Mercury results unlock up to $1 billion of investment
Results announcement
Results for announcement to the market
Name of issuer Mercury NZ Limited (MCY)
Reporting Period 12 months to 30 June 2024
Previous Reporting Period 12 months to 30 June 2023
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$3,424,000 +25.4%
Total Revenue $3,424,000 +25.4%
Net profit/(loss) from
continuing operations
$290,000 +158.9%
Total net profit/(loss) $290,000 +158.9%
Final Dividend
Amount per Quoted Equity
Security
$0.14000000
Imputed amount per Quoted
Equity Security
$0.05444444
Record Date 12 September 2024
Dividend Payment Date 30 September 2024
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$3.38 $3.41
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to accompanying audited financial statements.
The percentage changes detailed in the above table and the
prior comparable period net tangible assets per quoted equity
security are based on FY23 restated figures as outlined in
further detail in the FY24 financial statements.
Authority for this announcement
Name of person
authorised
to make this announcement
Howard Thomas, Company Secretary
Contact person for this
announcement
Howard Thomas, Company Secretary
Contact phone number +64 9 308 8200
Contact email address Howard.Thomas@Mercury.co.nz
Date of release through MAP
20/08/2024
Audited financial statements accompany this announcement.
---
The Mercury Building, 33 Broadway, Newmarket 1023
PO Box 90399, Auckland 1142
STOCK EXCHANGE LISTINGS: NZX (MCY) / ASX (MCY)
NEWS RELEASE
Mercury results unlock up to $1 billion of investment
FY24 Financial Results Summary
FY2024 FY2023 Change %
NET PROFIT AFTER TAX ($M) 290 112 159
EBITDAF ($M) 877 841 4
STAY-IN-BUSINESS CAPITAL EXPENDITURE ($M) 142 119 19
ELECTRICITY GENERATION (GWh) 8,780 9,038 -3
FINAL FULLY IMPUTED ORDINARY DIVIDEND (CENTS PER SHARE) 14.0 13.1 7
TOTAL ORDINARY DIVIDEND (CENTS PER SHARE), FULLY IMPUTED 23.3 21.8 7
20 August 2024 – Mercury’s focus on growth and execution has continued, with the company progressing major
renewable projects in FY24.
Mercury Chief Executive Vince Hawksworth said, “We’ve continued to deliver more renewable generation for New Zealand this
year. This includes $700 million committed to the expansions of Kaiwera Downs wind farm and Ngā Tamariki geothermal station
and more planned. These will help support Aotearoa’s shift to an electrified future.”
The impact of significant investment to increase scale, together with strong generation performance, helped secure Mercury’s
results over the period.
A rapidly changing landscape
Mercury Chair Scott St John said, “The energy transition will deliver long term gains for the nation; however, it requires careful
navigation – particularly to maintain reliable power while rapidly and affordably scaling up renewables. This is front of mind for
our strategic considerations.”
Mr St John said the company expected electricity price pressure to continue for some time, reflecting the ongoing need for
higher cost thermal generation in the system.
“As we continue to invest in renewables, generating capacity must remain flexible enough to quickly adjust to changing
environmental conditions, such as low rainfall or cloudy, still days.
“Gas has a critical role as a transition fuel. Gas supply challenges need to be addressed head on with recent projections
highlighting this may continue to impact energy markets through to early 2026
1
.”
To help facilitate the transition Mercury has supported the ongoing operation of the Huntly Power Station with purchases
through the Market Security and Huntly Firming Options.
Mr St John said lower than usual hydro inflow at 5
th
percentile nationally from 1 February 2024 to 18 August 2024 had
compounded current challenges, contributing to high spot and wholesale prices.
“While a few are exposed to these current high spot prices, 98% of our sales volume across residential, small and large
business customers are protected from these elevated prices due to fixed-rate agreements.”
FY25 guidance
Mercury’s FY25 EBITDAF guidance has been set at $820 million. Guidance may change and remains subject to any material
events, significant one-off expenses or other unforeseen circumstances including changes to hydrological conditions.
1
Gas Industry Company, June 2024 Quarterly Report
The Mercury Building, 33 Broadway, Newmarket 1023
PO Box 90399, Auckland 1142
FY25 stay-in-business CAPEX guidance is $160 million. FY25 ordinary dividend guidance is 24.0 cps, representing a 3%
increase on FY24 and the 17
th
consecutive year of ordinary dividend increase.
FY24 financial overview
Mercury’s net profit after tax lifted to $290 million, largely due to changes in the fair value of unhedged financial instruments.
Mercury reported $877 million EBITDAF, up 4% on the prior year, due to increased wind and geothermal generation and higher
customer prices, offset by reduced hydro generation and higher operating costs.
Taupō storage was impacted by 30
th
percentile inflows during the financial year, and hydro generation was 4,096GWh, down
21% on the prior year’s record generation. Wind generation of 2,062GWh was up 40% on the prior year with the addition of new
generation from Turitea South wind farm and stage 1 of the Kaiwera Downs wind farm. Geothermal generation was 2,622GWh,
up 11% on the prior year due to improved resilience.
Operating costs were $385 million, up 11% on the prior year, primarily due to an increase in the number of full-time employees
and new generation maintenance costs relating to the operation of Kaiwera Downs wind farm. Stay-in-business capital
expenditure (CAPEX) was $142 million, up 19% on the prior year, with the geothermal drilling campaign ramped up during the
year and continuing into FY25.
Delivering more generation for New Zealand
Mr Hawksworth said a key focus of the year was executing against Mercury’s commitment to invest up to $1 billion over the
financial year in new generation projects. Two of the three projects signalled were progressed during the year. Higher
procurement and construction costs lifted the cost of these projects, bringing Mercury’s combined total FY24 commitment to
these two renewables projects to over $700 million.
“This included the $220 million expansion of Ngā Tamariki geothermal station, which adds another net 46MW through the
addition of a fifth generating unit,” said Mr Hawksworth.
“We also began construction of the $486 million, 155MW second stage of Kaiwera Downs wind farm after signing a long-term
supply agreement with New Zealand Aluminium Smelters. This agreement gave us further confidence to execute on our high-
quality generation development pipeline.”
The third signalled project, Kaiwaikawe wind farm, was delayed due to procurement and construction logistics but is now
nearing final investment decision. In addition, Mercury celebrated the opening of stage one of Kaiwera Downs in November
2023, completed under budget and on schedule.
Innovating for customers
Mr Hawksworth said another focus of the year was innovation, including giving all Mercury customers access to a broader range
of products and services including a range of telecommunications solutions.
The integration of Mercury and Trustpower was completed on time and on budget in December 2023, following Mercury’s
acquisition of the Trustpower retail business in May 2022. The company anticipates exceeding the integration synergies
previously forecast, however inflationary pressures remain. Most synergies are expected to be realised in FY25.
“We believe this is one of the largest and most complex technology integration projects for the sector, and its success is a
testament to the commitment and capability of our people. We are now seeing the benefits of this, particularly the considerable
capability for product bundling.”
Mercury continued to provide wraparound support for customers experiencing hardship and focus on developing solutions that
address the broader challenges related to affordability.
“We’re proud of the meaningful impact our early intervention efforts and close community partnerships are having. Year-on-year,
our post-pay disconnections were down 76% (to 299 total, or 0.03%) as a result of the intervention and support of our team and
partners,” said Mr Hawksworth.
“Among other initiatives, we continue to provide significant commercial support to social retailers, Nau Mai Rā and Toast
Electric, to further help whanāu in need.”
Chief Executive appointment
The Board has announced Mr Hawksworth’s decision to retire from 31 August 2024, with Mercury’s Executive GM Generation,
Stew Hamilton, appointed to the role of Chief Executive to succeed Mr Hawksworth.
Mr St John said, “We are delighted to appoint Stew to the role, which is the result of focussed succession planning overseen by
the Board. Stew has proven success leading large, complex businesses in New Zealand and internationally, including as Chief
Executive at New Zealand Aluminium Smelters Ltd.”
“I also extend my thanks to Vince for his significant contribution to not only the long-term success of Mercury, but also the sector
more broadly.”
The Mercury Building, 33 Broadway, Newmarket 1023
PO Box 90399, Auckland 1142
Other key operational activities
• Trialled EV smart charging, hot water load control and time of use solutions to help customers shift their energy use.
• Published Mercury’s first mandatory Climate Statement, which complies with Aotearoa New Zealand Climate Standards.
• Made significant progress towards becoming a more progressive, future-fit organisation, and set several milestones to reach
safety citizenship, the gold standard of safety culture by December 2026.
Dividend
The Board has declared a fully imputed final dividend of 14.0 cents per share (cps) to be paid on 30 September 2024. This
brings the full-year ordinary dividend to 23.3 cps, up 7% on prior year (21.8 cps FY23). This is the 16
th
consecutive year of
ordinary dividend growth.
ENDS
Howard Thomas
General Counsel and Company Secretary
Mercury NZ Limited
For investor relations queries, please contact:
Paul Ruediger
Head of Business Performance & Investor Relations
027 517 3470
investor@mercury.co.nz
For media inquiries, please contact:
Shannon Goldstone
Reputation and Social Impact Lead
027 210 5337
mercurycommunications@mercury.co.nz
ABOUT MERCURY NZ LIMITED
Mercury generates electricity from 100% renewable sources: hydro, geothermal and wind. We are also a retailer of electricity,
gas, broadband and mobile services. We’re listed on the New Zealand Stock Exchange and the Australian Stock Exchange with
the ticker symbol ‘MCY’, with foreign exempt listed status. The New Zealand Government holds a legislated minimum 51%
shareholding in the Company.
Visit us at: www.mercury.co.nz
---
2024
Twelve Months Ended 30 June 2024
20 August 2024
VINCE HAWKSWORTH
Chief Executive
WILLIAM MEEK
Chief Financial Officer
PAUL RUEDIGER
Head of Business Performance & Investor Relations
FULL YEAR
RESULTS
DISCLAIMER.
2
This presentation has been prepared by Mercury NZ Limited and its group of companies (“Company”) for informational purposes. This disclaimer applies to this document and
the verbal or written comments of any person presenting it.
Information in this presentation has been prepared by the Company with due care and attention. However, neither the Company nor any of its directors, employees,
shareholders nor any other person gives any warranties or representations (express or implied) as to the accuracy or completeness of this information. To the maximum extent
permitted by law, none of the Company, its directors, employees, shareholders or any other person shall have any liability whatsoever to any person for any loss (including,
without limitation, arising from any fault or negligence) arising from this presentation or any information supplied in connection with it.
This presentation may contain projections or forward-looking statements regarding a variety of items. Such projections or forward-looking statements are based on current
expectations, estimates and assumptions and are subject to a number of risks, and uncertainties, including material adverse events, significant one-off expenses and other
unforeseeable circumstances, such as, without limitation, hydrological conditions. There is no assurance that results contemplated in any of these projections and forward-
looking statements will be realised, nor is there any assurance that the expectations, estimates and assumptions underpinning those projections or forward-looking statements
are reasonable. Actual results may differ materially from those projected in this presentation. No person is under any obligation to update this presentation at any time after its
release or to provide you with further information about the Company.
A number of non-GAAP financial measures are used in this presentation. You should not consider any of these in isolation from, or as a substitute for, the information provided
in the audited consolidated financial statements for the year ended 30 June 2024, which are available at www.mercury.co.nz/investors
.
The information in this presentation is of a general nature and does not constitute financial product advice, investment advice or any recommendation. The presentation does
not constitute an offer to sell, or a solicitation of an offer to buy, any security and may not be relied upon in connection with the purchase or sale of any security. Nothing in this
presentation constitutes legal, financial, tax or other advice.
Added two new projects to our pipeline, a
proposed grid-scale battery at Whakamaru
hydro station and a wind farm west of Huntly
MERCURY TAKES LEADING ROLE IN NEW ZEALAND’S ENERGY TRANSITION.
3
Business performance and major events
Produced 8.8TWh of diversified renewable
generation from hydro (47%), geothermal
(30%) and wind (23%) in FY24. Wind
generation was up 40% from prior year with
the addition of new generation from Turitea
South and Kaiwera Downs stage 1
Delivered new generation from stage 1 of
Kaiwera Downs in HY24. Started construction
of stage 2 following agreeing a 20-year CfD
with NZAS. This $486m project will increase
generation at Kaiwera Downs from 147GWh
to 672GWh
STRATEGIC
STRATEGICFINANCIALS
STRATEGIC
STRATEGIC
Started construction of the $220m Ngā Tamariki
geothermal expansion, site work underway,
2,000 tonne delivery to site of steel structure
and air cooled condensers. Ormat and their civil
and mechanical contractors mobilised on site
Completed the integration of Mercury and
Trustpower (people, processes, systems). Our
increased scale retail business has 864k
customer connections and provides customers
greater choice and enhanced experience
OPERATIONS
Our scaled business produced a FY24 EBITDAF
result of $877 million and ordinary full year
dividend of 23.3cps, the 16
th
year of consecutive
dividend growth. FY25 EBITDAF guidance of
$820 million on 3,800GWh of hydro generation
47
46
18
78
46
60
21
75
0
20
40
60
80
100
Women In
Leadership
Internal MobilityPeople Leaders
of Ethnicity
Mercury's
Cultural Index
%
FY23FY24Target
0
1
2
3
0
0.5
1
1.5
FY18FY19FY20FY21FY22FY23FY24
TRIFRHigh Severity Incidents (RHS)
OUR PEOPLE.
4
Employee measures
•Adaptive ways of working resulted in significant learning
opportunities and secondments for staff
•Women in leadership decreased slightly driven by the
completion of secondments into project lead roles
•Being inclusive of staff with different backgrounds, views,
experience and capability makes us stronger and better
as a business
Continued focus on Health, Safety and Wellbeing
Health, safety and wellbeing
•We continued to prioritise health, safety and wellbeing
with aspiration to reach safety citizenship, the gold
standard of safety culture by Dec-2026. We have
focused on three key areas to get us there, rituals and
routines, critical risks and safety data
•Zero fatality and high severity Health & Safety incidents
occurred in FY24. 12-month rolling TRIFR for FY24 the
lowest in seven years at 0.43
1
TRIFR is the Total Recordable Injury Frequency Rate per 200,000 hours, includes employees and on-site contractors.
OUR STRATEGIC FRAMEWORK SUPPORTS NZ’S ELECTRIFICATION OPPORTUNITY.
5
We launched our new three-year FY25 to FY27 objectives
Key messages
•Our strategic framework defines our purpose and outlines our priorities for short and long-term growth
•The new three-year objectives reflect our conviction that the electrification opportunity in New Zealand is
significant. We are focused on pursuing this by growing and executing our renewable generation options and
supporting New Zealand to electrify. We recognise that in order to do this successfully, we need to leverage
our capabilities, partnerships and technology solutions to drive performance and growth
TAKING ACTION TO REACH OUR 2035 ASPIRATIONS.
6
•Stay-In-Business capital expenditure higher from
geothermal drilling campaign, Karāpiro rehabilitation
offset by Kawerau turnaround spend reduction
•Growth investment includes construction costs of fifth
unit at Ngā Tamariki geothermal station and Kaiwera
Downs stage 1 and 2 wind farm
FINANCIAL – STRONG PERFORMANCE FOLLOWING FY23’S RECORD HYDRO GENERATION.
7
Our performance funds our ongoing investment
FY24 Financial Performance
•EBITDAF higher due to increased sales yield and
wholesale prices. This was partially offset by lower
generation and higher operating expenditure
•NPAT higher due to positive unrealised fair value
movements in derivatives and carbon, higher EBITDAF
and prior year revaluation losses and impairment. This
was partially offset by higher taxes and interest expense
1,163
346
841
112
578
119
177
302
1,228
385
877
290
612
142
154
325
0
200
400
600
800
1000
1200
1400
Trading MarginOperating
Expenditure
EBITDAFNPATOperating Cash FlowStay-In-Business
Capital Expenditure
Growth InvestmentDeclared Ordinary
Dividend
$m
FY2023
FY2024
•Price: higher wholesale prices and improved LWAP/GWAP;
increased loss and constraint rental rebates ($21m) offset
by increased connection charges from TPM (-$10m)
•Other income: largely a benefit of recognising a second
insurance claim related to the 2021 Kawerau outage
•Operating expenses: see next slide
FINANCIAL – NEW WIND AND CUSTOMER SALES LIFT EARNINGS.
8
EBITDAF bridge (FY23 to FY24)
Decrease Increase
FY24 EBITDAF Performance
•Generation volume down 0.3TWh from lower hydro,
coming off a record high hydro generation in FY23,
partly offset by improved geothermal availability and
new wind (Turitea and Kaiwera Downs)
•Customer sales: Mass market VWAP up $9/MWh,
commercial and industrial VWAP up $8/MWh
841
877
60
47
13
(46)
(39)
FY23Generation
volume
Customer SalesPriceOther
income
Operating
Expenses
FY24
EBITDAF
($m)
FINANCIAL – INVESTING IN FUTURE GROWTH.
9
FY24 Operating Expenditure
•Retail (other): see integration synergies slide (+$4
change in scope and other items and $3m realised
synergies)
•New wind operations at Kaiwera Downs and Turitea South
•Generation maintenance capability (asset resilience)
•Increased costs due to inflation at 4.4%
Continued investment in growth and existing assets
FY24 Movement in Net Debt
•42% of earnings reinvested in new and existing assets
•Strong performance enabled continued investment in
growth, with net debt lifting $46m from June 2023
•16
th
year of consecutive growth in ordinary dividends
•Investing cash flows mainly capital expenditure
(stay-in-business and growth capex)
346
385
1
11
11
15
FY23Retail
(other)
Wind generation
opex
Asset
maintenance
Inflation
at 4.4%
FY24
Opex ($m)
877
(46)
366
268
124
121
44
EBITDAFInvestingDividends Paid
with Cash
InterestTaxWorking
Capital
Increase in
Net Debt
$m
47
22
42
20
11
Drilling campaignHydro
rehabilitation
Generation related
projects
RetailEnterprise and
other
FY24 SIB Capex ($m)
FINANCIAL – CAPEX ENHANCING GEOTHERMAL RESILIENCE AND HYDRO CAPACITY.
10
Geothermal drilling lifted FY24 SIB capex
FY24 Stay-In-Business Capex
•Geothermal drilling campaign ramped up in FY24
•Kawerau turnaround (replacement of the generator and
turbine) primarily impacted FY23
•Karāpiro rehabilitation increased with the second of
three generator units
•Other includes the uplift in generation asset resilience
and performance across various projects
119
142
30
4
5
(16)
FY23Drilling
campaign
Kawerau
turnaround
Karāpiro
rehabilitation
OtherFY24
SIB Capex ($m)
FY24 Stay-In-Business Capex Breakdown
•Geothermal drilling campaign commenced late FY23,
offsetting the natural decline of well performance of the
Kawerau, Ngā Tamariki and Rotokawa fields
•Hydro rehabilitation (Karāpiro) is a three-year project
started in FY23 increasing station capacity by 17MW (17%)
on completion
•Generation related include multiple projects
improving asset resilience and performance
0
1,000
2,000
3,000
4,000
5,000
Jul-23Oct-23Jan-24Apr-24Jul-24
GWh
National Hydro Storage (GWh)
20232024Average
Key messages
•Full year national inflows were 23
rd
percentile with spot price
in Auckland averaging $187/MWh for FY24. Gas and
forward electricity prices have increased over CY24, primarily
from low hydrological inflows and gas. National hydro
inflows from Feb-24 and May-24 to mid Aug-24 were at the
11
th
and 2
nd
percentiles, respectively
•Low gas availability has constrained thermal generation
utilisation and increased gas prices as uncommitted gas is
sold to thermal generators at prices reflecting gas
generation yields. Hydro storage increasingly utilised as
backup generation as thermal generation reduces
•Long term forward prices increased from firming
requirements, limited gas availability and higher generation
development costs, partially offset by increased new
generation being committed across the sector
•The energy transition requires a continued focus on security
and affordability for all New Zealanders. Challenges like this
underline the critical importance of taking a
whole-of-system approach
OPERATIONAL – LOW HYDRO AND GAS DRIVING HIGH ELECTRICITY PRICES.
11
Source: ASX, Mercury, Enerlytica
1
Calculated on a two quarter ahead basis at Ōtāhuhu (Auckland), e.g. the Feb-24 price of $156/MWh represents the average futures price for the period Jul-24 to Jun-27
0
10
20
30
40
0
100
200
300
400
Jul-21Jan-22Jul-22Jan-23Jul-23Jan-24Jul-24
$/GJ
$/MWh
Spot Electricity ($/MWh) and Gas Price ($/GJ)
ElectricityGas (RHS)
0
50
100
150
200
250
Jul-21Jan-22Jul-22Jan-23Jul-23Jan-24Jul-24
$/MWh
Electricity Futures ($/MWh) Three Year Forward Price
1
0
100
200
300
400
500
600
GWh
LAKE TAUPŌ STORAGE
(since 1 Jul 1999)
Min / MaxAvgLake Taupo MCLFY2023FY2024
OPERATIONAL – TAUPŌ STORAGE IMPACTED BY 30
TH
PERCENTILE INFLOWS DURING FY24.
12
>50GWh above average
Month EndJulAugSepOctNovDecJanFebMarAprMayJunJulAug
5
Hydro Generation -
Delta to Average
2
(GWh)
2247-112-58-24-173336184544-5-7-19
Waikato Inflows -
Delta to Average
3
(GWh)
-64-95-27-77-41-1575-5-32-35-33-52-137-84
Taupō Storage –
Delta to Average
2
(GWh)
9-128-14-4185410979629-82-103-190-236
Spot Price -
Ōtāhuhu ($/MWh)
$120$148$126$133$152$183$203$164$218$230$303$260$355$693
Futures Price (M-3
4
)
Ōtāhuhu ($/MWh)
$193$151$121$123$159$88$140$197$202$167$190$260$247$261
1
Maximum Control Level
2
Monthly average since July 1999
3
Monthly average since July 1927
4
Closing price 3 months prior to end of month
5
To 13 August 2024
>50GWh below average
Source: NZXHydro, WITS, ASX
Above $100/MWh
Above $200/MWh
FY24 margin improvement from increasing generation in 2H. FY25 impacted by a continuation of low inflows
FINANCIAL – FY25 OUTLOOK.
13
•Since the start of FY25, national hydro lake levels were near record lows for this time
of year. Gas fired generation has been underutilised due to ongoing gas supply
shortages. This, combined with low hydrology, has led to high short-term electricity
and gas prices.
•The current market situation has negatively impacted Mercury’s FY25 trading margin
by $90m due to lower generation, higher retail gas costs and portfolio impacts.
•$52m impact from lower generation: Hydro down 278GWh to 3,800GWh from
a low starting lake level (-103GWh) and 6
th
percentile inflows from July to mid-
August (-175GWh). We assume 50
th
percentile inflows from Sep-24.
•$10m impact from higher retail gas costs: Most of our supply requirements are
currently being sourced through short-term transactions at high prices
reflecting thermal gas sales yields. This impact assumes we secure more long-
term gas contracts at prices reflecting normal hydrology.
•$28m impact from portfolio positions: Unfavourable short portfolio position in
Q1-FY25 required buying electricity at high prices, this combined with an
assumed full year trading activity loss of $16m is an exceptional event. We
assume a return to normal portfolio position from Q2-FY25.
Drought, electricity and gas prices unfavourably impacting FY25 earnings
$820m
PY $877m
FY25 EBITDAF Guidance
STRATEGIC - HIGH QUALITY GENERATION PIPELINE.
14
Kaiwaikawe wind farm progressing through Pre-FID
Project
Capacity
(MW)
Generation
(GWh pa)
Type &
Location
StageProgress Comment
Ngā Tamariki
OEC5
46390 uplift
Geothermal
near Reporoa
ConstructionFirst generation late Cal-25
Kaiwera Downs II
155525
Wind farm near
Gore
Construction
First generation mid Cal-26
Full generation end of Cal-26
Kaiwaikawe
74220
Wind farm near
Dargaville
Pre-FIDFID anticipated in Cal-24
Beyond FY25
Puketoi
2281,080
Wind farm near
Pahiatua
Feasibility & pre-
reconsenting
Scheme optimisation and
development work progressing
Mahinerangi 2
138470
Wind farm near
Dunedin
Feasibility & pre-
reconsenting
Development work progressing
Wind farm west of
Huntly
200-300600-900
Wind farm near
Huntly
Feasibility & pre-
consenting
Signed core wind farm
landowners and engaging other
landowners to secure expanded
site
Whakamaru BESS
stage 1
150
2hr
(300MWh)
BESS near
Taupo
Feasibility & pre-
consenting
Preliminary design, preparing
consenting reports &
application, stakeholder
engagement. FID anticipated in
FY26
Tararua
repowering
60MW
Uplift, to
221MW
270 uplift
Wind farm near
Palmerston
North
Feasibility & pre-
consenting
Developing the repowering
strategy. Project planned beyond
2030
Various other
prospects
1500~5,000Various
Prospecting,
feasibility
Includes onshore wind, solar,
geothermal & BESS
Key messages
•Mercury recently commissioned two significant wind
generation projects at a total cost of $565 million. This new
supply was commissioned ahead of recent demand growth
and represents 2.4% of total national FY24 demand
•Mercury is delivering more generation for New Zealand. We
committed to two renewable projects, bringing our
combined total FY24 commitment to new renewables to
over $700 million. This new generation from Ngā Tamariki
and Kaiwera Downs is now under construction and
represents a further 2.3% of national FY24 demand
•Construction of Ngā Tamariki OEC5 geothermal expansion
started in Apr-24. Construction of Kaiwera Downs stage 2
wind farm expansion started in Jun-24
•Two new projects have been added to the pipeline, a grid-
scale battery at Whakamaru hydro station and a wind farm
west of Huntly
15
STRATEGIC – OUR TRACK RECORD ON GENERATION DEVELOPMENT.
Turitea South wind farm fully operational in FY23,
increasing annual generation on average by 370GWh
Kaiwera Downs stage 1 wind farm fully operational in
HY24 increasing average annual generation by
147GWh. The project was on time and under budget
Committed to a 390GWh Ngā Tamariki geothermal
expansion in Sep-
2023 and 525GWh Kaiwera Downs
stage 2 wind farm in Jun-2024
Kaiwaikawe (wind)
74MW, 220GWh
Mahinerangi II (wind)
138MW, 470GWh
Kaiwera Downs II (wind)
155MW, 525GWh
Puketoi (wind)
228MW, 1,080GWh
Ngā Tamariki OEC5 (geothermal)
46MW, 390GWh
In Construction
Consented / Pre-FID
-
500
1,000
1,500
2,000
FY22FY23FY24FY25FY26FY27FY28
GWh
Total new and committed generation since FY22
Projects under construction or consented
Pre Reconsenting
Commercials
Connection
Landowners
Consents
STRATEGIC – BIG FOUR WIND FARM OPTIONS PROGRESSING.
16
Progressing and optimising pipeline options
Key messages
•Kaiwaikawe: Delays due to changing wind turbine supplier,
complexity connecting into a distribution network,
protracted transmission landowner negotiations. FID is
expected in late Cal-24
•Puketoi: Scheme optimisation progressing to improve
commercials and de-risking delivery across the steep and
challenging terrain. As a result, additional landowner
agreements for turbine overhang and consent
amendments are required. FID anticipated in Cal-26
•Mahinerangi 2: Changes to turbine technology and
regulation are likely to result in consent amendments for
transmission, tip height and renewal of construction
consents. Connection application in the Transpower queue.
FID anticipated in FY27
•Wind farm west of Huntly: Core landowners agreements
signed. Negotiating with additional landowners for an
expanded site. On site monitoring and consenting studies
underway. FID anticipated in FY28
Project Readiness
Kaiwaikawe
Puketoi
MahinerangiWest of Huntly
STRATEGIC – EXPANSION OF HIGH-QUALITY GEOTHERMAL GENERATION.
17
Key messages
•Ngā Tamariki power station consists of four Ormat Energy
Converter (OEC) units providing a net station capacity of
86MW. In September 2023, the $220 million OEC5 unit
was committed and will increase site generation by
390GWh and net output by 46MW
•Foundations for the Air Cooled Condensers (ACCs) are
complete and the 2,000 tonne delivery to site of steel
structure and ACC bundles was completed on time in July
•Ormat site work is now focused on foundations for major
equipment and buildings, services and erecting the ACC
structure
•Project is currently on time and on budget. Ormat plus
their civil and mechanical contractors have mobilised on
site and working effectively and safely (over 100
consecutive safe days on site to date)
Ngā Tamariki OEC5 under construction
First generation expected late calendar 2025
STRATEGIC – LEADING THE WAY IN THE CONSTRUCTION OF WIND GENERATION.
18
Commitment of Kaiwera Downs stage 2
Key messages
•New stage one wind farm generation completed at
Kaiwera Downs on time and under budget in November
2023. Stage one is a ten turbine 43MW wind farm with
annualised generation of 147GWh
•The success of the project provided a solid foundation for
development and construction of Kaiwera Downs stage 2
wind farm
•Construction of Kaiwera Downs stage 2 commenced in
June 2024, following the long-term supply agreement
with NZAS. The agreement with NZAS will take effect from
1 January 2025 for a period of 20 years, with baseload
volume stepping up from 50MW to 75MW in 2027
•Construction crews mobilised within one week of contract
execution. Weather in Gore has been favourable for
productive earth works
Kaiwera Downs stage 2 earth works and blasting rock
STRATEGIC – KAIWERA DOWNS IS A HIGH-QUALITY GENERATION INVESTMENT.
19
Stage 2 construction commenced in June 2024
Key messages
•Kaiwera Downs stage 2 (KD2) wind farm is a long dated
high quality generation development option located in
the Gore District 11km east of Mataura
•Resource consents were originally granted in 2008,
extended in 2018 and a final amendment was received
in July 2023 to increase the turbine tip height for KD2
•The Long Run Marginal Cost (LRMC) of KD2 is
~$95/MWh (based on the LCOE of ~$82/MWh real at
Gore). This LRMC can be compared with the average
baseload firmed wholesale price at Gore. Selling above
this price for the life of the project would be sufficient to
return a positive net present value
•KD2 capital costs are relatively higher than KD1 due to
higher civil costs (inflation), electrical works (substation
and cabling) and foreign exchange impacts
Project SpecificationStage 2Stage 1
Full GenerationLate Cal-2026November 2023
WTG SupplierVestasVestas
O&M Contractor / TermVestas / 30 yearsVestas / 30 years
Turbines36 x V136-4.3MW10 x V136-4.3MW
Turbine Tip Height / Tower Height156m / 88m145m / 77m
Rotor Diameter136m136m
Total Capacity155 MW43 MW
Net Capacity Factor38.7%39.0%
P50 Yield525 GWh pa147 GWh pa
Capital Cost
1
$486m$112m
Sunk Costs$5m
Total Operating Costs
2
(First full year pa)$17.3/MWh$22.5/MWh
EBITDAF Impact (First FY)$43m$15m
LCOE
3
at Gore (real)~$82/MWh~$64/MWh
1
Capital cost excludes capitalised interest and sunk costs
2
Total operating costs include operating expenditure and direct costs
3
Illustrative Levelised Cost of Electricity (LCOE) real at Gore based on an assumed 7% WACC
STRATEGIC – INVESTING IN OUR HYDRO ASSETS.
20
Large programme of works planned on our hydro assets for the next decade
FY12
FY13
FY14
FY15FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25FY26
FY27
FY28
FY29
FY30
FY31
FY32
FY33
FY34
FY35FY36
FY37
FY38
Capacity
Generation
Upgrade
ScopeCost
Aratiatia
RehabLead InTurbines
1 Unit sized for
Flow 28MW,
~15GWh p.a
All Generators,
Governors
~$49m
(3 Units)2 x 30MW
2 x Turbine
Refurb
Ohakuri
RehabLead InGenerators
+1-2MW
~25GWh
p.a
All Generators~$85m
(4 Units)Per Unit
Atiamuri
Lead InRehab
+1-4MW
tbc
All Turbines,
~$130m
(4 Units)Per Unit
Generators,
Governors
Whakamaru
Rehab
+6MW
~28GWh
p.a
All Turbines,
~$76m
(4 Units)
Per Unit 4 x
31MW
Generators,
Governors
Maraetai 1
Lead InRehab
+5-8MW
~32GWh
p.a
All Turbines,
~$180m
(5 Units)Per Unit
Generators,
Governors
Maraetai 2
Lead InRehab
(5 Units)
Waipapa
Lead In
(3 Units)
ArapuniGenerators
(8 Units)5- Aug
Karapiro
Class 4Lead InRehab
+5MW
~32GWh
p.a
All Turbines,
~$90m
(3 Units)
Per Unit 3 x
37MW
Generators,
Governors
Key messages
•Significant long-term
investment to enhance our
hydro capacity
•The Karāpiro project is
ongoing with the second of
three units due for completion
in Sep-2024. The third unit
will begin in Oct-2024 and
the full project is scheduled
for completion in Sep-2025.
The overall project is expected
to increase station capacity by
15MW and average generation
by 32GWh per year
OPERATIONAL – GEOTHERMAL DRILLING RECOMMENCED.
21
Geothermal drilling underway with new drilling contractor
Key messages
•The eight well geothermal drilling campaign commenced
in Jun-2023 to sustain capacity of the Kawerau, Ngā
Tamariki and Rotokawa fields, offsetting the natural
decline of well performance
•Our geothermal drilling campaign experienced a 3-month
delay in FY24 after we terminated our initial drilling
services contract. We recommenced with a new drilling
contractor in Apr-2024 and shifted from a single large 14-
month campaign to smaller campaigns over the next two
years
•We completed three wells out of eight in FY24 with a
further three wells targeted for completion in FY25. The
remaining two wells will be completed by the end of FY26
•To d a t e$69 million has been invested in the campaign. A
further ~$100 million is expected to complete the
remaining five wells through to FY26 (Total cost ~$169m),
up $9m from previous estimate
Kawerau drilling rig
Hydro 4.1TWh
Geothermal 2.6TWh
Wind Spot 0.9TWh
Customer 4.5TWh
Large Business 3.4TWh
Losses 0.4TWh
Financials 3.1TWh
Financials 2.1TWh
Wind PPA 1.2TWh
Wind PPA 1.2TWh
Spot 0.4TWh (Net)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
SupplyDemand
TWh
OPERATIONAL – PORTFOLIO MATCHING ACROSS MERCURY’S SUPPLY & DEMAND.
22
Renewable generation from hydro, geothermal & wind
Key messages
•Produced 8.8TWh of diversified renewable generation from
hydro (47%), geothermal (30%) and wind (23%)
•Wind generation of 2.1TWh was up 40% on the prior year
with the addition of new generation from Turitea South and
stage 1 of the Kaiwera Downs wind farm
•Majority of wind generation sold through PPA offtake
agreements
•FY24 portfolio management and flexible hydro delivered a
net long spot generation position in FY24 of 0.4TWh
•Mercury operates the portfolio with a strategically long
generation position to minimise short-term hydrological
impacts. The FY25 portfolio position to date has been
partially short generation primarily because of low
hydrological inflows in the Waikato catchment impacting
hydro generation
FY24 Mercury Supply & Demand
1734
1544
1703
1479
1555
1337
1438
1216
1373
1497
2287
2065
2362
2098
1242
1183
1202
1323
1323
1470
1611
1816
1651
1733
1840
1752
1750
1604
0
1,000
2,000
3,000
4,000
5,000
H1
FY18
H2
FY18
H1
FY19
H2
FY19
H1
FY20
H2
FY20
H1
FY21
H2
FY21
H1
FY22
H2
FY22
H1
FY23
H2
FY23
H1
FY24
H2
FY24
GWh
Mass Market (includes Trustpower retail)C&I (includes physical and financial sales)
OPERATIONAL – PLATFORM FOR CONNECTION GROWTH THROUGH INTEGRATION.
23
Total 864k connections across all products at full year
Key messages
•Retail integration has reshaped Mercury into a scaled
multi-product utility retailer, creating a foundation for
enhanced operating efficiencies and growth
•Electricity connections declined against PCP as we
pulled back on acquisition to focus on customer
migration. Cross-sell opportunities post integration saw
Telco increase by 16k connections against PCP, whilst
Gas grew by 2k connections
•Elevated forward curve pricing has seen strong contract
renewal prices through FY24. C&I yields (including
physical sales and end user CfDs) were $9/MWh higher
relative to PCP as a result of contracts repricing due to a
sustained higher electricity forward curve. Sales yields in
the Mass Market segment were $9/MWh higher relative
to PCP
1
Gas includes both reticulated gas and LPG
393
388
381
373
356
348
336
328
327
574
579
590
579
576
47
48
48
47
47
47
45
4547
95
98
102
102
104
130
161
168
174
184
0
100
200
300
400
500
600
700
800
900
1,000
H1
FY18
H2
FY18
H1
FY19
H2
FY19
H1
FY20
H2
FY20
H1
FY21
H2
FY21
H1
FY22
H2
FY22
H1
FY23
H2
FY23
H1
FY24
H2
FY24
Total Connections ('000)
ElectricityGasTelco
3
8
15
6
3
7
2
5
0
4
8
12
16
20
Brand
repositioning
Enhanced
CRM/billing &
customer
migration
Digital front endTransition costsOther
Spend $m
FY23FY24
OPERATIONAL – NEW ZEALAND'S LEADING MULTI-PRODUCT UTILITY.
24
Key messages
•Retail integration (people, processes, systems) was
completed during the year, with the programme of work
to migrate Mercury brand mass market customers to
the Gentrack billing system delivered in HY24. We
reduced our acquisition activity throughout HY24 to
prioritise customer migration
•The integration programme was delivered on-time and
on-budget. Programme spend was largely attributed to
technology, brand repositioning, resource back-fill, and
transition costs. Project costs included $30 million of
operating expenditure and $19 million of capital
expenditure
•The business is now focused on the delivery of the
benefits of the merger, predominantly the considerable
capability for product bundling and the delivery of
synergies
Integration of people, processes, and systems
160
168
160
7
4
4
8
3
20
-
20
40
60
80
100
120
140
160
180
200
FY23
Customer
segment
OPEX
Inflation
(4.4%)
Change in
scope and
other items
Realised
synergies
FY24
Customer
segment
OPEX
Estimated
Inflation
(2.5%)
Change in
scope and
other items
Planned
synergies
FY25
forecast
Customer
segment
OPEX
Opex ($m)
Increase
Decrease
Now NZ
Integration
$184m
$192m
$174m
OPERATIONAL – ON TRACK TO DELIVER INTEGRATION SYNERGIES.
25
Synergy forecast breakdown
$m< F Y2 4F Y2 4F Y2 5F Y2 6To t a l
Gross Margin-22-4
Opex12320641
Capex--123
TOTAL12523848
1
FY23 segment OPEX includes $12m of synergies as reported in the March Investor Day
2
Segment OPEX normalised for Integration, which is $18m in FY23 and $12m in FY24
3
Reserved for Segment OPEX normalised for Now NZ, which is $6m in FY23 for a part year and $13m in FY24 for a full year
Key messages
•$17 million of synergies delivered to date, of which $15
million are opex related
•Majority of the synergies expected to be realised in FY25.
An incremental $20 million of forecast synergies relate to
opex ($6 million technology and $14 million labour)
•We anticipate exceeding the $35 million synergies
previously targeted, however inflationary pressures remain
and these were excluded from the target
•Change in scope and other items refer to enterprise-wide
internal technology projects and uplift in compliance
related costs
Key messages
•Vince Hawksworth developed a strategic executive
leadership team, providing a strong platform for a
seamless Chief Executive transition to Stew Hamilton
•Stew has been responsible for the management,
operation and maintenance of Mercury’s hydro,
geothermal and wind assets. He is also responsible
for health, safety and wellbeing performance at an
enterprise level. Before joining Mercury, Stew was the
Chief Executive and General Manager at New
Zealand Aluminium Smelters Ltd
•Stew brings a proven track record of success in
leading large, complex businesses in New Zealand
and internationally. He has delivered strong business
value while building enduring partnerships and
driving health and safety performance
CHIEF EXECUTIVE APPOINTMENT.
26
Succession planning enables a seamless CE transition
ENVIRONMENTAL, SOCIAL AND GOVERNANCE – KEY ACTIVITY.
27
Key messages
•Mercury continues to provide wraparound support for
customers experiencing hardship, including developing
innovative solutions that address the broader challenges
related to affordability
•We’re proud of the meaningful impact our early
intervention efforts and close community partnerships are
having. Year-on-year, our post-pay disconnections were
down 76% (to 299 total, or 0.03%) as a result of the
intervention and support of our team and partners
•Among other initiatives, we also continue to provide
significant commercial support to social retailers, Nau Mai
Rā and Toast Electric, to further help whanāu in need
•We are contributing to sector initiatives and working with
community and non-governmental organisations to
provide a suite of support for those in hardship
Taking a collaborative approach to improve resilience
Natural Environment
Evolving our approach
to how we restore
nature
Customer Care
Meaningful support for
those experiencing
hardship
Iwi Relationships
Collaborative long-term
approach
Succession Plan
Aligned with long
term activities
Appointments
Made to complement
Board’s collective
capabilities
Remuneration
Principles are long
term, performance
based and simple
Governance
Social
Environmental
Community
Engagement
Crafting quality
engagement to build
our social licence to
operate
Key Suppliers
Working in effective
teams with our
suppliers
Climate Disclosures
FY24 to be our second
report against New
Zealand Climate
Standards
Key messages
•Sector has done a good job managing costs to consumers.
Total residential electricity price has tracked at lower than
inflation
•Current fuel shortages (gas and hydro) leading to high
wholesale spot and futures pricing, 98% of our sales
volumes to customers are insulated from these currently
•Thermal peaking has a key role in supporting a pathway
with the fastest and most significant emissions reductions
across the economy. To help facilitate this transition,
Mercury has supported the ongoing operating of Huntly
power station with purchases through the Market Security
and Huntly Firming Options (HFO)
•Key focus needs to be addressing gas supply challenges
and providing investment certainty
•Any intervention in response to current fuel shortages
needs to support broader electrification goals
•A whole-of-system view is essential when
thinking about solutions
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
0
5
10
15
20
25
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
CPI (relative to 2013)
Nominal c/kWh
Years ending 30 June
RESIDENTIAL PRICE
Lines componentEnergy and other componentCPI (RHS)
COLLECTIVE ACTION REQUIRED TO ELECTRIFY NZ.
28
Residential electricity prices tracked lower than inflation
1
Excludes Energy and other component for quarter ending June 2024 as data was
unavailable at the time of publishing
0
1
2
3
FY20FY21FY22FY23FY24
Net Debt ($b) and Debt/EBITDA
'BBB+ RangeNet Debt ($b)Debt/EBITDA
FINANCIAL – STRONG BALANCE SHEET SUPPORTS FURTHER INVESTMENT.
29
Key messages
•Mercury targets Debt/EBITDA between 2x-3x after
adjusting for S&P Global treatment, consistent with our
BBB+ rating
•Debt/EBITDA
1
at 2.0x for FY24, consistent with FY23 and
well positioned to support further investment
•S&P Global re-affirmed Mercury’s credit rating of
BBB+/stable in December 2023
•Diversified funding sources: commercial paper, bank
facilities, domestic wholesale bonds, retail bonds, AUD
wholesale bonds, USPP and capital bonds
•$300m Capital Bond (MCY020) redeemed and $350m
Capital Bond (MCY070) issued in Jul-2024
Forecast Debt/EBITDA provides platform for growth
1
Adjusted for actual / expected S&P Global treatment, based on FY24 EBITDA guidance
•Geo and Wind normalised: for average production and no major shuts
•Hydro generation 278GWh lower because of low starting lake level and inflows
•Portfolio impacted by net position during Q1 FY25 and assumes $16m of trading losses
•Gas margin impacted by higher gas purchase costs
•New wind: full year of Kaiwera Downs I
•Yield growth in Mass Market, C&I and Telco
•Transmission mainly loss rental rebates reverting to normal
•Operating expenses: retail integrations brings operating expenses down
FY25 EBITDAF guidance of $820m on 3,800GWh of hydro generation subject to hydrological volatility, wholesale market
conditions and any material adverse events, significant one-off expenses or other unforeseeable circumstances
•
FY25 ordinary dividend guidance 24.0cps (up 3% on FY24)
•
FY25 SIB capital expenditure guidance of $160m reflects the geothermal drilling and hydro rehab projects. Long term
SIB capital expenditure expected to be $150m with the ongoing geothermal drilling and hydro rehab programmes
30
Decrease Increase
FINANCIAL – FY25 GUIDANCE.
Current market impacts
877
859
820
2
4
43
15
(3)
(17)
(52)
(28)
(10)
(11)
700
720
740
760
780
800
820
840
860
880
900
FY2024
Actual
Hydro to
4,078GWh
Geo & Wind
normalised
Insurance
receipt
FY2024
normalised
Hydro
generation
PortfolioGasNew wind
generation
Yield
growth
Transmission
(LRR)
Operating
expenses
FY2025
guidance
EBITDAF ($m)
31
SUMMARY – KEY MESSAGES.
FY25 Summary
•Continued investment in the construction of the Ngā
Tamariki geothermal and Kaiwera Downs wind farm
expansions
•Anticipated FID for the 220GWh Kaiwaikawe wind farm in
late Cal-24
•Current market situation has unfavourably impacted FY25
trading margin by $90m, with $52m attributed to reduced
short term hydro generation
•FY25 ordinary dividend guidance of 24.0cps (up 3% on
FY24). This will be the 17
th
consecutive year of ordinary
dividend growth
•FY25 EBITDAF guidance of $820 million on 3,800GWh of
hydro generation subject to hydrological conditions and any
material adverse event or unforeseeable circumstances
•FY25 stay-in-business capital expenditure guidance of
$160m reflects the ongoing geothermal drilling
and hydro rehabilitation projects
FY24 Summary
•Construction of the 390GWh Ngā Tamariki geothermal
station began in Apr-24, and the 525GWh Kaiwera
Downs wind farm expansion started in Jun-24
•The 147GWh p.a. Kaiwera Downs stage 1 wind farm was
completed on time and under budget in Nov-23
•A long-term supply agreement with NZAS was signed,
providing market certainty and supporting our high-
quality generation development pipeline
•Geothermal drilling operations recommenced with a
new contractor in Apr-24 after a three-month delay due
to the termination of the initial drilling services contract
•Higher operating expenditure from inflation, full period
of NOW operations, new wind generation, enhanced
maintenance capability and insurance
•Retail integration programme completed and is
expected to exceed synergies previously targeted,
however inflationary pressures remain
32
Whakamaru Hydro Dam
Q&A
0
50
100
150
200
0
500
1,000
1,500
2,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
$m$m
Financial Year (ending 30 June)
INTEREST COSTS
1
Net debtInterest expense (RHS)
0
200
400
600
800
1,000
1,200
1,400
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025F
$m
Financial Year (ending 30 June)
CAPEX
Stay-In-BusinessGrowth
-10,000
-5,000
0
5,000
10,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
GWh
Financial Year (ending 30 June)
GENERATION VS SALES
1
ThermalWind (Spot)
HydroGeo
SalesNet position
0
200
400
600
800
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025F
$m
Financial Year (ending 30 June)
DISTRIBUTIONS
Share buybackSpecial dividend
Final dividendInterim dividend
0
100
200
300
400
500
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
$m
Financial Year (ending 30 June)
OPEX
1
Operating expenditure
820
0
200
400
600
800
1,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025F
$m
Financial Year (ending 30 June)
EBITDAF
33
1
FY25F figures not available as Mercury does not give guidance for Opex, Generation, Sales or Interest Costs
MERCURY’S LONG TERM TRACK RECORD.
50%
60%
70%
80%
90%
100%
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Financial Year (ending 30 June)
RENEWABLES PROPORTION
0%
5%
10%
15%
20%
25%
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Annualised Churn (%)
Financial Year (ending 30 June)
ICP CHURN
Total Churn
Trader Churn
$0
$50
$100
$150
$200
$250
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23
Jan-24
Jul-24
$/MWh
FUTURES VS SPOT PRICES
12 Mth rolling OTA Futures price (1 year prior)
12 Mth rolling OTA spot price
Quarterly OTA Futures price (2 years prior)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
kT CO2e
Financial Year (ending 30 June)
CARBON EMISSIONS
0
1
2
3
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
EBITDAF ($b)
Financial Year (ending 30 June)
SECTOR EARNINGS
CAGR: 2.2%
34
1
Source: Company reports, TPIX, MBIE, Pricing Manager (NZX), Electricity Authority
1
Includes trader churn and premise churn – switches caused by customers moving house
2
Switches where a customer changes retailer without changing residence
2
9.0
9.2
9.4
9.6
9.8
10.0
0
10
20
30
40
50
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
GW
TWh
Financial Year (ending 30 June)
DEMAND AND GENERATION CAPACITY
Demand
Max. Generation Capacity (RHS)
LONG TERM INDUSTRY TRENDS.
THE ELECTRIFICATION OPPORTUNITY IS SIGNIFICANT.
35
Key messages
•The 2050 energy transition will require a further
30TWh of renewable electricity in New Zealand, a
significant uplift from the current base of 36TWh
1
•Renewable electricity to account for 58% of New
Zealand’s total energy demand in 2050
•Global regulators are accelerating the energy
transition, growing demand and boosting the need for
investment
•Market signals in New Zealand are supportive of new
generation development
Renewable electricity supply to increase 30TWh by 2050
- 20 40 60 80
Cal-2050
Cal-2020
TWh
NZ Renewable Electricity Supply
1
Refer to the Boston Consulting Group Report ‘Climate Change in New Zealand: The Future is Electric’ published October 2022
TAKING ACTION TO REDUCE OUR EMISSIONS.
36
Our targets drive our emissions reduction actions
2030 Target2040 Target
Scope 1
Target Year: FY2030
70% reduction in emissions
intensity (in kgCO2e/kWh)
from 2022 base year
Target Year: FY2040
70% reduction in emissions
intensity (in kgCO2e/kWh)
from 2022 base year
Scope 2
Target Year: FY2030
42% absolute reduction from
2022 base year
Target Year: FY2040
90% absolute reduction from
2022 base year
Scope 3 – Use of
Sold Products
(Natural Gas Sales)
Target Year: FY2030
42% absolute reduction from
2022 base year
Target Year: FY2040
90% absolute reduction from
2022 base year
Note: These targets are subject to change through the validation process with SBTi.
Key messages
•We are progressing actions to reduce our emissions, to
support our Science Based Targets Initiative (SBTi) targets
•Key projects we are resourcing to achieve the targeted
emissions are focusing on reinjection of our geothermal
emissions, new renewable generation development and
helping our customers to reduce their emissions from gas
(captured in our Climate Statement and Climate Action
Plan)
•We have published in the annual report our mandatory
Climate Statement
1
and our Greenhouse Gas Inventory
Report – both have been independently assured. We have
also published our Climate Action Plan that describes the
measures and targets that we have set and the actions we
are taking to reduce emissions.
•Our 2030 and 2040 company wide emissions reduction
targets have been developed in accordance with SBTi
guidance to help drive internal decision making on carbon
emissions
1
In accordance with the NZ Government’s new Aotearoa NZ Climate Standards
0
2
4
6
8
10
12
0
20
40
60
80
100
120
140
2015201620172018201920202021202220232024
Generation (TWh)
Emissions Intensity
(kg CO2e/kWh)
Financial Year
Generation (RHS)Emissions Intensity kg CO2e/kWhNZ Grid Average kg CO2e/MWh
$-
$100
$200
$300
$400
$500
2025202620272028202920302031205020512052205320542055
$m
Financial Year
Commercial PaperUndrawn Bank FacilitiesUndrawn Rolling Bank FacilitiesDrawn Bank FacilitiesUS Private Placement
AUD Green BondsCapital BondsDomestic Wholesale Green BondsRetail Green Bonds
1
Requires 18 months notice of termination from lender
37
Debt maturities as at 30 June 2024
•Diversified funding sources: commercial paper, bank facilities, domestic wholesale bonds, retail bonds, AUD wholesale
bonds, USPP and capital bonds
1
FINANCIAL – DIVERSIFIED FUNDING PROFILE.
$300m Capital Bond redeemed,
$350m Capital Bond issued in Jul-2024
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
UrbanRuralDairyTiwaiIndustrial
(ex. Tiwai)
Irrigation
GWh
DEMAND
FY2020FY2021FY2022
FY2023FY2024
HIGHER NATIONAL DEMAND DESPITE INDUSTRIAL SECTOR HEADWINDS.
38
Key messages
•National demand up 0.9%
1
(unadjusted 2.1%) versus FY23,
with irrigation-linked sectors leading growth
•Urban sector demand also showed steady growth
•Industrial demand down in FY23 and FY24 due to Pan Pac
mill outage following damage from Cyclone Gabrielle
•FY25 demand will be impacted by Tiwai demand response
option exercise
•Sustained growth in electricity demand is anticipated,
driven by the electrification of homes, transportation, and
industrial sectors, alongside the expansion of data centres
Source: Transpower SCADA data, Mercury.
1
Normalised for temperature and number of days
SectorGWh
Sector %Total %
Urban
1
+680.4%0.2%
Rural
1
+1622.5%0.4%
Dairy processing+370.6%0.1%
Industrial-187(2.2)%(0.5)%
Irrigation+21817.4%0.5%
Other+486.7%0.1%
Total+3460.9%
FY24 NORMALISED DEMAND GROWTH BY SECTOR
0
20
40
60
80
100
120
140
160
MCY KD2 WindGeneric SolarHypothetical
Geothermal
(Brownfield)
LCOE real at GoreLRMC real at GoreLRMC real at Auckland
STRATEGIC - KAIWERA DOWNS IS A HIGH-QUALITY GENERATION INVESTMENT.
