Mercury – HY2017 Results and Interim Report

NZX Appendix 1 – 31 December 2016 | Page 1 of 2



Mercury NZ Limited
Stock Exchange listings NZX (MCY) ASX (MCY)
Results for announcement to the market
1. Half year reporting periods
Reporting Period 6 months to 31 December 2016
Previous Reporting Period 6 months to 31 December 2015


NZD Amount ($M) Percentage change
Revenue from ordinary activities 796 -2.1%
Profit from ordinary activities after tax attributable to
security holders 113 +52.7%
Net profit attributable to security holders 113 +52.7%
Earnings before net interest expense, income tax,
depreciation, amortisation, change in fair value of
financial instruments, impairments and equity
accounted earnings (EBITDAF) 270 +5.1%
Underlying earnings after tax
1
94 +5.6%

NZD Amount Percentage change
Basic and diluted earnings per share (weighted
average number of shares) $0.0821 +52.6%
Net tangible assets per share (excluding treasury
shares) $2.35 +1.7%

Amount per security
Imputed amount per
security
Interim Dividend $0.058 $0.022556
2

Record Date 15 March 2017
Dividend Payment Date 3 April 2017
Appendix 1 – Interim results

NZX Appendix 1 – 31 December 2016 | Page 2 of 2
Comments:
1. Underlying earnings after tax excludes one-off and/or
infrequently occurring events (exceeding $10 million of net profit
before tax). This is a non-GAAP measure.
2. A supplementary dividend of $0.010235 per share will be
payable on the interim dividend to shareholders who are not
resident in New Zealand.
2. Control of entities gained or lost during the period
Name Date control lost
MRP NRI-Germany Holdings Limited In voluntary liquidation as at balance date
MRP NRI-Peru Holdings Limited In voluntary liquidation as at balance date
MRP NRI-Chile Holdings Limited In voluntary liquidation as at balance date
MRP Holdings-Germany Limited In voluntary liquidation at 30 June 2016. Dissolved 15 October 2016.
MRP Holdings-Peru Limited In voluntary liquidation at 30 June 2016. Dissolved 22 September 2016.
MRP Holdings-Chile Limited
In voluntary liquidation as at balance date. To be dissolved 24 February
2017.
3. Dividends
See section 1 above and NZX Appendix 7 attached.
4. Dividend or distribution reinvestment plans
None.
5. Associates and joint venture entities
Refer to Consolidated Interim Financial Statements for the period ended 31 December 2016.
6. Accounting Standards
Refer to Consolidated Interim Financial Statements for the period ended 31 December 2016.
7. Review report
This report is derived from the Consolidated Interim Financial Statements. EY has provided a Review Report on the
Consolidated Interim Financial Statements, copy attached.
Attachments:
 News release
 Results presentation
 Interim Report and Consolidated Interim Financial Statements for the period ended 31 December 2016
 NZX Appendix 7 – ordinary dividend

---

HY2017 demonstrates clear momentum and customer loyalty
>> Solid progress on key strategic initiatives
>> Operating earnings (EBITDAF) up 5.1%
>> Interim dividend of 5.8 cents per share to be paid on 3 April
21 February 2017 – Favourable North Island hydro conditions have contributed to a 5.1% lift in Mercury’s
operating earnings (EBITDAF) to $270 million for HY2017.
The company’s results for the six months ended 31 December 2016 show strong customer loyalty around the new
Mercury brand and significant progress on value-enhancing partnerships. These include commercial relationships
with global technology leaders Trina Solar, SolaX Power and PlugShare, and Mercury became an exclusive
Airpoints
TM
partner with Air New Zealand.
Chair, Joan Withers, says Mercury will pay a fully-imputed interim dividend of 5.8 cents per share on 3 April 2017 to
90,000 owners, including the Crown. This represents 40% of the full-year ordinary dividend guidance of 14.6 cents
per share, a 2.1% increase on FY2016.
“Mercury’s owners can have confidence that their business is performing well, and they can see evidence of our
customer-led strategy. We have real momentum in the business and a clear focus on value-based opportunities.”
FINANCIAL RESULTS
HY2017
HY2016
EBITDAF ($M)
270
257
NET PROFIT AFTER TAX ($M)
113
74
UNDERLYING EARNINGS AFTER TAX ($M)
94
89
INTERIM DIVIDEND (CENTS PER SHARE)
5.8
5.7

Mercury’s financial results reflect a strong operating performance, together with above-average rainfall that enabled
a 7% increase in hydro generation. Mercury updated forecast FY2017 hydro generation in October (to 4,250GWh).
Chief Executive, Fraser Whineray, says the 2015 closure of the gas-fired Southdown station substantially reduced
future carbon obligations and the company took the opportunity to divest some of its carbon credits in HY2017.
This generated cash proceeds of $19 million and a gain on sale of $5 million. Net profit after tax was up from $74
million to $113 million due to the improved EBITDAF, movements in the fair value of the company’s financial
instruments, and impairments in the prior period. Underlying earnings were up $5 million to $94 million.
Operating costs were down 6% on HY2016 due to lower maintenance costs in the period. Full-year operating costs
are forecast to be in line with recent years. Capital expenditure is expected to be $115 million in FY2017 as a result
of the company’s current focus on hydro reinvestment and geothermal drilling, which is progressing well.

GROWTH OPTIONS
Alongside the robust results for HY2017, Mrs Withers says the reporting period included solid progress on several
key elements of the company’s strategy to create long-term sustainable value.
STOCK EXCHANGE LISTINGS: NZX (MCY) / ASX (MCY)

NEWS RELEASE

Highlights included the move to a new Mercury brand, successful customer loyalty initiatives, the launch of New
Zealand’s leading solar offering and the development of important partnerships.
The company has also undertaken a broad review of domestic growth options. Mr Whineray says this review,
involving external advisors, focused on opportunities with potential to deliver value for customers and help drive
progressive returns to Mercury’s owners over time.
“We have established capability and small, but important, new revenue streams in key technologies such as solar
and distributed storage to complement our core strength in renewable generation.
“We are investing in the Mercury Research and Development Centre to showcase world-leading solar, battery
storage, electric vehicle (EV) charging and other energy technologies in New Zealand conditions. We are also
looking beyond the home to opportunities in e-mobility and relevant areas of transportation.”
PARTNERSHIPS
In the six months to 31 December 2016, Mercury announced a range of initiatives being progressed through value-
enhancing partnerships.
Mercury has been confirmed by a global leader in solar panel technology and sustainability, Trina Solar, as their
preferred residential and commercial sales partner in New Zealand. We are also the exclusive New Zealand
supplier of the SolaX-BOX battery, which offers an advanced and flexible home storage system that complements
solar production and can provide effective back-up during a power outage.
The company has partnered with global software and services company, PlugShare, on the Electric Highway
TM
to
increase the visibility of the full range of EV charging locations to support electric vehicle growth in New Zealand.
Another substantial initiative, led by the chief executives of Mercury and Air New Zealand, saw 30 of New
Zealand’s leading businesses commit to a minimum of 30% EVs in their fleets by 2019, representing 1,450 EVs in
total.
Mr Whineray says: “This is one of the largest voluntary sustainability initiatives in New Zealand business history,
with the potential to take around 3 million kg of carbon emissions out of the environment every year. We also see
this as another very meaningful milestone in the uptake of EVs and electricity becoming the transport fuel of
choice.”
CUSTOMER LOYALTY
Mr Whineray says the response to the new Mercury brand (launched on 29 July 2016) has been “extremely
positive with our people and with our customers”.
Mercury’s customer satisfaction reached record levels during HY2017 and switching rates were more than 3%
lower than the market average reported by the Electricity Authority. Customer numbers increased by about 11,000
over the period, largely due to better retention of existing customers, consistent with our focus on rewarding loyalty.
More than 100,000 customers were rewarded with a Free Power Day, and almost 100,000 have registered for
Airpoints
TM
. Mr Whineray says another significant contributor to loyalty is the popularity of Mercury’s fixed-price
contracts.
“This is the single-most successful retail offering in terms of uptake in the New Zealand electricity market, with
1-in-3 Mercury customers opting for the certainty of contracts.”
Mercury’s first Airpoints
TM
offer has moved more than 4,000 customers to two-year contracts and is also expected
to be a powerful retention product. He says Mercury has continued to invest in and seamlessly implement updates
to key technology platforms to support service to customers and digital engagement.
FY2017 GUIDANCE
The company has revised EBITDAF guidance for the current financial year (FY2017) to $500 million, subject to any
material adverse events, significant one-off expenses or other unforeseeable circumstances including hydrological
conditions.

For further information:
Media – David Glendining 0272 105 337
Investors – Tim Thompson 0275 173 470

ABOUT MERCURY NZ LIMITED
At Mercury we’re thinking boldly about the possibilities with energy and inspiring New Zealanders with our
renewable electricity and ideas to make energy more wonderful. Energy from Mercury’s hydro and geothermal
stations will power a brighter future for our country.
Visit us at: www.mercury.co.nz

---

Financial Results
Six months ended 31 December 2016

WILLIAM MEEK
Chief Financial Officer
FRASER WHINERAY
Chief Executive
21 February 2017

DISCLAIMER
The information in this presentation has been prepared by Mercury NZ Limited (formerly known as Mighty River Power Limited) with
due care and attention. However, neither the company nor any of its directors, employees, shareholders nor any other person shall
have any liability whatsoever to any person for any loss (including, without limitation, arising from any fault or negligence) arising from
this presentation or any information supplied in connection with it.
This presentation may contain projections or forward-looking statements regarding a variety of items. Such projections or forward-
looking statements are based on current expectations, estimates and assumptions and are subject to a number of risks, uncertainties
and assumptions. There is no assurance that results contemplated in any projections and forward-looking statements in this
presentation will be realised. Actual results may differ materially from those projected in this presentation. No person is under any
obligation to update this presentation at any time after its release to you or to provide you with further information about Mercury NZ
Limited.
A number of non-GAAP financial measures are used in this presentation, which are outlined in the appendix of the presentation. You
should not consider any of these in isolation from, or as a substitute for, the information provided in the unaudited consolidated
financial statements for the six months ended 31 December 2016, which are available at www.mercury.co.nz.
Forward-looking statements are subject to any material adverse events, significant one-off expenses or other unforeseeable
circumstances including hydrological conditions.
The information in this presentation is of a general nature and does not constitute financial product advice, investment advice or any
recommendation. Nothing in this presentation constitutes legal, financial, tax or other advice.
FINANCIAL RESULTS
2

HIGHLIGHTS
3

OUR GOAL
To be New Zealand’s leading energy brand


OUR STRATEGY
Mercury will create long term value for our owners by:
1 2 3
Delivering customer
advocacy
Leveraging core
strengths
Delivering sustainable
growth
Outstanding
customer experience
Operational
efficiency
Executing relevant
strategic opportunities
Leading digital
offerings
Astute portfolio
management
Being ready for
domestic growth
Culture-driven
innovation
Efficient capital
allocation
Embracing emerging
technologies
HIGHLIGHTS
4
OUR PURPOSE
To inspire New Zealanders to enjoy energy in more
wonderful ways
To inspire New Zealanders
We want to inspire New Zealanders by delivering value,
innovation and outstanding experiences
To enjoy energy
We want our customers to enjoy what energy does for them
and choose Mercury because we make a positive difference in
their lives
In more wonderful ways
We will bring new technology and ideas to create wonderful
experiences for our customers in a uniquely New Zealand
context

