Sale of Contact’s LPG business Rockgas

1
Rockgas Timaru is a Joint Venture with Alpine Energy Limited
2
Liquigas is a provider of LPG storage facilities and transport and logistics services in New Zealand


31 July 2018

Sale of Contact’s LPG business Rockgas

Delivering on our strategy through portfolio optimisation

Contact has entered into an agreement to sell 100% of the shares in Rockgas Limited (Rockgas) to
Gas Services NZ Midco Limited (GSNZ) an associate of First Gas Limited (First Gas), for a cash
consideration of $260 million after an extensive competitive sales process.

Rockgas holds Contact’s LPG operations as well as 50% of the issued shares in Rockgas Timaru
Limited¹ and an 8.5% investment in Liquigas Limited².

As part of the transaction, Contact will enter into an exclusive marketing alliance with GSNZ to be
able to continue to offer LPG to mass market customers. In addition, Contact will enter into a services
agreement to provide call centre and billing services for mass market LPG customers.

Rationalisation of non-core portfolio assets

Contact’s strategy is to optimise the Customer and Generation businesses to deliver strong cash
flows for distribution to shareholders. The strategy is underpinned by a disciplined and transparent
approach to operating and capital expenditure while ensuring our portfolio of assets are delivering
returns for shareholders.

Rockgas purchases LPG from New Zealand producers (and when necessary, imports LPG) at prices
linked to international commodity indices and then arranges for storage and distribution to customers.
Rockgas supplies over 88,000 customers through an extensive branch and franchise network, which
has national distribution coverage.

The Rockgas business is markedly different to the generation of electricity at single sites and the
retailing of electricity, natural gas and broadband, which are distributed on networks not owned or
controlled by Contact.

Contact’s primary strategic interest in LPG is being able to offer the product as part of its energy
offering to customers which is retained as part of the transaction.

Creating value for Contact shareholders

Improve the focus and speed of transformation in the Customer business

In an environment of continuing competitive intensity, operational improvements in the Customer
business over the last few years have seen a move to a high-performing, efficient retailer focused on
improving the customer experience. The evidence of progress includes an 11% reduction in cost to
serve in FY18 (on FY17) and improving customer advocacy.

Divesting Rockgas will enable greater focus and allow for accelerated transformation in the Customer
business, delivering digitally led customer experience improvements and ultimately creating value for
shareholders.

Value in dual fuel and customer scale retained

Customers value a multiple product offering and are therefore more loyal with a lower propensity to
switch providers. Satisfied customers have higher customer lifetime value. The marketing alliance
with GSNZ will preserve the value in a multi-fuel offering and support our ability to compete in the
electricity market. In addition, the value from the scale advantage that Contact has in servicing
customers is maintained through the services agreement covering call centre and billing services for
mass market LPG customers. This allows for enhanced returns from digital transformation.

Reduced exposure to commodity prices

The price of and demand for LPG in New Zealand is affected by the domestic availability and
wholesale price of LPG (linked to international benchmarks in US$). Post sale, Contact will no longer
be directly exposed to movement in these commodity prices.

Improved balance sheet strength, debt to return to target gearing ratio

The sale proceeds will strengthen our balance sheet and facilitate improved distributions to
shareholders. Contact expects that post completion of the transaction the S&P net debt / EBITDAF
ratio will fall comfortably below the target 2.8x.

Consideration

The total consideration for the disposal is $260 million payable in cash at completion, with net
proceeds subject to standard pre-completion adjustments for net debt (primarily property leases),
working capital movements and transaction costs. As a sale of shares, the sales proceeds arising
from the disposal will not be subject to income tax. The transaction proceeds will be applied to the
reduction of debt on completion.

Completion

Completion of the sale is subject to the fulfilment of certain conditions set out in the transaction
agreements. These include GSNZ obtaining the required consents under the Overseas Investment
Act 2005 and the consent to change of control or assignment or novation of agreements from a
limited number of contractual counter-parties.

