Mercury NZ Limited 2020 ASM

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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 NZ Limited – 2020 Annual Shareholders’ Meeting
24 September 2020 – The attached presentations will be given at Mercury NZ Limited’s Annual Shareholders’
Meeting starting at 10:00am today which will be held as a virtual meeting. The virtual meeting can be accessed
through the web platform web.lumiagm.com or the Lumi AGM App which can be downloaded from the App Store or
Google Play for free.
- 2020 Annual Shareholders’ Meeting – Chair and Chief Executive Address
- 2020 Annual Shareholders’ Meeting – Presentation

ENDS
Howard Thomas
General Counsel and Company Secretary
Mercury NZ Limited

For investor relations queries, please contact:
William Meek
Chief Financial Officer
0275 173 470
For media queries, please contact:
Craig Dowling
Head of Communications
0272 105 337


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

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

NEWS RELEASE

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Mercury 2020 ASM Chair and Chief Executive speaking notes | 24 September 2020 | Page 1 of 18




Mercury – 2020 Annual Shareholders’ Meeting

Where: VIRTUAL MEETING
When: 10.00am, 24 September 2020

ADDRESS BY CHAIR PRUE FLACKS
Kia ora koutou katoa.
Haere mai ki tenei hui motuhake.
Good morning ladies and gentlemen and thank you for joining us.
My name is Prue Flacks and I am Chair of Mercury NZ Limited.
On behalf of your directors, the Chief Executive, our leadership team and all of our people at
Mercury, I extend a very warm welcome to those of you who have been able to join us, online.
I am pleased to confirm that we have a quorum represented here today and therefore declare
‘open’ the 2020 Annual Shareholders’ Meeting of Mercury NZ Limited.
You have received instructions on asking questions of us during this virtual meeting, and also on
how to cast votes.

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I now declare voting open on all items of business. The polling icon will soon appear, please
submit your votes at any time. I will give you notice before I move to close voting.
[SLIDE 7: AGENDA]
Outlining our agenda for today...
I’ll first introduce you briefly to the Board.
I will reflect on the past year, before summarising our capital structure, dividends, total shareholder
returns, and also update you on earnings guidance.
I’ll then hand you over to our Chief Executive, Vince Hawksworth.
As I noted in our Annual Report, your Board was extremely pleased to announce, at the end of
2019, that Vince would join Mercury following Fraser Whineray’s move to Fonterra.
Vince joined us at the end of March, in the midst of New Zealand’s first lockdown prompted by the
COVID-19 pandemic.
Although this was a challenging time to step into the role, Vince’s skills and deep experience in the
industry have ensured a smooth transition and strong leadership through this period.
In this context I would also like to acknowledge the contribution of William Meek, our CFO, who
stepped in as acting Chief Executive between Fraser’s departure and Vince’s arrival, a period
which obviously covered the initial stages of lockdown.
Vince will update you on our business initiatives and the operating environment, where Mercury’s
integrated approach to creating sustainable value intersects with critically important long-term
national outcomes.

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In terms of formal business, we have four resolutions to put to the meeting – these are resolutions
for the election of one Board member, Hannah Hamling, who joined us earlier this year; and for
the re-election of three other directors who retire by rotation and are eligible and available for re-
election.
I will outline the process for discussion and voting on the resolutions at that point in the agenda.
After the resolutions are presented and voting is closed, we will take questions from you on our
financial and operational performance or other questions relating to the company.
Now for the introductions:
[SLIDE 8: YOUR BOARD]
All of your Board are present for this meeting. Those of us who can be, are here at our office in
Auckland.
As I mention them, hopefully you can see them, and I invite them to say hello to you all.
Around the table, we have:
• Mike Taitoko, who joined the Board in 2015.
• Hannah Hamling, who joined us during the year to fill the vacancy presented by Joan
Withers’ retirement from the Board.
• Scott St John, who joined Mercury’s Board in 2017 and who chairs our People and
Performance Committee.
• Patrick Strange, who joined the Board in 2014.
• James Miller, who joined in 2012.

