Mercury Nz Ltd. · NZX:MCY
Mercury Nz — FY2020 Earnings Presentation
31 slides from Mercury Nz's earnings presentation, Aug 18, 2020
Slide 1: Financial Results - Year Ended 30 June 2020
_ FINANCIAL RESULTS. — YEAR ENDED 30 JUNE 2020 For personal u WILLIAM MEEK VINCE HAWKSWORTH wv Chief Executive Chief Financial Officer M. CEP ee ercury
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
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Slide 4: FY2020 Highlights
FY2020 HIGHLIGHTS LOCKDOWN RESPONSE CUSTOMER VALUE Smooth transition to working from Reduced acquisition activity with home during COVID-19 lockdown; Mercury's focus on rewarding loyalty worked with suppliers to mitigate and customer value leading to impacts; work at Turitea successfully increase in
Slide 5: Financial Performance
FINANCIAL PERFORMANCE 800 700 667 652 FY2019 600 = FY2020 506 494 500 & 400 357 272 300 199 190 207 ede an 215 200 161 164 na 165 89 of Energy Margin Operating EBITDAF NPAT Underlying Free Cash Flow! Stay-In-Business Growth __Declared Ordinary Expenditure Earnings Capital Investment? Dividend Expend
Slide 6: Strong Portfolio Response to Dry Conditions
STRONG PORTFOLIO RESPONSE TO DRY CONDITIONS EBITDAF BRIDGE (FY2019 to FY2020) Total Sales: # 90GWh? Decrease Ml Increase Generation: ¥ 376GWh Mass Market Yield: # 3.2% GWAPI: ¥ $29/MWh C&l Yield: # 8.8%? 600 $60m increase 500 20 o— —j— 2 | = = = 400 24) mmeeen & £ 184 % 300 = m2sme fr 200 100 Other
Slide 7: Our Direction
OUR DIRECTION OUR PURPOSE Fetal TO INSPIRE NEW ZEALANDERS TO ENJOY ENERGY IN MORE WONDERFUL WAYS OUR MISSION ENERGY FREEDOM 7, KAITIAKITANGA S LONG-TERM SUSTAINABILITY OF [NATURAL RESOURCES ANO ASSE ES. ,
Slide 8: Key Performance Indicators
KEY PERFORMANCE INDICATORS (versus previous yearly periods / 12-monthly rolling unless indicated) 14% & Mercury brand aw 60% 2 Net promoter score Brand Strength 57% 0% g trader churn 59% 13.72 60%? a CJ 5.9% é EPR recommendations 16 community su Worked with ate é being actioned ov partnerships PP’ 9
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Slide 10: Prudent Portfolio Management Mitigates Near-Record Low Inflows
PRUDENT PORTFOLIO MANAGEMENT MITIGATES NEAR-RECORD LOW INFLOWS LAKE TAUPO STORAGE (since 1 Jul 1999) ——----------= Min / Max Avg — — Lake Taupo MCL ———— FY2020 700 ("Hydro storage increased in 600 | Preparation for dry Q3 500 = 400 Fs & 300 200 100 Second lowest’ inflow sequence since Sep 19 0 Month
Slide 11: Retail Tactics Driving Growth in Customer Value
2 @ RETAIL TACTICS DRIVING GROWTH IN CUSTOMER VALUE >In a highly competitive retail market, Mercury is focused NATIONAL SWITCHING ms Nereury Group f aon , fercury Bran on rewarding our existing customers 000 Prior mth Mercury Switches > Focus on existing customers especially important in , ~~ Net Sw
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Slide 17: Spot Price Outcomes Dependent on Transmission Build; Thermal Response
SPOT PRICE OUTCOMES DEPENDENT ON TRANSMISSION BUILD; THERMAL RESPONSE > Spot price impacts likely from FY2022 > Transmission constraints limit initial impact to South Island > Price impacts primarily felt in the Lower South Island before Clutha Upper Waitaki Lines Project complete; then in the South
Slide 18: Lockdown Impact Felt Across All Major Sectors
LOCKDOWN IMPACT FELT ACROSS ALL MAJOR SECTORS > National demand down 1.0% versus FY2019 led by industrial and urban sectors > Industrial sector most affected by lockdown; Tiwai shut down Potline 4 in early April leading to 45MW load decrease > Urban and rural sector demand decreased reflecting lower
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Slide 20: FY2021 Guidance
FY2021 GUIDANCE > FY2021 EBITDAF guidance of $515m on 3,900GWh of hydro generation, subject to hydrological volatility, wholesale market conditions and any material adverse events, significant one-off expenses or other unforeseeable circumstances >FY2021 ordinary dividend guidance 17.Ocps (up 7.6% o
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Slide 23: 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 24: Electricity Spot Price Reflects Gas Availability and Hydrology
ELECTRICITY SPOT PRICE REFLECTS GAS AVAILABILITY AND HYDROLOGY HYDRO STORAGE VS. SPOT ELECTRICITY PRICE From Jan-99 $300 e © FY2018 @ FY2019 © FY2020 3 5250 @FY2021 = = od $200 2 a & w $150 2 2 « 5 si00 Tel © Jan-20 Feb-20 e@Dec-19 $50 $0 -2000 -1000 () 1000 2000 Delta to National Storage Average (G
Slide 25: Sales Portfolio Primarily Upper North Island
SALES PORTFOLIO PRIMARILY UPPER NORTH ISLAND Commercial & FY2020 Mass Market Industrial Upper North Island ~2,150GWh ~2,000GWh Lower North Island ~350GWh ~500GWh Upper South Island ~300GWh ~250GWh Lower South Island ~100GWh ~50GWh 25 > Excludes Virtual Asset Swap volumes of ~600GWh USI
Slide 26: New Segment Reporting
NEW SEGMENT REPORTING > Generation/Wholesale segment includes electricity production, electricity trading, generation development and earnings from associates > Also includes revenue from sale of electricity to commercial & industrial customers > Retail segment includes energy sales and related serv
Slide 27: Diversified Funding Profile
DIVERSIFIED FUNDING PROFILE DEBT MATURITIES AS AT 30 JUNE 2020 mCommercial Paper = Domestic Wholesale Bonds _ ™ Drawn Bank Facilities Undrawn Rolling Bank Facilities! Undrawn Bank Facilities m US Private Placement ™ Capital Bonds 800 700 600 500 & 400 2021 2022 2023 2024 2025 2026 2027 2028 2050 Fin
Slide 28: Financial Derivatives
FINANCIAL DERIVATIVES 12 months ended 12 months ended 30 June 2020 30 June 2019 Energy Margin contribution ($m) Sell CFDs (59) (171) Buy CFDs 22 64 Other Financial Derivatives 7 1 Total Energy Margin contribution (19) (106) 28
Slide 29: 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 30: Reference Material
REFERENCE MATERIAL MERCURY REFERENCES Mercury Investor Centre Quarterly Operational Updates HY2020 Results Presentation Investor Roadshow Presentation - November 2019 PUBLICATIONS https://www.mercury.co.nz/investors https://www.mercury.co.nz/investors/results-reports/operating-information https://is
Slide 31: For Further Information
For personal use only FOR FURTHER INFORMATION > WILLIAM MEEK | CHIEF FINANCIAL OFFICER T. +64 275 173 470 E. INVESTOR@MERCURY.CO.NZ