Mercury Nz Ltd. · NZX:MCY
Mercury Nz — Investor Day (September 2017)
97 slides from Mercury Nz's investor day presentation, Sep 25, 2017
Slide 1: News Release: Mercury Investor Day 2017
STOCK EXCHANGE LISTINGS: NEW ZEALAND (MCY) / AUSTRALIA (MCY) For personal use only NEWS RELEASE Mercury Investor Day 2017 25 September 2017 – Mercury is hosting its Investor Day 2017 in Auckland today, which includes presentations from the Chief Executive, Fraser Whineray, and other members of the s
Slide 2: Mercury Investor Day 2017
For personal use only MERCURY INVESTOR DAY 2017
Slide 3: Disclaimer
DISCLAIMER This presentation has been prepared by Mercury NZ Limited and its group of companies (“Company”) for informational purposes. This disclaimer applies to this document and the verbal or written comments of any person presenting it. For personal use only Information in this presentation has
Slide 4: Agenda
AGENDA 1:15pm – 2:00pm Overview For personal use only 2:00pm – 2:45pm Our Portfolio and Market Dynamics 3:00pm – 5:15pm Workshop 1: Our Assets - Enabling Our Mission (45 mins each) Workshop 2: Geothermal 101 Workshop 3: Loyalty & Digital Journeys 5:15pm / 6:30pm Drinks followed by Dinner
Slide 5: Overview
For personal use only OVERVIEW FRASER WHINERAY Chief Executive
Slide 6: For personal use only
For personal use only Ref. FY2017 Annual Report, pp. 4-5
Slide 7: Five Key Pillars
FIVE KEY PILLARS > Five key pillars underpin Mercury’s business model and strategy: For personal use only Source: FY2017 Mercury Annual Report, p. 21
Slide 8: Business Model
BUSINESS MODEL For personal use only Source: FY2017 Annual Report, pp. 6-7
Slide 9: High Performance Teams
HIGH PERFORMANCE TEAMS Three Attitudes Development For personal use only Commit & own it Safety & wellbeing Share & connect Management Curious & original Leadership Diversity of thought Skills growth Retention and Recruitment Employee value proposition A place to work that keeps our people engaged,
Slide 10: Growing Customer Loyalty
GROWING CUSTOMER LOYALTY Three Promises Competitive markets For personal use only Inspire me Innovation Reward me Technology Make it easy for me Reliability of supply Growing customer advocacy Innovation to deliver customer choice and value Correct incentives
Slide 11: Enhanced Natural Resources
ENHANCED NATURAL RESOURCES HYDRO AND GEOTHERMAL RESOURCES Kaitiakitanga Resource management For personal use only (Guardianship) Water management Asset management Reservoir management Natural resources managed with expertise and care for the long term benefit of New Zealanders and their communities
Slide 12: Stronger Together: Stakeholders
STRONGER TOGETHER STAKEHOLDERS Fit-for-purpose policy and Inter-generational For personal use only regulation long-standing community Value adding suppliers and iwi partnerships Aligned commercial partners Partnering to accelerate beneficial economic and community outcomes Recognition of New Zealand
Slide 13: Leading Economic Performance: Investors
LEADING ECONOMIC PERFORMANCE INVESTORS Stable capital structure Growth opportunities For personal use only Credit rating Market value growth Capital flexibility Investment in core business Debt & equity investment Home and e-mobility Australian metering Free Cash Flow Sustainable and growing returns
Slide 14: Tidal Forces and Sector Performance
TIDAL FORCES AND SECTOR PERFOMANCE SHARE PRICE INDEXED Contact Trustpower/Tilt (excludes dividends and other distributions) Meridian Genesis For personal use only Mercury NZX50 Index Gross 180 Indexed share price (100 = 30 Aug 2017) 160 140 120 100 80 60 40 20 0 Jul-2007 Jul-2008 Jul-2009 Jul-2010 J
Slide 15: Long-Term Industry Trends
LONG-TERM INDUSTRY TRENDS SECTOR EARNINGS DEMAND Demand 2.5 50 Max. Generation Capacity (RHS) 10.0 For personal use only CAGR: 3.3% 2.0 40 9.8 EBITDAF ($b) CAGR: 0% 1.5 30 9.6 TWh GW 1.0 20 9.4 0.5 10 9.2 0.0 0 9.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014
