Mercury – HY2020 Results and Interim Report

Results announcement





Results for announcement to the market
Name of issuer Mercury NZ Limited (MCY)
Reporting Period 6 months to 31 December 2019
Previous Reporting Period 6 months to 31 December 2018
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$928,000 -14.0%
Total Revenue $928,000 -14.0%
Net profit/(loss) from
continuing operations
$83,000 -20.2%
Total net profit/(loss) $83,000 -20.2%
Interim Dividend
Amount per Quoted Equity
Security
$0.06400000
Imputed amount per Quoted
Equity Security
$0.02488900
Record Date 13 March 2020
Dividend Payment Date 1 April 2020
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$2.50 $2.32
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to accompanying unaudited financial statements. Note
that net tangible assets per Quoted Equity Security for the prior
comparable period (as stated above), has been amended from
$2.30 due to an historic fair value adjustment as noted in the
audited financial statements for the period ended 30 June 2019.
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

25/02/2020

Unaudited financial statements accompany this announcement.

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`
The Mercury Building, 33 Broadway, Newmarket 1023

PHONE:
+ 64 9 308 8200
mercury.co.nz
PO Box 90399, Auckland 1142
New Zealand

FAX:
+ 64 9 308 8209



Mercury earnings impacted by lower generation
HY2020 Financial Results Summary
HY2020
Change
HY2019
EBITDAF ($M) 258
↓ 15%
302
NET PROFIT AFTER TAX ($M) 83
↓ 20%
104
UNDERLYING EARNINGS AFTER TAX ($M) 90
↓ 21%
114
STAY-IN-BUSINESS CAPITAL EXPENDITURE ($M) 53
↑ 18%
45
FREE CASH FLOW ($M) 127
↑ 1%
126
FULLY IMPUTED ORDINARY DIVIDEND (CENTS PER SHARE) 6.4
↑ 3.2%
6.2

25 February 2020 – Below average generation and the divestment of smart metering business Metrix impacted
Mercury’s earnings for the financial half-year to 31 December 2019, Chief Executive Fraser Whineray says.
Mr Whineray said that while earnings (EBITDAF) of $258 million ($302 million HY2019), and net profit after tax (NPAT) of $83
million ($104 million HY2019), were down on the near-record prior corresponding period, when adjusted for lower generation
and the sale of Metrix the result reflected strong execution across Mercury’s business.
Highlights included:
• committing to complete the construction of NZ’s largest windfarm at Turitea by building the remaining 27 consented
turbines, adding to the 33-turbine project announced earlier in 2019
• effective portfolio management to capture opportunities in a dynamic wholesale and retail market
• investment in data science and analytics capability to better inform our customer strategy
• configuration of Rotorua and Maraetai workspaces to support a more collaborative and high-performance team
environment
• completion of an upgrade to our Maximo asset management system
• management of planned geothermal maintenance shuts
Generation during the period reduced by 377GWh to 3,428GWh due to drier conditions in the Waikato and important scheduled
maintenance on several geothermal stations as part of Mercury’s long-term asset management plan.
Hydro generation was down 306GWh to 2,142GWh (2,448GWh HY2019) while geothermal generation was down 71GWh to
1,286GWh (1,357GWh HY2019).
“While hydro generation was below the mid-point forecast we had at the start of the financial year, our portfolio strategy has
captured opportunities in this dynamic environment,” Mr Whineray said.
STOCK EXCHANGE LISTINGS: NZX (MCY) / ASX (MCY)

NEWS RELEASE

| Page 2 of 3
“A deliberate portfolio strategy to maintain a longer net-generation position, particularly from October, has been positive for
earnings and risk management.
“Applying our expanded analytics capability helped enhance integration of our portfolio approach with our customer strategy.
We have been able to better apply insights to digital initiatives that reward loyalty and value. Mercury’s focus on customer value
rather than growing customer numbers at all costs saw mass market customer numbers down 16,000, however we achieved a
1.8% uplift in yield across our mass market segment through disciplined portfolio management,” Mr Whineray said.
Operating expenditure was $94 million ($99 million HY2019). Mercury’s stay-in-business capital expenditure (SIB capex) was
$53 million, up $8 million on the prior corresponding period due to scheduled geothermal well drilling costs.
Free cash flow at $127 million ($126 million HY2019) was slightly up due to lower interest costs, tax paid and elevated working
capital requirements in the prior corresponding period.
INTERIM DIVIDEND
Mercury’s Chair Prue Flacks said the Board had approved a fully-imputed interim dividend of 6.4 cents per share, an increase of
3.2% on HY2019, to be paid on 1 April 2020. This represents approximately 40% of the full-year ordinary dividend guidance of
15.8 cents per share.
Total shareholder return (TSR) across the 12-month period to 31 December 2019 was 43%.
Ms Flacks noted that this interim report was Fraser’s last as Chief Executive, before he leaves in March for a role at Fonterra.
“Fraser has been an inspiring leader for Mercury, and a pleasure to work with,” Ms Flacks said.
Mercury has appointed former Trustpower Chief Executive Vince Hawksworth to succeed Mr Whineray, with Mr Hawksworth
joining in late April.
FULL YEAR OUTLOOK
Mr Whineray said Mercury expects to see ongoing challenging wholesale conditions due to national thermal fuel and
transmission constraints, however the company’s portfolio is well positioned.
“Intense competition in retail and strained retail margins will continue to be a feature. I also anticipate further competitor
decisions on new generation development and retirement,” Mr Whineray said.
“Mercury is well positioned for the full year as a result of our portfolio and channel management, reinvestment activities in
generation, digital and our people, and new investment decisions.”
GUIDANCE
Mercury’s FY2020 EBITDAF guidance has been revised to $500 million, subject to any material events, significant one-off
expenses or other unforeseeable circumstances including hydrological conditions. Guidance at the time of this report assumes
3,900GWh of hydro production. FY2020 SIB capex guidance is $120 million, up $15 million from initial guidance due to costs
related to bringing forward the drilling of a geothermal well at Rotokawa.
FY2020 ordinary dividend guidance remains at 15.8 cents per share, fully imputed, representing a 2% increase on FY2019 and
the 12
th
year of progressive ordinary dividends.

| Page 3 of 3

Howard Thomas
General Counsel and Company Secretary
Mercury NZ Limited


For investor relations queries, please contact:
Tim Thompson
Head of Treasury and Investor Relations
0275 173 470
For media queries, please contact:
Craig Dowling
Head of Communications
021 615 663


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. Visit us at: www.mercury.co.nz

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2020 INTERIM REPORT // MERCURY NZ LIMITED

CONTENTS
02 CHAIR’S UPDATE
06 CHIEF EXECUTIVE’S UPDATE
13 INDEPENDENT REVIEW REPORT
JOIN THE
ELECTRIC
REVOLUTION.
That’s the theme of Mercury’s
new brand campaign which
features Kiwis ‘breaking up’ with
their old cars in favour of the
world of fun and function offered
by e.transport options.
We’re saying it’s time to “Kiss Oil
Goodbye”. Why? Because it’s clear
to us that faster change is needed
for a more sustainable future.
Of the things we could do differently,
vehicle emissions have some of the
biggest negative impacts on the
environment and our economy.
Your electricity... our electricity...
is part of the solution. Renewable
electricity can be used for lower-
emission and lower-cost transport
in an increasing number of ways.
We’re encouraging Kiwis to lead
their own electric revolution.
And letting them know that we’ll
be with them all the way, helping
to inspire them, make things easy,
and reward them for making
the change.
To learn more, visit:
mercury.co.nz
// 1

