Mercury rises to challenge with strong FY2019 result

Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)


Results for announcement to the market
Name of issuer Mercury NZ Limited
Reporting Period 12 months to 30 June 2019
Previous Reporting Period 12 months to 30 June 2018
Currency New Zealand dollars
Amount (000s) Percentage change
Revenue from continuing
operations
$2,000,000 11.2%
Total Revenue $2,000,000 11.2%
Net profit/(loss) from
continuing operations
$357,000 52.6%
Total net profit/(loss) $357,000 52.6%
Final Dividend
Amount per Quoted Equity
Security
$ 0.09300000
Imputed amount per Quoted
Equity Security
$0.03616667
Record Date 13/09/2019
Dividend Payment Date 30/09/2019
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$2.54 $2.35
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to accompanying audited financial statements
Authority for this announcement
Name of person

authorised
to make this announcement
Howard Thomas, Company Secretary
Contact person for this
announcement
Howard Thomas, Company Secretary
Contact phone number +64 9 308 8200
Contact email address Howard.Thomas@Mercury.co.nz
Date of release through MAP

20/08/2019

Audited financial statements accompany this announcement.

---

Mercury rises to challenge with strong FY2019 result
Summary of FY2019 performance
>> Operating earnings (EBITDAF) $505 million, down 11%
• Influenced by lower hydro generation and only eight months of Metrix earnings
>> Net profit after tax $357 million, up 53%
• Influenced by gain on sale of Metrix and lower interest costs
>> Final ordinary dividend 9.3 cents per share, fully imputed, to be paid on 30 September 2019
• Brings our total ordinary dividend to 15.5 cents per share, fully imputed, up 2.6%
• 11
th
consecutive year of ordinary dividend growth

20 August 2019 – Mercury produced a strong result under unusual weather and market conditions in its
financial year to 30 June 2019, Chief Executive Fraser Whineray said today.
Announcing Mercury’s annual results, Mr Whineray said that the overall performance of the business was even
more pleasing than last year’s record earnings, as Mercury executed a number of key strategic moves to position
the company for long-term sustainable growth.

Financial year milestones included: the sale of Mercury’s Metrix smart metering business for $272 million; the
announcement of a major refurbishment programme for its Karapiro hydro station; consolidation of three Auckland
premises into one new Auckland office in Newmarket; the roll-out of a new customer IT platform (SAP Commerce
Cloud); and the announcement of the construction of Mercury’s first wind farm, at Turitea near Palmerston North.

Operating earnings (EBITDAF) of $505 million were down 11% (FY2018 $566 million), impacted by early wet
weather across the Waikato catchment giving way to an acutely dry period from September. Annual hydro
generation of 4,006GWh was in line with the company’s long-term average but was 941GWh down on the record
established last year.

Annual geothermal generation set a record, reaching 2,896GWh, coinciding with record high annual spot prices
caused in part by gas supply and thermal generation constraints from October 2018.

“Making the most of the challenging hand dealt by Waikato catchment inflows and elevated spot pricing required a
very strong performance from generation and wholesale markets teams in FY2019,” Mr Whineray said.

“Our assets were prudently managed through challenging weather and wholesale market conditions. High
geothermal availability (97.7%), as the only renewable energy source that is not weather dependent, maximised
the opportunity of historically high spot prices.”

Mercury reduced retail acquisition activity and focused on customer value and loyalty as retail margins contracted
with elevated spot prices and ongoing high levels of retail competition.
Mercury’s record profit of $357 million was up $123 million on the prior year’s record, as the company benefited
from lower interest costs as historic hedges matured, and from the gain on sale of its Metrix smart metering
business. As with the prior year, there were no impairments recorded.

STOCK EXCHANGE LISTINGS: NZX (MCY) / ASX (MCY)

NEWS RELEASE

Financial Results
FY2019 FY2018 FY2017 FY2016 FY2015
EBITDAF ($M) 505 566 523 493 482
NET PROFIT AFTER TAX ($M) 357 234 184 160 47
UNDERLYING EARNINGS AFTER TAX ($M) 161 198 176 152 145
FULLY IMPUTED ORDINARY DIVIDEND
(CENTS PER SHARE)
15.5 15.1 14.6 14.3 14.0
FULLY IMPUTED SPECIAL DIVIDENDS
(CENTS PER SHARE)
5.0 7.5
UNIMPUTED SPECIAL DIVIDEND (CENTS
PER SHARE)
4.0
SHARE BUYBACK ($M) 50
ELECTRICITY GENERATION (GWh) 6,902 7,704 7,533 6,842 6,536

Dividend
Mercury Chair Joan Withers announced a final ordinary dividend of 9.3 cents per share, fully imputed. This brings
our total ordinary dividend to 15.5 cents per share, fully imputed, up 2.6% on FY2018. It is Mercury’s 11th
consecutive year of ordinary dividend growth.
“Our underlying performance and the bold and carefully considered moves we have executed successfully are all
indicators that Mercury is well positioned for growth in a dynamic market,” Mrs Withers said.
Total shareholder returns (TSR) of 42.5% included significant share price appreciation, which valued the company
at $6.3 billion at financial year end, compared with $4.6 billion at the same time last year.
FY2020 Guidance
EBITDAF guidance is $485 million for FY2020, based on forecast mean hydro and geothermal generation (~
6,620GWh). This guidance is subject to any material events, significant one-off expenses or other unforeseeable
circumstances including hydrological conditions.
FY2020 ordinary dividend guidance has been issued at 15.8 cents per share, a 2% increase on FY2019.
Mercury will continue to provide updates of its mid-point estimate of full-year hydro generation with its quarterly
operating statistics.
Outlook
Mr Whineray said that Mercury anticipates solid long-term demand growth as renewable electricity’s advantages
are increasingly unlocked through technology advances in applications such as transport and industrial heat, and
as consumers demand cheaper, cleaner, locally generated and low-carbon sources of energy to power their lives.
“We will continue to explore inspiring ways to encourage the transition to electrified transport for the long-term
benefit of the country as well as our owners.”
ABOUT MERCURY NZ LIMITED
Mercury’s mission is energy freedom. Our purpose is to inspire New Zealanders to enjoy energy in more wonderful
ways and our goal is to be New Zealand’s leading energy brand. We focus on our customers, our people, our
partners and our country; maintain a long-term view of sustainability; and promote wonderful choices. Mercury is
energy made wonderful.

For further information: Media – 0272 105 337; Investors – 0275 173 470. Visit us at: www.mercury.co.nz

---

Chief Financial Officer
Financial Results
for the year ended 30 June 2019
WILLIAM MEEK
FRASER WHINERAY
Chief Executive
20 August 2019

DISCLAIMER
The information in this presentation has been prepared by Mercury NZ 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 personfor
any loss (including, without limitation, that 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.
Forward-looking statements are subject to any material adverse events, significant one-off expenses or other unforeseeable
circumstances including hydrological conditions.
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 audited consolidatedfinancial
statements for the year ended 30 June 2019, which are available at www.mercury.co.nz.
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.
DISCLAIMER
2

$505m EBITDAF
Achieved through mean hydro
generation supported by record
geothermal generationin challenging
spot market conditions
MARKET THESIS
Being realised as more balanced supply
and demand and thermal fuel constraints
led to record futures prices
9.3cps
FINALDIVIDEND
Fully-imputed total ordinary dividend of
15.5cps; an increase of 2.6% versus
FY2018; 11
th
year of ordinary growth
FINANCIAL DISCIPLINE
Demonstrated as operating expenditure
of $199m was flat (adjusted for Metrix
sale) for the 6
th
year in a row
CAPITAL ALLOCATION
Active capital management through
divestment of Metrixfor $272m and
growthcapital contributions of $55m to
Tilt Renewables
RECOGNITION
Of our sales and retention teams at the
CRM Contact Centre Awards and as the
top-ranked Utility in the KPMG Customer
Experience Excellence report
CUSTOMER VALUE
Focus on rewarding loyalty and value
leading to reduced acquisitionactivity in
highly competitive retail market
TURITEA WIND FARM
$256m commitment to a 119MW /
470GWh p.a. wind farm; the first
large-scale NZ renewable electricity
generation development since 2014
Stay-in-business capital expenditureof
$89m
Included office consolidation bringing
teams togetherfrom across Auckland
and ongoing hydro refurbishment
FY2019 HIGHLIGHTS
3
FY2019 HIGHLIGHTS

4
>Energy Margin, EBITDAF and Free Cash Flow lower reflecting 19% reduction in hydro generation upon return to mean
following record levels in FY2018
>NPAT up reflecting gain on sale following divestment of Metrix metering business for $272m and also lower interest costs
>Stay-in-business capex of $89m reflecting ongoing hydro refurbishment
1
and Auckland office consolidation
>Growth investment of $81m reflecting contributions to Tilt Renewables ($55m) and wind generation development at Turitea
>Total ordinary dividend of 15.5cps, the 11
th
year of ordinary dividend growth
FINANCIAL PERFORMANCE
730
205
566
234
198
264
112
150
207
50
667
199
505
357
161
237
89
81
211
0
0
100
200
300
400
500
600
700
800
Energy MarginOperating
Expenditure
EBITDAFNPATUnderlying
Earnings
Free Cash FlowStay-In-Business
Capital
Expenditure
Growth
Investment
Declared
Ordinary
Dividend
Share Buyback
$m
FY2018
FY2019
FY2019 FINANCIAL HIGHLIGHTS
1
For further detail see Mercury Annual Report 2019, pp. 50-53

Total Net Sales: 484GWh
1
LWAP/GWAP: 1.9%
Mass Market Yield: 2.0%
C&I Yield: 1.1%
566
505
74
0
249
2
60
45
4
356
7
4
6
-
100
200
300
400
500
600
700
800
900
Volume
Price
Volume
Price
Volume
Price
Derivative
Settlements
Derivative
Settlements
Other
Other Income
OPEX
EBITDAF ($m)
5
Generation
FY2018FY2019
FPVV PurchasesFPVV Sales
End User
CFDs
Other Energy
Margin
Generation: 808GWh
Price: $52/MWh
Energy Margin: $63m
1
Includes FPVV and net CFD sales
2
Consistent with disclosures in December 2018
3
Includes ancillary services & gas purchases and sales
3
EBITDAF BRIDGE (FY2018 to FY2019)
HIGHER SPOT PRICES PARTLY OFFSETTING REDUCTION IN GENERATION
FY2019 FINANCIAL HIGHLIGHTS
Metrix divestment impact -$8m
2

New Zealand’s leading energy brand
Recognised as a leader within our industry, with our industry
recognised as a positive contributor to New Zealand; and Mercury’s
access to fuel and energy storage enduring and enhanced
Recognised as a leader in the ultra-long-term management of both
physical and natural assets
A zero harm organisation that has enabled our people to adapt to
the changing nature of work to deliver the highest levels of
performance and productivity
Leading our sector in terms of financial performance and
shareholder returns, earning at least our cost of capital
6
WHAT MATTERS MOST
WHAT MATTERS MOSTLONG-TERM SUCCESS STATEMENTS

Mercury brand
trader churn
7.4%
Customer
satisfaction
64%
1
Brand Love
85%
2
Industry recognised
as key enabler of
low-carbon economy
Airpoints™
registrations
160,000
3
EPR final report
expected late 2019
LWAP/GWAP
1.04
SIB Capex
$89m
Gross Generation
Emissions Intensity
39kg CO
2
e/MWh
Zero high severity
health and safety
incidents
TRIFR
0.72
4
Employee
Engagement
66%
5
Annual Total
Shareholder Return
43%
Total Ordinary
Dividend
15.5cps
Investment in growth
via Tilt and Turitea
and Metrix sale
7
WHAT MATTERS MOST
KEY PERFORMANCE INDICATORS –5 YEAR TRENDS
1
Based on Mercury’s monthly survey of residential customers, 12-monthly
rolling average to 30 June 2019 for Mercury brand only
2
Percentage of customers who say they ‘like’ Mercury, 3-monthly rolling
average to 30 June 2019
3
Total customers registered for Airpoints™ as at 30 June 2019
4
Total Recordable Injury Frequency Rate per 200,000 hours for the 12
months to 30 June 2019; includes employees and onsite contractors
5
From CultureAmpsurvey introduced 2019
✓
✓
✓

8
>Numerous reports released recognising renewable electricity as an opportunity for New Zealand
>Interim Climate Change Committee (Final report released July 2019)
>Recommends focus on renewable electricity for transport and industrial process heat rather than 100% renewable electricity
>New Zealand forecast to reach 93% renewable electricity by 2035 under business-as-usual
>Targeting 100% renewable electricity prohibitively expensive relative to electrification of transport and process heat
>Value of hydro generation to New Zealand’s climate objectives should be given “sufficient weight” in water allocation decisions
>MBIE Electricity Demand and Generation Scenarios 2050 (Released July 2019)
>Electricity demand predicted to grow in the range of 18% to 78% (7 to 31GWh p.a.) across all scenarios
>Renewable electricity generation predicted to rise in all scenarios from 82% in 2017 to around 95%
>Productivity Commission -Low Emissions Economy Report (Government response August 2019)
>Supports renewable electricity generation as a key enabler of transitioning NZ to a low emissions economy
>Government developing Renewable Energy Strategy for public consultation later in 2019
>Transport electrification
>Government consulting on a feebate scheme for low emissions light vehicles for implementation in 2021
>Major NZ corporates trialling electric transport options including waste management vehicles, electric ferries, tugs and planes
MARKET DYNAMICS
RECOGNISING NEW ZEALAND’S RENEWABLE ADVANTAGE

9
>Electricity Price Review (EPR)
>Final report and Government response now expected to be released in September 2019
>Based on the February EPR options paper, expectations are for incremental rather than fundamental structural reforms
>Main focus on improving outcomes for vulnerable customers through targeted assistance and other support mechanisms
>Transmission Pricing
>Electricity Authority released an issues paper for consultation by 1 October
>Significant reduction in impacts and benefits from the Authority’s 2016 proposal
>Indicative impact to Mercury of $6.6m p.a. not before April 2024; remains contingent on implementation and Government policy
>Tax Working Group
>Work programme includes further investigation of environmental taxes; no tax on hydro use expected in the near term
>National Policy Statements (NPS)
>Uncertainty as to whether hydro generation will be exempted in the new 2019 NPS on Freshwater Management due for
consultation in September
>Future geothermal generation investment needs to be explicitly recognised within the proposed NPS on Indigenous Biodiversity
MARKET DYNAMICS
REGULATORY ENVIRONMENT

Source: NZX Hydro, Pricing Manager (NZX), Mercury
1
Trendline includes all monthly data from Jan 1999 to Jul 2019
10
SPOT PRICES PERSIST ABOVE HISTORICAL TREND
MARKET DYNAMICS
Oct-18
Nov-18
Feb-19
Mar-19
$0
$50
$100
$150
$200
$250
$300
$350
-1500-1000-500050010001500
OTA Wholesale Price ($/MWh)
Delta to SI Storage Average (GWh)
SI MONTHLY HYDRO STORAGE AND PRICE
1
Jan 1999 to Jun 2016
FY2017
FY2018
FY2019
FY2020
$0
$50
$100
$150
$200
$250
$300
$350
-400-2000200400
OTA Wholesale Price ($/MWh)
Delta to NI Storage Average (GWh)
NI MONTHLY HYDRO STORAGE AND PRICE
1
Jan 1999 to Jun 2016
FY2017
FY2018
FY2019
FY2020
$59/MWh
$87/MWh
$143/MWh
$59/MWh
$87/MWh
$143/MWh

