Mercury Nz Ltd. · NZX:MCY
Mercury Nz — Debt Investor Presentation (March 2021)
26 slides from Mercury Nz's debt investor presentation, Mar 15, 2021
Slide 1: Retail Green Bond Offer
MERCURY. RETAIL GREEN BOND OFFER vs WILLIAM MEEK GEOFF SMITS CEP Chief Financial Officer Senior Treasury Dealer Mercury fo 15 March 2021
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 due
Slide 3: Important Information
IMPORTANT INFORMATION The offer (“Offer”) of fixed rate unsubordinated unsecured 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 o
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”) Issue Credit Rating: BBB+ (Mercury has an Issuer C
Slide 5: Country, Industry & Mercury
5 COUNTRY, INDUSTRY & MERCURY
Slide 6: Country, Industry & Mercury
COUNTRY, INDUSTRY & MERCURY Be Stable regulatory framework > Underpinned by strong industry performance on Reliability, Renewability and Pricing (the electricity trifecta’) > New Zealand has >80% renewable generation > Electricity recognised as a key enabler for New Zealand's low-carbon economy rey
Slide 7: Long-Term Industry Trends
LONG-TERM INDUSTRY TRENDS SECTOR EARNINGS DEMAND AND GENERATION CAPACITY ——Demand Max. Generation Capacity (RHS) 3 CAGR: 2.5% 50 pact ( 100 ag.) “0 8 ie «= 30 4 FS 94 e, 20 92 a 10 9.0 0 0) 88 2008 2009 2010 201 2012 2013 2014 2015 2016 2017 2018 2019 2020 2008 2009 2010 20M 2012 2013 2014 2015 2016
Slide 8: Mercury at a Glance
MERCURY AT A GLANCE > Vertically integrated 100% renewable North Island generator and national retailer of electricity > New Zealand's second largest gentailer! > Generation market share of 15%? > 51% owned by the New Zealand Government KEY INFORMATION Ticker Codes: MCY.NZ / MCY.AX Market Capitalisa
Slide 9: 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 9 KAITIAKITANGA LONG-TERM SUSTAINABILITY OF [NATURAL RESOURCES ANO ASSE ES. ),
Slide 10: Mercury's Long Term Track Record
MERCURY'S LONG TERM TRACK RECORD EBITDAF OPEX' = Operating expenditure = One-off Costs = DISTRIBUTIONS mShare buyback mi Special dividend 600 600 600 = Final dividend Interim dividend 500 400 400 400 & & Flat from FY2014 & 300 ” ~ =| eee 700 fos (| | | fe) 0 ie} see rte PS eEvreget 5 eet eex Ee eg B
Slide 11: Portfolio Approach to Risk Management
PORTFOLIO APPROACH TO RISK MANAGEMENT > Mercury operates an integrated electricity portfolio with © FY2020 NET POSITION BREAKDOWN electricity sales to customers providing a natural price 7,000 hedge to generation > Average net long position with movement year-on-year 6,000 due to hydrology, plant av
Slide 12: Financial Overview
12. FINANCIAL OVERVIEW g
Slide 13: Capital Expenditure
CAPITAL EXPENDITURE > > 13 Stay-in-business capital expenditure higher in recent CAPITAL EXPENDITURE Stay-In-Business years due to: 300 Growth? > Ongoing hydro refurbishment programme delivering significant life extension, capacity and efficiency gains 250 > SAP technology platform upgrades enabling
Slide 14: Stable Capital Structure
STABLE CAPITAL STRUCTURE > Mercury's dividend policy is to make distributions with a pay-out ratio of 70-85% of Free Cash Flow on average through time subject to: > Consideration of the Company's working capital requirements and medium-term asset investment programme; > Maintaining a sustainable fin
Slide 15: Diversified Funding Profile
DIVERSIFIED FUNDING PROFILE DEBT MATURITIES AS AT 10 MARCH 2021 Commercial Paper = Domestic Wholesale Bonds Undrawn Bank Facilities 1m Undrawn Rolling Bank Facilities’ US Private Placement mm MCY030 Bonds (Retail Green Bonds) Domestic Wholesale Green Bonds m MCY020 Bonds (Capital Bonds) £1 Proposed
Slide 16: Bond Credit Features
BOND CREDIT FEATURES > Mercury, under the Master Trust Deed, agrees to ensure that Net Worth at any time will not be less than $500m > S&P Global has assigned a BBB+ issue rating to the Green Bonds > Mercury has Guaranteed Liabilities that are unsecured and would rank equally with the Green Bonds in
Slide 17: Green Bond Offer Information
Slide 18: Green Financing Framework: Use of Proceeds
Certified GREEN FINANCING FRAMEWORK @ gona 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 proceeds
Slide 19: Green Financing Framework: External Review
GREEN FINANCING FRAMEWORK @ Bond External review CBI certification Monitoring and compliance 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 GL's limited
Slide 20: Eligible Asset Values
ELIGIBLE ASSET VALUES Geothermal Rating! Book Value* Rotokawa Generation (plant) 35MW $103m Rotokawa JV3 (steamfield) $108m* Nga Awa Purua JV (plant) 138MW. $337m* Mokai? TI2MW $68m+ Ngatamariki 82MW $498m Wind Turitea (under construction) 222MW $464m> (esac) oats TOTAL $2,058m = Rotokawa Mokai aS.
Slide 21: Key Terms of the Green Bond
KEY TERMS OF THE GREEN BOND Issuer Instrument Credit rating Issue amount Term Interest Rate Indicative Issue Margin Interest payments No guarantee Financial covenant Minimum application amount Quotation Mercury NZ Limited ("Mercury") Unsecured, unsubordinated fixed rate green bonds ("Green Bonds") I
Slide 22: Key Dates
KEY DATES Monday 15 March 2021 Friday 19 March 2021 at 12.00pm Friday 19 March 2021 Monday 29 March 2021 Tuesday 30 March 2021 29 September 2026
Slide 23: Appendix
cs 23 APPENDIX )
Slide 24: Climate Bonds Initiative Certification
“This is to certify that the Mercury N& Limited 2021 Green ‘Bond Issued by Mercury NY Limited Tas met the criteria for certification by the Climate Bonds Standard Board on behalf of the Climate Bonds Initiative 22 February 2021 Sean Kipney CEO, Climate Bonds Initiative ‘mit CALSTRS GCC iil @ == @
Slide 25: 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 26: For Further Information
FOR FURTHER INFORMATION > TIM THOMPSON | HEAD OF TREASURY & INVESTOR RELATIONS T. +64 275 173 470 E. INVESTOR@MERCURY.CO.NZ