14 FINANCIAL STATEMENTS
28 SHAREHOLDER INFORMATION
29 DIRECTORY
INTERIM REPORT 2020

CHAIR’S
UPDATE.
To our owners, employees, customers, partners
and all others with an interest in or relationship
with Mercury, it is my pleasure to present to
you Mercury's 2020 Interim Report, my first
external report as Chair.
This report covers the six-month period to
31 December 2019. It was again a period
of strong progress across our key areas of
focus; of further clear decisions aligned with
our strategy; and of change.
One particular highlight during the period
was the announcement of our commitment
to complete the construction of the
remaining 27 consented turbines at Turitea,
adding to the 33-turbine project announced
earlier in 2019. This will create New Zealand’s
largest wind farm at 222MW, producing
840GWh of electricity generation annually,
enough to power 375,000 EVs. Mercury's
Chief Executive, Fraser Whineray, will reflect
on this, and other operational and energy
sector matters, in his update which follows.
COMMERCIAL
Mercury's operating earnings (EBITDAF)
of $258 million ($302 million HY2019)
and net profit after tax (NPAT) of $83
million ($104 million HY2019) reflected
lower generation compared with the prior
corresponding period.
Hydro generation was 2,142GWh compared
with 2,448GWh in the prior corresponding
period and the record 2,694GWh in 2018.
Geothermal output across our five owned
or co-owned geothermal power stations
was at 1,286GWh (1,357GWh in HY2019)
while work was carried out as part of our
long-term asset management plan.
Other than a year-end drop related to the
late rainfall in the lower South Island, spot
prices remained elevated, driven largely by gas
supply constraints to thermal generators.
While hydro generation was below the
mid-point forecast we had at the start of
the financial year, our portfolio strategy
has captured opportunities in this dynamic
environment. As mentioned later, Mercury
reduced mass market volume through
reduced acquisition, and replaced that
volume with higher yielding wholesale sales.
Operating expenditure was $94 million
($99 million HY2019). Our stay-in-business
capital expenditure (SIB capex) was
$53 million, up $8 million on the prior
corresponding period due to scheduled
geothermal well drilling costs.
Free cash flow at $127 million ($126
million HY2019) was slightly up due to
lower interest costs, tax paid and elevated
working capital requirements in the prior
corresponding period.
Total shareholder return (TSR) across the 12
month period from 1 January 2019 was 43%.
In December, ratings agency S&P Global
confirmed Mercury’s corporate credit rating
as BBB+/Stable. This rating includes a one-
notch uplift from the company’s stand-alone
rating of ‘BBB’, reflecting the legislated
majority ownership by the New Zealand
government.
CUSTOMER
We continued our focus on customer value
rather than growing customer numbers at all
costs. Mass market customer numbers were
down 16,000 as part of this strategy, however
we achieved a 1.8% uplift in yield across our
mass market segment through disciplined
channel management.
PEOPLE
Health, safety and wellbeing are fundamentally
important for Mercury as we focus on retaining
capability and ensuring Mercury remains an
attractive, safe and enjoyable place to work.
Pleasingly, once again no high severity health
and safety incidents occurred during the
period. Our total recordable injury frequency
rate (TRIFR) for the half year was 0.67, lower
thanthe prior corresponding period.
INTERIM DIVIDEND
The Board has declared an interim fully
imputed dividend of 6.4 cents per share to
our 80,000 owners including the Crown.
This represents an increase of 3.2% on the
HY2019 dividend. The dividend will be paid
on 1 April 2020.
GUIDANCE
Mercury’s FY2020 EBITDAF guidance has
been revised to $500 million, subject to any
material events, significant one-off expenses
or other unforeseeable circumstances
including hydrological conditions. Guidance
at the time of this report assumes 3,900GWh
of hydro production. FY2020 SIB capex
guidance is $120 million, up $15 million
PRUE FLACKS // CHAIR
2 // 3CHAIR’S UPDATE

$258M
p
OPERATING EARNINGS
(EBITDAF)
6.4CPS
o
INTERIM DIVIDEND
DECLARED
43%
o
TOTAL SHAREHOLDER
RETURN
INTERIM REPORT 2020

IT WAS AGAIN A
PERIOD OF STRONG
PROGRESS ACROSS
OUR KEY AREAS OF
FOCUS; OF FURTHER
CLEAR DECISIONS
ALIGNED WITH OUR
STRATEGY; AND OF
CHANGE.
from initial guidance due to costs related
to bringing forward the drilling of a further
geothermal well at Rotokawa.
FY2020 ordinary dividend guidance remains
at 15.8 cents per share, fully imputed,
representing a 2% increase on FY2019 and
the 12th year of ordinary dividend growth.
BOARD COMPOSITION
It is an honour to succeed Joan Withers
as Mercury Chair. Joan retired at our 2019
Annual Shareholders’ Meeting after a
distinguished 10-year period at the Board’s
helm and her legacy at Mercury is deeply
entrenched and significant.
The vacancy arising from Joan’s retirement
has been filled with the appointment
of Hannah Hamling to the Board from
February 2020.
Hannah has a strong environmental science
and water management background.
These areas are particularly relevant to
Mercury as we continue to advance our
contribution to New Zealand’s sustainability
in the face of climate-related challenges
and opportunities. As directed by Mercury’s
constitution, Hannah will retire at our Annual
Shareholders’ Meeting in September 2020
and stand for election by shareholders.
As well as welcoming Hannah, I take this
opportunity to thank Anna Lissaman,
who sat with the Board for 18 months as
part of the Institute of Directors’ Future
Directors Programme. We enjoyed and
benefitted from Anna’s contribution during
her time with us and wish her well on her
governance journey.
We continue our support of the Future
Directors Programme and will look to invite
another business leader to join us as part
of the programme later this calendar year.
PARTNERSHIPS & KAITIAKITANGA
A very constructive and informative Board
meeting and stakeholder event was held
in Hamilton in November. Sessions that
involved korero (talking and engaging)
with our iwi partners were valuable to
us all in maintaining and enhancing our
understanding of what is important to key
stakeholders in the Waikato catchment.
EXECUTIVE MANAGEMENT
During the period our Chief Executive
Fraser Whineray announced he would
leave Mercury in March for a role at Fonterra.
Fraser joined Mercury in 2008 and has
made a significant contribution, firstly
leading the hydro/wholesale (and gas at the
time) parts of our operations before being
appointed Chief Executive in 2014. Fraser
has been an inspiring leader for Mercury, and
a pleasure to work with. His achievements
on behalf of Mercury, his championing of
renewable electricity as a meaningful way
to reduce carbon emissions across our
economy, and his passionate advocacy for
New Zealand, were recognised when he was
named Chief Executive of the Year at the
2019 Deloitte Top 200 Awards in December.
Following a rigorous recruitment process,
the Board was pleased to announce the
appointment of former Trustpower Chief
Executive Vince Hawksworth to succeed
Fraser as Mercury’s Chief Executive. It is
extremely gratifying to have attracted
someone of Vince’s calibre and industry
experience. We look forward to welcoming
Vince to Mercury in late April.
CONCLUSION
On behalf of the Board I congratulate the
people of Mercury and its management
team for a strong half-year, in particular for
their contributions to those decisions which
help set up the company for long-term
success. I acknowledge also the support
and work of our partners, and the loyalty
of our customers.
I look forward to the second half of the
financial year continuing Mercury’s track
record of efficient execution of our strategy
and delivering what we say we will do for the
balanced benefit of our stakeholders.
PRUE FLACKS // CHAIR
4 // 5CHAIR’S UPDATE

222
MW
NEW ZEALAND’S
LARGEST WIND FARM
840
GWh
ESTIMATED GENERATION
PER YEAR
Tilt Renewables’ Tararua Wind Farm
OUR TURITEA WIND FARM
INTERIM REPORT 2020