Source: NZX Hydro, Mercury
1
Maximum Controllable Level
2
Monthly average since July 1999
3
Monthly average since July 1927
4
Closing price 3 months prior
11
JulAugSepOctNovDecJanFebMarAprMayJunJul
Hydro Generation -
Delta to Average
2
(GWh)
+73+81+101-10-14-6-45-45-45-47-56-29+10
Waikato Inflows -
Delta to Average
3
(GWh)
+49+90-35-123-78+20-62-102-104-80-85-40+82
Spot Price -
Otahuhu ($/MWh)
$82$89$90$300$203$114$135$169$182$115$119$115$116
Futures Price (M-3
4
)
Otahuhu ($/MWh)
$74$71$61$63$69$76$90$105$91$122$130$147$145
MARKET DYNAMICS
PRUDENT RISK MANAGEMENT GIVEN CHALLENGING CONDITIONS
0
100
200
300
400
500
600
700
GWh
LAKE TAUPO STORAGE
(since 1 Jul 1999)
Min / MaxAvgLake Taupo MCLFY2019
1

12
THREE-YEAR MARKET THESIS HAPPENING
ANTICIPATED MARKET OUTCOMES
>Supply and demand re-balanced
>Conditions for demand growth
>Increased spot price volatility
>Futures price increase
>Commercial and Industrial (C&I) upwards price pressure
>Retail churn reduction
>Upward pressure on retail price
✓
✓
✓
MARKET DYNAMICS
✓
?
Futures and recent C&I contracted prices
up $20+/MWh across FY2019 in line with
spot prices
Increase in spot prices represents a cost of
retailing and a contraction of retail margins
Retail competition remains fierce despite
this dynamic
Mercury expects aggressive acquisition
offers still prevalent in the market are out of
the money
}
?
✓

13
>Demand flat in FY2019 as an increase in industrial demand was offset by decreases in other sectors
>Industrial demand increase driven by Tiwai Point 4
th
potline restart
>Tiwai Point 4th potline restart increased Tiwai demand by 4.1%, lifting from 572MW average in Jul-18 to a peak of 617MW
average in Feb-19 (down to 595MW in Jun-19), which added 0.5% to national demand in FY2019
>Excluding Tiwai Point, industrial demand decreased by 1.8% as spot-exposed users demonstrated sensitivity to high prices
Source: TranspowerSCADA data, Mercury
1
Normalised for temperature
SectorGWhSector%Total %
Urban
1
-75-0.5%-0.2%
Rural
1
+861.3%0.2%
Dairy processing-32-0.5%-0.1%
Irrigation-65-4.9%-0.2%
Industrial+1551.7%0.4%
Other-51-7.0%-0.1%
Total+180.0%
FY2019 NORMALISED DEMAND GROWTH BY SECTOR
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
UrbanRuralDairyTiwaiIndustrial
(excluding
Tiwai)
Irrigation
GWh
DEMAND
FY2015FY2016FY2017
FY2018FY2019
11
SEASONAL FACTORS CONTRIBUTE TO LOWER DEMAND
MARKET DYNAMICS

14
$60
$70
$80
$90
$100
$110
$120
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
$/MWh
FUTURES PRICE
(2 year average price starting 3 quarters ahead)
Otahuhu
Benmore
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
FY19FY20FY21
$/MWh
30-Jun-1830-Sep-1831-Dec-1831-Mar-1930-Jun-19
OTAHUHU FUTURES PRICE
Source: ASX, Mercury
MARKET DYNAMICS
FUTURES LIFTING, CONSISTENT WITH MARKET THESIS
>Gas supply and thermal generation restrictions expected to persist over the medium-term impacting wholesale prices

0%
5%
10%
15%
20%
25%
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Annual Churn
NATIONAL CHURN RATE
(12mth rolling)
All Retailers
Mercury Group
Mercury Brand
}
15
All switches
Trader switches
1
Source: Electricity Authority, EMI –Market share trends and switching breakdown
1
A trader switch is where a customer changes retailer without changing house
}
MARKET DYNAMICS
RETAIL COMPETITION UNAFFECTED BY HIGHER WHOLESALE PRICES
20% prompt
payment
discount
Get a $400
credit
Get a free
appliance
Get $200
power
on us
Half price
broadband for
12 months!
Save in your
first year.
Guaranteed.
EXAMPLES OF COMPETITOR OFFERS

MERCURY FOCUSED ON EXISTING CUSTOMERS AND VALUE
>Mercury is focused on value and fulfilling our customer
promises to reward loyalty, inspire and make it easy
>In line with this focus:
>Mercury has not increased residential headline pricing since
April 2018, despite steadily rising input costs
>Mercury is moving away from short-term deep discounted
acquisition pricing which doesn’t deliver value to existing
customers
>Proportion of Mercury brand customers acquired on discounted
rates decreased from 55% in Q4-FY2018 to 27% in Q4-FY2019
>We expect all acquisition offers by all retailers are out of
the money with this wholesale market outlook
>A strategic channel and partner review led to a mutual
agreement to exit the Fonterra Farm Source partnership
>~2,000 of our customer losses in July; will see more of these
customers moving over the coming months
16
MARKET DYNAMICS
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
Switches
NATIONAL SWITCHING
Mercury Group
Mercury Brand
Prior 12mth Mercury Switches
Net Switches
0%
10%
20%
30%
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Switches
Withdrawn
1
Source: Electricity Authority, EMI –Switching Breakdown
1
Switches which were initiated but not completed (inclusive of saves)

CONTINUOUS REVIEW OF CAPITAL ALLOCATION
326
89
211
81
270
215
-100
-50
0
50
100
150
200
250
300
350
Operating Cashflow
Stay-in-Business
Capex
Ordinary Dividends
Growth Capex /
Investments
Divestments
Debt Repayment
$m
USE OF FUNDS
IncreaseDecrease
>Mercury Net Debt/EBITDAF ratio at 1.9x
>1.9x after $272m Metrix divestment
>Consistent with low end of target band to retain flexibility and
growth aspirations
>Re-investment in core prioritisedwith continued hydro
refurbishment and technology upgrades
>Dividend policy is to pay 70-85% of free cash flow on
average through time enabling residual cash flow to be
applied to growth opportunities/debt repayment
>FY2019 represents the 11
th
year of ordinary dividend growth
>Tilt Renewables considering sale of Snowtown2 wind
farm which likely means little to no Tilt shareholder
capital contributions required in the medium-term
17
CAPITAL ALLOCATION
1
Negatively impacted by an increase in ASX
prudential requirements of $37m
1

PURSUING GROWTH
18
CAPITAL ALLOCATION
1
As at 16 August 2019
>Financial commitment in March 2019 of $256m to 119MW
Turitea wind farm
>Turitea complements Mercury’s existing baseload geothermal
and flexible hydro assets
>Ability to utilise flexibility of Waikato Hydro Scheme in the same
island to ‘firm’ intermittency of wind
>Transmission infrastructure enables further wind development at
Turitea and Puketoi
>Gas supply and thermal generation constraints and futures
prices indicate new generation capacity required
>Investment of $199m in Tilt Renewables as a vehicle to gain
exposure to Australia renewables transition
>Includes the initial investment (May 2018), a joint takeover offer
taking Infratilshareholding to >65% (August-December 2018),
and participating in the Dundonnell rights issue (February 2019)
>Fraser Whineray appointed to Tilt Renewables Board from
19 July 2019
>Investment now worth $247m
1
representing an ROI of 24%

505
~475
485
~15
~10
20
5
450
475
500
525
FY2019 Actual
Generation
Adjustment
Metrix Divestment
FY2019 Generation
Normalised
Opex
Growth
FY2020 Guidance
$m
INDICATIVE GUIDANCE BRIDGE
IncreaseDecrease
FY2020 GUIDANCE RE-BASED FOLLOWING METRIX DIVESTMENT
19
FY2020 GUIDANCE
19
>FY2020 EBITDAF guidance is $485m and assumes:
>Mean hydro and geothermal generation
1
>Operating expenditure reflecting increased activity with
multiple geothermal shuts and ongoing hydro refurbishment
>Growth through improving customer profitability, cost
transparency and trading performance
>FY2020 ordinary dividend guidance is up 2% to 15.8cps
>FY2020 stay-in-business capital expenditure guidance
is $105m
>Includes ongoing refurbishment at three hydro power
stations and drilling of two wells at Kawerau
>Guidance is subject to hydrological volatility, wholesale
market conditions and any material adverse events,
significant one-off expenses or other unforeseeable
circumstances
1
Mean total generation of ~6,620GWh (hydro ~4,020GWh
& geothermal ~2,600GWh)

20
Q&A
Q&A

100% renewable generation
>Two low-cost complementary fuel sources
in baseload geothermal and peaking
hydrowith same-island wind to be added
Superior asset location
>North Island generation located near major
load centres; rain-fed hydro catchment
inflows aligned with winter peak demand
Substantial peaking capacity
>The Waikato hydro system is the largest
group of peaking stations in the
NorthIsland
High performance teams
>Dynamic company culture built on the
understanding that our people, working
together and in alignment,set us apart
Track record of customer engagement
>Brand capital built through customer-led
innovation and rewarding loyalty
Long-term commercial partnerships
>With Maori landowners and other
key stakeholders
21
APPENDIX
MERCURY’S COMPETITIVE ADVANTAGE

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
GWh
FY2019 NET POSITION BREAKDOWN
Net Other CfDs
Network Losses
Commercial & Industrial
Major Industrial Customers
Mass Market
Hydro
Geothermal (Consolidated)
APPENDIX
22
>Mercury operates an integrated portfolio with electricity
sales to customers providing a natural price hedge to
generation
>Average net long position with movement year-on-year
due to hydrology, plant availability and values of sales
>Diversified sales portfolio including sales to Mass
Market, Commercial & Industrial customers and
derivatives
>Favouring increased spot exposure for value and risk
management in higher and more volatile price environment
>Significant volume tied to long-dated contracts with major
industrial customers (~790GWh p.a.)
>Turitea wind farm under development, due to start
operating late CY2020
>Annual generation of 470GWh
>Once commissioned, its variable wind generation will be
complemented by Mercury’s flexible hydro stations and
baseload geothermal
1
PORTFOLIO APPROACH TO RISK MANAGEMENT
1
Contract-For-Difference

STABLE CAPITAL STRUCTURE
APPENDIX
23
1
Adjusted for S&P treatment of Mercury’s Capital Bond
>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 5 December 2018
>One-notch upgrade given majority Crown ownership
>Capital management continuously reviewed
>Targeting gearing at low end of Net Debt / EBITDAF between 2.0x and 3.0x (key ratio for stand-alone S&P credit rating ‘bbb’) to
provide debt headroom due to Government minimum equity ownership requirement
>Net Debt / EBITDAF 1.9xat 30 June 2019
1
30 June 201930 June 201830 June 201730 June 201630 June 2015
Net Debt ($m)
1,0961,2641,0381,0681,082
Gearing Ratio (%)
23.727.723.924.424.5
Net Debt / EBITDAF(x)
1
1.91.91.82.02.0

0
50
100
150
200
250
300
350
400
450
500
202020212022202320242025202620272050
$m
Financial Year (ending 30 June)
DEBT MATURITIES AS AT 20 AUGUST 2019
Commercial PaperDomestic Wholesale BondsUS Private PlacementUndrawn Bank FacilitiesUndrawn Rolling Bank FacilitiesMCY020 Bonds
24
>The average debt maturity profile for committed facilities was 7.1 years
2
at 20 August 2019
>Interest paid decreased by $24m in FY2019 with further reduction (circa $10m) expected in FY2020
>Mercury redeemed its MCY010 Bonds on 11 July 2019 and issued new MCY020 Bonds to mature July 2049
APPENDIX
DIVERSIFIED FUNDING PROFILE
1
Requires 18 months notice of termination from lender
2
Includes Commercial Paper on issue, all bank facilities, wholesale
bonds, US private placement and MCY020 Bonds to maturity
1

CONTRACTS FOR DIFFERENCE
26
Yearended
30June2019
Year ended
30 June2018
Net Contracts for Difference
(Sell)/BuyGWh
Sell -End User(1,352)(1,226)
Sell -VAS
1
(599)(650)
Sell -Inter-generator & ASX(1,683)(1,737)
Sell CFD(3,634)(3,613)
Buy CFD2,0101,504
Net CFD(1,624)(2,109)
Energy Margin contribution ($m)(106)(1)
1
VAS included on both buy and sell side CFDs
APPENDIX

NON-GAAP MEASURES: NET DEBT, EBITDAFAND FREE CASH FLOW
27
>Net Debt is reported in the full year financial statements and is a measure commonly used by investors. Net debt is
calculated as total borrowings (both current and non-current) less cash and cash equivalents.
>EBITDAF is defined as earnings before net interest expense, income tax, depreciation and amortisation, change in
fair value of financial instruments, impairments, and equity accounted earnings of associates and joint ventures.
>Free Cash Flow is Net Cash Flow from Operating Activities less normalisedstay-in-business capital expenditure.
APPENDIX

28
REFERENCE MATERIALS
MERCURY REFERENCES
Mercury Investor Centrehttps://www.mercury.co.nz/investors
Quarterly Operational Updateshttps://www.mercury.co.nz/investors/results-reports/operating-information
Investor Presentation –November 2018https://issuu.com/mercurynz/docs/mercury_investor_roadshow_presentat?e=25554184/65954670
Governance Presentation–December 2018https://issuu.com/mercurynz/docs/mercury_governance_roadshow_present?e=25554184/66170875
PUBLICATIONS
Mercury –Electricity Price Review Submissionhttps://www.mercury.co.nz/news/electricity-price-review-executive-summary
Productivity Commission –Low-emissions Economy Report
https://www.productivity.govt.nz/assets/Documents/4e01d69a83/Productivity-Commission_Low-emissions-
economy_Final-Report.pdf
Interim Climate Change Committee –Accelerated Electrificationhttps://www.iccc.mfe.govt.nz/assets/PDF_Library/daed426432/FINAL-ICCC-Electricity-report.pdf
Transpower –Transmission Tomorrow –Our Strategyhttps://www.transpower.co.nz/sites/default/files/publications/resources/TTourstrategy2018.pdf
MBIE –Electricity Demand and Generation Scenarios
https://www.mbie.govt.nz/building-and-energy/energy-and-natural-resources/energy-statistics-and-
modelling/energy-modelling/electricity-demand-and-generation-scenarios/
NZ Initiative –Switched On
https://nzinitiative.org.nz/reports-and-media/reports/switched-on-achieving-a-green-affordable-and-reliable-
energy-future/
APPENDIX

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

---

ENERGY FREEDOM.
2019 ANNUAL REPORT // MERCURY NZ LIMITED
ENERGY FREEDOM.
2019 ANNUAL REPORT // MERCURY NZ LIMITED

Energy Freedom for all New Zealanders is our
mission. It’s about New Zealand being stronger
economically and more sustainable through
better use of homegrown, renewable energy.
OUR MISSION:
ENERGY
FREEDOM.
Tilt Renewables’ Tararua Wind Farm
2 // 3

Tilt Renewables’ Tararua Wind Farm
OUR ANNUAL REPORT 2019

STATEMENT FROM THE DIRECTORS
The directors are pleased to present Mercury NZ Limited’s Annual
Report and Financial Statements for the year ended 30 June 2019.
The Auditor-General is required to be the company’s auditor, and has
appointed Lloyd Bunyan of Ernst & Young to undertake the audit
on his behalf. The directors are not aware of any circumstances since
the end of the year that have significantly affected or may significantly
affect the operations of the company. This Annual Report is dated
20 August 2019 and is signed on behalf of the Board by:
02 OUR MISSION
04HOW WE DID THIS YEAR
06WHO WE ARE
08HOW WE CREATE VALUE
10CHAIR'S UPDATE
16CHIEF EXECUTIVE'S UPDATE
22WHAT MAT T ER S M OS T
24- OUR FIVE PILLARS
26- OUR STRATEGIC GOALS
28OUR STORIES
30- CUSTOMER
34- PARTNERSHIPS
38- KAITIAKITANGA + OUR CARBON PROFILE
46- PEOPLE
50- COMMERCIAL
54OUR FINANCIALS
56- FINANCIAL COMMENTARY
60 - FINANCIAL TRACK RECORD
61 - INDEPENDENT AUDITOR’S REPORT
64 - FINANCIAL STATEMENTS
94YOUR DIRECTORS
95YOUR EXECUTIVE TEAM
96INTEGRATED REPORTING
98SUSTAINABILITY INDICES
102 GOVERNANCE AT MERCURY
110 - REMUNERATION REPORT
116 - DISCLOSURES
124 INFORMATION FOR SHAREHOLDERS
125 DIRECTORY
HOW WE DID
THIS YEAR.
OPERATING EXPENDITURE
FLAT FOR THE 6TH STRAIGHT YEAR
ON A LIKE-FOR-LIKE BASIS
$199M
OPERATING EARNINGS (EBITDAF)
REFLECTING LOWER HYDRO
GENERATION AND LOWER METRIX
EARNINGS DUE TO SALE
FY2018 $566M
$505M
p
RECORD PROFIT (NPAT)
REFLECTING GAIN ON SALE OF METRIX
AND LOWER INTEREST COSTS
FY2018 $234M
$357M
o
TOTAL FULLY-IMPUTED
ORDINARY DIVIDEND
FY2018 15.1 CPS
15.5CPS
o
JOAN WITHERS // CHAIRKEITH SMITH // DIRECTOR
4 // 5