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• Keith Smith, who chairs our Risk Assurance and Audit Committee and joined as a director
in May 2009.
• And Andy Lark, who joined the Board in 2014, and who joins us from Sydney.
I encourage you to familiarise yourselves with your directors’ professional experience and skills,
which are outlined in our Annual Report’s corporate governance section and on Mercury’s website.
I note that Anna Lissaman, who sat with the Board and contributed strongly as part of the Future
Directors programme, finished her 18-months with us at the end of December 2019.
We are progressing our consideration of another appointment as part of that very worthy
programme, which aims to build a pipeline of talent for governance roles in New Zealand
businesses.
We are joined in Auckland by:
• Chief Executive, Vince Hawksworth.
• Chief Financial Officer, William Meek, and
• our Company Secretary, Howard Thomas, from whom you have already heard.
Also present are representatives of our auditors, Ernst & Young, representatives of our legal
advisors, Chapman Tripp and all members of Mercury’s Executive Team.
[SLIDE 9: FY2020 - IN REVIEW]
Moving now to the year in review.
As outlined in our Annual Report, and as reflected in our returns to shareholders, Mercury
performed strongly in FY20, despite very testing circumstances.

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From last September we faced what became drought conditions across the Waikato catchment.
These conditions directly impacted hydro generation which was approximately 300 Giga Watt
hours down against our long-term average.
Careful management of Lake Taupo’s storage levels, and prudent hedging, helped lessen the
financial impact of the extremely low inflows.
Geothermal production was only modestly down on the prior year’s record generation. This was a
good result as we managed a robust programme of scheduled maintenance activity through the
year.
Like everyone, we also had to respond to the COVID-19 pandemic.
I acknowledge that the impacts so far on Mercury have been modest compared to many
businesses, as we continued operating as an essential service – or life-line utility – during the
initial lockdown.
However, we are part of an environment in which we are all connected in different ways to the
significant disruption caused by COVID-19.
Vince will talk more about operational elements of this in his update.
From a governance perspective, the unprecedented events created by the pandemic have
accelerated the transition to digital ways of working, both within the Board and with management.
During the first lockdown, and subsequently, the governance of the business continued
seamlessly using digital platforms and other technology.

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As uncertainties related to the pandemic continue, our focus is on supporting Vince and his
management team to support our customers, and keep our people safe, and continuing with the
great work they do to deliver on our strategy.
I’ll talk a little more about this shortly, and this will be an ongoing area of attention for your Board
through FY21 and possibly beyond.
[SLIDE 10: FY2020 FINANCIAL OVERVIEW]
Moving to our financial results, Mercury’s operating earnings – or EBITDAF – of $494 million was
a strong result, given FY20 was the first full year without earnings from the Metrix smart metering
business, which was sold in FY19.
Capital expenditure of $279 million during FY20 represented a high level of activity across our
generation assets and technology platforms, all part of ensuring the core of our business is strong.
A significant component of this increased capital expenditure relates to $184 million we had spent
up to the end of June 2020 towards the Turitea wind farm construction programme. This wind
farm, which will be New Zealand’s largest, contributes to the growth trajectory that underpins our
approach to shareholder dividend increases.
While on the subject of wind energy, I will note that our investment in Tilt Renewables Ltd has
enabled us, as intended, to participate in renewable energy growth opportunities in Australia as
well as growth in New Zealand.
Mercury held its operating costs broadly flat for the seventh year in a row, after normalising for
changes to International Financial Reporting Standards and the sale of Metrix.
This continues to evidence Mercury’s disciplined and focussed approach to its core activities.

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Elevated spot prices during FY20 put pressure on margins, which remained challenged across all
segments.
Our focus on customer value and loyalty, as opposed to customer numbers, saw decreases in
customer acquisitions and in customer losses. Overall, customer numbers reduced from FY19 to
FY20.
Reflecting this strategy, however, average mass market yields increased 3.2% over the prior
period.
Market repricing across the commercial and industrial segment saw average C&I yields increase
by 8.8% during the financial year.
Our profit in FY20 was lower than last year’s record which benefitted by $177 million from the sale
of Metrix. Normalising for this gain on sale, however, net profit after tax for FY20 was up $27
million.
In our reporting we refer to underlying earnings, which enables an assessment and comparison of
earnings after removing one-off and/or infrequently occurring events, impairments and changes in
the fair value of derivative financial instruments.
Underlying earnings after tax increased by $3 million for the financial year, reflecting continued
focus on careful portfolio management, customer value and a disciplined approach to costs.
[SLIDE 11: CAPITAL STRUCTURE, DIVIDENDS and SHAREHOLDER RETURNS]
Mercury’s gearing level of 2-times debt to EBITDAF was up marginally on the previous year due to
the capital expenditure in relation to construction of the Turitea wind farm. The gearing ratio
remained at the strong end of our target credit range which supports our S&P Global credit rating
of triple-B-plus.

