2007 annual resultMichael Stiassny, Chairman

Simon Mackenzie, Acting Chief Executive Officer

Chris Gallaher, Acting Chief Financial Officer

15 August 2007

Agenda

Health chart

Regulatory & industry update

Vector’s next phase

Financial results

Questions

0

200

400

600

800

1000

1200

1400

Revenue EBITDA NPATA

2006

2007

020406080

100120

2006 2007Transmission Distribution

0

20

40

60

80

100

120

RY06 Q106 RY07 Q107

Earnings ($m)

Gas throughput (PJ)

0

2,000

4,000

6,000

8,000

10,000

12,000

2006 2007

Electricity distributed (GWh)

Greater Auckland

WellingtonSAID

I M

inute

s

SAIDI

Health chartYear ended 30 June

85.5

10,400

39.9

117.9

ExtremeNormal

22.8

105.3

RY = regulatory year ended 31 MarchQ1 = 3 months ended 30 June

1,132.9

578.6

143.7

8,033

2,367

8,160

2,435

10,595

115.6

21.4

94.6

22.0

1,352.9

610.0

199.9

Storm response – July ‘07

0

200

400

600

800

1000

1200

1400

Revenue EBITDA NPATA

2006

2007

020406080

100120

2006 2007Transmission Distribution

0

20

40

60

80

100

120

RY06 Q106 RY07 Q107

Earnings ($m)

Gas throughput (PJ)

0

2,000

4,000

6,000

8,000

10,000

12,000

2006 2007

Electricity distributed (GWh)

Greater Auckland

WellingtonSAID

I M

inute

s

SAIDI

Health chartYear ended 30 June

85.5

10,400

39.9

117.9

ExtremeNormal

22.8

105.3

RY = regulatory year ended 31 MarchQ1 = 3 months ended 30 June

1,132.9

578.6

143.7

8,033

2,367

8,160

2,435

10,595

115.6

21.4

94.6

22.0

1,352.9

610.0

199.9

Albany School broadband launch

Regulation & industry issues

Regulatory outcomes priority focus for Board and management

Over 50 regulatory/industry governance related work streams under active management

Key regulatory issues

Commerce Act reviewWe welcome the review of Parts 4, 4A and 5. We fully support the intention to ensure right balance between investment incentives and consumer protection

Administrative settlementRecent advice from Commission says consultation likely in September with decision shortly after. Meanwhile continue our voluntary rebalancing programme

Electricity thresholds reset - 2009Commission yet to communicate reset terms and methodology. Vector working through issues with Commission, another example of constructive working relationship

Key regulatory issues

Gas control final authorisation (Auckland networks)

Continue to operate under provisional authorisation, providing information so final decision can be made

Electricity Reform Act review

Some opportunities may emerge for lines company involvement in generation

Key industry issues

Electricity Commission

Vector involved in range of EC matters, including transmission

upgrades, transmission pricing with security of supply key focus

Energy supply security

Electricity grid upgrade approved by EC will improve upper North Island electricity supply security

Initiatives with Transpower – use of assets, joint report

Healthy gas supply position

Key industry issues

Climate change

Revolution not evolution for New Zealand businesses

Vector’s vision is to lead demand side solutions

Initial steps include NZ Windfarms and micro wind turbine trials

Customers will demand change, we must be a step ahead

Micro-wind turbine – Waitakere City Council

Vector’s next phase

Key drivers to Vector initiatives and decisions:

Cost efficiency – capex/opex managementRegulatory and customer outcomesOperational excellence/core business enhancementDisciplined growth

Explore telecommunications options

Lead demand side solutions for customers

Ensure appropriate focus on customer

Create shareholder value

Financial ResultsChris Gallaher

Acting Chief Financial Officer

Results summaryYear ended 30 June

+16.645.161.7- Underlying

NPAT:

+40.0--40.0- One off

+56.645.1101.7Total NPAT

+56.2

+6.3

+31.4

$ Change

NPATA

EBIT

EBITDA

$ Millions

143.7199.9

362.7369.0

578.6610.0

20062007

0

200

400

600

800

1000

1200

1400

1600

OperatingRevenue

OperatingExpenditure

EBITDA EBIT NPAT NPATA

Financial resultsYear ended 30 June

2006 2007

578.6554.3

362.7

45.1

1,132.9

143.7

$ Millions

1,352.9

742.9

610.0

369.0

101.7

199.9

$40.0m one-off deferred tax gain

61.7159.9

Operating marginsYear ended 30 June

0

10

20

30

40

50

60

EBITDA/OperatingRevenue

EBIT/OperatingRevenue

NPATA/OperatingRevenue

NPAT/OperatingRevenue

%2006 2007

51.1

4.0

32.0

12.7

45.1

27.3

14.8

7.5

Operating cash flowYear ended 30 June

11.4(113.6)(125.0)Dividends to Vector shareholders

4.8353.2358.0Operating cash flow

24.0(2.9)21.1Change in operating working capital

37.3(225.3)(262.6)Capex

4.913.58.6Non cash items

(29.6)

(59.2)

(222.5)

610.0

2007 $ Change2006$ Millions

43.914.3

38.8(20.4)Tax paid

6.9(215.6)Net interest paid

31.4578.6EBITDA

0

2

4

6

8

10

12

14

6.5

12.0

6.0

All dividends fully imputed

Shareholders record date 29 August 2007

Payable 4 September 2007

CPS(net)

2006 2007

Dividends

6.0

Interim

Final

6.5

13.0

Divisional resultsYear ended 30 June

45.1n/a70.536.561.8% Revenue

20.0

47.2

(19.7)

66.9

Technology TotalCorporate/Other

GasElectricity2007

$ Millions

369.0(70.2)152.7266.5EBIT

610.0(58.8)243.6378.0EBITDA

(742.9)(65.1)(424.6)(233.5)Operating Expenditure

1,352.96.3668.2611.5Operating Revenue

51.1n/a69.542.662.8% Revenue

12.9

41.9

(18.4)

60.3

Technology TotalCorporate/Other

GasElectricity2006

$ Millions

362.7(41.7)121.7269.8EBIT

578.6(34.9)207.1364.5EBITDA

(554.3)(41.3)(279.0)(215.6)Operating Expenditure

1,132.96.4486.1580.1Operating Revenue

Capital expenditure ($249.3 million)Year ended 30 June 2007

249.316.430.840.9161.2Total

100.0%6.6%12.3%16.4%64.7%% of Total Spend

227.19.726.944.2146.32006 total

Growth

Replacement/

Compliance

$ Millions

138.314.224.926.073.2

111.02.25.914.988.0

TotalCorporateTechnologyGasElectricity

(1) Includes PIPES $354 million as debt under NZ GAAP

(2) Net Debt

$m

%

%

X times

20052006

3,081.1

33.7

3,127.6

33.2

62.2

1.6

Net Debt

Equity/Total assets

Debt (2)/Debt (2)+Equity

Interest (net) cover

2007

(1) 3,147.6

75.1

21.6

1.61.6

Asset backing & capital structureas at 30 June

61.5

Debt Facilities Maturity Profile

46.71%5+ years

16.08%2-5 years

37.21%1-2 years

Consolidated Group Debt Facilities Maturity Profile

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

1,000.0

07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Financial Year Ended

Deb

t Fac

ility

($m

)

Credit WrappedFloating Rate Notes

USPP

6.81% Fixed RateNotes

Credit Wrapped AUDMedium Term Notes

CreditWrappedWholesaleFloating Rate Notes8.00% Capital Bonds

Senior Credit Facility

Working CapitalFacility

Questions?