FRASER WHINERAY // CHIEF EXECUTIVE
Mercury has achieved further key milestones
and a strong performance over the half year.
A deliberate portfolio strategy to maintain a
longer net-generation position, particularly
from October, has been positive for earnings
and risk management. Adjusting for changes
in hydro generation, HY2020 represents a
stronger result than the prior corresponding
period.
Part of achieving a longer net generation
position was a reduction in customer
numbers, particularly through choosing
not to aggressively pursue the Farm Source
(farming sector) contract. Dairy farmers have
a refrigeration load correlated through spring
and summer linked to grass growth, which
is when Mercury was seeking to reduce the
risk of the portfolio impacts of drought in the
Taupo catchment. We have also taken a very
disciplined approach to channel optimisation,
recognising that extensively discounted and
non-digital mass market acquisition channels
were sub-optimal relative to wholesale yields.
We maintain a dynamic forward view of
energy costs and channel optimisation.
As our Chair noted, we have committed
to build the remaining 27 turbines at the
Turitea wind farm, which will make this
New Zealand’s largest, representing two
percent of national demand.
Other key activity has included:
• Investment in data science and analytics
capability to better inform our customer
strategy;
• Reconfiguration of our Rotorua and
Maraetai workspaces to support a more
collaborative and high-performance
team environment;
• Development of our virtual customer
assistant 'Hiko', launched in January;
• Development of our new brand campaign
to further promote e.transport options for
New Zealand, launched in February;
• Completion of an upgrade to our Maximo
asset management system;
• The start of work to replace the top of
the cooling towers at Nga Awa Purua
geothermal power station (a maintenance
task that will involve the unscrewing and
screwing back up of 19,000 bolts).
FULL YEAR OUTLOOK
Looking to the second half of the financial
year, we expect to see ongoing challenging
wholesale market conditions due to national
thermal fuel and transmission constraints.
There will likely be a decision from Rio Tinto
concerning the Tiwai aluminium smelter’s
immediate future. Intense competition
in retail and strained retail margins will
continue to be a feature. Consequently,
it is likely further sub-scale, under-
capitalised, under-hedged and insufficiently
differentiated retailers will exit the market.
We also anticipate further competitor
decisions on new generation development
and retirement.
From a government and regulatory
perspective, we look forward to a satisfactory
conclusion of the Government’s National
Policy Statement for Indigenous Biodiversity
which does not prejudice geothermal
generation. We also look forward to further
clarity being provided by the Government in
acknowledging the importance of protecting
water storage capacity for hydro generation.
The latter is important to ensure the ongoing
reinvestment in hydro infrastructure that
underpins New Zealand’s renewable energy
advantage over other countries.
For Mercury we have a strong programme
of work to execute in the balance of the year.
We expect to complete the Whakamaru
hydro refurbishment started in 2016 and
the Aratiatia hydro refurbishment started in
2017. We will advance geothermal drilling at
the Kawerau and Rotokawa fields and make
extensive progress with the construction
of the Turitea wind farm. We are engaging
in ongoing activity related to the WAI85
(Waitangi Tribunal) claim process where
we are seeking to ensure key information
related to the Waikato Hydro System is
well understood. In the unlikely event
Mercury is affected, the Crown is required
to compensate Mercury.
For our customers, we will advance
engagement through digital channels
and complete our response to Electricity
Pricing Review recommendations. We have
launched the third phase of the Mercury
rebrand, begun in 2016, with our deliberately
positive and provocative “Kiss Oil Goodbye”
campaign. We will roll out a new digital
platform, Mercury Cosy, to assist customers
with understanding the best next steps to
improve their homes' energy efficiency.
Another initiative that Mercury looks
forward to advancing is our application of
geothermal science to the challenge of silica
deposition. There is very promising in-house
research underway with the potential to
reduce geothermal generation maintenance
costs, while at the same time reducing
geothermal greenhouse gas emissions.
CHIEF
EXECUTIVE’S
UPDATE.
6 // 7CHIEF EXECUTIVE’S UPDATE

*six month average
ZERO
HIGH SEVERITY
HEALTH & SAFETY
INCIDENTS
64%
CUSTOMER
SATISFACTION*
$53M
o
REINVESTMENT
CAPITAL EXPENDITURE
(SIB-CAPEX)
INTERIM REPORT 2020

8 // 9CHIEF EXECUTIVE’S UPDATE

Our commitment to custodianship of
natural resources is being progressed
through detailed strategic planning and
the development of a partnership model
to support our vision for the Waikato
catchment to be acknowledged as
among the world’s best.
We are also focused on a seamless Chief
Executive transition as I move to a new
role outside the energy sector, and Mercury
welcomes Vince Hawksworth to lead the
company.
In summary, Mercury is well positioned
for the full year as a result of our portfolio
and channel management, reinvestment
activities in generation, digital systems and
our people, and new investment decisions.
A LONGER TERM VIEW
With more than 11 years as an executive in
the electricity sector, across four elections,
two different primary regulators, and five
Energy Ministers, I provide below a few
reflections that are pertinent to its future.
A strong energy system, of which electricity
is a vital component, requires the careful
and dynamic balancing of the ‘trilemma’
of considerations, being reliability, cost and
renewability. These three matters must be
considered simultaneously as it is very rare
to find interventions affecting one leg of
the trilemma that don’t adversely impact
the others.
New Zealand’s electricity sector is world-
leading on dynamically balancing the
trilemma. The outlook is for this to
continue to happen with investment and
re-investment subject to high-quality and
predictable regulatory development.
The country manages to achieve this position
for several reasons:
• The quality of geothermal and wind
resources is so high that it is superior
to fossil fuel electricity generation even
without subsidies.
• The system has a significant proportion
of baseload renewable generation in
the form of geothermal generation.
Geothermal is a unique renewable in that
output does not depend on terrestrial
weather systems. As the country's
number two electricity source behind
hydro, huge geothermal investment has
effectively displaced base-load thermal
generation over the last two decades and
almost halved the emissions of the entire
electricity sector, equivalent to removing
all aviation emissions.
• The hydro systems accommodate vast
amounts of variable customer demand
and increasingly variable renewable
generation from wind and solar because
they were built with high peaking
capability.
• The market structure was carefully
designed in the early 1990s, following
recognition in the 1980s that central
ownership and control was ineffective
for the trilemma. This has evolved and
delivered in an ever-complex technology
and customer dynamic. It is important
that, as people who understand those
fundamentals from both the sector
and regulatory/policy positions retire,
apparently simple and narrow ideas are
not implemented without consideration
of the complex dynamics that underpin
a system which is globally superior.
• A diverse and innovative range of
customer, smart metering and generation
solutions was possible as a result of
the decentralisation in the 1990s. New
thinking and approaches continue to
thrive in this environment. That is the only
way to keep up with the pace of change.
One of the key reasons for the renewable
energy renaissance in New Zealand over the
last two decades is because the increasing
price and lower deliverability of gas brought
new renewable projects into financial viability.
New Zealand’s gas system is again facing
challenges, which is flowing through to
electricity. However the competition to
develop new generation, predominantly
renewable, is again rising to this challenge
with several developers having patiently
invested in ‘shovel-ready’ projects, consents
and agreements over many years.
New Zealand’s competitive advantage
in renewable energy is well known. The
Productivity Commission and the Interim
Climate Change Committee have both
recently produced well-researched
reports articulating the electricity sector’s
performance and strategic national
benefits for a decarbonising future. This
competitive advantage is frequently
highlighted internationally, particularly by
successive governments and public officials
considering trade arrangements and our
national identity. For some reason many of
those same voices find it very difficult to talk
positively about the sector when at home.
New Zealand's trilemma performance
isn't just good for New Zealand today,
but incredibly important for New
Zealand tomorrow. Good policy requires
“THIS YEAR, MERCURY IS ON
TRACK TO DELIVER ITS 12TH
PROGRESSIVE ORDINARY
DIVIDEND...AND EXPECTS TO
HAVE STRONG GROWTH OVER
THE NEXT THREE YEARS...
INTERIM REPORT 2020