39
KD2 wind LCOE & LRMC relative to other technologies
Key messages
•LCOE and LRMC ($/MWh) information for generation
projects can be difficult to interpret and benchmark across
technologies and locations
•Our preferred benchmark is LRMC Real at Auckland. This
can be benchmarked against a long-term wholesale price
and any generation project across NZ at Auckland
•The chart highlights how LRMCs can differ materially across
technologies even if developed at the same location
•LCOE real at Gore refers to the required year 1 average
revenue ($/MWh) to achieve WACC return, this considers
long term inflation
•LRMC real at Gore refers to the required year 1 average spot
price to achieve WACC return. This considers GWAP/TWAP
profile over time
•LRMC real at Auckland reflects the location factor
adjustment to scale the Gore grid price to Auckland
LCOE & LRMC ($/MWh)
ACCOUNTING IMPACTS – ACQUIRED ELECTRICITY SWAPS.
40
Key messages
Transactions involved acquisition of electricity swaps (in FY2022):
•Manawa: as part of the acquisition of the Trustpower retail business, Mercury
acquired a CFD with Manawa with a day 1 value of $488m
•Waipipi: as part of the acquisition of the Tilt NZ assets, Mercury acquired a
CFD (Waipipi windfarm) with a day 1 value of $43m liability
Accounting treatment:
•Swaps are measured at fair value at period end, and (unrealised) changes in
fair value are recognised through P&L, below EBITDAF
•Value unwinds across term of contract e.g. for a derivative asset this is a
reduction in revenue (see table) and non-cash
•These CFDs cannot be hedge accounted due to variable volumes or ASX
linked resetting prices
•Settlements (realised gains/losses) are recognised in changes in fair value in
the Income Statement, and are included in EBITDAF
•The 30 June 2023 Waipipi PPA value has been restated
Three CfDs acquired with material value
$mDay 1 FY2023FY2024
Manawa
Asset (B/S)488219357
Change in fair value (P&L)(225)138
Waipipi
Liability (B/S)(43)(38)(81)
Change in fair value (P&L)(10)(43)
ELECTRICITY DERIVATIVES.
41
Trading margin contribution
$m
12 months ended
30 June 2024
12 months ended
30 June 2023
Sell CFDs(141)125
Buy CFDs210(56)
Other electricity derivatives15(8)
To t a l8461
Key messages
Other electricity derivatives:
•Includes gains and losses on electricity trading (NZ
electricity futures), Financial Transmission Rights,
options and associated premiums, and impact of
futures positions novated from futures (ASX) to CFD
•Excludes financial PPAs (included in Generation
revenue)
42
•EBITDAF (or Operating Earnings) is earnings before net interest expense, tax expense, depreciation, amortisation,
change in the fair value of financial instruments, gain on sale and impairments
•Energy Margin is sales from electricity generation and sales of electricity and gas to customers and derivatives, less
energy costs, line charges, other direct costs of sales, and third-party metering
•Growth Investment is expenditure incurred by the company to create new assets and revenue
•Net Debt is carrying value of loans less fair value adjustments and cash and cash equivalents
•Operating Expenditure represents employee compensation and benefits, maintenance expenses and other
expenses
•Stay-In-Business Capital Expenditure is the capital expenditure incurred by the company to maintain its assets in
good working order
•Telco Margin is mobile and broadband sales to customers less direct costs of those sales including last mile
charges
•Trading Margin is Energy Margin plus Telco Margin
NON-GAAP MEASURES.
---
2024 INTEGRATED REPORT.
MERCURY NZ LIMITED
ABOUT THIS REPORT.
Mercury is committed to providing the full picture: transparent
disclosures in easily understood, comparable and engaging ways
so that we meet the expectations of our many stakeholders.
This is an Integrated Report which follows the Integrated
Reporting <IR> framework.
We describe Our Business Model, including inputs, outputs,
and the outcomes of our strategic approach across our five
long-term aspirations that determine how we generate long-
term value. We include a specific Global Reporting Initiative
MENU.
04 HOW WE CREATE VALUE.
TE PĒWHEA O TĀ MĀTOU WHAKAMANA.
05 OUR BUSINESS MODEL
06 DELIVERING ON OUR FY22-24 OBJECTIVES
08 OUR FY25-27 STRATEGIC FRAMEWORK
09 HOW WE WILL MEASURE PROGRESS ON OUR
FY25-27 OBJECTIVES
10 CHAIR & CHIEF EXECUTIVE UPDATE
14 WHAT MATTERS MOST.
TE MEA NUI.
15 ENGAGING WITH IWI AND STAKEHOLDERS
16 THE RISKS WE FACE
17 PULLING IT ALL TOGETHER
18 HOW WE DELIVER VALUE.
TE PĒWHEA O TĀ MĀTOU TUKU HIRA.
19 DELIVERING VALUE AT A GLANCE
20 KIRITAKI / CUSTOMER
22 KŌTUITANGA / PARTNERSHIPS
24 KAITIAKITANGA / STEWARDSHIP
26 NGĀ TĀNGAGA / PEOPLE
30 ARUMONI / COMMERCIAL
32 LOOKING AT THE NUMBERS.
TE TITIRO KI NGĀ TATAU.
33 FINANCIAL COMMENTARY
34 FINANCIAL TRACK RECORD
35 INDEPENDENT AUDITOR’S REPORT
38 GROUP FINANCIAL STATEMENTS
41 NOTES TO FINANCIAL STATEMENTS
62 CLIMATE STATEMENT.
TE TAUĀKI ĀHUARANGI.
64 INTRODUCTION
65 GOVERNANCE
69 STRATEGY
78 RISK MANAGEMENT
80 METRICS & TARGETS
83 ASSURANCE OPINION
(GRI) Index and comprehensive climate disclosures, which
align with the Aotearoa New Zealand Climate Standards.
We have grouped our reporting into six sections to help you
find areas of particular interest, but they are all part of who
we are, what we do and why. Across all this, our aim is to report
openly and honestly on our performance in a way that shows
the integrated approach we take.
If you have any comments about this report, including things
we could do better, please email investor@mercury.co.nz.
STATEMENT FROM THE DIRECTORS
The directors are pleased to present Mercury NZ Limited’s
Integrated Report and Financial Statements for the year ended
30 June 2024. The Auditor-General is required to be Mercury’s
auditor and has appointed Emma Winsloe of Ernst & Young
to undertake the audit on his behalf.
This Integrated Report is dated 20 August 2024 and is signed
on behalf of the Board by:
SCOTT ST JOHN // C H A I R
JAMES MILLER // DIRECTOR
85 LEADERSHIP & GOVERNANCE.
TE TĀTAKI ME TE WHAKAHAERE.
86 YOUR BOARD OF DIRECTORS
89 YOUR EXECUTIVE TEAM
90 GOVERNANCE AT MERCURY
105 REMUNERATION REPORT
116 NZX CORPORATE GOVERNANCE CODE INDEX
117 DIRECTORS’ DISCLOSURES
119 SECURITY HOLDER INFORMATION
120 BONDHOLDER INFORMATION
125 COMPANY DISCLOSURES
126 OTHER DISCLOSURES
129 GLOBAL REPORTING INITIATVE (GRI) INDEX
132 INFORMATION FOR SHAREHOLDERS
133 DIRECTORY
134 GLOSSARY
135 RĀRANGI INGOA LIST OF NAMES
1
MERCURY 2024 INTEGRATED REPORT MENU
EXPANDING HORIZONS.
Nau mai, haere mai. Welcome to Mercury’s 2024
Integrated Report. Our theme this year – Expanding
Horizons – highlights our focus on growth and
execution as we support the electrification opportunity
ahead for Aotearoa New Zealand.
We delivered on our previous goals while setting new
ambitions for growth in all aspects of our business.
This included introducing innovative solutions for
customers, developing closer partnerships with iwi
and stakeholders and empowering our people.
It also meant focussing on sustainable commercial
growth and renewable generation development
while ensuring the long-term sustainability of
our physical assets and the natural environment.
There are challenges as the energy transition gathers
pace, but also long-term gains for the nation. We are
working hard to actively shape the forward pathway
and deliver a better future for all.
Kaiwera Downs wind farm.
2
MERCURY 2024 INTEGRATED REPORT MENU
We generate electricity from 100% renewable
sources: hydro, geothermal and wind. We are
also a retailer of electricity, gas, broadband
and mobile services.
Our electricity generation sites are located along
the Waikato River (hydro), the nearby steamfields
of the northern part of the Central Plateau
(geothermal) and in the Manawatū, South Taranaki,
Otago and Southland regions (wind).
During the year we completed the first stage
of the Kaiwera Downs wind farm near Gore in November
and have now commenced construction on the second
stage, which we expect to complete in FY26.
WHO WE ARE.
KARĀPIRO
ARAPUNI
WAIPĀPA
MARAETAI I
AND II
WHAKAMARU
ŌHAKURI
ĀTIAMURI
ARATIATIA
NGĀ TAMARIKI
NGĀ AWA
PŪRUA
+
LAKE TAUPŌ
ROTOKAWA
+
MŌKAI
+
KAWERAU
MAHINERANGI
KAIWERA
DOWNS++
TURITEA
TARARUA
WAIPIPI
+ not 100% owned by Mercury
++ under construction
HYDRO STATIONS
GEOTHERMAL STATIONS
WIND FARMS
We have also commenced construction of a fifth
generation unit at Ngā Tamariki geothermal station.
We sell electricity, gas, broadband and mobile services
through our retail operations to residential and small
to medium-sized business customers. Our sub-brand
GLOBUG is our pre-pay electricity product.
Our Commercial sales team service industrial
and wholesale market customers offering electricity.
We are committed to building and maintaining
authentic relationships with iwi/Māori and stakeholders
across our business. This will be achieved through
ongoing conversations and careful listening to
understand where our values and aspirations align.
Karāpiro hydro station.
3
MERCURY 2024 INTEGRATED REPORT MENU
TE PĒWHEA O TĀ MĀTOU WHAKAMANA.
In this section we highlight factors that affect our ability to create value
over time (Our Business Model), including outlining our past and current
performance and outcomes. We show how we've performed against
our FY24-26 objectives and introduce our FY25-27 strategic framework
and objectives. Our Chair Scott St John and Chief Executive Vince
Hawksworth then jointly summarise our 2024 financial year.
Maraetai hydro station.
4
MERCURY 2024 INTEGRATED REPORTMENU
KŌTUITANGA
/
PARTNERSHIPS
Providing greater opportunities
for New Zealand, our industry,
our partners and our business
through long-term collaboration.
OUR BUSINESS MODEL.
4,096
2,6222,062
6,669
GWh HYDRO
GENERATION
GWh GEO
GENERATION
GWh WIND
GENERATION
GWh PHYSICAL
SALES
576k electricity
104k gas
160k telecommunications
24k mobile
2 geothermal joint ventures
8 formal iwi relationships
33 community, social and
commercial partnerships
69
K
SHAREHOLDERS
864
K
CUSTOMER
CONNECTIONS
9 hydro
5 geothermal
5 wind
19
POWER
S TAT IO N S
737 women
754 men
2 non-binary
492 in Auckland
514 in Tauranga
136 in Hamilton
86 in Rotorua
30 in Taupō
95 in Oamaru
140 Rest of NZ
1
,
493
PERMANENT
EMPLOYEES
3
K
BONDHOLDERS
10
33
FORMAL IWI
RELATIONSHIPS
PARTNERSHIPS
OUR BUSINESS
MODEL EXPLAINED.
Our Business Model shows our key inputs
interacting with our business activities
to create outputs of sustainable,
commercial value. The outcomes
of our activity are measured and take
us towards achieving our long-term
aspirations and realising our purpose.
OUR BUSINESS ACTIVITIESINPUTS
OUTPUTS
16
%
CONSUMPTION
MARKET SHARE
21
%
GENERATION
MARKET SHARE
C
U
R
I
O
U
S
•
•
C
O
M
M
I
T
•
C
A
R
E
•
C
O
N
N
E
C
T
KIRITAKI
/
CUSTOMER
Inspiring, rewarding and making
it easier for our customers.
KAITIAKITANGA
/ STEWARDSHIP
Long-term sustainability of natural
resources and assets.
N GĀ TĀN GATA
/
OUR PEOPLE
Enabling our people to perform
together in a changing environment
and keep each other safe.
ARUMONI
/
COMMERCIAL
Achieving our commercial goals
through sustainable growth.
5
MERCURY 2024 INTEGRATED REPORTHOW WE CREATE VALUEMENU
DELIVERING ON OUR FY22-24 OBJECTIVES.
The table below shows how we have performed
against our FY22-24 objectives over the financial
year. This is also the final year of our FY22-24
strategic cycle. As indicated below, we are
pleased to have largely met our objectives
for this period.
We outline how we will be reporting against
our FY25-27 objectives on page 9.
Key:
Met expectation. Minor variance from expectation. Did not meet expectation.
See ‘Our Strategic Framework’ on Page 8 to see how our objectives link to each of the categories for our long-term aspirations.
FY22-24
OBJECTIVES
PROGRESS AGAINST
OUR MEASURES
FY24
OUTCOMES
OVERALL
OUTCOMES
LONG-TERM
ASPIRATIONS
1
Enhance our licence
to operate through
collaborative work
with our stakeholders
• Zero-harm organisation Critical Risk Management plan was launched and is being
rolled out. Our TRIFR (Total Recordable Incident Frequency Rate)
for the financial year was 0.43, down from 0.49 in the previous
financial year.
Refreshed Health, Safety and Wellbeing programme was rolled out.
Our TRIFR has continued to trend down. FY21 - 0.64, FY22 - 0.60,
FY23 - 0.49, FY24 - 0.43.
• No serious injury at a Mercury site or of customers
through our service
No serious injuries in 2024. No serious injuries in FY22-FY24 period.
• Enhanced engagement with iwi,
partners and stakeholders
The appointment of our new Pou Tūhono-ā-iwi (Iwi Relationships
Manager) will help continue building on our relationships with iwi
across our operations.
Progressive approach for early engagement on key projects was
implemented and continued, along with the Pou Tūhono-ā-iwi
appointment.
• Collaboration with stakeholders in the Waikato
to improve the catchment
$450,000 was allocated to restoration projects in 2024 via
Waikato Catchment Enhancement Trust (WCEET).
Investment in restoration projects continued via WCEET. We
installed real time water quality monitoring sites and participated in
the golden clam governance group.
• Good practice approach to climate riskWe are publishing our first mandatory Climate Statement under
the NZ Climate Standards.
We improved the maturity of our approach to climate risk and
associated reporting.
• Delivering our customer care plan Vulnerable customer initiatives were progressed, including: a
new 'Here to Help' webpage; energy cap project with Kāinga
Ora; ERANZ Connect Me pilot; and expansion of community
partnerships as part of hidden hardship initiatives.
Customer Care plan continues to evolve and mature.
2
Increase the value
of our business to
$800m EBITDAF
• EBITDAF growth We have exceeded $800m EBITDAF target.We have exceeded $800m EBITDAF target in FY23 and FY24.
• Retail value growthNew customer operating model was implemented, delivering
further savings and positioning us to deliver on future
growth targets.
Retail integration project and customer operating model was rolled
out and is delivering cost savings. Electricity connection numbers
remain above the original Trustpower acquisition business case
assumptions. Broadband connections are below business case
assumptions, largely a result of the approach taken to Retail
Integration and the project taking longer than expected.
• Portfolio management Long term contracts are being progressed to underpin new
generation development.
In elevated spot and futures market, longer term contracts were
entered into with C&I customers.
• Generation asset performance Operational performance came in near budget for FY24 overall
- wind slightly ahead of budget and hydro and geo slightly
behind budget.
Near budget over three-year period. Geothermal impacted by
unplanned outages.
6
MERCURY 2024 INTEGRATED REPORTHOW WE CREATE VALUEMENU
DELIVERING ON OUR FY22-24 OBJECTIVES CONTINUED.
Key:
Met expectation. Minor variance from expectation. Did not meet expectation.
See ‘Our Strategic Framework’ on Page 8 to see how our objectives link to each of the categories for our long-term aspirations.
FY22-24
OBJECTIVES
PROGRESS AGAINST
OUR MEASURES
FY24
OUTCOMES
OVERALL
OUTCOMES
LONG-TERM
ASPIRATIONS
3
Unleash the full potential
of our people through
transforming culture
• Improvement in culture index Culture index FY24: 75%.Culture index: 72% in FY21, 75% FY22, 78% FY23, 75% FY24.
• Increase in diverse representation A third cohort of participants have been placed into the Diverse
Emerging Leaders programme.
Diversity increased across a range of measures.
• Learning opportunities taken up that lift capability Focussed on lifting capability through 1:1 coaching, learning
initiatives such as adaptive challenge working groups and
leadership development programmes.
Numerous initiatives rolled out including adaptive leadership
programme, new gen leaders' development programme, diverse
emerging leaders and leader action learning series.
4
Be an adaptive and
resilient organisation,
responsive to
future needs
• Our people taking up opportunities through
internal movement
Approximately 59% of new roles have been appointed internally.Roles filled internally has increased from 51% in FY22 to 59%
in FY24.
• Our systems are fit for purpose Future fit solution roadmap completed in 2024, with work to roll
out continuing into to 2025.
We have successfully integrated two retail businesses into a
'fit for now' state, with a roadmap in place for future fit systems.
5
Play a leading role
in New Zealand's
successful transition
to a low-carbon
economy
• Electricity is viewed as an enabler of the transition
to a low carbon economy
The proposed Sector and Government Energy Transition
Framework has now been agreed by all sector participants and
roll out options are being considered for the third quarter 2024.
We worked with others across the sector to develop mechanisms
to support collective action (across the sector and between public/
private sector participants).
• Progress on engagement with new technology We continued to engage with the industry via the Flex Forum.
15,000 hot water cylinders under control for winter FY24.
We engaged with industry participants across period including via
Flex Forum.
• Support for transport decarbonisation Our EV smart charging pilot concluded in June with findings
due in August.
Hikotron and Big Street Bikers partnerships are in place, as well as
support for on-demand electric transport in Tauranga.
• Progress on reducing our own emissions We successfully completed our non-condensable gas reinjection
trial at Ngā Tamariki, with plans to expand this to other sites.
Over the past three-years we have set SBTi-aligned emissions
reduction targets, and are on track to achieve them.
6
Create executable
options for new growth
• New opportunities for growth Significant focus on creating options including exploring
solar, grid-scale battery, new onshore wind farms, DER and
load management.
Large development pipeline in place that continues to evolve.
This includes flexibility (both supply and demand side).
• Executable development options Expansion of Ngā Tamariki (OEC5) and Kaiwera Downs 2
construction commenced in October 2023 and June 2024
respectively. Kaiwaikawe wind farm is in the final stages of
project development before moving to final investment decision.
Commissioning was completed on Turitea South and Kaiwera
Downs 1 wind farms in July and October 2023 respectively.
7
MERCURY 2024 INTEGRATED REPORTHOW WE CREATE VALUEMENU
Our strategic framework maps why we exist and what
we will need to focus on over the near and longer term,
to continue to grow and create value over time.
Our purpose recognises the role we play in using our unique
assets and capabilities to enable everyday living and connectivity
in our communities and to bring together the people we work
with to care for the natural environment and resources that we use.
Our interconnected long-term aspirations expand on our purpose
and provide a long-term direction for our business that reflects
the change and growth that we aspire to achieve.
This year we have reset our three-year objectives for FY25-27.
Our three-year objectives capture our shorter-term enterprise-
wide goals that are the key steps we need to take towards
meeting our long-term aspirations.
O
U
R
2
0
3
5
L
O
N
G
-
T
E
R
M
A
S
P
I
R
A
T
I
O
N
S
KIRITAKI / CUSTOMER
We put customers at the heart
of our business, they trust us
to deliver innovative services
that provide value and
convenience.
KAITIAKITANGA
/ STEWARDSHIP
We leave our physical assets
and the natural environment
thriving for future generations.
ARUMONI / COMMERCIAL
We are leading in sustainable
commercial growth and
renewable generation
development in Aotearoa.
NGĀ TĀNGATA / OUR PEOPLE
We learn and adapt so we all
realise our full potential,
driving success and growth.
KŌTUITANGA / PARTNERSHIPS
We are the partner of choice;
trusted by communities,
iwi and industry to create
shared value.
TIAKINA TE ANAMATA, MĀ TE
TŪHONO I NGĀ TĀNGATA ME
NGĀ WĀHI O TE INAMATA.
TAKING CARE OF TOMORROW:
CONNECTING PEOPLE AND
PL ACE TODAY.
OUR
PURPOSE
O
U
R
P
U
R
P
O
S
E
S
H
A
P
I
N
G
T
O
M
O
R
R
O
W
O
U
R
T
H
R
E
E
-
Y
E
A
R
O
B
J
E
C
T
I
V
E
S
2035
Creating
success
with others.
Performing
with an
adaptive and
inclusive culture.
Delivering
more reliable
and renewable
energy to power
Aotearoa.
Innovating with
technology.
Accelerating
the shift to a
low-carbon
future.
Achieving what
matters most
through financial
growth.
C
U
R
I
O
U
S
•
•
C
O
M
M
I
T
•
C
A
R
E
•
C
O
N
N
E
C
T
T
A
K
I
N
G
C
A
R
E
O
F
T
O
M
O
R
R
O
W
C
O
N
N
E
C
T
I
N
G
P
E
O
P
L
E
A
N
D
P
L
A
C
E
T
O
D
A
Y
8
MERCURY 2024 INTEGRATED REPORTHOW WE CREATE VALUEMENU
HOW WE WILL MEASURE PROGRESS
ON OUR FY25-27 OBJECTIVES.
FY25-27 OBJECTIVESMEASURES
Providing what matters most through financial growthEBITDAF
Delivering more reliable and renewable energy to
power Aotearoa
Generation asset performance and resilience
Economic generation pipeline
Accelerating the shift to a low-carbon future
Our contribution to the Sector Framework
Our own decarbonisation journey
Our contribution to our customers decarbonisation journey (electrification)
Creating success with others
Customer Care
Creating Shared Value
Performing with an adaptive and inclusive culture
Evolve the way we work to lift organisational performance
Diversity, equity and inclusion
Innovating with technology
Technology innovation
Technology productivity
Arapuni hydro station.
9
MERCURY 2024 INTEGRATED REPORTHOW WE CREATE VALUEMENU
U
P
P
D
D
ATE
CHAIR & CHIEF EXECUTIVE
SNAPSHOT.
Aotearoa New Zealand, and society at large,
is undergoing transformational change as rapid
technological advancements, evolving societal
expectations and climate change intensification
converge. This has created substantial opportunity
for electrification as a catalyst for a lower-emissions,
higher-growth economy. The energy sector will
be a significant contributor to the country achieving
its climate change goals through electrification.
The 2020s are the critical decade for progress.
We are working hard to actively shape the pathway
to support this increasing demand for renewable
energy, alongside other sector participants.
We are investing significantly to deliver at scale
and pace, contributing to a major uplift in the annual
national development rate of renewable generation,
which is expected to be over three times higher
in the first half of this decade (2021-2025), than
the entire previous decade (2011-2020)
1
.
We are committed to delivering on our purpose:
Tiakina te anamata, mā te tūhono i ngā tāngata
me ngā wāhi o te inamata. Taking care of tomorrow:
Connecting people and place today.
Mercury Chief Executive Vince Hawksworth and Mercury Chair Scott St John.
KUPU A TE HEAMANA ME TE POU
WHAKAHAERE.
SCOTT ST JOHN // CHAIR
VINCE HAWKSWORTH // CHIEF EXECUTIVE
DELIVERING MORE GENERATION
We continued to execute new renewable
generation projects and enhance
existing assets.
INNOVATING FOR CUSTOMERS
We focussed on empowering customers
through innovation, giving them greater
choice and enhanced experience.
COLLABORATING FOR SUCCESS
We worked with others to ensure
a balanced, collective view of the
energy transition.
SCALED BUSINESS DELIVERING
Our performance reflects the impact
of significant investment to increase scale.
EMPOWERING TALENT &
OPTIMISING PERFORMANCE
We are becoming a more progressive,
future-fit organisation with greater flow
and delivery of the most valuable work.
1
Electricity Authority, '2023 Generation Investment Survey'
.
Annual
development rate is based on projects completed or committed.
10
MERCURY 2024 INTEGRATED REPORTHOW WE CREATE VALUEMENU
It is a pleasure to present to you Mercury’s 2024
Integrated Report, my first as Chair after succeeding
Prue Flacks in January.
This year Mercury will also see a change in Chief
Executive, with Vince Hawksworth, who has served
as Chief Executive since March 2020, retiring at the
end of August. I extend my thanks to Vince for his
significant contribution to not only the long-term
success of Mercury, but also the sector more broadly.
I also thank Prue for her substantial contribution
to Mercury over a long period, including the first half
of the 2024 financial year.
Succession planning is a cornerstone of good
corporate governance. Having highly experienced
leaders and a deep talent pipeline is key to ensuring
Mercury can navigate the rapidly changing landscape
and seize the opportunities that lie before us.
The challenges of attracting and retaining talent
in New Zealand are well known and we need to have
a forward-thinking approach that ensures we are well
placed to build and grow talent at Mercury.
To that end, the Board was delighted to appoint
Executive General Manager Generation Stew Hamilton
to the role of Chief Executive to succeed Vince. We are
also overseeing a focus on growing talent more broadly
to ensure Mercury continues to have the capability to act
on the growth opportunities that electrification presents.
I am committed to ensuring the Board supports Stew
and the business to deliver this growth while also
contributing to collective action that unlocks prosperity
through the energy transition for New Zealand.
SCOTT’S
KEY OBSERVATIONS.
AN EVOLVING CONTEXT
Inflation impacting capital and operating costs, higher
interest costs and reduced gas availability persisted over
the period. We have also seen changes in the regulatory
and political environment, including welcome clarity
on the Lake Onslow pumped hydro scheme.
In June, the country’s largest electricity user,
New Zealand Aluminium Smelters (NZAS), announced
its decision to remain in New Zealand for the long
term, providing further market certainty. We were
one of three companies to sign a long-term supply
agreement with NZAS, a major milestone that gives
us further confidence to execute on our high-quality
generation development pipeline.
The landscape continues to evolve rapidly, with further
focus on security of supply following period end
highlighting the careful navigation required to achieve
the transition.
FINANCIAL OVERVIEW
Performance over the period was secured by strong
generation and the impact of significant investment
to increase scale.
Hydro generation was 4,096GWh, down 21%
on the prior year’s record generation. Wind generation
of 2,062GWh was up 40% on the prior year with the
addition of new generation from Turitea South and
stage 1 of the Kaiwera Downs wind farm. Geothermal
generation was 2,622GWh, up 11% on the prior year due
to improved resilience. In our customer business, we
again saw lifts in yields across all customer segments.
Our net profit after tax of $290 million was up by
$178 million from the prior year. We reported $877
million EBITDAF
2
, up by $36 million on the prior
year’s $841 million.
Operating costs increased by $39 million on the prior
year. Stay in business capital expenditure increased
$23 million on the prior year at $142 million.
Our FY25 EBITDAF guidance has been set at
$820 million.
DELIVERING MORE GENERATION
FOR NEW ZEALAND
A key area of focus has been executing against our
commitment to invest up to $1 billion over the financial
year in new generation projects. We progressed two
of the three projects signalled, bringing our combined
total FY24 commitment to new renewables to over
$700 million. This included commencing construction
of a fifth generation unit at Ngā Tamariki geothermal
station and the expansion of the Kaiwera Downs wind
farm. We began construction of the second stage
of Kaiwera Downs wind farm following our agreement
with NZAS. Higher procurement and construction
costs lifted the cost of these projects. The third
signalled project, Kaiwaikawe wind farm, is nearing
final investment decision.
In November, we celebrated the completion of the
first stage of the Kaiwera Downs wind farm, which
was delivered under budget and on schedule. We did
not, however, progress with an offtake agreement for
solar energy as none of the offers we received met
our economic thresholds.
Having policy arrangements which support sustainable
growth in supply and demand is key to achieving
Aotearoa’s climate change goals. We cover our views
on the fast-track consenting regime in Kōtuitanga/
Partnerships and the renewable projects we have
put forward for fast-track consideration in Arumoni/
Commercial, including two new projects - a proposed
grid-scale battery at Whakamaru hydro station and
a wind farm west of Huntly.
In addition to executing our pipeline of new generation
developments, we continue to enhance the resilience
and performance of our existing assets. We have a
long-term hydro refurbishment programme underway,
which we cover in Kaitiakitanga/Stewardship. We also
continue to focus on maximising the value of our
geothermal stations, recognising the important role
of baseload generation to security. This includes
undertaking initiatives to improve performance of
our geothermal plant and processes and have faster
return to service after outages. This activity resulted
in a record production performance at Ngā Awa Pūrua
geothermal station. We did, however, experience
operational challenges at Ngā Tamariki and Rotokawa
geothermal stations, which impacted production
at the beginning of the year.
Meanwhile, our geothermal drilling campaign was
delayed following our termination of the contract with
the drilling rig contractor. We have since recommenced
the campaign with a new contractor, who has made
good progress.
INNOVATING FOR CUSTOMERS
During the year, we completed the integration of
Mercury and Trustpower (people, processes, systems)
on time and on budget following our acquisition of the
Trustpower retail business in May 2022. This provided
customers greater choice and enhanced experience
by giving them access to a broader range of solutions,
benefits and service features. We anticipate exceeding
the synergies previously forecast, however inflationary
pressures remain. The majority of synergies are
expected to be realised in FY25.
We reduced our acquisition activity during the first
half of the financial year to prioritise the migration
of all Mercury brand mass market customers onto
a single technology stack. We ended the year with
864,000 customer connections, up 4,000 on FY23.
Sales to commercial and industrial customers, both
physical and financial, decreased slightly over the
period to 3,355 GWh.
2
EBITDAF: Earnings before net interest expense, tax expense, depreciation
and amortisation, unrealised change in the fair value of financial
instruments, gain on sale and impairments.
11
MERCURY 2024 INTEGRATED REPORTHOW WE CREATE VALUEMENU
It is anticipated consumers will play a more active role
in the energy transition as it progresses. To support this,
we have been trialing innovative EV smart charging, hot
water load control and time of use solutions to help
customers shift their energy use. We have also begun
providing gas customers with information about the
future of natural gas and investigating opportunities
to offer solutions that will enable customers to transition
to electric alternatives.
We expect to implement a larger electricity price lift
in FY25, than in the past few years, as a result of
increasing costs and rising level of investment required
in critical electricity infrastructure. Consumers are also
facing larger gas price lifts, with supply constraints
driving significant wholesale gas price increases.
We will continue to provide wraparound support
for customers experiencing hardship, as covered
in Kiritaki/Customer. This programme of care is having
a considerable impact, with our post-pay disconnections
down 76% on the previous year as a result of the
intervention and support of our team.
COLLABORATING FOR LONG-TERM
SUCCESS
We continued to work with others to ensure focus
on all arms of the energy trilemma as the energy
transition gathers pace. This included supporting
the establishment of a proposed energy transition
framework for sector participants, which takes a whole-
of-system view of the transition. It is the first time
this level of collaboration has occurred sector-wide,
recognising the critical importance of collective action
to the transition.
During the year, we engaged on regulatory and policy
topics across security, affordability and sustainability.
We also continued to advocate for a smart system
to unlock many elements of the transition.
EMPOWERING TALENT AND OPTIMISING
PERFORMANCE
Unleashing the full potential of our people and
technology is enabling our organisation to be more
progressive, future-fit and capable of responding
Andy Taylor, Maki Kobayashi and Anna Wishart.
quickly to challenges and opportunities that arise.
We are pleased to have made significant progress on
our journey to being a more adaptive organisation with
greater focus on and delivery of the most valuable work.
Interlinked with our adaptive journey is our continued
focus on uplifting diversity, equity and inclusion; a focus
which also underpins our maturing health, safety
and wellbeing programme. While we are pleased
to have seen a reduction in our total recordable injury
frequency rate, which was 0.43 for FY24 (down from
0.49 the previous year), our focus on health, safety
and wellbeing is much broader than this. We cover
our programme in Ngā Tāngata/People.
Utilising technology will help us drive innovation
and optimise performance, so we can deliver future-fit
customer and employee experiences. During the year,
we embarked on a major technology transformation
programme, including significant investment in new
platforms. We are also using smart technology to
deliver greater productivity, process improvement
and automation.
Our business, Aotearoa and the world have changed
considerably in my past four years at Mercury.
There has been significant investment in renewable
energy as we shift to a low-carbon electrified future.
Achieving this transition requires a continued focus
on security and affordability for all New Zealanders.
We have also seen gas come into the spotlight, with
production challenges constraining supply. This poses
a challenge in both the electricity and gas markets
over the next couple of years.
Challenges like this underline the critical importance
of taking a whole-of-system approach to the transition.
Mercury is committed to playing its part in addressing
these challenges and harnessing opportunities to
deliver better outcomes for Aotearoa. This includes
our responsibilities as a large provider of an essential
service. Our customer care programme has matured
in recent years to have a greater focus on targeted,
tailored solutions, which are making a meaningful
difference to customers most in need.
It is only with the commitment and dedication
of our people that we have the platform we do today.
I extend my thanks to the Mercury team for their
wisdom and support during my tenure. I am confident
they will ensure Mercury’s continued success.
VINCE’S
KEY OBSERVATIONS.
12
MERCURY 2024 INTEGRATED REPORTHOW WE CREATE VALUEMENU
FULL-YEAR DIVIDEND
A fully-imputed final dividend of 14.0 cents
per share (cps) has been declared. This brings
the full-year ordinary dividend to 23.3 cps, up 7%
on prior year (from 21.8 cps), marking our sixteenth
consecutive year of ordinary dividend growth.
Our FY25 ordinary dividend guidance is 24.0 cps,
representing a 3% increase on FY24 and the
seventeenth consecutive year of ordinary
dividend increases.
CLOSING REMARKS
As we reflect on our FY22-24 strategy cycle ending,
we are pleased to have largely met our targets
and are now firmly focused on delivering on our
FY25-27 objectives.
Tirohia ki mua, kia tupu, kia hua, kia puāwai.
(Look into the horizon, plant, nurture, grow.)
14.0CPS
o
$290
M
o
$385
M
o
EBITDAFFINAL DIVIDEND DECLAREDNET PROFITOPERATING EXPENDITURE
$877M
o
Construction of a fifth generation unit commenced at Ngā Tamariki geothermal station.
SCOTT ST JOHN // C H A I R
VINCE HAWKSWORTH // CHIEF EXECUTIVE
13
MERCURY 2024 INTEGRATED REPORTHOW WE CREATE VALUEMENU
TE MEA NUI.
In this section we look at how we have engaged with iwi and stakeholders
and then responded to what we have learned, as well as the trends we
have seen in our key risk areas in FY24. We then cover how these risks
and insights, as well as key opportunities and other external environment
insights, combine to form a view of what's material to our business.
[PHOTO TBC – KD RIBBON CUTTING]
Gore mayor Ben Bell and previous Mercury chairperson Prue Flacks cut the ribbon to officially open stage one of the Kaiwera Downs wind farm.
14
MERCURY 2024 INTEGRATED REPORTMENU
ENGAGING WITH IWI AND STAKEHOLDERS.
TE TORO KI NGĀ IWI ME TE HUNGA WHAI PĀNGA.
Building and maintaining relationships with iwi/Māori
and stakeholders across our business is fundamental
to our ability to create value and contributes to our
long-term success.
We aim to understand the needs and priorities of iwi/
Māori and key stakeholders. This guides our resource
allocation to business activities and informs our
strategy and business plans.
Over the year we continued to refine how we interact with
these diverse groups, recognising that there is no single
universally effective approach. Our engagement includes:
• Personalised one-on-one meetings in person
and/or online interactions.
• Group meetings in person, such as community
co-design forums and stakeholder events.
• Online surveys and audits, such as our Employee
Voice and Voice of Customer surveys.
• Regular written updates, such as project updates
to the local community and quarterly operating
updates to investors.
By customising engagement methods to meet
specific needs and preferences, we believe we have
been able to enhance accessibility and inclusivity
and gather richer, more meaningful data.
The feedback we have received through these
engagements has helped inform the business
activities covered in How We Deliver Value.
These insights, shared through key relationship
holders across our business, have also formed
the base of our FY24 Materiality Assessment.
OUR COMMUNITY ENGAGEMENT STRATEGY
Building and maintaining social licence is critical to
our long-term success. It helps build trust and resilience
in our reputation, supports continued access to land
and resources, encourages customer advocacy and loyalty
and contributes to employee retention and attraction.
During the year, we worked collaboratively to build
clarity, consistency and a shared understanding of what
community engagement means to our business. We have
developed an enterprise-wide approach to community
engagement to help drive more material outcomes
for our communities and business.
Having a clear framework for community engagement
helps us prioritise the highest impact activity – that
is, activity that aligns with our business strategy while
delivering meaningful outcomes for community.
The core elements we considered in designing
the community engagement strategy included:
• What matters most – focus on the most material
elements, with our purpose used to anchor efforts.
• Strategic aspiration – clear articulation of business value
and the correlating community impact relevant to us.
• Interconnected portfolio – community engagement
activity interlinked and more powerful in totality than
individually.
• Value over volume – do a smaller number of things
more effectively, in a coherent and unified way.
• Evolution rather than revolution – continue with
what’s going well while recognising some aspects
of our community engagement approach is no longer
fit-for-purpose.
• Balance of effort – focus on activity that fosters
meaningful, long-term change while recognising the role
that ad-hoc, reactive support plays in demonstrating
our flexibility to respond to community needs.
• Realising reputational benefits – deliberately
integrate leverage of community engagement activity
from the outset.
We have begun implementing this strategy. We recognise,
however, that it will never be ‘final’, given the dynamic
nature of this work. We will continue to iterate it over time,
ensuring we continue to deliver value for communities.
Nevaiahlia Leuamuli, one of the rangitahi from Ōtara Youth Hub,
supported by Mercury to go to the NASA Space Camp in Alabama.
KEY GROUPS WE WORK WITH:
CUSTOMERSPARTNERSGOVERNMENT
& REGULATORS
COMMUNITYIWIEMPLOYEES
INVESTORS
INDUSTRY
PARTICIPANTS
SUPPLIERS
15
MERCURY 2024 INTEGRATED REPORTWHAT MATTERS MOSTMENU
KEY RISK AREASAFETY AND
WELLBEING
COMPLIANCE
AND REGULATORY
R EPU TAT IO NOPERATIONALFINANCIALPEOPLE
FACTORS IMPACTING
CURRENT TRENDS
Safety continues to be one of
the major risks that could affect the
wellbeing of employees, contractors,
customers and the public.
Our key Risks and Lifesaving
Controls (the 11 key risks that can
kill or badly injure), our Leadership
Routines and the delivery of the
Enforceable Undertaking activities
with WorkSafe have all been
important safety priorities.
Our focus on process safety
also continues as a priority
at our generating assets.
Our three Major Hazard Facility
(MHF) sites have several process
safety projects underway to reduce
risk. Safety case resubmissions for
our MHF sites are due to WorkSafe
in FY25.
FY24 also saw the continuance
of several large development
projects relating to wells / drilling,
major hydro refurbishments,
wind farm construction and
geothermal turnarounds.
Compliance with resource consents
and the Electricity Industry
Participation Code is important
for our ability to operate.
Possible regulatory change and
intervention continues to present
a significant risk. While it is one
we cannot control, we do have
some ability to influence outcomes
to ensure that any intervention
does not undermine the balance
of reliability, affordability and
renewability. This balance will be
a key challenge as the energy
sector transition progresses.
In FY24, several regulatory processes
with the potential for significant
impact on us have progressed.
The proposed energy transition
framework for sector participants will
be a key way for participants to work
together to collaborate on shared
challenges related to transitioning
the energy system. We continue
to see an increased willingness for
regulators to pursue business over
breaches of any regulations.
Our reputation with investors,
stakeholders and the broader
community is one of our most
significant assets.
Ensuring that our fuel resources,
plants and systems don’t have
negative impacts on others is critical.
The importance of stakeholder
relationships and input has
continued to grow across each
of our key stakeholder groups –
our customers, communities,
partners and investors.
The level and sophistication of
cyber-attacks continue to increase
within New Zealand and globally.
We continue to implement a
comprehensive and multi-faceted
security uplift programme that seeks
to improve the organisation’s security
maturity across our IT, Operational
Technology and Internet Service
Provider (ISP) environments.
Operational risks have a potentially
significant impact on our ability
to generate electricity, provide telco
and ISP services and create revenue.
The key operational risks include:
asset management and availability;
fuel availability; market exposure; and
business interruption events (such as
natural disasters or global pandemics).
Our two major operational risks
continue to be the risk of a significant
and extended plant outage (primarily
baseload geothermal) and the risk
of an extended drought (impacting
on lake levels, water flows and plant
operations / outages).
Key financial risks include: climate
change impacts, appropriate insurance
cover and our ability to execute on
projects and new growth initiatives.
A core element of financial risk is
project failure risk. This risk revolves
around our ability to successfully
execute significant business initiatives
and thereby maintain or deliver
growing financial returns.
A key focus in FY24 was the
successful integration of Mercury
and Trustpower and the delivery
of the Kaiwera Downs wind farm.
Increased interest rates impact us
through increased funding costs and
reduced profitability. If interest rates
remain elevated, the increased cost
of capital may put future generation
development and new business
opportunities at risk.
We continue to deal with the shifting
landscape of today’s work environment.
Attracting, developing and retaining
capable and adaptable people
who can contribute to our strategic
priorities and grow with our business
remains a focus.
We also face the challenge of an
ageing workforce in several key
operational areas and attracting
suitable people remains an
area of risk.
We continue our strategy to create
a more dynamic, adaptive and
future-ready resilient business.
We aim to create a culture that
embraces learning, challenges
mindsets, lifts capability and
celebrates curiosity.
Recently, we have seen a trend
of aggressive behaviour towards
our frontline people, which impacts
on people’s wellbeing. We take
aggressive behaviours very seriously
and have adopted a number of
strategies to deal with incidents
and support our people.
OUR LONG-TERM
ASPIRATIONS
THE RISKS WE FACE.
A comprehensive summary of our key risks and
how we manage them is included in Governance
at Mercury.
This page provides a summary of the trends we have
seen this year in our key risk areas. We take these
into account in our view of what matters most and
to shape our focus for how we create value over time.
16
MERCURY 2024 INTEGRATED REPORTWHAT MATTERS MOSTMENU
PULLING IT ALL TOGETHER.
Our five long-term aspiration categories, established
in 2016, represent the key drivers of material value
creation for our business. These align to the six
capitals of the Integrated Reporting <IR> framework.
We use these categories to understand how different
resources (input capitals) can either create or erode
value. It also helps us take a holistic view of our
business and understand the broader environment
we operate in.
When thinking about materiality, we need to consider
both what matters most to our business and what
matters most to iwi/Māori and stakeholders. Together,
these considerations help inform the framework for our
long-term strategy and near-term business planning.
Reporting on what’s important to us and
our stakeholders also forms the basis of this
Integrated Report.
Reviewing our material topics
We continuously review our strategy against a broad
context and keep up to date with changes. When we
consider whether our most material topics have
changed, we also evaluate how our approach needs
to evolve to ensure we continue to create value.
The flow chart below outlines the process we have
taken to determine our most material topics.
Through this process, we have recognised a potential
gap in some communities surrounding our operating
assets and main retail customer bases. We are
working to close this information gap for our FY25
Materiality Assessment.
Our material topics
Following careful consideration of the data points
noted above, we have determined our material topics
and grouped them by value drivers. These will be taken
into account over the next financial year as we progress
activity against our FY25-FY27 objectives.
The materiality topics are largely unchanged
from FY23. New topics are denoted in bold.
GAT H ER DATA
We consider data points including:
- Iwi and stakeholder perspectives (page 15)
- External environmental considerations (pages 10-13)
- Risk assessment insights (page 16)
- Any other factors
REVIEW MATERIAL TOPICS
We review our most material topics, grouped
under our five long-term aspirations:
- Kiritaki / Customer
- Kōtuitanga / Partnerships
- Kaitiakitanga / Stewardship
- Ngā Tāngata / People
- Arumoni / Commercial
UPDATE MATERIAL TOPICS
Our material topics for FY24 are outlined
above and are reflected in our strategic
processes and the activity we undertake
during the year.
CONTINUED ENGAGEMENT
& MONITORING
We continue to engage with iwi
and stakeholders and monitor the
internal and external environment.
MATERIALITY ASSESSMENT
<IR> CapitalsOur long-term aspiration areasWhat’s important to us and our stakeholders
Social and Relationship
Kiritaki / Customer
• Building trust
• Customer experience
• Customer loyalty
• Innovative services
Kōtuitanga / Partnerships
• Building trust, mana-enhancing practices
• Creating shared value
• Forming strong, long-term relationships
• Innovation
Natural
Manufactured
Kaitiakitanga / Stewardship
• Optimising our physical assets
• Improving the natural environment
• Resilience to climate change
• Leading on electrification
Human
Intellectual
Ngā Tāngata / People
• Being a learning and adaptive organisation
• Health, safety and wellbeing
• Transparency
• Recognition
Financial
Arumoni / Commercial
• Sustainable commercial growth
• Renewable generation development
• Operational excellence
CONTINUOUS APPROACH TO EVALUATING MATERIAL TOPICS
17
MERCURY 2024 INTEGRATED REPORTWHAT MATTERS MOSTMENU
TE PĒWHEA O TĀ MĀTOU TUKU HIRA.
In this section, we report on material activity from the past year which
has supported us to reach our long-term aspirations. We reflect on our
progress, share successes and how we have responded to challenges
we have encountered.
Maraetai hydro station.
18
MERCURY 2024 INTEGRATED REPORTMENU
DELIVERING
VALU E AT
A GLANCE.
+ KEY TOPICS
• Delivering more solutions
and benefits
• Helping customers shift
their energy use
• Refining our approach
to hardship
+ KEY TOPICS
• Continued execution of
new generation at pace
• A premium pipeline
• Harnessing technology
for innovation and
performance
+ KEY TOPICS
• Evolving energy policy
and markets for a
changing world
• Creating a shared
approach to Aotearoa’s
energy transition
• Strengthening our
capability to work
with Māori
+ KEY TOPICS
• Empowering talent
• Evolution of our
operating model
• Pursuing safety citizenship
+ KEY TOPICS
• Investing in our
hydro assets
• Progressing towards our
Net Zero commitment
• Recycling components
from Southdown
power station
CONNECTIONS WITH:
CONNECTIONS WITH:
CONNECTIONS WITH:
CONNECTIONS WITH:CONNECTIONS WITH:
– KEY RISK AREAS
• Safety and wellbeing
• Compliance and regulatory
• Reputation
• Operational
– KEY RISK AREAS
• Operational
• Financial
• Compliance and regulatory
– KEY RISK AREAS
• Safety and wellbeing
• Compliance and regulatory
• Reputation
• Operational
• Financial
– KEY RISK AREAS
• Safety and wellbeing
• Operational
• People
– KEY RISK AREAS
• Safety and wellbeing
• Compliance and regulatory
• Reputation
• Operational
• Financial
1. KIRITAKI /
CUSTOMER
5. ARUMONI /
COMMERCIAL
2. KŌTUITANGA /
PARTNERSHIPS
4. NGĀ TĀNGATA /
PEOPLE
3. KAITIAKITANGA /
STEWARDSHIP
19
MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
1. KIRITAKI
/
CUSTOMER.
DELIVERING MORE SOLUTIONS
AND BENEFITS
During the year, we undertook a significant amount
of activity centred on innovation, including giving
customers access to a broader range of solutions,
benefits and service features.
This included completing the integration of Mercury
and Trustpower (people, processes, systems) following
our acquisition of the Trustpower retail business
in May 2022.
The Retail Integration programme harnessed
the strengths of both businesses, technology
and customer insights and spanned many facets
of our retail offering, including:
• products, services and offers, including adding
a range of telecommunications solutions, helping
more New Zealanders connect to high speed fixed
or wireless broadband services;
• giving all customers access to the Mercury Rewards
programme and bundling benefits;
• bringing additional service features to all customers,
such as easy-to-access usage data, empowering
customers to make informed decisions about their
energy consumption;
• a refreshed website and improved app functionality,
including an updated MyAccount portal, which
gives customers flexibility to manage many aspects
of their account themselves;
• introduction of an enhanced chatbot, which
supports our entirely New Zealand-based customer
service team to manage customer enquiries;
• a new-look customer bill, which was re-designed
based on customer insights to deliver improved
ease of understanding and clarity;
• offering a wider range of payment and service
solutions, including SmoothPay which enables
customers to pay a regular fixed amount over
the year to help avoid large bills over winter.
Alongside the Retail Integration programme, we
also delivered other programmes of work focussed
on innovating for customers.
HELPING CUSTOMERS SHIFT THEIR
ENERGY USE
We undertook several projects and trials in FY24
focussed on helping customers shift their energy
use to off-peak times. This supports our strategic
objective to accelerate the country’s shift to a low-
carbon future, by helping manage the load on the
national grid at peak times. We will take insights from
these to further develop how we support customers
through the energy transition.
We have completed an EV Smart Charge trial to
test a smart charging system that enables two-way
communication between EVs and the grid, optimising
the charging process. Participating customers set their
charging preferences via the Mercury Charge app,
Sharon Carvalho and Sarah Whalen.
plugged in their EV, and then we used various grid
scenarios to study how this system behaves in different
situations. Customers gave feedback throughout the
trial, which will help shape our next steps.
Meanwhile, we have been running a scale Hot Water
Load Control trial during winter. We have trialled
different control periods tailored to household
historical usage patterns to ensure little to no impact
to customers. We have also begun a Time of Use trial,
which involves giving participating customers pricing
that varies across the week to encourage them to shift
their energy use away from peak periods.
The sale of natural gas is our second largest
emissions source. To support the reduction of these
emissions, we have started providing our gas customer
base with information about the future of natural
gas and their energy options. We have also begun
investigating opportunities to offer solutions that will
enable our customers to transition to electric alternatives.
We anticipate providing these in partnership with other
providers, such as our long-term partner Samsung.
Further information about our approach to reducing
emissions is available in Kaitiakitanga/Stewardship
and our Climate Statement.
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MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
REFINING OUR APPROACH TO HARDSHIP
Managing affordability will be a key challenge as
the energy transition progresses, with a variety of costs
rising and investment required in critical electricity
infrastructure, as covered in Kōtuitanga/Partnerships.
We recognise any change to affordability has
an impact on consumers as they juggle multiple
household cost increases, but especially those
experiencing hardship. We continue to refine our
approach to supporting customers in hardship
to meet their unique and changing needs, including
developing innovative solutions that address the
broader challenges related to affordability.
To enhance our direct support, we have made our
Here to Help programme, which was piloted in FY22,
permanent. This includes having a dedicated team
supporting customers in hardship with tailored
solutions. To improve visibility and accessibility
of Here to Help, we created a new payment support
webpage and posters (both available in multiple
languages) and promoted these in the community.
We have developed close connections with community
groups over more than 15 years via dedicated
community engagement leaders, recognising
the critical role these groups play in supporting
households experiencing hardship. With this
foundation, we undertook a 2-year joint research
project into hidden hardship with community
groups and Genesis, which completed in February.
The research revealed a lack of trust in corporates
generally and other systemic issues were often barriers
to households seeking support. Community groups
suggested four key principles for all industry to focus
on: building trust, giving community a voice and
supporting their work and developing mana-enhancing
practices. We have seen great early success from
embedding these principles into our customer care
programme and progressing initiatives collaboratively
with community providers. For example, in partnering
with non-governmental organisations (NGOs) we have
been able to connect with customers we have in some
cases had no contact with for years. We have then
supported these customers to get on top of their account
with wraparound Here to Help support, with the NGOs
also able to provide the whanāu other support.
Further, we are nearing the completion of a two-year
Winter Energy Study in partnership with Kāinga Ora -
Homes and Communities, trialling how capped bills
could benefit customers over winter. We will consider
feedback from participating customers, including
a notable lift in household wellbeing for some, and our
own learnings as we continue to develop our approach
to hardship. We also continue to provide significant
commercial support to social electricity providers Nau
Mai Rā and Toast Electric, as well as support several
programmes managed by the Electricity Retailers’
Association (ERANZ) including a credit scheme
for those most affected by the low fixed user charge
tariff phase out.
Moving forward, we’re focussed on continuing
to enhance our customer care programme, as well
as help drive greater industry-wide action as a member
of a newly established ERANZ Consumer Care
Leadership Group.
Sustainable Energy Advice CEO Dr Sea Rotmann, Mercury Customer Care Manager Leapagatele
Helen Tua and Otara Health CEO Sosefina Paletaoga at the launch of the hidden hardship research.
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MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
EVOLVING ENERGY POLICY AND MARKETS
FOR A CHANGING WORLD
It is critical that there are robust and enduring regulatory
frameworks, which support the scale and pace of
change required for the transition. Over the period,
we observed a national shift towards enabling
infrastructure development and co-ordination together
with adaptation due to recent experience of weather-
related events.
