2020 Annual Shareholder Meeting

11 November 2020


CEO’s address to ASM

Tēnā koutou katoa

Greetings to you all and thank you for tuning in today.

Rob, thank you for your kind words.

I would like to introduce my fellow Leadership Team members with me today: Jacqui,
James, Dorian, Vena, Catherine and Jan. Our team has evolved this year with Jan joining in
November 2019, Jacqui promoted to our Chief Generation Officer in July 2020 and James
moving into a new role of Deputy CEO and leading our decarbonisation and demand growth
efforts.

Contact is a great place to be and I’m very proud of what we have achieved over the past
year. We have a fantastic, talented, resilient team and a very supportive Board. I’d like to
thank everyone for making me feel so welcome and for their assistance over my first few
months in the role, including the outgoing CEO Dennis Barnes. The time has flown by since
my first day in February 2020.

As a relatively new starter, I think Contact is guilty of hiding its light under a bushel at times.
We’re not very good at celebrating our successes externally, when in fact we are doing a
host of good things that more people need to know about. This is a challenge that I have put
to the leadership team as something we need to work on over the remainder of FY21 and
beyond: so expect to see a little more of us getting out there and making our voice heard.
This will include on the ESG front where we are on a journey of pursuing a range of
meaningful targets, and have this year produced one of the best integrated reports on the
NZX.

On the financial front the year certainly threw its fair share of unique challenges our way.
This included the impact of COVID-19, the Tiwai exit announcement and an unusual
hydrology sequence where the Clutha River experienced periods of extremely low inflows
and a one in 20 year flood. And we also felt the impact of recent under-investment in New
Zealand’s ageing gas fields as an unreliable supply of natural gas led to a sharp increase in
thermal input costs.

I was particularly proud of the company’s response to the pandemic situation we all found
ourselves in, as the nation changed forever at 11:59pm on 25 March when we went into
lockdown. Throughout the lockdown we stood up a crisis management team and continued
to operate as an essential service and lifeline utility, with an unwavering focus on looking
after our customers, looking after our people, and doing right by New Zealand.

This included extensive support for customers having a tough financial time in the maelstrom
of uncertainty that accompanied the pandemic response, including adapting payment terms
and options, working with social service agencies, suspending disconnections and debt
collection referrals, and automatically applying prompt payment discounts or forgoing late
payment fees.

We were also heavily involved in the Electricity Retailers Association-led initiative to fund
10,000 power credits worth $120 each, allocated by community groups to households
affected by COVID-19. And we acknowledged the efforts of organisations on the front line
looking after New Zealanders, by providing Women’s Refuge, Salvation Army and St John
with more than $400,000 of free electricity across their sites throughout New Zealand. We
know the response to the pandemic – and the aftermath - is going to require an ongoing
commitment of time, resources and perhaps most importantly kindness.

And from an organisation perspective, through necessity we mobilised almost all of our
people to work from home, including home-based call centres – this was extraordinary and
frankly it was something we never thought we could do. We looked after our people across
our sites and offices in Te Rapa, Stratford, Levin, Taupo, Whirinaki, Dunedin, Clyde,
Roxburgh, Auckland and Wellington. We continued to serve our customers but minimised
any risk of spreading COVID-19 through meticulous continuity and crisis planning, and
ramped up hygiene and physical distancing.

As the COVID-19 response got under way, we also reassured our 943 Contact people
across New Zealand that if they needed to be home for anything pandemic-related –
including looking after elderly relatives or to be with their kids – we would pay 100 per cent
of their salaries and not require them to take leave. This was the right thing to do and the
feedback we received was overwhelming.

***

Despite all of these unusual circumstances our high-quality, long-life, renewable generation
assets and lean, low-cost retail operations combined to deliver another solid financial result
for our investors.

In FY20 Contact generated revenue of $2,073 million, EBITDAF of $451 million, profit of
$125 million and operating free cash flow of $290 million.

Our statutory profit for FY20 of $125m was $220m lower than FY19, but note that last year
included a $170m gain on the sale of the Rockgas business and the Ahuroa gas storage
facility.

