ANNUAL REPORT 2025
Smart starts with people
In today's constantly changing energy landscape, Vector is focused on delivering what Kiwi homes and businesses rely on every day: safe, reliable, resilient and affordable energy
infrastructure. We're using smart technology and innovation to
do this for our customers.
1
Investing in a smarter system
2 Vector Annual Report 2025
We're investing in critical infrastructure, both physical and digital, and we're sharpening our focus on data and insights, to boost resilience in the face of climate change, empower our customers, and support economic growth.
3
Powering a smarter future
As we transition to an electrified future, we're making a series of smart moves to deliver affordability, accessibility and reliability, because this matters more than ever to our customers and the country.
4 Vector Annual Report 2025
Contents
Performance snapshot 6
Chair and group chief executive report 8
Environmental, social and governance (ESG) 12
People, health and safety 14
Sustainability 18
Business segment reports 20
Electricity 22
Gas distribution 24
Vector Technology Solutions (VTS) 25
Governance report 26
Remuneration report 36
Who we are
Our board
Our management team
Entrust, majority shareholder of Vector
Other disclosures
Operating statistics
Five-year financial performance Non-GAAP financial information
Financials
Financial statements
Notes to the financial statements Independent auditor's report
Statutory information
Financial calendar and directory
44
46
48
50
51
52
53
55
56
57
63
104
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118
About this report
This report, dated 22 August 2025, is a review of Vector's financial and operational performance for the year ended 30 June 2025. The financial statements have been prepared in accordance with appropriate accounting standards and have been independently audited by KPMG.
The financial and operational information has been compiled in line with NZX Listing Rules and recommendations for investor reporting.
The report has drawn from a wide range of information sources. This includes: our stakeholders, customers, communities, sustainability framework, value drivers, risk register, board reports, asset management plan, financial statements and our operational reports.
2025 REPORTING SUITE
GREENHOUSE GAS EMISSIONS INVENTORY REPORT 2025
CLIMATE-RELATED DISCLOSURES 2025
Smart moves
ANNUAL REPORT 2025
This annual report is published as part of a reporting suite, which also includes our climate-related disclosures report and greenhouse gas emissions inventory report. All three reports are available at vector.co.nz.
5
Performance snapshot
Performance snapshotFinancial and operational dashboard
SHAREHOLDER:
INDICATOR PERFORMANCE AND NOTES
Dividend 25 cents per share full-year dividend
New dividend policy linked to cash flow and aligned with five-yearly regulatory cycle (available at vector.co.nz/investors/dividends)
Capital expenditure $470.1 million for continuing operations
Adjusted EBITDA1 $401.1 million for continuing operations, up 16%
Droffit $154.7 million net profit after tax
CUSTOMER:
INDICATOR PERFORMANCE AND NOTES
Electricity connections 632,106
Gas connections 120,621
Electricity resilience and reliability
>2,000 km of network inspected by drones
12 projects completed to boost resilience and future capacity in Auckland
DATA:
INDICATOR PERFORMANCE AND NOTES
Smart meter data intervals 1.7 billion data intervals assessed on Diverge
platform, applying market rules to ensure accuracy, processed significantly faster than previous systems
Customer engagement 10,577 completed surveys or interviews with customers, providing direct feedback on our services, complementing further insights from conversational analytics
Network inspections More than 43,000 power poles inspected using 130,000 images, along with artificial intelligence to survey and assess condition
1. EBITDA from continuing operations adjusted for fair value changes, associates, third-party contributions, and significant one-off gains, losses, revenues and/ or expenses. Refer to the Non-GAAP reconciliation on page 55. Adjusted EBITDA excludes the capital contributions customers pay for new connections on the network.
6 Vector Annual Report 2025
Performance snapshot
ESG dashboard
ENVIRONMENT:
INDICATOR
2030 carbon emissions
reduction target (scope 1 and 2, excluding electricity line losses)
Scope 3 emissions Internal carbon price
Climate resilience investment
PERFORMANCE AND NOTES
Achieved target five years early (55% emissions reductions achieved in FY2025)
744,316 tCO2e (55% reduction from FY2020 baseline)
$140 per tCO2e
Around $300 million in climate resilience projects in our 2025 electricity asset management plan, including more than 50 resilience projects or programmes of work
Electric vehicles
54,135 electric vehicles on our network, up 5,703 from FY2024
Governance - we disclose comprehensive governance information on page 26.
SOCIAL:
INDICATOR
Talent pipeline
PERFORMANCE AND NOTES
64 critical roles identified, as part of our talent pipeline development strategy
Future talent strategic collaborations established with 3 organisations
Development and succession planning underway
Leadership development Community
Contractor safety
78% of people leaders attended at least one development activity
Home energy saver programme completed on 724
households in collaboration with Auckland Council
Quarterly workshops with contractors to support an open learning environment
7
Chair and group chief executive report
Chair and group chief executive reportNew Zealand's energy landscape has been extremely dynamic over the past year
as a consequence of challenges such as severe weather events, affordability, and scrutiny on sector performance, and its importance to businesses and households. Alongside this, global trends for the energy sector continue to take shape and require agility, like technology and digital innovation, evolving customer demand patterns and behaviour. We're engaging consistently with the Government as
they, and regulators, execute reviews into the structure, performance, and rules of the energy sector. It's critical that the right policy and settings are in place to enable the industry to manage the energy transition effectively, and it's clear that change from the status quo is needed.
Our Symphony strategy remains focused on putting the customer at the centre of our decisions. We're acutely aware of the importance of getting the balance right between affordability and prudent, efficient investment given the cost-of-living pressure many
of our customers are facing.
Our focus remains on providing a reliable, resilient, secure energy supply and our long-term planning to do this is influenced by rapid technological change and shifting customer behaviour. We've responded by thinking beyond traditional solutions and grasping
the opportunities that come with these developments. We continue to focus on innovation, embracing AI, harnessing data, and deepening our understanding
of customer needs, now and into the future.