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Your Board was pleased to announce, with our Annual Results, a final ordinary dividend of 9.4
cents per share, fully imputed. This lifted our total FY20 ordinary dividend to 15.8 cents per share,
making FY20 the 12th year of ordinary dividend increases.
Our total shareholder return during FY20, which includes changes in share price plus dividends
paid during the year, was 4.5%.
Since the end of the 2020 financial year, there have been some occurrences to highlight, and
which are also noted on page 69 of our Annual Report.
[SLIDE 12: POST FINANCIAL YEAR-END]
On the 9th of July New Zealand Aluminium Smelters announced its intention to wind down its
operations at Tiwai Point, which it expects to complete in August 2021.
The smelter accounts for around 13% of New Zealand’s electricity consumption and, if it closes, it
is likely to have a material impact on the country’s electricity demand/supply balance and
wholesale electricity prices.
Vince will talk more about Tiwai shortly.
At the end of August, Mercury announced an offer to institutional and retail investors of 7-year
unsecured, unsubordinated fixed rate green bonds.
The offer closed on the 4th of September, and 200 million dollars of green bonds was allocated to
the participants (or their clients) in the bookbuild process. This includes oversubscriptions of 50
million dollars.

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This is a great milestone for the company. It has been enabled by our heritage in renewable
energy. And it supports our renewable energy growth strategy and Mercury’s mission of Energy
Freedom.
The proceeds of the green bonds are intended to finance or refinance new or existing projects that
have been identified by Mercury as “Eligible Projects”. For us that means primarily to finance the
construction of the Turitea wind farm.
I would now like to comment briefly on two areas which have been and will continue to be
important to us from a governance perspective.
First, Covid-19.
[SLIDE 13: COVID-19 RESPONSE]
For our business, as for everyone, the response to the pandemic has made this a particularly
challenging year. Mercury has an important role as part of the energy sector to ensure that the
economy can function. The business maintained a joint focus on supporting our customers and
keeping our people safe to continue the operation and maintenance of our assets to ensure
security of supply.
We swiftly became aware that some customers were particularly vulnerable at this time and
significant effort was made to deal sensitively with them. Processes were implemented to support
our customers, specifically those who choose GLOBUG, our pre-pay product that allows
customers to manage their energy costs in real time by topping up their account as required.
Initially energy management, which can, in certain circumstances, involve halting power supply to
manage the build-up of debt, was paused. We consulted with community groups and budgeting
advisors and with their input made a number of changes.

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For our pre-pay GLOBUG customers, we increased communications and checks on customers’
wellbeing, eliminated top up fees and reduced minimum top up amounts.
The majority of our residential customers are on post-pay with monthly bills. For those who
identified that they were facing new financial pressures, we put in place extended payment
arrangements.
We have been working closely with our business customers, discussing flexible payment terms
where possible. This included supporting the S-O-S Business initiative that helped participating
businesses access cashflow when trading was halted due to pandemic restrictions.
We will continue to remain sensitive and responsive to customers’ needs.
I would also like to acknowledge the resilience shown by Mercury employees during the pandemic.
During the lockdowns the majority of our people worked from their homes and adapted to new
ways to remain connected and productive.
In addition, key essential staff were supported to continue to carry out their roles on our sites
safely.
The Board’s approach to remuneration outcomes for FY20, and to setting remuneration for FY21,
has been to balance the need to be fair to, and maintain the goodwill of, our people in the context
of the overall economic and social environment.
A decision was made by the Board to not review remuneration for any Mercury employee earning
a base salary of $100,000 or more in 2020. This includes all executives.
Directors’ fees remain unchanged from their last review in 2015. You can read more in the
Remuneration Report starting on page 79 of the Annual Report.

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I’d also like to talk about climate change.
[SLIDE 14: CLIMATE CHANGE]
Climate change has been identified as a material issue for Mercury and is a focus area for our
business.
We acknowledge that Mercury has a kaitiakitanga, or guardianship, role to play in helping New
Zealand reduce its greenhouse gas emissions, while we take responsibility for our own climate
change impacts as a business.
Our Annual Report this year describes how we are preparing for climate change and reporting
against a framework produced by the Task Force on Climate-related Financial Disclosures.
The Annual Report goes into more detail on this on page 35. This year Mercury produced a
specific Climate Change Management Plan, and the five-point strategy is available to be read on
the Mercury website.
Hannah Hamling, who was appointed to your Board this year and is to be considered for election
later in this meeting, brings strong environmental science credentials and experience in water
management issues, to support our Board in this area of growing importance.
I will conclude my overview by sharing your Board’s financial guidance for the 2021 financial year.
[SLIDE 15: FY2021 GUIDANCE]
Mercury’s earnings – or EBITDAF – guidance for FY21 has been revised as of this morning, due
to continued dry weather in the Taupo catchment.
An update has been provided to shareholders via the N-Z-X and A-S-X where we note we have
lowered guidance from 515-million dollars to 505-million dollars for FY21.