EBITDAF from continuing operations was down $54m (11%) on last year due to a
combination of lower renewable generation, lower wholesale prices and the impact of rising
costs of thermal generation and restricted gas supply.

Operating free cash flow was $290m, down 15 per cent on FY19 due to lower operating
earnings, partially offset by lower stay-in-business capital expenditure and interest costs.


***
I also wanted to update you on how things are tracking so far in FY21.

In September we were very pleased to complete the 100% acquisition of Simply Energy, a
business we acquired a stake in last year. Simply is a Wellington-based company that
delivers integrated energy solutions for generators, distributors, retailers and perhaps most
importantly commercial and industrial customers. Simply’s value proposition is to help
customers take meaningful action toward a cleaner energy future and their efforts form a key
part of our new #changematters initiative. We want Simply to operate as an agile, stand-
alone company so it can stay nimble and keep innovating fast for our customers.

More broadly we have been pleasantly surprised in how strongly demand has held up,
especially from large commercial and industrial customers.
o Given the hydrological sequence, and our gas supply, we are in good shape and
have made a strong start to the year as you may have seen in this morning’s October
operating report.
o This has been supported by an excellent operating performance with strong plant
uptimes. We also have more transformation initiatives in the pipeline to change the
way we fundamentally work as a company.
o In terms of our customer business, we now have more than 510,000 connections
across electricity, gas and broadband – we now provide more than 35,000 customers
with broadband from a standing start 18 months ago. We’re continuing our
transformation to becoming a digital-first retailer, and more than 100,000 customers
now use our apps and website for self-service each month.
o We committed money to accelerate the lower South Island upgrades to ensure that if
Tiwai leaves renewable energy isn’t stranded in the South Island, and it is pleasing to
see Transpower has begun this work with some urgency.

We also continue planning for a post-Tiwai environment. You may hear this described as a
‘just transition’ or ‘orderly exit’ to enable Southland, New Zealand and the electricity industry
to prepare for a post-Tiwai world. We remain optimistic a deal will be done soon.

As Rob mentioned we have put the development of the power station on the Tauhara
geothermal field near Taupō on hold. The team involved in the preparation of the site and
$40m appraisal campaign have done an outstanding job and confirmed that Tauhara is a
world-class renewable geothermal project, with very low associated carbon emissions.

We believe Tauhara remains New Zealand’s cheapest and most attractive option for new,
renewable, electricity generation and when its time comes, it will deliver substantial
economic benefits and jobs in the central North Island.

***
Before I finish, I want to reiterate where we are putting our energy.

Firstly, we want to play a role in leading New Zealand to a low-carbon future by developing
low carbon solutions for customers, and advocating for regulatory settings that will facilitate
the transition of New Zealand’s energy system away from fossil fuels.

We are well under way with helping large industrial customers transition from higher carbon
fuels to low carbon fuels, with new products and renewable substitutes, based around
renewable electricity and ‘direct heat’ geothermal steam. We are aiming to displace 1PJ of
industrial heat with electricity by 2022 – roughly equivalent to the electricity used by all the
homes in Taupō in a year.

Our recent successes include partnering with Open Country Dairy to support the installation
of New Zealand’s largest electrode boiler (13MW) at their Awarua site, and the expansion of
our geothermal direct heat to connect the Nature’s Flame wood pellet manufacturing plant
and displace coal usage outside of New Zealand. We are actively pursuing other
opportunities too, including electrifying further process heat applications and scoping green
hydrogen production for potential use for the likes of green ammonia and urea production.

We have also continued to grow our demand flexibility platform – with more than 20
customers signed up to automatically reduce power consumption from equipment such as
pumps, fans and compressors during high usage periods.

