Slide 1: 2023 Annual Results Presentation
2023 Annual Results Presentation 29 AUGUST 2023 Blade transportation at Meridian’s Harapaki wind farm
Slide 2: Key points
Key points 472 GWh of committed 3.1% increase in n dividend 10% increase in EBITDAF * process heat demand Ruakākā BESS Waitaki reconsent lodged Completed Forever Forest construction commenced e p r ners ps n p e land purchases H2 Harapaki on r Transformer issues and Woodside selected as White ill tu
Slide 3: Our people
Our people § Injury rate showing improving trend, with 17 Total recordable injury frequency rate per 200k hours Meridian employees non-serious lost time injuries in FY23 7 Meridian on-site contractors 6 5.46 § Mature hybrid working, revamped employee 5 4.71 4.68 3.99 benefits helping deliver stable
Slide 4: Customer outcomes
Customer outcomes § Retail electricity pricing continuing to decline Unit electricity costs (real) c/KWh Residential Commercial Industrial in real terms 40 including GST excluding GST excluding GST § Meridian is fully compliant with the 35 30 Electricity Authority’s customer care 25 guidelines 20 §
Slide 5: Wholesale market operation
Wholesale market operation § Forward curve has moderated during FY23 Otahuhu ASX futures settlement price $/MWh 250 § Wholesale market liquidity continues to rise 230 210 § New peak records point to overall demand 190 increases 170 150 § Expect to see real medium term forward 130 110 prices moderati
Slide 6: Policy and regulation
Policy and regulation Resource management reform § Natural & Built Environment Act and Spatial Planning Act passed into law § Climate Adaptation Bill yet to be introduced § Concerns with how the review of National Policy Statement and new National Planning Framework fit into law changes § And misali
Slide 7: New Zealand’s decarbonisation
New Zealand’s decarbonisation § 2022 Emissions Reduction Plan targets New Zealand average annual emissions Total significant non-agricultural emissions Mt CO2e 100 Non agriculture reductions 80 79.5 79.5 72.5 Agriculture § 5th (final) round of GIDI funding closed in 60 61.0 41.3 41.3 32.7 48.0 March
Slide 8: Meridian’s decarbonisation
Meridian’s decarbonisation Total greenhouse gas emissions tCO2e One-time construction Scope 3 60,000 Scope 2 Scope 1 Operational emissions Half by 30 operational target 50,000 40,000 30,000 20,000 10,000 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Financial Year ended 30 June Sourc
Slide 9: Customer decarbonisation
to purchase EV chargers by making it possible for them to pay Customer decarbonisation the costs back through their energy bill. Predict VPP Optimise Aggregate Transport Distributed Gen/Storage Process Heat Demand Flexibility ↙ ↓ ↘ ↓ Products/offers for customers that make Active management of Merid
Slide 10: NZAS termination – portfolio response
NZAS termination – portfolio response 29 AU GU ST 20 23 20 23 AN N U AL RE SU L T S PRE SE N T AT I ON 10
Slide 11: Harapaki wind farm
Harapaki wind farm § In February 2023, Cyclone Gabrielle caused Harapaki site damage and extensive destruction to East Coast roading and transmission infrastructure § Transpower repairs have enabled Harapaki substation commissioning § Waka Kotahi repairs to State Highway 5 have allowed first tranche
Slide 12: Renewable development pipeline
Renewable development pipeline § Ruakākā Battery Energy Storage System main civil works now underway § Mt Munro wind farm consent (90MW) was lodged in May 2023 § Ruakākā solar (120MW) consent lodging is imminent § Swannanoa solar (130MW) consent expected to be lodged in early 2024 Proposed layout of
Slide 13: Renewable development pipeline
Renewable development pipeline § Doubling of pipeline in FY23 to 4.7GW (11.1TWh) of development options § 1.5GW secured, 3.2GW in advanced prospects 29 AU GU ST 20 23 20 23 AN N U AL RE SU L T S PRE SE N T AT I ON 13