We actively participated in policy and market evolution
dialogue, both in collaboration with others and through
our own initiatives. Front of mind for us is the need to
balance all arms of the energy trilemma through the
transition, including:
Security: The need to ensure the lights stay on for
New Zealanders through the energy transition was
pulled sharply into focus for the public following the
10 May grid emergency notice and recent gas supply
challenges. We continue to advocate strongly for the role
of gas in the energy system as an effective transition
fuel. We expect the Market Development Advisory
Group’s work on wholesale market evolution
to remain a focus for the Electricity Authority.
There are foundational elements of this workstream
we are supportive of. However, we would like to see
it further explore the underlying market incentives
and structures for the transition, given heightened
challenges in maintaining reliability.
Affordability: Cost of living challenges continued
across the board, resulting in ongoing pressure for
many households. In May, the Commerce Commission
released its draft decision on price pathways for
Transpower and most network companies for 2025
to 2030, which will have a flow-on impact to consumers.
We are working through what this will mean for our
customers and working with industry bodies to ensure
changes are communicated in a clear and cohesive
way. Looking forward, ongoing tensions between
building for future needs while managing immediate
affordability challenges will likely persist. We will
continue to engage with government and others,
alongside taking action to help support consumers,
as outlined in Kiritaki/Customer.
Sustainability: We support the fast-track consenting
regime as an important enabler of renewable
infrastructure. We welcome a more efficient approval
process for significant infrastructure projects and greater
consideration of the long-term contributions these can
make to New Zealand’s sustainable future. Through
this process, we have nominated five renewable projects
for fast track, as outlined in Arumoni/Commercial.
Regardless of process, we remain committed to
developing and delivering projects in consultation with
iwi, community and stakeholders, always considering
their environmental impact. We continue to engage on
broader resource management reform which is needed
to enable the scale and pace of investment in renewable
electricity generation, transmission and distribution
needed to achieve the government’s goal of doubling
renewable energy. We are looking to the policies and
strategies in the second Emissions Reduction Plan
to adequately support the Emissions Trading Scheme
as an important lever in reducing emissions during
2026-2030 and beyond.
We believe New Zealand needs to prioritise
creating a smart energy system to unlock innovation,
get more out of our investments and ultimately, better
2. KŌTUITANGA
/
PARTNERSHIPS.
manage demand. There are incremental changes
across the system that can be made. For major change,
policy that paves a quick, smooth path to a smart
system is needed. We are supportive of the work
underway to progress this thinking, including through
forums such as the FlexForum. This will also be a likely
area of focus for the proposed energy transition
framework, covered in the following section.
We are also supportive of initiatives to encourage
green investment, including the creation of consistent
rules that align with best international practice.
CREATING A SHARED APPROACH TO
AOTEAROA’S ENERGY TRANSITION
A key activity for the energy sector over the period
has been to create an enduring mechanism to bring
together key participants of the electricity sector to
enable a shared approach to collaborate in
transitioning Aotearoa New Zealand’s energy system.
To do this, an energy transition framework has been
proposed, facilitating collaboration on the shared
challenges in transitioning the energy system. The
framework will provide a mechanism to surface
priority themes of critical importance to
decarbonisation and enable industry and government
to catalyse action based on a whole-of-system view.
In order to move at the pace required to support the
transition, we believe it is vitally important that we
work with others in a transparent and effective way.
We have contributed resources towards establishing
the framework, as have our peers.
Turitea wind farm.
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MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
We have supported Ngāti Tahu-Ngāti Whaoa with
many specialist projects over the years, including eel
research, wetland restoration, rangatahi leadership
programmes, pest control, waka for waka ama
and a trailer to transport waka, summer partnership
interns and a book titled Ngāti Tahu-Ngāti Whaoa
Social and Cultural Report on Te Awa O Waikato.
Further, in FY24 a Kawenata Agreement was signed
between Te Runanga o Ngāti Tahu-Ngāti Whaoa
and Mercury to further opportunities to work together.
Initially, this framework targets energy transition
concerns specific to the electricity system and
the key role gas (and other fuels) play in that part
of the energy sector. Looking forward, the intent
is to expand membership and scope to provide
a comprehensive representation of the entire
energy system.
A Chief Executive Level Steering Group has been
established, with 16 member participants from across
the sector, and an independent chair has been
appointed. We continue to engage with a broader
suite of stakeholders across the public and private
sectors to consider further opportunities to
participate with the framework.
While the framework will be a vehicle for collaboration
across the sector, a strong energy consumer lens
has been applied. We need to engage constructively
with the energy users; and provide clarity on the transition
and our sector’s role. To do this, the framework aims
to provide transparency on the actions we are taking
to support the transition and increase knowledge
on what the transition might look like for energy users.
The framework intends to disclose the metrics
and measures that will be tracked in the interest
of accountability, subject to Steering Group endorsement.
STRENGTHENING OUR CAPABILITY
TO WORK WITH MĀORI
We are continuing our focus on developing our
partnerships with iwi/Māori. This includes iwi we
have formal partnership agreements with and other iwi
relationships. We also continue to develop and evolve
our commercial partnerships with Tuaropaki Trust
and Tauhara North No.2 Trust, which underpin several
of our geothermal operations.
While we have enjoyed good partnerships with
Māori in the past, we recognise the need to continue
to invest more in our valued relationships, to improve
our knowledge and understanding of tikanga, te reo
Māori and history of the iwi and hapū we work with.
To help achieve this, we have launched Pūkenga,
an internal, online resource for staff to learn more
about te ao Māori, the Māori world view. Pūkenga,
which means repository, skill or expertise, is a dedicated
resource helping staff to improve their competency
of Māori culture. It covers tikanga Māori; te reo Māori
pronunciation, specifically for our generation sites; mihi
or pepeha for introductions; waiata (songs), and
whakatauī (proverbs).
Pūkenga also features He Kohinga Kōrero, a collection
of stories of iwi Māori located near our renewable
energy generation sites. This will help staff gain
a better understanding of the history of our iwi
partners, before we start working on new projects
and initiatives together.
The goal of Pūkenga is to grow our capacity to work
with mana and comfort with our iwi and hapū partners.
This is paramount to understand how we can work
in a co-management space with iwi in the Waikato
River catchment, and with iwi groups associated
with the resources we use to generate electricity.
We are also developing a cultural capability
framework to guide and develop the way we work
with mana whenua.
Pūkenga and our cultural capability framework
are important if we want to grow opportunities
with Māori.
One example is the partnership with Ngāti Tahu-
Ngāti Whaoa. These hapū border the Waikato River
at Ōhākurī and three Mercury hydro power stations
fall in their rohe; Aratiatia, Ōhākurī and Ātiamuri.
Three geothermal power stations are also in their
rohe: Ngā Tamariki, Rotokawa and Ngā Awa Purua.
We worked with Tauhara North No.2 Trust and Ngāti
Tahu-Ngāti Whaoa to develop the project to expand
Ngā Tamariki geothermal station, in order to ensure
the expansion considered the long-term sustainability
and cultural significance of the whenua. This work
is covered in Arumoni/Commercial.
Mercury Chair Scott St John, Chair of Ngati Tahu - Ngati Whaoa Roger Pikia, Chairperson of Tauhara North No.2 Trust Wikitoria
Hepi Te Huia, and Project Engineer Ormat Systems Ltd Omer Cohen at Ngā Tamariki expansion groudbreaking event.
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MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
INVESTING IN OUR HYDRO ASSETS
Our hydro stations on the Waikato River were
constructed from the late 1920s to the 1970s
and have worked hard to keep the country powered.
Our long-term hydro refurbishment programme
will protect these assets to ensure they can manage
water flow in a way that looks after the environment
but can also optimise energy from the awa.
The Karāpiro refurbishment was a primary focus
of our refurbishment programme during FY24.
Work to commission the second of its three new
generating units (generators, turbines, and governors)
is planned for August 2024.
Our project partner ANDRITZ Hydropower, a specialist
engineering firm from Austria, continue to gather
pace on the project.
There were delays during the first unit's installation
as our team worked through challenges around
components and assembly. Those lessons have
allowed us to refine our processes to ensure more
efficient and seamless installation of the second
and third units.
The road across the top of the Karāpiro Dam has
been closed during this work and we are aware of
the inconvenience this has caused commuters and
the local communities. We expect that work to install
the third unit will begin in October 2024 and the full
project is scheduled for completion in September
2025, after which we will be able to reopen to road.
The Karāpiro project is valued at ~$90m and will
enable the station to provide an additional 5MW
per unit, increasing capacity from 96MW to 112.5MW
(32GWh/year). The Karāpiro upgrade will lead
into a larger programme of works planned for the
next decade involving upgrading 13 key generators
and turbines at Ātiamuri, Ōhakuri and Maraetai I
hydro stations.
The next cab off the rank is Maraetai, with site
works planned for 2027. All its turbines, generators
and governors will be replaced. The upgrades will
add about 32 GWh annual output to the station
(an estimated additional 5-8MW per generating unit).
At Ātiamuri, work is scheduled for 2028 to upgrade
all four of its generators. These upgrades will add
an estimated 2-4MW per unit and 18GWh of
additional generation.
We replaced the four turbines at Ōhakuri from 2011
to 2014 and in 2029 the generators will be upgraded
to maximise power output. The increase is estimated
to be 2MW per unit and generate an additional 25GWh
for the station. At the completion of this programme
in 2032, an additional 75GWh of generation will be
provided per annum from the upgrade assets.
We also have planned substantial rehabilitation work
on two key areas of the Waikato Hydro System, so
they remain functional and safe places for everyone.
The first is on the Taupō gate structure, which helps
manage the flow of the Waikato River as it leaves Lake
Taupō. Regular maintenance checks have identified
that while it is safe for everyday use, maintenance
works are required and development of a long-term
strategy to achieve modern day engineering standards.
The second is at Arapuni Dam, where work is needed
to improve the left abutment seepage controls
with a modern equivalent.
3. KAITIAKITANGA
/
S T E WA R D S H I P.
Ohakuri hydro station.
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MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
For F Y25:
• Implement erosion control measures up
and downstream of the Taupō gates structure
and refurbish one of the gates. Continue engaging
with iwi and hapū partners and Taupō District
Council, as well as investigating alternative future
options for the structure.
• Investigate options to enhance the left abutment
seepage controls at Arapuni Dam and apply for
consents for the programme of works.
For F Y 26 -2 7:
• Progress ongoing maintenance works at the Taupō
gates and develop long term asset strategy with
iwi and Taupō District Council. Begin physical
rehabilitation, construction work on Arapuni Dam.
Completion tentatively mid 2027-28.
PROGRESSING TOWARDS OUR
NET ZERO COMMITMENT
Our near-term and long-term company-wide
emission reduction targets drive us to innovate and
collaborate for a greener future, ensuring our actions
are impactful and aligned with the Corporate Net-Zero
Standard established by SBTi. We are committed
to reducing our own emissions through the use and
exploration of new technologies and reducing indirect
emissions by collaborating with others.
Some of the current efforts we are undertaking
to achieve Net Zero by 2040 are as follows:
Reducing our direct emissions:
• Building renewable generation.
• Expanding reinjection of our geothermal emissions
back to the geothermal reservoirs, alongside
geothermal steam and fluid.
• Converting to a 100% electric vehicle fleet by 2030.
Reducing our indirect emissions:
• Supporting our customers to switch from natural
gas to electricity.
• Investigating biofuels and other gas alternatives.
• Helping our large customers to decarbonise
through direct power purchase agreements
for renewable electricity.
• Working with staff to reduce commuting emissions.
We have outlined further detail about the actions we
are taking as a business in our FY24 Climate Action
Plan. This includes the disclosure of certain financial
commitments, demonstrating our commitment
to emissions reduction actions.
Information about our material climate-related
opportunities and risks are covered in our F Y24
Climate Statement. We have also participated in the
development of climate scenarios for New Zealand’s
Energy and Telecommunications Sectors.
RECYCLING COMPONENTS FROM
SOUTHDOWN POWER STATION
Work to recycle components from the Southdown
power station in Auckland, which we decided to
decommission in 2021, is showing promising results.
Up to 98% of the material extracted from the thermal
power station so far has been diverted from landfill
for recycling. The Ward Group, an expert in demolition
and recycling, started work on the power station
in May 2022.
As of May, 2,724 tonnes of waste had been removed,
2,662 tonnes had been recycled from the 4.3ha site.
All of the metal removed from the plant, about 2,544
tonnes, was recycled.
More substantial recycling volumes are likely to be
achieved by crushing the plant’s concrete foundations
and reusing the material. Overall, we estimate that
12,000 tonnes of concrete will be recycled, to find
new use as a subbase or as backfill material to leave
the site suitable for future industrial development.
The return on the volume of steel, copper and other
recyclable components will help pay for the cost
of demolition.
The demolition project is due to be completed
in August 2024. The Ward Group will then release
a full report showing the level of recycling achieved.
Removing components from Southdown power station.
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MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
We are focussed on having an inclusive work
environment where contributions and diverse
perspectives are valued. We recognise diversity,
inclusion and belonging are critical to attracting
and retaining top talent. We have clear goals
and targets set by the Board to track our progress,
which are summarised below, and captured more
fulsomely in Diversity, Equity and Inclusion.
EMPOWERING TALENT
During the year we made significant progress on
our journey to become a future-fit organisation.
This aims to set us up to better navigate new and
complex challenges and deliver the highest value
work. This has included further embedding
adaptive ways of thinking and working with the
help of a range of practices and tools, and a
team of internal consultants.
* At all levels.
4. NGĀ TĀNGATA
/
PEOPLE.
Shifting from traditional ways of thinking and working
has been challenging at times. For some, this is
a fundamental shift from a reliance on hierarchical
decision making to broader accountability and
decisions being made closer to the work, supported
by empowering leaders.
To support our adaptive progress, two cohorts
completed an adaptive leadership programme
during the year. These included people from across
the business (in both formal and informal leadership
roles) uplifting their skills in adaptive practice and
leadership. Participants then had the opportunity
to work together on adaptive challenges facing
Mercury, such as the need to leverage talent more
effectively across the organisation.
Taking learnings from the first programme, the
second took place over a longer period of six months
to allow participants more time to reflect and work
on the challenges. It also ended with an internal event
designed and delivered by both cohorts focussed on
sharing learning and experiences. This event aimed
to further solidify learnings and introduce others to
adaptive leadership principles and techniques. Following
the success of this programme, we will run it again with
a third cohort this year.
Interlinked with our adaptive journey is our continued
focus on uplifting diversity, equity and inclusion at
Mercury. This is driven by our belief that embracing
the many backgrounds, views and capabilities of
our people makes us stronger as an organisation.
We also recognise that having an inclusive
environment provides a feeling of safety, encouraging
people to have a voice and drive innovation.
Darryl Bayliss and Tom Hurdley participate
in the Adaptive Leadership programme.
* At all levels
TargetProgress
against
target
FY24 performance
Gender diversity: 40% male, 40% female
with the balance being any gender*
Pay Equity: 100%*96.7%
Ethnic diversity: 15% Māori, 15% Asian, 10% Pasifika*
7% Māori, 19% Asian, 5% Pasifika (Employees)
7% Māori, 11% Asian, 2% Pasifika (People Leaders)
Age diversity: Benchmarked to national median
41.9
SNAPSHOT OF PERFORMANCE AGAINST TARGETS
Male
Female
All employees
49%51%
People leaders
54%46%
EMT
71%29%
Lorem ipsum
Board
62.5%37.5%
Key:
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MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
To achieve cohesive change, leaders worked
collaboratively to shape these changes. They
began by defining design principles to help guide
decision making and discovery work. Considerable
thought went into ways of working and leadership
requirements to ensure work would flow and be
delivered to meet strategic outcomes. As a result of
this thinking, our structure has evolved to give teams
the ability to flex to focus on the highest priority work.
On rollout of this change, wraparound support for
people was provided, recognising that change can
be uncomfortable.
The selection process for newly established roles
has prioritised diversity, equity, and inclusion. Interview
questions were shared in advance, emphasising key
leadership capabilities and mindsets such as the
willingness to create a psychologically safe environment.
This transparency aimed to encourage traditionally
hesitant individuals to envision themselves in these roles.
Given the scale of the Customer and People
Experience and Technology operating model, a key
challenge was gaining alignment with design leads
on all aspects of the future state. Acknowledging
how unrealistic perfection is, and to ensure we
minimised the period of uncertainty for our people,
there were some unresolved elements in the initial
rollout. However, this approach facilitated a
constructive consultation process, with genuine
intent to seek and incorporate feedback.
With the new operating models now in place, our
focus shifts to coaching and supporting individuals
in adaptive ways of working, leadership, culture,
governance, and planning. We’re also exploring how
other parts of Mercury could benefit from adopting
elements of an adaptive operating model.
“The Adaptive Leadership programme challenged me
to confront my limitations and explore a more expansive
view of leadership and change. I discovered the
transformative power of a growth mindset, which
not only changed how I showed up in the business
but also how I showed up for myself. As a result, when
the opportunity arose, I accepted the role of Adaptive
Consultant to help the business, my colleagues and
my friends benefit from the learning that means
so much to me.”
- Sean Hanson, who recently changed roles from Go To Market Delivery Specialist
to Adaptive Consultant.
A third iteration of our Diverse Emerging Leaders
programme will be completed in August. Growing the
leadership capability of diverse leaders and encouraging
a sense of belonging is critical to our adaptive success.
Other activity, such as employee network groups, also
continues to contribute to creating an environment
of belonging and inclusion at Mercury.
Moving forward, Adaptive at Mercury will progress
from being an emergent practice, to being integrated
into daily operations as more of the business adopts
adaptive mindsets, leadership, practices and tools.
This means all our people will be better aligned
to our purpose and strategy, enabling greater flow
and delivery of the most valuable work.
EVOLUTION OF OUR OPERATING MODEL
To help us to shift to a more adaptive organisation,
we continued to evolve the way we operate. During
the year, we embarked on a significant programme of
change, introducing new operating models for multiple
business units. The scope for these models was wide
– covering strategy, structure, process, people and
technology and impacted a little over 1,000 roles
in total (including a slight reduction in headcount).
The Sustainability team’s operating model was the first
cab off the rank. It focussed on better aligning delivery
of work more closely to outcomes the team delivers,
supporting greater cross-functional working and growing
capability in key areas required for future success.
The Customer and People Experience and Technology
operating model took a system-wide view of how
teams are set up to help deliver maximum value
across the end-to-end customer journey. To achieve
this, outcomes focussed on flow of delivery (bringing
business and technology closer together), empowered
talent (creating a modern learning organisation that
connects, empowers and grows people) and getting
closer to customers (setting up to respond and adapt
quickly to changes in the market).
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MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
PURSUING SAFETY CITIZENSHIP
We continued to prioritise health, safety and wellbeing
during the year. Drawing on the Sentis Safety Culture
Maturity model, we have self-assessed Mercury as
sitting at ‘private compliance’ and agreed an ambition
to reach the gold standard of safety culture – ‘safety
citizenship’ – by December 2026.
A number of milestones have been set to help
us measure progress towards this ambition:
• Dec 2024 – Our people are taking responsibility
"for themselves and each other, armed with the
right tools to deliver safe outcomes. This sense
of collective ownership is reflected in improvements
to key safety indicators;
• Aug 2025 – Our safety practices, policies and
mindset are at a high standard, considered a
reference point for our peers and other sectors
in Aotearoa New Zealand;
• Dec 2026 – Our safety practices, policies and mindset
are core to everything we do, and go above and
beyond when compared to best practices worldwide.
WE ARE HERE
IN 2-3 YEARS WE
WILL BE HERE
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MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
We identified three key areas of focus to help us get
there: rituals and routines, critical risks and health and
safety data, acknowledging that safety leadership from
our people will underscore these. We made significant
inroads on this journey over the period, including:
• Rituals and routines: We introduced a standardised
leader routines pilot in digital format and are installing
it across generation sites. Leader routines include
“toolboxes” (pre-shift safety sessions), short interval
controls (periodic safety observations, checks
and corrective actions) and handovers (critical data
captured for the next shift, creating a continuous
loop of improvement). These routines have been
designed to improve stability, delegation of work,
role clarity and quality of safety activities.
• Critical risks: We launched a ‘lifesaving controls’
initiative, profiling eleven critical health and safety
risks across our business that could kill or seriously
injure. Lifesaving controls have been developed
to set expectations for eliminating or significantly
reducing risks. To embed this, we have undertaken
an education programme, empowering all to
prioritise safety.
• Health and safety data: We worked on
benchmarking data at every level of the enterprise,
first understanding how health, safety and wellbeing
data is currently used to make decisions. The initial
area of focus is our customer frontline teams, with
a strong focus on wellbeing. We have sought to take
a science-based approach to this, including using
data to help inform support. We will be introducing
technology that identifies individuals with
unsustainable workloads, provide in the moment
advice for those under pressure and individual
data points for team leaders as well as aggregated
data for monitoring trends.
Underpinning our success in this space is diversity,
equity and inclusion. Being part of a team where
there is diverse thought and experience is a key
element to keeping our people safe, and we continue
to integrate Mercury’s diversity, equity and inclusion
approach into this programme of work.
During the year, Mercury agreed to an Enforceable
Undertaking with WorkSafe in response to the
uncontrolled release of geothermal steam at our
Rotokawa power station in 2021. The Enforceable
Undertaking – a binding commitment to improve
safety – is now underway and we expect to complete
this in February 2026. Key work includes further
education and coaching, autonomous inspections
of certain sites, sharing learnings with others and
support of a health and safety scholarship. We expect
this will deliver benefits to not just our people but also
to our sector and the community.
LIFESAVING CONTROLS.
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MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
CONTINUED EXECUTION OF NEW
GENERATION AT PACE
Developing more renewable generation remains
a key growth area for Mercury and is one of the most
meaningful ways we can contribute to New Zealand
becoming a lower emissions economy through
electrification.
We committed more than $700 million in new
renewable generation during the financial year
through two projects – the expansions of Ngā
Tamariki geothermal station and Kaiwera Downs
wind farm. The third project we had intended
to execute this financial year, Kaiwaikawe wind farm,
was delayed due to procurement and construction
logistics, but is now nearing final investment decision.
The $220 million expansion of Ngā Tamariki
geothermal station, to add a fifth generating unit
at the station, will boost the station’s generating output
by 46MW (390GWh per annum). We are working
with global geothermal manufacturer Ormat to deliver
the project, which we developed with support from
our commercial partner Tauhara North No.2 Trust.
This is an important addition to our portfolio, proving
additional 24/7 baseload energy which complements
intermittent renewables like wind. First generation from
the fifth unit is expected in late 2025.
We completed the 43MW (147GWh per annum)
stage one of Kaiwera Downs wind farm in November
under its $115 million budget and on schedule –
a credit to our people, delivery partners and the
support of the community. In June, we began
construction of the $486 million, 155MW (525GWh
per annum) second stage of this wind farm, with
the support of our delivery partners, Vestas, Higgins
and Electronet. Full generation is expected by late
2026. When Kaiwera Downs wind farm is complete
its total capacity will be 198 MW, making it the
second largest wind farm in New Zealand after
our Turitea wind farm.
Our expansion of Kaiwera Downs was confirmed
following the signing of a long-term agreement
with New Zealand Aluminium Smelters (NZAS).
We are pleased to have played a role in helping
NZAS commit to a long-term presence in Aotearoa,
providing welcome market confidence.
Our agreement takes effect from January 2025
for a period of up to 20 years, with baseload volume
stepping up from 50MW to 75MW in 2027.
Having guaranteed consumers of renewable
electricity provides further certainty in New Zealand’s
future demand profile, underpinning the scale and
pace at which we continue to build more renewable
electricity for Aotearoa. In addition to our NZAS
agreement, we have Power Purchase Agreements
with a number of large commercial customers.
Looking forward, we are focussed on continuing
to navigate challenges in the operating environment,
such as higher costs, to ensure continued execution
of renewable generation projects at pace. A forward
view of activity is covered in the following section.
5. ARUMONI
/
COMMERCIAL.
Ngā Tamariki geothermal station.
30
MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
In January, we issued a request for Expressions of
Interest for an offtake agreement for 100MW of solar
energy, commencing in 2026, which we saw as an
opportunity to further diversify our renewable energy
portfolio. This garnered a variety of responses, but
after thorough examination we determined our own
development options presently provide greater value
than an agreement of this nature would. We gained
valuable insight from this process, which we may
consider again in the future.
HARNESSING TECHNOLOGY FOR
INNOVATION AND PERFORMANCE
During the year, we embarked on a major technology
transformation programme, including significant
investment in new platforms to enable enhanced
customer and employee experiences.
As part of the integration of Mercury and Trustpower,
we migrated our Mercury retail customers on to
Gentrack’s meter-to-cash solution, for billing and
payment management of our utility services. This
enables us to deliver a range of telecommunications
and energy bundles for our customers under a new
suite of systems. We are also migrating our large
commercial customers to a new technology stack,
with Robotron as the key software partner. We plan
to migrate to the Robotron solution in FY25.
We have also formed small multi-disciplinary teams
to further explore the harnessing of AI and how we
support the capability required to safely explore user
case opportunities. The team continues to review
opportunities to maximise business value from AI
while emphasising ethics and eliminating bias.
Generative AI is being tested to analyse customer
sentiment, topics, tone and agent engagement,
helping to discover trends, opportunities, churn risks
and innovative ideas for decision-making. Microsoft’s
A PREMIUM PIPELINE
We have a premium generation development
pipeline and remain confident we have the resource
and capability to develop this ourselves alongside
our delivery partners, further supporting the
electrification opportunity ahead.
As noted in Kaitiakitanga/Stewardship, we see making
the approval process for significant infrastructure
projects quicker and more efficient as an important
enabler of renewable electricity generation projects
being delivered at the scale and pace required to
enable Aotearoa to meet its climate change goals.
To that end, we have put forward five projects
at varying stages of development for the fast-
track consenting programme. This includes two
new projects – a proposed grid-scale battery at
Whakamaru hydro station and a wind farm west
of Huntly, as well as the previously signalled Puketoi
wind farm, repowering of Tararua wind farm (through
the installation of new turbines) and stage 2 of
Mahinerangi wind farm. The Whakamaru Battery
Energy Storage System would be our first grid-scale
battery, capable of re-distributing energy to the
national grid when demand is high.
AI Copilot technologies are being trialed across
various business groups to drive improvements in
everyday productivity.
Meanwhile, work is underway to replace our legacy
finance system with Workday Financials. The new
cloud-based system and associated processes
will help drive performance and growth across our
business. We plan to migrate to Workday Financials
in FY25.
We are also trialling an autonomous vehicle to
enhance work safety at our Rotokawa geothermal
station near Taupō, as part of an enforceable
undertaking agreement with WorkSafe.
The new autonomous vehicle will roam the Rotokawa
station, taking pictures of valves, pumps and pipes
and feeding the data to the station’s AI system.
The robot workmate has been fitted with infra-red
sensors, cameras, gas sensors and sound sensors, to
help minimise staff exposure to hazardous situations.
In time it will provide data to identify trends and help
staff be more focused with plant maintenance.
Staff trialling the robot aim to have it operational at
the Rotokawa station in FY25. It will be further tested
to learn how the technology can complement the
safety measures and protocols we have at our other
power generation sites.
Autonomous vehicle 'Optimus Brine' being trialled at Rotokawa geothermal station.
31
MERCURY 2024 INTEGRATED REPORTHOW WE DELIVER VALUEMENU
TE TITIRO KI NGĀ TATAU.
This section explains how our integrated thinking, our decisions and actions
play out in financial results. We provide commentary on our financial
performance for the year to the end of June 2024 compared with prior
years, as well as our auditor's report and our financial statements. Segment
reporting has been set out so you can clearly see the financial dynamics
of our generation operations as distinct from our retail operations.
CONTENTS.
33 FINANCIAL COMMENTARY
34 FINANCIAL TRACK RECORD
35 INDEPENDENT AUDITOR'S REPORT
GROUP FINANCIAL STATEMENTS
38 CONSOLIDATED INCOME STATEMENT
38 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
39 CONSOLIDATED BALANCE SHEET
40 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
40 CONSOLIDATED CASH FLOW STATEMENT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
41 GENERAL INFORMATION AND SIGNIFICANT MATTERS
A. FINANCIAL PERFORMANCE
42 A1. REVENUE
42 A2. SEGMENT REPORTING
45 A3. TAXATION
B. OPERATING ASSETS
46 B1. PROPERTY, PLANT AND EQUIPMENT
48 B2. INTANGIBLE ASSETS
C. WORKING CAPITAL AND PROVISIONS
49 C1. RECEIVABLES
50 C2. INVENTORIES
50 C3. PROVISIONS
D. FUNDING
51 D1. SHARE CAPITAL AND DISTRIBUTION
51 D2. BORROWINGS & NET INTEREST
53 D3. COMMITMENTS AND CONTINGENCIES
54 D4. RECONCILIATION OF PROFIT TO OPERATING CASH FLOWS
E. GROUP STRUCTURE
54 E1. ASSOCIATES & JOINT ARRANGEMENTS
55 E2. RELATED PARTY TRANSACTIONS
F. RISK
56 F1. DERIVATIVE FINANCIAL INSTRUMENTS
59 F2. FINANCIAL RISK MANAGEMENT
G. OTHER
61 G1. SHARE-BASED PAYMENTS
61 G2. SUBSEQUENT EVENTS AND OTHER MATTERS
32
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
FINANCIAL COMMENTARY.
Mercury’s FY2024 EBITDAF is $877 million, up by $36
million on the prior year of $841 million. This result
reflects strong generation performance and the
impact of significant investment to increase scale
with construction of stage 1 of the Kaiwera Downs
wind farm being completed during the year.
OPERATIONAL ACTIVITY
At 4,096GWh, Mercury’s hydro generation was
down 1,113GWh on the prior year’s record generation.
This generation was still at average levels, despite
30th percentile inflows into the Waikato catchment
during the financial year. Lake Taupō ended the year
with storage below average by ~103GWh. Geothermal
generation was up 264GWh on the prior year due
to improved resilience. Wind generation increased
591GWh with the addition of new generation from
Turitea South and stage 1 of the Kaiwera Downs
wind farm following completion of construction
in early FY2024.
The decreased hydro generation meant that net
position decreased from 560GWh long last year
to 362GWh long for FY2024. In our customer business,
we again saw lifts in customer yields across all customer
segments. Yields in the commercial and industrial
segment (physical and financial) increased by $9/MWh
over the period. Average mass market yields also
increased $9/MWh.
OPERATING EARNINGS (EBITDAF)
Mercury’s EBITDAF of $877 million rose $36 million
from the previous year, as explained in the following
paragraphs.
Mercury’s trading margin of $1,228 million was up
$65 million from the previous year’s trading margin,
driven by high wholesale electricity prices and new
wind generation from Kaiwera Downs.
Operating costs increased by $39 million on the
prior year, primarily due to increases in employee
costs with increased FTEs, and new generation
maintenance costs relating to the operation
of Kaiwera Downs.
PROFIT FOR THE YEAR
Mercury’s net profit after tax of $290 million was
up by $178 million from the prior year, primarily
due to an uplift in EBITDAF ($36 million), being
an uplift in underlying performance of 4%, changes
in unrealised gains/losses on unhedged financial
instruments ($179 million), changes in the fair
value of carbon ($44 million), revaluation losses
and impairment in FY23 ($53 million), offset
primarily due to: interest costs ($34 million)
and tax expense ($82 million).
CAPITAL STRUCTURE AND DIVIDENDS
Net debt was $1,953 million as at 30 June 2024,
an increase of $46 million from the prior year.
The increase in net debt follows commencement
of construction of stage 2 of the Kaiwera Downs
wind farm and the addition of a fifth generating
unit at Ngā Tamariki geothermal station.
Treasury stock of $44 million was re-issued
through FY2024 in relation to Mercury’s dividend
reinvestment plan (DRP). The company’s gearing
level is calculated at 2.0 times debt/EBITDAF after
adjusting for S&P Global treatment of Mercury’s
hybrid debt and provisions. Consistent with the
previous year, the gearing ratio remains at the
low end of Mercury’s target range of 2.0x to
3.0x debt/EBITDAF supporting our S&P Global
credit rating of BBB+. At year end, Mercury held
6 million shares as treasury stock, has available
debt headroom of $340 million net of short-term
commercial paper on issue and held cash and cash
equivalents of $44 million. This continues to provide
balance sheet flexibility for growth over and above
current commitments.
A fully imputed ordinary dividend of 14.0 cents per
share (cps) final dividend has been declared. This brings
the full-year ordinary dividend to 23.3cps, up 7%
on prior year (from 21.8 cents per share), marking our
sixteenth consecutive year of ordinary dividend growth.
Under the terms of Mercury’s DRP, dated 22 February
2022, shareholders may elect to receive the dividend
either wholly or partially by receiving Mercury ordinary
shares in lieu of cash. The Board has determined that
shares issued under the DRP in respect of the 2024
final ordinary dividend will be issued at a discount
of 2.0% to the daily volume weighted average share
price calculated in accordance with the DRP terms
and conditions.
CASH FLOWS FROM OPERATING
ACTIVITIES
Net cash provided by operating activities represents
cash flows from the sale of electricity, gas, and
telecommunication services, along with the costs
associated with their sale and the cash costs
of interest and taxes. Cash flows from operating
activities were up $34 million this year, in line
with increased EBITDAF.
BALANCE SHEET
Total assets of the company increased by $376
million, due mainly to higher receivables resulting
from higher wholesale prices, and higher property,
plant and equipment resulting from continued
investment in generation development.
Stay in business capital expenditure (CAPEX) increased
$23 million on the prior year at $142 million, with good
progress made on the drilling campaign, which will
continue into the next financial year. Growth CAPEX
was down $23 million on the prior year to $154 million
with completion of the first stage of Kaiwera Downs
wind farm early in FY2024 and the beginning
of construction of the second stage of Kaiwera
Downs wind farm in June which is expected to
be fully operational in the first half of FY27.
33
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
For the year ended 30 June ($ million)2024
Restated
2023
2
202220212020
1
Income statement
Trading margin1,2281,163745616652
EBITDAF877841581463490
Net profit for the year290112
469141209
Balance sheet
Total shareholders' equity4,8494,8634,7524,1863,733
Total assets9,7959,4199,6317,9786,877
Total liabilities4,9464,556
4,8793,7923,144
Cash flow
Operating cash flow612578352338352
Investing cash flow(366)(271)(534)(296)(194)
Financing cash flow(277)(297)
8442(173)
Capital expenditure
Total capital expenditure2962961,420250275
Growth capital expenditure1541771,352194165
Stay-in-business capital expenditure142119
6856110
Other financial measures
Free cash flow470459284282242
Ordinary and special declared dividends325302275231215
Ordinary dividends per share (cents)23.321.820.017.015.8
Basic and diluted earnings per share20.858.1134.3210.3615.36
Net debt1,9531,9071,9611,3291,149
Gearing (net debt/net debt + equity, %)28.728.229. 224.123.5
Debt/EBITDAF (x)
3
2.02.0
2.92.52.2
Operational measures
Total recordable injury frequency rate (TRIFR)
4
0.430.490.600.641.26
Sales to customers (FPW, GWh)6,6696,7495,1054,5224,361
Electricity customers ('000)576590
574328348
Electricity generation (GWh)8,7809,0387,4996,2056,331
1
Restated for change in accounting policy in relation to configuration and customisation costs incurred in implementing SaaS arrangements.
2
Restated for change in valuation of Power Purchase Agreement. See Significant Matters.
3
Restated and adjusted for S&P treatment.
4
Per 200,000 hours; includes on-site employees and contractors.
FINANCIAL TRACK RECORD.
Arapuni hydro station.
34
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance
in our audit of the consolidated financial statements
of the current year. These matters were addressed
in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion
on these matters. For each matter below, our
description of how our audit addressed the matter
is provided in that context.
We have fulfilled the responsibilities described in the
Auditor’s responsibilities for the audit of the consolidated
financial statements section of the audit report, including
in relation to these matters. Accordingly, our audit
included the performance of procedures designed
to respond to our assessment of the risks of material
misstatement of the consolidated financial statements.
The results of our audit procedures, including
the procedures performed to address the matters
below, provide the basis for our audit opinion on
the accompanying consolidated financial statements.
To the shareholders of Mercury NZ Limited
Report on the audit of the consolidated financial
statements for the year ended 30 June 2024
The Auditor-General is the auditor of Mercury NZ
Limited (‘the Company’) and its subsidiaries (the Group).
The Auditor-General has appointed me, Emma Winsloe,
using the staff and resources of Ernst & Young, to carry
out the audit of the consolidated financial statements
of the Group on his behalf.
Opinion
We have audited the consolidated financial statements
of the Group on pages 38 to 61, that comprise the
consolidated balance sheet as at 30 June 2024,
the consolidated income statement, consolidated
statement of comprehensive income, consolidated
statement of changes in equity and consolidated cash
flow statement for the year then ended, and the notes
to the consolidated financial statements, including
material accounting policy information.
In our opinion, the consolidated financial statements
present fairly, in all material respects, the consolidated
financial position of the Group as at 30 June 2024,
and its consolidated financial performance and its
consolidated cash flows for the year then ended
in accordance with New Zealand equivalents
to International Financial Reporting Standards
and International Financial Reporting Standards.
Basis for our opinion
We conducted our audit in accordance with the Auditor-
General’s Auditing Standards, which incorporate the
Professional and Ethical Standards and the International
Standards on Auditing (New Zealand) issued by the
New Zealand Auditing and Assurance Standards Board.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit
of the consolidated financial statements section of our
report. We are independent of the Group in accordance
with the Auditor-General’s Auditing Standards, which
incorporate Professional and Ethical Standard 1:
International Code of Ethics for Assurance Practitioners
issued by the New Zealand Auditing and Assurance
Standards Board, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for
our opinion.
In addition to the audit we have carried out
engagements in the areas of interim financial statements
review, agreed-upon procedures and other assurance
engagements, which are compatible with those
independence requirements. Partners and employees
of our firm may deal with the Group on normal terms
within the ordinary course of trading activities of the
business of the Group. Other than the audit and these
engagements, we have no relationship with or interests
in the Company or any of its subsidiaries.
Independent auditor’s report
Valuation of level 3 derivative financial instrumentsValuation of generation assets
Why significantHow our audit addressed the key audit
matter
Generation assets were revalued to $7,797 million at
30 June 2024 as set out in note B1 of the consolidated
financial statements. The generation assets represent
approximately 80% of the Group’s total assets.
The Group engages an external valuation specialist
("valuer") to estimate the fair value of generation
assets using a discounted cash flow model. The most
significant inputs used to estimate the fair value of
the generation assets include the forecast wholesale
electricity price path, generation volumes and the
discount rate as described in note B1 of the consolidated
financial statements.
The forecast wholesale electricity price path and
discount rate assumptions are estimated by the Group’s
valuer. Forecast generation volumes are based on
the Group’s own forecast average generation volumes
and are assessed by the valuer.
We consider the valuation of generation assets to be
a key audit matter given the significance of the assets
to the Group and because the inputs to the valuation
models are inherently subjective.
In obtaining sufficient appropriate audit evidence we:
• met with the valuer to understand the valuation
methods adopted and the significant inputs and
assumptions used by the valuer to estimate the fair
value of the generation assets as at 30 June 2024.
• compared forecast generation volumes to historical
generation volumes.
• involved our own valuation specialists to assess the
appropriateness of:
• the forecast wholesale electricity price path; and
• the discount rate.
• assessed the competence, capabilities and objectivity
of the valuer;
• assessed whether the valuation adjustments made
to the recorded asset values were in accordance
with the Group’s accounting policy; and
• assessed the adequacy of the related financial
statement disclosures in note B1.
As a result of the above procedures, we considered
the valuation techniques and key assumptions
reasonable in forming our opinion on the financial
statements as a whole.
Why significantHow our audit addressed the key audit
matter
The Group’s activities expose it to certain risks which
are managed using derivative financial instruments.
At 30 June 2024, the fair value of derivative assets
total $516 million and derivative liabilities total $667
million as set out in note F1 of the consolidated
financial statements.
These balances include certain electricity price
derivatives for which the valuation inputs are not readily
observable in active primary or secondary markets and
require the use of more complex valuation assumptions,
including the Group’s internal forecast wholesale
electricity price path. Derivatives for which the valuation
inputs are not readily observable are referred to as ‘level
3’ derivatives as disclosed in note F1 of the consolidated
financial statements.
We consider the valuation of level 3 derivatives to be
a key audit matter as the inputs to the valuation models
are inherently subjective.
In obtaining sufficient appropriate audit evidence we:
• involved our valuation specialists to assess, on a
sample basis, the models used to estimate the fair
value of the level 3 derivatives as at 30 June 2024,
including the appropriateness of:
• the valuation methodologies; and
• the key assumptions applied in the valuation
models being:
• the forecast wholesale electricity price path
with reference to the generation asset valuation
procedures detailed above; and
• the discount rate.
• on a sample basis, agreed key contract terms,
including contract start and maturity dates, expected
volumes and electricity strike prices applied in the
valuation models to the relevant contract.
• assessed the adequacy of the related financial
statement disclosures in notes F1 and F2.
As a result of the above procedures, we considered
the valuation techniques and key assumptions
reasonable in forming our opinion on the financial
statements as a whole.
performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with the Directors regarding, among
other matters, the planned scope and timing of the
audit and significant audit findings, including any
significant deficiencies in internal control that we
identify during our audit.
We also provide the Directors with a statement that
we have complied with relevant ethical requirements
regarding independence, and to communicate with them
all relationships and other matters that may reasonably
be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the Directors, we
determine those matters that were of most significance
in the audit of the consolidated financial statements
of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s
report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should
not be communicated in our report because the
adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits
of such communication.
Our responsibilities arise from the Public Audit Act 2001.
Emma Winsloe
Ernst & Young
On behalf of the Auditor-General
Auckland, New Zealand
20 August 2024
Other information
The Directors are responsible on behalf of the Group
for the other information. The other information
comprises the information included on pages 1 to 34
and 62 to 136 but does not include the consolidated
financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements
does not cover the other information and we do
not express any form of audit opinion or assurance
conclusion thereon.
In connection with our audit of the consolidated
financial statements, our responsibility is to read the
other information and, in doing so, consider whether
the other information is materially inconsistent
with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears
to be materially misstated. If, based on the work we
have performed, we conclude that there is a material
misstatement of this other information, we are
required to report that fact. We have nothing to report
in this regard.
Directors’ responsibilities for the consolidated
financial statements
The Directors are responsible on behalf of the Group
for the preparation and fair presentation of the
consolidated financial statements in accordance with
New Zealand equivalents to International Financial
Reporting Standards and International Financial
Reporting Standards, and for such internal control
as the Directors determine is necessary to enable the
preparation of consolidated financial statements that
are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements,
the Directors are responsible on behalf of the Group
for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related
to going concern and using the going concern basis
of accounting unless the Directors either intend to
liquidate the Group or to cease operations, or have
no realistic alternative but to do so.
The Directors’ responsibilities arise from the Financial
Markets Conduct Act 2013.
Auditor’s responsibilities for the audit of the
consolidated financial statements
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements
as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report
that includes our opinion.
Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance
with the Auditor-General’s Auditing Standards will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of shareholders taken on the basis
of these consolidated financial statements.
As part of an audit in accordance with the Auditor-
General’s Auditing Standards, we exercise professional
judgement and maintain professional scepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement
of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations,
or the override of internal control.
• Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness
of the Group’s internal control.
• Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of the use of the going
concern basis of accounting by the directors and, based
on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related
disclosures in the consolidated financial statements or,
if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report.
However, future events or conditions may cause
the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content
of the consolidated financial statements, including
the disclosures, and whether the consolidated financial
statements represent the underlying transactions
and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business
activities within the Group to express an opinion
on the consolidated financial statements. We are
responsible for the direction, supervision and
GROUP FINANCIAL STATEMENTS.
CONSOLIDATED INCOME STATEMENT.
For the year ended 30 June 2024
Note
2024
$M
Restated
2023
$M
RevenueA1, A23,424 2,730
ExpensesA2(2,704)(1,900)
Depreciation and amortisationB1, B2(350)(344)
ImpairmentA2, B2–(12)
Revaluation loss of generation assetsA2, B1–(41)
Change in the fair value of financial instrumentsF1, F2172 (159)
Change in the fair value of carbon units held for tradingC28 (36)
Share of profit/(loss) from associates and joint venturesE1(1)5
Gain/(loss) on acquisitions and disposal–12
Interest incomeA2, D26 3
Interest expenseA2, D2(140)(103)
Profit before tax415 155
Tax expenseA3(125)(43)
Profit for the year attributable to owners of the parent290 112
Basic and diluted earnings per share (cents)20.858.11
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME.
For the year ended 30 June 2024
Note
2024
$M
Restated
2023
$M
Profit for the year attributable to owners of the parent290112
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Change in asset revaluation reserve 138 113
Change in cash flow hedge reserve transferred to balance sheetF1 (2) 2
Share of movements in associates' and joint ventures' reservesE1(6) 11
Tax ef fe c t(37) (31)
Items that may be reclassified subsequently to profit or loss
Change in cash flow hedge reserveF1(180)212
Tax ef fe c t50(60)
Other comprehensive income for the year, net of taxation(37)247
Total comprehensive income for the year attributable to owners
of the parent
253359
38
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
CONSOLIDATED BALANCE SHEET.
For the year ended 30 June 2024
Note
2024
$M
Restated
2023
$M
SHAREHOLDERS’ EQUITY
Issued capital 378 378
Treasury sharesD1 (15) (34)
Reserves 4,486 4,519
Total shareholders’ equity 4,849 4,863
ASSETS
Current assets
Cash 44 75
Trade and other receivablesC1 638 440
Contract assets and costs 35 32
InventoriesC2 120 91
Derivative financial instrumentsF1 313 201
Total current assets 1,150 839
Non-current assets
Property, plant and equipmentB1 8,222 8,099
Intangible assetsB2 132 138
Investment in and advances to associates and joint venturesE1 69 80
Advances to joint operationsE1 4 4
Trade and other receivablesC1 - 1
Contract assets and costs 15 15
Derivative financial instrumentsF1 203 243
Total non-current assets 8,645 8,580
Total assets9,7959,419
Note
2024
$M
Restated
2023
$M
LIABILITIES
Current liabilities
Payables and accruals 462 344
ProvisionsC3 3 3
BorrowingsD2 383 375
Derivative financial instrumentsF1 371 186
Taxation payable 73 44
Total current liabilities1,292 952
Non-current liabilities
ProvisionsC3 82 81
Derivative financial instrumentsF1 296 243
BorrowingsD2 1,558 1,523
Deferred taxA31,7 18 1,757
Total non-current liabilities3,654 3,604
Total liabilities4,9464,556
NET ASSETS 4,849 4,863
For and on behalf of the Board of Directors who authorised the issue of the Financial Statements
on 20 August 2024.
SCOTT ST JOHN //
CHAIR OF THE BOARD OF DIRECTORS
JAMES MILLER //
CHAIR OF THE RISK ASSURANCE
AND AUDIT COMMITTEE
The accompanying notes form an integral part of these financial statements.
39
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY.
For the year ended 30 June 2024
Note
Issued
capital
$M
Retained
earnings
$M
Asset
revaluation
reserve
$M
Cash flow
hedge
reserve
$M
Other
reserves
$M
Tot al
equity
$M
BALANCE AS AT 1 JULY 2022 378 516 4,153 (245)(50) 4,752
Adjustment on restatement of PPA valuation
(see Significant Matters)
–5 ––– 5
RESTATED BALANCE AS AT 1 JULY 2022378521 4,153 (245)(50) 4,757
Movement in asset revaluation reserve,
net of taxation
–– 82 –– 82
Movement in cash flow hedge reserve,
net of taxation
––– 154 – 154
Share of movements in associates’ and joint
ventures’ reserves
––– 11 – 11
Other comprehensive income–– 82 165 – 247
Net profit/(loss) for the period– 112 –––112
Total comprehensive income for the year– 112 82 165 –359
DividendD1– (286)–––(286)
Issue of treasury shares for dividend
reinvestment program
D1– 15 ––1328
Sale of treasury sharesD1– 2 ––3 5
Restated balance as at 30 June 2023378364 4,235(80)(34)4,863
RESTATED BALANCE AS AT 1 JULY 2023 378 364 4,235 (80) (34) 4,863
Movement in asset revaluation reserve,
net of taxation
––99–– 99
Movement in cash flow hedge reserve,
net of taxation
––– (130) – (130)
Share of movements in associates’ and joint
ventures’ reserves
–––(6)– (6)
Other comprehensive income–– 99 (136)– (37)
Net profit for the year– 290––– 290
Total comprehensive income for the year–29099(136)–253
DividendD1– (311)––– (311)
Issue of treasury shares for dividend
reinvestment programme
D1–26––18 44
Balance as at 30 June 2024378 369 4,334 (216) (16) 4,849
CONSOLIDATED CASH FLOW STATEMENT.
For the year ended 30 June 2024
Note
2024
$M
2023
$M
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 3,116 2,620
Payments to suppliers and related parties(2,094) (1,687)
Payments to employees (165) (147)
Interest received 6 3
Interest paid (130) (104)
Taxes paid (121) (107)
Net cash provided by operating activitiesD4 612 578
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisition of property, plant and equipment (295) (250)
Payments for acquisition of intangibles (39) (47)
Payments for acquisition of NOW New Zealand– (17)
Distributions received from/(advances paid to) associates and joint ventures 4 6
(Lodgements)/return of prudential deposits (36) 37
Net cash (used)/received in investing activities (366) (271)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 360 509
Repayment of borrowings (356) (544)
Principal repayment of lease liabilities (13) (9)
Proceeds from the sale of treasury shares - 5
Dividends paid (268) (258)
Net cash (used)/received in financing activities (277) (297)
Net increase/(decrease) in cash held (31) 10
Cash at the beginning of the period 75 65
Cash at the end of the period 44 75
Cash balance comprises:
Cash held at bank at the end of the period4475
The 'Other reserves' category includes treasury shares, the foreign currency translation reserve and the share based payment reserve.The accompanying notes form an integral part of these financial statements.
40
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
GENERAL INFORMATION
AND SIGNIFICANT MATTERS
GENERAL INFORMATION
These consolidated financial statements (“Group
financial statements”) are for Mercury NZ Limited
Group (“the Group”). The Group financial statements
comprise Mercury NZ Limited ("the Company") as
the parent, and its subsidiaries and its investments
in associates and interests in joint arrangements.
The Company is incorporated in New Zealand and
registered under the Companies Act 1993. It is listed
on the NZX Main Board and on the ASX, with foreign
exempt listed status. It also has bonds quoted on
the NZX debt market. Mercury NZ Limited is an FMC
reporting entity under the Financial Markets Conduct
Act 2013.
The Company is a mixed ownership model company,
majority owned by the Government, and is bound
by the requirements of the Public Finance Act 1989.
The liabilities of the Group are not guaranteed in any
way by the Government or by any other shareholder.
BASIS OF PREPARATION
The Group financial statements have been prepared:
• in accordance with the Financial Markets Conduct
Act 2013 and Generally Accepted Accounting
Practice in New Zealand (“GAAP”). They comply
with New Zealand equivalents to International
Financial Reporting Standards (“NZ IFRS”) and
International Financial Reporting Standards ("IFRS")
as appropriate for profit-oriented entities.
• on a historical cost basis, with the exception
of certain fair value measurements.
• using the same accounting policies for all reporting
periods presented.
• in millions of New Zealand dollars, unless
otherwise stated.
• exclusive of GST, with the exception of payables
and receivables that include GST invoiced.
ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires
judgements and estimates that impact the
application of policies and the reported amounts
of assets and liabilities, income and expenses.
Actual results may differ from these estimates.
The areas of significant estimates and
judgements are as follows:
• Fair value of generation plant and equipment
(refer note B1).
• Valuation of financial instruments (refer note F1).
SIGNIFICANT MATTERS
Restatement of a PPA Valuation
An error has been identified in the prior period
valuations of a power purchase agreement (PPA)
that was acquired in August 2021 as part of the
acquisition of Tilt New Zealand assets.
1 July
2022Adjustments
Restated
1 July
2022
Audited
30 June
2023Adjustments
Restated
30 June
2023
CONSOLIDATED INCOME STATEMENT
Change in fair value of financial instruments (172) 13 (159)
Tax expense (39) (4) (43)
CONSOLIDATED BALANCE SHEET
Reserves 4,424 5 4,429 4,505 14 4,519
Non-current derivative financial liability 400 (7) 393 263 (20) 243
Deferred tax liability 1,753 2 1,755 1,751 6 1,757
Accounting standards, interpretations and
amendments not yet effective
In May 2024, the External Reporting Board (XRB)
introduced NZ IFRS 18
Presentation and Disclosure
in Financial Statements
(effective for reporting
periods beginning on or after 1 January 2027).
This standard replaces NZ IAS 1
Presentation
of Financial Statements.
The Group has not yet
assessed the impact of NZ IFRS 18.
There are no other accounting standards that are
not yet effective that will have a material impact
on the Group's financial statements.
41
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
NOTE A2. 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 a monthly basis, who assesses
the performance of the operating segments on a
measure of EBITDAF.
EBITDAF is a non-GAAP measure that is used
internally to assess the operating performance of the
Group without the impact of non-cash and one-off or
infrequent transactions. Segment EBITDAF represents
earnings before net interest expense, tax expense,
depreciation, amortisation, unrealised change in
the fair value of financial instruments, gain/(loss)
on disposal and impairments by each segment
inclusive of an allocation of central operating revenue
and costs. Operating segments are aggregated
into reportable segments only if they share similar
economic characteristics.