As well as our focus on decarbonisation and demand growth, we are also under way with
several other areas of strategic activity including
• maintaining flexibility and the freedom to explore options around where we invest across
multiple renewable energy sources (with a focus on geothermal);
• simplifying how Contact is set up to be more effective and efficient, transforming our
operating model, and building on the experiences of the COVID-19 lockdown by
transforming our ways of working;
• being a leading energy retailer in New Zealand as we accelerate digitisation, consider
additional adjacent products and services, and optimise our spending; and
• embedding our commitment to best practice environmental, social and governance
practices across Contact.

***

Finally I wanted to thank Rob and the Board for their support over the past year. Thank you
to the Contact team for their commitment to doing a great job. Thank you to our customers
and suppliers.

And thank you to our neighbours. We live, work and operate in communities across the
country, and we know our actions impact on the people and environment around us. We are
not perfect but we strive to be the neighbour you’d want to have.

Nga mihi




-ends-


Investor enquiries
Matthew Forbes
+64 21 072 8578

Media enquiries
Paul Ford
+64 21 809 589

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11 November 2020


Chair’s address to ASM

Today I'd like to share some brief observations about Contact Energy, the industry and
context in which the company is operating, and then look down the track to what lies ahead
as we pursue our vision to help build a better New Zealand.

After the resignation of Dennis Barnes as CEO in June 2019, Mike Fuge arrived in February
2020 to begin a new chapter of leadership for Contact. Mike joined us from Refining NZ,
armed with a strong history in the energy sector in New Zealand and overseas, including as
CEO of Pacific Hydro in Australia and as Chief Operating Officer at Genesis Energy.

Mike has demonstrated his passion for renewable energy and has relished the challenges
and opportunities that have come his way over the past 9 months. Just weeks after his
commencement, the COVID-19 pandemic response began and his focus and energy turned
to crisis management and doing right by Contact’s customers, staff and broader New
Zealand.

It has been, and continues to be an extraordinary time. Contact fully supported the actions of
the NZ Government in restricting the spread of COVID-19. A lot of work was done to ensure
we actively reduced the risk of the virus spreading and made sure our people across New
Zealand were as safe as possible.

More change and challenges were to come soon after the pandemic lockdown, with the
closure of the Tiwai smelter announced following the conclusion of Rio Tinto’s strategic
review. Citing high energy costs and a challenging outlook for the aluminium industry, NZAS
gave notice to terminate the power supply contract in August 2021.

We have made no secret of our view that the people of Southland, NZ Inc and a stable path
for renewable energy investment is best served by NZAS remaining operational in the
medium-term: ideally for at least the next five years. We remain hopeful that a deal will soon
be struck, given the goodwill from all sides that emerged in the lead-in to the election.

More recently the Board has been working with Mike and the leadership team on Contact’s
strategy, and reflecting on the future shape of the company, the sector and the country in a
world that has COVID-19 and potentially no Tiwai smelter in the short or medium term.

There is uncertainty but within this lies plenty of opportunity too, and we expect Contact to
play an important role in the decarbonisation of the energy sector and wider economy.

This year we increased our efforts to promote our ESG credentials. This includes the
emergence of our first annual report aligned with the integrated reporting framework as we
focus on providing more transparency on how we do business and deliver value over the
longer term, and beyond just financial returns.

We have a good story to tell and we understand and agree with the increasing expectations
on all companies from investors, customers and communities to provide this information.

Contact has a leading role to play in tackling climate change via tangible actions that drive
good business outcomes. As we say - and as you saw in the opening video - change
matters.

This includes supporting and growing New Zealand’s low-carbon advantage. To do this we
need policy settings to support accelerated electrification of process heat and the transport
and agriculture sectors away from carbon-intensive fossil fuels like coal and petroleum – but
without unduly burdening the economy and consumers.

Here I feel compelled to make a brief comment about the pumped hydro plans set to be
investigated at Lake Onslow. Whilst it is a fascinating project, we do have concerns that
although the goal is worth pursuing, a multi-billion dollar solution from the past is high risk on
several fronts and we are not sure it will solve the problem in the best way.

We need only look across the Tasman to the Snowy Hydro project’s enormous cost over-
runs. We believe there is much smarter technology that can potentially be harnessed in the
pursuit of a lower carbon economy in Aotearoa.

