Contact Energy Governance Roadshow

1
Auckland, Wellington, Sydney
G O V E R N A N C E R O A D S H O W
OCTOBER 2019

2
C O R P O R AT E G OV E R NA N C E P R I N C I P L E S
E F F E C T I V E C O R P O R A T E G O V E R N A N C E I S A N I M P O R T A N T I N G R E D I E N T
F O R T H E L O N G-T E R M S U C C E S S O F C O M P A N I E S A N D T H E I R I N V E S T O R S
W E U S E V A N G U A R D ’ S F O U R P R I N C I P L E S O F G O V E R N A N C E T O F R A M E O U R A P P R O A C H,
AND C O M P L E M E N T O U R D O M E S T I C S T A N D A R D S
2
1
3
4
Board Composition
Oversight of Strategy & Risk
Governance Structures
Executive Selection
& Compensation

3
B OA R D O F D I R E C TO R S
T H E B O A R D R E P R E S E N T T H E I N T E R E S T S O F T H E I R S H A R E H O L D E R S A N D M A K E
C R I T I C A L D E C I S I O N S A B O U T A C O M P A N Y ' S L E A D E R S H I P , I T S S T R A T E G Y, A N D T H E
R I S K S T H A T C O U L D C R E A T E O B S T A C L E S T O I T S L O N G-T E R M S U C C E S S
Elena Trout, Victoria Crone, Jon Macdonald, Dame Therese Walsh, David Smol, WhaimutuDewes, Rob McDonald
TENURE (YEARS)
1
2
3
4
GENDER DIVERSITY
AGE (YEARS)
0-3
4-6
7+
43%
43%
14%
57%
43%
30-50
> 5 0
0%
43%
57%
< 3 0

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B OA R D O F D I R E C TO R S
C O N T .
1
2
3
4
CustomerNext generation customer experience
WholesaleEnergy sector, including regulation, generation and renewable energy
Corporate/Portfolio
Physical infrastructure
Capital markets –investment community knowledge and connections
Portfolio efficiency
Iwi connections/relationships
Financial expertise
IT/Technology
STRATEGIC FOCUS
EXPERTISE

5
B OA R D C O M P O S I T I O N
1
2
3
4
R E G U L A R P E R F O R M A N C E R E V I E W S , C O M P L E M E N T E D B Y A R O B U S T S E L E C T I O N P R O C E S S,
E N S U R E A L I G N M E N T O F T H E B O A R D ’ S S K I L L S W I T H T H E C O M PA N Y ’ S S T R A T E G I C F O C U S
Board of
Directors
Board
Vacancy
Candidates
1. DIRECTOR CHANGES
2. NOMINATIONS
3. VOTING PROCESS
•Retirement by rotation
•Review of the Board skills required for success
against the skills of the existing Directors
•People committee undertake regular
reviews to identify gaps
•Comprehensive biennial external
performance review
•Retirement and not standing for re-election
•Board may fill a casual vacancy, subject to shareholder confirmation
•Nominations may be made by shareholders
•Board recommendation based on: Skills matrix requirements, inclusion and diversity policy and
external advice for key roles
•Shareholders to confirm
appointments

6
OV E R S I G H T O F S T R AT E G Y & R I S K
R I S K M A N A G E M E N T F R A M E W O R K E N A B L E S T H E B O A R D T O S E T A N A P P R O P R I A T E R I S K
S T R A T E G Y A N D E N S U R E T H A T R I S K I S M A N A G E D T H R O U G H T H E O R G A N I S A T I O N
Board
Risk
Capacity
& Tolerance
Strategic
Direction
G o v e r n a n c e s t r u c t u r e s , p o l i c i e s
a n d o b j e c t i v e s , i d e n t i f i c a t i o n o f
s i g n i f i c a n t r i s k
M o n i t o r t h e e n v i r o n m e n t , r e s p o n d
t o s t a k e h o l d e r m a t e r i a l i s s u e s ,
a n t i c i p a t e l o n g-t e r m t h r e a t s a n d
o p p o r t u n i t y
A p p r o v i n g s t r a t e g i c d i r e c t i o n ,
m o n i t o r i n g o f p e r f o r m a n c e
1
2
3
4

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G OV E R NA N C E S T RU C T U R E S
1
2
3
4
T O E M P O W E R S H A R E H O L D E R S A N D E N S U R E A C C O U N T A B I L I T Y
•
Giving shareholders a voice and a vote on
governance matters
•
Annual meeting where shareholders can
ask questions and vote on all resolutions
including Director appointments. This can
be done in-person, through the virtual
meeting facilities or by proxy
•
Every three years Directors are required
to retire by rotation at the annual meeting
•
All shareholders have equal voting
rights with voting by poll
•
Any shareholder may propose a resolution
provided sufficient notice is given
•
Contact runs an active investor relations
programme which facilitates effective two-
way communication with shareholders
BOARD OF DIRECTORS
CHIEF EXECUTIVE OFFICER
Independent
audit and
assurance
Audit and Risk committee
Peoplecommittee
Health, Safety and Environment
(HSE) committee
External financial reporting
Internal control environment
Internal and external audit
functions
Risk management
People strategies and processes
Remuneration
Board composition and
performance
Monitoring key people risks
HSE vision, commitments and how
objectives will be met
Framework for monitoring HSE
performance and legal obligations
Leadership Team
SHAREHOLDERS
Accountability
Delegation
Risk &
Assurance
Distilled shareholder feedback
Investor
Relations
Two-way
communication

