Mercury Nz Ltd. · NZX:MCY
Mercury Nz — FY2021 Earnings Presentation
27 slides from Mercury Nz's earnings presentation, Aug 17, 2021
Slide 1: Financial Results, Year Ended 30 June 2021
_ FINANCIAL RESULTS. YEAR ENDED 30 JUNE 2021 For personal u WILLIAM MEEK ChiefExecutive = | ~—_ Chief Financia Mercury
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: Highlights
HIGHLIGHTS CONTINUOUS HIGH SPOT PRICES IMPROVEMENT Elevated due to fuel constraints with Thriving today through our focus on hydro generation limited by low continuous improvement to work inflows and gas deliverability reduced smarter, faster and better by issues at major gas producers PLATFORM FOR
Slide 4: Financial Performance
FINANCIAL PERFORMANCE! 700 4 652 616 600 FY2020 500 490 463 m= FY2021 £400 352 338 282 300 242 x5 232 194 190 209 194 200 “i 165 110 ol ___ Energy Margin Operating EBITDAF NPAT Operating Cash Free Cash Flow Stay-In-Business Growth Declared Ordinary Expenditure Flow Capital Investment Dividend Expend
Slide 5: Short exposure from low inflows and outage amplified by high prices
SHORT EXPOSURE FROM LOW INFLOWS AND OUTAGE AMPLIFIED BY HIGH PRICES EBITDAF BRIDGE (FY2020 to FY2021)" Total Sales: # 216GWh? Decrease Ill Increase Generation: ¥ 126GWh Mass Market Yield: 6.8% 1000 GWape: # $71/MWh Cl Yield: + 71%4 ' $14m decrease 900 19 800 700 372 & 600 500 14 —o— 135 a igen Sh —
Slide 6: Key Performance Indicators
KEY PERFORMANCE INDICATORS (versus previous yearly periods / 12-monthly rolling unless indicated) & Mercury brand 6.1% BT 65% 2 Net promoter score Brand Strength 60% E trader churn 59% 10.42 > 65%? a g CCC final advice Continued Signed two 3 B continues to heavily v engagement with Y relationship Y
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Slide 8: Refreshed Strategic Framework
REFRESHED STRATEGIC FRAMEWORK ‘OUR PURPOSE -HRIVING TODay Increase the value of our business to $700M Enhance our EBITDAF, Unleash the licence to operate full potential of our through collaborative people through work with our transforming stakeholders. culture Be an adaptive and. Create executable
Slide 9: Spot prices reflect reduced fuel availability & higher costs
SPOT PRICES REFLECT REDUCED FUEL AVAILABILITY & HIGHER COSTS GAS PRODUCTION re, Ch Neu NATIONAL HYDRO STORAGE icKee/Mangahewa ——Kupe Min / Mi —A ——FY2021 250 —Turangi Mixing Station (since T Apr 1999) in | Max "9 6,000 200 5,000 ® 150 4,000 S = 3,000 ® 100 ' V i c a> 2 4 2,000 50 id 1,000 ) 0 = es e
Slide 10: Flexibility impacted as high spot prices incentivise early use of storage
FLEXIBILITY IMPACTED AS HIGH SPOT PRICES INCENTIVISE EARLY USE OF STORAGE LAKE TAUPO STORAGE Min/Max ———Avg ——-Lake TaupoMCL'! ——=FY2020 ———FY2021 (since 1 Apr 1999) 600 ~ = — 22 percentile inflows in 24-2021 _ > Risk/return trade-off; capitalised on high spot prices €—=——-———— > vs risk of persiste
Slide 11: Lift in sales adds to short-term pain for longer-term gain
0:00 LIFT IN SALES ADDS TO SHORT-TERM PAIN FOR LONGER-TERM GAIN SALES BY SEGMENT = Mass Market CHANNEL YIELDS ——Otahuhu Futures Price! — Adjusted Mercury Mass Market Energy Yield ® 7000 1m C&I (includes physical and financial sales) $200 J otahuhu Spot Price? $180 6,000 $160 5,000 $140 $120 4,000 «
Slide 12: Elevated wholesale prices pressure retail margins
ELEVATED WHOLESALE PRICES PRESSURE RETAIL MARGINS > Retail market remains highly competitive despite low retail margins > National annual churn remains above 20% > Mercury remains focussed on customer value in the high price environment > Electricity customers declined through FY21 by 20k to 328k as
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Slide 18: FY2022 Guidance
FY2022 GUIDANCE >FY2022 EBITDAF guidance of $590m 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 > Excludes any contribution from Trustpower retail acq
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Slide 23: Mercury's Competitive Advantage
MERCURY'S COMPETITIVE ADVANTAGE 100% renewable generation High performance teams > Three low-cost complementary fuel sources in > Dynamic company culture built on the baseload geothermal and peaking hydro with understanding that our people, working together wind added and in alignment, set us apart
Slide 24: 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 : © FY2018 $300 © FY2018 © May A @ FY2019 @ FY2019 @ Apr-21 @ Jun-21 © FY2020 © FY2020 3 5250 © Maga) b 21 @FY2021 = $250 @FY2021 2
Slide 25: Diversified Funding Profile
DIVERSIFIED FUNDING PROFILE DEBT MATURITIES AS AT 12 AUGUST 2021 m Commercial Paper US Private Placement Undrawn Bank Facilities Undrawn Rolling Bank Facilities! m= Drawn Bank Facilities m Domestic Wholesale Bonds m Domestic Wholesale Green Bonds Retail Green Bonds Capital Bonds 600 500 i 400 & 300
Slide 26: Financial Derivatives
FINANCIAL DERIVATIVES 12 months ended 12 months ended 30 June 2021 30 June 2020 Energy Margin contribution ($m) Sell CFDs (286) (59) Buy CFDs 106 22 Other Financial Derivatives 44 7 Total Energy Margin contribution (136) (19) 26
Slide 27: For Further Information
For personal use only FOR FURTHER INFORMATION > TIM THOMPSON | HEAD OF TREASURY AND INVESTOR RELATIONS T. +64 275 173 470 E. INVESTOR@MERCURY.CO.NZ