Contact is targeting the satisfaction of these conditions and completion of the transaction by 31
December 2018.

On-going agreements

Rockgas and Contact will enter into a marketing alliance to promote and cross-sell their respective
LPG and electricity products. Contact will provide support services, including call centre, billing and
credit control services to Rockgas for mass market customers for an annual fee of $2 million.

Background

Contact entered the LPG market in 2007, through the purchase of Rockgas from Origin Energy (who
held a majority shareholding in Contact) for $156 million, during the first year of operation, EBITDAF
was $20m. The average annual EBITDAF for the period under ownership was $22 million, with a
range of $13 million to $35 million.

During the period of ownership, Contact improved the integrity, reliability and costs of operation with
operating costs down by $5 million which along with significant improvements to fuels procurement
and consolidation of bulk distribution and shipping along with lower product costs saw FY18 earnings
before interest, tax, depreciation and fair value adjustments in financial instruments (EBITDAF) of $32
million (unaudited).

About Gas Services New Zealand

GSNZ provides operational services for First Gas and other customers. GSNZ operates one of New
Zealand’s largest gas networks. GSNZ and Contact are currently working to satisfy the conditions to
complete the sale of the Ahuroa gas storage facility to GSNZ.

ENDS
Investor enquiries: Matthew Forbes +64 21 072 8578

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Graham Cockroft, Chief Financial Officer
Sale of Rockgas
Portfoliooptimisation
July 2018
31 July 2018
Dennis Barnes, Chief Executive Officer

Contact EnergyAnnual meeting of shareholders
July 2018
Disclaimer
2
Contact EnergySale of Rockgas
July 2018
Notfinancial product advice: This presentation is for information purposes only and is not financial or investment advice or a recommendation to acquire Contact
Energy's (Contact) securities, and has been prepared without taking into account the objectives, financial situation or needsofindividuals. Before making an investment
decision, prospective investors should consider the appropriateness of the information having regard to their own objectives,financial situation and needs and consult an
NZX Firm, or solicitor, accountant or other professional adviser if necessary.
Past performance: Past performance information given in this presentation is given for illustrative purposes only and should not be relied uponas (and is not) an
indication of future performance.
Future performance: This presentation may contain projections or forward-looking statements regarding a variety of items. Such forward-looking statements are based
upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number
of important factors and risks. Although management may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of
the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be
realised.
Investment risk: An investment in securities in Contact is subject to investment and other known and unknown risks, some of which are beyond the control of Contact.
Contact does not guarantee any particular rate of return or the performance of Contact.
Financial data: All dollar values are in New Zealand dollars (NZ$ or NZD) unless otherwise stated. Any financial information provided in thispresentation is for
illustrative purposes only and is not represented as being indicative of Contact's views on its future financial condition and/or performance.
Disclaimer: Contact and its affiliates, related bodies corporate, directors, officers, partners, employees and agents: (i) exclude anddisclaim all liability, for any
expenses, losses, damages or costs incurred by you as a result of any information in this presentation being inaccurate or incomplete in any way for any reason, whether
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bodies corporate, directors, officers, partners, employees and agents; and (iii) to conduct its own independent analysis of Contact and the presentation.

Contact EnergyAnnual meeting of shareholders
July 2018
3
Will deliver value by providing customers
with choice, certainty and control while
reducing cost to serve and improving the
customer experiencethrough systems-
enabled operational improvements
A low cost, long life and flexible generation
portfolio with a continuous improvement
programme focusing on safety, spend,
reliability and resource utilisation to improve
the efficiency of our generation assets
Contact’s strategy is to optimise the Customer and
Generation businesses to deliver strong cash flows
GenerationCustomer
Underpinned by a disciplined and transparent approach to operating and capital expenditure
while continuing to investigate ways to optimise our portfolio of assets
Contact EnergySale of Rockgas
July 2018

