Good afternoon to you all, and welcome to this event, the first in-person Vector AGM in three years. My name is Jonathan Mason, and I am Vector's Chair. I'd like to acknowledge Ngāti Whātua Ōrākei as mana whenua for Central Auckland, where we are today, and also thank them for their partnership over the past two years as Vector worked closely with them to support COVID-19 vaccination efforts. They're very supportive of Vector staff to including like essential control room people in getting vaccinations when they were hard to get. Thank you, Ngāti Whātua. As we have a quorum and it's 2:00 PM, I'll now declare open the 2022 annual meeting of Vector Limited shareholders. Today's meeting is a hybrid meeting, with shareholders attending either here in the room or online.
We hope this format provides our shareholders with more convenience while also allowing them to join proceedings in a way they're comfortable with. It's nice to be able to offer this choice, as I mentioned earlier, after two years of online-only meetings. A hybrid meeting does come with some special instructions to make sure everyone, whether in person or online, has an opportunity to participate. I apologize that I'm gonna have to go through those rules now. I don't really like going through rules like this, but today's meeting is being held both in person and online via the Computershare online meetings platform. This allows shareholders, proxies, and guests who are not able to travel and attend the meeting in person the ability to attend the meeting virtually.
All online attendees can watch a live webcast of the meeting and read the company documents associated with the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. For those of you attending the meeting virtually, if you have a question to submit, during the live meeting, please select the Q&A tab on the right half of your screen anytime. Type your question into the field and press Send. Your question will be immediately submitted. Should you require any assistance, you can type your query, and one of the Computershare team will assist with the chat function and reply to your query. Alternatively, you can call Computershare on 0800 650 034.
Please note that while those online can submit questions from now on, we will not address them until the relevant time in the meeting. Please also note that your questions may be moderated, or if we receive multiple questions on one topic, we might sort of try to bunch them together, amalgamate them a little bit. Finally, due to time constraints, we may run out of time. Hopefully not, but may run out of time to answer your questions, and if this happens, we'll answer them in due course via email. Now, for those in the room, we'll open the floor to questions at the relevant time in the meeting. We have a number of microphones that we'll spread out and make them available to you so everyone in the room can hear you and the online folks can hear you.
For all those asking questions, as this is a shareholder meeting, we ask that you please do not ask operational or customer service questions in this forum. I mean, the good news is I know that might be on the top of your mind, so we have members of our customer team available to help you with these questions after the meeting at the entrance to the room. For those online, these types of questions can be put to our customer services team by phoning 0508 Vector or in number terms that's 0508 832 867, or by emailing info@vector.co.nz. We have telephone and email.
Now, for members of the media at our meeting today, if we could ask you to hold your questions during the meeting, and if you wanna talk to Simon and myself or a relevant executive after the meeting, please talk to one of our communications team who'll be at the back of the room or use our usual media phone number. Now voting today will be conducted by way of a poll on all items of business. I'll now describe how you can cast your vote starting with the online process, and again, I apologize for the rules stuff here. For those online, if you are eligible to vote at the meeting, once I declare the voting to be open, you'll be able to cast your vote under the Vote tab. To vote, simply select your voting direction from the options shown on the screen.
You can vote for all resolutions at once or by each resolution. Your vote has been cast when the tick appears. To change your vote, simply select Change Your Vote. You have the ability to change your vote up until the time I declare voting closed. I suspect a lot of people aren't gonna be changing their vote multiple times, but in order to provide you with enough time to vote, I will shortly open the voting for all resolutions. Now for voting for those of us in the room. Those of you in the room are able to mark your voting paper at any time, and a team member from Computershare will collect the voting forms at the conclusion of the meeting. Again, just like for online, I'll indicate when voting will close so that you'll have a final opportunity to cast your vote.
With those instructions now complete, I now declare the voting open on all items of business. Those in the room, as I noted earlier, may mark your voting paper at any time, and those online will see the resolutions will now be open in the Vote tab, and you can submit your votes at any time. As I noted earlier, I'll give you a warning before I move to close voting. In addition to those attending the webcast today, 908 shareholders holding a total of more than 818,575,744 shares have appointed proxies. In my capacity as chair of the meeting and in my own name, I hold proxies for 445 shareholders, representing 812,782,076 shares.
Included in the proxies are 751 million shares held by Entrust, our majority shareholder. It is now my pleasure to introduce my fellow Directors, Alastair Bell, Tony Carter, Bruce Turner, Dame Paula Rebstock, Anne Urlwin, and Dr. Paul Hutchison. Also joining us are our Group Chief Executive, Simon Mackenzie, and John Rodger, our Chief Legal and Assurance Officer and Company Secretary. We also have our Chief Financial Officer, Jason Hollingworth, and Graham Edwards from our external auditors, KPMG. Graham's joining us via webcast. Now for the agenda of the meeting. We released our financial results on 26 August in our annual report, and that's available on our website and also has been mailed to all shareholders who requested a copy.
As all shareholders have by now had the chance to review the report, I'll take this opportunity to talk about some topics, and the first topic is the dividend, and then also some key themes for the year and actually multiple years. For example, how Vector is in the forefront of decarbonization initiatives on behalf of shareholders, customers, and communities. Before turning over to Simon, maybe just give a high-level short summary of the group's financial performance for this past year. What's wrong?
I just have a question. Do you have anybody available that can help people like me who can't read this well because of the size of the font?
Okay.
It is way too small.
Okay. The voting font is too small.
The whole font.
Okay. Aren't we gonna have certain breaks where people have the opportunity to think about the resolution? Could we help this gentleman during a break? Thumbs up. We'll help you during a break. As soon as we come to a break, someone will come and help you read through the resolutions, and that's before the voting closes. Is that okay? Yep, absolutely. Just to give you a preview then, I'm gonna hit high themes and Simon's gonna drill down and look at specific aspects of operational performance for the past year. Then after that, we'll open the meeting for specific discussion, questions on the annual report. That includes the financial statements in the audit report. Any question that came up in our addresses you can ask about.
After that, we move to formal business of the meeting, that's sort of election of Directors, election of the auditors, but we'll come back to that. Before I move to my address and some key themes for Vector, I did wanna acknowledge some important highlights of the year. First, we, the board, commend the efforts of Vector staff across New Zealand and Australia, together with our contracted field service providers who've worked extremely hard this year. They have again worked through COVID-19 lockdowns, ongoing disruption, and unexpected challenges to keep delivering to our customers. I mean, we think back a year ago, there was that unexpected snap lockdown in Auckland in August, and gosh, it went all the way through January with a pretty hard lockdown for all of us who are here in Auckland.
Not easy to operate effectively in that period, and there were certainly worries with our essential staff about going out every day, meeting other people during a time, you know, with COVID. Thanks. We all went through this journey, but a special thanks to the Vector staff. Secondly, I feel so honored to do this as a lover of history, I wanna call out that this year is significant for Vector, as it marks 100 years since the creation of the Auckland Electric Power Board. This is a local authority established back in first of April, 1922 to manage Auckland's power assets. It was created by an act of Parliament to supply about just 8,000 customers in the Auckland region. In that time, all electricity from within the region, also, so we were a gentailer back then.
Since then, Auckland Electric Power Board has become the Vector of today, an innovative and globally recognized New Zealand energy company with a portfolio of businesses delivering energy technology solutions and communication services to more than 8,000 customers, actually more than 1 million homes and commercial customers across Australasia and the Pacific. The board and I are proud and privileged to be part of this long heritage, which has always included a strong commitment to serve the interests of Vector's customers. Today, this commitment is embodied in Vector's Symphony strategy, which is enabling Vector to continue delivering today while proactively rising to the challenges of today and the future. Finally, I'd like to call out that Vector published its second TCFD. Sorry, that was a mouthful.
That's gonna be required for listed companies starting in 2024, and we're trying to get ahead of the curve. Within that, a detailed carbon abatement curve sets out actions to reduce our emissions, focusing, not surprisingly, not unexpectedly, on actions that save us money and make the world a better place. Improve our ability to pay you dividends and save money. Progress is being made on these initiatives. Simon will talk about this in a bit more detail. Now, for the key themes and first, dividend. The full year dividend, you can see on this chart the full year dividend is NZD 0.1675 per share, partially imputed at 10.5%. Paid to shareholders on 19th September.
The Entrust, I think we got our Entrust money in maybe a couple of weeks ago. But as we look at this chart, there are some headwinds. We continue to go up, we haven't gone down, but we sort of flattened a bit. I wanted to give you some of the background about why. Just six years ago, we were allowed in the biggest part of our assets, which generates, what? 80%-90% of our earnings still in our regulated asset business. We earned between 7% and 7.5%. We were allowed to earn that by the Commerce Commission.
As interest rates have declined, forget about the recent increase, that regulated return went from 7.19% down to 4.57%. On the biggest part of our business, we're really only allowed to earn about maybe 60% of what we were able to earn six years ago. That is the primary headwind. There's a lot of little things, but the primary headwind, lower interest rates, is why we haven't been able to increase the dividend. We think very carefully about the dividend. We know how much it means to Entrust beneficiaries, and we know how much it means to our shareholders. With higher interest rates, we should get a reversal of the regulated return.
The way the system works is we won't be able to recognize that for another 2 years under the rules. You know, that's sort of a high-level summary for the dividend. Happy to take questions on that when we get to Q&A period. Now, how have we done for our shareholders? That would be the next theme. This is a shareholder return slide. This looks at both dividends paid and share price change. You can see over a 5-year period, the dark blue is Vector, the light blue is the market. Over the 5-year period, we've done actually substantially better than the market.
Slightly lagging, unfortunately, the market over the 10-year period, and we're in that sort of 10%-15% range, 12.5, sort of 12%-13% range for the two periods. Top half of the market for the last 5 years, and we're certainly working and focusing on creating value for the shareholders for the next 5 years. I mean, we're forward-focused. Third extremely important aspect of how we perform is how reliable are we? We look at that in two different senses. We look at it as how many outages do we have, and how long do they last? And so on infrastructure, investment, and reliability, we invest significant sums. Last year, our investment stood at close to NZD 350 million or almost NZD 1 million a day.