Our business portfolio has continued to evolve. The completion of the sales of Natural Gas Trading, Vector Ongas and our shareholding in Liquigas are examples of successful transactions that align with the risk and future operating environment of each business. The
completed transactions enable us to concentrate on the core strengths and demands of our regulated electricity and gas networks and explore growth opportunities, such as through Vector Technology Solutions (VTS), or our investment in metering business Bluecurrent.
On 1 August, after balance date for these results,
Vector announced via the New Zealand Stock Exchange (NZX) the sale of HRV.
In the reporting period, our new five-yearly default price quality path (DPP4) for the electricity network has taken effect, on 1 April 2025. We've valued the engagement we've had with the Commerce Commission as they worked through this important regulatory milestone,
and we're pleased to see recognition of the importance of several of our long-standing focus areas, such as uplifts in provisions for cyber resilience and customer engagement, and an expanded innovation allowance scheme.
We're well placed to continue our investment approach under the new DPP, which is to avoid committing to high levels of capital investment in areas where there
is significant uncertainty, or to cover short demand peaks when there are other, less capital-intensive ways to use available capacity and build network resilience. What this means is that we've prioritised how we invest capital to areas where we can have the most impact on customers. For example, in the past year we've inspected more than 2,000 km of network using drones, and completed 12 projects to boost resilience and future capacity in the CBD.
Our commitment to Auckland's growth and electrification remains strong, and the region continues to grow despite the broader economic slowdown. While we've seen a softening in the rate of new connections this year, and fewer private electric vehicles being sold, Auckland is experiencing rising demand for hyperscale data centre connections, each with significant energy requirements (see Data Centres on p10).
In 2020, we set a target to reduce direct emissions (scope 1 and 2, excluding electricity line losses) by 53.5%
by 2030, aligned with the Science Based Targets initiative (SBTi) to limit warming to below 1.5°C. This year we recorded a reduction of 55%, which is calculated against the businesses we have now, meaning it reflects our actual emissions reductions, not those from businesses we've sold. This was driven by innovation in technology and processes, which were mapped on our publicly available carbon cost abatement curve, and which
we've progressively actioned. While some efforts fell short, others are now embedded in our operations -such as our gas sniffer trucks which proactively locate leaks on our gas distribution network. We'll continue to focus on our emissions targets and we recognise there could be some volatility in maintaining and improving our overall emissions.
8 Vector Annual Report 2025
Chair and group chief executive report
During the financial year, we completed the sale of the businesses within our prior Gas Trading segment, including Natural Gas Trading (1 July 2024), Ongas (31 January 2025) and Liquigas (31 January 2025). These businesses have been classified as discontinued operations in these full-year results.
EBITDA from continuing operations adjusted for fair value changes, associates, third-party contributions, and significant one-off gains, losses, revenues and/or expenses. Refer to the Non-GAAP reconciliation on page 55.
Group financial performance1
SYMPHONY STRATEGY
As we've noted in our previous annual reports, our Symphony strategy helps us navigate and shape the energy transition, aiming to deliver a more efficient network that is reliable, safe and ready for the future, recognising the challenge of affordability. There are five pillars to Symphony: leading the New Zealand energy transition; evolving our core infrastructure; embracing data and insights; putting our customers at the heart; and investing in our people. During the past year we've seen continued progress under each of these pillars.
Earnings
FY2025 adjusted earnings before interest, tax, depreciation and amortisation (adjusted EBITDA2) for continuing operations were up $55.8 million or 16% to $401.1 million.
Capital contributions from customers for new connections are excluded from our adjusted EBITDA figure. Our new five-year regulatory price period began on 1 April 2025, resulting in higher revenue in the final quarter to 30 June 2025, in line with the uplift provided by the Commerce Commission under the new DPP; this reflects the increase in interest rates and inflation experienced within the prior DPP3 period. We've also maintained prudent financial management across the group.
Profit
Group net profit after tax for continuing operations was
$154.7 million, inclusive of a $37 million impairment of
the gas distribution business. Underlying profit, excluding the impairment, was $191.7 million. The impairment recognises our latest forecasts for gas network connections, where we see a decline in net connections from FY2026,
as a result of significant market uncertainty, scarcity of gas and rising costs. Following the impairment, the carrying value of the gas distribution business is consistent with the estimated value of the regulated asset base.
DOUG MCKAY CHAIR
SIMON MACKENZIE GROUP CHIEF EXECUTIVE
9
Chair and group chief executive report
These forecasts reflect the unprecedented uncertainty around the future of natural gas, driven in the near term by significant market uncertainty, scarcity of
gas and rising costs, and in the long term by lack of clarity over how gas distribution businesses will be impacted by New Zealand's 2050 net-zero emissions targets. Current regulatory settings were designed in a more stable environment, where demand for gas was growing, and we are urging the Commerce Commission to update these to recognise this uncertainty and ensure any shift away from gas protects the interests
of consumers and other stakeholders. A new draft gas DPP is expected to be announced by the Commission in November 2025 (with a final DPP announced in May 2026), and we are participating fully in the process so the Commission understands our perspective both for investors and customers.
Capital expenditure
Total capital expenditure for continuing operations was
$470.1 million, down $29.1 million, reflecting a number of factors including the timing of large projects. Within this capital expenditure we recognised $210.5 million of capital contributions from customers, which is up
$15.2 million on the year before.
Dividend
As we announced in our half-year results in February 2025, the board has approved revisions to the dividend policy, linking to cash flow. The intent is to align the policy with the Commerce Commission's five-yearly regulatory cycle, as this is a large part of what determines our revenue and earnings in each five-year period.
The board has determined an unimputed final dividend of 13 cents per share, taking the full year dividend to
25 cents per share. This represents an 85% payout of free cash flow, in the mid-point of the 70-100% range as stated in our policy. Shareholders should not interpret this year's payout as being an indication that future dividends will be in the midpoint of the range.
STRATEGIC PARTNERSHIPS FOR INNOVATION
An example of embracing strategic partnerships to innovate for better customer outcomes is the expansion of GridAware, a new AI tool that is reinventing the way we inspect and maintain the electricity network. This project, developed as part of our partnership with X (Google's innovation lab) and Tapestry, X's energy moonshot, complements the Grid Planning Tool for Distribution, another
AI tool from Tapestry that aims to transform our forward planning by enabling much faster scenario testing for future impacts such as EV
uptake, rooftop solar and data centre growth. How GridAware helps boost efficiency in our network maintenance programme is set out on page 23.
