Vector Annual Report 2020

ANNUAL REPORT 2020 The interplay of today and tomorrow.

Second to second. Decade to decade. THE INTERPLAY OF TODAY AND TOMORROW

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At Vector, the interplay of daily living, detail and foresight – now and in the future – motivates us to ensure our essential services are delivered for customers, but also that we continue to evolve to meet future challenges. Our focus is on being proactive, leading, and creating, not waiting for the future to arrive. This year, the COVID-19 lockdowns further highlighted the need for everyone who uses our services to have as close to uninterrupted supply as possible. Our people are dedicated to making that happen. We continue to lift our responsiveness to ensure our energy system operates at peak efficiency. We continue to sharpen our networks and increase new technologies. We question the rules that seem to hold energy consumers back. In the longer term, as the very nature of how customers source their power changes, we’ll be at the heart of a digital and technological revolution that will accelerate decarbonisation and see our customers empowered as never before. We have a key role to play in creating a cleaner energy future. Already, we’re engaging in new technologies, partnerships and global alliances that will redefine the possibilities in the years ahead.

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About this report

This report, dated 26 August 2020, is a review of Vector’s financial and operational performance for the year ended 30 June 2020. 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 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.

THE INTERPLAY OF TODAY AND TOMORROW

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Contents

Symphony Strategy

4

Performance snapshot

6

Chair and Group Chief Executive report

8

Chief Financial Officer report

12

Safety always

14

Our people

15

Regulated networks

16

Gas trading

18

Metering

19

Sustainability

20

Our Board

22

Our management team

24

Governance report

26

Entrust, majority shareholder of Vector

29

Joint ventures and investments

30

Operating statistics

31

Financial performance trends

32

Non-GAAP financial information

34

Financials

35

Independent auditor’s report

84

Statutory information

90

Financial calendar and directory

100

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Energy systems in New Zealand and globally are under pressure to respond to the uptake of new consumer energy technology, electrification of transport, demands for decarbonisation, increased consumption of renewable energy and energy poverty. Disruption is here, and while some energy companies choose to take a “wait and see” approach, Vector has been an active leader in the disruption for years. We have long recognised the potential benefits of energy sector transformation, and we’ve been

3. Optimise the system – leverage smart energy solutions, future focused using technology and >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104

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