Thank you. Tēnā koutou katoa.

Hello everyone, and welcome to this presentation. I'm Doug McKay, Vector's Chair.

Today we're going through Vector's results briefing for the half year ended 31 December 2025. Joining me on the call for the first time as our Group Chief Executive is Chris Blenkiron.

Pleased to have you here, Chris. We have Chief Financial Officer, Jason Hollingworth.

We'll start the presentation with comments from Chris on overall financial performance, then Jason will look at the detail. Chris will then talk about the outlook for the next 6 months, and then I will come back to talk about the dividend.

After that, we'll be happy to take your questions, and I'll now hand over to Chris to start the presentation.

Thank you, Doug. Hello everyone, and thank you for joining the call.

It's great to be speaking with you for my first market update since joining Vector in December. I'll start off by setting the context for these results.

The new regulatory period, known as DPP4, began on the 1st of April 2025. At this time, the Commerce Commission increased allowable revenue for all electricity distribution businesses in New Zealand.

The changes support the investment that's needed for the country's energy transition. Also, keep in mind that the grey bars on the slides show the impact of businesses that have now been sold, and continuing operations are shown in blue.

This is to allow for easy year-on-year comparison. With that background in mind, I'll talk through some of the top-line results.

Vector's group financial performance for this half year has been strong and in line with our expectations. Revenue for Vector Group is up 14%, driven by higher electricity revenue.

Higher revenue has flowed through to an increase in adjusted EBITDA to $240 million. This is up 19% over the same period in 2024.

Adjusted EBITDA excludes capital contributions, which are paid by new customers for their connections to the network, and is how we currently ensure that growth pays for growth, rather than costs of growth being spread across all Auckland electricity consumers. Net profit after tax was $113 million, down 4%, with the higher adjusted EBITDA offset by lower capital contributions.

Gross capital expenditure was $223 million, down 15% on the prior period. However, we do expect capital expenditure to be higher in the second half of the year than it was in the first.

In terms of regulatory quality measures, we include SAIDI minutes in our quarterly operating statistics, which were released last month. SAIDI is how electricity distribution businesses are measured by the Commerce Commission for the duration of power outages on their networks over a year.

At this stage in the regulatory year, which finishes at the end of March, we are within the regulatory limit. Our focus is on making sure every dollar we spend produces the best value possible, and keeping our charges, which are around a quarter of the total power bill, as affordable as we can.

I'll now hand over to Jason to go over the detail behind these top-line results.

Thank you, Chris. This slide shows the segment contributions towards the adjusted EBITDA figure.

Adjusted EBITDA from the electricity segment was up $48 million, reflecting that HY26 was under DPP4 and HY25 was under DPP3. Earnings for gas were flat on the prior period.

Other includes VTS, Vector Fibre, Equalise, which offers cyber services to other lines companies, and our group eliminations. It also includes a $9.3 million loss on sale from HRV, effective on 1st of August 2025.

Next slide. Net profit after tax was down $5 million or 4%.

This is down on the prior period, with the higher adjusted EBITDA being offset by the factors shown on the slide, including lower capital contributions, fair value movements on financial instruments, and tax. Gross capital expenditure has decreased from the comparable 2024 period to $223 million, and you can see here some of the detail.

Net CapEx, after deducting capital contributions, was down at $126 million. Capital contributions were down at $97 million.

The slide on group debt shows that our debt levels have remained flat, with gearing at 37%. Next slide, we'll now look at the segment performance starting with electricity.

Adjusted EBITDA for electricity was higher, as previously mentioned. The higher impact from pass-through costs is the transmission charges we collect on behalf of Transpower.

These have increased because of Transpower's own revenue reset that repriced transmission at the same time as distribution. We pass transmission costs on and recover them via our revenues.

There are also higher OpEx costs in the period linked to increased maintenance activity and also higher digital costs. Total electricity connection numbers grew by 1.3%.

Looking at gas, adjusted EBITDA for gas distribution was flat at $24 million. There was slightly higher revenue in the period offset by slightly higher costs.

Gas distribution volume was down 4.5% compared to the prior period due to lower demand from the residential, industrial, and commercial sectors. There has been a 0.4% in total gas connections over the period.

These results are consistent with our most recent forecasts for the gas network, which were published last year in our Gas Asset Management Plan. We have recently submitted on the Commerce Commission's DPP4 draft gas decision.

This is the 5-year reset for gas distribution networks, with the Commission's final decision due in May 2026. We welcome the Commission's intention to continue to accelerate depreciation given the heightened uncertainty over the long-term nature of gas in New Zealand.

Given the difficulty in accurately forecasting gas volumes for the next 5 years, which is a fundamental input into setting a price cap, our submission advocates for a move away from a price cap to an approach that would share volume forecast risk between both the network owners and consumers. The Commerce Commission is still considering its final decision, we don't yet know what this will mean for consumer prices.