Slide 16: Mercury Growth Supported by Investment and Efficiency Gains
MERCURY GROWTH SUPPORTED BY INVESTMENT AND EFFICIENCY GAINS EBITDAF OPEX Operating Expenditure One-off costs DISTRIBUTIONS Interim dividend Final dividend 600 CAGR: ~5% 600 600 Special dividend Share buyback For personal use only 500 500 500 Flat from FY2014 9 years of ordinary dividend growth 400 4
Slide 17: Our People's Wellbeing
OUR PEOPLE’S WELLBEING TOTAL RECORDABLE INJURY FREQUENCY RATE > Zero harm is our wellbeing goal (TRIFR) For personal use only (per 200,000 hours; includes onsite employees and contractors) > Employee engagement survey supports Mercury’s 3.0 Low Severity Incidents commitment to the Health & Safety of
Slide 18: Our Customers' Wellbeing
OUR CUSTOMERS’ WELLBEING DISCONNECTIONS OUTAGES (VECTOR) VCT SAIDI (Normal For personal use only Mercury operations only) Bosco SAIDI threshold 8000 Tiny Mighty Power 200 7000 180 160 6000 140 Minutes 5000 120 4000 100 3000 80 60 2000 40 1000 20 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 19: Strategic Drivers & FY2017 Outcomes: Delivering Customer Advocacy
STRATEGIC DRIVERS & FY2017 OUTCOMES DELIVERING CUSTOMER ADVOCACY For personal use only > Below market customer churn > Trader churn1 of 5.7% versus market at 7.1% > Increasing customer satisfaction > Customer satisfaction2 of 64%, up 4% from FY2016 > Award winning ‘Energy Made Wonderful’ campaign >
Slide 20: Strategic Drivers & FY2017 Outcomes: Leveraging Core Strengths
STRATEGIC DRIVERS & FY2017 OUTCOMES LEVERAGING CORE STRENGTHS For personal use only > Goal of zero-harm > 95% of employees agreed that Mercury is committed to the Health and Safety of its people1 > Record employee engagement > Employee engagement1 at 81%, up 2% from FY2016 > Maximised value from ren
Slide 21: Strategic Drivers & FY2017 Outcomes: Delivering Sustainable Growth
STRATEGIC DRIVERS & FY2017 OUTCOMES DELIVERING SUSTAINABLE GROWTH For personal use only > Managing cost > Operating costs flat for the 4th consecutive year > Investing in growth > Minimal growth capex in FY2017 > Strategic review of future growth options in FY2017 > Generation development options re
Slide 22: Delivering Innovation for Customers
DELIVERING INNOVATION FOR CUSTOMERS GLOBUG GEM MERCURY SOLAR For personal use only New Zealand’s leading An energy tracking and In-house solar and battery pre-paid customer solution reporting tool that gives storage installation customers greater visibility of capability their household energy usage
Slide 23: Emerging Technology in Context
EMERGING TECHNOLOGY IN CONTEXT Solar For personal use only > Will be a niche feature of the NZ electricity market > 1m solar panels is equivalent to ~1% of national demand > Solar generation is not well matched to NZ’s demand profile which peaks in winter evenings > Regulatory focus on reforming dis
Slide 24: Levers for Growth
LEVERS FOR GROWTH Better supply and demand For personal use only > Market thesis: Upward pressure on end-user pricing due to supply and demand balance tightening Investment in core business > Wind options (Turitea & Puketoi) remain ready for multi-stage development at the right time > Current geothe
Slide 25: Contextualising Value Levers
CONTEXTUALISING VALUE LEVERS Residential Yield For personal use only ($1/MWh change in yield) Ignores timing of fixed price contracts Commercial Yield ($1/MWh change in yield) Customer Churn (1% change in annual churn rate) Cost To Serve ($1/customer change in cost) Geothermal Availability (1% chang
Slide 26: Unique Competitive Advantages
UNIQUE COMPETITIVE ADVANTAGES 100% renewable generation with two low- Rain-fed North Island hydro catchment For personal use only cost complementary fuel sources in base- with inflows correlated with winter peak load geothermal and peaking hydro demand North Island generation is uniquely located Est