The segment report includes a Derivatives category
within the Electricity margin. This represents the
settlement (realised gains or losses) of both hedged
and unhedged electricity swaps.
Realised gains or losses (settlements) on unhedged
electricity swaps are reported within Electricity margin
for the purposes of EBITDAF, but are reported within
the change in fair value of financial instruments
in the income statement. Realised gains or losses
(settlements) on hedged electricity swaps are
reported within Electricity margin for the purposes
of EBITDAF, and within revenue or expenses as
appropriate in the income statement. Unrealised
gains or losses on both hedged and unhedged
electricity swaps are not included in EBITDAF and
are reported in either change in fair value of financial
instruments in the income statement or in other
comprehensive income. A reconciliation of EBITDAF
to profit before tax can be found in the summary
table of the note.
IDENTIFIED SEGMENTS
Generation / Wholesale
The generation/wholesale market segment
encompasses activity associated with the
electricity production, electricity trading, generation
development activities and the company's share
of associates earnings in TPC Holdings Limited
(see note E1). It also includes revenue from the sale
of electricity, to both commercial and industrial
customers and the customer segment, net
settlement of energy hedges and sale of trading
emissions units to third parties.
Customer
The customer market segment encompasses
activity associated with sale of electricity, gas,
telecommunication products/services and other
related products and services to mass market
customers in New Zealand.
Other
Represents corporate support services which are
not directly attributable to the generation/wholesale
or customer segments and the company's share
of associates earnings in EnergySource LLC and
EnergySource Minerals LLC.
Inter-segment
Transactions between segments represent transfer
charges by generation/wholesale to customer for the
purchase of electricity.
NOTE A1. REVENUE
Mercury earns revenue from the following sources:
Revenue streamDescription & revenue recognition
Electricity generation,
net of hedging
Revenue is received from:
• Electricity generated and sold through the New Zealand electricity spot market, and physical power
purchase agreements (PPAs). Revenue is recognised at the time of generation and at the spot price
or contract price.
• Net settlement of hedged energy contracts sold or bought on the futures market, and to generators,
retailers and commercial and industrial customers and recognised at the time of hedge settlement.
Electricity and gas
sales to customers
• Electricity and gas sales to customers are recognised when the energy is supplied for customer
consumption.
• Acquisition incentives such as credits and appliances are offered to new customers and treated as
individual performance obligations and a portion of the expected revenue over the life of the total
contract is allocated to the performance obligation based on their standalone selling price and
recognised immediately. Corresponding contract assets are recognised on the balance sheet and
amortised to the income statement over the contract period as the future consideration is billed.
Incremental costs to obtain and retain customers are recognised on the balance sheet as contract
costs and amortised to the income statement on a straight-line basis over the expected average
mass market customer tenure.
Telco revenueCustomers consume mobile and broadband services which are measured and billed according to
monthly billing cycles and are recognised when the service has been provided. Acquisition incentives
are treated the same as above.
Other incomeIncome is received from:
• Insurance proceeds. Income is recognised at the time the insurance proceeds are virtually certain
to be received.
• External management fees. Revenue is recognised at the time the services have been delivered.
• Sale of emission units sold to third parties. The sale is recognised at the point in time that the
emission unit is confirmed as being transferred into the acquirer's emission unit account.
42
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
SEGMENT RESULTS
YEAR ENDED 30 JUNE 2024Generation/
Wholesale
$M
Customer
$M
Other
$M
Inter–
segment
$M
Tot al
$M
Generation1,435–––1,435
Sales to customers464 1,291 –– 1,755
Inter-segment sales615 –– (615) –
Derivatives84 ––– 84
Electricity purchases (1,347) (615) –615 (1,347)
Transmission, distribution and metering (141) (560) –– (701)
ELECTRICITY MARGIN1,110 116 –– 1,226
Gas Revenue–103 –– 103
Gas purchases– (38) –– (38)
Transmission, distribution and metering– (47) –– (47)
GAS MARGIN–18 –– 18
Telco Revenue–170 ––170
Cost of sales– (121) –– (121)
TELCO MARGIN–49 ––49
Other direct cost of sales (28) (37) –– (65)
TRADING MARGIN1,082 146–– 1,228
OTHER INCOME324(2)–34
Employee compensation and benefits (52) (94) (24) – (170)
Maintenance expenses (67) (20) – – (87)
Other expenses (51) (49) (28) – (128)
Allocation of corporate overheads (23) (29) 52 ––
Total operating expenses (193) (192) –– (385)
Segment EBITDAF921(42)(2)–877
SEGMENT RESULTS
RESTATED YEAR ENDED 30 JUNE 2023Generation/
Wholesale
$M
Retail
$M
Other
Segments
$M
Inter–
segment
$M
Tot al
$M
Generation
766 ––– 766
Sales to customers
442 1,206 –– 1,648
Inter-segment sales
529 –– (529) –
Derivatives
59 ––– 59
Electricity purchases
(656) (529) –529 (656)
Transmission, distribution and metering (119) (531) –– (650)
ELECTRICITY MARGIN1,021 146 –– 1,167
Gas Revenue–89 ––89
Gas purchases– (29) –– (29)
Transmission, distribution and metering– (41) –– (41)
GAS MARGIN–19 ––19
Telco Revenue–155 ––155
Cost of sales– (105) –– (105)
TELCO MARGIN–50 ––50
Other direct cost of sales (35) (38) –– (73)
TRADING MARGIN 986 177 ––1,163
OTHER INCOME21 1 2 –24
Employee compensation and benefits (46) (84) (18) – (148)
Maintenance expenses (54) (16) –– (70)
Other expenses (54) (62) (12) – (128)
Allocation of corporate overheads (9) (21) 30 ––
Total operating expenses (163) (183) –– (346)
Segment EBITDAF844(5)2–841
NOTE A2. SEGMENT REPORTING (CONTINUED)
43
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
RESTATED YEAR ENDED 30 JUNE 2023Generation/
Wholesale
$M
Retail
$M
Other
Segments
$M
Inter–
segment
$M
Tot al
$M
Summary and reconciliation
to net profit before tax
Revenue1,809 1,450 – (529) 2,730
Expenses (973) (1,456) –529 (1,900)
Realised gain/(loss) on unhedged
electricity swaps
6 –––6
Share of profit/(loss) from associates
and joint ventures
2 1 2–5
Segment EBITDAF844(5)2–841
Gain/(loss) on disposal 12
Impairment(12)
Revaluation loss of generation assets (41)
Change in fair value of carbon units held for trading(36)
Unrealised gain/(loss) on unhedged derivatives and
hedge ineffectiveness through income statement
(165)
Interest income3
Interest expense (103)
Depreciation and amortisation (344)
Profit before tax 155
Audit Fees
Mercury NZ Limited (the Company) is a public entity as defined in the Public Audit Act 2001. The Auditor-
General is the auditor of every public entity. The Auditor-General has appointed Emma Winsloe of EY to carry
out the audit on his behalf from 1 July 2023. NZX listing rules and Mercury's Audit Independence Policy
requires that the signing partner performing the audit rotate every five years.
2024 $0002023 $000
Audit of the financial statements794668
Review of interim financial statements8075
Other assurance related services145187
Non-audit services22
Total fees paid to auditors1,021932
Other assurance-related services include engagements for climate-related disclosures ($66k), greenhouse gas
emissions inventory ($63k), telecommunications development levy ($12k) and Mercury's Master Trust Deed ($3k).
Non-audit services related to agreed upon procedures for directors' debt compliance certificates ($2k).
YEAR ENDED 30 JUNE 2024Generation/
Wholesale
$M
Customer
$M
Other
$M
Inter–
segment
$M
Tot al
$M
Summary and reconciliation
to net profit before tax
Revenue2,4711,568 -(615)3,424
Expenses (1,709) (1,610)–615 (2,704)
Realised gain/(loss) on unhedged
electricity swaps
158 ––– 158
Share of profit/(loss) from associates
and joint ventures
1 –(2)– (1)
Segment EBITDAF921(42)(2)–877
Change in fair value of carbon
units held for trading
8
Unrealised gain/(loss) on unhedged derivatives and
hedge ineffectiveness through income statement
14
Interest income 6
Interest expense (140)
Depreciation and amortisation (350)
Profit before tax 415
NOTE A2. SEGMENT REPORTING (CONTINUED)
44
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
NOTE A3. TAXATION
2024
$M
Restated
2023
$M
Income Tax
(i) Tax expense
Profit before tax 415 155
Prima facie tax expense at 28% on the profit before tax (116) (43)
Adjusted for the tax effect of the following items:
• share of associates’ and joint ventures’ tax paid earnings (1) 1
• capital gain– 3
• impairment of NOW goodwill– (3)
• other differences– (1)
• removal of building depreciation (8)–
Tax expense attributable to profit from ordinary activities(125)(43)
Represented by:
Current tax expense(152)(140)
Deferred tax recognised in the income statement2797
The effective tax rate for the financial year is 30%
(30 June 2023: 28%) due to the removal of tax
depreciation on non-residential buildings.
Legislation to remove tax depreciation on non-
residential buildings was enacted at the end of March
2024 resulting in $8 million deferred tax liability
associated with this change being recognised as a tax
expense at 30 June 2024.
The income tax expense charged to the income
statement includes both the current year’s provision
and the income tax effect of:
• taxable temporary differences, except those arising
from initial recognition of goodwill; and
• deductible temporary differences to the extent that
it is probable that they will be utilised.
Deferred Tax
Deferred tax is provided in full, using the liability
method, on temporary differences arising between
the tax and accounting bases of the assets and
liabilities. A deferred tax asset is only recognised to
the extent that there will be future taxable profit to
utilise the temporary difference.
Property, plant and equipment is held on capital
account for income tax purposes. Where assets are
revalued, with no similar adjustment to the tax base,
a taxable temporary difference is created that is
recognised in deferred tax.
OECD Global Anti-Base Erosion (GloBE) Pillar Two
The New Zealand Government has enacted legislation
to implement the OECD Global Anti-Base Erosion
(GloBE) Pillar Two rules which address the tax
challenges arising from the digitalisation of the global
economy. The Pillar Two rules seek to apply a 15%
minimum tax across all jurisdictions in which the
Group reports income.
The Pillar Two legislation is enacted but not yet
in effect. The Group has applied a temporary
mandatory relief from deferred tax accounting
in respect of the Pillar Two rules and it will be
accounted for as a current tax when it is incurred. Initial
assessment of the Group’s exposure to the Pillar Two
legislation, when it comes into effect, indicates that no
top-up tax would have arisen for the Group using the
most recent financial information for the Group.
Movement in deferred tax
Property,
plant and
equipment
$M
Financial
instruments
$M
Employee
entitlements
$M
Other
$M
Tot al
$M
Asset/(Liability) Balance as at 1 July 2022 (1,759) (16)3 19 (1,753)
Adjustment on restatement of PPA valuation– (2)–– (2)
Restated balance as at 1 July 2022 (1,759) (18)3 19 (1,755)
Charged/(credited) to the income statement 34 49 1 13 97
Charged/(credited) to other
comprehensive income
(31) (60)–– (91)
Deferred tax associated with the
acquisition of NOW
––– (8) (8)
Restated Asset/(Liability) Balance
as at 30 June 2023
(1,756) (29)4 24 (1,757)
Restated Asset/(Liability) Balance
as at 1 July 2023
(1,756) (29) 4 24 (1,757)
Charged/(credited) to the income statement 33 91(8)35
Charged/(credited) to other
comprehensive income
(38) 50 –– 12
Deferred tax associated with the removal
of building depreciation
(8)––– (8)
Asset/(Liability) Balance as at 30 June 2024 (1,769) 30 516(1,7 18)
'Other' deferred tax balances comprises temporary differences relating to the acquisition of NOW NZ Ltd (NOW)
and the use of carried forward losses from NOW.
45
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTE B1. PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED 30 JUNE 2023Generation
assets at
fair value
$M
Other assets
at cost
$M
Right-of-use
assets
$M
Capital work
in progress at
cost $M
Tot al
$M
Opening net book value
7,723
51 97 209 8,080
Additions
1
1 - 24 4 246
Additions in relation to the acquisition
of Now Broadband New Zealand
-
4 - - 4
Tr ans fer s
257
4 - (261) -
Disposals
(7)
- - - (7)
Gain on revaluation
110
- - - 110
Loss on revaluation
(41)
- - - (41)
Depreciation charge for the year (270) (13) (10) - (293)
Closing net book value 7,7 73 47 87 192 8,099
Balance at 30 June 2023
Cost or valuation 7,7 73 146 120 192 8,231
Accumulated depreciation - (99) (33) - (132)
Net book value 7,7 73 47 87 192 8,099
YEAR ENDED 30 JUNE 2024Generation
assets at
fair value
$M
Other assets
at cost
$M
Right-of-use
assets
$M
Capital work
in progress at
cost $M
Tot al
$M
Opening net book value
7,7 73
47 87 192 8,099
Additions
–
3 30 260 293
Tr ans fer s
164
11 – (175)–
Disposals
(1)
(1)–– (2)
Gain on revaluation
137
––– 137
Depreciation charge for the year (276) (15) (14)– (305)
Closing net book value7,797 45 103 277 8,222
Balance at 30 June 2024
Cost or valuation8,073 159 150 277 8,659
Accumulated depreciation (276) (114) (47)– (437)
Net book value7,797 45 103 277 8,222
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
Karāpiro hydro station.
46
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTE B1. PROPERTY, PLANT AND
EQUIPMENT (CONTINUED)
Assets carrying values
All assets, except generation plant and equipment,
are recognised at cost less accumulated depreciation.
Fixed assets, excluding land, are depreciated on a
straight line basis over their expected useful lives.
Generation plant and equipment is originally
recognised at cost and subsequently measured at fair
value less accumulated depreciation. An independent
valuation is completed annually to determine the fair
value of these assets. Any surplus on revaluation is
recognised in the asset revaluation reserve, except
where it offsets a previous decrease in value that
was recognised in the income statement. Any
accumulated depreciation or impairment recognised
between revaluations is eliminated against the gross
carrying amount of the asset at the date of the
revaluation and the net amount is restated to the
revaluated amount of the asset.
The Group's leases relate to properties, geothermal
steam royalties, office equipment, and transmission
equipment. These leases are recognised as a right-
of-use asset and a corresponding liability. The
initial value of the asset and liability represent the
present value of all reasonably expected future
lease payments. Lease payments are recorded as
a repayment of the lease obligation and interest
expense. Lease assets are depreciated on a
straight-line basis over the term of the lease. The
most significant leases relate to office buildings
in Auckland and Tauranga. The weighted average
incremental borrowing rate applied to lease liabilities
in 2024 was 5.53% (2023: 5.36%). The Group's lease
interest was $7m (2023: $6m) and lease liability is
disclosed in note D2.
As at 30 June 2024, the capital work in progress
balance is largely made up of the following projects:
• The addition of a fifth generating unit at
Ngā Tamariki geothermal station;
• Stage 2 of Kaiwera Downs wind farm;
• Karapiro hydro station rehabilitation project (3rd unit);
• Geothermal drilling.
Depreciation
Depreciation is calculated on a straight-line basis on
all property, plant and equipment other than freehold
land, capital work in progress and exploration, so as
to write down the assets to their estimated residual
value over their expected useful lives.
The annual depreciation rates are as follows:
2024 2023
Office fixture and fittings,
including fit-out
2-33%2-33%
Generation assets1-20%1-20%
Computer hardware and
tangible software
5-33%5-33%
Other plant and equipment2-33%2-33%
Vehicles5-33%5-33%
Right of use assets2-50%2-50%
Assets carried at fair value
All generation assets shown at valuation were
revalued using a net present value methodology by
PwC, an independent valuer, as at 30 June 2024.
This resulted in increases of $78m, $47m and $9m
to the carrying values of the Turitea, Kaiwera Downs
Stage 1 and Mahinerangi wind farms, respectively.
There was also an increase of $4m in the carrying
value of Rotokawa generation, with no changes in
the carrying values of other geothermal assets in
the current year. As a consequence of the revaluation,
accumulated depreciation on these generation assets
has been reset to nil.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
SensitivityValuation impact
2024
$M
2023
$M
Future wholesale electricity price path+/- 10%$1,125 / ($1,119)$1,091 / ($1,087)
Discount rate+/- 0.5%($478) / $556($489) / $573
Operational expenditure+/- 10%($189) / $189($176) / $176
The carrying amount of revalued generation assets, had they been recognised at cost, would have been $2,783 million
(2023: $2,654 million).
AREA OF KEY JUDGEMENT
Generation asset valuation
The key assumptions used in the valuation include the
forecast of the future wholesale electricity price path,
generation volumes, projected operational and capital
expenditure and asset life assumptions and discount
rates. In all cases there is an element of judgement
required as valuations make use of unobservable inputs
including wholesale electricity prices over time of between
$79/MWh and $192/MWh (2023: $99/MWh and $179/
MWh), average operational expenditure of $256 million
p.a. (2023: $232.1 million p.a.), net average production
volumes of 9,015 GWh p.a. (2023: 8,771 GWh p.a.),
a post-tax discount rate of between 6.9% and 7.3%
for wind assets backed by long-term Power Purchase
Agreements (2023: 6.6% to 6.9%) and between 7.8%
and 8.2% for other assets (2023: 7.5% to 7.9%). The
valuation also assumes the operation of New Zealand
Aluminium Smelter Limited at Tiwai Point, no material
changes to the wholesale market regulatory regime, hydro
and geothermal fuel supply being sustained over the
modelled horizon and no material changes to generation
consent conditions. The discounted cash flow valuation
approach assumes 100% control and consequently a
control premium should be applied if using an equity
valuation technique to derive comparative asset values.
The risk type, time horizon, likelihood and materiality of
potential climate change impacts were considered in the
valuation. Only physical risks were considered relevant
for the purposes of the valuation, however the expected
impact of these risks was small and fell within the
valuation range.
Generation assets are classified as Level 3 in the fair value
hierarchy due to the use of non-market observable inputs
in the valuation. Changes in the Level 3 category during
the period relates to transfers from cost measurement
(capital work in progress), depreciation and impairment
(recognised in profit and loss) and revaluation movements
(recognised in other comprehensive income). The
following table outlines the valuation impact of changes
to assumptions, keeping all other valuation inputs
constant, that the valuation is most sensitive to.
47
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTE B2. INTANGIBLE ASSETS
YEAR ENDED 30 JUNE 2023
Intangible
software
$M
Acquired
intangible
assets
$M
Rights
$M
Carbon
units
$M
Work In
Progress
$M
Tot al
$M
Opening net book value
32 17
15 41 18 123
Additions
––
– 10 37 47
Additions in relation to the acquisition
of Now Broadband New Zealand
– 41
––– 41
Tr ans fer s
45 –
–– (45)–
Impairment
– (13)
––– (13)
Surrendered units
––
– (9)– (9)
Amortisation for the year (27) (23) (1)–– (51)
Closing net book value 50 22 14 42 10 138
Balance at 30 June 2023
Cost 208 46 34 42 10 340
Accumulated amortisation (158) (24) (20)–– (202)
Net book value 50 22 14 42 10 138
YEAR ENDED 30 JUNE 2024
Opening net book value
50 22
14 42 10 138
Additions
––
– 14 32 46
Tr ans fer s
25 –
–– (25)–
Surrendered Units
––
– (7)– (7)
Amortisation for the year (33) (11) (1)–– (45)
Closing net book value 42 11 13 49 17 132
Balance at 30 June 2023
Cost 233 46 34 49 17 379
Accumulated amortisation (191) (35) (21)–– (247)
Net book value 42 11 13 49 17 132
Software
Acquired computer software licenses and internally
developed software assets are recognised at cost
and amortised over their estimated useful lives of
1 - 15 years (2023: 1 - 15 years). As these assets are
deemed to have a finite life, impairment testing will
only be performed when there is an indication that
the intangible asset may be impaired.
Acquired intangible assets
As part of the acquisition of NOW in FY2023, the
Group allocated part of the purchase price to the
customer list acquired ($30m, assessed useful life
of 2.5 years). This acquired intangible asset was
partially impaired in FY2023 and has continued to be
amortised in FY2024. The acquired customer list has
a carrying amount of $11m and a remaining useful
life of 1 year (2023: $22m).
Rights
Rights, of which land access rights are the most
significant, acquired to further the Group's generation
development programme are stated at cost less
accumulated amortisation and any accumulated
impairment losses. Rights, which have a finite life,
are amortised over the life of the rights, which range
from 5 to 60 years (2023: 5 to 60 years). Testing for
impairment will only arise when there is an indication
that the asset may be impaired.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
Carbon units and emissions obligations
Purchased carbon units are recorded at cost
(purchase price). At 30 June 2024, the Group held a
total of 1,657,297 units within intangible assets (2023:
1,568,674 units). Carbon units, when allocated or
purchased for purposes other than trading units, are
recorded as intangible assets and are not revalued
subsequent to initial recognition.
Carbon units that are surrendered to the government
in compensation for the Group's emissions
obligations are recognised as an expense in the
income statement and a reduction to intangible
assets in the balance sheet, based on the weighted
average cost of the units surrendered.
Emissions obligations are recognised as a current
liability as the obligation is incurred. Up to the level
of units held, the liability is recorded at the carrying
value of those units intended to settle the liability.
Contracts for the purchase of carbon units are
recognised when they are settled.
48
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
NOTE C1. RECEIVABLES
2024
$M
2023
$M
Receivables
Trade receivables and revenue accruals508 360
Allowance for credit loss(6) (7)
Net trade receivables and accruals502 353
ASX prudential deposits96 60
Prepayments 40 28
638 441
Trade receivables are measured at amortised cost
using the effective interest method. Customers
are typically invoiced on a monthly basis. Large
commercial and industrial customers are billed
on a calendar month basis, while for most mass
market customers billing occurs on a rolling
cycle over the year. Revenue accruals for unbilled
telecommunication services and unread gas and
electricity meters at balance date involves an estimate
of consumption for each unread meter based on past
consumption history. Generation revenue accruals
are derived mostly from generation sales to the
New Zealand wholesale market at the prevailing spot
price at the grid injection point. Revenue is invoiced
by the Wholesale Market Clearing Manager on a
calendar month basis reflecting actual metered
generation at the stations.
Trade receivables are non-interest bearing and are
generally on 30 day terms for large commercial and
industrial customers and mass market customers are
on 18 day terms. For terms and conditions of related
party receivables refer to note E2.
The Company applies the simplified approach
to measuring expected credit losses, which uses
a lifetime expected loss allowance for all trade
receivables, with impairment being recognised
in the income statement and a corresponding
provision on the balance sheet at the time of billing.
To measure the expected credit losses, trade
receivables have been grouped based on days past
due. The expected loss rates are based on historical
credit losses in prior periods, adjusted for any
significant known amounts that are not receivable.
Prudential deposits act as security to cover mark-to-
market movement in the ASX futures position.
The following table details the loss allowance at
30 June 2024:
Not due
Less than 30
days past due
More than 30
days past due
More than 60
days past dueTot al
Expected loss rate%0%6%13%46%
Gross carrying amount – trade receivables$M 128 8 3 11 150
Expected credit loss$M– 1 – 5 6
2024
$M
2023
$M
Movements in the allowance for impairment loss were as follows:
Balance at beginning of the year 7 5
Charge for the year38
Amounts written off(4)(6)
Balance at end of the year67
49
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTE C2. INVENTORIES
Cost of consumable stores is determined on a
weighted average basis and includes expenditure
incurred in acquiring consumable stores and
bringing them to their final condition and location.
Consumable stores include consumables held to
service and repair operating plants and finished
goods relating to the customer business.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
2024
$M
2023
$M
Consumable Stores 53 51
Carbon Units - at fair value less cost to sell 67 40
Inventories 120 91
Carbon Units - at fair value less cost to sell2024
Units
000
2024
Value
$M
2023
Units
000
2023
Value
$M
Opening Balance 954 40 854 65
Purchases 375 19 321 27
Amounts recognised in income statement–– (221) (16)
Revaluation movement– 8 – (36)
Closing Balance 1,329 67 954 40
Inventories also include carbon units (NZUs) which
management has identified as held for trading.
These are measured at fair value less cost to sell.
When there is a change in fair value, the gain or loss
on revaluation is recognised in the income statement.
Fair value is calculated based on the CommTrade
spot price at the valuation date. As a result, the units
are classified as Level 1 in the fair value hierarchy.
NOTE C3. PROVISIONS
2024
$M
2023
$M
Balance at the beginning of the year8481
Provisions made/(used) during the year(3)–
Discounting movement43
Balance at the end of the year8584
Current33
Non-current8281
8584
Provisions have been recognised for the abandonment
and subsequent restoration of areas from which
geothermal resources have been utilised. The provision is
calculated based on the present value of management's
best estimate of the expenditure required, and the likely
timing of that expenditure. Changes in these estimates
made during the year are reported as an increase in
provisions and a reduction in revaluation reserves.
The increase in provision resulting from the passage
of time (the discount effect) is recognised as an
interest expense. The provision will be utilised when the
individual wells are abandoned. The wells are estimated
to have an average useful life of 19 years.
50
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
The share capital of the Company is represented
by 1,400,012,517 ordinary shares (2023: 1,400,012,517)
issued and fully paid. The weighted average number
of shares on issue during the year, on both a basic and
diluted basis, was 1,390,795,153 (2023: 1,385,131,962).
These shares do not have a par value, have equal
voting rights and share equally in dividends and
any surplus on winding up.
2024
Number
of shares
(M)
2024
$M
2023
Number
of shares
(M)
2023
$M
Treasury shares
Balance at the
beginning of the
period
13 34 19 50
Issue of treasury
shares for dividend
reinvestment
program
(7) (18) (5) (13)
Issue of treasury
shares for long
term incentive
scheme
– (1)––
Sale of treasury
shares
–– (1) (3)
Balance at the end
of the period
6 15 13 34
Treasury shares were issued during the financial year
for the following purposes:
• The dividend reinvestment program (DRP) continued
with the transfer of 6,887,550 shares (2023:
4,734,460) to shareholders that elected to reinvest
the net proceeds of cash dividends payable; and
• A total of 375,302 treasury shares worth $1m were
issued for management long term incentive (LTI)
payments (2023: 214,106 shares).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
Cents
per
share
2024
$M
2023
$M
Dividends declared and paid
Final dividend for 2022 12.0 – 166
Interim dividend for 2023 8.7 – 120
Final dividend for 2023 13.1 182 –
Interim dividend for 2024 9. 3 129 –
311 286
The imputation credit account was in a surplus
balance at 31 March 2024, as legally required. At
30 June 2024, no imputation credits were available
(2023: $nil) as the imputation credit account had a
deficit of $36m (2023: deficit of $39m) due to the
timing of the interim dividend payment.
2024 2023
Earnings per share
Profit for the year attributable to owners
of the parent ($M)
290 112
Weighted average ordinary shares 1,400 1,400
Less weighted average treasury shares (9) (15)
Weighted average ordinary shares
for earnings per share (millions)
1,391 1,385
Basic and diluted earnings
per share (cents)
20.85 8.11
NOTE D1. SHARE CAPITAL AND DISTRIBUTIONNOTE D2. BORROWINGS & NET INTEREST
2024
$M
2023
$M
Borrowing currency
denomination
MaturityCouponCarrying
amount
Carrying
amount
Debt measured at amortised cost
Bank facilitiesNZDVariousFloating50 57
Commercial paper programmeNZD< 3 monthsFloating307 300
Capital bonds - MCY020NZDJul-20493.60%302 302
Debt in fair value hedge relationships
USPP - US$45mUSDDec-20254.60%72 70
Green retail bonds - MCY040NZDSep-20262.16%186 179
Green retail bonds - MCY030NZDSep-20271.56%181 172
Green retail bonds - MCY060NZDJun-20285.64%157 156
Green wholesale bondsAUDNov-20282.92%197 193
Green wholesale bondsNZDOct-20301.92%127 119
Capital bonds - MCY050NZDMay-20525.73%248 245
Lease liabilities121 113
Deferred financing costs(7) (8)
Total carrying value of loans1,941 1,898
Current383375
Non-current1,5581,523
1,9411,898
51
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTE D2. BORROWINGS & NET INTEREST
(CONTINUED)
Changes in borrowings from
financing activities
2024
$M
2023
$M
Borrowings at the start of the year1,898 1,956
Net cash borrowed/(repaid)62 (35)
Cash paid on principal of lease liability(13) (9)
Non-cash change in lease obligations21 2
Non-cash change in fair value
adjustment
(28) (17)
Non-cash change in deferred
financing costs
11
Borrowings at the end of the year1,9411,898
Borrowings are recognised initially at fair value,
net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Some
borrowings are in fair value hedge relationships and
have fair value adjustments to their carrying amounts,
attributable to the risk being hedged through interest
rate swaps (IRS) and cross-currency IRS. Fair value
is calculated using the discounted cashflow method,
with applicable market yield curves adjusted for the
Group's credit rating. Fair value adjustments as at
30 June 2024 totalled $56m decrease to carrying
amount (30 June 2023: $84m decrease).
The Group is required to comply with certain financial
covenants in respect of its borrowings. During the
2024 and 2023 financial years, the Group was in
compliance with all of its financial covenants.
Current borrowings include all drawn bank facilities,
borrowings with a contractual maturity of less than
one year, accrued interest ($10m) and current lease
liabilities ($16m). Undrawn borrowing facilities at
30 June 2024 totalled $340m, net of Commercial
Paper on issue.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
Bank facilities
The Group has $700 million of committed and
unsecured bank loan facilities as at 30 June 2024
(30 June 2023: $650 million).
Commercial paper programme
The Group has a $400 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 S&P Global.
Green bonds
The Group has $908 million of green bonds
(including accrued interest) as at 30 June 2024
(30 June 2023: $908 million) . The green bond
proceeds have been tracked in accordance with
the Green Financing Framework.
USPP
The Group has $59 million of United States Private
Placement (USPP). The Group uses a cross currency
interest rate swaps (CCIRS) to manage foreign exchange
and interest rate risks on the notes. While the NZ dollar
amount required to repay the USPP is fixed as a result of
the CCIRS, the USPP is required to be translated to NZD
at the spot rate at the reporting date. Any revaluation of
the USPP as a result of this translation is offset by the
change in the value of the CCIRS.
Deeds
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 Company
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 terms and conditions.
There was no breach of the terms of this deed or the
terms and conditions of the US Private Placement.
Lease liabilities
The Group has entered into various lease contracts
for the right to use land and buildings and office
equipment and is also deemed to be a lessee of
transmission equipment. The most significant
leases relate to office buildings in Auckland and
Tauranga. Lease payments of $19m were made
in 2024, including lease interest expense of $7m
(2023: payments of $15m, lease interest expense
of $6m).
Net Interest Expense 2024
$M
2023
$M
Interest expense on borrowings135 103
Interest expense on lease liabilities7 6
Unwind of discount on provisions4 3
Less capitalised interest(6) (9)
Total interest expense140 103
Interest income(6) (3)
Net interest expense134 100
The Group is capitalising interest costs related to the
construction of new generation assets. The average
rate used to determine the amount of borrowing
costs eligible for capitalisation as at 30 June 2024
was 6.67% (30 June 2023 6.28%).
52
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTE D3. COMMITMENTS AND
CONTINGENCIES
Capital commitments2024
$M
2023
$M
Within one year 263 134
One to five years 454 67
Later than five years––
717 201
Capital commitments
Capital commitments include purchases of
both property, plant and equipment (PP&E) and
intangibles. PP&E commitments include contracts for
refurbishment of hydro generation assets at Karāpiro,
contracts for construction of an additional generating
unit at Ngā Tamariki geothermal station, geothermal
drilling campaigns across the Kawerau, Ngā Tamariki
and Rotokawa fields and contracts for construction
of stage 2 of the Kaiwera Downs wind farm.
Intangible commitments are contracts to purchase
New Zealand emissions trading scheme (NZ ETS)
units. In the event the NZ ETS is terminated the
existing purchase agreements, which cover the three
year period from the end of the reporting period,
will also terminate.
Operating commitments
As part of its day-to-day operations, the Group from
time to time enters various operating arrangements
and commitments with third parties to support and
enhance the Group’s long-term licence to operate,
provide access to land, and use of natural resources.
These operating arrangements may be short-,
medium-, or long-term in nature.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
Contingencies
On 7 June 2021, the Kawerau geothermal station
experienced an unplanned outage as a result of
a mechanical failure. An outage was completed
in June 2023 to install replacement equipment.
The Group received an initial payment of $26m
recorded as income in 2022, and has recognised
further interim income of $17m in 2024. The Group
expects to receive additional insurance proceeds
in the 2025 financial year once the total loss to the
Group as a result of the incident has been confirmed.
This will be recognised as revenue when it is virtually
certain to be received.
The Group holds land and has interests in fresh water
and geothermal resources that are subject to claims
that have been brought against the Crown. The Group
discloses these claims as contingent liabilities as
the value, timing and likelihood of the claims being
successful are all uncertain.
The Pouākani Claims Trust No 2 and a group of
kaumātua have filed a claim in the Māori Land Court
seeking a declaration that certain parts of the Waikato
riverbed on which Mercury operates hydro assets are
Māori customary land, including the riverbed beneath
the Whakamaru, Maraetai I and II and Waipapa dams
and certain related power stations. The claim has been
amended to include interests in the water flowing over
the riverbed. Mercury holds the fee simple or beneficial
title to those parts of Waikato riverbed beneath the
Whakamaru, Maraetai I and II and Waipapa dams,
and has received advice that if the outcome of the
claim adversely affects the Group’s title to, or ability
to access or operate its hydro assets, Mercury may
bring a claim seeking compensation against the
Crown. The claim is currently subject to a judicial
review challenge to the Māori Land Court’s decision
to decline Mercury’s application to strike out parts
of the claim. The applicants have also filed a related
claim in the Waitangi Tribunal under the Treaty of
Waitangi Act 1975, but have not yet taken any further
steps in relation to that claim.
The Group holds land that was subject to a remedies
hearing brought against the Crown in the Waitangi
Tribunal. The remedies hearing related to an application
seeking binding recommendations for the resumption
of land at Pouākani, including the Group’s land at
Maraetai. The Crown and Ngāti Kahungunu ki Wairarapa
Tāmaki nui-ā-Rua Settlement Trust signed a settlement
deed addressing the resumption claim, and settlement
legislation has been enacted bringing this claim to an
end. Wairarapa Moana Incorporation issued a further
claim against the Crown claiming the Ngāti Kahungunu
ki Wairarapa Tāmaki nui-ā-Rua settlement breaches
the New Zealand Bill of Rights Act 1990. The High Court
recently dismissed this claim.
A claim by the New Zealand Māori Council relating
to fresh water and geothermal resources was lodged
in 2012 with the Waitangi Tribunal. The inquiry
was divided into three stages. In earlier stages, 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. Stage three will
consider law reform, including what Māori rights
and interests in geothermal resources are guaranteed
and protected by the Treaty of Waitangi, whether
current law in respect of geothermal resources
is consistent with the principles of the Treaty of
Waitangi and, if not, what recommendations should
be made for the reform of the current law. Relatedly,
individuals representing hapū affiliated with Ngāti
Tūwharetoa have filed a claim in the Tribunal
asserting customary interests in certain geothermal
resources, including the Mōkai, Rotokawa and
Kawerau geothermal fields. The impact of these
claims on the Group’s operations, and consequently
the amount of any claim or recourse the Group may
have should that impact be adverse to the Group’s
interests, are 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.
The Group has no other material contingent assets
or liabilities.
53
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTE D4. RECONCILIATION OF PROFIT TO OPERATING CASH FLOWS
Net earnings attributable to owners of the parent ($M)
2024
$M
Restated
2023
$M
Profit for the year290112
Adjustments for non-cash movements:
• Change in interest expense accrual– (6)
• Gain on revaluation of NOW New Zealand shares– (12)
• Depreciation and amortisation350 344
• Impairment– 12
• Loss on revaluation of generation assets– 41
• Amortisation of contract assets and costs to profit or loss42 41
• Change in the unrealised fair value of financial instruments(14) 165
• Change in the fair value of carbon units held for trading(8) 36
• Movement in effect of discounting on long-term provisions4 3
• Share of earnings of associate and joint venture companies1 (5)
• Increase in deferred tax37 (57)
Net cash provided by operating activities before change in assets and liabilities702 674
Change in assets and liabilities during the year:
• (Increase) in trade and other receivables and prepayments(199) (48)
• (Increase)/decrease in inventories(21) 3
• (Increase) in contract assets and costs, net of amortisation(45) (58)
• Increase/(decrease) in trade payables and accruals146 (23)
• Increase in provision for tax29 30
Net cash inflow from operating activities612 578
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
NOTE E1. INVESTMENTS IN AND ADVANCES TO ASSOCIATES AND JOINT ARRANGEMENTS
(JOINT VENTURES AND JOINT OPERATIONS)
The Group financial statements include the following:
Interest held
Name of entityPrincipal activityType20242023Country
TPC Holdings LimitedInvestment holdingAssociate
1
25.00%25.00%New Zealand
RotokawaSteamfield operationJoint operation64.80%64.80%New Zealand
Nga Awa PuruaElectricity generationJoint operation65.00%65.00%New Zealand
EnergySource LLCInvestment holdingJoint venture
1
20.86%20.86%United States
EnergySource Minerals LLCMineral extractionJoint venture
1
17.7 3%18.41%United States
1
Associates and joint ventures are equity accounted under NZ IAS 28 Investments in Associates and Joint Ventures.
AssociatesJoint ventures
2024
$M
2023
$M
2024
$M
2023
$M
Balance at the beginning of the year 72 67 8 6
Additional investment during the year––– 3
Share of earnings 1 4 (2) 2
Share of movement in other comprehensive income and reserves (6) 11 ––
Distributions received during the year (4) (6)– (3)
Reclassification to subsidiary– (16)––
Fair value revaluation during the year – 12 ––
Balance at the end of the year 63 72 6 8
At the end of the year the Group had outstanding advances to its Rotokawa joint operation partner of $3 million
(2023: $3 million) and its associate TPC Holdings Limited of $4 million (2023: $4 million). For terms and conditions
of these related party receivables refer to note E2.
54
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTE E2. RELATED PARTY TRANSACTIONS
Majority shareholder
The majority shareholder of Mercury NZ Limited
is the Government. Transactions cover a variety of
services including energy, postal, travel and tax.
Transactions with related parties
The Group entered into a number of contracts with
other Crown-controlled entities to hedge against
wholesale electricity price risk, the most significant
being a virtual asset swap with Meridian Energy
Limited which has a remaining life of 1.5 years and a
contract for difference with Genesis Energy Limited
for generation produced at the Waipipi wind farm.
Mercury NZ Limited also 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 in the next table:
Transaction value
2024
$M
2023
$M
Associates
• Management fees and service
agreements received
26 18
• Energy contract settlements
(paid)/received
31 (2)
• Service fees (paid)/received– (3)
Joint operations
• Management fees and service
fees received and paid
31 21
• Energy contract settlements
(paid)/received
12 –
• Interest income– 1
On 15 December 2022, Mercury NZ Limited acquired
the remaining 52% interest in NOW. After this
acquisition date, NOW ceased to be an associate
of the Group. The service fees disclosed during
the comparative reporting period are related to
transactions with NOW during the period it was
an associate of Mercury NZ Limited.
An advance to TPC Holdings Limited of $4m
(30 June 2023: $4m) is interest free and is repayable
on demand subject to certain conditions being met.
The long-term advance to our Rotokawa joint
operation partner of $3m (30 June 2023: $3m)
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
2024
$000
2023
$000
Key management personnel
compensation (paid and
payable) comprised:
• Directors' fees1,102 1,101
• Benefits for the Chief Executive
and Senior Management:
Salary and other short-term
benefits
7,444 7,0 4 4
Termination benefits 312 –
Share-based payments 779 680
9,6378,825
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.
Some Directors also provide directorship services
to other third party entities.
A number of key management personnel provide
directorship services to subsidiaries, associates and
joint operations as part of their employment without
receiving any additional remuneration from the Group.
The Group purchases directors and officers insurance
for the benefit of key management personnel in
relation to the services they provide to the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
Mokai geothermal station.
55
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTE F1. DERIVATIVE FINANCIAL
INSTRUMENTS
The Group uses a range of derivative contracts
in order to manage risk and hedge against cash
flow and fair value volatility. It is the Group's policy
to apply hedge accounting to reduce volatility in profit
or loss, and where possible, derivatives are designated
into hedging relationships under NZ IFRS 9 as either
cash flow or fair value hedges.
Interest rate and cross currency interest
rate derivatives
Interest rate swaps and cross currency derivatives are
used to manage interest rate risks. Interest rate swaps
where we pay-fixed, and receive-floating interest rates
are designated as cash flow hedges in a relationship
with a portion of floating rate debt exposure. Interest
rate swaps where we receive-fixed, pay-floating
interest rate are designated as fair value hedges in
a relationship with the swap rate on fixed rate bonds.
Cross-currency swaps are designated as both fair value
and cash flow hedge relationships with the USPP and
Australian denominated Green wholesale bond (refer
note D2) depending on the component of the debt
being hedged: the risk free (swap) rate as a fair value
hedge; and the credit margin as cash flow hedge.
Foreign exchange derivatives
Foreign exchange forward contracts are designated
as cash flow hedges in a relationship with forecast
purchases of inventory and capital equipment, mainly
for maintenance and construction of generation assets.
Electricity contracts
Where possible, electricity price derivatives are
designated as cash flow hedges in a relationship
with forecast electricity sales and purchases.
Exceptions are swaps and options used for trading
(electricity futures, options and financial transmission
rights) as well as other contracts that have been deemed
Change in fair value of financial instruments
2024
$M
Restated
2023
$M
Realised gain/(loss) on unhedged electricity swaps 158 6
Unrealised gain/(loss) on unhedged derivatives and hedge ineffectiveness through income
statement
14 (165)
Change in fair value of derivative financial instruments per P&L172 (159)
The unrealised changes in fair values of all financial instruments recognised in the income statement and other
comprehensive income are summarised below:
Income statementOther comprehensive
income
2024
$M
Restated
2023
$M
2024
$M
Restated
2023
$M
Interest rate and cross currency interest rate derivatives13 (7)(9) 2
Electricity price derivatives20 (175)(171) 211
Foreign exchange rate derivatives––– (1)
Ineffectiveness of cash flow hedges recognised in the income statement(19) 17 ––
Total unrealised change in fair value of derivative financial instruments14 (165)(180) 212
Movement in cash flow hedge reserve on hedged unrealised gains/losses
2024
$M
Restated
2023
$M
Opening balance(80) (245)
Effective portion of cash flow hedges recognised in the reserve(180) 212
Amount transferred to balance sheet(2) 2
Equity accounted share of associate's movement in other comprehensive income(6) 11
Transfer of share of associate's reserves to profit or loss upon disposal––
Tax effect of movements51 (60)
Closing balance(217) (80)
Unrealised gains and losses on hedged derivatives are recognised in the cash flow hedge reserve and other
comprehensive income. When the gains or losses are realised, they are released from the cash flow hedge
reserve to the balance sheet or profit and loss in line with the underlying hedged item.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
not eligible for hedge accounting due to price
reset mechanisms, termination options or variable
volume structures (e.g. wind and solar power
purchase agreements).
The fair values of derivative financial instruments
are summarised in the following table:
2024
$M
Restated
2023
$M
CURRENT ASSETS
Electricity price derivative 308 190
Interest rate derivative 4 11
Cross currency interest rate
derivative
-–
Foreign exchange derivative 1–
313 201
CURRENT LIABILITIES
Electricity price derivative 327 133
Interest rate derivative 36 44
Cross currency interest rate
derivative
8 9
Foreign exchange derivative -–
371 186
NON-CURRENT ASSETS
Electricity price derivative 183 224
Interest rate derivative 6 6
Cross currency interest rate
derivative
14 13
203 243
NON-CURRENT LIABILITIES
Electricity price derivative 235 160
Interest rate derivative 54 73
Cross currency interest rate
derivative
7 10
296 243
56
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
AREA OF KEY JUDGEMENT
FAIR VALUE ESTIMATION
Valuation techniques
All fair value balances are assigned to a fair value hierarchy level as defined by NZ IFRS 13 Fair Value Measurement. No transfers
occurred between hierarchy levels in the period ended 30 June 2024.
The following table provides a breakdown of the fair value of derivatives by the source of key valuation inputs:
30 June 2024
Quoted
market
price
Market
observable
inputs
Non-
market
observable
inputsTot al
Valuation techniqueLevel 1
$M
Level 2
$M
Level 3
$M
$M
Financial assets
Derivative instruments
• Electricity price derivatives 36 – 455 491
• Interest rate derivatives– 10 –10
• Cross currency interest rate derivatives– 14 –14
• Foreign exchange rate derivatives– 1 –1
36 25 455 516
Financial liabilities
Derivative instruments
• Electricity price derivatives 72 – 490 562
• Interest rate derivatives– 90 –90
• Cross currency interest rate derivatives– 15 –15
• Foreign exchange rate derivatives–––-
72 105 490 667
Net financial asset/(liability) (36) (80) (35) (151)
Restated 30 June 2023
Quoted
market
price
Market
observable
inputs
Non-
market
observable
inputsTot al
Valuation techniqueLevel 1
$M
Level 2
$M
Level 3
$M
$M
Financial assets
Derivative instruments
• Electricity price derivatives 33 – 381 414
• Interest rate derivatives– 17 – 17
• Cross currency interest rate derivatives– 13 – 13
33 30 381 444
Financial liabilities
Derivative instruments
• Electricity price derivatives 45 – 248 293
• Interest rate derivatives– 117 – 117
• Cross currency interest rate derivatives– 19 – 19
45 136 248 429
Net financial asset/(liability) (12) (106) 133 15
NOTE F1. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
57
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
Valuation of Level 1 Financial Instruments
Level 1 financial derivatives includes ASX futures and financial transmission rights with fair values
determined using quoted prices. These prices represent regularly occurring market transactions on
an orderly basis.
Valuation of Level 2 Financial Instruments
The fair values of Level 2 derivatives are determined using discounted cash flow models. Listed below
are the Level 2 derivatives and the key inputs to the valuation model.
DerivativeValuation Input
Cross Currency Interest Rate Swaps (CCIRS)
Forward interest rate price curve and foreign exchange
rate curve
Interest Rate SwapsForward interest rate curve
Foreign Exchange ContractForward foreign exchange rate curves
Valuation of Level 3 Financial Instruments
The Group uses various methods in estimating the fair value of an electricity financial derivative. 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:
20242023
Price path $84/MWh to $221/MWh$73/MWh to $153/MWh
Discount rate10.3% to 4.1%12.0% to 4.0%
The wide range in discount factors are driven by entering into longer term derivative contracts. Forward
electricity spot price in the front end of the curve in FY24 were higher, driven by futures price, thus resulting
in a higher maximum price of $221/MWh in FY24 compared to $153/MWh in FY23.
The selection of valuation 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.
Reconciliation of Level 3 unrealised fair value movements
The unrealised Level 3 fair value movements in the Group's Consolidated Income Statement are recognised within 'change in the fair value of financial
instruments', along with realised gains/losses on financial instruments not in a hedging relationship.
Fair value through other
comprehensive income
Fair value through
profit or loss
Tot al
2024
$M
Restated
2023
$M
2024
$M
Restated
2023
$M
2024
$M
Restated
2023
$M
Opening balance sheet position (78) (257)211359133102
New contracts (48) 23 (4) 10 (52)33
Matured contracts (12) 66 (6) 17 (17)83
Gains and losses
• Through the income statement ––22 (175)22 (175)
• Through other comprehensive income (120) 90 ––(120)90
Closing balance sheet position (259) (78)223211(35) 133
NOTE F1. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
Sensitivity of Level 3 fair value measurements
The following summarises the potential impact of increases or decreases
in price risk exposures of the Group on post tax profit. Sensitivity analysis
is based on an assessment of the reasonably possible movements in
forward price. The electricity sensitivities disclosed below do not include
Level 1 electricity derivatives. Refer to note F2 for sensitivity analysis on
all electricity derivatives.
Impact on post
tax profit
2024
$M
Restated
2023
$M
Group
Electricity forward price increased by 10% (28) 39
Electricity forward price decreased by 10% 23 (45)
Deferred 'inception' gains/(losses) on Level 3 derivatives
There is a presumption that when derivative contracts are entered into at
an arm's length basis that the fair value at inception is 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 as at
30 June 2024.
2024
$M
2023
$M
Electricity price derivatives
Opening deferred inception gains/(losses) 39 26
Deferred inception gains/(losses) on new hedges(23) 17
Deferred inception(losses)/gains realised during
the year
(17) (4)
Closing inception gains/(losses)(1) 39
58
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTE F2. FINANCIAL RISK MANAGEMENT
The Group's overall risk management programme
focuses on the unpredictability of financial markets
and seeks to proactively manage these risks with the
aim of protecting shareholder wealth. Exposure to
price, credit, foreign exchange, liquidity and interest
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
(A) MARKET RISK
Nature of risk exposureRisk Management Policy
Electricity price
The Group is exposed to movements in the spot price of electricity
arising from the sale and purchase of electricity in the market.
The Group enters into electricity derivative contracts, including
swaps, futures, options and PPAs that establish a fixed price
at which future quantities of electricity are purchased and
sold. The electricity contracts are periodically settled with any
difference between the contract price and the electricity spot
price settled between the parties. Cash flow hedge accounting
is applied.
Foreign exchange
The Group is exposed to foreign exchange risk as a result of
transactions denominated in a currency other than the Group's
functional currency. The currencies giving rise to this risk are
primarily US Dollar, Japanese Yen, Euro, Yuan and AU Dollar.
The Group's policy is to enter into forward exchange contracts
to hedge its committed foreign denominated expenditure
programme.
Interest rate
The Group has exposure to interest rate risk to the extent
that it borrows for fixed terms at floating interest rates.
The Group uses mostly interest rate swaps and rarely interest
rate options to manage this exposure.
Derivatives in designated hedging relationships
ElectricityForeign ExchangeInterest Rate
2024
$M
Restated
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
Notional amount 5,830 4,680 202 31 2,500 2,061
Maturity1-20 years1-16 years0-1 year1 year0-10 years0-10 years
Carrying amount - asset76 135 1 – 24 30
Carrying amount - liability(360)(207)–– (105) (136)
Recognised in OCI (171) 211 – (1) (9) 2
Ineffectiveness (13) 9 –– (5) 7
Hedge Ratio1:11:11:11:11:11:1
rate risks arise in the normal course of the Group's
business. The Group's principal financial instruments
comprise cash, trade receivables and accruals (not
prepayments), advances, payables and accruals,
borrowings and derivative financial instruments.
At inception, each hedge relationship is formalised
in hedge documentation. Hedge accounting is
discontinued when the hedge instrument expires
or is terminated, exercised or no longer qualifies
for hedge accounting. The Group determines the
existence of an economic relationship between the
hedging instrument and the hedged item based
on the amount and timing of respective cashflows,
reference interest rates, currency, maturities and
notional amounts. The Group assesses whether the
derivative designated in each hedging relationship is
expected to be, and has been, effective in offsetting
the changes in cash flows of the hedged item using
the hypothetical derivative method.
The Group’s policy is to designate derivatives in hedge
relationships on inception when their fair value is
zero, applying a hedge ratio of 1:1. The main source
of ineffectiveness for electricity contracts relates to
the difference between the market price and the
strike price at inception of the contracts. For interest
rate derivatives, the weighted average hedge rate
for cashflow hedges (receive floating, pay fixed rate)
is 4.0% (2023: 3.6%) and for fair value hedges (pay
floating, receive fixed rate) is 3.4% (2023: 2.6%).
Market risk sensitivity analysis
The following summarises the potential impact of
increases or decreases in the relevant market risk
exposures of the Group on post tax profit (unhedged
derivatives) and on other components of equity
(hedged derivatives) from the change in the derivative
valuation. The analysis does not take into account
dynamic market response over time, which could be
material. The electricity sensitivities disclosed below
include Level 1 derivatives.
Impact on post tax profitImpact on equity
2024
$M
Restated
2023
$M
2024
$M
2023
$M
Electricity forward price increased by 10% (27)42 (77)(62)
Electricity forward price decreased by 10% 22 (43)76 62
Forward foreign exchange rates increased by 10%––(12) (2)
Forward foreign exchange rates decreased by 10%––17 2
Interest rates higher by 100 bps (32)(28)11 6
Interest rates lower by 100 bps 34 29 (11) (6)
(B) CREDIT RISK
Nature of risk exposureRisk Management Policy
The carrying amounts of financial
assets recognised in the balance
sheet best represent the Group's
maximum exposure to credit risk
at the reporting date without taking
account of any collateral held by
way of customer bonds.
The Group manages its exposure to credit risk under policies approved by the Board of
Directors. The Group performs credit assessments on all electricity customers and normally
requires a bond from commercial customers who have yet to establish a suitable credit
history. In the event of a failure by a retailer to settle its obligations to the Energy Clearing
House, following the exhaustion of its prudential security, a proportionate share of the
shortfall will be assumed by all generator class market participants. The Group would be
impacted in the event that this occurs. It is the Group's policy to only enter into derivative
transactions with banks that it has signed an ISDA master agreement with, and which have
a minimum long-term Moody's (or equivalent) credit rating of A- or higher.
59
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTE F2. FINANCIAL RISK MANAGEMENT (CONTINUED)
(C) LIQUIDITY RISK
Nature of risk exposureRisk Management Policy
Liquidity risk is the risk that the
Group will not be able to meet
its financial obligations as they
fall due.