Pipeline costs are just one component of a gas bill, however. Most forecasts show that over the long term, these will rise.

That's why we're advocating for a managed transition and making sure we recover costs fairly now. This also means keeping the gas network safe and reliable while it's still in use, and planning for decommissioning when these pipes reach the end of their life.

Next slide looks at Bluecurrent. Our investment in Bluecurrent continues to perform in line with our expectations.

Year-on-year, Bluecurrent has increased its revenue, resulting in higher EBITDA, and this is flowing through to higher distributions. In this period, we received $26.6 million of distributions in relation to our 50% shareholding.

I'll now hand back to Chris.

Thanks, Jason. For the 2026 full-year results, we are forecasting adjusted EBITDA to be within our guidance range of $470 to $490 million.

We're now forecasting gross capital expenditure within the range of $500 to $540 million. This forecast represents an increase over our full-year 2025 capital investment, and at around half a billion dollars, shows our commitment to significant investment in Auckland's critical energy infrastructure.

We're forecasting capital contributions within the range of $180 to $215 million for the full year. We've tightened the ranges for gross capital expenditure and capital contributions because we now have greater visibility of project timelines through to the end of the reporting period.

Thank you to all of the Vector people, our field partners, and suppliers, who work incredibly hard for our customers and who delivered these results. We know that for our energy system to be at its best and most affordable, the whole sector needs to coordinate well and work in concert with each other.

We're committed to doing this to support the region's role in our national economy and to help our country meet our energy aspirations. I'll now hand back to Doug.

Thank you, Chris and Jason. The board has determined an interim dividend of 12.5 cents per share with no imputation.

Now that brings us to the end of our presentation, but just before we move to questions, I'd like to thank Chris and his executive team and everyone else at Vector, plus our field service providers and call centre, for their hard work over the period to deliver for Vector customers and shareholders. Chris, Jason, and I are now happy to take any questions.

Oh, hi team. Can you hear me okay?

We can, Grant. Yep.

Oh, great. Thanks for the presentation and welcome, Chris.

Just around a few for me. The electricity business was a beat on my numbers at both revenue and EBITDA.

I think the revenue was up circa 28%, which is a touch higher than the Mar uplift that I was expecting. Were there any sort of one-offs in that result in terms of inflation catch-up and the like that we've seen in the past?

Grant. There is still a wash-up balance that we were able to recover in this period, so that is in there as well.

That's coming to an end because it has a 2-year lag.

Yeah. Okay.

Do you have that number to hand as to roughly how much that was?

I don't have it to hand, but I can look it up and get it to you, yep.

Okay. That's great.

Thank you. Okay.

No, that's good. Then so the guidance has been held, and we've also got that $9.3 million loss in there.

With guidance being held, was that guidance already factoring in the $9.3 million loss and the wash-up balance that you're going into that number when you set the guidance at the full year?

Look, I think to be honest, probably not, Grant. I think we're at the probably higher end of that number.

That loss turned up after we set that guidance, so, yeah.

Yeah. Okay.

So It's dropped us in the range. The wash-up balance was probably known, that's calculable.

Is this effectively a $9.3 million upgrade to the guidance range?

It puts us at the top end of that guidance. We're now saying, would have been at the top end of the guidance.

We've held the range, but I think if we hadn't had the HRV situation, we would have probably been guiding to the top end of the range rather than sort of leaving the range as it is.

Okay. No, that's useful.

Then just around the dividend payout, it was a touch lower than I had in my forecast. I was forecasting 13 versus your 12.5.

Appreciate it's a free cash flow measure, but obviously if we just think about the EBITDA for a second, that's up quite materially. How did the board go about think about setting the 1H dividend?

Then what are the sort of swing factors for the full-year dividend? What we might to expect to see there?

It's a good question. To be honest, we didn't pay any attention to and we haven't with the interim in terms of its percentage relative to the 70% of the policy, and I understand from Jason this morning it's lower than that

For the half result.

for the half result. We don't look at the half in that respect.

It's the full year that we will pay consideration to the 70% minimum. We don't have any reason to think we won't be well within the range at the year end.

Look, part of the decision-making was what was it last year in the interim and what should it be this year, given EBITDA is strong, as you say. We uplifted it by half a cent, and we sort of thought, well, that's a good indication of how confident we feel about the way things are tracking.

If you looked at it strictly versus the policy, but we don't think about the half year in that respect, we could have gone a bit higher, but no, we haven't.

Okay. I guess my full year is 27 versus the 25 last year based on a free cash flow calculation.

I guess what I'm hearing is that, yep, it was a touch low on the free cash flow side of things. If everything sort of plays out with respect to guidance and everything else, would it be reasonable to assume that there is a slightly stronger uplift in the second half if everything plays out according to plan?

