Mercury Nz Ltd. · NZX:MCY
Mercury Nz — Debt Investor Presentation (June 2023)
29 slides from Mercury Nz's debt investor presentation, Jun 6, 2023
Slide 1: I ge a a Sart
I ge a a Sart © CRAIGS {3 FORSYTH BARR INVESTMENT PA\ RTNERS
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared by Mercury NZ Limited (““Company" or "Mercury”) 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 Company with d
Slide 3: Important Information
IMPORTANT INFORMATION The offer (“Offer”) of unsecured, unsubordinated, fixed rate green bonds ("Green Bonds”) by Mercury described in this presentation is made in reliance upon the exclusion in clause 19 of schedule 1 of the Financial Markets Conducts Act 2013 ("FMCA’). The Offer is an offer of deb
Slide 4: Offer Highlights
OFFER HIGHLIGHTS Issuer Instrument Credit Rating Issue Amount Term Interest Rate Use of proceeds Arranger and Green Bond Co-Ordinator Joint Lead Managers Mercury NZ Limited ('Mercury”) Unsecured, unsubordinated, fixed rate green bonds ("Green Bonds”) Expected Issue Credit Rating: BBB+ (Mercury has a
Slide 5: Country, Industry & Mercury
Turbines at Tararua COUNTRY, INDUSTRY & MERCURY
Slide 6: Mercury Snapshot
MERCURY SNAPSHOT >We are an electricity generator and multi-product utility retailer of electricity, gas, broadband and mobile services focused on delivering wonderful solutions for New Zealanders at home, at work and Po on the move HYDRO GEOTHERMAL WIND . ~4,070GWh ~2,650GWh4 ~2,100GWh > New Zealan
Slide 7: Complementary Portfolio of Assets — Hydro, Geothermal & Wind
COMPLEMENTARY PORTFOLIO OF ASSETS — HYDRO, GEOTHERMAL & WIND - ~4,070GWh pa (mean inflows) GEOTHERMAL ASSETS: 466MW' - ~2,870GWh pa —_ HYDRO ASSETS: 1,117MW! a Geothermal assets that meet eligibility criteria under Mercury's Green = Financing Taupo Gates Aratiatia 7MW. Ohakuri 34 MW. Nga Awa Porua?
Slide 8: Complementary Portfolio of Assets — Hydro, Geothermal & Wind
COMPLEMENTARY PORTFOLIO OF ASSETS — HYDRO, GEOTHERMAL & WIND 1] 1] 1] 1] 1] 1] © Turitea North TI9MW Mahinerangi 36MW Tararua 160MW 1 470GWh 100GWh 560GWh ! (2021) (zon) (1999) 1] 1] 1] 1] 1] 1] 1] ! Waipipi 133MW I 455GWh I (2021) ‘otal Maximum Continuous Rating 2 Artist impression of Kaiwera Downs
Slide 9: Our FY24 Objectives & 2030 Goals
OUR FY24 OBJECTIVES & 2030 GOALS OUR 2030 LONG TERM GOALS ARE TO BE... THRIVING TODay Increase the New Zealand's leading energy brand CUSTOMER stakeholders. culture. value of our business to $800M Enhance our GEE Unleash the e . a , . . (enexeeci9 felleatentialotete gz Recognised as a leader within
Slide 10: Long Term Industry Trends
LONG TERM INDUSTRY TRENDS SECTOR EARNINGS DEMAND AND GENERATION CAPACITY FUTURES VS SPOT PRICES —Demand 12 Mth rolling OTA Futures price (1 year prior) 3 9 50 Max. Generation Capacity (RHS) 10.2 $250 12 Mth rolling OTA spot price _ CAGR: 1.5% 40 | pay [ 100 $200 —Quarterly OTA Futures price (2 years
Slide 11: Electricity Forward Price Influenced by Thermal Fuel Costs & Carbon Prices
ELECTRICITY FORWARD PRICE INFLUENCED BY THERMAL FUEL COSTS & CARBON PRICES > Rising 3-year average futures NATIONAL HYDRO STORAGE Min [Max COAL AND GAS PRICE —Coal! prices not strongly influenced (min/max range since 1 Apr 1999) —Avg Analyes of ecent digparch | C28 (RHS) 35 by hydrology when short-t
Slide 12: Mercury's Competitive Advantage
12 MERCURY'S COMPETITIVE ADVANTAGE 100% renewable generation > Three low-cost complementary fuel sources in peaking/firming hydro, baseload geothermal, and high-quality wind generation 2 Superior asset location > Predominantly North Island located generation near major load centres; hydro system inf
Slide 13: Mercury's Long Term Track Record
13 MERCURY'S LONG TERM TRACK RECORD AWC 2023F EBITDAF OPEX = Operating expenditure = One-off costs DISTRIBUTIONS mShare buyback m Special dividend 800 y 400 400 = Final dividend Interim dividend 600 7 Y 7 7 E 400 vs E 200 0 & 200 | rT 200 Y Y | | aa to} LL 0 a 0 ewezgeexEeegags eseze eee egure s ‘gg
Slide 14: Connections and Sales Lift Following Trustpower Retail Acquisition