This covers what we need to ensure that the electricity network is ready for the demands of the future, while ensuring Auckland has the infrastructure it needs now to continue growing and to support major changes to our transport and energy systems driven by decarbonization. We've reached a settlement agreement with the Commerce Commission in historic breaches of network quality standards. Do we have a chart on how we've done on reliability? Is that in the pack? Okay. Yeah. Nope, that's not it. Let's go back. It's okay. We're pleased to have seen full compliance since the period in question. This reflects our strong focus on improving performance and a comprehensive program of network reliability initiatives in recent years to mitigate the impacts of the challenges we've experienced in the operating environment.
Just to put it in less fancy words, we had some headwinds in Auckland, higher traffic, more frequent storms, focus on safety, and we had a rough period where we exceeded our regulatory limits. The last two years of that rough period were close to settling with the Commerce Commission. We went and just said, "How do we get a step change?" The stuff in Auckland is just gonna get worse, the traffic's just gonna get worse. The storms are just gonna get more frequent. We had this program called Finding Fifty, and we made a substantial improvement starting three years ago and following through into 2021 and 2022. We've been below our sort of reliability measures. That means good. When you're below, it's good for the last two years. Now let's move on to Vector Metering.
We've quietly had this metering business in New Zealand, and then we started in Australia about sort of six to seven years ago. We've just gradually been increasing it. In New Zealand now, it generates a lot of cash for us and, you know, we have a very good market share in New Zealand. In Australia, we wouldn't have the leading market share, but we've been growing steadily. We're doing a strategic review of Vector Metering. It's a fantastic business. When you grow initially in a market like that light blue line shows, it's a real capex hog because you have to do all the expenses to install meters, and then you get an annuity. You get a per year revenue for 15 years, but sort of initially spending a lot of money.
The strategic review is looking as to whether we might be able to grow this business faster or better with a partner, but it's really early. By the way, I'm probably not gonna be able to answer many questions on that because of confidentiality. The final is our role in decarbonization, the final theme. Now of course, the video sort of set the table on that. But looking at Vector Symphony strategy as it applies to Auckland's electricity network, certainly underlie that video. As New Zealand moves to lower carbon emissions, transport and other industries will increasingly look to electricity for their energy needs. It's the biggest area where the technology already exists to really decarbonize, so pretty important.
Combined with renewable generation, these are key to New Zealand achieving our decarbonization commitments. Now, the good news for Vector is this will result in a significant increase in demand for electricity. The bad news is that if that demand is unmanaged, for example, if electric vehicle charges all occur from 6:00 to 9:00 PM during the period of peak electricity demand, that will mean Vector has to build a lot more network to accommodate that demand. Very expensive. Is there a chart for daily demand here in that chart, maybe? Anyway, if I'll describe what the chart says, 6:00 to 9:00 PM is a lot more than 12:00 to 3:00 P.M. And so we have to smooth basically the peak. That's sort of what the chart says.
Instead, if the growth in electricity demand can be managed, that's what we mean by smooth the peak, we can spend a lot less and keep your electricity rates much lower. Vector's been looking at this as a big focus area in our thinking for a number of years, and we've been working over the last 3-4 years with Amazon Web Services and X, which is sort of Google X, on innovative new tools to enable us to handle that demand better. Through its leadership in relationships like these, Vector has a clear line of sight into what is needed to achieve this energy transition and can offer a perspective that others just don't have. It's crucial that policy decisions to support the changes needed are made quickly so that the energy transition can be successfully managed.
Just again, sort of normal words. We need the ability to spread out when people charge their EVs. You can plug them in, but we can't have everyone charging 6:00 PM to 9:00 PM We need to have that delayed from 9:00 PM to 6:00 AM That's sort of the key point there. My final slide, just a quick overview of financial performance before I turn over to Simon. Vector's delivered a steady result for the 2022 financial year against a backdrop of inflationary pressure, sustained supply chain challenges, and constant evolution of the impacts from the COVID-19 pandemic. The group recorded Adjusted EBITDA of NZD 510 million. This was down NZD 3.5 million or 0.7% on last year's result and is in line with guidance provided at the half-year result.
Group net profit after tax was NZD 160.9 million, which is NZD 33.7 million lower than the prior year due to a NZD 40.2 million non-cash goodwill impairment of Vector's LPG business. This goodwill impairment recognizes the impact of higher Saudi Aramco contract price of LPG, higher emission trading costs, and a weaker New Zealand dollar. Those all contributed to higher cost of gas, along with the impact of the increase in discount rates as at 30 June 2022. This was offset by higher capital contributions, lower interest cost, and gain from the sale of Vector's fifty percent shareholding in Treescape. Total capital expenditure for the year was NZD 545.9 million. See, that illustrates just how much money we're putting back into the network, and I mentioned about metering as well.
That's an increase of NZD 4.4 million or 0.8% on the prior period. The increase reflected continued investment in infrastructure to support Auckland's continued growth, higher network replacement expenditure, and continued rollout of advanced meters in Australia and New Zealand, and the rollout of 4G modem upgrades across the New Zealand advanced meter base. Operating cash flow was 3.9% higher at NZD 518.8 million. This increase was largely due to the higher capital contributions received in the period. That's it for the themes. Simon's gonna do a big drill-down. In closing, I thank my supportive great board for all their help and assistance for the company oversight leadership in 2022.
I thank Simon and his executive team for their leadership and Vector staff for all they've done to look after their customers, including, as I noted right at the start, navigating through another year of disruption from COVID-19 lockdowns. I'll now hand over to Simon.
Thanks, Jonathan. Afternoon, everyone. Look, I'd firstly like to also thank all our staff, field service providers of essential services for another full year of hard work, mahi, delivering for our customers. Again, with multiple disruptions due to COVID-19, not just lockdowns, but also the need to be flexible and adaptable as we saw absenteeism increase from infection and isolation protocols. Our people have shown amazing resilience and commitment to Vector and our customers in a time of great challenge and uncertainty. I'll start my address by reflecting on what's different about Vector compared to about a hundred years ago. Then I'll move to a short summary of our financial performance, then provide a few operational highlights, as well as talk about some of the challenges we see ahead and how we're addressing these.
Well, a lot has changed since the Auckland Electric Power Board was established 100 years ago. Today's Vector serves more than 600,000 electricity connections on the network. Of course, when the APB was formed, it was really just this side of the harbor and not on the northern side. We obviously supply everyone on the north now as well. We served 600,000 LPG bottle swaps around New Zealand in the last year. We operate nearly 2 million advanced meters across both New Zealand and Australia. We have an extensive fiber optic network across the Greater Auckland region, including our direct access into over 1,000 commercial buildings. We run a number of other energy-related businesses across our portfolio, including solar installation, heating and ventilation.
We're continuing to deploy large amounts of capital on our networks to enable and support Auckland's significant growth and transform the electricity network to facilitate a future where consumers increasingly demand and rely on cleaner, more reliable, and affordable energy. Through Vector Technology Solutions, we're looking to sell solutions to help other companies on similar transformation journeys, both locally and offshore. As Jonathan mentioned, we're looking ahead to the next chapter of our metering growth through Vector Metering and the review that's currently underway. All these activities reflect the pace of change the energy sector is going through now and the urgency to transform energy systems to address decarbonization. As you've seen on one of Jonathan's slides earlier, demand for electricity is going to increase, and we're still going to build some traditional network.
Not only will we be still building power lines, cables, transformers, it'll be supplemented with new forms of what we call hardware technology, whether it's things like batteries or other new solutions that will evolve. It's no longer realistic to just build those types of assets. We've got to build new digital infrastructure on top of the physical assets, so the whole system is more resilient in the face of climate change and can accommodate the increased demand for electricity that will come with decarbonization in the smartest possible and capital-efficient way. While much of what we do is unseen by customers, our solutions are crucial to the smooth running of consumers' lives at home and at work. Customers' needs are at the core of our Symphony strategy, and this includes equitable access to the energy they need to power what is important to them.
I'll just quickly move now on to some operational performance for the year. For the regulated electricity and gas networks, total net connections continue to grow, with electricity connections up 1.6% to 600,112, and gas connections up 1.3% to 117,995. The level of gross investment continues to be at high levels, with capital expenditure for financial year 2022 at NZD 331.9 million. That's just for the regulated assets. Electricity volumes overall were up 0.4% at 8,361 GWh, with lower business volume offset by higher residential volume. For metering, we deployed and built 93,000 advanced meters in Australia and 18,000 in New Zealand, with volumes impacted by COVID-19. These are new, not the existing.
Our advanced meter fleet now totals 1.98 million across New Zealand and Australia, with nearly 490,000 meters now installed in Australia and growing, as previously noted. We invested CapEx of NZD 156.7 million, or 3.9% lower than the prior year in the metering business. We're currently on a replacement of what's known as 2G modems to 4G modems. That's the cellular modems to connect to the cellular networks which the meters talk to. We're on a replacement program of those 2G modems with currently around 200,000 meters completed to date. For gas trading, we saw a 7.4% decrease in 9KG LPG bottle swaps to 629,651 in the year.
LPG volumes were down 1.6% to 44,330 tons, with bulk volumes and cylinder volumes down slightly. I now share some achievements in relation to our carbon emissions. We achieved a 16.5% reduction in our carbon footprint across Scope 1, 2, and 3 from our FY 2020 baseline. We also developed a tool that helps us identify and prioritize areas where we can focus on where to reduce our carbon emissions. We call this a carbon abatement cost curve. It sets out the causes of our carbon emissions and what it would cost us or save us to remove these emissions based on the alternative, which is to pay to offset them.
This is very important work, led to two initiatives this year where we've adapted our business processes to save money and reduce emissions while maintaining our service delivery standards. One of these initiatives involves identifying electricity maintenance jobs that can be completed using a transformer instead of a diesel generator to keep the power on for customers while we do the work. We ran a successful trial of this program and now operationalizing it into our maintenance programs. There were hundreds of thousands of tons of carbon saved as a result of that program. A second initiative was around increasing the frequency of inspections on our gas network. By increasing the inspection frequency, we can identify and fix gas leaks more quickly.