Slide 27: Overview
OVERVIEW OUR MISSION FIVE KEY PILLARS For personal use only > Ultra long-term > Genuine, integrated and aligned > Sustainability (in all its forms) > Sector leadership where it can make a difference EXECUTION LEVERS FOR GROWTH > Solid progress to date > First, do no harm > Performance upside possibl
Slide 28: Our Portfolio & Market Dynamics
For personal use only OUR PORTFOLIO & MARKET DYNAMICS PHIL GIBSON JAMES FLEXMAN GM Hydro/Wholesale Wholesale Markets Manager
Slide 29: Building on Previous Investor Days
BUILDING ON PREVIOUS INVESTOR DAYS For personal use only
Slide 30: Mercury's Competitive Advantages
MERCURY’S COMPETITIVE ADVANTAGES > Brand aligned portfolio For personal use only > 100% renewable generation with two low-cost complementary fuel sources > North Island located assets close to our customers > Rain-fed hydro system correlated to demand > Largest North Island peaking scheme
Slide 31: Mercury Brand and Culture a Competitive Advantage
MERCURY BRAND AND CULTURE A COMPETITIVE ADVANTAGE > End to end understanding of the importance of customers, and their expectations, to long-term value For personal use only > Three promises focus on loyalty > We’re moving the paradigm of price being the only driver > Our asset management considers
Slide 32: Uniquely Located Assets Close to Our Customers
UNIQUELY LOCATED ASSETS CLOSE TO OUR CUSTOMERS > Central North Island assets close to major demand centres and Mercury customer base For personal use only > Geothermal (baseload) and hydro (peaking) fuel systems are AUCKLAND • complementary Mercury’s generation assets > Future demand growth likely t
Slide 33: Mercury's Hydro Inflows Aligned with Peak Demand
MERCURY’S HYDRO INFLOWS ALIGNED WITH PEAK DEMAND > North Island winter (liquid) inflows are correlated with peak demand For personal use only > South Island peak inflows are in summer with a negative correlation to peak demand > Requires the use of hydro storage or thermal back-up to cover winter sa
Slide 34: Low Correlation Between North Island Storage and Price
LOW CORRELATION BETWEEN NORTH ISLAND STORAGE AND PRICE > Low correlation of price and North Island hydrology For personal use only > Reduces downside risk as low inflows do not typically equate to high wholesale prices (e.g. FY2014) > Enhances upside opportunity as high inflows do not preclude high
Slide 35: Waikato Hydro System the Largest North Island Peaker
WAIKATO HYDRO SYSTEM THE LARGEST NORTH ISLAND PEAKER WAIKATO HYDRO GENERATION PROFILE > Example from 4 July 2017: Net Position Waikato Generation Whakamaru Price (RHS) For personal use only > Mercury’s flexible hydro assets allowed $160 reduced overnight generation followed by a rapid increase to me
Slide 36: Portfolio Management
PORTFOLIO MANAGEMENT > Integrated portfolio approach For personal use only > Channel mix > Commercial and Industrial (C&I) sales key for positioning portfolio > Timing of C&I sales critical to extract value > Derivatives markets deliver risk management and value
Slide 37: Integrated Portfolio Management
INTEGRATED PORTFOLIO MANAGEMENT RISK ASSURANCE & GOVERNANCE For personal use only CONTROL MANAGE POSITION Horizon 6-12 weeks 3-24 months Longer-term Cover risk and achieve short- Manage portfolio for earnings Future earnings growth and Objective term fuel optimisation volatility throughout the year
Slide 38: Yield Optimised Through Channel Mix and Timing of C&I Sales
YIELD OPTIMISED THROUGH CHANNEL MIX AND TIMING OF COMMERCIAL & INDUSTRIAL (C&I) SALES FY2018 C&I SALES For personal use only C&I FPVV Won > Mass market sales deliver highest yield vs.1/01/2015 Auckland ASX Node (OTA) End User CFD Won 20/07/2015 5/02/2016 23/08/2016 11/03/2017 (with highest cost) ASX
Slide 39: Portfolio Positioning Reflects Inflows, Price and Risk Appetite