simultaneously entertaining all three
legs of the trilemma. No matter how well
intentioned, responding to narrow interests
without very careful and deep analysis can
destroy the trilemma very quickly. It would be
a tremendous affront to all New Zealanders
and their wellbeing if political dynamics
ended up destroying this competitive
advantage. Australian politicians have
created huge social and environmental
damage through ill-considered energy
policy over little more than a decade.
There is a lot the electricity sector can and
should do to continue to improve. Much of
this is covered in recommendations and
directions from the recent Electricity Pricing
Review, and is underway. A vast amount
more occurs across the sector for
its improvement without fanfare.
Turning to Mercury itself, I am grateful
to have had the opportunity to contribute to
the company and this exciting and dynamic
sector, and to have led Mercury since 2014.
I have seen first-hand what happens when a
purpose that genuinely extends to customers
and the country creates alignment for our
people, our partners and the environment.
In combination with a high-performance
team framework, that alignment combines
to produce some remarkable outcomes
that include innovation, quality execution
and a very enjoyable place to work. With
this purpose and momentum, Mercury’s
attractiveness as an employer has increased
considerably, most recently exemplified
in attracting someone as experienced
and qualified as Vince Hawksworth to be
Mercury’s third Chief Executive.
It is said people become a product of the
company they keep. The same is true for
companies. It has been tremendously
valuable to see the exchange of
“organisational DNA” with many of our
partners and the positive impact this has
had on Mercury. From the near century-long
geothermal joint venture with the Tauhara
North No.2 Trust to our relationships with
the Tuaropaki Trust, FCB, Andritz, Starship
Foundation, Waikato Tainui, Raukawa, Ngāti
Tahu-Ngāti Whaoa, Tūwharetoa and other
iwi, Waikato Regional Council, Waikato River
Trails, the Waikato Catchment Ecological
Enhancement Trust, Vestas, SAP and many
others. These partnerships very positively
influence the company and allow us to do far
more than we could contemplate alone.
Mercury is on track to deliver its 12th
progressive ordinary dividend, complete
major hydro refurbishments as part of a
multi-decade programme started in 2010,
enjoy the benefits of an exceptionally strong
balance sheet to support investment and
expects to have strong growth over the
next three years thanks to decisions already
undertaken. The company has much more
to achieve.
FINAL WORD
I am thankful for the commitment and
creativity of Mercury’s people, partners
and suppliers, and the support of our Board,
customers and owners for what has been
a very rewarding and challenging journey
since 2008.
I thank my predecessor Doug Heffernan for
his contribution to the competitive advantage
of New Zealand’s electricity system and
FRASER WHINERAY // CHIEF EXECUTIVE
establishing and growing Mighty River Power.
I wish Vince Hawksworth the very best for his
leadership of the company, with the guidance
of Prue Flacks and her fellow directors, and
the support of all of Mercury.
Ake ake kia kaha.
Together we are Mercury.
Energy made Wonderful.
Ngā mihi nui ki a koutou katoa.
10 // 11CHIEF EXECUTIVE’S UPDATE

SECOND HALF, FY2020 ACTIVITIES:
COMPLETION OF
WHAKAMARU AND
ARATIATIA HYDRO
REFURBISHMENTS

DRILLING PROGRAMME
AT KAWERAU AND
ROTOKAWA GEOTHERMAL
FIELDS
PROGRESS TURITEA WIND
FARM CONSTRUCTION
EXPAND MERCURY DRIVE
EV-BY-SUBSCRIPTION
SERVICE
BUILD “WORLD'S BEST
CATCHMENT” PLAN
FOR WAIKATO RIVER
SUSTAINABILITY

ENHANCE DIGITAL
ENGAGEMENT WITH
CUSTOMERS, INCLUDING
LEVERAGE OF NEW BRAND
CAMPAIGN
INTERIM REPORT 2020

LET’S GET
INTO THE
NUMBERS.
OUR FINANCIALS
12 // 13INDEPENDENT REVIEW REPORT

DIRECTORS’ RESPONSIBILITIES
The directors are responsible for the preparation and fair
presentation of consolidated interim financial statements
which comply with New Zealand Equivalent to International
Accounting Standard 34
Interim Financial Reporting and
International Accounting Standard 34
Interim Financial
Reporting
and for such internal control as the directors
determine is necessary to enable the preparation and fair
presentation of the consolidated interim financial statements
that are free from material misstatement, whether due to fraud
or error.
REVIEWERS’ RESPONSIBILITIES
Our responsibility is to express a conclusion on the consolidated
interim financial statements based on our review. We conducted
our review in accordance with New Zealand Standard on Review
Engagements 2410
Review of Financial Statements Performed
by the Independent Auditor of the Entity
(NZ SRE 2410). NZ SRE
2410 requires us to conclude whether anything has come to our
attention that causes us to believe that the consolidated interim
financial statements, taken as a whole, are not prepared in all
material respects, in accordance with New Zealand Equivalent
to International Accounting Standard 34
Interim Financial
Reporting
.
The Auditor-General is the auditor of Mercury NZ Limited
and its subsidiaries. Lloyd Bunyan, appointed by the Auditor-
General, performs the annual audit of the Group using the staff
and resources of Ernst & Young. As a result, and in compliance
with NZ SRE 2410, Ernst & Young is required to comply with
the independence requirements of the Auditor-General, which
incorporate the independence requirements of the External
Reporting Board.
BASIS OF STATEMENT
A review of consolidated interim financial statements
in accordance with NZ SRE 2410 is a limited assurance
engagement. The auditor performs procedures, primarily
consisting of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical
and other review procedures.
The procedures performed in a review are substantially less
than those performed in an audit conducted in accordance with
International Standards on Auditing (New Zealand). Accordingly
we do not express an audit opinion on the consolidated interim
financial statements.
In addition to this review and the audit of the annual financial
statements of the Group, we are engaged to perform other
engagements in the area of international tax compliance
and advice which are compatible with these independence
requirements. Partners and staff of Ernst & Young may deal
with the Group on arm’s length terms within the ordinary course
of trading activities of the Group or in the performance of this
review. These services have not impaired our independence as
auditor of the Group or in the performance of this review. Other
than these engagements and arm’s length transactions we have
no relationship with, or interests in, the Group.
CONCLUSION
Based on our review nothing has come to our attention that
causes us to believe that the accompanying consolidated interim
financial statements, set out on pages 14 to 27, do not present
fairly, in all material respects, the financial position of the Group
as at 31 December 2019 and its financial performance and cash
flows for the six months ended on that date in accordance with
New Zealand Equivalent to International Accounting Standard 34
Interim Financial Reporting.
Our review was completed on 25 February 2020 and our findings
are expressed as at that date.
REVIEW REPORT TO THE SHAREHOLDERS OF MERCURY NZ LIMITED
We have reviewed the consolidated interim financial statements of Mercury NZ Limited (“the Company”) and its subsidiaries (“the Group”)
on pages 14 to 27, which comprise the consolidated balance sheet of the Group as at 31 December 2019, and the consolidated income
statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated cash flow
statement of the Group for the six months ended on that date, and a summary of significant accounting policies and other explanatory
information.
This report is made solely to the Company's shareholders, as a body. Our review has been undertaken so that we might state to the
Company's shareholders those matters we are required to state to them in a review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's shareholders as a body,
for our review work, for this report, or for our findings.
INDEPENDENT
REVIEW REPORT.
ERNST & YOUNG
AUCKLAND, NEW ZEALAND
INTERIM REPORT 2020

CONSOLIDATED INCOME STATEMENT
For the six months ended 31 December 2019
Note
Unaudited
6 Months
31 Dec 2019
$M
Restated
Unaudited
6 Months
31 Dec 2018
$M
Restated
Audited
12 Months
30 Jun 2019
$M
Total revenue4928 1,079 2,001
Total expenses 4(670)(777)(1,495)
EBITDAF
1
258 302 506
Depreciation and amortisation(105)(104)(204)
Change in the fair value of financial instruments(22)(14)26
Gain on sale–– 177
Net interest expense4(30)(39)(75)
Profit before tax101145 430
Tax exp e nse(18)(41)(73)
Profit for the period attributable to owners of the parent83 104 357
Basic and diluted earnings per share (cents)6.17.626.2
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 December 2019
Unaudited
6 Months
31 Dec 2019
$M
Unaudited
6 Months
31 Dec 2018
$M
Audited
12 Months
30 Jun 2019
$M
Profit for the period83104 357
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Movement in asset revaluation reserve – – 244
Movement in cash flow hedge reserve transferred to balance sheet – –(1)
Share of movements in associates' and joint ventures’ reserves8–(9)
Tax ef fe c t–– (66)
Items that may be reclassified subsequently to profit or loss
Movement in cash flow hedge reserve1(64)(118)
Movement in other reserves––1
Share of movements in associates' and joint ventures' reserves(14)––
Tax ef fe c t–1832
Other comprehensive (loss)/income for the period, net of taxation(5)(46)83
Total comprehensive income for the period attributable to owners of the parent7858440
1. EBITDAF: Earnings before depreciation and amortisation, change in the fair value of financial instruments, gain on sale, impairments, net interest expense
and tax expense.
FINANCIAL STATEMENTS.
The accompanying notes form an integral part of these financial statements.
14 // 15FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET
As at 31 December 2019
Note
Unaudited
31 Dec 2019
$M
Restated
Unaudited
31 Dec 2018
$M
Audited
30 Jun 2019
$M
SHAREHOLDERS’ EQUITY
Issued capital 378 378 378
Treasury shares (101) (101)(101)
Reserves 3,2112,9623,260
Total shareholders’ equity 3,488 3,2393,537
ASSETS
Current assets
Cash and cash equivalents857894
Receivables183243256
Contract assets233
Inventories252723
Derivative financial instruments6678150
Total current assets 362 432 426
Non-current assets
Property, plant and equipment75,5175,2675,528
Intangible assets838185
Investments –142234
Investment and advances to associates83028676
Advances to joint operations676
Receivables63–
Derivative financial instruments6109127129
Total non-current assets 6,023 5,713 6,058
Held-for-sale assets–81–
Total assets 6,385 6,2266,484
LIABILITIES
Current liabilities
Payables and accruals153184216
Provisions1––
Borrowings9401288541
Derivative financial instruments6569045
Taxation payable221919
Total current liabilities633581821
Non-current liabilities
Payables and accruals10109
Provisions595259
Derivative financial instruments6219150208
Borrowings98511,095692
Deferred tax1,1251,0971,158
Total non-current liabilities 2,264 2,404 2,126
Held-for-sale liabilities–2–
Total liabilities 2,897 2,9872,947
Net assets 3,488 3,2393,537
For and on behalf of the Board of Directors, who authorised the issue of the Financial Statements on 25 February 2020.
PRUE FLACKS // CHAIR
25 February 2020
KEITH SMITH // DIRECTOR
25 February 2020
The accompanying notes form an integral part of these financial statements.
INTERIM REPORT 2020