CONNECTIONS AND SALES LIFT FOLLOWING TRUSTPOWER RETAIL ACQUISITION > Focus has been on bringing Trustpower and Mercury retail businesses together while also maintaining momentum CONNECTIONS > Moved rapidly to a single retail team operating across all brands 1000. "Eleticity connections (ICP's) Gas c
Slide 15: Strong Pipeline of New Renewable Generation Projects
15 STRONG PIPELINE OF NEW RENEWABLE GENERATION PROJECTS UNDER CONSTRUCTION, CONSENTED OR IN CONSENTING Projects under construction - 146MW, 520GWh > Turitea South all turbines expected to be operational by mid-CY23. Turitea North Kaiwaikawe was commissioned in Jan-22. Expected project cost $450m! an
Slide 16: Financial Overview
16 FINANCIAL OVERVIEW Turitea turbine blades oP
Slide 17: Strong Balance Sheet Supports Renewable Generation Growth
7 STRONG BALANCE SHEET SUPPORTS RENEWABLE GENERATION GROWTH > Debt / EBITDAF peaked in FY22 and is expected to reduce to a forecast of ~2.1x! by the end of FY23 due to an increase in EBITDA with full year contributions from Turitea North, ex-Tilt wind farms and Trustpower Retail business > S&P Globa
Slide 18: Diversified Funding Profile
18 DIVERSIFIED FUNDING PROFILE DEBT MATURITIES AS AT 30 APRIL 2023 = Commercial Paper Undrawn Bank Facilities Undrawn Rolling Bank Facilities ' 1m Drawn Bank Facilities US Private Placement AUD Green Bonds Capital Bonds m= Domestic Wholesale Green Bonds = Retail Green Bonds 71Proposed Offer? 500 400
Slide 19: Bond Credit Features
19 BOND CREDIT FEATURES > S&P Global Ratings is expected to assign a BBB+ Issue Credit Rating to the Green Bonds > Mercury, under the Master Trust Deed, agrees to ensure that Net Worth at any time will not be less than $500m > As at 31 December 2022, Mercury's Net Worth was $5,360m > Mercury has Gua
Slide 20: Green Bond Offer Information
GREEN BOND OFFER INFORMATION
Slide 21: Green Financing Framework
21 GREEN FINANCING FRAMEWORK @ gona Certified Use of proceeds >The proceeds of the Offer are intended to be earmarked to finance or refinance new or existing projects and expenditures relating to renewable energy and other Eligible Projects. Mercury expects to track an amount equal to the net procee
Slide 22: Green Financing Framework
GREEN FINANCING FRAMEWORK @ Bond External review CBI certification Monitoring and compliance 22 Mercury's Green Financing Framework has been independently reviewed by DNV GL Business Assurance Australia against the Climate Bonds Standard Version 3.0 and the ICMA Green Bond Principles. DNV GLs limite
Slide 23: Eligible Asset Values
23 ELIGIBLE ASSET VALUES Geothermal Rating! Book Value” Rotokawa (plant) 34MW $130m Rotokawa JV? (steamfield) $85m4 Nga Awa Parua JV? (plant) 138MW $401m* Mokai? 103MW $68m4 Ngatamariki 85MW $563m Wind Kaiwera Downs 1 (under construction) 43MW Si7me Mahinerangi 36MW $37m Tararua 160MW S377m Turitea
Slide 24: Key Terms of the Green Bonds
24 KEY TERMS OF THE GREEN BONDS Mercury NZ Limited ("Mercury") Unsecured, unsubordinated, fixed rate green bonds ("Green Bonds") Expected Issue Credit Rating: BBB+ (Mercury has an Issuer Credit Rating of BBB+) Up to NZ$100m plus oversubscriptions of up to NZ$50m (at Mercury's discretion) 5 years, ma
Slide 25: Key Dates
25 KEY DATES Tuesday 6 June 2023 Friday 9 June 2023 at 11.00am Friday 9 June 2023 Monday 19 June 2023 Tuesday 20 June 2023 19 June 2028
Slide 26: Appendix
Nga Awa Purua cooling tower APPENDIX cep 26
Slide 27: Climate Bonds Certification
27 ( ert ication This is to certify that the Mercury Green Bond 2023 Issued by Mercury NZ Limited Bonds Initiative Has met the criteria for certification by the Climate Bonds Standard Board on behalf of the Climate ea (ES, 10 May 2023 SEAN KIDNEY C.E.0., Climate Bonds Initiative Xone CALSTRS GCC i s
Slide 28: Non-GAAP Measures
NON-GAAP MEASURES >EBITDAF (or Operating Earnings) is earnings before net interest expense, tax expense, depreciation, amortisation, change in the fair value of financial instruments, gain on sale and impairments > Operating Expenditure represents employee compensation and benefits, maintenance expe
Slide 29: Slide 29