PORTFOLIO POSITIONING REFLECTS INFLOWS, PRICE AND RISK APPETITE NET POSITION VS SPOT PRICE Unadjusted Net Position FY2017 NET POSITION BREAKDOWN For personal use only Whakamaru Average Spot Price 600 $120 9000 Southdown in operation CFD Sell 400 8000 $100 FPVV Losses 7000 200 Commercial FPVV $80 600
Slide 40: Using Derivatives for Value and Risk Management
USING DERIVATIVES FOR VALUE AND RISK MANAGEMENT > Transactions across multiple timeframes FY2017 CFD BREAKDOWN For personal use only 2000 > Liquidity in the ASX enables hedging for value 1800 Intergen - Buy <12 months CUMULATIVE Q4-FY2017 CHANGE Hydro 1600 Intergen - Buy >12 (versus original forecas
Slide 41: Month Look Back
12 MONTH LOOK BACK > Late South Island dry sequence insufficient to evoke significant market response For personal use only > High North Island inflows and storage position also reduced market concern
Slide 42: Late Dry Sequence and High Starting Storage Tempers Price
LATE DRY SEQUENCE AND HIGH STARTING STORAGE TEMPERS PRICE > North Island inflows built through the year holding Lake Taupo at the top of its storage range For personal use only > Cyclones and high flow events in Q3-FY2017 > Given low South Island inflows, might have expected stronger wholesale price
Slide 43: Security Margin Forecast to Tighten, Fundamentals Remain
SECURITY MARGIN FORECAST TO TIGHTEN, FUNDAMENTALS REMAIN > Supply/demand rebalance impact muted by high NZ WINTER ENERGY MARGIN1 Margin inflows and, more recently, lower-priced swaptions For personal use only 35% Margin - Required New Supply > Decisions on investments for 2020 will need to be Hydro
Slide 44: Mercury's Market Thesis Remains
MERCURY’S MARKET THESIS REMAINS For personal use only DYNAMIC: SECURITY MARGINS TIGHTENING FOLLOWING THERMAL RATIONALISATION FUNDAMENTALS: SUPPLY AND DEMAND BETTER BALANCED ANTICIPATED MARKET RESPONSE > Increase in wholesale price volatility in the absence of high hydro inflows > Futures price inc
Slide 45: Our Portfolio & Market Dynamics
OUR PORTFOLIO & MARKET DYNAMICS COMPETITIVE ADVANTAGE PORTFOLIO MANAGEMENT For personal use only > Our assets and customers a natural > Extract value from highest benefit advantage sales and low cost generation > Single brand aligns our focus > Extra value from derivatives market around customer exp
Slide 46: Our Assets: Enabling Our Mission
For personal use only OUR ASSETS ENABLING OUR MISSION GRAEME HILL GAVIN WILLIAMSON Infrastructure Asset Manager Hydro Generation Manager
Slide 47: A Complementary Portfolio of Assets
A COMPLEMENTARY PORTFOLIO OF ASSETS 9x HYDRO ASSETS – 1,058MW – ~4,000GWh/yr 5X GEOTHERMAL ASSETS – 337MW1 – ~2,800GWh/yr For personal use only Aratiatia 78MW Ohakuri 106MW Atiamuri 74MW Kawerau 104MW Mokai* 112MW Rotokawa 34MW (1964) (1961) (1958) (2008) (2000) (1997) Whakamaru 106MW Maraetai I & M
Slide 48: A Complementary Portfolio of Assets
A COMPLEMENTARY PORTFOLIO OF ASSETS Hydro Geothermal For personal use only Location Central North Island Central North Island Operating role Peaking, frequency, Baseload (24/7) reserves Capacity factor On average 50-60% but 94-97% ranges from 30-65% Strengths Flexible, fast start, large Weather inde
Slide 49: Ensuring Long-Term Access to Renewable Energy Sources
ENSURING LONG-TERM ACCESS TO RENEWABLE ENERGY SOURCES For personal use only Custodial approach to renewable resources > Aligned values around sustainability of water resources > Hydro - non-consumptive > Geothermal - injection Community “licence to operate” [Picture from internal resource] > Long-te
Slide 50: Ensuring Long-Term Access to Renewable Energy Sources
ENSURING LONG-TERM ACCESS TO RENEWABLE ENERGY SOURCES For personal use only Partnerships > Joint ventures with Maori landowners and partnerships with Waikato River iwi a key foundation > Partnering with flood manager (Regional Council) to reduce impacts on the community during high inflow events, e.