The carbon abatement cost curve was particularly important here in identifying the right balance between the cost of increasing the inspection frequency against the higher cost of the gas leaks going undetected for longer. This abatement curve will help us reach our science-based target of 53.5% reduction in Scope 1 and 2 emissions by 2030. We've also published, as Jonathan mentioned, our TCFD report, which sets out a big picture of where the risks and opportunities are for our portfolio of energy businesses and our overall role in delivering clean, reliable, and affordable energy solutions for customers. You will find this on our website. I'll now talk about a few other highlights from the year. Earlier this year, we announced a strategic review of our metering business.
This comes at a time for the business we were on track with a major modem replacement in New Zealand to future-proof the fleet, and the trajectory for the business is strong, as smart metering has become a critical part of the transformation and digitalization of the energy sector around the world. We expect to announce the outcome of this strategic review by the end of this calendar year. Vector Technology Solutions continues to explore the commercial opportunities for digital solutions that we've co-developed in our strategic alliance with Amazon Web Services and other global partners. We are already providing services to five electricity distribution businesses across New Zealand. We have several encouraging offshore leads and more local opportunities to explore, and we're getting strong validation from customers that what we are offering helps them address their key challenges.
We're continuing our strategic collaboration with X, the Moonshot Factory, formerly known as Google X, which is developing technology and tools to enable the virtualization of the energy system and assist in managing the complexities that will arise both in real time and longer-term planning. These complexities largely arise if we go back 100 years where the energy was really flowing from one direction to multiple directions now as more and more consumers put more devices or solutions in their homes, whether it's solar, battery or electric vehicle charging. The complexities have gone up exponentially. Some of the challenges I'll talk to quickly that we're seeing in the regulatory landscape and how engaging with the policymakers to find solutions, I'll just quickly touch on. The Commerce Commission is reviewing the input methodologies for the first time since 2016.
These are the key regulatory rules that underpin the way energy networks are regulated and the large-scale investment needed to enable decarbonization. The key issues fall around incentives to invest, cash flow profile, the ability to finance and how these align with shareholder expectations and others such as credit rating agencies. The slide here shows or gives you an idea of the scale of investment already underway and what it's going to look like into the future. The orange bars there are a combination of what's known as the non-exempt EDBs or electricity distribution. The blue are Transpower and the green are Vector. It's one of those things that's important to point out that as you see with Vector, we spend over the next 10 years roughly around the same amount as Transpower are predicting.
Many people think that Transpower are the big investor in the sector. When you see what's happening in the electricity distribution business, it gives some magnitude of the amount of investment that's going to be required in the electricity distribution sector to start facilitating and enabling this decarbonization. We are advocating that the review needs to focus squarely on the implications of the government's decarbonization goals for the sector, since these are not accounted for in the current regime. It's critical time to ensure these settings are fit for purpose and properly support the transition to a net zero economy. We believe the review should be approached with a significantly higher level of engagement between the Commerce Commission and the industry, and we look forward to participating fully.
The Commerce Commission has also set the next default price-quality path for gas pipeline businesses for the four years commencing 1 October 2022. This is the price path that is set for the next four years that we can charge to customers. The new DPP allows for a moderate acceleration of asset depreciation. Our view this is a step in the right direction, is aligned with clear and consistent direction from government and the role of gas in New Zealand by 2050. We've been working constructively with the industry, Commerce Commission and the Gas Industry Co and the government, both individually as part of the Gas Infrastructure Group, to seek a transition plan that works for consumers, government and infrastructure owners, as well as recognizing the option for renewable gas.
More broadly, the government is looking to develop a national energy strategy. The current regulatory settings and structure of the industry has largely been the same for over 20 years. This now has to be questioned as to whether it is appropriate for the future, given the challenges of decarbonization, new technologies and customer expectations that have not been considered in past settings. We call on policymakers to consider the long-term interest of consumers in terms of an overall household energy wallet, rather than just looking individually at the cost of electricity or gas for specific services such as providing the network. In many instances, electrification may lead to overall savings for households.
A good example of this is the potential for EVs to reduce household spending on petrol costs by more than they increase spending on electricity, including the network investment needed to meet new demand which consumers pay through electricity bills. We will actively engage with government as new policy is developed, as we believe we bring a unique perspective given our global alliances with leading technology companies, as well as proven experience in trialing, analyzing and operating new technology, how it impacts our ability to deliver to customers energy for their daily lives. A final comment on regulatory matters, as Jonathan mentioned, we're pleased to have reached a settlement agreement with the Commerce Commission for historic breaches of network quality.
We remain committed to complying with our regulatory quality limits and have put significant effort and investment over many years into ensuring the network is safe, reliable and resilient, while also enough flexibility to meet the challenges of Auckland growth and supporting major changes such as electrification of transport. We maintain high levels of work even over the last few years through COVID-19 lockdowns and other disruptions. I just thought it was worth sharing a few numbers from the last year to put this volume of work into perspective. We completed more than 500 complex customer requested connection projects. So these are large complex connections. Expenditure, NZD 26.3 million. In addition, we also completed almost 4,000 non-complex new connection requests with expenditure of NZD 86 million.
We did 533,205 preventive maintenance activities to maintain the reliability of the network at a total spend of NZD 18.2 million. Put that in context, our network, electricity network, if it was laid end to end, would reach from Auckland to London and back a little bit of the way. It's a significant length of network to maintain and manage. For corrective maintenance, we spent NZD 57.6 million, and for reactive maintenance, we spent NZD 29.7 million responding to approximately 33,000 unplanned events driven by weather, cars hitting poles, and other issues that we have to deal with on a day-to-day basis.
All these numbers illustrate how we've maintained productivity despite COVID-19, and we're pleased to have seen full compliance through this time with COVID to our regulatory quality limits in the two years since these prior breaches occurred. In closing, I'll talk briefly about the year ahead. Vector is well-positioned to enable decarbonization, guided by our vision, which is to create a new energy future. Despite the challenges of climate change today, our Symphony strategy helps us seize the opportunities of a decarbonized future by creating a decentralized energy system that opens future possibilities, delivering decarbonization consistent with safe, reliable, and affordable energy solutions. The wider industry has never seen the level of change that is before us or the crucial nature of getting this transition right as we see more and more consumer requirements diverge onto requiring electricity.
Put that in context, if we think of the migration of everyone to electric vehicles, just puts the criticality of electricity up even greater. Collaboration across the industry, government, and regulators is vital, as is learning from overseas counterparts. We will continue to participate fully and advocate for customers. We look forward to the next chapter for Vector Metering. With our work to date recognized by global institutions, including AWS, we expect to announce an outcome by the end of calendar year. We intend to provide guidance to the market at our financial year 2023 interim results. I'd like to thank Jonathan and the rest of the board for their leadership and guidance over the past year. Of course, thanks once again to all Vector staff and our service contractors for all the work they've done over the last challenging year.
Thank you, Simon. Now back to sort of the business of the meeting. The notice of the meeting lists the items to be considered. An ordinary resolution requires a simple majority of valid votes, and the special resolution must be approved by a majority of 75% of valid votes. Don't think we have a special resolution today. Let's see. A reminder for those eligible to vote, you're able to do so at any time as the voting is now open. For transparency, you'll be shown the number of discretionary proxies held by me as chair of the meeting or in my own name. I declare that it is my intention to vote the discretionary proxies in favor of the resolutions. During discussion of the agenda items, I'll first call on questions from the room, followed by questions online.
I again ask that you confine your questions and any comments directly to matters that we're looking at before the meeting and to Vector business. Only questions related to the specific agenda item will be addressed as part of that discussion. We can defer others if they're not on the question. If, for example, a general question is asked during the agenda item during one of the Director reelection items, it'll be held until the appropriate item on the agenda. Like as an example. We're naturally happy to hear your views on how we operate our portfolio of businesses. We get great feedback from AGMs like this on areas that we're doing well and areas that we need to improve. We're also happy to answer questions about operational policy and practice.
As mentioned earlier, if you have a personal matter relating to Vector Services, our customer service representatives are available here in the room or can be contacted at 0508 Vector or info@vector.co.nz. Only shareholders registered at 5 PM on Monday, 26th September 2022, or their proxies or representatives may vote. If you've become a shareholder since that date, you cannot vote at this meeting, but we welcome your attendance and welcome next year when you can vote. Now to the agenda items. First agenda item is to invite questions for us for our reports on the financial year ended 30 June 2022 contained in our annual report. If you have a question on, like Simon's last slide, on future performance, well, we may wait for general business to take that.
Let's think sort of looking back right now. Our annual report was published online on the 26th of August 2022. Hard copy reports were sent to all shareholders who requested one. We may have a few extra ones here today as well. Questions on this topic also may be put directly to our external auditors, KPMG. Try to define those as an audit question rather than a general question about business. Over to you all. Are there any questions in respect to the annual report, the financial statements and/or audit report for the year ended 30 June 2022? First in the room. Coralie van Camp. I know there was some argument.
No.
Mrs. van Camp
I'm very happy for you to call me Coralie.
Okay. Thank you.
Thanks. There's only one person who has to call me.
Okay. I think I can guess who that is.
Yes. Coralie van Camp, shareholder. Now, first, I'm gonna start with something positive. I heard through the grapevine before coming to this meeting that this board was very focused on maintenance of our electricity network, and that gladdens my heart because that, to me, is what Vector's core business is. All I want from Vector is that you supply me with electricity through my network to my home when I need it. Now, coming to your balance sheet, I'm not so positive. Your net profit was only NZD 160.9 million, and you paid out NZD 169.1 million in dividends, which was more than your earnings. Your total equity is NZD 2.430 billion, of which NZD 1.262 billion is intangible assets.
Your net debt is NZD 3.296 billion, although it says your total liabilities are NZD 4.382 billion. I just feel that your debt is too high, that the payment of dividends on the basis of paying out more than your net profit is unsustainable. This has gone on for years, mind, way before most of you ever came onto the board. This is a trend with Vector, and it's not as bad in other companies that I invest in. This is the worst balance sheet of the companies that I invest in. Now, what I'm really hoping is that you can give me an assurance that you're going to improve this.
We're working very hard.