The Commerce Commission has acknowledged the customer benefit from this innovative project, awarding us an Innovation Project Allowance for the GridAware project within the regulatory year to 31 March 2025.
Business performance
With the successful completion of a number of transactions, we're now reporting financial results under a new segment structure: electricity performance is detailed on page 22 and gas distribution on page 24.
Our investment in Bluecurrent has performed in line with expectations, with distributions received from the investment recognised in our financial statements within cash flows.
We're continuing to improve our cyber security capabilities and make these available to others via our Equalise product offering, with further sign-ups in the New Zealand electricity distribution sector occurring during the past year.
DATA CENTRES
Auckland is experiencing rising demand for hyperscale data centre connections, each with significant energy requirements. These complex projects offer major opportunities for the region, and for New Zealand more broadly. For example, hyperscale data centres typically request 20 Mega Volt-Amperes (MVA) in the first phase of multi-stage developments, which is roughly equivalent to 8,000 homes. However, they are accompanied by uncertainty about the rate at which electricity demand will grow to meet the capacity requested, since this depends on the adoption of data centre services by the data centre's clients. We know these hyperscale data centre requests will drive
a need for us to invest in system growth, but we must ensure our investment is moving in step with demand. Because of the scale of some of these projects, their impacts may not be confined just to our distribution network, and may also
affect electricity generation and transmission; so, careful and coordinated planning is critical.
Vector Fibre has performed to expectations and is the subject of a previously announced strategic review, with Barrenjoey Capital Partners assisting in the process.
Highlights from the year for VTS are set out on page 25.
Electricity network regulatory performance
Our regulatory performance year runs to 31 March and includes measures that track the reliability of service we provide to our customers. In the most recent regulatory period, the 12 months to 31 March 2025, our network performance was within the regulatory limits for reliability, for both planned service interruptions (for example, where we shut power off temporarily to do work on the network safely) and unplanned service interruptions (for example, where a car hits a power pole and disables power until we can repair it).
In the first three months of the current regulatory period, 1 April to 30 June 2025, the Auckland region
once again experienced a significant weather event with Cyclone Tam, which delivered torrential rain and severe storms, followed by an intense and damaging lightning storm. These conditions caused widespread disruption, including power outages for our customers, and placed considerable pressure on our network operations.
Unplanned service interruptions in this quarter were higher than for the previous period, largely because of the impact from this event.
10 Vector Annual Report 2025
Chair and group chief executive report
Regulatory reform and market structure
Recent decisions by the Electricity Authority on connection processes mark a shift in how new electricity network connections will be managed. We support efforts to streamline and clarify these processes and remain committed to advocating for reforms that are fair, efficient and do not impose unexpected costs on existing customers.
We await with great interest the release of the Frontier report which the Government has commissioned to help with its review into the electricity market. Vector has taken an active interest in the process and will continue to provide input into important issues such as security
of supply, and an efficient market for customers.
The DPP4 regulatory cycle for electricity distribution networks has seen electricity network assets being repriced by the Commerce Commission to reflect higher interest rates and COVID-19 inflation impacts. This has resulted in price increases, which we recognise is hard on all consumers, however in real terms our electricity lines charges remain very similar to what they were more than ten years ago.
Looking ahead
We are strongly committed to helping lead
New Zealand's energy transformation, using data and AI to bring together commercial, customer and operational insights, and drive better outcomes.
This view is shaping how we plan, invest and serve our customers. We're building our own AI capability and attracting strong interest from applicants eager to join our team. Our people are becoming more sophisticated in using these tools, learning from global best practice and applying it to local challenges.
We're proud to partner with globally innovating organisations, such as X, the moonshot factory, giving our teams access to cutting-edge expertise and collaborative learning. These partnerships are helping us deepen our culture of innovation, which is grounded in curiosity, capability and customer focus. It's not just
about technology; it's also about mindset, culture and the way we work together to enable a smarter, more resilient energy future.
Doug McKay
Chair
Simon Mackenzie
Group Chief Executive
CEO DEPARTURE
In February we announced that group chief executive Simon Mackenzie had decided to step down.
Mr Mackenzie will depart his role at the end of 2025.
Mr Mackenzie has been Vector's group chief executive since 2008. In that time he has led the development and growth of competitive businesses such as Vector Metering (now Bluecurrent) and Ongas, delivering significant shareholder value; forged unique partnerships with AWS and Tapestry, the energy moonshot at X (Google's innovation lab) to harness the use of technology and data; overseen the investment in the electricity and gas networks
to meet Auckland's growth and adapt to the impacts of climate change; driven a culture of innovation including participation in trials of early technologies such as solar and batteries; grew the Vector portfolio through acquisitions of competitive businesses
and divested for value creation and strategic alignment; and set up VTS to pursue opportunities in New Zealand and globally.
In announcing his departure, Mr Mackenzie said, "The time is right for me to hand over - with Vector in a strong position financially, and a great culture, innovative mindset and talented leadership across the business."
The board thanks Mr Mackenzie for his years of service to Vector and its shareholders. Board chair Doug McKay said that Mr Mackenzie's contribution and achievements have been significant: "Simon is an outstanding chief executive and a highly respected Vector and industry leader. He has successfully led Vector's regulated and competitive businesses in a complex environment and has contributed to the wider energy industry through his leadership and extensive sector experience. The board wishes him well for the future and is grateful for his ongoing support while the recruitment process continues."
A recruitment process is currently underway and the market will be updated when an appointment is made.
11
Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG)
12 Vector Annual Report 2025
Environmental, Social and Governance (ESG)
13
People, health and safety
People, health and safetyOur Symphony strategy calls for innovation and new solutions
to meet the challenges of an increasingly complex energy system, where demand for key skills such as engineering, digital and data is increasing significantly. This is happening not just across other energy companies within New Zealand but globally too.