If everything plays out, yes, it will. Yeah.

I wouldn't necessarily agree with you the 27, but you're at the top end of what I'm thinking of as chairman anyway, and I'm not speaking for the board at the moment, but we'll see.

Sure, sure. Indeed.

Then last one for me. Just I think last year you'd provided guidance on Bluecurrent distributions.

Do you have any thoughts on that? I see we've got the half-year figure of 26.6.

Do you have a full-year figure in mind?

We do have a number, I don't have it to hand, but you can see the year-on-year sort of increase for Bluecurrent period-on-period. I think that we expect that to continue into the second half.

I think last period we got $23.4 million, this period we're getting $26.6 million, an uplift. I expect that to continue as they continue to deploy meters.

Yep. Okay.

No, that's great. Thank you very much.

Thanks for your questions. Very good.

Morning, Doug, Chris, and Jason. Just a couple of questions from me.

First one, just looking at the electricity OpEx line. There was a reasonable increase, I guess, relative to first half last year, but even relative to the second half last year.

Should we be thinking is that sort of the normal half-year run rate for OpEx on electricity going forward, or are there some sort of one-offs in there that might pull it back for the second half and later periods?

I think there are some one-offs in that, Andrew. I don't think it's necessarily coming down, but I don't think it's going to keep lifting at that rate.

There has been, I guess, an increase in our maintenance spend in this half that's probably going to continue with some changes in standards and just some extra activity that we've been doing. We also have a couple of large projects underway that, under these new accounting rules, now have to actually be expensed rather than capitalized, our digital costs are sort of running at a higher rate, which I think is probably going to continue while these projects are recurring.

Yeah. It's mainly those two areas that are causing that increase: maintenance spend, which is going to continue, and this lumpy digital spend around a couple of key projects that are cloud-based and, therefore, have to be expensed.

Yeah. Yeah.

Okay. Just a follow-on question around the metering.

I noticed, I think, that that's been refinanced, expecting lower interest costs going forward. All other things being equal, we should expect that to help increase distributions back to Vector from the metering?

Yep, they've refinanced at lower interest rates. Their NPAT number is lower because they've had to write off the arrangement fees from that original facility, but sort of that's non-cash, if you like.

The actual underlying cash flow is better because they've got lower interest rates, I think by circa 30 basis points from memory, it's a reasonable reduction.

Yeah. Okay.

Cool. Last question from me was just whether there was sort of a little bit of an update on the strategic review of the fibre business.

Andrew, no real update. That process continues, and just a reminder that there's no guarantee that the outcome of that strategic review would result in a sale, but the process does continue.

Great. Thank you.

That's all from me.

Thanks, Andrew.

Morning, everyone. Just a couple from me as well.

I just noticed in the half-year cash flow statement, looked as though there was some kind of positive working capital movement. That was one of the reasons why, if you did do a dividend payout ratio calculation was a little bit lower.

I'm assuming these just timing issues around that, Jason, and that will probably reverse in the second half?

That's right. There's nothing there that I'm aware of that's structural, I think it's timing, yep.

Then just on the dividend, coming back to this kind of 27 cents, I think we've got that in our model as well, and we're assuming that the payout ratio declined from last year, I think from last year, from memory, was 85%. We've got that coming down.

Just wanted to see if that was still the thinking. I think the rationale at the last result was just some uncertainty around what EA is doing in terms of those capital contributions.

I just wanted to check if that was still the thinking from the board?

It'll be lower than 85% this time round.

In fact, I think last year

we said,

"Don't lock that in because that was a sort of one-off to do with sort of transitioning from DPP3 to DPP4 and the fact we only had a quarter in our results." I think we said, "Look, we're paying up at this level, but Don't bake that into your future numbers," yeah.

Maybe just a question on CapEx. Obviously, it was a bit weaker in the first half and, obviously, you've tightened the range up in the full year.

Still a large number. What's the kind of reason for the CapEx number kind of coming down?

Phil, there's a couple of reasons. One is some customer projects were sort of pushed out.

It's always difficult with these lumpy capital projects, as you'd know, to get the timing right. A few of those have been pushed further out, and that's probably the primary reason.

We do have some confidence going to the second half that that runway will certainly pick up.

Is that data centers or you can't really comment?

We can't comment on the specific projects, but there's a number of them.

Then maybe just last question from me on metering. Noticed that Neil Williams has left as CEO, just wondering if there's any reason for that and whether you've recruited a new CEO for Bluecurrent?

Not yet, we haven't recruited yet. The Bluecurrent board is managing that process, and we have two representatives on that board looking after our interests: Dame Paula Rebstock and Simon Mackenzie, and they're in the process of working with a headhunter now to find the right replacement.

Great. Awesome.