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This is to reflect an expected 200 Giga Watt hour decrease in full year hydro generation to 3,700
Giga Watt hours, related to the dry conditions that have been experienced.
Mercury will continue to provide updates of its mid-point estimate of full-year hydro generation with
its quarterly operating statistics.
Our stay-in-business capital expenditure guidance is $80 million.
FY21 ordinary dividend guidance is unchanged at 17 cents per share, fully imputed. This
represents a 7.6% increase on FY20, and it will be the 13
th
consecutive year of ordinary dividend
increases.
This guidance is subject to any material events, significant one-off expenses or other
unforeseeable circumstances including hydrological conditions.
Guiding our approach to maintaining incremental dividend increases, we recognise that we have a
large register of retail shareholders who appreciate our efforts to sustain dividend increases in a
low interest rate environment.
And this has been enabled by a robust and consistent strategy that has guided decisions made
over time to ensure a strong platform for delivering what we say we will do.
I will now hand over to our Chief Executive, Vince Hawksworth.
ADDRESS BY CHIEF EXECUTIVE: VINCE HAWKSWORTH
[SLIDE 16 – CHIEF EXECUTIVE'S ADDRESS]
Kia ora tatou katoa
Thank you Chair

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[SLIDE 17 – CHIEF EXECUTIVE VINCE HAWKSWORTH]
Firstly, I would like to add my welcome to shareholders, this is my first ASM as Chief Executive. I
commenced the role in late March at the start of alert level 4 lockdown, it has been an unusual
way to enter the business. It is disappointing for me that I am unable to meet shareholders in
person, however as in everything we do Health and Safety is job number 1.
I would also acknowledge our executive team and all our Mercury team who have enabled a
seamless transition as I joined the company.
In my opinion your company is in good hands and has excellent prospects.
[SLIDE 18 – UPDATE]
In this presentation I will address the macro context for the Mercury business.
I will discuss the market outlook, our aspirations for the Waikato River catchment, our wind
investments, the customer business, our key activities and our focus on performance. Finally, I
will share our unique competitive advantage.
[SLIDE 19 – OUR DIRECTION]
Our mission of Energy Freedom remains relevant and the 5 pillars of our business model are
important: they create balance in the way we approach everything we do.
The pillars of Customer, People, Kaitiakitanga, Partnerships and Commercial provided a
framework for decision-making, this framework came to life as we responded to COVID-19 and will
help us navigate an uncertain future.
I now turn to the world around us

Mercury 2020 ASM Chair and Chief Executive speaking notes | 24 September 2020 | Page 14 of 18

[SLIDE 20 – NEED TO TARGET EMISSIONS IN TRANSPORT AND PROCESS HEAT]
The transition to a low emissions economy remains a huge opportunity for New Zealand. The
challenge is to develop a pathway to the 2050 net carbon neutral goal at the lowest economic cost
of abatement. It is our view that the largest opportunities for New Zealand to de-carbonise are:
• electrification of transport with 5 times the emissions of electricity
• conversion of industrial process heat with 2 times the emissions of electricity; and
• electrification of hospital and school boilers.
[SLIDE 21 – NEW ZEALAND’S COMPETITIVE ADVANTAGE IN ELECTRICITY]
In New Zealand the Trilemma of sustainable, reliable and affordable energy is within reach. The
electricity and carbon market price signals are leading to significant efficient investment. Our
Turitea wind farm being one of the 2 new wind farm projects in New Zealand. Turitea will produce
2% of New Zealand demand.
We should not confuse carbon emissions reduction with a 100% renewable electricity target. Both
the Productivity Commission and Interim Climate Change Committee pointed out that such a
target is prohibitively expensive, and that decarbonisation of the energy system is a better goal.
In recent weeks, the possibility of a large pumped storage scheme at Lake Onslow has been
suggested to manage dry year risks of transition. We welcome the robust investigation of such
alternatives.
However, it is critical that the scope of any investigation focuses on the best economic options to
manage the transition to a higher percentage of renewable generation that facilitates
decarbonisation.