The Group manages its exposure to liquidity risk
under policies approved by the Board of Directors.
Policies require that prescribed headroom is
available in undrawn and committed facilities
to cover unplanned needs and that a limited
amount of facilities mature over the immediate
12 month forward-looking period. The Group's
objective is to maintain a balance between
continuity of funding and flexibility through
the use of various funding sources.
The following liquidity risk disclosures reflect all contractually fixed
payoffs, repayments and interest from recognised non-derivative
financial liabilities. The timing of cash flows for non-derivative financial
liabilities is based on the contractual terms of the underlying contract.
The information on contractual cashflows are presented on an
undiscounted basis, consequently the totals will not reconcile with
the amounts recognised in the balance sheet.
• Net settled derivatives include interest rate derivatives and electricity
price derivatives.
• Gross settled derivatives relate to foreign exchange derivatives that
are used to hedge future purchase commitments.
• Foreign exchange derivatives may be rolled on an instalment basis
until the underlying transaction occurs. While the maturity of these
derivatives are short-term the underlying expenditure is forecast to
occur over different time periods. The Group also expects to receive
funds relating to derivative asset settlements.
While the following tables give the impression of a liquidity shortfall, the
analysis does not take into account expected future operating cash flows or
committed and undrawn debt facilities that will provide additional liquidity
support. The expectation of cash receipts in relation to derivative assets
should also be considered when assessing the ability of the Group to meet
its obligations.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
Less than 6 months
$M
6 to 12 months
$M
1 to 5 years
$M
Later than 5 years
$M
Tot al
$M
30 JUNE 2024
Liquid financial assets
Cash 44 – – – 44
Receivables 638 – – – 638
Non derivative financial liabilities
Payables and accruals (462) – – – (462)
Borrowings (341) (33) (1,041) (1,794) (3,209)
Lease liabilities (11) (11) ( 74) (56) (153)
Derivative financial liabilities
Derivative liabilities - net settled
Electricity price derivatives (180) (146) (338)– (664)
Interest rate derivatives (19) (14) (54) (8) (95)
Cross currency interest rate derivative (5) (4) 10 – 1
Derivative liabilities - gross settled
Foreign exchange derivatives inflows 202 – – – 202
Foreign exchange derivatives outflows (202) – – – (202)
Net outflows (336) (208) (1,498) (1,858) (3,900)
Less than 6 months
$M
6 to 12 months
$M
1 to 5 years
$M
Later than 5 years
$M
Tot al
$M
RESTATED 30 JUNE 2023
Liquid financial assets
Cash 75 – – – 75
Receivables 440 – 1 – 441
Non derivative financial liabilities
Payables and accruals (344)––– (344)
Borrowings (383) (28) (840) (1,793) (3,044)
Lease liabilities (7) (7) (55) (88) (157)
Derivative financial liabilities
Derivative liabilities - net settled
Electricity price derivatives(34)(57)(194)(19)(303)
Interest rate derivatives(23)(23)(69)(12) (128)
Cross currency interest rate derivative (5) (5) (7) 8 (9)
Derivative liabilities - gross settled
Foreign exchange derivatives inflows 31 – – – 31
Foreign exchange derivatives outflows (31) – – – (31)
Net outflows (280) (120) (1,164) (1,904) (3,468)
60
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
NOTE F2. FINANCIAL RISK MANAGEMENT
(CONTINUED)
(D) CAPITAL RISK MANAGEMENT
The Board policy is to maintain a sustainable financial
structure for the Group, recognising Mercury's targeted
long-term credit rating of BBB+ assigned by S&P
Global and the risks from predicted short and medium-
term economic, market and hydrological conditions
along with estimated financial performance. Capital
is managed to provide sufficient funds to undertake
required asset reinvestment as well as to finance new
generation development projects and other growth
opportunities to increase shareholder value at a rate
similar to comparable private sector companies.
In order to maintain or adjust the capital structure,
changes can be made to the amount paid as
dividends to shareholders, capital can be returned or
injected or assets sold to reduce borrowings.
Consistent with other companies in the industry, the
Group monitors capital on the basis of its gearing
ratio. This ratio is calculated as net debt divided
by total capital. Net debt is calculated as total
borrowings (both current and non-current) less cash.
Total capital is calculated as shareholders' equity plus
net debt. The gearing ratio is calculated below:
2024
$M
Restated
2023
$M
Borrowings at carrying value1,941 1,898
Add back: fair value adjustments5684
Less cash(44)(75)
Net debt1,953 1,907
Tot al equit y4,849 4,863
Total capital6,802 6,7 70
Gearing ratio28.7%28.2%
NOTE G1. SHARE-BASED PAYMENTS
LONG-TERM INCENTIVE PLAN
The Group operates an equity-settled share
based long-term incentive (LTI) plan for senior
management. The plan is designed to enhance the
alignment between shareholders and those senior
managers most able to influence the performance
of the Group.
Under the plan senior managers are granted the
shares at nil cost if certain total shareholder return
targets are met. Performance is measured against a
combination of: i) other electricity generators who are
listed on the NZX; and (ii) out-performance against
the Group's internal return on capital hurdles. The
plan is due to vest in July 2025 and July 2026.
Each LTI plan represents the grant of in-substance
nil-price options to senior managers. During the
year the Group expensed $779,312 in relation to
equity-settled share based payment transactions
(2023: $680,022).
The cost of the share-based payment is recognised
over the period in which the performance or service
conditions are fulfilled. The total amount expensed
is based on the Group’s best estimate of the number
of equity instruments that will ultimately vest,
taking into consideration the likelihood that service
conditions will be met, multiplied by the initial fair
value of each share.
Under the negative pledge deed in favour of its
bank financiers the Group must, in addition to
not exceeding its maximum gearing ratio, exceed
minimum interest cover ratios and a minimum
shareholder equity threshold.
The Group seeks to maintain a debt to EBITDAF ratio
of between 2.0 and 3.0 times, on average through
time, to maintain credit metrics sufficient to support
its credit rating on an on-going basis. For the purpose
of calculating this ratio and consistent with the rating
agency treatment, adjustments are made to net debt
and EBITDAF based on the definitions provided by
the rating agency. For the year ended 30 June 2024,
the Group had a debt to EBITDAF ratio of 2.0 times
(2023: 2.0 times).
Movements in the number of share options are
as follows:
2024
$M
2023
$M
Balance at the beginning of the year 930,241 863,879
Options granted 255,843 348,101
Options expired– (57,009)
Options exercised(358,528)(224,730)
Balance at the end of the year827,556 930,241
241,339 options were exercisable at the end of the
year (2023: 358,528) with the remaining options
under the plan having a weighted average life of 1
year (2023: 1 year).
NOTE G2. SUBSEQUENT EVENTS AND
OTHER MATTERS
The Board of Directors has approved a fully imputed
final dividend of 14.0 cents per share to be paid on
30 September 2024. The Group plans to continue
with the DRP announced in FY2022, with a DRP
strike price to be determined by the average of daily
volume weighted average sale price for a share,
calculated on all price setting trades of shares that
took place through the NZX Main Board over a period
of five trading days starting on 16 September 2024,
less a 2% discount.
On 11 July 2024, the Group redeemed capital bond
MCY020 and issued a new capital bond MCY070
for $350m.
There are no other material events subsequent to
balance date that would affect the fair presentation
of these financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
For the year ended 30 June 2024
61
MERCURY 2024 INTEGRATED REPORTLOOKING AT THE NUMBERSMENU
TE TAUĀKI ĀHUARANGI.
In this section we cover how we consider and respond to climate-related
risks and opportunities as we pursue our objective of accelerating the
shift to a low-carbon future.
Turitea wind farm.
62
MERCURY 2024 INTEGRATED REPORTMENU
MERCURY &
CLIMATE CHANGE.
This climate statement has been prepared in
alignment with the Aotearoa New Zealand Climate
Standards
1
(NZ CS) and is for the 2024 Financial
Year. In FY24, Mercury is relying on the adoption
provisions in NZ CS 2, namely adoption provision 2,
for an exemption from disclosing the anticipated
financial impacts of climate-related risks and
opportunities and adoption provision 4, for an
exemption from disclosing a selected subset of
our scope 3 GHG emissions sources, comprising
of capital goods, purchased goods and services
and investments.
1
Aotearoa New Zealand Climate Standards available www.xrb.govt.nz/
standards/climate-related-disclosures/aotearoa-new-zealand-climate-
standards/aotearoa-new-zealand-climate-standard-1/
FY24 CLIMATE STATEMENT
20 August 2024
SCOTT ST JOHN // C H A I R
JAMES MILLER // CHAIR, RISK ASSURANCE
AND AUDIT COMMITTEE
CONTENTS.
64 INTRODUCTION
65 GOVERNANCE
69 STRATEGY
78 RISK MANAGEMENT
80 METRICS & TARGETS
Aratiatia Rapids
63
MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
INTRODUCTION.
Mercury’s purpose is Tiakina te anamata, mā te tūhono i ngā tāngata me ngā wāhi o
te inamata. Taking care of tomorrow: Connecting people and place today. This brings
together our company, employees, customers, iwi, and stakeholders to contribute toward
a positive impact on people and the planet.
As Aotearoa New Zealand navigates to Net Zero, we
recognise the multifaceted nature of climate change,
including immediate and long-term challenges and
opportunities. These encompass physical impacts from
acute events such as storms, chronic long-term shifts
in climate patterns and transitional impacts such
as policy, legal, technology and market changes.
We recognise the potential opportunities such as
electricity demand increasing as we shift to a low-
carbon future. To effectively address these dynamics,
our integrated strategy considers climate-related risks,
opportunities and current impacts.
A SUMMARY OF KEY POINTS IN THIS CLIMATE STATEMENT ARE:
IMPORTANT INFORMATION
FOR READERS
Mercury has used best efforts in the preparation
of this Climate-Related Disclosure to provide accurate
information as at 20 August 2024 but cautions reliance
being placed on representations that are necessarily
subject to significant risks, uncertainties or assumptions.
This Climate-Related Disclosure contains forward-
looking statements, including climate-related metrics,
climate scenarios, estimated climate projections, targets,
assumptions, forecasts and statements of Mercury’s
future intentions. These statements necessarily involve
assumptions, forecasts and projections about Mercury’s
present and future strategies and the environment
in which Mercury will operate in the future, which
are inherently uncertain and subject to limitations,
particularly as to inputs, available data and information
which is likely to change. Mercury has used its best
efforts to provide a reasonable basis for forward-
looking statements but is constrained by the novel
and developing nature of this subject matter. Climate-
related forward-looking statements may therefore be less
reliable than other statements Mercury may make in its
annual reporting.
Descriptions of the qualitative and quantitative current
financial and other impacts of climate change draw
on and/or represent estimated figures only. In particular,
the risks and opportunities described in this report, and
the forecast emissions reductions, may not eventuate
or may be more or less significant than anticipated.
There are many factors that could cause Mercury’s actual
results, performance or achievement of climate-related
metrics (including targets) to differ materially from that
described, including climatic, government, consumer,
and market factors outside of Mercury’s control.
Nothing in this Climate-Related Disclosure should be
interpreted as capital growth, earnings or any other legal,
financial tax or other advice or guidance.
BASED ON THESE SCENARIOS:
We identified material climate-related risks
and opportunities that could affect our
business and captured our view of material
climate-related current impacts to Mercury.
MATERIAL CLIMATE-RELATED
OPPORTUNITIES IDENTIFIED
AS THOSE ARISING FROM:
• Low-carbon transition lifts
electricity demand
• Capital markets tilt towards
investing in low-carbon generation
MATERIAL CLIMATE-RELATED RISKS
IDENTIFIED AS THOSE ARISING FROM:
• Greater variability in weather patterns
(including more frequent high inflow
events and droughts) that reduces hydro
generation flexibility and profitability
• Growing intensity of atmospheric
conditions (including storm events)
that cause asset damage
• Government policy settings fail
to balance the energy trilemma
• Supply chain and labour constraints
MATERIAL CLIMATE-RELATED
CURRENT IMPACTS IDENTIFIED
AS THOSE ARISING FROM:
• Participation in the New Zealand
Emissions Trading Scheme
• Investment in greenhouse gas
reinjection at our geothermal sites
We employ strategic foresight to navigate uncertainties,
exploring risks and opportunities in different plausible
future scenarios. Mercury employs a single set of
scenarios that include both climate-related and other
strategic considerations. This Climate Statement
focuses on the climate-related aspects of Mercury’s
scenarios. Regular monitoring informs our choices,
keeping climate change central to our strategy.
Our governance frameworks and remuneration models
ensure that we have appropriate oversight and active
management of these factors.
12345
MERCURY’S SCENARIOS HAVE FOUR
DIFFERENT PATHWAYS:
• where global temperature increase
is limited to 1.5 ̊C,
• where global temperature increase
is limited to 2.5 ̊C,
• where global temperature increase
is limited to 3 ̊C,
• where global temperature increase
is greater than 3 ̊C.
We are continuing to explore additional actions to reduce our own emissions and mitigate climate change. Further details are outlined in our Climate Action Plan.
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
GOVERNANCE.
BOARD
Our Board oversees Mercury’s strategic scenarios, including climate-
related risks and opportunities. Responsibilities of the Board are outlined
in the Board Charter and include establishing clear strategic goals with
appropriate supporting business plans and resources, monitoring strategy
implementation, financial performance, and the integrity of reporting,
and ensuring that effective audit, risk management, and compliance
systems are in place and monitored.
The Board discusses Mercury’s scenarios, any changes in the external
environment (including climate-related changes) and progress towards
our three-year objectives quarterly (covered in Strategic Monitoring Reports)
and in more detail biannually at Strategy Days. From June 2024, the Board
also receive quarterly updates from the Executive GM Sustainability that
include how we are progressing toward our Scope 1, 2 and 3 emissions
reduction targets. For further information on our emissions reduction
targets, refer to the Metrics and Targets section of this Climate Statement.
A committee of the Board - the People and Performance Committee
(PPC) – supports the Board in setting the approach to remuneration,
including incorporating climate-related matters in the Short-Term
Incentive component of remuneration.
In FY24, the relevant Board meetings were:
August 2023
Board Meeting;
discuss scenarios,
external changes
and progress
towards our three-
year objectives
November 2023
Strategy Day; discuss
scenarios, external
changes and
progress towards our
three-year objectives
February 2024
Board Meeting;
discuss scenarios,
external changes
and new three-year
objectives
May 2024
Strategy Day; discuss
scenarios, external
changes and
progress towards our
three-year objectives
June 2024
Board Meeting;
discuss sustainability
quarterly update
In FY25, the relevant
Board meetings were:
August 2024
Approval of the FY24 Climate
Statement and Climate Action
Plan, discuss scenarios, external
changes and progress towards
our three-year objectives
In FY24, the relevant RAAC meetings were:
July and August 2023
Review and
endorsement of
the FY23 Climate
Statement
February 2024
Update on FY24
Climate Scenario
Analysis and risk
and opportunity
identification
May 2024
Initial review of
the FY24 Climate
Statement and
Climate Action Plan
In FY25, the relevant RAAC meetings were:
July 2024
Further review of
the FY24 Climate
Statement and
Climate Action Plan
August 2024
Final review and
endorsement of
the FY24 Climate
Statement and
Climate Action Plan
RISK ASSURANCE AND AUDIT COMMITTEE
A committee of the Board – the Risk Assurance and Audit Committee
(RAAC) – supports the Board in overseeing climate-related risks. The Board
itself has responsibility for climate-related opportunities. Members of
the EMT attend quarterly RAAC meetings where necessary to ensure
appropriate support and facilitate feedback and discussion. The RAAC
is responsible for reviewing and making recommendations to the Board
on our risk management policy and processes, including climate-related
risks and opportunities. They review progress against our risk management
framework, including metrics and targets. The Board is updated by the
RAAC Chair on relevant discussions and decisions reached at each meeting.
Mercury does not currently consider it necessary to establish a separate
sustainability sub-committee of the Board as Sustainability and
Kaitiakitanga/Stewardship are inherent in Mercury’s business operating
model and strategy and are therefore addressed within existing
governance structures.
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
SKILLS AND COMPETENCIES TO PROVIDE
OVERSIGHT OF CLIMATE-RELATED RISKS,
OPPORTUNITIES AND CURRENT IMPACTS
The Board’s skills matrix specifically includes
climate change.
In FY20, the Board evaluated our risk management
framework to assess whether it adequately addressed
climate-related risks within our integrated business
planning process. Given the potential impact of climate
change for Mercury, the Board amplified climate-
related risks within our consolidated risk register.
In FY21, the Board held an externally facilitated deep
dive into regulatory, economic, and legal aspects of
climate-related risks and opportunities. Additionally,
management presented its first climate change
scenario analysis report and the outcome of its review
of climate-related risks and opportunities to the RAAC.
In FY22 and FY23, we continued to mature our
approach to climate scenario analysis with input
from the RAAC through regular engagements.
The Board seeks internal and external expertise
and advice as required to ensure they have current
information for appropriate oversight of climate-
related risks and opportunities.
The Chair of our Board, Scott St John, has previously
been on the steering committee of Chapter Zero
New Zealand (www.chapterzero.nz), a global network
of board directors committed to acting on climate
change, which is hosted in Aotearoa New Zealand
by the Institute of Directors. Scott has recently
been appointed as a member of the Nominating
Committee for the Climate Change Commission.
MANAGEMENT’S ROLE IN ASSESSING AND
MANAGING CLIMATE-RELATED RISKS,
OPPORTUNITIES AND CURRENT IMPACTS
The Board entrusts the Chief Executive and the EMT
with responsibility for developing and recommending
strategies to identify, assess and manage climate-
related risks and opportunities (refer to the Leadership
and Governance section of the FY24 Integrated Report
for further detail). The EMT focuses on improving
reporting and disclosure of these climate-related
aspects, including identifying metrics and targets.
Mercury’s management is responsible for ensuring the
business effectively identifies, assesses, and manages
climate-related risks, opportunities and current impacts.
Mercury’s annual climate-related disclosure process
is prepared by Management with a primary governance
pathway, via the RAAC, to the Board.
The key inputs this year were:
• the analysis undertaken by the cross-functional
working group that reviewed and updated our
scenarios, risks, opportunities and current impacts;
• our participation in the development, and further
analysis, of the Energy and Telecommunications
Sector climate scenarios; and
• making progress towards the more detailed financial
quantification of our risks and opportunities.
In FY24, the relevant RMC meetings were:
January 2024
Update and endorsement of FY24
Climate Scenario Analysis and risk
and opportunity identification
April 2024
Initial review of the FY24
Climate Statement and
Climate Action Plan
In FY25, the relevant RMC meetings were:
July 2024
Further review of the FY24
Climate Statement and
Climate Action Plan
July 2024
Final review of the FY24
Climate Statement and
Climate Action Plan
RISK MANAGEMENT FRAMEWORK
Our risk management framework meets Aotearoa
New Zealand standard AS/NZS ISO 31000 Risk
Management – Principles and Guidelines. It helps
us to identify different categories of risk – compliance,
operational, reputational, financial and people risks.
Climate-related risks are integrated within these
categories and treated like other risks. More
information on our risk management approach can be
found in the Assurance & Managing Risk section of our
Corporate Governance Statement.
RISK MANAGEMENT COMMITTEE
Our management operates a Risk Management
Committee (RMC) whose mandate, as captured
in our Risk Management Policy, is to establish and
promote risk awareness among all staff, implement
and communicate effective risk management and
internal control frameworks, regularly monitor,
report, and review risk activities, and ensure sufficient
business resources for effective risk management.
Membership of the Risk Management Committee
includes representatives from the EMT and is
chaired by the Chief Executive. The RMC meets
approximately 10 times per year, including prior
to each RAAC meeting.
(Please refer to the table on the following page
for more information on specific responsibilities.)
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
BOARD
MERCURY BOARD
Establishes the purpose and strategic direction, oversees and approves risk management strategy and risk appetite and monitors progress against climate-related risks, metrics and targets.
Climate-related risks and opportunities form an integral part of Mercury’s overall risk management framework. All key climate-related risks and opportunities are approved by the Board.
In addition to reporting from the Risk Assurance and Audit Committee (RAAC), the Board receives quarterly updates on key sustainability trends and issues.
RISK ASSURANCE AND AUDIT COMMITTEE (RAAC)
The RAAC, a sub-committee of the Board, supports the Board in overseeing risks and opportunities including those related to climate change. The committee has been delegated primary responsibility for reviewing all
Climate Related Disclosures (CRDs) to ensure compliance with the NZ Climate Standards and engaging with management and assurance providers regarding these disclosures. The committee also ensures a suitable
system of controls and management in connection to climate-related risks is embedded in the business, including the keeping of proper CRD records.
Periodically reviews Mercury’s Risk Management Policy and Framework,
to ensure these remain fit for purpose, with appropriate and effective
risk management strategies in place.
Quarterly review of risk reports from management. Each year, there’s an annual
in-depth review including climate-related risk assessments and endorsing
updated scenarios used in Mercury’s identification of key climate-related risks
and opportunities.
Reports to the Board on the outcomes of RAAC meetings, including
discussion concerning risks and making recommendations to the Board.
EXECUTIVE
CHIEF EXECUTIVE AND EXECUTIVE MANAGEMENT TEAM
Overall accountability for actions and commitments to embed climate change into risk management, business strategy and planning, budgeting processes and frameworks.
Includes identifying, considering, and monitoring climate-related risks and opportunities and reporting to the RAAC and the Board.
RISK MANAGEMENT COMMITTEE (RMC)
The RMC is a committee of the EMT chaired by the Chief Executive.
Promotes risk awareness and appropriate risk management
throughout the business. Monitors and reviews risk activities at its
approximately 10 meetings each year.
Reporting of business risk is coordinated through the Risk Assurance Team and
Risk Assurance Officer. Climate-related risks and opportunities are reported to the
RMC through facilitation by the Sustainability Team.
When appropriate, management engages third-party experts for services
such as auditing, specific climate research or strategic management consulting.
EXECUTIVE
Ensures the risks in each business area are identified, understood, mitigated, managed and monitored and escalated appropriately.
Implements risk mitigation strategies.Reviews quarterly sustainability updates.
Monitors emerging and developing risks. For climate-related
risks and opportunities, this is facilitated by the Executive
General Manager Sustainability. Oversight of risk reporting
is performed by the Risk Assurance Team, which reports to
the Chief Financial Officer.
Preparation and presentation of climate-related
risk reports to the RAAC. These reports include
actions taken to mitigate risks previously disclosed.
Management remuneration includes incentives tied to climate-related risks and opportunities.
OPERATIONS
At an operational level, the identification and day-to-day management of climate-related risks is dispersed throughout Mercury.
OVERVIEW AND RELATIONSHIP BETWEEN RESPONSIBILITIES OF MERCURY BOARD, SUB-COMMITTEES AND MANAGEMENT.
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
CLIMATE-RELATED RISKS, OPPORTUNITIES
AND CURRENT IMPACTS ARE
INCORPORATED INTO COMPANY
STRATEGY DEVELOPMENT
Management’s periodic reviews of Mercury’s strategic
framework actively consider climate-related risks,
opportunities and current impacts. These reviews
play a crucial role in assessing significant market
changes, leading to the identification of new risks
and opportunities or re-assessment of existing ones,
potentially altering the likelihood and/or consequence
of their impact.
A cross-functional business team comprising of
representatives from our Sustainability, Portfolio,
Generation, Finance and Customer business units,
led by the Sustainability Team reporting through the
Executive GM Sustainability, contributes insights from
across the business. This group includes the strategy
function, as a fundamental objective of climate-
related scenario analysis is to bolster the resilience
of Mercury’s strategy. It also includes people who
engage with external stakeholders, such as suppliers,
customers, councils, and industry groups. Their work
directly informs scenario updates and continuous
monitoring of signals and signposts, culminating in
our quarterly Strategic Monitoring Reports. These
reports provide valuable insights during strategic
discussions and input into setting our three-year
objectives. Additionally, the EMT and Board conduct
quarterly reviews of our scenarios, integrating climate
considerations into our ongoing strategic monitoring
process. In FY24, these reviews occurred in August
and November 2023 and in February and May 2024.
MANAGEMENT REMUNERATION IS LINKED
TO MANAGEMENT OF CLIMATE-RELATED
RISKS AND OPPORTUNITIES
The remuneration of the Chief Executive and the EMT
is linked to Mercury’s strategic objectives, purpose and
goals. The Short-Term Incentive (STI) component of
remuneration is set as a percentage of the executive’s
base salary and for FY24 was set at 60% for the Chief
Executive and up to 35% for other EMT members.
A proportion (70% for the Chief Executive and 50%
for other EMT members in FY24) of the STI is related
to a shared set of Group Key Performance Indicators
(KPIs) that form our scorecard and are aligned with
our three-year objectives. These STI proportions have
remained consistent for over five years, and climate-
related KPIs have been a key part of this scorecard
for numerous years, as shown in the table below.
This scorecard is monitored by the Finance team and
reported to the People and Performance Committee
(PPC). The PPC reviews the annual performance
appraisal outcomes for all members of the EMT
and endorses for Board approval the outcomes for
all EMT members, including the Chief Executive.
Ngā Tamariki geothermal station.
FY22-24 THREE-YEAR
OBJECTIVE
FY22 KPIFY23 KPIFY24 KPIFY25-27 THREE-YEAR
OBJECTIVE
FY25 KPI
Play a leading role in
New Zealand’s successful
transition to a low carbon
economy
Support sector decarbonisation
options
Progress on future
development pipeline
Role in electricity sector
transition progress
Delivering more reliable
and renewable energy
to power Aotearoa
Generation availability
target met
Create executable options
for new growth
Progress generation development
pipeline options
Clear path to
carbon reduction
Progress on non-condensable
gas reinjection
Accelerating the shift
to a low-carbon future
Deliver 2 of 3 outcomes of:
• Advancement of new
demand or Commercial
and Industrial electrification
• Progress emission reduction
• Sector and Government
Energy Transition
Framework
More information on the responsibilities and remuneration of the Chief Executive and the EMT can be found in our Corporate Governance Statement and Remuneration Report.
68
MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
STRATEGY.
WHAT WE ARE SEEING
Mercury recognises that climate change is currently
impacting the way we operate. The material current
impacts on our business are as follows:
LOOKING FORWARD
SCENARIO ANALYSIS
Mercury recognises the importance of scenario
analysis in assessing climate-related risks and
opportunities, ensuring the resilience of our
strategy across different time horizons. To support
transparency and informed decision-making, we
update our scenarios quarterly and conduct an in-
depth annual review on the climate-related aspects.
Prior to FY23, we had climate scenarios aligned
with Task Force on Climate-related Financial
Disclosures recommendations that were separate
from our strategic scenarios. We had used external
third-party consultants to guide the scenario
analysis process.
In FY23, our cross-functional working group
conducted in-depth scenario analysis to highlight
emerging risks, opportunities and current impacts.
Recognising the interconnectedness of climate
considerations with our overall strategy, we
consolidated these scenarios into a unified set,
embedding climate into strategy discussions.
In FY24, our cross-functional working group
refined these scenarios and added a fourth
scenario incorporating climate-related aspects
into each. We also collaborated on the Energy
and Telecommunications Sector climate-related
scenarios with diverse businesses and external
parties. These helped us test and validate our
scenarios, risks and opportunities and identify any
gaps in our analysis. We also considered externally
published reference scenarios and models to enrich
our scenarios and will continue to use these as a
reference as we refine and update the climate-
related aspects of our scenarios.
Our unified set of scenarios explores a range of
plausible futures, and we use them to identify both
strategic and climate-related risks and opportunities
and to inform our strategic discussions and
decision-making.
The RMC, RAAC and the Board discussed our
scenarios to validate their robustness. The RAAC
and the RMC provided governance and oversight,
receiving updates from management and providing
feedback during meetings in February and May
FY24. These updates reviewed our processes,
updated scenarios and material climate-related
risks, opportunities, and current impacts. As part
of our quarterly strategic monitoring process, our
Board reviews our scenarios and provides feedback.
In accordance with NZ CS 1, we must consider three
scenarios: one with a global temperature increase
limited to 1.5 ̊C, another with a rise above 3 ̊C, and
a third with discretionary parameters (e.g., drivers).
Additionally, we explore a fourth scenario to further
assess alternative pathways for New Zealand’s low-
carbon transition. These scenarios and associated
pathways fulfil NZ CS 1 requirements, robustly
testing the resilience of our strategy and business
model under plausible and distinct futures,
and against diverse climate-related risks and
opportunities.
Our FY23 and FY24 scenario analysis has been
framed by the focal question: “What climate-related
risks and opportunities are affecting Mercury now
and could plausibly affect Mercury over the short,
medium and long terms?”.
The STEEP (Social / Technological / Economic /
Environmental / Political) framework shapes our
scenarios, considering external data sources as
captured in the Datasets and Models Used section
of this Climate Statement.
The boundary for Mercury’s scenario analysis covers
the entire organisation’s New Zealand operations,
including subsidiaries as well as joint ventures and
investments. Our investment in Energy Source LLC
and ES Minerals LLC was considered to not meet our
materiality threshold. We considered the impacts on
the upstream and downstream phases of our value
chain, e.g. key suppliers, partners, and customers.
Mercury did not undertake its own modelling in the
construction of its scenarios.
Our time horizons for both scenario
analysis and climate-related risks and
opportunities align with Mercury’s
business planning:
CURRENT: LESS THAN 1 YEAR
Tied to immediate planning and
operational considerations.
SHORT-TERM: 1 TO 3 YEARS
Aligning with Mercury’s 3-year objectives.
MEDIUM-TERM: 3 TO 10 YEARS
Corresponding to Mercury’s long-term
strategy and strategic scenarios.
LONG-TERM: 10 TO 30 YEARS
Aligning with the expected useful life
of new generation development.
1
234
CURRENT TRANSITION
CLIMATE IMPACTS
As a participant in the New Zealand Emissions Trading
Scheme, Mercury surrenders emissions credits for its
geothermal fugitive emissions and natural gas sales.
Financial impact: In FY24, the cost of New Zealand
emission units (NZU) surrendered totalled $7.2m NZD.
This cost is one of many factors that contribute
to wholesale electricity prices.
In FY24, Mercury sequestered ~7,100tCO
2
e by reinjecting
non-condensable gases from one unit at our Ngā
Tamariki geothermal station (about 20% of the total).
1
Expanding reinjection to other units at Ngā Tamariki
will begin early in FY25. We also plan to expand to
our Mokai and Rotokawa geothermal stations in the
next 5 years.
Financial impact: To date we have spent $3m.
1
Please refer to our GHG Emissions Inventory Report for details
on the calculation of our emissions.
CURRENT PHYSICAL
CLIMATE IMPACTS
No physical impacts have been deemed material for FY24.
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
2
SSP information sourced from IPCC, 2021: Summary for Policymakers. In: Climate Change 2021: The Physical Science Basis. Contribution of Working
Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [Masson-Delmotte, V. et al (eds.)]. Cambridge University Press,
Cambridge, United Kingdom and New York, NY, USA, p. 14. (www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_WGI_SPM.pdf) and SSP Public
Database, Version 2.0 (https://tntcat.iiasa.ac.at/SspDb/dsd?Action=htmlpage&page=welcome)
3
NGFS scenario information from the Scenarios Portal (www.ngfs.net/ngfs-scenarios-portal/explore)
OUR SCENARIOSORDERLY TRANSITION SCENARIO
(TEAL SCENARIO)
Global temperature increases are limited
to 1.5 degrees by 2100.
DISORDERLY TRANSITION SCENARIO
(BLUE SCENARIO)
Global temperature increases are limited
to 2.5 degrees by 2100.
DISORDERLY TRANSITION SCENARIO
(AMBER SCENARIO)
Global temperature increases are limited
to 3 degrees by 2100.
3+ DEGREE WARMING SCENARIO
(MAROON SCENARIO)
Global temperature increases
by 3+ degrees by 2100.
Scenario NarrativeGlobal cooperation and technology advancements
enable climate mitigation and adaptation. Aotearoa
excels in renewable energy, efficiently managing
high grid demand with decreasing wholesale prices,
leading to reliable and affordable energy. Fossil
fuels are phased out equitably, and New Zealand is
attractive for investment.
Insufficient infrastructure investment results in unreliable
grid systems and outages, exacerbated by extreme
weather. New technologies mitigate climate disruption
unevenly, leading to increased inequality and a
contested process for accessing natural resources.
Technological advancements lag behind, posing
challenges for renewable energy development.
New Zealand achieves a Zero Carbon energy sector
at considerable expense. Regulatory settings
contribute to delayed development.
Widespread climate impacts damage infrastructure
significantly. Slow technological advancements
hinder effective mitigation efforts. Deepening
economic inequalities lead a minority to pursue
luxury and sustainability in isolated communities.
Regulatory settings, alongside geopolitical tensions
disrupting international cooperation and supply
chains, complicate renewable energy development
essential for climate adaptation.
KEY DATAPOINTS – GLOBAL IMPACTS
Temperature increase
(2081-2100, relative to 1850-1900)
2
1.4°C 2.2°C2.7°C3.6°C
Technology Change
3
FastFastSlowSlow
Negative emissions technologies
3
Medium-high useMedium useLow-medium useLow use
KEY DATAPOINTS – AOTEAROA NEW ZEALAND IMPACTS
Average number of hot days (above 25°C)
(for the period 2031-50, average across
regions)
4
25 hot days 27 hot days27 hot days30 hot days
Renewable energy percentage
of total consumption in 2050
5
89% 87%74%46%
CLIMATE IMPACTSMedium physical climate risk. New technologies
have emerged to help adapt and mitigate
disruption caused. However, extreme weather
events occur more frequently, causing damage
and loss of life. Pre-emptive relocation of homes
and businesses in the areas predicted to be worst
hit is occurring.
We are able to navigate to a less than 2.5 degree future
and new technologies have emerged to help mitigate
disruption caused by climate change. However, the
impacts of climate change are widely felt, particularly in
poorer areas where these technologies are not in use.
We are able to navigate to a less than 3 degree
future, however, when climate events do occur,
they are expensive and disruptive as technological
solutions are not adequate to help adapt and
mitigate the disruption caused.
Highest physical climate risk. We have been unable
to navigate to a 1.5 degree future, with warming
on track to realise a 3+ degree future. Incidents of
disruptive and expensive damage to infrastructure
are growing in frequency. The retreat from the
ocean has begun.
REFERENCE SCENARIOS / DATA
SOURCES
SSP1-1.9
RCP2.6
CCC Tailwinds
NGFS Net Zero 2050
SSP4-3.4
RCP4.5
CCC Further Technology Change
NGFS Low Demand
SSP2-4.5
RCP4.5
CCC Headwinds
NGFS NDCs (Nationally Determined Contributions)
SSP3-7.0
RCP8.5
CCC CPR (Current Policy Representation)
NGFS Current Policies
4
RCP information applied to New Zealand by Ministry for the Environment 2018. Climate Change Projections for New Zealand: Atmosphere Projections
Based on Simulations from the IPCC Fifth Assessment, 2nd Edition. Wellington: Ministry for the Environment
(www.environment.govt.nz/assets/Publications/Files/Climate-change-projections-2nd-edition-final.pdf)
5
CCC scenarios as in Climate Change Commission ‘Chapter 12:Long Term Scenarios to meet the 2050 target’
(www.climatecommission.govt.nz/public/Evidence-21/Evidence-CH-12-Long-term-scenarios-to-meet-the-2050-target.pdf)
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
OUR SCENARIOSORDERLY TRANSITION SCENARIO
(TEAL SCENARIO)
Global temperature increases are limited
to 1.5 degrees by 2100.
DISORDERLY TRANSITION SCENARIO
(BLUE SCENARIO)
Global temperature increases are limited
to 2.5 degrees by 2100.
DISORDERLY TRANSITION SCENARIO
(AMBER SCENARIO)
Global temperature increases are limited
to 3 degrees by 2100.
3+ DEGREE WARMING SCENARIO
(MAROON SCENARIO)
Global temperature increases
by 3+ degrees by 2100.
ENERGY PATHWAYS:
Grid Demand
High demand driven by AI adoption, as well as
industry and transport decarbonisation. Peak shaving
and demand response (smart Distributed Energy
Resources- DER) are used efficiently to help manage
the grid effectively.
Grid electricity use is down due to an increase in
DER and loss of industry. DER creates a relatively flat
demand profile.
High demand is driven by transport
decarbonisation. Demand-side flexibility is minimal
and only used in emergencies (much like today).
Electricity demand has been stagnant to declining
due to a lack of industry decarbonisation and slow
EV uptake. Gas is still used quite extensively.
ENERGY PATHWAYS:
Grid Supply
Fossil fuels have been retired. Demand growth has
been met by grid-scale renewable generation and
batteries. Wholesale prices decrease.
Fossil fuels and thermal generation have been retired.
The system is under resourced and a little unreliable.
Net-Zero Carbon has been achieved. Grid scale wind
and other renewable solutions are the cornerstones
of this achievement. Blended Fossil and Bio-gas is
used for extreme peaks and security.
Fossil fuels remain with limited growth in
renewables. Large-scale storage will be used to help
meet peak demand and cover dry years once they
have been built.
MACROECONOMIC TRENDS:
Resource and technology constraints
Goods and knowledge are affordable and flow freely.
Technology allows a high degree of sustainable use
of natural resources. New Zealand is attractive for
investment.
Goods and knowledge are affordable and flow freely.
Access to natural resources is often contested and
involves a drawn-out process.
Physical resources were challenging to access due
to global demand, however, are now available from
global sources.
Access to knowledge and technology is difficult
and expensive. Physical resources were challenging
to access due to supply chain issues and global
demand.
POLICY AND SOCIOECONOMIC
ASSUMPTIONS:
Consumer needs
AI-powered digital assistants enrich consumers
lives. Consumers have a strong work/life balance
and discretionary spending on entertainment and
other luxuries.
Significant wealth divide in society between rich and
poor, with vastly different needs. The majority use
AI-powered digital assistants to enrich their lives.
A significant minority struggle for life’s essentials.
Many are struggling and looking for deals on the
basics, while a growing older wealthy segment is
looking for entertainment and life’s comforts.
Financial hardship has created a large price sensitive
segment focussed on the basics. There is a culture of
conserving, repairing, and reusing limited resources.
In contrast to the majority, there is a small segment
seeking luxury, who have created off-grid sanctuaries.
POLICY & SOCIOECONOMIC
ASSUMPTIONS:
Government and policy settings
International and New Zealand regulatory settings
for renewable energy do not constrain development.
Global carbon prices drive investment in renewable
technology without impacting supply chains.
International and New Zealand regulatory settings for
renewable energy somewhat constrain development
and drive uptake of DER.
Wealthier nations invest in energy research and
renewable technology.
International and New Zealand regulatory settings
for renewable energy delay development.
Supply chains are impacted by uncoordinated
international incentives to invest in clean energy.
International and New Zealand regulatory settings
for renewable energy obstruct development.
There is a lack of coordination and cooperation
internationally. Geopolitical tensions increase driving
protectionism and impacting supply chains and the
development of renewable technology.
CARBON SEQUESTRATION FROM
AFFORESTATION
Carbon sequestration from afforestation has been
utilised for emissions reduction to a limited extent,
being displaced by technological and nature-based
solutions as they become available.
Carbon sequestration from afforestation has been
utilised for emissions reduction to a limited extent, being
displaced by technological and nature-based solutions
as they become available.
Carbon sequestration from afforestation has been
widely deployed, being gradually superseded by
technological and nature-based solutions.
Carbon sequestration from afforestation is utilised
at a local level, without effective global coordination
and certification.
NATURE-BASED SOLUTIONSNature-based solutions have been developed
and form part of a broad portfolio of emissions
reduction solutions.
Nature-based solutions have been developed and
form part of a broad portfolio of emissions reduction
solutions.
Nature-based solutions have been developed
and form part of a broad portfolio of emissions
reduction solutions.
Effective nature-based solutions have not
been developed.
NEGATIVE EMISSIONS TECHNOLOGYEffective negative emissions technology has been
developed and widely deployed.
Effective negative emissions technology has been
developed and deployed.
The development of negative emissions
technology was slower than expected, leading
to its delayed deployment.
Negative emissions reduction technology has
not been developed.
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
CLIMATE-RELATED RISKS AND
OPPORTUNITIES
Climate-related risks and opportunities were identified
from the scenario analysis. They were assessed using
information and data from discussions with internal
technical experts, internal data such as hydro inflow
and storage and generation output, and key external
sources, including:
• Climate Change Projections for New Zealand from
NIWA, Ministry for the Environment and StatsNZ,
including local precipitation and wet day projections.
• Historical Wholesale price trends from the Electricity
Authority New Zealand.
• BERL (Business and Economic Research Limited) on
the economic impact of the electricity price changes.
• Paper for the Parliamentary Commissioner for the
Environment on the economics of the electricity
pathways.
New West Spring, Rotokawa geothermal field.
OUR APPROACH TO ASSESSING
MATERIALITY
Our approach to assessing the materiality of
information included in this Climate Statement,
including climate-related risks and opportunities, is to
consider whether the information or the way in which
information is presented, could influence the decisions
of users of our Climate Statement. The principle
of considering the impact of information on capital
allocation decisions of end users is broadly consistent
with the materiality principle applicable to preparing
financial statements and the continuous disclosure
rules under the NZX Listing Rules.
When assessing materiality, we evaluate both
quantitative and qualitative factors. The quantitative
threshold we use is aligned with the material value
we use to prepare our financial statements. We also
consider whether information could influence the
decisions of users of our Climate Statement, regardless
of its quantitative impact, due to the nature of the
example, we consider potential reputational impacts
or impacts on our social licence to operate. In assessing
each climate-related risk and opportunity, it involves
detailed processes, sources, and assumptions/limitations.
The following tables detail identified material climate
risks and opportunities and their anticipated
unmitigated impacts. The likelihood and consequence
of the following climate related risks and opportunities
is based upon Mercury’s risk matrix.
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
GREATER VARIABILITY IN WEATHER PATTERNS
(INCLUDING MORE FREQUENT HIGH INFLOW EVENTS
AND DROUGHTS) REDUCES HYDRO GENERATION
FLEXIBILITY AND PROFITABILITY
RISK TYPE: Chronic Physical
TIME HORIZON: Current, short, medium, long-term
TIME HORIZON OVER WHICH RISK BECOMES MATERIAL: Medium – long-term (3–30 years)
LIKELIHOOD:
This risk is assessed as being probable (1–10%
probability in any given year) to materialise.
CONSEQUENCE:
May have a significant financial impact,
i.e. between $7.5m—75m p.a.
1.
IMPLICATIONS:
More volatile catchment inflows from
changing and increasingly extreme weather
patterns makes it more difficult to optimally
manage hydro storage. This manifests
through increased risk of spill during high
inflow events and reduced generation
volumes during low inflow periods and
droughts. More volatile catchment inflows
may also have an impact on spot prices
in a highly renewable market.
ASSESSMENT METHODOLOGY:
Our approach to assessing this risk included
assessing changes in average rainfall and
minimum/maximum inflow profiles using
NIWA modelling (RCP8.5 scenario) to
determine the decrease in our long-run hydro
generation earnings and profile factor. This
evaluation is based on historical hydro inflow
and storage data from 1927 to 2024, historical
generation output from 2004 to 2024, and
insights from NIWA’s climate modelling and
research. Additionally, internal business insights
and historical wholesale price trends from the
Electricity Authority New Zealand were used
to quantify the impact.
MANAGEMENT RESPONSE:
• Mercury manages its peak customer sales
commitments by adopting a portfolio approach
that integrates generation development,
existing operations and financial hedging,
aiming to balance sales with our physical
generation and financial contract purchases.
• Mercury’s environmental and planning teams
engage with governing and consenting bodies
to manage the operational impacts of lake
storage levels and ensure we have the
operational flexibility that we need on the
Waikato Hydro System.
LIKELIHOOD:
This risk is assessed as being probable (1–10%
probability in any given year) to materialise.
CONSEQUENCE:
May have a significant financial impact,
i.e. between $7.5m—$75m per event.
IMPLICATIONS:
Increasing intensity of storm events, floods
and high wind events may lead to physical
damage to generation assets resulting in
costs to repair and lost generation revenue.
Increasing storm intensities and/or higher
likelihood of heating and fires and/or other
extreme atmospheric conditions may lead
to severe damage to electricity transmission
and distribution systems resulting in Mercury
being unable to export from stations.
ASSESSMENT METHODOLOGY:
Our approach to assessing this risk included
estimating the cost to repair generation assets
and the lost generation revenue from
transformer outages. The financial impact was
based on historical hydro inflow and storage
data from 1927 to 2024, historical generation
output from 2004 to 2024, and insights from
NIWA’s climate modelling and research.
Additionally, internal business insights, historical
experience on transmission repairs, and
historical wholesale price trends from the
Electricity Authority New Zealand were used.
MANAGEMENT RESPONSE:
• Mercury regularly assesses physical risks to
generating plant and assets as a reasonable
and prudent asset owner/operator and will
mitigate risks of damage as they arise.
• Mercury has a dam safety programme,
including annual and 5-yearly (external) reviews,
and continues to work to gain insight into the
impacts of climate change on flood risks.
• Mercury maintains a geographically dispersed
and fuel diverse generation fleet which reduces
impacts arising from locational-specific storm
events that could cause asset damage.
• Mercury carries insurance cover that mitigates
the financial impact of replacing damaged
assets and for business interruption.
GROWING INTENSITY OF ATMOSPHERIC
CONDITIONS (INCLUDING STORM EVENTS)
THAT CAUSE ASSET DAMAGE
2.
RISK TYPE: Acute Physical
TIME HORIZON: Current, short, medium, long-term
TIME HORIZON OVER WHICH RISK BECOMES MATERIAL: Medium – long-term (3–30 years)
CLIMATE RELATED RISKS
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
LIKELIHOOD:
This risk is assessed as being almost certain
(>30% probability in any given year) to materialise.
CONSEQUENCE:
May have a significant financial impact,
i.e. between $7.5m and $75m p.a.
3.
IMPLICATIONS:
Constrained global supply of renewable
generation technology (i.e. wind turbines and
solar panels) and skilled labour shortage causes
construction delays and capital cost overruns.
This may be exacerbated by geopolitical tensions
and the recent uptick in renewable generation
investment globally making it challenging for
manufacturers to meet that demand. In this
context, the NZ market is unattractive compared
to larger countries due to its relatively small
market and remoteness. On a local level, grid
constraints may impact our ability to connect
new renewable generation.
ASSESSMENT METHODOLOGY:
Our approach to assessing this risk included
estimating cost increases in generation
development and accounting for longer lead
times resulting in commissioning delays.
This evaluation was based on historical data
on supply chain disruptions such as those
documented in internal business insights and
historical project timelines. Additionally, insights
from industry reports, internal business
assessments, historical project timelines,
and historical wholesale price trends from the
Electricity Authority New Zealand were used
to quantify the impact.
MANAGEMENT RESPONSE:
• Mercury manages its generation development
pipeline to time procurement and development
at favourable periods and with sufficient lead
time to minimise unplanned delays.
• Mitigation for this risk includes key supplier
relationship planning and management.
LIKELIHOOD:
This risk is assessed as being highly likely (10-30%
probability in any given year) to materialise.
CONSEQUENCE:
May have a major financial impact,
i.e. between $75m—$750m p.a.
IMPLICATIONS:
Without clear and considered government
policy setting, the rate of electrification of industrial
process heat and transport could fall behind
projections or Resource Management Act reforms
could favour other environmental protection over
mitigating climate impacts, constraining and
adversely impacting Mercury’s generation
development pipeline. Specifically, this could
include declining demand growth, loss of investor
confidence, increased costs, delayed or declined
renewable generation consents, delayed renewable
electricity generation capacity development,
security of supply issues, and market intervention
that negatively impacts asset valuations.
ASSESSMENT METHODOLOGY:
Our approach to assessing this risk included
assessing the potential reduction in average
wholesale price for generation, reduced revenue
from delays in supplying renewable electricity
generation to the NZ market, and the reduced
enterprise value of the company. This evaluation
was based on historical data and research on
policy impacts, such as those documented in
external regulatory reports (such as BERL) and
market trends observed over recent years. Revenue
projections were made using historical data and
insights from internal assessments. Additionally,
the impact of historical policy changes was
analysed to quantify the potential future impacts.
MANAGEMENT RESPONSE:
• Engage on policy settings that will support
a successful transition for Aotearoa.
• Supporting decarbonisation opportunities with
existing and new commercial and industrial
customers as well as new demand sources,
such as data centres.
• Maintain a broad range of renewable electricity
generation development options that can be brought
to market in different demand scenarios.
• Mercury actively engages with regulators and
other external stakeholders to increase the
understanding that renewable electricity is a key
enabler of the transition to a low-carbon economy
and promote regulatory settings that support
the development of renewable electricity.
GOVERNMENT POLICY SETTINGS
FAIL TO BALANCE THE ENERGY TRILEMMA
4.
SUPPLY CHAIN AND LABOUR CONSTRAINTS
RISK TYPE: Transition
TIME HORIZON: Short, medium, long-term
TIME HORIZON OVER WHICH RISK BECOMES MATERIAL: Medium (3–10 years)
RISK TYPE: Transition
TIME HORIZON: Medium, long-term
TIME HORIZON OVER WHICH RISK BECOMES MATERIAL: Medium (3–10 years)
CLIMATE RELATED RISKS
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
LIKELIHOOD:
This opportunity is assessed as being
likely (1-10% probability in any given year)
to materialise.
CONSEQUENCE:
May have a major reputational impact.
2.
IMPLICATIONS:
Mercury’s profile as a renewable electricity
generator leads to reduced capital costs as
capital markets reflect societal desire to invest
in the transition to a low carbon economy.
ASSESSMENT METHODOLOGY:
Our approach to assessing this opportunity
included assessing the impact of the
reduced cost of borrowing. This evaluation
was based on historical data on borrowing
costs, trends in capital market investments,
and market insights on the financial
performance of low-carbon generation
projects. Additionally, insights from financial
reports, internal business assessments, and
historical market data were used to quantify
the impact.
MANAGEMENT RESPONSE:
• Mercury has looked to leverage its renewable
profile in issuing Green Bonds and promotes
its low-carbon generation profile to research
analysts and sustainability rating agencies.
LIKELIHOOD:
This opportunity is assessed as being almost
certain (>30% probability in any given year)
to materialise.
CONSEQUENCE:
May have a major financial impact,
i.e. between $75m—$750m p.a.
IMPLICATIONS:
Increased demand for renewable electricity
due to decarbonisation of transport and
process heat may provide greater
opportunities to build renewable generation
capacity and increase sales volumes.
ASSESSMENT METHODOLOGY:
Our approach to assessing this opportunity
included assessing the increased generation
revenue from new generation development.
This evaluation was based on the historical
data on electricity demand trends,
projections of future demand increases due
to low-carbon policies, and the financial
performance of generation development
projects. Additionally, insights from industry
reports, internal business assessments, and
historical wholesale price trends from the
Electricity Authority New Zealand were used
to quantify the potential future impacts.
MANAGEMENT RESPONSE:
• Mercury looks to secure resource consents for
generation development projects ahead of
expected increases in demand.
• Ensure a broad pipeline of development
opportunities and maintain strong relationships
with generation equipment suppliers.
• Ongoing exploration of additional demand that
we have not yet considered.
LOW-CARBON TRANSITION LIFTS
ELECTRICITY DEMAND
1.
CAPITAL MARKETS TILT TOWARDS INVESTING
IN LOW-CARBON GENERATION
OPPORTUNITY TYPE: Transition
TIME HORIZON: Medium, long-term
TIME HORIZON OVER WHICH OPPORTUNITY BECOMES MATERIAL: Medium – long-term (3–30 years)
OPPORTUNITY TYPE: Transition
TIME HORIZON: Short, medium, long-term
TIME HORIZON OVER WHICH OPPORTUNITY BECOMES MATERIAL: Long-term (10–30 years)
CLIMATE RELATED OPPORTUNITES
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
RESILIENCE OF STRATEGY
Management actions described above for each
of these climate-related risks and opportunities
are reflected in our planning processes through:
• the setting of strategic objectives and performance
incentives in the Executive Scorecard each
financial year;
• the application of our Risk Management Framework
to assess physical risks to generating plant and
assets and prioritising any required mitigation work
in business plans;
• the deployment of capital and funding for the
development of new renewable generation; and
• the consideration of portfolio risks when progressing
new generation development.
When making capital allocation decisions we
consider climate-related transition impacts, such as
decarbonisation initiatives and emissions reductions
pathways, given their significance on future electricity
demand growth. We also account for climate-related
risks and opportunities over different time horizons
in developing our capital investment plans. In FY24,
100% of Mercury’s growth capital expenditure was
allocated to renewable generation development.
TRANSITION PLAN ASPECTS
OF STRATEGY
Our business model and strategy are detailed
in our FY24 Integrated Report (on pages 5 and 8
respectively). We test the resilience of our strategy
through the lens of our material climate-related
risks and opportunities. We have developed a
plan including our targets and actions to transition
towards a low-emissions, climate-resilient future.
New Zealand’s largest emissions reductions by 2030
are expected to come from energy and industry,
meaning getting the settings right to support
electrification is crucial. We have a role to play
in supporting the decarbonisation of New Zealand,
and we’re doing so through significant investments
made in renewable generation development, which
aid in reducing emissions across the electricity sector
and other industries.