You may not know the answer to this question, but I just noticed in the AFR, there was obviously one of the Bluecurrent competitors, I think, potentially a transaction happening there. Just wondering if there's any valuation read-through that you might want to comment on?

Are you talking Plus ES?

Yeah.

Look, I can't quote the numbers, but I did remember thinking the expectations on value looked very, very high. I didn't do an earnings multiple or anything, I think it was $3 billion or something, it was a massive number, so, obviously we're trying to be involved in that process.

We're interested strategically in increasing our participation in that market, increasing our number of meters. We'll just have to see how that plays out.

If people are at that sort of number, that's a very big number.

Right. Then maybe just very very last one just on the fibre process.

Is there any kind of timetable there? When you say we're not guaranteed of sale, is there any time when bids are due or whereabouts are we in that process?

Hey,

there is a timetable, Phil, and I think we'll know by year end whether we've got a transaction or not. I guess, we won't quite know when that completes, it'll depend on what the terms and conditions are, but we'll certainly I think have landed a decision by 30 June one way or the other.

Okay. Great.

Awesome. Thank you.

Thanks, Phil.

Oh, morning, everybody, and welcome, Chris. All of my questions have actually been posed.

Perhaps just a general one for you, Chris. I know it's early days.

I know we'll be meeting with you, I believe, the 1st of March as a community. Any sort of initial observations on the state of Vector in terms of assets, people, and strategic direction and where you may, I suppose, differ from sort of the prior thinking, I guess?

Sure. Simon's left a very strong and good business operating here, Stephen.

We've got some very strong people in the right roles doing some really good work. In fact, I think some of the credit that we all get to keeping the lights on and the infrastructure going in Auckland is probably something that we should get.

It's in a strong state. In terms of the strategic direction, I've not contemplated any change of strategic direction.

The Symphony strategy remains as focused as it has. I think what we'll continue to do is an ongoing test against the external environment, whether that's the customer side, the regulatory settings, decarbonisation pace, technical, we'll continue to test those settings.

My focus at the moment is absolutely on sort of disciplined execution on the work that we're doing as we go into the second half. It's great to join a great business in a really strong shape.

Very good. Thanks, Chris, and look forward to catching up.

Looking forward to it. Thanks, Stephen.

Oh, hi, team. Another one from me.

Just around the meters rollout in Australia. Obviously, the regulatory bodies over there have, I'm not sure exactly what the terminology is, but effectively mandated 100% penetration by 2030.

Is there any sort of commentary you can give around Bluecurrent in terms of either contracts signed or thoughts around the level of participation in that rollout at this stage?

I don't have any updates, Grant, other than we had a board meeting here yesterday, and Paula was telling me that things are tracking as they had indicated they would be, the Bluecurrent board. There's no surprises there.

There's incremental increases in our metering network. We haven't had any acquisitions of packages of meters or anything like that in this period.

It's all organic at this point in time, and it's steady.

Okay. How do you just generally for the market as a whole, how do you see that rollout playing out?

Obviously, there was big contracts signed here for the rollout in New Zealand. Is it a similar sort of a process?

Is that what you're expecting over the next wee while, and you're sort of actively participating in those discussions?

Yes. Those contracts tend to be quite long term.

Once you settle into them, you've got a good tenure there mostly. You're not sort of every year or two into another process on those same contracts.

They require a lot of capital investment. They require a lot of systems and process changes and interactions.

It doesn't move around a lot. Once you land them, it's a reasonably settled market.

I I guess the question I'm sort of asking is, I think, rough guess there was sort of 5 million meters to go or something. You might tell me that's wrong.

Like do you expect to see sort of like, million a million meters contract for a rollout of a million meters signed in big chunks like that? Is that kind of how you expect this to play out?

The retailers typically bundle them up into reasonably large blocks, Grant, and then sort of tender them out. We have contracts in place with the existing retailers, and there are still some contracts being let, but we have a number already under contract.

It's competitive, as you'd imagine. Telstra, Plus ES are the other two big players, and these retailers are sort of getting a sharp price out of the market.

That's it. We've got a number already under contract that we're executing on.

New Zealand's deployed, there's not so much going on here. It's really an Australian growth sort of situation.

Once you've won those contracts, you still have to execute on them, right? There's always the risk that if you don't deliver, because there's a lot of competition for field service people to install all these meters.

It's one thing to win the contract, then you've actually got to execute on it. We're seeing a bit of that going on at the moment as well over there where some others potentially aren't quite performing.

These contract package sizes are often in the order of 200,000 to 300,000 meters.

That's right.

Yeah. Okay.

No, that is useful. Thanks very much.

Thank you. If there aren't any further questions, we'll end the teleconference and the webcast.

If analysts and investors have further questions, please feel free to contact Jason. For the media, please contact Matt Britton or call our usual media phone number.

Thank you, everyone, for joining us.