We are concerned that Project Onslow threatens to paralyse investment in renewable
energy infrastructure in the meantime, and hope that other options identified and explored as
part of the investigation are considered with an open mind. This may well be a once in a
generation opportunity to embrace the future of renewable energy in NZ, so let’s get it right
and not leap into high risk solutions grounded in the past.

Elsewhere, Contact is already one of the first power companies in the world to have carbon
emissions targets verified by the Science Based Targets initiative, we have an innovative
green borrowing programme, and this year we inked one of the country’s first sustainability-
linked loans.

With the recent appointment of James Kilty as deputy CEO we have also reiterated our
commitment to accelerating the decarbonisation of the New Zealand economy, and our
intention to play a leading role in this ongoing transition.

We’ve also walked the talk by making reductions in our own carbon emissions. We can do
more here and the Tiwai smelter’s exit will over time expedite the retirement of thermal
generation assets in the industry which will see emissions decline even further.

We see geothermal generation has a huge part to play here too. We’re very proud of our
team that leads the world in the development of this very low emission generation option.

You will be well aware that we have a world-class, shovel-ready project at Tauhara on hold.
We believe it is a matter of when – not if – Tauhara will play an important role in New
Zealand’s transition to a low-carbon future. However we must get a clearer picture of
demand before we make any final decision to proceed with this investment.

We were very pleased to deliver a solid financial result to investors in August. The second
half of the year was in line with our expectations despite the impact of COVID-19. We had a
more challenging first half of the year which was impacted by poor gas availability. Mike will
update you on how things are progressing early in FY21.

In August, the Board approved a final dividend of 23 cents thus totalling 39 cents per share
annual dividend this year, and in line with last year.

As I have previously mentioned, we anticipate a likely period of disruption in the industry,
and we are reviewing the appropriate level of future dividends as the status of Tiwai and
Tauhara are cemented over the coming months.

We will provide you with more clarity on this as soon as is appropriate, but rest assured our
focus remains on delivering sustainable, long-term growth and value for our shareholders.

Contact is a resilient organisation and in very good shape. Our portfolio of long-life
renewable generation assets, flexible generation portfolio, strong balance sheet and
operational discipline provide confidence we are well-placed even if a lower demand
environment emerges with a Tiwai exit in the near-term.

To finish I would like thank our customers and suppliers for their support and assistance.

Thank you to Mike, the leadership team and the wider Contact whanau for their hard work
over the past year. As always there is much to be done, but it is an exciting time at the
company and for the sector.

Thank you also to Vic, Elena, Therese, David & Jon for their commitment and dedication as
directors.

And today a special acknowledgment to Whaimutu Dewes for his decade of service on the
Board.

Whai has indicated that he will stand down as a director in 2021. He has made an enormous
contribution to the governance of Contact since joining the Board in February 2010. In the
time Whai has been a director he has provided guidance and stability as we have seen
changes in leadership, at both the CEO and Chair level and negotiating the sell-down of
Origin’s majority stake in Contact.

Whai has also been a significant contributor to the Board, most recently as Chair of the
health, safety and environment committee, and he has been instrumental in guiding the
Board through a cultural shift across HSE and our stakeholder relations. He has consistently
challenged the management team to do better for shareholders, customers and all
stakeholders.

The good news is that although Whai is stepping away from his governance duties, we are
very pleased he has agreed to stay involved with Contact and support the company in its
relationships with iwi stakeholders for an initial period of two years. Thank you Whai.

The Board is well-advanced in our search for a new director and we hope to make an
announcement in the not-too-distant future once the process concludes.

And finally thanks to you all for tuning in today and for your ongoing support as investors in
Contact Energy. We appreciate your commitment to Contact’s ongoing success and we
appreciate the opportunity to speak to you today.

Nga mihi.


-ends-


Investor enquiries
Matthew Forbes
+64 21 072 8578

Media enquiries
Paul Ford
+64 21 809 589