STRATEGY EXECUTION
ACTIVITY
DELIVERING CUSTOMER ADVOCACY LEVERAGING CORE STRENGTHS DELIVERYING SUSTAINABLE GROWTH

>Rewarding customer loyalty through Airpoints
and Free Power Days
>Demonstrating ‘Energy made wonderful’
through our E-Bike campaigns
>Making it easier for customers with a new
customer bill
>Focus on low probability, high consequence
H&S risks via Process Safety programme
>Considered portfolio management through a
period of high inflows into the Waikato hydro
catchment
>Re-investment in generation assets to
increase performance e.g. Whakamaru
>Strategic review of future growth options
facilitated by external consultant
>Embracing new technology and enabling
customer choice with the launch of
Mercury Solar and New Zealand’s ‘Electric
Highway’
OUTCOMES IN HY2017
Mercury

Benchmarks

Mercury

Benchmarks

>Looking beyond the home to opportunities
in e-mobility and relevant areas of
transport
>Small beginnings for Mercury Solar with
industry PV uptake slowing, EV take-up
continues to build momentum
Churn
1
16.9%

M: 20.0% P: 22.3%

LWAP/GWAP
1.04 P: 1.04
Customer
Satisfaction

63%
2
M: 50%
3
P: 61%
2
Geothermal
Capacity Factor

95%
M: ~85%
4
P: 95%

FPVV Sales
VWAP

$112.30 P: $115.56
>1 high severity H&S incident from office based
stair fall
1
Annualised churn rate
2
Mercury brand (which excludes Bosco and GLOBUG)
3
Largest 4 retail brands (excluding Mercury)
4
Derived from Transpower’s New Zealand geothermal
generation data (excluding Mercury operated plant)
HIGHLIGHTS
5
‘M’ = market comparison ‘P’ = prior comparable period

HEALTH & SAFETY
HIGHLIGHTS
6
>Zero harm is our well-being goal
>One serious injury of an on-site contractor in HY2017 due to
an office stair fall
>No high or moderate severity incidents at any generation
site in FY2017 to date
>Focus on continuous improvement
>Commenced enterprise wide Process Safety programme, focussing
on low probability high consequence events across all parts of the
business
>Developed a new worksite risk assessment process to ensure any
work that has a residual risk that is moderate or greater is signed off
by an appropriate manager for transparency
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
FY2013FY2014FY2015FY2016HY2017
TOTAL RECORDABLE INJURY FREQUENCY RATE
(TRIFR)
(per 200,000 hours; includes onsite employees and contractors)
Low Severity Incidents
Moderate Severity Incidents
High Severity Incidents

FINANCIAL HIGHLIGHTS
7
>Energy Margin, EBITDAF and Underlying Earnings up reflecting higher generation and customer sales offset by the
price of commercial and industrial sales being less than the level historically achieved
>Net Profit up reflecting a positive movement in the value of financial instruments (mostly interest rate hedges) over the
period and no asset impairments recognised in the period
>Free Cash Flow steady reflecting lower cash taxes offset by a step-up in stay-in-business capital expenditure
>Total Declared Ordinary Dividend up 1.8% to 5.8c per share
344
257
74
89
142
30
79
348
270
113
94
140
54
80
0
50
100
150
200
250
300
350
400
Energy MarginEBITDAFNPATUnderlying EarningsFree Cash FlowCapital ExpenditureDeclared Ordinary
Dividend
$m

HY2016
HY2017
HIGHLIGHTS

FY2017 GUIDANCE
8
>FY2017 EBITDAF guidance is $500m subject to any material events, significant one-off expenses or other
unforeseeable circumstances including hydrological conditions
>The FY2017 EBITDAF guidance assumes:
>4,250GWh of hydro production;
>Operating expenditure flat versus FY2016;
>Inclusion of $5m from the divestment of carbon credits; and
>No crystallisation of the Group’s non-cash FX translation reserve loss, which will occur on Chile exit completion
>FY2017 stay-in-business capital expenditure guidance is $115m
>FY2017 ordinary dividend guidance remains 14.6cps

HIGHLIGHTS

MARKET DYNAMICS
9

10
INTERPRETING MARKET DYNAMICS
DYNAMIC: THERMAL RATIONALISATION AND POSITIVE DRIVERS OF DEMAND GROWTH
EXPECTED MARKET RESPONSE
OBSERVED MARKET RESPONSE
MITIGATING FACTORS
Increased wholesale price volatility
Futures price increase
Commercial and Industrial (C&I) pricing increase
Retail margin reduction in the absence of energy price
increases
Benign wholesale prices
Futures pricing falling
Customer churn at high levels, but Mercury out-performing
New entrant retail market share increasing
Warmer and wetter conditions impacting demand
Continued above average inflows into national hydro
catchments
NZAS closure uncertainty, although no notice of termination
MARKET DYNAMICS
FUNDAMENTALS: SUPPLY AND DEMAND BETTER BALANCED

DEMAND
MARKET DYNAMICS
11
>Demand lower led by a fall in the irrigation, industrial and dairy processing sectors
>down 2.4% in HY2017, 1.6% after normalising for temperature
>decrease in agricultural sectors attributable to the wet conditions, with lower irrigation requirements and reduced national milk collection
>The fundamentals underpinning demand growth remain positive
>High net migration and growth in GDP per capita
>Auckland urban sector demand up 1.3% in HY2017 after normalising for temperature
* Normalised for temperature
Sector GWh Sector % Total %
Urban* +71 1.0% 0.3%
Rural* +16 0.5% 0.1%
Dairy processing -62 (1.9%) (0.3%)
Irrigation -163 (23.7%) (0.8%)
Industrial -160 (3.3%) (0.8%)
HY2017 NORMALISED DEMAND GROWTH BY SECTOR

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Urban*Rural*DairyTiwaiIndustrial
(excluding
Tiwai)
Irrigation
GWh

DEMAND
HY2014
HY2015
HY2016
HY2017

$0
$50
$100
$150
$200
$250
$300
-1500-1000-500050010001500
OTA Wholesale Price ($/MWh)

Delta to National Storage Average (GWh)
MONTHLY HYDRO STORAGE AND PRICE
Jan 1999 to Dec 2016
HY2015
HY2016
HY2017
>Rationalisation of thermal capacity during FY2016 has resulted in supply and demand being better balanced
>Short term supply drivers have limited how this has affected wholesale prices
>National inflows for HY2017 were 209GWh above average
>National storage ended HY2017 429GWh above average



SUPPLY
MARKET DYNAMICS
12
NZ ENERGY MARGIN
1

1
Based on Transpower’s Security of Supply Annual Assessment 2016
Assumes: (1) Huntly Rankine units and NZAS remain and (2) forecast demand growth of ~1% per annum
0%
5%
10%
15%
20%
25%
30%
35%
2016201720182019202020212022202320242025
NZ Energy Margin

Calendar Year
Hydro Adjustment
Margin - Required New Supply
Margin - Huntly Rankine Units (500MW)
Margin
Security Standard

>Benign wholesale prices due to continued above average inflows into national hydro catchments
>Wholesale price environment contributing to lower futures prices
>Unlikely that ASX prices fully reflect changes in supply and demand during FY2016





$65
$70
$75
$80
$85
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
$/MWh

FUTURES PRICE
(2 year average price starting 3 quarters ahead)
Otahuhu
Benmore
WHOLESALE ELECTRICITY PRICE
MARKET DYNAMICS
13
40%
60%
80%
100%
120%
140%
160%$0
$50
$100
$150
$200
$250
$300
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Storage (% of average
)
-

Inverted

Price Volatility ($/MWh)

WHOLESALE PRICE VOLATILITY
(5
th
to 95
th
percentile OTA price by month)

Otahuhu Price Range
Average Otahuhu Price
National Hydro Storage (RHS)

>Market churn remains high but Mercury out-performing in HY2017
>Increase in customer numbers due to reduced churn as Mercury focuses on rewarding loyalty















-10000
-8000
-6000
-4000
-2000
0
2000
4000
6000
8000
10000
Switches

NATIONAL SWITCHING
Mercury
Mercury Brand
CY2015 Mercury Switches
0%
5%
10%
15%
20%
25%
30%
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Annual Churn

NATIONAL ANNUALISED CHURN RATE
(6 Month rolling)
All Retailers
Mercury
Mercury Brand
0
1000
2000
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Switches
Withdrawn
2

CUSTOMER
14
Total switches
Trader switches
1
}
}
1
A trader switch is where a customer changes retailer without changing house
2
Switches which were initiated but not completed (inclusive of saves)
Source: Electricity Authority
MARKET DYNAMICS

MARKET DYNAMICS
15
>Differential improvement in customer satisfaction in HY2017
>Proactive retention initiatives and increasing ease of service
>Launch of partnership with Airpoints with nearly 100,000 customers
registered
>More than 100,000 customers enjoyed the latest Free Power Day
campaign
>117,000 residential customers (41% of Mercury brand) and 26,000
small commercial customers (63%) are on fixed-price contracts
>New simplified and transparent customer billing implemented
>Innovating and enabling customer choice
>In-house solar and battery capability with Mercury Solar
>Enabling customers to utilise electricity as a transport fuel:
> Mercury’s EV fuel package;
> Customer discounts for e-bikes with major bike retailers; and
> Establishment of New Zealand’s ‘Electric Highway’ in partnership
with Plugshare (Oregon, USA)

CUSTOMER
1
Percentage of customers who rate their satisfaction with their
current provider an 8-10 on a 0-10 scale in Mercury’s own survey
40%
45%
50%
55%
60%
65%
70%
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16

%
of Customers

CUSTOMER SATISFACTION
1
(6 months rolling)
Mercury Brand
Largest 4 Brands (excl. Mercury)

>Financial contract between NZAS and Meridian for 572MW through to 31
December 2030
>Price increase effective 1 January 2017
>Right to terminate contract with 12 months notice from 1 January 2017 (not triggered)
>Indications are that NZAS unlikely to be closed in the near term
>Desire to terminate Meridian contract has not been signalled by NZAS
>“In Aluminium, all of our assets were free cash flow positive, despite lower realised prices
in the first half.” Rio Tinto – Annual Results 2016 – 8 February 2017
>Further thermal rationalisation in the North Island highly likely in response to
NZAS closure
>Industry has demonstrated ability to quickly respond to changes in supply and demand
>Mercury relatively best placed to deal with resultant wholesale market
uncertainty following the closure of NZAS
>100% renewable North Island generation close to major North Island load centres
>Wholesale price separation due to increased losses, transmission constraints and North
Island reserve requirements
NEW ZEALAND ALUMINIUM SMELTER (NZAS)
MARKET DYNAMICS
16
Mercury generation assets
HVDC
NZAS
HAYW ARDS
BENMORE
AUCKLAND
•