TURITEA WIND FARM
INVESTMENT COMMITMENT
$256M
PROCEEDS FROM THE
SALE OF METRIX
$272M
MERCURY BRAND CUSTOMERS
SWITCHING RETAILER WITHOUT
MOVING HOUSE
F Y2018 6.4%
7. 4%
MERCURY CUSTOMERS
RATING AS ‘HIGHLY SATISFIED’:
12 MONTH ROLLING AVERAGE
FY2018 62%
64%
HIGH SEVERITY
HEALTH AND SAFETY
INCIDENTS
ZERO
TOTAL GENERATION
F Y 2018 7,70 4 GWh
6,902GWh
OUR ANNUAL REPORT 2019

WHO
WE ARE.
OUR PURPOSE IS TO
INSPIRE NEW ZEALANDERS
TO ENJOY ENERGY IN MORE
WONDERFUL WAYS.
R&D CENTREWIND FARM
HYDRO S TATIONS
GEOTHERMAL STATIONS
+ Not 100% owned by Mercury.(under construction)
KARĀPIRO
ARAPUNI
WAIPĀPA
MARAETAI
I AND II
WHAKAMARU
MŌKAI
+
ŌHAKURI
ĀTIAMURI
KAWERAU
ARATIATIA
NGĀTAMARIKI
NGĀ AWA
PŪRUA
+
LAKE TAUPŌ
ROTOKAWA
AUCKLAND
TURITEA
SOLAR
6 // 7

775
PERMANENT
EMPLOYEES
315 females
460 males
482 in Auckland
107 in Hamilton
25 in Ta u p ō
60 in Rotorua
101 in rest of New Zealand
WHO
WE ARE.
2019
MARKET SHARE
14% physical sales
17% generation
88
EVs IN OUR FLEET
74% of our fleet is electric
3,615 solar customers
825 customers on EV package
44%
DECREASE
in the carbon intensity
of our electricity generated
since FY2015
14
POWER STATIONS*
4,006GWh of hydro generation
2,896GWh of geothermal
generation
373K
CUSTOMERS
325,565 residential
44,527 commercial
2,182 industrial
561 spot
* Two are partnerships with Māori land trusts
16
PARTNERSHIPS
2 geothermal joint ventures
4 formal iwi partnerships*
10 community and
commercial partnerships
OUR ANNUAL REPORT 2019

HOW WE CREATE VALUE.
+
PORTFOLIO
MANAGEMENT
+
HIGH
PERFORMANCE
TEAMS
+
INNOVATION AND
THOUGHT LEADERSHIP
FOR NEW ZEALAND
ENERGY
CUSTOMER
Those who choose us.
INPUTS
VALUE
CREATION
OUTCOMES
PARTNERSHIPS
Relationships with individuals,
groups, institutions and
businesses important to us.
PARTNERSHIPS
Key relationships built on mutual
understanding and support,
leading to both social and
economic benefits.
CUSTOMER
Highly satisfied and loyal customers.
8 // 9

+
RELATIONSHIP
MANAGEMENT
+
HEALTH AND SAFETY
MANAGEMENT
+
CAPITAL
MANAGEMENT
FREEDOM
KAITIAKITANGA
The natural resources and assets we
need to run our business.
PEOPLE
A motivated, capable and
inclusive workforce.
COMMERCIAL
The capital we have, the investments
made in our business and the
dynamic market we operate in.
KAITIAKITANGA
Natural resources available through
sustainable management.
Assets fit for now and the future to
support New Zealand's energy needs.
PEOPLE
A place to work where our people
are engaged, safe and well and have
the capability to meet our current
and future needs.
COMMERCIAL
Sustainable and growing returns to
our owners.
OUR ANNUAL REPORT 2019

It is my pleasure to report to you, our owners,
on Mercury’s results for the financial year ended
30 June 2019 (FY2019).
This is my final Annual Report as Chair.
As signalled at our 2016 Annual Shareholders'
Meeting, and again last year, I have chosen to
step down from the Board after a decade in this
role. It has been an honour to serve you, and to
represent Mercury’s interests over this time.
As this report outlines, and as reflected in
our returns to shareholders, Mercury is in a
strong position. Our underlying performance,
our achievements in managing unfavourable
hydrology during the financial year and the
bold and carefully considered moves we have
executed are all indicators that the company is
in good heart and positioned well for growth in
a dynamic market.
STRONG
MOMENTUM.
JOAN WITHERS // CHAIR
Chair’s Update.
10 // 11

THIS IS MY FINAL ANNUAL
REPORT AS CHAIR... IT HAS
BEEN AN HONOUR TO SERVE
YOU, AND TO REPRESENT
MERCURY’S INTERESTS.
OUR ANNUAL REPORT 2019

OUR RETURNS:
FINAL ORDINARY DIVIDEND
9.3 CENTS PER SHARE,
FULLY IMPUTED

FULL YEAR ORDINARY
DIVIDEND 15.5 CENTS PER
SHARE (FY2018 15.1 CPS)

FINAL DIVIDEND TO BE PAID
30 SEPTEMBER 2019
Total shareholder returns (TSR) of 42.5% included
significant share price appreciation, which valued the
company at $6.3 billion at financial year end, compared
with $4.6 billion at the same time last year.
Our FY2019 dividend of 15.5 cents per share (cps),
fully imputed, makes this the 11th year of ordinary
dividend growth.
The momentum we are enjoying, assisted by the market’s
bias to sustainable yield, is supported by the clarity of our
strategy and Mercury’s track record of executing well on
what we say we will do. That position informs guidance for
a continuation of the trend through FY2020, and beyond.
What Mercury commits to and what we execute on
is guided by what we agree, as a Board and executive
leadership, is most important to the balanced interests
of all our stakeholders.
This integrated perspective is outlined within this report.
Fundamental to the Board’s assessment of priorities is
understanding risk and opportunity and determining
how best we can add value across the pillars of our
business: customer, partnerships, kaitiakitanga, people
and commercial.
Management and your Board have agreed three-year
targets across the pillars of our business. These are linked
to key performance indicators to measure our success
and progress. They connect to our overarching mission
and purpose and they will guide Mercury towards our
10-year goals.
This structure is outlined on pages 26-27 of this report.
Your Board regularly considers whether our composition
is fit for purpose and as Chair, my responsibility has been
to ensure that the skills and experience that sit around the
table are brought to bear in exercising our responsibilities.
Our ongoing focus has been to ensure we have true
diversity of thought around the Board table. We include our
Board skill matrix and state our goals in that area in this
report’s Governance section on pages 104-106.
In relation to individual director remuneration, again there
will be no recommendation for any increases taken to our
Annual Shareholders’ Meeting this year, as we have been
informed by the Government, as 51% shareholder, that
Shareholding Ministers would not support any increases
during this term of Parliament.
Succession planning has been an ongoing focus during
my tenure so I am delighted with the confirmation that
Prue Flacks will replace me as Chair at this year’s Annual
Shareholders’ Meeting. Prue has been on the Mercury
Board since 2010 and has been an outstanding contributor.
She chaired the Due Diligence Committee at the time of
our Initial Public Offering (IPO) in 2013 and has in recent
years chaired the People and Performance Committee.
Her previous professional experience as a leading
commercial lawyer has been invaluable to the company.
With the support of existing Board members, who all have
significant governance experience, I am confident that the
future of Mercury is in good hands.
We have our regular independently-facilitated Board
performance review underway currently and will receive
the results of that early in the new financial year.
OUR FY2019 DIVIDEND OF 15.5 CENTS
PER SHARE MAKES THIS THE 11TH YEAR
OF ORDINARY DIVIDEND GROWTH.
12 // 13CHAIR’S UPDATE

42.5%
TOTAL SHAREHOLDER
RETURN (TSR)
ACROSS FY2019
$211M
TOTAL ORDINARY
DIVIDENDS
DECLARED TO
SHAREHOLDERS
...I AM CONFIDENT
THE FUTURE OF
MERCURY IS IN
GOOD HANDS.
OUR ANNUAL REPORT 2019

My leaving the Board also provides an opportunity to
introduce new skills and ideas, which I believe is imperative
for a company’s sustainability and success. We expect
to announce the appointment of a new director early
in FY2020.
In terms of capital management, we concluded a
successful placement for $300 million of subordinated
capital bonds, allocated to New Zealand retail and
institutional investors. The interest rate was struck at 3.60%
per annum, with bonds issued on 11 July 2019. This has
enabled Mercury to redeem our existing subordinated
capital bonds.
The Board considers carefully the capital structure of
the company and works hard to balance appropriately
our requirements for 'stay-in-business' and maintenance
capital, investing in value-enhancing growth opportunities
and ensuring surplus capital is returned to
shareholders effectively.
Our capital management initiatives support Mercury’s
investment-grade credit rating (BBB+), which was
reaffirmed by Standard & Poor's (S&P) Global Ratings in
December 2018. Mercury’s strategy of pursuing growth
opportunities is important for securing our ultra-long-term
success and also for New Zealand.
As a board, we understand there is an alternative option
to focus predominantly on yield but we believe, on behalf
of our owners, that the appropriate strategy for Mercury
at this time is to be an active part of New Zealand’s need
for increased renewable energy output and continue to
reinvest in plant and systems across our entire business.
This will support a growing economy overall, while helping
to meet the imperative of reducing carbon emissions and
supporting New Zealand’s energy security.
A considered approach to growth through renewable
energy generation will also strengthen Mercury’s ability
to enhance the value of your capital into the future.
With that focus, it has been a big year again for Mercury.
Through the period, we advanced our relationship with
Tilt Renewables Ltd (NZX:TLT), and Fraser Whineray has
been appointed a director of Tilt Renewables’ board.
That followed our purchase of a 19.99% shareholding
in Tilt Renewables announced in May 2018.
During FY2019, Mercury partnered with Tilt Renewables’
majority owner, Infratil Ltd (NZX:IFT) for an offer to take
over the remaining shares in Tilt Renewables. While
acceptances fell short of allowing a full takeover, we have
benefited from strength in Tilt Renewables’ share price
and our share of its own renewable energy growth path.
The value of our stake at 30 June 2019 was 18% above our
total investment.
Mercury concluded the sale of the Metrix smart-metering
business at the beginning of March 2019 for a cash
consideration of $272 million. After previously exploring
smart-metering opportunities in Australia, the decision to
sell Metrix released capital and resources for other growth
opportunities and helped simplify the company's business.
Mercury confirmed a $75 million investment in securing
and enhancing the operating future of the Karāpiro hydro
station. This is part of our multi-year programme of work
demonstrating guardianship of New Zealand’s Waikato
hydro system.
MERCURY’S STRATEGY
OF PURSUING GROWTH
OPPORTUNITIES IS IMPORTANT
FOR SECURING OUR ULTRA-
LONG-TERM SUCCESS AND
ALSO FOR NEW ZEALAND.
GUIDANCE:
FORECAST FY2020
GENERATION 6,620GWh

FY2020 ORDINARY DIVIDEND
15.8 CENTS PER SHARE
(INCREASE OF 2%)

FY2020 STAY-IN-BUSINESS
CAPITAL EXPENDITURE
$105 MILLION
^ Based on catchment inflows and generation at 20 August 2019
14 // 15CHAIR’S UPDATE

YOUR BOARD ALSO APPROVED THE DECISION
TO CONSTRUCT OUR FIRST WIND FARM, AT
TURITEA NEAR PALMERSTON NORTH, WITH A
COST ESTIMATE OF $256 MILLION. THE DECISION
TO PROCEED AT TURITEA WAS MORE THAN A
DECADE IN THE MAKING.
Your Board also approved the decision to construct our first
wind farm, at Turitea near Palmerston North, with a cost
estimate of $256 million. The decision to proceed at Turitea
was more than a decade in the making.
The resource consents for Turitea were granted in 2011 and
we have involved landowners and other stakeholders in
regular meetings since then. Our objective is to build strong
and enduring relationships as we deploy resources to create
a new renewable generation asset to add to our existing
portfolio of geothermal, solar and hydro.
We tell some of the Turitea story through the partnership
lens later in this report (pp 34-37).
Reflecting once more that this is my last Annual Report
Update as Chair, I acknowledge the wonderful support and
contribution of all my Board colleagues throughout
my tenure.
To you, our owners, I have appreciated your support as well.
I look forward to connecting with those who can make it in
person to our Annual Shareholders’ Meeting which will be
held on 27 September. This year it will be held at Eden Park,
in Auckland.
I sincerely thank Mercury’s Chief Executive Fraser Whineray.
The relationship between a Chair and Chief Executive
is a critical one and I am personally delighted that I am
leaving the company in great hands at both executive and
governance level. It has been a privilege to work with Fraser
and his executive and leadership group, and I thank all of
Mercury’s dedicated people for executing so well on
our strategy.
Finally, I gratefully acknowledge the customers, partners
and other stakeholders who continue as strong advocates
for Mercury, as I will be, into the future.
CURIOUS ABOUT
WIND ENERGY?
Please visit www.mercury.co.nz/wind
JOAN WITHERS // CHAIR
OUR ANNUAL REPORT 2019

PERFORMANCE
ACROSS OUR CORE
BUSINESS PROVIDES
THE FOUNDATION
FOR US TO PURSUE
GROWTH.
16 // 17

WORKING
FOR
GROWTH.
FRASER WHINERAY // CHIEF EXECUTIVE
Chief Executive’s Update.
In last year’s Annual Report I noted “It rained
– a lot.” In contrast, this year the Waikato
catchment received extremely low (second
percentile) inflows from September 2018 to
late May 2019. This sustained dry sequence
coincided with a serious strain on the country’s
thermal generation, record annual spot prices,
and very poor liquidity in New Zealand’s over-
the-counter and electricity futures markets.
Despite these challenging conditions, Mercury
delivered a strong performance. In these
circumstances, this year was even more
satisfying than our record result for FY2018.
Performance across our core business provides
the foundation for us to pursue growth.
Long-term sustainable growth is essential
to support our now 11-year track record of
increasing ordinary dividends to our owners,
and to provide enduring opportunities for our
people, customers and partners.
OUR ANNUAL REPORT 2019

