Mercury Nz Ltd. · NZX:MCY
Mercury Nz — HY2021 Earnings Presentation
23 slides from Mercury Nz's earnings presentation, Feb 23, 2021
Slide 1: Financial Results, Six Months Ended 31 December 2020
For personal use only FINANCIAL RESULTS. SIX MONTHS ENDED 31 DECEMBER 2020 VINCE HAWKSWORTH WILLIAM MEEK Chief Executive Chief Financial Officer 23 February 2021 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: HY2021 Highlights
HY2021 HIGHLIGHTS ELEVATED PRICES PERSIST FOCUS ON CUSTOMER VALUE Wholesale market prices remain Mercury pursuing value with elevated reflecting continued gas changing sales composition leading deliverability constraints and future to increased yields; reduced demand firming with NZAS decision acqui
Slide 4: Financial Performance
FINANCIAL PERFORMANCE 400 350 | 342 “er Hy2020 294 300 258 = HY2021 250 & 200 60 130 115 tzo_ V6 121 100 94 87 83 90 3 87 (93 50 | | 2 4 | of | Energy Margin Operating EBITDAF NPAT Underlying Free Cash Flow! Stay-In-Business Growth _Declared Ordinary Expenditure Earnings Capital Investment Dividend
Slide 5: Strong Underlying Portfolio Performance
STRONG UNDERLYING PORTFOLIO PERFORMANCE EBITDAF BRIDGE (HY2020 to HY2021) Decrease Ill Increase Total Sales: # 130GWh? Trading Contribution: # $14m Generation: ¥ 108GWh Mass Market Yield: # 7.0% Opex: ¥ Fewer outages in HY21 360 GWAP!: ¢ $12/MWh C&l Yield: 4 8.7%? Other: # Tilt and HRI $50m increase
Slide 6: Key Performance Indicators
KEY PERFORMANCE INDICATORS (versus previous half-year periods / 6-monthly rolling unless indicated) & Mercury brand 190 oy 2 61% Net promoter score Brand Strength EG 5 trader churn ~ 19.02 a 693 a CJ 6.7%! 16 g CCC Draft Report Commitment to 8 B supportive of v vehicle emissions v 2 electrification
Slide 7: Reduced Gas Availability Lifts Electricity Spot Prices
ee REDUCED GAS AVAILABILITY LIFTS ELECTRICITY SPOT PRICES HYDRO STORAGE VS. SPOT ELECTRICITY PRICE THERMAL GENERATION lam Thermal (excl. Huntly Rankines) From Jan-99 mm Huntly Rankine Units 1 e FY2019 — Otahuhu Price (RHS) $300 e i 16,000 1 | arge gas fields experiencing significant production cuts
Slide 8: Retail Margin Compression with Sustained Elevated Wholesale Prices
RETAIL MARGIN COMPRESSION WITH SUSTAINED ELEVATED WHOLESALE PRICES CHANNEL YIELDS > —Otahuhu Futures Price! Adjusted Mercury Mass Market Energy Yield°-—-Otahuhu Spot Price” $160 rgins negative $140 olesale price $120 Geothermal generation build Thermal rationalisation $100 $30/MWh+ = increase in = s
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Slide 10: Portfolio Management Vital in Response to Fluctuating Hydrology
PORTFOLIO MANAGEMENT VITAL IN RESPONSE TO FLUCTUATING HYDROLOGY 10 LAKE TAUPO STORAGE (since 1 Jul 1999) Min / Max 700 Avg Hydro storage recovery in Q2 on average inflows Record low 12-month inflow sequence to 31 October = - -Lake Taupo MCL m= FY2021 Month End Jun Jul Aug Jan Feb! Mar Apr May Jun Hy
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Slide 15: FY2021 Guidance
FY2021 GUIDANCE > FY2021 EBITDAF guidance has been revised from $535m to $520m reflecting an expected IJOOGWh decrease in full year hydro generation to 3,88300GWh due to dry weather in the Taupo catchment and ASX electricity futures indicating wholesale prices remaining elevated for the remainder of
Slide 16: For personal use only
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Slide 17: Mercury's Competitive Advantage
MERCURY'S COMPETITIVE ADVANTAGE 100% renewable generation > Two low-cost complementary fuel sources in baseload geothermal and peaking hydro with wind to be added Superior asset location > North Island generation located near major load centres; rain-fed hydro catchment inflows aligned with winter p
Slide 18: Demand Resilient to COVID-19 Impact
S DEMAND RESILIENT TO COVID-19 IMPACT > National demand flat, down 0.2%! versus HY2020 as decreased industrial sector load was offset by increases across most other sectors > Industrial demand declined as large users reduced production due to economic outlook > Tiwai average demand decreased 5% from
Slide 19: Diversified Funding Profile
DIVERSIFIED FUNDING PROFILE DEBT MATURITIES AS AT 19 FEBRUARY 2021 Commercial Paper = Domestic Wholesale Bonds Undrawn Bank Facilities = Undrawn Rolling Bank Facilities’ WUS Private Placement ™ MCY030 Bonds (Retail Green Bonds) Domestic Wholesale Green Bonds ™mMCY020 Bonds 600 500 400 E w 300 0 = ||
Slide 20: Financial Derivatives
FINANCIAL DERIVATIVES 6 months ended 31 December 2020 6 months ended 31 December 2019 Energy Margin contribution ($m) Sell CFDs (59) (48) Buy CFDs 22 14 Other Financial Derivatives 24 10 Total Energy Margin contribution (14) (24) 20
Slide 21: Non-GAAP Measures
NON-GAAP MEASURES > Energy Margin is sales from electricity generation and sales to customers and derivatives, less energy costs, line charges, other direct costs of sales, and third-party metering > Operating Expenditure represents employee compensation and benefits, maintenance expenses and other
Slide 22: Reference Material
REFERENCE MATERIAL MERCURY REFERENCES Mercury Investor Centre Quarterly Operational Updates FY2020 Results Presentation PUBLICATIONS https://www.mercury.co.nz/investors https://www.mercury.co.nz/investors/results-reports/operating-information https://issuu.com/mercurynz/docs/mercury fy2020 results_p
Slide 23: 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