REGULATION

MARKET DYNAMICS
17
Industry
>Government and opposition parties constructively engaged in policy development
>Mercury proactively engaging with the new Energy Minister, Hon Judith Collins, following appointment in December 2016
>Mercury surprised by Electricity Authority (EA) stress test results which show the risk exposure of some participants
despite well-functioning hedge market
Transmission Pricing Methodology (TPM)
>EA has released a supplementary consultation on the second issues paper on TPM with proposal to remain with a two
part charge (Area-of-Benefit and Residual) capped at consumer impact of 3.5% raising at 2% per annum with
implementation April 2020
>Additional Mercury charges indicatively assessed by EA remain at ~$5m/annum (broadly in line with 2015 and secondary proposal)
>Opposition to reform remains and there exists a high likelihood of legal challenge following a decision in April 2017 which will affect the
implementation date
Electric Vehicle (EV) policy
>Government target of 64,000 electric vehicles (2% of light vehicle fleet) by 2025
>Over 80 applications with $3.5m allocated and further $6m anticipated in 2017 for Low Emission Vehicles Contestable Fund
>EV uptake boosted by business sustainability commitment led by Air New Zealand and Mercury
>30 leading NZ companies will shift 30% of their fleets to electric vehicles by 2019 (circa $60m commitment)

18
FINANCIAL SUMMARY

257
(27)
29
3
(1)
3
6
270
0
50
100
150
200
250
300
EBITDAF HY2016GenerationEnergy Cost*CFDsCustomer SalesOther RevenueOperating
Expenditure
EBITDAF HY2017
$m

Energy Margin up $4m
Improvement
Reduction
EBITDAF (HY2017 vs. HY2016)
FINANCIAL SUMMARY
19
>Energy margin up $4m
>152GWh more hydro generation replacing thermal generation in the prior period
>Additional commercial and industrial sales contracted throughout the year at lower prices than achieved historically
>Operating expenditure down $6m due to lower maintenance costs
>Full year operating expenditure expected to be in line with FY2016
>Other revenue up $3m reflecting gain on sale of carbon credits (partially offset by land sales in prior period)
* Energy cost excludes gas generation purchases and volume impacts of end user
sales, which are included within generation and customer sales respectively

Carbon credits
>Future carbon obligations substantially reduced following
the 2015 closure of the Southdown gas-fired station
>Opportunity taken in HY2017 to divest some carbon
credits at elevated prices
>Sale of 1.1m credits with cash proceeds of $19m and gain
on sale of $5m
>Remaining inventory and supply contracts sufficient to
meet future obligations for 10+ years
>Including zero cost units (PREs) to meet obligations through to end
of FY2018
Chile
>Crystallisation of Group’s non-cash FX translation reserve
loss (~$10m) and any other related obligations will be
recognised on Chile exit completion






CARBON CREDITS & CHILE
20
FINANCIAL SUMMARY
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
NZU Carbon Price

NZU CARBON PRICE

Source: Westpac

DIVIDENDS
21
>Focus remains on appropriate capital management
>HY2017 fully-imputed dividend up 1.8% to 5.8 cents
per share
>Dividend to be paid on 3 April 2017
>FY2017 dividend guidance of 14.6 cents per share
maintained
>Minor change to dividend policy for interim payment
date
>‘Dividend payments are expected to be split into an interim
dividend paid in April, targeting 40% of the total expected
dividend for the financial year, and a final dividend paid in
September.’
0
5
10
15
20
25
201220132014201520162017F

Cents per share

Financial Year
DIVIDEND
InterimFinalSpecialsOrdinary guidance
FINANCIAL SUMMARY

74
69
60
79
59
115
288
183
33
31
13
0
50
100
150
200
250
300
350
400
201220132014201520162017F
$
m

Financial Year
CAPITAL EXPENDITURE
New investment
Stay-in-business
CAPITAL EXPENDITURE
FINANCIAL SUMMARY
22
>Capital expenditure of $54m (HY2016: $30m)
>Stay-in-business of $54m (HY2015: $18m) reflects the successful completion of 2 wells on the Kawerau geothermal field and the on-
going hydro life-cycle refurbishment at the Whakamaru and Aratiatia power stations
>FY2017 guidance of $115m for stay-in-business and for minimal growth capital expenditure
>Stay-in-business includes the drilling of 2 further wells as part of a co-ordinated campaign across multiple geothermal fields
>On-going investment is planned to further develop Mercury’s digital experience to continue to offer new value,
simplified, and personalised experiences for our customers


Stay-in-business capital expenditure for the period
FY2013 through FY2017 averages ~$80m

FUNDING PROFILE
23






>$120m of wholesale bonds matured in October 2016 and were partially re-financed with a new $50m bank facility
>The average debt maturity profile for committed facilities was 9.0 years at 31 December 2016
>Interest costs elevated due to interest rate hedges put in place in 2008 during the company’s domestic geothermal
investment programme. These hedges roll off progressively from the end of FY2018 with an estimated $20m
annual cash flow benefit in FY2019
-
50
100
150
200
250
300
350
201720182019202020212022202320242025202620272045
$m

Financial Year
DEBT MATURITIES AS AT 31 DECEMBER 2016
Domestic Wholesale BondsUS Private PlacementCapital BondDrawn Bank FacilitiesUndrawn Bank Facilities
FINANCIAL SUMMARY

CAPITAL STRUCTURE
FINANCIAL SUMMARY
24






1
Adjusted for S&P treatment of subordinated debt
>BBB+ rating is key reference point for dividend policy and an efficient and sustainable capital structure
>S&P re-affirmed Mercury’s credit rating of BBB+/stable on 4 December 2016
>One-notch upgrade given majority Crown ownership
>Key ratio for stand alone S&P credit rating bbb requires Debt / EBITDAF between 2.0x and 3.0x
>Capital management continues to be reviewed
>Debt/EBITDAF 2.0x at 30 June 2016
>Gearing level will be maintained reflecting majority Government ownership



31 December 2016 30 June 2016 30 June 2015 30 June 2014 30 June 2013
Net debt ($m)
1,080 1,068 1,082 1,031 1,028
Gearing ratio (%)
24.7% 24.4 24.5 24.3 24.4
Debt/EBITDAF (x)
N/A

2.0
1
2.0
1
2.1 2.7

APPENDIX
25

OPERATING INFORMATION
26
Six months ended
31 December 2016
Six months ended
31 December 2015
Year ended
30 June 2016
Electricity Sales
VWAP
1

($/MWh)
Volume
(GWh)
VWAP
1

($/MWh)
Volume
(GWh)
VWAP
1

($/MWh)
Volume
(GWh)
FPVV sales to customers 112.30 2,395 115.56 2,253 114.83 4,397
Residential customers 1302 1,340 2,438
Commercial customers 1093 913 1,959
FPVV

purchases from market 2529 2,380 4,643
Spot customer purchases 454 520 950
Total NZEM purchases 54.83 2983 63.27 2,900 65.41 5,593
Electricity Customers (000)
2
387 380
376
North Island customers 346 344 339
South Island customers 41 36 37
Dual Fuel customers 43 41 41
Metrix AMI Meters (000)
399
389 396
1
VWAP is volume weighted average energy-only price sold to FPVV customers after lines, metering and fees
2
Excludes vacant premises
APPENDIX

OPERATING INFORMATION
27
Six months ended
31 December 2016
Six months ended
31 December 2015
Year ended
30 June 2016
Electricity Generation
VWAP
($/MWh)
Volume
(GWh)
VWAP
($/MWh)
Volume
(GWh)
VWAP
($/MWh)
Volume
(GWh)
Hydro 55.14 2,367 61.41 2,215 64.84 3,866
Gas (all 1HY2016) - - 68.62 146 68.64 146

Geothermal (consolidated)
1
48.71 1,290 58.93 1,299 60.84 2,596
Geothermal (equity accounted)
2
49.77 113 59.40 118 61.44 234
Total 52.78 3,770 60.78 3,778 63.29 6,842
LWAP/GWAP 1.04 1.04 1.03
Carbon Emissions (‘000 tonnes)
186 249 428

1
Includes Mercury’s 65% share of Nga Awa Purua generation
2
Tuaropaki Power Company (Mokai) equity share
APPENDIX

CONTRACTS FOR DIFFERENCE
28
Six months ended
31 December 2016
Six months ended
31 December 2015
Year ended
30 June 2016
Net Contracts for Difference
(Sell)/Buy GWh
Sell - End User (673) (746) (1,448)
Sell - VAS
1
(352) (352) (701)
Sell - Inter-generator & ASX (775) (821) (1,259)
Sell CFD (1801) (1,919) (3,408)
Buy CFD 904 929 1,741
Net CFD

(897) (990) (1,667)
Energy Margin contribution ($m) 20 14 27
1
VAS included on both buy and sell side CFDs
APPENDIX

BALANCE SHEET
29
$m
As at
31 December 2016
As at
31 December 2015
As at
30 June 2016
SHAREHOLDERS’ EQUITY
Total shareholders’ equity 3,287 3,236 3,315
ASSETS
Current assets 254 285 313
Non-current assets 5,698 5,662 5,772
Held for sale 0 6 0
Total assets 5,952 5,953 6,085
LIABILITIES
Current liabilities 168 337 310
Non-current liabilities 2,497 2,380 2,460
Total liabilities 2,665 2,717 2,770
TOTAL NET ASSETS 3,287 3,236 3,315
APPENDIX

NON-GAAP MEASURE: ENERGY MARGIN
30
>Energy Margin provides a measure that, unlike sales or total revenue, accounts for the variability of the wholesale
spot market and the broadly offsetting impact of wholesale prices on the cost of retail electricity purchases

$m
Six months ended
31 December 2016
Six months ended
31 December 2015
Year ended 30
June 2016
Sales 772 792 1,512
Less: lines charges (227) (217) (419)
Less: energy costs
(167) (201)
(384)
Less: other direct cost of sales, excluding third-party metering (18) (18) (28)
Less: third party metering (12) (12) (23)
Energy Margin 348 344 658
APPENDIX

NON-GAAP MEASURE: FREE CASH FLOW
31
>Free Cash Flow is a measure that the Company uses to evaluate the levels of cash available for debt repayments,
growth capital expenditure and dividends
$m
Six months ended
31 December 2016
Six months ended
31 December 2015
Year ended 30
June 2016
Net cash provided by operating activities 194 160 280
Less: Stay-in-business capital expenditure (including accrued costs) (54) (18) (59)
Free Cash Flow 140 142 221
APPENDIX

NON-GAAP MEASURE: EBITDAF, UNDERLYING EARNINGS AND NET DEBT
32
>EBITDAF is reported in the financial statements and is a measure that allows comparison across the electricity
industry
>Underlying Earnings is reported in the financial statements and in contrast to net profit, the exclusion of certain items
enables a comparison of the underlying performance across time periods
>Net Debt is reported in the full year financial statements and is a measure commonly used by investors
APPENDIX

FOR FURTHER INFORMATION >> TIM THOMPSON | HEAD OF TREASURY & INVESTOR RELATIONS T. 0275 173 470 E. INVESTOR@MERCURY.CO.NZ

---

2017 INTERIM REPORT >> MERCURY NZ LIMITED

02 >> REPORT CARD
04 >> CHAIR & CHIEF EXECUTIVE’S MESSAGE
10 >> FINANCIAL COMMENTARY
13 >> INDEPENDENT AUDITOR’S REVIEW
15 >> FINANCIAL STATEMENTS
28 >> OTHER DISCLOSURES
28 >> SHAREHOLDER INFORMATION
2 9 >> DIRECTORY
OUR NEW MERCURY BRAND IS MAKING
A POSITIVE IMPACT AND INSPIRING
CUSTOMER LOYALTY.
WE HAVE CLEAR MOMENTUM, A NEW ENERGY
IN OUR PEOPLE AND A FOCUS ON THE FUTURE.
WE ARE PROUD TO BE CONTINUING TO BUILD
ON A RICH HERITAGE OF INNOVATION AS
WE PROGRESS OPPORTUNITIES TO DELIVER
LONG-TERM SUSTAINABLE VALUE FOR OUR
CUSTOMERS AND SHAREHOLDERS.