Good
... sensitive to our cash flows. Look, if I step back, what you get with Vector, you look at the income statement, and we have a solid income statement with the headwind that I mentioned on interest rates going down, which are now reversing. Okay. Income statement. The issue is when you get to the cash flow statement, and you have pointed out correctly that we, with our CapEx, and you had mentioned it just in with net income. But you know, with the CapEx that we have, the over NZD 500 million of CapEx to improve maintenance and meet Auckland's growth needs, plus our metering business, we've taken on more debt over the past year. That cannot. You can't just take on more debt as a percentage of your total capital year in, year out.
We're looking certainly at approaches. Think of the Vector Metering review as one of the possible approaches. Also, some of our new businesses are very light on CapEx, so that would be a second attractive lever that we're pulling. We do have to reverse increases in leverage year in, year out. Our leverage just hasn't though gone up. It has gone up, come down, bounced around, gone up a little bit this year again, so.
But, but that's-
I take your point on board.
This is a trend for years past, and I was really hoping with this new board.
Yeah
Most of you are new, that would be.
Well-
that I'd see a turnaround. I'm really looking forward to
Okay
Seeing your balance sheet next year.
Absolutely. What I will point out when you say it's a trend for years, I mean, there was a time when I was on the board and, for example, we sold the big pipeline, gas pipeline from Taranaki to Auckland. Our leverage went down 15%, and that would've been 7 years ago. I mean, it's not a 10-year trend, but I'd say for the last 5 years, because of our network CapEx and metering, our leverage has gone up. Thank you for the point. Parker. Yeah. Okay. Any other questions, or could you raise your hand if you'd like a question? Yes.
Yeah. Hi. Alex Jamieson.
Alex.
Mine's aimed at Simon. Simon, can you tell me roughly how many parking tickets Vector vehicles have got in the last 12 months for parking on footpaths? You may laugh, folks, but I'm the one that's in danger when I have to go onto the road. I've had three mobility scooters written off because I got hit because a Vector vehicle was blocking the footpath totally, and I was on my way to cancer treatment.
I honestly don't know that number. That's something that we'll have to contact our third service provider.
Yeah. I didn't expect you to actually know it, Simon.
But, um-
Because it's probably-
It is an issue.
In the hundreds.
Yeah. Look, it's something that we can definitely raise with them and express the concerns.
Surprising to hear that they're parking on the footpaths without the necessary traffic management and assistance for people such as yourselves, because that's typically how the site should be set up to ensure it's safe for all, residential consumers and people wanting to use the footpaths to get by any work site safely.
These weren't work sites. These are a guy that parks on the street for the weekend. I can only suspect.
Okay
that he's on call.
Yeah. I don't know. It's just.
He parks his Vector vehicle on the footpath and blocks it, and gets very abusive when he's asked to move it.
Well, perhaps afterwards we could like.
Get the specific details.
Have a discussion specifically where you're
Yep
where you are, and we can actually have that conversation with the person that's
Yep
involved.
Yeah. I would appreciate that.
Sure. No problem.
Thank you.
The second question: When can Vector, if they don't already, guarantee residents like myself power 24/7? Because I'm going on a machine as of tomorrow called a CPAP. Now, I don't know whether you know what a CPAP is, but it helps me breathe, because I now have a health condition that I'm actually struggling at the moment to breathe.
Sure. Look, the reality is that we can't guarantee 100% reliability. What I would suggest is that because of the issue you raise, that how the responsibility for this falls on the energy is you need to identify with your retailer as someone that's got that kind of dependency.
Yeah, right.
And then-
Right.
Okay. Off the back of that, they have a process to identify whether or not if there's an outage or if there's gonna be planned outages, how your circumstances get taken into account. The other thing obviously which, you know, we would recommend to most people if it's appropriate, is that you get what's known as standby power packs that can actually mean that your CPAP device can actually last for a period of time, by which time, you know, most of the time their network is up and running again.
Yeah.
Of course, it very much depends on where you live because an overhead network versus an underground network has quite a different repair time profile.
Which is the better one?
Well, it depends. I mean, an underground network, you know, you typically probably don't find that you get as many outages, but if you do have an outage, it's a lot longer to repair than an overhead network.
Okay.
Yeah. We do have an underground network, and our house is 60 years old.
Mm.
It might surprise people.
Right.
It's underground.
Mm.
The house behind us is 33 years old, and it's underground.
Mm.
That's why ours is. But I'm apparently going to need it 3 minutes without the power, and I won't be at any more Vector meetings unless they carry me in a coffin.
Right.
That's how serious my illness is.
Mm.
We'll talk to the customer service rep.
Yeah
Do whatever we can through your retailer.
Yeah
to get you on a special list. Just remember.
All-
There are outages that occur.
All this has happened in the last six months.
Yeah. Yeah.
I went in the hospital with what I thought was a heart attack, but it's cancer in both lungs.
Okay. I'm so sorry.
That's rough.
Oh. As the saying goes, "Shit happens," and I'm five years past my use-by date.
Mm-hmm.
I'm not particularly worried, but my grandkids are.
Okay.
Thank you.
Okay. Other questions? Yes. Oh, did you wanna wait for the mic so everyone can hear you?
Thank you. McLeod, shareholder. My question is directed to Simon Mackenzie dealing with the energy future. What's his opinion on hydrogen?
Simon, future of hydrogen.
I think one of the big challenges of this is my personal perspective, that to produce hydrogen currently is extremely expensive. Estimates would put it against a gas equivalent at somewhere between 12 x the cost of gas as it currently sits at the moment. I think in the New Zealand context with hydrogen, one of the big challenges will be the cost, and where would that hydrogen be used. How do you actually transport it? What mode would it actually serve as a purpose? I mean, it can be blended into gas streams, but typically only up to about 20% of the gas stream can take hydrogen. After that, you know, you basically can't operate.
I think that there is clearly the opportunity for hydrogen in what you'd say is the heavy transport kind of solution rather than electric for heavy transport. Lastly, I guess just as an analogy around whether or not we can export hydrogen, I think we only have to look at what happened in the oil and gas market in New Zealand and recognize that we are isolated from global markets. Producing hydrogen, which we know is being looked at quite significantly up in you know northern parts of Australia, where solar panels can be deployed in large scale, hydrolyzed, and then shipped into Asian markets. Obviously, they just benefit from the location.
The reason for my question here on this, Simon. There is a transport company, a very large one in Southland. Their headquarters is in Mataura.
Mm-hmm.
Richardson Group. They're very large in that area right through the South Island, particularly in Southland. All the trucks are powered with diesel. Now they've been working in converting from diesel to hydrogen, and they've been very successful. The last report was 2-3 months ago. They've been congratulated from other sources outside New Zealand in the work that they've done. It shows it can be done, and they're also. They're looking at exporting hydrogen-
Mm-hmm.
Which could mean a big industry for New Zealand.
Yeah.
Yeah. I think.
Thank you.
I think definitely, you know, as I said, I think heavy transport is clearly one area of opportunity. At the end of the day, it's still gonna come down to what is the cost to be able to produce hydrogen, and currently that's pretty high.
It's expensive.
Compared to other fuel sources. The other aspect is from an export perspective. Think we just gotta look globally and say if someone's, you know, developing hydrogen in New Zealand, you've still gotta transport it to a market, and there's no reason in those proximity markets, like for example, Asia, they're also looking to build hydrogen generation plants. I think that, you know, what is the cost advantage when the technology's pretty similar? It's the input cost, which is fundamentally what is the cost of energy? If it's solar, then that's going to be pretty challenging for New Zealand to compete against solar out of, for example, northern Australia. Yeah. Yeah. I think that there's always gonna be movements with regards to technology gains. Yeah.
Okay. Now any other questions on the annual financial statements? Yes. Oh, and there you go.
Hope this is the appropriate question for this.
Okay.
I'm not in shape but.
We can always do it later. It's gonna be appropriate at some point.
Yeah. Okay. You said you needed a lot of money to invest in Australia, the metering system and all that.
The way that metering works is if you just think of it on a one-by-one metering, it costs you a lot to install a meter, and then you have a contract for, say, 15 years, where you get paid every year with no service or, I mean, minimal service required. The metering is a big upfront spend and then very reliable annual revenue. It's almost like, you know, when you install a security system in your house, if anyone's done that. The company that does it spends a lot of money installing it, but then you have to sign like a multi-year contract. It's true, utilities metering runs on the same concept.
When we're starting in Australia, we now are creating a metering base that's generating a reasonable amount of cash in Australia, but our installation rate is still so high that the cash flow is still negative for metering in Australia.
Okay.
Does that make sense?
Also, you have done your due diligence because if you look at the past history, Air NZ and Ansett, Telstra, Spark, I've forgotten the name, and then you had The Warehouse, all they invested in Australia, and then they came back with their tails between their legs. What make you so sure that it is the right investment? Because we got enough to do here.
Yeah.
All the over-
Yeah.
Overhead power lines and all that.
Yeah.
You think you're making the right investment in Australia?
Yeah. We're hitting all our milestones, and like, if I were to compare it to The Warehouse, for example. The Warehouse is dependent on competition with other department stores there, and they were never able to create a sort of a meaningful market share on metering. We've hit our milestones in terms of the installation of a metering base. Once you have the base, you actually have some reliable revenue going forward. Like, we could stop installation of meters today and have a very good business in Australia and a reasonably certain return, if that makes sense.
Yeah.
It is, it's a little different. Look, one of our core competencies is metering. We have a great Australian team. The board is very cognizant of the risks for going outside New Zealand.
Okay.
As you've noted, there is a long list of companies that have thought they did great in New Zealand and we can just reapply the business model to Australia, and it hasn't gone well. There are also New Zealand companies that have done quite well in Australia. In fact, it's driven most of their value. It's not 100% failure, and we are confident we're hitting our milestones. Is that okay?
Okay. To date, have you come in plus or are you in minus?
In cash flow or earnings?
Yeah. In earnings.
Yeah. Earnings, I think we're in the black in metering in Australia, but we're hitting our milestones. As we grow, we knew we were gonna lose cash flow, and it's on an expected basis. Actually, the more we grow faster in metering, the more contracts we get, the more cash flow we lose.
