Mercury Nz Ltd. · NZX:MCY
Mercury Nz — HY2022 Earnings Presentation
28 slides from Mercury Nz's earnings presentation, Feb 22, 2022
Slide 1: Financial Results, Six Months Ended 31 December 2021
For personal use only FINANCIAL RESULTS. SIX MONTHS ENDED 31 DECEMBER 2021 VINCE HAWKSWORTH WILLIAM MEEK Chief Executive Chief Financial Officer 22 February 2022 Mercur ye
Slide 2: 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. Information in this presentation has been prepared by the C
Slide 3: HY2022 result reflects significant change in the period
HY2022 RESULT REFLECTS SIGNIFICANT CHANGE IN THE PERIOD 3 TILT NZ ACQUISITION Acquired five operating wind farms which combined with Turitea North make Mercury NZ's largest wind generator! $242m EBITDAF Down $48m versus HY2021 reflecting lower hydro generation, Kawerau outage impacts and Norske Skog
Slide 4: HY2022 result reflects significant change in the period
HY2022 RESULT REFLECTS SIGNIFICANT CHANGE IN THE PERIOD! 700 685 600 HY2021 500 ms HY2022 421 400 | 361 & 321 290 300 242 200 91 106 130 15 49 236 2 121 93. 109 100 = = om of — Energy Margin Operating EBITDAF NPAT? Underlying Free Cash Flow Stay-In-Business Growth _Declared Ordinary Expenditure Earn
Slide 5: HY2022 reflects changes and Norske Skog transaction: EBITDAF bridge
Opex increase breakdown: HY2022 REFLECTS CHANGES AND NORSKE SKOG TRANSACTION Wind farm maintenance [7 Other generation costs > EBITDAF BRIDGE (HY2021 to HY2022)! Decrease [Ml Increase _| (includes Kawerau outage) ICT 3 Spot Generation?: + 162GWh Total Sales: ¥ 76GWh* ihe 5 Wind Generation: # 587GWh
Slide 6: Hydro generation reduced due to low inflows and hydro management
HYDRO GENERATION REDUCED DUE TO LOW INFLOWS AND HYDRO MANAGEMENT LAKE TAUPO STORAGE Min / Max ——-Avg == =Lake Taupo MCL! -- (since 1 Jul 1999) 600 500 400 GWh 300 Record low 200 inflows in Jan-22 100 Lake level lifted, despite low H1 inflows, in preparation for seasonally dry Q3 Aug Sep Oct fe) Mont
Slide 7: High spot prices reflect thermal utilisation and fuel costs
HIGH SPOT PRICES REFLECT THERMAL UTILISATION AND FUEL COSTS THERMAL GENERATION AND PRICE = Thermal Generation GAS PRODUCTION = —Pehokura —Maui Average Price (at OTA2201, RHS) McKee/Mangahewa = ——Turangj Mixing Station 1,000 $250 250 ——Kupe 800 $200 200 € 600 sis0 § —_B 150 Fil i zg 2 © 400 $100 % =F
Slide 8: Retail market remains competitive with margins under pressure
RETAIL MARKET REMAINS COMPETITIVE WITH MARGINS UNDER PRESSURE SALES BY SEGMENT = Mass Market CHANNEL YIELDS —Otahuhu Futures Price? , Adjusted Mercury Mass Market Energy Yield 4000 = C&l (includes physical and financial sales) $250 a orahuhu Spot Price? $200 3,000 $150 £ FA = 2,000 = a $100 1000 $50
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Slide 10: Mercury advancing generation development opportunities
MERCURY ADVANCING GENERATION DEVELOPMENT OPPORTUNITIES Development Options Potential Capacity (est.) Commentary Puketoi ~230MW Consented lapse period extended to 2031 Constructability work and consent enhancements being progressed Kaiwaikawe ~TOMW Resource consent hearing complete, decision pending
Slide 11: Strategic framework linking three-year objectives with long-term goals
STRATEGIC FRAMEWORK LINKING THREE-YEAR OBJECTIVES WITH LONG-TERM GOALS nN OUR PURPOse THRIVING TODay Increase the value of our business to $700M Enhance our EBITDAF, Unleash the licence to operate full potential of our through collaborative people through work with our transforming stakeholders. cul
Slide 12: Delivering on strategic framework
DELIVERING ON STRATEGIC FRAMEWORK Thriving Today Shaping Tomorrow Enhance our license to operate through collaborative work with our stakeholders Increase the value of our business to $700m EBITDAF Unleash the full potential of our people through transforming culture Be an adaptive and resilient org
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Slide 16: Other items
OTHER ITEMS > Mercury has committed to a drilling campaign with Iceland Drilling commencing in FY2023 > Involves 8 wells being drilled across FY23-24 with associated increase in stay-in-business capex of ~$65m in each year > Partial payment of insurance receipts fromm Kawerau outage likely in 2H-FY2
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Slide 18: HY2022 dividend - dividend reinvestment plan announced
HY2022 DIVIDEND —- DIVIDEND REINVESTMENT PLAN ANNOUNCED 18 ORDINARY DIVIDENDS Cents per share 20 5 18 4 16 4 144 12 4 3 = Final dividend Interim dividend 2018 2019 2020 Financial Year 2021 2022 Interim Dividend > 8cps (fully-imputed), up 18% from HY2021 Dividend Reinvestment Plan (DRP) > DRP to appl
Slide 19: Guidance adjustments reflect growth
GUIDANCE ADJUSTMENTS REFLECT GROWTH >FY2022 EBITDAF guidance remains $570m! on 3,750GWh of hydro generation subject to hydrological volatility, wholesale market conditions and any material adverse events, significant one-off expenses or other unforeseeable circumstances >FY2022 ordinary dividend gui
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Slide 24: Demand steady despite lockdown; lower on industrial and irrigation load
DEMAND STEADY DESPITE LOCKDOWN; LOWER ON INDUSTRIAL AND IRRIGATION LOAD > National demand down 1.0%! versus HY2021 due to reductions in industrial and irrigation sectors > Urban and rural sector demand lifted despite COVID-19 lockdown > Industrial demand decreased due to the closure of Norske Skog a
Slide 25: Diversified funding profile
DIVERSIFIED FUNDING PROFILE DEBT MATURITIES AS AT 14 FEBRUARY 2022 m= Commercial Paper Undrawn Bank Facilities Undrawn Rolling Bank Facilities! Drawn Bank Facilities Domestic Wholesale Bonds = Domestic Wholesale Green Bonds _® Retail Green Bonds ™US Private Placement AUD Green Bonds Capital Bonds 35
Slide 26: Financial derivatives
FINANCIAL DERIVATIVES 6 months ended 31 December 2021 6 months ended 31 December 2020 Energy Margin contribution ($m) Sell CFDs (21) (59) Buy CFDs (2) 22 Other Financial Derivatives' (1) 23 Total Energy Margin contribution (24) (14) 26 | Excludes carbon trading derivatives and acquisition amortisati
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Slide 28: For further information
For personal use only FOR FURTHER INFORMATION > TIM THOMPSON | HEAD OF TREASURY & INVESTOR RELATIONS T. +64 275 173 470 E. INVESTOR@MERCURY.CO.NZ