BUILDING MORE RENEWABLES
The rapid growth of new renewable electricity
generation development is key to Mercury’s
contribution to Aotearoa’s transition to a low-carbon
economy. We recognise the risks involved in bringing
large-scale, complex projects to market while
balancing the energy trilemma needs of security,
affordability, and sustainability. Some of these
include whether demand for electricity will occur
at the predicted levels, ensuring stability across
our operations, navigating supply chain complexities,
and working collectively with others across the sector.
Our strategy and business model evolving through:
Cultivating a robust and diverse generation
pipeline, including wind, solar and geothermal,
considering both fuel types and locational risks
(considering the vulnerabilities caused by the co-
location of generation assets). In FY24 this included
completion of the Kaiwera Downs 1 wind farm,
starting development of a new unit (OEC5) at Ngā
Tamariki geothermal station and the second stage
of the Kaiwera Downs wind farm, and progressing
development of other onshore wind farm projects.
Positioning ourselves for a range of different
outcomes related to demand and taking action
to enable electrification and attract new sources
of demand to Aotearoa such as offering Power
Purchase Agreements (PPAs) for new infrastructure,
such as Data Centres.
In 2024, we issued a request for Expressions
of Interest for an offtake agreement for 100MW
of solar energy, commencing in 2026, which we
saw as an opportunity to further diversify our
renewable energy portfolio. This garnered a variety
of responses, and after a thorough examination we
determined our own development options presently
provide greater value than an agreement of this
nature would. We gained valuable insight from this
process, which we may consider again in the future.
Committing to long-term capital allocation aiming
to ensure sustained investment in the development
of renewable energy, with a significant portion directed
towards growth capital specifically earmarked for
constructing new renewable generation. We have
started measuring the impact of this growth capital
activity on Scope 3 emissions (capital goods)
through our GHG Inventory process. As we mature
our approach to recording emissions from long-
term capital allocation, we will look to disclose
these in the GHG Inventory report. By acknowledging
and including these emissions, we are transparent
about the environmental impact of our growth and
are committed to mitigating these impacts through
sustainable practices and innovative solutions.
Collaborating closely with suppliers to secure reliable
supply chains for renewable components, is critical
amidst intensifying global competition.
Engaging with regulators to advocate for renewables
aligning with stringent environmental standards.
Collaborating with others across the sector to collectively
improve the energy transition for New Zealand.
A significant portion of our growth capital is allocated
specifically for new renewable generation. In FY22,
this totalled $85m, $155m for FY23 and $153m
for FY24. This ongoing investment demonstrates our
commitment to building more renewable generation in
Aotearoa. We also have dedicated teams for generation
development and management of our portfolio.
This strategic allocation underscores our commitment
to expanding renewable energy and supporting
Aotearoa‘s transition to a low-carbon economy.
Maraetai hydro station.
76
MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
MANAGING OUR ASSETS
Mercury is committed to effectively managing our
assets to ensure long-term operations. Our strategy
and business model are evolving to incorporate
climate-related impacts into our asset management
capabilities. Some of the challenges we are responding
to include maintaining asset integrity, navigating supply
chain complexities, reducing the emissions from
our own operations, and ensuring we have a team
that supports our long-term assets.
Our strategy and business model are evolving through:
Maintaining and refurbishing our assets to ensure
integrity and performance under changing conditions.
Including the hydro refurbishment programme,
involving significant investment over the past 10+
years to ensure our assets continue to generate
renewable energy for years to come. We are working
on a ~$90m refurbishment of the Karāpiro hydro
station that will extend the asset’s life by 50 years and
make it more efficient in different flow conditions.
Programmes on dam safety that support asset
integrity for our hydro assets. One element of
management of dam safety risks is incorporating
the Probable Maximum Flood (PMF) assumptions
to reflect potential changes due to shifting climate
conditions. This measures the possible volume
and flow rate of the Waikato River in the event
of an extreme flood. Our PMF values are prudently
conservative, and we are mindful that our PMF
values may need adjustment over time. Through
our ongoing dam safety work programme and
hydrological studies, we are working alongside other
dam infrastructure owners in New Zealand to review
the PMF assumptions including considering if these
need to be updated to reflect the changing climate.
We are working on how we can reduce emissions
from our operations. We are currently sequestering
~7,100 tonnes of CO
2
e per annum from our
Ngā Tamariki station and are looking to expand
CO
2
capture and reinjection across this and other
geothermal sites.
Investing in the development of our workforce,
nurturing talent and fostering skill development via
graduate roles. Employee training and development
play a crucial role in enhancing skill sets within
our organisation. We continually invest in training
programmes to equip our workforce with the
necessary knowledge and expertise to manage
our assets effectively.
We also invest in and develop our core asset
management groups that work horizontally across
the business while supporting local decision-making.
These teams include specialist asset engineers who
monitor and improve asset performance across the
business, ensuring that we have robust maintenance
routines and ensuring there are sound whole-of-life
plans for our critical infrastructure, thus reducing
business risks.
HELPING OUR CUSTOMERS ON THEIR
ENERGY TRANSITION
Mercury is dedicated to supporting our customers
through the energy transition, which involves potential
changes in energy choices. Some of the challenges our
strategy and business model are responding to include:
uncertainty of the role and supply of gas in the Aotearoa
New Zealand market, the pace of adoption of new uses
of electricity (like Electric Vehicles), continued efficiency
opportunities as we use more electricity and how
affordability can be navigated through the transition.
Our strategy and business model are responding,
including through:
A retail gas strategy, providing our customers with
information about their energy options.
Offering innovative solutions to customers, such as
our recent smart charging trial, concluding in June
2024, enabling two-way communication between
EVs and the grid, optimising the charging process.
Insights gained and customer feedback gathered
from this trial will shape future EV propositions.
While our EV discount product remains available,
decisions on smart charging will be based on
these findings.
Providing usage monitoring tools and tips
on our app and website, empowering
customers to make informed decisions about their
energy consumption.
Taking a programme approach to customer care
including increasing knowledge and understanding
of hardship, direct support, and partnerships/
collaborations with others including community
providers that support our customers.
Engaging with others across the sector
to provide electricity users with clear information
on how pricing could change through the
transition, along with sector-wide initiatives
to support customers through the transition.
We have dedicated teams that work on developing
new customer propositions, teams that support
customers through periods of financial hardship,
and broader community engagement.
Further information on our emission reduction
targets and the actions we are taking can be found
in our Climate Action Plan and details on our
targets and progress can be found in the metrics
and targets section of this Climate Statement.
Whakamaru hydro station.
77
MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
RISK MANAGEMENT.
PROCESSES FOR IDENTIFYING AND
ASSESSING CLIMATE-RELATED RISKS
Risk management is an integral part of Mercury’s
business. We have an overarching Risk Management
Policy supported by a suite of risk management
tools and practices appropriate for our business.
The purpose of the Risk Management Policy
is to embed a risk management competence
across the entire Mercury enterprise. This group-
wide capability provides a consistent method of
identifying, assessing, controlling, monitoring and
reporting on potential risks to our business and to
the achievement of its plans.
Our risk management framework meets
New Zealand standards (see the Governance
section in this Climate Statement).
Our cross-functional working group support the
identification of climate-related risks through
scenario analysis (see the Scenario Analysis section
in this Climate Statement). They utilise information
to understand whether potential risks are material
and to inform our view of the likelihood and impact
of these risks. In FY24, we made progress towards a
more detailed financial quantification process, which
informed our climate-related risks and opportunities.
Climate-related risks are classified and assessed
relative to other types of risks using a common
methodology (the risk matrix – shown below). This
was done in FY24, and we intend to conduct this
process annually. Mercury’s risk matrix requires
consideration of both estimated quantitative impacts,
such as loss of revenue or increases in costs, and
qualitative impacts, such as loss of social license,
or reputational impacts. The likelihood is measured
against the probability of a risk taking place in any
given year. We have assessed the materiality
of our climate-related risks and opportunities
to determine whether the information or the way
in which information is presented, could influence
the decisions of users of our Climate Statement,
considering both quantitative (financial impacts)
and qualitative factors (non-financial impacts).
In FY24, we have sought to align our approach
to materiality with the thresholds of materiality we
use in other company disclosures. For example, the
quantitative threshold is aligned with the materiality
value used to prepare our financial statements.
The RMC and RAAC review climate-related risks.
Climate-related risks have been incorporated into
our existing risk management framework by being
recorded in our risk register system and assigned
to relevant business units.
The climate-related risks and opportunities included
in this year’s climate statement have been identified
by considering our four climate change scenarios
over a 30-year time horizon. In doing so, we
considered all phases of our value chain (without
any exclusions).
MANAGING CLIMATE-RELATED RISKS
The day-to-day management of climate-related
risk occurs across various business units such
as Generation, Portfolio, Customer, Finance and
Sustainability with escalating responsibilities up to
the RMC and the RAAC. The RAAC assesses the
appropriate management of our climate-related risks
and ensures there are effective systems of control,
assurance, reporting, policies and procedures in place.
As an example, when the technical safety team
considers the risks faced by their business function,
potential impacts from climate change are
considered. The technical safety team works with the
Executive GM Generation to build an approach to
manage these risks and develop their forward plans.
Where material, risks and issues are escalated to the
RMC, the RAAC and the Board (see responsibilities of
RMC, and the RAAC in the Governance section in this
Climate Statement).
In relation to markets, our Portfolio and Finance
teams manage risks and opportunities presented by:
• the electricity market – we continually model
scenarios of resource availability, electricity
market supply and demand and adjust our
approach accordingly.
• the carbon market – we are involved in forest carbon
investments and have long-term contracts in place.
Regulatory risks and opportunities are managed by
the Sustainability team. In FY24, submissions have
been made to the Climate Change Commission
regarding its 2023 draft advice to inform the strategic
direction of the government’s second Emissions
Reduction Plan, its fourth emissions budget, 2050
target, and the inclusion of international aviation and
shipping in the 2050 target. We have engaged in
broader Electricity Authority work programmes to
transition the existing market arrangements to enable
a more renewable future. We have also provided the
Ministry for the Environment (MfE) feedback on the
Emissions Trading Scheme. Alongside this, Mercury
maintains active involvement in ongoing government
processes to create a framework for climate adaptation.
Physical risks and opportunities from climate change
fall into acute (event-driven, such as increased severity
of extreme weather events) and chronic (longer-term
shifts in precipitation and temperature and increased
variability in weather patterns, such as sea level rise).
We continue to monitor proposed methodologies
for climate change risk assessment and adaptation
planning, both nationally and internationally.
We have models of storm events experienced
within the Waikato Hydro System and we work in
partnership with the Waikato Regional Council to
engage in training exercises and flood simulations to
educate and familiarise Mercury and council staff on
the management of storms and flood risks.
We continue to refine and mature our climate-
related scenario analysis to assess the impacts of
our changing climate on our assets and business
while working with research organisations to improve
the quality of our climate data including potential
future inflows to the Waikato Hydro System.
Existing regional-level datasets lack the granularity
for informed long-term investment decisions for
hydro assets.
IMPACT
InsignificantMinorModerateSignificantMajorFundamental
LIKELIHOOD
Almost Certain
Highly Likely
Likely
Possibly
Unlikely
Rare
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
DATASETS & MODELS USED
In undertaking scenario analysis, we considered
a number of external data sources, including:
• Shared Socioeconomic Pathways (SSPs) in the
IPCC Sixth Assessment Report on Climate Change
to inform our consideration of global socioeconomic
changes and data points such as global
temperature changes.
• Representative Concentration Pathways (RCPs)
in the IPCC Fifth Assessment Report on Climate
Change and Ministry for the Environment and NIWA
Climate Change projections for New Zealand to
inform our consideration of New Zealand specific
impacts under different pathways. These provided
data points such as the increased number of hot days
and were a key input to our financial quantification.
• Climate Change Commission Long Term Scenarios
to meet the 2050 target to inform our consideration
of how different scenarios could play out in New
Zealand, including the role of renewable energy.
• Networking for Greening the Financial System
(NGFS) Scenarios and analysis to inform our
consideration of global physical climate risks and
policy and technology trends in different scenarios.
Maraetai hydro station.
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MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
METRICS & TARGETS.
NEAR-TERM / INTERIM TARGETLONG-TERM TARGET
Scope 1Target Year: FY2030
70% reduction in emissions intensity
(in kgCO
2
e/kWh) from base year
Target Year: FY2040
70% reduction* in emissions intensity
(in kgCO
2
e/kWh) from base year
Scope 2Target Year: FY2030
42% absolute reduction from base year
Target Year: FY2040
90% absolute reduction from base year
Scope 3 – Use of sold products
(Natural Gas Sales)
Target Year: FY2030
42% absolute reduction from base year
Target Year: FY2040
90% absolute reduction from base year
FY23 FY24
Scope 14.7 tCO
2
e/GWh decrease from base year
18.39% decrease in emissions intensity
from base year
1.7 tCO
2
e/GWh decrease from base year
6.45% decrease in emissions intensity
from base year
Scope 2476 t CO
2
e decrease from base year
42.96% absolute reduction from base year
587 tCO
2
e decrease from base year
52.98% absolute reduction from base year
Scope 3 – Use of sold
products
2,369 tCO
2
e decrease from base year
1.71% absolute reduction from base year
3,168 tCO
2
e decrease from base year
2.29% absolute reduction from base year
CLIMATE TARGETS
Mercury has committed to set our near-term and long-
term company-wide emission reduction targets in line
with science-based net-zero, using Science Based
Targets Initiative (SBTi). These targets have been
developed using tools provided by the SBTi and have
been approved by the Board. The SBTi framework uses
a sectoral decarbonisation approach to align emissions
reductions in each industry to a global emissions
reduction pathway consistent with limiting global
warming to 1.5 degrees Celsius compared to pre-
industrial revolution times. It is Mercury's view that by
meeting SBTi criteria, we contribute to this global effort
to limit warming to 1.5 degrees Celsius.
Our fixed base year for these targets is FY22, which
serves as a consistent historical reference point for
comparing current emissions. Since our long-term
targets extend to 2040, we regularly assess any
material changes in the organisation since FY22.
If such changes occur, we will undergo a base year
recalculation process following Greenhouse Gas
Protocol guidance which will enable us to better
track progress toward our SBTi targets and make
meaningful comparisons between reporting periods.
In FY24, we recalculated our FY22 base year emissions
from the sale of natural gas to include emissions from
a full twelve months of Trustpower gas sales, as the
existing FY22 base year only included two months
of Trustpower gas sales following our acquisition
of the Trustpower retail business in May 2022.
This recalculation approach follows the Greenhouse
Gas Protocol guidance. Additionally, the calculation
methodology for reticulated gas sales has been
revised to account for the purchasing of reticulated
gas on the wholesale spot market. This change
impacts GHG inventories from FY23 onwards,
In FY24, Mercury’s progress against these targets was:
necessitating a restatement of the emissions for use
of sold products in FY23. We have applied this new
methodology to our FY24 GHG Inventory, and we will
continue with this calculation approach in future.
* Mercury’s 2040 Scope 1 emissions intensity target is equivalent to our 2030 Scope 1 emissions intensity target as the targeted 2030 emissions reduction will
already reduce Mercury’s Scope 1 emissions intensity to the level required by the SBTi for our 2040 target.
Note: These targets are subject to change through the validation process with SBTi. Mercury does not currently use emissions offsets and, in alignment with the SBTi
framework, does not intend to use offsets to achieve interim targets. Offsets may be used for persistent emissions that are unable to be abated for final targets, or
for broader purposes outside of achieving interim targets.
FY22 TONNES
CO
2
e (Original)
FY22 TONNES
CO
2
e (Adjusted)
Reticulated Gas sales78,196121,136
Distribution losses
(reticulated gas sales)
4,6437,192
LPG Sales1,7589,951
Tot al84,597138,279
Impact of Recalculation on Emissions
FY23 TONNES
CO
2
e (Original)
FY23 TONNES
CO
2
e (Adjusted)
Reticulated Gas sales119,004121,301
Distribution losses
(reticulated gas sales)
4,3804,464
LPG Sales10,14510,145
Tot al133,529135,910
Impact of calculation methodology change
on emissions
Overall, we are making progress towards our Scope
1 emissions intensity reduction target since our base
year. Despite this, we observed a slight increase in
emissions intensity in FY24. This can be attributed
to two primary factors: reduced hydro electricity
generation during this period, and temporary outages
at our Kawerau and Nga Awa Pūrua geothermal
stations in FY23. The latter event caused our emissions
to be unusually lower that year, making FY24’s figure
appear higher in comparison.
As our renewable generation projects that are currently
under construction come online, along with the
expansion of our NCG reinjection activities to additional
stations, we expect our emissions intensity will reduce.
Mercury is actively working towards reducing our
emissions and meeting our climate targets, both near
and long-term. In FY24, we continued to progress
decreasing our Scope 3 emissions from gas sales.
As we continue implementing our retail gas strategy,
we expect this downward trend to continue, positioning
us well to meet our near-term target. Our scope 2
emissions continue to decrease and at the end of FY24,
we sit close to a 53% reduction since our base year.
80
MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
FY22 (tCO
2
e)FY23 (tCO
2
e)FY24 (tCO
2
e)
Scope 1222,736213,645239,574
Scope 2 (location-based)1,108632521
Scope 3138,591137,159136,335
MEASURING OUR IMPACT – EMISSIONS
Mercury produces an annual GHG Emissions
Inventory Report in accordance with the Greenhouse
Gas Protocol which is available on our website. This
document has further information available for the
methods and assumptions used in determining our
emissions as well as the limitations of those methods,
and uncertainties in our approach.
A summary of our FY24 and prior years GHG
emissions and emissions intensity is shown below.
Our gross emissions are primarily driven by Scope
1 emissions, which account for ~63% of our entire
emissions profile. Over the past nine years they have
reduced by 55%. This is due to the elimination of our
emissions from thermal electricity power generation
by decommissioning the Southdown gas-fired
power station in FY16, the natural decline in fugitive
geothermal emissions over time and our investment
in geothermal greenhouse gas reinjection. Our FY24
emissions intensity has decreased by 0.002kg CO
2
e/
kWh since our base year, and by 0.046kg CO
2
e/kWh
since FY15. Details of these figures can be found in
table 12 and figure 1 in our FY24 Greenhouse Gas
Emissions Inventory Report.
Our Scope 3 emissions from total gas sales now
account for ~36% of our total gross emissions. This
represents an annual decrease from FY23 of 2.78%.
The emissions intensity calculation uses gross
Scope 1 emissions and total generation output
figures from all our power stations under operational
control. No adjustments have been made to reflect
Mercury’s part-ownership of two of our geothermal
power stations nor have any adjustments been
made in relation to carbon credit surrenders or
trading conducted under the NZ Emissions
Trading Scheme (ETS).
Under the NZ ETS, Mercury surrenders certified
forestry-backed carbon units, purchased under
long-term agreements with forest owners, to the
NZ Government which covers all our geothermal
emissions, and to the NZ Government or to our
gas supplier for gas sales related emissions.
Consistent with a reduction in our gross emissions
over time, our emission intensity has also reduced
where the impact of our increase in wind generation
from both new builds and acquisitions is having
measurable impacts.
This year we updated our FY22 Scope 3 emissions
from natural gas sales to reflect a full year of
Trustpower gas sales. This has meant a recalculation
of our FY22 base year emissions, resulting in an
increase in total and Scope 3 emissions compared
to our previous years reporting.
Further, our calculation methodology for reticulated
gas sales has been adjusted to include wholesale spot
market purchases, aligning with the Greenhouse Gas
Protocol's Corporate Value Chain (Scope 3) Standard.
This adjustment ensures that all gas passing through
Mercury’s value chain is accurately accounted for
from FY23 onwards. For further information on both
changes, please refer to the FY24 GHG Emissions
Inventory report.
0
100,000
200,000
300,000
400,000
500,000
600,000
Scope 1
FY24FY23FY22FY21FY20FY19FY18FY17FY16FY15
TONNES CO2e
FINANCIAL YEAR
Scope 2Scope 3
EMISSIONS INTENSITY
(kg CO2e/kWh)
GENERATION (
GWh)
FINANCIAL YEAR
0.02
0.04
0.00
0.06
0.08
0.10
0.12
0.14
0
2,000
4,000
6,000
8,000
10,000
12,000
FY24FY23FY22FY21FY20FY19FY18FY17FY16FY15
Total Generation (RHS)Mercury Generation Emissions IntensityNZ Grid Emissions Intensity
Data from FY2015 to FY2021 presented in these graphs have not been subject to assurance procedures.
FY22 has been restated to include Trustpower and FY23 has been restated for a reticulated gas sales methodology change
81
MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
Our Climate Action Plan outlines in detail the actions
that we are taking to work towards a 1.5-degree
future and play our part in reducing greenhouse
gas emissions by reaching Net Zero by 2040.
MEASURING OUR IMPACT – CROSS
INDUSTRY MEASURES AND OTHER
ACTIVITY METRICS
In addition to emissions metrics, Mercury has looked
to the International Sustainability Standards Board
(ISSB) sector metrics for Electric Utilities and Power
Generators for general and industry-based metrics
for the management of climate-related risks and
opportunities. These metrics have been assessed
for their materiality to Mercury and the relevant
metrics are disclosed below.
WATER USE
WAT ER US EFY22FY23FY24
Geothermal
Water extracted (Mm3)252425
Water reinjected at source (Mm3)101311
Hydro
Non-consumptive water use (Mm3)6,52710,7857, 200
Mercury utilises geothermal water for generation
by extracting and reinjecting it. Additionally, Mercury
is a non-consumptive user of water through our hydro
power stations. The first half of 2023 experienced the
wettest conditions on record for several areas in the
North Island. This led to a significant increase in non-
consumptive water use at our hydro stations between
FY22 and FY23, before it decreased again in FY24.
The non-consumptive water flowing through our hydro
stations is measured from two sources, turbines and
spill flow. Turbines have MW/flow ratings allowing us to
measure the water passing through the turbines. Spill
flow is calculated using water levels and a gate opening
when water is spilled. Both sources are combined
to get the total flow. Geothermal water use figures are
prepared using our emissions information from each
station which contain extraction and re-injection data.
Upon reviewing figures from FY22 and FY23,
we picked up an error in our previous calculations.
We have restated our water use for the two periods
to ensure accuracy. Non-consumptive water use for
FY23 was updated from 11,529 (Mm3) and FY22 from
6,465 (Mm3). FY22 geothermal water reinjected at
source was also updated from 13 (Mm3).
Mercury does not extract any water from regions
with High or Extremely High Baseline Water Stress.
In FY24, there were no incidents of non-compliance
with water quantity and/or quality permits, standards,
and regulations.
Other material Activity Metrics are described in the
Our Business Model section of our FY24 Integrated
Report and disclosed in Operating Statistics.
FUGITIVE EMISSIONS
Fugitive emissions are unintended releases of gases
and for Mercury these originate primarily from
two sources, geothermal generation and sulphur
hexafluoride (SF6) releases during operations.
We measure these emissions through our GHG
Inventory process, which follows the Greenhouse Gas
Protocol reporting framework. Mercury is committed
to demonstrating transparency and uses commonly
accepted standards when accounting for its
greenhouse gas emissions.
The Fugitive Emissions in the table below shows
the combined emissions from geothermal and
SF6 releases. Most of these emissions are from
geothermal sources and trend within the expected
range due to planned and unplanned outages
associated with geothermal operations.
More information on our emissions can be found
in our Greenhouse Gas Emissions Inventory report
available on our website.
FUGITIVE
EMISSIONS
FY22
(tCO
2
e)
FY23
(tCO
2
e)
FY24
(tCO
2
e)
Scope 1222,397212,785236,312
IMPACTS OF THE CHANGING CLIMATE ON
OUR ASSETS AND BUSINESS ACTIVITIES
Mercury acknowledges the impact of physical risks,
transition risks, and climate-related opportunities on
our assets and therefore business activities. Unless
otherwise stated, these impacts have not changed
over the preceding two years.
All, i.e. 100%, of our generation assets and related
business activities are vulnerable to the physical risks
of climate change such as extreme wind, floods and
fires. Details on identified material risks are disclosed
earlier in this Climate Statement.
Mercury’s assets and business activities are
vulnerable to transition risks as described below:
• All of our geothermal generation assets, comprising
~30% of Mercury's generation assets recognised
in our FY24 financial statements, produce fugitive
emissions that are vulnerable to transition risks
in the form of rising NZU carbon prices in the event
that geothermal emissions are unable to be captured
and/or reinjected.
• All of our generation portfolio is vulnerable to climate
transition risk from regulatory settings impacting
the energy trilemma, e.g. through influencing carbon
pricing in the NZ ETS which directly impacts the
spot price of electricity. Our generation development
portfolio is vulnerable to risks arising from regulatory
settings constraining renewable electricity development.
• All of our gas sales activities, comprising 3% of FY24
revenue, are vulnerable to transition risks in changes
in regulatory settings and/or changes in consumer
preferences away from fossil fuels. This impact
increased in FY22 following the acquisition of
the Trustpower retail business, including its gas
customer base.
All, i.e. 100%, of Mercury’s existing electricity generation
assets are considered aligned with climate-related
opportunities as enablers in Aotearoa’s low carbon
transition. Increasing demand for renewable electricity
due to the decarbonisation of transport and process
heat has been identified as a material climate-related
opportunity from which 100% of Mercury’s renewable
generation assets stand to benefit.
The majority of Mercury’s capital deployment is also
aligned with climate-related opportunities as in FY24
$153m of growth capital expenditure was allocated
to new renewable generation development. Mercury
is also pursuing climate-related opportunities to reduce
emissions through developing reinjection of geothermal
non-condensable gases.
The alignment of management remuneration to these
climate-related risks and opportunities is discussed
in the Governance section of this Climate Statement.
We use the Carbon NZU spot price to value our
inventory of carbon units. The monthly prices as of
30 June, adjusted for inflation were, FY24: $50/t, FY23:
$41/t, FY22: $76/t. We also have an internal emissions
price forecast—a metric representing the cost per metric
tonne of CO
2
e, which guides decision-making within
our operations. This forecast informs strategic decisions
related to buying and selling carbon units and serves as
an input for business cases where they impact our GHG
profile. We assess opportunities across various carbon
forward curve scenarios for up to 15 years into the
future. These ranges, adjusted for inflation, were FY24:
$44/t - $127/t, FY23: $41/t - $117/t, FY22: $27/t - $101/t.
The volatile carbon prices over the past three years
have been primarily due to heightened regulatory
measures and balancing market demand and supply
for carbon units. Long term, the carbon price is
expected to increase, reflecting a growing emphasis
on reducing greenhouse gas emissions.
82
MERCURY 2024 INTEGRATED REPORTCLIMATE STATEMENTMENU
A MEMBER FIRM OF ERNST & YOUNG GLOBAL LIMITED
Assurance Conclusion
Based on our limited assurance procedures
performed and the evidence we have obtained,
nothing has come to our attention that causes
us to believe that Mercury NZ Limited's
("Mercury") Climate Statement for the year
ended 30 June 2024 is not fairly presented
and has not been prepared, in all material
respects, in accordance with Aotearoa New
Zealand Climate Standards (‘NZ CSs’).
Independent Limited Assurance
Report to the Directors of
Mercury NZ Limited
Scope
Ernst & Young Limited (“EY”) has undertaken a limited
assurance engagement, as defined by International
Standards on Assurance Engagements, to report on
Mercury’s Climate Statement for the year ended 30
June 2024 on pages 62 to 82 (the “Subject Matter”
or “Report”) within the Mercury 2024 Integrated
Report. The Report includes web links to information
which is included in the scope of our assurance.
Criteria applied by Mercury
In preparing the Report, Mercury applied the NZ CSs
(the “Criteria”). In applying the Criteria the methods
and assumptions used are described on pages 62 to
82 of the Report, as are the estimation uncertainties
inherent in the methods used.
Mercury’s Responsibility
The Directors are responsible, on behalf of Mercury,
for the preparation and fair presentation of the Report
in accordance with the NZ CSs. This responsibility
includes establishing and maintaining internal controls,
maintaining adequate records and making estimates
that are relevant to the preparation of the Report, such
that it is free from material misstatement, whether due
to fraud or error.
EY’s Responsibility
Our responsibility is to express a limited assurance
conclusion on the Report based on the procedures we
have performed and the evidence we have obtained.
Our engagement was conducted in accordance with
the International Standard for Assurance Engagements
(New Zealand): Assurance Engagements Other than
Audits or Reviews of Historical Financial Information
(‘ISAE (NZ) 3000’) and additionally in relation to
GHG disclosures in accordance with the International
Standard for Assurance Engagements (New Zealand):
Assurance Engagements on Greenhouse Gas
Statements (‘ISAE (NZ) 3410’). Those standards require
that we plan and perform this engagement to obtain
limited assurance about whether the Report has
been prepared, in all material respects, in accordance
with the Criteria. The nature, timing and extent of
the procedures selected depend on our judgment,
including an assessment of the risk of material
misstatement, whether due to fraud or error.
We believe that the evidence obtained is sufficient
and appropriate to provide a basis for our limited
assurance conclusion.
Ernst & Young provides financial statement audit
and review services and agreed upon procedures
to Mercury. Partners and employees of our firm may
deal with Mercury on normal terms within the
ordinary course of trading activities of the business
of Mercury. We have no other relationship with,
or interest in, Mercury.
Our Independence and Quality Management
We have complied with the independence and other
ethical requirements of the Professional and Ethical
Standard 1 International Code of Ethics for Assurance
Practitioners (including International Independence
Standards) (New Zealand) issued by the New Zealand
Auditing and Assurance Standards Board, which
is founded on fundamental principles of integrity,
objectivity, professional competence and due care,
confidentiality and professional behaviour.
The firm applies Professional and Ethical Standard
3 Quality Management for Firms that Perform Audits
or Reviews of Financial Statements, or Other Assurance
or Related Services Engagements, which requires
the firm to design, implement and operate a system
of quality management including policies or procedures
regarding compliance with ethical requirements,
professional standards and applicable legal and
regulatory requirements.
A MEMBER FIRM OF ERNST & YOUNG GLOBAL LIMITED
Description of procedures performed
Procedures performed in a limited assurance
engagement vary in nature and timing from,
and are less in extent than, for a reasonable assurance
engagement. Consequently, the level of assurance
obtained in a limited assurance engagement is
substantially lower than the assurance that would
have been obtained had a reasonable assurance
engagement been performed. Our procedures
were designed to obtain a limited level of assurance
on which to base our conclusion and do not provide
all the evidence that would be required to provide
a reasonable level of assurance.
Although we considered the effectiveness of
management’s internal controls when determining
the nature and extent of our procedures, our assurance
engagement was not designed to provide assurance on
internal controls. Our procedures did not include testing
controls or performing procedures relating to checking
aggregation or calculation of data within IT systems.
A limited assurance engagement consists of making
enquiries, primarily of persons responsible for
preparing the report and related information and
applying analytical and other relevant procedures.
Our procedures included:
• Interviewing key personnel to understand the
reporting processes, including management’s
processes to identify Mercury’s material climate-
related risks and opportunities
• Considering the Report to understand how
Mercury’s identified material climate-related risks
and opportunities are reflected in the qualitative
disclosures
• Evaluating the suitability of the methods and
assumptions used in adopting the Criteria
and whether the Criteria have been applied
appropriately to the Subject Matter
• Identifying and assessing whether the assumptions
and approach supporting Mercury’s scenario analysis
and portfolio assessment were reasonable and
consistent with the principles specified in the Criteria,
• Undertaking analytical procedures in relation to the
metrics and targets disclosed in the Report
• On a limited sample basis, comparing metrics
to source information
• Obtaining Director representation
We also performed such other procedures as
we considered necessary in the circumstances.
Inherent Uncertainties
As discussed on page 64 of the Report, climate-related
risk management is an emerging area, and often
uses data and methodologies that are developing
and uncertain. The Report contains forward looking
statements, including climate-related scenarios, targets,
assumptions, climate projections, forecasts, statements
of future intentions and estimates and judgements
that have not yet occurred and may never occur.
We do not provide assurance on the achievability
of this prospective information.
The GHG quantification process is subject to scientific
uncertainty, which arises because of incomplete
scientific knowledge about the measurement of GHGs.
Additionally, GHG procedures are subject to estimation
(or measurement) uncertainty resulting from the
measurement and calculation processes used to
quantify emissions within the bounds of existing
scientific knowledge.
Other matter
Our review included web-based information that was
available via web links as of the date of this statement.
We provide no assurance over changes to the content
of this web-based information after the date of this
assurance statement.
Use of our Assurance Report
We disclaim any assumption of responsibility for any
reliance on this assurance report to any persons other
than the management and Directors of Mercury, or for
any purpose other than that for which it was prepared.
Ernst & Young Limited
Auckland, New Zealand
20 August 2024
TE TĀTAKI ME TE WHAKAHAERE.
In this section we introduce our Board and Executive Management
Team and present our corporate governance statement. We also share
our remuneration policy and report, directors’ and other disclosures,
information for security holders, sustainability index, directory information
and a glossary.
The Mercury Building, Auckland.
85
MERCURY 2024 INTEGRATED REPORTMENU
SCOTT ST JOHN CHAIR
Tenure:First Appointed: 1 Sep 2017
(Chair since Jan 2024)
Last Elected: 19 Sep 2023
Key Skills*: M&A and capital structure; stakeholder
relationships; commercial experience; people leadership.
Scott has an extensive background in investment advisory
and capital markets. Scott is Chair of Fisher & Paykel
Healthcare Corporation
1
, Chair of ANZ New Zealand and a
director of ANZ Group and Next Foundation. He was formerly
a director of Fonterra Cooperative Group, a member of the
Capital Markets Development Taskforce and the Financial
Markets Authority Establishment Board and was Chancellor
of the University of Auckland. He was the Chief Executive
of First NZ Capital from 2002 to 2017.
MARK BINNS DIRECTOR
Tenure:First Appointed: 1 Sep 2023
Last Elected: 19 Sep 2023
Key Skills*: Energy industry; wholesale markets trading;
commercial experience; major project investment.
Mark was CEO of Meridian Energy from 2012 – 2017 and
before that spent 22 years with Fletcher Building, including 15
years as CEO of the Construction and Infrastructure division.
He currently chairs Crown Infrastructure Partners and Hynds
Limited and is a director of Auckland International Airport.
YOUR BOARD OF DIRECTORS.
HANNAH HAMLING DIRECTOR
Tenure:First Appointed: 1 Feb 2020
Last Elected: 19 Sep 2023
Key Skills*: Natural resource management (including water
and climate change); health and safety; risk management.
Hannah is an environmental scientist with a particular interest
in sustainable development and resilience. Until January
2020, she was President of the Asia Pacific Region and Global
Sustainable Development Leader for Golder, a Canadian global
ground engineering and environmental science company.
Before joining Golder, Hannah was Managing Director of New
Zealand environmental consultancy firm Kingett Mitchell.
Hannah has extensive background in consulting, management
and board roles across various sectors including electricity,
construction and water management.
R
P
NR
R
P
* Key Skills are defined as the particular skills each director
brings to the Mercury Board, and which
we consider in our succession planning.
1
Scott St John will retire from the Board of Fisher & Paykel
Healthcare Corporation in August 2024.
ADRIAN LITTLEWOOD DIRECTOR
Tenure:First Appointed: 1 Aug 2023
Last Elected: 19 Sep 2023
Key Skills*: Commercial experience; large organisation and
cultural leadership experience; major project investment;
stakeholder relationships.
Adrian has deep executive experience including 12 years
at Auckland International Airport, nine of these as CEO.
Before that he held senior roles across strategy, operations,
product and marketing with Telecom New Zealand. Previous
governance roles include acting as the New Zealand Chair
of the Australia/New Zealand Leadership Forum, Chair of the
NZ Airports Association and a director of North Queensland
Airports and Tourism Industry Aotearoa.
Committee Membership Key:Tenure Key:
N
Nominations and Corporate
Governance Committee
P
People and Performance Committee
R
Risk Assurance and Audit Committee< 3 years6
+
years
3-6 years
Chair of the committee
86
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
JAMES MILLER DIRECTOR
Tenure:First Appointed: 2 May 2012
Last Elected: 22 Sep 2022
Key Skills*: M&A and capital structure; investment analysis;
audit and risk management; energy industry.
James is an experienced non-executive director and chair
and an experienced chair of Audit and Risk Committees.
James is an is an experienced company director and Chair
of company Audit and Risk Committees. He has specialist
expertise in utility economics and 15 years’ experience
in capital markets. He is currently Chair of Channel
Infrastructure NZ and is a director of Vista Group, and Ryman
Healthcare. James’ prior roles have included Chair of NZX,
Deputy Chair of Accident Compensation Corporation and
board positions with Auckland International Airport, the
Financial Markets Authority and Vector.
James is a qualified Chartered Accountant and is a Fellow
of the Institute of Chartered Accountants and Institute
of Finance Professionals.
YOUR BOARD OF DIRECTORS.
MIKE TAITOKO DIRECTOR
Tenure:First Appointed: 28 Aug 2015
Last Elected: 23 Sep 2021
Key Skills*: Iwi and other stakeholder relationships; natural
resource management (including water and climate
change); digitisation.
Mike is a leading advisor on Māori economic development and
has well-established networks in Māoridom. Mike has strong
commercial skills in the application of digital technologies. He
is the co-founder and CEO of Takiwā Limited and a co-founder
and director of Toha Foundry Limited, technology companies
commercialising cloud-based geospatial analytics services.
He was formerly a director of Auckland Tourism Events
and Economic Development (ATEED).
SUSAN PETERSON DIRECTOR
Tenure:First Appointed: 1 Sep 2022
Last Elected: 22 Sep 2022
Key Skills*: Large organisation and people leadership; AI;
data and digitisation; customer relationships; governance.
Susan is an experienced non-executive director, board
chair and chair of People and Remuneration and Audit
and Risk Committees. As a business leader, Susan has
helped companies to drive growth through technology,
innovative customer solutions and organisational culture.
She currently chairs Vista Group and is an independent
director of Xero and Arvida. Susan is also an independent
director of Craigs Investment Partners.
Susan was previously a member of the New Zealand
Markets Disciplinary Tribunal and a past director of
Trustpower, ASB Bank and Property for Industry. Susan
also served on the Board of Global Women and has been
a past Ministerial appointee to the National Advisory
Council for the Employment of Women.
LORRAINE WITTEN DIRECTOR
Tenure:First Appointed: 1 Sep 2022
Last Elected: 22 Sep 2022
Key Skills*: Governance; commercial experience; audit and
risk management; innovation.
Lorraine is an experienced director and business leader with
an extensive background in the telco, technology, and ICT
sectors. Lorraine currently chairs Rakon and is a director
of MOVE Logistics Group
1
and VWORK. Lorraine’s prior roles
are as chair of audit and risk committees including Chair
of the Department of Corrections Audit and Risk committee,
director of Horizon Energy Group, Pushpay Holdings, Board
member WREDA and director and Chair of Kordia Group.
Lorraine is a qualified Chartered Accountant and is a Fellow
of the Institute of Chartered Accountants.
N
RNP
P
R
* Key Skills are defined as the particular skills each director
brings to the Mercury Board, and which
we consider in our succession planning.
Committee Membership Key:Tenure Key:
N
Nominations and Corporate
Governance Committee
P
People and Performance Committee
R
Risk Assurance and Audit Committee< 3 years6
+
years
3-6 years
Chair of the committee
1 Lorraine Witten will retire from the Board of MOVe Logistics Group in
October 2024.
87
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
YOUR BOARD OF DIRECTORS.
PRUE FLACKS PAST CHAIR
1
Tenure:First Appointed: 1 May 2010
(Chair since Sep 2019)
Last Elected: 28 Sep 2021
Resigned: 31 Dec 2023
Key Skills*: Governance; commercial experience;
stakeholder relationships; people leadership.
Prue is a professional director with experience across a
range of industries. Formerly a commercial lawyer and
partner in the national law firm Russell McVeagh for 20
years, her expertise included corporate and regulatory
matters, corporate finance, capital markets and business
restructuring. Prue was formerly a director of Chorus
Limited, Bank of New Zealand and Chair of Queenstown
Airport Corporation. Prue retired from the Mercury Board
on 31 December 2023.
PATRICK STRANGE PAST DIRECTOR
2
Tenure:First Appointed: 1 Feb 2014
Last Elected: 24 Sep 2020
Resigned: 19 Sep 2023
Key Skills*: Energy industry; major project investment;
health and safety.
Patrick was a Mercury director in 2006-2007 before being
appointed Chief Executive of New Zealand’s transmission
owner and operator, Transpower, a position he held for more
than six years. At the time he was a Mercury director, Patrick
chaired Auckland International Airport and was a director
of Transgrid. He was previously a director of NZX Limited
and Essential Energy, Australia. Patrick retired from Mercury
after the September 2023 Annual Shareholders’ meeting.
NICOLE ROSIE FUTURE DIRECTOR
First Appointed: 1 May 2024 (1 year term)
Key Skills*: Networked infrastructure (delivery
and operation), regulation, public and private sector,
cultural change, health and safety and sustainability/
climate change.
Nicole is an experienced Chief Executive and director. She is
currently the Chief Executive of the New Zealand Transport
Agency, Waka Kotahi and before that, Chief Executive
of WorkSafe. Nicole has also held a range of Board and
governance roles with Auckland Transport, The Construction
Accord and in large infrastructure delivery programmes.
Her executive experience includes executive roles in Fonterra,
KiwiRail, Vector and Fletcher Challenge Forests.
As a Future Director, Nicole is invited to attend and
participate in Mercury Board and Committee meetings,
although she does not participate in decision making.
RP
NR
1
Prue was a director of Mercury from 1 May 2010
until 31 December 2023.
2
Patrick was a director of Mercury from 1 February 2014
until 19 September 2023.
* Key Skills are defined as the particular skills each director
brings to the Mercury Board, and which
we consider in our succession planning.
Committee Membership Key:Tenure Key:
N
Nominations and Corporate
Governance Committee
P
People and Performance Committee
R
Risk Assurance and Audit Committee< 3 years6
+
years
3-6 years
Chair of the committee
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
YOUR EXECUTIVE
MANAGEMENT TEAM.
VINCE HAWKSWORTH //
CHIEF EXECUTIVE*
LUCIE DRUMMOND //
EXECUTIVE GENERAL MANAGER
SUSTAINABILITY
PHIL GIBSON //
EXECUTIVE GENERAL MANAGER
PORTFOLIO
FIONA SMITH //
EXECUTIVE GENERAL MANAGER
PEOPLE EXPERIENCE AND TECHNOLOGY
STEW HAMILTON //
EXECUTIVE GENERAL MANAGER
GENERATION*
WILLIAM MEEK //
CHIEF FINANCIAL OFFICER
CRAIG NEUSTROSKI //
EXECUTIVE GENERAL MANAGER
CUSTOMER
* Vince will retire effective 31 August and Stew Hamilton will succeed him
as Chief Executive.
The Executive Management Team leads our business
to deliver on strategy, ensuring we continue to succeed
while also positioning us for future opportunities and
challenges. The team bring enterprise-wide leadership
capability, together with deep subject knowledge
expertise. Together, they provide leadership for our
people and more widely in a changing environment.
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
SCOTT ST JOHN // C H A I R
GOVERNANCE AT MERCURY.
LETTER FROM OUR CHAIR.
Dear Shareholder
It is my pleasure to present our corporate governance
statement for the year ended 30 June 2024.
This corporate governance statement outlines
Mercury’s Corporate Governance Framework, including
information about the composition, characteristics
and function of Mercury’s Board, how we oversee ethical
and responsible action at Mercury, our approach to risk,
and inclusion and diversity.
Mercury’s directors have deep industry, governance,
and business experience. The Board draws on this
experience to oversee the delivery of Mercury’s goals
and the setting of new ambitions to play a leading role
in the electrification of the New Zealand economy.
This letter highlights some of the Board’s activity
in F Y24.
CONTINUED PATH OF SUCCESSION
The Board has a significant focus on succession
at Mercury and in FY24 the positive impact of this
focus was evident, with change at governance and
leadership levels.
Prue Flacks retired as Board Chair, and I assumed the role
in January 2024. Meanwhile, Susan Peterson took on the
role of Chair of the People & Performance Committee.
During her tenure, Prue made an enormous contribution
to Mercury’s evolution from State-Owned Enterprise
to a listed company that is one of New Zealand’s largest
generators and multi-product, digital retailers. On behalf
of the Board, I extend my thanks to Prue.
Patrick Strange also retired from the Board during
the year. Patrick made a significant contribution
to Mercury over a total of 11 years as director.
I thank Patrick for his service.
During FY24, Adrian Littlewood and Mark Binns
joined the Board. These appointments reflect
our commitment to building a Board with deep
and varied experience to govern the business over
the medium to longer term.
Mercury continues to participate in the Future
Directors programme established by the Institute
of Directors. Nicole Rosie was appointed as Mercury’s
current “Future Director” from 1 May 2024.
BOARD COMMITTEE STRUCTURE
During FY24, the Board discussed reviewing
our committee structure to maximise director
effectiveness and efficiency in discharging Board
duties. As part of this, we clarified the role of the
‘Nominations Committee’ to address governance
matters beyond director nominations, such as
oversight of ongoing director development and Board
performance. The committee was renamed the
‘Nominations and Corporate Governance Committee’
to reflect this. Our review of the Board committee
structure is ongoing. We intend to progress this
during FY25 with updates to be reflected in our
FY25 Corporate Governance Statement.
TRANSITION OF LEADERSHIP
Vince announced his retirement effective from the end
of August 2024 and Stew Hamilton, Mercury’s Executive
General Manager Generation, was unanimously
appointed by the Board as the incoming Chief Executive.
Vince spearheaded significant growth over his four years
at Mercury, guiding the company through a phase of
renewable construction and delivery, and overseeing two
major acquisitions (Tilt Renewables and Trustpower).
I thank Vince for his significant contribution to Mercury.
I also extend a warm welcome to Stew in his new
role. Stew has a track record of success leading
large, complex businesses in New Zealand and
abroad. During his time at Mercury, he has generated
substantial business value while fostering lasting
partnerships and enhanced health and safety
performance. Stew’s appointment underscores
the depth of talent at Mercury and our commitment
to fostering this.
As announced in late 2023, William Meek, our
Chief Financial Officer, will be stepping down in 2025.
A recruitment process for a new Chief Financial Officer
is ongoing and we are confident that the transition will
be smooth.
CLIMATE
Climate has once again been a focus for the Board
in FY24. This year Mercury has published its first
mandatory climate-related disclosures in accordance
with the Aotearoa New Zealand Climate Standards.
This has involved a concentrated effort from the
Board and the Risk Assurance and Audit Committee.
Of particular focus for the Board this year was our
approach to scenario analysis, the articulation of
our material climate-related risks and opportunities,
and our progress towards our climate targets.
CAPITAL BOND ISSUANCE
In June 2024, the Board approved the issuance
of a $350m capital bond to refinance existing bonds
and for general corporate purposes. The bond issue
was fully subscribed, and the strong response from
the market demonstrates continued long-term
confidence in Mercury’s business performance
and future outlook.
ANNUAL SHAREHOLDERS' MEETING
Our ASM will be held in a hybrid format again this
year, with shareholders being able to join in person or
remotely via video link. This approach was successful
in 2022 and 2023 and Mercury is aligned with the
New Zealand Shareholders' Association’s principles
of maximising meaningful shareholder participation
and quality engagement.
It is a privilege to lead our Board in overseeing
Mercury’s role in Aotearoa New Zealand’s energy
transition. The Board is focussed on facilitating
the delivery of Mercury’s commitments to deliver
new renewable generation for New Zealand and drive
returns for our shareholders. I look forward to seeing
you at our ASM.
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
CORPORATE GOVERNANCE FRAMEWORK.
This corporate governance statement (comprising
pages 85 to 104 of this report) has been prepared
in accordance with NZX Listing Rule 3.8.1 and was
approved by the Board of Mercury NZ Limited on
20 August 2024. The information contained in this
corporate governance statement is current as at that
date. Some information in the corporate governance
statement is expressed to be current at another date,
for example the FY24 balance date of 30 June 2024.
This corporate governance statement reports against
the NZX Corporate Governance Code dated 1 April 2023.
At Mercury, we are committed to the highest standards
of corporate governance, business behaviour and
transparency to protect and enhance the interests
of our owners. Our corporate governance framework
includes robust policies and processes which are
fundamental to all of Mercury’s foundational pillars.
Our corporate governance framework underpins
the maintenance of strong relationships with
our stakeholders and our ability to create long-
term value. It also ensures Board accountability
to our shareholders and provides for an appropriate
delegation of responsibilities to our people.
The Board regularly reviews our corporate governance
policies and practices to ensure compliance with
NZX and ASX standards (Mercury is an ASX Foreign
Exempt Listed company) as well as reflecting positive
contemporary corporate governance trends in
New Zealand and Australia.
Over the reporting period, our corporate governance
practices were in substantial compliance with the
NZX Corporate Governance Code. The only exceptions
relate to Recommendation 3.3 (Remuneration
Committee), where the governance of remuneration
at Mercury is split between the People and Performance
Committee and the Nominations and Corporate
Governance Committee (see the Board Committees
section of this report for a full explanation of this exception);
and Recommendation 5.1 (Director Remuneration), where
Mercury adopted a policy for director remuneration during
the reporting period but did not have a specific policy
for the full reporting period (see the Remuneration Report
for a full explanation of this exception).
While not required due to our ASX foreign exempt
listing status, we also endeavour to comply with
ASX Corporate Governance Principles and
Recommendations (fourth edition).
SHAREHOLDERS
CHIEF EXECUTIVE
EXECUTIVE MANAGEMENT
TEAM
MERCURY PEOPLE
RISK ASSURANCE &
AUDIT COMMITTEE
PEOPLE & PERFORMANCE
COMMITTEE
NOMINATIONS
& CORPORATE
GOVERNANCE
COMMITTEE
MERCURY BOARD
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
MERCURY’S BOARD.
BOARD COMPOSITION & CHARACTERISTICS
Structure of the Board
The Board typically comprises eight directors
although this number may vary as required to ensure
effective succession.
To enable Mercury to achieve its strategic goals,
the Board strives to include an effective combination
and diversity of skills, backgrounds and experiences.
The Board also focuses on ensuring that its culture
reflects Mercury’s values, to foster alignment with
the wider business.
There is a brief bio of each director at the beginning
of this section.
Chair
Scott St John is the Chair of the Board. First appointed
as a director in 2017, he was appointed as Chair in
2024. Scott is an independent, non-executive director.
The Chair’s overarching responsibilities are to provide
leadership to the Board and to ensure the Board is
well informed and effective. More information about
the role of the Chair is contained in the Mercury Board
Charter (found on the Corporate Governance section
of our website).
Future Director
The Institute of Directors’ Future Directors Programme
provides people with governance potential and ambition
with mentorship and the opportunity to participate on
a board. It aims to increase the next generation of board-
ready directors in New Zealand. The Mercury Board is a
supporter and active participant in the programme, with
Nicole Rosie (the current Future Director) the fifth such
appointee to the Mercury Board.
Future Directors are invited to attend, and actively
participate in, Mercury Board and Committee meetings,
although they do not participate in decision making.
The Board is structured to ensure that as a collective
group it has the skills, experience, knowledge, diversity
and perspective to fulfil its purpose and responsibilities.
INDEPENDENCE
All of Mercury’s directors, including the Chair, are
considered by the Board to be ‘independent’ directors,
in that they are non-executive directors who are not
substantial shareholders and who are free of any
interest, business or other relationship that would
materially interfere with, or could reasonably be seen
to materially interfere with, the independent exercise
of their judgement.
The Mercury Board takes director tenure into account in
considering independence. The NZX recommends that
issuers consider the effect of tenure on independence
after 12 years’ service. The Board has determined
James Miller to be independent. Mercury values
the experience and deep understanding of Mercury’s
business, energy markets and major capital investment
which James brings to the Board. James has been
on the Board since 2012, but in light of the considerable
value that he provides to the Board, his ability to
challenge and hold management to account and
the fact that he has been Chair of the Risk Assurance
and Audit Committee only since 2022, the Board has
determined that James’ independence is not affected
by his tenure. James intends to retire from Mercury
at the end of his current three-year term following
the 2025 Annual Shareholders’ Meeting.
RESPONSIBILITIES
The Board is responsible for Mercury’s strategic
direction and operation and has delegated certain
responsibilities to the Chief Executive and the
Executive Management Team (EMT).
The Board’s responsibilities are set out in the Board Charter,
which is reviewed at least every two years, and include:
Strategy and Planning• establishing clear strategic goals
with appropriate supporting
business plans and resources
• monitoring strategy
implementation
Environmental and
Health and Safety
• ensuring Mercury’s environmental
and health and safety culture
and practices comply with all
legal requirements, reflect best
practice in New Zealand and
are recognised by employees
and other stakeholders as
key priorities
Financial Performance
and Integrity
• monitoring financial
performance, effective delivery
of the budget and business
plan, and ensuring the integrity
of reporting
Executive Authority • setting delegated authority
levels for the Chief Executive
and EMT
Risk and Audit• ensuring that effective audit, risk
management and compliance
systems are in place and
monitored to protect Mercury’s
assets and to minimise the
possibility of Mercury operating
beyond legal or regulatory
requirements or beyond
acceptable risk parameters
as determined by the Board
Ethics, Culture and
Corporate Behaviour
• ensuring Mercury adheres
to high standards of corporate
behaviour, responsibility
and ethics
The Chief Executive and EMT are responsible for:
• developing and making recommendations to the Board on
Mercury strategies and associated initiatives
• managing and implementing strategies approved by the
Board
• formulating and implementing policies and reporting
procedures for management
• decision making compatible with Mercury’s Delegations
Policy
• managing business risk
• the day-to-day management of Mercury
The Chief Executive and EMT have appropriate
employment agreements setting out their roles
and conditions of employment.