Yeah.
Because of the installation problem.
Well, well, I don't mind investing overseas.
Yeah.
Well, that's fair enough.
Yeah.
We got enough to do here, rather than taking a chance and investing all that heavy sum of money there.
Yeah.
I'll give you the fourth example. Ah Chee has in SkyCity.
Adelaide Casino.
Yeah
which is also going into loss.
Yeah.
Because this year they're not paying dividend.
Yeah.
All I ask you to have.
Absolutely.
Do your due diligence and pick.
Yeah.
Thank you.
Thank you. It's a point that the board's very sensitive to, the risks of investing other places. Any other questions from the floor? Is there another question? Did I miss one? Okay.
Are you prepared in the future to do anything for pensioners? Over the last two years, we have not had an increase. We're on a fixed income. I'd like anyone else in this boardroom that's not over 65 to say they can honestly live on NZD 300 a week.
Right.
When our rates.
Yeah.
come in at NZD 4,000.
Yeah. That was the reason.
I'm in Mangere East.
Okay.
I'm not in Remuera.
Yeah. That was the reason. We're very sensitive to what we pay Entrust, and then how Entrust. That's Entrust's decision then. What then happens to our beneficiaries? That's 75% of our company. In my presentation, the first slide that I put up was the dividend slide, and that is the NZD 300. What I noted is, the big headwind we have is that as interest rates have come down, the biggest part of our business, regulated networks, we've only earned about 60% of what we were able to earn six years ago. That is reversing now because of higher interest rates. Unfortunately, the inflation thing. The silver lining is, for us, the higher interest rates allow us to earn more. That is not coming through until 2024.
By the way, van Camp, on your question, we will get more earnings in 2024 because of the way the regulatory system works.
And the other-
It is the top of our mind, and it's something. Just in the last two days, the board's been meeting. A big focus has been how do we improve our cash flow and our dividend?
So-
Thank you for bringing that up.
The other two questions, one of them is, we've not got a meter in our house. I mean, you know, one of these fancy meters.
Yeah.
Nor is in the house behind us. I know that 'cause I own both houses.
Personally.
When are we planning on covering all of New Zealand before we wonder about those or worry about those fellows across the ditch?
We don't have all the meters in New Zealand, so we have to compete through all the gentailers to install meters for your house. Your gentailer determines what type of meter you have in your house. We try to get contracts. Sometimes successful, sometimes unsuccessful.
What's a gentailer? Because
Oh, sorry. That's contact Mercury. Are you Mercury?
Yeah.
Mercury will make that decision. Apologize for the lingo.
I'll ring Mercury.
Yeah
Do the area.
Yeah.
I've got nothing else to do all day.
Yeah. Maybe you'll generate another sale for Vector by doing that. Another smart meter sale.
Yeah.
Okay.
Now I've forgotten what the other thing was.
Yeah, we can come later in the meeting. This is just the financial statement, so a subset of questions.
Oh, I've-
Okay
... remembered it. I've spoken to a couple of the board members. I don't know, Meridian or something is putting in charging points for EVs.
Yeah.
They forget. This is an EV.
Okay.
It's what you guys call it.
Yeah
a mobility scooter.
Yeah. Okay.
To get away from the person that I suffer an allergy to occasionally. Would you consider putting charge points in the malls? I think there's about 6 of them in Auckland.
Simon, do you wanna try?
They or me.
We could leave it till the end when we hit all our general business.
Yeah. I think what we've found with that type of solution, typically the mall owners are the parties that control that space and look to either open up the opportunity for people to put them in. We've seen public vehicle charging stations put in, you know, the perimeters of malls and supermarkets. It's probably a conversation that should be had with the likes of the mall owners about what are they gonna put in their centers to enable access for the likes of yourself. We typically wouldn't do that because we don't run network into premises such as malls or anything. Ours usually stops out on the road and then just is supply into the premise itself.
Yeah. 'Cause down in, I think it's the mall in, Mount Maunganui. I forget what it's called.
Bay Fair.
It has a charging point. Yeah,
Bay Fair.
Bay Fair has charging points for mobility scooters.
Mm.
They have three different charge leads 'cause there's three different plug-in points on scooters.
Mm
Or designs. There's the pyramid, circle one and etc..
Yeah. Okay.
I just wondered because that would assist the disabled and the elderly. I think you should cut off the power to Auckland Transport 'cause they don't like disabled people.
Somewhat controversial. Question. This is annual financial statements. Do you have a question? Yep. It is. We strayed into operational. Thank you so much for keeping our focus on the agenda. Any other questions before we go online? We wanna hear from the online folks. They may have questions on annual financial statements as well. Oh, one other question.
Thank you. Neil Hart, small shareholder.
Yep.
I was just wondering how many people are actually watching this online. Thank you.
Oh, shoot. Do we know?
Thirty.
Thirty.
Thank you.
Okay. Maybe with that question, that's a great sort of lead in to, are there any questions online from our 30 participants? No. Okay. So no final questions on the financial statements from the floor? Think we're okay there. Now we're gonna move to election and re-election of Directors, and that's our second item of business. The biographies of each Director seeking election or re-election are available on page nine on the notice of meeting. If you have questions online, remember, you can post them at any time. The first Director to be considered is Dr. Paul Hutchison. In accordance with NZX Listing Rule 2.7.1, Paul Hutchison retires, having been appointed by the board late in 2021, and being eligible, offers himself for election. I now put the resolution to elect Paul Hutchison.
As you're looking at the resolution, I'd like to invite Paul to address the meeting. Paul.
Thank you, Mr Chairman. Good afternoon, ladies and gentlemen, and thank you very much for the opportunity to speak briefly as I seek to be elected to the Vector board as a non-independent Director. From the outset, I want to emphasize my support and enthusiasm for Vector as it leads the South Pacific, New Zealand, and beyond in creating a new energy future. As the annual report highlights, climate change, the release of New Zealand's first emissions reduction plan, and rapidly increasing customer expectations together with a highlighted focus on affordability, point to a future that must be different from today. I fully support the fact that Vector has focused on making changes through its Symphony strategy. The strategy has the customer at the center and embraces decarbonization, innovation, and technology.
By way of background, I was privileged to join the Vector board at the end of last year. I was first elected to Entrust, the majority shareholder of Vector, in 2015. Prior to that, I had a wide experience as a medical specialist and in public life, serving as the New Zealand Parliament's Health Select Committee chairman for six years and in a variety of businesses. Governance experience includes being a former member of the New Zealand Medical Council, Director of a number of smaller companies, and a member of the Institute of Directors. I have a profound interest in the transformational power of science, of technology and innovation, and its links to higher standards of living, economic growth, and protecting our environment.
Vector has to date been a leader in transforming its own business, grounded in data and insights, and smartly using technology to benefit customers and to support decarbonization goals. I see my role as continuing to support this focus, challenging and questioning where appropriate. As one of five trustees of Entrust, we are committed to do everything possible to increase and protect your dividend, ensure reliable and affordable power supply as a core activity, transition to a low-carbon energy future, invest in innovation and digital solutions, and to continue undergrounding power lines where appropriate. The optimal future of Auckland is very important to me, as it is to all of us in this room. As a Vector Director, I want to ensure there is a constructive relationship with the Vector board and management, with appropriate challenge and questioning where necessary.
As a trustee of Entrust, I understand that the success of Vector means success of Entrust and of all shareholders. I believe Entrust and Vector share similar goals, and at the heart of that is sustainable earnings for the benefit of all shareholders. To back this, my role as a trustee Director will see me championing Vector, maintaining the highest business standards, advocating best practice regulatory reforms, and embracing new opportunities, such as the review of smart metering business, which is exploring opportunities to accelerate growth. I guess from a professional and a personal point of view, as a medical practitioner, I've been very encouraged the way Vector proactively manages the health, safety, mental health, and well-being of Vector's people. Their best possible health is vital to the success of the company.
Finally, it's a huge privilege to sit on the Vector board with a group of outstanding professional independent Directors and a management team that is truly leading New Zealand's energy transformation. Thank you very much for the opportunity to serve on the Vector board. I greatly appreciate your support. Thank you.
Thank you, Paul. Now, to remind shareholders, you may vote at any time, and there will be a final opportunity to cast your votes later in the meeting when all resolutions have been moved and discussed. Are there any discussion or questions? Okay, yes. Let's say you first, then you. Yeah. Is that okay? You can wait for the mic. You can direct either the question to me or we'll see what the question is, and then we'll see who answers.
Peter McLean speaking. With this form, is there any significance in the different colors of four and five here? Why is one Director being reelected for one year and the others over no different period of time?
On the colors. John, I'm trying to think of the colors that you're referring to.
From here.
The significance of the colors.
There shouldn't be any significance in the colors.
No, it's just that some are in ordinary color, and four and five are in a reddish color.
Right. No. The ordinary resolutions are all listed on page two and three.
I'm looking at the voting form.
Right. I see.
No, there should be no significance.
Thank you.
Don't be concerned about it.
Okay. We okay on the color question?
Yeah. Thanks.
Okay. Hold fire for just, like, two minutess on the 1-year thing. The 1 year is me, and I'll explain it in my talk. It's a great setup for my talk. There was another question.
Mohammed Naqi, shareholder. Hutchison, you were appointed last year you said?
Correct.
Okay. The record shows that you attended one meeting. Now, is that correct?
Is that a meeting attendance schedule?
Oh, yeah, that's right.
Yeah.
If there were more than one meeting.
Paul's attended.
How many-
Paul's attended every meeting since he's become a Director.
Director.
Yeah.
Are you sure?
Yeah.
Okay. Because going through, it said attendance it was one. Yeah. Might be I'm wrong.
It could be if it's referring to a committee. Directors aren't on all the committees, so sometimes it just shows up that they went to one committee meeting as an observer, but.
Okay. Thank you.
All the Directors. Okay.
Sorry about this.
Good. Yes. Oh my gosh, this is the most questions we've had on any Director election, Paul. You should feel so honored.
Hi. I have a question for all Directors intending to seek reelection. Two questions. What specific skill set does each Director bring to balance the board's current skill set? Number two, what management subcommittee will each Director contribute to? For example, in ESG audit and so on and so forth. Thank you.