Slide 51: Objective – Managing Our Assets to Enable Our Mission
OBJECTIVE – MANAGING OUR ASSETS TO ENABLE OUR MISSION Our foundations ASSET AGE PROFILE For personal use only Hydro > Commercial Turbines, Generators, Governors & Transformers Geothermal > Wellbeing 50 45 > Kaitiakitanga (guardianship) 40 Key inputs Number of Assets 35 30 > Asset Management Framewor
Slide 52: Asset Management Framework – A Continuous Approach
ASSET MANAGEMENT FRAMEWORK – A CONTINUOUS APPROACH & A CORE STRENGTH HYDRO RISK CONDITION & RISK For personal use only Portfolio Strategy Governance Asset Integrity Framework OHK ARI Sth Asset Management Policy ARI Nth Strategic Asset Management Plan Asset Group Fuel / Reservoir Plan Tactics/Strateg
Slide 53: Asset Management Framework – A Continuous Approach
ASSET MANAGEMENT FRAMEWORK – A CONTINUOUS APPROACH & A CORE STRENGTH Symbols HYDRO RISK CONDITION & RISK For personal use only Portfolio Strategy Colour Planned Planned Works Works (Un Approved) (W2W Risk) (Scoping) Governance Replacements completed Minor Minor Upgrade Upgrade 5 Asset Integrity Fram
Slide 54: Hydro Cash Costs of ~$20/MWh
HYDRO CASH COSTS OF ~$20/MWh HYDRO CAPEX HYDRO / WHOLESALE OPEX For personal use only Excluding Major Refurbishments $70m $70m $60m $60m $50m $50m $40m $40m $30m $30m $20m $20m $10m $10m $0m $0m 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 55: Geothermal Cash Costs of ~$40/MWh
GEOTHERMAL CASH COSTS OF ~$40/MWh1 GEOTHERMAL CAPEX* GEOTHERMAL OPEX* For personal use only Plant Steamfield $50m $50m $40m $40m $30m $30m $20m $20m $10m $10m $0m $0m 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Financial Year Financial Year 1Including direct costs such as steam royal
Slide 56: Independent Review & Continuous Improvement
INDEPENDENT REVIEW & CONTINUOUS IMPROVEMENT For personal use only Continuous improvement / development > Local and global industry forum participation > Hydro - Hydro Power Engineering Exchange, NZ Society of Large Dams, CEATI, Electricity Engineers Association > Geothermal - NZ Geothermal Workshop,
Slide 57: Process Safety
PROCESS SAFETY Do we understand what can go wrong? For personal use only > Major Incident Hazards – loss of containment, or loss of control: Do we know what our controls are to prevent these happening? > PLANT – make sure they are safe and reliable > PROCESSES – ensuring they are robust > PEOPLE – o
Slide 58: Process Safety
For personal use only PROCESS SAFETY
Slide 59: Whakamaru Station Rehabilitation
WHAKAMARU STATION REHABILITATION COMPLETION MID 2020 – ~$76M For personal use only Drivers > Mid-life refurbishment and value from reduced risk and uprate Choices > Replace all generators, turbines and governors > Replace all generators and overhaul turbines, and delay replacement of turbines and go
Slide 60: Kawerau Steam Turbine
KAWERAU STEAM TURBINE COMPLETION JAN 2018 – ~$13M For personal use only Drivers > Significant de-risk of ongoing operation and business interruption Choices > Procure spare LP rotor blades in FY2020 > Procure complete steam path > Procure turbine rotor and high pressure stationary blades (with low p
Slide 61: Aratiatia Station Rehabilitation
ARATIATIA STATION REHABILITATION COMPLETION MID 2020 – ~$49M For personal use only Drivers > Mid-life refurbishment, risk reduction, station performance optimisation Choices > Optimise for min flow - three identical turbines to suit 50 m3/s min flow > Optmise for max output - three identical turbine
Slide 62: Our Assets – Enabling Our Mission
OUR ASSETS – ENABLING OUR MISSION COMPLEMENTARY PORTFOLIO ASSET MANAGEMENT For personal use only > North Island based and > Enabling Our Mission complimentary portfolio > Systematic framework based > Enduring partnerships > Independent and continuous review > Operationally astute PROCESS SAFETY VALU