Traditional engineering is still vital to our industry, but we must add new capabilities to maximise the opportunities ahead. Recognising and staying ahead of this skill
adaptation is the basis for our people strategy, and we've continued to make progress this year.
Symphony capabilities
In our 2024 annual report we noted the introduction of new behaviours that supported a need to evolve the way we work. This year, we've built on these behaviours by going further and identifying the specific capabilities needed to deliver our Symphony strategy, drawing on our behaviours, global skills trends and the critical skills needed for the energy transition.
This has created a strong framework for a structured approach to strategic workforce planning, where we've begun mapping the skills
and competencies of our current workforce, identifying gaps at both individual and functional levels, and developing plans to address these gaps through strategic training, upskilling and recruitment as vacancies become available.
We identified about 10% of roles across Vector as critical to our core operations, strategic goals, revenue, compliance, and operational continuity, and we're focused on ensuring there is a strong talent pipeline for these roles.
"The support from the team, the open communication, and the overall work environment have all contributed to a very positive experience. I feel valued and motivated, and I appreciate the opportunities to grow and contribute.''
Employee feedback from Vector's eNPS survey
14 Vector Annual Report 2025
People, health and safety
Talent and leadership development
We've continued a strong focus on talent development this year, with a multi-layered leadership programme for new, seasoned and senior leaders supporting the development of leadership competencies and team member coaching capabilities. We had strong participation this year, with 78% of our people leaders taking part in development activities.
We complement this by strategic collaborations with corporate learning providers to design programmes to our specific needs and run talks with global and local speakers to engage and upskill our people.
"The coaching is definitely pushing my thinking in both professional and personal development.''
A people leader's feedback about one of Vector's leadership development programmes
Strengthening our talent pipeline
We're proactively building a diverse and talented pipeline of people who want to come and work for us and are engaged and motivated when vacancies arise. We're doing this with a particular focus on specialist roles in engineering, digital and data that are critical to the energy transition. Our approach includes building relationships with universities in support of a dynamic graduate programme focused on strategic capability, as well as looking further back than recent graduates to target talent who may still be deciding which qualifications they want to acquire and which fields to enter.
We've joined the Aruhiko Power Engineering Excellence Trust, which encourages students in the field of power systems engineering with scholarships, experiences in the field and connections with industry
employers. We've also engaged in an internship programme with Stanford University, hosting two interns
from the Stanford Doerr School of Sustainability. This programme was implemented with the support of the University of Auckland.
FROM STANFORD TO VECTOR
This winter, Vector welcomed two interns from Stanford University. The internship came about after Stanford's School of Sustainability, together with All Birds founder Tim Brown, went looking to connect students with purpose-driven companies around the world. Four organisations were chosen to host interns, including Vector. Hosting interns from
top universities generates fresh ideas and perspectives and is
a great way to showcase our culture and the opportunities on offer for career development. The interns' projects feed into Vector's strategic direction with a focus on electricity demand-response policies around the globe, and understanding to what extent time-of-use plans change Aucklanders' electricity consumption.
We recognise that the energy sector as a whole is going through a skills
transition, and so we also participate in industry collaborations, where relevant for Vector and where we're confident we can advance our specific needs.
Vector, along with 10 other companies, is on the steering committee for the electricity sector member association, the Electricity Engineering Association's (EEA) Re-Energise workforce initiative, which focuses on preparing the workforce for the energy transition. This project will provide strategic and actionable recommendations to ensure the industry is ready to meet future challenges and technologies.
Driving performance excellence
Our performance management framework is focused on clarity of direction, acknowledging our
people's performance and reinforcing our culture. We run a 12-month performance management cycle with a mid-year check-in.
To support consistency of end-of-year reviews and ratings, we hold calibration sessions across the business. Employees and managers are evaluated not only on what
they delivered but also on how they delivered it, informed by Vector's behaviours.
15
People, health and safety
Engagement and wellbeing
In the past year our three regular surveys, which are employee engagement, employee Net
ANNUAL EMPLOYEE SATISFACTION SURVEY RESULTS
BENCHMARK AMONG GLOBAL
ENERGY COMPANIES VECTOR RESULT
Promoter Score (eNPS), and wellbeing, were all above benchmarks. Our engagement programme is informed by data and shaped by what our people are telling us, and so these results are a significant validation of our approach and its contribution towards our positive culture where our people are supported to do their best work. In our engagement survey this year, 87% of our people said they are proud to work for Vector.
Health safety and environmental (HSE)
Ensuring the health and safety of our staff, those delivering work on our behalf and the public is paramount at Vector. We're committed to
continuous improvement of our health and safety culture and performance and we're proud of the progress we've made to support this in the past year. This includes: scheduled quarterly safety forums with our key contracting partners to promote an open learning environment focused on the most important preventative measures to minimise harm, enhancing in-field critical risk control verifications and embedding a new HSE Incident Management System to better track corrective actions, and improvements in shared learning from high potential events to ensure insights are identified and critical controls continue to be improved. We've also consulted
with key internal stakeholders and contracting partners to inform the revision of our HSE system.
These initiatives have contributed to a reduction in both Lost Time Injury Frequency Rate (LTIFR) and Total Recordable Injury Frequency Rate (TRIFR) compared to the year before,
and to the introduction of measurable critical risk lead indicators for the coming year. For the past 12 months, the LTRIFR was 3.0 and the TRIFR 6.9 (these figures include HRV, which
was sold after balance date).
A robust audit and assurance programme supports our approach which includes internal first - and second - line defence activity, third-party assessment and retaining
our ISO accreditation in ISO45001 Health and Safety Management Systems, ISO14001 Environmental Management Systems and NZS7901 Public Safety.