Could I just try to do that? To go through every Director is gonna be a little time-consuming. If I just start at the high-level, and I'm happy to go into detail, like, after the meeting for any specific Director. What we did, this past year, is we got an independent consulting firm called Propero, who came in and looked at all our skills and compared those to the skills that we wanted to have in an ideal world. You always have to make compromises, but we need financial literacy. We need an understanding of the New Zealand regulatory environment. We needed some understanding of the Australia regulatory environment. It is really handy to have at least one Director with an engineering, sort of an electrical engineering, background.
To give just a couple examples on that, like Paula Rebstock was former head of Commerce Commission and is, I mean, Paula just to compliment you, is so amazing when we have to approach the Commerce Commission and Electricity Authority in thinking how they would look at stuff. It has helped us to fashion better responses to very important regulators. I mean, you know, the Commerce Commission with the drop in the re-regulated interest rate has dropped our earnings 40%. Another example, Bruce Turner has worked for Vector, what, 30, 40 years ago, and as part of the energy security sort of a committee in New Zealand for many years and just knows the electrical network really well. Those would be two examples of how we look at a skills matrix. What do we ideally need on the board?
We want like complementary skills. What do we actually have? Alastair Bell is another example. You know, great accounting background. He'd be on the accounting and risk committee. We divide it up in committees based on our skills as well.
Thank you for that. I think it would be advantageous for us to assess. For each of the Directors, if they're gonna be a Director, they have to stand up for themselves and sell themselves to us, say.
Yep
... and not-
What we didn't do with the Directors, we could think about this network, we certainly beefed up in our annual report, our skills matrix. Our description of what we want. If you look this year in the annual report, we didn't have it last year. Is a skills matrix for the Directors. We're anticipating your question already in this year's annual report. Each Director talks about their background. What I would really need to do as chair to address your question well is to talk about the skills on the board, what we have, and how different Directors contribute to them. That just might be a little bit time-consuming right now. I'm happy to talk after the meeting. Okay? Is that okay? Any other questions for Paul? I think we're.
Thank you for questions for Paul. Now.
Chair John.
Yes. What? Yeah.
Thank you.
Yeah. Yeah. The one was Mike Buczkowski, who happens to be here. He only attended one meeting because he stepped off the board. That was the one meeting. It was just a line up from Paul. I knew Paul had had perfect attendance. Okay. I'm going for election, and I'll explain the one-year thing. Sort of for good corporate governance, I'm now gonna turn over to the deputy chair, Paula Rebstock, to take us through and to lead the meeting while I'm asking for election. Paula.
Tena koutou katoa. Good afternoon, everyone. It's a great pleasure to be here with you and to introduce this next item on the agenda. In accordance with NZX Listing Rule 2.7.1, Jonathan Mason retires by rotation, and being eligible, offers himself for re-election for a term of one year. I now put the resolution to re-elect Jonathan Mason. I'd also now like to invite Jonathan back to the microphone to address the meeting, and hopefully will answer one of the questions that was put. Thank you.
Sorry, I'm back, and I'm gonna be really brief this time. I'm Jonathan Mason, Independent Director and Chair for Vector, and I've been on the Vector board for the last 9.5 years. Before that, I had a career working as a chief financial officer for publicly listed companies, including Fonterra, Carter Holt Harvey. I'm also currently a Director at Air New Zealand, Xero and Westpac. Oh, American. I started as an American citizen, moved here 20 years ago and loved it so much. My wife's American too, but we moved here. Now, I'm gonna anticipate this question again. Okay, sorry, it's gonna be brief.
I have a finance background, so I was, as chair of the audit committee, analyzed the financial statements to make sure that they were accurate. The financial statements you get, I worked on them, you know, supporting management to look if they're accurate. At places like Fonterra and International Paper where I worked, huge capital budgets, just like Vector. I had a background in analyzing capital investments to try to figure out whether they're gonna work or not, what are the risks. Also risk management. Don't wanna get into things that hurt Vector's reputation or, hurt our profit or have unanticipated consequences. On the risk management committee, have worked over the last 9-10 years really thinking about. It's audit and risk or risk, Bruce shares it. Really looked, helped look at the committee, think about risks.
That's what I would bring to the board. I'm gonna skip over the next section because I sort of ad-libbed through the last section and just go back to now for the one-year issue. Term limits, I think we have really a set of capable Directors. It's not good to stay on boards forever. I've been here 9.5 years, and it made sense. Like, we talked as a board, talked with Entrust, and it made sense for 10.5 years. Then other people take over, and change is good. I have 10 years of history I've contributed. I just wanna say, I have felt so privileged working for you. Not everything has gone perfectly, horribly. I wish our financials were a little better, and we're working to make them better.
working for beneficiaries, living in Remuera, so I'm a beneficiary too. A privilege working for you the last nine years, and I hope you'll support me for re-election for one more year. Thank you.
Okay. Thank you, Jonathan. Just to remind shareholders, you may vote at any time, and there will be a final opportunity to cast your votes later in the meeting when all resolutions have been moved and discussed. First, I'd like to ask, is there any discussion on this resolution to reappoint Jonathan for one year? It doesn't appear to be any questions in the room. I'll now ask if there are any questions online with respect to this resolution. Now I can see the two heads nodding that are monitoring that, so thank you for that. And then, since there appears to be no further discussion on this resolution, you can now see the proxy voting position for this resolution on the screen. Thank you for that, and I'll hand back to Jonathan. Thanks.
Again, sorry to be repetitive, but to remind everyone, you may vote at any time. Final opportunity to cast your votes later in the meeting when all resolutions have been moved. Going to the next resolution, we're gonna do sort of a swap. The next resolution is for Paula. The proxy voting position will be stated, and I think I'll turn it over. Do I have to reissue the listing rules? We do this every time. NZX Listing Rule 2.7.1. Paula Rebstock retires by rotation and being eligible, offers herself for re-election. Now put the resolution to re-elect Paula and would like Paula to address the meeting. Paula.
Kia ora koutou. Thank you again for just giving me a brief opportunity to give you some background on my possible re-election. First of all, I just want to acknowledge how fantastic it is to see a number of you again in person. I've been here for the last few years, but it is nice to be back in person. I want to add my congratulations to Vector in their ability to continue to provide customers exemplary service when and where it was required throughout the series of COVID lockdowns that impacted our city. I joined the Vector board three years ago in April of 2019, and I'm pleased today to have the opportunity to now seek your support for my re-election as an independent Director.
The last three years has been filled with a number of opportunities and challenges. You've heard a great deal today about the important matter of addressing the quality breaches that Vector had with the Commerce Commission. When I came on the board, that issue was just starting to be addressed. As with my colleagues, I'm thrilled to see that having been addressed. For two years now we have more than met the expectations on these critical performance measures. Now, this is important because it allows us to resolve a problem we have with the commission. That's for certain. What really matters about it and why the commission cares about it is because it adversely affects our customers if we don't provide the services at the quality that people in the city deserve.
It is really with great delight that we see those matters having been addressed, and not just addressed in a one-off way, but in a way that can be sustained, and we can ensure that people in the city get the services they deserve and they demand, and not just any, service, but the best this country has to offer. Globally, the energy sector is facing levels of change not seen by this industry in decades, if ever. Importantly, Vector continues to work towards its vision of creating a new energy future through the Symphony Strategy. With the customer at the center of the strategy, Vector has, for a number of years, been working to meet the challenges and opportunities of decarbonizing New Zealand's economy.
The partnerships with Amazon Web Services and X, formerly Google X, are tangible examples of the sector leadership that Vector plays and how these strategic collaborations can help to solve today's challenges in ways that are very different to the past. The company is well-positioned across its regulated businesses, smart metering, cyber, and Vector Technology Solutions. The board has worked hard with management to find a strategy that not only delivers services today but ensures that we're able to deliver the services you all deserve in the future. Over these past three years, I've served on the full range of board committees, the Audit and Finance Committee, the Risk Committee, the Remuneration Committee, the Nominations Committee, and I'm currently chairing the People and Remuneration Committee. You all know how important this particular committee is at this time.
It's always important to look after your people 'cause at the end of the day, that's all this business is, people. It's particularly challenging right now. Every business you'll own, you'll be shareholders in a lot of businesses. You'll hear it at every shareholders meeting. It is very tough right now to recruit, retain, and properly reward people. This subcommittee, I have the pleasure of chairing it, and we're very focused on the well-being of our staff. I believe that my experience with the public and private sector continues to be relevant to the effective governance and commercial success of Vector. I am an economist by training, and I've worked with the energy sector in various roles for 15 years. My business and governance experience spans the financial markets, infrastructure, regulatory, and health sectors.
In particular, I've been fortunate to be involved in a number of large-scale digital transformations aimed at meeting the rapidly shifting consumer needs and expectations. My other current roles include being a Director of AIA, One Rail Australia, and CityLink. I'm also Chair of Kiwi Group Holdings, an Asia-Pacific healthcare group. I won't go over my past roles. They're in the material that's been provided. In conclusion, I'd like to welcome your support for my re-election as an independent Director. If re-elected, I look forward to working with my fellow Directors and the senior leadership team to continue to deliver value and sustained investment returns for you, our shareholders. Thank you.
Thank you, Paula. Is there any discussion or questions for me or the board or Paula? Don't think I see any. So there's the proxy voting position for this resolution that should be shown on the screen. Sorry. Now on to Alastair Bell. Sorry to repeat this. In accordance with NZX Listing Rule 2.7.1, Alastair Bell retires by rotation, and being eligible, offers himself for re-election. I now put the resolution to re-elect Alastair Bell, and I'd like to invite Alastair to address the meeting.
Thank you, Mr. Chairman, shareholders, tena koutou katoa. Thank you for the nomination for re-election to the board. I was first appointed to the Vector board at this meeting three years ago. As a Director of your company, I acknowledge the opportunities ahead for Vector, as well as the privilege and responsibilities of being a board member. Vector's at the heart of the massive changes impacting consumers that are occurring throughout the energy system. The sustainable value drivers for newer forms of energy and their place in the energy market are evolving at pace. Vector can look ahead and contribute to a decarbonized power system that is much more heavily electric and data centric. Vector plays a critical role in the energy sector. It's an active participant in the value chain of energy distribution.
