly and honestly with its
customers; and
‒be a good corporate citizen.
Vector’s governance practices are
informed by the NZX Listing Rules
(NZX Rules), the NZX Corporate
Governance Code (2020) (NZX Code),
the Financial Markets Conduct Act 2013
and the Companies Act 1993. Vector’s
governance practices are consistent with
the principles in the NZX Code, except
that Vector has not adopted a formal
protocol for responding to takeovers
(NZX Code Recommendation 3.6).
Because Entrust holds 75.1% of Vector’s
shares, it is not practically possible for a
takeover offer of Vector to be made by a
party other than Entrust.
Vector’s key corporate governance
documents, including board and
committee charters and policies which
are mentioned in this report, can be
found at www.vector.co.nz/investors/
governance.
Roles and responsibilities of the
Board and management
The primary objective of the Board is to
protect and enhance the value of the
company in the interests of Vector and
its shareholders.
The Board has overall responsibility for all
decision-making within Vector.
Vector’s governance practices are
designed to:
‒enable the Board to provide strategic
guidance for Vector and effective
oversight of management;
‒clarify the roles and responsibilities
of Vector’s directors and senior
executives in order to facilitate Board
and management accountability to
both Vector and our shareholders;
and
‒ensure a balance of authority
so that no single individual has
unfettered powers.
To ensure that Vector’s business
objectives and strategies are achieved
and to deliver value to the company
and its shareholders, the Board strives
to understand, meet and appropriately
balance the expectations of all its
stakeholders, including its employees,
customers and the wider community.
In carrying out its responsibilities
and powers, the Board at all times
recognises its overriding responsibility
to act honestly, fairly, diligently and in
accordance with the law. The Board
works to promote and maintain
an environment within Vector that
establishes these principles as basic
guidelines for all of its employees
and representatives.
Vector achieves Board and management
accountability through its Board charter,
which sets out (among other things)
matters reserved for the Board and
responsibilities delegated to the Group
Chief Executive, and a formal delegation
of authority framework. The effect of this
framework is that, while the Board has
statutory responsibility for the activities
of the company, this is exercised through
VECTOR ANNUAL REPORT 2021 /
30
the delegation to the Group Chief
Executive, who is responsible for the
day-to-day leadership and management
of the company. The framework also
reserves certain matters for the decision
of the Board.
The Board charter sets out the
expectation that all directors
continuously educate themselves to
ensure that they may appropriately and
effectively perform their duties.
The main functions of the Board include:
‒reviewing and approving the
strategic, business and financial plans
prepared by management;
‒monitoring performance against
the strategic, business and financial
plans;
‒appointing, delegating to and
reviewing the performance of the
Group Chief Executive;
‒approving major investments and
divestments;
‒ensuring ethical behaviour by the
company, Board, management and
employees; and
‒assessing its own effectiveness in
carrying out its functions.
A committee or individual director
may engage separate independent
professional advice in certain situations,
at the expense of the company, subject
to first obtaining the approval of the
Chair of the Board.
Each director has a duty to act in the
best interests of the company and the
directors are aware of their collective and
individual responsibilities to stakeholders
for the manner in which Vector’s affairs
are managed, controlled and operated.
The Board ensures that there is
appropriate training available to all
directors to enable them to remain
current on how best to discharge their
responsibilities and keep up-to-date on
changes and trends in areas relevant to
their work.
The Board regularly assesses its
effectiveness in carrying out its functions
and responsibilities. The Board Chair
leads the review and evaluation of the
Board as a whole, and of the Board
Committees, against their respective
charters. The Board Chair also engages
with individual directors to evaluate and
discuss performance and professional
development. The next review, which
will be externally facilitated, is planned
for FY22.
The Group Chief Executive has
responsibility for the day-to-day
management of Vector and its
businesses. He is supported in this
function by the Vector executive team.
Details of the members of the executive
team are set out on pages 28 and 29 of
this annual report and in the About Us
section of Vector’s website (www.vector.
co.nz/about-us/board-executive-team).
Board membership
Vector’s Board comprises experienced
directors from diverse backgrounds and
who lead the company on behalf of its
shareholders and other stakeholders. The
directors are committed to maintaining
high standards of corporate governance,
ensuring transparency and fairness
and recognising the interests of our
stakeholders.
Vector’s Constitution and the NZX Rules
set certain requirements in relation
to the Board structure. The Board
must have a minimum of three and
a maximum of nine directors, with at
least two being ordinarily resident in
New Zealand.
Our Board comprises six directors, all of
whom are non-executive. Biographies
are set out on pages 26 and 27 of this
report and include information on the
year of appointment, skills, experience
and background of each director. The
current directors possess an appropriate
mix of skills, expertise and diversity
to enable the Board to discharge
its responsibilities and deliver the
company’s strategic priorities. The Board
looks to strengthen its oversight of issues
in all disciplines, as required, through
expert advice.
Director independence
The Nominations Committee has
responsibility on behalf of the Board
for making determinations as to the
independence status of all directors.
The committee’s assessment of
independence is guided by the NZX
Rules and the commentary to NZX Code
Recommendation 2.4.
The Board has reviewed the position
and relationships of all directors in office
and considers that four of the non-
executive directors are independent.
Those directors are Jonathan Mason who
is Vector’s Chair, Dame Paula Rebstock
who is Deputy Chair, Tony Carter and
Bruce Turner. Michael Buczkowski
and Alastair Bell represent Vector’s
majority shareholder Entrust, and are
therefore not independent directors.
Directors are required to inform the
Board of all relevant information which
may affect their independence. The
Nominations Committee is responsible
for assessing director independence on
an ongoing basis.
Only independent directors are eligible
to be the Board Chair. The roles of Board
Chair, Audit Committee Chair, Risk
and Assurance Committee Chair and
Group Chief Executive are each held by
different people.
Ownership of Vector shares by directors
is encouraged but is not a requirement.
Directors’ ownership interests are listed
on page 105 of the annual report.
The Board does not have a tenure policy.
However, it recognises that a regular
refreshment programme leads to the
introduction of new perspectives, skills,
attributes and experience.
Director period of appointment
0-3 years3-9 years9 years +
Number of
directors510
31
Creating a new energy future – a bold vision
Attendance at meetings
Attendance records of Board and committee meetings are provided in the table below.
COMMITTEEFULL BOARDAUDIT COMMITTEE
RISK AND
ASSURANCE
COMMITTEE
REMUNERATION
COMMITTEE
NOMINATIONS
COMMITTEEAGM
TOTAL MEETINGS1267321
A Bell1262
†
321
M Buczkowski124
†
721
A Carter1262
†
321
J Mason (Chair)1167221
A Paterson*423121
P Rebstock1067321
B Turner126721
* Alison Paterson ceased to be a director on 25 September 2020.
† Director attending the committee meeting who is not a member of the committee.
Board committees
There are currently four Board
committees: an Audit Committee,
a Nominations Committee, a
Remuneration Committee and a Risk
and Assurance Committee.
Members of each committee are
appointed by the Board. Each
committee has a written charter that
is approved by the Board and sets out
its mandate. The charters are reviewed
at least every two years, with any
proposed changes recommended to
the Board for approval. All charters are
available on Vector’s website.
The Company Secretary has unfettered
access to the Chair of the Board and the
Audit Committee.
The members and chairs of each committee are:
COMMITTEEMEMBERS
Audit CommitteePaula Rebstock (Chair)
Alastair Bell
Tony Carter
Jonathan Mason
Bruce Turner
Nominations CommitteeJonathan Mason (Chair)
Alastair Bell
Mike Buczkowski
Tony Carter
Paula Rebstock
Bruce Turner
Remuneration CommitteeTony Carter (Chair)
Alastair Bell
Jonathan Mason
Paula Rebstock
Risk and Assurance CommitteeBruce Turner (Chair)
Michael Buczkowski
Jonathan Mason
Paula Rebstock
VECTOR ANNUAL REPORT 2021 /
32
Governance report
Nominations Committee
The Board is responsible for appointing
directors. It seeks diversity in the skills,
attributes, perspectives and experience
of its members across a broad range of
criteria so it represents the diversity of
shareholders, business types and regions
in which the company operates. The
Board has a Nominations Committee, the
purpose of which is to assist the Board
in fulfilling its responsibility to have an
efficient mechanism for examining of the
selection and appointment practices of
the company.
The Nominations Committee’s
responsibilities broadly include
management of the appointment process
for new directors and the re-election of
existing directors and is also responsible
for coordinating director appointments
with Entrust, consistent with Entrust’s
rights under the Vector Constitution. For
as long as Entrust holds at least 50.01%
of Vector’s shares, the Nominations
Committee undertakes consultation
with Entrust prior to finalising any Board
recommendation regarding a director
nomination or appointment.
When considering an appointment, the
Nominations Committee will undertake
a thorough check of the candidate
and his or her background. A director
is appointed by ordinary resolution
of the shareholders or the Board may
fill a casual vacancy. Where the Board
determines a person is an appropriate
candidate, or has appointed a director
as a casual vacancy, shareholders are
notified and provided with appropriate
information to enable them to vote on
whether to elect or re-elect a director.
The Nominations Committee also has
responsibility for reviewing the Board’s
composition and succession plans to
ensure that the company has access to
the most appropriate balance of skills,
qualifications, experience, perspectives
and background to effectively govern
the company.
Other responsibilities of the Nominations
Committee include recommending
procedures for the regular review of
the performance of the Board and
committees; making determinations as to
the independence status of all directors;
and ensuring there is an appropriate
induction and education programme and
that letters of engagement are in place
for new directors.
All new directors enter into a written
agreement with Vector, which sets out
the terms of their appointment.
The Nominations Committee’s
charter requires that the nominations
committee shall comprise not less
than three members, being directors
of Vector, a majority of whom shall be
independent directors.
An invitation may be extended to non-
committee member directors, the Group
Chief Executive and/or management to
attend meetings of the committee.
Audit Committee
The purpose of the Audit Committee is
to assist the Board in its oversight of the
quality and integrity of Vector’s external
financial reporting, the independence
and performance of the external
auditors, and the effectiveness of internal
control systems for financial reporting
and accounting records. The Audit
Committee supervises the financial
information flow to ensure accuracy and
objectivity of financial summaries.
The Audit Committee provides a formal
forum for communication between the
Board and the external auditors, ensures
the independence of the external
auditors, has oversight of audit planning,
reviews and recommends audit fees,
considers audit opinions and evaluates
the performance of the external auditors.
Oversight of the company’s external audit
arrangements to safeguard the integrity
of financial reporting is the responsibility
of the Audit Committee. Included within
the committee’s responsibilities in its
charter is the requirement to ensure that
audit independence is maintained, both
in fact and appearance.
The NZX Rules and the Audit
Committee’s charter requires that the
committee must comprise not less
than three members, being directors of
Vector, at least one of whom must have
an adequate accounting or financial
background and a majority of whom are
acknowledged as independent by the
Board pursuant to its charter. The chair
shall be an independent director and
shall not be the chair of the Board.
All members of the Audit Committee
have specialist financial skills and
experience.
The Group Chief Executive and
the Chief Financial Officer have a
standing invitation to attend Audit
Committee meetings.
Remuneration Committee
The purpose of the Remuneration
Committee is to assist the Board
in overseeing the appointment,
performance and remuneration of the
Group Chief Executive and members of
the executive team (including succession
planning) and reviewing and monitoring
the Remuneration Policy. Evaluations
are based on criteria that include
the performance of Vector and the
accomplishment of strategic objectives.
The Remuneration Committee’s charter
requires the committee to comprise not
less than three members, being directors
of Vector, a majority of whom shall be
independent directors.
The Group Chief Executive may be
invited to attend meetings where the
Remuneration Committee thinks this
is appropriate.
Risk and Assurance Committee
The purpose of the Risk and Assurance
Committee is to assist the Board in
fulfilling its responsibilities to protect
the interests of shareholders, customers,
employees and the communities in which
Vector operates through establishing a
sound risk management framework and
rigorous processes for internal control.
The Risk and Assurance Committee
charter requires the committee to
comprise not less than three members,
33
Creating a new energy future – a bold vision
being directors of Vector. Only
Committee members attend Committee
meetings unless an invitation is
extended to other directors, the Group
Chief Executive, management and/or
other guests.
External auditor
The role of the external auditor is to
audit the financial statements of the
company in accordance with applicable
auditing standards in New Zealand and
to report on its findings to the Board and
shareholders of the company.
The effectiveness, performance and
independence of the external auditor
is reviewed annually by the Audit
Committee. The Board, after considering
the recommendations of the Audit
Committee, considers and reviews
the appointment of external auditors.
The Board requires the rotation of the
audit partner for the statutory audit
after no more than five years. The
company’s external auditor is KPMG.
Graeme Edwards has been the Audit
Partner since 2019 and Laura Youdan
has been the Assurance Partner since
2018. All services provided by KPMG
are considered on a case-by-case basis
by the Audit Committee to ensure
there is no actual or perceived threat to
independence in accordance with the
policy. The Audit Partner and Assurance
Partner have provided the Audit
Committee with written confirmation
that, in their view, they were able to
operate independently during the year.
KPMG has provided the Board with the
required independence declaration for
the financial year ended 30 June 2021.
The Audit Committee has determined
that there are no matters that have
affected the auditor’s independence.
It is the Board’s policy that all non-audit
services proposed to be undertaken
by the external auditor must be pre-
approved by the Audit Committee. The
Audit Committee considered and gave
its approval for the auditor to undertake
certain non-audit related matters. Fees
paid to KPMG are included in Note 8 of
the notes to the financial statements on
page 62 of the annual report.
KPMG was paid $1.2m for audit related
services in the financial year to 30 June
2021. KPMG did not provide any non-
audit related services. Non-audit work
did not exceed 25% of the amount paid
for audit work. Further detail is provided
on page 62 of this annual report.
The auditor is regularly invited to meet
with the Audit Committee including
without Management present.
The auditor has been invited to attend
the Annual Shareholders’ Meeting and
will be available to answer questions
about the audit process and the
independence of the auditor.
Risk management
At Vector, we recognise that rigorous
risk and opportunity management is
essential for corporate stability and
performance, and supports us in our
pursuit to create a new energy future.
To drive sustainable growth and ensure
business resilience, we must anticipate
risks to our operations while capitalising
on opportunities as they arise.
Vector’s enterprise risk management
(ERM) framework provides a flexible
and purpose-built approach to the
application of risk management
across Vector and is consistent with
the Australian/New Zealand Risk
Management Standard “AS/NZS
ISO 31000:2018 Risk management
– Principles and Guideline”. Our risk
management processes and tools
are embedded within our business
operations to drive consistent, effective
and accountable decision-making.
Consistent with the “Three Lines of
Defence” principle, all Vector people are
responsible for applying Vector’s ERM
framework within their individual roles to
proactively identify, analyse, escalate and
treat risks. This risk mindset has been
implemented through:
‒awareness of risk management’s
value at operational, Executive and
Board level;
‒relatable and easily applied risk
management policies, processes
and tools;
‒integration of specialised risk partners
throughout the business; and
‒continuous training and education,
both formal and informal.
Our key and emerging risks
Strategic Risks
1Adverse impacts, government responses, and unexploited opportunities f rom climate change
2Failure to adapt to economic, f inancial, environmental, customer and/or social changes to maximise opportunity and value
3Uncertain, adverse or underutilised legislative, policy or regulatory settings in all operating jurisdictions
4Reputational damage / loss of trust & conf idence with key stakeholders
5Electricity network fails to adapt and transition to changing demand, affordability & regulatory policy causing ineff icient capital
spend and reliability challenges
6Rapid digitalisation and technology change
7Funding, liquidity, cashflow and credit risk due to uncertain economic conditions and market risks
Operational Risks
8Serious harm or fatality event, including mental health & wellbeing
9Major/repeated disruption of critical services
10Cyber security compromise
11External shock event, including natural disaster and response to the Covid-19 pandemic
12Breach of SAIDI & SAIFI
13Failure or poor performance of critical third parties (including service providers, suppliers and partnerships)
14Failure to collect, protect or create value f rom information
15Inability to develop, retain and recruit talent
Emerging Risks
16Gas businesses adversely impacted by changing climate change policy and regulation
VECTOR ANNUAL REPORT 2021
34
Governance report
Vector continues to review and mature its
ERM to reflect its key and emerging risks.
We engage external advisers to assist us
to incorporate the latest developments
in risk management and to reflect the
current operating environment.
The Board is responsible for ensuring
that key business and financial risks
are identified, and that appropriate
controls and procedures are in place to
effectively manage those risks. The Risk
and Assurance Committee has overall
responsibility for ensuring that the
company’s risk management framework
is appropriate and that it appropriately
identifies, considers and manages risks.
To support the identification of
emerging risks and opportunities,
Group Risk monitors the changing
business landscape, assessing the
influence of macro-economic trends on
Vector’s operating environment. These
perspectives, along with the material
risks from the individual business unit
risk profiles, inform the development
of the Group Key Risk Profile which
provides both the Board and Executive
team with a consolidated view of:
1. the strategically focused risks
which could have a significant
impact on the long term value and
sustainability of Vector’s business;
2. the material operational risks facing
Vector as part of its business as usual
activities which require significant
oversight and control; and
3. emerging risks acknowledged as
having the potential to increase in
materiality over time.
Health and Safety
Vector is committed to ensuring that
it has best-practice health and safety
practices. Our commitments and
requirements for health and safety
are set out in the Health and Safety
Policy. Vector will conduct its business
activities in such a way as to protect the
health and safety of all workers of Vector
and its related companies, the public
and visitors in its work environment.
We are committed to continual and
progressive improvement in its health
and safety performance. Page 14 of
the annual report contains Vector’s
performance in these areas, including its
Total Recordable Injury Frequency Rate
(TRIFR) and Lost Time Injury Frequency
Rate (LTIFR).
The Board has delegated day-to-day
responsibility for the implementation
of health and safety standards and
practices to management. The Board
is committed to providing effective
resources and systems at all levels of the
organisation to fulfil its commitment
to employees, customers, shareholders
and stakeholders.
Internal audit
Vector’s internal audit function is
overseen by the Risk and Assurance
Committee and provides independent
and objective assurance on the
effectiveness of governance, risk
management and internal controls
across all business operations. The team
follows a co-sourced model, drawing on
both in-house and external expertise,
and has unrestricted access to all Vector
staff, records and third parties. The team
liaises closely with KPMG, as Vector’s
external auditor, to share the outcomes
of the internal audit programme to
the extent that they are relevant to the
financial statements.
Ethical and responsible behaviour
Directors and employees are expected
to act legally, ethically, responsibly
and with integrity in a manner consistent
with Vector’s policies, procedures
and values.
The Code of Conduct and Ethics
covers a wide range of areas and
provides guidance regarding
personal integrity, business integrity,
customers and society, people, and
assets and information. It outlines
the responsibilities of Vector’s people
and explains the standards of conduct
and ethics.
At Vector our vision and values are the
foundation of our business; they reflect
who we are and how we do business.
Together as a team, as well as with
our customers, partners and the wider
community, each and every one of us
has an important role to play in bringing
our values to life.
The purpose of our Code is to provide a
framework for ethical decision-making.
However, the Code is not a substitute for
good judgement. As Vector employees,
we strive to carry out our work in
accordance with our values, and this
Code should be used as a practical set
of guiding principles to help us make
decisions in our daily jobs.
The procedure for advising the company
of a suspected breach is set out in the
Whistleblower Policy. People at Vector
have a range of options to speak up
if they notice something that’s not
right, including raising a concern with
a relevant manager. These options
include in person, by phone, email,
post, online form and all options can be
done anonymously.
A comprehensive set of policies has been
put in place to assist directors, staff and
contractors to act and make decisions in
an ethical and responsible manner.
The Board has implemented formal
procedures to handle trading in
Vector’s securities by directors and
employees of Vector in the Insider
Trading Policy, with approval from the
Chair and the Company Secretary being
required before trading can occur. The
fundamental rule in the policy is that
trading with insider information is
prohibited at all times. The requirements
of the policy are separate from, and in
addition to, the legal prohibitions on
insider trading in New Zealand.
The policy provides that shares may not
be traded at any time by any individual
holding “material information” (as
defined in the NZX Rules). A blackout
period is imposed for all directors,
senior officers and certain other people
between the day before the end of the
half-year and full-year balance dates and
the day after the release to NZX of the
result for that period.
35
Creating a new energy future – a bold vision
Diversity and inclusion
The Board’s commitment to creating
and maintaining both a diverse
workforce and an inclusive workplace
for all employees is reflected in the
Diversity and Inclusion Policy. A
Diversity Council, made up of senior
management representatives, provides
governance over the implementation
of the policy. The Diversity Council also
provides guidance and direction in
relation to the activity of the Diversity
Committee, which consists of employee
representatives from across the business.
The Board is satisfied with the initiatives
being implemented by the Group and
its performance with respect to the
Inclusion and Diversity Policy.
Vector is committed to:
‒adding to, nurturing and developing
the collective relevant skills, and
diverse experience and attributes of
Vector’s people;
‒ensuring that Vector’s culture and
management systems are aligned
with and promote the attainment of
diversity and inclusion;
‒providing an environment in which all
people are treated with fairness and
respect, and have equal opportunities
available at work; and
‒being recognised as an organisation
that exemplifies diversity and
inclusion in action.
Vector recruits, promotes and
compensates based on merit,
regardless of gender, gender identity,
ethnicity, disability, religion, age,
nationality, sexual orientation, or socio-
economic background.
It is a company policy that people in
the workplace are treated with respect
in accordance with the company’s
philosophies of equal employment
opportunities, and anti- harassment and
discrimination policies.
Vector’s workforce is made up of
many individuals with diverse skills,
values, backgrounds and experiences.
We respect and value the benefit of
this diversity.
“Diversity” at Vector refers to all
characteristics that make individuals
different from each other, including
gender, gender identity, ethnicity,
disability, age, sexual orientation, religion
and socio-economic background.
“Inclusion” at Vector means providing a
work environment where everyone feels
comfortable to bring themselves to work,
where they have an opportunity to fully
participate in achieving our business
objectives and where each person is
valued for their unique perspectives,
skills and experiences.
Responsibility for workplace diversity
and the setting of measurable objectives
for approval by the Board is held by
management on behalf of the Board.