REPORT CARD.
$270M
EBITDAF up 5.1%, reflecting a lift in hydro
generation and customer sales offset by a lower
average yield for commercial and industrial sales.
$113M
Net profit was $39 million higher than HY2016
with improved operating earnings, positive fair
value movements and no impairment charges.
$140M
Free Cash Flow steady, with higher stay-in-
business capital expenditure offset by lower
tax paid.
5.8CPS
Fully-imputed interim dividend to be paid on
3 April 2017. Full-year ordinary dividend guidance
of 14.6 cents per share, a 2.1% increase on FY2016.
>> FINANCIALS

1-in-3
A third of Mercury customers are opting for
the certainty of fixed-price offers.
3M
KG CO
2
-e/YEAR
Reduction in carbon emissions from a
30 company commitment to purchase electric
vehicles, led by Mercury and Air New Zealand.
10K
Customers in the Kaikoura region were contacted
with Free Power Days to offer our support
following the November earthquakes.
$120K
Through our long-standing support with our
customers, Mercury helped fund a new OCT
eye scanner for Starship Children’s Hospital.
100%
RENEWABLE GENERATION
Capital investment is focused on further improving
the efficiency and long-term reliability of hydro
generation and sustainable optimal production at
our geothermal stations.
100K
Customers were rewarded with Free Power Days
as part of a focus on rewarding loyalty.
>> CUSTOMERS
>> COMMUNITY
>> ENVIRONMENT

>> CHAIR &
CHIEF
EXECUTIVE’S
MESSAGE.
CHAIR AND CHIEF
EXECUTIVE’S MESSAGE.
We have a clear goal to be New Zealand’s leading energy brand.
That requires a strategic focus towards customer value and relevant new
technologies – building on remarkable foundations laid over almost a century.
In our new Mercury brand we have a common platform to support
our success today, our ambition and future growth.
We are pleased to be reporting
enhanced customer loyalty following
the brand consolidation and significant
progress on value-enhancing
partnerships during the half-year.
Over the six months ended 31 December
2016, we have announced commercial
relationships with global technology
leaders Trina Solar, SolaX Power and
PlugShare, and Mercury became
an exclusive Airpoints
TM
partner with
Air New Zealand.
FINANCIAL RESULTS
Our core performance demonstrates
Mercury’s current competitive strengths
and resilience.
Despite subdued wholesale electricity
pricing, we have been able to leverage
favourable North Island hydro conditions
and achieve a 5.1% lift in Mercury’s
operating earnings (EBITDAF) to
$270 million for HY2017.
Mercury will pay a fully-imputed interim
dividend of 5.8 cents per share on
3 April 2017 to our 90,000 owners,
including the Crown. This represents
40% of the full-year ordinary dividend
guidance of 14.6 cents per share, a 2.1%
increase on FY2016.
Mercury’s financial results for the
half-year include the benefit of
above-average rainfall that enabled
a 7% increase in hydro generation.
We updated our forecast FY2017 hydro
generation in October (to 4,250GWh),
and at the time of these results we have
increased our full-year EBITDAF
guidance to $500m.
The 2015 closure of the gas-fired
Southdown station substantially
reduced the Company’s future carbon
obligations and we took the opportunity
to divest some of our surplus carbon
credits in HY2017.
This generated cash proceeds of
$19 million due to significantly higher
carbon pricing, and a gain on sale of
$5 million. Net profit after tax was up
from $74 million to $113 million due to
the improved EBITDAF, movements in
the fair value of the company’s financial
instruments, and impairment charges
in the prior period. Underlying earnings
were up $5 million to $94 million.
Operating costs were down 6% on
HY2016 due to lower maintenance costs.
Full-year operating costs are forecast
to be in line with recent years.
Capital expenditure is expected to
be $115 million in FY2017 as a result
of the company’s current focus on hydro
reinvestment and geothermal drilling,
which is progressing well.
This programme, currently focused
around Whakamaru and Aratiatia
hydro stations, will further improve
the efficiency and long-term
reliability of operations on the Waikato
River and sustain performance of
geothermal production. Together, this
supports Mercury’s 100% renewable
generation accounting for 15-17%
of New Zealand’s total annual
electricity demand.
We have also completed a smooth
transition to UGL as the company’s
maintenance contractor across all
of our geothermal and hydro operations.
Having a single primary maintenance
partner will lead to improved efficiencies
and greater consistency across safety
and processes.
We have continued a very positive health
and safety trend in the highest-risk areas
of our business with no injuries requiring
medical treatment, or resulting in lost
time, occurring at any of our generation
sites in HY2017. However there were
a number of incidents that contributed
to a poorer performance against our key
lag measure, Total Recordable Injury
Frequency Rate (TRIFR).
With our goal of ‘zero harm’, it was
concerning to have a stair-fall injury
involving a contractor at our Greenlane
office. We are pleased to report that
they have now returned to
work full-time.
Our focus remains on preventing low
probability high consequence events,
with a significant effort currently on
implementing a Process Safety
programme concentrating on key risks
in our business.
04 // 05

>> JOAN WITHERS
CHAIR
WE ARE PLEASED TO BE
REPORTING ENHANCED
CUSTOMER LOYALTY
FOLLOWING THE BRAND
CONSOLIDATION AND
SIGNIFICANT PROGRESS
ON VALUE-ENHANCING
PARTNERSHIPS DURING
THE HALF-YEAR.
>> FRASER WHINERAY
CHIEF EXECUTIVE
DESPITE SUBDUED
WHOLESALE ELECTRICITY
PRICING, WE HAVE BEEN
ABLE TO LEVERAGE
FAVOURABLE NORTH
ISLAND HYDRO
CONDITIONS AND ACHIEVE
A 5.1% LIFT IN MERCURY’S
OPERATING EARNINGS TO
$270 MILLION FOR HY2017.

WE HAVE UNDERTAKEN
A BROAD REVIEW OF
DOMESTIC GROWTH
OPTIONS, FOCUSED ON
OPPORTUNITIES WITH
POTENTIAL TO DELIVER
VALUE FOR CUSTOMERS
AND HELP DRIVE
PROGRESSIVE RETURNS
TO MERCURY’S OWNERS
OVER TIME.
>> CHAIR &
CHIEF
EXECUTIVE’S
MESSAGE.
GROWTH OPTIONS
Alongside the robust results for HY2017,
the reporting period included solid
progress on several key elements
of the company’s strategy to create
long-term value.
Highlights included the move to
a new Mercury brand, successful
customer loyalty initiatives, the launch
of New Zealand’s leading solar
offering and the development of
important partnerships.
We have also undertaken a broad
review of domestic growth options.
This review, involving external advisors,
focused on opportunities with potential
to deliver value for customers and
help drive progressive returns to
Mercury’s owners over time.
We have established capability
and small, but important, new
revenue streams in key technologies
such as solar and distributed storage
to complement our strength in
renewable generation.
Mercury is also investing in the Mercury
Research and Development Centre
to showcase world-leading solar,
battery storage, electric vehicle (EV)
charging and other energy technologies
in New Zealand conditions. We are
also looking beyond the home to
opportunities in e-mobility and relevant
areas of transportation.
CUSTOMER LOYALTY
The response to the new Mercury brand
(launched on 29 July 2016) has been
extremely positive with our people and
with our customers.
Mercury’s customer satisfaction reached
record levels during HY2017 and
annualised switching rates were more
than 3% lower than the market average
reported by the Electricity Authority.
Customer numbers increased by
about 11,000 over the period, largely
due to better retention of existing
customers, consistent with our focus
on rewarding loyalty.
More than 100,000 customers were
rewarded with a Free Power Day, and
almost 100,000 have registered to
receive Airpoints™.
Another significant contributor to
loyalty is the popularity of Mercury’s
fixed-price contracts.
This is the single-most successful retail
offering in terms of uptake in the
New Zealand electricity market, with a
third of Mercury customers opting for
the certainty of contracts. Mercury’s first
Airpoints™ offer has moved more than
4,000 customers to two-year contracts
and is also expected to be a powerful
retention product.
06 // 07

Our customers have responded very
favourably to our Free Power Day offer
alongside the re-launch, and we offered
a Free Power Day to more than 10,000
Mercury customers in the areas near
Kaikoura impacted by the November
earthquakes to give them a little support.
We also credited GLOBUG and Tiny
Mighty Power customers in this region
to give them the equivalent of a Free
Power Day and received great responses
when we texted these customers
individually to let them know.
As part of our focus on customer
engagement, following the brand
re-launch we encouraged all of our
employees across the business to each
call a customer. This was a challenge
to our people, particularly those who do
not usually talk directly with customers.
The very high participation rate,
employee engagement and customer
feedback was truly uplifting.
Through the move to our new brand,
activity such as the promotion of e-bikes
has been a practical way of showing
what our mission of ‘Energy Freedom’
means. E-bike sales have also jumped
nationally on the back of our promotion
and ride events, reflecting the
heightened awareness and positive
interest measured in our brand research
with customers.
We have continued to invest in and
seamlessly implement updates to our
key technology platforms to support
our service to customers and digital
engagement. Another area of focus
following the brand change has been to
implement a simplified customer bill in
HY2017. This has reduced the number of
related enquiries, allowing greater
capacity for conversations focusing on
delivering value for customers. Ongoing
investment is planned to further develop
Mercury’s digital experience so that we
can offer new value, simplify and
personalise the experience for our
customers.
PARTNERSHIPS
We have announced a range of initiatives
being progressed through value-
enhancing partnerships.
Mercury has been confirmed by a global
leader in solar panel technology and
sustainability, Trina Solar, as their
preferred residential and commercial
sales partner in New Zealand. We are
also the exclusive New Zealand supplier
of the SolaX-BOX battery, which offers
an advanced and flexible home storage
system that complements solar
production and can provide effective
back-up during a power outage.
The company has partnered with global
software and services company,
PlugShare, on the Electric Highway™
to increase the visibility of the full range
of EV charging locations to support
electric vehicle uptake in New Zealand.
This free app gives EV owners the
confidence and choice of where they can
fill up on home-grown renewable energy,
aggregating charging points from the
many different infrastructure providers.
Another substantial initiative, led by
the chief executives of Mercury and
Air New Zealand, saw 30 of
New Zealand’s leading businesses
commit to a minimum of 30% EVs in
their fleets by 2019, representing 1,450
EVs in total. This is one of the largest
voluntary sustainability initiatives in
New Zealand business history, with the
potential to take around 3 million kg of
carbon emissions out of the environment
every year. We also see this as another
very meaningful milestone in the uptake
of EVs and electricity becoming the
transport fuel of choice.