POWER FOR CHANGE
Consumers have power in their hands. The choice,
technology and service available to meet their stationary
and mobile energy needs continues to expand. That the
consumer will benefit from this competition is a given, and
we welcome the challenge to continuously improve our
performance against our goal of becoming New Zealand’s
leading energy brand.
Mercury anticipates long-term demand growth as
renewable electricity’s value is increasingly unlocked
through technology in applications such as transport, and
as consumers embrace cheaper, locally produced and low-
carbon products.
We will continue to explore inspiring ways to encourage the
transition to electrified transport for the long-term benefit
of the country as well as our owners.
Our Mercury Drive 'EV-by-subscription' initiative and
our e.bike and e.scooter promotions are examples of
contributing to this momentum.
Our customers continue to have a strong affinity with
our brand. Sixty-four percent reflect high levels of
satisfaction (62% FY2018). For FY2020, our attention
will continue to be on inspiring, rewarding and making
things easy for our customers: growing deeper customer
relationships that deliver long-term value, rather than
chasing growth in customer numbers at any cost,
particularly given wholesale market dynamics.
A major investment in IT infrastructure, SAP Commerce
Cloud, was implemented this year to make it easier for our
customers to interact with us digitally. The roll-out of this
platform across our customer base will continue through
210,000
ELECTRIC
CARS CAN BE
POWERED BY
THE ENERGY
PRODUCED AT
OUR TURITEA
WIND FARM.
FY2020. This has already improved the experience of
customers’ online engagement through My Account.
Our IT infrastructure will allow new product configurations
and price options to be chosen online by customers, giving
them an easier, more streamlined experience and reducing
the time to serve and set up new business.
WORKING BETTER TOGETHER
Building High Performance Teams continues to be a
focus. This financial year, our people in Auckland moved
from three separate premises into one office location in
Newmarket. This investment means that Mercury remains
competitive for retaining, developing and attracting people,
and having them work together in High Performance
Teams. We have also reworked our office space at the
Maraetai hydro power station, to facilitate greater teamwork,
with very pleasing results.
A new and detailed employee survey this year has provided
a new employee engagement baseline of 66%. We will
report against this measure in future years.
MERCURY’S INTERACTIVE
BRAND SHOWCASE AT OUR
OFFICES IN NEWMARKET,
AUCKLAND, HIGHLIGHTS
‘ENERGY MADE WONDERFUL’.
OPEN TO THE PUBLIC, YOU’RE
WELCOME TO COME CHECK IT
OUT IF YOU’RE IN AUCKLAND.
18 // 19CHIEF EXECUTIVE’S UPDATE

GENERATION
Making the most of the challenging hand dealt by
Waikato catchment inflows and elevated spot pricing
required a very strong performance from our generation
and wholesale markets teams in FY2019. Mercury’s people
optimised for the weather and market conditions, and our
teams in geothermal (the only renewable energy source
that is not weather dependent) worked well to maintain
high geothermal availability of 98% under these
dynamic conditions.
In the decade to 2015, renewable geothermal generation
growth from New Zealand’s electricity sector, including
Mercury, underpinned what is perhaps the country’s
greatest green-economic transition of the century
to date. Renewable geothermal electricity generation is
now the second largest contributor to New Zealand’s total
electricity generation.
For Mercury directly, and through our valued long-term
partnerships with Māori land trusts, our renewable
geothermal output continues to be a source of wonderful
energy. Our geothermal output was 2,896GWh in FY2019
compared with 2,757GWh in FY2018.
Mercury’s ongoing maintenance and efficiency programme
across geothermal stations (more than $200 million
over the next five years), alongside the huge, long-run
reinvestment programme for the Waikato hydro system, is
a direct illustration of how we apply our understanding of
kaitiakitanga over assets that are essential for New Zealand
and New Zealanders.
FANS OF WIND
This year we committed to the construction of
a new wind farm at Turitea, east of Palmerston North.
This significant investment, together with our shareholding
in Tilt Renewables, means Mercury is the only
New Zealand energy company with the 'awesome
foursome' of renewable energy in our portfolio (wind,
geothermal, solar and hydro).
The Turitea investment has been very patiently pursued
since Mercury won the rights from Palmerston North City
Council in 2005, followed by consenting in 2011. Again,
long timeframes and substantial investment of capital and
highly skilled people are required to develop, maintain and
ultimately execute wind development.
The potential for new wind generation to be the major
contributor to growth of New Zealand’s renewable energy
assets has been highlighted by the International Energy
Agency, the Productivity Commission and the Interim
Climate Change Committee.
We are well positioned to grow our wind portfolio through
the multiple wind consents we hold in the Manawatu, as
well as through our shareholding in Tilt Renewables, which
has signalled its own wind energy development and re-
powering activity in New Zealand.
...MERCURY IS THE ONLY
NEW ZEALAND ENERGY
COMPANY WITH THE
'AWESOME FOURSOME' OF
RENEWABLE ENERGY...
5,000 RIDES
ON MERCURY E.BIKES
250,324KM
DRIVEN BY MERCURY
DRIVE CUSTOMERS
GEOTHERMALSOLARWINDHYDRO
OUR ANNUAL REPORT 2019

1. New Zealand Productivity Commission (2018).
Low-emissions economy: Final report.
Available from www.productivity.govt.nz/low-emissions
2. Accelerated Electrification p.51, Interim Climate Change
Committee (2019) www.iccc.mfe.govt.nz
The New Zealand Productivity Commission's report, 'Low
Emissions Economy'
1
, reviewed scenarios that forecast
New Zealand's electricity demand increasing from the
current 40TWh to 60TWh per annum by 2050. That's an
expansion equivalent to over 40 Turitea (northern zone)
wind farms over 30 years.

Furthermore, thermal plant
that does not provide specific capacity peaking or energy
firming capability will struggle to find a business case
for refurbishment and likely retire within this timeframe,
requiring additional renewable development in its place.
2

OUR RENEWABLE
ADVANTAGE AS A NATION
The way New Zealanders talk about our renewable
advantage has changed. There is much wider
understanding that our country's electricity system is
world-leading on the three essential measures of reliability,
sustainability and affordability.
This is important because if we are to continue to make
investments like Turitea, estimated at $256 million, with
payback periods spanning more than eight election cycles,
our investors, which include all New Zealanders, need to
have confidence that the rules supporting that investment
will have a high degree of predictability. As long as politics
continues to be strongly influenced by polling, which cannot
fully capture long-term infrastructure considerations, this
represents a risk.
To offset this risk, a strong retail performance is essential.
It is why the benefits of electric vehicles (EVs), such as fuel
at the equivalent of 30 cents per litre, must be promoted
at every opportunity. It is why national energy freedom
from high-carbon, high-price fuel imports must be
advanced. And it is why governments need to avoid the
political temptation to respond to narrow agendas that
have dangerously weakened functioning and progressive
electricity markets in Australia and the United Kingdom.
This industry has plenty to do to improve, including
avoiding narrow and/or short-term agendas itself. Shared
areas for focus are: efficiency and productivity; safety and
sustainability; and understanding and meeting customer
needs. It needs to get on with these things and constantly
demonstrate and communicate that progression.
FY2020 ACTIVITIES:
ADVANCE CONSTRUCTION OF THE
TURITEA WIND FARM

CUSTOMER FOCUS ON VALUE AS WE
MANAGE OUR POSITIONS IN ELEVATED
AND VOLATILE WHOLESALE MARKETS

COMPLETE THE HYDRO
REFURBISHMENTS AT WHAKAMARU
AND ARATIATIA AND ADVANCE THE
KARĀPIRO REFURBISHMENT

COMPLETE DETAILED WORKFORCE
PLANNING AS WE MOVE FURTHER
INTO THE DIGITAL AGE
20 // 21CHIEF EXECUTIVE’S UPDATE

Q2
Q4
Q1
Q3
QUARTER-
BY-QUARTER
ACTIVITIES.
• Mercury Drive (EV subscription service) pilot launched –
and heavily over-subscribed
• New Zealand’s first grid-scale battery storage facility
launched at our R&D Centre
• 5 gold stars from Canstar Blue, plus top spot in their
natural gas customer satisfaction rating
• Sale of Metrix smart-metering business for
$272m announced
• Kawerau station celebrated 10 years of generating
renewable geothermal energy – and smashed their
records for production in October
• Gifted solar panels and an energy storage battery to
Ngāi Tahu Tourism's National Kiwi Hatchery Aotearoa
• $75m reinvestment in Karāpiro power station announced
(completion FY2024)
• Construction of $256m Turitea wind farm announced
(completion FY2021)
• Auckland teams move into a single location at
33 Broadway, Newmarket
• Rated by the Carbon Disclosure Project among NZ’s top
10 companies for reducing our environmental impact
• Partnered with the University of Auckland’s Faculty of
Engineering to support them in increasing first-year
female undergraduate enrolments to at least
33% by 2020
• Awarded Employer of the Year, Newmarket Business
Awards 2019
• Innovations to our online platform to make it easier for
customers to join us and stay with us on moving house
• Congratulated 11 more Mercury graduates of the NZQA-
accredited New Zealand Certificate in Contact Centres
• Partnered with the Electricity Retailers’ Association of
New Zealand on the EnergyMate initiative, a free in-home
energy coaching service to help families at highest risk of
energy hardship
• Offer of $300m subordinated capital bonds
ACKNOWLEDGING OUR CHAIR
As has been announced, this Annual Report is the last
with Joan Withers as Chair of our Board after a decade
in the role. On behalf of our people and our partners,
I acknowledge Joan’s very significant contribution to all
that Mercury is today.
With Joan as Chair, Mercury has advanced our growth
in renewable energy. Joan presided over the listing of
Mighty River Power on the New Zealand and Australian
Stock Exchanges in 2013 and was a great support through
the consolidation of the Mighty River Power and Mercury
Energy brands under the refreshed Mercury banner in 2016.
The establishment of our strong platform and clear
strategy for growth is part of the legacy Joan will leave us.
Joan will hand over the Chair’s responsibilities to Prue
Flacks at the conclusion of our Annual Shareholders’
Meeting on 27 September. I look forward to working
with Prue to further advance Mercury on our mission.
LAST SHOUT-OUT
On behalf of Mercury’s executive, I acknowledge the mahi
nui (strong work) of our people, the pono (loyalty) of our
customers, and the mana of our owners and our partners.
We will continue to work in your collective interests to
deliver long-term sustainable value. I thank you again for
being part of our story.
Together we are Mercury.
Energy made Wonderful.
Ngā mihi nui ki a koutou katoa.
FRASER WHINERAY // CHIEF EXECUTIVE
OUR ANNUAL REPORT 2019

WHAT
MATTERS
MOST.
22 // 23

WHAT
MATTERS
MOST.
OUR ANNUAL REPORT 2019OUR ANNUAL REPORT 2019

OUR FIVE PILLARS.
CUSTOMER
PARTNERSHIPS
KAITIAKITANGAPEOPLE
COMMERCIAL
24 // 25WHAT MATTERS MOST

2017
Incorporated more input from our
stakeholders into our view of what
matters most.
OVER THE PAST FOUR YEARS, WE HAVE...
Since 2015 we've been building the understanding across Mercury of how we create long-term
value. Integrated thinking enables better decision-making throughout our business and aligns
effort to improve our performance.
2016
Identified the key drivers of material
value creation (our pillars).
2018
Aligned how we measure the success
of Mercury and company-wide
planning with our pillars.
These strategic goals enable a co-ordinated
and integrated programme of activity
that acknowledges and is influenced by
the expectations of our key stakeholders.
It provides a common framework for
planning across the business.
KEY FEATURES OF
OUR PLAN ARE:
Long-term success – we have set out what
our view of success is for each of our pillars
in 2030, reflecting and communicating our
strategic intent.
Our plan maps the creation of value over the
short, medium and long term across each
of our pillars.
Mid-term goals – we have created three-year
goals to the end of FY2022. These are the
way-points that will help us assess how
we are tracking towards achieving our
long-term success.
2019
Taken the next step in our integrated
thinking by creating a plan that aligns our
operational activity with our strategic intent.
OUR ANNUAL REPORT 2019

OUR STRATEGIC GOALS.
CUSTOMERPARTNERSHIPSKAITIAKITANGAPEOPLECOMMERCIAL
LONG-TERM SUCCESS
BY 2030 WE WILL BE:
New Zealand’s leading energy brand.Recognised as a leader within
our industry, with our industry
recognised as a positive contributor
to New Zealand, and with Mercury’s
access to fuel enduring and
enhanced.
Recognised as a leader in the
ultra-long-term management of
both physical and natural assets.
A Zero Harm organisation that
has enabled our people to adapt
to the changing nature of work
to deliver the highest levels of
performance and productivity.
Leading our sector in terms
of financial performance and
shareholder returns, earning at
least our cost of capital.
MID-TERM GOALS
WE’RE ON TRACK
BY FY2022 IF:
We are inspiring, rewarding and
making it easy for customers in
our target segments.
There is bipartisan national, regional
and community support for positive
contributions from the renewable
electricity industry.
Existing relationships are maintained
and strengthened, and new
relationships are created, consistent
with our purpose and strategy.
We understand and are managing
the long-term sustainability of the
natural resources and assets that
we rely on.
We have enabled our people to
understand and respond to the
changing nature of work in order
to deliver the highest levels of
productivity and performance and are
viewed as an attractive place to work.
We are a Zero Harm organisation that
continues to focus on the physical
and mental wellbeing of all the people
who are important to our business.
We deliver EBITDAF growth and
maintain an appropriate average
for stay-in-business CAPEX
investment, while operating within
agreed risk parameters.
OUR FOCUS AREAS:
Brand
Loyalty
Experience
Industry & Research
Iwi
Government
Natural Resources
Climate Change
Assets
High Performance Teams
Safety & Wellbeing
Capability & Development
Operational Excellence
Generation Development
Sustainable Growth
26 // 27WHAT MATTERS MOST

CUSTOMERPARTNERSHIPSKAITIAKITANGAPEOPLECOMMERCIAL
LONG-TERM SUCCESS
BY 2030 WE WILL BE:
New Zealand’s leading energy brand.Recognised as a leader within
our industry, with our industry
recognised as a positive contributor
to New Zealand, and with Mercury’s
access to fuel enduring and
enhanced.
Recognised as a leader in the
ultra-long-term management of
both physical and natural assets.
A Zero Harm organisation that
has enabled our people to adapt
to the changing nature of work
to deliver the highest levels of
performance and productivity.
Leading our sector in terms
of financial performance and
shareholder returns, earning at
least our cost of capital.
MID-TERM GOALS
WE’RE ON TRACK
BY FY2022 IF:
We are inspiring, rewarding and
making it easy for customers in
our target segments.
There is bipartisan national, regional
and community support for positive
contributions from the renewable
electricity industry.
Existing relationships are maintained
and strengthened, and new
relationships are created, consistent
with our purpose and strategy.
We understand and are managing
the long-term sustainability of the
natural resources and assets that
we rely on.
We have enabled our people to
understand and respond to the
changing nature of work in order
to deliver the highest levels of
productivity and performance and are
viewed as an attractive place to work.
We are a Zero Harm organisation that
continues to focus on the physical
and mental wellbeing of all the people
who are important to our business.
We deliver EBITDAF growth and
maintain an appropriate average
for stay-in-business CAPEX
investment, while operating within
agreed risk parameters.
OUR FOCUS AREAS:
Brand
Loyalty
Experience
Industry & Research
Iwi
Government
Natural Resources
Climate Change
Assets
High Performance Teams
Safety & Wellbeing
Capability & Development
Operational Excellence
Generation Development
Sustainable Growth
OUR ANNUAL REPORT 2019

OUR
STORIES.
Tilt Renewables’ Tararua Wind Farm
28 // 29

OUR ANNUAL REPORT 2019

01. CUSTOMER
CONVERTING
HUMAN
ENERGY INTO
WONDERFUL
ENERGY.
Bex Rose knows wonderful. In 2017, the Deputy
Principal of Brookby School was awarded the
title of
Auckland's favourite teacher. Bex was
nominated by her pupil Miles Wilson, who doesn’t
like skipping school anymore because he’d miss
her too much.
The love is reciprocated with Bex saying: “The kids,
first and foremost, inspire me. They just bring light
to your life and keep you young and on your feet.”
As well as being a teacher, Bex has been a Mercury
customer for 15 years. During this time, she’s gone
from being a student, to young professional, to a
home-owner, wife and mother.
30 // 31

MERCURY
ON THE GO.
The freedom to manage your energy
is in your hands.
Download the Mercury Go app to
view your account balance, pay your
account, earn rewards, and enter
step challenges to keep active.
To download the app, visit the App
Store or Google Play.
I’M ALREADY QUITE
ACTIVE, SO IT’S NICE TO
EARN REWARDS AND GET
A COUPLE OF DOLLARS
HERE AND THERE FOR THE
POWER BILL.
OUR ANNUAL REPORT 2019