Gender statistics:
Vector’s gender statistics are as follows:
AS AT 30 JUNE 2021AS AT 30 JUNE 2020
PositionFemaleMaleDiverseFemaleMaleDiverse
Directors1 (17%)5 (83%)2 (29%)5 (71%)
Executive team2* (25%)6 (75%)4 (44%)5 (56%)
Direct reports to the executive team19 (34%)37 (66%)18 (35%)34 (65%)
Across the Vector group451 (36%)816 (64%) 1 (0.1%)431 (35%)797 (65%) 1 (0.1%)
REMUNERATION
Vector’s goal is to provide a fair,
reasonable and competitive
remuneration for its directors. This
will ensure we can attract and retain
high-calibre directors who have the
skills, experience and knowledge to
increase entity value, to the benefit of
all shareholders.
Vector’s directors do not participate
in an executive remuneration or share
scheme. Directors do not receive any
options, bonus payments or incentive-
based remuneration. The company
does not have a scheme for retirement
benefits to be given to directors.
The Remuneration Committee is
responsible for reviewing or the review of
directors’ remuneration and, from time
to time, making recommendations in
relation to the level of fees in accordance
with the Remuneration Policy.
Directors’ fees were last approved
by shareholders at the 2013 annual
shareholders’ meeting. Directors receive
a single fee for membership of the
Board and committees. All Directors are
also entitled to be reimbursed for costs
associated with carrying out their duties.
Fees payable to Vector’s directors for the
2021 financial year were as follows:
DIRECTORFEE ($)
J Mason176,138
A Bell100,650
M Buczkowski100,650
A Carter100,650
A Paterson50,325
P Rebstock100,650
B Turner100,650
* Fiona Michel is currently on secondment.
VECTOR ANNUAL REPORT 2021 /
36
Governance report
Remuneration framework
Vector’s remuneration framework is
designed to attract and retain high-
performing individuals, to support the
delivery of the company’s strategy
and vision, and reward our people
appropriately and competitively.
The Remuneration Committee
assists the Board in overseeing the
Remuneration Policy.
Vector’s Remuneration Policy is that of
a total remuneration framework which
comprises fixed remuneration, plus an
at-risk component in the form of a Short-
Term Incentive (STI). STI is a variable
element of remuneration and is only
paid, at the Board’s discretion, if financial
and health and safety gates are met,
and company performance goals have
been achieved. From FY22, the STI will
only apply to executive team members
and their direct reports. Employees who
were previously eligible for STI have
received an adjustment to their fixed
remuneration based on historic STI
performance.
Vector has not provided any joining
bonus to Executives in the last
financial year. Vector does not provide
“termination payments” to outgoing
Executives, nor does it provide
retirement payments at greater rates for
Executives than other staff (if any at all).
Fixed remuneration
Fixed remuneration is reviewed annually
based on data from independent
remuneration specialists. Employees’
fixed remuneration is based on a matrix
of their own performance and their
current position in their salary band
when compared with Vector’s internal
role bands and the market.
Short-Term Incentive
Prior to any STI payment being available
to eligible employees the conditional
gateway goals (Health and Safety – no
fatalities; Financial – achieving at least
95% of budget) must be met.
The STI Scheme for FY21 recognises
Group and business unit-level
achievement of financial, customer,
operational, health and safety and
sustainability performance outcomes
within the at-risk component of
employees’ remuneration. The
STI Scheme does not reward
individual performance.
The at-risk percentage of fixed
remuneration for the FY21 STI Scheme
ranges from 5% to 50% of base salary
depending on the complexity of the role.
Company performance goals are set and
reviewed annually by the Board to align
with business and financial objectives.
The percentage split applicable to
performance goals can vary by business
unit. For this financial year, Vector’s
group goals were:
‒40% Financial;
‒40% Customer;
‒10% Health and Safety; and
‒10% Decarbonisation.
Customer goals include measures
of customer satisfaction, as well as
operational performance such as
electricity network standards as set by
the Commerce Commission (SAIDI/
SAIFI), gas response to emergency and
the achievement of customer service
level agreements.
STI payments are determined following
a review of company performance and
paid out at between 0% and 100% for
the Group Chief Executive, executive
leadership team, and all eligible
employees. Performance against the at-
risk STI element is capped at 100%.
As an example of how STI is calculated,
an employee with fixed remuneration
of $80,000 and an STI element of 10%
may receive between $0 and $8,000
(0% to 100% of their STI) depending,
at the Board’s discretion, on the level
of company performance once the
gateways have been achieved.
STI Scheme payments relating to the
financial year ended 30 June 2021 are
delivered as a taxable cash payment and
are payable on completion of the annual
audited financial statements. Payments
relating to the 2021 financial year are
therefore paid in the 2022 financial year.
Group Chief Executive
remuneration
The Board rewards the Group Chief
Executive with fixed remuneration and
an at-risk component in the form of
a Short-Term Incentive. There are no
long-term incentive or any share option
schemes available at Vector.
The Group Chief Executive’s fixed
remuneration is reviewed periodically
by the Board, by external remuneration
specialists using relevant market peer
benchmarks, as is the case with the
executive leadership team and all senior
leadership roles.
The Group Chief Executive’s STI and fixed remuneration are set out below.
GROUP CHIEF EXECUTIVE REMUNERATION
FIXED REMUNERATIONAT-RISK REMUNERATION
TOTAL
REMUNERATION
SALARY BENEFITS SUBTOTALSTI SUBTOTAL
FY21$1,430,550.00–$1,430,550.00*$1,430,550.00
FY20$1,402,500.00–$1,402,500.00$481,758.75$1,884,258.75
* STI will be paid September 2021 for FY21.
DESCRIPTION OF THE GROUP CHIEF EXECUTIVE STI SCHEME
FOR PERFORMANCE PERIOD ENDING 30 JUNE 2021
SchemeDescriptionPerformance MeasuresPercentage of Maximum Awarded
STISet to a maximum of 50% of f ixed
remuneration for FY21 on-plan
performance where the highest levels of
company performance measures are
achieved.
Company Performance measures:
40% Financial
40% Customer
10% Health & Safety
10% Decarbonisation
If met, will be paid in
September 2021.
37
Creating a new energy future – a bold vision
Investor engagement
Vector recognises the rights of
shareholders as the owners of the
company and encourages their ongoing
active interest in the company’s
affairs by:
‒communicating with them
effectively;
‒ensuring they have full access to
information about the company,
including through the Vector website;
‒conducting shareholder meetings in
locations and at times convenient to
the majority of shareholders, where
possible; and
‒providing shareholders with adequate
opportunity to ask questions about,
and comment upon, relevant matters,
and to question directly the external
auditors at shareholder meetings.
Vector’s Board is committed to
maintaining open and transparent
communications with investors
and other stakeholders and it
supports a programme for two-way
engagement with shareholders, debt
investors, the media and the broader
investment community.
Annual and interim reports, NZX
releases, quarterly reports on operational
performance, governance policies and
charters and a wide variety of corporate
information are posted on our website.
Vector conducts detailed market
briefings in conjunction with the release
of the annual and interim financial
results. Transcripts of the briefings are
available at the annual reports page of
the Investor section of the website.
Each shareholder is entitled to receive
a hard copy of each annual and
interim report.
We have a Shareholder Meetings page
in the Investors section on our website
where documents relating to meetings
are available.
Vector’s Constitution includes provisions
relating to Entrust, Vector’s majority
shareholder. In addition, Vector and
Entrust are parties to a Deed Recording
Essential Operating Requirements,
which includes certain policy,
consultation, pricing reporting and the
energy solutions programme obligations.
The Board is committed to reporting
Vector’s financial and non-financial
information in an objective, balanced,
and clear manner. The Board takes an
active role in overseeing financial and
non-financial reporting. The annual
report is an important document for
communicating financial reporting and
also reports on strategic progress and
operational performance. It contains
the financial statements that are
prepared to comply with generally
accepted accounting practice. The
Board contributes to and reviews the
annual report.
A series of key performance indicators
is used to link results to strategy.
Vector is committed to transparent
reporting of non-financial objectives,
such as environmental, social, and
governance factors.
Shareholders may raise relevant
matters for discussion at the Annual
Shareholders’ Meeting either in person
or by emailing the company with a
question to be asked. Shareholders
can also contact the company to
ask questions, or express views,
about matters affecting Vector. A
dedicated email address is available for
shareholder/investor queries, which is:
investor@vector.co.nz. Contact details for
Vector’s head office are available on the
website and at page 106 of the annual
report. Vector is committed to complying
with its obligations under the NZX Rules
and the Companies Act 1993, both of
which contain specific requirements to
obtain shareholder approval for certain
significant matters affecting Vector.
Where voting on a matter is required,
the Board encourages investors to
attend the meeting or to send in a proxy
vote. Notices of meeting are usually
available at least 20 working days prior
to the meeting on the Shareholder
Meetings page in the Investors section of
the website.
Continuous disclosure
The Board is committed to the provision
of accurate, timely, orderly, consistent
and credible disclosure and compliance
with the continuous disclosure
requirements of the Financial Markets
Conduct Act 2013 and the NZX Rules. The
Board supports the principle that high
standards of reporting and disclosure
are essential for proper accountability
between the company and its investors,
employees and stakeholders.
It achieves these commitments, and the
promotion of investor confidence, by
ensuring that trading in its shares takes
place in an efficient, competitive and
informed market. Vector’s Continuous
Disclosure Policy, Shareholder Relations
Policy and Stakeholder Relations Policy
set out protocols to facilitate effective
and compliant disclosure.
The accountabilities of individual
directors and employees are
documented in the Continuous
Disclosure Policy. Vector has also
established procedures to follow if
potential material information is raised
by an employee or a director and a
management disclosure committee
which meets regularly to discuss
continuous disclosure matters.
Significant market announcements,
including the preliminary announcement
of the half-year and full-year results, the
financial statements for those periods,
and any advice of a change in earnings
forecast are approved by the Board. The
Chair will consult with directors on any
other matters for which the issue or form
of the disclosure is determined by the
Chair to be a matter for the Board.
VECTOR ANNUAL REPORT 2021 /
38
Governance report
Entrust, majority
shareholder of Vector
Consumer trust Entrust was formed
more than 25 years ago to ensure
that stewardship over Auckland’s
electricity network remains in the
hands of Aucklanders. Entrust
acts in the interests of its 340,500
families and businesses in Auckland,
Manukau, northern Papakura and
eastern Franklin. Entrust protects
the $3 billion investment in Vector
through its role in the appointment
of directors to Vector’s Board.
Enabling projects with
direct benefit
Entrust has an agreement with
Vector that requires an average of
$10.5 million to be invested in projects
in the Entrust District every year.
In the year to 30 June 2021, key
undergrounding projects have been
undertaken in Mt Albert, Powell Street
& Himikera Ave (Avondale), Ngahue
Drive (Stonefields), Bella Vista Road
(Herne Bay), Laings Road & Bucklands
Beach Road (Bucklands Beach), and
Pacific Parade (Surfdale).
KAREN SHERRY PAUL HUTCHISON
MICHAEL BUCZKOWSKI (DEPUTY CHAIR)WILLIAM CAIRNS (CHAIR)
ALASTAIR BELL
Here for the community
Entrust is proud of the work it has
undertaken for its beneficiaries and
all Aucklanders.
Passing on a share of Vector’s
profits to beneficiaries
Vector’s growth and operating
performance enables Entrust to
distribute an annual dividend to
beneficiaries through its 75.1% stake
in Vector.
Advocacy on behalf of
energy consumers
Entrust regularly advocates on behalf
of energy consumers on important
matters such as the Climate Change
Commission’s advice on initiatives to
reduce greenhouse gas emissions, and
other regulatory matters
IN SEPTEMBER 2020, EACH OF
ENTRUST’S 340,500 BENEFICIARIES
RECEIVED A $280 DIVIDEND –
THAT’S MORE THAN $95 MILLION
GOING STRAIGHT INTO THE
AUCKLAND ECONOMY.
MORE THAN 233 UNDERGROUNDING
PROJECTS HAVE BEEN COMPLETED
SINCE THE PROGRAMME BEGAN, IN
AUCKLAND, MANUKAU AND
NORTHERN PAPAKURA.
39
Creating a new energy future a bold vision
Vector has investments in a number of businesses that complement our network
businesses and strengthen our capabilities in the energy services field.
50
%
TREESCAPE
Vector holds a 50% shareholding in Tree Scape Limited, one of Australasia’s largest
specialist tree and vegetation management companies, with depots throughout
New Zealand and in Queensland and New South Wales. Treescape employs more than
600 staff. Its customers include councils, utilities, government agencies, construction
companies and developers. Treescape implements Vector’s planned vegetation
management programme, which plays a major role in minimising the impact of
severe weather on Vector’s electricity network.
On 10 July 2021, Vector and the other shareholders of Tree Scape Limited agreed the
conditional sale of all of the shares of the company. Subject to the conditions being
satisfied, the sale is anticipated to complete by the end of August 2021.
www.treescape.co.nz
60.25
%
LIQUIGAS
NGC Holdings Limited (a wholly owned subsidiary of Vector) holds a 60.25%
shareholding in Liquigas Limited, New Zealand’s leading company for tolling,
storage and distribution of bulk LPG. Liquigas has staff and depots in Auckland,
New Plymouth, Christchurch and Dunedin.
www.liquigas.co.nz
8.1
%
mPREST
Vector holds a 8.1% shareholding in mPrest Systems (2003) Limited. The mPrest
technology allows companies to better monitor, analyse, and control energy
networks and connect traditional infrastructure like electricity lines and substations
with new technology like solar and battery energy solutions.
www.mprest.com
Joint ventures
and investments
VECTOR ANNUAL REPORT 2021
40
YEAR ENDED 30 JUNE20212020
ELECTRICITY
Customers
1, 5
590,799580,060
New connections14,99512,231
Net movement in customers
2
10,7398,935
Volume distributed (GWh)8,3258,315
Network length (km)
1
19,16818,999
SAIDI (minutes)
3, 4
Normal operations unplanned86.3116.7
Normal operations planned46.550.8
Major network events0.03.4
Total132.8170.9
GAS DISTRIBUTION
Customers
1, 5
116,472113,960
New connections3,8443,201
Net movement in customers
2
2,5122,318
Volume distributed (PJ)14.114.3
GAS TRADING
Natural gas sales (PJ)
6
8.612.4
Gas liquid sales (tonnes)
7
45,04343,338
9kg LPG bottles swapped
8
680,099701,923
Liquigas LPG tolling (tonnes)
9
102,351116,024
TECHNOLOGY
Electricity: advanced meters
1, 10
1,864,7241,713,674
Electricity: legacy meters
1
61,83169,527
Electricity: prepay meters
1
1528
Electricity: time-of-use meters
1
12,67112,556
Gas: advanced meters
1
5960
Gas: legacy meters
1
234,279230,862
Data Management and service connections
1
8,3598,472
1. As at 30 June.
2. Net number of customers added during the period, includes disconnected,
reconnected and decommissioned ICPs.
3. SAIDI minutes for the regulatory year - 12 months ended 31 March (audited).
4. SAIDI in relation to normal operations and major network events has been updated
in accordance with the DPP3 regulatory guidelines.
5. Billable ICPs.
6. Excludes gas sold as gas liquids.
7. The group completed the sale of its interests in the Kapuni Gas Treatment Plant
(KGTP) and co-generation facility on 31 March 2020. As a result, we have changed the
methodology of calculating liquids volumes to reflect continuing activities only. LPG
volumes include LPG sold by the OnGas business. LPG and Natural Gasoline sold by
KGTP is now excluded. Comparatives have been restated to reflect this.
8. Number of 9kg LPG bottles swapped and sold during the year.
9. The group has revised the methodology for Liquigas LPG tolling to reflect new
contractual terms and calculates product tolling domestic and exports. Product
further tolled in South Island has been removed.
10. The number of advanced meters as at 30 June 2021 includes 177,397 meters
managed but not owned by Vector (30 June 2020: 168,793).
Operating
statistics
41
Creating a new energy future – a bold vision
YEAR ENDED 30 JUNE ($ MILLION)20212020201920182017
PROFIT OR LOSS
Revenue1,279.31,294.01,318.61,328.41,226.7
Adjusted EBITDA
1
513.5490.0485.8470.1474.4
Depreciation and amortisation(270.1)(262.8)(246.8)(225.9)(199.6)
Adjusted EBIT243.4227.2239.0244.2274.8
Net profit194.697.384.0149.8168.9
BALANCE SHEET
Total equity2,335.42,259.72,349.42,457.92,448.3
Total assets6,519.56,380.96,061.05,808.05,574.6
Economic net debt (borrowings net of cash and short-
term deposits)3,073.22,882.32,627.52,377.82,220.1
CASH FLOW
Operating cash flow499.1397.3348.1389.9335.7
Capital expenditure(516.2)(476.4)(418.4)(386.8)(354.3)
Dividends paid(165.8)(167.0)(164.1)(163.9)(161.0)
KEY FINANCIAL MEASURES
Adjusted EBITDA/revenue40.1%37.9%36.8%35.4%38.7%
Adjusted EBIT/revenue19.0%17.6%18.1%18.4%22.4%
Equity/total assets35.8%35.4%38.8%42.3%43.9%
Return on assets (adjusted EBITDA/assets)7.9%7.7%8.0%8.1%8.5%
Gearing
2
56.5%55.2%52.2%48.8%47.1%
Net interest cover (adjusted EBIT/net interest costs)
(times)2.21.81.81.82.0
Earnings (NPAT) per share (cents)19.39.58.314.816.7
Dividends declared, cents per share16.7516.5016.5016.2516.00
1. Refer to Non-GAAP reconciliation on page 44.
2. Gearing is defined as economic net debt to economic net debt plus adjusted equity. Adjusted equity means total equity adjusted for hedge reserves.
Five year financial
performance
VECTOR ANNUAL REPORT 2021 /
42
REGULATED NETWORKS
GAS TRADING
METERING
CORPORATE AND OTHER
INTER-SEGMENT
REVENUE
$ MILLION
, .
,.
,.
, .
,.
FY17FY18FY19FY20FY21
ADJUSTED EBITDA
$ MILLION
470.1
485.8
490.0
513.5
0
100
-100
200
300
400
500
600
700
474.4
FY21FY20FY19FY18FY17
REGULATED NETWORKS
GAS TRADING
METERING
CORPORATE AND OTHER
TOTAL GROUP
NET PROFIT
$ MILLION
FY FY FY FY FY
.
.
.
.
.
1. FY17 includes a $15.0 million gain from a tax dispute
settlement.
2. FY18 includes a $16.7 million one-off tax gain.
3. FY19 includes a $46.6 million non-cash impairment.
4. FY20 includes a $32.0 million non-cash impairment.
43
Creating a new energy future – a bold vision
OPERATING CASH FLOWS
$ MILLION
FY FY FY FY FY
.
.
.
.
.
43.5%
56.5%
F
Y
2
1
F
Y
2
0
55.2%44.8%
7.2%
31.2%
2.1%
59.5%
F
Y
2
1
F
Y
2
0
6.1%
64.9%
1.7%
27.3%
CAPITAL EXPENDITURE
REGULATED NETWORKS
GAS TRADING
METERING
CORPORATE AND OTHER
ECONOMIC NET DEBT
ADJUSTED EQUITY
SOURCE OF FUNDING – GEARING
AS AT 30 JUNE
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 the 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-
20212020
YEAR ENDED 30 JUNE ($ MILLION)
Segment adjusted EBITDA
REPORTED
SEGMENT
EBITDA
LESS CAPITAL
CONTRIBUTIONS
AND OTHER
MOVEMENTS
SEGMENT
ADJUSTED
EBITDA
REPORTED
SEGMENT
EBITDA
LESS CAPITAL
CONTRIBUTIONS
AND OTHER
MOVEMENTS
SEGMENT
ADJUSTED
EBITDA
Metering171.6 – 171.6 154.8 – 154.8
Gas Trading27.4 – 27.4 33.9 – 33.9
Unregulated segments199.0 – 199.0 188.7 – 188.7
Regulated segment471.8 (121.1)350.7 423.3 (85.7)337.6
Corporate and other(36.5) 0.3 (36.2) (38.2)1.9 (36.3)
TOTAL634.3 (120.8)513.5 573.8 (83.8)490.0
GAAP To Non-GAAP Reconciliation
YEAR ENDED 30 JUNE ($ MILLION)
Group EBITDA and adjusted EBITDA20212020
Reported net profit for the period (GAAP)194.6 97.3
Add back: net interest costs108.6 126.5
Add back: tax (benef it)/expense61.0 55.2
Add back: depreciation and amortisation270.1 262.8
Add back: impairment– 32.0
EBITDA634.3 573.8
Adjusted for:
Associates (share of net (prof it)/loss)(1.8)(0.3)
Capital contributions(122.5)(86.4)
Fair value change on f inancial instruments3.5 3.4
Gain on sale of Kapuni gas interests – (0.5)
Adjusted EBITDA513.5 490.0
GAAP profit measures’ available on our
website (vector.co.nz).
Non-GAAP profit measures are
not prepared in accordance with
New Zealand International Reporting
Standards (NZ IFRS) 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.
Non-GA AP financial
information
Definitions:
EBITDA
Earnings before interest, taxation,
depreciation, amortisation and
impairments from continuing operations
Adjusted EBITDA
EBITDA from continuing operations
adjusted for fair value changes,
associates, third-party contributions,
and significant one-off gains, losses,
revenues and/or expenses.