Contact EnergyAnnual meeting of shareholders
July 2018
4
Executing our strategy –Transaction summary
»Contact has entered into an agreement to sell 100% of the shares in RockgasLimited (Rockgas) which includes 50% of the issued
shares in RockgasTimaruLimited and an 8.5% investment in LiquigasLimited to Gas Services NZ MidcoLimited (GSNZ), an
associate of First Gas Limited (First Gas)
»GSNZ is a provider of operational services for First Gas and other customers. GSNZ operates one of New Zealand’s largest
gas networks, with 2,500 kilometres of high pressure gas transmission pipes and around 4,800 kilometres of gas distribution
pipes in the North Island. GSNZ and Contact are currently working to satisfy the conditions to complete the sale of the Ahuroa
gas storage facility.
»The sale price of $260 million is payable in cash at completion subject to standard pre-completion adjustments for net debt
(primarily property leases) and working capital movements. As the sale is of shares there is no tax payable on sale. Contact will
apply the net proceeds to the reduction of debt.
»As part of the transaction the parties will enter into two agreements:
»Marketing alliance: This agreement sets out the basis for cooperation on growing the value from dual fuel mass market
customers
»Services agreement: Contact has agreed a service level agreement with GSNZ, covering call centre services and billing and
collections for mass market customersfor an annual fee of $2 million
»Contact will also provide certain transitional services after completion of the sale to ensure no disruption to customers
»The conditions precedent to the sale, include Overseas Investment Office approval and the consent to change of control or
assignment or novation of agreements from a limited number of contractual counter-parties
Contact EnergySale of Rockgas
July 2018

Contact EnergyAnnual meeting of shareholders
July 2018
5
Creating value for Contact shareholders through
the sale of Rockgas
Monetising scale
advantages
Reduce commodity
exposure
Strengthen
balance sheet
Divesting the
logistical
aspects of the
LPG business
will improve
the focus and
speed of digital
transformation
of our
Customer
business
»The services
agreement will
preserve our scale
advantage to enhance
returns from digital
transformation
»The sale will eliminate
Contact’s exposure to
the variability in
international LPG
prices, exchange
rates and domestic
LPG supply and
demand dynamics
Preserving dual
fuel value
»The marketing
alliance allows
Contact to continue
to offer LPG as part
of its product suite
and grow the
customer base
through cross-selling
to both new and
existing customers
»The benefits of lower
churn retained
»The sale proceeds
will improve our
balance sheet
strength and
facilitate improved
distributions to
shareholders
Contact EnergySale of Rockgas
July 2018
LPG
Sale price represents a multiple of 8.1x FY18 EBITDAF, or 11.8x average EBITDAF since 2007

Contact EnergyAnnual meeting of shareholders
July 2018
6
Agreements ensure that LPG will continue to be an important part of Contact’s product suite
ContactGSNZ
LPGprocurement and commodity risk
management
Operations, distributionand logistics
Call centre and billingMass market LPGBulk LPG
Ability to market and sell LPG
LPG margin
Contact EnergySale of Rockgas
July 2018
GSNZ will be Contact’s specialist LPG fulfilment
partner
Includes sales to large customers, franchises, service stations and automotive
An important competency of our Customer business is the contracting and management of
fulfilment partners

Contact EnergyAnnual meeting of shareholders
July 2018
7
Simplification will allow the Customer business to
accelerate it’s digital transformation
CUSTOMER BUSINESS STRATEGY REMAINS UNCHANGED
FOCUS AREAS
Deliver value by providing customers with choice, certainty and control while reducing cost to serve and
improving the customer experiencethrough systems-enabled operational improvements
»Sustainable cost reduction through continuous improvement
»Deliver a digitally led customer experience transformation
»Digitalise / streamline highest-priority customer journeys
»Optimiseand automate processes
»Adapt IT operating model to better serve customer needs
»High-performing, efficient retailer with the lowest cost to serve and best customer experience of the tier 1
retailers in New Zealand, with an ability to execute consistently
NEAR TERM SUCCESS MEASURES
ACCELERATE THE STRATEGY TO CAPTURE VALUE FOR SHAREHOLDERS
Contact EnergySale of Rockgas
July 2018
In an environment of continuing
competitive intensity, speed is key to
capturing value for shareholders