Our ongoing support for Starship
together with our customers resulted in
investment in new leading-edge eye
scanning technology at the national
Children’s Hospital that is helping with
more accurate diagnoses. Previously this
partnership has funded other important
investments such as the installation of
pull-down beds that allow parents to
stay in the rooms with their children.
Mercury also celebrated the outstanding
performances at the Rio Olympics with
our partners Rowing New Zealand, who
we have supported for nearly 20 years.
Another excellent partnership example
is Metrix’s commercial arrangement with
Counties Power to deliver smart meter
services to retailers on their network.
The 15-year arrangement involves
Counties Power investing in the physical
infrastructure and Metrix managing the
communications network, back-office
systems and provision of Cloud-based
services to electricity retailers that are a
New Zealand first.
Counties Power selected Metrix due to
our expertise in running Advanced
Metering Infrastructure (AMI) radio-
mesh technology and for our service
delivery platform to electricity retailers.
Our understanding of the benefits
of AMI to electricity line distributors
was also an important factor.
Together with the superior customer
offering, Counties Power is effectively
the first electricity lines company in this
country to see the full benefit from
AMI services with the ability to
substantially optimise their field
resources during periods of intermittent
supply or outages, receiving alert
notifications within seconds that
support security of supply for their
business and residential customers.
SECTOR OUTLOOK
Standing back from our business, the
New Zealand electricity market remains
healthy with strong underlying
fundamentals and a good balance
between supply and demand.
The closure of several industrial facilities
within the past 18 months has extended
a decade-long trend of falling electricity
demand from this segment. National
consumption dipped in HY2017 with
the impact of wetter and warmer weather
conditions. However, GDP growth and
record net migration are positives that
will flow through to demand.
Importantly, the conversation on
electricity and its renewability in
New Zealand has shifted substantially
from issue to opportunity and our sector
is now increasingly being considered a
national competitive advantage. At a
time when other countries around the
world are looking to decarbonise their
energy systems, New Zealand’s electricity
supply is our low-carbon solution.
The conversation had to change for
the long-term benefit of our country,
for consumers, and for you as the
owners of Mercury.
An example of just how far this
conversation has moved is the recent
direction from the Government around
public consultation on the New Zealand
Energy Efficiency and Conservation
Strategy, and the clear determination to
ensure that this country makes the most
of this renewables advantage.
Further change is required to foster
continued innovation, deliver value to
customers and increase the benefits for
the country.
The regulatory environment must be
simplified and evolve. In particular,
Mercury believes distribution pricing
needs to be overhauled as a priority
to provide appropriate long-term signals
for consumers and generators alike and
to keep pace with new technologies.
As we focus on taking renewable
energy beyond the home, we are
advocating for a fundamental shift in
energy policy from the current renewable
electricity target, to focusing on total
renewable energy.
An energy target would force us as a
country to give much greater weight to
the opportunity to use renewable heat in
industrial applications and to electrify
transport, which we have consistently
promoted as New Zealand’s largest
green-growth opportunity.
08 // 09

We are encouraged by the constructive
approach to policy development across
the political spectrum. This is essential to
provide customers, employees, investors
and our communities with confidence in
this essential sector with ultra-long-term
planning horizons. Collectively we must
also have a view to the opportunity in
front of us to address climate change
and to secure better outcomes for the
planet through the greater application of
our renewable energy.
The Electricity Authority’s consultation
process on transmission pricing has
been extensive. However, it is vital that
we do not lose sight of what is in the
best interests of customers and
New Zealand as a whole.
We could not be more proud of what our
entire team at Mercury has achieved
through this half-year with the support
of the leadership team and our Board.
The highlights included in this report are
only a snapshot of the extensive activity,
achievements and challenges in HY2017.
This has been an exciting and rewarding
period of evolution for Mercury. These
outcomes are a product of both
tremendous focus and commitment
from our people.
Our thanks also go to director Mike Allen
who stepped down from the Board in
November, after seven years’ service.
His deep expertise in geothermal was
extremely valuable through a time
when Mercury completed two major
geothermal developments in
New Zealand that have contributed
to geothermal growing to become
New Zealand’s second-largest electricity
fuel source.
As we focus on future growth
opportunities, we will ensure that
Mercury’s Board remains well-balanced
and has the skills and experience
necessary to guide the company in
pursuit of its strategic priorities.
>> JOAN WITHERS, CHAIR
>> FRASER WHINERAY, CHIEF EXECUTIVE
IMPORTANTLY, THE
CONVERSATION ON
ELECTRICITY AND ITS
RENEWABILITY IN
NEW ZEALAND HAS
SHIFTED SUBSTANTIALLY
FROM ISSUE TO
OPPORTUNITY AND OUR
SECTOR IS NOW
INCREASINGLY BEING
CONSIDERED A NATIONAL
COMPETITIVE ADVANTAGE.

0
50
100
150
200
250
300
350
400
20172016201520142013
HALF YEAR
$m
0
30
60
90
120
150
20172016201520142013
HALF YEAR
$m
>> FIGURE 1: ENERGY MARGIN
>> FIGURE 2: OPERATING COSTS
>> FINANCIAL
COMMENTARY.
FINANCIAL
COMMENTARY.
This overview of our Interim Financial Statements focuses on
key measures relating to the performance of Mercury NZ Limited
during the six months ended 31 December 2016. For an explanation
as to why we focus on the following measures please refer to the
Creating Shared Value section of our 2016 Annual Report.
ENERGY MARGIN
Mercury’s energy margin of $348 million was up $4 million
on HY2016, supported by a 152GWh increase in the company’s
hydro generation. This increase offset the thermal volumes
generated during the prior period, with a related saving
in fuel costs.
The ratio of electricity purchase costs to average generation
prices (LWAP/GWAP) remained similar to the same period last
year at 1.04. This reflects a continuation of lower wholesale price
volatility and the closure of the company’s Southdown gas-fired
station on 31 December 2015.
The average energy price to customers was down 2.8% to
$112.30/MWh relative to the same period last year. This reflects
additional commercial and industrial sales contracted
throughout the year at lower prices than achieved historically
and the timing of customer loyalty product offerings.
OTHER INCOME
During the period the company sold down 1.1 million carbon
emission units, recognising a gain on disposal of $5 million
and cash proceeds of $19 million, reflected through
cash inflows from investing activities. The sale reflected
the company’s substantially-reduced carbon emission
obligations following the retirement of the Southdown station.
OPERATING COSTS
Operating costs were $6 million lower than HY2016 at
$102 million, as a result of reductions in maintenance costs as
higher expenditures occurred in geothermal drilling activities
and hydro refurbishment projects, both mostly capital in nature.
Full-year operating costs are expected to remain in line with
levels over the past three years.
10 // 11

EBITDAF
These energy margin, other income and operating cost
movements were reflected in higher operating earnings
(EBITDAF), which were up $13 million on the prior comparable
period to $270 million.
PROFIT
Profit for the period increased $39 million to $113 million due
to the improved EBITDAF performance, increased gains in
the fair value of the company’s financial instruments, mostly
due to an increase in the forward interest rate curve, and the
impairment charges reported in the prior period.
UNDERLYING EARNINGS
Underlying earnings after tax increased by $5 million
to $94 million, reflecting the increase in Mercury’s
EBITDAF performance.
CASH FLOW
Net cash flow from operating activities increased
$34 million, due to the improved EBITDAF performance
along with an $11 million decrease in cash taxes.
The company elected to pre-pay some of its third provisional tax
payment in March 2016, which would otherwise have been
payable in July, to fully impute the 4 cents per share special
dividend paid in September 2016.
0
50
100
150
200
250
300
20172016201520142013
HALF YEAR
$m
>> FIGURE 3: EBITDAF
>> FIGURE 4: UNDERLYING EARNINGS AFTER TAX
0
20
40
60
80
100
120
140
20172016201520142013
$m
HALF YEAR

>> FINANCIAL
COMMENTARY.
BALANCE SHEET
Stay-in-business capital expenditure for the period was
$54 million, reflecting the hydro refurbishment projects
currently underway at Aratiatia and Whakamaru, where
significant delivery payments have taken place, along with the
geothermal drilling programme which will continue into the
second half of FY2017. Full year stay-in-business capital
expenditure is expected to be $115 million, with average
annual capital expenditure over the medium term remaining
in line with guidance of $80 million.
CAPITAL STRUCTURE AND DIVIDENDS
A key reference point in Mercury’s ongoing commitment to
an efficient and sustainable capital structure is its BBB+ credit
rating, which considers the company’s working capital
requirements and medium-term investment programme.
During the period $120 million of the company’s wholesale
bonds matured, with repayment funded out of existing
committed bank facilities, which were increased by $50 million
to $350 million. At the end of the period $114 million of these
facilities was drawn. The average maturity profile for committed
facilities is 9.0 years.
The company’s average interest rate of 8.4% reflects interest
rate hedges put in place in 2008 ahead of the company’s
significant geothermal development programme. These hedges
mature by the end of the 2018 financial year. From that time the
estimated cash flow benefit, at current rates, is in excess of
$20 million per annum.
In line with Mercury’s dividend policy targeting a pay-out ratio of
70% to 85% of Free Cash Flow on average over time, a fully
imputed 5.8 cents per share interim dividend has been
declared, payable on 3 April 2017. The FY2017 ordinary dividend
guidance of 14.6 cents per share remains unchanged,
representing a 2.1% increase on FY2016.
>> FIGURE 6: INTERIM DECLARED DIVIDENDS
0
1
2
3
4
5
6
20172016201520142013
HALF YEAR
Cents per shar
e
>> FIGURE 5: CAPITAL EXPENDITURE
HALF YEAR
$m
0
20
40
60
80
100
120
140
160
20172016201520142013
12 // 13

INDEPENDENT AUDITOR’S REVIEW.
>> INDEPENDENT
AUDITOR’S REVIEW.
REVIEW REPORT TO THE SHAREHOLDERS OF MERCURY NZ LIMITED
We have reviewed the consolidated interim financial statements of Mercury NZ Limited (“the Company”) and its
subsidiaries (“the Group”) on pages 16 to 27, which comprise the consolidated balance sheet of the Group as at
31 December 2016, and the consolidated income statement, consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated cash flow statement of the Group for the six months
ended on that date, and a summary of significant accounting policies and other explanatory information.
This report is made solely to the Company’s shareholders, as a body. Our review has been undertaken so that we might
state to the Company’s shareholders those matters we are required to state to them in a review report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s shareholders as a body, for our review work, for this report, or for our findings.
DIRECTORS’ RESPONSIBILITIES
The directors are responsible for the preparation and fair presentation of consolidated interim financial statements which
comply with New Zealand Equivalent to International Accounting Standard 34
Interim Financial Reporting and for such
internal control as the directors determine is necessary to enable the preparation and fair presentation of the consolidated
interim financial statements that are free from material misstatement, whether due to fraud or error.
The directors are also responsible for the publication of the consolidated interim financial statements, whether in printed
or electronic form.
REVIEWER’S RESPONSIBILITIES
The Auditor-General is the auditor of the Group pursuant to section 5(1)(f) of the Public Audit Act 2001. Pursuant to
section 32 of the Public Audit Act 2001, the Auditor-General has appointed Simon O’Connor of Ernst & Young to carry out
the annual audit of the Group.
Our responsibility is to express a conclusion on the consolidated interim financial statements based on our review. We
conducted our review in accordance with New Zealand Standard on Review Engagements 2410
Review of Financial
Statements Performed by the Independent Auditor of the Entity
(NZ SRE 2410). NZ SRE 2410 requires us to conclude
whether anything has come to our attention that causes us to believe that the consolidated interim financial statements,
taken as a whole, are not prepared in all material respects, in accordance with New Zealand Equivalents to International
Accounting Standard 34
Interim Financial Reporting. As the auditor of Mercury NZ Limited, NZ SRE 2410 requires that we
comply with the ethical requirements relevant to the audit of the annual financial statements.
BASIS OF STATEMENT
A review of consolidated interim financial statements in accordance with NZ SRE 2410 is a limited assurance engagement.
The auditor performs procedures, primarily consisting of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures.
The procedures performed in a review are substantially less than those performed in an audit conducted in accordance
with International Standards on Auditing (New Zealand). Accordingly we do not express an audit opinion on the
consolidated interim financial statements.
We did not evaluate the security and controls over the electronic presentation of the consolidated interim financial statements.