VECTOR ANNUAL REPORT 2021
44
Creating a new energy future – a bold vision
45
Financials
2021 FINANCIAL STATEMENTS
These f inancial statements for the year ended 30 June 2021 are dated 23 August 2021,
and signed for and on behalf of Vector Limited by:
Director 23 August 2021
Director 23 August 2021
And management of Vector Limited by:
Group Chief Executive 23 August 2021
Chief Financial Officer 23 August 2021
Financial Statements
CONTENTS
Financial Statements
Prof it or Loss 47
Other Comprehensive Income 48
Balance Sheet 49
Cash Flows 50
Changes in Equity 51
Notes to the Financial Statements 52
Independent Auditor’s Report 90
VECTOR ANNUAL REPORT 2021 /
46
Financial Statements
Financial Statements
Profit or loss
for the year ended 30 June
NOTE
2021
$M
2020
$M
Revenue71,279.31,294.0
Operating expenses8(643.3)(717.6)
Depreciation and amortisation(270.1)(262.8)
Interest costs (net) 9(108.6)(126.5)
Impairment11–(32.0)
Associates (share of net prof it/(loss))61.80.3
Fair value change on f inancial instruments21.2(3.5)(3.4)
Gain on sale of Kapuni gas interests–0.5
Profit/(loss) before income tax255.6152.5
Income tax benef it/(expense)15(61.0)(55.2)
Net profit/(loss) for the period194.697.3
Net profit/(loss) for the period attributable to
Non-controlling interests 1.41.9
Owners of the parent 193.295.4
Basic and diluted earnings per share (cents) 24.319.39.5
47
Creating a new energy future – a bold vision
NOTE
2021
$M
2020
$M
Net profit/(loss) for the period194.697.3
Other comprehensive income net of tax
Items that may be re-classif ied subsequently to prof it or loss:
Net change in fair value of hedge reserves21.346.9(20.6)
Translation of foreign operations0.83.5
Share of other comprehensive income of associate60.1(0.1)
Items that will not be re-classif ied to prof it or loss:
Fair value change on investment14.1(0.5)(2.8)
Other comprehensive income for the period net of tax47.3(20.0)
Total comprehensive income for the period net of tax241.977.3
Total comprehensive income for the period attributable to
Non-controlling interests 1.41.9
Owners of the parent 240.575.4
Other Comprehensive Income
for the year ended 30 June
VECTOR ANNUAL REPORT 2021 /
48
Financial Statements
NOTE
2021
$M
2020
$M
CURRENT ASSETS
Cash and cash equivalents17.428.3
Trade and other receivables1083.288.6
Contract assets105.592.7
Derivatives2138.0–
Inventories12.49.4
Contingent consideration58.25.2
Intangible assets2.02.4
Income tax1528.733.7
Investment classif ied as held for sale612.2–
Total current assets307.6260.3
NON-CURRENT ASSETS
Receivables101.71.7
Derivatives2165.3220.4
Contingent consideration573.579.5
Investment in associate6–8.9
Investment in private equity14.112.312.8
Intangible assets111,292.31,283.4
Property, plant and equipment (PPE)12 4,625.84,367.7
Right of use assets (ROU)13.136.135.8
Income tax15102.8110.0
Deferred tax162.10.4
Total non-current assets6,211.96,120.6
Total assets6,519.56,380.9
CURRENT LIABILITIES
Trade and other payables17221.7200.8
Provisions1821.327.8
Borrowings20232.3374.7
Derivatives210.99.5
Contract liabilities65.053.4
Lease liabilities13.28.48.2
Income tax1.80.1
Total current liabilities551.4674.5
NON-CURRENT LIABILITIES
Provisions188.77.8
Borrowings202,838.32,760.9
Derivatives21164.795.4
Contract liabilities30.238.6
Lease liabilities13.229.029.6
Deferred tax 16561.8514.4
Total non-current liabilities3,632.73,446.7
Total liabilities4,184.14,121.2
EQUITY
Equity attributable to owners of the parent2,319.72,242.8
Non-controlling interests in subsidiaries15.716.9
Total equity2,335.42,259.7
Total equity and liabilities6,519.56,380.9
Net tangible assets per share (cents)24.3102.595.7
Gearing ratio (%)24.356.555.2
Balance Sheet
as at 30 June
49
Creating a new energy future – a bold vision
NOTE
2021
$M
2020
$M
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts f rom customers1,268.91,312.9
Interest received 2.92.0
Payments to suppliers and employees(626.3)(717.2)
Interest paid(125.3)(134.0)
Income tax paid (21.1)(66.4)
Net cash flows from/(used in) operating activities23.1499.1397.3
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds f rom sale of PPE and software intangibles 0.20.5
Purchase and construction of PPE (474.9)(436.7)
Purchase and development of software intangibles(41.3)(39.7)
Proceeds f rom contingent consideration4.4–
Other investments0.2(0.3)
Net cash flows from/(used in) investing activities(511.4)(476.2)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds f rom borrowings3530.0797.1
Repayment of borrowings3(350.0)(541.6)
Dividends paid 3(165.8)(167.0)
Lease liabilities payments(11.0)(8.9)
Redemption of preference shares f rom non-controlling interests 3(1.8)–
Net cash flows from/(used in) financing activities23.21.479.6
Net increase/(decrease) in cash and cash equivalents(10.9)0.7
Cash and cash equivalents at beginning of the period28.327.6
Cash and cash equivalents at end of the period17.428.3
Cash and cash equivalents comprise:
Bank balances and on-call deposits12.823.2
Short-term deposits 4.65.1
17.428.3
Cash flows
for the year ended 30 June
VECTOR ANNUAL REPORT 2021 /
50
Financial Statements
Changes in equity
for the year ended 30 June
NOTE
ISSUED
SHARE
CAPITAL
$M
TREASURY
SHARES
$M
HEDGE
RESERVES
$M
OTHER
RESERVES
$M
RETAINED
EARNINGS
$M
NON-
CONTROLLING
INTERESTS
$M
TOTAL
EQUITY
$M
Balance at 30 June 2019880.0(0.4)(61.1)(1.5)1,515.417.02,349.4
Net prof it/(loss) for the period––––95.41.997.3
Other comprehensive income––(20.6)0.6––(20.0)
Total comprehensive income––(20.6)0.695.41.977.3
Dividends 3––––(165.0)(2.0)(167.0)
Employee share purchase
scheme transactions–0.1–(0.1)–––
Total transactions with
owners–0.1–(0.1)(165.0)(2.0)(167.0)
Balance at 30 June 2020880.0(0.3)(81.7)(1.0)1,445.816.92,259.7
Net prof it/(loss) for the period––––193.21.4194.6
Other comprehensive income––46.90.4––47.3
Total comprehensive income––46.90.4193.21.4 241.9
Dividends 3––––(165.0)(0.8)(165.8)
Employee share purchase
scheme transactions–0.1–(0.1)–––
Redemption of preference
shares3–––––(1.8)(1.8)
Reclassif ication to
investment held for sale6–––1.4––1.4
Total transactions with
owners–0.1–1.3(165.0)(2.6)(166.2)
Balance at 30 June 2021880.0(0.2)(34.8)0.71,474.015.72,335.4
51
Creating a new energy future – a bold vision
Notes to the Financial Statements
VECTOR ANNUAL REPORT 2021 -
52
Notes to the Financial Statements
Notes to the Financial Statements
Note 1Company information53
Note 2Summary of significant accounting policies53
Note 3Significant transactions and events54
Note 4Segment information55
Note 5Contingent consideration58
Note 6Investment held for sale58
Note 7Revenue59
Note 8Operating expenses62
Note 9Interest costs (net)62
Note 10Trade and other receivables63
Note 11Intangible assets64
Note 12Property, plant and equipment (PPE)66
Note 13Leases68
Note 14Investments69
Note 15Income tax expense/(benefit)71
Note 16Deferred tax72
Note 17Trade and other payables72
Note 18Provisions73
Note 19Fair values74
Note 20Borrowings76
Note 21Derivatives and hedge accounting78
Note 22Financial risk management 82
Note 23Cash flows86
Note 24Equity87
Note 25Related party transactions88
Note 26Contingent liabilities 89
Note 27Events after balance date89
1. Company information
Reporting entityVector Limited is a company incorporated and domiciled in New Zealand, registered under the
Companies Act 1993 and listed on the NZX Main Board (NZX). The company is an FMC reporting
entity for the purposes of Part 7 of the Financial Markets Conduct Act 2013. The f inancial
statements comply with this Act.
The f inancial statements presented are for Vector Limited Group (“Vector” or “the group”) as at,
and for the year ended 30 June 2021. The group comprises Vector Limited (“the parent”) and its
subsidiaries (together referred to as “the group”).
In accordance with the Financial Markets Conduct Act 2013, where a reporting entity prepares
consolidated f inancial statements, parent company disclosures are not required.
Vector Limited is a 75.1% owned subsidiary of Entrust which is the ultimate parent entity for
the group.
The primary operations of the group are electricity and gas distribution, natural gas and LPG sales,
metering, telecommunications and new energy solutions.
2. Summary of significant
accounting policies
Statement of complianceThe f inancial statements comply with New Zealand equivalents to International Financial
Reporting Standards (NZ IFRS), and other applicable Financial Reporting Standards, as
appropriate for Tier 1 for-prof it entities. They also comply with International Financial
Reporting Standards.
Basis of preparationThe f inancial statements have been prepared in accordance with New Zealand Generally
Accepted Accounting Practice (NZ GAAP) as appropriate to Tier 1 for-prof it entities.
They are prepared on the historical cost basis except for the following items, which are measured
at fair value:
—the identif iable assets and liabilities acquired in a business combination; and
—certain f inancial instruments, and
—contingent receivable and investment in private equity, as disclosed in the notes to the
f inancial statements.
The presentation currency is New Zealand dollars ($). All f inancial information has been rounded
to the nearest 100,000, unless otherwise stated.
The statements of prof it or loss, other comprehensive income, cash flows and changes in equity
are stated exclusive of GST. All items in the balance sheet are stated exclusive of GST except for
trade receivables and trade payables, which include GST.
Signif icant accounting,
estimates and judgements
Vector’s management is required to make judgements, estimates, and apply assumptions that
affect the amounts reported in the f inancial statements. They have based these on historical
experience and other factors they believe to be reasonable. The table below lists the key areas of
judgements and estimates in preparing these f inancial statements:
KEY AREAS JUDGEMENTS / ESTIMATESNOTE
Valuation of contingent consideration receivable Estimates5,19
Intangible assets: valuation of goodwillEstimates11
Property, plant and equipment: classif ication of costsJudgements12
Leases: assessment of lease term for perpetual leases
and leases with renewal optionsJudgements13
Valuation of derivative f inancial instrumentsEstimates19,21
53
Creating a new energy future – a bold vision
2. Summary of significant
accounting policies continued
New standards and
interpretations adopted
IAS 38 Intangible Assets interpretation: configuration or customisation costs in a cloud
computing arrangement
The group has adopted a new interpretation f rom the IFRS Interpretations Committee (IFRIC)
issued in April 2021 on the International Accounting Standard 38 Intangible Assets (“IAS 38”). The
interpretation considers how an entity accounts for conf iguration or customisation costs in a
cloud computing arrangement. An entity does not recognise an intangible asset in a cloud
computing arrangement if the contract does not contain a lease of the underlying software or if
the entity has no control of the underlying software. The assessment is done as at
commencement of the contract.
The group has assessed the impact of the interpretation and recognised $2.3 million of cloud
computing conf iguration and customisation costs as an expense in the current f inancial year
prof it or loss. The identif ied costs represent up-f ront costs incurred at the implementation phase
of new cloud computing arrangements whereby the group has not recognised an intangible asset
under IAS 38.
The group has also assessed the Balance Sheet impact of the interpretation at 30 June 2019 and
30 June 2020 as not material. The 2020 comparatives are therefore not restated.
Amendment to NZ IAS 1: Presentation of Financial Statements
The group has elected to early adopt the Amendment to NZ IAS 1: Presentation of Financial
Statements, Classif ication of Liabilities as Current or Non-current retrospectively, effective f rom 1
July 2020. Adoption of the amendment has no impact on the group’s f inancial results for the year
ended 30 June 2021, and no changes to comparative information for the year ended 30 June 2020
were made.
3. Significant transactions
and events
Signif icant transactions and events that have impacted the f inancial year ended 30 June 2021:
Loss rental rebates On 26 August 2020, we released our 2020 Annual Report and noted that we would not be
distributing loss rental rebates (LRRs) in September 2020, but retaining the LRRs with a view to
offset the impact of any electricity volume reductions on revenue and mitigate potential future
prices increases for consumers under the new revenue cap regulatory regime effective 1 April
2020. Any excess LRRs not required to mitigate such revenue shortfalls will be returned to
customers at a later date.
To this effect, Vector have recognised a total of $22.8 million as income in the current year prof it or
loss, comprising LRRs received in the current and prior f inancial years. Consistent with the
approach stated earlier, and as communicated in Vector’s media release on 30 June 2021, the
board have approved the distribution of excess LRRs not required to mitigate revenue shortfalls to
customers. The provision for distribution to customers of $11.9 million provides for $20 per
customer on the Vector electricity network. Refer to note 18.
Sale of investment in
Tree Scape Limited
In May 2021, the Vector board resolved to enter into a sale and purchase agreement with other
current shareholders of Tree Scape Limited to sell all ordinary and paid up shares in the company
to Blair Mill Investments LLC or its nominated subsidiary. As a result, the investment was classif ied
as a non-current asset held for sale in the same month. Equity accounting ceased f rom 1 June
2021. Refer to note 6 for details.
On 20 July 2021, Vector and the shareholders signed a sale and purchase agreement to sell all the
shares in the company to Blair Mill NZ Holdings Limited for cash, subject to conditions being
satisf ied. The target completion date is 31 August 2021. The group will use the proceeds f rom the
sale to repay group debt as it matures.
Climate Change
Commission Advice
On 31 May 2021, the Climate Change Commission (“the CCC”) finalised their advice to the
New Zealand Government (“the Government”) on its first three emissions budgets and direction
for its emissions reduction plan 2022 – 2025. The Government has until 31 December 2021 before
it communicates its position on the CCC’s advice.
The Government’s response to the CCC advice will likely have significant implications for Vector’s
businesses and specifically, our gas distribution network and gas trading operations. Refer to
Note 11 for further detail.
VECTOR ANNUAL REPORT 2021 /
54
Notes to the Financial Statements
Redemption of
preference shares
The shareholders of Liquigas Limited, of which the group owns 60.25%, resolved to redeem
4,427,863 non-participating, redeemable preference shares in May 2021 for a total consideration of
$4.4 million, at $1 per share. $1.8 million of the consideration was paid to non-controlling interest
holders in accordance with their shareholding.
Debt programmeThe $350.0 million floating rate notes, credit wrapped by MBIA Insurance Corporation were repaid
on 27 October 2020. These were ref inanced as part of our ongoing debt management activities.
In October 2020, Vector issued $170.0 million of wholesale bonds at a f ixed rate of 1.575% maturing
in October 2026.
During the year ended 30 June 2021, the group drew down a net of $360.0 million (2020: repaid a
net of $245.0 million) f rom the bank facilities. Refer to note 20.
DividendsVector Limited’s f inal dividend for the year ended 30 June 2020 of 8.25 cents per share was paid on
21 September 2020, with a supplementary dividend of 0.44 cents per non-resident share. The total
dividend paid was $82.5 million.
Vector Limited’s interim dividend for the year ended 30 June 2021 of 8.25 cents per share was paid
on 8 April 2021, with a supplementary dividend of 0.44 cents per non-resident share. The total
dividend paid was $82.5 million.
Liquigas Limited, a subsidiary of the group, paid a f inal dividend in June 2021 of $0.8 million to the
company’s non-controlling interests.
4. Segment information
SegmentsVector report on three reportable segments in accordance with NZ IFRS 8 Operating Segments.
These segments are reported internally to the group chief executive. This reporting is used to
assess performance and make decisions about the allocation of resources.
The segments are unchanged f rom those reported in Vector’s annual report for the year ended 30
June 2020. The segments are:
Regulated Networks Auckland electricity and gas distribution services.
Gas Trading Natural gas and LPG sales, storage, and transportation.
Metering Metering services.
Segment information is prepared and reported in accordance with Vector’s accounting policies.
Intersegment transactions included in the revenues and operating expenses for each segment are
on an arm’s length basis.
Segment prof itThe measures of segment prof it reported to the group chief executive are earnings before interest
and tax (EBIT) and earnings before interest, tax, depreciation, amortisation and impairments
(EBITDA). Both are non-GAAP measures that do not have a standardised meaning under NZ IFRS.
Activities not reported
in segments
Other activities engaged by the group comprise shared services and other business activities.
Revenues generated by these activities are incidental to Vector’s operations and/or do not meet
the def inition of an operating segment under NZ IFRS 8. The results for these activities are
reported in the reconciliations of segment information to the group’s f inancial statements.
Interest costs (net), fair value change on f inancial instruments and associates (share of net prof it/
(loss)) are not allocated to the segments.
Geographical informationThe group derives the majority of the revenue f rom external customers in New Zealand.
Major customersVector engages with three major customers, each of which contribute greater than ten percent of
the group’s revenue. These customers are large energy retailers. For the year ended 30 June 2021,
the customers contributed $191.3 million (2020: $216.5 million), $152.4 million (2020: $159.1 million)
and $135.0 million (2020: $158.5 million) respectively, which is reported across all segments.
55
Creating a new energy future – a bold vision
4. Segment information continued
2021
REGULATED
NETWORKS
$M
GAS
TRADING
$M
METERING
$M
INTER–
SEGMENT
$M
TOTAL
$M
External revenue:
Sales 625.2209.0225.7–1,059.9
Third party contributions121.1–––121.1
Other18.8–––18.8
Intersegment revenue2.4–1.3(3.7)–
Segment revenue767.5209.0227.0(3.7)1,199.8
External expenses:
Electricity transmission expenses(179.7)–––(179.7)
Gas purchases and production expenses–(128.9)––(128.9)
Metering services cost of sales––(26.4)–(26.4)
Network and asset maintenance(68.7)(6.3)(9.2)–(84.2)
Employee benef it expenses(16.0)(11.4)(10.9)–(38.3)
Other expenses(31.3)(31.3)(8.9)–(71.5)
Intersegment expenses–(3.7)–3.7–
Segment operating expenses(295.7)(181.6)(55.4)3.7(529.0)
Segment EBITDA471.827.4171.6–670.8
Depreciation and amortisation(134.5)(12.0)(89.9)–(236.4)
Segment profit/(loss)337.315.481.7–434.4
Segment capital expenditure314.711.2165.3–491.2
Reconciliation to revenue, profit/(loss) before income tax and capital expenditure
reported in the financial statements:
2021
REVENUE
$M
PROFIT/(LOSS)
BEFORE
INCOME TAX
$M
CAPITAL
EXPENDITURE
$M
Reported in segment information1,199.8434.4491.2
Amounts not allocated to segments (corporate activities):
Revenue 78.178.1–
Third party contributions1.41.4–
Employee benef it expenses–(56.5)–
Other operating expenses–(70.8)–
Elimination of transactions with segments–13.0–
Depreciation and amortisation –(33.7)–
Interest costs (net)–(108.6)–
Fair value change on f inancial instruments–(3.5)–
Associates (share of net prof it/(loss))–1.8–
Capital expenditure––38.3
Reported in the financial statements1,279.3255.6529.5
VECTOR ANNUAL REPORT 2021 /
56
Notes to the Financial Statements
4. Segment information continued
2020
REGULATED
NETWORKS
$M
GAS
TRADING
$M
METERING
$M
INTER–
SEGMENT
$M
TOTAL
$M
External revenue:
Sales 656.9256.4203.9–1,117.2
Third party contributions85.7–––85.7
Other15.6–––15.6
Intersegment revenue2.7–1.3(4.0)–
Segment revenue760.9256.4205.2(4.0)1,218.5
External expenses:
Electricity transmission expenses(200.8)–––(200.8)
Gas purchases and production expenses–(153.2)––(153.2)
Metering services cost of sales––(25.2)–(25.2)
Network and asset maintenance(68.4)(13.8)(9.1)–(91.3)
Employee benef it expenses(18.9)(13.8)(7.4)–(40.1)
Other expenses(49.5)(37.7)(8.7)–(95.9)
Intersegment expenses–(4.0)–4.0–
Segment operating expenses(337.6)(222.5)(50.4)4.0(606.5)
Segment EBITDA423.333.9154.8–612.0
Gain f rom sale of Kapuni gas interests–0.5––0.5
Depreciation and amortisation(131.2)(14.9)(81.3)–(227.4)
Segment profit/(loss)292.119.573.5–385.1
Segment capital expenditure317.18.2133.3–458.6
Reconciliation to revenue, profit/(loss) before income tax and capital expenditure
reported in the financial statements:
2020
REVENUE
$M
PROFIT/(LOSS)
BEFORE
INCOME TAX
$M
CAPITAL
EXPENDITURE
$M
Reported in segment information1,218.5385.1458.6
Amounts not allocated to segments (corporate activities):
Revenue 74.874.8–
Third party contributions0.70.7–
Impairment (refer to note 11.1)–(32.0)–
Employee benef it expenses–(54.2)–
Other operating expenses–(66.9)–
Elimination of transactions with segments–10.0–
Depreciation and amortisation –(35.4)–
Interest costs (net)–(126.5)–
Fair value change on f inancial instruments–(3.4)–
Associates (share of net prof it/(loss))–0.3–
Capital expenditure––30.1
Reported in the financial statements1,294.0152.5488.7
57
Creating a new energy future – a bold vision
5. Contingent consideration
NOTE
2021
$M
Carrying value of contingent consideration
Balance at 30 June 202084.7
Unwinding of discount96.3
Payments received(3.4)
Fair value movement21.2(5.9)
Balance at 30 June 202181.7
Comprising:
Current8.2
Non-current73.5
Key accounting estimateThe fair value of the contingent consideration was estimated by calculating the present value of
the future expected cash flows payable by Todd Petroleum Mining Company Limited to Vector.
The future period of payment is not f ixed by the contract but is dependent on the remaining
useful life of the Kapuni gas treatment plant (KGTP), which is directly correlated to the volume of
gas available at the Kapuni gas f ield and the rate at which the gas is extracted. The values of
future cash flows are highly dependent on the future sale prices of gas products (LPG and oil) in
the market. Underpinning this all is the assumption that there is an active market for processed
gas products in the future and government policy relating to the transition of New Zealand to a
low carbon economy.
Management have re-estimated the same unobservable inputs when calculating the fair value of
the contingent consideration at balance date. Refer to note 19 for details and sensitivity analysis
around signif icant unobservable inputs used in measuring fair values.
Payments received$1.0 million of payments received this year was classif ied as part of trade and other receivables at
30 June 2020. Refer to note 10.
6. Investment held for saleVector owns 50% of Tree Scape Limited, an associate of the group whose principal activity is
vegetation management. An associate is an entity over which the group has signif icant influence.
Signif icant influence is the power to participate in the f inancial and operating policy decisions of
the investee but is not control or joint control over those policies.