Bex has always been active and she’s always been open
to trying new things. It’s not surprising then that Bex was
one of the first to download and use our new mobile app,
Mercury Go.
Through the app, customers can track their daily usage and
pay their account. They can also earn rewards (including
Mercury Dollars) by completing fun challenges. Customers
can then use their Mercury Dollars to get money off their
bill or redeem them for Airpoints Dollars™.
There are currently three ways customers can earn Mercury
Dollars or win prizes through the app: by loading a profile
pic, completing step challenges, and getting friends to join
Mercury. And there’ll be more ways to earn coming soon.
“The app is great for seeing how much your next bill will be,
and for viewing your balance,” Bex said.
“And having the rewards is definitely an incentive to keep
active. I like the short, sharp bursts: a two-day challenge is
manageable for a lot of people to get that done and then
getting the incentive at the end makes it cool.
I LOVE THE
FREE POWER
DAYS; THEY'RE
AWESOME.
MERCURY BRAND CUSTOMERS
SWITCHING RETAILER WITHOUT
MOVING HOUSE
64%
CUSTOMERS
'HIGHLY SATISFIED'
4.4%
2017
6.4%
2018
7. 4 %
2019
32 // 33OUR PILLAR STORIES // CUSTOMER

1.2M
NUMBER OF APP
LAUNCHES
15,226
NUMBER OF MERCURY
DOLLARS REDEEMED FOR
AIRPOINTS DOLLARS
TM
“I’m already quite active, so it’s nice to earn rewards and
get a couple of dollars here and there for the power bill.
I run a boot camp for mums after school and I’ve been
encouraging them to download the app. It’s been great for
them because the challenges and rewards have motivated
them to move more, which is neat.”
Bex’s favourite rewards are the Free Power Days customers
can earn.
“I love the Free Power Days; they’re awesome. I use the dryer
on those days, which I don’t normally use. We do all the
sheets and all the things I’ve been putting off.”
The app has been downloaded by 57,000 customers since
its launch in August last year.
Almost 160,000 challenges have been accepted and
over 85,000 have been completed. We have given away
$157,000 in prizes, including Free Power Days, e.bikes,
e.scooters, a trip for two to Europe, and over $117,000
Mercury Dollars.
Head of Brand and Marketing Ben Harvey-Lovell says the
app was another way to bring Energy Freedom, and Energy
made Wonderful, to life for our customers.
“We wanted to make it easy for customers to manage
their account through the app, but we also wanted to
inspire them to interact with us more often through the
challenges.
“Our goal is to be the leading energy brand in New Zealand,
and to achieve that goal we need to design experiences
that customers love.
"The app is a way for us to get customers thinking about
Mercury when they’re doing fun things like exercise.
“Hearing about the joy the Rose family get from the app
and their Free Power Days is Energy Freedom in action, and
it’s why we do what we do,” says Ben.
86,533
FREE POWER DAYS
ENJOYED BY CUSTOMERS
OUR ANNUAL REPORT 2019

Andrew Day’s grandfather started farming
sheep and beef in the Tararua Ranges above
Palmerston North in 1929. Today, Andrew farms
this hill country and the rolling farmland further
to the east, in partnership with his parents.
“It’s quite exposed country,” Andrew says. “It’s
renowned for its wind but also for a reasonably
awful, wet climate.”
The Day family met Mercury more than 10 years
ago. After extensive initial negotiations to agree
access to his farm for wind turbines at Turitea,
as well as part of the transmission line for the
proposed Puketoi wind project, communication
between the family and Mercury was mostly
maintained through a regular annual function.
TURITEA WIND FARM,
PALMERSTON NORTH
A WONDERFUL
ALLIANCE.
TURITEA
WIND FARM
PAHIATUA
LINTON
SUBSTATION
r
PUKETOI WIND FARM
53 turbines consented
SOUTHERN
TURBINE ZONE
27 turbines
consented
PALMERSTON
NORTH
10 KM
National Grid
Committed 220kV
Transmission
Consented future
220kV Transmission
Turbine Zone
NORTHERN
TURBINE
ZONE
33 turbines
committed
34 // 35
02. PARTNERSHIPS

FIND OUT MORE
ABOUT OUR
WIND FARM BUILD.
Please visit mercury.co.nz/windupdates
OUR ANNUAL REPORT 2019

Andrew’s contact with Mercury has mostly been through
Property Manager Duncan Annandale. Duncan has been
responsible for building Mercury’s relationships with the
landowners for eight years. Over time, since the original
agreements were secured, it became clear that patience
would be necessary.
“Because of flat demand in the electricity market we had
to wait until the economics were right to build. There were
years of communicating with the landowners and updating
them on the status of the market so that they understood
why no activity was taking place,” says Duncan.
“The annual catch-ups with this group, and now continuing
with people associated with the future project at Puketoi,
are also times for us to find out about their lives and
families and what’s going on with them.
“As the years pass, it’s interesting to see the
intergenerational theme coming through as people retire
or younger family members take a more active role in their
farms and businesses. Family is important for these long-
term relationships.
“Now that we’ve made the decision to start building the
Turitea wind farm, my role extends to managing the next
stages of the contracts with the landowners, as well as
ensuring that their voices are heard as part of the design,
development and building phases.”
Duncan’s work with the landowners on the wind farm and
transmission sites has built trusted relationships over time.
“We’re a company, but we try to present a consistent, human
face,” he says.
WE'RE A COMPANY, BUT
WE TRY TO PRESENT A
CONSISTENT, HUMAN FACE.
125
M
HIGH FROM BASE
TO ROTOR TIP
470
GWh
GENERATION PER YEAR
Tilt Renewables’ Tararua Wind Farm
36 // 37OUR PILLAR STORIES // PARTNERSHIPS

BUILDING
RELATIONSHIPS
IN THE
COMMUNITY.
We’ve been talking with people in communities around
Turitea and Puketoi in the Manawatu for a long time.
Mercury’s wind strategy goes back over 15 years (since 2004).
During this time, we have worked with Councils in the region,
contributing to their public planning processes to ensure
that consent pathways are supportive of renewable
energy policies.
Consents to build the Turitea wind farm were granted in
2011. One consent condition is to have a Community Liaison
Group, to share information around the construction and
operation of the wind farm and receive feedback.
PROVIDING RELEVANT
INFORMATION IN A
PROFESSIONAL WAY, SETTING
OUT WHAT IS ABOUT TO HAPPEN
AND INVITING FEEDBACK
AND DISCUSSION BUILDS
RELATIONSHIPS OF RESPECT
AND ACCOUNTABILITY.
Andrew confirms this: “I’ve had a reasonably long
relationship with Duncan, and what I value is that he’s
also had farming experience himself so he’s reasonably
conscious of how we operate and has an understanding
of our farming operation that I wouldn’t have typically
expected to find in an energy company.”
OF COURSE THERE’S
PERSONAL BENEFIT
TO OUR BUSINESS.
BUT MORE BROADLY,
AS A COUNTRY WE’VE
GOT TO GET OUT OF
CARBON INTENSIVE
ENERGY SOURCES.
Margaret Kouvelis, former Mayor of Manawatu District
Council, is the Independent Chair of the Community Liaison
Group. She says:
“So far, I have been impressed with the quality of the
information and the people presenting it, the willingness
of the company to be hospitable, available and open to
residents and the efforts at communicating the content
and timing of these meetings in order to minimise the
impact on the communities most affected.”
Through this group, Mercury connects with a range of
people in the community. We’ll be engaging further with
local iwi, looking for opportunities to work in partnership
there too. We’ve already been exploring how we can build
their capacity to support project outcomes. And Mercury
will continue to work closely with Councils to encourage
renewable electricity generation growth that is good for
New Zealand’s energy freedom and that also contributes
significantly to regional development.
For Duncan, what he likes best about the job is providing an
opportunity to add value to rural properties.
“A rural property that happens to have hills or ranges which
catch wind at the top becomes a site where you can put
turbines, and the landowner can profit from that on top
of their ongoing farming operation. It diversifies the farm
income and that’s what I enjoy seeing happen.”
New Zealand’s electricity supply is already more than 80%
renewable. The initial phase of the Turitea wind farm is just
one of the consented projects being built as the demand
for renewable electricity grows (including through the
accelerated electrification of transport and retirement of
thermal generation) and the country moves towards a
lower-carbon economy.
Andrew sees clear benefits from the wind farm beyond
his family farm. “Of course there’s personal benefit to our
business. But more broadly, as a country we’ve got to get
out of carbon intensive energy sources. Wind power, being
virtually carbon free, is something that we’ve got to push on
with around New Zealand.”
Mercury is intent on advancing renewable energy
generation through wind power as part of our strategy for
growth and our mission of Energy Freedom.
OUR ANNUAL REPORT 2019

SOLAR GIVES
KIWI A BRIGHTER
FUTURE.
In June, a farmer found an injured kiwi, dazed
and confused on the side of a rural road near
Whakatāne. The kiwi had been hit by a car.
His first bit of luck was being taken by the
farmer to a local vet. Once the extent of his
injuries was identified, his second bit of good
fortune was being transferred to Ngāi Tahu
Tourism’s National Kiwi Hatchery Aotearoa in
Rotorua where a dedicated kiwi hospital had
just opened. He was its first patient.
Kiwi are a unique part of New Zealand’s
biodiversity and an important taonga
(treasure). Once abundant, there are now
only around 68,000 of our beloved national
birds left. Today their status is often used as a
barometer of how our environment is coping
with the challenges being thrown at it.
03. KAITIAKITANGA
38 // 39

WE WANT TO INSPIRE
NEW ZEALANDERS TO
ENJOY ENERGY IN MORE
WONDERFUL WAYS – AND
WHAT’S MORE WONDERFUL
THAN ENSURING THE
SURVIVAL OF OUR BELOVED
NATIONAL ICON?
WATCH AND LEARN
ABOUT HOW MERCURY
HELPS NGĀI TAHU
TOURISM’S NATIONAL
KIWI HATCH ERY.
Please visit www.mercury.co.nz/kiwihatchery
OUR ANNUAL REPORT 2019

THE NEW HOSPITAL IS A
'FANTASTIC ADDITION' AND
WILL HAVE A DIRECT IMPACT
ON KIWI POPULATIONS.
Ninety-five percent of kiwi chicks born in the wild die before they
reach breeding age (three years old), according to the Department
of Conservation. This is due to non-native predators such as stoats
and the impact of humans.
Our five kiwi species range from recovering to critically endangered
and they need our help to survive. That’s why individuals,
community groups, iwi and conservation agencies are working
hard to ensure the birds are given a chance to survive and thrive in
their natural habitat.
The National Kiwi Hatchery is a leader in this work, which includes
kiwi husbandry, egg incubation systems, hatching techniques and
chick rearing. As the hatchery is a Mercury customer, our Head
of Mass Market Segments, Mohammed (Mo) Abbas, visited the
facilities. While there, he noticed there wasn’t a back-up electricity
supply to incubators. Mo knew it was important to keep the
precious eggs warm in the event of any power outage, and that
there was expertise we could share.
Working with the hatchery, Mercury developed a solar electricity
supply package coupled with a Tesla battery. The solution reduces
running costs for the hatchery while ensuring security of electricity
supply. This proved its value this year when power had to be
disconnected for maintenance and the incubators ran off battery
power for 15 hours.
“We want to inspire New Zealanders to enjoy energy in more
wonderful ways – and what’s more wonderful than ensuring
the survival of our beloved national icon?” Mo says.
“It’s everyone’s responsibility to fight for kiwi. Caring for them,
breeding them and raising them is an incredibly specialised job
and one we’re in awe of. By supporting the hatchery, Mercury can
help reverse some alarming statistics facing kiwi.”
40 // 41OUR PILLAR STORIES // KAITIAKITANGA

KOMANAWA THE KIWI
Komanawa was the first kiwi to be treated in
the National Kiwi Hatchery's new kiwi hospital.
After two weeks of treatment, Komanawa
was released back into the wild.
WEIGHT ON ARRIVAL: 1392G
WEIGHT AT RELEASE: 1457G
1923
CHICKS HATCHED SINCE THE
OPENING OF THE NATIONAL
KIWI HATCHERY
Every week, 20 kiwi die from factors such as cars, stoats and
dogs. By collecting eggs from the wild and hatching them at
the hatchery, the chicks have a 65% chance of reaching the
1kg milestone, the weight kiwi need to be to defend themselves
against most predators.
This year, Mercury donated a stand-alone building to the
hatchery for a new kiwi hospital. It is fitted with nine heated
areas to treat sick and injured kiwi, as well as to house health
chicks brought in from the wild.
Kiwi Husbandry Manager Emma Bean said the new hospital
was a “fantastic addition” and would have a direct impact on
kiwi populations.
That’s where our injured kiwi from Whakatāne ended up.
He was brought to the hatchery bruised, grazed and with
patches of feather loss. Luckily, an x-ray showed no bones
had been broken.
He was treated with anti-inflammatory medication and
precautionary antibiotics for five days, and hand-fed twice a
day “because he didn’t think much of the cooking,” Emma
says. He was released back into the forest after two weeks;
slightly heavier and with a new name, Komanawa, a reference
to a natural spring near where he was found.
The 2018/19 breeding season was successful for the hatchery
and our partnership, with 145 chicks being released into the
wild, up eight chicks on the previous year.
“That might not seem like a big difference, but literally every
bird we can reintroduce to the wild counts,” Emma says.
“They say it takes a village to raise a child – well it’s the same
for kiwi. There’s an awful lot of hard work and love that goes
into saving kiwi. It’s a huge project but amazing to be part of.”
Mercury feels the same.
145
CHICKS WERE RELEASED
INTO THE WILD IN FY2019
15
HRS
OF BACK-UP POWER
FROM SOLAR/BATTERY
INSTALLATION
OUR ANNUAL REPORT 2019

THE 2018/19 BREEDING SEASON
HAS BEEN SUCCESSFUL FOR THE
HATCHERY AND OUR PARTNERSHIP,
WITH 145 CHICKS BEING RELEASED
INTO THE WILD, UP EIGHT CHICKS
ON THE PREVIOUS YEAR.
42 // 43OUR PILLAR STORIES // KAITIAKITANGA

OUR ANNUAL REPORT 2019

An important kaitiakitanga role that we acknowledge
is our need to help the country reduce its greenhouse
gas (GHG) emissions and for us to take responsibility
for our own. Mercury is carbon positive, with our
carbon units exceeding the level of our emissions
(including those of our residential gas customers).
This was achieved through active participation in the
New Zealand Emissions Trading Scheme, the careful
measurement of our GHG emissions and long-term
partnerships with forest owners.
OUR CARBON
PROFILE.
• This year, an increase in our geothermal generation
resulted in a 6% increase in fugitive GHG emissions.
These occur naturally in the geothermal fluid and must
be removed prior to generating electricity.
• The gross emissions intensity of the electricity we
generate is 39kg CO
2
e/MWh. This is 60% lower than
the New Zealand grid average and a 44% decrease
since FY2015.
• As we build more wind generation the intensity of
emissions for our overall generated electricity may
further reduce.
20152016201720182019
E
m
i
s
s
i
o
n
s

i
n
t
e
n
s
i
t
y

t
o
nne
s

C
O
2
e
/GWh
Generation (GWh)
Generation (GWh)Emissions Intensity
0
10
20
30
40
50
60
70
80
5800
6000
6200
6400
6600
6800
7000
7200
7400
7600
7800
44 // 45OUR PILLAR STORIES // KAITIAKITANGA