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2019
Issued
capital
$M
Retained
earnings
$M
Asset
revaluation
reserve
$M
Cash flow
hedge
reserve
$M
Other
reserves
$M
Total
equity
$M
Restated balance as at 1 July 2018378 164 2,901 (24)(114) 3,305
Movement in cash flow hedge reserve, net of taxation – – – (46) – (46)
Share of movements in associates' and joint ventures' reserves – – 8 (8) – –
Recycling of fair values losses in available for sale reserves – (15) – – 15 –
Other comprehensive income/(loss) – (15)8(54)15(46)
Net profit for the period – 104 – – – 104
Total comprehensive income/(loss) for the period – 898(54)1558
Dividend – (124) – – – (124)
Restated balance as at 31 December 2018378 1292,909 (78)(99)3,239
Restated balance as at 1 January 2019 378 129 2,909 (78) (99) 3,239
Movement in asset revaluation reserve, net of taxation – – 176 – – 176
Movement in cash flow hedge reserve, net of taxation – – – (39) – (39)
Movements in other reserves –2 – – (1)1
Share of movements in associates' and joint ventures' reserves – – (8) (1) – (9)
Other comprehensive income/(loss) – 2168 (40)(1)129
Net profit for the period – 253 – – – 253
Total comprehensive income/(loss) for the period – 255168 (40)(1)382
Dividend – (84) – – – (84)
Balance as at 30 June 2019378 3003,077 (118)(100)3,537
Balance as at 1 July 2019 378 3003,077 (118) (100) 3,537
Movement in cash flow hedge reserve, net of taxation – – – 1 – 1
Share of movements in associates' and joint ventures' reserves – – 9 (13)(2) (6)
Other comprehensive income/(loss) – –9 (12)(2)(5)
Net profit for the period – 83 – – – 83
Total comprehensive income/(loss) for the period – 839 (12)(2)78
Dividend – (127) – – – (127)
Balance as at 31 December 2019378 2563,086 (130)(102)3,488
The accompanying notes form an integral part of these financial statements.
16 // 17FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 December 2019
Unaudited
6 Months
31 Dec 2019
$M
Unaudited
6 Months
31 Dec 2018
$M
Audited
12 Months
30 Jun 2019
$M
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers9811,0571,952
Payments to suppliers and employees(721)(796)(1,478)
Interest received–11
Interest paid(30)(36)(70)
Taxes paid(50)(55)(79)
Net cash provided by operating activities 180 171326
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment(68)(39)(93)
Acquisition of intangibles(19)(14)(29)
Acquisition of investment––(55)
Distributions received and advances repaid from associates and joint ventures235
Proceeds from the sale of metering business––270
Net cash (used)/received in investing activities(85)(50)98
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans3256930
Repayment of loans(300)–(166)
(Payment)/receipt of lease (liabilities)/incentives(2)79
Dividends paid(127)(124)(208)
Net cash used in financing activities (104)(48)(335)
Net (decrease)/increase in cash and cash equivalents held(9)7389
Cash and cash equivalents at the beginning of the period9455
Cash and cash equivalents at the end of the period857894
Cash balance comprises:
Cash balance at the end of the period857894
The accompanying notes form an integral part of these financial statements.
INTERIM REPORT 2020

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 interim financial statements (the "Group financial statements") are for Mercury NZ Limited Group (“Group”). The Group
financial statements comprise the Company and its subsidiaries, including its investments in associates and interests in joint arrangements.
The 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 New Zealand equivalent to International Accounting Standard
34 – Interim Financial Reporting ("NZ IAS 34"). In complying with NZ IAS 34, these statements comply with International Accounting
Standard 34 – Interim Financial Reporting.
These Group financial statements, including the accounting policies adopted, do not include all the information and disclosures required in
the annual financial statements. The Group financial statements have been prepared using the same accounting policies as, and should be
read in conjunction with, the Group's annual financial statements for the year ended 30 June 2019.
The energy business operates in an environment that is dependent on weather as one of the key drivers of supply and demand. Fluctuations
in seasonal weather patterns, particularly over the short-term, can have a positive or negative effect on financial performance. It is not
possible to consistently predict this seasonality and some variability is common.
The preparation of financial statements requires judgements and estimates that impact the application of policies and the reported
amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
Certain comparatives have been restated where needed to conform to current year classification and presentation.
During the 2019 financial year, an historic overstatement of a fair value adjustment was identified and corrected. Since this overstatement
occurred in 2011, our half year comparatives within this interim report have also been restated. Please refer to the 2019 annual report for
further information. The change had no impact on the consolidated statement of comprehensive income for any of the periods presented.
It resulted in a reduction of $19m to non-current borrowings and opening reserves in the consolidated balance sheet presented as at 31
December 2018.
The Group has also decided to recognise earnings of associates and joint ventures within total revenue as it anticipates these to become
more significant going forward. Prior periods have been restated to reflect this change.
NOTE 2. SEGMENT REPORTING
IDENTIFICATION OF REPORTABLE SEGMENTS
The operating segments are identified by management based on the nature of the products and services provided. Discrete financial
information about each of these operating segments is reported to the Chief Executive, being the chief operating decision-maker, on at
least a monthly basis, who assesses the performance of the operating segments on a measure of EBITDAF. Segment EBITDAF represents
earnings by each segment exclusive of any allocation of central administration costs, depreciation and amortisation, change in the fair value
of financial instruments, gain on sale, impairments, interest expense and tax expense. Operating segments are aggregated into reportable
segments only if they share similar economic characteristics.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 31 December 2019
18 // 19FINANCIAL STATEMENTS

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 development and operations.
Unallocated
Represents corporate support services and related elimination adjustments.
Inter-segment
Transactions between segments are carried out on normal commercial terms and represent charges by Other Segments to Energy Markets.
SEGMENT RESULTS
Six months ended 31 December 2019 (unaudited)
Energy
Markets
$M
Other
Segments
$M
Unallocated
$M
Inter–
segment
$M
Total
$M
Total segment revenue923 5 ––928
Direct costs(575)(1)––(576)
Other operating expenses(63)(1) (30)–(94)
Segment EBITDAF 285 3 (30)–258
Six months ended 31 December 2018 (restated unaudited)
Energy
Markets
$M
Other
Segments
$M
Unallocated
$M
Inter–
segment
$M
Total
$M
Total segment revenue1,064 27 –(12)1,079
Direct costs(686)(4)–12 (678)
Other operating expenses(62)(9)(28)–(99)
Segment EBITDAF316 14(28)–302
Twelve months to 30 June 2019 (restated audited)
Energy
Markets
$M
Other
Segments
$M
Unallocated
$M
Inter–
segment
$M
Total
$M
Total segment revenue1,978 37 2(16)2,001
Direct costs(1,306)(6)–16 (1,296)
Other operating expenses(127)(13)(59)–(199)
Segment EBITDAF545 18(57)–506
INTERIM REPORT 2020