In May 2021, the Vector board resolved to enter into a sale and purchase agreement with other
current shareholders of Tree Scape Limited to sell all ordinary and paid up shares in the company
to Blair Mill Investments LLC or its nominated subsidiary. Vector’s investment was classif ied as
held for sale at the time of board approval, as the board have deemed the sale as highly probable
– with an expectation completion would be within one year f rom May 2021 - and that the
investment was available for immediate sale in its present condition.
The f inancial results and assets and liabilities of Tree Scape Limited are recognised in these
f inancial statements using the equity method of accounting for 11 months of the f inancial year up
to and including May 2021. From 1 June 2021, Vector’s investment was measured at the lower of
carrying amount and fair value less costs to sell.
VECTOR ANNUAL REPORT 2021 /
58
Notes to the Financial Statements
6. Investment held for sale
continued
2021
(11 MONTHS)
$M
2020
(12 MONTHS)
$M
Carrying amount of associate prior to classification as held for sale
Balance at 1 July 8.98.7
Share of net prof it/(loss) of associate 1.80.3
Share of other comprehensive income of associate0.1(0.1)
Balance at 31 May (2020: 30 June)10.88.9
Equity accounted earnings of associate
Prof it/(loss) before income tax2.50.4
Income tax benef it/(expense)(0.7)(0.1)
Share of net profit/(loss) of associate1.80.3
Total recognised revenues and expenses1.80.3
2021
$M
At classification as held for sale
Carrying amount using the equity method10.8
Foreign currency translation reserve transferred f rom equity 1.4
Investment reclassified to held for sale12.2
7. Revenue
7.1 Revenue from contracts
with customers
2021
$M
2020
$M
Regulated networks – sale of distribution services644.0672.5
Regulated networks - third party contributions121.185.7
Gas trading sales209.0256.4
Metering services225.7203.9
Other79.575.5
Total 1,279.31,294.0
Revenue streamsSatisfaction of performance obligation
Regulated networks – sale of
distribution services
The group receives revenue f rom
business customers and energy
retailers who sell energy to end
customers for electricity and gas
distribution services in Auckland.
Revenue f rom electricity and gas distribution services are
measured at the value of consideration received, or
receivable, to the extent that pricing is measured by the
regulator within a def ined revenue path.
Revenue is recognised over time on a basis that
corresponds with end consumers’ pattern of electricity and
gas consumption. Customers are billed monthly in arrears
for distribution services, measured in units of electricity
and gas distributed. Revenue f rom distribution services
therefore includes an accrual for services provided but not
billed at the end of the month.
The accrual is determined based on the group’s estimate
of volume distributed in the month using the most recent
data available. A large portion of the contract assets at
balance date consists of this accrual.
59
Creating a new energy future – a bold vision
Revenue streamsSatisfaction of performance obligation
Regulated networks – third
party contributions
The group receives contributions
f rom residential and commercial
customers towards the construction
of distribution system assets in the
Auckland electricity or gas
distribution networks.
Third party contributions are recognised as revenue over
time, reflecting the percentage completion of the
underlying construction activity. The group recognises a
contract liability to account for consideration received
f rom the customer but where the agreed construction
activity is not completed; and conversely a contract asset is
recognised to account for activities completed not billed.
The transaction price for third party contributions is netted
against estimated rebates payable to commercial
customers. A contract liability is recognised to account for
payments received f rom customers for construction
activities completed but who are eligible for rebates in the
future based on completion of developments.
In the event that a contract combines a contribution
towards an agreed construction activity with sale of
electricity or gas distribution services, the group
unbundles the contract into two performance obligations
and recognises revenue in accordance with each
obligation’s accounting policy.
Gas trading salesGas trading sales comprises predominantly three revenue streams: sale of natural gas, and
distribution and sale of LPG.
Revenue streamsSatisfaction of performance obligation
Sale of natural gas
The group receives revenue f rom
business customers for providing a
supply of natural gas over a
contracted time period.
Revenue is recognised over time that corresponds with the
customer’s consumption of natural gas and measured at
the transaction price of the contract.
The transaction price for a gas supply contract includes
variable consideration in the form of indexed pricing,
volume pricing, and take or pay arrangements. The group
estimates the amount of variable consideration present in
each contract using the expected value method.
Customers are billed monthly. A contract asset is
recognised to account for natural gas supplied but not
billed to the customer at balance date.
Sale of LPG
Sale of LPG comprises bulk LPG sales
to commercial customers and bottled
LPG sales to both commercial and
residential customers.
Revenue is recognised at a point in time when LPG is
delivered to a customer’s site.
Billing to a customer occurs after completion of deliveries
and at the end of each month with payment terms
ranging f rom 60 days to 90 days.
Distribution of LPGThe group provides services in the
areas of bulk LPG storage,
distribution and management.
Revenue is recognised over time in line with a customer’s
consumption of monthly tolling and storage volumes and
measured at the transaction price of the contract. The
transaction price for a monthly tolling and storage
contract includes variable consideration in the form of
volume pricing and take or pay arrangements. The group
estimates the amount of variable consideration present in
each contract using the expected value method.
7. Revenue continued
7.1 Revenue from contracts
with customers continued
VECTOR ANNUAL REPORT 2021 /
60
Notes to the Financial Statements
7. Revenue continued
Revenue streamsSatisfaction of performance obligation
Metering services
The group receives revenue f rom
business customers for providing
electricity and gas metering and
data services.
Customer is predominantly an energy retailer who has
multiple customers (end users) consuming electricity and
gas. Metering and metering data services comprise
collection and provision of half-hourly data, utilising the
group’s electricity and gas meter assets that are f itted at
the premises of end users. Metering services are billed to
the customer monthly, based on actual and validated
metering and data services provided. Customers are
billed a number of days after the end of the month to
allow for data validation to take place. A contract asset
is recognised at the end of each month for services
provided but unbilled.
Other revenue streams
Other revenue includes telecommunications revenue and revenue f rom providing energy
solution services.
Telecommunications revenue f rom commercial customers comprise the sale of f ibre services.
Revenue is recognised at the point in time of supply and customer consumption.
Energy solutions services comprise predominantly the sale of home and commercial ventilation
and solar services. Revenue is recognised over time, reflecting the percentage completion of each
ventilation and solar system install.
7.2 Revenue in relation to contract liabilities
The following table sets out the expected timing of future recognition of revenue relating to performance obligations not satisf ied
(or partially satisf ied) at balance date:
2021
1 – 2 YEARS
$M
2 – 4 YEARS
$M
TOTAL
$M
Electricity distribution services1.71.73.4
Telecommunication services3.32.45.7
Total5.04.19.1
2020
1 – 2 YEARS
$M
2 – 4 YEARS
$M
TOTAL
$M
Electricity distribution services2.61.94.5
Telecommunication services3.42.25.6
Total6.04.110.1
PoliciesNo information is provided in relation to the remaining performance obligations at 30 June 2021 or
30 June 2020 that have an original duration of one year or less as permitted by NZ IFRS 15 Revenue
f rom Contracts with Customers.
Revenue recognisedOf the revenue recognised this year, $32.6 million was included in the contract liability balance at
the beginning of the reporting period. (2020: $30.2 million).
61
Creating a new energy future – a bold vision
8. Operating expenses
NOTE
2021
$M
2020
$M
Electricity transmission 4179.7200.8
Gas purchases and production 4128.9153.2
Metering cost of sales426.425.2
Energy solutions cost of sales23.123.7
Network and asset maintenance 484.291.3
Other direct expenses53.375.6
Employee benef it expenses494.894.3
Administration expenses15.718.0
Professional fees8.410.9
IT expenses19.616.6
Other indirect expenses 9.28.0
Total 643.3717.6
Fees paid to auditorsFees were paid to KPMG as follows:
—audit or review of f inancial statements: $459,000 (2020: $562,000);
—regulatory assurance: $718,525 (2020: $663,000);
—other assurance fees: $72,000 (2020: $22,000);
—non-audit fees: nil (2020: $125,000).
Other assurance fees include fees for the audit of guaranteeing group f inancial statements, bond
registers, greenhouse gas calculations, and agreed upon procedures required by certain
contractual arrangements. Non-audit fees in the prior year related to fees for compliance services
for R&D tax credits.
9. Interest costs (net)
NOTE
2021
$M
2020
$M
Interest expense112.4121.2
Amortisation of f inance costs7.57.9
Capitalised interest(4.5)(4.1)
Interest income(2.9)(2.2)
Unwinding of discount of contingent consideration5(6.3)(1.7)
Interest on leases13.31.81.9
Unwinding of discount of decommissioning
provisions180.61.7
Interest associated with Commerce Commission
settlement–1.8
Total 108.6126.5
PoliciesInterest costs (net) include interest expense on borrowings and interest income on funds invested
which are recognised using the effective interest rate method.
Capitalised interestVector has capitalised interest to PPE and software intangibles while under construction at an
average rate of 3.9% per annum (2020: 4.3%).
VECTOR ANNUAL REPORT 2021 /
62
Notes to the Financial Statements
10. Trade and other
receivables
NOTE
2021
$M
2020
$M
Current
Trade receivables 60.264.0
Interest receivable10.211.0
Prepayments8.79.0
Consideration due f rom sale of Kapuni gas interests5–1.0
Other taxes and duties receivable2.01.7
Other2.11.9
Balance at 30 June83.288.6
Non-current
Other contract receivables1.71.7
Balance at 30 June 1.71.7
At 30 June, the exposure to credit risk for trade and other receivables by type of counterparty was
as follows.
2021
$M
2020
$M
NOT CREDIT
IMPAIRED
CREDIT
IMPAIRED
NOT CREDIT
IMPAIRED
CREDIT
IMPAIRED
Business customers38.62.355.72.4
Mass market customers
(includes customer contributions)15.4–4.40.3
Third party asset damages–3.5–4.6
Residential and other3.82.22.11.5
Total gross carrying amount57.88.062.28.8
Loss allowance–(3.9)–(5.3)
57.84.162.23.5
The following table provides information about the exposure to credit risk and expected credit
losses for trade and other receivables as at 30 June.
2021
$M
2020
$M
CARRYING
AMOUNT
LOSS
ALLOWANCE
CARRYING
AMOUNT
LOSS
ALLOWANCE
Not past due52.7–55.0–
Past due 1-30 days4.8–2.7–
Past due 31-120 days2.90.44.80.5
Past due more than 120 days1.83.53.24.8
Balance at 30 June61.93.965.75.3
PoliciesTrade receivables are predominantly billed receivables. Sales to business customers are billed
monthly. Trade receivables f rom mass market, residential and other customers are recognised as
they are originated.
Other receivables represent the amount of contractual cash flows that the group expects to
collect f rom third parties but that did not arise f rom contracts with customers. Where contractual
cash flows are expected or contracted to be received after 12 months, the balance is presented as
non-current.
63
Creating a new energy future – a bold vision
10. Trade and other receivables
continued
Expected credit lossesIn assessing credit losses for trade receivables, the group applies the simplif ied approach and
records lifetime expected credit losses (“ECLs”) on trade receivables. The group considers both
quantitative and qualitative inputs. Quantitative data includes past collection rates, industry
statistics, ageing of receivables, and trading outlook. Qualitative inputs include past trading history
with the group.
Lifetime ECLs result f rom all possible default events over the expected life of a trade receivable.
The group considers the probability of default upon initial recognition of the trade receivable,
based on reasonable and available information on the group’s customers and groups of
customers. The group’s trade receivables are monitored in two groups: business customers, and
mass market residential customers.
The group’s customer acceptance process includes a check on credit history, prof itability, and the
customer’s external credit rating if available. Different levels of sale limits are also imposed on
customer accounts by nature.
11. Intangible assets
NOTE
CUSTOMER
INTANGIBLES
$M
EASEMENTS
$M
SOFTWARE
$M
TRADE
NAMES
$M
GOODWILL
$M
CAPITAL
WORK IN
PROGRESS
$M
TOTAL
$M
Carrying amount 30 June 201924.117.365.214.01,234.318.31,373.2
Cost49.917.3299.016.81,341.018.31,742.3
Accumulated amortisation(21.9)–(233.8)(2.8)––(258.5)
Accumulated impairment(3.9)–––(106.7)–(110.6)
Additions–––––49.049.0
Transfers–0.545.3––(45.8)–
Sale of Kapuni gas interests––––(65.8)–(65.8)
Disposals––(0.2)–––(0.2)
Impairment11.1(15.4)––(12.2)(4.4)–(32.0)
Amortisation for the period(4.5)–(34.5)(1.8)––(40.8)
Carrying amount 30 June 20204.217.875.8–1,164.121.51,283.4
Cost49.917.8343.216.81,275.221.51,724.4
Accumulated amortisation(26.4)–(267.4)(4.6)––(298.4)
Accumulated impairment(19.3)––(12.2)(111.1)–(142.6)
Additions–––––50.550.5
Transfers–0.440.0––(40.4)–
Disposals––(0.2)–––(0.2)
Amortisation for the period(1.6)–(39.8)–––(41.4)
Carrying amount 30 June 20212.618.275.8–1,164.131.61,292.3
Cost13.118.2372.0–1,275.231.61,710.1
Accumulated amortisation(10.5)–(296.2)–––(306.7)
Accumulated impairment––––(111.1)–(111.1)
VECTOR ANNUAL REPORT 2021 /
64
Notes to the Financial Statements
11. Intangible assets continued
11.1 Goodwill
Goodwill by cash generating unit
2021
$M
2020
$M
Electricity881.0881.0
Gas Distribution169.2169.2
Gas Trading––
Natural Gas10.310.3
LPG40.240.2
Liquigas40.540.5
Communications––
Metering22.922.9
E-Co Products––
Total 1,164.11,164.1
PoliciesGoodwill represents the excess of the consideration transferred over the fair value of Vector’s share
of the net identif iable assets of an acquired subsidiary.
Goodwill is carried at cost less accumulated impairment losses.
AllocationGoodwill is monitored internally at a group level. It is allocated to the group’s cash generating
units (“CGUs”), for impairment testing purposes.
This is the highest level permissible under NZ IFRS. The CGUs within the group are: electricity, gas
distribution, metering, natural gas, LPG, Liquigas, communications and E-Co Products.
Goodwill is tested at least annually for impairment against the recoverable amount of the CGU to
which it has been allocated.
Impairment testingFor all segments the recoverable amount of each segment to which goodwill is allocated exceeds
the net assets plus goodwill allocated. Therefore, the group has determined that no impairment
to goodwill has occurred during the period.
As at 30 June 2020, the group recognised an impairment loss of $32.0 million in respect of
goodwill and intangible assets allocated to the E-Co Products CGU.
Key accounting judgementsTo assess impairment, management must estimate the future cash flows of operating segments
including the CGUs that make up those segments. This entails making judgements including:
—the expected rate of growth of revenues;
—margins expected to be achieved;
—the level of future maintenance expenditure required to support these outcomes; and
—the appropriate discount rate to apply when discounting future cash flows.
AssumptionsThe recoverable amounts attributed to all of the group’s CGUs are calculated on the basis of
value-in-use using discounted cash flow models.
Future cash flows are forecast based on actual results and business plans.
For the electricity, gas distribution and metering CGUs, a ten-year period has been used due to
the long-term nature of the group’s capital investment in these businesses and the predictable
nature of their cash flows. A f ive-year period has been used for the natural gas, Liquigas, LPG,
E-Co Products and communications CGUs.
Terminal growth rates in a range of 0.0% to 1.8% (2020: 0.0% to 2.0%) and post-tax discount
rates between 3.7% to 6.5% (2020: 3.9% and 8.2%) are applied. Rates vary for the specif ic CGU
being valued.
Projected cash flows for regulated businesses are sensitive to regulatory uncertainty. Estimated
future regulated network revenues and the related supportable levels of capital expenditure are
based on default price-quality path determinations issued by the Commerce Commission and are
in line with estimates published in the asset management plans.
Climate Change
Commission advice
The New Zealand Government (“the Government”) has until 31 December 2021 to set its f irst three
emissions budgets out to 2035 and release the country’s f irst emissions reduction plan detailing
the policies it will use to achieve the budgets. As policies are formalised, their impact on the
assumptions used in impairment models will need to be carefully assessed.
65
Creating a new energy future – a bold vision
11. Intangible assets continued
11.1 Goodwill continued
Climate Change Commission
advice continued
The impact of any policy changes on the Commerce Commission’s regulatory model for the gas
distribution network will be fundamental to any revision in assumptions for the valuation of the
gas distribution CGU. The timing or extent of this is not yet known. The regulatory model
determines the cash flows we can earn f rom the gas distribution business and hence its value. We
will be monitoring any policy developments closely as the next reset for the regulatory default
price path for gas distribution is due to come into force f rom 1 October 2022. Similarly, any policy
changes could impact valuation assumptions for the natural gas, LPG and Liquigas CGUs.
Vector performed an assessment for any indicators of impairment as at 30 June 2021. We did not
model any potential impacts of the Climate Change Commission (“CCC”) advice during that
assessment. While we determined there were no indicators of impairment as this time, we
recognise that the Government’s policy response to the CCC advice may have signif icant risk to
the cashflows and expected lives of the group’s gas distribution and gas trading businesses.
11.2 Other intangible assetsOther intangible assets are initially measured at cost, and subsequently stated at cost less any
accumulated amortisation and impairment losses.
Software and customer intangibles have been assessed as having a f inite life greater than 12
months and are amortised f rom the date the asset is ready for use on a straight-line basis over its
estimated useful life. The estimated useful lives (years) are as follows:
Software 3 – 10
Customer intangibles 3 – 10
Easements are not amortised but are tested for impairment at least annually as part of the
assessment of the carrying values of assets against the recoverable amounts of the CGUs to which
they have been allocated.
12. Property, plant and
equipment (PPE)
DISTRIBUTION
SYSTEMS
$M
ELECTRICITY
AND GAS
METERS
$M
LAND,
BUILDINGS
AND
IMPROVE-
MENTS
$M
COMPUTER
AND TELCO
EQUIPMENT
$M
OTHER
PLANT AND
EQUIPMENT
$M
CAPITAL
WORK IN
PROGRESS
$M
TOTAL
$M
Carrying amount
30 June 20193,110.2525.5180.294.4164.291.84,166.3
Cost4,280.4926.7219.4198.4286.091.86,002.7
Accumulated depreciation(1,170.2)(401.2)(39.2)(104.0)(121.8)–(1,836.4)
Additions––––5.1439.7444.8
Transfers293.2115.68.35.310.5(432.9)–
Sale of Kapuni gas interests(17.3)–(2.1)–(11.2)–(30.6)
Disposals(3.2)–(0.2)(0.3)(0.7)–(4.4)
Depreciation for the period(124.2)(59.2)(3.5)(9.9)(11.6)–(208.4)
Carrying amount
30 June 20203,258.7581.9182.789.5156.398.64,367.7
Cost4,458.51,039.6222.2199.7289.798.66,308.3
Accumulated depreciation(1,199.8)(457.7)(39.5)(110.2)(133.4)–(1,940.6)
Additions––––1.3477.7479.0
Transfers314.1126.19.511.523.7(484.9)–
Disposals(6.3)(0.2)––(1.3)–(7.8)
Depreciation for the period(122.4)(67.1)(3.4)(9.1)(11.1)–(213.1)
Carrying amount
30 June 20213,444.1640.7188.891.9168.991.44,625.8
Cost4,755.21,161.8231.3208.1313.091.46,760.8
Accumulated depreciation(1,311.1)(521.1)(42.5)(116.2)(144.1)–(2,135.0)
VECTOR ANNUAL REPORT 2021 /
66
Notes to the Financial Statements
12. Property, plant and
equipment (PPE)
PoliciesPPE is initially measured at cost, and subsequently stated at cost less depreciation and any
impairment losses. Cost may include:
—Consideration paid on acquisition
—Costs to bring the asset to working condition
—Materials used in construction
—Direct labour attributable to the item
—Interest costs attributable to the item
—A proportion of directly attributable overheads incurred
—If there is a future obligation to dismantle and/or remove the item, the costs of doing so
Capitalisation of costs stops when the asset is ready for use.
Subsequent expenditure that increases the economic benef its derived f rom the asset
is capitalised.
Uninstalled assets are stated at the lower of cost and estimated recoverable amount.
Depreciation commences when an asset becomes available for use.
Depreciation of PPE, other than f reehold land and capital work in progress, is calculated on a
straight-line basis and expensed over the useful life of the asset. Useful lives are reviewed regularly
and adjusted as appropriate for the revised expectations.
Estimated useful lives (years) are as follows:
Buildings40 – 100Meters and meter inspections 2 – 40
Distribution systems5 – 100Computer and telco equipment 2 – 50
Leasehold improvements5 – 20Other plant and equipment 2 – 55
Key accounting judgementsThe group’s property, plant and equipment, particularly the group’s distribution assets, are critical
to the running of the group’s business. In assessing whether the costs incurred in a project on the
group’s assets are capital in nature, management must apply the following judgements:
—Whether the costs incurred are directly attributable to bringing an asset to the location and
condition necessary for it to be capable of operating in the manner intended by management;
—Whether subsequent costs incurred represent an enhancement to existing assets or maintain
the current operating capability of existing assets;
—Whether overhead costs can be reasonably allocated to the construction or acquisition of
an asset.
Capital commitmentsThe estimated capital expenditure for PPE and software intangibles contracted for at balance date
but not provided is $206.1 million for the group (2020: $127.0 million).
67
Creating a new energy future – a bold vision
13. Leases
13.1 Right of use assets
LAND,
BUILDINGS
AND
IMPROVE-
MENTS
$M
OTHER
PLANT AND
EQUIPMENT
$M
TOTAL
$M
Carrying amount 30 June 201934.73.438.1
Additions4.02.76.7
Disposals–(0.1)(0.1)
Depreciation for the period(7.0)(1.9)(8.9)
Carrying amount 30 June 202031.74.135.8
Additions7.23.110.3
Disposals–––
Depreciation for the period(7.7)(2.3)(10.0)
Carrying amount 30 June 202131.24.936.1
Cost49.78.358.0
Accumulated depreciation(18.5)(3.4)(21.9)
13.2 Lease liabilities
maturity analysis
MINIMUM
LEASE
PAYMENTS
$M
INTEREST
$M
PRESENT
VALUE
$M
Within one year9.9(1.5)8.4
One to f ive years24.0(3.8)20.2
Beyond f ive years12.8(4.0)8.8
Total46.7(9.3)37.4
Current portion8.4
Non-current portion29.0
Total37.4
13.3 Lease expenses included
in profit or loss
2021
$M
2020
$M
Short-term leases 0.20.1
Interest on leases1.81.9
13.4 Lease cashflows included
in Statement of cash flows
2021
$M
2020
$M
Total cash outflow in relation to leases12.210.6
VECTOR ANNUAL REPORT 2021 /
68
Notes to the Financial Statements
13. Leases continued
PoliciesRight of use (“ROU”) assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of ROU assets
includes the amount of lease liabilities recognised, initial direct costs incurred, restoration
obligations, and lease payments made at or before the commencement date less any lease
incentives received.