Mercury 2020 ASM Chair and Chief Executive speaking notes | 24 September 2020 | Page 15 of 18

Two of our current challenges are the fallout from COVID-19 and the uncertainty around the Tiwai
Point aluminium smelter.
[SLIDE 22 – COVID-19 RESPONSE AND IMPLICATIONS]
In dealing with the impact of COVID-19, our people ensured that the assets operated, “keeping the
lights on” and that our customers were supported.
However, alert level 4 lockdown did mean that Turitea construction was put on hold. I will discuss
this further shortly.
We observed a 14% decrease in demand through lockdown that recovered subsequently,
however there remains uncertainty about the medium-term future of industrial load and electricity
demand more generally.
Like so many businesses, COVID-19 has caused us to think about our resilience to ‘unexpected’
events. It has caused us to look internally at the opportunity to be more efficient, more resilient
and create a step change in performance. Our team is focused on increasing shareholder value,
staff engagement and company resilience.
[SLIDE 23 – TIWAI POINT CLOSURE IMPLICATIONS]
Turning to the Tiwai Point aluminium smelter, our working assumption is that the smelter will close
by 31 August 2021.
We are aware of reports of a possible extension to this date and current forward electricity futures
prices appear to reflect this.
We note that a closure will likely cause retirement of some thermal generation and will mean hydro
generation will be trapped in the lower South Island. To alleviate this, significant investment is

Mercury 2020 ASM Chair and Chief Executive speaking notes | 24 September 2020 | Page 16 of 18

proposed in transmission upgrades over the next 5 to 8 years. It will be important this investment
is subject to a robust business case.
[SLIDE 24 – MARKET OUTLOOK REVISED]
In our view the market outlook will be impacted by headwinds – demand growth constrained by
economic activity, the exit of Tiwai and potential for further de-industrialisation – leading to market
uncertainty and volatility.
Mercury is well-placed in these circumstances, your company produces 100% renewable
generation and the assets are entirely North Island-based, close to major customer demand
centres and largely unconstrained by the transmission system.
Mercury is well positioned for future growth. I will now update shareholders on some of our key
activities.
[SLIDES 25 – TURITEA WIND FARM]
The 222MW Turitea wind farm being constructed by Vestas under a fixed price contract for
Mercury has suffered some delays due to both COVID-19 and contractor delivery challenges
across design and construction. However physical erection of turbines has begun and we look
forward to commissioning the northern 33 turbines in mid-2021 and the southern 27 turbines in
late-2021.
The image you see on this slide is of a turbine base having been erected.
We will now play a video that gives you a sense of the scale of the turbine blades.
[SLIDE 26 – VIDEO: BLADE TRANSPORT]
[SLIDE 27 – TILT RENEWABLES INVESTMENT]

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Our investment in Tilt Renewables provides an important exposure to the Australian transition to a
low carbon energy sector.
Whilst the investment performance has been impressive, importantly the growth prospects are
also positive as Australia currently has only 20% of the its electricity produced by renewable
sources.
Tilt Renewables has a good pipeline of projects and the capability to manage the risks associated
with the Australian market.
[SLIDE 28: WAIKATO RIVER – OUR ASPIRATION]
A critical part of our business is the relationship with the Waikato River and all of the stakeholders
associated with the river.
By listening to our iwi partners, we have learnt that the Awa is a sacred Tupuna (ancestor) and
living Taonga (treasure) that we have a duty to nurture its health and wellbeing.
Our aspiration is that all interested parties are able to regard the Waikato as the world’s best
catchment.
[SLIDE 29 - GROWING CUSTOMER VALUE]
Mercury has a powerful retail brand and it is well recognised. The current Kiss Oil Goodbye
advertising campaign resonates with customers and the message is consistent with our view that
transport electrification is the best form of emissions reduction.
Our challenge is to convert the brand story to increased customer loyalty and acquisition.
We have a number of ideas in test and are committed to improving our customer experience,
creating value for shareholders.

Mercury 2020 ASM Chair and Chief Executive speaking notes | 24 September 2020 | Page 18 of 18

[SLIDE 30 – MERCURY'S COMPETIVE ADVANTAGE]
In conclusion we are aware of the challenges facing New Zealand and the energy sector in the
post-COVID-19 world.
We are resilient and the combination of quality assets, located close to demand, our focus on
strong partnerships and customer engagement give us a strong competitive platform.
It is our people who are passionately aligned to our mission that give me confidence about our
ability to execute.
Thank you for your attention.
Nga mihi nui.
I will now hand back to the Chair.