NOTE 3. NON-STATUTORY MEASURE – UNDERLYING EARNINGS
Underlying earnings after tax 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 profit before tax, which represents material items), impairments, gain on
sale and any change in the fair value of derivative financial instruments, all net of tax expense.
Unaudited
6 Months
31 Dec 2019
$M
Unaudited
6 Months
31 Dec 2018
$M
Audited
12 Months
30 Jun 2019
$M
PROFIT FOR THE PERIOD83 104 357
Change in the fair value of financial instruments22 14 (26)
Impairments/(Gain on sale)–– (177)
Adjustments before tax expense2214(203)
Tax exp e nse(15)(4)7
Adjustments after tax expense710(196)
Underlying earnings after tax90114161
Tax has been applied on all taxable adjustments at 28%. A $10m deferred tax expense was recognised in prior periods in relation to
unrealised fair value movements of the Group's investment in Tilt Renewables Limted. This tax expense was reversed during the period and
is detailed further in Note 8.
The group has previously backed out its equity accounted share of the change in fair value of financial instruments of associate entities. The
group no longer feels that it is relevant to include this within underlying earnings and has amended its calculation accordingly. This change
had no impact on the prior period comparatives for Underlying Earnings.
NOTE 4. OTHER INCOME STATEMENT DISCLOSURES
Unaudited
6 Months
31 Dec 2019
$M
Restated
Unaudited
6 Months
31 Dec 2018
$M
Restated
Audited
12 Months
30 Jun 2019
$M
Sales from electricity generation 398 535 944
Sales to customers and derivatives 519 519 1,013
Earnings of associates and joint ventures 3 – 1
Other revenue 8 25 43
Total revenue9281,0792,001
Energy costs (329)(423)(802)
Line charges (205)(221)(422)
Other direct cost of sales, excluding third-party metering (18)(17)(33)
Direct costs of other revenue (1) (4)(6)
Third-party metering (23)(13)(33)
Employee compensation and benefits (41)(45)(86)
Maintenance expenses (22)(21)(42)
Other expenses (31)(33)(71)
Total expenses (670)(777)(1,495)
Interest expense (30) (40)(76)
Interest income–11
Net interest expense (30)(39) (75)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 31 December 2019
20 // 21FINANCIAL STATEMENTS

NOTE 5. SHARE CAPITAL AND DISTRIBUTION
The share capital of the Company is represented by 1,400,012,517 ordinary shares (30 June 2019: 1,400,012,517) issued and fully paid.
These shares do not have a par value, have equal voting rights and share equally in dividends and any surplus on winding up.
Unaudited
31 Dec 2019
Number of
shares (M)
Unaudited
31 Dec 2019

$M
Unaudited
31 Dec 2018
Number of
shares (M)
Unaudited
31 Dec 2018

$M
Audited
30 Jun 2019
Number of
shares (M)
Audited
30 Jun 2019

$M
Treasury shares
Balance at the beginning and end of the period 39 1013910139101
Cents per
share
Unaudited
6 Months
31 Dec 2019
$M
Unaudited
6 Months
31 Dec 2018
$M
Audited
12 Months
30 Jun 2019
$M
Dividends declared and paid
Final dividend for 20189.1–124124
Interim dividend for 20196.2 – – 84
Final dividend for 20199.3127 – –
127124208
INTERIM REPORT 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 31 December 2019
NOTE 6. FINANCIAL INSTRUMENTS
The Group's overall risk management programme seeks to proactively hedge risks arising from the unpredictability of financial markets with
the aim of protecting shareholder value. Exposure to price, credit, foreign exchange, liquidity and interest rate risks arise in the normal course
of the Group's business. The Group's principal financial instruments comprise cash and cash equivalents, trade receivables and accruals (not
prepayments), advances, payables and accruals, borrowings and derivative financial instruments. Further information on the identified risks
can be found within note 14 of the Group's annual financial statements for the year ended 30 June 2019.
Fair values
The carrying amount of financial assets and liabilities recorded in the financial statements approximates their fair values except for: (i) the
Fixed Rate Bonds, the Floating Rate Bonds and the US Private Placement, the fair values for which have been calculated at $59 million
(30 June 2019: $60 million), $297 million (30 June 2019: $296 million) and $310 million (30 June 2019: $312 million) respectively; and (ii)
the Capital Bonds, the fair value for which has been calculated at $311 million (30 June 2019: $305 million). Fair values are based on quoted
market prices and inputs for each bond issue. Refer to note 9 which outlines the values of each of these instruments.
Valuation techniques
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
• Level 1 – the fair value is calculated using quoted prices in active markets;
• Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices); and
• Level 3 – the fair value is estimated using inputs that are not based on observable market data.
As at 31 December 2019 all of the Group's financial instruments carried at fair value were categorised as level 2, except for electricity price
derivatives. Electricity price derivatives assets of $45 million were categorised as level 1 (30 June 2019: $44 million) and $85 million were
categorised as level 3 (30 June 2019: $79 million). Further information on the identified risks can be found within note 14 of the Group's
annual financial statements for the year ended 30 June 2019. Electricity price derivative liabilities of $19 million were categorised as level 1
(30 June 2019: $17 million) and $163 million were categorised as level 3 (30 June 2019: $138 million).
Financial instruments that use a valuation technique with only observable market inputs, or unobservable inputs that are not significant to
the overall valuation, include interest rate derivatives and foreign exchange rate derivatives not traded on a recognised exchange.
Financial instruments that use a valuation technique which includes non-market observable data include non-exchange traded electricity
contracts which are valued using a discounted cash flow methodology using a combination of ASX market prices for the first three years,
combined with management's internal view of forward prices for the remainder of the contract's term. Management's internal view of
forward prices incorporates a minimum price of $71/MWh and a maximum price of $134/MWh (30 June 2019: a minimum price of
$69/MWh and a maximum price of $114/MWh) over the period in question (in real terms) and is determined by a demand supply based
fundamental model which takes account of current hydrological conditions, future inflows, an assessment of thermal fuel costs, anticipated
demand and supply conditions and future committed generation capacity.
Where the fair value of a derivative is calculated as the present value of the estimated future cash flows of the instrument there are two key
inputs being used; the forward price curve and the discount rate. Where the derivative is an option, then the volatility of the forward price
is another key variable. The selection of the inputs requires significant judgement, and therefore there is a range of reasonably possible
assumptions in respect of these inputs that could be used in estimating the fair values of these derivatives. Maximum use is made of
observable market data when selecting inputs and developing assumptions for the valuation technique.
22 // 23FINANCIAL STATEMENTS

Unaudited
6 Months
31 Dec 2019
$M
Unaudited
6 Months
31 Dec 2018
$M
Audited
12 Months
30 Jun 2019
$M
RECONCILIATION OF LEVEL 3 FAIR VALUE MOVEMENTS
Opening balance (59) 54 54
New contracts (4) (10) (28)
Matured contracts 9 1 1
Gains and losses
Through the income statement (13) (7) (8)
Through other comprehensive income 10 (49) (78)
Closing balance(57)(11)(59)
Deferred 'inception' gains/(losses)
There is an assumption that when derivative contracts are entered into on an arm's length basis, fair value at inception would be zero. The
contract price of non exchange traded electricity derivative contracts are agreed on a bilateral basis, the pricing for which may differ from
the prevailing derived market price curve for a variety of reasons. In these circumstances an inception adjustment is made to bring the initial
fair value of the contract to zero at inception. This inception adjustment is amortised over the life of the contract by adjusting the future
price path used to determine the fair value of the derivatives by a constant amount to return the initial fair value to zero.
The table below details the movements in inception value gains/(losses) included in the fair value of derivative financial assets and liabilities:
Unaudited
6 Months
31 Dec 2019
$M
Restated
Unaudited
6 Months
31 Dec 2018
$M
Audited
12 Months
30 Jun 2019
$M
Opening deferred inception (losses)(12)(15)(15)
Deferred inception gains on new hedges743
Deferred inception (losses) realised during the period(1)––
Closing inception (losses)(6)(11)(12)
NOTE 7. PROPERTY, PLANT AND EQUIPMENT
Unaudited
6 Months
31 Dec 2019
$M
Unaudited
6 Months
31 Dec 2018
$M
Audited
12 Months
30 Jun 2019
$M
Opening net book value5,5285,3705,370
Additions, including transfers from capital work in progress8135139
Disposals––(50)
Net revaluation movement––250
Transfer to held-for-sale–(47)–
Depreciation charge for the period(92)(91)(181)
Closing net book value5,5175,2675,528
INTERIM REPORT 2020