In addition to this review and the audit of the annual financial statements of the Group, we are engaged to perform
other engagements in the area of remuneration benchmarking and tax compliance which are compatible with the
independence requirements of the Auditor-General, which incorporate the independence requirements of the External
Reporting Board. In addition, partners and staff of Ernst & Young may deal with the Group on arm’s length terms within
the ordinary course of trading activities of the Group. These services have not impaired our independence as auditor of the
Company or Group. Other than these engagements and arm’s length transactions, and in our capacity as auditor acting
on behalf of the Auditor-General, we have no relationship with, or interests in, the Company or Group.
CONCLUSION
Based on our review nothing has come to our attention that causes us to believe that the accompanying financial
statements, set out on pages 16 to 27, do not present fairly, in all material respects, the financial position of the Group as
at 31 December 2016 and its financial performance and cash flows for the six months ended on that date in accordance
with New Zealand Equivalent to International Accounting Standard 34
Interim Financial Reporting.
Our review was completed on 21 February 2017 and our findings are expressed as at that date.
SIMON O’CONNOR
ERNST & YOUNG
AUCKLAND, NEW ZEALAND
14 // 15

FINANCIAL
STATEMENTS.

CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2016
Note
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Total revenue4796 813 1,564
Total expenses4(526)(556)(1,071)
EBITDAF
1
270 257 493
Depreciation and amortisation(93)(90)(182)
Change in the fair value of financial instruments26 3 20
Impairments – (17) (19)
Earnings of associates and joint ventures2 2 3
Net interest expense4(49)(49)(97)
Profit before tax156 106 218
Tax expense(43)(32)(58)
Profit for the period attributable to owners of the parent113 74 160
Basic and diluted earnings per share (cents) 8.21 5.38 11.63
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 DECEMBER 2016
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Profit for the period113 74 160
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Movement in asset revaluation reserve – – 106
Share of movements in associates’ and joint ventures’ reserves 1 (3)6
Tax effect – – (30)
Items that may be reclassified subsequently to profit or loss
Movement in cash flow hedges reserve 42 (31)(54)
Movement in other reserves 1 – 2
Tax effect (12)9 16
Other comprehensive income/(loss) for the period, net of taxation32 (25)46
Total comprehensive income/(loss) for the period attributable to owners of the parent145 49 206
1 EBITDAF: Earnings before net interest expense, income tax, depreciation, amortisation, change in fair value of financial instruments, impairments and equity accounted
earnings of associates and joint ventures.
The accompanying notes form an integral part of these financial statements.
16 // 17

CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2016
Note
Unaudited
31 Dec 2016
$M
Unaudited
31 Dec 2015
$M
Audited
30 Jun 2016
$M
SHAREHOLDERS’ EQUITY
Issued capital 378378378
Treasury shares(52)(52)(52)
Reserves2,9612,9102,989
Total shareholders’ equity3,2873,2363,315
ASSETS
Current assets
Cash and cash equivalents274146
Receivables158187198
Inventories453945
Derivative financial instruments6241821
Taxation receivable––3
Total current assets254285313
NON-CURRENT ASSETS
Property, plant and equipment75,4075,3555,440
Intangible assets506368
Investment and advances to associates8786978
Investment in joint ventures8131514
Advances101210
Receivables11–
Derivative financial instruments6139147162
Total non-current assets5,6985,6625,772
Held-for-sale assets–6–
TOTAL ASSETS5,9525,9536,085
LIABILITIES
Current liabilities
Payables and accruals130151156
Provisions1163
Borrowings99132130
Derivative financial instruments6212221
Taxation payable716–
Total current liabilities168337310
Non-current liabilities
Payables and accruals––2
Provisions532151
Derivative financial instruments6186243267
Borrowings91,1531,0461,047
Deferred tax1,1051,0701,093
Total non-current liabilities2,4972,3802,460
Total liabilities2,6652,7172,770
Net assets3,2873,2363,315
For and on behalf of the Board of Directors who authorised the issue of the Financial Statements on 21 February 2017.
Joan Withers Keith Smith
Chair Director
21 February 2017 21 February 2017
The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2016
Issued
capital
$M
Retained
earnings
$M
Asset
revaluation
reserve
$M
Cash flow
hedge
reserve
$M
Other
reserves
$M
Total equity
$M
Balance as at 1 July 20153783212,738(37)(63)3,337
Movement in cash flow hedge reserve, net of taxation–––(22)–(22)
Movements in other reserves––––––
Share of movements in associates’ and joint ventures’
reserves–––(3)–(3)
Release of asset revaluation reserve, net of taxation––––––
Other comprehensive income–––(25)–(25)
Net profit for the period–74–––74
Total comprehensive income/(loss) for the period–74–(25)–49
Dividend–(150)–––(150)
Balance as at 31 December 20153782452,738(62)(63)3,236
Balance as at 1 January 20163782452,738(62)(63)3,236
Movement in asset revaluation reserve, net of taxation––79––79
Movement in cash flow hedge reserve, net of taxation–––(16)–(16)
Movements in other reserves––––22
Share of movements in associates’ and joint ventures’
reserves––72–9
Release of asset revaluation reserve, net of taxation––(3)––(3)
Other comprehensive income––83(14)271
Net profit for the period–86–––86
Total comprehensive income/(loss) for the period–8683(14)2157
Dividend–(78)–––(78)
Balance as at 30 June 20163782532,821(76)(61)3,315
Balance as at 1 July 20163782532,821(76)(61)3,315
Movement in cash flow hedge reserve, net of taxation–––30–30
Movements in other reserves––––11
Share of movements in associates’ and joint ventures’
reserves–––1–1
Other comprehensive income–––31132
Net profit for the period–113–––113
Total comprehensive income for the period–113–311145
Dividend–(173)–––(173)
Balance as at 31 December 20163781932,821(45)(60)3,287
The accompanying notes form an integral part of these financial statements.
18 // 19

CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2016
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers8268021,515
Payments to suppliers and employees(553)(552)(1,051)
Interest received113
Interest paid(48)(48)(98)
Taxes paid(32)(43)(89)
Net cash provided by operating activities194160280
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment(53)(29)(78)
Acquisition of intangibles(4)(2)(12)
Disposal of property, plant and equipment, including land–2647
Disposal of intangibles19––
Distributions received from associates and joint ventures and advances to joint venture
partner repaid446
Net cash used in investing activities(34)(1)(37)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans114––
Repayment of loans(120)––
Dividends paid(173)(150)(228)
Net cash used in financing activities(179)(150)(228)
Net increase/(decrease) in cash and cash equivalents held(19)915
Net foreign exchange movements––(1)
Cash and cash equivalents at the beginning of the period463232
Cash and cash equivalents at the end of the period274146
Cash balance comprises:
Cash balance at the end of the period274146
The accompanying notes form an integral part of these financial statements.

NOTE 1. ACCOUNTING POLICIES
(1) Reporting entity
Mercury NZ Limited (the “Company”) is incorporated in New Zealand, registered under the Companies Act 1993, an FMC
reporting entity under the Financial Markets Conduct Act 2013, and is listed on the NZSX and ASX.
The consolidated interim financial statements (the “Group financial statements”) are for Mercury NZ Limited Group (“Group”).
The Group financial statements comprise the Company and its subsidiaries, including its investments in associates and
interests in joint arrangements.
The liabilities of the Group are not guaranteed in any way by the Crown or by any other shareholder.
(2) Basis of preparation
The Group financial statements have been prepared in accordance with the Financial Reporting Act 2013, the Companies Act
1993 and in accordance with New Zealand Equivalent to International Accounting Standard 34 - Interim Financial Reporting
(“NZ IAS 34”). In complying with NZ IAS 34, these statements comply with International Accounting Standard 34 - Interim
Financial Reporting.
These Group financial statements, including the accounting policies adopted, do not include all the information and
disclosures required in the annual financial statements. Consequently, these Group financial statements should be read in
conjunction with the Group’s annual financial statements for the year ended 30 June 2016.
The energy business operates in an environment that is dependent on weather as one of the key drivers of supply and
demand. Fluctuations in seasonal weather patterns, particularly over the short-term, can have a positive or negative effect on
financial performance. It is not possible to consistently predict this seasonality and some variability is common.
The preparation of financial statements requires judgements, and estimates that affect the application of policies and the
reported amounts of assets and liabilities, income and expenses. Future actual results may differ from these estimates.
NOTE 2. SEGMENT REPORTING
Identification of reportable segments
The operating segments are identified by management based on the nature of the products and services provided. Discrete
financial information about each of these operating segments is reported to the Chief Executive, being the chief operating
decision-maker, on a regular basis, who assesses the performance of the operating segments on a measure of EBITDAF.
Segment EBITDAF represents profit earned by each segment exclusive of any allocation of central administration costs, share
of earnings of associates, change in fair value of financial instruments, depreciation, amortisation, impairments, finance costs
and tax expense. Operating segments are aggregated into reportable segments only if they share similar economic
characteristics.
Types of products and services
Energy Markets
The Energy Markets segment encompasses activity associated with the generation, sale and trading of energy and related
services and products, and generation development activities.
Other Segments
Other operating segments that are not considered to be reporting segments are grouped together as “Other Segments”.
Activities include metering and international geothermal operations.
Unallocated
Represents corporate support services and related elimination adjustments.
Inter-segment
Transactions between segments are carried out on normal commercial terms and represent charges by other segments to
energy markets.
20 // 21
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 6 MONTHS ENDED 31 DECEMBER 2016

Segment results
Six months ended 31 December 2016 (unaudited)
Energy
Markets
$M
Other
Segments
$M
Unallocated
$M
Inter–
segment
$M
To t a l
$M
Total segment revenue784 25 1 (14)796
Direct costs(438) – – 14 (424)
Other operating expenses(62)(10)(30) – (102)
Segment EBITDAF284 15 (29) – 270
Six months ended 31 December 2015 (unaudited)
Energy
Markets
$M
Other
Segments
$M
Unallocated
$M
Inter–
segment
$M
To t a l
$M
Total segment revenue802 25 1 (15)813
Direct costs(461) (1) (1)15 (448)
Other operating expenses(75)(13)(20) – (108)
Segment EBITDAF266 11 (20) – 257
Twelve months to 30 June 2016 (audited)
Energy
Markets
$M
Other
Segments
$M
Unallocated
$M
Inter–
segment
$M
To t a l
$M
Total segment revenue1,542 50 2 (30)1,564
Direct costs(882) (2) – 30 (854)
Other operating expenses(145)(24)(48) – (217)
Segment EBITDAF515 24 (46) – 493
During the reporting period, the Group centralised a number of shared operating activities, resulting in a transfer of other
operating expenses from Energy Markets and Other Segments to Unallocated.
NOTE 3. NON STATUTORY MEASURE – UNDERLYING EARNINGS
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Profit for the period113 74 160
Change in the fair value of financial instruments(26)(3)(20)
Income attributable to land and associated real property sold or held-for-sale – – (13)
Impairments – 17 19
Adjustments before tax expense(26)14 (14)
Tax expense 7 1 6
Adjustments after tax expense(19)15 (8)
Underlying earnings after tax94 89 152
Tax has been applied on all taxable adjustments at 28%.