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PRUE FLACKS
Chair
MERCURY NZ LTD
ANNUAL SHAREHOLDERS’ MEETING.
24 SEPTEMBER 2020
VINCE HAWKSWORTH
Chief Executive

VOTING AND QUESTIONS.
>Voting and questions can be submitted at any time
from the start of this meeting
>Questions received via the online platform will be
relayed to the Chair via a facilitator during the time
set aside for questions towards the end of the
meeting
>Questions must be relevant to proceedings, and we
ask that they be succinct and clear
>Should we be unable to address all questions due to
time constraints, we will provide answers to
remaining questions on our website
2020 ANNUAL
SHAREHOLDERS’
MEETING.

ONLINE ATTENDEES –QUESTION PROCESS
2020 ANNUAL
SHAREHOLDERS’
MEETING.
>When the Question function is
available, the Q&A icon will appear
at the top of the app.
>To send in a question, simply click in
the ‘Ask a question’ box, type your
question and the press the send
arrow
>Your question will be sent
immediately for review

ONLINE ATTENDEES –VOTING PROCESS
2020 ANNUAL
SHAREHOLDERS’
MEETING.
>When the poll is open, the vote
will be accessible by selecting
the voting icon at the top of the
screen
>To vote simply select the option
you wish to send. The selected
option will change colour

CHAIR’S ADDRESS.

AGENDA.
>Chair’s address
>Chief Executive’s address
>Resolutions and completion of voting
>Other business and questions
2020 ANNUAL
SHAREHOLDERS’
MEETING.

YOUR BOARD.

FY2020 –IN REVIEW.
>Strong performance in testing circumstances
>Drought conditions in Waikato catchment
>Careful lake management and prudent hedging lessened
financial impact
>Ongoing maintenance programme well managed through
disruptions
>COVID-19 response
>Smooth transition to more digital ways of working
>Focus on people, customers and resilience
2020 ANNUAL
SHAREHOLDERS’
MEETING.

FY2020 FINANCIAL OVERVIEW.
$494M EBITDAF
Reflecting lower generation on and
Metrix sale; strong underlying
portfolio performance across
generation and customer markets
CAPITAL EXPENDITURE
Representing high level of activity
across generation assets and
technology platforms, ensuring
strength of core business
OPERATING COSTS
Held broadly flat for seventh year in
a row reflecting disciplined and
focussed approach to core activities
CUSTOMER VALUE
Reduced acquisition activity with
Mercury’s focus on rewarding
loyalty and customer value leading
to increase in sales portfolio yields
NET-PROFIT $207M
Lower than FY2019 record, which
benefitted from sale of Metrix
UNDERLYING EARNINGS UP $3M
Reflecting focus on portfolio
management, customer value and
disciplined approach to costs
1
For 12-month periods ended 30 June since 1999
2020 ANNUAL
SHAREHOLDERS’
MEETING.

CAPITAL STRUCTURE, DIVIDENDS
AND SHAREHOLDER RETURNS.
>Gearing level = 2x debt to EBITDAF
>S&P GLOBAL credit rating of BBB+
>Final ordinary dividend of 9.4 cents per share
>Total FY2020 ordinary dividend 15.8 cents per share
>FY2020 Total shareholder return 4.5%
2020 ANNUAL
SHAREHOLDERS’
MEETING.

POST FINANCIAL YEAR-END.
>Tiwaismelter closure
>Green Bonds
>Milestone offer of 7-year unsecured unsubordinated fixed
rate Green Bonds
>$200 million Green Bonds issued 14 September
>Proceeds intended to finance or refinance new or existing
projects identified as “Eligible Projects”
2020 ANNUAL
SHAREHOLDERS’
MEETING.

COVID-19 RESPONSE.
>Joint focus on:
>People safety to support operation of assets and security of
supply
>Supporting our customers
>Customer actions included:
>Vulnerable customer initiatives enhanced –including flexible
payment options
>Small businesses supported
>Board decisions:
>Upper levels of remuneration held flat
>Directors’ fees unchanged from last review in 2015
2020 ANNUAL
SHAREHOLDERS’
MEETING.