ROU assets are subsequently depreciated using the straight-line method f rom the
commencement date to the end of the lease term.
Key accounting judgementsDetermining the term of a perpetual lease and a lease with renewal options (single or multiple)
can have a material impact on the value of the ROU asset and associated lease liability.
The group has two perpetual leases relating to two LPG storage and transportation sites at
Lyttelton and Dunedin with no expiry dates. Management have determined the lease term for the
perpetual leases be the same as the lease for the Port Taranaki LPG import facility, on the basis
that economic benef its f rom the perpetual leases are requisite on the group having a continuing
right to use the site and associated facilities at Port Taranaki. The end of the lease term for the
lease at Port Taranaki is 30 September 2044.
For leases with renewal options, management include one to all available renewal periods in the
lease term if it is reasonably certain that the renewal option or options will be exercised. In making
this judgement management consider the non-cancellable period of the lease, other leases or
assets associated with the lease in question, and other economic factors such as availability of
similar leases in the market and costs to identify and negotiate another lease if not renewed.
Several property leases in the group’s portfolio of leases contain renewal options. The group has
estimated the impact f rom potential future lease payments, should it exercise these extension
options, to be an increase of $10.0 million (2020: $2.9 million) in the group’s lease liability.
14. Investments
14.1 Investment in private equity
EQUITY INTEREST HELD
INVESTEEPRINCIPAL ACTIVITY
COUNTRY OF
INCORPORATION20212020
mPrest Systems (2003) LimitedTechnology developmentIsrael8.1%8.1%
2021
$M
2020
$M
Fair value of investment
Balance at 1 July 12.815.6
Fair value movement recognised in OCI(0.5)(2.8)
Balance at 30 June 12.312.8
PoliciesThe investment is accounted for as a f inancial asset at fair value through other comprehensive
income (“OCI”) on the Balance Sheet.
Fair value of the investment is determined using the discounted cash flow method. Refer to note
19 for details on the signif icant unobservable inputs used in measuring the fair value and related
sensitivity analysis.
69
Creating a new energy future – a bold vision
14. Investments continued
14.2 Investments in subsidiaries
Signif icant entities and holding companies in the group are listed below.
PERCENTAGE HELD
PRINCIPAL ACTIVITY20212020
Trading subsidiaries
NGC Holdings LimitedHolding company100%100%
Vector Gas Trading LimitedNatural gas trading and processing100%100%
Liquigas LimitedBulk LPG storage, distribution, and
management 60%60%
On Gas LimitedLPG sales and distribution100%100%
Vector Metering Data Services LimitedHolding company 100%100%
Advanced Metering Assets LimitedMetering services 100%100%
Advanced Metering Services LimitedMetering services 100%100%
Arc Innovations LimitedMetering services 100%100%
Vector Communications LimitedTelecommunications 100%100%
Vector Energy Solutions LimitedHolding company100%100%
PowerSmart NZ LimitedEnergy solutions services100%100%
Vector ESPS Trustee LimitedTrustee company100%100%
E-Co Products Group LimitedHolding company100%100%
Cristal Air International LimitedVentilation, heating and water systems sales
and assembly100%100%
Vector Advanced Metering Services (Australia)
Pty LimitedMetering services 100%100%
Vector Advanced Metering Assets (Australia) LimitedMetering services 100%100%
Vector Energy Solutions (Australia) Pty LimitedEnergy solutions services100%100%
Vector Technology Services LimitedTechnology services100%100%
Vector Auckland Property LimitedAssets holding company 100%100%
Vector Northern Property LimitedAssets holding company100%100%
Non-trading subsidiaries
Ventilation Australia Pty LimitedHolding company100%100%
HRV Australia Pty LimitedVentilation systems and parts sales100%100%
PoliciesSubsidiaries are entities controlled directly or indirectly by the parent. Vector holds over 50% of the
voting rights in all entities reported as subsidiaries. The f inancial statements of subsidiaries are
consolidated into the group’s f inancial statements. Intra-group balances and transactions
between group subsidiary companies are eliminated on consolidation.
AmalgamationVector Kapuni Limited was amalgamated into Vector Gas Trading Limited on 30 June 2021. Vector
Kapuni Limited had been non-trading since April 2020.
GeographyAll subsidiaries are incorporated in New Zealand, except for the following which are incorporated
in Australia:
—Vector Advanced Metering Services (Australia) Pty Limited;
—Vector Energy Solutions (Australia) Pty Limited;
—Ventilation Australia Pty Limited;
—HRV Australia Pty Limited.
VECTOR ANNUAL REPORT 2021 /
70
Notes to the Financial Statements
15. Income tax expense/
(benefit)
Reconciliation of income tax expense/(benefit)NOTE
2021
$M
2020
$M
Prof it/(loss) before income tax255.6152.5
Tax at current rate of 28% 71.642.7
Current tax adjustments:
Non-deductible expenses2.01.9
Adjustment relating to sale of Kapuni gas interest–9.0
Impairment–9.0
(Over)/under provisions in prior periods(2.6)(1.6)
Other permanent difference–(0.9)
Deferred tax adjustments:
Impact f rom tax legislation amendment 16–(3.5)
(Over)/under provisions in prior periods(10.0)(1.4)
Income tax expense/(benefit)61.055.2
Comprising:
Current tax33.427.8
Deferred tax 27.627.4
PoliciesIncome tax expense/(benef it) comprises current and deferred tax and is calculated using rates
enacted or substantively enacted at balance date.
Current and deferred tax is recognised in prof it or loss unless the tax relates to items in other
comprehensive income, in which case the tax is recognised as an adjustment in other
comprehensive income against the item to which it relates.
Income tax assetAs at 30 June 2021, Vector recognised a current income tax asset of $28.7 million (2020: $33.7
million) and a non-current income tax asset of $102.8 million (2020: $110.0 million).
Imputation creditsThere are no imputation credits available for use as at 30 June 2021 (2020: nil), as the imputation
account has a debit balance as of that date.
71
Creating a new energy future – a bold vision
16. Deferred tax
Deferred tax liability/(asset)
PPE AND
INTANGIBLES
$M
PROVISIONS
AND
ACCRUALS
$M
HEDGE
RESERVES
$M
OTHER
$M
TOTAL
$M
Balance at 30 June 2019535.3(25.5)(23.7) 1.5487.6
Recognised in prof it or loss23.1(1.6)–9.430.9
Recognised in other comprehensive income––(8.0)–(8.0)
Deferred tax associated with sale of Kapuni gas interests1.06.0––7.0
Impact f rom tax legislation amendment (3.5)–––(3.5)
Balance at 30 June 2020555.9(21.1)(31.7)10.9 514.0
Recognised in prof it or loss21.35.8–0.527.6
Recognised in other comprehensive income––18.1–18.1
Balance at 30 June 2021577.2(15.3)(13.6) 11.4559.7
The group’s deferred tax position is presented in the balance sheet as follows:
2021
$M
2020
$M
Deferred tax asset(2.1)(0.4)
Deferred tax liability561.8514.4
Total559.7514.0
PoliciesDeferred tax is:
—Recognised on temporary differences between the carrying amounts of assets and liabilities
for f inancial reporting purposes and the amounts used for taxation purposes.
—Not recognised for the initial recognition of goodwill.
—Measured at tax rates that are expected to be applied to the temporary differences when
they reverse.
17. Trade and other payables
2021
$M
2020
$M
Current
Trade payables 174.7154.4
Employee benef its 22.717.8
Interest payable24.328.6
Balance at 30 June221.7200.8
Employee benef its Vector accrues employee benef its which remain unused at balance date, and amounts expected
to be paid under short-term cash bonus plans.
VECTOR ANNUAL REPORT 2021 /
72
Notes to the Financial Statements
18. Provisions
NOTE
PROVISION FOR
DISTRIBUTION TO
CUSTOMERS
$M
DECOMMISSIONING
PROVISIONS
$M
PRODUCT
WARRANTY
$M
OTHER
$M
TOTAL
$M
Balance at 30 June 202015.57.83.39.035.6
Additions19.20.3–1.521.0
Unwinding of discount–0.6––0.6
Reversed to prof it or loss3(22.8)–(0.7)(3.7)(27.2)
Balance at 30 June 202111.98.72.66.830.0
Comprising:
Current11.9–2.66.821.3
Non-current–8.7––8.7
PoliciesThe group recognises a provision when the group has a present obligation – legal or constructive – as a
result of a past event, it is more likely than not that the resulting liability will be required to be settled, and
the amount required to settle can be reliably estimated.
Provision for
distribution to
customers
The group’s stated intention to distribute excess loss rental rebates not used to mitigate revenue shortfalls
to customers on Vector’s electricity network gives rise to a constructive obligation that forms the basis of
the provision.
Decommissioning The decommissioning provisions represent the present value of the future expected costs for dismantling
the depot assets situated at various regions in New Zealand. Timing of economic outflows represents
management’s best estimate of the end of the useful life of the plant and associated assets.
Product warrantyThe group provides for restatement costs and warranty claims on products sold or installed. Provisions are
recognised when the product is sold, or the service is provided to the customer. Initial recognition is based
on historical experience and subsequently revisited at each reporting date.
Other provisionsThese provisions comprise amounts that may be required to be utilised within one year or a longer period
dependent on ongoing negotiations with third parties involved. There are currently no foreseeable
uncertainties which would be reasonably expected to lead to material changes in the amounts provided.
73
Creating a new energy future – a bold vision
19. Fair values
NOTE
SIGNIFICANT
OBSERVABLE
INPUTS
(LEVEL 2 INPUTS)
2021
$M
SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3 INPUTS)
2021
$M
SIGNIFICANT
OBSERVABLE
INPUTS
(LEVEL 2 INPUTS)
2020
$M
SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3 INPUTS)
2020
$M
Assets measured at fair value
Derivative f inancial instruments21103.3–220.4–
Investment in private equity14.1–12.3–12.8
Contingent consideration5–81.7–84.7
Balance at 30 June103.394.0220.497.5
Liabilities measured at fair value
Derivative f inancial instruments21165.6–104.9–
Balance at 30 June165.6–104.9–
PoliciesThe table above provides the fair value measurement hierarchy of the group’s assets and liabilities
that are measured at fair value.
The group estimates all fair values using the discounted cash flows method. All assets and
liabilities for which fair value is measured and disclosed in the f inancial statements are categorised
within the fair value hierarchy, described as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; or
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset
or liability, either directly (prices) or indirectly (derived f rom prices); or
Level 3: Inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
Derivative f inancial
instruments
Fair value is calculated using the discounted cash flow method, estimated using observable
interest yield curves and/or foreign exchange market prices. The carrying values of the f inancial
instruments are the fair values excluding any interest receivable or payable, which is separately
presented in the balance sheet in other receivables or other payables.
Investment in
private equity
Fair value is calculated using the discounted cash flow method. In estimating the fair value, the
group made assumptions on unobservable inputs, including, amongst others, forecasted future
cash flows, an appropriate discount rate and terminal growth rate.
Contingent
consideration
Fair value is calculated using the discounted cash flow method. The group made assumptions on
unobservable inputs including , amongst others, future raw gas volume f rom the Kapuni gas f ield,
future LPG prices, future oil prices, foreign exchange rates, and an appropriate discount rate.
Further details on the inputs are as follows:
—Future raw gas volume f rom the Kapuni gas f ield is based on published forecasts f rom the
Ministry of Business, Innovation and Employment;
—Future LPG prices are based on an independent f inancial institution’s commodity price
forecasts;
—Future oil prices are based on S&P Capital IQ forecast data;
—Future natural gas prices are based on an independent expert’s commodity price forecast;
—Future foreign exchange rates are based on an independent f inancial institution’s foreign
exchange rate forecasts; and
—Discount rate of 8% (2020: 8%), representing market discount rates as applicable to the
remaining life of the Kapuni gas f ield.
VECTOR ANNUAL REPORT 2021 /
74
Notes to the Financial Statements
19. Fair values continued
Description of signif icant
unobservable inputs
The table below summarises the signif icant level 3 unobservable inputs used by the group in
measuring fair values and related sensitivity analyses.
2021
SIGNIFICANT
UNOBSERVABLE INPUTSRANGE AND ESTIMATES
SENSITIVITY OF VALUATION TO CHANGES IN INPUTS
LOW
VALUATION
IMPACT $MHIGH
VALUATION
IMPACT $M
Investment in
private equity
Forecast cashflows$-1.3 million to $11.7
million
-10.0%-$1.110.0%+$1.1
Discount rate9.2%-1.0%+$2.21.0%-$1.7
Terminal growth rate1.5%-1.0%-$1.01.0%+$1.3
Contingent
consideration
Discount rate8.0%-1.0%+$4.61.0%-$4.2
Future raw gas volume254 PJ- 2PJ per
annum
-$10.3+ 2PJ per
annum
+$10.2
LPG pricingUSD $525/tonne
long-term
- USD $50/
tonne
- $8.6+ USD $50/
tonne
+$8.6
Oil pricingUSD $70/barrel
long-term
- USD $7/
barrel
- $4.0+ USD $7/
barrel
+$4.0
2020
SIGNIFICANT
UNOBSERVABLE INPUTSRANGE AND ESTIMATES
SENSITIVITY OF VALUATION TO CHANGES IN INPUTS
LOW
VALUATION
IMPACT $MHIGH
VALUATION
IMPACT $M
Investment in
private equity
Forecast cashflows$-3.6 million to
$13.8 million
-10.0%-$1.210.0%+$1.2
Discount rate9.8%-1.0%+$2.51.0%-$1.9
Terminal growth rate2.0%-1.0%-$1.11.0%+$1.4
Contingent
consideration
Discount rate8.0%-1.0%+$4.31.0%-$4.0
Future raw gas volume210 PJ- 2PJ per
annum
-$10.3+ 2PJ per
annum
+$10.3
LPG pricingUSD $520/tonne
long-term
- USD $50/
tonne
- $8.1+ USD $50/
tonne
+$8.1
Oil pricingUSD $60/barrel
long-term
- USD $6/
barrel
- $3.0+ USD $6/
barrel
+ $3.0
75
Creating a new energy future – a bold vision
20. Borrowings
2021CURRENCY
MATURITY
DATE
FACE
VALUE
$M
UNAMORTISED
COSTS
$M
FAIR VALUE
ADJUSTMENT
ON HEDGED
RISK
$M
CARRYING
VALUE
$M
FAIR
VALUE
$M
Bank facilities – floating rateNZDJul 2021
– Jan 2025510.0(1.5)–508.5510.4
Capital bonds – 5.7% f ixed
rate
NZD–
307.2(0.4)–306.8321.8
Wholesale bonds - f ixed rateNZDMar 2024
– Oct 2026410.02.0–412.0429.2
Senior notes – f ixed rateUSDOct 2021
– Mar 20351,613.4(4.0)(14.1)1,595.31,654.9
Senior bonds – 3.45% f ixed
rate
NZDMay 2025
250.0(2.0)–248.0266.1
Balance at 30 June3,090.6(5.9)(14.1)3,070.63,182.4
2020CURRENCY
MATURITY
DATE
FACE
VALUE
$M
UNAMORTISED
COSTS
$M
FAIR VALUE
ADJUSTMENT
ON HEDGED
RISK
$M
CARRYING
VALUE
$M
FAIR
VALUE
$M
Bank facilities – floating rateNZDFeb 2021
– Jan 2025150.0(1.3)–148.7150.3
Capital bonds – 5.7% f ixed rateNZD–307.2(0.7)–306.5337.7
Wholesale bonds – f ixed rateNZDMar 2024240.03.1–243.1274 .6
Senior notes – f ixed rateUSDOct 2021
– Mar 20351,613.4(4.6)231.11,839.91,873.6
Floating rate notes – floating rateNZDOct 2020350.0(0.1)–349.9350.0
Senior bonds – 3.45% f ixed rateNZDMay 2025250.0(2.5)–247.5276.6
Balance at 30 June2,910.6(6.1)231.13,135.63,262.8
PoliciesBorrowings are initially recorded at fair value, net of transaction costs. After initial recognition,
borrowings are measured at amortised cost with any difference between the initial recognised
amount and the redemption value being recognised in interest costs in prof it or loss over the
period of the borrowing using the effective interest rate method.
The carrying value of borrowings includes the principal converted at contract rates (face value),
unamortised costs and a fair value adjustment for the component of the risk that is hedged. The
fair value is calculated by discounting the future contractual cash flows at current market interest
rates that are available for similar f inancial instruments. The fair value of all borrowings, calculated
for disclosure purposes, are classif ied as level 2 on the fair value hierarchy.
VECTOR ANNUAL REPORT 2021 /
76
Notes to the Financial Statements
20. Borrowings continued
Bank facilitiesNew floating rate bank facilities were added as part of our debt management activities.
Capital bondsCapital bonds of $307.2 million are subordinated bonds with the next election date set as 15 June
2022. The interest rate was f ixed at 5.7% at the previous election date of 15 June 2017.
Wholesale bonds$240.0 million of f ixed rate wholesale bonds were issued at a f ixed rate of 4.996% maturing in
March 2024.
$170.0 million of f ixed rate wholesale bonds were issued at a f ixed rate of 1.575% maturing in
October 2026.
Senior notes
DATE
ISSUED
AMOUNT
ISSUED NZD
AMOUNT
ISSUED USD
DATE
OF MATURITY
March 2020$797.1
million
$500.0
million
$573.9 million (USD $360.0 million) matures in
October 2032 and $223.2 million (USD $140.0 million)
matures in October 2035.
October 2017$415.8
million
$300.0
million
$277.2 million (USD $200 million) matures in
October 2027.
$138.6 million (USD $100.0 million) matures in
October 2029.
October 2014$150.0
million
$130.0
million
$150.0 million (USD $130.0 million) matures in
October 2021.
December 2010$250.5
million
$182.0
million
$250.5 million (USD $182.0 million matures in
December 2022.
CovenantsAll borrowings are unsecured and are subject to negative pledge arrangements and various
lending covenants. These have all been met for the years ended 30 June 2021 and 30 June 2020.
77
Creating a new energy future – a bold vision
21. Derivatives and hedge accounting
CASH FLOW HEDGESFAIR VALUE HEDGESCOST OF HEDGINGTOTAL
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
Derivative assets
Cross currency swaps–(23.8)98.1251.5(6.5)(7.6)91.6220.1
Interest rate swaps11.0–––––11.0–
Forward exchange
contracts0.70.3––––0.70.3
Total 11.7(23.5)98.1251.5(6.5)(7.6)103.3220.4
Derivative liabilities
Cross currency swaps(85.8)–(30.9)–(3.6)–(120.3)–
Interest rate swaps(44.3)(104.5)––––(44.3)(104.5)
Forward exchange
contracts(1.0)(0.4)––––(1.0)(0.4)
Total (131.1)(104.9)(30.9)–(3.6)–(165.6)(104.9)
Key observable market data for fair value measurement20212020
Foreign currency exchange (FX) rates as at 30 June
NZD-USD FX rate0.69830.6454
Interest rate swap rates
NZD0.26% to 1.88%0.21% to 0.74%
USD0.10% to 1.74%0.16% to 0.88%
Sensitivity to changes
in market rates
The graphs below illustrate the impact on derivative valuations of possible changes in interest
rates and foreign exchange rates, assuming all other variables are held constant.
Impact on comprehensive income
.
.
.
.
.
.
.
.
interest rates (- %/+ %)
interest rates (- %/+ %)
foreign exchange rates (- %/+ %)
foreign exchange rates (- %/+ %)
Rate increaseRate decrease
Impact on profit or loss
.
.
.
.
.
.
.
.
interest rates (-%/+%)
interest rates (-%/+%)
foreign exchange rates (- %/+ %)
foreign exchange rates (- %/+ %)
Rate increaseRate decrease
VECTOR ANNUAL REPORT 2021 /
78
Notes to the Financial Statements
21. Derivatives and hedge
accounting continued
PoliciesVector initially recognises derivatives at fair value on the date the derivative contract is entered
into, and subsequently they are re-measured to their fair value at each balance date. All derivatives
are classif ied as level 2 on the fair value hierarchy explained in note 19.
Vector designates certain derivatives as either:
—Fair value hedges (of the fair value of recognised assets or liabilities or f irm commitments); or
—Cash flow hedges (of highly probable forecast transactions).
At inception each transaction is documented, detailing:
—The economic relationship and the hedge ratio between hedging instruments and
hedged items;
—The risk management objectives and strategy for undertaking the hedge transaction; and
—The assessment (initially and on an ongoing basis) of whether the derivatives that are used in
the hedging transaction are highly effective in offsetting changes in fair values or cash flows of
hedged items.
The underlying risk of the derivative contracts is identical to the hedged risk component (i.e. the
interest rate risk and the foreign exchange risk) therefore the group has established a one-to-one
hedge ratio. Effectiveness is assessed by comparing the changes of the hedged items and
hedging instruments.
Hedge accounting is discontinued when the hedge instrument expires or is sold, terminated,
exercised, or no longer qualif ies for hedge accounting.
Fair value hedgesVector has entered into cross currency interest rate swaps (the hedging instruments) to hedge the
interest rate risk and foreign currency risk (the hedged risk) arising in relation to its USD senior
notes (the hedged items). These transactions have been designated into fair value hedges.
The following are recognised in prof it or loss:
—The change in fair value of the hedging instruments; and
—The change in fair value of the underlying hedged items attributable to the hedged risk.
Once hedging is discontinued, the fair value adjustment to the carrying amount of the hedged
item arising f rom the hedged risk is amortised through prof it or loss f rom that date through to
maturity of the hedged item.