16 Vector Annual Report 2025
Employee engagement 70% Above benchmark
eNPS (Net Promoter Score) 15 Above benchmark
"Vector has demonstrated a strategic and data-driven approach to employee wellbeing and psychosocial risk management. Through our long-standing partnership with them and annual wellbeing Pulse surveys (2022 to 2025), they've shown consistent improvements in resilience, organisational support, and key work factors. Since their 2022 psychosocial risk assessment, their practices have matured significantly, with ongoing refinement and iteration. Their commitment is evident in both leadership engagement and staff feedback, positioning them as a proactive leader in the wellbeing space. While challenges remain, their continuous efforts to improve are commendable and reflect a genuine investment in their people. It is a privilege to work with leaders who truly care about their people, are eager to learn how to support mental health, and
are committed to helping others when they see someone struggling."
Dr Dougal Sutherland, Principal Psychologist, Umbrella Wellbeing
People, health and safety
CHALLENGE YOURSELF
Our series of Vector-wide "challenge yourself" events were designed to support upskilling in digital and data by getting people excited, inspired and curious about how they could make better use of it in their roles. With
a strong focus on cross-functional collaboration, our first event saw teams come together to solve a series of data-driven clues by applying data insights in creative ways. For the second event (pictured), we hosted a series of rapid-fire conversations where data leads and people from around
the business would talk through data challenges and solutions.
Engagement and advocacy
We've been active in raising awareness and advocating on health and safety matters this year, making a joint submission on the proposed Health and Safety at Work Act reform in conjunction with the Business Leaders' Health and Safety Forum, an organisation we're a founding member of.
We've continued public engagement around key aspects of safety associated with our assets, business activities and worksites. Examples of these include our public awareness campaigns, together with targeted stakeholder engagement, around keeping safe when working near electricity or gas assets - for example when digging near electrical or gas assets, working at height near power lines and what to do if you encounter downed power lines.
We've also been advocating strongly to raise awareness of the minimum safe distances from overhead lines for new building activity, as set out in the
New Zealand Electrical Code of Practice for Electrical Safe Distances (ECP34). The issue of lack of awareness is becoming increasingly concerning because we've observed a rise in non-compliance since recent intensification planning rule changes have enabled building closer
to property boundaries. We're working constructively with the planning and building industries to raise awareness of the issue, but our view is that more needs to be done to address this safety
issue. A common-sense approach would see the safe distances included in the Building Code, as today a building project can receive a valid building and resource consent but still be non-compliant with ECP34. We're advocating for this solution with the Government because of our serious concerns about safety.
EMPLOYEES BY ETHNICITY
EMPLOYEES BY AGE
EMPLOYEES BY GENDER
12%
UNKNOWN
1.9%
UNKNOWN
10.3%
60+
11.5%
20-29
0.5%
UNDISCLOSED
5%
PASIFIKA
2%
OTHER
3% NZ MĀORI
31%
ASIAN
18.4%
50-59
35.4%
FEMALE
64.1%
MALE
18%
EUROPEAN
28.9%
30-39
25%
NZ EUROPEAN
4%
MELAA*
29.1%
40-49
There were no notable movements in the year, apart from a 3% increase in the proportion of female employees following the sale of Ongas.
* Middle East, Latin America and Africa.
17
Sustainability
Vector is a climate reporting entity under the Financial Markets Conduct Act 2013 and is required to produce climate statements that comply with the Aotearoa New Zealand Climate Standards (NZCS) 1, 2 and 3 issued by the External Reporting Board (XRB).
Our climate-related disclosures report considers our climate-related risks and opportunities,
and, together with this annual report and our greenhouse gas emissions inventory report, comprises our annual reporting suite, available at vector.co.nz/investors/reports.
Resilience
As climate change drives more extreme and damaging weather, it's even more critical that our electricity infrastructure is resilient. Through the work we've done with external climate scientists to understand physical climate changes, together with our own expertise in assessing the impact on our assets, we can develop optional pathways for improved performance against climate impacts. But each of these optional pathways comes at additional cost. While our approach to resilience investment aims to remove the most risk with the lowest capital expenditure, we're thinking ahead about where and how more resilience could be built, and how the costs of doing so could be met.
In this context we were pleased this year to see the Government's decisions on the long-awaited reform of the tree trimming regulations. The changes will improve the ability of electricity distribution businesses to assess and manage hazardous trees around lines, and issue notices requiring that they be removed by their owner.
This will help us protect our lines from trees, and so protect our customers' electricity supply; however, the cost recovery challenges of tree trimming remain unaddressed following these changes.
Carbon emissions
2030 emissions reduction target
In FY2021 we set an absolute emissions reduction target, aligned with a methodology published by the
Science Based Target initiative (SBTi) at the time, though not validated by the SBTi. That target is for Vector to reduce its scope 1 and 2 emissions (excluding electricity distribution losses) by 53.5% by FY2030 from an FY2020 baseline. The emissions reduction target does not rely on any offsets.
This year, we achieved a 55% emissions reduction, hitting our 2030 target five years early. While we're proud of
this outcome, we're resetting our focus on maintaining these reductions and beginning to look beyond 2030 for further opportunities to reduce emissions in a
cost-efficient way. Main contributors to our emissions reductions have been a decrease in methane leaks on our gas pipelines through proactive surveying, and a reduction in diesel generation in planned maintenance projects. For more information, please refer to our greenhouse gas emissions inventory report available at vector.co.nz/reports.
18 Vector Annual Report 2025
Sustainability
Emissions abatement for our scope 1 and 2 emissions target
In FY2022 we developed a carbon abatement cost curve to help measure and understand our emissions reduction targets (scope 1 and 2 excluding electricity distribution losses) and actions available to Vector to contribute to reaching those targets. This work identifies the financial impact of potential carbon reduction activity across
Emissions inventory
Vector's total emissions (including Scope 3 and including electricity distribution losses) have also decreased by 54% since our base year FY2020. This is mainly because of a wind-down of Vector's Natural Gas Trading contracts, and a reduction in natural gas consumption in the Auckland region.
scope 1 and 2 emissions, using an internal carbon cost of $140 per tonne of carbon dioxide equivalent (tCO2e) as a comparative 'do nothing' cost. This cost curve
EMISSIONS REDUCTIONS TABLE
FY2020 (BASE YEAR)
FY2025 CHANGE
was updated in the past year to reflect the progress we've made. | Scope 1 | 22,933 | 10,449 | -54% |
Scope 21 | 33,087 | 39,476 | 19% | |
Scope 3 | 1,656,403 | 744,316 | -55% | |
Total | 1,712,423 | 794,241 | -54% |
Due to the completion of the sales of Vector Ongas, our shareholding in Liquigas, and some natural gas trading contracts, our historic emissions inventory has
been recalculated to exclude these emissions. For more information on the methodology, results, and emissions recalculations over time, please see our greenhouse gas emissions inventory report, at vector.co.nz/reports.