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I N C O M I N G C H I E F E X E C U T I V E
1
2
34
P R O V E N L E A D E R W I T H A S T R O N G T R A C K R E C O R D I N R E N E W A B L E E N E R G Y
•
Mike will join Contact in Q1 2020 after an
extensive international search
•
Strong track record as the Chief Executive of
Pacific Hydro in Melbourne –a global
renewable energy owner, operator and
developer
•
Longhistoryintheenergysector,bothinNew
Zealandandinternationally,withhiscurrentrole
astheChiefExecutiveofRefiningNZ,having
alsoheldthepositionofChiefOperatingOfficer
atGenesisEnergy,followingalongcareerat
RoyalDutchShellGroupinternationally
•
Mike will ensure Contact is a leader in the
decarbonisation of New Zealand
MICHAEL FUGE
1,1501,1501,150
288
575
345
345
242
403
1,000
0
2,000
500
1,500
2,500
2,473
FixedOn-plan
1,150
Maximum
2,024
Equity
Long-term incentive
Cash
Short-term incentive
Equity
Short-term incentive
Base salary
EXECUTIVE REMUNERATION ($000s)
•
CEO remuneration package that reflects the wide-
ranging skills required–based on independent
remuneration benchmark data
•
Equity incentives ensure alignment with shareholders
•
Cash incentives dependent on achievement of Board-
set KPIs (operating FCF –60%, EPS –30%, HSE
index –10%)

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E X E C U T I V E M A NAG E M E N T TEAM
1
2
34
C O N T A C T I S L E D B Y A N E X P E R I E N C E D A N D D I V E R S E L E A D E R S H I P T E A M W H O I S
C O M M I T T E D T O O U R C U S T O M E R S , S H A R E H O L D E R S A N D P E O P L E
James Kilty (Chief Generation and Development Officer), Vena Crawley (Chief Customer Officer), Dorian Devers (Chief
Financial Officer), Dennis Barnes (Chief Executive Officer), Catherine Thompson (GM External Relations and General Counsel)
•
Two new appointments delivering a diverse capability set and
mix of tenure to support strategy execution
•
Dorian Devers was appointed as Chief Financial
Officer in December 2018. Dorian brings strong
business transformation experience, having led
successful turnarounds of businesses in both the UK
and South Africa.
•
Announced the appointment of Jan Bibby who will join
Contact as Chief People Officer in November. Jan has
driven organisational transformations through mergers
and acquisitions, leadership development, talent
management, change management
•
The remaining members of the leadership team have been in
their current roles since at least 2014

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W H Y OW N C O N TAC T ?
T H E I N V E S T M E N T O P P O R T U N I T Y I N O U R C O R E M A R K E T S I S S I G N I F I C A N T , W I T H
G O O D V I S I B I L I T Y O N P R O J E C T S T O D E L I V E R C A S H F L O W G R O W T H
Strong cash
flow generation
Dividend policy
provides certainty
Shares offer value
when benchmarked
ESG credentials
Latent potential with
world-class
geothermal
capability

11
S T RO N G F I NA N C I A L T R AC K R E C O R D
3.1
3.1
3.0
2.7
2.5
3.4
3.2
3.2
3.1
2.3
FY19FY15
2.8
FY18FY16FY17
Smoothed
Snapshot
191
186
186
229
280
367
100
557
FY16FY15FY17FY18FY19
286
525
523
501
481
518
FY19FY17FY15FY18FY16
397
391
357
301
272
FY19FY18FY15FY16FY17
-9%
338
353
305
301
341
FY15FY16FY17FY18FY19
FY17FY15FY19FY16
9.0
FY18
8.5
9.5
8.6
8.9
Buyback
Special
Ordinary
EBITDAF ($m)
OPERATING FREE CASH FLOW ($m)
DISTRIBUTIONS ($m)
ELECTRICITY GENERATION (TWh)
CONTROLLABLE OPEX AND CAPEX ($m)
NET DEBT / EBITDAF (x)
76%
82%
80%79%
84%
% renewable
Thermal
Hydro
Geothermal

12
D I S T R I BU T I O N P O L I C Y
D I S T R I B U T I O N P O L I C Y P R O V I D E S C L A R I T Y T O I N V E S T O R S A N D D R I V E S
A S T R O N G C A P I T A L D I S C I P L I N E
Ordinary dividend of
of expected Operating Free CashFlow¹
Distribution policy
FY19
Ordinary dividend
=
Balance sheet
capacity
376
968
Headroom to BBB ($m)
S&P net debt ($m)³
2.8x
Net debt to
EBITDAF²
716m shares
$280m
•
Recent business portfolio changes provide balance sheet capacity to buffer shareholders from hydrology and stay-in-business capex cycles
•
Structural changes which cause sustainable changes in operating free cash flow will lead to reassessment of 39 cps dividend.
100%
39cps
¹Operating Cash Flow less stay-in-business capex and net interest costs after adjusting for expected medium-term stay-in-business capital expenditure, mean hydrology and appropriate Board consideration of a
sustainable financial structure including targeting the long-term credit rating of BBB from S&P
²Assuming FY20(f) EBITDAF of $480m
³As at June 30 2019. With a new long-term user contracted to access AGS, S&P will no longer capitalise the storage service payments from FY20