NOTE 8. INVESTMENT AND ADVANCES TO ASSOCIATES AND JOINT ARRANGEMENTS
(JOINT VENTURES AND JOINT OPERATIONS)
Investments include:
Interest held
Name of entityPrincipal activityType
Unaudited
31 Dec
2019
Unaudited
31 Dec
2018
Audited
30 Jun
2019Country
TPC Holdings LimitedInvestment holdingAssociate25.00%25.00%25.00%New Zealand
Tilt Renewables LimitedElectricity generation
and development
Associate19.97%19.99%19.97%New Zealand
RotokawaSteamfield operationJoint Operation64.80%64.80%64.80%New Zealand
Ngā Awa PurūaElectricity generationJoint Operation65.00%65.00%65.00%New Zealand
EnergySource LLCInvestment holdingJoint Venture20.86%20.86%20.86%United States
EnergySource Minerals LLCMineral extractionJoint Venture20.84%20.84%20.84%United States
Hudson Ranch I Holdings LLCElectricity generationJoint Venture75.00%75.00%75.00%United States
AssociatesJoint ventures
Unaudited
6 Months
31 Dec 2019
$M
Unaudited
6 Months
31 Dec 2018
$M
Audited
12 Months
30 Jun 2019
$M
Unaudited
6 Months
31 Dec 2019
$M
Unaudited
6 Months
31 Dec 2018
$M
Audited
12 Months
30 Jun 2019
$M
Balance at the beginning of the year 76 8888 – – –
Additions during the period230 – – – – –
Share of earnings3 –1 – – –
Share of movement in other comprehensive income (6) –(9) – – –
Distributions received during the period (1) (2)(4) – – –
Balance at the end of the period3028676 – – –
The group purchased an initial 19.99% stake in Tilt Renewables Limited ("Tilt") in 2018. At that time the group did not have representation
on its board of directors and this investment was accounted for as an investment at fair value through the income statement. On 19 July
2019 the group’s Chief Executive was appointed as a non-independent director to the board of Tilt. Consequently, the group considers that
it gained significant influence in the context of IAS 28 –
Investments in associates and joint ventures and has accounted for its investment
as an investment in an associate from that date. This has resulted in an unrealised fair value loss of $4m being recognised for the period,
bringing the investment to its market value on 19 July 2019.
In applying NZ IAS 28, the group is required to compare the cost of its investment on 19 July 2019, to the fair value of its share of identifiable
net assets of Tilt, and account for any resulting differences this creates when equity accounting its share of earnings and reserves. In doing
so, the group has taken into account the information arising from the sale of Tilt’s Snowtown 2 subsidiary in December 2019. The effect of
this adjustment is to largely bring Tilt's identifiable net assets into line with its market value as of 19 July 2019 and no gain or loss has been
recorded by Mercury in respect of the sale of Snowtown 2 in the period to 31 December 2019. The group will revisit this approach when it
prepares its full year financial statements.
Additionally, following an announcement from Tilt that it will be looking to reinvest earnings into capital development and due to the
additional influence gained from having a director appointee, the group considers it unlikely that Tilt will pay dividends in the foreseeable
future and has therefore reversed its $10m deferred tax liability recognised at 30 June 2019 in relation to unrealised fair value gains.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 31 December 2019
24 // 25FINANCIAL STATEMENTS

NOTE 9. BORROWINGS
Borrowing Currency
DenominationMaturity Coupon
Unaudited
6 Months
31 Dec 2019
$M
Restated
Unaudited
6 Months
31 Dec 2018
$M
Audited
12 Months
30 Jun 2019
$M
Bank facilitiesNZDVariousFloating25 130 –
Commercial paper programmeNZD< 3 monthsFloating199 200 199
Wholesale bondsNZDMar–20195.03% – 76 –
Capital bondsNZDJul–20196.90% – 305 305
Wholesale bondsNZDFeb–20208.21%31 31 31
USPP – US$125mUSDDec–20204.25%163 163 163
Wholesale/credit wrapperNZDSep–2021Floating300 300 300
USPP – US$30mUSDDec–20224.35%39 39 39
Wholesale bondsNZDMar–20235.79%26 25 26
USPP – US$45mUSDDec–20254.60%59 59 59
Capital bondsNZDJul–20493.60%302 – –
Lease liabilities69 21 69
Deferred financing costs(4) (3) (1)
Fair value adjustments43 37 43
Carrying value of loans1,2521,383 1,233
Current401 288541
Non-current8511,095692
1,2521,3831,233
The Group has $500 million of committed and unsecured bank loan facilities of which $100 million expires in June 2021, $100 million
expires in August 2022, $100m expires in October 2022, and a rolling bank loan of $200 million currently expires in June 2021.
The Company has a $200 million Commercial Paper programme which is fully backed by committed and undrawn bank facilities. Notes
issued under the programme are short-term money market instruments, unsecured and unsubordinated and targeted at professional
investors. The programme is rated A2 by Standard & Poor’s.
On 11 July 2019 Mercury redeemed the existing $300m MCY010 bonds and issued $300m of new unsecured, subordinated bonds
(MCY020). The MCY020 bonds are due to mature in July 2049 unless redeemed earlier and have a fixed interest rate of 3.6% through
to the first reset date of 11 July 2024.
The Group has entered into a Master Trust Deed and Supplementary Trust Deeds for all its NZD denominated Senior Fixed and Floating
Rate Bonds with the New Zealand Guardian Trust Group Limited, acting as trustee for the holders. The Group has agreed, subject to certain
exceptions, not to create or permit to exist a security interest over or affecting its assets to secure indebtedness, and to maintain certain
financial covenants. There has been no breach of the terms of these deeds.
The Group has entered into a negative pledge deed in favour of its bank financiers in which the Group has agreed, subject to certain
exceptions, not to create or permit to exist a security interest over or affecting its assets to secure its indebtedness, and to maintain certain
financial ratios in relation to the Group. These undertakings and covenants also apply to the US Private Placement (USPP) terms and
conditions. There has been no breach of the terms of this deed or the terms and conditions of the USPP.

INTERIM REPORT 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 31 December 2019
NOTE 10. RELATED PARTY TRANSACTIONS
Majority shareholder
The majority shareholder of Mercury NZ Limited is the Government. All transactions with the Government and other entities wholly or partly
owned by the Government are on normal commercial terms. Transactions cover a variety of services including trading energy, postal, travel
and tax.
Transactions with related parties
Mercury NZ Limited has investments in subsidiaries, associates and joint arrangements, all of which are considered related parties.
As these are consolidated financial statements, transactions between related parties within the Group have been eliminated.
Consequently, only those transactions between entities which have some owners external to the Group have been reported below:
Transaction value
Unaudited
6 Months
31 Dec 2019
$M
Unaudited
6 Months
31 Dec 2018
$M
Audited
12 Months
30 Jun 2019
$M
Associates
• Management fees and service agreements received101216
• Energy contract settlements received81314
Joint operations
• Management fees and service agreements received6512
• Energy contract settlements received41832
• Interest income – –1
Energy contracts, management and other services are made on normal commercial terms.
An advance to TPC Holdings Limited of $4 million (2019: $4 million) is interest free and repayable on demand subject to certain conditions
being met.
The long-term advance to our Rotokawa Joint Venture partner carries a floating interest rate. Repayments under the advance are linked
to the level of receipts under the geothermal energy supply agreement. There is no fixed repayment date; the agreement will terminate on
receipt of any outstanding balances.
No related party debts have been written off, forgiven, or any impairment charge booked.
Transaction value
Unaudited
6 Months
31 Dec 2019
$000
Unaudited
6 Months
31 Dec 2018
$000
Audited
12 Months
30 Jun 2019
$000
Key management personnel compensation (paid and payable) comprised:
• Directors’ fees466493990
• Benefits for the Chief Executive and Senior Management:
Salary and other short-term benefits 3,6833,2396,519
Share-based payments228114532
4,3773,8468,041
Further information on the terms and conditions of these related party transactions can be found in note 17 of the Group's annual financial
statements for the year ended 30 June 2019.
26 // 27FINANCIAL STATEMENTS