Slide 14: Financial performance
Financial performance 2 9 AUGUS T 2 02 3 2 02 3 AN N UAL R E S ULTS PR E S E N TATI ON 14
Slide 15: Dividends
Dividends § Final ordinary dividend declared of 11.90cps Total dividends declared (+3%), 80% imputed 25 Ordinary dividends Special dividends § Brings FY23 full year ordinary dividend declared to 17.90cps (+3%), 80% imputed 20 4.88 2.44 § Represents 80% payout of free cash flow 15 § Dividend reinvest
Slide 16: EBITDAF
EBITDAF1 § FY23 EBITDAF +10% on FY22 EBITDAF movement $M § +14% higher retail contracted sales revenue 900 § +3% higher generation volumes, despite La Niña driven summer drought and low wind +2 conditions 800 -1 -1 -3 -33 § +16% growth in operating costs +110 § +10% growth in operating cash flows 70
Slide 17: Energy margin
Energy margin § Sales volume growth across agricultural and New Zealand energy margin movement business segments $M 1,400 physical +$244M financial -$130M § Lift in both mass market and corporate average pricing 1,200 +2 § +2.6% higher physical generation +71 -232 +111 -9 -4 +80 § Financial contract
Slide 18: Customers
Customers § Sales volume growth in small medium Customer sales Average Total sales North Island South Island price volume sales volume sales volume business (+13%), agricultural (+8%), large ($/MWh) (GWh) (GWh) (GWh) business (+17%) FY23 Residential 1,765 973 792 § Higher mass market net average sal
Slide 19: Generation
Generation § FY23 inflows were 107% of average, Meridian average generation price $/MWh including record winter inflows, third 200 173 consecutive dry summer/early autumn 150 130 123 period 100 89 § Lowest year of generation from the current 73 installed wind farm fleet from reduced wind 50 speeds a
Slide 20: Operating costs
Operating costs § Slightly above the $242M-$247M guidance FY23 operating cost movement $M range 275 § $33M (15%) increase in FY23 operating costs +1 250 +4 § $20M (9%) increase on a same basis, +12 adjusting for: +3 225 +6 +7 § FY22 provision release relating to the MBIE review of Meridian’s holiday
Slide 21: Capital expenditure
Capital expenditure § Lower end of $340M-$365M guidance Capital expenditure range $M Total Growth Stay in business § Consistent level of stay in business capex 400 346 (system and generation asset enhancement spend) 300 § Harapaki and Ruakākā battery construction is the bulk of the FY23 growth capex
Slide 22: Cost guidance
Cost guidance § 8%-10% FY24 operating cost increase FY24 operating cost movement $M includes expanding energy hardship 300 programme and new financial system 275 +5 implementation +7 +2 +7 +4 274 ↑ § SIB capex includes SCADA system upgrade, 250 268 Wellington office move and generation 225 249 proje
Slide 23: Below EBITDAF
Below EBITDAF § $351M decrease in NPBT1 from the net change in Net profit after tax (continuing operations) fair value of hedges ($402M increase in FY22) $M 500 § $10M net impairment charge, mainly exit of 400 Wellington office lease and falling NZU prices 300 § $26M reduction in net finance costs w
Slide 24: Fair value movements
Fair value movements § Meridian uses derivative instruments to manage Net changes in fair value of energy & treasury hedges interest rate, foreign exchange and electricity $M 600 price risk 400 § As forward prices and rates on these instruments 200 +402 move, non-cash changes to their carrying value
Slide 25: Debt and funding
Debt and funding § June 2023 total borrowings of $1,236M1 Debt maturity profile as at 30 June 2023 $M 800 Drawn debt maturing (face value) Available facilities maturing § Total funding facilities of $1,756M, of which $535M were undrawn 600 § All facilities classified under Meridian’s 400 215 Green F