Cash flow hedgesVector has entered into interest rate swaps and cross currency interest rate swaps (the hedging
instruments) to hedge the variability in cash flows arising f rom interest rate and foreign currency
exchange rate movements in relation to its NZD floating rate notes and USD senior notes.
The effective portion of changes in the fair value of the hedging instruments are recognised in
other comprehensive income.
The following are recognised in prof it or loss:
—any gain or loss relating to the ineffective portion of the hedging instrument; and
—fair value changes in the hedging instrument previously accumulated in other comprehensive
income, in the periods when the hedged item is recognised in prof it or loss.
Once hedging is discontinued, any cumulative gain or loss previously recognised in other
comprehensive income is recognised in prof it or loss either:
—at the same time as the forecast transaction; or
—immediately if the transaction is no longer expected to occur.
Market rate sensitivityAll derivatives are measured at fair value. A change in the market data used to determine fair value
will have an impact on Vector’s f inancial statements.
The graphs on the previous page show the sensitivity of the f inancial statements to a range of
possible changes in market data at balance date.
79
Creating a new energy future – a bold vision
21. Derivatives and hedge
accounting continued
2021
$M
2020
$M
DERIVATIVES
POSITION AS
PER BALANCE
SHEET
AMOUNT
AFTER
APPLYING
RIGHTS OF
OFFSET
UNDER ISDA
AGREEMENTS
DERIVATIVES
POSITION AS
PER BALANCE
SHEET
AMOUNT
AFTER
APPLYING
RIGHTS OF
OFFSET
UNDER ISDA
AGREEMENTS
Derivative assets103.339.3220.4152.1
Derivative liabilities (165.6)(101.6)(104.9)(36.6)
Net amount(62.3)(62.3)115.5115.5
Rights to offsetVector enters into derivative transactions under International Swaps and Derivatives Association
(ISDA) master agreements. The ISDA agreements do not meet the criteria for offsetting in the
balance sheet for accounting purposes. This is because Vector does not have any currently legally
enforceable right to offset recognised amounts. Under the ISDA agreements the right to offset is
enforceable only on the occurrence of future events such as a default on the bank loans or other
credit events. The potential net impact of this offsetting is disclosed in column ‘amount after
applying rights of offset under ISDA agreements. Vector does not hold and is not required to post
collateral against its derivative positions.
Managing interest rate
benchmark reform
The group has no derivative that will be affected by the interbank offered rates (“IBOR”) reform as
at 30 June 2021. However, the f inancial modelling of the fair values for certain hedge relationships
will shift f rom applying USD LIBOR to an alternative benchmark interest rate when the transition
happens, currently expected at the end of 2021. The group is in the process of assessing the
expected impact of the shift in f inancial modelling.
21.1 Effects of hedge accounting on the financial position and performance
The tables below demonstrate the impact of hedged items and the hedging instruments designated in hedging relationships:
—The NZD floating rate exposure includes $1,030.0 million arising f rom hedging the USD senior bonds (2020: $930.0 million), and in
2020 $350.0 million f rom the floating rate notes as allowable under NZ IFRS 9 Financial Instruments.
—The interest rate swaps include $350.0 million of forward starting swaps (2020: $500.0 million).
2021
FACE
VALUE
$M
WEIGHTED
AVERAGE
RATE
ACCUMU-
LATED FAIR
VALUE
HEDGE
ADJUST-
MENTS
$M
CARRYING
AMOUNT
ASSETS/
(LIABILITIES)
$M
CHANGE IN
FAIR VALUE
USED FOR
MEASURING
INEFFECTIVE-
NESS –
CASHFLOW
HEDGE
$M
CHANGE IN
FAIR VALUE
USED FOR
MEASURING
INEFFECTIVE-
NESS – FAIR
VALUE
HEDGE
$M
HEDGING
(GAIN) OR
LOSS
RECOGNISED
IN CASH
FLOW HEDGE
RESERVE
$M
(GAIN)
OR LOSS
RECOGNISED
IN
COST OF
HEDGING
$M
Cash flow hedge –
Interest risk
Hedged item: NZD
floating rate exposure
on borrowings(1,030.0)(33.5)
Hedging instrument:
Interest rate swaps(1,380.0)2.2%(33.3)(33.3)(71.2)
Cash flow and fair value
hedges – Interest and
exchange risks
Hedged item: USD f ixed
rate exposure on
borrowings (1,613.4)14.1(1,595.1)(97.9)186.7
Hedging instrument:
Cross currency swaps
– FV and CF(1,613.4)floating(28.8)(85.8)(184.3)3.4(2.6)
Ineffectiveness–2.4
VECTOR ANNUAL REPORT 2021 /
80
Notes to the Financial Statements
21. Derivatives and hedge
accounting continued
21.1 Effects of hedge accounting on the
financial position and performance continued
2020
FACE
VALUE
$M
WEIGHTED
AVERAGE
RATE
ACCUMU-
LATED FAIR
VALUE
HEDGE
ADJUST-
MENTS
$M
CARRYING
AMOUNT
ASSETS/
(LIABILITIES)
$M
CHANGE IN
FAIR VALUE
USED FOR
MEASURING
INEFFECTIVE-
NESS –
CASHFLOW
HEDGE
$M
CHANGE IN
FAIR VALUE
USED FOR
MEASURING
INEFFECTIVE-
NESS – FAIR
VALUE
HEDGE
$M
HEDGING
(GAIN)
OR LOSS
RECOGNISED
IN CASH
FLOW HEDGE
RESERVE
$M
(GAIN)
OR LOSS
RECOGNISED
IN COST OF
HEDGING
$M
Cash flow hedge –
Interest risk
Hedged item: NZD
floating rate exposure
on borrowings(1,280.0)(106.2)
Hedging instrument:
Interest rate swaps(1,780.0)3.4%(104.5)(104.5)26.3
Cash flow and fair value
hedges – Interest and
exchange risks
Hedged item: USD f ixed
rate exposure on
borrowings (1,613.4)(231.1)(1,839.9)(31.8)(143.7)
Hedging instrument:
Cross currency swaps (1,613.4)floating220.123.8140.31.4(0.9)
Ineffectiveness–(3.4)
Hedging instruments and hedged items are included in the line items “Derivatives” and “Borrowings” respectively in the balance
sheet. Ineffectiveness is the sum of the change in fair value of the hedged item and the change in fair value of the hedging
instrument. The source of ineffectiveness is largely due to counterparty credit risk on the derivative instruments. Hedge
ineffectiveness is included in the “Fair value change on f inancial instruments” in the prof it or loss. Please refer to the asset and
liability positions of the hedging instruments in Note 21 derivatives and hedge accounting table above.
21.2 Fair value changes on
financial instruments
NOTE
2021
$M
2020
$M
Recognised in profit or loss
Fair value movement on hedging instruments (184.3)140.3
Fair value movement on hedged items186.7(143.7)
Fair value change on contingent consideration5(5.9)–
Total gains/(losses)(3.5)(3.4)
81
Creating a new energy future – a bold vision
21. Derivatives and hedge
accounting continued
21.3 Reconciliation of changes
in hedge reserves
Hedge reserves
2021
CASHFLOW
HEDGE
RESERVE
$M
COST OF
HEDGING
$M
TOTAL
$M
Opening balance76.35.481.7
Hedging gains or losses recognised in OCI – Interest
rate swaps(37.7)–(37.7)
Hedging gains or losses recognised in OCI – Cross
currency swaps2.72.75.4
Hedging gains or losses recognised in OCI – Forward
exchange contracts2.4–2.4
Transferred to prof it or loss – Interest rate swaps(33.5)–(33.5)
Transferred to prof it or loss – Cross currency swaps0.7–0.7
Recognised as basis adjustment to
non-f inancial assets(2.3)–(2.3)
Deferred tax on change in reserves18.9(0.8)18.1
Closing balance27.57.334.8
Hedge reserves
2020
CASH FLOW
HEDGE
RESERVE
$M
COST OF
HEDGING
$M
TOTAL
$M
Opening balance56.44.761.1
Hedging gains or losses recognised in OCI – Interest
rate swaps57.4–57.4
Hedging gains or losses recognised in OCI – Cross
currency swaps7. 31.08.3
Hedging gains or losses recognised in OCI – Forward
exchange contracts(0.4)–(0.4)
Transferred to prof it or loss – Interest rate swaps(31.2)–(31.2)
Transferred to prof it or loss – Cross currency swaps(5.9)––
Recognised as basis adjustment to non-f inancial
assets0.4–0.4
Deferred tax on change in reserves(7.7)(0.3)(8.0)
Closing balance76.35.481.7
22. Financial risk
management
Risk management f rameworkVector has a comprehensive treasury policy, approved by the board, to manage f inancial risks
arising f rom business activity. The policy outlines the objectives and approach that the group
applies to manage:
—Interest rate risk;
—Credit risk;
—Liquidity risk;
—Foreign exchange risk; and
—Funding risk.
For each risk type, any position outside the policy limits requires the prior approval of the board.
Each risk is monitored on a regular basis and reported to the board.
VECTOR ANNUAL REPORT 2021 /
82
Notes to the Financial Statements
22. Financial risk
management continued
22.1 Interest rate risk
Interest rate exposure
2021
< 1 YEAR
$M
1 – 2 YEARS
$M
2 – 5 YEARS
$M
> 5 YEARS
$M
TOTAL
$M
Interest rate exposure: borrowings967.2250.5490.01,382.93,090.6
Derivative contracts:
Interest rate swaps(1,230.0)40.0840.0350.0–
Cross currency swaps1,463.4(250.5)–(1,212.9)–
Net interest rate exposure1,200.640.01,330.0520.03,090.6
Interest rate exposure
2020
< 1 YEAR
$M
1 – 2 YEARS
$M
2 – 5 YEARS
$M
> 5 YEARS
$M
TOTAL
$M
Interest rate exposure: borrowings500.0457.2740.51,212.92,910.6
Derivative contracts:
Interest rate swaps(1,030.0)–480.0550.0–
Cross currency swaps1,613.4(150.0)(250.5)(1,212.9)–
Net interest rate exposure1,083.4307.2970.0550.02,910.6
PoliciesVector is exposed to interest rate risk through its borrowing activities.
Interest rate exposures are managed primarily by entering into derivative contracts. The main
objectives are to minimise the cost of total borrowings, control variations in the interest expense of
the borrowings f rom year to year, and where practicable to match the interest rate risk prof ile of
the borrowings with the risk prof ile of the group’s assets.
The board has set and actively monitors maximum and minimum limits for the net interest rate
exposure prof ile.
22.2 Credit risk
Policies
Credit risk represents the risk of cash flow losses arising f rom counterparty defaults. Vector is
exposed to credit risk in the normal course of business f rom:
—Trade receivable transactions with business and mass market residential customers; and
—Financial instruments transactions with f inancial institutions.
The carrying amounts of f inancial assets represent the group’s maximum exposure to credit risk.
The group has credit policies in place to minimise the impact of exposure to credit risk and
associated f inancial losses:
—The board must approve placement of cash, short-term cash deposits or derivatives with
f inancial institutions whose credit rating is less than A+. As at 30 June 2021, all f inancial
instruments are held with f inancial institutions with credit rating above A+;
—The board sets limits and monitors exposure to f inancial institutions; and
—Exposure is spread across a range of f inancial institutions. Where we deem there is credit
exposure to energy retailers and customers, the group minimises its risk by performing credit
evaluations and/or requiring a bond or other form of security.
83
Creating a new energy future – a bold vision
22. Financial risk
management continued
22.3 Liquidity risk
Contractual cash flows maturity profile
2021
PAYABLE
<1 YEAR
$M
PAYABLE
1 – 2 YEARS
$M
PAYABLE
2 – 5 YEARS
$M
PAYABLE
>5 YEARS
$M
TOTAL
CONTRACTUAL
CASH FLOWS
$M
Non-derivative financial liabilities
Trade payables174.7–––174.7
Contract liabilities7.310.111.60.829.8
Lease liabilities10.07.816.212.746.7
Borrowings: interest90.763.1140.1165.4459.3
Borrowings: principal1,003.4260.7490.01,315.73,069.8
Derivative financial (assets)/liabilities
Cross currency swaps: inflow(234.7)(300.4)(102.8)(1,309.7)(1,947.6)
Cross currency swaps: outflow187.3290.3134.91,489.02,101.5
Forward exchange contracts: inflow(61.8)(9.5)––(71.3)
Forward exchange contracts: outflow61.99.6––71.5
Net settled derivatives
Interest rate swaps 20.913.63.4(0.5)37.4
Group contractual cash flows1,259.7345.3693.41,673.43,971.8
Contractual cash flows maturity profile
2020
PAYABLE
<1 YEAR
$M
PAYABLE
1–2 YEARS
$M
PAYABLE
2–5 YEARS
$M
PAYABLE
>5 YEARS
$M
TOTAL
CONTRACTUAL
CASH FLOWS
$M
Non-derivative financial liabilities
Trade payables154.4–––154.4
Contract liabilities10.99.916.81.839.4
Lease liabilities9.87.815.015.748.3
Borrowings: interest96.390.5167.0214.6568.4
Borrowings: principal499.1507.7775.21,239.53,021.5
Derivative financial (assets)/liabilities
Cross currency swaps: inflow(55.8)(253.8)(399.1)(1,454.1)(2,162.8)
Cross currency swaps: outflow35.7182.6341.01,448.52,007.8
Forward exchange contracts: inflow(33.1)(2.3)––(35.4)
Forward exchange contracts: outflow33.02.4––35.4
Net settled derivatives
Interest rate swaps 33.824.047.69.3114.7
Group contractual cash flows784.1568.8963.51,475.3 3,791.7
VECTOR ANNUAL REPORT 2021 /
84
Notes to the Financial Statements
22. Financial risk
management continued
22.3 Liquidity risk continued
Contractual cash flowsThe above table shows the timing of non-discounted cash flows for all f inancial instrument
liabilities and derivatives.
The cash flows for bank facilities, included in borrowings, are disclosed on the basis of their
contractual repayment terms for the individual drawdowns.
The cash flows for capital bonds, included in borrowings, are disclosed as payable within 0 – 1 year
as the next election date set for the capital bonds is 15 June 2022 and the bonds have no
contractual maturity date.
PoliciesVector is exposed to liquidity risk where there is a risk that the group may encounter diff iculty in
meeting its day to day obligations due to the timing of cash receipts and payments.
The objective is to ensure that adequate liquid assets and funding sources are available at all times
to meet both short-term and long-term commitments. The board has set a minimum headroom
requirement for committed facilities over Vector’s anticipated 18-month peak borrowing
requirement.
At balance date, in addition to short-term deposits, Vector has access to undrawn funds of $670.0
million (2020: $955.0 million).
22.4 Foreign exchange risk
Policies Vector is exposed to foreign exchange risk through its borrowing activities, foreign currency
denominated expenditure, and through our Australian subsidiaries.
Foreign exchange exposure is primarily managed through entering into derivative contracts. The
board requires that all signif icant foreign currency borrowings and expenditure are hedged into
NZD at the time of commitment to drawdown or when the exposure is highly probable. Hence, at
balance date there is no signif icant exposure to foreign currency risk.
22.5 Funding risk
PoliciesFunding risk is the risk that Vector will have diff iculty ref inancing or raising new debt on
comparable terms to existing facilities. The objective is to spread the concentration of risk so that if
an event occurs the overall cost of funding is not unnecessarily increased. Details of borrowings
are shown in note 20.
The board has set the maximum amount of debt that may mature in any one f inancial year.
85
Creating a new energy future – a bold vision
23. Cash flows
23.1 Reconciliation of net profit/(loss)
to net cash flows from/(used in)
operating activities
Reconciliation of net profit/(loss) to net cash flows
from/(used in) operating activities
NOTE
2021
$M
2020
$M
Net prof it/(loss) for the period194.697.3
Items classified as investing activities
Items associated with investing activities(8.1)(10.0)
Items classified as financing activities
Items associated with lease liabilities0.4(1.0)
Non-cash items
Depreciation and amortisation270.1262.8
Non-cash portion of interest costs (net)(3.7)(7.0)
Fair value change on f inancial instruments21.23.53.4
Associates (share of net (prof it)/loss)6(1.8)(0.3)
Impairment–32.0
Increase/(decrease) in deferred tax 27.427.4
Increase/(decrease) in provisions(5.4)11.2
Gain on sale of Kapuni gas interests–(0.5)
Other non-cash items0.80.8
290.9329.8
Changes in assets and liabilities
Trade and other payables 14.12.9
Contract liabilities3.3(0.3)
Contract assets(12.9)12.7
Inventories(3.0)(1.0)
Trade and other receivables5.96.9
Income tax 13.9(40.0)
21.3(18.8)
Net cash flows from/(used in) operating activities499.1397.3
23.2 Reconciliation of movement
of liabilities to cash flows arising
from financing activities
Reconciliation of movement of
liabilities to cash flows arising
from financing activities
LEASE
LIABILITIESBORROWINGSDERIVATIVESTOTAL
Balance at 1 July 202037.83,135.6(115.5)3,057.9
Net draw downs–180.0–180.0
Lease liabilities payments(11.0)––(11.0)
Financing cash flows(11.0)180.0–169.0
Cost of debt raising–(1.0)–(1.0)
Fair value changes–(245.2)177.8(67.4)
Borrowing fees paid–(5.5)–(5.5)
Amortisation of debt raising costs–7.6–7.6
Premium released–(0.9)–(0.9)
ROU asset additions10.3––10.3
Other0.3––0.3
As at 30 June 202137.43,070.662.33,170.3
PoliciesCash and cash equivalents are carried at amortised cost. Cash and cash equivalents include
deposits that are on call.
VECTOR ANNUAL REPORT 2021 /
86
Notes to the Financial Statements
24. Equity
24.1 Share Capital
SharesThe total number of authorised and issued shares is 1,000,000,000 (2020: 1,000,000,000).
All ordinary issued shares are fully paid, have no par value and carry equal voting rights and
equal rights to a surplus on winding up of the parent.
At balance date 82,035 shares (2020: 116,948) are allocated to the employee share
purchase scheme.
24.2 Capital Management
PoliciesVector’s objectives in managing capital are:
—To safeguard the ability of entities within the group to continue as a going concern;
—To provide an adequate return to shareholders by pricing products and services commensurate
with the level of risk; and
—Maintain an investment grade credit rating.
Vector manages and may adjust its capital structure in light of changes in economic conditions
and for the risk characteristics of the underlying assets. To achieve this Vector may:
—Adjust its dividend policy;
—Return capital to shareholders; or
—Sell assets to reduce debt.
24.3 Financial ratios
Basic and diluted earnings per share
2021
$M
12 MONTHS
2020
$M
12 MONTHS
Net prof it attributable to owners of the parent 193.295.4
Weighted average ordinary shares outstanding during
the period (number of shares)999,906,097999,876,571
Total earnings per share19.3 cents9.5 cents
Net tangible assets per share
2021
$M
2020
$M
Net assets attributable to owners of the parent 2,319.72,242.8
Less total intangible assets (1,294.3)(1,285.8)
Total net tangible assets1,025.4957.0
Ordinary shares outstanding (number of shares)999,917,965999,883,052
102.5 cents95.7 cents
Economic net debt to economic net debt plus adjusted
equity ratio (“gearing ratio”)
2021
$M
2020
$M
Face value of borrowings3,090.62,910.6
Less cash and cash equivalents(17.4)(28.3)
Economic net debt3,073.22,882.3
Total equity2,335.42,259.7
Adjusted for hedge reserves34.881.7
Adjusted equity 2,370.22,341.4
Economic net debt plus adjusted equity 5,443.45,223.7
56.5%55.2%
87
Creating a new energy future – a bold vision
24.Equity continued
24.4 Reserves
Hedge reservesHedge reserves comprise the cash flow hedge reserve and cost of hedging.
The cash flow hedge reserve records the effective portion of changes in the fair value of derivatives
that are designated as cash flow hedges.
The gain or loss relating to the ineffective portion is recorded in prof it or loss within interest
costs (net).
During the year, $32.8 million (2020: $37.1 million) was transferred f rom the cash flow hedge
reserve to interest expense.
Cost of hedging records the change in the fair value of the cost to convert foreign currency into
New Zealand dollars as required under NZ IFRS 9.
Other reservesOther reserves comprise:
—A share-based payment reserve relating to the employee share purchase scheme. When shares
are vested to the employee, the reserve is offset with a reduction in treasury shares.
—A foreign currency translation reserve to record exchange differences arising f rom the
translation of the group’s foreign operations.
—A reserve recording the group’s share of its associate’s other comprehensive income.
—A reserve to record the fair value movements in the group’s investments in f inancial assets.
25. Related party transactions
2021
$M
2020
$M
Transactions with Entrust
Dividends paid 123.9123.9
Distribution to customers–5.0
2021
$M
2020
$M
Transactions with joint operation (until 31 March 2020)
Purchases of electricity and steam f rom Kapuni Energy Joint
Venture (“KEJV”)–7.3
Sale of gas to KEJV–8.2
Sales of operations and maintenance services to KEJV –1.5
Sales of administration and other services to KEJV–0.1
Transactions with associate
Purchase of vegetation management services f rom
Tree Scape Limited7.79.9
Directors’ fees received f rom Tree Scape Limited0.10.1
Transactions with key management personnel
Salary and other short-term employee benef its5.87.1
Directors’ fees0.80.9
Related partiesAs noted in note 6, the group’s investment in Tree Scape Limited has been reclassif ied as held for
sale, with a target sale completion date of 31 August 2021. Until the sale is completed, Vector
remains a 50% shareholder of Tree Scape Limited, who will continue to transact with the group as
a related party.
The Kapuni Energy Joint Venture was a joint operation to which the group was a party with 50%
interest. The interest was sold on 31 March 2020 as a part of the sale of Vector’s Kapuni gas
interests to Todd Petroleum Mining Company Limited.
Other related parties are Entrust, the group’s ultimate parent entity and key management
personnel that include the group’s directors and the executive team.
VECTOR ANNUAL REPORT 2021 /
88
Notes to the Financial Statements
26. Contingent liabilities
DisclosuresThe directors are aware of claims that have been made against entities of the group and, where
appropriate, have recognised provisions for these within note 18.
No material contingent liabilities have been identif ied.
27. Events after balance date
Loss rental rebatesOn 23 August 2021, the board have approved the distribution of loss rental rebates to customers on
the Vector electricity network at a rate of $20 per household. The distribution is expected to take
place in September 2021.
