Table of Contents
What changed
Revenue slipped 1.1% to $1.3b, yet adjusted EBITDA rose 4.8% to $513.5m and PBT jumped 67.6% to $255.6m. Reported NPAT almost doubled to $193.2m from $97.3m. Segment mix did most of the work: Regulated networks revenue edged up to $767.5m (60.0% of group, from 58.8%) while segment result rose to $337.3m from $292.1m, lifting inferred margin to ~43.9% from ~38.4%. Gas Trading revenue fell to $209.0m from $256.4m (share down 3.5pp) with segment profit down to $15.4m. Metering gained share and held a ~36.0% margin.
On the balance sheet, gross borrowings declined to $3.1b from $3.1b and cash fell to $17.4m from $28.3m, leaving net debt at $3.1b. Net debt/EBITDA improved to ~5.9x from ~6.3x. Capex rose to $529.5m (41.4% of revenue versus 37.8%). The final dividend was lifted to 8.5c (full-year 16.75c versus 16.5c).
What matters
- Regulated networks margin expansion is the core story. The ~5.5pp lift in segment margin on near-flat revenue drove the bulk of the PBT uplift and tightens Vector's dependency on this one segment, which now contributes roughly 78% of disclosed segment profit.
- The NPAT optic overstates operating progress. The effective tax rate fell to ~23.9% from ~36.2%, and the prior period included a disclosed $32.0m non-cash impairment. PBT growth of 67.6% is the cleaner operating read; the 98.6% NPAT gain is flattered by both effects.
- Leverage is still heavy despite directional improvement. Net debt/EBITDA at ~5.9x remains elevated, and capex intensity rose meaningfully while cash balances contracted by $10.9m. The business is investing ahead of earnings.
Expectations
No quantitative targets or forward-work disclosures were supplied, and no forward guidance is available in the materials. Seasonality context: HY21 represented 50.6% of full-year revenue, 53.3% of EBITDA and 52.3% of NPAT, so FY21 is mildly first-half-weighted rather than second-half-weighted. Against that shape, the second-half run-rate for EBITDA implies ~$239.7m, a softer pace than HY21's $273.8m — worth noting when extrapolating into FY22. The release does not support any view on multi-year trajectory beyond the observation that Regulated networks margin is the swing variable.
Quality of result
The earnings uplift is mixed in quality. The segment-margin expansion in Regulated networks appears operational and, if sustained, durable. However, the reported NPAT gain is amplified by a lower effective tax rate and a favourable comparison against a prior-period impairment, neither of which are repeatable operating effects. Operating cash flow was not disclosed in the supplied FY21 extract (prior: $397.3m), so OCF/EBITDA conversion cannot be quantified for this period — a material gap given capex rose to $529.5m. Receivable days improved slightly (17.2 vs 18.1), inventories rose 31.9% off a small base, but full working-capital movement is not reconstructible. The disclosed dividend increase is modest relative to the NPAT optics, consistent with a cautious reading of cash cover.
Unresolved
- What drove the large fall in the effective tax rate, and is it repeatable?
- What was FY21 operating cash flow, and did cash conversion keep pace with the EBITDA lift given capex at 41.4% of revenue?
- What underpinned the ~5.5pp margin expansion in Regulated networks — tariff reset effects, cost deferrals, or mix — and is it sustainable into FY22?
- Why did Gas Trading revenue drop 18.5%, and is the segment earnings base now stabilised?
- A detailed bridge from statutory profit to adjusted EBITDA is not provided in the supplied extract.
This briefing cannot assess FY21 cash conversion, free cash flow, or dividend cash cover because operating cash flow was not disclosed in the supplied data.
Key metrics
| Metric | FY21 | FY20 | Change |
|---|---|---|---|
| Revenue | $1.3b | $1.3b | -1.1% ↓ |
| EBITDA | $513.5m | $490m | +4.8% ↑ |
| Net profit after tax | $193.2m | $97.3m | +98.6% ↑ |
| Net cash inflow from operating activities | — | $397.3m | — |
| Final dividend per share | 8.5c | 8.3c | +2.4% ↑ |
| Profit before tax | $255.6m | $152.5m | +67.6% ↑ |
| Cash and cash equivalents | $17.4m | $28.3m | -38.5% ↓ |
| Total assets | $6.5b | $6.4b | +2.2% ↑ |
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Regulated networks | $767.5m | $760.9m | $337.3m | +1.2pp |
| Gas Trading | $209m | $256.4m | $15.4m | -3.5pp |
| Metering | $227m | $205.2m | $81.7m | +1.9pp |
Analytical metrics
| Metric | FY21 | FY20 | Context |
|---|---|---|---|
| PBT growth | +67.6% | — | cleaner earnings measure |
| Effective tax rate | 23.9% | 36.2% | — |
| Capex % revenue | 41.4% | 37.8% | — |
| Capex | $529.5m | $488.7m | +$40.8m |
| Debtor days | 17.2 | 18.1 | -0.9 days |
| Trade debtors | $60.2m | $64m | −$3.8m |
| Net debt | $3.1b | $3.1b | −$54.1m |
| Net debt / EBITDA | 5.90x | 6.30x | Strengthening |
| Gross borrowings | $3.1b | $3.1b | −$65m |
| ROE (annualised) | 8.3% | 4.3% | Strengthening |
| HY21 share of FY21 revenue | 50.6% | — | Other half was 49.4% |
| HY21 share of FY21 EBITDA | 53.3% | — | Other half was 46.7% |
| HY21 share of FY21 NPAT | 52.3% | — | Other half was 47.7% |
| Profit from continuing operations | $193.2m | $97.3m | +$95.9m |
This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.
Source-backed analysis from the filing set attached to this briefing.