Abatement cost
$/tCO₂e/year
$1,000
3-month gas pipeline surveying (2027) 6-month gas pipeline surveying (2024) 3-month high-pressure gas
pipeline surveying (2025)
$0
$140/ tCO₂e
Annual gas pipeline surveying (2022)
SF6
monitoring
Abatement potential tCO₂e
Renewable-only electricity (2023)
Transition vans and utes to electric (when available)
Vector headquarters to '6 Green Star' building (2023)
Transition remaining light vehicle fleet to EV (2020 - 2027)
Hybrid generator (in trial)
Uncosted emissions
-$1,000
Third-party gas pipeline damage
Other fugitive methane
Other diesel generation
Public engagement on dial before you dig (2023)
-$2,000 Using mobile transformers as opposed to diesel generators for multi-day upgrades (2024)
Completed In progress
Planned
Reducing unnecessary diesel generation through process optimisation (2021)
53.5%
Emissions reduction target
Market-based method for electricity consumption. For further information on where market-based and location-based electricity emissions are included, see our greenhouse gas emissions inventory report, available at vector.co.nz/reports.
19
Business segment reports
Business segment reports
20 Vector Annual Report 2025
Business segment reports
21
Electricity
ElectricityAdjusted EBITDA
Electricity adjusted EBITDA is up
$56.8 million or 19% to $351.9 million.
This result was driven by the higher revenue, owing to pricing adjustments and as a result of the new DPP period which began on 1 April 2025, as well as because of
higher pass-through and recoverable costs. Total operating expenses, excluding pass-through charges, were flat. This reflects our ongoing commitment to efficient network management.
Connection growth
Network connection numbers have continued to grow, with total electricity connections up 1.2% to 632,106. The rate of growth has
declined, with new connections 21.4% lower than for the previous year, given the broader economic slowdown.
Volumes
Electricity distributed volume was down 1.4% compared to FY2024. This largely correlates with warmer temperatures in FY2025, with fewer days when electricity was used
for heating.
Capital investment
Gross capital investment was
$25 million lower than for the last
12 months, at $432 million, reflecting a number of factors including the timing of large projects. Growth capital investment was up $7.5 million or 3%, with the majority of growth capital investment funded by customers causing the need for investment, through $195.9 million
of capital contributions.
Smart maintenance
While overall capital expenditure was down marginally, we continued to invest in the maintenance of
the network and enhancing the effectiveness of this maintenance by optimising our investments and leveraging technology.
This year we've leveraged technology and strategic partnerships to replace traditional ground-based field inspections with aerial surveying that captures much more detailed and useful information than has been possible before. Rather than walking the lines, network inspectors now conduct detailed assessments from their desks by analysing high-resolution images, Light Detection and Ranging (LiDAR) and thermal scans of network assets, captured
by drones and helicopters. This rich asset information already means we're better able to validate asset condition and improve our decision-making
on where to prioritise maintenance investment. This has been enabled through our strategic partnership with X and, with the use of advanced AI, has the potential to further increase efficiency significantly (see break-out box on page 23).
Delivering efficiently for our customers
We're keeping our focus on delivering safe and reliable electricity for customers as we see their
expectations for service rise, driven by costs and changing behaviour such as working from home. Requirements around traffic management add significant cost and time to our projects, so we're involved in trialling a new, risk-based guideline for traffic management, where site managers will have more power to apply safety measures that are reasonable for a
given situation. We're hopeful the new guidelines, due to come into force in 2026, will dramatically reduce costs for our customers without compromising safety. To avoid disruptions to our work programmes, we've also kept our attention on procurement processes that mitigate what can be long times for network equipment.
22 Vector Annual Report 2025
Electricity
DRONES AND AI LEAD A REVOLUTION FROM POLES TO DIXELS
We're revolutionising how we maintain our electricity networks through a strategic partnership with X, (Google's innovation lab) and Tapestry, its energy moonshot. By combining aerial technology with AI, Tapestry's GridAware platform is transforming traditional network inspections from a manual ground-up process into an intelligent, automated system that can spot wear and tear before it becomes a problem. This improves network maintenance inspections so our customers can benefit from
more reliability, and sets a new standard for how we inspect and prioritise maintenance on our network.
The aerial survey technology - from helicopters and drones - captures precision images of our equipment, as well as other data like thermal
scans. With lots of high-quality data to hand, our network inspectors review this back at their desks using GridAware and mark up images when they spot something needs fixing. Two things happen next: we assess this rich information to improve our decision-making on where to focus maintenance investment, and we use it to train Tapestry's AI to automatically conduct condition assessments as more images are captured from elsewhere on
the network. It's a powerful example of how technology, alongside Vector's experts, can solve real-world challenges, while making essential services more resilient and efficient for the people of Auckland.
Enabling network access and reinforcing capacity
While the broader economic slowdown has led to a softening in the rate of new connection growth, we're seeing strong and
dynamic activity in the data centre market, with changing connection requirements driven by market dynamics, and AI advancements. We're enabling growth in this market by supporting customers' planning and development needs, and we're well-positioned to handle the complexity and demand from the sector by maintaining our proactive investment in core network capacity.
We work closely with all customers on their specific network connection requests. In April we introduced
a new flexible commercial connection option which provides customers with an on-ramp towards electrification by time-shifting future capital improvements on
the network. This provides a better understanding of the business case and path towards electrification
for the customer, and a more efficient use of the existing and planned network.
Our position on who should pay for the growth of the network remains that those causing the growth should pay for it. This underpins our 100% recovery of connection costs from connecting customers. We believe this position is aligned with the Electricity Authority's
pricing principles, however the EA is consulting on the methodology for connection charges across
New Zealand, as we note on page 11.