Slide 26: Closing comments
Closing comments § Higher customer sales underpinned FY23 result § Customer decarbonisation solutions gaining momentum § Grid-scale battery construction underway § Mt Munro consent lodged, Ruakākā solar consent lodging imminent § Meridian’s emissions offset expanded to include construction projects
Slide 27: Questions
Questions 2 9 AUGUS T 2 02 3 2 02 3 AN N UAL R E S ULTS PR E S E N TATI ON 27
Slide 28: Additional information
Additional information 2 9 AUGUS T 2 02 3 2 02 3 AN N UAL R E S ULTS PR E S E N TATI ON 28
Slide 29: Segment results
Segment results § Flux Federation included in ‘other and unallocated’ segment $M Wholesale Retail Australia Other & unallocated Inter-segment Discontinued op's Total 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Contracted sales 530 525 1,208 1,057 - 96 - - - - - (96) 1,738 1
Slide 30: Change in presentation of realised energy hedge balances
Change in presentation of realised energy hedge balances § From a change in interpretation of NZ IFRS 9 § Previous income statement treatment was as revenue or expenses (hedge energy sales or purchases) § Realised energy hedge balances now included in the net change in fair value of energy hedges §
Slide 31: Six monthly results
Six monthly results $M 1H 2H Total 2023 2022 change 2023 2022 change 2023 2022 change Contracted sales 826 788 38 912 794 118 1,738 1,582 156 Cost to supply customers (523) (905) 382 (967) (1,558) 591 (1,490) (2,463) 973 Net cost of hedging (68) (4) (64) (53) 152 (205) (121) 148 (269) Generation spo
Slide 32: Earnings from continuing operations
Earnings from continuing operations NZ Operations Financial year ended 30 June 2023 2022 2021 2020 2019 $M Contracted sales 1,738 1,582 1,433 1,327 1,178 Cost to supply customers (1,490) (2,463) (2,896) (1,486) (1,874) Net cost of hedging (121) 148 271 11 126 Generation spot revenue 1,020 1,757 2,19
Slide 33: Retail
Retail Customers New Zealand customer connections ICP (000) Meridian North Island Meridian South Island Powershop Total 500 § 1% decrease in customers since June 2022 400 365 363 347 324 302 300 106 117 117 74 89 Residential, business, agri segment 200 119 120 122 125 124 § 1% decrease in residentia
Slide 34: Hydrology
Hydrology Inflows Meridian's combined catchment inflows GWh 16,000 § FY23 inflows were 107% of average 14,000 § July 2023 inflows were 86% of average 12,000 10,000 8,000 6,000 Storage 4,000 2,000 § Meridian’s Waitaki storage at 30 June 2023 0 Financial 2009 2010 2011 2012 2013 2014 2015 2016 2017 20
Slide 35: Generation
Generation Volume New Zealand generation GWh Hydro Wind 16,000 § FY23 generation was 3% higher than FY22, 14,000 1,244 1,465 1,395 1,285 1,202 with higher hydro and lower wind 12,000 10,000 generation 8,000 6,000 12,326 12,758 12,271 12,701 11,297 4,000 Price 2,000 0 2019 2020 2021 2022 2023 § FY23
Slide 36: FY23 EBITDAF
FY23 EBITDAF Movement in EBITDAF $M New Zealand energy margin +$110M 1,200 1,000 -269 +5 +2 800 +151 -9 -4 -1 -1 -3 -33 600 +973 -737 400 783 709 200 0 EBITDAF 30 Retail Wholesale Generation Cost to Net cost of Virtual asset Other Other Transmission Hosting Metering Other EBITDAF 30 Jun 2022 contrac
Slide 37: EBITDAF to NPAT
EBITDAF to NPAT FY23 EBITDAF TO NPAT RECONCILIATION $M 800 -294 600 -17 -44 400 783 -113 200 315 -309 +17 +82 95 0 -10 -200 EBITDAF Depreciation Premiums paid Net finance Tax Underlying Net change in Impairment of Premiums paid Tax NPAT from and on electricity costs NPAT fair value of assets on elec
Slide 38: Energy margin
Energy margin Defined as § Revenues received from sales to customers net of § A non-GAAP financial measure distribution costs (fees to distribution network companies representing energy sales revenue less that cover the costs of distribution of electricity to energy related expenses and energy custo