Mercury has maintained a robust programme investing
in forestry units for the past nine years. This results in
us holding more carbon units than we require to offset
emissions we produce through our operations and activities.
Our total GHG footprint has decreased by 36% between
FY2015 and FY2019, influenced by the mothballing of
Mercury's Auckland thermal (gas) generation facility at
Southdown.
Emissions from our vehicle fleet have reduced since 2016
as a result of converting over 70% of our fleet to electric
vehicles (EVs) or plug-in hybrid vehicles (PHEVs).
Emissions associated with the electricity we purchase for
offices and other buildings account for less than 1% of our
total GHG footprint.
Mercury surrenders emissions units for all the energy
we provide, including the gas consumed by our dual-
fuel customers. We will continue to explore emissions
associated with our supply chain, using our supplier guiding
principles to engage in partnerships that can realise further
emission reductions.
Assessment of potential impacts of climate change on our
business is an ongoing focus.
Physical risks:
Using various climate change scenarios (from <1.5°C
to >3.0°C) across different time scales, we consider the
potential impacts on generation operations and generation
assets. This includes the impacts of changing rainfall
patterns and intensities as well as increasing average
temperatures. The results of ongoing modelling facilitate
the development of our climate change management plan
which will highlight requirements and further options for
mitigation and/or adaptation.
Regulatory risks:
There are potential financial and operational implications
and opportunities of New Zealand’s transition to a low-
carbon economy. Regulation such as the Zero Carbon Bill,
renewable energy targets, and a revised Emissions Trading
Scheme all have implications for Mercury. We remain
actively involved in assessing carbon prices, emissions
trading mechanisms and the implications of revised
regulations around carbon units.
Further information on our management of climate-related
risks can be found in the Corporate Governance Statement
on Mercury's website.
For an energy generator and retailer, with a mission of
Energy Freedom, climate change presents opportunities
to achieve additional commercial outcomes and promote
sustainable, low-emission lifestyles. Opportunities relevant
to Mercury include increased renewable energy generation
and the promotion, development and expansion of low-
emission goods and services.
MANAGING CLIMATE CHANGE RISK
AND OPPORTUNITIES.
-
500
1,000
1,500
2,000
2,500
Emissions (To
nne
s

C
O
2
e
/
'
000s)
Our carbon position FY2015 to FY2019
FY15FY16FY17FY18FY19
Direct emissions -
predominantly fugitive
emissions from
geothermal facilities
Scope 1
Scope 2
Indirect emissions -
from purchased
electricity used
in offices
Scope 3
Other indirect emissions -
99% downstream from
gas sales to dual fuel
customers
The number of carbon units
we hold, after surrendering
units relating to our
operations and activities
Net carbon position
CARBON POSITIVE

The forestry units we hold represent absorbtion of
more carbon than we contribute to the environment.
OUR ANNUAL REPORT 2019

BUILDING
BLOCKS FOR
SUCCESS.
2019 saw the long-anticipated move of 560
Mercury team members from three offices
across Auckland to one.
While the shift to 33 Broadway in Newmarket
looked like a building project on the surface,
the focus was not bricks and mortar; it was our
people and our customers.
04. PEOPLE
83%
OF OUR PEOPLE SAY THAT
OUR PHYSICAL WORKSPACE
IS ENJOYABLE TO WORK IN
84%
OF OUR PEOPLE SAY
THEIR TEAM DELIVERS
HIGH QUALITY RESULTS
46 // 47

BEING TOGETHER IN THE ONE
LOCATION ENABLES US TO CREATE
A BETTER CUSTOMER EXPERIENCE,
BECAUSE WE CAN COLLABORATE
MORE EFFECTIVELY AS HIGH
PERFORMANCE TEAMS DELIVERING
THE LEVEL OF SERVICE OUR
CUSTOMERS DESERVE.
MEET HUIA
Huia is one of Mercury’s wonderful
telesales representatives.
Huia returned to Mercury from
parental leave in late 2017. You
could say it was a different world
for her back then.
OUR ANNUAL REPORT 2019

THE NEW TECHNOLOGY
AND MORE SOURCES OF
KNOWLEDGE AVAILABLE GIVE
US THE CAPABILITY TO SOLVE
QUERIES MORE QUICKLY...
MEET HUIA COCKER
Telesales Representative Huia Cocker returned to Mercury
from parental leave in late 2017 – it was a different world for
her back then.
"When I returned to full-time work at Mercury, I was in a
small office near Mercury’s Greenlane site in Auckland," says
Huia. "While it was exciting to hear of the upcoming move
to Newmarket, as a working mum living out in Pukekohe my
mind went to the complexities of managing the change of
location, while still adjusting to life as a working parent."
Fortunately for Huia, our people and our customers were at
the core of the decision-making. The vision of the four-year
project was to give our Auckland teams the freedom to do
their best work together.
Newmarket was chosen because of its place as both a
transport hub (well served by rail and bus) and a social hub.
This vision also meant rolling out new streamlined technology
and introducing the High Performance Teams way of working
prior to the move – enabling people to collaborate and work
more effectively together. And it guided the interior design
decisions made with architects Warren and Mahoney, with
our customer teams at the centre of the building and an
openness that promoted flexibility, wellbeing, safety and
collaboration.
"I have loved the change," says Huia. "We were well prepared
for the move, which made such a difference to me for my
first time working in ‘the big smoke’. I haven’t looked back.
Being together in the one location enables us to create a
better customer experience, because we can collaborate
more effectively as High Performance Teams delivering the
86
%
OF OUR PEOPLE SAY THAT WE
ASK FOR HELP WHEN WE NEED IT
AND LEARN FROM EACH OTHER
80
%
OF OUR PEOPLE AGREE THAT
PEOPLE FROM ALL BACKGROUNDS
HAVE EQUAL OPPORTUNITIES TO
SUCCEED AT MERCURY
48 // 49OUR PILLAR STORIES // PEOPLE

level of service our customers deserve. The new technology
and more sources of knowledge available give us the
capability to solve queries more quickly, and from there,
better customer outcomes flow.
"In addition, Mercury’s inclusive culture has meant I haven’t
felt like a ‘fish out of water’; in fact, the people I now have
the opportunity to interact with every day are the number
one reason I love working at 33 Broadway so much.
I feel more engaged in the business and I can sense
the opportunities," says Huia.
Mercury's Workforce Strategy Manager Sarah Holt was
involved in the project from the start and is extremely
happy with the final product. "The building’s connectivity
gives us a competitive advantage," says Sarah. "It has
wonderful visual connectivity, with the atrium and
bridges at its heart, which enable chance meetings and
collaboration. The design also offers different spaces for
working. It's an equitable setting that supports the freedom
to choose a work space suitable for the task people need
to complete that day. Seamlessly integrated software tools
also enhance our ability to collaborate with each other and
deliver to our customers."
WELLBEING
Wellbeing is at the heart of our focus on
creating inclusive work environments where
our people can be themselves and do their
best work together.
EMPLOYEE SAFETY
TOTAL RECORDABLE INJURY
FREQUENCY RATE
1.05
0.87
0.72
2017
2018
2019
78%
OF OUR PEOPLE CONFIRM
THAT MERCURY IS VISIBLY
AND ACTIVELY INVOLVED
IN THE WELLBEING OF
ITS PEOPLE
81%
OF OUR PEOPLE
SAY THEY FEEL SAFE
AND SUPPORTED IN
THEIR TEAM
OUR ANNUAL REPORT 2019

‘WONDERFUL’
FLOWING WELL
INTO THE FUTURE.
KARĀPIRO REINVESTMENT
On the Waikato River just south of Cambridge it’s a
frosty morning that will turn into another sparkling
blue day. In the powerhouse below the Karāpiro
dam David Derecourt (Regional Manager Hydro
North) has been working with the huge machines
that harness energy and create electricity for all of
his working life.
05. COMMERCIAL
50 // 51

WATCH L AKE
KARĀPIRO'S DAILY
WATER LEVEL AND
OUTFLOW ONLINE.
Please visit www.mercury.co.nz/lakelevels
THIS HYDRO STATION HAS BEEN
RUNNING SINCE 1948, AND THIS
NEW INVESTMENT IS GIVING
HER ANOTHER 80 YEARS OF
CONTINUED SERVICE.
OUR ANNUAL REPORT 2019

The next six years are going to see $75 million reinvested
in this infrastructure, to build on its 71-year legacy and
secure its future. The refurbishment of the power station
machinery will make it more efficient and allow up to
17% more generation from the river’s flow. This will help
Mercury respond to market demand, providing power to the
lightbulbs and EVs of New Zealand homes and businesses.
And David is proud to be part of the project. “I would like
to think that everyone involved will be more than happy
to stand up with a sense of pride, and tell their family and
their mates at the sports club that ‘I was involved with that’,”
he says.
“I will be proud to say that this project was a success, we
had a fantastic team working on it, it was delivered well,
nobody was hurt and we should be good to go for the next
80 years.”
$75
M
INVESTMENT IN CORE
IMPROVEMENTS
AND MAINTENANCE
OF THIS KEY
GENERATION
INFRASTRUCTURE
I WILL BE PROUD TO SAY THAT THE PROJECT
WAS A SUCCESS, WE HAD A FANTASTIC TEAM
WORKING ON IT, IT WAS DELIVERED WELL,
NOBODY WAS HURT AND WE SHOULD BE
GOOD TO GO FOR THE NEXT 80 YEARS.
71
YEARS
SINCE THE POWER
S TAT IO N WA S
COMMISSIONED
Long-term, multi-generation thinking goes with the
territory. “This hydro station has been running since 1948,
and this new investment is giving her another 80 years of
continued service,” David explains. “These machines had a
mid-life refurb in the 1980s but indications are they are in
their twilight years now.”
At the time of this previous investment in the 1980s, the
teenage David was approximately 50km downstream,
attending Ngāruawāhia High School. “I was born in
Ngāruawāhia and the awa (river) was a big part of my life,”
he says. “In 1991, I fronted up as a fresh-faced electrical
apprentice in the Arapuni Area (Karāpiro, Arapuni and
Waipāpa hydro power stations).”
52 // 53OUR PILLAR STORIES // COMMERCIAL

* Output based on average since 2000. Average home = 7000kWh per year; average EV = 2200kWh per year.
Fast-forward nearly 30 years and David’s team looks after
the day-to-day running of the plant, with a huge number of
others behind them who “keep these generators running
and keep more of the ‘wonderful’ flowing”.
The Waikato River is New Zealand’s most important and
diverse water catchment. Mercury delivers around 10% of
New Zealand’s electricity from the fall of the water in this
river (an average of ~4,020GWh each year). And out of that,
Karāpiro station generates about 12% (511GWh annually* –
equivalent to the power used by 73,000 homes or 230,000
EVs*). Hydro electricity doesn’t really use water – water
passes through our power stations but remains in the
river, unaltered for other users and environmental benefits.
Only the gravity is used.
David’s favourite part of the job? “Knowing that I’ve been
entrusted to look after 70 to 80-year-old bits of kit,
enabling the people in the teams to support and maintain
that, and being involved in refreshing the future of those
assets to give them another 80 years. I’m giving back to
the ‘old girl’ that gave me my first job. If it wasn’t for these
power stations I wouldn’t be where I am today.”
The project will overhaul and in some cases replace the
turbines, generators and governor systems. In concurrent
work to future-proof the station, other items are also being
addressed due to either age-related issues (by-pass valves
and associated works) or legacy performance challenges
(hydro intake gates and operating mechanisms, stoplogs).
“We’re lifting the lid on every part of the station, with some
significant parts being replaced,” says David. “It’s going to
make life at the station interesting for the next six years.
Apart from some big trucks delivering some huge kit, this
project shouldn’t impact on local people at all, and the
additional people on site will create new opportunities for
value creation in the communities nearby.”
David is motivated by a view well beyond his time so far on
the river.
“I want to hand back these assets – the power station and
the awa – to those who walk in my footsteps, to receive it in
a better condition than I received it. These fantastic assets
have a long history and will forever have a long history.
They’ll be around long after I’ve gone – in 200 years plus,
they’ll still be around.”
WHAT’S THE OUTCOME OF
THIS PROJECT?
15% increase in peak capacity at the
station from this project – generating
more electricity from the water flow.
Future-proofing the station with plant
replacement and upgrades.
39 units and ancillary equipment being
refurbished across the Waikato Hydro
System’s nine hydro power stations during
this decades-long programme of work,
which started in 2011.
AND THE FULL PROGRAMME
OF WORK?
Whakamaru: 4 to 5-year on-site project finishing
mid 2020. Outcome: capacity gain from 25MW to
31 MW for each of the 4 units; increase in efficiency
and in asset reliability. Total cost ~$76m.
Aratiatia: 3 to 4-year on-site project finishing
mid 2020. Outcome: optimising station
performance for the available river flow and
increase in asset reliability. Total cost ~$49m.
OTHER CURRENT MAJOR
INFRASTRUCTURE INVESTMENT IN
THE WAIKATO HYDRO SYSTEM
8
YEARS’ WORK
2 YEARS’ PLANNING AND
5 YEARS’ ON-TOOLS WORK
2024
SCHEDULED FINISHING
DATE OF PROJECT
OUR ANNUAL REPORT 2019

LET’S GET
INTO THE
NUMBERS.
OUR FINANCIALS
54 // 55

LET’S GET
INTO THE
NUMBERS.
OUR ANNUAL REPORT 2019

$505M
OPERATING EARNINGS
(EBITDAF)
$357M
RECORD PROFIT
(UP $123 MILLION)
FINANCIAL
COMMENTARY.
Mercury produced a strong financial result during FY2019
under unusual weather and market conditions.
The financial year started with wet weather across the
Waikato catchment, but turned acutely dry from September
2018. Annual hydro generation was 4,006GWh, in line
with the company’s long-term average, albeit with around
200GWh reduction in Lake Taupō’s level over the year.
Annual geothermal generation set a record at 2,896GWh,
coinciding with record-high annual spot prices caused
by gas supply and thermal generation constraints from
October 2018. These generation constraints pushed
the generation-weighted average price earned above
$138/MWh for the year.
Mercury’s focus on customer value and loyalty resulted in
reduced acquisition activity, as elevated spot prices meant
retail margins were negative for all customer segments over
the year. The average price received for sales to residential
and small commercial customers was up two percent year-
on-year.
Mercury sold our smart-metering business, Metrix, in
February 2019 for $272 million, which has resulted in a
gain on sale of $177 million. The company committed
$256 million in March 2019 to build our first wind farm at
Turitea near Palmerston North, with commissioning from
Q2 FY2021.
15.5CPS
o
PER SHARE FULL YEAR
ORDINARY DIVIDEND
56 // 57FINANCIALS

600
620
640
660
680
700
720
740
20152016201720182019
$M
Financial Year
Energy Margin
440
460
480
500
520
540
560
580
20152016201720182019
$
M
Financial Year
Operating Earnings (EBITDAF)
OPERATING COSTS
The company continued our disciplined
approach to efficient and focussed activity.
Costs, normalised for the adoption of IFRS 15
and 16 and the sale of Metrix, remained flat for
the sixth year in a row.
Operating costs represent the company’s indirect
costs of sales, including salaries and wages,
maintenance costs and all other overheads.
190
195
200
205
210
215
220
20152016201720182019
$
M
Financial Year
Operating Costs
6TH YEAR
IN A ROW OPERATING
COSTS HELD FLAT
ENERGY MARGIN
Mercury’s energy margin of $667 million versus
$730 million in the prior year was achieved
with 800GWh, or 10%, less generation. Hydro
generation, while in line with the company’s
long-run average, was highest in the first quarter
of the year, prior to the sustained increase in spot
prices from October.
The company’s continued focus on customer
value and rewarding loyalty resulted in reduced
acquisition activity as retail margins contracted
with spot and futures energy costs lifting.
This continues to be reflected in our focus on
meeting our customer promises and providing
better customer-led digital experiences.
OTHER INCOME
Other net income of $37 million was down for
the year due to the sale of the company’s smart-
metering business, Metrix, on 28 February, with
only eight months of revenues reported. Other
income also includes proceeds from property
sales, insurance and dividends received from our
investment in Tilt Renewables.
OPERATING EARNINGS
(EBITDAF)
The company’s $505 million of EBITDAF fell on
the prior year’s record of $566 million, which
benefited from over 800GWh more generation
and a full year of Metrix ownership.
Note: Financial results for the periods ended 30 June 2017 and earlier have not been restated for new IFRS standards.
OUR ANNUAL REPORT 2019