Improving customer experience through digital and data
This year, we've invested in building our data and digital capability,
both in terms of bringing in specific skills around AI, data science
and machine learning, as well as deploying a modern data platform to unlock advanced analytics and further innovation.
This investment is already delivering greater insights that improve our ability to deliver better customer experiences. One way it's doing this is through a new tool we've developed that combines datasets from various sources such as smart meters and Optical Network Terminals, to help
us proactively identify individual power outages following widespread network damage caused by storms. We've begun trialling this tool to help us improve outcomes for customers.
Work has begun on the next stage of a significant digital project to introduce new capabilities into our advanced distribution management system. These new capabilities comprise: an automated outage management system, which will predict the most likely fault location and provide relevant information to control room operators, and switch order management, which reduces
reactive switching times through the use of scenario analysis tools and automatic safety checking. In addition to improving core network
operations, these enhancements will improve the information we provide to our customers through our outage centre, especially during storms, by making it possible to supply updated data much faster.
Network resilience
We're investing in network resilience against the impacts of storms, such as Cyclone Tam which occurred in April this year. Our approach remains to do this smartly, prioritising cost-effective actions, such as infrastructure upgrading
to improve flood resilience at key zone substations, and strengthening electrical conductors. We're acutely aware of the need to strike the
right balance between investing for resilience and ensuring the cost burden for our customers remains appropriate.
23
Gas distribution
Gas distributionAdjusted EBITDA
Gas distribution adjusted EBITDA is up $1.9 million or 4% to $46.7 million, as a result of pricing adjustments.
Operating expenses were relatively flat overall compared to the previous year. However, maintenance expenses were higher, which is in line with
our strategy to optimise our asset management approach in response to our most recent demand forecasts (see the break out box below).
Capital investment
Capital investment was down
$3.2 million or 14% to $19.0 million, with $13.3 million of that expenditure funded by customers through capital contributions. The decrease was driven by lower levels of
growth investment, reflected in capital investment net of capital
contributions being 50% lower than for the year before at $5.7 million.
This is in line with our strategy to optimise our asset management approach (see break-out box below).
Connections
There has been a 0.2% increase in connections on our gas distribution network over the year to 30 June 2025, bringing the total number of connections to 120,621. However, new gas connections were down 33% on the previous year Total connections.
Volumes
Gas distribution volume was down 8.5% at 11.9 PJ compared to the previous years because of
lower demand from the residential, industrial and commercial sectors.
Network and public safety
We're proud that the past year has again been one without any major safety-related incident on our gas network. We are committed to delivering a safe, reliable and efficient service and we focus not just on our own asset management practices, but also on engaging with the public and customers to raise awareness of safe working practices near our network. Over recent years we've boosted our proactive leak detection programme using vehicle-mounted gas detection equipment. This programme helps
us locate leaks faster, enabling us to fix them quickly before impacts are experienced by customers.
The programme has the added benefit of reducing carbon emissions from these leaks.
SAFETY, RELIABILITY AND SERVICE IN AN ENVIRONMENT OF DECLINING DEMAND
As we set out in our 2025 gas asset management plan (AMP)1, there is unprecedented gas market uncertainty, scarcity of gas and rising costs. This results in our connections forecast seeing customers disconnect at a faster rate than new customers connect from FY2026, with new connections stopping in FY2029.
Despite this, we remain dedicated to maintaining the reliability and security
of our gas distribution network, and our view remains that a long term solution needs to be reached between government and network operators, as we describe on page 10.
We've taken prudent steps to optimise our gas asset management strategies to maintain network safety and reliability, while reducing asset stranding risk.
One of the ways we're doing this is by reducing capital expenditure on asset replacements (which is recovered over the life of the asset) and replacing this with increased operational expenditure on maintenance (which is recovered during a single financial year). Over time, this approach will see a reduction in capital expenditure and a corresponding increase in operational expenditure.
We're also calling for more to be done to provide certainty to help customers and gas distribution businesses navigate the future.
1. Our gas asset management plan is available on our website: vector.co.nz/about-us/regulatory.
24 Vector Annual Report 2025
Vector Technology Solutions (VTS)
Vector Technology Solutions (VTS)Over the past two years, VTS has been live with Diverge, its next-generation energy data platform. As utilities around the world evolve to meet the needs of the energy transition, Diverge provides visibility and insight at the edge of electricity networks, where this visibility had previously been limited.
Bluecurrent has served as the primary deployment for
Diverge, where the platform has demonstrated its capacity to scale with the demands of the energy sector. Since the introduction
of 5-minute electricity market settlement rules in Australia, Diverge has consistently processed six times the volume of smart meter data
at ten times the speed of legacy systems. Diverge has also been delivering network operational data to electricity distribution businesses across New Zealand providing insights that improve operations and planning. In parallel, in the past year Vector's electricity business has used Diverge to operationalise
data science, transforming analytical models into practical tools that inform important decisions and strategic planning. This has included managing electric bus charging dynamically within available network capacity, proactively detecting network anomalies, such as incorrect phase mapping, and understanding electric vehicle charging using advanced algorithms.
These commercial deployments have validated Diverge's underlying architecture and have guided ongoing product refinement.
VTS is now leveraging its success with Bluecurrent and Vector to
bring Diverge to global utilities facing similar challenges. VTS is partnering with Slalom, a leading technology consulting firm and a collaboration with EDMI, a leading global smart metering solutions provider. These partnerships aim to accelerate
the roll-out of Diverge, combining expertise in data, devices and digital enablement.
Over the past 12 months, VTS has demonstrated its capability to solve problems on an international stage and this has been received positively.
As a result, VTS has been invited to participate in multiple formal procurement processes, reflecting
growing demand for solutions that can enable smarter, more responsive, and data-driven networks.
The challenges faced by overseas utilities are similar to those VTS has already helped us solve locally, but the scale is much larger. Through the engagements VTS has had
this year, we're seeing strong signs it is well positioned to bridge the gap between Vector's internal digital transformation and an external product commercialisation capability that has the potential to help utilities globally.