Slide 63: Geothermal
For personal use only GEOTHERMAL 101 NICK CLARKE JOHN CLARK GM Geothermal Kawerau Field Manager
Slide 64: Geothermal Systems Explained
GEOTHERMAL SYSTEMS EXPLAINED > Key characteristics of a successful geothermal reservoir are: For personal use only > Geothermal water temperature > Impermeable clay cap > Permeable rock > Heat is supplied from magma intrusion at 5km – 10km depth > Natural “convection system” established below clay c
Slide 65: Choosing the Right Technology
CHOOSING THE RIGHT TECHNOLOGY > Right technology selected for maximum conversion efficiency from geothermal heat to electricity: For personal use only > Flash Plant: Kawerau & Nga Awa Purua > Binary Plant: Ngatamariki > Combined Cycle: Rotokawa GEOTHERMAL PLANT GENERIC EFFICIENCY1 1Source: Moon & Za
Slide 66: Geothermal Journey
GEOTHERMAL JOURNEY 82 > New Zealand ranks 5th globally in geothermal electricity generation For personal use only 135 135 New Zealand’s journey > 1958 Wairakei Power Plant 104 104 104 > Lessons along the way – environmental impacts at Wairakei and Ohaaki highlighted 94 112 112 112 112 the importance
Slide 67: Diverse Operations
DIVERSE OPERATIONS For personal use only Nga Awa Mercury In-service Assets Kawerau Rotokawa Ngatamariki Purua Production Wells 7 8 4 4 Injection Wells 7 4 2 4 Monitoring Wells 8 8 26 Drilling (km) 40 60 35 Steamfield Pipelines (km) 12 10 5 9
Slide 68: Technical Strength Is Our Competitive Advantage
TECHNICAL STRENGTH IS OUR COMPETITIVE ADVANTAGE > Numerical (Reservoir) Modelling is fundamental to understanding and managing long-term reservoir health For personal use only > We routinely calibrate our Reservoir Models with field data, operational data and technical knowledge > Investing in inter
Slide 69: Reservoir Management Underpins Our Performance
RESERVOIR MANAGEMENT UNDERPINS OUR PERFORMANCE > A geothermal reservoir is a natural and living system For personal use only > Proactive and adaptive management of the reservoir is fundamental to our long-term value, and a demonstration of our role in kaitiakitanga (guardianship) Monitoring Programm
Slide 70: Proactive Risk Management Through Innovation
PROACTIVE RISK MANAGEMENT THROUGH INNOVATION > We proactively solve geothermal challenges; we collaborate with industry experts globally, constantly exploring For personal use only fresh ideas and opportunity Key focus areas Examples of how we manage them Reservoir health Injection and production we
Slide 71: Underpinned by Local Partnerships
UNDERPINNED BY LOCAL PARTNERSHIPS > Partnerships and kaitiakitanga are at the heart of our business For personal use only > Land access is an integral part of our geothermal development > Through strong partnerships, we build enduring geothermal opportunities, create financial freedom and generate o
Slide 72: Operating for the Long-Term
OPERATING FOR THE LONG-TERM > We maximise our power plant generation while GEOTHERMAL PLANT AVAILABILITY1 managing our reservoirs for the long-term For personal use only 100% > We have achieved higher than the originally designed MW at our power plants 90% > We work hard to drive our operational eff
Slide 73: Drilling Success Through Continuous Improvement
DRILLING SUCCESS THROUGH CONTINUOUS IMPROVEMENT > Make-up wells are generally expected to secure fuel ROTOKAWA DRILLING Fuel Capacity and Demand Fuel Supply Capacity For personal use only supply over time, examples: 5500 Fuel Demand > Replenish declining fuel supply or injection capacity caused by d
Slide 74: Growth Options
GROWTH OPTIONS > We continually explore a range of growth options: For personal use only > Silica products, such as colloidal silica, as a potential growth option with industry partner such as Geo40 Limited > Direct heat options > “Bottoming Units” (3MW - 5MW range) to extract energy from lower enth