0
20
40
60
80
100
120
140
20152016201720182019
$
M
Financial Year
Capital Expenditure
Stay-in-businessNew investment
0
50
100
150
200
20152016201720182019
$
M
Financial Year
Underlying Earnings After Tax
0
5
10
15
20
25
20152016201720182019
Cents per share
Financial Year
Dividends
InterimFinalSpecialBuyback
PROFIT FOR THE YEAR
The company’s record net profit after tax of
$357 million was up $123 million on the prior
year’s record. Mercury benefited from lower
interest costs as our historical out-of-the-money
hedges matured, and from the gain on sale of
our smart-metering business, Metrix. As with the
prior year, there were no impairments recorded.
CAPITAL STRUCTURE
AND DIVIDENDS
The company’s gearing level of 1.9x remains
in line with the strong end of Mercury’s target
range of 2.0x to 3.0x debt/EBITDAF ratio for our
S&P credit rating of BBB+, which was reaffirmed
in December 2018.
Mercury currently holds 39 million shares as
treasury stock and has available debt headroom
within our current facilities of $300 million
and cash and cash equivalents of $94 million.
This continues to provide balance sheet flexibility
for growth.
In line with our dividend policy, targeting a
pay-out ratio of 70% to 85% of Free Cash Flow
on average over time, a fully imputed 9.3 cents
per share final dividend has been declared. This
brings the full-year ordinary dividend to 15.5
cents per share, up from 15.1 cents per share in
FY2018, and marks our 11th consecutive year of
ordinary dividend growth. The final dividend will
be paid on 30 September 2019.
UNDERLYING EARNINGS
AF T ER TA X
Underlying earnings is provided to enable our
stakeholders to make an assessment and
comparison of earnings after removing one-off
and/or infrequently occurring events (exceeding
$10 million of profit before tax), impairments
and any changes in the fair value of derivative
financial instruments.
Underlying earnings after tax decreased by
$37 million to $161 million, reflecting the
company’s stronger EBITDAF performance in
FY2018 which was underpinned by the highest
North Island hydro inflows and total generation
in the company’s history.
11TH
CONSECUTIVE
YEAR OF ORDINARY
DIVIDEND GROWTH
$161M
UNDERLYING EARNINGS
AFTER TAX
58 // 59
FINANCIALS

NET CASH FLOWS FROM
OPERATING ACTIVITIES
Net cash provided by operating activities
represents the cash flows from the sale of
electricity and metering services, along with the
costs associated with their sale and the cash
costs of interest and taxes.
BALANCE SHEET
Total assets of the company increased by
$378 million in the financial year, largely due to
a $250 million upwards revaluation of Mercury’s
generation assets due to a lower cost of capital.
It is emphasised that this asset valuation is
completely unrelated to decisions on customer
pricing. Net debt at the end of the year fell to
$1,096 million compared to $1,264 million in
FY2018, primarily due to the sale of Metrix for
$272 million.
The market’s view of thermal generation
availability looking forward has reduced, with
electricity futures prices in FY2020 and FY2021
lifting accordingly to over $105/MWh. Mercury
is well positioned to take advantage of higher
forward prices and committed to build its
first wind farm at Turitea. This represents an
investment of $256 million in 33 V-112 Vestas
turbines at the wind farm, with $23 million
advanced by the end of FY2019.
The company invested $115 million in capital
expenditure (CAPEX), comprising stay-in-
business (SIB) CAPEX of $89 million and
$26 million of growth capex spent mostly
on initial payments in relation to Turitea.
The company continued to invest in major hydro
refurbishment projects at our Aratiatia and
Whakamaru hydro stations and commenced the
refurbishment works at our Karāpiro station.
Mercury continues to invest in our core SAP
customer and financial system. The year
featured the implementation of the SAP
Commerce cloud-based customer relationship
management system and significant upgrades
to the web experience for customers joining
Mercury or moving house.
$89M
OF STAY-IN-BUSINESS CAPEX
$256M
COMMITTED TO BUILDING THE
COMPANY’S FIRST WIND FARM
$272M
PROCEEDS FROM THE SALE
OF THE COMPANY'S SMART-
METERING BUSINESS, METRIX
OUR ANNUAL REPORT 2019

FINANCIAL PERFORMANCE TRENDS
For the year ended 30 June
1
($ million)20192018201720162015
Income statement
Energy Margin667730698660650
EBITDAF505566523493482
Net profit for the year35723418416047
Balance sheet
Total shareholders’ equity3,5373,3053,3083,3153,337
Total assets 6,4846,1065,9976,0856,058
Total liabilities2,9472,8012,6892,7702,721
Cash flow
Operating cash flow326376372280309
Investing cash flow98(260)(90)(37)(103)
Financing cash flow(335)(141)(298)(228)(195)
Capital expenditure
Total capital expenditure11511811672110
Growth capital expenditure26621331
Stay-in-business capital expenditure891121145979
Other financial measures
Underlying earnings after tax161198176152145
Free Cash Flow237264258221230
Ordinary and special declared dividends211207270252296
Ordinary dividends per share (cents)15.515.114.614.314.0
Special dividends per share (cents)––5.04.07.5
Basic and diluted earnings per share (cents)26.2317.0013.3711.63.4
Net debt1,0961,2641,0381,0681,082
Gearing (net debt/net debt + equity, %)23.727.723.924.424.5
Debt/EBITDAF (x)
2
1.91.91.82.02.0
Operational measures
Total recordable injury frequency rate (TRIFR)
3
0.720.871.050.741.25
Sales to customers (FPVV, GWh)4,5004,4774,6064,3974,486
Electricity customers (‘000)373388392376382
Electricity generation (GWh)6,9027,7047,5336,8426,563
1. Financial results for the periods ended 30 June 2017 and earlier have not been restated for new IFRS standards.
2. Adjusted for S&P treatment of subordinated debt issued in FY2015.
3. Per 200,000 hours; includes on-site employees and contractors.
FINANCIAL
TRACK RECORD.
60 // 61
FINANCIALS

OPINION
We have audited the financial statements of the Group, on pages
64 to 93 of the Financial Report, that comprise the consolidated
balance sheet as at 30 June 2019, the consolidated income statement,
consolidated statement of comprehensive income, consolidated
statement of changes in equity and the consolidated cash flow
statement for the year then ended on that date, and notes to the
consolidated financial statements that include accounting policies and
other explanatory information.
In our opinion, the consolidated financial statements of the Group
present fairly, in all material respects, the consolidated financial
position of the Group as at 30 June 2019, and its consolidated financial
performance and cash flows for the year then ended, in accordance
with New Zealand Equivalents to International Financial Reporting
Standards and International Financial Reporting Standards.
The basis of our opinion is explained below. In addition, we outline the
responsibilities of the Board of Directors and our responsibilities, and
explain our independence.
BASIS FOR OPINION
We carried out our audit in accordance with the Auditor-General’s
Auditing Standards, which incorporate the Professional and Ethical
Standards and the International Standards on Auditing (New Zealand)
issued by the New Zealand Auditing and Assurance Standards Board.
Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements
section of our report.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
We are independent of the Group, in accordance with the Auditor-
General’s Auditing Standards, which incorporate Professional and
Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners
issued by the New Zealand Auditing and Assurance Standards Board,
and we have fulfilled our other ethical responsibilities in accordance with
these requirements.
In addition to the audit and assurance services, we have carried out
assignments including a review of the Group’s consolidated financial
statements for the six months ended 31 December 2018, remuneration
advisory services and tax advisory and compliance services in the
INDEPENDENT AUDITOR’S
REPORT.
United States, which are compatible with independence requirements.
These services have not impaired our independence as auditor of
the Group.
Partners and employees of our firm may deal with the Group on normal
terms within the ordinary course of trading activities of the business of the
Group. Other than the audit and these assignments and trading activities,
we have no relationship with, or interests in, the Group.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement,
were of most significance in our audit of the consolidated financial
statements of the current period. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
We have fulfilled the responsibilities described in the Auditor’s
responsibilities for the audit of the financial statements section of the
audit report, including in relation to these matters. Accordingly, our
audit included the performance of procedures designed to respond to
our assessment of the risks of material misstatement of the financial
statements. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit
opinion on the accompanying consolidated financial statements.
TO THE SHAREHOLDERS OF MERCURY NZ LIMITED
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
The Auditor-General is the auditor of Mercury NZ Limited (‘the entity’) and its subsidiaries and other controlled entities (collectively referred to as ‘the Group’).
The Auditor-General has appointed me, Lloyd Bunyan, using the staff and resources of Ernst & Young, to carry out the audit of the consolidated financial
statements of the Group on his behalf.
OUR ANNUAL REPORT 2019

INFORMATION OTHER THAN IN THE FINANCIAL
STATEMENTS AND AUDITOR’S REPORT
The Board of Directors is responsible on behalf of the entity for the Annual
Report and the Financial Report, which includes information other than
the consolidated financial statements and auditor’s report.
Our opinion on the consolidated financial statements does not cover
the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements,
our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated. If, based on the work we
VALUATION OF GENERATION ASSETS
Why significantHow our audit addressed the key audit matter
Generation assets were revalued to $5,347 million at 30 June 2019 as set
out in note 8 of the consolidated financial statements. This is significant
because the generation assets represent approximately 82% of the
Group’s total assets.
The Group engages an independent external party to estimate the fair
value of generation assets using a discounted cash flow model. The most
significant inputs used to calculate the fair value of the generation assets
include the wholesale electricity price path, generation volumes, and the
discount rate.
The wholesale electricity price path is estimated by the Group’s
independent valuation specialist as described in note 8 of the
consolidated financial statements. The model used to estimate the
wholesale electricity price path is complex and includes a number of
significant assumptions (comprising internal and external data).
In obtaining sufficient appropriate audit evidence we:
• met with the independent valuation specialist to understand the
valuation methods adopted and assessed the significant inputs to
the model used to estimate the fair value of the generation assets.
• compared forecast generation volumes to historical
generation volumes.
• involved our own valuation specialists to:
• consider the process over the determination of the wholesale
electricity price path by the Group’s independent valuation
specialist and the extent to which they considered internal
and external data relevant to the wholesale electricity price
path forecast; and
• assess the appropriateness of the discount rate.
• assessed the professional competence, independence and objectivity
of the Group’s independent valuation specialist.
• assessed the adequacy of the related financial statement disclosures
as described in note 8.
VALUATION OF NON- STANDARD ELECTRICITY PRICE DERIVATIVE FINANCIAL INSTRUMENTS
Why significantHow our audit addressed the key audit matter
The Group’s activities expose it to certain risks which are managed
using derivative financial instruments. At 30 June 2019, the fair value
of derivative assets total $179 million and derivative liabilities total $253
million as set out in note 15 of the consolidated financial statements.
These balances include certain electricity price derivatives for which
the valuation inputs are not readily observable in active primary or
secondary markets and require the use of more complex valuation
assumptions including the Group’s internal wholesale electricity price
path forecast. We refer to these derivatives as Non-Standard Derivatives
which are included within the amounts disclosed in note 15 of the
consolidated financial statements.
In obtaining sufficient appropriate audit evidence we:
• involved our valuation specialists and challenged the significant
inputs to the model used to estimate the fair value of the Non-
Standard derivatives. Our valuation specialists:
• evaluated the appropriateness of the valuation
methodologies; and
• compared the Group’s internal wholesale electricity price path
to other price path estimates obtained in performing our
Generation Asset procedures detailed above.
• agreed underlying data to the contract terms on a sample basis.
• assessed key assumptions and inputs.
• assessed the adequacy of the related financial statement disclosures
as described in note 15.
have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to
report in this regard.
DIRECTORS’ RESPONSIBILITIES FOR
THE FINANCIAL STATEMENTS
The directors are responsible on behalf of the entity for the preparation
and fair presentation of the consolidated financial statements for
the Group that comply with New Zealand Equivalents to International
Financial Reporting Standards and International Financial
Reporting Standards.
The director responsibilities arise from the Financial Markets Conduct
Act 2013.
62 // 63
FINANCIALS

The directors are also responsible for such internal control as
they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due
to fraud or error, and for the publication of the financial statements,
whether in printed or electronic form.
In preparing the consolidated financial statements, the directors are
responsible, on behalf of the entity, for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting,
unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes
our opinion.
Our responsibilities arise from the Public Audit Act 2001. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Auditor-General’s Auditing Standards
will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with the Auditor-General’s Auditing
Standards, we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control.
• Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made
by management.
• Conclude on the appropriateness of the use of the going concern
basis of accounting by the directors and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue
as a going concern.
• Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and
whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Group to
express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
• We did not examine every transaction, nor do we guarantee complete
accuracy of the financial statements. Also, we did not evaluate the
security and controls over the electronic publication of the
financial statements.
We communicate with the directors regarding, among other matters,
the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied
with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence and, where
applicable, related safeguards.
From the matters communicated with the directors, we determine those
matters that were of most significance in the audit of the financial
statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report, unless law or regulation
precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated
in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such
communication.
LLOYD BUNYAN // ERNST & YOUNG
ON BEHALF OF THE AUDITOR-GENERAL
AUCKLAND, NEW ZEALAND
20 AUGUST 2019
OUR ANNUAL REPORT 2019

The accompanying notes form an integral part of these financial statements.
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2019
Note2019 $M2018 $M
Total revenue42,000 1,798
Total expenses 4(1,495)(1,232)
EBITDAF
1
505 566
Depreciation and amortisation8, 9(204)(201)
Change in the fair value of financial instruments1526 49
Gain on sale4177 –
Earnings of associates and joint arrangements1012
Net interest expense4(75)(91)
Profit before tax430325
Tax exp e nse6(73)(91)
Profit for the year attributable to owners of the parent357 234
Basic and diluted earnings per share (cents)26.23 17.00
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2019
2019 $M2018 $M
Profit for the year357234
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Movement in asset revaluation reserve 244 55
Movement in cash flow hedge reserve transferred to balance sheet
15
(1) 5
Share of movements in associates and joint ventures’ reserves
10
(9)14
Tax ef fe c t (66) (17)
Items that may be reclassified subsequently to profit or loss
Movement in cash flow hedge reserve
15
(118)33
Movement in other reserves1(64)
Tax ef fe c t 32(9)
Other comprehensive income for the year, net of taxation8317
Total comprehensive income for the year attributable to owners of the parent440251
1. EBITDAF: Earnings before net interest expense, income tax, depreciation and amortisation, change in the fair value of financial instruments, impairments and equity-
accounted earnings of associates and joint ventures
FINANCIAL STATEMENTS.
64 // 65
FINANCIALS

CONSOLIDATED BALANCE SHEET
For the year ended 30 June 2019
Note2019 $M2018 $M
SHAREHOLDERS’ EQUITY
Issued capital 378 378
Treasury shares5 (101) (101)
Reserves 3,260 3,028
Total shareholders’ equity 3,537 3,305
ASSETS
Current assets
Cash and cash equivalents 94 5
Receivables11 256 226
Contract assets 3 3
Inventories7 23 35
Derivative financial instruments15 50 31
Total current assets 426 300
Non-current assets
Property, plant and equipment8 5,528 5,370
Intangible assets9 85 101
Investments 10 234 130
Investment and advances to associates10 76 88
Advances to joint operations106 7
Derivative financial instruments15 129 110
Total non-current assets 6,058 5,806
Total assets 6,484 6,106
LIABILITIES
Current liabilities
Payables and accruals11 216 198
Borrowings13 541 350
Derivative financial instruments15 45 24
Taxation payable6 19 17
Total current liabilities 821 589
Non-current liabilities
Payables and accruals11 9 6
Provisions12 59 51
Derivative financial instruments15 208 73
Borrowings13692 951
Deferred tax61,158 1,131
Total non-current liabilities 2,126 2,212
Total liabilities 2,947 2,801
Net assets 3,537 3,305
For and on behalf of the Board of Directors, who authorised the issue of the Financial Statements on 20 August 2019.
The accompanying notes form an integral part of these financial statements.
JOAN WITHERS // CHAIR
20 August 2019
KEITH SMITH // DIRECTOR
20 August 2019
OUR ANNUAL REPORT 2019