Slide 39: New Zealand energy margin
New Zealand energy margin New Zealand energy margin $M 3,000 2,500 +1,020 -1,243 2,000 1,500 +530 -247 +46 1,000 +493 -586 -7 -8 +419 500 1,132 +715 0 Res, SMB, C&I sales Financial Generation Cost to Cost to Hedging Hedging Contract VAS marginsMarket costs Energy Agi sales contract spot supply suppl
Slide 40: New Zealand energy margin
New Zealand energy margin New Zealand energy margin movement $M 1,600 1,400 -71 +145 1,200 +5 -235 +71 +37 +80 -9 -4 1,000 +828 800 -737 1,132 1,022 600 400 Energy Res, SMB, C&I sales Financial Generation Cost to Cost to Hedging Hedging Contract VAS Market Energy Margin 30 Agi sales contract spot su
Slide 41: New Zealand energy margin
New Zealand energy margin FY23 FY22 Volume VWAP NZD M Volume VWAP NZD M Res, business, agri sales 5,258 $136 714 5,012 $127 635 Corporate and industrial sales 3,917 $126 492 3,929 $107 422 Retail contracted sales 9,175 $131 1,206 8,941 $118 1,057 NZAS sales 5,009 4,992 Financial contract sales 3,098
Slide 42: Funding metrics
Funding metrics § Net debt/EBITDAF is the principal metric underpinning S&P credit rating § S&P calculation of net debt/EBITDAF includes numerous adjustments to reported numbers; § Borrowings adjusted for the impact of leases § Cash balances adjusted for restricted cash Net debt to EBITDAF Financial
Slide 43: Proforma income statement
Proforma income statement Proforma income statement Financial year ended 30 June 2023 2022 2021 2020 2019 reported reported pro forma pro forma pro forma $M Operating revenue 3,222 3,776 4,115 3,357 3,554 Operating expenses (2,397) (3,188) (3,634) (2,560) (2,835) Depreciation and amortisation (294)
Slide 44: Segment earnings statement
Segment earnings statement Segment earnings statement Financial year ended 30 June 2023 2022 2021 2020 2019 $M New Zealand energy margin 1,132 1,022 994 1,122 1,108 Australia energy margin - - - 122 118 Other revenue 29 27 27 27 25 Energy transmission expense (80) (79) (82) (123) (131) Hosting expen
Slide 45: Underlying NPAT reconciliation
Underlying NPAT reconciliation UNPAT Financial year ended 30 June 2023 2022 2021 2020 2019 $M Net profit after tax 95 664 428 175 339 Underlying adjustments Discontinued operations - (213) (13) - - Hedging instruments Net change in fair value of energy hedges 333 (145) (157) 113 (58) Net change in f
Slide 46: Cash flow statement
Cash flow statement Cash flow statement Financial year ended 30 June 2023 2022 2021 2020 2019 $M Receipts from customers 3,354 3,934 4,164 3,375 3,463 Interest and dividends received 11 2 - 1 1 Payments to suppliers and employees (2,637) (3,254) (3,472) (2,520) (2,628) Interest paid (65) (76) (82) (
Slide 47: Balance sheet
Balance sheet Balance sheet Financial year ended 30 June 2023 2022 2021 2020 2019 $M Cash and cash equivalents 212 363 148 176 78 Trade receivables 334 399 491 323 292 Financial instruments 141 213 192 100 118 Other current assets 60 66 86 66 334 Total current assets 747 1,041 917 665 822 Property,
Slide 48: Glossary
Glossary Hedging volumes buy-side electricity derivatives excluding the buy-side of virtual asset swaps Average generation price the volume weighted average price received for Meridian’s physical generation Average retail contracted sales price volume weighted average electricity price received from
Slide 49: Disclaimer
Disclaimer The information in this presentation was prepared by Meridian This presentation contains a number of non-GAAP financial Energy with due care and attention. However, the information is measures, including Energy Margin, EBITDAF, Underlying NPAT and supplied in summary form and is therefore