Chief Executive and EMT performance are reviewed
regularly against objectives and measures set by the
Board in annual performance scorecards. The Chief
Executive’s and each EMT member’s performance
were evaluated during the reporting period on
this basis. Further details are contained in the
Remuneration Report.
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
CONFLICTS
Mercury maintains a directors’ interests register. The
interests’ register is reviewed at each Board meeting
to ensure it is up to date and to determine if any
directors are interested in any current or proposed
transaction in which Mercury is or may become
involved. If a director is interested in a transaction,
this is discussed with the Chair and the Company
Secretary and actively managed. A management
plan is established and periodically reviewed as
necessary. More details on the Board’s approach to
conflicts of interest can be found in Mercury’s Board
Charter. Information on current directors’ interests
can be found under Directors’ Disclosures.
ACCESS TO ADVICE & COMPANY
SECRETARY
Directors may access such information and seek
such independent advice as they consider necessary
or desirable, individually or collectively, to fulfil their
responsibilities and permit independent judgement
in decision making. They are entitled to have access
to internal and external auditors without management
present and, with the Chair’s consent, seek
independent professional advice at Mercury’s expense.
All directors have access to the advice and services
of the Company Secretary for the purposes of the
Board’s affairs. The Company Secretary is appointed
on the recommendation of the Chief Executive
and must be approved by the Board. The Company
Secretary is accountable to the Board, through
the Chair, on all governance matters. As at the date
of this Corporate Governance Statement, Howard
Thomas is the Company Secretary.
SELECTION, NOMINATION & APPOINTMENT
All directors are elected by Mercury’s shareholders
(other than directors appointed by the Board to fill
casual vacancies, who must retire and stand for election
at the next meeting of shareholders) with rotation
and retirement determined in line with the NZX Listing
Rules. The Board is responsible for considering and
appointing directors to the Board after candidates have
been identified by the Nominations and Corporate
Governance Committee (see Board Committees).
Mercury notifies shareholders of their right to nominate
a candidate for election as a director by notice on the
NZX and ASX.
Where any director election or re-election is to occur at
a shareholder meeting, the Notice of Meeting includes
all information on candidates for director election or
re-election that the Board considers may be useful to
shareholders. Directors must retire every three years
and, if desired, seek re-election.
Mike Taitoko, having served for three years since his last
re-election, will retire at the September 2024 annual
shareholders’ meeting and stand for re-election in
accordance with the NZX Listing Rules.
The Board and Nominations and Corporate
Governance Committee carry out appropriate due
diligence before appointing a director or nominating
a candidate for election as a director in accordance
with our governance processes.
Mercury has a written agreement with each director
set out in a letter of appointment containing the
terms and conditions of their appointment. A copy
of the standard form of this letter is available in
the Corporate Governance section of our website.
In addition, Mercury also enters into deeds of
indemnity and insurance with each director, in
terms of which Mercury indemnifies and provides
insurance to directors in accordance with the
Companies Act 1993.
INDUCTION & DEVELOPMENT
All new directors participate in a comprehensive
induction programme to familiarise them with
Mercury’s business and the energy and
telecommunications industries. The induction
programme covers key Mercury policies and internal
frameworks and includes sessions run by EMT
members on their business areas and important
projects happening within Mercury. New directors
may request further induction training as needed.
The Board receives regular briefings on Mercury’s
business operations from senior managers. Regular
Board strategy days are held to consider matters
of strategic importance to Mercury, and Board and
management run scenario thinking sessions for key
issues. Visits to Mercury’s facilities keep the Board
informed of Mercury’s assets and operations
and in particular with respect to health, safety
and wellness matters.
The Board has an ongoing programme to enhance
the effectiveness of directors. This involves both deep-
dives into aspects of Mercury’s business, and sessions
focusing on the broader environment including future
trends and innovation. During FY24 there was a
session run on iwi rights and interests. Additionally,
in September 2023, directors undertook a study tour
across the US, UK and Europe. This included meetings
with industry representatives to discuss topics such as
balancing the energy trilemma, delivering on projects,
emerging technologies and trends and effective
business models.
Directors are also encouraged and supported
to continue their own professional development
through individual learning opportunities.
It is essential to Mercury that directors commit
sufficient time to prepare and perform their duties
properly and effectively. The Board has considered
this issue during the reporting period and is satisfied
that, taking into account all of their commitments,
each director had sufficient time to perform their
duties for Mercury.
MERCURY’S BOARD CONTINUED.
1
Prue Flacks and Patrick Strange are not included in this data for FY24 as they were only directors for part of the period. Nicole Rosie (Future Director)
is not included in this data.
KEY BOARD STATS
1
TENUREGENDER
Key:
6+ years (37.5%)
3-6 years (12.5%)
< 3 years (50%)
Key:
Female (37.5%)
Male (62.5%%)
Gender diverse (0%)
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
SKILL & EXPERIENCE CATEGORYCOMBINED BOARDSKILL & EXPERIENCE CATEGORYCOMBINED BOARDSKILL & EXPERIENCE CATEGORYCOMBINED BOARD
STRATEGY & RISK SETTINGSSTAKEHOLDERSGOVERNANCE & RISK MANAGEMENT
Significant commercial
experience across
different industries
and economic cycles
Customer relationships
across market segments
and demographics
Governance experience, including
listed companies
Major project investment
and experience
Partner relationships
Finance/accounting/audit
committee experience
M&A and capital
structure experience
Government relationships
Risk management process and
experience, including cyber
security, climate related, structural
asset integrity
AI, automation and digitisation
Shareholder/investment
community relationships
PEOPLE LEADERSHIP
Health, safety and
wellbeing governance
Disruption and innovation
in energy and other sectors
Iwi relationships/connectivity
Large organisation and cultural
leadership experience
Climate Change and natural
resource management
(including water)
ENERGY INDUSTRYKEY
Energy industry experience
Substantial
Medium
Some
None
R E TAI L
Wholesale markets
trading (energy and/or
other commodities)
Understanding and maximising
value in retail distribution
networks at scale
BOARD SKILLS MATRIX
Through the Nominations and Corporate Governance
Committee, the Board regularly assesses its skills and
competencies in the context of key outputs required,
including:
• setting risk parameters for both value creation and
value protection;
• cultural leadership to reflect our values,
environmental kaitiakitanga and social licence
to operate; and
• strategy development in an environment of
disruption, requiring courage to challenge, resilience
and agility to respond.
During the reporting period, the Nominations and
Corporate Governance Committee has considered
and reviewed the skills of the Board and updated
the Board skills matrix. Recognising that how well
the Board performs is a function of the skills and
experience of individual directors and how the
directors work together as a whole, we consider
that addressing the level of skills and experience
collectively is a better indicator of overall Board
capability.
Although the Board fosters collaborative and open
discussion and each director is expected to contribute
broadly, the key skills which individual directors
contribute to the Mercury Board are indicated in the
director profiles. The purpose of identifying key skills
at an individual level is to signal the skills which would
need to be considered when a director retires. This is
important for succession planning purposes.
2
The skills matrix presented here includes data for all current directors as
at the date of this Integrated Report. It does not include data for Patrick
Strange (left the Board on 19 September 2023) or Prue Flacks (left the
Board on 31 December 2023).
MERCURY’S BOARD CONTINUED.
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
REVIEWING PERFORMANCE
The performance of the directors (individually and
collectively), and the effectiveness of Board processes
and committees, are regularly evaluated using a
variety of techniques including external consultants,
questionnaires and Board discussion. A performance
review was carried out by an external facilitator during
the reporting period. A performance review led by the
Chair will be carried out during the 2025 calendar year.
DIRECTORS’ MERCURY SHAREHOLDINGS
The Board encourages the alignment of directors’
interests with those of shareholders and with Mercury’s
strategic aims. Non-executive directors are encouraged,
within five years of their appointment, to purchase and
hold Mercury shares equivalent to the non-executive
director’s fixed annual base fee. Further details
of directors’ shareholdings in Mercury are set
out in Directors’ Disclosures.
BOARD COMMITTEES
The Board has three standing committees: the Risk
Assurance and Audit Committee (RAAC), the People
and Performance Committee and the Nominations
and Corporate Governance Committee. Each Committee
focuses on specific areas of governance. Together,
they strengthen the Board’s oversight of Mercury.
Committee meetings are scheduled to coordinate
with the Board meeting cycle. Each Committee reports
to the Board at the subsequent Board meeting
and makes recommendations to the Board for
consideration as appropriate.
During the period, the Board discussed and clarified
the role of the previously named ‘Nominations
Committee’. The Committee was renamed the
‘Nominations and Corporate Governance Committee’
to more accurately reflect the Committee’s governance
roles and responsibilities.
As an exception to the NZX Corporate Governance
Code, Mercury does not comply with Recommendation
3.3 because it does not have a separate remuneration
committee. This exception has been approved by the
Board. The functions that would ordinarily be allocated
to a remuneration committee are shared between
the People and Performance Committee in respect of
the Chief Executive and the EMT, and the Nominations
and Corporate Governance Committee in respect
of the directors. These responsibilities are reflected
in the Committee Charters.
Each standing Committee operates in accordance
with a written Charter approved by the Board
and reviewed as required and at least every two
years. The Committee Charters are available in
the Corporate Governance section of our website.
ADDITIONAL COMMITTEES
Mercury assesses on a regular basis whether
additional standing or ad hoc committees are
required. Additional temporary committees are
established from time to time, including as required
to provide governance oversight on short-term
projects. As at the date of this statement, Mercury
has considered that no other standing committees
are required. During the year ended 30 June 2024,
the Board established one temporary committee
for a discrete project. The table below details the
directors that were members of that temporary
committee and the number of meetings attended.
Committee MemberMeetings attended
Scott St John0
James Miller1
Hannah Hamling1
MERCURY’S BOARD CONTINUED.
Arapuni hydro station.
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
People and Performance Committee
Risk Assurance and Audit Committee
Nominations and Corporate Governance Committee
Membership and MeetingsMembership and MeetingsMembership and Meetings
Members as at 30 June 2024:
At least three directors, majority
independent.
Meetings in FY24:
At least 3 annually
Aug 23Dec 23Apr 24Jun 24
Out of
cycle
3
Susan Peterson (Chair)
Became Chair on 1 Jan 2024
3
Mike Taitoko
3
Adrian Littlewood
Became member on 1 Aug 2023
Observer3
Scott St John (prev. Chair)
Chair until 1 Jan 2024, member
as Board Chair from 1 Jan 2024
3
Prue Flacks
Member as Board Chair
until 31 Dec 2023
N/AN/AN/A
Members as at 30 June 2024:
At least three directors, each
independent non-executives.
At least one with accounting /
financial background. Board Chair
not eligible to be RAAC Chair.
Meetings in FY24:
At least 3 annually
Aug 23Dec 23Apr 24Jun 24
Out of
cycle
4
James Miller (Chair)
1
Hannah Hamling
1
Mark Binns
Became member on 1 Sept 2023
N/A0
Lorraine Witten
1
Scott St John
Member as Board Chair
from 1 Jan 2024
ObserverObserver
1
(Observer)
Prue Flacks
Member as Board Chair
until 31 Dec 2023
N/AN/A1
Patrick Strange
Member until 19 Sept 2023
N/AN/AN/A1
Members as at 30 June 2024:
At least three directors, majority independent.
Meetings in FY24:
At least annually
Nov 23Apr 24Jun 24
Scott St John (Chair)
Became Chair from 1 Jan 2024
James Miller
Susan Peterson
Became member on 1 Jan 2024
N/A
Prue Flacks (prev. Chair)
Chair until 31 Dec 2023
N/AN/A
PurposePurposePurpose
Assisting the Board to fulfil its people and performance responsibilities relating to:
• Mercury’s People and Performance strategy and plan
• review of inclusion and diversity objectives and progress against objectives
• the remuneration and performance of the Chief Executive and EMT
• People and performance policies and practices
Monitoring and providing guidance to management on people and performance
related matters.
Overseeing, reviewing and advising the Board on Mercury’s:
• risk management policy and processes (which include oversight of Health
and Safety assurance and climate-related risks and opportunities)
• internal control mechanisms and internal and external audit functions
• compliance with legislation and regulation
• financial information prepared by management for publication
Management retains responsibility for the implementation and operation
of adequate risk assurance, internal control and audit systems. Management
only attend RAAC meetings by invitation. The Board has delegated to the RAAC
the authority to oversee and monitor these activities.
Ensuring the Board and its committees are structured appropriately and composed
of suitably qualified individuals to support the Board’s effectiveness in discharging
its duties and responsibilities and adding value through good governance.
The Nominations and Corporate Governance Committee plays an important
role in identifying, for the Board to consider, people with the necessary expertise,
experience, diversity and perspectives for selection as potential directors to be
nominated for election at the next annual shareholder meeting or to fill a casual
vacancy on the Board.
PNR
4
There was one out of cycle Risk Assurance and Audit Committee meeting during the period
in relation to our FY23 climate-related disclosures.
3
There were three out of cycle People and Performance Committee meetings during the period
in relation to the Chief Executive transition.
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
ASSURANCE & MANAGING RISK.
AUDIT PLAN & ROLE OF AUDITOR
As a public entity under the Public Audit Act 2001,
the Auditor General is the independent auditor
of Mercury and each of our subsidiaries (together,
the ‘Group’). The Auditor-General appointed Emma
Winsloe of Ernst & Young to carry out the FY24 audit
on his behalf. The NZX Listing Rules require rotation
of the key audit partner at least every five years.
The provision of external audit services is guided
by the Audit Independence Policy available on
the Corporate Governance section of our website.
The external auditor attends the Annual Shareholders’
Meeting and is available to shareholders to answer
questions relevant to the audit.
INTERNAL AUDIT & RISK ASSURANCE
Mercury has a comprehensive internal audit and risk
assurance plan, which take a holistic view of Mercury’s
culture, practices and procedures and include periodic
reviews of relevant areas of Mercury’s operations.
The internal audit plan is designed, updated and
approved by the RAAC in consultation with the Risk
Assurance Officer and the Internal Auditor (currently
made up of an internal team, Deloitte and other
internal audit and process specialists appointed
on an outsourced basis) who report on progress
and the results of internal audit reviews at each
RAAC meeting. The Internal Auditor has access
to management and the right to seek information
and explanations.
The RAAC meets with the Internal Auditor at least
once each year without management present.
During FY24, the focus of the RAAC was compliance
(regulatory), reputation, financial (including climate),
operational and health and safety. Assurance reviews
were undertaken for the following areas: Well Integrity
Management Systems, Incident Simulation, NOW’s
Compliance Framework, Cyber Security, Key Financial
Controls, Wholesale Markets, Medically Dependent
and Vulnerable Customers, and Treasury.
TIMELY & BALANCED DISCLOSURE
Shareholders and Markets
Mercury is committed to maintaining a fully informed
market through effective communication with the NZX
and ASX, our shareholders and investors, analysts,
media and other interested parties. Mercury provides
all stakeholders with equal and timely access to
material information that is accurate, balanced,
meaningful and consistent. Where Mercury provides
a new and substantive investor and analyst presentation,
these materials are released to the NZX and ASX ahead
of the presentation.
The Market Disclosure Policy is designed to ensure
this occurs in compliance with Mercury’s continuous
disclosure obligations under the NZX Listing Rules.
The Policy is available in the Corporate Governance
section of our website.
The Board has appointed the Company Secretary
as the Disclosure Officer who is responsible for
administering the Policy. The Disclosure Committee
(made up of the Board Chair, RAAC Chair, Chief
Executive, Chief Financial Officer and Disclosure
Officer) is responsible for ensuring that Mercury
complies with its disclosure obligations.
The Chief Executive and EMT are responsible for
providing the Disclosure Officer with all material
information relating to their areas of responsibility.
Information which, in the opinion of the Disclosure
Officer, may require disclosure is provided to the
Disclosure Committee for decision.
Disclosures relating to the annual and interim
financial statements must be reviewed by the RAAC
before being approved by the Board. Once approved
for disclosure, the Disclosure Officer is responsible for
releasing material information to the market.
Directors consider at each Board meeting whether
there is any material information which should be
disclosed to the market.
Integrity of Reporting
The Chief Executive and the Chief Financial Officer are
required each half year and full year to provide a letter
of representation to the Board confirming that the
financial statements have been prepared in accordance
with legal requirements, comply with generally accepted
accounting practice, and present fairly, in all material
respects, the financial position of Mercury and the
results of its operations and its cash flows.
A letter of representation confirming those matters
was received by the Board with respect to the Group’s
FY24 financial statements.
We report on non-financial information in our
Integrated Report. Material environmental, social
and governance matters are covered in this report,
corporate governance statement and the Climate
Statement. To provide this information in a format
accessible to our stakeholders we take guidance from
both the Global Reporting Initiative (GRI) standards
and the International Integrated Reporting Council
(IIRC) Integrated Reporting <IR> framework. We obtain
an independent limited assurance opinion from
Ernst & Young on our FY24 Climate Statement
and Greenhouse Gas Emissions Inventory.
OUR KEY RISKS
Safety and wellbeing
Mercury undertakes activities that potentially involve
significant safety risks. When we think about safety
and wellbeing risks at Mercury we focus on our 11
critical risks: driving, electricity, confined spaces, stored
energy, working around water, mental wellbeing,
dropped or falling objects, hazardous substances,
mobile plant and equipment, working alone, and
working at heights. A critical risk is something that
has the potential to kill or seriously hurt our people,
our partners or a member of the public.
There are several factors that can create wellbeing
risk for our people and our customers. Mercury has
implemented specific internal and external initiatives
(e.g. a suite of staff wellbeing tools, Customer Care
programme for Vulnerable and Medically Dependent
customers, Here to Help programme for affordability
issues) to address this risk and alleviate impacts.
Mercury operates three stations that are designated
as Upper-Tier Major Hazard Facilities (MHF) which
have unique safety risks beyond those found in
our other generation plants. As an operator of a
designated MHF, we work closely with WorkSafe
and Fire & Emergency NZ and have regular contact
with local councils and communities. We have a
strong focus on Process Safety management and
our Safety Cases demonstrate how we manage and
operate safely to ensure that risks to personnel are
reduced and that any potential damage to property,
the environment and the community is minimised.
COMPLIANCE
Legislative and regulatory changes
Regulatory changes to the current wholesale and retail
market structure and pricing regimes may affect how
Mercury manages its integrated business model of
generation and retailing electricity, gas and telco and
could adversely impact on Mercury’s ability to create
value. Legislative or regulatory changes, including Treaty
of Waitangi claims and iwi-related litigation with the
Government, changes to consent conditions, or levies
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
ASSURANCE & MANAGING RISK CONTINUED.
on the use of natural resources, may result in Mercury
facing significant direct or indirect restrictions, conditions
or additional costs on Mercury’s access to freshwater
or geothermal resources and its hydro, wind and
geothermal generation activities.
Managing the energy trilemma (reliability, affordability
and renewability) is a key challenge as the energy
sector transition progresses and this in turn creates
an increased risk of possible regulatory intervention as
a way of impacting upon affordability.
Fuel constraints arising from reduced gas availability
at times of very low hydro storage can result in high
energy market volatility, resulting in financial and
operational stress for many New Zealand businesses.
This stress increases the risk of regulatory intervention
by the Government, which has the potential to
impact on Mercury’s wholesale/commercial sales and
profitability.
Reputation
Our reputation with investors, partners, customers
and the broader community is one of our most
significant assets. In addition to the risks mentioned
elsewhere in this statement, the following events
could threaten that reputation and could lead to
negative publicity resulting in the loss of business
revenues or a reduction in Mercury’s value:
• errors in customer connections, billing or general
customer communications
• errors by directors, management, contractors or related
industry operators negatively reflecting on Mercury
• adverse environmental impact caused by, or
perceived to be caused by, Mercury’s operations
• health and safety incidents under the operational
control of Mercury
• a reduction in standards of how we treat the
communities that we operate in.
Some of these reputational risks have the potential
to impact on Mercury’s social licence to operate
and hence our long-term success.
OPERATIONAL
Fuel security and supply
Mercury’s generation depends upon the availability
of water for hydro generation, wind for wind
generation, and geothermal fluid for geothermal
generation. The principal risks include the inability
to generate expected levels of electricity due to either
temporarily or permanently reduced fuel supplies,
loss of access to supply, or increased costs to secure
the necessary fuel, all of which may adversely affect
Mercury’s earnings.
Supply chain
Mercury is exposed to both international and
domestic supply chain risks that can impact on
our ability to successfully deliver our generation
development pipeline projects and major plant
refurbishment programme.
Electricity market exposure
In the short run, our ability to manage our electricity
portfolio risk depends upon our ability to purchase
and sell electricity in the wholesale electricity market
which could be impacted by:
• short-term changes in supply and demand
• national fuel availability based on hydrological
and thermal conditions (including extended
national drought)
• competitor behaviour
• significant reduction or ceasing of electricity
consumption (e.g. by large industrial companies)
• constrained transmission and distribution
of electricity.
In the long run, wholesale prices are determined
by the level of national demand relative to supply
from power generation. Prices can be affected by
levels of activity in the industrial sector, population
size, economic conditions, competitor behaviour,
generation build or retirement, technological changes
or new sources of energy, and regulatory changes.
We could also be adversely impacted if a large group
of customers, one or more major customers, or a New
Zealand market participant were to default on payment
for electricity provided or for hedge settlements.
Broadband and mobile services
Mercury now retails broadband and mobile
telecommunication services to residential and
commercial customers. Broadband and mobile
both introduce different operational challenges (e.g.
network availability, cyber-security) that if not well
managed can jeopardise Mercury's capacity to supply
telecommunication services to customers.
Power station availability
Our ability to generate electricity depends upon the
continued efficient operation of our power stations.
The viability, efficiency or operability of our power
stations could be adversely affected by a range
of factors including:
• catastrophic events such as a major earthquake,
volcanic eruption, or other natural perils that could
cause failure of one or more of our power stations
• material failure of turbines, transformers, key
infrastructure or geothermal wells that results
in unplanned power station outages that require
replacement or repair and could be influenced
by supply chain delays
• unexpected events impacting the short-term
availability of key people required to operate
stations, provide hydro control or trading oversight
• cyber-attacks upon our power stations that could
result in a plant failure or sustained loss of control.
Information security
We depend on many different IT systems for our
continued operations. There is a risk that the security
of critical systems may be compromised and/or
information accessed, copied, deleted or corrupted,
impacting on our ability to operate critical systems.
Such an event could result in costs to resolve or
repair; potential downtime of operations; potential
breaches of our customers’ privacy, including
unauthorised access and disclosure of their personal
information; and reputational impacts from any
loss of service, or resulting impacts on safety,
our environment or community.
FINANCIAL
Insurance
Mercury is insured through a comprehensive
programme including cover for generation property,
plant and equipment and business interruption with
a combined limit of $1 billion. Some catastrophic
events are uninsurable, or we have chosen not to
insure against them as the cost of cover is prohibitive
and the likelihood of occurrence is extremely rare.
This is a common approach in our industry.
In the event of a severe catastrophic event, it is possible
that the insurance portfolio will not provide sufficient
cover, impacting future operational performance and
the financial condition of Mercury. We estimate that
the maximum foreseeable loss to which the Group
could potentially be exposed to (cascade dam failure
causing significant flooding, business interruption,
direct reinstatement costs and potential loss of life)
is approximately $13 billion with an assessed likelihood
of occurrence of 1 in 100,000 years.
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
RISK
MANAGEMENT
POLICY
GOVERNANCE
RISK
APPETITE
STATEMENTS
CONSOLIDATED
RISK REPORT
RISK
MATRIX
BOARD
Accountable
for governing risk
RISK ASSURANCE
AND AUDIT COMMITTEE
Oversees and monitors risk
management framework
CHIEF EXECUTIVE
Accountable to the Board and RAAC.
Responsible for managing risk
RISK
ASSURANCE OFFICER
Oversees implementation of
risk management framework,
promotes risk awareness and
mitigations, and tests key controls
RISK MANAGEMENT
COMMITTEE
Establishes, promotes and
implements risk management
(processes, controls, systems
and awareness)
EGM AND BUSINESS UNIT LEADERSHIP TEAMS
Oversees and owns Business Unit risks and controls
BUSINESS UNITS
Owns and manages day to day risks and controls
REPORTING
DELEGATES
OWNERSHIP & MANAGEMENT
BOARD APPROVED RISK MANAGEMENT FRAMEWORK
ASSURANCE & MANAGING RISK CONTINUED.
We review the level and nature of our insurance cover
annually. Following a third-party risk tolerance analysis
which considered several key financial metrics specific
to Mercury, the decision was previously made to retain
additional financial risk (e.g. deductibles, shared
primary level cover, caps, waiting periods, etc.) in the
event of an insurable loss to our generation assets.
Side C cover, which insures the company against
liabilities arising out of securities market conduct
breaches, was also previously removed from our
directors’ and officers’ insurance policy.
Climate change
For details of our key climate-related risks and how we
manage them, please refer to our Climate Statement.
Growth and development
Growth and development projects are subject
to risks that may affect expected financial returns
or outcomes:
• major generation development projects during
construction give rise to risks including cost over-
runs, commissioning delays, environmental impacts
and employee/contractor safety
• political and regulatory uncertainty, high interest
rates and poor economic conditions may limit our
development choices or adversely affect the viability
or costs of future developments.
Liquidity and earnings
A deterioration of our financial condition or instability
in capital markets could increase our cost of capital,
affect our ability to raise debt, or reduce our cash
liquidity thereby impacting our financial performance,
pursuit of our strategic objectives or result in insolvency.
The Crown’s shareholding and the provisions of
the Public Finance Act limits our ability to raise
equity capital.
There is a risk that foreign currency or interest rate
movements may impact our earnings by increasing
the cost for imported goods and services and the
cost of debt.
People
Attracting, developing, and retaining capable and
adaptable people who can contribute to our strategic
priorities and grow with our business remains a
focus for Mercury. We also face the challenge of an
aging workforce in several key operational areas and
attracting suitable people remains an area of risk.
RISK MANAGEMENT FRAMEWORK
& RAAC RESPONSIBILITIES
Risk management is an integral part of our business.
Responsibility starts with the Board who oversee that
effective audit, risk management, and compliance
systems are in place and monitored to protect
Mercury’s assets and to minimise the possibility
of operating beyond legal or regulatory requirements
or beyond acceptable risk parameters. The Board
delegates this oversight responsibility to the Risk
Assurance and Audit Committee (RAAC).
1
The RAAC’s Charter sets out the role, responsibilities,
composition, structure, and procedures of the
Committee. The Charter provides guidance for
the effective oversight of risk assurance and audit
matters by the Committee on behalf of the Board.
Mercury has an overarching Risk Management Policy
in place (see the Corporate Governance section of
1
The RAAC oversees the overall audit, risk management, and compliance systems. The Board delegates responsibility for certain people-related risks
to the People and Performance Committee (e.g. culture and psychological safety).
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
ENGAGING WITH INVESTORS.
OUR INVESTOR RELATIONS PROGRAMME
We are committed to open and effective
communication with our stakeholders and owners
by providing comprehensive relevant information.
We take the steps set out in our Market Disclosure
Policy to achieve this.
We communicate with our investors in various ways,
including the Investor section of our website, annual
shareholders’ meetings (ASM) and webcasts, our annual
and interim reports, regular information disclosures,
and analyst and investor briefings and road shows. Our
aim is to clearly communicate our strategic direction,
including articulating our strategic priorities and how
these leverage our competitive advantages.
We also run a programme to build understanding and
appropriate measurement of our performance among
investors and research analysts. That programme
aims to be responsive, clear, timely, consistent, even-
handed and accurate, and is designed to ensure
appropriate access to management and directors.
Summary records of matters discussed at meetings
with investors and analysts are kept for internal use,
unless a recording or transcript of the presentation
is published on our website.
WEBSITE
Our website contains a comprehensive set of investor-
related information and data including stock exchange
and media releases, interim and annual reports,
investor presentations and webcasts, and shareholder
meeting materials. We will continue to build
environmental, social and governance (ESG) website
content to meet the increasing demand for transparent
disclosures of its performance across these areas and
the management of long-term risks and opportunities.
Shareholders can direct questions and comments
to Mercury through the website or contact
investor@mercury.co.nz.
our website) supported by a suite of risk management
tools appropriate for our business, including our Risk
Appetite Statement, the Mercury Code, an Energy
Markets Risk Management Policy, a Treasury Policy
and a Delegations Policy.
The purpose of the Risk Management Policy is to
embed a comprehensive, holistic, Group-wide capability
in risk management, which provides a consistent
method of identifying, assessing, controlling, monitoring,
and reporting existing and potential risks to our business
and its plans. The Policy sets out the risk management
objectives and requirements of Mercury within which
management is expected to operate. The Policy applies
to all business activities of the Group including Mercury-
controlled joint ventures and is reviewed annually
by the RAAC and approved by the Board.
The risk management framework supports a
comprehensive approach to risk, encompassing
financial, strategic, environmental, operational,
regulatory, reputational, social and governance risks.
This approach includes assessing and managing
climate-related risks.
The framework involves actively identifying
and managing risk and taking measures to reduce
the likelihood of risk, contain potential hazards and
take mitigating action to reduce impacts in line with
risk tolerances. This approach is consistent with the
precautionary principle.
We must accept some risks to achieve our strategic
objectives and to deliver shareholder value. Our
tolerance for risks is embodied in our Risk Appetite
Statement which are set and regularly reviewed by the
Board. As part of the current Risk Appetite Statement,
Mercury targets a long-term credit profile of BBB+
(bbb on a stand-alone basis) from S&P Global
(or its equivalent).
ASSURANCE & MANAGING RISK CONTINUED.
We have a Risk Assurance Officer who has the
independence to determine the effectiveness of risk
management, assurance and internal audit. The Risk
Assurance Officer has a dual reporting line to the Chief
Financial Officer and the RAAC Chair. The RAAC tasks
the Risk Assurance Officer to ensure healthy and robust
debate and interaction between management, risk
assurance and audit providers.
Our management operates a Risk Management
Committee, whose mandate is to establish, promote
and implement risk awareness and adequate risk
management controls to all staff. It also aims to monitor
and review risk activities as circumstances and our
strategic and operational goals change. Membership
of the Risk Management Committee is made up
of representatives from the Executive Management
Team and is chaired by the Chief Executive. The Risk
Management Committee meets at least quarterly.
In addition to these risk management processes,
several measures are employed to manage risks.
These include employee awareness, incident training,
due diligence, financial risk mitigation tools, active
involvement in the regulatory environment and
established whistle blower policy and procedures.
As noted above, the RAAC is responsible for
overseeing, reviewing and providing advice to
the Board on Mercury’s risk management policies
and processes. The Risk Assurance Officer reports
regularly to the RAAC on the effectiveness of our
management of material business risks. In addition,
the RAAC annually reviews the risk management
framework. The last review of the risk management
framework took place in May 2024.
Mercury’s Constitution, and relevant Charters and
Policies are available in the Corporate Governance
section of Mercury’s website.
GOVERNANCE ROADSHOW
Mercury held a series of investor meetings
during June 2024, primarily with institutional
investors. The governance roadshow aims to
provide an overview of Mercury’s activities and
significant governance matters during the year.
Materials from the roadshow can be found on
our website.
ANNUAL SHAREHOLDERS’ MEETING
& WEBCAST
An ASM is held in New Zealand at a time and location
which aims to maximise participation by shareholders.
Mercury’s 2024 ASM will be held in Auckland on 19
September 2024 and once again will be held in a
hybrid format (in person and online). This approach
was successful at the 2022 and 2023 ASMs and
is considered by the New Zealand Shareholders’
Association as the most effective approach to enable
meaningful shareholder participation.
ELECTRONIC COMMUNICATIONS
We encourage shareholders to provide email
addresses to enable them to receive shareholder
materials electronically. Communicating electronically
is faster and more cost effective. Most of our
shareholders receive information electronically.
However, we understand that this does not suit
everyone. We also provide a hard copy Integrated
Report to shareholders who wish to receive it.
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
ACTING ETHICALLY & RESPONSIBLY.
TE NGĀKAU TAPATAHI ME TE HAEPAPA.
The Mercury Code and the policy framework described
below support our promises to each other and define
our commitment to our customers, our people and
community and our investors. The Mercury Code,
Modern Slavery Statement, and all Policies referred
to in the table on the following page are available
on the Corporate Governance section of our website.
THE MERCURY CODE
Mercury people strive to do what’s right. We have put in
place the Mercury Code to ensure that our people know
what the ‘right thing to do’ is. The Mercury Code is our
version of a code of conduct and ethics and documents
the behaviours we require to embed and sustain our
culture to successfully deliver our strategy and achieve
our Purpose of taking care of tomorrow: connecting
people and place today. The Mercury Code underpins
everything we do. It requires all Mercury people,
including directors and employees, to act honestly
and with integrity and fairness at all times, and to strive
to foster those standards within Mercury.
A Mercury employee is expected to apply the Mercury
Attitude. This attitude shapes our decisions, our actions
and our interactions with each other. Our Mercury
Attitude aligns our direction to achieve our Purpose.
The Mercury Code is reviewed by our Board at least
every two years. All Mercury employees are required to
complete an annual re-certification training on applying
the Mercury Code. This is an interactive e-learning
module which tests employees on their understanding
of applying the Mercury Code in different situations.
A 100% score is required to pass the module.
Directors are required, in the performance of their
duties, to give proper attention to the matters before
them and to act in the best interests of Mercury at
all times.
SUPPLIER CODE OF CONDUCT
We also want to ensure that we work with suppliers
who share our commitment to acting ethically and
doing the right thing. Our Supplier Code of Conduct
describes the way we work with our suppliers and what
we expect in return. The Supplier Code of Conduct
includes our commitments and our expectations
in relation to social responsibility, health and safety,
compliance with all applicable modern slavery laws,
environmental responsibility, and business integrity.
MODERN SLAVERY
Mercury acknowledges the importance of assessing
and addressing the risk of modern slavery in our
operations and supply chain. We continue to publish
a modern slavery statement, consistent with the
Australian Modern Slavery Act 2018. Our FY23
statement outlines the work undertaken during FY23
to assess and address the risk of modern slavery in
our operations and supply chain and identified the
following key focus areas for FY24.
The areas set out in the table on the next page are
of fundamental importance to Mercury to ensure
good governance and responsible business practices
are followed.
CARE / TAURIMA
Doing what's right.
Te mahi i te mea tika.
COMMIT / KĪ TAURANGI
Taking ownership.
Rangatiratanga.
CONNECT / HONONGA
Working together.
Te mahi tahi.
CURIOUS / PĀKIKI
Exploring possibilities.
Te wherawhera i ngā āheinga.
C
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•
•
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O
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•
C
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
Our Governance and Responsible Business Practices
ConflictsConflicts of interest must be avoided, except with the prior consent of Mercury. Mercury
people are required to declare conflicts of interests and are encouraged to proactively
discuss potential conflicts with their manager. Mercury takes practical, preventative action
wherever possible, for example by substituting project managers in circumstances of
possible conflict with contractors and suppliers.
Our directors declare all potential conflicts of interest prior to appointment
and if applicable, at each Board meeting in relation to specific agenda items.
BriberyThe acceptance of bribes, including gifts or personal benefits of material value which
could reasonably be perceived as influencing decisions, is prohibited under the Mercury
Code. Under Mercury’s Delegations Policy, donations to political parties are prohibited.
Use of
Mercury Assets
The Mercury Code places restrictions on the use of corporate information, assets and
property. All persons covered by the Mercury Code are encouraged to report any breach
or suspected breach of the Code.
WhistleblowingWe provide a framework for the protection of employees wishing to disclose serious
wrongdoing. This is described in Mercury’s Whistleblowing Policy.
Employees are also encouraged to voice with their manager, the HR team, the General
Counsel, other managers or directors any concern over ethical or irresponsible behaviour,
even if not reaching the threshold of serious wrongdoing.
Trading In
Company
Securities
Mercury’s Trading in Company Securities Policy sets out the rules and restrictions relating
to trading in Mercury securities by directors, employees and contractors, including the
prohibition on insider trading. The Policy is closely monitored by the Company Secretary
and is overseen by the RAAC.
The Chief Executive and EMT members are prohibited, by the Trading in Company
Securities Policy, from entering into transactions in associated products which limit
the economic risk of participating in unvested entitlements under Mercury’s Long-Term
Incentive Plans.
During FY24, the Trading in Company Securities Policy was updated to clarify the
application of trading restrictions to people associated with Mercury restricted persons.
Our Governance and Responsible Business Practices
Market
Disclosures
Our Market Disclosure Policy ensures we maintain a fully informed market through
communication with the markets, investors and stakeholders and by giving them equal
and timely access to material information.
PrivacyWe are committed to the safeguarding and proper use of personal information. We have
a comprehensive Privacy Policy, which is reviewed every two years, and a robust privacy
framework. Privacy is afforded significant consideration within Mercury and is managed
in accordance with our risk management framework.
Our General Counsel is Mercury’s Privacy Officer and is responsible for implementing our
Privacy Policy, promoting awareness of privacy matters, monitoring matters on a day-to-
day basis, and escalating matters as required to our Chief Executive, with notification to
our Risk Management Committee. Privacy issues are reported to the Risk Management
Committee on a quarterly basis. We also have a Group Information Security Manager who
is responsible for ensuring that appropriate systems and processes are in place for the
storage and security of personal information.
SustainabilityOur Sustainability Policy sets out the core principles and values that promote ethical
and responsible decision-making.
Under the Policy, we commit to integrating sustainability through principles relating
to our five-pillar strategy: Customers, Partnerships, Kaitiakitanga, People, Commercial.
Environmental Our Environmental Policy recognises that our generation activities rely on access to natural
resources that we know are highly valued by our communities. We strive to maintain
this trust by working with partners to deliver renewable electricity and make a long-term
difference New Zealand’s environmental health.
We work responsibly to deliver today and sustainably for future generations and will
achieve this by focussing on: Kaitiakitanga, challenging our performance, promoting
awareness, complying with requirements, and setting objectives and targets.
Takeover
Response Policy
We have a Takeover Response Policy to guide the Board and management if the
Company receives a takeover notice or the Company becomes aware that a takeover offer
in respect of the Company (or an analogous scheme of arrangement) is, or is likely to be,
proposed by another person.
ACTING ETHICALLY & RESPONSIBLY CONTINUED.
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
DIVERSITY, EQUITY & INCLUSION.
REREKĒTANGA, MANA ŌRITE
ME TE WHAKAURU.
Mercury embraces and celebrates diversity in all
its forms. When we care, commit, connect and bring
our curiosity, we make a real difference.
Being inclusive of individuals with different backgrounds,
views, experience and capability working together makes
us stronger as an organisation. We are committed to
recruiting and retaining people who respect each other,
our customers, our stakeholders and our partners and
have a broad range of skills, experiences and frames of
reference to drive innovation, deliver improved financial
performance and help us to achieve our ambition.
Our commitment to diversity, equity and inclusion
starts with our Diversity, Equity and Inclusion Policy
and framework. A copy of this policy is available
in the Corporate Governance section of our website.
Our approach takes a strategic view that to build
diversity, equity and inclusion in our organisation
we must align a variety of initiatives. These initiatives
aim to enable and involve our people, build external
partnerships, grow capability, and ensure our work
environment and structure support a diverse,
equitable and inclusive culture. The activity we
undertake across these areas of focus is aligned
to the following principles:
• pursue diversity of our people at all levels;
• create a flexible and inclusive work environment that
values difference and enhances business outcomes;
• harness diversity of thought and capitalise
on individual differences;
• embrace leadership behaviours that reflect our
belief in the value of diversity, equity and inclusion;
• attract and retain a talented workforce through
increasing the diversity of the candidate pool and
maintaining a recruitment strategy that is attractive
to all candidates, and
• recognise the importance of investing in creating
a greater sense of belonging for our people.
This approach will be achieved across by:
• providing learning opportunities that raise awareness
of the benefits of diversity, equity and inclusion,
improve understanding of the biases that hinder
progress, and support leaders to create safe,
supportive, and equitable spaces where team
members of all backgrounds and experiences belong;
• ensuring our recruitment and selection, development
and talent management approaches are equitable
and enable inclusion and diversity at all levels;
• regularly reviewing and enhancing processes and
policies to encourage greater flexibility and diversity
and enable an inclusive and equitable environment
where everyone can belong;
• embedding diversity, equity and inclusion in our
culture through engaging internal communications
and events, active employee led network groups
that promote awareness, and seeking diverse
perspectives on issues that matter to our people;
• regularly tracking progress towards a diverse
workforce at all levels against specific targets;
• engaging with educational institutions and
partners in our communities to address inequity
and promote and encourage wide talent pools
for the industry;
• reporting on our progress to the Board and holding
ourselves to account.
In addition to the actions we undertake, we also
support a diverse, equitable and inclusive workplace
through not permitting or condoning any harassment,
discrimination or victimisation. Our Anti Bullying,
Harassment and Discrimination Policy outlines our
approach to this.
Our progress against diversity and inclusion goals is
measured against objectives set by the Board. These
objectives are made up of a mixture of targets and
benchmarks. Generally, targets exist where we believe
that achieving diversity in that area is aided by us
working towards a specific measure. In other areas,
we use benchmarks where comparison against those
identified data points will help inform our view of how
our work towards diversity in that area is progressing.
Diverse emerging leaders programme participants.
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
ObjectivesFuture years - targets
Gender
We have clear and simple targets for gender diversity
of 40:40:20 at all levels.
This means we aim for a minimum of 40% female
and 40% male, with the balance being any gender.
Pay Equity
We ensure that everyone is rewarded fairly for their work.
Employee GroupOur Long Term TargetsJune 2023 Actuals (Female/Male)June 2024 Actuals (Female/Male)
Progress
against targets
All Employees40:40:20
51%49%49%51%
●
People Leaders40:40:20
47%53%
46%54%
●
EMT40:40:20
37.5%62.5%
29%71%
●
Board40:40:20
50%50%37.5%62.5%
●
Gender Pay EquityOur target is 100% Pay Equity.97.1%96.7%
●
Ethnicity
Aligned to our goal of having clear and simple targets, we have
simplified long-term targets for ethnicity of 15:15:10. This means
we aim for a minimum of 15% Māori, 15% Asian and 10%
Pasifika at all levels (these are closely aligned to our population
demographics and are minimums).
EthnicityOur Long Term TargetsJune 2023 ActualsJune 2024 Actuals
Māori
Employees
People Leaders
15%
15%
7%
6%
7%
7%
●
●
Asian
Employees
People Leaders
15%
15%
17%
10%
19%
11%
●
●
Pasifika
Employees
People Leaders
10%
10%
5%
2%
5%
2%
●
●
Age
To ensure our business is diverse in a range of ways, we monitor
our age profile to check that we are aligned to the national median.
The median age of the NZ workforce is 41.8 years (National Labour Force projections,
2023). Benchmark against national median age ofthe labour force in New Zealand
National Labour Force projections.
41.241.9
●
At 30 June 2024, the proportion of women on the EMT (who represent Mercury's Officers, including
the Chief Executive) was 28.6%, or two out of seven (as at 30 June 2023 this was 37.5% or three out
of eight). The proportion of women on the Board at balance date was 37.5%, or three out of eight,
including the Chair (as at 30 June 2023 this was 50%, or four out of eight). No Directors or EMT/
Officers self-identify as gender diverse (also the case as at 30 June 2023).
In order to maintain consistency of measurement against our targets, we have adopted the Stats NZ
prioritised ethnic groups. This involves each person being allocated to a single ethnic group based
on the groups they have identified with, which are, in order of priority: Māori, Pacific, Asian and
European/Other.
At 30 June 2024, our gender pay equity was 96.7% (as at 30 June 2023 this was 97.1%). Gender pay
equity is calculated as the average position in range (relative to the role’s band midpoint) of female
fixed remuneration compared with the average position in range of male fixed remuneration. Our
gender pay gap which compares the median hourly rate between males and females was 37%
(as at 30 June 2023 this was 41.9%).
Pay equity by ethnicity compared to “other” ethnicity was Māori 98.8%; Asian 98.2% and Pasifika
96.7% (as at 30 June 2023 this was Māori 99.9%; Asian 98.6% and Pasifika 97.6%). The ethnicity pay
gap which compares the median hourly rate between each ethnicity and “other” ethnicity was Māori
22.2%; Asian 2% and 37.9% for Pasifika (as at 30 June 2023 this was Māori 32%; Asian -2.7% and
Pasi fika 37.7%).
The Board believes that for this reporting period Mercury has continued to make progress towards
achieving our inclusiveness, equity, and diversity objectives. However, the Board notes that continued
focus is required.
DIVERSITY, EQUITY & INCLUSION CONTINUED.
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MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
been a significant twelve months of execution,
and our people have been unwavering in their
commitment to our customers, stakeholders
and our company. I’d also like to acknowledge my
peers on the People and Performance Committee
for their support. Together we will continue to ensure
Mercury remains a great workplace, where our
people are empowered to excel for our customers
and shareholders.
REMUNERATION REPORT.
Dear Shareholder
As Chair of the People and Performance Committee
(PPC), it is my pleasure to present our Remuneration
Report for the year ended 30 June 2024.
Financial and operational highlights
We are pleased to be in a position to report strong
financial results in a year of challenging external
conditions. These results underscore the importance
of strategic clarity, investing for growth, prioritising
sector resilience, empowering our people to be
successful and maintaining strong relationships
with our community.
As noted elsewhere in this report, net profit after tax
was $290 million, up $178 million from the prior year.
We reported $877 million EBITDAF, up by $36 million
on the prior year’s $841 million.
Operating costs increased by $39 million on the prior
year, with increases in employee costs contributing
to this rise.
Enabling our strategic ambitions
Mercury has a clear ambition to play a leading role in
the electrification of the New Zealand economy, drive
greater value for our customers, provide an exciting
and rewarding environment where our people can
excel and continue to deliver sustainable growth
for our shareholders.
In a world that is rapidly changing, an adaptive culture
with an emphasis on performance and delivery will
be critical to our success moving forward.
We continue to focus on supporting our teams to be
more adaptive, grow our change leadership capability
and equip our teams to successfully execute on our
strategy in an evolving environment.
Changes to Mercury’s operating model were made
during the year to further support these aspirations.
These changes included the bringing together our
people and technology functions in recognition that
technology is a mission critical enabler for our people.
Concurrently, the integration of the Trustpower and
Mercury retail businesses was successfully completed.
This integration enables our Mercury team to apply
the best approaches to support more retail customers
to be successful.
Continuing to grow talent
Turning our sights to the future, the PPC spends
considerable time ensuring that we can continue
to attract and retain top talent, further invest in
our leadership capability at all levels and shape a
performance-led culture. These efforts are critical
for ensuring effective succession planning across
our business. We are delighted that this work enabled
the internal promotion of Stew Hamilton as Chief
Executive. More details of this work is captured in
the Governance at Mercury.
We believe that diversity, equity and belonging
are critical components of any healthy and high
performing team. At Mercury, we work hard to ensure
that we have an inclusive work environment where
contributions and diverse perspectives are valued
and our team members feel psychologically safe.
The Board has set clear goals and targets to track
our progress, which are captured more fulsomely
in Diversity, Equity and Inclusion.
We are also considering carefully how our reward
and recognition policies continue to evolve in
a way that empowers and motivates our people
and recognises the contribution that they make
to company performance.
Executive remuneration
With the departure of Vince Hawksworth in August
2024, the Board made no change to his base salary
for FY25. The Board also agreed that Vince would
not be eligible for any STI component for the FY25
year, nor be invited to participate in the FY25-FY27
LTI gr ant.
The Board approved managements performance
against the short-term incentives (STIs) Key
Performance Indicators (KPIs) at 53.1% of the maximum.
More detailed information can be found here.
Mercury benchmarks executive remuneration against
comparable companies in New Zealand, ‘matching’
each Mercury executive role to market roles with
broadly similar accountabilities in a comparative
environment. This is covered in more detail in
Remuneration Benchmarking.
Director remuneration
Mercury’s approach to director remuneration is to ensure
that our directors are rewarded fairly and equitably.
On 17 June 2024, Mercury adopted a Non-Executive
Director Remuneration Policy to align with the NZX
Corporate Governance Code recommendations on
director remuneration. The Policy provides a framework
for setting and reviewing Mercury’s non-executive
director remuneration arrangements to ensure that we
are able to attract and retain directors with the skills
and experience necessary to govern our business and
achieve our strategic objectives.
Note of appreciation
As another financial year ends, I’d like to extend
my thanks to all the people at Mercury who have
contributed to our success over the year. This has
“ We believe that diversity,
equity and belonging are critical
components of any healthy and
high performing team. At Mercury,
we work hard to ensure that we
have an inclusive work environment
where contributions and diverse
perspectives are valued.”
SUSAN PETERSON // CHAIR, PEOPLE
AND PERFORMANCE COMMITTEE
105
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
EXECUTIVE REMUNERATION GOVERNANCE
Mercury’s Board is committed to a remuneration
framework that promotes a high-performance culture
and that aligns executive reward to the achievement
of strategies and objectives to create sustainable
value for our shareholders. The Board is committed
to demonstrating transparency in its remuneration
policy and practice.
The purpose of the PPC is to assist Mercury’s
Board in fulfilling its responsibilities relating to
Mercury’s People Experience strategy and plan,
People Experience policies and practices and the
remuneration and performance plan of the Chief
Executive and executives. More information on
the responsibilities of the PPC and members of the
Committee can be found in the 'Board Committees’
section of our Corporate Governance Statement
on pages 95 - 96 of this report. The Committee
Operates under a written charter. This charter is
available to view here.
The PPC reviews the annual performance appraisal
outcomes for all members of the EMT and endorses
the outcomes for approval by the Board. Annual
remuneration reviews take into account external
benchmarking to ensure competitiveness with
comparable market peers, along with consideration
of an individual’s performance, skills, expertise
and experience.
Use of discretion
The Board has discretion in relation to granting and
testing variable remuneration, including in relation to
assessing whether LTI and STI performance hurdles
have been satisfied. In addition, malus provisions
are available to the Board should an adverse event
occur or performance be deemed unacceptable,
enabling the Board to diminish or extinguish STI
or LTI outcomes. The Board also has discretion
on how to treat variable remuneration in a cessation
of employment scenario.
The Board did not apply discretion with respect to
grants to the CE and CFO during FY24. All grants
were made in accordance with the standard terms
and treatment applicable to the vested FY22-FY24
LTI grant and FY24 STI plan.
SIMPLICITY
Design is kept simple and easy
to understand
ALIGNMENT TO PERFORMANCE
Remuneration for EMT reflects
the level of performance and
delivery of successful outcomes
SUSTAINABLE
SHAREHOLDER VALUE
Remuneration is aligned to long-
term sustainable shareholder value
123
EXECUTIVE REMUNERATION POLICY
Mercury’s Executive Remuneration Policy is available
to view here. Mercury’s Executive remuneration
policy is founded on three guiding principles:
REMUNERATION REPORT CONTINUED.
Mercury office, Tauranga.
106
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
EXTERNAL AND INDEPENDENT ADVICE
During FY24, Mercury sought external and
independent advice from PricewaterhouseCoopers
(PwC) to provide executive benchmarking data and
Long-term performance incentives (LTIs) calculations
to determine grant and vesting LTI values.
This Remuneration Report contains disclosure
of the employees who received remuneration and
any other benefits in their capacity, the value of which
was or exceeded $100,000 per annum, in brackets
of $10,000, as required by the Companies Act 1993.
This can be found on page 114.
REMUNERATION BENCHMARKING
PwC provided Mercury with benchmark
remuneration data from a core comparator group
of companies tested with and confirmed by the PPC
for this purpose. The comparator group comprised
large New Zealand energy sector companies, utility
companies and companies with a retail customer
focus. The majority of the core comparator group
are members of the NZX 20 Index. PwC's approach
in selecting proposed market comparators for Mercury
was to match each executive role with market roles
with broadly similar accountabilities within companies
of a comparable scale and complexity to Mercury.
The key factors for assessing scale and complexity
included industry/sector, key company metrics such
as revenue, total assets and employee numbers and
geographic/product scope and diversity. However, to
ensure strong role matching and robust sample sizes,
PwC included additional comparators for individual
executive roles where necessary. PwC did not provide
consent to list the peer group of companies that
was used.
EXECUTIVE REMUNERATION COMPONENTS
Total remuneration for all EMT is made up of three components: fixed remuneration, short-term performance
incentives and long-term performance incentives. Mercury’s remuneration philosophy is to pay for performance
and there is an opportunity for executives to receive, where performance has been exceptional, a total
remuneration package in the upper quartile for equivalent market-matched roles.
Fixed RemunerationShort-Term IncentivesLong-Term Incentives
PurposeAttract and retain Executives of
a high caliber and experience to
deliver our strategy.
To motivate and reward employees
for performance over the financial
year.
Reward the achievement of
performance measured over the
longer term aligning Executive
reward with shareholder returns.
FY24 and FY25
approach
Fixed remuneration consists
of base salary and benefits
including insurance and KiwiSaver/
Superannuation. Mercury’s policy
is to pay fixed remuneration with
reference to the fixed pay market
median.
Performance assessed against
a Company scorecard of
predetermined financial and non-
financial objectives over the course
of the financial year. Criteria closely
aligned with Mercury’s strategic
objectives, purpose and goals.