Other transactions with key management personnel
Key management personnel are those people with responsibility and authority for planning, directing and controlling the activities of the
Group. Key management personnel for the Group are considered to be the Directors and Senior Management.
Directors and employees of the Group deal with Mercury NZ Limited as electricity consumers on normal terms and conditions, with staff
discounts for employees, within the ordinary course of trading activities. A number of Directors also provide directorship services to other
third party entities. A number of these entities transacted with the Group on normal commercial terms during the reporting period.
A number of key management personnel provide directorship services to subsidiaries and other third party entities as part of their
employment without receiving any additional remuneration, with exception to the Group's Chief Executive who was elected to the Board of
Directors of Tilt Renewables Limited during the period and directly receives remuneration for his directorship services. Again, a number of
these entities transacted with the Group, in all circumstances on normal commercial terms in the reporting period.
The Group purchases directors and officers insurance for the benefit of key management personnel in relation to the services they provide
to the Group.
NOTE 11. COMMITMENTS AND CONTINGENCIES
Commitments
Unaudited
6 Months
31 Dec 2019
$M
Unaudited
6 Months
31 Dec 2018
$M
Audited
12 Months
30 Jun 2019
$M
Capital48994341
Other operating commitments31299211
Capital commitments include both commitments to purchase property, plant and equipment as well as intangible commitments. Intangible
commitments includes commitments to purchase emissions units. In the event the New Zealand Emissions Trading Scheme (NZ ETS)
terminates, the existing forward purchase agreements for the acquisition of emissions units, which cover the eight-year period from the end
of the reporting period, will also terminate.
Contingencies
The Group holds land and has interests in fresh water and geothermal resources that are subject to claims that have been brought against
the Government.
On 29 August 2014, the Supreme Court gave its decision in Paki v Attorney-General and dismissed the claimants’ action seeking a
declaration that the Government holds those parts of the bed of the Waikato River which adjoin former Pouakani land on trust for the
Pouākani people on the basis it was incorrectly advanced. The Supreme Court decision has left open the possibility of further litigation in
respect of ownership of that land currently held by the Group. The Group has received advice that it may proceed with a high degree of
confidence that future decisions on the matter will not impair the Group's ability to operate its hydro assets.
The Group holds land at Maraetai, Waikato, that is subject to a remedies hearing brought against the Government in the Waitangi Tribunal
pursuant to the Treaty of Waitangi Act 1975. The remedies hearing relates to an application seeking binding recommendations for the
resumption of land at Pouākani, including the Group’s land at Maraetai. The Group has received advice that the Tribunal’s decision on the
matter is unlikely to impair the Group’s ability to operate its hydro assets.
A separate claim by the New Zealand Māori Council relating to fresh water and geothermal resources was lodged in 2012 with the Waitangi
Tribunal. The Tribunal concluded that Māori have residual (but as yet undefined) proprietary rights in fresh water and geothermal resources
and it will be for the Government to determine how any such rights and interests may best be addressed. The impact of this claim on the
Group’s operations is unknown at this time.
From time to time the Group will issue letters of credit and guarantees to various suppliers in the normal course of business. However, there
is no expectation that any outflow of resource relating to these letters of credit or guarantees will be required as a consequence.
The Group has no other material contingent assets or liabilities.
NOTE 12. SUBSEQUENT EVENTS
The Board of Directors has approved an interim dividend of 6.4 cents per share to be paid on 1 April 2020.
There are no other material events subsequent to balance date that would affect the fair presentation of these financial statements.
INTERIM REPORT 2020

Shareholder enquiries
Changes in address, dividend payment details and
investment portfolios can be viewed and updated online:
www.investorcentre.com/nz. You will need your CSN
and FIN numbers to access this service.
Enquiries may be addressed to the Share Registrar
(see Directory for contact details).
Investor information
Our website at www.mercury.co.nz is an excellent source of
information about what’s happening within the company.
Our Investor Centre allows you to view all regular investor
communications, information on our latest operating and
financial results, dividend payments, news and share price history.
Electronic shareholder communication
It is quick and easy to make the change to receiving your reports
electronically. This can be done either:
• Online at www.investorcentre.com/nz by using your CSN and
FIN numbers (when you log in for the first time). Select ‘View
Portfolio’ and log in. Then select ‘Update My Details’ and select
‘Communication Options’; or
• By contacting Computershare Investor Services Limited by email
or post.
INFORMATION FOR SHAREHOLDERS.
28 // 29INFORMATION FOR SHAREHOLDERS

Board of Directors
Prue Flacks, Chair
Hannah Hamling
1

Andy Lark
James Miller
Keith Smith
Scott St John
Patrick Strange
Mike Taitoko
Executive Team
Fraser Whineray
2
,
Chief Executive
Kevin Angland,
General Manager Retail & Digital
Nick Clarke,
General Manager Geothermal & Safety
Lucie Drummond,
Risk Assurance Officer
Phil Gibson,
General Manager Hydro & Wholesale
Julia Jack,
Chief Marketing Officer
William Meek,
Chief Financial Officer
Tony Nagel,
General Manager Corporate Affairs
Matt Olde
3
,
General Manager
Marlene Strawson,
General Manager People & Performance
Company Secretary
Howard Thomas,
General Counsel
Investor Relations & Sustainability Enquiries
Tim Thompson,
Head of Treasury & Investor Relations
Mercury NZ Limited
PO Box 90399
Auckland 1142
New Zealand
Phone: +64 27 517 3470
Email: investor@mercury.co.nz
Registered Office in New Zealand
33 Broadway, Newmarket, Auckland 1023
Registered Office in Australia
c/– TMF Corporate Services (Australia) Pty Limited
Level 16, 201 Elizabeth Street
Sydney, NSW 2000
Phone: +61 2 8988 5800
Legal Advisors
Chapman Tripp
Level 35, ANZ Centre
23-29 Albert Street,
Auckland 1010
PO Box 2206, Auckland 1140
Phone: +64 9 357 9000
Bankers
ANZ Bank
ASB Bank
Bank of New Zealand
China Construction Bank
Mitsubishi UFJ Financial Group
Mizuho Bank
Westpac
Credit Rating (re-affirmed December 2019)
Long term: BBB+
Outlook: Stable
Share Registrar – New Zealand
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road, Takapuna,
Auckland 0622
Private Bag 92119
Auckland 1142, New Zealand
Phone: +64 9 488 8777
Email: enquiry@computershare.co.nz
Web: www.investorcentre.com/nz
Share Registrar – Australia
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston Street, Abbotsford, VIC 3067
GPO Box 3329, Melbourne, VIC 3001, Australia
Phone: 1 800 501 366 (within Australia)
Phone: +61 3 9415 4083 (outside Australia)
Email: enquiry@computershare.co.nz
DIRECTORY.
1
Effective 1 February 2020.
2
Fraser Whineray will leave the company in March 2020.
www.mercury.co.nz/whineray
3
Matt Olde will leave the company on 6 March 2020.
www.mercury.co.nz/executive
INTERIM REPORT 2020

MY LAST
PETROL CAR.
TAKE THE PLEDGE AT MERCURY.CO.NZ
30 // 31

TAKE THE PLEDGE AT MERCURY.CO.NZ
INTERIM REPORT 2020

---

Distribution Notice







Section 1: Issuer information
Name of issuer Mercury NZ Limited
Financial product name/description Mercury NZ Limited ordinary shares
NZX ticker code MCY
ISIN (If unknown, check on NZX
website)
NZMRPE0001S2
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies
Record date 13/03/2020
Ex-Date (one business day before the
Record Date)
12/03/2020
Payment date (and allotment date for
DRP)
01/04/2020
Total monies associated with the
distribution
$87,140,750.21
Source of distribution (for example,
retained earnings)
Income available for distribution
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution $0.08888889
Gross taxable amount $0.08888889
Total cash distribution $0.06400000
Excluded amount (applicable to listed
PIEs)
N/A
Supplementary distribution amount $0.01129412
Section 3: Imputation credits and Resident Withholding Tax
Is the distribution imputed Fully imputed
If fully or partially imputed, please
state imputation rate as % applied
28%
Imputation tax credits per financial
product
$0.02488889
Resident Withholding Tax per
financial product
$0.00444444

Section 4: Distribution re-investment plan – Not Applicable
Section 5: 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

25/02/2020