NOTE 4. OTHER INCOME STATEMENT DISCLOSURES
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Sales 772 792 1,512
Other revenue 24 21 52
Total revenue796813 1,564
Energy costs (167)(201)(384)
Line charges (227)(217)(419)
Other direct cost of sales, excluding third party metering (18)(18)(28)
Third party metering (12)(12)(23)
Employee compensation and benefits (41)(42)(83)
Maintenance expenses (18)(23)(45)
Other expenses (43)(43)(89)
Total expenses (526)(556)(1,071)
Interest expense (50) (50) (100)
Interest income 1 1 3
Net interest expense (49)(49)(97)
NOTE 5. SHARE CAPITAL AND DISTRIBUTION
The share capital of the Company is represented by 1,400,012,517 ordinary shares (30 June 2016: 1,400,012,517) issued and
fully paid. These shares do not have a par value, have equal voting rights and share equally in dividends and any surplus on
winding up.
Unaudited
31 Dec 2016
Number of
shares (M)
Unaudited
31 Dec 2016
$M
Unaudited
31 Dec 2015
Number of
shares (M)
Unaudited
31 Dec 2015
$M
Audited
30 Jun 2016
Number of
shares (M)
Audited
30 Jun 2016
$M
Treasury shares
Balance at the beginning of the period 24 52 24 52 24 52
Disposal of treasury shares – – – – – –
Balance at the end of the period 24 52 24 52 24 52
Dividends declared and paid
Cents per
share
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Final dividend for 2015 8.4 – 116 116
Special dividend – paid September 2015 2.5 – 34 34
Interim dividend for 2016 5.7 – – 78
Final dividend for 2016 8.6 118 – –
Special dividend – paid September 2016 4.0 55 – –
173 150 228
22 // 23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 6 MONTHS ENDED 31 DECEMBER 2016

NOTE 6. FINANCIAL INSTRUMENTS
The Group’s overall risk management programme focuses on protecting shareholder wealth by proactively managing the risks
inherent in the energy and financial markets. Exposure to electricity price, credit, foreign exchange, capital liquidity and interest
rate risks arise in the normal course of the Group’s business. The Group’s principal financial instruments comprise cash and
cash equivalents, trade receivables and accruals (not prepayments), advances, payables and accruals, borrowings and
derivative financial instruments. Further information on the identified risks can be found within note 14 of the Group’s annual
financial statements for the year ended 30 June 2016.
Fair Values
The carrying amount of financial assets and liabilities recorded in the financial statements approximates their fair values
except for: (i) the Fixed Rate Bonds, the Floating Rate Bonds and the US Private Placement, the fair values for which have been
calculated at $140 million (30 June 2016: $216 million), $286 million (30 June 2016: $339 million) and $298 million
(30 June 2016: $306 million) respectively; and (ii) the Capital Bonds, the fair value for which has been calculated at
$316 million (30 June 2016: $321 million). Fair values are based on quoted market prices and inputs for each bond issue.
Refer to note 9 which outlines the values of each of these instruments.
Valuation techniques
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
• Level 1 – the fair value is calculated using quoted prices in active markets;
• Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices); and
• Level 3 – the fair value is estimated using inputs that are not based on observable market data.
As at 31 December 2016 all of the Group’s financial instruments carried at fair value were categorised as level 2, except for
electricity price derivatives. Electricity price derivative assets of $10 million were categorised as level 1 (30 June 2016:
$8 million) and $78 million were categorised as level 3 (30 June 2016: $77 million). Further information on the identified risks
can be found within note 14 of the Group’s annual financial statements for the year ended 30 June 2016. Electricity price
derivative liabilities of $1 million were categorised as level 1 (30 June 2016: $2 million) and $71 million were categorised as
level 3 (30 June 2016: $89 million).
Financial instruments that use a valuation technique with only observable market inputs, or unobservable inputs that are not
significant to the overall valuation, include interest rate derivatives and foreign exchange rate derivatives not traded on a
recognised exchange.
Financial instruments that use a valuation technique which includes non-market observable data include non-exchange
traded electricity contracts which are valued using a discounted cash flow methodology using a combination of ASX market
prices for the first four years, combined with management’s internal view of forward prices for the remainder of the contract’s
term. Management’s internal view of forward prices incorporates a minimum price of $64/MWh and a maximum price of
$117/MWh (30 June 2016: a minimum price of $66/MWh and a maximum price of $102/MWh) over the period in question
(in real terms) and is determined by a demand supply based fundamental model which takes account of hydrological
conditions, potential future inflows, an assessment of competitor thermal fuel costs, anticipated demand and supply
conditions and future committed generation capacity.
Where the fair value of a derivative is calculated as the present value of the estimated future cash flows of the instrument
there are two key inputs being used; the forward price curve and the discount rate. Where the derivative is an option, then the
volatility of the forward price is another key variable. The selection of the inputs requires significant judgement, and therefore
there is a range of reasonably possible assumptions in respect of these inputs that could be used in estimating the fair values
of these derivatives. Maximum use is made of observable market data when selecting inputs and developing assumptions for
the valuation technique.
Reconciliation of Level 3 fair value movements
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Opening balance (12) – –
New contracts 3 (1) 2
Matured contracts (1) (2) (1)
Gains and losses
Through the income statement 5 (3) (3)
Through other comprehensive income 12 (19) (10)
Closing balance7 (25) (12)

Deferred ‘inception’ gains/(losses)
There is an assumption that when derivative contracts are entered into on an arm’s length basis, fair value at inception would
be zero. The contract price of non exchange traded electricity derivative contracts is agreed on a bilateral basis, the pricing for
which may differ from the prevailing derived market price curve for a variety of reasons. In these circumstances an inception
adjustment is made to bring the initial fair value of the contract to zero at inception. This inception value is amortised over the
life of the contract by adjusting the future price path used to determine the fair value of the derivatives by a constant amount
to return the initial fair value to zero.
The table below details the movements in inception value gains/(losses) included in the fair value of derivative financial assets
and liabilities:
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Opening deferred inception (losses)/gains (14) 15 15
Deferred inception (losses)/gains on new hedges 4 27 (21)
Deferred inception (losses)/gains realised during the period (1) (4) (8)
Closing inception (losses)/gains (11) 38 (14)
NOTE 7. PROPERTY, PLANT AND EQUIPMENT
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Opening net book value 5,440 5,416 5,416
Additions, including transfers from capital work in progress 53 41 71
Disposals – (1) (1)
Transfer from held-for-sale – – 3
Net revaluation movement – – 137
Impairments – (17) (19)
Depreciation charge for the period (86) (84) (167)
Closing net book value 5,407 5,355 5,440
24 // 25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 6 MONTHS ENDED 31 DECEMBER 2016

NOTE 8. INVESTMENT AND ADVANCES TO ASSOCIATES AND JOINT ARRANGEMENTS (JOINT
VENTURES AND JOINT OPERATIONS)
Investments include:
Interest Held
Name of entityPrincipal activityType
Unaudited
31 Dec
2016
Unaudited
31 Dec
2015
Audited
30 June
2016Country
TPC Holdings LimitedInvestment holdingAssociate25.00%25.00%25.00%New Zealand
RotokawaSteamfield operationJoint Operation64.80%64.80%64.80%New Zealand
Nga Awa PuruaElectricity generationJoint Operation65.00%65.00%65.00%New Zealand
Energy Source LLCInvestment holdingJoint Venture20.86%20.86%20.86%United States
Hudson Ranch I Holdings LLCElectricity generationJoint Venture75.00%75.00%75.00%United States
Associates:Joint Ventures:
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Balance at the beginning of the period78 74 74 14 14 14
Share of earnings 2 1 3 – 1 –
Share of movement in other comprehensive income 1 (3) 6 – – –
Distributions received during the period (3) (3) (5) (1) – –
Balance at the end of the period78 69 78 13 15 14
NOTE 9. BORROWINGS
Borrowing
Currency
DenominationMaturityCoupon
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Bank facilitiesNZDVariousFloating 114 – –
Wholesale bondsNZDOct–20167.55% – 71 71
Wholesale bondsNZDOct–2016Floating – 51 51
Wholesale bondsNZDMar–20195.03%76 76 76
Wholesale bondsNZDFeb–20208.21%31 31 31
USPP - US$125mUSDDec–20204.25%164 164 164
Wholesale / Credit wrapperNZDSep–2021Floating301 301 301
USPP - US$30mUSDDec–20224.35%39 39 39
Wholesale bondsNZDMar–20235.79%25 25 25
USPP - US$45mUSDDec–20254.60%58 58 58
Capital BondsNZDJul–20446.90%305 305 305
Deferred financing costs(6) (7) (7)
Fair value adjustments55 64 63
Carrying value of loans1,162 1,178 1,177
Current 9 132 130
Non-current1,153 1,046 1,047
1,162 1,178 1,177
The Company has $350 million of committed and unsecured bank loan facilities, of which $200 million expires in August
2018, $50 million expires in September 2019 and a rolling bank loan of $100 million currently expiring in June 2018.
The Company has a $200 million Commercial Paper programme which is fully backed by committed and undrawn bank
facilities. Notes issued under the programme are short-term money market instruments, unsecured and unsubordinated and
targeted at professional investors. The programme is rated A2 by Standard & Poor’s. As at 31 December 2016, no notes had
been issued.