The cost of delivering energy to consumers, whether businesses or households, is always a constant consideration and a rightful constraint. It's right too that intergenerational considerations continue to ensure that the enormous capital costs of delivering, growing, and upgrading Vector's infrastructure are fairly balanced between today's consumers and future generations. Vector's Symphony strategy places the customer at the center, and this may sound a bit repetitive at the center of their own energy needs, encouraging consumers to make informed data-led choices about what's best for them. Digital solutions are critical to the delivery of this strategy and how Vector continues to deliver safe, reliable, affordable energy as demand continues to increase. All Directors are appointed with the support of the majority shareholder interest, which is one of its core responsibilities undertaken with due care.
As a non-independent Director, I, along with my colleague, Dr. Paul Hutchison, act in the interests of Vector. However, I also represent the 75.1% majority shareholder. Entrust has over 351,000 beneficiaries who are consumers connected to the Vector Electricity Network in Central, East, and South Auckland. It's a special ownership structure where the interests of energy consumers are strongly recognized and included in this regulated and critical infrastructure business. In fact, last week, as the 2022 final Vector dividend was paid to all shareholders, those 351,000 consumers, mostly not shareholders, also received their share of the dividend paid to Entrust. The payment to consumers amounted to over NZD 95 million directly into the Auckland economy.
Essential to consumers and shareholders alike is Vector's commitment to power reliability and affordability, rising expectations, responding to climate change, and the government's policies and business and consumers' actions on decarbonization. As a media commentator said this week.
There's a lot to be said for businesses involved in the transition to clean energy being likely to drive future value. It's a professional privilege to work alongside recognized, highly qualified independent Directors on the Vector board, led by our Chair, Jonathan Mason, and the professionals of the Vector business, including Simon Mackenzie and his team. I would welcome your support for my re-election. If reelected, I look forward to working collaboratively on delivering value and sustainable investment returns to you, our shareholders. Thank you.
Thank you, Alastair. Any discussion or questions for Alastair? I don't think I see any hands up. The proxy voting statistics for this resolution should be shown on the screen. Great. Now last but not least, the board recommends Doug McKay for election as an additional Director. Doug's unlike reelections, Doug is being elected. Doug, being eligible, offers himself for election with effect from the first of October. I now put the resolution to elect Doug McKay and would like to invite Doug to address the meeting. Doug.
Tēnā koe Jonathan, and Kia ora, everyone. Good afternoon to all fellow shareholders, future colleagues, ladies and gentlemen. It is a privilege to put myself forward as a board member candidate for your board. This is my first time before you, so I would like to properly introduce myself and explain why I would value your support today because of what I can bring to the company and to the board. Firstly, an overview of my experience and background, and its fit with Vector's strategic focus going forward. My executive life was spent as CEO or managing Director in multiple industries in a diverse range of large and complex companies. I have always gravitated to businesses facing challenging strategy transformations and for whom operational excellence is at the heart of what we do. Vector has these characteristics.
As an executive at Lion Nathan, Carter Holt Harvey, Goodman Fielder, Sealord, and Independent Liquor, and in more recent times as a Director on Ryman Healthcare, Genesis Energy, National Australia Bank, IAG New Zealand, Fletcher Building, and chair of the BNZ and of Eden Park, I am now a seasoned and well-performing experienced Director, also with extensive Trans-Tasman exposure, all of which I think is particularly relevant to the challenges and opportunities Vector is dealing with. With eight years on the Genesis board and stepping off to take up this opportunity at Vector, I have a good understanding of how the New Zealand energy industry works and have seen Vector from the perspective of a supplier, partner, and competitor. The challenges of energy transition are all too real for me, and I look forward to applying myself to those challenges in an energy distribution business and provider of critical infrastructure.
In an era of distributed energy, Vector certainly has some significant competitive advantages in leading decarbonization and network optimization, and also enabling others to reduce their carbon impact by using energy more efficiently. I believe that on New Zealand's path to decarbonization, solving for process heat, empowering consumers to adopt demand response solutions and electric New Zealand passenger transport are examples of important areas where Vector can continue and increase its leadership, given its expertise in distributed energy and network management. I am confident I bring relevant, deep experience and knowledge of operating in Australia and New Zealand. Vector is on a growth trajectory in both these geographies, and I can help a lot with experience operating in both.
Here in Auckland, which of course is Vector's home patch, I also bring unprecedented experience and knowledge, having been in Auckland for most of my life and in 2009 was appointed as the inaugural CEO of the Auckland Super City, a position I held for four years through until 2013. I have also been Chair of Eden Park Trust for nine years, and am confident I know how to operate in Auckland at all levels and do understand citizens' expectations of critical city infrastructure. That said, the Vector group of businesses span most of New Zealand, and Vector Technology Solutions opens up potential markets overseas for new energy technology. On the governance front, I mentioned earlier my current and recent board responsibilities on which I have also been chair of various committees, including audit, risk, health and safety, and environment and remuneration.
I am an experienced full-time independent Director who will hit the ground running with your support today. I am very excited and energized to be more deeply involved in learning more about the regulatory environment Vector operates in. Not unfamiliar territory to have regulator oversight, as I have had on the BNZ and NAB boards in banking and also with insurance at IAG. Even with Fletchers, of course, the Commerce Commission has loomed large recently. While some of this will be familiar, I will also enjoy learning new perspectives as well. I look forward to being part of a senior and highly experienced board supporting and challenging a talented management team. Thank you in anticipation of your support.
Thank you, Doug. Questions or discussions. Yes.
Mr. McKay, I'd like to ask you, can you give us one really bright idea on how to improve Vector's balance sheet?
Well, he doesn't start until the first of October, okay? Pretty steep learning curve still.
You must have read the report.
I've read the report. Thank you for the question. I'd just like to emphasize what Jonathan said to you, Mrs. van Camp also, that it is a very, very good question. It is the challenge that sits in front of all of us, how we leverage the balance sheet in a safe and. I think I'd like to be a bit more conservative on our balance sheet, I think would be the direction of travel I'd like to see us go. We have a huge infrastructure business. Remember, we are investing to maintain the current asset base while we're trying to invest to create a new set of assets in a decarbonizing world.
We're also looking to get growth for our shareholders so we can strengthen the cash flow and the earnings going forward. I can give you my commitment that I'll take a very balanced view with an objective to decreasing leverage in the balance sheet. That's what I'd like to say at this stage.
Other questions. Oh, yeah.
Mr. Chairman, I have one question for Doug McKay. There's no question about your ability, you certainly have it. What I would like to know, how many companies as of the moment are you a Director of?
Thank you for that question. My capacity is where I want it right now. To be honest, I couldn't tell you the exact number. It's seven or eight or six or seven boards. Let's say seven for the moment. I won't waste the time to go and count exactly. I have been on this number of boards for the last decade, and both the shareholders associations in Australia and New Zealand are comfortable with where my portfolio sits. I could not have added Vector as an additional board to my portfolio, and hence, as I was coming off Genesis, reaching close to full term, I have replaced Genesis with Vector because I feel like I have the passion and the energy to go another round with a new company who interests me very much.
You don't see any conflict with your time. That's—'cause some Directors are in so many companies. That's the failing after a while. They realize it's not good for anybody, particularly the new person taking over.
Yeah.
as a Director of that company.
I just repeat the evidence that sits before you, which I've operated at this level for the last 10 years with this amount of boards. I am full-time committed to being an independent Director. Previously in my executive life, I was like Simon, no doubt, is today, 60-70 hours a week. In my full-time governance life, I'm aiming to be 40 hours a week, 40-50 hours a week. I've cut it back from executive life, but I'm very comfortable, as is my wife, as is my family, who are very supportive of the hours and the time I spend on my boards.
Very good, Mr. McKay. Thank you for that.
Any other questions for Doug? Anything online? No. Oh, there was another question. Sorry.
It's only for the whole board and the management. Have you at any time considered wind power?
Okay. Why don't we hold that until the end of the meeting?
Yeah.
Because it is just about Doug's election right now, right? Hold that thought. Any other questions on Doug's election? Okay. I don't see any further questions. The proxy voting position for this resolution is now shown on the screen. We've completed now the Director elections, and we're going to move forward now with the appointment and remuneration of the auditor. I am hoping this is a non-controversial part of our business agenda today. Section 207T of the Companies Act 1993 provides that a company's auditor is automatically reappointed unless there is a resolution or other reason for the auditor not to be reappointed. The company wishes KPMG to continue as its auditor, and KPMG has indicated its willingness to do so.
Section 207S of the Companies Act of 1993 provides the fees and expenses of KPMG as auditor are to be fixed by the company at the annual meeting or in such a matter as the company determines at the annual meeting. The board proposes that, consistent with past practices, the auditor's fees should be fixed by the Directors. Questions on the reappointment of the auditor?
What were the fees last year?
They're in our annual report. Jason, do you have the page number for that? We're required to put them in our annual report under the Fees section, so. I always look in the annual report for it. I just don't have a page number in my mind.
I've seen the three.
Right at the bottom of the sheet, but some of you won't have this in front of you. Fees paid to KPMG, audit and review of our financial statements, NZD 594 thousand. Regulatory assurance, we have to file a lot of regulatory statements, NZD 394 thousand. Other assurance fees, NZD 67 thousand. Non-audit fees, NZD 199 thousand. That's a recap of their fees.
What was the total?
Oh, gosh. Okay. Jason, I want a subtotal in that note for next year. Just kidding. NZD 1.1 million, NZD 1.2 million. Happy after the meeting to add those numbers up for you and give you the exact dollar amount. Yeah. Yeah. Roughly the same as the previous year. A few puts and takes in the subcategories. Other questions on auditor remuneration? I don't think I see any further questions, and so the proxy voting position for this resolution is shown on the screen. Okay, moving on to the next matter. We have a couple alterations to our constitution. The resolution deals with amendments to Vector's constitution. Full explanation is set out in the notice of the meeting, and the proposed amended constitution has been available to view on Vector's website. In summary, the amendments fall into two categories.