CLIMATE CHANGE.
>Material issue for Mercury
>Acknowledged role to play in:
>Helping New Zealand reduce greenhouse gas emissions
>Managing own climate change impacts
>Annual Report describes how we are preparing for
climate change
>Climate Change Management Plan established
2020 ANNUAL
SHAREHOLDERS’
MEETING.

FY2021 GUIDANCE
>FY2021 earnings guidance revised to $505m
>On 3,700GWh of hydro generation
>Subject to hydrological volatility, wholesale market
conditions and any material adverse events, significant one-
off expenses or other unforeseeable circumstances
>FY2021 stay-in-business capital expenditure
guidance of $80m
>FY2021 ordinary dividend guidance 17.0cps (up
7.6% on FY2020)
>13
th
consecutive year of ordinary dividend increases
2020 ANNUAL
SHAREHOLDERS’
MEETING.

CHIEF EXECUTIVE’S
ADDRESS.

>Started 30 March, during COVID-19 lockdown
>Former CEO of Hydro Tasmania and Trustpower
>CEO of Trustpowerfor nine years, led development of wind generation at
Trustpower, culminating in demerger of Tilt Renewables
>Highly experienced in the energy sector in New Zealand and Australia covering
both generation and retail
CHIEF EXECUTIVE VINCE HAWKSWORTH.
2020 ANNUAL
SHAREHOLDERS’
MEETING.

UPDATE.
2020 ANNUAL
SHAREHOLDERS’
MEETING.
>The World Around Us -macro context for the Mercury business
>De-carbonisationpath for New Zealand
>Tiwaismelter closure
>COVID-19 response and implications
>Key activities
>TuriteaWind Farm
>World’s Best Catchment aspirations
>Tilt Renewables investment
>Customer expectations
>Our competitive advantage

2020 ANNUAL
SHAREHOLDERS’
MEETING.
OURDIRECTION.
OUR
MISSION
CUSTOMER
INSPIRING, REWARDING
AND MAKING IT EASIER FOR
OUR CUSTOMERS.
PARTNERSHIPS
PROVIDINGGREATEROPPORTUNITIES
FORNEWZEALAND,OURINDUSTRY,OUR
PARTNERSANDOURBUSINESS
THROUGH LONG-TERM
COLLABORATION.
A
•
OUR
PURPOSE
KAITIAKITANGA
LONG-TERMSUSTAINABILITYOF
NATURALRESOURCESANDASSETS.
PEOPLE
ENABLING OUR PEOPLE TO PERFORM
TOGETHER IN A CHANGING
ENVIRONMENT
AND KEEP EACH OTHER SAFE.
COMMERCIAL
ACHIEVING OUR COMMERCIAL
GOALS THROUGH SUSTAINABLE
GROWTH.
ENERGY
FREEDOM
TO INSPIRE
NEW
ZEALANDERS
TO ENJOY
ENERGY IN
MORE
WONDERFUL
WAYS

2020 ANNUAL
SHAREHOLDERS’
MEETING.
Source: Productivity Commission
Transport
emissions 5x
higher than
electricity
NEED TO TARGET EMISSIONS IN TRANSPORT AND PROCESS HEAT.
Nearly half of NZ
emissions are not
easily addressable
compared to transport
and process heat
Process heat
emissions 2x
higher than
electricity

2020 ANNUAL
SHAREHOLDERS’
MEETING.
NEW ZEALAND’S COMPETITIVE ADVANTAGE IN ELECTRICITY.
Source: Accenture, Ministry of Business, Innovation & Employment, United States Chamber of Commerce
‘Among the most
competitive markets
in the world’
COMPETITIVENESS
NZ 3rd highest level of renewable
electricity generation in OECD
RENEWABILITY
NZ ranks 3
rd
lowest out of 25 large
energy-consuming countries for
energy security risk
RELIABILITY
STABLE REGULATORY
ENVIRONMENT

COVID-19 RESPONSE AND IMPLICATIONS.
>People and Operations
>Smooth transition to working from home
>85% of our people reported same or greater productivity
>Demand
>Down 14% during first lockdown but recovered to similar levels compared with prior year
>Medium-term outlook affected by industrial closures
>Customers
>Worked proactively with customers to prevent large debt balances accruing
>Moderate increase in aged debt
>Development
>Work put on hold at Turitea, successfully restarted
>Need for clarity around key personnel
2020 ANNUAL
SHAREHOLDERS’
MEETING.