COVID-19 pandemicAustralia
On 19 July 2021, the State Government of New South Wales (“NSW Government”) imposed
additional restrictions to the area of Greater Sydney which included a pause on construction
activity. This has resulted in some disruption to the deployment of meters in the Greater Sydney
area. On 28 July 2021, the NSW Government announced a 4-week extension to the lockdown until
28 August 2021. This announcement established a red zone and a green zone within Greater
Sydney. We continue to work in green zone areas but have suspended all activity aside f rom
emergency works in the red zones. At the time these f inancial statements are approved, it is not
clear when these restrictions will be lifted and when the deployment of meters will return to
normal. The situation in other parts of Australia reflects mainly short-term restrictions which we
continue to carefully monitor. Overall, these recent events in Australia have no material impact on
the f inancial statements.
New Zealand
On 17 August 2021 the New Zealand Government announced the country would return to Alert
Level 4, where only essential services can operate, in response to signs of community transmission
of the virus. Further announcements by the New Zealand Government have extended Alert Level
4 until at least 11:59pm 24 August 2021. As with its previous responses to alert level changes,
Vector’s businesses have continued to operate as essential services except for the energy solutions
business while the metering segment has seen a slight drop in work volumes. The f inancial
impact f rom these events therefore has not been signif icant.
Debt programmeAs part of our debt management activities, the group replaced the $325.0 million bank facilities,
which matured in July 2021, with bank facilities of the same level, and secured net additional
facilities of $100.0 million.
ApprovalThe f inancial statements were approved by the board on 23 August 2021.
Final dividendOn 23 August 2021, the board declared a f inal dividend for the year ended 30 June 2021 of
8.50 cents per share.
No adjustment is required to these f inancial statements in respect of this event.
89
Creating a new energy future – a bold vision
© 2021 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Independent Auditor’s Report
To the shareholders of Vector Limited
Report on the audit of the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of Vector Limited
(the ’company’) and its subsidiaries (the 'group') on
pages 47 to 89:
i. present fairly in all material respects the group’s
financial position as at 30 June 2021 and its
financial performance and cash flows for the
year ended on that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated balance sheet as at 30 June
2021;
— the consolidated statements of profit or loss
and other comprehensive income, changes in
equity and cash flows for the year then ended;
and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 International Code of
Ethics for Assurance Practitioners (Including International Independence Standards) (New Zealand) issued by the
New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International Independence
Standards) (‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
Our firm has also provided other services to the group in relation to regulatory assurance services, other
assurance services and compliance services in relation to R&D tax credits. Subject to certain restrictions,
partners and employees of our firm may also deal with the group on normal terms within the ordinary course of
trading activities of the business of the group. These matters have not impaired our independence as auditor of
the group. The firm has no other relationship with, or interest in, the group.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually
and on the consolidated financial statements as a whole. The materiality for the consolidated financial
VECTOR ANNUAL REPORT 2021 /
90
Independent Auditor’s Report
Independent Auditor’s Report
2
statements as a whole was set at $9.1 million determined with reference to a benchmark of group profit before
tax. We chose the benchmark because, in our view, this is a key measure of the group’s performance.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the consolidated financial statements in the current period. We summarise below those matters and our key
audit procedures to address those matters in order that the shareholders as a body may better understand the
process by which we arrived at our audit opinion. Our procedures were undertaken in the context of and solely
for the purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not
express discrete opinions on separate elements of the consolidated financial statements.
The key audit matter How the matter was addressed in our audit
1. Capitalisation and asset lives (Property, plant and equipment of $4,625.8 million, Software of $107.4
million, with additions during the year of $529.5 million). Refer to Notes 11 and 12 of the financial
statements.
Capitalisation of costs and useful lives assigned to
these assets are a key audit matter due to the
significance of property, plant and equipment and
software to the group’s business, and due to the
judgement involved in determining the carrying
value of these assets, principally:
— the decision to capitalise or expense costs
relating to the metering, electricity and gas
distribution networks. This decision depends
on whether the expenditure is considered to
enhance the network (and is therefore capital),
or to maintain the current operating capability
of the network (and is therefore an expense).
There is also judgement when estimating the
extent of recovering internal salary costs,
particularly within digital projects; and
— the estimation of the useful life of the asset
once the costs are capitalised. Estimated lives
range between 2 and 100 years, resulting from
the diversity of property, plant and equipment
and software assets across a portfolio of
businesses. There is also judgment when
estimating asset lives due to the uncertainty of
the impact of technological change.
Our audit procedures in this area included, among others:
—
examining the operating effectiveness of controls
related to the approval of capital projects;
— assessing the nature of capitalised costs by checking
a sample of costs to invoice to determine whether
the description of the expenditure met the
capitalisation criteria in the relevant accounting
standards;
— assessing the useful economic lives stated in the
accounting policies of the group by comparing to
industry benchmarks and our knowledge of the
business and its operations; and
— assessing whether the useful economic lives of each
individual asset capitalised in the current period was
within the stated policies.
We found no material errors in the nature and amount
capitalised in the period and that the estimated useful
lives of assets were within an acceptable range when
compared to those used in the industry.
2. Impairment assessment of the Electricity distribution, Gas distribution, Gas trading, OnGas, Liquigas and
the Metering cash generating units (inclusive of $1,164.1 million of goodwill). Refer to Note 11 of the
financial statements.
We considered the impairment assessment of the
Electricity distribution and Gas distribution cash
generating units to be a key audit matter due to the
significance of goodwill of $1,164.1 million to the
financial position of the group and the significant
The procedures we performed to evaluate the
impairment assessments included:
— assessing whether the methodology adopted in the
discounted cash flow models was consistent with
91
Creating a new energy future – a bold vision
3
The key audit matter How the matter was addressed in our audit
judgment used to estimate future pricing of the
regulated revenue streams beyond the timeframe
of the current Commerce Commission regulatory
price paths.
We considered the impairment assessment of the
Metering cash generating unit to be a key audit
matter due to significant value of intangible assets
in the business which operates across two
geographical markets.
We considered the impairment assessment of the
Gas Trading segments to be a key audit matter due
to the competitive margin trading environment and
the potential impact of the response on the global
climate change.
accepted valuation approaches of NZ IAS 36
Impairment of Assets and within the energy industry;
— evaluating the significant future cash flow
assumptions by comparing to historical trends,
budgets and where applicable, Asset Management
Plans, and regulatory pricing models;
— comparing the discount rates applied to the
estimated future cash flows and the terminal growth
rates to relevant benchmarks using our own
valuation specialists;
— challenging the above assumptions and judgements
by performing sensitivity analysis, considering a
range of likely outcomes based on various scenarios;
— calculating the regulated asset base (‘RAB’) multiple
implied by valuation of the Regulated Network cash
generated unit and comparing this to the range of
RAB multiples observed in the marketplace; and
— comparing the group’s net assets as at 30 June 2021
of $2,335.4 million to its market capitalisation of
$4,050.0 million at 30 June 2021 which implied total
headroom of $1,714.6 million.
We found the methodology to be consistent with
industry norms, specifically:
— the discount and terminal growth rates were in an
acceptable industry range;
— future cash flow assumptions were supported by
comparison to the sources we considered above;
and
— the overall comparison of the group’s net assets to
market capitalisation did not indicate an impairment.
VECTOR ANNUAL REPORT 2021 /
92
Independent Auditor’s Report
4
Other information
The Directors, on behalf of the group, are responsible for the other information included in the group’s Annual
Report. Other information comprises the information included in the group’s Annual Report, but does not include
consolidated financial statements and our Independent Auditor’s Report thereon. Our opinion on the
consolidated financial statements does not cover any other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Use of this independent auditor’s report
This independent auditor’s report is made solely to the shareholders as a body. Our audit work has been
undertaken so that we might state to the shareholders those matters we are required to state to them in the
independent auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the shareholders as a body for our audit work, this independent
auditor’s report, or any of the opinions we have formed.
Responsibilities of the Directors for the consolidated financial
statements
The Directors, on behalf of the company, are responsible for:
— the preparation and fair presentation of the consolidated financial statements in accordance with generally
accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial
Reporting Standards) and International Financial Reporting Standards;
— implementing necessary internal control to enable the preparation of a consolidated set of financial
statements that is fairly presented and free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial
statements
Our objective is:
— to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs NZ will always detect a material misstatement when it exists.
93
Creating a new energy future – a bold vision
5
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated financial statements is located at
the External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Graeme Edwards
For and on behalf of
KPMG
Auckland
23 August 2021
VECTOR ANNUAL REPORT 2021 /
94
Independent Auditor’s Report
Statutory
Information
95
Creating a new energy future – a bold vision
VECTOR ANNUAL REPORT 2021 /
96
Statutory Information
Statutory Information
Interests Register
Each company in the group is required to maintain an interests register in which the particulars of
certain transactions and matters involving the directors must be recorded. The interests registers
for Vector Limited and its subsidiaries are available for inspection at their registered off ices.
Particulars of entries in the interests registers made during the year ended 30 June 2021 are set
out in this Statutory Information section.
Information used by directors
During the f inancial year there were no notices f rom directors of Vector Limited, or any subsidiary,
requesting to use information received in their capacity as a director which would not otherwise
have been available to them.
Indemnification and insurance of directors and officers
As permitted by the constitution and the Companies Act 1993, Vector Limited has indemnif ied
its directors, and those directors who are directors of subsidiaries against potential liabilities and
costs they may incur for acts or omissions in their capacity as directors. In addition, Vector Limited
has indemnif ied certain senior employees against potential liabilities and costs they may incur for
acts or omissions in their capacity as employees of Vector Limited, or directors of Vector
subsidiaries or associates.
During the f inancial year, Vector Limited paid insurance premiums in respect of directors and
certain senior employees’ liability insurance which covers risks normally covered by such policies
arising out of acts or omissions of directors and employees in their capacity as such. Insurance
is not provided for criminal liability or liability or costs in respect of which an indemnity is
prohibited by law.
Donations
Vector Limited made donations of $10,981 during the year ended 30 June 2021. Subsidiaries of
Vector Limited made donations of $26,677 during the year ended 30 June 2021. No political
donations were made during the year ended 30 June 2021.
Credit rating
At 30 June 2021 Vector Limited had a Standard & Poor’s credit rating of BBB/stable, and a
Moody’s credit rating of Baa1/stable.
NZX Regulation waivers and rulings
No new waivers were granted in the year ended 30 June 2021.
Exercise of NZX powers
NZX did not exercise any of its powers set out in Listing Rule 9.9.3 (relating to powers to cancel,
suspend or censure an issuer) with respect to Vector Limited.
Trustees of Entrust
During the year ended 30 June 2021, Vector Limited made payments to A Bell and M Buczkowski,
trustees of Entrust (Vector Limited’s majority shareholder) totalling $201,300 in respect of their
roles as directors on the Vector Limited board.
Subsidiaries and associates
A list of each of the Company’s subsidiaries and associates is contained on pages 69 and 70.
The Company has not gained or lost control of any entity during the year ended 30 June 2021.
Statutory Information
97
Creating a new energy future – a bold vision
Directors
The following directors of Vector Limited and current group companies held off ice as at 30 June 2021 or resigned (R) as a director
during the year ended 30 June 2021. Directors marked (A) were appointed during the year.
PARENTDIRECTORS
Vector LimitedA Bell, M Buczkowski, A Carter, J Mason, A Paterson (R), P Rebstock, B Turner
All of the above directors in off ice at 30 June 2021 are independent directors, except for A Bell and M Buczkowski who are trustees
of Entrust (Vector Limited’s majority shareholder).
SUBSIDIARIESDIRECTORS
Advanced Metering Assets LimitedJ Hollingworth (A), S Mackenzie (A), J Mason (R), A Paterson (R), B Talacek (A)
Advanced Metering Services LimitedJ Hollingworth (A), S Mackenzie (A), J Mason (R), A Paterson (R), B Talacek (A)
Arc Innovations LimitedJ Hollingworth (A), S Mackenzie (A), J Mason (R), A Paterson (R), B Talacek (A)
Cristal Air International LimitedJ Hollingworth (A), S Mackenzie
E-Co Products Group LimitedJ Hollingworth (A), S Mackenzie
HRV Australia Pty LimitedS Mackenzie, J Sheridan
HRV Clean Water LimitedJ Hollingworth (A), S Mackenzie
HRV Filters LimitedJ Hollingworth (A), S Mackenzie
Liquigas LimitedA Andriopoulos, H Blackburn (R), S Bridge, A Gilbert (A), P Goodeve, N Hannan, E Krogh
(R), R Middelbeek, G O’Brien (R), R Sharp, B Talacek, M Trigg
NGC Holdings LimitedJ Hollingworth (A), S Mackenzie (A), J Mason (R), A Paterson (R)
On Gas LimitedJ Hollingworth (A), S Mackenzie (A), J Mason (R), A Paterson (R), B Talacek (A)
PowerSmart NZ LimitedJ Hollingworth (A), S Mackenzie
Safe Filters LimitedJ Hollingworth (A), S Mackenzie
Safe Windows LimitedJ Hollingworth (A), S Mackenzie
SolPho LimitedJ Hollingworth (A), S Mackenzie
Vector Advanced Metering Assets
(Australia) Limited
J Hollingworth (A), S Mackenzie (A), J Mason (R), A Paterson (R), B Talacek (A)
Vector Advanced Metering Services
(Australia) Pty Limited
J Hollingworth (A), S Mackenzie, J Sheridan, B Talacek (A)
Vector Auckland Property LimitedJ Hollingworth (A), S Mackenzie (A), J Rodger (R)
Vector Communications LimitedJ Hollingworth (A), S Mackenzie (A), J Mason (R), A Paterson (R)
Vector Energy Solutions (Australia)
Pty Limited
J Hollingworth (A), S Mackenzie, J Sheridan
Vector Energy Solutions LimitedJ Hollingworth (A), S Mackenzie
Vector ESPS Trustee LimitedJ Hollingworth (A), S Mackenzie
Vector Gas Trading LimitedJ Hollingworth (A), S Mackenzie (A), J Mason (R), A Paterson (R), B Talacek (A)
Vector Management Services LimitedJ Hollingworth (A), S Mackenzie
Vector Metering Data Services LimitedJ Hollingworth (A), S Mackenzie (A), J Mason (R), A Paterson (R)
Vector Northern Property LimitedJ Hollingworth (A), S Mackenzie
Vector Technology Services LimitedJ Hollingworth (A), S Mackenzie (A), Nikhil D R (A), J Rodger (R)
Ventilation Australia Pty LimitedS Mackenzie, J Sheridan
VECTOR ANNUAL REPORT 2021 /
98
Statutory Information
Directors continued
ASSOCIATESDIRECTORS
Tree Scape LimitedA Botha, E Chignell, J Hollingworth (A), K Smith, B Whiddett
Directors’ remuneration and value of other benef its received f rom Vector Limited and current group companies for the year ended
30 June 2021:
DIRECTORS OF VECTOR LIMITED
PAID BY
PARENT
$
PAID BY
SUBSIDIARIES
$
A Bell100,650–
M Buczkowski100,650–
A Carter100,650–
J Mason176,138–
A Paterson50,325–
P Rebstock100,650–
B Turner100,650–
729,713–
DIRECTORS OF SUBSIDIARIES
PAID BY
PARENT
$
PAID BY
SUBSIDIARIES
$
A Andriopoulos–5,000*
H Blackburn–2,887*
S Bridge–5,000
A Gilbert–2,500
P Goodeve–5,000
N Hannan–5,000
R Middelbeek–5,000*
G O’Brien–2,500
R Sharp–5,000*
B Talacek–7,500*
M Trigg–44,200
–89,587
* Directors’ fees relating to any Vector Limited employee are paid to the company.
No special exertion benef its additional to payments above were paid to directors in the year ended 30 June 2021.
99
Creating a new energy future – a bold vision
Directors continued
Directors of Vector Limited
Entries in the interests register of Vector Limited during the year to 30 June 2021 that are not set out elsewhere in this annual report:
DIRECTORENTITYPOSITION
A BellEntrustTrustee
Communities and Residents
Administration Limited
Director
New Zealand National PartyDirector
M BuczkowskiEntrustTrustee
A CarterANZ Bank New Zealand LimitedDirector
Avonhead Mall LimitedDirector and shareholder
Capital Education LimitedAdvisor
Capital Solutions Limited Advisor
Datacom Group LimitedChairman
Loughborough Investments LimitedDirector and shareholder
Maurice Carter Charitable TrustTrustee
My Food Bag Group LimitedChairman
T R Group LimitedChairman
J MasonAir New Zealand Limited Director
Alvarium Wealth (NZ) LimitedDirector
University of AucklandTrustee and Adjunct Professor of Management
Westpac New Zealand LimitedDirector
Zespri Group LimitedDirector
P RebstockAccident Compensation CorporationChair
Auckland District Health BoardChair (Audit, Finance and Risk Committee)
Kiwi Group Holdings LimitedChair
National Hauora Coalition LimitedChair
New Zealand Defence Force BoardChair
Ngāti Whātua Ōrākei Whai Maia LimitedChair
On Being Bold LimitedDirector and shareholder
Freightlink LimitedDirector
Sealink New Zealand LimitedDirector
Sealink Pine Harbour LimitedDirector
Sealink Travel Group New Zealand LimitedDirector
B TurnerFonterra Co-op Group LimitedDirector (Central Portfolio Management)
GlobalDairy Trade Holdings LimitedMember of the Oversight Board
The Arapaho Springs TrustTrustee
The Arapaho Springs Investment TrustTrustee
The entities listed above against each director may transact with Vector Limited and its subsidiaries in the normal course of business.
Auckland based directors (A Bell, M Buczkowski, A Carter, J Mason, P Rebstock and B Turner) are Vector Limited residential
electricity customers.
Directors of subsidiaries
There are no entries in the interests register of subsidiaries up to 30 June 2021 that are not set out elsewhere in this annual report.
VECTOR ANNUAL REPORT 2021 /
100
Statutory Information
Employees
The number of current employees of the company and the group receiving remuneration and
benef its above $100,000 in the year ended 30 June 2021 are set out in the table below:
CURRENT EMPLOYEESGROUPCOMPANY
$100,001 – $110,0006953
$110,001 – $120,0007154
$120,001 – $130,0004943
$130,001 – $140,0005244
$140,001 – $150,0004832
$150,001 – $160,0003225
$160,001 – $170,0002416
$170,001 – $180,0002014
$180,001 – $190,0001915
$190,001 – $200,0001610
$200,001 – $210,000149
$210,001 – $220,00097
$220,001 – $230,0001111
$230,001 – $240,000109
$240,001 – $250,00054
$250,001 – $260,00031
$260,001 – $270,00044
$270,001 – $280,00033
$280,001 – $290,00022
$290,001 – $300,0001-
$300,001 – $310,00054
$310,001 – $320,00044
$320,001 – $330,00011
$330,001 – $340,00021
$340,001 – $350,00043
$350,001 – $360,0001-
$360,001 – $370,00022
$370,001 – $380,00011
$380,001 – $390,00011
$390,001 – $400,00022
$400,001 – $410,00022
$410,001 – $420,00021
$440,001 – $450,00011
$490,001 – $500,0001-
$510,001 – $520,00022
$550,001 – $560,00022
$570,001 – $580,00011
$610,001 – $620,00011
$780,001 – $790,00011
$1,880,001 – $1,890,00011
499387
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Creating a new energy future – a bold vision
Employees continued
The number of former employees of the company and the group receiving remuneration and
benef its above $100,000 in the year ended 30 June 2021 are set out in the table below:
FORMER EMPLOYEES (INCLUDING ANY TERMINATION PAYMENTS)GROUPCOMPANY
$100,001 – $110,00024
$110,001 – $120,00033
$120,001 – $130,00033
$130,001 – $140,00042
$140,001 – $150,00044
$150,001 – $160,00022
$180,001 – $190,00011
$210,001 – $220,00011
$220,001 – $230,0001-
$230,001 – $240,00033
$$430,001 – $440,00011
2524
No employee of the group appointed as a director of a subsidiary or associate company receives or
retains any remuneration or benef its as a director. The remuneration and benef its of such
employees, received as employees, are included in the relevant bandings disclosed above, where
the annual remuneration and benef its exceed $100,000.
Pension payments are at consistent rates for all employees accordingly to the legal requirements
in the jurisdiction they are employed in.
VECTOR ANNUAL REPORT 2021 /
102
Statutory Information
Bondholder statistics
NZDX debt securities distribution as at 30 June 2021:
5.70% capital bonds
RANGE
NUMBER OF
BONDHOLDERS
PERCENTAGE OF
BONDHOLDERS
NUMBER OF
SECURITIES HELD
PERCENTAGE OF
SECURITIES HELD
5,000 – 9,99961217.09%3,314,0001.08%
10,000 – 49,9992,25162.86%45,008,50014.65%
50,000 – 99,99944812.51%25,443,3008.28%
100,000 – 499,9992356.56%36,447,00011.86%
500,000 – 999,99990.25%5,545,0001.81%
1,000,000 plus260.73%191,447,20062.32%
3,581100.00%307,205,000100.00%
No current directors of the parent are holders (either benef icially or non-benef icially) of Vector
Limited capital bonds as at 30 June 2021.