NOTE 10. RELATED PARTY TRANSACTIONS
Ultimate shareholder
The majority shareholder of Mercury NZ Limited is the Crown, providing it with significant potential influence over the Group.
All transactions with the Crown and other entities wholly or partly owned by the Crown are on normal commercial terms.
Transactions cover a variety of services including trading energy, postal, travel and tax.
Transactions with related parties
Mercury NZ Limited has investments in subsidiaries, associates and joint arrangements, all of which are considered related
parties.
As these are consolidated financial statements, transactions between related parties within the Group have been eliminated.
Consequently, only those transactions between entities which have some owners external to the Group have been reported
below:
Transaction Value
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Associates
Management fees and service agreements received 2 2 4
Energy contract settlements paid (1) – 2
Joint operations
Management fees and service agreements received 3 3 5
Energy contract settlements paid (5) (4) (7)
Interest income 1 1 1
Transaction Value
Unaudited
6 Months
31 Dec 2016
$000
Unaudited
6 Months
31 Dec 2015
$000
Audited
12 Months
30 Jun 2016
$000
Key management personnel compensation (paid and payable) comprised:
Directors’ fees456 416 871
Benefits for the Chief Executive and Senior Management:
Salary and other short-term benefits 3,216 2,859 5,302
Termination benefits – 134 259
Share-based payments 200 164 324
3,872 3,573 6,756
Further information on the terms and conditions of these related party transactions can be found in note 17 of the Group’s
annual financial statements for the year ended 30 June 2016.
Other transactions with key management personnel
Key management personnel are those people with responsibility and authority for planning, directing and controlling the
activities of the Group. Key management personnel for the Group are considered to be the Directors and Senior Management.
Directors and employees of the Group deal with Mercury NZ Limited as electricity consumers on normal terms and conditions,
with staff discounts for employees, within the ordinary course of trading activities. A number of Directors and the key
management personnel also provide directorship services to other third party entities. A number of these entities transacted
with the Group, in all circumstances on normal commercial terms during the reporting period.
A number of key management personnel provide directorship services to direct subsidiaries and other third party entities as
part of their employment without receiving any additional remuneration. Again, a number of these entities transacted with the
Group, in all circumstances on normal commercial terms in the reporting period.
The Group purchases directors and officers insurance for the benefit of key management personnel in relation to the services
they provide to the Group.
26 // 27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 6 MONTHS ENDED 31 DECEMBER 2016

NOTE 11. COMMITMENTS AND CONTINGENCIES
Unaudited
6 Months
31 Dec 2016
$M
Unaudited
6 Months
31 Dec 2015
$M
Audited
12 Months
30 Jun 2016
$M
Commitments
Capital154 161 147
Operating leases110 35 113
Other operating commitments84 89 92
Capital commitments include both commitments to purchase property, plant and equipment as well as intangible
commitments. Intangible commitments includes commitments to purchase emissions units. In the event the New Zealand
emissions trading scheme is terminated the forward purchase agreements for the acquisition of emissions units that cover a
12 year period will also terminate.
Operating leases are of a rental nature and are on normal commercial terms and conditions. The majority of the lease
commitments are for building accommodation, the leases for which have remaining terms of between 1 and 13 years and
include an allowance for either annual, biennial or triennial reviews. The remainder of the operating leases relate to vehicles,
plant and equipment.
Contingencies
The Company holds land and has interests in fresh water and geothermal resources that are subject to claims that have been
brought against the Crown. On 29 August 2014, the Supreme Court gave its decision in Paki v Attorney-General and dismissed
the claimants’ action seeking a declaration that the Crown holds those parts of the bed of the Waikato River which adjoin
former Pouakani land on trust for the Pouakani people on the basis it was incorrectly advanced. The Supreme Court decision
has left open the possibility of further litigation in respect of ownership of that land currently held by the Company. The
Company has received advice that it may proceed with a high degree of confidence that future decisions on the matter will not
impair the Company’s ability to operate its hydro assets. A separate claim by the New Zealand Maori Council relating to fresh
water and geothermal resources was lodged in 2012 with the Waitangi Tribunal. The Tribunal concluded that Maori have
residual (but as yet undefined) proprietary rights in fresh water and geothermal resources and it will be for the Crown to
determine how any such rights and interests may best be addressed. The impact of this claim on the Company’s operations is
unknown at this time.
From time to time the Company will issue letters of credit and guarantees to various suppliers in the normal course of
business. However, there is no expectation that any outflow of resource relating to these letters of credit or guarantees will be
required as a consequence.
The Group has no other material contingent assets or liabilities.
NOTE 12. SUBSEQUENT EVENTS
The Board of Directors has approved an interim dividend of 5.8 cents per share to be paid on 3 April 2017.
There are no other material events subsequent to balance date that would affect the fair presentation of these Group financial
statements.

OTHER DISCLOSURES
Shareholder enquiries
Changes in address, dividend payment details and
investment portfolios can be viewed and updated online:
www.investorcentre.com/nz. You will need your CSN and FIN
numbers to access this service.
Investor information
Our website at www.mercury.co.nz is an excellent source of
information about what’s happening within the company.
Our Investor Centre allows you to view all regular investor
communications, information on our latest operating and
financial results, dividend payments, news and share price history.
The company’s net tangible assets per share (excluding treasury stock) as at 31 December 2016 was $2.35, compared with $2.31 at
31 December 2015.
Control of entities that was gained or lost during the period was as follows:
Company name Date control lost
MRP NRI-Germany Holdings Limited In voluntary liquidation as at balance date
MRP NRI-Peru Holdings Limited In voluntary liquidation as at balance date
MRP NRI-Chile Holdings Limited In voluntary liquidation as at balance date
MRP Holdings-Germany Limited In voluntary liquidation as at balance date. Dissolved 15 October 2016.
MRP Holdings-Peru Limited In voluntary liquidation as at balance date. Dissolved 22 September 2016.
MRP Holdings-Chile Limited In voluntary liquidation as at balance date. To be dissolved 24 February 2017.
SHAREHOLDER INFORMATION
Electronic shareholder communication
It is quick and easy to make the change to receiving your reports
electronically. This can be done either:
• Online at www.investorcentre.com/nz by using your CSN
and FIN numbers (when you log in for the first time). Select
‘View Portfolio’ and log in. Then select ‘Update My Details’
and select ‘Communication Options’; or
• Contact Computershare Investor Services Limited by email,
fax or post.
28 // 29

DIRECTORY
Board of Directors
Joan Withers, Chair
Prue Flacks
Andy Lark
James Miller
Keith Smith
Patrick Strange
Mike Taitoko
Executive Management Team
Fraser Whineray,
Chief Executive
Kevin Angland,
General Manager Digital Services
Nick Clarke,
General Manager Geothermal
Phil Gibson,
General Manager Hydro & Wholesale
Julia Jack,
Chief Marketing Officer
William Meek,
Chief Financial Officer
Tony Nagel,
General Manager Corporate Affairs
Matt Olde,
Metrix Chief Executive
Marlene Strawson,
General Manager People & Safety
Company Secretary
Tony Nagel
Investor Relations
Mercury NZ Limited
P O Box 90399
Auckland 1142
New Zealand
Phone: +64 9 308 8200
Fax: +64 9 308 8209
Email: investor@mercury.co.nz
Registered Office in New Zealand
Level 3, 109 Carlton Gore Road, Auckland 1023
Registered Office in Australia
c/– TMF Corporate Services
(Aust) Pty Limited
Level 16, 201 Elizabeth Street
Sydney NSW 2000
Phone: +61 2 8988 5800
Legal Advisors
Chapman Tripp
Level 35, ANZ Centre
23-29 Albert Street, Auckland 1010
PO Box 2206, Auckland
Phone: +64 9 357 9000
Bankers
ANZ Bank
ASB Bank
Bank of Tokyo-Mitsubishi UFJ
Bank of New Zealand
Westpac
Credit Rating (reaffirmed December 2016)
Long term: BBB+
Outlook: Stable
Share Register – New Zealand
Computershare Investor Services Ltd
Level 2, 159 Hurstmere Road, Takapuna,
Auckland 0622
Private Bag 92 119
Auckland 1142
New Zealand
Phone: +64 9 488 8777
Fax: +64 9 488 8787
Email: enquiry@computershare.co.nz
Web: www.investorcentre.com/nz
Share Register – Australia
Computershare Investor Services Pty Ltd
Yarra Falls, 452 Johnston Street, Abbotsford, VIC 3067
GPO Box 3329
Melbourne, VIC 3001
Australia
Phone: 1 800 501 366 (within Australia)
Phone: +61 3 9415 4083 (outside Australia)
Fax: +61 3 9473 2500
Email: enquiry@computershare.co.nz
insight
creative.co.nz
MERC044

>> MERCURY NZ LIMITEDMERCURY.CO.NZ
ENERGY MADE WONDERFUL.

---

APPENDIX 7 – NZSX Listing Rules
Number of pages including this one
(Please provide any other relevant
NZSX Listing Rule 7.12.2. For rights, NZSX Listing Rules 7.10.9 and 7.10.10. details on additional pages)
For change to allotment, NZSX Listing Rule 7.12.1, a separate advice is required.
Full name
of Issuer
Name of officer authorised to
Authority for event,
make this notice
e.g. Directors' resolution
Contact phone
Contact fax
numbernumberDate
Nature of event
BonusIf ticked,Rights Issue
Tick as appropriateIssuestate whether:Taxable/ Non TaxableConversionInterestRenouncable
Rights IssueCapitalCallDividend
If ticked, stateFull
non-renouncable
change
x
whether:
Interim
X
YearSpecialDRP Applies
EXISTING securities affected by this
If more than one security is affected by the event, use a separate form.
Description of theISIN
class of securities
If unknown, contact NZX
Details of securities issued pursuant to this eventIf more than one class of security is to be issued, use a separate form for each class.
Description of theISIN
class of securities
If unknown, contact NZX
Number of Securities toMinimum
Ratio, e.g
be issued following eventEntitlement
1 for 2 for
Conversion, Maturity, Call
Treatment of Fractions
Payable or Exercise Date
Tick if
provide an
pari passu
ORexplanation
Strike price per security for any issue in lieu or date
of the
Strike Price available.
ranking
Monies Associated with Event
Dividend payable, Call payable, Exercise price, Conversion price, Redemption price, Application money.
Source of
Amount per securityPayment
(does not include any excluded income)
Excluded income per security
(only applicable to listed PIEs)
SupplementaryAmount per security
Currencydividendin dollars and cents
details -
NZSX Listing Rule 7.12.7
Total monies
TaxationAmount per Security in Dollars and cents to six decimal places
In the case of a taxable bonusResident
Imputation Credits
issue state strike priceWithholding Tax(Give details)
Foreign
FWP Credits
Withholding Tax(Give details)
Timing
(Refer Appendix 8 in the NZSX Listing Rules)
Record Date 5pmApplication Date
For calculation of entitlements -Also, Call Payable, Dividend /
Interest Payable, Exercise Date,
Conversion Date. In the case
of applications this must be the
last business day of the week.
Notice DateAllotment Date
Entitlement letters, call notices,For the issue of new securities.
conversion notices mailedMust be within 5 business days
of application closing date.
OFFICE USE ONLY
Ex Date:
Commence Quoting Rights:Security Code:
Cease Quoting Rights 5pm:
Commence Quoting New Securities:Security Code:
Cease Quoting Old Security 5pm:
Mercury NZ Limited ordinary sharesNZMRPE0001S2
EMAIL: announce@nzx.com
Notice of event affecting securities
1
Mercury NZ Limited
Tony Nagel, GM Corporate AffairsDirectors' resolution
+64 9 308 8200+64 9 308 820921022017
Enter N/A if not
applicable
In dollars and cents
Income available for distribution
$0.05800
not applicable
New Zealand Dollars$0.010235
$79,825,809
Date Payable
3 April 2017
$$0.004028$0.022556
$
15 March 20173 April 2017