Slide 75: Geothermal: Platform for Success
GEOTHERMAL 101 GENERATION PORTFOLIO PLATFORM FOR SUCCESS For personal use only > Geothermal reservoirs are renewable > We invest to understand our energy systems reservoirs > We have built a world class > Reservoir management underpins our geothermal business success long-term > Partnerships are key
Slide 76: Driving Customer Loyalty
For personal use only DRIVING CUSTOMER LOYALTY JULIA JACK MOHAMMED ABBAS BEN HARVEY-LOVELL Chief Marketing Officer Head of Mass Market Sales Head of Brand & Marketing
Slide 77: Mercury Now Out-Performs the Market on Retention
MERCURY NOW OUT-PERFORMS THE MARKET ON RETENTION AS A RESULT OF OUR CONSISTENT STRATEGY For personal use only > Mercury group outperforms the market at both a CHURN Market total and a “trader” switching level (12mth rolling) Mercury Group 30% Mercury Brand > Mercury brand customers currently churn a
Slide 78: Our Customers Built Our Strategy With Us
OUR CUSTOMERS BUILT OUR STRATEGY WITH US For personal use only > Listening to our customers defined our strategy to: > INSPIRE ME > REWARD ME > MAKE IT EASY FOR ME > Customers helped design everything from our logo to our bill [Picture from internal resource]
Slide 79: Customers Choose Us for Unique Long Term Value and Choice
CUSTOMERS CHOOSE US FOR UNIQUE LONG TERM VALUE AND CHOICE CUSTOMER SWITCHING Mercury Group For personal use only > Our focus on inspire, reward and make it easy (12mth rolling) Mercury Brand enables us to acquire long-term customers Net Switching 100,000 > We sell on “non-price” attributes such as 8
Slide 80: Customers Stay for Unique Long Term Value and Reward
CUSTOMERS STAY FOR UNIQUE LONG TERM VALUE AND REWARD For personal use only > The number of customers enjoying unique Mercury rewards continues to grow: > 145,000 AirpointsTM customers > 140,000 on fixed-term pricing > 157,000 Free Power Days in FY2017 > $10m donated to Starship over 18 years
Slide 81: Customers Love Free Power Day Rewards
CUSTOMERS LOVE FREE POWER DAY REWARDS For personal use only > Free Power Days have high perceived value and are a unique Mercury reward > Delivering long-term reward and one-off “surprise and delight” > Providing rich user-generated content with customers sharing their “FPD” stories Dryingfrom child
Slide 82: Our Digital Channels Have Been Making It Easy
OUR DIGITAL CHANNELS HAVE BEEN MAKING IT EASY FOR OUR CUSTOMERS For personal use only > Our new responsive Mercury website launched in July 2017 > Website traffic is up 42% YOY > 43% of that traffic is now on mobile/tablet > My Account has a high level of engagement with 190,000 customers registered
Slide 83: Digital Is the Key Enabler to Retain and Reward Customers
DIGITAL IS THE KEY ENABLER TO CONTINUE TO RETAIN AND REWARD OUR CUSTOMERS For personal use only > Digital engagement is not just about self-service > GEM, our usage monitor, is one of our most popular services with ~100,000 customers engaging every week > Our new digital on-boarding programme has a
Slide 84: Our Foundations Will Enable Us to Inspire, Reward and Make It Easy
OUR FOUNDATIONS WILL ENABLE US TO CONTINUE TO INSPIRE, REWARD AND MAKE IT EASY FOR OUR CUSTOMERS TO STAY WITH MERCURY For personal use only > We have built our loyalty platforms as part of a multi-year strategy > We have focused on offering unique propositions that reward existing customers, attract
Slide 85: Driving Customer Loyalty
DRIVING CUSTOMER LOYALTY GROWING CAPABILITY CUSTOMER–LED STRATEGY For personal use only > In a highly competitive market, > Our retention success is the result of Mercury already out-performs on listening to our customers retention CREATE FUTURE VALUE > Our loyalty platforms are built to deliver lon
Slide 86: Technology & Digital