25
Governance report
Governance reportThis section of the annual report is an overview of Vector's corporate governance framework, approved by the board, for the ffinancial year ended 30 June 2025.
Vector's board is committed to maintaining high standards of corporate governance, ensuring transparency and fairness, and recognising the interests of our shareholders and other stakeholders.
The board has an established set of guiding principles that state that the company will:
Be a leading commercial enterprise in New Zealand with a reputation for delivering results through sound strategy
Have entrepreneurial agility, being the first to identify opportunities and bring them to market
Be a great employer which values knowledge and talent
Strive to ensure that everyone who does work for Vector goes home healthy and safe
Deal fairly and honestly with its customers
Be a good corporate citizen.
Vector's governance practices are informed by the NZX Listing Rules (NZX Rules), the NZX Corporate Governance Code (31 January 2025) (NZX Code), the Financial Markets Conduct Act 2013 and the Companies Act 1993. Vector's governance practices are consistent with the principles in the NZX Code, except that Vector has not adopted a formal protocol for responding to 'control transactions' takeovers (NZX Code Recommendation 3.6). Vector
has not adopted a formal protocol because Entrust holds 75.1% of Vector's shares; this means that:
Any takeover offer would need to involve Entrust
Any scheme of arrangement would require Entrust's approval.
Vector's key corporate governance documents, including board and committee charters and policies, can be found at vector.co.nz/investors/governance.
Roles and responsibilities of the board and management
The primary objective of the board is to protect and enhance the value of Vector in the interests of Vector and its shareholders.
The board has overall responsibility for all decision-making within Vector. Vector's governance practices are designed to:
Enable the board to provide strategic guidance for Vector and effective oversight of management
Clarify the roles and responsibilities of Vector's directors and senior executives to facilitate board and management accountability to both Vector and its shareholders
Ensure a balance of authority so that no single individual has unfettered powers.
To ensure that Vector's business objectives and strategies are achieved and to deliver value to the company and
its shareholders, the board strives to understand, meet and appropriately balance the expectations of all its stakeholders, including its employees, customers and the wider community.
In carrying out its responsibilities and powers, the board recognises its overriding responsibility to always act honestly, fairly, diligently and in accordance with the law. The board works to promote and maintain an environment within Vector that establishes these principles as basic guidelines for all its employees and representatives.
Vector achieves board and management accountability principally through its board charter, which sets out matters reserved for the board and responsibilities delegated to the group chief executive, and a formal delegation of authority framework. The effect of
this framework is that, while the board has statutory responsibility for the activities of the company, this is exercised through the delegation to the group chief executive, who is accountable for the day-to-day leadership and management of the company.
26 Vector Annual Report 2025
Governance report
The main functions of the board include:
Reviewing and approving the strategic, business and financial plans prepared by management
Monitoring performance against the strategic, business and financial plans
Appointing, delegating to and reviewing the performance of the group chief executive
Approving major investments and divestments
Ensuring ethical behaviour by the company, board, management and employees
Assessing its own effectiveness in carrying out its functions.
The board charter sets out the expectation that all directors continuously educate themselves to ensure that they may perform their duties appropriately and effectively.
A committee or individual director may engage separate independent professional advice in certain situations, at the expense of the company, with the prior approval of the chair of the board. The board also has access to executives within the Vector group as a means of receiving expertise and assurance information.
Each director has a duty to act in the best interests of the company and the directors are aware of their collective and individual responsibilities to stakeholders for the way Vector's affairs are managed, controlled and operated.
The board regularly assesses its effectiveness in carrying out its functions and responsibilities. The board chair and the committee chairs review and evaluate the board and committees against their respective charters. The board chair also engages with individual directors to evaluate and discuss performance and professional development. Externally facilitated reviews of the board's performance, including its committees, are carried out from time to time. The board last participated in an externally facilitated review in 2024.
The group chief executive is supported by the Vector executive team. Details of the members of the executive team are set out in the management team section on pages 48 and 49 of this annual
report and in the About Us section of Vector's website (vector.co.nz/about-us/board-executive-team). Members of the Vector executive team have regular access to the board.
Board membership
Vector's board comprises experienced directors from diverse backgrounds who govern the company on behalf of its shareholders and other stakeholders. The directors are committed to maintaining high standards of corporate governance, ensuring transparency and fairness and recognising the interests of stakeholders.
Vector's constitution and the NZX Rules set certain requirements in relation to the board structure. The board must have a minimum of three and a maximum of nine directors, with at least two being ordinarily resident in New Zealand (as explained in section 3.1.6 of the NZX's Governance Guidance Note (January 2025)) and at least two being 'Independent Directors' (as defined in the NZX Rules). The board currently comprises seven directors,
all of whom are non-executive. Six of Vector's directors ordinarily reside in New Zealand and one director ordinarily resides in Australia. Biographies are set out on pages 46 and 47 of this report and include information on the year of appointment, independence, skills, experience and background of each director. The current directors possess an appropriate mix of skills, expertise and diversity to enable the board to discharge its responsibilities and deliver the company's strategic priorities, as illustrated
in the skills and experience matrix on page 28. The board recognises that a regular refreshment programme leads to the introduction of new perspectives, skills, attributes and experience and the board also has regular regard for succession planning for its roles. As required, the board strengthens its oversight of issues in all disciplines by seeking expert advice.
27
Governance report
Board skills and experience
STRATEGIC FOCUS DESCRIPTION NUMBER OF DIRECTORS
Leadership Senior leadership experience, board director
and executive
Strategy Strategy and commercial acumen
Customer Customers and community
Energy Energy industry experience
ESG Social and environmental, climate change, ESG, sustainability
People People and culture, workforce, remuneration and talent
Governance Governance, risk and compliance
Regulatory Regulatory and government policy
Finance Financial acumen
Technology Technology, cyber security, AI, data
Digital innovation Digital evolution, transformation and innovation
28 Vector Annual Report 2025
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Vector Limited published this content on August 24, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on August 24, 2025 at 21:02 UTC.