A, changes allowing Entrust to appoint a Director to fill a casual vacancy on the board due to the departure of a Director that is an Entrust trustee. Basically, having one new Entrust trustee, having that vacancy filled. B, changes to allow the trustees of Entrust to approve transactions involving more than 15% of Vector's average market capitalization by providing approval in writing. Just to remind shareholders, you may vote at any time. That's A, that's B. Then there's a final opportunity to cast your vote. Importantly, though, any questions on A or B on the amendments to the constitution? Anything online? I don't think I see any questions. Proxy voting position is shown on the screen. The next item, I think we're close to the end on the resolutions.
Apologize that we have so many. We have more than normal this meeting. This resolution seeks shareholder approval to increase the total annual Director fees, implement this over 2 years, and change the structure of fees from fixed amounts to a maximum pooled amount. The board has undertaken a detailed review of Directors' remuneration, including engaging PricewaterhouseCoopers to undertake independent market benchmarking. A full explanation of the proposal is set out in the notice of meeting, and a summary of PwC's benchmarking report has been available to view on Vector's website. Questions or discussion on Director fee increase? It's in the notice of meeting. I mean, what I'd say is Directors' fees have been flat for 9 years. This reflects a bump up in Directors' fees. Any questions? Any questions online? No further questions.
Oh, there is a question. Yes.
Ross Collison, shareholder. I have one sort of question with this. Like, looking at the figure, it's quite a big figure, but as you say, it's been nine years since you had an increase, so it's probably not a great movement. Just out of interest, over the same period, the general staff that works for Vector, have they had a similar increase?
Yeah. This represents about a 2.5% per year increase, 2013 to 2023, and I anticipated your question. I asked our head of HR earlier today that very question. I think we estimated it at about 3%, 4%. Let's say 3%-4%. We're comfortable it's below that. We were sensitive. We see ourselves as servants of you all, and also overseers, but servants of the company, and we wouldn't want our remuneration to be higher than staff. The staff have got an increase every year, right? They haven't gone 9 years without an increase. Any other question? Okay. With that proxy voting position for this resolution is shown on the screen. Happily, we have finished all ordinary business.
Are there any items of general business to be discussed or questions to be raised? Sir, you had the question on wind power.
Yes.
Now, what was the question exactly?
Yeah. Basically, instead of one PR firm. I'm only asking 'cause my son-in-law owns the largest-
Right.
farm in the North Island.
Okay.
Probably has an investment close to yours. It's well over NZD 100 million.
Okay.
Somebody, I think it's Genesis, has snuck in there and building a wind farm on his farm.
Okay.
He's still got another-
Good
80,000 acres.
Yep. I'm gonna start, and Simon, fill in anything you'd want to. We're not a generator. I use that term gentailer. Generators are doing wind farms like, you know, almost, I think, pretty much all of them. We're a deliverer of energy. We transport rather than generate energy. We have a store. We did have an investment in a wind farm, I'm gonna say 8, 9 years ago, but we divested out of that, and we haven't reinvested in any meaningful new wind farms because we wanna define our business more narrowly and not try to be everything for everyone. Plus, pretty expensive CapEx on wind farms, and we've already alluded to capital challenges. Simon, do you wanna say anything else on that?
No. Basically, just one point is that under the Electricity Act, we can't invest in those kind of large farms because of the separation between the network and the generation retail market. We can do a very minimal amount, but nothing that would ever get to scale and be of relevance.
Is that okay? Any other questions? Yes.
Yeah. Hi. Ian Renton, bondholder and proxy. Question on plans and strategies for undergrounding. Dr. Paul Hutchison mentioned it briefly in his address, but I haven't read or seen anything lately. It was also mentioned AEPB was 100 years ago, and I suspect that some of the infrastructure might have been put up on day one, maybe. I'm just wondering where we're going with that.
At least we sweated the assets in that case, but they need to be workable. Simon, do you wanna talk about our status on undergrounding? We do have quite a big project in St Heliers currently.
Yep.
Yeah.
We basically have an annual undergrounding projects that typically are around about NZD 12 million-NZD 14 million a year, depending on how things play out with regards to timing. That's the level that's undertaken. That's a commitment that we've entered into, or sorry, that was in place because of the relationship with Entrust when we listed. That's the level of undergrounding. When we talk about undergrounding, of course, most of the network that we're building new is underground now.
Other questions.
Simon, for undergrounding for AEPB, but I'm not gonna need. We haven't had an outage for three years.
Okay. That's good to hear.
One anecdote.
Yeah.
Good. Thank you. Other questions, general business? Yes.
I'm Dennis Bacon, I'm shareholder. The last actual meeting we had here, I heard somebody say that HRV, when you bought it, was a dead duck. Now, could you please give us some idea on how it's performed since it's been under your control?
Yeah. HRV, we did take an impairment on that two or three years ago, and since then it's gone into the black. What I'd say though also is, it has been disadvantaged on the stop-start, so it's been hurt by the lockdown. When we went into a deep lockdown six months or 12 months ago and stayed there, HRV's business plummeted down and, we couldn't get out to a lot of the houses in any case. Since then, it's done reasonably well. It's not a material part of our business, but I'd say it is in the black. Other questions?
Over here.
Yep.
Yeah. My name's Robert Gray, shareholder. Talking about wind farms, the one you used to have shares in, I remember that Michael Wow. You know, the meeting's just been this morning.
Yep.
The company seem to have big plans for the future.
Thank you for that update.
Maybe you should buy shares in it. Maybe you should buy some more shares in it again.
Okay. Yeah. We look at spending our money very wisely, but take the update. Other questions, general business? Yep.
Hi. Richard Jenkins, small shareholder.
Yeah.
It says up there, "Creating a new energy future." Now, the energy future that I see is everyone is gonna have big batteries on wheels in their garages. What I think needs to happen is we need to use those batteries to generate power at peak times and then charge them at 2:00 A.M. when, you know, there's no demand. When is that gonna be able to happen?
Simon. Part of a Chair's role is, if they get a difficult question, they move it to the CEO immediately.
I think probably two answers to that. One is that it is already available now. You can do that. It's called vehicle-to-grid charging. We have some vehicles that can enable that. One of the primary issues with vehicle-to-grid is actually what the vehicle manufacturers will allow their vehicles to do because it goes to battery warranty issues around, you know, the car warranty and everything else. The technology is available now. For us, the point you raise around charging and discharging the energy from those batteries is something that we passionately believe in and have run a trial of 200 electric vehicles being charged.
Primarily charged, not discharging, but charged, using a platform to actually schedule when they charge so as to smooth out the amount of peak energy that they require on the system, so they don't all connect at once. That's certainly the way of the future. It's the way that we see in the UK that things are now playing out, that there's a requirement for where there are people have electric vehicles that the charging device gets connected into a system that controls. It's almost like an air traffic control system that said, "Okay, let's have these scheduled, so they don't all need to be charged at the same point in time." It understands what's going on in the network. That's something we're very much pushing for. We've invested in the technology. We've done two-year trials.
We know that there are things called machine learning and algorithms that actually understand the behavior of customers and when do they need to have their vehicle charged, and therefore having it ready in time. It's really a set and forget mentality. People don't wanna have to kind of wake up and think, "I need to plug in, plug in now," or anything like that. The other point which is super critical about it is what it also does is it means the amount of network that needs to be invested in can be managed, so it's much more affordable for everyone in Auckland.
Because if you build to peak, it's actually gonna be a very expensive network build, and our analysis shows that by around about 2040, if you had an uncontrolled environment, the amount of the network that we need to build now would be three times what we currently have as a network asset. If we have a controlled environment, it's about twice. It's a very material cost difference.
667.
The people who are using the cars back to the house.
Yeah.
Yeah.
The power from the vehicle to the house, as I say, can be done now. But you do need basically a different type of charging port or a port because you're doing basically a bi-directional flow. Enabling it to come in and out, there's quite a lot of complexity based on how that interfaces into the household environment.
What you described is our vision for the future. We have few impediments.
Do you have that now?
We have, for example, we have that running in our basement in Auckland now. It's we have a vehicle running on it out in a rural area. Primarily the bigger issue is what is the consumer demand for it and what is available through manufacturers, vehicle manufacturers, 'cause that's primarily where the solution we see will come from. Vehicle manufacturers coupled up with the people that are providing the charges.
We'll watch how the EVs.
Probably within five years.
Yeah. Watch how the EVs come into-
Yeah
New Zealand.
I don't think any of it will survive.
Okay
to be quite honest.
Okay.
Because the farming community will not pick up any EV.
Um, other-
Yeah, I think at that point, the issue will be which we see very much occurring now is in different parts of the country, there'll be totally different solutions required.
Yeah.
Hybrids, hydrogen for heavy transport.
Yeah.
In urban environments, we'll see probably more EVs. What we do know from research overseas is, as countries like Norway that have a very high penetration of EVs, most people still have or quite a lot of people still have a, fossil, you know, or a petrol-fueled vehicle for much longer range when they're traveling.
Good. Other questions, general business? I don't see any. Is there any questions on general business online? Okay. That concludes our discussion on the items of business. Okay, now it's time to cast your votes if you've not already done so, and we're gonna get help for you to translate any of the small words. Have we done that?
All done.
All done. Okay, excellent. Time to cast your votes. I'm gonna give 30 seconds. I know we've sort of had a long annual meeting already. Tony's giving me an F.
Yeah.
Now I will shortly close the voting system. Let that go on for a little bit. Casting your paper votes. Good. Gave a little longer than 30 seconds. Good. Please ensure that you've cast your vote on all resolutions. We're sort of waiting a moment for final votes to be cast. We've gone through the paper votes through the room. Has everyone in the room been able to vote? You've all found a box to vote? Good. Okay. See the last few votes going through. Okay. We'll just say final closing of the meeting. I'd like to thank again my fellow board members for their input during the year, Simon and his team for the performance throughout the year. Once the voting's closed, the result of these votes will be released to the stock exchange tomorrow.
Everyone have their vote in. I now formally close the voting. We already had general business. Any final questions? I think we have had plenty of time for questions.