Mercury Nz Ltd. · NZX:MCY
Mercury Nz — H1 FY2020 Earnings Presentation
23 slides from Mercury Nz's earnings presentation, Feb 25, 2020
Slide 1: Financial Results. Six Months Ended 31 December 2019
For personal use only FINANCIAL RESULTS. SIX MONTHS ENDED 31 DECEMBER 2019 FRASER WHINERAY WILLIAM MEEK Chief Executive Chief Financial Officer 25 February 2020 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: HY2020 Highlights
HY2020 HIGHLIGHTS DYNAMIC MARKET CUSTOMER VALUE Elevated wholesale prices persist Reduced acquisition activity with reflecting tight gas deliverability and Mercury's focus on rewarding loyalty higher prices; retail market remains and customer value resulting in lower highly competitive market share
Slide 4: Financial Performance
FINANCIAL PERFORMANCE 400 380 350 34e HY2019 30e = HY2020 300 258 250 & 200 150 "4 126 127 104 100 99 94 83 30 84 87 45 53 0 _ oe Energy Margin Operating EBITDAF NPAT Underlying Free Cash Flow Stay-In-Business Growth _Declared Ordinary Expenditure Earnings Capital Investment Dividend Expenditure > E
Slide 5: Strong Underlying Portfolio Performance
STRONG UNDERLYING PORTFOLIO PERFORMANCE EBITDAF BRIDGE (HY2019 to HY2020) Total Sales: + 91GWh? Decrease Ml Increase Generation: ¥ 377GWh Mass Market Yield: 4 1.8% 350 GWAPI: ¥ $24/MWh C&l Yield: 6.8%? 300 1 $23m increase 250 53 3 4 3 4 130 es 150 om EBITDAF ($m) 100 50 FPVV Sales End User Other Ene
Slide 6: Our Direction
OUR DIRECTION OUR PURPOSE =O TO INSPIRE NEW ZEALANDERS TO ENJOY ENERGY IN MORE WONDERFUL WAYS ae s es AA 00 yy OUR MISSION Oo ENERGY FREEDOM 6 KAITIAKITANGA S LONG-TERM SUSTAINABILITY OF [NATURAL RESOURCES ANO ASSE ES. ,
Slide 7: Key Performance Indicators
DEO mS KEY PERFORMANCE INDICATORS (versus previous half-year periods / 6-monthly rolling unless indicated) & Mercury brand 19% Customer Brand Love om an @ trader churn Ca satisfaction a 92% — é 5.9%! oom 64%? ° g B EPR final report Airpoints™ werk 1598 Pe released, supportive of v registrations “. 2
Slide 8: For personal use only
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Slide 10: For personal use only
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Slide 11: Demand Grows as Urban, Irrigation Sectors Offset Industrial Decline
DEMAND GROWS AS URBAN, IRRIGATION SECTORS OFFSET INDUSTRIAL DECLINE > National demand up 0.9% versus HY2019 led by urban and irrigation sectors > Industrial demand declined as large users continue to demonstrate sensitivity to high spot prices > Tiwai demand holding at an average 595MW in HY2020, be
Slide 12: Electricity Spot Price Reflects Gas Availability and Hydrology
@-@ ELECTRICITY SPOT PRICE REFLECTS GAS AVAILABILITY AND HYDROLOGY HYDRO STORAGE VS. SPOT ELECTRICITY PRICE SPOT GAS VS. SPOT ELECTRICITY PRICE From Jan-99 From Sep-14 $300 e © FY2018 $300 © eFy2018 @FY2019 @FY2019 $250 © FY2020 $250 © FY2020 = = a wn $200 *g $200 8 8 = é 3 a % $150 @ $150 2 <= 2 2
Slide 13: Prudent Portfolio Management with High Prices Forecast for H2-FY2020
ee PRUDENT PORTFOLIO MANAGEMENT WITH HIGH PRICES FORECAST FOR H2-FY2020 LAKE TAUPO STORAGE (since 1 Jul 1999) Min / Max Avg — — Lake Taupo MCL —— FY2020 700 600 500 ws 400 = © 300 200 100 0 Month End Jun Jul Aug Sep Oct Nov Dec Jan Feb! Mar Apr May Jun Hydro Generation - Delta to Average? (GWh) +10
Slide 14: Focus on Rewarding the Loyalty of Our Existing Customers
FOCUS ON REWARDING THE LOYALTY OF OUR EXISTING CUSTOMERS >In a highly competitive retail market, Mercury is focused on rewarding our existing customers > Mercury has moved away from the recent industry norm of aggressive discounted acquisition, consistent with our focus on loyalty > Reduced Mass Mar
Slide 15: FY2020 Guidance Revised
FY2020 GUIDANCE REVISED > FY2020 EBITDAF guidance revised to $500m (down $10m) on 3,900GWh of hydro generation (down 170GWh), subject to hydrological volatility, wholesale market conditions and any material adverse events, significant one-off expenses or other unforeseeable circumstances >FY2020 ord
Slide 16: For personal use only
For personal use only
Slide 17: Mercury's Competitive Advantage
MERCURY'S COMPETITIVE ADVANTAGE 100% renewable generation > Two low-cost complementary fuel sources in baseload geothermal and peaking hydro with wind to be added Superior asset location > North Island generation located near major load centres; rain-fed hydro catchment inflows aligned with winter p
Slide 18: Diversified Funding Profile
DIVERSIFIED FUNDING PROFILE DEBT MATURITIES AS AT 21 FEBRUARY 2020 Commercial Paper = Domestic Wholesale Bonds ™ Drawn Bank Facilities Undrawn Bank Facilities = Undrawn Rolling Bank Facilities! m US Private Placement ™ MCY020 Bonds 600 500 400 £ & 300 iz 200 100 0 |_| _ |_| 2020 2021 2022 2023 2024
Slide 19: For personal use only
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Slide 20: Financial Derivatives
FINANCIAL DERIVATIVES 6 months ended 31 December 2019 6 months ended 31 December 2018 Energy Margin contribution ($m) Sell CFDs (48) (98) Buy CFDs 14 35 Other Financial Derivatives 10 (1) Total Energy Margin contribution (24) (64) 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, excluding third-party metering, and third-party metering > Operating Expenditure represents employee compensation and benefits,
Slide 22: Reference Material
REFERENCE MATERIAL MERCURY REFERENCES Mercury Investor Centre Quarterly Operational Updates FY2019 Results Presentation Governance Presentation - December 2018 PUBLICATIONS https://www.mercury.co.nz/investors https://www.mercury.co.nz/investors/results-reports/operating-information https://issuu.com
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