Contact EnergyAnnual meeting of shareholders
July 2018
8
Rockgashistory
»Contact acquired 100% of Rockgasfrom Origin
Energy in 2007 for $156m
»FY07 Rockgasgross profit was $42m with an
EBITDAF of $20m
»Contact has improved margins since acquisition
through:
»Operating cost reduction of ~$5m p.a
»Optimisedfuels procurement
»Optimisedbulk services and shipping
»Annual average EBITDAF range for the period under
ownership (FY07 and FY18) of $22m with an
EBITDAF range of between $13m to $35m
»RockgasFY18 unaudited EBITDAF is estimated at
$32m.
»Sold to GSNZ for $260m
Contact EnergySale of Rockgas
July 2018
0
100
200
300
400
500
600
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800
900
0
20
40
60
80
100
120
FY12FY13FY14FY15FY16FY17FY18
Rockgas LPG product cost NZ$/ T
Average oil price US$/
bbl
Oil price - Brent (lhs - US$)7 year oil price average (lhs - US$)
Rockgas Price of LPG (rhs - NZ$)
0
100
200
300
400
500
600
700
800
900
0
5
10
15
20
25
30
35
40
FY12FY13FY14FY15FY16FY17FY18
Rockgas LPG product cost NZ$/ T
Annual EBITDA ($m)
Rockgas EBITDAF (lhs - NZ$m)Rockgas Price of LPG (rhs - NZ$)
International oil prices and product cost
Rockgasprofitability and product cost

Contact EnergyAnnual meeting of shareholders
July 2018
9
Key financial impacts
EARNINGS PER SHARE
(EPS)
OPERATING FREE
CASH FLOW
CREDIT METRICS (S&P
NET DEBT / EBITDAF)
EBITDAF
($32m)
(1.3 cps)
(0.8 cps)
Unaudited FY18 LPG EBITDAF $32m
Reduction in EBITDAF offset by lower
interest ($15m) and depreciation ($5m) and
accounting tax
Reduction in EBITDAF offset by lower
interest ($15m) and capital expenditure
($6m) and cash tax
BORROWINGS
$250m
Estimated net cash proceeds applied to
borrowings after net debt adjustment and
transaction fees
03
04
05
01
02
strengthened
S&P net debt to EBITDAF ratio expected to
be comfortably below target of 2.8x on
completion
Contact EnergySale of Rockgas
July 2018
Average
(FY07 –18)
Range
(FY07 –18)
EBITDAF$22m
$13m to
$35m
EPS
(0.3
cps)
0.6 cps to
(1.6 cps)
Operating free
cash flow
0.2
cps
1.1 cps to
(1.1 cps)
On FY18 results
Since Contact ownership
Based on the expected net proceeds applied to debt reduction

Contact EnergyAnnual meeting of shareholders
July 2018
10
Conditions precedent and transaction timeline
Overseas Investment Officeconsent for
GSNZ topurchase Rockgas
The consent to change of control or
assignment or novation of agreements
from a limited number of contractual
counter-parties
01
02
Limited conditions precedent
Contact is targeting transaction completion by the
end of 1H19
Estimate 4 –6
months
Transition /
separation
arrangements
2Q FY19
Targeted transaction
completion.
Repayment of
borrowings.
Targeted end of
the transition
period.
6 months after
completion
Contact EnergySale of Rockgas
July 2018
Transition / Separation arrangements
Contact and GSNZ will work together to transfer the
assets and undertakings of the Rockgasbusiness from
Contact to Rockgas