The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2019
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 2017378 203 2,849 (53)(50) 3,327
Movement in asset revaluation reserve, net of taxation – – 40 – – 40
Movement in cash flow hedge reserve, net of taxation – – – 27 – 27
Movements in other reserves – – – – (14) (14)
Share of movements in associates and joint ventures’ reserves – – 12 2 – 14
Acquisition in treasury shares – – – – (50) (50)
Other comprehensive income – – 52 29 (64)17
Net profit for the year – 234 – – – 234
Total comprehensive income for the year – 234 52 29 (64)251
Dividend – (273) – – – (273)
Balance as at 30 June 2018378 1642,901 (24)(114)3,305
BALANCE AS AT 1 JULY 2018 378 164 2,901 (24) (114) 3,305
Movement in asset revaluation reserve, net of taxation – – 176 – – 176
Movement in cash flow hedge reserve, net of taxation – – – (85) – (85)
Movements in other reserves –2 – – (1)1
Recycling of fair value losses in available for sale reserves – (15) – – 15 –
Share of movements in associates and joint ventures’ reserves – – – (9) – (9)
Other comprehensive income – (13) 176 (94) 14 83
Net profit for the year – 357 – – – 357
Total comprehensive income for the year – 344 176 (94) 14 440
Dividend – (208) – – – (208)
Balance as at 30 June 2019378 3003,077 (118)(100)3,537
66 // 67
FINANCIALS

The accompanying notes form an integral part of these financial statements.
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 June 2019
2019 $M2018 $M
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 1,952 1,800
Payments to suppliers and employees (1,478)(1,232)
Interest received 1 2
Interest paid (70)(92)
Taxes paid (79)(102)
Net cash provided by operating activities 326 376
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment (93)(94)
Acquisition of intangibles (29)(33)
Acquisition of investment (55) (144)
Disposal of land and associated real property – 5
Distributions received from and advances repaid to associates and joint ventures 5 6
Proceeds from the sale of metering business 270 –
Net cash received/(used) in investing activities 98 (260)
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of treasury shares – (50)
Proceeds from loans 30 262
Repayment of loans (166) (75)
Receipt/(payment) of lease incentives/(liabilities)9 (5)
Dividends paid (208)(273)
Net cash used in financing activities (335)(141)
Net change in cash and cash equivalents held 89 (25)
Cash and cash equivalents at the beginning of the year 5 30
Cash and cash equivalents at the end of the year 94 5
Cash balance comprises:
Cash balance at the end of the year945
OUR ANNUAL REPORT 2019

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
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 NZX Main
Board and with foreign exempt listed status on the ASX.
The consolidated financial statements (“Group financial statements”)
are for Mercury NZ Limited Group (“the Group”). The Group financial
statements comprise the Company and its subsidiaries, including its
investments in associates and interests in joint arrangements.
The majority shareholder of Mercury NZ Limited is Her Majesty the Queen
in Right of New Zealand (“the Government”), providing it with significant
potential influence over the Group. The liabilities of the Group are not
guaranteed in any way by the Government or by any other shareholder.
(2) BASIS OF PREPARATION
The Group financial statements have been prepared in accordance with
the Financial Markets Conduct Act 2013 and in accordance with New
Zealand Generally Accepted Accounting Practice (“NZ GAAP”). They
comply with New Zealand equivalents to International Financial Reporting
Standards (“NZ IFRS”) as appropriate for profit-oriented entities. These
financial statements also comply with International Financial Reporting
Standards (“IFRS”).
The Group financial statements are prepared on the basis of historical
cost, with the exception of financial instruments and generation assets
which are measured at fair value.
The Group financial statements have been prepared so that all
components are stated exclusive of GST, with the exception of receivables
and payables that include GST invoiced.
Functional and presentation currency
These financial statements are presented in New Zealand Dollars ($)
which is the Group’s functional currency, apart from Mighty Geothermal
Power Limited and its direct subsidiaries as their functional currency is the
United States Dollar. Unless otherwise stated, financial information has
been rounded to the nearest million dollars ($M).
The assets and liabilities of entities whose functional currency is not the
New Zealand Dollar are translated at the exchange rates ruling at balance
date. Revenue and expense items are translated at the spot rate at the
transaction date or a rate approximating that rate. Exchange differences
are taken to the foreign currency translation reserve.
Estimates and judgements
The preparation of financial statements requires judgements and
estimates that impact the application of policies and the reported
amounts of assets and liabilities, income and expenses. Actual results
may differ from these estimates.
The areas of significant estimates and judgements are as follows:
• Generation plant and equipment (refer note 8)
• Retail revenue accruals (refer note 11)
• Restoration and environmental rehabilitation (refer note 12)
• Valuation of financial instruments (refer note 14 and note 15)
Accounting policies and standards
The Group has adopted new international financial reporting standards
relating to Financial Instruments (NZ IFRS 9), Revenue from Contracts
with Customers (NZ IFRS 15), and Leases (NZ IFRS 16) for the reporting
period ended 30 June 2019.
The adoption of IFRS 9 has not resulted in a material change to the
Group’s derivative financial instruments. For the impairment of financial
assets, a lifetime expected credit loss has been recognised in the income
statement on trade receivables, with a corresponding adjustment to
provisions on the balance sheet.
The adoption of IFRS 15 results in a change to the Group’s policy relating
to the treatment of credits given to customers and incremental costs (like
commissions) of acquiring or retaining customers. The Group previously
recognised both customer credits and incremental costs of acquisition
or retention as expenses when incurred. The change of policy results
in customer incentives being recognised directly against revenue when
incurred. Incremental costs are recognised on the balance sheet as
customer contract assets, and amortised on a straight-line basis over the
period, which is consistent with the transfer of the benefit to the customer,
assumed to be two years.
The adoption of IFRS 16 results in all leases being recognised on the
balance sheet. Lease payments are now recorded as a repayment of the
lease obligation and interest expense instead of as an operating expense
in the income statement. Lease assets are depreciated on a straight-
line basis over the current lease term. The Group has recognised lease
assets and lease liabilities at the present value of future lease payments
for existing lease terms and all lease renewal options that are reasonably
certain to be exercised. The weighted average incremental borrowing rate
applied to lease liabilities recognised in the statement of financial position
on transition at 1 July 2018 was 6.6%.
IFRS 15 and IFRS 16 have been applied retrospectively. The effect of these
changes in accounting policies are shown in the following table.
During the period a $19 million overstatement of a fair value adjustment
in relation to the US Private Placement borrowings was identified. This
overstatement occurred in 2011 when it was originally booked to the
income statement and has therefore necessitated a prior period change in
2018, through an increase in opening retained earnings and a reduction to
non-current borrowings as included in the following table.
68 // 69
FINANCIALS

Audited
year ended
30 June
2018 $M
Adjustments
$M
Restated
audited
year ended
30 June
2018 $M
CONSOLIDATED INCOME STATEMENT
Total revenue 1,803 (5)1,798
Total expenses (1,242) 10 (1,232)
EBITDAF 561 5 566
Depreciation and amortisation (197) (4)(201)
Change in the fair value of financial instruments 49 – 49
Earnings of associates and joint arrangements2– 2
Net interest expense (90) (1)(91)
Profit before tax325325
Tax exp e nse (91) – (91)
Profit for the year attributable to owners of the parent 234 – 234
CONSOLIDATED BALANCE SHEET
Contract assets – 3 3
Lease assets (Property, plant and equipment) – 12 12
Lease liabilities (Borrowings) – (15) (15)
Fair value adjustments (Borrowings)(51)19(32)
Non-current financial instruments (73) – (73)
Deferred tax liability (1,131) – (1,131)
Retained earnings (145)(19) (164)
Cash flow hedge reserve 24 – 24
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 businesses is reported to the Chief Executive, being the chief operating decision-maker, on at least a monthly 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 electricity production, electricity trading, and sale of energy and related services and
products to customers, 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, sales of
solar equipment, and international geothermal operations.
OUR ANNUAL REPORT 2019

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.
SEGMENT RESULTS
June 2019
Energy
Markets
$M
Other
Segments
$M
Unallocated
$M
Inter–
segment
$M
Total
$M
Total segment revenue 1,975 37 4 (16) 2,000
Direct costs (1,306) (6) – 16 (1,296)
Other operating expenses (127) (13) (59) – (199)
Segment EBITDAF 542 18 (55) – 505
June 2018
Energy
Markets
$M
Other
Segments
$M
Unallocated
$M
Inter–
segment
$M
Total
$M
Total segment revenue1,768 53 2 (25)1,798
Direct costs(1,046)(6) – 25 (1,027)
Other operating expenses(130)(17)(58) – (205)
Segment EBITDAF592 30 (56) – 566
The operating results for Metrix for the period up to 1 March 2019 is shown in “Other Segments” above.
NOTE 3. NON-STATUTORY MEASURE – UNDERLYING EARNINGS
Underlying earnings is presented to enable stakeholders to make an assessment and comparison of earnings after removing one-off and/or infrequently
occurring events (exceeding $10 million of net profit before tax), impairments and any changes in the fair value of derivative financial instruments or any
equity accounted share of changes in the fair value of derivative financial instruments.
2019 $M2018 $M
PROFIT FOR THE YEAR357234
Change in the fair value of financial instruments(26)(49)
Equity accounted share of the change in the fair value of financial instruments of associate entities – (1)
Impairments/Gain on sale in metering business (177) –
Adjustments before tax expense(203)(50)
Tax exp e nse 7 14
Adjustments after tax expense(196)(36)
Underlying earnings after tax161 198
Tax has been applied on all taxable adjustments at 28%.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 2. SEGMENT REPORTING (CONTINUED)
70 // 71
FINANCIALS

NOTE 4. OTHER INCOME STATEMENT DISCLOSURES
2019 $M2018 $M
Sales – electricity generation 944655
Sales to customers and derivatives1,0131,096
Other revenue 43 47
Total revenue2,000 1,798
Energy costs (802)(527)
Line charges (422)(437)
Other direct cost of sales, excluding third-party metering (33)(32)
Direct costs of other revenue (6)(6)
Third-party metering (33)(25)
Employee compensation and benefits (86)(87)
Maintenance expenses (42)(51)
Other expenses (71)(67)
Total expenses (1,495)(1,232)
Interest expense ( 74) (93)
Lease interest expense (2) –
Interest income 1 2
Net interest expense (75)(91)
RECONCILIATION OF INCOME TO SEGMENT REPORTING
Sales - Electricity
generation
Sales to customers
and derivativesOther revenue
Total segment
revenue
June 2019$M$M$M$M
Energy Markets 944 1,013 18 1,975
Other Segments - - 37 37
Unallocated - - 4 4
Inter-segment - - (16) (16)
Total revenue 944 1,013 43 2,000
Sales - Electricity
generation
Sales to customers
and derivativesOther revenue
Total segment
revenue
June 2018$M$M$M$M
Energy Markets 655 1,09617 1,768
Other Segments - - 5353
Unallocated - - 22
Inter-segment - - (25) (25)
Total revenue 655 1,096471,798
On 1 March 2019, the Company sold its smart-metering business, Metrix, to intelliHUB Group for a cash consideration of $272 million, resulting in a gain on
sale of $177 million. The Metrix contribution to 2019 EBITDAF was $20 million, and the annualised reduction to EBITDAF from the sale is $28 million.
Audit fees
Fees payable to EY, who are appointed by the Auditor-General, for the audit and review of the financial statements were $605,000 (2018: $590,000).
Non-audit services in relation to payroll advisory services were $33,000 (2018: $71,000). EY (US) also provided US tax compliance services in the amount of
$264,000 (2018: $247,000).
OUR ANNUAL REPORT 2019

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 5. SHARE CAPITAL AND DISTRIBUTION
The share capital of the Company is represented by 1,400,012,517 ordinary shares (2018: 1,400,012,517), issued and fully paid. The weighted average number
of shares on issue during the year, on both a basic and diluted basis, was 1,360,894,041 (2018: 1,374,982,137). These shares do not have a par value, have
equal voting rights, and share equally in dividends and any surplus on winding up.
2019 Number
of shares (M)2019 $M
2018 Number
of shares (M)2018 $M
Treasury shares
Balance at the beginning of the year39101 24 51
Acquisition of treasury shares––1550
Balance at the end of the year 39 10139101
Cents per share2019 $M2018 $M
Dividends declared and paid
Final dividend for 2017 8.8 – 121
Special dividend paid September 2017 5.0 – 69
Interim dividend for 2018 6.0 – 83
Final dividend for 2018 9.1 124 –
Interim dividend for 2019 6.2 84 –
208273
No imputation credits are available at 30 June 2019 (2018: $nil) as the imputation credit account has a deficit of $25 million (2018: deficit of $24 million).
The imputation credit account is required to have a surplus balance at 31 March each year.
N OT E 6. TA X AT IO N
2019 $M2018 $M
Income Tax
(i) Tax expense
Profit before tax430325
Prima facie tax expense at 28% on the profit before tax (120) (91)
Increase/(decrease) in tax expense due to:
• share of associates and joint ventures’ tax paid earnings – 1
• capital gain51–
• other differences (4)(1)
Tax expense attributable to profit from ordinary activities (73) (91)
Represented by:
Current tax expense (81)(97)
Deferred tax recognised in the income statement86
The tax expense charged to the income statement includes both the current year’s provision and the income tax effect of:
• taxable temporary differences, except those arising from initial recognition of goodwill; and
• deductible temporary differences to the extent that it is probable that they will be utilised.
72 // 73
FINANCIALS

Deferred Tax
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax and accounting bases of the Group’s assets and
liabilities. A deferred tax asset is only recognised to the extent that there will be future taxable profit to utilise the temporary difference.
Property, plant and equipment is held on capital account for income tax purposes. Where assets are revalued, with no similar adjustment to the tax base,
a taxable temporary difference is created that is recognised in deferred tax. The deferred tax liability on these revaluations is unlikely to crystallise in the
foreseeable future under existing income tax legislation.
Assets
2019 $M
Assets
2018 $M
Liabilities
2019 $M
Liabilities
2018 $M
Net
2019 $M
Net
2018 $M
(i) Recognised deferred tax assets and liabilities
Property, plant and equipment–– (1,185) (1,155) (1,185) (1,155)
Financial instruments 23 5 –– 23 5
Employee benefits and provisions 2 2 –– 2 2
Other 2 17 –– 2 17
27 24 (1,185) (1,155) (1,158) (1,131)
Property, plant
and equipment
$M
Financial
instruments
$M
Employee
entitlements
$M
Other
$M
Total
$M
(ii) Movement in deferred tax
Balance as at 1 July 2017 (1,155) 29 2 13 (1,111)
Charged/(credited) to the income statement17 (15) – 46
Charged/(credited) to other comprehensive income (17) (9) – – (26)
Balance as at 30 June 2018 (1,155) 5 217 (1,131)
Balance as at 1 July 2018 (1,155) 5217 (1,131)
Charged/(credited) to the income statement 26 (14) – (5) 7
Charged/(credited) to other comprehensive income(56)32 – (10) (34)
Balance as at 30 June 2019(1,185)23 2 2 (1,158)
Tax deductions for building depreciation were disallowed by the Inland Revenue from 1 July 2011. The Group has maintained the view that both hydro-electric
and geothermal powerhouse assets are plant and not buildings and therefore should not be captured by this change. Inland Revenue accepted the Group’s
view in respect of hydro-electric powerhouse assets, but not in respect of geothermal powerhouse assets.
In July 2019, the High Court issued its decision, in favour of Inland Revenue, that geothermal powerhouse assets were buildings for tax purposes. The Group
has decided not to appeal this decision. This has resulted in a one-off increase to tax expense of $6 million, an additional deferred tax liability of $3 million,
and an increase in provision for income tax of $3 million.
NOTE 7. INVENTORIES
Cost is determined on a weighted average basis and includes expenditure incurred in acquiring inventories and bringing them to their final condition and
location. Consumable stores of $23 million (2018: $26 million) are held to service and repair operating plant. Meter stock of $nil (2018: $9 million) is held in
inventory until it is deployed into the field, at which time it is transferred into property, plant and equipment.
OUR ANNUAL REPORT 2019