Twenty largest registered capital bond holders as at 30 June 2021:
BONDHOLDER
NUMBER OF
BONDS HELD
PERCENTAGE OF
BONDS HELD
Forsyth Barr Custodians Limited <1-CUSTODY>31,688,00010.31%
FNZ Custodians Limited24,356,0007.93%
Custodial Services Limited <A/C 3>19,418,0006.32%
Custodial Services Limited <A/C 4>19,021,0006.19%
Custodial Services Limited <A/C 2>15,940,2005.19%
JBWere (NZ) Nominees Limited <NZ RESIDENT A/C>12,615,0004.11%
Custodial Services Limited <A/C 1>7,914,0002.58%
Custodial Services Limited <A/C 18>7,813,0002.54%
Investment Custodial Services Limited <A/C C>6,236,0002.03%
Hobson Wealth Custodian Limited <RESIDENT CASH ACCOUNT>6,015,0001.96%
Masfen Securities Limited5,980,0001.95%
Forsyth Barr Custodians Limited <ACCOUNT 1 E>4,586,0001.49%
Citibank Nominees (New Zealand) Limited – NZCSD <CNOM90>4,450,0001.45%
Tappenden Holdings Limited3,856,0001.26%
NZPT Custodians (Grosvenor) Limited – NZCSD <NZPG40>3,016,0000.98%
Francis Horton Tuck + Catherine Ann Tuck <PUKETIHI A/C>2,300,0000.75%
Custodial Services Limited <A/C 16>2,166,0000.71%
Fletcher Building Educational Fund Limited2,000,0000.65%
National Nominees Limited – NZCSD <NNLZ90>1,980,0000.64%
FNZ Custodians Limited <DRP NZ A/C>1,732,0000.56%
183,082,20059.60%
103
Creating a new energy future – a bold vision
Bondholder statistics continued
3.45% Senior retail bonds
RANGE
NUMBER OF
BONDHOLDERS
PERCENTAGE OF
BONDHOLDERS
NUMBER OF
SECURITIES HELD
PERCENTAGE OF
SECURITIES HELD
5,000 – 9,9999714.10%592,0000.24%
10,000 – 49,99944264.24%8,920,0003.57%
50,000 – 99,999679.74%4,136,0001.65%
100,000 – 499,999446.40%7,862,0003.14%
500,000 – 999,99981.16%6,199,0002.48%
1,000,000 plus304.36%222,291,00088.92%
688100.00%250,000,000100.00%
Twenty largest registered senior bond holders as at 30 June 2021:
BONDHOLDERBONDS HELD
PERCENTAGE OF
BONDS HELD
Forsyth Barr Custodians Limited <1-CUSTODY>37,097,00014.84%
FNZ Custodians Limited27,168,00010.87%
Custodial Services Limited <A/C 4>20,755,0008.30%
National Nominees Limited – NZCSD <NNLZ90>20,697,0008.28%
HSBC Nominees (New Zealand) Limited O/A Euroclear Bank –
NZCSD <HKBN95>15,000,0006.00%
Custodial Services Limited <A/C 2>11,751,0004.70%
Custodial Services Limited <A/C 3>10,888,0004.36%
Citibank Nominees (New Zealand) Limited – NZCSD <CNOM90>9,380,0003.75%
BNP Paribas Nominees (NZ) Limited – NZCSD <BPSS40>9,229,0003.69%
HSBC Nominees (New Zealand) Limited – NZCSD <HKBN90>7,820,0003.13%
Custodial Services Limited <A/C 1>6,852,0002.74%
Generate Kiwisaver Public Trust Nominees Limited
<NZCSD> <NZPT44>6,361,0002.54%
Custodial Services Limited <A/C 18>4,706,0001.88%
Adminis Custodial Nominees Limited4,000,0001.60%
Hobson Wealth Custodian Limited <RESIDENT CASH ACCOUNT>3,772,0001.51%
Investment Custodial Services Limited <A/C C>3,726,0001.49%
Custodial Services Limited <A/C 16>2,990,0001.20%
JBWere (NZ) Nominees Limited <NZ RESIDENT A/C>2,882,0001.15%
Mint Nominees Limited – NZCSD <NZP440>2,875,0001.15%
Forsyth Barr Custodians Limited <ACCOUNT 1 E>1,883,0000.75%
209,832,00083.93%
VECTOR ANNUAL REPORT 2021 /
104
Statutory Information
Shareholder statistics
Twenty largest registered shareholders as at 30 June 2021:
SHAREHOLDER
ORDINARY
SHARES HELD
PERCENTAGE
OF ORDINARY
SHARES HELD
Entrust751,000,00075.10%
Custodial Services Limited <A/C 4>16,000,2951.60%
Citibank Nominees (New Zealand) Limited – NZCSD
<CNOM90>14,520,7681.45%
Custodial Services Limited <A/C 3>11,742,0531.17%
Custodial Services Limited <A/C 2>9,321,3440.93%
Accident Compensation Corporation – NZCSD <ACCI40>8,756,0130.88%
Hobson Wealth Custodian Limited <RESIDENT CASH ACCOUNT>7,552,0080.76%
Generate Kiwisaver Public Trust Nominees Limited
<NZCSD> <NZPT44>6,855,0700.69%
JBWere (NZ) Nominees Limited <NZ RESIDENT A/C>5,916,2030.59%
FNZ Custodians Limited5,285,6420.53%
Custodial Services Limited <A/C 18>5,131,8530.51%
HSBC Nominees (New Zealand) Limited A/C State Street –
NZCSD <HKBN45>4,709,9670.47%
JPMorgan Chase Bank NA NZ Branch-Segregated
Clients ACCT – NZCSD <CHAM24>4,433,0270.44%
New Zealand Depository Nominee Limited <A/C 1 CASH
ACCOUNT>4,295,3000.43%
HSBC Nominees (New Zealand) Limited – NZCSD <HKBN90>4,004,0540.40%
Custodial Services Limited <A/C 1>3,441,6590.34%
National Nominees Limited – NZCSD <NNLZ90>3,290,9160.33%
ANZ Custodial Services New Zealand Limited – NZCSD <PBNK90>2,649,4410.27%
Forsyth Barr Custodians Limited <1-CUSTODY>2,526,7740.25%
Custodial Services Limited <A/C 16>2,194,5950.22%
873,626,98287.36%
Substantial product holders as at 30 June 2021:
SHAREHOLDER
NUMBER OF
RELEVANT
INTEREST
VOTING
PRODUCTS
HELD
PERCENTAGE
OF VOTING
PRODUCTS
HELD
Entrust 751,000,00075.10%
Alastair Bell, Michael Buczkowski, William Cairns, Paul Hutchison and Karen Sherry are the
registered holders of the shares held by Entrust..
105
Creating a new energy future – a bold vision
Shareholder statistics continued
As at 30 June 2021, voting products issued by Vector Limited totalled 1,000,000,000
ordinary shares.
Ordinary shares distribution as at 30 June 2021:
RANGE
NUMBER OF
SHAREHOLDERS
PERCENTAGE OF
SHAREHOLDERS
NUMBER OF
SHARES HELD
PERCENTAGE OF
SHARES HELD
1 – 4996,19221.04%1,924,4820.19%
500 – 9993,10810.56%2,418,8330.24%
1,000 – 4,99914,93350.75%27,008,9952.70%
5,000 – 9,9992,5788.76%17,272,0891.73%
10,000 – 49,9992,3638.03%42,623,0474.26%
50,000 – 99,9991470.50%9,308,7340.93%
100,000 plus1060.36%899,443,82089.95%
29,427100.00%1,000,000,000100.00%
Analysis of shareholders as at 30 June 2021:
SHAREHOLDER TYPE
NUMBER OF
SHAREHOLDERS
PERCENTAGE OF
SHAREHOLDERS
NUMBER OF
SHARES HELD
PERCENTAGE OF
SHARES HELD
Entrust10.00%751,000,00075.10%
Companies9173.12%12,437,0251.24%
Individual Holders16,05954.57%52,727,6305.27%
Joint8,56229.10%40,180,4984.02%
Nominee Companies2850.97%133,855,35013.39%
Other3,60312.24%9,799,4970.98%
29,427100.00%1,000,000,000100.00%
The following current directors of the parent are holders (either benef icially or non-benef icially) of
Vector Limited ordinary shares as at 30 June 2021:
DIRECTOR
NUMBER
OF SHARES
M Buczkowski1,322
A Carter (as a shareholder of Loughborough Investments Limited)20,000
J Mason (as a trustee of the Trumbull Trust)33,500
Alastair Bell, Michael Buczkowski, William Cairns, Paul Hutchison and Karen Sherry are the
registered holders of the 751,000,000 ordinary shares held by Entrust. Alastair Bell and Michael
Buczkowski are directors of Vector Limited.
The following disclosures are made pursuant to section 148 of the Companies Act 1993, in relation
to dealings during the year ended 30 June 2021 by directors of Vector Limited in the ordinary
shares of Vector Limited:
There were no disposals of relevant interests.
Acquisitions of relevant interests – Vector Limited ordinary shares:
DIRECTOR
NATURE OF
RELEVANT
INTEREST
DATE OF
ACQUISITION
CONSIDERATION
PAID (PER
SHARE)
NUMBER
OF SHARES
IN WHICH
RELEVANT
INTEREST
ACQUIRED
J Mason (as a Trustee of the
Trumbull Trust)
Benef icial9 September
2020
$4.5115,000
VECTOR ANNUAL REPORT 2021 /
106
Financial Calendar
Financial Calendar
Financial calendar
2021
Final dividend paid 16 September
Annual meeting 29 September
2022
First quarter operating statistics October
Second quarter operating statistics January
Half year result and interim report February
Interim dividend* April
Third quarter operating statistics April
Fourth quarter operating statistics July
Full year result and annual report August
Final dividend* September
* Dividends are subject to Board determination.
Investor information
Ordinary shares in Vector Limited are listed and quoted on the New Zealand Stock Market (NZSX) under the company code VCT.
Vector also has capital bonds and unsubordinated f ixed rate bonds listed and quoted on the New Zealand Debt Market (NZDX).
Current information about Vector’s trading performance for its shares and bonds can be obtained on the NZX website at
www.nzx.com. Further information about Vector is available on our website www.vector.co.nz.
Directory
Registered office
Vector Limited
101 Carlton Gore Road
Newmarket
Auckland 1023
New Zealand
Telephone 64-9-978 7788
Facsimile 64-9-978 7799
www.vector.co.nz
Postal address
PO Box 99882
Newmarket
Auckland 1149
New Zealand
Investor enquiries
Telephone 64-9-978 7735
Email: investor@vector.co.nz
This annual report is dated
23 August 2021 and signed
on behalf of the Board by:
Jonathan Mason Dame Paula Rebstock
Chair Director
insight
creative.co.nz
VEC229
Creating a new energy future
VECTOR.CO.NZ
---
•
•
•
•
•
•
1,294.0
490.0
488.7
97.3
397.3
165.0
1,279.3
513.5
529.5
194.6
499.1
167.5
RevenueAdjusted EBITDACapital ExpenditureNet ProfitOperating Cash FlowFull Year Dividend
FY21 FINANCIAL PERFORMANCE ($M)
FY20
FY21
6.00
6.506.506.506.50
6.75
7.00
7.25
7.507.50
7.75
8.00
8.258.258.258.25
6.00
6.50
6.75
7.25
7.50
7.50
7.50
7.75
7.75
8.00
8.00
8.00
8.00
8.258.25
8.50
FY06FY07FY08FY09FY10FY11FY12FY13FY14FY15FY16FY17FY18FY19FY20FY21
Dividend (cents per share)
InterimFinal
•
•
−
−
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
490.0
513.5
+13.1
-6.5
+16.8
+0.1
FY2020Regulated NetworksGas TradingMeteringCorporate and Other*FY2021
FY21 ADJUSTED EBITDA MOVEMENT ($M)
97.3
194.6
+32.0
+16.9
+26.0
-5.3
+12.9
+14.8
FY2020Prior year
impairment
EarningsCapital
Contributions
Depreciation and
amortisation
InterestOtherFY2021
MOVEMENT IN NET PROFIT AFTER TAX ($M)
$317.1m
65%
$8.2m
2%
$133.3m
27%
$30.1m
6%
$314.7m
60%
$11.2m
2%
$165.3m
31%
$38.3m
7%
GROSS CAPEX BY SEGMENT
Regulated Networks
Gas Trading
Metering
Corporate and Other
FY20
FY21
272.8
305.1
309.7
345.8
402.3
407.0
49.8
62.3
71.5
79.3
86.4
122.5
FY16FY17FY18FY19FY20FY21
Net capexCapital contributions
488.7
425.1
381.2
367.4
322.6
•
•
•
529.5
2,6252,7451,9332,2202,3782,6282,8823,073
52.5%
53.6%
43.7%
47.1%
48.8%
52.2%
55.2%
56.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Jun 14Jun 15Jun 16Jun 17Jun 18Jun 19Jun 20Jun 21
NET ECONOMIC DEBT & GEARING ($M)
Net economic debt ($m)Gearing
•
•
•
FY22FY23FY24FY25FY26FY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
Debt Maturity Profile $m
Bank FacilitiesUSPP
Wholesale BondsPerpetual Capital Bonds
Retail Bonds
Vector holds a BBB credit rating by Standard and Poor’s and a Baa1 rating by Moody’s
337.6
350.7
-28.0
16.4
22.8
1.9
FY2020Lower electricity
prices
Other electricity
revenue impacts
LRRs retainedOtherFY2021
ADJUSTED EBITDA MOVEMENT ($M)
•
•
•
•
−
−
6,202
7,813
8,526
9,138
11,135
11,000
12,231
14,995
3,107
2,821
3,323
3,515
3,165
3,322
3,201
3,844
FY14FY15FY16FY17FY18FY19FY20FY21
NEW CONNECTIONS
ElectricityGas
•
•
•
FY13FY14FY15FY16FY17FY18FY19FY20FY21
ReplacementGrowth
FY13FY14FY15FY16FY17FY18FY19FY20FY21
DPP1DPP2DPP3
Electrcity WACCGas WACC
•
•
33.9
27.4
-6.7
0.7
1.5
-1.9
-0.1
FY2020Sale of KGTPImproved
Natural gas
margins
Improved LPG
margins
Lower Liquigas
margins
OtherFY2021
ADJUSTED EBITDA MOVEMENT ($M)
375
364
358
352
320
302
266
229
203
158
305
338
300
301
284
248
240
200
185
155
FY21FY20FY19FY18FY17FY16FY15FY14FY13FY12
BOTTLE SWAP VOLUMES (‘000 9kg cylinders)
H1H2
•
̅
•
•
−
−
−
−
•
•
•
154.8
171.6
12.8
4.0
0.0
FY2020Advanced Meters in
Australia
Advanced Meters in
NZ
OtherFY2021
ADJUSTED EBITDA MOVEMENT ($M)
•
•
−
−
−
−
•
̅
̅
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
AustraliaNZ
•
•
•
•
•
FY2017FY2018FY2019FY2020FY2021
Regulated Networks
361.2358.6367.0337.6350.7
Gas Trading
36.934.431.333.927.4
Metering
113.3124.7138.7154.8171.6
Corporate and Other
(37.0)(47.6)(51.2)(36.3)(36.2)
Total Group
474.4470.1485.8490.0513.5
Adjusted EBITDA (Continuing Operations Only)
INCOME STATEMENT
2021
$m
2020
$m
Change
%
AdjustedEBITDA513.5490.0+4.8
Netprofitfortheperiod194.697.3+100.0
CASH FLOW
2021
$m
2020
$m
Cashavailableforgrowthanddebtrepayment134.735.8
Predebtfinancingcash(outflow)/inflow(178.1)(245.9)
Increase/(decrease)incash(10.9)0.7
Year ended 30 June
Reported
segment EBITDA
less third-party
contributions
and other
movements
Segment
adjusted EBITDA
Reported
segment EBITDA
less third-party
contributions
and other
movements
Segment
adjusted EBITDA
Unregulated Segments199.0-199.0188.7-188.7
Regulated Networks471.8(121.1)350.7423.3(85.7)337.6
TOTAL REPORTED SEGMENTS670.8(121.1)549.7612.0(85.7)526.3
Corporate and Other *(36.5)0.3(36.2)(38.2)1.9(36.3)
TOTAL634.3(120.8)513.5573.8(83.8)490.0
Definitions
EBITDA
Adjusted EBITDA
GAAP toNon-GAAP reconciliation
EBITDA and Adjusted EBITDA
20212020
EBITDA634.3573.8
AdjustedEBITDA
513.5490.0
Supplementary Annual Information
Regulated Networks Adjusted EBITDA
$mFY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Electricity347.1312.8309.9325.2317.7318.7329.9299.9312.2
Gas Distribution Auckland44.838.339.943.443.540.037.037.738.4
Total391.9351.1349.8368.5361.2358.6367.0337.6350.7
FY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Gas Distribution Auckland Volumes (PJ)
PJsFY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Q13.8 3.9 4.0 4.3 4.3 4.4 4.4 4.4 4.3
Q23.1 3.0 3.3 3.3 3.3 3.3 3.4 3.4 3.2
Q32.4 2.7 2.7 2.7 2.9 2.9 2.9 2.9 2.9
Q43.5 3.4 3.4 3.6 3.8 3.9 3.8 3.5 3.6
Total12.9 13.0 13.4 13.9 14.3 14.5 14.4 14.3 14.1
Gross New ICPs
# of ICPs (gross)FY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Q1- - 807 831 982 875 800 832 959
Q2- - 743 707 925 781 869 1,031 1,068
Q3- - 605 948 842 481 705 784 905
Q4- - 666 837 766 1,028 948 554 912
Total2,464 3,107 2,821 3,323 3,515 3,165 3,322 3,201 3,844
Data not available prior to FY15
347.1
312.8
309.9
325.2
317.7
318.7
329.9
299.9
312.2
44.8
38.3
39.9
43.4
43.5
40.0
37.0
37.7
38.4
FY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Adjusted EBITDA
ElectricityGas Distribution Auckland
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
FY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Gas Distribution Volumes (PJ)
Q1Q2Q3Q4
Net New ICPs
# of ICPs (net)FY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Q1620 524 839 616 878 872 560 674 624
Q2415 566 713 727 718 728 700 778 848
Q3508 558 584 809 626 468 378 484 582
Q4377 892 645 605 126 491 775 382 458
Total1,920 2,540 2,781 2,757 2,348 2,559 2,413 2,318 2,512
Total ICPs
# Total ICPsFY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Q194,944 96,768 99,623 102,181 105,200 107,542 109,789 112,316 114,584
Q295,359 97,334 100,336 102,908 105,918 108,270 110,489 113,094 115,432
Q395,867 97,892 100,920 103,717 106,544 108,738 110,867 113,578 116,014
Q496,244 98,784 101,565 104,322 106,670 109,229 111,642 113,960 116,472
Gas Distribution Lines Revenue
$mFY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
H128.327.526.128.528.927.525.525.725.9
H224.419.523.423.625.021.721.622.022.8
Lines Revenue52.747.049.552.253.949.247.147.748.7
-
100
200
300
400
500
600
700
800
900
1,000
FY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Net Gas ICPs
Q1Q2Q3Q4
96,244
98,784
101,565
104,322
106,670
109,229
111,642
113,960
116,472
FY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Total Gas ICPs as at full year
52.7
47.0
49.5
52.2
53.9
49.2
47.1
47.7
48.7
FY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Gas Distribution Lines Revenue $m
Gas Distribution Adjusted EBITDA
$mFY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
H124.523.121.423.823.522.620.820.921.1
H220.215.218.519.520.017.416.316.917.4
Total44.838.339.943.443.540.037.037.838.4
Capital Contributions
$mFY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Electricity25.431.636.943.557.564.172.979.3111.1
Gas2.33.13.05.43.76.16.16.410.1
TOTAL27.834.739.948.961.270.278.985.7121.1
Capex
$mFY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Electricity150.2162.3154.4179.4187.6219.1237.6295.9287.9
Gas14.221.416.021.623.026.723.321.226.8
TOTAL164.4183.7170.4201.0210.6245.8260.9317.1314.7
24.5
23.1
21.4
23.8
23.5
22.6
20.8
20.9
21.1
20.2
15.2
18.5
19.5
20.0
17.4
16.3
16.9
17.4
FY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Gas Distribution Adjusted EBITDA $m
H1H2
25.4
31.6
36.9
43.5
57.5
64.1
72.9
79.3
111.1
2.3
3.1
3.0
5.4
3.7
6.1
6.1
6.4
10.1
FY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Capital Contributions $m
ElectricityGas
150.2
162.3
154.4
179.4
187.6
219.1
237.6
295.9
287.9
14.2
21.4
16.0
21.6
23.0
26.7
23.3
21.2
26.8
FY2013FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Regulated Capex $m
ElectricityGas
---
VECTOR LIMITED
Results announcement
Results for announcement to the market
Name of issuer VECTOR LIMITED
Reporting Period 12 MONTHS TO 30 JUNE 2021
Previous Reporting Period 12 MONTHS TO 30 JUNE 2020
Currency NEW ZEALAND DOLLAR
Amount (000s) Percentage change
Revenue from continuing
operations
$1,279,306 (1.1%)
Total Revenue $1,279,306 (1.1%)
Net profit/(loss) from
continuing operations
$193,192 102.4%
Total net profit/(loss) $193,192 102.4%
Final Dividend
Amount per Quoted Equity
Security
$0.08500000
Imputed amount per Quoted
Equity Security
$0.00997207
Record Date 9 September 2021
Dividend Payment Date 16 September 2021
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.02550000 $0.09570000
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to accompanying audited financial statements
Authority for this announcement
Name of person
authorised
to make this announcement
JOHN RODGER
Contact person for this
announcement
JOHN RODGER
Contact phone number 021 573640
Contact email address john.rodger@vector.co.nz
Date of release through MAP
24/08/2021
Audited financial statements accompany this announcement.
---
Vector Limited
Distribution Notice
Section 1: Issuer information
Name of issuer VECTOR LIMITED
Financial product name/description ORDINARY SHARES
NZX ticker code VCT
ISIN (If unknown, check on NZX
website)
NZVCTE0001S7
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies
Record date 09/09/2021
Ex-Date (one business day before the
Record Date)
08/09/2021
Payment date (and allotment date for
DRP)
16/09/2021
Total monies associated with the
distribution
$85,000,000
Source of distribution (for example,
retained earnings)
RETAINED EARNINGS
Currency NEW ZEALAND DOLLARS
Section 2: Distribution amounts per financial product
Gross distribution $0.09497207
Gross taxable amount $0.09497207
Total cash distribution $0.08500000
Excluded amount (applicable to listed
PIEs)
$0.00000000
Supplementary distribution amount $0.00452514
Section 3: Imputation credits and Resident Withholding Tax
Is the distribution imputed Partial imputation
If fully or partially imputed, please
state imputation rate as % applied
10.5%
Imputation tax credits per financial
product
$0.00997207
Resident Withholding Tax per
financial product
$0.02136872
Section 4: Distribution re-investment plan (if applicable)
NOT APPLICABLE
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
JOHN RODGER
Contact person for this
announcement
JOHN RODGER
Contact phone number
021 573 640
Contact email address John.rodger@vector.co.nz
Date of release through MAP
24/08/2021
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.