Source:
Transpower
TIWAIPOINT CLOSURE IMPLICATIONS.
>In July 2020, Rio Tinto gave notice that the contract relating to Tiwai
Point aluminium smelter will be terminated on 31 August 2021
>TiwaiPoint aluminium smelter consumes ~13% of New Zealand
national demand
>North Island thermal operators considering thermal station closure and
assessing generation portfolios
>Major transmission upgrades required to enable South Island
generation to be shifted to North Island load centres
>$650-850m investment required over 5-8 years
>Mercury relatively well placed to manage impact of NZAS closure:
>100% low variable-cost renewable generation
>100% North Island generation portfolio, free of major transmission
constraints and close to major load centres
>A major supplier of North Island reserves which support high north HVDC
transfer
Clutha to Upper Waitaki
1
$100-150m over 2 years
HVDC 4
th
cable
$150-200m over 5 years
Central NI line upgrades
$400-500m over 5 -8 years
POSSIBLE TRANSMISSION UPGRADES
South Island demand (excl. Tiwai) = 10TWh
Tiwai demand =5TWh
North Island demand = 25TWh
1
Project commenced following support from major South Island generators
2020 ANNUAL
SHAREHOLDERS’
MEETING.

MARKET OUTLOOK REVISED.
MARKET DRIVERS
>Demand growth limited by economic downturn
>Potential for further de-industrialisation
>Supply and demand imbalance due to expected Tiwai exit
>Downward pressure on wholesale prices; flowing through to retail
>Transmission uncertainty to increase basis risk between North and South Islands
>Retail competition to increase in South Island; possible moderation in North Island
MARKETOUTCOMES
2020 ANNUAL
SHAREHOLDERS’
MEETING.

TURITEAWIND FARM.
>Wind farm works
>Wind farm (excluding transmission and connection) covered by a
fixed-price contract with Vestas
>Expecting completion of the northern 33 turbines in Q2 CY2021 and
southern 27 turbines in late CY2021
>Project times remain subject to contractor performance and further
COVID-19 restrictions
2020 ANNUAL
SHAREHOLDERS’
MEETING.

2020 ANNUAL
SHAREHOLDERS’
MEETING.
BLADE TRANSPORT VIDEO.

TILT RENEWABLESINVESTMENT.
>Investment in Tilt Renewables part of overall wind strategy
>Wind generation recognisedas lowest cost new-build renewable generation
>Provides exposure to Australian decarbonisation transition
>Investment now worth $273m, representing ROI of 66%
1
>$55m capital return in July 2020
>Active investment with strong development pipeline
>Turbine erection completed at Dundonnellwind farm in July 2020
>1,500MW of wind and solar development with planning approvals
2020 ANNUAL
SHAREHOLDERS’
MEETING.
1
As at 21 September 2020, includes capital returnTilt Renewables’ TararuaWind Farm

2020 ANNUAL
SHAREHOLDERS’
MEETING.
WAIKATO RIVER –OUR ASPIRATION.
>World’s Best Catchment
>A critical part of our business is the relationship with the Waikato
River and all of the stakeholders associated with the river
>By listening to our iwi partners, we have learnt that the Awa is a
sacred Tupuna (ancestor) and living Taonga (treasure) that we have
a duty to nurture its health and wellbeing
>Our aspiration is that all interested parties are able to regard the
Waikato as the world’s best catchment

GROWING CUSTOMER VALUE.
>Powerful retail brand supported by bold'Kiss Oil
Goodbye' campaign to inspire customers
>FY21 focus on converting brand story to further
increase customer loyalty and acquisition
>Digital and data driven initiatives
2020 ANNUAL
SHAREHOLDERS’
MEETING.

30
100% renewable generation
>Two low-cost complementary fuel sources in baseload
geothermal and peaking hydro with wind to be added
>Exposure to Australian decarbonisation
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 able to firm intermittent
renewables
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
MERCURY’S COMPETITIVE ADVANTAGE.

RESOLUTIONS.

RESOLUTION 1.
>Election of Hannah Hamling
2020 ANNUAL
SHAREHOLDERS’
MEETING.

RESOLUTION 2.
>Re-election of Andy Lark
2020 ANNUAL
SHAREHOLDERS’
MEETING.

RESOLUTION 3.
>Re-electionof Scott St John
2020 ANNUAL
SHAREHOLDERS’
MEETING.

RESOLUTION 4.
>Re-electionof Patrick Strange
2020 ANNUAL
SHAREHOLDERS’
MEETING.

VOTING.

Q&A.
37

FOR VOTING RESULTS > WWW.MERCURY.CO>NZ/INVESTORS