Performance measured by total
shareholder return against (1) an
industry peer group and (2) the
cost of equity, in each case over
the three year vesting period.
SHORT-TERM PERFORMANCE INCENTIVES
Short-term incentives (STIs) are at-risk payments
designed to motivate and reward for performance
fairly in that financial year.
The target value of an STI payment is set annually
as a percentage of the executive’s base salary.
For FY24 the relevant target percentage for the
Chief Executive was 60% and up to 35% for other
EMT members.
A proportion (70% for the Chief Executive and 50%
for other EMT members) of the STI is related to
a shared set of Group Key Performance Indicators
REMUNERATION REPORT CONTINUED.
(KPIs) based on business priorities for the next 12
months, with the objective of aligning the EMT’s
focus with the company’s priorities. The balance of
the STI for the Chief Executive is related to individual
performance measures set by the Board. In the case
of other EMT members, the balance is related to
business unit and individual performance measures.
The target STI opportunity for all Executives is 100%
and maximum STI opportunity is 160%. In the event
all on-target KPIs are not met on the Scorecard,
no STI payment will be made.
107
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
FY24KPIsAlignment to 3 year ObjectivesKPI outcome
Commercial 40%1. EBITDAF
1
target achieved
2. EBITDAF target exceeded
• Increase the value of our business to
$800m EBITDAF
1. Achieved. EBITDAF target of
$834m exceeded by $38m
2. Not achieved. EBITDAF target
of $844m exceeded by $28m.
Second milestone not met
Retail 12.5%3. New propositions piloted
4. Successful retail integration delivery
• Create executable options for new growth
• Increase the value of our business to
$800m EBITDAF
3. Achieved. Two propositions piloted
4. Part achieved. Not all milestones met
Adaptive Organisation 10%5. Increased internal movement
6. Safety critical element verification completion
• Unleash the full potential of our people
through transforming culture
• Be adaptive and resilient organisation,
responsive to future needs
5. Achieved. Target met
6. Part achieved. Not all milestones met
Generation Growth 10%7. Pipeline of new renewables options
8. Reduce unplanned/forced outages
• Increase the value of our business to
$800m EBITDAF
• Create executable options for new growth
7. Achieved. Required milestones met
8. Not achieved. Milestones not met
Relationships 12.5%9. Deepening of partner relationships
10. Work closely with iwi partners
• Enhance our licence to operate through
collaborative work with our stakeholders
• Be adaptive and resilient organisation,
responsive to future needs
9. Achieved. Required milestones met
10. Achieved. Required milestones met
Climate 15%11. Role in electricity sector transition progress
12. Progress non-condensable gas reinjection
• Play a leading role in New Zealand’s
successful transition to a low carbon
economy
• Enhance our licence to operate through
collaborative work with our stakeholders
11. Achieved. Required milestones met
12. Part achieved. Good progress made
1
EBITDAF normalised for positive and negative annual variations in hydrology. For FY24 normalised EBITDAF was $872m.
BREAKDOWN OF STI PERFORMANCE (KPI)
MEASURES FOR FY24:
FY24 STI GROUP SCORECARD ASSESSMENT
Aligning to our FY22-24 three year goals, 12 Key Performance Indicators
(KPIs) were selected for the FY24 Group Scorecard. The Scorecard
consisted of on-target KPIs (aligned to 100% of the KPI) and stretch KPIs
(aligned to 160% of the KPI) and appropriately weighted in terms
Chief Executive
CFO / Other EMT members
IndividualGroup ScorecardIndividualGroup ScorecardBusiness Unit
IndividualGroup ScorecardIndividualGroup ScorecardBusiness Unit
of value. The PPC carefully considers delivery and achievement against
each KPI and recommends performance outcomes to the Board for
approval. Where the Board deems necessary, it applies discretion both
upwards and downwards to agree the final outcome.
REMUNERATION REPORT CONTINUED.
108
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
The Board approved managements performance against the short-term
incentives (STIs) Key Performance Indicators (KPIs) for FY24 at 53.1% of
maximum. This recognises achievement of a mix of ‘on-target’, ‘stretch’
performance and those KPIs that were not achieved.
In terms of the individual targets the Board determined that the targets
were met for Commercial KPIs and that stretch targets were met for
the Relationship KPIs. The Generation Growth KPI targets were not met.
The Board applied discretion and agreed that the Retail, Adaptive
Organisation and Climate KPIs were partially met.
The Board elected to exercise discretion to determine a performance
outcome for the on-target Retail scorecard measure of 10% against
an on-target of 12.5%. Whilst the on-target measure had not been met,
the Board considered it appropriate to recognise the successful project
to integrate the Mercury and Trustpower Retail teams.
The Board elected to exercise discretion to reduce the performance
outcome for the Adaptive Organisation scorecard measure from 16% to
5%. Whilst considerable progress had been made against process safety
through the course of the year, the Board did not believe we were yet
where we needed to be.
The Board elected to exercise discretion to determine a performance
outcome for the on-target Climate scorecard measure of 10% against
an on-target of 15%. Whilst the on-target measure had not been met,
the Board acknowledged the significant programme of climate work
that was delivered during the year.
FY25 GROUP SCORECARD
The FY25 Group Scorecard aligns to our new FY25-FY27 three year
goals, with 12 Key Performance Indicators (KPIs). The Scorecard consists
of on-target KPIs and stretch KPIs and appropriately weighted in
terms of value. For FY25, in the event there is a fatality or the normalised
hydrology adjusted EBITDAF does not reach 80% then no STI payment
will be made.
For FY24 and FY25 Group Scorecards, the Commercial goal is
normalised for positive and negative annual variations in hydrology
as these are beyond management’s control.
The stretch performance levels within each goal allowed employees
to be rewarded for exceptional performance. The maximum amount
of an STI payment for an EMT member for the shared KPIs was
160% of the STI on-target amount.
The Board retains discretion to ensure the final outcome of STI
payments fairly reflects performance over the relevant financial year.
COMMERCIAL 50%
FY25KPIsALIGNMENT TO 3 YEAR OBJECTIVES
GENERATION GROWTH 10%
CLIMATE 10%
RELATIONSHIPS 10%
TECHNOLOGY 10%
ADAPTIVE ORGANISATION 10%
Providing what matters most through financial growth
Delivering more reliable and renewable energy to power Aotearoa
Creating success with others
Innovating with technology
Performing with an adaptive and inclusive culture
Accelerating the shift to a low-carbon future
EBITDAF target achieved
2
EBITDAF target exceeded
Generation availability target met
Advancement of pipeline activity exceeded
Deepening of iwi relationships
Broadening of iwi relationships
Deliver enhanced technology solutions
Deliver performance improvement use cases
Maintain health, wellbeing and safety employee voice scores;
and deliver integration synergies
Progress operational excellence and productivity
Deliver 2 of 3 outcomes of:
- Advancement of new demand or Commercial and Industrial electrification
- Progress emission reduction
- Sector and Government Energy Transition Framework in place
Deliver all 3 outcomes above
ON-TARGET AND STRETCH EBITDAF WORTH 50% / ON-TARGET AND STRETCH NON-FINANCIAL GOALS WORTH 10% EACH
1
3
5
6
7
9
8
10
11
12
2
4
REMUNERATION REPORT CONTINUED.
2
EBITDAF normalised for positive and negative annual variations in hydrology.
109
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
LONG-TERM PERFORMANCE INCENTIVES
Long-term performance incentives (LTIs) are at-risk
payments designed to align the reward of executives
with the enhancement of shareholder value over
a multi-year period.
Under the LTI plan, grants are made annually with
performance measured over a three-year period.
The LTI plan is a dividend protected share rights plan
and executives are granted a number of share rights
determined by dividing the face value of the grant
by the value of one Mercury share at the date of the
grant. At vesting, subject to meeting the performance
hurdles, each share right is converted to one ordinary
share. The LTI outcome opportunity is capped at
100%, though executives may also receive additional
shares representing the value of dividends paid over
the vesting period. The executive is liable for tax on
the shares received at this point.
Each grant under the LTI plan has two tranches with different performance hurdles:
TranchePerformance hurdle
Tranche 150% of the grant is based on Mercury’s Total Shareholder Return (TSR) relative to
the performance of an industry peer group comprising Meridian Energy, Genesis Energy,
Contact Energy and Manawa Energy. There is no positive TSR performance gate on
this tranche but Mercury’s TSR must be at the 50th percentile of the comparator group
for any award to be made on this component.
Tranche 250% of the grant is based on Mercury’s absolute TSR against the company’s cost
of equity over the vesting period, plus 1%.
For the FY24 grant period commencing 1 July
2023, the value represented 40% of the Chief
Executive base salary and between 25% to 35% of
base salary for other EMT members.
The Board retains discretion over the final outcome of
the LTI plan, to allow appropriate adjustments where
unanticipated circumstances may impact performance,
positively or negatively, over a three-year period.
REMUNERATION REPORT CONTINUED.
Ngā Awa Pūrua geothermal station.
110
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
CHIEF EXECUTIVE’S REMUNERATION
Chief Executive's remuneration (FY24 and FY23)
Salary
3
$Benefits
4
$Subtotal $Pay for performance $
Tot al
remuneration $
STILTISubtotal
Chief Executive – Vince Hawksworth
F Y241,371,00279, 22 11,450,2237 73,241 321,298
5
1,094,5392,54 4,762
FY231,391,38573,0111,464,396993,5881,388,127
6
2,381,7153,846,111
6
3
Actual salary paid includes holiday pay paid as per NZ legislation. The base salary for Vince Hawksworth for FY23 was $1,285,200 and $1,349,460 for
FY24. With a Company change from a monthly pay cycle to a fortnightly pay cycle during FY24, Vince was paid for 51 weeks for FY24 with the remaining
week paid in FY25.
4
Benefits include KiwiSaver and insurance.
5
The FY24 LTI value relates to the grant for the FY22-FY24 performance period ending 30 June 2024. Performance against the LTI measures for FY22-
FY24 was assessed as 35%. The value shown is the total value of 35% of the share rights issued to Vince at the time of the grant on 9 September 2021.
The value of share rights on grant date is calculated using the volume weighted average price of Mercury shares over the 10 trading days from the
commencement date of the grant. The share rights for the FY22-FY24 grant will transfer to Vince after this integrated report is published. The market
value of the vested share rights will be calculated at transfer date using the number of vested share rights including dividend shares multiplied by the
volume weighted average price of Mercury shares over the 5 trading days prior to the share transfer date and will be reported in our FY25 integrated report.
6
The FY23 LTI value relates to the grant for the FY21-FY23 performance period ending 30 June 2023. The value shown is the market value of the vested
shares at the 23 August 2023 transfer date. The value was calculated using the number of vested share rights including dividend shares multiplied by the
volume weighted average price over the 5 trading days prior to the share transfer date. This value has been updated following the FY23 integrated report
as the market value could not be calculated until transfer date. Total Chief Executive remuneration reported in the FY23 integrated report was $3,357,981,
with the LTI value reported as $899,997, being the value of the share rights issued to Vince at the time of the grant on 7 October 2020. The value of share
rights on grant date is calculated using the volume weighted average price of Mercury shares over the 10 trading days from the commencement date of
the grant.
Five-year summary – Chief Executive's remuneration
Total remuneration
paid
7
$
Percentage
STI against
maximum
8
%
Percentage
vested LTI against
maximum %
Span of LTI
performance
period
Chief Executive –
Vince HawksworthF Y242,54 4,76260352021 - 2024
FY233,846,111811002020 - 2023
FY222,072,44377Not eligibleNot eligible
FY211,799,51550Not eligibleNot eligible
FY20513,94051Not eligibleNot eligible
Chief Executive –
Fraser WhinerayFY201,653,47669872017 – 2020
7
Total remuneration paid including Salary, Benefits, STI and LTI payments. The FY23 value has been updated following the FY23 integrated report as the
market value of LTI could not be calculated until transfer date. Total Chief Executive remuneration reported in the FY23 integrated report was $3,357,981.
8
For FY22 to FY24 the Maximum STI was 160% of ‘on-target’ performance pay. All other years the Maximum STI was 178% of ‘on-target’ performance pay.
REMUNERATION REPORT CONTINUED.
Ray Ferguson and Andrew Smith.
111
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
Breakdown of Chief Executive's pay for performance (FY24)
DescriptionPerformance measures
Percentage
achieved by
Vince Hawksworth
STI
9
Set at 60% of base salary. Based on a
combination of key financial and non-
financial performance measures
70% based on the six Company Shared goals
(weighted 10-40%)
53%
30% based on individual measures75%
LTI
10
FY22-FY24 grant set at 75% of
base salary. Share rights issued at 9
September 2021 with value of $917,994.
Volume weighted average price
(V WAP)
11
of 6.7.
50% relative TSR performance against Peer Group70%
50% absolute TSR against the company’s cost of
equity over the vesting period, plus 1%.
0%
9
The above STI percentages achieved by Vince is the percentage STI against the maximum STI percentage of 160%.
The above STI for FY24 will be paid in FY25.
10
The above LTI outcome for FY22-FY24 will be issued in shares in FY25.
11
The volume weighted average price calculated across the 10 trading days from the Commencement Date of 1 July 2021.
Chief Executive’s long-term performance incentives
LTI Tranche
12
Performance
Period
Grant
year
Share rights
issued date
Number
of share
rights
issued on
grant
Value
of share
rights on
grant date
$
13
Number
of share
rights vested
including
dividend
shares
14
Value of
shares on
transfer date
$
15
Share
transfer
date
FY21-FY23 1 July 2020 to
30 June 2023
FY217 October
2020
191,501$899,997214,085
16
1,388,12723 August
2023
FY22-FY24 1 July 2021 to
30 June 2024
FY229 September
2021
137,014$917,99454,040To be
determined
on transfer
date
August
2024
FY23-FY25 1 July 2022 to
30 June 2025
FY2316 September
2022
167,111$963,896To be
determined
after vesting
date
To be
determined
on transfer
date
August
2025
FY24-FY26 1 July 2023 to
30 June 2026
F Y2425 September
2023
83,178$539,78400N/A
12
With Vince Hawksworth’s departure in FY25, the Board agreed:
• FY25-27 tranche: Vince Hawksworth was not invited to participate in the FY25-27 grant;
• FY24-26 tranche: Vince Hawksworth will no longer be eligible for any LTI in respect of the FY24-26 grant and all share rights will be forfeited; and
• FY23-25 tranche: Vince Hawksworth’s FY23-25 grant will remain on foot and will vest in line with that year’s grant.
13
The value of share rights on grant date is calculated using the volume weighted average price of Mercury shares over the 10 trading days
from the commencement date of the grant.
14
Vesting is subject to the performance hurdles being met. See page 110 for the performance hurdles.
15
The value of share rights on transfer date is calculated using the number of vested share rights including dividend shares multiplied
by the volume weighted average price of Mercury shares over the 5 days prior to the share transfer data.
16
This figure was incorrectly reported as 214,805 in our 2023 Remuneration Report and has now been corrected to 214,085.
REMUNERATION REPORT CONTINUED.
Caroline Warwick and Hui Jia.
112
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
Five-year summary – TSR Performance (company vs peer group)
KIWISAVER
The Chief Executive is a member of KiwiSaver. As a member of this scheme, the Chief Executive is eligible
to contribute and receive a company contribution of 3% of gross taxable earnings (including short-term
incentives). For FY24, the company’s contribution for Vince Hawksworth was $70,938.
FY25 CHIEF EXECUTIVE’S REMUNERATION STRUCTURE
With the departure of Vince Hawksworth and incoming Chief Executive appointment of Stewart Hamilton in
FY25, both remuneration structures for FY25 are outlined below. These figures are based on the annualised
amount in the Chief Executive role. Vince Hawksworth is not eligible for an STI for the FY25 year or invited to
participate in the FY25-FY27 LTI grant.
MCY
Peer
0
10
20
30
40
50
30 June 202030 June 202130 June 202230 June 202330 June 2024
-20
-10
TSR %
Incoming Chief Executive – Stewart Hamilton (FY25 appointment)
0.5
1.0
1.5($millions)
2.0
2.5
FIXED
Base salary & benefits
Annual variable with
performance hurdles
Long-term incentives
performance pay
granted (2027 vesting)
ON-PLANMAXIMUM
REMUNERATION REPORT CONTINUED.
FY25Base Salary $Benefits
17
$Subtotal $Pay for performance 'on-target' $Total remuneration $
Chief Executive –
Vince Hawksworth1,349,46048,7671,398,227
STI
N/A
LTI granted
18
N/A
Subtotal
N/A1,398,227
Incoming Chief
Executive –
Stewart Hamilton1,100,00027, 3811,127, 381550,000440,000990,0002,117, 381
17
Benefits include KiwiSaver and insurance.
18
This LTI will be granted in FY25 and, if hurdles are met, paid in shares in 2027.
113
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
Remuneration Band
25
Currently
Employed
No longer
employedTot al
$100,001-$110,00071576
$110,001-$120,00073275
$120,001-$130,0001163119
$130,001-$140,00083487
$140,001-$150,00055560
$150,001-$160,00054256
$160,001-$170,00039443
$170,001-$180,00033538
$180,001-$190,0002626
$190,001-$200,00016420
$200,001-$210,00010414
$210,001-$220,00013316
$220,001-$230,00013316
$230,001-$240,00013215
$240,001-$250,00055
$250,001-$260,00066
$260,001-$270,00055
$270,001-$280,000314
$280,001-$290,00066
$290,001-$300,00044
$300,001-$310,00011
$310,001-$320,00033
SHARE OWNERSHIP
The Chief Executive and Chief Financial Officer’s ownership of Mercury shares as at 30 June 2024 are:
Executive
Number of shares owned (excludes
shares held in trust for the LTI scheme)
Change in shares owned since
30 June 2023
Chief Executive263,312
22
2 19,596
Chief Financial Officer040,438
23
Balance of EMT96,001
24
-127,7 15
22
Chief Executive shares include shares held in personal capacity as well as those held in trust. The Chief Executive also has a beneficial
interest in 100,000 MCY040 bonds and 30,000 MCY060 bonds held in trust.
23
The Chief Financial Officer disclosed in an Ongoing Disclosure Notice to the market dated 6 September 2023 a transfer of 40,438
shares to Tracey Meek, the Chief Financial Officer’s wife. The Chief Financial Officer ceased to have a relevant interest in these shares
upon transfer to Tracey Meek.
24
Balance of shares owned by other EMT members as at 30 June 2024, excluding shares owned by the Chief Executive and Chief
Financial Officer. This includes shares in which a beneficial interest is held and includes shares owned by Marlene Strawson who left
Mercury in December 2024.
Remuneration Band
25
Currently
Employed
No longer
employedTot al
$320,001-$330,00011
$330,001-$340,00011
$340,001-$350,00033
$360,001-$370,00022
$370,001-$380,00033
$390,001-$400,00011
$420,001-$430,00011
$450,001-$460,00011
$470,001-$480,00011
$580,001-$590,00011
$620,001-$630,00011
$680,001-$690,00011
$690,001-$700,00011
$720,001-$730,00011
$910,001-$920,00011
$980,001-$990,00011
$1,070,001-$1,080,00011
$3,830,001-$3,840,00011
Tot al66949718
TOTAL REMUNERATION RATIO
The total remuneration ratio for FY24 between employee (median) and
Chief Executive was 1:30. This is based on, for employees, actual
remuneration paid in FY24 (employee median was $83,973) and for
the Chief Executive, the amount specified in the table on page 111,
$2,544,762.
1:30
EMPLOYEE REMUNERATION
During the FY24 year the Group paid remuneration in excess of $100,000 including benefits to 718 employees
(not including directors) in the following remuneration bands:
25
The remuneration bands above include 19 employees who received
redundancy payments in FY24.
CHIEF FINANCIAL OFFICER’S REMUNERATION
In the interests of providing greater transparency of executive remuneration, the Board has elected to provide
details regarding total remuneration paid to the Chief Financial Officer in FY24.
FY24Base Salary
19
$Benefits
20
$Subtotal $Pay for performance $
21
Total remuneration $
Chief Financial
Officer567,75731,934599,691
STI
180,329
LTI
61,249
Subtotal
241,578841,269
19
Actual salary paid includes holiday pay paid as per NZ legislation.
20
Benefits include superannuation and insurance.
21
The STI payment relates to FY24 but to be paid in FY25. Performance against the LTI measures for FY22-FY24 was assessed as 35%. The LTI value
shown above is the total value of 35% of the share rights issued to the Chief Financial Officer (CFO) at the time of the grant on 9 September 2021.
The value of share rights on grant date is calculated using the volume weighted average price of Mercury shares over the 10 trading days from
the commencement date of the grant. The share rights for the FY22-FY24 grant will transfer to the CFO after this integrated report is published.
The market value of the vested share rights will be calculated at transfer date using the number of vested share rights including dividend shares multiplied
by the volume weighted average price over the 5 trading days prior to the share transfer date.
REMUNERATION REPORT CONTINUED.
At 30 June 2024, our gender pay equity was 96.7% (as at 30 June 2023
this was 97.1%). Gender pay equity is calculated as the average position in
range (relative to the role’s band midpoint) of female fixed remuneration
compared with the average position in range of male fixed remuneration.
Our gender pay gap which compares the median hourly rate between
males and females was 37% (as at 30 June 2023 this was 41.9%).
Pay equity by ethnicity compared to “other” ethnicity was Māori 98.8%;
Asian 98.2% and Pasifika 96.7% (as at 30 June 2023 this was Māori
99.9%; Asian 98.6% and Pasifika 97.6%). The ethnicity pay gap which
compares the median hourly rate between each ethnicity and “other”
ethnicity was Māori 22.2%; Asian 2% and 37.9% for Pasifika (as at
30 June 2023 this was Māori 32%; Asian -2.7% and Pasifika 37.7%).
114
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
DIRECTOR REMUNERATION.
Mercury adopted a Non-Executive Director Remuneration Policy on 17 June
2024. The Policy can be found on the Corporate Governance section of our
website. As an exception to the NZX Corporate Governance Code, Mercury
did not fully comply with Recommendation 5.1 for part of the reporting
period because we did not have a director remuneration policy for the
whole period. Mercury is now compliant with Recommendation 5.1.
The directors’ remuneration is paid in the form of directors’ fees. Additional fees
are paid to the Chair and in respect of work carried out by directors on various
Board committees to reflect the additional time involved and responsibilities
of these positions. The total pool of directors’ fees includes headroom which
may be used to pay ad hoc compensation to directors for significant additional
work performed outside usual Board and committee responsibilities
(e.g. special projects). No additional compensation was paid in FY24.
The total pool of fees able to be paid to directors is subject to shareholder
approval and currently stands at $1,085,400 for a Board of eight directors.
Directors’ fees were last reviewed in 2021, with the increase taking effect
from 1 October 2021. These fees are set following consultation with
key stakeholders and having considered independent remuneration
benchmarking advice. Under the NZX Listing Rules, the size of the total
pool of directors’ fees may increase from time to time as the number
of directors on the Board increases. Mercury meets directors’ reasonable
travel and other costs associated with Mercury business. Mercury does
not pay any retirement benefits and does not offer share incentives
or share options to directors.
The following people held office as directors during the year to 30 June
2024 and the remuneration set out in the table was received during the
period. The number of meetings and attendance rate by directors during
the year to 30 June 2024 was as follows:
DirectorBoard
Risk Assurance
& Audit Committee
People & Performance
Committee
Nominations & Corporate
Governance CommitteeTot al
1
No. of meetings13
2
5
3
7
4
328
Fees $Meetings Attended Fees $Meetings Attended Fees $Meetings Attended Fees $Meetings Attended Fees $
Scott St John
5
154,000
(Chair)
13–
5
(3 as observer)
10,200
(Chair)
73,0003167, 200
Mark Binns
Joined as director on
1 September 2023. Fees
paid are representative
of part-year payments.
85,8331110,8333–
1
(observer)
––96,666
Hannah Hamling103,0001113,0005––––116,000
Adrian Littlewood
Joined as a director
on 1 August 2023. Fees
paid are representative
of part-year payments.
94,41712–
2
(observer)
9,167
7
(1 as observer)
––103,584
James Miller103,00013
28,000
(Chair)
5––6,0003137,000
Susan Peterson
6
103,00013–
2
(observer)
15,200
(Chair)
73,0002121,200
Mike Taitoko103,00012–
1
(observer)
10,0007––113,000
Lorraine Witten103,0001313,0005––––116,000
Prue Flacks
Retired as a director on
31 December 2023. Fees
paid are representative
of part-year payments.
102,5005–3–2–1102,500
Patrick Strange
Retired as a director on
19 September 2023. Fees
paid are representative
of part-year payments.
25,75023,2502––––29,000
Total97 7,50068,08344,56712,0001,102,150
7
1
Disclosure Committee is not reported on as these occur as ad-hoc and on an as required basis.
2
This includes nine regular Board meetings and four out of cycle Board meetings. The out of cycle meetings were
outside of, and in addition to, the usual meeting cycle and were in relation to our FY2023 annual results, our
drilling campaign and the Chief Executive transition.
3
This includes four regular Risk Assurance and Audit Committee meetings and one out of cycle meeting relating
to our FY23 climate-related disclosures.
4
This includes four regular People and Performance Committee meetings and three out of cycle meetings relating
to the Chief Executive transition.
5
Scott St John became Chair of the Board on 1 January 2024. Scott St John’s fees cover $102,500 as Chair and
$51,500 in the capacity of director. Scott’s fee for the People and Performance Committee and the Nominations
and Corporate Governance Committee reflect his participation in those committees as director and Chair of the
People and Performance Committee between the period of 1 July 2023 to 31 December 2023. Following that
period, Scott participated in committees in the capacity of Board Chair and did not receive payment for those
attendances in addition to his fees as Chair.
6
Susan Peterson was a member of the People and Performance Committee from 1 July 2023 to 31 December
2023 before becoming Chair of the People and Performance Committee and a member of the Nominations and
Corporate Governance Committee on 1 January 2024. Susan’s fees reflect part-year committee and committee
chair payments.
7
The total directors’ fee pool was last approved by shareholders at Mercury’s 2021 annual shareholders’ meeting
as $1,085,400. Under Rule 2.11.3 of the NZX Listing Rules, the Board may, without shareholder approval,
proportionately increase the total pool of directors’ fees to accommodate an increase in the number of directors
from the number of directors in office when the fee pool was last approved by shareholders. During FY24, the
number of directors on the Board increased from eight to 10 when Adrian Littlewood and Mark Binns became
directors, decreased to nine following Patrick Strange’s retirement and then decreased to eight again following
Prue Flacks’ retirement. The total directors’ fee pool was adjusted throughout FY24 to accommodate the changing
number of directors in accordance with the NZX Listing Rules, with the total fees paid to directors in FY24 of
$1,102,150 being less than the maximum amount by which the fee pool could have been increased.
For reference: Future Director Nicole Rosie was paid $3,333 in relation to her role as future director in FY24. Nicole Rosie's position as future director began on 1 May 2024.
115
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
NZX CORPORATE GOVERNANCE CODE INDEX.
NZX CGC RecommendationSection titleLocation
Principle 1 – Ethical Standards
1.1 Code of ethicsActing Ethically & Responsibly
The Mercury Code & Our Governance and
Responsible Business Practices, p101-102
1.2 Financial product dealing
policy
Acting Ethically & ResponsiblyOur Governance and Responsible Business Practices,
p102
Principle 2 – Board Composition & Performance
2.1 Board charterMercury’s Board
Responsibilities, p92
2.2 Board nomination and
appointment
Mercury’s Board
Selection, Nomination & Appointment, p93
2.3 Director agreementsMercury’s BoardSelection, Nomination & Appointment, p93
2.4 a. Director profiles, tenure
and ownership interests
Your Board of Directors
Directors’ Disclosures
p86-88
Interests register, p117
b. Director meeting
attendance
Remuneration ReportDirector Remuneration, p115
c. Director independenceMercury’s BoardIndependence, p92
2.5 Diversity policyDiversity, Equity & Inclusion
p102
2.6 Director trainingMercury’s Board
Induction & Development, p93
2.7 Director performanceMercury’s Board
Board Skills Matrix, p94
Reviewing Performance, p95
2.8 Majority independent
directors
Mercury’s Board
Independence, p92
2.9 Independent chairMercury’s BoardIndependence, p92
2.10 Chair / CEO separationYour Board of Directors
Your Executive Management Team
p86-88
p89
Principle 3 – Board Committees
3.1 Audit committeeMercury’s Board
Board Committees, p95-96
3.2 Attendance at audit
committee by employees
by invitation
Mercury’s Board
Board Committees, p96
3.3 Remuneration committeeMercury’s Board
Board Committees, p95
As an exception to the NZX Corporate Governance Code, Mercury does not comply with
Recommendation 3.3 because it does not have a separate remuneration committee.
See the Board Committees section of this report for a full explanation of this exception.
3.4 Nomination committeeMercury’s BoardBoard Committees, p95-96
3.5 Other standing committeesMercury’s Board
Board Committees, p95
3.6 Takeover protocolActing Ethically & Responsibly
Our Governance and Responsible Business
Practices, p102
NZX CGC RecommendationSection titleLocation
Principle 4 – Reporting & Disclosure
4.1 Continuous disclosure policyActing Ethically & Responsibly
Our Governance and Responsible Business
Practices, p102
4.2 Code of ethics, charters and
policies on website
Acting Ethically & Responsibly
www.mercury.co.nz/investors/
corporate-governance
The Mercury Code & Our Governance and
Responsible Business Practices, p101-102
4.3 Balanced, clear and objective
financial reporting
Notes to the Consolidated
Financial Statements
p41-61
4.4 Non-financial disclosureClimate Statementp62-84
Principle 5 - Remuneration
5.1 Director remuneration policyRemuneration Report
Director Remuneration, p115
As an exception to the NZX Corporate Governance Code, Mercury did not fully comply
with Recommendation 5.1 for part of the reporting period because we did not have
a director remuneration policy for the whole period. Mercury is now compliant with
Recommendation 5.1.
See the Remuneration Report for a full explanation of this exception.
5.2 Executive remuneration
policy
Remuneration ReportExecutive Remuneration, p105-114
5.3 CEO remunerationRemuneration ReportChief Executive’s Remuneration, p111-114
Principle 6 – Risk Management
6.1 Risk managementAssurance & Managing Risk
The Risks We Face
Our Key Risks, Risk Management Framework & RAAC
Responsibilities, p97-100
Our Key Risks, p16
6.2 Health and safety risksThe Risks We Face
4. Ngā Tāngata / People
Our Key Risks, p16
Pursuing Safety Citizenship, p28
Principle 7 - Auditors
7.1 Audit frameworkAssurance & Managing Risk
Audit Plan & Role of Auditor, p97
7.2 External auditor attends
annual meeting
Assurance & Managing Risk
Audit Plan & Role of Auditor, p97
7.3 Internal auditAssurance & Managing RiskInternal Audit & Risk Assurance, p97
Principle 8 – Shareholder Rights & Relations
8.1 Investor website
www.mercury.co.nz/investors
8.2 Shareholder communicationsEngaging With Investors
p100
8.3 Right to voteOther Disclosures
Information About Mercury NZ Limited Ordinary
Shares, p126
8.4 Pro rata offersN/A during the reporting period
8.5 Notice of meetingSee the Notice of Meeting for 2024
on NZX and posted on our website
116
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
DIRECTORS’ DISCLOSURES.
INTERESTS REGISTER
DISCLOSURE OF DIRECTORS’ INTERESTS
Section 140(1) of the New Zealand Companies Act
1993 requires a director of a company to disclose
certain interests. Under subsection (2) a director can
make disclosure by giving a general notice in writing
to the Company of a position held by a director in
another named company or entity. The following
are particulars included in the Company’s Interests
Register as at 30 June 2024:
Mark Binns
Crown Infrastructure Partners LimitedChair
1
Hynds LimitedChair
1
Auckland International Airport LimitedDirector
1
Meridian Energy LimitedShareholder
1
Manawa Energy LimitedShareholder
1
Contact Energy LimitedShareholder
1
Genesis Energy LimitedShareholder
1
Vector LimitedShareholder
1
Susan Peterson
Vista Group International LimitedChair / Shareholder
Craigs Investment Partners LimitedDirector
CIP Holdings LimitedDirector / Shareholder
Arvida Group LimitedDirector / Shareholder
Xero LimitedDirector / Shareholder
Mike Taitoko
Takiwa Limited Director / Shareholder
Waiora Consulting LimitedDirector / Shareholder
Toha Foundry LimitedDirector / Shareholder
Takiwā NZ LimitedDirector / Shareholder
Toha Network LimitedDirector / Shareholder
1
Toha Aotearoa 2030 LimitedDirector / Shareholder
1
RETIRED DURING THE REPORTING PERIOD
Prue Flacks retired as a director during the period on 31
December 2023 and Patrick Strange retired as a director
during the period on 19 September 2023. The following
are particulars included against their names in the
Company’s Interest Register during this period.
Prue Flacks
None
Patrick Strange
Auckland International Airport Limited Chair
TransgridDirector
Scott St John
Fisher & Paykel Healthcare
Corporation Limited*
Chair
Next Foundation (and associated
vehicles)
Director
ANZ Bank New Zealand Limited
Chair
1
(previously Director)
Australia and New Zealand Banking
Group Limited
Director
1
ANZ Group Holdings LimitedDirector
1
Fonterra Co-operative Group LimitedDirector
2
1
Entries added by notices given by the directors during the year ended
30 June 2024
2
Entries removed by notices given by the directors during the year ended
30 June 2024
* Lorraine Witten has given notice that she will retire from the Board of
MOVe Logistics Group Limited and other group entities in October 2024.
* Scott St John has given notice that he will retire from the Board
of Fisher & Paykel Healthcare Corporation Limited in August 2024.
Hannah Hamling
ArcActive LimitedShareholder
Adrian Littlewood
Craigs Investment Partners LimitedDirector
1
CIP Holdings LimitedDirector / Shareholder
1
Contact Energy LimitedShareholder
1
Spark New Zealand LimitedShareholder
1
James Miller
Channel Infrastructure NZ Limited Chair
Vista Group International LimitedDirector
Ryman Healthcare LimitedDirector
Lorraine Witten
VWORK LimitedDirector / Shareholder
MOVe Logistics Group Limited*
(and other group entities)
Director
1
(previously
Chair) / Shareholder
Rakon LimitedChair / Shareholder
Rakon PPS Trustee LimitedDirector / Shareholder
117
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
DIRECTORS’ AND OFFICERS’ INDEMNITIES
Indemnities have been given to and insurance has been effected for, directors and senior managers of the
Group to cover acts or omissions of those persons in carrying out their duties and responsibilities as directors
and senior managers.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARE AND BOND TRANSACTIONS
Directors disclosed, pursuant to section 148 of the New Zealand Companies Act 1993, the following acquisitions
and disposals of relevant interests in Group shares and bonds during the period to 30 June 2024:
Name of director
Date of acquisition/
disposal of relevant
interest
Nature of transaction
and relevant interest
Consideration
(NZD)
Securities in which a
relevant interest was
acquired/(disposed)
Scott St John29 September 2023
Acquisition of beneficial interest
in ordinary shares as a result of
participation in Mercury’s Dividend
Reinvestment Plan
$6,191.651,019
Scott St John 2 April 2024
Acquisition of beneficial interest
in ordinary shares as a result of
participation in Mercury’s Dividend
Reinvestment Plan
$4,485.07673
DIRECTORS’ DISCLOSURES CONTINUED.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARES AND BONDS
Directors disclosed the following relevant interests in Group shares and bonds as at 30 June 2024:
Director
Number of Shares in which
a relevant interest is heldNumber of bondsChange since 30 June 2023
Mark Binns28,240150,000 MCY050 Capital BondsN/A
Hannah Hamling16,300––
Adrian Littlewood4,160–N/A
James Miller40,320––
Susan Peterson5,400––
Scott St John 48,931–+1,692 shares
Mike Taitoko2,200––
DISCLOSURE OF SUBSIDIARY DIRECTORS’ INTERESTS
The following are particulars included in the Interests Register for Mercury’s subsidiary companies
as at 30 June 2024:
DirectorInterest Entity
Prue Flacks
Refer to Disclosure of Directors’ Interests.
Phil GibsonNil
Stewart HamiltonNil
Vincent Hawksworth
1
Chief Executive OfficerMercury NZ Limited
James Miller
Refer to Disclosure of Directors’ Interests.
William Meek
1
Chief Financial OfficerMercury NZ Limited
Craig NeustroskiNil
Mike Taitoko
Refer to Disclosure of Directors’ Interests.
Marlene StrawsonNil
Howard Thomas
1
Nil
Timothy AynsleyNil
1
This person is a Director of more than one subsidiary of Mercury NZ Limited, please refer to Company Disclosures.
118
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
SECURITY HOLDER INFORMATION.
SHAREHOLDER INFORMATION
Twenty largest registered shareholders as at 30 June 2024
1
Name
Number
of shares
% of shares
2
The Sovereign in right of New Zealand acting by and through their Minister of Finance
and Minister for State Owned Enterprises
716,140,52851.15
HSBC Nominees (New Zealand) Limited 70,623,3755.04
HSBC Nominees (New Zealand) Limited A/C State Street60,638,7894.33
Citibank Nominees (New Zealand) Limited54,385,2553.88
JPMorgan Chase Bank NA NZ Branch-Segregated Clients ACCT46,133,0133.30
Custodial Services Limited 39,838,1822.85
BNP Paribas Nominees (NZ) Limited 38,428,8152.74
Accident Compensation Corporation 20,520,4061.47
FNZ Custodians Limited17,076,9241.22
New Zealand Depository Nominee Limited 13,022,0780.93
JBWere (NZ) Nominees Limited 12,682,3020.91
Tea Custodians Limited Client Property Trust Account 11,924,17 10.85
BNP Paribas Nominees (NZ) Limited 9,725, 2320.69
Generate Kiwisaver Public Trust Nominees Limited 9,617,1930.69
HSBC Nominees A/C NZ Superannuation Fund Nominees Limited 9,529,74 40.68
Forsyth Barr Custodians Limited 8,122,0810.58
ANZ Wholesale Australasian Share Fund 7, 202,4910.51
Simplicity Nominees Limited 6,898,4960.49
PT (Booster Investments) Nominees Limited6,078,2050.43
Mercury NZ Limited
3
5,956,7850.43
Tot al1,164,544,06583.18
1
As required by the NZX Listing Rules, New Zealand Central Securities Depository (NZCSD) holdings are included above and not detailed separately.
2
Percentage calculated on the basis of Mercury having 1,400,012,517 ordinary shares on issue as at 30 June 2024, which included 5,956,785 ordinary
shares held as treasury shares.
3
Held as treasury shares.
Distribution of shareholders and holdings as at 30 June 2024
Size of holding
Number of
shareholders
% of
shareholders
1
Number of
shares
Holding
quantity %
1
1 to 1,00027,06239. 3318,175,3241.30
1,001 to 5,00033,21348.277 7,087,0655.51
5,001 to 10,0005,3867.8339,439,8282.82
10,001 to 100,0003,0454.4362,813,1544.49
100,001 and above 1030.151, 202,497,14 685.89
Tot al68,8091001,400,012,517100
1
Rounding applied.
Substantial product holders as at 30 June 2024
Class of Securities
Number of Securities
in Substantial Holding
Total Number of
Securities in Class
The Sovereign in Right of New ZealandOrdinary shares725,738,272
1
1,400,012,517
2
1
This comprises (a) 716,140,528 shares held by the Crown on its own account; (b) 9,529,744 shares forming part of the New Zealand Superannuation Fund
which are the property of the Crown; and (c) 68,000 shares held by Public Trust on trust for the Crown and certain iwi.
2
As at 30 June 2024, Mercury had 1,400,012,517 ordinary shares on issue, which included 5,956,785 ordinary shares held as treasury shares.
119
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
BONDHOLDER INFORMATION.
Twenty largest registered holders of MCY020 capital bonds (3.60%) as at 30 June 2024
1
Name
Number of MCY020
capital bonds
% of MCY020
capital bonds
2
Forsyth Barr Custodians Limited 106,285,00035.43
Custodial Services Limited 52,932,00017.6 4
JBWere (NZ) Nominees Limited 31,217,00010.41
FNZ Custodians Limited12,803,0004.27
Forsyth Barr Custodians Limited 9,366,0003.12
Public Tr us t 9,313,0003.10
NZPT Custodians (Grosvenor) Limited 7,195,0002.40
Forsyth Barr Custodians Limited 4,530,0001.51
Tea Custodians Limited Client Property Trust Account 4,056,0001.35
Generate Kiwisaver Public Trust Nominees Limited 3,387,0001.13
Masfen Securities Limited3,200,0001.07
Best Farm Limited2,900,0000.97
Citibank Nominees (New Zealand) Limited 2,815,0000.94
The Tindall Foundation Inc1,800,0000.60
Forsyth Barr Custodians Limited 1,290,0000.43
Wharetukura Limited1,200,0000.40
Robert Murray Solloway1,025,0000.34
Richard Barton Adams and Allison Ruth Adams 1,000,0000.33
CML Shares Limited900,0000.30
Investment Custodial Services Limited 808,0000.27
Tot al258,022,00086.01
1
As required by the NZX Listing Rules, New Zealand Central Securities Depository (NZCSD) holdings are included above and not detailed separately.
2
Percentage calculated on the basis of Mercury having 300,000,000 MCY020 capital bonds on issue as at 30 June 2024.
Note: All MCY020 Capital Bonds were redeemed on 11 July 2024.
Distribution of MCY020 (3.60%) capital bondholders and holdings as at 30 June 2024
Size of holding
Number of MCY020
capital bondholders
% of MCY020 capital
bondholders
1
Number of MCY020
capital bonds
Holding
quantity %
1
1,001 to 5,000786.44390,0000.13
5,001 to 10,00023819.6 42,305,0000.7 7
10,001 to 100,00082568.0727,371,0009.12
100,001 and above715.86269,934,00089.98
Tot al1,212100300,000,000100
1
Rounding applied.
120
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
BONDHOLDER INFORMATION CONTINUED.
Twenty largest registered holders of MCY030 green bonds (1.56%) as at 30 June 2024
1
Name
Number of
MCY030
green bonds
% of MCY030
green bonds
2
Custodial Services Limited 38,966,00019.4 8
Tea Custodians Limited Client Property Trust Account 26,769,00013.38
HSBC Nominees (New Zealand) Limited 16,507,0008.25
Forsyth Barr Custodians Limited 14,247,0007.12
ANZ Wholesale NZ Fixed Interest Fund 12,250,0006.13
FNZ Custodians Limited12,110,0006.06
BNP Paribas Nominees (NZ) Limited 11,384,0005.69
JBWere (NZ) Nominees Limited 8,364,0004.18
Adminis Custodial Nominees Limited6,000,0003.00
HSBC Nominees (New Zealand) Limited A/C State Street5,211,0002.61
MT Nominees Limited 4,448,0002.22
ANZ Custodial Services New Zealand Limited 4,367,0002.18
FNZ Custodians Limited 3,584,0001.79
Generate Kiwisaver Public Trust Nominees Limited 3,112,0001.56
Citibank Nominees (New Zealand) Limited 2,416,0001.21
Forsyth Barr Custodians Limited 2,392,0001.20
BGLIR Trustee Limited 2,000,0001.00
Mint Nominees Limited 1,918,0000.96
Forsyth Barr Custodians Limited 1,556,0000.78
Investment Custodial Services Limited1,240,0000.62
Tot al178,841,00089.42
1
As required by the NZX Listing Rules, New Zealand Central Securities Depository (NZCSD) holdings are included above and not detailed separately.
2
Percentage calculated on the basis of Mercury having 200,000,000 MCY030 green bonds on issue as at 30 June 2024.
Distribution of MCY030 (1.56%) green bondholders and holdings as at 30 June 2024
Size of holding
Number of MCY030
green bondholders
% of MCY030 green
bondholders
1
Number of MCY030
green bonds
Holding
quantity %
1
1,001 to 5,000175.4585,0000.04
5,001 to 10,0005818.59529,0000.26
10,001 to 100,00018559. 296,806,0003.40
100,001 and above5216.67192,580,00096.29
Tot al312100200,000,000100
1
Rounding applied.
121
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
BONDHOLDER INFORMATION CONTINUED.
Twenty largest registered holders of MCY040 green bonds (2.16%) as at 30 June 2024
1
Name
Number of
MCY040
green bonds
% of MCY040
green bonds
2
Custodial Services Limited 47,205,00023.60
FNZ Custodians Limited30,336,00015.17
Forsyth Barr Custodians Limited 15,924,0007.96
BNP Paribas Nominees (NZ) Limited 13,061,0006.53
Tea Custodians Limited Client Property Trust Account11,950,0005.98
HSBC Nominees (New Zealand) Limited 11,875,0005.94
Southland Building Society 9,250,0004.63
PIN Twenty Limited 7,178,0003.59
Citibank Nominees (New Zealand) Limited 6,705,0003.35
NZX WT Nominees Limited 4,163,0002.08
FNZ Custodians Limited 3,465,0001.73
Dunedin City Council3,000,0001.50
MT Nominees Limited 3,000,0001.50
Forsyth Barr Custodians Limited 2,905,0001.45
Forsyth Barr Custodians Limited 2,686,0001.34
Investment Custodial Services Limited 2,211,0001.11
JBWere (NZ) Nominees Limited 2,013,0001.01
FNZ Custodians Limited 1,851,0000.93
JBWere (NZ) Nominees Limited 1,807,0000.90
JBWere (NZ) Nominees Limited 1,485,0000.74
Tot al182,070,00091.04
1
As required by the NZX Listing Rules, New Zealand Central Securities Depository (NZCSD) holdings are included above and not detailed separately.
2
Percentage calculated on the basis of Mercury having 200,000,000 MCY040 green bonds on issue as at 30 June 2024.
Distribution of MCY040 (2.16%) green bondholders and holdings as at 30 June 2024
Size of holding
Number of MCY040
green bondholders
% of MCY040 green
bondholders
1
Number of MCY040
green bonds
Holding
quantity %
1
1,001 to 5,000217.66105,0000.05
5,001 to 10,0005921.53568,0000.28
10,001 to 100,00014954.385,718,0002.86
100,001 and above4516.42193,609,00096.80
Tot al2 74100200,000,000100
1
Rounding applied.
122
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
BONDHOLDER INFORMATION CONTINUED.
Twenty largest registered holders of MCY050 capital bonds (5.73%) as at 30 June 2024
1
Name
Number of
MCY050
capital bonds
% of MCY050
capital bonds
2
Forsyth Barr Custodians Limited 82,710,00033.08
JBWere (NZ) Nominees Limited 33,125,00013.25
HSBC Nominees (New Zealand) Limited 22,108,0008.84
Custodial Services Limited 18,610,0007.4 4
Citibank Nominees (New Zealand) Limited 11,550,0004.62
Forsyth Barr Custodians Limited 6,494,0002.60
Generate Kiwisaver Public Trust Nominees Limited 6,238,0002.50
FNZ Custodians Limited5,851,0002.34
Forsyth Barr Custodians Limited 4,966,0001.99
Adminis Custodial Nominees Limited3,780,0001.51
CML Shares Limited3,655,0001.46
Millar Capital Fund Limited3,000,0001.20
Investment Custodial Services Limited 2,476,0000.99
Masfen Securities Limited2,000,0000.80
Best Farm Limited1,500,0000.60
Forsyth Barr Custodians Limited 1,335,0000.53
Fletcher Building Educational Fund Limited1,000,0000.40
JBWere (NZ) Nominees Limited 1,000,0000.40
Robert William Bentley Morrison and Andrew James Stewart and Anthony
James William Howard
1,000,0000.40
RGTKMT Investments Limited800,0000.32
Tot al213,198,00085.28
1
As required by the NZX Listing Rules, New Zealand Central Securities Depository (NZCSD) holdings are included above and not detailed separately.
2
Percentage calculated on the basis of Mercury having 250,000,000 MCY050 capital bonds on issue as at 30 June 2024.
Distribution of MCY050 (5.73%) capital bondholders and holdings as at 30 June 2024
Size of holding
Number of MCY050
capital bondholders
% of MCY050 capital
bondholders
1
Number of MCY050
capital bonds
Holding
quantity %
1
1,001 to 5,00011710.96585,0000.23
5,001 to 10,00023421.912,224,0000.89
10,001 to 100,00064560.3921,418,0008.57
100,001 and above726.74225,773,00090.31
Tot al1,068100250,000,000100
1
Rounding applied.
123
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
BONDHOLDER INFORMATION CONTINUED.
Twenty largest registered holders of MCY060 green bonds (5.64%) as at 30 June 2024
1
Name
Number of
MCY060
green bonds
% of MCY060
green bonds
2
Custodial Services Limited 64,546,00043.03
HSBC Nominees (New Zealand) Limited 20,600,00013.73
Forsyth Barr Custodians Limited 12,946,0008.63
FNZ Custodians Limited8,575,0005.72
BNP Paribas Nominees (NZ) Limited 7,634,0005.09
Queen Street Nominees ACF Pie Funds 5,900,0003.93
JBWere (NZ) Nominees Limited 3,820,0002.55
ANZ Fixed Interest Fund 2,950,0001.97
NZPT Custodians (Grosvenor) Limited 2,500,0001.67
Forsyth Barr Custodians Limited 2,449,0001.63
Investment Custodial Services Limited 1,959,0001.31
JBWere (NZ) Nominees Limited 1,000,0000.67
ANZ Custodial Services New Zealand Limited 682,0000.45
Fletcher Building Educational Fund Limited670,0000.45
Custodial Services Limited 625,0000.42
HSBC Nominees (New Zealand) Limited A/C State Street600,0000.40
Omega Investments Limited550,0000.37
Citibank Nominees (New Zealand) Limited 500,0000.33
Lee Paterson Family Trust Company Limited500,0000.33
Sirius Capital Limited500,0000.33
Tot al139,506,00093.00
1
As required by the NZX Listing Rules, New Zealand Central Securities Depository (NZCSD) holdings are included above and not detailed separately.
2
Percentage calculated on the basis of Mercury having 150,000,000 MCY060 green bonds on issue as at 30 June 2024.
Distribution of MCY060 (5.64%) green bondholders and holdings as at 30 June 2024
Size of holding
Number of MCY060
green bondholders
% of MCY060 green
bondholders
1
Number of MCY060
green bonds
Holding
quantity %
1
1,001 to 5,000248.14120,0000.08
5,001 to 10,0005217.6 3492,0000.33
10,001 to 100,00017860.345,494,0003.66
100,001 and above4113.90143,894,00095.93
Tot al295100150,000,000100
1
Rounding applied.
124
MERCURY 2024 INTEGRATED REPORTLEADERSHIP & GOVERNANCEMENU
COMPANY DISCLOSURES.
STOCK EXCHANGE LISTINGS
Mercury NZ Limited (referred to in this section as
“Mercury” or “the Company”) is listed on the New
Zealand stock exchange and as an ASX Foreign
Exempt Listing on the Australian stock exchange.
In New Zealand, Mercury is listed with a “non-
standard” (NS) designation. This is due to particular
provisions of the Constitution, including the
requirements regulating ownership and transfer
of Ordinary Shares.
ASX approved a change in Mercury NZ Limited’s
ASX admission category from an ASX Listing to
an ASX Foreign Exempt Listing, effective from the
commencement of trading on 19 February 2016.
The Company continues to have a full listing on
the NZX Main Board, and the Company’s shares
are still quoted on the ASX. The Company is primarily
regulated by the NZX, complies with the NZX Listing
Rules, and is exempt from complying with most
of the ASX Listing Rules (based on the principle
of substituted compliance).
MERCURY NZ LIMITED
The following persons held office as Directors of
Mercury NZ Limited during the 2024 financial year
and as at the end of the 2024 financial year, being
30 June 2024: Scott St John (Chair)
1
, Mark Binns
2
,
Hannah Hamling, Adrian Littlewood
2
, James Miller,
Susan Peterson, Mike Taitoko, Lorraine Witten, Prue
Flacks (Chair)
3
and Patrick Strange
3
.
SUBSIDIARY COMPANIES
The following persons held office as directors of
subsidiaries of Mercury NZ Limited during FY24:
Company nameDirectors
Mercury Solar Limited
Vincent Hawksworth
William Meek
Howard Thomas
Mercury SPV Limited
Vincent Hawksworth
William Meek
Howard Thomas
Mercury Wind Limited
Vincent Hawksworth
William Meek
Howard Thomas
Mighty Geothermal Power
International Limited
Vincent Hawksworth
William Meek
Howard Thomas
Mighty Geothermal Power Limited
Vincent Hawksworth
William Meek
Howard Thomas
Mighty River Power Limited
Vincent Hawksworth
William Meek
Howard Thomas
Ngātamariki Geothermal Limited
Vincent Hawksworth
William Meek
Howard Thomas
NOW New Zealand Limited
Timothy Aynsley
Vincent Hawksworth
Paul Callow
3
Hamish White
Craig Neustroski
2
Company nameDirectors
Blockchain Energy Limited
Vincent Hawksworth
William Meek
Howard Thomas
Bosco Connect Limited
Vincent Hawksworth
William Meek
Howard Thomas
Glo-Bug Limited
Vincent Hawksworth
William Meek
Howard Thomas
Kawerau Geothermal Limited
Vincent Hawksworth
William Meek
Howard Thomas
Mercury Drive Limited
Vincent Hawksworth
William Meek
Howard Thomas
M
[TRUNCATED]
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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