For personal use only TECHNOLOGY & DIGITAL KEVIN ANGLAND NISHA CLARK ROXANNE SALTON General Manager Head of ICT Delivery Head of Digital Strategy Digital Services and Delivery
Slide 87: Growing Our Talent and Capability & Changing How We Deliver
GROWING OUR TALENT AND CAPABILITY & CHANGING HOW WE DELIVER For personal use only > We have increased our investment in our brand, people and talent strategy to attract and retain the best talent > We have implemented new agile/collaborative ways of working, and are applying a continuous delivery ap
Slide 88: Growing Our Talent and Capability – Culture Built on Trust
GROWING OUR TALENT AND CAPABILITY – CREATING A CULTURE BUILT ON TRUST AND COLLABORATION ATTRACT BEST TALENT WORLD CLASS PARTNERSHIPS For personal use only > We have built a strong experienced internal workforce and are partnering with world class digital Highly effective workforce technology provide
Slide 89: Changing How We Deliver Has Been Key to Our Success
CHANGING HOW WE DELIVER HAS BEEN KEY TO OUR SUCCESS FROM TO LEADS TO For personal use only Funding the work Enabling people Building Mercury’s human capital for a future focused workforce Long term sustainability Feature based Project prioritisation prioritisation Reduction in effort Faster
Slide 90: Building a Solid Technology Foundation
BUILDING A SOLID TECHNOLOGY FOUNDATION For personal use only > Our core technology platforms are being upgraded, setting the foundation for future operational improvement and growth > We are investing in future-proof platforms, partners and services while maintaining flexibility and limiting our exp
Slide 91: We Are Building for Operational Excellence
WE ARE BUILDING FOR OPERATIONAL EXCELLENCE > We are making it easier for our people to deliver experiences that inspire, reward and make it For personal use only easy for our customers EXPERIENCE LAYER > We are investing in a core foundation that provides us with flexibility, agility and re-use, all
Slide 92: We Are Taking a Stepped Approach to Our Technology Investment
WE ARE TAKING A STEPPED APPROACH TO OUR TECHNOLOGY INVESTMENT For personal use only GROUP ICT CAPEX GROUP ICT OPEX $50m Metrix, $50m SAP, Software & Hybris cloud $40m $40m licensing Metrix, SAP $30m $30m $20m $20m $10m $10m $0m $0m 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 201
Slide 93: Customer-Led Digital Experiences Delivering Real Value
CUSTOMER-LED DIGITAL EXPERIENCES DELIVERING REAL VALUE For personal use only > Customer engagement via digital continues to grow and we continue to see uplift in customer preference for digital self-services > We continue to deliver digital experiences that support our brand promise to inspire, rewa
Slide 94: Our Customers Want to Engage Digitally, Across More Touch Points
OUR CUSTOMERS WANT TO ENGAGE DIGITALLY, ACROSS MORE TOUCH POINTS INBOUND CUSTOMER ENGAGEMENT For personal use only > Digital engagement is trending upwards, indicating a shift away from traditional analogue channels as the primary touch point > Over 1/3 of our residential customer initiated service
Slide 95: Creating Future Value by Leveraging Emerging Technologies and Partnerships
CREATING FUTURE VALUE ACROSS THE ENTERPRISE BY LEVERAGING EMERGING TECHNOLOGIES AND PARTNERSHIPS For personal use only > We are exploring and experimenting with emerging technologies to identify new opportunities for growth, innovation, optimisation and efficiencies across Mercury > We have adopted
Slide 96: Technology & Digital
TECHNOLOGY & DIGITAL GROW TALENT & CAPABILITY CUSTOMER–LED DIGITAL For personal use only > We have built the necessary > Digital is a growing channel for capability to dynamically execute on Mercury and we continue to deliver our digital aspirations rewarding and inspiring experiences supporting our
Slide 97: For personal use only
For personal use only